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litigation on those issues already. What we are worried about is taking that authorization of judicial review several steps beyond where it exists today.

For example, S. 343 proposes to repeal section 611 of the Regulatory Flexibility Act, which precludes judicial review of two steps in the regulatory flexibility process. The first is an agency certification that the Regulatory Flexibility Act standard—that is, that the rule will have a significant impact on a substantial number of small entities-has not been met.

This gets back to Peter's point that there has never been judicial review of many of the discretionary decisions that go into rulemaking. Is a rule major or is it not? Does regulatory flexibility analysis, the act-is it triggered by the application of the rule? All we are urging, Senator Grassley, is that the normal standards of judicial review not be extended, in our view, quite dramatically in this bill.

Mr. STRAUSS. If I may, if, by citizen suit provisions, you mean the kinds of citizen provisions which are in some legislation that basically authorize citizens to grab hold of an agency's priorities, yes, I oppose them just as vigorously as I oppose those kinds of judicial review provisions in here. We just don't have the resources in this country for government to deal with the diversion that those provisions inevitably carry with them.

I think that there are significant areas of government action where political oversight is the appropriate level of oversight and judicial oversight is not required. When you get to the end product of the process, testing it, citizens and regulated alike ought to have the opportunity to test it, and if you add decisional criteria to rulemaking, that means they ought to have the opportunity to test whether those decisional criteria have been met, although I hope you might change the language to emphasize to the courts in a way that they don't know about the fact and should pay some respect to agency judgments on difficult issues of scientific judgment because we have gotten into trouble there in the past.

Senator GRASSLEY. I have no further questions. I would like to say to staff and to you, since members aren't here today, you may get some questions submitted in writing and I hope you could respond to those. I don't know exactly how long we will leave the record open, but I imagine 10 days to 14 days, roughly.

Mr. STRAUSS. Any way I can be helpful to you, Senator.
Mr. VLADECK. Thank you very much, Senator Grassley.

Senator GRASSLEY. We will now call Robert Cynkar and George Freeman. Mr. Cynkar specializes in litigation practice at Shaw, Pittman, Potts, and Trowbridge. He has supervised personally and participated in a broad variety of litigation, and he has done that on behalf of the Federal Government, including cases seeking review of regulatory actions undertaken by nearly all Federal departments and agencies. He joined the Justice Department after 4 years on the staff of the Senate Judiciary Committee, where he worked on the Subcommittee on Improvement in Judicial Machinery and the Subcommittee on Regulatory Reform.

Mr. Freeman is a senior partner of the administrative law group of the law firm of Hunton and Williams, and in the early 1980's he testified before Congress on proposals for regulatory reform and was a major supporter of 1080 in the 97th Congress. He is currently co-chair of the American Bar Association's Working Group on Regulatory Reform, and it is my understanding you are testifying on behalf of the ABA.

Mr. FREEMAN. Yes.

Senator GRASSLEY. I think we will start with Mr. Cynkar and then go to Mr. Freeman.

PANEL CONSISTING OF ROBERT J. CYNKAR, SHAW, PITTMAN,

POTTS, AND TROWBRIDGE, WASHINGTON, DC; AND GEORGE FREEMAN, JR., HUNTON AND WILLIAMS, RICHMOND, VA, ON BEHALF OF THE AMERICAN BAR ASSOCIATION

STATEMENT OF ROBERT J. CYNKAR Mr. CYNKAR. Thank you, Mr. Chairman. I have submitted a fairly large statement, and I obviously won't read it or even try to summarize it at the end of these 2 days of hearings.

I think the point perhaps to start out with is the fact that I am even sitting at the table indicates that this kind of legislation is long overdue. In the early 1980's, the U.S. Senate made the judgment that it was needed, and I don't think that the passage of time has weakened the need for it. Indeed, in spite of the good efforts in the executive branch, we still see the kind of regulatory excess and problem as was evidenced on Wednesday by the panel of individuals from your State and New Jersey concerning the problems of regulatory cost and burden.

The witnesses who have testified against this legislation here are certainly among the most capable attorneys and practitioners in the area of administrative law. However, I would have to fundamentally disagree with the characterization both Ms. Katzen and some of the other witnesses who had fundamental problems with the legislation said.

There is an extremely vast difference in terms of the perspectives of the people who testified against this legislation and the proponents of this legislation, and indeed the Members of the Senate who are still here who supported S. 1080, and I think it can be illustrated by two points.

The concerns that both Professor Strauss and Mr. Vladeck and even Ms. Katzen identified focus on costs and burdens on the agencies, and the supporters of S. 1080 14 years ago, and indeed the proponents of this legislation, are concerned about the burdens of government on citizens. I would suggest that that is the baseline. That is where you have to start.

Even for individuals who have a fairly muscular approach to the role of government in our society, some of the individuals like Senators Kennedy, Leahy, and Metzenbaum, who cosponsored S. 1080, much less voting for it, recognized that the purpose of government is to serve citizens, not the other

way

around. All of the costs that one could identify that this legislation may impose upon agencies is minuscule compared to the costs and impact of Federal regulation on private individuals. Indeed, the concern about reducing the trigger for major rules from $100 million to $50 million I find particularly striking because at least for folks outside the Beltway who don't deal with the Federal budget, $50

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million is a heck of a lot of money, and if an agency is imposing that kind of burden on the economy, I think it makes common sense to have the kind of analysis, whether cost-benefit analysis or risk assessment, that is proposed in this legislation.

At bottom, I pointed out in my testimony that the two principles here that have really animated Members of the Senate are reasoned decisionmaking by agencies and agency accountability.

I think that part of the problem that I see with the testimony critical of S. 343 is illustrated by perhaps one part of Administrator Katzen's testimony which is on page 3 of her prepared statement where she points out in criticizing the “major rule” definition of the legislation-she says, “Is there a substantial increase," which is some of the trigger language in the legislation, "in price if there is a 5-cent increase in a 15-cent item, a 5-cent increase in a dollar item," and so forth.

I guess there are two observations one could make. First of all, if an agency can't answer these kinds of questions, if these fairly reasonable questions are beyond the wit of people who exercise government power, well, sure as shooting, they shouldn't be regulating, they shouldn't act at all.

These are obvious, straightforward questions and it seems to me that if government power is exercised without this kind of basic, commonsense judgment being made, it shouldn't be exercised at all. The default should be no government action in such circumstances.

But what is particularly perplexing about Ms. Katzen's criticism of just that particular part of the bill is that the executive order that she administers requires her, presumably, to make that very judgment. To be sure, the legislation talks about a substantial increase in price and significant adverse effects on competition, but the trigger mechanism in the executive order talks about rules that will adversely affect in a material way the economy, sector of the economy, competition, and so forth.

The mainstream of thinking about what makes sensible regulatory policy has long embraced these kinds of analyses. Again, in 1981, the Senate asked the Congressional Research Service to identify parts of the United States Code where these kinds of analyses were done, cost-benefit analysis, cost-effective kinds of judgments that agencies had to make. In 1981, that long ago, CRS identified 200 parts of the United States Code where such judgments were made.

In closing, Mr. Chairman, I would just say that this legislation really does occupy the mainstream of thinking about how regulatory decisions should be made. To be sure, it is not a perfect bill and does need some adjustment. That is normal for legislation at this stage, and indeed some of Professor Strauss' concerns about judicial review are not poorly taken. But I would say in the main this is an excellent piece of legislation, and I encourage the subcommittee and the full committee to act expeditiously on it.

[The prepared statement of Mr. Cynkar follows:)

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PREPARED STATEMENT OF ROBERT J. CYNKAR

SUMMARY The Senate's earlier attempt at regulatory reform, S. 1080, met with strikingly broad support (passing the Senate by a vote of 94-0) because sound regulatory reform is, at bottom, a "good government” initiative on which reasonable people of widely divergent political philosophies can agree. The guiding principles of regulatory reform are the notions of reasoned decision making and agency accountability. Cost-benefit analysis, risk assessment, and the legislative veto, the main components of S. 343, clearly enhance reasoned decision making by regulatory agencies and make them more accountable to the public.

As then-professor, now Justice, Stephen Breyer put it, “regulation is justified only if it achieves without too great a correspondent cost policy objectives that a consensus of reasonable observers would consider to be in the public interest.” Risk assessment and cost-benefit analysis are simply analytic techniques to answer the question of whether the costs of regulation are justified. In the words of one commentator, these techniques are “a kind of organized common sense.”

The legislative veto has long been recognized as a useful device to enhance agency accountability, being first introduced by Congress in 1932. The legislative veto provisions included in S. 343 conform to the constitutional requirements of enactment by both Houses of Congress and presentment to the President, and so should not raise constitutional concerns. The limitation of the legislative veto to major rules, however, seems to be unnecessary.

Reforms of the informal rulemaking procedures of the APA should also be included in this legislation, perhaps drawing on the provisions of S. 1080. In addition, to ensure that citizens can go to court and get a complete remedy for injuries caused by unlawful agency action, the district courts should be allowed to award monetary relief and the Court of Federal Claims should be allowed to enter injunctive or other equitable relief where appropriate.

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: My name is Robert J. Cynkar. I am a partner in the law firm of Shaw, Pittman, Potts & Trowbridge. I very much appreciate your invitation to appear before you today on S. 343, the "Comprehensive Regulatory Reform Act of 1995."

Appearing before this Subcommittee on this subject feels very much like “old home weeks to me. The bill before the Subcommittee was proposed by Sen. Dole, and draws on an earlier regulatory reform effort, S. 1080, which passed the Senate overwhelmingly in 1982. As a young attorney on Sen. Dole's Judiciary Committee staff in 1979, I had the opportunity to work

on what became the first Dole costbenefit analysis proposal. Two years later, as General Counsel for the Subcommittee on Regulatory Reform, then chaired by Sen. Paul Laxalt, I had the privilege of doing much of the staff work on what was then known as the Laxalt-Leahy bill, S. 1080.

My professional life since that time has kept me intimately involved in administrative law and regulatory issues. In the Reagan Administration, I served as a Deputy Assistant Attorney General in charge of the Federal Programs Branch of the Justice Department's Civil Division. The Federal Programs Branch is charged with the duty of defending the rulemakings and regulatory initiatives of most federal departments and agencies. In that position, I was responsible for defending federal regulations in court, and also played some role in the drafting of regulations. Since 1988, I have been in private practice, generally representing private entities on matters involving federal regulation or regulatory enforcement. I am also a Vice-Chair of the Committee on Government Operations and the Separation of Powers of the American Bar Association's Section of Administrative Law, though I do not appear here in that capacity.

My experience over the last 13 years convinces me that the need for legislation like S. 343 has not diminished with the passing of time. If anything, the continued growth of the federal regulatory establishment, and its ever-expanding influence in American life, has made the need for reform of administrative procedures that were fashioned 50 years ago all the more apparent. Indeed, the problems in administrative procedure that need reform were aptly summarized by the Senate Judiciary Committee in 1982 as “includ[ing] overbroad exemptions, insufficient means for developing the factual underpinning of a proposed rule, the absence of a procedure to fairly test the reliability of critical data or conclusions and the lack of a uniform record of rulemaking proceedings to ensure reasonably effective judicial review.” S. Rep. No. 284, 97th Cong., 1st Sess. 52 (1982).

GUIDING PRINCIPLES FOR REFORM The reason why the Senate's earlier attempt at regulatory reform, S. 1080, met with such strikingly broad support is not because it embodied legislation that had been so diluted by comprise as to be meaningless. Rather, sound regulatory reform is, at bottom, a "good government” initiative on which reasonable people of widely divergent political philosophies can agree. The guiding principles of regulatory reform-which have clearly shaped S. 343—are the notions of reasoned decision-making and agency accountability. These principles really flow from the unique status of administrative agencies in our constitutional system. Even agencies not formally insulated from Presidential control are often in practice far removed from the influence of the President, and so are far removed from accountability to their fellow citizens. Yet the decisions made by these agencies have a tremendous impact on the lives of all Americans, as the various estimates of the costs of federal regulation attest. Thus reasoned decision-making by such powerful entities, and their ultimate accountability to the public, have obvious importance in our national life. In our law, administrative procedure provides one fundamental avenue to advance reasoned decision-making by agencies and to secure their accountability.

The relationship of these two principles to particular reforms of administrative procedure is easy to identify. Cost-benefit analysis, risk assessment, and various changes to rulemaking procedures are obviously designed to enhance reasoned decision-making by agencies. Many of those same procedural reforms, by requiring the thinking of an agency to be set out for public scrutiny, also make an administrative agency more accountable to the public. Other initiatives, such as the legislative veto and changes to standards of judicial review, serve as other devices to make agencies accountable to the representatives of the public or to the policy choices they have enacted in their laws.

Judged by these principles, S. 343 provides an excellent foundation for truly meaningful regulatory reform in the modern era of administrative law.

S. 343–COST-BENEFIT ANALYSIS AND RISK ASSESSMENT In the time that has passed since the regulatory reformers of the 1980's embraced methodologies like cost-benefit analysis and risk assessment, these guides to decision-making have truly entered the mainstream of opinion concerning sensible regulatory policy. To be sure, the estimation of the cost and benefits of regulation can be a difficult task, yet yields extremely significant, if not always precise, information. In its work on S. 1080, the Senate Judiciary Committee surveyed the thenexisting estimates of the costs and benefits of federal regulation in a variety of contexts. See S. Rep. No. 284, supra, at 19–39. The few available monetary estimates of the aggregate

impact of regulation seem to bracket a figure of over $100 billion in 1988 dollars. See Hahn & Hird, The Costs and Benefits of Regulation: Review and Synthesis, 8 Yale J. on Reg. 233, 236 (1990). A more recent study estimated that the cost of complying with federal regulations in 1991 was approximately $542 billion. See Thomas D. Hopkins, Costs of Regulation: Filling the Gaps 2 (1992) (report prepared for the Regulatory Information Service Center, Washington, D.C.). Costs at such levels are staggering, and the broad range of consequences of such a regulatory price tag has been amply documented. See, e.g., Susan Eckerly, A Citizen's Guide to Regulation (1994); Hahn & Hird, supra.

In the face of such costs stands an unassailable proposition, in the words of thenProfessor, now Justice, Stephen Breyer, that “regulation is justified only if it achieves without too great a correspondent cost policy objectives that a consensus of reasonable observers would consider to be in the public interest.” Breyer, Analyzing Regulatory Failure: Mismatches. Less Restrictive Alternatives, and Reform, 92 Harv. L. Rev. 549, 553 (1979) (emphasis in original). How can we know whether these costs of regulation are justified? How can we know if regulation is achieving the benefits intended?

Risk assessment and cost-benefit analysis are simply analytical techniques to answer such questions, as one commentator put it, “a kind of organized common sense.” Kasper, Cost-Benefit Analysis in Environmental Decision Making, 45 Geo. Wash. L. Rev. 1013, 1014 (1977). Indeed, as a practical matter, “every policy action reveals that, in the mind of decision maker(s), benefits do exceed costs and that the distribution of benefits and costs is socially desirable." Miller & Yandle, "Introduction,” in Benefit-Cost Analysis of Social Regulation 4 (1979). The techniques of risk assessment and cost-benefit analysis bring better information to such a decision maker, and make that implicit judgment explicit.

For example,

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