Cost-Benefit Analysis & EO 12866: A Twenty-Year Retrospective - Part III

by Nina Hart

On October 28, 2013, New York University’s Institute for Policy Integrity hosted its Fifth Annual Cost-Benefit Analysis & Issue Advocacy Workshop.  One highlight was an afternoon panel reflecting on the consequences of Executive Order 12866 of 1993, which reaffirmed and expanded on the Reagan Administration’s requirement that significant executive agency regulations be subject to cost-benefit analysis.  The panel featured Boris Bershtyn, former Acting Director of OIRA (2011-13) and General Counsel for OMB (2012-13); Sally Katzen, former Director of OIRA (1993-98); C. Boyden Gray, former White House Counsel (1989-93); and E. Donald Elliott, former Assistant Administrator and General Counsel for the EPA (1989-91).  Richard Revesz, dean emeritus and professor at NYU School of Law, moderated the panel.  Notice and Comment is pleased to present series of posts by blogger Nina Hart on some of the critical issues discussed during the panel and key policy recommendations. 

Changes in the Political Landscape Present Separate Challenges to OIRA’s Analytic Capacity

One of the arguments often asserted for creating OIRA is the necessity of having a guardian of cost-benefit analysis.  Revesz asked if that rationale was justified considering some of the new regulations stemming from the political issues du jour – namely, regulations from Dodd-Frank and the Department of Homeland Security.

           

First, on DHS regulations, Bershtyn stressed that aside from the typical uneven quality of expertise in OIRA, this area presented unique challenges to the idea that OIRA had the analytic capacity to address the problem.  Specifically, DHS deals with preventing infrequent, catastrophic events, and itself has only a small staff with limited economic analytical ability.  How does OIRA, not versed in national security, deal with its internal lack of expertise and DHS’ potential lack of economic expertise?  Elliott concluded that this presented an even more compelling case for requiring or at least “normalizing” interagency review.  Even though outsiders think of OIRA as doing its own review, the reality is that OIRA often convenes discussion teams but not often enough to make it part of the bureaucratic culture.

           

On financial regulations arising from Dodd-Frank, Gray said this presented a strong case for extending OIRA review to the independent agencies.  Without such review, OIRA might not be able to get all the key players to the table for input on how to avoid conflicts or reach the best outcome.  Katzen said that President Reagan had been the first to ask whether OIRA could constitutionally review independent regulations, and the Office of Legal Counsel informally said yes.  The issue then was that Vice-President Bush did not approve.  Then, President Clinton asked and got the same answer, but Vice-President Gore objected.  Katzen admitted that, at the time, she agreed with Gore, but she has since changed her mind because all agencies go about rulemaking in the same way.  She said that coordination among the Fourth Branch is crucial to ensuring careful analysis and review.  However, she concluded that OIRA most likely lacks the resources to oversee such a large expansion of its authority, but in an ideal world, this expansion would occur.