The Public-Interest Era: Consumer Rights and Environmentalism

The consensus that enveloped administrative regulation crumbled in the late 1960s, and a decade later a full-blown movement toward deregulation was under way. The attack on the regulatory state came from many directions. Consumer and environmen

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tal advocates complained that businesses under regulation had captured their regulators, making the agencies into little more than tools of the regulated. Ralph Nader, the most visible and articulate consumer activist of the era, directed particularly strong attacks against the Federal Trade Commission (FTC) and the Food and Drug Administration. The business community was equally adamant, charging that the agencies had driven up costs by imposing unworkable and costly regulations. The federal judiciary abandoned its deference, questioning the extent to which many federal agencies provided due-process guarantees in both rulemaking and adjudication.

Congress poured forth a stream of consumer and environmental legislation, further tipping the federal system in favor of the central government and continuing the tradition of cooperative federalism initiated in the Progressive era. Federal and state regulatory officials ostensibly shared responsibility for planning and funding, but federal officials, with superior resources, usually held the whip hand.

The beginning of the era of public-interest law dated from the Auto Safety Act of 1966, which imposed federal safety standards in automobiles, an area traditionally reserved to the states. The Wholesome Meat Act of 1967, also influenced by Nader, extended federal standards to meat-processing plants doing intrastate business. The Magnuson-Moss Warranty and FTC Improvements Act of 1972 was designed to overcome the deficiencies in the handling of consumer matters by the FTC. The establishment a year later of the Consumer Product Safety Commission gave consumers a separate agency. The Occupational Safety and Health Act of 1970 brought the federal government into direct regulation of the work place.

Environmentalists won important victories as well. Congress in 1970 passed the National Environmental Policy Act (NEPA) and the Clean Air Amendments (CAA). The former directed the Council on Environmental Quality to monitor environmental trends. What was an otherwise broad statement of national policy did contain one provision with significant regulatory consequences: the environmental impact statement. It required both developers and regulators, in all agencies, to take into account the environmental consequences of their actions.

The CAA was equally pathbreaking in restricting administrative discretion and forcing action on the part of regulators and the regulated. The Environmental Protection Agency (EPA) administered CAA, but EPA relied on the states for implementation, imposing fines and penalties when states failed to cooperate. The act forced both administrative and state action by specifying rigid time periods during which certain actions had to take place. The act made the EPA into a policing agency, charging it not only with monitoring state compliance but also with overseeing the directives issued to auto manufacturers to reduce exhaust emissions dramatically.

Consumer and environmental groups did not want to do away with regulation; they just wanted to make federal agencies more responsive. During the late 1960s and early 1970s these groups frequently charged that "economic regulation was adrift in a sea of irresolution." ⁴⁹ They complained that regulatory bodies failed to delineate long-term policies and that they had inappropriately mixed promotional and regulatory objectives.

The AEC was a notable example. Congress established it to promote and regulate nuclear energy in the United States. In 1974, however, as the complexities of building nuclear power stations became evident, and as a small but active grassroots antinuclear movement pressed for greater controls on nuclear plants, Congress abolished the AEC,

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replacing it with two new bodies: the Nuclear Regulatory Commission (NRC) and the Energy Research and Development Administration (ERDA). The NRC was later merged into the Department of Energy.

Other critics complained that the regulatory state, intended to serve the public, had become oppressive. Yale Law Professor Charles Reich in 1964 complained that the largess doled out by government agencies constituted a "new property," the control of which properly belonged to elected officials and judges rather than bureaucrats. ⁵⁰ Reich also accused regulators of failing to abide by their own rules and, even when they did, with adjudicating cases in ways that violated traditional due-process guarantees.

The federal courts obliged the demands by consumer and environmental groups that regulatory bodies consistently follow their procedures and respect due process. Two cases during the mid-1960s challenged the self-proclaimed wisdom of regulatory agencies as the exclusive guardians of the public interest. The first was Office of Communication of the United Church of Christ v. FCC, decided by the Circuit Court for the District of Columbia in 1966, and the other was Scenic Hudson Preservation Conference v. FPC, decided by the U.S. Second Circuit Court of Appeals in 1965.

The former involved an application by a Jackson, Mississippi television station to have its license renewed after repeated instances of denying civil rights advocates access to the public. For example, the station cut off transmission just as an NAACP representative was about to speak. The Federal Communications Commission (FCC) granted the station a new license without allowing blacks who were opposed to renewal an opportunity to testify. The federal circuit court reversed the decision, finding that the FCC had failed to abide by its own rules requiring that the listening public have an opportunity to comment.

Scenic Hudson was an even more important case, marking the beginning of the environmental movement's use of the federal courts. In this instance, the Federal Power Commission (FPC) issued a license to construct a hydroelectric power plant at Storm King Mountain, a scenic area on the Hudson River. The FPC refused to hear testimony about the impact of the plant on fisheries, and it rejected the application of expert witnesses on the environment to add their testimony to the record. The second circuit court rebuked the actions of the FPC and directed it and the project developers to prepare a statement weighing the intangible concerns about the environment with economic considerations.

These decisions were important precedents in the growth of judicial oversight of administrative and regulatory agencies. The New Deal had placed great weight on the idea that expertise could override the consequences of political decision making; but in the 1970s, many former prophets of regulation claimed that technical expertise had to be balanced by respect for procedure, and the federal courts emerged as watchdogs by imposing a stringent level of judicial review on administrative decision making.

Courts and regulators plunged into areas that presented often intractable controversies over the need for a clean environment and the requirement for economic growth. Quantifying aesthetic and environmental values was troubling enough, but matters became even more complicated when hazardous materials, often essential to industrial production, were involved. The EPA, for example, was often placed in the difficult position of having to devise regulations about the use of these materials based on uncertain evidence about their safety and health effects.

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A classic example was the struggle over the Reserve Mining Company's operations in Minnesota on the shore of Lake Superior between 1969 and 1975. The EPA ordered the company to cease dumping of taconite tailings into the lake, charging that they contained asbestos fibers widely believed to cause cancer. The company claimed that the EPA had failed "to establish, under traditional standards of proof, that the tailings" were harmful to human health. ⁵¹ In 1975, the U.S. Eighth Circuit Court of Appeals, in Reserve Mining Co. v. EPA, found that the burden of proof lay with the Reserve Mining Company to show that the tailings were not dangerous rather than on the injured parties. The plant closed. By the mid-1980s, the problem of latent-toxic torts (ones whose effects did not become noticeable until years and in some cases decades later) was burgeoning.

In the late 1970s, the attack on the regulatory state took a new turn as a bipartisan consensus emerged in favor of deregulation. The dramatic rise in inflation, sagging industrial productivity, and the loss of market share by U.S. producers to foreign companies encouraged this reassessment. Consumer activists deplored the new reform effort, but, after years of criticizing federal agencies, their arguments rang hollow. Congress responded to the demands for deregulation by enacting statutes aimed at transportation, the oldest of the regulated industries. The Airline Deregulation Act of 1978 provided for a phased ending to fare setting and to entry restrictions on air travel. The Motor Carrier Reform Act of 1980 and the Staggers Rail Act of the same year relaxed rate and entry regulations on motor carrier and rail traffic, respectively. The Depository Institutions Deregulation and Monetary Control Act of 1980 eliminated interest rate ceilings on time and savings deposits.

Republican President Ronald Reagan, elected to office in 1980, while trumpeting the personal virtues of Franklin Roosevelt, engaged the powers of the presidential office to subvert rather than support the regulatory state. Reagan pledged to get the federal government "off the peoples' backs" by ending the welfare state. He appointed agency heads sympathetic to his views. For example, the National Highway Traffic Safety Administration (NHTSA) in 1977 adopted during the administration of President Jimmy Carter a regulation mandating by 1984 the use of passive restraints in automobiles either by the use of airbags or seat belts. When Reagan came into office, he appointed a new head of NHTSA who proceeded to revoke the mandatory restraint requirement, arguing that the costs of compliance outweighed the effects to be achieved. The Supreme Court, in Motor Vehicle Manufacturers Association v. State Farm Mutual Auto Insurance Co. ( 1983), found the agency's reasoning inadequate, and it overturned the new regulation and remanded it to the agency for further consideration. ⁵² In response, the president directed that all of his appointees to the federal bench embrace his own skeptical attitude toward the regulatory state.

Reagan's efforts produced more show than substance. The administrative state, which had begun in the nineteenth century as a modest enterprise, had grown by the 1980s into a distinct branch of government that was essential to the functioning of a complex and interdependent society. Moreover, the regulatory state after the New Deal was compatible with the ideology of liberal legalism. The administrative law and regulatory agencies did not force a redistribution of wealth; there was no requirement that the polluters give money to those who were injured. That goal was only available through lawsuit. As Richard Posner argued, regulation did have costs, but the prevailing view, as in tort law, was that business should internalize and pass them on to

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consumers in the form of higher prices. The regulatory system was a means by which to restrict unacceptable activities rather than a program of planned social activity.

Date: 2015-01-29; view: 682