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The agency could enforce a subpoena in the United

States district court, which would ordinarily be required to rule on the matter within 45 days. The agency would also have power to enforce a subpoena administratively, by deciding some or all of the issues in the case in a manner that would prevent the recalcitrant party from obtaining an unjust advantage. This power to enforce a subpoena administratively is identical to the power currently possessed by all Federal judges when they enforce subpoenas in cases before them.

5. Agency Review. A principal cause of delay in any large organization is the failure of those at the top to delegate decisions. The problem of failure to delegate is similar in a regulatory agency to that in any other large institution, except that agency heads may feel legally

obligated or politically pressured to personally review all or nearly all of the individual cases decided by the agency. The agency head's desk is piled high with cases that should have been decided finally by an ALJ or, at most, reviewed by an employee board. The decisions are delayed, and the agency head has no time left for tasks that should not be delegated--like establishing an efficient and effective regulatory process.

The Regulation Reform bill would permit all agencies to establish boards to take over some of the work of reviewing

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initial ALJ decisions.

Whether or not a review board is

established, each agency could specify the circumstances when appeal of decisions would be allowed, either to the board or to the agency head. All decisions that are not reviewed would become final.

To avoid unnecessary layers of review, the Administration bill limits the levels of review within the agency to two. Indeed, in most cases agencies should need no more than one level of review. Finally, the amendment does not alter pre-existing law governing particular agencies' ability to create review boards and to limit review of decisions.

Unlike the Administration bill, S. 262 would allow an agency or board to review a decision only after determining that one of certain specified conditions involving the need for review is satisfied. I agree fully with the intent of this provision; agencies can avoid delay only if they avoid unnecessary reviews. However, there is a risk that forcing agencies to determine whether specified conditions for review are satisfied may unintentionally create an additional source of delay and additional issues to be litigated. this reason, a limitation of agencies' power to review decisions was not included in the Administration bill.

For

50-941 0 80 14

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Permitting greater delegation of decisions, along with providing for an expedited procedure and strengthening ALJ management of formal proceedings, are all efforts to

streamline and expedite the process of deciding administrative cases. Perhaps as important as the actual changes made in the law by these provisions would be the message they would convey to the regulatory agencies. The trend of the law has been so strongly in the direction of getting rid of useless legal formality that judicial opinions and individual statutes have anticipated the provisions of this bill in a number of respects. However, in many instances overly cautious agencies and ALJs have adopted more trial-type procedures and other legal formalities than the law requires. Accordingly, I agree with the statement in this Committe's report, that "giving these new procedures the permanence and authority of general legislation amending the APA should help agencies resist a piecemeal drift back toward adjudicatory forms of action."

6.

Except

Judicial Review. Agency decisions are not really final until the courts have completed their review. where review of a class of rules is governed by a special statute, agency rules are reviewed first in the district courts, with appeal routinely available to the courts of

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appeals. Although district courts are specially equipped to determine facts, they review agency rules on a written administrative record compiled by the agency. Furthermore, since rules often have broad impact, district court decisions on rules are nearly always appealed to the courts of appeals. Consequently, district court review of rules is time-consuming, expensive, and serves little purpose. The solution provided in the Regulation Reform Act would be direct review of all rules by the courts of appeals.

Our experience at EPA with this form of judicial review under the Clean Air Act, the Clean Water Act, and other statutes -- has been very favorable. Courts of appeals are equipped not for fact finding, but for reviewing the record of an earlier proceeding. Such a written record of rulemaking proceedings ought to be developed as a matter of good administrative practice, regardless of judicial review. And with a full written record of the agency action available, the court of appeals is the best judicial forum for providing prompt review of the rule.

Mr. Chairman and Members of the Committee, the Administration is strongly committed to making regulation meet

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its social and human objectives under our statutes, with a minimum of cost, waste, and paperwork. I believe that we have already made significant strides in improving the process. Enactment of the Regulation Reform Act of 1979 will provide us with the statutory tools we need to expand our efforts to make the regulatory process work better. This concludes my prepared statement. Now Charlie Schultze will discuss the regulatory analysis requirement and other economic aspects of our proposed legislation.

TESTIMONY OF CHARLES L. SCHULTZE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS

Mr. SCHULTZE. Mr. Chairman, members of the committee, I am pleased to be here this morning to discuss with the committee the administration's proposed regulatory reform bill, S. 755, and the very similar bill sponsored by Chairman Ribicoff, S. 262, and other legislation, S. 93, with closely related objectives.

It is particularly refreshing to be here after having wrestled with the energy program for the last week or so. I find it a refreshing change.

Senator RIBICOFF. I hope you have more luck with this area than I think you are going to have with that.

Mr. SCHULTZE. Senator, I am tempted-I don't know whether to comment on that--I guess, maybe, I better not.

Senator RIBICOFF. I think it would be safer.

Mr. SCHULTZE. I better not.

What I would like to do, Mr. Chairman, is to concentrate my testimony on a very important and central feature of the proposed legislation, and one which the Council of Economic Advisers is most directly involved; namely, the regulatory analysis requirement of S. 755 and the similar provisions in S. 262.

The purpose of those provisions is to promote rational decisionmaking by regulatory agencies, and in particular to assure that economic considerations are integrated into the regulatory process. Paying attention to the economic effects of regulation doesn't mean slighting environmental safety or health considerations. Far from it.

In the first place, economically efficient regulations have a better chance of achieving their objectives. In most cases, cleaner air, cleaner water, healthier workplaces, and safer consumer products have to be achieved through the activities of private firms. Most regulations seek to change the decisions of business firms from what they would have been in the untrammeled marketplace. So they have to be carefully designed to operate within a highly complex system that is principally driven by monetary incentives