Cross-posted from the Center for Progressive Reform.

The Economist’s Feb. 18 edition offers a cover package of five articles on “Over-regulated America” (1, 2, 3, 4, 5). Our British friends want you to know there’s a problem here in the States that needs fixing:

A study for the Small Business Administration [SBA], a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.

You can almost feel The Economist’s pain: The jobless rate should be a lot higher than it is, if the premise about the costs of regulations is correct. Surely if the regulatory burden were actually 12 percent of GDP — that’s what the SBA numbers say, if you draw them out — things would be far worse than they are. Ideologically unable to consider the obvious alternative — that regulations don’t add $10,585 in costs per employee — The Economist just, well, “wonders” aloud.

Here’s what The Economist would have found if they’d dug just a little bit: Fully 70 percent of the SBA estimate was actually based on a regression analysis using opinion polling data on perceived regulatory climate across countries (in a strange twist, a separate article in the same issue actually questions the study, briefly). Whole reports have been [PDFs] written on why that number is bogus.

Our economy is still recovering from a tremendous collapse largely caused by under-regulation of financial institutions. But in its group of articles, The Economist wants us to think the opposite: “The home of laissez-faire is being suffocated by excessive and badly written regulation.” That premise, in turn, leads the magazine to — you guessed it — a series of warmed-over right-wing policy ideas aimed at gutting regulations. Let’s take a closer look.

The fundamental challenge for The Economist is squaring its anti-regulatory critique with its admission that “most” of today’s regulations have monetized benefits exceeding costs. The magazine likes that, after all. So where’s the problem?

Big business in the United States spent years pushing to institute a system where regulations are only approved if their monetized benefits exceed their monetized costs. So, for example, a polluter can’t foul a waterway and kill a couple people along the way, unless it makes a whole lot of money doing it. But a challenge emerged for these industries: Many of the biggest regulations — EPA air pollution rules, in particular — have benefits far exceeding costs. Of course, the companies who will have to bear some of the cost of finally cleaning up their act still want to stop these regulations. So what to do?

The Economist has industry’s back, dedicating one of its articles to arguing that the federal agencies have been overstating the benefits of their proposed rules. Exhibit A: the EPA’s “Utility MACT,” which will put limits on certain pollutants for coal-fired power plants, and save literally thousands of lives every year. In reality, the Utility MACT perfectly refutes The Economist’s premise: It is actually an example of an agency underestimating, not overestimating, benefits.

The magazine is upset that in the EPA’s calculation of $37 billion to $90 billion each year in health benefits for the rule (compared with $9.6 billion in costs), “less than 0.01 percent of the monetary benefits” came from reductions of mercury pollution. The monetized benefits came from reductions in particulate matter and other harmful pollutants, but not from the mercury that was the prime target of the rule. This is an argument we’ve heard ad nauseam [PDF] from the coal power industry and its allies. It’s nonsense: The quantified mercury benefits are low because EPA didn’t calculate them. Putting an exact monetary value on not poisoning our children with neurotoxins that stunt their mental development is difficult and there’s no right number; the EPA just left it out, relying on the benefit calculations for the reduction of other pollutants. The case is a prime example, in fact, of how agency analyses usually underestimate regulatory benefits. Likewise, independent studies have shown the agency projections of costs of regulations to be too high [PDF].

The Economist settles on a series of unfortunate recommendations. Let’s start with the championing of sunset provisions: “All big regulations should also come with sunset clauses, so that they expire after, say, 10 years unless Congress explicitly reauthorizes them.” But the same pages contain a plea against involving Congress in rules, as they rightly criticize the REINS Act: “Passed by the House, it would involve Congress more heavily in rulemaking. If there is a body worse than the executive agencies at this kind of thing, it is Congress.” The magazine also seems to realize another problem: “Lastly, automatic ‘sunsets’ of laws have their fans, though Congress could mindlessly reauthorize laws gathered up in omnibus bills (and a bitterly divided Congress might allow good laws to lapse).” The magazine has laid out some of the important arguments against one of its key recommendations.

Here’s one of their other big ideas: “More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.”

This call for stripping laws or regulations of clear mandates, championed for decades by Philip Howard, is a prescription for giving up our existing public protections for some future, nebulous protection system with no clear teeth. And it would lead to, among other things, a storm of action in the courts, which would have to spend years interpreting what the broad rules meant. That should be troubling for The Economist, which says it’s worried about courts interpreting rules: “The courts, in fact, are the source of the worst uncertainty surrounding environmental regulation.”

The magazine touts “creating a full-time advocate for regulatory rollback” — seemingly unaware that our tax dollars already fund such an office, the SBA’s Office of Advocacy. Just this week, that office trumpeted a list of rules that it says it played a roll in weakening or gutting.

Perhaps most troubling, The Economist floats the idea of requiring that an existing regulation be revoked any time a new one is instituted. This idea is not new; anti-regulatory guru Chris Demuth of American Enterprise Institute was pushing this idea at least as early as 1980. And it makes no more sense today than it did then. New and existing regulations should be evaluated on their merits, not an arbitrary system that says we have to get rid of the rule on peanut safety if we need to make a new one on cantaloupe safety. We need to be able to address new threats, be they toys from China or BPA in water bottles.

The Economist wants us to take its proposals seriously. But all it has done is repackage false claims about the problem — and about the solutions.

When former Harvard Law Professor and eclectic intellectual Cass Sunstein was named administrator of the Office of Information and Regulatory Affairs (OIRA), conservative, industry-oriented Wall Street Journal editorial writers enthused that his appointment was a “promising sign.” A slew of subsequent events has proved their optimism well placed, as we have noted repeatedly in CPRBlog.

But nothing beats hard, empirical evidence. In a report released yesterday, CPR announces the results of an exhaustive six-month analysis of the barebones information OIRA has eked onto the web regarding 1,080 meetings held over a 10-year period (October 2001-June 2011) with 5,759 outside lobbyists, 65 percent of whom represented industry and 12 percent of whom represented public interest groups. The results were shocking even to us, long-time and admittedly jaded observers of OIRA’s one-way ratchet toward weakening public health and other protections.

• Obama’s OIRA changes more rules than Bush’s did. The Obama administration has further entrenched a regulatory system in which White House officials trump agency expertise with decisions based on raw politics. While the Bush administration changed 64 percent of regulations under this process, the Obama administration has changed 76 percent.
• Industry dominates the OIRA meetings process. OIRA makes no effort to balance its meeting schedule by hearing from even a rough equivalence of organizations supporting protective regulations. In only 16 percent of reviews involving meetings did OIRA meet with organizations from across the spectrum of interested groups, while in 73 percent OIRA met only with industry representatives. These meetings come on top of an already exhaustive public process run by the agencies themselves, involving numerous meetings before a rule proposal is even crafted, multiple rounds of public comments that give a wide range of interest groups the opportunity to file thousands of pages of advice, public hearings across the country, thousands of hours of staff work invested in reviewing the comments and either accepting or rebutting the information they contain, and — last but not least — court review for many major rules.
• OIRA meetings correlate with changes to rules. Rules that were the subject of meetings were 29 percent more likely to be changed than those that were not. OIRA does not disclose its changes, but there is extensive evidence that OIRA functions as a one-way ratchet, exclusively weakening agency rules.
• OIRA is obsessed with the EPA. While rules from the Environmental Protection Agency (EPA) made up only 11 percent of all reviews by OIRA, 41 percent of all OIRA meetings targeted EPA rules. EPA rules were changed at a significantly higher rate — 84 percent — than those of other agencies — 65 percent — over the whole 10-year period.
• OIRA routinely misses deadlines, stalling public health and safety protections. By executive order, OIRA has 90 days to review a rule, plus a possible 30-day extension. Of the 501 completed reviews in which outside parties lobbied OIRA, 59 (12 percent) lasted longer than 120 days and 22 extended beyond 180 days (about six months).
• OIRA ignores public disclosure requirements. OIRA is required by executive order to make available “all documents exchanged between OIRA and the agency during the review by OIRA,” and agencies are required to “identify for the public those changes in the regulatory action that were made at the suggestion or recommendation of OIRA.” OIRA never follows those requirements, and the agencies — with the notable exception of the EPA in limited circumstances — don’t either.
• OIRA ignores the limitations on its reviewing authority. An executive order instructs OIRA to focus on “economically significant rules” (those imposing more than $100 million in annual costs), allowing OIRA to extend the scope of its review in very limited circumstances. In practice, “non-economically significant rules” are reviewed at a ratio of six to one with the rules that should be the primary focus of OIRA’s work.

Despite his selection of experienced and well-respected appointees to lead health and safety agencies — most notably, Lisa Jackson at the EPA, Margaret Hamburg at the Food and Drug Administration, and David Michaels at the Occupational Safety and Health Administration — President Obama has not made lasting commitments to substantially increase their budgets, has not supported them when they are politically attacked, and done next to nothing to press for updating the outmoded laws that hamper their efforts to police corporate misconduct. Worst of all, he has continued the Reagan and Bush tradition of enthroning OIRA as the final arbiter of whether public health and environmental protections see the light of day.

Centralized White House regulatory review shoves policymaking behind closed doors, wastes increasingly limited government resources, confuses agency priorities, demoralizes civil servants, and, worst of all, costs the nation dearly in lost lives, avoidable illness and injury, and destruction of irreplaceable natural resources.

President Obama’s op-ed in the Wall Street Journal this morning touted EPA’s “deregulation” of the artificial sweetener saccharin as a positive development for America. Inadvertently, the president made EPA look silly for having regulated the stuff in the first place. The use of this example was also unfortunate because EPA’s decision to deregulate had little consequence. Here’s the back story.

Beginning in the 1970s, scientists discovered that if you feed large quantities of saccharin to rats, they develop cancer. As a result, products containing saccharin were required to carry a warning label, and saccharin went on the lists of “hazardous substances” potentially subject to the Superfund toxic waste cleanup and hazardous waste regulations, as did all carcinogens. This result seemed counterintuitive and industry lobbyists working against Superfund’s renewal in 1984-87 ridiculed EPA with the question: “If I spill a truckload of Tab, do I create a Superfund site?” Of course the answer was no. EPA did not have the time, the money, or grotesque lack of judgment to even consider pursuing such idiosyncratic problems, even if they had occurred.

Meanwhile, saccharin got a lot of bad publicity, and manufacturers of saccharin hustled to perform studies showing that in the amounts consumed by humans, the sweetener was safe. But saccharin, apparently through some administrative oversight of the Bush EPA, remained on the Superfund list. In the fall of 2010, Obama’s EPA delisted it, in response to a petition from the Calorie Control Council. 

The listing had no significant practical implications for anyone in industry, and the delisting was so obscure that almost no one knew about it until it came up in the president’s op-ed. If people threw out saccharin products for any reason, government officials did not come swooping down to prosecute them for violating hazardous waste laws. If you didn’t hear about the rush to hire more workers in late 2010 after the saccharin burden was lifted, that’s because there wasn’t one. Saccharin remained one of only a handful of examples where a chemical, previously thought dangerous, was later deemed not dangerous. In fact, this problem was so negligible that although John Graham, George W. Bush’s regulatory czar, used it as an example of regulation run amok, even he did not think the burden on business was great enough to bother doing anything about its presence on the EPA lists.

Moral of the story: Deregulators have their urban legends, but telling them over and over does not make them so.

Deep in thought about saccharin.Photo: The White House

Since then, much of the president’s domestic agenda has been adopted, and a mid-term election “shellacking” has intervened. And now, President Obama, with the 2012 election drawing ever nearer, is embracing a far less generous vision. In an op-ed on the opinion pages of today’s Wall Street Journal, truly the belly of the conservative beast, the president embraces a frame for the coming discussion about the role of regulation in society that is right out of the Republican hymnal, calling for “balance” between safety and economic growth, and bemoaning regulations that sometimes “plac[e] unreasonable burdens on business — burdens that have stifled innovation and have had a chilling effect on growth and jobs.”

He also used the op-ed to announce a new initiative “to review outdated regulations that stifle job creation and make our economy less competitive.” By casting the discussion in those terms, the president swallows the GOP’s frame for the debate hook, line, and sinker. 

If you listen carefully, you might hear the voices of disbelief and anguish from the families of the 11 workers killed in the Deepwater Horizon disaster, the 29 workers whose lives were extinguished at the Big Branch mine, and the nine who died after eating peanut butter crackers and similar products infected by salmonella. How about the people who knew the uncounted tens of thousands of others who were given cancer by airborne toxics at work or in the neighborhood, experienced devastating headaches because Chinese manufacturers put sulfur compounds in their drywall and no one checked the product as it crossed our borders, or were crippled by repetitive movements in a slaughterhouse or a poultry processing plant, all on President Obama’s watch? The families, friends, and coworkers of these victims of under-regulation and under-enforcement might conclude that the United States is reverting to a place where the government most definitely does not protect people who can’t protect themselves. Sure, they think to themselves as they read about the president’s new détente initiative with big business, we all need jobs, but aren’t all those billions in profits and executive bonuses enough for the business sector? Didn’t the government bailouts of the big banks do the trick?

Large corporations were at the bottom of all of the human damage listed above, not because they are intrinsically evil but because they cannot be trusted to regulate themselves. And given the current state of regulatory dysfunction at the agencies founded to protect the public, caused by a noxious mix of underfunding, political attacks, and lack of effective enforcement authority, that’s exactly what they’re doing way too much, almost everywhere you look.

To be sure, public anger and distrust, coupled with massive campaign contributions from corporate and other sources, translated into Republican triumph electorally, and the big companies who brought us the Gulf spill, the Big Branch mine collapse, tainted food, and runaway cars have now come to collect. But Barack Obama is a president from the party that should know better, the evidence of which is that he has appointed great people to lead the very agencies that so badly need rescuing after eight years of George W. Bush’s concerted efforts to de-fund and de-fang them. Instead, the president’s newly stated position diminishes EPA’s Lisa Jackson, FDA’s Margaret Hamburg, and OSHA’s David Michaels, siding instead with his regulatory czar, Cass Sunstein, who has steadily pushed to issue an executive order that throws a net over his colleagues rather than helping them do their jobs.

The principal example of outdated regulations that the president cites is the listing of saccharin as a hazardous waste. EPA removed saccharin from the list recently, a decade after the science supporting the move came together. But in the intervening years, it’s not as if there’s evidence the regulation has been costing us jobs. Companies weren’t told to dig special saccharin waste dumps to dispose of the stuff, after all. So it’s business friendly rhetoric that has the unfortunate by-product of making the agencies sound more than a little silly, but it doesn’t make the case that outdated regulations are costing us jobs. Forcing beleaguered agencies to “look back” and find more saccharin examples will have real costs, though, because they are already pushed to their limits by funding shortfalls that give them, in many cases, the same budgets in real dollars as they had in the mid-1980′s, when the White House also was hounding them to control themselves. Does the president really intend regulators to freeze-frame efforts to solve public health crises that abound all around them so that they can engage in a draining search to placate companies already rushing to Republicans in Congress with regulatory “hit lists”?

As for the argument that we need to loosen regulation in order to create jobs, the believers in this superficially appealing bit of dogma have yet to cite research showing that regulations are slowing the economic recovery. They just serve up the assertion, in part to distract us from the hard reality that it was deregulatory fervor that got us into this mess in the first place. And while President Obama may not accept it, he’s apparently willing to let the debate be conducted in those terms.

OMB director nominee Jacob Lew.Photo: Wikipedia Commons

The hearings will likely focus on budgetary issues, but no less important is another division of OMB: the Office of Information and Regulatory Affairs (OIRA), the office charged with coordinating regulatory policy. The policy context is this: from salmonella-laced eggs to the BP oil spill, we are in a year of regulatory disasters. No one agency or individual is responsible for the breakdown; the problems are pervasive and the fixes often not easy.

The OMB could be playing a positive role in supporting regulatory agencies and helping to stop the next crisis before it happens. Instead, it has too often busied itself meddling in agencies’ processes, and rushing to stand up for industries with questionable claims of high regulatory compliance costs. Meanwhile, in the real world, toys are tainted with lead, the coal ash ponds are leaking chemicals into the water, and we move from one food contamination episode to the next.

If Jacob Lew is confirmed, he should take a fresh look at the regulatory situation and change OMB’s mindset.

A year of regulatory disasters, a systemic problem

Early this year, we learned that dozens of people have been killed in incidents involving unintended acceleration in Toyota cars. In April, 29 coal miners were killed in the West Virginia explosion. In May, the BP oil spill saga began, killing 11 workers and creating one of the biggest environmental disasters in our national history. August brought a giant egg recall, but it was too little and too late for an estimated 1,500 sickened by salmonella.

The pattern is clear for anyone who is looking. These are systemic regulatory failures, signs of government and specifically federal agencies (FDA, EPA, MMS, NHTSA, OSHA, CPSC) not able to accomplish their missions of protecting the public. There are sometimes individual bad apples involved in the failures, but usually the problems run far deeper. We simply have been too cheap, for example, to pay for enough inspectors to examine many imported toys and imported food.

We have given these agencies budgets that are miniscule in the scope of the federal budget and in the scope of the job we’ve assigned them. We spend more to buy two military planes (two individual aircraft) than we do for the entire Consumer Product Safety Commission (CPSC) each year. The CPSC is responsible for ensuring the safety of every consumer product sold in America except cars, drugs, and food.

Next, we’ve given them limited authority. When an employer commits a serious worker safety violation, something that poses a substantial probability of death or serious physical harm, the maximum penalty the government can issue is $7,000. That’s seen as just the cost of doing business. And if that weren’t enough, we’ve politically abused the agencies, allowing special interests to “capture” the agenda of agencies, and the White House to interfere in agency decision-making.

These are not problems Jacob Lew, or any one individual or office can fix. But this is the situation that the Obama administration faces. Fixing the regulatory state will require making some serious changes.

OMB in its own world

OMB’s Office of Information and Regulatory Affairs, led by Cass Sunstein, has not visibly gripped the reality of the string of regulatory failures and the systemic problems in the agencies it works with.

In July, Sunstein sent the agencies a memorandum on “guidelines and procedures for publishing the fall 2010 Regulatory Plan and Unified Agenda of Federal Regulatory and Deregulatory Actions.” The memo is absolutely remarkable for its oblivious attitude toward all of the problems that make up the pattern just described. Agencies are cautioned to worry about whether the proposed regulations on their annual agendas will have an adverse effect on small business and to begin quantifying the costs and benefits of potential new requirements before they even develop such proposals. It could have been signed by any OIRA director who served Presidents Reagan, George H.W., and George W. Bush.

In the last year, OIRA has often performed a role it played in the last administration: meddling in agency decisions and acting as an agent on behalf of regulated industries. The office has effectively hijacked EPA’s work to finally regulate coal ash, the toxic byproduct from coal power plants that is currently allowed to be dumped in unlined pits in the ground, where it seeps into rivers and groundwater and poisons wells.

OIRA interfered in EPA’s Endocrine Disruptor Screening Program, prompting pointed criticism from defenders of scientific integrity (in that case, OMB later righted the wrong). OIRA has asserted jurisdiction over “guidance documents” from regulatory agencies despite a revocation of that authority by the president; it has exceeded deadlines for completing reviews under the terms of EO 12,866; and it has failed to disclose “before and after” documents allowing the public to determine what changes were made to regulatory actions after its review.

A positive agenda for Jacob Lew

The Obama administration has shown in many instances that it “gets it” that our regulatory system needs to be fixed. The regulatory failures we’ve witnessed this year should be lessons not that we should give up on government when government has let us down, but that we should work to fix our regulatory state. As David Axelrod said, “I think we’ve tested the proposition of what no regulation means, and what you get is … the leak, the mine disaster in West Virginia, and you get an economic crisis.”

If and when he is confirmed, Jacob Lew will be overseeing the office, OIRA, that is the White House’s own agent in the regulatory world. He should make sure first that it does no harm. It should not challenge agencies on science determinations that are the realm of scientists and not economists. It should not believe astronomical predictions from industry of regulatory compliance costs. It should not use cost-benefit analyses that wildly undervalue environmental protections.

Instead, OIRA can function as a supporter of the agencies. It has a unique position to help inter-agency coordination. It can help catalogue agencies’ priorities, and assist them in identifying what legal authorities could help them achieve their missions. It can be an advocate for getting agencies the resources they need, helping them to develop budget requests that reflect the needs of getting their jobs done.

None of this is easy. But the new OMB director will have a tremendous opportunity to help mend our broken regulatory state. He ought to use
it.

An industry victory on the issue would suggest that presidential appointees, confirmed by the Senate and presented to the American people as accountable for everything from food and drug safety to toxic chemical exposures in the workplace, are not really in charge of their agencies but instead could be compelled to become puppets for a White House staff any time a powerful industry screams loudly enough.

The most recent chapter in this saga begins in Kingston, Tennessee three days before Christmas, 2008. A six-story-high earthen dam used to contain a coal ash waste pond at a power plant operated by the Tennessee Valley Authority (TVA) collapsed, releasing more than 1 billion gallons of jet black sludge laced with arsenic, cadmium, chromium, lead, mercury, selenium, and thallium. By volume, the spill was more than 100 times larger than the Exxon Valdez disaster, covering more than 400 acres of homes, farms, businesses, roads, rivers, and irreplaceable wetlands. (See table at end of this post listing the chemicals commonly found in coal ash and their negative health effects.)

According to EPA data, nearly 600 similar earthen coal ash dams are spread across 35 states, including 50 so-called “high hazard” dams holding back tens of millions of tons of coal ash waste. In 2009 alone, U.S. coal-fired power plants produced more than 136 million tons of coal ash waste — more than enough to fill the boxcars of a train stretching from Washington, D.C., to Melbourne, Australia. By 2015, industry will produce 175 million tons per year. And the kicker is that if you live within one mile of a coal ash disposal site, you are twice as likely to live below the poverty line as the average U.S. citizen and 30 percent more likely to be a person of color.

EPA has fiddled with the coal ash problem for a quarter of a century. In 1980, Congress enacted an exception to the tough federal statute directing EPA to regulate hazardous waste. So-called “Bevill wastes” were exempt from regulation until EPA studied their characteristics comprehensively. EPA was instructed to report back on coal ash by 1982. Throughout the 1980s and 1990s EPA extemporized, studying the problem, venturing the opinion that no strict regulation was needed, reversing itself and promising to regulate coal ash as a “contingent” hazardous waste, and ultimately shelving these efforts during the Bush II Administration. Years of work and millions of dollars later, we have amassed rock solid evidence that when coal ash waste is collected in unlined pits in the ground, it is extraordinarily dangerous to people, livestock, and wildlife, not to mention water quality. The record includes EPA studies and a report by a blue ribbon panel of scientific experts at the National Research Council. For an excellent summary of the issues, see congressional testimony by Earthjustice attorney Lisa Evans.

EPA Administrator Jackson, who has embraced environmental justice as one of her top priorities, promised to break this gridlock and propose a rule controlling the disposal of coal ash by the end of 2009. She sent the draft over to Cass Sunstein’s Office of Information and Regulatory Affairs (OIRA) at OMB. The draft was never released to any member of the public, although I suspect that industry lobbyists have a copy because they have already invented multiple toothless counter-proposals. As we have reported before in these pages, Sunstein’s staff commenced a marathon of meetings with coal industry executives, their paid experts and lobbyists, state highway administrators who want to spread the stuff in road beds, and other opponents of the EPA rule — 21 meetings at last count, more than on any other subject that has engaged OIRA’s attention for many years.

Obviously and sensibly embarrassed by how all this looks from the outside, the OMB issued a statement last week asserting something as silly as it is untrue: “By executive order,” the official fantasized, “if a stakeholder on a proposal asks to meet with OMB (OIRA), they are required to take the meeting.” Pressed on the point, OMB asserted that the executive order in question was EO 12866, which says nothing of the sort.

In fact, the order, issued by Bill Clinton in 1993 and continued through the Bush II Administration, is scrupulous about demanding that the lead agency in charge of a regulatory proposal (that would be EPA in this instance) afford the public an opportunity for “notice” (by publishing the proposal in the Federal Register) and “comment” (by receiving and reviewing all the written comments anyone may care to submit during a 30 to 90 comment period). Sometimes, lead agencies even hold public hearings on particularly controversial proposed rules. But this rule has not yet been proposed. If it had been, EPA would be obligated to hear from all the stakeholders in the debate, but not OIRA economists, until it had decided what it wanted to do. Not even the Bush Administration’s OIRA offered such a novel and absurd interpretation of its obligations. If it had, it would have been a green light to industry to schedule meetings 24/7 for the rest of the administration’s term, thus delaying action forever.

I wish Jackson the best of luck in this grueling battle, as should anyone who hopes that the nation’s environmental policy will be crafted with a minimum of special interest politics, by experts who have spent a lifetime studying the science and law of these issues. She does not deserve to get sandbagged by OIRA, and if she does, the American people, especially those living near coal ash catastrophes-in-waiting, will have much to lament. If OIRA establishes its primacy over EPA, we can look forward to many more such intrusions in the future — a very discouraging omen, indeed.

Human Health Effects of Coal Combustion Waste Pollutants

As you know, we picked a spat with the Office of Information and Regulatory Affairs (OIRA) last week over Randy Lutter’s supposedly temporary detail appointment to your office. It’s not the first time we’ve criticized the workings of OIRA, and almost certainly won’t be the last. 

I’ve spoken to a number of people in the media and elsewhere who have expressed surprise that progressive organizations like Center for Progressive Reform are such relentless critics of a progressive administration. I’m sure administration officials feel this frustration as well. That dynamic is at work in OIRA’s case because you have a reputation as a progressive thinker on many issues.

I won’t try to speak for all progressives, but I can assure you that very few of us criticize the administration lightly. Nor do we do it with any sense of pleasure. The Obama administration inherited an absolute mess on every front and progressives are well aware of the herculean effort you are making to dig out. But while it is tempting to take refuge in the notion that if only a few things are better at the end of however many terms the voters give President Obama, that limited vision is not why you signed up to serve, nor is it why so many of us voted for your man. 

President Obama promised a transformation and that’s what we will keep asking you to deliver. We won’t settle for “better than Bush” or even “better than Clinton.” We want the worst problems to improve a lot, not comparatively. 

We want the president to succeed in his stated goals of protecting the environment and people’s health and safety, and we’d be delighted to do nothing but applaud and throw rose petals — and in fact, we have, when it was merited. I was impressed, for example, that OIRA opened up the process for devising its forthcoming executive order on the regulatory process to public comment. It wasn’t required; doing so was a nice bow to transparency, and I said so at the time. Petal-throwing was also in order when you pledged to leave EPA alone as it proceeds with its program for endocrine disruptor testing. Some damage had been done by OIRA interference before you were confirmed, but things seem to be back on track now. 

But frankly, I’m very worried about the direction of OIRA — worried that close to a year into the Obama administration, your staff has not yet embraced the president’s call for a reinvigorated regulatory system. True, you spent most of this period awaiting confirmation while right-wing extremists invented far-fetched and unfair reasons to slow that process down. But progress on the president’s agenda need not wait for the confirmation process. To pick just a couple of examples of business-as-usual at OIRA:

• L’affaire du Lutter. Temporary or otherwise, Mr. Lutter was brought to OIRA despite a plainly right-wing track record on the very issues he’s working on, and has pursued that agenda while there.

• Meetings with industry. OIRA staff have had a lengthy series of meetings with industry representatives to discuss an EPA coal ash regulation that hasn’t even been formally started yet. Industry should raise its concerns with EPA, not OIRA. OIRA shouldn’t be setting itself up to conduct a parallel review of the substance of the regulation, certainly not before EPA has done its work.   

• The Executive Order. We’re eager for the administration to issue its update to Executive Order 12,866, establishing a regulatory roadmap for the Obama years. We hope for a surprise, but we’re fully expecting it to continue to employ cost-benefit analysis as a yardstick for grading the worth of proposed regulations. There’s a lot to say about this, but I’ll confine myself to one, threshold point: A quarter century of experience with cost-benefit demonstrates that it is a badly warped yardstick, that its application overstates costs to industry and understates benefits of regulations to consumers and families. And in most cases, it’s not what the law calls for. 

Those are all worrisome issues that do not portend a bright future.

Undoing each of Bush’s anti-regulatory maneuvers should be a start, but I fear that the actions enumerated above mean that your office hasn’t yet begun serious work on achieving that baseline goal.

Instead, while we argue about when OIRA will begin to change, the bigger picture is left unaddressed. Undoing Bush is just the start. The real challenge is to actually reinvigorate the regulatory system so that Americans can count on safe food and drugs, safe workplaces, breathable air, drinkable water, a toxic-free environment — and more. In other words, Bush took a regulatory system that was underfunded and in general disrepair and reduced it to shambles. OIRA’s challenge is to revive EPA, FDA, CPSC, NHTSA, and OSHA so that they are independent, strong, and effective. To accomplish that larger and overridingly important mission, here’s what needs to happen at OIRA:

First, the agencies responsible for safeguarding our environment, our food, our workplaces, our cars, and our toys need to be restored to full fighting weight, with enough resources to mount credible enforcement programs, write appropriately stringent rules, and, most difficult of all, rediscover their autonomy, self-respect, and independence. Your staff should help agency chief financial officers figure out a method for estimating what they really need to do their jobs, and you should help the CFOs and agency heads present those findings to Congress, preferably outside the routine appropriations process.

Second, the three dozen or so professionals under your supervision should redefine their role, giving up the posture of guardians against regulatory excess and becoming guardians of public health, worker safety, and the environment. They should stop serving as a backdoor for industry to work its will on regulations because they’ve got other things to do, including working to correct exaggerated industry estimates of the potential costs of proposed regulation, helping agencies overturn the various Bush midnight regulations that remain on their books, and developing a methodology for calculating the budget increases that are necessary to make it possible for the agencies to carry out their statutory mandates. 

Third, to accomplish the difficult but crucial culture change of shifting OIRA’s attention from industry complaints to an affirmative agenda appropriate for the Obama presidency, your staff should spend each and every day thinking of ways to streamline and hasten the regulatory process, delivering on mandates communicated by Congress long ago. You might consider telling everyone who wants to meet with you about an issue within the purview of the agencies that they have to go to the agencies first, and come back to OIRA only when you actually have a regulatory decision under review. You should meet with them only when their concerns are rationally related to OIRA’s appropriate role. Don’t allow them to repeat complaints about issues-especially scientific issues — within the expertise of the regulatory agency itself. And you should set standards for your staff on when and with whom to meet, ensuring that OIRA hears from all sides of the debate evenly, rather than expending large amounts of OIRA staff time hearing only from those with the money to field dozens of “experts.”

Fourth, your office should set a sterling example on a central tenet of the president’s agenda, posting online all of your communications, both incoming and outgoing, with agencies and stakeholders about rules and other regulatory decisions that you choose to monitor. These postings should include agency communications to you, which some agency staff apparently want to keep confidential, for reasons that should not be permitted to trump the president’s overriding commitment to transparency.  

This affirmative agenda goes beyond fixing the extreme policies of the Bush administration, and takes on the real work of using the regulatory structure to do exactly what it was created to do: keep Americans safe from a variety of hazards. We’re eager to help you move in that direction.

Rena Steinzor

The best thing that can be said about the prospect of hiring Randall Lutter, a Cornell-educated economist who cut his teeth at the American Enterprise Institute (AEI), is that he is a straightforward traditionalist. No “soft” or “humane” cost-benefit analysis for him, he likes his de-regulatory policy nice and raw. Lutter was the senior economist at the benighted Food and Drug Administration during the George W. Bush Administration, and now he brings his anti-regulatory toolbox to the epicenter of cost-benefit analysis, OIRA.

Ironically, the most glaring example in a long list of Lutter publications goes after one of the President’s most important, and often stated, regulatory priorities: safeguarding children, especially children of color, from the lurking dangers of toxic pollution, poor health care, and the grinding burden of poverty.

What does Lutter believe on this deceptively straightforward subject? The following may be hard to imagine, but fortunately the paper I describe is short and pithy, enabling readers to double check.

Over the objections of many, economists inside and outside the government use cost-benefit analysis to decide whether a proposal to protect public health is a good or a bad idea, and over the last 20 years, it has served to halt, mangle, or stop quite a few important initiatives. The economists begin by quantifying in dollars both the projected compliance costs that would be imposed on industry by the proposal and the projected benefits to public health that would be gained. If the pollutant targeted by the regulation causes brain damage to the point that a child loses IQ points, economists would calculate how much a person would be “willing to pay” to save her IQ points — a bizarre concept because it is hard to imagine how real people might make such a choice.

By that method, the measure of how much children — or society as a whole — should theoretically be willing to pay to avoid exposure to lead or mercury, to take two notoriously toxic heavy metals as an example, is how much more income they could earn if they hadn’t lost IQ points to poisoning. In one particularly startling example of this false, even macabre, precision (see pages 10-5 to 10-10, 10-45 to 10-47), EPA number crunchers came in at $8,800/IQ point lost. The equation used to churn up this number assumed that society would save money because lower-IQ kids need less schooling, meaning that we could deduct from the benefits column the money we save by turning them out on the street sooner.

It’s worth noting here that both lead and mercury poisoning are well-known to affect children of color disproportionately. In the case of lead, little ones who live in the inner city where exposure to tiny amounts of flaking, chipping, and peeling lead-based paint begin the poisoning process. With mercury, babies in utero and infants born to Native American and Asian-American fishermen in the Great Lakes are exposed to contaminated fish, a major component of their diet, just when their brains are most vulnerable to mercury.

In 2000, Randall Lutter chided his colleagues at the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) for overstating the dollar value of IQ points lost as a result of lead poisoning by as much as six-fold, saying he would reduce the value to somewhere in the vicinity of $1,500. How and why? Instead of focusing on income lost to poisoned children, Lutter centers his calculations on how much a theoretical parent would be required to pay for chelation, a drastic, dangerous, and relatively rare procedure used to treat severely poisoned children. Chelation involves injection of a toxic agent, ethylenediaminetetraacetic acid, which in turn leaches lead from the child’s bones. Typically done in a hospital setting, the procedure has unpleasant side effects (nausea, vomiting, pain at the injection site, etc.) and can also harm the child by removing calcium along with the lead. Lutter is clearly confused about the procedure, claiming at one point that blood lead levels “are relatively poor measures of cumulative exposure” because they can return to normal even when exposure is “excessive.” Of course, as any medical expert will tell you, by that point damage has already been done to the developing neurological system. Chelation does not avoid those results, although it may prevent seizures and other extreme symptoms of poisoning.

Lutter concludes his analysis with the observation that “federal agencies should reconsider their lead hazard standards” because overly strict limits on exposure “redistribute family resources from parents to children. But such redistribution is inequitable because children are likely to live longer and have much higher incomes than their parents.” In a former life, I spent many hours representing lead-poisoned kids and their parents in Baltimore City courts, trying to wring cleanup out of slum landlords. (An estimated 85 percent of Baltimore rental housing contains ample amounts of lead paint, which contains as much as 40 percent pure lead by volume.) I visited their homes, listened to their anguished reports of discovering what had happened to their little ones, and argued before a series of overworked judges who did not know what to do about this pervasive and devastating problem. In the context of that reality, Randy Lutter sounds like an alien from another planet.

Last Monday, a group of public interest representatives met with Cass Sunstein to discuss OMB’s review of agency science. As the meeting wound down, I asked whether rumors of Lutter’s return to OMB were true. Sunstein and Michael Fitzpatrick, his political deputy, did lots of hemming and hawing, leaving the group with the strong impression that Lutter was under serious consideration, but never clearly confirming that he had already been hired. Within 24 hours of the meeting, perhaps by coincidence, AEI had pulled many documents referring to Lutter off its web site, including his biography.

Small wonder that Sunstein is embarrassed and big wonder why he thinks that this kind of policy advice will go unnoticed if and when he — and by implication the President — follows it.

Cass Sunstein

Although Professor Sunstein has been sitting in the Old Executive Office Building for months, he has undoubtedly been preoccupied with his nomination battle. Having survived the occasionally nonsensical trial by partisan and self-serving flight of fancy that was his confirmations process, we hope he will notice that his staff at OIRA has been behaving as if the 2008 election never happened. Having paid careful attention to OIRA over these past few months, in search of evidence of a new outlook, I’m sorry to report that I’ve drawn the strong impression that Bush Administration culture and ideology remain unchanged at OIRA. To deliver change we can believe in, Cass Sunstein needs to convert OIRA from industry waiting room to objective arbiter of inter-agency disputes.

My impression that change has not yet arrived is based in great measure on a chart [PDF] compiled and released today by the Center for Progressive Reform, showing that in recent months, OMB met nine times with outsiders to discuss health and safety regulations, and that eight of those meetings were dominated by industry representatives complaining about proposals under development at the Environmental Protection Agency (EPA), the Food and Drug Administration (FDA), and the National Highway Traffics Safety Administration (NHTSA). For example, tire manufacturers met to discuss NHTSA’s proposals on inflating tires to increase fuel efficiency. The oil industry met to discuss EPA’s rule on the reporting of greenhouse gas emissions. And the airline industry met to discuss EPA’s rule on water discharges from airport de-icing operations. Public interest groups have met with OIRA on only one regulatory matter: amendments to an EPA rule on renewable fuels. That meeting was one in a set of four, with the other three devoted to the views of the American Petroleum Institute, the biodiesel industry, and Shell Oil. 

Now, OIRA may well take the view that when you hold an open house for the neighborhood, you cannot help who drops by. But the history of the office makes that seem like a superficial argument.  For years, and especially during the tenure of Presidents Reagan, Bush I, and Bush II, OIRA has served as a backdoor for regulated industries, giving those aggrieved by agency decisions a second, third, and fourth bite at the apple to press their case. Having failed to persuade Congress of their arguments during the legislative process and then the regulatory agency during their deliberations, industry has found a friendly hearing from OMB, and OMB has too often watered down or scuttled regulations afterwards. But even if OMB staff sit silently at the meetings, giving an audience to industry complainants but not otherwise agreeing to overturn agency decisions, the practice is questionable. As experience in the courts since before the nation was founded has convinced us, only by airing all sides of a dispute through balanced advocacy can a wise decision be made.

Even if for some elusive reason we were willing to accept OMB’s “listening post” justification for these meetings, the sad fact is that objective evaluation of OMB’s role is impossible because OMB discloses only the fact of meeting, not its outcome. While this quasi-transparency is better than nothing, it cannot allay suspicions that the regulatory czar’s job is to kill, not improve, regulation.

We look forward to working with Cass Sunstein. And we also promise to stay in his face, making sure he remembers that his biggest challenge is to revive strong government protection of environmental quality, food, drug, and worker safety, and the control of climate change, not working to appease industry. We wish him luck and success. 

This post originally appeared in the Center for Progressive Reform blog.

If scaring the public is the objective, environmentalists don’t have to look very far for hard facts to support the effort. All they really need to do is focus on what the world’s most prominent and reputable scientists keep trying to tell us about the dismal state of the environment that we’re preparing to hand over to our children — not in 100 but in 30 or 40 years — if we don’t control our energy consumption. Spend an hour perusing the various reports of the Intergovernmental Panel on Climate Change (IPCC), a remarkable consortium of thousands of the world’s leading experts in all of the relevant scientific disciplines, and the scope and severity of the problem will be abundantly clear. It’s even more troubling when one considers that the IPCC is an international group that operates by consensus, and still manages to frame warnings that will turn your hair white.

So what’s the dilemma for environmentalists? Why don’t they simply recite the facts, reminding Americans of the great damage caused by unregulated pollution and the important benefits of cleaning it up? It’s a strategy that has worked on a number of environmental issues in the past, even in the face of brutally misleading industry campaigns along the lines of the one we’re now witnessing. Why, when even John McCain ostensibly agrees with them on this issue, have so many decided they need to convert climate change into an economic development issue?

Well, even without the effective industry campaign and the expected outspending of environmental organizations by fossil fuel producers, a dismally bad economy is a very tough time to bring up legislation that admittedly would cost significant money sooner than it will deliver its far more valuable benefits. The worst damage will be in the developing world, and despite dire predictions of sea levels overwhelming the Florida coastline and the edges of Manhattan, weak-kneed legislators hide behind the demand that China and India go first.

But environmentalists are making matters tougher on themselves by confusing the public about what is truly at stake. Green jobs are a good idea, but not the main reason to control carbon emissions. And when folks cross the line into advocating the interests of specific industries that could reap a windfall from the legislation, they hopelessly confuse their audience.

I have great respect for the work of the Center for American Progress (CAP), and its founder and leader, John Podesta, former Clinton chief of staff and Obama transition head. Indeed, the Center for Progressive Reform has worked with CAP on a number of occasions in the past, and looks forward to future collaborations. But Podesta recently joined with former Colorado Senator Tim Wirth, also a progressive with a strong track record, to produce a report on energy sources that has some language that endorses a rollback of environmental protection beyond the reasonable expectations of the energy industry.

The report was jointly published by the Center and the Energy Future Coalition, a “broad-based non-partisan alliance that seeks to bridge the differences among business, labor, and environmental groups and identify energy policy options with broad political support.” Its advisory council includes the director of corporate affairs for Shell Oil Co., and its steering committee includes Frances Beinecke, the president of the Natural Resources Defense Council, a preeminent national environmental group. The report‘s main purpose is to sing an anthem to natural gas as the “bridge fuel for the 21st century.” It proposes to use money raised by selling licenses to release carbon to compensate the owners of old, dirty coal-fired power plants that would be closed down, analogizing the program to the popular “cash for clunkers” automobile subsidy program.

Now, nothing is wrong with politics making strange bedfellows, as all the tributes to Senator Ted Kennedy illustrated so well. But the partnership should be judged by the content of the proposals it yields, not simply by the novelty of the collaboration.

In this case, the collaboration has produced a proposal that would significantly delay meaningful controls on a method of extracting natural gas that is among the most environmentally destructive ways to produce electricity. They write (on pages 9-10 of the report):

One critical part of the process for producing shale gas in the United States, including shale gas, is called “fracking.” It involves pumping water and other materials under high pressure deep into rock formations that hold gas. The process fractures the rock and holds open the fissures to allow the gas to flow to the surface more efficiently. This process can employ toxic chemicals such as benzene and has the potential to pollute deep aquifers,
groundwater, and surface waters.
…
Adjacent communities are concerned about the public health impacts from the use and release of toxic substances, both naturally occurring and those used in the natural gas production process such as benzene, formaldehyde, or radioactive materials. The process also yields significant amounts of air pollution.
…
As a first step, the EPA must undertake a comprehensive scientific analysis of the air, land, water, and global warming impacts from natural gas production.
…
After the release of this analysis, states should have the opportunity to adopt the appropriate safeguards to protect their residents and environment. If a state declines to act after a reasonable amount of time, then the federal government should have the authority to establish safeguards for the state based on the state’s particular characteristics, including location of the gas, water system, and other relevant variables.

On its face, such a policy seems to make sense. But what it ignores is that EPA has a long history with fracking, having spent thousands of hours mastering the environmental downsides of natural gas production. That’s why the report could list the problems with the method with such certainty. “A comprehensive scientific analysis” is an industry euphemism for another long stall — not for months but for years — before regulators take effective action to curb the environmental damage caused by the mammoth expansion of natural gas production that the report advocates. Worse, the idea that after doing all this research, EPA should stand back and let the gas-producing states take the lead, stepping in only after much more delay, would amount to a rollback of environmental protection to the dark days of the 1950s and 1960s, before modern environmentalism and federal regulation began.

No wonder the Washington Post‘s David Fahrenthold thinks the environmental movement is so confused. Its leaders need to expand their vision beyond forming coalitions with industry and return to the kind of advocacy they do best: explaining to the American people what will happen to the environment if we do not act.

This post originally appeared in the Center for Progressive Reform blog.