Lapas attēli
PDF
ePub

the desirability of an open and transparent process. More importantly, we have done a great deal to put these ideas into practice, beginning almost immediately after we took office.

Executive Order No. 12866, which president Clinton signed on September 30, 1993, represents the cornerstone of our efforts. It recognizes that there is an important role for regulation in protecting the health, safety, environment, and well-being of the American people. At the same time, it emphasizes that Government has a basic responsibility to govern wisely and carefully, regulating only when necessary and only in the most cost-effective manner.

To implement this philosophy, the Order sets forth principles emphasizing the critical role of analysis (of costs, benefits, and risk) and of the use of that analysis in decisionmaking; consideration of different regulatory alternatives and of alternatives to regulation; the importance of private markets and the use of market incentives in regulating; the need for performance standards rather than command and control techniques; better consideration of the needs of small businesses and the roles of state and local governments; and the need for extensive consultation with all those affected by the regulation (both those who will benefit and those who will be burdened). The Executive Order requires agencies to propose or adopt a regulation only after determining that the rule would achieve its objective in a cost-effective manner, and that its benefits would justify its costs. The Executive Order also charges my office with reviewing all significant Executive Branch agency rules in order to ensure that its principles are satisfied.

Recognizing that risk and cost/benefit analyses are valuable tools in helping agencies make regulatory decisions in a sensible and cost-effective manner, the Administration has expressed its support for legislation in this area that is fair, effective, and affordable. But we do not support legislation that is likely to burden the regulatory process with unnecessary or costly requirements that will cause delay and gridlock, or likely to have substantive consequences that are detrimental to the American people.

We have reviewed S. 343 and very much regret that it does not appear to live up to these standards, nor to its own professed standards of regulatory efficiency. To the contrary, as drafted, S. 343 is subject to the same criticism often leveled at the existing regulatory system it is seeking to fix-too broad, too prescriptive, and fraught with consequences that threaten to impede, entangle, and further bureaucratize important functions of government. Let me describe some of these problems.1 Section 621-the Definition of "Major Rule." One obvious problem with S. 343 is its scope. Its regulatory impact analysis requirements apply to each "major rule." A major rule is then defined as one that "is likely to have a gross annual effect on the economy of $50,000,000 or more" or is likely to result in "a substantial increase in costs or prices" for everyone in our society or has "significant adverse effects" on competition, employment, investment, innovation, the environment, public health or safety, etc.

These open-ended phrases, once written into statute, to be interpreted by the courts, could sweep in an enormous number of regulations that do not warrant, and could not conceivably profit from, a full-blown cost/benefit analysis. Is there a "substantial increase" in price if there is a 5 cent increase in a 15 cent item? A 5 cent increase in a $1.00 item? What if you use a 1,000 of those $1.00 items? Is it still "substantial" if the 1,000 items account for less than 1 percent of your cost of service? Where is the line to be drawn? How are the agencies to know where it should be drawn and what criteria would be used by the courts in reviewing whatever decision is made?

Even where there is a clear line established-namely, the $50,000,000 thresholdthat clear line is highly questionable in light of the experience of the last 20 years. Since president Ford, every president has had an executive order establishing regulatory review. An essential ingredient of these orders is a distinction between that which is important and that which is more routine or administrative. For over 20 years, that distinction has been drawn at an aggregate annual effect on the economy of $100 million.

In developing Executive Order No. 12866, the Administration consciously retained $100 million as the threshold for requiring a cost/benefit analysis, having determined that the resources devoted to regulatory analysis should be commensurate with the significance of the decision to be made. Allocating resources where they are most productive (i.e., getting the biggest bang for the buck) is a tenet of proponents of cost/benefit analysis. But by setting the threshold for such analyses at one half

1 There are some confusing aspects of the bill as introduced, such as cross-references to a Subpart III that does not exist, and amendments to the Regulatory Flexibility Act that I am not discussing here.

of what president Reagan used in his Executive Order, S. 343 dilutes this distinction. Indeed, for a large number of rules, there would be newly imposed procedural and paperwork requirements that can only cause delay and gridlock.

Section 623-"Decisional Criteria." S. 343 provides that no final major rule can be issued unless the agency finds that the potential benefits of the rule "outweigh" the potential costs of the rule and that the rule will provide greater net benefits to society "than any of the reasonable alternatives" identified during the rulemaking process. To be explicit on the intended effect of this provision, the language goes on to state that unless an existing statute "contains explicit textual language prohibiting the consideration" of these decision criteria, these criteria "shall supplement the decisional criteria for rulemaking" under the statute authorizing the rulemaking.

The potential effects of Section 623 are hard to itemize, but the significance of the contemplated change cannot be overstated. For more than 30 years, Congress has passed-and Presidents from both parties have signed-publicly acclaimed legislation for which the decisionmaking criteria are different from that suggested here. Some legislation-much of it seeking to redress long-standing wrongs to minority groups and persons with disabilities-is based on social and procedural, rather than economic, standards of equity, fairness, and due process. Other legislationincluding legislation involving safety to workers-reflects Congressional judgments that significant occupational hazards should be eliminated if economically feasible. Still other legislation-much of it designed to protect the environment-is based upon standards tied to the most advanced technology being used by industry. And other legislation-underpinning entitlements, benefits, and formula grant programs-views certain individuals and groups as worthy of society's support exceeding a level that a marginal analysis of aggregate social needs might suggest.

All of this legislation was vigorously debated and carefully considered at the time of enactment, and it has served as the underpinning of American society since at least World War II. It may be appropriate to review and/or reconsider some of these decisions, but any changes in underlying standards should be debated and decided on the merits and not in the guise of procedural reform. To override all of this history in 21 lines of text, without identifying the statutes and regulatory programs involved, and without a reasoned discussion by the responsible Committees and by the full Senate and House of the myriad of social and economic policies that are implicated cannot be fairly characterized as good government.

Sections 624 and 628 Judicial Review. Adding to this potential chaos is the explicit provision that agency_compliance or noncompliance with these decision criteria is subject to review in the Federal courts.2 Each regulation issued under an existing statute (with its own decision criteria, agency practice, and court precedent) would become subject to these new decision criteria. For present purposes, the important point is that the bill (specifically Section 624(d)) makes Federal judges, rather than the Congress, responsible for deciding what changes in social and economic policy are to be made.

Consider also the provision for judicial review of the determination of whether or not the rule is a major rule to which these criteria are applicable. As I noted above, the open-ended definition of "major" invites endless opportunities for litigation, producing uncertainty and delay with all of the attendant costs. Again, the Federal judges are being asked to focus on whether the agencies choose the right path to follow in developing a rule rather than a review of the rule on the merits.

We are also troubled by Section 628, which requires a reviewing court "applying traditional principles of statutory construction" to look to whether the agency has applied the "interpretation of the statute intended by Congress," and if the statute gives the agency discretion to choose from among a range of permissible statutory constructions, to choose the interpretation "that maximizes net benefits to society." As this Committee well knows, there is an enormous body of law and lore on the subject of statutory construction and on the more arcane issue near and dear to the hearts of administrative lawyers on the subject of an agency's interpretation of its statutory mandate. It is far from clear what changes to the Chevron decision are being made, what other seminal administrative law decisions are being overturned or significantly modified, and, again, what the implications will be for the host of organic statutes whose interpretations (by the agencies or by the courts under a different standard of review) have up to now been considered settled law. These are

2 Section 624 is reinforced, in Section 628, by having the Federal court favor, within the "range of permissible statutory constructions" considered by the agency, the "one that maximizes net benefits to society." 3 Chevron v. NRDČ, 467 U.S. 837 (1984).

matters that should not be lightly brushed aside, particularly in the name of improving the regulatory system.

Also, to the extent that the agencies (and the courts) are locked into the intent of Congress, the weight will likely be given to the intent of the Congress that passed the statute-10, 20, 30, or more years ago-augmented by the intent of subsequent Congresses only to the extent they have manifested that intent in the form of amendments, riders, etc. What will be the weight accorded the oversight process in the more recent past, currently, or as it may be expressed in the future? Is it really the will of the Congress to instruct the Federal judiciary to ignore the results of this traditional and highly effective Congressional oversight process?

Section 626 Comprehensive Report and Wait. Our concerns with Section 626 focus in the other direction on improper interference in the Executive's responsibility to implement the law. Section 626 provides that, subject to certain limited exemptions, any major rule is to lay over in Congress for 45 days awaiting, under expedited procedures, a potential legislative override. While Section 626 purports to restore power to the Congress to stabilize the balance of power, it could in fact raise serious Constitutional questions.

I need not belabor the Constitutionally established separation of powers: Congress the Legislative branch--authorizes the Executive branch to carry out designated responsibilities. The Executive branch is responsible for the day-to-day decisionmaking the conduct and fulfillment of these Federal responsibilities. To oversee these day-to-day activities, Congress--its Committees, its leadership, its individual Members-retains well-established mechanisms of formal and informal oversight.

But in Section 626, the Congress will put itself into the position-for 45 daysto have individual Members, their staff, and any private constituents whose help they request scrutinize the agencies' work product. Will some suggest "modest changes" if the agency wants its rule to go forward? Will others suggest the addition (or deletion) of one "small piece" of the proposed package? This is a very significant handle to give an individual Member-or his or her staff-and it will virtually ensure that the lobbying on particular regulations (which can be quite intense) will now move from the agency-where the often competing claims are to be reconciledto the Hill, where there is neither the time nor the resources to verify information, hear the "other side of the story," or resolve the conflict. And this intervention would take place at the end of the process and without any of the disclosure and record requirements set forth in the Administrative Procedure Act, which stresses openness, accountability, and due process for all.

In addition, Section 626 provides for the suspension of all statutory deadlines, and deprives the Federal courts of jurisdiction based on any such deadlines, until all the requirements of this law are met. Again, with a few lines of text, a host of statutes will be amended without identifying which they are and without consideration having been given to why in each instance an earlier Congress chose to impose such deadline.

Section 625-Look-Back. Section 625, "petition for cost-benefit analysis," provides that anyone may petition for review of an existing major rule if he or she believes it does not provide "greater net benefits to society than any reasonable alternative to the rule," and then the agency must conduct a detailed cost/benefit analysis as provided in S. 343. As a matter of principle, this Administration supports-indeed, encourages-agencies to review the effectiveness and efficiency of existing rulesparticularly those that have been on the books for a number of years. But Section 625 is unworkable and, if enacted as drafted, could transfer the management of the agencies from both the Executive and Legislative branches of government to special interests pursuing their own agendas.

Section 625 authorizes individuals to file a petition to have an agency review a major rule, any portion of a major rule, or agency guidance or general statement of policy that is equivalent to a major rule. The agency is to decide whether there is "a reasonable likelihood that the costs * ** outweigh the benefits or that reasonable questions exist as to whether the rule provides greater net benefits to society than any reasonable alternative ***". If the agency denies the petition, that action is immediately reviewable in court. If the agency grants the petition, it must promptly undertake the requisite cost/benefit analysis of the subject of the petition. And for certain categories of petitions, the agency is prohibited from enforcing the regulatory requirements until that analysis is complete.

There is little in the field of regulation that would not give rise to some "reasonable questions." Moreover, since the threshold for defining a "major" rule would be half of what it has been for the past 20 years (without even taking account of inflation), there are undoubtedly a very large number of regulations that have never been subject to the requisite cost/benefit analysis.

The task, therefore, facing the agency may be formidable. The time pressure would likely be impossible to meet. But most significantly, the agency's task will not be determined by the President or the people he appoints, or by the Congress. Rather the priorities for the agencies will be set by the special interests who are the first to flood the agencies with their petitions and sufficiently well-financed to keep the petitions coming.

There are several other concerns that we have with S. 343. For example, Section 627 prohibits, "notwithstanding any other provision of law," any rule "that expands Federal power or jurisdiction beyond the level of regulatory action needed to satisfy statutory requirements." Depending on how one interprets the word "requirements," this could be applied to nullify any effort by an agency, despite any statement of original Congressional intent, to go beyond the bare minimum of what is explicitly required in the statute. Similarly, the language of Sections 652 and 653 is problematic in that S. 343 assumes that the reviewing entity will have serious substantive responsibilities but only provides 30 days in which to carry them out. These may well be issues of drafting, rather than of differences in objectives, that can easily be resolved.

I regret that I have spent so much time speaking to matters on which we disagree rather than on the areas where we agree. The current regulatory system needs improvement. This Administration has stated (well before the most recent election— indeed, since its inception) that there are too many regulations, that many are excessively burdensome, that many do not ultimately provide their intended benefits, and that, consequently, many members of the public are justifiably frustrated and angry with the federal regulatory system.

Working together, I am confident that we will be able to help bring the American people a rational regulatory system that works for them, not against them, and that improves our quality of life, promotes our health and safety, and protects the environment, without imposing undue costs or burdens.

Thank you, Mr. Chairman. I am happy to answer your questions.

Senator GRASSLEY. Mr. Gray and Mr. Turner?

For the audience, I feel like I should always call Boyden Gray "Boyden" because several years ago when I first came to the Senate, the first official meeting I had was with Vice President Bush on the subject of regulatory reform. You were in the meeting and you were his very good counsel, and you have been a very loyal person to work with and very loyal to the public officials you work with. So I welcome you and welcome Mr. Smith.

I want to introduce Boyden Gray. He became partner of a law firm, Wilmer, Cutler, and Pickering in 1976, and then in 1981, as I have indicated, became legal counsel to Vice President George Bush. He also served as counsel to the Presidential Task Force on Regulatory Relief, chaired by the Vice President, and that was from 1981 to 1983.

Then in 1985, he became counsel to the Vice President, and in December of 1986 again became counsel to the Presidential Task Force on Regulatory Relief. In 1993, he returned to Wilmer, Cutler, and Pickering, and he was counsel to President Bush.

Mr. Smith is a partner in the Washington, DC, office of Hunton and Williams, an international law firm. Mr. Smith has practiced environmental law for over 25 years. Recently, his practice has focused on major environmental rulemaking, corporate environmental management issues, regulatory reform matters, and advising companies on international environmental law.

I will ask you to start, Mr. Gray.

PANEL CONSISTING OF C. BOYDEN GRAY, WILMER, CUTLER, AND PICKERING, WASHINGTON, DC; AND TURNER T. SMITH, JR., HUNTON AND WILLIAMS, WASHINGTON, DC

STATEMENT OF C. BOYDEN GRAY

Mr. GRAY. Senator Grassley, thank you very much for the opportunity. You have my statement, so I will just try to give a brief summary of the summary and make three points against the backdrop of something you said, that this has also been bipartisan. I think it is also never-ending. Regulatory relief is a never-ending process as we wrestle some of these issues to the ground.

The first point I want to make is that centralized review is essential. There is a good provision in S. 343 for that, but it is very, very important. If you step back and look at how one deals with the so-called fourth branch of Government, there are three ways with the three constitutional branches. You can have Congressional review, but that takes time and it doesn't always fit with calendars.

You can have judicial review; that can take even more time, and the courts have limited expertise or resources to get into factual matters. Then you have the White House, and my own experience, maybe colored by the fact that I worked in the White House for so long, is that the most effective is White House review. The President and the Vice President are, after all, the only two people in our Government who are elected by everybody and they cannot, the way the White House operates, answer to any particular constituency, the way often a committee can or a Congressman can or a Senator who comes from a particular State with particular constituents. So the White House's role in this is essential.

We fell down in the Bush administration because we never had an OIRA head and we never had a Ms. Katzen in our administration. I could say that had there been legislation, had S. 1080 passed the House back in 1982 and been signed by the President, that would have made it very, very difficult for the complex set of events that occurred which led to no appointment-very difficult for that complex set of events to repeat themselves. So I would strongly urge that the centralized review provisions be retained.

The second point I want to make is that risk assessment-people say it is great, but it really ought to be done. The point of risk assessment is to allow the public a better view of what the agencies do. It is a bipartisan issue. The leading academic work on this was done 2 years ago by Justice Breyer. I do not think there should be any partisan reason to step back and not do it.

A good example of where risk assessment would have been very helpful is the asbestos case. It is written up recently in, I guess, last week's issue of U.S. News and World Report. I would commend it to everyone here to read if you haven't read it. It is a very discouraging story of how an agency gets involved in something and can't get out of it. With a risk assessment provision, billions and billions of dollars that should have been redirected to educating our children could have been saved.

Finally, market-based incentives. We have remarkable examples of success, but they seem not to be duplicated with the kind of interest that I think would flow from what has happened. Take the

« iepriekšējāTurpināt »