The Role of the Council on Competitiveness in Regulatory Review

THE ROLE OF THE COUNCIL ON COMPETITIVENESS IN REGULATORY REVIEW

THURSDAY, OCTOBER 24, 1991

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 9:40 a.m., in room SD-342, Dirksen Senate Office Building, Hon. John Glenn, Chairman of the Committee, presiding.

Present: Senators Glenn, Levin, Kohl, and Lieberman.

Chairman GLENN. The hearing will come to order. Before I give my statement, I was doing some rewriting on it this morning, and copies of itwill be available at the press table a little bit later after they have a chance to print the thing up.

OPENING STATEMENT OF SENATOR GLENN

Chairman_GLENN. This morning we examine the role of the Council on Competitiveness in reviewing Federal regulations. The past ten years the Governmental Affairs Committee has followed the development of the OMB regulatory review process created by Executive Orders 12291 and 12498 and operated by OMB's Office of Information and Regulatory Affairs, usually called OIRA. Now we have been concerned all through these years about balance, and by balance I mean the economic impact. I mean the impact on consumers, the impact on business and on manufacturing, all of which are a part of international competitiveness, if you will, in addition to matters of public health and safety and matters involving the environment. I think you have to consider all of those things when considering balance in the regulatory process.

Now it is a complicated process and must consider, weigh, and make decisions among quite disparate views of many special interests, all claiming the public good as their mandate. This Committee has often questioned OMB officials about that process. We have also heard frequent testimony about the problems it has created: ex parte communications, undue delay, regulatory decisions unsupported by an agency rulemaking record. Finally, we have considered several legislative proposals to remedy these problems.

It is with some concern, therefore, that we convene today to hear about another layer of regulatory review, that is the regulatory review activities of the President's Council on Competitiveness chaired by the Vice President. In the last year, the Council has emerged as both a supervisor of OMB regulatory review and as a regulatory reviewer in its own right. Today we hope to shed some

light on the Council, its relation to OMB regulatory review, and the impact of this new process on Federal agency decision-making as well as establish a need for greater accountability in the regulatory process. That includes the right to know how and with what advice decisions are arrived at and whether balance and fairness prevail in that process as opposed to favoritism to any one particular advocacy group or interest.

Before we hear from the other members of the Committee and from our witnesses, I would like to describe some of the reasons why I called this hearing. First, as I said, we have been trying for several years to come to grips with the public accountability problems created by OMB regulatory review. This has been a long process. It was carried out in good faith negotiating with Mr. Darman and his staff, which last year resulted in what we thought was a balanced, a workable and fair agreement with the administration on how best to improve the accountability of the OMB process. The administration agreed that upon reauthorization of the Paperwork Reduction Act, it would issue an executive order setting out public access requirements and time limits for OMB review. The executive order was never issued, however, because anonymous Republican rolling holds in the Senate prevented Senate consideration of the Paperwork Reduction Reauthorization bill.

Now let me just describe that just a little. The anonymous hold permitted as a senatorial courtesy to a particular senator through his party's leadership objection to considering legislation in the Senate is, to me, one of the Senate's more obnoxious customs. It is even more onerous when exercised as a rolling hold where anonymous objection is passed from one senator to another so it becomes virtually impossible to ferret out who is doing the objecting and to attempt to deal with it to get on with the business of the country. Now this was not Mr. Darman's doing, but apparently was done by those who found it very difficult to accept a balanced approach to regulatory review.

For the record, I will insert several documents that reflect the administration's position last year including the draft executive order and the statement of administration policy, a statement that has apparently been repudiated despite a sign-off by the Director of OMB, Mr. Darman.1

What was not clear to me last year was that while on the one hand the administration was discussing procedures to govern OMB regulatory review, on the other hand it was developing what appears to be a new process whereby the Council could bypass those very same procedures. While I am still unsure about the true extent of the Council's authority and power, I now know that last year's agreed upon procedures for OMB appear to have been superseded in many instances by the insertion of the Council into the regulatory review process, even after our lengthy, good-faith bargain. Given these developments, I view this hearing as a first step toward a new set of regulatory review procedures that can provide the balance, the fairness, the openness, and public accountability

1 See pages 229-278, 357.

the American public deserves from its government and which we had negotiated.

The second reason for this hearing is the growing record of the Council on Competitiveness. According to a March 23, 1991 memorandum from the Vice President, President Bush asked the Council to, "to oversee the regulatory review process" run by OMB. According to press reports, this has meant private meetings between Council staff and business groups affected by agency regulations, Council staff participation with agency officials in drafting specific regulatory provisions, regular Council staff meeting with OMB staff to discuss agency rules, and Council staff calls to an agency head directing him not to release a regulatory proposal.

Now lest anyone think that we are just dealing with bureaucratic in-fighting, these are not small issues. This is not just bureaucratic wrangling. We are talking about many billions of dollars. We are talking about lives being affected where there are threats to public safety and health. We are talking about businesses and jobs that may rise or fall on these decisions, and that was the reason we spent so much time and so carefully crafted the process including the public's right to know how these decisions were arrived at, decisions we hoped would involve fairness and would involve no back room dealings with special interests outside of normal negotiated channels.

Now we have been told repeatedly that all the Council gets involved with are inter-agency disputes. Now that is one of the things we have to look into. Regulations adversely affected by such Council activities include Clean Air Act regulations, the wetlands delineation manual, biotechnology regulation, FAA aircraft noise standards, regulations implementing the Nutrition Labeling and Education Act, Clinical Laboratory Improvement Amendments of 1988, and Medicare and laboratory certification rules, and OSHA occupational exposure to formaldehyde.

Council involvement is also reported in administration support for the recent Symms takings amendment, opposition to the ultimately vetoed Orphan Drug Act Amendments of 1990, and most recently review of proposed congressional testimony by SEC Chairman Breeden. Details on these and other reported incidences of council involvement in agency decision-making, are reported in articles that I will include in the record.

Last fall, we had reached tentative agreement with the administration on procedures governing regulatory review and public disclosure. However, this year with the emergence of the Council, the administration refused to endorse that agreement. We spent 21⁄2 years working that out. It appears to us that our good faith agreement worked out is now being bypassed.

In an effort to better understand the Council's activity, Senator Kohl, Senator Levin, and I wrote to the Vice President who chairs the Council on April 17 of this year, and we asked about the authority and operations of the Council. Now, we did receive an answer, but it was basically a letter to serve as a cover sheet for press releases and for fact sheets that did not really address the questions that we had wanted answered. We asked again about the authority and operations of the Council. Day before yesterday, however, we finally received a response to our questions. It took 6

months, repeated staff calls, meetings with Council staff, meetings with the Vice President personally by both Senator Levin and myself, and the announcement of this hearing to finally get a re

sponse.

While the letter from the Council provides few details about the Council's operations, it definitely lays claim to broad authority over OMB regulatory review as well as power to engage in regulatory review on its own. For the record, let me note that we did invite the administration to testify today. We asked the Vice President, the Council staff, Council members, and through staff Mr. Darman, who also declined to attend today, too. I was not able to talk to him personally about it. For the record I also want to note that today's hearing is not meant to be a hearing on OIRA's authority under the Paperwork Reduction Act. In the coming year, I intend to look more closely at OIRA and its activities under that Act.

As to the substance of the issues we address today, let me say that I believe the President has the authority as the chief executive to coordinate agency decisions and set policy priorities for them consistent with statutory mandates. And I also believe the President and the Vice President require some protection so that advice and the development of administration policy can take place free of public scrutiny. There have to be many pros and cons in that whole process, and I fully support that. But that is not what we are trying to eliminate. But I do not believe that either executive privilege or respect for the deliberative process should be used to: hide back-door contacts with individuals powerful enough to have access to the White House; to substitute political opinion for the technical and scientific judgments that Congress delegated to agencies; justify yet another regulatory review process by yet another group; or justify agreeing to accountability for OMB regulatory review while simultaneously trying to circumvent those rules as it appears to us through organizations like the Council.

Needless to say, rulemaking and regulatory review issues are not simple ones. They are certainly not just matters of academic interest, as I pointed out before. There is no easy formula for making what may be life and death decisions, and there can be no politically correct answer for each question faced by an agency decisionmaker. These processes on the balance were worked out with OMB over a long period. They seem to have been thwarted by the Republican rolling holds we had last fall when we had the legislation ready to go to the floor and could not get it considered, and now in part are being bypassed by the Council on Competitiveness.

Again, lest we think that this is just a little bureaucratic in-fighting, let me show you an insert out of The Dayton Daily News. It is a whole section here. It must be 10 or 12 pages. It goes on about what has happened under OSHA with the last two administrations, what the difficulties have been, fireball, people injured, and so on, where these things have been put off to the States rather than being enforced. These are some of the decisions that are made. So these are not tiny issues that we are talking about. We are talking about life and death issues for many people.

What there can be and what there must be is an open and a publicly accountable process so that the President, the Congress, the

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