The Anti-Regulator

Susan Dudley has spent the last eight years as director of regulatory policy for the Mercatus Center, an industry-funded think tank. In those eight years, she has opposed regulations that would: lower the threshold for arsenic in drinking water; set more stringent fuel economy standards for automobiles; provide more information to communities on toxic releases; limit the use of snowmobiles in national parks; reduce pollution emissions from motor vehicles and heavy duty trucks; and set standards for advanced airbag technology in automobiles.

Now, Dudley may soon oversee the regulations she has spent her career criticizing. At the eve of the August congressional recess, the Bush administration announced its intention to nominate Dudley as the new regulatory czar.

If appointed, Dudley would become the new administrator of the Office of Information and Regulatory Affairs (OIRA), a department within the White House's Office of Management and Budget (OMB) with enormous power over health, safety, and environmental regulations. Through an obscure executive order which has never been authorized by Congress, all federal regulations deemed economically or otherwise significant, as determined by OIRA, require the approval of the agency's administrator. The appointment of Susan Dudley would thus put a leading anti-regulatory zealot in charge of regulation.

Dudley subscribes to a stridently free-market view of regulations that would make it nearly impossible for an agency to justify regulatory intervention. She has claimed that regulation is only justified if it is meant to rectify a market failure. Yet even in cases when a market failure has been identified, Dudley has often argued that the agency does not have enough information to act.

In commenting on a proposed rule by the Federal Motor Carrier Safety Administration (FMCSA) limiting the number of hours that truck drivers can be on the road without rest, for instance, Dudley claimed that the Department of Transportation had failed to “present data to support its assertion that fatigue systematically contributes to highway fatalities.” (In the final regulation, the agency apparently took the suggestions of Dudley and her industry allies to heart, weakening the standard to actually allow truck drivers to spend more hours on the road.) Dudley also argued that the EPA did not have enough information on the health effects of regulating ozone to justify setting air quality standards. Regarding the EPA's limit on arsenic in drinking water, Dudley maintained that, “though evidence from other countries supports an association between arsenic and certain forms of cancer, the effect of exposure to the low doses present in the U.S. water supply is very uncertain, and science alone cannot determine the appropriate level [of protection]."

Ironically, Dudley has also argued against possibly the cheapest kind of regulatory intervention -- the simple release of information. Dudley claimed that releasing more information on hazardous chemicals through the Toxic Release Inventory was not justified because more information is not necessarily socially valuable. (“Even if we determine that information on the release of certain chemicals has a net social value, we cannot assume that more frequently reported information, or information on a broader range of chemicals would be more valuable.”) Dudley opposed the release of information concerning the potential consequences of leaks from chemical or industrial facilities, claiming that information “is unlikely to be of any public value.”

Of course, the White House's hostility towards health, safety, and environmental standards is nothing new. In 2001, OMB solicited nominations for regulations to be repealed or weakened, and in comments authored by Dudley, Mercatus offered up 44 of the 71 total suggestions sent to the office, including several related to the EPA's standards for safe drinking water as well as the FMCSA's regulation of truck drivers' hours of service. The White House incorporated 14 of Mercatus's suggestions into its final regulatory hit list.

Dudley would replace John Graham, who left the office in February to become dean of the RAND Corporation's graduate school. At the time of Graham's appointment in 2001, public interest groups led by Public Citizen waged a campaign to oppose the nomination, which eventually passed by a vote of 61 to 37. According to documents uncovered by Public Citizen, Graham had questionable ties to industry. Moreover, Graham favored analytical approaches to regulation -- such as cost-benefit analysis -- that often served to justify weak public protections.

But in his time in office, Graham preferred technocratic solutions that at least sometimes favored regulatory action. By contrast, Dudley's public comments written during her time at Mercatus reveal a hostility towards environmental, health, and safety regulations that is ideological and virtually total. As Frank O'Donnell of Clean Air Action has said, “Susan Dudley makes John Graham look like Ralph Nader.” Laura MacCleery of Public Citizen's CongressWatch, who helped spearhead the campaign against Graham's nomination, put the matter even more bluntly: "John Graham has an anti-regulatory bias, but Susan Dudley is an anti-regulatory crusader. This is like trading in a scalpel for a sledge hammer."

The Mercatus Center receives much of its funding from private corporations, most notably the oil and gas giant Koch Industries. Charles G. Koch, a major Bush contributor and president of Koch Industries, sits on the Mercatus board of directors. Other corporate funders of Mercatus include BP Amoco, Exxon Mobil, General Motors, JP Morgan, and Chase and State Farm Insurance. Even Mercatus's foundation support, which includes the late Sam Walton's Walton Foundation, has a corporate slant. With automobile and energy giants as major contributors, it's little wonder that Dudley has adamantly opposed EPA measures to curb pollution emissions from automobiles and increase fuel efficiency.

While environmental groups have already begun to sound the alarms, it seems unlikely that Dudley will see a Senate confirmation in the coming months. With little time left in the congressional calendar and a backlog of legislation to contend with, the Senate has little incentive to take up the appointment of a controversial nominee. Thus, Bush may very well use the adjournment at the end of the 109th Congress to make a recess appointment.* That would guarantee at least a year at the helm for his anti-regulatory "crusader" -- and provide industry with yet another important champion inside the administration.

*This sentence was modified from the original.

Genevieve Smith is a regulatory policy analyst with the nonpartisan public policy group OMB Watch and a freelance writer living in Washington, D.C.