Outlook hazy for climate regulations? Some environmental advocates say they are dismayed to see Obama select someone whom PHIL FARNSWORTH, HARVARD UNIVERSITY
The federal government’s Office of Information and Regulatory Affairs (OIRA) is about to get a new face. Unknown to many people outside of Washington, D.C., OIRA is located right next door to the White House and oversees all of the rules and regulations that are issued each year, including any dealing with climate. But unlike former president George W. Bush, who encouraged OIRA to assert significant control over rulemaking, President Barack Obama is taking steps that may weaken this office’s power. Or is he? Obama has apparently selected Cass Sunstein, a Harvard law professor and prolific writer on regulatory issues, to head OIRA in a position many call the “regulatory czar”. A key role of this office is to analyze the cost-effectiveness of federal regulations. Many supporters of controls on greenhouse gases are expecting the Obama Administration to issue tough new rules on these emissions, but the choice of Sunstein has them scratching their heads. Sunstein, a longtime friend of Obama’s, had not been officially nominated when this story went to press. Sunstein is generally described as liberal politically and in favor of strong but cost-effective regulations. However, his academic writings have pushed some hot buttons for liberals and environmentalists. Sunstein has questioned some worker safety laws and advocated a very controversial “senior death discount” that calculates a lower economic value for the lives of the elderly compared with the young. Many climate control advocates are rattled by Sunstein’s push to give prominence to cost-benefit analyses when crafting new federal rules, which they say consistently tips the scales against environmental regulations by tallying greater costs than benefits.
Cass Sunstein
they expect to continue the approach of John Graham, OIRA chief under Bush. It was under Graham’s leadership that OIRA consolidated its power over regulatory decisions by requiring cost-benefit analyses. In 2001, Sunstein backed Graham’s nomination to head OIRA, which was under fire by Democrats in Congress. And Sunstein has written in favor of expanding both OIRA’s role in rulemaking and its use of cost-benefit analysis in the rulemaking process, suggesting that OIRA should be allowed to “prompt regulation as well as constrain it.” The office, which is part of the White House Office of Management and Budget (OMB), is “powerful, and not well understood,” says Rick Piltz of Climate Science Watch, a program of the whistle-blower protection group Government Accountability Project, which is aimed at defending government and corporate employees. Piltz believes that
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at times, OIRA can wield power over the agency employees who are charged by Congress with developing rules. “For economists at OIRA to overrule the expertise in agencies is problematic,” he says.
Sunstein on climate change Sunstein has authored more than 500 works and has been called the most frequently cited legal scholar in America, so critics have plenty of material to pore over. He has discussed climate change in a number of publications, and his views have raised some eyebrows among climate experts. Sunstein outlined his opinions on fairness to future generations affected by climate change in a paper he coauthored for the American Enterprise Institute (AEI), a conservative think tank. In the paper, he argues in favor of the use of social discount rates, one of the most controversial aspects of costbenefit analysis as applied to climate change. A discount rate sets, in essence, a depreciation rate over time for the economic value of future costs and benefits. Some experts consider such a calculation morally indefensible when applied to public wellbeing, but the use of discount rates is standard practice in most economic cost-benefit analyses, and economists say the rates reflect a well-documented preference by people for reaping benefits now rather than later. “The destruction of Florida through sea level rise in 200 years, for example, turns out to matter very little in a cost-benefit analysis that relies on discounting,” Sunstein notes in the AEI paper. This might argue for allowing Florida to disappear underwater. Yet, he says, “A refusal to discount may well hurt, rather than help, future generations.” Sunstein explains that
10.1021/es900517v
2009 American Chemical Society
Published on Web 03/11/2009
clash with EPA and other federal agencies as they advance regulations. Obama has lined up an environmentalist’s “dream team” of appointees who support strong emission controls, including Carol Browner, who headed EPA for 8 years during the Clinton Administration and who will advise Obama as “energy czar” from an office in the White House; Lisa Jackson, leading EPA after helping to push New Jersey to become one of the first states to adopt greenhouse gas limits; Nancy Sutley, chairing the Council on Environmental Quality after serving as special assistant to Browner and working on climate issues as deputy mayor for energy and environment in Los Angeles; and scientist Steven Chu, former chief of Lawrence Berkeley National Laboratory and the new head of the Department of Energy. Sunstein already has a history of dissent with Lisa Heinzerling, Obama’s recent pick for top climate adviser at EPA. Heinzerling is a strong proponent of climate regulation and was the lead author of the plaintiff’s brief in Massachusetts v. EPA in 2007, in which the Supreme Court ruled, in agreement with Heinzerling, that EPA has the authority to regulate CO2. In her 2004 book, Priceless: On Knowing the Price of Everything and the Value of Nothing, Heinzerling criticized the use of cost-benefit analysis in setting environmental and public-health regulations and argued for abandoning such analyses in favor of the precautionary principlesa “better to be on the safe side” approachswhich holds that possible harm should be avoided until harmful effects are either ruled out or unquestionably proven. Sunstein responded with a review in the New Republic, arguing that costs must be considered, and the pair’s debate has continued in the pages of academic journals. “I don’t know how the team of rivals will work,” Steinzor says, referring to the difficulty of keeping so many leaders with big, and potentially conflicting, ideas on the same page. The Center for Progressive Reform has published an 18-page GETTY IMAGES; U.S. HOUSE OF REPRESENTATIVES
analysis is a useful and intuitive helping future generations faced way to evaluate regulations, he with climate change may be best says, but his concern about strict accomplished by choosing projects adherence to a cost-benefit apwith the highest rate of return on proach for climate is that “you can investment. In other words, leaving get any answer you want, dependthe maximum wealth to future Floing on how you discount the future ridians will help them deal with and weigh the cost of uncertainclimate change, and ensuring their ties.” Climate impacts are longfuture wealth might be better term and uncertain, so even small achieved through means other than changes in discount rates can add stringent emissions cuts. up to diminish the apparent benIn a 2007 paper published by efits of tackling climate change the University of Chicago, Suntoday. “Climate change is a risk stein takes this view one step farmanagement problem and you ther, arguing that despite its need to approach it that way,” he wealth and its position as the leading emitter of greenhouse gases historically, the U.S. does not have a special obligation to reduce greenhouse emissions. He writes, “Redistribution from the United States to poor people in poor nations might well be desirable, but if so, expenditures Carol Browner (left) and Lisa Heinzerling on greenhouse gas reductions are a crude says. For example, it is important means of producing that redistrito factor in the risks of low-probbution: It would be much better ability but disastrous abrupt clito give cash payments directly to mate changes, which is technically people who are now poor.” difficult to do in a standard cost“That’s not a position that benefit analysis. comes from a starting point of understanding that we may be cooking the planet,” says Rena The way forward Steinzor of the Center for ProgresAlthough few people outside of sive Reform, an organization of Washington, D.C., have ever heard progressive lawyers. “It assumes of OIRA, the office acts as a gatewe can tolerate climate change if keeper for the regulatory authority we even out the inequities and of the federal agencies, influencing give [developing countries] more regulations on pollution, food and money.” However, if damages worker safety, and many other isfrom unmitigated climate change sues. OIRA reviews every “economiare very large, the return on other cally significant” federal regulation, investments may be lost to coping defined as any regulation having an with those damages, and overall economic effect greater than $100 welfare might not improve as million, and as an office of the Sunstein suggests. White House, it can bring political Climate change is different from influence to bear on those meaother regulatory issues, says econosures. This means that if the U.S. mist Gary Yohe of Wesleyan UniEPA develops new rules under the versity, a lead author on multiple Clean Air Act to regulate greenIntergovernmental Panel on Clihouse gas emissions, OIRA will remate Change reports, including the view them and can potentially 2007 report that won the Nobel force the agency to change those Peace Prize. “It’s a global public regulations on the basis of its good problem, and we’ve had those analysis. before, but the diversity of impacts If formally nominated by the and distribution of vulnerability has president and confirmed by the not been as large and as proSenate, Sunstein will be in a posifound,” he says. Cost-benefit tion where he could potentially
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report raising concerns about Sunstein, although the group notes that it does not endorse or oppose any nominee. “He’s an absolutely terrific scholar,” says report coauthor Sidney Shapiro of Wake Forest Law School. “But as head of OIRA, that’s a very specific role, evaluating regulations rule by rule using cost-benefit analysis, and OIRA has always worked against regulations, so is [the apparent choice of Sunstein] signaling a Graham-like approach to running OIRA?” he asks. Richard Newell of Duke University, an economist who supports investing in cutting greenhouse gas emissions, cautions against reading too much into the Sunstein pick. “There will often be an economic analysis that comes along with regulation, but often it’s kind of a sideshow. The analysis is required to be done, but it’s not determinative,” he says. Sunstein’s nomination has been hailed by some industry lobbyists and conservative organizations such as the Competitive Enterprise
Institute, a nonprofit group that describes itself as “advancing the principles of free enterprise and limited government.” The American Chemistry Council, a chemical industry trade group, praises Sunstein’s work on “how to improve regulations to make them more efficient and effective.”
A new OMB? In a memorandum on February 3, Obama ordered the new OMB director, Peter Orszag, and agency leaders to suggest changes to OMB. According to the memo, Obama will then issue an executive order to outline the relationship between OIRA and the agencies and “offer suggestions on the role of cost-benefit analysis”. The memo is seen by policy observers as paving the way to soften OMB’s broad powers, but it is not clear whether OIRA will gain or lose authority. Obama has already overturned two Bush-era executive orders that gave more regulatory control to OIRA and agency political appointees. Obama’s orders
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also restore the vice president’s authority to review agency regulations, which could signal a role for Vice President Joseph Biden in settling disputes over regulations. The watchdog group OMB Watch had been critical of Bush’s approach to OMB and issued a statement saying the group “applauds President Barack Obama’s decision to undo one of former President George W. Bush’s attempts to paralyze the regulatory process.” “That was a good step,” Piltz agrees. “But the problem won’t go away if you have an OIRA director at odds with the rest of the White House and EPA on how you approach thinking about controlling greenhouse gases.” Although Obama’s transition team has made it clear that Sunstein is Obama’s pick, the nomination has not been made officially, and a Senate confirmation hearing had not yet been scheduled when this article was completed. —ERIKA ENGELHAUPT
