5.

Mr. Smith, could you please give us your best estimate of how many existing rules

in the environmental area have an annual cost of $50 million or more?

Answer:

I do not have the factual information necessary to answer this question.

6.

Could you both comment on whether you think there would be significant interest among business in reexamining existing rules which have an annual cost of $50 million or more? Are you concerned that petitions for review of existing rules would overwhelm the agency resources available for conducting such reviews?

Answer:

I believe that the business community has a significant interest in a careful and orderly review of existing major rules to determine whether there are any where the costs clearly outweigh the benefits or where there is some better way of accomplishing the objective. Further, the business community believes, in my judgment, that this determination, and the prioritization of the review, should not be left entirely in the hands of agency bureaucrats. The petition process empowers all citizens to make the review themselves and to petition the agency where the petitioner is prepared to do the hard work necessary to assemble a case that documents the inadequacies of an existing rule. Because the burden of proof would be on the petitioner, the petitioner will be required to assemble the necessary facts and analysis and place them before the agency in its petition if it is to prevail. Meritless or unsupported petitions can be summarily dismissed. In my judgment, there may well not be many petitions filed, but the freedom to file them where major rules are seriously deficient is an important one.

7. Could you both state whether you favor the $50 million threshold for "major" rules established in S. 343, or the $100 million limit set forth in Executive Orders and S. 1080 in the 97th Congress?

Answer:

As between the $50 million threshold for "major" rules established in S. 343 and the $100 million Hmit set forth in the Executive Orders and S. 1080 in the 97th Congress, I favor the $50 million threshold.

RESPONSES TO QUESTIONS POSED BY SENATOR HEFLIN

BY DAVID C. VLADECK, DIRECTOR

PUBLIC CITIZEN LITIGATION GROUP

1. Summarize your objections to the cost/benefit analysis provisions and then tell the subcommittee what changes you would make to S. 343 that would improve the bill in this regard.

The cost/benefit provisions in S. 343 require agencies to conduct a formal cost/benefit analysis for every rule that has an impact of $50 million or more on the economy. Under the bill, indirect impacts would have to be considered. Moreover, a number

of other factors would have to be assessed even where the cost of the rule appears to be less than $50 million.

The result of this redefinition of major rule is that virtually all health and safety rules will qualify as "major" under S. 343. Making matters worse, S. 343 requires agencies to rely on cost/benefit analysis as a decisional criteria in virtually all

instances.

For the reasons set forth at length in my full testimony, that is objectionable.

Having said this does not mean that Public Citizen opposes the use of cost/benefit analysis in selected instances. We had no objection to the requirement in either the Reagan or the Clinton Executive Orders that costs and benefits be assessed rigorously with respect to any major rule i.e., rules imposing $100 million or more impact on the economy. We do, however, strenuously oppose the use of cost/benefit analysis as a decisional criteria for the reasons stated in my testimony.

2. In your testimony you list 10 examples of Health and Safety Standards that would be stopped or delayed by S. 343. Please tell the subcommittee what provisions in the bill will stop or delay these rules and how those provisions do this.

There are several provisions in S. 343 that will delay or stop badly needed health and safety regulations. First, performing the

analytical assessments imposed by S. 343 will take considerable amounts of time. In order to perform cost/benefit analysis and risk assessments, agencies will have to broaden considerably their gathering activities, will have to engage economists,

data

epidemiologists, toxicologists, and other highly skilled professionals to conduct these reviews, and then integrate these reviews into the agencies' broader assessment of the policies and goals underlying the rules. That is a resource-intensive, timeconsuming task that will add months, if not years, to the rulemaking process.

To compound the problem, these analytic requirements are expensive to perform. As set forth on page 16 note 6 of my testimony, there is considerable research on the cost of performing cost/benefit and risk assessment analyses. We estimate that S. 343 will cost an agency like the Food and Drug Administration (FDA) approximately $700,000 per rule. would note that the Congressional Budget Office reached a similar estimate with respect to the costs that would be imposed on the FDA under H.R. 9 House bill closest to S. 343. As a matter of simple economics, most agencies will not be able to afford to conduct all of the rulemakings that are needed, and thus, as a matter of triage, an agency will have to forego engaging in certain rulemakings regardless of how vital they may be to protect the public simply because the agency cannot afford the rulemaking cost.

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the

3. S. 343 would allow anyone to petition an agency to perform a cost/benefit analysis on any existing agency rule. Some say this will paralyze the Federal rulemaking process. How would you change this provision would you prefer to delete it entirely or is there a middle ground? Does the President's Executive Order

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requiring agency reviews of unneeded regulations suffice?

I agree with those who say that the petition mechanisms built 343 will paralyze the federal rulemaking process and subvert the abilities of agencies to address today's problems. I

into

S.

would urge that this provision be deleted.

First, given the mandate in President Clinton's Executive Order that agencies review unneeded regulations, I believe this provision is unnecessary. Moreover, the Administrative Procedure Act already empowers any individual to file a petition with an agency to review the rationality of an existing rule. 5 U.S.C. § 553 (e). Accordingly,

to the extent that any interested party believes an existing rule is outmoded, he or she may already seek relief from the agency; however, the question would be whether the rule itself remains reasonable, not whether one of the underlying analytic documents is simply out of date. In this regard, it is important to note that courts are obligated to review claims that agencies have enacted in an arbitrary fashion in denying such petitions.

4. You seem to object to the Congress and/or federal courts involved, as you call it, in the "nitty-gritty" of rulemaking. Yet, undeniably sometimes agencies go too far in issuing rules. What is wrong with allowing Congress to review agency final rules and overturning them if we, as elected officials who wrote a law in the first instance, make a judgment that the rule has gone too far?

I agree that sometimes agencies err in issuing rules. I also agree that Congress is empowered to overturn agency rules where Congress believes that the agency has committed an error. Thus, I do not disagree in principle with the points made in this question.

As I see it, the issue is what vehicle should Congress use to monitor the performance of agencies. My testimony suggests that a universal report and wait provision is inefficient and creates unneeded opportunities for mischief. I would prefer to see a far more selective approach to congressional review.

5. Do you see any "middle ground" with regard to S. 343 that is, can it be improved, and if so how, OR should be defeated in its entirety?

I do not see any "middle ground" with respect to S. 343.

In

my view, S. 343 embodies a number of radical proposals that would dramatically restructure our federal rulemaking system and would cripple the ability of agencies to do their work. Moreover, I am concerned about the thrust of S. 343, which appears to be an aggressive effort by some in Congress to micromanage the way agencies regulate risks. And above all else, Congress ought not to dictate science to expert administrative agencies.

I do think, however, that there are seeds of a constructive approach in S. 343. For instance, we have no objection to agencies being directed to use cost/benefit analysis and risk assessments where appropriate, although we believe that, if anything, the threshold for a major rule ought to be increased from $100 million, not cut in half. We also have no objection to some more selective congressional review. But, as currently drafted, S. 343 should be

opposed.