Of the hundreds of federal agencies issuing thousands of rules each year, there is one small body, of a few dozen employees, within the federal government that reviews some (not all) of what some (not all) of them do.
Is that really too much?
Sen. Elizabeth Warren took to the Senate floor to speak against Neomi Rao, an impeccably credentialed George Mason University law professor and director of the Center for the Study of the Administrative State. Rao was President Donald Trump’s nominee to head the Office of Information and Regulatory Affairs, or OIRA.
Rao was confirmed, 54-41.
Warren’s characterization of Rao on her YouTube page is: “a law school professor who advocates for weakening and handcuffing agencies.”
OIRA began under Jimmy Carter, and was initially charged with paperwork reduction. Carter actually had a bit of a streak for regulatory liberalization. So did Bill Clinton, under whom Republicans and Democrats worked together on the Small Business Regulatory Enforcement Fairness Act, Unfunded Mandates Reform and more.
We’re in a particularly venonous, partisan period, but OIRA isn’t that controversial in terms of legitimacy of its lonesome role in reviewing regulations. It’s been led by prominent scholars such as Cass Sunstein under President Obama, who defends its role and that of cost-benefit analysis generally.
OIRA doesn’t really review that much, even — fewer than two dozen rules annually get both benefit and cost analysis. That’s one reason why more thorough regulatory reforms spearheaded by Congress are in order. The executive branch can’t do it alone even with OIRA, largely because Congress has delegated too much power.
None of the unaccountable independent agencies have rules reviewed by OIRA; not even the Federal Communications Commission, or financial agencies like Warren’s Consumer Financial Protection Bureau.
These agencies as well as the executive agencies like the Labor Department, the Environmental Protection Agency, Housing and Urban Development, the Food and Drug Administration not only collectively put out those thousands of rules yearly, but also issue massive amounts of guidance documents and memoranda that influence policy. OIRA barely touches these, yet another reason congressional reforms are needed.
Warren is obsessed with “big business,” using the term along with “giant corporations,” “powerful companies,” and “corporate interests” several times in her remarks.
But big business loves regulation. They often capture regulators and the regulatory process, at the expense of smaller rivals and the “working families” Warren believes she champions.
Warren showed no corresponding concern over “big bureaucracy” and its toll, or its enabling behavior.
But’s let’s take a look at some of Warren’s remarks in the Senate. Forgive the shouting “ALL CAPS” from the C-Span transcript.
“FROM DAY ONE, THIS ADMINISTRATION, PRESIDENT TRUMP AND CONGRESSIONAL REPUBLICANS HAVE ATTACKED RULES THAT PROTECT WORKING FAMILIES.”
Just because something is a rule from Washington does not mean it always protect families. That’s what the Obamacare unraveling and the collapse of insurance markets has revealed, as has the Department of Labor’s rollback of Obama guidance on franchising and independent contracting that threatened employment arrangements. Same goes for now-challenged overtime rules that undermined promotion and elevated part time work. Or forced minimum wages.
“JUST ONE HOUR AFTER TAKING THE OATH OF OFFICE, PRESIDENT TRUMP INDEFINITELY SUSPENDED A PLAN TO MAKE IT EASIER FOR WORKING FAMILIES TO BE ABLE TO AFFORD A MORTGAGE.”
Government control of insurance fees, and meddling in insurance markets, and mortgage insurance premiums specifically, is the kind of thing about which lessons have been learned the hard way. But government agencies responsible for over-extended credit escaped most all blame. Seemingly the presumption here is that they will again.
“TEN DAYS LATER,HE ISSUED AN EXECUTIVE ORDER REQUIRING AGENCIES TO IDENTIFY AND ELIMINATE TWO RULES FOR EVERY ONE NEW RULE THEY ISSUED”
Countries including Canada and Great Britain have implemented versions of this commonsense effort, since rules are added every year, but rarely rolled back. This notion was first prominently proposed in the U.S. in 2010 by Democratic Sen. Mark Warner as Regulatory PAYGO. Canada’s version of the idea was also spoken of in fairly nice terms on NPR. All before Trump, of course.
“CONGRESSIONAL REPUBLICANS SPENT THE FIRST FEW MONTHS OF THE YEAR ELIMINATING RULES THAT PROTECT WORKERS, STUDENTS, AND FAMILIES. THEY KILLED A RULE THAT REQUIRED COMPANIES IN DANGEROUS INDUSTRIES TO TRACK WHEN THEIR EMPLOYEES WERE INJURED.”
Not sure if there has been a rule the Senator didn’t or doesn’t like. This particular rule was a considerable paperwork burden for questionable benefit. The rules that have been rolled back in the 115th Congress were all last-minute Obama rules, so called “midnight regulations,” that were subject to the bipartisan Congressional Review Act, signed into law by President Clinton. Of hundreds of candidate rules, there have been only 14 rollbacks, as tabulated here by the Government Accountability Office.
“THEY EVEN KILLED A RULE THAT HELPED KEEP GUNS OUT OF THE HANDS OF THE MENTALLY ILL.”
2nd Amemdment. And concerns with the federal government deciding who is mentally ill.
“WITH PRESIDENT TRUMP IN OFFICE AND REPUBLICANS IN MAJORITY IN CONGRESS, THOSE INDUSTRIES WERE READY TO CASH IN, AND THEY HAVE THEIR WISH LIST READY.”
Where do most campaign contributions go? Does Wall Street, for one, give more to Democrats or Republicans? In any event regulations have risen under prior Republican presidents, and Republicans brought us major regulatory programs such as the antitrust laws, the Environmental Protection Agency and the Department of Homeland Security. I couldn’t care less one way or the other about the two parties, but Democrats collect more cash.
“ALTHOUGH THE ATTACK ON PUBLIC-CENTERED RULES…
What exactly is the evidence that the rulemaking process is public-centered? Agency personnel are unelected and usually set for life. There is a major debate underway in the country over the legitimacy, humanity, and constitutionality of the administrative state. It is only going to intensify.
…HAS INCREASED IN INTENSITY DURING THIS ADMINISTRATION, I JUST WANT TO SAY IT’S NOT NEW. POWERFUL COMPANIES HAVE LONG UNDERSTOOD THAT THE FIGHT IN CONGRESS IS JUST THE FIRST OF MANY BATTLES. IF BIG BUSINESS CAN’T WEAKEN OR KILLS BILLS THAT THEY DON’T LIKE IN CONGRESS, THEY TURN THEIR ATTENTION TO THE AGENCIES … THEY CITE SHAM RESEARCH AND BOUGHT AND PAID FOR EXPERTS. AND IF AT THE END OF THAT LONG, ARDUOUS PROCESS A STRONG PUBLIC-CENTERED RULE IS PUBLISHED ANYWAY, THOSE COMPANIES SUE, LOOKING TO BUSY JUDGES WHO ARE UNFAMILIAR WITH THE ISSUES TO OVERTURN THE DECISION OF EXPERT AGENCIES.”
So much here. First, the separation of powers is legitimate and elemental. And at the very least there is certainly a right of all citizens to participate in the process by which they are going to be regulated. And note that “experts” Warren disagrees with are “bought and paid for,” but the “expert agencies” are not to be questioned. I would argue that regulatory agencies often lack the expertise attributed to them, especially with respect to frontier technologies and industries.
But more importantly in the current debate, if rulemakings are this controverial, if they are exceedingly complex and drag on for years and years, it’s a clear signal that, rather than a so-called “public-centered” rulemaking by unelected agencies, Congress needs to vote on the rule. That’s what, constitutionally, is supposed to happen anyway.
As it happens, there’s legislation called the REINS Act (the acronym stands for “Regulations from the Executive In Need of Scrutiny”) to require Congress to affirm the most costly of rules. What is Sen. Warren’s position on it? Just a rhetorical question.
“THERE’S NO TWO WAYS ABOUT IT. THE RULE-MAKING PROCESS IS BROKEN.”
Well, I agree the rulemaking process is broken. There are too many rules, from too many agencies. Can those who feel the same, albeit from opposing viewpoints, use this to come to bipartisan agreement of some kind, as Sunstein notes, and as we have done in the past?
“THERE ARE FAR TOO MANY OPPORTUNITIES FOR GIANT CORPORATIONS TO INFLUENCE THE RULE-MAKING PROCESS”
Big businesses don’t don’t need an OIRA; they already dominate the rulemaking process. Warren emphasizes their undermining the process; many scholars would argue they exploit it to create rules favorable to them and unfavorable to rivals. The entire point of central review is that it can give unorganized groups a marginal advantage in influencing regulation (See for detail, James C. Miller III, James C., William F. Shughart II, and Robert D. Tollison, “A Note on Centralized Regulatory Review,” Public Choice, 43, 1984.)
It is an OIRA that can aid the “public centeredness” Warren invoked.
“AND THERE ARE FAR TOO FEW OPPORTUNITIES FOR MEANINGFUL PUBLIC PARTICIPATION.”
It is indeed the case that there are too few opportunities for public participation. But guess what; sometimes the agencies are to blame. A recent GAO report found that agencies failed to issue a “Notice of Proposed Rulemaking” (NPRM) more than one-third of the time, denying the public the opportunity to comment before a rule was finalized.
“THE REPUBLICANS DON’T WANT TO FIX THIS PROBLEM. NO WAY, NO. THEY WANT TO MAKE THE RULE-MAKING PROCESS WORK EVEN BETTER FOR THEIR CORPORATE BUDDIES AND WORK EVEN HARDER AGAINST AMERICAN FAMILIES.”
Many corporate CEOs are Democrats. A lot. Here’s the tech industry heads Reid Hoffman and Mark Pincus showing their Democrat-ness, when I might wish for them to be more libertarian. I doubt many Democrats feel they are working against American families.
“AND, BOY, DID THEY PICK THE RIGHT PERSON TO LEAD THE CHARGE. PRESIDENT TRUMP NOMINATED NEOMI RAO, A LAW SCHOOL PROFESSOR HAND-PICKED FOR WEAKENING AGENCIES.”
There is no evidence of such motives in the sinister way this is stated. This is just an attack and rather offensive. But even on its own terms, weakening agencies doesn’t equate to weakening regulation. The conditions we need to promote — food safety, financial stability, privacy, environmental amenities — are all forms of wealth requiring something more than an oversight bureau. If we are going to have the administrative state, someone in charge needs to understand that.
“BEFORE THE DEPARTMENT OF LABOR CAN ISSUE A RULE ON WORKPLACE SAFETY, FOR EXAMPLE, OR THE ENVIRONMENTAL PROTECTION AGENCY CAN ISSUE A RULE RESTRICTING WATER POLLUTION OR THE DEPARTMENT OF EDUCATION CAN ISSUE A RULE PROTECTING STUDENTS FROM SHADY FOR-PROFIT COLLEGES, THAT RULE MUST BE SUBMITTED TO OIRA TO SIGN OFF.”
So has it been since 1981, under both Republican and Democratic administrations. But as noted, not independent agencies. And also as noted, few rules, a relative handful, get this scrutiny.
“IF OIRA DOESN’T LIKE THE RULE, IT CAN CHANGE THE RULE OR HOLD IT UP FOR MONTHS AT A TIME. AND WHEN A RULE FINALLY MAKES IT OUT OF THE OIRA WRINGERER CHANCES ARE ANY CHANGES WOULD BE SLANTED IN FAVOR OF CORPORATE INTERESTS.”
Surely Warren means Democratic corporate interests? But seriously, the relative handful of rules this controversial or that experience such delays need to be voted on by Congress. As the founders intended for law to be made.
As the joke goes, “The Constitution isn’t perfect, but it’s better than what we have now.”
“PROFESSOR RAO’S VIEWS OF AGENCIES MAKE HER THE WRONG PERSON TO LEAD THIS POWERFUL AGENCY. SHE BELIEVES THAT JUDGES SHOULD PAY LESS ATTENTION TO THE CONCLUSIONS OF EXPERTS AT FEDERAL AGENCIES”
Again, expertise is not to be taken as given. And Congress should be making important law. Judges need not defer to agencies own interpretations of statute, or their own regulations, or their own guidance documents. But they very well may, and do.
“IF PROFESSOR RAO HAD HER WAY, INDEPENDENT AGENCIES LIKE THE CFPB [Consumer Financial Protection Bureau] WOULD BE HANDCUFFED BY OIRA… IT IS NO SURPRISE THAT THE WALL STREET GIANTS WHO HAVE BEEN TRYING TO TAKE DOWN THE CFPB FOR YEARS LOVE PROFESSOR RAO’S VIEWS. IF CONFIRMED, PROFESSOR RAO WILL BE PERFECTLY POSITIONED TO PUT HER THEORIES INTO PRACTICE. …SHE WILL DETERMINE WHETHER RULES GO THROUGH THE SLANTED OIRA PROCESS.”
The CFPB was Warren’s own proposal, naturally she wishes to protect it. But there are grave constitutional questions with respect to this agency’s legitimacy and it is due for a restructuring. This is a debate that can be had in levelheaded fashion.
The “slanted” OIRA process is bipartisan, upheld by Republican and Democratic presidents alike, including executive orders to strengthen elements of its role from Bill Clinton and Barack Obama.
“ANYONE WHO THINKS THAT WE’RE SUPPOSED TO BE HERE TO WORK FOR THE AMERICAN PEOPLE WILL VOTE TO REJECT HER NOMINATION.”
Rao’s confirmation vote was largely party-line, but in contrast to this alarmism, here’s top-ranking Democratic Sen. Claire McCaskill on Rao’s confirmation hearing: “I look forward to finding opportunities to join with the Trump Administration to reduce the regulatory burden on Missouri small businesses….“I’m hopeful about working with Ms. Rao to eliminate unnecessary regulations while protecting Missourians’ health and safety.”
Regulatory liberalization is a serious issue, and, properly, a bipartisan one.
Originally posted to Forbes.