ML20197D107
| ML20197D107 | |
| Person / Time | |
|---|---|
| Issue date: | 11/19/1997 |
| From: | Cyr K NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | Diaz N, Dicus G, Shirley Ann Jackson, Mcgaffigan E, The Chairman NRC COMMISSION (OCM) |
| References | |
| NUDOCS 9712240349 | |
| Download: ML20197D107 (59) | |
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orrict or THE GrNrRAL COUNSEL COMSECY-97-030 MEMORANDUM TO:
Chairman Jachon Commissioner Dieus Commissioner Diaz Commissioner McGaffi an hC, k FROM:
Karen D. Cyr -
General Counse
SUBJECT:
S.981, THE REGULATORY IMPROVEMENT ACT OF 1997 PURPOSE:
The main purpose of this memorandum and its first Attachment is to describe for the Commission the most recent legislative proposal on " regulatory reform,' namely, S. 981, entitled the
- Regulatory Improvement Act of 1997.* The memorandum also discusses the impact the bill might have on the independence of the NRC and provides a draft of a letter that the Commission could send to the Senate Committee on Governmental Affairs to urge that the bill be modified to preserve the independence of the agency. See Attachment 2. Also attached are the full text of the bill, Senator Thompson's statement in the Senate when he introduced the bill, and testimony on the bill by Sally Katzen, Administrator of the Office of Information and Regulatory Affairs (OIRA)in the Office of Management and Budget (OMB),
BACKGROUND AND
SUMMARY
Efforts in the last Congress to change the regulatory process in major ways failed in part for lack of bipartisan support of some of the more controversial features of the bills that proponents of reform introduced, such as cost benefit decision criteria that would in effect have supplanted existing statutory health, safety, and environmental standards. Despite the lack of support for major reform, Congress did enact the more modest Congressional Review Act (CRA), which was a portion of the Small Business Regulatory Enforcement Fairness Act (SBREFA). Under the CRA, every " rule" (where " rule" is defined broadly enough to include policy statements and guidance documents) must be sent to Congiass before the rule can become effective, and Congress can use expedited procedures to enact legislation that would modify or repeal" major" rules.
In the current session, however, there is in the Senate a renewed effort, now bipartisan, to address long standing and widely shared concerns that the regulatory process is too costly; that it overlooks less costly alternatives; that it lacks sufficiently scientific underpinnings; that it does not take risk into account sufficiently; that it lacks centralized oversight of risk considerations; that it too often ignores social values, distributional effects, and equitable 5
r concerns; and that it does not provide the public with enough information.
9 F03 L ll M*+ d CONTACT:
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The sponsors of S. 981 believe that it goes a long way toward meeting those concerns, and that it does so without overturning existing statutory standards for protection of public health and safety and the environment and without bringing about a costly revolution in the way the regulatory agencies do their work (see Attachment 4). If enacted into law, S. 981 may have little effect on the analysis that goes into an NRC rule making, in part because the bill focuses on " major" rules, of which the agency has issued, and is likely to issue, very few. However, some of the bdrs provisions appear to subject independent regulatory agencies to significantly more oversight by OMB, and it is to that lessening of independence that the attached draft letter is aimed.
The Commission has seen some material on S. 981. On September 12,1997, the Office of Congressional Affairs sent the Commission a memorandum that reported on hearings held on S.981 before the Senate Committee on Governmental Affairs and discussed the bilts prospects for passage. Sally Katzen OIRA Administrator, testified at that hearing aryd raised a number of concerns about the legislation. The Commission saw Ms. Katzen's testimony in draft form on September 9. Both the draft testimony and the final expressed the Administration's preference for legislation tailored to specific regulatory programs - legislation such as the recent Safe Drinking Water Act and the Food Quality Protection Act - rather than what Ms. Katzen called
'one size-fits all" legislation estabdshing new procedural requirements (see p. 7 of Attachment 5, the final testimony). However, Ms. Katzen also said that, if S. 981 moves forward, the Administration would like to work with the Corrmittee 'to identify appropriate modifications to the bill's language, to address [the Administration's) concerns." See id. The NRC had asked OMB to revise the draft testimony to say that the substance of rules of independent regulatory agencies should not be subject to OMB review under the proposed legislation. However, the final testimony did not contain any such statement, and OMB gave no reason why.
This memorandum and Attachment 2 analyze the billin some detail. The memrvandum provides an overview of the bill and highlights certain aspects of it, especially its possible impact on the NRC's independence. The Attachment describes the bill section by section.
DISCUSSIOR S. 981 would add three new subchapters to Chapter 6 of the Administrative Procedure Act gAPA). The first would deal with cost benefit analysis and risk assessment for " major rules,' the second with agency reviews of existing rules according to cost benefit criteria, and the third with the President's role in setting the government's rule making agenda and reviewing " major" rules and other "significant regulatory actions." Because the agency has issued so few " major rules,"
the first new subchapter may have little immediate impact on the NRC. However, application of the second is relatively easily triggered. Moreover, the third new subchapter could have an immediate impac t on the NRC's independence, and research required by the first could eventually have an impact on the same.
Cost benefd Analyses and Risk Assessment: The first new subchapter, with sections numbered in the 620s, would generally require that e!I agencies perform analyses of the cost l
and benefits of all proposed or final" major" rules (secs. 622 23). The subchapter would exempt from this requirement rules of certain independent regulatory agencies that oversee economic matters -- for example, the Federal Reserve Board and the SEC, though not the FTC l
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- rules that are required by statute to be issued annually, rules that relate to the public debt, and rules that prescribe future rates, prices, and the like (sec. 621). The NRC's annual revision of its fee rules could fit under any of the latter three categories of rules, and is thus exempt from this subchapter. A rule is " major"if it has an annualimpact on the economy of $100 million, or if the Director of OMB determines that the rule is likely to adversely affect,"in a material way,"
the economy or a sector thereof," sector" being quite broadly defined (sec. 621). For this memorandum, no survey of past NRC rules has been done to determine how many have been
" major *, but informal discussions with the staff suggest that very few have been.
The cost benefit analyses required would be very inclusive. For example, the agency would nave to consider all" reasonably identifiable,' direct.ind indirect, quantifiable and non-quantifiable safety, environmental, and economic costs and benefits, and would have to identify a " reasonable number" of " reasonable" altematives to the proposed or final rule, including any performance based options (sec. 623) that might exist.
An agency would be allowed a good deal of discretion in using the cost benefit analysis to reach a decision on whether to issue a rule. Some of the bill's language is similar to language in the NRC's backfit rule (10 CFR 50.109). For each proposed and final ru!e, the agency would have to determine whether the benefits of any new " major" rule " justified" its costs, and whether the rule was likely to "substantially achieve" its objectives in a "more cost-effective manner,'
andwith " greater net benefits,' than any of the reasonable alternatives (sec. 623). The "more cost-effective" and " greater net benefits" standards are not the same: An action with costs of
$100 and benefits of $200 is more cost-effective than an action with costs of $1000 and benefits of $1500, but the latter action has greater net benefits. The bill would have the agency apply, and seek to optimize a rule under, both standards.
Strictly speaking, the bill would not require that a rule in fact outperform any alternative under either s'andard. It would require only that the agency determine whether a given rule is the best under both standards, or ' explain why* a determination that it is in fact the best cannot be made. For example, a statute may prohibit the application of such standards, or it may mandate issuance of a rule with a specified content, whatever its costs and benefits as compared to the costs and benefits of reasonable alternatives However the bill puts no limits on how an agency might explain why it was unable to reach a determination that a rule was the best under both cost benefit standards. Thus, unlike some regulatory reform bills in the last Congress, not only would S. 981 not supplant existing statutory health, safety, or environmental standards; it would not dictate whether an agency could proinulgate a given rule that statutory law left the agency free to promulgate or not.
Cost benefit analyses are common in rule making, especially NRC rule making, but risk assessments of the sort that would be required by the bill are less common. For any proposed or final major rule the main purpose of which is to regulate public health and safety or the environment, the agency would also have to perform a risk assessment that identified the risk to be regulated, its magnitude, who suffered the risk, whether they suffered it voluntarily, the effect of the rule on the risk, how the risk compared to other risks routinely encountered by the public, and the uncertainty in the assessment (sec. 624).
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Groups outside the agency would have a large role in the rule making. Perhaps most prominent among them would be the peer review panels: Every cost benefit analysis and risk assessment accompanying a major rule would be subjected to peer review, on the public record, by a formal or informal organization of people chosen by the agency for their expertise.
The organization would also hava to be ' oroadly representative and bafanced." Such persons f
would have to be independent of the agency but could have interests affected by the rule being ara!yzed, though they would have to disclose those interests (sec. 625).
The Federal courts would have a significant role in reviewing agency action under this first new subchapter (sec 627), though the role is roughly analogous to the courts' present role in reviewing agency rule making records and thus would not create sionificant new opportunities for attacking agency rules in court. A court could remand a rule for agency fal.ure to perform the required analyses. In some limited circumstances, a court could overturn an agency's determination that a given rule was, or was not, " major.' A court could also review a cost-benefit analysis and risk assessment, and an agency's cost benefit determination, though only in the course of determining whether the final rule for which the analysis and assessment had been prepared was arbitrary and capricious.
The bill would expand somewhat OMB's familiar role in standardizing cost benefit analysis (secs. 627 28), and it would require research that could eventually have an effect on the NRC's independence, though not for many years probably. The bill would require OMB to write guidelines on cost benefit analysis and risk assessment, contract for research on how to improve such analysis and assessment, and, most interestingly for the long-term, contract for research that would establish a catalog of the extent and seventy of risks to public health and safety and the environment, study methods of comparing risks, and recommend how to allocate
" resources within and across agencies to set priorities for the reduction of risks." Allocation of resources for risk reduction across agencies is " risk-informed" regulation on a government wide scale, something Supreme Court Justice Stephen Breyer urged in his 1993 book, Breaking the Vicious Circle. Were a method of such allocation found, the NRC might be stopped from reducing a given risk because some other agency was facing a higher priority risk.
Review of existing rbles: A second new subchapter for the existing Chapter 6 of the APA would require that, every 5 years from the date of enactment of'he Act, any agency that had promulgated a " major" rule in the past 10 years (as measured from each S-year mark) undertake an extensive review of its existing ru!ss, apparently whether they were major or not, to see if they could be modified to increase t? e net benefits they provide (there is no mention of the cost-effectiveness standard here). Thus this second new subchapter does not impose an absolute cost-effectiveness or net benefit standard on existing rules. It seeks only an increase in net benefits. Each five-year review would begin with the establishment of an advisory committee that would study the existing rules for one year and recommend to the agency what rules should be modified, dropped, or retained (assuming the agency had the discretion to take such actions). The committee membership would have to represent "a balanced cross section of public and private interests effected by the regulations of the age.,cy, including small businesses small govemments and public interest groups." The agency would have the
' discretion to modify the lists of recommended actions in a public process. A court could overturn an agency determination to retain a rule only if the court found clear and convincing l
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The Comm:ssion 5
evidence that an alternative would have substantially increased net benefits while meeting the objectives of the statute underlying the rule. (Sec. 63133.)
Even if the NRC has issued few major rules, it would take only one in the decade before any given 5-year mark to trigger the elaborate review process described in this second subchapter.
Thus, even if the NRC were seldom to be affected by the subchapter on cost benefit analyses and risk assessments, the agency might often have to undertake a review of its existing rules.
Executive Oversight: The third new subchapter the bill would insert into the APA would pose the most immediate impact on the NRC's independence. The new sections, numbered in the 640s, world estabhsh a process for Presidential review and coordination of agency " regulatory actions." The phrase ' regulatory actions" is defined very broadly: it includes rule making agendas,e notices of proposed rule making, and notices of proposed and final rules.
The mai,0cus is on " major rules" and "other significant regulatory actions," "significant" being an undLined term. However, the language is general enough to support an interpretation that OMB oversight might extend to review of al/ NRC proposed and final rules before publication.
The new subchapter would apply to " agencies" simply. There is no mention, let alone exclusion, of independent regulatory agencies. The NRC may issue few " major rules," but it does often take "significant regulatory actions," and, of course, many ' regulatory actions." Thus the NRC, being an " agency," would appear to be affected by this new subchapter st least every time it issued a "significant regulatory action," if not also every time it took a ' regulatory action."
Except under the Paperwork Reduction Act, the NRC is not now subject to Presidential review of the substance of its rules.
The process that would be established by the subchapter is designed in part to assure compliance with the rest of the bill, especially its emphasis on cost benefit ana,ysis and risk assessment. The process is also designed in part to be noticeably more open than the current process of Presidential review. For example, the agency would be invited to any meeting OMB had with outside parties about the substance of the rule being reviewed (sec. 643), and OMB would have to publicly disclose allits written communications relating to the substance of a regulatory action. The subchapter does not give the President any sort of veto over agency rule making, but such Presidential review as exists now doesn't either, and yet it makes the rule makings of the agencies subject to it longer, more complex, and subject to a brriader range of external and policy factors. The process required by S. 981 would likely increase the length and complexity of rule makings. For example, OMB can take up to 90 days to review a proposed _or final rule, and the Administratior, would like even more time (see Attachment 5, pp.
16 17).
CONCLUSlQ'. AND RECOMMENDATION S. 981 is another step in whst has come to be called " regulatory reform." In SBREFA, Congress established a streamline'l process that allows it to modify or repeal major rules quickly. S. 981 would control agency analytic processes rather than policies directly, even legislative policies: The bill seeks to make regulatory agencies more conscious of risks, costs, and benefits, in both new and existing rules; but it makes no attempt to supplant existing statutory standards for protection of health, safety, or the environment; nor does it force
The Commission 6
agencies to repeal old rules that might not pass muster under a cost effectiveness standard or a net benefit standard.
l While the end result of S. 981 might be more risk. and dollar informed rules, the result would l
certainly also be rule making potentially complicated and lengthened by risk assessments, peer review, advisory committee review of existing rules, and OMB oversight of perhaps all rule making, Only some of this added complication would affect the NRC, because the bill focuses on " major rules," and the NRC issues very few such rules. Nenetheless, for the NRC in particular, the subchapter on Presidential review of " major,""significant," and perhaps even all
- regulatory actions" would mea.i much more oversight by OMB. The Commission has consistently sought to maintain its independence from OMB oversight of rulemaking. For this reason, we have provided for Commission consideration the attached letter to the Senate to reiterate these views.
Attachments: 1. Draft Letter to Senate Committee on Governmental Affairs
- 2. Section by Section Analysis
- 3. Text of S.981
- 4. Senator Thompson's Floor Statement
- 5. Administrator Katzen's Testimony cc w/ attachments:
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The Honorable Senator Fred Thompson, Chairman Committee on Governmental Affairs United States Senate Washington, D.C. 20510
Dear Mr. Chairman:
On behalf of the Nuclear Regulatory Commission (NRC), I am writing to comment on S.981, the Regulatory improvement Act of 1997 (RIA), and especially on the new subchapter, " Executive Oversight,"which Section 3 of the RfA would add to the Administrative Procedure Act.
The RIA would aim at much that the NRC is working toward in its own regulatory process better cost-benefit analyses and risk asressments for major rules, greater emphasis on science and scientific information, better ways to express risk findings and deal with uncertainties and non-quantifiable factors, and comparison of regulsted risks with risks routinely encountered by the public. The NRC would also welcome increased exchange among the regulatory agencies on the subjects of cost benefit analysis and risk assessment. The Commission believes that the agency could both contribute to and learn from such increased exchange.
However, the Commission shares some of the concerns expressed by Sally Katzen, Administrator of the Office of Information and Regulatory Affairs, in testimony before your Committee on September 12,1997. We would want to be confident that the potential gains in regulation based on sound science and economics justify the added costs in time, money, and personnel, especially in a time of declining resources.
The Commission is most concerned, however, about an issue that Ms. Katzen did not discuss in her testimony, and that, if not dealt with rightly, could have a negative impact on achievement of the legislation's laudable goals. The RIA's subchapter on executive oversight might be read to require that the Office of Management and Budget (OMB) review the subclance of every proposed and final rule issued by any of the independent regulatory commissions not excluded by the definition of " rule' in the bill. At the very least, such centralized reviews would greatly lengthen the NRC's rule making process, which is already long enough.
But most important, a requirement for such reviews would weaken the long standing, statutorily-based, independence of the NRC. That independence, established at the agency's founding by section 201 of the Energy Reorganization Act of 1974, has permitted the agency to develop the scientific expertise and information necessary for regulating, (in an effective and timely way,)
the advanced and importcat set of technologies used in nuclear power and the other uses of radioactive materials.
For example, in the last decade alone, the NRC has begun and completed rule makings on retrofitting, nuclear power plant maintenance, nuclear power plant license renewal, standardization of new nuclear power plant designs, and decommissioning and decontamination of nuclear facilities. All of these rule makings required careful consideration of costs, benefits, and risks. During the same time, the cgency has undertaken a number of
projects aimed at increasing the consideration of risk in the agency's decision making For example, the agency is engaged in research on probabilistic risk assessment and has worked with several utilities to develop methods of ranking risks. Had the agency been subject to centralized review of every proposed regulation, final regulation, guidknee doeuraent, and policy staters.3nt the agency wanted to issue during that decade, it is doubtful that the agency could have accomplished so much.
Adding to the agency's rule making the length and cost of OMB reviews of every proposed and i
final rule is unlikely to increase the scientific content or the effectiveness of NRC regulation, and it will certainly reduce its timeliness. As part of its reinventing Dovernment effort, the NRC is striving to reduce the time it takes to complete rule makings. Moreover, rules needed to promote nuclear safety might also be delayed or modifktd for unrelated to safety. This -
legislation would instead prolong an already lengthy process. There are surely other ways to achieve the aims of better and more consistent use of cost benefit analysis and risk assessment in regulatory analysis performed by the independent regulatory agencies. An independent regulatory staffed and directed by the necessary expertise, as the NRC is, can adopt sound new practices more quickly than a regulator subject to continuous central oversight. The RfA seems to have recognized this principle in excluding from its reach several categories of rules issued by some of the independent regulatory agencies that regulate economic matters.
For these reasons, the Commission therefore would urge that independent regulatory agencies -
with public health and safety responsibilities be explicitly excluded from the reach of the RIA's subchapter on executive oversight.
Sincerely, Shirley Ann Jackson cc: The Honorable John Glenn d.
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SECTION BY SECTION ANALYSIS OF S. 981 I
The ' Regulatory improvement Act of 199 /"
The Act would add three new subchapters to Chapter 6,'The Analysis of Regulatory Functions
- t of the Administrative Procedure Act,5 USC 551 and following. The table of contents of the new subchapters is given below (it appears at the end of Section 3 of the Act). It can serve as an l
outline of this Attachment.
SUBCHAPTER ll-REGULATORY ANALYSIS 621. Definitions.
622. Applicability.
623. Regulatory analysis.
624. Principles for risk assessments.
l 625. Peer review.
626. Deadlines for rule making.
627, Judicialreview.
628. Guidelines, interagency coordination, and research.
629. Comparative risk analysis st'dy.
SUBCHAPTER lil-REVIEW OF RULES 631, Definitions.
632. Advisory committee on regulations.
633. Agency regulatory review.
SUBCHAPTER IV-EXECUTIVE OVERSIGHT 641 Definitions.
642 Presidential regulatory review.
643. Pubhc disclosure of information.
644. Judicial review.
Section.f, "SHORT TITLE,' denominates the Act the
- Regulatory improvement Act of 1997."
The title's emphasis, confirmed by the ' findings' set forth by Section 2 of the Act, and by the June 27,1997, press release by the bill's leading sponsors, Senators Levin (D Mich.) and Thompson (R-Tenn.), is on " improvement,' not " reform."
Section 2, ' FINDINGS,' sets forth seven Congressional conclusions. They suggest that the aims of the Act are risk reduction, cost-effectiveness, social values such as equitable
. distribution of risk, scientifically sound methods and information, governmentwide consistency, and an informed public Paraphrased, the seven findings are as follows:
(1) Regulation can be improved by being "more firmly rooted in sound economic and scientific analysis."
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2 S. 981 Section by Section (2) Cost benefit analysis and risk assessment are useful but do not replace
' good judgment and consideration of values."
(3) Regulation of health, safety or the environment should consider cost and risk, but also " social values, distributional effects, and equity.'
(4) Cost-benefit analysis and risk assessment must state clearly assumptions and uncertainties, and the implications of alternative assumptions.
(5) The public has a *right to know' about cost, benefits, risks, and the quality of scientific and economic analysis that support rule making decisions.
(6) The Administrator of OM8's Office of infor. nation and Regulatory Affairs (OIRA) should ensure ' consistent and valid use' of cost benefit analysis and risk assessment by "all agencies."
(7) The Federal Government should conduct research to better understand the
' strengths, weaknesses, and uncertainties' of cost-benefit analysis and ilsk assessment, and to improve these tools.
Eartic41
- REGULATORY ANALYSIS,* is the heart of the Act. It sets forth the three new subchapters whose contents are listed on the first page of this Attachment according to their new APA section numbers.
First New Subchapter: Cost Bonolit Analysis and Risk Assessment The first of these new subchapters, encompassing new APA sections 621 to 629,is also entitled ' Regulatory Analysis." It requires that agencies do cost be nefit analyses and risk eesessments for major rule makings, it sets forth standards for these analyses and t ssessments, it requires that agency analyses and assessments undergo peer review, it gives OIRA a role la guiding and coordinating agency analyses and assessments, and it calls for research aimed at improving these tools. Because this subchapter is focused on " major rules,"
it probably would have little direct impact on the NRC, because the NRC seldom promulgates a major rule.
Section 621, ' Definitions," defines several key terms, most of which are described briefly below, in alphabetical order. The bill's definitions of key terms like
- cost' and ' cost-benefit analysis" are worth reading in full. The definitions repeatedly omploy terms like " reasonable,"
'significant.' and other terms that require judgment to apply and will likely generate much litigation before their meanings become fixed, unless OMB or the Department of Justice provide useful guidance.
- Denefit" is defined broadly as 'the reasonably identifiable staificant favorable effects," direct and indirect, of implementation of a rulo. The definition ir ades, among other things, nonquantifiable effects, and social, environmental, and distributional" effects.
- Cost
- is defined as broadly as ' benefit": *the reasonably identifiable significant adverse effects," again direct and indirect, of a rule, including again nonquantifiable effects, and social, environmental, and distributional effects.
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S. 981 Section by Section
- Cost benefit analysis"is the evaluation of costs and benefits,' quantified to the extent feasible and appropriate," but otherwise qualitatively described, and done *at level of detail appropriate and practicable for reasoned decisions."
The term ' major rule' is key because much of the Act applies only to " major" rules. The definition is a modest rewrite of the definition which appeared in the Small Business Regulatory Enforcement Fairness Act (SBREFA), and is now found at 5 USC 804. Like the definition in SBREFA, the Act's definition has a quantitative part and a nonquantitative part: A rule, or "a group of closely related rules,' is a
- major rule' if it is *likely" to have an annual effect on the economy of $100 million or more *in reasonably quantifiable costs," or is otherwise deemed
" major" because the Director of OIRA believes that it is "likely' to ' adversely affect, in a material way," the economy, or a sector of the economy, where " sector" includes, among other things, jobs, the environment, safety, or even " communities." The application of ' major" to "a group of closely related rules' would appear to be intended to prevent agencies from going around the Act by dividing a major rule into parts none of which is *rNjor."
A ' reasonable alternative' is a ' reasonable regulatory option that would achieve the objective of the statute" and which the agency by law can implement.
- Risk assessment
- is the " systematic process of organizing hazard and exposure assessments to estimate the potential fr : pecific harm to exposed individuals, populations, or natural resources."
- Risk characterization,' on the other hand, is 'the presentation of risk assessment results including, to the extent feasible, a characteria.ation of the distribution of risk as well as an analysis of uncertainties, variabilities, conflicting information, and inferences and assumptions in the assessment."
The term ' rule
- has much of the breadth of the same term in the APA and SBREFA, and thus includes such agency documents as policy statements, guidance documents, and interpretations of law, documents that, in ordinary parlance, are not called ' rules." However, S.
981 takes greater care than SBREFA did to exempt certain regulations from the definition of rule, particularly rules governing the economy. For example," rule' does not include any rule that involves internal revenue laws or monetary policies of the Federal Reserve Board, any rule that " relates' to the public debt, or any rule "of particular applicability that approves or prescribes for the future rates, wages, prices,... reorganizations, [and so on].' The effect of most of these exclusions is to help secure continued independence for most of the agencies that regulate the economy (not, however, for the Federal Trade Commission). However, the NRC benefits from one exclusion: The definition also excludes any rule ' required to be promulgated at least annually pursuant to statute." The NRC's annual revision of its fee rules, Parts 170 and 171, is one such rule, and just about the only " major" rule the agency issues.
Thus this exclusion significantly reduces the impact of the Act on the NRC. (Arguably, the NRC's fee rules are also excluded as ru!es that relate to the public debt, and as rules that prescribe future rates and prices.)
4 S. 961 Section-by-Section A
- substitution risk
- is "an increased risk to health, safety, or the environment reasonably likely to result from a regulatory option.' The presence of this notion in the Act shows that the drafters believe that agencies bent on risk reduction in one area may increase risk in another.
Sect!on 622, " Applicability,' applies the new subchapter on regulatory analysis to both proposed and final rules, but only majorones. OGC has not done a survey of existing NRC rules to determine how many might arguably be called " major," but informal discussion of this question with the staff leads us to believe that very few NRC rules have been " major."
Therefore, the subchspter's requirements for cost benefit analyses and risk assessments probably will seldom apply directly to the NRC's rule makings, though they may have an indirect effect on how regulatory analyses of rules of any size are done at the agency. For example, the agency may decide to adopt for some or all non major rule makings the analytical requirements governing major rules under this legislation.
Section 623,
- Regulatory Analysis,' sets forth requirements on cost benfit analysis. Its importance in the whole scheme of the Act is marked in part by the fact that its title is sko the title of both the subchapter and the chapter of which it is a part. Every major rule, as ' major rule' is defined in the bill, must be accompanied by a regulatory analysis, usually at both the proposed rule and final rule stages, although in cases in which there is an imminent threat of significant harm to the public or the environment, the analysis may be published after the rule has been issued. If the agency skips the analysis on the grounds that the agency thinks the rule is not ' major,' OIRA can reverse the agency and require that the analysis be done (though OIRA has only 30 days after the close of the comment period on the rule to do so).
The regulatory analysis must contain analyses of the costs and benefits of the proposed rule, as 'costc' and ' benefits
- are defineJ in the act, and also analyses of a " reasonable
- number of
- reasonable
- alternatives to the rule, including, where " feasible,' the option of no govemment action and options that would leave the regulated parties free to determine how to achieve the goals of the regulation (options that the bill calls
- flexible regulatory options *). The analysis must identify who will bear the costs and who the benefits, and must include a risk assessment if the rule is aimed at protecting, health, safety, or the environment (Section 624 sets out the requirements on risk assessments). It must describe the ' scientific or economi: evaluations or information' on which the agency "substantially" relied.
Ultimately, the analysis must enable the agency to determine whether the benefds 'justity" the costs, and whether the rule " substantia!!y' achieves its objective in a "more cost-effective manner, or with greater net benefits,' than do the other attematives the agency considered.
The agency must be able to say how the analysis leads to the determination, and, if the determination is that the attemative fails to justify its costs, or fails to do as cost effectively or with as great a not benefit as another alternative, the agency must say what stands in the way of implementing the cther alternative (a statute, for example, might stand in the way). Strictly speaking, the bill would not require that a rule in fact outperform any alternative under either standard, it would require only that the agency determine whether a given rule is the best under both standards, or " explain why" a determination thet it is in fact the best cannot be made. The bill puts no !imi's on how an agency might explain why it was unable to reach a determination that a rule was the best under both cost-benefit standards.
5 S. 96f Section by-Section The analysis must be made public, and summaries of it made available in the rule making notices. The final analysis must discuss ' material
- changes made to the initial analysis and discuss 'significant* comment on the initial analysis.
Section 624,' Principles for risk assessment," may be the most innovative, but also the most detailed and prescriptive, of the new sections. It covers what risks must be described, how they must be described, how they are to be compared, what information the age"q must use, and how the agency should proceed in the face of insufficient information. Risk assessments are required for major rules whenever the ' primary purpose
- of the rule to address health, safety, or environmental risk, or the rule results in a significant " substitution risk" (defined in section 621).
A risk assessment is to describe the nature and severity of the hazards the proposed rule would regulate, who is put at risk by the hazards, under what scenarios, and with what likelihood.
When the necessary scientific information is " reasonably" available, the assessment must compare the hazards with other " reasonably comparable
- risks, *f:miliar to and routinely encountered by the general public," and consider " relevant" distinctions among the risks being compared, for example whether they are voluntary. Also when reasonably available scientific information permits, the assessment must describe any substitution risks that implementation of the proposed ru;e would create.
The assessment must also describe the uncertainties in each component of the assessment, and their influence on the results of the assessment. To the extent scientifically
- appropriate,'
the overall estimate :f risk should be expressed as a
- reasonable range or probability distribution that reflects variabilities, uncertainties, and lack of data," and the assessment should describe the corresponding scenarios. Risks to highly exposed or sensitive subpopulations should also be assessed.
Where quantliative factors are lacking, the assessment must describe qualitative factors that influence the range, distribution, and likelihood of possible risks. Generally the assessment should consider reliable and ' reasonably" available scientific information and describe the basis for selecting such information; but where such information is not available, the assessment may use reasonable assumptions,if the assessment identifies their bases, ' reasonable" alternative assumptions, why the latter assumptions were not used, and how use of them would have changed the outcome of the assessment.
The agency must provide for " appropriate' public participation in the assessment. At the final rule making stage the agency need not redo the assessment done at the proposed rule stage, except to the extent necessary to respond to comments.
Section 625,
- Peer review,"is one of two sections requiring outside review of agency rules (the other is section 632). It requires peer review of every cost benefit analysis or risk assessment required by the subchapter on regulatory analysis. The focus of the peer review is on science:
The peer review is to be done by a " formal or informal
- body with the relevant expertise.
However, the group performing the peer review must also be ' broadly representative and balanced,' and the section provides little guidance on what those terms mean. On the one hand, the representation is not to be so broad as te include someone connected with the agency ' program' (it is not clear whether this latter term is broad enough to refer to any agency
6 S. 981 Section-by-Section employee or consultant or is narrow enough to refer simply to the rule making itself or perhaps the office that would implement the rule), on the other hand, persons who have financial interests in the outcome of the rule making may participate in the peer review, as long as they fully and publicly disclose such interests. It is not clear whether ACRS or ACNW review would satisfy section 625's balance requirements. This would depend on the meaning of the phrase
- broadly representative.' As to financialinterests, the section may require more public disclosure and less recusal than are required under current ethics laws.
All wrRten commer e and conclusions by the peer review group, and the agency's wntten responses to th' gnificant ones among them, must be made public and will become a part of the rule maw
,ord. The section does not explicitly require the agency to respond to the significant pt.
comments, but it would probably be unwise for the agency not to respond.
d Of course peer i aiew will probably lengthen and complicate any major rule making the NRC may do. Section 625 gives only a little relief from the lengthening, and what relief it gives is either ambiguous or dependent on the judgment of someone outside the agency: The section says that peer review must meet ' agency deadlines," but the section does not make clear whether those deadlines are imposed by the agency on peer review, or imposed on the agency by outside forces such as Congress or the couits. Presumably, the phrase includes both sorts of deadlines. The section also says that a cost-benefit analysis or risk assessment, or even a part of either, that the agency believes has been subjected to " adequate" peer review needs no further peer review. However, this relief is not available unless OIRA concurs in the agency's judgment that the review has been " adequate.'
Section 626,' Deadlines, extends for up to 6 months any rule making deadline imposed on an agency by a statute or a federal court that would require the agency to promulgate a major rule during the first two years the legislation is in effect. The section thus implicitly acknowledges that the new requirements for cost-benefit analysis, risk assessment, and peer review will lengthen rule makings.
l Section 627, " Judicial review," gives the federal courts a moderate amount of power over regulatory analysis, but the section does not provide any significant new opportunities for i
attacking the agency in court. Though a court cannot review a cost benefit analysis, risk assessment, or cost benefit determination by itself (separate from review of the final rule to which the analysis, assessment, or determination applies) the court can take these documents into consideration in deciding whether the final rule is " arbitrary and capricious." A court can also remand a rule to the agency, or invalidate the rule, if the agency has failed to perform a required costhenefit analysis or risk assessment, or to make the cost benefit determination required by section 623. In cases where the agency has done none of these things because it believes that the rule in question was not " major,' the power to remand or invalidate implies the power to overtur" 'he agency's judgment that the rule is not ' major.' However, this latter power is limited. It can,iot be exercised unless there is a " clear and convincing showing" that the agency's judgment *is erroneous in light of the information available' to the agency when the l
agency reached its judgment. It is an implication of this standard that if, after a rule rightly judged by the agency to be not ' major" has been promulgated without a cost benefit analysis, i
risk assessment, or cost-benefit determination, new information reveals that the rule is in fact I
l l
o 7
S. 981 Section-by-Section
- major,' the court cannot remand or invalidate the rule either solely er partly on the grounds that the analysis, assessment, and determination were not done.
Section 628, ' Guidelines, interagency coordination, and research," implicitly recognizes that not enough is known about how to do cost benefit analysis and risk assessment, and that, in part for that reason, some coordination is required among the agencies, and further research must be done. The section requires that OIRA, in consultation with the White House Office of Science and Technology Policy (OSTP), write guidelines on cost benefit analyses and risk assessments, and publish them no later than 9 months after the effective date of the section.
The section in turn requires each ' relevant
- agency to adopt detailed guidelines on the same subject, and to do so within 18 months of the effective date of the section. The agencies' guidelines must be consistent with OIRA's. The section does not define ' relevant agency,' but one plausible interpretation of the phrase is that it refers to any agency that might promulgate a
- major" rule. All the guidelines, OIRA's and the agencies', are to be developed following notice and comment, and they are to be revised periodically. A court can compel the development of guidelines but cannot otherwise review them.
OIRA and OSTP are also to conduct periodic evaluations of federal agency cost benefit analyses and risk assessments, set up interagency mechanisms to improve the consistency and quality of such analyses and assessments, and make recommendations to the President and Congress on how to improve the same. Each agency must also develop a strategy to meet its needs for research and training in cost benefit analysis and risk assessment. Within 6 months of the enactment of this section, OIRA must enter into ' appropriate arrangements with an accredited scientific institution" for research on risk analysis and risk communication. Such research must be completed no later than 18 months after enactment of this legislation.
Section 629,
- Comparative risk analysis study," takes some steps in the direction of a risk-informed approach across regulatory agencies, not just within each one. OIRA, again consulting with OSTP, is required to enter into a " contract" (not just an " appropriate arrangement," as in Section 628) with an ' accredited scientific institution" to conduct a study that provides a ' systematic comparison' of the extent and severity of *significant" risks to health, safety, and the environment, a study of methods of comparing dissimilar risks, and guidance and recommendations how to use comparative risk analysis to allocate resources across and within agencies. The study is to be peer reviewed and made available for public comment. It is to be completed within 3 years of enactment of this legislation. Two years later, and periodically thereafter (the period not specified), the President is to recommend legislation on setting risk reduction priorities "more effectively and efficiently.' Such legislation would probably aim to establish a mechanism that would use comparative risk analysis to subordinate the risk reduction efforts of each agency to Executive Branch-wide risk reduction priorities.
Such research thus could lead to new limitations on the independence of the NRC's safety judgments.
Second New Subchapter Review of Existing Rules The second of the three new subchapters in Section 3 of the billis entitled ' Review of Rules.' It encompasses new APA sections 631 to 633. In certain circumstances, in which the NRC might well find itseif, this new subchapter requires periodic review of existing rules under a ' net
8 S. 981 Section by Section benefit
- standard. The first phase of the review is conducted by an advisory committee composed of representatives of affected interests.
Section 631, ' Definitions,' states only that the definitions in the already existing section 551 of the APA, and the definitions in new section 621, discussed above, apply in this subchapter.
Section 632,' Advisory committee on regulations," requires that every five years any agency that has promulgated at least one major rule within the past 10 years (as measured from the periodically recurring 5 year mark) must establish an advisory committee that shall review the agency's existing rules - apparently whether major or not - to see whether any can be revised to increase the not benefits of their implementation (see section 633, below; no mention is made of a cost-effectiveness standard). The committee is to be establ shed under the Federal Advisory Committee Act, and must have a ' reasonable
- number of members. The members shall
- represent a balanced cross section of public and private interests affected by' the agency's regulations, including small businesses, small govemments, and public interest groups. The members shall receive only travel expenses. The committee is to terminate after one year.
Section 633, 'Agoney regulatory review," would establish the respective responsibilities of the advisory committee and the agency, giving the committee significant power to set an initial agenda for rule revision, but leaving the agency relatively free to modify that agenda. The committee shall produce a list of rules, in order of priority, that it believes can be modified to incre.ase net benefits (no mention is made of increasing the cost-effectiveness of existing rules),
but the committee shall recommend only revisions that the agency has the authority to promulgate. The committee must solicit public comment on the list.
The agency must "give deference
- to the Committee's recommendations but can nonetheless modify the list, taking into account not only net benefits but also the agency's resource constraints. A court can overturn an agency's decision to continue a rule, but "only upon a clear and convincing showing that the agency could have adopted a reasonable alternative that would substantiallyincrease net benefits... * [ Emphases added ] Note that the section does not require that an existing rule be cost effective, or show net benefits, before the agency can continue the rule. The section looks to relative, substantial, improvement, not absolute tests, it thus would not overthrow an existing rule that, despite its cost ineffectiveness or small benefits, could not be substantially improved.
The section establishes an elaborate and alternately time-constrained and time-free process for getting from the committee's recommendations to actual repealed or revised rules: no more than 60 days from receipt of the committee's list to agency publication of its own initial schedule for rule revision, at least 60 days for public comment on the initial schedule, no more than 60 days from the close of the comment period to publication of a final revision schedule, no more than 5 years from publication of the final schedule to completion of
- review' of all rules on the final schedule, and no more than 2 years from such final determinations to the actual repeal or revision of any of the rules (though during that 2 years the agency has the discretion to change its mind), During the S years from publication of the final schedule to completion of review, the age.
must propose to repeal, revise, or continue each of the rules on the schedule; receive public comment on its proposals; and publish final determinations on whether to repeal, revise,
9 S. 981 Section by Section or continue each of the rulos. When the year the advisory committee is in operation is added to the numbers just recited, these can be 8% years or more between the time the agency convenes the advisory committee and the time the agency repeals or revises rules. Therefore, because agencies that promulgate major rules often enough would have to initiate a new review process every five years, review cycles could overlap, and the agency would be reconsidering existing rules perennially.
Third Now Subchapter Increased Exocutive Overs lpM This subchapter, which encompasses new APA sections 641 to 644, raises some concems about possible inroads on the independence of the NRC. It would not give OIRA any veto power over agency decisions, but one possible reading of the subchapter, indeed the likely reading, is that OIRA would be given authority to review the substance of all the agency's rules, be they major or not. At the very least, NRC rule making would become longer and more complicated politically.
Section 641, ' Definitions," like its analogue, section 631, states that the definitions in the already existing section 551 of the APA, and the definitions in new section 621, discussed above, apply in this subchapter. However, section 641 also defines one new, crucial, term,
' regulatory action." It means an agenda or schedule for rule making, an advance notice of proposed rule making, or a notice of proposed, interim, or final rule making.
Section 642,
- Presidential regulatary review,' directs the President to establish a process for
' review and coordination uf Federal agency regulatory actions' by OIRA. There is no exclusion for independent regulatory agencies other than those already excluded by the definition of
- rule' in section 621, discussed above (that section did not exclude the NRC).' The process clearly goes beyond the technical guidance function assigned to OIRA by sections 628 and 629, discussed above. The President shall develop and ' oversee uniform regulatory policies and procedures' for compliance with the rest of the Act, develop policies and procedures for the Director's
- review of regulatory actions," and develop and ' oversee an annual governmentwide regulatory planning process that shallinclude review of planned agency major rules and other significant regulatory actions... * 'Significant' is not defined, but the word does make clear that OIRA review is not limited to major rules. This governmentwide planning process is to publish, among other things, a schedule for promulgation of planned agency major rules. The section does not say how the schedule is to be established. The section also does not say what the nature of OIRA's review of ' regulatory actions
- is (the next section,643 implies more). Though the focus does seem to be on major rules, it does not rule out the possibility that OIRA can
" review' any regulatory action it wants. The next section seems to realize that possibility.
Section 642 limits OIRA generally to no more than 90 days to complete its review.
Section 643, *Public disclosure of information," aims to ensure that the public, and to some extent the agency whose action is being reviewed, knows what impact OIRA review and
'At a recent conference, Senator Levin, a sponsor of the legislation, said that the drafters of the legislation intended that the regulatory actions of independent regu!atory agencies be subject to OMB review and oversight.
o 10 S. 981 Section by-Section conti @with persons outside the Executive Branch have had on the substance of a " regulatory actio., ' Ind why OIRA has taken a particular review action. For the definition of the term "regu er / action,'see the analysis of new APA section 641 above. The breadth of that definv N combined with section 643's use cf the phrase unmodified by any limiting term like
' major' or 'significant*, suggests that the regulatory review carried out under section 642 (see above), applies to the substance of every rule making action, from the setting of a rule making agenda to a final rule. Section 643 also tends to confirm that OIRA review of a regulatory action is limited to ' suggestion and recommendation."
The section requires that OIRA make available to both the public and the agency all written communications between OIRA and persons outside the Executive Branch on the substance of a regulatory action, and also make available to the public all written communications between OIRA and the agency on the substance of a regulatory action. Notes identifying dates, names, and subject matter of substantive meetings or telephone conversations on the substance of the regulatory action between OIRA and any person outside the Executive Branch shall also be made available to both the public and the agency, and the agency must be invited to such meetings (no mention is made of making available any record of meetings or phone convercations between OIRA and just the agency) OIRA must also explain its ' review actions" in writing to both the public and the agency. The required disclosures to the public are to be made 'no later than publication of a regulatory action.'
Before publication of any proposed or final rule, the agency shall include in the rule making record an account of all changes made at the ' suggestion or recommendation of the Director of OIRA," and all written communications between OIRA and the agency during the rule making, including drafts and analyses.
Section 644, " Judicial Review,' confirms by fair implication that OIRA's review power does not include the legal power to veto an agency rule. The section says that the exercise of au'hority under this third new subchapter is not subject to judicial review. Only the agency can be sued on the rule making.
Ensflon d,
- EFFECTIVE DATE," wou'd give the Act possibly some retroactive effect. It says that the Act shall not apply to any agency rule for which nctice of proposed rule making was published on or before August i of this year. The Act thus looks backwards for its starting date.
However, the aim here seems to be not retroactivity, but rather application of the Act to ruls makings that are ongoing when the Act becomes effective, which is 180 days after its enactment. The only rules that would be unsettled by this provision would be rules that appeared in proposed form after August 1 and in final form before the effective date of the Act.
4 i,
i n
105nt CONGRESS ghO 1 Ist Feems
,ggg l
T.~,.<-.
1 I
l l
j IN TIIE SENATE OF TIIE UNITED STATES i
Jrwa 27,1997 l
Mr. Ianw (for homett Mr. Tauemmes, Mr. Ctaxw, Mr. AnstanAes. Mr.
hea, Mr. hynt. Mr. Hmiur.rwn a re, and Mr. Bruvuss) intrudumi ehr 3
r
- ~
~ ~
c-(M Affaers t
t i
{
o l
A BILL l
To povekle for -id. of masor rules.
j 1
Be it caiscied 6y tac Senede end Hoesse of Represente-t l
2 times of the United States ofAnames in Compress -
?' L i
3 secrnoM1.5mperrTrrIX 4
This Act niay be cited as time " Regulatory Insprove-f 5 ment Act of 1997".
6 se c.n.rusemess.
L 7.
Congress fise&.the fo80 wing:
l 8'
(1) Current L. * -, programas can be isn-i t
9 premt hy b ing nuore firnaly rected in sound ceo-10 noenie and scientific analysis.
f
,-.~- -.-. -. -. -..... -. - -.
2 3
I (2) Cmt-la-nefit analysis arul risk assessnent I
cost-benefit analysis ami risk assewnw-nt among all 2
arr uwful toeds to letter inform ac neies in dewhp-2 acM5.
3 ing regulatiorn, altimagh tiry da m,t regdan the 3
(7) The Federal Go.nurwat shouki deveky a 4
retgl for good jtwigrrent aml etinsiileration of values _
4 better umlerstanding of the strengths, weaknesses, 5
(3) Cost aral risk med to Ix musidm,1 in eval-5 amt uncertainties of cost-Irrrfit analysis aral risk 6
unting regulatoiy pm; isals which addrvss twalth' 6
aswssment nnd conduct the research needal to im-7 safety, or the envimnnent. O'.her factors such as so-7 pmve these analytical toids.
8 eial values, distritmtional efferts, arul ninity, must 8 SEC.3.REGt1ATORT ANAI.YM 9
also le musidered.
9 (a} 13 Ggsgart..--Chapter 6 of title 5. United 10 (4) Cost-terwrit analysis arul risk assessment 10 States C4=le, is ameruled by a<kling at the end the fidlow-i1 should le presental with a clear statement of the l
1I.mg-12 ana!ytical assumptions arul urnertaintk-s irwiuding 12 "SUllCIIAl"rER ll-REGULATORY ANALYSIS 13 an explanathm cf what is known ami mit known arxl 13 "l621. Definitions e
i1 what the implicatkms of alternative assumptions 18 "For purposes of this sulchapter the definithms 15 might le.
15 uruler section 551 shall apply and-16 (5) The public has a right to krwnw alamt the 16
"(1) the term ' benefit' means the reasonaldy l
. ientifiable significant favorable effects, quantifialde 17 costs ami tenefits of regulations, the risks ad-17 w
18 d essnl, the anumnt of risk rolucci, ami the quality g
g 19 of scientific amt economie analysis used to supgunt 19
- nvimnmental, economic, arxl distnlmthmal efftets, 20 derisions. Such krmwinige will promote the quality, 20 that are expected to result directly or ind.irectly from
~
.impicmentation of, or compliance with, a mie; 21 integrity aral responsiveness of agency acti<ms.
21 22 (6) The Administrator of the Office of Informa-22
"(2) the term ' cost' means the reasonaldy iden-23 tion r_rul Regulatory Affairs simuld oversee rrgu-U 6Mk @h de 4m WiM M latory activities to ensure consistent and v-dkl use of 24 nonquantifialde, including social, health, safety, enri-24 25 mnmental, economie, and distributional effecta that
.1 u
~
5 4
I
"(A) the agency prtyosing the rule or ti.e I
are ex;weted to result directly or indirectly from im.
2 Director reasonably determines is likely 5 have 2
piementation of, or compliance with, a rule; 3
an annual effect on the economy of 3
"(3) the term ' cost-beneSt analysis' means an 4
$100,000,000 or uwre in reasonably quantifi-4 evaluation of the costs arul tenefits of a rule, quau-5 able costs; or 5
tif'wd to the extent feasible arul appronriate arul oth.
6
"(B) is otherwise designated a mador rule erwise qualitatively descrilei, that is prepamh in ac.
6 7
by the Director on the ground that the rule is 7
cordance with the requirements of this subchapter at 8
hkely to achersely affect, in a material way, the 8
the level of detail appropriate arxl practicable for 9
reasorel decisionmaking on the matter involved, 9
economy, a sector of the economy, including 10 small business, pral*xtivity, competition, jobs, 10 taking into consideration uncertainties, the signifi.
1I the environment, public health or safety, or 1I cance arul complexity of the decision, arul the need 12 State, local or tribal governments, or commu-12 to adequately inform the publie,-
13 nities; 13
"(4) the term ' Director' neans the Director of 14
"(7) the term
- reasonable alter native' means a l
14 the Ofraec of Management arul Budget, acting 15 reasonable regrhtory option that woukt achieve the 15 through the Administrator of the Office of Informa.
16 objective of the statute as addressed by the rule 16 ti<m aral itegtalatory Affairs; 17
"(5) the term
- flexible regulatory ordions*
17 making and ti at the agency has authority to adopt 18 under tie statute granting rule making authority, 18 means regulatory options that germit flexibility to 19 including flexible regulatory options; 19 regulated persons in achieving the objective of the 20
"(8) the term
- risk assessment
- means the sys-20 statute as addressed by the rule making, including 21 tematic process of organizing hazani arxl exposure 21 regulatory options that use market-basal mecha.
22 a.swo.a.ta to estimate.he potential for specific 22 nisms, outcome oriented performance-basal stand.
23 harm to exposed individuals, populations, or natural 23 ants, or other options that promote flexibility; 24 resources; 24
"(6) the term ' major rule' means a rule or a i
25 group of e-losely related rules that-
1
)
7 6
"(E) a rule relating to the safety or sound-1
"(9 the term ' risk characterization' means the i
ness of federally insured depository institutions 2
pe esentation of risk ass-ssinent e-milts including, to 2
3 the extent feasible, a characterization of the dis-3 or any afD!iate of uch an institution (as de-fined in section 2(k) of the Bank IIolding Com-4 tribution of risk as well as an analysis of uncertain-4 5
ties, va-iabilities, conflicting information, and infer-5 pany Act er 1956 (12 U.S.C 1841(k)); credit 6
enees and assumptions in the assessment; 6
unions; ane Federal Ilome Lean Banks; gowrn-7
"(10) the term ' rule' has the san >e meaning as 7
ment-sponsored housing enterprises; a Farm 8
in section 551(4), and shall not include 8
Credit System Institution; foreign banks, and their branches, agencies, commercial lending 9
"(A) a rule exempt from notice azul public 9
10 comment procedure under section 553; 10 companies or representative offices Wat operate in the United States and any affiliate of such 11
"(B) a rule that involves the internal reve-11 12 nue laws of the United States, or the asmss-12 foreign banks (as those terms are defined in the 13 ment and collection of taxes, duties, or ottwr 13 International Banking Act of 1978 (12 U.S.C.
14 revenue or receipts; 14 3101)); or a rule relating to the payments sys-15
"(C) a rule of particular applicability that 15 tem or the pn>tection of deposit insurance funds 16 or Farm Credit Inrurance Fuml; 16 appnives or prescr:bes for t'ie future rates, j
17 wages, prices, services, corporate or financial 17
"(P) a sule or order relating to the finan-18 rtructures, reorganizations, mergers, acquisi-18 eial responsibility, recordkeeping, or reporting 19 tions, accounting practices, or disclosures bear-19 of brokers and deakrs (including Government 20 securities brokers and dealers) or futures com-20 ing on any of the foreguing; 21 mission menthants, the safeguarding of investor 21
"(D) a rule relating to mor.etary policy 22 securities and funds or commodity future or op-22 proposed or promulgated by the Boani of Gov-23 ernors of the Federal Reserve System or by the 23 tions customer securities and funds, the clear-24 ance and settlement of securitier, 'utures, or 24 Federal Open Market Committee; 25 aptions transactions, or the suspension of trad-h i
i
~
l 9
N i
"(12) the term ' substitution risk' means an in-1 I
ing under the Securities Exchange Act of 1934 creased risk to health, safety, or the envi unment 2
l 2
(If, U.S.C. 78a et seq.) or emergency action reasonably likely to result from a regulatory option.
taken under the Commodity Exchange Act (7 3
3 U.S.C. I et seq.), or a rule relating to the pro-t 4 gs22. Applicability 4
"Except a.s provided in section 623(e), this suis-5 tection ~ of the Securities 'mestor Protection 5
6 chapter shall apply to all proposed and final nudor rv*s.
6 Corporation, that is promulgated urxler the Se-curities Investor Proteethm Act of 1970 (15 7 "l823. Regulatory analysis 7
"(a)(1) Before publishing a notice of a proposal cule 8
U.S.C. 78aaa et seq.), or a rule relating to the 8
9 making for any rule, each agency shall determine wheth*r at custody of Government securities by de witory 9
10 the rule is or is not a mgor ruk cmered by this sub-10 institutions under section 3121 or 9110 of 11 chapter.
1I title 3I; 12
"(2) The Director may designate any rule to be a
"(G) a rule issued by the Federal Election 12 13 m@r rule under section 621(6)(B),if the Director--
Ccmmission or a mie issued by the Federal l
13
'.'(A) makes such designation no later than 30 14 Communications Co.nmission under sections 14 15 days aner the close of the comment geriod for the -
15 312(a)(7) and 315 of the Communications Act 16 rule; and 16 of 1934 (47 U.S.C. 312(a)(7) and 315);
"(II) a rule required to be promulgated at l
17
"(B) publishes such determinadon in the Fed-17 cral Register together with a succinct statement of 18 18 least annually pursuant to statute; or the basis for the deterr.sination within 30 dap after 19 i
"(I) a rule or agency action relating '.o the 19 l
20 such determination.
20 public debt; l
21
"(b)(1)(A) When an agency publishes a retice of pro-21
"(I1) the term ' screening analysis' means an 22,msed rule making for a mmor rule, the agency shall pre-22 analysis using simple assumptions to arrive at an es-23 pare and place in the rule making fue an initial regulatory 23 timate of upper and lower Imunds of risk as appro-24 analysis, and shall include a summary of such analysis 24 priate; and
10 11 1 consistent. sith subsection (d) in the notice of prnposed 1
"(ii) an analysis of the costs of the pro-2 rule making.
2 gesed nde, induding any costs that cannot be 3'
"(II)(i) When the Director has putilished a deter-3 quantified, and an explanation of how the agen-4 mination that a rule is a major rule after the publication 4
cy anticipates that such costs will result'fn>m 5 of the notice of pmposed rule making for the nde, the 5
the proposta nde, including a description of the 6 agency shall promptly prepare and place in the rule mak-6 persons or classes of perwns likely to bear such 7 inr file an initial wgulatory analysis for the rule and shall i
7 costs; arul 8 publish in the Federal thyister a summary of such analy-8
"(iii) an evaluation of the relationship of 9 sis consistent with subscetion (d).
9 the benefits of the proposed rule to'its costs, in-10
"(ii) Following the issuance of an initial regulatory 10 eluding the determinations minimi under suir i! analysis under clause (i), the agency shall give interested 1I section (c)(3), taking into account the results of l
12 persons an opportunity to comment under section 553 in 12 any risk assessment; 13 the same manner as if the initial regulatory analysis had 13
"(iv) an evaluation of the benefits and 14 been issued with the notice af proposed rule making.
14 costs of a reasonable number of reasonal>le al-15
"(2) Each initiid regulatory analysis shall contain-15 ternatives rtilecting the range of regulatory oiw 16
"(A) a cost-benefit analysis of the progesed rule 16 tions that would achieve the objective of the 17 that shall contain-17 statute as addressed by the rub making, includ-18
"(i) an analysis of the benefits of the pro-18 ing, where feasible, alternatives that-19 gesed rule, including any benefits that cammt 19
"(I) require no governmot action; 20 he quantified, and an explanation of how the 20
"(11) accommodate differences among 21 agency anticipates that such benefits will be 21 geographic regions and among persons 22 achieved by the proposed rule, including a de-22 with differing levels of resources with 23 scription of the persons or classes of persons 23 which to comply; er l
24 likely to receive such benefits; 24
- (111) employ flexible regulatory op-1 l
25 tions;
1 12 13 I
"(v) a description of the scientific or eco-t "f 3)(A) The wney shall ir#ade in the statement of 2
nomie evaluations or information upon which 2 basis and purpose for the ru!c a reasonable deterrmaation, 3
the agency substantially relied in the cost-bene-3 base
- upon the rule making record considered as a 3
4 fit analysis and rith assessment requim! under 4 whole-5 this subchapter, and an explar.ation of how the 5
"(i) whether the rule is likely to provide tene-6 agency reached the determinations under suis-6 fits that justify the costs of the rule; and 7
section (c)(3); and 7
"(ii) whether the rule is likely to substantially achieve the rule making objective in a more cast-ef-8
"(II) if requimi, the risk assessment in acconl-8 fective manner, or with greater net benefits, than 9
ance with section 624.
9 10
"(c)(1) When the agency publishes a final major rule
- 10 the other reasonable alternatives considemi by the
!I the agency shall also prepare and place in the rule making i1 agency.
12 file a final regulatory analysis, and shall prepare a sum-12
"(11) If the agency head cannot reasonably determme i
l 13 that the final rule is likely to pruvide benefits that justify 13 mary of the analysis consistent with subsection (d).
I 14
"(2) Each final regulatory analysis shall address each 14 tha costs of the rule and substantially ach.ieve the rule 15 of the requirements for the initial regulatory analysis 15 making objective in a more cost-effective manner or with 16 under subsection (b)(2), revised to reflect-16 greater net benefits than the other reasonable alternatives 17
"(A) any material changes made to the p" 17 consideml by the agency, the agency heal shall-18 posed rule by the agency after publication of the no-IF
"(i) expla.m why such determinations cannot be 19 tice of proposed rule making; 19 made; 70
"(11) any material changes made to the cost-20
"(ii) identify any statutory prevision or other 21 benefit analysis or risk assessment; and 21 factor that prevents such determmations; and 22
"(C) agency consideration of significant com-22
"(iii) desen.be a reasonable alternative consid-23 ments received reganling the proposed rule and the 23 emi by the agency, if feasible,'that would allow the 24 initial agulatory analysis, including regulatory "
24 agency to determine that the benefits justify the 25 view communications under sulchapter IV.
25 costs and that the rule making obj.ective wouhl be
14 15 I
achieved in a more cost-effective marmer or with I
ty that is likely to result in significant harm to the 2
greater net benefits than the other reasonable alter-2 public or the environment; and 3
natives considemt by the agency.
3
"(11) the agency imblishes in the Federal iteg-4
"(d) Each agency shall include an executive summary 4
ister, together with such fimling, a succinct state-5 of the regulatory analysis, including any risk assessment, 5
ment of the basis far the finding.
6 in the regulatory analysis and in the statement of basis 6
"(2) If a mador rule is adopted unde. paragraph (1),
7 and purpose for the nile. Such executive summary shall 7 the agency shall comply with this subchapter as promptly 8 include a succinct presentation of-8 as possible unless compliance would be unreasonable le-9
"(1) the benefits and cuts expectni to result 9 cause the rule is, or soon will be, no longer in effect.
10 from the rule and any determinations miuimi und-r 10 "1624. Principles for risk n--
- nts 11 subsection (e)(:1);
11
"(a)(1) Subject to paragraph (2), each agency shall 12
"(2) if applicable, the risk addressed by the 12 design and conduct risk assessments in accorslance with 13 nile, including the most plausible estimate of the 13 this subehapter for each proposed and final nudor rule the 14 risk and the results of any risk assessment; 14 primary purpose of which is to address health, safety, or 15
"(:1) the benefits and costs of reasonable alter-15 environmental risk, or which results in a significant sub-16 natives consideml~by the agency; and 16 stitution risk, in a manner that promotes rati< mal amt in-17
"(4) the key assumptione and scientific or eco-17 fonned risk management decisions and infonned public 18 nomic information uixm which the agency relied.
18 input into ami umlerstanding of the process of making 19
"(e)(1) A midor nile may be adopted without prior 19 agency decisions.
20 compliance with this subchapter if-20
"(2) If a risk assessment umir, texs subchapter is 21
"(A) the agency for gomi cause linds that con-21 otherwise requimi by this section, cut the agency deter-22 ducting the regulatory analysis under this sub-22 mines that-23 chapter is contrary to the public interest due to an 23
"(A) a final rule subject to this subchapter is 24 emergency, or an imminent threat to health or safe-24 substantially similar to the prvposal nile with re-25 spect to the risk being addressed;
. v.
(
17 I
"(B) explain the basis for any choices amor.g i
"(H) a risk assessment for the proposed rule assumptions and, where applicable, the tasis for 2
2 has been carried out in a manner consistent with 3
combining multiple assumptions; and
(
3 this subehapter, and '
4
"(C) describe reasonable alternati assump-4
"(C) a new risk assessment for the final rule is tiorr that were considered but not selected by the 5
5 not requimt in order to respomi to comments re-6 caived during the period for comment on the pro-ternative assurnptions would have changed the con-7 7
posed rule, 8
elusions of the risk assessment, and the rationale for f
8 the agency may publish such determination along with the 9
not using such alternatives.
l 9 final rule m. lieu of preparing a new risk assessment for 10
"(d) Each agency shall provkie appmpriate opgwr-10 the final rule.
11 "fb) Each agency shall conskler in each risk assess-12 velopment of a risk assesament.
12 ment reliable and reasonably available scientific informa-13
"(e) Each risk assessment supporting a mdor rule
(
13 tion and shall describe the basis for selecting such sci-14 under this subchapter shall include, as appropriate, each r
14 entific information.
15 of the following:
15
"(e)(1) Each agency may use reasonable assumptions 16 to the extent that relevant and reliable scientific informa-17
"(2) A description of the populations or natural f
l 17 tion, including site-specific or sulstance-specific informa-18 resources that are the subject of the risk assess-18 tion, is not reasonabiy available.
19 ment.
19
"(2) When a risk assessment involves a choice of as-20
"(3) An explanation of the exposure scenarios 20 sumptions, the ageng shall-21 used in the risk assessment, including an estimate of 21
"(A) identify the assumption and its scientific 22 the corresponding populat.en at risk and the likeh.-
'2 or 'clicy basis, including the extent to which the as-23 hood of such exposure scenarios.
23 sumption has been validated. by, or conflicts with, 24 empirical data;
. - _ = _ _ _ -
pf l
1 18 19 magnitude of a risk to health, safety, or the environment
"(4) A description of the nature and sewrity of I
1 the hann that could reasonably occur as a result of 2 being analyzed in relationship to other reasonably com-2 3
exposure to the hazard.
3 parable risks familiar to and mutinely encountem! by the 4 general Alic. Such comparisons should consider n levant
"(5) A description of the imdor unwrtainties in I
4 each comgwment of the risk assessment and their in-5 distinctions among risks, such as the voluntary or involun-5 6
fluence on the results of the assessment.
6 tary natiire of riska.
7
"(h) When scientifica!!y appropriate information on
"(f) To the extent scientifically appropriate, each 7
8 significant substitution riska to health, safety, or the envi-i 8 agency shall-
'l 9
"(1) express the overall estimate of risk as a 9 ronment is reasonably available to the agency, the agency reasonable range or probability distribution that re-10 shall describe such n. ks.m the risk assessment.
s 10 ficcts variabilities, uncertainties, and lack of data iii 11 "I825. Peer review I1 12 the analysis; 12
"(a) Each agency shall provide for peer review in ac-e
"(2) provide the range and distribution of risks 13 m>rdance w.th this sect. ion of any cost benefit analysis and i
13 14 n. k assessment required by th.is subchapter that forms the and the corresgwmding exposure scenarios, identify-s l
14 l
ing the range and distribution and likelihood of risk 15 bas.is of any mgjor rule covered by tiu.s subchapter.
15 16 to the general gw)pulat. ion and, as appropriate, to 16
"(b)(1) Peer review nquim! under subsection (a) more highly exposed or sensitive subpopulations, in-17 shall-17 eluding the most plausible estimates of the risks; 18
"(A) provide for the creation or utilization of 18 19 and 19 peer renew panels, expert bodice, or other formal or
"(3) where quantitative estimates are not avail-20 informal devices that are broadly representative and 20 21 balanced and that consist of panel members or ger-l able' describe the qualitative factors influencing the 21
- t..acipants with expertise relevant to the sciences in-range, distribution, and likelihood of possible n. ks.
s 22 22 23 volved in the regulatory decisions and who are inde-
"(g) When scientific information that permits rel-23 24 evant comparisons of risk is reasonably available, each 24 pendent of the agency program; 25 agency shall use the information to place the nature and
i J
21 20 1 "l626. Deadlines for rule making
"(11) exclude any gerwn as a panel member or
"(a) All deadlines in statutes or imposed by a court I
2 parthipant if such person has a financial interest in 3 of the United States, that m;uire an agency to pmpose 2
the outcome, unless such person ftdly discloses such 4 or promulgate any mdor rule during the 2-year geriod be-3 interest to the agency and the public; 5 ginning on the effective date of this section shall le sus-4
"(C) provide for the timely completion of the 5
6 pendni until the earlier of-peer review including meeting agency deadlines;
"(1) the date on which the requirements of this 6
7
"(D) contain a brdanced presentation of all con-7 8
subchapter are satisfied; or siderations, including rninority regx>rts and an agen-
"(2) the date occurring 6 months ance the date 8
9 9
cy resixense to all significant peer review comments; 10 of the applicable deadline.
10 and
"(b) In any case in which the failure to pnsmulgate 11
"(E) provide adeepnate protections for confiden-12 a mWor rule by a dead'Se occurring during the 2-year 11 tial business information and trade secrets, including 13 period beginning on the efTective date of this section would 12 nquiring panel members or participants to -nter 14 create an obligation to regulate through individual a@u-13 14 mto confidentiality agreements.
15 dications, the deadline shall be suspemled until the earth >r
"(2) All peer n view written comments or conchisions 15 16 of-16 and the agency's written responses to significant peer re-
"(1) the date on which the requirements of this 17 17 view comments shall be made available to the public and l
18 subenapter are satisfied; or 18 shall he made part of the rule making reconi for purposes
"(2) the date occurring 6 months after the date 19 19 ofjudicial review of any final agency action.
l 20 of the applicable deadline.
20
"(3) If the head of an agency, with the concurrence 1
21 "6 627. Judicial review 21 of the Director, nublishes a determination that a cost-ben-
"(a) Compliance or noncompliance by an agency with 22 22 efit analysis or risk assessment, or any cominment thereof, 23 the pmvisions of this subchapter shall only be subject to 23 luts been previously subjected to adequate peer review, no 24 judicial review in accordance with this section.
24 further peer review shall be required under this section
"(b) Any determination of an. agency whether a rule 25 25 for such analysis, assessment, or comgwment.
x - - :.....
-.i i.
c > t unr u a. n l
23 22 1 *$ 628. Guldelines, lateragency coordination, and re-I be set aside by a reviewing court only upon a clear ard 2
eearch 2 convincing showing that the determination is ermneous in 3
"(a)(1) No later than 9 months after the date of en-3 light of the information available to the agency at the time 4 actment of this section, the lYirector, in consultation with 4 the agency made the determination.
5 the Director of the Office of Science and Technology Pol-5
"(c) Any determination by the Director that a rule 6 is a major rule under section 621{6), or any failure to 7 make such determination, shall not be subject to judicial 8 this subchapter or with significant implications for public 8 review in any manner.
9
"(d) The cost-benefit analysis and any risk assess-10 the principles of sections 623 and 624. The Director shall 10 ment miuimi under this subchapter sha!! not be subject 11 oversee arul periodically revise such guidelines as appru-1I to judicial review separate from review of the final rule 12 priate.
12 to which they apply. The cost-benefit analysis, cost-benefit 13
"(2' As soon as practicable aral no later than 18 13 determination under section 623(c)(3), and any risk as-14 months after the date of enactment of this section, each 14 sessment shall le part of the whole rule making record 15 relevant agency shall arlopt detailed guidelines for risk as-15 for purposes of judicia, review of the rule and shall le 16 sessments required by this subchapter or with signiGeant 16 considemi b a court in deterrmning whether the final rule 3
17 implications for public policy, Such guidelines shall be con-17 is arbitrary or capricious unless the agency can dem-18 sistent with the guidance issued under paragraph (1).
18 onstrate that the analysis or assessment would not be ma-19 Each agency shall periodically revise auch agency guide-19 terial to the outcome of the rule.
- 20
"(e) If an agency fails to perform the cost-benefit 21
"(3) The guideliries under this subsection shall be de -
21 analysis, cost-benefit determination, or risk assessment, a 22 veloped following notice snd public comment. The develop -
22 court shall remand or invalidate the rule.
23 ment ami issuance of the guidelines shall not be subject 24 to judicial review, except in accordance with section 25 706(1) of this title.
4 21 25 1
"(b) To pnimote the use of mst lenefit analysis and of assumptions and the identificati<m and quantification I
2 axscssi.mnt in a consistent manner and to identify agency mi variability.
3 research and training needs, the Director, in consultation
"(2)(A) No later than 6 months from the date of en-
{
3 4 with the Dinrtor of the orrice of Science ami Tnhnology 4 actment of this section, the Dirxtor, in consultatkm with 5 Policy, shall-5 the Director of the Office or Science ami Teetuw3% M 6
"(1) oversee gerimlic evaluations of Federal 6 icy, shall enter into appropriate arrangements with an ac-7 agency cost-lenent analpis and risk assessment; 7 credited scientific institution to conduct research to-g
"(2) pnivide advice and recommendations to the
"(i) identify and evaluate a common basis to g
President and Congress to improve agency use of ass st comparative risk analpis and risk commu-9 9
nication related to both carcinogens and noncarcino-10 cost-lwnefit analysis and risk assessment; 10 1I
"(3) establish appnipriate interagency nwcha-and 12 nisms to impnwe the consisteney and quality of cost-
"(ii) appn>priately incorporate risk assessments 12 13 tenefit analysis and risk assessnwnt among Federal
"(11) The results of the research conducted under this 14 tyyneies; and 14 15
"(4) establish appropriate mechanisms between 15 paragraph shall be submitted to the Dirntor and Con-l 16 Pedend and State agencies to improve coogeration 16 gems no later than 18 memths after the date of enactment i
17 in the development and application of cost-benent 18 analysis and risk aswssmes.t.
18 "1629. Comparative risk analysis study 19
"(e)(1) The head of each agency, in consultation with
"(a) No later than 180 days after the effective date 20 the Dutor and the Director of the Office of Science ami 20 of this section, the Director, in consultation with the Di-21 Technology Policy, shall regularly evaluate and develop a rector of the Office of Science and Technology Policy, shall 21 22 strategy to meet agency needs for research and training 22 enter into a contract with an accredited scientific institu-23 in cost-lenefit analysis and risk assessment, including re-23 tion to conduct a study that provides--
"(1) a systematic comparisam of the extent and 24 sean h on mmlelling, the development of generie data, use 24 severity of signincant risks to human health, safety, 25
Y
- 4..
t
'27 26
-I "SUBCILil'TER III-REVIEW OF RULES 1
or the en-imnment (hereafter refermi to as a com-2 *gsSt. DeGaltions 2
parative risk analysis);.
3 "For purposes of this subehapter the definitions 3
"(2) a study of methodologies for using com.
4 under sections 551 anxi 621 a. hall apply.
parative rLk analysis to compare dissimilar risks to 4
5 "Ie32. Adsieory comedesee on g=m
' 5 human health, safety, or the environment; and 6
"(a)(1)(A) No later than 90 days after the date of 6
"(3) technical guidance and recommendations 7 enactment of this section and every 5 years thereabr, the -
- 7 on the use of comparative risk analysis to assist in R head of each agency described uruler subparagraph (H)
- 8 allocating resources within and across agencies to 9 shall establish an advisory committee for the' review of 9
set priorities for the reduction of risks to human i
10 rules.
10 health, safety, or the environment.
11
"(B) An agency referred to uruler subparagrag4: (A) 11
"(b) The Director shall ensure that the study re-12 is any agency that has promulgated a nudor rule during 12 quired under subsection (a) is-13 the 10-year period pireeding the date of the establishment 13
"(1) comlueted through an open process 14 of an advisory committee uruler subparagragdi (A).
14 providing peer review consistent 'with section 625 15
"(2) The head et an agency describal under para-15 and opgertunities for public comment and participa-16 graph (1) may establish panels uruier its advisory commit-16 tion; and 17 tee.
17
"(2) completed and submitted to Conga and Ib
"(b)(1) Each such agency head shall appoint a rea 18 the 1* resident no later than 3 years after the effec-19 sumable number of members to serve on the agency's advi-19 tive date of this section.
20 sory committee and shall designate a chairman from the 20
"(c) No later than 5 years after the effective date 21 members of the committee. Membership on the committee 21 of this seethm, and periodically thereafter, the l' resident 22 shall represent a balanced erves-section of public and pri-22 shall submit a report to Congress recommeruling legisla-23 vate interests affectal by the regulations of the agency, f
23 tive changes to assist in setting priorities to more effee-24 including nr..all businesses, small governments, and public 24 tively and efficiently reduce risks to human health, ss.fety,
'f 25 interest groups. No employee of the agency establishing v
25 or the environment.
29 selecting rules for review, each committee shall consider 28 I
the committee shall serve as a member of such agency's f
1 2 the extent to which--
2 committee under this section.
"(1) a rule could be revised to substantially in-3
"(2) Each member shall be appointed for the life of crease net benefita, including through flexible regu-3 4
4 the advisory committee. TFe advisory committee shall ter-5 latory options; 5 minate 1 year after the date on which the committee is
"(2) the rule is important relative to other rules l
6 6 established.
7 being considemi for review; and
"(3) A vacancy on a committee shall be filled in the
"(3) the agency has discretion under the statute 7
3 8 same manner as the original cppointment authorizing the rule to modify or repeal the rule.
9
"(4)' Each committee shall solicit public comments
"(b) In developing the list required under subscetion f
9 10 10 and may solicit public participation through appropriate (a), each edvisory committee shall obtain comments and I
11 means including bearings, written comments, public meet-12 suggestions frum the public.
iI i
12 ings, and electronie mail.
"(c) No later than 1 year after an advisory committee 13
"(5) Members of each committee shall receive travel 14 is established, such committee shall deiieer to the agency 13 14 expenses, including per diem in lieu of subsistence, in ae-15 the committee's recommended list of rules to be reviewed 15 cordance with sections 5702 and 5703.
16 in onler of priority. The agene/ shall immediately publish
"(6) Each committee shall be subject to the provi.
17 the list in the Federal Register and forward a copy of the i
l 16 17 sions of the Federal Advisory Committee Act (5 U.S.C.
18 list to the appropriate committees of jurisdiction in the 18 App.).
19 Ilouse of llepresentatives and tim Senate.
19 "l633. Agency regulatory review
"(d)(1) No later than 60 days after receiving amt re-
?O
"(a) Each advisory committee appointed under see-viewing the list of rules from its committee, the agency 20 21 J
21 tion 632 shall develop a list of rules promulgated by the 22 shall publish in the Federal Register a preliminary sched-22 agency that the committee serves, which the committee de-23 ule for n view of rules based on such list.
1 23 termines should be reviewed by the agency and can reason-
"(2) The agency shall provide in the Fed.ral Register -
24 24 ably be reviewed by the agency within a 5-year period. In 25 at the time the preliminary schedule is published an expla-t i
31 30 I
er the rule should be continued, amended, or m-I nation of eacn modification to the list provided by the ad.
2 pealed; 2 visory committee nd shall invite public comment on the 3
"(B) no later than 1 year befoie the deadline 3 preliminary schedule for a perimi of no less than 60 days.
4 in such schedule, publish in the Federal Ikster a 4
"(e) The pieliminary schedule uruler this section shall 5
notice that-5 pmpose deadlines for review of each rule listed thereon, 6
"(i) addresses public comments generated 6 and such deadlines shall occur no later than 5 years from 7
by the notice in subparagraph (A);
7 the date of publication of the final schedule.
8
"(ii) contains a preliminary analysis by the 8
"(f)(1) No later than 60 days after the chise of the 9
agency with respect to subsection (a) (1), (2),
9 comment perimi, the agency shall publish a final schedule 10 and (3);
10 of rules to be reviewed by the agency ander this section.
I1
"(iii) contains a preliminary determination 11
"(2) The schedule shall establish a deadline for com.
12 whether the rule should be continued, amended, 12 pletion of the review of each rule listed on the schedule.
13 or wpealed; and 13 Each deadline shall occur no later than 5 years from the 14
"(iv) solicits public comment on the pre-14 date of publication of the final schedule.
15 timinary determination for the rule; and
=15
"(g) In preparing the preliminary and final schedule, 16'
"(C) no later than 60 days before the deadline 16 the agency shall give deference to the recommendations 17 in such schedule, publish in the Federal Hegister a l
17 of its advisory committee but may modify the list of rules 18 tinal notice on the rule that-l 18 to be reviewed, taking into account the factors contained 19
"(i) addresses public comments generated f
19 in subsection (a) and the resource constraints of the agen.
20 by the notice in m.bsection (e);
20 cy.
21
"(ii) contains a determination to continue,
- 21
"(h)(1) For each rule on the schedule under sub.
22 amend, or repeal the rule and an explanation of 22 section (e), the agency shall-23 such determination with respect to subsection 23
"(A) no later than 2 years before the deadline 24 (a) (1), (2), and (3); and 24 in such schedule, publish in the Federal Register a 25 notice that solicits public comment reganling wheth.
i
{
l I
1 32 33 1
- "(iii) if the agency determines to amend or i eluding th.uugh flexible regulatory options, while nieeting 2
repeal the rule, contains, if mtuimi, a notice of 2 the objectiws of the statute =is addressed "vy the ru% mak-3 proposed rule snaking under section 553.
3 ing.
l 4
"(2) If the final determination of the agency is to 4
"SUIICIIAI"TER IV-EXECUTIVE OVERSIGIIT 5 continue the rule, such determination shall constitute final 5 "G 641. Definitions 6 agency action 60 days after the publication in the Federal 6
"For purposes of this subchapter-7 Register of the notice in paragraph (1)(C).
7
"(1) the definitions under sections 551 and 621 8
"(i) If an agency makes a determination to amend 8
shall apply; and 9 or repeal a rule under subsection (h)(1)(C), the agency 9
"(2) the term ' regulatory action' means any one 10 shall complete final agency action with regard to such rule 10 of the following:
11 no later than 2 years aller the deadline established for 11
"(A) An agenda or schedule for rule mak-12 such rule under subsection (f)(2).
12 ings.
13
"(j) Nothing in this section shall limit the diserttion 13
"(B) Advance notice of proposed rule mak-14 of an agency to decide, after having proposed to modify 14 ing.
15 or repeal a rule, not to promu! gate such modification or 15
"(C) Notice of proposed rule making.
16 repeal. Such decision shall constitute final agency action 16
"(D) Final nde making, including interim 17 fier the purposes ofjudicial review.
17 final rule making.
18
"(k) Agency failure to take the actions m;uimi by 18 "6 642. Preeldential regulatory review 19 this section shall be subject to judicial review only under 19
"(a) The President shall establish a process for the a 20 section 70f>(1). Them shall be no judicial review of the 20 review and coordination of Federal agency regulatory ac-21 preliminary or final schedule.
21 tions. Such process shall be the itsponsibility of the Diree-22
"(1) A court may remand a determination under sub-22 tor.
23 section (h)(2) only upon a clear and convir-ing showing 23
"(b) For the purpose of carrying out the myiew es-24 that the agency could have adoptal a reasonable alter-24 tablished under suosection (a), the Director shall-25 native that wouhl substantially increase net benefits, in-
+
34 35 I
"(1) develop and oversee uniform ngulatory 1
"(F) recommendations for improving com-2 policies and procedurns, including those by which 2
- Jiance with this chapter ami increasing the ef-3 each agency shall comply with the reguirernents of 3
ficiency and effectiveness of the regulatory 4
this chapter; 4
process.
5
"(2) develop policies and prmdures for the re-5
"(c) The review established under subsection (a) shall 6
view of n gulatory actions by the Director; and 6 be conducted as expeditiously as practicable and the Di-7 rector's review of any nyulatory action shall be hmited 7
"(3) develop and oversee an annual govern 1
8 mentwide regulatory planning pn3 cess that shall in-8 to na more than 90 days, unless extended for an additional 9
elude review of planned agency mgjor rules and (
9 30 days at the written request of the rule snaking agency 10 other significant regulatory actions and publication 10 or the Dirretor.
1I of-11 "l643. Public disclosure of information 12
"(A) a summary of and schedule for pro-12
"(a) The Director, in carrying out the provisions of 13 mulgation of planned agency major rules; 13 section 642, shall establish procedures to provide public 14
"(11) wney specific schedules for review 14 and agency access to information cimeerning nplatory 15 of existing rules under subchapter Ill; 15 review actions, including-16
"(C) a summary or regulatory review ac-16
"(1) disek> suit to the public on an ongoing 17 tions undertaken in the prior year; 17 basis of information reganlissg the status of regu-18
"(D) a list of major rules promulgated in 18 hatory actions undergoing review; 19 the prior year for which an agency could not 19
"(2) disclosure to the public, no later than pub-20 rnake the determinations that the benefits of a 20 lication of a regulatory auion, of-21
"(A) all written communications relating e 21 rule justifj the costs under section 623(c)(3);
22
"(E) identification of significant agency 22 to the substance of a segulatory action includ-23 noncompliance with this chapter in the prior 23 ing drafts of all proposals ami associated analy-24 ses, between the Director or employees of the 24 year; and 25 Director and the regulatory agency;
O 36 37 I
"(11) all wntten communications relating I
conversations, and an invitation to participate 2
to the substance of a regulatory action between 2
in mtim niadg to de aw of a e 3
the Director or employees of the Director and 3
latory action between the Director or employxs 4
any person not employed by the executive 4
of the Director an.d any person not employed 5
branch of the Federal Government; 5
by the executive branch of the Federal Govern-o 6
"(C) a list identifying the dates, names of 6
ment; and 7
individuals involved, and subject matter dis-7
"(C) a written explanation of any review 8
cussed in substantive meetings and teleplw>ne 8
action taken concerning an agency glawy 9
conversations relating to the substance of a reg-9 action.
10 ulatory action between the Director or employ-10
"(b) Prior to the publication of any proposed os final 11 ees of the Director and any person not em-11 rule, the agency shall include in the rule making record-12 played by the executive branch of the Federal 12
"(1) ' a document identifying in a complete, 13 Government; and 13 clear, and simple manner, the substantive changes 14
"(D) a written explanation of any review 14 between the draft submitted to the Director for re-15 action and the date of such action; and 15 view and the rule subsequently announced; 16
"(3) disclosure to the regulatory agency, on a 16
"(2) a document identifying those changes in s
17 timely basis, of-17 the nde that were made at the suggestion or ree-18
"(A) all written communications relating 18 ommendation of the Director; and 19 to the substance of a regulatory action between 19
"(3) all written communications exchanged be-20 the Director or employees of the Director and 20 tween the Director and the agency during the review 21 any person who is not employed by the execu-21 of die nde, imlMing d@ of a mais and a 22 tive branch of the Federal Government; 22 sociated analyses.
23
"(11) a list identifying the dates, names of 24 individuals involved, and subject matter dis-25 cussed in substantive meetings and telephone
38 39 d
"'24P"""r'"*'*""""""''"*
1 al844.Jindicial review s:s.Iwre m..
$ 'i ', j $ "'.'ge"ny"w"o~rd==ti==.a=1-ewek-2 "The exercise of the authority granted under this' s s c.arimw.nter 3 subchapter by the D.irector or the Presu. lent shall not be s:s c.,,,,,,.t,,, o,n y
.t sy.
4 subject tojudicial review in any manner.".
- SUBCilAPTF2 III-REMEw OF RULES 5
(b) PRESIDENTIAL AUTIIORITY.-Nothing in.his Act
~$ [
a,,,,,,
m
~633. Asenry e planary r==.
6 'shall limit the exercise by the President of the authority "SUBCIIAl"TER IV-sAtxvTn E OVERSIGIIT '
7 and responsibility that the President otherwiw possesses
,y
- 642. Prendentaal regialesary review.
8 under the Constittit. ion and other laws of the United s.3 %
g,,,,,,,,,,r i.r,,,,,,,,,
se u.a.ei.:v m...
9 States with respect to regulatory policies, procedures, and 10 programs of delmrtments, agencies, arul offices.
11 (c) TECilNICAL AND CONFORMING AMENDMENTS.-
12 (1) Part I of title 5, United States Code, is 4 "SUBCIIAI"I'ER I-ANALYSIS OF REGULATORY 13 amanded by striking time chapter heading and table 5
FLEXIBILITY".
14 of sections for chapter 6 end inserting the following:
15
" CHAPTER 6-THE ANALYSIS OF
^# *
' * ^
- 16 REGULATORY FUNCTIONS N
- SUIMJIAITER l-ANALYSIS OF REGULATORY FLEXIBILITY a
9 this Act, but shall not apply to any agency rule for which
-s,e.
~601. Definamina so;t Repiniory.cr aa..
10 a notice of proposed rulemaking is published on or before "603. Initial segulatory f1cubility analysis.
-so4. Fi at recuintory nemini.ty analy==
11 August 1,1997.
"60s. Avoidanre of duplaatsve er unnrecusary analyura.
"606. Effert on odwr law.
O
- 607. Preparatum of analysm "608. Prevdure for waiver er delay of cornpletion.
"609. Pmerdures for gathenng eemanwnts.
"Glo. Perumise review of rules.
"611., Jadrial revww.
"612. Reports armi interventuna rights.
" SULF'llAITER II-REUULATORY ANALYSIS "621. Definitions.
- 622. Appleatal.ty.
+
"623. Mcgulatory analysm
hupd/www.sem te. gov /-gov _affairvfloorsta f I(loor Stajement on The Regulatory improvem:nt Act of 1997 Senator Thompson's floor statement on The Regulatory Improvement Act of1997 June 27,1997 REGULATORY IMPROVEMENT AND GOVERNMENT ACCOUNTABILITY Mr. Thompson. Mr. President, I am pleased to be able to join with Senator Levin and several of our colleagues in introducing legislation to improve how the federal government regulates. This legislation is an effort by some of us to devise a common solution to the problems of our regulatory system. We have some real political difTerences among us, but we all share the same goals: clean air and water, injury free workplaces, safe transportation systems, to name a few of the good things that can com regulation. We also all share the goal of avoiding regulation which unnecessarily interferes in people lives and businesses, which costs more than it benefits, or which - inadvertently - causes actual harm.
I am pleased we are introducing this bill with Senators Glenn, Abraham, Robb, Roth, Rockefeller an Stevens. They have all toiled in the fields to improve regulation.
' li was in this spirit that the legislation we are introducing today was drafled. The Regulatory improvement Act will promote the public's right to know how and why agencies regulate, improve the q uality of govemment decision making, and increase govemment accountability and responsiveness to t ric people it serves.
The problem is that agencies sometimes lose sight of common sense as they create regulations. Then even well intentioned rules can produce disappointing results.
Consider the airbag issue that has been in the news lately. The National Highway Transportation Safety Administration required high force air bags to maximize the odds of survival for adult males in hiphway crashes. But the de? oyment force from the these air bags can be so severe that they can injure chhdrcn, l
women, and the cicerly. Senator Kempthorne has spoken about the tragic death of a young girl from Idaho who was decapitated when an air bag deployed during a low-impact collision. The agency is now considering the use of an air bag cut off switch to avoid these tragedies. But Mr. President, tragedies.ike l
this never should have occurred. We could have avoid:d needless deaths and injuries if the agency had carefully considered the risks that high-impact airbags pose to certain populations. I hope today's proposal will correct mistakes like this before they occur.
A second example is the removal of asbestos from our schools and other public buildings. Early in the 1980s, gavernment scientists argued that asbestos exposure could cause tacusar.ds of deaths. Congress responded by passing a sweeping law that led ci:ics and states to spend nearly $20 billion to remove asbestos from public buildings. After further research, EPA officials eventually concluded that ripping out the asbestos had been an expensive mistake. Ironically, removing the asbestos actually raised the risk to the public -- because asbestos fibers become airborne during removal. This mistake never would have occurred if these increased risks had been considered in the first place. I hope that would change under the Regulatory improvement Act.
Finally, let me mention our Superfund req uirements. Superfund was passed with the good intention of cleaning up America's toxic waste sites. L nfortunately, things are not working as well as intended.
Su perfund has become a legal and regulatory maze where a good 90% ofinsurers' costs and 20% of liable parties' costs are spent on lawyers and consultants -- not on cleaning up the environment. We also have to ask if we focusing on the most important priorities. For example, Superfund imposes extremely stringent standards for cleaning up lead in groundw ter. Now, this is a good rule in many cases, because o
lead can be very toxic to children. The problem is that we may be overlooking more direct threats to children from lead. For example, lead paint in old houses can be a greater threat to children's health than lead that may be under some mdustrial site where there are no children. Last congress, our Committee heard testimony about how the Superfund law requires groundwater in a Newark rail-yard to be cletmer 10'31/97 10:44 icf3
http://www Tenit e. gov /-gov _affairvfloorsa (loor Statement on The Rigulatory it.1provement Act of 1997 Second, this bill does not contain a petition process that would allow outside parties to sue agencies in court to change particular rules that the litigant does not like. While we believe there are fruitful opportunities to update and improve old rules, we do not want to set up a review process that could create a litigation morass. instead of a petition process, agencies will use independent advisory committees that would recommend a list of rules that could be improved to substantially increase net benefits to the public. The agency would defer to the recommendations of the advisory committee, but they could not k dragged into court if someone war.ted a difTerent rule to be reviewed.
Finally, this bill strikes a balanced approach to judicial review. We allow limited judicial review under the deferential arbitrary and capricious standard to ensure that agencies issue reasonable regulations using the tools of cost-benefit analysis and risk assessment. But this legislation does not provide a series of trip wires that could hinder agencies from performing their missions. In other words, we realize the agencies may not be perfect in complying with this law. They may make mistakes from time to time. We won't imperil important regulations because the agency made honest mistakes. We just ask the agency to make reasonable and honest decisions, and the public deserves no less.
Mr. President, we are devoting vast resources to achieve our regulatory goals. By some estimates, the annual regulatory burden is nearly $700 billion per year -- almost $7,000 for the average American household. Our regulatory goals are too important, and our resources are too precious, to spend this money unwisely.
The Regulatory improvement Act will ensure that agencies conduct better economic and scientific analysis before they issue regulations. Government will be more open to the public, will better explain the problem, and will consider the best available information to solve the problem. Agencies will consider the benefits and burdens of different regulatory attematives so we can reach the most sensible solutions. And agencies will modernize old rules on the books to increase the benefits to the public. In the piacess, we won't sacrifice our important national goals and values. We can make our govemment more effective, more open, and more accountaHe than ever.
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EXECUTIVE OFFICE OF THE PRESIDENT 7.
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OFFICE OF MANAGEMENT AND BUDGET
- 1 WASHINGTON. O C. 2e503 CDMINIST M ATOR d
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STATEMENT OF SALLY KATZEN ADMINISTRATOR OFFICE OF INFORMATION AND REGULATORY AFFAIRS OFFICE OF MANAGEMENT AND BUDGET before the
. COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE September 12,1997 Mr. Chairman, Members of this Committee, I appreciate the opportunity to appear 'oefore you today. In particular, I welcome the opportunity to discuss S. 981, the " Regulatory Improvement Act of 1997." This bill was introduced on June 27,1997, by Senator Carl Levin and is cosponsored by Chairman Thompson, three former Chairmen of this Committee (Senators Glenn, Roth, and Stevens), as well as Senators Abraham, Robb, and Rockefeller.
To a large extent, this bill endeavors to codify the regulatory principles that President Clinton set forth in Executive Order 12866. It would also embody in statute a number of administrative procedures and practices that our rulemaking agencies are following to make the -
regulatory system better. The bill also includes numerous provisions that go beyond the
- Administration's current practices, but these provisions, too, are intended to serve the same regulatory reform goals that have animated the Administration's efforts. As Senator Levin explained:
"We do need better cost benefit analysis and risk assessment, more flexibility for the regulated industries to reach legislative goals in a variety of ways, mora cooperative
? efforts between govemment and industry and less 'us versus thein' attitudes.
" Based on these common principles, Senator Thompson and I have been working for
2 mones on this legislative proposal that I hope will yield a more rational and fair regulatary process and bette. uore flexible, more cost effective and more enforceable regulations."'
In a similar vein, Chairman Thompson stated:
"The Regulatory Improvement Act wi!! promote the public's right to know how and why agencies regulate, improve the quality of government decisionmaking, and increase Government accountability and responsiveness to the people it serves."2 The aspirations for this bill are high. Senator Levin has said: "[T]his bill will improve the regulatory process, will build confidence in the regulatory programs that are so important to this society's well-being, and will result in a better... a less contentious regulatory process.")
We cannet understate the significance of the second clause in the above quotation, for regulatory programs are indeed vital to the well being of our society; whatever criticism there may be of the precess by which regulations have been developed or implemented, we cannot lose sight of the fact that regulations limit pollution, increase worker safety, discourage unfair business practices, and contribute in many o her ways to a safer, healthier, more productive, and more equitable society.
Because of the importance of regulations to our societal well-being, we are pleased that the drafters of this bill have been sensitive to the deeply held concerns with the regulatory reform propmals in the last Congress, and that they have eliminated many of the troublesome aspects of those bills, it is clear that they have worked hard to move a contentious issue forward in a constructive, positive way. While the Administration has serious concerns about the bill in its current form, we nonetheless appreciate this Committee's recognition of the importance both of regulatory reform und of"getting it right."
' 143 Cong. Rec. S6743 (June 27,1997).
2 143 Cong. Rec. S6749 (June 27,1997).
3 Senator Carl Levin,143 Cong. Rec. S6744 (June 27,1997).
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3-The Clinton Administration agrees that regulatory reform is important, and, as a result, during the past four years, President Clinton has undertaken a number ofinitiatives to improve the Federal regulatory system. Early in his first term, President Clinton signed Executive Order No.12866," Regulatory Planning and Review."' E.O.12866 sets forth the President's.
" regulatory philosophy," which holds that regulations should: be issued only where necessary; be based on a full assessment of costs and benefits of reasonable alternatives, including not regulating; and reflect the attemative that maximizes net benefits (unless a statute requires another approach).8 In the same month, Vice President Gore issued the first Report of the National Performahce Review (NPR)," Creating a Govemment That Works Better & Costs Less," which included in its Chapter " Cutting Red Tape" a discussion of ways for " Eliminating Regulatory Overkill." To reinforce this effort, the NPR issued a report making a number of specific recommendations for " Improving Regulatory Systems."'
On February 21,1995, President Clinton directed the Federal agencies to conduct a page-by-page review of their existing regulations to determine which should be eliminated and which should be streamlined, simplified, updated, or otherwise improved. He mstructed the agencies to ask themselves:
Is this regulation obsolete?
Could its intended goal be achieved in more efficient, less intrusive ways?
' 58 Fed. Reg. 51735 (October 4,1993).
5 A number of procedural themes run through the Order as well. Within the Executive Branch,it encourages cooperation and coordination among OMB and the agencies. With respect to the public, it emphasizes opennes's and early involvement by all of the interested entities, including particularly State, local, and tribal entities.
- The NPR also issued reports involving specific Federal agencies that included recommendations for improving specific regulatory activities. Thereafter, the NPR issued annual status reports describing agency accomplishments in furtherance ofits original recommendations. OIRA issued six-month and one year reports describing ager:cy implementation of E.O.12866; most recently, in December 1996, OIRA issued "More Benefits; Fewer Burdens - Creating a Regulatory System that Works for the Americe People"-- a report to the President on the Third Anniversary of E.O.12866.
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4 Are thiere private sector altematives, such as market mechanisms, that can better achicve the public good envisioned by the regulation?
Could private business, setting its own standards and being subject to accountability, do thejob as well?
Could the States or local governments do the job, making Federal regulation unnecessary?
In addition, building on the original NPR reports and recommendations, Vice President Gore led a comprehensive review of both cross-cutting and sector-specific regulatory issues.
From this process, President Clinton announced several major reforms. Among others, EPA committed to 25 environmental reforms that would reduce burdens and costs for entities regulated by EPA, while maintaining EPA's ability to protect the public health and environment responsibly and effectively. FDA announced 36 reforms that would significantly cut drug approval times and streamline the pre-market clearance process for certain devices. OSHA committed to issuing common sense regulations; encouraging partnerships between business, labor, and government; and eliminating red tape. SBA streamlined its rules for small businesses by rewriting all ofits regulations in plain English and cutting the number of pages by over 54 percent. HHS launched administrative reforms in health care, including cutting paperwork for patients, doctors, and other health professionals.'
Also starting four years ago, this Committee (as well as other committees in Congress) began consideration of a wide variety oflegislative proposals for regulatory reform. On May 25, 1995, this Committee unanimously reported out S. 291, the " Regulatory Reform Act of 1995."8
' See, NPR " Reinventing Er.vironmental Regulation" (March 16,1995); NPR " Reinventing Environmental Regulation: P ogress Report" (March 29,1996); NPR " Reinventing Drug &
Medical Device Regulations"(April 1995); NPR "The New OSHA: Reinventing Worker Safety and Health"(May 1995);NPR "The New SBA: Reinventing Service to the Small Business Community"(June 12,1995); NPR " Reinventing Health Care Regulations"(July 1995).
s S. Report.104 88.
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. Because of enormous controversy over variations on the regulatory reform themes embodied in S. 343, as well as H. R. 9 and H.R. 994, S. 291 did not pass.
But other related legislative efforts did pass and become law. Members of this Committee were actively involved in the passage of the "Unfunded Mandates Reform Act of 1995," the " Paperwork Reduction Act of 1995,"80 and the"Small Business Regulatory Enforcernent Faimess Act of 1996."" This Committee supported each of these bills because each orc was designed, in its own way, to improve aspects of our Federal regulatory system.
President Clinton signed each bill with a strong supporting statement because each bill was likely, on balance, to result in productive reform.
Title 11 of the Unfunded Mandates Reform Act was designed to assure that Federal agencies are sensitive to the needs of, and potential regulatcry burdens being imposed on, their inter gov,mmental partners - and to assure that consultations take place before completion of regulatory actions that would particularly affect them." The Paperwork Reduction Act (FRA) was designed, in part, to assure that collections ofinformation included in regulations by Federal agencies mir:mize burden on respondents and maximize their usefulness to the agencies."
' P.L.104-4 (March 22,1995). See,in particular, Title 11," Regulatory Accountability and Reform."
P.L.104-13 (May 22,1995).
" Title 11 of P.L.104121 (March 29,1996). See also, Section 645 of the Treasury, Postal Services and General Govemment Appropriations Act,1997 (P.L.104-208)(September 30, 1996), sponsored by former Govemmental AfTairs Chairman Stevens, now Chairman of the Senate Appropriatio. Committee, and OMB's" Draft Report to Congress on the Costs and Benefits of Federal Regulat:c.ns," 62 Fed. Reg. 39352 (July 22,1997).
" For a discussion of agency implementation of this Act, see the two annual OMB Reports to Congress entitled," Agency Compliance with Title 11 of Unfunded Mandates Reform Act of 1995," dated March 22,1996 and April 1997.
" See OMB's "Information Resources Management Plan of the Federal Govemment" (August 1996), particularly Chapter ll,"The Fiscat Year 1995 Information Collection Budget (1CD)."
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'Ihe "Small Business Regulatory Enforcement Fairness Act"(SBREFA) was designed to increase agency sensitivity to the needs and concerns of small business it seeks, for example, to have agencies write their regulations so that those affected can more easily understand them and know how to comply, and to have agencies establish programs to provide for the reduction, and in appropriate circumstances for the waiver, of civil penalties for violations of a statutory or regulatory requirement by a small entity SBREFA reinforces this need for agency attentiveness to small business concerns by providing forjudicial review of various provisions of the Regulatory Flexibility Act to enable small entities adversely affected and aggrieved by final agency actions to 6btain reasonable relief. SBREFA also contains provisions for " Congressional Review of Agency Rulemaking."" These,.rovisions began as S. 219, under the bipartisan sponsorship of Senators Nickles and Reid, and with the strong support of President Clinton. By passing this law, Congress acknowledged and assumed more responsibility for its continuing role in the regulatory system.
The Administration's support -- indeed strong support - for each of these bills was based on our evaluation of what we both hoped, and based on our experience, anticipated, would be accomplished. In each case we concl>Hed that the bill would improve the process for developing and carrying out Federal regulations. In each case, we also had confidence that, despite the additional burden on the Federal regulatory agencies, the new law would not interfere with their ability to carry out their statutory responsibilities to protect American health, safety, and the environment, or to promote social or economic weil being.
This is the same test that we would apply to S. 981: will this bill improve the regulatory system without imposing undue burdens on the regulatory agencies or otherwise impeding their sbility to cany out their missions on behalf of the American public?
We are not, however,writi'ng on a blank slate. The three generic regulatory reforrn bills
" Tite 11, Subtitle E, of P.L 104-121 (March 29,1996), codified at 5 U.S.C. chapter 8.
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l enacted in the last few years imposed new responsibilities affecting the development and implementation of Federal regulations. Some of the costs of these bills are being felt, as are some of the benefits. Undoubtedly, we would all be more confident in our judgment of their net effect, and better able to apprise the need for further legislative reform, if we had more time and experience with implementation of the reforms already enacted.
Moreover, the Administration believes, as do many Members of Congress, that other models of regulatory reform may be more effective than enactment of additional comprehensive, one-size fits all, procedural requirements. In President Clinton's first term, he supported and signed the Food Quality Protection Act, the Safe Drinking Water Act, the Pipeline Reauthorization Act, two bills providing for banking reform, and other legislation providing for interstate trucking deregulation, procurement reform, and pension refonn. In each instance, the regulatory reform provisions were carefully tailored to the needs and concems of the specific regulatory programs involved, and avoided the risk of over or under-inclusion pcsed by one-size fits-all legislation. In this Congress, we are working on FDA reform and reauthorization of the Endangered Species Act and Superfund.
For these reasons, we are - I believe, legitimately - skeptical as to whether another omnibus regulatory reform bill is the right course to take at this time. However, should the Committee determine that S. 981 is ' he correct direction to take and that the timing to report this t
bill is propitious, then there are a number of provisions that need to be modified before this bill would meet the test that we hav: articulated. For purposes of this hearing,I am restricting my comments to the more important concerns. As with any legislation of this scope and complexity, there are technical details that have, or may have, significant policy ramifications but that cannot be discussed effectively in formal testimony. If S. 98; is to move forward, the Administration would like an opportunity to review these issues with the Committee and to identify appropriate modifications to the bill's language to address our concems, 1
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Cost Benefit Analysis and Judicial Review - Sections 623 and 627. I raise this issue first primarily because of the history of comprehensive regulatory reform legislation in the prior -
Congress, specifically S. 343 and H.R. 9. As you know, the interaction of cost-benefit analytical requirements (or " decisional criteria") and judicial review was one of the central, and most controversial, issues in past comprehensive bills.
Of particular concem in earlier bills was language that would have superseded the decisional criteria in the agencies' organic statutes. Changing in one fell swoop literally scores of health, safety, ahd environmental laws that were vigorously debated and carefully considered by the Congress at the time they were enacted without a reasoned discussion by the responsible.
committees and the full House and Senate could not fairly be characterized as good government.
Overriding pre existing substantive law would be even less appropriate with regard to those laws, where language addressing the consideration of costs and benefits was carefully negotiated as a key ingredient of the statute. For ex' ample, in the Safe Drinking Water Act and the Food Quality Protection Act, enacted by the 104th Congress, a great deal of time and effort were spent drading language that defines the precise role played by cost-benefit analysis in regulatory decisionmaking, and the resulting legislation received near unanimous support in the Senate. If a comprehensive regulatory reform bill either added an additional procedural layer or introduced new requirements, it would clearly undercut,if not eviscerate, these significant achievements.
This Administration is very much in favor of u:ing cost benefit analysis to produce common sense regulations. As you know, under E.O.12866 agencies are required to prepare and submit to OMB cost benefit analyses for the economically significant rules that my office
- reviews. These cost-benefit analyses are to inform the regulatory decisionmaking, with the goal of producing rules that are more focused, more cost effective, more flexible, and less burdensome. But cost benefit analysis alone is not, and should never be, dispositive. Instead, it represents one of many useful tools that contribute to making sound regulatory decisions; indeed, other Presidential Executive orders include requirements thet agencies consider children's health and environmental justice issues during rulemaking.
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9 Also of significant concern in earlier bills were provisions that would have allowed a reviewing court to delve into an agency's cost benefit analysis and remand the entire rule based on a single perceived procedural misstep. Judicial review,f agency action is a well-estab!ished and essential part of administrative law. But the concept that has consistently found favor among jurists, practitioners, and academics is that the court should review a final agency action in light of the rulemaking record as a whole. The Administration most emphatically b(lieves that one or more pieces of the record should not become the basis for courts to send rules back to agencies to start their rulemaking processes all over again.
The sponsors of this bill state that it is not their intent to have their cost b.acfit requirements operate as a supermandate or to have procedural flaws in the cost benefit analysis be a ground for remand." As we read the bill,it represents a clear improvement over earlier bills in these respects. But while the language used appens to reflect the sponsors' stated intention,it could be interpreted differently. If we are to avoid needless litigation over the scope ofjudicial review, the language should be improved so that the sponsors' intent is the law.
For example, in Section 623 (the cost benefit section), a " savings provision" could be added similar to the one that was included in an earlier bill sponsored by Senators Chafee and Glenn, S.1001 - i.e., one that states explicitly that nothing in the subchapter relating to the
" "[S. 981) does not create a supermandate that would amend existing laws nor does it contain mandatory decisional criteria that would establish new standards for an agency to meet..
.. There is nojudicial review permitted of the cost benefit analysis or risk assessment requirea by this bill outside ofjudicial review of the final rule. The analysis and assessment are includeo in the rulemaking record, but there is no judicial review of the content of those items or the procedural steps followed or not followed by the agency in the development of the analysis or assessment." Senator Levin,193 Cong. Rec. S6742,36744 (June 27,1997).
"First, this legislation does not contain a supermandate.... Finally, this bill strikes a balanced approach tojudicial review. We allow limited judicial review under the deferential arbhrary and capricious standard to ensure that agencies issue reasonable regulations using the tools of cost-benefit analysis and risk asses: ment. But this legislation does not provide a series of trip wires that could hinder agencies from performing their missions." Senator Thompson, 193 Cong. Rec. S6750 (June 27,1997).
I
' vialytical requirements should be construed to modify or override any statutory standard or requiremer,t designed to protect health, safety, or the environment. In Section 627 (the judicial review section), language could be added to ensure that judicial review of the cost benefit and risk assessments, and the agency's cost benefit determination under Section 623(c)(3), would be no more than,imd no different from,that currently permitted by Section 706 of the APA. Thus, in Section 627(d), one could incorporate language similar to that in S. 291, the Glenn Roth bill voted out of this Committee unanimously last Congress, explicitly prohibiting judicial review of the procedural requirements for the cc,st benefit and risk analyses in Sections 623 and 624; and one could add langbage explicitly stating that courts are to review these cost benefit and risk assessments, as well as the agency's cost benefit determination, only in acco, dance with Section 706 of the APA or the specine judicial review provisions otherwise a.pplicable to the regulation.
Alternatively, the following language, added in place of existing Section 627(d), would further clarify the sponsors' iment:
"(d)ln ay proceeding involving judicial review under Section 706 or under the statute granting the rulemaking authority, the information contained in any cost benefit analysis or risk assessment required under Subchapter 11 [ Sections 623,624, and 625] may be considered by the court as part of the administrative record as a whole solely fc,r the purpose of determining whether the final agency action is arbhrary, capricious, or an abuse of discretion, or is unsupported by substantial evidence where that standard is otherwise provided by law. De adequacy of compliance or the failure to comply with Subchapter 11 [bettions 623,624, and 625] shall not be [' rounds for remanding or invalidating a final agency action, unless the agency entirely failed to perform a required cost benefit analysis or risk assessment."
Lookhack and Advisory Committees - Sections 631-633. Ilow best to "look back" and review existing regulations is an important issue that we have all strugt,!ed with. For example, Section 5 of E.O.12866 instructed agencies to review existing regulations to ensure that they were still timely, compatible, effective, and not unnecessarily burdensome. And building on this effort,in February 1995 President Clinton asked agencies to conduct a page by-
See Section 622, S.1001 (104th Cong.),
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1 page review of their existing r:gulations to toss out or reinvent those that were overly burdensome, outdated, or in need of revision. As of August 1997, agencies had completed action to eliminate over 13,000 pages of regulations and, more importantly, they had issued proposed or final rules to reinvent nearly 25,000 pages of regulations to make them more streamlined, focused, flexible, or cost effective.
While the goal of routinely reviewing existing rules is a laudable one, the effort to draft legislative language to codify a lookback process has proven to be very difficult. S. 343 would have created a contplex and cumbersome petition process that would have been unworkable.
And li.R. 994 would have compounded this problem by indiscriminately sunsetting any rules, even important public heald. and safety rules,if the required reviews were not completed with!n the bill's extremely tight deadlines.
The advisory committee process proposed in this bill is an improvement over earlier bills, although we remain concemed about its effect on agency resources and regulatory programs. As always, the devil is in the details; and as currently drafted, the bill's lookback process contains such detailed and prescriptive procedures to take place in such unrealistically short time frames as to make these provisions of the bill highly objectionable.1 or example, in its current form, the bill provides that the advisory committee must make recommendations to the agency, the agency must publish a preliminary review schedule, the agency must publish a final review schedule, the agency must publish a notice soticiting public comment on wh.ther the agency should continue, modify, or eliminate a rule; the agency must publish a notice addressing public comments and making a preliminary determination of what action to take; the agene" must publish a notice addressing public comment on the agency's preliminary determination and making a final determination of what action to take; and so forth, all within very tight time limits. Moreover.
l the agency that falls to meet a review deadline is to immediately begin a long and costly rulemaking proceeding to repeal the rule, regardless of how close the agency is to completing its L
review or the merits of repealing the rule.
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, Such detailed procedural requirements, applicable to each regulatory agency regardless of its size, administrative stmeture, or statutory responsibilities, with such mechanistic sanctions, could lead to bureaucratic gamesmanship, not genuine, good,villed efforts to improve and otherwise reinvent ongoing regulatory programs. Indeed, the likelihood for mischiefis all the greater here because the advisory committees will not have sinffs of their own. Thus, for them it is not only relatively cost free, but also another means to use scarce agency resources to, at best, shift agencies' agendas away from the agencies' choices on how best to protect the public interest toward the particular goals of special inte ests, and at worst, divert the agencies from pursuing their substantive statutory mandates. This portion of the bill is also problematic because it introduces different standards of review for evaluating the reasonableness of an agency's decision to eliminate, revise, or continue an existing rule.
We are also quite concemed that the bill might be construed to establish a supermandate in Section 633(1). By providing for court remand of a rule whenever the court concludes that an agency "could have adopted a reasonable altemative that would substantially increase net bcncfits... while addressing the objectives of the statute..."(emphasis added), the bill would effectively narrow the range of regulatory discretion that the underlying statute confers on the agency. This is because regulatory statutes often allow agencies to consider other factors in choosing an alternative than simply the one that maximizes ne'. benefits. By contrast, section 623 of this bill makes clear that the sponsors intend only that the agency state whether or not it has selected the attemative that maximizes net benefits.
For all of these reasons, we believe it is essential to redo this portion of the bill, streamlining and simplifying the many detailed requirements, extending the very tight time limits explicitly recognizing that the size of the advisory committee's "wish list" must be tied in some way to agency resources for this project, and conforming the analytical requirements regarding the judicial review provisfons to earlier sections of the bill. Here is no need for such micromangement of this process, and even less need for a law,,:rs' feast oflitigation over its j
details. For if an advisory committee produces a reasonable list, an agency would disregard it at
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its peril, particularly if the recommendations were sent to Congress, where the agency's oversight committees would be able to evaluate the merits of the recommendations and the effect of agency action in the context of then current program and budgetary concems.
Peer Review - Section 625. Another area of concem is the bill's peer review provisions, which unfortunately add an additional set of procedural requirements that would themselve, be unlikely to pass a cost benefit test.
The AdmirGstration supports peer review;in fact, many agencies already routinely use various peer review bodies or attemative processes for receiving independent input. And we enderstand W..y the Congress would want to encou age agencies to supplement their own work with a rev'rw by outside experts who can provide a balanced evaluatior of the scientific support for, and th e likely economic implications of, the rule.
It is important to recognize, however, that peer review, like other salutary steps in the regulatory process,is not cost free, either in terms of agency resources or in time. In fact, six-months to a year would be the norm, not the exception for each review. By its terms, the bill requires agencies to have peer review of cost benefit analyses as well as risk assessments, it is unclev, however, what a peer review of a cost benefit analysis would do, or what value would be added, beyond the work already done by OIRA in the course ofits review of the proposed and final rules. Moreover, this bill appears to require agencies to conduct each peer review twice -
both before publication of the notice of proposed rulemaking (NPRM) and before publication of the final rule. Before the NPRM, much of the information to be reviewed may be incomplete or unresolved; indeed, the purpose of an NPRM is to propose attematives ana provide for meaningful public comment. ' Die benefits of peer review at this early stage would not seem to justify the costs.
Also, we remain concemed about the bill's provisions for eligibility to participate on peer review panels. Specifically, the bill appears to authorize panel members who may have conflicts
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r 14 ofinterert, as long as those conflicts are disclosed. There are a number of existing government-wide statutes addressing conflict of interest, and there is no perceived reason to treat individuals on the peer review panels established in this bill differently from members of other advisory boards or committeen. Moreover, we are concemed that these provisions will ur'dermine the perceived integrity of the scientific peer review process.
Additional Guidelines, Studies, Analyses, and Contracts - Sections 628 and 629.
We are also very troubled by the many new mandates sprinkled throughout the bill requiring agencies, OMB, arid the Omce of Science and Technology Policy (OSTP) to draft various studies, analyses, and guidelines, and to enter into several research contracts. I am referring to Section 628's requirement that OMB and OSTP, within 9 months of enactment," develop [and periodically revise) guidelines by which relevant agencies shall prepare (and periodically revise) detailed guidelines for cost benefit and risk assessments" and that agencies produce these detailed guidelines; Section 628's requirement that OMB and OSTP enter into a contract with a scientific institution to conduct research on, among other things, comparative risk analysis and risk communication; Section 629's requirement that OMB and OSTP enter into a contract with a scientific institution to conduct a study, within 3 years, on comparative risk which includes guidance on the use of comparative risk; and Section 629's requirement that the President submit periodic reports to Congress recommending legislative changes regarding nsk prioritization.
l These reports will cost real money and consume real time. I speak from recent first hand experience. The Stevens Amendment" called on OMB to prepare a report to the Congress on the l
costs and benefits of regulations in the aggregate, and ofindividual economically significant rules reviewed by OMB in the last ; utr. The amendment was supported by President Clinton, l
" Section 645 of the Treasury, P.ostal Services and General Government Appropriations Act, l
1997 (P.L 104 208)(September 30,1996), sponsored by former Governmental Affairs Chairman Stevens, now Chairman of the Senate Appropriations Committee. See, OMB's " Draft Report to Congress on the Costs and Benefits of Federal Regulations," 62 Fed. Reg. 39352 (July 22,1997).
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and we have been devoting the resources necessary to produce a report we are proud of. It was a productive project and one that we teamed a lot from. But, at the snne time, it tnok about one.
i sixth of my staff resources otherwis: available for regulatory and paperwork review about three i
to four months to complete the work. If you multiply this burden several times, and impose it cach year, you see in concrete terms the costs that would be imposed by these new requirements.
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Given that all of the agencies are facing static or declining resources, we believe that these provisions should be eliminated or substantially scaled back if this bill is to move forward.
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J Risk Assessment - Section 624. We have expressed concern with risk assessment provisions in past comprehensive regulatory reform bills because they contained detailed and overly prescriptive requirements. This bill is substantially improved in this regard. Nonetheless, it retains a one size fits.all quantitative approach to risk assessments designed for health risk assessments involving cancer risks that is not well suited to many safety risk assessments (e.g.,
transportation or workplace safety) that are qualitative and carried out for non cancer causing
- hazards, in addition, one of our concems with risk assessment provisions in earlier bills was that the risk assessment requirements were potentially applicable to almost aii agency actions. This bill specifically limits Section 624's requirements to major rules, and we agree that risk assessments supporting these major' rules should be made public and subject to scientif s scrutiny. But we are concemed that Section 628's requirement that agencies produce risk guidelines that are consistent with Section 624 may indirectly apply the bill's risk assessment -
reouirements to non major rules that have "significant implications for public policy," a tenn, incidently, that is not defined in the bill. Such a back door extension of the scope of the risk assessment requirements would be very troubling.
We are also concerned, as we have been with past bills, with the requirement in section 624(f)(2) that agencies provide the range and distribution of risks, including th "most plausible g-,
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of the others - something most individual scientistr. are loath to do.
Finally, as with past bills, we are concemed with the provision that permits use of
" reasonable assumptions" only if" relevant and reliable scientific information is not reasonably available," because it sets up a false dichotomy between "r.ssumptions" and " scientific information.' The assumptions often used by agencies (e.g., that chemicals that cause cancer in animals are likely 1o do so in humans) are usually supported by hundreds of similar cases and decades of scientific observation; simply because a piece of information that conflicts with an established assumption is availabic and " reliable does not automatically destroy the credibility of the assumption nor should it necdssarily prevent the agency from using the assumption. Le piece ofinformation may be " reliable" in the sen:e that it is not disputed, but there may be many implications of the information, all of varying degrees of credibility.
Codifying Executive Regulatory Review - Sections 641 through 644. The provisions establishing Executive regulatory review tre modeled on E.O.12866. For the most part, we are comfortable with the policy judgments and have no objection to their being codified. Here are, however, certain prnisions that, based on our experience, should not be cast in statutory provisions.
For example, Section 642(c) would establish a 90-day limit for regulatory review that could be extended for an additier.al 30 days. I appreciate that President Clinton inserted a simiin
- (but somewhat more flexible) time limit into E.O.12866, largely to allsy concems about rules
. subject to Executive review in previous Administrations going into what seemed like a giant black hole for years on end. Nevert eless, we have found that when two or more agencies are at h
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loggerheads over a regulatory issue, it may well take more than 90, or even 120, days to obtain needed data and analyser, to conduct the appropriate evaluation, and to arrange for the policy l
officials in the interested agencies to come to ap.reement. We are also concemed that if there is a l
fixed statutory deadline, there may be a temptation - if only in some circumstances - to " game" the system by responding to our or another agency's questions on the 89th day. So long as it is on our clock, there is little incentive for prompt resolution of outstanding issues." A solution to the second concem would be to stop the clock once OIRA had passed its comerns on to the rulemaking agency, it is more diflicult to suggest a solution for the delays caused by interagency coordination - possibly there could 'bc a statutory exhortation for prompt and ongoing effort, coupled with a waiver for the time limits.
I would also note that the proposed disclosure provisions are broader than those stated in E.0,12865, which apply to OIRA, the OhiB component responsible for regulatory review. The bil!'s disclosure provisions scens to apply to other parts of OMB, notably its budget activities, and the timing for the disclosure is not clear. We do not see any need for any change in existing practice, and are very concemed about the unintended consequerces of some of the proposals.
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l Even more importantly, and to me more objectionable, is the requirement in Section
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643(b)(2) that, prior to publication of any proposed or final mie, the agency must include in the rulemaking record a doct ment identifying the changes in the rule "that were made at the suggestion or recommendation of [OhiB)." First, in our review process, it is very often not entirely clear who suggests or recommends a change in a regulation. For example, OMB may raise a question about a proposed approach and suggest an alternative. The agency may oppose the suggested altemative, but agree with the concern that prompted it, and decide to clarify or l
modify its own languaje Was this a change "made at the suggestion or recommendation of
[OhiB]"? And, even more critically, will having this requirement enhance the review process, or
" These issues were raised well before there were any drafts oflegislation, see, e.g., OMB's
" Report on Executive Order No.12866, Regulatory Planning and Review," 59 Fed. Reg. 242i6, l
24288-89 (May 10,1994).
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l 18-will it result in resistance to change lest the " record" reflect a series of"gotchas" by OMB7 Based on my four and a half years overseeing the regulatory review process, I strongly believe that this provision is counterproductive to everything we have sought to achieve in carrying out meaningful review. The public would not be disadvantaged without this provision because Section 643(b)(1) provides that the public will have access to the draft submitted to OMB for review and the final published rule. Who gets " credit" for suggesting these changes is inclevant."
Rulemaking Deadlines - Section 626. 'Ihis section provides for an automatic six-month extension of existing court imposed deadlines. To the extent that this language purports to modify judicial decrees orjudgments,it raises separation of powers concerns. The Supreme court has long held that while Congress has plenary power to modify the law that courts must apply in pending cases, Congress' power to modify court decisions or judgments in a particular case or controversy may impermissibly infringe on Article 111 powers. Mant v. Spendthrift Farms, Inc.,115 S. Ct.1447 (1995); Unitcd States v. Klcin,80 U.S. (13 Wall.) 128 (1871). This possible constitutional defect can be cured by simply deleting court deadlines from the scope of the section.
I would note that this is unlikely to affect the sponsors' htent. As long as Section 626 continues to modify the statutory deac1ines that give rise to court imposed deadlines, affected agencies will be able to rely on the change in the law to seek appropriate relief from the relevant court-imposed deadline.
Effective Date - Technical and Conforming Amendments. As a final matter, we belb that the provisions with respect to the effective date of the bill must be revised to ensure that agencies will not have to begin again any rulemakings already well underway to conform to
" licie, as above, see footnote 18, these are issues we raised long before there was any legislation being proposed on this subject.
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the bill's new requirements. In addition to the obvious waste of agency tesources al cady expended, there could be substantial delays in the issuance ofimportant health, safety, and environmental regulations.
Again,I appreciate the opportunity to testify before you today. I would also appreciate the opportunity, if you decide to move forward with S. 981, to discuss with you and your staff these and other mo're detailed concerns that the Admin 4tration has.
I will be happy to answer any questions that yots may have.
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