Washington: Slash and Burn?

The regulatory revolt takes the Hill.


This summer, the Kall Inn, owned by the Kahle family and situated near the town of Kieler in the southwestern corner of Wisconsin, hopes to celebrate its 50th year of operation. Since 1957, the 25-table restaurant has been located in a former fish market, a mile and a half from the main highway on the opposite side of the Mississippi River from Dubuque, Iowa. Bass fishing lures most visitors to the sparsely populated area, but Wayne and Mary Kahle, who have run the inn since 1965, offer another attraction—fine dining that draws customers from as far away as Chicago, some 175 miles east.

In March of last year a Department of Natural Resources inspector notified the Kahles that it was illegal to continue drawing water from the inn's well, which is located beneath the kitchen. The water wasn't contaminated. In fact, it is much purer than needed to pass safety standards. At the most recent inspection, nitrate levels were only 6 percent of the legal maximum. The well is protected by a cement sleeve and cap that have been in place since 1972.

But to comply with the federal Clean Water Act, the state DNR gave the Kahles three choices: 1) Construct some type of above-floor extension of the well cover that would be directly in the traffic pattern of the kitchen staff. 2) Spend at least $10,000 to dig a new well away from the building. 3) Or close the restaurant.

The Kahles can't understand why they've been targeted for such scrutiny. "It's not fair," says Mary. "A health hazard is one thing," says Wayne. "But all [the DNR] says is that we're 'not complying.'" State Rep. Duane Johnsrud, recently appointed by Gov. Tommy Thompson to chair the DNR, is pushing state regulators to lay off. But the regulators are driven by federal requirements, and it isn't clear that the state can back off without federal permission.

The Kahles' story isn't unusual; it has become typical. And their story helps explain why Democratic congressional barons were unceremoniously tossed out of office last November. The Washington establishment routinely defends the type of nutty regulations that do nothing to protect public health or safety but can bankrupt entrepreneurs like Wayne and Mary Kahle.

As Rep. John Mica (R-Fla.) said at a February 22 Capitol Hill press conference, "You can't wake up each day, put your feet outside your bed, and complete your day without violating some type of rule—particularly if you're engaged in business or industry or any type of productive activity." Republican leaders in Congress, backed by conservative and moderate Democrats and some bomb-throwing backbenchers of both parties, are pushing a regulatory rollback that could dramatically shrink the power of bureaucrats and begin to relegate "Imperial Washington" to the history books.

Freshman Rep. David McIntosh (R-Ind.), chairman of the House subcommittee on regulatory affairs, sees the war against regulation advancing simultaneously on three fronts: preventing scheduled regulations from taking effect; changing the regulatory process so that new government rules are less burdensome; and reviewing (and in some cases eliminating) existing red tape. Despite the fervent opposition of the White House, left-wing Democrats, and outside apologists for the regulatory state, the impulse to deregulate is gaining strength.

Every president since Gerald Ford has asked Congress to subject regulations to cost-benefit analyses before putting them on the books and has set up internal review panels to cut red tape. The only notable deregulations occurred under Jimmy Carter (interstate trucking, airlines, railroads) and Ronald Reagan (oil, natural gas). In each case the White House had enough allies on Capitol Hill to override the typical legislative impulse to pass lots of laws and then let regulatory agencies take responsibility for enforcing them.

The Bush administration, however, dropped three of the biggest regulatory bombs ever: the 1990 Americans with Disabilities Act, the Clean Air Act amendments of 1990, and the 1991 civil rights act. Bill Clinton added the Family and Medical Leave Act in 1993. His administration promulgated 4,866 regulations last year; it took 64,914 pages of the Federal Register to explain them.

On February 24, the House of Representatives clearly indicated that times have changed. Over the promise of a presidential veto, the House passed a moratorium on existing regulations by a nearly veto-proof margin of 276 to 146. The moratorium, which would affect many of the 4,300 regulations scheduled to be implemented between November 20, 1994, and the end of this year, was led by McIntosh, who was staff director of Vice President Dan Quayle's Council on Competitiveness.

The moratorium would slow down a series of burdensome rules scheduled to take effect this year. Among them: new Occupational Safety and Health Administration rules on ergonomics, which would force businesses to redesign their workplaces and could cost $21 billion to implement; 1,700 pages of regulations under the 1977 Clean Air Act that would require new emission controls in California on everything from factories to lawn mowers; and the listing of 400 new plants and animals under the Endangered Species Act. McIntosh says the moratorium "offers a clear-cut 'yes' or 'no' on more federal regulations."

The moratorium would not absolutely prohibit any new regulations. Indeed, it has loopholes that exempt the ubiquitous "national security" matters. Executive branch agencies could also continue to implement regulations that prevent "imminent threats to health and safety," although Congress could overrule them. The moratorium also lets stand rules that streamline or reduce regulatory burdens.

But the moratorium could prevent further White House mischief as Congress considers more-sweeping procedural reforms in the Contract With America. As March began, the House passed bills that would subject new regulations to risk assessment and cost-benefit analyses, require federal agencies to identify voluntary alternatives to new government rules, and compensate property owners when regulations reduce the value of their land.

The 100-day deadline House Republicans imposed on themselves to pass the Contract With America has compressed the time in which bills can be considered on Capitol Hill. The concept of a "contract" has also made it difficult (if not impolitic) for House leaders to accept big changes in the components of the various bills.

So while the House seeks to contain the expansionist regulatory state, the Senate may actually try to roll it back. Majority Leader Bob Dole has introduced a regulatory reform bill that would, in some instances, go further than the House. Its bill requires cost-benefit analyses not only of new regulations but also of existing ones if individuals or business request that they be reviewed. If the review determines that a regulation has greater costs than benefits, the agency has to modify or revoke it.

Dole, once called "a tax collector for the welfare state" by Newt Gingrich, seems an unlikely advocate for smashing the regulatory state. But he is running for president, and he certainly knows how to follow public opinion. Dole's chief rival for the Republican nomination, Texas Sen. Phil Gramm, has staked out hard-line positions against affirmative action and federal spending, and for enhancing the rights of business, property, and gun owners. And Capitol Hill insiders claim Dole won't let himself be outflanked by anyone.

Dole has appointed his own Regulatory Relief Task Force, led by Sens. Kay Hutchison (Tex.) and Christopher Bond (Mo.). The task force issued its own "Top 10" list of worst regulations, led by the Endangered Species Act, the Clean Air Act, wetlands laws, and OSHA. Notably absent from the list, however, are three recent regulatory extensions: the 1991 civil rights bill, the ADA, and the family-leave act. "There is no conceptual justification for giving a free ride to the so-called civil-rights laws," says Murray Weidenbaum, chairman of the Center of the Study of the American Business and one of the principal architects of deregulation in the Reagan administration.

Weidenbaum is especially critical of federal enforcement of the ADA. "To require [businesses to construct] expensive facilities that are almost never used," he says, shows that "the aim [of the regulation] is to maximize the cost to punish those of us who aren't disabled." Dole, however, has been a major supporter of the ADA, a role he has yet to reconcile with his new persona as scourge of the regulatory state.

Although Dole's bill would subject some existing regulations to cost-benefit analyses, a bipartisan group of more-radical House members want to go further: They would force every federal regulation to undergo review each seven years. Any regulation that couldn't be justified by the executive branch or Congress would be eliminated.

The bill, sponsored by Reps. Jim Chapman (D-Tex.), Mica, and Majority Whip Tom DeLay (R-Tex.), would require each agency to appoint a person to oversee the regulatory review. The agency would have seven years to list the regulations it enforces. For each regulation, the agency would have to recommend leaving the rule in place, modifying it (proposing suggested changes in the Federal Register), or eliminating it. This report would go simultaneously to the Office of Internal Regulatory Administration at the Office of Management and Budget and to Capitol Hill. Congress could ultimately modify or eliminate rules the executive branch wanted to keep. New regulations would face sunsetting within three years.

At a Capitol Hill press conference introducing the bill, Chapman was asked if he actually expected the bill would pass. He replied that anyone who opposes the idea of sunsetting regulations is in the position of defending the most bizarre laws on the books. Two he cited: The Americans with Disabilities Act requires automatic-teller machines at drive-through windows to be accessible to the blind. And, to comply with U.S. Department of Agriculture regulations, butchers must keep their floors wet; to comply with OSHA, however, the floors must be dry. "The notion that you should write [a regulation] and forget it," he said, "is simply nonsense."

If the regulatory revolt continues to simmer as different versions of the same bill pass the House and the Senate, the bill that reduces regulations more may be the version that emerges for a final vote. And Congress could even combine the toughest provisions from both houses into the final bill.

Consider property rights. The Senate bill introduced by Gramm would allow property owners to sue for compensation when federal regulations reduce the value of their land by 25 percent or $10,000, whichever is less.

The House takings bill has a 20-percent threshold and no dollar alternative. But it lets landowners file for compensation through an administrative procedure rather than by going to court, a prospect that's too costly for many small landowners. Peggy Riegle, whose Fairness to Landowners Committee represents more than 16,000 "mom and pop" property owners, says her members will push for any final bill to have an absolute-dollar threshold and the administrative-procedure provision.

Such proposals won't succeed without a struggle. As the House began to debate the moratorium on February 21, Bill Clinton responded with his mantra: "We want leaner government, not meaner government." He gave his cabinet agencies four months to list unnecessary regulations that could be pared back but stated his unequivocal opposition to any sort of moratorium. As with his "reinventing government" initiative, the president intends to make government more efficient rather than less intrusive.

And it's clear that Clinton intends to reduce the burdens on bureaucrats rather than on business or landowners. At the February 21 press conference, the president crowed about reducing the forms local school districts have to fill out to qualify for federal school lunches, eliminating the federal government's 10,000-page personnel manual, and "slash[ing] the small-business loan form from an inch thick to a single page."

Clinton responded to the proposed moratorium by asking federal agencies to push "horror" stories citing the alleged harms a regulatory "time out" would cause. The moratorium would, for instance, prevent the Consumer Product Safety Commission from forcing a redesign of five-gallon buckets to prevent children from drowning in them; it would stop the Department of Transportation from requiring airline first-aid kits to include latex gloves; and it would keep the Agriculture Department from determining when grocery-store chickens could be labeled "frozen" or "fresh."

The Clintonites presented their list. The public yawned. The republic should survive such threats.

"Last November, the American people sent us a message: Rein in big government," said Dole when he introduced his bill. "Stop micromanaging our lives through burdensome and costly regulations." The Kahles, and thousands of other business and landowners, hope the Republican Congress can back up its tough rhetoric with substantive action.