REGULATORY REFORM LEGISLATION TUESDAY, MARCH 20, 1979 U.S. SENATE, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, D.C. The committee met at 10 a.m., in room 3302, Dirksen Senate Office Building, Hon. Abraham A. Ribicoff (chairman of the committee) presiding. Present: Senators Ribicoff, Sasser, Levin, Pryor, Percy, Javits, Roth, Cohen, and Durenberger. Chairman RIBICOFF. Mr. Cary and Mr. Millar, you can come to the table, and those associates you brought with you. If you will introduce them to us, we will know who they are. Mr. CARY. Fine, Mr. Chairman. On my left is Vic Millar, deputy vice chairman of Arthur Andersen & Co., and he will be making a part of the presentation this morning. On his left is Jerry Walker. On my right is Mike Simon. Both are partners in Arthur Andersen, who is responsible for the Business Roundtable Task Force. OPENING STATEMENT OF SENATOR RIBICOFF Chairman RIBICOFF. Today marks the first day of hearings on regulatory reform, a matter of widespread public concern. I am convinced that the year for improving Federal regulation has arrived. We must have a more efficient and effective process for decisions. But we shouldn't cripple the ability of agencies to properly discharge their essential statutory duties. We must not lose sight of the important purposes served by effective Federal health, safety, and environmental controls. We need that regulation. I also recognize that we are in a very difficult and complex field which will require careful consideration. Over the next 6 to 8 weeks, our hearings will explore the major areas of concern in Federal regulation. Today we begin consideration of the ways in which we can control regulatory cost and improve agency procedures. In future sessions, we will also consider reforms for better agency management, and more effective public participation. Today we will be hearing from the Business Roundtable and the American Bar Association. In future hearings, the administration will testify on its regulatory reform proposals. We will also have testimony from representatives of the agencies, the business community, consumer and environmental groups, labor unions, the academic community, and from other interested members of the public. These important issues merit a full and complete hearing record. (1) Our committee is well equipped for this task. The committee's 3year study of Federal regulation is complete. Six volumes of that study have been published. Many of the proposals we will consider were recommended in that comprehensive series of reports. The committee has before it a number of bills to reform regulation. These hearings will consider those proposals-including S. 262, a bill I've introduced with Senator Percy and Senator Kennedy. I'm pleased that 25 other Members, including 6 committee chairmen, have joined in support of that bill. A major provision of S. 262 will require all Federal departments and agencies to conduct an economic impact analysis-which evaluates the costs, benefits, and alternatives-of proposed regulation. We will also be discussing S. 445, introduced by Senator Percy and others, which proposes the "sunset" concept for the regulatory agencies. I expect that the President will soon be submitting his proposals for regulatory reform. Those proposals will receive careful consideration. I am very pleased that Frank Cary will be our first witness. Mr. Cary is qualified to lead off these hearings. As chairman of the IBM Corp., he knows Federal regulation firsthand. Mr. Cary is also chairman of the Business Roundtable Task Force on Government Regulation. Just last week, the Roundtable released a major study of the incremental costs of Federal regulation. This morning Mr. Cary will be testifying on behalf of the Business Roundtable. He is accompanied by Mr. Victor E. Millar of Arthur Andersen & Co. Following the Roundtable testimony will be representatives from the American Bar Association. I am pleased that Mr. William Ross, head of the ABA's Administrative Law Section will be testifying on reforms of agency procedures. In addition, Mr. Richard Smith will be representing the ABA's Commission on Law and the Economy. Last year, the commission published its outstanding report on Federal regulation. In preparing our own studies, that report was very helpful to the committee. I want to commend Mr. Cary, the Business Roundtable, and Arthur Andersen & Co. for their cost of regulation report. Without question, the study's findings are a most useful contribution. Up until now, we've had to rely on "guestimates" in this area. The Roundtable effort has changed that situation. The Roundtable study is fair and well balanced. Again and again, it recognizes the important social purposes served by Federal health, safety and environmental regulations. It does not call for an end to those controls. Instead, the study states that "in many instances, specific regulations are well conceived and implemented.' The study also emphasizes the difficulties of figuring costs as well as benefits. This is important. Here we have the combined resources of some of the major companies in America-assisted by a leading accounting firm. Yet they experienced difficulties in putting together precise cost figures. There is an important lesson here: We cannot at this time expect too much from existing methodology to determine costs-not to mention benefits. However as its sponsors will readily admit-the study had its limitations. First, the study did not consider the economic and other benefits that result from regulation. Thus there is no indication of how regulatory achievements-such as reducing medical costs by preventing injuries-may offset compliance burdens. Second, the study involved only major companies, and only social regulations. The report tells us the impact of regulation on small business will be the subject of future study. Also, economic regulations such as ICC controls on trucking-were not included. In economic areas, private industry is very often the chief beneficiary of controls. Also-unlike health, safety, and environmental regulation-controls in areas like trucking have no offsetting benefits to compensate for costs. Third, participating companies joined the effort on a voluntary basis. Thus, as the Roundtable recognizes, the base for the study was not representative of all businesses. The information contained in the Roundtable study will be carefully considered by the committee in developing an effective regulatory analysis requirement. This is something we are going to have to understand and make a contribution toward if we are going to help solve these problems. I would ask unanimous consent that the full statement of my comments be placed in the record. [The opening statement of Senator Ribicoff follows:] OPENING STATEMENT OF SENATOR RIBICOFF Today marks the first day of hearings on regulatory reform, a matter of widespread public concern. I am convinced that the year for improving Federal regulation has arrived. We must have a more efficient and effective process for decisions, but we shouldn't cripple the ability of agencies to properly discharge their essential statutory duties, we must not lose sight of the important purposes served by effective Federal health, safety and environmental controls. We need that regulation. I also recognize that we are in a very difficult and complex field which will require careful consideration. Över the next six to eight weeks, our hearings will explore the major areas of concern in Federal regulation. Today we begin consideration of the ways in which we can control regulatory cost and improve agency procedures. In future sessions, we will also consider reforms for better agency management, and more effective public participation. Today we will be hearing from the Business Roundtable and the American Bar Association. In future hearings, the Administration will testify on its regulatory reform proposals. We will also have testimony from representatives of the agencies, the business community, consumer and environmental groups, labor unions, the academic community, and from other interested members of the public. These important issues merit a full and complete hearing record. Our Committee is well-equipped for this task. The Committee's three-year Study of Federal Regulation is complete. Six volumes of that study have been published. Many of the proposals we will consider were recommended in that comprehensive series of reports. The Committee has before it a number of bills to reform regulation. These hearings will consider those proposals-including S. 262, a bill I've introduced with Senator Percy and Senator Kennedy. I'm pleased that 25 other Members, including six committee chairmen, have joined in support of that bill. A major provision of S. 262 will require all Federal departments and agencies to conduct an economic impact analysis—which evaluates the costs, benefits, and alternatives-of proposed regulation. We will also be discussing S. 445, introducd by Senator Percy and others, which proposes the "sunset" concept for the regulatory agencies, I expect that the President will soon be submitting his proposals for regulatory reform. Those proposals will receive careful consideration. I am very pleased that Frank Cary will be our first witness. Mr. Cary is qualified to lead off these hearings. As Chairman of the IBM Corporation, he knows Federal |