Let the Buyers Beware

By WALTER ISAACSON

Consumer advocates retrench for hard times

Like bulwarks along an abandoned beach, federal regulations designed to protect the consumer are crumbling against the new tide of free-market economics championed by Ronald Reagan. Most businessmen see the trend as a key to reviving the economy. But consumer activists see it as a catastrophe and are busily seeking ways to slow it. "Consumers are being ignored," says Ralph Nader, patriarch of the movement. 'This Administration is out to destroy the rule of law as it applies to corporations."

At the heart of the dispute is a gulf in philosophy as big as a couple of decades' worth of Federal Registers. The Reagan Administration, committed to promoting economic recovery by, among other things, curtailing Government intervention, has brought a cost-vs.-benefit analysis to consumer safeguards. Says James Miller, director of the President's Task Force on Regulatory Relief: "The question is how to achieve legitimate goals at the lowest possible cost. Regulations cost a lot, and these costs are passed on to the consumer." Consumer activists, however, feel that the Administration, in its letting-go zeal, is jettisoning important regulations that are the only way to protect the buyer in the marketplace, the worker on the job and the citizen at home. Says Dr. Sidney Wolfe, executive director of the consumer lobbying group Public Citizen: "They want to take us back to the 19th century and let business regulate itself."

Both sides agree that what is crimping the consumer movement most is rising worries about broader economic problems. Says President Reagan's consumer adviser Virginia Knauer: "Inflation is the No. 1 consumer concern. It is what the election was all about." Agrees Stephen Brobeck, executive director of the Consumer Federation of America: "We underestimated people's concern with their economic condition. The main issue for most people now is one of economic survival."

The President's task force on Government regulation last month chose 30 regulations, many of which affect the consumer, for review and possible elimination. Among them: strict standards that manufacturers must follow in testing the safety of pesticides; rules setting standards for mobile homes; and regulations controlling the marketing of meat and poultry. Says Vice President George Bush: "There is nothing in our approach destined to diminish the quality of life. We're trying to find a balance that has not been found in previous rules." In so doing, the Administration has changed the entire concept of the Federal Government as guarantor of four basic consumer rights --to be informed, to be protected from dangerous products, to choose goods and services freely, and to be heard--spelled out 20 years ago by President John Kennedy. Among the retreats from these principles this year:

Buyers' Information. Consumerists charge that the Administration is hypocritical in its claim to support a free-market economy because it has moved to restrict the flow of information needed for a truly free marketplace. The White House has canceled regulations that would have required industries to post a list of chemicals their workers are exposed to on the job, made drug firms spell out the possible risks of each medicine they sell, and now plans to cancel a regulation that would compel hotdog makers to note if their products contain ground bone. The Car Book, a popular 68-page pamphlet that lists the safety features and maintenance costs of 81 U.S. and foreign automobiles, is not being reprinted even though it is one of the most successful publications ever offered by the Government (1.5 million copies distributed in one year). The book had been compiled each year by the National Highway Traffic Safety Administration, a whipping boy for conservatives because of its efforts to promote airbags or other passive safety restraints in cars; automobile companies have also objected to the comparative ratings of cars.

Safety Standards. The first victories won by Nader in the 1960s involved the setting of federal automobile safety standards, some of which are now being rolled back. The Administration is reducing the collision speed at which a bumper must protect a car from 5 m.p.h. to 2.5 m.p.h. --a move consumer activists say will raise insurance rates and accident costs. Despite a request by the Administration to delay its decision, the Supreme Court ruled last June that cost-benefit analyses cannot be required when setting federal health standards for the workplace. Nevertheless, the Occupational Safety and Health Administration (OSHA) has had the number of its inspectors cut by 11%, and the Administration is determined to relax many of the OSHA regulations that businessmen feel are unduly costly.

Product Evaluation. The Administration has proposed eliminating, or at least folding into the pro-business Commerce Department, the Consumer Product Safety Commission, which keeps watch over 15,000 products. Congress saved the agency from dissolution in the Reagan budget, but reduced its allocation by nearly 30% and decreed that new standards be issued only if the agency finds that voluntary industry codes or warning labels are wanting. Even then, Congress reserved for itself the power to veto any proposed regulation. The crippled commission's new head, Nancy Steorts, has called for an improved Government-business relationship. Says she: "Cooperation with industry will replace the adversary relationship of the past." Karen Burstein, chairman of the New York State consumer protection board, says that the government is retreating from taking action on some potentially harmful products like urea formaldehyde, a home insulation component that is feared to be a possible carcinogen. Says she: "Formerly the CPSC would have banned it or mandated warning labels."

Regulation of Trade Practices. The Federal Trade Commission now makes cost-benefit analyses before issuing new rules. The Administration has also cut back on the funding and powers of the FTC's antitrust division, which it had originally hoped to eliminate. As a result, the FTC has been less aggressive in opposing corporate mergers, a reversal that may be helping to fuel the recent rash of takeover bids. Last week an FTC official ruled that antitrust actions against the three largest cereal companies be dropped. The commission is also backing away from plans to regulate nonprescription drugs, require used-car dealers to issue warranties, and restrict advertising for sugared cereals and other products aimed at children.

The new attitude may travel overseas. The Administration is considering relaxing regulations that require American exporters of products banned from use in the U.S. to provide detailed information to the importing country about the potential safety hazards.

Deprived of a friend in the Administration, consumer advocates say they will turn to the courts to protect their gains. In the past, it was usually industry that went to court to challenge government regulations. Now consumer groups will be the ones suing both the government and corporations to enforce compliance with the laws that can be protected from repeal. The White House is trying to make such legal recourse more difficult. With the backing of congressional conservatives, the Administration eliminated funding for the Legal Services Corporation from the 1982 budget bill. One reason: to stop class-action suits brought on behalf of consumers. A fight is now under way in Congress to restore some of the funding.

In fact, even business groups are concerned that the slackening of federal consumer protections, and the end of many product safety standards, will mean an increase in individual lawsuits, particularly in the area of product liability. Says Nashville Attorney James Neal, who represented the Ford Motor Co. in damage suits resulting from the design of the firm's Pinto: " I don't think there is anything unfair in the concept of a national agency setting national standards for a product. I would hate to see the policing of industries done through tort [personal injury] suits, because you get such mixed signals through litigation."

Consumer activists are pursuing another avenue of recourse besides the courts. Adam Levin, director of the New Jersey commission on consumer affairs, says that "the limelight has shifted from the Federal Government to the states." His state, which has 78 local consumer agencies, is among the most consumer-oriented, and the legislature has recently passed a bill limiting excessive medical fees. In New York, state funds were used to replace those cut from the federal Energy Department budget that pay for consumer advocates at utility hearings. The Wisconsin legislature set up a private citizen's utility board to protect citizens' interests. The group is authorized to include membership appeals with power companies' bills. And Massachusetts has banned urea formaldehyde insulation without waiting for federal agencies to act.

But state-by-state action has its limits in policing product safety. Says Texas Consumer Protection Director David Bragg: "The expert time, the tests and the lab procedures required are far too expensive for most states to take on. The Firestone 500 case [in which 7.5 million radial tires were recalled for defects] is an example of an action too big for state government to handle." Roberta Lynch, who helped lead an unsuccessful fight in the Illinois legislature for a workplace chemical warning regulation similar to the national rule canceled by OSHA, agrees that states can play only a selective role: "One reason OSHA was created was that states had the responsibility before and did not do a very good job."

In addition, the states face the legal problem of "pre-emption," which limits their right to pass statutes in areas that are already addressed by national laws. For example, courts have held that a strict California consumer protection bill was pre-empted by a similar federal law, even though the federal version was weaker.

Nor are most states inclined to buck the antiregulation trend. In Texas, for example, consumerists could hardly get committee hearings this year for their bills, and fought a rear-guard action to prevent weakening of existing laws. The budget signed into law this summer by Massachusetts Governor Edward King eliminates that state's consumer council.

For consumer activists there is some hope for a growing backlash among concerned citizens. Says Jim Hightower, president of the Texas Consumer Association: "As the establishment stiff-arms us, they build issues for us to run on. We have eager ears for the first time in years." The Illinois Public Action Council, a coalition of 95 citizens' groups, has formed a political committee to elect sympathetic officeholders. Minnesota Citizens Action, a statewide consumer organization, responded to a cut in its federal funding by setting out to knock on every door in St. Paul, and many doors elsewhere, in a successful membership drive.

Like the environmentalists, consumerists hope to parlay the backlash against Reagan's policies into increased contributions. Next week, for example, loyalists will gather in Washington to celebrate the tenth anniversary of Nader's Public Interest Research Groups and Public Citizen. These days, Nader has no qualms about trying to attract "fat cat" contributors; the dinner will cost $1,000 a plate.

The money will go for a new building from which the groups can fight a holding action, until the day consumer protection once again becomes a national priority.

Nader, mellower and a bit grayer than in his days as a corporate Goliath slayer, is optimistic that the tide will again turn.

Says he: "The Reagan Administration's approach will boomerang. The more they succeed, the more they assure their ultimate failure." --By Walter Isaacson. Reported by Hays Gorey/Washington, with other U.S. bureaus

With reporting by Hays Gorey/Washington

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