Earlier this month, the White House released much-anticipated changes to federal regulatory practices, including a new Executive Order 14094 on “Modernize Regulatory Review,” draft revisions to Circular A-4 governing regulatory impact analysis, and draft guidance on meetings with entities outside of the executive branch. The Office of Information and Regulatory Affairs (OIRA) has the lead for implementing these changes, which comprise the most significant regulatory policy initiatives of the Biden administration. In this opening session, OIRA experts, including several former OIRA administrators will review these developments.
Nate Kaczmarek: Good morning and welcome to the Eleventh Annual Executive Branch Review Conference. My name is Nate Kaczmarek, and I am Vice President and Director of the Practice Groups for The Federalist Society. We are delighted that you could be here with us at the Mayflower. We’d also like to greet those of you who are watching us remotely via the livestream.
The other day I was watching the first opening session of the first Executive Branch Review Conference more than 10 years ago. That panel was titled “Is the Administrative State on the Rise?” In his initial remarks, Dean Reuter was encouraging the audience to find a handout with a true novelty—a QR code—from The Federalist Society. He waited for everyone to locate it in their seats and then directed them on the card -- to take the card home to their children so that they can show them how to read the QR code with their cell phone.
In the decade that has passed, some things have changed. We now charge to attend this event; we now livestream every panel; we are familiar with and use QR codes all the time, including to help us with important tasks like signing in and signing out for CLE at our conferences. There’s a QR code on the back of your program to do so.
But other things remain the same. Our senior vice president and general counsel, Dean Reuter, who provided excellent leadership for this conference since its inception, is still here today, and we look forward to his fireside chat with former Vice President Pence this afternoon. Our 15 practice group executive committees remain devoted to hosting excellent panel discussions and asking important questions about the executive, this year particularly focused on transparency and accountability. And brave souls like Clinton administration administrator of OIRA and NYU law professor, Sally Katzen, are still willing to come here to engage with us candidly in order to enrich our discourse. Thank you for joining us once again, Sally.
Thanks as well to my great Federalist Society colleagues who work very hard to put together today’s conference.
So let’s get things started by turning to our opening plenary session, which is co-sponsored with our Regulatory Transparency Project. This session is titled “Regulatory Review Reset.” We certainly have an all-star panel and are very pleased that Andrew Olmen is here to moderate our discussion.
Andrew is a partner with Mayer Brown, where his practice focuses on complex financial services, regulatory and public policy matters. He previously served as Deputy Assistant to the President for Economic Policy and Deputy Director of the National Economic Council. Prior to that, he served as Chief Counsel at the U.S. Senate Banking Committee -- I’m sorry, U.S. Senate Committee on Banking, Housing, and Urban Affairs. For full bios of our speakers today, you can visit our website, fedsoc.org.
One last note before I hand it over to Andrew, at the very end of this panel, we will be showing two quick upcoming Federalist Society film trailers, so please stay in your seats at the end of this session and we will show those trailers.
With that, thanks all very much for being here. Andrew, the floor is yours.
Andrew Olmem: Thank you for that introduction. Well, it’s my pleasure to moderate this panel on the Biden administration’s recent proposals to perform the regulatory review process of the Office of Information and Regulatory Affairs, also known as OIRA, at the Office of Management and Budget. This is an apt starting place for today’s conference on important developments in the executive branch. This is because OIRA, while it’s not well known outside of Washington and is little understood within, OIRA plays an essential and pivotal role in the development of federal regulation. If one wants to understand federal regulation, one has to understand OIRA.
And the timing of our panel couldn’t be better. Earlier this month, President Biden issued an executive order on modernizing the regulatory review process, and concurrently, OIRA issued several supporting reform proposals, which collectively, these proposals would substantially revise and modernize the way that OIRA conducts regulatory reviews and when it does and how agencies develop regulations, including how they use cost-benefit analysis.
So to discuss these proposals and their potential impacts on public policy, we are very fortunate today to have with us several of the nation’s leading experts on OIRA and federal regulation. So let me begin by introducing our panel.
Starting at my far right, Susan Dudley is the Director of the George Washington Center -- George Washington University Regulatory Study Center and a distinguished professor of practice in the Trachtenberg School of Public Policy and Administration. She served as the OIRA administrator in the Bush administration from 2007 to 2008. She had previously served as an economist at OIRA for five years. So she has lots of time in the building, as we would say.
Previously, Susan had also directed the Regulatory Studies Program at the Mercatus Center and taught courses on regulation at the George Mason University School of Law. And she also previously served as a staff economist at the EPA and the Commodity Futures Trading Commission. She was also the past-president of the Society for Cost Benefit Analysis, which is highly relevant for our discussion today.
She’s a graduate of the Sloan School of Management at MIT and the University of Massachusetts. She is also an author. She literally wrote the book on regulation called Regulation: A Primer.
Our next panelist is Sally Katzen, who is Professor of Practice and Distinguished Scholar in Residence at the New York University School of Law. She is also the Co-Director of the Legislative and Regulatory Process Clinic. Sally served in the Clinton administration as the administrator of OIRA from 1993 to 1998—also having some significant time in the building.
Also, very importantly, she served as the deputy assistant to the president for economic policy and the deputy director of the NEC, which maybe we should have another conversation about. As much as being the head of OIRA must’ve been great, I assume NEC deputy was equally, if not a better, job. She was also deputy director at OMB.
Before joining the Clinton administration, Sally was a partner at the law firm of Wilmer, Cutler & Pickering. And earlier in her career, she served in the Carter administration as the general counsel of the Council on Wage and Price Stability in the Executive Office of the President. Given what’s going on in inflation, maybe we have to come back to that experience later in our discussion. She’s a graduate of Smith College in the University of Michigan Law School. She clerked for Judge J. Skelly Wright on the U.S. D.C. Circuit.
Our final panelist is Anthony Campau. Anthony is a Principal at Clark Hill, where he focuses on complex regulatory privacy data and compliance and corporate governance issues. Anthony previously served as the chief of staff and counselor at OIRA from 2017 and 2019. In that role, I can personally attest Anthony was the person who made the office run and function, which I think we’ll hear more about.
Anthony also was previously an in-house counsel and assistant secretary of the board for a large university and also served as a regulatory fellow at the Heritage Foundation. He previously clerked for the Honorable Neomi Rao on the D.C. Circuit. He is also a graduate of the University -- Georgetown University Law Center and Southeastern University.
So with those introductions behind us, I think we want to start out with just a little 101 on OIRA for those of you who are not familiar to build a base of common knowledge. So, Susan, why don’t I start with you? Just walk us through. What is OIRA? What’s this weird acronym we have here? And what does it do, and what’s its function in the federal government?
Susan Dudley: Thanks, Andrew. How many people in the room have heard of OIRA? Excellent. I’ve never seen so many hands raised for that question. So maybe you don’t need this introduction. But OIRA is a small agency in -- within the Office of Management and Budget in the Executive Office of the president. It was technically created by the Paperwork Reduction Act, which Jimmy Carter signed in 1980.
All right. People behind me, I’m going to have to talk in the mic, so I’m not looking at you.
Sally Katzen: Yeah. Why don’t you move over, seriously?
Susan Dudley: Yeah.
Sally Katzen: And you guys move over. We won’t call on anybody.
Susan Dudley: Well, I might. When Reagan was elected in 1981, he gave this new office responsibility for reviewing all the regulations of the executive branch. So under Executive Order 12291, Sally and I were comparing notes at how many of these old executive orders we can just rattle off.
When President Clinton was elected, there were a lot of people who hoped that he would abandon this office and this interagency review process. But with Sally at the helm of OIRA, he did not. Instead, he issued Executive Order 12866, which is still in effect today. So think about that—an executive order that can be rescinded with the stroke of a pen has survived for almost 30 years. We’ll celebrate its 30th birthday in August.
So OIRA is a small staff. And Andrew pronounced OIRA right. That’s important to know how to pronounce it. And also, the staff of about 50 are “OIRAranians.”
Susan Dudley: And Sally and I are still OIRAranians. You never lose that—headed by a PAS administrator. So quickly, what it does is it wears -- the OIRA staff wears four hats: one is what President Obama called a “dispassionate and analytical second opinion on agencies’ actions.” So that’s looking at the regulatory impact analysis, focusing on economic efficiency, but also bringing in scientific, legal, engineering, other arguments—statistics. The chief statistician of the United States has a branch chief in OIRA.
The second hat is interagency coordination. So often, OIRA review of a regulation and sharing it with other relevant agencies may be the only time that -- it may be the first time that agencies have seen things that are relevant to them that others are doing. I know Cass Sunstein empathized that after he left as OIRA administrator.
The third is that they ensure that the president’s policies are respected and reflected in their regulations. And that’s an important component that I’m sure our former NEC leads will agree with that OIRA is a career staff within the EOP, which is largely non-career—largely political. And they bring that institutional knowledge to it. And so it helps a president understand what agencies are doing and are relevant. I mean, I think about Elena Kagan’s article, Presidential Administration, and the important role that OIRA plays in that.
And then finally, we might touch on this today is meeting with the public. So when a regulation is under review, OIRA will accept requests for meetings with the public. So with that, Andrew, maybe a too long-winded explanation given the number of hands.
Andrew Olmem: That was perfect. So why don’t I turn it over to Anthony then to give us a little bit more detail about how that mission of OIRA is actually undertaken. As chief of staff, you’re the point person on making sure the organization works. So walk us through exactly -- what does that mean on a day-to-day basis.
Anthony Philip Campau: Great, thank you very much, Andrew. So one of the things that we really try to emphasize, I guess, as a sort of preliminary step was the unified agenda. We really tried to breathe life back into that document and process. So the agenda is this mechanism by which the executive branch tells the public everything that it’s working on, everything that’s in the pipeline.
So a preliminary thing we did was to try to get everybody aligned across the EOP and across the executive branch on what exactly is the president’s agenda, and let’s make sure that we’re reflecting that in this public document—not just at a high level of policy, but at a very granular level of implementation: what are the exact regulatory instruments that are going to be used to implement and achieve that agenda and have them in that document.
And then the process starts generally at each review. So OIRA reviews roles, as Susan said, and that starts with a significance determination process. A desk officer in the course of regular conversation with agency counterpart says, “This rule, we think, is economically significant or policy significant, legally significant,” something else, brings it in for review, and circulates it around the Executive Office of the President and to interagency stakeholders that have an equity in that process.
So perhaps it’s an EPA rule, and they want to make sure that the Interior Department or FERC or some other sibling agency has an opportunity to see it, contemplate it, think about the interaction of the various legal and regulatory jurisdictions and make sure it all works together rationally.
And so it runs that process. And that can be as simple as an email exchange on the policy, or it can lead to 20 rounds of policy conversations around big tables with lots of people talking to each other nicely or not so nicely, discussing, debating the substance of the policy, discussing the analysis, discussing the legal rationale, and really benefiting from the various strengths of the executive branch.
So perhaps you have justice department lawyers there who’ve litigated the -- basically, the five different permutations of this policy in the past that can tell you what the status is of it in the courts and that sort of thing—bring all those various perspectives to bear. And now those can sort of escalate all the way up to the top as necessary. That’s at the review process.
But there are also -- Andrew and Sally and lots of others sort of ran policy processes within the EOP and within the executive branch. And OIRA’s staff, often we had OIRA staff attend a lot of those to be a part of the conversation before even pen maybe gets to paper on the drafting process to say, “No, no. You’re thinking about this completely wrong. There’s a different area where you should be -- a different regulatory docket that maybe addresses this more rationally”—something like that.
So participating in kind of the ordinary policy development processes and then, on the back end, once the policies are developed, to make sure everything works consistent with the architecture that we’re going to talk about a little bit more.
Andrew Olmem: That’s good. And I’ll just say, as somebody who engaged a fair amount with OIRA during my time in the Whitehouse, I always found the staff incredibly professional and very constructive and helped give the White House a more orderly process for following all of the regulations that the entire federal government does.
I think that’s one thing that, when you get to the White House, you realize that how many different agencies and departments are issuing regulations. And OIRA really does provide a way to organize and to come up with a process to make sure that each are appropriately considered.
Now, with that background, let’s jump into what the Biden administration has proposed. And I’m going to ask you, Sally, can you just give us some background, I think, that’s essential for understanding what these reform proposals involve by talking about, first, Executive Order 12866—which is the kind of building block executive order that Susan mentioned—and how the Biden administration’s proposals would modify its requirements?
Sally Katzen: Thank you, and I’m delighted to be here. I’m always surprised when The Federalist Society wants to invite me. I wear a D jersey and have served in Democratic administrations and often perform the function of the skunk at the picnic at these discussions. Today, I think we’re all like-minded in respect of OIRA and trust in its principles. So I don’t think there’ll be quite as much differences of opinion. But we have them, and I’m sure we will share them.
Susan mentioned the Reagan executive order, 12911. And that was the first time that it was established that there would be a review—a centralized review by an office close to the president—and second, that there would be decisional criteria, that there would be an economic analysis. And it was incumbent upon the agency to say that the benefits were greater than the costs of any proposals that were to go forward.
And that was the essence of the Reagan—and then Reagan/Bush—order that was there for 12 years. It was wildly hated by the Democrats on the Hill for a number of reasons, including, one, they had delegated authority, in their infinite wisdom, to the agencies. And what was the White House doing screwing around in the merits of this?
Two, it was meant to be deregulatory, and there was an emphasis on costs rather than benefits. And this was seen to be deleterious to the objectives of many of those in Congress. And three, it was a big, black box. No one knew what was happening, who was meeting with whom, how long it would take, what was going on. It was the world’s greatest held secret.
And so, as Susan said, it was assumed that when President Clinton was elected, he would disband OIRA, and that would be -- rescind the executive order, and that would be the end of it—but it was not to be. We revised the executive order, and we gave birth to 12866. The numbers just trip lovingly off my tongue.
Sally Katzen: It did a number of things. It was more selective. The Reagan order had called for all regulations to be reviewed. The Clinton order called only for those that were significant—a term used by Anthony, a term used by Susan. And it was designed to be more transparent. There were rules made about who would be meeting with whom and who would be in attendance. It was more flexible.
I used to say that the cost benefit analysis was informative but not definitive and that we were interested in non-monetized—even non-quantifiable—benefits that are difficult to quantify or monetize. There were time limits imposed and other such things. And that was signed by President Clinton on September 30, 1993.
Every administration since has touched the document in different ways. George W. Bush, in the middle of the second term but right before Susan arrived, put out a series of amendments, which President Obama disapproved of and removed on day one. President Obama added a series of provisions whereby he reaffirmed 12866 but focused extensively on retrospective views of regulations so that agencies would try to figure out what they did right, what they did wrong—and perhaps get rid of a lot of them.
President Trump, who did not write off the books—either the Obama or the Clinton executive order—may or may not have followed them precisely. He used a different approach with his two-for-one regulatory budget and other executive orders, in which his approach was clearly deregulatory. Let’s get rid of -- there’s this picture of him with stacks of paper and red tape. And he was holding a giant scissors.
Susan Dudley: Golden scissors.
Sally Katzen: Golden scissors? Oh, thank you.
Sally Katzen: Golden scissors to cut the red tape, which -- and his executive orders were disapproved and eliminated on day one by Biden. So everybody has done a little bit, some of which has been maintained, others of which has not.
This one by President Biden puts most of its emphasis on bringing in marginalized communities—something that he had spoken about during the campaign and was a day one memorandum to modernize the regulatory process. He was worried about underserved communities who had not participated in the regulatory process.
Now, the actual executive order that he released last week or 10 days ago -- time flies when you’re having fun. My last class, and now I have to grade exams. Oh, my God. There is some updating. For example, he changes the 100-million dollar threshold for an economically significant regulation to 200 million, which exactly tracks inflation—so not new.
He also suggests, or actually provides—and this was Susan’s pick up. I want to give her full credit for this—that every three years, this number would be increased by the inflation. And I think Susan is absolutely correct when she says, “That makes it seem so precise in a way that really doesn’t make a whole lot of sense.” Review is for things that are important, that are for things that are big, and nothing hovers right at the line.
I know that when we wrote 12866, we kept the 100 million that Reagan had used because we looked at the inventory of what was before us. And is this either a couple million dollars or almost a million dollars? I mean, nothing was hovering at the 100 million. But if you changed it by two percent, it’s going to bring in lots more. So I’m not sure what all that does for us on this one.
He also changed the process for the fourth category. There are three categories of significance which remain essentially unchanged, except for the update: economically significant budgetary impacts and inconsistency with other agency actions. He also changed the description of the fourth, which was novelty—as we had written in a novel.
And that’s kind of interesting. We had thought of it as a stop gap. What was novel? What was novel was, “Oh, that was the question I got all the time.” How are you defining novel? And I searched for a definition, and what I came up with was, “I don’t know, but your communications director will know. Walk down the hall and talk to your communications director. When we release this, is it going on the front page of the Washington Post or The New York Times, or is it going on the last page of Inside EPA?”
Sally Katzen: “If it’s the latter, we don’t want to see it. If it’s the former, we do want to see it.” And that was the description of novelty which I lived with and which I thought actually was pretty crisp but turned out to be more difficult to manage.
And while it was a real backstop for us—and we only picked up a few—it has turned out over the years to be an increasingly large percentage of what has been brought in as significant. And I think the agencies are saying, “Woah, this is undefined. Who is doing this? What’s happening?” And so you have that.
Well, what I really love—if I can take a few more minutes—what I really am particularly intrigued by is the bulk of this executive order is an attempt to deal with these meetings that are held by OIRA with people outside the administration. Now, when we started, these meetings were relatively infrequent. On the big ticket items, we’d get a lot of requests.
At that time, I went to every single meeting. As a result, a very senior person at the agency went to every single meeting so that they were hearing what I was hearing. And I didn’t like to hear about law, even though I’m a lawyer by training. I told them, “I want to talk about the policies involved here and the mechanics,” or I would say, “Humor me. There is a problem. Just accept that. What would you do?”
And I learned a lot, and I got a lot of information from these, as did the agency representative. And when we had a lot of requests, I put them together. All the oil companies are going to come in at one time or all the public interest groups are going to come in at one time, and we’re going to listen to you all.
And so there, A, weren’t that many meetings, B, I attended them all, and, C, they were productive. Fast forward—I guess you say—fast forward 30 years, and now, I have been told it is legal malpractice if you do not request a meeting whether you have anything to say or not. You got to go in there. You got to plead your case.
Two, they do talk a lot about the law, and they talk about everything else in between. And because these meetings are held without any disclosure by the OIRAranian staff as to what the document says, there’s a weird thing going on where people are speculating all over the place about what’s really happening, and the OIRA staff is sitting there, “Hear no evil, hear no evil, talk no evil”—whatever the thing is.
But they’re stone silent. This is a colossal waste of time. It is a colossal waste of resources by a very small staff. And I have been pleading for the last 20 years to “get a grip” on this process and tighten it.
So here we see some tightening, but also some loosening. On the one hand—and this is the tightening part—the executive order says that OIRA shall come up with a scheme in which to discourage the frequent visitors who take advantage of every opportunity to argue every single thing, and that’s for OIRA to try to figure out.
I think they should be even more aggressive on that front. They say twice in the document that they’re going to take all meetings. Why? That’s absurd. The second piece is that the executive order calls for enticing, welcoming, accepting marginalized communities to participate. Now, this has raised some issues in the administrative law world.
The thought of comments—a notice comment—the thought of comments is to do analysis is to either critique the agency’s analysis or provide your own analysis. It’s substantive. It’s to educate the agency, or it’s to shed new light or provide new ideas. These “marginalized communities” do not have the resources—easy for me to say—do not have the resources to develop these kinds of inputs. And we know that rulemaking is not a plebiscite. So it’s not appropriate for them to come to the table and say, “I vote against this.”
On the other hand, I fervently believe that they have something to contribute. They can say, as no one else can, “You’re doing this to help me. I’m the regulatory beneficiary, right? This ain’t going to do it. This doesn’t meet what I need, or this is off kilt from where I am.” That’s important to hear because so many times, we assume, A) full compliance, and, B) accomplishment of the objectives. That may not matter, or you may not get the full compliance.
And to hear people say, “Not going to work in my community” or, “That’s not my experience; that’s not my problem. Here’s where I’m coming from,” I think is incredibly important. And so that piece of this executive order, I think is tremendously important. It’s consistent with President Biden’s attempt to take a government-wide look at embracing all of our citizens and bringing everyone to the table. And I’m sorry I took so much time.
Andrew Olmem: No, that’s perfect. So I want to move to Susan now to follow up on the other aspect of the Biden EO, which is the updating on Circular A-4.
Sally Katzen: Oh, yes.
Andrew Olmem: Well, I’m going to have Susan address that. But this sounds incredibly bureaucratic and technical—the ’ol Circular A-4. What’s going on here? But Susan, I think this is a really important -- an equally important part of what the EO is doing.
Susan Dudley: But you should care.
Andrew Olmem: So can you walk us through? What is Circular A-4? What does it do now, and what are the proposed changes to it?
Susan Dudley: Yeah. And I know you meant to talk about that because there were three changes to -- the executive order did three main things.
Sally Katzen: I just got caught up.
Susan Dudley: Yes. And let me just add one more thing on the definition of “significance,” which means which rules come into OIRA on that fourth category that -- the novel category. Not only was the definition changed, but the OIRA administrator needs to personally approve those before they are brought into review.
So Circular A-4, yes. Andrew is right. It may sound like you -- but you should be interested in this. So A-4 is regulatory impact analysis guidelines that were published after going through notice and comment and getting pure review in 2003. They had been built on economic analysis guidelines that came out in Sally’s -- during Sally’s time.
So given the amount—so we’ve got another 20 years—it may well be time to see what needs to be modernized and what needs to be updated. I haven’t digested it yet. It’s 91 pages compared to the 48 pages in the existing Circular A-4, plus a 34-page preamble. And if you’re interested in this, I strongly encourage you to read the preamble as well as the draft guidelines. The guidelines are open for public comment until June 6. And it is something that I think they are very open to, and that preamble tells you what topics especially they’re interested in.
So I would say just an overarching change is there’s less -- it seems less focused on efficiency than the previous order and does bring in things, like what Sally mentioned—having more consideration of distributional impacts. I keep looking down, but I don’t have any notes.
So to that point, for example, there is a discussion of distributional impacts. And previous orders also had that. 12866 talks about understanding who is bearing the cost, who is receiving the benefits. Reagan’s order did. I think Carter’s order before that also talked about that as part of the analysis. He required agencies to perform. But we really aren’t doing it very well. We still do these analyses and get an, on average, this -- these are the benefits, and these are the costs. So that’s an important aspect of the new order.
What concerns me about it is that instead of laying out clearly who is receiving benefits and who is receiving costs or how they differ across different communities of interest, there’s a discussion of putting weights on benefits. And I think once you do that, you really do get the black box that Sally was talking about.
So the decisions, the policy decisions, get made in the analysis rather than by the policy officials when the analysis is laid out before them. And I think that’s the real value of regulatory impact analysis is to lay out for policy officials what we expect to be the likely advantages, disadvantages, benefits, and costs and then allow -- so that with that information, the policy official makes a decision.
As Sally said—and she always says, and I love this phrase—“RIA is meant to be informative, not dispositive.” So trying to put some of the policy judgments into the analysis itself, the resulting analysis, I think, will be less valuable. We also see some of that more normative prescriptive rather than descriptive in -- I think, in the discount rates. And this might be the most significant change.
The Circular A-4, the 2003, the existing circular, asked agencies to analyze their benefits and costs using both the three percent and a seven percent rate. And the current one says 1.7 percent for everything. What that does is that it makes the value of future benefits relative to upfront costs of achieving those benefits much higher. So, for example, appliance efficiency standards.
If the value of the energy savings that consumers get from buying a more efficient clothes washer is discounted at 1.7 percent, it’s going to look as if you’re saving consumers a lot of money. And low-income consumers who may not be able to borrow at 1.7 percent, they are really not saving that money, and that’s the kind of thing. So I think the discount rate is very important -- that waits for distribution as opposed to clearly laying out the distributional impacts.
And talking about the scope, the previous order A4 says, “Your scope is domestic benefits and costs. If you think that the global benefits or costs are particularly important, do that as a separate analysis.” This doesn’t really stray -- well, it does stray from that, but it still talks about the importance of understanding the benefits and costs domestically.
But it does open a much wider door for making decisions based on global impact, and that’s something that, I think, since there are a lot of lawyers in the room, that’s a question to be able to think through in terms of statutes. If the statutory authority addresses impacts on citizens of the United States and if the -- using domestic benefits, it doesn’t pass a cost/benefit test.
It costs U.S. citizens, as consumers or workers, a lot more than the benefits than they get. Is that consistent with your statute? So I’ll just lay my non-lawyer analysis out there like that. I’m sure there are other aspects of it that I’m forgetting, and I’m just going to stop because we’ll probably come up with it during our discussion.
Andrew Olmem: Perfect. So why don’t I turn to Anthony, who is a lawyer, and we’ll get the legal analysis. Also, Anthony, can you take -- building on what Susan said about what A-4 -- the reforms A-4 would do? What are the kind of policy implications, and how is it going to change on how federal regulations are developed?
Anthony Philip Campau: Right. So I guess there are going to be a lot of changes in the near and medium term that flow from this in the sort of day-to-day policy making process. But I guess where I’d like to start is in the longer -- over the longer term.
I think I am pretty concerned that this is going to -- look. We took a pass on these kinds of changes. We very much wanted to reform A-4 in a different direction, and we took a pass on that. We talked about it. We debated it. We went over it for years. And same with 12866. And Sally mentioned some of the changes that we made.
But you will note that our changes were all supplemental to 12866 and A-4. They did not open in any way. We changed not one word or comma or anything about 12866 or A-4. All of the requirements were still in place. We enforced them. Sally may not think we did a good enough job of enforcing them, but there’s a 12866 discussion in all of our rules.
And we went through the analysis carefully. Cost/benefit analysis was integral to the regulatory budget. The regulatory budget was built on top of the A-4 and 12866 framework. We did not throw anything away. And so I think I -- personally, I’m sort of a little more frustrated than my co-panelists here, I think, in seeing this because we took a lot of criticism for our regulatory budget. They said, “You’re dismantling the foundation of the administrative state.”
We did something separate. We layered on top of everything that was already there a new framework for thinking about how to make regulatory policy choices. And we did not discard anything underneath—despite the fact that this was the sort of running discussion, that we were throwing it all away, throwing it all in the garbage can. We did not do that.
Today, we have a rewrite of the foundational documents of the administrative state. 12866 is open. It’s on the table. You can go comment on it now. These changes are to the text of 12866 that Sally, as she mentioned, labored so intensely for so many years. Here I am protecting Sally’s baby.
But she worked very hard for 12866, and I have a lot of problems with it. My fellow travelers, we -- there are all kinds of things we wanted to do to that document, and we didn’t do it. So again, I’m sort of, I think, a little frustrated. And I think what’s going to happen is if the administration proceeds with these -- okay.
Susan put it very kindly, as she always does. She said that sort of seems less focused on efficiency. The phrase “economic efficiency” appears nowhere in the text of A-4, the proposed A-4. Nowhere. It appears one time in a footnote in reference to distributional effects and why we need to have more distributional effect analysis and provide an extra waiting for distributional analysis. I’m perfectly fine with analyzing distributional effects, as I have said for many years.
I think it’s an important part. It may not be the part that we emphasize as much, but it’s been there for a long time with respect to that long-standing bipartisan consensus and agree to let it remain and be part of the regular sort of flow of analysis. But that’s the only context in which economic efficiency is mentioned at all in the new A-4. I think that’s disastrous. It’s a move away from economic efficiency intentionally, directionally, and it’s significant.
And I think that this proposal will commence a process where every four years or eight years, we rewrite the foundational documents of the administrative state. And if you are a sort of small C conservative who thinks that one of the objectives of competent administration is stability over decades and being able to have not a lot of disruption, I think you should be very concerned about these changes—not to put too fine a point on it.
But I think that there will be, from sort of for the foreseeable future, a sort of full revisiting and rewriting of these documents. And I think that, again, we took a pass on that last time around. I don’t think that’s going to happen next time, and it’s going to be very interesting to see how it all unfolds. So we can get into the specifics of it more.
Andrew Olmem: So let me just do a follow up with you on this because I think this is really a key issue to discuss on this, which is, you make a very good point about the importance of stability and predictability in the regulatory process, particularly across administrations. And we’ve certainly had that here.
And the idea, though, is to make sure that the president has a reliable process to make sure that agencies are fully informed before they make decisions and, most important, that presidential policies are reflected in regulations. Why can’t one simply look at what’s happening here as President Biden determining that he wants to make a policy change on how regulations are promulgated throughout the federal government?
So in a way, what’s happening here is that this is just another stamp of presidential priorities is that his priorities on how cost/benefit analysis is conducted, how the regulatory review process is conducted is simply different. And here, we’re actually seeing presidential -- this is not a case of where agencies are off doing something contrary to what the president would want to do. This is a case of where the proposals are in line with what the president wants. So, in other words, which is -- do you value more, stability and the regulatory review process or presidential priorities?
Anthony Philip Campau: Yeah. Well, and to be clear, I mean, I played a big role in sort of developing and implementing the regulatory budget with the goal of sort of rolling back rules. So don’t be confused that I’m just focused on the long-term consistency of programs or something.
But I do think for the foundational documents, there’s something to be said for some more strong dose of stability across the decades. But you’re absolutely right. I mean, I think that if the administration sort of owned these and said, “Yes, we are intentionally putting normative value judgments into our analysis and thereby exerting presidential control and direction for the administrative state,” that would be -- I think that would be appropriate. That is what this is.
This is an effort to sort of put sort of policy judgments into the underlying analysis. I mean, Susan and Sally, correct me if I’m wrong. I’m sure you will. But my view of this has been that the focus, efficiency, and the cost/benefit analysis framework to date is not -- it is not intended to replace other policy considerations. It’s a supplement to them. So there are all sorts of factors that go into decision making on a policy.
And so those other types of considerations are on the table in every policy, interagency policy discussion. The economic analysis provides a rigorous analysis of the efficiency of competing alternative solutions so that you can make a rational choice. But you sort of lay that alongside of the policy judgment. This puts the policy -- all the policy right into the analysis. But yeah.
I mean, I think it’s one -- that is one way to sort of flex the president’s muscles on policy making, and they certainly have the right to do it. It’s their documents they’re in charge of now.
Andrew Olmem: Now, let me flip back to Sally, though.
Sally Katzen: May I?
Andrew Olmem: This is on the other side, which is -- Anthony’s point, I think, is definitely a strong one here, which is that consistency is helpful in how regulation is developed. Now, I want you to expand on that, which is -- I remember in law school reading some of the early documents from the Roosevelt and Wilson era when federal agencies were first being established, right?
And a lot of the theory there was that if we only had really smart career officials who could simply sit down and look at all of the facts and get politics out of policymaking, they would come up with really good -- make really good decisions, and that would be better for public policy.
But as you can hear from what Anthony is saying is that the -- even the process by which one gathers the data and kind of gets all the facts so to speak involves some political decisions, and hence kind of really calls into question whether or not agencies really can make decisions in a depoliticized environment. Doesn’t this just kind of support further kind of the idea that—again, this supports OIRA—that presidential control over OIRA is very important because, inherently, all public policy decisions are political?
Sally Katzen: I’m going to come at this in three different directions because I disagree with Anthony on virtually everything he said to the extent I understand it.
Andrew Olmem: Well, that’s good because I think you were earlier worried about a lack of disagreement here.
Sally Katzen: That’s true. That’s true.
Andrew Olmem: It’s not a good panel if we don’t have some disagreement.
Sally Katzen: Let me start by saying I think elections have consequences. And as a result, when a Biden is elected, it’s very different from when a Trump is elected, and it’s very different from when an Obama is elected. And you will expect to see differences in policies and in the implementation of those policies.
And I don’t think it was any secret that President Biden was concerned about bringing more Americans to the table—whether it was to vote, which is an issue, or to participate in their economic lives. So I think that’s part of it.
Going to your addition to the question about the original concept of a neutral bureaucratic -- and I do not say that with a sneer. I actually like bureaucrats. I think they’re dedicated, responsible, hardworking, and bureaucrat bashing is a disservice to this country big time. Having said that, the idea was to have people with technical, scientific, economic—even lawyering skills—apply neutral principles to a problem.
I think we continue to have that with the civil service, and I think we have that actually also at OIRA, where the staff is virtually all civil servants. And what they do is produce analysis for the policy decision makers. So what they do is, “Here are the facts.” Do you remember Sergeant Friday in Dragnet? “The facts, man. Just the facts.” There’s not enough people in the audience that are old enough to remember that.
Sally Katzen: But that’s what they do. “Here are the facts. Here’s the analysis. Here are the pros and cons.” And then let the policy people figure out what they want to do because, going back to the first principles, elections have consequences.
But now, I want to come to what Anthony was saying, and that is stability, consistency, yes. Foundational documents, yes. You did not touch 12866. They did but with a very light hand. I mean, there are three things in there. There is the updating of the definition of economic significance. And as Susan was saying, you need the administrator’s approval now for the fourth category. But that’s not the one that calls for the massive cost/benefit analysis. That’s the one that calls for a simplified version of that in the first instance.
Two, the meetings—meetings with outsiders. You know as well as I do that’s a tiny part. It’s a big time sync for staffers at OIRA to have to go to those meetings, and it’s of very little value. But that is a small piece of 12866, and it’s mostly saying to the agencies, “Think about ways of getting more involved, and the OIRA staff, think about ways of tightening it up.” There are no demands made in that section.
And the third is rethink A-4. Now, is A-4 a foundational document that has produced stability? To the extent that I can read A-4, without falling asleep, I think it’s the best answer for insomnia. I mean, it really is. Just pick it up. Keep it in your nightstand. If you ever can’t fall asleep, start reading it.
Susan Dudley: Don’t listen to her. It’s fascinating.
Sally Katzen: But as I read A-4, it’s, “You could this, or you can do this, or you could do this, or you can do this.” There are options put out. There are ways of doing different things, whether it’s cost/benefit analysis, cost efficiency studying, and then all these other names that I can never remember of sophisticated analyses that take place in there.
So it is a foundational document? No, it’s a, “Here’s various ways of doing -- of producing the data”—and I’m coming back to where I started—“of the analysis for the policy people to make a decision. And it’s not foundational. And I happen to think that the 241, even though you say it’s on top of 12866, the 241 really squelched decision making for new rules.
And that was what Trump had campaigned on. And as I say, elections have consequences. And I’m not saying you guys destroyed 12866. You never got to it—usually, most of the time.
Susan Dudley: I think Anthony has a quick response to that, and then I have something.
Andrew Olmem: So yeah. I was going to say, why don’t we have Anthony respond, and then I’m going to have Susan talk about some of the implications here.
Anthony Philip Campau: So on the executive order itself, I mean, it is no throw away clause. In Section 1(f)(4), the final clause says, “As specifically authorized in a timely manner by the administrative of OIRA in each case.”
This, to me, is just an affront to the professional staff of OIRA because it says, basically, that they cannot -- they are not capable of making the judgment about which rules can come in for this review—despite the fact they are the ones that managed the -- they managed the dockets in these areas over the course of generations.
This is part of their tremendous value add to the process is that they can -- they know where all the bodies are buried. They know all the things that I did to this rule, and they can say, “Hey, those crazy people, they were doing all these things. You need to pull this in and fix those.” And that is something that they can -- they know where that is and every rule. And by taking that -- I mean, how else should I read this clause?
It basically says that they cannot make these judgment calls on their own. I just think that’s --
Sally Katzen: On their own, but no one is stopping them from having the thoughtful conversations that I had with all of my staff people before we took matters up the chain.
Anthony Philip Campau: Yeah. No, that’s right. That’s right. I mean, it doesn’t take it away, but it’s certainly designed to limit the number of those. It seems to me to be designed to limit the number of those that are reviewed and takes away -- I mean, the idea is that the sort of experts should manage it.
The people who manage these dockets, they’re the experts, and they know which of those rules should fall into that category. So that, to me, is interesting. I mean, also, you mentioned that 30 years ago, you put the meeting provision in there for a particular reason, and that’s changed over time. I would say, actually, that 30 years on, the administrative state is much bigger. There’s a lot more power and authority and decision making and quasi law making within the executive branch.
I think it’s a sort of constitutionally dire situation. And with that general framework, I would say we want more participation in all of the executive branch processes, more comments, more engagement. And that is part of -- as you said, the effort to have more affirmative outreach, fine.
But I think that there should be -- we should -- part of -- when we were there, part of the objective was to have trying to inject more of the sort of APA norms and values into the process as much as we can to try to make slightly -- this whole project slightly more constitutional.
Sally Katzen: I think we should probably not slip into nondelegation doctrine and some of the other constitutional law issues, which I am a lawyer too. I’m happy to debate.
Andrew Olmem: Let me turn to Susan here. And so I think we have a little consensus that the president, at the end of the day, can determine how the OIRA process works. I think the question there then is, are the changes going to improve public policy, right? And that’s, at the core—the question here.
So let me ask you, Susan, is, where do you see -- if the Biden reforms are adopted, where do you see the biggest impacts on public policy? Are there particular agencies or policy areas where you think these changes will have their greatest impact?
Susan Dudley: Yeah. Let me step back from agencies first. Of the three main reforms that were in the executive order, which are the definition of significant rules for rules that get covered by OIRA interagency review, second is the public engagement—both by agencies and by OIRA—and then the third is A-4.
I think the definition of significance, it looks like a sleeper that could be important. I understand that the CEA, Council of Economic Advisors, has estimated that OIRA will review 20 percent fewer rules as a result of this. What I don’t know and haven’t gotten an answer to is whether that’s 20 percent fewer of these economically significant rules because of the 200 -- 100 to 200 million change or if it’s that other significant category.
I think the other significant category may be more -- a more important one, and we’re just going to have to wait and see. So I did some estimates and thought it could be as many as 60 to 80 percent of the regulations that OIRA reviews could be not deemed significant. That’s probably the higher end, but I think we just have to wait and we’ll have to see: does it really significantly change—I shouldn’t use significant twice—but does it change the number of significant rules? And that, I think, is important for various reasons, but I think we’ve kind of touched on it because we all agree that OIRA review brings value.
On the meetings, and I don’t want to spend a lot of time on the meetings because I really do agree that there are way too many, and they take time away from a very small staff’s ability to actually do the review and the interagency coordination.
But in a way, so the one big difference between Sally’s time and now is that those meetings are posted on the internet. And so that’s why Sally mentioned any lawyer worth their salt has to get in and get a meeting. And so you do see, as my experience when I was at OIRA -- when I was administrator was that there were too many meetings, and too many of them actually didn’t help. They weren’t valuable and constructive.
But I’m not sure. The genie may be out of the bottle. I’m not sure how best to try to bring those in and only hold the meetings, except the meetings that are going to be substantive, as Sally pointed out, and not the ones that just are going to take time.
On A-4, I’m concerned about the specifics. I don’t think it’s unreasonable, though, to open it up after 20 years. And one thing that I want to impress upon everyone is that it isn’t baked yet. What’s in that draft isn’t necessarily what will be in the final version that the executive order says should come out by April -- by next April within the calendar year.
So there are problematic parts. You need to bring economic literature, legal experience to that review process. And just to be clear—and I know since you’re mostly lawyers—the executive order itself, not open for comment. It’s done, so you can’t suggest changes to that. It is very possible that the next Republican president will rescind it on day one, as have -- presidents have rescinded previous orders -- previous amendments to the Clinton order.
But the two things that are open for comment are both circular A-4. So you have until June 6 to comment on that. And until the end of this week—or maybe even Thursday—to identify peer reviewers. So you can recommend who would be able to peer review that document. So they plan to -- and I think that’s very important.
And then the other thing that’s open for comment is on how OIRA holds those meetings. So they have guidelines, draft guidelines for how they will do that and try to achieve the two goals that Sally talked about. And so that’s another thing that especially if you’ve had those meetings and have ideas on how to improve, and I’m not sure I do. But I think those are things that they’re not baked yet.
Andrew Olmem: Sally, I want to ask you then, where do you see the biggest impacts on policy then? Are there particular agencies or policies that typically would be reviewed by OIRA that won’t be?
Sally Katzen: I don’t see the latter very much. I think if there’s something that’s important, it’s going to be seen by OIRA. And that is not going to be an issue. In terms of what areas, my sense is that this is across the board, that it is not for environment only or healthcare only or labor policy only or even primarily in those areas.
OIRA has always been quite expansive in its subject matter and its concerns. And I think this speaks to the process rather than the substance. So, of course, I smashed my --
Susan Dudley: Crystal ball.
Sally Katzen: -- crystal ball in 2016. I figure it’s not very valuable. And so I’m not sure I can see ahead to how this will play out. But I suspect that it will be relatively even handed. And you might find areas like -- I’m sorry -- like HUD or education that have not had the kind of microscopes necessarily drawn to them that may feel some of this where the actual regulatory beneficiaries—if I could call them that—are on the ground and want to speak to what’s being done for them rather than to them.
Susan Dudley: Andrew, could I jump in since I think I didn’t fully answer your question before?
Andrew Olmem: Sure.
Susan Dudley: Just quickly. You asked specific agencies, and you mentioned EPA or Environmental. I do think two things in the revised circular, which isn’t final yet, would alter EPA’s rules. One is the global benefits, and that seems to be specifically designed for climate change, climate emissions, the social cost to greenhouse gasses, and the other is the discount rate.
So in terms of the process changes, I think the fourth definition of significance may matter, but that remains to be seen. But in terms of the substantive, I think, first of all, a lot -- all of Circular A-4 -- and I remembered one more thing I wanted to mention, one change that I thought was important, and that is identifying the need for the regulation in the first place.
Both President Clinton’s order—Executive Order 12866 and Circular A-4—talk about a compelling public need, including material failures of private markets. This new A-4 or draft A-4 still does think about that, but there’s less appreciation, emphasis on how markets -- what competitive markets do for improving wellbeing and human flourishing and are much more comfortable with identifying other reasons where government can override individual’s decisions and make them better off.
Andrew Olmem: I want to pivot real quick and let Anthony talk just a little bit about the regulatory budget concept. He referred to it several times, and he’s written a really fantastic article on it because I think it is part of this discussion about alternatives on how to think about how regulation should be overseen. So Anthony, why don’t you walk us through? What’s a regulatory budget?
Anthony Philip Campau: Yeah. Thanks, Andrew. So Sally mentioned two for one. I guess one of the things that I tried to point out in this paper is that the regulatory budget that President Trump put in place, it attempts to look at the overall efficiency of rules by focusing on the costs side of the ledger and integrating into a budget the standards of cost/benefit analysis so that that is fully contemplated as well.
But it’s a way of making policy choices, of making regulatory choices. Part of what we did was to basically put that onus on the agencies to make those calls, so we did not direct from OIRA that you can’t do this, you can’t do that because you have an offset -- it was more of a ground-up exercise based on what was articulated. And Sally is ready to jump out of her chair.
Anthony Philip Campau: But the idea is to basically give us another framework for decision making that integrates with the existing framework.
Andrew Olmem: So you said how much total cost agencies can devote towards regulations can impose on the economy overall and broke it up?
Anthony Philip Campau: Yeah, that’s right. So in the first year, it was zero dollars in net new regulatory costs and then a number in the second year to be determined by the administrator of OIRA in collaboration with the agency and various stakeholders within the executive branch and then modify it on a rolling basis.
That was really a ground-up process. The agencies came in and said, “This is what we think our budget ought to be.” If you go to -- families have budgets. Businesses have budgets. Religious organizations, everybody has a budget. If a business says -- does say it is -- the CEO doesn’t say to sales team, “Go out and maximize my profits” without any sort of budget for maximizing it, which is, I would say, here, we maximize net benefits. But we need some sort of basic cost budget to get there. And so that was what we tried to do: put in place a cost framework.
I think that there will very likely be a return of a regulatory budget. I think it’ll be interesting to see where this lands, as Susan pointed out. This is a live, open discussion, and I think it’s really important for everyone to engage in that robustly. I think there’s a lot here. When I last checked the Federal Register page, there were something like 400 views total of the announced change—so still not a lot of eyes on the actual changes. And I think it’s really important for folks to get in there, read the proposed A-4.
Go back and read the original A-4. It’s great. And actually, a lot of it lives here. So to be fair, I’ve been pretty tough. This is a lot of it. Actually, what I would love to see is a sort of red line. I haven’t attempted to do that, but I know we are on regs all the time. I’d love to see a red line against A-4 because there is a lot of --
Andrew Olmem: I’ve done it. It’s pretty messy.
Anthony Philip Campau: Is it? Okay, yeah. Well, I’m sure that it could be provided in a cleaner fashion so that we could see the --
Susan Dudley: Yeah. Chris Walker on Yale Journal on Regulation, their blog has a red line.
Anthony Philip Campau: Do they? Okay, okay. Great. Yeah, I’m going to go and take a look at it. But a lot of it does carry forward.
Andrew Olmem: Well, I’m going to pivot to Sally again. So clearly, the Biden reforms are going to lead to less regulations going through OIRA. Now, let’s talk about what are the practical results in the White House for that? I want to kind of go back to your prior services as Deputy Director of the NEC. Does that effectively mean that the regulatory reviews are going to move more towards the policy consoles because, if it’s not going towards OIRA, somebody in the White House clearly is going to have to make sure that the regulation is consistent with presidential priorities.
And if they’re not going through OIRA, does that mean that what we’re really going to see in practice is a strengthening role for the policy counsels to work either on probably a more informal basis to review and engage with the agencies about rulemaking—so in a sense that all the reforms are doing are changing the distribution of the review process in the White House and moving it away from OIRA?
Sally Katzen: I hope not.
Andrew Olmem: But --
Sally Katzen: No, let me -- I’m sorry.
Andrew Olmem: But how would that not happen if you’re trying to have a White House --
Sally Katzen: Well, let’s start with the assumption. The premise is that there are going to be fewer regulations going through OIRA. I think Susan was very careful in saying she wasn’t sure how that was going to play out. I’m not sure how that is going to play out, and I don’t think anyone else can be sure.
And then is the question, of those that don’t go through, what are they? Are they fairly simple, straightforward, less controversial? I don’t think the White House should be seeing every single solitary clause, sentence, paragraph, that comes out of the agencies.
We’ve already moved in the last 50 years or 60 years that I’ve been in this town, we have moved from having departments and agencies that are expert—as you were quick to point out—being made into second-class citizens by a growing White House staff, growing powers in the counsels, growing concentration of things in the West Wing with people who do not have the knowledge, the expertise, or sometimes even—I’ll leave it there before I get in trouble—to make those kinds of decisions and to worry that an unknown quantity of efforts by agencies will suddenly be unleashed and that the White House will be embarrassed or terrified by something that is happening at the agencies is, I think, to blink reality.
Those people know what they’re doing. And they are led by political appointees, and those political appointees are responsible. And it takes only one mistake to capture the interest of the White House and to shut down that effort.
I mean, we talked earlier about the definition of novelty. No one knew what it meant, and I came up with this scheme of checking with the communications people. And it was about a month and a half or two months after President Clinton had signed the executive order. And I was sitting at breakfast, and I read about a department that had issued a notice of proposed rulemaking that I thought was, “Oh, my God.”
And I went into the office, and I said, “Have we seen this? No one told me about this.” “No, we had never gotten it.” I called the general counsel of this department. You know what? It never happened again, never. In the five years I was there, I was never surprised. All it takes is one instance of some stupidity or slip—however you want to define it or describe it—and that stops.
So I think fears of rampant policy decisions coming up all over that nobody can control is probably unfound, that I also think that -- and the reason I said, “No, I don’t want it to go to the policy council” is that OIRA is defined by its public meetings, its availability. That is not the case with the NEC and the DPC or the NSC, for example.
Andrew Olmem: Or the NEC.
Sally Katzen: And so I don’t want to move it across the street. When I was there, I honestly thought that if nothing ever crosses Pennsylvania Avenue, I’ve done my job. And the more that goes over to the policy councils or the West Wing, I’ve screwed up.
Andrew Olmem: Well, and I will interject to say, when I was at the NEC, anytime OIRA could do work that we didn’t have to, I was very happy because there’s plenty for the policy councils to do, so I pretty much agree with that sentiment.
Susan Dudley: Yeah. My concern is a slightly different scenario. Not that novel issues will get out without any oversight, but that the policy councils will find—who are already working closely with agencies—will bring regulations -- will review regulations but say, “Don’t worry, OIRA. You don’t need to see it.”
And that’s the scenario that Sally has, is that you have these politicians making some decisions. And I agree. Elections have consequences, but it is much less transparent. One of the real benefits of the OIRA review is it is a transparent process, and I think you lose of that if that’s what happens: if regulations that OIRA is told are not significant are actually managed elsewhere, that’s a concern.
Andrew Olmem: Yeah. The review process will happen someplace, whether it be formal and transparent, or will it be informal someplace. After all, at some point, the president has to weigh in on significant regulations, right?
With that, why don’t I pivot to -- another question here is the scope of OIRA here. And one thing that this didn’t do -- and it’s an important thing for -- to understand about OIRA is they -- oh, okay. Questions, Q&A. Actually, let me skip to Q&A because we only have five minutes left. Thank you. Right here. If you can just identify yourself, and just keep it to --
Susan Dudley: There’s mics -- there are mics here and here.
Andrew Olmem: Oh, mics? Good. If you can just keep it to a question, too.
Roman Buhler: Roman Buhler with the Madison Coalition. I don’t think I’ve seen four more qualified experts on the regulatory process. And my question is, as you probably know, there is out there a proposal called the Regulation Freedom Amendment to require the major -- the Constitution will require that major new federal regulations be approved by Congress.
What do you all think of the principle that, at the end of this OIRA process, major new federal regulations ought to be approved by Congress as opposed to simply being dictated by the bureaucracy?
Sally Katzen: Okay. Well, without any descriptive, I think it’s stupid. I think it’s insane, and I think the other words that come to mind should not be repeated, even if there are no children present.
Andrew Olmem: Can you be a little clearer, Sally?
Sally Katzen: You want me to hold back?
Susan Dudley: I should probably defer to the lawyers over there. But I don’t think it’s quite as stupid as Sally does. I think it could be a solution to the excessive delegation problem. How it would work out in practice, I think it’s challenging.
Andrew Olmem: Anthony, real quick?
Anthony Philip Campau: I would prefer more front-end fixes than back-end fixes. The Congressional Review Act is one back-end fix that’s already there. There are other ones that are contemplated, like the REINS Act and GOOD Act, and I think there’s a pretty broad view on the right end of the philosophical spectrum that that should -- those are all good and should happen and should move forward. So I expect that Republicans will push those, and that would be fine by me.
Andrew Olmem: Next question.
Devin Watkins: To me, there seems to be two things that are missing --
Andrew Olmem: Can you identify yourself, please?
Devin Watkins: My name is Devin Watkins from the Competitive Enterprise Institute. In my mind, there’s two things missing from the modern thought around regulations. First is that it sets up the cost and benefit, but we all know that there’s going to be tradeoffs that have to be made between certain costs and benefits or risks.
But it treats it as if it doesn’t matter who makes those tradeoffs: whether it’s a bureaucrat or an individual or Congress. It treats it as if liberty and freedom have no value whatsoever. And that, to me, seems to be a major problem.
The other thing it seems to be missing is error. Anytime you make a measurement of a value and try to say what the facts are, you’re never going to be a hundred percent correct or know all the facts. And yet, that error really isn’t quantified by this process at all. It’s done in science all the time to evaluate what your error is and what the likelihood of these being the actual facts are.
And yet that uncertainty is kind of waived away in the modern A-4. So I was wondering what the panelists’ thoughts on those two factors were.
Andrew Olmem: Those are great questions. Susan, do you want to --
Susan Dudley: Yeah. Thanks, Devin.
Andrew Olmem: How do you quantify freedom?
Susan Dudley: Yeah. So I think that’s a very important point, and that was one of the comments I made briefly that establishing a need for regulation requires respecting freedom to make individuals to make choices. And just starting with a benefit/cost analysis—that presupposes that we know what’s good for people better than they do—is a problem. And I think this new -- the draft A-4 takes us further down that path maybe than we already are.
On the error and uncertainty, it’s a huge problem. And one of the things is we do these ex-ante analyses and spend lots of agency resources and estimate benefits and costs down to the dollar. And then we don’t go back. First of all, we don’t put a range in and say, “Here are big assumptions. We’re supposed to, but here are the big assumptions that could alter our decision.” And we don’t go back and see whether we were right.
So that is something that Sally mentioned the Obama administration orders. They both put a real emphasis on retrospective evaluation. It wasn’t done. It hasn’t been done, and this new order seems to reduce the value of that. I mean, the closest they might have been Anthony’s -- the regulatory budget because that forced agencies to look at, “Gee, do I really need this existing regulation, or is it not working? I could get rid of that one and then do something that’s going to be more effective.”
Anthony Philip Campau: I would just note that there is discussion of uncertainty analysis in the new A-4, and it’s good to read it and comment on it because it gets into a little bit.
Susan Dudley: Yeah. This is kind of in the weeds, but it removes the assumption of risk neutrality, and I think that changes things when it comes to [inaudible 01:26:26].
Andrew Olmem: Let’s go to our last question here because we’re almost out of time.
Sally Katzen: Can I just say that the --
Andrew Olmem: Thirty seconds.
Sally Katzen: -- three seconds -- is that the attempt to include the marginalized community is an attempt to bring to the table an aspect of freedom and liberty to groups that have had things done to them without their consent, without their input. And I think if one is going to value liberty, one should value liberty for all.
Jerry Cox: My name is Jerry Cox. I’ve been dealing with federal bureaucrats for the last 35 years. And Professor Katzen, I do not love them. I think if you had spent more time doing what I’ve been doing and less time in the classroom, the main thing you would’ve learned would’ve been, “Talk to the hand.”
The administrative state, those folks up there in many of those bureaucratic positions, have their own agendas. It’s not necessarily affected by the election. I think the Trump administration barely made a dent in the administrative state. And if something that is going to have to happen, I hope it will happen. But that is just a comment rather than a question. But anybody certainly is welcome to respond to that. That’s just based on practical experience.
Sally Katzen: Well, I had 25 years in private practice before I went into the government. So I have not been in the classroom even half of my career. I have also spent time in several administrations. And so I have worked with bureaucrats in different capacities. I don’t think any organization is perfect. None is, including the private sector, where you can sit on the phone and wait for a human being to answer a question or whatever as well.
And they all have their own private agendas. This is not a pissing contest. This is an attempt to try to bring the best that we can. And we may have different views of the value of the civil servants. But I for one am more optimistic, apparently, than you are.
Andrew Olmem: I’m just going to give Anthony --
Jerry Cox: The people who are being --
Andrew Olmem: Excuse me. I’m just going to give Anthony the last word, and then we’re running out of time. Thank you.
Anthony Philip Campau: I would just say that I was privileged to work with professional staff across the government. And these interagency processes bring together all kinds of economists and scientists and subject matter experts from all different sibling agencies. And I was just bowled over by the professionalism and skill.
And we often did not agree on the outcomes, but I found often to have respectful engagement with the staff across the government to -- that things worked very well, and we were able to have very productive engagements.
Jerry Cox: I would just encourage everybody to think about the people who are being regulated.
Anthony Philip Campau: Yeah, absolutely.
Andrew Olmem: I want to thank our panel here and ask to give them a round of applause for just a fabulous discussion.