At his Senate confirmation hearing May 12, Office of Management and Budget regulatory affairs administrator-designee Cass Sunstein vowed to respect the rulemaking authority of EPA and other agencies, and to limit and “humanize” the use of cost-benefit analysis in reviewing proposed agency rulemakings so as not to allow “maximizing money” to undermine the values of environmental and health protection and the integrity of scientific assessment in decisionmaking. If he makes good on these promises, he will begin to undo the damage done by the Office of Information and Regulatory Affairs under his predecessor.

Post by Rick Piltz

See our earlier posts:

White House OMB should not be allowed to undermine EPA Clean Air Act regulation of greenhouse gases

Our questions for EPA Administrator nominee Lisa Jackson at her Senate confirmation hearing

The Senate Committee on Homeland Security and Governmental Affairs held a hearing on May 12 to consider the nomination of Cass Sunstein to be Administrator of the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget, which is part of the Executive Office of the President.

Sunstein’s written testimony

Especially under the George W. Bush Administration, during most of which OIRA was headed by John Graham, that Office expanded its control over regulatory policy throughout the federal givernment well-beyond what should be allowed, and used this control to drive an anti-regulatory agenda.  OIRA blocked needed advances in environmental, safety, and health rulemaking, in part by creating a chilling effect on federal agencies that deterred strong regulatory proposals and in part by the manipulative use of cost-benefit analysis to skew regulatory review against protection of public safety, health, and the environment.

Under Graham, OIRA made a completely illegitimate move to create for itself a powerful role in second-guessing the scientific conclusions of experts in federal agencies empowered by law with developing regulations based on scientific assessments.  It took an aggressive pushback from leaders in the scientific community, public interest groups, and Congressional overseers to back OIRA down on this move.   

President Obama’s selection of Cass Sunstein to head OIRA raised the issue of the proper role for OIRA and the need for fundamental reform. Sunstein has a prolifically productive record as a legal scholar and author on a wide range of questions that bear on the role of federal regulatory policy.  Serious questions have been raised about how he would handle the position, given what he has written that expresses a belief in greater centralization of regulatory review authority and a commitment to cost-benefit analysis, which arguably is an inappropriate tool for evaluating environmental and public health regulation. (See Priceless: On Knowing the Price of Everything and the Value of Nothing, by Frank Ackerman and Lisa Heinzerling, for a brilliant anjalysis that essentially de-legitimizes the use of mainstream economic cost-benefit analysis in making regulatory decisions on protection of human life and the environment.)  Sunstein has earlier endorsed the appointment of Graham as OIRA Administrator, and it remains to be seen just how fully he will jettison Graham’s approach and what he will replace it with.

In the run-up to Sunstein’s hearing, on April 30 the Subcommittee on Investigations and Oversight of the House Committee on Science and Technology, chaired by Rep. Brad Miller (D-NC), held a hearing on The Role of Science in Regulatory Reform, at which these issues and the role of OIRA were discussed. Excellent and sophisticated testimony was given by witnesses representing OMB Watch, the Natural Resources Defense Council, and other groups. Their recommendations for reforms would go a very long way toward solving the problem of keeping OMB from interfering with the integrity of the regulatory process.

I was struck by the testimony of Rena Steinzor, University of Maryland law professor and President of the Center for Pregressive Reform. Steinzor co-authored a CPR white paper, Reinvigorating Protection of Health, Safety, and the Environment: The Choices Facing Cass Sunstein, that influenced my thinking about watchdog issues involving Sunstein and how the role of OIRA should be substantially re-framed and limited, leaving agencies to apply their expertise to carrying out their statutory responsibilities in the area of scientific assessment and environmental regulation unfettered by inappropriate White House interference.

Steinzor’s testimony at the April 30 hearing made three crucial points:

1. The Obama Administration and Congress should define a new mission for the regulatory czar. The term “regulatory reform” has become a shorthand reference to the assertion that regulatory agencies—especially in the health and safety arena and most especially with respect to the Environmental Protection Agency (EPA)—must have a heavy net thrown over them to contain their excessive rules and overzealous staff. This approach was never a good idea and, in any event, is outmoded. The American people need more, not less regulation on every front, from mortgage lending to workplace hazards. The regulatory czar’s mission should be to rescue struggling regulatory agencies by helping them to obtain more resources and stronger legal authority.

2. OIRA should stop reviewing individual regulatory proposals. Empirical studies reveal that OIRA has served for well over 30 years as a killing ground for protective regulations. Except during the Clinton Administration, OIRA’s threat to target any given regulatory proposal has chilled the development of strong and effective regulation. OIRA has plenty of work to do formulating regulatory policy and should leave the drafting of individual rule regulatory impact analyses and the making of final decisions to agency experts, supervised by Obama political appointees.

3. OIRA must stay out of science policy. OIRA is a small office, comprised of approximately 40-50 professionals, the vast majority of whom are economists. During the Graham era of kingdom-building, five or six of these positions were set aside to hire scientists, who proceeded to propose radical changes in the way research would be used to make regulatory policy. OIRA is not competent to propose science policy in the regulatory arena and should abandon this role.

Steinzor describes OMB/OIRA as a “regulatory killing ground” (with the ideologically slanted and inappropriate application of economic cost-benefit analysis as the murder weapon), and the current state of “acute regulatory dysfunction,” with federal agencies under-resourced and too blocked and intimidated politically to carry out effectively their statutory mandates.  She noted: “A few weeks ago, GAO issued a report warning that EPA’s capacity to deal with new climate change regulations was fundamentally compromised.”

On OIRA and science integrity, she said:

Under John Graham, OIRA embarked on two fundamentally misguided projects to change the way regulatory science is analyzed and used. The first involved the peer review of studies used by federal agencies to make such decisions. The second purported to announce a “one-size-fits-all” risk assessment policy for the entire government. These proposals were drafted by a tiny group of scientists hired by Graham to expand his reach into science policy. The documents were so poorly informed and extreme that they provoked a backlash of opposition from the scientific community, the public interest community, and this Committee. A panel convened by the National Research Council condemned the risk assessment bulletin in no uncertain terms. National Research Council, Scientific Review of the Proposed Risk Assessment Bulletin from the Office of Management and Budget, available at In the end, OIRA was compelled to drastically revise the peer review bulletin, cutting back severely on its scope. It withdrew the risk assessment guidance….

Given this unfortunate track record, it is vitally important that OIRA under the Obama Administration confine its supervision of government to areas within its expertise, leaving to experts such as White House science policy adviser John Holdren the difficult job of restoring the independence and integrity of regulatory and other science policy issues throughout the government.

At a May 14 House Science and Technology Committee hearing on the Federal R&D Budget for FY 2010, Rep. Miller asked the President’s Science and Technology Adviser, John Holdren, whether he agreed that OMB regulatory review procedures might compromise scientific integrity in regulatory policy, whether he agreed that this problem had occurred under the Bush Administration, and whether Cass Sunstein would demonstrate a commitment to reforming OIRA. 

Mr. Miller’s exchange with Dr. Holdren (from 30:30-37:00 on the archived webcast of the hearing on the committee’s website included this:

Miller:  One of the abuses of science has actually taken the form of a claim for a need to do more, we need to have more science – and you’ll never find a scientist who’ll say that we don’t need to do more research. But that has been used as a pretext for inaction. And that’s particularly true of OIRA, the Office of information and Regulatory Affairs at OMB.  It is probably the agency that has done more to suppress scientific integrity, or attack scientific integrity, than any others….

Have you talked with Prof. Sunstein about his view of science and the role of science, and the need to act sometimes without waiting for the answer to end all answers?

Holdren: Yes, I have talked to Prof. Sunstein, who I think will prove to have a balanced position on this. He’s well-aware of the need to make decisions based on imperfect information….People who say we don’t have enough information to act need to understand that not to act is also to make a decision – a decision of the status quo. I think we’re going to get that right. I think Cass Sunstein is a very smart and reasonable person, and that whatever OIRA’s shortcomings in the past have been, I would have confidence that he will move to fix them.

Miller: The need for scientific exactness was frequently used by OIRA as a pretext for inaction. They wanted not to act and they used the lack of scientific exactness and the need for more precision as a pretext for not acting. So a lot depends on what you’re trying to do and what your motivation is.

Holdren: I agree, sir, that that has been a problem…It has been a real problem…But this administration is not interested in using uncertainty as a pretext for inaction.

At his confirmation hearing, under questioning from committee chair Sen. Lieberman (I-CT), Sunstein appeared to soften or walk back from some of the positions his critics have associated him with on the basis of his writings.  Will he push the idea of a regulatory review process with even greater power centralized in OMB?  Will he aggressively promote cost-benefit analysis in such a way as to bias regulatory policy against normative considerations of safety, health, and environmental protection?  An exchange that starts at 47:30 on the archived webcast of the hearing on the committee’s web site included the following:

Lieberman: On the relationship between OIRA and the agencies: Who should be in the lead in setting priorities in deciding what kind of regulation is needed, and then setting the content of the rules – the agencies that are given the authority under the law, or OIRA?

Sunstein: The statutes that give rulemaking authority give it to the agencies. There’s also a structure in place for regulatory review – but it must respect the policymaking and rulemaking authority of the agencies.

Lieberman:  On the role of cost-benefit analysis: In your writings you’ve been an advocate for cost-benefit analysis in rulemaking. John Graham was also an advocate of cost-benefit analysis. Some of us voted against him because we were afraid he was going to frustrate the intention of Congress and the statutes. But his work is comparable to yours, at least in its direction. Why shouldn’t a Senator who voted against John Graham’s confirmation also vote against yours?

Sunstein: My own approach to cost-benefit analysis is inclusive and humanized. Cost-benefit analysis shouldn’t put regulation in an arithmetic straitjacket. There are values – moral, distrubutional, esthetic, and otherwise – that have to play a part in whatever is done….For example, we’re not trying to maximize money with regulations against discrimination….If the Clean Air Act has provisions that forbid cost-benefit analysis from being the basis for decision, then that’s authoritative.

Lieberman’s interrogation didn’t examine either specific writings or specific issues. The questioning could have shown more follow-through and depth of digging. But Sunstein stated views that, if put into practice, have the potential to undo some damage and set OIRA on a better course. I’m hopeful. We’ll see. In particular, whether he is called on to review a proposed EPA rulemaking to regulate greenhouse gases under the Clean Air Act, pursuant to EPA’s recent “endangerment” finding, will depend on whether EPA follows through on its statutory responsibility to regulate and proposes something for OIRA to review.