Regulators Likely to Be Busy in Clinton Era : Administration: Deregulation will come under scrutiny by the President-elect, who has promised to be an activist chief executive.

The nation’s powerful federal regulatory agencies--which had faded into the political backdrop as three successive administrations labored to rein in government red tape--are expected to assume a higher profile under Bill Clinton, who has promised to be a more activist chief executive.

Although it is never a sure bet that any politician will govern the way he campaigns, experts and Clinton campaign officials say federal regulation--which affects virtually every household and workplace and costs the U.S. economy billions of dollars annually--will likely become a key battleground for change. Over the next four years, federal regulators and U.S. industry will grapple with the accelerated pace of new technology, global competition and a host of domestic social and economic problems.

“There will be a spirit of innovation that will extend down to regulation,” said Michael Waldman, a senior adviser to Clinton who handles regulatory affairs. “You can certainly expect to see Gov. Clinton work vigorously to enact his goals to protect the environment,” cut health care costs and improve the nation’s infrastructure.

“The assault on deregulation is underway. . . . It is entirely likely that we will have substantial new regulatory burdens imposed on business,” said Brink Lindsey, director of regulatory affairs at the Cato Institute, a Washington research foundation.

“But this isn’t just a business versus union or consumer dispute. Often it’s business versus business,” he said, as companies try to encourage federal regulation to gain competitive advantage.

Within hours of Clinton’s victory on Nov. 3, industry executives and consumer groups had begun competing for the ear of the President-elect.

The American Bankers Assn., which has strong ties to Clinton, met with him in June and is trying to schedule a second session in the next few weeks, for instance.

“Our president (William H. Brandon) is from Arkansas and has known Clinton for a number of years,” said Edward L. Yingling, the ABA’s chief lobbyist. “We believe that regulatory burden relief should be part of the short-term spur to the economy.”

The head of the airline industry’s trade group has also weighed in, complaining earlier this week that the airlines face unnecessary regulations that drive up the cost of providing air transportation but do little to improve safety or efficiency. The official cited the required random drug testing of 50% of all employees holding certain airline jobs.

“We can achieve the same detection and deterrent benefits from reducing the test sample on airline employees from 50% to 10% and save millions of dollars,” Air Transport Assn. President Jim Landry told industry officials meeting Tuesday in Orlando, Fla. “The airlines simply cannot afford such regulations while still keeping air transportation affordable.”

Meanwhile, labor and consumer groups, claiming inadequate federal protection of workers and consumers, are asking Clinton to encourage federal regulators to get tougher on business.

“The most basic consumer protections have been lost in the last decade,” said Joan Claybrook, former head of the National Highway Traffic Safety Administration and now president of Public Citizens, a Washington group that is one of seven consumer advocacy organizations that have encouraged Clinton to step up federal regulation. “All have been sacrificed because the federal agencies have listened to business interests first.”

AFL-CIO spokeswoman Candice Johnson added: “You can’t say all deregulation is bad, but for the most part the government has an important role to play in ensuring that working people and consumers are protected from hazards and aren’t exposed to dangers on the job or at home. But under the 12 years of Reagan and Bush, the regulatory agencies were a poor forum to address these issues.”

Any reshaping of federal regulatory policy would have a profound effect on business, labor and consumers.

Federal agencies set rules for everything from the placement of car headlamps to what radio frequencies Americans must use to chat over cellular telephones. At the Interstate Commerce Commission alone, more than 1 trillion rates regulating the transportation of goods are on file. The federal government even has an agency--the Office of Information and Regulatory Affairs--that, in effect, regulates the regulators.

Cutting back on all this government red tape has produced disparate results in the 16 years since President Jimmy Carter launched the current era of deregulation by loosening federal restrictions on the banking and transportation industries in the late 1970s.

On the one hand, deregulation has produced, among other benefits, generally lower air fares in major markets, as well as more competitive telephone rates and services.

On the other hand, new technologies such as AM stereo radio have languished because the government has declined to set a single standard, and Americans could end up shelling out more than $500 billion to pay for financial misdeeds committed in the wake of the loosening of federal restrictions on the savings and loan industry in 1982.

For his part, Clinton has resisted the use of the terms “regulatory” or “deregulatory” to describe the way he would govern--saying, simply, that he wants to further free market competition. But he has indicated that he believes additional federal rules may be needed in a broad range of areas, including the environment, health care and telecommunications.

“It is not productive to ask whether our Administration would take a ‘regulatory’ or ‘deregulatory’ approach,’ ” Clinton wrote in a letter published in Broadcasting magazine last month. “Rather, the question for us will be whether regulation is necessary and, if so, whether it can reasonably be expected to achieve its chosen goal.

“The recent cable legislation adopted by Congress--over President (Bush’s) veto--provides one example,” Clinton continued, “where additional government regulation was needed because the absence of meaningful competition enabled the cable companies to take unfair advantage of consumers.”

The President-elect, however, may face numerous obstacles in trying to alter the course of federal regulatory policy. Many of the 30-odd major federal regulatory agencies are led by bipartisan panels, and the functions of federal agencies vary widely.

What’s more, consumer and labor groups complain that many rules and regulations already on the books aren’t enforced by the federal government.

In the last 20 years, for example, only two employers have been sent to jail for violating federal workplace safety standards despite many deaths and injuries on the job, according to the AFL-CIO.

Still, Clinton will have an opportunity to have significant impact on the huge federal regulatory bureaucracy, particularly in the important banking industry, where he will be one of the few Presidents to appoint both the Comptroller of the Currency--which charters and regulates national banks--as well as all of the directors of the Federal Deposit Insurance Corp., an independent federal agency that insures funds of bank depositors.

And before his first term in office ends, Clinton will also make several appointments to the seven-member board of governors of the Federal Reserve System, which sets federal monetary policy.

“The Administration . . . can have a strong impact,” said the ABA’s Yingling. But, he added, the Administration will have to be vigilant to keep federal regulation in check.

Indeed, the Bush Administration had vowed to continue President Reagan’s aggressive rollback of federal regulation. But President Bush ended up launching some of the most costly regulatory programs in U.S. history.

Among the measures President Bush shepherded through during his first two years in office were the Clean Air Act, laws guaranteeing access for the disabled to public facilities and tougher financial rules issued in the wake of the savings and loan debacle.