Veto decision may unleash regulators

At the souvenir vans that surround Washington tourist sites, you can't buy paperweights in the shape of the Federal Trade Commission building. There are no ''I visited the Federal Home Loan Bank Board'' T-shirts for sale.

But these and other federal regulatory agencies are seats of independent political power, as are the more widely depicted United States Capitol and White House. In fact, regulatory agencies handle some of the tougher questions the US government must answer, such as ''What safety devices should we require on automobiles?'' and ''Is it safe to restart the Three Mile Island nuclear power plant?''

Though most of them are technically independent, federal regulators have long been subject to pressure from the President and Congress. Last week, however, the Supreme Court handed down two decisions - one sweeping, one more narrow - which will, in effect, serve to protect regulatory agencies against the meddling hand of other branches of government.

The first and most wide-ranging of the decisions rapped Congress's knuckles by striking down the ''legislative veto.'' The legislative veto, a provision included in some 200 laws, allowed Congress unilaterally to scuttle regulations issued under those laws, if it so desired.

Last year, for instance, Congress killed a Federal Trade Commission (FTC) rule that would have required used car dealers to disclose known auto defects.

Members of Congress felt they could act in such a peremptory manner because the FTC and other agencies are children of their own creation, born of bills enacted in years -past.

But the Supreme Court said Congress had no such parental authority. Since the President isn't given the chance to pass on legislative vetoes, said the court, the act is an illegal infringement of executive branch powers. The Constitution requires that all congressional legislative actions be signed by the President before becoming law.

Congress's desire to sit in judgment over proposed rules is based on the fact that regulatory agencies have loose charters that allow them much freedom of action.

The FTC, for instance, is charged with prohibiting ''unfair and deceptive'' business acts, but is left free to define ''unfair and deceptive.'' As a result, the commission has often acted in what Congress considers too zealous a manner - as when it proposed the restrictions on used-car dealers.

The legislative veto gave Congress a quick and easy way to head off rules it didn't like. Last year, as part of a general regulatory reform bill, Congress even considered extending its legislative veto power to cover all rules proposed by all agencies.

''Chief Justice [Warren E.] Burger correctly called the veto 'a shortcut,' '' says Alan Morrison, a lawyer with the Ralph Nader group Public Citizen.

Members of Congress, in the wake of the legislative veto decision, are saying they will simply be much more careful about delegating authority to regulatory agencies.

But regulators say they doubt that will happen - since their function is to make the hard choices that Congress has neither the time nor stomach for.

''In many areas of regulation, Congress can't look far enough down the road to be specific,'' agrees Joseph Cooper, a Rice University professor and author of several articles on legislative veto. ''And the [political] pressures around rules are too great. They'll have to delegate authority.''

A high FTC official who asked not to be named points out that FTC chairman Jim Miller has, in fact, tried to get Congress to define ''unfair and deceptive'' business practices more narrowly, and that Congress has refused.

And even without legislative veto at its disposal, this FTC official points out, Congress still has ''27 different ways of torture'' - such as oversight hearings - for agencies whose actions it disapproves. And legislators can always pass a full-blown bill disallowing an agency action. These methods are simply harder and less convenient than a simple veto.

The second Supreme Court decision affecting regulatory agencies rebuked the Reagan administration for withdrawing a regulation that all new cars have air bags or automatic seat belts.

The court said the administration simply had no justification for withdrawing the rule, and thus was ''arbitrarily and capriciously'' infringing on the National Highway Traffic Safety Administration's duty to increase highway safety.

Unlike the legislative veto decision, this action simply protected one proposed regulation from interference.