regulates the regulators in the federal government? For the past 21
years, that job has been the responsibility of an obscure White
House organization known as the Office of Information and
Regulatory Affairs (OIRA). This office reviews each major new rule
developed by executive branch agencies to ensure that it is
justified and consistent with the President's priorities.
During the eight years of the Clinton
Administration, OIRA rarely blocked, or even slowed, proposed
regulations. But since last summer, things have been different.
John Graham, the former Harvard professor who took over the office
last July, has reinvigorated it, taking firm stands against federal
agencies that do not justify their regulatory plans adequately.
more needs to be done--the Bush Administration's record is far from
a model of regulatory restraint--yet OIRA's renewed activity has
already sparked much criticism from regulators as well as the
interest groups with a stake in regulation. The key question is
whether President George W. Bush and other top policymakers will
give their full backing to the work of this oft-neglected
OIRA plays a
Each year, the nation's approximately 130,000
regulators promulgate over 4,000 new rules. According to a recent
OIRA report, annual regulatory costs are about the same as the
entire federal discretionary budget: about $2,500 per American.
Until about 30 years ago, new regulations
were generated by each agency with only informal review by the
White House. However, as the number of regulations and rulemaking
agencies grew, the system became unworkable; Presidents became
unable to oversee the quality of rulemaking or even its consistency
with the policies of their own Administrations.
1971, to address this problem, Richard Nixon required each agency
to perform rudimentary analyses of each new regulation under the
direction of the Office of Management and Budget (OMB). Gerald Ford
expanded on this system, as did Jimmy Carter.
1981, Ronald Reagan established the modern structure for the review
of regulations. Under this system, all executive branch agencies
were required to produce formal "Regulatory Impact" (cost-benefit)
analyses of their proposed regulations. These analyses were
reviewed by the newly created OIRA (a part of OMB). OIRA approval
was required for a rule to
move forward, subject to a Cabinet-level appeal. This basic
structure was maintained by the first Bush Administration.
President Clinton kept the same basic
system, although--in response to concerns over secrecy--he required
more public disclosure of contacts with OIRA. Throughout the
Clinton years, however, OIRA became a much less aggressive watchdog
over regulation than it had been under previous Presidents. From
1993 to 1999, OIRA returned, on average, only two rules per year to
agencies for more work, in contrast with the over 31 per year that
were returned from 1981 to 1992. None were returned during the last
three Clinton years. Not surprisingly, the regulatory burden became
heavier during this time; total Federal Register pages increased 30
percent (although the actual number of new rules was relatively
Since last year, OIRA not only has recovered its
historical role, but has been more active than ever. By its own
recent accounting, OIRA has:
- Returned more
proposed regulations. Twenty proposed regulations were
returned to agencies from July 2001 to March 2002--more than during
the entire Clinton Administration.
- Identified rules
for review. Last year, OIRA identified 23 existing rules
that should be re-examined by agencies, and it plans to target more
this year. At the same time, it has sent what it calls "prompt
letters" to agencies, recommending areas for possible action.
- Set new
standards for cost-benefit analyses. Among other things,
OIRA recommends that analyses be peer-reviewed, ensuring that an
outside source attests to their accuracy.
quicker reviews. OIRA is now completing its reviews in 90
days or less.
staff. This is an area of concern, given that regulators
have outmanned OIRA's approximately 50 staffers by some 2,500 to
one, making effective oversight difficult.
openness. Rather than simply return a rule without
explanation, a public letter explaining OIRA's rationale is now
part of each return.
The reform of regulatory watchfulness is good news
for consumers. Policymakers who want to impose new regulations now
have to work a little harder to justify their plans. Moreover,
changes in OIRA have the potential to increase the quality of the
review process, permitting better decisionmaking.
However, more reform is needed. The
Administration has allowed far too many questionable
regulations--on everything from the size of washing machines to
drinking water--to take effect. And there are institutional
challenges. As the gatekeeper against excessive regulation, OIRA
will often be at odds with various agencies, which may view its
requirements as bureaucratic procedural hurdles to their own
agendas. Their natural inclination will be (and historically has
been) to appeal directly to White House higher-ups, including the
President, to bypass or overrule the process.
situation presents a challenge for President Bush. While OIRA
should not be immune from appeal, its decisions must not be easily
reversible, or else--as the Clinton experience shows--it will lack
the credibility and clout needed to do its job. In this sense,
institution-building is as important as procedural reform in
restraining excessive or counterproductive regulation. OIRA and its
standards of review should become an accepted and respected part of
the regulatory system, just as OMB is in the budgetary system.
achieve this objective, President Bush must make clear to all,
including his agency heads, that restraining regulation is a key
goal of his Administration and that OIRA's efforts will receive his
backing. Through both words and actions, he must make it clear that
regulatory review procedures are more than just another bit of
Washington paperwork that can be disregarded when politically
convenient. While OIRA has much more to do, it has improved the
regulatory process. President Bush should take advantage of the
opportunity presented by that reform.
Gattuso is Research Fellow in Regulatory Policy in
the Thomas A. Roe Institute for Economic Policy Studies at The