Federal regulators would have to calculate costs for all major rules they promulgate under a bill authored by Senators Fred Thompson (R-Tenn.) and Carl Levin (D-Mich.). The Regulatory Improvement Act of 1997 is feared by environmentalists, while business groups think it's too weak.

Analysts say the bill is a sign, however, that Congress still remembers how to spell "regulatory reform."

• Regulators would be required to hire independent experts to compare costs and benefits in consistent ways, and provide justification for any rules for which the costs appear to outweigh the benefits.

• For regulations addressing health and safety issues, the regulators would have to explain who was at risk and to what degree.

• If there were several possible means to the same end -- for example, a choice of mandated technological fixes or market-based financial incentives -- agencies would have to explain the alternatives and the reason for favoring one over another.

In the past, Congress has formally prohibited cost considerations on expensive health and safety laws -- notably the Clean Air Act. The Thompson-Levin bill would presumably change that. It's one reason why environmental groups fear the change, because they have an inside track on influencing policy at the Environmental Protection Agency.

Source: Peter Passell, "A New Move to Cut the Costs of Federal Regulations," New York Times, July 17, 1997.

A report by Robert Crandall of the Brookings Institution and Jerry Ellig of George Mason University examines the benefits of deregulation in certain large industries since the mid-1970s. The results are cause for jubilation among deregulation proponents, who promised good things if only, in Ronald Reagan's words, government would "get off our backs."

• By 1985, when all natural gas discovered since 1976 was freed from federal price regulations, gas prices began a steep plunge and quality of service improved once the threat of artificially created shortages was removed.

• Deregulation of air fares and abolition of the Civil Aeronautics Board in the 1970s and early 1980s resulted in savings to passengers of $12.4 billion annually -- while increased competition improved air travel quality by increasing flights and reducing transfers.

• Within six years of deregulating the trucking industry, the number of licensed motor carriers doubled and over the years rates have fallen and stayed low -- with innovations benefiting consumers such as tracking and monitoring services being introduced.

• In the ten years following deregulation in these industries, real prices fell by these proportions: natural gas, 27 to 57 percent; long-distance telephone service, 40 to 47 percent; airline fares, 29 percent; trucking, 28 to 58 percent; and railroad delivery, 44 percent.

Source: John Hood (John Locke Foundation), "Dividends of Deregulation," Policy Review, July - August, 1997.

Federal mandates on business and the states are a cheap alternative to increasing federal spending. But economists warn many federal regulations do not pass the common-sense test, in which benefits exceed costs to society:

• According to economic analysis, between 1982 and mid-1996 more than half of all social regulations flunked a cost-benefit test.

• These regulations cost the economy almost $300 billion.

• Today, America spends more than $200 billion a year for social regulatory mandates.

A bill just introduced by Sens. Fred Thompson (R-Tenn.) and Carl Levin (D-Mich.), the Regulatory Improvement Act, would add some fiscal and social responsibility to the federal regulatory process:

• Federal agencies would have to conduct a cost-benefit analysis for every new regulation with an annual impact of over $100 million.

• Independent experts would conduct peer reviews of major rules so "junk science" could be trashed before political appointees invoke it as supporting evidence.

• Agencies would have to recommend more cost-effective alternatives for rules that do not pass the cost-benefit test.

The bill would also appoint an advisory committee to review existing rules that need to increase their net benefit to consumers. Rules not reviewed within five years would be automatically repealed.

Robert W. Hahn (American Enterprise Institute); Robert E. Litan (Brookings Institution), "Putting Regulations to a Test," Washington Post, July 30, 1997.