Trump's Regulators Can Benefit From a Bush-Era Idea

There's a formal way to prompt federal agencies to consider specific action, including deregulation.

No complaints about this regulation.

Photographer: Tim Boyle/Getty Images

The Trump administration has repeatedly vowed to reduce the level of federal regulation. Naomi Rao, who was confirmed this week as the administrator of the Office of Information and Regulatory Affairs, will play a central role in that effort.

In her first year, Rao, who was a law professor at George Mason University, should consider reviving a creative idea pioneered in the George W. Bush administration -- one that could enlist OIRA's expertise to spur cost-saving deregulation, an administration priority, as well as to promote life-saving regulatory initiatives.

The innovation is known as the “prompt letter,” by which the administrator of OIRA publicly prompts federal agencies to consider specific initiatives, whether regulatory or deregulatory. The beauty of prompt letters is that they are typically based on careful analysis of costs and benefits -- and they can spur beneficial action from the federal government.

True, prompt letters are far from the center of the office's regulatory responsibilities. Since 1981, OIRA has been a clearinghouse for regulations drafted by executive agencies, such as the Environmental Protection Agency, the Department of Transportation and the Department of Health and Human Services.

Agencies must submit their regulations to OIRA, and in practice it has veto authority. It can prevent regulations from ever being proposed or finalized –- though its decisions are made in concert with high-level officials in the White House, and are always subject to the oversight of the president himself. 

Also since 1981, OIRA has focused on ensuring that the benefits of regulation justify the costs; that agencies follow the law; and that agencies respect presidential priorities. In some cases, the benefits of agency submissions are obviously greater than the costs. OIRA tends to be highly receptive to those proposals.

Though it is part of the Executive Office of the President, and headed by a Senate-confirmed political appointee, it consists mostly of civil servants (about 45 of them), whose focus is highly technical. They ask: Would the regulation save lives? How many? Would it impose serious burdens? How high?

In 2001, John Graham, Bush’s superb choice as OIRA administrator, decided that the office should use its expertise to “prompt” agencies to act -- and that it should do so through formal letters, available for the American people to see.

For example, Graham suggested that the Occupational Safety and Health Administration should promote the use of automatic external defibrillators in the workplace, arguing that they could be a cost-effective, life-saving intervention. 

He also asked the Food and Drug Administration to consider changing the Nutrition Facts panel on food labels to inform consumers of the amount of trans fats. He noted that the change could have health benefits that would far exceed the costs.

He requested the Department of Transportation to take new steps to protect drivers against lower-body injuries, contending that such steps could protect people from “years of chronic pain and impairment.” 

In several cases, Graham’s prompt letters helped produce beneficial reforms. Since 2004, however, OIRA has issued exactly zero prompt letters.

They fell into disuse during Bush’s second term, and the Barack Obama administration had no serious interest in them. I served as OIRA administrator from 2009 until 2012, when the White House believed that the best way to spur new initiatives, whether regulatory or deregulatory, was through phone calls and meetings, not through formal, public letters.

After all, any prompt letter might be inadequately informed, and Cabinet heads might not be thrilled to be told, in public, to focus on a problem that they did not regard as a high priority. They might ask: Why didn’t you just make a phone call?

Fair enough. But Graham’s approach has many virtues, and it could prove especially useful for Trump’s OIRA. Prompt letters are transparent and also evidence-based: They specify the problem and offer at least a preliminary account of the costs and benefits of a possible solution.

If they put a little pressure on a Cabinet head, well, that’s not the worst thing. When the analysis of costs and benefits suggests that an initiative is worthwhile -- perhaps because it would prevent hundreds of premature deaths -- it makes sense to require an agency to explain what’s wrong with it.

The Trump administration is focused, of course, on reducing regulatory burdens, not on increasing them. Prompt letters could easily be used for that purpose. They could specify promising deregulatory initiatives on which OIRA’s staff has experience and expertise, or they could identify methodological or scientific concerns that might ultimately lead to reduced burdens.

Compared with phone calls and meetings, official letters promote public scrutiny while also increasing the likelihood that agencies will give serious attention to new initiatives -- and possibly generating a helpful back-and-forth among technical experts.

Deregulation is often a terrific idea. But any OIRA administrator will discover, early on, that new regulatory initiatives can save a lot of lives, a lot of money or both. As John Graham’s work in the Bush administration showed, some of those initiatives make sense whatever your politics, because the benefits, in terms of health or dollars, are far in excess of the costs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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