Article by The Honorable Stephen Breyer
The most trenchant remark on the subject of regulatory reform was made over one hundred years ago by Lord Macauley. ‘Reform, reform,’ he said. ‘Don't talk to me about reform. We are in enough trouble already.’ In discussing regulatory reform, however, I will violate this sound advice, for despite unprecedented interest in this subject by politicians, the general public, and specialist scholars, I am pessimistic about the likelihood of further concrete results.
At the outset, let me limit my skepticism to regulatory reform of a certain kind: reform that radically changes the substantive nature of a regulatory program by embodying its changes in a new statute. We have seen recent examples of this type of reform in the airline, trucking, and railroad industries, and in financial institutions and communications.
Despite considerable change in the past decade, scholarly work in the area suggests that we have not run out of programs that are ‘candidates' for regulatory reform. Some of these ‘candidates' are of particular interest to manufacturing industries. Environmental regulation provides an apt example. Economists have argued for years that regulation would be more effective if it did not simply postulate rules that require firms to buy and to install particular equipment or to reduce emissions from individual smokestacks. A more feasible method of regulation would combine fairly simple rules with economic incentives such as tax breaks or marketable rights. This type of plan—proposed in the form of ‘bubbles' and the sale of pollution rights—has been the focus of enough study by both Republican and Democratic administrations to indicate that it may have promise. More environmental protection with less burden upon industry might well be the result. This would seem an irresistible political cry, but this approach is not yet at the center of political debate. Instead, the argument has raged between those who want ‘less' environmental regulation and control and those who want ‘more.’
Academics have similarly suggested fairly imaginative ways for making employee safety regulation more effective and less burdensome. Some of their proposals involve lessened reliance upon classical command and control forms of regulation in favor of individualized practices negotiated in the workplace. More informal processes—which could be created through collective bargaining—might lead to quicker adoption and more effective enforcement of the safety standards important to the individual workplace. Little political consensus exists to date, however, about the merits of a major change in this direction.
Problems with respect to the regulation of the field price of natural gas remain with us. Some individuals have argued that the rationale for regulation—transferring windfall profits from producers to consumers through lower prices—does not call for classical rate regulation. Indeed, Federal Power Commission rate-setting led to a natural gas shortage in the 1970's. At that time, I and others argued for deregulation.
Instead of regulation, Congress might have imposed a tax transferring excess producer profits to consumers. This would have accomplished Congress's major regulatory objective without the severe problems endemic to classical regulation. In any event, if we thought this problem was left behind with the passage of the Natural Gas Act in the 1970's, we were wrong. Severe regulatory problems remain.
My purpose, however, is not to explore the merits of proposals for reform with respect to the environment, worker safety, or natural gas. In these areas, it is plausible to believe in the possibility of reform that could benefit both the industry and the consumer, the employer and the employee, and the producer and the user. Experts have put forth serious proposals aimed at making regulation both more effective and less burdensome. Although these areas are good ‘candidates' for reform, I am mildly pessimistic about the possibility that they will soon undergo any major reform.
My pessimism begins with the fact that I see two different approaches to regulatory reform. I call the first the ‘generic’ approach. It seeks change that would improve government regulation as a whole. The second, I term the ‘case-by-case’ approach. It seeks major substantive change by focusing upon a single regulatory program. There is considerable interest in ‘generic reform,’ but I doubt whether ‘generic’ reforms can do very much about serious substantive regulatory problems. At the same time, my own experience with the case-by-case approach—involving airline deregulation—has made me aware of the difficult task in bringing about substantive change on a case-by-case basis. Increased effort would be required to obtain positive results. By discussing these two types of reform, I hope both to provide an intellectual framework for the analysis of current reform proposals and to show that greater emphasis should be placed upon the second kind of activity.
About the Author
The Honorable Stephen Breyer. Judge, United States Court of Appeals for the First Circuit.
Citation
59 Tul. L. Rev. 4 (1984)