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Jewish World Review June 6, 2000 /23 Iyar, 5760

Michael Barone

Michael Barone
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Consumer Reports

Reining in regulators: Will the Supreme Court clip Washington's wings? --
FOR MANY YEARS, through administrations Republican as well as Democratic, the regulatory power of the federal government has seemed to be growing. Now it may be contracting. One key event will come next fall, when the Supreme Court hears a case involving the Environmental Protection Agency that found part of the Clean Air Act unconstitutional. The case, decided by the D.C. Circuit Court of Appeals in a 2-to-1 decision, involves ozone and particulate matter–but it's about much more than that. Since the late 1930s, the court has placed few limits on federal regulatory agencies. Now it may be about to conclude that those powers are not as unlimited as everyone thought.

The D.C. Circuit did not challenge the EPA's findings that the emissions were harmful. But it ruled that the EPA "has failed to state intelligibly how much is too much" and that the Clean Air Act set forth no "intelligible principle" to guide the agency. The EPA reduced the allowed level of ozone from 0.09 to 0.08 parts per million, arguing that more people are exposed to harmful effects under the higher level. But, the decision asks, why not go down to 0.07? The EPA's reasons for not doing so, the decision argues, "could also be employed to justify a refusal to reduce levels below those associated with London's 'Killer Fog' of 1952."

A law that leaves a regulatory agency with such leeway–which allows it to impose costs on and even destroy businesses without any clear standards–was for this court an unconstitutional delegation of power. The argument is plausible, and there is precedent. In 1935, the Supreme Court in the Schecter Poultry case declared Franklin Roosevelt's National Recovery Act unconstitutional, because its authorization of 700-plus industry councils to set wages and prices was "delegation running riot." This was not one of those 5-to-4 or 6-to-3 anti-New Deal decisions that were soon overturned; it was unanimous, 9-to-0, subscribed to even by liberal justices. Schecter Poultry stands for the proposition that Congress cannot delegate power to regulate the private economy without some ascertainable and intelligible standards.

Rational rules. Such standards might include, the D.C. court says, cost-benefit ratios or quantitative standards like those Oregon has used to ration Medicaid funds. Or it might require total elimination of harm-causing substances. But no one is seeking total elimination of ozone or particulate matter, and a 1980 D.C. Circuit decision holds that the EPA act specifically forbids cost-benefit analysis. In this law, as in others, Congress had handed off technically difficult and politically perilous issues to agencies, with only vaguely worded guidance. Agencies like the EPA and the Occupational Safety and Health Administration, both created during the Nixon years, develop cultures favoring ever more stringent regulation and harassing insiders who disagree. The result is regulations like the challenged EPA air quality standards or OSHA's proposed ergonomic standards, which impose huge costs–tens of billions of dollars–on the private economy.

The D.C. Circuit decision, if affirmed by the Supreme Court, would change that. So would a decision overturning the 20-year-old case that bans cost-benefit analysis; the Supreme Court pointedly asked for argument on the cost-benefit issue as well.

The dissenting judge argues that restricting agencies' powers could threaten the Federal Communications Commission's ability to regulate broad- casting in the "public interest," the Agriculture Department's authority to approve interstate milk compacts on a finding of "compelling public interest," and the attorney general's authority to regulate new drugs that pose "an imminent hazard to public safety." Quite possibly. Requiring Congress to set clear standards or to resolve conflicting goals itself would leave less leeway for regulators. It would sharply rein in agencies like the EPA, which, as David Mastio wrote in a series of articles in the Detroit News, has increased regulation sharply but "has done little checking to determine whether its initiatives were having any impact on public health."

In the New Deal and Great Society eras that gave birth to these regulatory agencies, the assumption was that only disinterested, scientifically expert regulators could weigh competing values and resolve technically difficult issues. Today, we tend to be dubious about the competence of bureaucracies and to believe that market mechanisms can often do a better job. The FCC now allocates spectrum space by auction, rather than by trying to determine who serves the "public interest." The EPA itself, in a policy started during the Carter years, has had great success in improving air quality at minimal cost by allowing private parties to buy and sell pollution rights. A Supreme Court decision upholding the D.C. Circuit on EPA would continue this process. It would discipline regulators by requiring clear cost-benefit analyses or by bringing difficult regulatory decisions back into the political process, making regulators and politicians face the market costs of any regulations they seek to impose. Whoever wins in November.

JWR contributor Michael Barone is a columnist at U.S. News & World Report and the author of the biennialAlmanac of American Politics. Send your comments to him by clicking here.


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©2000, Michael Barone