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Industry Ally, Hostile to Health and Environmental Safeguards, Poor Choice for Key Regulatory Post in Bush Administration

Harvard Center Director Tapped for White House Office of Management and Budget

This week the Senate will vote on whether to confirm Bush nominee John Graham for an obscure but extremely influential government position -- Administrator of the Office of Information and Regulatory Affairs (OIRA), within the Office of Management and Budget (OMB). In this role, Graham would serve as the nation's regulatory gatekeeper, passing judgment over all major national health, safety, and environmental standards. Over the past decade, Graham has been an ally of the business community and played a leading role opposing strong government safeguards. If confirmed Graham would have the power to accomplish much of his agenda to roll back vital public health, workplace and environmental protections.

We have already seen a major attack on new public protections by the Bush administration. The president reversed his pledge to control carbon dioxide emissions and supported a congressional override of the ergonomics standard designed to prevent repetitive stress injuries. Bush also has overturned or pared down many Clinton administration rules, including those that reduce arsenic in drinking water, end new road construction in national forest wilderness areas, limit hard rock mining to reduce water pollution and improve energy efficiency standards for air conditioners.

It is clear that the president’s choice for OIRA Administrator represents more of the same. John Graham has garnered strong support from regulated industries because he has repeatedly sided with industry in opposing many health, safety and environmental standards over the past decade. As director of the Harvard Center for Risk Analysis, Graham plays a central role in undermining support for many of the country’s vital protections through his research, work with the media and testimony before Congress. Oil, chemical, auto, drug and food companies, mining and other industrial interests have heavily funded his work.

A diverse array of national organizations and prestigious academics are raising serious concerns about Graham's nomination.

Why OIRA Is So Critical

The development of new regulatory safeguards by federal agencies requires skilled professionals to conduct extensive studies, scientific research and economic analyses. Agencies also must conduct a formal notice and comment process wherein the stakeholders submit written testimony and testify at public hearings. As a result, federal agencies often take years to develop new rules (for example, the recently reversed ergonomics standard was 10 years in the making).

A series of presidential executive orders has provided that all significant pending rules are reviewed by OIRA, which means that its administrator can serve as a last-minute regulatory chokepoint on agency action. Federal safeguards on industrial chemicals, fuel economy standards, air and water pollution levels, tobacco regulation, implementation of a Patients’ Bill of Rights, and virtually every other issue that is critical to human and environmental health fall under the office’s purview.

The review power given to OIRA has, in the past, enabled conservative political appointees and government economists, many of whom are prejudiced against new regulations, to intervene in the regulatory process. OIRA has sought to control the agencies’ economic analyses so that the costs of a regulation appear greater and the benefits less; ordered agencies to base decisions on cost-benefit calculations even when prohibited by Congress, which prioritized safety first; and required agencies to reconsider data that it had already disregarded as scientifically unhelpful or flawed.

For example, under the Reagan and Bush I administrations, OIRA was viewed as a "black hole," and many needed regulations were stalled for long periods, altered to be less protective of the public, or blocked altogether. The office was the home of last resort for regulated industries: Whenever an industry did not prevail in the public rulemaking process conducted by agency experts, it came through the back door to quash a rule. President Bush I created the Council on Competitiveness, the so-called "Quayle Council," headed by Vice President Dan Quayle, to work with OIRA in facilitating industries’ anti-regulation objectives.

The Case Against John Graham

A wide range of organizations and prestigious academics recently wrote to the Senate Governmental Affairs Committee opposing Graham’s nomination and raising serious concerns about Graham’s fitness for the job. Their criticism covers three crucial areas:

1) Graham Has Deep Ties to Regulated Industries: Graham's Harvard Center for Risk Analysis has had more than 100 corporate and trade association funders since it was founded 12 years ago. Corporations contribute 60 percent of the Center’s annual budget. As the government's regulatory czar, Graham will sit in judgment over a wide range of regulatory proposals that will affect companies and industries with whom he has had a long-standing financial relationship, and for whom he has conducted research and public relations activities in opposition to government regulation. Rather than being a fair-minded assessor, opponents of Graham believe he would continue to collaborate with his industry supporters to weaken or stop the issuance of safety protections.

On April 12, 2001, 13 national organizations (including the Sierra Club, Natural Resources Defense Council, Defenders of Wildlife, AFL-CIO and Center for Science in the Public Interest) wrote to the Governmental Affairs Committee outlining their concerns about Graham’s conflict of interest. Their 16-page correspondence details numerous instances in which Graham presented questionable analytical findings that served industry’s goal, which was to avoid or delay potentially costly regulations. During these presentations, Graham identified himself as from Harvard yet typically failed to reveal his connections to interested corporate sponsors or the extent of his collaboration with industry. Graham’s habits are in marked contrast to the standard practice within academia of maintaining an arms-length -- and often even contractual -- relationship with those corporate funders that have a direct stake in the outcome of research.

The letter from the 13 organizations cites instances of Graham’s efforts on behalf of industry in relation to the regulation of tobacco, food, pesticides, cell phones, air bags and dioxin. Documents submitted with the letter reveal that Graham solicited $25,000 in the early 1990s from tobacco giant Philip Morris and later received funds through its subsidiary, Kraft Foods. Graham also wrote letters to Kraft in which he suggested the possibility of raising $25 million from the food industry for work on the "food safety debate."

In March, Public Citizen released an investigative report, "Safeguards at Risk," which details many examples of Graham's collaboration with industry and raises questions about the soundness of his research and methods. That study was endorsed by the Center for Science in the Public Interest, Health Care Without Harm, the Science and Environmental Health Network and the Center for Health, Environment and Justice.

2) Graham Has Conducted Questionable Research: Recently, two separate letters from 74 academics – including 11 colleagues of Graham’s from Harvard Medical School and the Harvard School of Public Health, which houses Graham’s Center – wrote to the Governmental Affairs Committee in opposition to the Graham nomination. Both letters raised concerns that Graham’s research has downplayed hazards faced by the public, one suggesting that his work shows "a remarkable congruency with the interests of regulated industries."

Serious questions have been raised about the positions advocated by Graham, the research underlying those positions and the possible corporate sponsorship of that research. For example, in March 1997, when questions were being raised about the safety of passenger-side air bags, Graham argued in news appearances and before the National Transportation Safety Board that a new, unpublished Center report had convinced him that passenger-side air bags were not cost effective enough to justify being mandated. His research, Graham suggested, showed that passenger-side air bags cost $399,000 for each year-of-life saved. After harsh criticism from auto safety advocates, Graham’s study was peer-reviewed.

This resulted in a dramatic turnaround by Graham, published in the Journal of the American Medical Association, showing that the cost of the same passenger-side air bags had been reduced to $61,000 for each year-of-life saved. Thus Graham’s new conclusion was that those air bags were a worthwhile investment by economic standards. Graham’s Center has received unrestricted funding from the auto industry, but it is not known in what amount, and unrestricted funding is not covered by Graham’s Center’s conflict of interest policy.

3) Graham Has Made Extensive Use of Faulty Methodologies: For years, there has been a major debate about the appropriate use of cost-benefit analysis in regulation. While some federal statutes instruct the agencies to protect public health regardless of cost considerations, other laws permit cost considerations to play a limited role.

If confirmed, Graham is expected to rely heavily on highly disputed cost-benefit calculations to determine when particular regulations are warranted. But there are numerous problems with the methods in the regulatory context. For example, OIRA sometimes uses the industries' own cost estimates, yet studies have repeatedly shown that these numbers are badly inflated, and some rules even stimulate productivity by encouraging sustainable technologies. The value of cost-benefit analysis is also limited by the lack of scientific data. Because we don't have good numbers for diseases other than cancer, calculations omit the benefits of reducing other illnesses. Nor do they take into account the value of a healthy ecosystem, which can't accurately be put into monetary terms. In short, the tools that Graham would apply at OIRA systematically short-change public health and environmental goals and can easily be manipulated on behalf of industry.

Graham has a history of misapplying cost-benefit methodology. His resume claims that "as a scholar," he is best known for a database of 500 risk interventions, which analyzes their cost-effectiveness. But in testimony submitted to the Senate Governmental Affairs Committee, Professor Lisa Heinzerling of Georgetown University Law Center has debunked Graham's work. Focusing on Graham’s research on cost-effectiveness in another study, which purported to show that 60,000 more lives could be saved if the government re-allocated its resources more efficiently, Heinzerling demonstrates that this most famous of Graham’s claims is resoundingly false. In fact, most of the egregiously cost-inefficient proposals that Graham cites as examples of regulation-run-amuck were never implemented by any agency. Heinzerling also criticizes Graham’s use of discounting, which grossly understates the value of a life.

Heinzerling also demonstrates that Graham perpetuated and encouraged a misinterpretation of his own research, claiming that his data showed that federal regulations result in, in his own words, the "statistical murder" of 60,000 Americans every year. This bit of misinformation has, courtesy of Graham’s promotion, become a shibboleth routinely used by opponents of regulation, and has been repeated dozens of times by the media, anti-regulation analysts and even by several members of Congress.

Conclusion

President Bush has nominated an OIRA Administrator who is not merely an academic. For a decade, Graham has been at the nexus of a corporate public relations effort intended to make it very difficult for federal agencies to enact new public and environmental safeguards. As Public Citizen's "Safeguards at Risk" report documents, Graham has devoted years to discrediting government regulators and shooting down safety standards through the use of economic pseudo-science.

Given Graham's past academic work and close collaboration with regulated industries, his appointment to OIRA would give industry a back door to the White House, enabling the Bush administration to block or neuter new regulatory initiatives under the misleading pretense that they fail on cost-benefit or "sound science" grounds. In ways the public and Congress may never know, the appointment of John Graham to this powerful office within the OMB could dramatically affect the quality of the air we breathe, the wholesomeness of the food we eat and the safety of the cars we drive.


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