Office of Management and Budget Click to print this document


March 11, 2003

Mr. Chairman, 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.

Since I testified last year before this subcommittee, our office has been working to improve the regulatory review process and to produce the reports to Congress required under the Regulatory Right to Know Act, which is the focus of this hearing.

As you know the Regulatory Right-to-Know Act1/, also known as the Regulatory Accounting Act, requires that:

(a) For calendar year 2002 and each year thereafter, the Director of the Office of Management and Budget shall prepare and submit to Congress, with the budget, an accounting statement and associated report containing

(1) an estimate of the total annual costs and benefits (including quantifiable and nonquantifiable effects) of Federal rules and paperwork, to the extent feasible

(A) in the aggregate;
(B) by agency and agency program; and
(C) by major rule;

(2) an analysis of impacts of Federal regulation on State, local, and tribal government,
small business, wages, and economic growth; and

(3) recommendations for reform.

(b)The Director of the Office of Management and Budget shall provide public notice and an opportunity to comment on the statement and report under subsection (a) before the statement and report are submitted to Congress.

(c)To implement this section, the Director of the Office of Management and Budget shall issue guidelines to agencies to standardize

(1) measures of costs and benefits; and
(2) the format of accounting statements.

(d) The Director of the Office of Management and Budget shall provide for independent and external peer review of the guidelines and each accounting statement and associated report under this section.

Today I would like to report on the progress we have made in providing the Congress and the public with the regulatory information and accounting statements required by the Act. As promised last year in my March 12th testimony before this committee, we published on March 28, 2002, a draft report for comment and peer review. After digesting the comments from the public, agencies and peers, we issued last December, Stimulating Smarter Regulation: 2002 Report to Congress on the Costs and Benefits of Regulations and Unfunded Mandates on State, Local, and Tribal Entities. On February 3, 2003, we released this year’s draft sixth report to Congress. These two reports, which devote significant attention to regulatory accounting, are the focus of my testimony.

OMB’s 2002 Final Report to Congress

The 2002 report, which was our fifth annual report to Congress on this subject, includes information on all major rules issued between April 1, 1999, and September 30, 2001, including details on how the agencies and OMB estimated their costs, benefits, and impacts. The report also contained an analysis of impacts of Federal regulation on State, local, and tribal government, small business, wages, and economic growth. The four earlier reports contain detailed information on the costs and benefits of major regulations issued between April 1, 1995, and March 31, 1999, as well as on aggregate costs and benefits of regulation and paperwork in total, by type of regulation, and by agency.

Because the Regulatory Right to Know Act requires more than regulatory accounting, the 2002 report devoted considerable attention to recommendations for regulatory reform received from the public. The report provides an overview of how the Administration is pursuing regulatory reforms and discusses comments from the public suggesting ways to improve that pursuit along with 316 specific recommendations for reform.

These public recommendations were forwarded to the federal agencies to which they applied and the agencies are currently working on determining the appropriate responses to the suggestions. We expect that in our sixth annual report we will report on the results of these efforts.

Appendix A of my written testimony summarizes the report in greater detail. The report together with an appendix discussing the nominations from the public and the comments from the public is on our website at /omb/inforeg/regpol-reports_congress.html.

OMB’s 2003 Draft Report to Congress

We released the draft version of our sixth report to Congress with the President’s budget on February 3, 2003. The draft report expands considerably upon earlier reports, particularly in the area of regulatory accounting. The report presents estimates for the first time of the costs and benefits of major regulations reviewed by OMB between October 1, 1992, and March 31, 1995. With the addition of costs and benefits from rules issued during fiscal year 2002, the report now contains estimates for all major rules issued in the past ten years. The report estimates that the annual quantifiable benefits of major rules issued during this period range between $135 billion and $218 billion with their quantifiable costs ranging between $38 billion and $44 billion. Nonquantifiable benefits and costs for all major regulations issued during this ten year period are found for the individual regulations in the appropriate annual report. It is our intention to continue to report costs and benefits of major rules on a ten-year rolling basis.

For the first time, the report also describes the costs and benefits over a ten-year period for eight cabinet departments and several agencies and programs. Most notably, the report indicates that the Clean Air Program in the Environmental Protection Agency’s Office of Air and Radiation accounts for the majority of regulatory benefits over the past decade (between $106 billion and $163 billion). The President’s Clear Skies Initiative calls for expanded authority for this program to reduce power plant pollution by 70% over 15 years.

The report also contains our Draft Guidelines for the Conduct of Regulatory Analysis and the Format of Accounting Statements. These draft guidelines were prepared by my staff in collaboration with the President’s Council of Economic Advisors. The guidelines are designed to help analysts in the regulatory agencies by encouraging good regulatory impact analysis and standardizing the way that benefits and costs of Federal regulations are measured and reported.

We will be accepting comments from the public on the entire report and the draft guidelines through April 3, 2003. I have also asked expert peer reviewers to give us comments on these guidelines. We are also convening a group of agency experts and practitioners to review and offer suggestions to improve the guidelines. In February, the agencies sponsored a two-day conference of the world’s leading experts on benefit-cost analysis and cost-effectiveness analysis at Resources for the Future. The conference was very well attended and much interest was expressed in improving the analysis of regulatory and public health outcomes.

The draft report also asks for public comment on how federal agencies are currently assessing and managing emerging risks to human health, safety, and the environment, particularly those risks that are subject to substantial scientific uncertainty. We are specifically interested in the role of precaution in health, safety, and environmental regulation. For future homeland security regulations, the draft report requests comment on improving the analysis of the benefits and costs of these proposals.

Appendix B of my written testimony summarizes the 2003 draft report and is on our website at /omb/inforeg/regpol-reports_congress.html.

Thank you very much for the opportunity to appear today. I am willing to answer any questions you may have.

Appendix A: OMB's 2002 Final Report to Congress
Appendix B: OMB's 2003 Draft Report to Congress


Appendix A: OMB’s 2002 Final Report to Congress

The major features and findings of the 2002 Final Report, which was issued on December 19, 2002 include:

Appendix B: OMB’s 2003 Draft Report to Congress

The major features and findings of the 2003 Draft Report, which was published in the Federal Register on February 3, 2003 include:

OMB is seeking public comment on all aspects of the draft report. Comments are due no later than April 3, 2003. OMB is specifically interested in public comment in the following three areas:

1/ Section 624 of the Treasury and General Government Appropriations Act, 2001, 31 U.S.C. ' 1105 note, Pub. L. 106-554, '1(a)(3) [Title VI, ' 624], Dec. 21, 2000, 114 Stat. 2763, 2763A-161.


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