Bush Moves To Circumvent Regulatory Process

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Last week, president Bush signed an Executive Order instructing all federal agencies to pass all their regulations and "guidance documents" through an appointee of the administration for approval.

This move coincides with the president re-nomination of Susan E Dudley to the Office of Information and Regulatory Affairs at the Office of Management and Budget. Ms Dudley has argued in the past that government intervention is not necessary "in the absence of a specific market failure."

The Executive Order provides instruction to agencies along the same lines as Ms Dudley's ideology. Essentially, what she is arguing for is no regulations unless the private sector has failed to address the issue.

This Executive Order runs contrary to the legislative process as Congress often enacts legislation calling for regulation which leaves the specific requirements and implementation up to the bureaucrats that run the agency. It seems likely that Congress will be forced to write more specific details into legislation when regulation is desired. In some ways, that will make the legislation harder to pass as people become concerned about the slow pace at which rules written into law could be adjusted to address market issues.

In effect, the administration is seeking to rein in and possibly completely derail the regulatory process. At the very least, the additional layer of approval will have a costly impact particularly in the area of public safety.

Consider the issue of arsenic in drinking water, something the EPA issued regulations on during the Clinton Administration. Here's a quote from Susan Dudley on that:

"The Clinton standards were "an unwelcome distraction from the task of protecting the water supply. . . . While [EPA] should share information about arsenic levels and hazards, it should not impose its judgment, based on national average costs and benefits, on individual communities as to how best to invest in their own public health."

How do you define market failure when it comes to safety issues? If every car manufacturer provides seat belts except one, does that mean the market works or the market has failed? Are we to naively assume that people will not buy the car without seatbelts? What if the car without seatbelts is the cheapest on the market?

This executive order puts public safety at the whims of market forces. People often buy what is cheapest rather than what is best. Remove the regulatory process and the cheapest products will start to be unsafe.

I strongly urge readers to read the source materials, and I invite comments below.


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