Regulators don't listen to us

How much change from the Bush Administration?

James Gattuso, a senior research fellow at the Heritage Foundation, stood out as the only witness to offer hard evidence of what he said was an “unprecedented tide of red tape.” His evidence took the form of an analysis of major rules issued in fiscal year 2009 — rules with a cumulative economic impact, he said, of $26.5 billion, which is the highest figure in the thirty years that such records have been kept by the nation’s regulators.

Why, then, had the testimony of his fellow-witnesses leaned so heavily on proposals that the administration had already decided to modify, delay, or shelve? Gattuso told Remapping Debate that it was only natural for businesses to air grievances over pending issues rather than settled ones: “The lobbying community tends to focus on the here and now,” he said.

Jerry Ellig, a senior research fellow at George Mason University’s Mercatus Center (which describes itself as “the world’s premier university source for market-oriented ideas”) had come to testify about the quality of the cost-benefit analysis that regulatory agencies are legally required to conduct. The quality was poor, he said, because the agencies did not take that responsibility very seriously. Ellig added, however, that this was no more true of Obama regulators than Bush regulators. “When we compare 2008 and 2009, there isn’t a whole lot of difference,” Ellig said.

Ellig added that he was not especially sympathetic to the “not listening” complaint. The same lack of sympathy was expressed, more emphatically, by Sidney Shapiro, the lone witness called by the committee’s Democratic minority. Shapiro, a regulation authority and law professor at Wake Forest University, argued that businesses were upset not over lack of access or input — not because an agency “doesn’t hear them, but because it sometimes disagrees with them.”

On one level, he added, their distress made sense, because major disagreements between regulators and businesses had been comparatively rare during the Bush years, when businesses and lobbyists had “open access and friends galore.” “Against that baseline, I suppose it might be true that they’ve been getting less attention,” Shapiro said. By any other standard, though, business influence and access remain strong, he said.

Ample opportunities for businesses to make their points

Under Democratic and Republican administrations alike, the rulemaking process abounds with “opportunities for businesses to make their points,” Shapiro said. It happens through the formal notice-and-comment process, through public hearings, and through informal contacts at every stage; it happens at the agency level, and again, quite often, when the White House Office of Information and Regulatory Affairs gets involved in a final review process.

Health, safety, and environmental advocates were intensely critical of OIRA in the Bush years. Such criticism has let up only modestly since the appointment of Cass Sunstein, a Harvard law professor and Obama confidant, to the post sometimes known as “regulation czar.” Sunstein took considerable flak from environmentalists early last year, for example, when his office directed the EPA to reconsider a proposed rule requiring the safe disposal of coal ash, the sometimes toxic residue left by the burning of coal in electricity generation. Utilities generally store coal ash behind earthenware containment dams like one that broke three years ago, 40 miles west of Knoxville, Tennessee, inundating a wide swath of countryside with toxic sludge containing elevated levels of lead and thallium, which can lead to birth defects as well as neurological and reproductive problems.

Environmentalists argued that it was long past time for the EPA to address the coal-ash problem. Sunstein angered them by faulting the agency for conducting a cost-benefit analysis that had not taken into account, as the industry had urged, the “stigma effect” of a hazardous-waste designation on the market for wallboard and other products made with recycled coal ash. The agency was then instructed to come up with two different plans, one treating coal ash as hazardous waste, the other as household waste.

Critics pointed out that, according to OIRA’s own records, it had reached that judgment after meeting with 29 opponents of the EPA’s proposal (representatives of refuse companies, power plants, and coal-mining interests), and only 13 supporters, according to a tally put together by the Center for Progressive Reform.

Such statistics are fairly typical, according to observers on both sides of these controversies. Businesses provide most of the input at the OIRA level, and at the agency level, too. A soon-to-be-published study of the deliberations behind EPA’s hazardous air-pollution rules suggests that the agency’s business contacts generally outnumber its public-interest group contacts by at least 20 to 1. “It’s very lopsided,” one of the study’s co-authors, Wendy Wagner, a University of Texas law professor, told Remapping Debate.

But it would be rash, according to Wagner and others, to conclude that regulators are letting businesses call all the shots. In some cases, a steep imbalance could mean that public-interest groups are not trying as hard. In other cases, agencies could be making an extra effort to insulate themselves against industry litigation. “An agency like OSHA has to respond to every objection,” Wake Forest’s Shapiro said.

Why do businesses complain so much, despite all the evidence of extensive involvement and influence? Some of it may have to do with the Bush-Obama contrast, as Doniger and Shapiro suggested. But Celeste Monforton offered another reason. Businesses rely on lobbyists and trade associations to represent their interests in Washington, she said. The lobbyists and trade associations, in turn, have an economic motivation to overstate the perils that face them. “They need their members, and they need to justify their existence,” Monforton said. “If there are no terrible things going on, what are they there for?”

Photo credit: Brian Stansberry, 2008. CC BY 3.0.