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Regulatory Tide Ebbs and Flows

Business groups and conservatives try to stem stronger enforcement of federal regulations since end of the Reagan era, seeking studies of costs versus benefits in such areas as antitrust activities, food, drugs, and alcoholic beverages

A REGULATORY renaissance in the Bush administration may be slowing as the White House brings more scrutiny to bear on federal regulators."We are looking at ways to work more closely with the heads of various agencies to insure an overall coordination of policy," says one White House official. The move comes after many months of complaints by business groups and conservatives who were an important part of President Bush's political coalition in 1988. There is "a sense of regulators crawling out of the woodwork where they were hiding during the 1980s," says Dan Mitchell, a senior fellow at the Heritage Foundation - the conservative think tank in Washington that provided many of the intellectual underpinnings for federal policy during the Reagan administration. Consumer advocates have been hailing "the bold moves" of such agencies as the Food and Drug Administration (FDA), the Federal Trade Commission (FTC), and the Bureau of Alcohol, Tobacco, and Firearms (BATF) which have all garnered many headlines for a number of recent regulatory actions.

Tough legal actions Procter & Gamble dropped the word "fresh" from the label of its Citrus Hill orange juice after the FDA on April 24 got a court order seizing a shipment because the juice itself is actually made from concentrate. By making an example of one of the most common brand names in the American kitchen, the FDA has gotten the rest of the food industry to say: all right, things we might have done... , we won't take those chances any more, notes Peter Barton Hutt, an attorney at Covington and Burling in Washington, who served as the FDA's chief counsel during the Nixon and Ford administrations. The Adolph Coors Brewing Company is now phasing out its commercials proclaiming that Coors Light beer "won't slow you down," after the BATF took enforcement action. "Obviously beer contains alcohol and it does slow you down," says Bruce Silverglade, an attorney at the Center for Science in the Public Interest - a New York- based organization that has long campaigned for limits on beer, wine, and liquor advertising. The FTC has also been stepping up its enforcement activities. This year, in separate cases against Volvo and the Louis Galoob Toy Company, the FTC not only cited the manufacturers for making misleading advertising claims, but also their ad agencies. An FTC attorney said these were the first cases in six years in which an ad agency was held responsible for the commercial speech of its clients.

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Record high spending Overall, consumer advocates agree that the level of enforcement muscle in many federal agencies has, until recently, vastly increased during the Bush years. The president's budget proposal for 1992 calls for an increase in regulatory spending to more than $13 billion which, even when adjusted for inflation, is a record high, according to a report from the Center for the Study of American Business at Washington University in St. Louis. And with 122,400 government workers expected to be part of the regulatory bureaucracy next year, "staffing figures are now higher than they were at the end of the Carter administration," the study notes. In addition, a new law, the Americans with Disabilities Act, requires businesses to spend money to accommodate people with special needs. This record has left many business leaders concerned that, as Jeffrey Perlman, the manager of legal and regulatory affairs at the United States Chamber of Commerce, put it: "We were going into a stage of re-regulation." But with the new initiative at the White House to scrutinize regulatory agencies more closely, many liberals, environmentalists, and consumer advocates are now the ones complaining. " There is a cutting back," says Joan Claybrook, the president of Ralph Nader's Public Citizen, a consumer advocacy group. "In the beginning," she says, "President Bush didn't pay a lot of attention" to what regulators were doing. "But now that there is more focused attention on them, they may be getting quashed." This summer, the White House has been stepping up the activities of a cabinet level group known as the Council on Competitiveness. Established in March, and chaired by Vice President Dan Quayle, a White House fact sheet lists its No. 1 purpose "as reducing regulatory burdens on the free enterprise system" by continuing the work of the old Task Force on Regulatory Reform chaired, during the Reagan years, by then Vice President Bush. One role "is to oversee the entire regulatory process - to make sure we don't put too many regulatory burdens on the economy," says the council's deputy director, David McIntosh. When the FDA's commissioner, David Kessler, appeared before the House Energy and Commerce subcommittee on health and the environment July 17, he was originally expected to endorse a bill that would expand his agency's enforcement powers - allowing it to recall unsafe items, assess fines, subpoena witnesses and documents, and embargo unsafe products.

Speaking with one voice But instead of endorsing it as expected, Kessler offered the subcommittee no particular opinion. Almost echoing the words of competitiveness council officials, he did state that "it is very important that we [the administration] speak with one voice." Behind that voice appears to be tighter adherence to the principles of cost-benefit analysis when measuring the worth of regulatory efforts. Cost-benefit was the watchword during the Reagan years. In it, you add up the benefits from a regulation and subtract what additional expenses a rule might add to the marketplace. Only if a benefit far outweighed the cost would regulation be deemed acceptable. This stands in contrast to the pre-Reaganite view that if something poses all but a negligible hazard, it is an appropriate target for regulation.

Cost-benefit analysis Previously, the Bush administration "wasn't cost-benefiting every regulation to death," says Mark Silbergelb, who heads the Washington office of Consumers Union. But with the ascension of the Council on Competitiveness, the basic regulatory arithmetic appears to be shifting back. "There are estimates of $185 billion in costs each year from government regulation," says the council's Mr. McIntosh. "It is vitally important that you have the competitiveness council reviewing each individual regulation to make sure costs are minimized so we don't have an additional burden on the economy." The rigorousness of this cost-benefit analysis was clear in the dispute over federal wetlands policy. Environmentalists complain that the council toned down a proposal from Environmental Protection Agency administrator William Reilly after hearing objections from the business community about the costs. Mr. Reilly's proposal was itself a compromise so controversial that two scientific advisers made it clear they wanted nothing more to do with the proposal - long before the competitiveness council got involved. After council members did, the matter escalated. "What they did was complete political meddling," complained Robert Dreher, an attorney at the Sierra Club Legal Defense Fund. But each time the council rankles environmentalists, consumer advocates, or liberals in Congress, it gains new credibility among Reagan-era conservatives. "The Council on Competitiveness is where the action is," says James Miller, a leading deregulatory force in the Reagan administration and former budget director, who now heads a conservative watchdog group called Citizens for a Sound Economy. For him and many other leading Republican conservatives, the competitiveness council has become the bulwark inside the Bush administration protecting the "Reagan revolution."

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