Presidential Review of Agency Rulemaking (c) maintaining a list identifying the time and general topic of oral communications that pertain to the substance of an agency rule under review with persons outside the government and making such list available to the rulemaking agency for inclusion in the public file; and (d) inviting a representative of the rulemaking agency to attend any meetings between the reviewing office and persons outside the government which pertain to any agency rulemaking under review by that office. The agency representative attending any such meeting should prepare an appropriate summary of the discussion and promptly place it in the public file of the rulemaking. 7. Not Judicially Reviewable. The 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. 1 CFR Ch. III (1-1-93 Edition) $305.69-8 Elimination of Certain Exemp- 8). RECOMMENDATION In order to assure that Federal agen. cies will have the benefit of the information and opinion that can be supplied by persons whom regulations will affect, the Administrative Procedure Act requires that the public must have opportunity to participate in rulemak. ing procedures. The procedures to assure this opportunity are not required by law, however, when rules are promulgated in relation to "public property, loans, grants, benefits, or contracts." These types of rules may nevertheless bear heavily upon nongovernmental interests. Exempting them from generally applicable procedural requirements is unwise. The present law should therefore be amended to discontinue the exemp. tions to strengthen procedures that will make for fair, informed exercise of rulemaking authority in these as in other areas. Removing these statutory exemp tions would not diminish the power of the agencies to omit the prescribed rulemaking procedures whenever their observances were found to be impracticable, unnecessary, or contrary to the public interest. A finding to that effect can be made, and published in the FEDERAL REGISTER, as to an entire subject matter concerning which rules may be promulgated. Each finding of this type should be no broader than essential and should include a statement of underlying reasons rather than a merely conclusory recital. Wholly without statutory amend ment, agencles already have the au thority to utilize the generally applica ble procedural methods even when formulating rules of the exempt types now under discussion. They are urged to utilize their existing powers employ the rulemaking procedures provided by the Administrative Proce dure Act, whenever appropriate, without awaiting a legislative command to do so. to Senator GRASSLEY. I am going to defer to Senator Thurmond because he has to go open up the Senate, and I am going to ask him to ask his questions first so he can perform his job as president pro tem. Senator THURMOND. Thank you very much, Mr. Chairman. Ms. ROGERS AND MR. Gellhorn, I want to thank you for your helpful testimony and constructive suggestions to S. 343. Ms. Rogers, your written testimony states that the Administrative Conference has not formally reviewed this legislation. Will a formal review be undertaken, and would you expect to have additional comments at that time? Ms. ROGERS. Senator Thurmond, it might be helpful that I just explain a little bit about the process of making formal recommendations through the Administrative Conference's formal process. The Administrative Conference undertakes projects of this nature and generally will begin working at the committee level, a committee such as the one chaired by Mr. Gellhorn, and will bring in consultants, if necessary, to look at the issue. I think you are probably proceeding on a much faster timeframe than the Administrative Conference can produce a formal recommendation. Generally, recommendations come out of the Conference over a period of, I would say, 10 months, about a 10-month period of time. It would be possible for us to, on a staff level, the office of the chairman, take a very close look at it and to work with the subcommittee in developing recommendations. But in terms of a formal recommendation, that is a process that is separate and apart from what we are offering today and it is one that is very deliberative and quite time-consuming. So we would not be able to, in a timely fashion, respond through a formal recommendation, but we certainly would be through staff assistance. Senator THURMOND. Ms. Rogers, I believe you indicate in your testimony that the dividing line for major decisions might be better made at $100 million rather than $50 million. Can either of you give us a rough idea of how many rules are promulgated each year which have annual costs of more than $100 million and how many have costs of more than $50 million? Ms. ROGERS. Senator Thurmond, what I observed, I think, in my prepared testimony was that other renditions of the limit have been at the $100 million, and we, just for observational purposes, noted that there is a difference between the tack taken by this bill and, say, the old executive orders. I don't have that information at hand, but if it would be useful Senator THURMOND. Can you please furnish it for the record? Mr. GELLHORN. One might note that the $100 million mark was that which was used since 1978 when the process of executive oversight really began under President Carter and was continued by President Reagan. One could go back to identify how many rules they reviewed. The difficulty, of course, is that the impact analysis of $100 million is a difficult one to determine with any degree of precision, and the decision of whether or not to review a rule is based on a substantial number of factors in addition to $100 mil lion. Applying the traditional inflation index, one might suggest that if the figure of $100 million was adequate in 1980, it probably ought to be at least double that amount today. Senator THURMOND. Ms. Rogers, you raise concerns about permitting private parties to require analysis of existing regulations. Can either of you give us any idea of how many rules now exist which have annual costs of more than $50 million and how many have costs of more than $100 million? Ms. ROGERS. Senator, I would have to give the same answer. Senator THURMOND. Ms. Rogers and Mr. Gellhorn, in determining whether the $50 million limit is met for a major rule, do you think that a one-time cost 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 in which it is incurred? Ms. ROGERS. I must say I haven't thought about that question. Senator THURMOND. Do you want to answer that for the record, too, Ms. Rogers? Ms. ROGERS. I will. Senator THURMOND. Mr. Gellhorn, do you want to answer now or answer for the record? Mr. GELLHORN. Well, let me take a stab at it now, and I think, Senator, you have put your finger on a very important point, and that is it is important to identify a major rule, something that has a significant impact. So I would say we ought to amortize it so that we don't overstate it, on the one hand. On the other hand, I think it is also very important that we don't try to micromanage it. What you are trying to do is send a signal and a message, but not tell the agency how to do it. Therefore, in that process, I think you ought to give the agencies substantial flexibility in determining, in connection with a particular rule, whether it should be amortized or identified in the initial year of expenditure. It really depends how that business, for example, would have to take it on its own books. Senator THURMOND. The legislation calls for consideration of social costs and benefits, as it should for a thorough analysis. Ms. Rogers and Mr. Gellhorn, my question is how these noneconomic costs and benefits can be considered and balanced, and whether agencies will be able to be precise enough to avoid regular judicial challenges. Ms. Rogers, would you care to answer that? Ms. ROGERS. I think it is an exceptionally difficult question. I think, though, that the social Senator THURMOND. If you would like to answer for the record, that would be all right. Ms. ROGERS. I certainly will be happy to. Senator THURMOND. Mr. Gellhorn, would you care to answer now or for the record? Mr. GELLHORN. I will be happy to do it now. Since the 1970's, the courts have applied a reasoned decision standard under the "arbitrary and capricious" language of section 706(2)(A) of title 5. In that process, they have frequently looked at costs and benefits, as well as social and noneconomic factors. In addition, under section 307 of the Clean Air Act, this very language is included of title 42, section 7607, and the courts have developed considerable experience and expertise in oversight of these standards. In addition, the Environmental Protection Agency, in this particular circumstance of this segment of the Clean Air Act, has also developed experience. What I would suggest, Senator, is that, yes, it is workable, but, no, do not craft and invent new language in the statute. There is a good model in section 307 of the Clean Air Act. This is one element of that act that does work, and it works very well, and I would urge that you use that language; that we not, as Judge Friendly used to say, always invent a new standard every time a new idea comes up. Then we have a reliable series of precedent that could be relied upon to implement the congressional wish. Senator THURMOND. Ms. Rogers and Mr. Gellhorn, 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? Ms. ROGERS. I would have to answer that for the record. Mr. GELLHORN. I don't think there is an answer for the record. I think that one is going to vary with each rule. Are we talking about a very focused rule of the Federal Aviation Administration, are we talking about a rule of the Securities and Exchange Commission, are we talking about a rule that covers all air pollution put out in a particular region by the Environmental Protection Agency? It is going to vary with the scope and significance of the rule, and what one wants is that the agency do it quickly, if it is a very narrowly focused rule, and do an in-depth analysis depending on the scope and the impact of that particular rule. Senator THURMOND. I just have one more question. Ms. Rogers and Mr. Gellhorn, are you concerned about any negative impact from the provisions of S. 343 that would terminate all guidelines and statements of policy that have the effect of major rules? Ms. Rogers? Ms. ROGERS. I am sorry, Senator. Senator THURMOND. Do you want to answer that for the record? Ms. ROGERS. I didn't understand the question. Senator THURMOND. Are you concerned about any negative impact from the provisions of S. 343 that would terminate all guidelines and statements of policy that have the effect of major rules? Ms. ROGERS. If I understand the question correctly, I certainly don't think that S. 343 will terminate Senator THURMOND. You can answer for the record if you would prefer to do that. Ms. ROGERS. I will do both, but I really don't see S. 343 as terminating the regulation of major rules. Senator THURMOND. Mr. Gellhorn? Senator THURMOND. Well, thank you both very much. I have got to go and open the Senate, Mr. Chairman. Thank you for allowing me to go first. Senator GRASSLEY. Thank you, Senator Thurmond, for participating today because this is a very important subject. We will be back at it on Friday with the administration witnesses and I hope you can be present at that time. I know that I shouldn't judge a President's position based upon a very short CNN news story, but this morning I heard the President in a reaction not to the subject that we are talking about today, but one aspect of the regulatory reform movement on the Hill, and that is a 6-month moratorium, and he stated in his opposition to that that his administration had been working for 2 years to make administrative regulation reform. This is how that statement by the President hits me a very sincere statement, I think, but when you have an office as powerful as the President's, and he is the chief administrator and chief executive, but particularly chief administrator of his administration, and the President of the United States in 2 years can't do it, Í think we have a tremendous problem out there, and it is better stated by the President than anything anybody on the Hill could say about the problem, or even any of the horror stories we can bring in here. So my question to you, in appreciating the fact that you are a nonpartisan, nonpolitical agency, is I assume that you are to some extent, at least, reviewing, not as part of the formal process, but just in your process of studying administrative action reviewing some things that the administration might have been doing over the last years to streamline the regulatory process. So my question is have they made changes that have been successful, and what, in your judgment, needs to be done that might not be done, and if it has done something, can things be done better? Ms. ROGERS. I can't underscore enough that I am here testifying on behalf of the Administrative Conference and not the administration Senator GRASSLEY. Yes, I understand that. Ms. ROGERS [continuing]. Although we have had some involvement with the National Performance Review in its effort to streamline government regulations. One of the things that we have done, certainly, in the last few years that I think is very important in terms of reforming the way that rulemaking takes place is the whole effort of negotiated rulemaking. I think negotiated rulemaking, as an alternative to dispute resolution, was promulgated in 1990 by this Congress and arises, I think, as a result of many of the recommendations that came out of the Administrative Conference. One of the very, very important parts of the negotiating rulemaking is that it brings the public around the table. It stimulates public participation in the rules that are ultimately going to be effected by them, and the administration has embraced negotiated rulemaking as a tool that agencies should use. Senator GRASSLEY. Wasn't that form of negotiation on rulemaking going on in the previous administration as well? I know on |