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Recent reports that the Bush administration has eased the standards for New Source Review and that the Office of Management and Budget is looking to work with the EPA as it drafts new rules for soot have many in the environmental community crying “regulatory rollback.” Proponents of command-and-control regulation imply that any reform measures are letting polluters off the hook and turning the clock backwards. In reality, it is becoming increasingly evident that many federal regulations provide little or no benefit to the public. Outdated or unnecessary regulations do, however, raise consumer prices, threaten American jobs, and reduce the competitiveness of American firms in a global economy.
The most recent uproar occurred when the Environmental Protection Agency (EPA) announced that it was reforming the Clean Air Act’s “new source review.” Under these regulations, any time a company upgrades its plant, it is required to install pollution control equipment. Routine maintenance, however, was exempted. The problem has been with the definition of routine maintenance. This was never clear, and even the new rule has yet to clarify this important point. Past enforcement by the EPA has been aggressive, with a very narrow definition of “routine maintenance.” Many companies delayed needed upgrades because the costs were prohibitive, which often led to inefficient production with older equipment that increased emissions. The most recent round of reforms aimed to clarify the scope of new source review while allowing companies to make required upgrades.
Similar concerns have been raised about the Office of Management and Budget’s involvement with the EPA as it writes new regulations for soot. Yet, in both cases, it is important to note that regulations are not being eliminated. There is no regulatory rollback; rather, these are attempts to define a more rational approach to regulation. The old command-and-control approach to regulation is offering diminishing benefits at increasing costs. Avoiding unnecessary increases in the regulatory burden requires new tools that allow agencies to more accurately determine costs and assess risks. These tools also allow more flexibility in regulatory compliance, which means agencies can achieve their objectives at a lower cost to society.
Requiring agencies to utilize new tools and techniques to evaluate regulations ensures that regulatory resources are allocated correctly. Cost-benefit analysis and risk assessment improve the quality of health and safety by making sure regulations address the most serious risks facing the public. Too often in the past regulations have been aimed at issues identified through media hype rather than sound science. Unfortunately, there is often a large gap between perception and reality that can divert valuable resources away from serious problems. The Environmental Protection Agency's own Scientific Advisory Board concluded in 1990 that environmental laws "are more reflective of public perceptions of risk than of scientific understanding of risk."
Oftentimes, public perceptions of risk do not match risks observed in the real world. In many instances the public exaggerates the harms of sensational yet unlikely risks while underestimating the potential dangers of less spectacular risks. For example, alarmists have been quick to criticize food irradiation, a safe practice that prolongs the shelf life of fresh foods. Yet, at the same time, lifestyle choices, which are personally controllable risks such as diet, exercise, smoking, and drinking, continue to be significant factors when it comes to health. Regulation by "media scare" does not necessarily provide the greatest protection for the American public.
Future increases in environmental quality will not come cheaply, nor as easily as the improvements over the last 30 years. The most obvious steps towards improvement have been taken and further improvements will require more precision and more flexible regulations. Risk assessment is an important tool that would ensure federal regulations provide benefits commensurate to their costs. In addition, a careful analysis of costs and risks will allow agencies to rank potential hazards and direct their resources to the most serious problems. More effective regulatory tools are required to guarantee that regulations help more people than they harm.
Over the past thirty years, the quality of life in America has improved dramatically. People are living longer and living better. Today, the air is cleaner and the water is purer. The food supply is safer and advances in technology have lowered the costs of production, making a nutritional diet more easily affordable. The benefits of the command-and-control regulations issued by the federal government can no longer justify their costs. It is time to review the $800 billion price tag of federal regulations. Just because there is a regulation on the books it does not necessarily mean that it is efficient or that it cannot be improved.