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Little-Known White House Office Plays a Big Role in Weakening Rules Aimed at Protecting Public Health

Posted on September 24, 2012

By Amy Sinden

Most people haven’t heard of the Office of Information and Regulatory Affairs (OIRA, pronounced “Oh-EYE-ra”), a little-known division of the White House’s Office of Management and Budget.  But this office of 30-some economists has an outsized impact on our health and the health of the planet.   Hidden largely behind a veil of secrecy, this obscure office acts as the gatekeeper of the federal regulatory system, and provides a back door for industry lobbyists to delay, weaken, and dilute federal regulations aimed at protecting public health, worker safety, and the environment.

The new more stringent ozone standard that would have protected hundreds of thousands of Americans from asthma and other smog-related illnesses?  Scrapped by OIRA.  The Coal Ash rule that EPA drafted in the year following the 2008 disaster at a power plant in Kingston, Tennessee, when a billion gallons of toxic coal ash laced with arsenic, lead and mercury burst from an inadequately constructed containment pond, burying houses and smothering all life in the nearby Emory River?  Delayed and weakened by OIRA.  (EPA tried to designate coal ash a hazardous waste.   But three years later, the rule is still stuck in administrative limbo at EPA after OIRA sat on it for six months and then pushed EPA hard to drop the “hazardous” designation.)   EPA’s proposal to add several chemicals – things like BPA – to its “Chemicals of Concern List,” which simply designates chemicals the agency believes “present or may present an unreasonable risk of injury to human health or the environment”?  Still stuck in limbo at OIRA, more than two years later.  The Occupational Safety and Health Administration’s proposed silica rule that would have finally offered workers protection from silicosis and other diseases caused by exposure to silica dust?   Stuck in limbo at OIRA for the past year and a half. 

Congress created OIRA as part of the Paperwork Reduction Act of 1980 to perform the relatively minor function of approving “data collection requests” by federal agencies in order to reduce paperwork burdens imposed on individuals, businesses, and state and local governments.  But when Reagan came into office in 1981, he signed an executive order giving OIRA a second, more far-reaching function.  At the behest of industry lobbyists increasingly irked by the public health and environmental regulations issued under the Clean Air Act, the Clean Water Act, and the other environmental statutes of the 1970s, Reagan directed all agencies to subject major regulations to cost-benefit analysis.  And he put OIRA in charge of reviewing those rules to make sure their benefits “outweighed” their costs.

This system of cost-benefit analysis and OIRA review has remained in place ever since, even through Democratic administrations with a far less hostile view toward regulation.   Since the Clinton administration, the review requirement has been rephrased as ensuring that benefits “justify” costs, rather than “outweigh” them, but in practice, the analysis required by economists at OIRA has become increasingly formalized, and OIRA review has continued to act as a one-way ratchet: often weakening regulatory requirements on industry, but never making them more stringent.   In January 2011, President Obama issued an executive order “reaffirming” those requirements for cost-benefit analysis and OIRA review.

The problem is that, by and large, cost-benefit analysis does exactly what the Reagan-era industry lobbyists intended it to do:  it over-emphasizes the costs and under-estimates the benefits of regulation.  As a result it provides increased pressure to make regulations less stringent and more friendly to industry.  To perform these cost-benefit analyses, OIRA economists sometimes make highly questionable assumptions in their effort to assign monetary values to intangible things, like human lives, or ecosystems, or clean air over the Grand Canyon. 

For example, one cost-benefit analysis of an EPA rule limiting mercury emissions from power plants estimated the dollar value of the IQ points lost by children exposed to mercury in utero.  Then, applying a kind of Alice-in-Wonderland logic, it counted as a benefit of mercury poisoning the fact that people with lower IQs tend to attend fewer years of school than those with higher IQs.  After all, school costs money—both in terms of direct tuition costs and in the opportunity costs of the lost wages you could have earned had you not been wasting time in the classroom.  So those who lose intelligence through mercury exposure enjoy the benefit of not having to pay for so many years of school!  Accordingly, the economists chose to offset the lost earnings per IQ point attributable to mercury poisoning against the money the exposed children would ultimately save in education costs. 

Combine all of that with the fact that the officials at OIRA operate largely in secret and spend far more time talking to industry representatives about how environmental and public health safeguards should be weakened rather than to public interest groups about how they should be strengthened, and you’ve got a recipe for weakening, watering down, and delaying regulation.   Even though the executive order that gave it the authority to review rules in the first place requires OIRA to make public the changes it makes to proposed rules, a recent study by the Center for Progressive Reform[i] found that it kept secret the changes it made to 85 percent of EPA rules and 65 percent of rules submitted by other agencies over the past 10 years.   That same study found that 73 percent of the time OIRA reviewed a rule, it met with industry representatives only and no public interest groups.  Indeed, meetings with industry representatives outnumbered meetings with public interest groups by five to one. 

Cass Sunstein, the Harvard Law Professor whom President Obama appointed in 2009 to head OIRA, just stepped down in August.   Mr. Sunstein ran the office with largely the same anti-regulatory bent as his Republican predecessors.  Those who follow regulatory affairs will watch with keen interest to see who the next president appoints to fill that position after the election.  


John Brna MD said ..

Why should economists decide whether a regulation for health concerns is justified? Priorities are misplaced again.

November 1, 2012

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