[Senate Report 104-90]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 118
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-90
_______________________________________________________________________


 
        THE COMPREHENSIVE REGULATORY REFORM ACT OF 1995--S. 343

                                _______


     May 26 (legislative day, May 15), 1995.--Ordered to be printed

_______________________________________________________________________


    Mr. Roth (for Mr. Hatch), from the Committee on the Judiciary, 
                        submitted the following

                              R E P O R T

                             together with

                   ADDITIONAL AND SUPPLEMENTAL VIEWS

                         [To accompany S. 343]
    The Committee on the Judiciary, to which was referred the 
bill (S. 343) to require Federal agencies to analyze rules to 
improve their effectiveness and to decrease their compliance 
costs, to provide for periodic review of regulations, and for 
other purposes, having considered the same, reports favorably 
thereon with an amendment in the nature of a substitute and 
recommends that the bill, as amended, do pass.
                                CONTENTS

                                                                   Page
  I. The development of S. 343.......................................28
 II. The need for reform.............................................37
III. Votes of the Committee..........................................44
 IV. Section-by-section analysis.....................................45
  V. Cost estimate..................................................125
 VI. Regulatory impact statement....................................128
VII. Additional views of Senators Biden, Kennedy, Leahy, Simon, Kohl129
     and Feingold.
VIII.
     Supplemental views of Senator Leahy............................151
 IX. Supplemental views of Senator Kohl.............................163
  X. Supplemental views of Senator Feingold.........................164
 XI. Changes in existing law........................................165

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:
SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Comprehensive Regulatory Reform Act of 
1995''.

SEC. 2. DEFINITIONS.

  Section 551 of title 5, United States Code, is amended--
          (1) in the matter preceding paragraph (1), by striking ``this 
        subchapter'' and inserting ``this chapter and chapters 6, 7, 
        and 8'';
          (2) in paragraph (13), by striking ``and'';
          (3) in paragraph (14), by striking the period at the end and 
        inserting ``; and''; and
          (4) by adding at the end the following new paragraph:
          ``(15) `Director' means the Director of the Office of 
        Management and Budget.''.

SEC. 3. RULEMAKING.

  Section 553 of title 5, United States Code, is amended to read as 
follows:

``Sec. 553. Rulemaking

  ``(a) This section applies to every rulemaking, according to the 
provisions thereof, except to the extent that there is involved--
          ``(1) a matter pertaining to a military or foreign affairs 
        function of the United States;
          ``(2) a matter relating to the management and personnel 
        practices of an agency;
          ``(3) an interpretive rule, general statement of policy, 
        guidance, or rule of agency organization, procedure, or 
        practice that is not generally applicable and does not alter or 
        create rights or obligations of persons outside the agency; or
          ``(4) a rule relating to the acquisition, management, or 
        disposal by an agency of real or personal property, or of 
        services, that is promulgated in compliance with criteria and 
        procedures established by the Administrator of General 
        Services.
  ``(b)(1) General notice of proposed rulemaking shall be published in 
the Federal Register, unless all persons subject thereto are named and 
either personally served or otherwise have actual notice of the 
proposed rulemaking in accordance with law. Each notice of proposed 
rulemaking shall include--
          ``(A) a statement of the time, place, and nature of public 
        rulemaking proceedings;
          ``(B) a succinct explanation of the need for and specific 
        objectives of the proposed rule, including an explanation of 
        the agency's determination of whether or not the rule is a 
        major rule within the meaning of section 621(4);
          ``(C) an explanation of the specific statutory interpretation 
        under which a rule is proposed, including an explanation of--
                  ``(i) whether the interpretation is expressly 
                required by the text of the statute; or
                  ``(ii) if the interpretation is not expressly 
                required by the text of the statute, an explanation 
                that the interpretation is within the range of 
                permissible interpretations of the statute as 
                identified by the agency, and an explanation why the 
                interpretation selected by the agency is the agency's 
                preferred interpretation;
          ``(D) the proposed provisions of the rule;
          ``(E) a summary of any initial analysis of the proposed rule 
        required to be prepared or issued pursuant to chapter 6;
          ``(F) a statement that the agency seeks proposals from the 
        public and from State and local governments for alternative 
        methods to accomplish the objectives of the rulemaking that are 
        more effective or less burdensome than the approach used in the 
        proposed rule;
          ``(G) a description of any data, methodologies, reports, 
        studies, scientific evaluations, or other similar information 
        available to the agency for the rulemaking, including an 
        identification of each author or source of such information and 
        the purposes for which the agency plans to rely on such 
        information; and
          ``(H) a statement specifying where the file of the rulemaking 
        proceeding maintained pursuant to subsection (f) may be 
        inspected and how copies of the items in the file may be 
        obtained.
  ``(2) Except when notice or hearing is required by statute, a final 
rule may be adopted and may become effective without prior compliance 
with this subsection and subsections (c) and (f) if--
          ``(A) the agency for good cause finds that providing notice 
        and public procedure thereon before the rule becomes effective 
        is contrary to an important public interest or is unnecessary 
        due to the insignificant impact of the rule;
          ``(B) the agency publishes the rule in the Federal Register 
        with such finding and a succinct explanation of the reasons 
        therefor; and
          ``(C) the agency complies with this subsection and 
        subsections (c) and (f) to the maximum extent feasible prior to 
        the promulgation of the final rule, and fully complies with 
        such provisions as soon as reasonably practicable after the 
        promulgation of the rule.
  ``(3) Whenever the provisions of a final rule that an agency plans to 
adopt are so different from the provisions of the proposed rule that 
the original notice of proposed rulemaking did not fairly apprise the 
public of the issues ultimately to be resolved in the rulemaking or of 
the substance of the rule, the agency shall publish in the Federal 
Register a notice of the final rule the agency plans to adopt, together 
with the information relevant to such rule that is required by the 
applicable provisions of this section and that has not previously been 
published in the Federal Register. The agency shall allow a reasonable 
period for comment on such final rule.
  ``(c)(1) After providing the notice required by this section, the 
agency shall give interested persons not less than 60 days to 
participate in the rulemaking through the submission of written data, 
views, or arguments.
  ``(2)(A) To collect relevant information, and to identify and elicit 
full and representative public comment on the significant issues of a 
particular rulemaking, the agency may use such other procedures as the 
agency determines are appropriate, including--
          ``(i) the publication of an advance notice of proposed 
        rulemaking;
          ``(ii) the provision of notice, in forms which are more 
        direct than notice published in the Federal Register, to 
        persons who would be substantially affected by the proposed 
        rule, but who are unlikely to receive notice of the proposed 
        rulemaking through the Federal Register;
          ``(iii) the provision of opportunities for oral presentation 
        of data, views, information, or rebuttal arguments at informal 
        public hearings, which may be held in the District of Columbia 
        and other locations;
          ``(iv) the provision of summaries, explanatory materials, or 
        other technical information in response to public inquiries 
        concerning the issues involved in the rulemaking; and
          ``(v) the adoption or modification of agency procedural rules 
        to reduce the cost or complexity of participation in a 
        rulemaking.
  ``(B) The decision of an agency to use or not to use such other 
procedures in a rulemaking pursuant to this paragraph shall not be 
subject to judicial review.
  ``(3) To ensure an orderly and expeditious proceeding, an agency may 
establish reasonable procedures to regulate the course of informal 
public hearings under paragraphs (1) and (2), including the designation 
of representatives to make oral presentations or engage in direct or 
cross-examination on behalf of several parties with a common interest 
in a rulemaking. Transcripts shall be made of all such public hearings.
  ``(4) An agency shall publish any final rule it adopts in the Federal 
Register, together with a concise statement of the basis and purpose of 
the rule and a statement of when the rule may become effective. The 
statement of basis and purpose shall include--
          ``(A) an explanation of the need for, objectives of, and 
        specific statutory authority for, the rule;
          ``(B) a discussion of, and response to, any significant 
        factual or legal issues raised by the comments on the proposed 
        rule prior to its promulgation, including a description of the 
        reasonable alternatives to the rule proposed by the agency and 
        by interested persons, and the reasons why each such 
        alternative was rejected;
          ``(C)(i) an explanation of whether the specific statutory 
        interpretation upon which the rule is based is expressly 
        required by the text of the statute; or
          ``(ii) if the specific statutory interpretation upon which 
        the rule is based is not expressly required by the text of the 
        statute, an explanation that the interpretation is within the 
        range of permissible interpretations of the statute as 
        identified by the agency, and why the agency has rejected other 
        interpretations proposed in comments to the agency;
          ``(D) an explanation of how the factual conclusions upon 
        which the rule is based are substantially supported in the 
        rulemaking file maintained pursuant to subsection (f); and
          ``(E) a summary of any final analysis of the rule required to 
        be prepared or issued pursuant to chapter 6.
  ``(5) The provisions of sections 556 and 557 shall apply in lieu of 
this subsection in the case of rules that are required by statute to be 
made on the record after opportunity for an agency hearing.
  ``(d) An agency shall publish the final rule in the Federal Register 
not less than 60 days before the effective date of such rule. An agency 
may make a rule effective in less than 60 days after publication in the 
Federal Register if the rule grants or recognizes an exemption, 
relieves a restriction, or if the agency for good cause finds that such 
a delay in the effective date would be contrary to an important public 
interest and publishes such finding and an explanation of the reasons 
therefor, with the final rule.
  ``(e)(1) Each agency shall give an interested person the right to 
petition for the issuance, amendment, or repeal of a rule.
  ``(2) Each person subject to a major rule may petition--
          ``(A) for the issuance, amendment, or repeal of such rule;
          ``(B) for the amendment or repeal of an interpretive rule or 
        general statement of policy or guidance;
          ``(C) for an interpretation regarding the meaning of the 
        rule, interpretive rule, general statement of policy, or 
        guidance; and
          ``(D) for a variance or exemption from the terms of the rule.
  ``(3)(A) Any person subject to a rule, interpretive rule, general 
statement of policy, or guidance may petition an agency for the 
amendment or repeal of any rule, interpretive rule, general statement 
of policy, or guidance.
  ``(B) If such petition presents a reasonable likelihood that, 
considering its future impact, the rule, interpretive rule, general 
statement of policy, or guidance is, or has the effect of, a major rule 
within the meaning of section 621(4), and its amendment or repeal is 
required to satisfy the decisional criteria of section 624, the agency 
shall grant the petition and shall, within one year, conduct a cost-
benefit analysis under chapter 6.
  ``(C) If, considering its future impact, the rule, interpretive rule, 
general statement of policy, or guidance does not satisfy the 
requirements of chapter 6, including the decisional criteria set forth 
in section 624, the agency shall take immediate action either to revoke 
or to amend the rule, interpretive rule, general statement of policy, 
or guidance to conform it to the requirements of chapter 6, including 
the decisional criteria in section 624.
  ``(4) The agency shall grant or deny a petition made pursuant to this 
subsection, and give written notice of its determination to the 
petitioner, with reasonable promptness, but in no event later than 180 
days after the petition was received by the agency. The written notice 
of the agency's determination shall include an explanation of the 
determination and a response to each factual and legal claim that forms 
the basis of the petition. A decision to deny a petition shall be 
subject to judicial review immediately upon denial, as final agency 
action under the statute granting the agency authority to carry out its 
action.
  ``(5) Following a decision to grant or deny a petition to conduct a 
cost-benefit analysis for a rule, interpretive rule, general statement 
of policy, or guidance under this subsection, no further petition for 
such rule, interpretive rule, general statement of policy, or guidance, 
submitted by the same person, shall be considered by any agency unless 
such petition is based on a change in a fact, circumstance, or 
provision of law underlying or otherwise related to the rule, 
interpretive rule, general statement of policy, or guidance occurring 
since the initial petition was granted or denied, that warrants the 
amendment or repeal of the rule, interpretive rule, general statement 
of policy, or guidance.
  ``(f)(1) The agency shall maintain a file for each rulemaking 
proceeding conducted pursuant to this section and shall maintain a 
current index to such file. The file and the material excluded from the 
file pursuant to paragraph (4) shall constitute the rulemaking record 
for purposes of judicial review. Except as provided in paragraph (4), 
the file shall be made available to the public beginning on the date on 
which the agency makes an initial publication concerning the rule.
  ``(2) The rulemaking file shall include--
          ``(A) the notice of proposed rulemaking, any supplement to, 
        or modification or revision of, such notice, and any advance 
        notice of proposed rulemaking;
          ``(B) copies of all written comments received on the proposed 
        rule;
          ``(C) a transcript of any public hearing conducted on the 
        rulemaking;
          ``(D) copies, or an identification of the place at which 
        copies may be obtained, of all material described by the agency 
        pursuant to subsection (b)(1)(G) and of other factual and 
        methodological material not described by the agency pursuant to 
        such subsection that pertains directly to the rulemaking and 
        that was available to the agency in connection with the 
        rulemaking, or that was submitted to or prepared by or for the 
        agency in connection with the rulemaking; and
          ``(E) any statement, description, analysis, or any other 
        material that the agency is required to prepare or issue in 
        connection with the rulemaking, including any analysis prepared 
        or issued pursuant to chapter 6.
  ``(3) The agency shall place the materials described in paragraph (2) 
in the file as soon as practicable after such materials become 
available to the agency.
  ``(4) The file required by paragraph (1) need not include any 
material that need not be made available to the public under section 
552(b)(4) if the agency includes in such file a statement that notes 
the existence of such material and the basis upon which the material is 
exempt from public disclosure under such section. The agency may not 
substantially rely on any such material in formulating a rule unless it 
makes the substance of such material available for adequate comment by 
interested persons. The agency may use summaries, aggregations of data, 
or other appropriate mechanisms to protect the confidentiality of such 
material to the maximum extent possible.
  ``(5) No court shall hold unlawful or set aside an agency rule 
because of a violation of this subsection unless the court finds that 
such violation has precluded fair public consideration of a material 
issue of the rulemaking taken as a whole. Judicial review of compliance 
or noncompliance with this subsection shall be limited to review of 
action or inaction on the part of an agency.
  ``(g) Notwithstanding any other provision of law, this section shall 
apply to and supplement the procedures governing rulemaking under 
statutes that are not generally subject to this section.
  ``(h) Nothing in this section authorizes the use of appropriated 
funds available to any agency to pay the attorney's fees or other 
expenses of persons participating or intervening in agency 
proceedings.''.

SEC. 4. ANALYSIS OF AGENCY RULES.

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

               ``SUBCHAPTER II--ANALYSIS OF AGENCY RULES

``Sec. 621. Definitions

  ``For purposes of this subchapter--
          ``(1) the term `benefit' means the reasonably identifiable 
        significant incremental benefits, including social and economic 
        benefits, that are expected to result directly or indirectly 
        from implementation of a rule or an alternative to a rule;
          ``(2) the term `cost' means the reasonably identifiable 
        significant incremental costs and adverse effects, including 
        social and economic costs, reduced consumer choice, 
        substitution effects, and impeded technological advancement, 
        that are expected to result directly or indirectly from 
        implementation of, or compliance with, a rule or an alternative 
        to 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 the significance and complexity of the decision 
        and any need for expedition;
          ``(4)(A) the term `major rule' means--
                  ``(i) a rule or a group of closely related rules that 
                the agency proposing the rule, the Director, or a 
                designee of the President reasonably determines is 
                likely to have a gross annual effect on the economy of 
                $50,000,000 or more in reasonably quantifiable 
                increased direct and indirect costs, or has a 
                significant impact on a sector of the economy; or
                  ``(ii) a rule or a group of closely related rules 
                that is otherwise designated a major rule by the agency 
                proposing the rule, the Director, or a designee of the 
                President on the ground that the rule is likely to 
                result in--
                          ``(I) a substantial increase in costs or 
                        prices for wage earners, consumers, individual 
                        industries, nonprofit organizations, Federal, 
                        State, or local government agencies, or 
                        geographic regions;
                          ``(II) significant adverse effects on 
                        competition, employment, investment, 
                        productivity, innovation, health, safety, or 
                        the environment, or the ability of enterprises 
                        whose principal places of business are in the 
                        United States to compete in domestic or export 
                        markets;
                          ``(III) a serious inconsistency or 
                        interference with an action taken or planned by 
                        another agency;
                          ``(IV) the material alteration of the 
                        budgetary impact of entitlements, grants, user 
                        fees, or loan programs, or the rights and 
                        obligations of recipients thereof; or
                          ``(V) disproportionate costs to a class of 
                        persons within the regulated sector, and 
                        relatively severe economic consequences for the 
                        class;
          ``(B) the term `major rule' does not include--
                  ``(i) a rule that involves the internal revenue laws 
                of the United States; or
                  ``(ii) a rule or agency action that authorizes the 
                introduction into, or removal from, commerce, or 
                recognizes the marketable status, of a product;
          ``(5) the term `market-based mechanism' means a regulatory 
        program that--
                  ``(A) imposes legal accountability for the 
                achievement of an explicit regulatory objective on each 
                regulated person;
                  ``(B) affords maximum flexibility to each regulated 
                person in complying with mandatory regulatory 
                objectives, which flexibility shall, where feasible and 
                appropriate, include, but not be limited to, the 
                opportunity to transfer to, or receive from, other 
                persons, including for cash or other legal 
                consideration, increments of compliance responsibility 
                established by the program; and
                  ``(C) permits regulated persons to respond freely to 
                changes in general economic conditions and in economic 
                circumstances directly pertinent to the regulatory 
                program without affecting the achievement of the 
                program's explicit regulatory mandates;
          ``(6) the term `performance-based standards' means 
        requirements, expressed in terms of outcomes or goals rather 
        than mandatory means of achieving outcomes or goals, that 
        permit the regulated entity discretion to determine how best to 
        meet specific requirements in particular circumstances;
          ``(7) the term `reasonable alternatives' means the range of 
        regulatory options that the agency has discretion to consider 
        under the text of the statute granting rulemaking authority, 
        interpreted, to the maximum extent possible, to embrace the 
        broadest range of options that satisfy the decisional criteria 
        of section 624(b); and
          ``(8) the term `rule' has the same meaning as in section 
        551(4), and--
                  ``(A) includes any statement of general applicability 
                that alters or creates rights or obligations of persons 
                outside the agency; and
                  ``(B) does not include--
                          ``(i) a rule of particular applicability that 
                        approves or prescribes the future rates, wages, 
                        prices, services, corporate or financial 
                        structures, reorganizations, mergers, 
                        acquisitions, accounting practices, or 
                        disclosures bearing on any of the foregoing;
                          ``(ii) a rule relating to monetary policy or 
                        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), 
                        credit unions, Federal Home Loan Banks, 
                        government sponsored housing enterprises, farm 
                        credit institutions, foreign banks that operate 
                        in the United States and their affiliates, 
                        branches, agencies, commercial lending 
                        companies, or representative offices, (as those 
                        terms are defined in section 1 of the 
                        International Banking Act of 1978); or
                          ``(iii) a rule relating to the payment system 
                        or the protection of deposit insurance funds or 
                        the farm credit insurance fund.
``Sec. 622. Rulemaking cost-benefit analysis

  ``(a) Prior to publishing notice of a proposed rulemaking for any 
rule (or, in the case of a notice of a proposed rulemaking that has 
been published on or before the date of enactment of this subchapter, 
not later than 30 days after such date of enactment), each agency shall 
determine whether the rule is or is not a major rule within the meaning 
of section 621(4)(A)(i) and, if it is not, whether it should be 
designated a major rule under section 621(4)(A)(ii). For the purpose of 
any such determination or designation, a group of closely related rules 
shall be considered as one rule.
  ``(b)(1) If an agency has determined that a rule is not a major rule 
within the meaning of section 621(4)(A)(i) and has not designated the 
rule a major rule within the meaning of section 621(4)(A)(ii), the 
Director or a designee of the President may, as appropriate, determine 
that the rule is a major rule or designate the rule a major rule not 
later than 30 days after the publication of the notice of proposed 
rulemaking for the rule (or, in the case of a notice of proposed 
rulemaking that has been published on or before the date of enactment 
of this subchapter, not later than 60 days after such date of 
enactment).
  ``(2) Such determination or designation shall be published in the 
Federal Register, together with a succinct statement of the basis for 
the determination or designation.
  ``(c)(1)(A) When the agency publishes a notice of proposed rulemaking 
for a major rule, the agency shall issue and place in the rulemaking 
file an initial cost-benefit analysis, and shall include a summary of 
such analysis in the notice of proposed rulemaking.
  ``(B)(i) When the Director or a designee of the President has 
published a determination or designation that a rule is a major rule 
after the publication of the notice of proposed rulemaking for the 
rule, the agency shall promptly issue and place in the rulemaking file 
an initial cost-benefit analysis for the rule and shall publish in the 
Federal Register a summary of such analysis.
  ``(ii) Following the issuance of an initial cost-benefit analysis 
under clause (i), the agency shall give interested persons an 
opportunity to comment in the same manner as if the initial cost-
benefit analysis had been issued with the notice of proposed 
rulemaking.
  ``(2) Each initial cost-benefit analysis shall contain--
          ``(A) an analysis of the benefits of the proposed rule, and 
        an explanation of how the agency anticipates each benefit will 
        be achieved by the proposed rule, including a description of 
        the persons or classes of persons likely to receive such 
        benefits;
          ``(B) an analysis of the costs of the proposed rule, and an 
        explanation of how the agency anticipates each such cost will 
        result from the proposed rule, including a description of the 
        persons or groups of persons likely to bear such costs;
          ``(C) an identification (including an analysis of the costs 
        and benefits) of reasonable alternatives that the agency has 
        discretion to adopt under the decisional criteria of the 
        statute granting the rulemaking authority, as supplemented by 
        the decisional criteria in section 624, for achieving 
        identified benefits, including, where appropriate, alternatives 
        that--
                  ``(i) require no government action;
                  ``(ii) will accommodate differences among geographic 
                regions and among persons with differing levels of 
                resources with which to comply; and
                  ``(iii) employ voluntary or performance-based 
                standards, market-based mechanisms, or other flexible 
                regulatory alternatives that permit the greatest 
                flexibility in achieving the identified benefits of the 
                proposed rule;
          ``(D) an assessment of the feasibility of establishing a 
        regulatory program that operates through the application of 
        voluntary programs, voluntary consensus standards, performance-
        based standards, market-based mechanisms, or other flexible 
        regulatory alternatives;
          ``(E) in any case in which the proposed rule is based on one 
        or more scientific evaluations, scientific information, or a 
        risk assessment, or is subject to the risk assessment 
        requirements of subchapter III, a description of the actions 
        undertaken by the agency to verify the quality, reliability, 
        and relevance of such scientific evaluations or scientific 
        information in accordance with the requirements of subchapter 
        III;
          ``(F) an analysis, to the extent practicable, of the effect 
        of the rule on--
                  ``(i) the cumulative burden of compliance with the 
                rule and other existing regulations on persons 
                complying with it; and
                  ``(ii) the net effect on small businesses with fewer 
                than 100 employees, including employment in such 
                businesses;
          ``(G) an analysis of whether the identified benefits of the 
        proposed rule justify the identified costs of the proposed 
        rule, and an analysis of whether the proposed rule will achieve 
        greater net benefits or, where applicable, lower net costs, 
        than any of the alternatives to the proposed rule, including 
        alternatives identified in accordance with subparagraphs (C) 
        and (D).
  ``(d)(1) When the agency publishes a final major rule, the agency 
shall also issue and place in the rulemaking file a final cost-benefit 
analysis, and shall include a summary of the analysis in the statement 
of basis and purpose.
  ``(2) Each final cost-benefit analysis shall contain--
          ``(A) a description and comparison of the benefits and costs 
        of the rule and of the reasonable alternatives to the rule 
        described in the rulemaking, including the flexible regulatory 
        alternatives identified pursuant to subsection (c)(2) (C) and 
        (D); and
          ``(B) an analysis, based upon the rulemaking record 
        considered as a whole, of--
                  ``(i) whether the benefits of the rule justify the 
                costs of the rule; and
                  ``(ii) whether the rule will achieve greater net 
                benefits or, where section 624(c) applies, lower net 
                costs, than any of the reasonable alternatives that the 
                agency has discretion to adopt under the decisional 
                criteria of the statute granting the rulemaking 
                authority, as supplemented by the decisional criteria 
                in section 624, for achieving identified benefits, 
                including, where appropriate, alternatives referred to 
                in subsection (c)(2) (C) and (D).
  ``(e)(1)(A) The analysis of the benefits and costs of a proposed and 
a final rule required under this section shall include, to the extent 
feasible, a quantification or numerical estimate of the quantifiable 
benefits and costs. Such quantification or numerical estimate shall be 
made in the most appropriate unit of measurement, using comparable 
assumptions, including time periods, shall specify the ranges of 
predictions, and shall explain the margins of error involved in the 
quantification methods and in the estimates used. An agency shall 
describe the nature and extent of the nonquantifiable benefits and 
costs of a final rule pursuant to this section in as precise and 
succinct a manner as possible. An agency shall not be required to make 
such evaluation primarily on a mathematical or numerical basis.
  ``(B) Where practicable and appropriate, the description of the 
benefits and costs of a proposed and final rule required under this 
section shall describe such benefits and costs on an industry by 
industry basis.
  ``(2)(A) In evaluating and comparing costs and benefits and in 
evaluating the risk assessment information developed pursuant to 
subchapter III, the agency shall not rely on cost, benefit, or risk 
assessment information that is not accompanied by relevant information 
that would enable the agency and other persons interested in the 
rulemaking to assess the accuracy, reliability, and uncertainty factors 
applicable to such information.
  ``(B) The agency evaluations of the relationships of the benefits of 
a proposed and final rule to its costs shall be clearly articulated in 
accordance with this section.
  ``(f) The preparation of the initial or final cost-benefit analysis 
required by this section shall only be performed by an officer or 
employee of the agency. The preceding sentence shall not preclude a 
person outside the agency from gathering data or information to be used 
by the agency in preparing any such cost-benefit analysis or from 
providing an explanation sufficient to permit the agency to analyze 
such data or information. If any such data or information is gathered 
or explained by a person outside the agency, the agency shall 
specifically identify in the initial or final cost-benefit analysis the 
data or information gathered or explained and the person who gathered 
or explained it, and shall describe the arrangement by which the 
information was procured by the agency, including the total amount of 
funds expended for such procurement.

``Sec. 623. Petition for cost-benefit analysis

  ``(a)(1) Any person subject to a major rule may petition the relevant 
agency, the Director, or a designee of the President to perform a cost-
benefit analysis under this subchapter for the major rule, including a 
major rule in effect on the date of enactment of this subchapter for 
which a cost-benefit analysis pursuant to such subchapter has not been 
performed, regardless of whether a cost-benefit analysis was previously 
performed to meet requirements imposed before the date of enactment of 
this subchapter.
  ``(2) The petition shall identify with reasonable specificity the 
major rule to be reviewed and the amendment or repeal requested.
  ``(3) The agency, the Director, or a designee of the President shall 
grant the petition if the petition shows that there is a reasonable 
likelihood that, considering the future impact of the rule--
          ``(A) the rule is a major rule; and
          ``(B) the proposed amendment or repeal of the rule is 
        required to satisfy the decisional criteria of section 624.
  ``(4) A decision to grant, or final agency action to deny, a petition 
under this subsection shall be made not later than 180 days after 
submittal.
  ``(5) Following a decision to grant or deny a petition to conduct a 
cost-benefit analysis for a rule under this subsection, no further 
petition for such rule, submitted by the same person, shall be 
considered by any agency, the Director, or a designee of the President, 
unless such petition is based on a change in a fact, circumstance, or 
provision of law underlying or otherwise related to the rule occurring 
since the initial petition was granted or denied, that warrants the 
amendment or repeal of the rule.
  ``(b) Not later than 1 year after the date on which a petition has 
been granted for a major rule under subsection (a), the agency shall 
conduct a cost-benefit analysis in accordance with this subchapter, and 
shall propose amendments to, or repeal of, the rule if required by the 
decisional criteria set forth in section 624.
  ``(c) For purposes of this section, the term `major rule' means any 
major rule or portion thereof.
  ``(d)(1) Any person may petition the relevant agency to withdraw, as 
contrary to this subchapter, any agency interpretive rule, guidance, or 
general statement of policy that would have the effect of a major rule 
if the interpretive rule, guidance, or general statement of policy had 
been adopted as a rule.
  ``(2) The petition shall identify with reasonable specificity why the 
interpretive rule, guidance, or general statement of policy would have 
the effect of a major rule if adopted as a rule.
  ``(3) The agency shall grant the petition if the petition shows that 
there is a reasonable likelihood that the guidance or general statement 
of policy would have the effect of a major rule if adopted as a rule.
  ``(4) A decision to grant, or final agency action to deny, a petition 
under this subsection shall be made not later than 180 days after the 
petition is submitted.
  ``(e) For each interpretative rule, guidance, or general statement of 
policy for which a petition has been granted under subsection (d), the 
agency shall--
          ``(1) immediately withdraw the interpretive rule, guidance, 
        or general statement of policy; or
          ``(2) within one year, propose a rule in compliance with this 
        subchapter incorporating, with such modifications as the agency 
        considers appropriate, the regulatory standards or criteria 
        contained in such interpretive rule, general statement of 
        policy, or guidance.
  ``(f) Upon withdrawing an interpretive rule, guidance, or general 
statement of policy, or where such interpretive rule, guidance, or 
general statement of policy is not withdrawn and a final rule is not 
promulgated within 2 years of granting a petition under subsection (d), 
the agency shall be prohibited from enforcing against any person the 
regulatory standards or criteria contained in such interpretive rule, 
guidance, or general statement of policy, unless and until they are 
included in a rule promulgated in accordance with this subchapter.
  ``(g)(1) Any person subject to a major rule may petition the relevant 
agency to modify or waive the specific requirements of the major rule 
and to authorize such person to demonstrate compliance through 
alternative means not otherwise permitted by the major rule. The 
petition shall identify with reasonable specificity the requirements 
for which the waiver is sought and the alternative means of compliance 
being proposed.
  ``(2) The agency shall grant the petition if the petition shows that 
there is a reasonable likelihood that the proposed alternative means of 
compliance would achieve the specific benefits of the major rule with 
an equivalent or greater level of protection of health, safety, and the 
environment than would be provided by the major rule, and would not 
impose an undue burden on the agency that would be responsible for 
enforcing such alternative means of compliance.
  ``(3) Following a decision to grant or deny a petition under this 
subsection, no further petition for such rule, submitted by the same 
person, shall be considered by any agency unless such petition is based 
on a change in a fact, circumstance, or provision of law underlying or 
otherwise related to the rule occurring since the initial petition was 
granted or denied, that warrants the granting of such further petition.

``Sec. 624. Decisional criteria

  ``(a) The requirements of this section shall supplement any other 
decisional criteria otherwise provided by law.
  ``(b) Subject to subsection (c), no final rule subject to this 
subchapter shall be promulgated unless the agency finds that--
          ``(1) the potential benefits from the rule justify the 
        potential costs of the rule; and
          ``(2) the rule will produce the most cost-effective result of 
        any of the reasonable alternatives that the agency has 
        discretion to adopt under the decisional criteria of the 
        statute granting the rulemaking authority.
  ``(c) If a statute requires or permits that a rule be promulgated and 
that rule cannot, applying the express decisional criteria in the 
statute, satisfy the criteria provided in subsection (b), the agency 
shall not promulgate the rule unless the rule imposes--
          ``(1) lower costs than any of the reasonable alternatives; or
          ``(2) the least costs taking into account benefits that the 
        agency has discretion to adopt under the decisional criteria of 
        the statute granting the rulemaking authority.
  ``(d) If an agency promulgates a rule that is subject to subsection 
(c), the agency shall prepare a written explanation of why the agency 
was required to promulgate a rule with potential costs that were not 
justified by the potential benefits and shall transmit that explanation 
along with the final cost-benefit analysis to Congress when the final 
rule is promulgated.

``Sec. 625. Judicial review

  ``(a) Each court with jurisdiction to review final agency action 
under the statute granting the agency authority to conduct the 
rulemaking shall have jurisdiction to review final agency action under 
this subchapter.
  ``(b)(1) Any cost-benefit analysis of, or risk assessment concerning, 
a rule shall constitute part of the whole rulemaking record of agency 
action for the purpose of judicial review and shall be considered by a 
court in determining the legality of the agency action, but only to the 
extent that it relates to the agency's decisional responsibilities 
under section 624 or the statute granting the agency authority to take 
the agency action.
  ``(2) No analysis required by this subchapter shall be subject to 
judicial review separate or apart from judicial review of the agency 
action to which it relates.
  ``(3) The court shall apply the same standards of judicial review 
that govern the review of agency findings under the statute granting 
the agency authority to take the action.
  ``(4) The court shall set aside agency action that fails to satisfy 
the decisional criteria of section 624, applying the applicable 
judicial review standards.

``Sec. 626. Deadlines for rulemaking

  ``(a) Beginning on the date of enactment of this section, all 
deadlines in statutes that require agencies to propose or promulgate 
any rule subject to this subchapter shall be suspended until such time 
as the requirements of this subchapter are satisfied.
  ``(b) Beginning on the date of enactment of this section, the 
jurisdiction of any court of the United States to enforce any deadline 
that would require an agency to propose or promulgate a rule subject to 
this chapter shall be suspended until such time as the requirements of 
this subchapter are satisfied.
  ``(c) In any case in which the failure to promulgate a rule by a 
deadline would create an obligation to regulate through individual 
adjudications by another deadline, the deadline for such regulation 
shall be suspended to allow the requirements of this subchapter to be 
satisfied.

``Sec. 627. Agency review of rules

  ``(a)(1)(A) Not later than 9 months after the date of enactment of 
this section, each agency shall prepare and publish in the Federal 
Register a proposed schedule for the review, in accordance with this 
section, of--
          ``(i) each rule of the agency that is in effect on such 
        effective date and which, considering its future impact, would 
        be a major rule under this subchapter;
          ``(ii) each rule of the agency that is inconsistent or 
        incompatible with, or duplicative of, any other obligation or 
        requirement established by any Federal statute, rule, or other 
        agency statement, interpretation, or action that has the force 
        of law; and
          ``(iii) each rule of the agency in effect on the date of 
        enactment of this section (in addition to the rules described 
        in clauses (i) and (ii)) that the agency has selected for 
        review.
  ``(B) Each proposed schedule required by subparagraph (A) shall 
include--
          ``(i) a brief explanation of the reasons the agency considers 
        each rule on the schedule to be a major rule under section 
        621(4)(A), or the reasons why the agency selected the rule for 
        review;
          ``(ii) a date set by the agency, in accordance with 
        subsection (b)(1), for the completion of the review of each 
        such rule; and
          ``(iii) a statement that the agency requests comments from 
        the public on the proposed schedule.
  ``(C) The agency shall set a date to initiate review of each rule on 
the schedule in a manner that will ensure the simultaneous review of 
related items and that will achieve a reasonable distribution of 
reviews over the period of time covered by the schedule.
  ``(2) Not later than 90 days before publishing in the Federal 
Register the proposed schedule required under paragraph (1), each 
agency shall make the proposed schedule available to the Director or a 
designee of the President, or to the Vice President or other officer to 
whom oversight authority has been delegated under section 643. The 
President or that officer may select for review in accordance with this 
section any additional rule.
  ``(3) Not later than 1 year after the date of enactment of this 
section, each agency shall publish in the Federal Register a final 
schedule for the review of the rules referred to in paragraphs (1) and 
(2). Each agency shall publish with the final schedule the response of 
the agency to comments received concerning the proposed schedule.
  ``(b)(1) Except as explicitly provided otherwise by statute, the 
agency shall, pursuant to subsections (c) through (e), review--
          ``(A) each rule on the schedule promulgated pursuant to 
        subsection (a);
          ``(B) each major rule under section 621(4) promulgated, 
        amended, or otherwise renewed by an agency after the date of 
        the enactment of this section; and
          ``(C) each rule promulgated after the date of enactment of 
        this section that the President or the officer designated by 
        the President selects for review pursuant to subsection (a)(2).
  ``(2) Except as provided in subsection (f)--
          ``(A) in the case of a regulation that takes effect after the 
        date of enactment of this section, the regulation shall 
        terminate on the date that is 5 years after the date on which 
        the regulation takes effect, unless the review required by this 
        section has been completed by the date that is 5 years after 
        the date on which the regulation takes effect; and
          ``(B) in the case of a regulation in effect on the date of 
        enactment of this section, the regulation shall terminate on 
        the date that is 7 years after the date of enactment of the 
        Regulatory Reform Act of 1995, unless the review required by 
        this section has been completed by the date that is 7 years 
        after the date of enactment of the Regulatory Reform Act of 
        1995.
  ``(c) An agency shall publish in the Federal Register a notice of its 
proposed action under this section with respect to a rule being 
reviewed. The notice shall include--
          ``(1) an identification of the specific statutory authority 
        under which the rule was promulgated and an explanation of 
        whether the agency's interpretation of the statute is expressly 
        required by the current text of that statute or, if not, an 
        explanation that the interpretation is within the range of 
        permissible interpretations of the statute as identified by the 
        agency, and an explanation why the interpretation selected by 
        the agency is the agency's preferred interpretation;
          ``(2) an analysis of the benefits and costs of the rule 
        during the period in which it has been in effect;
          ``(3) an explanation of the proposed agency action with 
        respect to the rule, including action to repeal or amend the 
        rule to resolve inconsistencies or conflicts with any other 
        obligation or requirement established by any Federal statute, 
        rule, or other agency statement, interpretation, or action that 
        has the force of law; and
          ``(4) a statement that the agency seeks proposals from the 
        public for modifications or alternatives to the rule which may 
        accomplish the objectives of the rule in a more effective or 
        less burdensome manner.
  ``(d) If an agency proposes to repeal or amend a rule under review 
pursuant to this section, the agency shall, after issuing the notice 
required by subsection (c), comply with the provisions of this chapter, 
chapter 5, and any other applicable law. The requirements of such 
provisions and related requirements shall apply to the same extent and 
in the same manner as in the case of a proposed agency action to repeal 
or amend a rule that is not taken pursuant to the review required by 
this section.
  ``(e) If an agency proposes to renew without amendment a rule under 
review pursuant to this section, the agency shall--
          ``(1) give interested persons not less than 60 days after the 
        publication of the notice required by subsection (c) to comment 
        on the proposed renewal; and
          ``(2) publish in the Federal Register notice of the renewal 
        of such rule, an explanation of the continued need for the 
        rule, and, if the renewed rule is a major rule under section 
        621(4), an explanation of how the rule complies with section 
        624.
  ``(f) Any agency, which for good cause finds that compliance with 
this section with respect to a particular rule during the period 
provided in subsection (b) is contrary to an important public interest, 
may request the President, or an officer designated by the President, 
to establish a period longer than 5 years, in the case of a regulation 
that takes effect after the date of enactment of this section, or 7 
years, in the case of a regulation in effect on the date of enactment 
of this section, for the completion of the review of such rule. The 
President or that officer may extend the period for review of a rule to 
a total period of not more than 10 years. Such extension shall be 
published in the Federal Register with an explanation of the reasons 
therefor.
  ``(g) In any case in which an agency has not completed the review of 
a rule within the period prescribed by subsection (b) or (f) of this 
section, the agency shall immediately publish in the Federal Register a 
notice proposing to issue the rule under subsection (c), and shall 
complete proceedings pursuant to subsection (d) or (e) not later than 
180 days after the date on which the review was required to be 
completed under subsection (b) or (f).
  ``(h) Nothing in this section shall relieve any agency from its 
obligation to respond to a petition to issue, amend, or repeal a rule, 
for an interpretation regarding the meaning of a rule, or for a 
variance or exemption from the terms of a rule, submitted pursuant to 
any other provision of law.

``Sec. 628. Special rule

  ``Notwithstanding any other provision of the Comprehensive Regulatory 
Reform Act of 1995, or the amendments made by such Act, for purposes of 
this subchapter and subchapter IV, the head of each appropriate Federal 
banking agency (as defined in section 3(q) of the Federal Deposit 
Insurance Act), the National Credit Union Administration, the Federal 
Housing Finance Board, the Office of Federal Housing Enterprise 
Oversight, and the Farm Credit Administration, shall have authority 
with respect to such agency that otherwise would be provided under such 
subchapters to the Director, a designee of the President, Vice 
President, or any officer designated or delegated with authority under 
such subchapters.
                   ``SUBCHAPTER III--RISK ASSESSMENTS

``Sec. 631. Definitions

  ``For purposes of this subchapter--
          ``(1) the term `benefit' has the meaning given such term in 
        section 621(1);
          ``(2) the term `best estimate' means an estimate that, to the 
        extent feasible and scientifically appropriate, is based on--
                  ``(A) central estimates of risk using the most 
                plausible and realistic assumptions;
                  ``(B) an approach that combines multiple estimates 
                based on different scenarios and weighs the probability 
                of each scenario; and
                  ``(C) any other methodology designed to provide the 
                most plausible and realistic level of risk, given the 
                current scientific information available to the agency 
                concerned;
          ``(3) the term `cost' has the meaning given such term in 
        section 621(2);
          ``(4) the term `cost-benefit analysis' has the meaning given 
        such term in section 621(3);
          ``(5) the term `emergency' means an actual, immediate, and 
        substantial endangerment to health, safety, or the human 
        environment;
          ``(6) the term `hazard identification' means identification 
        of a substance, activity, or condition that may cause to 
        health, safety, or the environment based on empirical data, 
        measurements, or testing showing that it has caused significant 
        adverse effects at some levels of dose or exposure combined 
        degree of toxicity and actual exposure, or other risk the 
        hazards pose for individuals, populations, or natural 
        resources; and
          ``(7) the term `major cleanup plan' means any proposed or 
        final environmental cleanup plan for a facility, or Federal 
        guidelines for the issuance of any such plan, the expected 
        costs, expenses, and damages of which are likely to exceed, in 
        the aggregate, $10,000,000, including a corrective action 
        requirement under the Solid Waste Disposal Act (notwithstanding 
        section 4(b)(1)(C) of such Act, but only to the extent of such 
        requirement), a removal or remedial action under the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980, and any other environmental restoration 
        or damage assessment carried out by, on behalf of, or as 
        required or ordered by, an agency or Federal court, or pursuant 
        to the authority of a Federal statute with respect to any 
        substance;
          ``(8) the term `major rule' has the meaning given such term 
        in section 621(4);
          ``(9) the term `negative data' means data that fail to show 
        that a given substance or activity induces an adverse effect 
        under certain conditions;
          ``(10) the term `risk assessment' means--
                  ``(A) the process of identifying hazards, and of 
                quantifying (to the maximum extent practicable) or 
                describing the combined degree of toxicity and actual 
                exposure, or other risk the hazards pose for 
                individuals, populations, or natural resources; and
                  ``(B) the document containing the explanation of how 
                the assessment process has been applied to an 
                individual substance, activity, or condition;
          ``(11) the term `risk characterization'--
                  ``(A) means the element of a risk assessment that 
                involves presentation of the degree of risk to 
                individuals and populations expected to be protected, 
                as presented in any regulatory proposal or decision, 
                report to Congress, or other document that is made 
                available to the public; and
                  ``(B) may include discussions of uncertainties, 
                conflicting data, estimates, extrapolations, 
                inferences, and opinions, as appropriate;
          ``(12) the term `rule' has the meaning given such term in 
        section 621(7); and
          ``(13) the term `substitution risk' means a potential 
        increased risk to health, safety, or the environment resulting 
        from market substitutions, a reduced standard of living, or a 
        regulatory alternative designed to decrease other risks.

``Sec. 632. Applicability

  ``(a) Except as provided in subsection (b), this subchapter shall 
apply to all risk assessments and risk characterizations prepared by, 
or on behalf of, or prepared by others and adopted by, any agency in 
connection with health, safety, and environmental risks.
  ``(b)(1) This subchapter shall not apply to risk assessments or risk 
characterizations performed with respect to--
          ``(A) a situation that the head of the agency finds to be an 
        emergency;
          ``(B) a rule or agency action that authorizes the 
        introduction into or removal from commerce, or initiation of 
        manufacture, of a substance, mixture, or product, or recognizes 
        the marketable status of a product;
          ``(C) a health, safety, or environmental inspection, 
        compliance or enforcement action, or individual facility 
        permitting action; or
          ``(D) a screening analysis clearly identified as such.
  ``(2)(A) An analysis shall not be treated as a screening analysis for 
the purposes of paragraph (1)(D) if the result of the analysis is 
used--
          ``(i) as the basis for imposing a restriction on a previously 
        authorized substance, product, or activity after its initial 
        introduction into manufacture or commerce; or
          ``(ii) to characterize a finding of risk from a substance or 
        activity in any agency document or other communication made 
        available to the public, the media, or Congress.
  ``(B) Among the analyses that may be treated as a screening analyses 
for the purposes of paragraph (1)(D) are product registrations, 
reregistrations, tolerance settings, and reviews of premanufacture 
notices under the Federal Insecticide, Fungicide, and Rodenticide Act 
(7 U.S.C. 136 et seq.) and the Toxic Substances Control Act (15 U.S.C. 
2601 et seq.).
  ``(3) This subchapter shall not apply to any food, drug, or other 
product label or to any risk characterization appearing on any such 
label.

``Sec. 633. Principles for risk assessment

  ``(a)(1) The head of each agency shall apply the principles set forth 
in subsection (b) when preparing any risk assessment for a major rule 
to ensure that the risk assessment and all of its components--
          ``(A) distinguish scientific findings and best estimates of 
        risk from other considerations;
          ``(B) are, to the maximum extent practicable, scientifically 
        objective, plausible, and realistic, and inclusive of all 
        relevant data;
          ``(C) rely, to the extent available and practicable, on 
        scientific findings; and
          ``(D) use situation- or decision-specific information to the 
        maximum extent practicable.
  ``(2) An agency shall not be required to repeat discussions or 
explanations required under this section in each risk assessment 
document if there is an unambiguous reference to the relevant 
discussion or explanation in another reasonably available agency 
document that was prepared in accordance with this subchapter.
  ``(b) The principles to be applied when preparing risk assessments 
are as follows:
          ``(1)(A) When assessing human health risks, a risk assessment 
        shall consider and discuss both the most important laboratory 
        and epidemiological data, including negative data, and 
        summarize the remaining data that finds, or fails to find, a 
        correlation between a health risk and a substance or activity.
          ``(B) When conflicts among such data appear to exist, or when 
        animal data are used as a basis to assess human health, the 
        assessment shall include a discussion of possible 
        reconciliation of conflicting information. Greatest emphasis 
        shall be placed on data that indicates the biological basis of 
        the resulting harm in humans. Animal data shall be reviewed 
        with regard to relevancy to humans.
          ``(2) When a risk assessment involves a choice of any 
        significant assumption (including the use of safety factors and 
        default assumptions), inference, or model, the agencies or 
        instrumentality preparing the assessment shall--
                  ``(A) present a representative description and 
                explicit explanation of plausible and alternative 
                similar assumptions, inferences, or models (including 
                the assumptions incorporated into the model) and the 
                sensitivity of the conclusions to them;
                  ``(B) give preference to the model, assumption, input 
                parameter that represents the most plausible or 
                realistic inference from supporting scientific 
                information;
                  ``(C) identify any science policy or value judgments 
                and employ those judgments only where the policy 
                determination has been approved by the head of the 
                agency, after notice and opportunity for public 
                involvement, as appropriate for the circumstance under 
                consideration;
                  ``(D) describe any model used in the risk-assessment 
                and make explicit the assumptions incorporated into the 
                model; and
                  ``(E) indicate the extent to which any significant 
                model has been validated by, or conflicts with, 
                empirical data.
          ``(3) Risk assessments that provide a quantification or 
        numerical output shall be calculated using the best estimate 
        for each input parameter and shall use, as available, 
        probabilistic descriptions of the uncertainty and variability 
        associated with each input parameter.
          ``(4) A risk assessment shall clearly separate hazard 
        identification from risk characterization and make clear the 
        relationship between the level of risk and the level of 
        exposure to a potential hazard.
          ``(5) A risk assessment shall be prepared at the level of 
        detail appropriate and practicable for reasoned decisionmaking 
        on the matter involved, taking into consideration the 
        significance and complexity of the decision and any need for 
        expedition.
          ``(6) Where relevant, practicable, and appropriate, data 
        shall be developed consistent with standards for the 
        development of test data promulgated pursuant to section 4 of 
        the Toxic Substances Control Act, and standards for data 
        requirements promulgated pursuant to section 3 of the Federal 
        Insecticide, Fungicide, and Rodenticide Act.
  ``(c)(1) The head of each agency shall promote early involvement by 
all stakeholders in the development of risk assessments that may 
support or affect agency rules, guidance, and other significant 
actions, by publishing as part of its semiannual regulatory agenda, 
required under section 602--
          ``(A) a list of risk assessments and supporting assessments, 
        including hazard, dose or exposure assessments, under 
        preparation or planned by the agency;
          ``(B) a brief summary of relevant issues addressed or to be 
        addressed by each listed risk assessment or supporting 
        assessment;
          ``(C) an approximate schedule for completing each listed risk 
        assessment and supporting assessment;
          ``(D) an identification of potential rules, guidance, or 
        other agency actions supported or affected by each listed risk 
        assessment and supporting assessment; and
          ``(E) the name, address, and telephone number of an agency 
        official knowledgeable about each listed risk assessment and 
        supporting assessment.
  ``(2)(A) The head of each agency shall provide an opportunity for 
meaningful public participation and comment on any risk assessment 
throughout the regulatory process commensurate with the consequences of 
the decision to be made.
  ``(B) In cases where the risk assessment will support a major rule, 
the agency shall publish, at the earliest opportunity in the process, 
an advanced notice of relevant risk assessment related information that 
includes, at a minimum, an identification of--
          ``(i) all relevant hazard, dose, exposure, and other risk 
        related documents that the agency plans to consider;
          ``(ii) all risk related guidance that the agency considers 
        relevant;
          ``(iii) all hazard, dose, exposure, and other risk 
        assumptions on which the agency plans to relay and the bases 
        therefor; and
          ``(iv) all data and information deficiencies that could 
        affect agency decisionmaking.
  ``(d)(1) No agency shall automatically incorporate or adopt any 
recommendation or classification made by an entity described in 
paragraph (2) concerning the health effects or value of a substance 
without an opportunity for notice and comment. Any risk assessment or 
risk characterization document adopted by an agency on the basis of 
such a recommendation or classification shall comply with this title.
  ``(2) An entity referred to in paragraph (1) includes--
          ``(A) any foreign government and its agencies;
          ``(B) the United Nations or any of its subsidiary 
        organizations;
          ``(C) any international governmental body or standards-making 
        organization; and
          ``(D) any other organization or private entity without that 
        does not have a place of business located in the United States 
        or its territories.

``Sec. 634. Principles for risk characterization and communication

  ``In characterizing risk in any risk assessment document, regulatory 
proposal or decision, report to Congress, or other document relating in 
each case to a major rule that is made available to the public, each 
agency characterizing the risk shall comply with each of the following:
          ``(1) The head of the agency shall describe the exposure 
        scenarios used in any risk assessment, and, to the extent 
        feasible, provide an estimate of the size of the corresponding 
        population or natural resource at risk and the likelihood of 
        such exposure scenarios.
          ``(2) If a numerical estimate of risk is provided, the head 
        of the agency, to the extent feasible and scientifically 
        appropriate, shall provide--
                  ``(A) the range and distribution of exposures derived 
                from exposure scenarios used in a risk assessment, 
                including, where appropriate, central and high-end 
                estimates, but always including a best estimate of the 
                risk to the general population;
                  ``(B) the range and distribution of risk estimates, 
                including best estimates and, where quantitative 
                estimates of the range of distribution of risk 
                estimates are not possible, a list of qualitative 
                factors influencing the range of possible risks; and
                  ``(C) a statement of the major sources of 
                uncertainties in the hazard identification, dose-
                response, and exposure assessment phases of risk 
                assessment and their influence on the results of the 
                assessment.
          ``(3) To the extent feasible, the head of the agency shall 
        provide a statement that places the nature and magnitude of 
        individual and population risks to human health in context.
          ``(4) When a Federal agency provides a risk assessment or 
        risk characterization for a proposed or final regulatory 
        action, such assessment or characterization shall include a 
        statement of any significant substitution risks to human health 
        identified by the agency or contained in information provided 
        to the agency by a commentator.
          ``(5) An agency shall present a summary in connection with 
        the presentation of the agency's risk assessment or the 
        regulation if--
                  ``(A) the agency provides a public comment period 
                with respect to a risk assessment or regulation;
                  ``(B) a commentator provides a risk assessment, and a 
                summary of results of such risk assessment; and
                  ``(C) such risk assessment is reasonably consistent 
                with the principles and the guidance provided under 
                this subtitle.

``Sec. 635. Requirement to prepare assessment

  ``(a) Except as provided in section 632 and in addition to any 
requirements applicable under subchapter II, the head of each agency 
shall prepare--
          ``(1) for each major rule relating to health, safety, or the 
        environment, and for each major cleanup plan, that is proposed 
        by the agency after the date of enactment of this subchapter, 
        is pending on the date of enactment of this subchapter, or is 
        subject to a granted petition for review pursuant to section 
        553(e) or 623, a risk assessment in accordance with this 
        subchapter;
          ``(2) for each such proposed or final plan, and each 
        reasonable alternative within the statutory authority of the 
        agency taking action, a cost-benefit analysis equivalent to 
        that which would be required under subchapter II if subchapter 
        II were applicable; and
          ``(3) for each such proposed or final plan, quantified to the 
        extent feasible, a comparison of any health, safety, or 
        environmental risks addressed by the regulatory alternatives to 
        other relevant risks chosen by the head of the agency, 
        including at least 3 other risks regulated by the agency and to 
        at least 3 other risks with which the public is familiar.
  ``(b) A major cleanup plan is subject to this subchapter if--
          ``(1) construction has not commenced on a significant portion 
        of the work required by the plan; or
          ``(2) if construction has commenced on a significant portion 
        of the work required by the plan, unless--
                  ``(A) it is more cost-effective to complete 
                construction of the work than to apply the provisions 
                of this subchapter; or
                  ``(B) the application of the provisions of this 
                subchapter, including any delays caused thereby, will 
                result in an actual and immediate risk to human health 
                or welfare.
  ``(c) A risk assessment prepared pursuant to this subchapter shall be 
a component of and used to develop any cost-benefit analysis required 
by this subchapter or subchapter II, and shall, along with any cost-
benefit analysis required by this subchapter, be made part of the 
administrative record for judicial review of any final agency action.

``Sec. 636. Requirements for assessments

  ``(a) The head of the agency, subject to review by the Director or a 
designee of the President, shall make a determination that, 
notwithstanding any other provision of law--
          ``(1) for each major rule and major cleanup plan subject to 
        this subchapter, the risk assessment required under section 635 
        is based on a scientific, plausible, and realistic evaluation, 
        reflecting reasonable exposure scenarios, of the risk addressed 
        by the major rule and is supported by the best available 
        scientific data, as determined by a peer review panel in 
        accordance with section 640; and
          ``(2) for each major cleanup plan subject to this subchapter, 
        the plan has benefits that justify its costs and that there is 
        no alternative that is allowed by the statute under which the 
        plan is promulgated that would provide greater net benefits or 
        that would achieve an equivalent reduction in risk in a more 
        cost-effective and flexible manner.
  ``(b) Notwithstanding any other provision of law, no agency shall 
prohibit or refuse to approve a substance or product on the basis of 
safety where the substance or product presents a negligible or 
insignificant human risk under the intended conditions of use.
  ``(c) Notwithstanding any other provision of law, issuance of a 
record of decision or a final permit condition or administrative order 
containing a major cleanup plan, or denial of, or completion of agency 
review pursuant to, a petition for review of a major cleanup plan under 
section 637(c), shall constitute final agency action subject to 
judicial review at the time this action is taken.

``Sec. 637. Regulations; plan for assessing new information

  ``(a)(1) Not later than 1 year after the date of enactment of this 
subchapter, the Director or a designee of the President shall--
          ``(A) issue a final regulation that has been subject to 
        notice and comment under section 553 that directs agencies to 
        implement the risk assessment and risk characterization 
        principles set forth in sections 633 and 634; and
          ``(B) provide a format for summarizing risk assessment 
        results.
  ``(2) The regulation under paragraph (1) shall be sufficiently 
specific to ensure that risk assessments are conducted consistently by 
the various agencies.
  ``(b) Review of a risk assessment or any entry (or the evaluation 
underlying the entry) on an agency-developed database (including, but 
not limited to, the Integrated Risk Information System), shall be 
conducted by the head of the agency on the written petition of a person 
showing a reasonable likelihood that--
          ``(1) the risk assessment or entry is inconsistent with the 
        principles set forth in sections 633 and 634;
          ``(2) the risk assessment or entry contains different results 
        than if it had been properly conducted under sections 633 and 
        634;
          ``(3) the risk assessment or entry is inconsistent with a 
        rule issued under subsection (a); or
          ``(4) the risk assessment or entry does not take into account 
        material significant new scientific data or scientific 
        understanding.
  ``(c) Review of a risk assessment, a cost-benefit analysis, or both, 
for a major cleanup plan shall be conducted by the head of the agency 
on the written petition of a person showing a reasonable likelihood 
that--
          ``(1) the risk assessment warrants revision under any of the 
        criteria set forth in subsection (b); or
          ``(2) the cost-benefit analysis warrants revision under any 
        of the criteria set forth in section 624.
  ``(d)(1) Not later than 90 days after receiving a petition under 
subsection (b), the head of the agency shall respond to the petition by 
agreeing or declining to review the risk entry, the cost-benefit 
analysis, or both, referred to in the petition, and shall state the 
basis for the decision.
  ``(2) If the head of the agency agrees to review the petition, the 
agency shall complete its review not later than 180 days after the 
decision made under paragraph (1), unless the Director agrees in 
writing with an agency determination that an extension is necessary in 
view of limitations on agency resources. Prior to completion of the 
agency review, the agency's written conclusions concerning the review 
shall be subjected to peer review pursuant to section 640.
  ``(3) A risk assessment review completed pursuant to a petition may 
be the basis for initiating a petition pursuant to any other provision 
of law.
  ``(4) Following a decision to grant or deny a petition under 
subsection (b) or (c), no further petition for such risk assessment, 
entry, or cost-benefit analysis, submitted by the same person, shall be 
considered by any agency unless such petition is based on a change in a 
fact, circumstance, or provision of law underlying or otherwise related 
to the matters covered by the initial petition, occurring since the 
initial petition was granted or denied, that warrants the granting of 
such further petition.
  ``(e) The regulations under this section shall be developed after 
notice and opportunity for public comment, and after consultation with 
representatives of appropriate State agencies and local governments, 
and such other departments, agencies, offices, organizations, or 
persons as may be advisable.
  ``(f) At least every 4 years, the Director or a designee of the 
President shall review, and when appropriate, revise, the regulations 
published under this section.

``Sec. 638. Rule of construction

  ``Nothing in this subchapter shall be construed to--
          ``(1) preclude the consideration of any data or the 
        calculation of any estimate to more fully describe risk or 
        provide examples of scientific uncertainty or variability; or
          ``(2) require the disclosure of any trade secret or other 
        confidential information.

``Sec. 639. Regulatory priorities

  ``(a)(1) Not later than 180 days after the date of enactment of this 
section, the Director of the Office of Management and Budget, in 
consultation with the Office of Science and Technology Policy, shall 
enter into appropriate arrangements with an accredited scientific body 
to--
          ``(A) conduct a study of the methodologies for using 
        comparative risk to rank dissimilar health, safety, and 
        environmental risks; and
          ``(B) to conduct a comparative risk analysis in accordance 
        with paragraph (2).
  ``(2) The study of the methodologies under paragraph (1)(A) shall be 
conducted as part of the first comparative risk analysis under 
paragraph (1)(B). The study shall--
          ``(A) seek to develop and rigorously test methods of 
        comparative risk analysis;
          ``(B) have sufficient scope and breadth to test approaches 
        for improving comparative risk analysis and its use in setting 
        priorities for health, safety, and environmental risk 
        prevention and reduction; and
          ``(C) review and evaluate the experience of States that have 
        conducted comparative risk analyses.
  ``(3)(A) The comparative risk analysis under paragraph (1)(B) shall 
compare and rank, to the extent feasible, health, safety, and 
environmental risks potentially regulated across the spectrum of 
programs relating to health, safety, and the environment administered 
by the departments, agencies, and instrumentalities of the Federal 
Government.
  ``(B) In carrying out the comparative risk analysis under this 
paragraph, the Director shall ensure that--
          ``(i) the scope and specificity of the analysis are 
        sufficient to provide the President and the heads of agencies 
        guidance in allocating resources across agencies and among 
        programs in agencies to achieve the greatest degree of risk 
        prevention and reduction for the public and private resources 
        expended;
          ``(ii) the analysis is conducted through an open process, by 
        individuals with relevant expertise, including, as 
        appropriate--
                  ``(I) toxicologists;
                  ``(II) biologists;
                  ``(III) engineers; and
                  ``(IV) experts in the fields of medicine, industrial 
                hygiene, and environmental effects;
          ``(iii) the analysis is conducted, to the extent feasible, 
        consistent with the risk assessment and risk characterization 
        principles described in sections 633 and 634;
          ``(iv) the methodologies and principal scientific 
        determinations made in the analysis are subjected to peer 
        review under section 640 and the conclusions of the peer review 
        are made publicly available as part of the final report;
          ``(v) there is an opportunity for public comments on the 
        results of the analysis prior to making them final; and
          ``(vi) the results of the analysis are presented in a manner 
        that distinguishes between the scientific conclusions and any 
        policy or value judgments embodied in the comparisons.
  ``(4) The comparative risk analysis shall be completed, and a report 
submitted to Congress not later than 3 years after the date of 
enactment of this section. The analysis shall be reviewed and revised 
not less often than every 5 years thereafter for a minimum of 15 years 
following the release of the initial analysis.
  ``(b) Not later than 180 days after the date of enactment of this 
section, the Director of the Office of Management and Budget, in 
collaboration with the head of each Federal agency, shall enter into a 
contract with the National Research Council to provide technical 
guidance to the agencies on approaches to using comparative risk 
analysis in setting health, safety, and environmental priorities to 
assist the agencies in complying with subsection (c).
  ``(c)(1) In exercising authority under any laws protecting health, 
safety, or the environment, the head of an agency shall prioritize the 
use of the resources available under such laws to address the risks to 
health, safety, and the environment that--
          ``(A) the agency determines are the most serious; and
          ``(B) can be addressed in a cost-effective manner, with the 
        goal of achieving the greatest overall net reduction in risks 
        with the public and private sector resources to be expended.
  ``(2) In identifying the sources of the most serious risks under 
paragraph (1), the head of the agency shall consider, at a minimum--
          ``(A) the plausible likelihood and severity of the effect; 
        and
          ``(B) the plausible number and groups of individuals 
        potentially affected.
  ``(3) The head of the agency shall incorporate the priorities 
identified in paragraph (1) into the budget, strategic planning, and 
research activities of the agency by, in the agency's annual budget 
request to Congress--
          ``(A) identifying which risks the agency has determined are 
        the most serious and can be addressed in a cost-effective 
        manner under paragraph (1), and the basis for that 
        determination;
          ``(B) explicitly identifying how the agency's requested funds 
        will be used to address those risks;
          ``(C) identifying any statutory, regulatory, or 
        administrative obstacles to allocating agency resources in 
        accordance with the priorities established under paragraph (1); 
        and
          ``(D) explicitly considering the requirements of paragraph 
        (1) when preparing the agency's regulatory agenda or other 
        strategic plan, and providing an explanation of how the agenda 
        or plan reflects those requirements and the comparative risk 
        analysis when publishing any such agenda or strategic plan.
  ``(4) In March of each year, the head of each agency shall submit to 
Congress specific recommendations for repealing or modifying laws that 
would better enable the agency to prioritize its activities to address 
the risks to health, safety, and the environment that are the most 
serious and can be addressed in a cost-effective manner consistent with 
the requirements of paragraph (1).
``Sec. 640. Establishment of program

  ``(a) The Director of the Office of Science and Technology or the 
Director, as appropriate, shall develop a systematic program for the 
peer review of work products covered by subsection (c), which program 
shall be used, in as uniform a manner as is practicable, across the 
agencies.
  ``(b) The program under subsection (a)--
          ``(1) shall provide for the creation of peer review panels 
        consisting of independent and external experts who are broadly 
        representative and balanced to the extent feasible;
          ``(2) shall not exclude peer reviewers merely because they 
        represent entities that may have a potential interest in the 
        outcome, if that interest is fully disclosed;
          ``(3) shall exclude experts who were associated with the 
        generation of the specific work product either directly by 
        substantial contribution to its development, or indirectly by 
        consultation and development of the specific product;
          ``(4) shall provide for differing levels of peer review 
        depending on the significance or complexity of the issue or the 
        need for expedition;
          ``(5) shall contain balanced presentations of all 
        considerations, including minority reports and an agency 
        response to all significant peer review comments; and
          ``(6) shall provide an opportunity for interested parties to 
        submit issues for consideration by peer review panels.
  ``(c) Matters requiring peer review shall include--
          ``(1) risk assessments and cost-benefit analyses for major 
        rules;
          ``(2) quantitative estimates of risk or hazard that are used 
        in making regulatory determinations, including all entries into 
        the Integrated Risk Information System;
          ``(3) risk assessment and risk characterization regulations 
        and cost-benefit guidelines; and
          ``(4) any other significant or technical work product, as 
        designated by the head of each agency, the Director of the 
        Office of Science and Technology, or the Director.
  ``(d) All underlying data shall be submitted to peer reviewers, 
except to the extent necessary to protect confidential business 
information and trade secrets. To ensure such protections, the head of 
the agency may require that peer reviewers enter into confidentiality 
agreements.
  ``(e) The peer review and the agency's responses shall be made 
available to the public for comment and the final peer review and the 
agency's responses shall be made part of the administrative record for 
purposes of judicial review.
  ``(f) The proceedings of peer review panels under this section shall 
be subject to the applicable provisions of the Federal Advisory 
Committee Act.

                  ``SUBCHAPTER IV--EXECUTIVE OVERSIGHT

``Sec. 641. Procedures

  ``(a) The Director or a designee of the President shall--
          ``(1) establish procedures for agency compliance with this 
        chapter; and
          ``(2) monitor, review, and ensure agency implementation of 
        such procedures.
  ``(b) Not later than 12 months after the date of enactment of this 
subchapter the Office of Management and Budget shall issue regulations 
to assist agencies in preparing the cost-benefit analyses required by 
this subchapter. The regulations shall--
          ``(1) ensure that cost and benefit evaluations are consistent 
        with this subchapter and, to the extent feasible, represent 
        realistic and plausible estimates;
          ``(2) be adopted following public notice and adequate 
        opportunity for comment; and
          ``(3) be used consistently by all agencies covered by this 
        subchapter.

``Sec. 642. Promulgation and adoption

  ``(a) Procedures established pursuant to section 641 shall only be 
implemented after opportunity for public comment. Any such procedures 
shall be consistent with the prompt completion of rulemaking 
proceedings.
  ``(b)(1) If procedures established pursuant to section 641 include 
review of any initial or final analyses of a rule required under 
chapter 6, the time for any such review of any initial analysis shall 
not exceed 30 days following the receipt of the analysis by the 
Director, a designee of the President, or by an officer to whom the 
authority granted under section 641 has been delegated pursuant to 
section 643.
  ``(2) The time for review of any final analysis required under 
chapter 6 shall not exceed 30 days following the receipt of the 
analysis by the Director, a designee of the President, or such officer.
  ``(3)(A) The times for each such review may be extended for good 
cause by the President or such officer for an additional 30 days.
  ``(B) Notice of any such extension, together with a succinct 
statement of the reasons therefor, shall be inserted in the rulemaking 
file.

``Sec. 643. Delegation of authority

  ``(a) The President may delegate the authority granted by this 
subchapter to the Vice President or to an officer within the Executive 
Office of the President whose appointment has been subject to the 
advice and consent of the Senate.
  ``(b)(1) Notice of any delegation, or any revocation or modification 
thereof shall be published in the Federal Register.
  ``(2) Any notice with respect to a delegation to the Vice President 
shall contain a statement by the Vice President that the Vice President 
will make every reasonable effort to respond to congressional inquiries 
concerning the exercise of the authority delegated under this section.

``Sec. 644. Judicial review

  ``The exercise of the authority granted under this subchapter by the 
Director, the President, or by an officer to whom such authority has 
been delegated under section 643 shall not be subject to judicial 
review in any manner under this chapter.''.
  (b) Regulatory Flexibility Analysis.--
          (1) Judicial review.--Section 611 of title 5, United States 
        Code, is amended to read as follows:
``Sec. 611. Judicial review

  ``(a)(1) Except as provided in paragraph (2), not later than 2 years 
after the effective date of a final rule with respect to which an 
agency--
          ``(A) certified, pursuant to section 605(b), that such rule 
        would not have a significant economic impact on a substantial 
        number of small entities;
          ``(B) prepared a final regulatory flexibility analysis 
        pursuant to section 604; or
          ``(C) did not prepare an initial regulatory flexibility 
        analysis pursuant to section 603 or a final regulatory 
        flexibility analysis pursuant to section 604 except as 
        permitted by sections 605 and 608,
an affected small entity may petition for the judicial review of such 
certification, analysis, or lack of analysis, in accordance with this 
subsection. A court having jurisdiction to review such rule for 
compliance with section 553 or under any other provision of law shall 
have jurisdiction to review such certification or analysis.
  ``(2)(A) Notwithstanding any other provision of law, an affected 
small entity shall have 2 years to challenge such certification, 
analysis or lack of analysis.
  ``(B) If an agency delays the issuance of a final regulatory 
flexibility analysis pursuant to section 608(b), a petition for 
judicial review under this subsection shall be filed not later than 2 
years after the date the analysis is made available to the public.
  ``(3) For purposes of this subsection, the term `affected small 
entity' means a small entity that is or will be adversely affected by 
the final rule.
  ``(4) Nothing in this subsection shall be construed to affect the 
authority of any court to stay the effective date of any rule or 
provision thereof under any other provision of law.
  ``(5)(A) Notwithstanding section 605, if the court determines, on the 
basis of the rulemaking record, that there is substantial evidence to 
conclude that the rule would have a significant economic impact on a 
substantial number of small entities, the court shall order the agency 
to prepare a final regulatory flexibility analysis pursuant to section 
604.
  ``(B) If the agency prepared a final regulatory flexibility analysis, 
the court may order the agency to take corrective action consistent 
with section 604 if the court determines, on the basis of the 
rulemaking record, that the final regulatory flexibility analysis was 
prepared by the agency without complying with section 604.
  ``(6) The court may stay the rule or grant such other relief as it 
deems appropriate if, by the end of the 90-day period beginning on the 
date of the order of the court pursuant to paragraph (5) (or such 
longer period as the court may provide), the agency fails, as 
appropriate--
          ``(A) to prepare the analysis required by section 604; or
          ``(B) to take corrective action consistent with section 604.
  ``(7) In making any determination or granting any relief authorized 
by this subsection, the court shall take due account of the rule of 
prejudicial error.
  ``(b) In an action for the judicial review of a rule, any regulatory 
flexibility analysis for such rule (including an analysis prepared or 
corrected pursuant to subsection (a)(5)) shall constitute part of the 
whole record of agency action in connection with such review.
  ``(c) Nothing in this section bars judicial review of any other 
impact statement or similar analysis required by any other law if 
judicial review of such statement or analysis is otherwise provided by 
law.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall take effect on the date of enactment of this Act, except 
        that the judicial review authorized by section 611(a) of title 
        5, United States Code (as added by subsection (a)), shall apply 
        only to final agency rules issued after the date of enactment 
        of this Act.
  (c) 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.
  (d) Technical and Conforming Amendments.--
          (1) Chapter analysis.--Part I of title 5, United States Code, 
        is amended by striking out the chapter heading and table of 
        sections for chapter 6 and inserting in lieu thereof the 
        following:
           ``CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS
                  ``SUBCHAPTER I--REGULATORY ANALYSIS

``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--ANALYSIS OF AGENCY RULES

``621. Definitions.
``622. Rulemaking cost-benefit analysis.
``623. Petition for cost-benefit analysis.
``624. Decisional criteria.
``625. Judicial review.
``626. Deadlines for rulemaking.
``627. Agency review of rules.
``628. Special rule.

                   ``SUBCHAPTER III--RISK ASSESSMENTS

``631. Definitions.
``632. Applicability.
``633. Principles for risk assessment.
``634. Principles for risk characterization and communication.
``635. Requirement to prepare risk assessment.
``636. Requirements for assessments.
``637. Regulations; plan for assessing new information.
``638. Rule of construction.
``639. Regulatory priorities.
``640. Establishment of program.

                  ``SUBCHAPTER IV--EXECUTIVE OVERSIGHT

``641. Procedures.
``642. Promulgation and adoption.
``643. Delegation of authority.
``644. Judicial review.''.
          (2) Subchapter heading.--Chapter 6 of title 5, United States 
        Code, is amended by inserting immediately before section 601, 
        the following subchapter heading:

                 ``SUBCHAPTER I--REGULATORY ANALYSIS''.

SEC. 5. JUDICIAL REVIEW.

  (a) Scope of Review.--Section 706 of title 5, United States Code, is 
amended to read as follows:

``Sec. 706. Scope of review

  ``(a) To the extent necessary to reach a decision and when presented, 
the reviewing court shall decide all relevant questions of law, 
interpret constitutional and statutory provisions, and determine the 
meaning or applicability of the terms of an agency action. The 
reviewing court shall--
          ``(1) compel agency action unlawfully withheld or 
        unreasonably delayed; and
          ``(2) hold unlawful and set aside agency action, findings and 
        conclusions found to be--
                  ``(A) arbitrary, capricious, an abuse of discretion, 
                or otherwise not in accordance with law;
                  ``(B) contrary to constitutional right, power, 
                privilege, or immunity;
                  ``(C) in excess of statutory jurisdiction, authority, 
                or limitations, or short of statutory right;
                  ``(D) without observance of procedure required by 
                law;
                  ``(E) unsupported by substantial evidence in a 
                proceeding subject to sections 556 and 557 or otherwise 
                reviewed on the record of an agency hearing provided by 
                statute;
                  ``(F) without substantial support in the rulemaking 
                file, viewed as a whole, for the asserted or necessary 
                factual basis, as distinguished from the policy or 
                legal basis, of a rule adopted in a proceeding subject 
                to section 553; or
                  ``(G) unwarranted by the facts to the extent that the 
                facts are subject to trial de novo by the reviewing 
                court.
  ``(b) In making the foregoing determinations, the court shall review 
the whole record or those parts of it cited by a party, and due account 
shall be taken of the rule of prejudicial error.
  ``(c) In reviewing an agency interpretation of a statute governing 
the authority for an agency action, including agency action taken 
pursuant to a statute that provides for review of final agency action, 
the reviewing court shall--
          ``(1) hold erroneous and unlawful--
                  ``(A) an agency interpretation that is other than the 
                interpretation of the statute clearly intended by 
                Congress; or
                  ``(B) an agency interpretation that is outside the 
                range of permissible interpretations of the statute; 
                and
          ``(2) hold arbitrary, capricious, or an abuse of discretion--
                  ``(A) an agency action as to which the agency--
                          ``(i) has improperly classified an 
                        interpretation as being within or outside the 
                        range of permissible interpretations; or
                          ``(ii) has not explained in a reasoned 
                        analysis why it selected the interpretation and 
                        why it rejected other permissible 
                        interpretations of the statute; or
                  ``(B) in the case of agency action subject to chapter 
                6, an interpretation that does not give the agency the 
                broadest discretion to develop rules that will satisfy 
                the decisional criteria of section 624.
  ``(d) Notwithstanding any other provision of law, the provisions of 
this subsection shall apply to, and supplement, the requirements 
contained in any statute for the review of final agency action which is 
not otherwise subject to this subsection.''.
  (b) Court of Federal Claims.--
          (1) In general.--Section 1491(a) of title 28, United States 
        Code, is amended--
                  (A) in paragraph (1), by amending the first sentence 
                to read as follows: ``The United States Court of 
                Federal Claims shall have jurisdiction to render 
                judgment upon any claim against the United States for 
                monetary relief founded either upon the Constitution or 
                any Act of Congress or any regulation or action of an 
                agency, or upon any expressed or implied contract with 
                the United States, in cases not sounding in tort, or 
                for invalidation of any Act of Congress or any 
                regulation of an executive department that adversely 
                affects private property rights in violation of the 
                fifth amendment of the United States Constitution.'';
                  (B) in paragraph (2), by inserting before the first 
                sentence the following: ``In any case within its 
                jurisdiction, the Court of Federal Claims shall have 
                the power to grant injunctive and declaratory relief 
                when appropriate.''; and
                  (C) by adding at the end the following new 
                paragraphs:
  ``(4) In cases otherwise within its jurisdiction, the Court of 
Federal Claims shall also have ancillary jurisdiction, concurrent with 
the courts designated in section 1346(b), to render judgment upon any 
related tort claim authorized under section 2674.
  ``(5) In proceedings within the jurisdiction of the Court of Federal 
Claims which constitute judicial review of agency action (rather than 
de novo proceedings), the provisions of section 706 of title 5 shall 
apply.''.
          (2) Pendency of claims in other courts.--Section 1500 of 
        title 28, United States Code, is repealed.
  (c) Judicial Proceedings.--
          (1) Consent decrees.--Chapter 7 of title 5, United States 
        Code, is amended by adding at the end the following new 
        section:

``Sec. 707. Consent decrees

  ``In interpreting any consent decree in effect on or after the date 
of enactment of this section that imposes on an agency an obligation to 
initiate, continue, or complete rulemaking proceedings, the court shall 
not enforce the decree in a way that divests the agency of discretion 
granted to it by the Congress or the Constitution to respond to 
changing circumstances, make policy or managerial choices, or protect 
the rights of third parties.''.
          (2) Affirmative defense.--Chapter 7 of title 5, United States 
        Code, is further amended by adding at the end the following new 
        section:

``Sec. 708. Affirmative defense

  ``Notwithstanding any other provision of law, it shall be an 
affirmative defense in any enforcement action brought by an agency that 
the regulated person or entity is complying with a rule, regulation, 
adjudication, directive, or order of such agency or any other agency 
that is inconsistent, incompatible, contradictory, or otherwise cannot 
be reconciled with the agency rule, regulation, adjudication, 
directive, or order being enforced.''.
          (3) Agency interpretations in civil and criminal actions.--
                  (A) In general.--Chapter 7 of title 5, United States 
                Code, is further amended by adding at the end the 
                following new section:

``Sec. 709. Agency interpretations in civil and criminal actions

  ``(a)(1) No civil or criminal penalty shall be imposed in any action 
brought in a Federal court, including an action pending on the date of 
enactment of this section, for the alleged violation of a rule, if the 
defendant, prior to the alleged violation--
          ``(A) reasonably determined, based upon a description, 
        explanation, or interpretation of the rule contained in the 
        rule's statement of basis and purpose, that the defendant was 
        in compliance with, exempt from, or otherwise not subject to, 
        the requirements of the rule; or
          ``(B) was informed by the agency that promulgated the rule, 
        or by a State authority to which had been delegated the 
        responsibility for ensuring compliance with the rule, that the 
        defendant was in compliance with, exempt from, or otherwise not 
        subject to, the requirements of the rule.
  ``(2) In determining, for purposes of paragraph (1)(A), whether a 
defendant reasonably relied upon a description, explanation, or 
interpretation of the rule contained in the rule's statement of basis 
and purpose, the court shall not give deference to any subsequent 
agency description, explanation, or interpretation of the rule relied 
on by the agency in the action that had not been published in the 
Federal Register or otherwise directly and specifically communicated to 
the defendant by the agency, or by a State authority to which had been 
delegated the responsibility for ensuring compliance with the rule, 
prior to the alleged violation.
  ``(b)(1) In a civil or criminal action in Federal court to redress an 
alleged violation of a rule, including an action pending on the date of 
enactment of this section, if the court determines that the rule in 
question is ambiguous, the court shall not give deference to an agency 
interpretation of the rule if the defendant relied upon an 
interpretation of the rule to the effect that the defendant was in 
compliance with or was exempt or otherwise not subject to the 
requirement of the rule, and the court determines that such 
determination is reasonable.
  ``(2) Without regard to whether the defendant relied upon an 
interpretation that the court determines is reasonable under paragraph 
(1), if the court determines that the rule failed to give the defendant 
fair warning of the conduct that the rule prohibits or requires, no 
civil or criminal penalty shall be imposed.
  ``(c)(1) No agency action shall be taken, or any action or other 
proceeding maintained, seeking the retroactive application of a 
requirement against any person that is based upon--
          ``(A) an interpretation of a statute, rule, guidance, agency 
        statement of policy, or license requirement or condition; or
          ``(B) a determination of fact,
if such interpretation or determination is different from a prior 
interpretation or determination by the agency or by a State or local 
government exercising authority delegated or approved by the agency, 
and if such person relied upon the prior interpretation or 
determination.
  ``(2) This subsection shall take effect on the date of enactment of 
the Comprehensive Regulatory Reform Act of 1995 and shall apply to any 
matter for which a final unappealable judicial order has not been 
issued.
  ``(d) This section shall apply to the review by a Federal court of 
any order of an agency assessing civil administrative penalties.''.
                  (B) Unpublished agency guidance.--Section 552(a)(1) 
                of title 5, United States Code, is amended by inserting 
                at the end the following new sentence: ``In an action 
                brought in a Federal court seeking a civil or criminal 
                penalty for the alleged violation of a rule, including 
                actions pending on the date of enactment of this 
                sentence, no consideration shall be given to any 
                interpretive rule, general statement of policy, or 
                other agency guidance of general or specific 
                applicability, relied upon by the agency in the action, 
                that had not been published in the Federal Register or 
                otherwise directly and specifically communicated to the 
                defendant by the agency, or by a State authority to 
                which had been delegated the responsibility for 
                ensuring compliance with the rule, prior to the alleged 
                violation.''.
          (4) Technical amendment.--The analysis for chapter 7 of title 
        5, United States Code, is amended by adding at the end the 
        following new items:
``707. Consent decrees.
``708. Affirmative defense.
``709. Agency interpretations in civil and criminal actions.''.
SEC. 6. CONGRESSIONAL REVIEW.

  (a) In General.--Title 5, United States Code, is amended by inserting 
immediately after chapter 7 the following new chapter:
         ``CHAPTER 8--CONGRESSIONAL REVIEW OF AGENCY RULEMAKING

``Sec. 801. Congressional review of agency rulemaking

  ``(a)(1) Before a rule takes effect as a final rule, the agency 
promulgating such rule shall submit to the Congress a report containing 
a copy of the rule, the notice of proposed rulemaking, and the 
statement of basis and purpose for the rule, including a complete copy 
of any analysis required under chapter 6, and the proposed effective 
date of the rule. In the case of a rule that is not a major rule within 
the meaning of section 621(4), summary of the rulemaking proceedings 
shall be submitted.
  ``(2) A rule relating to a report submitted under paragraph (1) shall 
take effect as a final rule, the latest of the following:
          ``(A) The later of the date occurring 45 days after the date 
        on which--
                  ``(i) the Congress receives the report submitted 
                under paragraph (1); or
                  ``(ii) the rule is published in the Federal Register.
          ``(B) If the Congress passes a joint resolution of 
        disapproval described under subsection (g) relating to the 
        rule, and the President signs a veto of such resolution, the 
        earlier date--
                  ``(i) on which either House of Congress votes and 
                fails to override the veto of the President; or
                  ``(ii) occurring 30 session days after the date on 
                which the Congress received the veto and objections of 
                the President.
          ``(C) The date the rule would have otherwise taken effect, if 
        not for this section (unless a joint resolution of disapproval 
        under subsection (g) is approved).
  ``(b) A rule shall not take effect as a final rule if the Congress 
passes a joint resolution of disapproval described under subsection 
(g), which is signed by the President or is vetoed and overridden by 
the Congress.
  ``(c)(1) Notwithstanding any other provision of this section (except 
subject to paragraph (3)), a rule that would not take effect by reason 
of this section may take effect if the President makes a determination 
under paragraph (2) and submits written notice of such determination to 
the Congress.
  ``(2) Paragraph (1) applies to a determination made by the President 
by Executive order that the rule should take effect because such rule 
is--
          ``(A) necessary because of an imminent threat to health or 
        safety or other emergency;
          ``(B) necessary for the enforcement of criminal laws; or
          ``(C) necessary for national security.
  ``(3) An exercise by the President of the authority under this 
subsection shall have no effect on the procedures under subsection (g) 
or the effect of a joint resolution of disapproval under this section.
  ``(4) This subsection and an Executive order issued by the President 
under paragraph (2) shall not be subject to judicial review by a court 
of the United States.
  ``(d)(1) Subsection (g) shall apply to any rule that is published in 
the Federal Register (as a rule that shall take effect as a final rule) 
during the period beginning on the date occurring 60 days before the 
date the Congress adjourns sine die through the date on which the 
succeeding Congress first convenes.
  ``(2) For purposes of subsection (g), a rule described under 
paragraph (1) shall be treated as though such rule were published in 
the Federal Register (as a rule that shall take effect as a final rule) 
on the date the succeeding Congress first convenes.
  ``(3) During the period between the date the Congress adjourns sine 
die through the date on which the succeeding Congress first convenes, a 
rule described under paragraph (1) shall take effect as a final rule as 
otherwise provided by law.
  ``(e) Any rule that takes effect and later is made of no force or 
effect by the enactment of a joint resolution under subsection (g) 
shall be treated as though such rule had never taken effect.
  ``(f) If the Congress does not enact a joint resolution of 
disapproval under subsection (g), no court or agency may infer any 
intent of the Congress from any action or inaction of the Congress with 
regard to such rule, related statute, or joint resolution of 
disapproval.
  ``(g)(1) For purposes of this subsection, the term `joint resolution' 
means only a joint resolution introduced after the date on which the 
report referred to in subsection (a) is received by Congress the matter 
after the resolving clause of which is as follows: `That Congress 
disapproves the rule submitted by the ____________ relating to 
______________, and such rule shall have no force or effect.' (The 
blank spaces being appropriately filled in.)
  ``(2)(A) A resolution described in paragraph (1) shall be referred to 
the committees in each House of Congress with jurisdiction. Such a 
resolution shall not be reported before the eighth day after its 
submission or publication date.
  ``(B) For purposes of this subsection the term `submission or 
publication date' means the later of the date on which--
          ``(i) the Congress receives the report submitted under 
        subsection (a)(1); or
          ``(ii) the rule is published in the Federal Register.
  ``(3) If the committee to which a resolution described in paragraph 
(1) is referred has not reported such resolution (or an identical 
resolution) at the end of 20 calendar days after its submission or 
publication date, such committee may be discharged by the Majority 
Leader of the Senate or the Majority Leader of the House of 
Representatives, as the case may be, from further consideration of such 
resolution and such resolution shall be placed on the appropriate 
calendar of the House involved.
  ``(4)(A) When the committee to which a resolution is referred has 
reported, or when a committee is discharged (under paragraph (3)) from 
further consideration of, a resolution described in paragraph (1), it 
shall at any time thereafter be in order (even though a previous motion 
to the same effect has been disagreed to) for any Member of the 
respective House to move to proceed to the consideration of the 
resolution, and all points of order against the resolution (and against 
consideration of the resolution) shall be waived. The motion shall be 
highly privileged in the House of Representatives and shall be 
privileged in the Senate and shall not be debatable. The motion shall 
not be subject to amendment, or to a motion to postpone, or to a motion 
to proceed to the consideration of other business. A motion to 
reconsider the vote by which the motion is agreed to or disagreed to 
shall not be in order. If a motion to proceed to the consideration of 
the resolution is agreed to, the resolution shall remain the unfinished 
business of the respective House until disposed of.
  ``(B) Debate on the resolution, and on all debatable motions and 
appeals in connection therewith, shall be limited to not more than 10 
hours, which shall be divided equally between those favoring and those 
opposing the resolution. A motion further to limit debate shall be in 
order and shall not be debatable. An amendment to, or a motion to 
postpone, or a motion to proceed to the consideration of other 
business, or a motion to recommit the resolution shall not be in order. 
A motion to reconsider the vote by which the resolution is agreed to or 
disagreed to shall not be in order.
  ``(C) Immediately following the conclusion of the debate on a 
resolution described in paragraph (1), and a single quorum call at the 
conclusion of the debate if requested in accordance with the rules of 
the appropriate House, the vote on final passage of the resolution 
shall occur.
  ``(D) Appeals from the decisions of the Chair relating to the 
application of the rules of the Senate or the House of Representatives, 
as the case may be, to the procedure relating to a resolution described 
in paragraph (1) shall be decided without debate.
  ``(5) If, before the passage by one House of a resolution of that 
House described in paragraph (1), that House receives from the other 
House a resolution described in paragraph (1), then the following 
procedures shall apply:
          ``(A) The resolution of the other House shall not be referred 
        to a committee.
          ``(B) With respect to a resolution described in paragraph (1) 
        of the House receiving the resolution--
                  ``(i) the procedure in that House shall be the same 
                as if no resolution had been received from the other 
                House; but
                  ``(ii) the vote on final passage shall be on the 
                resolution of the other House.
  ``(6) This subsection is enacted by Congress--
          ``(A) as an exercise of the rulemaking power of the Senate 
        and House of Representatives, respectively, and as such it is 
        deemed to be a part of the rules of each House, respectively, 
        but applicable only with respect to the procedure to be 
        followed in that House in the case of a resolution described in 
        paragraph (1), and it supersedes other rules only to the extent 
        that it is inconsistent with such rules; and
          ``(B) with full recognition of the constitutional right of 
        either House to change the rules (so far as relating to the 
        procedure of that House) at any time, in the same manner, and 
        to the same extent as in the case of any other rule of that 
        House.
  ``(h) This section shall not apply to rules that concern monetary 
policy proposed or implemented by the Board of Governors of the Federal 
Reserve System or the Federal Open Market Committee.''.
  (b) Technical Amendment.--The table of chapters for part I of title 
5, United States Code, is amended by inserting immediately after the 
item relating to chapter 7 the following:

``8. Congressional Review of Agency Rulemaking..............     801''.
SEC. 7. ACCOUNTING.

  (a) Definitions.--For purposes of this section, the following 
definitions apply:
          (1) Regulation.--The term ``regulation'' means an agency 
        statement of general applicability and future effect designed 
        to implement, interpret, or prescribe law or policy or 
        describing the procedures or practice requirements of an 
        agency. The term shall not include--
                  (A) administrative actions governed by sections 556 
                and 557 of title 5, United States Code;
                  (B) regulations issued with respect to a military or 
                foreign affairs function of the United States; or
                  (C) regulations related to agency organization, 
                management, or personnel.
          (2) Agency.--The term ``agency'' means any executive 
        department, military department, Government corporation, 
        Government controlled corporation, or other establishment in 
        the executive branch of the Government (including the Executive 
        Office of the President), or any independent regulatory agency, 
        but shall not include--
                  (A) the General Accounting Office;
                  (B) the Federal Election Commission;
                  (C) the governments of the District of Columbia and 
                of the territories and possessions of the United 
                States, and their various subdivisions; or
                  (D) Government-owned contractor-operated facilities, 
                including laboratories engaged in national defense 
                research and production activities.
  (b) Accounting Statement.--
          (1) In general.--(A) The President shall be responsible for 
        implementing and administering the requirements of this 
        section.
          (B) Every 2 years, not later than June of the second year, 
        the President shall prepare and submit to Congress an 
        accounting statement that estimates the costs of Federal 
        regulatory programs and corresponding benefits in accordance 
        with this subsection.
          (2) Years covered by accounting statement.--Each accounting 
        statement shall cover, at a minimum, the 5 fiscal years 
        beginning on October 1 of the year in which the report is 
        submitted and may cover any fiscal year preceding such fiscal 
        years for purpose of revising previous estimates.
          (3) Timing and procedures.--(A) The President shall provide 
        notice and opportunity for comment for each accounting 
        statement. The President may delegate to an agency the 
        requirement to provide notice and opportunity to comment for 
        the portion of the accounting statement relating to that 
        agency.
          (B) The President shall propose the first accounting 
        statement under this subsection not later than 2 years after 
        the date of the enactment of this Act and shall issue the first 
        accounting statement in final form not later than 3 years after 
        the date of the enactment of this Act. Such statement shall 
        cover, at a minimum, each of the 8 fiscal years beginning after 
        the date of the enactment of this Act.
          (4) Content of accounting statement.--(A) Each accounting 
        statement shall contain estimates of costs and benefits with 
        respect to each fiscal year covered by the statement in 
        accordance with this paragraph. For each such fiscal year for 
        which estimates were made in a previous accounting statement, 
        the statement shall revise those estimates and state the 
        reasons for the revisions.
          (B)(i) An accounting statement shall estimate the costs of 
        Federal regulatory programs by setting forth, for each year 
        covered by the statement--
                  (I) the annual expenditure of national economic 
                resources for the regulatory program; and
                  (II) such other quantitative and qualitative measures 
                of costs as the President considers appropriate.
          (ii) For purposes of the estimate of costs in the accounting 
        statement, national economic resources shall include, and shall 
        be listed under, at least the following categories:
                  (I) Private sector costs.
                  (II) Federal sector administrative costs.
                  (III) Federal sector compliance costs.
                  (IV) State and local government administrative costs.
                  (V) State and local government compliance costs.
                  (VI) Indirect costs, including opportunity costs.
          (C) An accounting statement shall estimate the benefits of 
        Federal regulatory programs by setting forth, for each year 
        covered by the statement, such quantitative and qualitative 
        measures of benefits as the President considers appropriate. 
        Any estimates of benefits concerning reduction in health, 
        safety, or environmental risks shall present the most plausible 
        level of risk practical, along with a statement of the 
        reasonable degree of scientific certainty.
  (c) Associated Report to Congress.--
          (1) In general.--At the same time as the President submits an 
        accounting statement under subsection (b), the President, 
        acting through the Director of the Office of Management and 
        Budget, shall submit to Congress a report associated with the 
        accounting statement (hereinafter referred to as an 
        ``associated report''). The associated report shall contain, in 
        accordance with this subsection--
                  (A) analyses of impacts; and
                  (B) recommendations for reform.
          (2) Analyses of impacts.--The President shall include in the 
        associated report the following:
                  (A) Analyses prepared by the President of the 
                cumulative impact of Federal regulatory programs 
                covered in the accounting statement on the following:
                          (i) The ability of State and local 
                        governments to provide essential services, 
                        including police, fire protection, and 
                        education.
                          (ii) Small business.
                          (iii) Productivity.
                          (iv) Wages.
                          (v) Economic growth.
                          (vi) Technological innovation.
                          (vii) Consumer prices for goods and services.
                          (viii) Such other factors considered 
                        appropriate by the President.
                  (B) A summary of any independent analyses of impacts 
                prepared by persons commenting during the comment 
                period on the accounting statement.
          (3) Recommendations for reform.--The President shall include 
        in the associated report the following:
                  (A) A summary of recommendations of the President for 
                reform or elimination of any Federal regulatory program 
                or program element that does not represent sound use of 
                national economic resources or otherwise is 
                inefficient.
                  (B) A summary of any recommendations for such reform 
                or elimination of Federal regulatory programs or 
                program elements prepared by persons commenting during 
                the comment period on the accounting statement.
  (d) Guidance From Office of Management and Budget.--The Director of 
the Office of Management and Budget shall, in consultation with the 
Council of Economic Advisers, provide guidance to agencies--
          (1) to standardize measures of costs and benefits in 
        accounting statements prepared pursuant to sections 3 and 7 of 
        this Act, including--
                  (A) detailed guidance on estimating the costs and 
                benefits of major rules; and
                  (B) general guidance on estimating the costs and 
                benefits of all other rules that do not meet the 
                thresholds for major rules; and
          (2) to standardize the format of the accounting statements.
  (e) Recommendations From Congressional Budget Office.--After each 
accounting statement and associated report submitted to Congress, the 
Director of the Congressional Budget Office shall make recommendations 
to the President--
          (1) for improving accounting statements prepared pursuant to 
        this section, including recommendations on level of detail and 
        accuracy; and
          (2) for improving associated reports prepared pursuant to 
        this section, including recommendations on the quality of 
        analysis.

SEC. 8. STUDIES AND REPORTS.

  (a) Risk Assessments.--The Administrative Conference of the United 
States shall--
          (1) develop and carry out an ongoing study of the operation 
        of the risk assessment requirements of subchapter III of 
        chapter 6 of title 5, United States Code (as added by section 4 
        of this Act); and
          (2) submit an annual report to the Congress on the findings 
        of the study.
  (b) Administrative Procedure Act.--Not later than December 31, 1996, 
the Administrative Conference of the United States shall--
          (1) carry out a study of the operation of the Administrative 
        Procedure Act (as amended by section 3 of this Act); and
          (2) submit a report to the Congress on the findings of the 
        study, including proposals for revision, if any.
                      I. The Development of S. 343

                             a. background

     The public has become increasingly concerned about the 
growth of the Federal Government and the number and scope of 
its regulatory programs. In the recent congressional elections, 
the public sent a clear message to Washington that they want a 
smaller, more efficient, and more effective government. This 
message reflects a deep and growing concern about the rising 
costs of federal regulations and their intrusiveness into the 
lives of most Americans.
    Although regulatory programs are intended to provide 
important protections and benefits to the public, it is clear 
that the regulatory process is failing to meet these goals in a 
cost-effective manner. Many regulations impose undue costs, and 
the regulatory process itself is too unresponsive and 
inefficient. The cumulative cost of regulation is enormous and 
is rising at an alarming rate.
    Over the past 25 years, and particularly during the Reagan 
Administration, both regulations and the regulatory process 
itself have received increasing scrutiny. That scrutiny, 
coupled with the recognition of the limited resources available 
for regulatory efforts, has revealed that regulation imposes 
enormous costs and is too inefficient and ineffective. The 
public outcry for a less burdensome, more efficient regulatory 
process has increased interest in the tools to achieve reform, 
including cost-benefit analysis, risk assessment, comparative 
risk analysis, market mechanisms, review of existing 
regulations, regulatory accounting, and congressional review of 
agency rules. All of these tools are required in the subject 
legislation. We have entered an era in government regulation 
where, now more than ever, efficiency must be a paramount 
concern. While many regulations provide important benefits and 
protections to the public, too often, regulations have been 
unduly costly or ineffective. The dual impact of rising 
regulatory costs and limited resources necessitates a smarter, 
more cost-effective approach to regulation. The goal is to 
increase the benefits and decrease the costs of regulation. The 
evolution to this efficiency paradigm is best understood in its 
historical context.1
    \1\ See generally, Marc Allen Eisner, Regulatory Politics in 
Transition, The Johns Hopkins Univ. Press (1993).
---------------------------------------------------------------------------
    Since the 1880's, regulation in the United States has 
evolved through several stages. Near the turn of the century, a 
market regime emerged in response to the rise of a new 
corporate economy. Corporations had expanded to internalize 
many functions previously accomplished through market 
transactions. Some large corporations adopted joint strategies 
to manage competition and expansion, although with mixed 
success. The growth of a large-scale corporate economy forced 
the integration of formerly local economies and threatened the 
economic independence that many businesses and consumers held 
earlier. Popular demands led government officials to try to 
force a return to the market (as in the case of antitrust) or 
to create administrative agencies to set rates approximating 
those that would have existed under market conditions. The 
market was the regulatory benchmark.
    A second wave of regulation followed the economic collapse 
of the Great Depression. Alarmed by the widespread economic and 
social dislocations of the depression, President Roosevelt 
focused on economic recovery and actively encouraged the 
organization of economic interests. Regulators allowed economic 
associations to play a central role in defining and 
implementing regulatory policy. They created a wide-ranging 
system of government-sponsored self-regulation. (See, e.g., The 
National Industrial Recovery Act.) By integrating interest 
groups into the regulatory process through quasi-corporate 
arrangements, they aimed to promote economic stability, allow 
regulators to draw on the expertise and resources of the 
regulated, and minimize confrontations. This associational 
regime, while rooted in the 1920's, emerged during the New 
Deal.
    The regulatory efforts in the 1960's and 1970's contrasted 
with the New Deal and the Progressive Eras. Many proponents of 
social regulation rejected earlier regulatory goals and were 
deeply suspicious of the distribution of economic power and 
excesses of capitalist production. Many major regulatory 
initiatives, instead of promoting economic stability or 
revitalizing markets, were intended to protect the public from 
health and environmental risks. Some social regulations even 
extended into the production process itself.
    The 1970's heralded a wave of new environmental, health and 
safety regulations. Congress created a series of new agencies 
with broad powers, including the Occupational Safety and Health 
Administration, the Environmental Protection Agency, the 
National Highway Traffic Safety Administration, the Consumer 
Product Safety Commission, and the Nuclear Regulatory 
Commission. Sweeping legislative mandates directed the agencies 
to regulate the environment, health, and safety, with little 
compromise.2
    \2\ See W. Kip Viscusi, Fatal Tradeoffs: Public and Private 
Responsibilities for Risk 248, Oxford Univ. Press, New York (1992).
---------------------------------------------------------------------------
    It soon became apparent that the costs of the new 
regulation were enormous and had to be monitored and 
controlled. The Nation's poor economic performance in the 
1970's and 1980's reshaped the political agenda. High interest 
rates, sluggish growth, and mounting foreign competition forced 
policymakers to reconsider whether many policies were 
justified. Public officials and policy analysts identified 
regulation as a cause of stagflation. Beginning with President 
Nixon, each President has implemented executive review 
processes to force agencies to consider the costs and benefits 
of their regulations. Increasingly, the economic analysis of 
regulation was conducted by economic staffs or policy offices 
within the agencies themselves. At the same time, a number of 
deregulatory initiatives were implemented. Increasingly, 
efficiency became the standard for regulatory actions.
    Deregulation of economic regulation and reform of social 
regulation began in earnest in the mid-1970's and carried over 
into the 1980's. In the context of economic regulation, there 
was a broad commitment to reevaluate well-established 
regulatory policies and to eliminate unnecessary or irrational 
regulations. While economic regulations guaranteed a degree of 
industrial stability, these gains were realized at undue costs 
from stunted competition and innovation. Most observers agreed 
that economic deregulation could benefit consumers by reducing 
prices, revitalizing economic growth, stimulating new 
competition and reducing production costs. Consumers benefited 
from the deregulation of many industries, including air 
transportation, surface transportation, energy, 
telecommunications and commercial banking.
    At the same time, the rising cost of new social regulations 
stimulated efforts to inject economic criteria into the 
regulatory decisionmaking process and to reconsider policies 
deemed too costly or intrusive. Regulatory reform focused on 
improving the internal management of the agencies by promoting 
the consideration of economic costs and benefits of 
alternatives.
    The central regulatory reform efforts involved Executive 
review of agency initiatives. Many of these efforts, however, 
failed to substantially improve the regulatory process because 
they were not sufficiently enforceable. Moreover, agency 
compliance was far from uniform, and the review process of each 
administration has been subject to shifting political winds.
    President Richard Nixon established the first modern 
regulatory review program. To address concerns over inflation, 
the Nixon administration made initial efforts to impose 
Executive review processes and provided a foundation on which 
later administrations would build. Concerns over the economic 
impact of environmental policy led the White House to establish 
an interagency ``quality of life'' committee to study the need 
for regulatory review in June 1971. In October 1971, President 
Nixon established the Quality of Life review process (``QOL''), 
supervised by OMB. Under QOL, agencies were required to 
consider various regulatory alternatives and their costs when 
developing ``significant'' regulations. The proposed and final 
regulations were submitted to OMB, which circulated them to 
other agencies for comment.
    The Nixon review process gave OMB a critical role in the 
review of regulations. However, it relied on the agencies to 
determine whether their regulations were ``significant'' and 
thus subject to OMB review. Therefore, many agencies ignored 
the process. OMB's authority was limited; the agencies retained 
final authority over the issuance of rules. Finally, the review 
process focused almost exclusively on EPA.
    President Gerald Ford expanded upon the initiatives of 
President Nixon. In an attempt to promote price stability, 
Congress authorized the creation of the Council on Wage and 
Price Stability in the Office of the President. The dual 
mission of the Council was to monitor private-sector events 
affecting price stability, and to review government programs 
and determine their inflationary impact. President Ford's 
Executive Order 11821 standardized this review by requiring 
inflationary impact statements for all major legislative 
proposals and regulations. Executive Order 11821 directed OMB 
to develop criteria for identifying major regulations and to 
prescribe procedures for their evaluation.
    Although President Ford's Executive review process made 
regulators more sensitive to the costs of regulations and 
eliminated some irrational regulatory proposals, the program 
was plagued by several problems. First, agency compliance was 
voluntary. The Council had to rely on the agencies to determine 
whether their activities were subject to review. Second, the 
quality of analyses was limited. Third, the impact statements 
were not integrated into the decisionmaking process, but were 
prepared after a proposal had been developed. Fourth, the 
Council lacked the power to reject regulations that failed the 
cost-benefit test. President Jimmy Carter continued President 
Ford's efforts to reduce the costs of regulations. The Council 
on Wage and Price Stability and the inflationary impact 
statement remained in place. In addition, President Carter 
established the Regulatory Analysis and Review Group 
(``RARG''), consisting of representatives of many Executive 
agencies, in January 1978. RARG reviewed a limited number of 
select regulations deemed to have a potentially significant 
impact on inflation--costing industry at least $100 million 
annually.
    During its last 2 years, the Carter administration made a 
systematic, but short-lived, attempt to comprehensively 
coordinate regulatory policy. In October 1978, President Carter 
created the United States Regulatory Council to coordinate and 
improve regulations. The Regulatory Council, which was composed 
of 20 Executive departments and 18 independent regulatory 
agencies, initiated a variety of projects to promote innovative 
regulatory approaches and to coordinate regulatory efforts. It 
also started a calendar of Federal regulations and issued a set 
of pamphlets on innovative approaches to regulation.3
    \3\ See Project on Alternative Regulatory Approaches, Guidebook 
Series on Alternative Regulatory Approaches, Books 1-6 (Washington, DC, 
September 1981).
---------------------------------------------------------------------------
    More importantly, President Carter issued Executive Order 
12044 in March 1978. Executive Order 12044 directed agencies to 
identify ``significant'' regulations imposing costs on the 
economy of $100 million or more per year or causing a major 
increase in costs or prices to various groups or regions, and 
to prepare an economic analysis for such regulations. The 
Carter Executive order extended earlier efforts by establishing 
guidelines for the development of regulations. The Carter 
review process explicitly applied economic analysis to 
determine whether new rules were justified and provided the 
foundation for the growing role of Executive review in the post 
comment period and in the review of existing rules.
    Despite these advances, the Carter regulatory review 
process was inadequate. As before, agencies were free to 
determine which of their proposed rules had a significant 
impact on the economy. RARG was limited by its narrow mandate 
and lack of enforcement powers. And the number of regulators 
and new Federal regulations spiralled higher than ever.
    The Reagan Presidency wrought important changes in the 
regulatory landscape that were to have a lasting impact. To 
stem the rising tide of regulations, President Reagan issued 
Executive Order 12291 shortly after taking office. This order 
incorporated and expanded upon the key provisions of Executive 
Order 12044, including a review of existing regulations, 
selecting the least costly regulatory alternative when 
developing new regulations, and requiring agencies to prepare 
regulatory cost-benefit analyses for major regulations. 
President Reagan directed agencies to develop regulations only 
if there was a clear need, the benefits outweighed the costs, 
and the least costly alternative was chosen. Most important, 
Executive Order 12291 centralized review and clearance of 
regulatory actions in OMB's Office of Information and 
Regulatory Affairs. Agencies had to respond to OMB comments and 
incorporate those comments and the agencies' responses in the 
rulemaking file before issuing a final regulation. President 
Reagan also issued Executive Order 12498 in March 1985, 
directing agencies to prepare a yearly agenda containing all 
significant regulatory actions for the coming year. Except for 
emergency situations, agencies were prohibited from taking any 
significant regulatory actions that had not been included in 
the agenda, unless those actions were cleared by OMB.
    The Reagan approach to regulation was unprecedented in 
several respects. First, regulatory review was strengthened and 
centralized in OMB and the White House more than ever. For the 
first time, no regulations could be promulgated unless they 
were first reviewed by a central clearinghouse. Centralizing 
regulatory review also helped to coordinate agency actions and 
minimize the economic impact of these actions. Executive review 
also compelled agencies to enhance their policy-planning and 
policy-evaluation staffs and to internalize the review process. 
Second, regulations had to be justified under cost-benefit 
analysis. Third, the market became the benchmark to assess the 
need for policies and to design them. Fourth, White House 
officials and regulators were sensitive to the cumulative costs 
of regulation, and this sparked regulatory reform and 
deregulation. During the 1970's, Murray Weidenbaum pioneered 
attempts to estimate the costs of regulation, including 
budgetary outlays and compliance costs. He noted that the 
administrative costs had increased dramatically during the 
1970's, driven in part by the creation of new regulatory 
agencies. However, he found that the increases in the 
regulatory budget were insignificant compared with the 
compliance costs and the total costs to the economy. The high 
cost of regulation, particularly social regulation, led 
Weidenbaum to urge policymakers and analysts to assess the 
economic impact of regulations to justify public 
policies.4
    \4\ See Murray L. Weidenbaum, ``On Estimating Regulatory Costs,'' 
Regulation 2, No. 3 (1978), at 14-17.
---------------------------------------------------------------------------
    President George Bush continued President Reagan's 
Executive orders when he took office in 1989. Concerned about 
the continuing increase in the cost of regulations, he also 
established the President's Council on Competitiveness in March 
1989 to oversee regulatory issues. The Council focused on 
reducing the cost of new and existing regulations. During a 
time of increasing social legislation, these efforts met with 
limited success.
    On October 4, 1993, President Bill Clinton issued Executive 
Order 12866, revoking prior Executive orders, but incorporating 
or restating some of the key provisions from those prior 
orders. One and one-half years after the implementation of 
Executive Order 12866, there is little evidence that the order 
has had a significant impact. In a time of increasingly limited 
government resources and reduced legislative initiatives, there 
is concern that the agencies have done too little to curb the 
rising costs and inefficiencies of regulation. Indeed, the 
administration's First Year Report on Executive Order 12866 
noted:

          Agencies today face unusual pressure to regulate. 
        With budgetary constraints so tight, and with the 
        difficulty of enacting new legislation in the highly 
        partisan atmosphere that has characterized the last 
        Congress, the only means left for the agencies to 
        implement their initiatives is through regulation. This 
        puts inordinate pressure on any attempt to hold steady 
        or reduce the amount of regulation in which they are 
        engaged.5
    \5\ ``The First Year of Executive Order No. 12866,'' a report 
prepared by Sally Katzen, Administrator, Office of Information and 
Regulatory Affairs, Office of Management and Budget (Dec. 20, 1994).

Recently, the Clinton administration listed 4,300 additional 
rulemakings scheduled for fiscal year 1995 and beyond, with 872 
final rules set to be released in the 6 months between October 
1994 and April 1995.6 Without significant new controls, 
the volume of regulations will only grow larger. This cannot 
continue.
    \6\ See Regulatory Plan and Unified Agenda of Federal Regulations 
(Nov. 14, 1994).
---------------------------------------------------------------------------

       B. The comprehensive regulatory reform act of 1995, S. 343

    S. 343, the Comprehensive Regulatory Reform Act of 1995, is 
the most recent attempt by the committee to deal with the 
costly, burdensome and abusive regulatory process. It is the 
product of at least 30 years of work in the Senate on improving 
the process by which Federal regulations are promulgated and 
enforced. In the 88th Congress, in 1964, the Subcommittee on 
the Administrative Practice and Procedure held 3 days of 
hearings and heard from 36 witnesses on a bill intended to 
``update and improve the procedural rules that govern 
proceedings before the departments and agencies.'' 7 
Hearings on this subject continued in the 89th,8 the 
94th,9 and the 95th Congresses.10 During the 96th 
Congress, the Subcommittee on Administrative Practice and 
Procedure embarked on an ambitious schedule of 10 days of 
hearings, receiving testimony from over 100 witnesses on all 
manner of regulatory reform.11
    \7\ Hearings on S. 1663 to amend the Administrative Procedure Act 
before the Subcommittee on Administrative Practice and Procedure of the 
Senate Committee on the Judiciary, 88th Cong., 2d sess. (1964).
    \8\ Hearings on Bills to Amend the Administrative Procedure Act 
before the Subcommittee on Administrative Practice and Procedure of the 
Senate Committee on the Judiciary, 89th Cong., 1st sess. (1965).
    \9\ Hearings on the Administrative Procedure Act Amendments of 1976 
before the Subcommittee on Administrative Practice and Procedure of the 
Senate Committee on the Judiciary, 94th Cong., 2d sess. (1976).
    \10\ Hearings on the Administrative Procedure Act Amendments of 
1978 before the Subcommittee of Administrative Practice and Procedure 
of the Senate Committee on the Judiciary, 95th Cong., 2d sess. (1978).
    \11\ Hearings on Regulatory Reform before the Subcommittee on 
Administrative Practice and Procedure of the Senate Committee on the 
Judiciary, 96th Cong., 1st sess. (1979) (in four parts). These hearings 
are summarized in S. Rept. 96-1018, 96th Cong., 2d sess., pt. 2 at 14-
16 (1980).
    In addition, the Committee on Governmental Affairs has 
devoted 6 years to an extensive study of the Federal regulatory 
process. In July 1975, that committee, then known as the 
Committee on Government Operations, was directed by S. Res. 71 
to conduct a comprehensive study of Federal regulation. The 
study was issued in six volumes over a 2-year period.\12\ 
During the last Congress, the Committee on Governmental Affairs 
also held 11 days of hearings on regulatory reform legislation 
and heard testimony from 80 witnesses.\13\
    \12\ The volumes of the Study on Federal Regulation by the 
Committee on Governmental Affairs were published over a period from 
January 1977 to December 1978. They are:
    1. Senate Committee on Government Operation, 95th Cong., 1st sess., 
1 Study on Federal Regulation, ``The Regulatory Appointments Process'' 
(Committee print 1977).
    2. Senate Committee on Government Operations, 95th Cong., 1st 
sess., 2 Study on Federal Regulation, ``Congressional Oversight of 
Regulatory Agencies'' (Committee print 1977).
    3. Senate Committee on Governmental Affairs, 95th Cong., 1st sess., 
3 Study on Federal Regulation, ``Public Participation in Regulatory 
Agency Proceedings'' (Committee print 1977).
    4. Senate Committee on Governmental Affairs, S. Doc. 95-72, 95th 
Cong., 1st sess., 4 Study on Federal Regulation, ``Delay in Regulatory 
Process'' (Committee print 1977).
    5. Senate Committee on Governmental Affairs, S. Doc. No. 95-91, 
95th Cong., 2nd sess., 5 Study on Federal Regulation, ``Regulatory 
Organization'' (Committee print 1977).
    6. Senate Committee on Governmental Affairs, S. Doc. No. 96-13, 
96th Cong., 1st sess., 6 Study on Federal Regulation, ``Framework for 
Regulation'' (Committee print 1978)
    [Hereinafter cited by volume of the Study on Federal Regulation.]
    \13\ Hearings on Regulatory Reform Legislation before the Senate 
Committee on Governmental Affairs, 96th Cong., 1st sess., (1979) (in 
two parts). These hearings are summarized in S. Rept. No 96-1018, pt. 1 
at 52-55 (1980).
---------------------------------------------------------------------------
    The Committee on the Judiciary and the Committee on 
Governmental Affairs each reported regulatory reform 
legislation in the 96th Congress. Though these bills had many 
similar provisions, their differences required that efforts be 
made to reconcile them before the floor consideration.\14\ The 
Congress adjourned before this work had been completed. 
However, part of the Judiciary Committee legislation, dealing 
with the impact of Federal regulation on small businesses, was 
separately enacted as the Regulatory Flexibility Act.\15\
    \14\ The parliamentary route followed by each of these bills was 
relatively complicated and shall not be recounted here. For a short 
summary, see S. Rept. 96-1018, pt. 2 at 12-14, 17.
    \15\ Public Law 96-354, 94 Stat. 1165 (codified at 5 U.S.C. 601 et 
seq.).
---------------------------------------------------------------------------
    The continuing problem of overregulation and regulatory 
abuse was a major issue during the 1994 congressional election 
cycle. The new Republican majorities in both the Senate and the 
House made regulatory reform a high priority for the 104th 
Congress.
    Majority Leader Robert Dole introduced The Comprehensive 
Regulatory Reform Act, S. 343, on February 2, 1995. The bill 
was then jointly referred to both the Committee on Judiciary 
and the Committee on Governmental Affairs. The Judiciary 
Committee subsequently referred the bill to the Subcommittee on 
Administrative Oversight and the Courts.
    Along with Majority Leader Dole, Judiciary Committee 
Chairman Orrin Hatch and Subcommittee Chairman Charles Grassley 
took the lead in developing a comprehensive approach to 
regulatory reform.
     As chairman of the Administrative Oversight and the Courts 
Subcommittee, Senator Grassley began the extensive process by 
holding a hearing over a 2-day period and then offering a 
substitute amendment at a subsequent markup on S. 343, where 
the substitute was adopted and reported to the full Judiciary 
Committee. Chairman Hatch held a full committee hearing and 
then held markup sessions on 3 separate days, where Chairman 
Hatch and Senator Grassley offered a modified substitute to S. 
343.
    Throughout the process, the drafters built upon extensive 
work that had taken place in the 97th Congress in the form of 
S. 1080. Although not as comprehensive as S. 343, S. 1080 
addressed certain fundamental problems of rulemaking and the 
oversight of that process. This bill had strong bipartisan 
support and eventually passed the Senate 94-0. However, the 
leadership of the House of Representatives refused to take 
action on S. 1080, and the bill failed to proceed.
    S. 343 is founded upon the structure of S. 1080, but has 
been expanded based upon the further development of 
administrative law and policy over the last 14 years.
    Like S. 1080, S. 343 modifies the rulemaking provisions of 
section 553 of the APA to expand effective public participation 
in agency rulemaking. The bill's amendments to the modest 
notice and comment provisions of section 553 require an agency 
to set out more thoroughly what it is trying to achieve with a 
new regulation, the legal basis for it, and a more thorough and 
substantive response to the issues raised and alternatives 
proposed by public comment on the proposed rule. These 
modifications are intended to improve agency decisionmaking by 
exposing the process to better public scrutiny and creating a 
more complete and useful record for more meaningful review by 
the President, the Congress and the courts.
    To accomplish the major goals of reducing costs and 
improving the effectiveness of regulations, S. 343 codifies the 
analytical techniques of cost-benefit analysis and risk 
assessment for ``major'' rules. These analytical tools have 
been used for some time. As the Administrative Conference of 
the United States has observed,

          Since 1974 executive branch agencies have been 
        subject to a series of Presidential executive orders 
        that required agencies to prepare comprehensive impact 
        analyses for major rulemaking proposals.

(ACUS, Recommendation 85-2: Agency Procedures for Performing 
Regulatory Analysis of Rules, reprinted in Subcommittee Hearing 
on S. 343, statement of Thomasina V. Rogers, Chair, 
Administrative Conference of the United States.)
     The wide use of these analytical techniques was reported 
to the committee as far back as 1981, when we were considering 
S. 1080. The Congressional Research Service identified over 200 
examples of Congress's incorporating these techniques into 
various statutes. (Congressional Research Service, Survey of 
United States Code Provisions Containing Requirements for Cost-
Benefit, Economic Impact, or Cost-Effectiveness Analysis 1 
(1981), reprinted in Hearing on S. 1080 Before the Subcommittee 
on Regulatory Reform, 97th Cong., 1st sess. 1141 (1981).)
                         c. lEGISLATIVE hISTORY

    S. 343 was introduced into the 104th Congress by Senate 
Republican Leader Robert Dole on February 2, 1995. Seventeen 
Senators joined Senator Dole as original cosponsors: Senators 
Nickles, Bond, Hutchison, Murkowski, Lott, Cochran, Hatch, 
Domenici, Kassebaum, Coats, Abraham, Inhofe, Smith, Santorum, 
Thompson, Warner, and Kyl. The bill was jointly referred to the 
Judiciary Committee and the Governmental Affairs Committee on 
February 3, 1995.
    The Subcommittee on Administrative Oversight and the Courts 
held a 2-day hearing primarily intended to highlight regulatory 
issues, including current problems and possible solutions. A 
variety of panels ranging from the Administration, independent 
business owners and regulatory specialists testified before the 
Subcommittee.
    The first day of the hearing was February 22, 1995. The 
subcommittee heard testimony from Thomasina Rogers, Chair of 
the Administrative Conference of the United States. She was 
accompanied by Ernest Gellhorn, Chairman of the Committee on 
Rulemaking with the Administrative Conference of the United 
States. Mr. Gellhorn did not offer testimony, but was present 
only to assist in answering questions. Rick Keith, assistant 
general manager of the Westbend Elevator Company in Mallard, 
IA, and Sal Risalvato, on behalf of the National Federation of 
Independent Businesses, testified as well. Marshall Breger of 
the Heritage Foundation and Peter Ferrara of the National 
Center for Policy Analysis concluded the hearing on February 
22.
    The subcommittee hearing on S. 343 was completed on 
February 24, 1995. Testimony was given by Sally Katzen, 
Administrator of the Office of Information and Regulatory 
Affairs within the Office of Management and Budget; C. Boyden 
Gray, with Wilmer, Cutler and Pickering law firm; Turner T. 
Smith, Jr., with Hunton and Williams; David Vladeck of Public 
Citizen; Peter Strauss, professor of administrative law, 
Columbia University Law School; Robert Cynkar of Shaw, Pittman, 
Potts and Trowbridge; and George Clemons Freeman, on behalf of 
the American Bar Association.
    On March 15, 1995, the Subcommittee on Administrative 
Oversight and the Courts reported S. 343 to the full committee 
in the form of a substitute without recommendation.
    On March 17, 1995, Chairman Orrin G. Hatch convened a 
Judiciary Committee hearing to consider S. 343. Those 
testifying included Congressman David McIntosh, R-IN; Sally 
Katzen, Administrator of the Office of Information and 
Regulatory Affairs; Philip K. Howard, author of The Death of 
Common Sense (1994); Kelvin Herstad, a small business owner 
from Deluth, MN; Robert Morris, a doctor from Milwaukee, WI; 
George Clemons Freeman, Jr., the co-chairman of the A.B.A. 
Group on Regulatory Reform; Christopher DeMuth, president of 
the American Enterprise Institute, and Cass Sunstein, a law 
professor at the University of Chicago.
    The first executive session of the Judiciary Committee was 
scheduled for the week of March 27, 1995. At the request of 
Senator Biden, Chairman Hatch delayed that meeting until April 
4. On April 3, Senator Biden again asked for a delay and the 
chairman rescheduled the meeting to April 5.
    On April 5 the Judiciary Committee met in executive session 
to consider S. 343. Chairman Hatch offered the Hatch-Grassley 
substitute as an amendment in the form of a substitute, which 
was accepted by unanimous consent.
    On April 6, 1995, the Judiciary Committee met to continue 
its consideration of S. 343. As a result of negotiations 
between the majority staff, the minority staff, and 
representatives of the administration, five pages of amendments 
were proposed. Additionally, there were a total of 21 
amendments proposed by the minority. A total of four amendments 
were offered. One of the five pages from the negotiations was 
accepted. An amendment by Senator Biden and one by Senator 
Kennedy were tabled. An amendment by Senator Feingold was 
discussed by not voted upon. At the conclusion of the day's 
session, the committee agreed to a unanimous-consent agreement 
whereby S. 343 would be favorably reported out of committee by 
6 p.m. on April 26. During the interim period the majority 
staff, minority staff, and representatives of the 
administration would negotiate on the bill.
    Between April 6 and April 26, the task force met on four 
separate days for over 22 hours. On April 25, Senator Biden 
asked Chairman Hatch to postpone the executive session until 
April 27 and proposed meeting from 10 a.m. until 1 p.m. The 
chairman agreed. Later, Senators Kennedy and Simon asked that 
the session begin at 8 a.m. instead of 10 a.m. and the meeting 
was so rescheduled. On April 27, 1995, Chairman Hatch convened 
an executive session of the Judiciary Committee to consider S. 
343. When he sought unanimous-consent for a revised agreement 
in order to vitiate the prior unanimous-consent agreement, 
Senator Kennedy objected. Thus, the original agreement to 
favorably report out S. 343 at 6 p.m. on April 26, 1995, 
remained in place.
    On April 26, 1995, the Senate Committee on the Judiciary 
approved S. 343 pursuant to the prior unanimous-consent 
agreement.

                        II. The Need for Reform

    Prior to the reporting of S. 343, the last major action on 
regulatory reform by the committee took place in the 97th 
Congress, when the committee reported S. 1080 unanimously to 
the Senate. At that time, we detailed the state of the 
regulatory system that underscored the need for reforming the 
regulatory procedures by which agency decisions are made and 
reviewed. We noted the explosive growth of federal regulations, 
S. Rept. 284, 97th Cong., 1st Sess. 9-13 (1981), reviewed 
analyses questioning the effectiveness of much of the 
regulation, id. at 17-20, and described the extraordinary costs 
imposed by regulation. Id. at 29-50.
    Despite the House of Representatives's failure to act on S. 
1080, President Reagan did initiate some reforms that helped 
centralize and strengthen White House review of Federal agency 
rulemaking. In his order on ``Federal Regulations,'' President 
Reagan required a regulatory impact analysis to be completed on 
all regulations before they could be issued. (Executive Order 
No. 12291, 3 C.F.R. 127 (1982).) President Bush continued to 
enforce President Reagan's Executive Order during his 
administration. In addition President Bush set up the 
President's Council on Competitiveness in March 1989. The 
Council focused on reducing the cost of new and existing 
regulations and was chaired by Vice-President Quayle.
    By any measure, the rapid growth of federal regulation is 
now continuing unabated. In 1993, President Clinton issued his 
Executive Order imposing a ``Regulatory Planning Review'' on 
the regulatory process. (Executive Order No. 12866, 58 Fed. 
Reg. 51735.) But the problem of the growth of Federal 
regulations remains. For example, in 1993, the number of pages 
in the Federal Register reached 60,950 pages, which is their 
highest since 1980. In addition, by 1994 the Federal regulatory 
establishment reached its largest size ever at 132,690 
individuals. (M. Warren, ``Reforming the Federal Regulatory 
Process: Rhetoric or Reality?'' Occasional Paper 138, Center 
for the Study of American Business (June 1994)). The size and 
growth of the Federal Register is graphically reflected in 
table 1.


    Despite the laudable goals of many programs, experience has 
taught us that, too often, regulations have been more costly 
and less effective than they could have been. There is a wide 
consensus on the need for regulatory reform and on how to 
achieve it. This consensus includes such diverse sources as the 
Clinton Administration,\16\ Justice Stephen Breyer,\17\ The 
Business Roundtable,\18\ the Administrative Conference of the 
United States,\19\ the Carnegie Commission,\20\ Resources for 
the Future,\21\ the National Research Council,\22\ The 
Brookings Institution,\23\ the American Enterprise 
Institute,\24\ and other think tanks, commissions, \25\ and 
independent scholars at universities throughout the 
country.\26\
    \16\ National Performance Review, Creating a Government that Works 
Better and Costs Less, Washington, DC (1993); address by President Bill 
Clinton, Washington, DC (Feb. 21, 1995); National Performance Review, 
Improving Regulatory Systems, Washington, DC (Sept. 1993).
    \17\ Stephen Breyer, Breaking the Vicious Circle: Toward Effective 
Risk Regulation, Harv. Univ. Press, Cambridge, MA (1993); Stephen 
Breyer, Regulation and Its Reform (1982).
    \18\ The Business Roundtable, Toward Smarter Regulation (1994); The 
Business Roundtable, Cost of Government Regulation Study (March 1979).
    \19\ See, e.g., ACUS Recommendation 85-2, ``Agency Procedures for 
Performing Regulatory Analysis of Rules'' (1985); ACUS Recommendation 
88-9, ``Presidential Review of Agency Rulemaking'' (1988); ACUS 
recommendation 93-4, ``Improving the Environment for Agency 
Rulemaking'' (1993).
    \20\ Carnegie Commission on Science, Technology, and Government, 
Risk and the Environment: Improving Regulatory Decisionmaking, 
Washington, DC (June 1993).
    \21\ Paul Portney, Public Policies for Environmental Protection, 
Resources for the Future, Washington, DC (1990); Paul Portney, 
``Economics and the Clean Air Act,'' 4 J. Econ. Perspectives 173 (Fall 
1990); Worst Things First?: The Debate Over Risk-Based National 
Environmental Priorities, Resources for the Future, Washington, DC 
(Adam N. Finkel and Dominic Golding, eds. 1994); Public Policies for 
Environmental Protection, Resources for the Future, Washington, D.C. 
(Paul Portney, Ed., 4th ed. 1993).
    \22\ National Research Council, Science and Judgment in Risk 
Assessment, National Academy Press, Washington, DC (1994); National 
Research Council, Issues in Risk Assessment, National Academy Press, 
Washington, DC (1993); National Research Council, Valuing Health Risks, 
Costs, and Benefits for Environmental Decision Making, National Academy 
Press, Washington, DC (1990); National Research Council, Improving Risk 
Communication, National Academy Press, Washington, DC (1989); National 
Research Council, Risk Assessment in the Federal Government: Managing 
the Process, National Academy Press, Washington, D.C. (1983).
    \23\ See, e.g, Lester Lave, The Strategy of Social Regulation, 
Brookings Institution, Washington, DC (1981); Lester Lave, Quantitative 
Risk Assessment in Regulation, Brookings Institution, Washington, D.C. 
(1982); Robert W. Crandall, Controlling Industrial Pollution: The 
Economics and Politics of the Clean Air Act, Brookings Institution, 
Washington, DC (1983).
    \24\ See, e.g., American Enterprise Institute, Benefit-Cost 
Analysis of Social Regulation: Case Studies from the Council on Wage 
and Price Stability, Washington, DC (James C. Miller and Bruce Yandle, 
eds. 1979); M. J. Bailey, Reducing Risks to Life: Measurement of 
Benefits, American Enterprise Institute, Washington, DC (1980); Robert 
W. Hahn and J. A. Hird, ``The Costs and Benefits of Regulation,'' 8 
Yale J. on Reg. 233 (Winter 1991); W. Kip Viscusi, Product-Risk 
Labelling: A Federal Responsibility, American Enterprise Institute, 
Washington, DC (1993).
    \25\ Worst Things First?: The Debate Over Risk-Based National 
Environmental Priorities, Resources for the Future, Washington, D.C. 
(Adam M. Finkel and Dominic Golding, eds. 1994); Public Policies for 
Environmental Protection, Resources for the Future, Washington, D.C. 
(Paul Portney, ed., 4th ed. 1993).
    \26\ Murray L. Weidenbaum, Business and Government in the Global 
Marketplace, Prentice Hall, Englewood Cliffs, NJ (5th ed. 1995); W. Kip 
Viscusi et al., Economics of Regulation and Antitrust, D.C. Heath & 
Co., Lexington, MA (1992); W. Kip Viscusi, ``Pricing Environmental 
Risks,'' Policy Study No. 112 (Center for the Study of Am. Bus. June 
1992); W. Kip Viscusi, Fatal Tradeoffs: Public and Private 
Responsibilities for Risk, Oxford Univ. Press, NY (1992); M.K. Landy et 
al., EPA: Asking the Wrong Questions, Oxford Univ. Press, NY (1990); 
Cass R. Sunstein, After the Rights Revolution, Harv. Univ. Press, 
Cambridge, MA (1990).
    In addition, the direct costs of complying with government 
regulation are large and ever increasing. A study done in 1992 
estimated that the cost of complying with Federal regulations 
in 1991 was approximately $542 billion (Thomas D. Hopkins, 
Costs of Regulation: Filling the Gaps 2 (1992) (report prepared 
for the Regulatory Information Service Center, Washington, 
DC)). In recent testimony by Thomas D. Hopkins before the 
Committee on Governmental Affairs, he estimated that some $600 
billion annually is spent by those regulated to comply with all 
Federal regulations. (Thomas D. Hopkins, Hearing Before the 
Committee on Government Affairs on Regulatory Reform, at 1, 
Feb. 8, 1995.)
    Adding the indirect cost of Federal regulation, which 
include higher consumer prices, less productive investment and 
lower GDP, increases the total economic costs to a range of 
$881 billion to over $1.6 trillion per year. (William G. 
Laffer, ``Realistic Options for Reducing the Burden of 
Excessive Regulation,'' Heritage Foundation Memo to President-
Elect Clinton, 1/19/93, pp. 5-6.)
    The Environmental Protection Agency's most recent estimate 
of direct compliance costs of Federal environmental regulations 
was in 1990, when it estimated the annual cost at $115 billion. 
This was the same as Hopkins' estimate. In 1992, Hopkins 
estimated environmental compliance to be $122 billion (1991 
dollars), which was 2 percent of the GDP. More than half the 
total environmental regulation costs are associated with water 
pollution control. Air pollution control is the second largest 
spending area, accounting for just over one-third of all 
federally mandated pollution costs. Land pollution control 
accounts for the rest of the environmental costs. Land 
pollution costs include solid waste; hazardous waste; RCRA and 
Superfund regulations. These cost estimates do not reflect 
implementation of the 1990 Clean Air Act Amendments. In 1992, 
Hopkins predicted the direct costs of environmental regulation 
will reach $178 billion by the year 2000.
    Regulations have high out-of-pocket expenses, that both 
directly and indirectly affect consumers. Studies on GNP losses 
from environmental regulations in 1989 and 1990 estimate that 
GNP is from 2.6 percent to 5.8 percent lower than it would have 
been without environmental regulations. In addition, without 
``destructive regulation'' the economy would have grown faster 
over the past 20 or 30 years, and each family would have a 
total income on the order of $8,000 to $17,000 higher per year, 
not counting regulations that produced more benefit than cost. 
(William G. Laffer, III, ``The Re-Regulation Explosion: Costs 
and Consequences,'' The Heritage Lectures, #422, 8/26/92, p.7.)
    It has also been estimated that 30 percent of the decline 
in U.S. manufacturing and productivity that began in the 1970's 
was due to EPA and OSHA regulation. (W. Gray, The Cost of 
Regulation: OSHA, EPA and the Productivity Slowdown, 77 
American Economic Rev. 998 (1987).)
    A sizable portion of these overburdensome costs are due to 
the misallocation of resources. For example, Justice Breyer has 
ably pointed out that spending around $4 billion per life on 
hazardous waste land-disposal bans, while failing to implement 
vaccination and mammography programs that could save lives at 
well under $100,000 per life, means something is wrong and 
lives are being wasted. (Stephen Breyer, Breaking the Vicious 
Circle: Toward Effective Risk Regulation at 17-19, (1993).) 
Similarly, the requirement set for pulp mills that imposes over 
$99 billion for each life-year saved. (Subcommittee Hearing on 
S. 343, statement of Peter J. Ferrara at 3.) Justice Stephen 
Breyer documented regulatory extremes by noting, ``Experts 
calculate that the EPA rules, regulating sources such as 
benzene storage vessels and coke-product recovery plants, save 
a total of three to four lives per year, at a cost of well over 
$200 million; one regulation costs approximately $180 million 
to save a single statistical life.'' (S. Breyer, supra, at 15). 
Justice Breyer also points out another recent case involving an 
EPA ban on asbestos pipe, shingles, and paper that cost from 
$200 million to $300 million to save a total of seven to eight 
lives over 13 years. (Id. at 14.) In striking down the 
regulation, a Federal court concluded, ``[O]ver the next 13 
years, we can expect more than a dozen deaths from ingested 
toothpicks--a death toll more than twice what the EPA predicts 
will flow from the quarter-billion dollar bans of asbestos 
pipe, shingles and roof coatings.'' (Corrosion Proof Fittings 
v. E.P.A., 947 F.2d 1201, 1223 n. 23 (5th Cir. 1991), quoted in 
Breaking the Vicious Circle, id. at 14.)
    Moreover, it is estimated that a reallocation of resources 
to more cost-effective programs could save an additional 60,000 
lives per year at no additional cost, and that the same number 
of lives we are currently saving could be saved for $31 billion 
less. (Tammy O. Tengs, ``Optimizing Societal Investments in 
Preventing Premature Death,'' Doctoral Dissertation, Harvard 
School of Public Health, June 1994; Tammy O. Tengs et al, 
``Five Hundred Life-Saving Interventions and their Cost-
Effectiveness,'' Risk Analysis, in press, as quoted in ``Reform 
of Risk Regulation: Achieving More Protection at Less Cost, 
Center for Risk Analysis, Harvard School of Public Health, at 
16 (March 1995).)
    These points confirm the conclusion of the representative 
of the National Federation of Independent Business (``NFIB'') 
who testified before the committee: ``Today, it doesn't matter 
whether one is a white male, a woman, or a minority, if you're 
in business, your common concern is TOO MUCH GOVERNMENT!'' 
(Hearing on S. 343 before the Senate Committee on the 
Judiciary, 104th Cong., 1st sess. (1995) (statement of Kelvin 
R. Herstad at 8) (emphasis in original) [hereinafter Hearing on 
S. 343].
    Indeed, the burdens of overregulation are dramatically 
exemplified in the small business community. Government 
paperwork alone has been estimated to consume 1 billion hours 
of small business owner's time, at an annual cost of $100 
billion. (Susan Eckerly, supra, at 1.) The difficulties in 
dealing with these burdens were expressed by small business 
operators in detail for the committee. (See both Committee 
Hearing and Subcommittee Hearing on S. 343, statements by 
Kelvin R. Herstad and Sal Risalvato.)
    This was recognized by the Clinton administration which 
acknowledged that ``We have spent too much money for programs 
that don't work.'' 27 Indeed, ``The average American 
believes that we waste 48 cents of every tax dollar.'' 28 
The growing number and cost of regulation is undermining the 
faith of the public in government. With regulations, as with 
any other government programs, the American public has a right 
to ask whether it is getting its money's worth.
    \27\ National Performance Review, Creating a Government that Works 
Better and Costs Less 2 (Sept. 7, 1993).
    \28\ Id. at 1.
---------------------------------------------------------------------------
    Without a doubt, we have become hostage to the unregulated 
regulatory process. As American Enterprise Institute President 
Christopher DeMuth stated in his testimony before the 
committee:

          Federal regulation has grown enormously in recent 
        decades and is today much more costly than all of the 
        domestic (nondefense) discretionary spending programs 
        of the federal government combined. Yet regulation is 
        subject to none of the public finance constraints that 
        govern and moderate direct federal spending: spending 
        authorizations, limits on available tax revenues, 
        regular annual review and appropriations by the 
        Congress, and so forth. Regulation is instead a form of 
        delegated lawmaking, in which Congress authorizes 
        administrative agencies to issue rules with the force 
        of law, most of whose effects--direct expenditures and 
        other costs, as well as benefits--are realized entirely 
        within the private sector, with no interposition of the 
        public fisc. (Hearing on S. 343, statement of 
        Christopher DeMuth at 2.)

    Professor Cass Sunstein, who testified before the committee 
against this bill made the point by underscoring the fact that 
``No one can dispute the claim that Federal regulation is too 
expensive. We could accomplish the same amount at much lower 
expense. Nor should anyone dispute the claim that government 
ought to engage in better risk assessment and priority setting. 
Too often large amounts are devoted to small problems, and 
small amounts are devoted to large problems.'' (Hearing on S. 
343, statement by Prof. Cass R. Sunstein at 3). Table 2, which 
Professor Sunstein provided to the committee, supports this 
statement.

                                                     TABLE 2                                                    
                                           [Millions of 1992 dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                                                  Cost-per-life-
    Budgeted regulations        Year              Agency                        Status                 saved    
----------------------------------------------------------------------------------------------------------------
1. Steering column               1967  NHTSA.......................  F..........................             0.1
 protection.                                                                                                    
2. Unvented space heaters...     1980  CPSC........................  F..........................             0.1
3. Cabin fire protection....     1985  FAA.........................  F..........................             0.3
4. Passive restraints/belts.     1984  NHTSA.......................  F..........................             0.4
5. Fuel system integrity....     1975  NHTSA.......................  F..........................             0.4
6. Trihalomethanes..........     1979  EPA.........................  F..........................             0.4
7. Underground constr.......     1989  OSHA-S......................  F..........................             0.4
8. Alcohol & drug control...     1985  FRA.........................  F..........................             0.7
9. Servicing wheel rims.....     1984  OSHA-S......................  F..........................             0.7
10. Seat cushion                 1984  FAA.........................  F..........................             0.8
 flammability.                                                                                                  
11. Floor emergency lighting     1984  FAA.........................  F..........................             0.9
12. Crane susp. pers. platf.     1988  OSHA-S......................  F..........................             1.2
13. Children's sleepware         1973  CPSC........................  F..........................             1.8
 flammability.                                                                                                  
14. Side doors..............     1979  NHTSA.......................  F..........................             1.8
15. Concr. & masonry constr.     1988  OSHA-S......................  F..........................             1.9
16. Hazard communication....     1983  OSHA-S......................  F..........................             2.4
17. Asbestos................     1986  OSHA-H......................  F..........................             2.8
18. Benzene/fugitive emiss..     1984  EPA.........................  F..........................             3.8
                                                                                                                
Regulations failing BCA test                                                                                    
                                                                                                                
19. Grain dust..............     1987  OSHA-S......................  F..........................             8.8
20. Radionuclides/uran.mines     1984  EPA.........................  F..........................             9.3
                                                                                                                
Regulations failing HHA (and                                                                                    
          BCA) test                                                                                             
                                                                                                                
21. Benzene.................     1987  OSHA-H......................  F..........................            23.1
22. Ethylene oxide..........     1984  OSHA-H......................  F..........................            34.6
23. Uran. mill tail./inact..     1983  EPA.........................  F..........................            37.3
24. Acrylonitrile...........     1978  OSHA-H......................  F..........................            50.8
25. Uran. mill tail./active.     1983  EPA.........................  F..........................            71.6
26. Asbestos................     1989  EPA.........................  F..........................            72.9
27. Coke ovens..............     1976  OSHA-H......................  F..........................            83.4
28. Arsenic.................     1978  OSHA-H......................  F..........................           125.0
29. DES (cattlefeed)........     1979  FDA.........................  F..........................           178.0
30. Arsenic/glass manufact..     1986  EPA.........................  F..........................           192.0
31. Benzene/storage.........     1984  EPA.........................  R..........................           273.0
32. Radionuclides/DOE facil.     1984  EPA.........................  R..........................           284.0
33. Radionuclides/elim.          1984  EPA.........................  R..........................           365.0
 phos..                                                                                                         
34. Acrylonitrile...........     1978  OSHA-H......................  R..........................           416.0
35. Benzene/ethylbenz./styr.     1984  EPA.........................  R..........................           652.0
36. Benzene/maleic anhydride     1984  EPA.........................  R..........................         1,107.0
37. Formaldehyde............     1987  OSHA-H......................  F..........................      119,000.00
----------------------------------------------------------------------------------------------------------------
Source--Lutter & Morrall, Health-Health Analysis, 8 Journal of Risk and Uncertainty 43, 59 (1994).              

    The Committee is deeply concerned about the adverse impact 
of the growing regulatory burden on the American public. 
Perhaps because regulatory costs generally directly impact 
businesses and governments and are off-budget expenditures, 
they have not been adequately scrutinized. Yet, these 
regulatory costs are like hidden taxes. While American workers 
see their tax burden on their Form 1040, they are told 
virtually nothing about their regulatory burden. Ultimately, 
however, these hidden taxes are passed on to the American 
consumer and taxpayer through higher prices, diminished wages, 
increased taxes, or reduced government services. These hidden 
taxes amount to about $6,000 per year for the average American 
household. 29 And the decisions to create and impose 
regulations, especially at the agency level, are remote from 
public view, where there is greater potential for waste. 
Regulations are created as their need is perceived, without the 
constraints of a budget or forced tradeoffs with other 
important priorities. Because regulatory costs do not appear 
directly in the government budget, it comes as no surprise that 
governments are tempted to implement programs by way of 
regulations instead of expenditures at a time of soaring 
deficits.
    \29\ See Thomas D. Hopkins, ``Costs of Regulation: Filling the 
Gaps'' (Rep. Prepared for Reg. Info. Service Center) (August 1992).
---------------------------------------------------------------------------
    The committee believes S. 343 will remedy this 
unjustifiable status quo by putting in place an improved 
administrative process that will require regulators to use 
reasoned decision-making and force the agencies to be more 
responsive and accountable to the American people, as well as 
to the Congress. After all, it is the American people, through 
their Congress, who have delegated their authority to the 
agencies.
                      III. Votes of the Committee

    Pursuant to paragraph 7 of rule XXVI of the Standing Rules 
of the Senate, each committee is to announce the results of 
rollcall votes taken in any meeting of the committee on any 
measure or amendment. The Senate Judiciary Committee, with a 
quorum present, met on Thursday, April 6, 1995, at 8:20 a.m. to 
mark up S. 343. The following rollcall votes occurred on 
amendments proposed thereto:
    (1) The Biden amendment to alter the petition process. The 
amendment was tabled: 9 yeas to 7 nays with 1 present.

        YEAS                          NAYS
Thurmond                            Biden
Simpson (Proxy)                     Kennedy
Grassley                            Leahy (Proxy)
Brown (Proxy)                       Simon (Proxy)
Thompson                            Kohl (Proxy)
Kyl                                 Feinstein
DeWine                              Feingold (Proxy)
Abraham
Hatch

                            Present--Heflin

    (2) The Kennedy amendment to exempt OSHA. The amendment was 
tabled 10 yeas to 7 nays.

        YEAS                          NAYS
Thurmond                            Biden (Proxy)
Simpson                             Kennedy (Proxy)
Grassley                            Leahy
Brown                               Simon (Proxy)
Thompson                            Kohl (Proxy)
Kyl                                 Feinstein (Proxy)
DeWine                              Feingold (Proxy)
Abraham
Heflin (Proxy)
Hatch

                    IV. Section-by-Section Analysis

                               section 1

    Section 1 sets out the short title of this bill, the 
``Comprehensive Regulatory Reform Act of 1995.''

                               section 2

    Section 2 makes technical amendments to section 551 of 
title 5, United States Code, and adds a definition that 
``Director'' means the Director of the Office of Management and 
Budget.

                               section 3

    Section 3 substantially rewrites section 553 of title 5, 
United States Code, which is the Administrative Procedure Act 
(hereinafter (``A.P.A.'') section governing informal (notice 
and comment) rulemaking. New section 553 would have the 
following provisions:

New Subsection 553(a)

    This subsection sets out the basic requirement that the 
procedures of section 553 apply to all rulemakings except those 
specifically exempted. Current section 553 does not clearly 
state its applicability, due in large part to the exemptions 
which are located in different parts of the section. The 
committee concluded that the applicability and requirements of 
section 553 should be reorganized in this way so as to more 
clearly express the provisions of this statute.
            New Paragraph 553(a)(1)
    Paragraph (a)(1) maintains the current exemption for a rule 
to the extent it involves a matter pertaining to a military or 
foreign affairs function of the United States.
            New Paragraph 553(a)(2)
    This paragraph tightens the existing rulemaking exemption 
for ``a matter relating to agency management or personnel.'' 5 
U.S.C. 553(a)(2). Under this provision only a rule relating 
exclusively to internal personnel rules and personnel practices 
of an agency is exempted from normal section 553 rulemaking 
procedures. The Committee adopts the discussion of this 
provision as it appears on pages 109-110 of its report on S. 
1080 (Senate Report 97-284 (1981)(hereinafter ``Report on S. 
1080'')).
            New Paragraph 553(a)(3)
    Currently the A.P.A. contains an exception for 
``interpretative rules and general statements of policy,'' 
allowing an agency to bypass the public notice and comment 
requirements otherwise applicable to agency regulations. 5 
U.S.C. 553(b)(A). Since the A.P.A. was first enacted in 1946, 
there has been continuous confusion and ambiguity concerning 
whether or not a regulation is merely clarifying or 
interpreting an already existing right or obligation or is a 
statement of new requirements. We intend, under this exemption, 
to allow an agency to make generally applicable statements that 
are genuinely interpretive and to make interpretations or 
policy statements applicable to a particular person for a 
particular regulated situation without following section 553 
rulemaking procedures. The Committee adopts the discussion of 
this provision as it appears on pages 110-114 of its report on 
S. 1080 (Senate Report 97-284 (1981)).
            New Paragraph 553(a)(4)
    This paragraph exempts rules relating to the acquisition, 
management, or disposal of real or personal property or 
services by an agency from the notice and comment procedures. 
Such rules do not restrict the public at large, but rather are 
internal rules of operation for the executive agencies 
themselves. As such, they do not add to the cumulative burden 
which regulation places on society. Therefore, the committee 
sees no reason to group them with burdensome regulations in 
requiring notice and comment.
New Subsection 553(b)

    This subsection considerably expands the amount of 
information which must be included in a notice of proposed 
rulemaking. In general, these expanded notice provisions will 
require an agency to give the public a clearer idea of the 
problem an agency believes a proposed rule addresses, of the 
contemplated provisions of the proposed rule, of how the rule 
will remedy the identified problem, and of the agency thinking 
behind the rule. These provisions will ``require more careful 
and thoughtful internal planning, evaluation and management of 
agency action and provide more informed public participation in 
the rulemaking process.'' (Hearing on S. 1080, statement of 
Nicholas Calio, Report on S. 1080).
    The fact that these provisions will require an agency to 
begin the public rulemaking process with a much clearer sense 
of what a particular rule is designed to achieve obviously 
means that the notice of proposed rulemaking will be a less 
tentative document than at present. A related purpose of these 
notice-and-comment procedures is for the agency to learn from 
the public more about the potential effect of a particular 
proposal. Accordingly, though the committee has expanded the 
notice requirements of the A.P.A. so that the public will be 
fully apprised of an agency proposal, the committee does not 
expect that these modifications will preclude an agency from 
changing its thinking with respect to a particular rulemaking 
after receiving public comment. The expanded notice provisions 
are intended to give the public a clear idea of agency 
thinking, so that if such thinking should be changed, helpful 
comments to that effect will be forthcoming. Indeed, these 
provisions do not preclude an agency from using various 
informal and flexible techniques, such as the so-called advance 
notice of proposed rulemaking, to solicit information from the 
public or to otherwise test ideas before issuing a notice of 
proposed rulemaking. In some instances, these expanded notice 
requirements may be a practical incentive for an agency to 
employ such informal techniques to more satisfactorily prepare 
the notice of proposed rulemaking. The committee concluded that 
any attempt to require such informal mechanisms in this 
legislation might detract from the flexibility and informality 
which recommends them. However, the committee strongly 
encourages agencies to use such techniques whenever 
appropriate.
    The committee expects that these expanded notice provisions 
will improve the rule eventually proposed by an agency; and, by 
setting out more definitely the rationale for the rule, make 
public comment more specific and useful:

          The required statements on statutory authority, 
        congressional intent, regulatory objectives, and 
        sources of information will focus the agency's inquiry 
        on the actual need, purpose and likely success of its 
        proposal. Simultaneously, those statements will allow 
        affected parties and the public to grasp the bases and 
        intent of the agency's action and better formulate 
        their support or challenge to it. Id.
            New Paragraph 553(b)(1)
    The beginning of new paragraph (b)(1) essentially maintains 
the present requirement governing how notice of a proposed 
rulemaking shall be given; that is, it shall be published in 
the Federal Register unless each person subject to the proposed 
rule is personally served with the notice or had actual notice 
of the proposed rulemaking. This provision does not preclude an 
agency from taking additional steps to ensure that those 
affected by a proposed rule are aware of the rulemaking, and 
the Committee encourages agencies to take such steps, The 
individual subparagraphs of subsection (b)(1) specify what 
information must be included in the notice.
            New Subparagraph 553(b)(1)(A)
    This subparagraph requires an agency to state in the notice 
when comments from the public will be received and the ``time, 
place, and nature'' of any hearings which the agency is 
planning to hold. Under this provision, an agency must give the 
public all the basic information of a more mechanical nature 
that they need to know to adequately participate in the 
rulemaking.
            New Subparagraph 553(b)(1)(B)
    Subparagraph (B) provides that the explanation of the 
agency of whether the proposed rule is a ``major rule'' within 
the meaning of that term as defined in new section 621 of title 
5, United States Code, must be published in the notice of 
proposed rulemaking. The requirement of ``a succinct 
explanation of the need for, and the specific objectives of the 
rule'' is intended to give the public a clear understanding of 
the perceived problem addressed by a proposed rule and how the 
agency expects the rule will resolve it. Obviously included in 
this basic rationale for the rule will be some explanation of 
the deficiencies in the existing regulatory scheme which 
necessitate the promulgation of the rule. In addition, this 
requirement will focus the attention of the agency on assessing 
whether a proposed rule reasonably can be expected to provide 
an improvement in the status quo. Thus, the agency should be 
able to identify such a reasonable improvement in the notice. 
The notice of proposed rulemaking should identify and discuss 
the factual information and policy determinations, including 
the justifications for any assumptions that underlie the 
agency's determination of need.
            New Subparagraph 553(b)(1)(C)
    Under subparagraph (C), an agency must explain its 
statutory authority to propose the rule which is the subject of 
the rulemaking. The committee expects that this explanation 
will be specific, setting out the explicit congressional 
delegation of rulemaking authority involved. As statutory 
language may be quite general or ambiguous, this subparagraph 
also requires an agency to succinctly explain how the 
rulemaking is consistent with the intent of Congress in 
delegating this authority to the agency. This provision forces 
the agency to comply with the standards set forth by the 
Supreme Court in Chevron v. Natural Resources Defense Council, 
467 U.S. 837 (1984. For a further discussion of these 
standards, see new section 706.)
            New Subparagraph 553(b)(1)(D)
    Under current law, the notice of proposed rulemaking must 
contain ``either the terms or substance of the proposed rule or 
a description of the subjects and issues involved.'' 5 U.S.C. 
553(b)(3). The committee concluded that this formulation 
allowed an agency to make too generalized a statement of a 
proposed rule, limiting the ability of interested persons to 
effectively comment on a rule an agency was likely to 
implement. Consequently, this subparagraph tightens this 
language, requiring that the notice include the ``proposed 
provisions of the rule.''
            New Subparagraph 553(b)(1)(E)
    This subparagraph requires that a summary of any 
preliminary regulatory analysis, required to be issued for a 
proposed ``major rule'' under new chapter 6 of title 5, United 
States Code, be published in the notice of proposed rulemaking. 
The committee did not require the whole preliminary regulatory 
analysis to be published in the notice because of the expense 
involved in printing a lengthy analysis and because the whole 
analysis will be in the rulemaking file, available for public 
inspection and copying. The complete preliminary regulatory 
analysis must be placed in the rulemaking file pursuant to 
subparagraphs 553(f) (1) and (2). The committee intends that 
the summary published in the notice will be a concise 
presentation of the substance of the preliminary regulatory 
analysis, yet comprehensive enough to basically advise the 
public of its contents.
            New Subparagraph 553(b)(1)(F)
    This subparagraph requires the agency in the notice to 
solicit suggestions from the public for more effective or less 
burdensome ways to achieve the objective of the rulemaking. The 
committee does not expect an agency unfailingly to generate by 
itself the ``right'' approach to a particular problem. The 
agency should learn, and the rulemaking benefit, from the 
ideas, expertise, and information contributed by interested 
members of the public. Consequently, the committee does not 
intend this requirement to degenerate into a mere recitation 
that the ``agency seeks proposals.'' Rather, an agency 
complying with this provision in good faith should tailor its 
invitation for alternatives to the particular rulemaking so as 
to stimulate helpful public comment.
            New Subparagraph 553(b)(1)(G)
    In adopting subparagraph (G), the committee is requiring 
agencies to provide a comprehensive description of the 
underlying data and scientific and other information which 
supports the proposal of the agency as well as other relevant 
information considered, including data which does not support 
the agency proposal. This description should indicate both the 
source of the supporting information and, where appropriate, 
the purposes for which the agency plans to rely on such 
information. Material that pertains directly to the rulemaking 
and that the agency has considered in connection with the 
rulemaking must be, described so as to disclose any information 
which may contradict the assumptions or conclusions of the 
agency which underlie the proposed rule. Subparagraph 
553(c)(1)(G) would require an agency to identify the data upon 
which it relied or planned to rely in proposing a rule 
concerning the health effects of a particular substance, and to 
indicate the purpose or purposes for which the agency would 
rely upon the data. The agency would also describe other 
information that pertained directly to the rulemaking, such as 
what steps the agency had undertaken to verify the quality and 
reliability of the information and evaluations upon which the 
agency plans to rely.
    The intent of this provision is to make all relevant 
scientific evaluations, data, and other information considered 
by or submitted to an agency in connection with a rulemaking 
available to the public in a manner which will aid public 
understanding both of the basis for the regulation and of the 
evidence challenging that basis; and which will ensure that the 
opportunity for public participation in the rulemaking will 
allow the public to present informed and meaningful comments.
            New Subparagraph 553(b)(1)(H)
    This provision requires an agency to identify where the 
rulemaking file may be inspected or where copies of the file 
may be obtained.
            New Paragraph 553(b)(2)
    Paragraph 553(b)(2) continues in limited form the current 
A.P.A. exemption for those rules for which the agency has 
found, for good cause, that notice-and-comment rulemaking is 
unnecessary. It allows an agency to delay compliance with 
section 553 rulemaking procedures, to comply only partially, or 
to not comply at all for a rule which will have only an 
``insignificant impact.''
    For example, a rule has insignificant impact when it 
details the performance of ministerial functions within the 
agency which have slight external effects, such as the 
appropriate processing of filings and forms within the agency's 
offices, United States v. Hayes, 325 F.2d 307 (4th Cir. 1963), 
or when it is merely a published notice of changes of address 
within the agency structure in accordance with section 
552(a)(1)(A) of title 5. An agency which consolidates two 
offices within its headquarters may rearrange its structure and 
may be required to publish such changes for the guidance of the 
public. But notice and comment are not necessary for the 
implementation of such actions. Also, events of an ephemeral 
nature which pass quickly but which are required to be done by 
rule, such as a temporary air space limitation for commercial 
aircraft over a missile range, are the kinds of events of 
insignificant public impact for which delay or exemption is 
appropriate. The person asserting that there is a need for 
prompt notice and an opportunity for comment is able to ask for 
such action by petition or by seeking injunctive relief.
            New Subparagraph 553(b)(2)(A)
    This subparagraph establishes an exemption from section 553 
rulemaking procedures for an emergency rule or a rule with an 
insignificant impact.
            New Subparagraph 553(b)(2)(B)
    This paragraph qualifies the exemption from notice-and-
comment rulemaking set out in new subparagraph 553(b)(2)(A). 
Under this provision, the exemption for rules with an 
insignificant impact is applicable only if the agency publishes 
the rule in the Federal Register with a statement explaining 
the finding of the agency that the rule will have an 
insignificant impact.
    This provision codifies the notion that a mere agency 
recital that a rule will have insignificant impact does not 
mean that the rule will in fact have only an insignificant 
impact. This is an approach adopted by the courts in applying 
the existing exemptions. E.g., Mobil Oil Corp. v. Dept. of 
Energy, 610 F.2d 796 (T.E.C.A. 1979). (``It is axiomatic that a 
mere recital of good cause does not create good cause.'' Id. at 
803.) Under this new paragraph, an agency must publicly justify 
its use of the rulemaking exemption for rules with an 
insignificant impact.
            New Subparagraph 553(b)(2)(C)
    This paragraph requires the agency to comply with notice 
and comment procedures ``to the maximum extent feasible'' 
before it promulgates a rule and must fully comply as soon as 
practicable thereafter.
    The committee intends that an agency shall follow the 
rulemaking procedures normally required before a rule is made 
effective even in the context of emergencies, ``to the maximum 
extent feasible.'' ``Feasible'' here means ``possible.'' 
Compliance with those procedures ``as soon as practicable 
thereafter'' has a similar meaning: as soon as the agency can 
fully comply, it must.

New Subsection 553(b)(3)

    The committee has determined that a successful public 
comment process requires fair and complete notice to the public 
of the subject of the rulemaking and of the agency's approach 
to that subject. When the agency's approach changes greatly in 
the course of the rulemaking, the public may no longer be in a 
position to offer valuable comment. Accordingly, paragraph 
(b)(3) is intended to require agencies to keep interested 
members of the public fairly and contemporaneously apprised of 
the material issues being considered by the agency and of the 
potential substance of rules under consideration. The committee 
adopts the discussion of this section in the Report on S. 1080 
at pages 120-122.
            New Paragraph 553(c)(1)
    Paragraph (1) of subsection (c) restates and elaborates on 
the current section 553(c). The significant new requirement is 
that agencies provide interested persons a period of not less 
than 60 days for the submission of written data, views, 
arguments and statements. Existing law provides no minimum 
comment period. The new 60-day requirement is in accord, 
however, with the practice of many agencies. It was also the 
minimum comment period specified for significant rules in 
Executive Order 12044, issued by President Carter. Executive 
Order 12044, 43 Fed. Bed. 12,661 (1978). Given the complexity 
of many of the issues involved in agency rulemaking, the 
committee believes that the 60-day period is necessary and will 
not result in delays in agency rulemaking. It should be 
emphasized, however, that the provisions of the bill regarding 
emergency rules will give agencies the necessary flexibility to 
place a rule into effect before allowing a normal comment 
period where a delay would seriously injure the public 
interest.
            New Subparagraph 553(c)(2)(A)
    The committee believes that increased public comment will 
serve to greatly enhance the effectiveness and efficiency of 
agency rulemaking. This subparagraph facilitates such increased 
comment by authorizing the agency to notice proposed 
rulemakings in advance, give special notice to those likely to 
be subject to a rule but unlikely to receive actual notice from 
the Federal Register, and opportunities for public hearings 
among other options. This procedure is entirely optional but 
the committee strongly encourages agencies to participate in 
the activities authorized by this subparagraph.
            New Subparagraph 553(c)(2)(B)
    As the decision to use or not to use the procedures in the 
above subparagraph are entirely discretionary, such decision is 
not subject to judicial review.
            New Paragraph 553(c)(3)
    Although the committee is strongly in favor of expanded 
public comment, it also recognizes the countervailing interests 
in having the rulemaking proceed at a reasonable pace. 
Therefore, this subsection authorizes agencies to establish 
``reasonable procedures to regulate the course of informal 
public hearings''. This subsection is in no way meant to 
provide the opportunity for an agency to exclude from the 
hearing a person, group of people, or organization which would 
otherwise be permitted to appear. Rather, it is meant to 
provide the agency with the ability to facilitate hearings by 
designating representatives for several parties with a common 
interest in the rulemaking.
            New Paragraph 553(c)(4)
    This subsection requires the agency to publish a statement 
of a rule's basis and purpose upon final publication of the 
rule. The committee intends that the agency statement, of basis 
and purpose be more complete and significantly more informative 
than the minimal statement provided for in current law. In 
contrast to present law, such statements no longer should be 
``general.'' Instead, agencies should articulate carefully and 
fully the basis and purpose of a rule grounded upon the 
rulemaking file as constituted on the date of the final 
rulemaking. This statement must accompany final publication of 
the rule, which must occur not less than 30 days before the 
effective date of the rule.
    The agency will be required to articulate the reasons 
behind the rulemaking as well as the factual and policy 
determinations that support it. This will afford a reviewing 
court the opportunity to ``consider whether [the agency's 
decision] embodies an abuse of discretion or error of law.'' 
Kennecott Copper Corp. v. EPA, 462 F.2d 846, 849 (D.C. Cir. 
1972). Only if the agency is required to ``articulate the 
standards and principles that govern [its] discretionary 
decisions in as much detail as possible,'' Environmental 
Defense Fund, Inc., v. Ruckelshaus, 439 F.2d 584, 598 (D.C. 
Cir. 1971), will a reviewing court be able to determine whether 
the agency ``[took] a 'hard look' at the salient problems and 
[had] not genuinely engaged in reasoned decision-making.'' 
Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. 
Cir. 1970). As a general matter, this will require the agency 
to cite the credible and reliable evidence in the rulemaking 
record and the policy bases which support its determinations, 
identify the factors considered in promulgating the rule, and 
explain how information received by the agency was developed 
and evaluated.
    It is important that the basis and purpose of the rule be 
delineated fully at the time of promulgation to avoid ``post 
hoc rationalizations'' by the agency or the courts. The 
requirement that the statement accompany the rule is also 
intended to further this goal. As the Supreme Court stated in 
FPC v. Texaco Inc., 417 U.S. 380, 397 (1974) (citing Burlington 
Truck Lines v. U.S., 371 U.S. 156, 168-69 (1962), ``we can not 
`accept * * * post hoc rationalizations for agency action'; for 
an agency's order must be upheld, if at all, `on the same basis 
articulated in the order by the agency itself.' '' Post hoc 
rationalizations serve to defeat the purpose of notice and 
comment rulemakings by permitting the one-sided articulation or 
creation of a ``rationale'' without the opportunity for public 
examination or commentary.
            New Subparagraph 553(c)(4)(A)
    The subparagraph (A) provision for ``a statement of the 
need for, and the objectives of, the rule'' is intended to 
require an agency to demonstrate adequate support for its 
determination that the final rule reasonably can be expected to 
improve significantly the status quo. Thus, the agency should 
make a threshold determination that there is a need for such a 
rule and that there is a reasonable likelihood of significant 
improvement as a result of the rule. This provision is intended 
to avoid regulation where significant improvement can not 
reasonably be predicted based on the information available to 
the agency. The agency's determination of need should be based 
on adequate information which, if questioned, has been 
validated and confirmed on the basis of generally accepted 
standards in relevant fields of expertise.
            New Subparagraph 553(c)(4)(B)
    This subparagraph is intended to ensure that an agency will 
genuinely consider and respond to reasonable alternatives to a 
rule proposed by persons outside the agency. The agency need 
not consider approaches which are not lawful under the 
applicable statutes. Indeed, since an agency may not promulgate 
a rule for which it lacks statutory authority, it is only 
common sense that it need not consider such a rule. In such a 
case, the agency should explain its conclusion that a 
particular alternative is not lawful. An agency is not 
precluded, however, from describing alternatives which are not 
lawful under applicable statutes where otherwise required by 
law to do so or where it believes a public airing of the issues 
will be in the public interest. This subparagraph also is 
intended to put on the record alternatives considered by the 
agency on its own and the reasons why the agency rejected these 
alternatives. As a result, the committee accepts that this 
provision will create an incentive for an agency to approach 
the resolution of a particular problem from the broadest 
possible perspective, always searching for more effective or 
less burdensome ways to fulfill its basic statutory mandate. In 
addition, by requiring an agency to address and respond to the 
reasonable alternatives proposed by the public, this 
subparagraph creates an incentive for interested members of the 
public to devote their time and energy to develop such 
alternatives. Both of these incentives only serve to improve 
the quality of rulemaking.
            New Subparagraph 553(c)(4)(C)
    This subparagraph requires essentially the same information 
to be published in the statement of basis and purpose as must 
be published in the notice of proposed rulemaking. This 
requirement is reiterated here to ensure that the agency 
addresses any comments from the public challenging the agency's 
assertion in the proposed rule. The committee felt that this 
legal issue should be segregated from other issues raised by 
public comments and subjected to particular scrutiny because of 
the serious consequences of expansive agency interpretations of 
enabling statutes. This reinforces the holding in Chevron v. 
Natural Resources Defense Council, 467 U.S. 837 (1984). (For a 
further discussion of these standards, see new section 706.) In 
addition, insofar as Congress has inadvertently created 
ambiguous delegations of authority to agencies, highlighting of 
statutory ambiguities in this way assists Congress in 
fulfilling its oversight responsibilities and provides an 
incentive for the Congress to avoid such ambiguities in the 
future. Finally, this process will assist the Congress in 
avoiding the constitutional problems of standardless 
delegations of lawmaking authority.
            New Subparagraph 553(c)(4)(D)
    Subparagraph (D) requires an agency to publish in the 
statement of basis and purpose ``a succinct explanation of how 
the factual conclusions upon which the rule is based are 
substantially supported in the rulemaking file.'' Under this 
provision, the agency must explain how the factual conclusions 
on which the rule is based are supported by reliable and 
credible evidence in the rulemaking file. This explanation does 
not need to be made for every factual conclusion. Rather, this 
requirement involves only factual conclusions of enough 
significance that they can be characterized as conclusions 
``upon which the rule is based.''
    For those factual conclusions ``upon which the rule is 
based,'' however, the committee expects the ``succinct 
explanation'' will be more than a mere recitation of the 
agency's factual conclusions. In its ``succinct explanation,'' 
the agency should meaningfully relate how its finding that a 
certain fact exists flows from the evidence before the agency, 
justifying its rejection of any contrary evidence.
    This subparagraph further requires the agency to publish a 
summary of its assessment of the comments presented by the 
public. This assessment should contain the agency's response to 
those comments. The agency is not required to respond to each 
commenter, but should respond to significant issues raised in 
the comments to the proposed rule. Of course, the committee 
does not intend that the significance of an issue be determined 
by the number of commenters who raise it. In some cases, a 
significant issue may be raised by only one commenter. The 
committee expects that the agency response will be commensurate 
with the comment. If comments are cursory or are concerned with 
trivial issues, they warrant little agency response. As the 
court noted in Portland Cement Ass'n. v. Ruckelshaus, 486 F.2d 
375, 394 (D.C. Cir. 1973), cert. denied 417 U.S. 921(1974), an 
agency's obligation to respond arises when public comments are 
``significant enough to step over a threshold requirement of 
materiality. * * *'' What will be required from the agency by 
way of response will depend on what is presented. Oljato 
Chapter of the Navajo Tribe v. Train, 515 F.2d 654, 666 n. 19 
(D.C. Cir. 1975). In each instance, the agency's response 
should be sufficient to demonstrate that the agency has given 
due consideration to the comments in arriving at a final 
rulemaking decision.
    Thus, this provision essentially codifies the better case 
law under the A.P.A., requiring courts to look for an agency's 
``conscientious attention to the objections raised to the 
proposed rule, and their reasoned disposition on the basis of 
technical information and other relevant considerations.'' 
Automotive Parts & Accessories Ass'n v. Boyd, 407 F.2d 330, 341 
(D.C. Cir. 1968). Accord, Natural Resources Defense Council v. 
Nuclear Regulatory Comm'n, 547 F.2d 633, 646 (D.C. Cir. 1976), 
cert. denied, 429 U.S. 1090 (1977).
            New Subparagraph 553(c)(4)(E)
    This subparagraph requires that a summary of any final 
regulatory analysis, required to be issued for a proposed 
``major rule'' under new subchapter II of chapter 6 of title 5, 
United States Code, be published in the statement of basis and 
purpose. The committee did not require the whole final 
regulatory analysis to be published in the statement of basis 
and purpose because of the expense involved in printing a 
lengthy analysis and because the whole analysis will be in the 
rulemaking file, available for public inspection and copying. 
The complete final regulatory analysis is a part of the file of 
the rulemaking. The committee intends that the summary 
published in the statement of basis and purpose will be a 
concise presentation of the substance of the final regulatory 
analysis, yet comprehensive enough to inform the public of its 
contents.
            New Paragraph 553(c)(5)
    This paragraph excepts from the requirements of new 
subsection 553(c) all rules which are promulgated pursuant to a 
statute which requires an opportunity for an agency hearing 
before rules are made on the record. It is the goal of the 
committee to assure the opportunity for public comment. 
Clearly, where the statute which is the basis for a proposed 
rule already provides for such opportunity, it would be 
unnecessary and repetitive to apply further, similar 
requirements. Thus, the committee is satisfied to defer to the 
requirements laid out in the existing statute, if such 
requirements exist.

New Subsection 553(d)

    This subsection requires the agency to publish a final rule 
in the Federal Register at least 60 days in advance of the 
effective date of said rule. While the committee is cognizant 
of the desire to promulgate rules expeditiously, it also 
recognizes the importance of giving the regulated community a 
fair and reasonable opportunity to comply with a new rule. The 
committee believes that this provision is crucial to provide 
the public enough time to prepare for the promulgation of a new 
rule.
    When a rule grants or recognizes an exemption or relieves a 
restriction, this provision is clearly unnecessary. It is only 
when new restrictions are created which the regulated community 
must comply with that the policy of early notification is 
applicable. Thus, the committee excepts from the 60 day 
requirement rules which lift restrictions.
    The committee also recognizes that in emergency situations 
it may be important for a rule to be promulgated without 
waiting for the 60-day advance notice. Thus, the subsection 
provides for a waiver of the requirement where the agency for 
good cause finds that the delay would be contrary to important 
public policy. The committee views this provision as applicable 
to emergencies, where delay in the promulgation of the rule 
would result in unusually serious harm to a public interest. In 
any case, in order for the agency to invoke this exception, it 
must publish a finding and explanation of the reasons for such 
invocation with the final rule.

New Subsection 553(e)

    This subsection expands the rights of petition under the 
A.P.A. by providing that an interested person may petition for 
advice or interpretation regarding the application of a rule, 
or, where permitted by law, for a variance or exemption. It 
also requires the agency to respond in writing and with 
reasonable promptness to such a petition and to state the 
reasons which support the agency's conclusions.
    The provision for advice or interpretation is not novel; it 
codifies the better practices of some agencies to respond to 
inquiries, sometimes only informally and sometimes formally, 
such as the Internal Revenue Service's private rulings. In the 
view of the committee, a person faced with conflicting rules 
and apparent inconsistencies in agency decisions, for example, 
should be able to obtain advice promptly from agencies to 
eliminate the potential for duplicative liability. This 
provision is intended to require agencies to reasonably respond 
to petitions for such interpretations. The provision for 
variances or exemptions is also not out of the ordinary; some 
agencies already are required to consider and act upon such 
requests, as the Supreme Court recognized in U.S. v. Storer 
Broadcasting, 351 U.S. 192, 201, 205 (1955).
    This subsection also requires a written response with a 
statement of reasons to be issued with reasonable promptness. 
In Oljato Chapter of the Navajo Tribe v. Train, 515 F.2d 654, 
667 (D.C. Cir. 1975), Judge Leventhal noted that ``the 
substantiality of the [agency's] response [to a petition] must 
necessarily be related to the substantiality of the issues 
raised.'' The Committee endorses this reasoning as spelled out 
in the Oljato case:

          Naturally the expansiveness of the Administrator's 
        articulation of reasons depends on the complexity and 
        substantiality of the issues raised. We are by no means 
        demanding comprehensive responses to frivolous 
        petitions, but nor are we sanctioning summary 
        dismissals of meritorious claims * * *. In large part 
        what we will demand by way of response from the 
        Administrator will depend on what is presented by 
        petitioners in support of this claim. Id. at 666-667 n. 
        19.

    The nature and substantiality of the agency's response will 
depend in each case on the relevance and importance of the 
issues raised in a petition, on the detail with which the 
petitioner's claims are presented, and on the quality and 
substantiality of the data, evidence and other material 
submitted in support of those claims.
    This subsection requires further that an agency respond to 
any petition ``no later than 180 days after the petition was 
received by the agency''. This is to ensure that petitions are 
dealt with in a reasonable period of time. Previously, agency 
reaction to similar petition processes was inordinately slow. 
Thus, the committee believes it necessary to place this 
reasonable time limit on the agency.
    It must be emphasized that the committee does not intend 
that this subsection create rights to a particular 
interpretation, or to a variance or exemption. If an agency is 
precluded by law from granting a variance or exemption from a 
rule, for example, this subsection does not give it the 
authority to do so. Similarly, this subsection does not 
contemplate a particular procedure by which an agency must 
respond to these petitions. An agency may employ, or even 
already have in place, any procedure for responding to such 
petitions which is consistent with and which achieves the goals 
of this subsection.

New Subsection 553(f)

    Subsection (f) specifies the categories of documents that 
comprise the rulemaking file. This file, plus the material 
excluded from the file pursuant to new paragraph 553(f)(2), 
constitutes the record of the rulemaking for purposes of 
judicial review. Thus, for example, the complete preliminary 
and final regulatory analysis and transcripts of any hearings, 
are part of the whole rulemaking record.
    The current A.P.A. contains no provision setting out what 
is to be the record of informal rulemaking, or indeed requiring 
that there is to be such a record. In order to make the 
judicial review provisions of the A.P.A. viable, however, the 
courts have found it necessary to imply a requirement that 
administrative decisions be based on some kind of a record. 
E.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 
U.S. 402, 420 (1971); Camp. v. Pitts, 411 U.S. 138, 142 (1973). 
See generally 1 K. Davis supra at section 6:5. Obviously, 
requiring a record for rulemaking in such a backhanded manner 
injects considerable, and unnecessary, uncertainty into 
judicial review of rulemaking:

          The problem with the ``records'' currently certified 
        to the courts is that their content is unknown until 
        judicial review is well under way. This may lead either 
        to inclusion of far more documents than are needed to 
        understand the rule or to exclusion of documents that 
        have a legitimate bearing on it. As a result the courts 
        are confronted with huge, unwieldy records, and are 
        forced to spend undue effort in weighing the parts of 
        each record and extracting underlying reasons from the 
        documents, jobs which the agencies should have done 
        themselves. (Report on S. 1080, statement of Raymond 
        Momboisse, at 11.)

    Furthermore, a requirement for a rulemaking record 
articulated essentially in judicial precedents is by nature 
indefinite in its application to specific rulemakings and 
leaves an agency with enormous discretion to determine the 
contents of the record:

          Agency practice has often varied widely from court 
        requirements. A chief reason for this is the current 
        absence of any general statutory requirement that a 
        record, available to the public, be established at some 
        point before a final decision is made. Unless some 
        special statutory provision requires otherwise, no 
        discrete record is currently necessary in informal rule 
        making until a court challenge is begun * * * [T]he 
        agency's instinct is to find everything that 
        conceivably supports its decision and claim that these 
        materials, together with publicly filed comments, 
        constitute the record. Unfavorable material, on the 
        other hand, especially if its existence is known only 
        to the agency, will not be handled so carefully. In 
        fact, such material may even be concealed. Id. 
        (Statement of Raymond Momboisse, at 11-12.)

    Accordingly, the Committee intends that paragraph (f) be a 
clear statutory articulation both of a requirement that 
informal rulemaking be based on material in a public file 
compiled contemporaneously with the progress of the rulemaking 
and of the categories of material that must be included in the 
file. By specifying these categories, the committee intends for 
the file to include those materials that might reasonably be 
expected to play an important role during a rulemaking or on 
judicial review of a rule. The record for judicial review 
includes not only the rulemaking file, but also confidential 
material excluded from the file pursuant to paragraph (4). If 
courts are to scrutinize rulemakings carefully on judicial 
review, they should have access to the complete text of 
significant confidential material, which the agency will place 
in the public file only in summary or aggregate form. It may be 
necessary for reviewing courts to exercise their inherent 
authority to preserve the confidentiality of such material 
during judicial review through appropriate in camera 
inspections, protective orders or similar devices.
                               Section 4

New Section 621

    Section 621 sets out the definitions of important terms 
used in subchapter II.

Subsection 621(1)

    This paragraph defines the term ``benefit'' as meaning the 
reasonably identifiable significant incremental benefits, 
including social and economic benefits, that are expected to 
result directly or indirectly from implementation of a rule or 
an alternative to a rule. The Committee intends that this term 
be defined broadly, so as not to exclude from consideration any 
significant beneficial effects that might derive from a rule or 
an alternative to a rule. Further, the benefits resulting 
directly or indirectly from a rule are not limited to effects 
which can be quantified. For example, they may include, where 
identifiable and significant, benefits of a less tangible 
nature, such as increased freedom of choice for consumers or 
other groups, or a positive impact on human enjoyment of the 
environment. In other words, qualitative and noneconomic as 
well as quantitative and economic benefits must be evaluated.
    At the same time, the definition specifies that the 
benefits to be considered are only those that are ``reasonably 
identifiable.'' The committee intends this qualification to 
exclude speculative benefits and to clarify that the 
identification of benefits to a rule or an alternative to a 
rule should be supported by adequate information and not by 
mere assumptions or guesses.
    In this regard, the committee intends to preclude the use, 
in determining or calculating benefits under this legislation, 
of speculative or theoretical benefits derived from the 
prevention of loss of so-called ``non-use'' values. For 
example, the U.S. Department of Interior has proposed 
calculating non-use values by assigning to a resource a dollar 
value based upon what people might be willing to pay 
(hypothetically) to preserve or restore the resource even if 
the resource is not directly used by the person or has no 
commercial economic value, i.e., the so-called ``contingent 
valuation method.'' See e.g., 59 Fed. Reg. 23,097 (May 4, 
1994). Thus, the committee intends that agencies not rely on 
speculative and unreliable methods, such as contingent 
valuation or other survey methods, to calculate ``use values'' 
for a resource.
    The use of the term ``incremental'' in the definition of 
benefits is meant to ensure that agencies recognize the role of 
diminishing returns in taking action toward any regulatory 
objective. In many cases, great benefits may be obtained by 
relatively inexpensive and simple steps. It is the intent of 
the word ``incremental'' that the agencies must apply cost-
benefit analysis so as to assess the utility of each further 
increment of control or action, as well as ensuring that the 
action level finally chosen has benefits that outweigh its 
costs.
    Finally, the definition of benefits is limited to those 
that are ``significant.'' This language specifies that agencies 
should not devote society's finite resources to achieving 
benefits whose significance is de minimis. In other words, an 
agency is not required to expend resources to quantify alleged 
benefits that existing science views as either speculative or 
de minimis.

Subsection 621(2)

    This paragraph defines the term ``cost'' in a manner 
essentially identical to that of the term ``benefit,'' while 
further specifying that ``costs'' includes reduced consumer 
choice, substitution effects, and impeded technological 
advancement that are expected to result directly or indirectly 
from implementation of, or compliance with, a rule or an 
alternative to a rule. Costs, therefore, are defined broadly to 
ensure agency consideration of any significant, identifiable 
adverse effects (including all identifiable adverse health, 
safety, or environmental effects) associated with a rule or an 
alternative. Indirect or secondary adverse effects should be 
considered, even though the agency may not always be able to 
measure such adverse effects precisely. Like benefits, the 
adverse effects that must be considered are those that are 
``significant'' and ``identifiable,'' and agencies should also 
consider intangible costs, although agencies should take care 
to base their cost estimates on information of reliable 
quality.
    In particular, the committee expects agencies, in meeting 
the requirements of this legislation, to be mindful of the fact 
that, in some cases, a rule that establishes some otherwise 
acceptable regulatory level or value can nonetheless impose a 
huge impact outside the scope of the statute under which the 
rule is adopted. Examples of this include the use of Safe 
Drinking Water Act maximum containment levels in establishing 
the remedy required by the Superfund program, as well as the 
use of CERCLA's reportable quantities in the U.S. Department of 
Transportation's (DOT's) hazardous materials regulations. At 
present, the ``secondary'' impacts of the levels or limits in 
these regulations are neither calculated nor considered when 
they are initially adopted.
    Thus, for instance, the costs and benefits of Superfund 
remedies that must incorporate the drinking water standard are 
not considered in setting that standard. However, neither are 
these costs really considered at the time the Superfund remedy 
is chosen because, by that time, the drinking water standard is 
seen as a mandatory item that must be met no matter what the 
cost. Similarly, the reportable quantities established by EPA 
under CERCLA are set without regard to the fact that they are 
incorporated into DOT's hazardous materials transportation 
rules. The committee views such lack of consideration of the 
``secondary'' impact of regulations to be inconsistent with the 
thrust and the purpose of this legislation and intends that 
agencies view the ``costs'' of their rules in a broad manner 
that encompasses secondary impacts.

Subsection 621(3)

    Under this paragraph, the term ``cost-benefit'' analysis is 
defined to mean 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 subchapter II of the 
legislation at the level of detail appropriate and practicable 
for reasoned decisionmaking on the matter involved, taking into 
consideration the significance and complexity of the decision 
and any need for expedition. By this definition, which calls on 
agencies to perform an ``evaluation'' of costs and benefits, 
the committee intends to make it clear that a traditional, 
formal ``cost-benefit analysis'' designed to reduce everything 
to a monetary value is not required.

Subsection 621(4)

    This paragraph defines the term ``major rule'' as used in 
the legislation. This definition establishes the criteria for 
determining or designating the rules for which cost-benefit 
analyses shall be performed under section 622 and which shall 
be treated as major rules for other purposes under this 
legislation.
    This paragraph provides two basic definitions for a ``major 
rule.'' These definitions are disjunctive and not conjunctive 
or cumulative. Thus, the test set out in clause (A)(i) is 
distinct from, and does not apply to, that in clause (A)(ii). 
It is possible, of course, that a rule might meet the criteria 
for being ``major'' under both tests, but that outcome is not 
required. A rule need meet the standard of only one of these 
clauses to be major.
    In evaluating whether a rule is major, both definitions 
apply to a ``rule or a group of closely related rules.'' In 
this manner, the definition of ``major rule'' recognizes that a 
number of different rules which, though not strictly ``major'' 
independently of each other, may be so related in either design 
or ultimate effect that together they have an impact of 
sufficient significance that they should be considered 
``major'' and subject to cost-benefit analysis.
    Clause (A)(i) sets out the basic elements of the first 
definition of ``major rule.'' It provides that a rule is a 
major rule if it has a gross annual effect on the economy of 
$50 million or more in reasonably quantifiable increased direct 
and indirect costs, or has a significant impact on a sector of 
the economy. The committee intends that the phrase ``direct and 
indirect costs'' should be read broadly to include the 
secondary costs that can be said to result from the rule and 
that can reasonably be measured in monetary terms. Thus, costs 
are not limited to those expenses for equipment and labor 
necessary to meet the terms of the rule, but also include 
indirect costs, such as adverse effects on health, employment, 
wages, consumer prices, the costs due to use of the rule's 
provisions in other regulatory contexts (as noted above), and 
the like. Remote or highly speculative costs, however, should 
not be included. As society's ability to make such quantified 
estimates expands, the class of costs encompassed by this 
definition will also expand. ``Gross annual effect,'' 
meanwhile, should also include that portion of the amortized 
capital costs of compliance that may reasonably be attributed 
in a given year.
    Clause (A)(ii) sets out the second definition for a ``major 
rule.'' It provides that an agency, or the Director of OMB or 
the President's designee, may designate a rule as major due to 
certain specific significant effects of the rule, irrespective 
of whether the rule will have an annual effect on the economy 
of $50 million or will have a significant impact on a sector of 
the economy. This definition may be characterized as being 
relatively more subjective than that in clause (A)(ii) because, 
not setting out a clear standard like an impact of $50 million, 
it relies heavily on the judgment of the agency, and of the 
Director or the President's designee, regarding the ultimate 
impact of the rule. In spite of this subjective element, the 
committee concluded that this alternate definition for major 
rules was necessary due to the inadequacy of the simple 
``$50,000,000 test'' in capturing rules whose disruptive impact 
was significant enough to warrant cost-benefit analysis, but 
whose impact did not rise to that level or was not reducible to 
a monetary measure. In addition, the ``$50,000,000 test'' tends 
to focus heavily on economic matters, or at least on 
quantifiable effects, thereby not completely reflecting the 
committee's view that cost-benefit analysis is not merely an 
economic impact analysis, but encompasses all effects of a 
rule. If a rule ``is likely'' to produce any of the effects set 
out in subclauses (I) through (V)--that is, if there is a 
substantial probability that any of those effects will result 
as a consequence of the rule--the rule should be designated as 
``major'' and subjected to cost-benefit analysis.
    The committee cautions agencies, in applying either of 
these statutory definitions, not to seek to avoid the 
requirements of the legislation by artful characterization, by 
claiming that a rule is procedural only, or by splitting a rule 
into numerous pieces. Rules which impose paperwork or 
procedural requirements on individuals or businesses or which 
specify a procedure that may increase the costs to an 
individual or business can have the same adverse effect on the 
economy and the Nation's competitiveness as a rule imposing 
substantive requirements, and all such rules should be subject 
to the requirements of this legislation. Where, for example, a 
rule establishes or effectuates a presumption and the 
presumption, if sustained, may lead to the imposition of costs, 
expenses, or damages exceeding the statutory threshold in a 
given year, the rule should be subject to the requirements of 
this legislation. Similarly, agencies are not permitted to 
divide a rule into segments or pieces and then claim that the 
segment or piece does not exceed the monetary threshold of this 
bill. Such piecemealing is completely contrary to the intent of 
this legislation. For the purpose of determining the 
application of the threshold, an agency must consider the 
effect of the entire subject matter of the rule at issue, 
including any item which is logically related or practically 
integral thereto.
    Finally, the language in (B) provides that the term ``major 
rule'' does not include a rule that involves the internal 
revenue law of the United States nor a rule or agency action 
that authorizes the introduction into, or removal from, 
commerce, or recognizes the marketable status of a product.

Subsection 621(5)

    This paragraph defines ``market-based mechanism'' in broad, 
straightforward and practical terms, to include any regulatory 
program that imposes legal accountability for achieving the 
regulatory objective on each regulated entity, affords maximum 
flexibility to each regulated entity in so meeting the 
regulatory objectives, and permits regulated entities to 
respond freely to changes in pertinent economic conditions and 
circumstances.

Subsection 621(6)

    Under this paragraph, ``performance-based standards'' 
include requirements, expressed in terms of outcomes or goals 
instead of mandatory measures, that permit discretion and the 
use of market-based mechanisms in determining how best to meet 
specific requirements in particular circumstances.

Subsection 621(7)

    The term ``reasonable alternative'' under this section is 
defined as meaning the range of regulatory options, including 
taking no regulatory action, that the agency has discretion to 
consider under the statute pursuant to which the rulemaking is 
authorized, as interpreted, to the maximum extent possible, to 
embrace the broadest range of options that satisfy the 
decisional criteria of section 624(b). In other words, an 
agency must consider the broadest range of alternatives that 
the text of such statute grants it discretion to consider, and 
must interpret that grant of discretion, to the maximum extent 
possible, so as to allow the agency to consider the broadest 
range of options that satisfy the cost-benefit decisional 
criteria of section 624(b).

Subsection 621(8)

    This paragraph provides that ``rule'' has the same meaning 
as already provided under section 551(4), while further 
specifying that, for purposes of subchapter II, it includes any 
statement of general applicability that alters or creates 
rights or obligations of persons outside the agency. The 
committee intends by this provision to subject to the 
requirements of this legislation agency interpretive rules, 
guidance documents, and statements of policy which, while not 
fitting within the classic definition of ``rule,'' have the 
practical effect of imposing binding obligations on regulated 
entities. In this regard, the committee is concerned by the 
practice of some agencies to evade the requirements of notice- 
and-comment rulemaking by styling seemingly prescriptive 
regulatory standards or criteria as ``guidance'' materials (or 
by strongly encouraging States with delegated programs to adopt 
such standards or criteria as a matter of State law), while at 
the same time claiming that those materials do not have the 
force of law or have binding effect. By defining ``rule'' in 
this way for purposes of subchapter II, the committee intends 
that the practical scope and effect of agency pronouncements 
and issuances, rather than the agency's own characterization of 
them, control for the purposes of ascertaining whether or not 
such materials are properly considered as being ``rules'' 
subject to the requirements of this legislation if they are 
determined to be, or designated as, ``major.'' The committee 
does not intend to discourage agencies from utilizing truly 
nonbinding guidance materials in carrying out their regulatory 
responsibilities; in fact, informal guidance on complying with 
existing regulations is to be encouraged, not discouraged. 
However, agencies should not attempt to evade the requirements 
of this legislation, or of the APA in general, through self-
serving mischaracterizations of such materials.
New Section 622

    Section 622 sets forth the basic requirements for the cost-
benefit analysis that must be developed by the agency in 
conjunction with its proposal and promulgation of a major rule. 
Under subsection (a), an agency must determine whether or not a 
rule is ``major'' within the meaning of section 621(4)(A)(i) 
before publishing the notice of proposed rulemaking. If an 
agency determines that the rule is not major under that 
definition, it may also decide, again before publishing the 
notice, whether it will designate the rule as major on the 
grounds set out in 621(4)(A)(ii). In those circumstances where 
a notice of proposed rulemaking had already been published 
prior to the date of enactment of this legislation, this 
determination or designation must be made not later than 30 
days after enactment.
    Where the agency determines that the rule is not ``major,'' 
under section 622(b), the Director or the President's designee 
may, as appropriate, make a determination or designation of the 
rule as ``major'' not later than 30 days after publication of 
the notice of proposed rulemaking (or, in the case of a notice 
proposed rulemaking that has been published after the date of 
enactment, not later than 60 days after enactment). Such 
determination or designation by the Director or by the 
President's designee shall be published in the Federal 
Register, along with a succinct statement of the basis for the 
determination or designation. This provision is not intended to 
displace the agency as the entity with primary responsibility 
for deciding whether a rule is major. Rather, it is intended as 
an oversight device to ensure that agencies evaluate the 
potential impact of a rule thoroughly and fairly. The committee 
considers such oversight to be critical to the effective 
application of cost-benefit analysis.
    Section 622(c) prescribes the requirements for an initial 
cost-benefit analysis to be included in the notice of proposed 
rulemaking for each major rule. Under section 622(c)(1)(A), the 
agency must place its initial cost-benefit analysis in the 
formal rulemaking file so that it is available, along with the 
rest of the agency's supporting documentation, for public 
notice and comment. In those circumstances where the Director 
or the President's designee has made the determination or 
designation of a rule as ``major,'' section 622(c)(1)(B) 
specifies that the agency must ``promptly'' issue and place the 
initial analysis in the rulemaking file, publish notice of such 
analysis in the Federal Register, and afford interested persons 
the same opportunity for comment as if the agency had initially 
made such determination or designation.
    In general, the initial cost-benefit analysis must set out 
the benefits and costs, and identify the ``reasonable 
alternatives'' that the agency has discretion to adopt under 
the statute granting the rulemaking authority as supplemented 
by the decisional criteria in section 624 to ensure 
consideration of the broadest range of options that could meet 
section 624. Paragraph (A) of section 622(c)(2) requires that 
the initial cost-benefit analysis contain an analysis of the 
anticipated benefits of the proposed rule, including benefits 
that cannot be quantified. When a benefit involves public 
health, for example, the agency should evaluate the underlying 
data and information to ensure that it is reliable and accurate 
and that the rule addresses the true cause of the particular 
public health problems. It can be expected that the group of 
benefits that are quantifiable will expand as measurement 
techniques improve, in some degree due to the impetus of this 
legislation. For intangible benefits that cannot be quantified, 
agencies should discuss the nature of the benefits and should 
explain the factual information and judgments that support the 
significance ascribed to such benefits by the agency.
    It must be remembered, in any event, that at this point the 
analysis is ``initial.'' This does not mean that the agency is 
free to make only minimal efforts to evaluate the potential 
effects of a proposed major rule. Rather, it serves to 
underscore the fact that this analysis is made at the beginning 
of the rulemaking process, before the agency has had the 
benefit of public comment. Accordingly, although the committee 
expects an agency to make its best efforts to analyze the 
ramifications of a proposed rule at this stage, we recognize 
that these efforts are, by definition, preliminary and, 
practically speaking, cannot be the kind of thorough and 
probing evaluation that the legislation demands of the final 
analysis.
    The agency must also explain how it expects the rule will 
produce each benefit. This explanation is central to the goals 
of this legislation because this explanation gives the public 
added insight into what the agency hopes to achieve with a 
particular rulemaking and how it expects to do so. With this 
information, interested persons outside the agency are in a 
better position to make useful comments on the rule, to either 
improve its effectiveness or reduce its burdens. This 
explanation must also describe the persons or classes of 
persons who will benefit from a proposed rule, the so-called 
``distributive effects'' of a rule. The agency should include 
in this explanation an identification of any special persons or 
classes of persons which might be intended by the enabling 
statute to benefit from the rule being promulgated.
    Paragraph (B) of section 622(c)(2) sets out the 
requirements for the description of the costs of a rule in a 
manner paralleling paragraph (A), governing the description of 
benefits. Both provisions are shaped by the same concern that 
the broadest range of reasonably identifiable effects--effects 
on individuals, on industries, on different levels of 
government--be taken into account in rulemaking. Consequently, 
paragraph (B) requires agencies to succinctly describe all the 
anticipated costs of a proposed rule, including costs which 
cannot be quantified, or which are indirect results of the 
rule, such as the loss of the use of a product or service. As 
explained above in the discussion of section 621(2), ``costs'' 
is not limited to economic impacts, but includes social effects 
as well. A deleterious impact on the environment, a restriction 
of consumer choice, or a constraint on the movement of 
populations could all be considered social costs of a rule.
    Paragraph (C) of section 622(c)(2) requires that an agency 
identify and thoroughly evaluate all of the reasonable 
alternatives to the proposed rule that the agency has 
discretion to adopt under the decisional criteria of the 
statute granting the rulemaking authority. The agency should 
list those alternatives, along with an analysis of the costs 
and the benefits of each of these alternatives. This paragraph 
specifically provides that an agency should consider 
permissible alternatives that require no government action 
(including voluntary or consensus standard-setting and taking 
no regulatory action at all), alternatives that account for 
differences among geographic regions (including the use of 
State or local level implementation and enforcement), and 
alternatives that employ voluntary or performance-based 
standards. The agency's analysis of the costs and benefits of 
alternatives under this provision should be similar to the 
corresponding analysis for the proposed rule.
    Paragraph (D) of section 622(c)(2) further specifies that 
the initial cost-benefit analysis must include an assessment of 
the feasibility of establishing a regulatory program that 
operates through the application of voluntary programs, 
voluntary consensus standards, market-based mechanisms, or 
other flexible regulatory alternatives.
    Paragraph (E) of section 622(c)(2) provides that, in any 
case in which the proposed rule is based on one or more 
scientific evaluations, scientific information, or a risk 
assessment, or is subject to the risk assessment requirements 
of subchapter III, the initial cost-benefit analysis must 
include a description of the actions undertaken by the agency 
to verify the quality, reliability, and relevance of such 
scientific evaluations or scientific information in accordance 
with the requirements of subchapter III.
    Paragraph (F) of section 622(c)(2) requires that the 
initial cost-benefit analysis contain an analysis, to the 
extent practicable, of the effect of the proposed rule on the 
cumulative burden of compliance with the rule and other 
existing regulations on persons complying with it, as well as 
an analysis of the net effect of the rule on small businesses 
with fewer than 100 employees, including employment in such 
businesses. The committee believes that it is important for 
each agency that engages in rulemaking to measure and account 
for the cumulative regulatory burden it is imposing on a 
particular industry as it issues each new major rule. In this 
regard, the committee would welcome the development--by OMB or 
some other suitable governmental entity--of a common, 
government-wide methodology for quantifying the cumulative 
regulatory burden on each sector of industry and for reporting 
it to Congress, the President, and the public. As the committee 
understands it, there exists feasible methods for doing this 
that employ a net present value cash flow analysis, utilize 
well-understood and commonly-used business financial data, and 
yield comparable results when applied across agencies. The 
committee strongly encourages the use of such a method in 
meeting the requirements of this provision.
    Paragraph (G) of section 622(c)(2) requires that the agency 
analyze (1) for proposals meeting the criteria of section 
624(b), whether the benefits of the proposed alternative 
justify its costs and that the alternative proposed will 
achieve greater net benefits than any of the other ``reasonable 
alternatives,'' or (2) for proposals to which section 624(c) 
applies (i.e., because none of the reasonable alternatives have 
benefits that justify their costs), how the proposal will 
result in lower net costs than any of the other reasonable 
alternatives. In general, what this provision is intended to do 
is to force agencies, at the very beginning of the rulemaking 
process, to seriously and comprehensively assess all the 
effects of regulations. All too often, in the committee's 
estimation, agencies have failed to undertake such an 
assessment, and this legislation is designed to remedy this 
serious deficiency in the agencies' rulemaking process.
    Under paragraph (G), the agency must explain whether the 
benefits of the proposed rule will ``justify'' its costs. The 
choice of the word ``justify'' is an important one. It 
signifies two things: first, that precise numerical 
quantification of costs and benefits is neither required nor 
anticipated in all cases; second, that agencies are free to 
bring to bear judgmental factors, to supplement their numerical 
analysis, in making the required determination. In other words, 
an agency must be able to conclude that, considering all of the 
relevant quantified and nonquantified and economic and 
noneconomic benefits and costs, and the persons or groups to 
whom those benefits and costs pertain, on balance the proposed 
action is worthwhile to society.
    When an agency publishes a final major rule, section 
622(d)(1) requires the agency to include a final cost-benefit 
analysis in the rulemaking file. As provided in section 
622(d)(2), this final cost-benefit analysis must contain a 
description and comparison of the reasonable alternatives the 
agency considered in promulgating the final rule. The final 
cost-benefit analysis must also explain how the agency applied 
the section 624 decisional criteria to select the final rule 
from among the reasonable alternatives considered. Pursuant to 
section 622(d)(2)(B), the final cost-benefit analysis must 
discuss, for final rules selected under section 624(b), how the 
benefits of the final rule justify its costs and how the final 
regulatory option selected will achieve greater net benefits 
than any of the other regulatory alternatives, including 
reasonable alternatives brought to the agency's attention in 
comments submitted during the rulemaking process, even if those 
alternatives were not among those listed by the agency in its 
initial cost-benefit analysis. For final rules to which the 
fall-back decisional criteria of section 624(c) apply, because 
none of the reasonable alternatives have benefits which justify 
its costs, the agency must discuss how the selected final 
regulatory alternative will result in lower net costs than any 
of these other reasonable alternatives.
    As the initial and final cost-benefit analyses are part of 
the formal rulemaking record, the agency's application of the 
decisional criteria in selecting among the reasonable 
alternatives is an issue that may be considered by a reviewing 
court under the APA in its review based on the rulemaking 
record as a whole. Judicial review of agency action under this 
legislation is discussed in further detail elsewhere in this 
report.
    Subsection (e) of section 622 requires agencies to quantify 
or to estimate numerically the costs and benefits of a rule 
whenever it is reasonably possible to do so. The Committee 
intends that agencies should perform this quantification even 
if uncertainties in the data preclude a precisely accurate 
numerical estimate. By requiring that benefits and costs be 
quantified ``in the most appropriate unit of measurement,'' the 
Committee intends to emphasize that benefits and costs need not 
be expressed in monetary terms except where appropriate to best 
describe the particular type of cost or benefit.
    Finally, subsection (f) provides that the agency 
decisionmaker is the person who must perform the initial and 
final cost-benefit analyses and make the various determinations 
required under this legislation. This requirement is important, 
for it preserves the role of regulatory analysis as a process 
which shapes regulatory decisionmaking. At the same time, the 
complexities of a particular rule might compel an agency to 
hire consultants to gather data, and perform some analysis of 
that data, for use in the cost-benefit analysis. This 
subsection specifically allows for such use of consultants as 
long as this practice does not usurp the position of the agency 
as the primary entity evaluating the effects of a rule. When a 
consultant is employed according to the provisions of this 
subsection, that fact must be disclosed in the initial and 
final cost-benefit analyses, including a description of the 
arrangement with the consultant.

New Section 623

    To maximize the effectiveness and reach of regulatory 
reform, the committee recognizes that the legislation should 
extend the benefits of its cost-benefit and other reasoned 
decisionmaking principles to existing major rules. It is the 
existing federal rules that the public is complaining about, 
and rightly so, in many instances. It is thus extremely 
important that the reasoned decisionmaking requirements of the 
legislation be used to correct past errors. In short, where an 
update of the science or of the decision in question is 
warranted under the new cost-benefit principles, the committee 
believes it should be undertaken.
    Section 623 seeks to achieve the goal of extending the 
benefits of cost-benefit principles to existing rules through a 
``reopener'' petition process that empowers ordinary Americans 
to help find and correct past regulatory mistakes. The 
Committee believes that the people on the receiving end of 
regulation, not just those issuing the regulations, should have 
a say on prioritization here. In effect, the petition process 
is intended as means of adopting an efficient ``management by 
exception'' approach that will create a level playing field by 
letting any interested member of the public petition. Section 
623 does this by providing that any person subject to an 
existing major rule, including a rule that was in effect on the 
date of enactment of this legislation, may petition the 
relevant agency to perform a cost-benefit analysis for such 
major rule.
    Under section 623(a)(2), the petitioner is required to 
identify with reasonable specificity the major rule to be 
reviewed and the amendment or repeal that is requested. Under 
section 623(a)(3), a petition shall be granted if it 
demonstrates that there is a reasonable likelihood that the 
future impact of the rule (measured as of the time at which the 
petition is filed) is such that the rule would meet the 
definition of a ``major rule'' under the legislation, and that 
the proposed amendment or repeal of the rule is required in 
order to satisfy the decisional criteria of section 624. For 
example, if the petition demonstrates that there is a 
reasonable likelihood that the potential future benefits of the 
rule do not justify its potential future costs, or that there 
are reasonable alternatives to the rule that provide greater 
future net benefits than the rule itself does, the agency shall 
grant the petition.
    An agency must grant or deny a petition within 180 days of 
submittal and shall consider any comments its receives in 
granting or denying a petition. A denial is subject to judicial 
review as final agency action. If the petition is granted, the 
agency must, within a year, undertake a cost-benefit analysis 
of the rule in accordance with the requirements of section 622 
and propose either to revise the rule to bring it into 
conformity with section 624 or to repeal the rule in its 
entirety. Following a decision to grant or deny a petition, no 
further petition that raises identical concerns regarding the 
same rule, submitted by the same person, shall be considered, 
unless such further petition is based on a change in a relevant 
fact, circumstance, or provision of law underlying or otherwise 
related to the rule and such change has occurred since the 
initial petition was granted or denied.
    Section 623 also contains a provision, embodied in 
subsections (d) through (f), which is intended to prevent 
agencies from evading the requirements of this legislation 
through the use of interpretive rules, guidance documents or 
policy statements. The Committee considers this provision 
extremely important, as it is already the case that agencies 
often seek to avoid notice-and-comment rulemaking requirements 
by styling seemingly prescriptive regulatory standards or 
criteria as ``guidance'' or ``policy'' documents, while 
claiming that those documents do not have the force of law or 
otherwise have the binding effect. If anything, without such a 
provision, this legislation could provide an incentive for 
agencies to resort to such practice to an even greater extent, 
as a way of evading the new requirements that the legislation 
would impose on the notice-and-comment process.
    Agencies are certainly encouraged to provide explanatory 
materials to regulated entities where appropriate. However the 
Committee considers the practice of issuing guidance documents 
that purport to be nonbinding (and, as such, not subject to 
judicial review) but which, in reality, impose requirements 
that the regulated community disregards at its peril, to be 
inherently unfair. Indeed, the committee considers this 
practice to violate, at a minimum, the spirit of the notice-
and-comment provisions of the APA and further expects that the 
definition of the term ``rule'' in section 621(8)--which 
clarifies that the term includes ``any statement of general 
applicability that alters or creates rights or obligations of 
persons outside the agency''--will help put a stop to this 
practice.
    To further ensure that agencies do not seek to evade the 
requirements of this legislation through the use of putatively 
``non-binding'' guidance or other materials, section 623(d) 
provides that any person subject to an interpretive rule, 
guidance, or general statement of policy may petition an agency 
to withdraw, as contrary to the provisions of subchapter II, 
any such interpretive rule, guidance document, or policy 
statement, including such materials in effect at the time of 
enactment of this legislation, that would have the effect of a 
``major'' rule. The petition must explain with reasonable 
specificity why the interpretive rule, guidance document, or 
policy statement has the effect of a ``major'' rule, and the 
petition shall be granted if it shows that there is a 
reasonable likelihood that such is the case. An interpretive 
rule, guidance document, or policy statement has the effect of 
a ``major'' rule if, as applied or as likely to be applied, it 
causes the equivalent economic impact of a ``major'' rule.
    The agency must either grant or deny a petition within 180 
days of its being submitted. A denial is subject to judicial 
review as final agency action under section 625. If the 
petition is granted, the agency has two options. It may either 
withdraw the interpretive rule, guidance document, or policy 
statement, or it can choose to propose a rule meeting the 
requirements of subchapter II that incorporates the regulatory 
standards or criteria that are contained in the interpretive 
rule, guidance, or policy statement. If it chooses the latter 
course of action, the agency must propose the rule within one 
year and must promulgate it within two years. Where the 
interpretive rule, guidance, or policy statement is withdrawn, 
or where an agency chooses to pursue the rulemaking option and 
a final rule has not been promulgated within the required two 
years, until such time as a final rule is promulgated pursuant 
to the requirements of this legislation, the agency is 
prohibited under section 623(f) from taking any enforcement 
action against any person based on the regulatory standards or 
criteria contained in the interpretive rule, guidance, or 
policy statement.
    Finally, section 623(g) establishes a process by which a 
person subject to a major rule can petition the relevant agency 
to modify or waive specific requirements of the rule and 
authorize that person to demonstrate compliance through an 
alternative means that would not otherwise be allowed under the 
rule. Its purpose is to authorize alternative approaches to 
regulatory compliance that would be more sensible, innovative, 
flexible, and more effective and efficient, while at the same 
time providing at least an equivalent level of protection of 
health, safety, and the environment. This provision is needed, 
as affected facilities, municipalities, and States currently 
have no process by which they may propose and utilize more 
effective regulatory approaches. The Committee intends section 
623(g) to provide a framework that favors new approaches and 
which rewards good performance.
    Under subsection (g)(1), a petition under this section must 
identify with reasonable specificity the requirements for which 
a modification is sought, along with an identification of the 
alternative means of compliance that the petitioner is 
proposing. Under subsection (g)(2), the agency must grant the 
petition if it shows that there is a reasonable likelihood that 
the proposed alternative compliance method would (1) achieve 
the specific benefits of the major rule with at least an 
equivalent level of protection of health, safety, and the 
environment, and (2) not impose an undue burden on the agency 
that would be responsible for enforcing the alternative 
compliance method.
    Determining whether or not a proposed alternative method of 
compliance would provide an ``equivalent'' level of protection 
will, of course, inherently involve a case-by-case evaluation 
of the facts and circumstances surrounding each particular 
situation, and the burden of establishing that the alternative 
compliance method provides such ``equivalent'' protection would 
rest, in the first instance, with the petitioner. Agencies are 
expected, however, to undertake a careful and searching 
evaluation of each petition, in order to give full expression 
to the committee's intent that alternative compliance 
techniques and strategies be employed wherever desired by the 
regulated community and warranted under the standards set forth 
in this section. In this regard, the committee notes that 
``equivalent'' protection does not mean ``identical'' 
protection, and agencies can and should, in the exercise of 
their sound discretion, evaluate and balance the full range of 
consequences of a proposed alternative compliance method in 
determining whether health, safety, and the environment would 
be protected. At the same time, in undertaking this evaluation, 
agencies should not attempt to ``second guess'' the rationale 
or the business judgment of the person seeking the alternative 
compliance method. That is, in ruling on a petition, an agency 
shall not take into consideration its own assessment of whether 
the proposed alternative compliance method makes sense, 
economically or otherwise, for the petitioner, but should 
evaluate the petitioner solely in light of the standards set 
forth in subsection (g)(2).
    Further, agencies are cautioned, in applying the ``undue 
burden'' prong of the standard in subsection (g)(2), not to 
reject petitions solely on the grounds that the proposed 
alternative method of compliance would impose an administrative 
inconvenience on the agency that would be responsible for 
enforcing the alternative method. By ``undue'' burden, the 
committee intends agencies to focus on truly significant 
matters, involving such questions as whether compliance with 
the proposed alternative method could be effectively monitored 
and enforced at all, not merely whether that alternative might 
impose new, or even novel, obligations on an agency. In this 
regard, the committee expects that before rejecting petitions 
on the ground that the proposed alternative would impose an 
undue burden on the agency, the agency will work cooperatively 
with the petitioner in an attempt to work out a plan or method 
for ensuring compliance that is acceptable to all concerned.
    Consistent with the other provisions of section 623, a 
decision to grant or deny a petition under subsection (g) must 
be made within a reasonable time (e.g., 180 days of the 
petition's being filed). Denial of a petition is subject to 
judicial review as final agency action under section 625 of 
this legislation. Subsection (g)(3) provides that, following a 
decision to grant or deny a petition, no further petition for 
such rule, submitted by the same person, shall be considered by 
the agency unless such petition is based on a change in a 
relevant fact, circumstance, or provision of law underlying or 
otherwise related to the rule that has occurred since the 
initial petition was granted or denied. By this, the committee 
intends to avoid having agencies burdened by a series of 
meritless petitions being filed by persons disappointed in 
having had earlier petitions denied. Nothing in subsection (g), 
however, should be construed to prevent a person who has filed 
a petition under that subsection from also challenging a rule, 
or the application of a rule, on any other legally cognizable 
grounds, or from petitioning the relevant agency, under section 
553 of the APA or under the other provisions of section 623, to 
revise or repeal such rule.

New Section 624

     Section 624 establishes decisional criteria for Federal 
agencies that reflect the straightforward, common-sense way in 
which real people make real decisions. It requires that every 
Federal agency, while respecting the existing instructions 
Congress has given it in other statutes, answer two simple 
questions before a major rule ($50 million impact or more on 
the economy) is promulgated--is this action ``worth it,'' and 
does this way of doing it produce, in light of the existing 
statutory instructions, the greatest overall benefits to 
society (in comparison to the reasonable alternatives 
considered by or proposed to it).
    Section 624(a) provides that the section 624 decisional 
criteria supplement the decisional criteria for rulemaking 
otherwise applicable under the statute pursuant to which a rule 
is promulgated. In effect, agencies will continue to follow the 
instructions provided by Congress in other Federal legislation, 
as supplemented by the additional decisional criteria of 
section 624.
    The decisional criteria in section 624 do not override 
congressional directives where the proposed rule cannot satisfy 
the decisional criteria in section 624(b) as a result of the 
express decisional criteria in the statute granting the 
rulemaking authority. In other words, section 624 addresses the 
exercise of agency discretion.
    Section 624(b)(1) requires that every ``major rule'' have 
potential benefits that ``justify'' its potential costs. 
Benefits are defined broadly by section 621(1) to mean the 
``reasonably identifiable significant incremental benefits, 
including social and economic benefits, that are expected to 
result directly or indirectly from implementation'' of the 
rule. Costs are similarly defined in section 621(2) to mean the 
``reasonably identifiable significant incremental costs and 
adverse effects, including social and economic costs, reduced 
consumer choice, substitution effects, and impeded 
technological advancement, that are expected to result directly 
or indirectly from implementation of, or compliance with, a 
rule.'' While cost and benefit estimates should be quantified 
to the extent possible, qualitative and noneconomic as well as 
quantitative and economic benefits and costs must be evaluated. 
Specifically, section 622(e)(1)(A) requires only that ``a 
proposed and final rule required under this section shall 
include, to the extent feasible, a quantification or numerical 
estimate of the quantifiable benefits and costs.'' (Emphasis 
added.) Any quantification or numerical estimate must be made 
``in the most appropriate unit of measurement,'' must use 
``comparable assumptions, including time periods,'' and must 
``explain the margins of error involved in the quantification 
methods and in the estimates used.'' An agency must also 
``describe the nature and extent of the nonquantifiable 
benefits and costs of a final rule pursuant to this section in 
as precise and succinct a manner as possible,'' and ``shall not 
be required to make such evaluation primarily on a mathematical 
or numerical basis.''
     Sections 622(c) and (d) call for an assessment of 
``incremental'' costs and ``incremental'' risk reduction or 
other benefits associated with the proposed action and with 
each significant regulatory alternative. It is essential, and 
this language considering ``incremental'' costs and benefits is 
intended to ensure, that the agencies recognize the role of 
diminishing returns in taking action toward any regulatory 
objective. In many cases, high levels of benefit may be 
obtained by relatively cheap and simple steps; it is the intent 
of the word ``incremental'' that the agencies must apply cost-
benefit analysis so as to assess the utility of each further 
increment of control or action, as well as ensuring that the 
action level finally chosen has benefits that outweigh its 
costs.
    The decisional framework established by section 622 and the 
decision criteria established by section 624 combine to create 
a strong, flexible set of legal parameters applicable across-
the-board to the exercise of agency discretion in major 
rulemakings. As indicated by the definition of ``cost-benefit 
analysis'' in section 621(3), the methodology and level of 
detail for cost-benefit analyses shall be ``at the level of 
detail appropriate and practicable for reasoned decisionmaking 
on the matter involved, taking into consideration the 
significance and complexity of the decision and any need for 
expedition.''
     It is for this reason that section 621(3)'s definition of 
``cost-benefit analysis'' calls for ``an evaluation'' (emphasis 
added) of costs and benefits--not a formal ``cost-benefit 
analysis'' that attempts to reduce every cost and every benefit 
to monetary values. Further, the benefits need only ``justify'' 
the costs. By this, the Committee means that the agency must be 
able to conclude that, considering all of the relevant 
quantified and nonquantified and economic and noneconomic 
benefits and costs and the persons or groups to whom those 
benefits and costs pertain, on balance the proposed action is 
``worth it'' to society.
    The determination required of the agencies is a highly 
judgmental one, requiring the good-faith exercise of an 
agency's best professional judgment in light of its underlying 
legislative directions from Congress. The determination will 
not be driven solely by numerical or economic analysis, except 
in the unlikely event that all significant, relevant benefits 
and costs can be and have been quantified. In short, this 
legislation structures the exercise of agency discretion by 
requiring the reasoned exercise of rational decisionmaking, in 
light of other express congressional instructions.
    It is important to emphasize that both risk assessments and 
cost-benefit analyses can be ``tiered''--that is, they can be 
tailor-made to fit the nature of the decisionmaking process and 
the decision confronting a particular agency, as long as the 
basic elements of reasoned decisionmaking and the logic of the 
cost-benefit and risk assessment methodology are respected. 
This legislation aims at ensuring the essential rationality of 
both the decisionmaking process and the ultimate decisions by 
Federal agencies, recognizing the wide variance in the types of 
decisions and types of situations faced by agency officials. We 
anticipate that the cost-benefit analysis procedures and 
regulations to be developed by the Office of Management and 
Budget under sections 641(a) and (b) will provide agencies with 
sufficient flexibility so that the basic principles of cost-
benefit analysis can be made workable in the individual 
circumstances faced by each.
     In short, sections 622 and 624 focus on decisionmaking, 
not on simply multiplying procedural burdens. Their mandates 
are flexible and goal-oriented. The cost-benefit requirements 
should be molded to the nature of the decisionmaking faced by 
the agency in question.
    Section 624(b) contains the heart of the new decisional 
criteria in this legislation. It has a number of steps. First, 
as noted above, it requires that any major rule have potential 
benefits that justify its potential costs. When an agency is 
considering rulemaking, however, there may be a number of 
regulatory options available to it that have such benefits 
justifying costs. Those options constitute, in the first 
instance, the ``reasonable alternatives'' that the agency must 
consider.
     Because the new section 624 decisional criteria supplement 
the existing decisional criteria applicable to an agency's 
action, the term ``reasonable alternatives'' is defined in 
section 621(7) to mean ``the range of regulatory options that 
the agency has discretion to consider under the text of the 
statute granting rulemaking authority, interpreted, to the 
maximum extent possible, to embrace the broadest range of 
options that satisfy the decisional criteria of section 
624(b).'' This means that the agency must consider the broadest 
range of alternatives that the text of that statute grants it 
discretion to consider, and must interpret that grant of 
discretion, to the maximum extent possible, so as to allow it 
to consider the broadest range of options that satisfy the new 
cost-benefit decisional criteria of section 624(b) (i.e., whose 
benefits justify their costs). This agency interpretation of 
the statute, as supplemented by the provisions of the bill, is 
reviewable under 5 U.S.C. 706(c)(2)(B). An agency 
interpretation that does not give the agency the broadest 
discretion to develop rules that satisfy the section 624 
decisional criteria may be set aside as arbitrary and 
capricious.
     Section 624(b)(2) goes on to require that among the 
regulatory alternatives defined, the agency must choose the 
alternative that has the greatest net benefits (i.e., ``most 
cost-effective result''). The language ``of any of the 
reasonable alternatives that the agency has discretion to adopt 
under the decisional criteria of the statute granted in the 
rulemaking authority'' in section 624(b)(2) is intended to be 
read in light of the definition of ``reasonable alternatives'' 
in section 621(7), since that definition instructs the agency 
as to the exercise of the scope of the discretion it has 
``under the decisional criteria of the statute granting the 
agency the rulemaking authority.''
     If, having gone through the analysis just noted, an agency 
finds that, applying the express decisional criteria in the 
text of the statute granting the rulemaking authority, none of 
the reasonable alternatives, as defined, can satisfy both 
sections 624(b)(1) and (2), it shall reconsider the reasonable 
alternatives and apply section 624(c). If the criteria in 
section 624(b)(1) cannot be satisfied, it will be because there 
are no alternatives satisfying the express decisional criteria 
in the text of the statute granting the rulemaking authority 
that have benefits that justify their costs. In such a case, 
the agency must look at the full range of alternatives that 
satisfy those express decisional criteria, which by definition 
(at that stage in the analysis) will only include those with 
costs not justified by benefits. From those, it shall select, 
from among such alternatives that have costs that do not 
justify their benefits, the alternative that either imposes the 
lowest cost or the lowest net social costs (the ``least costs 
taking into account benefits'') from among those available 
alternatives.
    In determining whether the ``express'' decisional criteria 
of a statute authorize promulgation of rules regardless of 
whether benefits justify costs, it is the committee's belief 
that the ``plain meaning'' rule will be used in construing the 
statute. Thus, if the textual language contains a standard 
requiring a particular regulatory outcome, regardless of the 
costs and benefits (or either), those ``decisional criteria'' 
must be met and the supplemental decisional criteria of this 
statute apply only in the selection among alternatives that 
meet the statutory decisional criteria. The alternative 
selected in that case will either be the one (meeting the 
statutory decisional criteria) that has the greatest net 
benefits under subsection (b)(2) or (where no such alternative 
has net benefits) the one that imposes the lowest net costs 
under subsection (c)(2), depending on the facts in the 
particular rulemaking.
    How a command to ``supplement'' an agency's decisional 
responsibilities can affect the discretion granted an agency 
under its enabling statute is demonstrated by the experience 
with the National Environmental Policy Act, 42 U.S.C. 4331, et 
seq. (NEPA). That statute requires Federal agencies ``to the 
fullest extent possible'' to implement their enabling 
legislation in accordance with the goals and policies of NEPA. 
42 U.S.C. 4332. NEPA also provides that its requirements are 
``supplementary to'' the decisional criteria of existing 
legislation. Id. at 4335.
    Prior to 1970, the regulatory authority of the Atomic 
Energy Commission (``AEC'') (now the Nuclear Regulatory 
Commission (``NRC'')) was interpreted as focusing exclusively 
on radiological health and safety concerns. New Hampshire v. 
AEC, 406 F.2d 170 (1st Cir. 1969). Following passage of NEPA 
and the decision of the U.S. Court of Appeals in Calvert 
Cliffs' Coordinating Committee v. AEC, 449 F.2d 1109 (D.C. Cir. 
1971), the NRC has routinely included nonradiological 
environmentally based conditions in its licenses. At the same 
time, courts have held that NEPA does not expand or override 
the jurisdictional bounds established by Congress. See, e.g., 
Natural Resources Defense Council v. EPA, 859 F.2d 156 (D.C. 
Cir. 1988); NRDC v. EPA, 822 F.2d 104 (D.C. Cir. 1987). In 
short, NEPA supplements agency decisionmaking authority on a 
generic basis by expanding the range of factors to be 
considered to include an important and frequently neglected 
factor--impact on the environment.30 Here, we also 
supplement agency decisionmaking authority on a generic basis 
by adding new decisional criteria so that agency decisionmaking 
is guided, within the framework of existing, program-specific 
decisional criteria, by the decisionmaking principles involved 
in section 624's flexible evaluation of costs and benefits.
    \30\ NEPA also demonstrates that Congress recognized as early as 
1969 that protecting human health and the environment through Federal 
legislation required a careful balance between environmental and 
economic factors. See 42 U.S.C. 4332(B) (must consider economic 
factors). Since the enactment of NEPA, however, the agencies--and 
occasionally Congress--have attempted to achieve greater environmental 
benefits without considering the economic costs of regulatory 
activities. Senate bill 343 therefore seeks to return the scales to a 
balance point, where agencies must improve human health and the 
environment while at the same time weighing the costs and benefits of 
their actions.
    In certain instances the express decisional criteria of the 
statute may dramatically limit the agency's discretion to 
identify alternatives that satisfy those criteria. An example 
of this category is American Textile Manufacturers Institute v. 
Donovan, 452 U.S. 490 (1981), where the Supreme Court 
interpreted the phrase ``to the extent feasible'' as not 
requiring the Department of Labor to ensure that cotton dust 
health standards issued under OSHA meet a rigorous cost-benefit 
analysis test before their issuance. Senate bill 343 does not 
overturn Donovan's construction of OSHA. However, whether or 
not OSHA precludes the Department from evaluating costs and 
benefits in developing reasonable alternatives that satisfy the 
OSHA decisional criteria,31 section 624 supplements the 
Department's decisional responsibilities by requiring it to 
consider cost-benefit principles in choosing among regulatory 
options that fully satisfy the OSHA decisional criteria. 
Accordingly, if under OSHA there are only, for example, two 
regulatory options that meet the ``to the extent feasible'' 
decisional criteria and at least one of them has benefits that 
justify its costs, the supplementary decisional criteria in 
section 624(b) will apply. If neither has benefits that justify 
its costs, then the supplementary decisional criteria in 624(c) 
would govern the choice between those two options based on a 
cost-benefit evaluation of each of them. Under the Donovan 
holding, any other statute that uses the express term 
``feasible'' as a decisional criteria may likewise fall into 
this category, depending on the full statutory analysis made by 
a court.
    \31\ In this regard, while the Court in Donovan held that section 
6(b)(5) of OSHA did not require the Department of Labor to engage in 
cost-benefit analysis, it did not appear expressly to preclude the 
Department from engaging in such an analysis if it so chose. Cf. 
Donovan, 452 U.S. at 512 (``We therefore reject the argument that 
Congress required cost-benefit analysis in [section] 6(b)(5).'') 
(emphasis added) with Donovan, 452 U.S. at 544 (J. Rehnquist, 
dissenting) (``As I read the Court's opinion * * * [i]t concludes that 
* * * the Act does not require the Secretary [of Labor] to engage in a 
cost-benefit analysis, which suggests of course that the Act permits 
the Secretary to undertake such an analysis if he so chooses.'') 
(emphasis in original).
---------------------------------------------------------------------------
    In the case of other statutes, such as the Clean Air Act 
and the Clean Water Act, the decisional criteria may constrain 
the reasonable alternatives to, for example, ``demonstrated'' 
or ``available'' technologies, although this range will likely 
be much broader than under the OSHA decisional criteria. In the 
case of such provisions in the Clean Air Act and Clean Water 
Act, the supplemental criteria of section 624 (b) or (c) of 
this legislation will govern the selection of a particular 
``demonstrated'' or ``available'' technology from the range of 
such technologies in the same fashion as noted above. \32\
    \32\ Most statutes already require or allow agencies to consider 
the costs (or costs and benefits) of their regulatory actions, so the 
``supplemental'' decisional criteria of section 624 can require clearer 
focus on justifying and reducing regulatory costs without changing 
existing law. See e.g., 7 U.S.C. 136(bb)(Federal Insecticide, 
Fungicide, and Rodenticide Act); 15 U.S.C. 2601(c) (Toxic Substances 
Control Act); 33 U.S.C. 1314(b)(1)(B) (Clean Water Act); 43 U.S.C. 
300g-1(b)(5) (Safe Drinking Water Act); 15 U.S.C. 1262 (Federal 
Hazardous Substances Act); 15 U.S.C. 2058(c)(1) (Consumer Product 
Safety Act); 42 U.S.C. 9621(a) (Comprehensive Environmental Response, 
Compensation and Liability Act). Even the Clean Air Act--with its 
emphasis on technology-based standards--accommodates a cost-benefit 
approach. See e.g., 42 U.S.C. 7408(b)(1) (air quality standards); id. 
section 7478(3) (best available control technology); id.section 
7412(d)(2) (maximum achievable control technology); id. section 
7521(a)(3)(A)(mobile source emission standards).
---------------------------------------------------------------------------
    Finally, at least in situations where consideration of 
costs and benefits (or either) is not precluded in the express 
decisional criteria of the underlying legislation, section 624 
will supplement an agency's authority under its express 
decisional criteria itself and thus govern the range of 
alternatives that will satisfy those decisional criteria (as 
opposed, as noted above, to only the choice among alternatives 
satisfying those criteria). By way of illustration, the section 
624 supplementary criteria can, again by analogy to NEPA, 
supplement a general statutory criteria like ``public 
interest'' or ``feasible'' where, under the statute in 
question, the agency has discretion to consider costs or cost-
benefit principles but has not, in the past, exercised that 
discretion. If the Agency were to exercise that discretion 
(e.g., in response to the supplementary commands of this 
legislation), the range of permissible alternatives might be 
increased. Accordingly, this legislation defines the 
``reasonable alternatives'' which an agency must take into 
account under section 624 as including the ``range of 
regulatory options that the agency has discretion to consider 
under the text of the statute granting the rulemaking 
authority, interpreted, to the maximum extent possible, to 
embrace the broadest range of options that satisfy the 
decisional criteria of section 624(b).'' Section 621(7) 
(emphasis added). Likewise, in order to be upheld on review 
under section 706(c)(2)(B), as revised by this legislation, a 
phrase such as ``to the extent feasible'' would have to be 
interpreted, consistent with the statute in question, by the 
agency in a manner that gives the agency the ``broadest 
discretion'' to adopt a rule that satisfies the decisional 
criteria of section 624.
    In sum, all this legislation does is supplement, in a 
manner that produces the most good or least harm (depending on 
the facts of a particular rulemaking), the discretion given the 
agency to identify and select from reasonable alternatives that 
satisfy the decisional criteria in the regulatory statute 
(supplemented, where permissible, as noted above). It does not 
override, in any case, the decisional criteria that Congress 
has directed the agency to apply.
    The reports to Congress required by section 624(d) should 
delineate any difficulties created by the operation of sections 
624 (b) and (c), and allow this committee and other committees 
of competent jurisdiction to focus on any legislative changes 
necessary in existing statutes in order to allow reasoned 
decisionmaking to prevail more simply and easily in all of the 
Federal regulatory programs covered by this legislation.

New Section 625

    The committee had three choices as to how it could approach 
the issue of judicial review of agency actions under this 
legislation. First, the legislation could have remained silent 
on the question. The consequence of such silence would have 
been that final actions under this legislation would have been 
subject to judicial review under 28 U.S.C. 1331 (the Federal 
question statute) in a federal district court, under section 
702 of the APA, or, possibly, where judicial review was 
provided in a Federal court of appeals, in the court of appeals 
under a theory of ``pendent jurisdiction.'' Needless procedural 
litigation in the court of appeals and the district courts over 
the details of the location, time, and standards for judicial 
review would undoubtedly result from this choice. See, e.g., 
E.I. Du Pont de Nemours & Co. v. Train, 430 U.S. 112 (1977).
    Second, the committee could have refused to provide any 
judicial review by expressly precluding judicial review. The 
Committee believes that this option would have relieved an 
agency from any accountability under this legislation.
    Third, the committee could expressly provide for judicial 
review in the same court, at the same time, and under the same 
standards for judicial review that would govern judicial review 
under the regulatory statute in question. This would assure 
that judicial review would not be bifurcated in two different 
courts and would eliminate confusion as to governing judicial 
review standards. For the reasons discussed below, the 
committee has chosen this third option.
    In the committee's view, the availability of effective 
judicial review of an agency's compliance with the decisional 
criteria of subchapter II is critically important to ensuring 
that agencies make such requirements a genuine element of their 
decisionmaking. To this end, section 625 expressly establishes 
that such agency compliance shall be judicially reviewable, in 
the same court that reviews agency findings under the statute 
granting the agency authority to take the action in question, 
at the same time as that review takes place, and applying the 
same standards of judicial review. In short, just as the new 
procedures and decisional criteria in subchapters II and III 
are supplemental to the procedures and decision criteria 
otherwise applicable to any agency action, they are equally 
subject to the same judicial review, as are those procedures 
and criteria.
    The promulgation of rules by agencies, whether ``major'' 
rules or not, are, of course, already subject to judicial 
review under the particular statute granting the agency 
authority to conduct the rulemaking. In this regard, section 
625 serves to clarify that an agency's cost-benefit analysis 
for a rule under section 622, and any risk assessment the 
agency performs in connection with a rule under subchapter III, 
shall constitute part of the whole record of the rulemaking and 
shall be considered by the court in determining the legality of 
the agency action, but only to the extent such cost-benefit 
analysis or risk assessment relates to the agency's decisional 
responsibilities under section 624 or the statute granting the 
agency authority to take the agency action. Of course, where 
procedural irregularities under this legislation rise to the 
level of prejudicial error under the normal doctrine of 
prejudicial error in the APA, as recodified by the legislation 
(and as further discussed elsewhere in this report), such 
procedural errors would constitute errors in the agency's 
decisional responsibilities.
    The importance of the decisional criteria of section 624 is 
such that section 625 expressly recognizes that a reviewing 
court must set aside agency action that fails to satisfy those 
decisional criteria under the normal standards of court review, 
as noted below. Technical, scientific or factual determinations 
by agencies under the provisions of subchapters II and III 
would not, however, be reviewed de novo. Rather, unless 
integral to the resolution of a question of statutory 
interpretation under new section 706(c)(1) of the 
Administrative Procedure Act, they would be reviewed under the 
arbitrary and capricious standard. Under revised section 
706(c)(2) of the Administrative Procedure Act, as well as under 
existing case law discussed in the section-by-section analysis 
of section 706(c)(2), the arbitrary and capricious standard of 
review requires only reasoned decisionmaking and does not allow 
a court to substitute its judgment for that of an agency.
    This legislation does not involve courts in unprecedented 
new review of scientific judgments. Courts routinely review 
complex scientific records and require reasoned decisionmaking 
by agencies under the arbitrary and capricious standard of 
review. They have been doing so for years in cases arising 
under the health, safety and environmental statutes that have 
been on the books since the early 1970s, and must do so if 
agency decisions are to be held accountable to law.
    Section 625 also makes it clear that the judicial review 
provided for shall not be separate or apart from judicial 
review of the agency action to which it relates. Section 625 
grants no new rights to interlocutory review; parties would 
have available only such rights in that regard as may already 
exist. In other words, section 625 takes account of the fact 
that it is essential that judicial review be ``channeled'' so 
that the entire decision related to a rule, including the 
determination as to whether a rule is a ``major'' rule, and the 
application of the decisional criteria under this legislation 
and under the statute granting the agency authority to conduct 
the rulemaking, is coordinated. Inefficient bifurcated review 
must be avoided. For example, a ``major'' rule promulgated by 
EPA under the Clean Air Act would be subject to judicial review 
under section 625 (to determine whether the rule satisfied the 
decisional criteria of section 624) at the same time and in the 
same court as when it was also subject to judicial review under 
section 307(b)(1) of the Clean Air Act (to determine compliance 
with the applicable provisions of the Clean Air Act). As a 
second example, petitions under section 623 shall be judicially 
reviewable in the same court that would review denial of any 
petitions under section 553(e) of the Administrative Procedure 
Act that relate to the underlying organic legislation at issue. 
In short, the language of section 625 is intended to ensure 
that time and effort are not wasted during judicial review 
because the proper coordination of that review was not 
established during passage of this legislation.
    The conduct of judicial review should, of course, proceed 
under the traditional standards of review established by 
Congress in the Administrative Procedure Act, as interpreted by 
the courts. It is essential, however, that the courts apply 
those standards without undue deference to agency 
determinations. When conducting judicial review, the reviewing 
court should use the normal standards of review, but apply them 
carefully, as we note elsewhere in this report, to assure that 
the proper measure of deference is given to agency decisions, 
as explained in such decisions as Chevron U.S.A. v. Natural 
Resources Defense Council, 467 U.S. 837 (1984), as codified by 
the changes made to section 706 of title 5 by this legislation.
    Finally, the effectiveness of a rule or other action would 
not be delayed automatically by a petition for judicial review. 
The high standards for obtaining a stay under existing law 
would continue to apply.

New Section 626

    While the Committee does not consider an across-the-board 
regulatory moratorium to be necessary or desirable in order for 
the beneficial consequences of this legislation to be realized, 
at the same time, the committee wishes to ensure that full and 
complete compliance by agencies with the requirements of this 
legislation should not be arbitrarily frustrated by rulemaking 
deadlines imposed by other statutes or by courts. As a result, 
this legislation does not prohibit an agency from adopting a 
rule after the date of enactment. It only prohibits an agency 
from relying on deadlines as a justification for not complying 
with this legislation.
    Accordingly, section 626(a) provides that, beginning on the 
date of enactment of this legislation, all statutory deadlines 
that would otherwise require agencies either to propose or to 
promulgate any rule subject to the requirements of subchapter 
II are suspended until those requirements are satisfied. 
Recognizing the practical reality that agencies often fail to 
meet such deadlines and that, as a consequence, rulemaking 
schedules are established through court-approved settlement 
agreements and consent decrees, section 626(b) further provides 
that, beginning on the date of enactment, the jurisdiction of 
any court of the United States to enforce a deadline pertaining 
to a rulemaking subject to this legislation is also suspended 
until such time as the requirements of subchapter II are met. 
It should be noted, however, that while section 626 authorizes 
the suspension of such deadlines, the committee does not 
anticipate that full and complete compliance by agencies with 
this legislation, which is designed to be inherently flexible 
in nature and applicability, will typically lead to many 
rulemaking deadlines being missed, nor should this section be 
construed as permitting any agency to delay the promulgation 
any rule, except as necessary to meet the requirements of the 
legislation.
    Further, in providing for the suspension of deadlines under 
this section, the committee is mindful of the need for agencies 
to preserve any lead times for compliance explicitly contained 
in, or implicitly created by, the underlying statute. For 
example, where a statute requires that an agency promulgate a 
rule by a specific date and also mandates that regulated 
entities come into compliance with the requirement of that rule 
within a certain time following promulgation, Congress has 
clearly intended to provide to such entities a period of lead 
time for achieving compliance. Where the initial rulemaking is 
delayed beyond the statutory deadline due to the agency's 
needing additional time to meet the requirements of this 
legislation, this lead time will be cut short unless the agency 
provides for an extension of the compliance deadline as well. 
With this consideration in mind, the committee intends that, 
where an agency promulgates a rule after a statutory deadline 
under section 626, the agency will exercise its discretion to 
provide sufficient time for those entities subject to the rule 
to come into compliance, consistent with congressional intent 
regarding the need to allow for such period of lead time. This 
reflects current law. See, e.g., Natural Resources Defense 
Council v. EPA, 22 F.3d 1125, 1135 (D.C. Cir. 1994); Natural 
Resources Defense Council v. Thomas, 805 F.2d 410, 435 (D.C. 
Cir. 1986); Citizens to Save Spencer County v. EPA, 600 F.2d 
844, 871 (D.C. Cir. 1979).
    Finally, subsection (c) provides that in those situations 
where an agency's failure to promulgate a rule by a given 
deadline creates an obligation to regulate through individual 
adjudications by another deadline, this second deadline is 
suspended until such time as the agency adopts a rule that 
meets the requirements of this legislation. Without this 
provision, agencies would have an incentive in such situations 
to delay the promulgation of rules that were subject to the 
requirements of this legislation, since the case-by-case 
regulatory standards would not have to satisfy those 
requirements. The committee notes that in using the term 
``adjudications'' in section 626(c), it does not intend to 
restrict the reach and effect of the subsection solely to 
``adjudications'' as the term is defined in section 551 of the 
APA. Rather, as used in section 626(c), the committee intends 
the term to mean any case-by-case, permitting, or other 
regulatory process that leads to the establishment of an 
individualized regulatory requirement or standard, such as 
under section 112(j) of the Clean Air Act.
New Section 627

    Section 627 ensures that rules will be terminated or 
revised as they become obsolete. It is only common sense that 
the utility of a rule may change as circumstances change. Thus, 
that a rule withstood cost-benefit analysis at the time of its 
promulgation provides no assurance that it remains cost-
effective 5 years later.
    Section 627 therefore requires agencies formally to review 
their major rules and certain other rules within a prescribed 
period of time (5 or 7 years in most cases), measuring the 
utility of the rules against the decisional criteria of section 
624. To ensure that this review is in fact conducted, 
subsection (b)(2) provides that a regulation shall terminate if 
the review is not conducted within the prescribed period of 
time. The effect of section 627, then, should be to make 
certain that rules remain in force only so long as they remain 
cost-effective.

New Subchapter III

    This subchapter on risk assessment is intended, the 
committee believes, to bring about several important reforms to 
the way the government currently assesses risks to human health 
and the environment, the most important of which are: (1) 
bringing greater consistency to the risk assessment process 
across Federal agencies; (2) encouraging the use of site 
specific data whenever possible; (3) identifying the value/
policy judgments which are made in developing risk estimates 
when site specific data cannot be used; (4) assuring that the 
risk assessor uses the most plausible and realistic assumptions 
and scenarios in lieu of site specific data; and (5) allowing a 
greater role for the public to comment on specific risk 
assessments and the assumptions/policies on which they are 
based.
    Up until recently, policymakers paid little attention to 
the significant policy decisions made by scientists in 
conducting risk assessments despite the fact that these policy 
decisions or value judgements could have a significant impact 
on the resulting estimate. The committee intends through these 
reforms first to make the process more transparent to the 
public and decisionmakers and second, to allow the public an 
opportunity to participate in and comment on the key judgements 
and assumptions being used.
    The committee also intends to stop the longstanding 
practice of presenting conservative (inflated) risk estimates 
as the primary way of dealing with uncertainty. Instead the 
legislation directs risk assessors to use the most plausible, 
realistic assumptions at each stage of the risk assessment 
process to ensure that the final estimate comes as close as 
possible to reflecting the public's true risk from a given 
activity or substance. This applies to the selection of 
exposure scenarios as well as to the specific steps used in 
calculating a substance's potency, such as the selection of 
models to extrapolate risks from high doses to low doses or the 
conversion factor used to translate animal data to potential 
human risk levels.
    Because of this focus on presenting the most plausible or 
likely estimate of risk, the bill includes a clear preference 
for point estimates of risk. Where point estimates cannot be 
made, risk ranges are also acceptable if they are based on 
probability distributions weighted according to their 
likelihood of occurrence. In other words, risk estimates which 
are provided to the public and decisionmakers should, to the 
maximum extent possible, inform them of the risk levels which 
are most likely to occur or be most representative of actual 
conditions.

New Subsection 631(1)

    The term benefit has the meaning given in 621(1).

New Subsection 631(2)

    The definition of the term ``best estimate'' is crucial to 
the reforms of the risk assessment process sought by this 
Committee. First and foremost, the ``best estimate'' of risk 
means a point estimate of individual and population risk that 
is based on the most plausible and likely scenarios and 
assumptions. It is the risk estimate which the risk assessor 
believes is the most likely to occur. Single point estimates, 
such as plausible upper bounds or worst-case scenarios, must be 
accompanied by lower bounds or optimistic scenarios and 
realistic (or likely) estimates of risk.
    If point estimates of risk are not technically feasible, 
``best estimate'' also means multiple estimates of risk based 
on different scenarios that are weighted according to the 
probability of each scenario's occurrence. Such weighted 
probability distributions can be provided along with point 
estimates that represent the best estimate, but should not be 
substituted for these point estimates unless the point 
estimates are technically infeasible.
    Agency assumptions and value judgments about proper margins 
of safety must be acknowledged explicitly, described in detail 
and supported with data that measure the number of citizens 
exposed to various levels of risk.
New Subsection 631(3)

    The term ``cost'' has the same meaning as the term in 
section 621(3).

New Subsection 631(4)

    The term ``cost-benefit analysis'' has the same meaning as 
the term in section 621(3).

New Subsection 631(5)

    The term ``emergency'' means an actual, imminent, and 
substantial endangerment to public health, safety, or the 
environment. Imminent means about to occur, impending and in 
the context of a potentially acute impact on public health or 
the environment. Emergency is specifically not intended to 
address impending public or environmental exposure to low 
levels of contaminants that have the potential for long-term, 
chronic impacts on public health or the environment. The 
emphasis here is on conditions that will cause immediate and 
substantial harm to human health.

New Subsection 631(6)

    The term ``hazard identification'' means identification of 
a substance, activity, or condition that may cause adverse 
effects to public health, safety, or the environment based on 
empirical data, measurements, or testing showing that it has 
caused significant adverse effects at some levels of dose or 
exposure combined degree of toxicity and actual exposure, or 
other risk the hazards pose for individuals, populations, or 
natural resources. Hazard identification is generally the first 
step in the risk assessment process and may be driven to some 
extent by an agency's statutory mandate. Addressing potential 
or actual adverse effects and hazard identification includes 
determining whether such effects are potentially acute or 
chronic, carcinogenic or noncarcinogenic, persistent or 
ephemeral or, indeed, plausible versus merely possible, all are 
important subcomponents of the concept of hazard 
identification. It is also worth noting that the term adverse 
effects is utilized in this definition, although it is not 
utilized in the definition of the term benefit as noted above.

New Subsection 631(7)

    The term ``major cleanup plan'' includes both any proposed 
or final environmental cleanup plan for a Federal facility or 
Federal guidelines for the issuance of such plans, whereby the 
expected costs, expenses and damages are expected to exceed (in 
the aggregate) $10 million. This section makes clear that its 
application is broad-based and includes such plans as the 
corrective action requirement under the Solid Waste Disposal 
Act, a removal or remedial action under the Comprehensive 
Environmental Response, Compensation, and Liability Act of 
1980, as well as any other environmental or damage assessment 
performed by a federal agency pursuant to Federal statute, 
court order or decree, or under agency authority.

New Subsection 631(8)

    The term ``major rule'' is the same as used in section 
621(4).

New Subsection 631(9)

    The term ``negative data'' means data that fail to show 
that a given substance or activity induces an adverse effect 
under certain conditions. All assumptions (e.g., model fitting 
assumptions science policy judgments, data set comparison or 
statistical thresholds) that may impact the interpretation of 
whether data is ``negative data'' must be clearly revealed to 
assure that negative data are properly factored into risk 
assessments.

New Subsection 631(10)

    The term ``risk assessment'' means--
          ``(A) the process of identifying hazards, and of 
        quantifying (to the maximum extent practicable) or 
        describing the combined degree of toxicity and actual 
        exposure, or other risk the hazards pose for 
        individuals, populations, or natural resources; and
          ``(B) the document containing the explanation of how 
        the assessment process has been applied to an 
        individual substance, activity, or condition.''
A risk assessment traditionally includes the components of 
hazard identification, dose response assessment, exposure 
assessment and risk characterization. Risk assessments are not 
designed for making judgments, but rather to inform them. In 
order to properly inform judgments, risk assessments must 
disclose the bases for decisions made and the quality and 
quantity of the information available at various stages and in 
the various components of the risk assessment. Risk assessments 
are intended to be iterative activities that can be modified, 
upgraded and improved with additional information, techniques 
or technologies.

New Subsection 631(11)

    The term ``risk characterization'' means--
          ``(A) the element of a risk assessment that involves 
        presentation of the degree of risk to individuals and 
        populations expected to be protected, as presented in 
        any regulatory proposal or decision, report to 
        Congress, or other document that is made available to 
        the public; and
          ``(B) may include discussions of uncertainties, 
        conflicting data, estimates, extrapolations, 
        inferences, and opinions, as appropriate.''
Risk characterization is traditionally the final component of a 
risk assessment and can be the major component with respect to 
explaining risk. The risk management decision is that part of 
the regulatory process wherein the decision is made as to what 
to do where some risk has been determined to exist. Risk 
characterization may be the most critical component of a risk 
assessment in terms of developing public understanding of the 
nature of a risk and the bases for justifying the costs and 
benefits of addressing a risk through some sort of regulatory 
or other control program.
New Subsection 631(12)

    The term ``rule'' has the same meaning as the term in 
section 621(7).

New Subsection 631(13)

    The term ``substitution risk'' means a potential increased 
risk to health, safety, or the environment resulting from a 
regulatory alternative designed to decrease other risks. 
Substitution risk can also refer to risks to health, safety, or 
the environment resulting from a reduced standard of living, or 
market substitutions caused by a regulatory alternative. In 
sum, substitution risks are the direct and indirect risks to 
human health and the environment that result from a regulatory 
option designed to reduce other risks. The term ``central 
estimate of risk'' means the overall risk estimate and is 
expressed as a probability distribution reflecting 
variabilities and uncertainties in the analysis. This will 
often be referred to by risk assessors in the scientific 
community as the ``best'' estimate of risk with quantified 
upper and lower bounds of uncertainty. Quantification of 
uncertainty should be provided to the maximum extent 
practicable and qualitative expressions of uncertainty to the 
extent necessary should be thoroughly explained; in particular, 
including the reasons why quantitative certainty is not 
possible or practicable.

New section 632

    This section clarifies that the requirements for risk 
assessments and risk characterizations apply to any agency 
which evaluates health, safety and environmental risks, whether 
the risk assessment or characterization is prepared by the 
agency, on behalf of the agency, or is prepared by others and 
adopted by the agency. In addition, this section creates 
certain exceptions under which risk assessments and 
characterizations will not be required. Those situations are: 
agency-designated emergencies; actions to authorize marketing 
or manufacturing a substance, mixture or product; certain 
inspection, compliance and enforcement actions; or certain 
clearly-identified screening analyses.

New Subsection 632(a)

    The language here indicates that this subchapter will apply 
to all risk assessments and risk characterizations prepared 
for, by or on behalf of, any agency in connection with health, 
safety, and environmental risks.
            New Paragraph 632(b)(1)
    The committee does not intend that the risk assessment 
requirements of this legislation apply to certain cases in 
which regulatory agencies need the flexibility to react quickly 
to emerging health and safety problems. As approved by the 
Committee, S. 343 exempts from the risk assessment provisions 
of the legislation the following: situations designated by the 
head of an agency as emergency; actions to authorize marketing 
or manufacturing a substance, mixture or product; certain 
inspection, compliance or enforcement actions; or clearly 
identified screening analyses.
    These provisions were added by the Committee to address the 
specific concerns expressed by the regulatory agencies, such as 
the Food and Drug Administration. The committee was mindful of 
the comments expressed by several agencies, including the 
Environmental Protection Agency, the Food and Drug 
Administration, and the Agriculture Department, that officials 
must have the ability to respond to public health and safety 
problems, whether it be an outbreak of listeria in ice cream or 
e coli bacteria in raw meat. The Committee believes that the 
provisions of Section 632, especially the exception for 
emergency designation, will address these concerns.
    In addition, the committee found very compelling the 
argument that the risk assessment provisions of this bill 
should not apply to individual product approvals, such as those 
for pharmaceutical or medical devices, or for individual 
product disapprovals or removals from the marketplace. 
Accordingly, section 632 exempts from the risk assessment 
provisions rules or agency actions that authorize the 
introduction into commerce, or initiation of manufacture, of a 
substance, mixture or product, or recognizes the marketable 
status of a product. In adopting such language, the Committee 
intends that actions to remove from the market specific 
products, or to disapprove specific products, also be included 
within the ambit of section 632.
    The Committee wishes to clarify, however, that the 
provisions of S. 343 with respect to risk assessment shall 
apply to agency actions governing product approvals or 
disapprovals in general, or to agency actions governing 
inspection, compliance or enforcement actions in general, that 
is, actions not with respect to individual products or 
enforcements. In other words, agency policy relating to risk 
assessment and risk management which is established, not just 
in formal regulations, but also in final guidances and 
protocols, would be subject to the requirements of S. 343.
    Under the committee bill, risk assessments and risk 
characterizations contained in any informal guidance must 
comply with the requirements of the bill, if they have general 
application and are not limited to an individual substance, 
product, or temporary emergency situation. This subchapter 
shall not apply to risk assessments or its characterizations 
performed with respect to:

          (A) A situation the head of any agency finds to be an 
        emergency which by definition (631(5)) requires action 
        to protect public health of the environment from 
        significant impending threat.
          (B) A rule or agency action that authorizes the 
        introduction into or removal from commerce a product or 
        substance. Thus, section 632(b) excludes from the 
        formal requirements for risk assessment and risk 
        characterization any rule or agency action that 
        authorizes the introduction into commerce, or other 
        recognizes the marketable status of, a product. This 
        provision is intended to give agencies charged with 
        protecting health or safety the ability to deal with 
        and prevent health exigencies.
          Many products are subject to premarket approval and 
        notification under existing regulatory statutes, 
        including chemicals, pesticides, new drugs, medical 
        devices, and food additives. As the substantive and 
        procedural requirements for obtaining approval of these 
        products are very burdensome, complex, lengthy and 
        costly, and in any event include evaluations of safety 
        that reflect the objectives of this legislation, it is 
        unwise and unnecessary to impose the formal 
        requirements for risk assessment and characterization 
        that are included in S. 343.
          (C) A health, safety or environmental inspection, 
        compliance or enforcement action or individual facility 
        permitting action, including both construction and 
        operating permits. We recognize that most permits apply 
        generic requirements already established by rules to 
        which this legislation may have applied, and while risk 
        assessments and risk characterization may be relevant 
        and appropriate to some such agency actions (e.g., some 
        permitting actions), such instances would be highly 
        dependent on site specific or individualized 
        circumstances and, therefore, not appropriately subject 
        to the requirements of this subchapter.
          (D) A screening analysis clearly identified as such 
        because such analyses are generally preliminary in 
        nature and not appropriate to provide the bases for 
        major affirmative regulatory action.
            New Subparagraph 632(b)(2)(A)
    An analysis shall not be treated as a screening analysis 
for the purposes of paragraph (1)(D) if the result of the 
analysis is used--
          (i) as the basis for imposing a restriction on a 
        previously authorized substance, product, or activity 
        after its initial introduction into manufacture or 
        commerce; or
          (ii) to characterize a finding of risk from a 
        substance or activity in any agency document or other 
        communication made available to the public, the media, 
        or Congress--we do not intend that a screening analysis 
        is to be used for the purpose of imposing restrictions 
        on previously authorized substances or to characterize 
        a finding of risk as the basis for any affirmative 
        major regulatory agency action or in any agency 
        document or other communication made available to the 
        public, media or Congress. Screening analyses can and 
        should be used to determine that certain kinds of 
        processes, facilities or contaminants are not worth 
        further regulatory oversight or control. Screening 
        analyses can be very useful in the initial stages of 
        prioritization of agency activities on the basis of 
        risk assessments by weeding out de minimis or 
        insignificant potential sources of risk.
            New Subparagraph 632(b)(2)(B)
    This provision enhances the quality of data used by 
agencies in risk assessments. Each federal agency must abide by 
the same standards and guidelines for toxicological data 
development that are imposed on outside parties who submit data 
to agencies.
            New Paragraph 632(b)(3)
    This paragraph makes clear that the risk assessment 
mandates of this subchapter do not apply to any requirement 
that mandates product informational labels, such as the Surgeon 
General's cigarette warning labels.
New Section 633

            New Paragraph 633(a)(1)
    The head of each agency shall apply the principles in 
subsection (b) when preparing a risk assessment for a major 
rule to insure (A)-(D). The committee believes that for the 
general public and the regulated public to understand the bases 
for agency actions relying to some significant degree on risk 
assessment, full disclosure is necessary. The head of an agency 
must take the steps necessary to explain the scientific and 
technical, legal and policy bases for agency action to assure 
that the true character of the final choices are revealed and 
to the maximum extent practicable reflect the best available 
scientific information addressing ``real world'' probabilities 
that significant adverse impacts will be avoided.
            New Paragraph 633(a)(2)
    This provision makes clear that subsection (a) allows 
incorporation by reference as long as references are adequately 
explained, adequately available, and prepared in accordance 
with this subchapter.

New Subsection 633(b)

    This subsection details the principles to be applied in 
preparing a risk assessment. They are as follows:
            New Subparagraph 633(b)(1)(A)
    The risk assessment shall consider both laboratory and 
``epidemiological'' data including negative data and summarize 
the remaining data that finds or fails to find a correlation 
between a health risk and a substance or activity. In a risk 
assessment, all relevant data that exists should be discussed 
as part of a complete risk assessment. Risk assessments that 
provide a quantification or numerical output shall use a 
central estimate risk which, as noted previously is preferably 
a ``best'' estimate with quantified upper and lower bounds of 
uncertainty.
            New Subparagraph 633(b)(1)(B)
    Reconciliation of, or at a minimum, thorough discussion of 
conflicting data (whether between epidemiological data or 
animal and epidemiological data) is extremely important. The 
committee stresses in this provision the importance of 
evaluating data for its relevance to human health risk. There 
can be a variety of scenarios in which data may have little or 
no relevance to biological reality (e.g., such as where 
anatomical differences make animal data irrelevant) and 
regulatory decisions based on such scenarios may not be based 
on reasoned decisionmaking.
            New Paragraph 633(b)(2)
    This provision requires that when a risk assessment is 
based on a significant assumption, preference or model, the 
agency preparing the assessment must--
          (A) elaborate and make clear the basis of such 
        assumptions, preferences, or models by presenting 
        explicit representative explanations and alternatives
          (B) This provision gives preference to the model 
        assumption that represents the most plausible or 
        realistic inference--this is the real world approach 
        that has been endorsed in several court decisions, 
        including Vinyl Chloride (NRDC v. EPA, 824 F.2d 1146 
        (D.C. Cir., 1987), Gulf South (Gulf South Insulation v. 
        CPSC, 701 F.2d 1137 (5th Cir., 1983), and Benzene 
        (Industrial Union Dept., AFL-CIO v. American Petroleum 
        Institute, 448 U.S. 607 (1980).
          (C) This subsection allows use of science policy and 
        value judgments only where they have been approved by 
        the agency head after notice and comment.
          (D)(E) These provisions address models. Any model 
        that is utilized in a risk assessment should be 
        identified and if it has not been validated, should 
        either be validated or there should be thorough going 
        explanation as to why it cannot be validated.
            New Paragraph 633(b)(3)
    Risk assessments that provide a quantification or numerical 
output shall use a central estimate of risk which preferably 
will be expressed as a ``best'' estimate with quantified upper 
and lower bounds of uncertainty. In any event, to the extent 
that a range of numerical or quantified risks is identified, 
the uncertainty in such range must be explained qualitatively 
if quantification is not practicable.
            New Paragraph 633(b)(4)
    A risk assessment should clearly separate hazard 
identification from risk characterization and make clear the 
relationship between the level of risk and the level of 
exposure. For example, a potential for significant adverse 
impacts may be identified for certain exposure scenarios, but 
if the exposure scenario is highly implausible then the 
potential for significant adverse impacts is likely to be 
minimal.
            New Paragraph 633(b)(5)
    This paragraph makes clear that a risk assessment should be 
prepared at the level of detail appropriate and practicable for 
reasoned decisionmaking. Thus, an agency is given the needed 
leeway for practical risk assessments.
            New Paragraph 633(b)(6)
    The purpose of this paragraph is to enhance the quality of 
data used by agencies in risk assessments: each Federal agency 
shall abide by the same standards and guidelines for 
toxicological data development that are imposed on outside 
parties who submit data to agencies. This is achieved by 
requiring, to the extent relevant, practicable, and 
appropriate, that data utilized by the agency for a risk 
assessment be developed consistent with guidelines for the 
development of data under two sets of guidelines. The first is 
promulgated pursuant to section 4 of the Toxic Substances 
Control Act (15 U.S.C. 2604) (``TSCA''). This set of standards, 
which appears at 40 C.F.R. Parts 796-799, address such issues 
as chemical fate testing guidelines, environmental effects 
testing guidelines, and health effects testing guidelines. The 
second is promulgated pursuant to section 3 of the Federal 
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136a) 
(``FIFRA''). This set of standards, found at 40 C.F.R. Part 
158, address such issues as environmental fate and toxicology 
data requirements.
    The referenced guidelines have been established by the 
Environmental Protection Agency and are generally accepted to 
be appropriate guidelines to be followed in developing 
toxicological data for use in risk assessments. The committee 
believes that this provision is necessary because in the past 
agencies have relied on suspect data, which would not have been 
acceptable if submitted by an outside party. Thus, this 
provision simply requires agencies to abide by the guidelines 
imposed on outside parties and ensures that the data relied on 
by the agency as the basis for risk assessments supporting 
regulatory determinations is of comparable quality.
            New Subparagraph 633(c)(1)(A-E)
    This section makes clear and effectuates an important 
element in regulatory reform: involvement by the regulated 
community (``stakeholders'') in the development of risk 
assessment guidelines.
            New Subparagraph 633(c)(2)(A)
    This provision provides an opportunity for meaningful 
public participation and comment on risk assessment throughout 
the regulatory process ``commensurate with the consequences of 
the decision to be made.''
            New Subparagraph 633(c)(2)(B)
    This subsection requires advanced publication and, 
therefore, identification by an agency of the relevant factors 
and criteria concerning risk assessment information that will 
become a basis for the promulgation of a major rule.
            New Paragraph 633(d)(1-2)
    This provision commands that no agency shall automatically 
incorporate or adopt any recommendations or classification made 
by an entity described in paragraph (2), which includes 
Foreign-governments or agencies, the United Nations or its 
subsidiaries, or any international body or organization. This 
provision is intended to prevent the automatic adoption of 
foreign generated data or standards as the basis of federal 
regulation, subjecting such data or standards to the same 
procedural requirements and validation protections as domestic 
data or standards. Thus, whether standard setting or expert 
organizations are national or international, any proposed 
standards or requirements should be evaluated in light of the 
statutory program that may ultimately form the basis for 
regulatory decisions. No data or standards should be 
automatically adopted or incorporated by reference.
New Section 634

New Subsection 634(1)

    The committee believes communication by federal agencies to 
Congress and the public of risk assessment determinations and 
characterizations to be meaningful ought to contain certain key 
components. These include descriptions of exposure scenarios 
and, where feasible, an estimation of the corresponding 
population or natural resource at risk and the likelihood of 
such exposure scenarios.
            New Paragraph 634(2)(A)
    If a numerical estimate of risk is provided, the head of an 
agency shall provide range and distribution of exposures 
scenarios including, where appropriate, central and high-end 
estimates, but always including a central estimate of risk to 
the general population.
            New Paragraph 634(2)(B)
    A list of qualitative factors influencing the range of 
possible risk must also be included. Where quantitative risk 
estimates of the range of distribution of risks are not 
possible there should be a thorough discussion as to why they 
are not possible or not practicable.

New Subsection 634(3)

    The head of an agency also shall provide the nature and 
magnitude of individual and population risks to human health in 
context.

New Subsection 634(4)

    This subsection addresses the communication of substitution 
risks, either identified by the agency or provided by a 
commentator. Where substitution risks are not appropriate, the 
agency may discuss why it does not believe the substitution of 
risk information is worthy of consideration or that indeed it 
is or to solicit additional information with respect to the 
potential substitution risks.

New Subsection 634(5)

    This provision essentially requires the agency to address 
risk assessments provided by those commenting on potential 
agency risk assessments that underlie regulatory control 
decisions. The committee intends to reach the situation in 
which the agency picks and chooses what it will address in its 
response to comments and often ignores risk assessments 
presented by commenters. This will encourage the private sector 
to engage in significant risk assessment efforts rather than 
discouraging them. Private entities often create high quality 
risk assessment information that has often been summarily 
dismissed as biased because it comes from industry. Any bias 
can be evaluated objectively.

New Section 635

    Section 635 provides transition rules to determine when the 
reforms of this subchapter will be applied to major cleanup 
plans which are already under development as of the date of 
enactment. To assure that these transition rules guarantee 
protection of human health, this section explicitly states that 
it does not apply to emergencies, which will include any 
actual, immediate, and substantial endangerment to health, 
safety, or the human environment. For circumstances where no 
emergency exists, this section is carefully tailored to balance 
two important objectives: extension of the benefits of these 
reforms to cleanup and restoration projects where it is 
feasible to do so and avoidance of dangerous or costly 
disruptions to ongoing cleanup and restoration projects. As a 
general rule, application of the risk assessment and cost-
benefit requirements does not entail serious disruption where 
construction has not yet commenced because, in such instances, 
the agency has only performed studies and analyses and normally 
need only provide a supplement which applies appropriate risk 
assessment and cost-benefit principles to existing data or 
which analyzes a new factor or issue that is relevant under the 
principles established in this bill. In effect, the analysis 
required for projects prior to construction is similar to a 
supplementary EIS which is required to comply with the NEPA law 
but which can usually be performed expeditiously and without 
significant delay to the construction project. In the current 
context, the supplementary analysis will simply be addressing 
risk assessment and cost-benefit requirements, rather than NEPA 
requirements. For instance, in a completed record of decision 
for a remedial action, the lead agency will already have 
performed a risk assessment and set forth and analyzed remedial 
alternatives; in the supplementary analysis performed by this 
section, the lead agency need only assure that the existing 
data developed in the risk assessment are analyzed according to 
the principles of this bill, that the list of remedial 
alternatives is complete, and that the alternative chosen has 
the greatest net benefits and is the most cost effective and 
flexible.
    This section recognizes that the prospect of disruption 
increases once construction has commenced as a part of a 
removal, remedial, corrective or restoration action. Under 
these circumstances, a risk assessment and cost-benefit 
analysis need not be performed where the delays incident to 
performance of such analyses will result in an actual and 
immediate risk to human health or where the disruption of the 
construction work will not lead to a cost effective result. The 
committee expects, however, that where none of these 
circumstances exist, substantial benefits will accrue from the 
application of these reforms to construction activity without 
significant offsetting disadvantages, such as risks to public 
health or the waste of public or private resources.
            New Paragraph 635(a)(1-2)
    The head of an agency must prepare for each major rule 
relating to health, safety, or the environment, and for each 
major cleanup plan, a risk assessment according to the terms of 
this subchapter. This command is applicable to appropriate 
agency actions proposed after the date of enactment of this 
subchapter, pending on the date of enactment, or which is 
subject to a granted petition pursuant to the act. A risk 
assessment must also be done if a cost-benefit analysis would 
have to be completed under the Act.
            New Paragraph 635(a)(3)
    The requirements for comparative risk analysis in this 
subsection are based on including at least three other risks 
regulated by the agency and at least three other risks with 
which the public is familiar. The key here is that the risks 
are in some fashion relevant to the risks being evaluated even 
though not necessarily exactly the same kind of risk. Risks can 
be relevant in a number of different contexts even if they are 
not exactly the same kind of risk (i.e., risk of getting 
cancer, risk of getting struck by lightning) if they are of a 
similar order of magnitude--for example, very small. The 
comparison can be based on similar types of risks such as the 
risk from naturally occurring background radiation and the risk 
from some human enhanced source of radiation. They can be 
similar in terms of projected impact (i.e., the number of 
people potentially impacted) however, quite different with 
respect to the likely impact (i.e., the difference between 
hypothetical extrapolated health risk and ``actuarial'' risks 
that are in some sense more ``real'' as based on statistical 
evidence of actual adverse effects).

New Subsection 635(b)

    This subsection details when major cleanup plans are 
subject to this subchapter.

New Subsection 635(c)

    This subsection requires that a risk assessment prepared 
pursuant to this subchapter shall be a component of and used to 
develop any cost-benefit analysis required by this subchapter 
and be included in the same administrative record.

New Section 636

    Section 636 provides that major cleanup plans must be based 
on scientific, plausible, and realistic risk assessments 
utilizing reasonable exposure scenarios and must select the 
alternative which has the greatest net benefits and which is 
the most cost effective and flexible. A major cleanup plan 
encompasses all of the activities envisioned for the entire 
facility or site, including any removal action, any remedial or 
corrective action, any environmental restoration, and any 
natural resource damage assessment. For the purpose of 
determining whether the monetary threshold may be exceeded, the 
lead agency must evaluate the potential cost of all such 
activities, in the aggregate, for the entire facility or site; 
the requirements of this section, however, will be applied to 
each individual removal action, remedial action, corrective 
action, restoration action, or damage assessment as it is 
determined for the facility or the site. Where a federal agency 
is proceeding at a site under the National Contingency Plan, 
for instance, the applicability of this section will be 
determined based on the potential costs of all removal and 
remedial actions and natural resource damages expected for the 
entire facility or site. Once the Federal agency has made this 
threshold determination, the risk assessment, cost/benefit, 
cost effectiveness, and flexibility requirements of this 
section must be satisfied for each removal or remedial action 
and for each natural resource damage assessment, unless the 
circumstances surrounding the specific action or assessment 
constitute an emergency.

New Subsection 636(a)-(c)

    This provision is a direction by Congress that agency 
heads, subject to the review by the Director of OMB or a 
designee of the President, will assure that risk assessments 
prepared for major rules or major cleanup plans shall be based 
on ``good science,'' supported by the best available scientific 
data as determined by a peer review panel pursuant to section 
640. This provision also contains a requirement that agency 
heads assure that a cost-benefit analysis must be done for any 
major cleanup plan subject to this act and that the plan will 
be implemented in a cost effective manner or will provide 
greater net benefits. Issuance of a record of decision, a final 
permit condition, or an administrative order for a cleanup 
plan, shall constitute final agency action under section 
636(c), subjecting the agency action to judicial review at the 
time the action is taken.

New Subsection 636(b)

    This section precludes agencies from denying approval of a 
substance or product on the basis of safety, if that substance 
or product poses a negligible or insignificant human risk under 
the intended conditions of use. This language would strike a 
provision in food and drug law commonly referred to as the 
``Delaney Clause.''
    The so-called ``Delaney Clause'' sets a ``zero risk'' 
standard in the food and drug law for substances which are 
potentially carcinogenic.
    When the Delaney Clause was first enacted in 1958, it was a 
policy that was appropriate at that time. Today, though, the 
provisions are outdated and work against the best interests of 
the American people by stifling research on new technologies or 
ingredients which could improve the public health. Advances in 
science now make it possible to detect minute quantities of 
substances which potentially cause cancer.
    The initial Delaney provision, added to the Federal Food, 
Drug and Cosmetic Act almost 40 years ago, provided that:

          No [food] additive shall be deemed to be safe if it 
        is found to induce cancer when ingested by man or 
        animal, or if it is found, after tests which are 
        appropriate for the evaluation of the safety of food 
        additives, to induce cancer in man or animal. [Section 
        409(c)(3), Federal Food, Drug and Cosmetic Act.]

    The Delaney prohibitions of the Federal Food, Drug and 
Cosmetic Act were expanded in 1960 to cover color additives 
[Section 512(d)(1)] and in 1968 to cover animal drugs [section 
721(b)(5)(B)]. Thus, the Delaney language requires that any 
potentially carcinogenic substance, in no matter how minute a 
quantity, be banned, even if it poses a negligible or 
insignificant risk to human health.
    The Delaney clause is interpreted and applied by two 
agencies: the Environmental Protection Agency (EPA) and the 
Food and Drug Administration (FDA). EPA applies it to all 
pesticide residues in processed food that are defined as ``food 
additives.'' FDA applies it to all food substances that are 
defined as food additives, as well as to animal drugs and color 
additives.
    Specifically, the Delaney language covers food additives, 
pesticide residues that concentrate in processed foods, color 
additives, animal feed additives and animal drugs. Ironically, 
a broader group of substances used for virtually identical 
purposes are not covered by the Delaney language. These are: 
pesticide residues that do not concentrate on processed foods; 
constituents of food additives; food substances which are not 
considered ``additives,'' either because they are generally 
recognized as safe or were approved by the FDA or the U.S. 
Department of Agriculture during 1938-1958; dietary supplement 
ingredients; environmental contaminants in the food supply; 
cosmetic ingredients; undetected animal drug residues; and 
ingredients in nonprescription and prescription drugs.
    It is important to have a single safety standard for all 
food substances, including constituents of these substances. 
The benefits to American consumers are obvious: they will be 
assured of a uniform, rational protection of the public health.
    The purpose of S. 343, the Comprehensive Regulatory Reform 
Act, is to make our country's regulatory process function 
better and be more responsive to the public interest. One of 
the principal tools for achieving that purpose contained in S. 
343 is the provision which will set forth reasonable guidelines 
for risk assessment. As Chairman Grassley said during 
subcommittee consideration of S. 343, ``Better rules, broadly 
speaking, are the rules that do more social and economic good 
than harm.''
    Unfortunately, the Delaney Clause does not allow that 
flexibility. In fact, the Delaney Clause may be one of the few 
laws on the books which actually precludes the application of 
modern science and risk assessment.
    A good example of this is the January 1990 decision by the 
Food and Drug Administration to terminate the provisionally 
listed uses of FD&C Red No. 3, a color additive. The agency 
action was based on life-time studies in rats, in which only 
the highest doses of the additive caused benign tumors in male 
animals. Not only were the levels causing the benign tumors 
literally thousands of times greater than any possible exposure 
to humans, scientists noted that the mechanism which caused the 
rat tumors did not even exist in humans. At the time of the FDA 
action, Secretary of Health and Human Services Louis B. 
Sullivan said that the color was not a health hazard, but that 
he had no choice but to act given the unyielding provisions of 
Delaney.
    The experience with the artificial sweetener saccharin is 
also illustrative of the problems posed by the Delaney 
language; moreover, it shows the widespread public and 
congressional recognition of the problems that Delaney poses, 
and the public's acceptance for a reasonable government 
solution to the problem.
    In 1977, the Food and Drug Administration announced it was 
going to take steps to remove from the market saccharin, the 
only artificial sweetener approved for use at that time. FDA's 
action was based on a Canadian Government study showing that 
the sweetener caused tumors in laboratory animals when fed in 
high doses. Although FDA noted in a March 9, 1977, release that 
saccharin had been in use for more than eight decades, that it 
had never been known to harm people, and that Canadian data did 
not indicate an immediate hazard to public health, the agency 
concluded, ``The law is clear. It says that no ingredient that 
causes cancer in man or animals may be added to our food 
supply.''
    Public and congressional reaction was swift. By November of 
that year, President Carter had signed into law the Saccharin 
Study and Labeling Act (Public Law 95-203), which held off the 
proposed ban for 18 months pending a new scientific review. The 
moratorium was then again extended by the Congress in 1980 
(Public Law 96-273), in 1981 (Public Law 97-42), in 1983 
(Public Law 98-22), and in 1985 (Public Law 99-46). Thus, on 
four occasions, the Congress passed, and the President signed 
into law, exceptions to Delaney for saccharin.
    Beyond the two above-cited examples, it is clear that the 
Delaney Clause gives rise to a host of problems:
    First, as noted, it sets a zero risk standard, which has 
proven too inflexible.
    Second, the Delaney Clause is scientifically outdated. Due 
to the advances in modern technology, we now have the ability 
to detect minute quantities of potential carcinogens, abilities 
which were neither possible nor foreseeable almost 40 years 
ago. Scientific advancements since 1958 allow us to identify 
threshold levels and application of a de minimis concept, that 
is, a concept allowing negligible risk, with reasonable 
certainty of safety.
    Third, a zero-risk standard for food and drug approvals 
stifles research and development of new technologies which can 
improve production and better meet consumer needs.
    The fourth problem has been referred to as the ``Delaney 
paradox.'' Pesticide residues on raw commodities such as fruit 
are not considered food additives and thus not subject to 
Delaney. On foods processed from those same commodities, the 
same residue could become illegal. In other words, a pesticide 
on an apricot is not considered a food additive and thus is not 
subject to the absolute prohibition contained in Delaney. If 
that same apricot were made into jam, Delaney could kick in.
    In addition, it is important to note that the Delaney 
restrictions have had a very serious, negative effect on 
America's farmers, an effect felt in virtually every State. 
Under the strict interpretation of the Delaney language, even 
though detectable levels of pesticides may represent a 
negligible health risk, many essential crop protection products 
will be banned, only because they are detectable. In many 
cases, this means that farmers will lose the benefits of the 
few remaining crop protection products available to them.
    Recognizing this fact, in 1988, the Environmental 
Protection Agency announced it would establish a de minimis 
exception from Delaney if the dietary risk to humans from 
pesticide residues were negligible. Although the EPA statement 
followed from a recommendation made by the National Academy of 
Sciences in its 1987 report, ``Regulating Pesticides in Food: 
The Delaney Paradox,'' it was challenged in Federal Court and 
subsequently overturned by the U.S. Court of Appeals Ninth 
Circuit in Les v. Reilly.
    The effect of the Court of Appeals ruling is that approval 
to use up to 80 pesticides, some of the most effective on the 
market, is scheduled to be removed. These are products used on 
virtually every crop in the United States, including corn, 
tomatoes, wheat, citrus, sugarcane, potatoes, apples, and 
cotton.
    While critics of a Delaney modification have argued that 
changing the law will lead to unsafe products being marketed, 
or the public health being injured, that is not the case. 
Although the language approved by the committee does repeal the 
zero-risk standard of Delaney, it preserves the requirement 
that products be adjudged safe under intended conditions of 
use.
    Further, the bill approved by the committee leaves intact 
two existing safety standards contained within food and drug 
law. Section 402(a)(1) of the Federal Food, Drug and Cosmetic 
Act bans any added food substance that may render the substance 
injurious to health. This has been definitively interpreted by 
the Supreme Court and applied by the FDA since first enacted in 
1906 as banning any food substance if there is a ``reasonable 
possibility of no harm to humans under the conditions of use.'' 
This standard is equivalent to negligible risk.
    The second section is 409(a) of the Food, Drug and Cosmetic 
Act (left intact by S. 343), which bans any food additive that 
is not the subject of a regulation promulgated by FDA setting 
forth its safe conditions of use. Legislative history on 
Delaney established a clear standard for this provision:

          Safety requires proof of a reasonable certainty that 
        no harm will result from the proposed use of an 
        additive. It does not--and cannot--require proof beyond 
        any possible doubt that no harm will result under any 
        conceivable circumstance. [S. Rpt. 2422 (1958).]

    Both FDA and EPA have adhered to this standard since 1958 
and the committee sees no reason why the agencies should, or 
would, change this interpretation.
    Since the early 1970's, FDA has on several occasions 
applied these two safety standards to animal carcinogens that 
are not subject to the three Delaney Clause provisions. In 
case, FDA has applied the principles of risk assessment and 
risk characterization, including information about the 
mechanism of action. In the future, these principles will 
continue to be applied, subject to the requirements of S. 343, 
to all food substances.
    In general, FDA has applied a standard of permitting the 
use of a substance that represents less than a one-in-a-million 
individual lifetime cancer risk. FDA has determined that this 
level of risk ``imposes no additional risk of cancer to the 
public,'' [44 Fed. Reg. 17070, 17093 (Mar. 20, 1979)] and ``is 
consistent with the likelihood that no cancers will result.'' 
[46 Fed. Reg. 15500, 15501 (Mar. 6, 1981), 47 Fed. Reg. 49628, 
49631 (Nov. 2, 1982)].
    FDA has also characterized the one-in-a-million lifetime 
risk as representing ``no significant carcinogenic burden in 
the total diet of man,'' [42 Fed. Reg. 10412, 10422 (Feb. 22, 
1977)], and ``for all practical purposes, zero,'' [50 Fed. Reg. 
51551, 51557 (Dec. 18, 1985)], or ``the functional equivalent 
of no risk at all,'' [51 Fed. Reg. 28331, 28344 (Aug. 7, 1986)] 
and ``so low that there is a reasonable certainty of no harm,'' 
[51 Fed. Reg. 4173, 4174 (Feb. 3, 1986)].
    EPA has also applied similar risk assessment principles in 
regulating chemicals, including pesticide residues, that 
concentrate in processed foods. EPA has most often referred to 
the level of risk as ``acceptable.'' In the early 1980's, EPA 
approved a number of pesticides that were deemed to present 
only an ``insignificant'' level of cancer risk. Since the late 
1980's, EPA has referred to these risks as ``negligible.''
    It is apparent that a wide variety of words could be used 
to signify a level of risk so low as to be meaningless to human 
health. Both agencies, working together to establish consistent 
risk assessment principles, have concluded that insignificant 
or negligible risks present no real threat to health and 
therefore should not be banned. The terms ``negligible'' and 
``insignificant'' are unquestionably synonyms.
    Accordingly, while some may assert that the Delaney Clause 
is needed to protect the public from dangerous substances in 
the food supply, that is wrong. Under the committee bill, 
substances would be permitted only if the regulatory process 
concluded that the risks were insignificant. It is important to 
underscore that the FDA and the EPA would have to define what 
substances pose no harm. Developing the thresholds is entirely 
within the agencies' discretion.
     Further, both Food and Drug Commissioner Kessler and EPA 
Administrator Browner have testified before Congress in favor 
of modification of Delaney. In fact, as recently as March 28, 
1995, at a House Appropriations Agriculture Subcommittee 
hearing, Commissioner Kessler told the committee: ``There is 
room for appropriate modification of Delaney.'' He also 
confirmed for the House panel that ``zero risk is impossible to 
achieve.''
     As noted previously, the committee is concerned about the 
inflexibility of the Delaney Clause, which we believe is the 
only provision in Federal regulatory law calling for an 
absolute or ``zero-risk'' standard for product approvals.
     It is the intent of the committee that the language 
contained in section 636(b) apply only to the three provisions 
in the Federal Food, Drug and Cosmetic Act that preclude any 
risk analysis at all in the approval or disapproval of food 
additives, color additives or animal drugs.
     Indeed, it is the belief of the committee that the 
language embodied in S. 343 will allow the Food and Drug 
Administration and the Environmental Protection Agency the 
latitude to determine the thresholds for marketing of animal 
drugs, or food/color additives, as appropriate, under a 
standard of ``negligible or insignificant risk.'' In other 
words, the agencies have the latitude under the committee bill 
to interpret by regulation how the terms ``negligible'' and 
``insignificant'' are to be applied.
     In allowing the agencies this discretion, the committee 
notes that imposition by regulation of a zero-risk standard 
would be precluded under the requirement that the measure of 
risk be ``negligible'' or ``insignificant.''
     The committee is aware of the opposition expressed by the 
Administration to the way this provision is drafted. 
Administration officials have told the committee that they 
believe the language is overly broad and may address situations 
beyond Delaney.
     For example, the FDA told the committee that it believed 
the language would limit its ability to remove from the market 
defective products such as certain sleep apnea monitors, which 
are used to guard against Sudden Infant Death Syndrome in 
infants. It is the committee's understanding that a situation 
had arisen in which the defective design of certain monitors 
led to the electrocution of infants.
     According to the FDA's interpretation of the committee 
bill, this language could have precluded the agency from 
removing such defective products from the market.
     The committee is puzzled by this interpretation, since 
under the provisions of S. 343 as reported, the FDA would have 
to find the possibility of electrocution ``insignificant'' or 
``negligible.'' The committee is hard-pressed to conclude that 
FDA would have rendered such a judgment.
     Likewise, an official from the Consumer Product Safety 
Commission told the Committee that he believed the language 
would preclude the Commission from acting to remove products 
from the market based on a ``reasonably foreseeable misuse'' 
standard.
     Again, the committee is perplexed by this interpretation 
of the law and notes that the language clearly does not apply 
to removals of products from the market. It is not the intent 
of the committee that the language contained in Section 636(b) 
apply to the enforcement actions of the Consumer Product Safety 
Commission.
     During consideration of S. 343, some raised the concern 
that the language included on negligible or insignificant risk 
may not adequately protect the health of women and children. 
The committee is very sensitive to this concern and notes its 
expectation that the administering agencies shall likewise give 
consideration to the health effects of products on women, 
children and other sensitive populations. While the agencies 
already have broad authority to make scientific determinations, 
they should be allowed to tailor their regulations to meet 
specific circumstances. This bill would not preclude that.
     The committee was reluctant to codify a requirement that 
the agencies comply with a 1993 National Academy of Sciences 
report on pesticides, as such a requirement could well become 
outdated in the future. The committee recognizes that the NAS 
study contained a number of beneficial recommendations to 
improve data on consumption, exposure and percent of crop 
treated in order to improve risk assessments with regard to 
infants and children.
     In fact, the committee is pleased that the EPA has begun 
to implement many of the NAS recommendations. EPA, for example, 
currently takes children's risk into consideration when setting 
tolerances for pesticides and routinely builds in a safety 
factor of at least a hundredfold.
     To allow the agencies the flexibility to make these 
judgments on their own seems sensible, given the general intent 
of the bill to allow the agencies flexibility to respond 
appropriately to public health needs. In addition, States and 
the Federal Government are already aware of the need to protect 
children and other vulnerable populations and are working to 
make these protections a reality.
     And, a May 1994 California Department of Pesticide 
Regulation review of the NAS report concluded: ``The current 
California and federal pesticide regulatory systems adequately 
protect infants and children from risks posed by pesticide 
residues in the diet.'' While several potential areas for 
improvement were identified, the current safety of fruits and 
vegetables for children was emphasized.
     Because of the importance of the health of women, infants 
and children, the committee intends to monitor closely 
implementation of the changes embodied in S. 343.
     Additionally, the committee wishes to respond to the 
suggestion that only the Delaney Clause provision relating to 
pesticides should be amended. The committee notes that this 
limited approach would be irrational public policy at best, and 
would be in complete conflict with current scientific knowledge 
and FDA regulatory policy.
     It is not wise public policy to set up two different 
standards for food additives: one for food additives generally; 
and one for concentrated pesticide residues that are regulated 
as food additives. It is equally unwise to set up differing 
standards for food substances that are technically classified 
as ``food additives'' and for food substances that escape the 
technicality because they are generally recognized as safe or 
prior-sanctioned. Accordingly, the committee believes the most 
sound approach, and the one that was adopted by the committee, 
is to modify all sections of the law which impose the Delaney 
standard.

New Section 640

     This provision requires that the Director of the Office of 
Science and Technology or the Director of the Office of 
Management and Budget establish a program of peer review to 
review the risk assessments and cost-benefit analyses for major 
rules, as well as certain other quantitative estimates. This 
section also establishes criteria to assure the impartiality of 
peer review panels and that the findings of the panels, as well 
as the agencies' responses, be made public for comment and 
final peer review. These findings and responses are to be made 
part of the administrative record for purposes of judicial 
review. The committee believes that peer review of risk 
assessment operates most effectively when it is open to public 
input on relevant issues. This section recognizes that 
interested parties often have valid issues that are outside the 
scope of inquiry by the review panel. Such relevant issues 
should be considered by peer review panels even though they are 
not among issues prescribed by the agency for review.

 New Subsection 644(b)

     The committee has included a section in this bill to amend 
the Regulatory Flexibility Act to repeal its prohibition 
against judicial review.
    The Regulatory Flexibility Act is based on two premises. 
First, Federal departments and agencies often do not recognize 
the impact of their rules on small businesses. Second, small 
businesses are affected disproportionately by Federal 
regulations compared to their larger counterparts.
    In 1980, The Regulatory Flexibility Act was enacted to 
reduce, where appropriate, the impact of Federal regulations on 
small businesses and certain other small entities. The Act 
requires Federal agencies to assess the impact of their 
proposals on these small entities before issuing the rule. 
Agencies have two options under the statute--performing a 
regulatory flexibility analysis or issuing a certification that 
the proposed rule will not have a significant economic impact 
on a substantial number of small entities.
     Unfortunately, too many Federal regulators fail to carry 
out their responsibilities under the Regulatory Flexibility 
Act. When Federal agencies fail to comply with these 
requirements, they impose significant and burdensome 
requirements that can threaten the viability of small 
businesses. All too often, these agencies view the act as 
nothing more than another procedural impediment to the adoption 
of a particular rule. As a result, some agencies have issued 
boilerplate ``no impact'' certifications without faithfully 
performing the underlying assessment of impacts on small 
businesses required by the act. As long as Federal departments 
and agencies continue to act in this manner, small businesses 
will be the losers. The committee believes Federal agencies 
have a significant responsibility under the Regulatory 
Flexibility Act that should not be ignored or overlooked.
    The authors of the original act apparently were concerned 
that a litigation explosion might result under this law if 
businesses attempted to delay the implementation of regulations 
through court review of regulatory flexibility analyses. To 
prevent this, the sponsors included a provision prohibiting 
judicial review of agency compliance with the Regulatory 
Flexibility Act.
    Today, we realize it is highly unlikely there would be a 
flood of litigation of judicial review as permitted under the 
Regulatory Flexibility Act. The fact is most small businesses 
do not have the desire or the financial resources to bring 
frivolous, unfounded lawsuits.
    Therefore, the committee has included a section in this 
bill that amends the Regulatory Flexibility Act that removes 
the prohibition against judicial review and establishes 
procedures for permitting certain court challenges. This 
section will insure that small businesses have the opportunity 
to force federal regulators to comply with the purposes and 
requirements of the Regulatory Flexibility Act.
    It is the committee's belief that this amendment will add 
teeth to the act and give small businesses a legal means for 
countering continued violations of the act. The Regulatory 
Flexibility Act, properly implemented and appropriately 
strengthened, is an integral element of our efforts to ease the 
regulatory burdens on small businesses. The beneficial impact 
on small business from honest and complete agency compliance 
with the Regulatory Flexibility Act will be as great as any 
other effort under regulatory reform.
    The committee intends for the judicial review of agency 
actions under the act to extend the consideration of the 
accuracy and completeness of any regulatory flexibility 
analysis prepared by a Federal agency, based on the court's 
review of the rulemaking record. Otherwise limiting the scope 
of the court's inquiry (for example, to merely reviewing 
whether an agency followed procedural steps outlined in the Act 
by issuing documents purporting to be responsive to the Act's 
requirements) would offer no meaningful assurance that the 
original purposes of the act are being met. This amendment 
should help achieve the act's goal of minimizing the economic 
impact of Federal rules on small entities.

New Section 706

    S. 343 incorporates certain substantial reforms made to the 
Administrative Procedure Act by S. 1080 in 1982, particularly 
changes made to APA sections 553 and 706(a). The committee 
hereby incorporates modified language taken from the committee 
on the Judiciary's Report on S. 1080 concerning those sections 
as follows:

                               Section 5

New Section 706

    Section 706 makes important changes in the provisions of 
the A.P.A. dealing with judicial review of agency actions.

New Subsection 706(a)

    This subsection makes several changes to the provisions of 
the APA governing the scope of judicial review of agency 
actions. The addition of a new clause (F) to section 706(a)(2) 
provides a separate, clearer standard for review of certain 
factual determinations in informal rulemakings. Relying on the 
analysis in Recommendation 74-4 of the Administrative 
Conference, 1 C.F.R. section 305.74-4 (1980), clause (2)(F) 
requires substantial support for factual determinations in 
informal rulemaking when (1) the determination of fact is 
necessary to the rule (that is, where the rule would fail to 
satisfy the ``arbitrary, capricious, [or] an abuse of 
discretion'' criterion, or where the rule would be in excess of 
the agency's authority, absent such a finding of fact), or (2) 
the finding of fact is an asserted basis for the rule (that is, 
where the agency relies on the finding as part of its rationale 
for the policy choice reflected in the rule).
    Under clause 2(F) the ``substantial support'' must be found 
in ``the rule making file, viewed as a whole''. This provision 
meshes with other provisions of S. 343 amending section 553, 
discussed earlier, which require the organized and systematic 
development of a file on which the rulemaking action is to be 
based and judicially reviewed.
    Section 706 in its present form does not specifically 
prescribe the standard of review for factual issues raised in 
review of rules promulgated under section 553 procedures. 
Courts have thus had to apply the ``arbitrary, capricious, [or] 
an abuse of discretion'' test to these factual issues. Many 
have looked for analogy to the ``substantial evidence'' 
standard now applicable to review of rule makings ``on the 
record'' and have formulated an equivalent standard requiring a 
court to take a ``hard look'' at agency factual determinations. 
Other courts have reviewed factual issues in a variety of ways, 
none easily defined.
    Finally, the ``substantial support'' standard in new clause 
(2)(F) recognizes that there is a distinction between an 
exercise of discretion (policy choice) by the agency, which 
remains subject to the ``arbitrary, capricious, [or] an abuse 
of discretion'' standard of clause 2(A), and the factual 
foundation for such a choice.
    The committee believes that these changes to section 706 
will not cause any dramatic upheaval in the process of judicial 
review of agency actions. These amendments to section 706 are 
not intended to affect any applicable rule of law which 
provides that in a civil or criminal action reliance on an 
agency rule or order is a defense. Thus, a defendant who has 
acted in compliance with an agency rule or order would continue 
to have any protection the law now provides even if the rule or 
order is subsequently found to be invalid.
    The committee expects that whenever an agency rule or order 
is challenged in a civil action where a private party is suing 
under an express or implied right of action for violation of an 
agency rule (arguably not a ``proceeding for judicial 
enforcement'' within the meaning of section 706) the court will 
apply the same standards of review as those set forth in 
section 706. In stating this expectation, we do not intend to 
imply any new standing or right of a defendant to challenge the 
validity of an agency rule or order. Thus, only if and to the 
extent that a rule can be reviewed by the court in the action 
would the reviewing court be expected to apply the same seciton 
706 tests of lawfulness of agency action.

New Subsection 706(b)

    The Administrative Procedure Act has long provided the 
``rule of prejudicial error,'' as stated in the last sentence 
of existing 5 U.S.C. section 706: ``In making the foregoing 
determinations [regarding judicial review of agency actions], 
the court shall review the whole record or those parts of it 
cited by a party, and due account shall be taken of the rule of 
prejudicial error.'' This provision is recodified in this 
legislation as subsection (b) in 5 U.S.C. section 706. Section 
706(b) must be read in conjunction with APA section 706(2)(D), 
which would require reviewing courts to set aside agency 
actions whereby procedures required by law were not observed. 
The committee believes, as more fully discussed below, that 
only where nonobservance of procedures materially altered the 
rights of affected parties should a court set aside the rule.
    This language prescribes a general test that courts must 
use in determining whether any error by the agency in 
promulgating a rule or taking other agency action is either 
``prejudicial'' or, conversely, ``harmless''--to a party 
seeking judicial review of the rule or other agency action. The 
circumstances that are likely to arise in actual cases, 
however, and the substantive statutory provisions under whose 
authority the agencies act, are highly varied. Notwithstanding 
this, the committee wishes to make clear its intentions with 
respect to certain situations. Where an agency has failed to 
give adequate notice to the public at the proposal stage (or at 
some other time that is early enough to afford a meaningful 
opportunity to comment) of the subjects ultimately addressed in 
the final rulemaking, or has failed to make an initial cost-
benefit analysis pursuant to chapter 6 or publish with the 
proposed rule a summary of that analysis pursuant to chapter 6, 
such failures would cast serious doubt on any claim that the 
agency has engaged in reasoned decisionmaking under the terms 
required by the bill. The committee intends that, with respect 
to any agency failure to comply with these fundamental 
requirements, the agency--not the petitioner--must bear the 
burden of showing that the agency's failure did not 
significantly change the action. For example, the committee 
endorses the view expressed by the U.S. Court of Appeals for 
the District of Columbia Circuit in McLouth Steel Products 
Corp. v. Thomas, 838 F.2d 1317, 1324 (D. C. Cir. 1988), and 
reaffirmed by that court in Shell Oil Co. v. EPA, 950 F.2d 741, 
752 (D.C. Cir. 1991), that petitioners do not bear the burden 
of showing that they would have submitted new arguments if the 
agency had satisfied the procedures of section 553 ``where the 
agency has entirely failed to comply with notice-and-comment 
requirements.'' Shell Oil, 950 F.2d at 752.
    On the other hand, some agency failures, while error, may 
not be prejudicial error. When, for example, the agency failed 
to fully describe an ``available alternative'' in an analysis 
subject to section 622 or failed to satisfy a requirement in 
subchapter III of this bill, it would be incumbent upon the 
petitioner to show how such a failure was of sufficient 
importance to the outcome of the rule through comments 
identifying the deficiency and explaining how correcting the 
deficiency would require a significant change in the rule. Only 
if the petitioner demonstrates that the agency's failure to 
correct the deficiency was arbitrary and capricious because the 
objection could have resulted in significant change if 
adequately considered could a court find that the agency had 
made a ``prejudicial error.''
    It would reflect a basic and clear misreading of the 
existing act and this bill to suggest that any deviation in a 
given proceeding from the bill's procedural requirements 
constitutes prejudicial error that calls for judicial remand or 
reversal of the agency action. That is not the law now and will 
not be the law under this bill. Very simply, some--not all--
errors are prejudicial. Some are harmless. There is no merit to 
the notion that any agency error, no matter how inconsequential 
in practical terms, is ``prejudicial.'' See, e.g., Small 
Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 540-41 
(D.C. Cir. 1983) (concluding that EPA ``committed error, but 
not reversible error'' when it added certain studies to the 
rulemaking docket ``too late for effective rebuttal'' but where 
the petitioner, notwithstanding the agency's error, had had 
``ample opportunity'' to comment on the matter). The relevant 
test under existing case law has been whether there is an 
absence of notice or whether there is a substantial likelihood 
that the final agency action would have been significantly 
different had the agency responded to comments demonstrating a 
failure to meet a procedural obligation.
    Accordingly, the committee recognizes that, in a particular 
case, some kinds of deviations from the bill's required 
administrative procedures may not affect the fundamental 
fairness of the agency proceeding and may not undermine the 
basic requirement of reasoned decisionmaking. These deviations 
should not, therefore, be considered to be prejudicial error 
and should not require reversal or remand of agency action.
New Subsection 706(c)

    Section 706(c) is one of several provisions of the bill 
which reflect the basic principle of administrative law that 
agencies must provide an explanation of the reasons for their 
proposed and final legislative rules, including the statutory 
authority for those rules. Under sections 553 and 622, the 
agency's explanation must establish a clear basis for informed 
and meaningful public comment and judicial review concerning 
the agency's interpretation of the statute under which the 
agency exercises the power delegated to it by Congress. Under 
section 706(c), the courts review the agency's decision in 
light of these principles that, at their core, require the 
courts to insist that agencies explain what they are proposing 
and, at the end, what they have done.
    The bill provides in amended 5 U.S.C. 553(b)(1)(C) and 
(c)(4) that a notice of proposed rulemaking and a statement of 
basis and purpose of a final rule must include an explanation 
of the specific statutory interpretation under which a rule is 
proposed or promulgated. In addition, for both a proposed and a 
final rule, the agency must state whether the specific 
statutory interpretation on which the rule is based is 
expressly required by the text of the statute and, if the 
interpretation is not expressly required by the text of the 
statute, the agency must state that the interpretation is 
within the range of permissible interpretations of the statute 
that have been identified by the agency in proposing the rule 
(or by commenters in commenting on the proposed rule). If the 
agency's interpretation is not expressly required by the text 
of the statute, the agency must state in proposing the rule why 
the interpretation that it has chosen is the agency's preferred 
interpretation, and must state in publishing the final rule why 
the agency has rejected any other interpretations proposed in 
comments to the agency.
    Provisions in 5 U.S.C. 622, to be added by the bill, 
reflect a parallel approach with respect to analysis of 
regulatory alternatives for major rules. Section 622(c)(2)(C) 
requires that an initial cost-benefit analysis must include an 
identification of reasonable alternatives that the agency has 
discretion to adopt under the decisional criteria of the 
statute granting the rulemaking authority, as supplemented by 
the decisional criteria in section 624, for achieving 
identified benefits. Section 622(d)(2) provides that the final 
cost-benefit analysis must describe and compare the benefits 
and costs of the rule and of the reasonable alternatives to the 
rule and must contain an analysis, based on the rulemaking 
record, of whether the rule will achieve greater net benefits 
(or lower net costs, in cases within the scope of section 
624(c)), than any of the reasonable alternatives that the 
agency has discretion to adopt under the decisional criteria of 
the statute granting the rulemaking authority. The bill, in 
section 621(7), defines ``reasonable alternatives'' as the 
range of regulatory options that the agency has discretion to 
consider under the text of the statute granting rulemaking 
authority, interpreted, to the maximum extent possible, to 
embrace the broadest range of options that satisfy the 
decisional criteria of section 624(b).
    The bill's judicial review provisions--specifically, 5 
U.S.C. section 706(c)--embody the basic principle that, to 
withstand judicial review, an agency's action, including a 
rule, must conform to the clear meaning of the statute or, if 
no single meaning is evident from the text of the statute, the 
action must be based on an interpretation that is within the 
range of interpretations that are permissible in light of the 
statute's text and other evidence of the power Congress 
intended to give the agency.
    In addition, if the agency's action is based on its 
conclusion that the interpretation adopted by the agency is the 
only permissible interpretation, and if the reviewing court 
determines that the agency had discretion to consider other 
interpretations, the court is to set aside that action as 
arbitrary, capricious, or an abuse of discretion, even if the 
interpretation adopted by the agency is permissible. The reason 
for this requirement is that the agency's action under these 
circumstances rests on a basic misconception of the scope of 
the discretion that the agency has been delegated by Congress. 
As a result, it has failed to exercise the discretion granted 
it by Congress, and, had it done so, might have concluded that 
some other permissible interpretation was preferable. For the 
same reason, if the agency, in taking a final action, has 
erroneously rejected an alternative interpretation (either one 
described by the agency in proposing the action or one proposed 
by a commenter) as being outside the range of permissible 
interpretations--i.e., if the reviewing court determines that a 
proposed interpretation rejected by the agency as impermissible 
is in fact permissible--the reviewing court is to set aside the 
agency's action even if the interpretation selected by the 
agency is also permissible. In such a case, the action must be 
set aside because the agency has again failed to exercise the 
discretion granted it by Congress since it has not considered 
the full range of options available to the agency. See Scenic 
Hudson Presentation Conference v. FPC, 354 F.2d 608 (2d Cir. 
1965).
    The bill does not contemplate, however, that a court would 
set aside an action on the grounds that the agency had 
improperly classified a particular interpretation as being 
within the range of permissible interpretations if (1) the 
agency did not rely on that interpretation as the basis of its 
action and (2) the agency did rely on a permissible 
interpretation. Because the agency's error in such a case would 
be harmless, it would be inappropriate for a court to set aside 
the agency's action; there is no reason to believe that a 
different agency action would result from a new agency 
proceeding based on a correct understanding of the scope of the 
agency's authority. In contrast, if the agency rejects an 
interpretation on the grounds that it is impermissible when, in 
fact, that interpretation is, in the court's view, within the 
range of permissible interpretations, the agency's action 
should be set aside because the outcome of the agency 
proceeding might be different if it is based on a correct 
understanding of the full range of the agency's discretion.
    Finally, section 706(c)(2)(B), as added by the bill, 
provides that, where the agency action is a major rule subject 
to chapter 6 (including section 622), a reviewing court is to 
set aside the rule if the agency's interpretation is not that 
interpretation, within the range of permissible 
interpretations, that gives the agency the broadest discretion, 
consistent with the terms of delegation to the agency in the 
governing statute, to make rules that satisfy the decisional 
criteria in section 624. This provision confirms that a court 
must reject an agency's designation of the range of 
``reasonable alternatives,'' as defined in section 621(7), that 
is based on an interpretation that restricts that range so as 
to exclude otherwise permissible alternatives.
    Since the beginning of the Republic, it has been 
``emphatically the province and duty of the judicial department 
to say what the law is.'' Marbury v. Madison, 5 U.S. (1 Cranch) 
137, 177 (1803); see Montana v. Clark, 749 F.2d 740, 744 (D.C. 
Cir. 1984) (``the judiciary is uniquely responsible for the 
final determination of the meaning of statutes'') (citing FTC 
v. Colgate-Palmolive Co., 380 U.S. 374, 385 (1965)), cert. 
denied, 474 U.S. 919 (1985). Thus, the principle is well 
established that ``[t]he judiciary is the final authority on 
issues of statutory construction.'' Chevron U.S.A. v. Natural 
Resources Defense Council, 467 U.S. 837, 843 n. 9 (1984).
    The hallmark of the modern administrative state, however, 
is Congress' delegation by statute to the executive branch of 
great power to make law in the form of rules and orders and, in 
doing so, necessarily to interpret the statutes that establish 
their authority. In recognition of Congress' decision to 
delegate law-making power to the executive branch agencies, 
courts generally will defer to agencies' interpretations of 
statutes if the statute requires the agency to exercise its 
discretion and the interpretations are accompanied by a 
reasoned analysis showing that the interpretation is 
permissible under the delegation from Congress.
    The Supreme Court in its landmark Chevron decision 
summarized the law in this area and articulated a two-part test 
for courts to follow in reviewing administrative actions in 
which the agency has interpreted a statute:

          When a court reviews an agency's construction of the 
        statute which it administers, it is confronted with two 
        questions. First, always, is the question whether 
        Congress has directly spoken to the precise question at 
        issue. If the intent of Congress is clear, that is the 
        end of the matter; for the court, as well as the 
        agency, must give effect to the unambiguously expressed 
        intent of Congress. If, however, the court determines 
        Congress has not directly addressed the precise 
        question at issue, the court does not simply impose its 
        own construction on the statute, as would be necessary 
        in the absence of an administrative interpretation. 
        Rather, if the statute is silent or ambiguous with 
        respect to the specific issue, the question for the 
        court is whether the agency's answer is based on a 
        permissible construction of the statute.

Chevron, 467 U.S. at 842-43. Moreover, ``[t]he court need not 
conclude that the agency construction was the only one it 
permissibly could have adopted to uphold the construction, or 
even the reading the court would have reached if the question 
initially had arisen in a judicial proceeding.'' Id. at 843 n. 
11 (citations omitted).
    Accordingly, in the first step of Chevron review, the court 
must determine whether Congress, in the statute, has resolved 
the issue. That is, the court must decide whether there is only 
one permissible interpretation of the statutory provision at 
issue as it relates it to the matter being decided. If there 
is, and the agency's interpretation is not that one permissible 
interpretation, the agency action is necessarily based on an 
impermissible interpretation--an interpretation that Congress 
has precluded--and the court must set aside the agency action.
    The second step of Chevron review occurs if the court 
determines that Congress, in the statute, has not resolved the 
issue. If Congress has not done so, the court must determine 
whether the agency's action is based on a permissible 
construction of the statute, even if that construction is not 
the only permissible one. In other words, a range of 
permissible interpretations--rather than only a single 
permissible interpretation--may exist with regard to that 
matter. A reviewing court's function in that circumstance is to 
determine whether the agency's interpretation is permissible 
under the terms of the statutory text and other relevant 
indicia of congressional intent. As long as the court 
determines that the agency's interpretation is permissible, the 
court does not determine whether the agency's interpretation is 
the one that the court would have adopted if the court had 
authority to review the matter de novo. See Chevron, 467 U.S. 
843 n. 11.
    Misunderstanding has arisen about step two of Chevron. In 
the years since the Supreme Court decided Chevron, some have 
come to invoke the ``Chevron doctrine'' as if it were a blank 
check for an agency to adopt any interpretation that it sees 
fit, as long as the court determines that Congress has not 
spoken directly to the precise issue. That view ignores the 
principle, laid down in Marbury v. Madison, and applied in 
later cases over almost two centuries, that the judiciary has 
the ultimate authority to interpret whether the actions of the 
executive branch are in accord with the law. The court must 
determine in all cases whether the agency's interpretation is 
permissible within the bounds of the discretion that Congress 
has delegated to the agency in the statute. Even where Congress 
has not directly spoken to the issue, certain agency 
interpretations may not, in the reviewing court's construction 
of the parameters of the statute, be a ``reasonable policy 
choice for the agency to make.'' Chevron, 467 U.S. at 845. This 
``reasonableness'' test reflects a proper degree of judicial 
deference to the agency to which Congress has delegated 
authority, but it is not absolute deference because it is 
grounded in a statute; it is not an abdication of the 
judiciary's responsibility under the Constitution to interpret 
the laws that Congress makes.
    In this regard, the Chevron decision was no judicial rubber 
stamp of the agency's interpretation. The Chevron Court itself, 
in the second step, recognized the twin congressional 
objectives under the Clean Air Act of promoting environmental 
protection and limiting burdens on the economy. See Chevron, 
467 U.S. at 863, 865. After determining that Congress had not 
``directly spoken to the precise question at issue,'' id. at 
842, the Court concluded that ``the Administrator's 
interpretation represents a reasonable accommodation of 
manifestly competing interests'' since ``the regulatory scheme 
is technical and complex, the agency considered the matter in a 
detailed and reasoned fashion, and the decision involves 
reconciling conflicting policies.'' Id. at 865 (footnotes 
omitted) (emphasis added). Thus, the agency acted ``within the 
limits of th[e] delegation'' of law-making power from Congress, 
and the agency's interpretation was ``a reasonable choice 
within a gap left open by Congress.'' Id. at 865, 866 (emphasis 
added). The basis of the Court's decision in the second step 
was its independent ``examination of the legislation and its 
history.'' Id. at 845. Only after conducting that examination, 
and reviewing the agency's explanation for its choice and its 
rejection of alternative interpretations, did the Court 
conclude that the Administrator's actions represented ``a 
reasonable policy choice for the agency to make.'' Id.
    The approach in the Chevron case, and in section 706(c), 
reflects the mainstream view of courts in requiring ``reasoned 
decisionmaking'' measured by the power given by Congress to an 
agency in a specific statute, not measured by some independent 
judicial standard for agency action. See, e.g., Rust v. 
Sullivan, 500 U.S. 173, 187 (1991); Madison Gas & Electric Co. 
v. EPA, 25 F.3d 526, 529 (7th Cir. 1994); Kansas City v. HUD, 
923 F.2d 188, 192 (D.C. Cir. 1991); Prill v. National Labor 
Relations Board, 755 F.2d 941 (D.C. Cir. 1985). An example of 
what, in the committee's view, is a misreading of the Chevron 
doctrine is the second sentence in the following passage: 
``Under Chevron, an agency's construction of a statutory 
provision it is responsible to implement is binding on a court 
if it is a permissible construction of the statute. It is a 
permissible construction unless Congress has unambiguously 
addressed the precise question in a manner inconsistent with 
the agency's construction.'' Davis and Pierce, Administrative 
Law Treatise (3d ed. 1994), vol. I, 235. Perhaps inadvertently, 
that formulation confuses the first step of Chevron with its 
second step and improperly suggests a judicial role in the 
second step that is more limited than in fact that role is. The 
mistake that the authors make is in suggesting that any agency 
interpretation is permissible (step two) as long as Congress 
has not unambiguously addressed the precise question (step 
one). A statute need not explicitly forbid a particular agency 
action for a court to conclude that such action is beyond the 
bounds of the power delegated by that statute.
    Under the existing Administrative Procedure Act and under 
the Act as amended by the bill, an agency rule may be binding 
only if it is the product of procedures for reasoned, public 
rulemaking under 5 U.S.C. 553 (or equivalent or more demanding 
procedures prescribed in substantive statutes). Because the 
agency's interpretation of the statute under which it receives 
delegated rulemaking authority is an essential basis for any 
legislative rule, the notice of proposed rulemaking under 
section 553(b)(1) must state clearly that interpretation. If 
the agency were not required to plainly state its 
interpretation of the relevant statutory provision, the public 
would be denied any meaningful opportunity to comment on 
perhaps the most fundamental element of any proposed rule: 
``the legal authority under which the rule is proposed.'' 5 
U.S.C. 553(b)(2) (1988).
    In proposed section 553(b)(1)(C), the bill makes explicit 
what is implicit in the APA and in Chevron, i.e., that the 
agency in the rulemaking must: make clear whether the statute 
compels the agency's interpretation (Chevron step one); and, if 
it does not, explain that the agency's interpretation is within 
the range of those interpretations that are ``based on a 
permissible [though not necessarily mandated] construction of 
the statute,'' Chevron, 467 U.S. at 843, and why the agency 
prefers that interpretation (Chevron step two). See Chevron, 
467 U.S. at 863 (``the agency, to engage in informed 
rulemaking, must consider varying interpretations'' of the 
governing statute).
    Inclusion of information on both Chevron steps in the 
notice of proposed rulemaking is necessary to provide the 
public with a clear basis on which to evaluate and comment on 
that aspect of the rulemaking that, under Chevron, will have to 
be addressed by any court that is called on to review the final 
product of the rulemaking. Fair procedure and fair access to 
the courts dictate that all members of the public have a 
meaningful opportunity to comment on the matters--including, 
first and foremost, statutory interpretation and the scope of 
the agency's discretion to interpret the statute--that a 
reviewing court would judge if the proposed rule were to be 
made law. A person must be given a meaningful opportunity to 
comment on all of those matters if it is to have not only the 
opportunity to try to persuade the agency but also the 
opportunity to shape the rulemaking record that the court will 
use to review those matters if that person appeals to that 
court for relief after the agency finally acts.
    Thus, section 553(b)(1)(C) is designed in part to require 
the establishment of an adequate written record that will be 
available for judicial review of the final rule. That record 
must include both the public's comments on the existence and 
nature of the statutory basis for the rule that the agency 
proposes and the agency's responses to those comments. Thus, 
section 553(c)(4)(B), as proposed to be added, makes clear that 
the statement of basis and purpose of a final rule must include 
a discussion of and response to any significant comments on 
legal issues. Unless the agency assembles a rulemaking record 
that reflects a full, public review of the agency's statutory 
interpretation, presented in terms of the Chevron two-step 
analysis, a critical objective of the existing act and of this 
bill--providing the opportunity for effective judicial review 
of final rules--would be frustrated.
    These provisions of the bill embody principles reflected in 
existing case law. For example, in Prill v. National Labor 
Relations Board, 755 F.2d 941, 947 (D.C. Cir.), cert. denied, 
474 U.S. 948, 971 (1985), Judge Edwards, speaking for the U.S. 
Court of Appeals for the District of Columbia Circuit, set 
aside an agency decision that was based on the National Labor 
Relations Board's conclusion that a particular interpretation 
of the phrase ``concerted activities'' in section 7 of the 
National Labor Relations Act was foreclosed by the statutory 
language. The court found the Board's conclusion to be 
erroneous. Because of that ``faulty legal premise,'' which the 
court found was a result of the Board's ``misinterpretation of 
judicial decisions and its own prior cases,'' the Board 
``failed to exercise its lawful discretion.'' Id. at 956, 957.
    The standard of review as articulated in Judge Edwards' 
opinion for the Court in Prill, and as codified in section 
706(c) of the act as proposed to be added by the bill, is the 
following:

          [A] reasonable construction of the [substantive 
        statute] by the [agency] is entitled to considerable 
        deference. An agency decision cannot be sustained, 
        however, where it is based not on the agency's own 
        judgment but on an erroneous view of the law. For it is 
        a fundamental principle of law that ``an administrative 
        order cannot be upheld unless the grounds upon which 
        the agency acted in exercising its powers were those 
        upon which its action can be sustained.'' Id. at 947 
        (emphasis added) (quoting SEC v. Chenery Corp., 318 
        U.S. 80, 95 (1943)).

    The Prill standard is applied not only when courts review 
agencies' orders but also when courts review agencies' rules 
under Chevron. See, e.g., Phillips Petroleum Co. v. FERC, 792 
F.2d 1165, 1169-72 (D.C. Cir. 1986); Id. at 1172 (``Under 
Chevron, reviewing courts accord deference to agency 
constructions of ambiguous statutes. Where, as here, however, 
an agency construction is not based on the agency's own 
judgment, but rather on an erroneous view of the law, the 
construction cannot be sustained.'')
    Prill and its progeny have solid grounding in precedent: 
Judge Edwards in Prill relied explicitly on the Supreme Court's 
landmark decision in SEC v. Chenery Corp., 318 U.S. 80 (1943). 
See Prill, 755 F.2d at 947-48. In that case, the Securities and 
Exchange Commission had made an order that, according to the 
Commission's statement in issuing the order, was based on the 
Commission's understanding of judge-made rules of equity rather 
than on an exercise of the discretionary authority that 
Congress had delegated to it in the substantive statute. The 
Supreme Court, in an opinion by Justice Frankfurter, refused to 
consider alternative grounds advanced by the SEC to support its 
order because the Commission had presented those alternative 
grounds only upon judicial review of the order, and not in the 
administrative proceedings that produced the order:

          The Commission's action cannot be upheld merely 
        because findings might have been made and 
        considerations disclosed which would justify its order 
        as an appropriate safeguard for the interests protected 
        by the Act. There must be such a responsible finding. * 
        * *
          There is no such finding here. Id. at 94.

    The Court made clear that effective judicial review is 
impossible without a clear explanation by the agency in the 
administrative proceeding 33 of the agency's reasons, 
including the legal basis, for the way in which it exercised 
its delegated authority:

    \33\ See Chenery, 318 U.S. at 92 (``the difficulty remains that the 
considerations urged here in support of the Commission's order were not 
those upon which its action was based'').
---------------------------------------------------------------------------
          That the scope of such [judicial] review is narrowly 
        circumscribed is beside the point. For the courts 
        cannot exercise their duty of review unless they are 
        advised of the considerations underlying the action 
        under review. If the action rests upon an 
        administrative determination--an exercise of judgment 
        in an area which Congress has entrusted to the agency--
        of course it must not be set aside because the 
        reviewing court might have made a different 
        determination were it empowered to do so. But if the 
        action is based upon a determination of law as to which 
        the reviewing authority of the courts does come into 
        play, an order may not stand if the agency has 
        misconceived the law. In either event the orderly 
        functioning of the process of review requires that the 
        grounds upon which the administrative agency acted be 
        clearly disclosed and adequately sustained. * * * [A]n 
        administrative order cannot be upheld unless the 
        grounds upon which the agency acted in exercising its 
        powers were those upon which its action can be 
        sustained. Id. at 94-95 (emphasis added).

    Thus, under Chenery as applied in Prill and other cases, 
the agency must clearly state the statutory basis for its 
action in the rulemaking record itself, and the agency's action 
cannot be sustained unless the record discloses an accurate 
understanding by the agency of the statute's meaning. These 
principles are reflected in the provisions of the committee's 
bill that amend sections 553 and 706 of the act, as described 
above.
    The committee emphasizes that, under the bill's judicial 
review provisions, although the courts have the authority and 
obligation to determine whether a particular interpretation is 
permissible within the bounds of the statute as evidenced by 
the enacted text and other evidence of congressional intent, 
they are not to impose any view as to the correct policy or the 
``preferable'' interpretation. Nonetheless, in reviewing any 
major rule that is subject to chapter 6, a court has a special 
responsibility to ensure that the agency's action fully 
conforms to the provisions of section 624. Thus, a reviewing 
court is to set aside an agency action that is based on an 
interpretation that, even if it is permissible under the 
substantive statute, is not the interpretation that is, of all 
the interpretations that are permissible under the substantive 
statute, the one that gives the agency the broadest possible 
discretion to make rules that conform to the decisional 
criteria in section 624.
    In many respects, the cost-benefit criteria of section 
624(b) are the heart of this bill. The only exception to the 
decisional criteria in section 624(b) is the very narrowly 
circumscribed category of rules subject to section 624(c). (Of 
course, rules within that narrow category must still meet the 
lowest cost or lowest net cost test established in section 
624(c).) In reviewing any agency rule that the agency claims 
falls within the section 624(c) exception, the court must 
scrutinize the agency's written explanation in support of its 
claim to determine whether the claim is valid. Although the 
court must give due consideration to the agency's explanation, 
the Committee intends that the court engage in de novo review 
of the question whether or not it is possible for a rule to 
satisfy the criteria in section 624(b) without contradicting 
``the express decisional criteria in the [substantive] 
statute.''
    The language in the bill--i.e., ``the express decisional 
criteria in the statute''--prohibits an agency or court \34\ 
from relying on any legislative history or other indicia of 
congressional intent that are not clearly and unambiguously 
reflected in the text of the statute as the basis for any 
conclusion that the rule is exempt from the section 624(b) 
decisional criteria. Moreover, court decisions, agency 
decisions, or other statements of the law that were made before 
enactment of section 624 cannot be relied on as precedent for 
any holding that the stringent test of section 624(c) has been 
met in a particular case, since those prior decisions or 
statements of the law were not made in light of section 624, 
which establishes decisional criteria that add to, or 
``supplement'', the existing agency decisional criteria.
    \34\ A court, in conducting its review, must, of course, ensure 
that its own construction of the substantive statute gives full effect 
to the congressional mandate that that statute be interpreted in a way 
that reconciles it with the decisional criteria in section 624(b) 
whenever it is possible to do so.
---------------------------------------------------------------------------
    Finally, subsection (d) of section 706 states that the 
provisions of subsection (c) ``shall apply to, and supplement, 
the requirements contained in any statute for the review of 
final agency action which is not otherwise subject to this 
subsection.'' By this, the committee intends to ensure that the 
judicial review of all rulemakings is conducted in accordance 
with section 706(c), as revised here. Such a provision is 
necessary because judicial review of certain rulemakings is not 
typically conducted pursuant to the APA, but according to 
standards set forth in the statute under which the rulemaking 
is conducted. For example, section 307(d)(1) of the Clean Air 
Act provides that the ``provisions of . . . section 706 of 
Title 5 shall not, except as expressly provided in this 
subsection, apply to actions to which this subsection 
applies.'' Instead, judicial review of Clean Air Act 
rulemakings under section 307 is conducted pursuant to the 
standards set forth in section 307(d)(9). These standards are 
essentially identical to those provided for in section 706 of 
the APA, but do not, of course, reflect the changes now being 
made to section 706 by this legislation. Section 706(d) makes 
clear that these provisions supplement and, therefore, govern 
rulemakings under section 307(d) of the Clean Air Act and any 
similar statutes that contain language overriding section 706 
as it existed prior to enactment of this legislation.
    In sum, specifying that the provisions of subsection (c) of 
section 706 ``apply to, and supplement'' the requirements for 
judicial review contained in such statutes as the Clean Air 
Act, the committee means to extend the reach of the present 
revisions to 706 to such review provisions in individual 
enabling statutes. Subsection (d) is intended to do that, 
without requiring the amendment of each of those individual 
statutes.
                            Subsection 5(b)

    This subsection amends the Tucker Act so as to address the 
jurisdictional problem colloquially known as the ``Tucker Act 
Shuffle''. The committee believes that the Tucker Act, which 
waives the sovereign immunity of the United States by granting 
the Court of Federal Claims jurisdiction to entertain monetary 
claims against the United States, actually complicates the 
ability of a property owner to vindicate the right to just 
compensation for a government action that has caused a taking. 
The law currently forces a property owner to elect between 
equitable relief in the Federal district and monetary relief in 
the Court of Federal Claims. Further difficulty arises when the 
law is used by the government to urge dismissal in the district 
court on the ground that the plaintiff should seek just 
compensation in the Court of Federal Claims, and is used to 
urge dismissal in the Court of Federal Claims on the ground 
that plaintiff should first seek equitable relief in the 
district court. This ``Tucker Act shuffle'' is aggravated by 
section 1500 of the Tucker Act, which denies the Court of 
Federal Claims jurisdiction to entertain a suit which is 
pending in another court and brought by the same plaintiff. 
Section 1500 is so poorly drafted and has brought so many 
hardships, that Justice Stevens, in Keene Corporation v. United 
States, 113 S.Ct. 2035, 2048 (1993), has called for its repeal 
or amendment.
    The committee is confident that section 5(b)(1)(A) of S. 
343 solves the problem of the Tucker Act shuffle by extending 
the jurisdiction of the Court of Federal Claims to include the 
authority to invalidate Acts of Congress and regulation, when 
the act or regulation adversely affects property rights in 
violation of the fifth amendment. Further, section 5(b)(1)(B) 
explicitly grants the Court of Federal Claims the authority to 
grant injunctive and declaratory relief where appropriate.
    Although concerns regarding the constitutionality of an 
article I court being given the authority to grant injunctive 
and/or declaratory relief were raised, the committee is 
satisfied that the Court of Federal Claims has exercised such 
powers in the past and that the grant of authority contained in 
this section is well within congressional authority. Indeed, 
the Court of Federal Claims currently exercises declaratory 
authority in contract cases (28 U.S.C. 1491(a) (2) and (3)) and 
in certain tax cases (28 U.S.C. section 1507). Both Supreme 
Court and appellate court precedent show that the Congress may 
vest the Court of Claims with the authority to declare acts of 
Congress unconstitutional. There are two theories under which 
this authority may be granted.
    First, the public rights doctrine allows Congress greater 
flexibility to assign jurisdiction to article I courts when the 
claim is a public claim. Since all claims which may arise under 
this act will be against the Federal Government, the public 
rights doctrine clearly applies. In Northern Pipeline the 
Supreme Court affirmatively held that, ``[t]here are matters, 
involving public rights, which may be presented in such form 
that the judicial power is capable of acting on them, and which 
are susceptible of judicial determination, but which [C]ongress 
may or may not bring within the cognizance of the courts of the 
United States, as it may deem proper.'' Northern Pipeline 
Const. v. Marathon Pipe Line Co., 458 U.S. 50, 67 (1982) 
(citing Murray's Lessee v. Hoboken Land & Improvement Co., 15 
L.Ed. 372 (1856) (emphasis omitted). Although Marathon involved 
two private litigants and thus the Court required the claim be 
heard by an article III court, cases under S. 343 would always 
be public since they would always be against the Federal 
Government. Thus, they would fall within the public rights 
doctrine described in this case.
    Second, it is beyond dispute that the government can only 
be sued when it permits the suit by waiving its sovereign 
immunity. The Supreme Court has held that Congress may put 
conditions on such waiver, one of which may be that the claim 
be heard in the Court of Federal Claims. In U.S. v. King, the 
Supreme Court implicitly stated that the Claims Court may issue 
declaratory judgements if Congress clearly grants such 
authority. It held that, ``the Court of Claims' jurisdiction to 
grant [declaratory] relief depends wholly upon the extent to 
which the United States has waived its sovereign immunity * * * 
'' United States v. King, 395 U.S. 1 (1969). See also Overall 
Roofing & Const., Inc. v. United States, 929 F.2d 687 (Fed. 
Cir. 1991).
    Additional case law supports the committee's view. In 
Commodity Futures v. Schor, the Supreme Court recognized that, 
``[o]ur precedents also demonstrate, however, that Article III 
does not confer on litigants an absolute right to the plenary 
consideration of every nature of claim by an Article III 
court.'' Commodity Futures Trading Comm'n v. Schor, 478 U.S. 
833, 848 (1986). In Thomas v. Union Carbide, the Court noted 
that ``[n]either this Court nor Congress has read the 
Constitution as requiring every federal question arising under 
federal law * * * to be tried in an Art. III court * * * '' 
Thomas v. Union Carbide Agr. Products Co., 473 U.S. 568, 583 
(1985)(citing Palmore v. United States, 411 U.S. 389, 407 
(1973).
    These cases make it abundantly clear that placing the 
authority to give declaratory relief, that is, to invalidate 
Acts of Congress, in the hands of the Court of Federal Claims 
is not inimical to the Constitution. Since the grant of 
authority in this section is very narrow in granting the Court 
of Federal Claims power to issue declaratory judgements in only 
certain instances, there is every reason to believe that such 
provision will be entirely effective and constitutional.
    The committee believes that the possibility of additional 
confusion regarding the proper scope of authority of the Court 
of Federal Claims is minimized by section 5(b)(1)(C). That 
section explicitly gives the court the authority to render 
judgment on tort claims which are related to a case properly 
within the jurisdiction of the court.
    Lastly, section 5(b)(2) repeals 28 U.S.C. 1500. As 
mentioned above, this section is poorly drafted and has been 
the cause of much confusion for litigants. The committee is 
positive that by removing this unnecessary provision the 
jurisdiction of the Court of Federal Claims is made much 
clearer and easier to understand.
    It was brought to the committee's attention that repealing 
section 1500 will permit the same case to be filed in both a 
District Court and the Court of Federal Claims. While this is 
technically correct, the committee is satisfied that is does 
not create any problems. For nearly the entire history of the 
Republic it has been technically permissible to file the same 
case in two District Courts, or a District Court and a State 
Court. This has not created any problems. The doctrines of res 
judicata and collateral estoppel guarantee that only one 
decision may be rendered. That is, while multiple filings of 
the same case are permitted, once any court has rendered an 
opinion on the merits, all other courts are required to defer 
to the first court's decision. Thus, there is no danger of 
multiple, conflicting rulings.
    The committee is also convinced that since section 1500 
presupposes a case within the court's jurisdiction, the repeal 
of section 1500 will not expand the jurisdiction of the Court 
of Federal Claims to cover cases not already within its 
jurisdiction. Thus, the committee is confident that the repeal 
of section 1500 will be a dramatic improvement in the 
jurisdictional rules of the Court of Federal Claims with little 
or no disadvantages.

New Section 707

    Section 707 addresses a problem commonly known as 
``government by consent decree''. Plaintiffs frequently sue 
federal regulatory agencies, claiming the defendant agency has 
not imposed rules or regulations of sufficient number or 
severity. To avoid the costly litigation these suits would 
entail, agencies routinely enter into judicially enforceable 
consent decrees that abdicate their policymaking discretion to 
the plaintiff. This practice yields bad policy results and 
stultifies the democratic process with regard to rulemaking.
    As to results, by raising the specter of protracted and 
expensive litigation, plaintiffs can often dictate the manner 
in which a regulatory agency will exercise its rulemaking 
discretion. The consent decrees that embody these commands 
effectively allow plaintiff to act as if they were the 
defendant agencies for purposes of administering the rules or 
regulations at issue in the lawsuits. For example, Citizens for 
a Better Environment v. Gorsuch, 718 F.2d 1117 (D.C. Cir. 
1982), concerned the EPA's administration of the Clean Water 
Act. There, as Judge Malcolm Wilkey noted in a scathing 
dissent, the consent decree agreed to by the EPA ``require[d] 
the agency to apply criteria and standards not found in the 
Clean Water Act, and require[d] the agency to undertake 
programs that are not required by the statute.'' Id. at 1131 
(Wilkey, J., dissenting). In short, the special-interest 
plaintiffs in Gorsuch managed to usurp much of the EPA's 
discretion under the Clean Water Act.
    Government by consent decree also thwarts the democratic 
process in a number of ways. First, consent decrees erode the 
political accountability of the agencies that agree to them. It 
is naive to think that plaintiffs and defendant agencies are 
always at loggerheads. Certainly cases must arise where, absent 
political obstacles, the defendant agency itself would have 
taken the action sought by the plaintiff. In cases like these, 
the prospect of protracted litigation merely provides 
justification for the agency to do what it could not have done 
had it been acting solely on its own responsibility.
    Second, the damage wrought by consent decrees often cannot 
be undone by succeeding administrations. Instead, as was the 
case in Gorsuch, a consent decree can bind succeeding 
administrations to the same extent that it binds the officials 
who entered into it. Perversely, then, consent decrees often 
freeze into place the policies of the very officials whose 
political accountability is eroded by them.
    Third, consent decrees are not subject to any democratic 
safeguards. Unlike the normal rulemaking process, which 
provides for a public notice and comment period, consent 
decrees are often entered into behind closed doors and then 
sprung upon the public as a fait accompli. Thus, as Judge 
Wilkey noted, the device [of consent decrees] makes far more 
difficult the task of those citizens who wish to monitor agency 
actions and influence their development. Id. at 1136. And, as 
Judge Wilkey further pointed out, the upshot of all this is 
simple enough: Government by consent decree enshrines at its 
very center those special interest groups who are party to the 
decree. Id.
    Section 707, modeled after U.S. Government-attorney 
guidelines issued in 1986 by the Department of Justice, bars 
enforcement of consent decrees to the extent they would divest 
an agency of discretion granted to it by the Congress or the 
Constitution to respond to changing circumstances, make policy 
or managerial choices, or protect the rights of third parties. 
By its plain terms, then, the section does not apply to cases 
where the agency has an express statutory obligation to take 
the action sought; instead, the section applies only to cases 
where the agency has discretion as to whether to take that 
action.
New Section 708

    This new Administrative Procedure Act section 708 creates 
an affirmative defense to an agency enforcement action. Where 
an enforcement action is taken against an individual, it shall 
be an affirmative defense that the regulated person is 
complying with a regulation that is contradictory to the agency 
regulation being enforced. The scope of the affirmative defense 
is limited by two qualifications: (1) that the regulations 
cannot be reconciled by a reasonable person, and (2) that the 
individual was in fact complying with the contradictory or 
unreconcilable regulation.
    By including the affirmative defense provision in this 
bill, the committee recognizes that Congress and the 
administrative agencies have not always written laws and 
regulations that can be easily reconciled. The inability of 
Congress and the agencies to reconcile laws and regulations 
creates onerous burdens on individuals regulated, particularly 
when enforcement actions are taken. The committee believes that 
individuals should not be punished for regulators' 
inconsistencies.
    If the executive branch heeds the requirements contained in 
other sections of this Act to reconcile regulations, the 
committee believes that the application of this affirmative 
defense should be limited.

New Section 709

    Section 709 is intended to deal with the problem that is 
appearing with more frequency of agencies' bringing enforcement 
actions, and seeking civil and criminal penalties, for the 
alleged violations of rules that are increasingly complex, 
convoluted, and often unclear. In their zeal to compile 
enforcement statistics, some government agencies have on 
occasion initiated cases based upon novel interpretations of 
their own rules--interpretations that have never been 
communicated to the regulated community. In some cases, actions 
have been brought to impose retroactively requirements based on 
some new agency interpretation of a rule, or new factual 
determination, even where the person against whom the action is 
brought has reasonably relied upon a prior agency 
interpretation or determination. The committee is concerned, as 
well, about situations in which agencies develop complicated 
and ambiguous rules and then seek to punish individuals or 
companies if they adopt an unintended but erroneous 
interpretation of what those rules mean. At stake in these 
cases are penalties worth hundreds of thousands or millions of 
dollars, and even Federal imprisonment.
    Against this backdrop, the committee views new section 709 
as an appropriate and necessary restraint on the authority of 
agencies to pursue civil or criminal penalties for the alleged 
violation of rules in circumstances where the imposition of 
such penalties would plainly be unfair. In large measure, 
section 709 simply makes explicit or clarifies requirements 
that already exist under the APA. Moreover, nothing in section 
709 prevents an agency from changing its interpretation of a 
rule, consistent with the requirements of sections 552 and 553 
of the APA and, subject to the protections provided by this 
section, enforcing the new interpretation prospectively. 
Section 709 does, however, prevent the government from 
extracting civil or criminal penalties, or retroactively 
imposing regulatory requirements, in cases where the defendant 
can demonstrate that, prior to the alleged violation, the 
responsible agency or State authority told the defendant, 
either directly or through an interpretation duly published in 
the Federal Register, that the defendant was in compliance 
with, or was not subject to, the rule at issue. The ultimate 
result of this legislation will be, in the Committee's view, 
fairer enforcement leading to better compliance and greater 
respect by the regulated community for the enforcement 
practices of the Federal Government.

New Subsection 709(a)

     This provision precludes, in two specific situations, the 
imposition of a civil or criminal penalty for the alleged 
violation of a rule. First, under subsection (a)(1)(A), no 
penalty may be imposed where the court finds that, prior to the 
commencement of the alleged violation, the defendant reasonably 
determined, based on the agency's own description, explanation, 
or interpretation of the rule contained in the rule's preamble, 
that the defendant was in compliance with the requirements of 
the rule or was otherwise not subject to those requirements. 
Subsection (a)(2) further provides that, in making its 
determination whether the defendant's reliance was 
``reasonable,'' the court should give no deference to any 
agency interpretation developed after the preamble 
interpretation was issued, unless, prior to the alleged 
violation, this new interpretation was published in the Federal 
Register or otherwise directly communicated to the defendant.
    The committee understands this provision to reflect basic 
principles of fairness and due process, as expressed in an 
array of federal cases. For instance, under current law, civil 
and criminal penalties cannot be imposed for the alleged 
violation of a rule if the rule did not ``adequately express'' 
what an agency intended or otherwise failed to give ``fair 
warning'' of the conduct that the rule prohibited or required. 
See, e.g., Diamond Roofing v. Occupational Safety and Health 
Review Comm'n, 528 F.2d 645, 649 (5th Cir. 1976)(A defendant is 
``entitled to fair notice in dealing with his government,'' and 
if a ``violation of a regulation subjects private parties to 
criminal or civil sanctions, a regulation cannot be construed 
to mean what an agency intended but did not adequately 
express.''); accord Gates & Fox Co. v. OSHRC, 790 F.2d 154, 156 
(D.C. Cir. 1986) (``Where the imposition of penal sanctions is 
at issue * * * the due process clause prevents [deference to 
agency interpretations] from validating the application of a 
regulation that fails to give fair warning of the conduct it 
prohibits or requires.''); Lloyd C. Lockrem, Inc. v. U.S., 609 
F.2d 940, 942-44 (9th Cir. 1979); Director, Office of Worker's 
Compensation v. Mangifest, 826 F.2d 1318, 1325 (3d Cir. 1987) 
(``A claimant proceeding in good faith should not be subjected 
to a trap brought about by an interpretation of a regulation 
hidden in the bosom of the agency.''). Subsection (a)(1)(A) is 
a logical amplification of this basic principle, as it follows 
a priori that if, in an enforcement action, an agency seeks to 
disavow the interpretation of a rule it set forth in the rule's 
preamble, then the agency did not ``adequately express'' its 
understanding of the rule when it first promulgated it.
    The committee further notes that, while subsection (a)(2) 
permits (although it does not require) a court to give 
deference to a subsequent agency interpretation that was 
published in the Federal Register or otherwise directly and 
specifically communicated to the defendant by the responsible 
agency or appropriate State authority, such publication or 
communication must also be made in a timely manner. In this 
regard, section 522 of the APA provides that ``[e]xcept to the 
extent that a person has actual and timely notice of the terms 
thereof, a person may not in any manner be required to resort 
to, or be adversely affected by, a matter required to be 
published in the Federal Register and not so published.'' The 
case law construing the meaning of the phrase ``actual and 
timely notice'' establishes that the concept of ``timely'' 
notice entails that some reasonable period of time must be 
afforded an entity responsible for meeting the requirements of 
an agency pronouncement, such as a changed interpretation, in 
order that the entity may come into compliance with that 
pronouncement. See, e.g., Northern California Power Agency v. 
Morton, 396 F. Supp. 1187, 1191 (D.C.D.C. 1975), aff'd 539 F.2d 
243 (D.C. Cir. 1976) (``What is contemplated [by the phrase 
``timely notice''] is a reasonably complete code of procedures 
set out in advance by which actions can be guided and 
strategies planned.''). Accordingly, the committee intends 
that, in those situations where the agency seeks to rely, in 
court, on a changed interpretation of a rule, the court shall 
not give deference to any such interpretation unless the 
defendant had been made aware of the interpretation (either 
directly or through publication in the Federal Register) and 
was given a sufficient period of time to come into compliance 
with any requirements imposed by the new interpretation.
    In addition, the committee wishes to clarify that nothing 
in this subsection should be read as altering the fundamental 
principle that the actual language of a regulatory provision, 
where its meaning is clear, is controlling. That is, where the 
language of a rule clearly states what the law is, a regulated 
entity is not compelled by anything in this section to review 
the rule's preamble in order to ascertain whether there is 
anything lurking therein that might possibly be construed as 
casting doubt on, or contradicting, the plain language of the 
rule. Subsection (a) merely provides that, where the preamble 
contains the agency's description or interpretation of the 
rule, a regulated entity is entitled reasonably to rely on such 
statements by the agency as to what the rule means.
    The second situation where subsection (a) will apply is 
where, prior to the alleged violation of a rule, the defendant 
had been informed by the agency that promulgated the rule (or 
by a State authority to whom had been duly delegated 
responsibility for enforcing compliance with the rule) that the 
defendant was in compliance with, or was exempt from, the rule. 
Under subsection (a)(1)(B), no civil or criminal penalties can 
be imposed in such circumstances. Again, the committee 
understands this straightforward provision to codify what 
should be an axiomatic principle of administrative law and due 
process. No penalty should be imposed where the court 
determines that the defendant reasonably relied upon 
information provided to it by the agency or by the State 
authority which had been delegated responsibility for 
implementing or ensuring compliance with the rule.
    Of course, the committee does not intend that, in applying 
this provision, a court should find reasonable reliance where 
the person that actually provided the information to the 
defendant had such a low level of responsibility within the 
agency (or State authority) that the person could not 
reasonably be said to have spoken ``for the agency.'' At the 
same time, the committee does not mean to require that any such 
information must be formally provided by the head of the agency 
(or the State authority) before a defendant's reliance on it 
will be considered to have been ``reasonable.'' The committee 
recognizes that, as a practical matter, officials below the 
level of ``agency head'' will typically issue guidance and 
other materials that speak ``for the agency,'' or otherwise 
represent the agency's position on a given matter, and 
information imparted by such lesser officials, made in 
accordance with standard agency practice, will be sufficient to 
constitute information provided by ``the agency'' (or by ``the 
State authority'') for purposes of this section. Thus, the 
committee expects that, in making its determination whether the 
defendant reasonably relied on information provided by an 
agency or State authority, the court will take into account 
such factors as the level of authority of the person within the 
agency who provided the information, as well the defendant's 
own reasonable belief as to the nature of the person's 
authority. What the committee anticipates in this regard is 
that the court will balance the authority of the person at 
issue against the defendant's own understanding of that 
authority in determining whether the defendant's reliance on 
the information provided by the person was ``reasonable.'' Of 
course, where the court determines that the defendant did not 
seek such information in good faith, or otherwise knowingly and 
willfully misled the person with respect to a material or 
knowingly and willfully failed to fully and accurately disclose 
a material fact, the defendant would not be deemed to have 
reasonably relied on any such information.
New Subsection 709(b)

    This subsection clarifies the extent to which, in the 
enforcement context, a court should give deference to an 
agency's interpretation of an ambiguous rule. The courts have 
not consistently addressed this question. Some decisions have 
turned on what the court perceived as the desirability of 
deferring to an agency's interpretation of an unclear rule, 
while other courts, focusing on whether the defendant had 
``fair warning'' of what was required by an ambiguous rule, 
have declined to give deference to the agency's construction. 
Subsection (b) adopts what the committee considers to be the 
better view of the law by providing that, in the context of an 
action to impose civil or criminal penalties, an agency's 
interpretation of an ambiguous rule does not warrant the 
deference that might otherwise be afforded the interpretation 
were such penalties not at issue. The approach adopted by the 
committee has been followed in such cases as Diamond Roofing 
Co. v. OCSHRC, 528 F.2d 645 (5th Cir. 1976); Phelps Dodge Corp. 
v. FMSHRC, 681 F.2d 1189 (9th Cir. 1982); Gates & Fox Co. v. 
OSHRC, 790 F. 2d 154 (D.C. Cir. 1986); Lloyd C. Lockrem, Inc. 
v. U.S., 609 F.2d 940 (9th Cir. 1979); Kropp Forge Co. v. 
Secretary of Labor, 657 F.2d 119 (7th Cir. 1981); and Dravo 
Corporation v. OSAHRC, 613 F.2d 1227 (3d Cir. 1980). See also 
Rollins Environmental Services Inc. v. EPA, 937 F.2d 649, 654-
57 (D.C. Cir. 1991)(Edwards, concurring in part and dissenting 
in part).
    Under paragraph (1) of subsection (b), ambiguity in a rule 
is construed against the agency that promulgated the rule. As 
the committee views it, this will entail courts' applying what 
is essentially a two-step process. First, the court, employing 
conventional principles of regulatory interpretation, will 
determine whether the rule was, as a matter of law, so unclear 
or confusing as to be ambiguous. Second, if, and only if, the 
court makes this threshold determination of ambiguity, then the 
court will not give any deference to the interpretation of the 
rule put forth by the agency if, prior to the alleged 
violation, the defendant interpreted the rule in such a way 
that it concluded that it was not in violation and the court 
determines that such interpretation was reasonable. In other 
words, where the agency is responsible for having promulgated 
an ambiguous rule, any ``reasonable'' interpretation of such 
rule that was embraced by the defendant prior to the alleged 
violation will be accepted over the interpretation put forward 
by the agency. In this regard, the committee notes that post 
hoc interpretations by the defendant's lawyers in court would 
not warrant such deference. Further, any interpretation relied 
upon by the defendant would have to be a ``reasonable'' one, 
although not the ``most reasonable'' one or one that is ``more 
reasonable'' than that put forth by the agency. Not only would 
this provision preclude agencies from recovering penalties for 
a defendant's unwitting violation of an ambiguous rule, the 
committee expects that it will encourage agencies to write 
clearer rules to begin with.
    Similarly, paragraph (2) of subsection (b) simply codifies 
well-established principles of due process. Again, it confirms 
that, notwithstanding whether or not a defendant itself puts 
forth a ``reasonable'' interpretation, if the court determines 
that, as a matter of law, that a rule did not give the 
defendant ``fair warning'' of the conduct that the rule 
prohibits or requires, no civil or criminal penalty may be 
imposed. See, e.g., Gates & Fox Co. v. OSHA, 790 F.2d 154, 156 
(D.C. Cir. 1986); Diamond Roofing Co. v. OSHRC, 528 F.2d 645, 
649 (5th Cir. 1976); see also Rollins Environmental Services, 
Inc. v. EPA, 937 F.2d 649, 654-655 (D.C. Cir. 1991) (J. 
Edwards, dissenting in part and concurring in part) (``It is 
true that `[c]ourts must give deference to an agency's 
interpretation of its own regulations.' * * * `Where the 
imposition of penal sanctions is at issue, however, the due 
process clause prevents that deference from validating the 
application of a regulation that fails to give fair warning of 
the conduct it prohibits or requires.' '') (citations omitted).

New Subsection 709(c)

    Like the rest of section 709, this subsection is intended 
to ensure that regulatory requirements are enforced fairly, and 
that persons are not subjected to enforcement actions if they 
did not have prior notice of the prohibited or required 
activity at issue. Specifically, section 709(c) bars an agency 
action, or any other action or proceeding, that would 
retroactively impose a requirement against a person if (1) the 
action is based on either (a) an interpretation of a statute, 
rule, interpretive rule, guidance document, statement of 
policy, or license requirement or condition, or (b) a 
determination of fact that is materially different from an 
interpretation or factual determination previously made by the 
federal or State agency that is authorized to implement the 
relevant Federal program, and (2) the person reasonably relied 
on the previous interpretation or determination.
    Like other provisions of section 709, subsection (c) will 
prevent the imposition of civil and criminal penalties, but it 
will also prevent the retroactive imposition of regulatory 
requirements that may be imposed through enforcement actions or 
other similar proceedings such as licensing or compliance 
proceedings before an agency or in court. In this regard, the 
committee recognizes that, in many instances, the retroactive 
application of a regulatory requirement, such as a permitting 
or technology requirement is more costly than any monetary fine 
associated with a new legal interpretation or factual 
determination. Thus, merely prohibiting the imposition of fines 
based on a change in agency position will not guarantee fair 
enforcement of regulatory requirements.
    The committee is aware that, in some cases, Federal 
agencies have tried to regulate retroactively by 
``reinterpreting'' a rule to penalize a responsible person that 
has relied, in good faith, on a previous interpretation made by 
the Federal agency or by a State agency authorized to 
administer the federal program. For example, the Surface Mining 
Control and Reclamation Act (SMCRA) authorizes State agencies 
to review and approve reclamation plans for mines within their 
States. In several cases, mine owners have substantially 
completed reclamation projects approved or required by the 
State, only to have a Federal agency come along later and claim 
that the work needs to be redone based on a different 
interpretation of regulatory requirements. Subsection (c) 
prevents such abuses and requires Federal agencies to resolve 
any difference of interpretation with the relevant State 
agency, rather than taking action against the private company.
    Retroactive application of regulatory requirements may also 
arise under regulatory programs that involve permits. For 
example, in some cases the Clean Air Act requires a facility to 
obtain a permit before making a physical or operational change 
that is expected to increase certain emissions above specified 
``significance'' levels. Permit requirements may include, among 
other things, the installation of control technology. Shortly 
after this program was enacted, EPA issued guidance stating 
that, in determining whether an expected emissions increase 
would exceed a significance level, a facility needed to 
calculate increased emissions only from the emissions unit 
being changed. Recently, however, the agency has changed its 
position and indicated that potential emissions increases from 
other units at the facility must also be counted. Further, EPA 
has attempted to use this new interpretation retroactively to 
impose permit requirements, including the retrofitting of 
control technology, for actions taken prior to the agency's 
change in position. Section 709(c) prohibits this sort of 
retroactive agency action.
    An agency's ``redetermination'' of facts also can lead to 
unfair retroactive application of a regulatory requirement. For 
example, based on an EPA-approved approach for calculating 
emissions, a State agency or a company may determine that 
emissions from a facility are not high enough to trigger permit 
requirements. Section 709(c) prohibits EPA from attempting, 
years later, to use a different or new approach for calculating 
emissions to impose such requirements retroactively.
    At the same time, the committee has been careful to design 
section 709(c) in a way that ensures that agencies retain their 
ability to enforce regulatory requirements effectively. The 
provision protects only those persons and companies that 
reasonably relied on an interpretation or determination. Thus, 
under this subsection a person cannot knowingly and willfully 
mislead an agency into making a particular interpretation or 
determination. Section 709(c) also requires that the prior 
interpretation or determination upon which the person relied 
must have been made by the relevant federal agency or by a 
State or local agency exercising authority delegated to it 
under Federal law. This provision is designed to ensure that an 
informal statement by low-level agency staff does not 
necessarily bind the agency. However, the requirement that an 
interpretation or determination be made ``by the agency or by a 
State or local government'' is not intended to require that the 
interpretation or determination be made formally by the agency 
head. Consistent with the committee's understanding of the 
analogous provision in subsection (a)(1)(B), an interpretation 
or determination made in accordance with standard agency 
practice is intended by the committee to qualify as an 
interpretation or determination ``by the agency.''
    Finally, the committee stresses that section 709(c) does 
not prevent an agency from changing an interpretation or 
factual determination and prospectively applying requirements 
based on such a change. This provision merely limits 
application of the reinterpretation or redetermination to the 
actions taken after the agency's change in position. Nor does 
it in any way prevent a Federal agency from exercising its 
oversight responsibility over State agencies as provided by 
law.

New Subsection 709(d)

    This subsection makes it clear that the requirements of 
section 709 also apply to the review by a Federal court of an 
agency order imposing administrative penalties, not merely to 
actions that, in the first instance, arise in Federal court. 
For example, under section 113(d) of the Clean Air act, EPA is 
authorized to impose civil penalties of up to $200,000 for 
violations of the act. Pursuant to this ``administrative'' 
authority, EPA can impose such penalties without having to 
bring an action in federal court. Under section 113, however, 
defendants can seek review of such penalties in Federal 
district court, and subsection (d) clarifies that, in such 
situations, once the case is in Federal court, the requirements 
of section 709 apply.
                               Section 6

New Section 801

    As the number of complexity of Federal statutory programs 
has increased over the last 50 years, Congress has come to 
depend more and more upon executive branch agencies to fill out 
the details of the programs it enacts. As complex as many of 
the statutory schemes passed by Congress are, the implementing 
regulations are often more complex by several orders of 
magnitude. The delegation of legislative rulemaking authority 
to executive branch agencies has been upheld by the courts, 
unless Congress has failed to establish sufficient standards to 
guide agency action. See, e.g., Panama Refining Co. v. Ryan, 
293 U.S. 388 (1935). However, as more and more of Congress' 
legislative functions have been delegated to Federal regulatory 
agencies, many have complained that Congress has effectively 
abdicated its constitutional role as the national legislature 
in allowing Federal agencies so much latitude in implementing 
and interpreting congressional enactments.
    In many cases this criticism is unjustified. However, there 
are instances where the criticism is well founded. Our 
constitutional scheme creates a delicate balance between the 
appropriate roles of the Congress in enacting laws, and the 
executive branch in implementing those laws. It must not be 
forgotten that Federal regulations have the force and effect of 
law only because Congress has delegated legislative rulemaking 
authority to executive agencies. Section 6 of S. 343 will help 
to redress the balance, reclaiming for Congress some of its 
policymaking authority, without at the same time requiring 
Congress to become a super regulatory agency.
    This section will allow Congress to examine agency rules 
before they are made effective and to determine whether to take 
legislative action disapproving rules that do not accurately 
reflect the intent of Congress in enacting the underlying 
statutory scheme. It is meant to restore congressional 
accountability in the legislative arena, and it is expected 
that these provisions will lead to more disciplined and 
accountable rulemaking by Federal agencies. The end result will 
be more efficient, more equitable, and better quality 
regulation.
    To that end, section 6 will add new section 801 to title 5 
of the United States Code providing for congressional review of 
agency rulemaking. Under this new section, before a rule takes 
effect as a final rule, the promulgating agency must submit to 
Congress a report containing a copy of the final rule, a copy 
of the notice of proposed rulemaking, a statement of basis and 
purposes for the rule, including a complete copy of any risk 
analysis performed on the rule, and the proposed effective date 
of the rule. For non-major rules, only a summary of the 
rulemaking proceedings must be submitted.
    Once the required report to Congress is submitted, the 
final rule shall take effect 45 days after Congress receives 
the report, or the rule is published as a final rule in the 
Federal Register, whichever is later. If Congress passes a 
joint resolution of disapproval of the rule, and it is signed 
by the President, or if the President vetoes the resolution but 
that veto is overridden, the rule shall not become effective as 
a final rule.
    If, however, Congress passes a joint resolution of 
disapproval of the rule, and the President vetoes the 
resolution, then the rule shall be effective as a final rule on 
the date either House of Congress fails to override the 
President's veto, or the date occurring 30 session days after 
the date on which Congress received the President's veto and 
objections, whichever is earlier.
    A rule may take effect before the expiration of the 45-day 
period for congressional action on the rule if the President 
determines that the rule must be made effective immediately 
because it is (1) necessary because of an imminent threat to 
the public health or safety, or other emergency; (2) necessary 
for the enforcement of the criminal laws; or (3) necessary to 
the national security. If the President takes such an action, 
the rule may be made effective immediately, but the procedures 
for congressional action on the rule shall continue. If 
Congress passes a joint resolution of disapproval, and if that 
resolution is signed by the President, or if the President's 
veto is overridden, the rule shall immediately cease to be 
effective in accordance with the terms of that resolution. Any 
such rule shall be treated as though it had never taken effect.
    Neither this subsection, nor any action taken pursuant to 
this subsection, may be reviewed in any court of the United 
States. The fact that Congress fails to enact a joint 
resolution of disapproval for any rule shall not be taken to 
imply any intent on the part of Congress by any agency or 
court.
    The requirement that in order to disapprove a proposed rule 
Congress must act through a joint resolution alleviates any 
constitutional concerns that might be raised based upon the 
Supreme Court's ruling in INS v. Chadha, 462 U.S. 919 (1983). 
New section 801 will not create a ``legislative veto'' over 
executive branch action, but will merely give Congress the 
opportunity to take bicameral action, that must be presented to 
the President for his signature or veto, on a rule before the 
rule is made effective.
                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 8, 1995.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary, U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 343, the 
Comprehensive Regulatory Reform Act of 1995.
    Enactment of S. 343 could affect direct spending. 
Therefore, pay-as-you-go procedures would apply to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                 June E. O'Neill, Director.

               congressional budget office--cost estimate

    1. Bill number: S. 343.
    2. Bill title: Comprehensive Regulatory Reform Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on the Judiciary on April 27, 1995.
    4. Bill purpose: S. 343 would impose many additional 
requirements on federal agencies that issue regulations and 
would apply such requirements to most agency rules expected to 
have an effect on the economy of at least $50 million annually. 
The bill would require all agencies to prepare preliminary 
cost-benefit analyses, in addition to final cost-benefit 
analyses.
    S. 343 also would require all agencies to review their 
major rules within five years (for rules adopted after 
enactment) or ten years (for rules adopted before enactment). 
This review would include a cost-benefit analysis of the rule 
over its lifetime and a determination by the agency as to 
whether the rule is justified. If an agency fails to meet the 
five- or ten-year deadline for a rule, then that rule becomes 
void.
    The legislation would require each agency to prepare an 
accounting statement that estimates the annual costs and 
benefits to the public sector an to the private sector of all 
the agency's regulatory programs. This statement would be 
submitted to the Congress every two years and would cover the 
current year and the four succeeding years.
    In addition, S. 343 would allow any person subject to a 
major rule to petition the agency to amend or repeal the rule 
or to perform a cost-benefit analysis of the disputed rule.
    5. Estimated cost to the Federal Government: We estimate 
that enactment of S. 343 would increase the total cost of 
issuing and reviewing regulations by the major federal 
regulatory agencies by at least $180 million annually. Few of 
the agencies that would be affected by this bill have had time 
to study systematically the additional costs that it would 
impose.
                  Additional Costs to Issue New Rules

    The requirements of S. 343 are similar to the work most 
agencies now conduct for some regulations expected to have an 
economic impact greater than $100 million annually. This 
estimate assumes that agencies will try to adhere to their 
current schedules for implementing new regulations and revising 
existing rules. CBO has insufficient information at this time 
to estimate the cost of this bill for all federal agencies; 
however, we believe the major cost impacts would fall upon the 
agencies discussed below.
    The Environmental Protection Agency currently spends more 
than $120 million annually on regulatory impact analysis to 
support rule making efforts for regulations expected to have an 
economic impact greater than $100 million annually. Based on 
preliminary information from the agency, we estimate that 
requiring regulatory analyses and reviews for regulations with 
annual economic impacts of $50 million or more would increase 
the agency's costs by $50 million to $100 million annually.
    The Department of Agriculture (USDA) currently prepares 
regulatory impact assessments environmental impact statements, 
and risk analyses for all regulatory actions affecting human 
health, safety, or the environment that are expected to result 
in annual costs to the economy of more than $100 million. Based 
on information from USDA, we estimate that lowering the 
threshold for these analyses would increase the number of 
assessments and cost-benefit studies by 50 to 100 each year. 
The additional costs associated with such assessments and 
studies range from less than $100,000 for a relatively routine 
rule to several million dollars for a major regulatory change. 
CBO estimates the most of the additional work would cost 
$150,000 to $250,000 per analysis, or an additional $10 million 
to $25 million annually for the department.
    Based on information from the Food and Drug Administration, 
CBO estimates that the bill's requirements would add less than 
$15 million annually to the agency's current spending on pre-
market regulatory activities.
    The Department of the Interior currently spends about $50 
million per year for regulatory analysis. This work is carried 
out primarily by the Office of Surface Mining, the Minerals 
Management Service, and the Bureau of Land Management as part 
of their overall regulatory enforcement activities. Lowering 
the threshold for regulatory analyses from $100 million to $50 
million would increase the number of analyses these agencies 
would have to prepare, resulting in additional annual costs of 
less than $20 million.
    Requirements in S. 343 also would increase costs for the 
Occupational Safety and Health Administration, the Mine Safety 
and Health Administration, and the Consumer Product Safety 
Commission. Based on information from these agencies, CBO 
estimates that enactment of the bill would result in total 
additional costs of less than $15 million per year for these 
agencies.
    The Department of Energy, Department of Transportation, and 
Department of Defense would incur additional cost to implement 
the bill. CBO cannot quantify the impact on these agencies at 
this time, but the additional costs could be significant.

                    Additional Costs to Review Rules

    The costs to review rules will depend on how the agencies 
fulfill the bill's requirements. For example, costs will vary 
as to how quickly agencies act to perform reviews within the 
five-year or ten-year windows allowed by the bill. Based on 
limited information from agencies, CBO estimates that the 
incremental costs resulting from the bill's review requirements 
would probably range from $20 million to $40 million annually.
    6. Comparison with spending under current law: CBO 
estimates that enactment of this bill would add at least $180 
million annually to the cost of issuing regulations.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting spending 
or receipts through 1998. Enactment of S. 343 could affect 
direct spending; therefore, pay-as-you-go procedures would 
apply to the bill.
    The additional regulatory requirements of S. 343 could lead 
to a delay in the implementation of rules relating to the 
collection of user fees or other charges. In addition, 
regulations that authorize the collection of fees could be 
voided if agencies fail to meet the review deadlines. CBO 
cannot estimate the potential magnitude of any such effects.
    8. Estimated cost to state and local governments: How 
enactment of S. 343 would affect the budgets of state and local 
governments is unclear. If regulations that would impose 
additional requirements on state and local governments are 
delayed by the enactment of these provisions, then costs to 
these entities would be less. It is also possible, however, 
that some regulatory actions that would otherwise provide 
relief to state and local governments could be delayed, thereby 
increasing their costs for various activities. CBO has no basis 
for predicting the direction, magnitude, or timing of such 
impacts.
    9. Estimate comparison: On February 23, 1995, CBO prepared 
a cost estimate for H.R. 926, as ordered reported by the House 
Committee on the Judiciary of February 17, 1995. Like S. 343, 
H.R. 926 would require agencies to perform regulatory impact 
analyses for rules expected to have an economic impact of at 
least $50 million annually. However, H.R. 926 would not require 
a periodic review of rules as would S. 343. Therefore, the 
estimated cost of H.R. 926 is $20 million to $40 million a year 
less than that of S. 343.
    On May 8, 1995, CBO prepared a cost estimate for S. 291, as 
ordered reported by the Senate Committee on Governmental 
Affairs on March 22, 1995. S. 291 would require agencies to 
review rules and to perform several other additional regulatory 
analyses, but it would apply to rules with an expected economic 
effect of at least $100 million annually. Since S. 291 would 
affect far fewer rules than S. 343, its estimated cost is much 
less than that of S. 343.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Mark Grabowicz.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                    VI. Regulatory Impact Statement

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the committee, after due consideration, 
concludes that S. 343 will have significant regulatory impact.
 VII. ADDITIONAL VIEWS OF SENATORS BIDEN, KENNEDY, LEAHY, SIMON, KOHL 
                              AND FEINGOLD

I. The Health and Safety of All Citizens Should Be the Highest Priority 
                               of the Law

    Every day, American consumers can choose from among the 
world's highest quality and safest products--from prescription 
drugs and medical devices to children's toys. They can 
confidently buy food in the supermarket knowing its safety has 
been certified. They can use the most reliable transportation 
system in the world when they go to work at safe and healthy 
working places. They enjoy the benefits of cleaner water and 
air.
    In contrast, we look around the world and witness the 
nuclear melt down at Chernobyl, the release of poisonous gas 
and resulting death in Bhopal, brutal child labor practices in 
many Third World countries, the catastrophic death toll due to 
the E-bola virus in Zaire, and the choking air pollution of 
Mexico City.
    Maintaining the high quality of life in the United States 
is the purpose of the Federal regulatory process. We recognize 
that some existing regulations have become obsolete and that 
agencies might make arbitrary and nonsensical decisions from 
time-to-time. However, while such anecdotes make good political 
fodder, they should not become the basis for undermining the 
ability of government to provide for the health and well-being 
of all Americans. 1
    \1\ Indeed, the problem with relying on anecdotes is that many turn 
out to be false and misleading. Nothing demonstrated this problem more 
clearly than the testimony given during the full committee hearing on 
S. 343. The testimony provided anecdotes alleging regulatory 
improprieties concerning 5-gallon buckets and breast self-examination 
pads which later turned out to be wrong and misleading. See Judiciary 
Committee Hearing, Mar. 17, 1995, the testimony of Congressman David 
McIntosh and his exchange with Senators Leahy and Simon concerning the 
pad, in addition to the letter of March 1995 from Ann Brown, Chair of 
the Consumer Product Safety Commission, to Senator Biden concerning 5 
gallon buckets (``For the Fourth time Congressman David McIntosh has 
misinformed Congress and the nation about this matter.'').
---------------------------------------------------------------------------
    We support regulatory reform that:
          Resolves identified problems in the regulatory 
        system;
          Provides safety and certainty to all citizens;
          Acknowledges that each citizen has a responsibility 
        to the community to conduct themselves in a manner that 
        does not threaten the health and safety of others;
          Allocates taxpayer resources efficiently and 
        streamlines the regulatory process; and
          Preserves Congress' role as the Nation's policymaker.
    As a primary function of government is to protect the 
public's health and safety, we believe that carefully balancing 
interests and determining the most accurate and best scientific 
methods and other evidence should be incorporated into the 
regulatory process but not in a way that allows those 
principles to impede a primary function of government.
    S. 343 would displace Congress as the arbiter of the ideal 
that the safety of the people is our highest priority and 
elevate instead the narrow, self-interested concerns of private 
parties. We respect and cherish the free enterprise system that 
has engendered wealth and prosperity for American citizens. We 
also remain committed to supporting the needs of business and 
industry but in ways that are consistent with workplace safety, 
quality of consumer products, clean water and air, and safe and 
sanitary food.
    Fundamentally, S. 343 would abdicate Congress' 
responsibility to establish policy. This legislation places on 
agencies a number of procedural requirements that would impede 
the development of necessary health and safety regulations.
    The bill ignores the fact that Congress passed each 
authorizing statute--the Clean Water Act, the Clean Air Act and 
the Endangered Species Act for examples--to meet a specific set 
of circumstances and address a specific set of problems. Senate 
bill 343 proposes to treat each regulation the same, as if each 
regulation's purpose and function were interchangeable. We see 
no reason why public debate should not take place regarding the 
application of the principles of this bill to each statute.
    The majority views fail to acknowledge that today's 
regulation is an outgrowth of past practices and their 
resulting unfortunate events. No recognition is given of the 
shipyard and construction workers killed and disabled by 
asbestos-related diseases, the fish kills in the Great Lakes or 
the fact that the Cuyahoga River in Ohio actually caught fire 
due to the chemicals dumped into it. Reading the majority 
views, one would never know that people's lives had been 
destroyed by thalidomide and the deadly water-borne parasite 
cryptosporidium. They never acknowledge the need for regulation 
to prevent a repeat of Three Mile Island or Love Canal. There 
is no mention of the people killed by E. coli bacteria in their 
hamburgers or the other real threats that our regulatory system 
is intended to protect us from each day. Indeed, no one would 
know from the majority's views of the millions of lives made 
healthier and better because of regulation.
    The majority would place an ill-defined notion of 
``efficiency'' ahead of health and safety. The majority poses 
``economic efficiency'' and ``health and safety'' as opposing 
concepts when it contends that ``[m]any major regulatory 
initiatives, instead of promoting economic stability or 
revitalizing markets, were intended to protect the public from 
health and environmental risks.'', p. 2, majority views. The 
government would have violated a fundamental responsibility to 
its citizens if there ever was a time when the public's health 
and safety was placed second to market revitalization or 
anything else.
    The provisions requiring cost-benefit analysis appear to be 
biased against taking any regulatory action. ``Costs'' are 
defined to include a myriad of factors and must be measured 
both with respect to the implementation of a rule and 
compliance with it. ``Benefits'' are defined narrowly and may 
only be measured with respect to the implementation of a rule, 
and do not include the benefit to society of compliance with a 
regulation. Thus, the costs will be measured as if every 
business complied fully with a regulation, but the benefits 
will not.
    Our concerns also relate to the amount of delay this bill 
would entail for developing necessary and beneficial 
regulations. Because S. 343 allows affected interests numerous 
opportunities to interrupt the rulemaking process, the bill 
will likely exacerbate--not diminish--problems related to 
regulatory uncertainty and delay. It does not provide a logical 
and coherent framework for the promulgation of regulations, 
instead, it would create a duplicative and cumbersome process 
that will not help distinguish between useful and unneeded 
regulation so much as to make regulations of any kind more 
difficult to promulgate. We all agree that safe drinking water 
is important and that measures should be taken to ensure the 
quality of the water. The steps outlined within this bill--
especially the notice and comment procedures, the petition 
process, peer review, and judicial review--will cut against the 
primary goal of clean water by encouraging delay in 
implementing of such regulations.
    The majority's superficial and subjective historical 
narrative attempts to portray the bill as the logical outcome 
of the evolution of the majority's ``efficiency paradigm.'' 
However, the inefficient procedural steps of the bill, 
beginning with the first notice that an agency intends to 
propose a rule, and ending with judicial review of the final 
agency action, will lead to delay and uncertainty in the 
regulatory process. The majority characterizes as ``reform'' a 
measure that would roll back years of progress in protecting 
the environment and the safety and health of the American 
people. Ironically, S. 343 is far from efficient--the 
Congressional Budget Office's rather conservative estimate 
concluded the bill would lead to at least $180 million increase 
in agency expenditures not including the significant costs that 
will be incurred by the Department of Energy or the Department 
of Transportation.2
    \2\ We believe that the CBO estimate should be much higher. The 
estimate did not take into account the costs that will accompany the 
expanded right of petition or the increase in the number of rules for 
which the bill will require a cost benefit analysis and risk assessment 
under the qualitative/narrative criteria for major rule designations. 
In addition, the CBO estimates assume that the cost-benefit analysis 
and risk assessment required under the bill will cost the same as the 
present analyses. This assumption is wrong as the procedures outlined 
in the bill will cost more.
---------------------------------------------------------------------------
    In 1982, the Senate passed S. 1080, the Leahy-Laxalt 
regulatory reform bill by a vote of 94-0. We would welcome the 
opportunity to return to the text and the bipartisan spirit of 
that effort. Regrettably, the majority has not offered the 
opportunity for meaningful bipartisan discussions, as was the 
case in the development of S. 1080, despite the majority's 
assertions to the contrary. Senator Kohl's bipartisan proposal 
was voted down on a party-line vote during subcommittee 
consideration. Senate bill 343 was never voted on by the 
committee, but was discharged summarily. Without adequate 
opportunity to offer amendments, we oppose S. 343 because it is 
unbalanced, unfair, illogical, poorly drafted, imprecise, 
overly prescriptive, dangerous, and short-sighted.
    The minority views set out our objections and proposed 
solutions to the issues we have identified with regard to the 
bill. It is our sincere hope that these views can serve as the 
basis for a bipartisan approach to regulatory reform.
 II. S. 343's Cost-Benefit Analysis: ``Costs the People, Benefits the 
                          Special Interests''

    We have highlighted areas--the uncertain scope of the bill, 
the supermandate, the notice and comment period, the peer 
review process, the petition process, judicial review, 
exemptions to the criminal and civil sanctions, the Delaney 
Clause and the Court of Federal Claims jurisdiction--in which 
we believe S. 343 would place the concerns of well-financed 
special interests ahead of public health and safety. The 
regulatory framework proposed under S. 343 will lead to an 
uncertain regulatory scheme through its one size fits all 
approach and the repetitive procedural requirements it imposes.

   A. S. 343's Scope: No Effort to Identify Where the Problems Exist

    S. 343's proponents have been unable or unwilling to 
identify the existing statutes the bill would affect or how 
many more rules will be designated ``major.'' As a consequence, 
we have no idea which congressionally approved policies will be 
changed by this legislation's imposition of cost-benefit 
analysis as the determinative criteria in every rulemaking. By 
default, these decisions will now be made by litigants and the 
Federal courts who hear their claims. By this fact alone, the 
proponents of the bill will ultimately cede significant 
congressional authority to the Federal courts.

1. The need to know which statutes will be impacted

    Over the past several decades, we have worked to craft 
statutes to protect our health, safety and the environment. 
These laws have individualized standards that are intended to 
respond to specific threats. They have made our air cleaner, 
our water healthier and our workplaces safer. While not 
perfect, these statutes have greatly benefitted the majority of 
Americans.
    S. 343 would override environmental and health and safety 
laws with a one-size-fits-all approach. We remain unsure which 
statutes will be affected by S. 343. While some statutes may be 
in need of reform, these matters are complex. Accordingly, 
substantive reforms should be undertaken in the context of the 
specific laws, not through a blanket rewrite of all 
environmental and health and safety laws.
    In presenting support for S. 343, the majority ignores 
situations in which the industry and the agencies have been 
working well together. In these situations, enactment of S. 343 
would upset the balance struck between the agency and industry.
    For example, in the case of the Mine Safety and Health Act 
of 1969, Richard Lawson, the president of the industry group 
National Mining Association, said, ``There is no question in my 
mind, and I don't know of anybody in the entire mining industry 
that would argue with this statement, that we wouldn't have 
achieved the results that we have in the past 25 years if we 
hadn't had a federal regulatory program and a state regulatory 
program.'' Prior to the Mine Act, in 1968, a coal miner was 
five times more likely to be killed while working than he would 
be today. Since 1968, coal mine productivity has increased 
approximately 80 percent.
    The proponents do not offer any explanation for the need to 
expend agency resources and tax dollars in reevaluating 
statutes in which the Federal Government and the industry have 
reached agreement. Indeed, S. 343 would promote inefficiency in 
such cases by upsetting the balance which regulators and the 
regulated previously had reached.
    On March 29, 1995, Senator Simon wrote a letter to Chairman 
Hatch asking him to provide a list of all the statutes that 
would be affected by S. 343. Specifically, Senator Simon wrote:

        * * * this legislation would dramatically alter the way 
        our regulatory process works and appears to undercut 
        many statutes that we have all labored long and hard to 
        enact. Before we complete the markup of this 
        legislation, I think it is critical that we know what 
        statutes this will apply to and how it will change the 
        authority created under those statutes.

Unfortunately, Senator Simon has not received a response to his 
letter.
    At the committee markup, Senator Simon was not given the 
opportunity to offer his amendment that would require Congress 
to enact legislation specifying the laws and proposed 
regulations that would be affected before S. 343 would become 
effective. We believe this information is critical to a proper 
understanding of S. 343 and must be provided. To proceed in the 
dark is unfair to the millions of Americans who have been 
protected by these laws for many years and deserve to know how 
they will be changed. We wonder whether the proponents of S. 
343 really intend to impede the development of safety standards 
for airlines, food products, medicine, children's toys or 
standards to rid drinking water of cryptosporidium by blindly 
passing this legislation.
    The bill before us fails its own cost-benefit philosophy--
we cannot determine how much it will increase the costs of 
writing and defending these safety standards--not simply the 
cost in dollars to taxpayers, but the costs to each citizen in 
health and safety as well as the costs to small business 
generated by an uncertain regulatory landscape. Unless we know 
how many, and which, regulations will have to be rewritten, we 
can't know if this is the best way to reform our regulatory 
system.

2. How many health and safety standards will be caught up in S. 343's 
        red tape?

    For the first time, S. 343 would codify the definition of a 
major rule. The major rule designation is the important first 
step in determining whether a rule will be subject to the 
rigorous cost-benefit analysis and risk assessment outlined in 
S. 343. We support the use of cost-benefit analysis and risk 
assessment in the promulgation of major rules. We, however, do 
not support the majority's definition of a major rule. The 
majority would define a ``major rule'' using two standards: (a) 
a rule that would have a $50 million dollar impact on the 
economy in direct and indirect costs, or (b) a rule that fits 
the description of certain qualitative criteria, a 
``significant impact on the economy'' for example. Both 
standards present a number of problems.
    Every administration since President Ford has issued 
Executive orders that define rules as ``major'' based upon the 
numerical threshold of a $100 million impact on the economy. 
The unfunded mandates bill uses the same $100 million 
threshold. The majority does not offer an explanation for the 
adoption of the lower threshold. They do not know how many 
current regulations will be subjected to challenge under this 
reduced economic threshold or the amount of scarce taxpayer 
dollars that will be spent by agencies to bring those 
regulations into compliance.
    The $50 million threshold includes both direct and indirect 
costs. The indirect costs, by statutory definition, include 
``reduced consumer choice, substitution effects, and impeded 
technological advancement.'' In our $6.3 trillion economy, just 
a few such hypothetical ``indirect'' costs can add up to $50 
million quickly. Indeed, virtually every rule could be a major 
rule under this definition, and, hence snared by the additional 
red tape required by S. 343.
    The majority offers no explanation as to how lowering the 
threshold actually promotes regulatory efficiency. We 
understand that each administration since President Ford has 
chosen the $100 million threshold in the belief that the 
resources devoted to a regulatory analysis should be 
commensurate with the significance of the decision to be made. 
We favor the use of cost-benefit analysis but only in those 
instances where it will be most productive--setting the 
threshold at $50 million dilutes this distinction and will 
create additional paperwork, uncertainty and delay.
    In addition to the uncertain number of major rules 
generated by the lower numerical threshold, S. 343 defines as 
``major'' a rule that has ``a significant impact on a sector of 
the economy'' and includes a number of other equally open-ended 
and ill-defined qualitative terms to define a major rule that 
will create confusion. Scant indication is provided as to what 
constitutes a significant impact, or what constitutes a sector 
of the economy: is there a mohair sector? a buggy whip sector? 
Agencies would be provided with little direction as to how to 
make such decisions.
    With a creative definition of ``indirect costs,'' every 
regulation has an impact on some sector of the economy. 
``Significant'' is certainly a relative term depending on the 
size of the sector. Combined with the lower numerical 
threshold, this definition will lead to an expansion of unknown 
proportion in the number of major rules. Ultimately, this 
important policy decision will be made by unelected judges.
    We question whether the enormous number of regulations that 
could be swept in under these standards actually will benefit 
from a cost-benefit analysis and whether the resources that 
will be expended on such analyses will be well spent. Because a 
designation or failure to designate a rule as ``major'' under 
the various qualitative standards is judicially reviewable, 
agency determinations that a rule is not major will be subject 
to review under an ill-defined but very broad standard. 
Litigation over this issue will hardly constitute an efficient 
use of taxpayer resources.
    Had we been given the chance, we would have offered an 
amendment to restore the $100 million threshold that has been 
used to define major rules in every Executive order for the 
past two decades. The numerical threshold should serve as a 
bright line test. We would also place all the qualitative 
standards into one provision from which the President or the 
agency may be guided, but not required, to choose to designate 
a rule as ``major.''
            B. S. 343's ``Supermandate'': Costs over Safety

    S. 343 contains what has been called a ``super-mandate.'' 
It creates supplementary decisional criteria for every agency 
action that permits the cost factors to trump safety factors in 
statutes in which Congress intended that safety should be the 
primary consideration. Without acknowledgement, the bill's 
supplementary decisional criteria effectively would amend the 
carefully considered criteria now in place in such landmark 
laws as the Food, Drug and Cosmetic Act, the Occupational 
Safety and Health Act, the Clean Air Act and an untold number 
of other laws.
    The bill creates a new section 624 of title 5 of the United 
States Code. This new provision would subject every major rule 
promulgated by an administrative agency to cost-benefit 
analysis, and would prohibit the issuance of a major rule 
unless the agency affirmatively finds that the benefits of the 
rule justify its costs. That is a superficially appealing 
notion, but it is flawed in several respects, especially in 
regard to regulations dealing with public health, safety and 
the environment.
    Many agencies dealing with public health and safety 
currently utilize cost-benefit analysis as a tool. But cost-
benefit is not the ultimate test that those agencies use to 
decide whether to protect the public. Instead, each agency 
relies on the decisional criteria that appears in the 
legislation that establishes the agency. For example, The Food, 
Drug and Cosmetic Act prohibits the distribution of food that 
is ``injurious to health'' but permits tolerable levels of 
certain deleterious substances in food if they cannot be 
avoided by ``good manufacturing practice.''
    The present standards represent a careful balancing of 
competing interests by Congress, and they have a well-defined 
meaning after years of agency practice and case law. There is a 
notion of cost-benefit analysis embedded in each standard, but 
in practice, a strict economic test does not overrule worker 
and consumer safety.
    The House-passed regulatory reform bill would simply 
override existing standards with a cost-benefit test. S. 343, 
as reported by the committee, purports to soften the blow by 
saying that cost-benefit analysis would only ``supplement'' the 
standards in existing law. But that means that an agency action 
would still have to meet both the old standard and the new 
standard. The economist's veto over public health and safety 
would prevail, even under the seemingly more reasonable 
Judiciary Committee bill.
    The problems with these procedural changes can be seen in 
the Cotton Dust case, in which the Supreme Court forbade the 
use of cost-benefit analysis as a decisional criterion in 
setting a particular health standard. Exposure to excessive 
levels of cotton dust had caused approximately 20 percent of 
the textile industry's workers to contract byssinosis or 
``brown lung'' disease, a respiratory ailment that cripples and 
eventually kills many of its victims. In 1978, the industry 
sued to block the issuance of regulations, arguing that the 
standards had not been subjected to a cost-benefit test, and 
that they would fail such a test. The Supreme Court rejected 
the industry's argument.
    Since the issuance of the regulations, the number of 
workers with brown lung disease has dropped from 40,000 in 1978 
to less than 2,000 in 1985. The rule turned out to be far less 
expensive than the industry had anticipated, costing less than 
a quarter of what the agency had estimated in its regulatory 
analysis (as is generally the case, the agency relies 
principally on cost data submitted for the record by the 
industry itself).
    Because the proponents of the bill fail to squarely address 
this regulation and other health based standards, S. 343 would 
create uncertainty in areas where peoples health and lives are 
at risk.
    During the markup, the committee unanimously adopted an 
amendment that created a special rule for agencies applying 
``the express decisional criteria in [a] statute.'' In such 
situations, agencies could promulgate a rule that does not 
satisfy this bill's cost-benefit test, but only if such a rule 
imposes

          (1) lower costs than any of the reasonable 
        alternatives; or
          (2) the least costs taking into accounts benefits 
        that the agency has discretion to adopt under the 
        statute granting the rule-making authority.

    This amendment improves the supermandate provision but does 
not adequately address the flaws in the provision. It still 
adds a new standard on top of legal standards that Congress has 
already determined are appropriate and necessary to protect 
public health and safety. Properly understood, this bill poses 
a substantial revision to the Occupational Safety and Health 
Act, the Food, Drug and Cosmetic Act, the Clean Air Act, the 
Clean Water Act and hundreds of other federal statutes.
    It is, of course, the prerogative of the new majority in 
Congress to place revisions of these landmark statutes on the 
congressional agenda. But that should be accomplished in a 
straightforward manner, with full notice to interested 
citizens, and not cloaked in a veil of process reform. For 
example, the House of Representatives has passed H.R. 961, a 
bill to revise the Clean Water Act. Many of us disagree with 
that action on its merits, but it is at least the result of a 
process that fairly put before the Congress and the American 
public the question of whether that law should be amended. In 
contrast, S. 343 constitutes a substantial reexamination of the 
Clean Water Act and every other environmental statute without 
even mentioning those statutes.
    In this manner, the bill also represents a circumvention of 
the committee process in the Senate. Ordinarily a bill that so 
profoundly implicates environmental laws would be considered by 
the Environment and Public Works Committee, just as a bill 
revising the Food, Drug and Cosmetic Act or the Occupational 
Safety and Health Act would come before the Committee on Labor 
and Human Resources.
    But S. 343 has not been referred to those committees. This 
is more than a mere parliamentary nicety. The committee system 
is designed to ensure that a group of Senators with expertise 
in a particular subject have ongoing responsibility for 
overseeing the implementation of and amending the laws relating 
to that subject. Typically, a bill is brought before the full 
Senate only after it has been considered and subjected to 
revision by those Members who have long-standing familiarity 
with the subject of the bill; Members of the Senate not on the 
relevant committee will often look to the views of their better 
informed colleagues on the committee as they formulate their 
own views on the bill.
    Members of the Judiciary and Governmental Affairs 
Committees may possess expertise in administrative process, but 
this bill has too many implications for the substance of 
health, safety and environmental laws to justify its 
consideration in this manner. Instead, each statute sought to 
be amended by the proponents of S. 343 should be the subject of 
legislative consideration by the respective committees of 
jurisdiction.
    The problem with considering a bill with ramifications on 
issues outside the committee's jurisdiction is further 
exemplified by the majority's discussion of the Supreme Court's 
Cotton Dust decision, American Textile Manufacturers Institute 
v. Donovan, 452 U.S. 490 (1981) in footnote 31. We believe the 
majority's understanding of the Cotton Dust decision based on a 
comment made by Justice Rehnquist in dissent is mistaken. The 
Supreme Court did preclude the use of cost-benefit tests in 
setting OSHA health standards.
    The fifth circuit in National Grain and Feed Association v. 
OSHA, 866 F.2d 717,730 (1988), wrote that the Supreme Court in 
the Cotton Dust case held ``that OSHA need not, indeed must not 
consider cost-benefit criteria in setting toxic substance 
standards.'' The Supreme Court's holding in the Cotton Dust 
case was not ambiguous. The Court held that the Secretary of 
Labor is precluded from performing cost-benefit analysis when 
setting health standards because Congress has already balanced 
costs and benefits and decided that the value of preserving the 
lives of workers outweighs any cost of regulation imposed on 
their employers, so long as the regulation is economically 
feasible. See American Textile Manufacturers Institute v. 
Donovan, 452 U.S. at 509.
    To avoid such misunderstandings, we suggest that a full 
airing of issues related to statutes under the jurisdiction of 
other committees take place. Until the relevant committees act 
in the appropriate fashion, we should continue to let each 
agency accomplish the mission that Congress has already set out 
for it using the decisional criteria that Congress has created 
in each statute to guide the agency's discretion.
    There are practical reasons why Congress has not set forth 
strict cost-benefit criteria for many agencies. In the context 
of health, safety and the environment, for example, costs may 
be easy to quantify, but benefits are not. We can determine 
with some specificity how much it will cost a factory to clean 
up a river, or how much it will cost business to provide safety 
gear to workers on a hazardous job site. But the benefits of a 
clean river, or clean air, or a hundred workers' lives are more 
intangible and often impossible to measure. To acknowledge that 
it is difficult to place a price tag on such things is not to 
say that they lack great value.
 C. S. 343's Notice and Comment Period: Works a Limitless Expansion to 
                     the Agency rulemaking Process

    Under the present law, the opportunity to shape the agency 
determination of a final rule and the informal contacts between 
agencies and industry occur from the start of the rulemaking 
process. An agency must file a notice of rulemaking and allow a 
period for public comments on the proposed rules.
    We believe that notice and comment serves to make the 
rulemaking process more informed. We also share the belief of 
many in industry that some agencies have been less than 
forthcoming in making these notice and comment periods true 
dialogues. We certainly would be supportive of measures 
designed to improve this area.
    However, the bill contains a significant number of new 
provisions governing the notice and comment period that would 
convert what should be an informed exchange between interested 
parties and agencies into an exchange of papers to be carefully 
tabbed and filed. Because these new provisions are judicially 
reviewable, an agency would be forced to spend substantial 
resources crafting the content of notices and processing and 
filing paper instead of evaluating the merits of the 
information.
    The majority makes a great deal out of the alleged growth 
in size of the Federal Register, yet we would note that S. 343 
would certainly make the Register more voluminous--indeed the 
growth would probably be off the majority's chart provided. We 
question the cost-effectiveness of requiring the Treasury 
Department to publish in the Federal Register all 11,000 
private letter rulings or include in the Federal Register the 
60,000 requests for statutorily approved alcohol labels that 
the Bureau of Alcohol, Tobacco and Firearms grants annually. 
Requiring the Internal Revenue Service to publish private 
letter rulings not only seems inefficient but it would also 
conflict with laws intended to govern privacy. These 
requirements, however, represent only a few of the bureaucratic 
hoop agencies will be forced to jump through.
    We wonder whether those provisions alone could survive 
cost-benefit analysis when considering the increased number of 
pages in the Federal Register they will require. This bill 
converts the rather straight-forward 1 page statute governing 
notice and comment into a 12-page, judicially reviewable, 
bureaucratic quagmire. Unfortunately, the present notice and 
comment period can extend for years and the provisions of this 
bill would certainly do little to shorten that process in order 
to bring important regulations into effect.

 D. S. 343's Petition and Look Back Provisions: Prevents a Logical and 
               Comprehensive Review of the Agency Process

    Presently, the Administrative Procedures Act contains a 
process whereby a private party can petition an agency with 
regard to a regulation. The majority's assertion during the 
markup that the provisions in this bill would narrow the 
petition process is incorrect. Senate bill 343 would expand 
dramatically the types and the number of private petitions 
seeking changes in existing regulations at the same time it 
would direct the agency to conduct a review of all existing 
rules.
    We support the adoption of requirements that would direct 
each agency to review existing rules in a timely and logical 
fashion based upon a schedule established with the aid of 
interested parties. We fail to see the efficiency in allowing 
special interests to push their concerns to the front of the 
line while undermining a schedule established for the benefit 
of the entire public.
    While the majority contends that the petition process 
should be open to all interested citizens, the bill allows only 
the regulated industry to challenge the regulation. That is to 
say, the majority wants to allow only those petitions alleging 
that a regulation is burdensome, but would preclude communities 
from challenging a regulation or practice that did not do 
enough to guarantee the safety of its citizens. The regulated 
community--not those protected by the regulations--would have 
the right to file separate petitions for the repeal of an 
existing major rule, the completion of a cost-benefit analysis 
of an existing major rule, the completion of a risk assessment 
of an existing major rule, and a variance or exemption from a 
major rule or guidance.
    The petition process proposed in S. 343 would undermine the 
conventional wisdom that agencies should be directed by the 
President and Congress and allows unelected and unaccountable 
private interests to set priorities. As Chairman Robert Walker 
noted during the House debate on the petition process, we would 
prefer not ``to pass a bill that is simply an employment policy 
for lawyers.'' The provisions of this bill make it more cost-
efficient to frustrate rulemaking rather than comply with 
health and safety standards.
    Of course, the S. 343 petition process poses problems for 
business as well. In situations in which industry and the 
agency have worked together to develop a set of regulations, 
the bill would provide no certainty that these regulations will 
not be undermined by a disaffected or irresponsible entity. 
Indeed, S. 343 would prevent businesses who seek to comply with 
the law from formulating a business plan that would include the 
necessary improvements or renovations to comply with the law. 
This type of uncertainty is hardly the hallmark of regulatory 
reform.
    In addition to the petition process, the bill also would 
require agencies to establish their own schedule for reviewing 
existing rules within 5 to 7 years. Any regulation that is not 
reviewed would sunset automatically. We fail to see the 
efficiency in requiring an agency to establish a schedule for 
the review of existing rules at the same time an agency must 
respond within a set time frame to private parties who will be 
able to disrupt that schedule with their own special concerns--
especially when private parties will be permitted to file a 
petition on each aspect of the rulemaking process.
    The broad new petition right means the agency cannot plan a 
logical review of regulations required under the bill if bad 
actors can petition randomly for the review of rules. It means 
that well-financed bad actors can paralyze agencies by flooding 
the agency with petitions. We share Chairman Walker's views in 
which he noted that the flood of petitions would leave 
``agencies at a point where they will not be able to do some of 
the things we want them to do; namely to put into effect a 
process for good science and common sense.'' (CR, Feb. 28, 
1995, H2352.) Agency resources would be targeted to respond to 
petitions, rather than to promulgate rules that improve the 
quality of our lives.
    The potential for abuse under S. 343 is not farfetched when 
one considers that any person subject to a rule can petition 
for its amendment or repeal. The agency must grant the petition 
and complete a cost-benefit analysis or risk assessment within 
one year if there is a reasonable likelihood that the rule will 
have the effect of a major rule.
    Even worse, perhaps, are the two overlapping petition 
processes that allow an individual to compel an agency to 
respond, in writing, within 180 days, to a request for an 
exemption or waiver from the requirements of a regulation. The 
agency, because it must decide each petition on the basis of 
the petitioner's legal and factual claims (each of which will 
differ according to the individual circumstances of the 
petitioner), will have to investigate every petition 
individually. Because a decision to deny a petition becomes 
immediately reviewable in court, the agencies will face a hard 
decision--whether to grant petitions willy-nilly or devote 
enormous amounts of their resources to litigation.
    Take a single agency and a single rule--OSHA's 
congressionally mandated standard for lead in construction. If 
only 1,000 of the tens of thousands of covered contractors 
petitioned for an exemption or variance, OSHA's compliance and 
legal staff would be completely overwhelmed. Repeat this for 
each of some 600 standards, and the absurdity of this provision 
becomes apparent. How does the rule of law mean anything if it 
cannot be enforced?
    The problem is not forcing the agency to review 
regulations--we want a logical, exhaustive and complete review. 
We do question whether an agency is able to allocate resources, 
establish priorities for review, fulfill directives from 
Congress, and respond to widely varying special interest 
petitions. The majority has made much of the growth in the 
number of regulators. The petition process is one example where 
this bill would require more government employees and a greater 
allocation of taxpayer resources.
    We think it would be preferable to establish a more 
systematic, unbiased approach. Senator Simon did not have the 
opportunity in committee to offer his amendment that would 
ensure an orderly and rational review of regulations under the 
supervision of a broadly representative advisory committee. The 
Simon amendment would provide for the creation of an agency-by-
agency blue ribbon advisory committee to review all 
regulations. Under the Simon amendment, the head of each agency 
would appoint a 7- to 15-member regulatory review advisory 
committee comprised of a diverse group of individuals, 
including representatives of the regulated industry, small 
businesses, State and local governments, and public interest 
groups.
    Not later than 1 year after the date of enactment of the 
act, the advisory committee would identify rules that warrant 
review by the head of the agency, and prioritize the order in 
which they should be reviewed. The agency head, upon receiving 
the priority list, would in turn conduct an analysis of the 
rules submitted by the advisory committee, identify which rules 
required re-analysis of the costs and benefits, and conduct 
these new analyses. The agency would make changes to 
regulations where appropriate. The agency head would complete 
its review (of the rules identified by the advisory committee) 
within 1 year.
    The Simon amendment would accomplish the same goal as the 
universal review and petition process dictated by S. 343, but 
would do it in an efficient, prioritized manner. Without this 
amendment, agencies will waste taxpayer dollars reviewing rules 
that are working perfectly well. Without this amendment, 
petitioners would be able to endlessly disrupt the rulemaking 
process, and make it impossible for agencies to respond, no 
matter how essential the regulation might be to protecting the 
public. With this amendment, careful and thorough scrutiny can 
be given to existing regulations to weed out unnecessary and 
overly burdensome regulations, at the same time allowing 
agencies the ability to continue protecting the health and 
safety of our constituents.
    In addition to the petition process and the agency review 
of regulations, S. 343 would start the clock ticking for a 
number of other existing health and safety standards that would 
automatically sunset if an agency fails or is unable to review 
within the 5- to 7-year period outlined in the bill. Further, 
there is a stay of enforcement of any rule that cannot be 
rewritten to comply with the new decisional criteria of S. 343 
within 2 years.
    Of even more concern is that the development of new health 
and safety standards, head impact protections for example, 
might have to take a back seat to an agency's obligations to 
respond to petitions and to review of existing rules. The 
tragic irony in the case of the head impact standards for car 
passengers is that these regulations have already undergone 
cost-benefit analysis--just not the one outlined in the bill. 
S. 343, however, would require that its cost-benefit provisions 
be applied to rule-makings that are not yet complete.
    As a consequence of S. 343's requirements, the National 
Highway Traffic Safety Administration (NHTSA) will have to redo 
the cost-benefit analysis. In the meantime, it will also have 
to answer petitions and review existing rules. For every year 
the implementation of the head impact standards is delayed, 
NHTSA calculates that more than 1,000 lives will be lost and 
more than 600 serious injuries will occur. The safety of our 
drivers, passengers, and children cannot afford the delay 
brought about by S. 343.
    e. s. 343's peer review panels: who will represent the public's 
                               interest?

    The operation and creation of peer review panels presently 
is under agency control. Peer review panels are established by 
agencies to evaluate and advise agencies concerning the methods 
and the science used to conduct cost-benefit analyses and risk 
assessments. The panels are comprised of scientists employed by 
the government, academics, and other independent experts. While 
we support the use of peer review panels to evaluate and make 
recommendations to agencies concerning the most applicable or 
up-to-date scientific methods, the provisions contained in the 
bill are ill-conceived and unbalanced.
    S. 343 would require the President to set up a uniform peer 
review process for all agencies under which each major rule, 
clean up plan, risk assessment and risk characterization must 
be reviewed by a panel. The bill would bestow significant 
power--veto authority--to the panel to dictate agency 
scientific procedures.
    The legislation would open up the panels to special 
interest participation--the bill allows consultants employed by 
entities with a potential interest in the outcome to serve on 
the panels, if their interest is fully disclosed. Conversely, 
it would exclude from panels ``experts who were associated with 
the generation of the specific work product either directly by 
substantial contribution. * * * Or indirectly by consultation 
and development of the specific product.'' The effect would be 
to include private parties with an interest in the litigation 
and exclude government scientists dedicated to protecting 
public health and safety.
    The proposed conflict rules limit the number of available 
scientists by precluding government scientists, and failing to 
acknowledge that academic scientists have faculty meetings to 
attend, research to conduct, grants to renew, papers to write 
and classes to teach. That combination leaves a likelihood that 
only private consultants will be available to serve on peer 
review panels on any consistent basis.
    As a group we differ on the advisability of allowing 
industry a role in the peer review process. However, we share 
the common view that this proposal would displace totally the 
people charged with ensuring the public's welfare with the 
narrow concerns of special interest groups and therefore is 
untenable.
    The proposed limitations on panel membership would only 
exacerbate the problem that there are probably not enough 
scientists and experts to serve on the number of panels this 
bill would require. The legislation would increase by hundreds 
the number of major rules requiring peer review, in addition to 
the hundreds of risk assessments and risk characterizations 
completed each year that also would require a peer review.
    The irrationality of this provision becomes more evident 
when we consider the bill's requirement to do a peer review on 
all risk characterizations. The Food and Drug Administration 
sometimes will request that a company issue a ``Dear Doctor'' 
letter to inform physicians about the dangerous side effects of 
a drug which may not be readily apparent on the label. These 
letters are ``risk characterizations'' and are one technique 
the FDA uses to communicate risk. Even though the risk from the 
drug is obvious and immediate, under S. 343, the FDA would have 
to conduct an exhaustive risk assessment, including a peer 
review, prior to issuing the letter--resulting in a delay in 
issuing the warning that could extend for years.
    We do not believe that such requirements actually serve the 
public well-being.
  f. s. 343's judicial review: misunderstands the proper role of the 
                               judiciary

    Our objections to the concept of judicial review as 
contemplated in this legislation do not rest on an objection to 
allowing judges to review agency actions--the right to bring a 
suit in Federal court is an important check on the arbitrary 
and abusive exercise of Federal authority. The right to 
challenge an agency action exists now, in the current version 
of the Administrative Procedures Act, and has provided an 
important check on agency discretion in the implementation of 
our health, safety, and environmental laws.
    We, however, are concerned about the undefined scope of 
policymaking authority we will blindly cede to the Federal 
courts, and question whether inviting litigators and judges to 
second guess the scientific assumptions and procedures adopted 
by agencies during the course of a risk assessment or cost-
benefit analysis will actually serve the goal of regulatory 
reform. Senate bill 343 would actually require judges to be the 
``judicial activists'' many of the proponents of this bill have 
decried over the years.

1. S. 343 places the Judiciary in the role of Congress

    In a previous section, we noted that the proponents of the 
bill do not know with any certainty all the statutes that will 
be affected by this legislation. As we also pointed out 
earlier, the legislation mandates the cost-benefit analysis as 
the determinative factor in whether a rule will be promulgated. 
No one can anticipate the kinds of issues that an agency will 
face in trying to reconcile the decisional criteria of this 
legislation with the decisional criteria of the underlying 
organic statute.
    S. 343 relinquishes to the courts the congressional 
responsibility to develop and oversee government policy. The 
priorities and the discretion of the agencies would be set by 
special interests litigating in Federal court. Such policy 
making functions ought to remain reserved to Congress. However, 
S. 343 would require the Federal courts to reconcile more than 
30 years of statutes, regulations, and judicial interpretation 
with its cost-benefit standard that was neither part of the 
debate on the underlying statute nor a part of the case 
establishing the precedent.
    Senator Kennedy noted during the full committee hearing and 
the markup, many of the worker safety statutes have been 
interpreted not to require cost-benefit analysis as the 
determinative criteria for promulgating a rule. In those 
instances where the statute is unclear, the court will 
ultimately be left to decide the public policy matter about 
whether Congress intended that a cost-benefit analysis be the 
determinative measure.
    If we want to codify the concepts of cost-benefit analysis 
and risk assessment, we, not the courts, should apply the 
decisional criteria to each statute--health, safety and 
environmental--and decide in each case if the result is one 
under which people will be able to live.

2. S. 343 will require judges to determine matters of science, not law

    Our second concern about the scope of judicial review in S. 
343 relates to the subject matter the proponents of the bill 
want to expose to judicial review--namely each procedural step 
of the rulemaking process. We question the wisdom of this 
legislation's invitation to litigators to reopen the entire 
rulemaking process after the substantial opportunity private 
parties will have to participate in that process.
    Under this bill judicial review is simply another place for 
well-financed parties to inject themselves into the process. We 
have noted already that this bill greatly expands the agency's 
obligations to allow notice and comment, provides an expanded 
right of petition, creates a peer review process dominated by 
private interests which can dictate agency policy, and includes 
congressional review of all regulations. After an agency goes 
through all the procedures outlined in this bill, private 
parties can still litigate the validity of a regulation's 
compliance with this statute in Federal court--even after 
Congress has approved the regulation!
    At the same time, the bill does not require the regulated 
parties to share information even though much of the 
information needed to determine whether a rulemaking will be 
``major'' will be held by industry.
    Ultimately, judges must focus on the cost-benefit analysis 
and risk assessment. A risk assessment and cost-benefit 
analysis must be completed in order to provide the necessary 
basis to apply S. 343's decisional criteria. Further, the bill 
is extremely prescriptive in outlining the procedures required 
for each type of analysis. Both the bill and the present 
Administrative Procedures Act provide for judicial review of 
all new procedures required under this bill.
    Before codifying and opening to judicial review the 
procedural requirements of this bill, we must recognize that 
underlying each risk assessment and cost-benefit analysis are 
assumptions about which experts differ, often dramatically. 
Both cost-benefit analysis and risk assessment are valuable 
tools that agencies should continue to use when promulgating 
Federal regulations.
    The judicial review provisions in S. 343 would require 
judges to determine which scientific or economic ``models'' 
over which experts disagree are the ``most plausible'' accounts 
of how a substance may harm people or the environment. Under S. 
343, those same judges will be confronted with choices between 
esoteric statistical models that attempt to quantify 
probabilities of, for example, cancer deaths which are 
themselves based on statistical models that are subject to 
debate. Moreover, judges will be forced to balance the 
scientific principles with the economic principles in order to 
determine which safety standard should apply.
    The majority neglects to confront situations in which an 
agency cannot comply with the cost-benefit or risk assessment 
requirements because there is not a sufficient understanding of 
the problem to be addressed. The Environmental Protection 
Agency is presently confronted with that problem in relation to 
safe drinking water regulations and cryptosporidium--a deadly 
water-borne parasite scientists do not understand but which 
made hundreds of thousands of people sick and killed more than 
a hundred in Milwaukee in 1993. The question remains under this 
bill whether a safe-drinking water regulation will pass 
judicial muster if the agency cannot quantify adequately the 
dangers of cryptosporidium. Further, the opportunities that the 
bill creates for bureaucratic delays will stall the 
promulgation of new standards necessary to protect against 
future appearances of deadly parasites like cryptosporidium.
    On other grounds, the prescriptive criteria imposed on both 
the cost-benefit analyses and the risk assessments under this 
bill would drive the process toward a certain kind of result--a 
result that would make it much more difficult to justify rules 
that protect certain vulnerable groups of people--children or 
pregnant women. Under standard cost-benefit techniques, those 
sensitive groups are ``worth'' fewer dollars to economists and 
may have lower tolerances than a hypothetical average citizen--
represented by the ``central estimate.'' The procedures in this 
bill would focus on that hypothetical average citizen and 
discount the value of sensitive subpopulations.
    Contrary to the majority's assertion that the bill will 
encourage innovation, one obvious problem with a process that 
mandates certain procedures and funnels virtually all of these 
decisions into court is that once a particular scientific model 
and statistical method is approved by a court, there will be a 
tendency to freeze the science. It will be difficult to argue 
that another, equally plausible, model that may be closer to 
reality should be accepted when it is inevitably dragged into a 
future court by an aggrieved party.
    As the majority points out, judges are often called upon to 
weigh complicated scientific questions. We question, however, 
whether Congress knowingly should provide the uncertainty that 
will be used by those who seek only to undermine the agency's 
position in court with any possible argument. We do not believe 
that such a scenario provides regulatory certainty.
    The Administrative Office of the U.S. Courts noted ``there 
could be substantial increases in actions seeking judicial 
review'' and there would be ``considerable increases in court 
time and resources necessary to review substantial expansions 
of the full agency record in each case.'' Certainly, the bill 
will require courts to delve into the scientific record.
    These are not reasons to do away with cost-benefit analysis 
or with risk assessment. We should, however, be responsible in 
our deployment of these tools. We should recognize their limits 
as well as their merits, and we certainly should not expect the 
court system to resolve fundamental scientific disputes. 
Unfortunately, in an attempt to put some ``teeth'' into the 
cost-benefit and risk assessment requirements in this 
legislation, S. 343 will short-circuit the very scientific 
procedures that we all want to guide--but not to determine--our 
regulations.
    Senator Biden's amendment would restrict judicial review to 
judgements about the reasonableness of the final rule itself, 
rather than expanding exponentially the grounds for future 
litigation. Making cost-benefit analysis and risk assessment 
part of the overall record open to the courts in their review 
of final agency action is sufficient to ensure the results we 
seek, without the problems we have described. Without these 
changes, no regulation written after the passage of S. 343 will 
be final--it will be open to endless litigation in which our 
courts will be asked to rule not just on the appropriate 
question of agency discretion under authorizing statutes, but 
on scientific models and statistical methods, as well.
G. S. 343's Criminal and Civil Exceptions: Would provide a loophole to 
                       those who violate the law

    We believe that people should not be prosecuted for 
activity an agency had previously advised was legal. But we 
also believe the laws should be enforced stringently, and not 
riddled with loopholes and defenses for those who would try to 
escape responsibility from complying with the law. The 
loopholes contained in S. 343 are not fair to the average 
citizen who relies on regulations to protect health and safety. 
In addition, we note the unfairness S. 343 would entail for 
businesses that make capital improvements to make their 
facilities environmentally safe for their employees and their 
communities. We do not think that bad actors should be given a 
competitive advantage over progressive and law-abiding 
corporate citizens.
    The costs of white collar-crimes are substantial. Consider, 
for example, health care fraud, which costs the U.S. economy 
over $100 billion per year. A number of us have been trying 
over the last several years to strengthen the prohibitions on 
fraudulent activity which costs each American family about 
$1,300 each year.
    S. 343 moves in the opposite direction and would seriously 
hamper law enforcement efforts. Section 709 would give heart to 
every shady character trying to game Medicare and Medicaid--not 
to mention those who pollute our water or our air, or those 
responsible for selling us unsafe food or unsafe medicine. 
Current criminal law provides appropriate protections for those 
trying to comply with law, generally requiring that the 
violation be ``willful.'' A person who in good faith gives the 
government complete information about what he is doing, and 
then receives government approval for his actions, cannot be 
prosecuted. The current law makes sense; someone who is trying 
to follow the law, but makes a mistake, should not be 
prosecuted.
    But this bill goes beyond current law. This bill undermines 
incentives to obey the law and weakens the government's ability 
to enforce compliance. Effectively, this bill lets the 
regulated person, not the government, decide what the law 
requires. For example, someone trying to evade compliance with 
a law could manipulate the system to insulate himself from law 
enforcement. To invoke the defense, the defendant need not 
provide complete, accurate or honest information about what he 
is doing. What we will get are people shading the facts. For 
example, someone telling the government that the kickback 
payment to get Medicare business is actually a legitimate 
payment to the doctor to do a ``study.'' If the government then 
tells that person that the arrangement is lawful, that is 
final. That individual can never be prosecuted under this bill, 
even though the individual was consciously trying to evade the 
law.
    Further, the bill prevents the government from changing its 
interpretations of a statute or its factual assumptions, 
essentially freezing all regulations in place. For example, let 
us assume that an agency made a mistake in evaluating the level 
of emissions created by a particular production process and 
told the company its emissions would comply with the 
requirements of the law. Later, it is determined that the 
initial analysis of the emissions level was too low and that, 
in reality, the level of pollutants violates the law. We 
believe that the company should not face any criminal or civil 
sanction if it comes forward with the information, since 
presumably it acted in good faith. However, we would not 
prevent the agency from subsequently requiring the company to 
come into compliance as would section 709(c)(1) of this bill.
    In addition, the bill in effect raises the level of proof 
required for civil enforcement actions to literally the same 
level as required for criminal prosecutions. Civil enforcement 
is a crucial tool for enforcing the health care fraud laws, the 
wage and hour laws, the immigration employer sanctions laws, 
and others. While we do not know what the fiscal impact of this 
will be, it certainly will reduce fraud recoveries and penalty 
recoveries throughout the government.
    The amendment Senator Biden would have proposed was better 
targeted and more responsible. It provided that in cases where 
intent must be proven, a defendant could assert a defense that 
he was relying on governmental advice. But it ensured that the 
defendant was required to do so responsibly by seeking advice 
from the government in good faith, before taking action, and 
after fully and accurately disclosing to the government all 
material facts. It did not tie the government's hands, and it 
did not turn over unprecedented authority to every government 
employee and every regulated party to determine what the law 
is.
     h. the proposal to repeal the delaney clause: reform run amok

    One of the most serious flaws in S. 343 is the proposal to 
repeal the Delaney Clause. While Delaney reform may well be 
warranted, the current law should not be changed unless it is 
replaced with a scientific standard that sufficiently protects 
the public from cancer-causing chemicals.
    The Delaney Clause has been part of Federal law for 
decades. It prohibits the approval of pesticide products, 
animal drugs, and food additives containing substances that may 
cause cancer. It was enacted to address the serious, legitimate 
concern about the impact on food safety of cancer-causing 
chemicals in pesticides and related products.
    For many years, critics have argued that the Delaney Clause 
is sunscientific and overbroad. In the interest of guarding 
against cancer, these sections of the Food, Drug and Cosmetic 
Act require a zero tolerance level for certain chemicals, and 
that may be too strict a standard. But while a consensus has 
developed that Delaney is in need of reform, there has been an 
equally strong consensus that if Delaney is to be repealed, it 
must be replaced by a scientific safety standard that provides 
rigorous guidance to the Federal agencies that regulate 
potential carcinogens. Furthermore, the scientific community 
recognizes that any such guidance must take account of the need 
to protect vulnerable populations such as children.
    The movement to reform the Delaney Clause began in earnest 
in 1987 with the publication of a National Academy of Sciences 
report entitled, ``Regulation of Pesticides in Food: The 
Delaney Paradox.'' That report recommended that Congress 
consider replacing the Delaney Clause with a more 
scientifically based public health standard.
    In the years since publication of this landmark National 
Academy report, several members of the Judiciary Committee have 
been active supporters of Delaney reform. Senators Kennedy and 
Leahy, for example, have each introduced detailed bills 
designed to repeal Delaney in a comprehensive fashion. See, 
e.g., S. 331, a bill introduced by Senator Kennedy in the 103d 
Congress. That bill and others similar to it contain detailed 
standards that reflect and respond to a substantial body of 
scientific literature.
    And Senator Hatch, the chairman of this committee and for 
many years the ranking member of the Senate Committee on Labor 
and Human Resources, has been a party to lengthy negotiations 
on a compromise standard to replace the Delaney Clause. Those 
negotiations never entertained the possibility that Delaney 
might be simply repealed.
    We would be pleased to resume such negotiations at any 
time. But the bill reported by the committee simply wipes 
Delaney off the books. Rather than a comprehensive system of 
risk protection in place of the Delaney Clause, this bill just 
dispenses with Delaney, and makes no attempt to address the 
significant public health issues presented by that repeal. Such 
a stunning reversal of public policy would mean a sweeping 
reduction in public health protection.
    Repeal of the Delaney Clause without a balanced effort to 
protect the American public would be a bad bargain for 
consumers and for parents who want to protect their children's 
health. Children are especially vulnerable to food-borne 
carcinogens because of their unique diet and metabolism.
    It is especially strange that the Judiciary Committee would 
take this action without the benefit of careful consideration 
by the Committee on Labor and Human Resources, the Senate 
committee with jurisdiction over this issue. In fact, this 
legislation has been drafted and reported by the Judiciary 
Committee without any recent hearings or debate in the Labor 
Committee. Perhaps that committee has been bypassed because 
testimony before it in the past has so emphasized the need for 
a scientific standard in place of Delaney. See, e.g., ``Hearing 
on Safety of Pesticides in Food Act'' (S. Hrg. 102-252) (July 
10, 1991).
    It is also disingenuous for the majority to suggest, as it 
does in its views, that FDA Commissioner David Kessler and EPA 
Administrator Carol Browner support the outright repeal of 
Delaney. Both officials may support reexamination of Delaney 
and possible replacement of it with a more scientific 
negligible risk standard, but neither supports the simple 
repeal of the Delaney Clause that appears in S. 343.
    In its views, the majority also expresses support for the 
EPA's efforts to implement some of the recommendations of the 
1993 National Academy of Sciences report on pesticides and 
children, supra. In particular, the majority suggests that the 
EPA is protecting children by utilizing hundred fold safety 
factors when interpreting animal data. But the NAS report 
explicitly challenged the hundredfold safety factor as 
inadequate to protect children, and recommended that an 
additional safety factor of up to tenfold be applied in order 
to protect children.
    In sum, it is irresponsible to eliminate the black-letter 
protection of the current Delaney Clause unless we are prepared 
to replace it with a thoughtful, serious, sophisticated process 
for protecting children and other vulnerable populations. We 
hope that progress can be made on this issue before this ill-
considered proposal is considered by the Senate.
  I. S. 343's Court of Claims Jurisdiction: Turning the 5th Amendment 
                       Takings Clause on its Head

    Section 5 of S. 343, which relates to judicial review, 
contains in subsection (b) a grant of authority to the Court of 
Federal Claims that relates to the takings clause of the fifth 
amendment. The majority contends this provision will eliminate 
the so-called ``Tucker Act Shuffle.'' While that may be true, 
it also turns on its head the fifth amendments takings clause 
jurisprudence.
    There are several remarkable things about this provision. 
First is the fact that we even find it in the middle of a 
regulation reform bill at all. This provision relates to the 
fifth amendment of the Constitution--and the whole complicated 
issue of property rights, takings, eminent domain and just 
compensation. Indeed, the provision is contained, word for 
word, in the comprehensive takings legislation that we have 
just begun to consider in committee.
    Both the regulatory reform bill and the takings legislation 
would make radical and major changes in separate and very 
complicated areas of the law. Both deserve our utmost care and 
attention. We should not complicate our consideration of 
regulation reform by rushing to judgment on one particular 
provision from the takings legislation.
     More importantly, however, is that this short, 2-page 
takings provision--buried in more than a hundred pages of 
legislation--is no trivial matter. We must admit at the outset 
that we find the provision quite confusing as drafted. But if 
we look at the plain meaning of the words, it could work an 
enormous and profound change in takings jurisprudence.
    The fifth amendment provides that ``no private property may 
be taken for public use without just compensation.'' What this 
means is that if the government ``takes'' your property--either 
outright in a condemnation proceeding or through regulation--it 
must pay you and it must pay you fairly. This is a bedrock 
constitutional protection for property owners. But the fifth 
amendment does not in any way say that the government can not 
take property for the public good--only that it must pay just 
compensation if its action results in a ``taking.''
    Indeed, the power of eminent domain is so firmly embedded 
in our nation's history and in our notion of what it means to 
be a sovereign nation, that it is not even mentioned in the 
Constitution. As the Supreme Court has said, the right of 
eminent domain ``appertains to every independent government. It 
requires no constitutional recognition; it is an attribute of 
sovereignty.'' Boom Co. v. Patterson, 98 U.S. 403, 406 (1879).
    S. 343 might very well change all that. It appears to 
declare that compensation--the time-honored constitutional 
remedy for a taking--is not sufficient. Rather, it authorizes 
the Court of Federal Claims to invalidate an act of government 
that ``adversely affects private property rights in violation 
of the Fifth Amendment of the Constitution.'' The invalidation 
of an act is a remedy not contemplated in the fifth amendment. 
Indeed, the Supreme Court has on a number of occasions 
explicitly rejected that idea. As it said in Ruckelshaus v. 
Monsanto 467 U.S. 986, 1016 (1984):

          equitable relief is not available to enjoin an 
        alleged taking of property for public use, duly 
        authorized by law, when a suit for compensation can be 
        brought against the government.

Or as then D.C. Circuit Judge Scalia once wrote:

          that money alone may not constitute just compensation 
        for purposes of the Fifth Amendment is a principle of 
        breathtaking novelty.

As drafted, this provision would thus rewrite a major chapter 
of takings law, and give a sweeping grant of authority to the 
Court of Federal Claims. Indeed, read literally, it can be seen 
as nothing short of a surrender of the government's sovereign 
right of eminent domain.
    The provision also would give this new, sweeping grant of 
authority to an article I--or so-called ``legislative''--court, 
the Court of Federal Claims. The judges who sit on this court 
do not have the protections of article III courts--protections 
of life tenure and protected salaries that are meant to 
safeguard their independence from the legislative branch and 
insulate them from political pressure.
    The independence of article III judges is why we entrust 
those courts with the core judicial responsibility of 
interpreting the Constitution and invalidating acts of Congress 
and the Executive. In this provision, we would give this core 
article III power to article I judges who do not have the 
independence protections. Needless to say, this raises 
questions in our minds about the constitutionality of this 
provision.
    On the merits, we believe that this provision's attempt to 
rewrite constitutional law and rearrange Federal court power 
are unwise and unwarranted, to say the least. Our view of the 
merits aside, we believe that it would be irresponsible for 
this committee to take such action without full and careful 
consideration--and certainly not in the middle of the already 
complicated debate we find ourselves in over regulatory reform.
    The Judicial Conference of the United States has written to 
Chairman Hatch a letter urging that we defer consideration of 
this provision until it can be more carefully analyzed. The 
Conference's Committee on Federal-State Jurisdiction is now 
examining the provision, which we might add, includes other 
less expansive but certainly significant issues--such as 
expanding the Court of Claims' power to issue declaratory 
judgements and to hear ancillary claims arising under the 
Federal Tort Claims Act.
    We have other major concerns regarding the costs of this 
takings provision to the Federal Government as well as the 
appropriateness of specifying compensation terms for regulatory 
actions. The compensation scheme of S. 343 is in complete 
contradiction to the judicial holdings under the takings clause 
of the U.S. Constitution.
    We should not be rushing to judgment on issues as serious 
and significant as those raised by this provision. We urge that 
this provision be struck from the bill until there is a full 
opportunity to consider it at the right place and the right 
time--when we take up the comprehensive takings bill.
               VIII. SUPPLEMENTAL VIEWS OF SENATOR LEAHY

    The committee was never given an opportunity to vote on 
whether it supported this legislation. There are many reasons 
the committee should have rejected and the Senate should reject 
this legislation.
    First, this legislation claims to be a regulatory reform 
bill. It is not. It is a regulatory policy bill. Unfortunately 
the policy assumptions of this legislation are contrary to both 
historic and contemporary American values.
    Second, it does not make regulation more efficient. It is a 
``monkey wrench'' bill that makes better regulations nearly 
impossible.
    Third, this is not a bill that benefits the public or the 
middle class. The corporate clients of the big Washington law 
firms and beltway consultants, not the middle class, will be 
its beneficiaries. They will employ the scientists and 
attorneys to contest cost/benefit analyses, risk assessments, 
or file petitions for review of regulations.
    Fourth, this bill does not protect the public from 
government. It is, instead, a profoundly anti-democratic, 
elitist bill.

                   contrary to shared american values

    As Americans, we have a history of shared community values. 
The phrase, ``your freedom ends, where my nose begins,'' 
expresses a commonly held view of the relationship between 
neighbors. This common value is now being challenged. Some are 
saying that property owners have a right to use their property 
in a way that harms their neighbors.
    This is not the American tradition. A person has never had 
an unfettered right to use his property in a way that hurts his 
neighbors.
    Before the American Revolution, community values were 
reflected in the ``common law.'' The ``common law'' was the 
body of law that developed out of common community values 
without any need for legislative action. The common law 
``nuisance'' action was the legal expression of the maxim, 
``your freedom ends where my nose begins.''
    As one commentator says:

          The beauty of a simple nuisance * * * case is that it 
        reduces that case to terms a lay person can understand: 
        ``You dumped it, it hurt me or my property, and you 
        should pay.''

    This regulatory ``reform'' bill is contrary to our shared 
community values. The bill's premise is that a person or his 
property should only be protected if that person's life or 
property is worth more than the activity of the person causing 
the damage. This is the essence of the cost/benefit requirement 
contained in the new section 624 of the Administrative 
Procedure Act proposed by this legislation.
    The use of cost/benefit analysis as a decisional criterion 
in this legislation shows how this legislation contradicts 
traditional American values.
    Americans do not believe that children, the poor or rural 
residents are of less value than adults, the wealthy or 
suburbanites. Unfortunately, the opposite premise is implicit 
in the use of cost/benefit analysis. The following chart is 
from a standard text book on cost/benefit analysis. It is 
included in a chapter entitled ``The Value of Longevity.'' (The 
Benefits of Environmental Improvement, Freeman; p. 170.) This 
chart indicates that using standard cost/benefit analysis 
techniques, the value of a female infant is $30,000 and the 
value of a 25 year old male is $170,000.

        TABLE 3. PRESENT VALUE OF LIFETIME EARNINGS, DISCOUNTED AT 6 PERCENT, BY AGE, SEX, AND RACE, 1972       
                                                  [In dollars]                                                  
----------------------------------------------------------------------------------------------------------------
                                                              Men                             Women             
                 Years of age                  -----------------------------------------------------------------
                                                  Total      White      Other      Total      White      Other  
----------------------------------------------------------------------------------------------------------------
Under 1.......................................    $48,720    $51,011    $31,232    $30,976    $31,557    $27,069
1-4...........................................     55,433     57,962     35,768     33,148     35,765     30,890
5-9...........................................     74,418     77,785     48,082     47,141     47,960     41,459
10-14.........................................     99,742    104,263     64,458     63,172     64,267     55,573
15-19.........................................    129,394    135,142     83,955     80,588     82,016     70,692
20-24.........................................    156,640    163,469    101,006     91,114     92,834     79,123
25-29.........................................    170,988    178,483    107,823     90,439     92,237     77,800
30-34.........................................    170,788    178,519    104,179     84,513     86,378     71,237
35-39.........................................    161,072    168,609     94,492     77,513     79,444     63,204
40-44.........................................    144,209    150,904     82,760     69,215     71,135     54,158
45-49.........................................    121,856    127,250     69,586     59,187     61,074     43,578
50-54.........................................     96,158    100,033     55,968     47,115     48,873     31,897
55-59.........................................     67,763     70,128     41,785     33,825     35,317     20,349
60-64.........................................     38,588     39,830     24,964     21,406     22,436     11,702
65-69.........................................     18,107     18,631     12,656     11,890     12,436      6,467
70-74.........................................      9,886     10,184      6,911      6,598      6,861      3,685
75-79.........................................      5,434      5,675      3,168      3,396      3,526      1,956
80-84.........................................      3,209      3,354      1,839      1,507      1,562        912
 85 & over....................................        519        543        291        194        200        128
----------------------------------------------------------------------------------------------------------------
Source: Cooper and Rice (1976), p. 28.                                                                          

    Why is there this disparity between the value of the adult 
male and the female infant? First, because this technique 
measures the value of a human life by the wages a person would 
receive in their life. Men normally earn more than women. 
Second, the disparity exists because cost/benefit analysis 
assumes that benefits that occur in the future have very little 
value.
    After determining the value of a human life, cost/benefit 
analysis applies a ``discount rate'' to benefits that will 
occur in the future. Benefits of the lives saved in the future 
by a regulation are reduced by 6-7 percent per year. In 
business planning this makes sense. A dollar of economic return 
10 years from now is worth less than a dollar of economic 
return earned today. This business evaluation tool does not 
make sense when applied to the protection of human life.
    For example, in arguing that it is essential to balance the 
Federal Budget, the Chair of the House Budget Committee, John 
Kasich recently stated, ``mothers and fathers will do virtually 
anything for their children.'' (Washington Post, May 15, 1995, 
p. 1.) This legislation does not share the same assumption 
about the value of children.
    While most of us would spend as much to save our infant 
child as we would to save our teenagers' life, cost/benefit 
analysis assumes the opposite. Babies do not earn wages for 
many years. The joy of childhood has no economic value. Thus, 
the value of saving their lives is reduced by discounting. 
Therefore, infants lives are worth less, according to this 
analysis.
    A simple example shows the importance of this disparity.
    Congress has told the Environmental Protection Agency to 
protect the public from toxic pollution. This legislation 
requires the EPA to look at a broad series of options. One 
option, will save 1,000 female infants. The second would save 
1,000 adult males. The pollution control costs are the same.
    If cost/benefit analysis is a decisional criterion, the 
agency would implement the option that saved the 25 year-old 
males simply because they are ``worth more.''
    Adults' lives are worth more because the value of saving 
lives in the future is much less than saving lives in the 
present.
    There are now some who want to revert to a 19th century 
Social Darwinism, in which it is every man for himself--and 
only the strongest men win. they want to revert to a theory of 
property and government that argues that child labor laws 
interfere with private property rights. The Supreme Court and 
our society have rejected this argument since the 1930's.
    For example, a recent Harris poll asked if owners of 
private land should be able to develop their land in a way that 
would harm the environment. By a 79-to-20-percent margin, the 
interviewees responded that the Federal Government should have 
the right to stop pollution. The polls show clear support for a 
``good neighbor'' philosophy.
    Regulations are neither good, nor bad, in and of 
themselves. In a complex society they are, however, the only 
way that we establish the responsibility of neighbors to 
neighbors. If the neighbors are local, it is local regulations 
that make a ``good neighbor'' policy works. In a complex 
society of 240 million Americans, Federal regulations are 
necessary to make sure that the acid rain produced by our 
neighbors in Ohio does not hurt Vermonters, or that meat packed 
by our neighbors in California does not cause illness or death 
in Oregon.
    Similarly, regulations make sure that responsible property 
owners are not at competitive disadvantage compared to 
irresponsible property owners.
    We have a responsibility to preserve these American values 
while protecting the American people.
    Our society does, and should, protect private property. It 
protects private property for two reasons. First, because it 
protects the liberty of those who own property. Second, 
protecting private property makes it possible to use that 
property to create the economic goods the society wants.
    The majority report claims that regulation is interfering 
with the ``creation of economic value'' aspect of private 
property. The facts do not support this contention.
    In a March 15, 1995, Washington Post article, the eminent 
economist, Robert Samuelson noted that ``industrial 
productivity has increased at its fastest rate in decades.'' 
``Between 1980 and 1994, U.S. manufacturing output rose more 
than 50 percent.'' Even though proponents of S. 343 claim that 
existing regulations are excessively burdensome, Samuelson 
points out that ``manufacturing output is now twice as high as 
in 1970 and five times as high as in 1950.''
    Many studies have assessed the effect of environmental 
regulation on our international competitiveness. On March 17, 
1994, The Washington Post noted that a review of 100 separate 
studies found that `` * * * there is little evidence that 
environmental compliance costs have adversely affected the 
competitiveness of U.S. manufacturing firms.'' Paul Portney of 
Resources for the Future explained that `` * * * with pollution 
control costs running at between 1 and 3 percent of sales in 
most industries, they simply aren't big enough to sway major 
decisions.''
    The other evidence that existing regulations are crippling 
the economy is anecdotal. For instance, Representative McIntosh 
cited several anecdotes in his testimony before the committee 
on March 17, 1995.
    His first anecdote involved a device which its proponents 
claim can be used to detect breast cancer. The second anecdote 
claimed that the Consumer Product Safety Commission was 
intending to require holes in buckets. Both stories are 
sensational and both stories were incorrect.
    Representative McIntosh claimed that the sensor pad device 
was approved by the ``equivalent of the Canadian equivalent of 
the Food and Drug Administration.'' Not only was Representative 
McIntosh wrong in claiming that the device had been approved in 
Canada, the sensor pad is banned in Canada. This was not the 
only misinformation Representative McIntosh shared with the 
public.
    In the hearing he also testified that the Consumer Product 
Safety Commission had prepared a guideline requiring that all 
five gallon buckets have a hole in the bottom. This was not 
true and Representative McIntosh knew it. The Judiciary 
Committee hearing was not the first time Representative 
McIntosh had used this erroneous story and been corrected.
    He used this story during the February 23, 1995, House 
floor debate and was immediately corrected by a letter from the 
Consumer Product Safety Commission. Then, on March 12, 1995, he 
used it again on the ``One to One'' television show, and was 
corrected by Congressman Kanjorski. An article appeared in the 
New York Times on February 29, 1995, again correcting this 
erroneous story. Finally, he used it at a public conference on 
food safety and was corrected publicly.
    The tragic truth of the CPSC's inquiry into the design of 
5-gallon buckets is that between 1984 and 1994, 228 children 
drowned after falling into the buckets. The CPSC issued an 
Advance Notice of Proposed Rulemaking on May 19, 1994. This 
notice sought to lay out the facts of the drownings in an 
attempt to solicit industry opinions and possible solutions. 
Early in the process of developing the proposed regulation, a 
CPSC engineer suggested that a bucket with a hole in it would 
be exempt from any performance standard which the Commission 
might issue.
    In fact, such a bucket is used by companies which collect 
waste products at curbside for recycling. In addition, less 
than 1 year after the Advance Notice was published, the bucket 
industry undertook a $500,000 public education campaign to warn 
parents about the dangers of children drowning in buckets. This 
campaign was done voluntarily by the bucket industry. The 
Commission voted to cancel the advance notice shortly after the 
public information campaign began.

              not regulatory reform: a monkey wrench bill

    This is a ``monkey wrench'' bill that establishes a 
presumption against regulation, even where it protects a 
neighbor from an irresponsible neighbor. It includes so many 
roadblocks that it will be nearly impossible to issue new 
regulations in the face of a well-financed, determined 
opposition.
    That this is a ``monkey wrench'' bill is clear from the 
fact that the business community has insisted that it be 
exempted from it. New product approvals are exempt from all of 
the ``reforms'' that apply to regulations designed to protect 
the public.
    Before an agency can issue a public safety regulation, it 
must do both a peer-reviewed, judicially reviewable, cost/
benefit analysis and a peer-reviewed, judicially reviewable, 
risk assessment. New product approvals are exempt from these 
``reforms.''
    This committee and its membership believe in regulatory 
reform. In 1982, the Laxalt-Leahy Regulatory Reform bill 
reported from this committee, S. 1080, passed the Senate 
unanimously. That was 13 years ago. The statement is often made 
that this bill--S. 343--is just an updated form of S. 1080.
    This is not correct. It is different in four critical ways.
          1. It includes judicial review of every element of a 
        cost/benefit analysis and a risk assessment.
          2. It is too broad. Many more regulations are covered 
        because the threshold is $50 million instead of the 
        $100 million threshold used in S. 1080.
          3. It includes a retroactive petition that allows 
        decade-old regulatory decisions to be reopened.
          4. Cost benefit is a decisional criterion, not a tool 
        to produce better decisions.
    Of these points of difference between S. 1080 and S. 343, 
the most critical is the section which makes ``cost/benefit 
analysis'' a decisional criterion. S. 1080 required cost/
benefit analysis. We all weigh the costs and benefits of 
optional courses of action and try to choose the most efficient 
means to reach that end. Making cost/benefit analysis a 
decisional criterion is very different.
    Congress should decide what responsibility we have to avoid 
harming our neighbors and the values it wants to protect. Then 
the agencies should use cost/benefit anlaysis--and whatever 
other tools are available--to design the best method of 
achieving that protection.
    This bill takes a fundamentally different approach to 
regulatory reform. As discussed earlier in these views, the use 
of cost/benefit analysis as a decisional criterion is contrary 
to shared American values.
    Independent analyst have also strongly criticized cost/
benefit analysis. A recent article by Professor Lester Lave of 
Carnegie Mellon University and Howard Gruenspecht of the 
President's Council of Economic Advisers summarizes these 
criticisms.
    In spite of the loyalty of some economists to this tool, 
they warn that the ``problem with benefit-cost analysis in both 
theory and practice seem overwhelming. * * * ''
    They note that:

          This tool grew out of utilitarianism in the 1810-1830 
        period in England. Utilitarians such as John Stuart 
        Mill believed that society could and should maximize 
        the greatest good for the greatest number. They myriad 
        assumptions of utilitarianism as moral philosophy are 
        rejected by modern philosophers, the economic 
        assumptions are largely rejected by economists.

    They further warn that ``in practice, the analysts are 
either biased or directed to justify a particular answer.''
    They conclude:

          The difficulties with missing data, uncertainty, and 
        too little time and resources for an exhaustive 
        analysis combine with the theoretical difficulties to 
        make ineffectual any serious claim that an applied 
        study produces an optimal or theoretically justified 
        outcome.

    The proponents of this legislation have often quoted Philip 
Howard, the author of a book criticizing regulation. 
Ironically, in his testimony before the committee, Mr. Howard 
said that:

          Less procedure is vital for regulatory reform. First 
        it is almost scandalous that it takes seven years for 
        the FDA to pass a rule, or that decades go by without 
        decisions on potentially harmful pesticides. * * *

    The committee unfortunately did not follow Mr. Howard's 
suggestions. Instead it created a bill with layer after layer 
of new procedures.
    One of the principal reasons that it is almost impossible 
for the Environmental Protection Agency to remove a pesticide 
from the market is that the pesticide statute makes cost/
benefit analysis a decisional criterion. It is virtually the 
only health and safety statute based on a cost/benefit, rather 
than a health-based criteria.
    The very legislation that Mr. Howard criticizes for 
excessive delay is the model for this so-called reform bill. In 
the end, this legislation is not a reform bill, it is a 
``monkey wrench'' bill.
    S. 1080 used cost/benefit analysis as a tool to make sure 
regulation is done right. This bill takes a useful tool, and 
turns it into a rigid rule. S. 1080 made sure that rules were 
sensible. This bill turns ``reform'' into a receipt for 
paralysis. Instead of making sure there are good decisions, it 
makes sure that there will be no decisions.

                 CONSULTANTS, NOT MIDDLE-CLASS BENEFIT

    The chief beneficiaries of this so-called reform will be 
the big Washington law firms and beltway consultants, not the 
middle class. These law firms and consultants will be hired to 
contest cost/benefit analyses, risk assessments, or file 
petitions for review of regulations.
    Indeed, in his testimony on the legislation, Professor Cass 
Sustein, a former Reagan Justice Attorney, called S. 343 a 
``Full Employment Act for both Lawyers and Accountants.'' The 
truth of this statement can be seen in the fact that this 
legislation will create over 100 new grounds for litigation. 
(List follows these views.)
    These are not processes that the middle class can or will 
use.

                      Anti-Democratic Elitist Bill

    This bill does not protect the public from government. It 
is, instead, a profoundly anti-democratic elitist bill.
    By making cost/benefit analysis a decisional criterion, 
this bill empowers an elite group of economists--using formulas 
we do not understand and values we do not share--to veto laws 
passed by Congress designed to protect the health and safety of 
the American people.
    This bill is anti-democratic. As discussed in the first 
section of these additional views, the use of cost/benefit 
analysis involves value-laden decisions about the value of 
human life and the value of the future. Even the Reagan 
Department of Justice rejected putting the courts of cost/
benefit analysis, according to Professor Cass Sunstein, an 
attorney at the Department of Justice. Professor Sunstein was 
an active participant in the Reagan administration's efforts to 
include cost/benefit analysis in the Federal regulatory 
process.
    In the interagency process leading up to the issuance of 
Executive Order 12991, the Reagan administration considered 
whether judicial view of cost/benefit analysis was a sound 
idea. Early in the interagency process it decided that 
empowering appointed judges to make decisions about cost-
benefit analysis was anti-democratic.

                               conclusion

    Regulations are tools used to protect commonly held 
American values about the proper relationship of neighbors to 
neighbors. The premises of this legislation are contrary to 
those commonly held values. It is also unworkable and anti-
democratic. It is based on the incorrect premise that the 
regulatory burden on the public is increasing. (See Attachment 
1)
    REGULATORY REFORM: Information on Costs, Cost-
Effectiveness, and Mandated Deadlines for Regulations (GAO/
PEMD-95-18BR, March 1995, p.15)


                   120 Items to Litigate Under S. 343

     1. Does a rule cost more than $50 million?
     2. Does rule have significant impact on sector of economy?
     3. Does rule substantially increase costs for wage 
earners?
     4. Does rule substantially increase costs for consumers?
     5. Does rule substantially increase costs for individual 
industry?
     6. Does rule substantially increase costs for nonprofits?
     7. Does rule substantially increase costs for government?
     8. Does rule substantially increase costs for a geographic 
region?
     9. Does rule adversely affect competition?
    10. Does rule adversely affect employment?
    11. Does rule adversely affect investment?
    12. Does rule adversely affect productivity?
    13. Does rule adversely affect innovation?
    14. Does rule adversely affect the environment?
    15. Does rule adversely affect public health or safety?
    16. Does rule adversely affect U.S. business' ability to 
compete?
    17. Is rule inconsistent or does it interfere with action 
of another agency?
    18. Does rule materially alter budgetary impact or rights 
of recipients of entitlements, grants, user fees, or loan 
programs?
    19. Does rule impose disproportionate and significant costs 
to class of persons within regulated sector?
    20. Is rule closely related to other rules that aggregate 
into major rule?
    21. Did agency adequately analyze benefits of rule?
    22. Did agency adequately explain how rule achieves each 
benefit?
    23. Did agency adequately identify recipients of benefits?
    24. Did agency adequately analyze costs of rule?
    25. Did agency adequately explain how rule results in 
costs?
    26. Did agency adequately identify bearers of costs?
    27. Did agency adequately identify alternatives that 
require no government action?
    28. Did agency adequately assess costs/benefits of no-
action alternatives?
    29. Did agency adequately identify alternatives that 
accommodate differences among geographic regions?
    30. Did agency adequately assess costs/benefits of 
geographic alternatives?
    31. Did agency adequately identify alternatives that 
accommodate different compliance resources?
    32. Did agency adequately assess costs/benefits of 
different compliance resource alternatives?
    33. Did agency adequately identify market-based 
alternatives?
    34. Did agency adequately assess cost/benefits of market-
based alternatives?
    35. Were alternatives examined authorized under statute 
granting rule-making authority?
    36. Did agency adequately assess feasibility of market-
based regulatory program?
    37. Did agency adequately verify quality, reliability, and 
relevance of science?
    38. Did agency adequately assess cumulative burden of 
compliance with rule and other existing regulations?
    39. Did agency adequately assess effect of rule on small 
businesses?
    40. Did agency adequately analyze whether benefits of rule 
justify costs?
    41. Did agency adequately analyze whether rule achieves 
greater net benefits to society than alternatives?
    42. Did quantify cost and benefits to extent feasible?
    43. Did quantification adequately specify ranges of 
predictions?
    44. Did quantification adequately explain margins of error?
    45. Did agency adequately describe nature and extent of 
nonquantifiable costs and benefits?
    46. Were costs and benefits broken down appropriately on 
industry-by-industry basis?
    47. Did agency rely impermissibly on unsupported 
information?
    48. Did non-agency employee participate in preparation of 
analysis?
    49. Did agency adequately identify data or information 
gathered by non-agency employee?
    50. Did agency adequately identify non-agency employee who 
gathered information?
    51. Did agency adequately explain financial arrangement for 
procuring information?
    52. Did agency correctly conclude that petition did not 
show that costs of rule likely exceed benefits?
    53. Did agency correctly conclude that petition raised no 
reasonable question that alternative to rule might provide 
greater net benefits to society?
    54. Did agency correctly conclude that guidance would not 
be major rule if adopted as rule?
    55. Did agency correctly conclude that statute expressly 
forbids consideration of whether benefits justify costs?
    56. Did agency correctly conclude that statute expressly 
forbids consideration of whether rule achieves greatest net 
societal benefits?
    57. If statute ambiguous, did agency correctly identify 
range of permissible statutory constructions?
    58. Is agency interpretation of statute within permissible 
range?
    59. Did agency reasonably determine that interpretation 
maximizes agency ability to base rule on cost/benefit analysis 
or greatest net societal benefits?
    60. Did agency adequately identify specific statutory 
authority for promulgating rule?
    61. Did agency develop adequate regulatory flexibility 
analysis?
    62. Does rulemaking record provide substantial support for 
asserted necessary factual basis for rule?
    63. Is a risk assessment exempt because of an emergency 
(does risk pose an imminent and substantial endangerment to 
public health or environment)?
    64. Is risk assessment related to rule authorizing a 
product's introduction into commerce?
    65. Is risk assessment an exempt screening analysis?
    66. Is screening analysis used as the basis for restricting 
an activities?
    67. Is screening analysis used to characterize a positive 
finding of risk in document available to public?
    68. Did agency appropriately assess incremental risk 
reduction associated with each significant regulatory 
alternative?
    69. Did agency adequately compare risk with other relative 
risk regulated by agency?
    70. Did agency adequately compare risk with other relevant 
risk with which public is familiar?
    71. Does risk assessment adequately distinguish scientific 
findings from other considerations?
    72. Is the science behind risk assessment objective?
    73. Is the science behind risk assessment unbiased?
    74. Does risk assessment include all relevant data?
    75. Does risk assessment rely to extent practicable on 
scientific findings?
    76. Does risk assessment adequately consider and discuss 
most reliable laboratory and epidemiological data?
    77. Does risk assessment adequately summarize other data?
    78. Does risk assessment adequately discuss reconciliation 
of conflicting information?
    79. Does risk assessment adequately discuss differences in 
study designs?
    80. Does risk assessment adequately discuss mechanisms of 
action?
    81. Does risk assessment adequately discuss comparative 
physiology?
    82. Does risk assessment adequately discuss routes of 
exposure?
    83. Does risk assessment adequately discuss 
bioavailability?
    84. Does risk assessment adequately discuss 
pharmacokinetics?
    85. Does risk assessment adequately discuss availability of 
raw data?
    86. Does risk assessment adequately discuss other relevant 
factors?
    87. Does risk assessment place greatest emphasis on data 
indicating biological basis of harm in humans?
    88. Does risk assessment appropriately discuss relevancy of 
animal data to humans?
    89. Does risk assessment involve the selection of any 
significant assumption, inference, or model?
    90. Does risk assessment adequately identify and explain 
all plausible and alternative assumptions, inferences, or 
models?
    91. Does risk assessment adequately explain sensitivity of 
conclusions to alternative assumptions, inferences, or models?
    92. Does risk assessment adequately explain the basis for 
selecting any assumption, inference, or model?
    93. Does risk assessment adequately identify all policy or 
value judgments?
    94. Does risk assessment sufficiently describe all models 
used?
    95. Does risk assessment appropriately specify the 
assumptions incorporated in any models used?
    96. Does risk assessment adequately explain the extent 
models have been validated by data?
    97. Does risk assessment clearly separate hazard 
identification from risk characterization?
    98. Does risk assessment adequately make clear the 
relationship between level of risk and level of exposure to 
potential hazard?
    99. Was risk assessment prepared at appropriate level of 
detail?
    100. Does risk characterization adequately describe the 
populations or resources at risk?
    101. Are numerical estimates of risk in risk 
characterization scientifically appropriate?
    102. Does risk characterization appropriately address the 
reasonable range of scientific uncertainties?
    103. Does risk characterization provide appropriate best 
estimate of risk?
    104. If no single best estimate of risk is given, does risk 
characterization include an appropriate discussion of multiple 
estimates?
    105. If risk characterization includes multiple estimates 
of risks, are the assumptions, inferences, and models 
associated with such multiple estimates equally plausible?
    106. Does risk characterization appropriately discuss the 
distribution and probability of risk estimates?
    107. Are all safety factors used similar in degree to 
safety factors used to ensure safety in human activities?
    108. Does risk characterization adequately explain exposure 
scenarios?
    109. Does risk characterization appropriately identify 
population at risk under each exposure scenario?
    110. Does risk characterization adequately discuss the 
relative likelihood of exposure scenarios?
    111. Does risk characterization place in appropriate 
context the nature and magnitude of individual and population 
risks?
    112. Does risk characterization adequately discuss 
substitution risks?
    113. Does risk characterization adequately discuss risk 
summaries submitted by other persons?
    114. In reviewing petition, did agency correctly conclude 
that risk assessment consistent with principles in Grassley 
Amendment to S. 343?
    115. In reviewing petition, did agency correctly conclude 
that risk assessment would not produce substantially different 
results?
    116. In reviewing petition, did agency correctly conclude 
that risk assessment is consistent with regulation governing 
risk assessments?
    117. Is there material new scientific information which 
risk assessment should take into account?
    118. Did peer review panel determine that rule is supported 
by best available scientific data?
    119. Did agency adequately respond to peer review panel 
comments?
    120. Does consent decree imposing rulemaking obligation 
divest agency of discretion to respond to changing 
circumstances, make policy or managerial changes, or protect 
rights of third parties?
                 IX. SUPPLEMENTAL VIEWS OF SENATOR KOHL

    I generally agree with the minority views of the other 
Democrats but I write separately to emphasize my support for 
bipartisan regulatory reform. Indeed, I believe that cost-
benefit analysis and risk assessment are vital to an effective, 
beneficial regulatory process. That is why I supported Senator 
Johnston's amendment to the Safe Drinking Water Act last year, 
offered Senator Roth's bill (S. 291) as a substitute for S. 343 
at subcommittee, and drafted an amendment for full committee 
consideration that drew heavily from the bipartisan Leahy-
Laxalt legislation of 1982 (S. 1080).
    However, while S. 343 purports to streamline regulations, 
it would still undermine the very cost-benefit goals it 
professes to achieve. The petition process alone will open up a 
Pandora's Box of litigation. For example, a single bad actor 
could drown an agency in paperwork in order to delay the 
implementation of a rule--even if virtually the entire 
regulated industry supports the regulation itself. In general, 
the Federal Government should be promoting the efforts of 
progressive businesses, not bolstering the actions of 
renegades, as S. 343 could do.
    Once S. 343 reaches the Senate floor, I look forward to 
working cooperatively with the proponents of the legislation to 
achieve a responsible and streamlined regulatory process.
               X. SUPPLEMENTAL VIEWS OF SENATOR FEINGOLD

    The need for meaningful reform of the Federal regulatory 
process is undeniable. Our farmers, our small businesses and 
our families too often become ensnared in a sea of burdensome 
and sometimes needless government red tape and regulation.
    At the same time, we cannot ignore the need and the 
responsibility to protect our Nation's health, safety and 
environment. Just 2 years ago, a cryptosporidium outbreak in 
the city of Milwaukee's water supply left 104 people dead and 
over 100,000 people seriously ill.
    The clear answer to this quandary--and one that has been 
agreed upon by a wide array of interested parties ranging from 
the Clinton administration to business advocacy groups--is to 
introduce a mix of common sense and sound science to the 
regulatory process. We must find the proper balance between 
adequately safeguarding health and safety protections that give 
us cleaner air, cleaner water and safer products, and granting 
greater relief to those who are being regulated by rules that 
have little or no rational and sensible basis.
    Unfortunately, S. 343 as reported by the Judiciary 
Committee, does not strike that balance. The Minority Views 
accurately enumerate many of the problematic sections of this 
legislation, such as the excessive and unmanageable judicial 
review and overprescriptive ``one-size-fits-all'' peer review 
provisions.
    It is my hope that when this legislation is brought to the 
Senate floor, the majority will recognize that there are 
Senators on both sides of the aisle who support making the 
regulatory process less bureaucratic and less problematic. As 
reflected by the Senate's actions in 1982, as well as the 
recent bipartisan work of the Government Affairs Committee, 
this issue has not been partisan in the past and should not be 
partisan in the future.

                                               Russell D. Feingold.
                              ----------                              

                              ----------                              

                      XI. CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 343, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

                           UNITED STATES CODE

          * * * * * * *

             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

                     PART I--THE AGENCIES GENERALLY
Chapter                                                             Sec.
    1. Organization...........................................       101
     * * * * * * *
    7. Judicial Review........................................       701
    8. Congressional Review of Agency Rulemaking..............       801
    9. Executive Reorganization...............................       901
     * * * * *
                  CHAPTER 5--ADMINISTRATIVE PROCEDURE

          * * * * * * *

Subchapter II--Administrative Procedure

Sec. 551. Definitions

    For the purpose of [this subchapter] this chapter and 
chapters 6, 7, and 8--
  (1) ``agency'' means each authority of the Government of the 
United States, whether or not it is within or subject to review 
by another agency, but does not include--
          * * * * * * *
          (13) ``agency action'' includes the whole or a part 
        of an agency rule, order, license, sanction, relief, or 
        the equivalent or denial thereof, or failure to act; 
        [and]
          (14) ``ex parte communication'' means an oral or 
        written communication not on the public record with 
        respect to which reasonable prior notice to all parties 
        is not given, but it shall not include requests for 
        status reports on any matter or proceeding covered by 
        this subchapter[.]; and
          (15) ``Director'' means the Director of the Office of 
        Management and Budget.

Sec. 552. Public information; agency rules, opinions, orders, records, 
                    and proceedings

    (a) Each agency shall make available to the public 
information as follows:
          (1) Each agency shall separately state and currently 
        publish in the Federal Register for the guidance of the 
        public--
          (A) * * *
          * * * * * * *
          (E) each amendment, revision, or repeal of the 
        foregoing. Except to the extent that a person has 
        actual and timely notice of the terms thereof, a person 
        may not in any manner be required to resort to, or be 
        adversely affected by, a matter required to be 
        published in the Federal Register and not so published. 
        For the purpose of this paragraph, matter reasonably 
        available to the class of persons affected thereby is 
        deemed published in the Federal Register when 
        incorporated by reference therein with the approval of 
        the Director of the Federal Register. In an action 
        brought in a Federal court seeking a civil or criminal 
        penalty for the alleged violation of a rule, including 
        actions pending on the date of enactment of this 
        sentence, no consideration shall be given to any 
        interpretive rule, general statement of policy, or 
        other agency guidance of general or specific 
        applicability; relied upon by the agency in the action, 
        that had not published in the Federal Register or 
        otherwise directly and specifically communicated to the 
        defendant by the agency, or by a State authority to 
        which had been delegated the responsibility for 
        ensuring compliance with the rule, prior to that 
        alleged violation.
          * * * * * * *
[Sec. 553. Rule making]
Sec. 553. Rulemaking

    (a) This section applies to every rulemaking, according to 
the provisions thereof, except to the extent that there is 
involved--
          (1) a matter pertaining to a military or foreign 
        affairs function of the United States;
          (2) a matter relating to the management and personnel 
        practices of an agency;
          (3) an interpretive rule, general statement of 
        policy, guidance, or rule of agency organization, 
        procedure, or practice that is not generally applicable 
        and does not alter or create rights or obligations of 
        persons outside the agency; or
          (4) a rule relating to the acquisition, management, 
        or disposal by an agency of real or personal property, 
        or of services, that is promulgated in compliance with 
        criteria and procedures established by the 
        Administrator of General Services.
    (b)(1) General notice of proposed rulemaking shall be 
published in the Federal Register, unless all persons subject 
thereto are named and either personally served or otherwise 
have actual notice of the proposed rulemaking in accordance 
with law. Each notice of proposed rulemaking shall include--
          (A) a statement of the time, place, and nature of 
        public rulemaking proceedings;
          (B) a succinct explanation of the need for and 
        specific objectives of the proposed rule, including an 
        explanation of the agency's determination of whether or 
        not the rule is a major rule within the meaning of 
        section 621(4);
          (C) an explanation of the specific statutory 
        interpretation under which a rule is proposed, 
        including an explanation of--
                  (i) whether the interpretation is expressly 
                required by the text of the statute; or
                  (ii) if the interpretation is not expressly 
                required by the text of the statute, an 
                explanation that the interpretation is within 
                the range of permissible interpretations of the 
                statute as identified by the agency, and an 
                explanation why the interpretation selected by 
                the agency is the agency's preferred 
                interpretation;
          (D) the proposed provisions of the rule;
          (E) a summary of any initial analysis of the proposed 
        rule required to be prepared or issued pursuant to 
        chapter 6;
          (F) a statement that the agency seeks proposals from 
        the public and from State and local governments for 
        alternative methods to accomplish the objectives of the 
        rulemaking that are more effective or less burdensome 
        than the approach used in the proposed rule;
          (G) a description of any data, methodologies, 
        reports, studies, scientific evaluations, or other 
        similar information available to the agency for the 
        rulemaking, including an identification of each author 
        or source of such information and the purposes for 
        which the agency plans to rely on such information; and
          (H) a statement specifying where the file of the 
        rulemaking proceeding maintained pursuant to subsection 
        (f) may be inspected and how copies of the items in the 
        file may be obtained.
    (2) Except when notice or hearing is required by statute, a 
final rule may be adopted and may become effective without 
prior compliance with this subsection and subsections (c) and 
(f) if--
          (A) the agency for good cause finds that providing 
        notice and public procedure thereon before the rule 
        becomes effective is contrary to an important public 
        interest or is unnecessary due to the insignificant 
        impact of the rule;
          (B) the agency publishes the rule in the Federal 
        Register with such finding and a succinct explanation 
        of the reasons therefor; and
          (C) the agency complies with this subsection and 
        subsections (c) and (f) to the maximum extent feasible 
        prior to the promulgation of the final rule, and fully 
        complies with such provisions as soon as reasonably 
        practicable after the promulgation of the rule.
    (3) Whenever the provisions of a final rule that an agency 
plans to adopt are so different from the provisions of the 
proposed rule that the original notice of proposed rulemaking 
did not fairly apprise the public of the issues ultimately to 
be resolved in the rulemaking or of the substance of the rule, 
the agency shall publish in the Federal Register a notice of 
the final rule the agency plans to adopt, together with the 
information relevant to such rule that is required by the 
applicable provisions of this section and that has not 
previously been published in the Federal Register. The agency 
shall allow a reasonable period for comment on such final rule.
    (c)(1) After providing the notice required by this section, 
the agency shall give interested persons not less than 60 days 
to participate in the rulemaking through the submission of 
written data, views, or arguments.
    (2)(A) To collect relevant information, and to identify and 
elicit full and representative public comment on the 
significant issues of a particular rulemaking, the agency may 
use such other procedures as the agency determines are 
appropriate, including--
          (i) the publication of an advance notice of proposed 
        rulemaking;
          (ii) the provision of notice, in forms which are more 
        direct than notice published in the Federal Register, 
        to persons who would be substantially affected by the 
        proposed rule, but who are unlikely to receive notice 
        of the proposed rulemaking through the Federal 
        Register;
          (iii) the provision of opportunities for oral 
        presentation of data, views, information, or rebuttal 
        arguments at informal public hearings, which may be 
        held in the District of Columbia and other locations;
          (iv) the provision of summaries, explanatory 
        materials, or other technical information in response 
        to public inquiries concerning the issues involved in 
        the rulemaking; and
          (v) the adoption or modification of agency procedural 
        rules to reduce the cost or complexity of participation 
        in a rulemaking.
    (B) The decision of an agency to use or not to use such 
other procedures in a rulemaking pursuant to this paragraph 
shall not be subject to judicial review.
    (3) To ensure an orderly and expeditious proceeding, an 
agency may establish reasonable procedures to regulate the 
course of informal public hearings under paragraphs (1) and 
(2), including the designation of representatives to make oral 
presentations or engage in direct or cross-examination on 
behalf of several parties with a common interest in a 
rulemaking. Transcripts shall be made of all such public 
hearings.
    (4) An agency shall publish any final rule it adopts in the 
Federal Register, together with a concise statement of the 
basis and purpose of the rule and a statement of when the rule 
may become effective. The statement of basis and purpose shall 
include--
          (A) an explanation of the need for, objectives of, 
        and specific statutory authority for, the rule;
          (B) a discussion of, and response to, any significant 
        factual or legal issues raised by the comments on the 
        proposed rule prior to its promulgation, including a 
        description of the reasonable alternatives to the rule 
        proposed by the agency and by interested persons, and 
        the reasons why each such alternative was rejected;
          (C)(i) an explanation of whether the specific 
        statutory interpretation upon which the rule is based 
        is expressly required by the text of the statute; or
          (ii) if the specific statutory interpretation upon 
        which the rule is based is not expressly required by 
        the text of the statute, an explanation that the 
        interpretation is within the range of permissible 
        interpretations of the statute as identified by the 
        agency, and why the agency has rejected other 
        interpretations proposed in comments to the agency;
          (D) an explanation of how the factual conclusions 
        upon which the rule is based are substantially 
        supported in the rulemaking file maintained pursuant to 
        subsection (f); and
          (E) a summary of any final analysis of the rule 
        required to be prepared or issued pursuant to chapter 
        6.
  (5) The provisions of sections 556 and 557 shall apply in 
lieu of this subsection in the case of rules that are required 
by statute to be made on the record after opportunity for an 
agency hearing.
  (d) An agency shall publish the final rule in the Federal 
Register not less than 60 days before the effective date of 
such rule. An agency may make a rule effective in less than 60 
days after publication in the Federal Register if the rule 
grants or recognizes an exemption, relieves a restriction, or 
if the agency for good cause finds that such a delay in the 
effective date would be contrary to an important public 
interest and publishes such finding and an explanation of the 
reasons therefor, with the final rule.
  (e)(1) Each agency shall give an interested person the right 
to petition for the issuance, amendment, or repeal of a rule.
  (2) Each person subject to a major rule may petition--
          (A) for the issuance, amendment, or repeal of such 
        rule;
          (B) for the amendment or repeal of an interpretive 
        rule or general statement of policy or guidance;
          (C) for an interpretation regarding the meaning of 
        the rule, interpretive rule, general statement of 
        policy, or guidance; and
          (D) for a variance or exemption from the terms of the 
        rule.
    (3)(A) Any person subject to a rule, interpretive rule, 
general statement of policy, or guidance may petition an agency 
for the amendment or repeal of any rule, interpretive rule, 
general statement of policy, or guidance.
    (B) If such petition presents a reasonable likelihood that, 
considering its future impact, the rule, interpretive rule, 
general statement of policy, or guidance is, or has the effect 
of, a major rule within the meaning of section 621(4), and its 
amendment or repeal is required to satisfy the decisional 
criteria of section 624, the agency shall grant the petition 
and shall, within one year, conduct a cost-benefit analysis 
under chapter 6.
    (C) If, considering its future impact, the rule, 
interpretive rule, general statement of policy, or guidance 
does not satisfy the requirements of chapter 6, including the 
decisional criteria set forth in section 624, the agency shall 
take immediate action either to revoke or to amend the rule, 
interpretive rule, general statement of policy, or guidance to 
conform it to the requirements of chapter 6, including the 
decisional criteria in section 624.
    (4) The agency shall grant or deny a petition made pursuant 
to this subsection, and give written notice of its 
determination to the petitioner, with reasonable promptness, 
but in no event later than 180 days after the petition was 
received by the agency. The written notice of the agency''s 
determination shall include an explanation of the determination 
and a response to each factual and legal claim that forms the 
basis of the petition. A decision to deny a petition shall be 
subject to judicial review immediately upon denial, as final 
agency action under the statute granting the agency authority 
to carry out its action.
    (5) Following a decision to grant or deny a petition to 
conduct a cost-benefit analysis for a rule, interpretive rule, 
general statement of policy, or guidance under this subsection, 
no further petition for such rule, interpretive rule, general 
statement of policy, or guidance, submitted by the same person, 
shall be considered by any agency unless such petition is based 
on a change in a fact, circumstance, or provision of law 
underlying or otherwise related to the rule, interpretive rule, 
general statement of policy, or guidance occurring since the 
initial petition was granted or denied, that warrants the 
amendment or repeal of the rule, interpretive rule, general 
statement of policy, or guidance.
    (f)(1) The agency shall maintain a file for each rulemaking 
proceeding conducted pursuant to this section and shall 
maintain a current index to such file. The file and the 
material excluded from the file pursuant to paragraph (4) shall 
constitute the rulemaking record for purposes of judicial 
review. Except as provided in paragraph (4), the file shall be 
made available to the public beginning on the date on which the 
agency makes an initial publication concerning the rule.
    (2) The rulemaking file shall include--
          (A) the notice of proposed rulemaking, any supplement 
        to, or modification or revision of, such notice, and 
        any advance notice of proposed rulemaking;
          (B) copies of all written comments received on the 
        proposed rule;
          (C) a transcript of any public hearing conducted on 
        the rulemaking;
          (D) copies, or an identification of the place at 
        which copies may be obtained, of all material described 
        by the agency pursuant to subsection (b)(1)(G) and of 
        other factual and methodological material not described 
        by the agency pursuant to such subsection that pertains 
        directly to the rulemaking and that was available to 
        the agency in connection with the rulemaking, or that 
        was submitted to or prepared by or for the agency in 
        connection with the rulemaking; and
          (E) any statement, description, analysis, or any 
        other material that the agency is required to prepare 
        or issue in connection with the rulemaking, including 
        any analysis prepared or issued pursuant to chapter 6.
    (3) The agency shall place the materials described in 
paragraph (2) in the file as soon as practicable after such 
materials become available to the agency.
    (4) The file required by paragraph (1) need not include any 
material that need not be made available to the public under 
section 552(b)(4) if the agency includes in such file a 
statement that notes the existence of such material and the 
basis upon which the material is exempt from public disclosure 
under such section. The agency may not substantially rely on 
any such material in formulating a rule unless it makes the 
substance of such material available for adequate comment by 
interested persons. The agency may use summaries, aggregations 
of data, or other appropriate mechanisms to protect the 
confidentiality of such material to the maximum extent 
possible.
    (5) No court shall hold unlawful or set aside an agency 
rule because of a violation of this subsection unless the court 
finds that such violation has precluded fair public 
consideration of a material issue of the rulemaking taken as a 
whole. Judicial review of compliance or noncompliance with this 
subsection shall be limited to review of action or inaction on 
the part of an agency.
    (g) Notwithstanding any other provision of law, this 
section shall apply to and supplement the procedures governing 
rulemaking under statutes that are not generally subject to 
this section.
    (h) Nothing in this section authorizes the use of 
appropriated funds available to any agency to pay the 
attorney's fees or other expenses of persons participating or 
intervening in agency proceedings.
          * * * * * * *
            [CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS

[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 analyses.
[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.]
             CHAPTER 6--THE ANALYSIS OF REGULATORY FUNCTIONS

                     subchapter i--regulatory analysis

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--analysis of agency rules

621. Definitions.
622. Rulemaking cost-benefit analysis.
623. Petition for cost-benefit analysis.
624. Decisional criteria.
625. Judicial review.
626. Deadlines for rulemaking.
627. Agency review of rules.
628. Special rule.

                     subchapter III--risk assessments

631. Definitions.
632. Applicability.
633. Principles for risk assessment.
634. Principles for risk characterization and communication.
635. Requirement to prepare risk assessment.
636. Requirements for assessments.
637. Regulations; plan for assessing new information.
638. Rule of construction.
639. Regulatory priorities.
640. Establishment of program.

                    SUBCHAPTER IV--EXECUTIVE OVERSIGHT

641. Procedures.
642. Promulgation and adoption.
643. Delegation of authority.
644. Judicial review.
                   Subchapter I--Regulatory Analysis
Sec. 601.  Definitions.

    For purposes of this chapter--
          * * * * * * *

[Sec. 611. Judicial review

    [(a) Except as otherwise provided in subsection (b), any 
determination by an agency concerning the applicability of any 
of the provisions of this chapter to any action of the agency 
shall not be subject to judicial review.
    [(b) Any regulatory flexibility analysis prepared under 
sections 603 and 604 of the title and the compliance or 
noncompliance of the agency with the provisions of this chapter 
shall not be subject to judicial review. When an action for 
judicial review of the rule is instituted, any regulatory 
flexibility analysis for such rule shall constitute part of the 
whole record of agency action in connection with the review.
    [(c) Nothing in this section bars judicial review of any 
other impact statement of similar analysis required by any 
other law if judicial review of such statement of analysis is 
otherwise provided by law.]
Sec. 611. Judicial review

  (a)(1) Except as provided in paragraph (2), not later than 2 
years after the effective date of a final rule with respect to 
which an agency--
          (A) certified, pursuant to section 605(b), that such 
        rule would not have a significant economic impact on a 
        substantial number of small entities;
          (B) prepared a final regulatory flexibility analysis 
        pursuant to section 604; or
          (C) did not prepare an initial regulatory flexibility 
        analysis pursuant to section 603 or a final regulatory 
        flexibility analysis pursuant to section 604 except as 
        permitted by sections 605 and 608,
an affected small entity may petition for the judicial review 
of such certification, analysis, or lack of analysis, in 
accordance with this subsection. A court having jurisdiction to 
review such rule for compliance with section 553 or under any 
other provision of law shall have jurisdiction to review such 
certification or analysis.
  (2)(A) Notwithstanding any other provision of law, an 
affected small entity shall have 2 years to challenge such 
certification, analysis or lack of analysis.
  (B) If an agency delays the issuance of a final regulatory 
flexibility analysis pursuant to section 608(b), a petition for 
judicial review under this subsection shall be filed not later 
than 2 years after the date the analysis is made available to 
the public.
  (3) For purposes of this subsection, the term ``affected 
small entity'' means a small entity that is or will be 
adversely affected by the final rule.
  (4) Nothing in this subsection shall be construed to affect 
the authority of any court to stay the effective date of any 
rule or provision thereof under any other provision of law.
    (5)(A) Notwithstanding section 605, if the court 
determines, on the basis of the rulemaking record, that there 
is substantial evidence to conclude that the rule would have a 
significant economic impact on a substantial number of small 
entities, the court shall order the agency to prepare a final 
regulatory flexibility analysis pursuant to section 604.
    (B) If the agency prepared a final regulatory flexibility 
analysis, the court may order the agency to take corrective 
action consistent with section 604 if the court determines, on 
the basis of the rulemaking record, that the final regulatory 
flexibility analysis was prepared by the agency without 
complying with section 604.
    (6) The court may stay the rule or grant such other relief 
as it deems appropriate if, by the end of the 90-day period 
beginning on the date of the order of the court pursuant to 
paragraph (5) (or such longer period as the court may provide), 
the agency fails, as appropriate--
          (A) to prepare the analysis required by section 604; 
        or
          (B) to take corrective action consistent with section 
        604.
    (7) In making any determination or granting any relief 
authorized by this subsection, the court shall take due account 
of the rule of prejudicial error.
    (b) In an action for the judicial review of a rule, any 
regulatory flexibility analysis for such rule (including an 
analysis prepared or corrected pursuant to subsection (a)(5)) 
shall constitute part of the whole record of agency action in 
connection with such review.
    (c) Nothing in this section bars judicial review of any 
other impact statement or similar analysis required by any 
other law if judicial review of such statement or analysis is 
otherwise provided by law.
          * * * * * * *
                SUBCHAPTER II--ANALYSIS OF AGENCY RULES

Sec. 621. Definitions

    For purposes of this subchapter--
          (1) the term ``benefit'' means the reasonably 
        identifiable significant incremental benefits, 
        including social and economic benefits, that are 
        expected to result directly or indirectly from 
        implementation of a rule or an alternative to a rule;
          (2) the term ``cost'' means the reasonably 
        identifiable significant incremental costs and adverse 
        effects, including social and economic costs, reduced 
        consumer choice, substitution effects, and impeded 
        technological advancement, that are expected to result 
        directly or indirectly from implementation of, or 
        compliance with, a rule or an alternative to 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 the significance and complexity of 
        the decision and any need for expedition;
          (4)(A) the term ``major rule'' means--
                  (i) a rule or a group of closely related 
                rules that the agency proposing the rule, the 
                Director, or a designee of the President 
                reasonably determines is likely to have a gross 
                annual effect on the economy of $50,000,000 or 
                more in reasonably quantifiable increased 
                direct and indirect costs, or has a significant 
                impact on a sector of the economy; or
                  (ii) a rule or a group of closely related 
                rules that is otherwise designated a major rule 
                by the agency proposing the rule, the Director, 
                or a designee of the President on the ground 
                that the rule is likely to result in--
                          (I) a substantial increase in costs 
                        or prices for wage earners, consumers, 
                        individual industries, nonprofit 
                        organizations, Federal, State, or local 
                        government agencies, or geographic 
                        regions;
                          (II) significant adverse effects on 
                        competition, employment, investment, 
                        productivity, innovation, health, 
                        safety, or the environment, or the 
                        ability of enterprises whose principal 
                        places of business are in the United 
                        States to compete in domestic or export 
                        markets;
                          (III) a serious inconsistency or 
                        interference with an action taken or 
                        planned by another agency;
                          (IV) the material alteration of the 
                        budgetary impact of entitlements, 
                        grants, user fees, or loan programs, or 
                        the rights and obligations of 
                        recipients thereof; or
                          (V) disproportionate costs to a class 
                        of persons within the regulated sector, 
                        and relatively severe economic 
                        consequences for the class;
          (B) the term ``major rule'' does not include--
                  (i) a rule that involves the internal revenue 
                laws of the United States; or
                  (ii) a rule or agency action that authorizes 
                the introduction into, or removal from, 
                commerce, or recognizes the marketable status, 
                of a product;
          (5) the term ``market-based mechanism'' means a 
        regulatory program that--
                  (A) imposes legal accountability for the 
                achievement of an explicit regulatory objective 
                on each regulated person;
                  (B) affords maximum flexibility to each 
                regulated person in complying with mandatory 
                regulatory objectives, which flexibility shall, 
                where feasible and appropriate, include, but 
                not be limited to, the opportunity to transfer 
                to, or receive from, other persons, including 
                for cash or other legal consideration, 
                increments of compliance responsibility 
                established by the program; and
                  (C) permits regulated persons to respond 
                freely to changes in general economic 
                conditions and in economic circumstances 
                directly pertinent to the regulatory program 
                without affecting the achievement of the 
                program''s explicit regulatory mandates;
          (6) the term ``performance-based standards'' means 
        requirements, expressed in terms of outcomes or goals 
        rather than mandatory means of achieving outcomes or 
        goals, that permit the regulated entity discretion to 
        determine how best to meet specific requirements in 
        particular circumstances;
          (7) the term ``reasonable alternatives'' means the 
        range of regulatory options that the agency has 
        discretion to consider under the text of the statute 
        granting rulemaking authority, interpreted, to the 
        maximum extent possible, to embrace the broadest range 
        of options that satisfy the decisional criteria of 
        section 624(b); and
          (8) the term ``rule'' has the same meaning as in 
        section 551(4), and--
                  (A) includes any statement of general 
                applicability that alters or creates rights or 
                obligations of persons outside the agency; and
                  (B) does not include--
                          (i) a rule of particular 
                        applicability that approves or 
                        prescribes the future rates, wages, 
                        prices, services, corporate or 
                        financial structures, reorganizations, 
                        mergers, acquisitions, accounting 
                        practices, or disclosures bearing on 
                        any of the foregoing;
                          (ii) a rule relating to monetary 
                        policy or 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), credit unions, Federal Home Loan 
                        Banks, government sponsored housing 
                        enterprises, farm credit institutions, 
                        foreign banks that operate in the 
                        United States and their affiliates, 
                        branches, agencies, commercial lending 
                        companies, or representative offices, 
                        (as those terms are defined in section 
                        1 of the International Banking Act of 
                        1978); or
                          (iii) a rule relating to the payment 
                        system or the protection of deposit 
                        insurance funds or the farm credit 
                        insurance fund.
Sec. 622. Rulemaking cost-benefit analysis

    (a) Prior to publishing notice of a proposed rulemaking for 
any rule (or, in the case of a notice of a proposed rulemaking 
that has been published on or before the date of enactment of 
this subchapter, not later than 30 days after such date of 
enactment), each agency shall determine whether the rule is or 
is not a major rule within the meaning of section 621(4)(A)(i) 
and, if it is not, whether it should be designated a major rule 
under section 621(4)(A)(ii). For the purpose of any such 
determination or designation, a group of closely related rules 
shall be considered as one rule.
    (b)(1) If an agency has determined that a rule is not a 
major rule within the meaning of section 621(4)(A)(i) and has 
not designated the rule a major rule within the meaning of 
section 621(4)(A)(ii), the Director or a designee of the 
President may, as appropriate, determine that the rule is a 
major rule or designate the rule a major rule not later than 30 
days after the publication of the notice of proposed rulemaking 
for the rule (or, in the case of a notice of proposed 
rulemaking that has been published on or before the date of 
enactment of this subchapter, not later than 60 days after such 
date of enactment).
    (2) Such determination or designation shall be published in 
the Federal Register, together with a succinct statement of the 
basis for the determination or designation.
    (c)(1)(A) When the agency publishes a notice of proposed 
rulemaking for a major rule, the agency shall issue and place 
in the rulemaking file an initial cost-benefit analysis, and 
shall include a summary of such analysis in the notice of 
proposed rulemaking.
    (B)(i) When the Director or a designee of the President has 
published a determination or designation that a rule is a major 
rule after the publication of the notice of proposed rulemaking 
for the rule, the agency shall promptly issue and place in the 
rulemaking file an initial cost-benefit analysis for the rule 
and shall publish in the Federal Register a summary of such 
analysis.
    (ii) Following the issuance of an initial cost-benefit 
analysis under clause (i), the agency shall give interested 
persons an opportunity to comment in the same manner as if the 
initial cost-benefit analysis had been issued with the notice 
of proposed rulemaking.
    (2) Each initial cost-benefit analysis shall contain--
          (A) an analysis of the benefits of the proposed rule, 
        and an explanation of how the agency anticipates each 
        benefit will be achieved by the proposed rule, 
        including a description of the persons or classes of 
        persons likely to receive such benefits;
          (B) an analysis of the costs of the proposed rule, 
        and an explanation of how the agency anticipates each 
        such cost will result from the proposed rule, including 
        a description of the persons or groups of persons 
        likely to bear such costs;
          (C) an identification (including an analysis of the 
        costs and benefits) of reasonable alternatives that the 
        agency has discretion to adopt under the decisional 
        criteria of the statute granting the rulemaking 
        authority, as supplemented by the decisional criteria 
        in section 624, for achieving identified benefits, 
        including, where appropriate, alternatives that--
                  (i) require no government action;
                  (ii) will accommodate differences among 
                geographic regions and among persons with 
                differing levels of resources with which to 
                comply; and
                  (iii) employ voluntary or performance-based 
                standards, market-based mechanisms, or other 
                flexible regulatory alternatives that permit 
                the greatest flexibility in achieving the 
                identified benefits of the proposed rule;
          (D) an assessment of the feasibility of establishing 
        a regulatory program that operates through the 
        application of voluntary programs, voluntary consensus 
        standards, performance-based standards, market-based 
        mechanisms, or other flexible regulatory alternatives;
          (E) in any case in which the proposed rule is based 
        on one or more scientific evaluations, scientific 
        information, or a risk assessment, or is subject to the 
        risk assessment requirements of subchapter III, a 
        description of the actions undertaken by the agency to 
        verify the quality, reliability, and relevance of such 
        scientific evaluations or scientific information in 
        accordance with the requirements of subchapter III;
          (F) an analysis, to the extent practicable, of the 
        effect of the rule on--
                  (i) the cumulative burden of compliance with 
                the rule and other existing regulations on 
                persons complying with it; and
                  (ii) the net effect on small businesses with 
                fewer than 100 employees, including employment 
                in such businesses;
          (G) an analysis of whether the identified benefits of 
        the proposed rule justify the identified costs of the 
        proposed rule, and an analysis of whether the proposed 
        rule will achieve greater net benefits or, where 
        applicable, lower net costs, than any of the 
        alternatives to the proposed rule, including 
        alternatives identified in accordance with 
        subparagraphs (C) and (D).
    (d)(1) When the agency publishes a final major rule, the 
agency shall also issue and place in the rulemaking file a 
final cost-benefit analysis, and shall include a summary of the 
analysis in the statement of basis and purpose.
    (2) Each final cost-benefit analysis shall contain--
          (A) a description and comparison of the benefits and 
        costs of the rule and of the reasonable alternatives to 
        the rule described in the rulemaking, including the 
        flexible regulatory alternatives identified pursuant to 
        subsection (c)(2) (C) and (D); and
          (B) an analysis, based upon the rulemaking record 
        considered as a whole, of--
                  (i) whether the benefits of the rule justify 
                the costs of the rule; and
                  (ii) whether the rule will achieve greater 
                net benefits or, where section 624(c) applies, 
                lower net costs, than any of the reasonable 
                alternatives that the agency has discretion to 
                adopt under the decisional criteria of the 
                statute granting the rulemaking authority, as 
                supplemented by the decisional criteria in 
                section 624, for achieving identified benefits, 
                including, where appropriate, alternatives 
                referred to in subsection (c)(2) (C) and (D).
    (e)(1)(A) The analysis of the benefits and costs of a 
proposed and a final rule required under this section shall 
include, to the extent feasible, a quantification or numerical 
estimate of the quantifiable benefits and costs. Such 
quantification or numerical estimate shall be made in the most 
appropriate unit of measurement, using comparable assumptions, 
including time periods, shall specify the ranges of 
predictions, and shall explain the margins of error involved in 
the quantification methods and in the estimates used. An agency 
shall describe the nature and extent of the nonquantifiable 
benefits and costs of a final rule pursuant to this section in 
as precise and succinct a manner as possible. An agency shall 
not be required to make such evaluation primarily on a 
mathematical or numerical basis.
    (B) Where practicable and appropriate, the description of 
the benefits and costs of a proposed and final rule required 
under this section shall describe such benefits and costs on an 
industry by industry basis.
    (2)(A) In evaluating and comparing costs and benefits and 
in evaluating the risk assessment information developed 
pursuant to subchapter III, the agency shall not rely on cost, 
benefit, or risk assessment information that is not accompanied 
by relevant information that would enable the agency and other 
persons interested in the rulemaking to assess the accuracy, 
reliability, and uncertainty factors applicable to such 
information.
    (B) The agency evaluations of the relationships of the 
benefits of a proposed and final rule to its costs shall be 
clearly articulated in accordance with this section.
    (f) The preparation of the initial or final cost-benefit 
analysis required by this section shall only be performed by an 
officer or employee of the agency. The preceding sentence shall 
not preclude a person outside the agency from gathering data or 
information to be used by the agency in preparing any such 
cost-benefit analysis or from providing an explanation 
sufficient to permit the agency to analyze such data or 
information. If any such data or information is gathered or 
explained by a person outside the agency, the agency shall 
specifically identify in the initial or final cost-benefit 
analysis the data or information gathered or explained and the 
person who gathered or explained it, and shall describe the 
arrangement by which the information was procured by the 
agency, including the total amount of funds expended for such 
procurement.

Sec. 623. Petition for cost-benefit analysis

    (a)(1) Any person subject to a major rule may petition the 
relevant agency, the Director, or a designee of the President 
to perform a cost-benefit analysis under this subchapter for 
the major rule, including a major rule in effect on the date of 
enactment of this subchapter for which a cost-benefit analysis 
pursuant to such subchapter has not been performed, regardless 
of whether a cost-benefit analysis was previously performed to 
meet requirements imposed before the date of enactment of this 
subchapter.
    (2) The petition shall identify with reasonable specificity 
the major rule to be reviewed and the amendment or repeal 
requested.
    (3) The agency, the Director, or a designee of the 
President shall grant the petition if the petition shows that 
there is a reasonable likelihood that, considering the future 
impact of the rule--
          (A) the rule is a major rule; and
          (B) the proposed amendment or repeal of the rule is 
        required to satisfy the decisional criteria of section 
        624.
    (4) A decision to grant, or final agency action to deny, a 
petition under this subsection shall be made not later than 180 
days after submittal.
    (5) Following a decision to grant or deny a petition to 
conduct a cost-benefit analysis for a rule under this 
subsection, no further petition for such rule, submitted by the 
same person, shall be considered by any agency, the Director, 
or a designee of the President, unless such petition is based 
on a change in a fact, circumstance, or provision of law 
underlying or otherwise related to the rule occurring since the 
initial petition was granted or denied, that warrants the 
amendment or repeal of the rule.
    (b) Not later than 1 year after the date on which a 
petition has been granted for a major rule under subsection 
(a), the agency shall conduct a cost-benefit analysis in 
accordance with this subchapter, and shall propose amendments 
to, or repeal of, the rule if required by the decisional 
criteria set forth in section 624.
    (c) For purposes of this section, the term major rule means 
any major rule or portion thereof.
    (d)(1) Any person may petition the relevant agency to 
withdraw, as contrary to this subchapter, any agency 
interpretive rule, guidance, or general statement of policy 
that would have the effect of a major rule if the interpretive 
rule, guidance, or general statement of policy had been adopted 
as a rule.
    (2) The petition shall identify with reasonable specificity 
why the interpretive rule, guidance, or general statement of 
policy would have the effect of a major rule if adopted as a 
rule.
    (3) The agency shall grant the petition if the petition 
shows that there is a reasonable likelihood that the guidance 
or general statement of policy would have the effect of a major 
rule if adopted as a rule.
    (4) A decision to grant, or final agency action to deny, a 
petition under this subsection shall be made not later than 180 
days after the petition is submitted.
    (e) For each interpretative rule, guidance, or general 
statement of policy for which a petition has been granted under 
subsection (d), the agency shall--
          (1) immediately withdraw the interpretive rule, 
        guidance, or general statement of policy; or
          (2) within one year, propose a rule in compliance 
        with this subchapter incorporating, with such 
        modifications as the agency considers appropriate, the 
        regulatory standards or criteria contained in such 
        interpretive rule, general statement of policy, or 
        guidance.
    (f) Upon withdrawing an interpretive rule, guidance, or 
general statement of policy, or where such interpretive rule, 
guidance, or general statement of policy is not withdrawn and a 
final rule is not promulgated within 2 years of granting a 
petition under subsection (d), the agency shall be prohibited 
from enforcing against any person the regulatory standards or 
criteria contained in such interpretive rule, guidance, or 
general statement of policy, unless and until they are included 
in a rule promulgated in accordance with this subchapter.
    (g)(1) Any person subject to a major rule may petition the 
relevant agency to modify or waive the specific requirements of 
the major rule and to authorize such person to demonstrate 
compliance through alternative means not otherwise permitted by 
the major rule. The petition shall identify with reasonable 
specificity the requirements for which the waiver is sought and 
the alternative means of compliance being proposed.
    (2) The agency shall grant the petition if the petition 
shows that there is a reasonable likelihood that the proposed 
alternative means of compliance would achieve the specific 
benefits of the major rule with an equivalent or greater level 
of protection of health, safety, and the environment than would 
be provided by the major rule, and would not impose an undue 
burden on the agency that would be responsible for enforcing 
such alternative means of compliance.
    (3) Following a decision to grant or deny a petition under 
this subsection, no further petition for such rule, submitted 
by the same person, shall be considered by any agency unless 
such petition is based on a change in a fact, circumstance, or 
provision of law underlying or otherwise related to the rule 
occurring since the initial petition was granted or denied, 
that warrants the granting of such further petition.
Sec. 624. Decisional criteria

    (a) The requirements of this section shall supplement any 
other decisional criteria otherwise provided by law.
    (b) Subject to subsection (c), no final rule subject to 
this subchapter shall be promulgated unless the agency finds 
that--
          (1) the potential benefits from the rule justify the 
        potential costs of the rule; and
          (2) the rule will produce the most cost-effective 
        result of any of the reasonable alternatives that the 
        agency has discretion to adopt under the decisional 
        criteria of the statute granting the rulemaking 
        authority.
    (c) If a statute requires or permits that a rule be 
promulgated and that rule cannot, applying the express 
decisional criteria in the statute, satisfy the criteria 
provided in subsection (b), the agency shall not promulgate the 
rule unless the rule imposes--
          (1) lower costs than any of the reasonable 
        alternatives; or
          (2) the least costs taking into account benefits that 
        the agency has discretion to adopt under the decisional 
        criteria of the statute granting the rulemaking 
        authority.
    (d) If an agency promulgates a rule that is subject to 
subsection (c), the agency shall prepare a written explanation 
of why the agency was required to promulgate a rule with 
potential costs that were not justified by the potential 
benefits and shall transmit that explanatio nalong with the 
final cost-benefit analysis to Congress when the final rule is 
promulgated.

Sec. 625. Judicial review

    (a) Each court with jurisdiction to review final agency 
action under the statute granting the agency authority to 
conduct the rulemaking shall have jurisdiction to review final 
agency action under this subchapter.
    (b)(1) Any cost-benefit analysis of, or risk assessment 
concerning, a rule shall constitute part of the whole 
rulemaking record of agency action for the purpose of judicial 
review and shall be considered by a court in determining the 
legality of the agency action, but only to the extent that it 
relates to the agency''s decisional responsibilities under 
section 624 or the statute granting the agency authority to 
take the agency action.
    (2) No analysis required by this subchapter shall be 
subject to judicial review separate or apart from judicial 
review of the agency action to which it relates.
    (3) The court shall apply the same standards of judicial 
review that govern the review of agency findings under the 
statute granting the agency authority to take the action.
    (4) The court shall set aside agency action that fails to 
satisfy the decisional criteria of section 624, applying the 
applicable judicial review standards.

Sec. 626. Deadlines for rulemaking

    (a) Beginning on the date of enactment of this section, all 
deadlines in statutes that require agencies to propose or 
promulgate any rule subject to this subchapter shall be 
suspended until such time as the requirements of this 
subchapter are satisfied.
    (b) Beginning on the date of enactment of this section, the 
jurisdiction of any court of the United States to enforce any 
deadline that would require an agency to propose or promulgate 
a rule subject to this chapter shall be suspended until such 
time as the requirements of this subchapter are satisfied.
    (c) In any case in which the failure to promulgate a rule 
by a deadline would create an obligation to regulate through 
individual adjudications by another deadline, the deadline for 
such regulation shall be suspended to allow the requirements of 
this subchapter to be satisfied.

Sec. 627. Agency review of rules

    (a)(1)(A) Not later than 9 months after the date of 
enactment of this section, each agency shall prepare and 
publish in the Federal Register a proposed schedule for the 
review, in accordance with this section, of--
          (i) each rule of the agency that is in effect on such 
        effective date and which, considering its future 
        impact, would be a major rule under this subchapter;
          (ii) each rule of the agency that is inconsistent or 
        incompatible with, or duplicative of, any other 
        obligation or requirement established by any Federal 
        statute, rule, or other agency statement, 
        interpretation, or action that has the force of law; 
        and
          (iii) each rule of the agency in effect on the date 
        of enactment of this section (in addition to the rules 
        described in clauses (i) and (ii)) that the agency has 
        selected for review.
    (B) Each proposed schedule required by subparagraph (A) 
shall include--
          (i) a brief explanation of the reasons the agency 
        considers each rule on the schedule to be a major rule 
        under section 621(4)(A), or the reasons why the agency 
        selected the rule for review;
          (ii) a date set by the agency, in accordance with 
        subsection (b)(1), for the completion of the review of 
        each such rule; and
          (iii) a statement that the agency requests comments 
        from the public on the proposed schedule.
    (C) The agency shall set a date to initiate review of each 
rule on the schedule in a manner that will ensure the 
simultaneous review of related items and that will achieve a 
reasonable distribution of reviews over the period of time 
covered by the schedule.
    (2) Not later than 90 days before publishing in the Federal 
Register the proposed schedule required under paragraph (1), 
each agency shall make the proposed schedule available to the 
Director or a designee of the President, or to the Vice 
President or other officer to whom oversight authority has been 
delegated under section 643. The President or that officer may 
select for review in accordance with this section any 
additional rule.
    (3) Not later than 1 year after the date of enactment of 
this section, each agency shall publish in the Federal Register 
a final schedule for the review of the rules referred to in 
paragraphs (1) and (2). Each agency shall publish with the 
final schedule the response of the agency to comments received 
concerning the proposed schedule.
    (b)(1) Except as explicitly provided otherwise by statute, 
the agency shall, pursuant to subsections (c) through (e), 
review--
          (A) each rule on the schedule promulgated pursuant to 
        subsection (a);
          (B) each major rule under section 621(4) promulgated, 
        amended, or otherwise renewed by an agency after the 
        date of the enactment of this section; and
          (C) each rule promulgated after the date of enactment 
        of this section that the President or the officer 
        designated by the President selects for review pursuant 
        to subsection (a)(2).
    (2) Except as provided in subsection (f)--
          (A) in the case of a regulation that takes effect 
        after the date of enactment of this section, the 
        regulation shall terminate on the date that is 5 years 
        after the date on which the regulation takes effect, 
        unless the review required by this section has been 
        completed by the date that is 5 years after the date on 
        which the regulation takes effect; and
          (B) in the case of a regulation in effect on the date 
        of enactment of this section, the regulation shall 
        terminate on the date that is 7 years after the date of 
        enactment of the Regulatory Reform Act of 1995, unless 
        the review required by this section has been completed 
        by the date that is 7 years after the date of enactment 
        of the Regulatory Reform Act of 1995.
  (c) An agency shall publish in the Federal Register a notice 
of its proposed action under this section with respect to a 
rule being reviewed. The notice shall include--
          (1) an identification of the specific statutory 
        authority under which the rule was promulgated and an 
        explanation of whether the agency's interpretation of 
        the statute is expressly required by the current text 
        of that statute or, if not, an explanation that the 
        interpretation is within the range of permissible 
        interpretations of the statute as identified by the 
        agency, and an explanation why the interpretation 
        selected by the agency is the agency''s preferred 
        interpretation;
          (2) an analysis of the benefits and costs of the rule 
        during the period in which it has been in effect;
          (3) an explanation of the proposed agency action with 
        respect to the rule, including action to repeal or 
        amend the rule to resolve inconsistencies or conflicts 
        with any other obligation or requirement established by 
        any Federal statute, rule, or other agency statement, 
        interpretation, or action that has the force of law; 
        and
          (4) a statement that the agency seeks proposals from 
        the public for modifications or alternatives to the 
        rule which may accomplish the objectives of the rule in 
        a more effective or less burdensome manner.
  (d) If an agency proposes to repeal or amend a rule under 
review pursuant to this section, the agency shall, after 
issuing the notice required by subsection (c), comply with the 
provisions of this chapter, chapter 5, and any other applicable 
law. The requirements of such provisions and related 
requirements shall apply to the same extent and in the same 
manner as in the case of a proposed agency action to repeal or 
amend a rule that is not taken pursuant to the review required 
by this section.
  (e) If an agency proposes to renew without amendment a rule 
under review pursuant to this section, the agency shall--
          (1) give interested persons not less than 60 days 
        after the publication of the notice required by 
        subsection (c) to comment on the proposed renewal; and
          (2) publish in the Federal Register notice of the 
        renewal of such rule, an explanation of the continued 
        need for the rule, and, if the renewed rule is a major 
        rule under section 621(4), an explanation of how the 
        rule complies with section 624.
  (f) Any agency, which for good cause finds that compliance 
with this section with respect to a particular rule during the 
period provided in subsection (b) is contrary to an important 
public interest, may request the President, or an officer 
designated by the President, to establish a period longer than 
5 years, in the case of a regulation that takes effect after 
the date of enactment of this section, or 7 years, in the case 
of a regulation in effect on the date of enactment of this 
section, for the completion of the review of such rule. The 
President or that officer may extend the period for review of a 
rule to a total period of not more than 10 years. Such 
extension shall be published in the Federal Register with an 
explanation of the reasons therefor.
  (g) In any case in which an agency has not completed the 
review of a rule within the period prescribed by subsection (b) 
or (f) of this section, the agency shall immediately publish in 
the Federal Register a notice proposing to issue the rule under 
subsection (c), and shall complete proceedings pursuant to 
subsection (d) or (e) not later than 180 days after the date on 
which the review was required to be completed under subsection 
(b) or (f).
  (h) Nothing in this section shall relieve any agency from its 
obligation to respond to a petition to issue, amend, or repeal 
a rule, for an interpretation regarding the meaning of a rule, 
or for a variance or exemption from the terms of a rule, 
submitted pursuant to any other provision of law.

Sec. 628. Special rule

  Notwithstanding any other provision of the Comprehensive 
Regulatory Reform Act of 1995, or the amendments made by such 
Act, for purposes of this subchapter and subchapter IV, the 
head of each appropriate Federal banking agency (as defined in 
section 3(q) of the Federal Deposit Insurance Act), the 
National Credit Union Administration, the Federal Housing 
Finance Board, the Office of Federal Housing Enterprise 
Oversight, and the Farm Credit Administration, shall have 
authority with respect to such agency that otherwise would be 
provided under such subchapters to the Director, a designee of 
the President, Vice President, or any officer designated or 
delegated with authority under such subchapters.
                    SUBCHAPTER III--RISK ASSESSMENTS

Sec. 631. Definitions

    For purposes of this subchapter--
          (1) the term ``benefit'' has the meaning given such 
        term in section 621(1);
          (2) the term ``best estimate'' means an estimate 
        that, to the extent feasible and scientifically 
        appropriate, is based on--
                  (A) central estimates of risk using the most 
                plausible and realistic assumptions;
                  (B) an approach that combines multiple 
                estimates based on different scenarios and 
                weighs the probability of each scenario; and
                  (C) any other methodology designed to provide 
                the most plausible and realistic level of risk, 
                given the current scientific information 
                available to the agency concerned;
          (3) the term ``cost'' has the meaning given such term 
        in section 621(2);
          (4) the term ``cost-benefit analysis'' has the 
        meaning given such term in section 621(3);
          (5) the term ``emergency'' means an actual, 
        immediate, and substantial endangerment to health, 
        safety, or the human environment;
          (6) the term ``hazard identification'' means 
        identification of a substance, activity, or condition 
        that may cause to health, safety, or the environment 
        based on empirical data, measurements, or testing 
        showing that it has caused significant adverse effects 
        at some levels of dose or exposure combined degree of 
        toxicity and actual exposure, or other risk the hazards 
        pose for individuals, populations, or natural 
        resources; and
          (7) the term ``major cleanup plan'' means any 
        proposed or final environmental cleanup plan for a 
        facility, or Federal guidelines for the issuance of any 
        such plan, the expected costs, expenses, and damages of 
        which are likely to exceed, in the aggregate, 
        $10,000,000, including a corrective action requirement 
        under the Solid Waste Disposal Act (notwithstanding 
        section 4(b)(1)(C) of such Act, but only to the extent 
        of such requirement), a removal or remedial action 
        under the Comprehensive Environmental Response, 
        Compensation, and Liability Act of 1980, and any other 
        environmental restoration or damage assessment carried 
        out by, on behalf of, or as required or ordered by, an 
        agency or Federal court, or pursuant to the authority 
        of a Federal statute with respect to any substance;
          (8) the term ``major rule'' has the meaning given 
        such term in section 621(4);
          (9) the term ``negative data'' means data that fail 
        to show that a given substance or activity induces an 
        adverse effect under certain conditions;
          (10) the term ``risk assessment'' means--
                  (A) the process of identifying hazards, and 
                of quantifying (to the maximum extent 
                practicable) or describing the combined degree 
                of toxicity and actual exposure, or other risk 
                the hazards pose for individuals, populations, 
                or natural resources; and
                  (B) the document containing the explanation 
                of how the assessment process has been applied 
                to an individual substance, activity, or 
                condition;
          (11) the term ``risk characterization''--
                  (A) means the element of a risk assessment 
                that involves presentation of the degree of 
                risk to individuals and populations expected to 
                be protected, as presented in any regulatory 
                proposal or decision, report to Congress, or 
                other document that is made available to the 
                public; and
                  (B) may include discussions of uncertainties, 
                conflicting data, estimates, extrapolations, 
                inferences, and opinions, as appropriate;
          (12) the term ``rule'' has the meaning given such 
        term in section 621(7); and
          (13) the term ``substitution risk'' means a potential 
        increased risk to health, safety, or the environment 
        resulting from market substitutions, a reduced standard 
        of living, or a regulatory alternative designed to 
        decrease other risks.

Sec. 632. Applicability

    (a) Except as provided in subsection (b), this subchapter 
shall apply to all risk assessments and risk characterizations 
prepared by, or on behalf of, or prepared by others and adopted 
by, any agency in connection with health, safety, and 
environmental risks.
    (b)(1) This subchapter shall not apply to risk assessments 
or risk characterizations performed with respect to--
          (A) a situation that the head of the agency finds to 
        be an emergency;
          (B) a rule or agency action that authorizes the 
        introduction into or removal from commerce, or 
        initiation of manufacture, of a substance, mixture, or 
        product, or recognizes the marketable status of a 
        product;
          (C) a health, safety, or environmental inspection, 
        compliance or enforcement action, or individual 
        facility permitting action; or
          (D) a screening analysis clearly identified as such.
    (2)(A) An analysis shall not be treated as a screening 
analysis for the purposes of paragraph (1)(D) if the result of 
the analysis is used--
          (i) as the basis for imposing a restriction on a 
        previously authorized substance, product, or activity 
        after its initial introduction into manufacture or 
        commerce; or
          (ii) to characterize a finding of risk from a 
        substance or activity in any agency document or other 
        communication made available to the public, the media, 
        or Congress.
    (B) Among the analyses that may be treated as a screening 
analyses for the purposes of paragraph (1)(D) are product 
registrations, reregistrations, tolerance settings, and reviews 
of premanufacture notices under the Federal Insecticide, 
Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.) and the 
Toxic Substances Control Act (15 U.S.C. 2601 et seq.).
    (3) This subchapter shall not apply to any food, drug, or 
other product label or to any risk characterization appearing 
on any such label.

Sec. 633. Principles for risk assessment

    (a)(1) The head of each agency shall apply the principles 
set forth in subsection (b) when preparing any risk assessment 
for a major rule to ensure that the risk assessment and all of 
its components--
          (A) distinguish scientific findings and best 
        estimates of risk from other considerations;
          (B) are, to the maximum extent practicable, 
        scientifically objective, plausible, and realistic, and 
        inclusive of all relevant data;
          (C) rely, to the extent available and practicable, on 
        scientific findings; and
          (D) use situation- or decision-specific information 
        to the maximum extent practicable.
    (2) An agency shall not be required to repeat discussions 
or explanations required under this section in each risk 
assessment document if there is an unambiguous reference to the 
relevant discussion or explanation in another reasonably 
available agency document that was prepared in accordance with 
this subchapter.
    (b) The principles to be applied when preparing risk 
assessments are as follows:
          (1)(A) When assessing human health risks, a risk 
        assessment shall consider and discuss both the most 
        important laboratory and epidemiological data, 
        including negative data, and summarize the remaining 
        data that finds, or fails to find, a correlation 
        between a health risk and a substance or activity.
          (B) When conflicts among such data appear to exist, 
        or when animal data are used as a basis to assess human 
        health, the assessment shall include a discussion of 
        possible reconciliation of conflicting information. 
        Greatest emphasis shall be placed on data that 
        indicates the biological basis of the resulting harm in 
        humans. Animal data shall be reviewed with regard to 
        relevancy to humans.
          (2) When a risk assessment involves a choice of any 
        significant assumption (including the use of safety 
        factors and default assumptions), inference, or model, 
        the agencies or instrumentality preparing the 
        assessment shall--
                  (A) present a representative description and 
                explicit explanation of plausible and 
                alternative similar assumptions, inferences, or 
                models (including the assumptions incorporated 
                into the model) and the sensitivity of the 
                conclusions to them;
                  (B) give preference to the model, assumption, 
                input parameter that represents the most 
                plausible or realistic inference from 
                supporting scientific information;
                  (C) identify any science policy or value 
                judgments and employ those judgments only where 
                the policy determination has been approved by 
                the head of the agency, after notice and 
                opportunity for public involvement, as 
                appropriate for the circumstance under 
                consideration;
                  (D) describe any model used in the risk-
                assessment and make explicit the assumptions 
                incorporated into the model; and
                  (E) indicate the extent to which any 
                significant model has been validated by, or 
                conflicts with, empirical data.
          (3) Risk assessments that provide a quantification or 
        numerical output shall be calculated using the best 
        estimate for each input parameter and shall use, as 
        available, probabilistic descriptions of the 
        uncertainty and variability associated with each input 
        parameter.
          (4) A risk assessment shall clearly separate hazard 
        identification from risk characterization and make 
        clear the relationship between the level of risk and 
        the level of exposure to a potential hazard.
          (5) A risk assessment shall be prepared at the level 
        of detail appropriate and practicable for reasoned 
        decisionmaking on the matter involved, taking into 
        consideration the significance and complexity of the 
        decision and any need for expedition.
          (6) Where relevant, practicable, and appropriate, 
        data shall be developed consistent with standards for 
        the development of test data promulgated pursuant to 
        section 4 of the Toxic Substances Control Act, and 
        standards for data requirements promulgated pursuant to 
        section 3 of the Federal Insecticide, Fungicide, and 
        Rodenticide Act.
  (c)(1) The head of each agency shall promote early 
involvement by all stakeholders in the development of risk 
assessments that may support or affect agency rules, guidance, 
and other significant actions, by publishing as part of its 
semiannual regulatory agenda, required under section 602--
          (A) a list of risk assessments and supporting 
        assessments, including hazard, dose or exposure 
        assessments, under preparation or planned by the 
        agency;
          (B) a brief summary of relevant issues addressed or 
        to be addressed by each listed risk assessment or 
        supporting assessment;
          (C) an approximate schedule for completing each 
        listed risk assessment and supporting assessment;
          (D) an identification of potential rules, guidance, 
        or other agency actions supported or affected by each 
        listed risk assessment and supporting assessment; and
          (E) the name, address, and telephone number of an 
        agency official knowledgeable about each listed risk 
        assessment and supporting assessment.
  (2)(A) The head of each agency shall provide an opportunity 
for meaningful public participation and comment on any risk 
assessment throughout the regulatory process commensurate with 
the consequences of the decision to be made.
  (B) In cases where the risk assessment will support a major 
rule, the agency shall publish, at the earliest opportunity in 
the process, an advanced notice of relevant risk assessment 
related information that includes, at a minimum, an 
identification of--
          (i) all relevant hazard, dose, exposure, and other 
        risk related documents that the agency plans to 
        consider;
          (ii) all risk related guidance that the agency 
        considers relevant;
          (iii) all hazard, dose, exposure, and other risk 
        assumptions on which the agency plans to relay and the 
        bases therefor; and
          (iv) all data and information deficiencies that could 
        affect agency decisionmaking.
  (d)(1) No agency shall automatically incorporate or adopt any 
recommendation or classification made by an entity described in 
paragraph (2) concerning the health effects or value of a 
substance without an opportunity for notice and comment. Any 
risk assessment or risk characterization document adopted by an 
agency on the basis of such a recommendation or classification 
shall comply with this title.
  (2) An entity referred to in paragraph (1) includes--
          (A) any foreign government and its agencies;
          (B) the United Nations or any of its subsidiary 
        organizations;
          (C) any international governmental body or standards-
        making organization; and
          (D) any other organization or private entity without 
        that does not have a place of business located in the 
        United States or its territories.

Sec. 634. Principles for risk characterization and communication

  In characterizing risk in any risk assessment document, 
regulatory proposal or decision, report to Congress, or other 
document relating in each case to a major rule that is made 
available to the public, each agency characterizing the risk 
shall comply with each of the following:
          (1) The head of the agency shall describe the 
        exposure scenarios used in any risk assessment, and, to 
        the extent feasible, provide an estimate of the size of 
        the corresponding population or natural resource at 
        risk and the likelihood of such exposure scenarios.
          (2) If a numerical estimate of risk is provided, the 
        head of the agency, to the extent feasible and 
        scientifically appropriate, shall provide--
                  (A) the range and distribution of exposures 
                derived from exposure scenarios used in a risk 
                assessment, including, where appropriate, 
                central and high-end estimates, but always 
                including a best estimate of the risk to the 
                general population;
                  (B) the range and distribution of risk 
                estimates, including best estimates and, where 
                quantitative estimates of the range of 
                distribution of risk estimates are not 
                possible, a list of qualitative factors 
                influencing the range of possible risks; and
                  (C) a statement of the major sources of 
                uncertainties in the hazard identification, 
                dose-response, and exposure assessment phases 
                of risk assessment and their influence on the 
                results of the assessment.
          (3) To the extent feasible, the head of the agency 
        shall provide a statement that places the nature and 
        magnitude of individual and population risks to human 
        health in context.
          (4) When a Federal agency provides a risk assessment 
        or risk characterization for a proposed or final 
        regulatory action, such assessment or characterization 
        shall include a statement of any significant 
        substitution risks to human health identified by the 
        agency or contained in information provided to the 
        agency by a commentator.
          (5) An agency shall present a summary in connection 
        with the presentation of the agency's risk assessment 
        or the regulation if--
                  (A) the agency provides a public comment 
                period with respect to a risk assessment or 
                regulation;
                  (B) a commentator provides a risk assessment, 
                and a summary of results of such risk 
                assessment; and
                  (C) such risk assessment is reasonably 
                consistent with the principles and the guidance 
                provided under this subtitle.

Sec. 635. Requirement to prepare assessment

  (a) Except as provided in section 632 and in addition to any 
requirements applicable under subchapter II, the head of each 
agency shall prepare--
          (1) for each major rule relating to health, safety, 
        or the environment, and for each major cleanup plan, 
        that is proposed by the agency after the date of 
        enactment of this subchapter, is pending on the date of 
        enactment of this subchapter, or is subject to a 
        granted petition for review pursuant to section 553(e) 
        or 623, a risk assessment in accordance with this 
        subchapter;
          (2) for each such proposed or final plan, and each 
        reasonable alternative within the statutory authority 
        of the agency taking action, a cost-benefit analysis 
        equivalent to that which would be required under 
        subchapter II if subchapter II were applicable; and
          (3) for each such proposed or final plan, quantified 
        to the extent feasible, a comparison of any health, 
        safety, or environmental risks addressed by the 
        regulatory alternatives to other relevant risks chosen 
        by the head of the agency, including at least 3 other 
        risks regulated by the agency and to at least 3 other 
        risks with which the public is familiar.
  (b) A major cleanup plan is subject to this subchapter if--
          (1) construction has not commenced on a significant 
        portion of the work required by the plan; or
          (2) if construction has commenced on a significant 
        portion of the work required by the plan, unless--
                  (A) it is more cost-effective to complete 
                construction of the work than to apply the 
                provisions of this subchapter; or
                  (B) the application of the provisions of this 
                subchapter, including any delays caused 
                thereby, will result in an actual and immediate 
                risk to human health or welfare.
  (c) A risk assessment prepared pursuant to this subchapter 
shall be a component of and used to develop any cost-benefit 
analysis required by this subchapter or subchapter II, and 
shall, along with any cost-benefit analysis required by this 
subchapter, be made part of the administrative record for 
judicial review of any final agency action.

Sec. 636. Requirements for assessments

  (a) The head of the agency, subject to review by the Director 
or a designee of the President, shall make a determination 
that, notwithstanding any other provision of law--
          (1) for each major rule and major cleanup plan 
        subject to this subchapter, the risk assessment 
        required under section 635 is based on a scientific, 
        plausible, and realistic evaluation, reflecting 
        reasonable exposure scenarios, of the risk addressed by 
        the major rule and is supported by the best available 
        scientific data, as determined by a peer review panel 
        in accordance with section 640; and
          (2) for each major cleanup plan subject to this 
        subchapter, the plan has benefits that justify its 
        costs and that there is no alternative that is allowed 
        by the statute under which the plan is promulgated that 
        would provide greater net benefits or that would 
        achieve an equivalent reduction in risk in a more cost-
        effective and flexible manner.
    (b) Notwithstanding any other provision of law, no agency 
shall prohibit or refuse to approve a substance or product on 
the basis of safety where the substance or product presents a 
negligible or insignificant human risk under the intended 
conditions of use.
    (c) Notwithstanding any other provision of law, issuance of 
a record of decision or a final permit condition or 
administrative order containing a major cleanup plan, or denial 
of, or completion of agency review pursuant to, a petition for 
review of a major cleanup plan under section 637(c), shall 
constitute final agency action subject to judicial review at 
the time this action is taken.

Sec. 637. Regulations; plan for assessing new information

    (a)(1) Not later than 1 year after the date of enactment of 
this subchapter, the Director or a designee of the President 
shall--
          (A) issue a final regulation that has been subject to 
        notice and comment under section 553 that directs 
        agencies to implement the risk assessment and risk 
        characterization principles set forth in sections 633 
        and 634; and
          (B) provide a format for summarizing risk assessment 
        results.
    (2) The regulation under paragraph (1) shall be 
sufficiently specific to ensure that risk assessments are 
conducted consistently by the various agencies.
    (b) Review of a risk assessment or any entry (or the 
evaluation underlying the entry) on an agency-developed 
database (including, but not limited to, the Integrated Risk 
Information System), shall be conducted by the head of the 
agency on the written petition of a person showing a reasonable 
likelihood that--
          (1) the risk assessment or entry is inconsistent with 
        the principles set forth in sections 633 and 634;
          (2) the risk assessment or entry contains different 
        results than if it had been properly conducted under 
        sections 633 and 634;
          (3) the risk assessment or entry is inconsistent with 
        a rule issued under subsection (a); or
          (4) the risk assessment or entry does not take into 
        account material significant new scientific data or 
        scientific understanding.
    (c) Review of a risk assessment, a cost-benefit analysis, 
or both, for a major cleanup plan shall be conducted by the 
head of the agency on the written petition of a person showing 
a reasonable likelihood that--
          (1) the risk assessment warrants revision under any 
        of the criteria set forth in subsection (b); or
          (2) the cost-benefit analysis warrants revision under 
        any of the criteria set forth in section 624.
    (d)(1) Not later than 90 days after receiving a petition 
under subsection (b), the head of the agency shall respond to 
the petition by agreeing or declining to review the risk entry, 
the cost-benefit analysis, or both, referred to in the 
petition, and shall state the basis for the decision.
    (2) If the head of the agency agrees to review the 
petition, the agency shall complete its review not later than 
180 days after the decision made under paragraph (1), unless 
the Director agrees in writing with an agency determination 
that an extension is necessary in view of limitations on agency 
resources. Prior to completion of the agency review, the 
agency's written conclusions concerning the review shall be 
subjected to peer review pursuant to section 640.
    (3) A risk assessment review completed pursuant to a 
petition may be the basis for initiating a petition pursuant to 
any other provision of law.
    (4) Following a decision to grant or deny a petition under 
subsection (b) or (c), no further petition for such risk 
assessment, entry, or cost-benefit analysis, submitted by the 
same person, shall be considered by any agency unless such 
petition is based on a change in a fact, circumstance, or 
provision of law underlying or otherwise related to the matters 
covered by the initial petition, occurring since the initial 
petition was granted or denied, that warrants the granting of 
such further petition.
    (e) The regulations under this section shall be developed 
after notice and opportunity for public comment, and after 
consultation with representatives of appropriate State agencies 
and local governments, and such other departments, agencies, 
offices, organizations, or persons as may be advisable.
    (f) At least every 4 years, the Director or a designee of 
the President shall review, and when appropriate, revise, the 
regulations published under this section.

Sec. 638. Rule of construction

    Nothing in this subchapter shall be construed to--
          (1) preclude the consideration of any data or the 
        calculation of any estimate to more fully describe risk 
        or provide examples of scientific uncertainty or 
        variability; or
          (2) require the disclosure of any trade secret or 
        other confidential information.
Sec. 639. Regulatory priorities

    (a)(1) Not later than 180 days after the date of enactment 
of this section, the Director of the Office of Management and 
Budget, in consultation with the Office of Science and 
Technology Policy, shall enter into appropriate arrangements 
with an accredited scientific body to--
          (A) conduct a study of the methodologies for using 
        comparative risk to rank dissimilar health, safety, and 
        environmental risks; and
          (B) to conduct a comparative risk analysis in 
        accordance with paragraph (2).
    (2) The study of the methodologies under paragraph (1)(A) 
shall be conducted as part of the first comparative risk 
analysis under paragraph (1)(B). The study shall--
          (A) seek to develop and rigorously test methods of 
        comparative risk analysis;
          (B) have sufficient scope and breadth to test 
        approaches for improving comparative risk analysis and 
        its use in setting priorities for health, safety, and 
        environmental risk prevention and reduction; and
          (C) review and evaluate the experience of States that 
        have conducted comparative risk analyses.
    (3)(A) The comparative risk analysis under paragraph (1)(B) 
shall compare and rank, to the extent feasible, health, safety, 
and environmental risks potentially regulated across the 
spectrum of programs relating to health, safety, and the 
environment administered by the departments, agencies, and 
instrumentalities of the Federal Government.
    (B) In carrying out the comparative risk analysis under 
this paragraph, the Director shall ensure that--
          (i) the scope and specificity of the analysis are 
        sufficient to provide the President and the heads of 
        agencies guidance in allocating resources across 
        agencies and among programs in agencies to achieve the 
        greatest degree of risk prevention and reduction for 
        the public and private resources expended;
          (ii) the analysis is conducted through an open 
        process, by individuals with relevant expertise, 
        including, as appropriate--
                  (I) toxicologists;
                  (II) biologists;
                  (III) engineers; and
                  (IV) experts in the fields of medicine, 
                industrial hygiene, and environmental effects;
          (iii) the analysis is conducted, to the extent 
        feasible, consistent with the risk assessment and risk 
        characterization principles described in sections 633 
        and 634;
          (iv) the methodologies and principal scientific 
        determinations made in the analysis are subjected to 
        peer review under section 640 and the conclusions of 
        the peer review are made publicly available as part of 
        the final report;
          (v) there is an opportunity for public comments on 
        the results of the analysis prior to making them final; 
        and
          (vi) the results of the analysis are presented in a 
        manner that distinguishes between the scientific 
        conclusions and any policy or value judgments embodied 
        in the comparisons.
    (4) The comparative risk analysis shall be completed, and a 
report submitted to Congress not later than 3 years after the 
date of enactment of this section. The analysis shall be 
reviewed and revised not less often than every 5 years 
thereafter for a minimum of 15 years following the release of 
the initial analysis.
    (b) Not later than 180 days after the date of enactment of 
this section, the Director of the Office of Management and 
Budget, in collaboration with the head of each Federal agency, 
shall enter into a contract with the National Research Council 
to provide technical guidance to the agencies on approaches to 
using comparative risk analysis in setting health, safety, and 
environmental priorities to assist the agencies in complying 
with subsection (c).
    (c)(1) In exercising authority under any laws protecting 
health, safety, or the environment, the head of an agency shall 
prioritize the use of the resources available under such laws 
to address the risks to health, safety, and the environment 
that--
          (A) the agency determines are the most serious; and
          (B) can be addressed in a cost-effective manner, with 
        the goal of achieving the greatest overall net 
        reduction in risks with the public and private sector 
        resources to be expended.
    (2) In identifying the sources of the most serious risks 
under paragraph (1), the head of the agency shall consider, at 
a minimum--
          (A) the plausible likelihood and severity of the 
        effect; and
          (B) the plausible number and groups of individuals 
        potentially affected.
    (3) The head of the agency shall incorporate the priorities 
identified in paragraph (1) into the budget, strategic 
planning, and research activities of the agency by, in the 
agency''s annual budget request to Congress--
          (A) identifying which risks the agency has determined 
        are the most serious and can be addressed in a cost-
        effective manner under paragraph (1), and the basis for 
        that determination;
          (B) explicitly identifying how the agency's requested 
        funds will be used to address those risks;
          (C) identifying any statutory, regulatory, or 
        administrative obstacles to allocating agency resources 
        in accordance with the priorities established under 
        paragraph (1); and
          (D) explicitly considering the requirements of 
        paragraph (1) when preparing the agency's regulatory 
        agenda or other strategic plan, and providing an 
        explanation of how the agenda or plan reflects those 
        requirements and the comparative risk analysis when 
        publishing any such agenda or strategic plan.
  (4) In March of each year, the head of each agency shall 
submit to Congress specific recommendations for repealing or 
modifying laws that would better enable the agency to 
prioritize its activities to address the risks to health, 
safety, and the environment that are the most serious and can 
be addressed in a cost-effective manner consistent with the 
requirements of paragraph (1).

Sec. 640. Establishment of program

  (a) The Director of the Office of Science and Technology or 
the Director, as appropriate, shall develop a systematic 
program for the peer review of work products covered by 
subsection (c), which program shall be used, in as uniform a 
manner as is practicable, across the agencies.
  (b) The program under subsection (a)--
          (1) shall provide for the creation of peer review 
        panels consisting of independent and external experts 
        who are broadly representative and balanced to the 
        extent feasible;
          (2) shall not exclude peer reviewers merely because 
        they represent entities that may have a potential 
        interest in the outcome, if that interest is fully 
        disclosed;
          (3) shall exclude experts who were associated with 
        the generation of the specific work product either 
        directly by substantial contribution to its 
        development, or indirectly by consultation and 
        development of the specific product;
          (4) shall provide for differing levels of peer review 
        depending on the significance or complexity of the 
        issue or the need for expedition;
          (5) shall contain balanced presentations of all 
        considerations, including minority reports and an 
        agency response to all significant peer review 
        comments; and
          (6) shall provide an opportunity for interested 
        parties to submit issues for consideration by peer 
        review panels.
  (c) Matters requiring peer review shall include--
          (1) risk assessments and cost-benefit analyses for 
        major rules;
          (2) quantitative estimates of risk or hazard that are 
        used in making regulatory determinations, including all 
        entries into the Integrated Risk Information System;
          (3) risk assessment and risk characterization 
        regulations and cost-benefit guidelines; and
          (4) any other significant or technical work product, 
        as designated by the head of each agency, the Director 
        of the Office of Science and Technology, or the 
        Director.
  (d) All underlying data shall be submitted to peer reviewers, 
except to the extent necessary to protect confidential business 
information and trade secrets. To ensure such protections, the 
head of the agency may require that peer reviewers enter into 
confidentiality agreements.
  (e) The peer review and the agency's responses shall be made 
available to the public for comment and the final peer review 
and the agency's responses shall be made part of the 
administrative record for purposes of judicial review.
  (f) The proceedings of peer review panels under this section 
shall be subject to the applicable provisions of the Federal 
Advisory Committee Act.

                   Subchapter IV--Executive Oversight

Sec. 641. Procedures

  (a) The Director or a designee of the President shall--
          (1) establish procedures for agency compliance with 
        this chapter; and
          (2) monitor, review, and ensure agency implementation 
        of such procedures.
  (b) Not later than 12 months after the date of enactment of 
this subchapter the Office of Management and Budget shall issue 
regulations to assist agencies in preparing the cost-benefit 
analyses required by this subchapter. The regulations shall--
          (1) ensure that cost and benefit evaluations are 
        consistent with this subchapter and, to the extent 
        feasible, represent realistic and plausible estimates;
          (2) be adopted following public notice and adequate 
        opportunity for comment; and
          (3) be used consistently by all agencies covered by 
        this subchapter.

Sec. 642. Promulgation and adoption

  (a) Procedures established pursuant to section 641 shall only 
be implemented after opportunity for public comment. Any such 
procedures shall be consistent with the prompt completion of 
rulemaking proceedings.
  (b)(1) If procedures established pursuant to section 641 
include review of any initial or final analyses of a rule 
required under chapter 6, the time for any such review of any 
initial analysis shall not exceed 30 days following the receipt 
of the analysis by the Director, a designee of the President, 
or by an officer to whom the authority granted under section 
641 has been delegated pursuant to section 643.
  (2) The time for review of any final analysis required under 
chapter 6 shall not exceed 30 days following the receipt of the 
analysis by the Director, a designee of the President, or such 
officer.
  (3)(A) The times for each such review may be extended for 
good cause by the President or such officer for an additional 
30 days.
  (B) Notice of any such extension, together with a succinct 
statement of the reasons therefor, shall be inserted in the 
rulemaking file.

Sec. 643. Delegation of authority

  (a) The President may delegate the authority granted by this 
subchapter to the Vice President or to an officer within the 
Executive Office of the President whose appointment has been 
subject to the advice and consent of the Senate.
  (b)(1) Notice of any delegation, or any revocation or 
modification thereof shall be published in the Federal 
Register.
  (2) Any notice with respect to a delegation to the Vice 
President shall contain a statement by the Vice President that 
the Vice President will make every reasonable effort to respond 
to congressional inquiries concerning the exercise of the 
authority delegated under this section.

Sec. 644. Judicial review

  The exercise of the authority granted under this subchapter 
by the Director, the President, or by an officer to whom such 
authority has been delegated under section 643 shall not be 
subject to judicial review in any manner under this chapter.
                       CHAPTER 7--JUDICIAL REVIEW

Sec.
701. Application; definitions.
     * * * * * * *
706. Scope of review.
707. Consent decrees.
708. Affirmative defense.
709. Agency interpretations in civil and criminal actions.
          * * * * * * *

[Sec. 706. Scope of review]
Sec. 706. Scope of review

  (a) To the extent necessary to reach a decision and when 
presented, the reviewing court shall decide all relevant 
questions of law, interpret constitutional and statutory 
provisions, and determine the meaning or applicability of the 
terms of an agency action. The reviewing court shall--
          (1) compel agency action unlawfully withheld or 
        unreasonably delayed; and
          (2) hold unlawful and set aside agency action, 
        findings and conclusions found to be--
                  (A) arbitrary, capricious, an abuse of 
                discretion, or otherwise not in accordance with 
                law;
                  (B) contrary to constitutional right, power, 
                privilege, or immunity;
                  (C) in excess of statutory jurisdiction, 
                authority, or limitations, or short of 
                statutory right;
                  (D) without observance of procedure required 
                by law;
                  (E) unsupported by substantial evidence in a 
                proceeding subject to sections 556 and 557 or 
                otherwise reviewed on the record of an agency 
                hearing provided by statute;
                  (F) without substantial support in the 
                rulemaking file, viewed as a whole, for the 
                asserted or necessary factual basis, as 
                distinguished from the policy or legal basis, 
                of a rule adopted in a proceeding subject to 
                section 553; or
                  (G) unwarranted by the facts to the extent 
                that the facts are subject to trial de novo by 
                the reviewing court.
    (b) In making the foregoing determinations, the court shall 
review the whole record or those parts of it cited by a party, 
and due account shall be taken of the rule of prejudicial 
error.
    (c) In reviewing an agency interpretation of a statute 
governing the authority for an agency action, including agency 
action taken pursuant to a statute that provides for review of 
final agency action, the reviewing court shall--
          (1) hold erroneous and unlawful--
                  (A) an agency interpretation that is other 
                than the interpretation of the statute clearly 
                intended by Congress; or
                  (B) an agency interpretation that is outside 
                the range of permissible interpretations of the 
                statute; and
          (2) hold arbitrary, capricious, or an abuse of 
        discretion--
                  (A) an agency action as to which the agency--
                          (i) has improperly classified an 
                        interpretation as being within or 
                        outside the range of permissible 
                        interpretations; or
                          (ii) has not explained in a reasoned 
                        analysis why it selected the 
                        interpretation and why it rejected 
                        other permissible interpretations of 
                        the statute; or
                  (B) in the case of agency action subject to 
                chapter 6, an interpretation that does not give 
                the agency the broadest discretion to develop 
                rules that will satisfy the decisional criteria 
                of section 624.
    (d) Notwithstanding any other provision of law, the 
provisions of this subsection shall apply to, and supplement, 
the requirements contained in any statute for the review of 
final agency action which is not otherwise subject to this 
subsection.

Sec. 707. Consent decrees

    In interpreting any consent decree in effect on or after 
the date of enactment of this section that imposes on an agency 
an obligation to initiate, continue, or complete rulemaking 
proceedings, the court shall not enforce the decree in a way 
that divests the agency of discretion granted to it by the 
Congress or the Constitution to respond to changing 
circumstances, make policy or managerial choices, or protect 
the rights of third parties.

Sec. 708. Affirmative defense

    Notwithstanding any other provision of law, it shall be an 
affirmative defense in any enforcement action brought by an 
agency that the regulated person or entity is complying with a 
rule, regulation, adjudication, directive, or order of such 
agency or any other agency that is inconsistent, incompatible, 
contradictory, or otherwise cannot be reconciled with the 
agency rule, regulation, adjudication, directive, or order 
being enforced.
Sec. 709. Agency interpretations in civil and criminal actions

    (a)(1) No civil or criminal penalty shall be imposed in any 
action brought in a Federal court, including an action pending 
on the date of enactment of this section, for the alleged 
violation of a rule, if the defendant, prior to the alleged 
violation--
          (A) reasonably determined, based upon a description, 
        explanation, or interpretation of the rule contained in 
        the rule's statement of basis and purpose, that the 
        defendant was in compliance with, exempt from, or 
        otherwise not subject to, the requirements of the rule; 
        or
          (B) was informed by the agency that promulgated the 
        rule, or by a State authority to which had been 
        delegated the responsibility for ensuring compliance 
        with the rule, that the defendant was in compliance 
        with, exempt from, or otherwise not subject to, the 
        requirements of the rule.
  (2) In determining, for purposes of paragraph (1)(A), whether 
a defendant reasonably relied upon a description, explanation, 
or interpretation of the rule contained in the rule's statement 
of basis and purpose, the court shall not give deference to any 
subsequent agency description, explanation, or interpretation 
of the rule relied on by the agency in the action that had not 
been published in the Federal Register or otherwise directly 
and specifically communicated to the defendant by the agency, 
or by a State authority to which had been delegated the 
responsibility for ensuring compliance with the rule, prior to 
the alleged violation.
    (b)(1) In a civil or criminal action in Federal court to 
redress an alleged violation of a rule, including an action 
pending on the date of enactment of this section, if the court 
determines that the rule in question is ambiguous, the court 
shall not give deference to an agency interpretation of the 
rule if the defendant relied upon an interpretation of the rule 
to the effect that the defendant was in compliance with or was 
exempt or otherwise not subject to the requirement of the rule, 
and the court determines that such determination is reasonable.
    (2) Without regard to whether the defendant relied upon an 
interpretation that the court determines is reasonable under 
paragraph (1), if the court determines that the rule failed to 
give the defendant fair warning of the conduct that the rule 
prohibits or requires, no civil or criminal penalty shall be 
imposed.
    (c)(1) No agency action shall be taken, or any action or 
other proceeding maintained, seeking the retroactive 
application of a requirement against any person that is based 
upon--
          (A) an interpretation of a statute, rule, guidance, 
        agency statement of policy, or license requirement or 
        condition; or
          (B) a determination of fact,
if such interpretation or determination is different from a 
prior interpretation or determination by the agency or by a 
State or local government exercising authority delegated or 
approved by the agency, and if such person relied upon the 
prior interpretation or determination.
    (2) This subsection shall take effect on the date of 
enactment of the Comprehensive Regulatory Reform Act of 1995 
and shall apply to any matter for which a final unappealable 
judicial order has not been issued.
    (d) This section shall apply to the review by a Federal 
court of any order of an agency assessing civil administrative 
penalties.
          CHAPTER 8--CONGRESSIONAL REVIEW OF AGENCY RULEMAKING

Sec. 801. Congressional review of agency rulemaking

    (a)(1) Before a rule takes effect as a final rule, the 
agency promulgating such rule shall submit to the Congress a 
report containing a copy of the rule, the notice of proposed 
rulemaking, and the statement of basis and purpose for the 
rule, including a complete copy of any analysis required under 
chapter 6, and the proposed effective date of the rule. In the 
case of a rule that is not a major rule within the meaning of 
section 621(4), summary of the rulemaking proceedings shall be 
submitted.
    (2) A rule relating to a report submitted under paragraph 
(1) shall take effect as a final rule, the latest of the 
following:
          (A) The later of the date occurring 45 days after the 
        date on which--
                  (i) the Congress receives the report 
                submitted under paragraph (1); or
                  (ii) the rule is published in the Federal 
                Register.
          (B) If the Congress passes a joint resolution of 
        disapproval described under subsection (g) relating to 
        the rule, and the President signs a veto of such 
        resolution, the earlier date--
                  (i) on which either House of Congress votes 
                and fails to override the veto of the 
                President; or
                  (ii) occurring 30 session days after the date 
                on which the Congress received the veto and 
                objections of the President.
          (C) The date the rule would have otherwise taken 
        effect, if not for this section (unless a joint 
        resolution of disapproval under subsection (g) is 
        approved).
    (b) A rule shall not take effect as a final rule if the 
Congress passes a joint resolution of disapproval described 
under subsection (g), which is signed by the President or is 
vetoed and overridden by the Congress.
    (c)(1) Notwithstanding any other provision of this section 
(except subject to paragraph (3)), a rule that would not take 
effect by reason of this section may take effect if the 
President makes a determination under paragraph (2) and submits 
written notice of such determination to the Congress.
    (2) Paragraph (1) applies to a determination made by the 
President by Executive order that the rule should take effect 
because such rule is--
          (A) necessary because of an imminent threat to health 
        or safety or other emergency;
          (B) necessary for the enforcement of criminal laws; 
        or
          (C) necessary for national security.
    (3) An exercise by the President of the authority under 
this subsection shall have no effect on the procedures under 
subsection (g) or the effect of a joint resolution of 
disapproval under this section.
    (4) This subsection and an Executive order issued by the 
President under paragraph (2) shall not be subject to judicial 
review by a court of the United States.
    (d)(1) Subsection (g) shall apply to any rule that is 
published in the Federal Register (as a rule that shall take 
effect as a final rule) during the period beginning on the date 
occurring 60 days before the date the Congress adjourns sine 
die through the date on which the succeeding Congress first 
convenes.
    (2) For purposes of subsection (g), a rule described under 
paragraph (1) shall be treated as though such rule were 
published in the Federal Register (as a rule that shall take 
effect as a final rule) on the date the succeeding Congress 
first convenes.
    (3) During the period between the date the Congress 
adjourns sine die through the date on which the succeeding 
Congress first convenes, a rule described under paragraph (1) 
shall take effect as a final rule as otherwise provided by law.
    (e) Any rule that takes effect and later is made of no 
force or effect by the enactment of a joint resolution under 
subsection (g) shall be treated as though such rule had never 
taken effect.
    (f) If the Congress does not enact a joint resolution of 
disapproval under subsection (g), no court or agency may infer 
any intent of the Congress from any action or inaction of the 
Congress with regard to such rule, related statute, or joint 
resolution of disapproval.
    (g)(1) For purposes of this subsection, the term ``joint 
resolution'' means only a joint resolution introduced after the 
date on which the report referred to in subsection (a) is 
received by Congress the matter after the resolving clause of 
which is as follows: ``That Congress disapproves the rule 
submitted by the ____________ relating to ______________, and 
such rule shall have no force or effect.'' (The blank spaces 
being appropriately filled in.)
    (2)(A) A resolution described in paragraph (1) shall be 
referred to the committees in each House of Congress with 
jurisdiction. Such a resolution shall not be reported before 
the eighth day after its submission or publication date.
    (B) For purposes of this subsection the term ``submission 
or publication date'' means the later of the date on which--
          (i) the Congress receives the report submitted under 
        subsection (a)(1); or
          (ii) the rule is published in the Federal Register.
    (3) If the committee to which a resolution described in 
paragraph (1) is referred has not reported such resolution (or 
an identical resolution) at the end of 20 calendar days after 
its submission or publication date, such committee may be 
discharged by the Majority Leader of the Senate or the Majority 
Leader of the House of Representatives, as the case may be, 
from further consideration of such resolution and such 
resolution shall be placed on the appropriate calendar of the 
House involved.
    (4)(A) When the committee to which a resolution is referred 
has reported, or when a committee is discharged (under 
paragraph (3)) from further consideration of, a resolution 
described in paragraph (1), it shall at any time thereafter be 
in order (even though a previous motion to the same effect has 
been disagreed to) for any Member of the respective House to 
move to proceed to the consideration of the resolution, and all 
points of order against the resolution (and against 
consideration of the resolution) shall be waived. The motion 
shall be highly privileged in the House of Representatives and 
shall be privileged in the Senate and shall not be debatable. 
The motion shall not be subject to amendment, or to a motion to 
postpone, or to a motion to proceed to the consideration of 
other business. A motion to reconsider the vote by which the 
motion is agreed to or disagreed to shall not be in order. If a 
motion to proceed to the consideration of the resolution is 
agreed to, the resolution shall remain the unfinished business 
of the respective House until disposed of.
    (B) Debate on the resolution, and on all debatable motions 
and appeals in connection therewith, shall be limited to not 
more than 10 hours, which shall be divided equally between 
those favoring and those opposing the resolution. A motion 
further to limit debate shall be in order and shall not be 
debatable. An amendment to, or a motion to postpone, or a 
motion to proceed to the consideration of other business, or a 
motion to recommit the resolution shall not be in order. A 
motion to reconsider the vote by which the resolution is agreed 
to or disagreed to shall not be in order.
    (C) Immediately following the conclusion of the debate on a 
resolution described in paragraph (1), and a single quorum call 
at the conclusion of the debate if requested in accordance with 
the rules of the appropriate House, the vote on final passage 
of the resolution shall occur.
    (D) Appeals from the decisions of the Chair relating to the 
application of the rules of the Senate or the House of 
Representatives, as the case may be, to the procedure relating 
to a resolution described in paragraph (1) shall be decided 
without debate.
    (5) If, before the passage by one House of a resolution of 
that House described in paragraph (1), that House receives from 
the other House a resolution described in paragraph (1), then 
the following procedures shall apply:
          (A) The resolution of the other House shall not be 
        referred to a committee.
          (B) With respect to a resolution described in 
        paragraph (1) of the House receiving the resolution--
                  (i) the procedure in that House shall be the 
                same as if no resolution had been received from 
                the other House; but
                  (ii) the vote on final passage shall be on 
                the resolution of the other House.
    (6) This subsection is enacted by Congress--
          (A) as an exercise of the rulemaking power of the 
        Senate and House of Representatives, respectively, and 
        as such it is deemed to be a part of the rules of each 
        House, respectively, but applicable only with respect 
        to the procedure to be followed in that House in the 
        case of a resolution described in paragraph (1), and it 
        supersedes other rules only to the extent that it is 
        inconsistent with such rules; and
          (B) with full recognition of the constitutional right 
        of either House to change the rules (so far as relating 
        to the procedure of that House) at any time, in the 
        same manner, and to the same extent as in the case of 
        any other rule of that House.
    (h) This section shall not apply to rules that concern 
monetary policy proposed or implemented by the Board of 
Governors of the Federal Reserve System or the Federal Open 
Market Committee.
          * * * * * * *
               Title 28--JUDICIARY AND JUDICIAL PROCEDURE

          * * * * * * *

                    PART IV. JURISDICTION AND VENUE

          * * * * * * *
                       CHAPTER 91--COURT OF CLAIMS

Sec.
1491. Claims against United States generally; actions involving 
          Tennessee Valley Authority.
     * * * * * * *
[1500. Pendency of claims in other courts.]
     * * * * * * *
Sec. 1491. Claims against United States generally; actions involving 
                    Tennessee Valley Authority

    (a)( 1) [The United States Claims Court shall have 
jurisdiction to render judgment upon any claim against the 
United States founded either upon the Constitution, or any Act 
of Congress or any regulation of an executive department, or 
upon any express or implied contract with the United States, or 
for liquidated or unliquidated damages in cases not sounding in 
tort.] The United States Court of Federal Claims shall have 
jurisdiction to render judgment upon any claim against the 
United States for monetary relief founded either upon the 
Constitution or any Act of Congress or any regulation or action 
of an agency, or upon any expressed or implied contract with 
the United States, in cases not sounding in tort, or for 
invalidation of any Act of Congress or any regulation of an 
executive department that adversely affects private property 
rights in violation of the fifth amendment of the United States 
Constitution. For the purpose of this paragraph, an express or 
implied contract with the Army and Air Force Exchange Service, 
Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, 
or Exchange Councils of the National Aeronautics and Space 
Administration shall be considered an express or implied 
contract with the United States.
    (2) In any case within its jurisdiction, the Court of 
Federal Claims shall have the power to grant injunctive and 
declaratory relief when appropriate. To provide an entire 
remedy and to complete the relief afforded by the judgment, the 
court may, as an incident of and collateral to any such 
judgment, issue orders directing restoration to office or 
position, placement in appropriate duty or retirement status, 
and correction of applicable records, and such orders may be 
issued to any appropriate official of the United States. In any 
case within its jurisdiction, the court shall have the power to 
remand appropriate matters to any administrative or executive 
body or official with such direction as it may deem proper and 
just. The Claims Court shall have jurisdiction to render 
judgment upon any claim by or against, or dispute with, a 
contractor arising under section 10(a)(1) of the Contract 
Disputes Act of 1978.
          * * * * * * *
    (4) In cases otherwise within its jurisdiction, the Court 
of Federal Claims shall also have ancillary jurisdiction, 
concurrent with the courts designated in section 1346(b), to 
render judgment upon any related tort claim authorized under 
section 2674.
    (5) In proceedings within the jurisdiction of the Court of 
Federal Claims which constitute judicial review of agency 
action (rather than de novo proceedings), the provisions of 
section 706 of title 5 shall apply.
          * * * * * * *
[Sec. 1500. Pendency of claims in other courts

    [The United States Claims Court shall not have jurisdiction 
of any claim for or in respect to which the plaintiff or his 
assignee has pending in any other court any suit or process 
against the United States or any person who, at the time when 
the cause of action alleged in such suit or process arose, was, 
in respect thereto, acting or professing to act, directly or 
indirectly under the authority of the United States.]