[Congressional Record Volume 144, Number 99 (Wednesday, July 22, 1998)]
[Senate]
[Pages S8806-S8810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MANAGERS' AMENDMENT TO THE REGULATORY IMPROVEMENT ACT
Mr. LEVIN. Mr. President, today Senator Thompson and I, as
sponsors of S. 981, the Regulatory Improvement Act of 1998, are putting
into the Congressional Record a proposed amendment we will offer when
S. 981 is brought to the Senate floor for consideration. The amendment
reflects changes to the bill we have agreed to make in response to a
number of concerns about the bill identified by the Administration and
Members of the Governmental Affairs Committee. We are putting it in the
Record at this time, to make the language available to the public and
persons interested in this bill. We are also putting into the Record
today the letter of July 15th from Acting OMB Director Jack Lew,
stating that the Administration will sign the bill if the changes
included in the Managers' Amendment are made and the bill passes both
Houses in the same form. We welcome the support of the Administration
in this effort and hope we can get the bill to the floor as soon as
possible.
OMB stated in their analysis of costs and benefits of federal
regulations in 1997 that regulation has enormous potential for good and
harm. ``The only way,'' OMB said, ``we know to distinguish between the
regulations that do good and those that cause harm is through careful
assessment and evaluation of their benefits and costs.'' S. 981 would
build that careful evaluation into the regulatory process of all the
regulatory agencies. OMB estimated that of the significant or major
regulations currently in effect, we have received approximately $300
billion in benefits at a cost of some $280 billion. We know that
through the appropriate use of cost benefit analysis and risk
assessment we can improve those figures. In a well-respected analysis
of 12 major EPA rules and the impact of cost-benefit analysis on those
rules, the author, Richard Morgenstern, former Associate Assistant
Administrator of EPA and a visiting scholar at Resources for the
Future, concluded that in each of the 12 rule makings, economic
analysis helped reduce the costs of all the rules and at the same time
helped increase the benefits of 5 of the rules. Report after report
acknowledges the importance of good cost-benefit analysis and risk
assessment for all agencies. It's long past time to get these basic
requirements into statute. S. 981 offers us the best opportunity to do
that.
The Managers' Amendment Senator Thompson and I will be offering to S.
981 reconfirms our intention that the bill not diminish or affect an
agency's
[[Page S8807]]
responsibility to carry out the purposes of the substantive statute
under which the agency is regulating. At the same time, the amendment
does nothing to weaken the important requirements of the bill that
agencies do a thorough and competent analysis of the costs and benefits
of the major regulations they issue.
Mr. President, I believe S. 981 will significantly improve the
regulatory process. If enacted, it 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. 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 programs--which are so
vital to our health and well being--come under attack. By providing an
open regulatory process guided by reasonableness and common sense, we
are protecting important programs from harmful attacks.
Mr. President, I ask that copies of three letters exchanged between
the Administration and Senator Thompson and me be printed in the
Record.
I am also pleased to announce that the Minority Leader, Senator
Daschle, has been added as a cosponsor to the bill, S. 981.
The letters follow:
Office of Management and Budget,
Washington, DC, March 9, 1998.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: I am writing to provide the
Administration's views on S. 981, the Regulatory Improvement
Act of 1998. The Administration commends the thoughtful
effort by both you and Senator Levin to address numerous
concerns raised by the Administration and by others about the
bill as introduced.
The Administration believes strongly in responsible
regulatory reform. President Clinton's issuance of Executive
Order No. 12866 was predicated on his belief that government
should do a better job of assessing risks and evaluating
costs and benefits before issuing major rules. While we have
been skeptical of the need for further comprehensive
regulatory reform legislation at this time, we have sought to
work with the Committee to ensure that any bill advances the
President's regulatory reform principles without creating
unwarranted costs to taxpayers or needless burdens on
agencies acting to protect human health, safety, or the
environment.
The substitute bill issued earlier this month contains
significant improvements over last summer's draft. We very
much appreciate this effort. While the substitute is
responsive to many of our concerns, there are still serious
issues remaining. One of the problems with comprehensive
legislation is that so many different kinds of rulemaking are
affected. We want to be sure that any new law meets a simple
test: that it truly improves the regulatory system, and does
not impair--by creating more litigation, more red tape, and
more delay--the agencies' ability to do their jobs. We are
interested in working with you to see if we can find the
common ground.
After a full review of the substitute to S. 981, we have
concluded that the bill does not yet meet the test we have
articulated, and therefore the Administration would oppose
the bill if it were to be adopted in its current form. Our
concerns are briefly outlined below, and we have developed
and enclosed for your consideration a set of modifications to
the bill that would remedy these and other concerns while
remaining faithful to the sponsors' intent. As you know from
our past conversations, many of these are critical to
achieving an acceptable result.
1. Judicial Review. The Administration remains concerned
that the judicial review provisions would promote tactical
litigation over errors that were not material to the outcome
of a particular rulemaking. We know that this conflicts with
the sponsors' intent, as reflected in earlier hearing
discussions. To avoid additional litigation over major rules,
the troubling ambiguity in the current version of the bill
should be eliminated.
2. Implicit Supermandate. We have been pleased that the
sponsors of S. 981 consistently have agreed with the view
that regulatory reform legislation should not alter or modify
the substantive reach of particular statutes designed to
protect human health, safety, or the environment. We remain
concerned that the current language of the bill would be
construed to narrow the range of discretion available to
agencies under their existing statutory mandates to protect
human health, safety, or the environment. The range of
discretion available to agencies under current law must be
expressly preserved to avoid an implicit supermandate.
3. Risk Assessment. The Administration believes that, while
there have been improvements in Section 624, this section
needs to be revised still further to eliminate the imposition
of burdensome requirements where those requirements will not
enhance major rules. For example, section 624 includes in its
sweep an unbounded category of agency actions that are not
rulemakings, as well as major rules where Congress has not
predicated regulatory standards on risk assessment. These
should be excluded. In addition, the requirement for revision
of risk assessments threatens an endless and costly
analytical process, reopened with each new study, that would
provide additional fodder for protracted litigation. We also
remain concerned that certain provisions are too specifically
tailored to analysis of cancer risks, and are thus ill-suited
to other objectives, such as an evaluation of risks related
to environmental and natural resource protection, worker
safety, or airworthiness.
4. Peer Review. The Administration is very concerned about
requiring peer review in contexts where the process would add
significantly to costs and delays of the regulatory process
without any foreseeable benefit. For example, the requirement
that cost-benefit analyses be subject to peer review would
add little to the review already performed by the Office of
Management and Budget in our regulatory review process. In
addition, the requirement that peer review be entirely
independent of the regulating agency would displace well-
established and credible peer review mechanisms, while making
good peer review virtually impossible in highly specialized
subject areas (e.g. nuclear safety). We also believe that the
statute should require no more than one round of peer review
for each major rule.
5. Review of Past Regulations. While the Committee
responded to many of the Administration's earlier concerns
about review of past regulations, the current version of the
bill creates two different, uncoordinated and likely
duplicative processes for the review of past regulations,
imposing a major burden on agencies and needless expense on
taxpayers. The second of these should be deleted, and the
cycle of review in the first should be set at 10 years.
6. Needless Burdens. A number of the bill's requirements
would impose substantial costs on agencies where there would
be no conceivable benefit to the public or regulated
entities. For example, the bill imposes its analytical
requirements and review requirements even where the costs of
compliance with the regulation have been incurred by the
regulated community and no costs can be avoided by selecting
a different regulatory option. Our proposed changes address
other examples as well.
7. Definitions and other issues. There are several
definitions and other provisions that need to be added or
modified to ensure clarity, to discourage unwarranted
litigation that would delay new safeguards, to protect the
constitutional prerogatives of the President and the
deliberative process within the Executive Branch, and to
eliminate unwarranted burdens on agencies. While many of
these changes appear minor, it would be difficult to
overstate their importance to us in evaluating the cumulative
effect of this bill.
In developing revisions to the bill that would address our
concerns, we have sought to suggest changes that are
consistent with our understanding of the sponsors' intent and
with the spirit of our very constructive discussions with the
Committee staff. We would welcome a further opportunity to
work with you before the bill is reported by the Committee.
Sincerely,
Franklin D. Raines,
Director.
____
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC, July 1, 1998.
Mr. Jack Lew,
Director Designate, Office of Management and Budget,
Executive Office Building, Washington, DC.
Dear Mr. Lew: In March of this year, Franklin Raines, then
Director of OMB, sent us a letter expressing the
Administration's views on S. 981, the Regulatory Improvement
Act, shortly before its scheduled mark-up in the Governmental
Affairs Committee. Mr. Raines stated that while ``the
Administration believes strongly in responsible regulatory
reform,'' it has ``serious issues remaining'' with respect to
S. 981. Mr. Raines then enclosed ``a set of modifications to
the bill that would remedy'' these concerns.
As you know, the bill was reported by the Committee on a
vote of 10 to 5, and now awaits consideration by the full
Senate. In the interest of addressing the Administration's
concerns so we can join together in support of S. 981, we
have enclosed our response to each of the proposed
modifications included in the attachment to the March 6th
letter from Mr. Raines. Our effort has been undertaken with
the objective of seeking to eliminate any cause for confusion
or misinterpretation about the specific provisions in the
bill while doing no harm to the important remedial and
beneficial effects of our legislation. We would be willing to
offer a Manager's Amendment on the floor during Senate
consideration of S. 981 which would make these changes.
Because such an amendment would meet your concerns, we would
do so with the understanding that the Administration would
then support this important legislation.
The path to this point has not been easy. Regulatory reform
legislation over the years has engendered a great deal of
distrust and friction among the interested parties. Yet we
feel deeply that this moderate proposal will bring important
analytical tools and openness to the very complex issues
involved in
[[Page S8808]]
federal regulation and will give the American people the
effective and efficient protections they deserve. If it's
true that nothing worth doing is ever easy, then S. 981 may
prove to be one of the most valuable pieces of legislation
we'll have enacted in a long time.
We welcome your support and look forward to your response.
Sincerely,
Carl Levin,
Senior Member.
Fred Thompson,
Chairman.
Enclosure.
1. Judicial Review:
a. Page 62, line 16, insert after ``determining'' the
following: ``under the statute granting the rule making
authority''.
b. Amend Section 627(e) to read as follows: ``If an agency
fails to perform the cost-benefit analysis, cost-benefit
determination, or risk assessment, or to provide for peer
review, a court may, giving due regard to prejudicial error,
remand or invalidate the rule. The adequacy of compliance
with the specific requirements of this subchapter shall not
otherwise be grounds for remanding or invalidating a rule
under this subchapter. If the court allows the rule to take
effect, the court shall order the agency to promptly perform
such analysis, determination, or assessment or provide for
such peer review.''
c. No judicial review for Subchapter III, because
Subchapter III will be deleted.
d. Clarification regarding interlocutory orders is not
necessary.
2. ``Implicit Supermandate'':
a. On page 47, strike lines 1 through 4 and insert the
following:
``(b) Nothing in this subchapter shall be construed to
alter or modify--
(1) the substantive standards applicable to a rulemaking
under other statutes;
(2) the range of regulatory options that an agency has the
authority to adopt under the statute authorizing the agency
to promulgate the rule, or the deference otherwise accorded
to the agency in construing such statute; or
(3) any opportunity for judicial review made applicable
under other statutes.''
3. Risk Assessment:
a. On page 54, strike lines 8 through 11 and insert the
following:
``(ii) any risk assessment that is not the basis of a rule
making that the Director reasonably anticipates is likely to
have an annual effect on the economy of $100 million or more
in reasonably quantifiable costs and that the Director
determines shall be subject to the requirements of this
section.''
b. On page 56, strike lines 10 through 12 and insert the
following:
``(2) Significant assumptions used in a risk assessment
shall incorporate all reasonably available, relevant and
reliable scientific information.''
c. On page 56, strike lines 13 and 14 up to but not
including ``and,'' on line 14 and insert the following:
``(d) The agency shall inform the public when the agency is
conducting a risk assessment subject to this section''.
d. No amendment. (MACT and BACT).
4. Peer Review:
a. On page 58, strike lines 10 through 12 and insert the
following:
``(a) Each agency shall provide for an independent peer
review in accordance with this section of--
(1) a cost-benefit analysis of a major rule that the agency
or Director reasonably anticipates is likely to have an
annual effect on the economy of $500 million in reasonably
quantifiable costs; and
(2) a risk assessment required by this subchapter.''
b. On page 60, between lines 12 and 13 insert the
following:
``(e) A member of an agency advisory board (or comparable
organization) established by statute shall be considered
``independent of the agency'' for purposes of section
625(b)(1)(A)(ii).
``(f) The status of a person as a contractor or grantee of
the agency conducting the peer review shall not, in and of
itself, exclude such person from serving as a peer reviewer
for such agency because of the requirements of (b)(1)(A)(ii)
of this section.''
c. On page 60, between lines 12 and 13 insert the
following:
``(g) Nothing in this section shall require more than one
peer review of a cost-benefit analysis or a risk assessment
during a rule making. A peer review required by this section
shall occur to the extent feasible prior to the notice
of proposed rule making.''
d. On page 60, between lines 9 and 10 insert the following
and renumber the remaining subsection accordingly:
``(d) The formality of the peer review conducted pursuant
to this section shall be commensurate with the significance
and complexity of the subject matter.''
5. Other
a. On page 70, between lines 20 and 21 insert the following
and renumber the remaining subsections accordingly;
``(a) This subchapter shall apply to all proposed and final
major rules and to any other rules designated by the
President for review.''
On page 72, line 4, strike ``(a)'' and insert in lieu
thereof ``(b)''.
b. Strike Subchapter III and strike section 610.
c. On page 53, strike lines 14 and 15 and insert the
following: ``as possible unless the Director determines that
compliance would be clearly unreasonable.''
d. No amendment (OSTP and OMB studies)
e. On page 51, between lines 17 and 18 insert the
following: ``Consistent with subsection 621(2) and 621(3),
net benefits analysis shall not be construed to be limited to
quantifiable effects.''
f. On page 46, strike lines 19 through 22 and insert the
following:
``(11) The term `substitution risk' means a reasonably
identifiable significant increased risk to health, safety, or
the environment expected to result from a regulatory option
and does not include risks attributable to the effect of an
option on the income of individuals.''
On page 46, strike lines 16 through 18 and insert the
following:
``(J) a rule or agency action that authorizes or bars the
introduction into or removal from commerce, or recognizes or
cancels recognition of the marketable status, of a product
under the Federal Food, Drug and Cosmetic Act;''
g. Executive Oversight:
On page 72, line 22, strike ``communciations'' and insert
``correspondence''.
On page 73, line 3, strike ``communications'' and insert
``correspondence''.
On page 73, line 10, strike ``substantive'' and insert
``significant''.
On page 73, strike lines 16 and 17.
On page 73, line 20, strike ``communications'' and insert
``correspondence''.
On page 74, line 3, strike ``substantive'' and insert
``significant''.
On page 74, strike line 9 through line 11.
On page 74, line 17, strike ``announced'' and insert
``published''.
On page 74, line 23, strike ``communications'' and insert
``correspondence''.
____
Office of Management and Budget,
Washington, DC, July 15, 1998.
Hon. Carl Levin,
Committee on Governmental Affairs,
U.S. Senate, Washington, DC
Dear Senator Levin: Thank you for your letter of July 1,
1998, in which you respond to the views on S. 981 that we
expressed in former OMB Director Frank Raines' letter of
March 6, 1998.
President Clinton has been a strong supporter of
responsible regulatory reform. In addition to signing into
law a number of important pieces of reform legislation, he
and Vice President Gore are taking a wide range of
administrative steps to improve the regulatory process. For
example, under the guidance of Executive Order 12866,
agencies are developing flexible performance standards and
using market incentives whenever possible; are applying
benefit-cost analysis to achieve objectives in the most cost-
effective manner; and are reaching out to the affected
parties, particularly our State and local partners, to
understand better the intended and unintended consequences of
a proposed regulatory action. Under the leadership of the
Vice President's National Partnership for Reinventing
Government, agencies are improving delivery of services,
reducing red tape, and reforming practices to focus on
customer service. The Administration's goal in these actions
is to streamline and reduce the burden of government on its
citizens, improve services, and restore the basic trust of
public in its government.
The debate on comprehensive regulatory reform legislation
is one that has sparked great passion and has provoked, as
you aptly note in your letter, ``distrust and friction among
the interested parties.'' We heartily agree with you that, to
say the least, ``[t]he path to this point has not been
easy.'' In part, this has been the result of earlier versions
of this legislation proposed by others that sought not to
improve the nation's regulatory system, but to burden and
undermine it. In a variety of ways these bills would have
created obstacles and hurdles to the government's ability to
function effectively and to protect the health, safety, and
environment of its citizens. In particular, these bills would
have created a supermandate, undoing the many protections for
our citizens that are carefully crafted into specific
statutes. In addition, strict judicial review and complex
analytic, risk assessment, peer review, and lookback
provisions would have hampered rather than helped the
government's ability to make reasonable decisions and would
have opened the door to new rounds of endless litigation.
We appreciate your thoughtful efforts over the past year to
respond to issues that we and others have raised. In your
latest letter you continue to take seriously our concerns.
Indeed, the changes you indicate that you are willing to make
would resolve our concerns, and if the bill emerges from the
Senate and House as you now propose, with no changes, the
President would find it acceptable and sign it.
I should note, however, that our experience with past
efforts to resolve these differences suggests that good ideas
and the resolution of differences can be destroyed during the
long process of getting a bill to the President's desk, and
the nuances and balance that we have all sought in this
legislation could be easily disrupted. Nanny of the terms
used carry great meaning, and further modification is likely
to renew the concerns that have animated our past opposition
to bills of this type. Accordingly, we look forward to
working with you to ensure that any bill the Congress passes
on this subject is
[[Page S8809]]
fully consistent with the one on which we have reached
agreement.
Sincerely,
Jacob J. Lew,
Acting Director.
Mr. THOMPSON. Mr. President, I want to ask my colleagues for their
help to bring much-needed improvements to our federal regulatory
system. In March, the Governmental Affairs Committee favorably reported
S. 981, the ``Regulatory Improvement Act,'' by a 10-5 vote. At the time
of the markup, the administration sent a letter to me and Senator Levin
expressing a number of concerns with the bill. Over the past few
months, we have worked to resolve those concerns, which largely
involved adding clarifying language to the bill. In addition, some
sections of the bill were modified, and a couple were dropped. On July
16, we received a letter from Jack Lew, the Acting OMB Director, on
behalf of the administration. The letter says the administration
supports the legislation with the proposed changes and will cooperate
with us to pass it. These changes are explained in the accompanying
summary of the managers' amendment that Senator Levin and I would
support. I am pleased that the President recognizes that we need this
legislation to deliver the effective and efficient regulatory system
that the American people expect and deserve.
Most of us recall the partisan and ultimately destructive debate on
this issue in the last Congress. Reforming regulation is an area
fraught with distrust. It is tempting for opponents of reform to try to
score political points by scare tactics. We have to set aside political
posturing if we're going to get the job done. Just last week, former
Majority Leader Howard Baker told us, ``it ill behooves America's
leaders to invent disputes for the sake of political advantage, or to
inveigh carelessly against the motives and morals of one's political
adversaries. America expects better of its leaders than this, and
deserves better.'' I hope we heed that good advice.
There's no doubt that improving the regulatory process is one of the
toughest challenges we face. Regulation affects virtually every aspect
of our lives. There are over 130,000 pages of federal regulations, and
60 agencies continue to issue new rules at a rate of 4,000 a year. The
costs are hundreds of billions of dollars annually, and the public
expects better results. As the costs of regulation rise with public
expectations of better results, the need is greater than ever for a
smarter way of regulating. We have to find ways to do more good while
reducing the waste in the current system.
The evidence is overwhelming that we can achieve greater benefits at
far less cost by regulating smarter. Hearings of the Governmental
Affairs Committee, investigations of the General Accounting Office, the
work of other congressional committees, and many scholarly studies show
a striking consensus on this point. Our Committee also has found that
the administration's Executive Order 12866 and other initiatives to
reinvent regulation have not been as effective as was hoped.
I want to thank the 19 cosponsors who have joined me and Senator
Levin to improve the regulatory process. The Regulatory Improvement Act
will promote the public's right to know, improve the quality of
government decisions, and make government more accountable to the
people it serves. Ultimately, it will help improve the quality of our
lives. That is why we have the support of State and local government,
businesses of all sizes, farmers, educational organizations, think
tanks, scholars, and the administration. We have a rare opportunity to
reform the regulatory process. Let's pull together and get the job
done.
Mr. LEVIN. Mr. President, I ask that a summary of S. 981 and a
summary of the proposed manager's amendment be printed in the Record.
The material follows:
Summary of Levin-Thompson Regulatory Improvement Act
The Levin-Thompson regulatory reform bill would put into
statute requirements for cost-benefit analysis and risk
assessment of major rules and executive oversight of the
rulemaking process. It builds on the bipartisan Roth-Glenn
bill unanimously reported out of the Governmental Affairs
Committee in 1995.
It requires agencies to do a cost-benefit analysis when
issuing rules that cost $100 million or have other
significant impacts. The agency must determine whether the
benefits of the rule justify its costs; whether the rule is
more cost-effective, or provides greater net benefits, than
other regulatory options considered by the agency; and
whether the rule adopts a flexible regulatory option. If the
agency determines that the rule does not do so, the agency is
required to explain the reasons why it selected the rule,
including any statutory provision that required the agency to
select the rule. If the rule involves a risk to health,
safety or the environment, the bill requires the agency to do
a quality risk assessment to analyze the benefits of the
rule. Risk assessments and cost-benefit analyses for rules
costing $500 million would undergo independent peer review.
During the cost-benefit analysis and risk assessment, the
rulemaking agency is required to consider substitution
risks--that is, risks that could be expected to result from
the implementation of the regulatory option selected by the
agency--and to compare the risk being regulated with other
risks with which the public may be familiar.
In presenting the cost-benefit analysis and risk
assessment, the rulemaking agency is required to present the
results of the analysis and assessment in a clear and
understandable form, including an executive summary of: the
expected benefits and costs of the rule and the agency's
cost-benefit determinations; the risk addressed by the rule
and the results of any risk assessment; the benefits and
costs of the other regulatory options considered by the
agency; and the key assumptions and scientific or economic
information upon which the agency relied.
The cost-benefit analysis, cost-benefit determinations, and
risk assessment are required to be included in the rulemaking
record and to be considered by the court, to the extent
relevant, only in determining whether the final rule is
arbitrary and capricious. In addition, if the agency fails to
perform the cost-benefit analysis, risk assessment or peer
review, the court may remand or invalidate the rule, giving
due regard to prejudicial error, and in any event shall order
the agency to perform it.
The bill codifies the review procedure now conducted by the
Office of Information and Regulatory Affairs (OIRA) and
requires public disclosure of OIRA's review process.
Finally, the bill requires the Director of OMB to contract
for a study on the comparison of risks to human health,
safety and the environment and a study to develop a common
basis for risk communication with respect to carcinogens and
noncarcinogens and the incorporation of risk assessments into
cost-benefit analyses.
Summary of Proposed Managers' Amendment to S. 981
Senator Levin and Senator Thompson plan to offer a
Managers' Amendment when S. 981 is brought to the floor for
Senate consideration. The Amendment would include the
following:
1. Judicial Review
The bill as reported requires a court to consider the cost-
benefit analysis, cost-benefit determinations, and risk
assessment in determining whether the final rule is arbitrary
and capricious. The bill as reported also requires a court to
remand or invalidate a rule if the agency fails to perform
the cost-benefit analysis, cost-benefit determinations or
risk assessment, or to provide for peer review as required by
S. 981. The Managers' Amendment modifies that requirement by
giving the court the discretion to remand or invalidate the
rule. The Managers' Amendment also adds a specific clarifying
sentence that the adequacy of compliance with the specific
requirements for performing the cost-benefit analysis, risk
assessment, and peer review is not otherwise independent
grounds for remanding or invalidating a rule. The Managers'
Amendment also requires a court to order an agency to perform
the cost-benefit analysis, cost-benefit determinations, risk
assessment, or peer review whenever the agency fails to do
so, even if the court allows the rule to take effect.
2. Relationship to Other Statutes
The Managers' Amendment adds two additional provisions to
the savings clause in order to reiterate that S. 981 does not
contain a ``supermandate'' that would override or alter the
substantive standards of the statute under which the rule is
being issued. The Managers' Amendment confirms that S. 981
does not alter the range of regulatory options the agency has
authority to adopt under the statute authorizing the agency
to promulgate the rule or the deference otherwise accorded by
the courts to the agency in construing such statute pursuant
to the Chevron decision.
3. Review of Rules
The bill as reported contained two provisions for the
review of existing rules: one for major rules and one for
rules affecting small businesses and small governments. The
Managers' Amendment strikes both review of rules provisions.
S. 981 will impose new and important responsibilities on
federal agencies to conduct their rulemakings with greater
care and thoroughness. In order to direct the resources of
the agencies to fully carrying out these requirements, the
provisions for the review of existing rules were stuck. Of
course, agencies remain free to review existing rules under
the Regulatory Flexibility Act on their own initiative, at
the request of an interested party, or pursuant to
Presidential directive.
4. Risk Assessment
The bill as reported requires a quality risk assessment to
be performed for each major
[[Page S8810]]
rule with a primary purpose to address risks to health,
safety or the environment, as well as for risk assessments
that are not the basis for a rulemaking and that the OMB
Director determines may have a substantial impact on public
policy or the economy. The Managers' Amendment narrows the
coverage of the bill with respect to risk assessments that
are not the basis of a rulemaking to those risk assessments
that the Director anticipates are likely to have an annual
effect on the economy of $100 millon or more.
5. Peer review
The bill as reported requires independent peer review of
the cost-benefit analysis and risk assessment for each major
rule. The Managers' Amendment would modify the application of
peer review of the cost-benefit analysis to only those rules
that the agency or OMB Director reasonably anticipates are
likely to have an annual effect on the economy of $500
million or more.
The Managers' Amendment clarifies that members of agency
advisory boards required by statute and persons who serve as
contractors or grantees to the agency conducting the peer
review are not precluded from serving as peer reviewers
solely because of the requirement that the peer reviewers be
``independent of the agency.'' The Managers' Amendment also
claifies that only one peer review of a risk assessment and
cost-benefit analysis is required by S. 981.
6. Net benefits
The Managers' Amendment clarifies that application of a net
benefits analysis under S. 981 is not intended to be limited
to only quantifiable benefits; S. 981 requires the net
benefits analysis to include consideration of nonquantifiable
as well as quantifiable benefits.
7. Substitution risk
The Managers' Amendment, in an effort to clarify the scope
of responsibility required of an agency in assessing
applicable substitution risks, incorporates the language in
the bill used to define costs and benefits. Thus,
substitution risk is defined in the Managers' Amendment as
``a reasonably identifiable significant increased risk to
health, safety or the environment expected to result from a
regulatory option.'' The definition also makes it clear that
substitution risk does not include ``risks attributable to
the effect of an option on the income of individuals.''
8. Exemptions
The bill as reported exempts from coverage of the
legislation ``a rule or agency action that authorizes the
introduction into commerce, or recognizes the marketable
status of, a product.'' The Managers' Amendment both expands
and limits this exemption. It expands it by adding
``removal'' of a product as well as ``introduction;'' it
limits this exemption by applying it only to rules ``under
the Federal Food, Drug and Cosmetic Act.''
9. Other
The Managers' Amendment would make a number of other
technical or minor changes to the bill.
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