Reining In the Regulators

By Christopher Byron

A fast Administration start to cutting back on Washington's red tape

Of all Ronald Reagan's campaign promises, none seemed more hopelessly dreamy than his pledge to cut back on federal regulation. Presidents have come and gone, but Washington's write-a-rule bureaucrats and their regulations just seemed to keep on multiplying from one Administration to the next.

Yet six months into his term, Reagan is having surprising success at reining in the regulators. The President has gone further, faster to beat back the bureaucrats and weed out their regulations than even the Administration's most ardent deregulators had hoped. Declares James C. Miller III, executive director of the Presidential Task Force on Regulatory Relief: "I came aboard saying that the best we can do is to bring the regulatory pendulum to a standstill. Now I think that by the end of the year we can actually achieve a real reduction in regulation."

For the first time since the spawning of modern U.S. Government-business relations during the Depression of the 1930s, Washington's bureaucrats are in retreat. In agency after agency, budgets are being cut, sometimes by 20%, 30%, even by half. Lawyers who six months ago could count on cushy five-figure incomes arguing clients' cases before obstinate boards and commissions are now seeing demand for their services shrink by the week. Reports Forrest Rettgers, a longtime business lobbyist for the National Association of Manufacturers: "I've been in Washington since 1956, and I've never seen anything like this. The agencies are deregulating faster than anyone can imagine."

Deregulation, of course, began to take root before the new Administration took power. Under Democrat Jimmy Carter, large strides were made toward spurring competition in banking, airlines and trucking. In all such cases, however, the thrust of reform was to promote competition in the marketplace by removing barriers to entry, thus making it easier, for example, for a company to start a new airline or trucking firm. The Reagan Administration seeks to go beyond supporting competition, to pruning what it regards as excessive and economically onerous "social" regulation that governs the way businesses operate.

One after another, activist chairmen from the Carter years are being replaced by pro-business deregulators screened by the Reaganauts for the purity of their deregulation beliefs. J. Lynn Helms, previously chairman of Piper Aircraft, is the new director of the Federal Aviation Administration; former Savings and Loan Lobbyist Richard T. Pratt heads the Federal Home Loan Bank Board; Broadcast Lawyer Mark S. Fowler is now the chairman of the Federal Communications Commission. But the most sweeping changes are occurring in the three agencies that have most rankled American businessmen in recent years. These are:

The Consumer Product Safety Commission. The eight-year-old body, smallest of the Government's health and safety agencies, with a staff of 900, keeps watch over some 15,000 consumer products. In the past four years, CPSC has banned the use of Tris, a cancer-causing flame retardant used in children's clothing, got companies to recall asbestos-insulated hair dryers and stopped the use of benzene in paint removers. The commission must be renewed by act of Congress before October, and the Administration is lobbying to either have it killed outright or buried in the generally pro-business Commerce Department. Meanwhile, the Commission's budget has been cut by nearly 30%, and eight of 13 regional offices are being closed down.

The Occupational Safety and Health Administration. This ten-year-old agency has been the embodiment of runaway regulation. Over the years, OSHA has issued thousands of health-and safety-related rules, right down to specifying the design of stepladders and the location of fire extinguishers in factories. Under Reagan Appointee Thorne G. Auchter, 36, a Florida construction executive, OSHA is changing direction. Auchter promises to stress cost-benefit analysis as the means of achieving the Government's goal at the lowest cost to companies. Says he: "We don't want to end all regulation, but we want to end excessive, unnecessary, unfounded regulation."

The Federal Trade Commission. This 65-year-old agency has in recent years single-mindedly pushed costly and complex antitrust actions and headline-grabbing proposals. Example: the 1978 recommendation to ban television commercials for sugared products such as candy and presweetened breakfast cereals that are aimed at audiences composed largely of small children. No new chairman has yet been formally appointed, but James Miller is a likely choice. Even before the new chairman arrives, policy is shifting. Last week the commission announced that it would not oppose Standard Oil of Ohio's takeover of Kennecott Corp., the nation's largest copper producer. A year ago, the FTC would probably have fought that acquisition.

The Administration's efforts to grab control of the bureaucracy began almost from the moment Reagan took office. A week after his Inauguraton, the President issued an Executive Order freezing, for 60 days, all the so-called midnight regulations that had been passed in the final days of the Carter Administration. Two weeks later, another Executive Order required that the 150 major Executive Branch agencies of Government undertake cost-benefit analyses before proposing enactment of significant new rules.

A the same time, the White House gave the Office of Management and Budget the authority to make sure that such rules and regulations are really cost effective. If not, OMB can reject them. In cases of dispute, a regulatory task force headed by Vice President George Bush will rule on the issue.

Many of the regulations halted by the 60-day freeze are still being blocked pending further study by the Administration. The Department of Education's rules calling for custom-tailored educational programs for handicapped students are being reviewed. The Department of Health and Human Services regulations that impede the speedy testing of new consumer drugs are also under study. At the Interior Department, rules that drive up the cost of strip-mining coal are being rethought. The Administration is also looking into possible changes in the 1931 Davis-Bacon Act, which increases the cost of Government construction projects by forcing businesses to pay the prevailing union wage even when less costly workers are available.

Though the Administration, for now at least, has the public solidly behind it, too much deregulation zeal could backfire. Many of the Government rules were written because of serious problems of polluted rivers, foul air and dangerous workplaces. The public opposed excessive and petty rule making, but it does not now want consumer products that maim or injure buyers.

Moreover, many federal regulations are essential to orderly commerce throughout the country. In March the Administration proposed to stop enforcement of nationwide Environmental Protection Agency noise standards, and congressional Democrats suggested that the rules might as well be repealed. But then business immediately began to protest. Reason: without national noise standards, interstate trucking and railroad companies could wind up being subjected to an impossible array of conflicting local standards from one community to the next.

Strong opposition to the Reagan program, however, now appears unlikely.

The once mighty consumer lobby, which generally enjoyed favor during the Carter years, is currently in disarray; it has few friends and almost no influence within the Administration. The consumer groups have, so far, been concentrating their criticism on the cozy relations between the new administrators and the industries they now watch over. Says David Cohen, who recently resigned as president of Common Cause: "This is tantamount to turning the keys over to industry." Reagan's deregulation challenge will now be to cut back on inefficient Government rules without at the same time making federal agencies mere pawns of American corporations.

-- By Christopher Byron.

Reported by Gisela Bolte and Douglas Brew/Washington

With reporting by Gisela Bolte, Douglas Brew/Washington

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