Regulatory Roll Back

by Nancy Watzman

 Representative David McIntosh, R-Indiana, used to be much more bashful. As director of then-Vice President Dan QuayleĂs Council on Competitiveness, he refused to testify before Congress when committees held hearings on the CouncilĂs interference with the Clean Air Act, wetlands protection, drug safety and myriad other health, safety and environmental regulations. The Quayle Council became infamous for its secret meetings with business lobbyists, where McIntosh and his staff would help design strategies to gut regulations that industry loathed.

Now McIntosh is a first-term member of Congress, elected in Indiana with the backing of business and some well-known conservatives. Not many new members of Congress were supported by campaign donations from such conservative stars as C. Boyden Gray, White House counsel under President Bush and now president of the conservative group Citizens for a Sound Economy; William Kristol, who ran QuayleĂs office; and Representatives Tom DeLay, R-Texas, and Chris Cox, R-California.

With his hands now on the levers of legislative power, McIntosh, now a high- profile member of the new crop of Republican representatives, is resuming work he began with the Quayle Council. A McIntosh-sponsored bill, which would impose a moratorium on rulemaking through June 30, 1995, retroactive to November 20, 1994, whizzed through the House on February 24, 1995. The bill passed on a 276-146 vote. Originally, the bill was retroactive to election day. But Republicans changed the date to win the vote of Representative Collin Peterson, D-Minnesota, according to Michael Weisskopf of the Washington Post. Peterson wanted to preserve a November 18, 1994 Agriculture Department rule that lifts a tax on malt barley, which is grown in his district. Regulations that did not make the cut include standards for nutritious school lunches, safe bicycle helmets and mammography exams.

 A less-sweeping regulatory moratorium bill passed the Senate Government Affairs Committee March 9 on a straight party-line vote. The Senate version would allow the Clinton administration to exempt regulations that would prevent an imminent threat to public health and safety.

 The moratorium McIntosh is sponsoring is just part of the RepublicansĂ grand plan to completely change the way that federal agencies regulate industries. "Where the Quayle Council attempted to gut health, safety and environmental regulations through the back door, the Republicans are striding right through the front door and trying to change the entire regulatory system," says Gary Bass, executive director of OMB Watch, a Washington, D.C.-based regulatory watchdog. Because it was housed in the executive branch, the Council could intervene in battles over specific regulations opposed by the business community, but the basic structures of federal rulemaking remained intact. Now, with Republican control of Congress, there is an opportunity to completely overhaul what regulatory agencies do.

The core of the Republican approach is the philosophy that federal regulation is a burden to business, plain and simple. Government action is undesirable and should be beaten back. The free market, under this vision, is the best regulator; if bicycle helmets do not shield heads effectively, people will stop buying them. If a new medicine does not work, nobody will take it. Even those businesses that do not ascribe to a pure, libertarian view tend to argue that federal regulations have spiraled out of control and the pendulum needs to swing back in the other direction. In contrast, environmental and consumer advocates continue to advocate government action when the market cannot be relied upon to ensure public safety.

Regulating the regulators

The greatest part of the Republican Contract with America challenge to federal agenciesĂ ability to protect the environment and public health lies in H.R. 9, the Job Creation and Wage Enhancement Act of 1995. This bill contains legislative prescriptions to revamp how federal agencies function, requiring them to comply with a battery of bureaucratic procedures before they can issue protective regulations. Supporters of H.R. 9 are not bashful about their intent. "If itĂs acceptable to place a regulatory burden on the public, why not place it on the federal agencies?" asked Representative Greg Ganske, R-Iowa, at a recent hearing.

 The irony is that the same businesses that have cried foul over the red tape they must confront in complying with regulatory protections of such things as air, food and drugs now demand reams of new paperwork. "Unfortunately, [the bill] not only emulates some of the most undesirable approaches used in our current regulatory system, but also creates seemingly endless analytic loops that could introduce additional inefficiency and delay in the rulemaking process," testified John H. Gibbons, director of the executive Office of Science and Technology Policy, before the House Committee on Science in early February.

Already, many environmental, health and safety statutes require agencies to do risk assessments and cost-benefit analyses before they issue regulations. The requirements are different in various statutes, tailored to the particular problem that is being addressed. There is also a requirement, by executive order, that agencies prepare a "risk impact analysis" for any rule that would impose annual costs on the economy of $100 million or more. H.R. 9, however, would override many of these requirements and require that, before an agency could take action at all, it comply with extensive, cost-benefit, peer- review analyses. The new requirements would place a heavy burden on the government to prove how the benefits of the protective action outweigh the costs to the economy and to demonstrate that the agency has chosen an efficient way to achieve a regulatory goal. Furthermore, the "peer reviews" would not exclude people who might have a monetary interest in the result. That means a pesticide company scientist, for example, could pass judgment on an Environmental Protection Agency (EPA) rule on pesticides.

Many of the requirements for analyses are extraordinarily vague, with the result that technical compliance could be unbearably difficult. For example, an agency would be required to make a statement, with each regulation on what "human risks are potentially posed" by the new rule itself, along with every possible regulatory alternative to it. "This requirement is wholly open ended: must the agency list all health risks each alternative could create, no matter how unlikely or remote these risks may be?" asked Gibbons in his testimony.

 Cost-benefit and risk analyses mean different things in different contexts. A recent trend in academic and policy circles is to strive for more "rational" policymaking. Environmental policy critics, for example, have charged that the EPA does not sufficiently rely on comparative risk assessment to direct its regulatory efforts. Exposure to toxic chemicals may be dangerous, they concede, but if a person is more likely to die from naturally occurring radon in their home than from cancer caused by toxins, then regulatory efforts should be devoted to the radon problem first. They also charge that not enough is done to measure the cost of regulatory compliance. Maybe there is a health benefit to pesticide regulation, they say. But to what extent is that benefit weighed against corporate costs of complying with regulatory testing requirements and with the job losses that may result from increased regulation?

 Sensible use of cost-benefit and risk-analysis techniques may lead to better policy. But environmental and other health and safety advocates argue that costs and benefits cannot always be calculated accurately. In the context of pesticide regulation, Lynn Goldman, assistant administrator of the EPAĂs Office of Prevention, Pesticides and Toxic Substances, explained at a February 2 hearing of the House Commerce Health and Environment Subcommittee that, "Data are often not available for environmental exposures involving critical health and ecological effects. Developmental effects in children, reproductive effects in men and women, neurotoxic effects and ecological effects of many kinds that may be associated with pesticide use cannot be neatly fitted into rigid equations due to [a] lack of data and scientifically accepted techniques for extrapolation and quantitative assessment."

Just because the scientific community has not progressed to the point where it understands exactly how harmful pesticides or other substances are does not mean they are not harmful - nor that the government should not act to protect citizens. When scientists first experimented with radiation, for example, knowledge of its effects were minimal. It would not have been possible to conduct a "cost-benefit" analysis on the use of radioactive substances. Yet, people subjected to radiation got sick and many of them died.

Big business bonanza

 Big industry groups backed H.R. 9 with a clever vengeance. In mid-December, the National American Wholesale GrocersĂ Association and Representative DeLay announced a new group, Project Relief, to "coordinate efforts in the private sector to garner support for the specific element of the Contract with America that calls for a dramatic reform of the way the federal government develops regulations." The steering committee is a whoĂs who of large business trade associations and industry-funded think tanks. Project Relief is advertising a toll-free telephone number to field complaints about excessive government regulation.

"We feel the government should have regulations that serve the American people, not people serving regulations," says Bruce A. Gates, vice president of public affairs at the National American Wholesale Grocers Association, a Project Relief leader.

 The National Association of Manufacturers and the Chamber of Commerce are members of Project Relief, as are the conservative Heritage Foundation, the Cato Institute and Citizens for a Sound Economy (CSE), home to several former Quayle Council staffers. CSE has won conservative kudos for its successful attacks on the Clinton administrationĂs ill-fated energy tax proposal and health plan. Among CSEĂs tactics are media advertisements that target the home districts of key members of Congress - an expensive but effective form of political pressure. Such "manufactured" grassroots campaigns are powerful new tools with which the monied interests influence controversial policy debates.

Another new coalition supporting the ContractĂs regulatory provisions is the Alliance for Reasonable Regulation, whose 22-page membership list contains hundreds of little-known businesses from Safety-Kleen Corporation to Ozark Wire Limited. Representing the Alliance at a recent congressional hearing, however, was a familiar face: Jerry J. Jasinowski, president of the National Association of Manufacturers, the heavy- hitting, big business trade association and a founding member of the Alliance.

Environmental and consumer groups, labor unions and other citizen organizations formed their own coalition to oppose H.R. 9, Citizens for Sensible Safeguards. But this poorly funded coalition has had trouble communicating its message on complex regulatory procedures. "WeĂve been trying to get the word out about how extreme and absurd a lot of these [regulatory] proposals are," says Erik Olsen, an attorney at the Natural Resources Defense Council (NRDC). "Clearly there is very little support for these proposals once theyĂre explained to the public, but theyĂve been tied up with a nice little bow and packaged and focus-grouped. But we have no money."

Greased lightning

H.R. 9 moved through the House of Representatives at a tremendous clip. The House Commerce Committee quickly passed Republican-backed amendments that would apply new cost-benefit requirements retroactively, subjecting current environmental laws to the possibility of repeal. "They proposed this language less than 48 hours before the markup that amends every law. There are no hearings, nothing. We have no idea about the impact of this new language," Olsen says. The House passed the regulatory provisions of H.R. 9 on March 3 on a 277-144 vote.

This deregulatory agenda also has been moving through the Senate, though not at the HouseĂs breakneck speed. Clinton administration officials have groused about the measure, but it has not sparked a veto threat and some administration officials have hinted that they might be able to live with the Senate version.

 Opponents hope the slower Senate pace will scrutiny of the sweeping, anti- regulatory agenda. If it passes, however, they are preparing for disaster. "ItĂs going to shut the government down," Olsen predicts. "What will happen is some big crisis and the EPA or some other agency will be paralyzed to do anything about it, and then there will be a public outcry. But in the meantime, a lot of people will be hurt."



Taking on the Environment

BURIED DEEP IN THE REPUBLICAN CONTRACT WITH AMERICA is a proposal that proponents say will protect property owners. Critics say that protection would come at the cost of more than 20 years of public health, safety, and environmental protection.

The Job Creation and Wage Enhancement Act, H.R. 9, was passed by the U.S. House of Representatives by a 277-141 vote on March 3, 1995. If enacted into law, it would radically restructure the way that public and private rights now are balanced in the United States, strengthening private power at the cost of the public good.

 The Fifth Amendment to the U.S. Constitution says "no person shall be deprived of life, liberty, or property without due process of the law; nor shall private property be taken for public use without just compensation." Historically, the courts have ruled that if federal, state or local governments exercise their eminent domain powers to take someoneĂs land for a highway, building or park, they must pay the owner the propertyĂs fair market value.

In the early twentieth century, the courts expanded takings law to cover instances in which government regulations effectively eliminated all the economic value of a property, a so-called "regulatory taking." Starting in the mid-1980s, the Supreme Court began to expand the regulatory taking doctrine further. The Court labeled as takings more incidental effects to private property from regulation, and required that compensation be paid to landowners for the diminished value of their land in more and more cases.

 Former President Ronald ReaganĂs administration sought to expand the definition of a regulatory taking to include any regulatory reduction in the use or value of land. Executive Order 12630 required all federal agencies to assess whether their regulatory actions were impacting property owners. The recent House vote is a culmination of a five- year effort to codify aspects of that executive order into law.

 Takings provisions in H.R. 9 require the government to pay a property owner compensation for regulations that reduce the resale value of his or her land by 10 percent or more. This requirement is only fair, say advocates of the takings provisions. "Today, environmental regulations destroy property rights on an unprecedented scale," Roger Mazulla, an attorney with the corporate law firm of Akin, Gump, Strauss, Hauer & Feld, told the House Agriculture Committee in February 1995. "Regulations designed to protect coastal zone areas, wetlands and endangered species habitats, among others, leave many owners stripped of all but bare title to their property." Explained Calvin Ploof, Jr., chair of the National Association of Realtors, to the House Committee on Transportation and Infrastructure, "The cost of the benefits to the general public achieved by such regulation should be borne by the beneficiaries - the general public."

But critics respond that property owners should not be given the right to harm the public. "These bills will convert our system from one in which the polluter pays to one in which the public pays," says John Stanton of the National Conference of State Legislatures. "If the community wants clean water and clean air, they must pay polluters not to pollute. If we have to pay more to protect our community, then there will be less community protection."

 StantonĂs concerns are echoed by Pat Byington, executive director of the Alabama Conservancy, a statewide nonprofit organization dedicated to helping landowners. "The environmental laws we have today, although not perfect, safeguard the property values of all citizens. One personĂs property rights end where his neighborĂs begin. If we reinterpret takings law to say that each person can do whatever they want with their land, no matter who it might hurt, we all lose."

 The states have become the front runners in the takings battle. Over 40 states have defeated similar kinds of takings bills in the last two years. Maryland Attorney General Ralph Tyler calls these bills "a radical, untested, and unwise way to block regulation and to raid the federal treasury. They appear to be designed to affirmatively discourage regulation."

 Joni Bosh, vice president of the Sierra Club agrees. Bosh led the battle to overturn a takings bill in the state of Arizona in 1994. "Although our state is politically quite conservative, the citizens of Arizona rejected a state takings bill by referendum by a 60 to 40 percent vote margin because they knew it would block crucial health and environmental safeguards they wanted," Bosh says.

 Concern over the future of health and safety laws brought Bill Klinefelter, legislative director of the AFL-CIO, into the takings battle. Klinefelter says that the federal government pushed corporate America to protect workers and the environment by setting health standards and forcing technology. "During the first Clean Air Act debate, the U.S. Congress set emissions standards and industry developed the technology to reach them," he says. "Industry said they couldnĂt reach the standards but they did. Today we have better science and more information so we can tackle our environmental and health problems in more innovative ways. If these takings proposals go through, any regulation on industry can be claimed to be a taking and all our progress will stop."

 The takings bill has yet to be acted upon in the Senate. The bill comes under the jurisdiction of Senator John Chafee, R-Rhode Island, chair of the Senate Environment Committee and a staunch opponent of takings bills. But the Senate has passed takings amendments in previous years and Republicans won a majority of the Senate in the 1994 elections.

Given how fast the takings legislation has been stitched together, it may have unintended consequences. With time to study the sweeping implications of this legislation, even conservative Senators may reconsider some of its most radical provisions.

After the House passed H.R. 9, Senator Patrick J. Leahy, D-Vermont, pointed out how another piece of legislation a House panel recently approved could prompt expensive takings challenges if both pieces of legislation end up being enacted.

A bill approved by the House Appropriations Committee would instruct the U.S. Forest Service to convert dead and diseased timber on its lands into six billion board feet of lumber over the next two years. The Congressional Research Service estimates that such a huge increase in lumber supplies will reduce prices, which Leahy says could prompt takings claims.

 -Pam Goddard



"Job Creation" or Regulatory Decimation

LEGISLATIVE PRESCRIPTIONS IN H.R. 9, the Job Creation and Wage Enhancement Act, range from complex new bureaucratic requirements to focus-group-friendly provisions designed to give the package a deceptively populist appeal.

 Risk-Assessment / Cost-Benefit Analysis requirements would impose much more demanding standards on the government. Its agencies would be required to assess data that may be nonexistent or difficult to collect and to subject their analyses to review by outside panels, whose members could be industry scientists.

Compliance Cost Caps would limit the amount that the private sector would have to spend to comply with federal rules and laws. Agencies would be required to reduce compliance costs by 6.5 percent a year until the total cost of laws and regulations amounted to no more than 5 percent of the gross domestic product. Congressional budget committees would impose a "regulatory budget" on authorizing committees. A committee could not pass a new law if the business compliance costs of that law would exceed a committeeĂs budget. Benefits of new laws, such as the money the economy would save by averting illnesses through a preventative health regulation, would not be credited to the budget.

 The Regulatory Flexibility Act would amend existing laws to require agencies to consider any new regulationĂs "indirect" impacts on small business (direct impacts are already considered). The act would require drafts of all proposed rules and regulatory-impact analyses to pass a Small Business Administration review.

The Paperwork Reduction Act requires agencies to go through new bureaucratic requirements before they could collect information from industry to use as a basis for new regulations. Since other aspects of H.R. 9 require agencies to consider additional risk-assessment and cost-benefit-analysis data, which would have to be collected from industry, this provision imposes a Catch-22 situation on regulatory agencies.

The CitizensĂ Regulatory Bill of Rights would create an enforcement "bill of rights." These include the rights of regulated business officials to remain silent, to be informed of their right to a warrant, to be warned that their statements can be used against them, and their right to have an attorney or accountant present. This is a vast expansion of the ConstitutionĂs Bill of Rights, which applies to people charged with a crime or who are the target of a grand jury investigation. In practical terms, it means that if government inspectors want to investigate a chicken processing plant for safety violations, they may need to secure a warrant first and to wait until the plant summons a lawyer or an accountant.

 Whistleblower Protection provisions would allow businesses or people subject to government enforcement actions to sue agencies and agency employees for civil and punitive damages. This would have a chilling effect, inhibiting agencies and their staff from doing their jobs. Before a government official cited a factory for worker safety violations, he or she would have to consider whether or not to run the risk of being sued.