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It's Not a Backroom Deal If the Call Is Made in the Oval Office

By Cindy Skrzycki
Tuesday, April 8, 2008

It isn't often in Washington that a paper trail on a controversial regulatory decision leads back to the White House quite so publicly.

The conflict between Stephen L. Johnson, administrator of the Environmental Protection Agency, and Susan E. Dudley, head of regulatory review at the Office of Management and Budget, over how strong to make a standard on ozone, a component of smog, was unusual because President Bush was asked to break the impasse. He decided on a requirement weaker than what the EPA wanted.

"During my experience, the policy people in the administration are all part of the same administration and don't like to air a public policy dispute," said Donald R. Arbuckle, a retired deputy of the OMB Office of Information and Regulatory Affairs who served there 25 years.

Regulatory experts said this was the first time they recall a president stepping in, under a provision of an executive order allowing appeals between agencies and the OMB to be sent to him for a final decision. Typically, differences like these are worked out behind closed doors among top officials.

When the Department of Transportation was sparring with the OMB in 2005 over the terms of a rule on how long truckers could drive before resting, a long conference call between officials of the two agencies settled the differences.

Democrats in Congress want to follow the paper trail further. Rep. Henry A. Waxman (D-Calif.), who is chairman of the House Committee on Oversight and Government Reform, has asked the OMB for "unredacted copies of communications" about the ozone standard.

In the Bush administration, the OMB has usually intervened at earlier, informal stages of rulemaking, where there is no public documentation. That makes it difficult to know where changes in an agency's final rule originated.

Veterans of the process say the ozone dispute was extraordinary because three documents written between March 6 and March 12 spelled out in detail the policy positions and arguments that the OMB and EPA marshaled. The disagreement was over a so-called public welfare standard for ozone, which is designed to protect vegetation, parks and farm lands.

When the EPA sent its final rule to the OMB on Feb. 22, it proposed lowering the permissible ozone "public health" standard to 0.075 parts per million, the concentration in the air over an eight-hour period, from the current 0.084 parts per million.

The agency proposed for the first time changing the secondary standard to one in which ozone would be measured over a seasonal period because of concerns over the cumulative effect the pollutant has on vegetation.

Agricultural interests, including corn growers and others in the biofuels business, opposed the idea. They had a meeting with OMB officials, including Dudley, on Jan. 24. The administration reviewers also met with public health and environmental groups pushing to make the rule more stringent.

In going ahead with the plan for a separate secondary standard, Johnson was following the advice of EPA staff members and scientific advisers.

Dudley fired back in a March 6 memo to Johnson, signaling her opposition. "The draft rule under review does not contain a reasoned basis for concluding that a secondary standard set separate from the primary standard is 'requisite to protect the public welfare,' " she wrote.

The EPA responded the next day that "there is no presumption that the secondary standard should be the same as the primary standard." The agency said it was relying on new research to propose seasonal monitoring. The letter was signed by Marcus Peacock, the deputy administrator who once worked at the OMB review office. The EPA also prepared a "deliberative and confidential" memo on March 11 to support the new, separate standard.

It was then that the feud escalated to the president. Another letter from Dudley on March 12 said Bush concluded the two standards should be the same.

A senior administration official said the exchange of correspondence was included in the public record to demonstrate that no backroom deals had been made.

"We thought it would be in everyone's interest to show clearly what our concerns were and the rationale for those concerns," said the official, who spoke on condition of anonymity because the negotiations were confidential. The goal in posting the documents on government Web sites "was to minimize mischaracterizations of these concerns," the official said.

Johnson said at a news conference that he made the final decision on the rule, though the published preamble to the rule reflects the influence of the OMB and the White House.

Frank O'Donnell, president of Clean Air Watch, an environmental group in the District, said, "EPA was carefully trying to keep records to show [that the OMB] was pushing them in a different direction. They were squashed at the last minute."

Waxman's attempt to learn more about the rulemaking has been stymied so far. He has received only documents already made public, according to a follow-up letter he sent to Dudley on April 1. He said the committee is entitled to the material unless the president "intends to assert a valid claim of executive privilege."

Cindy Skrzycki is a regulatory columnist for Bloomberg News. She can be reached atcskrzycki@bloomberg.net.

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