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Regulatory Fights Likely to Continue

December 31, 1996

‘Reform’ And Devolution Lead the List

Even before the 105th Congress convenes, public interest groups are gearing up for another round of fights to protect public safeguards. Citizens for Sensible Safeguards (CSS), a coalition of public interest groups chaired by OMB Watch, fought powerful interests, such as a coalition convened by the National Alliance of Manufacturers called the Alliance for Reasonable Regulation, to a draw in the 104th Congress. But CSS expects another round of fights on regulatory "reform" measures, federal mandates, and local flexibility as well as on use of two laws passed in the 104th Congress as tools to undermine public protections.

It is quite impressive the role CSS played, especially when considering that significant amounts of money have been spent by companies to promote an agenda to roll back safeguards. More than $151 million was spent on lobbying for the first six months of 1996 by members of the Alliance for Reasonable Regulation; millions more were spent by these organizations on campaign contributions.

Regulatory Reform

Regulatory "reform" legislation moved through the House very quickly as part of the Contract with America, but stalled in the Senate. Even though former Sen. Bob Dole (R-KS) made regulatory reform an important legislative cornerstone, it bogged down when public interest groups drew a connection between the proposed bill and the death of several people from hamburger meat laced the e coli bacteria. It became increasingly clear that federal agencies would be hamstrung under the Dole bill from addressing bacterial contaminants in meat. Other examples of the negative impact the Dole bill also began to surface. As a result, there were not enough votes to pass the bill.

More recently, the Congressional Quarterly had a story indicating that the House leadership did not intend to push for a comprehensive regulatory reform bill. This sentiment was echoed by the chief lobbyist for the National Federation of Independent Businesses, who said that small business thought the term "regulatory reform" was doomed from the start. He argued for smaller, more piecemeal legislation to achieve the same overall objectives.

Despite this movement away from a comprehensive regulatory reform bill, Sen. Carl Levin (D-MI) called several public interest organizations to his office to discuss his thoughts about introducing a comprehensive regulatory reform bill. This would be on top of two laws that passed in the 104th Congress that have yet to take full effect: the Congressional Review Act, and the Small Business Regulatory Enforcement Fairness Act.

The Congressional Review Act permits Congress to pass a resolution of disapproval of agency regulations, thereby stopping the regulation from being implemented. Under the new law, Congress has 60 legislative days to review the rule. For major rules, the agency may not implement the rule until the 60 legislative day period is up or Congress has passed a resolution of disapproval.

A number of regulations are making their way through the agency maze and any one of them could become the first test case of the Congressional Review Act:

An OSHA rule dealing with methylene chloride, which is a toxic, cancer-causing chemical used in a number of industries, including foam manufacturing and paint products. The rule is a long awaited one that protects workers by reducing the permissable exposure limits to the chemical. Many companies have already begun a lobbying effort to get Congress to stop OSHA's regulation.

An EPA rule on air pollution standards that would lower limits for ozone and particulate matter (tiny particles of soot given off by automobiles, utility companies, and factories). Despite scientific research showing the lives that would be saved, businesses are complaining to lawmakers that the cost of compliance would be too great. EPA found benefits of an estimated $51 billion to $112 billion annually in reduced medical costs, fewer sick days, and other benefits, against $6.5 billion to $8.5 billion in costs.

An EPA rule on dioxins, focused on the pulp and paper industry. Again, companies are seeking relief from Congress from what they call an instrusive and costly regulation from EPA.

The other new law, SBREFA, which is fully implemented March, 1997, creates new opportunities for small businesses to shape agency regulations by granting new opportunities to sue agencies, review regulations prior to public involvement, and thwart agency enforcement activities. Much of the implementation will be handled by the Small Business Admininstration, which recently appointed former Rep. Peter Barca (D-WI) as the new SBREFA ombudsman.

What to expect in the 105th Congress: We did not expect another comprehensive regulatory reform bill, but we will need to watch Senate Democrats, particularly Levin. We do expect smaller bills, targeted to specific programs to be introduced. Enhanced monitoring of the two new regulatory laws will be critical as powerful interests are likely to use them to undermine public protections.

Mandates

The Unfunded Federal Mandates Reform Act passed as one of the first Contract with America items. Citizens for Sensible Safeguards was successful in pushing for changes that moved the bill from a "no money, no mandate" bill to a law that creates new congressional procedures that requires a vote when imposing new mandates.

The law also required the Advisory Commission on Intergovenrment Relations to prepare a report on federal mandates. The report that ACIR developed proposed exempting state and local governments from complying with seven laws (e.g., Americans with Disabilities Act) and modifying seven other laws in a manner that would eviscerate the laws (e.g., Clean Air Act).

Even after a firestorm of protest from labor, disability, women's, and environmental groups, ACIR developed a final report that was highly controversial. For example, ACIR proposed that Congress not renew any law that grants the power of citizen suits against state or local governments (e.g., welfare suits, toxics citizen suits). In the end, ACIR staff failed to obtain support from a majority of the commissioners to pass the report; thus, ACIR never completed the report.

What to expect in the 105th Congress: House Republicans have put together a draft set of rules changes to House procedures that would be taken up on the first day of the 105th Congress, January 7, 1977. One rules change is titled, "Repeal of Inflation Statement Requirement and Establishment of Constitutional Authority Statement Requirement for Committee Report." The change requires committee reports to cite the specific powers granted by the Constitution on which a proposed bill is based.

This rules change proposal is very similar to a bill that Sen. Ted Stevens (R-AK) offered in the 104th Congress to create procedural hurdles to new federal laws. Any new law would have had to cite the Constutional authority for the law. By and large, conservatives are opposed to new federal mandates of any type, arguing that the constitution only permits federal intrusion when dealing with commerce. Coupled with recent Supreme Court decisions limiting federal authority in various areas, but most particularly the ability for the federal government to grant authority to citizens to sue state and local governments, there is likely to be significant effort to retrench the role of the federal government.

We can also expect the ACIR to take another shot at developing a report on federal mandates. This may be done as part of a review on local flexibility (see below).

Local Flexibility/Devolution

On the first day of the 104th Congress, Sen. Mark Hatfield (R-OR) introduced S. 88, the Local Empowerment and Flexibility Act. A similar bill was introduced at a later date in the House by Rep. Christopher Shays (R-CT) (H.R. 2086). The Local Flexibility bill was widely opposed by nonprofit organizations because it would have established a cumbersome process that could have resulted in undermining various public protections and vastly changing service delivery in this country and all without much public input.

Under the Local Flexibility bill, laws and regulations could have been waived, money transferred from one program area to another, state plans consolidated, eligibility to programs changed, and much more.

At first it appeared that most of the action would take place in the House. But at the last second, the bill was pulled from going to the floor for fear that the House Republicans would again be cast as "extremists." As a result, most of the action took place in the Senate, where Hatfield was a passionate supporter of his bill.

After repeated failed attempts by Hatfield to bring his bill to the floor on a "bipartisan" basis, he resorted to attaching S. 88 to an appropriations bill. When that appropriations bill had to be pulled, Hatfield set his sights on attaching S. 88 to the stop gap spending measure, called the Continuing Resolution. Ultimately, even with incorporating many changes promoted by Sens. John Glenn (D-OH), Carl Levin (D-MI), Ted Kennedy (D-MA), and Paul Simon (D-IL), the bill was stripped from the CR at the last second and died in the 104th Congress.

What to expect in the 105th Congress: On October 31, 1996, Hatfield wrote to Glenn asking him to pick up the leadership for pushing for local flexibility in the 105th Congress. Hatfield argued that compromises at the end made S. 88 a good bill, but "these changes did not near the changes insisted upon by private interest groups like OMB Watch or the National Education Association." Glenn responded on November 19, 1996 by saying, "I am interested in continuing to push for legislation to provide greater flexibility to State and local governments in administering Federal grants. I know others are as well, including the Administration. I believe that the compromise we reached at the close of the 104th would be a good starting point."

Thus, we can expect Glenn to introduce a local flexibility bill at the beginning of the 105th Congress. Additionally, in the House, Rep. Steny Hoyer (D-MD) has indicated that he would like to introduce a bill in the early part of the 105th Congress with a focus on programs serving children and families.

What You Can Do

OMB Watch runs two e-mail and fax distribution lists covering these subjects. One list covers general regulatory reform issues; the other covers local flexibility and other intergovernmental issues, such as federal mandates. The e-mails provide updates and suggested action steps when action is needed and is more interactive; the fax provides periodic action alerts.

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