Regulations Edwin L. Behrens Procter & Gamble Mfg. Co. 1801 Κ Street, N.W. Washington, D.C. 20006
Regulatory Reform—At the Crossroads This second and concluding article will be an analysis of present efforts and future issues related to the need for regulatory reform. The first article, which appeared in the June edition of this column (775-81 A), addressed the broadly recognized need for reform and discussed some of the underlying issues. This month's article will at tempt to describe steps that have al ready been taken by the Carter and prior administrations in their at tempts to institute more rational pro cesses to aid federal regulatory agen cies in the development of regulations. Recent legislative efforts requiring agencies to conduct an analysis of the likely impact of major rules (both fa vorable and adverse) will be discussed, including efforts that would require agencies to consider various regulatory (and nonregulatory) alternatives at the time a rule is proposed. The better proposals would even require an agen cy to at least consider the cost-effec tiveness of the various alternatives in selecting one for final rule making. Other issues that still need to be ad dressed in the pursuit of meaningful regulatory reform, particularly those having some likely impact upon or rel evance to the scientific community, will be identified. A specific proposal for how scientific issues might be bet ter resolved, particularly as they relate to the development of federal policies for controlling potential carcinogens and other chronic health-related poli cy actions, will be discussed. In the June article we reviewed the substantial costs that regulations are beginning to impose on the nation's economy. Dr. Murray Weidenbaum of the American Enterprise Institute (ΑΕΙ) has demonstrated that these costs result to a great extent from the sheer growth of regulatory agencies. In a recent statement before the House Committee on Interstate and Foreign Commerce, Weidenbaum testified that there were only a dozen federal 0003-2700/80/A351-1061$01.00/0 © 1980 American Chemical Society
regulatory agencies prior to 1930, but he indicated that they had grown to over two dozen in 1950 and total 56 today (1). James Miller, also of ΑΕΙ, has dramatized the expanded growth of regulatory agencies that occurred during the past decade. Miller points out that from 1970 to 1977 the number of major federal agencies having either "social" or "economic" regulatory re sponsibilities has increased by onethird (20 to 27); the number of pages per year in the Federal Register tri pled (20 036 to 61 000); and the feder al budget expenditures for the "social" agencies (environmental, health, and safety-oriented) more than qua drupled ($1.5 billion to $7.3 billion). Total budget expenditures for these combined agencies went from just above $1.6 billion to over $8.2 billion during that same interval (2). More recent indications are that the regulatory growth rate may be slow ing, but it is the total impact of these costs that must be the concern and not just the rate at which they are increas ing. Furthermore, the actual cost to the economy resulting from the imple mentation of regulations is just start ing to occur in many instances. For ex ample, General Motors began compil ing annual reports on its direct regula tory costs in 1974. The reports indi cate that, to date, GM has spent over $8 billion to comply and to prepare to comply with federal, state, and local government requirements. In 1979 alone, GM's direct regulatory expendi tures exceeded $1.9 billion (3). But the real issue is not necessarily just one of cost, nor is it, as was dis cussed in the previous article, the dif ficulties associated with the assess ment of regulatory benefit. Neither, for example, is it the impact of regula tory costs in contributing to inflation. The key regulatory question that will ultimately need to be addressed is the broader political question of agen cy accountability and who decides
what regulation the public wants, when, and to what degree. Most im portantly, the public must have a greater say in what trade-offs should be made. In a recent statement on the floor of the U.S. Senate, Senator Ribicoff (D-Conn.), defending against a proposal calling for an assessment of regulations for their impact on infla tion, said: [What if] an energy regulatory agency such as DOE or FERC may be required by law to issue new reg ulations which result in higher en ergy costs and significant inflation. Is the agency not to do this? Or is it supposed to do so only if it reduces the price of energy in another area? Or is some third, totally unrelated agency, such as the CPSC, Con sumer Product Safety Commission, supposed to issue new rulings rolling back safety requirements on cribs, regardless of the requirements of the statutes or the carefully adopted policies of the agency? What logic or principle should lead the CPSC to lower its safety standards so DOE may issue regulations increasing the cost of energy? (4) I believe that Senator Ribicoff, in his final question, has unintentionally, but precisely, stated the problem! At present there is no such logic or prin ciple, but perhaps there should be. Without it, what corresponding logic or principle guides policymakers to as sume that the American public will continue to be willing to be denied the opportunity to decide between choices made by government agencies (in the absence of any cohesive policy consid erations whatsoever) as to the accu mulating impact of regulations. Before one can focus on the broader issues and appreciate the substantial effort that still lies ahead if meaning ful reform is to be achieved, present efforts to improve the regulatory pro cess need to be understood. Administrative Efforts. Before
ANALYTICAL CHEMISTRY, VOL. 52, NO. 9, AUGUST 1980 · 1061 A
the 1976 elections, President Carter declared that the reform of the federal regulatory agencies would be one of the highest priorities of a Carter administration (5, 6). Beginning in 1977, Carter instituted a number of executive actions intended to reduce paperwork, reorganize some regulatory agencies and departments, and provide for an increased focus on regulatory policies within the Office of Management and Budget (OMB). In March of 1979, President Carter announced his comprehensive program to reform the regulatory process. The Administration's programs have included both executive actions and legislative proposals. IRLG. Perhaps the first step of particular interest to the scientific community was the formation of the InterAgency Regulatory Liaison Group (IRLG) in October of 1977. This group, comprised of the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Consumer Product Safety Commission (CPSC), and the Food and Drug Administration (FDA), and later to be joined by the Food Safety and Quality Service (FSQS) of the Department of Agriculture, was formed to better coordinate interagency activities across a broad range of issues. The objectives of the IRLG included the sharing of information, avoidance of duplicative regulatory actions, and the development of interagency position papers to contribute to more consistency across agencies in the development of their respective regulatory policies. Of particular interest was the formation of interagency work groups to address such issues as cancer risk assessment; testing guidelines and standards; and laboratories and analytical methods. It is difficult to say just how well the IRLG has worked. Certainly the concept of increased coordination among agencies on basic scientific issues is commendable. On the other hand, it is difficult to identify precisely where the work products of IRLG have led to more consistent regulatory policies. In fairness the work products of the IRLG may not have had adequate time to have policy impact on the regulatory actions of its member agencies. Looking ahead, the IRLG recently published their work plans for 1980/ 81. They included 11 items of major importance, many of which analytical chemists may find of particular interest (7). A concern has been that, as government becomes more coordinated, it is also becoming more closed. The communication channels between IRLG work groups and outside scientists, for example, have not been conducive to good scientific dialogue. Furthermore,
there is a concern that where opportunities for scientific input have occurred, they came very late in the IRLG process (8). One does need to be sensitive to the political, administrative, and other difficulties inherent in any attempt by staff to coordinate actions among various regulatory agencies. But in the interest of helping to ensure both the quality and breadth of acceptance to be awarded IRLG's work efforts, scientists should continue to encourage development of mechanisms that allow dialogue and early input by any outside parties capable of and interested in contributing. RARG. In a major step intended to provide greater focus on the impact of federal regulations, the President established the Regulatory Analysis Review Group (RARG) in January, 1978. It is the purpose of RARG to review between 15 to 20 individual major rules each year and to ensure that the least burdensome of the possible regulatory alternatives are selected for final rule making. The Regulatory Analysis Review Group is chaired by the Council of Economic Advisers (CEA) and has as members the principal economic and regulatory agencies of the executive branch, including the Council on Wage and Price Stability (CWPS) and OMB. RARG has demonstrated its ability to provide substantive input during a number of rule-making proceedings (9-72). If RARG has a liability, it results from the absence of any general statutory obligation on the part of the regulatory agencies to conduct regulatory analyses for review by RARG. Correspondingly, there is no authoritative overview by RARG should an agency conclude that a rule having potential major impact does not warrant the conducting of an analysis. Were there to be statutory authority for the conducting of a regulatory analysis, combined with effective follow-up by the Administration on RARG's recommendations, the RARG concept of an independent review of agency actions could be one of the most important contributions of the Carter Administration in the area of administrative reform. Provisions allowing for such authority and follow-up are included in a number of the regulatory reform proposals pending before Congress at this time. These proposals, particularly if they allow for executive oversight of an agency's determination of whether or not a rule is a major rule, should help ensure that rules likely to have a significant impact will be analyzed for their impact and effectiveness prior to promulgation. Executive Order 12044. In March 1978, the President issued Executive Order 12044 providing for the con-
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ducting of regulatory analyses for major rules, a plan for evaluating a regulation following its issuance or promulgation, and a periodic review of regulations to determine if they are still needed (12). The primary objective of this order is to improve the management process by which agencies develop regulations. Of particular importance within the order are the requirements that agencies develop and consider alternatives in the development of a rule, and that agencies select the "least burdensome acceptable alternative." The principles included within Executive Order 12044 are reflected in whole or in part in all of the leading regulatory reform initiatives that Congress is considering this year. Actually, the requirement that agencies perform analyses before issuing final rules is not new. For example, Executive Orders 11821 and 11949, issued by President Ford in 1974 and 1976, respectively, required agencies to prepare economic impact statements for major regulatory proposals (13). What is new is the recognition, both within Congress as well as in the executive branch, of the priority need to better manage and oversee the regulatory process. There is increasing recognition of the need for some process for establishing regulatory priorities and for ensuring that agency actions are consistent with an entire range of national needs and interests. These latter two issues are not addressed by the procedural reforms being considered by the Congress this year. Regulatory Council. In October 1978 the Regulatory Council was established to coordinate planned regulatory activity and to handle associated administrative details, such as the issuing of a periodic calendar of planned major regulations. The council is composed of all the executive departments, agencies having major regulatory responsibilities, and most of the independent agencies. Douglas Costle, Administrator of EPA, serves as chairman of the Regulatory Council; the council has its own director and a small staff. I believe that the council's actions to date, while perhaps not remarkable, have been helpful and constructive. The council recently completed two studies, the first a review of the impact of regulatory reform on agencies (14) and the second, a perceptive, sensitive, and compelling report on how federal regulation is viewed by the citizens of a small, midwestern city, Janesville, Wis. (15). The latter report concludes: • People in business, labor and city government often see little connection or relationship between the ac-
tivities regulation has imposed on them and the social goals regulation is supposed to achieve. • Lawyers, accountants and regu lators are judged to be the primary beneficiaries of government regula tion. • There is a sense that regulation has saddled smaller communities with the burden of responding to problems that are occurring else where. I believe a s t a t e m e n t included in t h e r e p o r t by Assistant Secretary of Agriculture, Carol F o r e m a n , under scores c o m m e n t s offered earlier in this analysis on t h e need to be sensitive to t h e public's perception of federal reg ulatory actions. T h e implications con tained in F o r e m a n ' s c o m m e n t s should have m e a n i n g to b o t h those responsi ble for t h e regulatory process, as well as those interested in achieving mean ingful regulatory reform. Secretary F o r e m a n said: Every so often someone writes a paper or makes a speech that changes the tone of a debate. "Reg ulation: the View From Janesville, Wisconsin," is that kind of paper. Even though there are factual errors and methodological flaws in the re port, it nonetheless elevates the de
bate surrounding regulation. It does this by concentrating on some of the important political questions that lie at the heart of administering a "government of laws." References (1) Weidenbaum, Murray. "The Continu ing Need for Regulatory Reform," Testi mony before the House of Representa tives' Committee on Interstate and For eign Commerce, Washington, DC, (Oct. 24, 1979). (2) Miller, James III and Jandle, Bruce, "Benefit-Cost Analysis of Social Regula tion: Case Studies from the Council on Wage and Price Stability," American Enterprise Institute for Public Policy Research, Washington, DC, 1979. (IS) General Motors, "1980 General Motors Public Interest Report." (4) Ribicoff, Senator Abe. Congressional Record, Washington, DC, pp S 4849-50, (May 7, 1980). (δ) "Carter Bringing Fundamental Changes in Regulation," The Washing ton Star, (June 24, 1979). (6) "The Politics of Regulation—Under standing the Regulatory Complex, Per spective on National Issues," The Na tional Association of Manufacturers, (March, 1980). (7) Inter-Agency Liaison Group, "Report on IRLG: Recent Accomplishments and 1980/81 Plans, Part III," Federal Regis ter, pp 6276-282, (Jan. 25, 1980). (8) Deisler, Paul F., Jr., "Inter-Agency De cision-Making: Opening Communica tions between IRLG and Industry," Paper presented at the Regulatory Re
form Conference, Federal Bar Associa tion, Washington, DC, (May 8, 1980). (9) Bosworth, Barry P., "Proposed Stan dard for Occupational Exposure for Acrylonitrile," Report Submitted by the Council on Wage and Price Stability on Behalf of the Regulatory Analysis Re view Group, (May 19, 1978). (10) Bosworth, Barry P, "Occupational Safety and Health Administration's Pro posal for the Identification, Classifica tion and Regulation of Toxic Substances Posing a Potential Occupational Carci nogenic Risk," Report submitted by the Council on Wage and Price Stability on Behalf of the Regulatory Analvsis Re view Group, (Oct. 24, 1978). (11) Russell, R. Robert, "U.S. Environ mental Protection Agency's Proposed Policy and Procedures for Identifying, Assessing, and Regulating Airborne Sub stances Posing Risk of Cancer," Report Submitted by the Council on Wage and Price Stability on Behalf of the Regulatorv Analysis Review Group, (Feb. 21, 198"0). (12) Executive Order 12044: "Improving Government. Regulations," Federal Reg ister, (March 24, 1978). (13) Schultze, Charles L., Testimony be fore the Senate Governmental Affairs Committee, Washington, DC, (April 6, 1979). (14) United States Regulatory Council, "Regulatory Reform Highlights, 197880, Summary and Findings," Washing ton, DC, (April, 1980). (15) United States Regulatory Council, "Regulation: The View from Janesville, Wisconsin and a Regulator's Perspec tive," Washington, DC, (March, 1980).
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