Regulations can help innovation
IF STATES are the laboratories of our democracy, Massachusetts is as influential and iconic as Bell Labs. From health care reform to our leadership in cutting carbon emissions, the Commonwealth has introduced ideas that became models for other states and the nation.
But Governor Charlie Baker’s recent executive order, calling for a review of state regulations, contains a provision that threatens to undermine Massachusetts’ role as an innovator. It states that, for the sake of competitiveness in attracting businesses, Massachusetts should ensure that its regulations are not more stringent than federal standards.
The notion of a regulatory review, to ensure that businesses aren’t unduly overburdened, is sensible. No one benefits from byzantine and duplicative rules, and regulations can be wrongheaded, creating perverse incentives or discouraging creative problem-solving.
But the new criteria make the mistake of presuming that weaker regulations are always better. A more effective litmus test would be whether a regulation helps Massachusetts drive progress in technology, entrepreneurship, and public health.
Just as a poorly designed regulation can be onerous, a strong, well-designed rule sends a signal to the marketplace and can be a critical driver of innovation. Take, for example, the lightbulb efficiency standards passed in the bipartisan Energy Independence and Security Act of 2007 and signed by President George W. Bush.
Even before enacted, the proposed rules sent a signal to innovators in the marketplace, encouraging them to come up with alternatives. Lightbulbs on the market today are between 25 and 80 percent more efficient than traditional incandescent bulbs, according to the US Department of Energy. They cast better light. And they’ve saved consumers and companies a lot of money on electric bills, while creating business for forward-thinking companies.
With Congress mired in ever-deeper dysfunction, the burden for innovation falls even more on states willing to lead. Until now, the Commonwealth has been up to the task. The zero-emissions vehicle standards pioneered by California and adopted by Massachusetts and six other states — stronger than federal fuel efficiency rules — have led to a new wave of electric vehicles coming off assembly lines in Detroit and abroad.
And a decade before the federal government moved to cut toxic mercury emissions from power plants and solid waste incinerators, Massachusetts and eight other Northeastern states forged ahead with regulations three times as stringent as federal standards. New technologies came to market that helped retrofit facilities without breaking the back of the power industry. Studies have since shown dramatic drops in mercury levels in the Commonwealth’s freshwater fish.
Baker’s regulatory review could have a chilling effect on future reforms. It could also lead the state to toss out current rules that are stronger than national requirements. One example is the organic food waste ban that took effect in October 2014, a first-in-the-nation initiative that prohibits large institutions and commercial outfits such as grocery stores, universities, and hospitals from putting food waste into landfills or incinerators. The ban will cut disposal costs and methane emissions from food waste. It’s also spurring new business opportunities centered on turning the waste into biogas, including at wastewater treatment facilities.
Officials at Massachusetts’ Office of Administration and Finance say we shouldn’t worry: There will be exceptions to Baker’s new criteria, granted for “essential” regulations, and a public process will air out which rules should be left intact. But the timeline for the review makes a rigorous and credible public engagement process unlikely. In the past, the state has taken multiple years to review dozens of regulations within a single agency. Baker wants to look at all of the executive branch’s 2,250 regulations in just one year, at a time when state agencies are strapped for cash.
If Baker cares about Massachusetts’ reputation for innovation, his administration should take more time. It should also set new criteria for judging regulations that are likely to spur new technologies or serve as models for the nation.
This is where vision comes in — and where protecting public health and the environment coincides with attracting and nurturing creative businesses. The state should assess its existing rules not by asking which activities they limit, but imagining what progress they’ll inspire.
Bina Venkataraman is director of global policy initiatives at the Broad Institute, a lecturer at MIT, and former senior adviser for climate change innovation in the Obama administration. Follow her on Twitter @binajv.