CPR Takes On Sunstein

In a post at CPRBlog, the Center for Progressive Reform, which I earlier mentioned as an organization on the left that had raised concerns about the idea of Cass Sunstein running the Office of Information of Regulatory Affairs (OIRA), responded to the President’s request for comments on proposed regulatory reform in the new Administration.  CPR has unveiled a stark proposal for dramatically altering the role of OIRA and the principles underlying much of the current federal regulatory program.  The full 19-page document (PDF) submitted to the Office of Management and Budget makes clear the dramatic scope of this proposal:

The institution of centralized regulatory review, conducted through the lens of cost-benefit analysis, has played a prominent role in contributing to the dysfunctional state of the regulatory system.  To correct this situation, and to rescue agencies from their dysfunctional state, nothing less than a fundamental redesign of the institution of regulatory review is required.  In particular, we recommend two major changes to Executive Order 12866.

First, the Office of Information of Regulatory Affairs (OIRA) must abandon its role of conducting centralized regulatory review.  . . . OIRA’s role should be fundamentally reoriented.  It should work with agencies to improve their ability to fulfill their regulatory missions, helping agencies to calculate and document their true budgetary needs, develop better and more proactive regulatory agendas, resolve interagency disputes, and ensure they have the necessary legal authority to truly protect individuals and the environment. . . .

Second, the new Executive Order must replace cost-benefit analysis as a determinative factor in regulatory decision-making for two reasons:  (1) it is inconsistent with the law in most cases and (2) it has failed as a tool of regulatory analysis.  In the vast majority of public health, safety, and environmental statutes, Congress has not chosen to incorporate cost-benefit analysis.  It has instead directed agencies to use a variety of well-established alternative methods for setting standards. . . .

Moreover, cost-benefit analysis is a failed approach to regulatory analysis, producing reliably unreliable results.  To be clear, cost-benefit analysis is not in need of mere tweaking.  It is inherently flawed.  Over a quarter century of use by administrations of both parties, it has failed to accurately or adequately capture the benefits of proposed regulations, and it has even ignored some benefits altogether because they defied monetization.  At the same time, it has frequently overstated the costs to industry of compliance.  As a result, cost-benefit analysis is a truly distorted approach to regulatory decision-making that is tilted heavily against new regulations.

First, this is a shot across the bow at Sunstein.  I’m not sure how calling cost-benefit analysis “inherently flawed” can be anything other than an assertion that you don’t think Cass Sunstein should be heading up OIRA.  Although Sunstein sees limits to the value of cost-benefit analysis, he certainly sees it as a valuable part of our regulatory system.  Additionally, CPR’s overall vision of decentralizing regulatory efforts (minimizing the influence of OIRA?) likewise appears to be a shot at Sunstein.

The CPR folks mean business; the question is:  Will the new Administration be listening?

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