REGULATORY REFORM LEGISLATION

FRIDAY, APRIL 6, 1979

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, D.C.

The committee met at 11 a.m., pursuant to call, in room 3302, Dirksen Senate Office Building, Hon. Abraham A. Ribicoff (chairman of the committee) presiding.

Present: Senators Ribicoff, Eagleton, Levin, Pryor, Percy, Javits, and Durenberger.

OPENING STATEMENT OF SENATOR EAGLETON Senator EAGLETON [presiding]. Good morning, ladies and gentle

men.

Power unchecked, whether in the physical universe or political, is dangerous.

At the present time, unrestrained regulatory power may well have crossed that threshold. The vast regulatory powers of a host of administrative agencies may well threaten the balance of powers that gives our Constitution equilibrium.

Agencies, essentially, have taken on legislative functions in adopting rules with the force of law. But they do so with the deliberative process of Congress, where all sides of an issue have a reasonable chance to be heard. But in the bureaucratic shadows, where administrative findings substitute the real debate, there is the fiat by fine print, and the Federal Register becomes the manual for increased intrusion into the lives and pocketbooks of Americans.

Obviously, some regulation is imperative to protect small business and consumers from unscrupulous practices, to conserve essential resources, to make our environment livable, our place of work and food supplies safe, and to assure equal opportunity for all Americans.

In no way can public safety be jeopardized.

As the nuclear crisis in Harrisburg, Pa., made so grimly clear, regulation may have to be intensified and clarified in some areas adequately to safeguard the public. But regulation cannot become, as I believe it is fast becoming, the providence of faceless bureaucrats deciding among themselves in the marbled quiet of Washington what is best for the country.

Clearly, Chairman Ribicoff's bill, S. 262, and the administration's bills offer streamlining of regulatory procedures to assure full public participation and expeditious and fair action on proposed rules.

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In particular, I believe the requirements in the bills for publication of regulatory priorities and activities for setting firm deadlines and clarifying procedures for informal hearings and for the selection of administrative law judges-all of this will do much to reduce the frustrating uncertainties of current practices.

Additionally, I believe Congress should require a clear, realistic analysis of the financial consequences of a proposed rule.

And I also believe in the need for a fail-safe sunset provision that will terminate obsolete and costly regulations.

Therefore, I should like to call the committee's attention to S. 93, which I have introduced with Senator Nelson of Wisconsin.

S. 93 makes its purpose inescapably clear; namely: To help reduce inflation by making rules and regulations more responsive to the needs of consumers.

The bill would require detailed analysis not only of the direct costs of implementation and enforcement but of the fallout of inflation-lost jobs, reduced production, and other economic disruptions. The analysis would be required for all major alternatives considered in a particular rulemaking. This would help eliminate those rules where the public's benefit is marginal and far outweighed by very real economic dislocation. And in those cases where the health, safety, or environmental gains are substantial and necessary, the economic analysis will permit the selection of the least costly regulatory approach.

S. 93 calls for total economic analysis and would not be restricted to what a regulatory agency is permitted by law to take into

account.

Specifically, S. 93 would do the following:

For each rule and analysis of economic consequences, this would include cost of compliance by the private sector and by the Federal, State, and local governments.

Additionally, agencies would have to publish an analysis of anticompetitive consequences of any proposed rule and would have to issue a special notice of jurisdiction whenever a rule specifies a design rather than a performance standard.

Two, with regard to the paperwork impact, an analysis would be required for any rule that would impose a major paperwork burden on more than 10 members of the public.

The analysis would contain the estimated cost of compliance and the number of man-hours involved and whether the desired information may be available elsewhere.

Third-and finally-with regard to the sunset provision, the regulations would lapse after 5 years. They could be renewed but only after a complete process of analysis and public comment.

Agencies would be required to fix specific expiration dates for a 5-year period for all regulations.

S. 93, I believe, would raise needed barriers against needless regulations. The bill would put the consumer in the center of the rulemaking process. The bill would put a premium on explicit, bread and butter figures with precise dollar amounts. Information is the ammunition that most effectively reduces arrogance and restrains special interests, and it is this, through the economic impact evaluation and the paperwork analysis, that S. 93 deliberately and explicitly mandates.

It's been estimated that regulation costs the average American family about $1,200 a year in taxes and in high prices.

The bill Senator Nelson and I have introduced will in no way stymie regulation truly needed to protect a vital public interest in health, environment of wholesomeness, and job safety. It merely ties consideration of cost and inflationary impact as an itegral part of rulemaking to protect the public against unnecessary cost and harassment from small-minded regulators.

Above all, S. 93 will make the regulators, themselves, more accountable to the American people.

Senator RIBICOFF. We welcome the gentlemen-Mr. Schultze, Mr. Costle, Mr. White-and staff, as we resume hearings begun in March on S. 262, S. 755, S. 445, S. 93, and other regulatory reform bills before our committee.

Our witnesses today will be Douglas Costle, Administrator of the Environmental Protection Agency; Charles Schultze, Chairman of the Council of Economic Advisers; and John White, acting Deputy Director of OMB.

Before we begin, I would like to compliment the administration on its regulatory reform effort. The White House, OMB, EPA, and other agencies have done an excellent job over the past several months to develop a thoughtful and constructive bill.

I am pleased that your proposal is similar in most respects to S. 262, which has 31 cosponsors. I look forward to working with the administration to shape regulatory reform legislation of which we all can be proud.

I would suggest, gentlemen, that you give your testimony in precis form. I would hope you wouldn't exceed 10 minutes.

Your entire statements will go in the record as if read.

Then we will have an opportunity to pose questions.

I am sorry we had to postpone this meeting to 11 o'clock. But I had a 9:45 meeting with the President.

Shall we start with Mr. Schultze? Or, Mr. Costle, would you like to begin?

TESTIMONY OF DOUGLAS COSTLE, ADMINISTRATOR, ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY JOAN BERNSTEIN, GENERAL COUNSEL, EPA; AND JUDITH AREEN, PROFESSOR, GEORGETOWN LAW SCHOOL

Mr. COSTLE. Mr. Chairman, thank you.

We are very pleased to be here this morning.

In addition to Mr. Schultze and Mr. White, I would also like to introduce to the committee two other people who are with us this morning: Judy Areen, professor at Georgetown Law School, who has been working with the administration in helping prepare our legislation; and Joan Bernstein, who is General Counsel for the Environmental Protection Agency, who has also been very deeply involved in preparing this legislation.

We are particularly pleased to have an opportunity this morning to discuss the regulatory reform program.

As you suggested, I would like to submit for the record my full statement and confine my remarks to a general precis.

We look forward very much, Mr. Chairman, to the opportunity to work with you on the administration's bill and, also, on your parallel bill, S. 262.

What I will try to do, if I may, is to give you a brief overview of the President's regulatory reform program. And I will then describe in some detail our proposal for amending the Administrative Procedure Act.

Mr. Schultze will discuss the role of economics in our regulatory reform effort.

John White will explain our efforts to reform the management of the regulatory process.

Before I begin, I would also like to submit for the record, with your permission, Mr. Chairman, a copy of the President's regulatory reform message.

Senator RIBICOFF. Without objection.

[The document referred to follows:]

TO THE CONGRESS OF THE UNITED STATES:

I am today announcing a program of major reforms in the regulatory process, including both legislative and executive action. This program will make new regulations more efficient and effective; ensure reviews of existing regulatory laws and individual rules to eliminate or revise those that are outmoded; and reduce the burden of regulation and paperwork without jeopardizing our progress toward vital

regulatory goals.

Since the first Federal regulatory agency was established nearly a century ago, regulatory programs have grown steadily in number, scope, and impact. During that time, however, little attention has been paid to the management of the regulatory process. There was little effort to re-examine rules which no longer served the public or to ensure that needed programs are run on a common sense basis, so that missions are accomplished with maximum results and minimum burdens. The time has come to stop this neglect. Just as we have injected a new sense of discipline into the management of Federal budgetary and personnel resources, we must reform the government's regulation of others' resources.

Much of Federal regulation is vitally important to modern society.

Goals such as equal opportunity, a healthy environment, a safe workplace, and a competitive and truthful marketplace cannot be achieved through market forces alone. In the last decade, the regulatory programs created to achieve these goals have produced a wide range of benefits, such as: Workplace health standards have been established which are protecting more than two and one-half million workers exposed to cancer causing substances,

such as asbestos, arsenic, and vinyl chloride.

GOVERNMENTAL AFFAIRS CO