[Congressional Record Volume 143, Number 93 (Friday, June 27, 1997)]
[Senate]
[Pages S6742-S6752]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself, Mr. Thompson, Mr. Glenn, Mr. Abraham, 
        Mr. Robb, Mr. Roth, Mr. Rockefeller and Mr. Stevens):
  S. 981. A bill to provide for analysis of major rules; to the 
Committee on Governmental Affairs.


                 The Regulatory Improvement Act of 1997

  Mr. LEVIN. Mr. President, today Senator Thompson and I are joined by 
Senators Glenn, Abraham, Robb, Rockefeller, Roth, and Stevens in 
introducing the Regulatory Improvement Act of 1997. The bill would put 
into law--first, basic requirements for cost-benefit analysis and risk 
assessment of major rules; second, a process for the review of existing 
rules where there is a possibility of achieving significantly greater 
net benefits; and third, executive oversight of the rulemaking process. 
It builds on the bipartisan Roth-Glenn bill that was unanimously 
reported out of the Governmental Affairs Committee in 1995.
  This bill would require agencies, when issuing rules that have a 
major impact on the economy or a sector of the economy, to do a cost-
benefit analysis to determine whether the benefits of the rule justify 
its costs and to determine whether the regulatory option chosen by the 
agency is more cost effective or provides greater net benefits than 
other regulatory options considered by the agency. If the rule involves 
a risk to health, safety or the environment, the bill requires the 
agency to do a risk assessment as part of the analysis of the benefits 
of the rule.
  The bill also requires agencies that issue major rules to establish 
advisory committees to identify existing rules that the agency should 
consider for review because they have the potential, if modified, to 
achieve significantly greater net benefits. It would also codify the 
review procedure now conducted by the Office of Information and 
Regulatory Affairs [OIRA] and require public disclosure of OIRA's 
review process.
  The bill is significantly different from S. 343, the Dole-Johnston 
bill which I strongly opposed and which was rejected by the Senate in 
the 104th Congress.
  It does not create a supermandate that would amend existing laws nor 
does it contain mandatory decisional criteria that would establish new 
standards for an agency to meet. It does require agencies to conduct 
cost-benefit analyses for major rules and explain whether the benefits 
of the rules justify the costs and whether the rule is cost-effective 
than the other alternatives considered by the agency. It does not 
mandate the outcome of the process, only the process itself.
  It does not provide for judicial review of the process for, or the 
contents of, the cost-benefit analysis or risk assessment. The cost-
benefit analysis and risk assessment are made part of the rulemaking 
record for judicial review of whether the final rule is reasonable.
  It does not provide for a petition process for challenging existing 
rules. It provides for advisory committees to identify rules for 
possible review, gives the agency head the discretion to select rules 
for review especially taking into account the resources of the agency, 
and requires the agency to review the rules scheduled for review in 5 
years.

  Mr. President, many people think that when many of us fought hard 
against the Dole-Johnston bill that we didn't really want to reform the 
regulatory process. Well they are wrong. Many of us were disappointed 
that we were unable to pass a comprehensive regulatory reform bill in 
the last Congress. We weren't going to support bad reform, but that 
doesn't mean we didn't want to see good reform. Those of us who believe 
in the benefits of regulation to protect health and safety have a 
particular responsibility to make sure that regulations are sensible 
and cost-effective. When they aren't, the regulatory process--which is 
so

[[Page S6743]]

vital to our health and well being --comes under constant attack . By 
providing a common sense, moderate and open regulatory process, we are 
contributing to the well being of that process and immunizing it from 
the attacks on excesses.
  Mr. President, I've fought for regulatory reform since 1979, the year 
I came to the Senate. I even had as part of my platform back in 1978, 
the legislative veto--which would give Congress the chance to block 
excessively costly and burdensome regulations before they take effect. 
That was my battle cry for years. I worked with former Senator Boren, 
for instance, trying to get an across-the-board legislative veto bill 
enacted into law. Last Congress we were finally able to get a version 
of that adopted.
  I was also the author of the Regulatory Negotiation Act which was 
passed in 1990 and reauthorized in 1995 to encourage agencies to use 
the collegial process of negotiation in developing certain rules in 
order to avoid the delays and costs inherent in the otherwise 
adversarial process.
  As for an overall regulatory reform bill, I've supported such 
legislation since 1980, when the Senate first passed S. 1080, the 
Laxalt-Leahy bill only to have it die later that year in the House.
  At the same time, I took a strong stand against several damaging 
regulatory reform proposals from the House including an overall 
moratorium of regulations and against the Dole-Johnston bill in the 
Senate. I will not support any regulatory reform proposal that I 
believe would roll back important environmental, public health and 
safety protections. Nor will I support any regulatory reform proposal 
that I believe will lead to gridlock in the agencies or the courts. We 
certainly don't need that.
  We do need--better cost-benefit analysis and risk assessment, more 
flexibility for the regulated industries to reach legislative goals in 
a variety of ways, more cooperative efforts between government and 
industry and less ``us versus them'' attitudes.
  Based on these common principles, Senator Thompson and I have been 
working for months on this legislative proposal that I hope will yield 
a more rational and fair regulatory process and better, more flexible, 
more cost-effective and more enforceable regulations.
  Let me highlight some important features of this legislation.
  First, we say right from the beginning, in the section on findings, 
that cost-benefit analysis and risk assessment are useful tools to help 
agencies issue reasonable regulations. But they are only tools; they 
are not the sole basis upon which regulations should be developed or 
issued. They do not, we explicitly state, they do not replace the need 
for good judgment and the agencies' consideration of social values in 
deciding when and how to regulate.
  We define benefits very broadly--expressly taking into account 
nonquantifiable benefits. There is nothing in this bill that suggests 
that the assessment of benefits by an agency should be only 
quantifiable. On the contrary, this bill explicitly recognizes that 
many important benefits may be nonquantifiable, and that agencies have 
the right and authority to fully consider such benefits when doing the 
cost-benefit analysis and when determining whether the benefits justify 
the costs. We emphatically do not intend for the benefits part of the 
equation in the cost-benefit analysis to be limited to merely those 
benefits that are quantifiable.
  We direct the agencies to consider regulatory options that provide 
flexibility, where possible, to the regulated parties. I have been a 
longtime proponent of performance standards in regulations and not the 
so-called command and control approach. This bill urges the agencies to 
include in its identification of possible regulatory approaches that 
permit flexibility in achieving the required goal, either through 
performance standards or market type mechanisms.
  The definition of major rule, to which the provisions of this bill 
apply, is limited to those with a $100 million impact on the economy 
and those otherwise designated by the Administrator of the Office of 
Information and Regulatory Affairs [OIRA].
  The bill requires an agency issuing a major rule to evaluate the 
benefits and costs of a ``reasonable number of reasonable alternatives 
reflecting the range of regulatory options that would achieve the 
objective of the statute as addressed by the rulemaking.'' I am quoting 
these words, because they are significant. The bill doesn't require an 
agency to look at all the possible alternatives, just a reasonable 
number; but it does require the agency to pick a selection of options 
that are available to it within the range of the rulemaking objective.

  This cost-benefit analysis, of which any risk assessment would be a 
part, is intended to be transparent to the public; that is, those of us 
outside the agency--Congress, the regulated community, the 
beneficiaries of the regulation, the general public--should be able to 
see and understand the thinking the agency used to select the 
regulatory option it did, as well as the underlying scientific and/or 
economic data. Agencies should not hide the important information that 
forms the basis of their regulatory actions.
  Another important provision of this bill is the one that requires the 
agency to make a reasonable determination whether the benefits of the 
rule justify the costs and whether the regulatory option selected by 
the agency is substantially likely to achieve the objective of the 
rulemaking in a more cost effective manner or with greater net benefits 
than the other regulatory options considered by the agency. This is not 
in any way a decisional criteria that the agency must meet. This only 
requires the agency to make its assessment. And, if, as the agency is 
free to do, it chooses a regulatory option where the benefits do not 
justify the costs or that is not more cost effective or does not 
provide greater net benefits than the other options, the agency is 
required to explain why it did what it did and list the factors that 
caused it to so. Those factors could be a statute, a policy judgment, 
uncertainties in the data and the like. There is no added judicial 
scrutiny of a rule provided for or intended by this section. The final 
rule must still stand or fall based on whether the court finds that the 
rule is arbitrary or capricious in light of the whole rulemaking 
record. That is the current standard of judicial review.
  The bill says that if an agency cannot make the determinations 
required by the bill, it has to say why it can't. Use of the word 
cannot does not mean that an agency rule can be overturned by a court 
for its failure to pick an option that would permit the agency to make 
the determinations required by the bill. The agency is free to use its 
discretion to regulate under the substantive statute, and there is no 
implication that such rule must meet the standards described in the 
determinations subsection. It does mean, though, that the agency is 
required to make such determinations and let the public know why it 
picked the regulatory option that it did, and if it can't say, or 
determine, that the regulatory option it chose is the most cost 
effective or provides greatest net benefits, it must say why it chose 
it. This legislation requires only that the agency be up front with the 
public as to just how cost beneficial and cost effective its regulatory 
proposal is.
  The risk assessment requirement in this bill, unlike previous bills, 
is not unduly proscriptive. It establishes basic elements for 
performing risk assessments, many of which, again, will provide 
transparency for an agency's development of a rule, and it requires 
guidelines for such assessments to be issued by OIRA in consultation 
with the Office of Science and Technology Policy.
  Peer review, Mr. President, is required by this bill for both cost-
benefit analyses and risk assessments, but only once per rule. Peer 
review is not required at both the proposed and final rule stages. 
There is great concern in the public interest community, that there 
will not be sufficient personnel available with appropriate expertise 
and independence to serve on each of these peer review bodies. I am 
hoping to pursue that issue at greater length during our committee 
hearings.
  There is a similar concern by the public interest sector as to the 
availability of a balanced cross-section of individuals to serve on the 
advisory committees required for the review of rules. Service on such 
bodies obviously takes time and expertise and both of

[[Page S6744]]

those cost money. I hope we can also address the concerns about the 
possibility of inadequate levels of participation by groups and 
interests which have fiscal constraints that could preclude their full 
participation.
  Mr. President, the review of rules provision in this bill is also a 
reasonable approach. Unlike past proposals, it does not provide for an 
automatic sunset of a rule that is not reviewed pursuant to the 
schedule. Rather it provides for the agency to determine during the 
review period of rules it chooses to review whether it is going to 
continue, modify, or repeal the rule under review. If it fails to make 
that determination and take the appropriate action, the agency can be 
sued under the existing provision of the Administrative Procedure Act 
to force agency action unlawfully withheld.

  Rules would be scheduled for review under the provisions of this 
bill, only at the discretion of the agency head. However, the public 
would know the list of rules recommended for review by the advisory 
committee. The advisory committee would recommend those rules for 
review that, if modified, could result in substantially greater net 
benefits to society. That is the standard the committees are supposed 
to apply. The agency must review the recommendations of the advisory 
committee and develop a schedule for review of rules taking into 
account the resources available to the agency to conduct such reviews.
  Judicial review has been of great concern to those of us who want 
real regulatory reform without bottling up important regulations in the 
courts. There is no judicial review permitted of the cost-benefit 
analysis or risk assessment required by this bill outside of judicial 
review of the final rule. The analysis and assessment are included in 
the rulemaking record, but there is no judicial review of the content 
of those items or the procedural steps followed or not followed by the 
agency in the development of the analysis or assessment. Only the total 
failure to actually do the cost-benefit analysis or risk assessment 
would allow the court to remand the rule to the agency.
  Finally, Mr. President, the bill puts into law the requirement that 
the President establish a process for reviewing rules and coordinating 
Federal agency regulatory actions. Despite over 15 years of Executive 
orders that impose such a requirement, Congress has yet to put such a 
responsibility of the President into law. This bill would do that. And 
with that responsibility goes the obligation of the President, acting 
through OIRA, to make public the process and results of its review of 
agency rules. This is an important element of accountability, and such 
disclosure should not depend upon the whim of the President but rather 
on the requirements imposed by permanent law.
  So those are some highlights. Senator Thompson has committed to 
hearings on the bill. Everybody will be given an opportunity to comment 
and identify potential problems and possible improvements.
  I believe this bill will improve the regulatory process, will build 
confidence in the regulatory programs that are so important to this 
society's well-being, and will result in a better--and I believe--a 
less contentious regulatory process.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 981

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Regulatory Improvement Act 
     of 1997''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Current regulatory programs can be improved by being 
     more firmly rooted in sound economic and scientific analysis.
       (2) Cost-benefit analysis and risk assessment are useful 
     tools to better inform agencies in developing regulations, 
     although they do not replace the need for good judgment and 
     consideration of values.
       (3) Cost and risk need to be considered in evaluating 
     regulatory proposals which address health, safety, or the 
     environment. Other factors such as social values, 
     distributional effects, and equity, must also be considered.
       (4) Cost-benefit analysis and risk assessment should be 
     presented with a clear statement of the analytical 
     assumptions and uncertainties including an explanation of 
     what is known and not known and what the implications of 
     alternative assumptions might be.
       (5) The public has a right to know about the costs and 
     benefits of regulations, the risks addressed, the amount of 
     risk reduced, and the quality of scientific and economic 
     analysis used to support decisions. Such knowledge will 
     promote the quality, integrity and responsiveness of agency 
     actions.
       (6) The Administrator of the Office of Information and 
     Regulatory Affairs should oversee regulatory activities to 
     ensure consistent and valid use of cost-benefit analysis and 
     risk assessment among all agencies.
       (7) The Federal Government should develop a better 
     understanding of the strengths, weaknesses, and uncertainties 
     of cost-benefit analysis and risk assessment and conduct the 
     research needed to improve these analytical tools.

     SEC. 3. REGULATORY ANALYSIS.

       (a) In General.--Chapter 6 of title 5, United States Code, 
     is amended by adding at the end the following:

                  ``SUBCHAPTER II--REGULATORY ANALYSIS

     ``Sec. 621. Definitions

       ``For purposes of this subchapter the definitions under 
     section 551 shall apply and--
       ``(1) the term `benefit' means the reasonably identifiable 
     significant favorable effects, quantifiable and 
     nonquantifiable, including social, health, safety, 
     environmental, economic, and distributional effects, that are 
     expected to result directly or indirectly from implementation 
     of, or compliance with, a rule;
       ``(2) the term `cost' means the reasonably identifiable 
     significant adverse effects, quantifiable and 
     nonquantifiable, including social, health, safety, 
     environmental, economic, and distributional effects that are 
     expected to result directly or indirectly from implementation 
     of, or compliance with, a rule;
       ``(3) the term `cost-benefit analysis' means an evaluation 
     of the costs and benefits of a rule, quantified to the extent 
     feasible and appropriate and otherwise qualitatively 
     described, that is prepared in accordance with the 
     requirements of this subchapter at the level of detail 
     appropriate and practicable for reasoned decisionmaking on 
     the matter involved, taking into consideration uncertainties, 
     the significance and complexity of the decision, and the need 
     to adequately inform the public;
       ``(4) the term `Director' means the Director of the Office 
     of Management and Budget, acting through the Administrator of 
     the Office of Information and Regulatory Affairs;
       ``(5) the term `flexible regulatory options' means 
     regulatory options that permit flexibility to regulated 
     persons in achieving the objective of the statute as 
     addressed by the rule making, including regulatory options 
     that use market-based mechanisms, outcome oriented 
     performance-based standards, or other options that promote 
     flexibility;
       (6) the term `major rule' means a rule or a group of 
     closely related rules that--
       ``(A) the agency proposing the rule or the Director 
     reasonably determines is likely to have an annual effect on 
     the economy of $100,000,000 or more in reasonably 
     quantifiable costs; or
       ``(B) is otherwise designated a major rule by the Director 
     on the ground that the rule is likely to adversely affect, in 
     a material way, the economy, a sector of the economy, 
     including small business, productivity, competition, jobs, 
     the environment, public health or safety, or State, local or 
     tribal governments, or communities;
       ``(7) the term `reasonable alternative' means a reasonable 
     regulatory option that would achieve the objective of the 
     statute as addressed by the rule making and that the agency 
     has authority to adopt under the statute granting rule making 
     authority, including flexible regulatory options;
       ``(8) the term `risk assessment' means the systematic 
     process of organizing hazard and exposure assessments to 
     estimate the potential for specific harm to exposed 
     individuals, populations, or natural resources;
       ``(9) the term `risk characterization' means the 
     presentation of risk assessment results including, to the 
     extent feasible, a characterization of the distribution of 
     risk as well as an analysis of uncertainties, variabilities, 
     conflicting information, and inferences and assumptions in 
     the assessment;
       ``(10) the term `rule' has the same meaning as in section 
     551(4), and shall not include--
       ``(A) a rule exempt from notice and public comment 
     procedure under section 553;
       ``(B) a rule that involves the internal revenue laws of the 
     United States, or the assessment and collection of taxes, 
     duties, or other revenue or receipts;
       ``(C) a rule of particular applicability that approves or 
     prescribes for the future rates, wages, prices, services, 
     corporate or financial structures, reorganizations, mergers, 
     acquisitions, accounting practices, or disclosures bearing on 
     any of the foregoing;
       ``(D) a rule relating to monetary policy proposed or 
     promulgated by the Board of Governors of the Federal Reserve 
     System or by the Federal Open Market Committee;
       ``(E) a rule relating to the safety or soundness of 
     federally insured depository institutions or any affiliate of 
     such an institution (as defined in section 2(k) of the Bank 
     Holding Company Act of 1956 (12 U.S.C. 1841(k)); credit 
     unions; the Federal Home Loan

[[Page S6745]]

     Banks; government-sponsored housing enterprises; a Farm 
     Credit System Institution; foreign banks, and their branches, 
     agencies, commercial lending companies or representative 
     offices that operate in the United States and any affiliate 
     of such foreign banks (as those terms are defined in the 
     International Banking Act of 1978 (12 U.S.C. 3101)); or a 
     rule relating to the payments system or the protection of 
     deposit insurance funds or Farm Credit Insurance Fund;
       ``(F) a rule or order relating to the financial 
     responsibility, recordkeeping, or reporting of brokers and 
     dealers (including Government securities brokers and dealers) 
     or futures commission merchants, the safeguarding of investor 
     securities and funds or commodity future or options customer 
     securities and funds, the clearance and settlement of 
     securities, futures, or options transactions, or the 
     suspension of trading under the Securities Exchange Act of 
     1934 (15 U.S.C. 78a et seq.) or emergency action taken under 
     the Commodity Exchange Act (7 U.S.C. 1 et seq.), or a rule 
     relating to the protection of the Securities Investor 
     Protection Corporation, that is promulgated under the 
     Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa 
     et seq.), or a rule relating to the custody of Government 
     securities by depository institutions under section 3121 or 
     9110 of title 31;
       ``(G) a rule issued by the Federal Election Commission or a 
     rule issued by the Federal Communications Commission under 
     sections 312(a)(7) and 315 of the Communications Act of 1934 
     (47 U.S.C. 312(a)(7) and 315);
       ``(H) a rule required to be promulgated at least annually 
     pursuant to statute; or
       ``(I) a rule or agency action relating to the public debt;
       ``(11) the term `screening analysis' means an analysis 
     using simple assumptions to arrive at an estimate of upper 
     and lower bounds of risk as appropriate; and
       ``(12) the term `substitution risk' means an increased risk 
     to health, safety, or the environment reasonably likely to 
     result from a regulatory option.

     ``Sec. 622. Applicability

       ``Except as provided in section 623(e), this subchapter 
     shall apply to all proposed and final major rules.

     ``Sec. 623. Regulatory analysis

       ``(a)(1) Before publishing a notice of a proposed rule 
     making for any rule, each agency shall determine whether the 
     rule is or is not a major rule covered by this subchapter.
       ``(2) The Director may designate any rule to be a major 
     rule under section 621(6)(B), if the Director--
       ``(A) makes such designation no later than 30 days after 
     the close of the comment period for the rule; and
       ``(B) publishes such determination in the Federal Register 
     together with a succinct statement of the basis for the 
     determination within 30 days after such determination.
       ``(b)(1)(A) When an agency publishes a notice of proposed 
     rule making for a major rule, the agency shall prepare and 
     place in the rule making file an initial regulatory analysis, 
     and shall include a summary of such analysis consistent with 
     subsection (d) in the notice of proposed rule making.
       ``(B)(i) When the Director has published a determination 
     that a rule is a major rule after the publication of the 
     notice of proposed rule making for the rule, the agency shall 
     promptly prepare and place in the rule making file an initial 
     regulatory analysis for the rule and shall publish in the 
     Federal Register a summary of such analysis consistent with 
     subsection (d).
       ``(ii) Following the issuance of an initial regulatory 
     analysis under clause (i), the agency shall give interested 
     persons an opportunity to comment under section 553 in the 
     same manner as if the initial regulatory analysis had been 
     issued with the notice of proposed rule making.
       ``(2) Each initial regulatory analysis shall contain--
       ``(A) a cost-benefit analysis of the proposed rule that 
     shall contain--
       ``(i) an analysis of the benefits of the proposed rule, 
     including any benefits that cannot be quantified, and an 
     explanation of how the agency anticipates that such benefits 
     will be achieved by the proposed rule, including a 
     description of the persons or classes of persons likely to 
     receive such benefits;
       ``(ii) an analysis of the costs of the proposed rule, 
     including any costs that cannot be quantified, and an 
     explanation of how the agency anticipates that such costs 
     will result from the proposed rule, including a description 
     of the persons or classes of persons likely to bear such 
     costs; and
       ``(iii) an evaluation of the relationship of the benefits 
     of the proposed rule to its costs, including the 
     determinations required under subsection (c)(3), taking into 
     account the results of any risk assessment;
       ``(iv) an evaluation of the benefits and costs of a 
     reasonable number of reasonable alternatives reflecting the 
     range of regulatory options that would achieve the objective 
     of the statute as addressed by the rule making, including, 
     where feasible, alternatives that--
       ``(I) require no government action;
       ``(II) accommodate differences among geographic regions and 
     among persons with differing levels of resources with which 
     to comply; or
       ``(III) employ flexible regulatory options;
       ``(v) a description of the scientific or economic 
     evaluations or information upon which the agency 
     substantially relied in the cost-benefit analysis and risk 
     assessment required under this subchapter, and an explanation 
     of how the agency reached the determinations under subsection 
     (c)(3); and
       ``(B) if required, the risk assessment in accordance with 
     section 624.
       ``(c)(1) When the agency publishes a final major rule, the 
     agency shall also prepare and place in the rule making file a 
     final regulatory analysis, and shall prepare a summary of the 
     analysis consistent with subsection (d).
       ``(2) Each final regulatory analysis shall address each of 
     the requirements for the initial regulatory analysis under 
     subsection (b)(2), revised to reflect--
       ``(A) any material changes made to the proposed rule by the 
     agency after publication of the notice of proposed rule 
     making;
       ``(B) any material changes made to the cost-benefit 
     analysis or risk assessment; and
       ``(C) agency consideration of significant comments received 
     regarding the proposed rule and the initial regulatory 
     analysis, including regulatory review communications under 
     subchapter IV.
       ``(3)(A) The agency shall include in the statement of basis 
     and purpose for the rule a reasonable determination, based 
     upon the rule making record considered as a whole--
       ``(i) whether the rule is likely to provide benefits that 
     justify the costs of the rule; and
       ``(ii) whether the rule is likely to substantially achieve 
     the rule making objective in a more cost-effective manner, or 
     with greater net benefits, than the other reasonable 
     alternatives considered by the agency.
       ``(B) If the agency head cannot reasonably determine that 
     the final rule is likely to provide benefits that justify the 
     costs of the rule and substantially achieve the rule making 
     objective in a more cost-effective manner or with greater net 
     benefits than the other reasonable alternatives considered by 
     the agency, the agency head shall--
       ``(i) explain why such determinations cannot be made;
       ``(ii) identify any statutory provision or other factor 
     that prevents such determinations; and
       ``(iii) describe a reasonable alternative considered by the 
     agency, if feasible, that would allow the agency to determine 
     that the benefits justify the costs and that the rule making 
     objective would be achieved in a more cost-effective manner 
     or with greater net benefits than the other reasonable 
     alternatives considered by the agency.
       ``(d) Each agency shall include an executive summary of the 
     regulatory analysis, including any risk assessment, in the 
     regulatory analysis and in the statement of basis and purpose 
     for the rule. Such executive summary shall include a succinct 
     presentation of--
       ``(1) the benefits and costs expected to result from the 
     rule and any determinations required under subsection (c)(3);
       ``(2) if applicable, the risk addressed by the rule, 
     including the most plausible estimate of the risk and the 
     results of any risk assessment;
       ``(3) the benefits and costs of reasonable alternatives 
     considered by the agency; and
       ``(4) the key assumptions and scientific or economic 
     information upon which the agency relied.
       ``(e)(1) A major rule may be adopted without prior 
     compliance with this subchapter if--
       ``(A) the agency for good cause finds that conducting the 
     regulatory analysis under this subchapter is contrary to the 
     public interest due to an emergency, or an imminent threat to 
     health or safety that is likely to result in significant harm 
     to the public or the environment; and
       ``(B) the agency publishes in the Federal Register, 
     together with such finding, a succinct statement of the basis 
     for the finding.
       ``(2) If a major rule is adopted under paragraph (1), the 
     agency shall comply with this subchapter as promptly as 
     possible unless compliance would be unreasonable because the 
     rule is, or soon will be, no longer in effect.

     ``Sec. 624. Principles for risk assessments

       ``(a)(1) Subject to paragraph (2), each agency shall design 
     and conduct risk assessments in accordance with this 
     subchapter for each proposed and final major rule the primary 
     purpose of which is to address health, safety, or 
     environmental risk, or which results in a significant 
     substitution risk, in a manner that promotes rational and 
     informed risk management decisions and informed public input 
     into and understanding of the process of making agency 
     decisions.
       ``(2) If a risk assessment under this subchapter is 
     otherwise required by this section, but the agency determines 
     that--
       ``(A) a final rule subject to this subchapter is 
     substantially similar to the proposed rule with respect to 
     the risk being addressed;
       ``(B) a risk assessment for the proposed rule has been 
     carried out in a manner consistent with this subchapter; and
       ``(C) a new risk assessment for the final rule is not 
     required in order to respond to comments received during the 
     period for comment on the proposed rule,
     the agency may publish such determination along with the 
     final rule in lieu of preparing a new risk assessment for the 
     final rule.
       ``(b) Each agency shall consider in each risk assessment 
     reliable and reasonably available scientific information and 
     shall describe the basis for selecting such scientific 
     information.
       ``(c)(1) Each agency may use reasonable assumptions to the 
     extent that relevant and reliable scientific information, 
     including

[[Page S6746]]

     site-specific or substance-specific information, is not 
     reasonably available.
       ``(2) When a risk assessment involves a choice of 
     assumptions, the agency shall--
       ``(A) identify the assumption and its scientific or policy 
     basis, including the extent to which the assumption has been 
     validated by, or conflicts with, empirical data;
       ``(B) explain the basis for any choices among assumptions 
     and, where applicable, the basis for combining multiple 
     assumptions; and
       ``(C) describe reasonable alternative assumptions that were 
     considered but not selected by the agency for use in the risk 
     assessment, how such alternative assumptions would have 
     changed the conclusions of the risk assessment, and the 
     rationale for not using such alternatives.
       ``(d) Each agency shall provide appropriate opportunity for 
     public comment and participation during the development of a 
     risk assessment.
       ``(e) Each risk assessment supporting a major rule under 
     this subchapter shall include, as appropriate, each of the 
     following:
       ``(1) A description of the hazard of concern.
       ``(2) A description of the populations or natural resources 
     that are the subject of the risk assessment.
       ``(3) An explanation of the exposure scenarios used in the 
     risk assessment, including an estimate of the corresponding 
     population at risk and the likelihood of such exposure 
     scenarios.
       ``(4) A description of the nature and severity of the harm 
     that could reasonably occur as a result of exposure to the 
     hazard.
       ``(5) A description of the major uncertainties in each 
     component of the risk assessment and their influence on the 
     results of the assessment.
       ``(f) To the extent scientifically appropriate, each agency 
     shall--
       ``(1) express the overall estimate of risk as a reasonable 
     range or probability distribution that reflects 
     variabilities, uncertainties, and lack of data in the 
     analysis;
       ``(2) provide the range and distribution of risks and the 
     corresponding exposure scenarios, identifying the range and 
     distribution and likelihood of risk to the general population 
     and, as appropriate, to more highly exposed or sensitive 
     subpopulations, including the most plausible estimates of the 
     risks; and
       ``(3) where quantitative estimates are not available, 
     describe the qualitative factors influencing the range, 
     distribution, and likelihood of possible risks.
       ``(g) When scientific information that permits relevant 
     comparisons of risk is reasonably available, each agency 
     shall use the information to place the nature and magnitude 
     of a risk to health, safety, or the environment being 
     analyzed in relationship to other reasonably comparable risks 
     familiar to and routinely encountered by the general public. 
     Such comparisons should consider relevant distinctions among 
     risks, such as the voluntary or involuntary nature of risks.
       ``(h) When scientifically appropriate information on 
     significant substitution risks to health, safety, or the 
     environment is reasonably available to the agency, the agency 
     shall describe such risks in the risk assessment.

     ``Sec. 625. Peer review

       ``(a) Each agency shall provide for peer review in 
     accordance with this section of any cost benefit analysis and 
     risk assessment required by this subchapter that forms the 
     basis of any major rule covered by this subchapter.
       ``(b)(1) Peer review required under subsection (a) shall--
       ``(A) provide for the creation or utilization of peer 
     review panels, expert bodies, or other formal or informal 
     devices that are broadly representative and balanced and that 
     consist of panel members or participants with expertise 
     relevant to the sciences involved in the regulatory decisions 
     and who are independent of the agency program;
       ``(B) exclude any person as a panel member or participant 
     if such person has a financial interest in the outcome, 
     unless such person fully discloses such interest to the 
     agency and the public;
       ``(C) provide for the timely completion of the peer review 
     including meeting agency deadlines;
       ``(D) contain a balanced presentation of all 
     considerations, including minority reports and an agency 
     response to all significant peer review comments; and
       ``(E) provide adequate protections for confidential 
     business information and trade secrets, including requiring 
     panel members or participants to enter into confidentiality 
     agreements.
       ``(2) All peer review written comments or conclusions and 
     the agency's written responses to significant peer review 
     comments shall be made available to the public and shall be 
     made part of the rule making record for purposes of judicial 
     review of any final agency action.
       ``(3) If the head of an agency, with the concurrence of the 
     Director, publishes a determination that a cost-benefit 
     analysis or risk assessment, or any component thereof, has 
     been previously subjected to adequate peer review, no further 
     peer review shall be required under this section for such 
     analysis, assessment, or component.

     ``Sec. 626. Deadlines for rule making

       ``(a) All deadlines in statutes or imposed by a court of 
     the United States, that require an agency to propose or 
     promulgate any major rule during the 2-year period beginning 
     on the effective date of this section shall be suspended 
     until the earlier of--
       ``(1) the date on which the requirements of this subchapter 
     are satisfied; or
       ``(2) the date occurring 6 months after the date of the 
     applicable deadline.
       ``(b) In any case in which the failure to promulgate a 
     major rule by a deadline occurring during the 2-year period 
     beginning on the effective date of this section would create 
     an obligation to regulate through individual adjudications, 
     the deadline shall be suspended until the earlier of--
       ``(1) the date on which the requirements of this subchapter 
     are satisfied; or
       ``(2) the date occurring 6 months after the date of the 
     applicable deadline.

     ``Sec. 627. Judicial review

       ``(a) Compliance or noncompliance by an agency with the 
     provisions of this subchapter shall only be subject to 
     judicial review in accordance with this section.
       ``(b) Any determination of an agency whether a rule is or 
     is not a major rule under section 621(6)(A) shall be set 
     aside by a reviewing court only upon a clear and convincing 
     showing that the determination is erroneous in light of the 
     information available to the agency at the time the agency 
     made the determination.
       ``(c) Any determination by the Director that a rule is a 
     major rule under section 621(6), or any failure to make such 
     determination, shall not be subject to judicial review in any 
     manner.
       ``(d) The cost-benefit analysis and any risk assessment 
     required under this subchapter shall not be subject to 
     judicial review separate from review of the final rule to 
     which they apply. The cost-benefit analysis, cost-benefit 
     determination under section 623(c)(3), and any risk 
     assessment shall be part of the whole rule making record for 
     purposes of judicial review of the rule and shall be 
     considered by a court in determining whether the final rule 
     is arbitrary or capricious unless the agency can demonstrate 
     that the analysis or assessment would not be material to the 
     outcome of the rule.
       ``(e) If an agency fails to perform the cost-benefit 
     analysis, cost-benefit determination, or risk assessment, a 
     court shall remand or invalidate the rule.

     ``Sec. 628. Guidelines, interagency coordination, and 
       research

       ``(a)(1) No later than 9 months after the date of enactment 
     of this section, the Director, in consultation with the 
     Director of the Office of Science and Technology Policy and 
     the relevant agency heads, shall develop guidelines for cost-
     benefit analyses and risk assessments required by this 
     subchapter or with significant implications for public 
     policy. To the extent feasible such guidelines shall apply 
     the principles of sections 623 and 624. The Director shall 
     oversee and periodically revise such guidelines as 
     appropriate.
       ``(2) As soon as practicable and no later than 18 months 
     after the date of enactment of this section, each relevant 
     agency shall adopt detailed guidelines for risk assessments 
     required by this subchapter or with significant implications 
     for public policy. Such guidelines shall be consistent with 
     the guidance issued under paragraph (1). Each agency shall 
     periodically revise such agency guidelines as appropriate.
       ``(3) The guidelines under this subsection shall be 
     developed following notice and public comment. The 
     development and issuance of the guidelines shall not be 
     subject to judicial review, except in accordance with section 
     706(1) of this title.
       ``(b) To promote the use of cost-benefit analysis and 
     assessment in a consistent manner and to identify agency 
     research and training needs, the Director, in consultation 
     with the Director of the Office of Science and Technology 
     Policy, shall--
       ``(1) oversee periodic evaluations of Federal agency cost-
     benefit analysis and risk assessment;
       ``(2) provide advice and recommendations to the President 
     and Congress to improve agency use of cost-benefit analysis 
     and risk assessment;
       ``(3) establish appropriate interagency mechanisms to 
     improve the consistency and quality of cost-benefit analysis 
     and risk assessment among Federal agencies; and
       ``(4) establish appropriate mechanisms between Federal and 
     State agencies to improve cooperation in the development and 
     application of cost-benefit analysis and risk assessment.
       ``(c)(1) The head of each agency, in consultation with the 
     Director and the Director of the Office of Science and 
     Technology Policy, shall regularly evaluate and develop a 
     strategy to meet agency needs for research and training in 
     cost-benefit analysis and risk assessment, including research 
     on modelling, the development of generic data, use of 
     assumptions and the identification and quantification of 
     uncertainty and variability.
       ``(2)(A) No later than 6 months from the date of enactment 
     of this section, the Director, in consultation with the 
     Director of the Office of Science and Technology Policy, 
     shall enter into appropriate arrangements with an accredited 
     scientific institution to conduct research to--
       ``(i) identify and evaluate a common basis to assist 
     comparative risk analysis and risk communication related to 
     both carcinogens and noncarcinogens; and
       ``(ii) appropriately incorporate risk assessments into 
     related cost-benefit analyses.
       ``(B) The results of the research conducted under this 
     paragraph shall be submitted to the Director and Congress no 
     later than 18

[[Page S6747]]

     months after the date of enactment of this section.

     ``Sec. 629. Comparative risk analysis study

       ``(a) No later than 180 days after the effective date of 
     this section, the Director, in consultation with the Director 
     of the Office of Science and Technology Policy, shall enter 
     into a contract with an accredited scientific institution to 
     conduct a study that provides--
       ``(1) a systematic comparison of the extent and severity of 
     significant risks to human health, safety, or the environment 
     (hereafter referred to as a comparative risk analysis);
       ``(2) a study of methodologies for using comparative risk 
     analysis to compare dissimilar risks to human health, safety, 
     or the environment; and
       ``(3) technical guidance and recommendations on the use of 
     comparative risk analysis to assist in allocating resources 
     within and across agencies to set priorities for the 
     reduction of risks to human health, safety, or the 
     environment.
       ``(b) The Director shall ensure that the study required 
     under subsection (a) is--
       ``(1) conducted through an open process providing peer 
     review consistent with section 625 and opportunities for 
     public comment and participation; and
       ``(2) completed and submitted to Congress and the President 
     no later than 3 years after the effective date of this 
     section.
       ``(c) No later than 5 years after the effective date of 
     this section, and periodically thereafter, the President 
     shall submit a report to Congress recommending legislative 
     changes to assist in setting priorities to more effectively 
     and efficiently reduce risks to human health, safety, or the 
     environment.

                   ``SUBCHAPTER III--REVIEW OF RULES

     ``Sec. 631. Definitions

       ``For purposes of this subchapter the definitions under 
     sections 551 and 621 shall apply.

     ``Sec. 632. Advisory committee on regulations

       ``(a)(1)(A) No later than 90 days after the date of 
     enactment of this section and every 5 years thereafter, the 
     head of each agency described under subparagraph (B) shall 
     establish an advisory committee for the review of rules.
       ``(B) An agency referred to under subparagraph (A) is any 
     agency that has promulgated a major rule during the 10-year 
     period preceding the date of the establishment of an advisory 
     committee under subparagraph (A).
       ``(2) The head of an agency described under paragraph (1) 
     may establish panels under its advisory committee.
       ``(b)(1) Each such agency head shall appoint a reasonable 
     number of members to serve on the agency's advisory committee 
     and shall designate a chairman from the members of the 
     committee. Membership on the committee shall represent a 
     balanced cross-section of public and private interests 
     affected by the regulations of the agency, including small 
     businesses, small governments, and public interest groups. No 
     employee of the agency establishing the committee shall serve 
     as a member of such agency's committee under this section.
       ``(2) Each member shall be appointed for the life of the 
     advisory committee. The advisory committee shall terminate 1 
     year after the date on which the committee is established.
       ``(3) A vacancy on a committee shall be filled in the same 
     manner as the original appointment.
       ``(4) Each committee shall solicit public comments and may 
     solicit public participation through appropriate means 
     including hearings, written comments, public meetings, and 
     electronic mail.
       ``(5) Members of each committee shall receive travel 
     expenses, including per diem in lieu of subsistence, in 
     accordance with sections 5702 and 5703.
       ``(6) Each committee shall be subject to the provisions of 
     the Federal Advisory Committee Act (5 U.S.C. App.).

     ``Sec. 633. Agency regulatory review

       ``(a) Each advisory committee appointed under section 632 
     shall develop a list of rules promulgated by the agency that 
     the committee serves, which the committee determines should 
     be reviewed by the agency and can reasonably be reviewed by 
     the agency within a 5-year period. In selecting rules for 
     review, each committee shall consider the extent to which--
       ``(1) a rule could be revised to substantially increase net 
     benefits, including through flexible regulatory options;
       ``(2) the rule is important relative to other rules being 
     considered for review; and
       ``(3) the agency has discretion under the statute 
     authorizing the rule to modify or repeal the rule.
       ``(b) In developing the list required under subsection (a), 
     each advisory committee shall obtain comments and suggestions 
     from the public.
       ``(c) No later than 1 year after an advisory committee is 
     established, such committee shall deliver to the agency the 
     committee's recommended list of rules to be reviewed in order 
     of priority. The agency shall immediately publish the list in 
     the Federal Register and forward a copy of the list to the 
     appropriate committees of jurisdiction in the House of 
     Representatives and the Senate.
       ``(d)(1) No later than 60 days after receiving and 
     reviewing the list of rules from its committee, the agency 
     shall publish in the Federal Register a preliminary schedule 
     for review of rules based on such list.
       ``(2) The agency shall provide in the Federal Register at 
     the time the preliminary schedule is published an explanation 
     of each modification to the list provided by the advisory 
     committee and shall invite public comment on the preliminary 
     schedule for a period of no less than 60 days.
       ``(e) The preliminary schedule under this section shall 
     propose deadlines for review of each rule listed thereon, and 
     such deadlines shall occur no later than 5 years from the 
     date of publication of the final schedule.
       ``(f)(1) No later than 60 days after the close of the 
     comment period, the agency shall publish a final schedule of 
     rules to be reviewed by the agency under this section.
       ``(2) The schedule shall establish a deadline for 
     completion of the review of each rule listed on the schedule. 
     Each deadline shall occur no later than 5 years from the date 
     of publication of the final schedule.
       ``(g) In preparing the preliminary and final schedule, the 
     agency shall give deference to the recommendations of its 
     advisory committee but may modify the list of rules to be 
     reviewed, taking into account the factors contained in 
     subsection (a) and the resource constraints of the agency.
       ``(h)(1) For each rule on the schedule under subsection 
     (e), the agency shall--
       ``(A) no later than 2 years before the deadline in such 
     schedule, publish in the Federal Register a notice that 
     solicits public comment regarding whether the rule should be 
     continued, amended, or repealed;
       ``(B) no later than 1 year before the deadline in such 
     schedule, publish in the Federal Register a notice that--
       ``(i) addresses public comments generated by the notice in 
     subparagraph (A);
       ``(ii) contains a preliminary analysis by the agency with 
     respect to subsection (a) (1), (2), and (3);
       ``(iii) contains a preliminary determination whether the 
     rule should be continued, amended, or repealed; and
       ``(iv) solicits public comment on the preliminary 
     determination for the rule; and
       ``(C) no later than 60 days before the deadline in such 
     schedule, publish in the Federal Register a final notice on 
     the rule that--
       ``(i) addresses public comments generated by the notice in 
     subsection (c);
       ``(ii) contains a determination to continue, amend, or 
     repeal the rule and an explanation of such determination with 
     respect to subsection (a) (1), (2), and (3); and
       ``(iii) if the agency determines to amend or repeal the 
     rule, contains, if required, a notice of proposed rule making 
     under section 553.
       ``(2) If the final determination of the agency is to 
     continue the rule, such determination shall constitute final 
     agency action 60 days after the publication in the Federal 
     Register of the notice in paragraph (1)(C).
       ``(i) If an agency makes a determination to amend or repeal 
     a rule under subsection (h)(1)(C), the agency shall complete 
     final agency action with regard to such rule no later than 2 
     years after the deadline established for such rule under 
     subsection (f)(2).
       ``(j) Nothing in this section shall limit the discretion of 
     an agency to decide, after having proposed to modify or 
     repeal a rule, not to promulgate such modification or repeal. 
     Such decision shall constitute final agency action for the 
     purposes of judicial review.
       ``(k) Agency failure to take the actions required by this 
     section shall be subject to judicial review only under 
     section 706(1). There shall be no judicial review of the 
     preliminary or final schedule.
       ``(l) A court may remand a determination under subsection 
     (h)(2) only upon a clear and convincing showing that the 
     agency could have adopted a reasonable alternative that would 
     substantially increase net benefits, including through 
     flexible regulatory options, while meeting the objectives of 
     the statute as addressed by the rule making.

                  ``SUBCHAPTER IV--EXECUTIVE OVERSIGHT

     ``Sec. 641. Definitions

       ``For purposes of this subchapter--
       ``(1) the definitions under sections 551 and 621 shall 
     apply; and
       ``(2) the term `regulatory action' means any one of the 
     following:
       ``(A) An agenda or schedule for rule makings.
       ``(B) Advance notice of proposed rule making.
       ``(C) Notice of proposed rule making.
       ``(D) Final rule making, including interim final rule 
     making.

     ``Sec. 642. Presidential regulatory review

       ``(a) The President shall establish a process for the 
     review and coordination of Federal agency regulatory actions. 
     Such process shall be the responsibility of the Director.
       ``(b) For the purpose of carrying out the review 
     established under subsection (a), the Director shall--
       ``(1) develop and oversee uniform regulatory policies and 
     procedures, including those by which each agency shall comply 
     with the requirements of this chapter;
       ``(2) develop policies and procedures for the review of 
     regulatory actions by the Director; and
       ``(3) develop and oversee an annual governmentwide 
     regulatory planning process that shall include review of 
     planned agency major rules and other significant regulatory 
     actions and publication of--
       ``(A) a summary of and schedule for promulgation of planned 
     agency major rules;
       ``(B) agency specific schedules for review of existing 
     rules under subchapter III;
       ``(C) a summary of regulatory review actions undertaken in 
     the prior year;

[[Page S6748]]

       ``(D) a list of major rules promulgated in the prior year 
     for which an agency could not make the determinations that 
     the benefits of a rule justify the costs under section 
     623(c)(3);
       ``(E) identification of significant agency noncompliance 
     with this chapter in the prior year; and
       ``(F) recommendations for improving compliance with this 
     chapter and increasing the efficiency and effectiveness of 
     the regulatory process.
       ``(c) The review established under subsection (a) shall be 
     conducted as expeditiously as practicable and the Director's 
     review of any regulatory action shall be limited to no more 
     than 90 days, unless extended for an additional 30 days at 
     the written request of the rule making agency or the 
     Director.

     ``Sec. 643. Public disclosure of information

       ``(a) The Director, in carrying out the provisions of 
     section 642, shall establish procedures to provide public and 
     agency access to information concerning regulatory review 
     actions, including--
       ``(1) disclosure to the public on an ongoing basis of 
     information regarding the status of regulatory actions 
     undergoing review;
       ``(2) disclosure to the public, no later than publication 
     of a regulatory action, of--
       ``(A) all written communications relating to the substance 
     of a regulatory action including drafts of all proposals and 
     associated analyses, between the Director or employees of the 
     Director and the regulatory agency;
       ``(B) all written communications relating to the substance 
     of a regulatory action between the Director or employees of 
     the Director and any person not employed by the executive 
     branch of the Federal Government;
       ``(C) a list identifying the dates, names of individuals 
     involved, and subject matter discussed in substantive 
     meetings and telephone conversations relating to the 
     substance of a regulatory action between the Director or 
     employees of the Director and any person not employed by the 
     executive branch of the Federal Government; and
       ``(D) a written explanation of any review action and the 
     date of such action; and
       ``(3) disclosure to the regulatory agency, on a timely 
     basis, of--
       ``(A) all written communications relating to the substance 
     of a regulatory action between the Director or employees of 
     the Director and any person who is not employed by the 
     executive branch of the Federal Government;
       ``(B) a list identifying the dates, names of individuals 
     involved, and subject matter discussed in substantive 
     meetings and telephone conversations, and an invitation to 
     participate in meetings, relating to the substance of a 
     regulatory action between the Director or employees of the 
     Director and any person not employed by the executive branch 
     of the Federal Government; and
       ``(C) a written explanation of any review action taken 
     concerning an agency regulatory action.
       ``(b) Prior to the publication of any proposed or final 
     rule, the agency shall include in the rule making record--
       ``(1) a document identifying in a complete, clear, and 
     simple manner, the substantive changes between the draft 
     submitted to the Director for review and the rule 
     subsequently announced;
       ``(2) a document identifying those changes in the rule that 
     were made at the suggestion or recommendation of the 
     Director; and
       ``(3) all written communications exchanged between the 
     Director and the agency during the review of the rule, 
     including drafts of all proposals and associated analyses.

     ``Sec. 644. Judicial review

       ``The exercise of the authority granted under this 
     subchapter by the Director or the President shall not be 
     subject to judicial review in any manner.''.
       (b) Presidential Authority.--Nothing in this Act shall 
     limit the exercise by the President of the authority and 
     responsibility that the President otherwise possesses under 
     the Constitution and other laws of the United States with 
     respect to regulatory policies, procedures, and programs of 
     departments, agencies, and offices.
       (c) Technical and Conforming Amendments.--
       (1) Part I of title 5, United States Code, is amended by 
     striking the chapter heading and table of sections for 
     chapter 6 and inserting the following:

           ``CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS

           ``SUBCHAPTER I--ANALYSIS OF REGULATORY FLEXIBILITY

``Sec.
``601. Definitions.
``602. Regulatory agenda.
``603. Initial regulatory flexibility analysis.
``604. Final regulatory flexibility analysis.
``605. Avoidance of duplicative or unnecessary analyses.
``606. Effect on other law.
``607. Preparation of analysis.
``608. Procedure for waiver or delay of completion.
``609. Procedures for gathering comments.
``610. Periodic review of rules.
``611. Judicial review.
``612. Reports and intervention rights.

                  ``SUBCHAPTER II--REGULATORY ANALYSIS

``621. Definitions.
``622. Applicability.
``623. Regulatory analysis.
``624. Principles for risk assessments.
``625. Peer review.
``626. Deadlines for rule making.
``627. Judicial review.
``628. Guidelines, interagency coordination, and research.
``629. Comparative risk analysis study.

                   ``SUBCHAPTER III--REVIEW OF RULES

``631. Definitions.
``632. Advisory committee on regulations.
``633. Agency regulatory review.

                  ``SUBCHAPTER IV--EXECUTIVE OVERSIGHT

``641. Definitions.
``642. Presidential regulatory review.
``643. Public disclosure of information.
``644. Judicial review.''.
       (2) Chapter 6 of title 5, United States Code, is amended by 
     inserting immediately before section 601, the following 
     subchapter heading:

         ``SUBCHAPTER I--ANALYSIS OF REGULATORY FLEXIBILITY''.

     SEC. 4. EFFECTIVE DATE.

       Except as otherwise provided in this Act, this Act shall 
     take effect 180 days after the date of enactment of this Act, 
     but shall not apply to any agency rule for which a notice of 
     proposed rulemaking is published on or before August 1, 1997.

           Summary of the Regulatory Improvement Act of 1997

       1. Regulatory Analysis (Sec. 623). When issuing major rules 
     (costing over $100 million or deemed by OMB to have a 
     significant impact on the economy), Federal agencies must 
     conduct a regulatory analysis, including a cost-benefit 
     analysis and, if relevant, a risk assessment.
       a. Cost-benefit analysis. The cost-benefit analysis shall 
     consider: The expected benefits of the rule (quantifiable and 
     nonquantifiable); the expected costs of the rule 
     (quantifiable and nonquantifiable); reasonable alternatives, 
     including flexible regulatory options--such as market-based 
     mechanisms or outcome-oriented performance-based standards;
       b. Cost-benefit determination. The agency shall include in 
     the statement of basis and purpose for the rule a reasonable 
     determination: (1) whether the rule is likely to provide 
     benefits that justify the costs of the rule; and (2) whether 
     the rule is likely to substantially achieve the rule making 
     objective in a more cost-effective manner, or with greater 
     net benefits, than the other reasonable alternatives 
     considered by the agency.
       If the agency cannot make those determinations, it shall: 
     (1) explain why such determinations cannot be made; (2) 
     identify any statutory provision or other factor that 
     prevents such determinations; and (3) describe a reasonable 
     alternative considered by the agency, if feasible, that would 
     allow the agency to make such determinations.
       The agency shall include an executive summary in the 
     regulatory analysis and in the statement of basis and purpose 
     for the rule.
       There is an exception from the regulatory analysis 
     requirements when an agency must act expeditiously to address 
     an imminent threat to health, safety or the environment.
       2. Risk assessment principles (Sec. 624). If the major rule 
     has the primary purpose of addressing health, safety, or 
     environmental risks, or results in a significant substitution 
     risk, the regulatory analysis must also include a risk 
     assessment following general statutory criteria to ensure 
     that the assessment is scientifically sound and transparent, 
     including: Identify and explain assumptions made when 
     measuring risks; provide appropriate opportunities for public 
     comment and participation during the development of the risk 
     assessment; disclose relevant information about the risk, 
     including the range and distribution of risks and 
     corresponding exposure scenarios, identifying the range and 
     distribution and likehood of risk to the general population 
     and any sensitive subpopulations, including the most 
     plausible estimates of the risks; when scientific information 
     permits, compare the risk being analyzed with other 
     reasonably comparable risks familiar to and routinely 
     encountered by the general public.
       3. Peer review (Sec. 625). Agencies shall conduct 
     independent peer review for risk assessments and cost-benefit 
     analyses related to major rules. Peer review is not required 
     where the agency and OMB certify that an assessment or 
     analysis has previously been subjected to adequate peer 
     review.
       4. Deadlines for rule making (Sec. 626). For two years 
     after the Act becomes effective, agencies are provided with a 
     6-month time extension from a regulatory deadline if needed 
     to satisfy the requirements of the Act.
       5. Judicial Review (Sec. 627). Judicial review is limited 
     to making sure that agencies perform the cost-benefit 
     analyses and risk assessments for major rules. (The process 
     for and content of such analysis is not subject to separate 
     judicial review.) The cost-benefit analysis and risk 
     assessment are to be included in the rule making record for 
     purposes of judicial review of the final rule under the 
     deferential arbitrary and capricious standard.
       6. Guidelines, interagency coordination, and research 
     (Sec. 628). Within 9 months, OMB is required to consult with 
     OSTP and relevant agencies to develop broad guidelines for 
     risk assessments and cost-benefit analyses consistent with 
     the Act.
       Within 18 months, each relevant agency shall develop more 
     detailed guidelines for risk assessments tailored to agency 
     programs consistent with the OMB/OSTP guidelines.

[[Page S6749]]

       OMB shall consult with OSTP to coordinate and improve 
     agency cost-benefit analysis and risk assessment practices 
     and to develop a strategy to agency research and training 
     needs.
       Within 6 months, OMB shall consult with OSTP to arrange for 
     research to identify and evaluate a common basis to assist 
     comparative risk analysis and risk communication related to 
     both carcinogens and noncarcinogens; and to appropriately 
     incorporate risk assessments into cost-benefit analyses.
       7. Comparative risk analysis study (Sec. 629). OMB, in 
     consultation with OSTP, shall enter into a contract with an 
     accredited scientific institution to conduct a study that 
     provides a comparison of significant health, safety and 
     environmental risks, the methodologies for such comparisons, 
     and technical guidance and recommendations on the use of 
     comparative risk analysis to set priorities within and across 
     agencies.
       Within 5 years, the President shall submit a report to 
     Congress recommending legislative changes to assist in 
     setting priorities to more effectively and efficiently reduce 
     risks to health, safety and the environment.
       8. Review of Rules (Sec. Sec. 631-633). Each agency that 
     has issued a major rule within the last 10 years shall 
     establish a balanced advisory committee to recommend a list 
     of rules that the agency should review to increase net 
     benefits. Membership of the committee shall include a 
     balanced cross-section of the public and private interests 
     affected by agency regulations, including small business, 
     small governments, and public interest groups.
       After reviewing the recommendations of the advisory group, 
     the agency shall develop and issue a schedule of rules to be 
     reviewed every 5 years, taking into account the extent of the 
     agencies resources to review such rules. The agency may 
     continue, modify or repeal the reviewed rule pursuant to 
     notice and comment rule making.
       9. Executive Oversight (Sec. Sec. 641-644). The bill 
     codifies the regulatory review process and sets out 
     responsibilities and authority of the Office of Information 
     and Regulatory Affairs (OIRA) to develop policies and 
     procedures to review regulatory actions and to develop and 
     oversee an annual government-wide regulatory planning process 
     that includes the review of major rules and other significant 
     regulatory actions.
       OIRA shall establish procedures to provide public and 
     agency access to information concerning regulatory review 
     actions.
       Information to be disclosed to the public includes: the 
     status of regulatory actions; written communications between 
     OIRA and the agency on the regulatory action; written 
     communications between OIRA and persons outside the Executive 
     Branch; and a list identifying the dates, names of 
     individuals involved, and subject matter discussed in 
     meetings and telephone conversations relating to the 
     regulatory action between OIRA and persons not employed by 
     the Executive Branch.
       Information to be disclosed to the regulatory agency 
     includes: written communications between OIRA and persons 
     outside the Executive Branch on a regulatory action; a list 
     identifying the dates, names of individuals involved, and 
     subject matter discussed in meetings and telephone 
     conversations relating to the regulatory action between OIRA 
     and persons not employed by the Executive Branch; and a 
     written explanation of any review action taken.
       The agency shall include in the rule making record: a 
     document identifying the substantive changes between the 
     draft submitted to the Director for review and the rule 
     subsequently announced; a document identifying those changes 
     in the rule that were made at the suggestion or 
     recommendation of the Director; and all written 
     communications exchanged between the Director and the agency 
     during the review of the rule, including drafts of all 
     proposals and associated analyses.
       10. Effective Date (Section 4). The Act shall take effect 
     180 days after the date of enactment, but shall not apply to 
     any agency rule for which a notice of proposed rule making is 
     published on or before August 1, 1997.

  Mr. THOMPSON. Mr. President, I am pleased to be able to join with 
Senator Levin and several of our colleagues in introducing legislation 
to improve how the federal government regulates. This legislation is an 
effort by some of us to devise a common solution to the problems of our 
regulatory system. We have some real political differences among us, 
but we all share the same goals: clean air and water, injury free 
workplaces, safe transportation systems, to name a few of the good 
things that can come from regulation. We also all share the goal of 
avoiding regulation which unnecessarily interferes in people's lives 
and businesses, which costs more than it benefits, or which--
inadvertently--causes actual harm.
  I am pleased we are introducing this bill with Senators Glenn, 
Abraham, Robb, Roth, Rockefeller and Stevens. They have all toiled in 
the fields to improve regulation.
  It was in this spirit that the legislation we are introducing today 
was drafted. The Regulatory Improvement Act will promote the public's 
right to know how and why agencies regulate, improve the quality of 
government decisionmaking, and increase Government accountability and 
responsiveness to the people it serves.
  The problem is that agencies sometimes lose sight of common sense as 
they create regulations. Then even well-intentioned rules can produce 
disappointing results.
  Consider the airbag issue that has been in the news lately. The 
National Highway Transportation Safety Administration required high-
force airbags to maximize the odds of survival for adult males in 
highway crashes. But the deployment force from these airbags can be so 
severe that they can injure children, women, and the elderly. Senator 
Kempthorne has spoken about the tragic death of a young girl from Idaho 
who was decapitated when an airbag deployed during a low-impact 
collision. The agency is now considering the use of an airbag cut-off 
switch to avoid these tragedies. But Mr. President, tragedies like this 
never should have occurred. We could have avoided needless deaths and 
injuries if the agency had carefully considered the risks that high-
impact airbags pose to certain populations. I hope today's proposal 
will correct mistakes like this before they occur.
  A second example is the removal of asbestos from our schools and 
other public buildings. Early in the 1980s, government scientists 
argued that asbestos exposure could cause thousands of deaths. Congress 
responded by passing a sweeping law that led cities and states to spend 
nearly $20 billion to remove asbestos from public buildings. After 
further research, EPA officials eventually concluded that ripping out 
the asbestos had been an expensive mistake. Ironically, removing the 
asbestos actually raised the risk to the public--because asbestos 
fibers become airborne during removal. This mistake never would have 
occurred if these increased risks had been considered in the first 
place. I hope that would change under the Regulatory Improvement Act.
  Finally, let me mention our Superfund requirements. Superfund was 
passed with the good intention of cleaning up America's toxic waste-
sites. Unfortunately, things are not working as well as intended. 
Superfund has become a legal and regulatory maze where a good 90 
percent of insurers' costs and 20 percent of liable parties' costs are 
spent on lawyers and consultants--not on cleaning up the environment. 
We also have to ask if we are focusing on the most important 
priorities. For example, Superfund imposes extremely stringent 
standards for cleaning up lead in groundwater. Now, this is a good rule 
in many cases, because lead can be very toxic to children. The problem 
is that we may be overlooking more direct threats to children from 
lead. For example, lead paint in old houses can be a greater threat to 
children's health than lead that may be under some industrial site 
where there are no children. Last congress, our committee heard 
testimony about how the Superfund law requires groundwater in a Newark 
railyard to be cleaner than drinking water--at enormous cost. Now, if 
land is going to be used for industrial purposes, and no children will 
be there, does this make sense? The answer may be no--those 
requirements may not improve the environment much, but they may drive 
businesses out of Newark. Nobody wants to open a business near a 
Superfund site and risk being sued. No wonder our inner cities are 
starved for jobs. In the end, we may be hurting the very people we 
should be concerned about--the inner-city poor, those who already have 
to live with many risks in their daily lives, those who do not have 
clout here in Washington.
  Virtually every serious student of the regulatory process agrees we 
can do better. One study by the Harvard Center for Risk Analysis found 
that if agencies simply set their priorities in a smarter way, we could 
save an additional 60,000 lives per year at no additional cost. Mr. 
President, we don't have a moment to lose when we could save more 
lives. We can set aside partisan politics, and we all can agree this is 
the right thing to do.
  Since I became chairman of the Governmental Affairs Committee, I have 
been working closely with Senator Levin to forge bipartisan legislation 
with three major purposes:
  First, to promote the public's right to know how and why agencies 
make

[[Page S6750]]

regulatory decisions. This legislation helps the public to understand 
agency decisions by directing agencies to--
  Allow the public to comment and participate as rules are developed; 
disclose the benefits and burdens of major rules; disclose any 
environmental, health and safety risks a rule is designed to reduce, 
and make those risks understandable by comparing them with other risks 
familiar to the public; and identify major assumptions and 
uncertainties considered in creating rules.
  Second, to improve the quality of government decisionmaking. Careful 
thought, grounded in science, will help us to target problems and to 
find better solutions. We must carefully craft new rules to be 
effective and efficient. Agencies will carefully consider the benefits 
and burdens of rules and use good scientific and technical information. 
Agencies will seek out smarter ways to regulate, including flexible 
approaches such as outcome-oriented performance standards and market 
mechanisms. We must modernize and improve rules already on the books. 
Independent committees will advise agencies how to revise rules to 
substantially increase the benefits to the public.

  And finally, to increase Government accountability to the people it 
serves. The Act will require agencies to--
  Clearly present regulatory proposals so the public, the Congress, and 
the President can understand the problem at hand and help find a 
solution; explain any legal impediment or other factor hindering the 
agency from issuing cost-effective and sensible regulations, and 
describe any superior alternatives; disclose realistic estimates of any 
risks addressed; document changes made to proposed rules when the rules 
are reviewed by the Office of Management and Budget [OMB]; disclose 
contacts from persons outside the executive branch with OMB when it is 
reviewing proposed rules, since such contacts may represent outside 
influence.
  Mr. President, while it is important to review what this legislation 
will accomplish, it also is important to note that this proposal avoids 
the contentious issues that thwarted agreement on legislation last 
Congress.
  First, this legislation does not contain a supermandate. That is, 
while we believe that cost-benefit analysis is an important tool to 
inform agency decisionmaking, the results of the cost-benefit analysis 
do not trump existing law. The bill explicitly recognizes that 
sometimes an agency will issue a rule that would not pass a cost-
benefit test. We only ask the agency to explain why it selected such a 
rule, including any legal impediment that hindered the agency from 
issuing a cost-justified rule.
  Second, this bill does not contain a petition process that would 
allow outside parties to sue agencies in court to change particular 
rules that the litigant does not like. While we believe there are 
fruitful opportunities to update and improve old rules, we do not want 
to set up a review process that could create a litigation morass. 
Instead of a petition process, agencies will use independent advisory 
committees that would recommend a list of rules that could be improved 
to substantially increase net benefits to the public. The agency would 
defer to the recommendations of the advisory committee, but they could 
not be dragged into court if someone wanted a different rule to be 
reviewed.
  Finally, this bill strikes a balanced approach to judicial review. We 
allow limited judicial review under the deferential arbitrary and 
capricious standard to ensure that agencies issue reasonable 
regulations using the tools of cost-benefit analysis and risk 
assessment. But this legislation does not provide a series of trip 
wires that could hinder agencies from performing their missions. In 
other words, we realize the agencies may not be perfect in complying 
with this law. They may make mistakes from time to time. We won't 
imperil important regulations because the agency made honest mistakes. 
We just ask the agency to make reasonable and honest decisions, and the 
public deserves no less.
  Mr. President, we are devoting vast resources to achieve our 
regulatory goals. By some estimates, the annual regulatory burden is 
nearly $700 billion per year--almost $7,000 for the average American 
household. Our regulatory goals are too important, and our resources 
are too precious, to spend this money unwisely.
  The Regulatory Improvement Act will ensure that agencies conduct 
better economic and scientific analysis before they issue regulations. 
Government will be more open to the public, will better explain the 
problem, and will consider the best available information to solve the 
problem. Agencies will consider the benefits and burdens of different 
regulatory alternatives so we can reach the most sensible solutions. 
And agencies will modernize old rules on the books to increase the 
benefits to the public. In the process, we won't sacrifice our 
important national goals and values. We can make our Government more 
effective, more open, and more accountable than ever.
  Mr. GLENN. Mr. President, I am very pleased today to cosponsor the 
Regulatory Improvement Act of 1997. This legislation, introduced today 
by my colleagues Senator Carl Levin and Senator Fred Thompson, reflects 
a bipartisan effort to establish a balanced, comprehensive 
governmentwide standard for Federal rulemaking.
  As former chairman and current ranking member of the Committee on 
Governmental Affairs, I have worked for over a decade to improve the 
Federal regulatory process. I must note that with me at every step has 
been my good friend and colleague, Senator Carl Levin. Now, we are 
joined by our new Committee Chairman, Senator Fred Thompson. I am very 
happy to take part in this bipartisan effort.
  Regulatory reform has seen many forms in Congress over the years, 
from S. 1080 over 15 years ago, to several bipartisan bills in the 
104th Congress--S. 291, our unanimous Governmental Affairs Committee 
bill introduced by Senator Roth and me, the Dole-Johnston S. 343, and 
the Glenn-Chafee S. 1001. While these bills differed in many ways, they 
all had one thing in common, a bipartisan resolve to reform the Federal 
regulatory process.
  The regulatory process is important because in our system of 
government, Congress relies on agency regulations to ensure the 
effective implementation of the laws we enact. Improved public health 
and safety and environmental protection are some of the successes 
provided by this process.
  Unfortunately, despite these successes, congressional oversight has 
shown there are too many instances where agencies have regulated 
without sufficiently analyzing the costs and benefits of regulation. 
Individuals, businesses, and State and local governments pay too high a 
price for such thoughtless rules. They also are often burdened by 
statutory requirements that force agencies to impose overly 
prescriptive requirements, unnecessary unfunded mandates, or 
unjustified costs.
  So, while I have supported many programs to improve health and safety 
and the environment, I have also worked to improve the regulatory 
process. This has involved legislation and oversight in several 
different areas. For example, the Paperwork Reduction Act, which we 
strengthened in 1995, requires Federal agencies to reduce burdensome 
information collection activities, such as forms and regulatory 
reporting requirements. The Unfunded Mandates Act of 1994, which I 
introduced with Senator Dirk Kempthorne, requires Congress and Federal 
agencies to account for unfunded legislative and regulatory 
requirements imposed on State and local governments. Most recently, I 
supported enactment of the Congressional Review Act, which provides for 
expedited congressional review of new regulations, so that we, as 
politically accountable public representatives, can take responsibility 
for implementation of the laws we enact.
  These initiatives addressed several parts of the administrative 
process. Still lacking is a comprehensive statutory framework for 
regulatory analysis. The search for the right mix of these regulatory 
analysis requirements was at the heart of the regulatory reform debate 
in the early 1980's, in the last Congress, and now again, in the 
legislation introduced today.
  I believe that this legislation would establish the needed reforms in 
a balanced and fair manner. It would require cost/benefit analysis and 
risk assessment of major rules, and require periodic review of existing 
rules. These basic requirements will improve regulatory decisionmaking 
and ensure that

[[Page S6751]]

Congress and the public are better informed about regulatory impacts.

  I believe that such regulatory reform can improve our Government and 
reduce regulatory burdens without harming important public protections. 
As I said many times during the debate in the last Congress, true 
regulatory reform must strike a balance between the public's concern 
over too much government and the public's strong support for 
regulations to protect the environment, public health and safety. The 
legislation developed by Senator Levin and Senator Thompson strikes 
this balance. It requires:
  Cost-benefit analysis and risk assessment of major rules; An agency 
cost justification statement to explain whether a rule's benefits 
justify its costs and whether it is more cost-effective or has more net 
benefits than other alternatives. If the agency cannot make that 
determination, it must explain why not, and if feasible describe an 
alternative that would, if permitted, be cost justified; peer review of 
cost-benefit analyses and risk assessments; OMB regulatory review, with 
sunshine protections for fairness and accountability; judicial review 
of relevant regulatory analyses, but only in the context of review of 
the final rule and the rulemaking record; and periodic review of 
existing rules.
  All in all, I believe these are the necessary core elements of an 
effective regulatory reform bill. Nonetheless, past debates have shown 
that the devil is in the details. This legislation will be no 
exception. There are several areas, in fact, that I believe should be 
examined closely in committee hearings to ensure that the regulatory 
process is improved and not impeded by this reform effort.
  First, the legislation's most fundamental provision is the 
requirement that all agency major rules must have a cost-benefit 
analysis. I believe that given 16 years experience with regulatory 
review under Presidential Executive order, it is appropriate to 
establish a statutory bottom line that all major rules must be 
accompanied by a cost-benefit analysis. While a cost-benefit analysis 
should not control decisionmaking, it is a very useful tool for 
decision-making, and should be used to the extent both practical and 
permitted.
  We need to be sure, however, that this requirement is not used to 
undermine program-specific statutory requirements that may, for 
example, preclude consideration of certain costs or alternatives. While 
I believe that a cost-benefit analysis should be done to inform every 
major rulemaking decision, if a statute requires a certain approach to 
decisionmaking, the agency has to be bound by that requirement.
  I think it will be very important to discuss this issue during 
committee hearings and decide whether the bill's formulation is 
sufficient. A more explicit savings clause may be needed. While we want 
to improve decision-making, we do not want paralysis by analysis. And 
we do not want to create new avenues for litigation to undermine 
statutory requirements. If there is a problem with a statute, Congress 
should be informed and Congress should correct the problem.
  The bill's second basic requirement is for evaluating the risks that 
would be addressed by a major rule. This is also a fundamental 
provision, but here too, I believe it will be very important to explore 
the bill's specific risk assessment language in more detail during 
committee hearings. For example, while science can provide critical 
data with which to inform a rulemaking decision, often times general 
observations cannot be reliably reduced to single point conclusions. 
Thus, I am concerned that the bill's use of the phrase ``most plausible 
estimate of risk'' could lead to the arbitrary selection of a single 
risk figure, when a range of risks is all that the scientific evidence 
would support. I agree that agencies should not be led by speculation, 
but we must not lose sight of the fact that caution is always in order 
when it comes to protecting public health and safety, and the 
environment.
  Finally, committee hearings will also be needed to explore the 
practical impact of the legislation's requirements for agency advisory 
panels, both for peer review of regulatory analyses and identifying 
current rules for review. These panels can provide a fair and effective 
means of providing important information to agencies. But they can also 
be used to unfairly sway decision-makers and obscure behind-the-scenes 
lobbying. Care must be taken to ensure that such panels are broadly 
representative and do not introduce undue delay or waste agency 
resources. Again, our committee hearings will be important to discuss 
these issues.
  Senator Levin and Senator Thompson are to be commended for the work 
they have done to sift through the contentious regulatory reform record 
and draw out the core requirements and many of the needed details for 
effective regulatory analysis. I believe we are very close to having a 
bill that should pass the Senate unanimously. I support this 
legislation and urge my colleagues to support it.
  Mr. ROBB. Mr. President, I rise today in support of comprehensive, 
responsible reform of our regulatory process. It has been a long and 
tortuous journey. Many thought it could not be done. But I'm pleased 
that it has been done, and I'm pleased to join Senators Levin and 
Thompson as an original sponsor of the Regulatory Improvements Act of 
1997.
  Efforts to reform the regulatory process began long before this 
Congress, and the legislation we're introducing today is a testament to 
the tenacity of Senator Levin, who has worked untiringly for 
responsible changes in the regulatory process for a long time. Senator 
Bumpers, as well as our former colleagues Senators Johnston, Nunn and 
Heflin, toiled in these vineyards for many years.
  The reason for this continued effort is clear. Regulations produce 
enormous benefits for society, protecting workers, conserving our 
environment, and promoting public health. But regulations also impose a 
tremendous cost on society. The purpose of regulatory reform is to make 
sure the benefits of the regulations warrant the costs.
  According to the GAO, expenditures relating to pollution abatement 
alone exceeded $110 billion in 1992. While this represents only a 
portion of the costs of regulation, it provides some guidance regarding 
the magnitude of regulation. If we can maintain the level of pollution 
abatement, but increase the efficiency in how we attain it, consumers 
will ultimately reap the benefits. And of course every dollar that a 
business spends beyond what is necessary to protect us and our 
resources is one less dollar that could otherwise be used to hire an 
employee, or fund a pay raise, or pay for a plant expansion. Not only 
will consumers benefit, but so will the economy.
  Regulating in a cost-effective fashion simply makes sense. If we can 
achieve the same environmental benefit for less money, or even better, 
achieve more environmental benefit for the same money, then it makes 
sense to do so.
  While the debate over regulatory reform has in the past been 
presented as a choice between the economy and the environment, there is 
a responsible middle ground. If done wrong, regulatory reform could 
harm the environment, but if done right, both the economy and the 
environment benefit.
  As noted by Vice President Gore in November 1995, in announcing one 
of the administration's regulatory reform initiatives:

       For decades, the American political system pitted the 
     economy against the environment in a false conflict. 
     America's business leaders were pitted against America's 
     environmentalists. It seemed that too often for one side to 
     get its way, the other side had to lose ground, and you had 
     to decide which side you were on, business or the 
     environment. Most people didn't like that choice, because 
     most people, in their hearts, really are on both sides and 
     don't see them as being in conflict.

  I share the Vice President's view that we can protect both the 
environment and the economy. The benefits of regulatory reform will 
come primarily from relieving consumers from unnecessary costs and 
strengthening people's respect for government. In addition, by 
developing a responsible approach to regulatory reform, we will be able 
to prove what most of us having been saying for years--that we can be 
true to our principles to protect people and preserve our natural 
resources without being antibusiness and antigrowth.
  At the same event in 1995, President Clinton reiterated that growing 
the economy and preserving our health and environment are compatible 
goals. The President stated that ``protecting the

[[Page S6752]]

health and safety of our citizens doesn't have to come at the expense 
of the bottom line,'' and that ``strengthening the economy doesn't have 
to come at the expense of the air we breathe, the food we eat, the 
water we drink.''
  During the last Congress, we witnessed a massive effort to pass an 
extremely broad regulatory reform bill, offered by former Senator Dole.
  Whether intentional or not, that bill could have lowered the 
standards regulating our health, our safety and our national resources.
  In addition, that bill was too reliant on litigation to challenge the 
enforcement process. For example, the process for reviewing existing 
rules was driven largely by individual petitions each of which were 
subject to review by a court. That bill also raised the specter that 
agency rules could be overturned in court for minor procedural errors 
that were unlikely to have affected the outcome of the decisionmaking 
process.
  The amount of litigation which would have been created by the 
original bill, coupled with excessive paperwork requirements, would 
have led to agency overload. Rather than focusing on producing and 
enforcing regulations to benefit society, the agencies would have been 
tied up in court or processing paper. And this problem would only have 
been exacerbated by deep cuts proposed for many of the affected 
agencies.
  After the original bill failed cloture for the third time, former 
Senator Johnston, Senator Levin and I and our staffs spent a great deal 
of time and energy trying to find common ground. Many Senators from 
both sides of the aisle were committed to reforming the regulatory 
process, and we tried to use the synergy of the expertise of Senators 
Levin and Johnston to develop an acceptable package. Ideas and drafts 
were frankly exchanged during the many hours of meetings we held. In 
between meetings, we talked to interested parties, including labor 
groups, environmental groups, business groups and the administration. 
The purpose of this excercise of listening and drafting was to 
determine whether we could craft a responsible middle ground on 
regulatory reform.
  The three of us came very close to settling on a middle ground, but 
eventually the Presidential campaign made it impossible to complete 
action. But what evolved from that process last year laid the 
groundwork for the efforts which began this Congress. With Presidential 
politics safely behind us, and with a substantially lowered decibel 
level, Senators Thompson and Levin were able to focus on the critical 
elements and develop responsible reform. The scope of the legislation 
has been narrowed to address only those issues which are essential to 
improving our regulatory process.

  By focusing on the essential requirements of reform, we've avoided 
many of the pitfalls found in the Dole bill. By narrowing the scope, 
we've also been able to concentrate our attention on those elements 
which belong in a regulatory reform bill but which were not resolved 
satisfactorily in the earlier bill.
  For example, we improved the ``look-back process'' which provides for 
the review of existing rules. The Dole bill allowed rules to be placed 
on the schedule for review either through agency action or a 
petitioning process reviewable by the courts. The petition process was 
for those who could show that a rule would fail to meet the decisional 
criteria. Each petition denied would have been separately reviewed by a 
court.
  The bill we're introducing today eliminates the courts from the 
agency review process altogether. The question of which rules should be 
reviewed will not be the subject of litigation. In my view, this is one 
of the major improvements in this new version. Rather than having 
courts decide, through an adversary process, which rules should be 
reviewed, the bill takes a more rational approach. Under the new bill, 
an advisory committee made up of a cross-section of public and private 
interests affected by an agency's regulations will recommend to the 
agency which rules to review. Agencies are required to give deference 
to the committee's list, and undertake a review of the rules selected. 
This will allow agencies to spend more of their time reviewing rules 
and less of their time in court.
  The most important aspect of a regulatory reform bill is how it will 
change agency behavior prospectively. We want to encourage agencies to 
choose the most cost-effective method for achieving the regulatory goal 
and to select a rule where the benefits justify its costs whenever 
possible.
  Under current law, agencies are not directed to take those factors 
into account. In fact, agencies are given broad discretion under 
current law when developing rules to implement statutes. The only guide 
an agency must use to develop rules is the language of the statute upon 
which the rule is based. That is the standard against which an agency's 
action will be judged if challenged in court. The agency must be able 
to demonstrate that the rule satisfies the statutory requirement.
  This legislation requires agencies to consider additional criteria in 
developing major rules. The rule would not only have to meet the 
standard contained in the statute upon which the rule is based, as 
required under current law, but would also have to consider whether the 
rule is the most cost-effective approach and meets a cost-benefit test. 
If the agency adopts a rule which is not the most cost-effective, or 
where the benefits do not justify the costs, the agency must explain 
why it chose that approach. We think consumers, taxpayers, and 
those subject to regulation have a right to know what benefits a 
proposed rule is likely to provide, and what the costs will be to 
achieve those benefits. We also think people have a right to know why 
an agency would select a rule other than the most cost-effective for 
meeting the objective of the statute.

  The bill broadly defines ``benefits'' and ``costs,'' which provides 
agencies with vast discretion. ``Benefits'' are defined as ``the 
reasonably identifiable significant favorable effects, quantifiable and 
nonquantifiable, including social, health, environmental, economic and 
distributional effects, that are expected to result directly or 
indirectly from implementation of, or compliance with, a rule.'' The 
term ``costs'' is similarly defined.
  As I stated at the beginning of my comments, this has been a long, 
evolutionary process. But I think this legislation we are introducing 
today represents a responsible approach to improving the regulatory 
process. And I think it demonstrates what we can accomplish when we set 
aside partisan wrangling and rely on reason rather than rhetoric to 
solve complex problems such as this. Once again, I've been pleased to 
be involved in this process, and I commend both Senators Levin and 
Thompson for their determination to see this through to conclusion. I 
look forward to working with my colleagues to improving the product and 
moving this legislation through the process.
                                 ______