EPA, OMB and OIRA: The Biggest Kid on the Block is Back

Flipping a Nation

The Environmental Protection Agency (EPA) recently released their revised ozone rules, which of course came out below science and public health recommendations. The agency changed the ozone levels from 84 parts per billion (ppb) to 75 ppb, whereas scientists have long agreed that only 60-70 ppb will decrease deaths and smog levels dangerous to children, the elderly, and those with asthma and respiratory disease. The press, scientists, and commentators reacted indignantly,although in fact the EPA's move surprised no one.

Industry and the Bush administration had weighed in to kill a secondary standard that EPA staff had recommended. The EPA's secondary standard would have allowed agency discretion to set temporary standards in the event of certain conditions like weather, for instance in to protect vegetation and wildlife from ozone exposure during growing seasons.

Considering the urgency of these proposals to protect humans, vegetation, and wildlife, the EPA issued a flaccid ruling. But in announcing their weak ruling, they held a full-court press conference to give EPA leaders the opportunity to beat their brave, intrepid, heroic chests. Administrator Stephen Johnson spoke of standard as, "the most health-protective eight-hour ozone decision in the nation's history".

In response, a New York Times editorial described:

"The big surprise was Mr. Johnson's proposal to rewrite the Clean Air Act to allow regulators to take costs into account when setting air quality standards. Since this would permanently devalue the role of science while strengthening the hand of industry, the proposal has no chance of success in a Democratic Congress."

Really? Why would that have no chance? The Bush administration has long been whittling away government regulation, privatizing various common assets like air, natural resources, forests and health, acting as a negligent steward for American citizens, and Congress has been quite complicit. The spin we hear about how the redistribution of national resources to private entities as a principled, constitutionally sound, economic idea, is well, a way of rewarding business with public assets. In driving for re-election, all elected public officials, especially those in Congress, get rewarded for such largess.

We can count the ways that our government ignores science. The EPA itself attempts to gut the Clean Air Act at every opportunity, for instance after Hurricane Katrina (pdf!). But to the NYT editor's point, is Johnson's cost/benefit proposal outlandish? Does it have not a chance of passing?

The EPA Saves "Living" Things: Documents

Johnson called the Clean Air Act a "living document" that needed to be "refurbished", "overhaul[ed] and enhance[ed]", "modernize[d] and upgrade[d]". There's really nothing to complain about on the face to this statement. Johnson announced his four "principles" for a Clean Air Act, including, to"allow decision-makers to consider benefits, costs, risk tradeoffs, and feasibility in making decisions about how to clean the air." The Clean Air Act was not "a relic to be displayed in the Smithsonian", he said.

The Times editor pointed out that Johnson's proposal would "cut to the very heart of the Clean Air Act", which was written to protect science from special interests by mandating rule-making based on health, not economic costs.

As we have witnessed, when the first hint of pollution regulation arises, any energy company worth its salt begins wailing about "technology not being available", about the exorbitant cost of the proposal, and about all the risks of complying when there is such scientific "uncertainty". Companies did just this when they held the nation in a decades long trance while they chanted about global warming uncertainty. Recognizing hints of recent history in his statement, and knowing how Johnson's incredulous suggestion could easily put estimates about cost and feasibility squarely in industry's park to the detriment of clean anything, we should be alarmed, perhaps leap into action and phone all our legislators.

However the NYT editor's tone sought to sooth us by calling Johnson's pronouncement a "revelatory moment", one that signaled the administration's "cry of frustration at being largely unsuccessful in undoing three decades of environmental law". Like the wolf frustrated in mid-hunt? One last guttural, spine chilling howl before giving up its prey -- and the fawn darts into a thicket of brambles just in the nick of time, a small defiant flick of its white tail?

Can we argue so optimistically, as the NYT editor did, that the Bush administration attempts have been "largely unsuccessful"? Knowing that standards should be set according to science can we be assured that, "the proposal has no chance of success in a Democratic Congress"? We love this view, can we share the optimism?

Ozone Decisions, Sunset Regulations and the Doyenne of Death

In Johnson's ozone ruling he said he followed the letter of the law and ignored "costs, net benefits and implementation challenges of more stringent standards", as required by the Act. Despite his words, scientists say that his new 75ppb standard was in deference to industry. Rogene Henderson, who chairs the Clean Air Science Advisory Committee, told Platts Energy: "I think [Johnson] is responding to the pressure of the industrial groups about the cost".

The idea that agencies need to consider the costs of clean water and air rulings on "small business" seems intuitive. But it can be manipulated to leave small businesses susceptible to lobby manipulation by groups like the National Coalition of Petroleum Retailers, who may officially represent "small business", but whose aims may appeal most strongly to huge business. For example, look at San Francisco's attempt to limit bisphenol A, and the immediate lawsuit that of course included BPA manufacturers, but also listed as parties to the suit local toy stores.

Various White House meeting records also indicate influence on the EPA from the Office of Management and Budget (OMB), and its Office of Information and Regulatory Affairs (OIRA). A series of memos between Susan Dudley, the OIRA administrator, and the EPA, detail the Administration's influence in crafting the rule (available online www.regulations.gov). Over a couple of exchanges, the EPA refused to back down on the secondary standard. Then administrator Dudley issued a 'President-says-so' order March 12th: "The President has concluded that, consistent with Administration policy, added protection [Orwellian Doublespeak?] should be afforded...by strengthening [more OD?] the secondary ozone standard and setting the secondary standard identical to the new primary standard..." Thus, the EPA was over-ruled.

So despite the New York Times characterization of the Bush administration's futile attempts, Susan Dudley was chosen by Bush to head the OIRA, where she has distinguished herself by attacking what she see as over-regulation, decrying the diminished role of the OIRA and OMB in overseeing the regulations that agencies enacted. In the 1990's she roundly criticized the effect of a Clinton executive order, which shifted regulation out from under executive control to independent regulatory science agencies like the EPA. Dudley said the OIRA and OMB under Clinton had been made impotent and she urgently advocated for cost benefit analysis, especially for ozone and particulate matter rules. In the anti-regulatory publication by regulation allergic Cato Institute, she chafed at how OIRA had lost its standing as the "watchdog for social welfare". (Regulation, Fall, 1997) As Reagan and H.W. Bush did before him, the current Bush administration has now spent the last 8 years pulling authority back into the executive branch. Dudley's interests are clearly aligned the administration's.

When Bush considered Susan Dudley to run OIRA, according the the Washington Post in 2006, "'Frank O'Donnell of Clean Air Watch called Dudley 'a true anti-regulatory zealot' who 'makes John Graham (previous OIRA head and Mercatus executive) look like Ralph Nader.'" In 2006 Public Citizen and OMB Watch published a report about Susan Dudley on the eve of her appointment to the OIRA, titled "The Cost Is Too High: How Susan Dudley Threatens Public Protections". The two groups argued against Dudley's appointment to the OIRA -- because her approach to regulation, they argue, was laden with "extreme-antiregulatory ideology". Public Citizen and OMB Watch went on to detail her background at the neoliberal Mercatus Center and her dedication to "embedding cost considerations in all laws that authorize agencies to protect the public, including...'safety first' laws" (like Clean Air Act).1

Of course cost/benefit calculations involve valuing health, the environment, and quality of life. When considering the cost/benefits of smog then, here's a question: what's an acceptable threshold for the number kids who are forced to stay inside on high ozone days to prevent asthma attacks? Thousands? Millions? Particular cost-of-death calculations are often seemingly arbitrary, and long-term injury or morbidity that may or may not truncate a life are treated in an even more speculative way by CBA. Moreover, the end, what does this say about how the US values its citizens, its children?

At the other end of the age spectrum, according to the OMBWatch/Public Citizen report "Dudley has supported a senior death discount that counts the lives of seniors for less than the lives of the young". While this may be standard actuarial practice, pollution is more dangerous to the elderly, which make her calculations seem savage. For the prospects of regulations protecting our welfare the report pulls no punches in painting Dudley as the doyenne of death.

What Happens in "The Catbird Seat"

The report's authors also point out that not all "costs" have the same moral and ethical value. With the government's "regulatory budgeting", they say, "industry can knowingly expose the public to grave harms, enjoy the financial benefits of failing to take the steps necessary to protect the public, and then use compliance costs -- the costs of finally doing the right thing -- as a shield against being forced to comply with new protective standards."

Then there is Dudley's advocacy for sunset regulation, which 'imposes automatic extinction to regulatory policies then puts agencies in the position of having to justify regulations'. As we can see from global warming, environmental damage accrues with indecision. By the time a piece of the Antarctic the size of seven Manhattan's drops off, well, too little has been done too late. Decades go by with corporations lobbying for quarter to quarter profits, as the ice melts.

Finally, as Public Citizen notes: "Dudley would impose "regulatory budgets": fictional budgets of industry compliance costs, with a cap. Once an agency like the EPA hits its cap, it would be forced to stop promulgating any new protective standards, no matter how great the need."

As part of its regulatory oversight OIRA invites industry to suggest changes to federal rules. The Washington Post reported that shortly into President Bush's first term, when the OMB asked for public input on which regulations should be revised or killed, Mercatus submitted 44 of the 71 proposals that the OMB received. OMB approved 15 of them according to the National Journal.

In 2002, this number increased significantly. 267 regulations were targeted, 80 from business associated organizations and a couple dozen from Mercatus. As a result, in 2001 and 2002 the Clean Air Act and the Clean Water Act were changed by proposals that benefited industry sponsors like BP Amoco, ExxonMobil and Koch Industries and other Mercatus donors.2 The Public Citizen/OMB Watch analysis predicted that when Dudley headed the OMB she "will sit in the catbird seat, overseeing the entire executive regulatory process...able to slow, stall, weaken regulatory proposals" to the detriment of public health and the environment.

Ozone Rulings and Regulatory Agencies

Bush worked around the nervousness surrounding Dudley's nomination by appointing her during Congress's recess. Dudley then immediately began to reclaim more ground for the OIRA. Specific to the smog ruling we opened with, Dudley had long advocated against smog regulations on behalf of industry. In 1997 testimony before the Senate Committee on Environmental and Public Works on the Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety she argued incorrectly as the Vice President of "Economists Incorporated" that smog was beneficial because it protected individuals from ultraviolet radiation. In the same presentation she asserted preposterously that since research showed that asthma rates were associated with poverty, a smog ruling would have the "perverse effect" by costing communities money, which would in turn increase poverty and asthma. She now works for government and on behalf of citizens instead of industry, but she employs the same line of thinking.

The OMB, for its part, has the EPA in its sights for what it deems as engaging in misguided rule-making based on unreasonable scientific uncertainty and high costs. In the 2007 annual report to Congress The Costs and Benefits of Federal Regulations, OMB criticized the EPA for its determinations of the health effects of particulate matter: "the degree of uncertainty in benefit estimates for clean air rules is large. In addition, the wide range of benefits estimates for particle control does not capture the full extent of scientific uncertainty", the agency wrote, managing to insert "scientific uncertainty" into every sentence, in order to deny the EPA its scientific evaluation of the health benefits of particulate matter regulation.

The OMB authors further single out six EPA rules on drinking water which they say cost state, local, and tribal governments or the private sector "over the threshold" of one hundred million dollars annually. Of course this OMB analysis doesn't expound on the enumerable benefits of clean drinking water free of cleaning agents, disinfectants or arsenic. And why one hundred million dollars? Some Senator's houses cost nearly that much. And this is a drop in the bucket compared to the Iraq war, which cost $341.4 million per day and has some mighty uncertain benefits.

The 2007 OMB costs and benefits report grounds its analysis in the philosophy that economically well-off countries have strong property rights and minimal regulation. The draft document often veers to pure right-wing ideology, citing the Heritage Foundation for information and absurdly saying that Communism was the result of excessive regulation gone awry.

Strengthening their hand, the Clinton/Bush II Executive Order 12866, and Bush's two recent amendments, increased OMB/OIRA's authority over the "independent" regulatory agencies, including putting executive appointed regulatory policy positions into each (decreasingly) independent agency.

No More Neighborhood Wimp

In an issue of Regulation in 1997 Dudley wrote before she was administrator about a previous OIRA administrator who had bragged that OIRA was the "biggest kid on the block", so other agencies had to respond to its agenda. She complained that the OIRA under Clinton was the neighborhood wimp. So although Dudley's perch at OIRA may be short-term, she has been preparing her tenure for decades and when nominated by Bush strode in to the post with a clear agenda.3

Johnson's proposal to rewrite the Clean Air Act is not out of left field, rather something urged for decades by industry, various government agencies, congressman and lobby groups. Furthermore, it's no more surprising then his smog ruling, if more appalling, since the changes he speaks of have been in the works for years and in fact progress towards the goals he articulated is well underway.

Health and the Environment: The Public's Standing

You'd think Johnson wouldn't even mention to Congress rewriting the Clean Air Act, given the spotlight on the EPA's recent record on the environment and the vocal admonition of members like Senator Boxer (D-CA). But Congress, though recently vocal against the EPA's refusal to move on environmental laws, has at times acquiesced eagerly to business deregulation and cost benefit guided rulemaking. Thus, the current ease and confidence of Dudley in thwarting the goals of the EPA. Congress of course touts progress on all fronts, business, environment, and health, but business generally comes out the biggest winner.

Our intent is not to focus entirely on Susan Dudley, anymore than it is to focus on Stephen Johnson, or George W. Bush. They're all accomplices to a larger agenda which seems outmoded and outdated, that needs to be "overhauled" and "modernized". We are not in competition with Soviet ideology, capitalism is not merely ascendant, it's dominant -- so arguments in last year's OMB report to Congress about regulations on Clean Air and Water being nigh to Communism are absurd.

We live in a time when kids can't play outdoors because of smog, when business pollutes with abandon then screams about a rule that mildly asks, please don't pour oil into streams. We live in a time when the UN warns monthly about climate change and rising seas. This is the state of our nation today. To Johnson's comment about the Clean Air Act not being a museum piece, it may be that the administration's decades old way of thinking deserves only to be encased in Plexiglas in a museum.

We live in a time when business calls the shots in Congress, in the White House and in the Judiciary, and we should all wake up to that truth. Yet voters still respond to "red phone" imagery with a knowing nod of utter naivete. There is no threat bigger than ourselves -- we are the traitorous monsters in our midst.

When the phone rings -- red, blue, yellow or green -- in the White House, in your Congressperson's office, or at the court house, it's not some nameless international threat, but an American industry whose TV advertisements you hum to and whose brand you endorse, and the person on the other end is calling to murmur in the lawmaker's ear about less regulation. One hand of the caller is slipping dollars into the decision-maker's pockets while the other waves fanatically to citizens about the economic doom of Clean Air and Clean Water, about the unemployment that will follow, and balance sheets that will run red. That's what happens when the red phone rings in the White House in 2008. Let's get real.

So what will elected representatives do for Clean Air? What they always do? Should the world have faith that Congress will protect Clean Air and Water? Sure, as long as somehow business benefits. But citizens have a choice, and always a voice, so we'll veer positive here. The NYT editor's right. The US evolves. Congress will see Johnson's clumsy marionette arms and legs being yanked by OIRA, his mouth voicing the agreed upon words from the decades old script. And in our dream world, your Congressman will answer the phone when citizens call, skip the form letter reply, and renounce Johnson's quest to rewrite Clean Air considering notions thrummed by business such as unbearable costs, scientific uncertainty, lack of feasibility, and job trade-offs.


1The report details how during seven years in the 1990's, Koch Industries (a petrochemical company) was found by the EPA to have spilled 3 million gallons of oil (300 unstopped leaks) into waterways in 6 states, and was fined $30 million dollars as a civil penalty (Koch founded Mercatus and is its largest contributor).

2 Incidentally, Mercatus donors included Merrill Lynch, JP Morgan Chase, NYSE, Fanny Mae, and Freddie Mac. A quarter of the proposals the Mercatus submitted to OIRA in 2001 and 2002 were for financial services deregulation.

3Executive orders and congressional laws paved the way, for instance in the 1990's, for frules such as the Unfunded Mandates Reform Act (1995), the Government Performance and Results Act (1993), and the Small Business Regulatory Enforcement Fairness Act (SBREFA) (1996) -- all addressed regulatory and reporting costs without expanding definitions of benefits. SBREFA, for example, spares businesses from what could be burdensome regulatory costs. Bush's latest rules significantly strengthen the clout of the agency.


Acronym Required wrote previously about the EPA, the environment, and public policy.

follow us on twitter!