Wrath of the Regulators: The Burdens of Big Government

Last month, the National Research Council (NRC) — an affiliate of the National Academies of Sciences — rebuked the White House for trying to bring reason to regulatory policy. At issue is the recent Proposed Risk Assessment Bulletin, put out by the White House’s Office of Management and Budget.

The bulletin was designed to comply with the Federal Data Quality Act, which demands that OMB work to improve data used by federal agencies in regulatory proceedings. The bulletin focuses on improving scientific studies that agencies must perform before finalizing regulations that can reduce freedom and levy heavy costs on consumers. Certainly, the bulletin could have been improved; and the NRC could have provided constructive advice, as many other scientists and risk assessors did during the OMB comment process.

But the NRC’s objection is more fundamental. It reflects a larger policy trend — one that involves moving regulatory policy away from scientific, standard-based processes and toward mushy, precautionary-based regulation. This new philosophy essentially allows policymakers to regulate on a whim, because something “might” be dangerous to someone, somewhere.

The NRC’s favored approach is dominant in Europe, where the prevailing regimes tend to favor regulation over freedom. For example, under a newly enacted European chemical regulation, private companies must somehow prove their products are “safe” before engaging in commerce. Under this logic, anyone who wants to engage in business is essentially presumed guilty of some unidentified evil until they prove themselves innocent.

Current U.S. regulatory policy stands in contrast. It generally demands that agencies scientifically demonstrate a safety threat before imposing regulations. Of course, our system is far from perfect. Our agencies often don’t meet scientific standards, and many have produced seriously misguided rules. That’s why OMB’s bulletin was designed to improve the process with a single set of guidelines for all agencies to apply “to the extent appropriate.” Agencies would surely abuse this process, but it was at least the bulletin step in the right direction.

Yet the NRC has essentially called on OMB to withdraw the bulletin, noting that it “implies” that agencies must first consider whether a substance or activity poses a clinically demonstrated danger before they impose regulations on it. Actually, the Bulletin simply says that agencies should employ standards that are “accepted in the relevant clinical and toxicological communities.” The NRC indicates that it would prefer much fuzzier standards, ones that direct agencies to consider “any possible” problem that could theoretically occur.

The NRC further criticized the OMB bulletin by asking regulators to consider “a range of plausible risk estimates” rather than assuming the worse-case scenario. And it criticized the bulletin for not paying enough attention to default assumptions. Agencies use such “default” assumptions when evidence is lacking that a regulated substance poses a serious risk. If regulators cannot identify adverse impacts, they simply make up data demonstrating a baseline level of risk.

Crudely stated, all this from the NRC amounts to the following claim: Agencies should be free to set risk-assessment standards that deviate from those accepted in the relevant clinical and toxicological communities, and that address any possible problem, even when it is not plausible. And if agencies cannot find data-warranting regulation, they should make some up. Sound like nonsense to you? It should.

Despite NRC complaints, OMB’s risk standards made some very good policy calls. A big problem with regulatory policy today is that it attempts to address highly implausible risks, and it uses too many default assumptions. In the end, we get needlessly expensive regulations that promise little in terms of benefits. An example includes drinking-water regulations that cost towns and cities millions of dollars to reduce trace-level chemicals from one inconsequential level to another.

In addition, agencies often produce policies that reduce quality of life and harm public health. The use of default assumptions in pesticide regulation has greatly reduced the number of products available for safely controlling deadly insect-borne diseases such as the West Nile virus. U.S. consumers have been denied the right to use medicines and medical devices that were saving lives in Europe for years before the FDA would allow them here. And because of fuel-economy standards downsizing cars, more Americans die in car crashes every year than otherwise would.

NRC does not appear to be too concerned about the human and other costs of regulations, but they are concerned about overburdening government agencies. One of its key complains that the risk standards would be too burdensome for government agencies. Heaven forbid that agencies work hard to justify placing burdens on the rest of us.

The NRC concludes: “OMB should limit is efforts to stating goals and general principles of risk assessment. The details should be left to the agencies or expert committees appointed by the agencies, wherein lies the depth of expertise to address issues relevant to their specific types of risk assessment.” In other words, the OMB should basically step aside and allow federal agencies and committees at the NRC that agencies hire to make risk policy.

A wiser choice for OMB would be to set the NRC policy recommendations aside and assume its congressionally mandated role. With improvements, OMB’s risk bulletin could become a model for rational risk policy in an increasingly irrational world.