Howard Shelanski

Howard Shelanski University of Florida

Sequestration, Furloughs Slow Down Review of Federal Regs

Cost-benefit analyses save money, regulatory chief says.

Howard Shelanski, the attorney-economist newly installed as President Obama’s regulatory chief, warned a House panel that sequestration and furloughs are delaying his office’s long-anticipated retrospective review of agency rules.

Testifying at a House Small Business Committee on “red tape,” the administrator of the Office of Information and Regulatory Affairs said the sequester “is having a negative effect, constraining us from having as much personnel” as needed to review agencies’ proposed regulations. “All of OIRA and [the Office of Management and Budget] is at bare-bones level of staffing because we’re not filling vacancies,” Shelanski said. “We lose some effort due to furloughs,” which are scheduled for the next two Mondays.

Chairman Sam Graves, R-Mo., opened the Wednesday hearing with a critique of the Obama administration’s “burdensome” approach to regulation, citing a recent Washington Post story about a magician in Missouri who has to take numerous steps to comply with the Agriculture Department’s 28-page rule to use a live rabbit in his act. “Over the last four years, regulatory burdens have increased at an astonishing rate,” Graves said, “Major rules alone have added nearly $70 billion in new regulatory costs. In fiscal 2012, more than 3,800 final rules were issued.”

Despite an effort by the Obama team to look back at existing regulations and apply cost-benefit analysis, the issue remains. “In survey after survey, small businesses regularly cite concerns about the complexity and burden of red tape,” Graves said.

Shelanski told the panel that cost-benefit analysis “very much at the heart of what OIRA does,” and that “a culture of retrospective review is taking hold at agencies. Already employers, many of them small businesses have been saved $10 billion as a result of recent presidential executive orders, he said.

Agencies this month have submitted to his office summaries of their retrospective reviews, which are still being compiled. Giving examples of progress, he said the Housing and Urban Development “is drafting a final rule that would create alternative, more streamlined financial statement reporting requirements for small supervised lenders and mortgagees. The rule would also eliminate duplicative reporting requirements for lenders who already report to other federal agencies. In addition, the Federal Aviation Administration is proposing a rule to update, simplify, and streamline rules of practice and procedure for filing and adjudicating complaints against federally assisted airports. Small businesses would particularly benefit from this rule,” Shelanski added, “which would decrease the time spent on processing complaints by allowing parties to file electronically.”

The lawmakers were told they could expect soon a Transportation Department rule on recordkeeping for truck drivers that will remove “hassle and annoyance” and could save industry $1.7 billion.

Shelanski explained that his office does not perform original research -- which is the prerogative of the agency of jurisdiction -- but does apply critical analysis to determine the adequacy of what a given agency has done and whether it might be done differently. “I share your concern about duplicative or conflicting rules,” he told one member who asked about a Labor Department rule that might overlap with one from the independent Securities and Exchange Commission, the latter of which is outside OIRA’s review authority.

The reviews do not always result in repealing regulations, Shelanski said, because many implement changes and updates or reduce paperwork.