open and visible to the public so that the regulated community and the public can see exactly how decisions are made in the Presidential review process.

We believe that increased transparency is important to the public's trust in the regulatory process. Nothing is more corrosive of the public's regard for regulation than the belief that secret deals are being made behind closed doors. We concluded that such transparency should be part of any program of Presidential review. The next to final point I would like to make concerns the regulatory analysis of existing regulations. The Administrative Conference recognizes that there are problems with existing regulations in that those regulations are not reviewed as they should be on a regular schedule, and that there are many, many, many regulations on the books that do not comport with the types of standards that you are talking about putting in place at this time.

However, we would like to express some concern regarding permitting any person subject to an existing major rule to petition an agency or the President to perform a cost/benefit analysis for that rule. In our view, this provision may have the consequence of allowing a few individuals effectively to set the agency's agenda, and to do so on a haphazard basis. This is particularly so because the bill is likely to stimulate individuals to file petitions even if the agency has performed a proper cost/benefit analysis under existing statutes or executive orders.

The Administrative Conference has undertaken, and Mr. Gellhorn can speak to this further, a review of just this issue, recognizing that existing rules are a problem, and attempting to craft a procedure that would allow the agency more control over its agenda, but at the same time bringing some solution to the problem of existing rules that do no comport with the cost/benefit analysis.

Finally, I would like to make a comment about the judicial review of agency statutory interpretations. As we read section 628 of S. 343, we think that it is intended to codify the scope of judicial review of agency interpretations of statutes set forth by the Supreme Court in the Chevron decision.

The Administrative Conference realizes the value of the Chevron standard, having stated in one of our recommendations that courts should do what Chevron suggests. So we think that to a great extent section 628 is broadly consistent with our recommendation.

I would point out that our recommendation in this respect reflects a consensus position of the judicial members of the Administrative Conference as well. But the section does not specifically use the terminology that is used in the Chevron case. Rather, it appears to be a decisional standard governing the agency's treatment of costs and benefits in the context of the statutory construction. Although the "reasoned decisionmaking" portion of the provision is useful, the last portion of the provision requiring a statutory construction that maximizes net benefit to society may be construed as different from the overarching decisional requirements contained in section 623(a) (1) and (2).

With that, I think I will conclude my testimony, if you are prepared to hear from Mr. Gellhorn.

Senator GRASSLEY. Mr. Gellhorn?

STATEMENT OF ERNEST GELLHORN

Mr. GELLHORN. Thank you very much for the opportunity to participate, Mr. Chairman, Senator Thurmond.

I want to make three points and expand on each one just briefly. The first is that I view S. 343 and the alternatives of S. 291 and H.R. 9, which are relevant for our consideration, as an important message to the agencies, and I would urge the committee not to be distracted from it by occasional attacks, especially recently in both the Washington Post and the New York Times.

You are on an important topic and I think you are addressing the four critical points of the administrative process: one, internally within the agencies; two, executive oversight; three, legislative oversight; and, fourth, judicial review. Each one is covered in this bill.

The second point is I think the priorities and balances basically are those on which there ought to be broad agreement. You focus on major rules, not every rule, and that is where I would urge the attention stay. You focus on some of the missing links-regulatory impact analysis, cost/benefit analysis. You, I think, recognize the limited office, yet important role of judicial review. Finally, and perhaps really third, you institutionalize Presidential oversight of the agencies, particularly of the independent agencies, which neither of the executive orders, those under President Reagan and those under President Clinton, have dared do, and I think all of those are important.

My third point, however, is less happy, and that is that I think this is a deeply flawed and ultimately unworkable piece of legislation, as drafted. It violates its own command of being, “clearly articulated," as stated on page 10. I cannot figure it out. I do not know what this judicial review provision means. I find the cost/benefit provision verbose, repetitive. It has got 11 different commands on 15 pages of legislation, and I would suggest that what we need to do is to simplify and make this legislation-stick with the basis points, but make it much more focused.

For example, on judicial review, it uses two different standards in terms of statutory interpretation. I don't know which one governs; I don't know what either one means. It has 11 different commands on cost/benefit analysis. Saying it more than once doesn't make it clearer. It makes it confusing, and it will invite, I would suggest, extensive judicial review.

Tying up the regulators in red tape may, of course, reduce the number of regulations they do, and it may be their just deserts, but it will not simplify the process. It will make it more expensive, and if one seeks to deregulate, as I would suggest is frequently necessary, it becomes even more difficult to do.

Well, it is easy to criticize. What does one offer as an alternative? Let me suggest that there is a basic vehicle out there to make the changes, and that is to go back to the simplicity of the Administrative Procedure Act, adopted unanimously by the Congress back in 1946.

For example, take the regulatory impact analysis suggestion. That could be part of section 553(b) on notice. Take the cost/benefit analysis. That ought to be stated very precisely, could be done in fewer than 10 words, and made part of 553(c) on the statement of

basis and purpose. That would automatically incorporate both into judicial review. Now, the judicial review provisions could be expanded specifically, as done in 1082, but I would suggest it could be done very simply by adding it to 706(2)(A) of title 5, the judicial provisions of the Administrative Procedure Act.

There are perhaps some additions here which really aren't in the APA which I would suggest ought to be an add-on either to 553 of title 5 or a new section between 553 on rulemaking and 554 on adjudication, and those would relate to the report-and-wait and the executive oversight. I think each of these could be done quite quickly. I would urge the committee to work with the Administrative Conference staff and the Committee on Rulemaking to accomplish these objectives. We stand prepared to try to assist in every way. One final point that I would make in terms of how to clarify this, and that is I would raise a question about the report-and-wait procedure under section-I think it is 655; I am not sure which number-which seems to me to contain a potential constitutional flaw, and that is it does not provide specifically for the President to sign if he approves of a regulation. It merely provides specifically that he has the opportunity to veto.

My reading of article I, section 7, subsection 3, of the Constitution doesn't permit that approach, or at least it raises a question because it provides not only in subsection 2 that every bill shall be approved and signed by the President, but in subsection 3, on resolutions, that they shall I will quote the Constitution-"shall be approved by him." I am not certain that requires that you say that he has to sign it, but I would say why leave the legislation so unclear to raise a constitutional question and give us 10 years before we know what the answer is going to be?

So my point is simply, ultimately, I urge the committee to stick by its guns, but I think there is a clearer, simpler, more direct way to accomplish its objectives.

Thank you very much.

[The prepared statement of Ms. Rogers follows:]

PREPARED STATEMENT OF THOMASINA V. ROGERS

WHAT IS THE ADMINISTRATIVE CONFERENCE OF THE UNITED STATES?

The Administrative Conference of the United States is an independent nonpartisan agency dedicated to reforming the administrative processes by which the federal government carries out the public's business. The Conference is the only federal agency whose exclusive charge is to make federal benefit and regulatory programs more effective, fair, and efficient. The Conference fulfills its responsibility in a cost-effective way by bringing together volunteer experts from the public and private sectors to research, recommend, and help implement improvements in administrative law and agency procedures.

Examples of the Conference's innovative work include:

inventing procedures so citizens, businesses, and state and local governments can more easily shape agency rules and regulations

• promoting innovative alternatives to traditional regulation, such as audited selfregulation

• streamlining the Social Security Administration's ability to dispense benefits

• developing procedures to replace costly litigation with faster, less expensive consensual ways to resolve disputes

• encouraging agencies to establish ombudsmen to investigate and deal with citizen complaints about the way government treats them

• tailoring procedures to address the special needs of small business

• creating interagency working groups for sharing resources and solving practical problems

• developing procedures for citizens to use electronic technology to exchange information with the government and participate in policymaking

• removing artificial barriers to citizens' ability to challenge government rules and decisions

• developing procedures to help farmers avoid foreclosure on family farms

• developing the first-of-its-kind code of conduct for presidential transition team members.

The Conference, with only 20 employees. serves as a centralized resource on administrative procedure for Congress, the federal departments and agencies, and the general public.Activities include issuing formal recommendations, providing technical and drafting advice and assistance, publishing interpretive and training materials, and conducting seminars targeted to meet specific informational needs on procedures for government programs. The Conference staff has been the driving force behind the movement to improve dispute resolution procedures in federal agency programs.

SUMMARY OF TESTIMONY

Informed observers generally agree that the rulemaking process has become increasingly more time-consuming while becoming less effective. Although much of the impetus for agency rulemaking comes in response to Congressional activity, the rulemaking process itself can certainly be improved.

Elements of S. 343 are helpful steps toward focusing agency attention on the most significant issues Congress wants addressed, providing specific Congressional guidance to agencies to evaluate carefully the costs and benefits of their proposals, to look for the most effective and least intrusive way to implement statutes, and to follow the President's direction on major rules.

The Administrative Conference has long supported the concept of regulatory analysis as a tool for improving the rulemaking process, which can be a useful device in rulemaking if it is taken seriously by upper level decisionmakers, the function is effectively integrated into the rulemaking process, and its limitations are recognized by those relying on it. The bill provides a Congressional prod for the use of regulatory analysis.

At the same time, the Conference's research and experience has revealed that broadly-applicable statutory analysis requirements can be counterproductive. The Conference believes that any analytical requirements Congress chooses to incorporate into law should be narrowly focused and structured to apply to the most significant rule or rules likely to be affected by the concern Congress wants addressed. S. 343 represents a reasonable step in that direction.

The Conference also supports Presidential review of agency rules. Such review can improve the coordination of agency actions, encourage consistency and resolve conflicts among agencies, and avoid duplication in regulatory activity. The Conference suggests the addition of specific provisions requiring public disclosure of certain information relating to the oversight process.

We recognize the need for agency attention to existing rules, however, we have concerns over the mechanism for that attention created by section 625, and suggest an alternative process that either focuses on particular rules or topics, or provides a general statutory mechanism requiring agencies, under a reasonable schedule, to review and reconsider the costs and benefits of existing rules.

The Conference recognizes the value of the judicial review standard articulated in Chevron USA v. NRDC, 467 U.S. 837 (1984). The bill should clarify whether it intends to codify that standard. We also suggest that section 628(c)(1)(C) be revised, because it introduces a somewhat different and inconsistent test from the overarching decisional requirements contained in section 623(a) (1) and (2).

The Conference also recommends that S. 343 be amended to eliminate the exemptions from notice-and-comment requirements for rules relating to public property, loans, grants, benefits or contracts, and that provision be made to allow for use of negotiated rulemaking as an alternative to the cost-benefit analysis.

INTRODUCTION

Thank you for inviting me to testify today on S. 343, the Comprehensive Regulatory Reform Act of 1995. I am testifying on behalf of the Administrative Conference of the United States (ACUS). With me is Mr. Ernest Gellhorn, who is both

a lawyer in private practice and a member of the faculty at the George Mason University Law School. He has been Chairman of the Conference's Committee on Rulemaking for almost nine years.

THE MISSION OF THE ADMINISTRATIVE CONFERENCE

As you well know, Mr. Chairman, the Administrative Conference is an independent nonpartisan agency dedicated to improving the administrative processes by which the federal government carries out the public's business. We are the only federal agency whose exclusive charge is to make federal regulatory (and other) programs more effective, fair and efficient. With the help of a small professional staffs and the assistance of contract consultants, most of whom are law professors, the volunteer members of the Administrative Conference from outside government come together with representatives of the principal departments and agencies to take a hard look at government processes, procedures, and organization-to see what works, what doesn't, and how things can be made more fair, more streamlined, and more effective. Our primary task is to make practical proposals for improving the way government interacts with the citizens it serves or regulates.

The Conference's formal recommendations are developed through a process_that involves careful consideration of an issue by one of our standing committees. (Rulemaking issues are considered by our Committee on Rulemaking.) Committee meetings are open to the public, and involve discussion and debate among the government and non-government members, as well as others who are interested. Proposed recommendations are forwarded from a committee to the full membership of the Administrative Conference, which meets twice a year in Plenary Session to debate and vote on the proposals. Only those recommendations that are adopted through this process become formal Conference positions.

The Conference has no partisan agenda. Our members from the private sector include individuals from both political parties, plus independents, who represent all points on the philosophical spectrum. Our recommendations are politically agnostic and reflect the consensus of our members. Neither I nor the Conference speaks for the Administration.

Nor does the Conference take positions on issues of substantive policy. By law we may not delve into the scope of responsibility given an agency by Congress or evaluate matters of substantive policy committed to an agency's discretion. See 5 U.S.C. 592(3). Our focus is solely on the procedures or processes used to implement agency programs and policies, and implications for the efficiency and fairness of those procedures and processes.

The Conference membership has not had the opportunity to examine S. 343 formally. It has, nevertheless, addressed numerous aspects of the rulemaking process in its Recommendations over the years, and in so doing, has considered some of the issues the bill raises. It did so most recently in 1993, and I have attached to my testimony a copy of Recommendation 93-4, entitled Improving the Environment for Agency Rulemaking. To the extent that my comments today go beyond the scope of the Conference's recommendations, they do not represent formal Conference positions. Rather, they reflect only my own effort to be helpful to the committee's endeavor to craft workable legislation to improve the rulemaking process.

THE NEED FOR REGULATORY REFORM

Informed observers generally agree that the rulemaking process has become increasingly more time-consuming while becoming less effective. The Administrative Procedure Act, which governs agency rulemaking procedures, does not completely reflect the current realities of the actual rulemaking process. On the one hand, many in the regulated community bemoan the cost of excessive regulation and paperwork, while agency officials complain about the need to go through a series of what some believe are unnecessary hoops and analyses of scores of individual is

sues.

Fundamentally, rulemaking is undertaken by agencies exercising Congressionallydelegated authority, to implement statutes that Congress has passed. So the rulemaking process is, to a considerable degree, a byproduct of Congressional activity and needs to be addressed by Congress and the Administration in the context of a deliberative analysis of individual program areas.

That is not to say that the rulemaking process itself cannot be improved. It can be. In offering direction to agencies drafting regulations that they will still be required to promulgate, we believe that elements of S. 343 are helpful steps toward (1) focusing agency attention on the most significant issues Congress wants addressed, and (2) providing specific Congressional guidance to agencies to evaluate carefully the costs and benefits of their proposals, to look for the most effective and