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REMARKS TO THE BOARD OF TRUSTEES
THE KEYSTONE CENTER
Washington, DC

June 18, 2002

I would like to say a few words today about information and regulatory affairs in the Bush Administration. In order for my remarks to be placed in a meaningful context, please allow me to offer some impressions about the history of my Office in OMB, the Office of Information and Regulatory Affairs.

In preparing to assume this role, there were three aspects of OIRA's reputation that were of concern to me. First, there was the charge that OIRA is the place at OMB where nefarious deals are cut with lobbyists wearing alligator shoes and Rolex watches. The suspicion surrounding this charge gained further legitimacy due to the substantial degree of secrecy, mystery and rumor that has historically surrounded OIRA's daily activities. Second, there was a related, though not necessarily consistent, charge that the OIRA career staff represent a narrow, ideological perspective that is hostile to regulation of any sort. One version of this charge is that the economics profession, particularly Chicago-school economics, is the dominant training and faith of OIRA staff. Finally, there was the charge that OIRA is clumsy and ineffective, working only at the end of the decision-making process when it is very difficult to have a constructive impact on analysis and decision-making.

 

My concerns about these charges do not mean that I believe that they are factually accurate. Some of it is clearly erroneous, such as the perceptions of the training and policy orientation of the OIRA staff, which is actually quite diverse. Yet in this town it is often said that perception is reality.

 

During the last year, my first priority has been to establish a climate of openness at OIRA that, quite frankly, is not typical of the Executive Office of the President. My boss Mitch Daniels and I believe that in a Republican Administration, where charges of pro-business bias will always be present, it is particularly important for regulatory review to be an open process. We see openness not simply as a canon of good government but as a strategy to transform the public debate about regulation to one of substance (do the benefits of this rule justify its costs to the consumer?) rather than process (who met with which lobbyist before the decision was made?). In pursuit of more openness, we have done the following:

 

-We disclose on the web the specifics of our meetings with outside parties--the date, the topic of the meeting, the names of participants and their affiliations--and we have invited the affected agency to be present for these discussions;

 

-We have placed on the web our key written communications with agencies, which place our technical and policy rationales in the public domain for scrutiny;

 

-We update daily on the web which rules are under review, which have been cleared and which have been returned for further consideration;

 

-We have provided electronic access to OIRA speeches, testimony and press releases; and

 

-We have invested in the development of a new electronic rulemaking information system, to begin late next year, that may render obsolete much of what we now call our public docket room.

 

In taking these steps toward openness, we are under no illusion that openness breeds consensus. We are aware that the substance of many of our initiatives are quite controversial, and our openness has the effect of sharpening that controversy. For those of you who know me well, you know that I would not be comfortable if I was not stirring the pot, hopefully in a constructive way. Nor do we believe that the degree of openness we have established is adequate. More steps in this direction are in the works.

 

In addition to openness, we are committed to greater use of science in regulatory policy. On this front, the Bush Administration is dedicated to a smarter regulatory system: one that adopts new regulations when markets fail to serve the public interest; that modifies existing rules to make then more effective, less costly or less intrusive; and one that rescinds rules that are outmoded or should never have been adopted in the first place.

 

Our philosophy is not uniformly pro-regulation or anti-regulation; it respects regulation as an essential function of government, but sees OMB review as a form of consumer protection to protect people from poorly designed rules. We can do better, for example, than regulate the design of airbag systems for the benefit of 170-pound unbelted adult males while children, the elderly and the petite experience little or no benefit or even net risk. We can also reduce air pollution at utilities with a market-based system of tradable permits--a system that achieves more pollution control at less cost than our current litigation-prone system.

 

OMB's process of centralized oversight is a device to strengthen the hands of scientists, engineers and economists within the agencies--they now know that regulatory proposals cannot survive OMB review without careful supporting analysis. OMB oversight is also a device, as Stephen Breyer has argued, to combat the tunnel vision that plagues the thinking of single-mission regulators. In our good-faith efforts to enhance the safety of tires, for example, we should not miss opportunities to regulate in ways that will simultaneously enhance the overall safety of the vehicle.

 

We therefore share the view that the complexity of regulatory policy demands the skill, expertise and experience of a dedicated career staff. We have recently reversed a 20-year decline in the number of professional staff at OIRA. Our objective has been to add science and engineering expertise to a staff that was already strong in policy analysis, economics, statistics and information technology. We are hiring, for example, the first toxicologist and the first epidemiologist at OIRA. This change in staffing mix reflects what we see as a rise in the importance of science-based regulation in the last 20 years, particularly in the health, safety and environmental arena. We are aware that this new expertise needs to be deployed carefully and with respect for the vast amounts of expertise and experience at the agencies. Yet we do plan to use this expertise to ask tougher questions of agencies about their priorities, their science-review procedures, and their specific rulemaking proposals.

 

Our commitment to sound science and economics is reflected in our aggressive implementation of the new information quality law. Congress has required that agencies provide the public an opportunity to seek correction of poor quality information that is being disseminated by federal agencies. This new system will take effect on October 1 of this year pursuant to OMB guidelines that were adopted through an extensive process of public comment and revision. Although some observers fear that this system is aimed only at government-generated information, a close reading of the OMB guidelines reveals that we are also seeking an improvement in the quality of third-party information used by federal agencies.

 

On the quality of regulatory analysis, my Office and CEA are at the outset of a process to refine the guidelines for regulatory analysis that govern our review of agency rulemaking packages. We have already invited public comment on which issues merit reconsideration and we intend to subject our initial proposal to an extensive process of public comment, peer review and interagency review.

Finally, we are trying to transform OIRA from an end-of-the-pipeline organization to one that also engages in early promotion of good policies and prevention of bad ones. That means a role in priority-setting, though we believe it is important to play this role in a transparent manner. We have used a new concept called the prompt letter to suggest promising regulatory priorities to agencies, some that can save thousands of lives and protect the environment in a cost-effective manner. An example is the forthcoming final rule from FDA that will provide consumers information about the trans-fatty acid content of foods, an important risk factor in development of heart disease.

 

Our annual Report to Congress has also added a new feature: an opportunity for the public to nominate regulatory programs that need to be extended, modified or rescinded. We have recently received over 2000 public comments on our 2002 Report to Congress, and we plan to publish by late summer our preliminary evaluation of whether each specific recommendation should be an agency priority. Final decisions about priorities will remain with the agencies. We believe this is a much more cost-effect approach to regulatory reform than the suggestion that agencies should review all of their existing rules.

 

In summary, the Bush Administration is committed to a strong, centralized approach to regulatory policy. We seek to adopt smarter regulations, not necessarily more or fewer rules. The approach is becoming more open, it is becoming more analytical, and it is beginning to exert influence at earlier stages of the regulatory process. We certainly have a lot of work to do and thus I am very eager to have any suggestions that you might provide. Thank you very much for the opportunity to speak today and I certainly welcome any questions and comments.