Hold those midnight rules

Government regulation of business is a subject that seems destined to be controversial. Consumer, environmental, and other interest groups tend to focus on the benefits of greater government involvement in the economy, while business representatives seem similarly focused on the other side of the regulatory equation - the costs that are imposed.

Like ships passing in the night, each has reason for maintaining its independent course. Good public policy consists of taking both of these viewpoints into account.

Yet there is one aspect of regulatory policy that should evoke broad agreement among the various disputants. It is the likelihood that hastily drafted rules and regulations will contain unintended defects and thus generate undesirable side effects. Unfortunately, this is not a new or partisan development.

The original precedent for haste in governmental decisionmaking was set by outgoing President John Adams. He supposedly burned the midnight oil to sign appointments for people of his choosing who subsequently would be serving in the incoming administration of President Thomas Jefferson. These so-called "midnight" appointments are a memorable, but hardly commendable, chapter of American history.

In that vein, several outgoing presidents in recent decades have issued a blizzard of new regulations, all of which would take effect in the next presidency. President Bill Clinton surely has not been exempt from this tendency. In recent weeks, he or other members of his administration, have promulgated new rules covering a very wide terrain - including the privacy of medical records, pollution controls on trucks and buses, linking the award of federal contracts to the enforcement of social regulations, and new requirements for workplace health and safety. One estimate is that 30,000 pages of regulations are involved in the last-minute Clinton administration rulemaking.

As would be expected, members of the administration strongly object to anyone describing this flurry of regulation in negative terms. They point out that some of these rules have been in preparation for several years. Nevertheless, in the fine print we learn that steps were taken to "streamline" and otherwise speed up the process by which these proposals are vetted by the various federal agencies and disputes between them resolved.

In any event, the regulations being promulgated generally conform with the standard description of previous regulations: They are intended to promote the public interest by dealing with some problem that has arisen in the operation of the complex American economy. The important concern that tends to get brushed aside in this process is not the worthiness of the objective, but the effectiveness of the proposed solution. Some well-intentioned regulations may generate more harm (i.e., adverse side effects) than good. Other proposed regulations may not be the most efficient way of responding to the problem at hand.

Incoming President Ronald Reagan faced this type of situation when he took office in January 1981. His response is a useful precedent for soon-to-be-inaugurated President George W. Bush. Mr. Reagan declared a limited moratorium on his predecessor's midnight rulemaking (with the inevitable exceptions for health, safety, and emergencies). The result was neither to prevent all of the new regulations from taking effect nor rubber- stamping them all.

Rather, the Reagan moratorium provided a breather during which the last-minute regulations of the Carter administration could be reviewed at a more leisurely pace. Some were rejected and others were revised, while still others were approved in the original form. Given the fact that there was no shortage of existing regulations, it seemed to those of us involved that little harm would result from a pause in the flurry of federal rulemaking.

In that spirit, it would be helpful if, soon after being sworn in, Mr. Bush would issue a moratorium on new regulations similar to that of Reagan. It is intriguing to note that Reagan set up a strong and effective regulatory review process which, although it continues in operation, has been greatly watered down.

Bush will have the opportunity to rebuild the organization and procedures which help ensure that the regulations that are issued are more carefully written and, thus, one hopes, more cost-effective in terms of their results.

Murray Weidenbaum is a scholar in residence at the Jones Graduate School of Management at Rice University in Texas. He is on leave from Washington University in St. Louis.

(c) Copyright 2001. The Christian Science Publishing Society