[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                    ADMINISTRATIVE LAW, PROCESS AND 
                           PROCEDURE PROJECT

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 1, 2005

                               __________

                           Serial No. 109-71

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


                                 ______

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                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             Philip G. Kiko, Chief of Staff-General Counsel
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                      CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina         MELVIN L. WATT, North Carolina
TRENT FRANKS, Arizona                WILLIAM D. DELAHUNT, Massachusetts
STEVE CHABOT, Ohio                   CHRIS VAN HOLLEN, Maryland
MARK GREEN, Wisconsin                JERROLD NADLER, New York
RANDY J. FORBES, Virginia            DEBBIE WASSERMAN SCHULTZ, Florida
LOUIE GOHMERT, Texas

                  Raymond V. Smietanka, Chief Counsel

                        Susan A. Jensen, Counsel

                   Mike Lenn, Full Committee Counsel

                        Brenda Hankins, Counsel

                   Stephanie Moore, Minority Counsel


                            C O N T E N T S

                              ----------                              

                            NOVEMBER 1, 2005

                           OPENING STATEMENT

                                                                   Page
The Honorable Chris Cannon, a Representative in Congress from the 
  State of Utah, and Chairman, Subcommittee on Commercial and 
  Administrative Law.............................................     1
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Commercial and Administrative Law...........................     3

                               WITNESSES

Morton Rosenberg, Esquire, Specialist in American Public Law, 
  American Law Division of the Congressional Research Service, 
  Library of Congress
  Oral Testimony.................................................     7
  Prepared Statement.............................................    10
Mr. J. Christopher Mihm, Managing Director of Strategic Issues, 
  United States Government Accountability Office
  Oral Testimony.................................................    31
  Prepared Statement.............................................    34
Professor Jeffrey S. Lubbers, Fellow in Law and Government 
  Program, Washington College of Law, American University
  Oral Testimony.................................................    59
  Prepared Statement.............................................    62
Professor Jody Freeman, Harvard Law School
  Oral Testimony.................................................    76
  Prepared Statement.............................................    80

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Chris Cannon, a 
  Representative in Congress from the State of Utah, and 
  Chairman, Subcommittee on Commercial and Administrative Law....     3

               Material Submitted for the Hearing Record

Responses to additional questions from Morton Rosenberg, Esquire, 
  Specialist in American Public Law, American Law Division of the 
  Congressional Research Service, Library of Congress............    94
Responses to additional questions from J. Christopher Mihm, 
  Managing Director of Strategic Issues, United States Government 
  Accountability Office..........................................   112
Responses to additional questions from Professor Jeffrey S. 
  Lubbers, Fellow in Law and Government Program, Washington 
  College of Law, American University............................   118
Responses to additional questions from Jody Freeman, Harvard Law 
  School.........................................................   125


           ADMINISTRATIVE LAW, PROCESS AND PROCEDURE PROJECT

                              ----------                              


                       TUESDAY, NOVEMBER 1, 2005

                  House of Representatives,
                         Subcommittee on Commercial
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable Chris 
Cannon (Chair of the Subcommittee) presiding.
    Mr. Cannon. If you would all like to take your seats. Thank 
you all for coming this morning.
    I don't have a gavel. We are now in order. Don't worry 
about it. It is not life or death here.
    The current Federal regulatory process faces many 
significant challenges. Earlier this year the head of OMB's 
Office of Information and Regulatory Affairs testified that 
``no one has ever tabulated the sheer number of Federal 
regulations that have been adopted since passage of the 
Administrative Procedure Act,'' which I might add 
parenthetically was in 1946. He further acknowledged, ``Sad as 
it is to say, most of these existing Federal rules have never 
been evaluated to determine whether they have worked as 
intended and what their actual benefits and costs have been.'' 
A rather depressing statement.
    In September 2005, the SBA's Office of Advocacy reported 
that the annual cost to comply with Federal regulations in the 
United States in 2004 exceeded $1.1 trillion, about 10 percent 
of our whole economy, which means that if every household 
received a bill for its equal share, each would have owed 
$10,172, an amount that exceeds what the average American 
household spent on health care in 2004, which is just under 
$9,000.
    Other problematic trends include the absence of 
transparency in certain stages of the rulemaking process, the 
increasing incidence of agencies publishing final rules without 
having them first promulgated on a proposal basis, the 
stultification of certain aspects of the rulemaking process, 
and the need for more consistent enforcement by agencies.
    Given the fact that the EPA was enacted nearly 60 years 
ago, a fundamental question that arises is whether the act is 
still able to facilitate effective rulemaking in the 21st 
century.
    In an attempt to answer that question, House Judiciary 
Chairman Sensenbrenner earlier this year requested that our 
Subcommittee spearhead the Administrative Law, Process and 
Procedure Project.
    The object of the project is to conduct a nonpartisan, 
academically credible analysis of Federal rulemaking that will 
focus on process, not policy concerns. Some of the areas that 
will be studied include the role of public participation in the 
rulemaking process, judicial review of rulemaking, and the 
utility of regulatory analysis and the accountability 
requirements.
    For the purpose of soliciting scholarly papers and 
promoting a robust dialogue, the Subcommittee intends to 
facilitate colloquia at various academic institutions and 
organizations that analyze Federal rulemaking.
    In addition, the Congressional Research Service has been 
asked to make some of its leading administrative law experts 
available to guide the project, one of whom is testifying 
today. Under the auspices of CRS, several independent empirical 
studies of various issues conducted by some of the most 
respected members of academia are already underway as part of 
the project, and we will hear about one of those ongoing 
studies as part of today's hearing.
    The project will also benefit from the wealth of expertise 
that the Government Accountability Office provides. To date, 
GAO has produced more than 60 reports on various aspects of the 
Federal regulatory process, and one of our witnesses will 
explain the work of GAO in this critical area.
    The project will culminate with the preparation of a 
detailed report with recommendations for legislative proposals 
and suggested areas for further research and analysis to be 
considered by the Administrative Conference of the United 
States.
    As you may recall legislation reauthorizing ACUS was signed 
into law last fall. ACUS was a nonpartisan, private-public 
think tank that proposed many valuable recommendations which 
improved administrative aspects of regulatory law and practice. 
Over its 28-year existence ACUS has served as an independent 
agency charged with studying the efficiency, adequacy and 
fairness of the administrative procedure used by Federal 
agencies. Most of its approximately 200 recommendations were 
implemented. They in turn helped save taxpayers millions of 
dollars.
    In a rare expression of unanimity, the Supreme Court 
Justices Scalia and Breyer jointly testified before our 
Subcommittee last year in support of ACUS. In complete unison 
they extolled the Conference's virtues. Justice Breyer in 
particular cited the value of the Conference's recommendations, 
noting that they resulted in ``huge'' savings to the public. 
Likewise Judge Scalia stated the Conference was ``an enormous 
bargain.'' Accordingly, it is critical that ACUS be 
appropriated its funding if not before, at least by the time 
the project report is completed.
    This is truly an exciting undertaking. I look forward--can 
you imagine an exciting undertaking in administrative 
procedures? It actually really is, and I look forward to the 
testimony from our witnesses as we get this project going.
    I now turn to my colleague, Mr. Watt, the distinguished 
Ranking Member of my Subcommittee, and ask him if he has any 
opening remarks.
    [The prepared statement of Mr. Cannon follows:]

 Prepared Statement of the Honorable Chris Cannon, a Representative in 
    Congress from the State of Utah, and Chairman, Subcommittee on 
                   Commercial and Administrative Law

    The current federal regulatory process faces many significant 
challenges. Earlier this year, the head of OMB's Office of Information 
and Regulatory Affairs testified that ``no one has ever tabulated the 
sheer number of federal regulations that have been adopted since 
passage of the Administrative Procedure Act,'' which I might add 
parenthetically was in 1946. He further acknowledged, ``Sad as it is to 
say, most of these existing federal rules have never been evaluated to 
determine whether they have worked as intended and what their actual 
benefits and costs have been.'' A rather depressing statement.
    In September 2005, the SBA's Office of Advocacy reported that the 
annual cost to comply with federal regulations in the United States in 
2004 exceeded $1.1 trillion, which means that if every household 
received a bill for its equal share, each would have owed $10,172, an 
amount that exceeds what the average American household spent on health 
care in 2004, which is just under $9,000.
    Other problematic trends include the absence of transparency at 
certain stages of the rulemaking process, the increasing incidence of 
agencies publishing final rules without having them first promulgated 
on a proposed basis, the stultification of certain aspects of the 
rulemaking process, and the need for more consistent enforcement by 
agencies.
    Given the fact that the APA was enacted nearly 60 years ago, a 
fundamental question that arises is whether the Act is still able to 
facilitate effective rulemaking in the 21st Century?
    To help us answer that question, House Judiciary Committee Chairman 
Sensenbrenner earlier this year requested our Subcommittee to spearhead 
the Administrative Law, Process and Procedure Project. The objective of 
the Project is to conduct a nonpartisan, academically credible analysis 
of federal rulemaking that will focus on process, not policy concerns.
    Some of the areas that will be studied include the role of public 
participation in the rulemaking process, judicial review of rulemaking, 
and the utility of regulatory analysis and accountability requirements.
    For the purpose of soliciting scholarly papers and promoting a 
robust dialogue, the Subcommittee intends to facilitate colloquia at 
various academic institutions and organizations that analyze federal 
rulemaking. In addition, the Congressional Research Service has been 
asked to make some of its leading administrative law experts available 
to guide the Project, one of whom is testifying today. Under the 
auspices of CRS, several independent empirical studies of various 
issues conducted by some of the most respected members of academia are 
already underway as part of the Project, and we'll hear about one of 
those ongoing studies as part of today's hearing. The Project will also 
benefit from the wealth of expertise that the Government Accountability 
Office provides. To date, GAO has produced more than 60 reports on 
various aspects of the federal regulatory process. And, one of our 
witnesses will explain the work of the GAO in this critical area.
    The Project will culminate with the preparation of a detailed 
report with recommendations for legislative proposals and suggested 
areas for further research and analysis to be considered by the 
Administrative Conference of the United States. As you may recall, 
legislation reauthorizing ACUS was signed into law last fall. ACUS was 
a nonpartisan ``private-public think tank'' that proposed many valuable 
recommendations which improved administrative aspects of regulatory law 
and practice. Over its 28-year existence, ACUS served as an independent 
agency charged with studying the efficiency, adequacy, and fairness of 
the administrative procedure used by federal agencies. Most of its 
approximately 200 recommendations were implemented, and they, in turn, 
helped save taxpayers many millions of dollars.
    In a rare expression of unanimity, Supreme Court Justices Scalia 
and Breyer jointly testified before our Subcommittee last year in 
support of ACUS. In complete unison, they extolled the Conference's 
virtues. Justice Breyer, in particular, cited the value of the 
Conference's recommendations, noting that they resulted in ``huge'' 
savings to the public. Likewise, Justice Scalia stated that the 
Conference was ``an enormous bargain.'' Accordingly, it is critical 
that ACUS be appropriated its funding, if not before, at least by the 
time the Project report is completed.
    This is a truly exciting undertaking and I look forward to the 
testimony from our witnesses.

    Mr. Watt. Thank you, Mr. Chairman, and thank you for 
convening this hearing, and thank Chairman Sensenbrenner and 
Ranking Member Conyers for enlisting the able assistance of the 
Congressional Research Service to provide guidance, supervision 
and a structural framework for this important, massive, 
bipartisan undertaking.
    As I indicated last year in our hearing in which Justices 
Scalia and Breyer offered their insights on the role that the 
defunct Administrative Conference of the United States had 
played prior to its demise, I found it somewhat ironic that the 
agency that had actively worked to make Government smaller, 
more efficient and more accountable was itself a victim of the 
end of the era of big Government mantra of the 90's by 
reauthorizing the Administrative Conference last term. Congress 
has now taken the first steps toward restoring an invaluable 
mechanism created to improve the content, implementation and 
processes of Federal administrative law.
    Now, if we could get funding appropriated to fund the 
Administrative Conference, this project will serve as a useful 
device to sort through and prioritize those systematic issues 
in the administrative law arena that cry out for examination 
and possible reform.
    There is no greater example, as noted by several of our 
witnesses in their written testimony, of the need for review of 
the effectiveness of administrative law and procedures before 
us today than the bureaucratic morass that seemingly and 
tragically undermined efforts to save and provide prompt relief 
to the countless families and individuals caught in the path of 
Hurricane Katrina.
    While there will be probing investigations into what went 
wrong in the aftermath of Katrina, bureaucratic flexibility in 
the face of national disasters or emergencies together with the 
interoperability and coordination of efforts at all levels of 
Government are vitally important to be considered in this 
examination of the current state of administrative process and 
procedure.
    In addition to disaster-related areas of inquiry, there are 
other areas that are deserving of the in-depth review the 
project seeks to provide. I believe that overall review not 
only of our administrative agencies themselves but also of the 
judicial, presidential and congressional roles in the 
administrative process, will provide us with a thorough 
understanding of how each branch of Government contributes to 
furthering or impeding the goals of that process.
    As the project progresses to evaluate e-Government and e-
rulemaking, I believe the questions of security, privacy and 
access must be considered. While technological advances have 
broadened the possibilities of delivering and managing some 
governmental services quicker with greater efficiency, these 
advances have also broadened the potential for abuse, misuse, 
and exclusion.
    For example, transparency may invite security concerns, 
assembly of vast amounts of personal data may invite privacy 
concerns, and the mere use of advanced technology to administer 
governmental programs and policies might invite access concerns 
for small, disadvantaged or minority stakeholders who have yet 
to cross the digital divide.
    There are many other issues, privatization, attorneys fees, 
judicial comity and the role of executive orders to name a few, 
that are important aspects of our system of administrative law 
and procedure.
    I look forward to continuing to work with you, Mr. 
Chairman, on this comprehensive and balanced bipartisan 
examination of the state of our administrative law system, and 
I thank the witnesses for the insights they will provide to us 
today and yield back the balance of my time.
    Mr. Cannon. Thank you, Mr. Watt. I have often said that the 
most interesting questions of our day are not partisan 
questions. This is certainly, I believe, one of them. When we 
consider a tenth of the economy is involved in the Federal 
regulatory process it is amazing.
    Without objection, all Members may place their statements 
in the record at this point. Without objection, so ordered.
    Without objection, the Chair will be authorized to declare 
recesses at any point in this hearing. Hearing none, so 
ordered.
    I ask unanimous consent that Members have 5 legislative 
days to submit written statements for inclusions in today's 
hearing record. Without objection, so ordered.
    I am now pleased and honored to introduce our witnesses for 
today's hearing. Our first witness is Mort Rosenberg, 
Specialist in American Public Law in the American Law Division 
of the Congressional Research Service. In all matters dealing 
with administrative law, Mort has been the Judiciary 
Committee's right hand. For more than 25 years, he has been 
associated with CRS. Prior to his service with that office he 
was Chief Counsel for the House Select Committee on 
Professional Sports, among other public servant positions he 
has held.
    In addition to these endeavors, Mort has written 
extensively on the subject of administrative law. We are proud 
that he will later this month receive the American Bar 
Association's Mary C. Lawton Award for Outstanding Government 
Service. Mort obtained his undergraduate degree from New York 
University and his law degree from Harvard Law School. Thank 
you for being here with us.
    Our second witness is Chris Mihm, who is the Managing 
Director of GAO's Strategic Issues team, which focuses on 
government-wide issues with the goal of promoting more results-
oriented and accountable Federal Government. The strategic 
issues team has examined such matters as Federal agency 
transformation, budgetary aspects of the Nation's long-term 
fiscal outlook and civil service reform. Sort of the easy 
things, right? Government reform?
    Mr. Mihm is a Fellow of the National Academy of Public 
Administration, and he received his undergraduate degree from 
Georgetown University.
    Professor Jeffrey Lubbers is our third witness. A Fellow in 
Law and Government at American University Washington College of 
Law, Professor Lubbers brings a unique perspective to today's 
hearing with respect to ACUS. As many of you know, Professor 
Lubbers worked at ACUS for 20 years, including 13 years as the 
Conference's Research Director. A prolific writer on the 
subject of administrative law, Professor Lubbers obtained his 
undergraduate degree from Cornell University and his law degree 
from University of Chicago Law School.
    I would also like to mention that about 3 years ago, 
Professor Lubbers testified before this Subcommittee at an 
oversight hearing regarding the administrative law and privacy 
ramifications involved in establishing the Department of 
Homeland Security. As a result of this hearing, our 
Subcommittee spearheaded the creation of the first statutorily 
mandated privacy officer as part of DHS's enabling legislation.
    Welcome back, Professor Lubbers. We appreciate that. That 
actually has worked out awfully well, we think.
    Our fourth witness is Professor Jody Freeman. Professor 
Freeman teaches administrative law and environmental law at 
Harvard Law School, where she is the Director of the 
Environmental Law Program. Prior to joining Harvard Law School, 
Professor Freeman taught at UCLA for 10 years. I appreciate 
some good Western perspective here. Currently, she serves as 
Vice Chair of the ABA Administrative Law Section Subcommittee 
on both Dispute Resolution and Environmental Law and Natural 
Resources. She also chairs the AALS Executive Committee on 
Administrative Law.
    Professor Freeman received her undergraduate degree from 
Stanford University and her law degree from the University of 
Toronto, where I have a son living now. She thereafter received 
her master's and doctorate of law from the Harvard Law School.
    I extend to each of you my warm regards and appreciation 
for your willingness to participate in today's hearing. In 
light of the fact that your written statement is being included 
in the record, I request that you limit your remarks to 5 
minutes. Accordingly, please feel free to summarize or 
highlight the salient points of your testimony.
    You will note that we have a lighting system that starts 
with a green light. After 4 minutes, it turns to a yellow light 
and then 5 minutes it turns to a red light. It is my habit, 
interestingly it is actually captured here in my notes, to tap 
the gavel at 5 minutes. We would appreciate it if you would 
finish up your thoughts within that time frame. We don't want 
to cut people off in the middle of their thinking, but it works 
better if everybody has that rule. It is not a hard rule, just 
so you know recognizing 5 minutes has gone by. We are actually 
quite interested in what you have to say and if it goes beyond 
that, I don't think today anybody is doing to be very 
exercised.
    We would appreciate that, and I if really start tapping 
hard then you know I am bored or Mel is nudging me or 
something. After you have presented your remarks, Subcommittee 
Members, in the order they arrive, will be permitted to ask 
questions of the witnesses subject to the 5-minute limit and 
possibly subject to more than one round.
    Pursuant to the direction of the Chairman of the Judiciary 
Committee, I ask that the witnesses please stand and raise your 
right hand to take the oath.
    [Witnesses sworn.]
    Thank you. You may be seated. The record should reflect 
that the witnesses answered in the affirmative.
    And Mr. Rosenberg, we would be pleased if you proceed with 
your testimony.

TESTIMONY OF MORTON ROSENBERG, ESQUIRE, SPECIALIST IN AMERICAN 
PUBLIC LAW, AMERICAN LAW DIVISION OF THE CONGRESSIONAL RESEARCH 
                  SERVICE, LIBRARY OF CONGRESS

    Mr. Rosenberg. Thank you, Mr. Chairman. Mr. Chairman, Mr. 
Watt, I am very pleased to be here today. I have enjoyed for 
many, many years working with your Subcommittee and Raymond 
Smietanka and Susan Jensen and with other parts of your full 
Committee. I am a wonk in administrative law. I get off on 
these kind of things and I have for over 30 years in CRS.
    You have asked me here today to discuss and describe the 
background, development and goals of your Committee's 
Administrative Law, Process and Procedure Project, CRS's role 
in that project, what we've done so far, and what we hope to 
accomplish in the future.
    In my prepared remarks, I have detailed the genesis of your 
project, from the coincidence of the briefing that T.J. 
Halstead, one of the CRS team, and I gave a full Committee 
staff briefing on emerging issues in law and ad process and 
your first hearing in the attempt to revive ACUS with Justices 
Scalia and Thomas [sic].
    My sense at that time was that there was a close nexus 
between the demise of ACUS in 1995 and the growing number of 
seemingly insoluble process and practice issues over the last 
decade, a sense that I tried to convey to the Committee. I was 
perhaps influenced by an unknowing dependence upon ACUS. I do 
not exaggerate when I say that I have always had within arm's 
reach in my 33 years at CRS a full and, until 1995, complete 
growing set of ACUS reports and recommendations, which were 
often my first resource in responding to clients such as your 
Committee.
    I was fortunate in the 80's and 90's, when I was deeply 
involved in issues involving Executive Order 12291, 
presidential review of rulemaking, and some of the first major 
efforts at regulatory reform that were going on in those days, 
and I was fortunate to call upon for assistance and 
occasionally work with Jeff Lubbers when he was Research 
Director at ACUS. In any event, I was excited--and I am 
excited--at the prospect of working with your Subcommittee, 
with the CRS team that includes T.J. Halstead of the American 
Law Division and Curtis Copeland, of our Government and Finance 
Division, in which to assist in the two-track effort that you 
have started. That is, by providing it with background 
materials and information to inform the bipartisan effort to 
reauthorize ACUS and identifying the issues that might be the 
subject of either further study by a revived ACUS and/or 
legislative action by the Committee during the 109th Congress.
    As you mentioned, success was achieved with regard to the 
first effort with the enactment of the Federal Regulatory 
Improvement Act of 2004 in October of 2004. But as of this 
date, funding legislation has not been passed.
    The Subcommittee, however, anticipated the possibility of 
an extended delay in the operational startup of ACUS after 
passage of the reauthorization legislation and directed its 
staff to consider, with the assistance of the CRS team, the 
options that would be available to it to accumulate the 
information and the data necessary to determine whether action 
on a particular issue required immediate legislative attention 
or was best referred to ACUS for further in-depth studies and 
recommendations.
    And after extended discussions, such traditional approaches 
that have been used in the past, such as a series of 
informative hearings by the Committee, possible establishment 
of a study commission, or the creation by the Committee of a 
study group, were rejected in favor of seeking and utilizing 
the assistance of resources outside of Congress and the 
Committee, such as academic institutions, think tanks, CRS, the 
Government Accountability Office, among others, and the 
potentiality of utilizing forums for the airing of issues 
outside of Washington were deemed important.
    The staff proposed and the Committee adopted a unique 
course of action. And I underline that what you're doing here 
is pretty unique. It is novel in the way it is reaching out 
beyond the Beltway to try to get a diversity of opinions and 
compile a record outside which might be more reflective of what 
is really going on and what real practical thoughts are out 
there.
    What you did was pursuant to the House rule requiring 
Committee adoption of an oversight plan for the 109th Congress. 
The full Committee made a study of emergent administrative law 
and process issues a priority oversight agenda item for the 
Subcommittee. Among the benefits of so identifying the study as 
a Subcommittee priority was to give it the imprimatur of 
official legislative legitimacy and importance which might, in 
turn, be useful in enlisting the voluntary assistance and 
services of individuals and institutions throughout the Nation.
    The oversight plan identified seven general areas for 
study: public participation in the rulemaking process, 
congressional review of rules, presidential review of agency 
rulemaking, judicial review of rulemaking, the adjudicatory 
process, the utility of regulatory analyses and accountability 
requirements, and the role of science in the regulatory 
process.
    The CRS team was designated by the Chairman and Ranking 
Minority Member to coordinate this project. Its first task was 
to take these seven broad study areas and identify or define 
potential questions or issues for research. The thought was not 
to limit research to those matters within the combined 
experience and expertise of the team members, but to develop 
theme packages in order to sell a package or a particular issue 
to a law school or university graduate school, a public agency 
or a consortium of those institutions for systematic, in-depth 
studies by means of empirical studies and papers conducted and 
prepared by leading experts in the particular areas which might 
be followed by public presentations and findings of symposia 
that would reflect these competing views.
    Hopefully, the end product of that exercise is to be a 
compilation of the papers and the transcripts of the various 
public symposia similar to the two-volume working papers of the 
National Commission on Reform of Federal Criminal Laws 
published by your Committee in 1970, which contains 59 studies 
covering all aspects of the then current issues in criminal law 
reform. Those studies actually informed Congress' subsequent 
successful reform efforts.
    As of this date, two major empirical studies are underway, 
and one forum is scheduled for this room on December 5th.
    One, being conducted under the direction of Professor Jody 
Freeman of Harvard Law School, is looking at the nature and 
impact of judicial review of agency rulemaking over what 
appears to be now a 13-year period in the 11 Federal Circuit 
Courts of Appeals. Professor Freeman is a fellow panelist today 
and will describe her plan for this very daunting and important 
undertaking.
    The second study is being led by Professor William West of 
the Bush School of Government and Public Service at Texas A&M 
and will be looking into the influences on the initiation, 
design and development of new rules at 20 agencies during the 
period prior to the publication of notices of proposed 
rulemaking for public comment in the Federal Register. 
Professor West will be assisted by eight graduate students, and 
the study is in part funded by CRS's Capstone Program grant.
    Both studies are expected to provide at least preliminary 
results by the spring of 2006. The third thing is the forum 
that is going to be lead by Professor Cary Coglianese here on 
e-rulemaking. There will be two panels of experts from the 
private sector, from the public sector, from Government, and 
they will be speaking with regard to the problems and 
potentialities of e-rulemaking as a way of fostering public 
participation.
    Some other projects that we hope to place include a mega-
project dealing with the problems that appear to be arising 
with presidential rulemaking, through executive orders, and the 
Congressional Review Act. That is the mechanism by which in 
1996 Congress hoped to have a more effective oversight role and 
to balance what was going on under the executive order system.
    It appears apparent that there are problems. In the last 
few years under the leadership of OMB Administrator John 
Graham, it appears the balance between Congress' review efforts 
and the control and direction of, and influence on agency 
rulemaking has extended to the extent that one could say that 
perhaps there is a constitutional imbalance that needs to be 
redressed. But again, as Professor Freeman notes in her 
statement, empirical study is really necessary to understand 
just exactly how effective and perhaps untoward the 
presidential review mechanisms are.
    Let me stop here and allow others to talk. There are a few 
other projects that we want to institute, but we can talk about 
those from your questions. I thank you.
    [The prepared statement of Mr. Rosenberg follows:]

                 Prepared Statement of Morton Rosenberg




    Mr. Cannon. Thank you, Mort. The gentleman from North 
Carolina and Ranking Member of the Subcommittee is also the 
Chairman of the Congressional Black Caucus and has been 
extraordinarily busy with the passing of Rosa Parks, and so he 
has been concerned about his time. I leaned over and asked him 
if he thought I should tap, and his response was more or less 
no, this is great because we don't have to read it. And so I 
suggest that is exactly my view, by the way. And so we are 
going to be a little bit liberal, in fact, forget the clock. 
Just be interesting and, if you see one of us nodding off, then 
you know you have probably gone on too long.
    Mr. Rosenberg. I have one or two----
    Mr. Cannon. We would like to hear that. Before you do so, 
let me suggest that we may be a little bit loose on the 
questioning too. As you were going through what were saying, 
Mort, it had occurred to me, are you familiar with WIKIsikis or 
Wikipedia, any of the panel? This is like a way for people to 
get online and work together. And you should look up Wikipedia, 
W-i-k-i-p-e-d-i-a, not the word spelling with the extra `a,' 
and it is actually remarkable. It is a great encyclopedia that 
is created by people all over the world. And I suspect that, 
while we don't have this broad a base for the Administrative 
Procedure Act as we do have for an encyclopedia, there are many 
people that are interested and so a public forum, it might be 
interesting as part of the process you're considering. There 
are other tools. My office uses a tool called Net Documents, 
which most large law firms use, and it is a way to work 
collaboratively online. You may want to think about some of 
these tools in the process because if some wonk somewhere can 
take 5 minutes and review the latest activity and says, ``Wow, 
you're wrong, you have missed an idea,'' it is a great way to 
really get a collaborative process. In the end, what we need 
here is not just a bipartisan process, we need a process the 
American people buy into because we are talking about 10 
percent of our economy here. And that 10 percent does many 
things.
    We were joking earlier about whether it does good things or 
not and it probably does, but it also limits the output of our 
economy in a dramatic way. So to the degree that we can remove 
obstacles that are not helpful, maybe create new obstacles that 
would be more helpful to what we don't have right now, and be 
more rational, we would do well. And that I think means that 
you might have a very, very large group of people that get 
engaged in that process.
    Thanks, Mr. Mihm. You're recognized for 5 minutes or 
whatever.

    TESTIMONY OF J. CHRISTOPHER MIHM, MANAGING DIRECTOR OF 
   STRATEGIC ISSUES, UNITED STATES GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Mihm. Thank you, Mr. Chairman and Mr. Watt. It is an 
honor to be here. And Mr. Chairman, I will try and take your 
challenge of being interesting. That is a high bar but I am 
very pleased to be here and to contribute to your overview of 
Federal rulemaking and obviously we look forward to supporting 
this Subcommittee in its comprehensive and bipartisan review as 
you move forward.
    As you mentioned in your opening statement, sir, over the 
last decade or so, at the request of Congress, we have prepared 
over 60 reports and testimonies reviewing cross-cutting aspects 
of rulemaking procedures and practices. Overall that work has 
found that--has identified important benefits of the efforts to 
enhance Federal rulemaking. At the same time, we have also 
pointed out some potential weaknesses and impediments to 
realizing those expected improvements. We have also identified 
some trends and challenges in the rulemaking environment that 
have emerged over the years that in our view merit closer 
congressional attention and consideration.
    I will touch on each of these points in turn. In terms of 
the benefits then, as detailed in my written statement, our 
review has identified at least four overall benefits associated 
with existing regulatory analysis and accountability 
requirements. First, encouraging and facilitating greater 
public participation in rulemaking that clearly gives 
opportunities for the public to communicate with agencies by 
electronic means have expanded and requirements imposed by some 
of the regulatory reform initiatives have encouraged additional 
consultation with affected parties.
    Second, improving the transparency of the rulemaking 
process. Initiatives implemented over the past 25 years have 
helped to make the rulemaking process more open by facilitating 
public access to information, providing more information about 
the potential effects of rules and available alternatives, and 
requiring more documentation and justification of agency 
decisions.
    Third, increasing the attention directed to rules and 
rulemaking. Our reports have pointed out that the oversight of 
agencies' rulemaking can and has resulted in useful changes to 
those rules and furthermore that agencies' awareness of this 
added scrutiny may provide an important and direct effect, 
potentially leading to less costly, more effective rules.
    And finally, increasing expectations regarding the analytic 
support for proposed rules. The requirements that have been 
added over the years have raised the bar regarding information 
and analysis needed to support regulations. Such requirements 
have also prompted agencies to provide more data on the 
expected benefits and costs of their rules, and encouraged the 
identification and consideration of available alternatives.
    On the other hand, as I mentioned, we have also identified 
at least four recurring reasons why reform initiatives have not 
been as effective. I think these are certainly consistent with 
the research agenda that the Subcommittee is putting forward.
    First, there has been a lack of clarity and other 
weaknesses in key terms and definitions. For example RFA's 
analytical requirements, which were intended to help address 
concerns about the impact of rules on small entities, do not 
apply if an agency head certifies that the rule will not have, 
``a significant economic impact on a substantial number of 
small entities.'' However, RFA neither defines this key phrase 
nor, importantly, places responsibility on any party to define 
it consistently across the Government, which not surprisingly 
has led to quite a bit of variance.
    Second, the limited scope and coverage of various 
requirements. For example, we pointed out last year that the 
relatively small number of rules identified as containing 
mandates under the unfunded mandates legislation could be 
attributed in part to the 14 different exemptions, exclusions 
and other restrictions on the identification of regulatory 
mandates under the act.
    Third, the uneven implementation of the initiatives' 
requirements. For example, our reviews of economic assessments 
that analyze regulations prospectively has found that those 
assessments are not always useful for comparisons across 
Government, because they are often based on different 
assumptions of the same key economic variables.
    And finally, a predominant focus on just one part of the 
regulatory process, and Mr. Chairman, in your opening statement 
this is certainly a point you were making. We have placed more 
analytic and procedural requirements on agencies' development 
of rules than on other phases of the regulatory process, from 
the underlying statutory authorization, through effective 
implementation and monitoring of compliance with rules, to an 
evaluation of existing rules. What are we actually getting in 
terms of benefits and costs associated with rules?
    Thus, while rulemaking is clearly an important point in the 
regulatory process, other phases can also help determine the 
effectiveness of Federal regulation.
    The findings and emerging issues reported in our body of 
work on Federal rulemaking suggest a few areas in which 
Congress might consider legislative action or further study, 
which are of course certainly consistent with those issues that 
are laid out in the Subcommittee's oversight plan and also as 
Mort was touching on in his written statement.
    We believe that first there is a need to reexamine 
rulemaking structures and processes, including APA, again a 
point, Mr. Chairman, you made in your opening statement.
    Second, there is a need to address previously identified 
weaknesses of existing statutory requirements.
    Third, we should promote additional improvements in the 
transparency of agencies' rulemaking actions.
    And fourth, a point, Mr. Watt, that you were making in 
regards to information technology, we need to open a broader 
examination of how developments in information technology might 
effect the notice in common under rulemaking process. And as 
you pointed out, sir, there are key issues of security, 
transparency and access that all need to be carefully weighed 
and balanced off against one another.
    Mr. Cannon, Mr. Watt, this concludes my statement. I will 
be happy to answer any questions you may have.
    [The prepared statement of Mr. Mihm follows:]

               Prepared Statement of J. Christopher Mihm




    Mr. Cannon. I thank you very much. You know you talk about 
a high bar. For APA wonks, the bar appears substantially lower. 
Like a heartbeat probably works.
    Mr. Lubbers, we appreciate your testimony now.

 TESTIMONY OF PROFESSOR JEFFREY S. LUBBERS, FELLOW IN LAW AND 
    GOVERNMENT PROGRAM, WASHINGTON COLLEGE OF LAW, AMERICAN 
                           UNIVERSITY

    Mr. Lubbers. Thank you, Mr. Chairman, Mr. Watt. It's great 
to be here with my distinguished panel members today, and I 
guess I do qualify as an administrative procedure wonk having 
worked in the area for so long.
    I found much to agree with in my fellow panelists' 
statements and very little to disagree with.
    I first want to applaud you and your Committee for leading 
the successful effort to reauthorize the Administrative 
Conference, which had to close its doors--exactly 10 years ago 
yesterday, by the way.
    I truly believe it was one of the Federal Government's most 
cost effective institutions and it has been sorely missed.
    I view this hearing as an opportunity to suggest a research 
agenda for ACUS that would help convince the appropriators that 
the relatively small investment in ACUS would be repaid many 
times over.
    I also applaud the Committee for sponsoring a series of 
empirical research projects that would provide reliable data 
for a reconstituted ACUS to use in making recommendations to 
use in improvements in the administrative process. I think it 
is a great idea and the two projects already underway to be 
carried out by Professor West and by Professor Freeman should 
be invaluable to all of us.
    Let me say that I think there is one analog that I can 
recall the Senate Governmental Affairs Committee back in the 
late 70's, maybe early 80's, late 70's, did a series of 
empirical studies that provided a very good basis for 
regulatory reform proposals in the 80's.
    I have provided the Committee with a lengthy menu of topics 
that I believe might form the research agenda of a revived 
ACUS. I group these topics into several major areas.
    First, the rulemaking process. The notice-and-comment 
rulemaking process is the preferred way for most agencies to 
make policy. However, this process has become much more 
complicated in the last 35 years due to additional procedural 
and analytical requirements, to the point where many 
commentators are worried that the process has become too 
difficult--or ossified, to use the two-dollar word. And 
agencies seem to be increasingly trying to avoid these 
requirements by making policy through less visible types of 
nonrule rules, such as guidance documents that are not subject 
to notice and comment.
    Therefore, I believe that one area researchers should 
pursue is the increasing complexity of the rulemaking process. 
For example, agencies are required to prepare about a dozen 
separate analyses in rulemaking. A study of the costs and 
benefits of these impact analyses and how they could at least 
be consolidated would be useful.
    I also agree with Mort Rosenberg that the systems for both 
White House and congressional review of agency rules should be 
examined to see what kinds of changes agencies have made in 
proposed rules, and how the length of the rulemaking process 
has been affected.
    There is also a renewed emphasis on the need for sound 
science in rulemaking. Last January OMB issued a bulletin that 
requires administrative agencies to conduct a peer review of, 
``scientific information disseminations.'' This followed 
enactment in year 2000 of the Information Quality Act, which 
was inserted as an undebated amendment into an omnibus 
appropriations bill.
    The IQA requires every agency to issue guidelines to ensure 
the quality, objectivity, utility and integrity of information 
disseminated by the agency.
    These two OMB-overseen initiatives require significant 
agency implementation activities, but it is unclear at this 
point how they have affected the rulemaking process or whether 
they have provided any improvements in regulatory science.
    Another study I recommend is to find out what is holding 
back negotiated rulemaking. Since the mid-90's its use has 
plateaued or even fallen despite its great promise. It would be 
useful to mount a major study of why it is faltering and what 
should be done to revive it.
    The other major change, as others have mentioned, to the 
rulemaking process has been the impact of the Internet, leading 
to what is called e-rulemaking. Since ACUS's defunding, there 
have been enormous developments in this area especially in the 
technology. But the legal developments are moving more slowly. 
I have tried to catalog the legal issues that provide 
challenges to the twin goals of better information 
dissemination and increased public participation in the 
rulemaking process.
    These legal issues include such things as how to best 
integrate the data, docketing questions, archiving, copyright 
protection, security, and privacy just to name a few.
    Beyond the rulemaking process itself, there are a lot of 
broader regulatory issues that need study: regulatory 
prioritization, retrospective reviews of agency rulemakings to 
see how the actual costs and benefits match the predicted costs 
and benefits, alternative approaches to regulation and 
enforcement--something that my colleague Jody Freeman has 
written very excellent articles about. Use of waivers and 
exceptions--something we have heard a lot about after the 
Katrina hurricane--federalism issues, and agency structural 
issues, such as how should departments and commissions be 
structured.
    There are also some pressing issues of administrative 
adjudication. The ALJ program, Administrative Law Judge 
program, is still having problems with agencies seeking to use 
other types of hearing officers too often. Agency appeal boards 
are coming under scrutiny in the immigration, Social Security 
and patent and trademark areas. And mass adjudication programs 
like the Social Security Disability program are facing huge 
backlogs and caseload pressures.
    And finally, there are recurrent issues concerning judicial 
review. The agency-court partnership is of obvious concern to 
all three branches of Government as exemplified by the Chevron 
case, in which the Supreme Court basically told the judiciary 
to defer to reasonable interpretations of statutes made by 
executive agencies. This simple dictum has spawned many cases 
concerning what this deference should consist of and to what 
types of interpretations it should be applied.
    There is no shortage of scholarly commentary on these 
cases. But there is an absence of consensus-building around 
this issue. The courts are struggling with these issues, and a 
renewed ACUS could help provide some focus for the courts.
    One other judiciary issue I will mention, which relates to 
attorneys' fee issues. This is something that ACUS had a role 
in, in overseeing the rules under the Equal Access to Justice 
Act. But a recent Supreme Court decision has limited what is 
meant by the term ``prevailing party'', which allows parties to 
get attorneys' fees. The impact of this decision should be of 
great interest to Congress, which could of course make its 
intent clear if it so wished.
    In conclusion, let me say that this is a short summary of a 
lengthy list. But even the full list is hardly a comprehensive 
menu of projects that could be tackled by a revived ACUS. It is 
a collection of issues that have accumulated in the past 
decade. The new ACUS chairperson and his or her counsel would 
obviously have their own priorities. But I hope that this 
listing does show the need for a revised and continuing focus 
on the administrative procedural issues that often get short 
shrift but can make or break the success of governmental 
programs.
    For 28 years ACUS provided a low cost center of research 
scholarship and consensus-building on administrative law within 
the Federal Government and I believe that now, through the 
efforts of you and your Committee, that ACUS has been 
reauthorized, it should be funded as soon as possible. Thank 
you, and I look forward to your questions.
    [The prepared statement of Mr. Lubbers follows:]

                Prepared Statement of Jeffrey S. Lubbers




    Mr. Cannon. My sentiment about funding exactly. I have been 
sitting here trying to figure out how we in an era of reducing 
programs by number as opposed to improving Government through a 
process is more important. We are working on that. Thank you, 
and appreciate your comments.
    Professor Freeman.

             TESTIMONY OF PROFESSOR JODY FREEMAN, 
                       HARVARD LAW SCHOOL

    Ms. Freeman. Mr. Chairman, Mr. Watt, members of the staff, 
I am delighted to be here today. As you know, I specialize in 
administrative law and I want to line up on your side in terms 
of being excited all the time about administrative law issues. 
If anybody wants to keep talking about it after the end of the 
hearing I will stay as long as anyone likes. It is hard to find 
friends. Administrative law and administrative process issues 
have a PR problem in this regard, and I think that is part of 
the reason.
    I have spent a lot of time trying to think about how to 
rename the field. Things like ``Government, power and you'' 
come to mind. But I want to focus on two points of my 
testimony. I have gone on at length in my written testimony, 
and I won't repeat all of it.
    First, I want to express the absolute clarity of the need 
for empirical research on what Government agencies do and how 
well they do it. We know precious little. We don't know much at 
all about the very important process of generating rules which, 
as you all well know, reach every corner of our economy and 
every aspect of social life. The high volume of rules coming 
out of agencies like DHS and EPA and HHS and DOT, these rules 
have the power, the effect of legislation. And yet we know 
almost nothing about how well we are doing this and how we 
might improve it. And there is a clear need, as this Committee 
well knows, for an informed approach to congressional law 
reform efforts.
    As you know, Congress passes a few hundred laws every year. 
The Supreme Court issues maybe between 70 and 100 cases every 
year. And yet we have thousands of rules coming from the 
Federal Government every year, and we have almost no--I feel 
safe in saying--only almost no careful empirical analysis of 
what agencies are doing.
    And this is a really serious, I think, problem because we 
can't answer some essential questions. We can't answer the 
question yet, how well is congressional review of agency 
rulemaking going? We can't answer whether OMB oversight is 
effective and whether it is effective for some agencies or not. 
Some agencies may perform cost-benefit analysis particularly 
well, some agencies maybe fairly poorly. We can't answer the 
question, have we heaped on too many of these analytic burdens 
so that we are actually undermining the ability of agencies to 
promulgate rational, defensible, smart rules?
    Intuitively you would expect more oversight, more analysis, 
more information to help the rulemaking process. But the 
problem is that we don't know how well we are actually 
performing.
    So we have only scratched the surface in starting to 
explore these issues, and I think a coherent, comprehensive 
empirical research project would be enormously helpful to your 
efforts in Congress to either avoid law reform that is wasteful 
and distracting and just a bad idea, and to target your law 
reform efforts and your money and your time on things, on 
measures that will be beneficial. There will be short term 
measures, longer term measures, but what you want I believe is 
a list of priorities and a sense of where you will get the most 
bang for your proverbial buck. And I think that is something 
that a revived ACUS that is appropriately funded can really 
contribute to.
    There are many myths about the administrative process. 
There is a figure that we all know about which circulated for 
years which was a figure that claimed that 80 percent of EPA's 
rules got challenged, and administrators of EPA cited this and 
people cited it in congressional testimony. And the truth is 
there was absolutely no empirical basis for the figure. People 
just thought it was 80 percent.
    This is not the way one ought to go about law reform and 
planning for administrative decision making.
    There is a similar figure floating around, and I believe 
there is a preliminary study that CRS did--I may be wrong about 
that--but there is a figure floating around that 50 percent of 
rules that get challenged upon judicial review get struck down.
    Some people believe it is as high as 50 percent. This is 
something the study I am doing is looking at, and the truth of 
the matter is we just don't know. We don't know how well rules 
fair when they get challenged.
    So I will be happy to talk a little bit about the study and 
give you a sense of it. We are at the preliminary stage, but 
this is the kind of thing we want to know about. Because it 
would be a big mistake and a waste of resources to conclude 
that so many rules are being challenged and so many rules have 
been struck down that the process isn't working and Congress 
ought to intervene to fix it if in fact that is not the case.
    So we really need to know the answers to these questions.
    Just briefly, the study that I am conducting I think can 
help shed some light on at least how one project is going about 
looking at the judicial review of rulemaking and also I think 
shed a little bit of light on the cost involved.
    This study grew out of conversations between me and staff 
at the Congressional Research Service, in particular, Curtis 
Copeland, which of course stem from this Committee's interest 
in sponsoring empirical work. And we focused on the fate of 
agency rules upon judicial review. This study is the most 
comprehensive study I am aware of. We look at a database 
initially of 10,000 cases but culled to 3,000 cases, of which 
we think there are about 20 percent involving rulemaking, 
challenges to rules. So we think we are going to end up with 
about 600 cases, which is a very big database of cases, and 
every one of them is being coded in the most deliberate manner 
so that what we can pull out of this data would be preliminary 
inferences, preliminary answers to questions like how many 
rules do get struck down across all of the 11 circuit courts? 
How often do interest groups of a particular type succeed in 
challenging rules? Does it make a difference what agency 
promulgated the rules? Do some agencies always win, do some 
agencies always have their rules struck down?
    We don't know the answers to these questions, and we are 
coding the data for even more than that. So if we want to ask 
even more detailed questions; for example, how do you do across 
the circuits? How does the Fifth Circuit compare to the First 
Circuit? Does it matter which panel of judges you come before 
in terms of the rate at which they strike rules down?
    All of these questions we are asking and we should be able 
we hope to infer something here as well about how closely 
judges are really reviewing rules because we are going to code 
the reasons why the rules are struck down, the basis for 
challenging why they are struck down when they are struck down. 
So we should be able to tell something about whether the courts 
are reviewing rules with a very serious, rigorous kind of 
approach which we would call ``hard look review'' or whether 
they are giving these rules rather a soft glance and not being 
particularly rigorous in reviewing them.
    So I am happy to talk more about that study. I will tell 
you something about what it costs, and this leads to this 
problem of incentives to do this kind of research. I will be 
very honest with you, law professors really don't want to do 
this. And the reason is not because we are not interested but 
you don't get tenure for it. These kind of empirical studies 
give us very few rewards. Luckily I have tenure. I can just be 
interested in it. But without incentivizing this kind of work 
that means without a body like ACUS that can draw on academic 
expertise and tempt academics by saying--guess what, you can 
interact with some of the best minds in practice, some of the 
best minds in agencies, you will have lots of access to this 
collaborative, cooperative exercise, without incentives--it is 
going to be very hard to generate this kind of work, the work 
that you need to inform your efforts.
    The other thing I want to mention about empirical work is 
it takes time and money. It is slower going than we would like. 
It is hard to do. My project involved an empirical expert who 
directs empirical research at UCLA School of Law where I 
formerly was a professor before I joined Harvard. You need 
someone with that kind of statistical expertise to do this work 
so it's reliable and credible for your purposes. I have a team 
of four research assistants. These people are very underpaid, 
and I need even more of them to do this properly. The project 
is probably easily costing $10,000 for the first cut through 
the data, and I imagine it will get easily to $20,000, and the 
generosity of the Dean of the Harvard Law School is making this 
possible. There is no other source of funding to do it.
    As you well know, Mr. Chairman, it is very hard to go out 
to foundations or anybody and say I am doing a fascinating 
project on the administrative process, even though it is about 
the way the American Government works and how well it works.
    Finally, my second big point and my most important point I 
think here for your purposes may be to reinforce the need to 
invest in ACUS. A small investment is going to go a very long 
way. This is a body that is going to be able to make 
recommendations in a way that no other body can. The American 
Bar Association doesn't have the legislative clout and the 
credibility with agencies that ACUS will have. There is a 
Center for Rulemaking that Professor Kerwin has initiated at 
the American University. It is a very interesting center, but 
it doesn't have the resources. It doesn't have the ability to 
do the kinds of things that ACUS can do. And as Justice Scalia 
noted very clearly, there is a big difference when ACUS comes 
to agencies and says we want to study you. They perceive that 
as potentially helpful, and not as something that will 
potentially be an obstacle that will get in their way.
    I really believe that ACUS is a bargain for Congress. And 
as you mentioned, Mr. Chairman, as other panelists have 
mentioned, it is clear that funding ACUS to a tune of the 
several million dollars should not be seen as in competition 
with other efforts that are very pressing in the Federal 
Government. ACUS can help to improve our efforts, as you 
mentioned, in terms of disaster relief response and also in 
terms of security, national security concerns. If you make 
Government work better and you figure out ways to improve it, 
you're going to assist in all those endeavors. It is well worth 
the investment.
    I just want to add to Professor Lubbers' long list a few 
ideas for what I believe is really the next generation of ACUS. 
Ten years is a long time. Things have changed since ACUS was 
around, and there is, as Professor Lubbers has mentioned, a 
backlog of work to do. But in particular a few things have 
developed that I think are very worthy of ACUS's time. One has 
been mentioned here today, privatization and contracting out. 
We really do not have administrative procedures adequate to 
guide privatization and contracting out. Private service 
providers are increasingly performing functions we have 
traditionally thought of as public, including functions 
associated with the military functions, prisons, national 
security. And the truth of the matter is most of these actions 
typically fall outside of the administrative law process and 
protections. And we need to think carefully about that. ACUS 
can spearhead in a bipartisan way a project to think about 
that.
    Second, I do want to mention it is the 10th anniversary of 
the Small Business Regulatory Enforcement Fairness Act and 
there have been concerns that small businesses are not the ones 
benefiting from getting an early look at these rules, but 
rather that, potentially, big business is driving the small 
business agenda. It is something that Congress may be 
interested in, something certainly that ACUS could look at.
    And finally, where ACUS could direct further research, as 
again has been mentioned here today and I want to reinforce it, 
is the reconciliation of the administrative law principles of 
fairness and openness and transparency and effectiveness with 
the clear imperatives of national security. This was not on the 
radar screen 10 years ago, and it is front and center on the 
radar screen right now.
    There are agencies in the Federal Government that are not 
subject at the moment to the kind of rigorous cost-benefit 
analysis and the kind of other requirements that we impose on--
that we normally impose on the process. And how are we going to 
reconcile the need to protect our national security while at 
the same time not abandon the norms and principles that inform 
administrative law? I think that's a huge challenge. I don't 
know the answer.
    But we are operating with a 60-year-old document, the 
Administrative Procedure Act, and we need to think very 
carefully about where and how to engage in reform. And I think 
ACUS will be well worth a small investment of Congress' time 
and money. Thank you.
    [The prepared statement of Ms. Freeman follows:]

                   Prepared Statement of Jody Freeman

    Mr. Chairman and Members of the Subcommittee:
    Thank you for the invitation to testify at the Oversight Hearing on 
the Administrative Law, Process and Procedure Project.
    I am a Professor of Law at Harvard Law School. I specialize in 
administrative law and environmental law. My scholarship focuses on 
congressional delegation of authority to agencies, inter-agency 
coordination, public-private collaboration, dispute resolution, 
regulatory innovation, and privatization. I am the Vice-Chair of the 
American Bar Association Administrative Law Section Sub-Committee on 
Dispute Resolution as well as the Vice Chair of the Sub-Committee on 
Environmental Law and Natural Resources. I am the current Chair of the 
American Association of Law Schools (AALS) Executive Committee on 
Administrative Law.
    My testimony focuses on two points: (1) the need for empirical 
research to support congressional law reform efforts in administrative 
law; and (2) the benefits to be gained by funding the Administrative 
Conference of the United States (ACUS) to produce and sponsor such 
empirical research. I will also describe the empirical project on 
agency rulemaking that I have undertaken in consultation with the 
Congressional Research Service (CRS), a project that I hope will 
further this Subcommittee's Oversight Plan and which might help to 
inform other empirical studies sponsored by ACUS, should it be funded. 
Although I will confine most of my remarks to the topic of rulemaking, 
the scope of what ACUS can and should undertake to study is broader. I 
will briefly touch upon some other matters ACUS might examine if it is 
funded, but a more developed proposal for the agency's agenda will be 
offered by my co-panelist, Jeffrey S. Lubbers.

 I. THE NEED FOR EMPIRICAL RESEARCH TO ASSIST CONGRESSIONAL LAW REFORM

    As this Subcommittee has noted, Congress needs more information on 
rulemaking and other aspects of the administrative process in order to 
focus its law reform efforts. We know precious little about the 
administrative process. Consider: Each year, Congress enacts a few 
hundred laws, the Supreme Court hands down fewer than a hundred 
decisions, and regulatory agencies promulgate several thousand rules. 
Yet while the legislative and judicial processes are the object of very 
close scrutiny and rigorous empirical analysis, the rulemaking process 
attracts strikingly little scholarly attention. Are rules effective? 
Are they produced in a timely manner? Are they produced with sufficient 
public input? Are they cost-effective? Do congressional and executive 
oversight mechanisms improve rules? Are rules challenged frequently? Do 
most challenged rules survive judicial review? We simply cannot answer 
these questions. The dearth of empirical research on rules is 
especially problematic given the importance of rulemaking as a vehicle 
for social and economic policy. Many rules have very significant social 
and economic effects. The agencies that produce a high volume of rules, 
including the Department of Transportation, the Environmental 
Protection Agency, the Department of Homeland Security, and Health and 
Human Services affect virtually every corner of the U.S. economy and 
every aspect of social life. Yet our empirical knowledge of the 
effectiveness of their rulemaking processes remains woefully thin.
    Without the benefit of reliable empirical research, Congress might 
waste both time and money on law reform efforts that are neither 
necessary nor effective. It would be a mistake, for example, to add 
more oversight mechanisms to rulemaking if the existing measures, such 
as cost-benefit analysis and peer review, work well. Intuitively, one 
would expect these additional steps to improve the quality of 
rulemaking, yet we cannot say with confidence whether or not this is 
true. Among the questions to be investigated are: How well do agencies 
perform these analyses? Do these oversight mechanisms improve the 
quality of rules? Do they slow down the rulemaking process 
unnecessarily? Are they a net benefit or a net cost? While we have some 
preliminary evidence on these questions, scholarly work to date has 
only scratched the surface.
    Moreover, to the extent that scholars do study the rulemaking 
process, the majority of attention focuses on ex ante processes in 
rulemaking (such as cost-benefit analysis). There is virtually no ex 
post empirical study of the rules themselves. To put a finer point on 
it, we do not know how well rules are implemented and whether they 
achieve their goals, and we lack mechanisms for feeding such ex post 
evaluation back into the rulemaking process.
    Indeed, we have not even agreed upon what measurement tools we 
would use to answer the most basic questions. For example, how would we 
answer the question, Are regulatory agencies getting better at 
rulemaking? Would we look to see if the agency is doing a better job of 
setting its priorities? Whether it is issuing rules faster than it used 
to? Doing a superior job of analyzing scientific data? Obtaining more 
feedback about the effect of its rules, and integrating it into 
decision making? Congress might be interested in knowing the answer to 
these questions before it undertakes reform. Perhaps agencies that are 
less successful at one or more of these steps might be encouraged to 
adopt the ``best practices'' of the more successful agencies. Congress 
might wish in some instances to require the adoption of certain 
practices across the board. With only anecdotal and impressionistic 
evidence, however, Congress would simply be guessing at what works.
    There are many myths about the administrative process that persist 
for years, despite their dubious origins. For example, scholars and 
practitioners of administrative law long subscribed to the widely-held 
belief that the vast majority--80 per cent--of regulations issued each 
year by the Environmental Protection Agency (EPA) were challenged in 
court. This statistic was relied upon by academics, legislators, and 
journalists, quoted by successive administrators of EPA, and cited 
before congressional committees as truth. The only problem was that the 
statistic had no factual basis. Indeed, one empirical study 
investigating its accuracy determined that no more than 35 per cent of 
the EPA's rules were challenged. This rate of challenge is still 
significant, and might justify law reform efforts aimed at reducing 
legal challenges to rules. Yet the example ought to make us cautious. 
Some concerns about the administrative process might be overstated, and 
some understated. There may be similar mistaken assumptions about how 
many rules are invalidated upon judicial review. Some believe the 
figure is as high as 50 per cent, but we don't really know. It would be 
a mistake to conclude, without knowing the real rate, that Congress 
needs to intervene to address this perceived problem. Only with good 
data can Congress choose wisely where to invest its resources, and 
prioritize which law reform efforts are most needed now, and which 
might be longer-term efforts.
    In its Oversight Report, this Subcommittee has already identified 
issues that require further study, including (1) public participation 
in the rulemaking process; (2) Congressional review of rules; (3) 
Presidential review of agency rulemaking; (4) judicial review of agency 
rulemaking, (5) the agency adjudicatory process; (6) and the utility of 
regulatory analysis and accountability requirements; and (7) the role 
of science in the regulatory process. I agree that these are important 
areas for examination and, after discussions with the CRS, I agreed to 
undertake an empirical study of one of these issues: the judicial 
review of rulemaking. I describe the study below.

          II. DESCRIPTION OF FREEMAN/DOHERTY EMPIRICAL STUDY: 
                     JUDICIAL REVIEW OF RULEMAKING

Origin of the Study
    This study grew out of conversations with the CRS about this 
Subcommittee's interest in empirical work on the administrative 
process. Among the important subjects CRS identified for scrutiny at 
the behest of this Subcommittee is the fate of agency rules upon 
judicial review. I agreed to do an empirical study on this topic 
together with Joseph Doherty, Associate Director for Research in the 
Empirical Research Group at the UCLA School of Law, and with the help 
of a team of research assistants at Harvard Law School. We expect to 
have preliminary results in January 2006 and a final report by the end 
of August 2006.

Purpose of the Study
    The goal of the study is to investigate what happens to rules upon 
judicial review, including the rate at which they are struck down; the 
reasons why they are struck down or upheld; and any trends in the cases 
that might be attributable to differences in (1) the agencies 
generating the rules; (2) the litigants challenging them; or (3) the 
Circuits hearing the cases. While this study is only a beginning, we 
expect it to yield useful data on what is actually happening to agency 
rules after they are promulgated and once they are challenged.

Database
    We are using a comprehensive database consisting of all federal 
appellate cases involving administrative agencies (not just challenges 
to agency rules) from 1991 to 2003. The database consists of 3,075 
cases that were decided in the Circuit courts during this thirteen-year 
period. The database was culled from an initial database of 10,000 
cases, which was collected and partially coded by the Administrative 
Office of the Courts. We obtained the original database with the 
assistance of the CRS. To my knowledge, this database is unique in its 
breadth and in the time span it covers.

Preliminary Report
    We are in the process of identifying those cases in which an 
agency's conduct in promulgating a rule was challenged. This includes 
both formal and informal rulemaking. Preliminary analysis suggests that 
approximately 20 per cent of the cases will be identified as rulemaking 
cases. Thus, we expect to analyze approximately 600 cases of 
rulemaking, a significant number and far in excess of the number of 
cases that have been examined to date. We will read every case in this 
group, and collect highly detailed information about who challenged the 
rule, the basis for the challenge, and the reasoning behind the court's 
decision to uphold or overturn the agency's action. This information 
will be collected and entered into a database. Analysis of the data 
will permit us to make inferences about general characteristics and 
trends in the courts' reasoning.

Relevance
    Why does this research matter? Right now, we simply do not know 
whether agency rules are generally upheld or not, or whether some 
agencies are more likely to have their rules struck down compared to 
others. Nor do we know whether challenges brought by certain types of 
groups are more successful than those brought by others. Moreover, we 
lack comparative knowledge about different Circuits i.e., whether 
outcomes vary across the Circuits, or indeed across specific panels of 
particular judges. In addition to shedding light on these matters, the 
study should enable us to say something about the extent to which 
courts are taking a ``hard look'' at agency rules (meaning that courts 
closely examine the rulemaking process), versus a more cursory ``soft 
glance'' kind of review (in which review is less exacting). Without 
answers to these questions, we cannot begin to answer the broader 
question of whether the rulemaking process is producing effective rules 
(or at least rules resistant to judicial invalidation), and whether 
judicial review is performing its intended function.

      III. THE BENEFITS OF FUNDING THE ADMINISTRATIVE CONFERENCE 
                          OF THE UNITED STATES

    Funding ACUS requires a relatively small investment but has the 
promise of big returns. I echo what this Subcommittee heard in the 
108th Congress from Justices Scalia and Breyer, among others, about the 
unique role that ACUS has played in the past by serving as a remarkably 
productive and bipartisan ``think tank'' for administrative law reform. 
I agree with the consensus view that at past funding levels, and at 
funding levels being considered by the 109th Congress, ACUS was and 
will continue to be a bargain. Its key strength is in bringing together 
academics, experienced practitioners, and agency officials--people of 
great distinction from both the public and private sectors--to think 
carefully and systematically about sensible good government reform. As 
Justice Scalia only half-jokingly pointed out, many of these people 
charge very high billable rates; Congress gets their help for free.
    As I argued above, and as this Subcommittee well knows, there is an 
obvious need for empirical study of the administrative process, and 
ACUS is the institution best situated to generate and sponsor high 
quality research. The need for empirical research, particularly in the 
area of administrative law, is increasingly being recognized. In July 
2004, the American University launched the Center for the Study of 
Rulemaking, which has as its mission examining and improving the 
processes used by government agencies to develop regulations. The 
Center has organized two conferences: one on e-rulemaking and another 
on the state of rulemaking in the federal government. While not devoted 
solely to empirical research, the Center has encouraged such study. 
Likewise, the American Association of Law Schools (AALS), a non-profit 
association of 166 law schools, has set ``empirical scholarship'' as 
the theme of its annual meeting in 2006. I am Chairing the 
Administrative Law Section meeting this year at the AALS and, in line 
with the overall theme, we are focusing on empirical study of 
administrative law. But this will be a one-time event.
    The shift toward empirical study--what Roscoe Pound described as 
``law in action''--may be ascendant, but it is neither coordinated nor 
coherent. While they can partner with ACUS, neither the Center for 
rulemaking, the AALS, the Administrative Law Section of the American 
Bar Association (ABA) nor any other body can by itself organize and 
direct a program of empirical study of administrative law issues. 
Moreover, as Justice Scalia testified before this Subcommittee last 
year, agencies view any review by these non-governmental bodies with 
suspicion. ACUS, on the other hand, is a ``government insider,'' with 
legislative clout. Justice Scalia described the difference as follows:

        I was Chairman of the Ad. Law Section for a year, and there's a 
        big difference between showing up at an agency and saying, 
        ``I'm from the American Bar Association, I want to know this, 
        that, and the other,'' and coming there from the Administrative 
        Conference which has a statute that says agencies shall 
        cooperate and provide information. It makes all the difference 
        in the world.

    Only ACUS is positioned to sustain these studies over the longer-
term, and to shape a coherent research agenda in coordination with 
Congress.

               IV. THE ADMINISTRATIVE CONFERENCE'S AGENDA

    This Subcommittee has already identified research questions that it 
would like to see ACUS pursue, and other witnesses on today's panel 
will have more to say on that topic. While I would not characterize the 
administrative state as being in crisis, it is operating with a sixty 
year old manual--the Administrative Procedure Act--and there are 
critical areas in need of closer examination and reform. Jeffrey S. 
Lubbers, in his submissions, has provided a list of issues that require 
further study, and I am in full agreement with him. I wish only to 
underscore that I believe that ACUS could be the incubator for the next 
generation of administrative law research and I would suggest three 
other research areas on which it might focus.
    The first is privatization and contracting out. Private entities 
increasingly perform what we traditionally view as government 
functions, including some functions associated with the military, 
prisons and national security. Private service providers have 
contractual obligations vis-a-vis the government, but their actions 
typically fall outside of administrative law protections, process and 
regulation. How, if at all, should we conceive of these actors in 
administrative law? Is there a need for administrative law reform to 
address the issues raised by contracting out? This is a topic of 
considerable relevance at the moment, and it will only become more 
important over time.
    The second area of research relates to the impact of the Small 
Business Regulatory Enforcement Fairness Act (SBREFA). In 1980, 
Congress enacted the Regulatory Flexibility Act (RFA), mandating that 
federal agencies consider the impact of regulatory proposals on small 
entities. The RFA was strengthened in 1996 by the enactment of the 
SBREFA. In the context of rulemaking, SBREFA grants small businesses 
the opportunity to see rules at a very early stage, before they are 
even proposed. While this seems to be a fair accommodation in 
principle, there is at least some anecdotal evidence that the process 
may not be working well and may even be abused. While small businesses 
may ostensibly be fronting the early review of rules, big business may 
in fact be driving the process behind the scenes. Next year is the 
tenth anniversary of SBREFA and it is an appropriate time to examine 
its effectiveness. ACUS could inquire into SBREFA's implementation and 
determine whether Congress' intended purpose of assisting smaller 
entities is, in fact, being met.
    Finally, the third area where ACUS could direct further research is 
the reconciliation of the principles of administrative law with the 
imperatives of national security. Like other agencies, the various 
agencies within the Department of Homeland Security (DHS) undertake 
administrative processes and promulgate rules. However, unlike the 
other agencies, the DHS has not, perhaps understandably, been subject 
to commensurate scrutiny or cost-benefit analysis. How are the 
administrative law principles of transparency and accountability, 
fairness and effectiveness, to be reconciled with national security 
interests? Can the Administrative Procedure Act, which is now 60 years 
old, deal with contemporary matters of national security? These are not 
easy questions to answer but ACUS could provide a forum for their 
consideration.
    These are among the next generation of issues that ACUS might 
profitably explore, along with coordinating empirical study of how well 
the administrative state currently performs its functions. A small 
financial investment in ACUS could lead to significant cost savings 
down the road by directing Congress to high priority issues that are 
most in need of reform, illuminating opportunities where Congress can 
get the biggest bang for its proverbial buck, and directing Congress 
away from reform measures that may be unnecessary.
    This concludes my remarks. I would be happy to take any questions 
that you might have.

    Mr. Cannon. Thank you. I just want you all to know that 
I've made all these arguments about funding ACUS, and I think 
we're making progress there. We'll be submitting written 
questions that I think will take the bulk of what I would 
otherwise do. I'd like to take just a few moments and talk 
about where I'd like to see us go.
    You know, the reason we--the reason the only program, or 
the only program that was actually defunded was ACUS is because 
people didn't understand it. They didn't share our heartbeat 
over what it does. And so we are spending some time trying to 
raise the level of interest in that.
    And it was a bipartisan elimination. I mean, nobody knew 
much about what it did except those people who really 
understood, and they were not persuasive enough.
    And so one of the things that I hope, as we proceed in this 
project, as I mentioned earlier, that we have, is we try and 
reach out to other interest groups. And there are a lot of 
people out there who care a lot about it if they thought there 
was a way to make some progress. And so I think it's our duty, 
as part of the project, to help look at those groups out there 
and draw them in. You do that by contacting them and by sending 
them an e-mail with a link and having them pop the link and 
then having a large corporation task a staff attorney or 
someone to follow the progress.
    And most corporations are spending a great deal of money on 
these issues. And as you tap into them and tap into the 
interest groups like the small business groups and the Chamber 
of Commerce and others, you end up with the ability to reach 
out and actually get people engaged in the process. And that 
means the process will be better, but it also means that we may 
actually be able to get something done.
    And so, I would, since we are all going to be working 
together on this over a long period of time, if I might 
suggest, you have WIKIs and blogs, you have Web sites and e-
mails, and we need to be using sort of these tools that are out 
there to promote what we are doing. And, in fact, we need to do 
something, as you said, Ms. Freeman, about changing the name, 
because APA puts you to sleep if you could remember what it 
stands for. But something like, ``The Government power and 
you''--that does touch people and it especially touches people 
who have deep pockets and who care about this stuff, but who 
have grown inured to the enormity of what's happening to them 
partly because the issues have been partisan.
    If you're talking about environmental issues, you have 
people who are pro and con before the issue is on the table. 
And so you can't say what is the process that leads us to an 
appropriate conclusion. And there are some people who will 
actually say that they specifically view the world that way. 
They don't want it to be touched because walking on public 
lands or stopping categorical exclusions for drilling, those 
things are good, regardless of the cost and the outcome in a 
world where technology has changed.
    We just had over the weekend a news report that the local 
gas company has been awarded a 20 percent increase in its costs 
and what people pay. And they met with me the day before that 
happened and said it was going to be 30 percent. So you--now 
you have a bunch of guys say 20 percent, how do we do it on 20 
percent? And what they have to do is come up with more oil and 
gas.
    They have several oil wells that have been completed, but 
not ready to produce because they are waiting for a signature 
by a bureaucrat in a system. And at the same time they believe 
they should get categorical exclusions which will allow them to 
drill enough wells between now and next November that prices 
could come down by 30 percent in November. And we are doing 
that in a context of people arguing at a level that is 
absolutely unrelated to either the production of more gas and, 
therefore, the lowering of costs or to the effectiveness of 
drilling when the technology is so radically different that we 
are not regulating the same thing that we produce the rules 
for.
    So this is a remarkably important time, and we are going to 
produce more oil and gas. The question is, do we do it 
thoughtfully? And what we do as a group here is likely to be a 
significant portion of that.
    So I am going to turn the time over to my Ranking Member in 
a moment, but I just want to thank you all for being here and 
tell you that this, I think, is about as important a thing as 
can be done in Government because we can regulate much more 
efficiently. We can accomplish our objectives without the kind 
of costs that we are imposing, and human beings and other 
species that share our world can enjoy it to a much better 
degree if we are faithful and articulate about what our goals 
are and how we achieve them than if we just live with an old 
structure that is in many ways probably not serving us very 
well.
    So I yield back my time. And Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman. I couldn't help but have 
my mind wonder at one point during this exciting testimony and 
your exciting response to the testimony, that a new 
stenographer came in the middle and she's probably wondering 
what in the world is a WIKI. You ought to at least try to 
explain that to her so she can get it in the record. I mean, 
there was a different reporter here.
    Mr. Cannon. W-I-K-I. And Google it, G-O-O-G-L-E. I am sure 
you know what that is.
    Mr. Watt. Don't make it worse.
    Mr. Cannon. It'll be great.
    Mr. Watt. She was having enough trouble following your Utah 
accent without all these extraneous words.
    Let me start by asking a global question, and then I want 
to just go down and ask each one of you a question or two that 
got sparked by your exciting testimony.
    Global question: I take it that all of you would agree that 
this project in which you all are engaged is not a satisfactory 
substitute for ACUS.
    Ms. Freeman. As somebody conducting one of the few studies 
ongoing, let me say, absolutely not. As much as I appreciate 
the enormous help of the Congressional Research Service and 
their tremendous ability to help me do this, the truth is, it 
is very ad hoc. It depends on what a few people are interested 
in. This is not a comprehensive, well-thought-out exercise by 
those of us who are picking it up on the go. We need a body to 
say, here are the priorities.
    Mr. Watt. I thought that would be the--I guess that's kind 
of the uniform response of all of the witnesses.
    Mr. Lubbers. I think the results of the project could 
provide some good raw data and empirical information that an 
ACUS could use.
    Mr. Watt. I have got a question, a specific question, about 
that that I'll come back to in a little bit. In light of your 
response, I think I will take a more frontal assault on the 
Contract with America that I took----
    Mr. Cannon. It preceded me.
    Mr. Watt. That, I took a gentle swipe at in my opening 
statement.
    I think, actually, doing away with ACUS is probably the 
most dramatic demonstration that the Contract was political, 
rather than practical. I mean, I just can't think of a more 
dramatic example of it, so I'll let that go.
    All right, I'm going on to my list of questions, and I'll 
just go down the questions, and maybe if you've got a thought 
or two about these questions that you want to do quickly, for 
each one of you--but it might be helpful to have you be more 
thoughtful and address these questions maybe as a follow-up to 
today's hearing because some of them are kind of more long 
term.
    Mr. Rosenberg, the question I had of you is, how systematic 
is the outreach in the project? Has the project itself become 
more of an inside game for inside players?
    In my role as Chair of the Congressional Black Caucus, one 
of the things I'm always concerned about is whether there is 
systematic or any effort to reach out to historically black 
colleges and universities, for example, to do any of these 
research projects. It is refreshing to see one female here on 
the panel, but I'm always wondering whether there is any 
diversity going on in any of this research or whether it is all 
an inside game. That was my question to Mr. Rosenberg.
    Mr. Mihm, you listed a series of things that you refer to 
as areas in which congressional action may be required--
weaknesses, transparency, technology, impact. I might suggest 
that some more specific examples of that, of those areas, might 
be worthwhile to give us a context.
    Maybe that's included in your testimony, your written 
testimony; maybe it's not. As the Chairman said, one of the 
reasons you all went on and on and on beyond the 5 minutes was 
because probably neither one of us has read, had the 
opportunity to read your testimony.
    Mr. Lubbers, a more concise statement of how ACUS has been 
missed and in what areas. You got to that issue, kind of 
indirectly by listing a bunch of things that the new ACUS might 
want to focus on, but there are probably some very dramatic 
examples that could be pointed to within the last 10 years of 
mistakes or things that would not have happened had ACUS been 
in existence, or possibly would not have happened had ACUS not 
been--it seems to me that that would be a good laundry list of 
things.
    I'm trying to build a case for ACUS. I forgot to give you 
my mantra at the outset, ACUS ASAP. What about that? You like 
that?
    Mr. Cannon. We're going to have to act like Senators and 
then figure out something that has meaning for that acronym.
    Mr. Watt. ACUS ASAP. That was kind of my overall mantra. I 
forgot to give it to you at the beginning. Okay, I'm almost 
through.
    I absolutely agree with Professor Freeman that we don't 
have a clue of whether our Federal Government agencies and/or 
the rules and regulations they promulgate are being effective 
or not, or how they could be improved. And I want to second 
that emotion.
    I am especially interested in some of the things that you 
mentioned about the next generation of ACUS privatization, and 
contracting out is a major, major concern of ours when we start 
contracting out fighting a war. And there is some excellent 
research out there about how much of the Iraq war is being 
contracted out to private contractors, security providers, the 
whole effort in Iraq which--none of which is subject or little 
of which--is subject to any kind of governmental oversight or 
administrative oversight or rules or regulations. And then when 
some of these private contractors get captured or taken as 
prisoners, we don't even know whether we have the 
responsibility to send the military in to rescue them or 
whether that is a private obligation.
    Even down to that level, when we start contracting out the 
interrogation of prisoners--this has been a major issue of ours 
domestically for years. When it comes to privatization of 
prisons, whether the private contractors are subject to the 
same set of responsibilities that the Government was subject to 
is a major issue, and I hope you'll elaborate on that.
    And then, of course, the issue that I raised in my opening 
statement, of reconciling these imperatives of privacy and 
transparency with national security is a major issue that I 
think we're just missing the boat on without ACUS doing 
systematic research. Not that the episodic research that you 
all are doing under the project is not good, but this needs to 
be systematic; and I want to join the Chairman of the 
Subcommittee in saying, it may not be exciting, but it is 
absolutely critically necessary.
    Might not be politically something that people want to 
spend money on, but when we start--what is it my mama used to 
say about saving, spending a little bit now to save more, penny 
wise and pound foolish, I think was the phrase she used. It is 
a dramatic demonstration that a lot of these suggestions that 
were implemented in the aftermath of the Contract with America 
have been just penny wise and pound foolish, in my opinion.
    So I won't get off on that. I didn't mean to politicize it.
    Mr. Cannon. Would the gentleman yield?
    Mr. Watt. I'm going to yield back.
    Mr. Cannon. Well, don't yield back.
    Mr. Watt. Sure, I yield.
    Mr. Cannon. You've asked several questions of the 
individuals. Can I just add another question to that? And 
probably, Professor Lubbers, you are best equipped, but others 
may want to comment.
    Is it possible for ACUS to operate with private funding? I 
am just thinking, due to the legislation, it's a Government 
agency almost, or it's a sort of private thing. I don't think 
it's a not-for-profit, but there are many agency groups out 
there, I think, who would like to see it operate, and I don't 
know that we're going to be able to do much this year.
    Mr. Watt. I've got an idea for you.
    Mr. Cannon. Yield back.
    Mr. Watt. I've got an idea for you. It'll cut down on 
regulations if you just have each agency's budget assessed when 
they do a regulation or a rule to fund ACUS.
    Mr. Cannon. As a Republican, I agree with that.
    Mr. Watt. Get the money out of the various agencies.
    Mr. Cannon. I get the sense you're trying to revive a new 
Contract with America from the Republican point of view. I got 
elected during the period of reaction to the Contract with 
America. I was only one of two Republicans who beat incumbent 
Democrats, whereas I think we lost eight or----
    Mr. Watt. Not enough.
    Mr. Cannon. Thank heavens.
    Anyway, I yield back to you; and I think you have asked 
your questions.
    Mr. Watt. If there are any quick responses to any of the 
things I have raised, but I, I mean, maybe some more 
thoughtful, longer-term written responses would be just as 
well. So go right ahead if you all want to comment.
    Mr. Rosenberg. My wife last night asked me what in the 
world I was doing working so late, and I explained to her, you 
know, what we were doing, and about ACUS and its 
reauthorization with no funds. She looked at me and said why 
didn't they do the Lance Armstrong solution. There must be 
enough wonks out there who will buy a bracelet, red, white and 
blue, you know, for a buck each. Maybe there are three million 
of them out there, we can get it going into next term.
    With regard to your question----
    Mr. Watt. Is this a policy wonks bracelet? Is that what 
you're advocating for?
    Mr. Rosenberg. Yes. A policy wonks bracelet. There should 
be three million of them out there for at least 1 year's work.
    These are just preliminary thoughts. What is the selection 
process? It isn't systematic. We are on the team and are 
familiar with various administrative law issues, administrative 
practice issues; and the way we know them is reading other--
what people have done, things that have been published by 
people wherever they are.
    One of the things that I was hoping is that this hearing 
would get some notice out there in the industry, where the 
wonks would say, I have an idea, I'm willing to do that, I have 
the resources, or whatever it may be, and would come to us. 
We're trying to find people in various areas and encourage 
them.
    The difficulty, as Professor Freeman has noted, is that 
whatever the university, graduate school, law school, whatever 
it is, unless there is some funding, they're not going to be 
able to do it. It takes time to do some of these things.
    Not all these projects that we're looking at by the way, 
are mega studies; some of them are mini studies. One of them 
involves consent decrees. Your Committee is dealing with a big, 
broad issue on consent decrees. But one thing it doesn't deal 
with is a problem that--or at least it's an anecdotal thing 
that I have come across--is that there's been a trend in the 
last 5 to 7 years of agencies whose rules are being challenged, 
are entering into consent decrees about those rules and 
changing the substantive thrusts of those rules. And under the 
law today, the only way those rules can then be changed is by 
Congress passing a law. It's set in stone, and it is 
undermining public participation.
    Now, that is a mini study. We want to--what I'm trying to 
do is get people who have written about consent decrees in this 
area to look at them very carefully and say, is this a real 
problem, is this a trend in the way the administrative agencies 
are evading public participation and being able to change the 
rules themselves? And once that is done, maybe there can be a 
solution with regard to--well, H.R. 1229, the Federal Consent 
Decree Fairness Act, tries to do it by limiting the duration of 
any consent decree. I don't think that will particularly work 
with this, but that would be one part of the solution.
    So they have a mini thing. And what you do is, you try to 
find somebody out there who has written about consent decrees 
and knows about this process and gets it, wherever they are, 
you know, whatever it is. We will try to make this as diverse 
as possible, but we have--it's difficult enough finding people 
like Jody Freeman, you know, to do this kind of thing.
    Mr. Watt. Are you all funding--who's funding even the basic 
part of this? Are there grants?
    Ms. Freeman. Harvard Law School.
    Mr. Watt. Harvard Law School has taken your project 
completely. So you've got to go ask somebody to do something 
for free.
    Mr. Rosenberg. Yes. But there is a partial funding of this 
public participation study at Texas A&M. It's coming from CRS, 
which has links with about four or five graduate schools, 
universities, where they have, where--this is a unique funding 
thing. Most of them are to help CRS do various studies. This is 
the first one in which we are aiding a Committee and funding, 
you know, the eight graduate students, you know, to do this 
massive study of----
    Mr. Watt. But think about what we're saying here. That's 
almost guaranteeing a lack of diversity because the people who 
are less--the institutions that are least likely to be able to 
pick up that kind of economic burden are the ones that are just 
not going to. I mean, an HBCU is not going to be able to do 
that. Harvard can; a small university can't. A big university 
may be able to, if, you know, so you're almost guaranteeing a 
lack of diversity through this project, I think.
    Anyway----
    Ms. Freeman. And, Mr. Watt, the problem's even worse 
because it is very unstable and unreliable, so even if you can 
pick up some funding for a little while, it gets cut off when 
you're mid-project.
    Mr. Mihm. Mr. Watt, in the question that you directed to 
me, I'm going to take you up on your kind offer to provide a 
more complete and perhaps thoughtful answer for the record. But 
at least three things right off the top in terms of statutory 
changes that Congress may want to consider.
    One, as I mentioned earlier, was revisiting the 
``significant economic impact on a substantial number of small 
entities'' and providing--this isn't a regulatory flexibility 
act, providing either some additional guidance to agencies on 
what that means, or more likely, I would think, requiring some 
consistent guidance that be provided on that so that we can get 
comparability across agencies; or when it's not comparable, 
make sure that it's done for known reasons, rather than just 
kind of idiosyncratic reasons.
    The second is that I think that we've published in the past 
that we think that Congress ought to revisit the Inflation 
Adjustment Act which allows agencies to increase their civil 
penalties to capture inflation. There've been problems with 
that both in kind of the technical aspects, some technical 
aspects of that, as well again as the need for some cross-
cutting guidance across Government. We found that as a result 
of that lack of guidance that there was some inconsistency in 
how agencies work.
    Mr. Watt. Are they required to increase them? Or some of 
them are doing it and some of them are not?
    Mr. Mihm. They are required, and some are doing it and some 
are not.
    Mr. Watt. But not consistently in the way they do it, is 
what you are saying?
    Mr. Mihm. Right. Yes, sir.
    And then the third and perhaps this is actually building on 
an ACUS recommendation to go back and look at APA, and in 
particular with, you know--APA, as you know, allows for good 
cause an agency not to have a notice of proposed rulemaking. 
That good-cause definition has been expanded and stretched and 
is perhaps at the screaming point in some places.
    Some clarified guidance on that or expectations from 
Congress, I think would also be helpful. But again, we will 
provide a more complete list for you.
    Mr. Lubbers. Mr. Watt, it is a little hard to come up with 
dramatic examples of things that might not have happened if 
ACUS were there. It's a little bit like proving a negative. And 
ACUS did not have any power, per se. It was a recommendatory 
agency. But let me try to give you a few thoughts that occurred 
to me.
    For example, the Department of Homeland Security, when that 
was created, a lot of agencies were brought together and there 
were some organizational issues that I think could have 
benefited from ACUS's consideration. Don't forget, ACUS was a 
large body of experts who were serving as volunteers, and it 
brought together people from all sides of the political 
spectrum. So I think one benefit of ACUS was that it reduced 
the partisanship that we see in Washington these days. So you 
had public interest groups from the left and the right talking 
to each other and Government people talking to private lawyers 
about some of these problems.
    Another issue that was sort of partisan was the midnight 
regulation issue. When the Clinton administration went out and 
the Bush administration came in, there were lots of crises 
about regulations that were issued at the end of the 
Administration and then withdrawn or delayed by the Bush 
administration. I think that is an issue that the 
Administrative Conference could have worked on.
    All of the issues regarding electronic rulemaking that I 
have mentioned I think would have benefited from scholarship 
and a coordinated set of studies. The Administrative Law Judge 
hiring program was frozen for 6 years at the Office of 
Personnel Management. Agencies could not hire new ALJs from the 
register of ALJs because of litigation over controversy 
concerning the Veterans Preference Act, and I think the 
Administrative Conference could have helped to solve that 
problem a lot earlier than 6 years.
    The asbestos compensation issue, which I know Chairman 
Cannon is very concerned about and this Committee is concerned 
about, is something that I think could have benefited from 
Administrative Conference review. Maybe an administrative forum 
could have been developed to help resolve that issue.
    Sarbanes-Oxley is another issue that receives a lot of 
concern. And I think that law was necessary because of some 
failings of self-regulatory organizations in the securities and 
accounting area. So that is another thing I think we could have 
worked on.
    Waivers and exceptions, we have seen that with respect to 
Katrina. People didn't know whether or how waivers and 
exceptions should be granted. I think that was on our list back 
in 1995, and I think we would have gotten around to that before 
2005. So those are some issues.
    Now, I just--I want to also respond to Chairman Cannon's 
question about private funding. The Administrative Conference 
statute, of course, is very broad and it does permit the agency 
to accept private gifts, private donations, volunteer services, 
dollar-a-year people, and anybody who wants to work, agency 
transfers of funds.
    ACUS has a very flexible statute, and it would permit all 
these sorts of funding--sources of funding to be used at ACUS. 
Whether you could come up with a completely private analog of 
ACUS that would be as effective, I have some doubts.
    And let me just mention one other thing while I have the 
microphone which is, I'm working on an advisory committee, 
National Academy of Sciences official advisory committee now, 
which is concerning one slice of the Social Security program. 
And this is the part of the program that has to do with 
beneficiaries who cannot handle the benefits. Because of their 
disability, or they're drug addicts or something like that, 
they have to have a representative payee to get these checks. 
And not surprisingly, there are some abuses in this area.
    So Congress has funded the Social Security Administration 
to then fund the National Academy of Sciences to study this 
issue. And this study, alone, I think, was funded at an $8 
million level. And our Committee just received bids from 
Beltway organizations to do a nationwide survey of about 4,000 
representatives and beneficiaries; and that's going to be, I 
think, about a $5 million study. So that's just one slice of 
one obviously important program that's being funded for $8 
million. And we're talking about a $3 million budget for the 
Administrative Conference.
    Ms. Freeman. I just have a couple of brief remarks in 
response to the questions and concerns.
    First, these very potentially politically contentious 
issues around contracting out, privatization, and harmonizing 
national security and administrative law procedures, the great 
value ACUS can aid here is obviously not solving this problem, 
not making the hard choices. That's for Congress to make, but 
steering a course through it by at least beginning to explain 
what kinds of contracting are not so problematic, what kinds of 
contracting are more problematic, what issues get raised, what 
rules apply.
    You know, procurement law. There is an elaborate set of 
rules and regulations because of procurement.
    But then there is an entirely different arena of 
contracting where almost nothing governs. And it's that kind of 
explaining what's going on, dissecting what the issues are, 
proposing potential solutions that can be so useful when 
delivered to Congress, and you can decide what you wish to do. 
But that function is being lost here.
    And I think, too, with the--the same thing with the 
contentious dimensions of the national security administrative 
law conflict here, the question is, what are the options and 
what are the perceived benefits, what are the perceived costs, 
and how ought we to think about it? That's a very important 
function that you want to put in the hands of a body that has 
this great reputation for being quite bipartisan and quite 
professional.
    And the final thing I want to mention that goes back to the 
mention of consent decrees and the problems of what I would 
call back-door rulemaking, whenever you tighten up discretion 
in one area, the funny thing with administrative agencies is it 
pops out somewhere else. And there is a relationship between 
additional oversight mechanisms from both Congress and the 
executive and the great search within agencies for areas where 
they can operate more freely.
    So it's something ACUS might look at; that is, the 
relationship between adding more analytic requirements and 
agencies feeling the need to go elsewhere, that is, operate 
through consent decrees, use exceptions that they can drive a 
truck through. These are related. And ACUS can look at that in 
a more comprehensive way than somebody who does a piecemeal 
study, part by part.
    And the very last thing, the problem, the PR problem with 
administrative law, this is a failure--I hate to admit this--of 
law schools. It's a failure of policy schools, it's a failure 
of public administration schools, because we have not developed 
a robust capacity to talk about how Government's working.
    We talk about Congress plenty and we talk about judges a 
lot. But we do not focus on the heart and soul of the Federal 
Government, and that is the rulemaking and adjudicatory 
processes. And ACUS can be a spark to reignite interest in this 
important topic.
    Mr. Watt. Mr. Chairman, I've gone way over my time. I'll 
just close by saying, ACUS ASAP. Yield back.
    Mr. Cannon. And that ``P'' probably needs to stand for 
private funding or some other source of funding, because we 
need to talk about it. Thank you very much, Mr. Watt.
    And we want to thank the panel. It is very insightful. 
We've, I think, learned a lot here today. I have. And we look 
forward to working with you over a long term on this, and maybe 
we can come up with some ways of actually getting people to 
realize that 10 percent of the economy is a lot more than 
whatever judges do or that these elections for Congress aren't 
really very important in that context either.
    Thank you a lot. We appreciate it. And see you soon.
    [Whereupon, at 11:32 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

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               Material Submitted for the Hearing Record

   Responses to additional questions from Morton Rosenberg, Esquire, 
    Specialist in American Public Law, American Law Division of the 
          Congressional Research Service, Library of Congress




 Responses to additional questions from J. Christopher Mihm, Managing 
 Director of Strategic Issues, United States Government Accountability 
                                 Office



 Responses to additional questions from Jeffrey S. Lubbers, Fellow in 
    Law and Government Program, Washington College of Law, American 
                               University



Responses to additional questions from Jody Freeman, Harvard Law School



                                 
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