JOHN D. GRAHAM, PH.D.
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES
AND REGULATORY AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES
and Members of this Subcommittee, thank you for inviting me to this
hearing. I am John D. Graham, Ph.D., Administrator, Office of Information
and Regulatory Affairs, Office of Management and Budget. Prior to
joining the Bush Administration, I served as a faculty member at
the Harvard School of Public Health, where I founded and directed
the Harvard Center for Risk Analysis.
is my first oversight hearing before this subcommittee, I would
like to say a few words about my objectives as OIRA Administrator
in the field of regulatory policy and then proceed to some remarks
about OIRA's implementation of the Regulatory Right-to-Know Act,
the primary topic of this hearing.
The Bush Administration
supports regulations that are sensible and based on sound science
and economics. My role, on behalf of the President, is to oversee
the activities of regulators throughout the federal government.
Since my Senate confirmation last July, my priorities have been
to (1) establish more openness and transparency about how the Office
does its work, (2) stimulate more analytic rigor in the process
of regulatory analysis throughout the federal government, and (3)
suggest promising regulatory reforms to the agencies - some of these
reforms call for more or stricter regulation for public benefit;
other reforms call for less intrusive or less costly regulation
for consumers and taxpayers. In doing our work we have sought to
respect the expertise of the agencies and the substantive laws governing
the activities of federal regulatory agencies.
On the subject
of openness and transparency, we have deployed our web site as a
vehicle to provide the public an unprecedented amount of information
about the Office. Each day our web site provides new information
about regulations that have been submitted to the Office, cleared
for publication, returned for reconsideration by agencies or withdrawn
by agencies. The web site also provides basic information about
our meetings with the public (names, affiliations, date and topic)
concerning rules under review, copies of return and post-clearance
letters, copies of my speeches and annual reports from the Office.
We have also added a basic "question and answer" section about my
Office, so that the public can learn the basic facts about the Office
of Information and Regulatory Affairs. OMB is committed to this
more open posture because we believe it will facilitate greater
public understanding of our analytic approach to regulatory oversight.
of last year, I have attempted to send clear signals to agencies
that the Bush Administration expects regulatory proposals to be
supported by formal analyses of high quality. In my September 20th
memorandum to the President's Management Council (which is posted
on our web site), I described in some detail the procedures and
criteria we shall use at OIRA to review the work of agencies.
There is a
change underway at OIRA compared to previous Administrations. For
example, in the last three years of the previous Administration,
OIRA returned to agencies exactly zero rules. Since my confirmation
in July, I have returned over twenty rules to agencies under the
authority of Executive Order 12866, the most common reason being
poor quality analysis (see our web site for a copy of these letters).
A return does not necessarily stop a rulemaking forever. In six
cases thus far, agencies have resubmitted improved analyses and
we have cleared those rules for publication in the FEDERAL REGISTER.
We have also encouraged agencies to make greater use of formal,
independent peer review of their technical analyses. We have offered
more deferential OMB review in those cases where agencies have voluntarily
subjected their analyses to open, competent, and credible procedures
of peer review.
OIRA has been primarily a reactive institution that responds to
the regulatory initiatives of agencies. In the Bush Administration,
OIRA has taken a more proactive role in suggesting regulatory priorities
for agency consideration.
we have used has been called the "prompt" letter. In each of the
five prompt letters that I have issued since last September, the
Office has suggested actions by agencies that can save lives, improve
health or protect the environment in a cost-effective manner. The
prompt letter is not an edict from a czar or even a Presidential
directive. It is a public request designed to stimulate agency and
public deliberation. Final decisions about priorities remain in
the hands of the agencies. These prompt letters, and the initial
agency responses, are also on our web site.
letters issued to date have emerged primarily from discussions with
my professional staff. However, there is no reason that members
of the public should not suggest ideas for prompt letters. Although
we are not yet receiving first-class mail due to the events of September
11th, ideas for prompt letters can also be faxed to my
office at (202) 395-3047.
ideas for regulatory priorities can be submitted to the Office during
the annual public comment process under the Regulatory Right-to-Know
Act. And that brings me to the major topic of this hearing, our
annual regulatory accounting report as mandated in the Regulatory
OIRA's 2001 REPORT
17th of last year we submitted to Congress the 2001 Report
to Congress under the regulatory accounting law. Entitled "Making
Sense of Regulation", the 2001 report provides both our annual Report
to Congress on Unfunded Mandates on State, local and tribal governments
and the regulatory accounting information on costs and benefits.
Given the change in Administrations and the timing of my confirmation,
it was not feasible to complete this report in February, when the
budget was released.
A unique feature
of this report was the request for public nomination of specific
regulatory reforms for consideration by OIRA and the agencies. We
received 71 nominations from 33 commenters involving 17 agencies.
My Office made a preliminary evaluation of these 71 nominations
and identified 23 as high priority for agency consideration. In
fact, many of these 23 reform ideas were already Administration
priorities. We are now in the process of discussing these nominations
with the relevant agencies and final decisions about whether to
enact these specific reforms will be made by the them through notice-and-comment
is that this public nomination process was only partly successful
because I have learned that many academics, business groups, state
and local groups, and public interest groups were not fully aware
of this nomination opportunity. Obviously, publication in the Federal
Register is not adequate to inform everyone. For this year's
report, we intend to increase outreach efforts in order to potentially
expand and diversify the public commenters. Those citizens and groups
that choose to participate can be assured that their efforts will
be taken seriously by OIRA.
OIRA's 2002 REPORT
We will soon
be publishing the 2002 regulatory accounting report in the Federal
Register for public comment and peer review, as required by
the Act. I know that over the last several years, members of the
Subcommittee have expressed concern that OMB has issued the Report
after the budget has been released. In future years, we intend to
cover the costs and benefits of all major rules published during
the previous year and then release the draft regulatory accounting
report at the same time that the budget is released. It may be difficult
to publish the final report with the budget due to the statutory
requirements for external peer review and public comment.
by the Act, the 2002 report shall contain estimates of the total
annual costs and benefits of Federal Rules and paperwork (a) in
the aggregate; (b) by agency and agency program; and (c) by major
rule. We shall also provide, as called for by the Act, analyses
of impacts of Federal regulations on State, local, and tribal government,
small business, wages, and economic growth as well as recommendations
for reform. Moreover, the 2002 Report shall also include additional
information in the spirit of the Regulatory Right-to-Know Act about
the Administrations's efforts to make its centralized approach to
federal regulatory policy more open, transparent, and accountable
to the public.
Since we hope
to issue the draft report within a week or two, I would like to
describe some of its major features and findings:
last six months, OMB has cleared 41 significant federal regulations
aimed at responding to the terrorist attacks of September 11th.
These rules address urgent matters such as homeland security,
immigration control, airline safety, and assistance to businesses
harmed by the resulting economic disaster experienced in several
regions of the country.
- We examined
major U.S. federal regulations cleared by OMB from April 1, 1995
to September 30, 2001 to determine their quantifiable benefits
and costs. The estimated annual benefits ranged from $49 billion
to $68 billion while the estimated costs ranged from $51 billion
to $54 billion. Our estimates of the total benefits and costs
of all federal regulations currently in effect are less
reliable because they are based substantially on figures that
the agencies did not produce and OMB did not review. The estimates
of total benefits, which are highly uncertain, range from about
one-half to three times the total costs, which are pegged at $520
billion to $620 billion per year. Total cost figures are roughly
comparable to the federal government's total discretionary budget
authority in FY 2001. The report acknowledges that these rules
also have many non-quantifiable costs and benefits that need to
be considered by policy makers and the public.
Thank you very
much for the opportunity to appear today. I am willing to answer
any questions you may have.