Inside Government

The Office of Information and Regulatory Affairs (OIRA), a part of the Office of Management and Budget (OMB), has become a well-established, often praised, and occasionally controversial institution within the federal government. OIRA was initially created in 1980 by the Paperwork Reduction Act, with the particular responsibility of approving (or disapproving) information collection requests from federal agencies. In one of his early actions, taken less than a month after assuming office, President Ronald Reagan gave OMB an additional responsibility, which is to review and approve (or decline to approve) federal rules from executive agencies, after careful consideration of costs and benefits.

Within OMB, that responsibility is exercised by OIRA. A primary goal of the OIRA process is to improve regulations by ensuring careful consideration of their likely effects before they are issued. The human consequences of federal rules are a central focus of OIRA review.

But what is the OIRA process actually like? How does that important part of government actually work? What is the purpose of the process? Even among close observers—in the media, in the business and public interest communities, and among academics, including professors of economics, political science, and law—the role of OIRA remains poorly understood. The misunderstandings are important, because they reflect a failure to appreciate the operations not only of the Executive Office of the President, but of the federal government as a whole.

My primary goal in this chapter is to dispel current misunderstandings. One of my central themes is that OIRA helps to collect widely dispersed information—information that is held throughout the executive branch and by the public in general. OIRA is largely in the business of helping to identify and aggregate views and perspectives of a wide range of sources both inside and outside the federal government. We shall see that while the President is ultimately in charge, the White House itself is a "they," not an "it." Outside of the White House, numerous agencies are also involved, and they may well be the driving forces in the process that is frequently misdescribed as "OIRA review." It would not be excessive to describe OIRA as, in large part, an information aggregator.

For example, the Department of Agriculture knows a great deal about how rules affect farmers, and the Department of Transportation knows a great deal about how rules affect the transportation sector, and the Department of Energy knows a great deal about implications for the energy sector. The OIRA process enables their perspectives to be brought to bear on rules issued by other agencies. Part of OIRA's defining mission is to ensure that rulemaking agencies are able to receive the specialized information held by diverse people (usually career officials) within the executive branch.

Another defining mission is to promote a well-functioning process of public comment, including state and local governments, businesses large and small, and public interest groups. OIRA and agencies work together to ensure that when rules are proposed, important issues and alternatives are clearly and explicitly identified for public comment. OIRA and agencies also work closely together to ensure that public comments are adequately addressed in final rules, often by modifying relevant provisions in proposed rules. Indeed, a central function of OIRA is to operate as a guardian of a well-functioning administrative process, to ensure not only respect for law but also compliance with procedural ideals, involving notice and an opportunity to be heard, that may not always be strictly compulsory but that might be loosely organized under the rubric of "regulatory due process." Indeed, OIRA helps to promote a system of deliberative democracy, which is a crucial safeguard against error.

In explaining these points, I emphasize four propositions that are not widely appreciated and that are central to an understanding of OIRA's role. These propositions will arise at various points in the discussion, and it will be useful to identify them at the outset.

1. OIRA helps to oversee a genuinely interagency process, involving many specialists throughout the federal government. OIRA's goal is often to identify and convey interagency views and to seek a reasonable consensus, not to press its own positions. While OIRA's own views sometimes matter, OIRA frequently operates as a conveyer and a convener. The heads of the various departments and agencies are fully committed to the process, and they play a crucial part in it. They understand, and agree, that significant concerns should be heard and addressed, whether or not they are inclined to agree with them.

2. When a proposed or final rule is delayed, and when the OIRA review process proves time consuming, it is usually because significant interagency concerns have yet to be addressed. Frequently there will be general agreement that a rule is a good idea, and the delay will be a product, not of any sense that it should not go forward, but of a judgment that important aspects require continuing substantive discussion. The relevant concerns may be highly technical; they may, for example, involve a complex question of law, or one or several provisions that are difficult to get right. One goal is to ensure that if a rule is formally proposed to the public, or finalized, it does not contain a serious problem or mistake. A final rule containing a problem or mistake creates obvious difficulties, perhaps above all if it is a mistake of law. But (and this is a more subtle point) even a proposed rule can itself significantly alter people's behavior, and thus create difficulties as well, if people believe that it is likely to be finalized in the same form.

3. Costs and benefits are important, and OIRA (along with others in the Executive Office of the President, including the Council of Economic Advisers and the National Economic Council) does focus on them, but they are not usually the dominant issues in the OIRA process. Especially for economically significant rules, the analysis of costs and benefits receives careful attention. To the extent permitted by law, the benefits must justify the costs, and agencies must attempt to maximize net benefits. But most of OIRA's day-to-day work is usually spent, not on costs and benefits, but on working through interagency concerns, promoting the receipt of public comments (for proposed rules), ensuring discussion of alternatives, and promoting consideration of public comments (for...