Wash Post

FRIDAY, NOVEMBER 22, 1991 A25

Jessica Mathew's

Bush's
Double
Game

Rep. Henry Waxman (D-Calif.) doesn't mince words on the subject of the White House Council on Competitiveness, chaired by Vice President Quayle. He thinks it is engaged in "wantonly illegal" activities that make it "a domestic version of the Irancontra operations of the National Security Council during the Reagan era.".

What has aroused Waxman's ire is a series of decisions that, if allowed to stand, would demolish much of the Clean Air Act, which Congress has just finished 10 painful years writing. The council provides a back door for industry to win policies explicitly rejected by Congress and by government agencies in public proceedings. By claiming executive privilege, it can act in secret, flouting public accountability rules meant to ensure the fairness, openness and integrity of official decision making. The gravest damage done is to the dwindling stock of public confidence in government.

At a time when conservatives as much as liberals can see the crying need to rebuild trust, the council's actions nourish the view that the federal government is an elaborate exercise in deception and hypocrisy. For its real job is to allow Bush to play a sophisticated game of bait and switch. By now the pattern is well established. The president claims public credit for environmental achievements and then reaps a quiet political reward from businessmen who use the council to undo them.

Thus the Clean Air Act, target of the council's most egregious recent attacks, is also proudly cited by the administration as the chief accomplishment of Bush's tenure as the "environment president."

Bush saw the potential in this stratagem while still vice president. As chairman of the council's predecessor, the Task Force on Regulatory Relief, he tried to derail the phase-out of lead in gasoline. While there are many questionable claims of environmental and health hazards, lead is not one of them.

It causes severe mental and physical retardation and, in the most minute quantities, lowers IQ. For the environment president, the education president or the just plain responsible president, getting rid of lead is beyond debate.

Nonetheless, the task force blundered ahead, trying to save the oil industry a few bucks. The move created such an uproar that it ultimately resulted in tougher regulations than those the task force reversed. During the campaign, Bush actually claimed credit for that outcome. That he got away with it is a tribute to the breathtaking ineptitude of the Dukakis campaign. The council hasn't gotten the message on lead yet. This year it rejected out of hand a proposed clean air ban on incinerating lead batteries.

Here's candidate Bush on another point: "Japan's recycling rate is 50 percent, yet some feel the EPA's national goal of a 25 percent reduction in waste is excessive. I'd like to see us exceed that goal in my first term." Following through, EPA proposed that incinerator operators be required to separate 25 percent of their garbage for recycling so long as the price of the recycled materials covered the costs Rejected-by the council.

Candidate Bush got lots of mileage out of his "no net loss of wetlands" pledge. President Bush got a lot of heat from developers. Solution? Have the council rewrite the technical manual to define away half of the wetlands. Oh, there are a few minor glitches. The new definition of wetlands doesn't cover the Everglades, for instance. Like the lead phase-out rule, this one has elicited a chorus of Bronx cheers and will have to be reversed. EPA will get the job of devising a face-saving outcome.

Remember that great photo op when the president in shirtsleeves pointed out the shrouded beauties of the Grand Canyon and announced an agreement to cut local emissions by 90 percent? What he didn't say was that the plan had been worked out by environmentalists, industry and local officials after the Council on Competitiveness had proposed to allow three times as much pollution.

The council's crowning achievement, the mother of all loopholes, concerns the Clean Air permit process. Under a key feature of the new law, factories and other pollution sources must obtain a permit stating their allowed emissions. The council's twist allows emitters to unilaterally change

their permits-increasing emissions by any amount-by writing a letter to their state agency. Unbelievable as it sounds, unless the state agency objects within seven days, that's it. Instead of the "polluter pays" principle, this is the "polluter permits" principle.

The White House is taking a second look at the plan now. If issued, the rule is likely to be struck down by the courts eventually. In the interim it will create regulatory chaos and delay clean air progress for years.

The Grand Canyon agreement, arrived at by negotiation and consensus, left all sides reasonably satisfied. It will stick. The council's one-sided rulings, by contrast, more often than not end in confusion, delay, litigation and uncertainty for investors-everything businessmen rightly hate in government regulation-and a drag on productivity and competitiveness. Still, a quick fix that leaves no public footprints is too good to ignore. As long as the opportunity is there, it will be used. The best way to end the president's double game and the council's assaults on policy, is a heavy dose of public scrutiny.

The writer, vice president of World Resources Institute, writes this column independently for The Post.

REGULATION

interview and even wondered how long top EPA officials could live with having their decisions systematically undermined by White House aides whose primary

President's Council on Competitiveness, Quayle has become the Bush Administration's point man in shaping the nation's

regulatory agenda-a role that has

dismayed public-interest groups.

delighted the business community and

Among the first to say that the standup comics are far off the mark in portray

ing Quayle as Bush's brainless second

banana are environmental activists, who have been stung by what they see as the

BY KIRK VICTOR council's repeated efforts to weaken the Environmental Protection Agency's (EPA's) proposed regulations for the 1990 Clean Air Act.

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Liberal lawmakers have joined the activists in denouncing the council, calling it the base of operations for a small band of zealots who do the bidding of business interests under the guise of promoting U.S. competitiveness. But as the critics' rhetorical level rises, so too have countervailing noises from industry representatives and others who praise the council's willingness to subject the proposals of government agencies to stringent cost-benefit analyses.

It's no surprise that the group has stirred up so much consternation in some quarters. It has weighed in on issues from national recycling requirements to emissions standards for industries throughout the country. On these and other contentious matters, it has turned into something of a court of last resort for parties who feel that they haven't gotten a fair shake from federal bureaucrats. "When they feel like they are being treated unfairly, they come to us," said Allan B. Hubbard, the council's executive director and Quayle's deputy chief of staff.

The council's clout has been so great. particularly in taking aim at EPA's proposals, that Rep. Henry A. Waxman, DCalif., chairman of the Energy and Commerce Subcommittee on Health and the Environment, angrily denounced it in an

ests.

"The Environmental Protection Agency, by and large, is trying to live up to the law and follow what they think is the right course from a policy perspective, based on their expertise, and then they get overturned by a group that has no knowledge about the law, no expertise in the field, but only is responding to pressures from industry," Waxman said. "We have a pretty clear sense from EPA that they're not happy, but their hands are tied and they feel they don't have the power to stand up to the council."

EPA administrator William K. Reilly, however, maintained that his agencynot the council-makes the final call. "They have no authority to direct me in how I'll administer the law."

But Waxman is adamant that the council has overstepped its authority. "It's unacceptable to me as a Member of Congress to have the law flouted by an agency that is not spelled out in any law or in the Constitution as having this kind of centralization of power to operate behind the scenes and to respond solely to the pressures of big business," he said.

Asked about the council's authority. Hubbard referred to Executive Order 12291, issued by President Reagan on February 17, 1981, which created the Task Force on Regulatory Relief, chaired by then-Vice President George Bush. The President's Council on Competitiveness is the task force's successor.

Hubbard also had a suggestion for Waxman and other critics, who contend that the council is unlawfully meddling in the rule-making process and conducting its business in secret. "Whenever a regulation is issued that someone thinks is inconsistent with a statute, all they have to do is to take it to court, and the court will adjudicate the matter." Hubbard said. (In April, the Natural Resources Defense Council Inc. [NRDC] sued EPA to force the agency to adopt recycling

regulations that the competitiveness outfit had crushed.)

Hubbard pointed out that all proposed regulations must be published so the public has an opportunity to comment on them before a final rule is issued. But he acknowledged that in reviewing a proposed regulation or the draft of a final regulation, "we don't ask 250 million Americans to come in and help us."

Hubbard and David M. McIntosh, the council's soft-spoken deputy director, portray the group as a neutral body with no preconceived agenda. The council, Hubbard said, is simply "driven by the numbers and by the desire to minimize regulations and to make regulations as unburdensome as possible while meeting the requirements of the statutes."

Hubbard's characterization provokes scorn from Rep. Gerry Sikorski. DMinn.. a member of Waxman's subcommittee. "What you have here is a specialinterest waltz that they do," he said. "Then they come out and say (a proposal] is anti-business."

THE RED TAPE BRIGADE

Hubbard and McIntosh insist that their mission is simply to carry out President Bush's marching orders. Bush recently praised the council for attacking "the scourge of unnecessary regulation," which he contended cost the economy $185 billion last year. Because about half of the cost stems from environmental rules, McIntosh said, EPA regulations are the subject of much of the council's work.

The White House's renewed assault on regulations came after Bush had heard criticism from friends in the business community that his Administration was reversing what he had accomplished as Vice President by issuing lots of "extraneous regulations," said Wayne H. Valis, who, as a member of the Reagan White House staff, had worked with Bush in the carly 1980s on the regulatory reform effort.

So upset was Bush about tales of burgeoning regulations that over the 1989 Christmas holidays, he directed a top aide to track Valis down-finally contacting him as he was riding a camel in Egypt-to set up a meeting to discuss how the earlier effort on regulatory relief had worked. Within months, the council got a jump-start.

Though it had been established on March 31, 1989, the council initially seemed to be little more than a facade that allowed the Administration to at least give a passing bow to the increasingly contentious debate over U.S. global competitiveness. It had no full-time staff and no real structure until Hubbard was

brought on board in July 1990, followed in short order by McIntosh.

Hubbard, a 43-year-old Harvard-cducated lawyer and entrepreneur who owns a specialty chemicals company in Indiana, also brings political skills to the job. He managed the presidential campaign of former Delaware Gov. Pierre S. (Pete) du Pont IV in 1988 and was deputy convention manager for Bush at the Republican National Convention. Last year he served as vice chairman of Dan Coats's successful senatorial campaign in Indi

ana.

McIntosh, who also serves as assistant to the vice president for domestic policy,

had been Quayle's deputy counsel before joining the council. Before that, he was special assistant to President Reagan for domestic affairs. His solid conservative legal background also includes a stint as special assistant to former Attorney General Edwin Meese III. A graduate of the University of Chicago Law School, Mclntosh, 33, is a co-founder and co-national chairman of the right-leaning Federalist Society for Law & Public Policy Studies.

The council relies heavily on other members of Quayle's staff and works closely with the Office of Management and Budget (OMB). Its permanent members, in addition to the Vice President,

Rep. Henry A. Waxman, D-Calif.
The council "is not accountable in any way."

are six Administration luminaries: Treasury Secretary Nicholas F. Brady. Commerce Secretary Robert A. Mosbacher. Attorney General Dick Thornburgh. chairman of the Council of Economic Advisers Michael J. Boskin. OMB direcTo Richard G. Darman and White House chief of staff John H. Sununu. They meet about every other month.

Don't let the involvement of the heavy hitters fool you. said David D. Doniger. senior attorney at the NRDC. "What you have is minimal involvement by Cabinetlevel officials on the council and very heavy involvement by what is becoming a permanent bureaucracy, a power center in the White House." he said. "They see it as their prerogative to make the decisions on issues that rise to their attention.

McIntosh, however, paints a more sys tematic and less ad hoc picture, noting that issues rise to the council's attention either when one agency disagrees with another over a proposal or when an agen cy disagrees with the review of a regula tion by OMB's Office of Information and Regulatory Affairs.

The council has also tackled Quayle's personal hobby horses, such as biotechnology, a $2 billion business in the United States that-barring the impediment of unnecessary regulations-is expected to hit $50 billion annually by the year 2000.

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according to a glossy fourcolor brochure that the council issued in February.

On the regulatory front. Quayle ruffled some feathers in March, when he sent a memorandum to all department and agency chiefs in which he enumerated a sweeping list of items subject to cost-benefit review. Although Hubbard said that the list simply conformed to Executive Order 12291. Quayle's inclusion of press releases and strategy statements raised some eyebrows.

"This has not happened before, where the Vice Pres ident reached in and actually told agencies how to comply with regulatory review," a Senate aide said. "It is a significant symbolic step of vice presidential hands-on control of regulatory review, which is unprecedented."

The council is also preparing a white paper on the future of the telecommunications industry and has a working group explor ing ways to streamline the process for approving new drugs. Anoth er working group is looking at reform of the civil justice system. The council has supported legislation to overhaul product liability laws, arguing that litigation costs and liability risks impede product development.

But Sikorski is not buying for a moment the council's protessed agenda. "They can't point to a single item that has made American industry more competitive." he said. "What they can point to is a bunch of backdoor, secret decisions that bailed out special interests-business

interests.

Echoing Sikorski's view and even likening the council's methods to Oliver L. North's. Waxman Tumed that by taking actions contrary to what Congress had prescribed and pursuing its agenda in a forum not open to the public. the council is "not accountable in any way.

"They see themselves and openly declare themselves as a place where industries can come in and overturn Congress and the regulatory agency, even though they've made their case and lost it in the places where authority rests-Congress in the first instance. the agency in the second." Waxman said.

Noting that Waxman can always call on senior Administration officials to testify. Michael M. Uhlman. an attorney who sought out the council's help in resolving

a dispute over the liability of financial institutions for hazardous waste cleanup costs, said that it is "not fair" to say that the group's work "occurs in the dark by conspiratorial forces you can't get at."

Similarly, Kent W. Colton, executive vice president of the National Association of Home Builders, who has met with the council on several occasions, disagreed with those who called it a closed shop. He said that he welcomed its involvement as "a broker" in helping to make certain that all views are heard, including those of business, which are sometimes shortchanged by agency bureaucrats.

McIntosh also flatly disputes the notion that the council has displaced the decision-making authority of agency chiefs, noting that if an environmental issue is raised at the council, EPA administrator Reilly simply weighs the council's recommendations in his deliberations before issuing a rule, but "the discretion remains with him."

Waxman, however, is unpersuaded. "I'm saying that Reilly does not have the final say even though by law he should." he said.

BATTLING THE BUREAUCRACY

The critics fury toward the council has stemmed from its recent handling of sev eral politically charged issues. It helped to scuttle an ambitious recycling require ment that EPA had favored: it sided with a power station targeted by EPA to substantially reduce its sulfur dioxide emissions and, thereby, clear the air around the Grand Canyon: and, most recently, it refereed a dispute between Treasury and EPA and helped to limit the liability of banks and other lenders for cleanup costs under the supertund-a position harshly criticized by some environmentalists.

Add to that list the council's ringing affirmation of private-property rights, as reflected in its strong support of an amendment to the Senate's highway reauthorization bill that would rea.re federal agencies to pay property owners for "takings" that affect property values. as in the case of setting aside wetlands. The amendment, for which Quayle lob bied, received 55 votes and would prevent any regulation from being issued unless the Attorney General certified that it complied with the executive order requiring agencies to review their actions to minimize the taking of private property.

Describing the issue as "somewhat technical" but one that "will have abg impact." Hubbard said that it "will force an agency, before imposing a regulation on your property, to assess whether a taking will occur. That will make the agency more cautious about imposing regula tions that have the effect of a takings."

But critics say that it is simply a barely disguised effort to discourage agencies from issuing regulations, including those designed to protect pristine land from development. "It gives the Attorney General virtual carte blanche to veto or indefinitely delay any federal regulation on any issue, no matter how badly that regulation is needed to protect people's rights to breathe clean air, to have the health and safety of food assured and a wide variety of other rights," said Glenn P. Sugameli, counsel for public lands at the National Wildlife Federation.

Even Charles Fried. the Reagan Administration's solicitor general and hardly a bleeding-heart liberal, recently wrote in Order & Law: Arguing the Rea gan Revolution-A Firsthand Account (Simon & Schuster Inc., 1991) that using the takings clause of the 5th Amendment of the Constitution as a "severe brake upon federal and state regulation of business and property" had been part of a "quite radical project" hatched by Meese and "his young advisers-many drawn from the ranks of the then fledgling Federalist Societies and often devotees of the extreme libertarian views of Chicago law professor Richard Epstein."

Sen. Steven D. Symms, R-Idaho, the sponsor of the amendment, listed more than 60 business groups that supported it. but Sugameli said the list constituted "basically a who's who of special interests who argue they want to be basically immune from all sorts of federal regulations."

Six months before it weighed in on the primacy of private-property rights, the council induced Reilly to back off of a proposed regulation under the Clean Air Act that would have required the diver sion of at least 25 per cent of recyclable

garbage from trash headed for municipal incinerators.

EPA conducted three studies of the costs of recycling and concluded that there would be a net savings as well as indirect benefitsless air and water pollution. But McIntosh said that the final decision was based chiefly on a cost-benefit calculus that showed the recycling requirement added $100 million to the cost "without any additional airquality benefits."

Doniger strongly disagreed with that assessment. "If this rule doesn't pass the cost-benefit test, then it shows that there is no neutral application of that test." he said. "Even in the worst possible assumptions, the cost is less than the price of one month's worth of bubble gum for my kids per person."

The proposal would fail to pass a cost-benefit analysis only under the most pessimistic assumptions-that is, if there were no market for recycled products and extraordinarily high costs for segregating recyclable garbage, he added.

Among those upset by EPA's recycling proposal and who lobbied the council were a phalanx of municipal and county officials concerned about its cost and its

breadth. Noting that EPA lacked the legal authority to require that the diverted trash be recycled under the Clean Air Act-only that it not be burned and

Richard A. Bl

cause dirty emissions-Barbara Paley. an associate legislative director at the National Association of Counties, said that the agency didn't care what you did with the garbage after it had been separated.

"You could leave it at the curb forever. put it in a landfill or dump it on the White House steps. They didn't care as long as it didn't show up at your incinerator." she said. "That was one of the things we thought was so ridiculous about the whole thing."

"EPA didn't seem

open to practical problems." agreed

Richard F. Goodstein, divisional vice president of national government affairs at Browning-Ferris Industries Inc.. a leader in the waste energy business.

Paley and other lobbyists called the White House, sent follow-up letters, and even met several times with White House aides. They were advised to contact the council, which Paley had never heard of. They hit pay dirt when OMB found that the proposal did not pass muster under a cost-benefit test and ran counter to principles of federalism, because garbage was an area traditionally reserved for state and local government action.

The idea that there's some pristine. constitutionally hallowed role for localities in handling garbage is silly." Doniger said. He noted that regulations for managing garbage by states and localities exist under the 1976 Resource Conservation and Recovery Act, a law that governs solid waste.

Reilly and one of his top lieutenants also disagreed with OMB's conclusion and decided to make their pitch to the council, but "they got rolled," said Doniger, who fortuitously happened to have a meeting with Reilly on Dec. 19— the same day he lost before the council. Reilly briefed him and other environmentalists about the council meeting and was "a good soldier." but "he also made

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