Committee on Governmental Affairs

United States Senate

Statement of Professor Margaret Gilhooley

Seton Hall Law School

On

Executive Oversight of Agency Rulemaking

November 15, 1991

I teach Administrative Law at Seton Hall Law School, and have also had experience in government regulatory programs, as an attorney at the Food & Drug Administration from 1975 81, and more recently, at the Environmental Protection Agency. I believe there is a need for more public disclosure with respect to Administration positions that lead to changes in agency rules during the oversight process.1 I especially support the provision in S 1942 that would require agencies to explain in a rulemaking notice any significant changes made to the rule as a consequence of regulatory review. have written an article, to be published in a forthcoming issue of the Indiana Law Review, urging agencies to disclose in the Federal Register changes in a rule made by an agency because of oversight, and the agency's reasons for adopting an Administration position.2

I. Role of Executive Oversight

Executive oversight exerts considerable influence in the agencies. One commentator described oversight under the Executive Order as "the administrative law story" of the 1980's.3 The importance of oversight has if anything grown in the 1990's, with the increase in regulatory activity at agencies like FDA, and the

passage of the Clean Air Act with its mandate for new regulations. Executive oversight has in my view an appropriate place in the

review of agency regulations of executive agencies".

It can help coordinate rules in areas where different agencies have overlapping or similar responsibilities. Moreover, oversight also helps

indirectly to make the agencies more accountable to the electorate by making the agencies give due weight and consideration to the policies of the President. The primary means the President has to influence the agencies is, of course, through the appointment of the agency head, but oversight is an additional means of promoting accountability.

The

appropriateness

of

oversight has

received

wide recognition, but there also has been a recognition of the need for disclosure about, and limits on, the oversight role." The OMB has already adopted some measures to guard against conduit communications, and to disclose written communications with the agency head."

In addition, the Clean Air Act has long required

a disclosure of the drafts EPA sends to OMB for review.7

The

drafts of other agency rules are also available from OMB upon a written request under OMB procedures.

II. Need for Disclosure of Reasons for Changes

I fully agree with the need for the existing disclosures, but, in addition, I believe there is a need for a specific disclosure of the reason for changes made in agency rules because of oversight. This recommendation is not entirely new. Professor Kenneth Davis

was recommended in the early 1980's as a policy matter that the Executive Order be amended to provide for the disclosure of the reason for changes made during oversight. A disclosure is

appropriate both to ensure the accountability of the Administration and the agency and to promote rational decision-making by the agencies for purposes of judicial review, as I will summarize.

1.

Accountability of the Administration.

Disclosure will

ensure that the Administration is publicly accountable for the influence the Administration exerts over an adopted agency policy. The accountability is not provided merely by the issuance of the rule, without a disclosure since the policy could simply reflect the agency's views. If the Administration is to influence the agency by bringing a wider perspective and policy viewpoint to the process, the Administration should acknowledge its contribution.

2. Accountability of the Agencies. The agencies are the ones who are responsible by statute for the policies adopted in rules, and, for the decision whether to accept and adopt an Administration position. An agency should not, in my view, accept an Administration position merely because the position is a rational one. Instead the agency should be persuaded as a policy matter that the position is at least as good, if not better, than the agency's initial position in promoting the statutory purposes.

The agency's role in the regulatory review process is a difficult one, as the agency is responsible for deciding whether to

be influenced by those with an oversight role, who are acting on behalf of the President, who has power to affect the tenure of the agency head. A public statement by the agency of its reasons for accepting an Administration position would provide a reminder, and a reinforcement, in this setting, that it is the agency's responsibility to make the decision. Furthermore, the statement would focus the attention of the agency and OMB on the key consideration, whether there are adequate reasons for a change in the rule.

Rational Decision-Making. Under the Supreme Court's State Farm decision, an agency is required to discuss important alternatives considered by the agency to the position an agency ultimately adopts in a rule.' The agency need not, however, discuss every alternative or merely speculative ones. When an agency has forwarded a rule to OMB for review, the alternatives identified by the agency are well-considered options. If the agency changes its position, as a result of the oversight process, I believe the State Farm principle calls for the agency to identify its initial option as an alternative that the agency had previously considered and its reasons for choosing another one instead. When the change is based on an Administration policy, that should be acknowledged. Such a discussion is needed to ensure rational decision-making and is an appropriate part of the record for

judicial review.

Even-Handedness in Public Disclosures.

The Executive

Order presently requires disclosure by the agency for the public record when an agency issues a rule over OMB objections, along with the agency's responses to the OMB objections.10 Thus, at present,

To ensure that oversight does

if an agency disagrees with OMB, the disagreement will be public, but if an agency changes its position to accept OMB views, there need be no public disclosure of the reason. This structure could influence the agency to accede to OMB views to avoid the burdens and drawbacks of public disclosure. not displace the agency responsibility to make the decision, the agency should be as free to accept or to reject OMB advise. A public disclosure of the agency's Administration position will promote evenhanded consideration by the agency of the merits of the OMB views.

reasons for accepting

5. Requirement in 8. 1942 for Explanation of Changes Consequently, I strongly support the provision in Section 5 of S. 1942 that requires agencies to explain any significant changes as a result of regulatory review. I interpret the provision as requiring the agency to explain the reason for the changes, not merely the fact of changes, but would recommend that the bill be amended to refer expressly to the reason for changes.

III.

Other Provisions of 8. 1942. The bill contains other important disclosure provisions. While I have not studied these issues as fully, I have some general comments.