press release


SACRAMENTO, Calif., July 10, 1995 -- Chevron Corporation Chairman Ken Derr today called upon business leaders to get involved in efforts to bring about needed reform of the nations tangled regulatory and civil justice systems.

Dollars now being wasted on unnecessary regulations could be freed up for truly productive purposes, spurring innovation, providing investment capital and growing new jobs, Derr said.

Reform of the tort system would help bring a hto unnecessary litigation and excessive punitive damages, which create an environment where good business decisions are compromised and productivity is hampered, he said.

Derr spoke to Sacramento's Comstock Club, a public affairs forum, in a lunch time address today.

The issues of regulatory and tort reform represent today's foremost concerns for business people throughout the country, Derr said. "With annual tort costs in the range of $100 billion, and regulatory costs five or six times that amount, the United States is carrying a severe and unnecessary handicap compared to its global competitors," he said.

Calling regulation a "hidden tax," Derr noted that the annual cost works out to nearly $6,000 per U.S. household. Twenty years ago, those expenditures bought big environmental improvements, he said. "Unfortunately, our regulatory system does not have a principle that says, 'enough is enough'," he added.

As an example, he cited California's decision to begin requiring the sale of so-called "Zero Emissions Vehicles," or electric cars. "A more appropriate tag might be Elsewhere Emissions Vehicles," Derr said. "In fact, electric cars do cause air emissions -- but they cause them at the power plant instead of at the tailpipe."

Derr added that the cost of producing and using electric vehicles is not justified by the resulting emissions reduction. "When the technology really arrives, maybe electric cars will be supported by the marketplace. But trying to force that arrival by government fiat has got to go down as one of the most absurd solutions ever proposed," he said.

Derr noted that critics of regulatory reform have labeled it as an effort to roll back the last 25 years of progress in the environmental arena. But no business wants to put its employees or neighbors in danger, and no agency is going to set aside rules that shield communities from genuine risk, he said.

"I don't believe the Congress is out to remove the vital organs of protective legislation," he said. "Instead, the operation they seem to have in mind is more like liposuction." Reforms goal, Derr said, is to trim fat from a regulatory process grown "bloated on an unbalanced diet of zero-risk thinking."

Derr supported four key yardsticks for measuring the effectiveness of regulations. They are:

  • risk assessment, to determine realistic risks of an activity, as opposed to worst-case scenarios, now often used;
  • cost-benefit analysis, to take into account society's limited resources;
  • comparative-risk analysis, to allocate efforts toward tackling the worst problems first;
  • good science, as the solid foundation for the three other essential steps.

"Meaningful reform of the regulatory process and the civil justice system could do more to invigorate the U.S. economy, and restore the competitiveness of U.S. industry, than any other government action I can think of," he said.

Updated: July 1995