Time to Stand Up and Be Counted

Executive Order 12866 may be twenty years old, but formal, centralized review of agency rulemaking by the Office of Information and Regulatory Affairs (OIRA) is more than thirty years old, having been instituted by President Ronald Reagan in Executive Order 12291 in 1981. Since then, this centralized review has been carried out without significant change over five presidential administrations and has had bi-partisan support in both the House and Senate. Progressives have been less enamored with this review, seeing in it a deliberate bias against regulation by reason of its additional roadblocks to and delays in adopting regulations. This bias was clearly intentional in the origin of the centralized review by President Reagan, who famously said, “government is not the solution to our problem; government is the problem.” However, even when Democrats became President the bias remained. President Clinton’s E.O. 12866 begins with a statement of regulatory philosophy that agencies should adopt “only such regulations as are required by law . . . or are made necessary by compelling public need,” not regulations that simply further the public interest or increase the net welfare to society. President Obama not only retained E.O. 12866 but also, in his E.O. 13563 explicitly reaffirmed its principles. 

Of course, there is nothing inherent in the concept of centralized oversight of agency regulation that requires a bias against regulation. After all, OIRA Administrator John Graham in the George W. Bush administration instituted “prompt letters,” which proactively requested agencies to take certain actions, including adopting new or strengthening older regulations. However, Although the “prompt letters” initiated by OIRA administrator John Graham in the George W. Bush administration demonstrate the ability of centralized review to spur regulation and to push for further regulation, the fact that there were only seven such letters in eight years probably reflects the exception that proves the rule.

Then there is the argument for a bias against regulation. In the past arguments have been made that agencies like the Federal Communications Commission and the former Interstate Commerce Commission and Civil Aeronautics Board were captured by the industries they putatively regulated; a similar argument might be made for the capture of agencies like the Environmental Protection Agency and the Occupational Safety and Health Administration being captured by environmental and labor groups respectively. Perhaps there is a need for OIRA to be a counterweight to those interests in OIRA. Or, perhaps the low hanging fruit for regulation that existed when EPA and OSHA were created has largely disappeared, so that regulations today make marginal improvements with higher marginal costs than in the past, requiring a closer look at the cost/benefit calculus. Whether any of these arguments have any merit is debatable, but for better or for worse the centralized review is here to stay. 

Nevertheless, it is important to note what the executive orders actually have said about centralized review. No President has been willing to state that OIRA or the Office of Management and Budget have the power of decision as to decide what regulations shall be promulgated. They review and comment; they do not decide. Partially, this may be due to legal concerns, in light of the fact that statutes almost invariably place the decision-making authority for rulemaking in the head of the agency rather than in the President. Indeed, the Order explicitly provides that nothing in the Order should be construed to affect the authority vested by law in an agency or its head. See Section 10. Beyond the legal issue, undoubtedly there is also a political reticence as well. For example, despite legal advice to the President that he can require the so-called independent regulatory agencies to submit to the centralized review applicable to executive agencies, no President has done so, because of the political ramifications. Moreover, Congress, despite bi-partisan approval of the current centralized review process, has not proposed, with the single exception of the Paperwork Reduction Act, to give OMB or OIRA veto authority over agency regulations. 

The reality of the current centralized review, however, does not accord with this understanding. Under E.O. 12866, agencies are to send both proposed and final significant regulatory actions to OIRA for its review before the agency publishes them in the Federal Register. Section 6(b)(2)(B) of the order requires OIRA to “complete its review” within 90 days of submission, which can be extended once for an additional 30 days if the agency itself requests that OIRA take longer. Section 6(b)(3) then provides that if OIRA returns the action to the agency for further consideration, and the agency head disagrees with any of the bases of the return, the agency head must inform OIRA in writing. Section 8 of the Order prohibits the agency from publishing the regulatory action until either OIRA indicates it has no requests for further consideration or the time period for consideration expires without OIRA notifying the agency that it is returning the action for further consideration. In other words, the agency cannot publish the action until OIRA is satisfied that no further consideration is required. This would be a backdoor veto power without explicitly saying so, but the agency does have an out. It may request Presidential consideration through the Vice President, and presidential resolution is required to occur within 60 days of the request. See Sections 7 & 8. 

As Lisa Heinzerling has pointed out, OIRA violates the letter and spirit of the Order on a routine basis. It refuses to acknowledge submissions in order to stop the clock from starting on its review. It regularly does not conclude its review within 90 days. It bullies agencies into requesting that OIRA take additional time, and sometimes just sits on regulatory actions indefinitely. For example, an EPA NPDES Clean Water Act rule has been languishing at OIRA for over two years, and it is not even economically significant. Of the five Department of Energy final rules at OIRA for review, three have been there for two years and none of the three is economically significant. OSHA’s proposed rule on exposure to silica dust was finally published in September after being held by OIRA since February 2011. 

Why aren’t heads of agencies invoking the Presidential review? Perhaps they are and we do not hear of it, but the more likely answer is that agency staffs are reluctant to complain to the head of their agency. In addition, perhaps the heads of agencies are cowed by the OIRA and White House staff. The heads of agencies are, after all, part of the President’s team, and if the President seriously supports OIRA’s work, then maybe they should follow OIRA’s lead. But OIRA is not the President, and when the message is that the “White House” doesn’t want something, the “White House” describes staff, not the President.  

The heads of agencies, however, principal officers of the United States, have taken an oath to “faithfully discharge the duties of the office” they hold. They presumably believe that the proposed and final regulatory actions they submit to OIRA are called for by the duties of their office. If they are not willing to stand up and be counted when OIRA attempts to override their judgments, they are violating that oath. If indeed the President wishes to direct the head of an agency to do or not do something which the officer believes is called for, that may be the President’s prerogative under his constitutional duty to see that the laws are faithfully executed, but OIRA has no such prerogative under the Constitution, the law, or E.O. 12866. Giving into a bully just encourages the bully. It is time for heads of agencies to stand up.