An annual draft report from the White House Office of Management and Budget (OMB) misleads the public on regulatory safeguards and makes OMB appear poised to impose misguided anti-regulatory policies, OMB Watch and other public interest groups told the White House last week. About the Report OMB's annual report on the costs and benefits of federal regulations is required by what is often referred to as the "Regulatory Right to Know Act." See Consolidated Appropriations Act of 2001, Pub. L. No. 106-554, 114 Stat. 2763A-161 to -162, App.C §§ 624-25 (2000). Under the act, OMB is also required to submit a draft of each year's report for public comment and peer review. This year, as in years past, the Bush White House has used the annual report as a vehicle to promote controversial anti-regulatory initiatives. In 2001, 2002, and 2004, OMB used the report to solicit from industry a hit list of regulatory safeguards to be weakened or eliminated. Last year's hit list is still an active controversy. In 2003, OMB used the report to propose new policies to govern cost-benefit analysis by agencies in rulemaking. This year's report does not propose any new policies to alter the regulatory process, but it does have a chapter that invites reform suggestions. In one section of the report, OMB finally acknowledges the objections from public interest groups that agency cost-benefit analyses rely on estimates of compliance costs that are significantly overblown. After a discussion of the value of studies that look back to compare ex ante estimates with ex post results, OMB lists a limited number of currently available look-back studies and invites the public to suggest reforms to the regulatory process that would follow from new insights gained by conducting more look-back studies. The White House and industry leaders have been repeatedly calling for automatic sunsets of regulatory protections. Such sunsets would theoretically apply even to proven protections, such as the ban on lead in gasoline. As a first step to such a destructive policy, one bill would increase the number of reviews conducted under the Regulatory Flexibility Act and would call on agencies to ask, during these reviews, whether existing protections should be eliminated. The draft report's emphasis on look-back studies and regulatory "reforms" could be laying the groundwork for a new regulatory sunset policy. In a separate section, OMB explores net benefits as an alternative method of regulatory accounting. In the past, OMB has tallied up the total range of estimated costs for a subset of "major rules" and set that range side by side with the total range of estimated benefits. This year, OMB offered an alternative approach that tallies net benefits rule-by-rule by picking the central tendency of each rule's cost and benefit estimates, subtracting cost from benefit for each rule to derive a net, and then totaling the sum of all major rules' net. Comments OMB Watch and other public interest groups used their opportunity to file comments to call OMB to task for its hostility toward regulatory protections of the public interest. OMB Watch's comments on the regulatory policy sections of the report hit five main points:

1. OMB needs to improve the transparency of this annual process and must be more responsive to the public's comments. Among other problems, OMB has repeated several mistakes in this year's report that were brought to its attention last year. Some of these mistakes have been pointed out multiple times over the years.
2. OMB continues to present the unproven argument that regulation to protect the public interest impedes the competitiveness of American businesses in the global marketplace. OMB offers evidence that is not only weak but, worse, irrelevant to this argument. As to be expected, OMB ignores the wealth of evidence that regulation does not impede national competitiveness but, instead, improves business operations by encouraging companies to create innovative new technologies and to discover more efficient ways of doing business.
3. OMB's section exploring net benefits as an alternative regulatory accounting methodology is both misguided and misleading. It masks highly debatable moral and ethical concerns in a simplistic final number that means, ultimately, nothing for reasonable social policy to protect the public welfare. It appears to be useful for little more than a public relations game, in which OMB's careful caveats about the methodological flaws and limitations of the net benefits numbers are buried far from the pages on which those numbers themselves are presented, allowing the Bush administration to present its pattern of failure to protect the public as though it signified real accomplishment.
4. OMB has provided a puzzlingly limited bibliography of look-back studies, some of which are so deeply flawed that they do not belong on any reasonable list of studies that have something meaningful to say. OMB must take steps to ensure that its use of look-back studies does not result in uninformed "reforms" of the regulatory process.
5. Whatever might be learned from any new look-back studies, we already have a significant body of research that has proven, again and again, that regulatory protections of the public interest not only satisfy their public interest purposes but also improve the economy. Any future reforms, therefore, should not add further burdens to the regulatory process but, instead, should remove unnecessary constraints on agency action, eliminate navel-gazing, and facilitate regulation to protect the public interest.

OMB Watch's information policy group also filed a separate set of comments addressing a chapter of the report on implementation of the Data Quality Act. Other public interest groups filing comments include the Center for Progressive Reform and Public Citizen.