ANSWER: If I could make three substantive changes in S.343 they would be as follows: 1. As I mentioned in my prepared statement, the jurisdictional confusion between the district courts and the Court of Federal Claims in remedying unlawful agency action needs to be addressed. I would give the district courts the ability to award monetary compensation, where appropriate, for injuries caused by unlawful agency action, and I would give the Court of Federal Claims the power to grant declaratory and injunctive relief. 2. I would include in S.343 the rulemaking reforms proposed in S.1080. 3. I would include in S.343 the provisions of S.1080 which required agencies to review their regulations on a regular basis. Answers of Messrs. Freeman and Harter, for the ABA to Questions from Senator Thurmond. On average, how long do you think it would take for an agency to conduct an adequate cost-benefit analysis, and on average how much do you think it would cost? ANSWER: A. Federal agencies have been making these analyses, under different names, for at least 25 years, starting with those required under the National Environmental Policy Act. OMB and GAO have been watching them in the process. These agencies are in a much better position than we are to marshall the relevant data to answer this question. But it is our belief, depending on the complexity of the proposed major rule, the time required would average from about six months to one year. Because this will be done concurrently with the normal one to four-year period now used by the agency to promulgate a rule, there should be no delay attendant on extending these procedures beyond where they are now in rulemakings covered by the present Clinton Executive Order. B. The overall costs of an adequate cost-benefit analysis generally fall into several categories. First, there are the Agency's costs. They consist of (a) the direct costs of the Agency (time of its own personnel at their salaries, telephone, printing, etc.), (b) the overhead costs of the Agency (what is a proper allocation of them to this specific project), and (c) the fees paid to outside consultants. Second, are the costs of other federal, and sometimes state, agencies who review and comment on the analysis. Third, there are the private sector costs. Usually they include comments of those who will potentially bear the costs of compliance with the proposed rule and those who are its intended beneficiaries (directly or through organized or unorganized groups). The combined total costs of all participating in the cost-benefit analysis process are usually considerable in absolute dollar terms. But for "major rules," those analysis costs are likely to be extremely modest in comparison to the long-term aggregate costs of the final rule. More often than not, the aggregate costs of analysis will result in selection of better "alteratives," producing the most social benefits in a least costly manner. 2. QUESTION: Discuss your views on the method or difficulties in determining the full costs of proposed regulations on businesses and the full benefits for society? ANSWER: The question of quantification of costs and benefits goes back a long way and there is voluminous information on it. A major effort was mounted to collect and evaluate this information in the Senate Judiciary hearings on S. 1080 in 1981, '82 and '83. We refer you to the record of those hearings and to the Senate Judiciary Committee Report on that bill. This information confirms that though quantification of some costs and some benefits in dollar terms is impossible or impracticable, having to identify 3. 4. and describe all social costs and benefits, quantifying them where practicable, and explaining their extent and weight in the analysis when quantification is not practicable, makes the decisional process easier, more open, and generally results in better rules. QUESTION: Please discuss whether you think the definition of "major rule," with its $50 million limit, is satisfactory? ANSWER: The ABA believes that major rule would be adequately defined by using a $100 million dollar figure and adding a number of "safety valve" categories to bring special situations involving lesser aggregate annual costs into the category of "major rule." For detailed suggestions, see our answer to Senator Heflin's Question Number One. QUESTION: Please state whether you think there would be significant interest among businesses in reexamining existing rules which have an annual cost of $50 million or more? What is your view on whether petitions for review of existing rules would overwhelm the agency resources available for conducting such reviews? ANSWER: A. B. The business community as a whole probably wants the most workable overall system for insuring that regulations are fair and efficient and do not impose unnecessary or counterproductive costs on the private sector. Individual business and separate industnes are also concerned with the direct effect of proposed and existing regulations imposed on them. Thus, for them the incidence of costs of a proposed rule is far more important than its aggregate costs. This is because they alone may have to bear the bulk of the costs of compliance. The ABA believes that "major rule" should be defined so as to strike a balance between this general need and these individual needs. The Association has long been on record as supporting a required periodic review by an agency of its existing "major rules." S.1080 would have done that by adding a new section 631, "Review of Agency Rules," to Chapter 6 of title 5. It would have required agencies to propose, within nine months after enactment of S. 1080, a schedule for review of existing rules that would have been a "major rule" if promulgated after that act's effective date. The President, or his designee could add rules to the list, and the public could comment on them. The new section also would have provided that "(n)othing in this section shall relieve an agency from its obligations to respond to a petition to issue, amend or repeal a rule... submitted pursuant to section 553 of this title." The ABA supported this provision and we urge you now to include it in S.343. Its inclusion would also afford Congressional committees with jurisdiction over the rule under which existing rules are promulgated an opportunity to influence the agency's final list of rules for review and the schedule for review. The committee could do so through comments to the agency or oversight hearings. And 5. in extraordinary cases, Congress could so do through a bill or a joint resolution. You would need no new legislative authority for this Congressional oversight process. We urge you to take this occasion also to cure two current deficiencies in the existing right to petition for rule changes in section 553 of the APA. The first deficiency is the absence of a statutory deadline for such petitions. S.1080 would have taken a step in that direction by amending Section 533 to require the agency to act with "reasonable promptness." You might also wish to consider a more specific deadline of 180 days. The second deficiency of the current APA right to petition is that there is no statutory requirement that the agency respond in writing to the petitions. S.1080 would have cured this by requiring that "[t]he response of the agency to each such petition shall be in writing. accompanied by a statement of reasons." If you make the above section changes, there would be little need for Section 625. Section 625 of S.343 takes a different approach from this S.1080 approach. Section 625 gives persons subject to a rule an express right, in addition to this more general existing right under section 553 of the APA, to initiate agency review of the rule if it is reasonably likely to meet the "major rule" test for a new rule under S.343. A "standings" requirement is reasonable here and we support it. If, on the other hand, it is retained, we suggest that the language be broadened to permit anyone with standing to submit such a petition. QUESTION: If you could make three substantive changes in S.343, what would they be? ANSWER: In our response to Senator Heflin's third question, the ABA recommends several substantive changes with regard to provisions presently in S.343 and we also list additional amendments that S. 1080 would have made in the Administrative Procedure Act which we recommend you reconsider. We incorporate those answers here. In terms of priorities, we rank the subject areas of the recommended changes in the following order of importance: A. B. C. Changes in the definition of major rule. (See our Answer I to Perfecting the judicial review provisions and closing loopholes in the The current "tell and wait" provision in Section 622, governing the effective date of a final regulation, however well intended is too complicated as presently drafted. We suggest substituting a general provision that all new rules take effect 120 days after publication in the Federal Register. This time frame should afford Congress a sufficient period for focusing on the occasional rogue rule and amending the underlving statute to forestall the new rule from could be required to give written notice to all Congressional committees with oversight jurisdiction over the statute under which the rule is being issued. This special notice would be required to be given contemporaneously with delivery of the notice of promulgation for printing in the Federal Register. (See our answer 3A to Senator Heflin's questions.) Responses of the American Bar Association to Senator Heflin's Questions The definition of a major rule includes all rules which have an effect on the economy of $50 million or more. Starting with President Carter up to President Clinton the test for effect on the economy has stood at $100 million. Do you agree with the lower dollar amount which is in this bill, and what is the reasoning behind your position? ANSWER: As indicated in our testimony before the Subcommittee on February 24, the ABA believes that prudence supports retaining the $100 million figure if a series of "safety net" exceptions for special circumstances are also added to the definition of "major rule." These "exceptions" would apply whether the expected total annual amount involved was below or above the $100 million figure. We noted that S.343 already provides for two of them in Section 621 (4)(A)(ii)(I) and (II). The "pursuant to sections 408, 409(C) and 706 of the Federal Food, Drug and Cosmetic Act" were at the end of (II) in S. 1080 but they have been deleted here. It is unclear whether this omission is intended to broaden the scope. We urge you to clarify this. (I) and (II) were in S.1080 and also in the Reagan Executive Order (but which were not included in the Clinton Order). We also recommend that two additional "exceptional circumstances" categories be added to the definition of "major rule." They appear in the Clinton Order. They are rules that: Create a serious inconsistency or otherwise interfere Materially alter the budgetary impact of entitlements, During the testimony of other witnesses on February 24, there was some discussion of possible situations where the cumulative aggregate dollars effects, while less than $100 million a year, might be concentrated disproportionately on a relatively small group. This is a special area of concern to small businesses because in certain circumstances the incidence of the rule could fall on a relatively small group who might not |