Deep Dive Episode 230 – Who Is Regulating the Regulators?
In the Executive Office of the President is a small office that most people outside the Beltway have never heard of. The Office of Information & Regulatory Affairs (OIRA) reviews agencies’ draft regulations, public information requests, surveys, etc. Across administrations — both Republican and Democratic — it has served as a check on excessive administrative zeal. The Joe Biden administration has yet to nominate someone to head the office.
Susan Dudley and Paul Ray served as the presidentially appointed administrators of the office in the George W. Bush and Donald Trump administrations, respectively. They shared their perspectives on the importance of this “obscure but powerful” office, and what the lack of a confirmed administrator means for the executive branch and its agencies.
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
[Music and Narration]
Introduction: Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.
On August 9, 2022, The Federalist Society’s Regulatory Transparency Project hosted a virtual event titled “Who is Regulating the Regulators?” The following is the audio from that event.
Steven Schaefer: Hello, and welcome to this Regulator Transparency Project Virtual event. My name is Steven Schaefer, and I am the Director of the Regulatory Transparency Project. Today, we are excited to host a discussion entitled “Who’s Regulating the Regulators?”, a discussion about the obscure but powerful Office of Information and Regulatory Affairs, commonly called OIRA, located in the Office of Management and Budget within the Executive Office of the President.
We are enthusiastic to have with us two former OIRA administrators who are also top administrative law experts—Susan Dudley and Paul Ray. Susan and Paul are uniquely situated to share their insights into the role that OIRA plays as the central authority for reviewing executive branch regulations, supervision over public information requests, among other responsibilities. They will also discuss the implications of the Biden administration not having an OIRA administrator. In the interest of time, I will keep introductions brief, but you can read their full bios on regproject.org—that’s regproject.org.
After the discussion between our two experts, if time allows, we will go to audience Q&A. Please enter any questions you have into the Q&A function at the bottom of your Zoom window. Note, as always, The Federalist Society and the Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speakers joining us.
Susan Dudley is Director and Founder of the George Washington University Regulatory Study Center, which she established in 2009 to improve regulatory policy through research education, and outreach. Susan is also a distinguished professor of practice in the Trachtenberg School of Public Policy and Public Administration. From April 2007 through January 2009, Susan served as the presidentially appointed OIRA Administrator under President George W. Bush. She holds a Master of Science from MIT and Bachelor of Science in resource economics from the University of Massachusetts, Amherst.
Paul Ray, who’s director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, where he leads the Heritage Foundation’s work on regulatory and economic policy. In January 2020, the U.S. Senate confirmed Paul as the OIRA Administrator under President Donald J. Trump. In this role, Paul led OIRA’s review of hundreds of regulations and led federal efforts on regulatory reform. Prior to his time at OIRA, Paul served as counselor to the U.S. Secretary of Labor and an attorney specializing in administrative appellate law. He clerked for Judge Debra Ann Livingston on the United States Court of Appeals for the Second Circuit and for Justice Samuel A. Alito on the United States Supreme Court. Paul holds a bachelor’s degree from Hillsdale College and is a graduate of Harvard Law School where he served on the Harvard Law Review.
We are happy to have both Susan and Paul with us today as members of the Regulatory Transparency Project and The Federalist Society’s Practice Groups. Thank you, and I will turn it on over to Susan.
Susan E. Dudley: Thank you, Steven. Am I unmuted?
Steven Schaefer: Yeah.
Susan E. Dudley: Sorry. I’ve got a little sign on my screen that tells me to unmute myself. So yeah, let me just start by giving a little bit of background that the listeners may already know. The Office of Information and Regulatory Affairs, or as Steve pronounced it OIRA—and it’s important to — you’ll hear a lot of different pronunciations, so you can practice that, so it’s not oy-ra or I don’t know what other things we’ve heard, Paul—it’s a small office in the Office of Management and Budget in the Executive Office of the President.
Jimmy Carter created it when he signed the Paperwork Reduction Act in December of 1980. But it was President Reagan who set it up soon after, a month or so later after taking office. And in addition to its Paperwork Reduction Act authority, which is to review all government collections of information to ensure they “maximize public utility and minimize reporting burden,” Reagan also gave OIRA the authority to review rulemaking. In the decade that had led up to that, the scope and the number of social regulations addressing health safety and environmental issues had increased dramatically. And prior to Reagan, previous presidents—President Carter and before him—had required agencies to analyze the costs and the benefits of regulation before issuing them. But it wasn’t formalized in a centralized review process until Reagan’s executive order in 1981.
At the start when it was created, it had a staff of about a hundred career professionals. Many of them came from other parts of OMB and also from the Council on Wage and Price Stability that Reagan abolished and moved the economist from that staff over to OIRA. Reagan’s order required agencies to submit draft proposed and final regulations to OIRA before publishing them in the Federal Register. So that was really pretty controversial at the time. And I think as Paul may tell us, it still isn’t completely non-controversial now. Nevertheless, 12 years later President Clinton—while he revoked Reagan’s order and replaced it with another order—his order continued both OIRA’s review and the requirements for doing that regulatory impact analysis.
That Clinton order, Executive Order 12866, still guides regulatory practice and policy today, which is really pretty remarkable when you think about the differences in the four presidents since Clinton. Now, each of those presidents has maintained it—at least on paper—those practices. But OIRA is now about half its original size. It still coordinates information collection and regulatory review along with statistical policy privacy, international regulatory cooperation, and more. I’m sure Paul will have some more functions to add to that. It reviews significant proposed and final rules issued by executive branch agencies—so that does not include independent regulatory agencies like the Securities and Exchange Commission or Federal Communications Commission.
I think in thinking about OIRA, it’s important to appreciate that it plays a similar role to other OMB offices—Office of Management and Budget. So each agency focuses on their own mission, and they naturally want bigger budgets, more legislative authority, more regulatory authority. And OMB has that cross-government perspective. So it seized the different tradeoffs across programs and has a tendency to push back on agencies’ requests, whether it is for a larger budget or more regulations. When OIRA conducts its review, OIRA staff, I like to think of them as wearing three hats.
The first is that they review draft regulations and the analysis that supports them to ensure that agencies consider viable alternatives and that they choose approaches that provide net benefits to society—taking into account other factors that either can’t be quantified or perhaps distributional impacts. It’s often said that OIRA are advocates for efficiency, and that’s certainly true. But they’re also advocates for transparent accounting about what’s known about a regulation’s consequences and what isn’t known. So in other words, is regulation the best way to solve this problem we’ve identified, and will the agency proposal do more good than harm?
But the second hat that they wear is to coordinate across federal agencies within the government. Often, I’ve found it’s the only way that one part of the government knows what the other part is doing is in the process of that interagency review that OIRA coordinates. So Paul and I can tell you numerous times where our role was to resolve disputes between different agencies over each other’s policies. And then the third hat is that they’re part of the White House. So even though it’s a largely career staff, they are — being part of the White House, they ensure that policies are consistent with those of the elected president. And I expect Paul will have more to add on that as well.
I’ve heard people who consider it a political review, and they’re concerned that political factors will influence regulations. But that happens — that’s a democracy. And that will happen whether you have an OIRA or not. There will be political factors. And what I’ve found very valuable about OIRA is that you have that career staff that can bring that analytical expertise and experience institutional knowledge across administrations. And they present an evidence-based case to political officials who may, in the end, make a decision that isn’t based on that evidence but at least they’ve seen it. So I’ll stop there with that brief review about what OIRA is and turn things over to Paul.
Paul J. Ray: All right. Can you guys hear me? All right. Susan, like you, I had a little sign that made me a little concerned there for a moment. So I’m glad you guys can hear me. Well, Susan, thank you for that introduction. Gosh, you’re a tough act to follow, so I’ll do my best here. What I’d like to do is take on—now that Susan has laid the groundwork here—take on a couple of objections that are occasionally raised to OIRA review. So one of those—and Susan touched on this briefly and gave a great response to it—is, “Is OIRA review political?” And usually when people ask that question or assert that OIRA review is political, they mean political in a negative sense—that OIRA review, because it occurs in an office that’s located in the broader White House complex, somehow results in political considerations playing the roles they shouldn’t play in agency rulemaking.
The best response, I think, is that there are senses in which OIRA review is apolitical and senses in which it is political. And I think it’s actually appropriately apolitical in the ways it’s apolitical and appropriately political in the ways that it’s political. So I want to unpack that a little bit. So OIRA review is apolitical in the sense that it aims to understand the truth about the effects of possible regulations. So it doesn’t have a political axe to grind when it urges agencies toward excellent benefit-cost analysis.
In my experience, our OIRA staff—and when I say staff, I mean the career staff and the political staff—really want to know what a regulation is going to do. They don’t want to just gather the studies and evidence to support one outcome over another. They really want to figure out what’s actually going to happen if the regulation goes forward. That’s one of the missions that OIRA is given in Executive Order 12866—which Susan eloquently explained to the group—and in my experience, everyone at OIRA takes it incredibly seriously. So there’s not sort of conservative facts or liberal facts—Republican facts or Democratic facts—that OIRA wants to take into account. It wants to really figure out what’s going to happen under the proposed regulation.
OIRA review is apolitical in another sense, and that is the sense in which it is interested in figuring out the most effective ways to accomplish predetermined ends. So if Congress has assigned an agency a task and a statute, or if a president or a cabinet secretary has determined that there was a particular policy goal, well OIRA wants to think about what is the most efficient and effective way to accomplish that goal. That’s not really a political question. It’s just a matter of the wise use of government resources and a wise regulatory regime of the private sector resources as well. There’s certainly no point in enacting regulations that are less efficient and effective at accomplishing the ends that everyone agrees you want to accomplish. And I don’t believe that’s a political — in any sort of sense, a political behavior.
Although, it is political in the sense that it’s a mechanism for ensuring that the president elected by the people is the ultimate decision maker within the executive branch. As Susan said, that’s what democracy means. In America, we’ve decided that these important decisions about policy need to be made by people — by decision makers who are accountable to the American people. There are, of course, other ways of doing things. Other regimes have unaccountable decision makers making their decisions. Here in America, we’ve decided—and I certainly think very rightly—that those kinds of decisions need to be made only by those whom the people can ultimately commend or reject through an election.
Now really, if you think about it, this combination of apolitical and political functions allows OIRA to actually elevate the political process by ensuring that the president and other decision makers have the best information and a variety of perspectives assembled from across the government. So as Susan mentioned, one of OIRA’s principal roles is to, through the review process, to assemble a set of facts on the one hand and perspectives on the other that represent the best knowledge and thinking and analysis of the executive branch considered as a whole. And that information is then presented to the president or other relevant politically accountable decision maker as a way to inform that person’s decisions. And really, that’s the best possible way to reach good decisions in our political process. Given that we’re going to have decision makers that are accountable to the people, we want them to have the full set of perspectives and facts available to them to inform that decision. And OIRA really facilitates that process.
So I want to move on to another objection that is raised against OIRA review, and it’s an objection that OIRA impedes the ability of agencies to accomplish their statutory missions. And really, the core of this objection is that OIRA makes it more difficult for agencies to regulate to address pressing problems. Often, that’s an objection about the length of OIRA review. And I think what’s important to understand about this objection is that it basically concedes that there’s value to OIRA review. It just thinks that it takes too long. It’s a little bit like that line from, I think it’s Christopher Marlowe, “Had we the world enough and time,” OIRA review would be great, but we don’t—so goes the argument.
And I think the thing to keep in mind when you think about this argument is, however long OIRA review is going to take, the regulations being reviewed is going to be on the books much, much longer—often for years or decades. I remember when I was in the administration, we discovered that there were still regulations on the books requiring submission to HHS of data in the form of telegrams—so regulations that have remained on the books, I suppose, since the 1950s to ‘60s when telegrams were still in frequent use. So these regulations have tremendous longevity. Surely, it makes sense to take a little extra time to get something that is going to be on the books for so long to get it right.
And of course, OIRA is no stranger to real world urgencies. Agencies can and do explain to OIRA when they are facing a particular statutory timeline or real-world exigency, and OIRA can calibrate the review accordingly. I certainly can’t think of a situation in which a real-world urgency went unmet because of OIRA review. OIRA career staff and political staff are responsible actors who want to see pressing problems abated surely as much as agencies staff are. So I think the objection based on the time constraints of review is a bit of a — is not well taken. So those are the two most common objections. So having dealt with those, I think I’m going to stop there and turn things back over to Susan.
Susan E. Dudley: Before you do, Paul, did you want to — do you want to say anything? One of the things we promised—and I would love to just go to questions soon too—is what are the — so we have not — we don’t have an OIRA or an official OIRA Administrator now. President Biden has not nominated someone. What are your thoughts on that, what the consequences of that are?
Paul J. Ray: Yeah, no. It’s a great question, Susan. So in my experience—and Susan, keen to hear your thoughts on this as well—Senate confirmed or politically accountable people in the administration like to deal with their peers. So the fact that OIRA for certain stretches has not had anyone politically appointed heading the office is pretty concerning. Because it means that, when some political official at an agency wants to have a dialog with OIRA about a rule under review, there’s not a politically appointed counterpart for them to have a dialog with.
So typically speaking, the OIRA Administrator would engage in dialog with the Deputy Secretary or General Counsel of a Cabinet department. Those positions are politically appointed often with Senate confirmation. An official of that level within an executive agency is going to have second thoughts about having as full and frank a dialog with say a career deputy who’s temporarily heading up an office. Now, OIRA’s career deputy, Dom Mancini, is just tremendous, an extraordinary person and a public servant of just renown within the executive branch. So if there’s anyone at all that I would want heading up OIRA in the absence of a Senate confirmed administrator, it would be Dom.
But nevertheless, it’s pretty helpful for an agency to have a politically appointed and Senate confirmed head. The fact that the administration has gone this long—I mean, this is now August of the second year of the administration—without even nominating an administrator does give cause for additional grave concern because it suggests that there’s not a lot of interest in what OIRA has to say and its function. As in all of our lives, you make time for what’s — we make time for what’s important to us. And that’s true for administrations as well. If there’s an office that goes unfilled for—I guess it’s over 18 months now—it really suggests that the administration doesn’t prioritize the office. So that’s an additional ground for concern.
Susan E. Dudley: Yeah. I agree with that, including how terrific the career staff are—including the current acting administrator or maybe this person carrying on — there’s some reason — anyway, person carrying on the responsibilities of administrator. I think the other — another disadvantage is that it makes OIRA less accountable to Congress, because the OIRA administrator can be hauled before Congress and asked questions about why is review taking too long or why is something happening. Certainly, it’s less likely to happen with a career deputy. Although, it wouldn’t be unheard of. You shouldn’t think that there’s no political influence if there’s no political administrator in place.
Because the White House offices very quickly — the other White House offices very quickly learn—if they didn’t know before they came into the administration—that regulations are really a key way to achieve policy goals. And so, they will be very involved in the regulation. But you don’t know who they are. Congress can’t call them, can’t call the head of the Domestic Policy Council or any one of the different kinds of councils in the White House, sometimes known as the czars, in there. So I think that also — it’s less transparent and less accountable, but it’s not less — it does not mean it’s going to be less political, so just add on to what Paul mentioned. What do you think, Steve? Should we go to questions? Paul and I can talk to each other about this all day.
Steven Schaefer: Yes. If any of you who are viewing this on the live stream would like to submit your questions, please do so in the Q&A function at the bottom of your Zoom screen. We have three questions already, so I will read this first one. And then, how about we go start with Susan and then with Paul. “Do you believe OIRA should have a bigger staff? Should the staff include more political appointees?”
Susan E. Dudley: Yes and no—or at least not necessarily. So I think every administrator, when we’re in the office, we’re part of the Office of Management and Budget. And so, we always will defend a lean OIRA. We’re a small group, but we’re scrappy. But in fact, when we leave, I haven’t met an administrator yet who does not say, “Yes. The value, I think, to society of a few more OIRA staff greatly exceeds the cost.” And whether there should be more politicals, my inclination is no. When I was OIRA Administrator, I actually freed up a slot that had been political and used it to create an SES level staff position. I really do think a lot of the value in OIRA comes from that career staff. Paul, what do you think?
Paul J. Ray: Well, Susan, I could not possibly agree more that OIRA could use more staff. There’s about 50 career staff right now, I think. You could add a zero to that and still get tremendous ROI. I like to joke that the one government measure that we can basically guarantee has benefits that exceed costs is adding OIRA staff. And the reason is that it’s really helpful to have a second set of eyes on a regulation, a second set of talented and expert eyes on important regulation that can save — can really improve the regulation, save tens of millions of dollars a year, potentially even result in savings to health and life as the regulation is made more effective at what it aims to do. So yeah, I think the return on investment there is super high.
Obviously—if I had my magic wand and could give OIRA anything—I’d give it more career and more political spots if I sort of get my wish list. I found that having a good core of political deputies in OIRA was helpful for resolving interagency disputes. So Susan alluded to OIRA’s dispute resolution function, and I found that a number of those disputes have political actors engaged on both sides from the agency. And when that happens, you really have to deploy OIRA political appointees to help resolve a dispute. And I think additional OIRA political appointees could help OIRA accomplish that vital task even more effectively.
Steven Schaefer: We have a second question that deals with — “If you don’t have an OIRA administrator, are there reviews of regulation taking place? And if so, who is fulfilling that function?”
Paul J. Ray: So there are reviews occurring, and the staff continue to carry out their role. The problem with the absence of an administrator is that, when the reviews are controversial and there’s a dispute between OIRA and an agency or between agencies, it’s more difficult for OIRA to resolve the dispute at a high level. So the reviews are still happening. They’re just also — they’re going to be less effective.
Steven Schaefer: There’s a question that involves — “How does the current absence of an OIRA administrator impact, if at all, regulation of cryptocurrency in the U.S.?”
Susan E. Dudley: That’s a very interesting question. I think a lot of crypto regulation would come more from the independent regulatory agencies that OIRA does not review. And since crypto was not an issue when I was administrator—and Paul is younger and has more recent experience—is that still true, Paul? Or are there some of the executive branch agencies, would they be relevant?
Paul J. Ray: It’s definitely still principally an independent agency issue. DFCC and CFTC are heavily involved. There are Treasury regulations that are relevant in the space. And Treasury typically is a politically powerful agency whose regulations are subject to OIRA review. So not having an OIRA Administrator really diminishes the ability of OIRA under the broader White House complex to have a robust dialog with Treasury when Treasury wants to enter the crypto space.
Steven Schaefer: We have a question about expertise being added to OIRA staff. The question basically is, “When it comes to hiring at OIRA, is there specific expertise that’s intentionally hired on staff?” And the example in the question is somebody who might have expertise in tax regulation, and this was in direct reference to the 2007 Tax Cuts and Jobs Act.
Susan E. Dudley: Paul, why don’t I respond generally first and then hand you the tax part.
Paul J. Ray: That’s great.
Susan E. Dudley: So generally OIRA staff are — they have training in public policy, economics, statistics, law. Although, over the years, they have added specific expertise that’s particularly valuable—like epidemiology or risk assessment—in order to be able to review public health and safety regulations more. But that broad based expertise, I think, adds value. I think being able to — if you understand policy analysis and statistics, there’s a lot that you can do and help review in the agency’s rulemaking. And let me just clarify one thing that people—this questioner doesn’t necessarily misunderstand this—but people often think that OIRA does the benefit-cost analysis—the regulatory impact analysis. And what they do is they review it. And so, different expertise may be needed. But, yes, the MOA with Treasury regarding IRS rules, that is a great question. Paul knows how they had to add — what kind of expertise they added.
Paul J. Ray: Yeah. No, absolutely. So for those of you who are not aware, for several decades, OIRA did not review tax regulations in their memorandum of understanding with Treasury. And there’s a new MOA entered into it in 2018 pursuant to which OIRA began to review tax regulations. And so, we had to hire some tax experts. So put out job postings for people with tax expertise and were able to steal a few away from elsewhere around town, and they did tremendous work in coming to grips with these often very complex regulations.
Steven Schaefer: We have a question that deals with some of the conflict resolution, Paul, that you had alluded to. And it says, “When it is necessary for an OIRA administrator to moderate a dispute between agencies, who is involved in that conflict resolution from the agencies or from OIRA?”
Paul J. Ray: So when there’s a disagreement between agencies, typically the dispute is sought to be resolved at a career staff level. So let’s take as a hypothetical example an HHS regulation dealing with health insurance that implicates concerns of the Labor Department. And that could happen because the Labor Department administers ERISA plans, which is the principal channel through which many employees access healthcare. So suppose HHS sends a regulation to OIRA for review, and OIRA shows the regulation to staff of the labor department. And the labor career staff say, “Oh, this would run straight into one of our priorities. We think HHS shouldn’t issue this regulation at all.”
So OIRA career staff would convene a meeting of career staff from HHS and Labor, and they would try to hammer it out, figure out what the HHS regulation really means. Is there a different way to do this? How strong is Labor’s objection?—et cetera, et cetera. If that meeting doesn’t resolve the issue, then it would go to the first political level, which is at the agency, the assistant secretary level within OIRA. It would be the Associate Administrator or a counselor to the Administrator, and there would be a meeting of political — often assisted by agency career staff.
If that meeting fails to resolve the issue, it would go to the deputy secretary level, and the OIRA Administrator would be involved. If that meeting fails to resolve the issue, then it would go to the Cabinet secretary level—so the HHS Secretary, the Labor Secretary, and the OMB Director. And often at that point, many other offices are involved—say the White House Council, head of Domestic Policy Council, head of the National Economic Council, and possibly other Cabinet secretaries. And then, if that meeting fails to reach resolution, then the decision would go to the president.
Now, the vast, vast majority of issues are resolved at the career level. Probably—I don’t know—one percent, five percent go to the next level, the political level. And of those that go to the next level, most are resolved at that level. Most do not go to the deputy level, and et cetera, et cetera. So imagine a pyramid with a very broad base and a very tiny peak. Very few decisions rise that high, at least in my experience. Susan, what’s your perspective?
Susan E. Dudley: Yeah, the same, that very few — I can think of one that went to the president. I’ll just add a couple things, because I think your pyramid and those steps definitely as a good, stylized explanation of how it works. But there was a joke—well, it wasn’t really a joke—but there was a frustrated political official at an agency who said, “First, if they can’t resolve things at the staff level, then it goes to the branch chief level. And then our person talks to Art Frost (sp).” Art Frost was — he’s since retired. “And if that level doesn’t work, it goes up one more level, and that person talks to Art Frost. And then we send it to our administrator, and the administrator—the secretary—talks to Art Frost.” So the career staff really are very involved along the way. And the other thing I would add is that the different White House offices will often also be very involved even at those early levels of meetings. But yes, it is rare to go to the president.
Steven Schaefer: Here’s a question related to this that asks, “Can you provide a concrete example”—it says “concrete example or two,” but a concrete sample I think would be more than sufficient—“of a conflict that may arise that would get elevated to an OIRA Administrator?”
Susan E. Dudley: I know when I was Administrator, there were — so this was after 9/11. And so, Homeland Security issues tended to — we felt frustrated that they were less — that they weren’t always supported by sufficient economic analysis supporting an alternative — one alternative or another. All homeland security had to say is, “Well, this may look expensive, but it’ll prevent the next 9/11.” And so, things just kind of washed through.
There was one that seemed particularly egregious. And that one—and I think I could probably talk about it—it was about imports and how shipments had to be tracked from country of origin to the time it got to the U.S. port. And that was one that a lot of different departments—from the Small Business Administration to the U.S. Trade Rep to the Department of Commerce—were very concerned about what the implications of these delays as companies were working on just-in-time shipping. The supply chain now is a big topic. It wasn’t as big a topic then, but that’s what they were concerned about. And that one did go — it didn’t go all the way to the president, but the Chief of Staff was there with arguments being made on both sides.
Did you want to add an example, Paul? It looks like we have a lot of questions still in the queue, Steve.
Paul J. Ray: Yeah, no. I think Susan, your example is a great one. I’m happy to just end with that one.
Steven Schaefer: Would one of you explain what a memorandum of understanding is, MOU, which was referenced earlier?
Paul J. Ray: Yeah. As Susan mentioned, there’s an executive order that governs the OIRA review process generally. But in a few cases, there are regulations that raise kind of special concerns. And so, OIRA will have a distinct understanding with certain agencies about particular kinds of regulations that can be expressed in a memorandum of understanding or a memorandum of agreement or in just a memo from the OIRA Administrator. So the review of tax regulations has been considered sui generis enough, distinct enough, that it’s been governed by a special understanding between Treasury and OIRA, as I mentioned earlier, exempts it from OIRA review for a number of decades. And now, there’s a memorandum bringing it back into OIRA review, which treats tax regulations appropriately as raising many of the same considerations present in any other regulatory context.
Steven Schaefer: We have a question here that involves social costs that are calculated. So the question is, “The Biden administration is supposed to come out with a new social cost of carbon soon which will have a big impact on environmental cost benefit analyses across the board. Would OIRA simply accept the new social cost of carbon, or does it have any ability to question those calculations when reviewing proposed rules?”
Susan E. Dudley: Well, my guess is is that there’s an interagency working group ongoing now that OIRA is probably — is a key part of. There’s working out what the appropriate social cost of carbon is. And there are the two main factors in establishing that—that different administrations will choose different — will have different choices, and neither one is right or wrong. One is the discount rate that’s applied, and the other is whether you consider domestic only or international global effects. I know my view is that you should have a range and present both international as well as domestic effects. But yes, so in brief, the answer to that question is, yes, I expect OIRA’s very involved. Whether their perspective and what the OIRA folks bring is what prevails is a different question.
Paul J. Ray: I agree.
Steven Schaefer: We have a question here about the Supreme Court of the United States recent West Virginia v. EPA decision. It says, “Will SCOTUS’s recent West Virginia v. EPA decision using the major questions doctrine have any effect on regulations subject to OIRA review or how that review is conducted?”
Paul J. Ray: Yeah. No, it’s a great question. So certainly, it is the case that West Virginia affects the framework under which agencies prepare regulations, and they will send those regulations then to OIRA for review. So no question, the answer to the first part of the question is yes. As to whether it changes the review, I wouldn’t say it would change review. OIRA reviews now with an eye toward the legal frameworks applicable to regulations. It’s not principally a legal office. It works with DOJ and White House counsel to conduct the legal aspects of the review. So I don’t see why any of those things would change in light of West Virginia.
Steven Schaefer: We have a question here. “Do you have any thoughts on how OIRA can prevent the flip-flopping of legal standards that has produced a lack of clarity? This is particularly prevalent within the labor and employment laws. How can we prevent the ping pong effect with rules?” And the example that this questioner gives is the Department of Labor’s independent contractor rule and joint employer status.
Susan E. Dudley: I’ll just say a little bit, Paul. You probably have more insights on this. I think to a certain extent that OIRA does — that is inevitable in the polarized world we’re in between presidents and the amount of flexibility that agencies have. This gets back to the previous question—the flexibility that agencies have in interpreting their statutes. But I think that would be worse without OIRA. One of the things about OIRA is that their real successes are always invisible. So you don’t know what things could have looked like if OIRA wasn’t there. Paul, more on the West Virginia v. EPA and whether that would change the flip-flopping.
Paul J. Ray: Yeah. No, it’s a great question. First of all, I totally agree with Susan. This is just endemic to our polarized politics. Indeed, one reason that our politics are so polarized—it seems to me—is precisely the power of the president — of whoever holds the office of the presidency to change the position of the agencies on important matters. So each side wants to kind of grasp the presidency to use it to change regulatory positions it doesn’t like. It could be—and I hope it is the case—that West Virginia narrows the range of legally permissible interpretations that presidents and their lieutenants at the agencies can take.
So pre-West Virginia, there was an understanding that agencies are free to take very, very aggressive views to create regulatory programs that are often not related to the concerns that Congress had in mind when it was enacting the statute. I’m painting with a very broad, broad brush here. There are many caveats to what I just said. But certainly, a number of agencies felt empowered to try to enact sweeping regulatory changes on the basis of statutory authorities several decades old that were not enacted with a view to addressing the central problem the agency wanted to address.
It could be that West Virginia makes agencies more reluctant to do that. If so, then there will still be ping pong—no question about that—but it will be ping pong across a smaller array of options. So the surprises that employees and employers and small businesses face depending on who wins the presidency, they would still face changes to the regimes under which they operate, but the changes would be smaller.
But I need to place a caveat on that suggestion, which is we really don’t know how aggressively the courts are going to interpret West Virginia. The Chief Justice named — spelled out five or six factors that led him to apply the doctrine in that case to the Clean Power Plan. We don’t know how many of those factors have to be present for the doctrine to apply at this point—so not clear how the doctrine will develop.
Steven Schaefer: There’s two related questions from the same questioner, and it involves OIRA review of proposed and final rules. And it just asks is that – “Can you use the Freedom of Information Act to request OIRA’s analysis of Notice of Proposed Rulemaking or final rules?”
Susan E. Dudley: Not sure about that, but what you can do is you can see a red line version of the draft rule that was submitted to OIRA that you can compare to how it was released from OIRA. So you can see that. That doesn’t necessarily tell you what changes were made by or suggested by OIRA staff versus other agencies or even the agency itself because sometimes an agency will send a rule over and then make some changes while it’s there. But what you can see is what was — what arrived for review and how it concluded. Under some statutes like the Clean Air Act, more information is recorded and made public. I don’t know about using FOIA though, Paul. Has that ever been tried?
Paul J. Ray: Susan, that’s a good question. There would be considerable redactions to any disclosures made under FOIA of reviews. We did receive FOIA requests, and if memory serves — while I am certainly not a FOIA lawyer, if memory serves, we did produce records and reviews in response to it. But they were redacted in light of the various privileges that apply under FOIA.
Susan E. Dudley: And related to that, people are always interested. But in fact, there are discussions within an agency. There are discussions with a lot of people across the government throughout policy development. And I never quite understood why the focused interest on what OIRA thought and what OIRA did since it is the agency that has the ultimate responsibility for issuing the regulation, and that’s very clear in how they relate.
Paul J. Ray: Susan, let me add to that. I think that’s a tremendous and important point. And I should add to that OIRA is not even the only mechanism through which interagency conversations occur. OIRA reviews proposed rules and final rules and convenes at interagency process reviewing those documents. But there are very often very serious interagency discussions involving the White House offices and senior White House officials before pen is ever put to paper on drafting regulations.
When an executive order is issued, for instance, directing agencies to consider a particular rulemakings, that executive order is almost invariably the process of a quite involved interagency process in which OIRA may play a role—it may be present as a participant—but almost never as a principal convener of such a policy process. So really, I think people think of OIRA as the principal interagency coordinator of the regulatory process. But there are other very important actors involved as well.
Steven Schaefer: We have a question here that – it says, “Does OIRA ever coordinate with state regulators, for example, if a federal regulation and state law impose conflicting requirements?”
Susan E. Dudley: I’d say it’s more likely that the responsible agency would be doing that coordinating than OIRA would, because that coordination would have to happen earlier in the rulemaking process. Whereas OIRA’s really looking at things a few months before they’re expected to be published in the Federal Register. That said, there’s a White House office that liaises with states. If there were an issue—when there is an issue that involves state interests—that person is always part of the OIRA review as well. But similar to what Paul said in response to the previous question, odds are that discussion has gone on before it reaches the stage that OIRA reviews. Would you agree, Paul?
Paul J. Ray: I totally agree. I would add only that it is very common for states to take advantage of the 12866 meeting process that OIRA offers. So in that process, states and any other entities—members of the public, businesses, trade associations, nonprofits, universities—anyone can request a meeting with OIRA and come in to talk for half an hour or an hour and express their views to OIRA. OIRA will have agency staff there as well. OIRA may ask a few questions, but it does not share its view of the regulation under review. It simply is in listening mode and hears what the member of the public has to say. States very, very commonly take advantage of that process, and I think it’s helpful when they do.
Susan E. Dudley: I’m glad you mentioned that, Paul. That maybe should have been a fourth hat I put on the OIRA staff, is receiving input from the public during that period.
Steven Schaefer: We have a question here that involves EPA regulations. It says, “EPA regulations are often a source of hot disputes for the OIRA review process. And Congress has tried to channel or constrain those disputes. I understand, for example, that the Clean Air Act requires EPA to disclose publicly the comments that the EPA has received from other executive branch agencies on proposed rules implementing the act. Could you discuss the chilling effect that the type of disclosure requirement has on deliberations within the executive branch and on the OIRA process? And are you aware of any challenge to that disclosure requirement?”
Susan E. Dudley: Yeah. That’s a rather long-standing requirement. I think it probably leads to behavior that there are more discussions, oral discussions, with fewer things transmitted in writing. It may lead agencies to channel their comments through OIRA rather than doing it separately. It’s an excellent question, and I don’t know that I have more insight on it than that. Paul, do you have experience with Clean Air Act requirements?
Paul J. Ray: Yeah. And Susan, I agree with everything that you said. That requirement assumes well-intentioned, but it’s rather like the requirements of the government of the Sunshine Act, which require — which forbid nonpublic meetings of the various submissions. And the result is pretty predictable. Right? The commissioners ensure that they don’t ever assemble with a quorum that would require disclosure until they’re ready to have a vote and pushes discussion into other channels. So I think that requirements like that are pretty — they’re pretty ineffective.
I think they’re, like I said, well-intentioned but misguided because I think of the principal purpose of transparency around these kinds of decisions as enabling the public to attribute the decision to the responsible political actor. And we actually know who those political actors are. It’s the agency head and the president. They’re the people who own the regulation. And so, knowing exactly what OIRA said versus some other commenting agency said in the process, that doesn’t really seem germane to the question of political accountability.
Steven Schaefer: We have one last question here. “In the last presidential term, the White House deployed ‘White House liaisons’ in the agencies as a measure to assert more political control with varying results. Would it be effective to assign OMB liaisons within cabinet agencies?”
Paul J. Ray: Susan, after you.
Susan E. Dudley: I’m not sure that — I’ve never thought about that, so I would probably need to think about it more. But I think in a sense, you have people in agencies that wear the hats similar to OIRA—at least that first hat that I talked about which is looking at regulations to try to understand what is the most efficient way of achieving goals and identifying whether the problem has been properly identified. And those are the policy offices and agencies. So the policy offices in OIRA often have similar perspectives and interests and objectives. And so, in a sense, you’ve got that. I’m not sure that having — certainly, you’d need a lot more OMB people. And to put somebody and label them an OMB liaison and putting them in an agency, I’m not sure that would do anything very differently if they’re embedded with the agency than the policy offices, which provide that valuable insight to agencies from within.
Paul J. Ray: Right. I certainly would not take any of the existing OMB staff and use them for that purpose. I think where there could be value—if we had abundant resources at OMB—is to create a role for OIRA to assist the agency as it begins the cost-benefit analysis process. OIRA is often presented with a cost-benefit assessment that’s already been being assembled for several months. OIRA often doesn’t see it until the end. And there’s good reason for OIRA to see at the end. It keeps OIRA staff from buying into whatever — if there are groupthink-type errors vetted in the cost-benefit analysis, it’s helpful to have OIRA staff bring fresh eyes to that analysis.
At the same time, OIRA has the greatest expertise in cost-benefit analysis across the government. And so, it would be helpful if there were a cadre of OIRA analysts who could perish it into agencies at the beginning of their preparation of a particular cost-benefit analysis and advise on methodology and work with the agency to design the best procedures and access the best data sets for conducting the analysis. You wouldn’t want those same staff to then be involved in the ultimate review of the analysis. But I do think that there’d be a benefit to early OIRA involvement. I wouldn’t embed them in the agency perhaps, but more have them as a tiger team that can deploy almost as consultants among the government.
Susan E. Dudley: And I’ll put in a plug for the George Washington University Regulatory Studies Center because we are developing some courses for agency staff, regulatory analysis. And we’re former OIRA-ians. So it’s the second best. Steve, I think we’ve run out of time.
Steven Schaefer: Well, thank you today. Thank you for joining us today. Susan and Paul, thank you for sharing your experience, your expertise, and your time. We greatly appreciate it. Thank you to our audience as well. If you are viewing this today or later, please check us out at regproject.org—that’s regproject.org. Thank you.
Conclusion: On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.
This has been a FedSoc audio production.
Director, GW Regulatory Studies Center & Distinguished Professor of Practice
Trachtenberg School of Public Policy & Public Administration, George Washington University
Director, Thomas A. Roe Institute for Economic Policy Studies
The Heritage Foundation