OMB Targets Outmoded, Expensive Regulations

The Office of Management & Budget (OMB) recently issued Making Sense of Regulation, its 2001 report to Congress on the costs and benefits of regulations.

The report indicates the cost of health, safety, and environmental regulation ranges from $150-$230 billion/yr. These regulations affect the converting industry as well as many of its customers.

The report presents several proposals to improve the rulemaking process, along with a priority list of “outdated or outmoded” regulations targeted for updating or rescinding that are of interest to converters. Relying on the regulatory principles of Executive Order 12866, Regulatory Planning and Review (an Executive Order issued by the Clinton Administration), the Bush Administration is taking steps to create “a regulatory system that makes sense.”

The guidelines establish a uniform standard of data quality, replacing the current process under which each office determines its individual information needs for conducting analyses.

As part of this process, OMB's Office of Information and Regulatory Affairs (OIRA) is getting involved much earlier in rulemakings to ensure greater objectivity by Federal agency staff.

Under John Graham, OIRA has issued 14 “return letters” to several agencies since July 2001, including the Environmental Protection Agency (EPA). A mechanism for denying approval to proposed or final rules, the return letters are issued by OIRA “for the agencies to take seriously the requirement for quality regulatory analysis.” OIRA also has issued letters “prompting” regulatory action as a way of initiating discussion and review of relevant rules. And more changes are on the way.

In developing its 2001 report, OIRA solicited public nominations of specific regulations that should be considered for reform. Of the 71 suggestions received, 21 have been targeted for high-priority review.

Eight of the high-priority rules are from EPA, including: the Mixture and Derived-From Rule governing hazardous waste disposal; cost-benefit analysis for drinking water regulations; the new source review rule governing air emissions controls; notice of substantial risk under toxics law; and the arsenic in drinking water regulation.

OIRA also will take a closer look at agency cost-benefit analyses and their underlying data. It recently released data quality guidelines that require every agency to implement, by April 1, a draft strategy for verifying the quality of information used in risk assessments and cost-benefit analyses.

The guidelines establish a uniform standard of data quality, replacing the current process under which each office determines its individual information needs for conducting analyses. The guidelines should provide a strong mechanism for challenging inadequate regulatory analysis.

Likewise, OIRA proposes to grant extra deference to agency rules that have undergone formal, independent, external peer reviews to promote their use in economically significant rulemakings ($100 million or greater cost impact).

The ascendance of OIRA ensures environmental decisionmaking in the Bush administration will promote a process that should result in greater agency attention to small business effects, costs, and basic administrative analytical review procedures.

A separate report by the General Accounting Office assessing the impact of provisions of the Small Business Regulatory Enforcement Fairness Act (SBREFA) also is relevant in this regard. That report concluded that agencies, including EPA and the Food and Drug Administration, are not uniformly issuing compliance guides describing requirements for small entities.

For converting industry members and their customers, these initiatives should promote a regulatory system in which rules adopted are both cost-effective and science-based, revised to make them less costly or more effective, and rescinded when they are outmoded.

Sheila A. Millar, a partner with Keller and Heckman LLP, counsels both corporate and association clients. Contact her at 202/434-4143; This email address is being protected from spambots. You need JavaScript enabled to view it.;

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