OMB urging regulatory reform plans for small agencies

By Jared Serbu
Federal News Radio

Thirty departments and agencies have submitted their preliminary plans for eliminating ineffective and burdensome regulations. Now, the White House’s chief regulator-of-regulations said the administration is encouraging independent regulatory agencies beyond the order’s legal reach to do the same.

President Obama’s January order called on executive branch agencies to implement plans to examine all the significant regulations they have on the books in order to determine which ones should be changed or eliminated to make their regulatory programs more effective and less burdensome.

The independent agencies are not required to develop their own plans, though Cass Sunstein, administrator of the Office of Information and Regulatory Affairs (OIRA) said there’s nothing keeping them from doing so voluntarily.

“We’ve gotten a plan from the (National Labor Relations Board), and we very much hope for more,” Sunstein told members of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations at a hearing Friday.

NLRB’s plan amounted to a single page, and is the only plan the White House has received from an independent agency, he said.

Members pressed Sunstein on why the administration hadn’t done more to prod independent agencies with large regulatory responsibilities—the Federal Communications Commission, the Securities and Exchange Commission and the Federal Election Commission—to name a few, into chipping in with their own plans.

James Gatusso, a senior research fellow at the Heritage Foundation, said the administration could have done more to persuade the agencies to submit their own plans, even if they can’t be bound by the executive order. He said it’s been done in the past.

“There is precedent on this,” Gatusso said. “In prior reviews of regulation by administrations such as the 1991 review by the Bush administration, it was made clear to independent agencies that they should participate, and they did. Frankly, a president that has his appointees serving at independent agencies can persuade them to participate if he expresses his desire strongly enough. I don’t think that was done in this case.”

The final plans from the 30 executive branch entities are expected in late August, after what Sunstein said will be a collaborative process that includes input from Congress, industry and the public. He said some of the plans call for future action, but others detail changes which agencies have already made.

“Some of the steps in these hundreds of pages of plans have already eliminated hundreds of millions of dollars in annual regulatory costs, including, by the way, costs on employers,” Sunstein said. “Over $1 billion can be expected in the near future, so these are not mere aspirations or plans-to-plan, these are concrete products that have either been delivered already or will be delivered in the very near future.”

For example, Sunstein said, the Environmental Protection Agency has exempted the milk and dairy industries from a rule that formerly classified milk products as an oil, which required dairy producers to take expensive measures designed to prevent oil spills into waterways.

“Over the next decade, the milk and dairy industries will cry not at all over spilled milk, and will save over $1 billion,” he said.

Other changes include:

  • An OSHA rule that would standardize hazard classifications and labels with those of other nations, a change the administrations says will save employers $585 billion per year.
  • EPA will eliminate a requirement for vapor recovery nozzles at gas stations in several states, since equivalently effective pollution control technologies are now built-in to modern cars. The agency says that change is worth about $67 million per year.

Sunstein said he did not yet have a tally for the amount of savings the review would produce for government and industry.

“But what we can say is that if we aren’t able to cut billions out of this process, that would be a surprise,” he said.

As to particular agencies and programs, members of the subcommittee focused their scrutiny in a handful of areas, most notably the EPA, and the Department of Health and Human Services’ implementation of the Affordable Care Act.

Lawmakers asked Sunstein more than once about how many proposed regulations his office had turned away. Agencies have withdrawn around 110 regulations from OMB review throughout the process, he said.

“In many cases, the reason for the withdrawal is insufficient engagement with issues of cost and economic impacts,” he said. “You can also see that often, the final rule comes out a lot different from the proposed rule. Often it’s a lot less expensive and less burdensome. And sometimes proposed rules just aren’t finalized, because of concerns in the interagency review, which involves not just the Office of Information and Regulatory Affairs. The Department of Commerce and the Council of Economic Advisors play a role.”

Another point of contention was the true overall cost to businesses caused by federal regulation. Several Republicans touted a study done last September for the Small Business Administration, pegging that number at $1.75 trillion per year.

Sunstein called that study an urban legend that was deeply flawed on several grounds, including that it failed to take into account the cost savings produced by regulation.

(Copyright 2011 by All Rights Reserved.)