courts, and the American public can read off the same page, and be confident that each agency's rulemaking record truly reflects the steps taken by the agency to make certain that there is balance and that all issues are considered in their rulemaking decisions. And we thought that is the kind of a process that we had negotiated, and were about to have in place.

So I hope that today's hearing can be our first step. I am sure that it will not be the only hearing, but I hope that today's hearing can be our first step to assuring that Federal agency decisionmaking can indeed be publicly accountable. That is the system we in good faith thought we had worked out.

PREPARED STATEMENT OF SENATOR GLENN

This morning we examine the role of the Council On Competitiveness in reviewing Federal regulations.

For 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 (OIRA). I am concerned that in the regulatory review process that a critical balance must be maintained between the economic, health and safety, environmental and consumer impact of Federal rules and regulations. This is a complicated process one that must consider, weigh and make decisions among disparate views of many interests, all claiming the "public good" as their mandate.

The 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, and 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.

In the last year, the Council has emerged as both a supervisor of OMB regulatory review, and as a regulatory reviewer on its own. 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 the need for greater public accountability and the right to know how and with what advice decisions are arrived at in the regulatory process. Balance and fairness must prevail in that process, as opposed to favoritism to any particular advocacy group or cause.

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, drawn-out process, carried out in good faith negotiation with Mr. Darman and his staff. Last year, we finally reached an agreement on what we thought was a balanced, workable, fair set of procedures for regulatory review. 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 holds prevented senate consideration of the Paperwork Reduction reauthorization bill.

Let me add that an anonymous "hold" is a courtesy permitted to a particular senator through his party's leadership to object to bringing up a piece of legislation for consideration on the Senate floor. I feel that this is one of the Senate's more obnoxious customs. It is an even more onerous practice when exercised as a "rolling hold" where the objection is passed from senator to senator, so that it becomes virtually impossible to ferret out who is doing the objecting so that their concerns can be dealt with, and we can get on with running the business of the Senate, and the country. Such an anonymous "rolling hold" was used by the Republicans to prevent our agreement with OMB from passing. This was not Mr. Darman's doing, but apparently was the action of 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 Adminis

tration policy a statement that has apparently been repudiated despite a sign-off by the director of OMB, Richard Darman.

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 a 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 have been superseded in many instances by the insertion of the Council into the regulatory review process even after reaching our good-faith bargain with the Administration on regulatory review procedures.

Given these developments, I view this hearing as a first step towards a new set of regulatory review procedures that can provide the openness, balance, fairness and public accountability that the American public deserves from its government.

The second reason for this hearing is the growing record of the Council on Competitiveness. According to a March 22, 1991, memorandum from the Vice President, President Bush asked the council "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.

Regulations adversely affected by such Council activities include EPA Clean Air act regulations on power plant permitting, the EPA wetlands delineation manual, EPA standards on municipal waste incinerators, FDA regulations on nutrition labeling, HHS rules on laboratory certification rules, OSHA formaldehyde standards, biotechnology regulation, and FAA aircraft noise standards.

The Vice President says the Council is set up to solve interagency disagreements on Federal rules. But these are not small issues just concerning inter-agency disputes and bureaucratic wrangling. They deal with decisions potentially involving billions of dollars, thousands of lives and jobs, and hundreds of businesses.

In an effort to better understand the council's activities, Senators Levin, Kohl and I wrote to the Vice President, who chairs the Council, on April 17 of this year. We asked about the authority and operations of the Council. The initial Council response to our letter included a packet of press releases and did not answer our questions. It was not until the day before yesterday that we finally received a credible response to our questions. It took six months, repeated staff calls and meetings with Council staff, meetings with the Vice President by both Senator Levin and me, and the announcement of this hearing to finally get a response.

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 the power to engage in regulatory review on its own.

For the record, let me note that I invited the Administration to testify today. We asked the Vice President, Council staff, and Council members, including OMB director Darman. All declined.

For the record, I also 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, something that I thought we had already worked out in good faith.

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. I also believe that 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. 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;

substitute political opinion for the technical and scientific judgments 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 through organizations like the Council.

Needless to say, rulemaking and regulatory review issues are not simple ones. And they are certainly not just matters of academic interest.

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 decision-maker.

But what there can be what there must be is an open and publicly accountable process so that the President, the Congress, the Courts, and the American public can read off the same page and be confident that each agency's rulemaking record truly reflects the steps taken by the agency in making its rulemaking decisions. This is exactly what I thought we had agreed upon in good faith last fall.

I hope that today's hearing can be our first step to assuring that Federal agency decision-making can indeed be publicly accountable.

Chairman GLENN. Senator Kohl?

OPENING STATEMENT SENATOR KOHL

Senator KOHL. Thank you very much, Mr. Chairman. We are pleased to be here this morning to examine an issue which does not always get much attention, but which is nevertheless relevant to every person in our country, namely how Federal rules are made and implemented. As our Chairman knows, this is not a new issue. In fact, this problem has been the subject of intense debate for many years and is not likely to be resolved at this hearing or at any time in the near future. Nevertheless, Congress has a clear and a continuing responsibility to oversee the rulemaking process through which the nation's laws are carried out, and that is why we are here today.

As we know, the specific purpose of this morning's hearings is for the Committee to examine the role that the President's Council on Competitiveness plays in the development of Federal rules and regulations. Recent press reports suggest that the Council chaired by Vice President Quayle is playing an increasingly greater role in the regulatory process, and so we are disappointed that the Council declined to send a representative to this hearing today. Nobody would disagree that a fair hearing requires that all sides be heard. And to the extent that most, if not all, of the witnesses here this morning will be critical of the Council's role in regulatory activities, the hearing will not be balanced, and that is unfortunate.

Nevertheless, I commend the Chairman for making every effort to encourage the Council's participation, and I sincerely wonder why the Council would not want to be represented at this hearing since their side of the story deserves to be heard. Let me also say that in my mind there are no simple answers about who is right and who is wrong in the arena of Federal rulemaking. Critics blast the administration and the Quayle Council for unfairly gutting regulations which are opposed by business and thwarting the will of Congress. And the business community complains that the administration has not done enough to reduce burdensome regulations that add to their costs and reduce both profits and jobs.

Clearly, both sides are partly right and partly wrong. It is my hope that this hearing will shed some light on this situation, and that further efforts by this Committee with the cooperation of the administration will help lead to a more fair accommodation of the complex issues surrounding the Federal regulatory process. It is critical that the business community, labor, environmentalists and government work together rather than at cross purposes toward

improving our economy and our quality of life. I look forward to the testimony this morning, and again I thank the Chairman for convening this hearing.

Chairman GLENN. Senator Lieberman?

Thank you, Mr. Kohl.

OPENING STATEMENT OF SENATOR LIEBERMAN

Senator LIEBERMAN. Thank you, Mr. Chairman, for your leadership in these matters which are critically important to our country. I look forward to this hearing today. Mr. Chairman, several months ago a senior executive of a large manufacturing firm based in Connecticut told me about a visit that he had with the Council on Competitiveness. This firm is very concerned about the ability or inability of U.S. firms to be competitive in the global economy, and apparently wanted to discuss with the Council on Competitiveness the need for the Federal Government to play a larger supporting role on international competitiveness issues. The response it got from the Council on Competitiveness was illuminating and shows, I think, that the sign on the door over there may not truly reflect what is going on inside the offices.

The Connecticut business executive was told that the Council on Competitiveness does not focus does not work-on questions related to the international competitiveness of American companies. He was told that they are right now focusing on reviewing some might say pursuing-EPA's environmental regulations, particularly pursuant to the Clean Air Act. Well, unfortunately Mr. Chairman, I think that anecdote sums up and points to this administration's failure to address two critical national needs. One is the genuine need to restore America's competitive position in the world economy. A lot of that has to do with putting the American government behind American business when it attempts to trade, and when it tries to invest in break through technologies that will be the dominant industries of the future. We are hardly doing any of that.

Second is the need for strong laws and regulations to protect the public health and the environment of America and American people. Mr. Chairman, because of my membership on the Environment and Public Works Committee and my involvement, through that membership, in the reauthorization of the Clean Air Act, I would ask the indulgence of the Chair and the Committee to take a few extra moments this morning to outline a couple of case studies which show why I think we all have reason to have grave concerns about the role the Council on Competitiveness, the so-called Council on Competitiveness, is playing. And I think the need to address these problems is becoming increasingly important because EPA itself, with regard to the Clean Air Act, has recently indicated that the White House and the Council are going to be actively involved in regulations on acid rain, vehicle inspection and maintenance, and standards for air toxics.

Mr. Chairman, evidence put before the Environment Committee during its consideration of the Clean Air Act showed that each of those acid rain, vehicular pollution, and air toxics are causing literally thousands of premature deaths in our country every year.

So this is a life and death matter. When the Environment and Public Works Committee reported the Clean Air Act about two years ago now, most observers were shocked by the sheer size of the legislation, the volume of it, the weight of it. One reason I want to suggest that one reason for the size of that bill was that for a decade EPA simply had refused to implement provisions of the 1977 reauthorization of the Clean Air Act, claiming that the law provided discretion not to act.

As a result, when our Committee rewrote the Clean Air Act last year, it spelled out EPA's obligations under the act in as much detail as possible. Yet obviously it is never possible for a legislative body to anticipate and spell out all of the details of a complicated law. I can tell you, however, Mr. Chairman, that the majority of members of the Environment Committee of both parties felt comfortable that the EPA, under Administrator Reilly and Assistant Administrator Rosenberg, would approach environmental protection under the Clean Air Act in an aggressive, advocacy-oriented way, certainly a different way from the previous administration. Many of us felt that those with the responsibility for implementing the law would carry out their obligations with a sincere desire to adhere to congressional intent.

Now let me take some time to discuss the Council on Competitiveness' role in just two of the regulations enacted under the Clean Air Act. One very important regulation concerns a permit program. That program is the cornerstone of the effort to regulate chemical plants, oil refineries, and other stationary sources of air pollution. The permit actually spells out a plant's that is a factory's obligation under the Clean Air Act, and it is a critical element in the evidentiary basis in the case for an enforcement action against violators of the Clean Air Act.

When EPA's permit rule was finally issued, more than 100 changes were included. Now according to a report issued by Congressman Henry Waxman earlier this year, which I have reviewed and concur in, many of those changes resulted from comments on EPA's original proposal, which was forwarded to the EPA as part of the Council on Competitiveness' and the Vice President's regulatory review process. As Congressman Waxman pointed out, none of the changes, none of the changes, proposed by the Vice President strengthened the permit program. Almost all of them would weaken it, and many are in clear conflict with the terms of the law changes that were set forth in a memorandum to EPA's Assistant Administrator Rosenberg from David McIntosh, Deputy Director of the Council, who attached a marked-up version of the EPA permit rule. Mr. McIntosh indicates in his memo that he is incorporating changes from the White House Counsel's Office, the Office of Policy Development, and OIRA. Mr. Chairman, I do not know David McIntosh. And since the Council refused to appear at this hearing at your request, I am not able to find out about anything more about Mr. McIntosh or about how his purported authority to determine that changes in EPA's permit rule were needed. I also do not know anything about the Office of Policy Development or its authority. What I do know, however, is that Mr. McIntosh is not an employee of the United States Environmental Protection Agency, which is the agency that Congress has delegated