Lieberman, Durbin Press OIRA On Openness, Accountability

WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., and Oversight of Government Management Subcommittee Ranking Member Dick Durbin, D-Ill., asked the Office of Information and Regulatory Affairs Thursday to improve the transparency, and therefore the public accountability, of its regulatory process. In a letter addressed to OIRA Administrator John Graham, the Senators noted that a recent General Accounting Office report (GAO-03-929) found key aspects of the regulatory review process occurring behind closed doors and out of public view. Lieberman and Durbin asked Graham to address the issues raised by the GAO report and implement GAO’s recommendations.

“We believe that the public should be able to see and understand the role and influence of OIRA in the development of regulations,” the Senators wrote. “We are therefore very concerned about GAO’s recent findings of substantial areas of secrecy in OIRA’s regulatory review process that… undermine the transparency” of rule making. The Senators raised particular concern over the lack of openness and the influence of polluters surrounding OIRA’s involvement in environmental regulations. “…The commonality between OIRA’s views and the views of those seeking to weaken environmental regulation is troubling,” Lieberman and Durbin wrote. According to the GAO, the shortcomings in OIRA’s process include: ? A failure to provide for disclosure of changes an agency makes to its draft rules at OIRA’s suggestion during the informal review process – before a rule has formally been submittted to OIRA for approval; ? Inadequate disclosure of information about OIRA’s communications with outside parties; ? A failure to disclose e-mail, faxes, and documents exchanged between agency regulators and OIRA staff below the level of branch chief; and ? The lack of explanation for why a rule is withdrawn from review. Following is a copy of the letter: November 7, 2003 The Honorable John D. Graham Administrator Office of Information and Regulatory Affairs Office of Management and Budget 725 17th Street, N.W. Washington, D.C. 20503 Dear Dr. Graham: We are writing to express our concern about the findings of a new GAO report that key aspects of the regulatory review process at OMB’s Office of Information and Regulatory Affairs (OIRA) continue to occur behind closed doors and hidden from public scrutiny. During your confirmation hearings, you pledged to make transparency and accountability among your top priorities. We therefore seek your commitment to promptly fulfill this pledge by addressing the issues identified by GAO in its recent report, “Rulemaking: OMB’s Role in Reviews of Agencies’ Draft Rules and the Transparency of Those Reviews” (GAO-03-929). During the early days of regulatory review, OIRA came under heavy criticism from some Members of this Committee and others for the secret process by which OIRA conducted reviews of agency rules. Opponents of regulations to protect health, safety, and the environment used the OIRA review process as a back-channel conduit by which to water down or block proposed regulations off-the-record. In an attempt to address these problems, provisions were incorporated into Executive Order 12866, which was issued in September 1993, to assure that regulatory review is accountable and transparent. This Executive Order, which remains in effect, contains “transparency” provisions requiring the disclosure of information about the review. For example, agencies must disclose changes to their proposed rules made at OIRA’s suggestion, and OIRA must disclose documents exchanged between itself and the agencies and communications between itself and outside parties. We believe that the public should be able to see and understand the role and influence of OIRA in the development of regulations. Access to information about the regulatory review process is crucial to the public’s understanding of how and when federal regulatory policies evolve from draft regulations to final rules. We are therefore very concerned about GAO’s recent findings of substantial areas of secrecy in OIRA’s regulatory review process that, together with recent developments in OIRA’s review practices, undermine the transparency intended by the Executive Order. Informal Review Executive Order 12866 requires that agencies: (1) identify for the public, in a complete, clear, and simple manner, the substantive changes between the draft submitted to OIRA for review and the action subsequently announced; and (2) identify for the public those changes in the regulatory action that were made at the suggestion or recommendation of OIRA. Disclosure of what changes an agency makes in its rules at OIRA’s suggestion is key to public understanding of the impact of OIRA review on regulatory decision making. GAO found that OIRA’s current regulatory review practices circumvent the transparency that the Executive Order is intended to achieve, for a number of reasons. OIRA increasingly influences agencies early in the rulemaking process, when OIRA says that key transparency requirements do not apply. GAO reports that OIRA has made a concerted effort to begin working with agencies – reviewing draft rules and engaging in substantive discussions – before the agency formally submits its rule for clearance because that is when OIRA can have its most important impact on agency rules. GAO also found that OIRA has assumed a more aggressive, “gatekeeper” posture in recent years, having blocked rules from publication and returned them to the originating agencies for further consideration; and this threat has further increased agencies’ receptiveness to early discussions with OIRA. Although OIRA’s current practices are calculated to have maximum impact on agency decision making during the “informal” review period, OIRA does not require agencies to disclose changes to the rule made during this period, even if made at OIRA’s behest. Obviously, if public disclosure does not apply during this period of regulatory review, the public is kept in the dark during one of the most influential aspects of the regulatory process. GAO discovered that OIRA “formal” review periods can be as short as one day, while informal review periods can extend for weeks or even months in advance of formal reviews. In fact, GAO found that the formal review period “may be somewhat of a formal construct,” where OIRA and the agency have been discussing the rule and exchanging drafts before the agency finally chooses to formally submit the rule and trigger the beginning of formal review. GAO cited the example of a rule issued by EPA establishing how to calculate the penalty for violations of the Clean Air Act requirements for new heavy-duty diesel engines. EPA had been sharing draft rules with OIRA and had been meeting jointly with OIRA and outside parties as early as October 2001, but EPA did not formally submit the rule to OIRA until December 2001 – and then OIRA concluded its formal review in only 10 days. In another example, where OIRA made significant changes to a final EPA rule revising the definition of “discharge of fill material” regulated under the Clean Water Act, OIRA’s records show that the “formal” review was concluded in just 1 day. Under these current OIRA practices, GAO concluded that restricting the transparency requirements in the Executive Order to only the short period of formal review “seems antithetical to the intent of those requirements.” Because of the increasing importance of the informal review period in shaping agency rules, OIRA itself now discloses its own substantive communications with outside parties involving specific rules during this informal review period. This change was made because outside parties were increasingly contacting OIRA during the informal period in an attempt to influence the process. As GAO points out, it is equally important to require public disclosure of changes made to draft rules during the informal process, in order to maintain the integrity of the process at all times. Having an open system of regulatory review is necessary to maintain public confidence in the process. We therefore ask that you implement GAO’s recommendation to disclose changes to draft rules made during the informal review period, as well as whether those changes were made at OIRA’s suggestion or recommendation. Disclosure of Communications With Outside Parties Executive Order 12866 requires OIRA to make certain public disclosures regarding contacts with outside parties, which OIRA has now interpreted to include contacts made during the informal review process. In an October 2001 memorandum, you announced that much of the information generated through the disclosure requirements would be made available to the public on the agency’s website. You also announced that other information previously available in hard copy and/or in the OIRA docket library would also be posted online. While these are positive steps, the GAO report concluded that some of the information OIRA provides on its website regarding its communications with outside parties is difficult to understand. Specifically, the information does not always clearly state what rule a meeting was about, the affiliations of the participants, or the substance of discussions. In order to address this problem, GAO recommended that OIRA more clearly indicate in its meeting log which regulatory actions were discussed and the affiliations of the participants in those meetings. We urge that OIRA promptly improve its transparency practices as recommended by GAO and also disclose the substance of oral comments provided by outside parties. Exchange of Documents Executive Order 12866 requires that OIRA shall make available to the public all documents exchanged between OIRA and the agency during the review by OIRA. OIRA has interpreted the term “all documents exchanged between OIRA and the agency” to apply only to exchanges made by OIRA staff at the level of branch chiefs. Therefore, according to GAO, any e-mails, faxes, or other documents exchanged between OIRA desk officers and staff in regulatory agencies are not disclosed – despite the fact that most documents are in fact exchanged at the desk officer level. Given that most documents are exchanged between desk officers and agencies, once again OIRA’s practices keep the public in the dark regarding important aspects of the rulemaking process. GAO recommended that OIRA reexamine its current policy that only documents exchanged by OIRA branch chiefs and above need to be disclosed. We urge you to change this practice, as recommended by GAO. Withdrawal of Rules From Review. GAO identified what appears to be a “gap in the transparency requirements” applicable to OIRA under the Executive Order. If OIRA returns a rule to an agency for reconsideration, OIRA must explain the reasons in writing; and, if a rule is changed while under formal review, the agency must identify those changes for the public and must state if the changes were made at the suggestion of OIRA. However, if the agency chooses to withdraw a rule from review, whether on its own initiative or at OIRA’s request, no disclosure is required. GAO has recommended, and we agree, that procedures should be established under which either OIRA or the agencies should disclose reasons why rules are withdrawn from review, and, specifically, whether the withdrawal was done at OIRA’s suggestion. Special Attention to Weakening EPA’s Draft Rules We have serious concerns about the special attention being given to rules submitted for review by the EPA. According to GAO, 14 of the 17 rules submitted by EPA to OIRA were significantly changed at OIRA’s suggestion, and a 15th was returned to EPA. Changes included: eliminating manganese from a final rule on the identification and listing of hazardous wastes; delaying the compliance date for states to report two types of emissions; and making compliance requirements more flexible in a proposed rule on pollutant discharge elimination systems for cooling water intake structures at existing power generating facilities. Moreover, there are continuing questions regarding OIRA’s role in persuading agencies to adopt the views advocated to OIRA by polluters and other regulated interests. GAO noted that where outside contacts occurred, in seven of the eleven rules that OIRA significantly affected “at least some of the actions that OIRA recommended or took appeared to be similar to those suggested to OIRA by regulated parties.” Environmental organizations and other public interest groups also directly contacted OIRA in 3 of the 7 cases, but OIRA’s actions were not similar to these groups’ suggestions in any of these cases. One striking example of OIRA’s intervention into environmental rulemaking was its review of EPA’s proposed Clean Water Act rule on cooling water intake structures at existing power-generating facilities. As described in the GAO report, OIRA suggested that EPA’s draft rule be modified by lowering the performance standard and adding compliance flexibility by allowing facilities to design site-specific approaches for minimizing environmental harm, rather than applying a national standard. Some of OIRA’s suggestions – particularly the site-specific approach – were similar to proposals made to OIRA by the electric power industry. OIRA’s suggestions were contrary to those made by an environmental group, which had contacted OIRA and advocated that EPA’s regulations should be based on nationally uniform standards to minimize environmental harm, rather than allowing site-specific determinations. In fact, EPA acknowledged that it followed many of OIRA’s suggestions in revising its proposed rule, including the option for allowing site-specific approaches. Another example involved EPA’s final rule defining certain substances as being “hazardous waste” that must be disposed of carefully. Representatives of regulated industries wrote letters and met with OIRA to oppose the listing of materials containing manganese as hazardous waste. OIRA prevailed upon EPA to defer any final action identifying manganese as a hazardous waste. While OIRA could have reached these conclusions regardless of the contacts with the polluting industries, the commonality between OIRA’s views and the views of those seeking to weaken environmental regulation is troubling. In the particular examples described in the report, GAO was able to trace the contacts between OIRA and regulated interests, the recommendations OIRA made to EPA, and the changes EPA made to its regulations at OIRA’s behest. Given these troubling patterns that we know about, we are very concerned about what may be hidden from public scrutiny by the substantial and growing amount of OIRA’s regulatory review activity that is shrouded in secrecy. We therefore call upon you to disclose the substance of oral comments provided to you by outside groups, and generally to act promptly on GAO’s recommendations. Specific Questions In addition to our request that you promptly act to improve OIRA’s policies on transparency, we ask for your response to the following questions: ? In your response to GAO, you state that you do not believe it would improve the rulemaking process to disclose deliberations between OMB and rulemaking agencies during the informal review period. Do you agree that the intent of Executive Order 12866 was to provide for the public an understanding of changes to agencies’ rules during OIRA’s review and at OIRA’s suggestion? How can you justify a policy that allows changes to be made behind closed doors and out of public view, which is what occurs during the informal review process? ? Why is disclosure treated differently for outside party contacts than for changes to draft rules during the informal review period? Isn’t it just as important to provide information about a period of the review process where OIRA can significantly affect rules as it is to provide information about outside influential contacts? Why do you support maintaining this distinction? ? In your response to the GAO report, you assert that you do not believe it would be appropriate for OIRA to require rulemaking agencies to release documents that they do not believe they are obligated to release. However, insofar as agencies’ failure to disclose rules changed or withdrawn at OIRA’s suggestion during informal review is (in GAO’s words) “antithetical to the intent” of Executive Order 12866, why don’t you at least recommend that agencies make such disclosures as a matter of policy? ? OIRA told GAO that disclosing changes made to rules during the informal review period could have a “chilling effect” on future communications between OIRA and the agencies. However, GAO reported that some agencies are already disclosing information from the informal review period and that this practice has not inhibited communications and was extremely helpful to GAO’s understanding of the changes made to certain rules. What is your basis for not making public disclosure of changes made to draft rules during the informal review period? ? You stated to GAO that you agree with the recommendation to more clearly indicate in the meeting log which regulatory actions were discussed and the affiliations of the participants. What specific steps will you take to implement this recommendation, and by when will you take these steps? ? During the informal review period, OIRA at least discloses substantive contacts with outside parties regarding specific rules. However, GAO found that OIRA applies no transparency policy whatsoever, when OIRA communicates with outside parties regarding a proposed rule during the period before any informal review process has begun, even if OIRA and the agency have begun general consultation about the issue. Information and arguments provided to OIRA during such early contacts might well persuade OIRA to attempt to influence the agency with respect to development of the rule, either then or when the agency subsequently comes to OIRA for review. What avenues are available by which the public can be adequately informed about such contacts, information, and arguments, and by which the public can gain access to relevant government records? ? You disagreed with GAO’s recommendation that the public should have access to documents exchanged between desk officers and agencies as recommended by GAO. Please provide us with any information supporting OIRA’s reasoning as to why this practice should not be changed. We recognize that, in implementing Executive Order 12866, OIRA has provided some measure of transparency to the process of regulatory review. However, with so many areas of the process obscured from public view, and with increasing amounts of OIRA’s real work being conducted during the early, largely secret part of the process, we believe that OIRA’s actions are antithetical to the intent of the Executive Order. We look forward to your response detailing how you plan to address these issues, as well as responding to our specific questions. Thank you for your attention and consideration of our concerns. Sincerely, Joseph I. Lieberman Ranking Member on Governmental Affairs Committee Richard Durbin Ranking Member Subcommittee on Oversight of Government Management