EXECUTIVE OFFICE OF THE PRESIDENT Honorable John Glenn Dear Senator Glenn: I appreciated the opportunity to testify on October 3rd on the Administration's oversight of regulatory activities of the executive branch. An issue that I feel merits further attention is the Office of Management and Budget (OMB) review of the Formaldehyde Standard (FS) promulgated by the Occupational Safety and Health Administration (OSHA). The two concerns that were raised involved an alleged OMB "delay" of the OSHA rule and the possibility of unwarranted OMB "interference" with the scientific conclusions of OSHA staff scientists. Neither concern is supported by the facts of the case. Timing of OMB Review: Over the three-year period that DOL required to develop and complete the formaldehyde rule, OMB review encompassed a total of 25 days. Due to a judicial deadline, the Department did not submit the NPRM to OMB for review under Executive Order No. 12291 (see Section 8(a)(2) of the Executive Order), although OMB did respond to informal drafts while the rule was being developed. Hence, OMB review did not delay the proposed rule a single day. The final rule was also under a judicial deadline. OMB's review of the final rule encompassed 25 days, and did not prevent the Department from meeting the judicial deadline. Substance of OMB Review: Following publication of the proposed formaldehyde rule, OMB submitted a 94-page filing to the public record. OMB's comments discussed in detail the OSHA proposal and reached the following conclusions: OSHA had presented a well-documented case that the acute health risks of exposure to formaldehyde supported a reduction in workplace exposures. The findings of the studies contained in the public record suggested that formaldehyde did not pose a significant carcinogenic risk to workers at current occupational exposures, and that Federal action may not have been warranted. 2 OMB pointed out that the risks from formaldehyde were at least an order of magnitude lower than risks from other substances that OSHA had regulated and lower than risks posed by most American jobs (OSHA's statistical model that best fit the data estimated that the risk of cancer resulting from one year of exposure to formaldehyde at the highest permissible limit was eight out of ten billion, which is less than one-millionth the annual risk of a job-related fatality in the retail clothing sector). OMB also pointed out that OSHA's risk estimates were extremely sensitive to certain assumptions, discussed the case for and against those assumptions, and showed how the risk estimates would change if different assumptions were made. addition, OMB compared OSHA's approach to the approach recommended for government-wide application by the Office of Science and Technology Policy in its 1985 risk assessment principles. These analyses suggested that even the low risks estimated by OSHA may have been substantially overstated. It was important that these points, which had not been made by OSHA staff scientists, be explicitly discussed on the record so that OSHA's decision-makers and the public would proceed with a full understanding of the relative risks of formaldehyde and the uncertainty underlying the risk estimates. In OMB also calculated that OSHA's formaldehyde rule would cost much more to reduce statistical cancer risks than other OSHA and Federal health standards. Some options being considered by OSHA would have a significant adverse economic impact on certain industries, including foundries, wood products and textiles, which were struggling to compete against imports. These disparities in risk and cost, and the potential impact of the regulation on affected industries and the jobs of workers in those sectors, raised questions about the reasonableness and economic feasibility of OSHA's proposed formaldehyde rule. These comments did not "interfere" with the conclusions of OSHA scientists. They accepted, for example, OSHA's designation of formaldehyde as a potential carcinogen. Instead, OMB's filing raised for comment whether the magnitude of risk posed by formaldehyde exposures warranted Federal action, whether OSHA's analysis presented sufficient information to decision-makers to reach an informed decision, and whether OSHA should require the expenditure of significant private sector resources in the face of extreme uncertainty about the risk. Such decisions are policy decisions that must be coordinated between Federal agencies to ensure that the nation's resources are being spent to mitigate the most serious risks and to avoid inconsistent and contradictory decisions among agencies. Staff scientists should not make these decisions; they should be made by policy officials who weigh all of the implications of Federal action, including uncertainty, economic impact and technical feasibility, and the significance of the health benefits to be realized. That explicit policy judgment is needed to translate scientific evidence into Federal action was also recognized by 3 the Supreme Court in its 1980 decision to overturn an OSHA rule because OSHA had failed to show that the risk to workers was significant: "Factual determinations can at most define the risk in some statistical way [the] determination that a particular level of risk is 'significant' will be based largely on policy considerations." The major source of complaint about OMB "interference" with regard to the formaldehyde rule has been from OSHA staff scientists who state that they were overruled in their determination that the residual risk was "significant." While one may be sympathetic to their views on the subject, this decision is not a scientific conclusion arising from an experiment or research study, but a policy decision properly made by the head of OSHA and properly a subject of comment by OMB. OMB's role in coordinating Federal policy between agencies was particularly important in the case of formaldehyde. At the time that OMB filed its comments in the public record, three other Federal agencies were considering the issue of whether the potential hazard posed by formaldehyde warranted Federal action, and if so, what action. The Consumer Product Safety Commission had attempted in 1982 to ban urea-formaldehyde foam insulation, but the U.S. Court of Appeals for the Fifth Circuit had overturned the ban because the court felt that the exposure data did not support the agency's conclusions about risk, despite the agency's "scientific" determinations that it did. The Department of Housing and Urban Development (HUD) had regulated formaldehyde emission levels in plywood and particleboard, but not certain kinds of fiberboard, and was considering the need for further regulatory action. The Environmental Protection Agency (EPA) was considering whether, under Section 4(f) of the Toxic Substances Control Act, formaldehyde posed "a significant risk of serious or widespread harm" to textile workers and consumers. Actions that EPA was considering included formally referring regulatory action to agencies such as OSHA and HUD or simply waiting for other agencies to decide if they needed to act. In addition, shortly after OSHA's publication of the NPRM, the National Cancer Institute completed the largest epidemiological study ever done on formaldehyde and concluded that there was "little evidence" that cancer mortality was associated with occupational exposures to formaldehyde. In such a dynamic and chaotic environment, it was particularly important that the Federal Government chart a stable and fully considered course. OMB staff are well qualified to assess and discuss the general policy issues in health and safety regulation, as well as the reasonableness of an agency's decision. Many of the scientific conclusions reached in safety and health regulations involve general approaches of data handling and methodology that fall within the expertise of those trained in general data analysis, like the OMB analysts who assessed OSHA's formaldehyde rule. In fact, policy analysts are trained to compile, assess and present data, the weaknesses in the data, and the consequences of various options. Policy decisions should arise from this process, rather than from a wholly uncritical acceptance of the judgment of any participant in the regulatory process. As rules are developed, scientific judgments and conclusions are evaluated, along with input from lawyers, economists, statisticians, enforcers, administrators and, through the public record, the public, in the context of the overall policies adopted by the agency and the Federal Government, to reach a final decision. The questions raised by OMB in the formaldehyde rulemaking, and in all reviews of Federal safety and health rules, pertain to issues of priority, approach and coordination of a coherent and balanced Federal policy on risk management for workers, consumers and the public. As we stated in the 1988 Regulatory Program of the United States Government: "Federal regulation cannot eliminate all safety, health and environmental risks. As a result, the regulation of each particular safety and health risk has to be kept in balance and proportionate with the regulation of all other such risks." (p. 8). In conclusion, I feel strongly that the central review function currently being performed by this office is essential to the development of a coherent, effective Federal policy on managing the health and safety risks faced by the American public. Such a policy should, as permitted by statute, be in balance with other societal interests, such as maintaining economic growth and jobs. In my testimony before the Committee, I listed several examples in which the central coordinating function of this Office resulted in regulations that were more effective, more efficient, and more likely to achieve the goals of the Congress and the Administration. Sincerely, Jay Playe Jay Plager Administrator Office of Information and Regulatory Affairs |