Post details: OMB guidance sets new hurdles for regulators


OMB guidance sets new hurdles for regulators

When the Environmental Protection Agency weighs whether environmental and health risks should lead to air quality rule changes, it soon will have to follow more stringent procedures being proposed by the Office of Management and Budget.

The Jan. 9 risk assessment bulletin outlines for the first time how regulatory agencies — such as EPA, the Transportation Department and Food and Drug Administration — analyze the likelihood and severity of risks to the public before they issue rules and policies.

Agency regulators already perform risk assessments when deciding whether to issue a regulation affecting a product or industry, but they don’t currently follow any set guidelines. Supporters of risk management argue that it helps government decision makers issue and enforce the most cost-effective and important regulations, while detractors say the practice is an underhanded attempt to protect corporate interests and block regulations.

Both sides agree that OMB’s risk assessment bulletin is one of the most important regulatory reforms pushed by the Bush administration.

“This is the most significant thing to come out since the [2001] Data Quality Act,” said Jim Tozzi, president of the Center for Regulatory Effectiveness, a Washington group that works to lessen the regulatory burden on the private sector.

Robert Shull, a regulatory analyst with OMBWatch, a Washington organization that advocates for increased regulation on corporations, agreed. “This is really significant, really serious,” he said. “It has a broad, reaching effect.”

Graham: Risk guru

When John Graham was nominated in 2001 as the administrator of OMB’s Office of Information and Regulatory Affairs (OIRA), opponents feared he would increase the amount of risk analysis and risk management in federal decision making. In fact, Graham ran the Harvard Center for Risk Analysis before taking the OMB job. However, the bulletin on risk assessment comes five years after he took office — after he reformed guidelines for peer review, data quality and cost-benefit analysis of regulations.

“I would have thought this was precisely the kind of thing [Graham] would have done immediately,” said Shull. He compared the late delivery of the bulletin to midnight regulations, the term applied to the presidential tendency to issue numerous regulations right before they leave office.

The risk assessment bulletin is part of an ongoing effort to improve the transparency, objectivity and integrity of information disseminated by federal employees to the public, said Susan Dudley, a former OIRA employee who heads the Arlington Va.,-based Mercatus Center’s Regulatory Studies Program, which studies the regulatory process.

Ideally, risk assessments are objective scientific investigations to estimate how much risk different activities pose and then inform policy decisions about what should be done, she said. Risk assessment should not be influenced by values or policy judgment, she said, but in practice they have been more of an art than a science.

“This guidance document should go a long way toward making government risk assessments more science than art. It guides agencies to rely on objective information, using the best data available, and to be transparent in their use of data and assumptions that make up an analysis,” she said.

Changes to assessments

Risk assessments are used by federal managers to set priorities and alert the public about problems, even if no regulations have been written. For instance, the government may want to tell citizens how much risk is associated with living in a house with high levels of radon gas or with a sport-utility vehicle with a high height-to-width ratio. All health, environmental and safety threats are subject to risk analysis as part of the normal regulatory process.

Agency managers use government scientists or government contractors to perform most risk assessments.

Under the proposed bulletin, all risk assessments will have to comply with six new standards. Every risk assessment will have to describe the data and methods used with a high degree of transparency and will have to place the risk in perspective by telling the public how it compares with other risks they understand.

The standards will govern the scope of risk assessments, how agencies are permitted to characterize risk and how scientists will ensure accurate and unbiased information.

So-called influential risk assessments will have additional barriers to overcome. Such assessments are those evaluations that will have a significant impact on public policy and private-sector decisions, such as determining the danger of faulty tire pressure in vehicles. Such a risk assessment would be used to determine whether to institute a costly rule requiring auto manufacturers to include tire-pressure monitoring systems. Influential risk assessments will be required to be reproducible, meaning that nongovernmental scientists using the same data and research methods would come up with similar results.

The bulletin calls for uniform standards for risk assessments across all federal agencies. According to the bulletin, uniformity is needed because an assessment prepared by one agency may inform the policy decisions of another agency or inform decisions made by legislators or the judiciary.

Interested parties have until June 15 to submit comments on the proposed guidance, found at infopoltech.html#iq.

Federal Times

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Environmental Valuation & Cost-Benefit News

Environmental Valuation & Cost Benefit News covers legal, academic, and regulatory developments pertaining to the valuation of environmental amenities and disamenities, such as clean air, trees, parks, congestion, and noise. We apprise the reader about ways in which costs and benefits are measured, and the results of empirical studies. We hope that this information will allow public and private organizations to comprehend the risks and benefits of various actions, help disputants to resolve conflicts equitably and efficiently, and improve the quality of public policies. We will only discuss issues related to the empirical quantification of private and social costs and benefits and damages, and summarize information from daily newspapers, academic journals, legal publications, court decisions, professional newsletters commissioned studies, and on-line services. This newsletter is dedicated to the principal that all policies place values upon life, liberty, and the pursuit of happiness. We believe that more information, explicit specification of assumptions, and rigorous analysis can help our society to better meet these ends. This site will increasingly serve, in conjunction with others, as a valuation database. We will include a wide range of studies, including non-environmental reports, because omission of a factor effectively values it at zero, and biases decisions.


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