Bush May Try to Revive Some Industry Controls : S&Ls;, Airlines, Workplace Could Face Tighter Regulation; Rules Might Be Eased in Other Areas

After eight years of confrontational Reagan Administration efforts to eliminate federal regulations, the Bush Administration is discussing a series of moves that could go even further to reshape the government’s oversight of major American industries.

But the new Administration, less ideological than the old, will probably seek to reinstate federal controls in some areas even as it relaxes regulations elsewhere.

For example, Bush’s new transportation secretary, Samuel K. Skinner, indicated during his Senate confirmation hearings that he will consider increased federal regulation of the nation’s crowded airways. New Labor Secretary Elizabeth Hanford Dole has given positive signs to advocates of increased workplace safety regulation.

And Bush advisers have made clear that they will aggressively supervise savings and loan institutions to prevent a repeat of mismanagement and possible fraud that appear to have saddled taxpayers with a multibillion-dollar bailout bill.

“There is no alternative to re-regulation of the American thrift industry,” said Rep. Jim Leach (R-Iowa), one of Bush’s longest-standing supporters in Congress.

In other areas, however, including the environment, Bush would like to reduce the federal government’s direct regulatory role.

Although the issue seldom came up during the fall presidential campaign, Bush has referred to deregulation in speeches as one of the policies that led to the economic expansion of the last six years of Ronald Reagan’s Administration. And he has pledged to continue deregulatory policies to “help start and expand new businesses.”

“All his biases are on the deregulation side,” Leach said of Bush. Aides describe the President, who once worked as an independent oil driller in Texas, as particularly receptive to complaints from small-business owners and entrepreneurs. The petroleum industry is likely to be the beneficiary of at least one new deregulatory initiative--further decontrol of natural gas sales, which Bush advocated during the campaign.

As Reagan’s vice president, Bush headed the White House Task Force on Regulatory Relief. C. Boyden Gray, Bush’s counsel and longtime aide, said Bush was the “architect of the Reagan approach” toward regulation and will probably pursue many of Reagan’s goals of the last eight years.

But Bush aides hope to pursue those goals by different means--means that may avoid the intense disputes of the Reagan years. In the area of the environment, for example, Bush aides have been considering a series of proposals that would move away from traditional “command and control” regulations and toward greater use of market incentives and other less intrusive mechanisms to achieve cleanup goals.

For example, factory emissions traditionally have been regulated by an extensive series of rules designed to limit the pollution left behind by each production process. But under a more flexible “bubble” plan, the entire factory is treated as if a huge bubble covered it.

The government regulates how much pollution comes out the top of the bubble, regardless of the sources, and lets the factory owner decide how to meet the goal. The resulting flexibility, at least in theory, allows companies to meet emissions goals more cheaply and also sharply reduces the cost to the government of monitoring emissions levels.

Democratic Support

There is at least some indication that in pursuing these new policies, Bush may be able to attract some support from Democrats and from some of the same liberal interest groups that fought the Reagan Administration’s efforts at every turn.

Reagan’s policies toward environmental regulation were driven by “a James Watt kind of school of exploiting resources,” said Sen. Timothy E. Wirth (D-Colo.), referring to Reagan’s first Interior secretary. The Reagan policies, he charged, “applied marketplace analysis to every part of the budget” except those that benefited industry.

Now, Wirth said, “we may have a chance to change things.”

Although federal regulation is a dry and technical area that normally attracts little public attention, changes in federal rules can have profound impact on daily lives.

For example, the Jimmy Carter Administration in 1979 changed federal rules to allow private companies to compete with the Postal Service for delivery of “urgent” mail. The result was to create an entirely new express mail industry that has changed the way most American offices work.

Similarly, decisions by Reagan appointees at the Federal Communications Commission profoundly changed the sorts of programming that Americans receive on their televisions and radios. Supporters say the changes have allowed broadcasters more freedom to respond to marketplace demands. Opponents blame deregulation for reduced public affairs programming and an increase in “trash TV.”

Although Reagan campaigned as a deregulatory champion, many of the regulatory changes that most affected daily life occurred during the early and mid-1970s, under Presidents Gerald R. Ford and Carter.

Unusual Alliances

The campaigns of those years spawned unusual alliances of liberals and conservatives. Sen. Edward M. Kennedy (D-Mass.), for example, was a chief advocate of deregulating the trucking industry, which economists estimate has saved consumers $40 billion to $60 billion over the last decade by introducing competition to a formerly non-competitive business.

During the Reagan years, by contrast, regulatory policy became the subject of bitterly polarized political battles. Partly as a result, the Reagan Administration actually eliminated fewer regulatory programs in eight years than the Carter Administration abolished in four.

At the same time, however, the Reagan Administration’s Office of Management and Budget, using a controversial executive order that allowed it to extensively review all new regulations, succeeded in stopping or delaying many new programs on the grounds that the costs would have exceeded the benefits.

But the result was frequently a policy gridlock that blocked widely supported reforms as well, experts on regulatory policy say. Consequently, the law underlying the budget office regulatory review process, which is set to expire this year, is likely to be watered down extensively when it is reviewed by Congress.

Even aides to Bush now concede that the confrontational mood of some Reagan appointees complicated the job. Appointees such as Anne Gorsuch Burford, who resigned as chief of the Environmental Protection Agency after charges of political interference in waste cleanup plans, “helped create distrust,” Gray said. “Hopefully,” he said, “we can get that behind us.”

Serves as Guide

The deregulatory task force chaired by Bush when he was vice president serves as something of a guide to the goals Bush may pursue as President. For example, Bush has taken a particular interest in the biotechnology industry, arguing that expanded federal regulation could raise costs enough to shift much of the business to Japan, Europe and elsewhere.

Bush also “paid personal attention” to the task force’s effort to speed up the government’s process for approving new drugs, Gray said. The President, he said, is likely to press the Food and Drug Administration for further changes in that process.

In addition to natural gas decontrol, Bush may also endorse further steps to deregulate the electric utility industry.

Once seen as a “natural monopoly” that could work efficiently only if one company produced, transmitted and distributed all the electric power for any given area, the utility industry has slowly been opened up to competition, starting with new federal laws adopted under Carter. Although actual distribution of electricity to homes and businesses is likely to remain a monopoly, federal officials have been pressing state regulators to allow more competition in power production.

But the area in which the greatest changes may occur--not coincidentally the area of greatest gridlock in the Reagan years--is environmental policy.

For example, full tryouts of market-based environmental regulations would, in many cases, require changes in federal laws. Plans to update such laws as the Clean Air Act, however, have repeatedly been stymied by political deadlocks. In eight years, the Reagan Administration was never able to produce a clean air proposal that could win approval even within the Administration, let alone one that would pass Congress.

Major Change Signaled

Already, Bush officials have signaled a major change. A new clean air proposal will be introduced early this year, EPA Administrator William K. Reilly told a Senate committee during confirmation testimony.

And although that proposal will almost certainly include new regulations, Gray said “the emphasis will be on market incentives to achieve results” and on “getting away from command and control so there is more flexibility, more efficiency” in meeting clean air goals.

Even strong advocates of traditional environmental regulation are not ready to denounce these ideas out of hand. Many of the flexible techniques “are designed by good people with the best of intentions,” said Joan Claybrook, head of Public Citizen, a Washington-based lobbying group founded by Ralph Nader.

But Claybrook warned that such approaches “tend to get out of hand” if officials who oppose the ultimate goals use flexibility as an excuse for lax enforcement.

Others take a still more positive view. Wirth, for example, argues that the environmental tasks facing the new Administration are so large that “EPA can’t afford the regulatory structure to do everything that has to be done. If you can get some of these legislative changes through here, you can do more with less.”

THE REGULATORY FUTURE Under the Bush Administration, some industries can look forward to deregulation, but others will face more regulation. Increased Regulation Savings and Loans--Likely tighter controls over loan making and deposit interest rates. Airlines--Possible increase in mandatory aircraft inspections and greater regulation of flight times to reduce airport congestion. Workplace Safety--Stepped up inspections and tougher OSHA enforcement. Decreased Regulation Electric utilities--Additional competition in power production Drug manufacturers--Reduce delays in FDA approval of new drugs Biotechnology--Streamline approval of research, testing and ultimately production of genetically engineered organisms. Natural gas producers--Relax price controls. New Regulatory Approaches Environment--Market-based incentives not to pollute may replace traditional reliance on direct regulation.