The Bush administration has turned back the clock with John Graham in place as head of OMB’s Office of Information and Regulatory Affairs (OIRA), which as an arm of the White House has the authority to review and possibly reject or amend new agency regulations. Graham, whose nomination was overwhelmingly opposed by the environmental community, labor unions, and public health advocates, has moved swiftly to create new barriers to health, safety, and environmental protections, and to assert centralized control over regulatory policy at OIRA. Subverting Congress Graham began his tenure with an agency-wide memo back in September of 2001 indicating his intent to elevate the use of monetized cost-benefit analysis in regulatory decision-making. Unfortunately, benefit estimates for health and safety standards are derived almost exclusively from avoided fatalities. They exclude or devalue other impacts, such as morbidity, effects on ecosystems, and equity considerations, which are difficult, if not impossible, to monetize. Moreover, even for measures of avoided fatalities, the sort of monetized cost-benefit analysis favored by Graham suffers from severe limitations and a host of questionable analytical assumptions. For instance, OIRA directs agencies to “discount ” -- or lower the dollar value of -- lives saved in the future compared to lives saved today, which has significant implications for regulation aimed at preventing cancer or other diseases with long latency periods. Such methods rig the system in favor of inaction. Indeed, for precisely this fear, Congress has expressly prohibited agencies from basing many health, safety, and environmental standards on cost-benefit analysis. Under the Clean Air Act and the Occupational Safety and Health Act, for instance, saving human life is supposed to be preeminent. Unfortunately, Graham and the administration appear intent on ignoring these directives, forcing agencies to adopt cost-benefit analysis as the primary decision-making tool. Amazingly, all this is happening even though OIRA has no statutory authority at all to shape regulation; its power flows from executive order. Yet as explained below, Graham has not shied away from overriding decisions by agencies, even on issues where Congress has given them exclusive responsibility. Gutting Public & Environmental Protections Graham has already rejected 17 standards -- more rejections than the entire Clinton era -- largely based on objections to agency cost-benefit analysis. In one highly dubious case, OIRA forced the National Highway and Traffic Safety Administration (NHTSA) to adopt a less protective standard, favored by automobile manufacturers, for warning drivers of under-inflated tires, which are linked to thousands of injuries and more than one hundred deaths a year. Graham has also moved to hijack environmental policy, weakening a number of new clean air and water standards in response to industry objections. Specifically:

• OIRA completely gutted a proposed EPA rule to limit runoff at construction sites, as documented in this report, which is the largest source of pollution in coastal waters and estuaries in the United States. Most of this discharge is the result of inadequate permanent controls put in place at the end of the construction. There are many ways to combat this problem, which were embraced by EPA’s original proposal. Yet OIRA completely stripped out any mention of permanent, post-construction controls from EPA’s proposal, and substantially weakened standards for temporary controls, in place during construction.
• OIRA substantially weakened a proposed EPA rule to protect fish and other aquatic life from being sucked up and killed by power plants that use rivers, estuaries, and oceans to cool their systems, as documented in this report. Each year, these plants withdraw more than 70 trillion gallons of water for cooling purposes, killing trillions of aquatic organisms in the process. The good news is that technology exists to cut these losses by up to 98 percent. EPA originally applied a standard to the 59 most harmful plants commensurate with the performance achievable by this technology. Yet OIRA vetoed EPA’s proposal, in apparent violation of the Clean Water Act, which requires standards to be set based on the “best technology available.”
• OIRA forced EPA to withdraw two proposed emissions standards for stationary internal combustion engines and industrial boilers, insisting that EPA provide exemptions from the standards if facilities can show their emissions are below a certain level. The use of such “risk-based exemptions” appears to violate the Clean Air Act, which calls on facilities to make upgrades and cut air pollution using the best available technology. With a risk threshold, particularly a high one, this could negate the need for facilities to make such upgrades and render the standards meaningless. In the case of EPA's standard on internal combustion engines, as many as 40 percent fewer emissions sources would be regulated.

Hijacking Science In an effort well outside the scope of its traditional activities, OIRA is reviewing an EPA report on children’s health before publication -- the first time, to our knowledge, OIRA has ever involved itself in the shaping of a scientific study. Unfortunately, OIRA’s review is probably not an aberration, but a sign of things to come. From the beginning, Graham, who is not a scientist, has signaled his intent to enter the scientific arena. Among other things, he has directed agencies how to conduct scientific risk assessment and moved to add four scientists to OIRA’s team of economists and policy analysts, the first scientists to ever work for OIRA, as part of his effort to centralize regulatory decision-making at the White House. More recently, Graham pushed two industry-friendly toxicologists -- Dennis Paustenbach and Roger McClellan -- to serve on the advisory committee to the Center for Disease Control’s National Center for Environmental Health, according to the August 30 issue of Science Magazine, when the administration put 11 new members on the 16-person panel -- a move environmental health advocates charge stacks the deck in industry’s favor. Paustenbach, who conducts paid risk assessments for industry, testified on behalf of Pacific Gas & Electric, which was ultimately found guilty of poisoning drinking water, in the trial that made Erin Brockovich famous. McClellan is the former director of the Chemical Industry Institute of Toxicology. It’s clear why Graham would want to involve himself in questions of science. For instance, a report or study on health or environmental problems can often create pressure for regulation, which the administration has shown it wishes to avoid. If the administration can shape a report’s findings before it’s made public, it can head off calls for stronger regulation and protect its political soft spot. Regulatory Hit List As part of its annual report to Congress on the costs and benefits of federal regulation, released in December of 2001, OIRA published a list of 23 “high priority” regulations it believes should be rescinded or revised, and has subsequently pushed agencies to make these changes. Many of these regulations are health, safety, and environmental standards, including major clean air and water standards (i.e., New Source Review and Total Maximum Daily Loads). EPA has the most rules on the list with eight, while the Department of Labor is second with five, including one under the Fair Labor Standards Act and another under the Family and Medical Leave Act. OIRA will soon publish its second report under Graham -- OMB Watch recently commented on its draft -- and more such recommendations are expected. OIRA’s target list is developed from recommendations submitted by the “public.” For Graham’s first report, OIRA received 71 such suggestions, 44 of which were from George Mason’s conservative Mercatus Center. Unfortunately, OIRA has given no indication of any sort of process for reviewing these recommendations, nor has any justification been given for rules that received a “high priority” ranking, which would allow the public to evaluate OIRA’s reasoning. Upfront Interference OIRA is becoming more involved in decision-making at the beginning of the regulatory process, taking an “upfront” approach as Graham calls it. This is uncharted territory for OIRA, which previously has only performed a review function. In playing this new role, Graham has sent agencies “prompt letters,” directing examination of specific issues, pressed agencies to revise or eliminate regulations, as discussed above, and for the first time ever, hired scientists to help OIRA engage in regulatory decision-making. This power grab threatens to subvert the prerogatives of health and safety agencies, which have the statutory authority delegated by Congress, the technical and scientific expertise, and the proximity to affected parties -- including regulated interests and the intended beneficiaries of regulation -- that OIRA lacks. In fact, in one case, OIRA has, for the first time ever, actually placed itself in the position of developing regulation, entering into an “unusual collaboration” with EPA to produce standards on non-road diesel engines. Alarmingly, this means OIRA will be functioning without any disclosure requirements, as this role was never contemplated by the executive order governing OIRA transparency. For instance, OIRA could potentially meet with affected interests and dictate the substance of the rule without ever having to disclose this to the public. Meanwhile, even though OIRA may be calling the shots, the courts will be holding EPA accountable. Fox in the Henhouse None of this is surprising given Graham’s background as director of the Harvard Center for Risk Analysis, which is heavily funded by corporate money. In this position, Graham was a consistent and reliable ally of almost any industry seeking to hold off new regulation. For instance, after receiving funding from AT&T Wireless Communications, Graham produced a study in July 2000 that argued strongly against a ban on the use of cell phones while driving, which was being considered by many cities and states at the time. He also downplayed the health risks of diesel engines, as well as second-hand smoke, and argued against a ban on highly toxic pesticides (all after receiving funds from affected industries). In a talk at the Heritage Foundation at the time, Graham said, "Environmental regulation should be depicted as an incredible intervention in the operation of society." As expected, under Graham’s leadership, OIRA has reverted to its activist ways during the Reagan and Bush I administrations, when it came under heavy fire from Congress for continually thwarting crucial public protections and tilting the regulatory process decidedly in favor of regulated industry.