Category Archives: Regulation

Chemical security act could affect Wichita water rates

The United States Congress is considering legislation that aims to increase the security of America’s chemical industry to terrorism threats. The legislation, if passed, would require chemical companies to substitute government-mandated processes and technology for their current processes. The post Chemical security law goes beyond protection explains more about this legislation.

Even places that we might not consider to be “chemical plants” could fall under this act.

The Center for American Progress — described by Wikipedia as “a liberal political policy research and advocacy organization,” an understatement if there ever was one — has produced a report titled Chemical Security 101: What You Don’t Have Can’t Leak, or Be Blown Up by Terrorists.

The Wichita Water Treatment Plant appears on their list of 202 additional facilities that should be required to change their processes, according to the report. The Wichita plant appears because it uses chlorine to treat drinking water, and, apparently, because it’s located in a large city.

I asked David Warren, Director of Utilities for the City of Wichita, about the proposed legislation and about the Wichita Water Treatment Plant being on a list of dangerous facilities.

While declining — understandably so — to discuss specifics of security at the Wichita plant, he said that if the legislation passes and is found to apply to Wichita’s plant, “it would require expensive changes in our treatment process.”

He also said that the reason for the Wichita plant’s inclusion on the list is due to its location (near the center of Wichita) rather than to any defect in security precautions.

It would be one thing if these changes were necessary and would contribute to national security. But Congressional testimony found that the legislation could actually increase risk to the businesses that the bill intends to protect.

Wichita water rates are already on the rise as the city undertakes capital improvement projects. It’s unknown how much bills might increase if the water plant was forced to make changes to its treatment technology.

But even slight increase can cause hardship. Last year Wichita city council member Lavonta Williams expressed concern that a $1 per month increase in water bills would be a hardship. And in her campaign last year, she stated “We need to start the conversation with service providers about whether we can offer laid-off workers reduced rates for water, heat and other essential services.”

Regulation can backfire, benefit wrong parties

Regulators — no matter how well-intentioned, no matter how noble their cause — usually fail to achieve their goals. Here’s a look behind the scenes of how things can work.

In a Washington Examiner article, Timothy P. Carney relates this story:

There’s a metaphor popularized by economist Bruce Yandle that is useful in explaining efforts to regulate anything from energy to toy safety. Call it the Tale of the Baptist and the Bootlegger.

Picture a small-town Southern politician after Prohibition’s repeal. Call him Jones. Jones’ campaign needs both cash and a winning issue. The state’s most prolific bootlegger comes and offers Jones both. “I can bankroll your entire campaign. You just need to outlaw alcohol in the county. If you close down the bars and clear the liquor out of the corner stores, the men will all have to come to me for their fix.”

Jones, with newly heavy pockets, walks down to the Lady’s Temperance Hall and declares, “Ladies, I’m running to end the scourge of alcohol in this town, and I’m asking for your support.” At his campaign kickoff the next week, Jones has the entire Temperance Union and the local preacher onstage endorsing him, and of course, he’s got the pipeline of alcohol cash from the rumrunner who will get even richer when the county goes dry again.

This appears in his article How Philip Morris benefits from tobacco regulation. It’s a revealing tale of how industry — specifically big and powerful companies in an industry — benefit from regulation designed to control them.

The “Watchful Eye” Fallacy

“In his inaugural address on January 20, 2009, Barack Obama said: ‘Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control.’ To prevent such unfortunate episodes, says Mr. Obama, the market needs to be supervised and regulated by the watchful eye of government. … The fallacy in this view lies in the assumption that government regulators rise above the human limitations that apply to everyone else. It assumes that while the businessman can be shortsighted, the senator will be farsighted, or that while the banker may be inattentive, the deputy undersecretary will not be.”

This is from the outstanding article The “Watchful Eye” Fallacy at FEE, the Foundation for Economic Education.

No end to increasing regulation

Contrary to the popular perception, Bush has been one of the most pro-regulation presidents — far more so than Democrat Bill Clinton, who, in many ways, was a better friend to the free market than Bush has been. …By 2002, just one year into the Bush Administration, there were clear signs of backsliding. A government report endorsed the view that human activity was a principal cause of global warming and the administration signaled that it was going to become more aggressive about issuing new regulations. Said OMB’s Graham, “There’s no allergy to regulation” at the White House….Bush threw all of his free market principles to the wind and endorsed the biggest expansion of government regulation in decades by signing the Sarbanes-Oxley bill. …According to a report by the Small Business Administration, by 2004, the burden of government regulation on the economy reached $1.1 trillion — $10,172 per American household. A recent report from the Competitive Enterprise Institute found the regulatory onslaught continuing through 2006, with many new regulations still in the pipeline.

— Bruce Bartlett, The Washington Times, February 7, 2007