Senator LEVIN. Our second panel this morning are representatives of two leading public interest groups in the District of Columbia. First we will be hearing from Mark Green and Nancy Drabble, from Congress Watch, and then Douglas Parker and Glenn Smith, Institute for Public Interest Representation.

As we asked the earlier witnesses, we would like to request that you keep your oral remarks to 10 minutes so we could have time for questions. Your full statements will be included in the record. Is there any order you would like to testify?

TESTIMONY OF MARK GREEN AND NANCY DRABBLE, CONGRESS WATCH; DOUGLAS L. PARKER AND GLENN C. SMITH, INSTITUTE FOR PUBLIC INTEREST REPRESENTATION

Mr. GREEN. Senator Levin, Senator Percy, I am Mark Green, director of Public Citizen's, Congress Watch. Testifying with me is Nancy Drabble, a staff attorney in our office.

Let me summarize some of the major themes of our testimony, both generally about regulation and then specifically about the two bills before us that we hope can help guide the committee in its continuing deliberations.

First, it is our judgment that the debate over regulation has been grossly distorted because the costs of regulation are repeatedly exaggerated by a business community invariably opposed to regulation per se, and the benefits of regulation are repeatedly understated because victims are unorganized. There is a mass propaganda campaign against regulation, not a specific kind of regulation, but against all regulation. You see it when you pick up any annual report. One of my favorite ads is one by a company called Gould, Inc. They had a picture of the Statue of Liberty being hung by a noose strung by Washington. Presumably the implication is that the Bill of Rights includes not only the freedom to speak but the freedom to pollute. Gould did not mention that prior to taking out this ad that it had suffered the largest court fine in history for the destruction of wildlife. A lot of the cost studies of regulation I think are inaccurate. The quoted one by Professor Weidenbaum, which came to $100 billion, has been discredited by the Library of Congress. Yet there aren't victim studies. I would like to see the National Traffic Safety Administration do a study, what is the effect to a family of a car accident, injury or death? Obviously, there are costs there, however unquantifiable. But the 50,000 people a year who die in car crashes don't have a lobby and don't conduct, nor can they afford to hire Arthur Andersen to conduct, the studies which affect their constituencies.

Also the costs are often exaggerated by industries. In the mid1970s the vinyl chloride industry objected to the pending regulation by saying it would cost their industry $65 to $90 billion a year and millions of jobs in that industry.

Several years later after regulation the cost to them is one twohundredths their estimate. No jobs had been lost. This is one of many examples one could call the Chicken Little school of economics. Yet the benefits are very real of health and safety regulations. The auto safety agency estimated 200,000 Americans are alive today because of 12 years of Federal auto and highway regulation.

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Yet, how do you measure the value to a person of seeing across the Grand Canyon, of not having a child disfigured because of a flammable fabric, of not losing the consortium of a spouse because of injury? Real, perhaps invaluable, yet immeasureable.

Happily, despite these distortions, the public is very strongly supportive of specific regulation. When you ask the public what you think of regulation generally, they don't like it. It is the new boogeyman. When you ask them about specific health/safety programs, there are 4 to 1 and 2 to 1 margins in favor of specific programs in many different polls.

A comprehensive opinion survey conducted by the American Enterprise Institute-not always a friend of health/safety regulation-concluded:

It remains true today many aspects of business activity is widely accepted and even popular. There is no basis yet for arguing that a great antiregulation tide is sweeping the country.

To move on to the administration and Ribicoff-Percy bills before us, I think they are both important steps in the direction of regulatory reform, needed regulatory reform. Each has certain strengths and weaknesses. I would just like to mention a few in the few minutes I have remaining.

First on public participation. Public Citizen thinks that if you want to make the regulatory process more effective, you have to assure that decisionmakers hear from affected communities even if they can't afford to come forward and hire a Washington lawyer to testify. One hardly has to lecture this committee about the point because it was this committee which did the excellent study showing a gross underrepresentation of consumer interests. Public participation is one, not the only, but one important way of trying to return the bureaucracy to people. Business trade lobbyists who like their hegemony in these proceedings-for example, the disproportionate investment they made in the CAB proceedings that Senator Percy mentioned-not unsurprisingly want to maintain their hegemony in these proceedings. That they don't want to encourage opponents in these proceedings may be legitimate from their point of view, but is not necessarily good public policy.

The past Republican chairman and the current Democratic chairman of the Federal Trade Commission have both testified how well that model program has worked. We think it works there. We think it could work throughout the Federal Government.

Second, regulatory analysis. It is good to require agencies to more clearly explain to the best of their skills what the potential adverse economic consequences are to affected communities and what are their best guess of the health/safety and noneconomic benefits of it. S. 755, though, tilts, I think, too much in favor of cheapness. Cheapness is not necessarily goodness. It creates the presumption that the regulation will be the least expensive, unless you explain otherwise. This, we think, exalts the cost-benefit analysis beyond its economic ability for reasons that Jeff Joseph mentioned: since you can't monetize the benefits you can't really have formal cost-benefit analysis. You are not going to be able to have an agency or court say, "This costs $160 million and this costs $161 million. If you do the $161 million alternative, the burden on you is to explain why." The economic state of the art does not permit

those kind of distinctions. Why not have a presumption that any regulation will save the most lives possible, unless you explain otherwise? It is logically possible, as logical as S. 755. Instead we prefer the more neutral standard of S. 262, which looks toward cost-benefit as a tool, not a straitjacket.

Third, periodic review. I have watched the Antitrust Division of the Department of Justice more than other agencies, and appreciate how antitrust consent decrees can apply decades after the economic condition that gave rise to them has ended. It is important to review past rules because the reasons for them may have evaporated. Still, to husband resources and since many agencies have scores or hundreds of rules, it is important to review the most important each year, especially where there are complaints. This is not cost free. It will cost money and resources for agencies to periodically review many past regulations. If this committee and the Congress decides to do that, we think it responsible to also give agencies the additional resources necessary to conduct these studies. You can't make bricks without straw. If you insist on numerous periodic reviews, and maintain static budgets, you could paralyze agencies from working on important market abuses that need reform.

One idea not in either bill, and that I would recommend, is to require as a part of any regulatory review a survey of the extent of compliance with existing rules. For example, statistical surveys could indicate what percentage of trucks are overweight on highways or what percentage of cars violate EPA emission standards. This would help pinpoint the cost of not regulating and the inadequacy of enforcement by agencies of rules which everyone agrees are good rules.

Let me mention briefly what I think is not helpful in some of these bills. First, judicial review. To permit judicial review of regulatory analysis would be to turn an economic and managerial tool into what we think is a litigative nightmare. It is not too difficult to predict the real world effects of judicial review. Washington lawyers and their clients would make extensive submissions and appearances in a regulatory analysis proceeding. Agencies fearing later reversal would feel pressure to surrender to the adjudicalization of this process. Suddenly a managerial reform becomes another dilatory tactic and yet another ground for disappointed industry groups to overturn agency decisions.

As is true for labor-management relations in this country, there is a rough historical balance now between two contending interests-the ability of agencies to promulgate consumer and environmental regulations and the ability of interested parties to overturn them in court. To allow judicial review of these economic and often debatable numbers would be to shift this balance grossly in favor of interests with fleets of lawyers retained to find a problem to every solution. As one agency counsel told Nancy and myself, "I guarantee my former law firm could paralyze an agency with the power of judicial review.'

Legislative veto, which I suspect we will talk about subsequently. It can't work, it won't work. Seven thousand rules a year are issued. Either the Congress will imply it can review them all, and hence be a superbureaucracy over a bureaucracy-which it can't do

or doesn't want to do-or they will review very few each year. Which ones? The ones that disappointed industry groups will seek review of trying to accomplish in the Congress by political strength what they failed to accomplish on the merits in agencies. Of course, there is such a thing as legislation. If there is a bad rule, you get each chamber to pass a law signed by the President. This has happened-saccharine, seatbelt interlocks. There is a way to hold these agencies accountable without defying the constitutional process.

Article 1 of the Constitution does say legislation requires two houses plus the President. Legislative veto effectively erases twothirds of that constitutional process.

I have several other points, perhaps I can raise them in the question period.

Let me conclude by saying the following: The former panel said that we should have regulatory analysis, periodic review, inflation impact analysis, a paperwork review, productivity impact analysis, a special small business analysis, an overlap analysis. If after that there is anyone left in the agency willing to try to regulate on behalf of public health and safety, the final rule is reviewed by judicial review. The regulatory analysis is reviewed by judicial review. There is legislative veto review. There is Presidential review by Presidential intervention. Then there is sunset.

Is this a "Saturday Night Live" parody or are these serious proposals? In my judgment a business community who has invariably opposed health/safety programs-in the 1950's it was called creeping socialism; that is a little de classe now-now it is called cost of regulation. It seeks in my judgment often not analysis but paralysis.

I would urge this committee in trying to decide what are the best ways to hold agencies accountable to go with the most cost effective, and not adopt a kitchen sink of ideas which could lead not so much to regulatory reform as regulatory abolition.

Thank you.

Senator LEVIN. Thank you very much, Mr. Green. Mr. Parker, Mr. Smith?

Mr. PARKER. My name is Douglas Parker. I am associate director of the Institute for Public Interest Representation. With me today is Glenn Smith, one of the staff attorneys who has worked a great deal on the problems of regulatory reform. We have over the last several months worked with a large group of consumer and environmental organizations in providing comments both to this committee and to the White House on the various proposals for regulatory reform.

As those proposals have developed, we have become convinced that, as Mark suggested in his testimony, that the entire debate has become rather seriously distorted. The thrust of it has been captured by one side.

Most of the interested parties seem to be operating on a very narrow set of assumptions which are that there is simply too much Federal regulation, that burdens far outweigh benefits and that some radical measures must be adopted to bring this bureaucratic monster under control. While we agree that in some sectors there is too much regulation and methods should be sought to reduce the

paperwork burdens on small businesses and unnecessary cost to consumers, we don't agree the entire Federal regulatory structure should be attacked. We don't agree Congress should adopt a very broad brush approach that is going to destroy some of the clear benefits of Federal regulation, particularly in the areas of health, safety and environmental protection.

We are concerned that many of those who seek a reduction in Federal regulation are not only the voice of the small dress shop owner in New Mexico and oppressed small businesses, but are also the voice of those who are the polluters and exploiters of consumers. Our fear is that the real issue is not ultimately regulatory reform but rather substantive opposition in the specific areas of regulation. We don't think the clear advantages of a regulatory system particularly in the health, safety and environmental areas should be overturned because of the special pleadings of those interests.

Our primary interest in this matter is to improve the effectiveness and the quality of those decisions that are made. Our view is that while we may not need more regulation, we do need more effective regulation. I think the recent Three Mile Island incident is probably becoming a cliche to some extent, but there there was a clear failure of regulation. We think great improvements can be made by opening up the regulatory process and making it more responsive to public input.

I would like to ask Glenn Smith, who has worked a great deal on the particular problems of intervenor funding programs to address those issues.

Mr. SMITH. I would just like to point out briefly, largely because a lot of the important points have been made in this committee's excellent 1977 report and in other submissions that are before the committee, that there is a substantial consensus among academicians and agency officials about three major aspects of the current regulatory process. First, it is agreed that agency performance over the last several decades has shown the need for extensive and meaningful citizen participation to give decisionmakers the full record and fully balanced presentations they need to make effective and responsible decisions.

Second, there is basic agreement that, despite the need for this extensive participation, the majority of administrative proceedings have no participation whatsoever. Where there is participation by interests other than regulated interests, that is, interests that don't necessarily have a particular interest in opposing regulatory or initiatives, those participants have not engaged in the kind of sophisticated advocacy and data presentation which would balance the extensive multimillion dollar presentations that regulated interests engage in.

The third area of basic agreement is that it is the costs of meaningful participation that are preventing citizen participation from being an important factor in the administrative process. Certainly efforts to improve notice and to make meetings more available to groups will help, but the major problem is that extensive presentations are simply too costly for consumers and for many small businesses.