June 22, 2011

Four Anti-Regulatory Proposals to Get Senate Hearing Thursday

Fact: It often takes agencies up to 10 years (in some cases even longer) to develop and issue critical regulations needed to protect people and the environment. These delays may save corporations money, but they impose real and preventable costs in terms of lives lost, money wasted, and ecosystems destroyed.

The reasons for this delay are not hard to divine. Before it can issue a rule, agencies must run a highly complex gauntlet of analyses and reviews that have piled up thanks to several decades’ worth of misguided regulatory legislation, executive orders, and OMB memos, letters, and circulars. The result is a mishmash of unnecessary or duplicative analyses and reviews that do little to improve the quality of agency decision-making.

For their part, agencies are hardly in the position to play these games. Over the last few decades, agencies have become overstretched as their budgets and staff have been held constant or even shrank, while the number of imported toys, new chemicals, and job hazards has increased. The result has been a series of catastrophic regulatory failures, such as the BP oil spill, salmonella outbreaks, and the Upper Big Branch Mine Disaster.

Under these circumstances, the image of agencies running amok and overregulating that is often invoked by industry and sympathetic members of Congress is absurd.

Nevertheless, this is the premise behind four proposals that will get an airing before  the Senate Homeland Security and Governmental Affairs Committee, which will conduct a hearing tomorrow to consider four plans would weaken public health and safety protections. The proposals from Senators Snowe, Roberts, Vitter, and Warner (all of whom will testify) all share one thing in common: they would delay critical safeguards even more without improving the benefits of current or future regulations.

A brief overview of these proposals:

  • Snowe’s bill would amend the Regulatory Flexibility Act to make its required analyses even more onerous. For example, it would require agencies to engage in a never-ending assessment of all the “indirect effects” of their regulation, and, as noted in an earlier post, it would reduce agency staffing budgets by 1 percent every time they failed to adequately conduct a “lookback” review of one of their existing regulations.
  • Roberts’ bill would codify many of the provisions of President Obama’s new Executive Order on regulation, imposing a cost-benefit analysis supermandate on all agency regulations. Along the way, however, the Roberts version would effectively gut critical statutes like the Clean Air Act and the Occupational Safety and Health Act.  It would also make agencies’ cost-benefit analyses judicially reviewable, enabling industry to tie up agency rulemaking in litigation even more while wasting limited court resources.
  • Vitter’s bill would exempt small businesses from fines for first-time paper work violations—including, in some cases, violations that would pose a danger to public health or safety—even though the paperwork requirements have been thoroughly vetted by OIRA pursuant to the Paperwork Reduction Act, and even though agencies already provide compliance assistance to small businesses to help avoid such violations in the first place. The bill would prevent agencies from exercising discretion in how to respond to first-time paperwork violations by small businesses, and ignores the fact that agencies usually exercise this discretion to exempt small businesses from fines for such violations already.  Many of the businesses that would be shielded from their reasonable responsibilities under this law are far from “small.”
  • Warner’s bill hasn't been released yet. Last December, Warner laid out a disastrous regulatory “pay-go” proposal, which would require agencies to eliminate existing regulations before they could add new ones (completely ignoring the benefits of existing regulations).  It will be interesting to see what exactly he presents on Thursday.

Sponsors of these proposals, as well as other anti-regulatory legislation, defend them on the unfounded grounds that they will help spur job growth and economic growth, recycling the old yarn that the weak economy is the product of overregulation. In reality, the current downturn is largely a story of under-regulation. It was under-regulation of Wall Street that caused the mortgage crisis that dragged our economy into recession. More recently, it was under-regulation of offshore oil drilling that has completely disrupted the regional economy of the Gulf Coast states following the BP oil spill.

More broadly, regulatory costs usually do not translate into job and other economic losses, despite what regulatory opponents might claim. This result makes sense, since the money spent on regulation spurs economic activity in the form of goods purchased and services rendered. This is why recent studies indicate that regulation does not decrease employment and that it can lead to increases in employment in some cases.

Now is not the time to build more delays into the regulatory process. Rather, both Houses of Congress should consider ways to free up agencies from existing analytical burdens so that they can carry out their mission of protecting people and the environment more effectively and swiftly.

Sidney Shapiro, CPR Member Scholar; Fletcher Chair in Admin Law, Wake Forest University School of Law. Bio.

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