Government watchdog group OMB Watch is urging Congress to impede the implementation of an executive order that increases the administration's influence over regulations and guidance documents issued by FDA and other agencies.

While proponents defended the measure as "good government," House Judiciary Subcommittee on Commercial and Administrative Law Chairwoman Linda Sanchez, D-Calif., called the order a "power grab" by the Bush administration that weakens public protection.

"I am concerned that the main thrust of this new order appears to shift control of the regulatory process from the agencies ... to the White House," Sanchez said Feb. 13 at one of two House hearings on the issue.

The Science and Technology Subcommittee on Investigations and Oversight also heard testimony from legal experts and current and former OMB officials.

The order issued Jan. 18 amends previous executive order 12866, which describes the principles and procedures by which the Office of Management and Budget's Office of Information and Regulatory Affairs reviews significant proposed and final agency regulations (¹ 'The Tan Sheet' Jan. 29, 2007, In Brief).

"While the language of the Amendment to Executive Order 12866 is alarming to many, the fundamental issue is how does OIRA intend to implement it?" the Science and Technology Subcommittee asked in material released at its hearing.

Rick Melberth, OMB Watch's regulatory policy director, urged lawmakers to explore the legality of the order, to oversee OIRA's guidance to agencies on implementation of the new requirements and to "alter the implementation" of the new order through the appropriations process.

"Congress should take a hard look at limiting agencies' and OIRA's spending on the specific elements of the [order]," Melberth said.

Shifting Focus From Public Health To Economics

The new order requires an agency to justify any proposed regulation by identifying the specific "market failure" the regulation will remedy. The original executive order defines market failures as "material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people."

Critics say emphasizing "market failure" as a required rationale for new regulations reduces the importance of other reasoning for regulation and could potentially undermine the intent of Congress in the statutes underpinning regulatory action.

"The president is institutionalizing an anti-regulatory approach by using a market failure criterion in place of actually identifying threats to public health and safety," Melberth testified before the Investigations and Oversight Subcommittee.

Testifying before Sanchez's subcommittee, however, OIRA Acting Administrator Steven Aitken said, "The recent executive order does not make the identification of a market failure the only basis on which a federal agency can justify regulatory action."

Aitken said many public health regulations can also be considered market failure remedies. FDA's recent regulations under the Public Health Security and Bioterrorism Preparedness and Response Act were needed because the free market provides insufficient incentive to prepare for many public health threats, he said.

OMB To Review Guidance Documents

With the amendment, OMB requires agencies to conduct regulatory impact analyses for guidance documents. Previously the order affected only proposed and final rules.

Additionally, it requires agencies issuing "significant" guidance documents to notify OIRA before publishing. The amendment defines significant guidance documents as those anticipated to have an annual effect of at least $100 million, to create a major conflict with another agency's policies or to cause novel legal or policy issues "arising out of legal mandates."

"While it is the case that guidance documents (unlike regulations) are not legally binding on the public, agency guidance documents nevertheless can potentially have an impact on society" comparable to regulations, Aitken said.

Melberth countered that agencies have historically turned to guidance as a faster way of "doing their job" and that subjecting guidances to the same process as regulations will only delay the issuance of guidance.

Melberth and other critics observed that the order's definition of "significant guidance" is broad enough to allow OIRA to review any guidance it chooses. These reviews will further delay agencies' efforts to advise the public on how to comply with regulations, they said.

Aitken explained that the recent order does not mandate that agencies submit all significant guidance documents, but instead requires them to inform OMB of significant guidance documents so there is an opportunity for review.

However, while the original order includes transparency provisions and a timeframe for OIRA turnaround of regulations, the new order does not contain similar provisions for OIRA review of guidances.

"If these provisions do not apply, then agencies may submit guidance to OIRA for review and the public may never know that OIRA is reviewing them, for how long or what changes were made at OIRA's direction," Curtis Copeland, a Congressional Research Service policy specialist, told the Commercial and Administrative Law Subcommittee.

The new order also states a presidential appointee will serve as the agency Regulatory Policy Officer (RPO) and be involved at each stage of the regulatory process, and "no rulemaking shall commence ... without the approval" of the officer.

Since the RPO also reports on regulatory plans to OMB, Melberth argues OIRA can "play an active role during the pre-rulemaking stage when agencies are formulating annual plans for regulatory activities."

But Aitken explains RPOs were already required under the original order and although agency heads were not required to choose a presidential appointee, many did anyway. The RPO for HHS is filled by the deputy secretary, a presidential appointee.

- Adosh Unni, ² 'The Gray Sheet' (a.unni@elsevier.com)

Congress Urged To Address OMB’s Expanded Role In Regulations, Guidance

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