Feb. 25, 2004
OMB Reliance on Cost-Benefit Analysis Threatens to Undermine Vital Public Protections
Public Citizen President Joan Claybrook Tells Lawmakers to Scrutinize the Underlying Biases of Regulatory Accounting
WASHINGTON, D.C. – The White House Office of Management and Budget’s (OMB) annual report to Congress is based on an analysis rife with factual deficiencies, conceptual fallacies and scientific distortions, Public Citizen President Joan Claybrook said in congressional testimony today. The report gives lawmakers a thoroughly skewed picture of the value of federal health and safety regulations and issues an invitation to industry to identify more rules to be eliminated or weakened.
In her testimony before the U.S. House Committee on Government Reform’s Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, Claybrook opposed H.R. 2432, which would mandate cost-benefit analysis, also called regulatory accounting, and take the first step toward requiring a regulatory budget. She warned that a regulatory budget, which would limit federal standards based on total estimated costs, no matter how pressing the need, is a threat to good government and the public’s well-being.
Cost-benefit analysis attempts to assign a monetary value to the costs and benefits of regulations, with an eye toward eliminating rules with a higher cost than benefit. The method ignores benefits that cannot be expressed in terms of money and disregards the principle that industry should bear the cost of alleviating the harm it causes.
"Regulatory accounting suffers from fatal flaws that make it useless for any purpose other than lending a false appearance of technical objectivity to a political decision that regulated industries’ interests trump the public’s interest," Claybrook said.
OMB’s report to Congress is misleading also in that it ignores the costs to the public of scores of public health, safety and environmental protections that have been weakened and blocked during the past three years.
Claybrook highlighted two attempts by OMB to water down important highway and auto safety rules mandated by Congress:
- The TREAD Act of November 2002, passed by Congress in the wake of the Firestone tire tread separation and Ford Explorer rollover tragedy, contained a rule requiring warning systems in new vehicles that would indicate when a tire was underinflated. OMB sent the National Highway Traffic Safety Administration’s (NHTSA) proposed rule back to the agency and directed it to consider warning systems that are cheaper for automakers but only 50 percent as safe for the public. Public Citizen sued and a federal court of appeals agreed that the weak rule violated the intent of Congress.
- Congress in 1995 instructed the Federal Motor Carrier Safety Administration to improve its rules on truck drivers’ hours of service. The agency proposed new rules after spending years gathering data showing the importance of uninterrupted hours of sleep and rest periods. Following cost-benefit analysis, however, the final rule abandoned the agency’s research-based recommendations and significantly increased weekly driving time. This increases the risk of truck crashes but saves the trucking industry an estimated $1 billion annually. Public Citizen has sued the agency over the rule; the case is pending in federal court.
In 2001, OMB asked the public to nominate regulations that should be rescinded or changed. This "hit list" was a corporate wish list, Claybrook told lawmakers. Now, as manufacturing job losses become a heated political issue, OMB again has invited industry and other parties to identify rules affecting the manufacturing sector that they would like to see scaled back or eliminated.
"Stripping American workers of hard-won health, safety and environmental protections is not sound manufacturing policy," Claybrook said. "Instead of cynically using the very real issue of job loss as an occasion to further its anti-regulatory agenda, the Bush administration should be pushing for enhanced health and safety protections and formulating safeguards that save lives."
Claybrook was administrator of NHTSA from 1977-1981. Click here to view her testimony.