Federal “regulatory reform” proposals: Leaving the states out?

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In addition to trying to postpone rules that have been in the pipeline for some time, two pieces of legislation embody conservative efforts to shackle our government’s ability to protect the public. The Regulations from the Executive in Need of Scrutiny (REINS) Act of 2011, and the Regulatory Accountability Act of 2011 would further encumber an already complex regulatory process by adding layers of Congressional oversight, for which the Congress is poorly staffed, and time-consuming analysis of the costs of regulation that would do little to improve the quality of resulting rules.

The irony is that the passage of these proposals could hurt the very businesses that, according to the Chamber of Commerce, are clamoring for their adoption. If the ability of the federal government to protect the public were to be limited by the passage of these proposals, the states would be likely to step into the breach.

We often forget that in many cases it was the states that first took on the task of regulating business in the name of the public interest. The first laws protecting workers and prohibiting child labor were created by states. Today we see continued evidence of states’ interest in protecting their residents where they feel the federal government has failed. In the area of air pollution, for example, many states, led by California, have enacted air pollution standards that are tougher than federal guidelines.

Substituting the regulations of multiple states for one federal standard would not be in the best interest of America’s large national corporations. Big businesses generally favor uniform national standards over multiple state standards because, on the whole, they dominate the federal regulatory process and their influence at the state level is less certain. Also, it is more difficult for large national businesses to comply with multiple state standards than it is for them to comply with a single federal standard.

By limiting the ability of our government to create needed protections, the legislation championed by Republican leaders in Congress would, in the short term, bring considerable harm to people in every state. However, in the long term their impact is more difficult to discern. If they were to become law, there is every possibility that public officials in California, New York, Massachusetts and other blue states would wrench leadership for public protections away from the federal government and initiate a new round of state-centered regulation in the public interest.

Michael Lipsky is a Distinguished Senior Fellow at Demos.