Risk-Risk Analysis

The Office of Management and Budget (OMB) recently suspended its review of a rule proposed by the Occupational Safety and Health Administration (OSHA) entitled "Air Contaminants Standard in the Construction, Maritime, Agriculture, and General Industries." OMB's decision to suspend its review was based on a model developed by a University of Southern California professor. GAO reviewed OMB's application of this procedure, which attempts to estimate increased mortality risk indirectly attributable to the costs associated with implementing the rule. GAO concludes that OMB's application of risk-risk analysis to the OSHA regulation (1) was based on a theory that is controversial in several respects, (2) employed a model that is as yet incomplete, (3) misinterpreted the model in several important ways, and (4) appears to be inconsistent with both Supreme Court and appellate court decisions.

GAO found that: (1) OMB determined that the costs of implementing the regulation could indirectly result in more fatalities than its preventive aspects were estimated to avert; (2) the method OMB used in its decision to suspend its review of the OSHA rule was cost-benefit rather than risk-risk analysis; (3) risk-risk analysis theory has a causation problem and a shortage of empirical data to confirm it; (4) OMB misused the model because the outcomes of calculations were not universally applicable and data appropriate to the situation were lacking; and (5) the use of cost-benefit analysis is permissible in the consideration of safety standards, but is prohibited in developing health standards.