From: Roll Call

More Resources for Regulatory Review Would Benefit Consumers

By Jerry Ellig and Rosemarie Fike

Regulatory advocates charge that 120 regulations are “stalled” at the Office of Information and Regulatory Affairs, the office that reviews executive branch regulations before they can be proposed or finalized. OIRA was singled out for criticism at a Senate Judiciary Committee hearing, “The Human Cost of Regulatory Paralysis,” held just before the August recess. On the other side of the Capitol, OIRA Administrator Howard Shelanski told the House Small Business Committee that this year’s sequester and furloughs have limited OIRA’s ability to conduct retrospective reviews of regulations.

Yet neither the administration nor its critics acknowledge that OIRA has been suffering from severe personnel constraints for decades. OIRA’s staff is currently outnumbered 5,000 to 1 by staff of federal regulatory agencies. Expanding OIRA would likely pay big dividends by increasing the odds that regulations solve real problems while minimizing the burden on people’s lives, liberty and prosperity.

A thorough regulatory impact analysis should identify the widespread problem regulation might solve, consider a variety of alternative solutions, and then assess the benefits and costs of each alternative. Without this information, regulatory decision-makers are flying blind.

Research suggests that OIRA reviews help improve the quality of agencies’ analysis. In a working paper recently published by the Mercatus Center at George Mason University, we find that longer OIRA review times correlate with higher-quality regulatory impact analysis. We also find that agencies do a better job of explaining how they use their analysis to make decisions during periods when the OIRA administrator is a presidential appointee, rather than a temporary acting administrator. This suggests that when OIRA has more clout, agencies are more accountable.

This is not the only research to document the potential link between OIRA review and the quality of agency regulatory impact analysis. In a forthcoming article in Administration & Society, Stuart Shapiro of Rutgers University and John Morrall of the Mercatus Center find that regulations that undergo longer OIRA review have more thorough analysis. They estimate that expanding OIRA’s staff would be the most cost-effective way to facilitate more careful regulatory review.

OIRA is one of the federal agencies that has shrunk substantially since its inception, with its staff falling from 90 to 45 since its creation in 1981.

In comparison, federal regulatory agencies added about 75,000 employees from 1980 to 2012, according to the Regulators’ Budget, an annual publication of the Regulatory Studies Center at George Washington University and the Weidenbaum Center at Washington University in St. Louis. That’s an increase of 51 percent.

There’s no clearer David vs. Goliath matchup in the nation’s capital. Ironically, regulatory advocates portray the agencies as David and OIRA as Goliath. At the Senate Judiciary Committee hearing, Rena Steinzor, president of the Center for Progressive Reform, charged that regulatory agencies are “chronically underfunded,” whereas OIRA is “the most troubling illustration of political interference” with regulations.

Some advisers to the administration recognized OIRA’s staffing handicap long before the current argument over the sequester and furloughs. In 2011, President Barack Obama’s jobs council noted that although OIRA’s role is “widely accepted and valued,” the office shrunk by half. The council recommends that OIRA’s staff “be increased to a level that will permit it conduct meaningful review of both executive branch and independent agency regulations.”

Small improvements in the benefits or costs of regulations can save the public billions of dollars. Given that reality, even doubling OIRA’s $8 million budget sounds like a bargain.

Jerry Ellig is a senior research fellow with the Mercatus Center at George Mason University. Rosemarie Fike is a doctoral candidate in economics at Florida State University. They are co-authors of a new working paper released by the Mercatus Center, “Regulatory Process, Regulatory Reform, and the Quality of Regulatory Impact Analysis.”