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Congress & Regulatory Reform: Achievements and Prospects

Christopher H. Foreman

The 1994 elections of the first Republican Congress since the early Eisenhower years guaranteed a dramatic change in the political environment for regulation. No longer would the crafty auto-industry defender John Dingell (D-MI) chair the House Committee on Energy and Commerce (since renamed the committee on commerce). No longer would Dingell rule the oversight staff empire that made him the most feared regulatory micromanager in congressional history. Nor would Dingell’s long-time adversary in clean air debates, environmental champion Henry Waxman (D-CA), hold the gavel at the Subcommittee on Health and the Environment. The election meant that these posts would pass to Republicans, two changes that, by themselves, augured a new day in regulatory politics.

Of course, the same thing would happen throughout Congress, assuring that federal regulators faced both a new set of overseers and a very different oversight message. Moreover, our Constitution allows Congress to pass any law it wants, provided that enough members want it and that not more than four Supreme Court justices object. On the other hand, a president, acting alone, can pass little more than his dinnertime mashed potatoes, and the 1994 elections clearly put President Clinton on the defensive politically. Thus some might have thought the situation conducive to far-reaching and fundamental statutory change in the pursuit of economic efficiency and scientific rationality.

But the legislative regulatory reform record of the past three years is decidedly mixed. Reform advocates have both won significant victories and encountered some predictable resistance. They have also made some avoidable mistakes. A look at where and how change has occurred thus far, and at where it has been stymied, should inform strategic thinking as the reform debate enters yet another congressional election, one overwhelmingly likely (if history is any guide) to leave Republicans in the driver s seat for at least two more years.

Political Parameters

Above all, it is important to keep in mind what the 1994 and 1996 elections did not change. They did not reduce in any way the basic political appeal (even sanctity) of the public health and safety or of the environment—all of which lie at the focus of our most consistently contentious national regulatory efforts. For many years opinion surveys have found a durable base of support for safe products, clean water, and the like. This will not change.

Citizens (and especially economic constituencies that may be adversely affected by regulation, such as coal miners) do predictably balk at possible job losses. They also chafe at personally intrusive or tangibly burdensome regulatory decisions and programs (and at costly deregulatory policies, such as allowing cable television rates to climb). Pollution-reducing restrictions on personal automobile use would simply go too far for most Americans. Expensive or invasive vehicle inspection and maintenance regimes can evoke outcry even among liberal Democrats. Recall that in the mid-1970s Congress quickly disconnected the National Highway Traffic Safety Administration’s automobile ignition interlock requirement (which prevented the start-up of a car until the seat belt had been buckled) and rebuffed a Food and Drug Administration proposal to ban saccharin as a possible human carcinogen. In both instances consumers were outraged and Congress responded. But none of this meant that citizens wanted to abolish either HTSA or FDA. They simply wanted “common sense” restored to regulation.

Nor did the 1994 and 1996 elections change the occupant of the White House, a Democratic president with his own set of incentives and cards to play in the game of regulatory politics. As things now stand, unless congressional Republicans pass regulatory bills that President Clinton finds tolerable, or approve controversial proposals by veto-proof margins, statutory reform of regulation simply cannot proceed. Moreover, as Republicans now know all too well, by publicly deriding their legislative initiatives as dangerous to Americans (and especially to their kids) President Clinton can quickly seize the high ground and leave his opponents gasping for political air.

Certain scenarios are simply implausible. Barring discovery of some new political alchemy, it is inconceivable for Clinton to endorse a revision of the Occupational Safety and Health Act (a statute that has stood virtually untouched since President Nixon signed it in 1970) if AFL-CIO president John Sweeney strongly opposes the bill. Clinton may be willing to antagonize organized labor on trade issues, but Al Gore can’t afford to go into the next presidential election campaign having broken his February 1996 promise to the AFL-CIO executive council to keep workplace protections intact. And no major FDA reform will get very far in the current White House if the FDA commissioner (especially one as widely respected as former commissioner David Kessler) complains that it places consumers at unreasonable risk or unduly ties FDA’s hands. Alternatively, funneling more resources to FDA to speed reviews of new drugs (as was done five years ago with the newly reauthorized Prescription Drug User Fee Act) is the kind of reform that both consumer-conscious liberals and enterprise-minded conservatives can embrace. Senators Orrin Hatch (R-UT) and Edward Kennedy (D-MA) jointly pushed for the legislation last time around.

Finally, as Pietro Nivola observes elsewhere in this issue, it is important to recognize a fundamental bipartisan appeal of policy making via regulation: it gives politicians something to sell to voters for which relatively few government (and therefore tax) dollars need be found. Direct regulatory burdens are typically borne by regulated firms, not taxpayers. As economists regularly observe, cumulative social costs can be significant (and may be questionable from the perspective of cost-benefit analysis), but they have the virtue of not turning up in the federal budget or directly increasing the deficit. Environmental programs (most notably clean air compliance and hazardous waste cleanup) result in billions of dollars in private-sector and transaction costs yearly. By comparison, the direct costs of EPA s clean air and hazardous waste programs pale into insignificance.

Curbing Costs, Crafting Procedures

Anxious to tame the federal government and make good on their Contract with America, congressional Republicans scored a lightening-quick victory for cost-conscious regulation with the 1995 Unfunded Mandates Reform Act. As far back as the 1970s New York City’s Democratic Mayor Ed Koch was regularly complaining about an onerous federal “mandate millstone” weighing on state and local governments. The new law required that estimates be made of the costs imposed on state, local, and tribal governments by major new federal initiatives, whether statutory (if greater than $50 million) or administrative (if exceeding $100 million). The law requires agencies to select “the least costly, most cost-effective, or least burdensome alternative” course for achieving their objectives.

A determined Congress signaled its desire for cost-conscious regulation through the Small Business Regulatory Enforcement Fairness Act and the regulatory accountability provision in the Omnibus Consolidated Appropriations Act of 1996. Of the two, only the former seems to have any real bite. It makes available new channels for small business to advocate its views before EPA and OSHA regulations are issued. It mandates congressional review of major regulations before they become effective, and it allows time for consideration of a joint resolution of disapproval (which requires a presidential signature). Of course, agencies are ever-sensitive to their political environments, and it will be a rare agency head who dares to risk a joint rebuke from both Congress and the president who appointed him or her. A safe bet is that this is most likely in the presumably rare instance when (as with FDA’s abortive saccharin ban 20 years ago) the agency concludes that the statutory instructions under which it operates – instructions crafted by a prior Congress – leave no choice but to offend current sentiments on the issue at hand.

As in earlier debates, a focus on generic regulatory review procedures has proved one politically feasible path to legislative consensus. Both congressional parties find legislative veto provisions (requiring the presentation of some general class of administrative actions to Congress before they take effect) appealing. Such provisions speak to a bipartisan concern with institutional power but do not single out or immediately threaten substantive regulatory programs (and their attentive constituencies). Old hands with long memories will recall a 94-0 Senate vote in March 1982 for similar legislation, which later died in the House.

The (Partial) Death of Delaney

But to get serious about legislative reform of regulation mostly requires getting a lot more specific. Particular substantive programs, and the statutes that authorize them, beckon. And it is here that both parties, at both ends of Pennsylvania Avenue, pulled off one of the more interesting, and instructive, legislative surprises in recent memory: the Food Quality Protection Act of 1996. This law abolished the long-derided, but long untouchable, Delaney clause in the Food, Drug, and Cosmetic Act as it applied to federal policy for agricultural pesticide residues in processed foods.

New York Congressman James Delaney inserted his famous clause into food and drug regulatory law some 40 years ago in response to rising public concern about cancer. The provision established a “zero tolerance, zero risk” framework for both food additives and pesticide residues: no detectable amount of either was permissible if it were found, through human or animal testing, to cause cancer. But over time, ever-more sensitive tests were able to identify substances at previously undetectable levels. As we went from measuring “parts per million” to “parts per trillion,” and some scientists began openly questioning the rationale for an obsessive focus on trace amounts of artificial chemicals in foods, the Delaney framework appeared increasingly less realistic.

But simply rescinding the Delaney clause was politically unthinkable. As a House staffer once pointedly said to me, no legislator wanted to see the New York Times story in which voters were told that their representative has just increased their likelihood of developing cancer.

In the summer of 1996, with little warning and after intense but quiet negotiations on Capitol Hill, the political logjam suddenly broke. The new law specifies safety as meaning “a reasonable certainty that no harm will result from aggregate exposure.” Observers cite several factors in the sudden turnaround: court decisions that threatened to force some pesticides off the market; Republican hunger for an environmental achievement; business desires for a consistent regulatory regime in which to operate; environmentalist (and EPA) interest in moving beyond a focus on cancer and processed foods; and simple exhaustion, and desire for a deal, among all parties concerned.

The central political secret of the new law is simply that it offers key benefits for business along with new elements that arguably strengthen consumer health protections. The new law embraces both raw and processed foods for the first time; rigidly restricts the circumstances under which social benefits may be considered when setting residue tolerance levels; and provides for expanded re-registration of existing pesticides. The industry complaint that a scientifically insupportable Delaney regime remains applicable to food additives and other substances will almost certainly have to be met with similar political creativity, allowing business and health advocates to emerge victorious.

Crisis Response: Dèjà Vu All Over Again

Changed health and safety regulatory statutes also continue to be especially likely in the same circumstances that have made them possible historically: the political need, and political opportunity, presented by a new or newly salient threat to the public health. Deregulators and regulatory reformers of all sorts have little choice but to respond to unforeseeable events on a case-by-case basis. From its beginnings in 1906 the history of FDA has largely been defined by a continuing series of crisis-inspired statutes. The deaths of some 100 people who had ingested a contaminated elixir propelled a major 1938 revision of the law, and Europe s thalidomide tragedy helped create a congressional climate favorable to passage of the 1962 drug amendments requiring, for the first time, that drugs be evaluated for efficacy as well as safety. Since then, defective intrauterine devices, painkillers, and infant formula have all given rise to new statutory authority for FDA, much as the crisis at Love Canal turned EPA into the custodian of a much-maligned Superfund hazardous waste cleanup program.

Today bacteria-tainted hamburger has revived calls for FDA and the Agriculture Department (responsible for meat and poultry safety) to have the authority to compel product recalls instead of pleading (in and out of court) for them. Food industry lobbies continue to resist giving FDA and USDA this power, believing it unnecessary. Advocates observe, by comparison, that NHTSA can order automobile recalls. But consider the differences in stakes, in political culture, and in consumer sensitivity. A handful of vertically integrated firms can far more easily respond to a recall order, and absorb its costs, than a small cannery or slaughterhouse, which may reasonably fear being put out of business. Farmers and cattlemen are also likely to harbor strong suspicions of Washington. And consumers, on average, are probably more nervous about any defect in the foods they eat than in the cars they drive. Lawmaking will have to take account of such factors to be successful. One beneficial effect of recent food safety scares, and of the resulting desperate search for solutions, has been FDA approval of an apparently reliable but long-neglected (some would say suppressed) technological option: the irradiation of foods to kill disease-causing microbes.

No Monkey Wrenching Allowed

If Republicans committed any single strategic blunder after their congressional takeover, it was allowing their opponents plausibly to accuse them of trying to kill the regulatory patient they said they wanted to save. The congressional leadership tried to embrace a “silver bullet” approach to reform, amending all regulatory statutes simultaneously in a single statute mandating generic procedural and analytic requirements. This would spare Republicans the need to fight a multi-front war of attrition on every separate statutory authorization. As noted above, they got some of what they wanted. But this strategy, and the tone of the debate that ensued, also allowed critics to portray what they were up to as insidious deregulation on-the-sly, what Jessica Mathews, writing in the Washington Post, later dismissed as a “sand-in-the-crankcase” approach to regulatory reform. A group of experts affiliated with the Brookings Institution, the American Enterprise Institute, and Resources for the Future recently recommended that Congress “rewrite key regulatory statutes” to encourage more flexible, cost-conscious regulation and a greater role for the states in managing “problems that can be better handled there” (see box). The debate should be thoughtful and honest. It will no doubt be contentious, and demagogic rhetoric on both sides is always a possibility. And to win, the Republican congressional majority must persuade instead of evade.

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