Shaping Regulation

THE OBAMA ADMINISTRATION is under enormous pressure from many sides as it formulates new federal strategies on issues that just about every citizen cares about, such as health care and economic recovery. But in addition to these widely publicized matters, another federal policy is under development that will influence both the number of regulations the government creates and how stringent they are.

Specifically, President Barack Obama is planning to replace a 16-year-old executive order specifying what agencies should consider when setting federal regulations. When he does so, the fingerprint of his directive will be on virtually every new federal regulation, from pollution standards to rules for financial institutions, for years to come.

As they issue regulations, federal agencies including the Food & Drug Administration and the Environmental Protection Agency currently must adhere to a directive that President Bill Clinton issued in 1993. It includes requirements for weighing the costs versus the benefits of a regulation. The White House Office of Management & Budget (OMB) enforces the directive by reviewing regulations before agencies issue them.

President George W. Bush maintained the Clinton executive order. Bush built on it two years ago with another directive that added layers of bureaucracy to the federal process for regulating everything from pharmaceuticals to pollution to financial institutions. Many business groups praised Bush's move, saying it would direct regulatory efforts to where they were most warranted. But many Democrats in Congress said Bush's order stifled regulators, amounting to a barrier to new environmental, safety, and health rules. They also worried that the added requirements boosted the influence of political appointees over federal scientists. And they said the directive weakened Congress' power to direct federal agencies to issue regulations.

In his first days in office, Obama revoked Bush's controversial executive order (C&EN, Feb. 9, page 24). Agencies went back to relying solely on the Clinton directive.

But Obama isn't satisfied with that move. He directed OMB to analyze the 1993 Clinton order, saying, "A great deal has been learned since that time. Far more is now known about regulation—not only about when it is justified but also about what works and what does not."

Obama plans to issue his own executive order on federal regulation, one likely to replace Clinton's. In his first weeks in office, he asked OMB for suggestions, which are due this month, on what the new directive should include. OMB asked for comments from the public and has received more than 180 detailed responses from industry, unions, academics, public interest groups, and members of Congress. Among those commenting were the chemical industry trade group American Chemistry Council (ACC) and environmental activists.

INDUSTRY GROUPS, including ACC, say federal agencies need to rely more on cost-benefit analysis as they regulate. Other commenters argue that this type of analysis is unable to fully estimate the benefits of safety, health, and environmental regulations—and thus should have less influence as agencies make regulatory choices. Meanwhile, commenters from all sides call for agencies to make public the data and assumptions they use in cost-benefit and other analyses used to guide rule-making.

Many members of Congress are tracking the development of Obama's planned directive. On April 30, the House of Representatives Science & Technology Subcommittee on Investigations & Oversight held a hearing to probe the role of science in federal regulatory policy.

OMB should ensure that agencies follow accepted scientific standards, Wesley P. Warren, director of programs at the environmental action group Natural Resources Defense Council, told the panel. But OMB should not substitute its scientific judgment for that of experts at specific agencies, said Warren, who was OMB associate director for natural resources, energy, and science during the Clinton Administration.

Cary Coglianese, director of the Penn Program on Regulation at the University of Pennsylvania, argued that OMB should inquire about agencies' use of scientific data as a basis for regulation. But Rena Steinzor, a professor at the University of Maryland School of Law, said the process of White House officials questioning agency scientists has political overtones. The result, she argued, is that safety or health concerns based on scientific data could get pushed aside and a regulation refocused to take into account mainly economic matters.

How Obama chooses to incorporate science into his regulatory directive will have long-standing impacts, said Rep. Brad Miller (D-N.C.), chairman of the subcommittee. The outcome, Miller said, "could be the difference between a government that follows the law—acting effectively and efficiently to protect the public's health and safety—and one that cripples the ability of its own executive agencies to carry out the laws passed by Congress."