Column: Would EPA deregulation help industry? History says otherwise

BY  

It is a truism often forgotten: Industries need regulation — for their own protection and profitability, writes George C. Lodge, professor emeritus at the Harvard Business School. This Torrance, California, chemical factory produced DDT in the 1970s, before being torn down and declared a superfund site. Photo by Andrew Lichtenstein/Corbis via Getty Images

President-elect Donald Trump has tapped Scott Pruitt, the Oklahoma attorney general, to be administrator of the Environmental Protection Agency. Pruitt has a long history of fighting the agency and has made no secret of his determination to gut it.

Before he goes too far, however, he should recall the 1983 downfall of one of his Republican predecessors: Anne Gorsuch Burford, whom President Ronald Reagan appointed administrator with the express purpose of weakening if not destroying the agency. In her first year, she cut the budget 22 percent, reduced clean air and water regulations, accelerated federal approval of poisonous insecticides, and more. After only 22 months in office, Congress – Republicans and Democrats both – dumped her. She was forced to resign after she was cited for contempt by Congress for refusing to hand over Superfund records, arguing that they were protected by executive privilege.

It is a truism often forgotten: Industries need regulation — for their own protection and profitability.

What some may find surprising and, perhaps, a hint of things to come: the charge against Burford was led by the nation’s largest chemical companies, which had suffered a series of devastating explosions, leaks and toxic releases. Under the brilliant leadership of Irving Shapiro, CEO of DuPont, the industry came to realize that it needed standards and rules rigorously enforced. The companies realized that such procedures were essential not only to protect the communities in which they operated, but to protect themselves from being undercut by fly-by-night polluters. In October 1981, the industry’s own journal, Chemical Week, reprimanded Burford, writing that “an ineffective EPA is not what the industry needs.” Indeed, the industry had supported the landmark Toxic Substances Control Act and provided experts to work in EPA to help create an effective regulatory framework.

It is a truism often forgotten: Industries need regulation — for their own protection and profitability. Just look at professional sports. Every successful league imposes restrictions on itself, most notably a salary cap, so that team owners are prevented (or at least discouraged) from expensive, possibly even ruinous, bidding wars for top players.

Or think of the financial crisis of 2008, brought on by licentious lending, itself triggered by the removal of regulatory restraints. Lehman Brothers would probably still be in business. So too Bear Stearns. But far more important, a disastrous downturn in the U.S. and even world economy could have been avoided.

It’s reasonable to suppose that even if Donald Trump discovers he doesn’t much like being president, he won’t want to lose in 2020. But a rash of environmental disasters could well catalyze a backlash against wanton deregulation, as it has in the past. As for Scott Pruitt, the disastrous career of Anne Gorsuch Burford should give him pause.

SHARE VIA TEXT