Daily Report for Executives

No. 15, Page A-24

Tuesday January 24, 2006

ISSN 1523-567X, Regulation & Law

Government Operations Graham's Reforms at White House Office Expected to Influence Decisions for Years

Under the leadership of John D. Graham, the White House Office of Information and Regulatory Analysis has developed a variety of methods that interested parties will be able to use to influence federal agencies' decisions, according to nearly a dozen regulatory analysts interviewed by BNA.

The OIRA is part of the White House Office of Management and Budget.

Graham, who has been administrator of the office since 2001, announced Oct. 17 that he will leave the position Feb. 1. He will become dean of the Frederick S. Pardee Rand Graduate School in Santa Monica, Calif.

"He left us a very nice tool box," said William Kovacs, vice president for environment, technology and regulatory affairs at the U.S. Chamber of Commerce. Kovacs was referring to guidance and other documents that OIRA has issued since Graham took over.

These documents include:

· guidance on the quality of information disseminated by federal agencies, including a directive telling agencies to establish procedures by which parties can challenge information that allegedly fails to meet OIRA's standards;

· guidance (Bulletin A-4) on the economic analyses agencies should use when evaluating potential rules;

· guidance on the types of scientific information that federal agencies should have peer-reviewed and a directive requiring agencies to make their plans to peer-review significant and highly significant information available online;

· a solicitation for public involvement in the regulatory reform process that resulted in more than 100 reforms or planned reforms;

· a draft bulletin that directs federal agencies to subject proposed guidance they are developing to the same type of notice-and-public comment required for rulemakings;

· draft guidance detailing procedures federal agencies should use when assessing risks; and

· prompt letters posted on OMB's Web site that urged agencies to issue specific regulations, such as reducing pollution from nonroad diesel engines or improving the Toxics Release Inventory.

Asked which of such tools were most important, Frederick R. Anderson, a partner with McKenna, Long and Aldridge, said he could not make a judgment on priorities.

"They were a package of reforms and actions that all have virtues that would improve government," he said, detailing the various benefits of the divergent documents.

Checking on Building Blocks of Regulation

Mark Greenwood, an attorney with Ropes and Gray who worked at the Environmental Protection Agency for 16 years, said the guidance that Graham developed addresses the building blocks of regulation.

Graham recognized that "a lot of policies are made before rules get proposed or final rules issued," Greenwood said.

Hence, Graham focused on making it easier for interested parties to track the risk assessments and other information that regulators would eventually use to craft a proposed rule or to make other decisions, Greenwood said.

The peer review agendas that federal agencies must post online are a valuable resource, Anderson said.

They allow interested parties to know what scientific information an agency considers significant or highly significant. They let the public know when the agency will have that information peer-reviewed, and they provide contact information for the agency staff who are working on the particular documents, Anderson said.

That means, among other benefits, that interested parties could make an agency aware of information that could affect a risk assessment but that is not yet available, Anderson said, adding that an agency might want to wait until that new information is available.

Guidances Likely to Continue as Policy

Greenwood, Anderson, and nearly every other analyst BNA interviewed, including critics of Graham's reforms, agreed on one point: The guidances Graham has issued will likely continue as policy even under a Democratic administration.

The guidance bulletins remain policy from one administration to the next, unless the succeeding administration specifically withdraws or revises them, said Jim Tozzi, who directs the industry-supported Center for Regulatory Effectiveness. Tozzi worked at OMB from 1972 until 1983, including serving as deputy director of OIRA.

"If they [future administrations] want their policies to be implemented, they will find these useful tools," said James Lamb, a senior vice president at the Weinberg Group, a consulting firm.

The various guidance documents that OIRA has issued will continue in effect because they did not dictate the outcome of any agency's analysis but asked the agencies to articulate their assumptions and the uncertainties in their analyses, said Jeff Hill, who retired from OIRA in 2003.

Documents such as the information quality guidance also will continue to be implemented because OIRA crafted them in consultation with attorneys from federal agencies, Hill said. Those attorneys understand that following the guidance could help them in court if a regulation is eventually challenged, he said.

Group Sees Potential for Obstruction

Sean Moulton, a senior information policy analyst with OMB Watch, a public interest group, agreed that the guidance Graham has issued is likely to remain in effect regardless of which party is in power.

That, he said, is a problem.

While OMB Watch appreciates the amount of information that Graham's guidances have made available to the public, Moulton said, the group "believes the public should have input into the federal government."

Taken together, the various documents have created a process by which virtually every piece of information used by a federal agency can be challenged, he noted.

While environmental groups have occasionally challenged the quality of information an agency disseminated, industry has the most to gain by using OMB's information quality guidance and other guidances to delay federal action as long as possible, Moulton said.

Moulton and Wendy Wagner, an attorney who teaches at the University of Texas, said that the guidances that Graham has issued make OIRA an arbiter of what constitutes proper scientific peer review and risk assessment, but that the office lacks the expertise and legal authority to have that job.

"His foray into substantive areas where OIRA has neither legal authority nor expertise is perhaps the most noteworthy aspect of his tenure at OMB, in my view, and one that sets a very dangerous and troubling precedent," Wagner said.

Graham Hired More Scientists

But Michael Dourson, director of nonprofit Toxicology Excellence for Risk Assessment (TERA), who worked at EPA from 1980 through 1994, said that Graham deserves credit for hiring more scientists.

According to information sent to BNA by OIRA, the office supplemented the economists, lawyers, and other staff it had with an epidemiologist, a toxicologist, and a public health officer while Graham was there.

It became possible under Graham for agency scientists to have technical discussions with OIRA staff, Dourson said.

Graham also encouraged federal scientists who had not been trained as risk assessors to take classes in risk assessment, Dourson said.

Increasing the number of federal staff who understand risk assessment improves the ability of various agencies to work together, he said. The staff may still disagree, but the quality of the discussion of their differences improves, Dourson said.

Over the past several years, TERA has worked with several federal agencies, some of which had differing opinions on EPA risk assessments.

More Effective Government Seen

Tozzi thinks Graham and the guidances he issued can improve government by encouraging effective regulation. Kovacs agreed but said it will take many years.

Tozzi said oversight is key. "Now that John has issued all this guidance, OIRA should return to its roots," he said.

When it was established in 1980 under the Paperwork Reduction Act, OIRA's mission was to oversee federal agencies, not just major regulations, he said.

Since then, the office began to focus on major regulations, Tozzi said.

In coming years, OIRA should use the tools Graham developed to oversee the various ways federal agencies are carrying out their missions and to ensure that they are doing it effectively, he said.

Time for 'Enforcement Mode.'

"OIRA must get into enforcement mode and make the agencies live by the guidances," Tozzi said.

Graham shared Tozzi's view on the importance of effective government.

Asked what he was most proud of as OIRA administrator, Graham said, "We have already cut by about 70 percent the growth of the cost of major federal regulations, compared to the rate in the 1990s."

"At the same time, we have doubled the rate of public health and environmental benefits," Graham said, referring to information in a report sent to Congress by OMB in December 2005.

That was accomplished, he continued, by issuing expensive but beneficial regulations such as the Clean Air Interstate Rule and the offroad diesel engines rule.

The benefits of those rules amount to approximately $50 billion to $100 billion a year, Graham added.

"So the track record is lower costs and larger benefits at the same time. I'm very proud of that," he said.

The OMB report, Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities, is available at https://www.whitehouse.gov/omb/inforeg/2005_cb/final_2005_cb_report.pdf. More information on peer review agendas and Web sites where federal agencies have posted information correction requests is available from BNA's Web Watch at https://www.bna.com/webwatch/DataQuality.htm.

By Pat Phibbs