Three Steps Forward, Two Back

By Ed Magnuson

A balance sheet on Reagan's efforts to deregulate America

Ronald Reagan's main assault in his war against Big Government is over, and his Administration has proclaimed itself the victor. After working for 30 months, the President's Task Force on Regulatory Relief has closed up shop with the declaration by its chairman, Vice President George Bush, that it has snipped enough bureaucratic red tape to save U.S. businesses and consumers $150 billion over the next ten years. Said Bush: "These savings will continue to make an important contribution to the economic recovery now under way, without jeopardizing the environment, job or consumer safety, or other regulatory goals."

But an array of consumer advocates, environmentalists and public interest groups contend that such savings are illusory and that the cost of a relaxed federal vigil in health and safety has not been accurately computed. By their reckoning, the American public has come out a loser. "Health and safety laws were passed by Congress to save lives and reduce injuries," declares Joan Claybrook, director of the National Highway Traffic Safety Administration (NHTSA) under President Carter. "The Reagan Administration is doing just the opposite."

The reality lies somewhere between the conflicting claims. Because changes in federal regulations can affect so many people, often indirectly and sometimes years later, their economic impact is difficult to measure. The social impact is even harder to quantify, since it involves such concerns as health and quality of life. All that is certain is that the debate will grow hotter as next year's elections draw closer.

Indeed, the Administration has already pulled back from some of its more controversial efforts to rescind what it considers needless rules and regulations.

There is no dispute over the desirability of eliminating federal rules that do not achieve their intended purpose or cost far more to follow than their benefits are worth. The Federal Register, which publishes all official drafts of proposed regulations, ran on for 82,012 pages the year before the Bush task force went to work. The commission led the drive to cut that mountain of pages to 58,494. The Administration revoked or revised about 100 burdensome rules and, more significant, slowed the growth in proposed new regulations by one-third from the last 30 months of the Carter Administration. The result, claims the task force report, is that 300 million hours of paperwork have been saved over the past two years.

That achievement is impressive. Still, even the task force's prize examples of cost-cutting are likely to have some negative as well as beneficial results. By requiring that bumpers on new cars be able to withstand a collision at 2.5 m.p.h. instead of the present 5 m.p.h., for example, the commission expects to save auto companies and car buyers $300 million a year. But insurance claims and premiums may increase beyond those estimated by the Government. By killing a proposed Carter Administration rule requiring pharmacists to insert warnings about the side effects of prescription drugs, the Administration expects to save consumers up to $100 million a year. But critics claim that buyers with special health problems could become seriously ill as a consequence.

In its laudable attempt to check the intrusiveness of Government, the Administration has occasionally stretched the limits of prudence and propriety. Reagan has slashed the budgets of regulatory and enforcement agencies, placed officials unsympathetic to vigorous enforcement in charge of the agencies, and given his Office of Management and Budget a virtual veto power over rules proposed by the Government's departments and agencies. These moves have eased the pressure on industry to conform to regulations that the Administration has been unwilling or unable to change through legislation or Executive action.

Critics charge that the result has been nonenforcement of existing laws rather than much needed and lasting reform of the regulatory system. "The Administration has taken the lazy and sloppy way out," contends Democratic Congressman Albert Gore Jr. "They just decided not to enforce the law. This sets up a conflict between those who would obey the law and those who would violate it, and gives the advantage to the violators." Contends Fred Wertheimer, president of Common Cause: "Basically, the Administration is saying, 'Don't worry about the statutes on the books; just go about your business.' That's a lousy way to govern."

Examples of budget cuts hindering enforcement are numerous. When Congress blocked attempts by the Health and Human Services Department to lower nutritional and health standards in nursing homes, and later to make inspections less frequently, the Administration simply cut the funds for such inspections nearly in half, from $27.6 million to $13.6 million. Until the Environmental Protection Agency's coziness with toxic-waste polluters became a scandal, funding for enforcement of waste regulations had been slashed from $11.4 million to $2.3 million and enforcement personnel cut from 311 to 75. When the Agriculture Department could not convince Congress that meat and poultry inspections could be reduced, it ordered inspectors, in effect, to work harder for the same pay. Where chickens used to whiz past inspectors at 70 a minute, the line has been speeded up to as many as 105 a minute, prompting inspectors to take caffeine pills and complain about "hypnosis" from the blur of birds.

Interior Secretary James Watt, who once headed a private Colorado group fighting federal restrictions on oil exploration in the West, is only the best known of Reagan's "fox in the chicken coop" administrators. Before he was named head of the Occupational Safety and Health Administration, Thome Auchter served as spokesman for a construction company owned by his family that had been cited 48 times by OSHA for safety violations. Two lobbies that have fought hard against meat inspections now have former executives high in the Agriculture Department: Assistant Secretary C.W. McMillan of the National Cattlemen's Association and Deputy Secretary Richard Lyng of the American Meat Institute.

Critics of the Administration, and even some officials in the regulatory agencies, complain that OMB has become a back channel for special interests trying to get relief from proposed or existing regulations. OMB was empowered by Reagan to apply a "cost-benefit" analysis to all federal rules. It has reviewed 119 regulations already on the books, killing or revising 76 of them and proposing changes in 27 more. Of 6,700 proposed new rules, it has revised or rejected about one in nine. Its review process can take months or years, effectively putting a brake on good as well as unnecessary changes.

OSHA, which has been criticized for failing to set a standard of maximum dust concentrations in grain elevators to avoid spontaneous explosions, blames OMB for the delay. In fact, all but three of 22 new safety rules proposed by OSHA have been blocked by the budget agency. "OMB has no technical knowledge," contends Thomas Seymour, OSHA's deputy director of safety standards. "They get their slant from contacts in industry."

In the view of advocates of regulatory reform, including both liberals and conservatives, the Administration mistook the public's disgust with red tape for hostility to all forms of Government regulation. Polls show that most Americans favor deregulation of industry, especially if it encourages competition. (For example, the Administration's deregulation in such economic areas as banking, bus transportation and telecommunications has provoked relatively little controversy.) But a Harris survey this year showed that 88% of Americans prefer even more stringent standards on clean air, and 91% either favor existing regulations on safety in workplaces or want those regulations made tougher. Failure to make the distinction between rules involving economic competition and those affecting health and safety, contends George Eads, an adviser on regulations to Presidents Ford and Carter, has "created a backlash" against deregulation that has ruined chances for real reform.

Much of the backlash was directed at the EPA, where more than a dozen top

Reagan appointees have been replaced, chiefly because of evidence that they were too receptive to the pleas of industries that may have been violating EPA regulations. The uproar over EPA prevented the Administration from pushing legislation through Congress that would have softened the Clean Air and Clean Water acts, which have technically expired but remain in effect until Congress acts either to kill or to renew them. Both are now likely to be strengthened.

The EPA's new administrator, William Ruckelshaus, has ordered that waste dumps be cleaned up first and the costs assessed against polluters later, reversing his predecessor's practice of delaying cleanup until EPA could work out a deal with the offending companies. He has asked for 1,100 new employees and a budget increase of $265 million; Congress added an extra $30 million.

While the EPA mess has been in the spotlight, the struggle over regulations and their enforcement has been just as fierce in three other agencies:

OSHA. Candidate Reagan loved to regale audiences with tales of the agency's absurdities, such as its instructions on how to climb a ladder ("Begin by facing the ladder"). President Reagan has backed away from his goal of dismantling OSHA, but he has checked its zeal. "They've succeeded in gutting enforcement," charges Peg Seminario, associate director of health and safety for the AFL-CIO. Between 1980 and 1982, OSHA reduced its workplace inspections by 17%, follow-up inspections by 87%, citations for willful violations by 91% and penalties by 78%.

Auchter insists that his agency's job "is not to issue fines; it's to reduce injury and illness." He concedes that there may be fewer inspections but explains that his inspectors are concentrating on those companies with bad safety records. Overall, Auchter insists, OSHA is achieving "more with less." Indeed, workplace injury and illness rates are down slightly under the Reagan Administration, though critics attribute the decline to high joblessness during the recession.

Some career employees at OSHA pay Auchter a backhanded compliment, saying that without him the agency would have fared "substantially worse" under Reagan. A critic, Democratic Congressman David Obey, member of a subcommittee dealing with health, admits that OSHA has "shown surface movement in the past three months," but contends that it is only because "Auchter doesn't want to wind up in the same boat as EPA."

Highway Safety. The President's task force overturned 17 standards set by the National Highway Traffic Safety Administration because they were burdens on the auto industry.

The Administration pegged the saving to consumers at up to $50 a car. But the consumer-oriented Center for Auto Safety contends that one of the scuttled rules--a requirement that new cars have a dashboard gauge warning drivers of low tire pressure--would have saved at least $300 in better gas mileage from properly inflated tires. Claybrook, who has now resumed duties as an aide to Ralph Nader, charges that "NHTSA has become a wholly owned subsidiary of Detroit manufacturers."

In 1981, the NHTSA rescinded a Carter Administration rule requiring Detroit to install either automatic seat belts or air bags on all 1984 model cars. The Reagan Administration had argued that motorists would detach the automatic belts, rendering the rule ineffective. The U.S. Supreme Court found this reasoning capricious, possibly because it did not apply to the air-bag option, and NHTSA is now groping for a better reason to oppose the rule.

The highway agency has lost 30% of ts employees and sustained a 25% budget cut under Reagan. For two years, NHTSA did little about repeated complaints that the brakes on more than 1 million X-cars made by General Motors tended to lock, especially on wet roads, resulting in the deaths of at least 15 people in skidding accidents. But now NHTSA has suddenly reversed course. It ordered the recall of 240,000 X-cars last spring, and this month it filed a lawsuit against GM demanding the recall of 1.1 million 1980 X-cars and charging that GM had lied to the agency. The suit seeks a $4 million fine.

The turnabout is attributed to several factors: the agency's director Raymond Peck departed; a new and aggressive Transportation Secretary, Elizabeth Dole, took office last February; and the 1984 election is approaching.

Food and Drugs. The Food and Drug Administration has long been considered overly cautious about approving new drugs, even when doctors, drug manufacturers and patients were urging fast action. The Reagan Administration set out to make the FDA move faster. Now some critics charge that the FDA has become a tool of the drug industry. They cite the FDA's approval in 1982 of Oraflex, an arthritis pain reliever, despite evidence that its side effects might be highly toxic. In the first three weeks, 64,000 U.S. prescriptions were written. But after 61 deaths in Britain had been linked to the drug, the manufacturer withdrew the product. Critics also note that the FDA's relaxation of rules allowed a defective batch of Nursoy, an infant formula, to reach the market. The cans were lacking a vitamin essential for safeguarding babies from convulsive seizures. The drug company recalled 50,000 cans.

But by and large, the Administration's efforts to loosen up the FDA have been foiled by career bureaucrats adhering to the agency's established habits of testing and enforcement. Says Peter Hutt, a former FDA general counsel: "It's simplistic to think that a President or an Administration can turn around an agency when you're dealing with one with a history and tradition like FDA. You can't change that easily, which is both a great weakness and a great strength."

By trying too often to abdicate rather than carefully define its regulatory role, the Administration has given deregulation a bad name. That is unfortunate, because the thicket of Government regulation does indeed need thinning. Even pro-regulation activists concede that there are many outdated or overly stringent rules on the books. But the Reagan Administration's uneven approach has made regulatory reform a political danger zone, to be avoided at least until after the 1984 elections. Concedes a senior White House aide: "Deregulation doesn't have the same priority for us it used to have. The political dividend aren't very high."

-- By Ed Magnuson

Reported by Evan Thomas/Washington

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