Briefing Book

More Falsehoods from OMB

Regulations may have costs, but they also have benefits.

By Sharon Block

Tagged OMBRegulation

Office of Management and Budget Director Mick Mulvaney has let loose another set of alternative facts—this time about the Obama Administration’s regulatory record. In an April 27 interview with Bloomberg BNA, Mulvaney accused the Obama Administration of “fail[ing] to follow the law” by ignoring the cost side of the regulations that we promulgated. Mr. Mulvaney may think it is okay to blithely accuse public servants of breaking the law for his own political reasons, but I don’t. As someone who was integrally involved in the rulemaking process at the Department of Labor (DOL) during the Obama Administration, I take deep offense at Mulvaney’s accusation—especially because it is blatantly untrue. You don’t have to trust me. Glenn Kessler, The Washington Post’s fact-checker, gave Mr. Mulvaney three Pinocchios for this allegation, concluding that his “sweeping claim is not supported. . . the Obama administration clearly considered the cost side of the equation in the majority of the rules.”

At DOL, no other aspect of our rules commanded more real estate in our final rules than discussion of the costs. Here are a few examples of the number of pages devoted to our economic analyses of the most consequential rules that the Department of Labor promulgated during the Obama Administration:

  • Employee Benefits Security Administration Conflict of Interest Rule: The final rule included publication of an almost 400-page regulatory impact analysis of which more than 40 pages were just devoted to the costs of the rule. We found that the rule would cost the industry between $10 and $31 billion over 10 years.
  • Fair Pay Safe Workplaces Executive Order Rule: The final implementing regulations included a 115-page regulatory impact analysis almost all of which was devoted to the costs of the rule. We found that the rule would cost contractors approximately $4.1 billion over ten years.
  • Mine Safety and Health Administration Respirable Dust Rule: We published a separate 267-page regulatory economic analysis of which almost 150 pages were devoted to the costs of the rule. We found that the rule would impose annualized costs of $24.8 million on the industry.
  • Occupational Safety and Health Silica Rule: We published a final economic analysis of the rule that was literally thousands of pages. The FEA chapter on costs was itself 548 pages. We found that the annualized costs were approximately $1 billion.
  • Wage and Hour Division Overtime Rule: The economic analysis of the overtime rule was approximately 75 pages, most of which was devoted to the compliance costs and transfers—the additional wages that employers would have to pay workers. We estimated that compliance with the rule would cost employers on average $295 million per year and that they would be required to pay workers approximately $1.2 billion more in wages each year.

If we were trying to hide costs, we didn’t do a very good job. Every fact sheet, press release, and Q&A document published with our rules included discussion of the costs of those rules. Moreover, despite the relentless attack on our rulemaking efforts by pro-business, anti-worker organizations, not a single court has found that we failed to do the required economic analysis.

A more serious concern is whether the Trump Administration is going to follow the rules for rulemaking. In the first days of the Administration, President Trump issued an Executive Order on “Reducing Regulation and Controlling Regulatory Costs,” that imposed a “2-for-1” requirement on all rulemaking—agencies must withdraw two rules for every one issued and must ensure that during fiscal year 2017 the net effect of rules is zero cost for business. The word “cost” appears a dozen times in the Executive Order, but you know what word never appears—“benefit.”

The Trump Administration’s failure to acknowledge that regulations have benefits as well as costs belies both the legal and philosophical infirmity of their regulatory policy. It is simply unlawful under the Administrative Procedure Act—the law that defines the federal regulatory process—to make costs the overriding determinant of whether to promulgate a regulation. The Executive Order also contravenes some of the specific statutes that govern the rulemaking process. For example, in the Occupational Safety and Health Act, Congress directed DOL to issue standards that protect workers from toxic substances “unless doing so is infeasible.” Infeasibility is defined as a cost that “threaten[s] massive dislocation to, or imperil[s] the existence of” an industry. That definition is a long way from the “more than zero” cost standard that the Trump Administration is imposing. That’s why the Executive Order is the subject of a lawsuit filed by Public Citizen, the Natural Resources Defense Council, and the Communications Workers of America.

Even more importantly, the Trump Executive Order demonstrates a callous disregard for the role that regulations play in leveling the playing field for ordinary Americans who want a fair shot at navigating today’s complex economy and in protecting citizens from serious threats to their lives, safety, and livelihoods. Should the only question surrounding the  justification for our overtime rule be about how much less in profits multinational corporations will make? Or should we consider how many families may be lifted out of poverty if they get just a little bit out of their paychecks?

For instance, one rule, now delayed, would limit workers’ exposure to respirable silica, which can cause a variety of serious illnesses. I wonder how Mr. Mulvaney would explain to the families of the more than 600 workers whose lives would be saved each year by that rule his Administration’s position that we should ignore the benefit of keeping their loved ones alive in order to focus solely on the dollars that the rule would cost businesses. Mr. Mulvaney should do a better job of understanding the facts, the law, and the heart of the rulemaking process before this Administration does more harm and further betrays the trust of the American public.

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Sharon Block is the Executive Director of the Labor and Worklife Program at Harvard Law School. She formerly served as Senior Counselor to Secretary of Labor Tom Perez, Principal Deputy Assistant Secretary of Labor for Policy, and Member of the National Labor Relations Board. The view expressed here are hers and not those of the Labor and Worklife Program or Harvard Law School.

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