The White House's anti-regulatory hit list took center stage in a House committee hearing, during which GOP members and White House regulatory czar John Graham praised the hit list as a gift to the manufacturing sector while Democratic members criticized the entire project as yet another example of a corporate special interest takeover of government. The hearing, held April 12 by the House Government Reform Committee's Subcommittee on Regulatory Affairs, featured Graham, Department of Commerce Assistant Secretary for Manufacturing and Services Albert Frink, and several representatives from the manufacturing sector all celebrating the hit list project. Only one witness -- Sidney Shapiro, law professor at Wake Forest University and board member of the Center for Progressive Regulation -- was allowed to offer an opposing view. What is the Hit List? The White House's Office of Information and Regulatory Affairs invited corporate special interests in March 2004 to send in their wish list of regulatory protections to be weakened or eliminated, and the administration followed up a year later with a list selecting 76 items from the industry wish list that the administration was endorsing as its "regulatory reform" priorities. OIRA did not, however, seek comments on protections to address unmet needs. (Read more about the hit list.) The hearing began with a statement from subcommittee chairperson Rep. Candice Miller (R-MI). According to the Washington Post, Miller has been meeting regularly with representatives from the manufacturing sector and other corporate special interests to develop anti-regulatory plans. Miller's opening remarks parroted the usual corporate special interest arguments that onerous regulation harms the competitiveness of U.S. manufacturing and directly contributes to job loss in that sector. OMB's Regulatory Hit List The hearing focused on the latest development in the White House's anti-regulatory hit list: the release last month of a report in which the White House selected 76 of the public's 189 suggestions for regulatory protections to be weakened or eliminated and endorsed them as the administration's regulatory "reform" priorities. The hit list items with the White House's seal of approval include such important protections as rules governing how long truck drivers can work without breaks and an interim rule protecting the food supply from the deadly food-borne pathogen Listeria. Graham promised that the 76 priority rollbacks "will be done," but he acknowledged that it would be a long road. The hit list focuses primarily on regulatory protections developed by the Environmental Protection Agency and the Department of Labor. Frink urged that the hit list should go even further, citing the Sarbanes-Oxley Act as the most onerous requirement for the manufacturing sector. The act seeks to avoid Enron and WorldCom-type scandals by establishing audit reporting standards and other rules to hold public companies accountable. Despite what Frink characterized as a "plea for assistance" from the manufacturing sector to reduce the burdens of rules associated with Sarbanes-Oxley, rules implementing that act do not appear on the final hit list. The Myth of Reduced Competitiveness The primary basis of the argument for regulatory rollbacks is a Small Business Administration study purportedly demonstrating that regulation is overly burdensome for the manufacturing sector, but Professor Shapiro debunked those arguments in his testimony. Scholarly research does not support the claim that regulation harms competitiveness. According to leading research, regulation does not affect plant location decisions or trade flow. In fact, in some cases regulation has actually increased competitiveness. The cost of compliance with regulation is less that half of one percent of the value of manufactured goods and can hardly be seen as the cause of manufacturing moving overseas, especially given labor and trade issues which have a much more marked impact on competitiveness. Other "Reforms" for Manufacturers The White House is targeting the manufacturing companies for even more favors beyond the anti-regulatory hit list. In January 2004, the Department of Commerce released a report entitled Manufacturing in America, which outlined recommendations to increase the competitiveness of the manufacturing sector. Already the Department of Commerce has implemented 18 recommendations from the plan and intends to work towards the rest. Reducing the burden of regulation and legislation is seen as a major priority under the recommendations. Among the recommendations already implemented was the creation of the position of an assistant secretary for manufacturing and services, a position now filled by Albert Frink, who spoke at the hearing. Other recommendations already implemented included the creation of a manufacturing council and an office of industry analysis, which will work with OIRA "to develop analytical tools and expertise to assess manufacturing competitiveness." Shapiro also discredited much of the underlying data on the cost of regulation to business. Much of the existing data comes from the manufacturing sector itself, which has clear incentives to overstate the costs of regulation. Further, their arguments fail to consider the benefits of these regulations. The cost may be high, but the benefits of these regulations are even greater. Even Graham concedes that the benefits of regulation far outweigh the cost. Shapiro also rejected the argument that the manufacturing sector deserves to be enabled to dodge its responsibilities because it bears larger regulatory burdens than other sectors. As Shapiro pointed out, manufacturing is also one of the most dangerous industries, along with logging and construction. Given that the manufacturing sector is responsible for some of the greatest risks to the public, it is only natural that the sector would have one of the largest regulatory burdens. Reduce Cost, Not Protections Rep. Stephen Lynch (D-MA), the ranking minority member on the subcommittee, made the case for strong public health and safety protections. Lynch relied on his own experience as a steelworker to assert the need for strong public health and safety protections. Visiting the wakes and funerals of friends who died on the job helped Lynch to realize the importance of government intervention in workplace health and safety. Though in some cases the cost of regulation can and should be reduced, it should not be done so at the expense of needed protections, Lynch asserted. Many items on the hit list seek not only to reduce cost burden but also to limit a needed public protection. For instance, one reform priority seeks to reduce reporting requirements to the Toxic Release Inventory. This supposed reform will limit the public's access to information about the release of harmful toxins by chemical plants and will ultimately impede EPA's enforcement of the Clean Air Act. Lynch also questioned several inconsistencies on the hit list, such as the appearance of the Listeria rule as an accomplishment in 2004 and then as an item for reform in the 2005 hit list. Graham claimed that the rule has turned out to be overly costly and that the reform is intended not to repeal the rule but rather to "refine and retune" it. Comments printed in the final hit list report suggest otherwise: the comments appended to the listing of the rule claim that not only were the costs of compliance too great, but that the benefits were also overstated. True regulatory reform should not just seek to remedy excessive regulation but must also seek to identify unmet needs and gaps in public protections. Rather, the current ad hoc hit list method seeks to remove regulation without simultaneously looking at gaps in regulation. Shapiro suggested that regulatory reform should take place in the context of agencies' regulatory plans. Shapiro suggested that the development of the semiannual agendas could be an occasion to identify regulations in need of updating as well as unmet needs crying out for new regulatory protections. Call for an Open and Transparent Process Lynch also called for the process of regulatory reform to be an open and transparent process in which all sides are given a voice. Lori Luchak, speaking on behalf of the American Composites Manufacturers Association, echoed this sentiment. She argued that stakeholders, who may have a better idea of the most effective way to implement a regulation, should have a seat at the table during the creation of a regulation. Not all stakeholders have had the kind of opportunity that Luchak enjoyed. The public interest community had little to no say in the rollback nominations; 97 percent of rollback on OMB's hit list were suggested by industry representatives. Public industry groups were left out of much of the OMB regulatory reform process due, in part, to the comments OMB solicited. Whereas in previous years OMB asked for comments on any proposals for regulatory reform, in 2004 OMB solicited nomination for regulatory reform measures that would reduce the burden on the manufacturing sector. This phrasing implied an interest only in rollbacks of existing protections, to the exclusion of calls for new safeguards to address unmet needs. Lynch insisted that complete and accurate information is essential for Congress to make well-informed regulatory decisions. Regulatory reform measures should reflect the interests of all stakeholders and not just those of big business. A balanced regulatory reform plan should address not only excessive costs but also the need for increased public protections. Lynch and Rep. Henry Waxman (D-CA) sent a letter to John Graham in March requesting information on the hit list process, in particular Graham's external communications on regulatory reform, including discussion participants and topics of discussion. Graham had yet to respond to their inquiry. Increased Congressional Oversight Both the committee members and the manufacturing sector seemed to view Congress's main role in the hit list and other regulatory "reforms" as one of oversight. When Miller pointedly asked Graham what the committee could do to help, Graham suggested that committee staff should be monitoring the progress of the agencies on completing the regulatory reform priorities and holding agencies responsible for missed deadlines. Corporate special interests, meanwhile, may be clamoring for an even more aggressively anti-regulatory role. According to the Washington Post, "the U.S. Chamber of Commerce wants the panel to require federal agencies to do a formal review of their past rules with an eye to eliminating some of them." Miller may take up this reform option or others when the committee considers the reauthorization of the Paperwork Reduction Act or other bills this session.