Regulatory reform: the case for common sense; an interview with Philip K. Howard.

It's not every day that the author of a book on rules and regulations gets invited onto "Oprah," but Philip K. Howard is just such an author. His book, The Death of Common Sense has spent six months on The New York Times' best seller list and has 295,000 copies in print. Howard argues that regulation has become disconnected from the humans who must enforce and live with it. The problem has its roots in the Enlightenment, he argues, and in the noble but misguided principle that "reason" can be achieved through uniform rules that anticipate every conceivable circumstance. Howard argues convincingly that these rules--which are at the heart of modern agencies like the Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA)--have had the perverse effect of eliminating common sense from the equation.

Take the Glen-Gery brick factory in Pennsylvania, Howard says. Instead of examining the real hazards of this workplace, OSHA applies a set of uniform rules, requires the factory to fill out hundreds of forms, and insists on enforcing the letter of the law. The factory has been cited for having railings 40 inches high, rather than the required 42 inches. With all that wasted energy, OSHA can't focus on what really might put workers in danger. "It is as if OSHA's goal, the safety of workers, is obscured from view by all the rules intended to advance it," Howard writes. "What we need is a system focused on goals and results, not rules and process." He applies this simple but powerful point to everything from governent contracting to the courts to schools and hospitals.

Regulatory reform is a hot topic in Washington and state capitals this summer, and Howard helped light the fire. He has been consulted at length by President Clinton and Senate Majority Leader Bob Dole, as well as numerous agency heads and governors. But with Howard's book being waved all over Capitol Hill and beyond, it's tough to discern just what the author and "government by principle" guru stands for when it comes to policy. Monthly Editor Joshua Wolf Shenk looked for answers in the following interview.

Monthly: Some people have the impression from your book that you're against regulation. But that's not true, is it?

Howard: Of course not. I want clean water and good meat and safe airplanes, and so does most everyone I know. And building codes and rules to protect disabled children. I also don't mind that it costs big business money to behave responsibly. We need to have certain standards, and government has a role there.

My point is that government rarely works sensibly, and a large part of the reason is the reams of detailed rules that try to account for every conceivable situation and end up choking the whole process. Just because environmental laws work terribly doesn't mean the government shouldn't protect the environment. The goal of the Superfund legislation is an important one. No one wants their kids playing near a toxic dump. But the law was written in such a way that all dumps are to be treated exactly alike. It doesn't allow the flexibility that's required to deal with a complicated situation.

I'm not saying you can eliminate all rules; they're important in some cases. But if you apply the rule to a specific situation and it's obviously stupid--like forcing a company to install expensive smokestack scrubbers when 90 percent of its pollution is coming from liquid chemicals--then the regulator needs to be able to adjust to that reality.

Here's the problem, though. Often, if not always, these detailed rules are written because we fear dumb or corrupt civil servants. Some of them need to have everything spelled out. What about the guy who shows poor judgment time after time?

First let me explain what I mean by "common sense." It's not a single truth, some absolute wisdom, but the responsibility to make sense of any given situation. Often the "common sense solution" is the result of a dialogue or an argument between, say, the safety inspector and the foreman, or between the citizen seeking a permit and the bureaucrat behind the desk. In today's regulatory system, the official has no opportunity to adjust for circumstances.

In my book I talk about this fellow Paul Atkinson, a farmer in Eugene, Oregon. A few years ago an inspector told Atkinson his pasteurizing vat--he made cheese on this farm--was not of the standard design. But there was nothing wrong with the cheese. It was plenty clean, and the inspector knew that. It was just a pointless ritual. And it was useless to complain. Anyone who has tried to argue with an inspector or a bureaucrat knows what happens. Their eyes glaze over. Their job is just to follow the rules. ,

Now, there are also legitimate concerns about the quality of our civil service. You have to have good people doing these jobs, and you have to keep folks on their toes. In some ways, and for some people, government has turned. into a kind of public dole. In order to have a system in which you give people discretion and allow them to use their judgment, you need to be able to hold people accountable for bad decisions. Today, you can barely fire people who don't come into work.

It's amazing to me that public employee unions defend bad performers, as if the people who pay the price aren't their co-workers. It's incredibly dispiriting to work with slackards. And when there are bad civil servants, they cast all government into disrepute. That's how most citizens see government--through the people they have contact with.

So should civil service reform be a top priority in any scheme for regulatory reform? No question about it. The civil service is there for a reason--to keep the system from being completely politicized. But we need to balance stability with the need to hold people accountable. Having people make decisions and take responsibility is really central to this whole undertaking.

It would also help the civil service if we give up this idea that we can eliminate risk by codifying every little detail. If you want someone to have the opportunity to do good, that always carries with it the opportunity to do bad. We suffer from "catastrophobia." We try so hard to eliminate the most remote risks--doctors ordering CAT--scans for headaches, for example--that we are unable to accomplish very much. What was that regulator thinking when he shut down the cheese-pasteurizing vat? He was thinking, "I could get into trouble if I break the rules." He wasn't thinking, "I need to figure out what works in this situation."

Give people responsibility and then check up on them. Clear-cutting the procedures would allow us to shine a spotlight on decision-makers. Then we could beef up the spot audit staff dramatically to check on them. This applies to everything from procurement in the Pentagon to local motor vehicle bureaus to state environmental agencies. In defense contracting, we could save tens of billions of dollars if we let the contract officers use their judgment and take responsibility, instead of putting legal manacles on them every step they take.

Do you share the Monthly's belief that we should beef up, not cut down, the GAO and the offices of Inspectors General? I mean, it's not just the workers in the field that need checking up on, but their bosses too. Sometimes a whole division can be screwed up.

Absolutely. The auditing functions of government ought to be very strong and very independent, and need to be up to date. In order to give the public the confidence to allow officials to take responsibility, we need to give them the confidence that there's a reasonable chance that the cheaters will get caught. As it stands, auditors are second-class citizens in the government.

You've been all over Capitol Hill this summer and Republicans can't stop talking about your book. But isn't the core of their agenda for regulatory reform putting tons more requirements on bureaucrats with moratoriums and cost-benefit analyses? Doesn't that run counter to your basic premise, that we need to have fewer rules, not more?

The Republicans have it at least half right. Unfortunately, that doesn't necessarily lead to a better situation. Where they're right is in arguing that many regulations cannot be justified in any sensible view of cost-benefit analysis. Take an easy example. Spending $100 million to eliminate a hazard that will save one life doesn't make much sense if we can save 1,000 lives spending that same money in another way. The classic example of this is the Delaney clause, which says that no element in a food additive is allowed if it can have a carcinogenic effect in animals. Well, as science has gotten steadily more sophisticated, spinach can barely pass that test.

So yes, measuring the costs versus the benefits is a useful tool in reanalyzing all those systems. But Republicans seem to think that cost-benefit analyses solve the problem, which is where they go wrong.

Sensible regulation, like most everything else in life, is ultimately about value judgments. The advantage of cost-benefit analysis is that it gives you a framework to view the facts, and then see the value judgment that underlies the decision. Aircraft safety is a good example. You could add up the cost of all the fail safe mechanisms that go into airplane design and FAA certifications and divide that by the number of lives lost. You would come up with a very high cost-per-life-saved. Compared to other regulations, it's a very high number. But that makes sense. We place enormous value on airplane safety. There's an all-or-nothing aspect to being up in a plane. You can't swerve onto the shoulder if something goes wrong.

In other words, cost-benefit analyses get you data, but you still have to interpret the data.

Yes. A cost-benefit analysis by itself is just a tool, not an ultimate answer. There is a value judgment in there and we have to recognize that.

Now, the final Dole bill that never got to the floor was amended to contain a definition of benefit and cost" that permitted unquantifiable factors. In other words, it allowed us to consider making people feel safe on airplanes as a "benefit." That's a good thing. But the bill still increased dramatically the right of private parties to sue over costs versus benefits. What does that do? It forces the judge to make a value judgment.

I'd argue that those judgments should be made by the agencies, with congressional oversight. When you take away their discretion, the regulators become like wood statues. That's what's really frustrating to the American people--not when bureaucrats make the wrong decision, but when they can't make decisions at all. We think of judicial review as being a harmless thing. Why not let people sue over every little problem? But you have to consider the practical consequences. No one likes being sued, and agencies are no exceptions. What happens when every little decision gets thrown into the courts is that agencies write rules to protect themselves. They want to be able to go to the judge and say, "I followed the rule."

And this starts with Congress trying to avoid accountability itself.

Well, yes. I mean, start with the Administrative Procedures Act, the APA. What it really is is a Substitute for Democracy Act. Congress is supposed to write rules and regulations, but it doesn't. It delegates that authority to agencies, which aren't democratically elected. So the APA contains the rules that the agencies are supposed to follow to make rules--and it's greatly complicated by judicial decisions. The net effect is that the ballot box gets replaced by a procedural mill. Rule-making proceedings make the O.J. Simpson trial seem crisp and efficient. It takes an average of seven years for the FDA to approve a new rule. Some rules have been in the proposal stage for decades.

What Congress should do--instead of putting all this energy into directing the agencies on how to make rules--is dig in themselves. Newt Gingrich has a good idea, to have a "corrections day" to replace silly rules. I'd like to see a "corrections year" during which Congress cleans out decades of detailed rules and replaces them with simple goals and guidelines that are actually understandable. The beauty is, Congress doesn't need procedures. It's Congress. They can pass a law that says "Hot dogs are illegal." Well, then they would get kicked out of office by angry baseball fans. But that's how the republic is supposed to work. If things get hidden under layers and layers of process, then there's no one to blame.

One of the worst elements of the Republicans' plan for regulatory reform is that they want to make it even harder to pass a new rule. What they don't get is that the harder it is to pass a new rule, the harder it is to get rid of an old rule. They may think they're doing big business a favor by letting them sue to block a new rule. But then it's easier for Ralph Nader to sue to prevent amending an old rule. The real crisis in regulation isn't in the new rules, but in the old ones--some 100 million words worth. Under the Republican plan we'll never get it cleaned up.

On the federal level, what are some specific rules that you'd like to see eliminated and what would you replace them with?

All you have to do is pick up any volume of the code of federal regulations and start thumbing through. OSHA doesn't need a rule to define a shower, or a long description of what a hammer is. Can you imagine the dialogue? "Harry, is that a shower or a buzzsaw?"

The detail of regulatory law would stun most people--and it's there not for any constructive purpose, but to try to keep out any human judgment. The problem is, the stuff gets so complicated that no one understands it. And the rulebooks are so dense that no one actually reads them. How many foreman have actually read the whole of OSHA's rules? Probably none.

I believe several hundred pages of OSHA rules could be replaced by one sentence: "Tools and equipment should be reasonably suited for the use intended, in accordance with industry standards." There's room for some disagreement, but not a lot. Principles go a long way. To be fair, there are some rules--toxic hazard limits are a good example--where you need explicit limits. No general principle is going to tell you how much benzene or cotton dust is tolerable. But in cases where rules need to be precise, bureaucrats also need the power to make exceptions. You reported a good example of this in the early eighties. There was this big pile of lime sludge in Minneapolis, and it could have been easily used for agriculture or something--it could have actually made money for the state--but because it had a pH higher than 12, EPA rules said it was hazardous. And no one had the power to make an exception. I would just insist that when regulators do waive a rule, they put it on the public record, and explain why.

That way, instead of everything being buried in incomprehensible rules, you get it out in the open.

That's my point. Give officials some rope, and see what they do. Let's put it this way: Why do you think Washington is so boring? You all resort to cheap thrills, with special counsels and babysitter's taxes and chasing out congressmen because they bounced some checks. It's because no one makes decisions. Process is inherently uninteresting.

Now imagine if all those executive agencies were filled with people standing up and taking responsibility. Newspapers would have a field day. And that's where we really need the power of the press, where government is really making a difference in people's lives. If that regulator in Oregon had the power to make a decision, and he made the stupid one anyway, then send in the hounds. The poor judgment of the bureaucrat in that case will make it unlikely that he ever gets responsibility again.

And some of those stupid judgments end up in the courts, don't they? We were talking before about the problem of judges making value judgments. But isn't that inevitable to some extent?

First, I honestly believe that letting regulators have substantive discussions with the people they're regulating and make informed decisions will limit the number of lawsuits. But yes, to some extent the courts will always be involved. You have to have an appeal mechanism.

The problem now is that the arguments that get to judges are over process, not over the substance--the majority of administrative litigation today comes from procedural challenges. If a company wants to challenge a bad decision, it doesn't say, "This was a bad decision." It says, "He didn't follow the rules correctly." Pristine process becomes a form of blackmail to drag hearings on for years. That's the reason rulemaking takes so damn long.

The right to sue over procedure should be sharply curtailed. Judges should be focusing on what really matters: Was the rule interpreted properly? Is it a bad rule? Let the courts take one bite of the apple over substance, and end it. Take a decision on dredging a harbor. If there is going to be litigation, let the judge decide whether dredging is reasonable, not whether the environmental impact statement correctly described the alluvial movement of harbor bottoms on page 652.

What about all these procedural lawsuit--are they partly a fault of the judges themselves? Judges, like bureaucrats, have come to see their role as managing the process, not making judgments based on what they believe is right. It's a field day for lawyers and litigants: It's as if they say, "Be as disingenuous as you like--talk any kind of nonsense--and I'll listen with respect. Any plausible theory will do." But this isn't what "judicial neutrality" is all about. Appellate courts should reread Justice Cardozo. What he said is that judges are supposedto be impartial, not brain-dead, not purged of intuition and values. The job of judges, which has been forgotten, is not to act like referees. The job of judges is to judge.

What's the principal danger of governing by principle?

I guess the greatest danger is that decisions will only be as good as the society in which they are made. If Americans have poor training or poor values, that will be reflected in our judgments. State-sponsored segregation, to go back to a sore point, existed for a century after the Fourteenth Amendment.

My complaint with our current system, which promises to cure human nature with detailed legal rules, is that it fails to cure our defects and doesn't allow our good side, our energy, our common sense, to come out. We'll never have a perfect system, but humans can do amazing things as long as we're not being crushed under a huge mountain of rules.

That's why, when it comes to regulatory reform, I'm sympathetic when Republicans get angry with the agencies and want to tell them exactly what to do. Bureaucrats make great scapegoats. But we need to be constructive. Instead of wagging their fingers at the agencies and putting more restrictions on them--which will make things worse--the Republicans need to give them the leeway to get it right.

In some sense, you need to separate "regulatory reform" from what we're trying to do with regulations. Let's get the process cleaned up, and then we can talk about, you know, how many acres of wetlands we want to preserve, and so forth. People will always disagree, and there will always be fights in Congress--fights about the "value judgments" I've talked so much about. But the way it is now, you can't make new rules, you can't get rid of old rules. You're stuck.