Bush Order Limits Agencies' 'Guidance'

Bush's executive order told agencies they must submit to the White House budget office for review any guidance that has an impact of $100 million or more on the economy and make such significant interpretations available to the public for comment.

Kovacs said the chamber's complaint about guidance "was one of the first issues we talked about" with John Graham, the administration's first regulatory czar at the OMB.

Another change requires agencies to state in writing "the specific market failure" that it intends to cure with a new rule. Insufficient competition can be a sign of such a failure, OMB officials said. Or the government may have to order nutritional labeling because there otherwise would be a lack of information for consumers.

The market-failure concept has taken on new emphasis with the Bush administration. The president nominated Susan Dudley, the former head of the regulatory program at the Mercatus Center, a free-market-oriented research group at George Mason University in Arlington, to replace Graham in the top regulatory job at the OMB. Dudley wasn't confirmed by the Senate in the last Congress and is now a top aide in the budget office.

Public Citizen, a District nonprofit group that monitors regulation, charged that Dudley will use a market-failure standard to create economic barriers to protecting the public.

Under the Bush executive order, regulators also now will have to estimate the total costs and benefits of planned rules. And the process will be overseen in each agency by a political appointee, another provision that public interest groups oppose.

"There is no question who this panders to," said Rena Steinzor, a University of Maryland law professor who is critical of administration regulatory policy. "It's something business has wanted."

Jeffrey Rosen, OMB's general counsel, said: "Simply put: What we are doing here is 'good government.' We are building upon a process that has been used by presidents of both parties to try to institutionalize best practices."

Criticism of the changes is "a tempest in a teapot," said Paul Noe, an adviser to Graham who is now a Washington lawyer. "The executive order promotes better-informed and more accountable regulatory decisions."

Congress should be paying attention to the president's action because he is usurping the authority the lawmakers gave the agencies to regulate, according to Peter Strauss, a professor at Columbia University law school.

"It's maybe not surprising that having lost control of the Congress, the president is doing what he can to increase control of the executive branch," Strauss said.

Cindy Skrzycki is a regulatory columnist with Bloomberg News. She can be reached atcskrzycki@bloomberg.net.