Executive Orders: An Overview

The executive branch has several methods for overseeing and managing its agencies. Presidential directives instructing agencies on how to carry out their work are called Executive Orders. Executive orders are management instructions to agency administrators, similar to instructions bosses give their employees in private companies. Like other employees, agency administrators follow Executive Orders to avoid being fired. Executive Orders generally persist until another President issues a new Order to replace the old one.

A 1981 Executive Order from President Reagan directed executive agencies to assess the benefits and costs of “major” rules. Reagan directed the Office of Information and Regulatory Affairs (“OIRA”) to oversee agency compliance with the Order. OIRA was created by Congress as part of the Office of Management and Budget (“OMB”) in the Paperwork Reduction Act of 1980. The OMB and OIRA are in the Executive Office of the President and considered closely connected to the policies of the President. OIRA was created to assess agencies’ proposed information collection schemes to ensure that regulated parties don’t get mired in paperwork. In 1993, President Bill Clinton ordered OIRA to focus on reviewing “economically significant” agency rules in Executive Order 12866. Clinton told OIRA to follow certain principles in its regulatory assessment, like ensuring agencies 1) considered economic incentive schemes as alternatives to direct regulation, 2) designed regulations in the most cost-effective manner to achieve its objectives, and 3) assessed both the costs and the benefits of the regulation and determined that the benefits of the justify the costs. 

To comply with OIRA requirements, agencies were required to submit proposed rules to OIRA before they were published for notice and comment in the Federal Register and again before they publish a final rule. In the article below, Lisa Heinzerling, an EPA administrator from the Obama Administration, describes her experiences with OIRA review.

Lisa Heinzerling, Inside EPA: A Former Insider’s Reflections on the Relationship Between the Obama EPA and the Obama White House

The Nineteenth Annual Lloyd K. Garrison Lecture

31 Pace Envtl. L. Rev. 325 (2014)

I will be discussing the relationship between the Environmental Protection Agency (“EPA”) and the White House. I will focus specifically on the role that the Office of Information and Regulatory Affairs (“OIRA”), within the Office of Management and Budget (“OMB”), plays in reviewing the EPA’s regulatory output.

As I will explain, OIRA’s actual practice in reviewing agency rules departs considerably from the structure created by the executive order governing OIRA’s process of regulatory review. The distribution of decision-making authority is ad hoc and chaotic rather than predictable and ordered; the rules reviewed are mostly not economically significant but rather, in many cases, are merely of special interest to OIRA staffers; rules fail OIRA review for a variety of reasons, some extra-legal and some simply mysterious; there are no longer any meaningful deadlines for OIRA review; and OIRA does not follow - or allow agencies to follow - most of the transparency requirements of the relevant executive order.

Describing the OIRA process as it actually operates today goes a long way toward previewing the substantive problems with it. The process is utterly opaque. It rests on assertions of decision-making authority that are inconsistent with the statutes the agencies administer. The process diffuses power to such an extent - acceding, depending on the situation, to the views of other Cabinet officers, career staff in other agencies, White House economic offices, members of Congress, the White House Chief of Staff, OIRA career staff, and many more - that at the end of the day, no one is accountable for the results it demands (or blocks, in the case of the many rules stalled during the OIRA process). And, through it all, environmental rules take a particular beating, from the number of such rules reviewed to the scrutiny they receive to the changes they suffer in the course of the process [...]

Misunderstandings of the OIRA process abound. Too often these misunderstandings are perpetuated by, or not contradicted by, the very personnel who have been involved in the process. Indeed, after I finished a stint as the head of the EPA office responsible for acting as the primary EPA liaison to OIRA, I did not write at any length about my experiences with OIRA review. Partly out of continuing loyalty to the administration that had made my time in government possible, partly out of respect for the sensitivity of interactions between high-level government officers, and partly out of a sense of sheer futility, I had resolved to move on to other topics. But when accounts of OIRA’s role in the Obama administration began to emerge from other quarters, and when these accounts, in many respects, did not jibe with my own experience, I decided to resurface and to describe the OIRA process from my perspective. Hence the account that follows.

I. THE HISTORY OF WHITE HOUSE REVIEW

It will be useful first to give a brief history of White House review of agencies’ regulatory actions. Some form of centralized review of agency action has been with us for decades. Such review took place episodically in the Nixon, Ford, and Carter administrations. But, it was during the presidency of Ronald Reagan that the practice of regulatory review began to take on the shape it has today.

A. Executive Order 12,291

In one of his earliest acts as President, Ronald Reagan issued an executive order - Executive Order 12,291- that gave centralized review more systematized form in two respects, First, Executive Order (“EO”) 12,291 put a specific office - OMB - in charge of reviewing agency actions. Second, it adopted cost-benefit analysis as the governing framework for this review [...]

[The] order’s legality rested on the premise that the centralized reviewers (OMB and a newly created Task Force on Regulatory Relief) would only supervise, and not displace, the exercise of discretion given to the agencies by statute. Office of Legal Counsel [legal advisor to the President] wrote: “[T]he fact that the President has both constitutional and implied statutory authority to supervise decision-making by executive agencies . . . suggest[s] . . . that supervision is more readily justified when it does not purport wholly to displace, but only to guide and limit, discretion which Congress has allocated to a particular subordinate official. A wholesale displacement might be held inconsistent with the statute vesting authority in the relevant official. . . The order does not empower the [OMB] Director or the Task Force to displace the relevant agencies in discharging their statutory functions or in assessing and weighing the costs and benefits of proposed actions.”

OLC’s opinion does not state that an order displacing the agencies’ discretion would certainly be illegal. But it does interpret EO 12,291 not to permit such displacement and it does suggest a potential legal problem with such displacement. Reading only EO 12,291 and the OLC’s opinion on it, one would conclude that agencies retained the decision-making discretion they were given by the statutes they are charged with administering.

In practice, though, it was not that simple. During the Reagan years, critics charged that OIRA did indeed displace - and not merely supervise - agencies’ decision-making discretion. In addition, OIRA’s process of review frequently delayed agency rules for extended periods. The process also at times degenerated into one in which OIRA served as a conduit for the views of industry on particular regulatory actions. This feature of the process was especially troubling insofar as the process was opaque. Only in 1986 did OIRA begin to make public the documents shared by outside parties with OIRA during its review. Even so, the bulk of the process - which agency actions went to OIRA, what happened to them while they were there, who made the decisions - was closed off to the public. Moreover, the cost-benefit lens through which OIRA viewed agency rules proved to skew against some kinds of rules, in particular environmental rules, since so many of the benefits of environmental rules are difficult or impossible to quantify and monetize, and since so many of these benefits occur in the future while the settled practice of cost-benefit analysis is to steeply discount future consequences.

Such critiques dogged the OIRA review process under EO 12,291 through the Reagan years and into the presidency of George H.W. Bush. By the time Bill Clinton came into office in 1993, many were hoping for change. Within months of taking office, President Clinton responded with a new executive order on regulatory review, EO 12,866.

B. Executive Order 12,866

Although EO 12,866 preserved the status quo in that it continued to require centralized White House review of agency actions under a cost-benefit framework, it also reformed several specific features of this review that had proved troublesome. Taking on the issue of displacement, an early passage in EO 12,866 “reaffirm[ed] the primacy of Federal agencies in the regulatory decision-making process.” At the same time, however, the order for the first time explicitly stated that if a conflict arose between OIRA and an agency over a particular matter that could not be resolved by the OMB Director and the agency head, it would be the President (or the Vice-President acting on the President’s behalf) who would settle the dispute - and make the “decision with respect to the matter.” [...] 

C. Executive Order 13,563

In January 2011, a new executive order on regulatory review finally emerged. The single most notable fact about the new order, EO 13,563, is how not-new it was; much of the order simply repeats, verbatim, the language of EO 12,866.

Another striking fact about the order is how weakly responsive it is to President Obama’s own directives in his presidential memorandum of January 2009: EO 13,563 does not say a word about “the relationship between OIRA and the agencies” or “methods of ensuring that regulatory review does not produce undue delay.” On “disclosure and transparency,” the order says nothing about disclosure and transparency related to OIRA, but focuses only on the agencies and here simply advises them to place materials online and in an open format wherever possible [...]

II. THE COMMON LAW OF EXECUTIVE ORDER 13,563

The common law of EO 13,563 determines the most important features of the current process of regulatory review: who is the decision maker, what is reviewed, why particular actions fail regulatory review, when actions emerge from review, and what is disclosed about the process. If one has read EOs 12,866 and 13,563, which in theory govern this process, surprises are in store once we look at the way the process actually operates.

A. Who Decides?

[...] EO 12,866 puts OIRA initially in charge of the process of regulatory review. But if, according to EO 12,866, a dispute arises between OIRA and the action agency, the dispute is to be resolved through a highly specified process that involves recommendations from the Vice-President and an ultimate decision by the President or by the Vice-President acting on his behalf.

This is not how regulatory review works today. In my two years at EPA, I do not recall ever hearing of Vice-Presidential involvement in a regulatory matter. Moreover, the OIRA process in the Obama administration was not structured to funnel disputes between OIRA and the agencies to Vice-President Biden for his recommendations. It was far messier and more ill-defined than that. From my perspective, it was often hard to tell who exactly was in charge of making the ultimate decision on an important regulatory matter.

A recent account of the OIRA process by former OIRA Administrator Cass Sunstein helps to explain this confusion as to some regulatory matters, but leaves a puzzle as to others. Sunstein states that OIRA’s primary role in the regulatory process is as an “information-aggregator” - compiling information from many actors in the executive branch and using that information to help get at the right regulatory result [...] Beyond the White House, Sunstein asserts that agencies other than the agency proposing a particular regulatory action also have a large influence on regulatory policy. Sometimes it is another Cabinet secretary who might have such influence; often, Sunstein says, it is career staff at another agency. Sometimes it is the Chief of Staff of the White House who plays the major role; sometimes it is a member of Congress. Sunstein extols the virtues of this system, arguing that the aggregation of input from all of these different sources produces better regulatory results [...] 

Sunstein’s account of the OIRA process at least helps me to understand why we were all so confused about exactly what the process was.

B. What Is Reviewed?

One domain in which OIRA’s powerful role is quite clear, however, is in the decisions about which regulatory actions OIRA will review. EO 12,866 states that OIRA may review not only economically significant actions, but also actions with a significant potential for interagency conflict or inconsistency and actions that raise “novel legal or policy issues.” In fact, most of the rules OIRA reviews are not economically significant. In the Obama administration so far, some 80 percent of the EPA rules that have been reviewed were not economically significant. Moreover, many of the rules under review lack any obvious interagency dimension. So how does OIRA come to review them?

While I was at EPA, we had a routinized process for determining what went to OIRA. Every three months or so, the Assistant Administrators of the program offices (air, water, solid waste and emergency response, chemical safety and pollution prevention) and I met with representatives from OIRA to go over the regulatory actions EPA planned to announce in the coming months. We offered our own opinion as to whether any given item warranted OIRA review. But the bottom line was that it was not our decision to make. If OIRA wanted to review something, OIRA reviewed it [...] 

C. Why Do Rules Fail?

One of the most vexing questions concerning regulatory review has to do with the basis on which regulatory actions fail this review. When a regulatory action goes to OIRA for review, it goes fully formed, reflecting the agency’s best judgment about the proper path in the relevant circumstances. EPA rules go to OIRA after an extensive period of internal development and review. In many cases, the rules have been under development for years, with dozens or more agency personnel working on them. In the case of the most significant rules, they have gone to the Administrator herself for initial selection of options and later for final review. It is a matter of some consequence, then, when OIRA does not allow such rules to issue, or requires substantial changes before they may issue.

One reason why OIRA might disapprove of an agency’s planned action is that it disagrees with the agency’s interpretation of the statute the agency is charged with administering. Notably, neither EO 12,866 nor EO 13,563 gives OIRA the authority to second-guess agencies’ interpretations of the statutes they administer. Indeed, both executive orders explicitly state that nothing in them permits a departure from existing law. Yet, in a post-Chevron world, that disclaimer means less than it seems. If a statute is ambiguous - or if OIRA believes that a statute is ambiguous - then perhaps OIRA has room to press an agency to change its interpretation of a statute it administers, without running afoul of the EOs’ injunction to follow existing law [...] 

I have argued elsewhere that agencies should not get deference under Chevron when an interpretation is foist upon them by OIRA; OIRA is not charged by Congress with interpreting the statutes the agencies administer, and OIRA does not have the expertise of the relevant agencies. But whatever one thinks about the legal consequences of an OIRA-driven agency interpretation, one must take note of the large degree of influence wielded by OIRA when one of the powers it asserts is to embed cost-benefit default principles into the regulatory process.

Another way rules can fail the OIRA review process is to fail cost-benefit analysis [...] 

If EPA [proposes] a rule that has much higher costs than benefits, that rule may not make it past OIRA. Among environmental rules, non-air rules fare the worst in a cost-benefit framework. Rules governing air pollution often produce relatively (or even very) high benefits in relation to costs on account of reductions in particulate matter. Indeed, according to OMB, in the last decade clean air rules have produced a majority of the total monetized benefits conferred by all of the major regulations in the federal government. Rules on water pollution, toxics, and hazardous waste contamination do not have a single category of benefits - like reductions in human mortality due to reductions in particulate matter - that makes it possible for them to clear the cost-benefit hurdle. These programs fare poorly in OIRA’s process of review. EPA’s proposal to regulate coal ash changed markedly while at OIRA, and has not seen the light of day since it was proposed. EPA initiatives on toxics have stalled at OIRA for years [...] 

D. When Does Review End (and Begin)?

The common law of 13,563 also determines the timelines under which OIRA operates. As discussed above, EO 13,563 explicitly reaffirms EO 12,866, which is the executive order that sets forth timelines for OIRA review: 10 days for pre-rule actions, 45 days for final rules on subjects already reviewed and little changed, 90 days for everything else [...] 

This is not the way the OIRA process now works. Many, many rules linger at OIRA long past the 90- or 120-day deadline. Many pre-rule actions stay long past 10 days. Some rules have been at OIRA for years [...]

To sum up, on the matter of deadlines, OIRA has broken entirely free from the constraints of EO 12,866. The 10-day, 45-day, and 90-day time limits on OIRA review perhaps survive as benchmarks, but nothing more. To maintain the fiction that deadlines still exist, OIRA extends review indefinitely at the “request” of agency heads - but these requests, in my experience, often are instigated by OIRA itself. To make matters worse, OIRA has fudged its own failure to meet the deadlines imposed by EO 12,866 by simply not “receiving” some regulatory packages until long after they are sent.

E. What Are We Told?

The last facet of the common law of EO 13,563 compounds the problems created by OIRA’s other innovations to the regulatory review process prescribed in EO 12,866: OIRA follows, and allows the agencies to follow, almost none of the disclosure requirements of EO 12,866 [...] 

OIRA does not explain in writing to agencies that items on their regulatory agenda do not fit with the President’s agenda. OIRA does not keep a publicly available log explaining when and by whom disputes between OIRA and the agencies were elevated. Indeed, when the first elevation of an EPA rule occurred in President Obama’s first term, I drafted a brief memo for the EPA’s docket explaining that elevation had occurred and noting the outcome. OIRA told me in no uncertain terms that the memo must not be made public. Moreover, except in one instance - President Obama’s direction to then-EPA Administrator Lisa Jackson to withdraw the final rule setting a new air quality standard for ozone - OIRA has not returned rules to agencies with a written explanation about why they have not passed OIRA review. Instead, as discussed above, OIRA simply hangs onto the rules indefinitely, and they wither quietly on the vine. This is how it comes to pass that a list of chemicals of concern or a workplace rule on crystalline silica lingers at OIRA for years.

Some agencies do post “before” and “after” versions of rules that have gone to OIRA. These redlined documents often feature hundreds of changes. There is nothing here like the “complete, clear, and simple manner” of disclosure contemplated by the Executive Order. There is also often no document that explains which changes were made at OIRA’s behest. Where, as Sunstein explains, changes might come from OIRA, from another White House office, from another Cabinet head, or from a career staffer in a separate agency, the failure to follow the Executive Order’s rules on transparency means that no one is ultimately accountable for the changes that occur. Who is responsible, for example, for the hundreds of technical changes made to the EPA’s scientific analyses of air quality rules? We simply do not know.