Revesz and Livermore write in BusinessWeek about the opportunities and challenges facing regulation czar nominee Cass Sunstein
February 3, 2009
In an op-ed in BusinessWeek, Richard Revesz, the Dean and Lawrence King Professor of Law, and Michael Livermore, executive director of the Law School’s Institute for Policy Integrity, write about the opportunities and challenges facing Cass Sunstein, President Barack Obama’s nominee to lead the Office of Information and Regulatory Affairs (OIRA). If confirmed, Sunstein will review every major regulation promulgated by any federal agency, giving him enormous influence to shape federal regulation.
Although his Senate confirmation hearings have yet to be scheduled, Revesz and Livermore note that Sunstein, the Felix Frankfurter Professor of Law at Harvard Law School, doesn’t fit into the forced categories of “conservative” or “liberal.”
“His views go beyond ‘corporations are bad, therefore regulation is good’ or ‘business is good, therefore regulation is bad,’” the authors write. “The highest priority in a Sunstein OIRA will be achieving a balancing act of strong regulations that don’t break the bank.”
Revesz and Livermore predict Sunstein will leave his mark in three areas.
First, they say he can push to reform regulatory programs to drive innovation and deliver better results for less money. For example, many companies spend large sums complying with point source regulations (e.g. the tail end of a factory) while equal reductions could be achieved from nonpoint sources (e.g. noxious runoff from pig or chicken operations) at a lower cost.
Second, they write that Sunstein can balance the OIRA review so that regulations don’t get watered down. “He can do this by removing biases that underestimate regulatory benefits and overestimate regulatory costs, ensuring that deregulation is subjected to as strict scrutiny as regulation, and counting the positive as well as negative side effects of regulation.”
Finally, the authors note that Sunstein’s writings on behavioral economics show an openness to expand OIRA review to combat market irrationality, from methods such as direct regulation of derivatives to increasing capital requirements.
“Sunstein has a difficult road ahead,” Revesz and Livermore write. “When job losses and foreclosures are at the top of everyone’s minds, he will need to show that it is in our national interest to pursue smart rules to protect the environment and public health.”
Revesz and Livermore are co-authors of Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health, published last year by Oxford University Press.