Published: May 10, 2012
Remarks, John Engler
ABA Administrative Law and Regulatory Practice Institute
Capital Hilton, Washington DC
May 10, 2012
[As Prepared for Delivery]
Thank you, Jamie [Conrad]. Thank you for the invitation to be with you today. I am pleased to be included in the 8th Annual Administrative Law and Regulatory Practice Institute.
When I found out my remarks today were going to qualify for CLE credits, I had these flashbacks to days as a night school student at Cooley Law School.
If I only my professors could see me now.
In any case, I hope you find my remarks credit worthy.
I'm sorry I missed Cass Sunstein earlier. At Business Roundtable, we appreciate Administrator Sunstein's advocacy of balance and efficiency in regulation... even at times in the face of strong opposition.
This afternoon, I want to highlight the private sector's views on federal regulation by sharing the perspectives of the more than CEOs who comprise the Business Roundtable….and it’s no surprise, their companies are highly regulated.
So regulatory reform is a priority, beginning with the founding of the BRT in the early ‘70s.
Today, our Committtee on Regulatory Reform is chaired by Andrew Liveris, CEO of Dow.
Liveris is a powerful advocate for revitalizing American manufacturing. His excellent book, "Make It In America: The Case for Re-Inventing the Economy,” argued persuasively that economic revival becomes much more difficult without regulatory reform.
He writes, and I quote:
“Clear, consistent and wise regulations not only protect the well-being of the population but improve U.S. industry’s ability to function and grow, which benefits every American. But that’s the key point.
“Regulations are beneficial only when they’re clear, consistent and wise. And, in large part, the U.S. regulatory regime is so complex and inconsistent that regulations hinder American manufacturers without helping anyone in particular.”
Clearly, business does not believe that all regulations are bad or undesirable, but regulators should recognize that regulation can dramatically affect investment decisions, hiring, and economic growth.
The evidence that this is so is the subject of considerable academic study today. In 2011 the Kaufman Foundation published impressive research from the foundation's task force on law, innovation and growth.
They describe “growth” as a series of inputs: Physical capital, human capital, and innovation. Regulation significantly influences each of these factors.
In addition, the foundation's book, entitled, “Rules for Growth: Promoting Innovation and Growth from Legal Reform,” offered this critical insight, one that has been the work of Nobel laureates, and I quote:
“Economies, like games, cannot function effectively without clear rules, set and enforced…”
Andrew Liveris and every CEO I talk to agrees with this. They also are adamant about the need for regulation to be consistent over time, and to be wise. Sometimes, that means that it’s technologically attainable; sometimes it means that it’s affordable, or that it’s not so anti-competitive to destroy a company’s business opportunities.
Recently, increasing attention is being focused on the cumulative effects of regulation.
Individual regulators may function in a fashion quite oblivious to what other individual regulators are doing. Yet the additive effect constitutes an underappreciated, but expensive problem for business and economic growth.
Let me explain through an example.
Take a large corporation, say a global, high-tech manufacturing enterprise.
Of course the company is impacted by the EPA and the agency’s environmental mandates, potentially running into the billions of dollars.
This enterprise also provides health care, so they are coping with the implementation of the 2,000-plus page Affordable Care Act. They are subject to the 2,000-plus page Dodd-Frank legislation.
They are subject to the Labor Department and a steady stream of rules relating to the employees and workplaces....And numerous other agencies regulating such things as how they ship their products, enforce export controls, get visas, advertise, sell stock, protect pensions. You get the point.
Add to this the uncertainty – and this is not the fault of regulators – about tax laws, how we’re going to solve our fiscal problems, what we’re doing with the debt ceiling.
You get a sense why I might suggest the cumulative impact of all this is a whole lot of uncertainty followed by a lot of reluctance to invest.
Companies simply have no idea what the regulatory environment is going to look like a year from now, or five years from now.
Increasingly, the public is able to relate to this because they don’t know what’s happening next year with their taxes or deductions or health care, or even the housing market.
Bottom line is, we’ve got a nation on edge.
The CEOs of the BRT want to elevate the debate. They want to get the country moving.
These are men and women who lead large organizations. They are decisive, they are action-oriented. When they see problems, they look for solutions and seek to implement them.
Solutions like those outlined in our December 2010 report, “Roadmap for Growth.” And, in our March 2012 report, "Taking Action for America: A CEO Plan for Jobs and Economic Growth."
Those reports were about economic growth and job creation. There’s one thing you can take away from today’s conversation, “We’re for that!”
We’re also for transparency and accountability. Jeff Rosen may have mentioned some of this earlier in his discussion of our report, which we released last fall, “Achieving Smarter Regulation."
The goal is to strike the right balance: How to minimize the economic cost while protecting the public interest.
We had a chance to talk to the President about some of our recommendations. We believe that:
Our CEOs discussed these issues with the President's Jobs Commission, and indeed, with President Obama himself at our Quarterly Meeting in March. The President’s tone was very positive.
And, the guidance issued by Administrator Sunstein two months ago addressed some of our concerns by calling for such things as early consultations with affected parties, more public input and transparency, and better consideration of how new rules interact with existing ones.
Are the departments, agencies and bureaus taking the guidance? We think most of them are aware of the change in tone, but I would say it doesn’t always translate.
For example, the President actually had to intervene and force the withdrawal of the proposed expedited air quality standards for ground-level ozone.
The President took heat for it, but he acknowledged the potential harm to the economy and job-creation, which in our view was very much the case … since it was the most expensive environmental regulation ever put forward in the history of the agency.
Another example of the President listening was the announcement last month that there would be a White House working group to coordinate federal regulation of hydrofracking.
This was welcome news because at last count 11 separate agencies were hard at work. I imagine that likely would have led to considerable confusion – not the clarity that business seeks.
Still, it takes more than tone at the top – that’s where many of you in this room come in.
Regulatory reform is undercut and credibility is lost when a key regional administrator is all over YouTube suggesting an effective enforcement approach can be based on the Ancient Romans’ tactic of picking out five villagers and crucifying them, just to send a message to the populace.
The Roundtable’s CEOs most recent report is "Permitting Jobs and Business Investment," which proposes steps to streamline the federal permitting process.
Our immediate goal is to expedite permits for major industrial and infrastructure projects -- the kind of projects that have an immediate impact on the economy and employment.
President Obama had asked for specific recommendations when we met with him, and some of those are in this report.
For the Administration, we proposed:
We also proposed that a public online permit-tracking dashboard be created to follow the dates and status of all federal permit applications across agencies.
When enacted, these reforms would achieve efficiency, transparency, accountability while not sacrificing the public interest.
I recognize that cooperation among agencies is a challenge when agencies jealously guard their authority and prerogatives – many time legitimately, based on their expertise.
But interagency squabbles can lead to costs and delays that do not help the interests of those who wish to regulate and those who are being regulated.
In contrast, multi-agency processes can work, be more tolerable and more effective, when guidelines are in place to establish a lead agency, require coordinated timelines, and have firm deadlines.
The BRT strongly supports the transparency that would come through creation of an online agency database -- or dashboard -- that would track projects and permits.
This is under way. Last December OMB announced its Federal Infrastructure Projects Dashboard, intended to track major energy and infrastructure projects.
This dashboard should be extended to include all pending permits, giving stakeholders and the public an ability to really assess whether progress is being made.
Is progress being made? I believe the dashboard is improving. On the 31st of this month, we’ll get a chance to see how much. That’s the deadline under the President’s executive order for federal agencies to post their plans to speed reviews and approvals of major permits.
We are encouraged by reports that most federal agencies will meet the May 31 deadline.
Not all problems can be fixed in the executive branch. The legislative branch has an important role to play in reforming the regulatory and permitting process.
Now, it’s not part of the Business Roundtable report, but it’s advice to Congress from someone who spent 20 years in the legislative branch: Write better laws and stop punting the tough questions over to the agencies for decisions at a later date.
The BRT did make some recommendations to Congress. Congress should:
Solid precedent exists for these statutory changes. In 2006, Congress enacted Section 6002 of SAFETEA-LU, the federal surface transportation bill.
Remember when Congress used to pass long-term highway bills?
The act streamlined the NEPA process by designating the Department of Transportation as the lead agency and set a 180-day statute of limitations to challenge DOT's determinations.
The provision has helped cut the time to complete the NEPA review nearly in half and encouraged prompt disposition of lawsuits. What a great model to apply to other areas of the law.
And given our economic challenges and the realities of global competition, we don’t have any time to waste.
Last January, Michael Porter and Jan Rivkin of the Harvard Business School released a survey of the school's alumni on U.S. competitiveness, a report entitled, "Prosperity at Risk."
Nearly 10,000 alumni of the Business School completed an in-depth survey for the project.
These men and women represent a great amount of expertise and insights about the economy; some 1,700 of them are personally involved in decisions about placing business activities and jobs in the United States or elsewhere.
The responses were often disheartening.
The Harvard alumni were asked about America's weaknesses and areas of deterioration when compared to U.S. competitors.
Regulation is one of those areas: Weak and deteriorating. So, too, are the legal framework and fiscal policy.
K-12 education...an even greater problem.
And the tax code? Bad and getting worse.
But near the top of these discouraging reviews is our political system.
The study's authors report it this way: "In the eyes of survey respondents, government officials in America are not doing their part to lay the groundwork for U.S. competitiveness."
Earlier I described Business Roundtable CEOs as men and women of action. I can tell you that this failure of political leadership -- gridlock, heightened partisanship, refusal to act -- is one of the greatest frustrations our members have.
Yet we retain our optimism. The U.S. economy -- and our society -- have great underlying strengths.
The Harvard Business School authors seem to share our view. They write:
"The good news is that some macro conditions can be improved rapidly through sound choices -- if a country can make them."
CEOs believe that regulatory reform and improving federal permitting are exactly the kind of sound, commonsense choices this country must make.
We have laid out proposals to accomplish reforms, and are dedicating efforts to seeing them through.
In this room are men and women who can help make them happen. We need your help.
We’re prepared to support you, not by abandoning all regulation, but by achieving regulations that are clear, consistent and wise...By creating a regulatory environment that’s transparent, effective and competitive.
This can be a win-win. America can create jobs at home and compete globally if we’re smart in our approaches.
We’re sparing no effort toward that end.
Thank you for your time today, and I would be happy to take questions.