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diversionary monster, that will needlessly swallow up scarce resources and delay valuable government activity.

The last quarter century of experience with impact statements taught us a number of valuable lessons. Judicial review of required impact analysis is today available only for environmental impact analyses under the National Environmental Policy Act, and even within that act it is available only to enforce procedural compliance with the Act, not particular outcomes. Congress did not seem to give careful consideration to the consequences of NEPA review, and the initial results were confusion and delays that many concluded exceeded the benefits of the statute. Ultimately, the NEPA review process became less burdensome, as courts significantly narrowed review to issues of procedural compliance. Still, until this year, Congress has remembered that experience with NEPA's unintended consequences, and has refused to subject any other analytic requirements to judicial review.

Judicial review has a number of characteristics that can impose large costs on regulatory processes. It is invoked by individuals, who need have no reason other than expectations of personal advantage for seeking it. Judicial review, in the end, is a winner-take-all process; while people might compromise to avoid the risks of litigation, that is a different kind of compromise than you accomplish here in Congress every day. One person insisting on her right can hold out against the whole world—a very valuable characteristic in settings where individual rights are at stake, but not when we are dealing with more political issues. Judicial review is particularly prone to error, in my judgment, when it deals with the kinds of problems for which you create expert agencies. It is accomplished by judges who have no detailed experience with or responsibility for regulatory programs, or the types of analysis involved in them. It can be started only after an agency has acted, and in important cases it takes years to complete. It is particularly problematic in deal. ing with issues of scientific uncertainty and recondite data. Often, it is not discriminating about the character of error-a relatively small mistake, years afterwards, can derail an important initiative; such an outcome is particularly frustrating if the error concerns the agency's process in deciding to act, rather than the merits of a conclusion it ultimately does reach. Few judges, over time, can acquire the sort of acquaintance with particular programs or issues that would permit expert judgment about the importance or not of a given kind of error, the relationship of a given dispute to an agency's overall program, the overall reliability of a given agency and its processes.

Agencies can, to a degree, anticipate these problems and defend against them, but not without incurring additional indirect costs of judicial review. The ossification of rulemaking, as the literature describes it, has required commitment of massive resources to each rulemaking, that slows the process. That can deny the public needed protection, and it can deny regulatees needed relief from excessively burdensome rules. I do understand that there are those who think that slowing the process is a good thing, and I do not mean to argue that all rulemaking choices have been wise ones. That is why we are here today. But if there are proper occasions for rulemaking, making the agencies excessively fearful and cautious about acting, making it very costly for them to act, are indirect costs of judicial review that have to be taken into account.

As one example of these problems, consider the Sixth Circuit's 1972 decision in Chrysler v. Department of Transportation, 472 F. 2d 659. That was the first rule that would have required the installation of air bags in automobiles—a rule that easily meets cost-benefit analysis. The Sixth Circuit found the rule itself valid, but it was troubled that the dummies that were going to be used to test compliance with the rule had necks that were a bit stiffer than yours or mine are, and it seemed not to understand the agency's reasonable commitment to accommodate the resulting measurement difficulties. It took twenty years, and tens of thousands of avoidable deaths to get to the point we have reached today, where air bags are a selling point and the public has received their beneficial protection. Another illustration, that I have written about, can be drawn from the Supreme Court's decision in the Overton Park case. A ten-year political process in Memphis had put before the people and apparently resolved a local dispute whether Interstate 40 ought to run through town. Using an environmental statute that gave no clear signals about judicial review, a small group of disgruntled citizens succeeded in blocking that road years after that decision had been taken, and on a basis I could find no sign anyone had anticipated. A park was saved; but quite a few people have lost their lives on the curves built into the road when it had to be rerouted, and the economic costs for Memphis seem also to have been high. It's not clear that a rights process, rather than a political process, was the best solution.

If issues of individual right are concerned, one nonetheless provides for judicial review—the importance to the particular individual of his or her right to lawful govPREPARED STATEMENT OF PETER L. STRAUSS My name is Peter Strauss. I am Betts Professor of Law at Columbia Law School, where I have taught and written about administrative law since 1971. I have also practiced administrative law as a government lawyer, serving in the Office of the Solicitor General during the Johnson and Nixon administrations, and as General Counsel of the Nuclear Regulatory Commission during the Ford and Carter administrations. I was a consultant to the American Bar Association's Coordinating Group on Regulatory Reform when Congress made its last serious effort at regulatory reform, during the Reagan administration; and I have since been chair of the ABA's Section of Administrative Law and Regulatory Practice. And I have for many years been a consultant, then public member, and now senior fellow of the Administrative Conference of the United States. The testimony ! am about to give you is entirely my own, and has not been paid for by or vetted with, directly or indirectly, any governmental official, private organization, or client. I am very pleased to have the chance to talk with you about legislation as important to the country as is S. 343.

I should start by saying that I learned the value of cost-benefit analysis in rulemaking and of properly conducted presidential oversight twenty years ago, during my years at the Nuclear Regulatory Commission. It may surprise you to hear that a major safety regulator, established by Congress as an independent regulatory commission, required its staff to justify rulemakings in cost-benefit terms and welcomed appropriate presidential participation in its work, but that was the case. Understanding the public's proper need for assurance about the safety of nuclear power generation, even under normal operating conditions, we had to develop principles for choosing how safe was safe enough. Perfect safety could and can never be obtained. And so we made what we thought were conservative assumptions about the health consequences of exposure to even minuscule amounts of radiation, and conservative estimates of the value of preventing those consequences, and on that basis developed a rule for saying when new safety improvements did, and did not, have to be adopted by operating plants. The NRC was also charged by Congress with responsibility for administering international nuclear programs, and in that context we thought it essential to consult closely with the executive branch. It is a small agency, and cannot duplicate the capacities of the Department of State or the CIA, for example, to assess matters of great subtlety and sensitivity. We and they understood that we had to reach our own judgment, but in a context of collaboration and mutual respect. We have one government, whose resources are limited; and they can be best and most efficiently deployed only from its' executive center. That was an important reality for the NRC then, as it is for our country now.

So I start out friendly to the project S. 343 seeks to accomplish. It is important legislation, that on the largest scale looks in the right direction. It is my hope that you will succeed in institutionalizing executive oversight of rulemaking, and in revising rulemaking to require that the most important initiatives be based on careful consideration of alternatives and on rational justification of the decision to devote the government's and the private economy's limited resources to the matter at hand. Of course there are the details—as has wisely been remarked, the devil is in the details

and we haven't got time to talk about them all. I want to recommend to you a course of action for assessing those details, and give you just one example of how such an assessment might change aspects of this bill's approach.

The recommendation is that you use the discipline of cost-benefit analysis as best you can in considering this legislation itself—that is, that you pay attention to possible unintended consequences, to regulatory overlaps, to less costly alternatives including approaches that rely on managerial standards and incentives rather than command and control approaches. The particular example concerns section 624's provision for judicial review of regulatory impact analysis, and its relation to properly constructed presidential and congressional oversight of that same activity. The proposition that underlies the example is that open, aggressive political oversight of rulemaking analysis

conducted as in my judgment the President and Congress have the incentive to conduct it, and in a manner that permits the public to assess its regularity and efficacy–will achieve the change you want in regulatory approaches without threatening to raise the costs of what government properly has to do. By way of contrast, permitting judicial review of the process hands over to interested private parties weapons with which they can cheaply and unaccountably delay government action, and make it more expensive to accomplish what government should be doing. Congress is, properly, trying to make government smaller. As the resources available to agencies diminish, it becomes increasingly important to protect agencies' ability to use their scarce resources efficiently. Thus, so long as government still has work to do, Congress needs to be careful that it doesn't create a diversionary monster, that will needlessly swallow up scarce resources and delay valuable government activity.

The last quarter century of experience with impact statements taught us a number of valuable lessons. Judicial review of required impact analysis is today available only for environmental impact analyses under the National Environmental Pol. icy Act, and even within that act it is available only to enforce procedural compliance with the Act, not particular outcomes. Congress did not seem to give careful consideration to the consequences of NEPA review, and the initial results were confusion and delays that many concluded exceeded the benefits of the statute. Ultimately, the NEPA review process became less burdensome, as courts significantly narrowed review to issues of procedural compliance. Still, until this year, Congress has remembered that experience with NEPA's unintended consequences, and has refused to subject any other analytic requirements to judicial review.

Judicial review has a number of characteristics that can impose large costs on regulatory processes. It is invoked by individuals, who need have no reason other than expectations of personal advantage for seeking it. Judicial review, in the end, is a winner-take-all process; while people might compromise to avoid the risks of litigation, that is a different kind of compromise than you accomplish here in Congress every day. One person insisting on her right can hold out against the whole world—a very valuable characteristic in settings where individual rights are at stake, but not when we are dealing with more political issues. Judicial review is particularly prone to error, in my judgment, when it deals with the kinds of problems for which you create expert agencies. It is accomplished by judges who have no detailed experience with or responsibility for regulatory programs, or the types of analysis involved in them. It can be started only after an agency has acted, and in important cases it takes years to complete. It is particularly problematic in dealing with issues of scientific uncertainty and recondite data. Often, it is not discriminating about the character of error-a relatively small mistake, years afterwards, can derail an important initiative; such an outcome is particularly frustrating if the error concerns the agency's process in deciding to act, rather than the merits of a conclusion it ultimately does reach. Few judges, over time, can acquire the sort of acquaintance with particular programs or issues that would permit expert judgment about the importance or not of a given kind of error, the relationship of a given dispute to an agency's overall program, the overall reliability of a given agency and its processes.

Agencies can, to a degree, anticipate these problems and defend against them, but not without incurring additional indirect costs of judicial review. The ossification of rulemaking, as the literature describes it, has required commitment of massive resources to each rulemaking, that slows the process. That can deny the public needed protection, and it can deny regulatees needed relief from excessively burdensome rules. I do understand that there are those who think that slowing the process is a good thing, and I do not mean to argue that all rulemaking choices have been wise ones. That is why we are here today. But if there are proper occasions for rulemaking, making the agencies excessively fearful and cautious about acting, making it very costly for them to act, are indirect costs of judicial review that have to be taken into account.

As one example of these problems, consider the Sixth Circuit's 1972 decision in Chrysler v. Department of Transportation, 472 F. 2d 659. That was the first rule that would have required the installation of air bags in automobiles

a rule that easily meets cost-benefit analysis. The Sixth Circuit found the rule itself valid, but it was troubled that the dummies that were going to be used to test compliance with the rule had necks that were a bit stiffer than yours or mine are, and it seemed not to understand the agency's reasonable commitment to accommodate the resulting measurement difficulties. It took twenty years, and tens of thousands of avoidable deaths to get to the point we have reached today, where air bags are a selling point and the public has received their beneficial protection. Another illustration, that I have written about, can be drawn from the Supreme Court's decision in the Overton Park case. A ten-year political process in Memphis had put before the people and apparently resolved a local dispute whether Interstate 40 ought to run through town. Using an environmental statute that gave no clear signals about judicial review, a small group of disgruntled citizens succeeded in blocking that road years after that decision had been taken, and on a basis I could find no sign anyone had anticipated. A park was saved; but quite a few people have lost their lives on the curves built into the road when it had to be rerouted, and the economic costs for Memphis seem also to have been high. It's not clear that a rights process, rather than a political process, was the best solution.

If issues of individual right are concerned, one nonetheless provides for judicial review—the importance to the particular individual of his or her right to lawful gov§ 623(b) will not accomplish everything its authors may hope, if not married to $622(e)(1)(B). I assume that the latter provision encourages agencies to make cost/ benefit analyses on an industry-by-industry basis. That might have resulted, for example, in more stringent OSHA controls over benzene in the rubber industrywhere many workers were exposed and controls were relatively cheap—than in the petrochemical industry, where few were exposed and costs were high. But $623(b) does not authorize such an approach.

§ 625 I have not had time to study this section carefully but my impression is that it is particularly susceptible of adventitious use by people who for their own private purposes would like to distract agencies and tie up their resources, regardless of the particular merits. It would be simpler and less threatening (in part because it would suggest a permissive standard of judicial review) to provide that a petition for rulemaking change under existing procedures (5 U.S.C. 8553(e)) may specify that it is based on the belief that the rule in question would be a major rule under this statute, and lacks requisite justification. Denial of such a petition is al. ready subject to review under a well-understood, rather permissive standard.

Rather than let each litigating petitioner control agency priorities, one could assure both prompt response and attention to overall government effort by providing for the President to oversee the handling of these petitions, and authorizing him to direct rulemaking in appropriate circumstances. Such directives could be given more quickly, and with greater attention to competing government needs and resources, than will happen if the issue is consigned to the courts.

As earlier suggested, (d) and (e) of $625 introduce publication rules (guidance, policy statement, etc.) rather than legislative rules for the first time. These measures are "rules" within the meaning of 5 U.S.C. $551, as the draft seems not to appreciate, but they are rules without direct legal force they do not bind, and cannot be enforced as such. They announce a planned course of action, which is formally open to challenge and revision at any point. Without meaning to contest the judgment that “major rule” analysis may sometimes be appropriate for these instruments, I want to point out (1) publication rules themselves are rarely reviewable directly as “final agency action,” which makes review of a petition to withdraw such a rule curious as a concept; (2) it is very problematic to prohibit agencies from having policy or interpreting a statute while they are in the course of reconsidering how to act; (3) again, it is formally incorrect to speak of prohibiting agency enforcement of policies or guidance, since they cannot be enforced as such. To give an example: FAA may have technical guidance how airframe manufacturers can comply with its regulations, and that guidance might involve major expenditures. It will be hard to tell whether the guidance documents involve more or less expense than alternative approaches that may comply with the regulations; formally, the manufacturers are free to meet the regulations any way they can show compliance, but they appreciate being told about acceptable methods. (e) seems to tell the agency and the manufacturers that the guidance can't be used if FAA decides (or is required) to reconsider it under this section—so the manufacturers will have to demonstrate compliance with the FAA rule in each case. That does not seem to be a sensible outcome.

$626(a), may simply intend to suspend “hammer" provisions Congress has enacted, which many regard as questionable in any case. Is it possible a court would read (a)(3)

to forbid adjudication in any case in which major rulemaking efforts were pending? That would hand private parties the power to paralyze government, and ought not be done.

8626(d)(4) The first three words of this subsection raise a difficult constitutional issue that there is probably no need to create.

$627(a) In 1911 the Supreme Court upheld a statute that authorized the Secretary of Agriculture “to make such rules and regulations * * *

regulate (the) occupancy and use (of national forests and] * * * preserve the forests and lands thereon from destruction.” He adopted a rule requiring a permit to graze sheep there. Is this a “regulatory action needed to satisfy statutory requirements? (emphasis added.) As worded, this is a remarkable provision. It would deny validity to a rule adopted to implement the Fifth and Fourteenth Amendments in the absence of a statutory requirement (for example, the federal executive order prohibiting racial discrimination in employment by federal contractors). If “need” and “requirement” were interpreted in one obvious way, a way that might be attractive to judges using “plain meaning,” this section would dený validity to rules that were convenient to implement a discretionary regulatory power, like that of the Secretary of Agriculture in the example given.

§ 628 Giving statutory form to the Chevron rule is, in my judgment, a useful step. Two cautions:

as will

(1) subsections (a) and (b) talk about “traditional" principles of statutory construc

tion, mirroring Chevron; (c), “established” principles. The courts will try to under

stand the difference, and I doubt one is intended. Make the usage consistent. (2) the last five words of (c)(1)(C) raise a delegation problem that is not present on

earlier occasions when this formula is used. In earlier usages, the agency was adopting a rule within its policy jurisdiction and, in that limiting context, was instructed to maximize benefits to society. But here it is giving shape to what its jurisdiction is, and Congress seems to be telling it not to make the best environmental (or workplace or aviation) policy it can, but to adopt the interpretation that “maximizes net benefits to society" from a broader, congressional perspective. Agencies have, and must have, limited agendas within which to act; this instruction should recognize those limitations. For example, "is the one that will best permit it, within its competence, to maximize net benefits to society.”. With that change, the agency is no longer required to consider issues of grand policy, beyond its responsibilities.

$611 For reasons already stated, the Regulatory Flexibility Act should be folded into S. 343. The perspectives I have suggested about judicial review under section 624 are equally applicable here. The number of small entities that could sue, and the number of courts they could sue in, illustrate the risks Congress would take in enabling private enforcement of broad public policies like those of S. 343. I urge you to consider whether programmatic compliance could be assured by political or other means, that present fewer risks of disruption of government programs to serve private advantage.

Senator GRASSLEY. You used these words in your statement, “As an alternative to judicial review, put in place mechanisms for encouraging uniformity in analysis and coordination among agencies and internal agency management structures." What do you mean, and who or what would make the decision, then, to make sure it actually works?

Mr. STRAUSS. I think the President, working with the Congress; that is to say, one of the ways—you asked earlier witnesses about their impression of the differences between 12866 and the prior executive order, and one of the impressions I have is that 12866 has put a good deal more emphasis on agency thinking processes rather than micromanaging specific rulemaking results.

That seems to me in line with one's general preference for performance standards. That seems to me the direction in which you would want to go. I think the Congress and the President, working together, want to put in place mechanisms for getting effective thinking into the agencies, and so OIRA is the basic answer.

Senator GRASSLEY. This question might be appropriate for you, Mr. Vladeck, but if you want to address it, too, Mr. Strauss, you could. Do you support the current citizen suit provisions in the environmental statutes, and if so, why not support them in this bill?

Mr. VLADECK. The citizen suits in the environmental statutes basically replicate the rights anyone would have under the APA to challenge the overall rationality of a rule. We do not say, and we have never suggested, that there ought not to be judicial review of the rationality of the agency's rule.

Under the Administrative Procedure Act, an agency must be able to demonstrate that its factual findings are based on substantial evidence in the record and that the rule satisfies the test that is set out in the APA, which is referred to as the arbitrary and capricious test, but really means does the rule satisfy a standard of rationality. We want to preserve that kind of review.

Under that standard, a reviewing court would be allowed to look to see whether the agency misapplied or made an egregious error in the way it construed the risks, the costs, the benefits. There is

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