Heckuva Job, OIRA

Remember the massive 500 million egg recall back in August? At least 2,000 people reported illness from the eggs; countless others may have mistakenly blamed their misery on some other source of food poisoning. We are now beginning to understand how regulatory pathologies beyond the usual capture story allowed this entirely preventable outbreak of salmonella.

Lyndsey Layton’s article on salmonella-tainted eggs offers an excellent case study of the toxic consequences of deregulatory ideology and a broken “cost-benefit analysis” apparatus. Layton describes years of controversy over bad eggs, which appeared to finally resolve in the late 1990s as the most responsible egg producers realized the terrible reputational consequences they were suffering because of their wild west competitors:

In the spring of 2000, a deal was struck. The egg industry agreed that the federal government would for the first time set rules for egg farms. At a private meeting on the eighth floor of a sleek office building overlooking Washington’s Union Station, Klippen, representing the egg farmers, shook hands with Richard Wood of Farm Animals Care Trust, who was negotiating on behalf of consumer groups. The regulators looked on, approvingly.

“This is how government and industry are supposed to work together,” Judy Riggins, a policymaker at the USDA, whispered to Klippen. And then, nothing. For the next nine years, the government failed to deliver the rules.

Old battles between the USDA and FDA explain some of the lethargy. But I found most remarkable this intervention from the OMB, whose Office of Information and Regulatory Affairs performs cost-benefit analysis on proposed regulations:

It took the FDA until 2004 to get proposed rules through the Department of Health and Human Services and to the Office of Management and Budget, which has final say over new regulations. . . .The FDA thought it had a compelling case. The rules would cost farmers $82 million a year but could save $1.4 billion in medical costs and lost productivity by preventing 79,000 illnesses and 30 deaths a year. Still, OMB “didn’t think there were enough bodies in the street,” Hubbard said. . . . Howard Maguire, who was the egg industry’s main lobbyist in 2008, said OMB had pushed FDA officials to take the proposal off the table.

This sad story is one more confirmation of the Center for Progressive Reform’s bleak characterization of OIRA from 2009:

In the recent past, OIRA has been a place where regulations to protect health, safety and the environment go to die, or at the very least be weakened. It has served as a forum of last resort for special interests. Regulated industries unable to convince Congress not to pass laws protecting health, safety and the environment, and unable to persuade regulatory agencies to go easy on them while drafting regulations pursuant to those laws, have often taken their case to OIRA, where they have met with considerable success, particularly during the Bush years.

As Director of OIRA, [Cass Sunstein now] leads an agency staff that has met routinely with special interests, sometimes exceeding the agency’s mandate to do so. Research from the Center for Progressive Reform, released on the day of Sunstein’s confirmation, demonstrates that this practice continued during the early months of the Obama Administration, before Sunstein was confirmed. In a blog post reacting to Sunstein’s confirmation, CPR Member Scholar Rena Steinzor highlighted the concerns raised by OIRA’s tilt toward industry — at least so far as its OIRA meeting schedule suggests.

Though I agree with CPR’s assessment, the egg story does show a positive role for industry: the leading egg producers actually did want to create some sort of standard to deter worst practices. The standard probably would have been better if there were more balanced involvement in its formulation, but at least the industry acceded to some rules. . . . only to be foiled by ideologues at OMB. How many outbreaks will have to occur, how many hundreds of millions of dollars wasted, before their viewpoint is discredited?

Image Credit: Sakurako Kitsa.

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