Lapas attēli

This question also raises the issue of determining the definition of an "existing rule." Rules codified in the Code of Federal Regulations, similar to public laws in the U.S. Code, are combined into titled sections of the CFR. A rulemight be as short as one subsection or as long as hundreds of pages. Note, for example, that the authors of a recent study of EPA's solid waste rules issues under the Resource Conservation and Recovery Act (RCRA) counted every decimal point CFR number (e.g., 261.31) as an individual rule, thus yielding 697 "rules" in the RCRA program. See James T. Hamilton & Christopher H. Schoeder, Strategic Regulators and the Choice of Rulemaking Procedures: The Selection

of Formal vs. Informal Rules in Regulating Hazardous Waste, 57 Law & Contemp. Prob. 111(1994). While this may not be the best approach, it does illustrate the definitional problem inherent in this issue.

Question 3. In determining whether the $50 million limit is met for a “major rule," do you think that one-time costs of compliance should be amortized, so that only part of the cost of new equipment, for example, is considered in a single year, or should the total amount spent be considered in the year it was incurred?

Answer 3. The Administrative Conference has not analyzed the economic issues at this level of detail. We would suggest, however, that questions like this one will surely arise if the “major rule” determination is made judicially reviewable. Therefore, some entity-perhaps OIRA-should be authorized to provide guidance to the agencies on these kinds of technical matters, to avoid inconsistent approaches.

Question 4. The legislation calls for consideration of "social" costs and benefits; as it should for a thorough analysis. My question is how these non-economic costs and benefits can be considered and balanced, and whether agencies will be able to be precise enough to avoid regular judicial challenges.

Answer 4. It is generally agreed that "social" costs and benefits are more difficult to quantify than are economic costs. Although S. 343 does not absolutely require that a dollar value be assigned to all costs and benefits, it does require that the costs and benefits reflect a quantification or numerical estimate to the extent feasible (8622(eX1XA), and that information be accompanied by "data, analysis, or other supporting materials that would enable the agency and other persons interested in the rulemaking to assess the accuracy,

reliability, and uncertainty factors applicable to such information." (8622(eX2XA). Thus, to the extent that judicial review will focus on the balance between costs and benefits, as section 623 would require, the courts, either on their own or by giving deference to agency determinations, will establish standards for precision.

We note that courts' ability to oversee agency analysis of complex factual questions has been the subject of considerable debate. For example, Supreme Court Justice Stephen Breyer, in his book, Breaking the Vicious Circle: Toward Effective Risk Regulation (1993), noted both the unintended impacts of judicial decisions requiring thorough consideration of "all alternatives in every case," even though it may be "obvious that lengthy investigation of an alternative will not yield significant additional relevant knowledge, and courts' increasing reluctance to “devote the considerable time and effort needed to review a several thousand-page agency record, informed by a thorough understanding of the substance of risk-related regulatory problems, in order to see whether or not that agency determination was arbitrary.” Id. at 58 59. For other descriptions of the problematic impacts of judicial review of agency action based on complicated factual decisions, see Richard J. Pierce, Jr., The Unin. tended Effects of Judicial Review of Agency Rules: How Federal Courts Have Con. tributed to the Electricity Crisis of the 1990s, 43 Admin. L. Rev. 7 (1991) (Federal Energy Regulatory Commission); Mashaw & Harfst, The Struggle for Auto_Safety (1990) (National Highway Traffic Safety Administration); R. Shep Melnick, Regulation and the Courts (1983) (Environmental Protection Agency).

With respect specifically to non-economic costs and benefits, there is some scholarly suggestion that quantifiable variables will tend to override less quantifiable concerns as decisional factors. See Gillette & Hopkins, Federal Agency Valuation of Human Life, (1988) ACUS Recommendations and Reports 389.

Question 5. On average, how long do you think it would take for an agency to conduct an adequate cost benefit analysis; and how much do you think it would cost?

Answer 5. The Administrative Conference does not specifically collect these kinds of data. The Environmental Protection Agency has informed us that it recently gathered preliminary data suggesting that cost-benefit analyses would range in cost from $50,000–100,000 for fairly straightforward projects and up to $1 million for larger rulemakings. This cost does not include costs of preparing risk assessments, but would be for work focusing on comparing costs and benefits of various regulatory alternatives. EPA estimates that doing a cost-benefit analysis involves between one and three staff years.

Congress held hearings on some related issues in 1983. The published Hearings before the Subcommittee on Administrative Law and Governmental Relations of the Committee on the Judiciary, House of Representative, 98th Congress, 1st Session, Serial No. 25, contain information about the costs and time required to prepare regulatory analyses for about a dozen cabinet departments and independent agencies. See id. at 1178 and following. In late 1982, the General Accounting Office prepared a report, "Improved Quality, Adequate Resources, and consistent Oversight Needed If Regulatory Analysis is to Help Control Costs of Regulations,” GAOPAD-83-6 (1982). In that report, GAO calculated an average cost of $212,200 for regulatory analyses prepared by eight departments and agencies. Id. at 20.

RESPONSES TO SENATOR HEFLIN'S QUESTIONS FROM THOMASINA V. ROGERS Question 1. Your testimony says that the Conference supports the concept of regulatory analysis and one of the Conference's recommendations states that cost-benefit analysis can be an effective tool of regulatory analysis. Does the Conference endorse the cost benefit provisions of S. 343, and please state why or why not.

Answer 1. The Administrative Conference, in Recommendation 85–5, (attached to our testimony) took the position that regulatory analysis is a useful tool, if its use is integrated into the agency's decisionmaking process and if its limitations are recognized. Among the limitations noted in that Recommendation are that (a) all quantitative models incorporate certain assumptions and uncertainties, (b) there is potential for bias in data used in regulatory analysis, and (c) not all decisionmaking variables are subject to quantitative analysis.

The precise scope of a cost-benefit analysis, and the factors that are included within it, reflect substantive policy judgments that are largely outside the domain of the Administrative Conference. For example, it seems to us to be a policy judgment whether a cost-benefit analysis contains a discussion of whether “marketbased mechanisms” (as defined in Š 621(7)) are feasible. Similarly, whether an analysis should contain an assessment of the "aggregate effect of the rule on small businesses with fewer than 100 employees, including an assessment of the net employment effect of the rule” would depends on whether one believed that small business concerns deserve special consideration, whether 100 employees is the proper dividing line, and whether employment effects are more important than, for example, effects of the business' balance sheet. All of these issues, like the question whether the cost-benefit analysis requirements of S. 343 should supersede other statutory limitations on the use of cost-benefit analysis are, at bottom, policy judgments. ACUS's primary concern here is that any such provisions are clearly drafted, produce a product that can be effectively incorporated into the agency decisionmaking process, and do not produce needless litigation.

Question 2. Does the Conference endorse the judicial review provisions of S. 343, and please state why or why not?

Answer 2. The Conference does not support the judicial review provisions of S. 343 as drafted.

We will address section 624's provisions in response to Question 3, below.

With respect to the provisions of section 628 (Standard for review of agency interpretations on an enabling statute), as we said in our testimony, it appears largely to be intended to codify the scope of judicial review of agency interpretations of statutes set forth by the Supreme Court in Chevron USA. V. NRDC, 467 U.S. 837 (1984). The Conference recognizes the value of the Chevron standard, as stated in our Recommendation 93-4 (attached to our testimony) that "courts should (undertake) a searching review of the range of factors or permissible choices that may be considered by the agency, and require deference to agency application of those factors once they are shown to be legally appropriate. Id. at (III)(C)(1). Given that courts generally apply the Chevron standard when reviewing agency rules under the Administrative Procedure Act's judicial review provision, 5 U.S.C. 706(2)(C), it is not clear that this new statutory provision is necessary. If Congress does nonetheless wish to codify the Chevron standard, we suggest that it use the express language of the Chevron case or, at a minimum, make it clear in legislative history that the intent is to codify the Chevron standard. In the absence of a clear statement that Congress intends to codify the Supreme Court's test in Chevron, substantial litigation is likely to be engendered on the issue of whether, and to what extent, the new statutory standard differs from that crafted by the courts.

We would note further that section 628(c)(1)(C) does not derive from the Chevron doctrine. Rather, it appears to be a decisional standard governing the agency's treatment of costs and benefits in the context of statutory construction. Although the "reasoned decisionmaking” language in that subsection is useful, the last part of the subsection, requiring a statutory construction that “maximizes net benefits to society,” may be construed as different from the overarching decisional requirements contained in sections 623(a) (1), (2) and (b). Because consistency with these latter sections would be subject to judicial review in any event, under 5 U.S.C. 706(2XC), it is redundant and potentially confusing to include the language in the last part of section 628(c/1XC). We would therefore suggest inserting a period after the word decisionmaking."

In addition, the scope of section 628 is unclear. As drafted, with the prefatory phrase “In reviewing a final agency action," the section could be read to apply to any agency action, be it a rulemaking or an adjudication. If it is intended only to apply to review of major rules, which the larger context for the section suggests, then the language should be amended to read "In reviewing a major rule.”

Section 628(b) instructs the court to apply "traditional principles of statutory construction." Section 628(c) refers to “established principles." In any event, the two should be consistent, but it might be better to replace them with "generally applicable" or "generally acceptable" principles, since statutory construction principles have evolved over time, and there is nothing to suggest that current principles should be carved in stone.

Section 627(a) appears to create a new test for reviewing courts to use in determining whether agency rulemakings exceed the agency's statutory jurisdiction. The APA, section 706(2XC), already requires reviewing courts to set aside agency action found to be "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.” Thus, section 627(a) seems unnecessary, and the new language will likely lead to confusion. Similarly, section 627(b) provides for various exceptions from 627(a) for various regulatory "relief measures or "clarification(s).” This could create interpretive difficulties, since many rules are both partially regulatory and partially deregulatory in nature. The word "clarification” is particularly susceptible of many interpretations. We would therefore suggest deletion of section 627.

Question 3. Please state why the Conference believes that Section 624 (which provides for judicial review of presidential/agency determinations classifying a rule major or not) should be amended to exclude judicial review of such a determination.

Answer 3. While the Conference did suggest that review of Presidential determinations in this area be precluded, we did not urge exclusion of judicial review of agency determinations. However, we did suggest that such review not be on an interlocutory basis.

Section 624 provides for interlocutory judicial review of determinations regarding the classification of a rule as a major rule. The Administrative Conference generally supports the view that judicial review should not occur piecemeal, and is best undertaken at the time the rule is final. Thus, interlocutory appeals should be discouraged. In the many Conference recommendations considering the rulemaking process, the question of interlocutory appeals has never been specifically addressed, because it has always been considered to be accepted (and proper) doctrine that such appeal is inappropriate.

Thus, we believe that review of a determination that a rule is or is not “major” should take place after the completion of rulemaking, as part of review of the final rule, rather than within 30 days of the determination. Courts have generally disfavored interlocutory review of agency determinations, allowing agencies to complete their rulemaking processes with court review of all procedural and substantive determinations occurring at one time on the basis of a complete agency record, and in light of the agency's final actions. The reviewing court would, of course, would have full power to remand agency determinations that run afoul of the requirements of section 622.

The Conference did suggest that judicial review of “presidential" determinations regarding whether a rule is “major" should be eliminated. The Conference believes that "[t]he presidential review process should be designed to improve the internal management of the federal government and should not create any substantive or procedural rights enforceable by judicial review.” Recommendation 88–9, at 97 (attached to our testimony). In any event, the agency's determination as to whether a rule is "major" would be reviewable (preferably on review of the agency's final action on the rule). The President's principal oversight role would appear to be to designate certain rules as "majorwhere an agency has not done so (a matter that would appear to us to lie essentially within the President's prerogative).

Question 4. Mr. Gellhorn's oral testimony stated that S. 343 needs to be "cleaner” and “simpler.” Please state in some detail how S. 343 needs to be amended in this regard.

Answer 4. We have asked Professor Gellhorn to respond to this question, and enclose a copy of his answer. As he notes, his response reflects his personal views.




Washington, DC, March 3, 1995. Hon. CHARLES E. GRASSLEY, Chairman, Subcommittee on Administrative Oversight and the Courts, Senate Judiciary Committee, U.S. Senate, Washington, DC.

DEAR SENATOR GRASSLEY: This letter responds to the following question posed by Senator Heflin:

Question 1. Mr Gellhorn's oral testimony stated that S. 343 needs to be "cleaners and “simpler.” Please state in some detail how S. 343 needs to be amended in this regard.

Answer 1. S. 343 is sound in principle in that it would send an important message to federal rulemakers on the need for a close assessment of the impact of a proposed regulation before it is adopted. This assessment would specifically include an eval. uation of the rule's costs and benefits, as part of the agency's determination of whether the rule is necessary and of its appropriate scope and application. It further would institutionalize in statutory form almost 20 years of presidential oversight of rulemaking and extend it to independent as well as other executive branch agencies. I also endorse the concept of Congressional review of major rules before they are effective. Finally, my testimony agreed with S. 343 that if such reforms were to be implemented, effective judicial review was necessary.

However, I am concerned that as drafted S. 343 would take years of litigation to unravel, that its language is loose and uncertain-indeed, often contradictory-and that it is unnecessarily verbose and complex. For example: it contains at least 11 different measures for cost-benefit analysis, specifies two different standards for statutory interpretation that courts are to apply, provides in one subsection that the new standard for judicial review applies to all agency action (action adjudication as well as rulemaking) while other subsections refer only to rulemaking, and raises unnecessary constitutional questions about the report-and-wait procedure under Article 1, Section 7 of the constitution because it fails to provide for Presidential approval under Section 626.

Thus, I recommended that S. 343 be written as an amendment to the Administrative Procedure Act, 5 U.S.C. $8551 et. seq. (“APA”). Specifically, the concept of a regulatory impact assessment could be added to the notice provisions of 8553(b), the cost-benefit requirement included in the statement and basis provisions of 8553(c), and the judicial review elements added with the insertion of the operative "cost-benefit balance” words into 5 U.S.C. 8 706(2XA) (the general "arbitrary and capricious” standard). Even the latter addition is not necessary since it would be automatically included in the "hard look” doctrine applied under the arbitrary and capricious standard. 1

The executive oversight and report-and-wait provisions of S. 343 would require an addition to the APA, which I would recommend be included as subsections (f) for report and wait and (g) for executive oversight. Again, however, I strongly urge that these additions be made with only a few words.

I would be pleased to work with the Subcommittee's staff on drafting these changes if this approach is of interest to the Subcommittee. My objection to lengthy additions is that they invite controversy and litigation and further delay the regulatory process. The purpose of administrative procedures is to ensure accuracy, fairness and efficiency; delay and complexity favor no one since regulations may ease as well as increase regulatory burdens. A well written regulation properly taking account of costs and benefits seeks to clarify general legislation, and often is requested by regulated parties. The strength and enduring quality of the Administrative Procedure Act has been its relative simplicity and clarity.

What I have suggested here is, in many respects, what Congress has already done for regulations issued under the Clean Air Act. In particular, I call your attention to Section 307 of that Act, 42 U.S.C. $ 7607. See also Administrative Conference of

1 See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29 (1983). Costbenefit requirements generally have been included in regulatory requirements without requiring unique provisions for judicial review, Cf. American Textile Mfrs. Instit. Inc. v. Donovan, 462 U.S. 490, 510–11 n.30 (1981) (listing statutes expressly requiring cost-benefit analysis).

the United States Recommendation 93–4 (Dec. 9, 1993) (Improving the Environment for Agency Rulemaking).

Thank you for the opportunity to supplement my testimony. Please note that my testimony and this letter do not speak either for the Administrative Conference or its Rulemaking Committee which I chair. If I can be of further assistance, please let me know. Respectfully yours,


RESPONSES TO SENATOR THURMOND'S QUESTIONS FROM MARSHALL J. BREGER Answer 1. The determination of "how long, on average * * * it would take for an agency to conduct an adequate cost-benefit analyses, and how much it would cost" depends on the specific regulation in question and the nature of the issues that must be quantified. From my own prior experience as Solicitor of Labor I know that the gestation period for a major rule can take three or four years with some considerable part of that time devoted to cost-benefit issues.

Answer 2. It is my understanding that the OIRA in 1994 undertook 135 cost-benefit analysis under Executive Order 12866. As you know a major rule under that executive Order is generally, although not always, triggered by costs to society of over $100 million.

I have not been able to find any figures that suggest how many agency rules are promulgated each year with annual costs of between $50-$100 million dollars. Nor have I figures on the number of existing rules with annual costs of more than $50 million.

Answer 3. The decision whether to make the trigger for cost-benefit review $25, $50, or $100 million (or more) depends in part on the impact on the regulated community and in part on the extent to which the agencies will be paralyzed by such a requirement. If the Administration believes that a cut off of less than $100 million will wreck havoc with the regulatory process it is incumbent on it to point specific figures as to why this is the case. To my knowledge they have not yet provided concrete figures as to the number and cost of cost-benefit reviews at the $50 million trigger. In fairness, however, I should note that the $100 million trigger was used by President Reagan in Executive Order 12291 and proved workable at that time.

Answer 4. This is only one of the myriad questions that arise in attempting to implement this kind of regulatory reform. For what it is worth, my own instincts are that standard accounting principles should be followed and if a company would likely amortize any compliance costs for tax purposes, the agency should be allowed to amortize it for purposes of major rule categorization.

Answer 5. As my testimony suggests, S. 343 would require all federal agencies including the so-called independent agencies to undertake cost-benefit review before promulgation new regulations that can be classified as “major rules". I do not believe that such a requirement of agency coordination with executive branch rulemaking procedures would create constitutional issues related to the autonomy of independent agencies.

RESPONSES TO SENATOR HEFLIN'S QUESTIONS FROM MARSHALL J. BREGER Answer 1. Our goal should be to ensure that “major" rules undergo the discipline of cost-benefit analysis. The dividing line between “major" and "minor" should be one of significant impact on the economy and significant impact on the agencies. While a $50 million threshold is in theory preferable, as my response to Senator Thurmond's question three suggests it may be that a $50 million trigger will have deleterious effects on regulatory agency activity. The Administration has yet to provide the figures to make that case. We do know that last year, OIRA undertook costbenefit analyses of 135 rules under Executive Order 12866. We do not know how many would have been undertaken at the $50 million level.

Answer 2. As my testimony suggests, I believe that it would be appropriate that agencies conduct an examination of their existing “major rules” on a regular and systematic basis. S. 291, for example, proposes that this be done on a ten year cycle and I would support that approach.

However, I do not believe that this should be a substitute for the petition process noted in section 625. It is perfectly appropriate for citizens to petition agencies to review existing rules. Indeed, there already is authority to undertake an analogue of the petition process in section 555(e) of the Administrative Procedure Act.

« iepriekšējāTurpināt »