from the Administrative Conference, which deals directly with the administrative process, and then we will hear from a couple of grassroots, everyday people who have to deal with Government bureaucrats on a day-to-day basis. The third panel will consist of experts in the field of regulation. Friday morning, we will hear from the administration and more experts in the field, as well as opponents to the legislation.

I look forward to hearing today's witnesses as we move forward on changing the way that our Government does, and in many instances doesn't do the business that it must do.

Ms. Rogers is with us. She has been confirmed by the U.S. Senate to chair of the Administrative Conference, and that was on September 29. The Administrative Conference of the United States is an independent, nonpartisan agency dedicated to reforming the administrative process by which the Federal Government carries out the public's business.

Ms. Rogers' position in government-her many positions have included assignment to the Presidential Personnel Office at the White House, 7 years as legal counsel and deputy legal counsel to the U.S. EEOC, and she has also worked as an attorney for the U.S. Department of Education in San Francisco and the Department of Health and Human Services in New York.

Ernest Gellhorn is involved in private law and consulting practice which includes antitrust counseling in Federal court trials and appeals, administrative rulemaking presentations and appeals, trade association formation and representation, FDA food labeling and medical device counseling, import and export licenses, general administrative agency representation, and general business representation. He also teaches administrative and antitrust law at George Mason University Law School. Mr. Gellhorn is a public member and chair of the Rulemaking Committee of the Administrative Conference of the United States.

Before you start your testimony, since my good colleague from South Carolina has come in, I would like to defer to him before we start the testimony, if you have an opening statement at this point. STATEMENT OF HON. STROM THURMOND, A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA

Senator THURMOND. Thank you, Mr. Chairman. Mr. Chairman, the hearing this morning focuses on the need for regulatory reform and, in particular, on S. 343, the Comprehensive Regulatory Reform Act.

Regulatory reform is an important issue which the Congress should undertake in order to significantly benefit our Nation. When unnecessary regulations are avoided or eliminated, American production will be more competitive and provide more jobs for American workers. Moreover, with true regulatory reform, American consumers will have more choices at lower prices.

At the heart of regulatory reform is the simple concept that the Government should not impose rules and regulations unless the benefits outweigh all the costs. The principle of applying cost/benefit analysis to Government regulations is easy to state. It is a concept which I strongly endorse and few would seriously dispute, but it is much harder to translate this principle into strong legislation

which achieves our goals. Determining the costs imposed by a regulation is an extremely difficult task, which is matched by the effort required to quantify the future benefits of a regulation.

Nevertheless, it is my belief that S. 343, the Comprehensive Regulatory Reform Act, goes far toward implementing a functional system of cost/benefit analysis. The bill articulates standards by which the costs and benefits of regulations are to be compared, and provides for judicial review of actions by the Government.

The bill applies not only to new regulations as they are formulated, but also to existing rules. The legislation limits its detailed cost/benefit analysis to relatively large regulations by defining as "major rules" those which impose costs in excess of $50 million per year or are otherwise significant.

At the same time, we must ensure that legislation in this area is carefully drafted. While the goal of this legislation is highly desirable, we must strive to ensure that the finite resources of Government agencies are not consumed by hiring the many economists, lawyers, and analysts who will be necessary to conduct all of the cost/benefits analyses required by the bill.

It may be desirable, for example, to ensure that agencies are not overwhelmed by simultaneous private challenges of large numbers of existing rules of the agency. In addition, it may be helpful to try to clarify how cost/benefit analysis should take into account the many intangible factors that are involved in rulemaking. I look forward to working with my colleagues on this legislation to achieve our goal of more rational regulation without unintended negative effects.

In conclusion, Mr. Chairman, I want to welcome the witnesses and to thank each of them for their time in preparing and appearing before the subcommittee this morning. The testimony of the witnesses will be helpful as we consider these important issues.

Mr. Chairman, I want to congratulate you for holding this hearing. I think it can accomplish a great deal.

Senator GRASSLEY. Yes, and as I indicated in my opening statement, we dealt with similar legislation that passed the Senate 94 to 0 in 1982. Of course, it didn't get through the House of Representatives at that time, and most everybody who is presently on the committee now who was on the committee at that time were supporters of that legislation.

Also, before you start, I need to further explain that Senator Heflin is absent today because of a funeral that he attended, and that is also the reason that we divided up the hearing today, that we hoped we could have gotten done all in one day instead of today and Friday, to accommodate that unexpected and necessary reason for Senator Heflin to be gone.

Senator Heflin also requested me to ask that we hold the record open for an appropriate time so that he can submit written questions and place an opening statement in the record, and I think with the hearing continuing on Friday there will be ample opportunity to do that.

[Prepared statement of Senator Heflin follows:]

PREPARED STATEMENT OF HON. HOWARD HEFLIN, A U.S. SENATOR FROM THE STATE OF ALABAMA

Due to the death of my long-time friend and trusted Alabama chief of staff Bill Gardiner, I regret that I am unable to be present to hear testimony in regard to S. 343, the Comprehensive Regulatory Reform Act of 1995, sponsored by Senator Robert Dole and other cosponsors. I am submitting written questions to various witnesses relative to their written testimony, and my staff counsels are attending today's subcommittee hearing and will give me a report of its proceedings as well as the hearing scheduled for Friday, 24 February.

I doubt that there are few members of Congress who have not heard horror stories of how overly zealous federal bureaucrats have used the heavy "fly swatter" of government_regulations to "kill a gnat." On many occasions, government bureaucrats have defied what I call the "rule of common sense" in issuing federal regulations, and these instances have lead to numerous bills being introduced in the 104th Congress to correct gross abuses of authority. Some of these bills call for a delay in issuing regulations, and some could require agencies which regulate health, public safety, and the environment to conduct extensive cost-benefit analyses on all existing regulations and would require such analyses on major regulations to be issued in the future.

Some of my constituents in Alabama who like to hunt and fish might be "mildly" upset if the Fish and Wildlife Service has to go through a complicated cost-benefit analysis before issuing a regulation opening this year's fishing and hunting season, or if a moratorium is enacted into law, will the opening of the season be delayed until the moratorium is lifted? One wary or the other, we in Congress had better "think things through" before we rush to judgment on these regulatory matters now pending before us.

There are a number of prominent witnesses who are testifying and who are wellrecognized in the area of the federal regulatory process, and I appreciate their taking the time to share their views on S. 343. Some of the issues the subcommittee will be exploring include asking whether increasing the use cost-benefit analyses and risk assessment, with judicial review at every step along the way, will add new layers to the federal bureaucracy. Will S. 343 add further costs and delays to the regulatory process thus achieving the very opposite result that some of us would like to see? Is S. 343 a recipe for regulatory gridlock?

When it comes to issues of public health and safety, what is the proper role for risk assessment and cost-benefit analysis as defined in S. 343? Is this bill too overreaching-in effect gutting proper federal regulation or is there a middle ground between the horror stories of the current system and what may be some of the overreach of S. 343??

I don't know the definitive answer to these questions, and I hope the panels of witnesses will enlighten this subcommittee on the details of S. 343, and in my particular case, I look forward to the written responses to the questions which I will submit to them.

Would you proceed, Ms. Rogers? Thank you very much.

STATEMENT OF THOMASINA V. ROGERS, CHAIR, ADMINISTRATIVE CONFERENCE OF THE UNITED STATES, WASHINGTON, DC; ACCOMPANIED BY ERNEST GELLHORN, CHAIR, COMMITTEE ON RULEMAKING, ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

STATEMENT OF THOMASINA V. ROGERS

Ms. ROGERS. Thank you very much. Good morning, Mr. Chairman and Senator Thurmond. I want to thank you at the outset for inviting me to testify today on S. 343, the Comprehensive Regulatory Reform Act of 1995.

At the cost of being redundant, my name is Tommie Rogers and I am the chair of the Administrative Conference of the United States and I am testifying on behalf of the Administrative Conference of the United States. With me is Mr. Ernest Gellhorn, who, in addition to being a lawyer in private practice and a member of the faculty at George Mason University Law School, as, Mr. Chair

man, you have indicated, is a member of the Administrative Conference where he has chaired the Committee on Rulemaking for the last 9 years, as contrasted with my 4 months as chair.

I would like to do three things this morning very briefly. One is I would like to submit my prepared testimony for the record, together with the appendices. Secondly, I would like to just highlight a few items, including some points in S. 343, and just give you some information about the Administrative Conference and what we bring to this issue.

Thirdly, I would like to encourage you to take advantage of Mr. Gellhorn being here. Mr. Gellhorn is certainly one of the preeminent experts on rulemaking, and has certainly demonstrated as much over the last 9 years.

Senator GRASSLEY. Mr. Gellhorn, are you going to make testimony as well or are you just here to respond to questions? Mr. GELLHORN. I will make a brief statement.

Senator GRASSLEY. OK; go ahead, Ms. Rogers.

Ms. ROGERS. The first point is the Administrative Conference, what it is and how it works and what it brings to this. Mr. Chairman, as you are aware, the Administrative Conference is an independent, nonpartisan Federal agency dedicated to improving the administrative processes by which the Government carries out its public business. We are the only agency whose exclusive charge is to make Federal regulatory and other programs more effective, fair, and efficient.

The way the Conference works is with volunteer members such as Mr. Gellhorn who come together from outside of Governmentthey come together with representatives of governmental agencies to take a hard look at how Government processes, procedures, and organizations are working to see what works and what doesn't work. Our primary purpose is to make practical proposals for improving the way the Government interacts with the citizens that it serves. So the Administrative Conference is very relevant to what is going on right now and what is going on in this hearing as far as regulatory reform.

I should point out that the Conference has no partisan agenda. Our members who are from the private sector include individuals from both political parties, plus independents, who represent all points on the political spectrum. I might also add that a number of the people who will be testifying before the subcommittee today and Friday are members of the Administrative Conference.

The Conference membership has not had an opportunity to formally look at and address S. 343. It nevertheless has over the years made certain recommendations to Congress and agencies regarding rulemaking, and I have attached those to the testimony.

To the extent that my comments go beyond the scope of the Conference's recommendations, those areas that the Conference has specifically undertaken and made recommendations, my comments do not represent the official, formal Conference positions. Rather, they reflect my own effort to be helpful to the committee's endeavor to craft workable legislation to improve the rulemaking process.

The second item I would like to mention is the need for regulatory reform. Mr. Chairman, you have indicated that there really is a need for regulatory reform, as evidenced by so much of the ex

cesses of regulation. I would like to just indicate a context that we should keep in mind as we move forward, and that is one of the preeminent administrative law professors, Kenneth Davis, once called notice and comment rulemaking one of the greatest inventions of modern government, and I think that remains the case. It doesn't indicate, though, and it doesn't necessarily mean that the process is not broken.

Informal observers generally agree that rulemaking has become increasingly problematic. It is more time-consuming, while becoming less effective. For that reason, I think rulemaking is subject to the kind of two-barrel criticism that there are too few regulations, on the one hand-some would call it the ossification of rulemaking and then the criticism that there are too many regulations. There are regulations that are arrived at through systems and procedures that are not accountable to the American people.

The Administrative Procedure Act, which governs agency rulemaking procedures, does not completely reflect the current realities of the actual rulemaking process. On the one hand, many in the regulated community bemoan the cost of excessive regulation and paperwork, while agency officials complain about the need to go through a series of what some believe are unnecessary hoops and analyses of scores of individual issues.

Fundamentally, rulemaking is undertaken by agencies exercising congressionally-delegated authority to implement statutes that Congress has passed. So the rulemaking process is to a considerable degree a product of Congressional activity and needs to be addressed by Congress and the administration in the context of a deliberative analysis of individual program areas.

The next point that I would like to address is one that is taken up by S. 343, and that is the regulatory analysis of new rules. The bill, S. 343, provides a Congressional prod for the use of regulatory analysis. The Administrative Conference has long supported the concept of regulatory analysis as a tool for improving the rulemaking process.

In a 1985 recommendation entitled "Agency Procedures for Performing Regulatory Analysis of Rules," at a time when Mr. Gellhorn was, again, chair of that committee, the Conference adopted a recommendation which, in summary, indicated that regulatory analysis can be useful in rulemaking if it is taken seriously by the upper-level decisionmakers and if the function is effectively integrated into rulemaking process and if its limitations are recognized by those who are relying on it. Of course, the bill goes a long way toward ensuring that regulatory analysis will, in fact, be taken seriously by the heads of agencies.

In addition, the Conference supports the Presidential review of agency rules that is reflected in the bill. Such review can improve the coordination of agency actions, encourage consistency, and resolve conflicts among agencies and avoid duplication in regulatory activity. The Conference also supports the specific proposal in S. 343 to bring independent regulatory agencies within the Presidential review process.

The one addition that the Conference would make to S. 343 in this regard is what is called in some circles increased transparency of the Presidential review process; that is, making that process