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Illustration of John D. Graham
Mr. Bottom Line

by Steve Weinberg

Quick: What's the dollar value of a human life? Of a river? John D. Graham says he knows. As the White House point man who weighs every health and environmental rule to decide if it's worth the cost, he's a bureaucrat with power over life and death.

When Reed Super went to Washington in February 2002 for a meeting with John D. Graham, the second most powerful environmental official in the nation after George W. Bush, he wasn't expecting much. Super, an attorney for a small environmental group called Riverkeeper, had asked for a chance to defend a new environmental rule awaiting Graham's approval. He had met with Graham's agency -- the Office of Information and Regulatory Affairs (OIRA) -- during the Clinton administration, and he knew he wouldn't learn anything at their talk. "My experience meeting with OIRA staff before and after Graham was exactly the same," he says. "Their attitude is they're required by law to have these meetings. You're talking the whole time, and they're nodding and looking at their watches." But, Super adds: "What OIRA actually did to the rule after Graham came in was utterly different."

The aim of the new rule was to stop old power plants from killing fish in their cooling systems. Power plants with 1950s-style technology take in enormous volumes of water for cooling; Indian Point, the largest on the Hudson, uses more than 2 billion gallons a day. Fish, eggs, larvae, and shellfish in the water that is sucked in by the plant die by the millions or billions every year. The Environmental Protection Agency (EPA), after several years of research, had drafted a rule requiring sixty of the biggest of these plants to build cooling towers so they could reuse the water. This rule was now under review at OIRA, and Super told Graham and his staff it was a good start.

Two months later, EPA published another version of the rule, revised according to OIRA's instructions. Graham's office had ordered the lowest-cost solution: The plants could keep their old cooling systems and add a few improvements. Riverkeeper calculates that the plants would still kill twenty times more fish per megawatt than with cooling towers.

"They call it 'maximizing net benefits,'" Super says. "It's outrageous." The new draft admitted that the benefits of cooling towers actually outweighed their costs. It wasn't even a close call; the ratio was 3 to 2. Moreover, the new draft specified that its dollar figure for those benefits was too low. "There was a whole list of benefits that EPA acknowledged in the final rule but that they didn't try to monetize," Super says. "They're included as a bunch of bullet points. You see the benefits number, and then you see, 'This number significantly understates the benefits.'" He finds it all a little Kafkaesque. "They said, 'The benefits are understated; they still outweigh the cost; and we're still not going to do it.'"

The cooling-system rule will get one more chance. The second version was so heavy-handed that EPA has called for another rewrite. Super, whose organization (along with NRDC) has been working on the fish kill problem since the 1970s, is relieved. When environmental rules are rewritten to Graham's orders, there usually is no second chance.

John D. Graham is a brilliant theoretician who achieved tenure at Harvard when he was thirty-two. Now, at forty-six, he is the person journalists call the Bush administration's "regulatory czar." Every economically significant regulation drafted by every executive branch agency to carry out the laws of Congress -- on power plants or forest conservation, on meat inspection or dioxin -- must cross Graham's desk before it goes into force. He decides whether the protection is worth the price. On environmental matters, his answer is often No.

Photo of John D. Graham Graham's specialty is a long-established but controversial number-crunching technique called cost-benefit analysis. Its purpose is to quantify, in dollars, every cost and every benefit of a possible course of action. Because Graham has spent his entire professional life working to enshrine it (and its near cousin, risk analysis) at the center of public policy, his nomination process was highly contentious. He got thirty-seven "No" votes in the Senate -- second only to Attorney General John Ashcroft, a better-known figure appointed to a much higher-profile office. Among the letters sent to the Senate about Graham was a critique signed by fifty-one academics; they charged that he had repeatedly lowballed health and environmental benefits, used "extreme and highly disputed" economic assumptions, and issued hard-and-fast opinions on complex medical and scientific topics in which he had no training.

OIRA began operations in 1981 under Ronald Reagan. It has a professional staff of about fifty people, mostly economists, to review the work of dozens of executive branch agencies. Depending on the administration in charge, OIRA can be a tool for quality control and consistency, or it can serve as a way for the White House to assert its political priorities over the agencies and Congress -- a backroom committee that releases or suppresses scientific decisions. "EPA, the Forest Service, the Food and Drug Administration -- agencies like these have hundreds of scientists. And they have the mission to protect the public. But OIRA has the final word," says Wesley Warren, an NRDC staff member who served in the Office of Management and Budget (of which OIRA is a part) under Clinton. At its height, in 1984, OIRA sent fifty-eight rules back to the agencies for rewriting. In the eight years under Clinton, only sixteen were sent back. Graham reversed the trend, sending back nineteen in his first year alone.

By no means have all of Graham's environmental decisions riled environmentalists. He personally approved a Clinton-era rule for hefty penalties on companies that make heavily polluting diesel engines. (Graham emailed me during the research for this article to make sure I knew about the diesel engine rule. At the end of the message he wrote: "We are not entirely evil!!") But for the most part, his environmental inclinations run the other way. OIRA has delayed rules to stop sewer overflows into water bodies. It has weakened restrictions on disposal of mining waste. It has undermined EPA recommendations for controlling polluted runoff from construction sites.

Graham is even reopening rules published by previous administrations. He has introduced the "prompt letter," in which he tells an agency to take a second look at a rule on its books. He has instituted a new yearly process of asking the public to suggest rules to be revised or repealed. In his first year, OIRA selected thirteen environmental rules for high-priority reconsideration, including Clinton-era rules to reduce arsenic in drinking water and keep roads out of wild areas in national forests. Most are now en route to being weakened.

Recently, OIRA has been asking EPA to include an "alternative estimate" for the dollar benefits of some rules, using lower figures for the value society places on a single human life. EPA uses $6.1 million as its basic figure for one "statistical life." The alternative figures, drawn from certain economists' studies of how people value risk, start at $3.7 million. But the alternative estimate also assumes that the elderly are not willing to pay as much to protect themselves. It prices people seventy or older at 63 percent of people under seventy, or $2.3 million per elderly life. Applied to, say, air pollution -- which can be deadly to older people with vulnerable lungs -- figures like these make a rule look less valuable by an order of magnitude.

At forty-six, Graham is a balding, bespectacled man with a precise, academic way of speaking, an open, wide-eyed face, and considerable charm. He treats his critics with unflappable respect. When he took part in EPA meetings on dioxin in the 1990s, antidioxin activists in the audience held up signs naming corporations that had helped fund his controversial risk analysis institute at Harvard. Later, Graham said merely that the activists "kindly assisted me on the disclosure matter." Graham says risk analysis uses science to separate alarmist rhetoric from genuine dangers. He invariably describes it as a commonsense good. "The question is very basic," he told me. "It's, 'Are we saving as many lives as we can for the resources we're expending?'"

The young John Graham talked about his agenda in much more polemical tones. Twenty-three years ago, in an article co-authored for the journal Public Interest , he wrote that there was a "hypochondria raging among various consumer advocates and public interest groups, and among policy makers in the gamut of government agencies and commissions on health and safety." The nation's safety restrictions for PCBs, saccharin, and nuclear power, Graham declared, were all products of this "flustered hypochondria." Graham shrugs off this stridency now as a youthful attempt to write for a popular audience. If he still feels any personal animus against restrictions on industry, he has learned not to express it. Today, he sounds as plain-vanilla, as commendably nonpartisan, as an academic should be. When I tell him that several of his professors and acquaintances from college and graduate school remember him as a fish out of water -- a Republican in a mostly liberal academic climate -- he takes issue, but mildly: "I don't remember myself having much partisan orientation at that time," he says. He religiously follows the advice he gave in a 1996 speech to the Heritage Foundation: Be careful what you say. At a panel for the foundation (a think tank that champions weakening government regulations), other speakers talked about "regulatory relief." Graham said, "I think our message should be that we want smarter, more efficient regulation in order to get more protection at less cost. Therefore, the word 'relief' is entirely inappropriate."








NRDC on the Bush administration
www.nrdc.org/bushrecord

OIRA
www.whitehouse.gov/
omb/inforeg

Riverkeeper
www.riverkeeper.org






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This article was made possible by NRDC's Josephine Patterson Albright Fund.

Journalist and biographer Steve Weinberg is the former executive director of Investigative Reporters and Editors, and is at work on a biography about pioneering reporter Ida Tarbell.

Illustration: Jim Spanfeller

Photo: Scott J. Ferrell

OnEarth. Spring 2003
Copyright 2003 by the Natural Resources Defense Council