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OMB and the Council on Competitiveness
Q: What role did OMB and the Council on Competitiveness play in EPA's life during that time?
MR. REILLY: In the era prior to my arrival at EPA, OMB was a thorn in the side of EPA for its constant involvement in regulatory decisions. [David ] Stockman, when he was Director of OMB, made it a matter of great personal interest to engage specific regulatory choices and argue against EPA proposals. Dick Darman did not really intrude much on our regulation-setting, unless some issue happened to get to the Competitiveness Council, where he could be counted on to weigh in. So, we didn't have that kind of high-level conflict. By and large, I thought we were able to work through many, if not most, of our regulations with the OMB process reasonably well. That was not true of a relatively small number which got a large amount of public attention, I think, as much for the way the issue was framed and dealt with by OMB as for their substantive view.
It is profoundly frustrating to an EPA Administrator to go through all of the careful control processes of arriving at a regulatory decision or proposal and to respect all of the rules against ex parte contact - make sure any contact with the regulated community is recorded, noted, memorialized, public, on the record - and then to have it go to the White House and see many of the same parties engaged in influencing other people who have influence over such decisions without any public record, without any acknowledgment that this is going on. The secrecy that characterized that process, I think, is a source of great mistrust and, potentially, of corruption. Corruption in the sense that it violates process, not that it involves anyone taking any money.
The Competitiveness Council was layered onto the so-called Office of Information and Regulatory Affairs (OIRA) review when the President became distressed about articles in the Wall Street Journal and other places indicating he was reregulating society and repudiating the Reagan era reforms - the deregulatory priority which he, himself, in the Reagan era had championed as head of a regulatory review task force. He had espoused the Clean Air Act and also the Americans with Disabilities Act, so it shouldn't have been a surprise that there was a spate of new regulations to implement those laws. EPA's contribution to regulations was, in fact, relatively small. Something like nine or ten percent of all regulations were EPA regulations, but they tended to be some of the more contentious regulations and to get more attention than those of other agencies.
The President gave to his Vice President, just as Reagan had given to him, the responsibility to get a grip on this. So, Vice President Quayle, wishing to carry out his assigned task, engaged some of these questions. I thought, myself, the way they were engaged, while it was guaranteed to attract attention for the Administration's deregulatory concerns, was not the most constructive way to vet an issue. The Council's selection of issues to make a stand on, also, I thought, wasn't the best. The Minor Permit Amendments issue was essentially a legal issue - when a pollution source wished to increase its emissions by up to 10 tons beyond the maximum allowed in its permit, did that trigger a requirement for a full public review with a hearing or not? Had there been an interest in the Competitiveness Council in avoiding a train wreck on that issue, we would have been able to do it by an early referral to the Attorney General. I don't think there was that interest.
I had a memorandum from my General Counsel basically boxing me in, saying that the approach that the Competitiveness Council wanted was not a lawful approach. Well, once I had that, I didn't have a lot of flexibility. Finally, after months and months of wrangling, and public wrangling at that, Congressional hearings and the rest, the President made a policy call and resolved that as a policy matter, he considered that the Competitiveness Council was correct, i.e., that no hearing was necessary. The Chief of Staff and others in the White House thought that should be the end of it, and didn't fully grasp that lawfully, legally, I had the statutory authority and the President didn't. I recall explaining to Chief of Staff Sam Skinner that I would respect the President's view on the policy, provided that I could be authoritatively assured that such an approach was lawful. Absent an opinion from the Attorney General, I said I would decline to sign a regulation waiving a hearing requirement. The White House got an opinion from the Attorney General fairly quickly which said that the Competitiveness Council was right on the law and my General Counsel was wrong. That provided the basis for accommodating their view, and then, of course, we'll only know what the truth is after it's been tested in court. The announcement of our final position on the issue was front-page news in the New York Times, and occasioned a lot of negative publicity, so much so that President Bush asked his counsel, Boyden Gray, "Who put me in the middle of this?" (Gray told him it was the Vice President's staffer, McIntosh.)
A lot of that I thought unnecessary. There was a certain amount of posturing, I think, to make the case to that segment of the country that was concerned about reregulation, the Reagan Republicans, that we were taking their concerns seriously, we were not reregulating society. The wetlands issue also engaged developmental interests, farmers' groups, and ideological conservatives. It was perhaps a natural for a Competitiveness Council headed by a conservative to latch onto. We, at EPA, successfully held the line on our wetlands delineation, despite very tense battles over it. We repeatedly made the case that there are only about 100 million acres of wetlands left in the country and it's inconceivable that wetlands restrictions could be having a deleterious effect on the economy of 1.6 billion privately owned acres, as some of the critics alleged. Had that process been on the record, had it been more open, had it been less political, had the bases for disagreement been reduced to writing in a communicable, publishable, form, I think we all might have come out better.
But in the end, the specific impact of the Competitiveness Council on regulations, I think, came down to two or three, not more. One was the decision to forego recycling as a requirement for granting permits for new municipal waste combusters, incinerators. EPA's proposal was intended to ensure that certain kinds of waste not go into incinerators, waste containing heavy metals, such as batteries. A condition necessary to qualify for a permit to build an incinerator was to be a commitment to recycle a quarter of municipal waste, and to exclude batteries altogether from the waste stream. The proposal was opposed by cities, and by Senate Democrats such as Senator Baucus. The cities resented what they saw as intrusion and overreaching by EPA. Baucus considered recycling inappropriate to pursue as a Clean Air Act matter. I thought you could make a reasonable argument for or against the proposal. The President was in favor of recycling; I espoused a national goal of 25 percent recycling of municipal waste; and the objective was achievable. But in deference to the critics, and frankly to give the Vice President a win on something, I withdrew the proposal. So, that became a Competitiveness Council victory. The Minor Permit Amendments was the second one.
The other great battle that we had, wetlands, which was a sort of soap opera throughout the Administration, was a stand-off. We did significantly strengthen the enforcement of our wetlands laws, put people in jail for the first time in history for violations of wetlands laws, and increased the number of civil actions and fines substantially. That, no doubt, contributed to the backlash. But we took our wetlands responsibilities seriously. They were, in my view, part of the ecological priority we had espoused.
In sum, the heavy press attention to the Competitiveness Council agenda was reassuring to an important element of the Administration's constituency, while EPA's aggressiveness in carrying out the law honored the President's commitment to be the environmental President.