    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                       REGULATORY IMPROVEMENT ACT OF 2007

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

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                       COMMERCIAL AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 3564

                                   __________

                               SEPTEMBER 19, 2007

                                   __________

                               Serial No. 110-157

                                   __________

             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

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBY'' SCOTT, Virginia   HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
    MAXINE WATERS, California            DANIEL E. LUNGREN, California
    WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
    ROBERT WEXLER, Florida               RIC KELLER, Florida
    LINDA T. SANCHEZ, California         DARRELL ISSA, California
    STEVE COHEN, Tennessee               MIKE PENCE, Indiana
    HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
    BETTY SUTTON, Ohio                   STEVE KING, Iowa
    LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
    BRAD SHERMAN, California             TRENT FRANKS, Arizona
    TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
    ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
    ADAM B. SCHIFF, California
    ARTUR DAVIS, Alabama
    DEBBIE WASSERMAN SCHULTZ, Florida
    KEITH ELLISON, Minnesota

                Perry Apelbaum, Staff Director and Chief Counsel
                     Joseph Gibson, Minority Chief Counsel
                                     ------

               Subcommittee on Commercial and Administrative Law

                    LINDA T. SANCHEZ, California, Chairwoman

    JOHN CONYERS, Jr., Michigan          CHRIS CANNON, Utah
    HANK JOHNSON, Georgia                JIM JORDAN, Ohio
    ZOE LOFGREN, California              RIC KELLER, Florida
    WILLIAM D. DELAHUNT, Massachusetts   TOM FEENEY, Florida
    MELVIN L. WATT, North Carolina       TRENT FRANKS, Arizona
    STEVE COHEN, Tennessee

                         Michone Johnson, Chief Counsel

                        Daniel Flores, Minority Counsel

                                C O N T E N T S

                                  ----------

                               SEPTEMBER 19, 2007

                                                                       Page

                                    THE BILL

    H.R. 3564, the ``Regulatory Improvement Act of 2007''............     2

                               OPENING STATEMENTS

    The Honorable Linda T. Sanchez, a Representative in Congress from
      the State of California, and Chairwoman, Subcommittee on
      Commercial and Administrative Law..............................     1
    The Honorable Chris Cannon, a Representative in Congress from the
      State of Utah, and Ranking Member, Subcommittee on Commercial
      and Administrative Law.........................................     4

                                   WITNESSES

    Mort Rosenberg, Esq., Specialist in American Public Law,
      Congressional Research Service (CRS), Washington, DC
      Oral Testimony.................................................     7
      Prepared Statement.............................................     9
    Jody Freeman, Esq., Professor, Harvard Law School, Cambridge, MA
      Oral Testimony.................................................    17
      Prepared Statement.............................................    19
    Dr. Curtis W. Copeland, Ph.D., Specialist in American National
      Government, Congressional Research Service (CRS), Washington,
      DC
      Oral Testimony.................................................    33
      Prepared Statement.............................................    35
    Jeffrey S. Lubbers, Esq., Professor, Washington College of Law,
      American University, Washington, DC
      Oral Testimony.................................................    49
      Prepared Statement.............................................    51

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable Chris Cannon, a
      Representative in Congress from the State of Utah, and Ranking
      Member, Subcommittee on Commercial and Administrative Law......     5
    Letter from Justice Stephen Breyer, Supreme Court of the United
      States, submitted by the Honorable Linda T. Sanchez, a
      Representative in Congress from the State of California, and
      Chairwoman, Subcommittee on Commercial and Administrative Law..    78
    Letter from Justice Antonin Scalia, Supreme Court of the United
      States, submitted by the Honorable Linda T. Sanchez, a
      Representative in Congress from the State of California, and
      Chairwoman, Subcommittee on Commercial and Administrative Law..    82
    Letter from the American Bar Association (ABA), submitted by the
      Honorable Linda T. Sanchez, a Representative in Congress from
      the State of California, and Chairwoman, Subcommittee on
      Commercial and Administrative Law..............................    84

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan,
      Chairman, Committee on the Judiciary, and Member, Subcommittee
      on Commercial and Administrative Law...........................    93
    Response to Post-Hearing Questions from Mort Rosenberg, Esq.,
      Specialist in American Public Law, Congressional Research
      Service (CRS), Washington, DC..................................    94
    Response to Post-Hearing Questions from Jody Freeman, Esq.,
      Professor, Harvard Law School, Cambridge, MA...................    96
    Response to Post-Hearing Questions from Curtis Copeland, Ph.D.,
      Specialist in American National Government, Congressional
      Research Service (CRS), Washington, DC.........................   105
    Response to Post-Hearing Questions from Jeffrey S. Lubbers, Esq.,
      Professor, Washington College of Law, American University,
      Washington, DC.................................................   120

                       REGULATORY IMPROVEMENT ACT OF 2007

                                  ----------

                         WEDNESDAY, SEPTEMBER 19, 2007

                  House of Representatives,
                         Subcommittee on Commercial
                                and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 3:04 p.m., in
    room 2141, Rayburn House Office Building, the Honorable Linda
    Sanchez (Chairwoman of the Subcommittee) presiding.
        Present: Representatives Conyers, Sanchez, Johnson,
    Lofgren, Delahunt, Cannon, Jordan, Keller, and Franks.
        Staff present: Susan Jensen, Majority Counsel; Daniel
    Flores, Minority Counsel; Adam Russell, Majority Professional
    Staff Member.
        Ms. Sanchez. This hearing of the Committee on the
    Judiciary, Subcommittee on Commercial and Administrative Law,
    will now come to order. And I will recognize myself for a short
    opening statement.
        Today's hearing provides an opportunity for us to
    officially begin one important project, as well as to formally
    bring to a close a related project. Today we begin the process
    of reauthorizing and securing funding for the Administrative
    Conference of the United States. To that end, I especially
    commend my colleague, the Ranking Member, Mr. Cannon, for his
    leadership in introducing H.R. 3564, the ``Regulatory
    Improvement Act of 2007,'' and for his deep and abiding
    commitment to revitalizing the conference.
        [The bill, H.R. 3564, follows:]

        Ms. Sanchez. Today we will also consider the final
    installment of a 2-year study known as the Administrative Law
    Process and Procedure Project for the 21st Century, which was
    sponsored on a bipartisan basis by the Judiciary Committee. Let
    me first explain the project.
        Through the guidance of the Congressional Research Service,
    particularly Mort Rosenberg, Curtis Copeland and T.J. Halstead,
    the Committee undertook a comprehensive analysis of the state
    of administrative law in our Nation. Over the course of this
    project, this Subcommittee held six hearings, participated in
    three symposia, and sponsored three empirical studies.
        Last December, an interim report in excess of 1,400 pages
    was issued, detailing various findings along with
    recommendations for legislative reform and suggested areas for
    further research and analysis. In particular, this report
    addressed: the agency adjudicatory process; public
    participation in the rulemaking process; the role of science in
    the regulatory process; the utility of regulatory analysis and
    accountability requirements; and congressional, presidential
    and judicial review of agency rulemaking.
        One of the project's most enduring legacies, however, will
    undoubtedly be how it underscored the absolute and urgent need
    to have a permanent, neutral, non-partisan think tank that can
    dispassionately examine administrative law and process and that
    can make credible recommendations for reform, namely the
    Administrative Conference of the United States.
        Although reauthorized in the 108th Congress with
    overwhelming bipartisan support, the conference has not been
    funded since, and its current reauthorization expires next
    week. In addition to supporting the reauthorization of ACUS, I
    hope my colleagues on this Subcommittee will also join me in
    the next step, obtaining funding for the conference once and
    for all.
        As I am sure the witnesses at today's hearing will explain
    in great detail, an extremely nominal investment to fund ACUS
    will unquestionably redound in billions of savings in taxpayer
    dollars. Accordingly, I look very much forward to today's
    hearing and to receiving the testimony from all our witnesses.
        I would now like to recognize my colleague, Mr. Cannon, the
    distinguished Ranking Member of the Subcommittee, for any
    opening remarks he may have.
        Mr. Cannon. Thank you, Madam Chair. I think the panel is
    quite familiar with my views on the issue. And so, with your
    permission, I would like to submit my statement for the record
    and want to just reiterate the one thing you said. You said
    many things that I agree with, but getting this thing funded is
    actually really the next big important step, as well as the
    reauthorization for which we are here today. So thank you for
    the hearing. And if you will accept my statement for the
    record, I will submit it.
        Ms. Sanchez. Without objection, so ordered.
        [The prepared statement of Mr. Cannon follows:]
     Prepared Statement of the Honorable Chris Cannon, a Representative in
     Congress from the State of Utah, and Ranking Member, Subcommittee on
                       Commercial and Administrative Law
        I would like to extend a warm welcome to the witnesses today, and I
    thank the Chair for scheduling this hearing. I hope that our work today
    leads promptly toward an authorized and appropriated Administrative
    Conference of the United States.
        ACUS was established in the 1960s to foster uniformity,
    effectiveness and fairness in federal administrative procedure. It was
    a small but productive agency that fulfilled its mission well.
        It served innovatively as a ``private-public think tank,''
    conducting basic research on how to improve the regulatory and legal
    process.''
        It facilitated the interchange among administrative agencies of
    information useful in improving administrative procedure.
        It collected information and statistics from administrative
    agencies and published reports evaluating and discussing procedural
    improvements.
        It served as a resource for Members of Congress and congressional
    committees.
        The initial jurisdiction was intentionally broad, and ACUS was the
    key implementing agency for the Administrative Dispute Resolution Act,
    the Negotiated Rulemaking Act, the Equal Access to Justice Act, the
    Congressional Accountability Act, and the Magnusson-Moss Warranty-
    Federal Trade Commission Improvement Act.
        ACUS developed and promoted procedures implementing the Negotiated
    Rulemaking Act, which encourages consensual resolutions accounting for
    the needs of affected interests.
        It recommended a model administrative civil penalty statute that
    has served as the basis for dozens of pieces of legislation.
        It facilitated judicial review of agency decisions and the
    elimination of technical impediments to such review.
        It helped to focus attention on the need for the federal government
    to be more efficient, smaller and more accountable.
        It actively promoted information-technology initiatives, such as
    developing methods by which the public could participate electronically
    in agency rulemaking proceedings.
        The list goes on and on.
        I cannot imagine what kind of regulatory structure we would
    confront had it not been for ACUS' contributions.
        I know that, whatever that structure might have been, it would
    certainly have been much more expensive and more cumbersome.
        As Richard Wiley, former Chairman, Commissioner and General Counsel
    of the Federal Communications Commission, once explained:
        ``ACUS, along with the Office of Federal Procurement Policy,
    convinced successfully some 24 agencies to initiate [Alternative
    Dispute Resolution] and to try to use it in disputes with private
    sector companies and government contracts. Given the fact that you have
    $200 billion going into the Government procurement program every year,
    the potential savings in that one program are simply enormous.''
        To take just one specific agency, the Social Security
    Administration estimated that the Conference's recommendation to change
    that agency's appeals process generated approximately $85 million in
    savings.
        Those figures, of course, were all in yesteryear's dollars.
        What was the cost to the taxpayer? The last appropriation for ACUS
    was merely $1.8 million per year.
        Against this background, it is easy to understand the observation
    of former White House Counsel C. Boyden Gray that ``as long as there is
    a need for regulatory reform, there is a need for something like the
    Administrative Conference.''
        Numerous other authorities, experts and luminaries have also
    weighed in on behalf of ACUS, including Supreme Court Justices Scalia
    and Breyer and prominent members of academia. One law school dean
    perhaps put it best, urging that: ``if the Conference didn't exist, it
    would have to be invented.''
        It also is easy to understand, and to laud, the bipartisan support
    that exists for the Conference's reauthorization and re-funding.
        As I said at the outset, I hope that this hearing is the start of
    finally bringing ACUS back. It can only help us to reinvigorate the
    centuries-old effort to help the government govern best by governing
    least, and to do so by identifying and helping to deploy the 21st
    Century methods that can help us do that in ways we never could before.
        I yield back the remainder of my time.

        Ms. Sanchez. And I just want to thank our witnesses for
    being patient. I know we started this hearing somewhat late due
    to the vote schedule on the floor. We are expecting votes in
    approximately 40 minutes, so we are going to try to get through
    as much of the testimony as possible.
        With that, I am pleased to introduce the witnesses for
    today's hearing. Our first witness is Mort Rosenberg, a
    specialist in American public law in the American Law Division
    at CRS. For more than 25 years, Mr. Rosenberg has been
    associated with CRS. Prior to his service with that office, he
    was chief counsel to the House Select Committee on Professional
    Sports. And he has held a variety of other public service
    positions. In addition to these endeavors, Mr. Rosenberg has
    written extensively on the subject of administrative law.
        Our second witness is Professor Jody Freeman. Professor
    Freeman teaches administrative law, environmental law, and
    natural resources law and is the director of the Harvard Law
    School Environmental Law Program. Her work in administrative
    law focuses on public-private collaboration and governance,
    regulatory innovation, negotiated approaches to regulation, and
    privatization. Prior to joining Harvard Law School, Professor
    Freeman taught for 10 years at my alma mater, the UCLA School
    of Law, where in 2004 she received the law school's Rutter
    Award for Excellence in Teaching, and in 2001, was voted
    professor of the year.
        Our third witness is Dr. Curtis Copeland, a specialist in
    American national government at CRS. Dr. Copeland's expertise,
    appropriately relevant for today's hearing, is Federal
    rulemaking and regulatory policy. Dr. Copeland has previously
    testified before this Subcommittee, and he is one of three CRS
    experts who are assisting the Subcommittee in the conduct of
    its administrative law project.
        His contributions to the project are deeply appreciated.
    Prior to joining CRS, Dr. Copeland held a variety of positions
    at the Government Accountability Office over a 23-year period.
        And our final witness is Professor Jeffrey Lubbers.
        Did I pronounce that correctly?
        Professor Lubbers, if I am smirking, it is because today is
    National Talk Like a Pirate Day. And landlubber is what comes
    to mind when I hear your name. I apologize.
        Professor Lubbers is a fellow in law and government. He
    holds expertise in administrative law, government structure,
    and procedures, regulatory policy and procedures.
        From 1982 to 1995, Professor Lubbers was the research
    director of the Administrative Conference of the United States.
    He has published two books, ``A Guide to Federal Agency
    Rulemaking'' and ``Federal Administrative Procedures Source
    Book.''
        He is also the editor of the American Bar Association's
    (ABA) Developments in Administrative Law and Regulatory
    Practice. In addition to teaching, Professor Lubbers is also an
    administrative law consultant whose clients include numerous
    Federal agencies, law firms, public interest groups, and
    international organizations, including the OECD and World Bank.
        I want to thank you all for your willingness to participate
    in today's hearing. Without objection, other Members' opening
    statements will be placed into the record. And we will ask that
    the witnesses please limit their oral remarks to 5 minutes.
    Your written testimony in its entirety will be placed into the
    record.
        For those of you not familiar with the lighting system,
    when you begin your testimony, the light will appear as green.
    When you have 1 minute remaining, it will warn you by changing
    to yellow. And then when your time expires, it will turn red.
        If the light should turn red and you are in the middle of a
    thought, we will allow you to finish off that thought before
    proceeding to the next person's testimony. After each person
    has presented his or her testimony, Subcommittee Members will
    be permitted to ask questions subject to the 5-minute limit.
        At this time, I would invite Mr. Rosenberg to proceed with
    his testimony.

       TESTIMONY OF MORT ROSENBERG, ESQ., SPECIALIST IN AMERICAN
     PUBLIC LAW, CONGRESSIONAL RESEARCH SERVICE (CRS), WASHINGTON,
                                   DC

        Mr. Rosenberg. Thank you very much, Madam Chairman, Mr.
    Cannon. Good to be here again and with you. And I am honored to
    be here to talk about the reauthorization and funding of the
    administrative conference.
        This last 3 years has been very rewarding, even though it
    was arduous. And the commitment that the Committee has had to
    this has been wonderful.
        I thought that I might concentrate my remarks with respect
    to two empirical studies that CRS commissioned. And I thought
    it would be useful to devote the time to that because of in
    describing the difficulties encountered by CRS in these
    studies, it underlines and underscores the need for a
    reactivated ACUS.
        ACUS' past accomplishments in providing nonpartisan,
    nonbiased, comprehensive, and practical assessments with
    respect to a wide range of agency processes, procedures and
    practices are very well documented. During the hearings
    considering ACUS' reauthorization in 2004, C. Boyden Gray, a
    former White House counsel during the George G.W. Bush
    administration, testified before your Subcommittee in support
    of reauthorizing ACUS, stating that, ``Through the years, the
    conference was a valuable resource providing information on the
    efficiency, adequacy and fairness of the administrative
    procedures used by administrative agencies in carrying out
    their programs.'' This was a continuing responsibility and a
    continuing need, a need that has not ceased to exist.
        Further evidence of the widespread respect of and support
    for ACUS continued. Work was presented by Supreme Court
    Justices Scalia and Breyer, both of whom worked at ACUS prior
    to their judicial careers.
        Justice Scalia stated that ACUS was an approved and
    effective means of opening up the process to Government to
    needed improvement. And Justice Breyer characterized ACUS as a
    unique organization carrying out work that is important and
    beneficial to the average American at low cost. Examples of the
    accomplishments for which ACUS has been credited range from
    simple and practical such as the publication of time-saving
    resource material to analyses of complex issues of
    administrative process and the spurring of legislative reform
    in those areas.
        I would here note that ACUS' established credibility and
    nonpartisan reputation opened doors at Federal agencies and
    allowed access to ACUS-sponsored research, to internal
    operational information that normally would not have been
    available otherwise. Justice Scalia remarked, ``I think the
    conference's ability to be effective hinged in part on the fact
    that we were a Government agency. And when we went to do a
    study at an agency, we were not stonewalled.''
        ``Very often a member of that agency was on our own
    assembly. And so, the agency would cooperate in the study that
    we did. I think it is much harder to do that kind of a study
    from the outside. The agencies tended to look upon us as
    essentially people from the executive branch trying to make
    things better.''
        Justice Breyer concurred, commenting that, ``the American
    Bar Association's administrative law section's attempts to do
    studies of agencies,'' commenting on that. What the conference
    could do that the Ad Law section couldn't do is just what
    Scalia is talking about. They could get access to the
    information inside the Government and the off-the-record
    reactions of people in charge of those agencies. So it produced
    a conversation that you can't have as easily just through the
    ABA.
        Justice Scalia underlined that point. I was chairman of the
    ad law section for a year. And there is a big difference
    between showing up at an agency and saying ``I am from the
    American Bar Association, I want to know this, that, and the
    other,'' and coming from the administrative conference, which
    has a statute that says agencies shall cooperate and provide
    information. It makes all the difference in the world.
        The CRS experience with its two sponsored empirical studies
    was disappointing for the very reasons alluded to by the
    justices. Professor William West testified before this
    Subcommittee of the reluctance of most agencies to provide him
    with information vital to his study on public participation at
    the development stage of an agency rulemaking proceeding.
        His requests for information were often met with reluctance
    and suspicion. And his most valuable contacts with
    knowledgeable officials were on deep background. With this
    potential obstacle in mind, when CRS considered a comprehensive
    study of science advisory panels in Federal agencies to
    determine, among other things, how many there were, are, how
    were members selected, how issues of neutrality and conflict of
    interest are handled and the impact of advisory body
    recommendations on agency decision making, we provided the
    research group at Syracuse University's Maxwell School of
    Public Administration with letters of introduction from the
    director of CRS and you, Chairman Cannon, as well as the
    Ranking minority Member of the Subcommittee, to try to assure
    agency officials of their bona fide and neutral academic
    purposes.
        Ms. Sanchez. Mr. Rosenberg, I apologize. But your time has
    expired. The time goes quickly.
        Mr. Rosenberg. I would just conclude that----
        Ms. Sanchez. If you would like to conclude.
        Mr. Rosenberg [continuing]. We tried very hard to get
    entree for these people, and we couldn't do it. It is the
    imprimatur and the reputation of ACUS that works and that has
    reestablished these kind of empirical studies will work.
        [The prepared statement of Mr. Rosenberg follows:]
                     Prepared Statement of Morton Rosenberg

        Ms. Sanchez. Thank you. I appreciate your testimony.
        At this time I would invite Professor Freeman to begin her
    testimony.

              TESTIMONY OF JODY FREEMAN, ESQ., PROFESSOR,
                   HARVARD LAW SCHOOL, CAMBRIDGE, MA

        Ms. Freeman. Madam Chair and Members of the Subcommittee,
    thank you for the invitation to testify today. Let me just
    applaud your efforts and your leadership, both Chair Sanchez
    and Ranking Member Cannon. This is an area of inquiry and study
    that is not the most exciting for everyone. I understand that
    as an administrative law professor. But the truth is nothing is
    more important than ensuring that our Government agency
    policies are fair, effective and efficient.
        Today, very briefly in my short time, I will describe the
    results of a study that I conducted in cooperation with, or at
    the behest of, CRS that is quite a comprehensive study of the
    judicial review of agency rules across all of the circuits over
    an 11-year period. More broadly, I will make two points.
        The first is the desperate need--and I am not overstating--
    the desperate need for research and study of the administrative
    process to help Congress engage in meaningful reform. And the
    second point, the benefit to be gained by funding an
    independent agency like the administrative conference, which
    can produce, sponsor and organize that kind of research.
        Just very briefly to make the case, the need for empirical
    data is striking. There are many misconceptions about the
    administrative process that could lead Congress down the wrong
    path to reform and could lead to a vast waste of taxpayer
    dollars.
        Agencies promulgate thousands of rules each year. The rules
    have, as you well know, the force and effect of law. They have
    a dramatic impact on our economy and society. And yet our
    empirical knowledge of how well agencies do this is very thin.
        We do not know, for example, how effective agencies' rules
    are. In fact, the people who study the administrative process
    don't yet agree on what a measure of effectiveness would be.
        We don't know how much time agencies spend on average
    promulgating rules. We don't know if cost benefit analysis and
    other analytic mechanisms used by the president or by Congress
    work and achieve the results they purportedly are designed to
    achieve. We have a lot of mechanisms, both in terms of
    executive orders and statutes that require ante-analysis of
    rulemaking, but very few post-analyses of how well these things
    work.
        There are many myths about the administrative process that
    lasts for years. My favorite is one that circulated and was
    cited in congressional testimony that 80 percent of EPA rules
    are challenged. It was made up.
        Imagine if Congress had gone and tried to reform
    administrative process at the EPA with a totally fabricated
    statistic like that. This is what keeps me awake at night.
        Again, a few more. Among other things we don't know well
    are rules implemented. Do they achieve their goals? Are
    agencies doing better in their use of science? What would
    better mean? Are agencies doing things with data collection
    that could be copied, absorbed by other agencies if we could
    just generalize across them and figure out what best practices
    are?
        Let me turn briefly to our study. The goal of the study was
    to--and this is a study I conducted with my coauthor, Joe
    Doherty, of your alma mater, Chair Sanchez, UCLA School of Law.
    He can't be here, but he is an empirical expert and certainly
    available to answer questions later.
        The goal was to study the rate at which rules are
    invalidated in whole or part, the reasons why, whether there is
    bias on the panels of judges that review these rules, and
    whether there is anything else about, any patterns we could
    detect, in terms of who files these lawsuits and who tends to
    win. And we have submitted for the record a much more detailed
    description.
        And I am sure you are relieved to know I won't take you
    through the tables. I don't have time. Our data show that the
    clear majority, 58 percent, of challenged rules are upheld in
    their entirety. And nearly 80 percent are upheld in whole or
    part, only 11 percent invalidated in their entirety. This is
    again all rules across all circuits for an 11-year period, the
    most comprehensive study we are aware of.
        The results are generally consistent over time across all
    the agencies and unaffected by the composition of the judicial
    panels reviewing the rules. And I can go into any detail you
    wish if you are interested in questions. But the implication of
    this is simply that we don't think the rulemaking process is in
    crisis.
        Agencies are not seeing their rules invalidated at alarming
    rates, nor are there disturbing patterns in terms of alleged
    bias of partisan judicial panels. Nor are we seeing skewed
    results in terms of the likelihood of success of you are a
    corporate versus an environmental versus a Government plan.
        We are contesting past studies. That is, some scholars have
    suggested that one or another agency was having great
    difficulty defending its rules. One study said EPA rules are
    entirely or mostly upheld only 33 percent of the time. That is
    not what our data says.
        Our study challenges that picture is inaccurate. And this
    leads me to my statement in support of ACUS. There remains a
    significant percentage of rules that are invalidated in whole
    or part, which suggests we need additional study about why, why
    do rules fail, and what reasons do judges invalidate them, why
    do judges invalidate them.
        This leads me to the need for ACUS. I am to stop also.
        Ms. Sanchez. You can finish your thought.
        Ms. Freeman. I have three things to say about ACUS. It is a
    bargain, especially at the funding levels being considered by
    this Subcommittee.
        For the last 12 years, we have missed it desperately. I
    could give you examples of what ACUS could have done, but
    wasn't allowed to do. And third, there is no substitute,
    whether within the Government, OMB, GAO or universities for
    what ACUS can accomplish. Thank you.
        [The prepared statement of Ms. Freeman follows:]
                       Prepared Statement of Jody Freeman

        Ms. Sanchez. Thank you so much for your testimony,
    Professor Freeman.
        I would now invite Dr. Copeland to proceed with his
    testimony.

    TESTIMONY OF CURTIS W. COPELAND, PH.D., SPECIALIST IN AMERICAN
      NATIONAL GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE (CRS),
                             WASHINGTON, DC

        Mr. Copeland. Thank you, Madam Chairman, Members of the
    Subcommittee. I am pleased to be here today to discuss recent
    rulemaking and administrative law issues that the
    Administrative Conference, or ACUS, might have been able to
    address as well as issues that it might address in the future.
        Although it is ultimately impossible to know what effect
    ACUS would have had on these issues, it is not far fetched to
    say that ACUS would have made a difference in our understanding
    and ability to deal with them.
        One such issue occurred within the last month. On August
    17th, the Centers for Medicare and Medicaid Services sent a
    letter to State health agencies requiring them to use specific
    procedures to ensure that the States' Children's Health
    Insurance Program, or SCHIP, does not substitute for coverage
    under group health plans. Although CMS said it was just
    providing guidance to the States, some observers considered
    this letter a rule that should have been submitted to Congress
    under the Congressional Review Act. Therefore, they said, the
    letter's requirements could not take effect.
        Had ACUS been available, it could have provided
    professional, objective, non-partisan advice to both Congress
    and CMS about whether the letter's requirements had crossed the
    line into rulemaking and, therefore, avoided at least this part
    of the SCHIP controversy. More generally, during the last
    decade ACUS might have published studies, convened panels and
    possibly issued authoritative guidance to all Federal agencies
    regarding this aspect of the rulemaking process.
        ACUS could have also been a player regarding an issue that
    came before this Subcommittee this year, Executive Order 13422,
    and its changes to the presidential regulatory review process.
    One of the most controversial elements of this executive order
    required agencies to designate presidential appointees as
    regulatory policy officers who appear to have been given
    enhanced authority to stop agency rulemaking.
        However, little was known about these policy officers'
    identities or their responsibilities. Even OMB did not know
    whether the new RPO designees were different than the ones
    serving prior to the executive order. Had ACUS been around
    during the last 12 years, it could have conducted studies
    indicating how many of the policy officers were already
    presidential appointees and determine whether the new designees
    represented a significant change. That information may not have
    diffused the controversy, but it might well have led to a more
    informed discussion.
        Another possible issue for ACUS is electronic rulemaking,
    which supporters say has the potential to increase the
    democratic legitimacy, improve regulatory policy decisions and
    decrease administrative costs. However, the Bush
    administration's effort to create a centralized electronic
    docket for all Federal agencies has generated strong
    congressional concern about its funding and management, and
    concerns from others about the functionality of the docket's
    application. ACUS could have provided Congress and the
    Administration advice on all these issues, bringing together
    leading experts to ensure compliance with applicable legal
    requirements and that the new docket system is cost-efficient,
    effective and user friendly.
        Civil penalties is another issue that ACUS could have
    examined more recently. In 1996, the year after ACUS was
    eliminated, Congress enacted legislation requiring agencies to
    examine their civil penalties for at least once every 4 years,
    and if necessary, adjust them for inflation. However, as GAO
    reported 3 years ago, certain provisions in the legislation
    actually prevent agencies from adjusting their civil penalties
    for inflation.
        As a result of this lack of action, the deterrent value of
    civil penalties have declined sharply over the years. Had ACUS
    been available, it might have been able to call attention to
    these problems while the legislation was being considered in
    Congress or could have identified the problems during
    implementation more rapidly. My written statement identifies
    several additional broad areas that ACUS could have addressed,
    including public participation in rulemaking, science in
    rulemaking, the effectiveness of analytic requirements placed
    on the agency rulemaking agencies, privacy protection,
    information access, presidential directives. The list goes on.
        Also ACUS could have helped in the development of what Neal
    Kerwin from the American University called the
    professionalization of rulemaking, ultimately leading to a
    defined career path. Although many organizations within and
    outside of Government have studied these kinds of issues, ACUS
    appears to have been unique in its ability to serve as a
    nonpartisan, deliberative forum and as a long-term source of
    unbiased, objective information on a range of topics.
        Madam Chairman, that concludes my prepared statement. I
    would be happy to answer any questions.
        [The prepared statement of Mr. Copeland follows:]
                    Prepared Statement of Curtis W. Copeland

        Ms. Sanchez. Thank you, Dr. Copeland. And I noticed you
    came in under the 5-minute mark. I appreciate that.
        At this time I would invite Professor Lubbers to begin his
    testimony.

     TESTIMONY OF JEFFREY S. LUBBERS, ESQ., PROFESSOR, WASHINGTON
          COLLEGE OF LAW, AMERICAN UNIVERSITY, WASHINGTON, DC

        Mr. Lubbers. Thank you very much, Madam Chair and Ranking
    Member Cannon, Members of the Committee. I am very pleased to
    be here today to discuss with you the continuing need to
    reauthorize the Administrative Conference of the United States,
    ACUS.
        I first want to applaud the Committee's leadership in this
    bipartisan effort that led to the successful effort 3 years ago
    to enact the Federal Regulatory Improvement Act of 2004, which
    reauthorized ACUS until the end of this current fiscal year.
    Unfortunately, no appropriations were made available to
    reconstitute ACUS in the past 3 years, so another
    reauthorization is necessary.
        Due to the work of this Committee in fostering studies and
    forums on the importance of the administrative process, I
    believe that at this time the foundation has been laid for a
    successful appropriations effort. So I strongly support a new
    2007 version of the Regulatory Improvement Act, H.R. 3564. And
    I also want to salute the excellent statements and all of the
    work of my fellow panelists who have been so instrumental in
    providing assistance to the Committee in this effort.
        As you mentioned, I spent 20 years of my professional
    career working at ACUS from 1975 until it lost its funding in
    1995. I truly believe it was one of the Federal Government's
    most cost-effective institutions. And it has been sorely
    missed.
        I have written three short articles supporting the revival
    of ACUS, which I am appending to this testimony. In my years at
    ACUS I saw just how cost-effective it was. We had a small staff
    and a small budget, but a large membership of agency
    representatives and private sector experts who donated their
    time in order to see consensus on some of the most vexing
    administrative procedure problems of the day, problems that the
    rest of the Government did not have the time to think about in
    such an ordered way.
        Our small budget was leveraged into savings many times over
    for the Government due to streamlined procedures, efficiencies
    in government-wide operations, and the sharing of information
    among agencies about procedural problems. Perhaps more
    important, the members were drawn from a wide variety of
    backgrounds and interest groups.
        It was heartening to see interest group lawyers who are
    normally strong opponents in the world of litigation, lobbying
    and politics come together in a spirit of cooperation to seek
    consensus on process. I firmly believe that the connections
    forged in the ACUS meetings helped increase civil discourse and
    reduce the level of partisanship in legal Washington, as the
    testimony of Justices Scalia and Breyer demonstrated, also the
    support for reviving ACUS by both the American Bar Association
    and the Center for Regulatory Effectiveness.
        Mr. Copeland, just 2 weeks ago I had a reminder of how ACUS
    is missed. I was asked to provide testimony to a small,
    independent agency that was created in 2003, the U.S. Election
    Assistance Commission.
        This agency was delegated the important function to issue
    standards and provide grants to the States for improvements in
    election processes around the country. Of course, as a Federal
    agency, it is covered by numerous cross-cutting procedural
    statutes such as the APA, Freedom of Information Act, Privacy
    Act, Sunshine Act, Paperwork Reduction Act and Government
    Performance and Results Act, just to name a few, many of which
    require agencies to take affirmative steps to publish
    procedural regulations and guidelines.
        The commissioners were seeking advice on what they had to
    do under these laws. And when I spoke to them, several of them
    said publicly that they wished there was an ACUS today that
    could advise them. Several of the commissioners told me
    privately that they had received no orientation about these
    laws when they were appointed, and now they realized they
    really need some.
        This is just the kind of advice and training that ACUS was
    able to do for new agencies like EAC. I also believe that a
    large inventory of administrative procedure issues has built up
    since ACUS shut its doors in 1995. And I gave kind of a laundry
    list 2 years ago when I appeared before this Committee, and I
    won't repeat them today.
        I also believe that the authorization of appropriations,
    the dollar amounts included in the bill, are appropriate. They
    are about the same in today's dollars as ACUS' highest
    appropriation of $2.3 million in 1992. And to put this amount
    in perspective, I would note that far greater amounts are often
    authorized by Congress for individual studies of the
    administrative process.
        I was personally involved in a congressionally mandated
    study just published today of one aspect of the Social Security
    Program. And the study cost $8.5 million.
        And I can't resist also pointing out the story in last
    Saturday's Washington Post about a report of the Department of
    Justice's inspector general, which found that DOJ spent $6.9
    million in the last 2 years just to host and send employees to
    10 conferences, with a total amount of $81 million for all
    conferences only in those 2 years. So I think the
    administrative conference is quite a bargain in light of these
    figures.
        So in summary, I would suggest that for all of these
    reasons, as elaborated in my attached articles and earlier
    testimony, I would strongly support the reauthorization and the
    reappropriation of this highly effective and cost-saving
    agency.
        Thank you, Madam Chair, Mr. Cannon. And I would be happy to
    try to answer any questions you might have.
        [The prepared statement of Mr. Lubbers follows:]
                    Prepared Statement of Jeffrey S. Lubbers

                                  ATTACHMENTS

        Ms. Sanchez. Thank you, Professor Lubbers. We will now
    begin our round of questionings. And I will begin by
    recognizing myself first for 5 minutes.
        Mr. Rosenberg, if ACUS were reconstituted, what, if
    anything, would you recommend be changed about the conference?
        Mr. Rosenberg. I think there should be a broadening of the
    people that make up the assembly so that there is more
    representation from States and localities, more representation
    from management and public administration types, and perhaps
    more in employment law and personnel kinds of people to reflect
    those areas that are now coming to the fore, and perhaps the
    kinds of issues that are raised by the reorganization of DHS,
    and some of the civil liberties kinds of issues that are coming
    up now.
        Ms. Sanchez. And how important would it be to preserve the
    bipartisan and nonpolitical nature of ACUS, especially given
    the topics that you have just given?
        Mr. Rosenberg. Absolutely essential, and also to lend to
    the credibility of opening doors for--just by the fact that
    ACUS is neutral and does open those doors to get the
    information that they need.
        Ms. Sanchez. Professor Freeman, I am going to give you an
    opportunity, as the time ran out, so that you could talk about
    what ACUS could have done but wasn't allowed to do. I am going
    to give you that opportunity now, during questions.
        Ms. Freeman. Thank you. I suppose that a highlight for me
    is the creation of DHS in the wake of September 11th. And this,
    of course, was the most important, massive creation of a
    Government bureaucracy in over 50 years. And not to have had
    some bipartisan and neutral advice for Congress and for others,
    the agencies themselves, to make that transition work smoothly,
    to try to harmonize the national security concerns of those
    agencies with the need for accountability, public access. That
    would have been a great service ACUS could have provided. That
    is just one in a long list.
        The other I would mention is that outsourcing has grown
    over the last couple of decades, but particularly in the last
    several years, there is need for a significant amount of study
    and attention to the implications of outsourcing. There was a
    New York Times blitz on outsourcing over the last year or 2.
    And you have seen this really come to the fore in the wake of
    Hurricane Katrina, as well as Iraq. Those two issues to me are
    things that ACUS could have helped out.
        Ms. Sanchez. Thank you. I appreciate your answers.
        I have more time remaining, but I am going to yield it
    back. We have been called across the street to vote. My
    understanding is there is one vote. So we will run across to do
    that and come back and resume questioning, unless the Ranking
    Member would like to maybe ask a quick question.
        Mr. Cannon. Madam Chair, I only have one question that I
    can just ask for the record.
        Ms. Sanchez. I will yield. I will yield my time to you, my
    remaining time to you, Mr. Cannon.
        Mr. Cannon. Thank you. And then hopefully we can just let
    the panel go.
        I appreciate you being here. We have been in this business
    together for a long time.
        And just a few, Dr. Freeman. And this is not urgent. But in
    your study, you have got EPA being reversed about 54 percent of
    the time. That seems to be way disproportionate to the other
    agencies involved. You have also got, I guess, the FCC as being
    reversed 43 percent and then others, I think, are averaging
    about 28.
        I actually was wondering why EPA, primarily, and then FCC
    are so far statistically out of line with the others. But
    again, that is not urgent. If you want to just give us
    something in writing.
        Ms. Freeman. I am happy to address it in writing. But just
    very, very briefly, actually, I don't think those numbers--I
    wouldn't necessarily agree exactly with that read of the
    numbers. It turns out that EPA is upheld in whole or part
    actually 74 percent of the time. But you are right that they
    have a lower rate of being upheld in their entirety. They are
    the lowest at 46 percent.
        But just to make one comment about this, we did some more
    analysis. And I don't think it is correct at the moment to
    assume that this means there is something wrong with how EPA
    writes its rules. It turns out that most of the cases, 66
    percent of the cases, in which EPA's rules are invalidated in
    whole or part, 66 percent, are Clean Air Act cases. And Clean
    Air Act implementation is extremely complicated, very likely to
    be subject to litigation.
        It may point to the need for Congress to revisit some of
    the most difficult issues in the Clean Air Act. It may not be
    the fault of EPA.
        Mr. Cannon. All right. Thank you.
        I yield back, Madam Chair, to you.
        Ms. Sanchez. Thank you. I am going to ask unanimous consent
    to enter into the record letters that we have received by
    Justice Breyer and Justice Scalia and also the American Bar
    Association to be made part of the record. Without objection,
    so ordered. Those will be made part of the record.
        [The information referred to follows:]
    Letter from Justice Stephen Breyer, Supreme Court of the United States,
       submitted by the Honorable Linda T. Sanchez, a Representative in
    Congress from the State of California, and Chairwoman, Subcommittee on
                       Commercial and Administrative Law

    Letter from Justice Antonin Scalia, Supreme Court of the United States,
       submitted by the Honorable Linda T. Sanchez, a Representative in
    Congress from the State of California, and Chairwoman, Subcommittee on
                       Commercial and Administrative Law

       Letter from the American Bar Association (ABA), submitted by the
    Honorable Linda T. Sanchez, a Representative in Congress from the State
         of California, and Chairwoman, Subcommittee on Commercial and
                               Administrative Law

        Ms. Sanchez. My understanding is that there are no further
    questions of the witnesses. So I would like to thank the
    witnesses for their testimony today. Without objection, Members
    of the Subcommittee will have 5 legislative days to submit any
    additional written questions, which we will forward to the
    witnesses and ask that you answer as promptly as you can so
    that they can be made a part of the record. And without
    objection, the record will remain open for 5 legislative days
    for the submission of any other additional materials.
        I realize this has been a bit of a quick and dirty hearing,
    but we do appreciate your attendance and your testimony. You
    will be receiving, as I said, probably additional questions to
    be answered in writing. I thank you for your patience and for
    your time. And with that, the hearing on the Subcommittee of
    Commercial and Administrative Law is adjourned.
        [Whereupon, at 3:40 p.m., the Subcommittee was adjourned.]
                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable John Conyers, Jr., a Representative
      in Congress from the State of Michigan, Chairman, Committee on the
     Judiciary, and Member, Subcommittee on Commercial and Administrative
                                      Law
        Today's hearing allows us to consider H.R. 3564, the ``Regulatory
    Improvement Act of 2007,'' a measure that would simply reauthorize the
    Administrative Conference of the United States for an additional 4
    years.
        There are few entities that enjoyed more bipartisan support than
    the Administrative Conference. It is also one of the few subject
    matters that both Justices Breyer and Scalia wholeheartedly agree upon,
    as evidenced by their enthusiastic testimony in support of the
    Conference before this Subcommittee in the 108th Congress.
        Let me just mention a few reasons why there has been and continues
    to be such broad bipartisan support for the Administrative Conference.
        First, the Conference helped agencies implement procedures that, in
    turn, saved taxpayers many millions of dollars. It proposed numerous
    recommendations to eliminate excessive litigation costs and long
    delays. Just one agency alone--the Social Security Administration--
    estimated that the Conference's recommendation to change that agency's
    appeals process would result in approximately $85 million in savings.
        Indeed, Justice Breyer described the ``huge'' savings to the public
    resulting from the Conference's recommendations, while Justice Scalia
    concurred that it was ``an enormous bargain.''
        Second, the Administrative Conference promoted innovation among
    agencies and how they function. To that end, the Conference
    successfully convinced 24 agencies to use Alternative Dispute
    Resolution to resolve issues with the private sector. It also
    spearheaded the implementation of the Negotiated Rulemaking Act, the
    Equal Access to Justice Act, and the Magnuson-Moss Warranty Act,
    governing consumer product warranties.
        Third, the Conference played a major role in helping agencies
    promulgate ``smarter'' regulations. It did this by working to improve
    the public's understanding of and participation in the rulemaking
    process, promoting judicial review of agency regulations, and reducing
    regulatory burdens on the private sector.
        After we proceed to markup of the legislation reauthorizing the
    Administrative Conference later this afternoon, I will recommend to
    House leadership that this measure be considered on the floor promptly
    in the coming weeks. I also intend to urge our colleagues on the
    Appropriations Committee to fund the Conference as soon as possible.

         Response to Post-Hearing Questions from Mort Rosenberg, Esq.,
       Specialist in American Public Law, Congressional Research Service
                             (CRS), Washington, DC

       Response to Post-Hearing Questions from Jody Freeman, Professor,
                       Harvard Law School, Cambridge, MA

        Response to Post-Hearing Questions from Curtis Copeland, Ph.D.,
      Specialist in American National Government, Congressional Research
                         Service (CRS), Washington, DC

    Response to Post-Hearing Questions from Jeffrey S. Lubbers, Professor,
         Washington College of Law, American University, Washington, DC