[Senate Hearing 107-71]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 107-71
 
 NOMINATIONS OF ANGELA B. STYLES, STEPHEN A. PERRY, AND JOHN D. GRAHAM

=======================================================================


                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                 ON THE

 NOMINATIONS OF ANGELA B. STYLES TO BE ADMINISTRATOR OF THE OFFICE OF 
  FEDERAL PROCUREMENT POLICY AT THE OFFICE OF MANAGEMENT AND BUDGET, 
  STEPHEN A. PERRY TO BE ADMINISTRATOR OF THE GENERAL SERVICES 
  ADMINISTRATION, AND JOHN D. GRAHAM TO BE ADMINISTRATOR OF THE OFFICE OF 
  INFORMATION AND REGULATORY AFFAIRS AT THE OFFICE OF MANAGEMENT AND 
                                 BUDGET

                               __________

                              MAY 17, 2001
                               __________

      Printed for the use of the Committee on Governmental Affairs









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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
           JOSEPH I. LIEBERMAN, Connecticut, Ranking Democrat
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
JUDD GREGG, New Hampshire            THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah              JEAN CARNAHAN, Missouri
             Hannah S. Sistare, Staff Director and Counsel
                     Ellen B. Brown, Senior Counsel
                      Paul R. Noe, Senior Counsel
                       Johanna L. Hardy, Counsel
              Susan G. Marshall, Professional Staff Member
     Joyce A. Rechtschaffen, Democratic Staff Director and Counsel
                 Lawrence B. Novey, Democratic Counsel
         Jason M. Yanussi, Democratic Professional Staff Member
       Michael L. Alexander, Democratic Professional Staff Member
                     Darla D. Cassell, Chief Clerk















                            C O N T E N T S

                                 ------                                
                                                                   Page

Opening statements:
    Senator Thompson.............................................     1
    Senator Voinovich............................................     3
    Senator Collins..............................................    21
    Senator Durbin...............................................    24
    Senator Bennett..............................................    28
    Senator Lieberman............................................    29
    Senator Carper...............................................    30
    Senator Akaka................................................    31
    Senator Levin................................................    46

                               WITNESSES
                         Thursday, May 17, 2001

Hon. Joe Barton, a Representative in Congress from the State of 
  Texas..........................................................     1
Hon. Ralph Regula, a Representative in Congress from the State of 
  Ohio...........................................................     2
Angela B. Styles to be Administrator of the Office of Federal 
  Procurement Policy at the Office of Management and Budget......     6
Stephen A. Perry to be Administrator of the General Services 
  Administration.................................................    11
John D. Graham to be Administrator of the Office of Information 
  and Regulatory Affairs at the Office of Management and Budget..    20

                     Alphabetical List of Witnesses

Barton, Hon. Joe:
    Testimony....................................................     1
Graham, John D.:
    Testimony....................................................    20
    Prepared statement...........................................   150
    Biographical and financial information.......................   153
    Pre-hearing questions and responses..........................   175
    Additional pre-hearing questions and responses submitted by:
      Senator Lieberman..........................................   191
      Senator Durbin with copies of correspondence from Philip 
      Morris Management Corp. and Kraft General Foods, Inc. 
      supplied by Mr. Graham.....................................   248
    Post-hearing questions and responses submitted by:
      Senator Akaka..............................................   303
      Senator Durbin.............................................   308
      Senator Levin with attachments.............................   310
Perry, Stephen A.:
    Testimony....................................................    11
    Prepared statement...........................................    93
    Biographical and financial information.......................   104
    Pre-hearing questions and responses..........................   122
Regula, Hon. Ralph:
    Testimony....................................................     2
Styles, Angela B.:
    Testimony....................................................     6
    Prepared statement...........................................    67
    Biographical and financial information.......................    69
    Pre-hearing questions and responses..........................    77
    Post-hearing questions and responses submitted by:
      Senator Lieberman..........................................    91

                                APPENDIX

Letter from Dr. Graham to Philip Morris Management Corp., dated 
  October 25, 1993...............................................   266
Article dated May 7, 2001 from Plastic News entitled ``Bush's 
  OIRA appointee Graham could lend clout to plastics'' (submitted 
  for the record by Senator Durbin)..............................   349
Examples of Graham and Harvard Center Findings Contrary to 
  Interests of Industries that Donated Restricted Funds for a 
  Specific Project...............................................   351
Chart of Graham quotes (submitted for the record by Senator 
  Durbin)........................................................   352
Letter from Dr. Graham to Senator Lieberman dated May 21, 2001...   353
Letter from Mayada Logue, Scientist, Corporate Scientific 
  Affairs, Philip Morris Management Corp., to Dr. Graham, dated 
  January 22, 1991 with an attachment (submitted for the record 
  by Senator Durbin).............................................   354
Letter from Dr. Graham to Philip Morris Management Corp., dated 
  January 31, 1992 (submitted for the record by Senator Durbin)..   356
Public Citizen May 22, 2001 letter (response to the Finkelstein 
  letter dated April 13, 2001)...................................   357
Public Citizen May 22, 2001 letter (response to an April 25, 2001 
  ``Scholarly Response to Public Citizen'')......................   360
Public Citizen May 22, 2001 letter (response to remarks made by 
  Senator Bennett)...............................................   364
Joan Claybrook, President, Public Citizen, prepared statement 
  with an attachment.............................................   366
Lisa Heinzerling, Professor of Law, Georgetown University Law 
  Center, prepared statement.....................................   403
    ``Safeguards at Risk: John Graham and Corporate America's 
      Back Door to the Bush White House,'' Public Citizen, March 
      2001.......................................................   422
    ``Civilizing the Sport Utility Vehicle,'' by John D. Graham, 
      Issues in Science and Technology, Winter 2000-01...........   543

Letters of Support and Opposition of the Graham Nomination:
    Ande Abbott, Director of Legislation, International 
      Brotherhood of Boilermakers................................   549
    John Adams, President, Natural Resources Defense Council.....   550
    Gary D. Bass, Chairman, Citizens for Sensible Safeguards.....   551
    Gary D. Bass, Executive Director, OMB Watch..................   553
    Randy Block, Co-Convener, Gray Panthers of Metro Detroit.....   555
    Merrick Carey, CEO, Lexington Institute......................   556
    Philip F. Clapp, President, National Environmental Trust.....   557
    Benjamin Cohen, Senior Staff Attorney, Center for Science in 
      the Public Interest, with attached letter sent to President 
      Bush.......................................................   558
    Frank B. Cross, Professor of Business Law, University of 
      Texas School of Law........................................   561
    David M. Cutler, Professor, Department of Economics, Harvard 
      University.................................................   564
    Douglas H. Dority, International President, United Food and 
      Commercial Workers International Union (UFCW)..............   565
    Hon. E. Donald Elliott, Professor (adj) of Environmental Law, 
      Yale Law School, formerly General Counsel, U.S. EPA, with 
      an attachment..............................................   567
    Harvey V. Fineberg, Office of the Provost, Harvard University   581
    Michael Finkelstein, Independent Consultant on Automobile 
      Safety.....................................................   583
    Former Federal Regulators....................................   585
    Harvard Center for Risk Analysis (response to Public Citizen 
      report)....................................................   588
    Pamela Williams, S.M., Sc.D., Environmental Health and Health 
      Policy and Management Program in Environmental Science and 
      Risk Management with an attachment.........................   592
    Harvard School of Public Health Supporters, ``Who is 
      Professor John D. Graham? A Scholarly Response to Public 
      Citizen''..................................................   596
    Harvard University Faculty...................................   611
    David Hemenway, Ph.D., Professor of Health Policy, Director, 
      Harvard Injury Control Research Center.....................   614
    David Holtgrave, Ph.D., Professor, Department of Behavioral 
      Sciences and Health Education and Department of Health 
      Policy and Management, Emory University....................   615
    J. Bennett Johnston, Partner, Johnston and Associates........   616
    Faculty members at Schools of Medicine and Public Health 
      across the United States...................................   617
    National Organizations requesting inquiry....................   622
    Charles M. Loveless, Director of Legislation, American 
      Federation of State, County and Municipal Employees, AFL-
      CIO........................................................   639
    Melissa A. McDiarmid, M.D., M.P.H............................   640
    J. Donald Millar, M.D., Don Millar and Associates, Inc., 
      Consultant in Occupational and Environmental Health........   641
    National Environmental Organizations.........................   642
    National Organizations.......................................   644
    Maria I. New, M.D., Professor/Chairman, Department of 
      Pediatrics, Weill Medical College, Cornell University......   645
    Joseph P. Newhouse, Ph.D., Director, Division of Health 
      Policy Research and Education, Harvard University..........   646
    Margaret S. O'Donnell, Stop Dioxin Exposure Campaign.........   647
    Office of Information and Regulatory Affairs (OIRA), former 
      Administrators.............................................   648
    Brian O'Neill, President, Insurance Institute for Highway 
      Safety.....................................................   651
    Public Citizen article ``Bush Nominee for Key Position Would 
      Thwart Protective National Health, Safety and Environmental 
      Safeguards''...............................................   652
    Willie L. Pelote, Sr., Political and Legislative Director, 
      California American Federation of State, County and 
      Municipal Employees, AFL-CIO...............................   655
    William ``Bill'' K. Reilly, former EPA Administrator.........   656
    Mark L. Rosenberg, M.D., M.P.P., Executive Director, The Task 
      Force for Child Survival and Development...................   657
    Alan Reuther, Legislative Director, International Union, 
      United Automobile, Aerospace and Agricultural Implement 
      Workers of America-UAW.....................................   659
    William Samuel, Director, Department of Legislation, American 
      Federation of Labor and Congress of Industrial 
      Organizations (AFL-CIO)....................................   661
    Scholars of law, medicine, economics, business, public 
      health, political science, psychology, ethics and the 
      environmental sciences.....................................   663
    Bob Stallman, President, Farm Bureau.........................   670
    Louis W. Sullivan, M.D., Chairman, Board of Trustees, Public 
      Health Policy Advisory Board...............................   671
    Cass R. Sunstein, Professor of Jurisprudence, University of 
      Chicago, The Law School....................................   672
    Katherine Swartz, Associate Professor, Harvard School of 
      Public Health..............................................   674
    Tammy Tengs, Sc.D., Assistant Professor, Department of Urban 
      and Regional Planning and Director, Health Priorities 
      Research Group, School of Social Ecology, University of 
      California, Irvine with an attachment......................   675
    Harry Teter, Executive Director, American Trauma Society.....   683
    James H. Ware, with an attachment............................   685
    Elizabeth M. Whelan, Sc.D., M.P.H., President, American 
      Council on Science and Health..............................   688










 NOMINATIONS OF ANGELA B. STYLES, STEPHEN A. PERRY, AND JOHN D. GRAHAM

                              ----------                              

                         THURSDAY, MAY 17, 2001

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Fred 
Thompson, Chairman of the Committee, presiding.
    Present: Senators Thompson, Collins, Voinovich, Bennett, 
Lieberman, Levin, Durbin, Carper, and Akaka.

             OPENING STATEMENT OF CHAIRMAN THOMPSON

    Chairman Thompson. The Committee will come to order, 
please. I think we will go ahead and get started.
    This morning we are holding a hearing to consider the 
nominations of Angela Styles to be Administrator of the Office 
of Federal Procurement Policy; Stephen Perry to be 
Administrator of the General Services Administration; and Dr. 
John Graham to be the Administrator of the Office of 
Information and Regulatory Affairs at the Office of Management 
and Budget.
    I understand that we have some Members of Congress and 
Senators here today to introduce these nominees. I will begin 
with Congressman Joe Barton. Glad to have you with us, 
Congressman.

TESTIMONY OF HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM 
                       THE STATE OF TEXAS

    Mr. Barton. Mr. Chairman, I appreciate the opportunity to 
be here before you, and Senator Voinovich, and the other 
Members of your Committee. It is my pleasure to introduce to 
this Committee Angela Barbee Styles. She is a young woman who I 
have known for over 10 years. Her father was one of my three 
chairmen in my first campaign for political office for U.S. 
Congress back in 1984. Angela helped some in that campaign in a 
volunteer capacity. She was attending college at the time. She 
later decided to take a break from her college duties and 
worked for me for over a year in my legislative shop here in 
Washington. She handled some fairly major issues. She was very 
bright, very personable, and very dedicated.
    She then decided to go back to college, went back to the 
University of Virginia. She graduated with distinction, went on 
to graduate school later on at the University of Texas at 
Austin, where she graduated with honors.
    She has been in Washington for a number of years now, most 
recently with a private law firm where her expertise was in 
contracting with the Federal Government. She is now married, 
has one child, I think a second child on the way. In fact, I 
think she is 9 months' pregnant, so this had better be a short 
hearing, Mr. Chairman. [Laughter.]
    Mr. Barton. I am trained as an emergency----
    Chairman Thompson. You notice we have her first.
    Mr. Barton. I noticed that. I would hate to have to show my 
skills as a volunteer ambulance driver and try to help deliver 
a new U.S. citizen in this hearing. But she is very well 
qualified. She would have the highest recommendation from any 
individual that she had worked with, and I would hope that this 
Committee would give her a positive recommendation and an 
expeditious review to the full Senate.
    Chairman Thompson. Thank you very much.
    Senator Voinovich, I believe you have an introduction.
    Senator Voinovich. Thank you, Mr. Chairman. At this time, I 
know it is not according to our protocol, but I would like to 
yield to the dean of the Ohio delegation, Congressman Ralph 
Regula, to begin the introduction of Steve Perry.
    Chairman Thompson. Congressman Regula.

 TESTIMONY OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Regula. Well, thank you, and thank you for your time 
and courtesy. I am here to speak on behalf of Stephen Perry, a 
senior vice president for human resources for the Timken 
Company. It is approximately a $3 billion company, operating in 
approximately 22 countries. So it gives you a measure of the 
responsibilities he carries as the vice president of this 
company.
    In 1991, he was appointed by our then-Governor Voinovich to 
be a member of his cabinet and Director of the Department of 
Administrative Services for the State of Ohio. So I know, 
Senator, you know very well of his excellent service to the 
State of Ohio.
    He has a master of science degree from Akron University and 
an MBA from Stanford University Graduate School, attended the 
University of Michigan, executive development. I could give you 
a whole list of all the things in which he has been involved. 
Just let me say that he is a great citizen of our community, 
highly respected, involved in a great number of community 
activities--the Stark Foundation and as a trustee of the 
Professional Football Hall of Fame.
    I am pleased, in fact, proud to introduce Steve Perry and 
recommend him for the job of the head of General Services 
Administration because I know the kind of service he has given 
to our community. His professional service on behalf of the 
Timken Company has been outstanding, and, of course, as Senator 
Voinovich knows, he did a great job on behalf of the State of 
Ohio. And his experience in Ohio fits very well with the 
responsibility of heading up GSA.
    Chairman Thompson. Mr. Congressman, thank you very much. I 
know you gentlemen have a very busy schedule, and you are 
welcome to stay as long as you can. But I know that you 
probably need to leave, so thank you very much for being with 
us.
    Mr. Barton. Thank you, Senator.
    Mr. Regula. Thank you.
    Chairman Thompson. Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Mr. Chairman, it is a pleasure to join 
with Congressman Regula in introducing to the Committee, 
President Bush's nominee for the position of the Administrator 
of the General Services Administration, my good friend Stephen 
Perry, of Canton, Ohio.
    Steve, I would like to extend a warm welcome to you and 
your lovely wife, Sondra, and thank you for your willingness to 
serve your country in a demanding position. I am delighted that 
you have once again accepted the call to public service. I 
would also like to thank you, Sondra, for the sacrifices you 
and your family made when Steve served in Ohio State Government 
and will likely make during his tenure at GSA.
    Mr. Chairman, as you know, the position of GSA 
Administrator is probably best described as being the Federal 
Government's landlord and purchasing agent all rolled into one. 
The GSA Administrator is responsible for an annual business 
volume of $16 billion. Although filling the role of 
Administrator can be a daunting task, I believe, without 
question, that Mr. Perry is the right individual for this 
important position.
    Mr. Chairman, I have personally worked closely with Steve 
Perry for a number of years. In February 1991, during my first 
term as Governor, I was pleased to appoint Mr. Perry to my 
cabinet as Director of the Ohio Department of Administrative 
Services, a position he filled until March 1993. He 
successfully managed this large department which is responsible 
for providing enabling services to State agencies in a manner 
similar to that of the GSA at the Federal level, including 
construction and maintenance services for Ohio's public 
buildings and leased facilities, procurement of supplies and 
services, and telecommunications services.
    As the director of the department, Mr. Perry played a key 
role with the Governor's Operations Improvement task force--
essentially, a Statewide top-to-bottom audit of State programs 
designed to improve the efficiency and effectiveness of each 
department and agency in State Government.
    Further, he served as my designee on the Managing for the 
Future task force, conducting a 12-month study to develop 
recommendations for the most efficient and effective operation 
of Ohio's higher education system. In 1993, I appointed Mr. 
Perry to a 9-year term on the Ohio Board of Regents, where he 
has had a leadership role in implementing these recommendations 
and other improvements statewide.
    Mr. Perry also helped me initiate Ohio's Total Quality 
Management program, which included working closely with 
unionized State employees. In my view, if Federal agencies are 
ever going to improve their operations, not only do they need 
to adopt modern business practices, but they need to make sure 
that unionized employees are involved in the process as well. I 
am glad that GSA will have an Administrator with experience in 
these areas.
    In addition to his extensive government service, Mr. Perry 
has had significant general management experience during his 
37-year career with the Timken Company. After serving with 
distinction in my cabinet, he rejoined the company in 1993 as 
vice president, and in 1998 he was named senior vice president 
for human resources, purchasing, and communications.
    His experience in both the public and private sector is 
going to be a tremendous asset to GSA. I have seen many skilled 
private sector managers stumble when given high-level 
government positions because they are not familiar with how 
government works. This is not going to be a problem for Mr. 
Perry.
    In light of the Federal Government's pressing need for 
effective managers, especially in the critical areas of human 
capital and procurement, I can think of few individuals more 
experienced and more qualified to assume the leadership of GSA 
than Mr. Perry.
    Steve, I look forward to working with you, and I thank you, 
Mr. Chairman, for holding this confirmation hearing this 
morning.
    [The prepared opening statement of Senator Voinovich 
follows:]

            PREPARED OPENING STATEMENT OF SENATOR VOINOVICH
    Thank you, Mr. Chairman, it is my great pleasure to join 
Congressman Regula in introducing to this Committee, President Bush's 
nominee for the position of Administrator of the General Services 
Administration, my good friend, Mr. Stephen A. Perry of Canton, Ohio.
    Stephen, I would like to extend a warm welcome to you and your 
lovely wife, Sondra, and thank you for your willingness to serve your 
country in a demanding position. I am delighted that you have once 
again accepted the call to public service. I would also like to thank 
you, Sondra, for the sacrifices you and your family made when Steve 
served in Ohio State Government, and will likely make during his tenure 
at GSA.
    Mr. Chairman, as you know, the position of GSA Administrator is 
probably best described as being the Federal Government's landlord and 
purchasing agent all rolled into one. The GSA Administrator is 
responsible for an annual business volume of $16 billion. Although 
filling the role of Administrator can be a daunting task, I believe, 
without question, that Mr. Perry is the right individual for this 
important position.
    Mr. Chairman, I have personally worked closely with Stephen Perry 
for a number of years. In February of 1991, during my first term as 
Governor of Ohio, I was pleased to appoint Stephen to my Cabinet as 
Director of the Ohio Department of Administrative Services, a position 
he filled until March of 1993. He successfully managed this large 
department which is responsible for providing enabling services to 
State agencies in a manner similar to that of GSA at the Federal level, 
including construction and maintenance services for Ohio's public 
buildings and leased facilities, procurement of supplies and services, 
and telecommunications services.
    As Director of the Department of Administrative Services, Mr. Perry 
played a key role with the ``Governor's Operations Improvement'' task 
force; essentially, a statewide top-to-bottom audit of State programs 
designed to improve the efficiency and effectiveness of each department 
and agency of State Government.
    Further, he served as my designee on the ``Managing for the 
Future'' task force, conducting a 12-month study to develop 
recommendations for the most efficient and effective operation of 
Ohio's higher education system. In 1993, I appointed Mr. Perry to a 9-
year term on the Ohio Board of Regents, where he has had a leadership 
role in implementing these recommendations and other improvements 
statewide.
    Mr. Perry also helped me initiate Ohio's total quality management 
program, which included working closely with unionized State employees. 
In my view, if Federal agencies are ever going to improve their 
operations, not only do they need to adopt modern business practices, 
but they need to make sure that unionized employees are involved in the 
process as well. I am glad that GSA will have an Administrator with 
experience in these areas.
    In addition to his extensive government service, Mr. Perry has had 
significant general management experience during his 37-year career 
with The Timken Company. After serving with distinction in my Cabinet, 
he rejoined the company in 1993 as vice president, and in 1998 he was 
named senior vice president for human resources, purchasing, and 
communications.
    His experience in both the public and private sector is going to be 
a tremendous asset to GSA. I have seen many skilled private sector 
managers stumble when given high-level government positions, because 
they are unfamiliar with how government works. This is not going to be 
a problem for Mr. Perry.
    In light of the Federal Government's pressing need for effective 
managers--especially in the critical areas of human capital and 
procurement--I can think of few individuals more experienced or 
qualified to assume the leadership of GSA than Mr. Perry.
    Stephen, I look forward to working with you, and I thank you, Mr. 
Chairman, for holding this confirmation hearing this morning.

    Chairman Thompson. Thank you very much.
    Before we turn to the nominees, Senator Durbin, did you 
have any opening comments?
    Senator Durbin. No.
    Chairman Thompson. All right. Let's turn to the nominees, 
and we will begin with Angela Styles, to be Administrator of 
the Office of Federal Procurement Policy at OMB.
    The mission of the Office of Federal Procurement Policy is 
to provide overall direction of government-wide procurement 
policies, regulations, procedures, and forms for executive 
agencies to promote economy, efficiency, and effectiveness in 
the procurement of property and services by the executive 
branch. This Committee has a longstanding interest in and 
jurisdiction over the Federal procurement system and has been 
primarily responsible for statutory improvements like the 
Federal Acquisitions Streamlining Act and the Clinger-Cohen Act 
and continuous oversight of the procurement process.
    Unfortunately, improvement in the procurement system has 
been slow in coming. One of our primary allies in the effort to 
ensure that within the procurement system industry sellers and 
government buyers offer and acquire, respectively, maximum 
value for the taxpayer is the Office of Federal Procurement 
Policy.
    I was pleased to see several initiatives already announced 
by the new administration. Forcing more competition in the many 
activities performed by the government, requiring more 
performance-based contracting, and insisting that we utilize 
the power of the Internet to streamline our procurement are 
just some of the things that are already underway. These 
initiatives, when implemented, will reap millions in savings 
and bring greater efficiency to government operations.
    Angela Styles has the experience and background to take on 
these challenges. In addition to substantive experience in 
government, both on the Hill and on behalf of the State of 
Texas, Ms. Styles has hands-on experience representing clients 
with real government procurement problems, with increasing 
focus in recent years on disputes involving cost accounting 
standards, compliance, and allowability of costs under Federal 
contracts.
    The Committee welcomes you, Ms. Styles.
    Ms. Styles has filed responses to a biographical and 
financial questionnaire, answered pre-hearing questions 
submitted by the Committee, and had her financial statements 
reviewed by the Office of Government Ethics. Without objection, 
this information will be made a part of the hearing record, 
with the exception of the financial data, which is on file and 
available for public inspection in the Committee's office.
    Our Committee rules require that all witnesses at 
nomination hearings give their testimony under oath. Ms. 
Styles, would you please stand and raise your right hand? Do 
you solemnly swear to tell the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Ms. Styles. I do.
    Chairman Thompson. Thank you very much. Please be seated.
    At this point I would like to give Ms. Styles an 
opportunity to introduce anyone who is with her here this 
morning.
    Ms. Styles. I would like to introduce my husband, Scott 
Styles.
    Chairman Thompson. Thank you. Welcome. Glad to have you 
with us this morning.
    Any further opening remarks by anyone? If not, we will turn 
to Ms. Styles and receive any statement that she might have for 
us.

 TESTIMONY OF ANGELA B. STYLES \1\ TO BE ADMINISTRATOR OF THE 
     OFFICE OF FEDERAL PROCUREMENT POLICY AT THE OFFICE OF 
                     MANAGEMENT AND BUDGET

    Ms. Styles. Thank you, Mr. Chairman and Members of the 
Committee. It is an honor to be here. I owe a special thanks to 
Congressman Joe Barton for his thoughtful introduction and a 
debt of gratitude for his continued support throughout my 
professional life. I am honored and grateful for his support 
today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Styles appears in the Appendix on 
page 67.
     The biographical and financial information of Ms. Styles appear in 
the Appendix on page 69.
     Pre-hearing questions and responses appear in the Appendix on page 
77.
     Post-hearing questions and responses appear in the Appendix on 
page 91.
---------------------------------------------------------------------------
    Second, but, I must confess, most importantly, I want to 
thank my husband, Scott, for his steadfast support throughout 
my career. Today is a particularly special occasion because it 
is also our wedding anniversary. I cannot imagine a better 
husband and father or one person that could possibly have been 
more tolerant and understanding of my legal career and now my 
commitment to public service.
    Mr. Chairman, I also want to express my gratitude to the 
Committee for the expeditious consideration of my nomination. 
Your staff has shown me extraordinary courtesy by moving 
through the process quickly. I appreciate their time and 
preparation as well as the opportunity to further develop the 
working and personal relationships that I have had with several 
members of your staff over the past few years.
    I am deeply honored and privileged by the President's 
nomination to be Administrator of the Office of Federal 
Procurement Policy and am looking forward with great 
anticipation to providing leadership and fostering an 
atmosphere of professional and excellence in acquisition 
policy.
    Over the past decade, the Federal acquisition system has 
undergone significant and continual reform. This reform 
movement has achieved many laudable goals, most important of 
which government customers now receive the goods they need in a 
fraction of the time it took a decade ago. However, as with any 
reform movement, confusion has often dominated the process. I 
have been and continue to be concerned that the efficient 
procurement model, coupled with significant implementation 
confusion, has compromised concepts fundamental to our system 
of government and our system of procurement.
    We must never forget that we are procuring $200 billion a 
year in goods and services for the Federal Government with 
taxpayer dollars. Because we are spending the public's money, 
there are some goals that cannot be compromised in the name of 
efficiency. The real challenge for OFPP in this administration 
will be to balance the obvious benefits of increased 
efficiencies with the maintenance of fundamental concepts of 
competition, due process, integrity, and transparency. Indeed, 
OMB has already started working towards these goals with 
management initiatives relating to competitive sourcing and 
performance-based service contracts.
    The next 4 years will be important years for our 
procurement system. I look forward to the prospect of working 
with you and other Members of Congress on these difficult 
acquisition issues.
    Thank you, Mr. Chairman and Members of the Committee, for 
the opportunity to appear before you and for the time you have 
given me. I am happy to answer any questions you might have.
    Chairman Thompson. Thank you very much. As I indicated 
earlier, the Committee submitted some substantive pre-hearing 
questions to the nominee, and the nominee has also met with 
Committee staff, as you have indicated, to discuss a variety of 
issues of Congressional interest regarding this office.
    Your written responses to the written questions will be 
placed in the record.
    I will start with questions that we ask all nominees. Is 
there anything that you are aware of in your background which 
might present a conflict of interest with the duties of the 
office to which you have been nominated?
    Ms. Styles. No.
    Chairman Thompson. Do you know of anything, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities as Administrator of 
OFPP?
    Ms. Styles. No, sir.
    Chairman Thompson. Do you agree without reservation to 
respond to any reasonable summons to appear and testify before 
any duly constituted Member of Congress if you are confirmed?
    Ms. Styles. Yes.
    Chairman Thompson. All right. Ms. Styles, in a March 9, 
2001, memorandum to agency heads, OMB Deputy Director Sean 
O'Keefe stated that agencies should set goals to make greater 
use of performance-based contracts. As you know, part of our 
government-wide procurement amendment to the DOD Authorization 
Act last year included language to provide for performance-
based contracts, but there is apparently disagreement among the 
agencies regarding the requirements to qualify as a 
performance-based contract.
    Do you think agencies will be able to meet this goal set 
out in Mr. O'Keefe's memo? And what benefits do you think might 
be derived from such contracts?
    Ms. Styles. I certainly hope that the agencies can meet 
these goals. Part of the problem right now, I think, as I 
identified in my responses to the written questions, is that 
there is no agreement among the agencies on what qualifies as a 
performance-based contract. NASA, for instance, thinks cost 
reimbursement type contracts are performance-based contracts. 
Other agencies don't agree with that.
    Chairman Thompson. How would you define a performance-based 
contract?
    Ms. Styles. I think there may need to be more than one 
definition for performance-based contracts. You have contracts 
on the low-risk end of the spectrum, which would be fixed-price 
contracts for something like janitorial services. I think we 
could define a performance-based contract, as it has been 
defined in the past, to include incentives to be stating what 
you want performed as opposed to the specific steps to get 
there.
    On the high-risk end of the spectrum, I think we should--we 
need to work a little bit harder to maybe take out some of the 
incentives. Obviously it's not going to be fixed-price 
contracts when you're talking about a cost reimbursement 
contract.
    I think we need to work on definitions that can fit the 
specific situations. There may be an overriding definition that 
can fit low-risk and high-risk contracts, but I think we also 
need to make sure that we don't forget high-risk contracts or 
cost reimbursement type contracts when we're making that 
definition.
    Chairman Thompson. In the interest of economy and 
efficiency, Federal Government buyers are placing increased 
emphasis on the use of multi-agency contracts. When properly 
developed and used, these contracts may enable Federal agencies 
to further leverage the government's buying power and satisfy 
agencies' contractual requirements. Agencies have been 
successful in marketing their many government-wide contracts to 
other Federal agencies.
    There has been some concern that agencies are using these 
vehicles to short-cut competition. What are your views on the 
use of these government-wide contracts? And how will you ensure 
that they are used for the benefit of the government's 
leveraged buying power and at the same time maintain 
competition?
    Ms. Styles. I am very concerned about the proliferation of 
these types of contracts. The best analogy that I can make is 
for me to go out and buy a car. The most efficient and easiest 
way for me to do that is to go to the Ford dealership down the 
street and tell them I want the new 2002 Ford Explorer with the 
third-row seat. But that doesn't mean I'm getting the best 
price for that car. There are other dealerships in town. There 
are dealerships in Texas. There are dealerships in California.
    From a procurement--and the most cost-effective way for me 
to actually buy that car would be to go to one inexpensive 
service that scours the country for the cheapest 2002 Ford 
Explorer, and I may be getting that car from New Mexico. It may 
take me 2 or 3 weeks, but I got the best price for the exact 
same car that I would have paid more for at the Ford dealership 
down the street.
    Contracting officers face a similar situation, but they 
don't have the mechanism, they don't have the centralized 
mechanism or somebody that's going to scour the agencies' 
acquisition contracts or the types of contracts to find out 
what the best deal they can get or to find out the best vehicle 
for contracting for what they want.
    A contracting officer looks at the situation. He will go to 
essentially the Ford dealership down the street, the easiest 
place to buy the goods or service that he needs. There is no 
centralization of these government-wide acquisition contracts. 
There's no one place he can go to to find all of the contracts 
for whatever particular goods or service he's looking for. So 
there's no assurance--in fact, there's no assurance whatsoever 
that we're getting the best deal, that there's any competition, 
and I think in the end the taxpayers are probably paying a 
great deal more money for the convenience of going to the Ford 
dealership down the street.
    Chairman Thompson. Do you have any ideas for improving that 
situation?
    Ms. Styles. I think we need to centralize the contracts 
that we're looking at, at least some centralization of where to 
go to look for the contracts. In the long term, I think we also 
need to be taking a look at the user fees on these contracts 
also.
    Chairman Thompson. Thank you very much. Senator Voinovich.
    Senator Voinovich. I am interested to hear you talk about 
centralization. If you are going to go in that direction, you 
better make sure that you have some really efficient people, 
because from my experience in government, it takes forever and 
a day to get anything done when you have had centralized 
purchasing. I think that is something that needs to be guarded 
against.
    The other thing that I would like to share with you is that 
so often there is an attitude that programs to provide 
incentives to minority business and small business are more 
socially oriented rather than bottom-line. I recall while I was 
mayor of the city of Cleveland that we participated in a 
Federal program that was aimed at attracting more people to 
compete for work with the Defense Department. When that program 
was announced, there were accusations that it was going to be a 
rip-off and it wasn't the right thing to do. It happened to 
specifically deal with torpedoes. We really promoted the 
program while I was mayor, and we got a lot of people to be 
interested in providing parts of torpedoes that had previously 
been purchased through the ``good-old-boy'' network.
    I will never forget it as long as I live. This major 
torpedo company, after it was all said and done, saved $14 
million as a result of going to the northeastern Ohio area and 
giving some folks an opportunity to compete for those Federal 
contracts.
    There was also in place something called a Maybank 
amendment, but I don't know if that is still around in terms of 
purchasing. You had to give the contract to the lowest and the 
best bidder. I lobbied very hard, and this was at a time in the 
early 1980's when unemployment was large in urban areas, 20 
percent in my city. We lobbied through a provision that said 
that if you were in a labor surplus area where they had high 
unemployment, that if the person applying for the work was 
within 5 percent of the low bid, that they would get the work. 
So once we got it through, I said now we have to take advantage 
of it.
    The interesting thing is this: By opening it up to a lot 
more people--we created an office called the ``Make it in 
Cleveland'' program with the Greater Cleveland Growth 
Association. It is something you should look into. They went 
out and looked at people that could compete for these 
contracts, particularly in the Defense Department. Long story 
short, we got a lot of contracts, and in no case did we ever 
have to take advantage of the 5 percent provision. The 
contracts from Ohio were the lowest bid. But there was kind of 
a closed set-up, that only the people that were wired got the 
business. And I am just bringing that to your attention because 
so often there is an attitude that some of these ``social 
welfare'' programs are going to cost us more money and we've 
got to worry about the bottom line. Well, I am saying that the 
ones I have had experience with have been terrific, and I would 
hope that you would look into those.
    The last thing I would like to discuss with you--and I 
would like your comments--is how familiar are you with the 
quality of the individuals that you are going to be dealing 
with in some of the departments in terms of procurement?
    Ms. Styles. I am relatively familiar with people that I 
have worked with at the Department of Defense. I have had 
clients and we have negotiated a number of agreements with the 
Department of Defense, many of them being contracting officers, 
defense corporate executives and the like.
    Senator Voinovich. What about the quality of their work?
    Ms. Styles. The ones I have dealt with have been very high 
quality, although I will qualify that with saying that most of 
the clients I worked with are the larger defense contractors. 
So I think you would expect their contracting officers or their 
defense corporate executives to be probably the best.
    Senator Voinovich. I have held hearings on the human 
capital crisis, and we had a hearing on the Commission on U.S. 
Security in the 21st Century. I would suggest that you read the 
testimony from Dr. Schlessinger, and from Admiral Trane, and 
familiarize yourself with it, because they have basically 
concluded that we are in a serious situation, particularly in 
the Defense Department, in terms of the quality of individuals 
that are there. I think one of the major problems that you are 
going to be confronted with is the quality of people who are in 
those departments and the prospect that many of them are going 
to be retiring before the year 2004 or will be eligible for 
retirement.
    Ms. Styles. I agree, and I think as we move to more 
competitive sourcing under A-76, the procurement people, the 
contracting officers are going to become increasingly more 
important. And I think we need to focus more training and 
recruitment in that area.
    Senator Voinovich. I would urge you, anybody in OMB--and my 
observation is we haven't had any ``M'' in OMB--that there be a 
specific line item for training in the Federal Government. 
There is no training line item, even today in the budgets that 
are being submitted. I have asked the same question, and they 
don't have it in their budgets. You should have training in 
those budgets. Without it, those departments can't be 
competitive. Many of the individuals are going to leave if they 
don't have an opportunity to improve their skills.
    Ms. Styles. I agree.
    Chairman Thompson. Thank you very much. I always learn more 
about State and local government by listening to Senator 
Voinovich. Someday I am going to learn why the city of 
Cleveland needs torpedoes. [Laughter.]
    We will get into that later. Senator Durbin.
    Senator Durbin. I have no questions, but the Chairman will 
also know, when he visits Cleveland, he can visit Voinovich 
Park, which I have seen in Cleveland.
    Thank you very much, Mr. Chairman.
    Chairman Thompson. Thank you very much.
    I might point out Senator Lieberman and I have sent a 
letter to OMB on the human resources problem, that we are very 
concerned about that Senator Voinovich mentioned. So I am sure 
that you will be talking to each other about that with your 
folks in OMB.
    That is all the questions I have. We expect to act on your 
nomination promptly. We thank you for being here. We thank you 
for offering yourself to public service, and you are obviously 
a very qualified, knowledgeable person, and we appreciate your 
being here today.
    Ms. Styles. Thank you for having me.
    Chairman Thompson. Thank you very much.
    We will now proceed to the nomination of Stephen A. Perry, 
to be Administrator, General Services Administration. The GSA 
Administrator is responsible for managing the agency that 
supports the work of the Federal Government. It provides work 
space, equipment, supplies, procurement services, and other 
assistance to other Federal employees. Therefore, it is 
extremely important for the Administrator to be well versed in 
government operations.
    Mr. Perry brings that experience to this position through 
his work as part of Senator Voinovich's--then-Governor 
Voinovich--cabinet as Director of the Ohio Department of 
Administrative Services, and his role as senior vice president, 
human resources, purchasing, and communications at the Timken 
Company.
    In light of the Federal Government's need for effective 
managers, Mr. Perry seems to be very qualified to assume the 
leadership of GSA. Mr. Perry has filed responses to a 
biographical and financial questionnaire, answered pre-hearing 
questions submitted by the Committee, and had his financial 
statements reviewed by the Office of Government Ethics. Without 
objection, this information will be made a part of the hearing 
record, with the exception of the financial data, which is on 
file and available for public inspection in the Committee's 
office.
    Committee rules require that all witnesses at nomination 
hearings give their testimony under oath. Mr. Perry, would you 
please stand and raise your right hand? Do you solemnly swear 
to tell the truth, the whole truth, and nothing but the truth, 
so help you, God?
    Mr. Perry. I do.
    Chairman Thompson. Thank you very much. Be seated, please.
    At this point I would like to give Mr. Perry an opportunity 
to introduce anyone here today with him he might want to 
introduce.

 TESTIMONY OF STEPHEN A. PERRY \1\ TO BE ADMINISTRATOR OF THE 
                GENERAL SERVICES ADMINISTRATION

    Mr. Perry. Thank you, Senator Thompson. Mr. Chairman and 
Members of the Committee, it certainly is an honor for me to be 
have been nominated by President Bush to serve as Administrator 
of General Services, and it is also an honor for me to have 
this opportunity to talk about that subject with this Committee 
today. With your permission, Mr. Chairman, I would first like 
to take a moment, though, to say thank you to Senator Voinovich 
and to Congressman Regula, not only for the kind words that 
they said this morning, but more particularly for their 
friendship over the years and for the kindness that they have 
extended to Sondra and me and many other constituents, I am 
sure, back in our home State of Ohio. I also want to take this 
opportunity to thank Senator DeWine, who could not be here this 
morning because of his work on the Judiciary Committee, but he 
has certainly been very helpful and supportive of me in this 
instance and throughout my experience working in public 
service.
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    \1\ The prepared statement of Mr. Perry appears in the Appendix on 
page 93.
     The biographical and financial information of Mr. Perry appear in 
the Appendix on page 104.
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    I sincerely appreciate the support and counsel that these 
gentlemen have given me over the years, and other members of 
the Ohio delegation have done the same. I understand that by 
supporting my nomination to lead GSA, each of them is saying 
something about the trust that they would place in me, and I 
want each of them to know, particularly you, Senator Voinovich, 
and I would like each of the Members of this Committee to know, 
that if I am confirmed, I pledge to continually strive to be 
worthy of your trust.
    Mr. Chairman, I certainly agree with you and other Members 
of the Committee regarding the very important role and 
responsibility that General Services Administration has in 
achieving effective and efficient government services on behalf 
of the American people. It certainly is very clear to me that 
the quality and timeliness of the work done by GSA in providing 
services to the other Federal agencies has a direct and 
significant impact on the ability of those other agencies to 
achieve their respective missions. The challenge for GSA is to 
achieve and sustain itself as a high-performance organization, 
committed to continuous improvement of the services that it 
provides to meet the needs of its customer agencies, and 
thereby improve government services rendered directly to the 
public.
    Mr. Chairman, I am very excited about the possibility of 
joining the team at GSA in this very important work. I am 
excited because I believe strongly in President Bush's 
aspiration to apply solid general management practices as the 
means to significantly improve government services for all 
Americans. I am excited because of the very interesting 
managerial challenge that will be involved with such a large 
and complex organization, and I am also excited to have this 
opportunity to be so involved in public service. I know that 
achieving and sustaining high-performance and a continuous 
improvement culture at GSA will be a very big job. I know it 
will have its hardships and frustrations. I know it will 
require long hours and some sacrifice by me, and certainly by 
Sondra and by others at GSA. I know that the administration and 
this Committee have high performance expectations for GSA.
    From what I have learned, I believe that the people at GSA 
will accept the challenge for high-performance, and I am 
confident that I can help the GSA team make it happen. Mr. 
Chairman, as I thought about this hearing this morning and what 
I might say in this brief opening statement, I felt it might be 
useful to the Committee if I said a few words about my views on 
achieving and sustaining high performance in such an 
organization. Obviously, accomplishing this will require a 
number of things on behalf of people both outside and inside 
the agency, and I wanted to take a moment to mention just a few 
of these items.
    First, I know that it is going to require very effective 
communication in all that we do. Constructive dialogue is 
critically important to get everyone involved on the same page 
and pulling in the same direction. Pardon me. I will have to ad 
lib. One example of a particular item of effective 
communication that perhaps we should spend some time on in the 
next few months, I believe, is in the area of the communication 
that GSA has with members of Congress and particularly with 
their staffs, and the same thing is going to be true with 
respect to communication that GSA has with the administration, 
and, there again, particularly with a staff of OMB.
    In fact, communication can be improved. I have had the 
opportunity to meet with some of the Congressional staff 
already, and talk about ideas that they have for making that 
improvement. I look forward to working together with them to 
make that happen. Second, in addition to improving 
communication, as I just mentioned, achieving and sustaining 
high-performance at GSA will require developing an intimate 
working relationship with each of our customer agencies, so 
that we can work well together with them to develop the most 
effective and efficient approach to satisfy their needs.
    The third item I would mention, that is necessary for 
achieving high-performance at GSA, will be to develop a very 
close working relationship with our suppliers. That is the way 
in which we can develop win-win approaches to developing the 
best value proposition for our customer agencies.
    Fourth, it will require organizational capability building. 
We need to do this in order to have the people in place that 
are capable to achieve the mission that we have set out to 
achieve, and this brings us to the discussion that Senator 
Voinovich raised with respect to managing our human capital.
    We must have a strong human capital management process 
throughout government. I am speaking particularly as it would 
relate to GSA. In this case, we must first determine the skills 
and competencies needed to achieve our specific goals for the 
coming years. We need to document that, understand what it will 
take to get us where we want to go. After having done that, 
then we need to identify the gap that exists between what is 
needed for success and what we have in place today. As we have 
identified that gap, then we need to execute the staffing plan 
that will bridge that gap by developing talent, by providing 
training, by recruiting people with the specific skills that 
GSA will need to achieve its goals.
    Mr. Chairman, the last item I will mention in this area of 
achieving and sustaining performance at GSA is a very, very 
critical one, and it is the need to have what I call a strong 
performance management process throughout the agency. I think 
the guidelines in the Government Performance and Results Act, 
or GPRA, will serve as the framework for this work. Our 
performance management process will be built on the foundation 
of shared GSA values and missions, along with clearly-
articulated goals and performance expectations. You can be sure 
that among the fundamental values will be integrity, customer 
service and accountability for results.
    We will work very hard to see that each individual on the 
GSA team understands his or her role and responsibility, and 
just as importantly as understanding, we will work to see that 
they are strongly committed and aligned with each other to 
achieve the powerful force necessary for high-performance and 
to successfully achieve the GSA mission. We will have clear 
performance expectations. We will work with our oversight 
committees and the OMB staff to make sure that is the case.
    We will have performance measures, so that we can be held 
accountable for our results. We will be proactive in taking 
corrective action as necessary to stay on course; and finally, 
the performance management process will provide for rewards and 
recognition to the people of GSA for their achievements. Mr. 
Chairman and Members of the Committee, as I said earlier, I 
know that achieving and sustaining high performance and 
continuous improvement at GSA will be a very big job. I believe 
that I do have the relevant experiences in business and in 
State Government which will enable me to be a strong 
contributor to the success of the GSA team in achieving the 
things that we have discussed here today.
    It would be an honor and a privilege for me to serve our 
country in this capacity as Administrator of GSA, and so I 
respectively ask for your support of my nomination. Thank you 
very much, and I would be happy to answer any questions.
    Chairman Thompson. Thank you very much. As I indicated 
earlier, the Committee submitted some substantive pre-hearing 
questions to the nominee,\1\ and the nominee has also met with 
the Committee staff to discuss a variety of issues of 
Congressional interest. Your written responses to the questions 
will be placed in the record, and I will start my questioning 
with questions we ask of all nominees.
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    \1\ 
     Pre-hearing questions and responses of Mr. Perry appear in the 
Appendix on page 122.
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    Is there anything that you are aware of in your background 
which might present a conflict of interest with the duties of 
the office to which you have been nominated?
    Mr. Perry. No, sir, there is not.
    Chairman Thompson. Do you know of anything, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the Administrator 
of GSA?
    Mr. Perry. No.
    Chairman Thompson. Do you agree with reservation to respond 
to any reasonable summons to appear and testify before any duly 
constituted committee of Congress, if you are confirmed?
    Mr. Perry. Yes, I do.
    Chairman Thompson. Mr. Perry, as you know, the GSA's 
Inspector General and the GAO have identified a number of 
management challenges that inhibit GSA's ability to achieve its 
mission, and this Committee has asked all agencies continually 
to set goals for solving many of these problems. As GSA's 
authorizing committee, we have a particular interest that you 
use the Results Act. You referred to GPRA, the Results Act, a 
few moments ago, but we really need you to use that to report 
to us on the extent to which you are solving them.
    I am informed that the GSA, with some reluctance, has begun 
to report on its major management challenges in its performance 
report--as you know, the Results Act requires annual 
performance reports--as to whether or not we are actually 
achieving the goals we set out to achieve. We are trying to get 
to a performance-based government here, instead of looking at 
inputs, how many hours we spent or how many pieces of paper we 
shuffle. We are looking for results. Are we getting the job 
done that we were set up to do? These reports help us do that.
    However, rather than setting concrete goals for addressing 
the problems, some of these GSA reports simply report on 
activities that they are undertaking to solve the problems. For 
example, regarding what the Inspector General calls GSA's 
information technology problem, GSA simply reports that they 
are working hard to improve. So I am going to ask you to really 
focus on that. We just had the Mercatus Center give us a report 
on the latest round of reports submitted, and they are all over 
the lot. Some agencies are doing a lot better job than others, 
and I think it depends more than anything else on what kind of 
leadership they are getting from the top, and whether or not 
the heads of these agencies prioritize that and think it is 
important.
    We think it is important, and we are going to be coming 
back to you time and time again, to make improvements, not only 
in your department or in your agency, but in the way you report 
your improvements. You sound, from your opening statement, like 
you fully appreciate that, without my even having to ask the 
question.
    Mr. Perry. Yes, Senator, I absolutely do, and that is why I 
did allude to that in my remarks, because I think the 
guidelines provided in the Government Performance and Results 
Act really do represent some elements of best management 
practices in that regard. It does talk about setting 
challenging, but achievable, goals; goals that are important to 
your customers, not necessarily goals that mean something only 
to people inside the organization. It also talks about doing 
that in a collaborative way, by that, I mean having dialogue so 
that people inside the organization understand the importance 
of the goal, and hopefully, in the course of that dialogue, 
really develop some personal commitment to achieve the goal; 
and as that happens, you do need to have, of course, in place a 
process to measure progress, the willingness to take corrective 
action if it is necessary to make sure you stay on track, and 
then, at the end of the day, you do have the data that measures 
whether or not you have moved the needle in the right 
direction, and that's what leads to accountability and 
continuous improvement.
    Another point, which I also alluded to, is that in the 
course of developing this initial plan and in the course of 
developing the initial performance measures by which we shall 
hold ourselves accountable, that is the point in time when GSA 
and the oversight committees, and people involved both on the 
Congressional side and the administrative side, need to be 
clear and on the same page. It should not be that GSA develops 
goals in a vacuum and then works on them. It should be that GSA 
develops goals that there is some consensus about, that these 
are the right things, so that we make sure we are doing what is 
viewed by everyone as the right thing. So I subscribe to that 
wholeheartedly. That will be the place where we will begin to 
work, day one.
    Chairman Thompson. Well, it looks like the agency is 
getting, maybe slowly, on the right track. I mentioned the 
Mercatus Center at George Mason University that does this 
annual assessment every year, and pointing out the importance 
of the job that you are about to take, it says the following: 
It says, ``Because of the nature of GSA's role in the 
government, which is to serve other agencies' business needs, 
improving its own processes often automatically benefits its 
customers in the Federal Government and presumably citizen 
taxpayers. The connection between what GSA does and the 
expected result is obvious. This report gives tangible evidence 
of savings to its customers. The story is not told at the 
highest level, but at the performance goal level, the impact is 
clear.'' So they have been able to document, through this 
reporting, and this last one anyway, some savings to its 
customers. So it looks like you have some good people over 
there working on this already.
    Mr. Perry. I would agree with that, Senator. In fact, there 
are a couple areas where the goals are really well-measured. I 
will mention public building service. There are certainly some 
other challenges in that area, but they had a specific goal as 
to how many days it would require to place an agency in leased 
space, once they had made the request, and there was dramatic 
improvement, even though the IG's report shows that they did 
not achieve the goal they set, the improvement was dramatic, 
and I think that is what engenders inside the people in the 
organization that winning, and you win a little bit and then 
you win a little bit more and then you win a little bit more, 
and before you know it, you become a high-performance 
organization dedicated to that kind of performance.
    Chairman Thompson. That is right. The direction is what is 
important, and agencies should not be afraid to set high goals 
for fear of missing their goal and somebody is going to 
criticize them. I think it is much more impressive to set high 
goals, and, whether you meet them or not, you are making 
progress toward achieving them. It sounds like that is what you 
are doing. GSA's government property auction site allows 
agencies to conduct online sales of everything from computer 
equipment to government vehicles. The commercial market 
provides the same service on the Internet sites, such as eBay 
and others. While having multiple sources for this type of 
activity is not uncommon, what is uncommon is the recent 
statement by a GSA official, who said GSA will go after the 
private sector government auction Federal business. Are you 
prepared to work with GSA's managers to better understand what 
capabilities should be developed in-house, and what should be 
contracted out? I think some in the government contracting 
community may think that GSA is duplicating the efforts of the 
private sector by developing technology within the agency, 
rather than taking advantage of commercially-developed 
solutions at a lower cost. Are you familiar with this issue, 
and what do you think about it?
    Mr. Perry. I am not intimately familiar. I know a little 
bit about it, and I can talk about it in general terms. On the 
one hand, I would certainly say at the outset that there are 
many things that GSA does which may be available to be done 
commercially, on the outside, and I think we ought to carefully 
consider those opportunities every time they exist. Where it is 
in the best interest of our customer agency to work with 
outside commercial organizations, we should do that, and I 
think a lot of that is already done. Specifically, with 
something like the property disposal web site, part of what I 
have heard anecdotally is that the private-sector companies 
would be interested in the more lucrative parts of that, and 
not in the whole batch of it.
    So what you would have remaining is GSA having to dispose 
of the things which are much more difficult to dispose of, and 
still having to develop the same web site to do it. So that 
would argue in favor of keeping the package together, so that 
you get the economies of scale. On the other hand, if there 
were a private-sector supplier out there who, in fact, would 
say, ``No, I will step up and I will take the whole package, I 
will take the plums and I will take the prunes together, and we 
will provide something that is better than what could be done 
by Federal agencies,'' then I say clearly we ought to go in 
that direction. That is one of the things I will have to----
    Chairman Thompson. You are obviously up on the issue, and 
it just requires good management judgment, which I am sure you 
will provide.
    Senator Voinovich.
    Senator Voinovich. Mr. Chairman, I just want to say that I 
hope that all of the President's nominees are as qualified and 
experienced and capable, and have the potential that Mr. Perry 
has. I think that your statement was very well put together, 
and I would like to say to you, Mr. Chairman, and to Senator 
Durbin, that in 2 years, this agency that Mr. Perry will head 
up will be a model, and one we can look to in terms of 
benchmarking some other agencies in the Federal Government.
    Chairman Thompson. He is not doing you any favors, is he, 
Mr. Perry?
    Mr. Perry. He is setting those high challenges, like you 
advised.
    Senator Voinovich. I would not be saying this if I did not 
think he was capable of doing it. I would just mention to you, 
as I said to Ms. Styles, that we do have a human capital 
challenge, and I was very pleased in your remarks that you 
talked about really looking at the skills and needs, and the 
shaping of your agency, to make sure that you can respond to 
the challenges currently and in the future. I would suggest to 
you that you look at your budget, find out whether or not some 
of the incentives that you need are currently in that budget, 
to retain people that you have and to attract other people into 
the agency. Also, one other important ingredient is the whole 
issue of training, which you are very, very familiar with.
    I will say to you that, from what I have picked up, there 
are some concerns between the management of that agency and 
their labor unions, and I would be interested to see how you 
handle that situation. One other area that came before this 
Committee was the whole controversy over the qualifications of 
the people who provide the security in our buildings throughout 
the country. It appeared to me that there was a feeling among 
many people, that part of your operation was not getting the 
same kind of attention that some other parts of the agency were 
getting. So those are two areas I think you need to look at 
pretty quickly, to see if there is something that can be done 
to deal with it.
    Mr. Perry. Thank you, Senator. I certainly will do that. I 
would like to just comment quickly, in the case of security, 
providing safe workplaces for Federal employees is of paramount 
importance. Part of what we have to understand is what is the 
duty and responsibility that we will place on those 
individuals? In other words, to some extent, that duty is to 
provide secure access to the building, and safety in that 
sense. There is another aspect that some talk about, which 
would be more in the line of police work, even investigative 
work. We have to define, first of all, what it is that we are 
responsible to do in that regard. Both of those things would 
have great implications with respect to the capability of our 
existing staff, or only the former portion of that, and that 
has to be worked out.
    I know that one change has already been made with respect 
to the management oversight of that activity. It is now in the 
public buildings services, and the responsibility is there for 
that individual to work with the people in all the regions, to 
make sure that we are applying consistent practices, and that 
was not the case before. So it is an item of great concern, 
given the nature of the world in which we live and the 
possibility for bad acts within Federal buildings. So it is 
something we will pay attention to very early on.
    Senator Voinovich. Thank you.
    Chairman Thompson. Thank you very much. Senator Durbin.
    Senator Durbin. Mr. Chairman, I will only note that in his 
biography, it says that Mr. Perry was a stockroom clerk at 
Timken in 1964, and now he is a Senior Vice President. So I do 
not think that Senator Voinovich's projected success of your 
service is exaggerated. I wish you the best.
    Mr. Perry. Thank you, Senator. Thank you very much.
    Chairman Thompson. We will act promptly on your nomination, 
Mr. Perry. Thank you very much for your service to your State 
and to your country, and we appreciate your being here and your 
willingness to serve. We look forward to acting on your 
nomination. Thank you very much.
    We will now turn to the nomination of John Graham to be 
Administrator of the Office of Information and Regulatory 
Affairs at OMB. OIRA, as we refer to it, is the statutory 
office within OMB.
    The administrator is the head of this office. OIRA was 
established in 1980 by legislation developed by this Committee, 
to address policy issues Congress was concerned were being 
neglected by the Executive Branch. Specifically, OIRA is 
charged with being a leader on regulatory reform, including 
implementing statutory requirements, reducing unnecessary 
paperwork and red tape, reviewing information policy and 
guiding statistical policy proposals. The decisions and actions 
of the OIRA Administrator are extremely important to the 
public, and these decisions should be made by an extremely 
capable and dedicated individual. Dr. Graham fits this profile.
    He has been a professor of Policy and Decision Sciences at 
the Harvard School of Public Health since 1991, and director 
for the Harvard Center for Risk Analysis. Like many other 
universes, such as Johns Hopkins, University of Pennsylvania, 
Washington University at St. Louis, Carnegie Mellon, George 
Mason and others, Harvard, through the Center for Risk 
Analysis, has researched analytical methods by which policy 
makers can make more reasoned regulatory decisions. Like these 
other research centers, the Harvard Center strives to continue 
its work through a diversity of supporters, including the 
university, government, and the private sector. As the 
government's share of research and development has decreased, 
universities have relied more and more on private support for 
crucial research. A survey by Committee staff indicates that 
research universities receive a substantial portion of their 
research dollars from industry, beyond monies from private 
foundations and non-profits. It is not uncommon for centers 
doing similar work as the Harvard Center to receive about 40 
percent to 60 percent of their funding from the private sector.
    It can be argued that much of the Harvard Center's work and 
the work of many other programs would not be possible without 
support from the private sector. A review by my staff and 
letters to the Committee indicate that the Harvard Center 
stands above many other centers because it has developed 
specific rules governing the researchers at the Center on 
conflicts of interest and financial disclosure, to ensure the 
integrity of the work. Many other centers surveyed relied 
solely on university-wide, or department policies, to address 
ethics concerns.
    Dr. Graham's background highly qualifies him for this 
position. While as an academic and researcher, he was able, as 
all researchers do, to explore new ideas and methods related to 
his field. He could argue about what theories worked or did not 
work. That is what academia and research is all about. The 
Committee has received many letters pertaining to this 
nomination from leaders in environmental, health and regulatory 
policy. There are many outstanding letters of support for Dr. 
Graham, including letters from William Riley, former EPA 
administrator and head of an environmental group, as well as a 
letter signed by all five of the former administrators of OIRA, 
from both Democratic and Republican administrations. I am 
confident that Dr. Graham will effectively be able to make the 
transition from academia to government service, and that he 
will be able to use his background to bring more insight to the 
issues that confront OIRA every day.
    Dr. Graham has filed responses to a biographical and 
financial questionnaire, answered pre-hearing questions 
submitted by the Committee, and had his financial statements 
reviewed by the Office of Government Ethics. Without objection, 
this information will be made a part of the record, with the 
exception of the financial data, which is on file and available 
for inspection in the Committee's office.
    Our Committee rules require that all witnesses at 
nomination hearings give their testimony under oath. Dr. 
Graham, would you please stand and raise your right hand? Do 
you solemnly swear to tell the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Mr. Graham. I do.
    Chairman Thompson. Please be seated. Dr. Graham, do you 
have anyone with you today that you would like to introduce?

  TESTIMONY OF JOHN D. GRAHAM \1\ TO BE ADMINISTRATOR OF THE 
 OFFICE OF INFORMATION AND REGULATORY AFFAIRS AT THE OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Graham. I do, indeed, sir. My wife, Susan, and 
daughter, Katy; my parents, Tom and Eileen Graham; and my 
sister and her husband, Sue and John Shefsley and their 
daughter, Sarah Shefsley; and my wife's parents, Leo and Gloria 
Warner.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Graham appears in the Appendix on 
page 150.
     The biographical information of Mr. Graham appears in the Appendix 
on page 153.
     Pre-hearing questions and responses appear in the Appendix on page 
175.
     Additional pre-hearing questions and responses appear in the 
Appendix on page 191.
     Post-hearing questions and responses appear in the Appendix on 
page 303.
---------------------------------------------------------------------------
    Chairman Thompson. All right. Thank you very much. You are 
all very welcome here this morning.
    Senator Voinovich, did you have any opening comments?
    Senator Voinovich. Yes, I do. Thank you, Mr. Chairman. I am 
pleased that the Committee on Governmental Affairs is 
considering the nomination of Dr. Graham to be the 
Administrator of the Office of Information and Regulatory 
Affairs within the Office of Management and Budget. Mr. 
Chairman, I view OIRA as a very important office in the Federal 
Government. Fortunately, President Bush has nominated an 
individual who has the experience, the knowledge, and the 
integrity to be a first-rate administrator. Dr. Graham, as you 
mentioned, is a tenured professor at Harvard University. He has 
published widely, managed the Harvard Center for Risk Analysis 
at the Harvard School of Public Health, and is considered to be 
a world-renowned expert in the field of risk analysis.
    When I was active in the National Governors Association, I 
had the pleasure of meeting Dr. Graham and hearing his 
testimony about risk assessment and cost-benefit analysis. He 
is, hands down, one of the most qualified people ever to be 
nominated for this position. Mr. Chairman, as you know, I 
served as Governor of Ohio for 8 years, and I know what it is 
like to operate in an environment of scarce resources, where 
tough choices have to be made on resource allocation among a 
State's various programs. In many instances, new Federal 
regulations have a habit of costing State and local governments 
tremendous sums of money to implement. That is why, many years 
ago, I was one of the four or five governors that pushed the 
passage of unfunded mandate relief legislation here on the 
Federal level; and, as Members of this Committee know, there 
was a provision in unfunded mandates relief legislation, that 
any regulation that was over $100 million had to be looked at 
in terms of risk assessment, cost-benefit, to determine whether 
or not it met the test.
    That is why it is important that we have an OIRA 
Administrator who understands the significance of sound 
regulations and usefulness of cost-benefit analysis when 
determining how the Federal regulations will be applied to our 
State and local governments. As one who was very involved in 
development, as I mentioned, in unfunded mandates, it is 
important that the Administrator work to encourage agencies to 
consult with State and local governments while developing new 
Federal rules. It is also important that OIRA administrator 
produce accurate cost-benefit analysis for major Federal 
regulations. I am confident Dr. Graham will bring a reasoned 
approach to the Federal regulatory process. Dr. Graham is 
widely respected and his nomination has received support, and I 
am not going to go into them, Mr. Chairman, because you have 
already mentioned that.
    I would mention, though, that he is so well-qualified that 
the last five OIRA Administrators, Democrats and Republicans 
alike, wrote to our Committee that, ``We are confident that 
John Graham is not an opponent to all regulations, but rather 
is deeply committed to seeing that regulations serve broad 
public purposes as effectively as possible.'' These five 
individuals know what it takes to be an effective 
Administrator, because they have done the job themselves. Dr. 
Graham does have the skills and the qualifications to be a 
responsible steward of the public interest, and I agree with 
their assessment.
    Before I conclude, Mr. Chairman, I would like to raise 
another point about Dr. Graham's nomination. While there has 
been strong support for his nomination from a variety of 
sources, I am familiar with the criticisms of Dr. Graham and 
the Harvard Center for Risk Analysis regarding their corporate 
funding. I see this criticism, frankly, as unfounded. The 
Harvard Center for Risk Analysis has a comprehensive disclosure 
policy, with the Center's funding sources disclosed and the 
Center's annual report on their web site. If reporters, 
activists or legislators want to know how the Harvard Center is 
funded, the information is publicly available.
    It is well-known that the Harvard Center has substantial 
support from both the public and private sectors. The Harvard 
Center also has an explicit public conflict of interest policy. 
As for Dr. Graham, he has a personal policy against accepting 
personal consulting income from companies, trade associations 
and other advocacy groups.
    Dr. Graham, I want to thank you for your willingness to 
serve your Nation. Your background and your experience have 
prepared you well to become the next Administrator of OIRA.
    Thank you, Mr. Chairman.
    Chairman Thompson. Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman, and good morning, 
Dr. Graham. I look forward to this hearing on Dr. John Graham's 
nomination to be the Administrator of the Office of Information 
and Regulatory Affairs. Along with most Members of this 
Committee, I have been able to work with Dr. Graham on such 
issues as the regulatory reform legislation that drew 
bipartisan cosponsorship from a diverse group of Senators. Dr. 
Graham's credentials for this position are stellar, and it 
would be hard to imagine anyone better qualified than he for 
this important position.
    OIRA is responsible for reducing government paperwork and 
ensuring that regulations are drafted in a manner that will 
achieve their goals, but without unnecessary costs and 
increased risk. Dr. Graham has been a leader in the application 
of sophisticated research tools, such as risk analysis, that 
let us accomplish such regulatory rationalization in a far more 
effective manner. The risk analysis tools used by Dr. Graham 
and his colleagues help avoid regulatory paralysis and enhance 
public safety and welfare. It would be difficult to find a 
person better qualified to use these tools for the public's 
good than Dr. Graham, a professor at the Harvard School of 
Public Health and the founder of the Harvard Center for Risk 
Analysis.
    In the years since its establishment, the Center has 
provided invaluable research on regulatory health and safety 
issues. As the Chairman has noted, Dr. Graham's nomination has 
been endorsed by a wide range of organizations, scholars and 
former OIRA Administrators. Mr. Chairman, I think it is 
unfortunate that a few groups have decided to oppose Dr. 
Graham's nomination, not by engaging in debate about his 
beliefs and positions, but rather by attacking his personal 
character and that of his academic colleagues at Harvard. 
Rather than discussing the merits of his analysis, his critics 
have somehow called into question his character and his 
judgment, because, like most academic institutions, the Harvard 
Center accepts private donations from industry groups.
    Those who make such criticisms clearly know little about 
the Center. The Harvard Center, after all, receives 
considerable public funding, too, and has tougher conflict of 
interest policies than that of Harvard University as a whole. 
The Center is funded by both private industry and by the 
government's own regulatory and research agencies, including 
such organizations as the Environmental Protection Agency, the 
National Science Foundation, and the National Cancer Institute. 
Measurement of the effectiveness and efficiency of government 
regulations simply makes good sense, and it is ludicrous to 
suggest that rigorous analysis of government laws and 
regulations is somehow against the public interest, but to 
undertake such a study is all that Dr. Graham has done.
    After all, Dr. Graham is hardly an opponent of well-
crafted, commonsense regulation. He sounded the alarm, for 
example, of the deteriorating quality of indoor air quality in 
this country, a subject that had been virtually forgotten in 
our debates over clean air standards. Dr. Graham has also been 
an advocate of such conservation measures as the higher 
gasoline tax and tax credits for those who purchase vehicles 
utilizing a variety of energy-saving devices. I agree with him 
on one of those proposals and not on the other. I do not think 
we ought to have a higher gasoline tax, but my point is that he 
has been a supporter of efforts that would increase regulations 
in some areas. He has also been a supporter of efforts to 
regulate particulate matter.
    In closing, Mr. Chairman, let me just make a few brief 
observations. Were Dr. Graham not strongly in favor of 
effective safety regulations, the American Trauma Society and 
the Task Force for Child Survival and Development would not 
have sent strong letters in support of his nomination, but they 
did. Were Dr. Graham not strongly in favor of effective 
regulations to protect Americans' health, the President of the 
American Council on Science and Health would not have informed 
me that Dr. Graham would be an outstanding OIRA Administrator, 
but she did. Were Dr. Graham not superbly qualified for this 
position, he would not have drawn the praise of every former 
administrator legally permitted to give it, and he would not 
have won endorsements from scholars of all political 
persuasions and from many different disciplines, but he has.
    Mr. Chairman, I am confident that, at the end of the day, 
the American people will be impressed, not only without Dr. 
Graham's qualifications and experience, but also with his 
willingness to leave academia for public service.
    Thank you, Mr. Chairman.
    [The prepared opening statement of Senator Collins 
follows:]

             OPENING STATEMENT OF SENATOR SUSAN M. COLLINS
    I look forward to this hearing on Dr. John Graham's nomination to 
be administrator of the Office of Information and Regulatory Affairs. 
Along with others on this committee, I have been able to work with Dr. 
Graham on such issues as the Thompson-Levin regulatory reform bill--
legislation that drew the cosponsorship of a diverse group of Senators 
in both parties.
    Dr. Graham's credentials for this position are stellar, and it 
would be hard to imagine anyone better qualified for the job. OIRA is 
responsible for reducing government paperwork and ensuring that 
regulations are drafted in a manner that will achieve their goals, 
without unnecessary costs and increased risk. Dr. Graham has been a 
leader in the application of sophisticated tools, such as risk 
analysis, that let us accomplish such regulatory rationalization in a 
far more effective manner. Far from being ``paralysis through 
analysis,'' the risk-analysis tools used by Dr. Graham and his 
colleagues help avoid regulatory paralysis and enhance public safety 
and welfare. And it would be difficult to find a person better 
qualified to use these tools for the public good than Dr. Graham, a 
professor at the Harvard School of Public Health and the founder of the 
Harvard Center for Risk Analysis. In the years since its establishment, 
the Center has provided invaluable research on regulatory health and 
safety issues.
    I am pleased to note that every single person, whether Republican 
or Democrat, ever to hold the position of OIRA administrator--every 
person, that is, except for two who are now federal judges and are 
quite properly prohibited from making such endorsements--have signed a 
letter to you, Mr. Chairman, and the Ranking Member, on Dr. Graham's 
behalf. In this letter, they urge us to act expeditiously, and with an 
open mind because, in their words, ``we are confident that [Dr. Graham] 
is not an `opponent' of all regulation but rather is deeply committed 
to seeing that regulation serves broad public purposes as effectively 
as possible.'' This statement from the people who know the job best is 
clearly a powerful indication of Dr. Graham's capability. It also 
highlights the non-ideological, nonpartisan, scholarly approach he will 
bring to OIRA.
    Mr. Chairman, it is unfortunate that a few groups have decided to 
oppose Dr. Graham's nomination not by engaging in debate about his 
beliefs and positions but by attacking his personal character, and that 
of his academic colleagues at Harvard. Rather than discussing the 
merits of his analysis, his critics have tried to insinuate that he is 
somehow ``corrupt'' because, like most academic institutions, the 
Harvard Center accepts private donations from industry groups.
    Those who make such criticisms clearly know little about the 
Center. The Harvard Center, after all, receives considerable public 
funding too, and has tougher conflict-of-interest policies than that of 
Harvard University as a whole. The Center is funded both by private 
industry and by the government's own regulatory and research agencies, 
including such organizations as the Environmental Protection Agency, 
the National Science Foundation, and the National Cancer Institute.
    Measurement of the effectiveness and efficiency of government 
regulations makes good sense. And it is ludicrous to suggest that 
rigorous analysis of government laws and regulations is somehow against 
the public interest. But to undertake such study is all that Dr. Graham 
has done.
    After all, Dr. Graham is hardly an opponent of well-crafted, 
common-sense regulation. He has sounded the alarm, for example, over 
the deteriorating quality of indoor air quality in this country--a 
subject that has been virtually forgotten in our debates over clean air 
standards. Dr. Graham has also been an advocate of such conservation 
measures as the higher gasoline tax and tax credits for those who 
purchase vehicles utilizing a variety of energy saving devices. He was 
also a supporter of efforts to regulate particulate matter. Are all of 
these the positions of a man whose scholarly views have been 
``captured'' by private industry? Clearly not.
    In closing, Mr. Chairman, allow me to make a few observations:

     LWere Dr. Graham not strongly in favor of effective safety 
regulations, the American Trauma Society and the Task Force for Child 
Survival and Development would not have sent strong letters in support 
of his nomination--but they did.

     LWere Dr. Graham not strongly in favor of effective 
regulations to protect Americans' health, the President of the American 
Council on Science and Health would not have informed me that Dr. 
Graham would be an outstanding OIRA administrator--but she did.

     LWere Dr. Graham not superbly qualified for this position, 
he would not have drawn the praise of every former OIRA administrator 
legally permitted to give it, and he would not have won a rousing 
chorus of endorsements from scholars of all political persuasions and 
from many different disciplines--but he has.

    Mr. Chairman, I am confident that, at the end of the day, the 
American people will be impressed not only with Dr. Graham's 
qualifications and experience but also with his willingness to leave 
academia for the public service.
    Thank you, Mr. Chairman.

    Chairman Thompson. Thank you very much. I don't know 
whether to call on the Ranking Member or the gentlemen that has 
been here longer.
    Senator Lieberman. I yield.
    Chairman Thompson. All right. Senator Durbin.

              OPENING STATEMENT OF SENATOR DURBIN

    Senator Durbin. Thank you, Mr. Chairman.
    Dr. Graham, thank you for joining us today. I am happy that 
you came by my office and we had an opportunity to meet. I have 
not made any secret of the fact that I am going to oppose your 
nomination, and I hope, during the course of asking questions 
here, you will understand the misgivings I have about your 
appointment to this position. I do not think many people 
understand the importance of this position, but there are some 
who do. This position has been characterized as really the 
gatekeeper for rules and regulations related to public health 
and safety in our Nation.
    In the testimony of Joan Claybrook, that was before this 
Committee, she has stated, ``In theory, the OIRA director 
should serve as an honest broker, reviewing regulatory 
proposals from Federal agencies and deferring to agency 
expertise on the most technical and scientific matters. Federal 
safeguards on industrial chemicals, fuel economy standards, air 
and water pollution, tobacco regulation, implementation of a 
Patient's Bill of Rights, and virtually every other issue that 
is critical to human and environmental health fall under the 
office's purview.''
    She goes on to say, ``Under the Paperwork Reduction Act, no 
government agency can gather information from 10 or more 
entities, a request which is often essential for research that 
justifies regulation, without the approval of this office. 
Through these mechanisms, OIRA can slow, stall, weaken or stop 
regulatory proposals and final rules that the regulated 
industry opposes.''
    How does industry view this appointment? Well, an article 
\1\ in Plastic News, May 7, 2001, is headlined: ``Bush's OIRA 
appointee, Graham, could lend clout to plastics,'' and they go 
on to say, ``The job sounds boring and inside the Beltway, but 
the office can wield tremendous behind-the-scenes power, 
because it acts as a gatekeeper of Federal regulations ranging 
from air quality to ergonomics. It has the power to review them 
and block those that it chooses to.''
---------------------------------------------------------------------------
    \1\ Article from Plastic News dated May 7, 2001, appears in the 
Appendix on page 349.
---------------------------------------------------------------------------
    They go on to say in this article, ``The Harvard Center for 
Risk Analysis, which Graham founded and directed until Bush 
nominated him, gets a significant part of its $3 million annual 
budget from plastics and chemical companies.'' This is all from 
the Plastic News article: ``The Center's donor list reads like 
a Who's Who of the chemical industry,'' and they go on to list 
some of the sponsors of Dr. Graham's institute. Graham is well-
thought of by the plastics industry. Persons from that industry 
said, ``The Bush Administration intends to make OIRA more 
important than it was in the Clinton Administration, elevating 
it to its intended status.'' This gentleman, Mr. Freeman, says, 
``They have a big stick if the President in office allows them 
to use it, and if they have someone in the office who knows how 
to use it.'' I ask this article be made part of the record, Mr. 
Chairman.
    Chairman Thompson. It will be made part of the record, 
without objection.
    Senator Durbin. Mr. Chairman, I am troubled by a number of 
the things that Dr. Graham has done in his professional career. 
I think he has, in many aspects of his job, trivialized 
environmental problems that face our Nation. I hear from my 
constituents every day about their environmental concerns. The 
number one web site in the Federal Government at the EPA is the 
web site that parents visit every day to see if there is an 
ozone or smog warning, because they have children who are 
asthmatic. I know about these families. I think virtually all 
of us know someone who is suffering from asthma. When you talk 
about regulations relative to air pollution, regulations which 
Dr. Graham will ultimately review and stop if he disapproves, 
we can understand it is literately a matter of life or death.
    When a rural couple wonders about their tap water and 
whether our national drinking water standards for arsenic and 
other chemicals will give them adequate protection, the final 
word may rest with Dr. Graham, if he wins this appointment. 
From a shopper in Chicago, writing to me about pesticides on 
food, to families all across America, they may not know what 
OIRA stands for, but decisions made in that agency will affect 
their lives. I have detected an attitude in Dr. Graham's work 
and writings that troubles me greatly. He has made the case 
that a little bit of dioxin might be good for you; that 
pesticide residues on food should not be taken all that 
seriously, that reducing smog might be a mistake because it 
would let in more damaging rays from sunlight; that banning DDT 
might have been a mistake; that environmental regulations can 
actually cause deaths, rather than prevent them.
    I know you are going to find some of the things I have just 
said incredible. I will present some of Dr. Graham's actual 
quotes and will give him a chance to respond to them during the 
course of this hearing. I would like to ask that the entire 
statement be made part of the record, and save my remaining 
time for questions, Mr. Chairman.
    Chairman Thompson. It will be made part of the record, 
without objection.
    [The prepared statement of Senator Durbin follows:]

                  PREPARED STATEMENT OF SENATOR DURBIN
    The word most often used to describe the office to which Professor 
Graham has been nominated--the Office of Information and Regulatory 
Affairs--is ``obscure''. Few are aware of OIRA, or of just how powerful 
the position of ``regulatory czar'' really is. But this office--this 
senior White House staff position--exercises enormous authority over 
every major federal regulation that the government has under 
consideration. Because of this, the OIRA Administrator must have a 
commitment to even-handedness, objectivity, and fair-play in analyzing 
and presenting information about regulatory options.
    John Graham came by my office a few weeks ago for a courtesy visit, 
which I appreciated. Before that meeting I reviewed his extensive 
public record, his many articles, speeches and the numerous times he 
has testified before this and other Congressional committees.
    It is Professor Graham's public record that troubles me--these many 
statements over the years that have minimized and trivialized 
environmental problems and have been dismissive of public concerns. His 
research work was worrisome--research that seemed to stretch the 
available information out of shape, in order to repeatedly reach the 
conclusion that we don't need regulations for air pollution or water 
pollution or pesticides. I'm troubled, as well, by the number of times 
Professor Graham worked too closely with industrial funders of his 
work, in order to advance a specific agenda at the expense of objective 
scholarship and the public interest.
    I'd like to lay out in more detail a few of the areas that are of 
particular concern to me.
                  trivializing environmental problems
    I hear from my constituents every day about their environmental 
concerns. From the young mother whose son has asthma, and can't go out 
to play on smoggy days. From a rural couple wondering about their tap 
water, and whether our national drinking water standards for arsenic 
will give them adequate protection. From a shopper in Chicago writing 
to me about pesticides on foods. I take every letter, every call, every 
concern very seriously.
    I detect a very different attitude at work in Professor Graham's 
writings and statements. He has made the case that a little bit of 
dioxin might be good for you . . . that pesticide residues on foods are 
not a serious health threat . . . that reducing smog might be a mistake 
because it would let in more damaging rays from sunlight . . . that 
banning DDT might have been a mistake. That environmental regulations 
can actually cause deaths, rather than prevent them.
    I'm not sure how someone holding those views could look at a 
regulatory proposal to reduce the levels of arsenic in drinking water 
and decide that it would be a good thing for society to do. Following 
Professor Graham's logic, a little bit of arsenic may be good for us as 
well.
    It's not just environmental issues either. Professor Graham's work 
has been broad ranging, to say the least. In one study he concluded 
that safe housing regulations can lead to excess deaths. In another, he 
found that the use of cell phones while driving--which, by his own 
estimates cause 1,000 deaths per year--shouldn't be regulated since the 
benefits of cell phones outweigh the costs.
    And I'm also troubled by what strikes me as a very dismissive 
attitude towards the American people. According to John Graham, we are 
``paranoid'', ``neglectful'', ``dysfunctional'', and generally ill-
informed and over-emotional. In one article, Professor Graham talked 
about America's ``emotional gush'' in the aftermath of the high school 
shootings in Littleton, Colorado, arguing that it might divert us from 
the real dangers that our children face.
    Violence in schools is one of the real dangers that our children 
face, every day.
            publishing misleading, anti-regulatory research
    I also have concerns about the nature of many of Professor Graham's 
research projects. They all seem to support--sometimes directly, 
sometimes indirectly--the message that government regulations are a bad 
idea. And many of his results simply strain credibility. Regulations 
are killing 60,000 people a year through a process he calls 
``statistical murder''! Environmental regulations are forcing our 
country to spend million, billions . . . even trillions of dollars to 
save a single life! Saving five lives would cost us our entire Gross 
Domestic Product. I just don't see how any legitimate scientific 
analysis can reach these exaggerated conclusions.
    And others have the same problem. Lisa Heinzerling is a well-
respected Law Professor at Georgetown University who submitted 
testimony to today's hearing. I commend her testimony to all my 
colleagues, and wish that Professor Heinzerling were here to deliver it 
in person. She writes that the claims Professor Graham has made 
regarding the cost of regulations, in terms of both dollars and human 
life, are ``exceedingly problematic, for three basic reasons. . . .''

        --``they misrepresent the output of the current regulatory 
        system;''
        --``ignore many of the benefits of Federal regulation;''
        --``Land rest on controversial moral judgments about whose life 
        is worth saving.''

    This last point is particularly troubling, because it involves the 
practice of ``discounting'' human life in exactly the same way 
economists discount money--a life saved or a dollar earned today is 
much more valuable than a life saved or a dollar earned in the future. 
Discounting makes sense for dollars. But it only trivializes the value 
of the lives of our next generation, and creates a built-in bias 
against environmental regulations meant to provide protections over the 
long term.
    Dr. Heinzerling points out a fact in her testimony that startled 
me. Of the most expensive environmental programs that Professor Graham 
identified in his research, none of them were ever implemented! Where 
he says we spend hundreds of billions of dollars, we actually spend 
zero dollars, because these are programs that do not exist.
    I asked the Congressional Research Service to look into the most 
expensive program that Professor Graham identified--chloroform 
standards that cost $99 billion for each year of life saved. Their 
response--this was a ``hypothetical'' case study never proposed, nor 
even considered for proposal.
    There are organizations that absolutely love research results that 
show billions of dollars being wasted by unnecessary environmental 
regulations--groups like the Cato Institute, the Heritage Foundation, 
and the American Enterprise Institute, all of whom have made use of 
Professor Graham's results to strengthen their anti-regulatory 
arguments.
    And perhaps this may be the result of how they've used the 
information, rather than his research itself, but the end result has 
been to inject a great deal of misinformation into the regulatory 
reform debate about what the true costs and benefits of Federal 
regulations actually are.
                         conflicts of interest
    Which leads me to the last area of concern: How the work Professor 
Graham does so neatly supports the very agendas of the organizations 
that support his work. There have been troubling charges of conflict of 
interest. Many of Graham's own colleagues from Harvard University have 
written this Committee alleging:

        ``L. . . a persistent pattern of conflict of interest, of 
        obscuring and minimizing dangers to human health with 
        questionable cost-benefit analysis, and of hostility to 
        governmental regulation in general. . . .''

    Some of the specific instances cited include soliciting funds from 
Philip Morris at the same time Professor Graham was writing a chapter 
on tobacco risks he invited Philip Morris to review in draft form. He 
returned funds received from Philip Morris as a violation of University 
ethics policy, yet solicited and received funds from Kraft Foods, a 
subsidiary of Philip Morris. His research on cell phone use while 
driving, critics charge, is patently designed to please the corporate 
sponsors of the study.
    These concerns are broadly shared, which is why this nomination--to 
what would ordinarily be an obscure and non-controversial position--has 
generated so much opposition. Groups opposing this nomination include 
advocacy groups such as NRDC and OMB Watch, as well as labor unions, 
academics, health professionals, and public health organizations like 
the Center for Children's Health and the Environment at the Mount Sinai 
School of Medicine in New York.
    We need to hear more about these possible conflicts in the course 
of this hearing. Professor Graham, I look forward to the opportunity to 
engage you on these issues.

    Chairman Thompson. Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman.

              OPENING STATEMENT OF SENATOR BENNETT

    Dr. Graham, we welcome you here. I have read Joan 
Claybrook's presentation.\1\ I have also read the refutation of 
that presentation submitted by David Hemingway, Ph.D., 
Professor of Health Policy, and Director of the Harvard Injury 
Control Research Center. If I may quote from Dr. Hemingway's 
cover letter of that refutation, not that this should be 
dispositive, but unfortunately, in this arena, this has to be 
said, ``I am a public health professional and a Democrat. I 
agree with John's conclusion on many issues and disagree on 
some, but I have always respected his science and his 
integrity. I think the current administration in Washington has 
made some terrible decisions. However, I believe the 
appointment of John Graham is one of its best ones. John will 
serve the Nation well. I do not know of a more appropriate 
person to be appointed to oversee regulatory issues at OMB.''
---------------------------------------------------------------------------
    \1\ The prepared statement of Joan Claybrook appears in the 
Appendix on page 366.
---------------------------------------------------------------------------
    Joan Claybrook spends most of her time quoting newspaper 
articles. There is no indication that her special-interest 
group, Public Citizen, has ever examined, to the degree that 
David Hemingway, a colleague at Harvard, has examined the 
actual work of this nominee. She spends a great deal of her 
time complaining about those who have contributed money to 
Harvard University, on the grounds that by contributing money, 
they have somehow poisoned the well at Harvard and every 
professor who teaches there. I would be more impressed if, in 
her special-interest group, Joan Claybrook would disclose her 
sources of funds. We have no idea who paid for the statement 
she compiled and put together, what other special-interest 
groups have combined behind the cloak of her special-interest 
group to launch this assault on the integrity of this nominee.
    She and her colleagues have every right to attack the 
integrity of the nominee, but we as Senators must pay attention 
to those who know him best and to those who know the job best. 
Those who know the job best have unanimously endorsed this 
nominee, including those who held the job under President 
Clinton. Those who know the nominee best, his colleagues at 
Harvard, have unanimously endorsed this nominee. I was unaware 
that Harvard was part of the vast right-wing conspiracy, but 
apparently it is, in some circles here.
    Finally, Mr. Chairman, I remember when Joan Claybrook and 
Public Citizen told us of the tremendous number of deaths that 
would occur on the highway if the Congress were to raise the 
speed limit. Congress allowed the speed limit to be raised and 
the deaths did not materialized. As a matter of fact, the 
number of deaths per mile driven went down after the speed 
limit was raised. So I feel that we are seeing an attempt here 
to attack a public citizen in the name of public citizens, who, 
if he is confirmed, will render superb service.
    Will he be right every time? Of course not. None of us is, 
including, if I may be so bold, even me. But given the track 
record that he has accomplished in his academic life, given the 
endorsement that has been given him by his colleagues at a 
university that some suggest is our leading university in the 
United States, given the record of integrity that has been 
endorsed by those who have performed this job under different 
Presidents and in different political atmospheres, I think it 
is incumbent upon this Committee to give a strong vote for this 
nominee, and send him to the floor with our endorsement.
    Thank you, Mr. Chairman.
    Chairman Thompson. Thank you very much. Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman. First, I want to 
object to Senator Bennett's conclusion that Harvard is our 
leading university.
    Chairman Thompson. I am glad you are sticking up for 
Vanderbilt. I appreciate that. [Laughter.]
    Senator Bennett. I will be happy to recant that statement.
    Senator Lieberman. We think of Vanderbilt as the Yale of 
the South.

             OPENING STATEMENT OF SENATOR LIEBERMAN

    Senator Lieberman. Thanks, Mr. Chairman. Well, we could use 
a little levity today.
    Thank you, Dr. Graham. This, as my colleagues have said, is 
a very important nomination because of the importance that OIRA 
holds in our governmental system. It is, as Senator Durbin 
said, very little-known, but casts a very large shadow and 
footprint across the workings of our government, particularly 
in what I would call the protective aspect of our government. I 
mean, after all, we, in the Legislative Branch, adopt laws 
which presumably are an attempt to express our values, to draw 
lines between what is right and wrong, what is acceptable and 
unacceptable, what is desirable and undesirable in our society, 
and we leave many of the details, because it is impossible to 
cover every situation through law, through legislation, that 
may be effective, and we leave the details to the regulatory 
process.
    Particularly in the protective aspect of government, which 
is one of our most important roles, that regulatory part of the 
process is critically important. And what do I mean by 
protective? The obvious, which is that there are dangers that 
face people in our society, in our country, every day, that are 
so large or in other ways so difficult for individuals to 
respond to, that the government has a responsibility to do so. 
And this is not big government, this is protective government, 
and I think, in many ways, though I cannot cite a particular 
public opinion survey on this, the most desired, accepted, and 
supported aspect of our government.
    Let me be specific. We have talked about environmental 
protection as a broad, bipartisan ethic in our society. I think 
about the importance of protecting the environment, the 
critical role that government plays in that. The other aspect 
of what we call environmental protection, but is really people 
protection, which is protecting people from the adverse 
consequences of environmental pollution, whether it is, as 
Senator Durbin said, the impact on an asthmatic child or an 
older person with respiratory problems of air pollution, 
whether it is the dangers associated with polluted water, or, 
in another sense, the natural resource sense, the role that 
regulation plays in protecting some of the great natural 
treasures that the good Lord has given us here in the United 
States.
    So this is a very important part of government, and OIRA is 
the gatekeeper. It is at the center of this process. In recent 
years, OIRA has reviewed regulations to ensure that the agency 
has adequately defined the problem, considered non-regulatory 
alternatives, assessed available information on risks, costs 
and benefits, and consulted affected parties before those 
regulations can go forward to publication and full 
effectiveness. So this is an important position.
    Because of what you have written and said, and, in some 
sense, done, so far as you have been an activist or involved in 
preparation of legislation, or testimony, your nomination has, 
I think, quite predictably become controversial, and based on 
your writings, because they do raise questions, it is a 
provocative nomination. It is, I think, all the more 
controversial at this particular moment because of the anxiety 
that is felt in different parts of our population in our 
country, about early first steps that the Bush Administration 
has taken with regard to protective regulations, beginning with 
a memo issued by the Chief of Staff to the President, Andy 
Card, the so-called Card memo, holding up a number of 
regulations that were issued by the Clinton Administration. And 
then some of the actual acts, the most controversial ones, such 
as the regulation with regard to the tolerable amount of 
arsenic in drinking water, and, of course, this is of wide 
concern, because the reason there is a limit placed is because 
at least some science and medicine says that arsenic in 
drinking water can cause cancer. So, in that context, based on 
your body of work and opinion, I think this nomination, your 
nomination, has actually raised more anxiety than it might have 
had those actions not preceded it.
    But I think we have an obligation to try to be fair to you, 
and, I suppose, not to punish you because you have written or 
thought or spoken in ways that are different or provocative. I 
have always felt, as I presume most of my colleagues do, that 
our role in the advice and consent power in the Senate that the 
Constitution gives us is not to decide whether we would appoint 
a nominee, but whether the nominee is the appropriate choice 
for the position to which he or she has been nominated, and it 
is that standard that I am going to hold myself to as I 
consider your testimony today and the cumulative evidence that 
is presented to us about your nomination.
    So I look forward to your testimony and to the question 
period, and I thank you very much for responding to the pre-
hearing questions, voluminous as they were, that I and others 
submitted to you.
    Thank you, Mr. Chairman.
    Chairman Thompson. Thank you very much. Senator Carper, I 
believe you are next.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Mr. Chairman, and to our nominee, 
welcome today. I don't know you, and I don't believe we have 
ever met, and I don't know a great deal about you. I have heard 
today from colleagues here whom I respect enormously who seem 
to feel that you are an excellent nominee. And I have heard 
from a colleague who I also respect enormously who has raised 
serious questions about your nomination.
    I will be very brief. I just want to say that I think we 
all agree--I am sure you do as well--character is terribly 
important. There are few qualifications that are more 
important, maybe none, with respect to those who come before us 
for our consideration. Integrity, which is closely related to 
character, is just vitally important.
    I hope in your comments today and in the opportunities we 
have with questions that you will just address very directly 
the concerns that have been raised about you, your character, 
and some of the work that you have been involved in in ways 
that will dispel some of the concerns that have been raised.
    Again, we welcome you today and your family. We thank you 
for your willingness to serve, and we look forward to this 
hearing.
    Chairman Thompson. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman. I wish to 
add my welcome to Dr. Graham and his family.
    In 1986, Congress voted to make the Administrator of the 
Office of Information and Regulatory Review a presidentially 
appointed position. The action was taken because of the lack of 
transparency in the office's operations and an erosion of trust 
between OMB and Congress.
    Given OIRA's wide-ranging authority over Federal regulation 
and information, there is a tremendous potential for abuse and 
a disregard for the technical expertise in decisions made by 
Federal agencies. The possibility of abuse remains, and the 
questions continue. How much weight should be given to cost/
benefit assessment? And how should it be applied? Should all 
costs and benefits be lumped together in calculating cost/
benefit ratios? Should distinctions be made between costs borne 
by industry versus private citizens or benefits gained by 
children as opposed to senior citizens?
    It is in this light that I will view the nomination of Dr. 
John Graham. I want to know if he supports open and transparent 
reviews of rules and regulations and regular communications 
with Congress. I want to know if he would return OIRA to the 
1980's when regulations went into a black hole and never came 
out again.
    The regulations that OIRA reviews affect everyone in Hawaii 
and throughout the Nation. OMB and OIRA must be able to assure 
all stakeholders that their voices will be heard during the 
consideration of regulations. I want to be assured that 
transparency and accountability of the regulatory review 
process within OIRA, as supported by OMB Director Daniels 
during his confirmation hearing before this Committee, will be 
maintained. Openness and public participation must be the 
cornerstones of Federal rulemaking.
    This is my statement, Mr. Chairman, and thank you very 
much.
    Chairman Thompson. Thank you very much.
    Senator Bennett, you made your comments earlier, didn't 
you?
    Senator Bennett. Yes. I have some questions at the 
appropriate time.
    Chairman Thompson. All right.
    Dr. Graham, let me start off by thanking you for offering 
yourself to public service and to the ordeal to which you are 
about to be introduced.
    Certain questions, of course, have been raised concerning 
potential conflicts of interest that the Harvard Center might 
have, although the Harvard Center is almost unique in having 
specific conflict of interest rules for its Center. Questions 
have been raised about the fact that private money is taken for 
research, although all similar institutions, the most reputable 
institutions in the country, do so. Questions have been raised 
about the source of your funding, although you have a more 
extensive disclosure policy than any other institution that I 
know, at least as extensive or more than most, and certainly 
more than most of your critics have. So we will have a chance 
to address all of those.
    I must say, in sitting here just thinking about it, it is 
kind of ironic for Congress to be criticizing someone for 
taking money from somebody and then passing judgment on 
interests that have to do with their business. We do that on a 
daily basis, and we have the benefit of reading in the 
newspaper every time we pass some policy decision who gave who 
the most money.
    Now, even with campaign finance reform, that will still be 
the case because large amounts of money are involved. At the 
same time, we are making policy decisions with regard to those 
who just gave us the money. So I don't think we ought to get 
too high up on our high horse with regard to that.
    Obviously, one of the things we have to do with regard to 
addressing that institutional situation that apparently these 
research centers find themselves in is to have rigorous 
disclosure. And it seems to me that the Harvard Center has 
that.
    I was impressed, particularly among all of the favorable 
comments that you received, by one of Robert Litan, who is vice 
president and director of economic studies at The Brookings 
Institution, and a regulatory expert, who said, referring to 
you, ``He's one of the most qualified people ever to be 
nominated for the job. He's drawing opposition from people who 
oppose cost/benefit analysis itself since he's the leading 
practitioner.''
    I want to talk a bit about this cost/benefit analysis. As 
you proceed, it is true that you, anyone in your position, 
would have somewhat of a burden to overcome because of recent 
events and the press treatment and so forth. After 8 years, the 
Clinton Administration on the way out the door put in certain 
regulatory requirements that even local Democratic officials in 
some cases would say would break their municipality if they 
were implemented, so it was obvious to me that they knew that a 
new administration would have to look at those things.
    So you are having to look at them now, and you are getting 
the flack that comes from not just rubber-stamping whatever was 
done as they went out the door. I like to think that we all 
have the same interests in this country. We all have kids, and 
many of us have grandchildren, and all of us are concerned 
about the air that they breathe and the water that they drink. 
But we also realize that we make cost/benefit judgments every 
day. If we wanted to pay the price to save more lives, we 
wouldn't have automobiles on the streets. I don't think it is 
anti-safety but, rather, pro-safety to point out that seat 
belts or air bags are good things, but they can also kill 
children. And you might want to look at ways of doing that 
better.
    We have had that experience. It is not anti-environment to 
say let's quit spending so much money on a water requirement 
that saves X number of lives and let's spend more money on a 
water requirement that saves more lives. Those are trade-offs, 
it seems to me, that are common sense and that we make every 
day. And you have had the audacity to put it up front and 
acknowledge that we do make those trade-offs and that they 
should be a part of the policy discussion. You have never been 
emperor or had the ability to put these things into effect, but 
you have candidly given the benefit of your research along with 
your colleagues. And most of these--I might point out, most of 
these reports that the Center has written, especially those 
with restricted funds, have been written with one or two more 
of your colleagues, the ones that you have been on, so very few 
of these things with restricted money have been things that you 
have done alone.
    But, clearly, this cost/benefit analysis has stirred 
passionate disagreement, even though there seems to be a 
consensus on the use of regulatory analysis. Since the Carter 
administration, each President has required agencies to use 
regulatory analysis for important regulatory decisions. 
President Clinton's Executive Order on regulatory review looks 
a lot like President Reagan's.
    Why the passionate disagreement, do you think, over these 
regulatory issues? And explain to us and to the public your 
view of the tools of risk assessment and cost/benefit analysis 
and why you think it is important for responsible regulatory 
policy?
    Mr. Graham. Senator, I had a short opening statement, and I 
wondered whether I should just pass it up and go to questions, 
or how do you want to do that?
    Chairman Thompson. You should go ahead and give it. In 
fact, I am remiss in not calling on you to give it. So do that 
at this time, if you would.
    Mr. Graham. The good news is I am going to cut it in half 
given what has been said already.
    Let me thank you, Chairman Thompson, Senator Lieberman, and 
Members of the Committee, for the opportunity to provide a 
brief opening statement. I am honored to be President Bush's 
nominee as Administrator of the Office of Information and 
Regulatory Affairs and look forward to the opportunity to work 
with each Member of this Committee. Some say that I am not 
practicing risk analysis in my own life since the risks of this 
job may end up exceeding the benefits. Yet I take a more 
optimistic view and aspire to working on behalf of the public 
to improve the regulatory system.
    If I am confirmed as OIRA Administrator, I will be making a 
major change in my professional role and my responsibilities 
will be different. I will no longer be an academic, advancing 
provocative ideas, and will instead be responsible for 
enforcing the laws of the land as Congress wrote them. I will 
advise the OMB Director and the President on future 
legislation. I will implement the President's policies and 
advocate the President's priorities. I will also lead a team of 
fine analysts at OMB and work with Congress and the public on 
issues regarding regulation and information.
    I see my chief role as to stimulate more analytical 
thinking about major regulatory decisions in the Federal 
Government--decisions that affect State and local governments, 
small and large businesses, and the public at large. My 
responsibilities will also include paperwork reduction, 
information policy, and statistical policy.
    Mr. Chairman, the subject of openness in regulatory review 
at OMB has been a concern of this Committee for more than 15 
years. Progress has been made in recent years, and I pledge to 
continue that progress while protecting the ability of OMB 
staff to do their jobs efficiently. If confirmed, I will work 
to achieve regulatory reviews that are timely, transparent, and 
rigorous. I understand that openness does not necessarily 
create agreement. Yet I also hope that we will find issues 
where the spirit of openness permits dialogue and a narrowing 
of policy disagreements.
    Since my nomination in March, some have charged that I and 
the Harvard Center for Risk Analysis have a pro-business bias. 
I respectfully disagree. Sometimes the findings of our studies 
have supported the interests of sponsors, who happen to be 
business organizations. Sometimes the findings of our studies 
have supported strict regulation of business. And sometimes our 
studies offer public health insight but do not really affect 
business interests one way or another. Our Center has simply 
followed the scientific data and analysis, wherever they have 
happened to lead us.
    Thank you for the opportunity to make this opening 
statement, and I hope we can proceed to questions.
    Chairman Thompson. Thank you very much. Well, I will go 
back to my question, and that has to do with your explanation 
of the tools of risk analysis and cost/benefit analysis, why 
you think they are important, and why the passionate 
disagreement with regard to those issues that I described 
earlier.
    Mr. Graham. Senator, I see the purpose of these analytic 
tools, like risk analysis and cost/benefit analysis, not 
necessarily to create fewer regulations or more regulations, 
but to create a smarter regulatory system, one that can save 
more lives and protect the environment more effectively but at 
lower cost than we are currently doing now.
    For 20 or 30 years there has been concern in the public 
interest community about these analytic tools, but I think what 
we have shown in our prior scholarship in this area, not just 
myself but other people in this field, is that these analytical 
tools can be a force for more protection at less cost than 
we're achieving today.
    Chairman Thompson. You have written a lot about the need to 
make more efficient regulatory decisions. That sounds rather 
hard-hearted. Why do you think that is important when you are 
dealing with lives and safety of people?
    Mr. Graham. Right. Well, one way to think about this is 
that if we, as a society, don't invest our resources in life 
saving or in environmental protection in the areas where they 
can do the most good, then we have foregone the opportunity to 
spend those same resources to save more lives or do more for 
the environment.
    Chairman Thompson. Is this based on the assumption that we 
as a Nation, regardless of what we say, are not willing to make 
unlimited resource commitments to every danger, every threat to 
safety in this country?
    Mr. Graham. Yes, sir. I am fond of telling my students 
that, if we have unlimited resources in these areas, there 
isn't any need for risk analysis, there isn't any need for 
cost/benefit analysis, because we can simply tackle all these 
problems.
    Chairman Thompson. Are equitable issues often important to 
the consideration of making regulatory decisions?
    Mr. Graham. Yes.
    Chairman Thompson. Is considering efficiency inconsistent 
with considering fairness, for example?
    Mr. Graham. Well, I think that there are different 
dimensions of equity and fairness, and often times one needs to 
consult the underlying laws or statutes passed by Congress to 
understand what is the nature of the equity or fairness claim 
that Congress has insisted be honored. And once that is done, 
then one can look at what is an efficient way to accomplish the 
protection of fairness. So, yes, I think fairness and equity 
are important.
    Chairman Thompson. All right. We have several Members here 
today, so we are going to proceed with Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Dr. Graham, as you know, some who oppose your nomination 
have argued that your methodology essentially stacks the deck 
against many pollution control, employee protection, and other 
environmental measures. So to help me understand and evaluate 
their concern, I want to quote from an article that you wrote 
that was published in 1995 and then ask some questions off of 
it. And this is an article published by the National Center for 
Policy Analysis called ``Comparing Opportunities to Reduce 
Health Risks: Toxin Control, Medicine and Injury Prevention.''
    In this article, you compare the cost effectiveness of a 
number of different kinds of public health programs, and as I 
read it, you reached two basic conclusions. First, you reported 
that the average toxin control program costs much more than the 
average medical or injury prevention program, and you gave as 
an example that we spend $115.6 million per year on benzene 
emission control during waste operations to save what you call 
5 life-years--we can get into life-years a bit if you want--
while the same spending, the same amount of money spent on 
collapsible steering columns in cars saves 1,684 life-years. 
Then the second conclusion that I see in the article is your 
recommendation that the private sector should not be required 
to spend so much money on these cost-ineffective requirements 
to control toxic pollution.
    So I have a few questions that I want to ask off of that, 
and the first is that it seems to me that in comparing costs 
and benefits, your study doesn't seem to consider the question 
of whose costs and whose benefits.
    I am going to go now to, I believe, advocacy that you made 
in an article, that OIRA should use its regulatory review 
authority to promote what you have called more rational 
priority setting. I think it is consistent with the article 
that I just quoted. As an example of this, you suggested that 
OIRA should promote arrangements where an oil refinery might be 
allowed to release more of a toxic pollutant in return for its 
commitment to fund AIDS prevention or violence prevention 
programs. Now, those are--I used the word earlier--very 
thought-provoking ideas, but the question I wanted to ask you 
to respond to is: How would such an approach help protect the 
health of, for instance, a family who lives next to the oil 
refinery? In other words, in making what is--well, in one sense 
is an apples-and-oranges comparison, but a comparison of 
different kinds of threats, even if your analysis leads you to 
think that one is more cost efficient than the other, or there 
is a trade-off, for instance, between the health of someone 
living next to an oil refinery affected by air pollution and 
the health of someone suffering from AIDS or injured by 
violence, what answer does society give to the victims who, as 
a result of your cost/benefit analysis, we would not help?
    Mr. Graham. That is a very complicated and well-framed 
question, and I will try to give a short answer, which is, I do 
think you can make a fairness or equity objection to the idea 
of allowing some of the additional emissions at the plant in 
exchange for the violence prevention and AIDS prevention.
    The only qualification I might make is that, if you could 
save a sufficiently large number of lives from violence 
prevention and from AIDS prevention, even in the neighborhoods 
near that facility, you might be able to persuade people that 
it is worthwhile. But I think basically your argument is 
correct that you can make an equity objection against that kind 
of trade.
    Senator Lieberman. Yes, that is my concern, and that in 
some senses the rational priority setting that you have 
advocated is, dare I say, too rational or so rational that it 
becomes to those who don't make it past the cost/benefit 
analysis cruel or uncaring or inhumane.
    The study that I referred to earlier seems to suggest that 
our willingness to forego increased protection in the safety 
and medical areas is a reason not to protect ourselves against 
toxins. So let me ask you specifically, as we consider your 
nomination: Would you, if you became the Admistrator at OIRA, 
reject a rule, for example, submitted by the Environmental 
Protection Agency because you concluded that there were more 
cost-effective ways to save lives in other areas unrelated to 
the particular rule that was submitted to you for review?
    Mr. Graham. Well, Senator, I think it would possibly depend 
upon the underlying statutory and legal framework that the 
agency is operating under when they make that proposal. It may 
be that it is not even relevant, that they could, in fact, save 
lives through doing something very different or another part of 
the Federal Government could save more lives. If they're 
operating from a statutory framework that says they're going to 
address this particular drinking water problem or clean air 
problem, then I think it's OIRA's responsibility to review the 
proposal in the context of that legal or statutory framework.
    Senator Lieberman. So that you would not apply the kind of 
cost/benefit analysis that you have advocated in your writings 
and statements in that case?
    Mr. Graham. I think that the kind of priority setting--and 
I refer to it as risk-based priority setting--that I have 
advocated, I see it as more appropriate in the front end of 
both the legislative and the regulatory process. I don't see it 
as appropriate after an agency has already made a determination 
that an area is a priority, a rule is being developed. I think 
it's a little late in the game to try to be constructive at 
that point by saying, well, you should be writing some other 
regulation.
    Now, there are ways under the Executive Order, the existing 
Executive Order, to stimulate the front-end priority setting 
I'm talking about.
    Senator Lieberman. Tell me what you mean by the front end 
of the regulatory process. I understand what you meant about 
the legislative process in considering these kinds of trade-
offs, but what do you mean by the----
    Mr. Graham. Well, under the Executive Order, there are 
requirements that agencies lay out their plans for regulation 
over the next year, for example, and there can be dialogue at 
that stage. There can also be decisions in the budgeting 
process as OMB works with agencies on how they're going to 
spend their resources. So those I think are areas where there 
is room for some discussion about these issues.
    Senator Lieberman. Let me approach the question of 
comparative risks or comparing risks, and if one risk seems to 
be susceptible to more cost-effective response, then you might 
pull away from responding to the other risk even though there 
are people whose health is being adversely affected by those 
risks.
    You have said in some of your work that EPA often addresses 
the wrong priorities, such as one example you have given as 
outdoor air pollution where you believe that the worst risks 
involve indoor air pollution, for instance, from wood stove 
smoke.
    However, I am obviously not the only one who would be 
troubled if you at OIRA were to encourage or even require EPA 
to weaken its regulatory initiatives for outdoor air pollution 
because you believe that the resources would be better spent on 
more efficient programs.
    So let me ask you now whether you can provide assurances 
that you would not do this without express statutory 
authorization if you are confirmed as OIRA Administrator.
    Mr. Graham. Well, at the end of your comment and question, 
you asked about the need for express statutory authorization, 
and I guess I shouldn't suggest that I really know the legal 
necessities in that regard. I do want to respond to your basic 
point, though, with an example of a case where two agencies 
could be interested in clean air, say EPA interested in outdoor 
air and OSHA interested in indoor air. And there have been 
cases where a proposal by EPA to reduce outdoor air pollution 
caused some of the pollution to be captured and concentrated 
indoors and created a concern for the Occupational Safety and 
Health Administration.
    I do think it's appropriate for the Administrator of the 
Office of Information and Regulatory Affairs to try to identify 
these potential conflicts between agencies and seek some kind 
of resolution.
    Senator Lieberman. I hear you, but barring that kind of 
direct conflict, can you assure us that, for instance, you 
would not question EPA regulations on outdoor air pollution 
because you conclude on your own cost/benefit analysis or risk 
analysis that it would be a better use of their resources to 
focus on indoor air pollution?
    Mr. Graham. I think this runs back to your previous 
question, which is where is the appropriate place in the 
process, the appropriate forum for risk-based priority-setting 
analysis. And I would like to see it more at the front end, 
both legislative process and budgeting process and regulatory 
calendar at the beginning of the year. I don't think--once an 
agency has identified an area as a priority under its existing 
statutory framework, has proposed a regulation to OIRA, has 
invested that energy, I'm not sure at that stage it's 
appropriate to be engaging in the kind of dialogue you're 
talking about.
    Senator Lieberman. My time is up on this round. I guess I 
would say very briefly, before I get another chance to question 
you, that one of the concerns that has been raised is whether--
almost as a result of both your orientation, your skeptical 
orientation about some regulations, and your intellectual 
acuity--that you would be asking so many questions, including 
at the front end, that there would be--and this is not my 
phrase, but others--that in the regulatory process of the 
Federal Government there would be what others have called 
paralysis by analysis. And I do think that it is a fair 
question, and on my second round, I am going to ask you that.
    Thank you.
    Chairman Thompson. Something we have some familiarity with, 
don't we?
    Senator Lieberman. Yes.
    Chairman Thompson. Senator Voinovich.
    Senator Voinovich. How familiar are you with the regulatory 
aspects of the unfunded mandates relief legislation and what do 
you think about them? Are you familiar with the current 
President's Executive Order, and what do you think of it? And 
then the last question is: Do you think that the former 
administration followed the provisions of both the unfunded 
mandates relief legislation, the regulatory portion of it, and 
the President's Executive Order?
    Mr. Graham. Well, let me just briefly comment on the 
Unfunded Mandates Act, which I understand to be a requirement 
that when the Federal Government imposes significant regulatory 
requirements on State and local governments, and it may cover 
private businesses as well, that there needs to be some 
analysis of what the costs and benefits are. And I have not 
studied in detail the actual implementation of the Unfunded 
Mandates Act. If I'm confirmed, it's definitely an area where I 
would like to spend some time actually looking at how well 
these analyses are done and determine their impact on actual 
decision making. I would elicit some feedback, for example, 
from State and local governments on how they feel the 
implementation of those provisions have been.
    On the Executive Order, I have not engaged in any detailed 
study of how the existing Executive Order that was adopted at 
the beginning of the Clinton Administration, how, in fact, it's 
actually been implemented. So I can't really comment on that, 
and I don't have any plan to recommend any specific change to 
the Executive Order at this time.
    Senator Voinovich. So you are not familiar with how they 
honored either the regulatory aspect of the unfunded mandates 
relief legislation or the Executive Order?
    Mr. Graham. I'm sorry. The first part of your question, how 
they did what?
    Senator Voinovich. In terms of whether or not they honored 
the----
    Mr. Graham. The previous administration?
    Senator Voinovich. The previous administration honored----
    Mr. Graham. I haven't done a careful study of how much 
they've honored it, no.
    Senator Voinovich. Well, we have, and we have lots of tes-
timony----
    Mr. Graham. I suspect you'll inform me.
    Senator Voinovich. And if you get the job, I am going to at 
least share with you some of the concerns that we have had in 
terms of the provision that said any regulation over $100 
million ought to be looked at from a cost/benefit point of view 
before it is implemented, and also the area of both President 
Clinton's and President Reagan's Executive Order in terms of 
cost/benefit analysis.
    I just want to mention this: You are being attacked to a 
degree because some of the stuff that you have written and said 
was allegedly colored by contributions to your Center.
    You have expressed concern, for example, that many 
chemicals in widespread use have not been tested for their 
cancer-causing potential. You objected to this practice and 
advocated a new approach of assigning default cancer potency 
numbers to chemicals until they are tested. And yet you have 
received money at the Harvard Center from chemical producers.
    Particulate air pollution, another example is something 
that I am very interested in. You supported the work of the 
Harvard Center team making the case for increased regulation to 
find particles in outdoor air. You authored a commentary in the 
Harvard Center's newsletter highlighting the health risks of 
particulate exposure. And in spite of the fact that you 
received support from a wide range of industries, including 
energy, chemical producers, and manufacturers, global climate 
change--something we just had a major hearing on in another 
committee that I am a member of--you backed the hiring of a 
faculty member who is a specialist on the economics of global 
climate change and have written papers supporting the need for 
the United States and the world to take long-term actions to 
slow the rate of global climate change. And you said the United 
States should indeed take cost-effective steps to demonstrate 
our seriousness about the global climate issue and spur global 
policies. And you have received money from the wide range of 
industries, including manufacturers, energy producers and so 
forth. The same way with sports utility vehicles, you have 
indicated that there ought to be stricter safety measures and 
consumer tax credits for environmentally friendly vehicles, and 
you received money from the auto makers and the petroleum 
industry.
    The point I am trying to make here is if you look at the 
record, you do the job that you are supposed to do in the most 
objective way that you possibly can. Do you want to comment on 
that?
    Mr. Graham. We tried. We try as hard as we can to maintain 
objectivity, regardless of whether the funding source is an 
industrial source or a governmental agency source. And I do 
want to add that our Center does get substantial funding from 
government agencies like the Environmental Protection Agency, 
the National Highway Traffic Safety Administration, the 
Department of Energy, the National Science Foundation, the 
Centers for Disease Control, and the U.S. Department of 
Agriculture. As the Center director, I have aggressively sought 
to provide analytic support and advice to Federal agencies as 
well as to the private sector.
    Chairman Thompson. Thank you very much. Senator Levin, did 
you want to make some opening comments?
    Senator Levin. I will with my questions.
    Chairman Thompson. OK. Senator Durbin.
    Senator Durbin. Thank you very much, Mr. Chairman.
    Dr. Graham, when I look at your resume, I am curious. Do 
you have any degrees or advanced training in the fields of 
chemistry, for example?
    Mr. Graham. No, sir.
    Senator Durbin. Biology?
    Mr. Graham. No, sir.
    Senator Durbin. Toxicology?
    Mr. Graham. No.
    Senator Durbin. What would you consider to be your 
expertise?
    Mr. Graham. Well, I have a Ph.D. in public affairs from 
Carnegie-Mellon University with an emphasis in a field of 
management science called decision science. And at the School 
of Public Health I teach analytic tools and decision science, 
like risk assessment, cost-effectiveness analysis and cost/
benefit analysis.
    Senator Durbin. No background in medical training?
    Mr. Graham. No. I do have a post-doctoral fellowship funded 
by the Environmental Protection Agency where I studied human 
health risk assessment and had research experience in doing 
human health risk assessment of chemical exposures.
    Senator Durbin. Does your lack of background in any of 
these fields that I have mentioned give you any hesitation to 
make statements relative to the danger of chemicals to the 
human body?
    Mr. Graham. I think I have tried to participate in 
collaborative arrangements where I have the benefit of people 
who have expertise in some of the fields that you've mentioned.
    Senator Durbin. But going back to the old television 
commercial, ``I may not be a doctor, but I play one on TV,'' 
you wouldn't want to assume the role of a doctor or public 
health expert when it comes to deciding the safety or danger of 
exposure to certain chemicals, would you?
    Mr. Graham. Well, I think our Center and I personally have 
done significant research in the area of risk assessment of 
chemicals, and often times my role is to provide some 
analytical support to a team, and then other people on the team 
provide expertise in whether it be toxicology medicine or 
whatever.
    Senator Durbin. Based on that experience, have you come to 
a conclusion as to whether exposure to dioxin can increase a 
person's likelihood of cancer?
    Mr. Graham. My involvement in the dioxin issue comes 
primarily from serving on two committees of the Science 
Advisory Board of the Environmental Protection Agency, where I 
was asked to be a member of roughly a 20-member team of 
scientists, where we looked at the full body of data on human 
exposure to dioxin and the toxicity of dioxin, and the beliefs 
that I formed were as a consequence of those experiences.
    Senator Durbin. Let me return to the question. Based on 
that experience, do you believe that exposure to dioxin can 
increase your likelihood of cancer?
    Mr. Graham. Thank you for reminding me of the first part of 
the question. I think that at high dose in laboratory animals 
there's clear evidence that dioxin causes cancer.
    Senator Durbin. So do you--sorry. Go ahead.
    Mr. Graham. I was going to say, in humans I think that the 
database is more mixed and difficult to interpret.
    Senator Durbin. So do you believe there is a safe level of 
exposure or accumulation of dioxin?
    Mr. Graham. I don't know the answer to that question.
    Senator Durbin. I would like to bring up a quote which you 
have made on this subject. If you would put that up, please?\1\ 
I show side by side here two quotes from you and quotes from 
other sources on the subject of dioxin. And I remind you that 
you have really told this panel that you don't have any special 
personal expertise when it comes to the impact of chemicals on 
the human body. Your statement to the EPA Science Advisory 
Board, November 1, 2000, you said, ``It's possible that 
measures to reduce current average body burdens of dioxin 
further could actually do more harm for public health than 
good.'' And then you went on to say--and this is at the same 
time--``I think there would also be merit in stating not only 
that TCDD''--which is dioxin--``is a carcinogen, but also I 
would put it in the category of a likely anti-carcinogen.''
---------------------------------------------------------------------------
    \1\ The chart appears in the Appendix on page 352.
---------------------------------------------------------------------------
    Now, that is compared to what others have said on the 
right. The National Institutes of Health: ``Dioxin is a known 
human carcinogen.'' And from EPA: ``Exposure to low levels of 
dioxin over long periods (or high-level exposure at sensitive 
times) might result in reproductive or developmental effects. 
Those could include weakened immune responses and behavior 
changes in offspring.''
    Can you explain to me, are you suggesting in your second 
statement there that dioxin can either cure cancer or stop 
cancer when you call it an anti-carcinogen?
    Mr. Graham. There are several studies available that show 
that as dioxin exposures are lessened in both human populations 
and in animals, that actually the carcinogenic effect that you 
see at high doses disappears, and there does appear to be 
evidence of an actual decline in cancer incidence. So there are 
some studies that suggest that.
    Senator Durbin. And this would--I am going to ask you, does 
this lead you to conclude, then, that we should not be 
aggressively trying to stop the release of dioxin in the 
environment and the exposure of American citizens to dioxin?
    Mr. Graham. No, sir. In fact, in my service on these 
committees, I have been aggressive at pointing out that there 
is actually more compelling scientific information around a 
variety of non-cancer adverse health effects. Some of the 
reproductive and developmental effects that you have, I think 
appropriately, quoted on that chart, which would provide a 
sufficient rationale to continue reducing exposures to dioxin, 
even if the cancer risk issue were not settled.
    Senator Durbin. But isn't it true, Dr. Graham, that at the 
Harvard Center where you work, you have testified rather 
consistently to reduce the levels and standards when it comes 
to dioxin, for example, in the State of Maine, when you 
represented Georgia Pacific and they talked about release of 
dioxin from paper and pulp mills?
    Mr. Graham. I believe, Senator, in the early 1990's I 
served as an expert witness for several law firms representing 
pulp and paper companies. And I did not serve as an expert on 
the biology or the toxicology or the risk of dioxin. I served 
as an expert on the question of what are the different ways 
that the term ``acceptable risk'' is dealt with in public 
policy, what is the notion of a significant risk or acceptable 
risk, for example, in EPA decision making.
    Senator Durbin. I will, of course, defer to the record, and 
I will look at it again. But I recall your testimony in the 
State of Maine was relative to the State standard for dioxin.
    Mr. Graham. It was in the context of the dioxin 
deliberation, yes.
    Senator Durbin. You were representing George Pacific, where 
we know that the pulp and paper industry is a source of dioxin 
in the environment. Is it not?
    Mr. Graham. I think so.
    Senator Durbin. You think so?
    Mr. Graham. Yes. You are talking about the effluent into 
the water.
    Senator Durbin. Right.
    Mr. Graham. Yes.
    Senator Durbin. Do you think so or do you know?
    Mr. Graham. Now that you remind me, I know so.
    Senator Durbin. Thank you.
    Who supports your position that lowering the level of 
dioxin actually decreases the incidence of cancer?
    Mr. Graham. I can give you a copy of the studies that I 
referred to in the Science Advisory Board deliberations, and I 
would be happy to share those with you. And this issue was 
discussed collectively within the Committee, and there was 
spirited dialogue, I can assure you, after I introduced those 
particular studies. Some of the scientists criticized them. 
Other ones said that they're valid.
    Senator Durbin. You were on the EPA Science Advisory Board, 
if I am not mistaken.
    Mr. Graham. Correct.
    Senator Durbin. And they deliberated for some 10 years on 
questions related to dioxin. Is that true?
    Mr. Graham. Yes, I think they have been studying dioxin in 
one way or another for probably longer than that.
    Senator Durbin. And are you still participating in that 
process?
    Mr. Graham. No. I resigned from the committee at the point 
of my nomination.
    Senator Durbin. And after your resignation, there was 
finally, after more than 10 years, a unanimous agreement from 
that board to release its report to the EPA. Are you familiar 
with it?
    Mr. Graham. I have not seen the report, no.
    Senator Durbin. So you can't tell us whether you would have 
signed on to that report or not?
    Mr. Graham. I can't.
    Senator Durbin. The report contains significant findings, 
among them, and I quote, ``It is important that EPA continue to 
try to limit emissions and human exposure to the class of 
chemicals in view of their very long biological and 
environmental persistence,'' and they were referring to dioxin. 
So if you are at this new position at OIRA and this suggested 
policy comes before you, and you are to look at the issue of 
dioxin, are you going to hold to your belief that reducing 
levels of dioxin could actually reduce the incidence of 
cancer--or increase the incidence of cancer?
    Mr. Graham. I think that in the context of the 
deliberations I talked about, I was introducing two specific 
studies into a Science Advisory Board deliberation of a 
collaborative body. My assumption would be that at OIRA a lot 
of these issues would have already been ventilated at the 
agency and by the Science Advisory Board, and then that package 
would be coming to OIRA.
    So I don't see myself in the process of interjecting my 
personal opinions about dioxin into the deliberation.
    Senator Durbin. Frankly, Dr. Graham, that is your job, to 
decide whether or not, for example, research will continue in 
given areas, whether regulations will be issued, and that is 
why it has given me great pause to consider you in this 
position, because when I look at some of your views--and I can 
tell you, quite frankly, I have never heard of anybody 
suggesting that dioxin somehow reduces cancer risk. It is just 
the opposite. It seems to be the vast body of knowledge that 
has been gathered on this chemical is exactly the opposite. And 
if you have said that publicly, as you have in the course of 
this consideration, you can understand why those of us who are 
concerned about issues like arsenic in drinking water may be 
concerned about having you at the helm to decide whether or not 
arsenic causes cancer or reduces the likelihood of cancer.
    Do you have an opinion on that?
    Mr. Graham. No, sir.
    Senator Durbin. You have no opinion on whether arsenic is a 
dangerous chemical?
    Mr. Graham. I haven't had any experience in dealing with 
the arsenic issue, either at the scientific level or at the 
cost-effectiveness of control.
    Senator Durbin. Thank you, Mr. Chairman. I will wait for 
the next round.
    Chairman Thompson. Thank you very much. Senator Bennett.
    Senator Bennett. Thank you. Dr. Graham, you have admitted 
you have no training and background in biology or medicine. 
Have you ever been to law school?
    Mr. Graham. No, sir.
    Senator Bennett. Have you ever studied languages?
    Mr. Graham. A little bit of German, but not much.
    Senator Bennett. The reason I raise that is because John 
Spotila, your predecessor, appointed by President Clinton and 
confirmed unanimously by the Senate, which means that all of 
the Members of the Committee here voted for him, is a lawyer 
who studied languages at Georgetown University before he went 
to the Yale Law School, and his government experience was a 
general counsel for the Small Business Administration.
    Have you ever done any work on wage and price stability?
    Mr. Graham. No, sir.
    Senator Bennett. The reason I raise that is that Mr. 
Spotila's predecessor, appointed by President Clinton, Sally 
Katzen, is also a lawyer, whose government service included 
work on the Council on Wage and Price Stability. Do you 
consider that Mr. Spotila and Ms. Katzen were improperly 
confirmed by the Senate for this assignment, or do you think 
they were qualified?
    Mr. Graham. I think I'll let this Committee make that 
judgment.
    Senator Bennett. All right. Well, the Senate unanimously 
felt that in spite of the fact that they did not have any 
medical background or studies in toxicology, that their entire 
experience was in the legal field, that they somehow were 
qualified for this, and President Clinton appointed them and 
they were unanimously confirmed.
    I want to move to an area that I have a particular interest 
in which deals with the future. In the year 2000, there were 
586 computer security incidents reported by civilian agencies. 
Of these, 155 were root compromises. A root compromise, for 
those that don't understand the phrase, means that whoever got 
into the computer got all the way in and ultimately could take 
control of the system. You got down to the roots. And a root 
compromise means the intruder owns the system and controls it. 
That happened 155 times in the year 2000 in 32 different agency 
systems.
    Now, I should stress that these are only the reported 
incidents. We do not know how often somebody got into one of 
those computers and got to root compromise level and then got 
out without being detected.
    You are going to work for the Office of Management and 
Budget. We on this Committee have heard former Directors of OMB 
tell us they spent all their time on budget and they never got 
around to dealing with management.
    And I think the ability of someone to break into the 
computers, compromise the database, and, if they wish, change, 
therefore, the results that come out is something that the 
Office of Management and Budget needs to deal with.
    I understand you have some understanding of this kind of 
capacity, and I would like you to describe that for us to see 
if my understanding is correct. If my understanding is correct, 
that would be a further reason to want you in OMB as opposed to 
somebody who doesn't have any understanding of this particular 
challenge. Could you comment on this area?
    Mr. Graham. Well, I'm not sure I do know as much as you 
might think I know, sir. The particular area you're talking 
about hasn't been an area of my scholarship and my writing, so 
I don't want to overstate my competence in the area. So if you 
could focus the question a little bit more specifically, I'll 
do my best to respond to it.
    Senator Bennett. Well, have you ever looked at the question 
of computer security and preservation of the reliability of 
databases on which you depend?
    Mr. Graham. I do understand that the issue of computer 
security is extremely important in the Federal Government, both 
on the civilian side and on the national security side. And I 
understand that OMB historically has had a particularly 
important role on computer security in the civilian side.
    But I haven't had the opportunity--I've had maybe just one 
briefing or so from OMB staff on computer security issues, so 
I'm in a learning mode.
    Senator Bennett. All right. Well, I appreciate your paying 
attention to this because in the borderless world which we now 
live, the borderless economy, where people from countries or 
places unknown can get into government databases and at the 
moment we think, as they go after those databases, they are 
trying to take something out, the concern that I have is that 
at some point they are going to try to leave something behind. 
They are going to try to make changes in the database to 
affect, for whatever nefarious purposes, the decision making in 
the Federal Government.
    To put in a military context, it would be the same thing as 
if our military had been able to get into Saddam Hussein's 
command and control system and change his orders to his troops 
without his knowing that they were doing that.
    So that someone who had an interest in what was going on 
might want to break into American computers so that the data 
you receive as you make your decision as to cost/benefit 
analysis has been compromised, if not contaminated. And I would 
just suggest to you, looking ahead to the future, that you do a 
little bit of cost/benefit analysis on how the government is 
dealing with that issue, because it seems to me it is a whole 
lot cheaper to prevent it than it is to clean up after it if 
somebody has done that. And if I were someone who wished this 
country ill, I could think of no better way to terrify our 
population than to deal with our database that would cause 
improper decisions to be made about health and safety, because 
the database has been triggered with by some terrorist group or 
hostile nation state that wants to use this as a way to cause 
difficulty.
    So I realize this has nothing to do with the clamor that 
has been raised about your nomination. I vented my spleen on 
what I thought was the character assassination attempt in my 
opening statement, and I want to focus now on some of the 
duties that you will have if you are confirmed. I expect you 
will be confirmed and trust you will be confirmed, and that is 
why I raise the issue.
    Let me go to the issue that Senator Lieberman raised, which 
I find kind of interesting, that suggested that given your 
intelligence and your capacity, you might somehow break out of 
just reviewing the regulations when they get to you in your 
normal pattern as the watchdog there at OMB, but you would go 
to the front end, as you put it, and participate there in ways 
that Senator Lieberman felt might be inappropriate for you to 
do that. I think you are going to have enough to do at OIRA 
that you won't have to be called upon to do that.
    But it strikes me that this is a complaint that may say you 
are overqualified for this job, you know too much, and we 
shouldn't have somebody who understands all of these things in 
that kind of a position.
    Could you comment on your own sense of what the workload 
would be and whether, in fact, you would be tempted to do the 
things Senator Lieberman suggested and inject yourself into the 
regulatory process prior to the time when a regulation comes to 
you for review?
    Mr. Graham. Well, I think that the experience that I've 
been told from the OMB OIRA staff, the career staff at the 
agency, is that once an agency has already formulated a 
position and has proposed a regulation and key officials have 
signed off on that and it goes to OMB, there is opportunity for 
OMB to have a review at that stage, but it is often more 
effective to have at least some dialogue with the agencies 
early on in the process, so that they can be sensitive to the 
kinds of concerns that are going to arise when it's ultimately 
reviewed at OIRA. And, in fact, sometimes you would save time 
and resources of both OMB OIRA and the agency if there was some 
initial dialogue on these issues.
    Senator Bennett. So that is the pattern that goes on now. 
Is that what you are telling us?
    Mr. Graham. I think that was the sentiment that was 
expressed by some of the career staff, but I haven't studied it 
enough in detail to know how often that happens now.
    Senator Bennett. But isn't the primary responsibility in 
the agency and not in OMB? Isn't your role a review role rather 
than an initiating role?
    Mr. Graham. Well, the Executive Order does have a review 
role, but it also has mechanisms provided in the Executive 
Order through the calendar and through the dialogue with 
agencies on the intent for their regulations and through the 
budgetary process for OMB to play a greater role in 
participating with the agencies.
    Senator Bennett. Thank you very much.
    Chairman Thompson. Thank you very much. Senator Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Thank you, Mr. Chairman. Let me add my 
welcome to you, Dr. Graham. My one experience with you was 
working on the regulatory reform bill with our Chairman, with 
Senator Voinovich, and with others, and I found you, during 
that experience, to be moderate and thoughtful. The positions 
that you took on cost/benefit analysis, on risk assessment 
were, I thought, positions which were constructive positions. 
You, for instance, did not argue that benefits had to justify 
costs in order that the regulations proceed, but that you ought 
to know whether benefits justify costs, and if they don't, then 
explain why one is regulating.
    You took the position that benefits needn't be 
quantifiable, that if there is, for instance, a quality-of-life 
benefit, whether or not the air quality coming up over Lake 
Michigan interferes with a view of Lake Michigan, or whether or 
not an IQ could be affected by some particular substance in the 
air or water, that even though those benefits may not be 
quantifiable, that nonetheless they are worthy of being 
considered.
    So I have found in my experience with you that you were a 
thoughtful and a moderate person who is willing to look at the 
importance of weighing costs and benefits, but not let that 
tail totally wag the dog.
    Others obviously have raised concerns about your nomination 
based on their experience or their belief that they have 
knowledge of your background. And I want to explore a few of 
those concerns with you today. I think it is important that you 
address a number of the concerns, and a number of them have 
been raised here already.
    Senator Durbin asked you about some reports or about a 
statement you made relative to the anti-carcinogenic effects of 
a particular substance, and you made reference to a report or 
two on which you had based that conclusion. And I think it 
would be useful if you would submit those reports for the 
record so that we could see what the basis of your statement 
was.
    We received a letter from some people who object to your 
nomination--the letter says, ``Time and time again, Professor 
Graham has accepted money from industries while conducting 
research and policy studies on public health regulations in 
which those same industries had substantial vested interest.'' 
And my question to you is whether or not your policy relative 
to the receipt of funding for your studies has been approved by 
Harvard University. In other words, do they know of your 
policies and have they either approved, disapproved, or are 
they silent on them?
    Mr. Graham. The Center's procedures for dealing with both 
government and industry funding are regulated within the 
university--both at a university level and they are also 
reviewed at the dean's level in the School of Public Health, 
where my faculty appointment is. So, yes, they are aware of 
those practices.
    Senator Levin. All right. We have received a letter, Mr. 
Chairman, from a professor of business law at the University of 
Texas whose name is Frank Cross,\1\ and I am just wondering 
whether or not the various letters \2\ both in support of the 
nomination and opposed to the nomination have been made part of 
the record. Have they already been?
---------------------------------------------------------------------------
    \1\ Letter from Frank Cross appears in the Appendix on page 561.
    \2\ The letters of support and in opposition appear in the Appendix 
beginning on page 549.
---------------------------------------------------------------------------
    Chairman Thompson. They are. Right.
    Senator Levin. All right. Thank you.
    If it has already been made part of the record, I will 
simply quote from one part of it, that ``the Harvard Center has 
taken numerous steps to preserve its integrity and credibility, 
steps that surpass those taken by comparable research 
institutions, and documentation of these policies is publicly 
available on the Internet.''
    It also says the following, on page 2, that ``the question 
of conflicts of interest provides an even more stark contrast'' 
after the statement that the Harvard Center clearly provides 
more systematic financial disclosure to the public than the 
other institutions. And then the professor says this: ``While 
many of the similar research centers have mission statements 
regarding their operations, none appears to have a separate and 
independent conflicts of interest policy.''
    Another statement which is made in the letter that I 
referred to by those who oppose your nomination is the 
following, that you have ``consistently produced reports, 
submitted testimony to the Congress, and made statements to the 
media that have supported industry positions, frequently 
without disclosing the sources of his funding.''
    I would like to ask you about disclosure of the sources of 
your funding and whether or not you indeed have consistently 
produced reports, submitted testimony to Congress, and made 
statements to the media that have supported industry positions 
without disclosing the sources. Has that happened with 
frequency? And if it has happened, should it happen? And what 
is your policy about that?
    Mr. Graham. Yes, Senator. For those reports or articles 
that the Center produces that were funded with a sponsored 
grant or a restricted grant for that purpose, the funder of 
that work should be disclosed on the publication itself.
    If, however, the publication or report was produced under 
unrestricted funding, whether that unrestricted funding be from 
companies, from the university, from a trade association, or 
private individuals, then we rely on the general disclosure on 
our website and on our annual report to allow people to 
understand how our work is funded.
    That is the basic approach that we have at the Center to 
disclosure.
    Senator Levin. All right. So that if a report is a result 
of restricted funding, that source is supposed to appear on the 
report.
    Mr. Graham. That should be on the report, yes, sir.
    Senator Levin. Has it ever happened that it did not appear 
on the report, do you know?
    Mr. Graham. I don't recall an example of where we failed to 
do that.
    Senator Levin. All right. If you do find such an instance, 
would you let us know? There are an awful lot of reports, 
obviously. I have looked through the list of your reports. But 
perhaps somebody could do that and tell us whether or not there 
has been a report that has been produced by your Center which 
is the product of restricted funding where that source has not 
been reflected in the report.
    In response to the written questions from Senator 
Lieberman, you said the following: ``When publishing 
newsletters, the restricted grants are supposed to be noted on 
the publication. But when it's unrestricted, the Center relies 
on disclosure found on the Web and in our annual reports.'' But 
then you said the following, which is confusing to me, that 
``the Center discloses restricted sources of support for 
specific studies to the media and otherwise only discloses 
funding sources if asked to do so by the reporter.''
    Mr. Graham. If we had a press release on one of our studies 
that was financed through restricted support, we would disclose 
on the press release that it was funded by a particular agency 
or company or trade association. If a reporter calls us, we 
don't have a general policy of affirmatively disclosing: Here 
are all the places where we get our money from. We rely on the 
journalist to ask us, and often they do.
    Senator Levin. All right. There has been a question raised 
by one of the letters in opposition as to, again, the corporate 
sponsorship of your research. And one of the examples--the 
first example given related to air bags, and I would like to 
just ask you about that example.
    Apparently you are a proponent of air bags. Your Center did 
a study in 1997 on the cost effectiveness of air bags, and the 
results of the study prior to peer review showed a cost of 
about $400,000 for each life saved for passenger-side air bags. 
And then after there was criticism of the study, the study was 
peer-reviewed. The results were significantly different, and 
the cost of each life-year saved after peer review then dropped 
to $61,000, and your conclusion was that that was within the 
acceptable range.
    Now, the suggestion in that letter was that your 
preliminary finding of $400,000 per life saved was somehow 
skewed because of the funding that you received from industry. 
On the other hand, your report said that the research was 
supported in part by a grant from Centers for Disease Control 
and the Harvard Injury Control Center and the Harvard School of 
Public Health.
    So I am trying to find out--it said ``partly supported.'' 
Was the other part a general support or----
    Mr. Graham. That's correct.
    Senator Levin. So the only restricted grants that went into 
that were from the ones that you identified?
    Mr. Graham. The air bag study would have been in the CDC, 
Centers for Disease Control in Atlanta, Georgia. That's my 
recollection.
    Senator Levin. All right. And would they have any interest 
in skewing this to a $400,000 cost instead of a $61,000 cost?
    Mr. Graham. Not that I can think of, sir.
    Senator Levin. All right. My time is up. Thank you.
    Chairman Thompson. Thank you very much. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Dr. Graham, I want to ask what, I think, is the fundamental 
question here, and that is: Do you let the source of your 
funding, whether it is from an industry group or a private 
individual or the university or government agencies, influence 
the findings and conclusions of your studies?
    Mr. Graham. No, Senator. I, as the Center director and my 
faculty colleagues, strongly believe that we need to pursue the 
design and analysis of our data and publish our results in the 
most objective manner possible, regardless of whether that 
would happen to serve the interests of a particular funder or 
not.
    Senator Collins. Thank you. And, in fact, you have 
supported new regulation of the automobile industry that called 
for a redesign of air bags in order to protect children from 
injury or death when deployment suddenly occurs. Is that 
correct?
    Mr. Graham. Yes, that's correct.
    Senator Collins. Could you tell us a little bit more about 
your work in that area?
    Mr. Graham. Yes. The National Transportation Safety Board 
meeting in 1997 that Senator Levin was referring to in his 
questions exposed a number of the issues around children and 
air bags. It stimulated our Center to form a working group of 
engineers, physicians, and decision analysts to look into the 
problem and suggest possible solutions. And we published those 
solutions in the journal Pediatrics. And one idea is the 
recommendation that vehicle manufacturers be expected to 
develop technology to sense whether a child is in the front 
seat and not deploy the air bag if a crash occurs.
    Senator Collins. Did the Automobile Manufacturers 
Association welcome those findings, and were they just 
delighted that you were calling for a redesign in the air bags?
    Mr. Graham. I do not recall specific reactions from 
particular companies.
    Senator Collins. It is my understanding that the automobile 
manufacturers were not real happy about the findings of your 
survey because it was going to mean redesign work and 
additional expenses, which I think speaks to the fact that you 
do the research, and wherever it leads you, you publish those 
conclusions.
    I would also like to ask, have you supported the 
development of new safety regulations for sports utility 
vehicles to prevent rollovers or to reduce the rate of their 
involvement in rollover crashes?
    Mr. Graham. Yes. In an article published in Issues in 
Science and Technology,maybe a year or 18 months ago, I argued 
that we ought to, as a country, develop a multi-year research 
and regulation program to reduce the rate at which sport 
utility vehicles roll over. And that program is consistent, but 
perhaps a little bit more aggressive than some of the 
legislation that has been passed by the Congress at the present 
time.
    Senator Collins. Mr. Chairman, I have a copy of that 
article which Dr. Graham authored, entitled ``Civilizing the 
Sport Utility Vehicle,'' and I would ask unanimous consent that 
it be made part of the record.\1\
---------------------------------------------------------------------------
    \1\ Article referred to appears in the Appendix on page 543.
---------------------------------------------------------------------------
    Chairman Thompson. Without objection.
    Senator Collins. Dr. Graham, have you also done work in the 
area of the EPA's low sulphur diesel rules as a strategy to 
allow for more fuel-efficient and cleaner diesel engines as 
well?
    Mr. Graham. Yes. In fact, I have a doctoral student, Edmond 
Toy, writing a thesis on that subject right now.
    Senator Collins. And, again, this is another area where you 
believe that there could be improvements in the regulations 
that would produce environmental benefits?
    Mr. Graham. Yes, if we can bring the sulphur levels down in 
diesel fuel, it would increase the chances that diesel engine 
technology could meet the particulate and nitrogen dioxide 
standards that EPA applies. And if we could do that, diesel 
engines offer a lot of fuel efficiency and carbon dioxide 
benefits compared to conventional engine technology.
    Senator Collins. Thank you, Dr. Graham.
    Chairman Thompson. Is the Senator finished?
    Senator Bennett. Thank you, Mr. Chairman.
    Senator Levin's citation of some letters----
    Chairman Thompson. Excuse me. I am sorry. I asked if the 
Senator was finished. I take it you were.
    Senator Collins. I was, yes.
    Chairman Thompson. We are ready for another round now, I 
believe.
    Senator Bennett. Yes, and I was a little surprised. I am 
not next. [Laughter.]
    Chairman Thompson. I am sorry. I hate to interrupt you 
midsentence here, but I guess we better go in order, which, 
coincidentally, starts with me. [Laughter.]
    Senator Levin. Mr. Chairman, may I ask a question?
    Chairman Thompson. Yes, sir.
    Senator Levin. Can the record be kept open for questions 
for a reasonable period of time?
    Chairman Thompson. Yes. Would 24 hours be sufficient?
    Senator Levin. That would be fine. Thank you.
    Chairman Thompson. Some of the issues that have been 
raised, first of all, concern the issue of your qualifications. 
One of the letters that was sent in criticized you for your 
lack of degree in hard sciences and giving your opinion on some 
of these areas that have been raised. And attached to that 
letter or signing on to that letter were several pages of 
academics, and I noticed most of them were lawyers. One of them 
is a professor of philosophy, another professor of philosophy, 
a professor of psychiatry, a professor of psychology, a 
professor of romance languages, and three professors of 
psychology. You are not doing well among the psychologists, Mr. 
Graham. [Laughter.]
    Another professor of psychology, a chair of philosophy, 
associate professor of linguistic sciences, and another 
professor of psychology.
    So they are entitled to their opinion, and their opinion is 
a part of the record, but I just say I believe that your 
qualifications in these areas probably are superior to some of 
the qualifications of your detractors.
    I might point out that, on the other hand, we had a letter 
signed onto by at least twice as many academics, who are 
scholars working in environmental policy, health policy, and 
related fields. So I think that our record reflects pretty 
well, not only in terms of the background of the people who 
have sent in expressing their views, but also in terms of your 
comparison with your predecessor, as Senator Bennett pointed 
out. Your predecessors were lawyers who were appointed because 
they were good administrators. I think you bring some special 
skills to the position that we have not had in some time.
    On the issue of your benefactors, there are several--let me 
get the list here. Several of the Senators here have referred 
to areas where your opinion, and those of your colleagues with 
whom you submitted these reports, went counter to those who had 
funded you with restricted funds, funds that went for a 
particular subject matter.
    I am going to make a part of the record something that the 
staff compiled, and I emphasize this is a majority staff 
compilation, but I think it is quite impressive, and I think it 
will bear scrutiny.
    In these following areas, we found where you and the 
Harvard Center reached opinions that were contrary to the 
interests of the industries that donated restricted funds for a 
particular project: Cancer risk from formaldehyde is one; 
cancer risk for chloroform; panel review of National Cancer 
Institute's Agricultural Health Study; study of using diesel 
versus compressed natural gas in transit buses; indoor air 
pollution; exposure to chemicals; untested chemicals; concern 
for highly exposed people; energy conservation; particulate air 
pollution; global climate change; sports utility vehicles have 
been mentioned; health risks; and air bags have been mentioned.
    I will not go into what you found, and I will not even 
mention all of the sponsors--a wide range of industries, 
energy, chemical, automobile manufacturers, chemical producers, 
tobacco company, and the petroleum industry. In each of these 
instances, you apparently, from our analysis, went against what 
would certainly seem to be the wishes and desires of the people 
involved.
    So, if we get past the issue of, shall we say, skewing your 
reports to favor one side or another, then we have to get down 
to the merits of what you are actually dealing with in terms of 
these sometimes controversial subjects. I hope we are not 
getting to the point where we discourage scientists and 
academics from giving opinions, based upon research and based 
upon analysis of other research that has been done, even if it 
is sometimes controversial.
    If you have a study that shows an increased risk of 
something, you will be embraced with open arms by everyone, 
including the Congress and the news media, and it allows us to 
emphasize our concern to citizens. But if you have a study that 
indicates that perhaps a particular risk has been 
overemphasized and resources would be better spent in another 
area, where the risk has been underemphasized, you are treading 
upon dangerous ground, and you will get very little comment, 
certainly, from any member of Congress about that because it is 
politically dangerous.
    And I hope that we do not do anything to discourage our 
scientists and our people in academia from venturing into those 
grounds, and just have a good, open, honest debate about it, 
even if sometimes it goes contrary to commonly accepted or 
assumed notions.
    Let me see if my understanding is correct concerning the 
dioxin issue. You were selected to serve on EPA's Science 
Advisory Board on Dioxin for both the 1995 and the 2000 
reviews; is that right?
    Mr. Graham. Yes, sir.
    Chairman Thompson. And you withdrew from the 2000 review 
when your nomination occurred.
    Mr. Graham. That is right.
    Chairman Thompson. According to my information, in both 
reviews, you raised concerns that EPA may be exaggerating the 
cancer risk of low levels of dioxin exposure, but that you also 
said that the noncancer risks of dioxin exposure--damage to 
reproduction, development, immune system, and the endocrine 
system--merited greater attention by the EPA; is that correct?
    Mr. Graham. That is correct.
    Chairman Thompson. And your writings show how risk analysis 
played an important part in reducing dioxin pollution from the 
pulp and paper industry in a cost-effective manner.
    Mr. Graham. Yes, that is true.
    Chairman Thompson. We have made passing reference to peer 
review, which I think is one of the most important aspects of 
what we are dealing with here and that people need to 
understand. These reports are not something that you sketch out 
on the back of an envelope and get typed up the next day based 
upon your own notion solely, but that they are peer reviewed.
    Will you discuss, in some detail, what that is, what it 
involves, and what part it plays in your work and especially 
with regard to the reports that have been referred to here 
today, the controversial ones. Perhaps they are the same as the 
noncontroversial ones, but what is the process?
    Mr. Graham. The commitment to peer review from the Center 
is to make sure that intellectual products that come out of the 
Center have been subject to peer review by qualified 
scientists. The level and intensity of peer review varies a 
lot, depending on the nature of the product itself.
    For each issue of our newsletter, we try to make sure that 
at least two people within the Center review it before it goes 
out, and their names are actually put on the newsletter issue 
itself, as well as the authors of the newsletter issue. So I 
would say that is internal peer review, and it is the most 
modest level for the newsletter itself.
    If we have a Center report that is not being published in a 
journal, we would typically apply at least internal review by 
our faculty colleagues, and in more complex or controversial 
cases, we would also get outside external peer review added to 
that.
    Journal peer review practices, where a majority of our work 
is published, are variable, but they typically involve 
anonymous external peer review.
    Chairman Thompson. How does that work?
    Mr. Graham. Well, in a journal setting, we would submit a 
paper to a journal, and then the editor of the journal would 
make a selection of appropriate reviewers, and their names and 
identities would not be disclosed to the authors of the papers.
    Chairman Thompson. So you would have nothing to do with who 
is reviewing your work.
    Mr. Graham. For a journal peer review, but for the Center 
peer review, we in the Center would select those reviewers. So 
it is a different style.
    Chairman Thompson. All right. I understand, since 1990, you 
have been on 97 studies at the Harvard Center.
    Mr. Graham. I guess if you counted our publications list 
since 1990, that sounds in the ballpark.
    Chairman Thompson. My information is that virtually every 
study done with restricted funds, that is, for a particular 
subject, had three or more authors. Is that right?
    Mr. Graham. That sounds right.
    Chairman Thompson. All right. My information is 45 of the 
studies have three or more authors, 27 had two, 25 of the 
studies had one author. Does that sound about right?
    Mr. Graham. I would be happy to check it for you, but it 
sounds in the ballpark.
    Chairman Thompson. I am not holding you to the numbers. 
This is my information. But I think the point, the obvious 
point, is that we are dealing with a situation that is peer 
reviewed. The serious articles that go out, most of the ones we 
are dealing with that we see in the reports and so forth are 
peer reviewed by people other than anyone that you have any 
control over, that these articles that you are putting out for 
the most part, have others of your colleagues there at Harvard 
joining in, and it is all done pursuant to a process in terms 
of conflicts of interest and disclosure and so forth is 
established by Harvard. This seems to be more extensive than 
other similar situations. Thank you very much.
    Mr. Graham. Just a brief clarification, Senator. The peer 
review process that we apply to our own publications is an 
internal process or external, where we pick the peer reviewer, 
whereas a journal, the editor would pick the reviewer. So there 
is a little bit extra assurance to some extent in a journal 
peer review process.
    Chairman Thompson. Thank you very much. Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Dr. Graham, at a Congressional hearing, you were asked how 
we should evaluate whether risks we hear about are real or 
exaggerated, and part of your answer--I think it may have been 
the beginning of your answer--is as follows: ``Yes, the first 
thing I think we should keep in mind is if you are a risk 
assessor or a scientist in one of these Federal regulatory 
agencies, you don't usually have an incentive to find that an 
alleged hazard does not exist, because if you highlight the 
fact that a hazard exists, you may attract the attention of 
Congress and the media, and thereby garner public support and 
resources for your agency.''
    Do you stand by that statement?
    Mr. Graham. Did I say it as an incentive, do they have an 
incentive to do that?
    Senator Lieberman. Yes, ``you don't usually have an 
incentive to find that an alleged hazard does not exist, 
because if you highlight the fact that a hazard exists, you may 
attract the attention of Congress and the media, and thereby 
garner public support and resources for your agency.''
    Mr. Graham. I think that is plausible speculation.
    Senator Lieberman. Here is my concern, and it is this. In 
light of that statement and that attitude, can we assume that 
you would be able to give fair and unbiased review of rules 
developed by those same government scientists and analysts 
whose motivations, I think it is fair to say, perhaps even 
their professionalism, you question in that comment that you 
made to the hearing.
    Mr. Graham. Well, I think this actually comes from one of 
the written questions you submitted to me. And I do think that 
when I transition from a college professor to OIRA 
Administrator, I'm going to have to be a little bit more 
respectful of the public spiritedness and intentions of agency 
risk assessors. So I do hope to be sensitive to that.
    Senator Lieberman. Let me go on. In one of my written 
questions I raised--this goes back to environmental 
protection--I raised concerns that you have so consistently 
been critical of our national environmental laws, that it leads 
to a broader concern about how you would handle environmental 
protection and people protection from environmental pollution 
regulations. And your response said that I should look at your 
book, ``The Greening of Industry.''
    And I did. And it does seem to me that the book ultimately 
reinforces the impression, my original impression, in this 
sense, that many environmental laws are based on certain 
rights, for example, that every American is entitled to breathe 
clean air and drink safe water. But your book seems to be an 
advocacy piece, supporting very fundamental revisions in those 
basic principles of our environmental laws, and that is because 
of the heavy emphasis you give on the assessments and the cost-
benefits that we have referred to earlier. And at one point I 
think you have indicated, you have said that these 
environmental laws should no longer be grounded in what you 
referred to as the people's ``rights to environmental 
protection.''
    So I want to ask whether you would respond to a fear that I 
have heard from your critics, because of your writings and your 
statements, that there would be a danger that you would 
effectively eviscerate this principle that I think does 
underlie our environmental laws, that every American has a 
right to a clean environment, certainly insofar as it deals 
with their own health and safety, clean air and clean water--
and I suppose, in fairness, I should say, regardless of whether 
there is a more cost-effective way to do something else, as we 
compared risks to people before.
    I wonder if you would respond to that fear of your critics.
    Mr. Graham. I think it is an excellent question. There has 
been an intellectual dialogue and debate under way, certainly 
for 30 years in this country, over whether our environmental 
laws should be predominantly ``rights-based'' in their 
underlying structure, or whether they should be predominantly 
economics based in trying to achieve efficient solutions to 
environmental problems. And I think it's fair to say that in 
that intellectual debate, I have been in the camp of people who 
would like to see the environmental laws move in the direction 
of more sensitivity to economics and efficiency.
    Having said that, if I become OIRA Administrator, I'm 
perfectly comfortable enforcing the environmental laws of the 
land as they are currently written, and a number of them are 
currently written much more in the rights orientation than in 
the economics orientation. But I think even in those areas 
where they are written with a rights orientation, there are 
pieces of those laws, for example, the implementation phases of 
the Clean Air Act, that allow for economics and efficiency 
considerations to have some role.
    So I will try to be sensitive as OIRA Administrator to the 
exact statutory framework we're talking about when a rule is 
proposed to OIRA and that would influence the kind of review we 
would give it.
    Senator Lieberman. So what you are saying though, as you 
said correctly, is that your work has put you in the sort of 
economics/efficiency side of the debate with the environmental 
rights advocates, that--we do have a tendency here to pass laws 
based on the environmental rights theories and values--and you 
are saying that in reviewing regulations implementing such 
laws, such environmental-rights based laws, that you do not 
believe that your past tendency towards the economic efficiency 
side of the debate would inhibit you from approving 
regulations, carrying out the environmental-rights based laws?
    Mr. Graham. Right. In my role as a college professor and in 
my role as an advocate, I try to make a case for changing 
environmental laws in a direction that I feel is appropriate 
and reasonable. But in the context of being OIRA Administrator, 
I have a responsibility to enforce the laws as they are 
written. And a number of them are written that way, in no small 
measure, because of your work, Senator Lieberman.
    Senator Lieberman. Well, I suppose I should say thank you. 
[Laughter.]
    Dr. Graham, let me ask you about a very different aspect of 
your work if you go to OIRA, and that is the question we talked 
about briefly when you were in my office yesterday, and that 
is, the whole area of openness of OIRA, timeliness and 
accountability. This actually embraces the earlier reference I 
made to paralysis by analysis, whether either for reasons of 
ideology or just intellectual curiosity, your leadership there 
would have the effect of so delaying the movement of 
regulations through OIRA, that the rights of people who would 
be protected by those regulations would be compromised.
    I want to go back to the first decade of OIRA's existence, 
when there was a history about OIRA reviewing regulations in 
secret, without disclosure of meetings or contacts. Rules would 
often languish, literally for years, as you probably know from 
your studies, with no explanation, and then be returned to the 
agencies with many required changes, which effectively not only 
compromised the rights of the presumed beneficiaries of those 
laws, but also frustrated the will of Congress in adopting the 
laws.
    The last administration put provisions into effect through 
Executive Order 12866, which aimed at overcoming those 
problems. Public disclosure requirements, a 90-day period for 
OMB review, provisions to keep the regulatory agency informed 
and included, and provisions to prevent some entity outside of 
OMB from becoming a conduit for outside groups to try to 
influence the regulation off the record. Those assurances were 
quite hard won, and I believe it is essential that they be 
retained to avoid recurrences of the abuses that we saw 
earlier.
    So I want to ask you for your commitment to retain those 
existing provisions, and to in fact, reflect them in your own 
administration of OIRA should you be there, on openness, 
timeliness and accountability. I just want to very briefly say 
these provisions include those for public disclosure, timely 
review, written explanation for any regulation returned to the 
agency, keeping agencies informed and involved in any OIRA 
context with outside parties, and the provision directing that 
only the OIRA Administrator may receive oral communications 
from those outside government regarding regulatory reviews. Can 
you give us such an assurance that you would continue such 
policies?
    Mr. Graham. That is another big, complicated question. And 
I guess the easiest thing to start with is to say that I think 
OMB Director Daniels and myself are both committed to the 
principle of openness and transparency in regulatory review. I 
don't think that we have reached a determination that any of 
the specific transparency requirements that are in the current 
Executive Order are necessarily inappropriate.
    I happen to be aware of one particular GAO report that 
looks into one of the transparency requirements that you 
mentioned, where there was a dispute between OIRA and GAO about 
whether that particular transparency requirement was workable, 
but I don't feel that I know the details of that well enough to 
have a strong opinion about that. But in general, I don't see 
any desire on the part of the administration to be going 
backward in the area of transparency and openness.
    Senator Lieberman. OK. My time is up. I do want to ask you 
to consider that Executive Order 12866, and just for myself, I 
would like very much to hear if you have any specific concerns 
about it prior to the time that we vote on the nomination, 
because I do think apart from the concerns that have been 
expressed about substance, the process here that goes on is 
critically important, and that is not a matter, obviously, of 
ideology or politics. So to the extent that you are able, I 
would personally be benefited by hearing whether you have any 
concerns, or in fact, whether after your review of that 
Executive Order, you are comfortable with it.\1\
---------------------------------------------------------------------------
    \1\ Responsive letter to Sen. Lieberman from Dr. Graham, dated May 
21, 2001, regarding Executive Order 12866 appears in the Appendix on 
page 353.
---------------------------------------------------------------------------
    Mr. Graham. OK. I'll look into that.
    Senator Lieberman. Thank you. Thanks, Mr. Chairman.
    Chairman Thompson. Thank you very much. Senator Voinovich.
    Senator Voinovich. It is my understanding that in terms of 
disclosure, that because of your personal involvement, you have 
gone beyond the policy of Harvard University in regard to 
disclosure of people who contribute to your Center. Is that 
correct?
    Mr. Graham. We've gone beyond what are standard disclosure 
policies at a lot of institutions, at a lot of units both 
within Harvard and outside of Harvard.
    Senator Voinovich. Senator Lieberman made reference to 
Executive Order 12866, and I referenced that earlier, but I did 
not have the statistics, and I now have them. There was a GAO 
review of what OIRA did in terms of some 110 rules that were 
economically significant under the Clinton Administration, 
under E.O. 12866, and they found that 78 out of 110 times, 
there was no cost benefit analysis produced by the 
administration. Because of that, I think there was some feeling 
in the community, the country, that perhaps the reason why they 
were not done was because if they were, the regulation coming 
from the agency might have not met the test.
    And I think that one of the problems we have today is that 
there is a lot of suspicion about the transparency in the 
decision making. I support Senator Lieberman in terms of a 
transparency and openness so people know why you are doing the 
things that you are doing. But hopefully, you will get the job. 
If you do, there is going to be a lot of people out there 
saying, ``Well, he is on the other side. He is for the 
polluters or the business or the industrial people.'' I think 
there was a strong feeling today in the country that the 
Clinton Administration was in the pocket of the extreme 
environmental groups, and they had sway over that 
administration.
    I would like to know how you are going to assure all of us 
that we are not going to see, 3 years from now, a GAO study of 
your agency, that says out of so many economically significant 
issues, you have not done the job on many of them. How are you 
going to take care of that problem?
    And I just want to mention one other thing that is so 
important. I have to believe that many lawsuits are filed in 
this country by one group or another because they think the 
people that are doing the job are biased or in somebody's 
pocket or being influenced by them. The sooner that we can get 
away from that, I believe that we are going to move forward in 
terms of the environment, with a cleaner environment. I believe 
that instead of people settling their situations in lawsuits, 
that if they have trust in agencies, we can move forward and 
make some real progress.
    Mr. Graham. Well, let me just start by saying that if GAO 
reports like that are written under my tenure as OMB OIRA 
Administrator, I don't think Mr. Daniels is going to be very 
happy. So I'm definitely going to be looking very carefully at 
how we achieve the types of review that we need of each of 
those major regulations. That may involve a need to look into 
whether the organization itself is adequately staffed and has 
the adequate resources to provide the types of reviews, and I 
haven't had a chance to look at that in detail yet. But 
certainly that has to be looked into if we're serious about 
providing that level of review to that many regulations.
    Senator Voinovich. How about the issue that Senator 
Lieberman made in terms of transparency? What are you going to 
do about that, so that people know that the fix is not on?
    Mr. Graham. Well, regarding the GAO report, I haven't made 
a firm conclusion yet, because I don't really feel I fully 
understand the dimensions of the issue, but I am concerned that 
you have a previous OIRA Administrator who tried to enforce the 
Executive Order saying that a transparency requirement in that 
Executive Order is not workable and feasible. I think that is 
something that needs to be looked at carefully.
    And as I recall the basic requirement is showing how the 
rule was changed due to OIRA's activities, and the 
Administrator was arguing that it's often difficult to tell, 
after a dialogue with an agency, whether a change was due to 
OIRA's suggestion or the agency's suggestion and so forth.
    Senator Voinovich. Well, again, I want to emphasize how 
important that is. I would hope that after your being there a 
couple of years, people would say that the guy really knows 
what he is doing, he is objective in what he is doing. You can 
argue maybe about what the result is, but it is being done 
objectively, and we understand that it is because information 
that you used or the reasons for your decision making have been 
made public, therefore will command the respect of objective 
reviewers including members of the U.S. Senate and the House of 
Representatives.
    Mr. Graham. Yes, Senator.
    Chairman Thompson. Thank you, Senator Voinovich. Senator 
Durbin.
    Senator Durbin. Thank you, Mr. Chairman.
    There have been a lot of questions asked of you, Dr. 
Graham, concerning conflicts of interest at the Harvard Center, 
and I would like to ask you, have you ever been asked by 
Harvard University to return any of the corporate funds that 
were given to the Center?
    Mr. Graham. Yes, sir.
    Senator Durbin. How many occasions?
    Mr. Graham. One that I recall.
    Senator Durbin. Can you tell me what that occasion was?
    Mr. Graham. That was an occasion where our Center solicited 
an unrestricted contribution from Philip Morris, and the Dean 
of the Harvard School of Public Health instructed me to return 
it.
    Senator Durbin. Was your Center involved in any kind of 
studies relative to tobacco at that time?
    Mr. Graham. Not that I recall, sir.
    Senator Durbin. Has your Center been, at any point in time, 
engaged in a study relative to the safety of tobacco?
    Mr. Graham. I think we have had a variety of pieces of 
work, either on tobacco explicitly or possibly comparing 
tobacco to other types of risks.
    Senator Durbin. Did you at any point review any Surgeon 
General reports on the warnings and safety of tobacco?
    Mr. Graham. I believe a colleague of mine, Evridiki 
Hatziandreu, M.D. and I jointly were involved in a project 
where we did review some Surgeon General's reports, yes.
    Senator Durbin. Why did Harvard University ask you to 
return the $25,000 from Philip Morris?
    Mr. Graham. My recollection is that the Dean of the Harvard 
School of Public Health felt that it was inappropriate for a 
school of public health to accept a gift, an unrestricted gift 
from a tobacco company.
    Senator Durbin. Why?
    Mr. Graham. I think that Dean Fineberg's, basic view--and 
this was a good while ago--was that tobacco is such a serious 
public health problem, that it's not appropriate for a school 
of public health to be accepting money from that type of 
organization.
    Senator Durbin. Do you agree with that?
    Mr. Graham. I argued against it at the time, and even 
today, I still have some reservations with that judgment.
    Senator Durbin. You made the original solicitation to 
Philip Morris, did you not?
    Mr. Graham. Correct.
    Senator Durbin. For the $25,000, which they sent you on 
January 22, 1992.\1\ The records indicate on January 31, after 
the deans contacted you, you returned the Philip Morris check. 
Is that correct?
---------------------------------------------------------------------------
    \1\ The letter dated January 22, 1992, from Philip Morris to 
Harvard Center appears in the Appendix on page 354.
---------------------------------------------------------------------------
    Mr. Graham. Yes, sir.
    Senator Durbin. What was interesting about this--and I 
would like to make this letter part of the record \2\--was, you 
wrote them a very short letter and said, ``I'm sending back the 
$25,000. Have Kraft Foods send it back to me.''
---------------------------------------------------------------------------
    \1\ The letter dated January 31, 1992, from Harvard Center to 
Philip Morris appears in the Appendix on page 356.
---------------------------------------------------------------------------
    Senator Durbin. Kraft Foods is a subsidiary of Philip 
Morris, right?
    Mr. Graham. Kraft Foods is definitely a subsidiary.
    Senator Durbin. Did you see any ethical problem there, 
where you were told by the dean to get out of the pocket of 
Philip Morris, we do not want to be associated with it, and 
then you came back and said, ``But have one of your 
subsidiaries send the $25,000 right back to me?''
    Mr. Graham. My recollection is that the dean and I 
discussed the issue of whether the subsidiaries of Philip 
Morris were inappropriate for unrestricted contributions. And 
the determination was that a contribution from--I think Kraft 
Foods in particular we discussed--would be acceptable according 
to the guidelines that he was developing.
    Senator Durbin. October 25, 1993,\1\ you sent a thank you 
letter to Philip Morris for their donation to the research 
center of a desktop computer. Is that correct?
---------------------------------------------------------------------------
    \1\ The letter dated October 25, 1993, appears in the Appendix on 
page 266.
---------------------------------------------------------------------------
    Mr. Graham. I believe it was to Mayada Logue for a personal 
donation, yes.
    Senator Durbin. And so you were told by the university not 
to be affiliated or take money from the tobacco company. You 
said, ``I will take it from a subsidiary.'' And the university, 
according to your testimony, has gone along with it. And then 
within a year, you are receiving a personal computer from the 
Philip Morris Company. Is that correct?
    Mr. Graham. I don't think that's correct. I think the 
donation of the personal computer was a personal donation, and 
not a donation of Philip Morris. And I don't recall my dean 
putting any restrictions on my ability as a professor to 
affiliate with people from Philip Morris.
    Senator Durbin. They gave a computer to you personally 
instead of money to the Center?
    Mr. Graham. No. The donation was a personal donation of 
Mayada Logue to the Harvard Center for Risk Analysis.
    Senator Durbin. What is Philip Morris's connection then?
    Mr. Graham. I don't know that there was. She was employed 
at the time by Philip Morris, and the thank you note, went back 
to her at her Philip Morris address, but the actual donation 
was a personal donation of Mayada Logue.
    Senator Durbin. I would like to go back to a point that was 
raised earlier about the fact that you do not have any 
qualifications or degrees in hard sciences, and I would like to 
make two points about that. First, I do not believe that is a 
prerequisite for this job, and I think predecessors certainly 
have not had that background. But you have held yourself out on 
a number of issues related to public health and science, and 
that is why you are being asked many of these questions today.
    In terms of the letters in opposition to your nomination, 
they may include letters from psychologists and people in 
language sciences. They also include letters from 21 medical 
doctors, including one Nobel prizewinner, and a variety of 
Ph.D.s in public health and cell biology.
    Now, the reason that is important is the next issue I would 
like to go to which relates to pesticides in food. Can I ask my 
staff to bring up some of the things that have been said about 
that particular issue.
    I think it is fair to say that you have been dismissive of 
many of the public concerns about pesticides, and many of your 
funders, of course, are on your side on that. Your quote on the 
left says, ``The evidence on pesticide residues on food as a 
health problem is virtually nonexistent. It's speculation.''
    Here is what others have said. ``Changes are needed to 
protect children from pesticides in diet.'' National Academy of 
Sciences.
    Then we have Consumer's Union, which is not viewed as an 
advocate on either side really. ``There is a 77 percent chance 
that a serving of winter squash delivers too much of a banned 
pesticide to be safe for a young child.''
    And then from the EPA. ``EPA's risk assessment showed that 
methyl parathion could not meet the FQPA Safety Standard. The 
acute dietary risk to children age 1 to 6 exceeded the 
reference dose for the amount that could be consumed safely 
over a 70-year lifetime by 880 percent.''
    I am trying to reconcile, Dr. Graham, your conclusion that 
pesticide residue on food is virtually nonexistent as a health 
problem and is speculation, with the sources on the right, 
which come to the exact opposite conclusion. The obvious reason 
is that if you are appointed to this position, you will have 
food safety questions coming before you that may relate to 
pesticide residues. You have suggested to us that you are going 
to change your position when it comes to your views of people 
working in government developing these regulations, and when it 
comes to being rights-oriented rather than money-oriented when 
it comes to regulation. Are you going to change your views on 
the danger of pesticides on food, particularly for children?
    Mr. Graham. No, Senator.
    Senator Durbin. You do not believe there is a danger; it is 
pure speculation.
    Mr. Graham. I think there is actually a pretty heated 
debate within the scientific community on whether the pesticide 
residues on foods at their current levels represent a health 
risk.
    Senator Durbin. Let us go to methyl parathion. How much do 
you know about it?
    Mr. Graham. Not much, sir.
    Senator Durbin. Well, that is unfortunate, because that 
really makes the case. The decision was made because methyl 
parathion was being used as a pesticide on foods that kids were 
consuming. It was a danger to these children. And the Federal 
Government decided to change the uses of that pesticide, and 
ban it from certain foods where it might accumulate in 
children, causing health problems.
    But from your point of view, they should not have done 
that, that was pure speculation; the health problem there was 
virtually nonexistent; is that correct?
    Mr. Graham. I haven't studied that particular example, sir.
    Senator Durbin. But you see, Dr. Graham, that is what 
troubles us. Arsenic in drinking water is a new issue for you. 
Methyl parathion is a new issue for you. You're not trained as 
a biologist or toxicologist. Yet, you make broad statements 
about the lack of health effects of pesticides, or dioxin being 
an anti-cancer chemical. I mean to think that we are going to 
entrust you with a position where you will be the gatekeeper on 
food safety, on pesticide levels on fruit and vegetables, when 
this government really tries to protect children, vulnerable 
children from what is a serious health risk. That is why your 
lack of training in sciences related to this field, the fact 
that you have made some rather, I think, outrageous statements 
about science during the course of your professional career, 
and now seek to be the last word at OMB as to health and safety 
regulations, I hope you can understand that gives many of us 
some pause when we consider your candidacy.
    Mr. Graham. Senator, if EPA, for example, submits a 
proposal to OIRA that presents a strong case that children are 
going to be at risk if we don't lower exposures from pesticide 
residues, I think that is something I would certainly look at 
very carefully and very seriously in the context of the 
underlying statute and the terms of the executive order.
    Senator Durbin. But which John Graham are we dealing with 
here, the John Graham that says pesticide residues on food as a 
health problem is virtually nonexistent, or the John Graham 
that says he is going to be measured and objective and consider 
these things?
    I think we have a lot of confirmation conversions here on 
Capitol Hill. And when we look at your background and the 
people who have supported you, and some of the statements you 
have made about dioxin actually eliminating cancer, and 
pesticide residue health threats to be virtually nonexistent, I 
hope you can see where many of us feel that putting you in this 
position is really a risk.
    Mr. Graham. [No response.]
    Senator Durbin. Thank you, Mr. Chairman.
    Chairman Thompson. Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman.
    Dr. Graham, you may take a place in history, alongside with 
Robert Bork. I have not seen such a concentrated effort to 
destroy the reputation of a man, who is considered by his peers 
to be of the highest integrity, highest objectiveness, 
willingness to take a risk and state positions outside the norm 
on the basis of your own research. I have not seen such an 
assassination since the time of Robert Bork.
    Let me go to another letter. I began by quoting a letter 
from a fellow who had analyzed all of the statements in Joan 
Claybrook's statement. I will conclude by a fellow who has 
something also to comment on this effort. This is a letter 
addressed to the Chairman from Michael Finkelstein.
    He identifies himself, ``I am an independent consultant 
working on automotive safety, and have know Dr. Graham for more 
than 15 years. I first met him in the mid 1980's when he was 
doing research on air bags. Since then I have followed his work 
at the Harvard Center for Injury Control, and most recently at 
the Harvard Center for Risk Analysis. His academic credentials 
are outstanding, and there is little I could say that would add 
to his scientific accomplishments.''
    So far that is a garden variety endorsement of you, of 
which there are, as the Chairman has pointed out, literally 
hundreds. It is the next paragraph that caught my eye.
    ``Rather, the reason for this letter is to discuss Dr. 
Graham's integrity, both as a scientist and as a public health 
professional. The reason I feel compelled to write is that I 
discovered that a 1997 letter that I wrote was used by Public 
Citizen in their recent report criticizing Dr. Graham's 
nomination as head of OIRA. Frankly, I was very surprised to 
see Public Citizen use my letter to criticize Dr. Graham. In 
fact, when a representative of Public Citizen contacted me to 
learn my views of Dr. Graham, I told them that I was strongly 
in favor of his possible appointment to any number of positions 
in the new administration.''
    So here is a man who is being quoted as an opponent of 
yours, who feels it absolutely essential to set the record 
straight by pointing out that he is a supporter. The 
interesting thing as to your credentials, in the conversations 
we have had here, comes in his explanation of his experience 
with you. He describes a presentation which you made, with 
which he had very strong disagreement. In other words, somewhat 
in the attitude of the Committee in some of the statements that 
have been made.
    He says, ``I felt that his analysis was flawed''--``his 
analysis'' being your analysis--``and given the publicity 
surrounding Dr. Graham's preliminary conclusions, I wrote him a 
very strong letter, raising a number of technical problems that 
I had with his research, and in fact, during the peer review 
that his research received prior to his publication, apparently 
a number of reviewers raised many of the same questions. As a 
result, when the paper was published in the Journal of the 
American Medical Association, it had been substantially 
revised. Had Dr. Graham not presented his preliminary findings 
at the NTSB meeting, there would have been much less feedback 
from the safety community and the quality of the final 
published paper may have been diminished. Given the importance 
of the subject, Dr. Graham's presentation of his preliminary 
findings at the NTSB was reasonable. And while I disagreed with 
his conclusions, I certainly never questioned his motives for 
presenting that data. Further, when his research was subjected 
to the peer review process, he made a number of substantive 
changes which did in fact change his conclusions, and it is the 
paper published in JAMA that is used today to characterize air 
bag cost effectiveness.''
    In other words, what we have here from a man who was one of 
your critics, is a real-life example of your willingness to 
listen to other points of view, your willingness to accept peer 
review, and your willingness to change your conclusions when 
confronted with peer review that suggests that such a change is 
necessary. What we have here is a real-life example of a man 
who is open to criticism, open to review, and willing to make 
changes if he feels scientifically that those changes are 
required. In my view, that is the kind of a man we want as the 
head of OIRA.
    Thank you, Mr. Chairman.
    Chairman Thompson. Thank you very much. I think that is 
extremely important, Senator, because I think that what we are 
dealing with here in this job is very much process oriented. 
Your job is going to be to insure that the agency does a 
careful analysis of what it is dealing with. You are not being 
put in there to create new scientific findings, are you?
    Mr. Graham. No, sir.
    Chairman Thompson. And you are an expert in regulatory 
analysis, that it is not uncommon for us to confirm people who 
have views. Anyone who has accomplished anything in life and 
lived a few years, has views. And we confirmed an Attorney 
General, time before last, who was opposed to the death 
penalty. And I think every member of the Judiciary Committee 
and every member of the U.S. Senate, who supports the death 
penalty, voted for her confirmation, because she stated that 
she would apply the law that was on the books.
    And I think a letter like this is testament to the fact 
that you are a person who is intellectually honest, and that 
you will apply the law and the regulations as you find them, 
but not be afraid to have an intellectual discussion about 
issues that are of importance to the public.
    On the tobacco issue, my record reflects that you cited 
smoking as the No. 1 killer in America in over 100 species. 
Does that sound right to you?
    Mr. Graham. That's right, sir.
    Chairman Thompson. Your Center finds smoking prevention 
programs to be cost effective; is that correct?
    Mr. Graham. Yes, sir.
    Chairman Thompson. In one book, for example, you 
recommended that, ``Physicians should be encouraged and trained 
to counsel all patients to stop smoking, an intervention with 
varied favorable cost effectiveness for all types of smokers.'' 
Your writings and Congressional testimony point to indoor air 
pollution generally, and secondhand smoke specifically as a 
significant health hazard; is that correct?
    Mr. Graham. Yes, sir.
    Chairman Thompson. And that study was at least in part 
financed by tobacco companies, was it not?
    Mr. Graham. Well, if we're going to characterize Kraft 
Foods in that fashion, I guess that's true, but that's probably 
not fair.
    Chairman Thompson. Well, I guess this is reflected in your 
tobacco sources, because my file indicates that tobacco-related 
companies constitute less than 1 percent of the funding for 
your Center. Would that comport with your recollection 
generally?
    Mr. Graham. Yes. I think Kraft Foods is the only company at 
issue.
    Chairman Thompson. Tobacco related?
    Mr. Graham. Right.
    Chairman Thompson. Thank you very much. Senator Lieberman.
    Senator Lieberman. I do not have any more questions, Mr. 
Chairman. If I have any, I will submit them for the record.
    I mean, it is interesting, as I think about the hearing and 
several of the questions that I have asked this morning, and 
others have, Dr. Graham, you have referred to the transition 
you are making, if you are confirmed for this position, from 
academic to public administrator, and that would require--
sensitivity was one word you used--and I do not mean to take it 
out of context, but a different kind of orientation than you 
had up until this time. And I think the question that remains, 
for me anyway, is whether you can make that transition. And 
that is exactly what I, myself, want to consider as I consider 
your testimony and the answers that you have given in the 
context of your background.
    I must say again what I said at the outset, that if the 
Bush Administration had not taken actions early on, which raise 
questions about this administration's attitude toward a whole 
range of protective regulations, then there would be much less 
anxiety and unease about your past statements and work in this 
area. If one can imagine such a prospect, if you had been 
nominated by President Clinton, for instance, I think there 
would be less anxiety, less concern, because of what seemed to 
be the clear orientation of that administration toward these 
protective regulations.
    Anyway, I thank you for your testimony, and I promise you 
that I will give the fullest consideration to what you have 
said today and the answers you have submitted for the record 
previous to the hearing, and I would welcome any additional 
input you would care to give to me or other Members of the 
Committee, either in writing or in person, before the Committee 
votes. Thank you.
    Chairman Thompson. Thank you very much. Senator Durbin.
    Senator Durbin. Thank you, Mr. Chairman.
    Dr. Graham, you have used cost analysis on regulations and 
rules in your professional career, and it involves something 
called ``discounting lives.'' Is that something, a statistical 
model that you have used to evaluate the cost of rules and 
regulations?
    Mr. Graham. Yes. Discounting is commonly used in cost 
effectiveness and cost benefit analysis, for both health 
benefits and economic benefits.
    Senator Durbin. Could you, in laymen's terms, explain what 
``discounting lives'' means?
    Mr. Graham. Discounting lives involves applying a 
preference to saving lives now as opposed to saving lives in 
the future.
    Senator Durbin. And so that might lead you to conclude, as 
you have, that fire extinguishers in airplanes, or air bags or 
seat belts, because they would prevent accidents on a more 
immediate basis, would be of more value to society than some 
other rules and regulations that do not cost benefit out as 
well?
    Mr. Graham. I am not sure about the specific examples, but 
I think your general point is right, which is that the 
discounting factor will end up favoring regulations that have 
immediate benefit.
    Senator Durbin. And here--I guess this is where I get down 
to the problem, and Dr. Heinzerling, over at Georgetown Law 
School, has written about this as well. I do not subscribe to 
that point of view, and I voted against it when it has been 
proposed in this Committee. And the difficulty I have is this. 
Many of the things we are talking about--dioxin, arsenic, 
pesticide residue and the like--may not have an immediate 
impact on public health and mortality statistics, but it 
certainly will in the long term if you accept the premise that 
exposure to some of these chemicals does ultimately result in 
cancer. And so if it saves lives 10, 20 or 30 years from now, 
the statistical approach of discounting lives would place less 
value on it; it is not as important as dealing with today's 
problems and today's mortality tables. And I think that is why 
many of us, who think that there is an important responsibility 
to this government when it comes to environmental protection 
and public health, worry about putting someone in with such a 
strong bent toward discounting lives and the impact it will 
have on public health and safety.
    Would you comment on that?
    Mr. Graham. Senator, I don't think that my convictions 
behind discounting future lives are any greater or less than is 
typical among decision scientists and economists who practice 
these analytic tools. I do think you're raising a very good 
point, that you may want to, on certain occasions, allow 
consideration of factors that are outside of the economic 
discounting framework to influence the regulatory choice, and I 
think that's a fair comment.
    Senator Durbin. Well, your critics have said, of course, 
that discounting lives really does work against environmental 
and long-term public health goals, because the savings are not 
immediate. We make a lot of decisions today that may have some 
benefit to our children or to their children, and I think we 
consider that a valuable part of our legacy. But if we are just 
measuring it by today's benefit, how much we can benefit 
immediately, I think the discounting lives approach diminishes 
that value.
    I am going to close by just asking you for a general 
comment on a statement that you made in a book that you wrote, 
entitled ``Making Sense of Risk, an Agenda for Congress'', 
1996. And you said in that book, ``The public's general 
reaction to health, safety and environmental dangers may best 
be described as a syndrome of paranoia and neglect.'' What did 
you mean by that, Dr. Graham?
    Mr. Graham. We overreact to some risks, and we neglect 
others.
    Senator Durbin. And do you feel that you have taken a 
balanced approach on questions like dioxin and pesticides on 
foods?
    Mr. Graham. Yes, sir.
    Senator Durbin. Thank you. Thank you, Mr. Chairman.
    Chairman Thompson. Thank you very much.
    Does anyone else have anything further? If not, I am going 
to thank you, Dr. Graham, for being here with us today, and for 
volunteering for this important public service. We will act 
expeditiously on your nomination. Thank you very much.
    We are adjourned.
    [Whereupon, at 1:34 p.m., the Committee was adjourned.]
                            A P P E N D I X

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