nificance has always been used to measure a rule has been a $100 million threshold, and indeed that metric is about 25 years old. S. 343 cuts it in half, but in other ways also broadens the definition of a major rule. In my view, there is virtually no rule that a health and safety agency promulgates that will escape being labeled "major" under S. 343, and I think that is a significant mistake because S. 343 requires an enormous amount of analytical work even for rules that will pose a very modest burden on the economy. I cite in my testimony one that I think is really paradigmatic of this problem, which is the FDA's rule in iron toxicity. It is a rule that is entirely uncontroversial. Industry doesn't disagree with it. It is very hard to imagine anyone taking the position that parents ought not to be warned that iron tablets can be toxic to their children. Industry is not complaining that it is a necessity that these iron pills he placed in child-proof containers. But the rule, particularly as you have defined the term "major" in S. 343, would plainly exceed the triggers, and so the FDA would be required to do risk assessments and cost-benefit analyses and other very expensive kinds of documentation simply to get out a rule that I think is not only noncontroversial, but certainly doesn't require the expenditure of this kind of enormous time and money to promulgate a rule. I also oppose very strongly using cost-benefit analysis as a principal criterion for decisionmaking and rulemaking, and I have two objections to it. The first is it elevates the notion that cost-benefit analysis yields a number that we can all trust, and I won't go into the details, but there are fundamental problems with the reliability of cost-benefit analysis. The numbers that go into it, by necessity, are often estimates. They are good-faith estimates by and large; they are reasonable estimates, but sometimes they are flat out wrong. And, worse, everyone would acknowledge there are many benefits of regulation that simply cannot be monetized, and it is a false sense of objectivity to be able to point to a cost-benefit analysis and say that this analysis captures all of the costs and all of the benefits that are imposed by a rule. It captures many of them and that is why it is a valuable tool. We don't have any objection to agencies being compelled in cases where the rule is a significant one to be required to conduct a costbenefit analysis, and to look at it and to use it to try to come up with the most cost-effective means of regulation. But making it a universal decisional criterion, I think, overstates the reliability of cost-benefit analysis. The other problem, of course, is the one that Sally alluded to this morning that many of our statutes, after exhaustive debate by Congress, have very different decisional criteria and are set up to operate around those decisional criteria. For Congress simply to systematically replace them in a procedural statute that doesn't go back and look at what impacts this substitution will have on the Occupational Safety and Health Act, the Food, Drug, and Cosmetic Act, I think, is a terrible mistake. I mean, just take a step back, Senator Grassley, and try to work through how the Food, Drug, and Cosmetic Act would work if the agency, before it took a medical device off the market, had to do, and substitute, a hardcore cost-benefit analysis. I am not sure it is possible and I am not sure it is good policy. Yet, this bill would, in my view, end up with that substitution. Let me make two other very brief points and then I will yield the microphone to my more senior colleague, my former law professor. I am very troubled by the petition mechanism in this rule. It is not to say that once an agency finalizes a rule it ought to be etched in stone. Under the Administrative Procedure Act, there already is a mechanism by which people can petition agencies to reconsider their rules, and you can get judicial review in the event that an agency denies that petition. The problem with the petitions mechanisms that are written out in S. 343 is that because petitions are so inexpensive to file, it will turn out that agencies will spend much of their time simply responding to petitions, and much of the agencies' resources will be tied up simply in dealing with them. The Congressional Budget Office scored the analytic requirements imposed by H.R. 9, which imposes similar analytical requirements, but does not have a petition mechanism. The numbers are sobering in terms of the enormous costs that these kinds of requirements will place on an agency. This petition mechanism will place enormous financial constraints on agencies because they will continually have to revisit risk assessment and cost-benefit documents to ensure that they are up to date and they are based on the latest information. So instead of addressing today's problems, agencies will be constantly reproving the wheel. I think that is a terrible misallocation of agency resources, particularly where agencies are certain that if they so no, their denials will be subject to judicial review. That leads me to my last point, which is that I wonder whether the Senate is being sold a pig in a poke with these judicial review provisions. I am a litigator. All I do is administrative law. That is my job, and I am very troubled by the scope of the judicial review provisions in S. 343, even though by and large we support broadscale judicial review. My concern, I think, is different than that which has been articulated to this committee in the past. It is not simply that S. 343 will unleash a torrent of new litigation on the courts. I think that is apparent. There are two different problems. The first is, by allowing wholesale litigation over the analytic documents, what you do is you place the agencies at risk because if they have committed an error, a computational error or some error in a cost-benefit document or a risk assessment document, the rule is subject to invalidation even though the rule may make sense, it may be cost-effective, it may be the best rule coming down the pike. That, to me, is irrational. The second problem is that courts are ill-equipped to consider the flood of these highly complex analytical cases. I have litigated some of these cases and they are just enormous drains on the resources of courts. If S. 343 is enacted, I urge the committee to give serious consideration to beefing up some of the courts of appeals that will have to review these cases. They are very time-consuming, they are very complex, they are very resource-intensive to a court, and if Congress makes the decision that it is worthwhile to do that, please look on the other side of the ledger, which is our colleagues in the judicial branch who will have to face these cases day in and day out. Thank you very much. Senator GRASSLEY. Before you go ahead, your comment about we might be buying a pig in a poke-although I know 343 is different to some extent than 1080, would you have made the same comment 10 years ago about 1080? Mr. VLADECK. We did make exactly the same comment, sir, 10 years ago about 1080, though I think, in fairness, the judicial review provisions here are broader because the petition mechanism, in my view, is almost the 13th stroke of the clock and it calls into question everything that precedes it. All of those decisions will be subject to judicial review. If I want to tie up an agency, all I have to do is file five or six petitions and let them go revisit-for example, take the Occupational Safety and Health Administration; let them go revisit the cost-benefit analysis in the lead, the risk assessment in the coke oven emissions standard, the risk assessment in the cadmium standard or in the ethylene oxide standard. I file petitions for review in the District of Columbia Circuit. Their senior scientific staff and their legal staff are now devoted to doing one thing, which is beating my petition through review. They are not working on existing standards; they are not working to clean up old, outmoded standards. They are doing nothing constructive to make the regulatory process work better. They are just dealing with me in court, and that, in my view, is not productive. [The prepared statement of Mr. Vladeck follows:] PREPARED STATEMENT OF DAVID C. VLADECK Public Citizen opposes the enactment of S. 343 because it would cripple the ability of health and safety agencies to carry out their important work. First, we object to requiring agencies to prepare cost/benefit analyses and risk assessments for virtually every rule. • Redefining the threshold for major rules in the manner proposed by S. 343 would sweep virtually every rule into the "major" category. That is unwise, since even rules with quite modest impacts would be subject to the highly burdensome requirements set forth in subchapters II and III of the bill. • S. 343 would compel agencies to use cost/benefit analysis as the main decisional criteria in setting standards. Not only would this provision thwart most health and safety regulation, but also, given the inherent limitations and unreliability of costs and benefits data, it is unsound from a policy perspective to rely heavily on cost/benefit analysis. • Equally problematic is S. 343's sweeping risk assessment mandate. Risk assessment can be a valuable tool in selected rulemakings. But it is wasteful to prepare risk assessments in many of situations covered by S. 343. Moreover, the bill's theory that "one size" risk assessment fits all circumstances is misguided. Congress ought not to dictate science policy to expert agencies. Requiring agencies to engage in an industry-by-industry cost/benefit analysis on a virtually universal basis is wasteful and wholly unjustified. • We estimate that it will cost agencies a minimum of $700,000 per rule to comply with the analytical requirements imposed by S. 343. S. 343 is a classic “unfunded mandate." At same time Congress is imposing expensive requirements on agencies, it is proposing to slash agency budgets. Second, we object to the "petition" mechanisms which would allow recalcitrant companies to tie agencies in knots with petitions to reexamine agencies' cost/benefit analyses and risk assessments. This provision guarantees that agencies will spend much of their resources responding to petitions, not addressing the important issues of today. Third, the bill proposes that both Congress and the Courts micro-manage the work of agencies to an unprecedented degree. Congress ought not to saddle the court system with a torrent of new, highly complex cases without providing the courts with additional resources. Nor should Congress systematically review every major rule issued by federal agencies. The potential for impermissible congressional interference in agency rulemaking is simply too high. Mr. Chairman and members of the Committee, thank you for the opportunity to testify this morning on S. 343, the Comprehensive Regulatory Reform Act of 1995. Before I turn to my substantive remarks, let me briefly sketch out the basis for my interest in this matter. I am the Director of Public Citizen Litigation Group, the legal arm of Public Citizen, Inc., a nationwide advocacy organization of over 100,000 members that has long been active in health and safety matters. Among other things, for more than twenty years we have represented consumer groups, labor unions, worker groups, and public health organizations in standard-setting proceedings and in litigation involving the OSHA, EPA, FDA, USDA, NHTSA and other health and safety agencies. We have also handled many of the pivotal separation of powers cases decided over the past twenty years, including the legislative veto case (INS v. Chadha); the GrammRudman case (Bowsher v. Synar); the impoundment cases (Campaign Clean Water v. Train and City of New Haven v. USA); and the Sentencing Commission case (Mistretta v. US). This experience gives us a real-life appreciation of the way our system now operates. It also allows us to comprehend the breathtaking, radical, indeed, unprecedented changes that are proposed in S. 343-not just in the procedural rules that govern agency rulemaking, but in basic health, safety, environmental and civil rights protections guaranteed by substantive statutes. S. 343 will not bring these changes through a serious, careful and rigorous public debate over the merits of the Food, Drug & Cosmetic Act, the Clean Air and Water Acts, the Occupational Safety and Health Act, or our civil rights laws. Rather, the Act will eviscerate-if not repeal-those laws by making it impossible for agencies that are assigned the task of implementing those laws to perform their jobs. In our view, it would be far more forthright and less wasteful of taxpayer dollars if the bill simply said: “No more rules." Although there are many proposals embodied in S. 343 with which we disagree, this testimony will concentrate on three basic points: • First, the cost/benefit analysis provisions of S. 343 would thwart health, safety, environmental and civil rights regulation. Public Citizen has no objection to requiring agencies to engage in cost/benefit or cost/effectiveness analysis as one of several analytical tools. But making agencies perform cost/benefit analysis for virtually every rule cannot conceivably be justified. Nor is it defensible to use cost/benefit as the sole decisional criteria in virtually all rulemakings. That both overstates its precision and overlooks the painful reality that many things society values equity, fairness, environmental justice, the avoidance of pain and suffering, and so forth-cannot be quantified in any reasonable way. Finally, requiring agencies to engage in an industry-by-industry cost/benefit analysis all but guarantees that agencies will be strangled in a sea of red tape. • Second, as presently structured, the Act would allow anyone to petition an agency to perform a cost/benefit analysis or review a risk assessment on an existing rule or guidance document. Agencies will not be able to withstand the blitzkrieg of petitions they are certain to receive. Nor will they be able to afford all of the analyses that would be required to comply with this section. This provision seems to be designed to ensure that agencies spend all of their time and money performing unproductive tasks, instead of tackling today's problems. • Third, S. 343 contemplates unprecedented roles for both federal courts and Congress in micro-managing the affairs of administrative agencies. Assuming that Congress can constitutionally play such an extensive role in guiding agency deliberations (an assumption hardly free from doubt following Chadha), it is unwise as a matter of policy to have Congress and the courts integrally involved in the nitty-gritty of rulemaking. As we noted, the upshot of these new requirements will be that the development of health and safety standards will be substantially delayed or stopped altogether. Here are just a few examples of rules that are currently being developed, but would be stymied by passage of S. 343: • Proper Mammograms for Breast Cancer Detection • Prevention of Iron Poisoning in Children • Testing of Meat and Poultry for Contamination • Reductions' of Emissions That Cause Birth Defects and Cancer from Incineration of Municipal and Medical Waste • Prevention of Fatal Head Injuries in Car Crashes • Fatal Truck Accident Prevention Rules • Workplace Exposure to Tuberculosis • Coal Mining Hazard Prevention Tracking Defective Medical Devices 1 We urge Congress to carefully consider the impact S. 343 will have on these and other pending rulemakings, before it adds new burdens on our already overworked agencies. I. COST/BENEFIT ANALYSIS UNDER S. 343 Without question, the most disturbing features of S. 343 relate to its cost/benefit mandates. In order to understand just how radical a departure S. 343 is from current law, it is important to review briefly existing requirements. Under the Executive Orders applicable during the Reagan, Bush and Clinton Administrations, regulators were required to prepare detailed, thorough cost/benefit analysis whenever they proposed "major rules." Since the Ford Administration, there has been a consensus that a "major rule" is one that has an annual impact of $100 million on the economy. While agencies were thus required to prepare cost/benefit analyses for major rules, all of the Executive Orders made it clear that, where an agency's statutory mandate forbade the use of cost/benefit analysis as a decisional criteria, the agency should obey the law. For most health and safety agencies, that mandate meant that while cost/benefit considerations informed their rulemakings, agencies applied the decisional criteria laid out in the statutes they were enforcing. And agencies are under no general requirement to perform risk assessments for major rules, although many health and safety agencies regularly perform such assessments when they believe that a risk assessment will provide information of value to the rulemaking. Let us now turn to some of more troubling proposals made in S. 343. A. S. 343 unwisely lowers the threshold for major rules S. 343 marks a radical departure from these requirements in many respects. For one thing, it proposes to dramatically lower the benchmark of what constitutes a major rule down to $50 million-which will require time-consuming and costly analyses for rules that impose a relatively modest impact. Further, under current law, an agency considers only the "direct" impacts of a rule to determine whether it is "major." Under the bill, "indirect" impacts—a term nowhere defined-would have to be considered. Taking indirect impacts into account can easily double or triple the estimated "cost" of a rule. As a result, it is hard to imagine that more than a handful of rules will not be subject to the onerous cost/benefit and risk assessment requirements imposed by S. 343. To illustrate, consider the Food and Drug Administration's recent proposal to deal with iron poisoning-the result of a child taking too many vitamin tablets. Iron toxicity is one of the leading cause of poisoning deaths in children today. From 1986 through 1992, over 100,000 children were poisoned; many suffered permanent injury-and at least 33 died, according to the Center for Disease Control. In response, the FDA has proposed limiting the iron potency of vitamins intended for children, as well as placing a warning on the labels of higher potency pills and requiring child-proof containers for them. Under the modest $50 million threshold proposed in S. 343, it is possible-indeed virtually certain-that this innocuous rule will be deemed "major," and thus subject to all of the time-consuming, burdensome and expensive analytical requirements mandated by subchapters II and III of the bill. Does that make any sense? We submit that it does not. 1 Details about these rulemakings are set forth in an addendum to this testimony. |