Scrutinizing Inaction

With the announcement earlier this week that President Obama will nominate Jacob Lew to replace Peter Orszag at the Office of Management and Budget (OMB), it is worth taking a fresh look at how decisions are made within that agency. When the Environmental Protection Agendy (EPA), or any other federal agency, promulgate a significant regulation, the decision is pored over and scrutinized by OMB's Office of Information and Regulatory Affairs (OIRA) to ensure it is a wise course of action. But when the government fails to regulate, little attention is paid, even when the stakes are high. To lessen the imbalance, there should be a formal process that reviews inaction.

When proposing important new rules, agencies must conduct cost-benefit analyses that are reviewed by OIRA. The proposals are rigorously vetted from many angles to ensure that Americans are getting a good deal. As long as it's done fairly, giving equal weight to pros and cons, that's a good thing: We want to avoid regulations that are inefficient, duplicative, overly costly, or too weak.

Sometimes, however, there is a clear need for protections but government fails to act. These instances often go years without resolution because there is no formal process for a stringent review of inaction. Failure to scrutinize inaction, while closely overseeing agency actions, can help contribute to bureaucratic inertia.

When regulatory action is slow, sometimes disaster strikes. The coal-ash spill in Kingston, Tennessee in December 2008, a harrowing event that sent millions of tons of toxic sludge careening across acres of land, destroying homes and taking lives and costing millions to clean, could have been avoided. Though the problem was clear--poisonous sludge, created by power plants, was allowed to be stored in unsafe heaps, always in danger of collapsing--nothing was done. The behavior was legal and without adequate environmental oversight.

A basic cost-benefit analysis shows that regulating the storage of this substance is justified many times over. There was no formal process, however, for OIRA to review EPA's failure to regulate coal ash. Instead, Tennessee residents lived in the shadow of a growing mound of toxic mud until the walls broke. It took that 2008 catastrophe for the government to move in earnest to bring this threat under control.

There is a process that allows individuals and organizations to petition for agency protections. Prior to the Kingston disaster, a petition to regulate coal ash had been before EPA since early 2004. Other petitions have been submitted to regulate auto fuels and control greenhouse gases from marine vessels. These petitions can languish for years with little or no response, and OIRA does not currently examine the petitions that are sent to agencies.

These petitions can provide valuable information on new areas that need agency attention, and OIRA should have a process for determining where a necessary protection has been overlooked. If this were required in the case of coal ash, EPA would have had to act sooner, possibly avoiding the spill.

OIRA review of petitions need not be burdensome. Agencies are already required to review petitions, and every year OIRA and the agencies work together to develop a regulatory plan, and make reports to Congress on their activities in the past year. Review of petitions by OIRA could be added to this planning process, creating an opportunity for outside groups to contribute information that can be useful for setting future regulatory agendas. And, as petitions begin to see deeper scrutiny by OIRA, they are likely to include more information that OIRA in many cases find helpful, such as cost-benefit analyses of their proposed rules. An important additional advantage of this proposal is that OIRA can make a more rational evaluation of what an agency chooses to regulate by understanding what it chooses not to regulate.

As it stands, petitioners can go to courts, but judges tend to give agencies broad discretion to set their agendas--it is rare that a court would be anything but deferential to an agency's denial of a petition requesting a regulation. (There are exceptions: The Supreme Court in Massachusetts. v. EPA determined that the agency had no adequate justification for denying a petition, and required the agency either to regulate, or show that climate change was not a threat.)

While the process of OIRA review of petitions for rulemaking may never be as in depth as its process of reviewing regulatory proposals, it will provide an important second opinion on decisions not to regulate. This kind of parallel process for both types of decisions can help correct imbalances in the current system that tend to disfavor beneficial regulation.

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