The committee's 1977 report on "Public Participation in Regulatory Proceedings" has recognized all these factors and suggested that there ought to be agencywide programs of public participation funding. Congress has recognized the need for funding on three occasions in statutes, and several agencies are moving forward to establish programs.

We support the S. 262 and S. 755 provisions which would extend these efforts in a responsible and modest way throughout the Government. We come to that view having carefully assessed the major objections that have been put forward about public participation funding. I thought it might be useful to the committee if I just briefly canvass a few of these objections.

The first, and perhaps the most often heard, objection is that Government agencies can adequately represent citizen interests on their own, without hearing directly from consumers, small businesses, and other unrepresented members of the public. This notion was rejected more than a decade ago by Chief Justice Burger in a landmark case, in which he cited the lack of agency resources and the conflict in the dual agency roles of advocate and decisionmaker. The chamber has in its testimony presented an interesting variation on this discredited notion: that the offices of consumer affairs in each agency, if they are beefed up, can adequately represent the consumer and public view, without direct citizen representation.

I think there are three basic problems with the chamber's suggestion. First, it assumes that consumers are the only groups unrepresented in the current administrative process. Yet, as this committee's report showed, small businesses are among the primary participants who ought to be before the agencies representing their interests, but who are not. Second, the idea that any one advocate can represent the consumer view assumes that consumers are monolithic in their perspectives on all regulatory issues. Yet there is a whole spectrum of consumer opinion that needs to be represented, and represented directly.

Third, I think the suggestion that the offices of consumer affairs can represent the viewpoints that need to be brought forward ignores the inherent advantage in having direct communication between citizens and their chosen representatives and the government officials who must make the decisions. It is a suggestion that is not responsive to the desire that citizens now feel to talk directly, not through governmental intermediaries, to their decision mak

ers.

Perhaps because there is no real theoretical objection to participation funding programs, opponents have emphasized the problems that are supposed to have resulted from implementation of these programs. The charges made about the Federal Trade Commission funding program have been adequately rebutted on the public record. Specifically, it is important to point out, as the Senator did, that the Administrative Conference is studying the matter and has yet come to no definitive judgment about it. Further, even if one finds that there have been some abuses in existing agency programs, that simply says nothing about the basic justification for participation funding. All it says is that there should be tighter regulation and greater oversight, which both bills would accom

plish by putting responsibility in the Administrative Conference for implementation of the program.

Finally, I would say it is purely erroneous for opponents to portray public participation programs as simply funding those interests who want to come in and support the agency's point of view. The theory behind public participation funding is that people who have novel perspectives not otherwise represented will be brought into the process. If someone wants to come in and parrot the agency, they will not meet the eligibility criteria proposed in S. 262 and S. 755. Moreover, the practice, particularly at the Federal Trade Commission, has been that both the small business trade associations and the consumer groups that have been funded have often taken issue with the agency, have opposed staff recommendations and, as is particularly important in this era of trying to create more efficient regulations, have often suggested ways in which regulations could be simplified and made less burdensome. In sum, I believe it is not possible to both support enhanced public participation and oppose public participation funding. Lack of finances is the major problem. If one is going to oppose solutions to solve that, one is also fundamentally opposed to the kind of meaningful participation that is necessary to make the administrative process truly open and effective.

Mr. PARKER. Senator, I would like to address a few additional points that are covered in more detail in our testimony. It is significant to me that many of the same interests that are opposing the public participation funding program are also those interests who seem to support the idea of so-called executive coordination and executive intervention in rulemaking. We recognize it is a rather difficult and delicate issue as to the extent to which the White House should be able to direct the regulatory process. We start from the premise that in an administrative proceeding of any kind, ex parte communication should be controlled and the integrity of the process is best protected by insuring all the parties, whoever they are, know what the positions and facts of all the other parties are.

We think that the controls on ex parte communications should extend to a large number of people in the executive branch at least. I should make clear I think we are not talking about the right of the President to step in after rulemaking is complete and the decision is entirely made and determine that rule will simply not be implemented. I am troubled by that. I think that is not really the most serious problem at this point, however. What we are talking about is an effort by the President or by his staff, such as as the Council on Wage and Price Stability, to purportedly be participating in a regulatory process as a regular commenter or participant, but to have no way for the other parties who are participating in those proceedings to actually know what is being said.

From the standpoint of our group, which is one that actually participates in administrative proceedings, we think we should have an opportunity to address all of the factors that go into the reaching of the decision by the agency; if there is relevant information that the decisionmaker should consider, that information

should be openly presented and should be available for public examination and comment.

To do otherwise we think makes a sham of the Administrative Procedure Act and turns proceedings under that act into a mere formal exercise. Executive intervention can become a conduit for the views of special interests. It is not merely the President looking at things in the broadest possible view and deciding certain policies need to be coordinated and implemented, but rather there is also the risk that through representatives of the President, the special interests who are unable to convince the rulemaker or unwilling to present their arguments will use the executive branch as a conduit for effecting the administrative process.

Rather than deal in further detail with all the points in our testimony, I will say that our general thrust is one of making the agencies more independent. We recognize the need for coordination. But our view is that the regulatory process generally needs to be strengthened.

I would conclude by saying that we support very strongly Mark Green's discussion of the problems of cost-benefit analysis or cost effectiveness analysis. It is an immensely difficult issue. We are very concerned that in any analysis where costs are emphasized above all other factors that the methodology is such that the cost information is going to be, on its face, more persuasive than the information about the value of the view across the Grand Canyon. We appreciate very much the opportunity to make our views known, and particularly to emphasize our view that public participation in intervenor funding is critical. We will be submitting additional comments for the record within the 30-day period.

Thank you.

Senator LEVIN. Thank you all. Relative to the public funding question, S. 262 and S. 755 differ as to who should distribute the public participation funding. S. 262 provides for the Administrative Conference to do it; S. 755 lets each agency do it. One of the arguments is the Conference would be a more neutral source. This of course assumes there is funding in the bill. What is your response to that?

Mr. SMITH. I will start off and say that I think you also might want to hear from Nancy Drabble.

MS. DRABBLE. We are still studying that question because we think there are good arguments on both sides. But we do tend to tilt in favor of the administrative conference making the decision because we think it is crucial that you avoid any sort of potential conflict of interest on the part of the person making the decision. In the public participation funding programs that are currently operating, the decisionmaking is insulated in the agency away from the staff so that the decision is made by someone who has absolutely no stake in how that proceeding turns out. That kind of process has the virtue of someone making the decision who is familiar with the agency proceedings. It may be difficult for the Administrative Conference to understand who has the best presentation to make about a fairly technical bumper standard over the National Highway Traffic Safety Administration. The Administrative Conference has no institutional stake in who would be getting that grant or

how the decision comes out over at the National Highway Traffic Safety Administration.

Senator LEVIN. If you have your conclusions ready within the next 30 days or so, you might forward them on.

Mr. SMITH. In addition to the current procedures now used in agencies to insulate funding decisions from interested staff members, the Senator raised a very good suggestion that should be considered for inclusion in the legislation: a specific prohibition on involvement of interested staff in soliciting or passing on funding applications.

Senator LEVIN. When I made a 30-day reference, if it comes later than 30 days you should forward them anyway, but they would be too late for the record. The same would be true with you.

Relative to judicial review, what is your response to those who argue that without some form of judicial review, the regulatory analysis requirement would just be merely in effect a formality without substance or procedural effect?

Mr. GREEN. The bills do provide for either Congressional Budget Office or OMB review of the regulatory analysis. There will continue to be oversight hearings and the potential threat of legislation overturning agency decisions-or agencies through sunset. There are a lot of accountability mechanisms without giving disappointed litigants the ability to litigate for years when one economist's study was statistically or methodologically preferable to another economist's studies. George Bernard Shaw once said, if you laid all the economists in the world end, to end they still wouldn't reach a conclusion.

Senator LEVIN. I thought he was talking about lawyers. [Laughter.]

I am a lawyer so I can say that.

Mr. GREEN. He said another thing about lawyers.

Senator LEVIN. That is a different hearing, if you don't mind. [Laughter.]

Mr. GREEN. One wonders whether judges are really in the position to make those kind of economic distinctions when economists often cannot.

Senator LEVIN. Senator Bentsen has a bill in, I think it is S. 54, which provides that the judicial review, of the regulatory analysis would, No. 1, be part of judicial review of the final rule. I don't think there would be any interlocutory review permitted. And, No. 2, it would be limited to a determination of whether the regulation was promulgated with deliberate or capricious disregard of the provisions of the bill. Do you think that approach would raise any of the problems that you mentioned?

Mr. GREEN. To the extent that a court said you didn't have enough economists testifying before giving you enough cost estimates, we would still oppose it. There is now judicial review of rules based on an arbitrary, capricious standard and if decisionmakers are reckless or engage in some of the acts in the language you just described, that decision can be overturned-as many of the Consumer Product Safety Commission Standards, as has been mentioned, as been overturned. But giving them the extra hook of regulatory analysis could lead to the kind of delays and burdens which would really potentially shut down agencies or keep admin

istrators from issuing rules knowing there is this additional subsequent review.

Mr. PARKER. Senator, I would certainly want to second that. I think we have to have some faith here in the good faith of the regulators. I don't think it is essential that we conclude that the only way to insure that the agencies are going to carry out their statutory mandates is through an elaborate system of judicial review. Specific directions to the agencies with some congressional oversight and reporting requirements I think would be a sufficient device for insuring that they do, indeed, pay attention to the various factors that should go into the decisionmaking.

Mr. SMITH. One of the best ways, short of having an onerous judicial review, to make sure all the factors are weighed and that cost and noncost factors are seriously and adversarily debated, is to have full participation by the whole spectrum of interests. In that kind of an open forum, full participation assures that all relevant factors can be assessed, so that Monday morning quarterbacking by the judiciary will not be needed.

Senator LEVIN. Even though the legislative veto question is not in the bills before us, I would like to ask Mr. Green a question or two on his comments relative to it.

There are a number of existing laws which contain legislative veto provisions. I am wondering whether you made an analysis of those laws, seen how they work and whether it has resulted in any inundation of the Congress?

Mr. GREEN. There was an excellent study which appeared a few years ago by Professor Gellhorn which looked at those few instances where there were legislative vetoes over programs exercised. Their conclusion was it didn't work well and often politicized the decision. A lot of the legislative veto provisions came out of the 1930's, some were more recent in reaction to President Nixon's disregard of congressional intent and they haven't been exercised in the short term. However, if you had H.R. 1776, or the Senate equivalent which is legislative review governmentwide, that raises the specter of what Senator Percy was asking about before-which is Senator Levin glancing at the 100,000 page dockets that Mr. Joseph mentioned previously and with the staff trying to come to a conclusion about whether is it good public policy within 60 days. Senator LEVIN. I think you made a comment about the quantity, though, that would be processed by the Congress. How many, in fact, how many regulations have in fact been vetoed through legislative veto?

Mr. GREEN. I don't know the answer to that.

Senator LEVIN. Second, you talked about a one-house veto. I think you made reference to a one-house veto. You raised questions of constitutionality without getting into them, because that is debated. Would your comments apply equally to a two-house veto? Mr. GREEN. A two-house veto is a little less pregnant. A twohouse veto is better than a one-house veto because two-thirds of the constitutional trinity would be involved in making that law. But it would still in my judgment violate the Constitution because the President would be erased from the process, hence my opening remark that either it is or isn't constitutional. We are still troubled by that procedure.