[EDITOR'S NOTE-Attachment B: A Report of the Committee on the Judiciary, U.S. Senate, on S. 1080 is retained in committee files.]

Senator GRASSLEY. Well, thank you for very concise and very worthwhile testimony from two people who have been involved in this process for a long time. My questions would be about four or five, and how you folks want to answer them, either or both of you, as you feel you can contribute.

Administrator Katzen, as you just heard, has talked up President Clinton's rulemaking executive order, so I would kind of like to have your judgment, qualitative or quantitative judgment, about how helpful or effective have been the administration's efforts in improving both current rules, and more importantly the rulemaking process.

Mr. GRAY. Well, I will start, Senator Grassley. The rule on the surface looks very much like the one that President Reagan adopted in 1981. There are some differences. Distributional equity issues are put in, along with more sort of neutral economic cost-benefit factors that one normally thinks of.

I don't know whether that or whether the fact that the executive order covers fewer rules or whether the timeframes are specifically put out that are shorter-I don't know what particular difference, not major, but what particular difference accounts for it, but it has been my impression that the review process in the current administration has not worked as well as it did, even going back to President Ford.

I cannot pinpoint exactly why. I don't know that I can blame it on the executive order, but I do believe that were the purpose of that order, like the purpose of the preceding orders, in a statute, I do believe that Ms. Katzen's office would have more clout and would be held more accountable by you and your counterparts in the House and the entire process of centralized review would be strengthened. My impression has been that--and this is, I suppose a subjective judgment-her office has not been given the White House support that it had in previous administrations.

Senator GRASSLEY. Mr. Smith, do you want to add?

Mr. SMITH. Yes; I might point out some specific aspects in which the Clinton executive order, while looking on the surface like the Reagan executive order, in my judgment, lacks the core toughness of the Reagan executive order.

In particular, the Reagan executive order had clear and specific decisional criteria, and when you look at the Clinton order you find that replaced by general statements of regulatory philosophy and principles of regulations that speak in "shoulds" rather than the Reagan executive's "shall."

Furthermore, I think the ability of the OMB office to intervene and determine whether something is a major rule and reach down and insist that it be dealt with as a major rule is much weakened in the Clinton executive order because that determination has to be made within 10 days of receipt of a list of planned regulatory actions, and they had much more authority and power under the Reagan order.

Finally, the Reagan order provides that if the agency disagrees with the comments of Ms. Katzen's office, they are simply required to inform her in writing, and there is no explicit requirement that they explain why or otherwise justify their decision to march on.

So those I don't know that they explain the lack of effectiveness that Boyden has seen, but I think they may well contribute to it. Senator GRASSLEY. I would next like to have your response to the argument of the administration that there must be flexibility within the system and that a rigid set of procedures will be detrimental to the rulemaking process-how you would respond to that, and more importantly how that might apply to S. 343.

Mr. SMITH. Well, maybe I can give you some specifics. I believe that the framework spelled out in S. 343 is, in fact, not rigid. I think it is quite flexible. In many ways, it is remarkably similar to the one in S. 1080, and an excellent report by the Judiciary Committee detailed the nature of the flexibility both required and built into that legislation.

In my testimony at page 10, I identify a series of provisions in the cost-benefit sections and in the risk assessment sections of the bill where you find things like costs being defined as those that are reasonably identifiable; benefits being referred to as those that are reasonably identifiable; the description requiring, to the extent feasible, a quantification on numerical estimate; a specific requirement that where things are not quantifiable, they be considered in the process on an unquantified basis.

Finally, in the risk assessment section, which is strewn throughout with the words "to the extent feasible," "as practicable," "where relevant," "when doing this, then, if possible, you must do that," there is a specific section that I think is important and could apply equally, and probably should apply and be written in on cost-benefit requirements, and it says in 635(b)(3), "“A risk assessment shall be prepared at the level of detail appropriate and practicable for reasoned decisionmaking on the matter involved, taking into consideration the significance and complexity of the decision and any need for expedition."

Now, it seems to me that what you need to do is provide that flexibility, provide the rational framework, and then insist that bureaucrats use their heads and have the courage to produce expli

cations of their decisions which aren't three volumes long when the decision does not require that.

Mr. GRAY. Senator Grassley, if I could just reaffirm that, if there is anything that is inflexible about this bill, it is that the basis for agency decisions, especially in the risk area, be made public, be made transparent, be made open.

You mentioned the assumption built into the grain permitting rule that assumes that the grain elevator is operating 365 days a year. Were that more publicly known, perhaps the agency wouldn't be so quick to make the assumption that indeed it does.

One of the major assumptions in the risk arena with which you may be entirely familiar, so excuse me if I go on for 30 seconds, is the much-feared maximum exposed individual. That is the MEI, not to be confused with the MTD, which is the maximum tolerated dose. Now, all of these are arcane sorts of things, but they are quite important. The maximum exposed individual is the model on whom all risk appears to be based, at least at EPA.

It assumes, if you have a leak in a plant somewhere, that everybody in the world is just like what I call the sleeping bag man who huddles up in his sleeping bag, nestled under the leaky valve for 24 hours a day, 7 days a week, 52 weeks a year, 70 years of his life. He never takes a weekend off, never takes a vacation, never switches jobs, never gets to go abroad. But this is not the exposure level that most people face, and that is what much of this legislation is designed to do, is to get this out into the open so the public can participate in how these factors are taken into account.spell

Senator GRASSLEY. I think you remind us of the ridiculous process we go through. It almost begs just a little more commonsense approach and that the people making the regulations ought to have that commonsense approach.

On another matter, Mr. Smith, I know you specifically talked a little bit about judicial review, I would like to know-and also Mr. Gray-the extent to which there is fear of judicial review leading to so much more litigation or just the further defining of a new law leading to further litigation. Do you think that S. 343 is going to do that?

Mr. GRAY. There are a couple of provisions which sort of come back to me as I try to do other things that bother me, and I haven't quite put my finger on exactly how to fix them or how I would recommend that you fix them, but I do think some more work could be done to be more precise about the standard that the courts might apply.

Generally speaking, courts are going to have to defer, and should defer, to agency fact-finding missions, and I think it is important to keep this legislation from putting the courts in the fact-finding shoes of the agency and I think some more work could be done to trim that.

Senator GRASSLEY. Mr. Smith?

Mr. SMITH. Senator Grassley, I think, for my money, the question about whether this is going to drive more litigation requires understanding that it applies to the cost-benefit analysis requirements apply to major rules. Those major rules in almost every case, if not every case, will already be subject to judicial review under the leg

islation that they are being promulgated under or pursuant to the APA.

If one is going to make the cost-benefit requirements part of the decision, as it seems to me clearly should, and was done in S. 1080, then, just as in S. 1080, you must provide for judicial review of that part of the decision or you would have a part of the decision subject to judicial review and a part of it, the cost-benefit analysis elements, not subject to judicial review. I think you want the whole decision and everything the agency considered on the whole record reviewed all at once in the same court, and that is what I believe this bill is trying to do.

Now, major rules are already analytically complex. We do not avoid having courts deal with questions of discretion and questions of analytical complexity in the review of major rules. They already have to do that. This legislation gives a statutory standard for the exercise of the discretionary aspects of the agency's decision given to it under the organic legislation, and I submit that it will not cause any more complexity in the judicial review of major rules that will already take place than what we have now. In fact, by giving the courts guidance and the agencies guidance about how to exercise the discretionary aspects of their authority under their existing organic legislation, it may help simplify things.

Senator GRASSLEY. Do you have a view on the issue of consent judgments where an agency agrees with a private party to judicially enforceable obligations?

Mr. GRAY. This is a very troublesome area and very difficult to deal with, Senator Grassley, and I don't pretend to know what an answer is. But in the Reagan administration, you may recall that Attorney General Meese issued a circular that prohibited, or tried to prohibit agencies, or tried to prohibit the department from representing agencies, from entering into consent decrees that mandated, required action on the part of the parties that the agency did not have authority to require at the outset under the organic governing statute.

I don't think that the current administration has followed that. That might be a useful way of dealing with this problem, but consent decrees are sort of like friendly lawsuits. It happens frequently at EPA that a lawsuit is brought by an environmental group. It is not really all that hostile to the agency, and in judge's chambers a consent decree is worked out that binds the agency, ties its discretion for the next 10, 15, 20, 30 years, and often requires the parties to do things that the agency could never ask them to do under the statute. I think that is very dangerous.

In the current rulemaking on the permitting rule, which is perhaps the most troublesome of all the rules that are now pending in the pipeline, a lawsuit was brought and the agency changed direction within the closed walls of settling the lawsuit. Now, they have reproposed in the Federal Register the agreement, the tentative agreement reached in the settlement agreement, but I think that is a bad way to run a railroad and I hope that the reproposal gets shot down, as I think it should be. It should not have been agreed to, I think, in the consent decree process.

Mr. SMITH. Just a short thought, and that is where a consent decree is entered into under existing law, and thus freezing, in a

sense, agency discretion and its exercise in the future, that may be an important place for legislative oversight by the Congress and perhaps may require changing the underlying legislation.

Senator GRASSLEY. I thank both of you, and I hope you will feel free to work with us on this legislation even without our contacting you. But I hope if we do contact you, you will be able to help us. Thank you very much.

Mr. GRAY. Thank you very much.

Senator GRASSLEY. I now call David Vladeck, and he is with a Public Citizen here in Washington, DC, and then we have Mr. Peter Strauss, Betts Professor of Administrative Law, Columbia University Law School, in New York City.

Welcome, and you can proceed. Do you have any specific amount of time you want to request?

Mr. VLADECK. As I understand the committee's rules, the witnesses are allotted 5 minutes, and I will try to keep to that. Senator GRASSLEY. OK, go ahead.

PANEL CONSISTING OF DAVID C. VLADECK, DIRECTOR, PUBLIC CITIZEN LITIGATION GROUP, WASHINGTON, DC; AND PETER L. STRAUSS, BETTS PROFESSOR OF LAW, COLUMBIA UNIVERSITY SCHOOL OF LAW, NEW YORK, NY

STATEMENT OF DAVID C. VLADECK

Mr. VLADECK. First of all, thank you very much for inviting me to appear before you this morning.

Let me start by assuring the committee that I don't think the disagreement among the witnesses that you are going to hear from today and have already heard goes toward the goals of what Congress is trying to do. No one disagrees that rules ought to be reasonable, they ought to be cost-effective, they ought not to impose unreasonable demands on regulated entities. So I don't think the disagreements that separate us have to do with aspirational goals. They have to do with the means by which Congress will direct the administrative agencies to achieve those goals.

I am here this morning to say that while we support your effort, in principle, we are very troubled by many of the provisions in S. 343 that, in our view, would strangle agencies in red tape and would produce exactly the opposite result that this committee and many members of Congress want to achieve, which is sensible regulation.

Let me start out simply by pointing out that the critics of regulation today say it is overly prescriptive, it is overly burdensome, it places needless paperwork burdens on regulated entities, and it is too expensive. Each of these criticisms, I would submit, fits S. 343 like a glove.

S. 343 is extremely prescriptive. It will be enormously expensive for agencies to comply with. It generates substantial amounts of paperwork for each rule, much of which for most rules is unnecessary. With that background in mind, let me explain why I take that view.

The first, and in my view one of the most serious problems with S. 343, is its redefinition of what constitutes a major rule. As Sally and Boyden pointed out this morning, the yardstick by which sig