S. 262 are drawn).

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OMB also played a leading role in

developing most of the requirements of the Executive Order

in the first instance.

With respect to the independent agencies, we do not contemplate that OMB would assume authority to direct remedial measures where their compliance with regulatory analysis requirements, or other provisions of the bill, is unsatisfactory. However, OMB should be required to collect information about the state of the independent agencies' compliance, just as it should regarding the agencies covered by Executive Order 12044. Such information should be kept, and appraised, in one place. The President, the Congress, and the public should have the benefit of comprehensive and informed assessment of the effects of this legislation on the operations of the entire government including agencies headed by one administrator, a cabinet secretary, or several commissioners.

With regard to the oversight question, I would like to stress my strong conviction that both the Administration and you, Chairman Ribicoff, have chosen wisely in precluding judicial review of regulatory analyses. There are some who contend that the threat of judicial review is necessary to assure that agencies respect statutory requirements to analyze the economic effects of regulatory decisions. Certainly no one is more interested than I in seeing that

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economic analysis becomes an important feature of regulatory decision making. However, judicial evaluation of the quality of these analyses will hamper achievement of that goal -

not promote it.

The key function of the Federal courts in reviewing administrative action is to evaluate the substantive validity of decisions and to assure that individual rights have been respected in the decision process. The courts' function is not to second-guess internal management arrangements or processes. If every assertion, phrase, or figure in a regulatory analysis can be subjected to adversary attack in litigation, then new delays in the regulatory process seem a likely prospect. And these delays would happen with no offsetting gains in the quality of the analysis or in its actual use by decision makers. If these documents are to become the basis for invalidating an agency action then they are likely to become litigationoriented briefs rather than candid attempts to illuminate the difficult choices that regulation inevitably involves. Their value to agency decision makers as well as to the Congress and the public could be severely impaired.

To the extent analyses are now influential in the rulemaking process it is because they are developed informally without the pressure of court review. My

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personal experience with analyses reviewed by the RARG has underscored the extent to which informal cooperation and discussion is of utmost importance. Adding judicial review of the adequancy of the analysis to the process would introduce undesirable formality and further rigidify the development of final regulations.

The more appropriate role for court review is over the regulation itself. Under current provisions of the Administrative Procedures Act, regulations are overturned if they are "arbitrary, capricious, or otherwise unwarranted by law." The Administration's proposal gives courts further guidance by requiring that agencies respond to significant issues raised by public comments at the time the regulation is proposed. These comments and recommendations will help the courts decide whether the regulation itself is legally supportable. If such comments--whether on the regulatory analysis or on any other basis

-

show that the alternative

selected by the agency is "arbitrary, capricious, or otherwise unwarranted by law," then the regulation would be upset by

a reviewing court. But the process should not be short-circuited, if the regulation itself is sound, simply because analytical shortcomings appear in the documents required by Section 602.

This concludes my formal testimony.

I will be happy to

answer your questions after Mr. White has finished with testimony.

Senator RIBICOFF. Mr. White?

TESTIMONY OF JOHN P. WHITE, DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

Mr. WHITE. Mr. Chairman, I would just like to take a few minutes to highlight four points: First, the management reform provisions of title I; second, provisions to increase public participation; third, our proposal to insure high quality performance by administrative law judges; and fourth, the administrative conference.

The administration's bill contains a number of important management improvements. It requires at least semiannually, a regulatory agenda for upcoming significant regulations, as does S. 262. That agenda will give the public a snapshot of upcoming regulatory activity, at least every 6 months. In addition, both bills require agencies to establish deadlines for key regulatory actions. Deadlines will provide incentives for agency officials to complete the stage of the process for which they are directly responsible. They will also alert agency heads to the need for corrective action when a proceeding is unduly delayed and inform participants in advance as to when they must be ready to meet filing dates or to participate in hearings. This, in turn, should reduce delays.

Both S. 755 and S. 262 require the creation of an office for regulatory planning and management to oversee the required management improvements. Our proposal incorporates the requirements of Executive Order 12044, that before any significant regulation is finally adopted, it must be personally approved by the agency head. In addition, S. 755 requires agencies to establish procedures to insure regulations are needed, written in plain English, and have been developed after full consultation with State and local governments and with appropriate participation by the public. We are particularly concerned that agencies select the approach that avoids imposing unnecessary and unneeded economic and other burdens. We believe that placing responsibility for these concerns at the highest levels within agencies will assure the adoption of better regulations. Both S. 755 and S. 262 require a systematic review of existing regulations. Ten year review requirements should help the agencies to identify instances of overlapping, conflicting or other unnecessary regulations, policies, and procedures. I should point out that we are concerned about those sections of S. 262 that provide for concurrent submission to the President and Congress to the budgets and legislative recommendations to the end regulatory commissions. The administration opposes such provisions because budget requests and legislative recommendations of individual agencies, including independent regulatory agencies, have important relationships with other agencies and programs. Premature disclosure of individual agency requests or proposals could mislead the Congress and result in disjointed consideration of important issues. Once the President's budget has been sent to the Congress however, agencies may provide information about their individual requests when Congress asks for this information in connection with its consideration of the President's budget.

The administration's bill directs agencies to seek out ways to insure meaningful public participation. We want agencies to go beyond the routine publication in the Federal Register to reach

those affected by a proposed rule. Individual citizens, small businesses and public interest representatives can contribute significantly to a full presentation and discussion of the issues involved in proposed agency action. In the past, the involvement of these groups has been hampered by substantial financial barriers. The administration's bill would provide a modest amount of moneys to be made available to individuals, small businesses, and citizens groups for the purpose of participating effectively in the regulatory process. Under our proposed provisions, agencies will request and receive funding for public participation through the normal budget process. The Administrative Conference of the United States will be responsible for monitoring implementation of the various agency programs. We do not believe, however, that the Administrative Conference should itself distribute the funds to participate in regulatory proceedings.

With respect to administrative law judges, because of the important role that they play in guiding key agency regulatory actions, both S. 755 and S. 262 contain proposals to help insure highly qualified individuals are selected to serve as administrative law judges. Both bills move responsibility for evaluating the performance of administrative law judges to the Administrative Conference. S. 755 also moves the responsibility for the initial screening of applicants for these positions to the Conference. Our proposal provides for administrative law judges to be appointed for 7-year terms. Evaluation of their performance and qualifications will be the basis for their reappointment at the end of the term. Since candidates for administrative law judge positions are frequently Government employees in midcareer, we have provided fallback provisions for those who came from career Government positions and fail to meet performance standards. This would encourage Government employees to apply for administrative law judge positions. In addition, the chairman of the Administrative Conference is authorized to encourage excellence in performance by paying awards of up to 20 percent of the rate of basic pay of the administrative law judge.

Both S. 262 and S. 755 propose expanded roles for the Administrative Conference of the United States. We believe that the conference should play a key role in the oversight of administrative law judges and public participation funding programs. The Cconference should be streamlined to make it a more effective participant in the regulatory reform effort. However, we question the wisdom of creating the Conference as a new independent regulatory agency and giving it responsibility for crosscutting administrative reforms such as the Privacy Act, the Sunshine Act and the Freedom of Information Act. Lodging such authorities in an agency beyond the President's direct control, raises serious constitutional questions. S. 262 would also transfer policy oversight for paperwork control from OMB to the Conference. We believe this would make the paperwork reduction program less effective and it is contrary to the recommendations of the former Commission on Federal Paperwork. Overall, we believe the oversight role belongs in the Executive Office of the President. We recommend that the Office of Management and Budget continue its responsibility for overseeing imple