A Revolting Administration

By Michael Fumento

By Michael Fumento
Copyright 1997 Reason Magazine

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Industry doesn’t like the proposed EPA regulations? What’s new? Many scientists think they’re unsubstantiated? So what? But the EPA’s proposals are so absurd that even members of the Clinton administration are objecting.

Last November, before issuing its proposals, the EPA solicited comments from other branches of the administration. In March, via a leak, many of these comments came to light. What they showed was that the EPA had gone forward with its proposed standards even though many parts of the executive branch had expressed sometimes strong disagreement with them. To quote the Associated Press, these concerns were "only slightly less intense than the criticism from industry groups, members of Congress and state officials."

Among the critics were members of the president’s Council of Economic Advisers, the White House science adviser, the Commerce, Transportation, Treasury, and Agriculture departments, and the Small Business Administration. Only the Interior Department completely approved the EPA proposal.

Assistant Secretary of Transportation Frank Kruesi wrote that it was "incomprehensible that the Administration would commit to a new set of standards and new efforts to meet such standards without much greater understanding of the problem and its solutions." He also complained that the proposals would "bring a significantly larger proportion of the population and more jurisdictions under Federal oversight and procedural burdens."

The EPA claims that its proposals will have no significant impact on small businesses, but the SBA is convinced this position is absurd. "We urge the agency to rethink its position," wrote the SBA’s chief counsel for advocacy, Jere Glover, who noted that it "would be a startling proposition to the small business community." The "EPA’s own analysis" showed the new standards "will unquestionably fall on tens of thousands, if not hundreds of thousands, of small businesses."

He wrote that at least 10 and as many as 54 different types of industries whose businesses typically have fewer than 100 employees "would face costs in excess of 10 percent of sales" due to the proposed ozone standard alone.

Glover added, in bold type, "Thus, this regulation is certainly one of the most expensive regulations, if not the most expensive regulation, faced by small businesses in ten or more years."

Meanwhile, a memo from the secretary of agriculture said, "We share the concerns of the Small Business Administration regarding the potential impacts of these proposals on small businesses. Can EPA address these concerns before the final rule is issued?" It could have; it didn’t.

Some objectors said not enough scientific work has been done. "I find it hard to believe that we would suffer more than we would gain by taking more time for further interagency review, consensus building and additional analysis," then-White House science adviser John Gibbons wrote. Others said the science simply didn’t support the EPA position. "Current data do not support clear associations of [premature mortality] effects with either fine particles (PM2.5), inhalable particles PM10 or PM15, [or] sulfate, so that causality for the observed mortality and morbidity effects cannot be established," wrote Rosina Beirbaum, acting associate director of the White House Office of Science and Technology Policy, in a memorandum. She added, "The database for actual levels of PM2.5 is also very poor, and only a handful of studies have actually studied PM2.5 effects, per se."

The rebellion didn’t end with the November memoranda, nor did the EPA’s efforts to squelch it. Last December, House Commerce Committee Chairman Thomas Bliley asked the Office of Information and Regulatory Affairs (OIRA), a section of the Office of Management and Budget, for a reading on the EPA’s handling of the air pollution proposal. OIRA is supposed to review economic analyses that agencies are required to prepare indicating that they have regulated in the most cost-effective manner. To help this procedure along, OIRA has prepared a "best practices" document to identify procedures that will provide the best analysis of the impact of a regulation. On January 15 the committee received a document from OIRA that was generally supportive of the EPA. But this was a revised draft. The earlier two drafts, both drawn up in early January, had horrified EPA officials.

The key sentence of the original 27-page document was, "While these analyses produce much useful information, there were several areas in which they did not fully conform to the principles discussed in the Best Practices document." After reviewing the draft, an EPA deputy director within the Office of Air and Radiation, John Beale, wrote to the OMB economist in charge of the project, Art Fraas, complaining that the response placed too much emphasis on differences between the agencies and "could be very damaging" to the proposed rule change. He also repeatedly telephoned Mary Nichols, his direct boss. Prior to becoming the top air pollution official at the EPA, Nichols headed up the Natural Resources Defense Council office in Los Angeles. He urged her to pressure OIRA administrator Sally Katzen, and Nichols did so. Now under pressure from Beale and Katzen directly and Nichols indirectly, Fraas gave in.

The final draft of the report was snipped down to 12 pages. More important, the key sentence had been changed so that it now read, "While these analyses were consistent with the Best Practices document and produced much useful information, there were several areas where additional work would have been productive."

That wasn’t the only favor OMB was to do for the EPA. The November memoranda were not formal responses to the EPA; the formal responses required by the Administrative Procedure Act were to be submitted in March. Yet the deadline came and went, and the comments weren’t turned in. "The comment period for the proposals closed Wednesday, March 12, 1997. No Executive Branch Departments or Agencies, including USDA, submitted written comments to the docket," an undated Agriculture Department memo later stated. In fact, a few agencies had made submissions, including the USDA itself. Among the official comments that squeezed through were the Pentagon’s, which said the DOD "believes that the establishment of a PM2.5 [standard] as proposed would critically impact its ability to properly train military personnel" and that already current EPA ozone regulations could "limit military aircraft operations."

But most comments did not get submitted. Why not? Because the OMB stopped them. An e-mail message from Jean Vernet of the Department of Energy to other people within the department dated March 11 stated: "Based on reports from a meeting this morning with Sally Katzen, at which Dan Reicher and Kyle Simpson represented the Department, Federal agencies will not [repeat not] be transmitting comments on the EPA O3/PM [ozone and fine particle] proposals. To what extent agency comments will be entertained during a yet undefined interagency review effort is unclear." (Emphasis in original.)

"All the [department] secretary-level comments came into OMB, and there was so much discord and problems with the proposed new standards they’re proposing that they didn’t want to show the administration was so fractured," one USDA official told me on condition of anonymity. According to him, Katzen "said we’re not going to show these fractured efforts within the administration." He adds, "Instead of handing in written documents, they’ve established some kind of interagency working committees to iron out problems. But they will be behind closed doors."

His view is supported by notes I obtained from a November 11, 1996, interagency briefing on the proposed standards, written on the White House Office of Science and Technology Policy’s letterhead. "NO meetings with outsiders on this matter!! If someone asks for a meeting, refer them to Sally Katzen. No one who talks to their constituents about these matters will be invited back to future meetings — this must be run right [as] it is a ’poster child’ for reg reform." (Emphasis in original.) Katzen declined to be interviewed for this article.

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Read Michael Fumento’s additional work on the EPA and on pollution.