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the ethanol rules under the Clean Air Act there was that process put in place.

Ms. ROGERS. I think there were some agencies that were, in fact, using negotiated rulemaking. What the Congress did with the Negotiated Rulemaking Act in 1990, as a result of the efforts of the Administrative Conference in surveying agencies, was to encourage the use of it. As a result of the executive order that President Clinton signed encouraging the use of negotiated rulemaking, and the statute, many, many more agencies are, in fact, using negotiated rulemaking than there were prior to 1990.

Senator GRASSLEY. So negotiated rulemaking would be the only thing that you can point to that the administration has done to enhance the process and to streamline the process?

Ms. ROGERS. I certainly would not say that. I don't want to be put in the position of speaking for the administration because I don't. I didn't come prepared to

Senator GRASSLEY. What I was hoping for was kind of a dispassionate sort of view by somebody who is very separated from the administration and can speak from an intellectual point of view as to what they might be doing, and to give us some sort of qualitative analysis of how you feel they are doing.

Ms. ROGERS. Well, I certainly think that, on the one hand, the transparency effort of the Clinton administration's executive order on rulemaking certainly was a move in the right direction. I think that Sally Katzen, who will be testifying later, can outline some of the things that they have done.

We have not undertaken a review of the administration efforts. What we have concentrated on in the 4 months, certainly, since I have been chair of the Administrative Conference has been the efforts of the agencies themselves and working with the agencies to overcome some of the problems that they face in the rulemaking process, as well as the Congress and making suggestions to the Congress.

Mr. GELLHORN. If I could supplement that—and I am usually not in the position of defending what the administration is doing, so I am a little uncomfortable I would identify very specifically that the President has issued a new executive order that sought to build on the prior executive orders in giving direction to the agencies in terms of the various assessments that need to be made in rulemaking. I think they are very articulate, very clear, and quite simple and direct to apply and understand. I think the real problem, frankly, is in getting the agencies to pay attention and to follow.

The other flaw, I would argue, in the executive order is that it doesn't apply to the independent agencies. It is the same flaw that the prior administration had. That is, to me, one of the great benefits of the proposed S. 343.

Senator GRASSLEY. Then your first point would follow on the frustration I feel. If the President of the United States issues an order and you have trouble getting the administrative agencies to follow it, then just how responsive is our governmental process to the mandates of elections and to people who are elected, as the President was, to make a difference? It speaks to a problem much greater than just the horror stories that come from regulations.

If the President of the United States is the most powerful head of state and most respected office and can't get unelected bureaucrats to do what he wants, then we have kind of got a Government out of control.

Mr. GELLHORN. It seems to me, Senator, that many of those problems, frankly, start with the Congress.

Senator GRASSLEY. Because we aren't precise enough?

Mr. GELLHORN. Precisely, in passing legislation that doesn't give a mandate, and, second, that often ties the agencies' hands in terms of what they have to consider without giving the President the authority.

Senator GRASSLEY. I sensed that in your admonition to us when you described 15 pages for cost/benefit analysis that maybe the very legislation that we are writing to overcome a lot of the problems that other imprecise legislation has created for us—that we may not even be doing a very good job of that as we write this legislation, as you suggested on those 15 pages.

Mr. GELLHORN. I think it can be done if we focus in each instance and ask the question, what is it we really want to do with cost/benefit; can we reduce it basically to a sentence? Make legislative history clear of what it means, and the courts have, I believe, in general, been faithful to those commands.

Ms. ROGERS. I would just like to add one thing, Mr. Chairman. I think the problem is not necessarily that all bureaucrats are out to regulate, and to regulate inappropriately. I think part of the problem comes from the problem with how legislation has been enacted, as Mr. Gellhorn said, but I think a bigger problem has been the accountability problem.

I think S. 343 goes certainly down the road to addressing the accountability problem in requiring agencies to do cost/benefit analysis and put in legislation the Presidential review of the regulatory process. I think these are very, very helpful tools that will bring some results.

Senator GRASSLEY. In regard to the negotiated rulemaking, do you believe that rules that go through that process should be exempt from the cost/benefit analysis?

Ms. ROGERS. I think that certainly is a possibility because some of the things that the cost/benefit analysis attempts to achieve are the real essences of the negotiated rulemaking process. You have the individuals who are affected by the rules around the table, and the level of public participation, I think, is one of the safeguards that ensures that regulations are on target, that they are not producing the unintended consequences that cost/benefit analysis, I think, is a surrogate for.

Senator GRASSLEY. I think one place where your opinion can be very helpful to us if you can be very clear and precise on the arguments that opponents to this legislation are making that the new requirements are going to weigh down the process and prevent the implementation of necessary regulations. What is your view on the bill in regard to that?

Ms. ROGERS. Well, we certainly believe that the more requirements that are placed on agencies, the more likely agencies are either going to end-run the regulatory process and use nonrule rules or are not going to regulate effectively. As I indicated, I think that the factors that are included in S. 343 are minimal compared to some of the other bills. So in that regard, I think S. 343 is good.

Mr. GELLHORN. I would add to that that, in essence, the requirement in section 553 that the agencies have a statement of basis and purpose supporting a rule after having given proper notice, and, two, on the judicial standard, as interpreted, of requiring reasoned decisionmaking—the sensitive, thoughtful agency inevitably already includes a regulatory impact analysis in its notice and a cost/benefit analysis as part of the statement of basis and purpose, so that I don't think it is a great burden.

That doesn't undermine the thrust of the legislation because I think it is important to give the message to the agencies that the Congress puts a premium on cost/benefit analysis. But in terms of the argument that this will tie up the agencies in hours and weeks of effort and additional paperwork, I think the answer is it is because they haven't been doing the job already, so that it is a burden that is appropriate in that circumstance. But for the careful project, it is not.

Senator GRASSLEY. It is my understanding that you might have some problems with section 625, and that is in regard to the review of existing rules. What mechanism would you use that would ensure affected parties' participation?

Ms. ROGERS. I think the Administrative Procedure Act already allows for petition for review of agencies' existing rules. At this point, I must confess that it is a dilemma in the sense that existing rules and the burdens that they place are, in fact, problems that the Administrative Conference has recognized, and has undertaken a study of how to structure the review of existing rules in a way that does not unnecessarily truncate the discretion that the agencies need to manage their programs. So there is a balance there that must be struck.

Mr. GELLHORN. It is a study that the Rulemaking Committee plans to review this spring and come up with some specific recommendations. It is also an issue that the American Bar Association's Section on Administrative Law and Regulatory Practice has recently reviewed and is submitting a recommendation, and you will hear testimony on it.

I would suggest two items for your consideration which I have averted to just briefly in my earlier testimony. One is to require that the agencies install in a rule a stated period of time within which they would review its impact. That wouldn't require that they get rid of it, but when they adopt a rule, say, well, let's get 5 or 10 years' experience, or give the agencies the alternative of putting a sunset provision in the rule itself, if they want to avoid the regulatory process. Those would be triggers for either getting rid of the rule, on the one hand, if they think it is a short-term problem, or reviewing it automatically on the other.

The third possibility would be then to give the agencies a period of time to implement that process and review their existing rules. But what I would urge the Congress to avoid, and the Senate specifically to avoid, is a regulatory hammer. The Administrative Conference has previously addressed this issue of putting in statutes specific time limits which force agencies to shift their resources and to spend a lot of time in an area which may at the time not be the

appropriate area to spend the money and which may force, in particular, regulated parties to expend a lot of money to defend themselves in connection with a rule which nobody really wants at that point.

Senator GRASSLEY. I think I am done with my questioning. I think you might expect that since this is a very important issue and other people couldn't be here that you may get some questions to respond to in writing besides those that you are going to respond to for Senator Thurmond. I would ask you to expedite the responses, and I thank you very much for your participation today.

Ms. ROGERS. Thank you, Mr. Chairman.
Mr. GELLHORN. Thank you.

Senator GRASSLEY. I would like to call the second panel, one representing agricultural interests, the other small business interests. I have the pleasure of introducing a constituent of mine, Richard Keith. He is manager of the West Bend Elevator Company in Mallard, IA, and is manager of the local grain elevator. Mr. Keith is

aware of Federal, State, and local regulations with which elevator companies throughout the Midwest, and maybe throughout the entire country, are expected to comply.

Salvatore Risalvato has started his own landscaping business way back in 1976, and in 1978 he sold that business and

purchased a retail gasoline and service station. He has remained in that business at several different locations over the past 16 years. He is testifying today on behalf of the National Federation of Independent Business—we call it NFIB here and has been a member of that organization now for 16 years.

We also have a representative of the National Grain and Feed Association, Tom O'Connor, and while you are there you can be with Mr. Keith.

I think I will start with you, Mr. Keith, and then go to Mr. Risalvato.


STATEMENT OF RICK KEITH Mr. KEITH. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, I appreciate the opportunity to participate in this hearing. My name is Rick Keith. I am the manager of the West Bend Elevator Company at Mallard, IA. With me today is Tom O'Connor. He is the director of Technical Services with the National Grain and Feed Association. The National Grain and Feed Association is a trade association of more than 1,000 grain, feed, and processing firms, compromising 5,000 facilities that store, handle, merchandise, mill, process, and export more than two-thirds of all the U.S. grains and oilseeds utilized in domestic and export markets.

I would like to focus my thoughts today on some commonsense ways to cut the regulatory burden on small businesses like ours as a result of the requirements of the Clean Air Act of 1990.

Our local elevator is one of nine small local farmer-owned cooperatives that have joined together for greater efficiencies in the purchasing of agricultural inputs for our customers and in the marketing of their grain. This joint operation is known as the West Bend Elevator Company, serving some 1,700 active farmers in three northwestern Iowa counties. We offer grain, feed, seed, crop protection products, fertilizer, petroleum, and other farm supply products. We employ 93 agribusiness professionals companywide.

As manager of the local elevator at Mallard, I am acutely aware of the myriad of Federal, State, and local regulations with which we are expected to comply. This maze of regulation places a tremendous strain on vur bottom line and the outlook isn't very bright. Currently, there are more than 70 Federal regulations from at least 7 different departments or agencies affecting local retail agribusinesses like ours that are either in the preproposal stage, already proposed, or just recently finalized.

But the most cumbersome regulatory intrusion into our business of serving farmers and growers comes out of the Clean Air Amendments of 1990. This fall, at the height of a record harvest, the application for the clean air permit landed on my desk. The application is 280 pages long and asks a number of questions that we simply do not have the internal resources to accurately complete.

I have got a copy of this report right here. It came last fall—280 pages long.

Some of our neighboring elevators have been quoted bids of between $25,000 and $40,000 by environmental consultants to come in and complete the forms on our behalf. If I and our eight fellow location managers decided to utilize the services of these consultants, we would have spent more than $100,000 of our farmers' money just to complete an exercise that in the end serves no meaningful purpose, and here is why.

Our actual emissions of grain dust and those of 99 percent of Iowa elevators are about one-fifth of the threshold of the 100 tons per year prescribed by the Clean Air Act of 1990. Yet, at this point, we are forced to comply. Let me explain.

The 1990 Clean Air Act regulates air emissions, including 189 air toxics, 6 criteria pollutants, and dust. It also requires fees on emissions to pay for enforcement and sets the fees at $25 per ton, unless a State can justify a lower fee.

The Clean Air Act defines major sources as those with the “potential to emit” 100 tons of air pollutants per year or 10 tons of a hazardous air pollutant. The phrase "potential to emit” is key because each source's potential to emit is calculated based on the capacity of the emitting equipment.

For our facility at Mallard, and I have a picture here, the EPA guidelines claim that we have 74 such emission points, including slide gates, storage tanks, the actual grain-conveying equipment, internal transfer augers, and other equipment used in the filling and the emptying of the bins.

The "potential to emit" formula

Senator GRASSLEY. Let me ask you this. When I drive into my local elevator at New Hartford, IA, to unload corn in the fall and we open the end gate of our-well, it is the side gate of our

Mr. KEITH. Wagon.

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