General Practice, Solo & Small Firm DivisionBest of ABA Sections

FALL 1997

Administrative Law & Regulatory Practice

Regulatory Reform in the 104th Congress

John F. Cooney

Regulatory reform was bitterly contested in the 104th Congress. The Senate failed to pass Senator Dole’s global regulatory process reform bill by a narrow margin. As has been reported previously in these pages, however, a number of lesser nonprogram-specific reform measures did pass, including the Unfunded Mandates Reform Act and amendments to the Regulatory Flexibility Act and Paperwork Reduction Act. [ See "More Stealth Regulatory Reform," Admin. & Reg. L. News, Summer 1996 (available on the Section WWW page); "Report Card on Regulatory Reform," Admin. & Reg. L. News, Summer 1995 (available on WestLaw).]

In addition to these laws, the 104th Congress achieved significant regulatory reform in several substantive programs. For example, the major telecommunications deregulation bill was passed; the food safety law was amended to replace the Delaney Clause with a more sensitive risk assessment measure with respect to agricultural pesticide residues; and a substantial foundation was constructed for future deregulation of the electric utility industry.

Further, Congress quietly passed two environmental bills with significant regulatory reform features, the Safe Drinking Water Act Amendments (Pub. L. No. 104-182) and the Pipeline Safety Reauthorization Act (Pub. L. No. 104-304). Each law contains sector-specific provisions that address the cost-benefit and risk assessment issues that proved intractable at a broad philosophical level. Since the composition of the new Congress is little changed, the progress of these two bills likely foreshadows the fortunes of regulatory reform proposals in 1997-98.

 

Safe Drinking Water Act. Two features of this law had long been criticized. First, EPA was required to set new drinking water standards for possible carcinogens at a level at which no adverse health effects could be shown to exist, plus an adequate margin of safety. In making those decisions, EPA could not consider costs. Second, the law adopted a "one size fits all" approach, in which small water systems had to follow the same standards as a metropolis, regardless of the actual risks to consumers or costs.

Events proved that the policy of chasing minute risks from potential carcinogens, regardless of cost, poorly served the public health. In 1993, the Milwaukee water system became contaminated with Cryptosporidium, which killed 131 people and infected 400,000 others. In 1996, the Washington, D.C., water system exceeded the EPA standard for the bacterium E. coli and had to be flushed with large doses of chlorine. The Milwaukee epidemic and the contamination of their own drinking water persuaded many members of Congress that the law misdirected public resources to minor cancer risks, and thereby soaked up resources that could have been better used to address critical health risks from traditional bacterial pollutants.

In August 1996, Congress amended the law to concentrate resources on public health outcomes, rather than devising rules of universal application; to allow EPA to focus on the contaminants with the greatest actual risk; and to provide smaller municipalities with flexibility in implementing the law. In particular, the amendments require EPA to conduct a risk assessment for each new proposed maximum contaminant level and to study the quantifiable and nonquantifiable benefits and costs. Section 104(a) further provides that EPA must publish a determination whether the benefits justify or do not justify the costs of the proposed standards. Finally, Congress accelerated to twenty-four hours the time within which a water system must notify EPA of an exceedance and established a mechanism by which water systems must notify residents of the contaminants found in their water systems.

The new cost-benefit provision does not formally prohibit EPA from issuing a drinking water standard if the costs exceed the benefits. However, this "soft" cost-benefit provision requires EPA to assemble substantial health and cost data. Regulatory reform advocates were satisfied that collection of these data makes it unlikely as a practical matter that EPA will proceed without a strong case for the corresponding benefits. At the same time, some lawmakers with concerns about the mechanical application of cost-benefit provisions accepted this approach, because it provided wiggle room for EPA to proceed with a drinking water standard if it believed real, but unquantifiable, public health benefits overcame more readily quantifiable costs.

 

The Pipeline Safety Reauthorization Act. This bill incorporates two significant regulatory initiatives devised by the Senate. It authorizes a demonstration project to explore whether the existing regulatory regime can be improved. And it establishes an explicit cost-benefit test for future rules.

 

The demonstration project provision allows the Department of Transportation to work with one pipeline to develop an alternative, less costly set of pipeline safety standards, as long as the new standards provide the public at least the same degree of protection as the existing rules.

Natural gas pipelines are a good subject for such an experiment. First, the major safety risk is well understood—catastrophic rupture. There is little concern with harms that are hard to quantify, like exposure to carcinogens, or benefits whose valuation is controversial, like natural resource damages. Second, gas pipelines run primarily through rural areas. The current DoT rule follows the traditional approach of requiring a uniform level of protection for each mile of the pipeline. By determining whether the safety regimen can be tailored to the actual degree of risk for different segments of the pipeline, the demonstration program will establish whether public health and the environment can be better protected by shifting safety expenditures from unpopulated areas to urban areas.

 

The cost-benefit language was proposed by DoT. This "strong" cost-benefit principle would allow the secretary to issue a new rule "only upon a reasoned determination that the benefits of the intended standard justify its costs." At first, Senators Glenn and Levin blocked the bill because of the cost-benefit provision. They proposed alternative language under which the secretary could consider cost-benefit information, but it would not "control" DoT decisions. The two Senators agreed to DoT’s stronger cost-benefit provision in the specific context of natural gas pipeline safety, in return for a commitment from the Republican leadership that this action would not be considered "as a precedent for adopting a similar standard in any other program." Senator Glenn specifically noted that the standard could not be used "in the debate on the larger regulatory reform bill."

In the House, several powerful Democrats, including John Dingell, opposed the bill because of the demonstration program and the cost-benefit language. They argued that these provisions might increase the risks of spills and explosions.

The bill passed the House on a close vote, but the battle did not end. Environmental groups and several ranking House Democrats, including Reps. Dingell, Waxman, and Miller, attempted to persuade the president to pocket veto the bill. The president ultimately signed the bill.

 

Conclusions. The legislative history of these bills teaches two important lessons for the 105th Congress. First, regulatory improvements are likely to be enacted incrementally, through provisions narrowly tailored to a particular sector, and not by a comprehensive "silver bullet" approach that the Republicans tried in 1995.

Second, at a global level, the suspicions generated by the regulatory process debate in the 104th Congress have not died down. The positions taken on the Pipeline Reauthorization bill by prominent Democrats in both chambers reveal the problems facing efforts to move general regulatory process legislation through a narrowly divided Congress. However, the protagonists have devised a common vocabulary to describe their differences. This suggests that compromise may be possible in less controversial areas of health and safety regulation.

John F. Cooney is with Venable, Baetjer, Howard & Civiletti in Washington, D.C.

 This article originally appeared in Administrative and Regulatory Law News, Winter 1997 (22:2).

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