Neomi Rao, a little-known law professor at George Mason University, could soon become one of the most powerful officials in Washington.
President Trump has nominated the conservative lawyer to run the obscure but powerful Office of Information and Regulatory Affairs, a gateway through which federal regulations must pass.
The office, known as OIRA (pronounced oh-eye-rah), would make Rao the Trump administration’s regulatory czar, responsible for vetting and tallying cost estimates for most regulations. The office also resolves conflicts between agencies, and can either sink a rule or send it back for major rewrites.
Rao would also be in a position to promote her conservative views. A critic of “the administrative state” that White House chief strategist Stephen K. Bannon has vowed to deconstruct, Rao has written that the independence of federal agencies should be abolished, their rules subject to White House review, and the heads of those agencies subject to dismissal by the president.
In past administrations, the OIRA administrator has played the role of a check on ideology, but with Rao and many department chiefs all pushing for deregulation, OIRA’s role as objective analyst could be compromised.
“OIRA is the mediator, the referee when agencies are trying to put through regulations,” said Ted Gayer, director of economic studies at the Brookings Institution. “It could be enormously influential in any administration and in this administration even more so because so much of the efforts are going to be on the deregulation side rather than legislative accomplishments.”
Trump’s executive order that two regulations must be eliminated for every new regulation — and with costs and benefits that match — hands even greater authority to OIRA.
In addition, because of the growth of science-based regulations, OIRA has increasingly weighed in on controversial science debates. About a decade ago it hired experts in public health, toxicology, engineering and other technical fields to supplement its experts on policy and economics. Under Trump, it may also have to deal with climate issues.
People familiar with Rao’s writing say it does not show whether as OIRA director she would stand up to an administration bent on tearing down much of the government’s regulatory regime. Trump has said that “we can cut regulations by 75 percent.” But the OIRA director typically lays out the cost of eliminating regulations as well as adopting them.
Among the more controversial aspects of Rao’s writings is her support for the power of the president and the need to bring independent agencies under control of the White House.
One example: Rao has written that the Dodd-Frank financial reform law’s creation of the Consumer Financial Protection Bureau, whose director can be removed only for “inefficiency, neglect of duty or malfeasance in office,” violated the Constitution and was based on acceptance of “virtually unlimited congressional authority to impose limits on presidential control.”
A case challenging the CFPB’s independence is before the Court of Appeals for the District of Columbia Circuit. But Rao’s critique extends far beyond the CFPB.
Rao “appears to support bringing independent regulatory agencies like the Securities and Exchange Commission, the Federal Communications Commission and the Federal Reserve under OIRA review, which would be a major expansion of OIRA and White House control,” Curtis W. Copeland, formerly a specialist in American government at the Congressional Research Service, said in an email.
“There is also a recent article where she indicates that the President should be able to fire the heads of independent regulatory agencies (who currently have ‘for cause’ removal protection),” Copeland added. “Congress set up these agencies to be independent of the President. If the President can fire the heads of these agencies, and (through OIRA) can say whether or not they can issue significant regulations, that is a huge change.”
The Supreme Court has upheld the independence of certain agencies going back more than a century to cases involving the Federal Trade and Interstate Commerce commissions.
Not surprisingly, some liberal groups have opposed Rao, who must be confirmed by the Senate.
“President Trump has proclaimed that his intent is to defang regulatory agencies and gut regulatory protections,” Robert Weissman, president of Public Citizen, said in a statement. “But the OIRA administrator has a duty to ensure implementation of the laws of the land, which require government agencies to issue new rules to advance their missions, not to give corporations a free hand to pollute and pilfer, poison and profiteer.”
In articles and congressional testimony, Rao has also advocated limiting the authority of federal agencies to draw up rules in areas left ambiguous by legislation. She has said that Congress must spell out clearly what it wants agencies to do. Critics, however, say that when it comes to technical regulations, lawmakers lack the expertise to write detailed regulations the agencies are better equipped to draw up.
Rao has called on the courts to review the judicial principle known as Chevron deference, which leaves it up to agencies to interpret ambiguously worded statutes to fulfill legal mandates.
“Deference is one consequence of Congress leaving a significant interpretive space for administrative agencies,” she said in March 17, 2016 testimony to the Senate Homeland Security Committee’s governmental affairs subcommittee. That error has been compounded by the courts, she said, which have also deferred to agencies and have “allowed for the expansion of the administrative state outside the checks and balances of the Constitution.”
Rao has an impeccable conservative track record. A graduate of Yale University and the University of Chicago Law School, she clerked for Supreme Court Justice Clarence Thomas. In 2016 when Thomas’s clerks set up a laudatory website about him, Rao told USA Today that he was “more willing to go back and overturn precedents, to go back and find the original meaning of the Constitution.”
Rao also served as an associate counsel and special assistant to President George W. Bush. Later, she moved to George Mason where she received tenure in 2012. In 2015, she founded the Center for the Study of the Administrative State. Events there have featured critics of federal regulation.
OIRA, created as part of the Office of Management and Budget by the Paperwork Reduction Act in 1980 under President Jimmy Carter, was given a broader role under President Ronald Reagan to review the impact of regulations. Under Reagan’s OIRA director James Miller, the office became known as “the black hole where rules would go and disappear,” said Thomas O. McGarity, a law professor at the University of Texas at Austin.
Some administrative law experts fear that Rao and Trump’s agency heads will all be pushing in the same direction.
“It is important for OIRA to act as a counterweight to the agencies in the regulatory process,” said Ryan Bubb, a law professor at New York University and a former policy analyst at OIRA.
During the Obama administration, for example, OIRA Director Cass Sunstein — a respected friend of the president — “played an important role in forcing the Environmental Protection Agency to improve its cost-benefit analysis of proposed regulations, often leading to an improvement in the final rulemaking in the form of a less-costly alternative,” Bubb said. In the most public case, Sunstein rejected a version of the EPA’s proposed ozone rule, and the president backed him up.
“What you want, in my view, is an energetic, activist agency, counterbalanced by a more centrist, analytical OIRA,” Bubb said. “Key to OIRA’s function is for it to inject some conflict and friction into the rulemaking process.”
But there may be little friction between Rao and other Trump officials.
“Scott Pruitt is by all accounts going to focus on rolling back EPA regulations. Given his deregulatory tilt, the key question about Neomi Rao is whether she will be an effective counterweight and force the EPA to justify its deregulatory actions on cost-benefit grounds,” Bubb said.
“When Cass Sunstein was nominated, there were plenty of environmental activists on the left who were disappointed, because they (correctly) viewed him as a likely roadblock to expanding environmental regulation,” Bubb added. “But I am not aware of anyone on the right who is worried that Rao might hold up Pruitt’s deregulatory agenda. Hopefully OIRA under Rao will continue to play the centrist, analytical role that it has historically.”