Office of Management and Budget, Administrator, Office of Information and Regulatory Affairs

Department/Agency: Office of Management and Budget

Position:

Administrator, Office of Information and Regulatory Affairs

Executive Schedule: Executive Level III - Presidential Appointment with Senate Confirmation

Major Responsibilities:

• Review the economic impact of all rules and regulations issued by federal department and agencies 
• Serve as the White House regulatory czar and gatekeeper 
• Review the regulatory plans of each department and independent agency 
• Advise the director and deputy director of OMB 
• Oversee government-wide information and privacy policy

Key Competencies and Preferred Qualifications:

• Knowledge of the federal regulatory and legislative processes 
• Understanding of cost-benefit analyses 
• Skill at making complex policy analysis 
• Grasp of politics and ability to communicate

Insight:

Susan Dudley described being administrator of OMB’s Office of Information and Regulatory Affairs as her “dream job,” the best job in Washington and “maybe the best job in the world.” What makes it the best, she added, is “its mission- to understand the consequences of different regulatory options before they are in effect, and ensure that the selected option maximizes net benefits to the public, to the extent possible subject to constraints.”

The OMB office was created by the Paperwork Reduction Act of 1980 during the Carter administration. President Ronald Reagan promptly issued an executive order giving OIRA the mandate to analyze regulations, and a 1993 executive order by President Bill Clinton cemented the office’s importance in deciding which regulations go forward and which never see the light of day. “The American people,” Clinton said, “deserve a regulatory system that works for them, not against them: a regulatory system that protects and improves their health, safety, environment, and well-being and improves the performance of the economy without imposing unacceptable or unreasonable costs on society; regulatory policies that recognize that the private sector and private markets are the best engine for economic growth; regulatory approaches that respect the role of State, local, and tribal governments; and regulations that are effective, consistent, sensible, and understandable. We do not have such a regulatory system today.”

President George W. Bush chose for his first “regulatory czar,” as the OIRA administrator often is called by the media, a Harvard professor, John D. Graham, who made his reputation as a scholar on the cost and benefits of automotive safety and environmental regulation. Some environmental organizations opposed his nomination in vain. Graham served for five years. In the aftermath of 9/11, the post of regulatory czar generated less coverage and controversy that might otherwise have been the case. Yet the administrator sits in the regulatory catbird seat, overseeing reviews that often create friction between OMB and the departments and independent agencies’ pushing regulations forward. According to the draft 2008 report on the costs and benefits of regulation that OMB is required to send to Congress, the costs of regulations issued by the Bush administration is down markedly over previous administration. “The average annual costs of regulations issued over the last seven years is about 24 percent less than the annual average costs over the previous 20 years,” it said. The benefits of regulations issued from 1992 to 2007 exceed the costs to taxpayers “by more than four fold.” 

The terrorist attacks on the United States led to the creation of the Department of Homeland Security in 2003 and its enactment of several major regulations that seek to improve homeland defense – at a cost. OIRA, in its 2007 report to Congress, said, “Because the benefits of homeland security regulation are a function of the likelihood and severity of a hypothetical future terrorist attack, they are very difficult to forecast, quantify, and monetize.” It said that the 10 major homeland security regulations finalized to date had imposed costs on the economy of between $2.2 billion and $4.1 billion a year. 

Dudley said in a law school speech that regulatory analysis has proved itself “as an integral part of government accountability – a non-partisan tool for understanding the likely effects of regulation. There are those who still object to attempts to quantify the impacts of regulation, and certainly those who also object to OIRA's role in regulatory coordination, but nevertheless, the principled approach to regulation articulated by Presidents Reagan and Clinton has withstood the test of time.” 

Administrator Dudley, in response to the Council for Excellence in Government’s survey, said the three biggest challenges facing the next OIRA administrator were:

1. Building relationships with other officials in the government
2. Grasping the big picture consequences of policies (particularly regulations), both individually and cumulatively, rather than focusing on parochial interests.  In developing their information collection requests and draft regulations, agencies appropriately focus on their specific areas of expertise and authority.  OIRA’s role is to evaluate those proposals in a broader context, by coordinating review among various government agencies, and applying the principles laid out in Executive Order 12866 and the Paperwork Reduction Act.  Thinking through unintended consequences and offering alternative approaches is challenging, and can meet resistance from those who have invested heavily in a different proposal.
3. Triage.  There are always too few staff and too many issues to do each one justice, so OIRA staff, guided by the Administrator and career management team, must be able to focus on regulatory, paperwork, and information issues for which OIRA oversight will add the most value.  (OIRA’s career analytical staff of 41 reviews an average of 600 significant regulations and 3,500 information collection requests per year.)
   

“The workload is enormous, with responsibility for reviewing regulations of all Executive Branch agencies, and information collections of the entire government.  That was daunting at first, but not unexpected,” Dudley said. To fill the administrator’s job, the next president should look for “an analytical thinker, able to work with staff analysts to understand key policy tradeoffs and likely consequences, underlying risks and expected outcomes.   He or she should also be skilled at conflict resolution, able to appreciate different perspectives, and reach agreement that best meets statutory objectives and enhances public welfare. Related to this is the ability to set priorities, not only for focusing research and oversight resources, but to understand when to push for a certain outcome in negotiations, and when to compromise.” 

Asked what she would tell her successor, Dudley replied, “The most important advice is to appreciate the OIRA staff.  They are extremely competent and widely respected (though not always liked) throughout government.  They are non-partisan, and loyal to OIRA and OMB, and the function the office serves.  They understand that, even if they present superior analytical arguments, their preferred solution will not always prevail, and they appreciate a candid assessment of that.  They need little management, but respond well to openness and principled guidance.”

Dudley noted that under Executive Order 12866 – an order that President Bill Clinton first issued in December 1993 to make the regulatory review process more orderly and transparent – “OIRA meets with non-government representatives on regulations under review, and under the Paperwork Reduction Act, it engages non-government entities on proposed information collections.” These are listening sessions, she said, “where OIRA staff listen to attendees’ concerns without providing pre-decisional information.  The challenge in these meetings is to learn about the potential effects of a regulation or information collection, while distinguishing the parochial interest being represented from the broader public interest.  OIRA faces critics who disapprove of its oversight function under E.O. 12866.  Facing these critics with openess, and following OIRA’s transparency procedures scrupulously may help to soften the criticism and mistrust.” 

Dudley added, “I was not prepared for the number of outside meeting requests under E.O. 12866, and I would recommend deciding early in a new Administration how to limit these.  Previous Administrators have had a policy of accepting all meeting requests, but designating senior OIRA staff to attend, rather than attending themselves.” Dudley, who rarely attended the meetings herself, said, “In some cases, we have encouraged parties with similar interests who have requested meetings to come together, but they are often not willing to do that. I have limited the length of the meetings to 30 minutes, and that has worked to focus attendees on presenting their analysis efficiently and effectively, and also to provide written material, which is then made available on OMB’s website.” 

Dudley had this to say about OIRA’s reputation as the regulatory power behind the throne. “OIRA is often characterized as having significant power over Executive Branch agencies, but what is not fully appreciated is the role of the White House policy councils.  The OIRA staff and Administrator must cultivate relationships with these policy councils, understand their priorities, and keep them informed of any policy disputes.”

Dudley strove to reach out to the designated Regulatory Policy Officers across the executive branch, and suggested her successor would do well to do likewise. “A solid, friendly working relationship with these RPOs will make discussions on difficult policy issues more positive and constructive.  Invite them individually to breakfast or lunch at the White House Mess.  It would also be valuable, early in the Administration, to hold a meeting of all RPOs and ‘Reg Seconds,’ the senior career official responsible for regulation, to be sure they understand the principles of interagency review, and agree on procedures for interagency coordination.”

She added, “a good, open relationship with OIRA staff is absolutely essential to effective execution of OIRA’s responsibilities.  I recommend daily meetings with the Deputy Administrator, weekly meetings with the management team (Branch and “Twig” Chiefs), and bi-weekly meetings with each branch.  Hold these routine meetings in the New Executive Office Building, where career staff’s office are located, and take time occasionally to walk through the staff hallways, or sit down in the communal areas. “

She observed that other than the E.O. 12866 meetings, “the OIRA Administrator and staff have little interaction with parties outside the government.  OIRA’s role is more internal coordination and oversight, than external engagement.”

Graham, in response to a Council for Excellence in Government survey, said a successful OIRA administrator must have:

•         Confidence of the new president and his chief of staff

•         Respect among both parties in Congress

•        Appreciation of the role of policy analysis in government

•        Skills in outreach to diverse interest groups

Graham said that, “The outside interest groups varied enormously depending on the issue.” While reporters often wrote about OIRA’s role in regulatory disputes pitting businesses against non-government organizations, “the more difficult issues were those that pitted one business sector versus another (e.g., oil versus autos or ethanol versus oil,” he said.

Asked what advice he would give the next administrator, Graham said, “The growing complexity of the Executive Office of the President makes it more difficult for EOP to speak with a single voice, unless the POTUS (the president) is talking.” He also decried “the tendency of many political actors in both parties to resolve issues strictly on ideological, partisan or interest-based grounds, without regard to the insights of science or policy analysis.” Graham added, “Policy analysis needs strong advocates in the Executive Office of the President, and OMB is well positioned institutionally to be such an advocate.”

Two things took Graham most by surprise on the job, his first appointment in government.

“Career staff often chooses not to elevate issues based on a misperception of what stances their political leadership would be willing to take. In other words, career staff are not always the best political thinkers and are not always well informed about their political leadership, even though they may be talented thinkers and well trained analysts,” he said.

Graham, who came to Washington straight from academe, said, “For political appointees who were not involved in the campaign, it takes a period of time to build relationships and trust among those administration officials who were involved in the campaign.”

Key Relationships – Within the Department or Agency:

White House Chief of Staff
OMB Director and Deputy Director
OMB Program Area Directors (PADs)
OMB General Counsel
OMB Administrator of E-Gov and IT        
Director, White House Office of Legislative Affairs
Chairs or Leaders of the White House Policy Councils (domestic, national security, homeland security, and the Office of Science and Technology Policy)

Key Relationships – Within the Government:

Designated “Regulatory Policy Officers” (RPOs) in each agency—generally the general counsel, deputy secretary or an assistant secretary—and their seconds, the senior career officials responsible for regulation

Nomination Referred to:

Senate Committee on Homeland Security and Government Affairs

Current Position Profile:

1. Cass R. Sunstein, J.D. (Confirmed: Sept 10, 2009). Former Felix Frankfurter Professor of Law, Harvard Law School, Harvard University. Former Harry Kalven Visiting Professor of Law, Law School, University of Chicago.

Recent Position Profiles:

2. Susan E. Dudley, MS (recess appointment 2007-2009). Expert on regulations who was an OIRA economist, policy adviser at the Environmental Protection Agency and adviser to the Commodity Futures Trading commission during earlier stint in government. Taught courses on regulation as adjunct at George Mason University School of Law and directed the university’s Regulatory Studies Program. Master of Science degree from MIT’s Sloan School of Management.

3. Steven D. Aitken, J.D. (Acting 2006-07). Career OMB civil servant. Deputy general counsel of OMB. 

4. John D. Graham, Ph.D. (2001-2006). Founder and director of the Harvard Center for Risk Analysis. Expert on cost-benefit analysis of safety and environmental regulations.