Who Needs Regulation, Anyway?

The Competitive Enterprise Institute is upset with the way administrative law works. On Thursday they released their annual report on the costs of regulations. I hesitate to dignify it with pixels, but here goes.

CEI has a problem with agency rulemaking altogether:

Congress should answer for the compliance costs (and benefits) of federal regulations. Requiring expedited votes on economically significant or controversial agency rules before they become binding on the population would reestablish congressional accountability and would help fulfill the principle of “no regulation without representation.”

First, CEI owes an apology to our revolutionary forebears for bending the notion of “no taxation without representation” into an anti-regulatory chant. And while I’m diverting, exactly who is without representation in this construction? More significantly, long before agencies adopt regulations – and in many cases, a very long time before they adopt them – elected officials have already passed health and safety laws with instructions to the agencies on how rules are to be developed. In theory, the policymaking and political part of the process is supposed to end right there. The agencies are supposed to implement the law, applying whatever technical expertise is required in a way that’s consistent with Congress’s direction. In practice, the politicking goes on long after Congress does its work, precisely because CEI’s industry friends line up outside the door of regulatory agencies and the White House “regulatory czar,” even before the ink is dry from the Presidential bill-signing ceremony. In effect, industry gets multiple bites of the apple. First, they contribute millions of dollars to congressional campaigns, in hopes of producing Members of Congress who feel indebted to them. Then they pour vast sums of money into lobbying when Congress is preparing to legislate. And then, once a bill is signed into law, they go to work on the regulatory agencies, applying pressure, burying them in “data dumps” intended to slow down the process, and more. Eventually that process yields a proposed regulation. It’s at that point -- often years removed from passage of the original legislation because of industry efforts to delay and hobble the effort to regulate -- it’s at that point, CEI suggests, that we should give industry yet one more bite of the apple, asking for Congress to vote again on the regulation, no doubt amidst one final blizzard of lobbying and campaign contributions. Another important point is that CEI hangs much of its “analysis” on the idea that we should subject regulations to rigorous cost-benefit analysis (CBA). No doubt that seems like a good idea to CEI because CBA has proved so much more effective at slanting the playing field against protective regulations than it has at actually measuring the costs and benefits of regulations. But here’s the kicker, most of the nation’s protective statutes don’t call for CBA. Of the 31 major statutory provisions protecting health, safety, and the environment, only two require cost-benefit analysis. Six allow it. Then there are the other 23, which instruct the agencies to use some other method of regulatory impact anaylsis, usually a technology-based or effects-based standard (see our cost-benefit analysis chart). That hasn't stopped the White House and agencies from weakening rules through cost-benefit analysis, unfortunately, but that doesn't mean the laws aren't clear about what standard Congress intended. So if CEI is truly worried about following the will of our elected Congress, they've gotten themselves into a pickle. But let me move to the real world for a moment. CEI's anti-regulatory vision is not just some future hypothetical. In many areas, we’ve already tried CEI’s vision of allowing big business to pollute however much they want, and we know the consequences. We tried letting polluters use the Chesapeake Bay as a dumping ground, and sure enough they killed jobs in Maryland’s oyster and fishing industries. We tried letting paint manufacturers continue putting lead in paint even after we knew it was toxic, and ended up with thousands upon thousands of kids with significantly lowered IQs. I could go on. The point is, there’s good reason the public supports a role for the government in protecting us from those who would do us harm just to maximize profits. And there's no good reason to give industry one more chance to block badly needed regulations.