John D. Graham’s departure at the end of this month as head of the White House Office of Information and Regulatory Affairs will be little noticed by the public. His agency, known simply as OIRA, has about 50 employees and operates in the recesses of the White House bureaucracy as part of the Office of Management and Budget. But the tough approach to federal regulation that the owlish, 49-year-old former Harvard professor has taken, weighing the benefits of government rules against their financial cost to business, is likely to be one of the most significant domestic legacies of the Bush administration.

By intervening early in the regulatory process, often as a government agency is writing rules, Graham has set a precedent for White House authority and established a pattern for rule-making procedure that is sure to continue long after he has left to run a doctoral program in public policy at the Rand Corp. in California.

One of the most focused of President Bush’s early appointees — he joined the administration in the summer of 2001 — Graham not only set about revising scores of federal rules that he thought were unwise or not cost-effective, he put in place policies designed to reshape the entire regulatory process. Graham told agencies what kind of data and analyses to use when drafting rules and how to conduct peer reviews. His policies allow anyone, but most pointedly business lobbyists, to directly challenge the data that agencies use to undergird their rules. And he has set standards for the analysis of risks that lead to regulation in the first place.

“These prescriptions are there and will serve the interest of this administration,” said Sally Katzen, who administered OIRA for five years in the heart of the Clinton administration. “The tools he’s created are quite significant because they restrict or cabin the agency’s use of its expertise and experience to do what they’d otherwise proceed to do.”

The White House claims that this has already reduced the annual rate that regulatory costs rise by 68 percent since 2001, compared with the average for the previous 20 years, while increasing the net benefits.

The December report, prepared by Graham’s office, was peer reviewed primarily by pro-business scholars and lawyers, including the anti-regulatory Mercatus Center in Virginia, a business-supported think tank located at George Mason University. The nonprofit advocacy group <OMB> Watch commented dryly at the time that the report, taken as a whole, “probably would fail standards established under the <OMB>’s own information quality guidelines.”

The use or misuse of data is at the heart of Graham’s campaign against what he considers needless or needlessly expensive regulation. Rather than attack the philosophy of regulations and touch off a purely ideological debate, he has questioned the information upon which regulation rests: research, surveys and conclusions that agencies use to justify their approaches and the costs of doing something vs. doing nothing. Graham’s campaign is akin to the broader demand by Republicans in the administration and Congress that federal policies rest on “sound science,” though what constitutes such soundness is itself open for debate.

Graham is a leading proponent of comparative risk analysis: balancing the need and cost of government regulation against the chances of something harmful happening. He founded the Harvard Center for Risk Analysis, which is funded partly by large corporations.

He has been just as deliberate and analytical in building policies that will continue to rein in rule-making. His legacy will be a more skeptical approach to regulations and a further shift of power from federal agencies to the White House.

The next OIRA administrator will be philosophically close to Graham, according to lobbyists and agency officials who work on regulatory issues. Contenders for the post include Susan Dudley, regulatory studies director at Mercatus, and Tom Sullivan, a former executive director of the National Federation of Independent Business Legal Foundation and now chief counsel for advocacy at the Small Business Administration.

One of Graham’s longtime top assistants, former GOP congressional aide Paul Noe, will probably help veteran OIRA deputy Don Arbuckle direct operations until a replacement for Graham is named.

In addition to Graham’s agenda, the agency also will probably keep his skillful approach to public relations, combining an almost startling openness on its regulatory deliberations with secrecy about its preliminary work with federal agencies.

Graham has pushed for consultation with agencies earlier in the rule-making process than his predecessors did, and those discussions are not public. By the time that many rules come to OIRA now for official review, a private decision about their fate often has already been made, sometimes after the agency incorporated OIRA’s suggestions.

One of the first tasks for Graham’s replacement will be to finish what he has started. Like many administrators nearing the end of their tenure, he has been pushing out as many major proposals as possible, which his successor will have to implement.

In November, he issued a directive that would restrict the ability of federal agencies to shortcut the laborious rule-making process by giving interested parties such as corporations unofficial guidance about how the agency would implement a new law.

Agency officials worry that the new policy will have a chilling effect on interactions between regulated industries and the agency, or that such interactions may become more covert, such as taking place in phone conversations rather than written memos.

Then on Jan. 9, Graham proposed another complicated policy that would require agencies to follow his standards in assessing the likelihood that a risk will occur. The National Academy of Sciences will review the proposal in the next few months.

The regulatory office is expected to finalize both policies this year after Graham leaves.

Other challenges ahead for OIRA include finding a way to implement rules critical to the nation’s counterterrorism effort without creating unnecessary bureaucratic burdens, Graham said in a Jan. 11 interview.

The Department of Homeland Security regulates everything from the issuance of Coast Guard merchant mariners’ licenses to the protection of food products, and it has been issuing batches of new rules. The White House has allowed most of them to take effect without challenging their methodology. Administration officials say it is imperative to have the rules in effect quickly to shield Americans from potential attacks.

But some critics, including both liberals and conservatives, say the security rules should be scrutinized as carefully as more routine health, safety and environmental standards are. Conservatives worry about the layers of bureaucracy that are being added, while liberals say it is unfair that the Homeland Security regulations are moving through quickly while other types of rules are stalled.

Homeland Security has “issued any number of regs without going through cost-benefit analysis,” said Katzen. “So when it matters to them to get rules out quickly, they wink and blink. But in areas of public health and safety, where they have longstanding relations with the business communities involved, they’re insistent on satisfying these standards.”

Graham says examining the Homeland Security rules more closely will be important. “It’s a new department that’s developing its own rule-making system, and we’re only starting to develop the science for how you project terrorist risks or the effectiveness of [terrorism] countermeasures.”

Beyond that, Graham says, the agency should review the endless volumes of regulations already on the books to see if they are really necessary. The White House has proposed a series of methods that could be used to curb regulations already adopted, such as directing a commission to review regulations and propose elimination of those that are outdated. But those ideas require legislation, which Congress has not granted.

“The next mission of OIRA,” said Jim Tozzi, who ran the agency for a time in the Reagan administration, “ is to . . . enforce all the stuff Graham has done and then go way beyond just major regs.”

Graham says OIRA is continuing to evolve into an office that is more effective in controlling regulations, even though it is actually smaller than it was during the Reagan years. At the time he was confirmed by the Senate, Graham said that “the standard view was that OIRA is too few in numbers and has too few levers to make a difference.” But he said the office’s focus on key rule-makings and long-term changes in the way that OIRA oversees rules “will make a big difference.”

Supporters of Graham’s approach, and some of his critics, say his influence will continue for years. “People will look back five years from now and see the long-term stratagem,” said Bob Shull, a policy analyst at <OMB Watch. “Whatever it is that we’re in the middle of then, we’ll look back and say that John Graham made it all possible.”

Graham’s influence, 2002 CQ Weekly, p. 2183; OIRA’s Web site