Notice and Comment Blogger Nina Hart recently had the opportunity to interview Sally Katzen, the former head of the Office of Information & Regulatory Affairs (OIRA) during the Clinton Administration. Below she shares insight on her administrative law experience and lessons in leadership.
An Unexpected Path
Sally Katzen says that her path to law school began unexpectedly. “I wanted to be a math major at Smith College,” she recounts, but the College refused to give her credit for her AP Calculus class. “I was bored, so I went casting about for other things.” She settled on Government 101, and liked her professor so much that she enrolled in his Constitutional Law course. Even with this burgeoning interest in the law, Katzen recounts that the details of why she decided on law school are a bit fuzzy. “My senior year in college, on my 21st birthday, President Kennedy was assassinated, and apparently over the weekend I applied to law schools.”
Katzen graduated from the University of Michigan Law School, and spent one year clerking for Judge J. Skelly Wright of the U.S. Court of Appeals for the District of Columbia Circuit. After that year, she went to work for what was then the small firm of Wilmer Cutler & Pickering. Here, she began developing an expertise in both economics and administrative law. “The firm did a lot of communications law, and I was fortunate to spend a lot of time representing CBS and the Communications Satellite Corporation,” Katzen says. “I drafted comments and participated in hearings at the FCC.”
After working on a number of cases before the FCC, Katzen branched out to appear before other agencies as well, such as the Civil Aeronautics Board and the Interstate Commerce Commission. “After a series of adventures [before the FCC],” Katzen notes, “it was relatively easy to work on matters before other agencies”; their procedures are very similar, so it was simply a matter of learning new subject matter. One of the most prominent cases she worked on was United States v. Allegheny-Ludlum Steel, which was the companion to the well-known case United States v. Florida East Coast Railway Co.
During this period Katzen gained her reputation as an administrative law expert, which led Alfred Kahn, Chairman of the Council of Wage & Price Stability, to offer Katzen the position of General Counsel for the Office. As Katzen describes it, her function “was to administer a program run by economists,” which led her to “learn an enormous amount about incomes policy in a very short period of time.”
It was in this position that Katzen first came into contact with the ABA Section of Administrative Law & Regulatory Practice. After the Council of Wage & Price Stability released its draft procedures for the program, Katzen learned that the Section’s Executive Council was going to vote on a resolution condemning the procedures. “I took this personally because I had drafted the procedures.” So, Katzen requested and was granted an opportunity to defend her program before the Executive Council. Recalling the meeting, Katzen said that she was “very impressed” with the questions and engagement of the Council. Her presentation must have impressed the Council as well—after leaving the Carter Administration, Katzen was asked to join the Executive Council, and served as both an Officer and Chair.
During the 1980s, after Katzen had returned as a partner to Wilmer, OIRA’s visibility and political salience grew. In fact, the Office’s activities became an issue during the 1992 presidential campaign after congressional leaders threatened to defund the agency for lack of transparency and allegedly favoring business interests. Katzen served as a surrogate for the Clinton campaign on the issue, and, after being asked if she would like to serve in the Administration, jumped at the chance to lead OIRA.
Lessons in Leadership
“I believe in OIRA,” says Katzen. “If OIRA did not exist, any sensible president, Republican or Democrat, would have to invent it.”
Katzen’s view stems from the basic reality that regulations often have unanticipated consequences. OIRA can mitigate those consequences and promote sensible regulation through two means. First, agencies are required by Executive Order to perform cost-benefit analyses (CBA) for certain regulations, and OIRA reviews agency compliance with this requirement. Second, OIRA facilitates the interagency review process, which occurs when OIRA receives draft regulations and distributes them to all other interested agencies. This multi-agency review simply “makes sense when you have a single president responsible for the whole Administration,” Katzen says. Moreover, this interagency review “is essential today when no problem is one-dimensional.” Describing this regulatory spillover, Katzen remarked, “I remember chairing lots of meetings where someone said, ‘It’s not that you’re invading our turf, but this is going to have an effect on our programs.’ Labor or Treasury might say, ‘before you do this, you have to understand the implications of this for the workforce or for the industry.’ Another agency might say ‘we’re attacking the same problem but doing it in a different way; shouldn’t we try to coordinate?’”
Despite the benefits associated with OIRA review, Katzen says there are challenges. First and foremost, the agencies lack sufficient resources, which impairs their ability to carry out their statutory mandates. Katzen attributes this largely to the current political climate and lack of understanding that the public has for what the agencies actually do. “We have run from government, at least the federal government,” Katzen says. In polls, the public responds favorably to reducing the size of government, but when asked about whether individual programs ought to be cut, the resounding response is, “no.” There is a strong sentiment against government-managed health care, but seniors love their Medicare; people are often put off by government providing benefits, but farmers love their crop insurance and hurricane victims love their loans or grants; people don’t want the federal government in their businesses, but they invariably support food labeling, FDA testing before a drug goes on the market, and USDA meat inspections. And even those people who acknowledge support for some or many government programs often do not translate that to respect for the people who are working in government. Rather than appreciate the dedication and public service of the government employees, the public focuses on “bureaucrat bashing.” “Bureaucrat has become a bad word,” Katzen says. “I think it should be taken off the books.”
A second shortcoming of the current system is that centralized review does not extend to independent regulatory commissions (IRCs). Katzen said that although she initially supported this distinction between executive agencies and IRCs, “In retrospect, I think it was the wrong decision. There are aspects of IRCs that are very different from executive branch agencies, and I respect those. But when they do rulemaking they are doing the same kind of processes.” Undertaking adequate CBA for rulemaking is a discipline that the agencies subject to OIRA review have learned over time. However, the IRCs have not been forced to learn, and also may not have the incentive to do so. As Katzen says, “they too are strapped for resources and do not have unlimited funds, so if they don’t have to undertake CBA, they won’t. As a result, I think the work product suffers, but it may or may not be because they don’t have the capacity; they may just not have the will.”
Apart from these systemic challenges, ensuring efficient and sensible regulation will depend, to an extent, on the relationships that exist between OIRA and the agencies. As Katzen noted, “At any moment of time, the relationships can be very different.” This is because good relationships depend on good communication, which in turn depends on the personalities involved. Thus, for Katzen, approaching agencies with a collaborative mindset and openness is important. Katzen explained, “It’s the agencies that read the comments and deal with the stakeholders every day. And here comes these people at OIRA who don’t have that background, who are suggesting changes and appear to be second-guessing.” Due to this potential for resentment, “how those views are communicated and when can make a big difference.”
Thus, there are two ways for an OIRA Administrator to approach the agencies. One way, is to say, “This is the right way; take it or leave it.” As Katzen noted, this attitude prevailed during the Reagan-Bush years. “When I first arrived [at OIRA] I heard a great deal about the tension, suspicion and hostility that existed between OIRA and the agencies.” Katzen rejected this approach, and, instead, focused on reaching out to the agency heads and their staffs. As each agency head was confirmed, Katzen invited him or her to lunch. In her candid way, she would say, “‘You are going to hear that my staff or I did something which you will not believe. And it’s not believable because it’s probably not true. I will hear from my staff that you or your staff did something unbelievable, and, again, it’s not believable because it’s also probably not true. So if you hear something like that, pick up the phone and call me. We are trying to make sure that you can achieve your objectives in the most efficient and effective way possible; we’re on your side.’” In addition to reaching out to the agency heads, Katzen traveled to each agency to speak with the staff. “I said, ‘this is who I am. I don’t have horns. I admire and respect you. I want to work with you.’” Katzen’s approach took some agency officials by surprise, but helped facilitate productive communications and productive relationships.
The ability to communicate and work well together could yield positive results. Katzen recounted an instance when the FDA wanted to revamp its regulations on seafood safety. At the time, the USDA had multiple inspectors in each meat plant, but seafood plants were visited rarely and only by a single inspector. To rectify the disparity, the FDA came up with a complicated inspection regime, and presented it to OIRA very early in the drafting process. Katzen’s staff listened and then suggested that the FDA consider a performance-based approach, which became known as the Hazard Analysis & Critical Control Points (HACCP) plan. HACCP requires manufacturers to identify points at which there are risks or hazards, and present a way to resolve it; for instance, if something must be frozen, then the temperature must always be below 30-something degrees. The FDA agreed to pursue the HACCP approach, and undertook the requisite notice-and-comment procedures. Katzen concluded, “I remember the day the final rule was released, the head of the FDA called me to say, ‘I just saw the headlines on the editorial page of a Seattle newspaper—‘FDA Issues Sensible Regulations.’ From that moment on, our relationship with the FDA was different than it had been because they understood we could be a friend, a helper.”
Preparing the Next Generation
Katzen spent five years as Administrator of OIRA. During the Clinton Administration she also served as Deputy Assistant to the President for Economic Policy; Deputy Director of the National Economic Council; and Deputy Director for Management in the Office of Management and Budget.
Today, Katzen is passing on her expertise to students at New York University School of Law. In the fall, she co-teaches a clinic with Bob Bauer in Washington DC. The clinic places students in government agencies, and focuses on the role that lawyers play in government as well as how various offices interact with Congress. In the spring, she teaches Legislation & the Regulatory State, a 1L requirement that introduces students to statutory interpretation and the workings of the administrative state.
This post was originally published on the legacy ABA Section of Administrative Law and Regulatory Practice Notice and Comment blog, which merged with the Yale Journal on Regulation Notice and Comment blog in 2015.