Mr. Chairman, I urge this Committee and the Congress to develop legislation to curb the usurpation of its power, restore the openness and responsiveness of the regulatory agencies to the mandates in the laws. I urge you to enact the reforms needed to end the secrecy and the hostage-taking and extortion, which is inherent in the current regulatory review process. Thank you.

Chairman GLENN. Thank you, Mr. Doniger, very much. And I would just add before we go on to the next witness we thought that is exactly what we had done over about a 22 year period was negotiate out what was going to be a very good, fair, balanced approach to all of these regulatory matters, and then we got thwarted last fall by the onerous rolling hold that I described in my opening statement. So we are back to square one with the Council now apparently having moved into some of these areas.

OK. Our next witness is Mr. Harold Bruff, professor of law, University of Texas at Austin, nationally known as an administrative law expert, who has studied and written about presidential regulatory review for a number of years. In a 1988 report to the Administrative Conference of the U.S., he recommended the regulatory review process be regularized by the use of public access procedures and time limits, preferably through legislation. He has written about presidential regulatory review and, argues it must be governed by clear standards to protect against the displacement of agency rule-making authority.

Professor Bruff, we welcome you this morning and look forward to your testimony.

TESTIMONY OF HAROLD BRUFF, UNIVERSITY OF TEXAS SCHOOL OF LAW

Mr. BRUFF. THANK YOU, MR. CHAIRMAN. THE SHORT NOTICE FOR TODAY'S HEARING HAS KEPT ME FROM PROVIDING A WRITTEN STATEMENT IN ADVANCE.

Chairman GLENN. Fine.

Mr. BRUFF. Thank you. I might add to your introduction that for 2 years I worked in the Office of Legal Counsel of the Department of Justice. I might be the only friend of the executive branch in the room, although I suspect that what I have to say will cause them to disclaim any parentage of my views. Let me begin by emphasizing that executive oversight of regulation-which I view as clearly legitimate occurs alongside congressional oversight and judicial review of regulation, that is the constitutional scrutiny of both other branches. I think it is especially important that constitutional oversight by any of the branches (including the executive) has to be crafted in a way that does not disable oversight by the other branches.

In other words, we need to control executive review so that it does not disable congressional oversight and judicial review. All three constitutional actors have a legitimate role to play here. Looking at the formation of the Competitiveness Council, adding it as a super-structure to OIRA's role, it strikes me that many of the tensions and the controversies that have surrounded it are essentially inherent in any central system of executive review, and were inherent in the early days of OIRA, because of two characteristics

flowing from the structure of the executive branch. One is that any form of centralized review will necessarily include tensions between the central reviewer and the agencies. A central reviewer like OMB tends to see the agencies as too parochial, and tends to think it can ably weigh the costs and benefits of a particular rule against other competing demands for our national resources. That perception is a stated premise of the very existence of the Council on Competitiveness. This is, I think, a standard perception for persons near the center of the executive branch-that they have a wider viewpoint than persons in any particular agency, who they would charge have a parochial overemphasis on the mission of their particular agency.

The second essential feature of this is that any central executive oversight has or ought to have inherent limits to it. The Council on Competitiveness consists of a quite small professional staff and a few heads of departments and senior White House officials including the Vice President, all of whom are very busy with other responsibilities. What this means is that central review of this kind, due to limitations on time and information, cannot hope to simply reproduce, to fully second-guess an agency decision anymore than all of you on the Committee exercising congressional oversight would try to do that when you review what an agency has done. I do not think that central executive oversight can hope, then, to reproduce an agency decision. It surely should not displace it in the sense of taking the responsibility for the agency decision away from the statutory decision-maker and having the actual decision made by somebody else in the White House. That violates congressional allocation of decisional responsibility. What central oversight can do, and I think can do effectively, is to probe agency decisions, see if they have a factual basis, if they have a policy basis, are persuasive, and indeed to try to promote consistency with overarching presidential views of good policy, of course within statutory limits.

The initial premises of Executive Order 12291 always were just what I have mentioned. Review would probe agency decisions, try to ensure that costs and benefits were correctly taken care of, but would not simply shift decisions into the White House. Now a decade of practice under the initial executive order has shown a series of problems. All the members of this Committee know that there has been sharp and often partisan controversy, leading to the overall accommodation of interests that characterize the 1986 compromise, and that I wish had endured through the recent controversies that you have all been party to.

Here are the essential problems that arose under 12291. All of them, I believe, are equally problems for whatever the Council on Competitiveness will do. First, simple delay, the least important of the problems surrounding this process. Any added process carries time costs. There is, of course, no free lunch. If we add another layer of centralized review, it will cost us more in terms of time and delay, and all of us know that this can have important effects on the American public. Our hope is that the benefits of review will pay for these costs. Anyway, under the executive order program, delay has not been really significant except for the most controversial administrative rules. That is, most rules have not been

much delayed by OIRA. But there have been long delays for some quite controversial rules.

In some cases, agencies have missed deadlines in statutes, and reviewing courts have then compelled immediate action on their part. All of you on the Committee are familiar with proposals to deadline the process, which under the initial executive order does not carry formal deadlines. I think deadlines in some form are clearly warranted. Reasonable minds could differ on exactly how to set them.

Now the two more serious problems. First of all, the introduction into administrative decision of factors that are not permissible under the governing statute. In centralized executive review, there are essentially two ways in which this can occur. One is what one might call the indirect leverage possessed by OMB. OMB has both the supervisory responsibilities under the executive order, and also its central budgeting function for almost all Federal agencies.

It is possible for OMB to say to an agency: "we do not like your rule, and if you will not agree with us, we will cut your budget." It is not a permissible factor for decision under agency statutes that a certain regulation will or will not lead to a cutting of the agency's budget. So OMB's central place in the executive branch gives a lot of indirect leverage over agencies, and everyone who is a player in this game is very well aware of that. Secondly, the conduit problem that Mr. Doniger referred to a moment ago. The problem is that private interests who are vitally interested in any particular regulation have no particular reason to adhere to factors made relevant by statute. They have desires. And pressure coming from private interests can, especially when given added weight by endorsement by OMB, tend to lever agencies away from decisions that are based on statute.

A simple example is that cost considerations that Congress may have made irrelevant to statutes can flow back in due to private sensitivities. Let me say in fairness to the executive that these problems of indirect leverage and conduit communications are shared in the oversight of both political branches. That is, congressional or executive oversight can be subject to these problems. And then, third, the other severe problem here is that centralized review can result in a decision that the administrative record does not support. There were signs of this in the early days under OIRA. The typical way that it occurs is that the agency staff produces a massive administrative record, almost equally massive explanations of fact, policy, and law, all of it pointing in the direction of what is almost a final rule. Then, in negotiations at the last moment with OMB, the outcome changes sometimes radically. The possibility is that last minute review can produce an outcome that is simply unrelated to the supporting administrative record, or perhaps even in conflict with it. That can happen. It did happen in a couple of cases under OIRA.

And the problem with it, in part, is that where this does occur, a reviewing court can be just about 100 percent guaranteed to reverse the agency decision, saying it is arbitrary and capricious under the APA, and then a very wasteful sequence occurs where we go back to the agency and get to do everything again. So the point is simply that executive review, if not controlled, can cause

an agency to drift away from decisions that it does have support for in its administrative record. I think that conduit communications are especially problematical here because new fact arguments and new policy arguments can come to the agency via the executive reviewers without the testing by public process that we rely on so much for what agencies do.

It is really a problem. I would put it most simply as a problem of bureaucratic regularity, that is, trying to tie a final agency decision to support in a very large and complexly gathered administrative record. Now in reaction to the problems I have just described, the members of this Committee are closely familiar, I am sure, with the 1986 compromise with OIRA that I studied for the Administrative Conference. It seems to me that that compromise was a pretty good accommodation of the needs of all three of the branches. I thought it facilitated both congressional and judicial review of agencies while allowing enough discretion for executive review.

Basically, of course, what that compromise entailed was that drafts of proposed and final rules that were submitted to OMB would become available after the final decision in a rulemaking along with correspondence between OIRA and agency heads and all conduit materials. Written conduit materials were simply placed in the file. At least the fact of oral ones was also indicated. The Office of Legal Counsel had, early in the Reagan administration, early in the history of this program, advised agencies to do just that. All of these matters were to be made available after the final rulemaking. There was an effort to avoid making them available immediately during an ongoing executive review because that would tend to draw outside lobbying-even more conduits-in the way that a waffle draws a fly.

There was in the compromise, though, no logging requirement for oral contacts. By logging, I mean some summary of oral comments put in the record. The compromise wound up fitting the existing case law pretty much to a T. I have especially in mind the Court of Appeals, quite intelligent decision in Sierra Club v. Costle, which allows both members of Congress and members of the executive oral contacts with agencies engaged in rulemaking and requires some written materials to reach the record. Anyway, the essential part of the compromise was that there was to be a paper trail of what had happened so that interested persons inside and outside government could trace what had occurred. They would not know everything, to be sure, but at least those things that had reached writing would reach outside scrutiny after the fact.

Let us apply this to the Council on Competitiveness. One feature of the Council is, I think, to be welcomed. Early experience under OIRA revealed that there was the need for some form of known appeal mechanism beyond OIRA. There was a tendency for longstanding impasse between OIRA and agencies. Something needs to resolve that, and I think it is a help if we know where these things go, and if the ground rules are understood. So I think there is something to be said for just having an appeal mechanism. But the problems with it are the same as those initially for OIRA. There is also a severe added problem, and here we are going to start to reach uncharted ground. The Council on Competitiveness is headed by the Vice President. It includes as its principal members senior

White House staff and cabinet officials, and it raises the important question: what is the scope of executive privilege coverage for both the Vice President's Office itself and for the principals that exercise this review?

It is possible that the courts would hold that the entire process above OIRA is shielded by executive privilege. What is the scope of the executive privilege? I can give you only one honest answer, which is: no one knows for certain. But since my portfolio is to opine, here we go. We know some things from United States v. Nixon, the primary Supreme Court case on this from 1974. We know that the president and his immediate advisers possess a qualified constitutional executive privilege to discuss policy. Is that just an oval office privilege? Well, it is at least an oval office privilege. We know that from the Nixon case. What about subject matter? Clearly that counts. For matters of national defense and foreign policy, there has been for a very long time an allied privilege called the state secret privilege, which is essentially unqualified and also not involved here. We are not talking for ordinary regulation about defense secrets or foreign policy concerns.

What we are talking about is something that all members of the Committee appreciate: the value of candid political discourse among the final deciders on matters that are heavily infused with political value as well as technical underpinnings. All right. How does the executive privilege apply to the vice presidency? Well, let us take a look at the vice president's constitutional role. Here unlike the president himself the vice president has a quite limited set of constitutional responsibilities, only two of them that I can identify. One is to preside over the Senate. And the other is the famous duty to inquire daily after the health of the president.

But I think what we need to do with the vice presidency is to encourage, not to deter, finding substantive responsibilities for vice presidents. It would be nice if we could make something out of the office. There have been efforts over the decades to do this. For example, the historical responsibility of vice presidents for the space program (that one person present would remember with some pride, I should think) and vice presidents have been given other kinds of portfolios. We do not want then to constrain executive privilege so much that the vice president is left attending funerals and cannot do anything useful at the center of the Federal Government.

Well, what about regulation? For this function, I want to end where I started: with the idea that we are talking not about defense or foreign policy secrets. We are talking not about the vice president's role as confidant to the president, but the vice president and senior cabinet officials as supervisors of ordinary regulation in the agencies. A total executive privilege shield over all activities of the Council could disable congressional and judicial review of regulation. I do not think I need to tell this Committee what the frustrations are that it presents for congressional oversight. Those have been spread over all of your statements this morning.

It obviously has problems for judicial review as well, of the sorts I have been mentioning. Possibly bringing in impermissible factors, divorcing agencies from their administrative records. So what I would like to suggest to the Committee is, again, an accommoda