Panel Paper: Regulatory Lobbying At the Office of Management and Budget

Saturday, November 10, 2012 : 10:15 AM
Calhoun (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Susan Webb Yackee, University of Wisconsin-Madison and Simon Haeder, University of Wisconsin – Madison

Do interest groups influence government regulations by lobbying the President’s Office of Management and Budget (OMB)? Federal agencies develop and promulgate hundreds of legally binding rules each year through a process called “rulemaking”.  These rules fill in the gaps of legislation, but they also resolve highly controversial questions of public policy ranging from standards for air quality to child car seats.  Given the importance of regulatory policymaking, it is not surprising that interest groups actively seek to influence regulatory decision making by federal agencies. As a result, agency lobbying has long been the focus of scholars and policymakers alike.

Since the 1980s, presidents from both parties have sought to restrain agency autonomy by subjecting the most important agency rules to mandatory approval by OMB. Today most agencies are required to submit important draft-NPRMs and draft-Final Rules to OMB for approval.  OMB’s review occurs after the agency has taken public comment and composed the draft-Final Rule, but before the Final Rule has been promulgated.  During its review process, OMB reports that numerous rule “changes” occur.  In fact, under President Clinton 55% of draft-Final Rules changed during OMB review, while 76% changed under the latter President Bush.  Many observers criticize OMB review for interfering with the ability of agencies to regulate on the basis of their expertise. Remarkably, we know little about the content of these policy changes, and more importantly, if interest group lobbying contributes to these changes.

This paper combines—for the first time—three datasets.  First, we study all Final Rules reviewed by OMB between January 2005 and June 2011. Second, we study all items in the Unified Agenda of Regulatory and Deregulatory Actions for the same time period. Third, we focus on all lobbying meetings held by OMB with interested parties during OMB’s review of regulation.  The first part of this paper analyzes the determinants of OMB review utilizing Probit Multivariate Analysis. The second part of the paper utilizes a Heckman Selection Model to assess rule changes that occur during OMB’s rule review process to account for potential selection biases.  Shifts in content are identified by comparing the content of the draft-Final Rule submitted by the agency to OMB with the content of the agency’s Final Rule as published in the Federal Register utilizing plagiarism software.

This project innovatively advances important debates in political management, public policy, and administrative law about the extent to which the federal regulatory system is influenced by well-connected organized interests.  It thus combines the normative and speculative arguments of the legal and the political science literatures with a sophisticated empirical research design to test hypotheses about interest group influence that have, to date, remained untested.