Sunstein at the Helm

With his attractive family and a phalanx of top aides in tow, Professor Cass Sunstein had a cordial, 45-minute hearing before the Senate Homeland Security and Government Affairs Committee yesterday. He was introduced by former student and current Senator Amy Klobuchar (D-MN) who praised Sunstein as a teacher, mentor, and eclectic thinker, all qualities for which he is rightly known. Ironically, however, the remainder of the hearing could be summarized as efforts by the three Senators in attendance— Chairman Joseph Lieberman (I-CT), ranking minority member Susan Collins (R-ME), and Senator Daniel Akaka (D-HI)—to get Sunstein to pledge that eclectic thinking will not be his modus operandi at the White House.

The Sunstein story has taken on a life of its own, significantly out of proportion to the interest this level of position typically sparks, especially given the urgency of headlines on the global economic crises, swine flu, the global economic crisis, the war in Afghanistan, and the global economic crisis. A major reason is that Sunstein has been such a prolific and provocative writer, producing at a pace that amazes those of us who toil in the vineyards of footnoted law review articles for a living. From proclaiming animal rights to making the argument for why the Occupational Safety and Health Administration is unconstitutional, Sunstein’s past writings, as one reporter observed to me privately, suggest that he was untethered by the possibility that he might one day sit in a seat before a Senate committee and have to answer for any of them. An admirable quality, in its way.

And yet that day came, and Sunstein was all about promising that he understood the difference between his role as intellectual gadfly and his role as “regulatory czar” with real power. He assured Senator Collins that he supports the Second Amendment right to bear arms, and knows that hunters are among the strongest environmentalists in the country. He told the senators that he understood that the evaluation of regulation cannot simply boil down to “arithmetic” calculations but must also take into consideration such “soft variables” as protecting the vulnerable. And he told Senator Lieberman that a controversial paper he’d written on the Occupational Safety and Health Administration reached the happy conclusion that the statute creating the agency was constitutional, which perhaps reflects his current views, but which is not quite so apparent from what he actually wrote:

In these circumstances, courts have three options. The most aggressive is to invalidate the statute creating OSHA on constitutional grounds. Notwithstanding its disruptive potential, this route does not entirely lack appeal. Congress should be expected to do much better than to instruct the Secretary of Labor to do what he deems “reasonably necessary or appropriate.” Invalidation of the statute might well have a democracy-forcing function, one that would spur a degree of national deliberation about how best to protect American workers from hazards faced in the workplace. Such deliberation could well produce a greatly improved statute, one that would benefit from a great deal of theoretical and empirical work since OSHA was first enacted. And however aggressive, this approach would be less radical than it might seem. No other federal regulatory statute confers so much discretion on federal administrators, at least in any area of such scope, and it is not difficult to distinguish OSHA from statutes that the Supreme Court has upheld.

Sunstein’s prepared statement was heartening in one key respect: he reiterated several times that he understood that the health and safety agencies themselves were charged by the statutes with addressing the threats to public health, worker safety, and the environment and that OMB, of necessity, must play a subordinate role. He also admitted that some statutes do not allow the agencies—most notably, EPA—to take costs into consideration when setting National Ambient Air Quality Standards. Whether this important point means he will instruct his stop forcing EPA to squeeze regulations under the statute through a cost-benefit-analysis sieve remains to be seen.

On a more discouraging note, Sunstein also reiterated the “principle” of “looking before you leap” as inspiring his view of regulatory policymaking. Since he has written so extensively and so very critically about fundamental regulations to control toxics in the workplace and the environment (as just one example, the EPA rule adopted by Bush II Administrator Christine Todd Whitman to remove arsenic from drinking water), this reiteration of the strange perception that we are in an era of mindless and excessive regulation was disconcerting, to say the least. For most of the last decade, agencies have not been lining up to leap cheerfully into the abyss of overly costly regulation, but rather have been staring into space, immobilized by just such a canard. Sunstein gave no hint that he recognizes, much less has thought about how to reverse, the steady decline into dysfunction of health and safety agencies like the EPA (stalled mercury regulations), the OSHA (collapsing cranes), the Consumer Product Safety Commission (lead-covered, imported toys), and the Food and Drug Administration (peanut butter spiked with salmonella). As we have said repeatedly in this space, to really serve President Obama, and to deliver “change we can believe in,” Sunstein will need to dramatically alter OIRA’s focus – from preventing supposed overregulation to encouraging and supporting desperately needed reinvigoration of the largely dysfunctional regulatory system.

In response to a question by Senator Collins regarding business community demands that OMB assert jurisdiction over independent agencies, Sunstein equivocated. He offered up as an example of “looking before you leap” the Federal Trade Commission, an agency that is attempting to crack down on credit card company consumer fraud at the moment, but also said he understood he had to stay within the law and respect the FTC’s independence. The problem with this “on the one hand, on the other hand” answer is that the FTC has long been a whipping boy for powerful industries who resent its aggressive efforts to protect consumers. OMB should stay away from independent agencies, but if Sunstein was going to walk where angels fear to tread, why not cite the Securities and Exchange Commission (SEC)—the agency that ignored the unfolding Madoff scandal—as an example?

Further, OMB has an enormous ability to throw sand in the gears simply by peppering such agencies with questions and critical comments without ever reaching the point that it asserts authority to bring rulemaking to a grinding halt. The real question will be whether these behind-the-scenes efforts are subject to disclosure, with the exchanges between the agencies posted on the Internet. In response to questions about his office’s transparency, Sunstein made a half-promise: everyone will know who OMB officials met with. It’d be better if he had also promised to disclose what was actually said.

In a final intriguing exchange, Senators asked Sunstein whether the new Obama Executive Order on regulatory review would be ready soon. The nominee answered that he has made his own recommendations to OMB director Peter Orszag, but that no schedule for releasing the proposal had yet been set. But he also went out of his way to explain that the option of simply keeping the old Clinton/Bush II Executive Order—12,866—on the books was definitely a possibility. Among other things, 12,866 gave great power over regulations to OIRA, requiring that before any agency could finalize any “significant” regulatory proposal (one that will impose more than $100 million in compliance costs), it must submit its draft to OIRA for review and approval. The order also requires agencies to perform cost-benefit analysis for any such rule, using the guidelines that OMB has established for those analyses. When President Obama announced he wanted OMB to review the executive order, everyone assumed the review would provide an opportunity for Sunstein to engraft his own elaborations of how to do cost-benefit analysis onto an already broad grant of discretion for OMB to be the decider on health and safety regulations. How interesting it would be if Sunstein decides to forego this opportunity by simply reinstating 12,866, saving his ammunition for private interventions with the agencies on issues like climate change, rather than elaborating a process that leaves so much to the regulatory czar’s discretion in any event.