Obama’s regulatory reforms draw mixed reviews

By Jason Miller
Executive Editor
Federal News Radio

President Obama’s Executive Order and corresponding memos detailing changes to the federal regulatory process received a mix of reactions from industry experts and on Capitol Hill.

Many experts say the White House is just codifying many things agencies already are doing. Others say the President is capitulating to the pressures of business lobbyists.

But nearly everyone said the fact that Obama is even issuing orders and memos regarding regulatory reform shows the importance of these efforts across the government and society.

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“Generally there are two basic mechanisms to achieve public policy goals,” said Susan Dudley, former administrator in the Office of Information and Regulatory Affairs in the White House under President Bush. “One is spending programs that are funding through taxes. The other is regulations. They tend to get less attention from the White House – not just this one, but all White Houses. The fact regulations have risen to the president’s attention is a positive sign that he’s aware of the struggling economy and that there are concerns about excess regulatory activity without regard to the consequences.”

President Obama Tuesday signed an Executive Order instructing agencies to get rid of outdated regulations and those that conflict with each other. The President also signed two memos around small business regulatory flexibility, and one on the transparency of industry compliance information.

Agencies by May will have to submit a preliminary plan to the Office of Information and Regulatory Affairs (OIRA) to detail how they will periodically review existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives.

Cass Sunstein, the administrator of OIRA, said the goal is to see if the older regulations are costing more and providing fewer benefits than initially imagined.

Collaboration in rulemaking

Sunstein said of the order’s six provisions the requirement for agencies to review existing regulations and the one requiring closer collaboration on rulemaking are new.

“The provision that calls for the simplification and harmonization of rules is important because the executive branch large and there are a lot of agencies and sometimes rules issued by one agency may not square with one issued by another,” he said. “The President is asking agencies to work together to try to harmonize, coordinate and simplify.”

Sunstein said agencies already do this to some extent through OIRA’s interagency review process, and through a regulatory working group that meets periodically. But OIRA will place a bigger focus on this ensuring agencies are collaborating on rules.

Sunstein said a recent example is when the Environmental Protection Agency and the Transportation Department worked together on fuel standards.

OIRA will issue guidance to help agencies implement the Executive Order and memos in the coming months. He said there is no specific timeline on when the implementation plan will be released, but it will be sooner than later as agencies have 120 days to develop initial implementation plans for how they will review existing regulations.

“Agencies are in the best position to make choices about which rules to review and justify whether they need to be modified” he said. “The Executive Order makes clear that the look back process will occur with full understanding of the agency’s priority settings and resource constraints in a tough budgetary environment. So we expect the agencies will take this process very seriously but do so in way that recognizes resources are not unlimited.”

Sunstein said agencies will have to find a way to do the look back based on the resources they have already.

“I don’t anticipate any additional budgetary assistance for the look back,” he said. “We do anticipate a rule of reason where agencies will be expected to make their own choices about how to balance the cost because in many of the agencies there either is some process of look back and because of all agencies there is considerable expertise about the existing set of programs, we don’t think this will require huge resources to be invested.”

The administration has been working on the Executive Order and memos for almost a year. It’s been part of an ongoing effort to reduce burdens-both paperwork and cost-on businesses. OIRA reported in July that in fiscal 2009 agencies promulgated 66 major rules, of which 16 were estimated to result in a total of $8.6 billion to $28.9 billion in annual benefits and $3.7 billion to $9.5 billion in annual costs.

Mixed reviews

The memos and Executive Order received mixed reviews.

Rep. Darrell Issa (R-Calif.), chairman of the Oversight and Government Reform Committee, applauded the memos.

“It’s in the interest of every American that we create a modern, regulatory environment that fosters economic growth and makes U.S. companies globally competitive,” Issa said in a release. “I look forward to providing the President with insights gained from our current effort to hear directly from job creators about what they perceive as barriers standing in the way of their ability to create jobs.”

Earlier this month, Issa asked industry for input on what regulations were most onerous. He promised to share the results with the administration.

Sens. Joseph Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee, Susan Collins (R-Maine), joined Issa in a separate release in support of the regulatory reform.

“The President’s strategy emphasizes protecting the health and safety of the American people and the environment while minimizing the burden on small businesses so they can grow and create new jobs,” Lieberman said. “This is a balanced, common sense strategy specifically calibrated to encourage economic recovery.”

Collins added Obama’s approach helps remove roadblocks, but she withholds judgment until agencies begin implementing the new processes.

“[T] he administration’s track record has been one of imposing costly new burdens and red tape on employers,” Collins said. “There are many examples. Last spring, needed lead paint rules did not allow small businesses time to receive mandated training in order to avoid steep fines. Maine’s forest products industry would have been disadvantaged by EPA rules intended to cut certain emissions from wood-fueled boilers. We are seeing a consensus now that onerous regulations are suppressing innovation and job creation. I am eager to work with the administration to ensure that we factor in the economic impact when regulations are developed and that rules meant to benefit the public do not impose harm through unreasonable or unnecessary costs.”

Cost-benefit analyses

Former OIRA administrator Dudley, who now works as a professor for the George Washington University in Washington, said a lot the White House’s efforts build on the Executive Order from the Clinton administration in 1993 calling for cost-benefit analyses for new regulations.

She said it always is difficult to figure out cost-benefit analysis, and reviewing existing rules will prove challenging.

“The real question is to look at the opportunity costs to the regulations,” she said. “Not just in compliance, but what did we give up to give to go down this path instead of another path? If you limit choices to innovate you don’t know what ideas were lost out on.”

She said one common way to look at the impact of existing rule is for agencies to talk to the industries or people affected by the regulations. She said the Bush administration did that, and most recently the British government did something similar and received a huge response.

Gary Bass, executive director of OMBWatch, a bi-partisan non-profit, said there are good and bad in these reforms.

Bass said by looking back at existing regulations agencies may find not only outdated policies, but also gaps where new ones are needed.

He said a lot of these efforts will depend on OIRA’s implementation guidance.

“The dangers are this could be on hamster’s treadmill where agencies are always spinning and never moving forward,” Bass said. “The business community for years have pushed for a look back. Now the Obama administration has put it in an Executive Order. At a rationale level, one always welcomes analysis of existing regulations. What we may discover is the cost estimates used to come up with regulations are much lower in practice than what the estimates were because of technology and other innovations.”

Bass said the small business memo is most disappointing. Not only does it reiterate a law that has been on the books for years, but encourage flexibility when dealing with regulations for small businesses.

“The focus is only on reducing regulatory burdens on small business through increase flexibility, but with any kind of assessment one should be looking at regulatory burden, but also the benefits,” he said. “The mantra of the Obama administration has been balance, but this language could have come out during the Bush administration where there was not a strong regulatory environment.”

Bass said the administration caved to business complaints instead of sticking to their convictions.

“This is just unreasonable, if not an ill conceived memo,” he said. “And the administration should be castigated for serving up the interest to the small business community. What we have gone through is eight years of a cozy relationship between the regulated community and the regulators, and the Obama administration came in and we started having a cop on the beat. And now the business community gets outraged.”

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