John Graham, who was confirmed as head of the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) amid a firestorm of protest, is beginning to use the immense power of his office -- which must give clearance to all agency rules and paperwork -- to shape policies and procedures across government, signaling a return to OIRA's activist past. This past week, Graham put agencies on notice with a memo outlining his priorities at OIRA. On the surface, the memo may seem rather benign -- not much more than a restatement of OIRA's current responsibilities. But in a number of ways, it signals a new aggressiveness, which may not bode well for health, safety, and environmental protections. In particular, Graham signals that he will exercise increased oversight over agency cost-benefit analysis, risk assessment, and other various executive orders, including those requiring assessments of effects on our energy supply and federalism. OIRA has always exercised authority in these areas, but with varying degrees of diligence (and in the Clinton administration, at least, provided the agencies a degree of deference). For instance, the federalism executive order, which has its roots in the Reagan administration, served more as a general statement of policy and has never been enforced by OIRA. Graham, however, makes clear that his OIRA will be more demanding of agencies than ever before (at least in this respect). "As OMB Director Daniels has pledged to Congress," he says in the memo, "rulemaking proposals that were not subjected to adequate State and local consultation will be returned to agencies for reconsideration." Interestingly, Graham's memo makes no mention of enforcing an executive order, signed by President Clinton, requiring that agencies give special attention to children's health. The memo is clear that emphasis should be on burdens to regulated industry. On this point, Graham's effort to elevate cost-benefit analysis in the rulemaking process is particularly troubling. Graham's memo indicates that rules will be returned if OIRA deems the agency has performed inadequate analysis, noting HREF="http://www.whitehouse.gov/omb/inforeg/return_letter.html">this has already happened in several cases. Frequently, laws designed to protect public health or safety -- such as the Clean Air Act or the Occupational Safety and Health Act -- forbid agencies from basing decisions on cost-benefit analysis (even though E.O. 126866 still instructs them to do it); instead, saving human life is preeminent. In these cases, Congress has rightly recognized that such analysis is unreliable and frequently biased in favor of costs because of analytical limitations, which can lead agencies to be hyper cautious, leaving the public with insufficient protection. Graham, who served as director of the Harvard Center of Risk Analysis prior to his confirmation, has advocated a different position; once he was part of an amicus brief before the Supreme Court arguing that costs should be considered for clean air rules. The danger is Graham will enforce his vision despite congressional restrictions and the fact that agencies, not OIRA, are statutorily charged with carrying out regulation. As part of his effort to elevate cost-benefit analysis -- also referred to as Regulatory Impact Analysis (RIA) -- Graham's memo advises agencies to subject each RIA to peer review by "qualified specialists." Currently, agencies frequently engage in some sort of peer review -- such as EPA's Science Advisory Boards -- to assess the science and whether regulation is necessary. But RIAs are not subject to peer review. This idea has been a key component of regulatory "reform" legislation -- never enacted, but energetically supported by Graham -- that has been a mainstay since the Contract with America. Currently, anyone can comment on an RIA following publication of a proposed rule in the HREF="http://www.access.gpo.gov/su_docs/aces/aces140.html">Federal Register, and the agency has a chance to respond and incorporate suggestions as it moves to finalize the regulation. The problem with the sort of peer review advocated by Graham is that it is a closed process, conducted before notice is even given to the public. Moreover, on a more practical level, "qualified specialists" will be difficult to find, particularly given limited resources with which to compensate peer reviewers. The danger is that peer review panels would become a stacked deck of those with the time, money, and incentive to serve -- namely regulated industry. Nonetheless, Graham serves up a nice carrot to get agencies to comply: "OIRA will be giving a measure of deference to agency analysis that has been developed in conjunction with such peer review procedures." Consistent with this desire to impose his vision on the rulemaking process, Graham also advises agencies on his preferred method of risk assessment, quoting at length the risk assessment provisions of the Safe Drinking Water Act. Graham was closely involved in writing the Safe Drinking Water Act. It's understandable that he holds the act in high regard -- he even cites the Act in another rule on data quality. Yet its provisions for assessing risk may not be appropriate for assessing risk in all cases, across the whole range of government activities. Indeed, in many cases, an agency's methods for assessing risk will be governed first by its statutory obligations laid out by Congress. Finally, Graham moves OIRA into wholly new territory, indicating he will be issuing "prompt letters" advising agencies to take certain action on regulation. Graham actually issued two prompt letters prior to the memo. One asks the Food and Drug Administration (FDA) to give priority to a proposed rule on trans fatty acids; the other asks OSHA to look into requiring defibrillators in the workplace. By themselves, neither of these letters is harmful, and in fact, may be helpful. However, they raise the question of the proper role for OIRA. OIRA has -- for good reason -- never before attempted to prioritize for agencies, which unlike OIRA, are statutorily charged with carrying out regulation. OIRA has no scientific expertise on staff and lacks the resources and procedural mechanisms to guarantee public involvement in such important decisions. Indeed, the letter to OSHA seems to have been sent because Graham happened to have read a couple of journal articles. This hardly seems a sound foundation on which to base agency priority setting. The case of the FDA rule, however, is less clear-cut. In this case, the agency had already initiated a rulemaking, making it a priority on its own. The public interest community has long complained that agency rulemakings take too long, sometimes more than a decade. It might be an appropriate role for OIRA to provide the occasional whip to make sure that rules are being completed in a timely fashion, and examine the possible sources of ossification (such as budgetary constraints) where it exists. If "prompt" letters are limited to such purposes, the public will be well-served. A cynic might observe that Graham picked his first two prompt letters because they advocate regulation -- something his critics, including OMB Watch, have argued he's predisposed against. Yet, for now, Graham deserves the benefit of the doubt. He may surprise us. However, the prompt letters will be something to keep an eye on, to see if future letters seek to roll back health, safety, and environmental protections. More detailed analysis on this and other OIRA activities will be available in OMB Watch's first monthly report on executive branch issues, which will be delivered to Watcher subscribers in the coming days.