How Sequestration Downsizes Regulation

Sequestration is a heavy blow to regulatory agencies. For the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and the Securities and Exchange Commission (SEC), among many others, the $85 billion in cuts is the next step in deregulation, which accelerated in the 1990s, especially in the financial arena.

Regulators responsible for writing and enforcing the rules from the Dodd-Frank Wall Street reform law, a piece of legislation that has yet to be fully implemented and has already been watered down, will see significant portions of their budgets cut.

The SEC is facing up to $108 million in cuts from its $1.3 billion budget between now and September 30, the end of the Federal fiscal year. The Commodities Futures Trading Commission, etiolated after the Commodities Futures Modernization Act of 2000, could lose $17 million from its budget of $205 million.

The cuts may also increase the number of food recalls. U.S. Department of Agriculture Food Safety and Inspection Service employees could be furloughed up to two weeks according to a memo the White House released about a month ago.

It said that there would be 2,100 fewer food facility inspections by the FDA, “putting families at risk and costing billions in lost food production.”

Meat prices would rise as well, it said, because meat plants, which are required to have USDA inspectors at their disposal, would be forced to close.

“The public could suffer more food borne illness,” the memo continued, “such as the recent salmonella in peanut butter outbreak and the E. coli illnesses linked to organic spinach, as well as cost the food and agriculture sector millions of dollars in lost production volume.”

The cuts come at a time when the FDA was gearing up to impose more inspections on food facilities.

President of the American Meat Institute J. Patrick Boyle wrote an open letter to the Agriculture Secretary Tom Vilsack, saying that fewer inspections violate United States law and would result in lower food quality.

The sequester also threatens the EPA’s ability to enforce laws that protect water sources from the process of hydraulic fracturing or fracking. Cuts mean that the EPA will have fewer resources to study to effects fracking has on drinking water in places such as the Appalachia region.

Cuts would also slow the EPA’s research on how shale gas development affects a variety of species, including brook trout and freshwater mussels.

Environmental activists in Pennsylvania, which holds up to $20 billion worth of shale gas in its Utica shale play, are particularly worried. Geologists are still assessing the basic effects that fracking, a relatively new innovation, has on the environment. A decrease in funding for research could empower natural gas companies to push through the regulatory and legislative barriers, which are meant to protect air and water quality.

“Losing another $5 million of federal money is going to just blow a huge hole in the Department of Environmental Protection's budget,” says Bob Wendelgass, president of Clean Water Action. “It's going to make it harder for it to keep up with the range of responsibilities its got to protect our air and water, particularly with the new threats from fracking.”

Oil industries, as well, might face fewer regulatory hurdles amid concerns of an increase in offshore drilling.

Incidents such as the Shell Corporation drilling rig that ran aground an island in Alaska two months ago could become more frequent.

The prospects of increased offshore drilling coupled with a decrease in oversight are exacerbated by President Obama’s pick for Interior Secretary Sally Jewell, who supports an “all-of-the-above” energy policy.

A lack of regulation, in the end, will result in more waste, more carbon emissions, more toxins in everyday consumer products, an even less transparent market on Wall Street, and a sluggish manufacturing sector that will have fewer regulators on hand to inspect and approve products so that they can be sold in a timely manner.

Sequestration isn't just a blow to the economy. It's a blow to the safety of Americans.