[Senate Hearing 106-179] [From the U.S. Government Publishing Office] S. Hrg. 106-179 S. 746--THE REGULATORY IMPROVEMENT ACT OF 1999 ======================================================================= HEARING BEFORE THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS FIRST SESSION __________ APRIL 21, 1999 __________ Printed for the use of the Committee on Governmental AffairsU.S. GOVERNMENT PRINTING OFFICE 57-552 cc WASHINGTON : 1999 _______________________________________________________________________ For sale by the Superintendent of Documents, Congressional Sales Office U.S. Government Printing Office, Washington, DC 20402 COMMITTEE ON GOVERNMENTAL AFFAIRS FRED THOMPSON, Tennessee, Chairman WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut TED STEVENS, Alaska CARL LEVIN, Michigan SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey THAD COCHRAN, Mississippi MAX CLELAND, Georgia ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina JUDD GREGG, New Hampshire Hannah S. Sistare, Staff Director and Counsel Paul R. Noe, Senior Counsel Joyce A. Rechtschaffen, Minority Staff Director and Counsel Darla D. Cassell, Administrative Clerk C O N T E N T S ------ Opening statements: Page Senator Thompson............................................. 1 Senator Lieberman............................................ 2 Senator Voinovich............................................ 3 Senator Levin................................................ 5 Senator Durbin............................................... 7 Senator Edwards.............................................. 52 WITNESSES Wednesday, April 21, 1999 Hon. Gregory S. Lashutka, Mayor, City of Columbus, Ohio.......... 8 Robert E. Roberts, Executive Director, Environmental Council of States......................................................... 10 Scott L. Holman, Chairman, Regulatory Affairs Committee, U.S. Chamber of Commerce............................................ 12 Ronald A. Cass, Dean, Boston University School of Law............ 31 Lester M. Crawford, Director, Center for Food and Nutrition Policy, Georgetown University.................................. 32 John D. Graham, Ph.D., Director, Center for Risk Analysis, Harvard School of Public Health................................ 34 Patricia G. Kenworthy, Vice President, Government Affairs, National Environmental Trust................................... 35 Franklin E. Mirer, Ph.D., Director, Health and Safety Department, International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW)................ 37 David C. Vladeck, Director, Public Citizen Litigation Group...... 39 Alphabetical List of Witnesses Cass, Ronald A.: Testimony.................................................... 31 Prepared statement........................................... 101 Crawford, Lester M.: Testimony.................................................... 32 Prepared statement........................................... 108 Graham, John D.: Testimony.................................................... 34 Prepared statement........................................... 110 Holman, Scott L: Testimony.................................................... 12 Prepared statement........................................... 92 Kenworthy, Patricia G.: Testimony.................................................... 35 Prepared statement with an attachment........................ 119 Lashutka, Hon. Gregory S.: Testimony.................................................... 8 Prepared statement........................................... 80 Mirer, Franklin E.: Testimony.................................................... 37 Prepared statement........................................... 133 Roberts, Robert E.: Testimony.................................................... 10 Prepared statement........................................... 88 Vladeck, David C.: Testimony.................................................... 39 Prepared statement........................................... 144 Appendix Jacob J. Lew, Director, Office of Management and Budget, prepared statement with enclosures...................................... 59 GAO report entitled ``Regulatory Reform, Comments on S. 746--The Regulatory Improvement Act of 1999,'' dated April 21, 1999, GAO/T-GGD/RCED-99-163.......................................... 71 Letter from Edel Wasserman, President, American Chemical Society, dated April 14, 1999, with an enclosure of a prepared statement from the American Chemical Society............................. 155 Edison Electric Institute, prepared statement.................... 160 National Federation of Independent Business, prepared statement.. 168 Letter from Shane C. Downey, dated April 20, 1999, on behalf of the Associated Builders and Contractors, Inc................... 170 D. Lynn Johnson, Vice President for Government Relations, Eastman Chemical Company, on behalf of Alliance USA--the Alliance for Understandable, Sensible, and Accountable Government Rules, prepared statement............................................. 171 Keith H. Dinger, President, Health Physics Society, prepared statement...................................................... 178 Chemical Manufacturers Association, prepared statement........... 182 Letter from John F. Smith, Jr., Chairman, The Business Roundtable, dated April 16, 1999............................... 202 Letter from Anne G. Giesecke, on behalf of the American Bakers Association, dated May 28, 1999................................ 203 Letter from Gaylen M. Camera, CAE, Executive Director, on behalf of the American Industrial Health Council, dated April 20, 1999, with a prepared statement attachment..................... 204 Letter to Senators Thompson and Levin from the ``Big 7,'' dated April 21, 1999................................................. 239 Letter to Senator Thompson from Robert W. Varney, President, Environmental Council of the States, dated April 16, 1999...... 241 Response to John D. Graham's April 21, 1999, testimony from Joan B. Claybrook, President, Public Citizen........................ 242 Response by Professor John D. Graham to comments submitted by Ms. Joan Claybrook................................................. 250 GAO report entitled ``Regulatory Reform, Agencies Could Improve Development, Documentation, and Clarity of Regulatory Economic Analyses,'' May 1998, GAO/RCED-98-142.......................... 254 Copy of S. 746................................................... 295 S. 746, THE REGULATORY IMPROVEMENT ACT OF 1999 ---------- WEDNESDAY, APRIL 21, 1999 U.S. Senate, Committee on Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 9:35 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Fred Thompson, Chairman of the Committee, presiding. Present: Senators Thompson, Voinovich, Lieberman, Levin, Durbin, and Edwards. OPENING STATEMENT OF CHAIRMAN THOMPSON Chairman Thompson. Good morning. Let us come to order, please. The Committee will consider the Regulatory Improvement Act of 1999, S. 746, which Senator Levin and I introduced in March with 15 of our colleagues. We began our work on this legislation in the last Congress and S. 746 reflects changes that we made in negotiations with the White House. We are pleased that the administration has said the President would sign this proposal. We want to bring much needed improvement to the Federal regulatory system. We believe that the American people deserve better results from the vast resources and the time that is spent on regulation. We support sensible regulations that help ensure a cleaner environment, safe food, safe workplaces, and reliable economic markets. Some continue to make increasingly isolated claims that the Regulatory Improvement Act would block or undermine important safeguards. We disagree with that. We want to make some common sense changes that will benefit all. There is compelling evidence that our current rulemaking system is missing opportunities to deliver greater benefits at less cost. Ineffective and wasteful regulations erode the public's confidence in government and they undermine important programs that the public values. We have to regulate smarter. This legislation will lead agencies to carefully consider and disclose the benefits and costs of different regulatory alternatives and seek out the smartest and most flexible solutions. It will help the Federal Government set smarter priorities to better focus money and other resources on the most serious problems. It will add transparency and accountability to the current regulatory process and help expedite important safeguards to reduce risk and save lives. We have a fine lineup of witnesses from government, the private sector, public interest groups, and academia to provide input into the bill. I want to welcome them all and I look forward to hearing their views. Before I call my first witness, I will recognize Senator Lieberman and other Members of the Committee who may be present for any opening comments. Senator Lieberman. OPENING STATEMENT OF SENATOR LIEBERMAN Senator Lieberman. Thanks, Mr. Chairman. Let me say at the outset how much I appreciate the efforts that you and Senator Levin have made on this proposal over a long period of time. I recognize that this measure before us, S. 746, includes a number of changes made in response to some of the concerns expressed about the bill in the last session, and I thank you for that. Nevertheless, I may be one of those who remain skeptical about the approach of the legislation, for many of the reasons that I have expressed at the earlier hearings. I continue to worry about unintended consequences and unforseen results. Trying to reform every type of regulation with a single law still seems to me to pose too high a risk to the public's health and safety. As democratically elected representatives, I know we all feel that we have an obligation to the people we serve to protect them from harm. That means, among other things, maintaining a strong defense, adequately staffing local police departments, but I think it is also equally our responsibility to protect people from breathing polluted air, drinking dirty water, eating contaminated food, working under hazardous conditions, and falling prey to consumer fraud. There is a broad consensus in this country and in this Congress, I believe, that transcends party lines, for an appropriately active regulatory role for government. I think there is also a consensus that we ought to be enacting these protections in an equitable, efficient, and fact-based manner, in a manner that is open to as much public understanding and participation as possible. In other words, we all support in the broad sense regulatory reform, but the question is how do we achieve it, and to me, the best way to achieve it is to target it statute by statute, not general and across the board. An example of what I would call effective regulatory reform is the Safe Drinking Water Act Amendments that were enacted a few years ago, including a very targeted series of reforms that dealt with features unique to the problem of drinking water quality. Similarly, the Food Quality Protection Act, which focused on reforming the pesticide regulatory program, was narrowly tailored. In both instances, negotiations led to agreements intended to increase future cost effectiveness while giving EPA the flexibility to address the higher priority risks to the public. Both bills passed the House and Senate by wide bipartisan margins. Now, by comparison, let me offer an example of how I fear omnibus regulatory reform might affect regulation under individual statutes, and I am going to use the program regulating toxic air pollution under the Clean Air Act as an example. In 1990, when we amended the Clean Air Act, we recognized that toxic air pollution was not being adequately controlled. Literally thousands of pollution sources were releasing chemicals into the air that were known or suspected causes of cancer, birth defects, or other serious health problems. Many of these pollution sources were without controls, partly because it took too long for the agency to research and analyze the risks, as was required by the law. Instead, Congress decided that there was already sufficient evidence of risk to justify regulating a list of particularly harmful chemicals, to narrow the field of regulation in that way, and we instructed EPA to set basic standards based on existing technologies without revisiting the questions of risk that Congress had already settled. So if this bill, S. 746, applied to the air toxics program, I worry that EPA could be required to delay issuing standards for these toxic chemicals until the agency conducted extensive risk assessment for each standard, which was not the intention when we adopted the law. I know some of the witnesses today will discuss other examples of areas where S. 746 would affect regulation in ways that are probably not intended or may not be anticipated. As troubled as I am about these examples, I am equally concerned about the ones that we are not going to hear about today and cannot foresee because this will have such a broad impact across all of our laws and regulations. I think it might be interesting to see a law-by-law survey showing how S. 746 would affect individual programs that now exist, whether at EPA or the Nuclear Regulatory Commission or the Food and Drug Administration, the National Highway Traffic Safety Administration, the Federal Aviation Administration, or any other agency. We have already, in fact, enacted a number of regulatory reforms beyond those targeted statutes in recent years, and, as I have said before, I prefer to give those some more time and to have us evaluate how they are affecting environmental protection, consumer protection, and worker safety, for instance, until we go further. These are the questions that leave me skeptical about the proposal, though I know it is well intended, and I look forward to the testimony today and to working with my colleagues on this Committee in pursuing the goal of fair and effective regulatory reform that I know we all share. I thank you. Chairman Thompson. Thank you very much. Senator Voinovich. OPENING STATEMENT OF SENATOR VOINOVICH Senator Voinovich. Mr. Chairman, I am pleased that we are here today conducting this hearing on a very important issue of regulatory reform. As you know, I testified before this Committee last year as a governor in support of the Regulatory Improvement Act. When I was Chairman of the National Governors' Association, I worked with the State and Local Government Coalition to make this bill one of our top priorities. That is an organization better known as the ``Big 7.'' As a matter of fact, I spent over 40 hours in the last session trying to lobby this bill through this very Committee. Fundamentally, what this legislation does is it says that we need to do risk assessment, cost-benefit analysis, objective standards that would be set for various agencies by OMB and the President's Scientific Council. It would allow for peer review of that. It would look at alternatives to regulations that are being contemplated and it would finally provide an opportunity to file a lawsuit if an agency did something that was capricious and arbitrary--reasonable things that I think ought to be applied to all of our regulatory agencies. One of the things that I was impressed with last year is how this Committee worked on a bipartisan basis to put this bill together and also with the White House to try and make it something that would be acceptable to the various groups that were concerned about this legislation. So this is an opportunity to take something that has really been debated and talked about and get it done this session. Again, I want to commend Senator Levin and our Chairman for the good job that they have done. I also want to extend a warm welcome to a gentleman who was my mayor while I lived in the governor's residence in Columbus, Mayor Greg Lashutka. Mayor Lashutka was a leader in the unfunded mandates debate and is a strong proponent of the use of risk assessment and cost-benefit analysis. Like Mayor Lashutka, I am a public servant who cares deeply about the needs of our environment and the health and well- being of our citizens. However, I am also concerned about the unnecessary and burdensome costs that are imposed on our citizens and State and local governments through Federal laws and regulations. As the lead governor on federalism for the National Governors' Association, I worked with the State and Local Government Coalition to help push the unfunded mandates relief legislation through and the Sage Drinking Water Act Amendments of 1996. Much of the initial research showing regulatory cost on State and local governments was started in Ohio and Mayor Lashutka was one of the leading advocates of both pieces of legislation, as mayor and president of the National League of Cities. These statutes set key precedents for the reforms that are envisioned in the Regulatory Improvement Act, as they made government more accountable based on awareness of risk, cost, and benefits. I would just like to remind the Members of the Committee, when we passed the amendments to the Safe Drinking Water Act, there were a lot of environmentalists and others that were opposed to it and we worked with those organizations and I will never forget being at the White House when the President signed that piece of legislation. It was that same kind of openness and working together that caused us to be successful with that and I am hopeful that same attitude will prevail with this legislation today. I am not going to go into all the details about the costs that are involved in businesses and others complying with regulations, but I would like to say that, so often Congress fails to realize how much these regulations cost State and local government, our partners. As a former mayor and governor, I did not mind regulations, but I did mind regulations that when you looked at them and you looked at the costs involved and realized that the benefits that derived were not analyzed or looked at from a cost-benefit point of view, it was very frustrating. So, Mr. Chairman, I am hopeful that we can get this legislation on the floor as soon as possible and that we can work with other Members of this Committee that may have some reservations to see if we cannot answer their concerns and others that will be testifying before us. Thank you. PREPARED STATEMENT OF SENATOR VOINOVICH Mr. Chairman, I am pleased that you are conducting this hearing on this very important issue of regulatory reform. As you know, I testified before this Committee last year as a governor in support of the Regulatory Improvement Act. When I was Chairman of the National Governors' Association, I worked with the State and local government coalition to make this bill one of our top priorities. I am pleased to join you now as an original cosponsor of this important legislation. I commend you and Senator Levin for your bipartisan work to enable Federal regulators to do a better job of protecting public health, safety and the environment. I want to extend a warm welcome to a gentleman who was my mayor while I lived in the governor's residence in Columbus, Mayor Greg Lashutka. Mayor Lashutka was a leader in the unfunded mandates debate and is a strong proponent for the use of risk assessment and cost- benefit analysis. Like Mayor Lashutka, I am a public servant who cares deeply about the needs of our environment and the health and well-being of our citizens. However, I am also concerned about the unnecessary and burdensome costs that are imposed on our citizens and State and local governments through Federal laws and regulations. As the lead governor on Federalism for the National Governors' Association, I worked with the State and local government coalition to help push the Unfunded Mandates Reform Act (UMRA) and the Safe Drinking Water Act Amendments of 1996. Much of the initial research showing regulatory cost on State and local governments was started in Ohio. Mayor Lashutka was one of the leading advocates of both pieces of legislation as a mayor and president of the National League of Cities. These statutes set key precedents for the reforms that are envisioned in the Regulatory Improvement Act, as they made government more accountable based on awareness of risk, cost, and benefits. However, UMRA and the drinking water amendments have had limited applications. The Regulatory Improvement Act is needed to provide across-the-board cost-benefit analysis and risk assessment procedures at all Federal agencies, including independent agencies. I think it is time that we make Federal agencies--not just Congress--accountable for the decisions they make. As a Nation, we spend vast sums of regulations. A report commissioned by the U.S. Small Business Administration estimates that regulations will cost the economy about $709 billion in 1999--more than $7,000 for the average American household. Unfortunately, this burden on consumers and American businesses has not always resulted in maximum health or environmental protection. At times, it has diverted scarce resources that could be used for other priorities such as education, crime prevention and more effective protection of health and the environment. The challenge facing public officials today is determining how best to protect the health of our citizens and our environment with limited resources. We need to do a much better job ensuring that regulations' costs bear a reasonable relationship with their benefits, and we need to do a better job of setting priorities and spending our resources wisely. I think S. 746 will help achieve these goals by increasing the public's knowledge of how and why agencies make major rules. I also believe that this bill increases government accountability to the people it serves and will improve the quality of government decision- making by allowing the government to set priorities and focus on the worst risks first. Mr. Chairman, I look forward to today's testimony. Chairman Thompson. Thank you very much. Senator Levin. OPENING STATEMENT OF SENATOR LEVIN Senator Levin. Mr. Chairman, I want to thank you for calling the hearing, for your cosponsorship of this legislation, for sustaining the level of effort that is going to be necessary to see that this legislation becomes law. This task may be a Herculean one. I just hope it is not a Sisyphean one. I came to the Senate because I believe that government can make a difference in people's lives, and I also know that government can waste money on a good cause, and when we do so, we jeopardize support for government acting to achieve the essential goals of public health, safety, and a clean environment. If we can do more with the resources that we have, or if we can spend less to achieve the protections that we want, we are wasting our money if we do not do that. If we can choose between protecting 5,000 people for a cost of $100 million or 10,000 people for a cost of $110 million, I want to know about that choice. If it costs five times more to protect twice as many people, I want to know that, too. If we do not set up the systems so that we know what the choices and trade-offs are, then we are just being ostrich-like and putting our heads in the sand. This bill is about information--information which we can use to judge the work that our government is doing to determine what the best methods are for achieving our goals. This bill directs agencies to consider all of our values, those that can be quantified and those that cannot be quantified. It directs agencies to learn about things, to get certain information. It does not tell the agencies when to regulate, what to regulate, or how to regulate. It just gives the information to agencies so that they can regulate wisely and it gives the public information that it can use to assess the agency's decision. It is one thing to argue against a regulatory reform bill because of the concern that a bill that looks pretty good today may be modified in the legislative process to be unacceptable tomorrow, and I can understand that argument and I am very well aware of that concern. But it is another thing to argue that people should not know the costs and benefits of major Federal regulations. We should not be afraid of knowing what we are doing when we are regulating. I have read the testimony of the opponents of the legislation and I must say that they are often describing a bill that I do not recognize and they are defending a cause which I do not support. The cause that I am referring to is not the cause of a cleaner environment or a safer workplace. Those are causes I do support, and strongly so. But the cause that they are too often defending and the cause that I do not support is choosing not to know the consequences of our actions as a government. This bill has broad bipartisan support, including the support of the Democratic leader, Senator Daschle. It also, obviously, has opposition. The President has agreed to sign this bill if it comes to him in its current form, and I would ask, Mr. Chairman, if it already has not been done, that a statement of Jack Lew, the Director of the Office of Management and Budget, that says that if S. 746 emerges from the Senate and House as you now propose, the President would sign it, be inserted in the record.\1\ --------------------------------------------------------------------------- \1\ The prepared statement of Jacob J. Lew, Director, Office of Management and Budget, appears in the Appendix on page 59. --------------------------------------------------------------------------- Chairman Thompson. Without objection. Also, Mr. Chairman, I would ask, if it has not already been inserted in the record, that the statement of the General Accounting Office on this bill be inserted in the record, and I would just simply read one paragraph on page 8.\1\ --------------------------------------------------------------------------- \1\ The prepared statement of the General Accounting Office on S. 746 appears in the Appendix on page 71. --------------------------------------------------------------------------- ``S. 746 contains a number of provisions designed to improve regulatory management. These provisions strive to make the regulatory process more intelligible and accessible to the public, more effective, and better managed.'' The GAO concludes that paragraph by saying, ``Passage of S. 746 would provide a statutory foundation for such principles as openness, accountability, and sound science in rulemaking.'' Chairman Thompson. It will be made part of the record, without objection. Senator Levin. Finally, Mr. Chairman, we all want an effective government that protects public health, welfare, and the environment. We all want our government to achieve those goals in the most sensible and efficient way possible. We all want to do the best that we can with what we have and to do more good at less cost, if possible. That is the intention of this bill and I believe that this bill will help us achieve that. Thank you, and I also want to thank Senator Voinovich, who, when he was a governor testified here was so effectively on this legislation last year. Chairman Thompson. Thank you very much. Senator Durbin. OPENING STATEMENT OF SENATOR DURBIN Senator Durbin. Thanks very much, Mr. Chairman. I suspect I am a minority on this panel, but I have serious problems with this legislation, as I did when we last considered it. I agree that we need regulatory reform. We need to make every effort to reduce bureaucracy and red tape and litigation. But I do not agree that a child's health can be measured in dollars or that public safety should take a back seat to a marathon of bureaucratic haggling. I am fearful that this bill would slow down the regulatory process by imposing new responsibilities on Federal agencies for net cost-benefit determination, risk assessment, and peer review. If you take a look at the track record of this Federal Government in responding to national crises, it really suggests that we are not quick to respond in the time when most Americans think we would. In 1993, the E. Coli outbreak really signaled that our food safety inspection process needed to be looked at and brought up to date. Well, it took us over 3 years to get started and to implement the HACCP process, and, frankly, it will not be operational until the year 2000. So this is a process that is already slow and will be made even slower if this legislation passes. Look at the OSHA situation. OSHA is an agency which is supposed to protect the health and safety of workers. It takes 10 years, on average, to issue a worker health and safety protective standard. This bill will make it longer. It took the EPA 10 years to issue a clean water rule. This bill will make it longer. When you look at all these, you have to stop and ask whether or not we are prepared to put the people in place at these agencies to implement this bill, and the honest answer is we are not. In this same building, a budget resolution is talking about cuts of up to 12 percent in terms of the budgets of some of these agencies. This bill will impose new standards, new responsibilities on these agencies without even a hint that we are going to provide the personnel so that they can keep up with these new requirements. The people on the other side, in the private sector, will be making their investment in their attorneys and researchers and scientists. We will not make the investment on the government side to protect public health. We will impose new responsibilities and mandates on these agencies before they can issue regulations for health and safety, and yet we will not provide them the people to implement those mandates. So there will be fewer people involved in inspection, and fewer people involved in implementation. The net result, of course, the American consumers and families are the losers. We might have a good idea about how to protect them, but we have to clear all the new hurdles in this bill and we do not have the people to do it. That, I am afraid, is the bottom line. As it is currently written, this bill will result in more bureaucracy, more red tape, and more delay. Congress does not and should not have to choose between business and consumers. There has to be a sensible approach that can protect both interests. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. I would like to recognize our first panel. We are pleased to have today with us, as Senator Voinovich indicated, the Hon. Gregory Lashutka, Mayor of the City of Columbus, Ohio. We also have Robbie Roberts, the Executive Director of the Environmental Council of States, and Scott Holman, the Chairman of the Regulatory Affairs Committee of the U.S. Chamber of Commerce. Thank you for being with us here today. Mayor, do you have a comment that you would like to make? TESTIMONY OF HON. GREGORY S. LASHUTKA,\1\ MAYOR, CITY OF COLUMBUS, OHIO Mr. Lashutka. I do, Mr. Chairman. Thank you very much to the Members of this Committee and particularly warm greetings to my Senator, Senator Voinovich. I do appreciate the opportunity to provide testimony today on the Regulatory Improvement Act, S. 746. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Lashutka appears in the Appendix on page 80. --------------------------------------------------------------------------- I do want to echo the comments of others commending you, Mr. Chairman, and Senator Levin, particularly, on your expertise and commitment in making the regulatory process, in fact, more accountable to the people of this country. As you may be aware, our city has looked at this issue for a number of years and we have been stressing the need for Federal procedures to reduce the very unintended consequences that Senator Lieberman had alluded to. Those unintended consequences are a result of mandates and regulations on significant occasions that affect our Nation's cities and towns. Not only have I weighed in on behalf of our citizens on regulatory reform, but today I am appearing and testifying on behalf of the National League of Cities. The National League of Cities is the largest and the oldest organization representing cities from the East and West Coast and North and South, citizens that live in each of your States, from the largest to smallest. We are proud of our two past presidents--who are now in the Senate--including Senator George Voinovich and Senator Dick Lugar from Indiana. Our organization represents 135,000 cities and towns across the country. Significantly, over 75 percent of those are from the smallest cities, with populations less than 50,000, cities reflected in your State, Mr. Chairman, Tennessee, and all the States represented by this Senate. We strongly, as an organization--the National League of Cities--support the Regulatory Improvement Act of 1999. We are not alone. All the lead organizations representing the Nation's local governments, known as the ``Big 7,'' are in support of passing this legislative and regulatory goal that will benefit the States and local government and most particularly their constituents. I am pleased that a letter should be forthcoming to you later today,\1\ Mr. Chairman, from all those State and local government associations, known as the ``Big 7,'' supporting this legislation. Passage of this bill is part of the federalism partnership agenda of the ``Big 7.'' --------------------------------------------------------------------------- \1\ The letter from the ``Big 7,'' dated April 21, 1999, to Senator Thompson appears in the Appendix on page 238. --------------------------------------------------------------------------- The ``Big 7'' is also pleased to work with you and Senator Levin and Members of this Committee for the passage of the Regulatory Right-To-Know Act, S. 59, as well as the preemption bill that we are currently drafting. The ``Big 7'' believes these bills are a significant legislative package in their entirety to clarify the intent of Federal regulation and legislation. While this will allow further input from those of us who really have the main responsibility in implementing that, State and local government, we applaud your distinctive leadership on this issue. While the Unfunded Mandates Relief Act of 1995 had a very positive impact on the shift of burden of cost on State and local government, it only addressed the legislative process. It does not address Federal regulations. S. 746 will enclose the gap that is left open that allows costly regulation on cities by providing for better consultation with State and local government for risk assessment and cost-benefit analysis of the legislation that would be proposed. It is imperative that all levels of government work together to deliver the most efficient services to constituents that are both of ours, Federal, State, and local. Our constituents expect no less than the Federal, State, and local government to work together, providing effective service. And the most effective way for us to deliver those services is for each level of government to stay within its most effective and efficient roles. These lines are becoming more and more obscure as the Federal Government continues to regulate various sectors in our local communities, too often without consideration of the very impact that is a concern by both sides on this issue. Gaining an equal voice through this legislation in the regulatory process will allow cities and towns to demonstrate the impacts before it is too late. We must balance health, safety, and economic needs and wants of our citizens. Here is the core problem in my opinion. Each Washington bureaucracy, or sometimes even a Congressional committee, views each of our cities through a soda straw on the given issue at hand for that day. It is only one look at one point in time on one issue. For example, we promote regulations on underground storage tanks, and that is one set of legitimate issues, and yet we may or may not correlate, and quite often does not, with our stormwater runoff or how we are pursuing the issue on drinking water that was raised earlier or other environmental issues that are of equal concern to our citizens. But we are forced on a local level to triage the most important. The Federal Government wants us to address all of those, quite often at the same time. We are a microcosm that interacts, a living, breathing, dynamic region and not just a government, but we have to deal with businesses, large and small, not-for-profit organizations, and neighborhoods, all who have some dynamic with us. We look to our businesses, the economic energy and revenues, to provide basic services, and all the mandates have an impact, good or bad, upon us. Sometimes they, in fact, do have a rational scientific basis. At other times, they do not. The problem, again, as I mention, is tunnel vision. Each regulation may take a few pages in the Federal Register, but I would suggest to you as we were successful in passing the Unfunded Mandates Relief Act that the pile of regulations our city had affected is taller than you, Senator, taller than the rest of the Senators on your Committee, and taller than myself on an annual basis and we are responsible for reviewing those, as are others. This past year, our cities and towns have seen regulations that preempt our cities and towns in decision making on authority on local issues and regulations and those cost us millions of dollars. An example, our Occupational Health and Safety Administration mandated cities who were in OSHA State plans would have to do the following manning standards to respond to interior structural fires, a legitimate cause, but our cities and towns support those efforts and regulations and the need for greater health, safety, and environment. But this regulation was implemented at a period when fire is at a historical low. I have other testimony, but I notice the red light is on and I would be more than happy to tender that to the written testimony if you like, Mr. Chairman. Chairman Thompson. All written statements will be made a part of the record. Thank you very much. Mr. Roberts. TESTIMONY OF ROBERT E. ROBERTS,\1\ EXECUTIVE DIRECTOR, ENVIRONMENTAL COUNCIL OF STATES Mr. Roberts. Mr. Chairman, Members of the Committee, thank you for the opportunity to appear before you this morning regarding the Regulatory Improvement Act of 1999. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Roberts appears in the Appendix on page 88. --------------------------------------------------------------------------- My name is Robbie Roberts. I am the Executive Director of the Environmental Council of States. The Environmental Council of States is the national nonpartisan, nonprofit association of State and territorial environmental commissioners. Each State and territory has some agency, called different things in different States and located in different places in different State Governments, that corresponds to the U.S. Environmental Protection Agency. Our members are the States and territories and the people with whom we work are the officials who manage the environmental agencies in the States and territories. Currently, 52 of the 55 States and territories are members of the Environmental Council of States. We are delighted to join with our friends and colleagues in the National Governors' Association, the Council of State Governments, the National Conference of State Legislatures, the National Association of Counties, the U.S. Conference of Mayors, and the National League of Cities to support this legislation. Robert W. Varney is the Commissioner of the New Hampshire Department of Environmental Services. He is our current President. He signed the letter which has been provided to the Committee already. He regrets he could not be with you today but asks that I formally present that letter, which I have done.\1\ --------------------------------------------------------------------------- \1\ The letter from Mr. Varney to Senator Thompson dated April 16, 1999, appears in the Appendix on page 240. --------------------------------------------------------------------------- Let me read one paragraph from Commissioner Varney's letter that I think captures the central issues in this legislation. ``We support consideration of cost-benefit analysis because to do otherwise is to risk misapplication of limited resources. We support risk analysis because to do otherwise may be to attack the wrong problems. Expanding the participation of State and local government officials in the development of national environmental requirements can only strengthen the final products.'' Mr. Chairman, the extent to which environmental protection is performed not by the Federal Government but by the States and local governments is not perhaps generally understood. Let me give you four measures of the degree to which environmental responsibilities have been shifted to the States. First, approximately 75 percent of State environmental and natural resources spending is State funds, not Federal funds. Second, approximately 78 percent of enforcement actions are taken by State environmental officials, not by Federal environmental officials. Third, about 96 percent of the total environmental quality information currently held in Federal databases was gathered by State environmental officials, not by Federal environmental officials. And fourth, of all the major environmental programs that were designed to be delegated to the States, about 71 percent have been delegated and are currently being administered by the States. This is a success story. We have talked over the last few years about devolution of responsibility to the States and much of that devolution has taken place. As States have increased their capacity and as environmental protection has become increasingly important to the general public, more and more responsibilities have been moved to the level of government best able to carry them out--State and local governments--which are best able because they are closest to the problem, closest to the people who must solve the problems, and closest to the communities that must live with the solutions. In this situation, it becomes increasingly important that taxpayer resources be directed to the most important problems. Problems sometimes seem to be infinite. Resources are finite. To help prioritize problems and define where to apply limited resources, new and innovative techniques are required. Risk analysis and benefit cost analysis of proposed Federal rules and regulations can improve our ability to spend taxpayers' money wisely. Finally, we support actions which make the Federal rulemaking process easier to understand and easier to participate in. By making more information available, all interested participants, including State and local government officials, can help assure that rules and regulations better meet the needs of the local area and of the Nation. Thank you, Mr. Chairman, for the opportunity to make this presentation. Chairman Thompson. Thank you very much. Mr. Holman. Senator Levin. Could I just give a special welcome to Mr. Holman, who comes from my home State of Michigan, an area of the State where my great grandparents happened to come from, but more important, he has been active in the small business community, the education community, and I just want to give him a special welcome. TESTIMONY OF SCOTT L. HOLMAN,\1\ CHAIRMAN, REGULATORY AFFAIRS COMMITTEE, U.S. CHAMBER OF COMMERCE Mr. Holman. Thank you, Senator. Chairman Thompson, Ranking Member Lieberman, and Members of the Committee on Governmental Affairs, I am Scott Holman, owner and President of Bay Cast, Incorporated, of Bay City, Michigan. My company is a small manufacturer of large custom steel castings for the automotive tooling, machine tool, steel mill, and construction industries. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Holman appears in the Appendix on page 91. --------------------------------------------------------------------------- I am a member of the U.S. Chamber of Commerce's Board of Directors, Small Business Council, and Chairman of the Chamber's Regulatory Affairs Committee. I was a delegate to the 1995 White House Conference on Small Business and served on the Michigan Chair for both Regulatory and Taxation Committees. I would like to thank you for the opportunity to testify on behalf of the Chamber, of which more than 96 percent of the members are small businesses, 71 percent of which have 10 or fewer employees. Therefore, we are particularly cognizant of the problems of smaller businesses. Mr. Chairman, first, I would like to salute you and my Senator, Mr. Levin, for your leadership in making the Federal regulatory process more accountable and responsive to the regulated community, which includes all Americans. The growing spirit of bipartisanship in Congress for improving the regulatory system is very encouraging to me, along with the Regulatory Improvement Act, the Mandates Information Act, the Regulatory Right-To-Know Act, and the Small Business Paperwork Reduction Act, all examples of both parties coming together to provide some common sense rationality to the fragmented and overly complex regulatory system with which small businesses must deal. Government paperwork, red tape, and regulations are among the greatest concerns facing small business owners today. The regulatory burdens imposed upon business in the United States are astounding. Recent studies estimate that the compliance costs of Federal regulations are more than $700 billion annually and small businesses bear much of this cost. A 1995 study conducted by renowned economist Tom Hopkins found that businesses with fewer than 20 employees have almost twice the regulatory cost per employee than operations with 500 or more employees. I, like other small businesses across our Nation, find it frustrating that regulators cannot seem to figure out that regulations and paperwork cost not only money but time spent in figuring out how to comply. For example, regulation relevant to just one of the many raw materials used in the metal casting industry deals with sand. Every year, foundries use more than 100 million tons of this material. Approximately 90 to 95 percent of the foundry sand used is not toxic when tested by the EPA required method. Five to 10 percent portion of that sand fails to pass a toxicity test. It is easily identifiable by a specific production process at the source. So the hazardous portion could easily be disposed of differently than the non-hazardous portion. Unfortunately, the regulation does not allow us the flexibility to do the sensible thing. In fact, an independent study conducted in Wisconsin shows the used foundry sand to be less of a threat to the human health than even natural background soils. This material is a commodity that can be made available for reuse in numerous construction related applications. Technology also exists to convert foundry sand into glass or for roofing or for other materials. Yet foundries across the Nation face tremendous hurdles in getting approval for beneficial reuse of this byproduct from their processes. So foundries end up paying an ever-increasing disposal cost for sand. The burdens imposed by these restrictions amount to significant costs for small facilities, like mine. Disposal costs for these and other reusable materials is approximately $500 million for the industry, depending on the landfill tonnage and fees at the time. This is too much to pay for materials that have been judged to be cleaner than dirt. It is sad and ironic that our society and small metal casters are forced to pay a double cost because of excessive regulation. We lose the opportunity to convert sand into useful economic items and we must instead pay the high cost of needless disposal. So the sand fills up valuable landfill space while it could have been recycled to make new products. Is this environmentally friendly regulation? So information is the power. This has never been as true as it is in today's information age. The Regulatory Improvement Act is about ensuring a healthy exchange of information on government decisions between people and their government. One of the founding principles of our Nation was the ability of people to question their government. The Regulatory Improvement Act of 1999 provides power of the American people through greater information. While not an expert theorist on risk analysis, I am a practicing expert on cost-benefit analysis and risk assessment, as are most surviving entrepreneurs. If I fail to set priorities based upon well-grounded information, I risk not being able to make my payroll. If I fail to make appropriate risk assessment, I can lose the order that may keep my people working, or worse, maybe get the order and place the whole operation at risk for our very survival. If I fail to use well- founded plausible assumptions in the allocation of my limited resources and commit capital in the wrong areas, I can get into trouble. So I need that kind of information. The burdens for small business go far beyond the direct cost of compliance. Most of us cannot afford to have the full or even part-time environmental staff in-house and therefore face escalating costs of consultants and attorneys just to comprehend our obligations under the hailstorm of regulations. Are we going to tailor our laws to the actual risks out there? Which regulations are justified, those that make an appreciable difference in our health and quality of life or those that force us to jump through new hoops and pile up paper and consume capital and human resources with questionable results? S. 746 is a pragmatic and measured attempt to correct real flaws in our system without giving up the protection that the public wants. I, for one, do not want to poison my workers or my neighbors or destroy the beauty of the community, but I have no interest in paralyzing our regulatory system with hurdles and delays. This legislation forces a degree of feet-on-the-ground accountability through risk analysis, cost-benefit analysis, open communication, contextual comparison, and peer review. Ultimately, reasonable people of good will can disagree on the details, but the overarching and powerful concept of this legislation must be given a try. The Committee deserves to be commended for its efforts to provide greater accountability and better decision making into the regulatory process and the Chamber appreciates the difficulty involved in pursuing the reform. We encourage the Committee to continue working toward reform this year so that these crucial reforms can become law. Again, thank you for this opportunity to testify at this time. I am willing to answer any questions that you have, and Mr. Chairman, I request that my full statement be submitted for the record. Chairman Thompson. It will be made a part of the record. Thank you very much for being here today, gentlemen, all of you. It looks to me like in getting back into this again this year and looking at the statements and so forth that, once again, we risk those of us who are proponents of this legislation and those who are opponents, some risk of talking past each other. Those who promote this legislation want better rules, and those who oppose want to do nothing to make things less safe or less healthy, as if these were two different positions. I think the main point that I would like to make out of all of this is that better rules will make for a safer environment. We live in an age of regulation. Some people think the more regulation, the better. It is especially better if it is unquestioned and we set up a regulatory that essentially does not have to give any reasons for what they do. I disagree with that. But the fundamental question is, what is most likely in the long run to produce a safer environment, a healthier environment? Is it one where the best science is used or not used? I mean, we worship at the altar of science in this country and we have made tremendous strides in our ability to do such things as risk analysis, for example. Yet we have to ask ourselves the question, are we better off if we avail ourselves of that or not? Are we likely to produce a safer or healthier society by analyzing? Those are the key words of this legislation, analysis, assessment, balanced review, having experts look at it. Are we better off? Are we going to be less healthy or less safe by having an assessment of what we are doing, by having experts balance all views presented, looking at it? We know that we are spending more money than we need to. Every expert in the field will tell us that, billions and billions of dollars. We know we do not always come up with the best regulations. We know we do things sometimes that, contrary to the best intentions, hurt people instead of helping people, whether you talk about air bags or asbestos removal or drinking water standards and so forth. Oftentimes, we know we do not have the right priorities, that we are using limited resources in ways that somebody thought was the best way to use it, but unquestioned, unaccountable, basically, not transparent. So which is most likely to produce a safer, cleaner society, that way or using scientific benefits that we have derived over the years in the framework of analyzing it and assessing it and doing a balanced review? The irony of it to me is that when people talk about, well, it is going to slow down the process and all the bad things about this and so forth, is that under the President's Executive Order, in most cases, we are supposed to be doing these things anyway, cost-benefit analysis and that sort of thing. So we really are perpetrating a fraud when, on the one hand, we say we are doing it while we know that, apparently, in many cases, we are not doing it. We have it on paper because we give lip service to the notion that these obvious things are true, and that is we are better off if we bring some of these things to bear. We give lip service to that. We put it in writing and we put it out there as a good thing to do, apparently not thinking that it is going to slow down the process, not thinking that it is going to produce a more dangerous or less safe society. But then we want to be free to totally ignore that. It does not make sense to me. It looks to me like we are better off in the long run to bring these other things to bear, and again, as Senator Levin said, without even requiring--this is informational. This has to do with analysis of what we are doing and assessing what we are doing, reviewing what we are doing. Is that really going to produce a more dangerous society? Is that going to make our children more susceptible to E. coli, by using the limited resources that we have for things that will, with better information, be directed toward where the problem is and having someone unaccountable essentially doing that? Mayor and Mr. Roberts, you deal where the rubber meets the road, and the mayors and States and so forth, as you point out, Mr. Roberts, most of this is done at the State level. As Director of the Environmental Council of the States, you represent the people who do the environmental work there. You obviously have to be concerned about the claim that what you are advocating here is going to make a more dangerous society, you are somehow endangering the health of the people that you represent. What is your response to that? Mr. Roberts. Mr. Chairman, I think it goes without saying that no State environmental department sets out to endanger the health of the people in the State. No administration, no governor is interested in anything remotely approaching that. Our position has been that the more that rules are scientifically based and cost based and the more we have tools to make those kinds of decisions, the better we can target the limited resources that are available, and resources are always going to be limited irrespective of what their total amount is. We can spend them more intelligently on more pressing problems. The more rules are easily understood, the more the public will support them. The more people are involved in the making of the rules, the more people will buy into the rules and support them. So these seem to us to be two tools in a broad range of public participation to make better, more targeted use of resources in dealing with more pressing and immediate problems. Chairman Thompson. Mayor Lashutka. Mr. Lashutka. Mr. Chairman, Members of the Committee, the question you raise is a legitimate one. Frankly, my colleagues across the country, I think, are as environmentally sensitive as anyone because their constituents understand that for the young and the old and those of us in between, that in our cities if we do not protect the environment and if we do not provide a quality of life, people will leave. They have the idea of moving to other States and other cities. We want to keep our businesses. We want to keep a quality of life that is very important. We have a choice of either complying with all of these regulations and raising the cost of doing service, either as businesses or taxes we impose upon our citizens, or stretching those dollars as long as we can. Two examples might be helpful. I am afraid sometimes examples, though, polarize on both sides, so I do not mean that. That is not intended. But the unintended consequences that were a concern came from a regulation in Columbus on a chemical for our water treatment plant that, to the best of our knowledge, was used only for pineapples in Hawaii. We do have a very aggressive and growing agricultural community that is part of central Ohio, but growing pineapples is not part of what we make in central Ohio as part of our agricultural effort. And so those dollars could be better used for---- Chairman Thompson. Tell me exactly what you are talking about here. What was the regulation and what was the---- Mr. Lashutka. This has been cured subsequently, but it was used roundly on the unfunded mandates legislation that talked about the unintended consequences and the problems, but before that was passed, we were required in our drinking water statutes to test for a chemical that is only used for the growing of pineapples and that is primarily in Hawaii. That was not the intent. I think good people tried to have a regulation, but it goes back to the ``soda straw'' example. On the flip side of it, we also saw a blip in our lead testing which occurred randomly in the spring on water runoff. We have been tested by both Ohio Environmental Protection Agency and the U.S. Environmental Protection Agency, and the Senator now from Ohio who was governor then and I talked about it, but the regulation required us, because of the time frame, to send a notice to all water users who provide water users in our city and the entire region. I know I have a legitimate lead paint situation on the south side of the city with older houses. The dollars used for that mailing, which could have been mailed in a regular water and sewer payment, had to be mailed separately because of the Federal regulation and we could not until a year or two later have a reach in our stretch of dollars for a legitimate effort in the south side housing effort on our lead paint situation. That tradeoff, we make every day, and we have to make those and we are forced to. But we clearly think that this legislation, as has been said by my friend, Mr. Roberts, will be more informational, provide a better result, and frankly, maybe in some occasions, slowing it down is in everybody's best interests. When we need to move ahead, we are willing to do so in the interest of safety of our people, just as those of the Federal Government. Chairman Thompson. You say slowing it down might be in some cases be in everybody's best interest. What are you thinking about? In what kind of situation? Mr. Lashutka. Let me move away from the environmental side, but recently, there was a regulation that came out of the Department of Housing and Urban Development and the rule would have granted HUD unilateral and unbridled and unchecked authority to determine whether a city or a State could curb the efforts regarding fair housing, both within and outside of our legal authority. It was criticized roundly without any input meaningfully from those of us at the State and local level. I might give the good side of the story. It was reviewed after a hue and cry came from those of us responsible and HUD retracted that order, but if this legislation was in place, it would have compelled that discussion before unintended consequences provided an adverse result, another example of something that did not work but was intended to be a good result. It just did not fit with the way people are regulating in the real world. Chairman Thompson. Thank you very much. Thank you, gentlemen. Senator Lieberman. Senator Lieberman. Thanks, Mr. Chairman. Thank you, gentlemen, for your thoughtful testimony. Let me go back, if I may, to the contrast I tried to draw in my opening statement between the targeted regulatory reform that has been part of, for instance, the Safe Drinking Water Act Amendments, and the broader regulatory reform that is involved in S. 746, about which, as I have said, I have concerns of what I have called unintended consequences. Let me ask you specifically to comment on the concern I expressed about the possible impact of this legislation if it were adopted on those sections of the Clean Air Act Amendments of 1990 that control toxic air pollution. My concern is that this legislation, S. 746, would require risk assessments in this program, the toxic air pollution program, where Congress decided in 1990 that analysis of risk would no longer be required. What might potentially happen here is that we would end up in a quagmire of delay that Congress intended to avoid in 1990. So my question is, to any of you or all of you, why does it make sense for us now to make a decision that would alter the decision we made in 1990, that the problem was so severe with this limited number of chemicals that we did not need to wait for risk assessments? For instance, we have not studied the circumstances involving the regulation of air toxics anymore in coming to the consideration of this bill. So that is my concern. Why adopt a bill that might well overturn a judgment that we made earlier, in 1990? Does anybody want to take a shot at that? Mayor Lashutka. Mr. Lashutka. Senator Lieberman, Members of the Committee, I would like to, and this may not be totally on point but I think it generally is in the ballpark. Some years ago in this country, there was a huge concern that landfills were a dramatic problem, a concern identified at the national level and one at the local level. In the six priorities of reduce, reuse, recycle, there were landfills and waste energy as the next two and then through a discussion, landfills dropped to No. 6 in that priority. In the meantime, our community under a prior mayor concluded that landfills probably should not be the preferred choice because they were tough to site, they had environmental problems, and we were encouraged through policy then to pursue a waste-to-energy plant, and we did, popular in Europe, growing in some discussion in this country. At a cost of several hundreds of millions, we created a cutting-edge facility. It had problems, but overall was performing, the biggest recycler, I might say, in our area. During my time as mayor, I inherited this facility, but a curious thing happened. Landfills then moved back from No. 6 to No. 4 as a preferred choice. Waste-to-energy plants, because of issues that would be a concern on air pollutants, became less desirable, and we were closely scrutinized, as every waste-to- energy plant all across America. And over the back of that, I had to appoint a board to a regional authority that the governor and others in the legislature thought was appropriate so we could regionalize our approach. That board was faced, as we were as owners of the facility, with criminal sanctions if we did not succumb to what was perceived as a threat by Dioxin. After all, that was a challenge. Most of the people I appointed, who are good citizens, business people in our community, people who are concerned about the environment, chose not to have to go to jail to pursue this issue and it was settled. Oddly enough, without much discussion nationally, the issue of Dioxin, which was going through some significant challenges on peer review, dropped off the chart and was not the threat that it was alleged to be at the time we had to face criminal sanctions in keeping the plant open. Consequently, it is closed. We are picking up off of our general obligation debt the funding for the bond holders, and we still have a AAA bond rating in spite of that, and the threat that was perceived, without having appropriate peer review, went away. Somehow, in our citizens' confusion, this is a significant question. How could all of this happen? Now, if the threat was not legitimate at the beginning and it ultimately left with huge consequences, and luckily, we are a robust city financially, we could endure it. But for other cities going through similar consequences, these are back breakers, and particularly that 75 percent of our smaller cities who are dealing with well intended consequences but they do not comport to the real problems with cities. I hope that is somewhat helpful to you as a legitimate problem in our city. Senator Lieberman. Yes, I hear you. It is interesting, the response. My concern is that in this case, there has been no similar change of attitude or evidence regarding the air pollution standards. Incidentally, I want to tell you that the robust nature of your economy, I believe that my 11-year-old daughter takes partial credit for because of her excessive purchases from the Limited Too. Mr. Lashutka. The chairman of the Limited Too, all the stockholders, and I appreciate your daughter's buying and we would encourage more, of course, in your discretion with you and your wife. Senator Lieberman. Thank you. I have another question, unless either of you is eager to jump into that one. Mr. Roberts, let me focus another example of my concern to you because it involves State activities with regard to automobile tailpipe emissions and standards that some of your member States have taken in trying to achieve cleaner ambient air. In establishing, as you know, the ambient air quality standards, EPA conducted fairly broad analysis of health benefits and risk reduction, but in developing the automobile tailpipe regulations needed for the States to achieve their ambient air quality standards, EPA analyzed their effectiveness in meeting the standards but did not repeat the analysis of health benefits and risk reduction. So my question is whether you have considered whether S. 746 might cause delays in establishing tailpipe emissions standards by requiring EPA to go back and reanalyze the underlying risks of violating the ambient standards and the health benefits of achieving them. Mr. Roberts. Senator, we have not looked at an impact like you describe on any existing program, and certainly I would never tell you that there is no possibility of unintended consequences of any legislation that might come out on this subject. In answer to your first question, we have not looked at the impact on the clean air, either. Senator Lieberman. Right. Mr. Roberts. As I said before, I think our position is simply that these are additional tools to be applied to help us spend limited resources more effectively. I do not understand the bill to go back and require relooking at prior decisions that have been made, but I could be wrong in that interpretation. My concern about a targeted change would be, as you know, the great difficulty in considering the major environmental legislation a piece at a time, as in the reauthorization process. That can be very time consuming. To take that approach delays what we would see as the benefits of this kind of an approach. Senator Lieberman. I wonder if I might ask you--if it is something that you can do without spending too much of your time--if you might raise the question I raised with some of your member States. I would appreciate hearing in writing what their reaction is. A final question, which goes to another example of the kinds of concerns I have. Currently, EPA and OSHA do not conduct risk assessments for right-to-know regulations, which, as you know, provide communities and workers just with information about toxic chemicals and releases, and they have had a generally salutary effect. I think even the businesses involved have a pretty good feeling about the effect now. The community right-to-know law, for example, requires companies to let the surrounding community know the amount of certain chemicals that are emitted from a facility. There is no requirement that exposure data be collected. It is just informational, and the hope is that you put people on notice and maybe, by the fact of disclosure, you encourage the source to reduce the emissions. But there is no mandate in there. So my question is why a risk assessment and cost-benefit analysis should be required for a regulation like this one that does not control toxic exposure but instead just mandates public information. Any response? Mr. Roberts. I think, Senator, the response to the requirement to release the information has generally been what you alluded to, and that is that the releases have been decreased---- Senator Lieberman. Yes. Mr. Roberts [continuing]. Simply because people did not necessarily want to be branded, if that is the right word, with having made those releases. Senator Lieberman. Right. Mr. Roberts. And so in that instance where the requirement is a public information requirement, it would seem to be having the salutary effect that was desired, which was to reduce the releases themselves. Senator Lieberman. It is, indeed, and my concern is that, notwithstanding the general support for the law at this point, that S. 746 would subject it to regulatory review and risk assessment and cost-benefit analysis that might delay or defer its effectiveness. Mr. Roberts. I will ask those questions as you asked, Senator, and will reply to you in writing. Senator Lieberman. Thank you very much. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. Senator Voinovich. Senator Voinovich. Mr. Chairman, first of all, I think that your statement was well taken in that what we are talking about here today is something that appeals to common sense, and that is that if you are going to pass a rule or regulation, and we are talking about rules and regulations that are over $100 million nationally, that you ought to use risk assessment and cost-benefit analysis to determine whether or not the regulation is, indeed, needed. In addition, I think that people should be comfortable with the fact that OMB and the Office of Science and Technology Policy would be the organizations to establish the objective criteria by which you go about making those decisions, which would, I think, be very helpful to our various Federal agencies. In addition, I think, in response to Senator Lieberman's questions, S. 746 does not override statutory standards nor statutory deadlines that are currently in effect today. So those are exempted from this legislation. It also does one other thing that I think is very important and I think was part of the compromise that we put together last year on this legislation, and that was that it exempts rules where the agency finds for good cause for proceeding quickly without complying with S. 746. So there is a provision that says that here is something that is very important and for just cause, we are going to bypass S. 746 and get out there and take care of that situation. In terms of the tailpipe issue that Senator Lieberman brought up, it is very interesting. Ohio is one of the few States that have instituted emissions testing, and as Mayor Lashutka knows, I caught a great deal of hell from a lot of people for instituting it. By the way, today, we have every area in the State but one that complies with the current ambient air standards. But one of the things is that a lot of groups raised the issue about whether or not tailpipe emissions testing really does something to help the air. We went back to the EPA, and you know something, they did not have the scientific data to prove that it did, and so we got Congress to appropriate last year $350,000 to do a study for the EPA to verify the fact that, indeed, this does make a difference on the environment. So we are trying to get at stuff that, from a common sense point of view, makes sense, and I would have loved to have been able to say to them, hey, the science says this really does work. They had not done that. I would like to ask Mayor Lashutka, and this is a little off the subject, but I am going to ask it anyhow because I wanted the Chairman to include this in this bill and he is going to do it some other way, you and the ``Big 7'' worked hard to ensure that Medicaid was covered by the Unfunded Mandates Reform Act of 1995,. However, the Congressional Budget Office is misinterpreting the mandates law in a way that takes most Medicaid mandates off the table. Chairman Thompson has led the charge to correct CBO's interpretation, and last year he introduced S. 2068, a bill that was cosponsored by Senator Glenn, my predecessor. This legislation made it clear that cutting the Federal share of Medicaid and requiring States to make up the difference is, indeed, an unfunded mandate. I am working with Senator Thompson to reintroduce this bill in the 106th Congress and I would like to know, does the ``Big 7'' have a position in regard to this legislation? Mr. Lashutka. Yes. Mr. Chairman, Senator Voinovich, I believe the position is in support of that bill. That legislation is consistent with the spirit of the debate that took place in the unfunded mandates legislation that was successful again in 1995 and we think that amendment will be helpful to States and local government. Senator Voinovich. Thank you. Mr. Roberts, some argue that Federal agencies are already required to conduct risk assessment and cost-benefit analysis under Executive Order 12866. If they are required to do so, why is this legislation needed? Mr. Roberts. Senator, we are not certain that those analyses have always been done as they were required to be done. This would strengthen the requirement that such analysis be done before the rule is finalized. It would institutionalize a way in which State and local government officials might be able to participate in that process before it was complete and we would regard both of those as advantageous to those agencies that are carrying them out on a day-to-day basis. Senator Voinovich. I think one of the things that all of us are concerned about in terms of rules and regulations, also, are that dollars be spent that really make a difference in terms of the environment, and I think that, getting back to my example about tailpipe emissions and the inconvenience and the cost of it, it is nice to know that, whether you are a businessman or a governmental agency, that the costs that are incurred as a result of what you are being asked to do really do make a difference. That makes it a whole lot easier. In addition, I think that from a point of view of public safety or environment, with dollars that are limited, you want to make sure that when you do spend those dollars, you are spending them on those things that are really going to make a difference and not put them on something that may be the flavor of the month and you get into it and you get back later and realize that you have invested the money and you are not getting your return on it, whereas you could be spending that money on something else and really making a difference in terms of public safety or the environment or public health. Mr. Chairman, I am finished. Chairman Thompson. Thank you very much. Senator Levin. Senator Levin. Thank you, Mr. Chairman. Senator Voinovich raises a specific issue which actually had an application in Michigan on the tailpipe emissions. Ours was very similar and it illustrates what this bill is really all about. On the west side of our State, we had three counties that were required to go through testing of each automobile, take certain action on each tailpipe, because the three counties had, I believe, 2 or 3 days a year of excess ozone. The reason they had excess ozone in those three counties was because of certain air that was blown up from the south. It came up from Indiana, Illinois--but in any event, from the south. Let us leave it that way. Chairman Thompson. But not too far south. Senator Levin. Yes, just the right distance. [Laughter.] I think we lost Durbin to this cause already. I cannot do any more damage. Senator Voinovich. You may have lost me. [Laughter.] Senator Levin. I think I will actually gain you on this. I cannot get more support from you than we have already received. Now, EPA then forces every person in those three counties to take an action which is totally irrelevant to the air quality. If there were no cars in those three counties, you would still have the same number of days of violation. You could push all the cars into Lake Michigan. EPA then became a subject of scorn. People were put to expense and trouble to do something (putting aside the fact that they did not cause it, forget that) to do something that they cannot correct. Two things happened, and I think, Mr. Roberts, you and others here already said so. Money was wasted that could be used for a good cause and public support for environmental protection, through that particular agency, at least, is undermined. Both those things happened. Was the environment advanced by that? That was the purpose of it. It had the opposite effect. That is our tailpipe experience on the west side of Michigan. First, let me ask the mayor, in your judgment and in the judgment of the League of Cities, will this bill in any way harm the environment or public safety? Mr. Lashutka. Mr. Chairman and Senator Levin, no. Senator Levin. Mr. Roberts, you have described briefly the work that you do and I would like you just to explain a little bit more. You have given us some very good figures in terms of the percentage of certain activities which are carried out by the States and so forth. Are the States that you represent, States and territories, all but, I believe, two or three, you said? Mr. Roberts. Yes, sir, 52 of 55. Senator Levin. The agencies that you represent, the heads of those agencies are responsible for protecting the environment in those States, is that correct? Mr. Roberts. Yes, sir. They are in most instances appointed by the governors of the State and confirmed by some element of the State legislature. In some instances, they work for commissions that have been appointed by the State. But in all instances, they are responsible for carrying out the Clean Water Act, the Clean Air Act, RCRA, CRCLA, those kind of pieces of legislation, and they are, with the exception of the governor, the only official in the State that is responsible for all elements of environmental protection within the State. Senator Levin. Senator Lieberman suggested that the bill overturns Congressional mandates or intent, and I do not believe that it does. I agree with what Senator Voinovich said on that. For instance, Congressional direction to use the best available technology or the maximum achievable technology is not affected by this bill. This bill adds information where a problem is to be addressed by an agency. And, by the way, I think the other example you used would also not be covered, since the information requirement in terms of the toxics which are released into the air does not require any action. It is simply an informational requirement. Ironically, that is what this bill does. It is a wonderful example of a way where information can lead to a result, even though it does not mandate a result. I think that the bill requiring the listing of toxics that are released into the air has had an impact without mandating anything other than information. That is what this bill is all about. So, ironically, that example, I think, is supportive of the approach used by this bill. But in terms of your specific point, because the requirement does not address a problem by requiring an action to be taken relative to it, it does not mandate anything, it is my belief that we can work this out, and that this bill's requirement would not affect that particular Congressional intent. Just one final question, Mr. Holman. You have given us a very interesting example in your toxic sand. As I understand that example, you had a situation where there was a certain percentage of sand which could be toxic as a byproduct of your processing, your manufacturing process, and that you were required to handle it in a certain way which was more expensive than how you could have handled that in a different way. The issue, then, is not whether or not, as I understand it, you are going to address the problem of the byproduct. You believe that that problem should be addressed. The issue is whether it needed to be addressed in the more expensive way required by the Federal regulation or whether or not you would be permitted to address the same problem in a less expensive way. Is that generally correct, and if not, just correct me on it. Mr. Holman. The sand has binders in it and certain processes have binders that can produce some toxic by the standards of the EPA. Most of the sand is not. Most of the foundries use binders that do not create that. The point is that we have been forced to treat all sand, that 90 percent which is not toxic, the same as if it were toxic. Senator Levin. Well, now how do you know without treating it that 90 percent sand is not toxic? How can you be so confident? Do you not have to treat it all in order to cover the 10 percent? Mr. Holman. Because of the process that you use. For example, you know what binders that you are using in the sand or that you are buying for that particular process. If you are not using that binder in your foundry, you know that you do not have that problem. Senator Levin. All right. So you are being required to treat a byproduct of a process which does not use a binder which creates the problem? Mr. Holman. That is right. So they are broad-brushing all sand with those foundries that use, for example, phenolic binders which may require toxic handling with other binders that do not require that. Senator Levin. All right. And that has an impact on your costs? Mr. Holman. A tremendous impact on the costs. It is trucking, disposal costs, when it could be used for a resource. We ought to get paid for it, not have to pay to get rid of it. Senator Levin. When you say paid for it, because you could use that in another---- Mr. Holman. As a resource, right. Senator Levin. But it has a cost, an expense that you must incur to which is useless? It increases the cost of your product? Mr. Holman. It increases the cost of the product. Senator Levin. Does it make you less competitive? Mr. Holman. Absolutely, on an international market. Senator Levin. It costs jobs, wastes money, no environmental benefit, is that a fair summation? Mr. Holman. It is a fair summation, and it uses up landfill space. Senator Levin. Indeed, has an environmental detriment. Mr. Holman. That is right. Senator Levin. So something which is intended to have an environmental benefit is an environmental detriment, costs us money which we could use for the environment or public health, safety, welfare, and makes you less competitive, which then costs us jobs, costs you, obviously, as a small business person, money and profit. On the international market, do you know what other countries would require their small business people to go through that same process? Offhand, would you know if any other country does that? Mr. Holman. I think the only country that I can think of perhaps is Canada, but---- Senator Levin. They might? Mr. Holman. They are not a major competitor of ours. We are dealing with overseas competitors. Senator Levin. Have you talked to your Canadian colleagues and asked them if they have the same problem with their regulation? I am curious. Mr. Holman. No. I have not talked with them. Senator Levin. Have we lost significant business to countries which do not have that requirement? Mr. Holman. Absolutely, and I am talking about India, South Africa, the Czech Republic, all of the overseas--we compete internationally, as do many metal casters. Senator Levin. Thank you. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. Senator Durbin. Senator Durbin. Thank you, Mr. Chairman. I want to thank the panel for being here. I want to follow up on that last question. It really raises an interesting challenge to us, since we are in the world of global competition, but I think we also have to concede that there are certain standards of living in America that we are very proud of, the quality of our clean air and clean water, the protection of our citizens when it comes to environmental standards. If we were to be asked to compromise those to be more competitive in the world market, I think most American families would react negatively. They would say, surely, in our ingenuity and creativity, there must be a way to be competitive without in any way endangering the water I drink or the air that I breathe. So I hope that the global competition argument does not suggest that we have to go down to the lowest common denominator. I have visited China. China is coming on. It is a huge economy and everybody is interested in it and it is going to be producing a lot. I can tell you that any time of the day or night that you get up in Beijing, you will face fog. That fog is pollution. It is there when you wake up in the morning, it does not burn off at noon, and it is there when you go to sleep at night. That fog and pollution comes from burning coal. We certainly do not want to accept standards at that level to be ``competitive'' in the world economy. I do not quarrel with your statement, Mr. Holman, nor Senator Levin's that there are regulations that go too far, but I think we have to keep a perspective here about the fact that, yes, in America, we will do it a little differently. We will make it a little tougher for business because we believe that that is part of the quality of life in this country. I would like to ask the mayor here a specific question, though, because I want to go back to an illustration he used. I do not know much about toxic sand, so I cannot really follow up there. But I really do want to address the issue about pineapples in Ohio, if I might, because I thought that was an illustration that was given and has been mentioned before about just how silly regulations can be, the idea of checking for a chemical that is being used to grow pineapples in Ohio. Yet, when you look more closely, it turns out that there is much more to the story. I am going to mispronounce this, but I am going to try. The name of the chemical, DBCP, is dibromochloropropane. It is a highly persistent pesticide that, in fact, has been found in ground and surface water across America. It was widely used as a soil fumigant across the country on over 40 crops until it was outlawed for most uses other than pineapples. DBCP is considered a probable human carcinogen. It has been linked to sterility in production workers. Therefore, it was restricted from most uses in 1987. Due to its persistence, it has been found in 16 of 25 States that have tested for this pesticide and at levels that exceed EPA's drinking water standard in at least 10 States. Over 2,000 wells in California alone are contaminated with DBCP. This is a report from 1995. The cost of testing contaminants in intake water under the Safe Drinking Water Act had been wildly exaggerated. EPA estimates that, aside from testing for bacteria and lead and copper from pipes, the total nationwide testing cost is $60 million per year. The reason I raise that, mayor, is that there is always more to the story, and although this pesticide is used on pineapples, it clearly was used by a lot of other people for a lot of other reasons, and that may be the reason why you had to test for it in Ohio, and probably in Illinois. I can understand that government can go too far, and maybe the toxic sand example is an illustration, but do you not agree with me that once you have heard the whole story, that perhaps picking out this pineapple pesticide really does not tell the story completely? Mr. Lashutka. Mr. Chairman, Senator Durbin, I have heard nothing from you that would dissuade me that my argument is incorrect. There is no evidence of a problem in central Ohio. Your reading does not suggest there was. And, in fact, it was an illustration, I think, that held the test of time then for us and does today. I have agreed that there are extreme examples that do a disservice to both sides of this argument. It was not my intention to do so. I think it fits more into the example that my friend, Mr. Holman, said about a well-intended consequence that was blanketed for everybody without pinpointing where those problems are that should be part of the mission of the State environmental protection agencies and U.S. EPA. Clearly, a mayor in California with the evidence problem would do the same thing. They would test on water quality. What you read to me did not suggest anything that that problem exists in central Ohio, and yet I am required then to have tested it. Might I say that that has been corrected by U.S. EPA in the interim as we had the debate on the unfunded mandates legislation, and it is to their credit they recognized that perhaps it was overreaching, as well. At least, that is the understanding I have from my folks who run our water treatment plant, and it shows a willingness when more information is provided that we have the ability to adequately regulate and wisely regulate. So, no, I would not agree with your conclusion there at all. I do not shift my---- Senator Durbin. Well, let us just go a step further. Mr. Lashutka. Sure. Senator Durbin. If you have a chemical that is a known carcinogen and that has shown up in States across the Nation-- let us see here, now, 16 out of 25 have been shown to exceed the EPA's drinking water standard and at least 10 of those States--you do not think we should test for that? Mr. Lashutka. That is not what I said. I will repeat what I said to make sure that you and I are communicating appropriately. What I have said is that if there is evidence of a problem---- Senator Durbin. That is fair. I agree with that. Mr. Lashutka [continuing]. And what you are saying---- Senator Durbin. Are you sure there was no evidence of it in the State of Ohio? Mr. Lashutka. I did not say that. My city is in central Ohio. We have a region that has seven cities with a population of 100,000 or more. The problems in Columbus are different than they are in the industrial belts that include Youngstown and Cleveland. We are agriculture, primarily, and service, with some industry. Cincinnati and the river has a different set, and frankly, that is the spirit of what this legislation is all about, is to have information, have it risk based, and address those problems legitimately. Senator Durbin. I think it is reasonable, I would agree with you, that if there is no evidence of this chemical in the State of Ohio, to put that standard is not reasonable. There has to be some connection. But I want to make the record clear that it has a lot more to do with a known carcinogen than growing pineapples. I hope that we can both agree that if there was evidence in my home State of Illinois or yours of Ohio, we would want testing, would we not? Mr. Lashutka. There is no question, if there is a legitimate problem, I think that there is a responsibility for mayors, for regulators at the local and the State and the Federal level, and more importantly, I think those people who are residents and run the businesses all want the same goal. But it is not blanketed. It should not be viewed that all parts of Ohio are the same or, frankly, all parts of Illinois the same and that regulations that affect Chicago are the same thing downstate in Illinois or they are in Columbus versus the other parts of our State. Senator Durbin. Mr. Roberts, may I ask you a question. Going back to Senator Lieberman's question, we passed a law that said if you are a business that would emit certain chemicals which we considered unsafe, you would be required to report that emission so that people in the local community would know that you and your plant were emitting these chemicals into the atmosphere. It is known as the Toxic Release Inventory. Getting back to this whole question about cost-benefit assessment, there clearly is a cost to the industry involved here. They have to report it and probably have to file a lot of forms to do it and hire some people to make sure it is done right. How would you measure the benefit to the public and their right to know that those chemicals were being emitted? Mr. Roberts. First, Senator, I do not know whether that requirement, if it came along now, would be subject to this bill or not, and that is just lack of understanding on my part. I do not know whether this requirement for the cost-benefit analysis would apply to the Toxic Release Inventory if it came along now and it is one of the points that we have indicated we will try to respond in writing to Senator Lieberman about. It is very difficult to measure the benefit there. I agree with you, absolutely. What has happened, as we have noted already, is that most of those releases have been reduced simply because the industries or factories involved did not want to be associated with that maximum release. Now, in that current legislation, all that is measured is release. Exposure or impact is not measured, and if there were a way to measure the exposure or impact that could easily be applied, that would be a better measure than the release and it would be headed in the direction of this legislation because it would be a measure of the risk of that release. But I agree with you that it is very difficult to measure what the benefit would be. Senator Durbin. But I want to follow through, because I really think you get to the heart of this legislation with the answer you have just given to me. You cannot quantify the value of the public right-to-know. How do you put a dollar amount on that? I think that is what you said. But I think what you also said, you could quantify illnesses or deaths associated with it. We believed in passing this legislation that there was a social value to public information, that mayors, governors, Senators, Congressmen would know that these chemicals are being emitted, perhaps to give notice to some agency to more carefully track, to perhaps suggest that maybe in Columbus or Springfield, Illinois, that the emission of these chemicals might have a possible impact on groundwater and the drinking water of people who lived in the mayor's town or my town. So, you see, that is where I have a problem with this legislation. You cannot put a dollar sign on everything, and trying to put a dollar sign on the public right-to-know, I think, really raises a serious defect in this bill. Mr. Roberts. I do not disagree with what you are saying, Senator. The only addition I would make is that Congress, State legislatures, State environmental agencies, mayors, city councils, all are driven to make decisions about where to spend their resources, and recognizing the limitations of this kind of analysis, if it can help make those decisions, we would be in favor of it. Senator Durbin. Thank you for your testimony. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. On the Toxic Release Inventory question, the TRI rules do not have the primary purpose to address, that is treat health, safety, and environmental risks. TRI rules simply require the disclosure of emissions information. Therefore, S. 746 would not require risk assessment for the TRI rules. Insofar as cost-benefit analysis goes, S. 746 would only apply that requirement if the Executive Order would require it. It is our understanding that TRI rules typically have not had an impact of $100 million annually and thus has fallen under the requirement for cost-benefit analysis under the applicable Executive Order. Since S. 746 contains the same basic provisions for applicability of the Executive Order, it cannot really be asserted that this legislation will apply where the Executive Order does not. I believe that is the appropriate answer to the question as far as the right-to-know regulations are concerned. It is just not what this legislation is designed to affect. Unless anybody else has---- Senator Levin. I just had one comment, one very quick comment. Chairman Thompson. Go ahead. Senator Levin. I could not agree more with Senator Durbin, that you cannot put a dollar sign on everything and that you surely cannot measure a child's health in dollars. This bill does not. Let me just say it again. This bill does not. The bill says it six times. I am not going to say it orally six times. I just said it twice. But I could not agree more that you cannot measure health, or life, in dollars. Now, there are some efforts on the parts of some people to do that, to attach the value of a life, some of the scientists do try to do that. This bill does not--this bill uses both quantifiable and non- quantifiable benefits. I think it is so important that we put that off the table. There are a lot of important issues that this bill tries to address, but it does not put a value on a human life. If 10,000 fewer kids are going to be asthmatic because of some regulatory action, that is a valuable fact to know. You do not need to specify the value in dollars of having 10,000 fewer asthmatic kids. Those benefits may be non-quantifiable. Senator Lieberman. Mr. Chairman, I just very briefly want to put on the record my own--I do not know if I would call it a dissenting opinion--but an expression of uncertainty about the interpretation of the applicability of S. 746 to the Toxic Release Inventory, for instance. And just to read from the bill, it says that ``each agency shall design and conduct risk assessments in accordance with this subchapter for--(i) each proposed and final major rule the primary purpose of which is to address health, safety, or environmental risk.'' So I would argue that a Toxic Release Inventory requirement is a rule which has the primary purpose of addressing health, safety, or environmental risk, even though it does not mandate any behavior beyond the release of the information. But perhaps that will be settled by a higher court sometime. Senator Levin. Actually, it could be settled by the sponsors of the legislation, who have both just spoken out on it today. The word ``address'' means treat. But in any event, as the two lead sponsors of this legislation, we have just said that that is not the intent. We do not think that is what the word means. So that should not be a problem in terms of clarification. Chairman Thompson. I think that is true. My only parting comment would be, with regard to the quantifying human life and so forth, it is ironic to me that those who would want the status quo and put all your trust, faith, and confidence in an unsupervised kind of regulatory situation, but at the same time think that if we pass this law, that those same people would be in some way minimizing the loss of human life or that if you look at any of these major rules with regard to teen smoking or tobacco sales to children and things like that, the benefits greatly outweigh the costs. So these same people are not going to change their stripes overnight and start minimizing or discounting or in any way upsetting the balance as far as what traditionally have been the assessments of costs and benefits. Any of those things, as far as I have seen, where you have got public health issues, kids smoking or the meat inspection rules or anything like that, the benefits clearly have always outweighed the costs in those assessments and I would assume that they would continue to do so. Senator Durbin. Mr. Chairman. Chairman Thompson. Yes, Senator Durbin? Senator Durbin. I was going to suppress the urge to comment again, but since you raised the issue of tobacco, I have to tell you that that is a classic illustration of why this does not work. This Dutch survey that came through and said stopping people from smoking allows them to live longer and cost us more, if they continue to smoke and die an early death, they are cheaper, just to put a cash register up on the table and measure it, you would draw a conclusion, well, maybe we should not stop people from smoking. But, thank God, we did not draw that conclusion. We are trying everything we can and 41 State attorneys general are trying to stop them, too. Just measuring it in dollars and cents does not work sometimes. Chairman Thompson. The FDA, when they looked at it, they put, as far as tobacco sales to children, they put the benefits at between $28 and $43 billion a year and the costs at $149 to $185 million a year. They did not look at it in the same way that you are looking at it. I would just simply say that, again, these regulators who we place our faith and confidence in and the opponents of this bill do not want to upset that, I would suggest when they take a look at that situation that it is going to be a no-brainer. They will not say, oh, my God, because somebody has done this analysis, we are going to have to not regulate in this area. We are talking about non-quantifiable benefits as well as quantifiable and non-quantifiable costs. We have a provision in there that says if it is contrary to the public interest, the law does not even apply, every safeguard imaginable. So, again, we have either got to have some confidence in our regulators or not. We cannot have it both ways, I do not think. But anyway, gentlemen, thank you very much. We have got another panel here, so we will not detain you any longer. You have been very helpful to us and we appreciate your comments. Thank you. I would like to turn now to our second and final panel. With us today is Professor Ron Cass, Dean of the Boston University School of Law and Melville Madison Bigelow Professor of Law. Dean Cass is also Chair of the Section on Administrative Law and Regulatory Policy of the American Bar Association. He will be followed by Dr. Lester Crawford, Director of the Georgetown University Center for Food and Nutrition Policy. Our third witness will be Dr. John Graham, Director of the Harvard Center for Risk Analysis. Pat Kenworthy will then testify on behalf of the National Environmental Trust. Our fifth witness will be Frank Mirer, Director of UAW Health and Safety Department. Dr. Mirer will be followed by David Vladeck, Director of the Public Citizen Litigation Group. Because this is a large panel, I would like to again encourage the witnesses to limit their oral testimony so that we can give ample opportunity for questions. Your prepared testimony will be included in its entirety in the record. Dean Cass, would you like to begin, please? TESTIMONY OF RONALD A. CASS,\1\ DEAN, BOSTON UNIVERSITY SCHOOL OF LAW Mr. Cass. Thank you, Mr. Chairman, Members of the Committee. I appreciate the opportunity to appear here. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Cass appears in the Appendix on page 100. --------------------------------------------------------------------------- Let me just make three brief points about this legislation. First, I have to agree with Senator Levin that it is hard for me to recognize the legislation toward which most of the criticism is directed. It is not the bill that I have read. S. 746 is a fairly balanced bill. It is sensitive to concerns that Americans have concerns with regulation, concerns both that the government do enough to protect us against risk to health and safety and concerns that government not impose undue costs on us, our businesses, our State and local governments. This is not a bill that overrides concerns for health and safety only to look at economic concerns. It is not a bill that says, look only at quantifiable costs and benefits. It is not a bill that requires agencies to look only at some risks. It seeks to get better information on which to regulate. Second, given my size, I am very much concerned about anything that is one-size-fits-all. It never fits me. This legislation is not one-size-fits-all legislation. It is generic legislation that deals with all agencies, but it does so in a flexible way. It does so in a way that gives the agencies a great deal of discretion to choose how they will comply with the statute. The agencies are given the option of choosing different ways of doing their cost-benefit analysis, different ways of doing valuation, different ways of doing risk assessment, and different ways of doing peer review. Look, for instance, at the peer review section. It says that agencies can, if they want to, use institutions, panels of experts, or other formal or informal means. If they use a panel of experts, they choose the experts. I do not see any reason to believe the agencies will choose the wrong experts. If you trust the agency, as we said a moment ago, if you trust the agency to do the regulation in the first place, you should trust their choice of experts. In addition, the legislation has not just one but at least two safety valves in it. There is a safety valve express in the legislation that allows agencies to say, here is why we cannot do this in this case. There are also safety valves in the Administrative Procedure Act whose definition of rules is used in this legislation, so that if there is an emergency, there is not time to go through the ordinary notice and comment proceeding, the agency can choose not to come within the definition of ``rule'' that is in this legislation. Third, judicial review. There is an assumption that is made in some testimony that somehow this bill changes what courts are going to do in a radical way and gives courts a tool that they can use to eviscerate health and safety regulation. I do not see that anywhere in this bill. It is a bill that leaves in place the standards of judicial review that exist today. If an agency refuses to comply at all with the law, a court can, but it does not have to, reverse or remand the agency decision. Other than that, the judicial review provisions intend to, and I think generally do, leave in place the standards of review under the Administrative Procedure Act. In my written statement, I have recommended one small change to make that even more clear. Thank you again, Mr. Chairman, Members of the Committee, for letting me comment here. Chairman Thompson. Thank you very much. Dr. Crawford. TESTIMONY OF LESTER M. CRAWFORD,\1\ DIRECTOR, CENTER FOR FOOD AND NUTRITION POLICY, GEORGETOWN UNIVERSITY Mr. Crawford. Thank you very much, Mr. Chairman. I am Director of the Center for Food and Nutrition Policy at Georgetown University, but prior to that assignment, I was in leadership positions in food safety at the Food and Drug Administration and also at the U.S. Department of Agriculture from 1978 to 1991. It is from that perspective that I present my comments on the bill. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Crawford appears in the Appendix on page 107. --------------------------------------------------------------------------- I am pleased to note from the last time I testified on a predecessor bill that there has been improvements in the bill that were discussed then, some of which were included in my testimony, and I appreciate that very much, indeed. I also believe, though, that the new bill is improved in many other ways that I think will help the regulatory process in the Federal Government. I would like to make comment with respect to the food safety and public health aspects of the bill. There are three tools that are institutionalized in the bill. The first is the cost-benefit analysis, and I very much appreciate the earlier discussion among the Senators about this aspect of the bill. One has to be very careful in talking about cost-benefit with respect to human health, death, disease, and suffering, and I appreciate the safeguards that are present in the bill in that regard. Also, I am pleased to see that the bill does not override the so-called super mandate. The second thing that would be institutionalized--risk assessment--is extraordinarily important and is rapidly becoming the international language of food safety. We recently held a risk assessment consultation at the World Health Organization in Geneva in which an attempt was made to publish, in effect, a book which will recommend to all governments that they use this as the means of communication within the government and also to their various publics and between governments in an effort to make more rational decision making in terms of public health, and particularly food safety. So I think you are right on the cusp of a revolution in communication both within the government, within the scientific apparatus, and also between regulators and the public and it is going to make a large difference in how we agree on major efforts in public health. The third thing is peer review, which has been called the surety bond of science. Peer review is the modern day application of the old adage, two heads are better than one. It has been tried in the government a couple of times with great success, in my view. In 1958, the Food Additives Amendment created the term ``generally recognized as safe,'' which embraces the idea that if you can empanel an uneven number of experts in a field and they say that a substance is generally recognized as safe, then FDA may conclude the substance is safe. A number of years later, FDA institutionalized while I was there the concept of product specific advisory groups such as the oral contraceptive advisory group, diabetes drug advisory group, and so forth. These are, in effect, peer reviewers who look at the evidence, look at what FDA may be proposing to do, and makes a judgment. The fact that you have included peer review in the bill will make available to the Federal Government in one expertise than has been the case in the past. I think these three tools would be a great help. Now, let me use the case example to illustrate my point. Previously, it was mentioned that the Hazard Analysis Critical Control Point system, HACCP, is a new food inspection standard not only in this country but in the world. The United States almost was the leader in this field. We discovered the concept in the United States, and following a National Academy of Sciences study in 1985, we attempted to convert HACCP to a regulatory tool. We were ready by 1989 to propose to the country and also to decision makers at the highest level in this government that the inspection programs be converted to HACCP, but we had difficulty in communicating to OMB the value of the concept because decision making in that distant time, just 10 years ago, was largely intuitive and subjective and it was difficult for regulators and scientists to find at OMB a common ground for discussion. We performed risk assessments, but they were not able to take those and see in them the same things we were, so they resorted to various regulatory and administrative subterfuges to slow down the process, one of which and the last of which was the Paperwork Reduction Act. The process envisioned by S. 746 would have averted this unfortunate development. Had we had that, I believe HACCP would have been implemented about 3 years earlier. I believe that S. 746 will lead to better, more efficient government, and I am convinced the bill provides a framework wherein regulatory initiatives can be fairly and openly judged in a transparent manner. My conclusion is that the bill will institutionalize risk assessment as a calculus for regulatory decision making. To the extent that this is the case, S. 746 will bring the United States in congruence with its international trading partners and the long-sought goal of science-based decision making will at last have been realized. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. Dr. Graham. TESTIMONY OF JOHN D. GRAHAM,\1\ PH.D., DIRECTOR, CENTER FOR RISK ANALYSIS, HARVARD SCHOOL OF PUBLIC HEALTH Mr. Graham. Thank you, Mr. Chairman. I am Professor of Policy and Decision Sciences at the Harvard School of Public Health, where I teach the methods of risk analysis and cost- benefit analysis. Mr. Chairman, I am honored to be here today to offer my enthusiastic support for the Regulatory Improvement Act. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Graham appears in the Appendix on page 109. --------------------------------------------------------------------------- For the last 15 years, I have studied the decision making at Federal agencies responsible for protecting public health, safety, and the environment. Although each of these agencies serve a vital public function, I have found the decisions of these agencies are not always grounded in a good understanding of science, engineering, and economics. As a result, our regulatory system is far less effective and efficient than it could and should be. One of my previous doctoral students at Harvard, now Professor Tammy Tengs at the University of California at Irvine, found in her doctoral dissertation that life saving investments in the United States are often inefficient. Based on a sample of 200 policies, she estimated that a reallocation of life saving resources to cost-effective programs could save 60,000 more lives per year than we are currently saving at no increased cost to taxpayers or the private sector. Please let me cite three concrete examples of flawed regulatory decisions that resulted from inadequate regulatory analysis. Example one, the risks of cleaner gasoline, MTBE. In the 1990 Clean Air Act, Congress sought to reduce pollution in city air by ordering EPA to force an increase in the oxygen content of gasoline. EPA later issued a rule that permitted a particular chemical, MTBE, to be used in compliance with the mandate. Now that MTBE is widely used in gasoline throughout the United States, serious questions are being raised about the safety and toxicity of MTBE. There are also reports that this highly persistent chemical is contaminating groundwater supplies in several regions of the country. EPA is now scrambling around trying to find evidence in support of this mandate, and they have recently kicked this issue, this hot potato, to an independent commission. That may be helpful, but what is missing today is the same thing that was missing in 1990, a careful risk-benefit analysis of MTBE and its alternatives. Example two, mandatory fuel economy standards. During the oil crisis of the mid-1970's, a Federal agency was charged with regulating the average fuel economy of new vehicle fleets. As a result, cars have become more fuel efficient, but they have also become smaller and lighter than they would otherwise have been, causing an additional 2,000 to 3,000 additional traffic fatalities each year because of the inferior occupant crash protection provided by smaller vehicles. More recently, the objectives of this entire regulation have begun to be circumvented by the growing popularity of sport utility vehicles, a class of vehicles that has not yet been seriously analyzed for its safety and environmental consequences. Example three, passenger air bags and children. When air bags were mandated in the early 1980's, concerns were raised that the passenger air bag might be dangerous to children seated in the front seat. Technical papers by engineers from General Motors and Honda had already quantified the potential dangers of these air bags to children. The relevant Federal agency, NHTSA, did perform a risk assessment of air bags, but it was not subjected to independent peer review. NHTSA analysts concluded the passenger air bag could endanger children under rare circumstances, but the problem was unlikely to be widespread and serious. To the agency's credit, now 15 years later, NHTSA has published a real world analysis showing how wrong their early predictions were--increases of 20 to 100 percent in the risks to children in cars with passenger air bags have been shown. In this case, NHTSA designed a regulation that has harmed children unnecessarily because the underlying analysis was flawed and never subjected to independent peer review. Looking back on these three examples, it must be acknowledged that we have much more knowledge today than Congress and agencies had when these regulations were originally formulated. The benefits of hindsight are certainly considerable. Nonetheless, it is my opinion that in each of these cases, the regulatory decisions and the subsequent actions by Congress might have been very different and smarter if the agency had performed the kinds of analysis mandated in the bill we are discussing today. Thank you very much, and I look forward to the question period. Chairman Thompson. Thank you very much. Ms. Kenworthy. TESTIMONY OF PATRICIA G. KENWORTHY,\1\ VICE PRESIDENT, GOVERNMENT AFFAIRS, NATIONAL ENVIRONMENTAL TRUST Ms. Kenworthy. Good morning, Mr. Chairman. On behalf of the National Environmental Trust, I wish to thank you and Senator Lieberman, as well as other Members of this Committee, for the opportunity to present our views today about S. 746. I am Vice President for Government Affairs and Senior Attorney at the National Environmental Trust, and prior to joining NET 2 years ago, I was Director of Regulatory Affairs for Monsanto Company. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Kenworthy appears in the Appendix on page 118. --------------------------------------------------------------------------- We believe there are a number of serious problems with the bill. It will, in our opinion, greatly increase the time required for agencies to make regulatory decisions. No provision is made for a corresponding increase in resources to address these newly imposed burdens. We believe that attempting to accomplish sweeping reform by enacting a single comprehensive statute is bound to result in unforseen and unintended consequences, including in some cases subjecting new rules to inappropriate analysis that was never intended by the authorizing statutes. Senator Lieberman mentioned the Toxic Release Inventory law. I would like to take that example a little bit further, although quite a bit has already been said about it here this morning. As has been discussed, this law is not a risk-based statute. It is simply a community right-to-know law. It is an example of the potential for unintended consequences that this legislation would create. By the way, our information is that TRI rules have been subjected to the Executive Order and under that test would certainly be subject to the mandates of S. 746. If TRI laws and other community right-to-know laws and many other examples that can be enumerated of rules to which this statute would create unintended consequences, we believe simply that those things should be specifically excluded. As Senator Lieberman pointed out in his response to the Chairman's comments, we can all read the statute a different way about the applicability of some of these things. It is not all that clear. We read S. 746 to require that a risk assessment be performed before a new regulation can be promulgated in order for the benefits to be calculated. This brings up an important point about risk assessment and cost-benefit analysis generally. These evaluations are not a panacea to prevent bad regulatory decisions. Risk assessment and cost-benefit evaluations inform, surely, but do not provide answers to hard questions. The answers to how to regulate a particular risk must in the end always be based on value judgments. We have heard a great many anecdotes and examples here this morning intended to demonstrate how irrational the existing system is and that are supposed to show that S. 746 would improve the system. In any large and complex regulatory system, there will be errors, there will be foolish results, and there will be bad decisions. As Senator Durbin has pointed out, in some of the particular cases we have heard about this morning, there has been and is more to the story. In any event, S. 746 would not have changed the outcome of most of the examples we have heard this morning, even if it had been enacted. The better approach, in our opinion, is to deal with particular situations, with particular problems that may arise from individual statutes on a case-by-case basis. There is very real potential for unintended consequences when an attempt is made to reform perceived regulatory problems with a comprehensive piece of legislation. This bill attempts to address an array of many different statutes that have diverse purposes and goals. These many affected statutes are administered by many different Federal agencies with distinct missions. We do not think this kind of comprehensive legislation can possibly effect improvement under those circumstances. We believe that, instead, it would create confusion and inconsistencies and do great harm to agencies' abilities to protect health, safety, and the environment. It is for these reasons that we oppose this legislation. Thank you again for this opportunity to testify. Chairman Thompson. Thank you very much. Dr. Mirer. TESTIMONY OF FRANKLIN E. MIRER,\1\ DIRECTOR, HEALTH AND SAFETY DEPARTMENT, INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) Mr. Mirer. Thank you very much, Mr. Chairman. I am very pleased to be back. Senator Levin, I bring greetings from Green Acres. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Mirer appears in the Appendix on page 132. --------------------------------------------------------------------------- Chairman Thompson. We are having a reunion of a lot of old friends today, are we not? Mr. Mirer. Right. Senator Levin. Old neighbors. Mr. Mirer. I heard a lot of John Graham's issues when I was on his advisory board and I am pleased to speak again. In part of my role in the UAW, I visited 46 foundries myself. Dealing with the previous example, spent foundry sand is filled with carcinogens. The workers that breathe that dust suffer excess mortality from lung cancer. The exposures are only partly regulated by OSHA, partly as a result of 13 years of litigation by the UAW. We would hope to address the rest of them. So I would not view foundry sand as safer than dirt myself and would not have it in my backyard. Next week, the UAW will observe Worker Memorial Day. Hundreds of local unions will fly flags at half mast to recognize workers killed, injured, made ill on the job. Many of the fatalities and virtually all of the occupational disease identified among our members by research arose from conditions not covered, or exposures permitted by existing OSHA standards. We are back here opposing S. 746 because it contains no provisions that would facilitate improving OSHA standards, and would do the opposite. In my testimony, I describe the history of metal working fluid standards, as yet another example of the real world potential of S. 746. There are about a million American workers exposed to metal working fluids. Our efforts began in the early 1980's when we did several studies in Connecticut bearing plants showing increased cancer among our members there. My full testimony describes an outbreak of serious lung disease, hypersensitivity pneumonitis at Chrysler's Kenosha engine plant, affecting dozens of workers, some of whom will never come back to work. I talk about the extraordinary efforts of Chrysler, UAW Local 72, the Wisconsin Health Department, and NIOSH in responding to this problem. The key point is that there was no exposure in that facility remotely approaching OSHA's permissible exposure limit, and no OSHA requirement for medical surveillance for those employees that would have stemmed the outbreak before it got as bad as it did. We have been working on this problem a while, starting in the 1980's. After a decade of research, we petitioned OSHA for a new standard. In 1993, after 4 years, OSHA formed a 17-member standards advisory committee. We have had eight or nine meetings, traveled around the country. After we get done, there will be at least a 2-year delay to get the proposal issued with the existing processes, even to get to a public hearing. That is the present situation. Now, if S. 746 were to become law, even if the 17 members, union, management, and public health representatives reached complete agreement on every issue in the standard, OSHA would still have to conduct a new formal risk assessment, a different cost-benefit analysis than what is required under the statute, a substitution risk analysis, comparative risk analysis. Then OSHA would have to subject it to peer review before the proposal would be formally issued for public comment. So the specific provisions in this bill would add years of additional delay. I also want to talk a little bit about the so-called peer review provisions. From personal experience as a peer reviewer, they are actually substantially less accountable, less transparent, less open than the current OSHA procedures. OSHA now holds an informal public hearing on the proposal to which everybody can come, everybody can ask questions, and all the evidence is questioned by the parties of interest. The process is open, on the record, exhaustive. The President's Commission on Risk Assessment and Risk Management recognized this as equivalent to peer review. By contrast, the additional peer review process required in S. 746 is closed. Participation is limited. By its nature, workers would be excluded from participation and it would involve industry representatives with conflicts of interest and it permits decisions to be made on secret information. I have done peer review of journal articles and peer review of grants. Peer review is a secret, closed process. Sometimes, the identity of the reviewer is concealed from the person who submitted the journal article, and the identity of the author of the journal article is concealed from the reviewer. So I just do not think it is an appropriate process, certainly not in all cases, and not as good as what we have now. I make some other general points about whether the specifications in the bill and cost-benefit analysis are appropriate, whether it is burdensome or not. The bill kicks in with an OSHA standard that costs the average employer $17 a year. A major rule at OSHA is something that costs an employer $17 a year. Let me close by saying what would really solve some of the regulatory problems, the standard setting problems at OSHA and see whether we see any of these in S. 746. First, I think it is important to recognize that the OSHA process is actually more transparent, open, and accountable than the new peer review process and that has to be specified. Second, we have got a lot of off-the-record, opaque, hidden processes in this business already, SBREFA review, some of the aspects of OMB review not fully covered by the Executive Order or the language here. All of that has to be brought into the open so that we, the advocates of the regulation, have the right to question those people who are involved in the regulatory process. Third, we have to provide the same access to judicial remedies for the parties who wish to challenge the agency's failure to act. As much of the litigation at OSHA is over agency's failure to act to protect, as those who would oppose action. And finally, not only will this legislation add delay to the standards process that is already decades long, but it will also reduce the number of hazards which the agency can take up by soaking up resources for some analyses that are irrelevant. So I think those four issues have to be addressed if we are going to have anything like a balanced approach to public health protection. Thank you very much. Chairman Thompson. Thank you very much. Mr. Vladeck. TESTIMONY OF DAVID C. VLADECK,\1\ DIRECTOR, PUBLIC CITIZEN LITIGATION GROUP Mr. Vladeck. Thank you, Mr. Chairman, Members of the Committee. Thank you for inviting me again to testify on this bill. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Vladeck appears in the Appendix on page 143. --------------------------------------------------------------------------- I bring to the table 20 years of experience as a lawyer representing consumers, workers, and others who are dependent on our health and safety agencies to protect them from hazardous workplaces, from foods that may be adulterated, from dangerous drugs and other consumer products. It is difficult for me to find myself in disagreement with people who I respect and people who share common aspirational goals. We all want to see better, more efficient, and improved rulemaking and decision making. But today, our health and safety agencies are on the brink of paralysis. OSHA takes 10 years or more from start to finish to get a rule out to protect workers. That is intolerable. It can take EPA just as long. The Department of Agriculture, as Dr. Crawford already made clear, spent years developing HACCP. It is not in place today and there is no HACCP standard for prepared or packaged meats that is even on the table. I would suggest to Congress that it ought to tackle the gridlock that now paralyzes our regulatory agencies rather than look at S. 746, which will only add to that delay. I would like to start out this morning by talking about how and why S. 746 is going to condemn agencies to regulatory paralysis. One thing that S. 746 does that has not been talked about is it dictates a structure that agencies must follow in their rulemaking process. This is clear. This is not flexibility by any stretch. The first thing that the agency must do, well before it begins formal rulemaking, is it has to publish notice that it is about to undertake a risk assessment. It must solicit information from the regulated industry as well as from the public. That is before it begins. It is also required to consider all relevant information that is reasonably available. This requirement is unbounded. It is not limited durationally. It extends until the date the final rule is published. It is an undoable task for the agency to be on a treadmill, always assimilating new data when it comes in, yet that is a requirement of this bill. The agency then has to follow what I believe are relatively prescriptive requirements for risk assessment, requirements that are far more prescriptive than exist today in the Executive Order or any other source of law. Finally, the agency then has to submit its risk assessment to a peer review organization. That will take time. This is just the first step of the agency's sequence, because the agency is directed to include the results of the risk assessment in the cost-benefit analysis, which is the second step of this sequence. This, too, is a laborious, long process that will require the agency to devote considerable time and effort to preparing before it even begins the rulemaking. Then, again, a new requirement, unmatched anywhere else in law, agencies must address substitution risks, and for agencies like OSHA and EPA, which by definition regulate where there will be substitution risks, this, too, is a very considerable task. Only after the agency completes all of these tasks may it take even the first step in the regulatory process, which is to publish a notice of proposed rulemaking. It cannot be seriously argued that this bill will not add considerably to the delay that is already paralyzing our regulatory agencies. That is wrong. It is bad policy. The second thing I would like to talk about is judicial review. I disagree with my good friend, Ron Cass, that the judicial review provision in this bill is benign. I think there are many problems with it. I would like to focus only on one. It has at least been commonly understood in discussions with staff that this bill was not intended to allow a rule to be set aside or remanded if the agency performed the risk assessment, performed a cost-benefit analysis, but did not do so in the manner prescribed by the statute. I do not think this bill, the way it is drafted, achieves that result, and there are three reasons for my conclusion. The first is, this bill does not contain language that was in its predecessors that said rules could be remanded only if the agency failed entirely to perform these functions. That language has been deleted. Next, the bill says that the adequacy of compliance with specific requirements of this subchapter shall not be grounds for invalidating the rule. But the phrase ``adequacy of compliance'' suggests that compliance with specific requirements is reviewable, but adequacy is not. It is a dangerous formulation that invites mischievous judicial review. And third, and this is my last point, the act sets forth very prescriptive provisions governing risk assessment, cost- benefit analysis, and so forth. A reviewing court is going to be skeptical that you in Congress wanted the agency to do this but could simply put in a piece of paper labeled ``risk assessment'' and that would foreclose judicial review. I think that is an untenable position to take. I think the way this provision is drafted, you are inviting courts to set aside agency rules simply because the agency, in performing the risk assessment, the cost-benefit analysis, did not dot its ``i''s and cross its ``t''s. That could have devastating consequences for agency rules. Chairman Thompson. Thank you very much. On your last point first, Senator Levin and I have spent a long time on this, and if somebody can come up with a way to make this clearer, I would welcome the suggestion. The idea that the court can throw the analysis out because of the adequacy of the cost-benefit analysis or the risk assessment is just totally unfounded. I do not know how it could be any clearer. It says in Section 627(d), the cost-benefit analysis, cost- benefit determination under Section 623(d) and any risk assessment required under this subchapter shall not be subject to judicial review separate from review of the final review to which such analysis or assessment applies. The cost-benefit analysis, cost-benefit determination under Section 623(d) and any risk assessment shall be part of the rulemaking record and shall be considered by a court to the extent relevant only in determining under the statute granting the rulemaking authority whether the final rule is arbitrary and capricious and abuse of discretion or unsupported by substantial evidence where the standard is otherwise provided by law. Then Section 623(e) says that if you fail to perform the cost-benefit analysis or risk assessment, a court may remand or invalidate the rule. Can you think of a way that we can draft that to make it any clearer? Obviously, the rule in and of itself, if it is arbitrary and capricious, the court can throw it out, but the court clearly cannot pick out the cost-benefit analysis or the risk assessment and consider that individually and the adequacy of that individually in order to throw the rule out. It goes into the entire rule and the court has to consider the rule. Can it be any clearer than that? Mr. Vladeck. Well, I take it your question is directed to me. I think it could be much clearer and I think you should go back to the language in the Glenn-Chafee bill that included a qualifier between fails to perform such as entirely and you take out the lead in the next sentence, the adequacy of, because what you are doing is you are inviting the court to review--not to review adequacy, but to do a checklist. Remember, under this statute, a cost-benefit analysis is only one done in accordance with the strictures laid out in the statute. If you look at Section 621, the definition of cost- benefit analysis says it is one performed in accordance with the mandates laid out later on in the statute. If you take out that language, you significantly alleviate the possibility that a court will do what I have just said, which is---- Chairman Thompson. Take out what language, the adequacy of? Mr. Vladeck. The adequacy of. Chairman Thompson. And just say the compliance? Mr. Vladeck. The first thing I would do is I would go back to Glenn-Chafee. That is the best and clearest way to fix this concern, which is to use a qualifying phrase like--and I would be glad to work with your staff on this, and Paul knows these arguments backwards and forwards--but to use qualifying language like that, that would make it crystal clear to a reviewing court that if, for example, the agency failed to--in the risk assessment requirement, you have to describe the major uncertainties in each component of the risk assessment. If you have failed to do that, that may be grounds---- Chairman Thompson. But it says that the risk assessment shall not be subject to judicial review, separate and apart. Mr. Vladeck. No, but suppose there is a challenge to an agency final rule? One argument that will be made is that the final rule is not rational. It is arbitrary and capricious because there are flaws in the risk assessment. The flaw in the risk assessment---- Chairman Thompson. And that would be valid only if it is so flawed that it makes the final rule arbitrary and capricious. Mr. Vladeck. I am suggesting another ground for remand. Chairman Thompson. I beg your pardon? Mr. Vladeck. I am suggesting a different ground for remand. The argument you made is the conventional argument. Yes, the rule itself is irrational as demonstrated by the flaw in the risk assessment. There is a second line of argument made available under this bill, which is that the risk assessment is flawed because it omits consideration of something mandated by this rule. Therefore, the agency failed to perform the risk assessment as Congress has decreed and that independently may provide a reviewing court a ground for setting aside or remanding a rule. Chairman Thompson. We cannot give risk assessment total immunity. I mean, no matter how flawed it is, it becomes a part of the rule. You have to look at the rule including the risk assessment. Mr. Vladeck. Risk assessments are already judicially reviewable. In fact, courts look at them all the time. The UAW--in a case that I represented them--won an OSHA case challenging the adequacy of a risk assessment. There is nothing unusual or unconventional about that. Chairman Thompson. This has some additional elements that the court considers. Mr. Vladeck. That is correct. Chairman Thompson. Professor Cass, what am I overlooking here? We tried to provide a belt and suspenders to this thing and still, evidently, we have not accounted for the imagination of good lawyers. What do you think? Mr. Cass. Well, Mr. Vladeck is right about one thing, and that is that he and I disagree on this. [Laughter.] I think the legislation is crystal clear on this point. I think you cannot read Sections 622 and 627(d) and (e) and come to the conclusion that a court is invited to go off and do a detailed review of the risk assessment and then throw it out if the judge does not like the way it has been done. Unfortunately, in my profession as a law professor, we tend to focus on the really odd case, on the court that goes way off the deep end. There are 22 million civil actions a year of which the Supreme Court hears argument in about 85, and one of those every few years makes it into a case book. Those are the ones we spend all our time on. It gives us something of a warped view of the system. I think this legislation is quite clear. I do not see the risk that Mr. Vladeck does here at all. Chairman Thompson. All right. Let me ask some of you to address another criticism that we have heard fairly consistently. The reference is made to the OSHA process and perhaps the EPA process, it takes 10 years to get a rule, and so forth. I assume going in there is an awful lot that we all agree on here that we are trying to do, and transparency is good, using the best scientific analysis is good. Even having some, regardless of what kind of review it is, having some process or someone of expertise, if it is fair and balanced, looking at all of this. A lot of this is incorporated in the Executive Order. So, as I say, we pay lip service that this is a good idea. If it is not a good idea, it should not be in the Executive Order. But having agreed on all those things, there still is clearly concern that what we are doing here is going to slow down the process. It takes, let us say, 10 years to get some of these rules done. There is one major OSHA rule a year or something like that, I guess. Dr. Graham, what would be your feeling about that? Mr. Graham. Mr. Chairman, I wanted to share with the Committee the results of a book provocatively entitled ``The Fifth Branch: Science Advisors as Policy Makers,'' written by Professor Sheila Jasanoff, then at Cornell University, now at the Kennedy School of Government. And what she did is she reviewed those health, safety, and environmental agencies that currently use independent peer review. She looked at case studies of what happens when independent experts from universities and think tanks review the analyses performed by agencies. Let me give you just a paraphrased summary of her conclusions. One scientific peer review can actually shorten the rulemaking process by increasing technical consensus about whether regulation is necessary and increasing the credibility of the agency in the decisions that it makes. Two, when scientific peer review is routine and rigorous, judges are less likely to second guess agency decisions because those decisions have been supported by independent scientific peer review. Third, it is a myth that scientific peer review is a pretext for delaying decisions. Early peer review can actually accelerate regulatory decisions by building consensus about what science says on the issue. Four, agencies have developed workable procedures for handling conflict of interest issues, though continued vigilance is required. The academic literature on this subject, the studies of the actual peer review process, do not suggest that some of the perilous stories that you have been told would actually take place. Chairman Thompson. Are there any examples of where a cost- benefit analysis was used in order to expedite a process or make a process more politically palatable, to allow it to take place sooner, in your opinion? Mr. Graham. I do not know an example on the cost-benefit analysis off the top of my head, but I think there is a very good one in the case of the Safe Drinking Water Act. Under the Safe Drinking Water Act, there already is a mandatory requirement for independent peer review. In the case of nitrates, a contaminant of drinking water, an agency scientist misread the underlying toxicological and epidemiological literature and was going to set a standard that was not protective enough of infants who might be exposed to nitrates. The independent peer review process exposed this error and caused the agency to set the maximum contaminant level tighter than it otherwise would have been. That is a case of peer review making the process more protective of public health and the environment. So I do not think we should assume that peer review is going to be a bad thing for these public health agencies. Chairman Thompson. Before my light goes off, let me ask Dr. Crawford. I will get in under the wire here. Mr. Crawford. Yes. I agree with Dr. Graham. I guess every witness has more or less said that some of these rules take too long. We have talked about some that took 10 years. I can tell you one when I was at FDA that took 24 years. But the question is whether or not we are going to do something about it or whether we are just going to continue to bemoan the fact that the regulatory process is out of control. I think these systems, as Professor Graham mentioned, when I was in the government, would have helped us establish diplomatic relations with OMB and we could perhaps, I believe, have gotten things like HACCP through much quicker. I just know we could, because we eventually had lost communications and also perhaps scientific credibility that peer review and risk assessment would have given us back. Chairman Thompson. Thank you very much. Senator Levin. Senator Levin. Thank you, Mr. Chairman. Mr. Vladeck has testified that the USDA could not have initiated, and these are his words, the HACCP rule, or at best would have been severely hampered by it, had S. 746 been in effect, and I am wondering, Dr. Crawford, whether you agree with that. Mr. Crawford. Actually, in the predecessor bill hearing last year, we did evaluate HACCP under what would happen if the bill had been passed. We found out that HACCP would have passed with flying colors. There would be a $2 billion, as I recall, on the plus side for HACCP. So that, again, would have been a compelling case for us to override OMB's worries about the Paperwork Reduction Act, whatever that was. Senator Levin. Would it have gone through possibly even faster? Mr. Crawford. It would have gone through, I would say, 3 years faster. Senator Levin. If this bill were in effect? Mr. Crawford. Yes. Senator Levin. Now, if there is a case where these provisions are creating delay, and I will ask you, Mr. Vladeck, is it not true there is a provision in this bill which says that the agency may proceed without taking these actions if doing so, if conducting the regulatory analysis, would be contrary to an important public interest? You at least agree that language, that safeguard is in the bill? Mr. Vladeck. Yes, sir. Senator Levin. I know you do not think it is adequate, but you would agree, at least, the language is there? Mr. Vladeck. You have my position. Senator Levin. All right. Now, you have also testified, Mr. Vladeck, that S. 746 requires that an agency ``certify that its rule optimizes economic efficiency,'' and then you go on from there. I would suggest to you that you are going back. We do not have a certification the way Glenn-Chafee did. Glenn- Chafee, a bill which many of the groups supported, now oppose our bill. Glenn-Chafee had a requirement that there be a certification that the rule produce benefits that will justify the costs. Indeed, the Executive Order which we now have says that each agency shall assess both the cost and the benefits of the intended regulation, and recognizing that some costs and benefits are difficult to quantify, propose or adopt the regulation only upon a reasoned determination that the benefits of the intended regulation justify the costs. That is the current Executive Order. We do not do that. We do not have a requirement that there be a determination that benefits justify cost. We do not have a certification. We have a determination as to whether or not the rule is likely to provide benefits that justify the costs, and then if it does not, why it is that the agency proposes to regulate. So in your testimony, you are using a word which appeared in Glenn-Chafee which is a much more restrictive word on the agency than what we have here, and I would just simply urge you as we proceed with discussion of this bill that we focus on the language of this bill. And this bill, again, has a determination as to whether a rule is likely to provide benefits that justify costs and this bill says, if not, then why is the agency proposing to regulate. It is a much more flexible standard for the agency than the current Executive Order and it is more flexible than Glenn-Chafee in this particular regard. Feel free to comment on that, if you wish. Mr. Mirer. Senator Levin, could I comment on that? Senator Levin. Yes. Mr. Vladeck. I think my statement, when read in context, is accurate. Your bill says the agency must make a determination whether the net benefits test is met, and what my focus is is not on the word ``certify'' or ``determine,'' it is on ``net.'' Every dictionary you look at suggests that you are talking about a mathematical quantification. Senator Levin. Even though it says quantifiable or non- quantifiable? Mr. Vladeck. Yes, because the word ``net'' is the modifier. There has never been any explanation of why that is not an incoherent standard, to say to the agency, on one hand, you must use this mathematical net benefits test. On the other hand, you can use non-quantifiable factors. Mr. Mirer. At the risk of being practical here---- Senator Levin. Well, the only---- Mr. Mirer. If I could just say, in the OSHA process---- Senator Levin. I am just going to have to comment on this, and I have got a time limit, so forgive me. The bill itself says, and I want to read the language here, on page 14, line 14, I want to read the language. ``Net benefit analysis shall not be construed to be limited to quantifiable effects.'' Mr. Vladeck. As I acknowledged. Senator Levin. I just want to simply read the language, without arguing it with you. Mr. Mirer. Now, here is the practical point. In the OSHA process, and I do not know how anybody does this at any other agency, in the OSHA process, there is no credible economic information available until we get to the hearing. All the feasibility information, the cost of control, the options that could be taken, the substitutions of chemicals that might take into account, none of that stuff comes out until the hearing. When it gets to the hearing, OSHA does a preliminary analysis, which is usually very weak and limited, partly because of the Paperwork Reduction Act, and then in the hearing, workers who actually do the jobs and employers who actually run these processes come forward with the real data and it is possible to make the determination. So what this process is doing is requiring all that to be done prior to getting to the hearing, holding up the hearing until it can be done, peer reviewing it before we can get to the hearing to get to the real data, and then I guess the agency has to, if there is substantial new evidence that comes out at the hearing, which is the purpose of having the hearing in the first place, they would have to go through the process again. So that is our argument for why this front loading, which is destructive anyway, of the process as we see it is not a good idea. And then the second point is that this cost-benefit, etc., is not the economic feasibility standard, to which OSHA is held and so it is irrelevant, and as Senator Levin said, information can lead to a result, even if it does not mandate the result. That is exactly what we are afraid of here, overriding the underlying protections in the OSHA statute, even if it is not the intended result. Senator Levin. This question, Dr. Graham, is for you, as to whether or not the peer review which is provided for in this bill is duplicative of what the rulemaking process already provides in the area that they discussed. Mr. Graham. I think that the literature that exists on peer review shows that certain agencies, such as FDA and parts of EPA, currently use peer review processes, and I think those would satisfy the requirements of this bill. Other parts of EPA, other parts of FDA and OSHA, do not currently have an independent peer review process. In those cases, they would be asked to institute what is already being done at other programs. But I think there is a lot of flexibility in the way the peer review provision is written that would allow different agencies to tailor the kind of peer review that is appropriate for the kinds of rules they are developing. Senator Levin. So the bottom line is, then, that the requirements on peer review do not duplicate---- Mr. Graham. They would not have to do it twice. I see nothing in there that suggests to me they would have to do it twice or three times. Senator Levin. I think that is all I have for this round. Thank you. Chairman Thompson. Thank you very much. Senator Voinovich. Senator Voinovich. I listened to Dr. Mirer's testimony and Mr. Vladeck's. I am a new member of the Senate and what I am hearing today is that we have agencies out there that are already taking a long time to move things through them. I am also hearing that if we require them to do more, it is going to take a longer period of time. I wear hearing aids today because when I was a construction laborer, there was not a requirement that you have the ear plugs. I have an uncle that died prematurely, I think, because he worked with chemicals and he got leukemia. Mr. Chairman, I just wonder, do we have a problem with some of these Federal agencies in terms of the adequacy of the number of people that work in them? It is like we do not have enough people to get the job done, and if that is the problem, then why do we want to load them up with some more stuff? The object is to try and have regulations that are sensible and make sense and protect people and do what they are supposed to be doing. If the problem is that we do not have the wherewithal in these departments, then I think that this Committee ought to be very, very much concerned about that. I am thinking maybe you ought to bring in those agencies and talk to them about how adequate are they in terms of the staffing that they need to get the job done that they are supposed to be doing. It is fundamental. As a governor, I had great complaints, for example, about our medical board in Ohio, that they were not doing the job that they were to be doing, so we got involved in it and doubled the money that was made available to them and put new people on the board. I think 2 years ago or last year, it is the best medical board now in the country in terms of getting rid of these people that should not be practicing medicine. So I think that maybe there is another problem here that we need to address our attention to, in addition to just looking at this legislation. One of the criticisms that we heard, that if you have cost- benefit analysis and risk assessment, it is going to end up in a situation where you are going to put dollars over the values of the lives and health of our citizens. You hear it all the time, and I would like any panelist that would like to, to comment on that. Mr. Cass. I would be happy to, Senator. I think that there is no doubt that all of us every day make choices where we are trading off some type of risk against some type of cost. There is no other way to live. We do not have unlimited resources and we live in a world where those choices are necessary. If we look at the amount of money the Federal Government has, even at its current level, it is limited, and the amount of money we have in the economy is limited. The agencies have to be saying at some point, is the amount of dislocation, cost, imposition on others worth this saving in health and safety? It has got to be implicit in what they do now. What this legislation says is not to make a precise, quantifiable point at which you value human life. What it says is not pin down the unique solution to this problem. It says to look carefully at how much different types of rules are going to cost and see if you can do what you want more cost effectively--see if you can prevent more risk more cheaply. And I think that is a good instruction to give agencies. Mr. Mirer. I do not think that there is any question that agencies try to do that now. The heightening of the importance of regulatory analysis is actually the bottleneck at OSHA. The system is being run by the people who do the economic analysis, and the leader of that group was just put in charge of all standard setting. So instead of the health scientists or the engineers being the critical skill, the critical skill is being able to get out these analyses that will withstand Executive Order review, that will withstand the subsequent challenges in court and the like, and that is the dominant feature. That is what is slowing things down. When we come to the question of cost-benefit, one of the first standards that OSHA took up was the noise standard, and that would be, by any measure, a major rule. The problem is what is the value of a worker's hearing? That would actually be the thing over which we struggled. Those ear plugs that you were provided with, we now know they do not work anywhere near as well as they were supposed to work, and people are losing their hearing even if they religiously wear those hearing protection devices. So now we are getting to balance the cost of quieting the noise, and it is doable, against human hearing and what is the value of a worker's hearing. I actually do not know how to put a number on that, but I can tell you that putting that as a cost-benefit question has stopped progress on noise abatement in American industry now. We have not had any progress in 10 or 15 years as a result of that cost-benefit determination being made, actually by a review commission judge, not even by a real court. Senator Voinovich. Do any other panelists want to comment here? [No response.] Senator Voinovich. I am finished. Chairman Thompson. You have a little time left, so I am going to take 30 seconds of it. Senator Voinovich. I yield my time to the Chairman. Chairman Thompson. You are right. I mean, the difficulty you point out is a correct one. But the other question is, what is the best rule in order to prevent loss of hearing? And you also said in your statement, we know more about ear plugs now than we did then. So I think your point is well taken, but it is only a part of the picture. We are talking about not only the value of it but what is the best way to protect whatever value that a person might put on it in view of current science, in view of what we know now, and work all that into the process to come out with the best results, right, Senator Durbin? Senator Durbin. Right. Thanks, Mr. Chairman. Is there anyone on the panel who believes that the passage of this legislation will not add to the responsibility of the agencies covered? Is there anyone who believes that the agencies will need fewer employees because we pass this bill, as opposed to their current employee workload? Mr. Cass. I do not believe that you will need fewer employees, but I do not believe that for agencies, generally, you will be making any significant addition to the burden on them. Most of the agencies you are addressing these requirements to have very similar requirements at present, and generally, when things are slow at an agency, the answer is politics, not science, not administrative practice. Senator Durbin. Mr. Vladeck. Mr. Vladeck. I would like to respond to that. There are huge differences between this bill and the Executive Order that add all sorts of analytic burdens to the agency that they cannot possibly meet with existing staff. You can just tick them off quickly. The Executive Order does not have a peer review requirement. The Executive Order does not prescribe across-the- board risk assessment. The Executive Order does not prescribe the net benefits test. The Executive Order does not change judicial review. The Executive Order does not require the consideration of substitution risks. So there are a lot of differences--plus, the Executive Order does not require anything amounting to the detail that is required in this statute for cost-benefit analysis and so forth. So there should be no pretense. There is no way agencies can do this with their existing staff. Senator Durbin. I agree with Mr. Vladeck on this point. I wanted to let everyone have a chance to say what they thought about it, and when I offered an amendment before this Committee last year which said, do not go forward with this if the agencies certify you are going to in any way hamper their core mission, for example, the Environmental Protection Agency and the inspection standard and so forth, I lost 10 to 5. It appears we want to do this on the cheap, and I think Senator Voinovich has made my point. We would like to impose new mandates on these agencies in terms of what they are going to do, the list that Mr. Vladeck said, and not provide them the resources. Let me ask Dr. Graham, I know a little bit about oxygenated fuels because I come from ethanol land. As I understand your testimony and my memory of what was involved in it, in an effort to reduce air pollution, we suggested the use of oxygenated fuels---- Mr. Graham. Mandated it. Senator Durbin [continuing]. Mandated oxygenated fuels, but permitted them to use ethanol or MTBE. The permission was given. It was not a mandate that they use it in a certain area. Mr. Graham. EPA did a rulemaking in which they could have compared the risks and benefits of alternative oxygenated fuels. They could have provided technical information that would have caused people to go to one oxygenated fuel or another. They did not do so. They just let politics and market forces play it out and---- Senator Durbin. They let the private sector play it out? Mr. Graham. Right. And the public health and the environment oftentimes need EPA to exercise scientific and public health leadership, which did not happen. Senator Durbin. I think you are calling for more regulation, and it is---- Mr. Graham. Senator Durbin, I am an advocate of public health, safety, and environmental regulation---- Senator Durbin. So am I. Mr. Graham [continuing]. Smart regulation based on science. Senator Durbin. My point is that many of us thought MTBE was dangerous to start with, for a lot of the reasons that have now been discovered, but the marketplace was allowed to work it out, if you will, and then---- Mr. Graham. And it might have been different if, in fact, EPA had done an authoritative comparative risk assessment of MTBE versus the alternatives. Senator Durbin. Let me ask about this. Everybody keeps using the phrase independent peer review. Let us test how independent peer review is under this bill. Should peer review be limited to both industry and government experts who have no financial interest in the outcome of the decision? Does anybody disagree with that? If you have a financial interest in the outcome of the decision, should you be sitting on a peer review panel under this bill? Mr. Graham. You should not let industrial scientists numerically dominate the peer review panel. I think that it would be a big mistake, but Senator Durbin, to say in the case of a peer review of an air bag design issue that you are going to exclude all of the air bag supplier engineers, all the air bag manufacturer engineers, you are just going to exclude them from the peer review. That would be a big mistake and loss of critical expertise. Senator Durbin. Well, let me suggest here, this bill, if I read it correctly, excludes those in government agencies from serving on the peer review panels---- Mr. Graham. I do not read it that way. Those particular government employees involved in developing the regulation, but other aspects of the agency or the Federal Government, I read this as saying that they could potentially serve on it. Senator Durbin. One of the objections made by OMB last year, by Mr. Raines, was, for example, in the area of nuclear regulatory activity, there are a limited number of government experts here, and when we start excluding certain agencies from participating, then we exclude resources that may not be easy to duplicate. Mr. Graham. Right. Senator Durbin. But I find it interesting that you use the word ``dominate''. I do not know how you can predict in advance who is going to dominate a peer review. Is someone going to be milquetoast meek or stand up and say, ``I am in charge here. I am the jury foreman.'' Mr. Graham. Right, but industry scientists should not numerically dominate. Senator Durbin. That is a little hard to call, and if you are saying that if we are going to do an air bag peer review, we certainly ought to bring in somebody from General Motors and Ford to sit there, is this then an independent peer review? Mr. Graham. I think it would be very hard to construct a technically competent peer review on air bag design issues and have no engineers from the air bag supplier community and from the manufacturing community. Furthermore, if you look at the history of peer review at Federal agencies, which is what this book does, what you find is that in most cases, the dominance in the peer review in terms of the number of participants, they are either from academic organizations or from nonprofit research institutions. There would on occasion be one or two members from a regulated community or from a labor union or from a public interest group. But the dominant involvement in these peer review panels in terms of number of participants and overall influence on the process are people who do not have any particular stake in the outcome, and that is the way it should be. Mr. Mirer. If I could---- Senator Durbin. I am sorry. Mr. Mirer. I have been on a lot of peer review groups myself, at the National Academy of Sciences, National Toxicology Program, Board of Scientific Counselors, which peer reviews the report on carcinogens and the like. My trouble with the peer review requirement, certainly in the OSHA context, is that, yes, you want people who have an interest in the outcome to be involved in the rulemaking process, who have the expertise. I agree with Mr. Graham on that. What I do not agree with is saying that these people get special crack at the rule before anybody else gets it. That is the problem with the process as it is set up in the bill now, the detriment of the process relative to OSHA. Peer review groups involve--there is another conflict of interest which is not talked about. The academic reviewers are often reviewing their own work and evaluating the quality of their own work and how dispositive it is of the rule. That is a grievous conflict, actually, and may even be the dominant one on these committees. Stuff is decided based on extra-record evidence, and prejudices of the individuals--free ideas, and frankly, they are not bound by criteria in legislate or regulation. I mean, you take a full professor of oncology on one of these committees. He does not necessarily believe he has to follow the rules. He thinks he is better than the rules, so he is not following them, and that is just the way it is. It is an inherent problem with the methodology and I think we have this in the system now. Senator Durbin. We have lionized and sanctified peer review in this panel, and after some of the comments here, I am a little bit suspicious as to the product we can expect to come from it. But let us go a step further. Should we have public access to the peer review? Should people be able to judge for themselves who dominated, whether the right people were chosen? Ms. Kenworthy. Senator Durbin, could I speak to that? I have had some experience during my working career with FIFRA, the insecticide law, pesticide law, scientific advisory panel as well as with the EPA Science Advisory Board. Both of those processes work routinely with public scrutiny. They announce their meetings in the Federal Register ahead of time and people are allowed to sit in. Oftentimes, the public is permitted to be present when the regulated entity presents its side of the issue. Those processes generally have worked extremely well. I think, particularly if you are going to have peer reviewers who are financially dependent upon the regulated entity, that is all the more reason for the need for public scrutiny. Senator Durbin. Thank you. Mr. Vladeck. Mr. Vladeck. Yes. It bears mention that this bill reverses the presumption that normally attaches to peer review activity. Most peer review committees are governed by the Federal Advisory Committee Act, which mandates very broad openness, not simply with respect to the meetings but with the working papers and so forth of the Committee. There is nothing in this bill that mirrors that. In fact, it is explicitly made not applicable, which means that there may be even internal papers generated by the peer review committee that would not be made public. That is a serious problem. Senator Durbin. Yes. Dr. Crawford. Mr. Crawford. I have a couple of experiences which might be worthwhile. As you know, the National Academy of Sciences last year asked itself to be excluded from the Federal Advisory Committee Act because they believed certain aspects impeded scientific decision-making. Congress granted that request. Then another point is that when FDA approves drugs, food additives, and so forth, this is not an open process. They may hold hearings or public advisory committee meetings but the final decision is reserved to FDA staff. Another way is that some of the FDA committees, like the Food Advisory Committee, requires members with vested interests to be non-voting members. That would be a third way of dealing with the perceived problem. Senator Durbin. Thank you. Thank you, Mr. Chairman. Chairman Thompson. Thank you very much. Senator Edwards. OPENING STATEMENT OF SENATOR EDWARDS Senator Edwards. Thank you, Mr. Chairman. I decided when I was sitting in my office and Senator Durbin started to talk about tobacco, I had better get down here. [Laughter.] Senator Durbin. I am leaving. Senator Edwards. Let me say first that I have enjoyed the discussion. This subject, I think, is a fascinating subject. I think the bill intends to do some very positive things. I do not think there is any question about that. It seems to me we ought to be trying to improve efficiencies, reduce bureaucracy. I am personally concerned about the human impact of this bill, if it were to pass. I just wonder whether, ultimately, this bill, which I think has a very laudable goal, accomplishes what it is we are trying to accomplish, which is to, for example, to improve agency efficiency, to get these OSHA regulations, EPA regulations, passed more quickly, whether we are reducing unnecessary regulatory bureaucratic burdens that are placed on businesses, and I emphasize unnecessary. A lot of the arguments that have been made on both sides of this bill lead me to the conclusion that it is still a bill that I am open minded about, but I have real concerns about it, very serious concerns. Let me just ask you sort of a generic question to start with and whoever wants to respond. Does anyone believe that this piece of legislation, in fact, makes agency rulemaking more efficient? And tell me why. Mr. Crawford. Yes, I do, because at the present time the first thing that happens is the agency decides to announce that they have an intention to regulate by publishing an advance notice of proposed rulemaking, and the way an agency comes to that point may vary from a petition that is sent in, it might be a letter from a citizen of the United States or someone who is not even a citizen and it is not routinized. There is no decision making matrix that they have to conform. So, consequently, petitions that turn into regulations can lay in abeyance for 4 or 5 years before they come up with some sort of structure to put them together. This would give them that structure and it would make it routine throughout the Federal Government, and over time, through experience, I believe S. 746 would make the whole process more efficient and certainly more transparent. It would be more like what goes on in other countries and groups of countries, like the European Union, where risk assessment has become the order of the day and the state of the art. Ms. Kenworthy. Senator Edwards, could I respond to that, just briefly? Senator Edwards. Yes, of course. Ms. Kenworthy. First of all, I do not agree that because you have put all of those additional requirements, front load the process with all of those additional requirements, that we are improving efficiency here. What we are doing is putting more and more steps and more and more process into the whole system. But further to that, I have to say, businesses should be efficient. That is how they succeed. Sometimes governments should be efficient, but not always. There are other things that governments need to do besides focusing on efficiencies, and indeed, if that were the only focus of the government, we would lose a lot of our democratic protections. Senator Edwards. I agree with that, Ms. Kenworthy. Mr. Mirer. No, I do not think it is more efficient. Dr. Crawford actually mentioned one of the defects, I think, in the current approach, that it is unbalanced because there is not anything in there which pushes the agency to respond to a petition and to justify equally the failure to act. Right now, agencies have to defend against pretty strong attack when they act. There is no similar pressure on the agency to defend a refusal to act and to put protections forward. If there were something like that in the bill, you could consider it at least a balanced attempt, but there is nothing like that in the bill. Senator Edwards. Yes. Mr. Vladeck. Mr. Vladeck. Let me just add one thought. You have to look at this bill in the context that exists in a regulatory environment that, particularly in the last few years, has layered requirement upon requirement for agencies to overcome in order to regulate. You have SBREFA, you have the Congressional Accountability Act, you have a host of new enactments, and that no one has stood back and simply assessed their impact on the agency. If the question is, does this add to the agency's efficiency, you have to ask, where are the agencies today? And if you look at the literature on administrative law, it is quite clear that agencies have suffered from a process of ossification. They are now so process-laden because of requirements imposed by Congress, the Executive Order, the courts, they are like the giant who is simply tied down with all this rope. All this bill does is add some more rope. It does not add to the agencies' efficiency. It certainly does not add to the informational mix that is out there today. If you look at the agency rulemaking record, there is tons of information about cost, about risks. So if your question is, does this optimize efficiency, the answer has to be no. Mr. Graham. Senator Edwards, if we asked an engineer at North Carolina State or at Duke or something like that to serve on a peer review panel for an EPA regulation, from the perspective of the agency analyst, that may look a little frightening and it may look a little like it is a layer of hoop they are going to have to go through because this person is going to comment on their work and potentially slow the process down. But I think the point of this book by Sheila Jasanoff is when the regulation is actually done and after the dialogue between the experts and the agency officials, the ultimate product is actually a smarter regulation, one that is more protective and less costly than it would have been without that review. So I am not sure if that is efficient or not efficient, but I think it potentially is a step in the right direction. Senator Edwards. I want to ask about a couple of specific things in the proposed bill, starting with peer review. Do any of you have any notion of how many rulemaking procedures or what percentage of rulemaking procedures actually meet this threshold criteria for peer review, which appears to me to be affecting the economy by $500 million or more for health and safety? Mr. Mirer. Anything that costs the average employer $87 a year will meet that requirement. Mr. Cass. The only estimate I have seen, Senator, is that there are roughly two dozen rules that would meet a $100 million threshold. Senator Edwards. Those were two very different answers. Mr. Graham. Yes, they were very different statements. Senator Edwards. Let us start with you, Professor Cass, if you could tell me the basis for that conclusion. Mr. Cass. In testimony offered last year by Professor Ernie Gellhorn, he had gone through the rules and looked at the number that met the $100 million threshold and his estimate for that was about 25 rules annually. Senator Edwards. And out of how many rulemakings that occur each year? Mr. Cass. There are thousands that occur every year, and there are thousands of pages added to the Federal Register every year by these agencies that are so bound down that they cannot pass regulations. Senator Edwards. Well, if you are correct, the bottom line is there would be very few peer reviews that would actually occur. Mr. Cass. I believe so. Senator Edwards. I see everybody at that end of the table shaking their head yes and I see everybody at this end shaking their head no, so can I get a response? Mr. Mirer. We are back to--we had this colloquy last year. Mr. Thompson said, ``See, there were no OSHA regulations that were affected by this,'' and I said, ``Yes, that is the whole point. There are no OSHA regulations----'' Chairman Thompson. You see, I did not ask you that this year. Mr. Mirer. No, you did not ask that question again, but you did. The situation is OSHA regulates 6.5 million employers. Anything with broad impact is going to be a major rule. The example I always use is lighting an exit sign, which I did last year, too, and I heard the sigh. Actually we do not have a lit exit sign here like we ought to have, but Congress is exempt from OSHA, or maybe not exempt anymore. But if you light that exit sign with a 50-watt bulb, you are over $17 a year. So that is an example of the reach that this bill would have. An information statute, an information rule affecting large numbers of employers would get caught up in this, and basically anything with broad application. Now, I am not opposed to economic analysis of these rules because I think the economic analysis drives stricter regulation than you would get if you had just a bunch of people sitting around a table wondering about what things would cost. My only concern is that we have to get to the hearing quicker when we have real economic data because you do not have that in advance of the hearing, which is when it would be peer reviewed. Mr. Graham. Senator, I would repeat the threshold is $500 million, actually, on the cost-benefit peer review. Senator Edwards. I know it is, and I think that is what I said. Mr. Graham. That is a big threshold. Mr. Mirer. That is $85 a year. Mr. Graham. I would encourage you to ask CBO if you are not sure about this. I think you will find out it is a limited number of regulations. Senator Edwards. I wanted to ask you a couple other specific questions, but let me just say, I did not mean to indicate that I think efficiency takes precedence over human life and environmental concerns. I absolutely believe the opposite of that. Mr. Graham. You did not say that. Senator Edwards. But I do think we want to make these agencies as efficient as they can. You said something, Dr. Graham, that I just want to make sure I understood, and I do not want to take much time on it because I have something else I want to ask. Mr. Graham. All right. Senator Edwards. I heard you saying in response to Senator Durbin's question--he expressed a concern that I also share, which is it appears to me that industry representatives who have a financial interest in or could have a financial interest in the outcome of any particular rulemaking procedure can clearly participate in the peer review process. Do I hear you saying that you believe that is justified, even though obviously we give up some objectivity and independence by having them on the panel? Mr. Graham. Yes. Senator Edwards. Do you believe that is justified because they bring information and expertise to the discussion? Is that basically what you are saying? Mr. Graham. Right, and the standard conflict of interest procedures at the National Academy of Sciences and at the EPA Science Advisory Board would call for disclosure, public disclosure of that conflict and they would never allow more than a couple of those participants for fear of dominating the peer review panel. But there are many cases where the necessary expertise on the subject matter in question would require an engineer, a scientist, or an economist from one of the affected regulated parties, and I think that is perfectly appropriate. Senator Edwards. Mr. Vladeck, if I could have just another second, Mr. Chairman, could I get you to respond to that, please? Mr. Vladeck. Our concern--I mean, I think there is a legitimate argument for having people with an interested stake to debate the issues. There is ample opportunity today for anyone who is interested in an agency risk assessment or cost- benefit analysis to share their views with the agency. That is the whole point of notice and comment rulemaking. What is wrong about this bill is it gives people with an interested stake in the outcome a privileged place in the rulemaking proceeding denied to every other member of the public. They will have access to information other people will not have. They will have the ability to demand written responses from the agency and they will get their crack at the rulemaking process well before there is even a notice of proposed rulemaking published. Senator Edwards. Basically, what I hear you saying is they can provide their expertise, counsel, etc., without being on the peer review panel? Mr. Vladeck. Absolutely, and they do so in every major rulemaking today. Senator Edwards. Thank you all very much. Chairman Thompson. But the agency, of course, as it is now, can control pretty much what it agrees to hear and how it agrees to hear it. On peer review, just so that we all understand what this bill requires, it says that panels must be broadly representative, expertise relevant to the sciences, etc., and who are independent of the agency, independent of the agency involved, not of the government in total. You can bring governmental experts in. Then be governed by agency standards and practices governing conflicts of interest and non- governmental agency advisors. So for people concerned about conflicts of interest, we are using the current agency rules on conflicts of interest now. So if it is a conflict of interest before this law, it will be a conflict of interest after and vice-versa. Then in terms of flexibility, it says the formality of the peer review conducted under this section shall be commensurate with the significance in complexity of the subject matter. It says that a member of an agency advisory board shall be considered independent of the agency, so you are not excluding agency advisory boards. I guess we are always wanting people who know the most about it but have no interest in it. Mr. Graham. There are not many people. The Martians are not going to do peer review. Chairman Thompson. It is an inherent impossibility. But I go back to something Senator Edwards and I know a little something about, is that it is not that you can always find a witness that has absolutely no interest in it, it is that you disclose it. Then, one way or another, that is factored into the credibility of the information that you are getting. So I do not see any other way to do it. I appreciate this panel today. Senator, I appreciate your commitment to keep an open mind on this for a while. [Laughter.] It seems to me what we are trying to do here, we are all trying to reach a good result, and I agree with you that efficiency is not the main goal of this particular act. We deal with efficiency a lot on this Committee. We have a high risk list where we have agencies year in and year out who are on a list that have a real problem with waste, fraud, and abuse, and they come in year after year after year, high levels of waste, fraud, and abuse in the agencies, and I seldom, if ever, hear them say, ``We just do not have enough people to deal with it.'' There are all different kinds of excuses. What we are trying to do in a democratic society, I think, is try to come up with a system so that no one is unaccountable. That is part of the problem we have with the Independent Counsel Act now. We cannot set someone or a group of people up and say, you are not accountable. We do not want to do anything to slow you down, even though we know you are going in the wrong direction sometimes, and creating bad rules and rules that hurt people sometimes. So it has to do with accountability and transparency and requiring them to give reasons for what they are doing, and then at the end of all that, we do not say you have to do anything about it except give you reasons for what you are doing. Then if you are so far off the mark, some Federal judge will look at all of it and tell you so, not in terms of micromanaging what you did but looking at the rule as a whole. If it is arbitrary and capricious, and you know how high that standard is, then a Federal judge might get involved. As Jonathan Swift would have said, ``I think it is a very modest proposal.'' We have had a good hearing today. You have all been excellent witnesses, as usual. We appreciate your time very much and we look forward to working with any and all of you as we go forward to see if we cannot do everything we can to come together as much as might be possible. So thank you very much. I would like to include in the record a statement from Ed Wasserman, President of the American Chemical Society, regarding S. 746.\1\ --------------------------------------------------------------------------- \1\ The letter from Mr. Wasserman dated April 14, 1999, with an enclosed prepared statement appears in the Appendix on page 154. --------------------------------------------------------------------------- With that, we will adjourn. [Whereupon, at 12:49 p.m., the Committee was adjourned.] A P P E N D I X ---------- [GRAPHIC] [TIFF OMITTED] T7552.001 [GRAPHIC] [TIFF OMITTED] T7552.002 [GRAPHIC] [TIFF OMITTED] T7552.003 [GRAPHIC] [TIFF OMITTED] T7552.004 [GRAPHIC] [TIFF OMITTED] T7552.005 [GRAPHIC] [TIFF OMITTED] T7552.006 [GRAPHIC] [TIFF OMITTED] T7552.007 [GRAPHIC] [TIFF OMITTED] T7552.008 [GRAPHIC] [TIFF OMITTED] T7552.009 [GRAPHIC] [TIFF OMITTED] T7552.010 [GRAPHIC] [TIFF OMITTED] T7552.011 [GRAPHIC] [TIFF OMITTED] T7552.012 [GRAPHIC] [TIFF OMITTED] T7552.013 [GRAPHIC] [TIFF OMITTED] T7552.014 [GRAPHIC] [TIFF OMITTED] T7552.015 [GRAPHIC] [TIFF OMITTED] T7552.016 [GRAPHIC] [TIFF OMITTED] T7552.017 [GRAPHIC] [TIFF OMITTED] T7552.018 [GRAPHIC] [TIFF OMITTED] T7552.019 [GRAPHIC] [TIFF OMITTED] T7552.020 [GRAPHIC] [TIFF OMITTED] T7552.021 [GRAPHIC] [TIFF OMITTED] T7552.022 [GRAPHIC] [TIFF OMITTED] T7552.023 [GRAPHIC] [TIFF OMITTED] T7552.024 [GRAPHIC] [TIFF OMITTED] T7552.025 [GRAPHIC] [TIFF OMITTED] T7552.026 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