Quayle’s Competitiveness Council Comes Under Fire : Government: Panel has become a key player in regulatory disputes. Critics allege it tries to circumvent laws and an official has a conflict of interest.

Asked to name the most influential power centers in Washington, a Republican Party activist and businessman responded without hesitation: “The national security-Defense Department apparatus, the Department of State and the Council on Competitiveness.”

The Council on Competitiveness?

“Definitely,” replied the businessman. “It may be small and still unknown, but it’s one of the few places where things really get done in Washington these days.”

Chaired by Vice President Dan Quayle and staffed by less than a dozen of his aides, the Council on Competitiveness is only recently emerging from the obscurity that has surrounded its increasingly influential role as the arbiter of regulatory disputes within the Bush Administration.

But as its influence becomes more apparent, the council is drawing fire from Democrats and public interest advocates who accuse it of trying to circumvent the intent of congressional legislation and constrain the actions of other government agencies as it pursues a decidedly conservative, pro-business agenda.

Most recently, the council has also become embroiled in a controversy over whether its executive director, Quayle aide Allan B. Hubbard, has violated federal ethics laws by involving himself in decisions that affect industries in which he has substantial financial interests.

“Mr. Hubbard’s participation in matters affecting companies in which he has a financial interest is a matter of grave concern,” said Rep. Henry A. Waxman (D-Los Angeles), one of the council’s most vocal critics. The House Energy and Commerce health and environment subcommittee, which Waxman chairs, has scheduled a hearing Tuesday to examine the allegations uncovered by his staff as well as what Waxman says is the council’s “consistent refusal to observe the most basic safeguards ensuring public accountability.”

Within Republican circles, Quayle’s supporters are of two minds about the attention the council is receiving from Congress and the media.

On the one hand, while they freely admit that the council pursues an unabashedly pro-industry agenda, Quayle’s supporters bridle at suggestions--which they dismiss as politically motivated--that there is anything unethical about its activities.

“First it was (John H.) Sununu,” said Tom Korologos, a prominent Republican lobbyist, referring to the White House chief of staff who was forced to resign last week amid mounting attacks over his antagonistic management style. “They got Sununu, and now they’re going after the Competitiveness Council because it’s the only thing of substance that Quayle has got going for himself.”

On the other hand, Quayle aides also make no secret of the fact that they are delighted by the new prominence the controversy surrounding the council has conferred upon the vice president. “At least now he is being vilified on substance,” one source close to the vice president said. “First the critics were attacking him as a lightweight, as a politically ineffective entity. Now they’re attacking him for being effective, even if they don’t like what he’s being effective at.”

It is better to take a few punches on the chin, this line of reasoning goes, than to be the punch line of countless political jokes.

Supporters say that since President Bush tapped him to head the council in 1989, Quayle has turned the panel into a dynamic vehicle that both addresses conservative concerns about federal interference in the private sector and puts the vice president at the center of the domestic policy-making process.

Critics agree, but they interpret the significance differently. “Dan Quayle has made the transition from irrelevant to dangerous,” said Rep. Gerry Sikorski (D-Minn.).

The outgrowth of a less influential panel that Bush chaired when he was vice president, the council’s members include the secretary of the Treasury, the secretary of commerce, the attorney general, the director of the White House Office of Management and Budget, the chairman of the Council of Economic Advisers and the White House chief of staff.

Meeting formally about once a month, its stated aim is to protect the competitiveness of American business by listening to industry complaints and reviewing pending regulations to ensure that they are not overly burdensome. Ostensibly, the council also mediates regulatory disputes between federal agencies.

Under Quayle’s direction, however, the council has increased its authority; a small but aggressive and highly conservative staff led by Hubbard picks and chooses for review regulations it suspects pose undue hardships on industries.

While it has no statutory power to force changes in those regulations, its opinions “carry the imprimatur of the White House” and are not lightly disregarded, one Administration official said. While agencies can refuse to make suggested changes, the council can in turn put a regulatory proposal on almost indefinite hold until it gets what it wants.

The council has opposed the Environmental Protection Agency’s wetlands policy, proposing a more restrictive definition that would open more wetlands to development, and rejected an EPA proposal to require municipal incinerators to recycle some of the garbage they burn. It also sided with industry on issues ranging from expediting the approval of new drugs to eliminating red tape--and critics contend safeguards--in the biotechnology and telecommunications industries.

Critics like Waxman contend that the council’s ideological bent, coupled with the confidentiality in which it cloaks its discussions, have turned it into a “shadow government” and a back door for industry influence-peddling at the White House. The secrecy--the council is not obliged to put its objections to an agency rule or its reasons for those objections into a public record--also “provides fertile ground for conflicts of interest,” Waxman said.

In the hearings, Democrats are expected to question Hubbard’s involvement in two recent reviews in which the council sought to weaken proposed EPA rulings on pollution permits for chemical plants and pollution monitoring devices for utility companies.

Hubbard, a millionaire whom Quayle brought to the White House last year, is co-owner of a small Indianapolis chemical plant and owns stock in an Indiana utility company that objected to the latter EPA ruling.

Waxman and others contend that Hubbard’s involvement in seeking the regulation changes amounts to a conflict of interest.

But council spokesman Jeff Nesbit denied the allegation. None of the decisions in which Hubbard participated directly or substantially affected his holdings, Nesbit said.

Nesbit also noted that earlier this year Hubbard sought and received a waiver from Quayle allowing him to participate in policy decisions, as long as they did not directly affect his own investments.

However, Waxman, noting that Hubbard and Quayle have not put their investments in blind trusts, as others in the Administration--including the President--have done, questioned the ethical propriety of granting “such a broad waiver.”