Stealth Deregulation: The Untold Story

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The Deregulation Playbook

Once these anti-regulatory ideologues and industry representatives were in place, they were free to begin to impede the regulatory process and to undermine regulations passed by Congress. The specific tactics varied, but included:

Stalling. Agency personnel routinely and systematically delayed in formulating and issuing regulations mandated by law. For example, even though the Bush administration promised to act quickly to devise urgently needed rules to protect the right whale from extinction, it took the maximum time allowed by law, then refused to issue the rule, in violation of the law, for an additional 453 days. 3

Cutting Their Own Budgets. Remarkably, Bush appointees routinely tried to cut the budgets of their own agencies – making it more difficult for them to do their job. The budget for mine safety inspections, for instance, went from $139 million in 2001 to $118 million in 2006.

Inactivity. Administrators simply ignored emerging problems. In the area of workplace safety, despite evidence of a number of threats to Americans on the job, the Bush Occupational Safety and Health Administration largely sat on its hands during its entire tenure – issuing only one significant new regulation in eight years. Also, for years, Bush environmental officials refused to admit that global warming was a serious issue that merited immediate action.

Reducing Enforcement. Regulations are only effective if they are enforced vigorously. Bush appointees routinely worked to weaken enforcement. For example, they cut the civil penalties that polluters had to pay by half – weakening the incentives to comply with environmental protection rules. Another example was the reduction of inspectors and inspections in areas like food safety and mine safety. In 2003, the FDA conducted over 11,000 inspections a year for food safety – a figure that fell to 6,000 by 2007.

“Relaxing” Rules. Bush officials would look for opportunities to create exceptions or loopholes to rules so that various businesses could escape regulation. For example, they relaxed nationwide permit rules so coal companies, developers, and others could fill in thousands of streams, swamps, and other wetlands, without public notice or comment.

Listening Only to Industry. Many Bush appointees met routinely with business lobbyists interested in deregulation, but met only rarely or never with representatives of public interest groups. For example, Dick Cheney and other officials on the Energy Task Force met dozens of times with business leaders from the oil, gas, coal, and nuclear industries. Only one meeting was held for environmental groups – it lasted just one hour and much of that was taken up with introductions of the participants.

Refusing to Fill Appointments. Bush often took an inordinate amount of time filling high-level management vacancies in agencies he didn’t like. This left these agencies adrift, often run by temporary appointments who tended to not be very aggressive in pursuing the mandate of these organizations.

Ignoring Expert Advice. When research produced results that the Bush administration did not like, administration officials often ignored it and refused to act on it. A particularly egregious example was the suppression of scientific research about the seriousness of global warming and the attempt to gag administration scientists who tried to speak out on this issue.

Embracing “Voluntary” Regulation. Abandoning aggressive approaches to regulatory enforcement – like the use of the courts to force compliance – the Bush administration favored “voluntary” compliance schemes which often had little effect. The SEC, for instance, relied heavily on voluntary regulation of financial institutions. After the financial meltdown in 2008, the Chairman of the SEC admitted that this approach was “fundamentally flawed from the beginning … because investment banks could opt in or out of supervision voluntarily."

The Secret Office of Deregulatory Affairs

Just in case some federal administrators forgot what administration they were in and became too enthusiastic about initiating regulatory protections, the Bush White House vigorously employed the oversight powers of the Office of Information and Regulatory Affairs. Created in the Reagan administration, this little-known 50-person unit is buried in the Office of Management and Budget. In conservative administrations, the job of the OIRA is to review every proposed regulation and see it if may be too costly, particularly to business. If so, it is sent back to the particular agency for review or repeal. For much of the Bush administration, this agency was run by John Graham – a well-known opponent of much federal regulation. In the past, he had written that efforts to regulate such things as nuclear power and PCBs were simply a product of “a hypochondria raging among various consumer advocates and public interest groups.”4

Graham was particularly enthusiastic in using his unique administrative powers to frustrate regulation. During the eight years of the Clinton Administration, the OIRA sent back only 16 proposed regulations. In his first year alone, Graham sent back 19 regulations. And in his second year, his office identified 326 regulations for possible rejection or softening. Not surprisingly, many of these regulations were specifically targeted by various business interests and right-wing think tanks. In fact, when Graham entered office, he secretly surveyed business groups in order to compile a hit list of regulations they considered too onerous. The list included a wide variety of environmental, health, and safety regulations, including some addressing pesticide use, coal-mine ventilation, air and water quality, lead paint disclosure, toxic-release reporting, and family and medical leave. According to one lobbyist, “This was hush-hush, behind closed-doors stuff.” For business interests, this process showed them that Graham was on their side. As another lobbyist observed, “With Graham in that job, we figured we could get whatever we want.”5

New (Anti) Regulatory Philosophies

Anti-government ideologues in the Bush administration were not only trying to relax regulations and their enforcement, they were also trying to change the way administrators think about regulations. They were promoting new “regulatory philosophies” that primarily functioned as rationalizations for more deregulation. One new way of thinking about regulation that proved particularly dangerous to the public and the environment was cost-benefit analysis. The Bush administration acted vigorously to impose strict cost-benefit tests on all new proposed regulations, insisting that the benefits of new rules outweigh the costs. One of the chief promoters of this approach has been none other than John Graham, the one-time head of the Office of Information and Regulatory Affairs discussed earlier – a man who believes America has become highly over-regulated. At first glance, cost-benefit analysis sounds pretty reasonable – no one wants regulations that create more harm than good, right? But the problem is that there is a strong anti-regulatory bias in this analytic process.

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