tactics and to encourage them to keep their zealous defense of their clients within bounds. I don't think it is necessary to have a sanction of this kind. I think what it creates would be efforts to, I am afraid, I have to say, to harass lawyers, to prevent lawyers from giving their clients an effective defense before an agency. I don't like it. The Association doesn't like it. We urge you to abandon it. Now I would like to turn finally to what I think is maybe the heart of part A of title II and possibly the most important single element of S. 262, although only history will reveal that. That is the general hearing process. The American Bar Association is in favor of amending the Administrative Procedure Act to adopt some form of modified hearing process. We applaud the efforts which the committee has made in attempting to develop what would be an historic departure from the way in which formal adjudication of regulations on issues of fact and policy and law have been made in our Federal Government. We are in general approval with the tack which is taken in section 202(e) of the bill. That is a two-stage procedure whereby an initial determination would be made by the hearing officer as to whether the issues were such that they should be tried in formal trial type proceedings, and then the setting of only those issues for this type of formal adjudicatory process. We believe that the present bill, S. 262, although we consider it a substantial improvement over last year's bill in this respect, that is S. 2409, still falls short in that it unduly restricts the right to have formal trial type hearings, to present evidence and call witnesses and cross-examine witnesses. It unduly restricts this right which we believe is a very valuable tool for correct decisions, for a sound administrative process. We believe that that right should be preserved. In other words, it should not be at the discretion of the hearing officer, where there are material issues of fact presented or where there are material issues of expert opinion. The bill's standard where a person is entitled to a formal process only where the administrative law judge or hearing officer finds that it is necessary for a resolution of issues with sufficient accuracy strikes us as being not only quite vague but also as imposing on the discretion of the judge an unwarranted discretion. The bill preserves the right to cross-examination only where there are disputes involving the factual assumptions or methodology of an expert. We believe that the rights should be broader; in other words, that the existing right to cross-examine an expert on bias, expert qualifications, the logic of his position, testing the internal consistencies of his ideas, probing his data base, all of this should be preserved. Under our present system, the main discipline on expert testimony is that expert's knowledge that he will have to stand up before a judge and hopefully an experienced and skilled cross-examiner and justify his own conclusions, that one question will follow another. My experience has been in rulemaking, where you have a battle of affidavits, that you do not get the winnowing and testing proc ess. You get affidavits passing in the night. People can say anything if they are not going to be cross-examined, if they are not going to be confronted. Now I don't mean that there aren't abuses in cross-examination. I think they stem largely from the fact that the administrative law judges and hearing officers today, for institutional reasons, are extremely reluctant to restrict it when it goes on too long or to forbid it when it is not called for. I think that a restructured general hearing process which would preserve this right would still result in a great reduction in needless cross-examination. But the key is to make sure that the judge has the power and knows that he is required to exercise it. There are experts who are no experts at all. There is very often surprisingly in a proceeding where people put on opposing experts when their testimony is closely read it is found not to conflict with each other. There is no reason to have cross-examination in those cases. There is no reason to cross-examine an expert's opinion which has no reference and which has no basis in his experience. Senator PERCY. I wonder if you would mind an interruption, Mr. Chairman. Can I have unanimous consent, Mr. Chairman, to submit questions for the record? Chairman RIBICOFF. I think we all will have that. Senator PERCY. I must leave for a meeting in Senator Baker's office now. I have just one question, on the general hearing process. Could I ask that? Chairman RIBICOFF. Yes. Senator PERCY. It relates to your formal statement on page 12. One of the principal problems which the study on Federal regulation came up with was the long delay in reaching decisions. This has been the most aggravating part of the regulatory process. The Rock Island Railroad case is a famous or infamous example. Thirteen years after it made application to the ICC, Rock Island went into bankruptcy. That railroad could have been saved as a company. They never got a decision. The process now takes an average of 11 months for licensing, 12 months for rulemaking, and 3 years of enforcement according to the committee study. S. 262 creates a "general hearing process" based mainly on written submissions of evidence. You note in your statement that it is not readily apparent that the new process would necessarily be more expeditious than a formal trial-type hearing, given various existing legal safeguards. I was curious about that statement. Could you expand on that just a little bit? Mr. Ross. Yes, sir. That leads me into what would have been my last comment in effect. We think that there is at least a question as to whether the general hearing process would produce less delay or greater delay. That is where we suggest it be put on a kind of sunset basis, that it be adopted with the provision it be tried for a number of years and then terminated, unless it was affirmatively continued. Five years would give you the answer to the question. We have this process before the FTC today in a modified form. It is going nowhere. As I think the committee knows, they have concluded two proceedings in 3 years. The problem, Senator Percy, is: (a), you are talking about two hearings instead of one; (b), you are talking about a war on paper, written cross-examination, which can be very time consuming; and finally, you are talking about the fact that all of the statistics are on the way you indict the agency decisional process much more than you indict the hearing process. The hearings are a small portion of the delay. Now if it turns out that this process doesn't somehow speed up the ability of the agencies to decide cases which have been tried on a timely basis, it may turn out not to be worthwhile. We are optimistic. We would like to see it tried, with the reservations I have expressed. But we can't be sure if we will be successful. Senator PERCY. Thank you very much. Chairman RIBICOFF. Senator Durenberger? Senator DURENBERGER. One question I guess of Mr. Ross relative to concentrating on the rulemaking side. Have you had an opportunity to examine what the office of hearing examiners has been able to accomplish in the State of Minnesota as an impact on the rulemaking process in the last, I think, 4 years? Mr. Ross. I am ashamed to say I haven't, Senator. Senator DURENBERGER. Mr. Smith, have you as part of thisMr. SMITH. I am not familiar with the Minnesota experience. Senator DURENBERGER. I guess that I am curious about your roads to reform, or whatever it is, the first being modification of sunset, which has already been approved. I take it that would be a part of this record. The second one is the overlapping jurisdiction issue and the conflicting goals issue. Will that be a part of the record, even though it hasn't been approved by the House of Delegates? Mr. SMITH. You mean a part of the record of this hearing? Senator DURENBERGER. Yes. Mr. SMITH. I think that our report has been submitted to the committee.1 I am not sure what the association will do with those recommendations. We hope they will be favorable. Senator DURENBERGER. The last question deals with the position on recommendation No. 5 on the legislative appeal, which I happen to agree with the last part of it, which is don't let this body appeal everything. I am curious to have you expand a little bit on the association's feeling on that recommendation. Mr. SMITH. We addressed that subject mainly in conjunction with our recommendation on the balancing process. Our effort was in effect to avoid the issue by providing by statute a mechanism where Congress and the Presidency would be able to respond to views without opposing that. We have a number of reservations in the adequacy of that. Senator DURENBERGER. Thank you. Chairman RIBICOFF. Your complete statement will go in the record. [The prepared statement of Mr. Smith follows:] The report is retained in committee files. Prepared Statement of Richard B. Smith Preliminary My name is Richard B. Smith. I am a practicing lawyer in New York City and Vice-Chairman of the American Bar Association's Commission on Law and the Economy. On behalf of the Association and the Commission, I am happy to respond to the Committee staff's request that I testify at these initial hearings on what we consider an important bill. Our Commission's work is relevant to S. 262, which in fact embodies the thrust of a number of our recommendations. We, of course, would be generally in support of those provisions of the bill. I should point out that because of the shortness of time I was unable to review my prepared statement with other members of the Commission. The provisions of S. 262 deal with numerous matters that were considered at some length by the Commission, and especially by a committee of the Commission under the chairmanship of Judge Henry J. Friendly, of the Second Circuit Court of Appeals, and C. David Ginsburg, a practicing attorney here in Washington, D.C. Unfortunately, because of scheduling conflicts, neither of them are able to appear here today. However, we understand from the Committee staff that further hearings are expected to be held on the bill, hopefully at a time when Judge Friendly and Mr. Ginsburg will be able to appear. We would welcome that further opportunity also because the Commission has not at this time been able to do the kind of detailed analysis of the bill that we would like. Through consultants, we are having preliminary analytical work done and at the subsequent hearings we would expect to be able to present more precise and comprehensive testimony than I shall be in a position to give today. My statement today will do little more than set the stage for such further testimony and indicate in only a general way where the House of Delegates of the American Bar Association, in acting on recommendations which our Commission submitted to it, has indicated its support of certain principles contained in S. 262. ABA Commission on Law and the Economy I believe that members of the Committee, and certainly its staff, are familiar with the nature and work of our Commission. Nevertheless, it may be useful to the Committee if I capsulate that here. The Commission on Law and the Economy was formed by the American Bar Association and began its work more than three years ago. The leadership of the Association had a concern then that the apparatus for Federal governmental regulation of the economy was not working well, and in fact had become a pervasive national problem. Since lawyers have had a good deal to do with the creation and drafting of regulatory legislation, the staffing of administrative agencies created by such legislation, the implementation of regulations, and the representation of persons affected by such governmental interventions in the economy, it was felt that the organized Bar had a responsibility to consider in a comprehensive fashion what had been wrought and what could be done to improve the situation. Because, it was believed, the problems went beyond procedure to the governmental decision-making process in its broadest sense, the Association decided to create a special commission. Improvements in agency procedures are the regular concern of the Association's Administrative Law Section, the Chairman of which will have preceded me on this panel. Because improving agency procedures is an integral part of the broader task of regulatory reform, our Commission has worked closely with the Administrative Law Section on major parts of our report. But in addition to procedures at the agency level, we have concerned ourselves with the standards and alternatives for governmental interventions in the economy, the structures for implementing, coordinating and evaluating those interventions, and, in short, the processes for substantive regulatory reform. Our Commission is composed of twenty-six people from throughout the country. While the membership of the Commission has necessarily changed over time, most have been involved with its work from inception. Its Chairman is John J. McCloy, a lawyer-statesman known to all for his many public roles and the significant contributions he has made during and since World War II in the service of his country. Because we recognize that lawyers have much to learn from |