SPEAKERS CONTENTS INSERTS
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ADMINISTRATIVE LAW, PROCESS AND PROCEDURE PROJECT
COMMERCIAL AND ADMINISTRATIVE LAW
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
NOVEMBER 1, 2005
Serial No. 10971
Printed for the use of the Committee on the Judiciary
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Available via the World Wide Web: http://judiciary.house.gov
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
DANIEL E. LUNGREN, California
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
SPENCER BACHUS, Alabama
BOB INGLIS, South Carolina
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL ISSA, California
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
STEVE KING, Iowa
Page 3 PREV PAGE TOP OF DOCTOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California
CHRIS VAN HOLLEN, Maryland
DEBBIE WASSERMAN SCHULTZ, Florida
PHILIP G. KIKO, Chief of Staff-General Counsel
PERRY H. APELBAUM, Minority Chief Counsel
Page 4 PREV PAGE TOP OF DOCSubcommittee on Commercial and Administrative Law
CHRIS CANNON, Utah Chairman
HOWARD COBLE, North Carolina
TRENT FRANKS, Arizona
STEVE CHABOT, Ohio
MARK GREEN, Wisconsin
RANDY J. FORBES, Virginia
LOUIE GOHMERT, Texas
MELVIN L. WATT, North Carolina
WILLIAM D. DELAHUNT, Massachusetts
CHRIS VAN HOLLEN, Maryland
JERROLD NADLER, New York
DEBBIE WASSERMAN SCHULTZ, Florida
RAYMOND V. SMIETANKA, Chief Counsel
SUSAN A. JENSEN, Counsel
MIKE LENN, Full Committee Counsel
BRENDA HANKINS, Counsel
STEPHANIE MOORE, Minority Counsel
C O N T E N T S
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The Honorable Chris Cannon, a Representative in Congress from the State of Utah, and Chairman, Subcommittee on Commercial and Administrative Law
The Honorable Melvin L. Watt, a Representative in Congress from the State of North Carolina, and Ranking Member, Subcommittee on Commercial and Administrative Law
Morton Rosenberg, Esquire, Specialist in American Public Law, American Law Division of the Congressional Research Service, Library of Congress
Mr. J. Christopher Mihm, Managing Director of Strategic Issues, United States Government Accountability Office
Professor Jeffrey S. Lubbers, Fellow in Law and Government Program, Washington College of Law, American University
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Professor Jody Freeman, Harvard Law School
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Chris Cannon, a Representative in Congress from the State of Utah, and Chairman, Subcommittee on Commercial and Administrative Law
Material Submitted for the Hearing Record
Responses to additional questions from Morton Rosenberg, Esquire, Specialist in American Public Law, American Law Division of the Congressional Research Service, Library of Congress
Responses to additional questions from J. Christopher Mihm, Managing Director of Strategic Issues, United States Government Accountability Office
Responses to additional questions from Professor Jeffrey S. Lubbers, Fellow in Law and Government Program, Washington College of Law, American University
Responses to additional questions from Jody Freeman, Harvard Law School
ADMINISTRATIVE LAW, PROCESS AND PROCEDURE PROJECT
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TUESDAY, NOVEMBER 1, 2005
House of Representatives,
Subcommittee on Commercial
and Administrative Law,
Committee on the Judiciary,
The Subcommittee met, pursuant to notice, at 10 a.m., in Room 2141, Rayburn House Office Building, the Honorable Chris Cannon (Chair of the Subcommittee) presiding.
Mr. CANNON. If you would all like to take your seats. Thank you all for coming this morning.
I don't have a gavel. We are now in order. Don't worry about it. It is not life or death here.
The current Federal regulatory process faces many significant challenges. Earlier this year the head of OMB's Office of Information and Regulatory Affairs testified that ''no one has ever tabulated the sheer number of Federal regulations that have been adopted since passage of the Administrative Procedure Act,'' which I might add parenthetically was in 1946. He further acknowledged, ''Sad as it is to say, most of these existing Federal rules have never been evaluated to determine whether they have worked as intended and what their actual benefits and costs have been.'' A rather depressing statement.
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In September 2005, the SBA's Office of Advocacy reported that the annual cost to comply with Federal regulations in the United States in 2004 exceeded $1.1 trillion, about 10 percent of our whole economy, which means that if every household received a bill for its equal share, each would have owed $10,172, an amount that exceeds what the average American household spent on health care in 2004, which is just under $9,000.
Other problematic trends include the absence of transparency in certain stages of the rulemaking process, the increasing incidence of agencies publishing final rules without having them first promulgated on a proposal basis, the stultification of certain aspects of the rulemaking process, and the need for more consistent enforcement by agencies.
Given the fact that the EPA was enacted nearly 60 years ago, a fundamental question that arises is whether the act is still able to facilitate effective rulemaking in the 21st century.
In an attempt to answer that question, House Judiciary Chairman Sensenbrenner earlier this year requested that our Subcommittee spearhead the Administrative Law, Process and Procedure Project.
The object of the project is to conduct a nonpartisan, academically credible analysis of Federal rulemaking that will focus on process, not policy concerns. Some of the areas that will be studied include the role of public participation in the rulemaking process, judicial review of rulemaking, and the utility of regulatory analysis and the accountability requirements.
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For the purpose of soliciting scholarly papers and promoting a robust dialogue, the Subcommittee intends to facilitate colloquia at various academic institutions and organizations that analyze Federal rulemaking.
In addition, the Congressional Research Service has been asked to make some of its leading administrative law experts available to guide the project, one of whom is testifying today. Under the auspices of CRS, several independent empirical studies of various issues conducted by some of the most respected members of academia are already underway as part of the project, and we will hear about one of those ongoing studies as part of today's hearing.
The project will also benefit from the wealth of expertise that the Government Accountability Office provides. To date, GAO has produced more than 60 reports on various aspects of the Federal regulatory process, and one of our witnesses will explain the work of GAO in this critical area.
The project will culminate with the preparation of a detailed report with recommendations for legislative proposals and suggested areas for further research and analysis to be considered by the Administrative Conference of the United States.
As you may recall legislation reauthorizing ACUS was signed into law last fall. ACUS was a nonpartisan, private-public think tank that proposed many valuable recommendations which improved administrative aspects of regulatory law and practice. Over its 28-year existence ACUS has served as an independent agency charged with studying the efficiency, adequacy and fairness of the administrative procedure used by Federal agencies. Most of its approximately 200 recommendations were implemented. They in turn helped save taxpayers millions of dollars.
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In a rare expression of unanimity, the Supreme Court Justices Scalia and Breyer jointly testified before our Subcommittee last year in support of ACUS. In complete unison they extolled the Conference's virtues. Justice Breyer in particular cited the value of the Conference's recommendations, noting that they resulted in ''huge'' savings to the public. Likewise Judge Scalia stated the Conference was ''an enormous bargain.'' Accordingly, it is critical that ACUS be appropriated its funding if not before, at least by the time the project report is completed.
This is truly an exciting undertaking. I look forwardcan you imagine an exciting undertaking in administrative procedures? It actually really is, and I look forward to the testimony from our witnesses as we get this project going.
I now turn to my colleague, Mr. Watt, the distinguished Ranking Member of my Subcommittee, and ask him if he has any opening remarks.
[The prepared statement of Mr. Cannon follows:]
PREPARED STATEMENT OF THE HONORABLE CHRIS CANNON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH, AND CHAIRMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW
The current federal regulatory process faces many significant challenges. Earlier this year, the head of OMB's Office of Information and Regulatory Affairs testified that ''no one has ever tabulated the sheer number of federal regulations that have been adopted since passage of the Administrative Procedure Act,'' which I might add parenthetically was in 1946. He further acknowledged, ''Sad as it is to say, most of these existing federal rules have never been evaluated to determine whether they have worked as intended and what their actual benefits and costs have been.'' A rather depressing statement.
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In September 2005, the SBA's Office of Advocacy reported that the annual cost to comply with federal regulations in the United States in 2004 exceeded $1.1 trillion, which means that if every household received a bill for its equal share, each would have owed $10,172, an amount that exceeds what the average American household spent on health care in 2004, which is just under $9,000.
Other problematic trends include the absence of transparency at certain stages of the rulemaking process, the increasing incidence of agencies publishing final rules without having them first promulgated on a proposed basis, the stultification of certain aspects of the rulemaking process, and the need for more consistent enforcement by agencies.
Given the fact that the APA was enacted nearly 60 years ago, a fundamental question that arises is whether the Act is still able to facilitate effective rulemaking in the 21st Century?
To help us answer that question, House Judiciary Committee Chairman Sensenbrenner earlier this year requested our Subcommittee to spearhead the Administrative Law, Process and Procedure Project. The objective of the Project is to conduct a nonpartisan, academically credible analysis of federal rulemaking that will focus on process, not policy concerns.
Some of the areas that will be studied include the role of public participation in the rulemaking process, judicial review of rulemaking, and the utility of regulatory analysis and accountability requirements.
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For the purpose of soliciting scholarly papers and promoting a robust dialogue, the Subcommittee intends to facilitate colloquia at various academic institutions and organizations that analyze federal rulemaking. In addition, the Congressional Research Service has been asked to make some of its leading administrative law experts available to guide the Project, one of whom is testifying today. Under the auspices of CRS, several independent empirical studies of various issues conducted by some of the most respected members of academia are already underway as part of the Project, and we'll hear about one of those ongoing studies as part of today's hearing. The Project will also benefit from the wealth of expertise that the Government Accountability Office provides. To date, GAO has produced more than 60 reports on various aspects of the federal regulatory process. And, one of our witnesses will explain the work of the GAO in this critical area.
The Project will culminate with the preparation of a detailed report with recommendations for legislative proposals and suggested areas for further research and analysis to be considered by the Administrative Conference of the United States. As you may recall, legislation reauthorizing ACUS was signed into law last fall. ACUS was a nonpartisan ''private-public think tank'' that proposed many valuable recommendations which improved administrative aspects of regulatory law and practice. Over its 28-year existence, ACUS served as an independent agency charged with studying the efficiency, adequacy, and fairness of the administrative procedure used by federal agencies. Most of its approximately 200 recommendations were implemented, and they, in turn, helped save taxpayers many millions of dollars.
In a rare expression of unanimity, Supreme Court Justices Scalia and Breyer jointly testified before our Subcommittee last year in support of ACUS. In complete unison, they extolled the Conference's virtues. Justice Breyer, in particular, cited the value of the Conference's recommendations, noting that they resulted in ''huge'' savings to the public. Likewise, Justice Scalia stated that the Conference was ''an enormous bargain.'' Accordingly, it is critical that ACUS be appropriated its funding, if not before, at least by the time the Project report is completed.
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This is a truly exciting undertaking and I look forward to the testimony from our witnesses.
Mr. WATT. Thank you, Mr. Chairman, and thank you for convening this hearing, and thank Chairman Sensenbrenner and Ranking Member Conyers for enlisting the able assistance of the Congressional Research Service to provide guidance, supervision and a structural framework for this important, massive, bipartisan undertaking.
As I indicated last year in our hearing in which Justices Scalia and Breyer offered their insights on the role that the defunct Administrative Conference of the United States had played prior to its demise, I found it somewhat ironic that the agency that had actively worked to make Government smaller, more efficient and more accountable was itself a victim of the end of the era of big Government mantra of the 90's by reauthorizing the Administrative Conference last term. Congress has now taken the first steps toward restoring an invaluable mechanism created to improve the content, implementation and processes of Federal administrative law.
Now, if we could get funding appropriated to fund the Administrative Conference, this project will serve as a useful device to sort through and prioritize those systematic issues in the administrative law arena that cry out for examination and possible reform.
There is no greater example, as noted by several of our witnesses in their written testimony, of the need for review of the effectiveness of administrative law and procedures before us today than the bureaucratic morass that seemingly and tragically undermined efforts to save and provide prompt relief to the countless families and individuals caught in the path of Hurricane Katrina.
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While there will be probing investigations into what went wrong in the aftermath of Katrina, bureaucratic flexibility in the face of national disasters or emergencies together with the interoperability and coordination of efforts at all levels of Government are vitally important to be considered in this examination of the current state of administrative process and procedure.
In addition to disaster-related areas of inquiry, there are other areas that are deserving of the in-depth review the project seeks to provide. I believe that overall review not only of our administrative agencies themselves but also of the judicial, presidential and congressional roles in the administrative process, will provide us with a thorough understanding of how each branch of Government contributes to furthering or impeding the goals of that process.
As the project progresses to evaluate e-Government and e-rulemaking, I believe the questions of security, privacy and access must be considered. While technological advances have broadened the possibilities of delivering and managing some governmental services quicker with greater efficiency, these advances have also broadened the potential for abuse, misuse, and exclusion.
For example, transparency may invite security concerns, assembly of vast amounts of personal data may invite privacy concerns, and the mere use of advanced technology to administer governmental programs and policies might invite access concerns for small, disadvantaged or minority stakeholders who have yet to cross the digital divide.
Page 15 PREV PAGE TOP OF DOC There are many other issues, privatization, attorneys fees, judicial comity and the role of executive orders to name a few, that are important aspects of our system of administrative law and procedure.
I look forward to continuing to work with you, Mr. Chairman, on this comprehensive and balanced bipartisan examination of the state of our administrative law system, and I thank the witnesses for the insights they will provide to us today and yield back the balance of my time.
Mr. CANNON. Thank you, Mr. Watt. I have often said that the most interesting questions of our day are not partisan questions. This is certainly, I believe, one of them. When we consider a tenth of the economy is involved in the Federal regulatory process it is amazing.
Without objection, all Members may place their statements in the record at this point. Without objection, so ordered.
Without objection, the Chair will be authorized to declare recesses at any point in this hearing. Hearing none, so ordered.
I ask unanimous consent that Members have 5 legislative days to submit written statements for inclusions in today's hearing record. Without objection, so ordered.
I am now pleased and honored to introduce our witnesses for today's hearing. Our first witness is Mort Rosenberg, Specialist in American Public Law in the American Law Division of the Congressional Research Service. In all matters dealing with administrative law, Mort has been the Judiciary Committee's right hand. For more than 25 years, he has been associated with CRS. Prior to his service with that office he was Chief Counsel for the House Select Committee on Professional Sports, among other public servant positions he has held.
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In addition to these endeavors, Mort has written extensively on the subject of administrative law. We are proud that he will later this month receive the American Bar Association's Mary C. Lawton Award for Outstanding Government Service. Mort obtained his undergraduate degree from New York University and his law degree from Harvard Law School. Thank you for being here with us.
Our second witness is Chris Mihm, who is the Managing Director of GAO's Strategic Issues team, which focuses on government-wide issues with the goal of promoting more results-oriented and accountable Federal Government. The strategic issues team has examined such matters as Federal agency transformation, budgetary aspects of the Nation's long-term fiscal outlook and civil service reform. Sort of the easy things, right? Government reform?
Mr. Mihm is a Fellow of the National Academy of Public Administration, and he received his undergraduate degree from Georgetown University.
Professor Jeffrey Lubbers is our third witness. A Fellow in Law and Government at American University Washington College of Law, Professor Lubbers brings a unique perspective to today's hearing with respect to ACUS. As many of you know, Professor Lubbers worked at ACUS for 20 years, including 13 years as the Conference's Research Director. A prolific writer on the subject of administrative law, Professor Lubbers obtained his undergraduate degree from Cornell University and his law degree from University of Chicago Law School.
I would also like to mention that about 3 years ago, Professor Lubbers testified before this Subcommittee at an oversight hearing regarding the administrative law and privacy ramifications involved in establishing the Department of Homeland Security. As a result of this hearing, our Subcommittee spearheaded the creation of the first statutorily mandated privacy officer as part of DHS's enabling legislation.
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Welcome back, Professor Lubbers. We appreciate that. That actually has worked out awfully well, we think.
Our fourth witness is Professor Jody Freeman. Professor Freeman teaches administrative law and environmental law at Harvard Law School, where she is the Director of the Environmental Law Program. Prior to joining Harvard Law School, Professor Freeman taught at UCLA for 10 years. I appreciate some good Western perspective here. Currently, she serves as Vice Chair of the ABA Administrative Law Section Subcommittee on both Dispute Resolution and Environmental Law and Natural Resources. She also chairs the AALS Executive Committee on Administrative Law.
Professor Freeman received her undergraduate degree from Stanford University and her law degree from the University of Toronto, where I have a son living now. She thereafter received her master's and doctorate of law from the Harvard Law School.
I extend to each of you my warm regards and appreciation for your willingness to participate in today's hearing. In light of the fact that your written statement is being included in the record, I request that you limit your remarks to 5 minutes. Accordingly, please feel free to summarize or highlight the salient points of your testimony.
You will note that we have a lighting system that starts with a green light. After 4 minutes, it turns to a yellow light and then 5 minutes it turns to a red light. It is my habit, interestingly it is actually captured here in my notes, to tap the gavel at 5 minutes. We would appreciate it if you would finish up your thoughts within that time frame. We don't want to cut people off in the middle of their thinking, but it works better if everybody has that rule. It is not a hard rule, just so you know recognizing 5 minutes has gone by. We are actually quite interested in what you have to say and if it goes beyond that, I don't think today anybody is doing to be very exercised.
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We would appreciate that, and I if really start tapping hard then you know I am bored or Mel is nudging me or something. After you have presented your remarks, Subcommittee Members, in the order they arrive, will be permitted to ask questions of the witnesses subject to the 5-minute limit and possibly subject to more than one round.
Pursuant to the direction of the Chairman of the Judiciary Committee, I ask that the witnesses please stand and raise your right hand to take the oath.
Thank you. You may be seated. The record should reflect that the witnesses answered in the affirmative.
And Mr. Rosenberg, we would be pleased if you proceed with your testimony.
TESTIMONY OF MORTON ROSENBERG, ESQUIRE, SPECIALIST IN AMERICAN PUBLIC LAW, AMERICAN LAW DIVISION OF THE CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS
Mr. ROSENBERG. Thank you, Mr. Chairman. Mr. Chairman, Mr. Watt, I am very pleased to be here today. I have enjoyed for many, many years working with your Subcommittee and Raymond Smietanka and Susan Jensen and with other parts of your full Committee. I am a wonk in administrative law. I get off on these kind of things and I have for over 30 years in CRS.
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You have asked me here today to discuss and describe the background, development and goals of your Committee's Administrative Law, Process and Procedure Project, CRS's role in that project, what we've done so far, and what we hope to accomplish in the future.
In my prepared remarks, I have detailed the genesis of your project, from the coincidence of the briefing that T.J. Halstead, one of the CRS team, and I gave a full Committee staff briefing on emerging issues in law and ad process and your first hearing in the attempt to revive ACUS with Justices Scalia and Thomas [sic].
My sense at that time was that there was a close nexus between the demise of ACUS in 1995 and the growing number of seemingly insoluble process and practice issues over the last decade, a sense that I tried to convey to the Committee. I was perhaps influenced by an unknowing dependence upon ACUS. I do not exaggerate when I say that I have always had within arm's reach in my 33 years at CRS a full and, until 1995, complete growing set of ACUS reports and recommendations, which were often my first resource in responding to clients such as your Committee.
I was fortunate in the 80's and 90's, when I was deeply involved in issues involving Executive Order 12291, presidential review of rulemaking, and some of the first major efforts at regulatory reform that were going on in those days, and I was fortunate to call upon for assistance and occasionally work with Jeff Lubbers when he was Research Director at ACUS. In any event, I was excitedand I am excitedat the prospect of working with your Subcommittee, with the CRS team that includes T.J. Halstead of the American Law Division and Curtis Copeland, of our Government and Finance Division, in which to assist in the two-track effort that you have started. That is, by providing it with background materials and information to inform the bipartisan effort to reauthorize ACUS and identifying the issues that might be the subject of either further study by a revived ACUS and/or legislative action by the Committee during the 109th Congress.
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As you mentioned, success was achieved with regard to the first effort with the enactment of the Federal Regulatory Improvement Act of 2004 in October of 2004. But as of this date, funding legislation has not been passed.
The Subcommittee, however, anticipated the possibility of an extended delay in the operational startup of ACUS after passage of the reauthorization legislation and directed its staff to consider, with the assistance of the CRS team, the options that would be available to it to accumulate the information and the data necessary to determine whether action on a particular issue required immediate legislative attention or was best referred to ACUS for further in-depth studies and recommendations.
And after extended discussions, such traditional approaches that have been used in the past, such as a series of informative hearings by the Committee, possible establishment of a study commission, or the creation by the Committee of a study group, were rejected in favor of seeking and utilizing the assistance of resources outside of Congress and the Committee, such as academic institutions, think tanks, CRS, the Government Accountability Office, among others, and the potentiality of utilizing forums for the airing of issues outside of Washington were deemed important.
The staff proposed and the Committee adopted a unique course of action. And I underline that what you're doing here is pretty unique. It is novel in the way it is reaching out beyond the Beltway to try to get a diversity of opinions and compile a record outside which might be more reflective of what is really going on and what real practical thoughts are out there.
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What you did was pursuant to the House rule requiring Committee adoption of an oversight plan for the 109th Congress. The full Committee made a study of emergent administrative law and process issues a priority oversight agenda item for the Subcommittee. Among the benefits of so identifying the study as a Subcommittee priority was to give it the imprimatur of official legislative legitimacy and importance which might, in turn, be useful in enlisting the voluntary assistance and services of individuals and institutions throughout the Nation.
The oversight plan identified seven general areas for study: public participation in the rulemaking process, congressional review of rules, presidential review of agency rulemaking, judicial review of rulemaking, the adjudicatory process, the utility of regulatory analyses and accountability requirements, and the role of science in the regulatory process.
The CRS team was designated by the Chairman and Ranking Minority Member to coordinate this project. Its first task was to take these seven broad study areas and identify or define potential questions or issues for research. The thought was not to limit research to those matters within the combined experience and expertise of the team members, but to develop theme packages in order to sell a package or a particular issue to a law school or university graduate school, a public agency or a consortium of those institutions for systematic, in-depth studies by means of empirical studies and papers conducted and prepared by leading experts in the particular areas which might be followed by public presentations and findings of symposia that would reflect these competing views.
Hopefully, the end product of that exercise is to be a compilation of the papers and the transcripts of the various public symposia similar to the two-volume working papers of the National Commission on Reform of Federal Criminal Laws published by your Committee in 1970, which contains 59 studies covering all aspects of the then current issues in criminal law reform. Those studies actually informed Congress' subsequent successful reform efforts.
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As of this date, two major empirical studies are underway, and one forum is scheduled for this room on December 5th.
One, being conducted under the direction of Professor Jody Freeman of Harvard Law School, is looking at the nature and impact of judicial review of agency rulemaking over what appears to be now a 13-year period in the 11 Federal Circuit Courts of Appeals. Professor Freeman is a fellow panelist today and will describe her plan for this very daunting and important undertaking.
The second study is being led by Professor William West of the Bush School of Government and Public Service at Texas A&M and will be looking into the influences on the initiation, design and development of new rules at 20 agencies during the period prior to the publication of notices of proposed rulemaking for public comment in the Federal Register. Professor West will be assisted by eight graduate students, and the study is in part funded by CRS's Capstone Program grant.
Both studies are expected to provide at least preliminary results by the spring of 2006. The third thing is the forum that is going to be lead by Professor Cary Coglianese here on e-rulemaking. There will be two panels of experts from the private sector, from the public sector, from Government, and they will be speaking with regard to the problems and potentialities of e-rulemaking as a way of fostering public participation.
Some other projects that we hope to place include a mega-project dealing with the problems that appear to be arising with presidential rulemaking, through executive orders, and the Congressional Review Act. That is the mechanism by which in 1996 Congress hoped to have a more effective oversight role and to balance what was going on under the executive order system.
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It appears apparent that there are problems. In the last few years under the leadership of OMB Administrator John Graham, it appears the balance between Congress' review efforts and the control and direction of, and influence on agency rulemaking has extended to the extent that one could say that perhaps there is a constitutional imbalance that needs to be redressed. But again, as Professor Freeman notes in her statement, empirical study is really necessary to understand just exactly how effective and perhaps untoward the presidential review mechanisms are.
Let me stop here and allow others to talk. There are a few other projects that we want to institute, but we can talk about those from your questions. I thank you.
[The prepared statement of Mr. Rosenberg follows:]
PREPARED STATEMENT OF MORTON ROSENBERG
[Note: Image(s) not available in this format. See PDF version of this file.]
Mr. CANNON. Thank you, Mort. The gentleman from North Carolina and Ranking Member of the Subcommittee is also the Chairman of the Congressional Black Caucus and has been extraordinarily busy with the passing of Rosa Parks, and so he has been concerned about his time. I leaned over and asked him if he thought I should tap, and his response was more or less no, this is great because we don't have to read it. And so I suggest that is exactly my view, by the way. And so we are going to be a little bit liberal, in fact, forget the clock. Just be interesting and, if you see one of us nodding off, then you know you have probably gone on too long.
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Mr. ROSENBERG. I have one or two
Mr. CANNON. We would like to hear that. Before you do so, let me suggest that we may be a little bit loose on the questioning too. As you were going through what were saying, Mort, it had occurred to me, are you familiar with WIKIsikis or Wikipedia, any of the panel? This is like a way for people to get online and work together. And you should look up Wikipedia, W-i-k-i-p-e-d-i-a, not the word spelling with the extra 'a,' and it is actually remarkable. It is a great encyclopedia that is created by people all over the world. And I suspect that, while we don't have this broad a base for the Administrative Procedure Act as we do have for an encyclopedia, there are many people that are interested and so a public forum, it might be interesting as part of the process you're considering. There are other tools. My office uses a tool called Net Documents, which most large law firms use, and it is a way to work collaboratively online. You may want to think about some of these tools in the process because if some wonk somewhere can take 5 minutes and review the latest activity and says, ''Wow, you're wrong, you have missed an idea,'' it is a great way to really get a collaborative process. In the end, what we need here is not just a bipartisan process, we need a process the American people buy into because we are talking about 10 percent of our economy here. And that 10 percent does many things.
We were joking earlier about whether it does good things or not and it probably does, but it also limits the output of our economy in a dramatic way. So to the degree that we can remove obstacles that are not helpful, maybe create new obstacles that would be more helpful to what we don't have right now, and be more rational, we would do well. And that I think means that you might have a very, very large group of people that get engaged in that process.
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TESTIMONY OF J. CHRISTOPHER MIHM, MANAGING DIRECTOR OF STRATEGIC ISSUES, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE
Mr. MIHM. Thank you, Mr. Chairman and Mr. Watt. It is an honor to be here. And Mr. Chairman, I will try and take your challenge of being interesting. That is a high bar but I am very pleased to be here and to contribute to your overview of Federal rulemaking and obviously we look forward to supporting this Subcommittee in its comprehensive and bipartisan review as you move forward.
As you mentioned in your opening statement, sir, over the last decade or so, at the request of Congress, we have prepared over 60 reports and testimonies reviewing cross-cutting aspects of rulemaking procedures and practices. Overall that work has found thathas identified important benefits of the efforts to enhance Federal rulemaking. At the same time, we have also pointed out some potential weaknesses and impediments to realizing those expected improvements. We have also identified some trends and challenges in the rulemaking environment that have emerged over the years that in our view merit closer congressional attention and consideration.
I will touch on each of these points in turn. In terms of the benefits then, as detailed in my written statement, our review has identified at least four overall benefits associated with existing regulatory analysis and accountability requirements. First, encouraging and facilitating greater public participation in rulemaking that clearly gives opportunities for the public to communicate with agencies by electronic means have expanded and requirements imposed by some of the regulatory reform initiatives have encouraged additional consultation with affected parties.
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Second, improving the transparency of the rulemaking process. Initiatives implemented over the past 25 years have helped to make the rulemaking process more open by facilitating public access to information, providing more information about the potential effects of rules and available alternatives, and requiring more documentation and justification of agency decisions.
Third, increasing the attention directed to rules and rulemaking. Our reports have pointed out that the oversight of agencies' rulemaking can and has resulted in useful changes to those rules and furthermore that agencies' awareness of this added scrutiny may provide an important and direct effect, potentially leading to less costly, more effective rules.
And finally, increasing expectations regarding the analytic support for proposed rules. The requirements that have been added over the years have raised the bar regarding information and analysis needed to support regulations. Such requirements have also prompted agencies to provide more data on the expected benefits and costs of their rules, and encouraged the identification and consideration of available alternatives.
On the other hand, as I mentioned, we have also identified at least four recurring reasons why reform initiatives have not been as effective. I think these are certainly consistent with the research agenda that the Subcommittee is putting forward.
First, there has been a lack of clarity and other weaknesses in key terms and definitions. For example RFA's analytical requirements, which were intended to help address concerns about the impact of rules on small entities, do not apply if an agency head certifies that the rule will not have, ''a significant economic impact on a substantial number of small entities.'' However, RFA neither defines this key phrase nor, importantly, places responsibility on any party to define it consistently across the Government, which not surprisingly has led to quite a bit of variance.
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Second, the limited scope and coverage of various requirements. For example, we pointed out last year that the relatively small number of rules identified as containing mandates under the unfunded mandates legislation could be attributed in part to the 14 different exemptions, exclusions and other restrictions on the identification of regulatory mandates under the act.
Third, the uneven implementation of the initiatives' requirements. For example, our reviews of economic assessments that analyze regulations prospectively has found that those assessments are not always useful for comparisons across Government, because they are often based on different assumptions of the same key economic variables.
And finally, a predominant focus on just one part of the regulatory process, and Mr. Chairman, in your opening statement this is certainly a point you were making. We have placed more analytic and procedural requirements on agencies' development of rules than on other phases of the regulatory process, from the underlying statutory authorization, through effective implementation and monitoring of compliance with rules, to an evaluation of existing rules. What are we actually getting in terms of benefits and costs associated with rules?
Thus, while rulemaking is clearly an important point in the regulatory process, other phases can also help determine the effectiveness of Federal regulation.
The findings and emerging issues reported in our body of work on Federal rulemaking suggest a few areas in which Congress might consider legislative action or further study, which are of course certainly consistent with those issues that are laid out in the Subcommittee's oversight plan and also as Mort was touching on in his written statement.
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We believe that first there is a need to reexamine rulemaking structures and processes, including APA, again a point, Mr. Chairman, you made in your opening statement.
Second, there is a need to address previously identified weaknesses of existing statutory requirements.
Third, we should promote additional improvements in the transparency of agencies' rulemaking actions.
And fourth, a point, Mr. Watt, that you were making in regards to information technology, we need to open a broader examination of how developments in information technology might effect the notice in common under rulemaking process. And as you pointed out, sir, there are key issues of security, transparency and access that all need to be carefully weighed and balanced off against one another.
Mr. Cannon, Mr. Watt, this concludes my statement. I will be happy to answer any questions you may have.
[The prepared statement of Mr. Mihm follows:]
PREPARED STATEMENT OF J. CHRISTOPHER MIHM
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Page 29 PREV PAGE TOP OF DOC Mr. CANNON. I thank you very much. You know you talk about a high bar. For APA wonks, the bar appears substantially lower. Like a heartbeat probably works.
Mr. Lubbers, we appreciate your testimony now.
TESTIMONY OF PROFESSOR JEFFREY S. LUBBERS, FELLOW IN LAW AND GOVERNMENT PROGRAM, WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY
Mr. LUBBERS. Thank you, Mr. Chairman, Mr. Watt. It's great to be here with my distinguished panel members today, and I guess I do qualify as an administrative procedure wonk having worked in the area for so long.
I found much to agree with in my fellow panelists' statements and very little to disagree with.
I first want to applaud you and your Committee for leading the successful effort to reauthorize the Administrative Conference, which had to close its doorsexactly 10 years ago yesterday, by the way.
I truly believe it was one of the Federal Government's most cost effective institutions and it has been sorely missed.
I view this hearing as an opportunity to suggest a research agenda for ACUS that would help convince the appropriators that the relatively small investment in ACUS would be repaid many times over.
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I also applaud the Committee for sponsoring a series of empirical research projects that would provide reliable data for a reconstituted ACUS to use in making recommendations to use in improvements in the administrative process. I think it is a great idea and the two projects already underway to be carried out by Professor West and by Professor Freeman should be invaluable to all of us.
Let me say that I think there is one analog that I can recall the Senate Governmental Affairs Committee back in the late 70's, maybe early 80's, late 70's, did a series of empirical studies that provided a very good basis for regulatory reform proposals in the 80's.
I have provided the Committee with a lengthy menu of topics that I believe might form the research agenda of a revived ACUS. I group these topics into several major areas.
First, the rulemaking process. The notice-and-comment rulemaking process is the preferred way for most agencies to make policy. However, this process has become much more complicated in the last 35 years due to additional procedural and analytical requirements, to the point where many commentators are worried that the process has become too difficultor ossified, to use the two-dollar word. And agencies seem to be increasingly trying to avoid these requirements by making policy through less visible types of nonrule rules, such as guidance documents that are not subject to notice and comment.
Therefore, I believe that one area researchers should pursue is the increasing complexity of the rulemaking process. For example, agencies are required to prepare about a dozen separate analyses in rulemaking. A study of the costs and benefits of these impact analyses and how they could at least be consolidated would be useful.
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I also agree with Mort Rosenberg that the systems for both White House and congressional review of agency rules should be examined to see what kinds of changes agencies have made in proposed rules, and how the length of the rulemaking process has been affected.
There is also a renewed emphasis on the need for sound science in rulemaking. Last January OMB issued a bulletin that requires administrative agencies to conduct a peer review of, ''scientific information disseminations.'' This followed enactment in year 2000 of the Information Quality Act, which was inserted as an undebated amendment into an omnibus appropriations bill.
The IQA requires every agency to issue guidelines to ensure the quality, objectivity, utility and integrity of information disseminated by the agency.
These two OMB-overseen initiatives require significant agency implementation activities, but it is unclear at this point how they have affected the rulemaking process or whether they have provided any improvements in regulatory science.
Another study I recommend is to find out what is holding back negotiated rulemaking. Since the mid-90's its use has plateaued or even fallen despite its great promise. It would be useful to mount a major study of why it is faltering and what should be done to revive it.
The other major change, as others have mentioned, to the rulemaking process has been the impact of the Internet, leading to what is called e-rulemaking. Since ACUS's defunding, there have been enormous developments in this area especially in the technology. But the legal developments are moving more slowly. I have tried to catalog the legal issues that provide challenges to the twin goals of better information dissemination and increased public participation in the rulemaking process.
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These legal issues include such things as how to best integrate the data, docketing questions, archiving, copyright protection, security, and privacy just to name a few.
Beyond the rulemaking process itself, there are a lot of broader regulatory issues that need study: regulatory prioritization, retrospective reviews of agency rulemakings to see how the actual costs and benefits match the predicted costs and benefits, alternative approaches to regulation and enforcementsomething that my colleague Jody Freeman has written very excellent articles about. Use of waivers and exceptionssomething we have heard a lot about after the Katrina hurricanefederalism issues, and agency structural issues, such as how should departments and commissions be structured.
There are also some pressing issues of administrative adjudication. The ALJ program, Administrative Law Judge program, is still having problems with agencies seeking to use other types of hearing officers too often. Agency appeal boards are coming under scrutiny in the immigration, Social Security and patent and trademark areas. And mass adjudication programs like the Social Security Disability program are facing huge backlogs and caseload pressures.
And finally, there are recurrent issues concerning judicial review. The agency-court partnership is of obvious concern to all three branches of Government as exemplified by the Chevron case, in which the Supreme Court basically told the judiciary to defer to reasonable interpretations of statutes made by executive agencies. This simple dictum has spawned many cases concerning what this deference should consist of and to what types of interpretations it should be applied.
Page 33 PREV PAGE TOP OF DOC There is no shortage of scholarly commentary on these cases. But there is an absence of consensus-building around this issue. The courts are struggling with these issues, and a renewed ACUS could help provide some focus for the courts.
One other judiciary issue I will mention, which relates to attorneys' fee issues. This is something that ACUS had a role in, in overseeing the rules under the Equal Access to Justice Act. But a recent Supreme Court decision has limited what is meant by the term ''prevailing party'', which allows parties to get attorneys' fees. The impact of this decision should be of great interest to Congress, which could of course make its intent clear if it so wished.
In conclusion, let me say that this is a short summary of a lengthy list. But even the full list is hardly a comprehensive menu of projects that could be tackled by a revived ACUS. It is a collection of issues that have accumulated in the past decade. The new ACUS chairperson and his or her counsel would obviously have their own priorities. But I hope that this listing does show the need for a revised and continuing focus on the administrative procedural issues that often get short shrift but can make or break the success of governmental programs.
For 28 years ACUS provided a low cost center of research scholarship and consensus-building on administrative law within the Federal Government and I believe that now, through the efforts of you and your Committee, that ACUS has been reauthorized, it should be funded as soon as possible. Thank you, and I look forward to your questions.
[The prepared statement of Mr. Lubbers follows:]
Page 34 PREV PAGE TOP OF DOCPREPARED STATEMENT OF JEFFREY S. LUBBERS
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Mr. CANNON. My sentiment about funding exactly. I have been sitting here trying to figure out how we in an era of reducing programs by number as opposed to improving Government through a process is more important. We are working on that. Thank you, and appreciate your comments.
TESTIMONY OF PROFESSOR JODY FREEMAN, HARVARD LAW SCHOOL
Ms. FREEMAN. Mr. Chairman, Mr. Watt, members of the staff, I am delighted to be here today. As you know, I specialize in administrative law and I want to line up on your side in terms of being excited all the time about administrative law issues. If anybody wants to keep talking about it after the end of the hearing I will stay as long as anyone likes. It is hard to find friends. Administrative law and administrative process issues have a PR problem in this regard, and I think that is part of the reason.
I have spent a lot of time trying to think about how to rename the field. Things like ''Government, power and you'' come to mind. But I want to focus on two points of my testimony. I have gone on at length in my written testimony, and I won't repeat all of it.
Page 35 PREV PAGE TOP OF DOC First, I want to express the absolute clarity of the need for empirical research on what Government agencies do and how well they do it. We know precious little. We don't know much at all about the very important process of generating rules which, as you all well know, reach every corner of our economy and every aspect of social life. The high volume of rules coming out of agencies like DHS and EPA and HHS and DOT, these rules have the power, the effect of legislation. And yet we know almost nothing about how well we are doing this and how we might improve it. And there is a clear need, as this Committee well knows, for an informed approach to congressional law reform efforts.
As you know, Congress passes a few hundred laws every year. The Supreme Court issues maybe between 70 and 100 cases every year. And yet we have thousands of rules coming from the Federal Government every year, and we have almost noI feel safe in sayingonly almost no careful empirical analysis of what agencies are doing.
And this is a really serious, I think, problem because we can't answer some essential questions. We can't answer the question yet, how well is congressional review of agency rulemaking going? We can't answer whether OMB oversight is effective and whether it is effective for some agencies or not. Some agencies may perform cost-benefit analysis particularly well, some agencies maybe fairly poorly. We can't answer the question, have we heaped on too many of these analytic burdens so that we are actually undermining the ability of agencies to promulgate rational, defensible, smart rules?
Intuitively you would expect more oversight, more analysis, more information to help the rulemaking process. But the problem is that we don't know how well we are actually performing.
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So we have only scratched the surface in starting to explore these issues, and I think a coherent, comprehensive empirical research project would be enormously helpful to your efforts in Congress to either avoid law reform that is wasteful and distracting and just a bad idea, and to target your law reform efforts and your money and your time on things, on measures that will be beneficial. There will be short term measures, longer term measures, but what you want I believe is a list of priorities and a sense of where you will get the most bang for your proverbial buck. And I think that is something that a revived ACUS that is appropriately funded can really contribute to.
There are many myths about the administrative process. There is a figure that we all know about which circulated for years which was a figure that claimed that 80 percent of EPA's rules got challenged, and administrators of EPA cited this and people cited it in congressional testimony. And the truth is there was absolutely no empirical basis for the figure. People just thought it was 80 percent.
This is not the way one ought to go about law reform and planning for administrative decision making.
There is a similar figure floating around, and I believe there is a preliminary study that CRS didI may be wrong about thatbut there is a figure floating around that 50 percent of rules that get challenged upon judicial review get struck down.
Some people believe it is as high as 50 percent. This is something the study I am doing is looking at, and the truth of the matter is we just don't know. We don't know how well rules fair when they get challenged.
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So I will be happy to talk a little bit about the study and give you a sense of it. We are at the preliminary stage, but this is the kind of thing we want to know about. Because it would be a big mistake and a waste of resources to conclude that so many rules are being challenged and so many rules have been struck down that the process isn't working and Congress ought to intervene to fix it if in fact that is not the case.
So we really need to know the answers to these questions.
Just briefly, the study that I am conducting I think can help shed some light on at least how one project is going about looking at the judicial review of rulemaking and also I think shed a little bit of light on the cost involved.
This study grew out of conversations between me and staff at the Congressional Research Service, in particular, Curtis Copeland, which of course stem from this Committee's interest in sponsoring empirical work. And we focused on the fate of agency rules upon judicial review. This study is the most comprehensive study I am aware of. We look at a database initially of 10,000 cases but culled to 3,000 cases, of which we think there are about 20 percent involving rulemaking, challenges to rules. So we think we are going to end up with about 600 cases, which is a very big database of cases, and every one of them is being coded in the most deliberate manner so that what we can pull out of this data would be preliminary inferences, preliminary answers to questions like how many rules do get struck down across all of the 11 circuit courts? How often do interest groups of a particular type succeed in challenging rules? Does it make a difference what agency promulgated the rules? Do some agencies always win, do some agencies always have their rules struck down?
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We don't know the answers to these questions, and we are coding the data for even more than that. So if we want to ask even more detailed questions; for example, how do you do across the circuits? How does the Fifth Circuit compare to the First Circuit? Does it matter which panel of judges you come before in terms of the rate at which they strike rules down?
All of these questions we are asking and we should be able we hope to infer something here as well about how closely judges are really reviewing rules because we are going to code the reasons why the rules are struck down, the basis for challenging why they are struck down when they are struck down. So we should be able to tell something about whether the courts are reviewing rules with a very serious, rigorous kind of approach which we would call ''hard look review'' or whether they are giving these rules rather a soft glance and not being particularly rigorous in reviewing them.
So I am happy to talk more about that study. I will tell you something about what it costs, and this leads to this problem of incentives to do this kind of research. I will be very honest with you, law professors really don't want to do this. And the reason is not because we are not interested but you don't get tenure for it. These kind of empirical studies give us very few rewards. Luckily I have tenure. I can just be interested in it. But without incentivizing this kind of work that means without a body like ACUS that can draw on academic expertise and tempt academics by sayingguess what, you can interact with some of the best minds in practice, some of the best minds in agencies, you will have lots of access to this collaborative, cooperative exercise, without incentivesit is going to be very hard to generate this kind of work, the work that you need to inform your efforts.
Page 39 PREV PAGE TOP OF DOC The other thing I want to mention about empirical work is it takes time and money. It is slower going than we would like. It is hard to do. My project involved an empirical expert who directs empirical research at UCLA School of Law where I formerly was a professor before I joined Harvard. You need someone with that kind of statistical expertise to do this work so it's reliable and credible for your purposes. I have a team of four research assistants. These people are very underpaid, and I need even more of them to do this properly. The project is probably easily costing $10,000 for the first cut through the data, and I imagine it will get easily to $20,000, and the generosity of the Dean of the Harvard Law School is making this possible. There is no other source of funding to do it.
As you well know, Mr. Chairman, it is very hard to go out to foundations or anybody and say I am doing a fascinating project on the administrative process, even though it is about the way the American Government works and how well it works.
Finally, my second big point and my most important point I think here for your purposes may be to reinforce the need to invest in ACUS. A small investment is going to go a very long way. This is a body that is going to be able to make recommendations in a way that no other body can. The American Bar Association doesn't have the legislative clout and the credibility with agencies that ACUS will have. There is a Center for Rulemaking that Professor Kerwin has initiated at the American University. It is a very interesting center, but it doesn't have the resources. It doesn't have the ability to do the kinds of things that ACUS can do. And as Justice Scalia noted very clearly, there is a big difference when ACUS comes to agencies and says we want to study you. They perceive that as potentially helpful, and not as something that will potentially be an obstacle that will get in their way.
Page 40 PREV PAGE TOP OF DOC I really believe that ACUS is a bargain for Congress. And as you mentioned, Mr. Chairman, as other panelists have mentioned, it is clear that funding ACUS to a tune of the several million dollars should not be seen as in competition with other efforts that are very pressing in the Federal Government. ACUS can help to improve our efforts, as you mentioned, in terms of disaster relief response and also in terms of security, national security concerns. If you make Government work better and you figure out ways to improve it, you're going to assist in all those endeavors. It is well worth the investment.
I just want to add to Professor Lubbers' long list a few ideas for what I believe is really the next generation of ACUS. Ten years is a long time. Things have changed since ACUS was around, and there is, as Professor Lubbers has mentioned, a backlog of work to do. But in particular a few things have developed that I think are very worthy of ACUS's time. One has been mentioned here today, privatization and contracting out. We really do not have administrative procedures adequate to guide privatization and contracting out. Private service providers are increasingly performing functions we have traditionally thought of as public, including functions associated with the military functions, prisons, national security. And the truth of the matter is most of these actions typically fall outside of the administrative law process and protections. And we need to think carefully about that. ACUS can spearhead in a bipartisan way a project to think about that.
Second, I do want to mention it is the 10th anniversary of the Small Business Regulatory Enforcement Fairness Act and there have been concerns that small businesses are not the ones benefiting from getting an early look at these rules, but rather that, potentially, big business is driving the small business agenda. It is something that Congress may be interested in, something certainly that ACUS could look at.
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And finally, where ACUS could direct further research, as again has been mentioned here today and I want to reinforce it, is the reconciliation of the administrative law principles of fairness and openness and transparency and effectiveness with the clear imperatives of national security. This was not on the radar screen 10 years ago, and it is front and center on the radar screen right now.
There are agencies in the Federal Government that are not subject at the moment to the kind of rigorous cost-benefit analysis and the kind of other requirements that we impose onthat we normally impose on the process. And how are we going to reconcile the need to protect our national security while at the same time not abandon the norms and principles that inform administrative law? I think that's a huge challenge. I don't know the answer.
But we are operating with a 60-year-old document, the Administrative Procedure Act, and we need to think very carefully about where and how to engage in reform. And I think ACUS will be well worth a small investment of Congress' time and money. Thank you.
[The prepared statement of Ms. Freeman follows:]
PREPARED STATEMENT OF JODY FREEMAN
Mr. Chairman and Members of the Subcommittee:
Thank you for the invitation to testify at the Oversight Hearing on the Administrative Law, Process and Procedure Project.
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I am a Professor of Law at Harvard Law School. I specialize in administrative law and environmental law. My scholarship focuses on congressional delegation of authority to agencies, inter-agency coordination, public-private collaboration, dispute resolution, regulatory innovation, and privatization. I am the Vice-Chair of the American Bar Association Administrative Law Section Sub-Committee on Dispute Resolution as well as the Vice Chair of the Sub-Committee on Environmental Law and Natural Resources. I am the current Chair of the American Association of Law Schools (AALS) Executive Committee on Administrative Law.
My testimony focuses on two points: (1) the need for empirical research to support congressional law reform efforts in administrative law; and (2) the benefits to be gained by funding the Administrative Conference of the United States (ACUS) to produce and sponsor such empirical research. I will also describe the empirical project on agency rulemaking that I have undertaken in consultation with the Congressional Research Service (CRS), a project that I hope will further this Subcommittee's Oversight Plan and which might help to inform other empirical studies sponsored by ACUS, should it be funded. Although I will confine most of my remarks to the topic of rulemaking, the scope of what ACUS can and should undertake to study is broader. I will briefly touch upon some other matters ACUS might examine if it is funded, but a more developed proposal for the agency's agenda will be offered by my co-panelist, Jeffrey S. Lubbers.
I. THE NEED FOR EMPIRICAL RESEARCH TO ASSIST CONGRESSIONAL LAW REFORM
As this Subcommittee has noted, Congress needs more information on rulemaking and other aspects of the administrative process in order to focus its law reform efforts. We know precious little about the administrative process. Consider: Each year, Congress enacts a few hundred laws, the Supreme Court hands down fewer than a hundred decisions, and regulatory agencies promulgate several thousand rules. Yet while the legislative and judicial processes are the object of very close scrutiny and rigorous empirical analysis, the rulemaking process attracts strikingly little scholarly attention. Are rules effective? Are they produced in a timely manner? Are they produced with sufficient public input? Are they cost-effective? Do congressional and executive oversight mechanisms improve rules? Are rules challenged frequently? Do most challenged rules survive judicial review? We simply cannot answer these questions. The dearth of empirical research on rules is especially problematic given the importance of rulemaking as a vehicle for social and economic policy. Many rules have very significant social and economic effects. The agencies that produce a high volume of rules, including the Department of Transportation, the Environmental Protection Agency, the Department of Homeland Security, and Health and Human Services affect virtually every corner of the U.S. economy and every aspect of social life. Yet our empirical knowledge of the effectiveness of their rulemaking processes remains woefully thin.
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Without the benefit of reliable empirical research, Congress might waste both time and money on law reform efforts that are neither necessary nor effective. It would be a mistake, for example, to add more oversight mechanisms to rulemaking if the existing measures, such as cost-benefit analysis and peer review, work well. Intuitively, one would expect these additional steps to improve the quality of rulemaking, yet we cannot say with confidence whether or not this is true. Among the questions to be investigated are: How well do agencies perform these analyses? Do these oversight mechanisms improve the quality of rules? Do they slow down the rulemaking process unnecessarily? Are they a net benefit or a net cost? While we have some preliminary evidence on these questions, scholarly work to date has only scratched the surface.
Moreover, to the extent that scholars do study the rulemaking process, the majority of attention focuses on ex ante processes in rulemaking (such as cost-benefit analysis). There is virtually no ex post empirical study of the rules themselves. To put a finer point on it, we do not know how well rules are implemented and whether they achieve their goals, and we lack mechanisms for feeding such ex post evaluation back into the rulemaking process.
Indeed, we have not even agreed upon what measurement tools we would use to answer the most basic questions. For example, how would we answer the question, Are regulatory agencies getting better at rulemaking? Would we look to see if the agency is doing a better job of setting its priorities? Whether it is issuing rules faster than it used to? Doing a superior job of analyzing scientific data? Obtaining more feedback about the effect of its rules, and integrating it into decision making? Congress might be interested in knowing the answer to these questions before it undertakes reform. Perhaps agencies that are less successful at one or more of these steps might be encouraged to adopt the ''best practices'' of the more successful agencies. Congress might wish in some instances to require the adoption of certain practices across the board. With only anecdotal and impressionistic evidence, however, Congress would simply be guessing at what works.
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There are many myths about the administrative process that persist for years, despite their dubious origins. For example, scholars and practitioners of administrative law long subscribed to the widely-held belief that the vast majority80 per centof regulations issued each year by the Environmental Protection Agency (EPA) were challenged in court. This statistic was relied upon by academics, legislators, and journalists, quoted by successive administrators of EPA, and cited before congressional committees as truth. The only problem was that the statistic had no factual basis. Indeed, one empirical study investigating its accuracy determined that no more than 35 per cent of the EPA's rules were challenged. This rate of challenge is still significant, and might justify law reform efforts aimed at reducing legal challenges to rules. Yet the example ought to make us cautious. Some concerns about the administrative process might be overstated, and some understated. There may be similar mistaken assumptions about how many rules are invalidated upon judicial review. Some believe the figure is as high as 50 per cent, but we don't really know. It would be a mistake to conclude, without knowing the real rate, that Congress needs to intervene to address this perceived problem. Only with good data can Congress choose wisely where to invest its resources, and prioritize which law reform efforts are most needed now, and which might be longer-term efforts.
In its Oversight Report, this Subcommittee has already identified issues that require further study, including (1) public participation in the rulemaking process; (2) Congressional review of rules; (3) Presidential review of agency rulemaking; (4) judicial review of agency rulemaking, (5) the agency adjudicatory process; (6) and the utility of regulatory analysis and accountability requirements; and (7) the role of science in the regulatory process. I agree that these are important areas for examination and, after discussions with the CRS, I agreed to undertake an empirical study of one of these issues: the judicial review of rulemaking. I describe the study below.
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II. DESCRIPTION OF FREEMAN/DOHERTY EMPIRICAL STUDY: JUDICIAL REVIEW OF RULEMAKING
Origin of the Study
This study grew out of conversations with the CRS about this Subcommittee's interest in empirical work on the administrative process. Among the important subjects CRS identified for scrutiny at the behest of this Subcommittee is the fate of agency rules upon judicial review. I agreed to do an empirical study on this topic together with Joseph Doherty, Associate Director for Research in the Empirical Research Group at the UCLA School of Law, and with the help of a team of research assistants at Harvard Law School. We expect to have preliminary results in January 2006 and a final report by the end of August 2006.
Purpose of the Study
The goal of the study is to investigate what happens to rules upon judicial review, including the rate at which they are struck down; the reasons why they are struck down or upheld; and any trends in the cases that might be attributable to differences in (1) the agencies generating the rules; (2) the litigants challenging them; or (3) the Circuits hearing the cases. While this study is only a beginning, we expect it to yield useful data on what is actually happening to agency rules after they are promulgated and once they are challenged.
We are using a comprehensive database consisting of all federal appellate cases involving administrative agencies (not just challenges to agency rules) from 1991 to 2003. The database consists of 3,075 cases that were decided in the Circuit courts during this thirteen-year period. The database was culled from an initial database of 10,000 cases, which was collected and partially coded by the Administrative Office of the Courts. We obtained the original database with the assistance of the CRS. To my knowledge, this database is unique in its breadth and in the time span it covers.
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We are in the process of identifying those cases in which an agency's conduct in promulgating a rule was challenged. This includes both formal and informal rulemaking. Preliminary analysis suggests that approximately 20 per cent of the cases will be identified as rulemaking cases. Thus, we expect to analyze approximately 600 cases of rulemaking, a significant number and far in excess of the number of cases that have been examined to date. We will read every case in this group, and collect highly detailed information about who challenged the rule, the basis for the challenge, and the reasoning behind the court's decision to uphold or overturn the agency's action. This information will be collected and entered into a database. Analysis of the data will permit us to make inferences about general characteristics and trends in the courts' reasoning.
Why does this research matter? Right now, we simply do not know whether agency rules are generally upheld or not, or whether some agencies are more likely to have their rules struck down compared to others. Nor do we know whether challenges brought by certain types of groups are more successful than those brought by others. Moreover, we lack comparative knowledge about different Circuits i.e., whether outcomes vary across the Circuits, or indeed across specific panels of particular judges. In addition to shedding light on these matters, the study should enable us to say something about the extent to which courts are taking a ''hard look'' at agency rules (meaning that courts closely examine the rulemaking process), versus a more cursory ''soft glance'' kind of review (in which review is less exacting). Without answers to these questions, we cannot begin to answer the broader question of whether the rulemaking process is producing effective rules (or at least rules resistant to judicial invalidation), and whether judicial review is performing its intended function.
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III. THE BENEFITS OF FUNDING THE ADMINISTRATIVE CONFERENCE OF THE UNITED STATES
Funding ACUS requires a relatively small investment but has the promise of big returns. I echo what this Subcommittee heard in the 108th Congress from Justices Scalia and Breyer, among others, about the unique role that ACUS has played in the past by serving as a remarkably productive and bipartisan ''think tank'' for administrative law reform. I agree with the consensus view that at past funding levels, and at funding levels being considered by the 109th Congress, ACUS was and will continue to be a bargain. Its key strength is in bringing together academics, experienced practitioners, and agency officialspeople of great distinction from both the public and private sectorsto think carefully and systematically about sensible good government reform. As Justice Scalia only half-jokingly pointed out, many of these people charge very high billable rates; Congress gets their help for free.
As I argued above, and as this Subcommittee well knows, there is an obvious need for empirical study of the administrative process, and ACUS is the institution best situated to generate and sponsor high quality research. The need for empirical research, particularly in the area of administrative law, is increasingly being recognized. In July 2004, the American University launched the Center for the Study of Rulemaking, which has as its mission examining and improving the processes used by government agencies to develop regulations. The Center has organized two conferences: one on e-rulemaking and another on the state of rulemaking in the federal government. While not devoted solely to empirical research, the Center has encouraged such study. Likewise, the American Association of Law Schools (AALS), a non-profit association of 166 law schools, has set ''empirical scholarship'' as the theme of its annual meeting in 2006. I am Chairing the Administrative Law Section meeting this year at the AALS and, in line with the overall theme, we are focusing on empirical study of administrative law. But this will be a one-time event.
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The shift toward empirical studywhat Roscoe Pound described as ''law in action''may be ascendant, but it is neither coordinated nor coherent. While they can partner with ACUS, neither the Center for rulemaking, the AALS, the Administrative Law Section of the American Bar Association (ABA) nor any other body can by itself organize and direct a program of empirical study of administrative law issues. Moreover, as Justice Scalia testified before this Subcommittee last year, agencies view any review by these non-governmental bodies with suspicion. ACUS, on the other hand, is a ''government insider,'' with legislative clout. Justice Scalia described the difference as follows:
I was Chairman of the Ad. Law Section for a year, and there's a big difference between showing up at an agency and saying, ''I'm from the American Bar Association, I want to know this, that, and the other,'' and coming there from the Administrative Conference which has a statute that says agencies shall cooperate and provide information. It makes all the difference in the world.
Only ACUS is positioned to sustain these studies over the longer-term, and to shape a coherent research agenda in coordination with Congress.
IV. THE ADMINISTRATIVE CONFERENCE'S AGENDA
This Subcommittee has already identified research questions that it would like to see ACUS pursue, and other witnesses on today's panel will have more to say on that topic. While I would not characterize the administrative state as being in crisis, it is operating with a sixty year old manualthe Administrative Procedure Actand there are critical areas in need of closer examination and reform. Jeffrey S. Lubbers, in his submissions, has provided a list of issues that require further study, and I am in full agreement with him. I wish only to underscore that I believe that ACUS could be the incubator for the next generation of administrative law research and I would suggest three other research areas on which it might focus.
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The first is privatization and contracting out. Private entities increasingly perform what we traditionally view as government functions, including some functions associated with the military, prisons and national security. Private service providers have contractual obligations vis-à-vis the government, but their actions typically fall outside of administrative law protections, process and regulation. How, if at all, should we conceive of these actors in administrative law? Is there a need for administrative law reform to address the issues raised by contracting out? This is a topic of considerable relevance at the moment, and it will only become more important over time.
The second area of research relates to the impact of the Small Business Regulatory Enforcement Fairness Act (SBREFA). In 1980, Congress enacted the Regulatory Flexibility Act (RFA), mandating that federal agencies consider the impact of regulatory proposals on small entities. The RFA was strengthened in 1996 by the enactment of the SBREFA. In the context of rulemaking, SBREFA grants small businesses the opportunity to see rules at a very early stage, before they are even proposed. While this seems to be a fair accommodation in principle, there is at least some anecdotal evidence that the process may not be working well and may even be abused. While small businesses may ostensibly be fronting the early review of rules, big business may in fact be driving the process behind the scenes. Next year is the tenth anniversary of SBREFA and it is an appropriate time to examine its effectiveness. ACUS could inquire into SBREFA's implementation and determine whether Congress' intended purpose of assisting smaller entities is, in fact, being met.
Finally, the third area where ACUS could direct further research is the reconciliation of the principles of administrative law with the imperatives of national security. Like other agencies, the various agencies within the Department of Homeland Security (DHS) undertake administrative processes and promulgate rules. However, unlike the other agencies, the DHS has not, perhaps understandably, been subject to commensurate scrutiny or cost-benefit analysis. How are the administrative law principles of transparency and accountability, fairness and effectiveness, to be reconciled with national security interests? Can the Administrative Procedure Act, which is now 60 years old, deal with contemporary matters of national security? These are not easy questions to answer but ACUS could provide a forum for their consideration.
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These are among the next generation of issues that ACUS might profitably explore, along with coordinating empirical study of how well the administrative state currently performs its functions. A small financial investment in ACUS could lead to significant cost savings down the road by directing Congress to high priority issues that are most in need of reform, illuminating opportunities where Congress can get the biggest bang for its proverbial buck, and directing Congress away from reform measures that may be unnecessary.
This concludes my remarks. I would be happy to take any questions that you might have.
Mr. CANNON. Thank you. I just want you all to know that I've made all these arguments about funding ACUS, and I think we're making progress there. We'll be submitting written questions that I think will take the bulk of what I would otherwise do. I'd like to take just a few moments and talk about where I'd like to see us go.
You know, the reason wethe reason the only program, or the only program that was actually defunded was ACUS is because people didn't understand it. They didn't share our heartbeat over what it does. And so we are spending some time trying to raise the level of interest in that.
And it was a bipartisan elimination. I mean, nobody knew much about what it did except those people who really understood, and they were not persuasive enough.
And so one of the things that I hope, as we proceed in this project, as I mentioned earlier, that we have, is we try and reach out to other interest groups. And there are a lot of people out there who care a lot about it if they thought there was a way to make some progress. And so I think it's our duty, as part of the project, to help look at those groups out there and draw them in. You do that by contacting them and by sending them an e-mail with a link and having them pop the link and then having a large corporation task a staff attorney or someone to follow the progress.
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And most corporations are spending a great deal of money on these issues. And as you tap into them and tap into the interest groups like the small business groups and the Chamber of Commerce and others, you end up with the ability to reach out and actually get people engaged in the process. And that means the process will be better, but it also means that we may actually be able to get something done.
And so, I would, since we are all going to be working together on this over a long period of time, if I might suggest, you have WIKIs and blogs, you have Web sites and e-mails, and we need to be using sort of these tools that are out there to promote what we are doing. And, in fact, we need to do something, as you said, Ms. Freeman, about changing the name, because APA puts you to sleep if you could remember what it stands for. But something like, ''The Government power and you''that does touch people and it especially touches people who have deep pockets and who care about this stuff, but who have grown inured to the enormity of what's happening to them partly because the issues have been partisan.
If you're talking about environmental issues, you have people who are pro and con before the issue is on the table. And so you can't say what is the process that leads us to an appropriate conclusion. And there are some people who will actually say that they specifically view the world that way. They don't want it to be touched because walking on public lands or stopping categorical exclusions for drilling, those things are good, regardless of the cost and the outcome in a world where technology has changed.
We just had over the weekend a news report that the local gas company has been awarded a 20 percent increase in its costs and what people pay. And they met with me the day before that happened and said it was going to be 30 percent. So younow you have a bunch of guys say 20 percent, how do we do it on 20 percent? And what they have to do is come up with more oil and gas.
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They have several oil wells that have been completed, but not ready to produce because they are waiting for a signature by a bureaucrat in a system. And at the same time they believe they should get categorical exclusions which will allow them to drill enough wells between now and next November that prices could come down by 30 percent in November. And we are doing that in a context of people arguing at a level that is absolutely unrelated to either the production of more gas and, therefore, the lowering of costs or to the effectiveness of drilling when the technology is so radically different that we are not regulating the same thing that we produce the rules for.
So this is a remarkably important time, and we are going to produce more oil and gas. The question is, do we do it thoughtfully? And what we do as a group here is likely to be a significant portion of that.
So I am going to turn the time over to my Ranking Member in a moment, but I just want to thank you all for being here and tell you that this, I think, is about as important a thing as can be done in Government because we can regulate much more efficiently. We can accomplish our objectives without the kind of costs that we are imposing, and human beings and other species that share our world can enjoy it to a much better degree if we are faithful and articulate about what our goals are and how we achieve them than if we just live with an old structure that is in many ways probably not serving us very well.
So I yield back my time. And Mr. Watt.
Mr. WATT. Thank you, Mr. Chairman. I couldn't help but have my mind wonder at one point during this exciting testimony and your exciting response to the testimony, that a new stenographer came in the middle and she's probably wondering what in the world is a WIKI. You ought to at least try to explain that to her so she can get it in the record. I mean, there was a different reporter here.
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Mr. CANNON. W-I-K-I. And Google it, G-O-O-G-L-E. I am sure you know what that is.
Mr. WATT. Don't make it worse.
Mr. CANNON. It'll be great.
Mr. WATT. She was having enough trouble following your Utah accent without all these extraneous words.
Let me start by asking a global question, and then I want to just go down and ask each one of you a question or two that got sparked by your exciting testimony.
Global question: I take it that all of you would agree that this project in which you all are engaged is not a satisfactory substitute for ACUS.
Ms. FREEMAN. As somebody conducting one of the few studies ongoing, let me say, absolutely not. As much as I appreciate the enormous help of the Congressional Research Service and their tremendous ability to help me do this, the truth is, it is very ad hoc. It depends on what a few people are interested in. This is not a comprehensive, well-thought-out exercise by those of us who are picking it up on the go. We need a body to say, here are the priorities.
Mr. WATT. I thought that would be theI guess that's kind of the uniform response of all of the witnesses.
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Mr. LUBBERS. I think the results of the project could provide some good raw data and empirical information that an ACUS could use.
Mr. WATT. I have got a question, a specific question, about that that I'll come back to in a little bit. In light of your response, I think I will take a more frontal assault on the Contract with America that I took
Mr. CANNON. It preceded me.
Mr. WATT. That, I took a gentle swipe at in my opening statement.
I think, actually, doing away with ACUS is probably the most dramatic demonstration that the Contract was political, rather than practical. I mean, I just can't think of a more dramatic example of it, so I'll let that go.
All right, I'm going on to my list of questions, and I'll just go down the questions, and maybe if you've got a thought or two about these questions that you want to do quickly, for each one of youbut it might be helpful to have you be more thoughtful and address these questions maybe as a follow-up to today's hearing because some of them are kind of more long term.
Mr. Rosenberg, the question I had of you is, how systematic is the outreach in the project? Has the project itself become more of an inside game for inside players?
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In my role as Chair of the Congressional Black Caucus, one of the things I'm always concerned about is whether there is systematic or any effort to reach out to historically black colleges and universities, for example, to do any of these research projects. It is refreshing to see one female here on the panel, but I'm always wondering whether there is any diversity going on in any of this research or whether it is all an inside game. That was my question to Mr. Rosenberg.
Mr. Mihm, you listed a series of things that you refer to as areas in which congressional action may be requiredweaknesses, transparency, technology, impact. I might suggest that some more specific examples of that, of those areas, might be worthwhile to give us a context.
Maybe that's included in your testimony, your written testimony; maybe it's not. As the Chairman said, one of the reasons you all went on and on and on beyond the 5 minutes was because probably neither one of us has read, had the opportunity to read your testimony.
Mr. Lubbers, a more concise statement of how ACUS has been missed and in what areas. You got to that issue, kind of indirectly by listing a bunch of things that the new ACUS might want to focus on, but there are probably some very dramatic examples that could be pointed to within the last 10 years of mistakes or things that would not have happened had ACUS been in existence, or possibly would not have happened had ACUS not beenit seems to me that that would be a good laundry list of things.
Page 56 PREV PAGE TOP OF DOC I'm trying to build a case for ACUS. I forgot to give you my mantra at the outset, ACUS ASAP. What about that? You like that?
Mr. CANNON. We're going to have to act like Senators and then figure out something that has meaning for that acronym.
Mr. WATT. ACUS ASAP. That was kind of my overall mantra. I forgot to give it to you at the beginning. Okay, I'm almost through.
I absolutely agree with Professor Freeman that we don't have a clue of whether our Federal Government agencies and/or the rules and regulations they promulgate are being effective or not, or how they could be improved. And I want to second that emotion.
I am especially interested in some of the things that you mentioned about the next generation of ACUS privatization, and contracting out is a major, major concern of ours when we start contracting out fighting a war. And there is some excellent research out there about how much of the Iraq war is being contracted out to private contractors, security providers, the whole effort in Iraq whichnone of which is subject or little of whichis subject to any kind of governmental oversight or administrative oversight or rules or regulations. And then when some of these private contractors get captured or taken as prisoners, we don't even know whether we have the responsibility to send the military in to rescue them or whether that is a private obligation.
Even down to that level, when we start contracting out the interrogation of prisonersthis has been a major issue of ours domestically for years. When it comes to privatization of prisons, whether the private contractors are subject to the same set of responsibilities that the Government was subject to is a major issue, and I hope you'll elaborate on that.
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And then, of course, the issue that I raised in my opening statement, of reconciling these imperatives of privacy and transparency with national security is a major issue that I think we're just missing the boat on without ACUS doing systematic research. Not that the episodic research that you all are doing under the project is not good, but this needs to be systematic; and I want to join the Chairman of the Subcommittee in saying, it may not be exciting, but it is absolutely critically necessary.
Might not be politically something that people want to spend money on, but when we startwhat is it my mama used to say about saving, spending a little bit now to save more, penny wise and pound foolish, I think was the phrase she used. It is a dramatic demonstration that a lot of these suggestions that were implemented in the aftermath of the Contract with America have been just penny wise and pound foolish, in my opinion.
So I won't get off on that. I didn't mean to politicize it.
Mr. CANNON. Would the gentleman yield?
Mr. WATT. I'm going to yield back.
Mr. CANNON. Well, don't yield back.
Mr. WATT. Sure, I yield.
Mr. CANNON. You've asked several questions of the individuals. Can I just add another question to that? And probably, Professor Lubbers, you are best equipped, but others may want to comment.
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Is it possible for ACUS to operate with private funding? I am just thinking, due to the legislation, it's a Government agency almost, or it's a sort of private thing. I don't think it's a not-for-profit, but there are many agency groups out there, I think, who would like to see it operate, and I don't know that we're going to be able to do much this year.
Mr. WATT. I've got an idea for you.
Mr. CANNON. Yield back.
Mr. WATT. I've got an idea for you. It'll cut down on regulations if you just have each agency's budget assessed when they do a regulation or a rule to fund ACUS.
Mr. CANNON. As a Republican, I agree with that.
Mr. WATT. Get the money out of the various agencies.
Mr. CANNON. I get the sense you're trying to revive a new Contract with America from the Republican point of view. I got elected during the period of reaction to the Contract with America. I was only one of two Republicans who beat incumbent Democrats, whereas I think we lost eight or
Mr. WATT. Not enough.
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Mr. CANNON. Thank heavens.
Anyway, I yield back to you; and I think you have asked your questions.
Mr. WATT. If there are any quick responses to any of the things I have raised, but I, I mean, maybe some more thoughtful, longer-term written responses would be just as well. So go right ahead if you all want to comment.
Mr. ROSENBERG. My wife last night asked me what in the world I was doing working so late, and I explained to her, you know, what we were doing, and about ACUS and its reauthorization with no funds. She looked at me and said why didn't they do the Lance Armstrong solution. There must be enough wonks out there who will buy a bracelet, red, white and blue, you know, for a buck each. Maybe there are three million of them out there, we can get it going into next term.
With regard to your question
Mr. WATT. Is this a policy wonks bracelet? Is that what you're advocating for?
Mr. ROSENBERG. Yes. A policy wonks bracelet. There should be three million of them out there for at least 1 year's work.
These are just preliminary thoughts. What is the selection process? It isn't systematic. We are on the team and are familiar with various administrative law issues, administrative practice issues; and the way we know them is reading otherwhat people have done, things that have been published by people wherever they are.
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One of the things that I was hoping is that this hearing would get some notice out there in the industry, where the wonks would say, I have an idea, I'm willing to do that, I have the resources, or whatever it may be, and would come to us. We're trying to find people in various areas and encourage them.
The difficulty, as Professor Freeman has noted, is that whatever the university, graduate school, law school, whatever it is, unless there is some funding, they're not going to be able to do it. It takes time to do some of these things.
Not all these projects that we're looking at by the way, are mega studies; some of them are mini studies. One of them involves consent decrees. Your Committee is dealing with a big, broad issue on consent decrees. But one thing it doesn't deal with is a problem thator at least it's an anecdotal thing that I have come acrossis that there's been a trend in the last 5 to 7 years of agencies whose rules are being challenged, are entering into consent decrees about those rules and changing the substantive thrusts of those rules. And under the law today, the only way those rules can then be changed is by Congress passing a law. It's set in stone, and it is undermining public participation.
Now, that is a mini study. We want towhat I'm trying to do is get people who have written about consent decrees in this area to look at them very carefully and say, is this a real problem, is this a trend in the way the administrative agencies are evading public participation and being able to change the rules themselves? And once that is done, maybe there can be a solution with regard towell, H.R. 1229, the Federal Consent Decree Fairness Act, tries to do it by limiting the duration of any consent decree. I don't think that will particularly work with this, but that would be one part of the solution.
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So they have a mini thing. And what you do is, you try to find somebody out there who has written about consent decrees and knows about this process and gets it, wherever they are, you know, whatever it is. We will try to make this as diverse as possible, but we haveit's difficult enough finding people like Jody Freeman, you know, to do this kind of thing.
Mr. WATT. Are you all fundingwho's funding even the basic part of this? Are there grants?
Ms. FREEMAN. Harvard Law School.
Mr. WATT. Harvard Law School has taken your project completely. So you've got to go ask somebody to do something for free.
Mr. ROSENBERG. Yes. But there is a partial funding of this public participation study at Texas A&M. It's coming from CRS, which has links with about four or five graduate schools, universities, where they have, wherethis is a unique funding thing. Most of them are to help CRS do various studies. This is the first one in which we are aiding a Committee and funding, you know, the eight graduate students, you know, to do this massive study of
Mr. WATT. But think about what we're saying here. That's almost guaranteeing a lack of diversity because the people who are lessthe institutions that are least likely to be able to pick up that kind of economic burden are the ones that are just not going to. I mean, an HBCU is not going to be able to do that. Harvard can; a small university can't. A big university may be able to, if, you know, so you're almost guaranteeing a lack of diversity through this project, I think.
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Ms. FREEMAN. And, Mr. Watt, the problem's even worse because it is very unstable and unreliable, so even if you can pick up some funding for a little while, it gets cut off when you're mid-project.
Mr. MIHM. Mr. Watt, in the question that you directed to me, I'm going to take you up on your kind offer to provide a more complete and perhaps thoughtful answer for the record. But at least three things right off the top in terms of statutory changes that Congress may want to consider.
One, as I mentioned earlier, was revisiting the ''significant economic impact on a substantial number of small entities'' and providingthis isn't a regulatory flexibility act, providing either some additional guidance to agencies on what that means, or more likely, I would think, requiring some consistent guidance that be provided on that so that we can get comparability across agencies; or when it's not comparable, make sure that it's done for known reasons, rather than just kind of idiosyncratic reasons.
The second is that I think that we've published in the past that we think that Congress ought to revisit the Inflation Adjustment Act which allows agencies to increase their civil penalties to capture inflation. There've been problems with that both in kind of the technical aspects, some technical aspects of that, as well again as the need for some cross-cutting guidance across Government. We found that as a result of that lack of guidance that there was some inconsistency in how agencies work.
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Mr. WATT. Are they required to increase them? Or some of them are doing it and some of them are not?
Mr. MIHM. They are required, and some are doing it and some are not.
Mr. WATT. But not consistently in the way they do it, is what you are saying?
Mr. MIHM. Right. Yes, sir.
And then the third and perhaps this is actually building on an ACUS recommendation to go back and look at APA, and in particular with, you knowAPA, as you know, allows for good cause an agency not to have a notice of proposed rulemaking. That good-cause definition has been expanded and stretched and is perhaps at the screaming point in some places.
Some clarified guidance on that or expectations from Congress, I think would also be helpful. But again, we will provide a more complete list for you.
Mr. LUBBERS. Mr. Watt, it is a little hard to come up with dramatic examples of things that might not have happened if ACUS were there. It's a little bit like proving a negative. And ACUS did not have any power, per se. It was a recommendatory agency. But let me try to give you a few thoughts that occurred to me.
Page 64 PREV PAGE TOP OF DOC For example, the Department of Homeland Security, when that was created, a lot of agencies were brought together and there were some organizational issues that I think could have benefited from ACUS's consideration. Don't forget, ACUS was a large body of experts who were serving as volunteers, and it brought together people from all sides of the political spectrum. So I think one benefit of ACUS was that it reduced the partisanship that we see in Washington these days. So you had public interest groups from the left and the right talking to each other and Government people talking to private lawyers about some of these problems.
Another issue that was sort of partisan was the midnight regulation issue. When the Clinton administration went out and the Bush administration came in, there were lots of crises about regulations that were issued at the end of the Administration and then withdrawn or delayed by the Bush administration. I think that is an issue that the Administrative Conference could have worked on.
All of the issues regarding electronic rulemaking that I have mentioned I think would have benefited from scholarship and a coordinated set of studies. The Administrative Law Judge hiring program was frozen for 6 years at the Office of Personnel Management. Agencies could not hire new ALJs from the register of ALJs because of litigation over controversy concerning the Veterans Preference Act, and I think the Administrative Conference could have helped to solve that problem a lot earlier than 6 years.
The asbestos compensation issue, which I know Chairman Cannon is very concerned about and this Committee is concerned about, is something that I think could have benefited from Administrative Conference review. Maybe an administrative forum could have been developed to help resolve that issue.
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Sarbanes-Oxley is another issue that receives a lot of concern. And I think that law was necessary because of some failings of self-regulatory organizations in the securities and accounting area. So that is another thing I think we could have worked on.
Waivers and exceptions, we have seen that with respect to Katrina. People didn't know whether or how waivers and exceptions should be granted. I think that was on our list back in 1995, and I think we would have gotten around to that before 2005. So those are some issues.
Now, I justI want to also respond to Chairman Cannon's question about private funding. The Administrative Conference statute, of course, is very broad and it does permit the agency to accept private gifts, private donations, volunteer services, dollar-a-year people, and anybody who wants to work, agency transfers of funds.
ACUS has a very flexible statute, and it would permit all these sorts of fundingsources of funding to be used at ACUS. Whether you could come up with a completely private analog of ACUS that would be as effective, I have some doubts.
And let me just mention one other thing while I have the microphone which is, I'm working on an advisory committee, National Academy of Sciences official advisory committee now, which is concerning one slice of the Social Security program. And this is the part of the program that has to do with beneficiaries who cannot handle the benefits. Because of their disability, or they're drug addicts or something like that, they have to have a representative payee to get these checks. And not surprisingly, there are some abuses in this area.
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So Congress has funded the Social Security Administration to then fund the National Academy of Sciences to study this issue. And this study, alone, I think, was funded at an $8 million level. And our Committee just received bids from Beltway organizations to do a nationwide survey of about 4,000 representatives and beneficiaries; and that's going to be, I think, about a $5 million study. So that's just one slice of one obviously important program that's being funded for $8 million. And we're talking about a $3 million budget for the Administrative Conference.
Ms. FREEMAN. I just have a couple of brief remarks in response to the questions and concerns.
First, these very potentially politically contentious issues around contracting out, privatization, and harmonizing national security and administrative law procedures, the great value ACUS can aid here is obviously not solving this problem, not making the hard choices. That's for Congress to make, but steering a course through it by at least beginning to explain what kinds of contracting are not so problematic, what kinds of contracting are more problematic, what issues get raised, what rules apply.
You know, procurement law. There is an elaborate set of rules and regulations because of procurement.
But then there is an entirely different arena of contracting where almost nothing governs. And it's that kind of explaining what's going on, dissecting what the issues are, proposing potential solutions that can be so useful when delivered to Congress, and you can decide what you wish to do. But that function is being lost here.
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And I think, too, with thethe same thing with the contentious dimensions of the national security administrative law conflict here, the question is, what are the options and what are the perceived benefits, what are the perceived costs, and how ought we to think about it? That's a very important function that you want to put in the hands of a body that has this great reputation for being quite bipartisan and quite professional.
And the final thing I want to mention that goes back to the mention of consent decrees and the problems of what I would call back-door rulemaking, whenever you tighten up discretion in one area, the funny thing with administrative agencies is it pops out somewhere else. And there is a relationship between additional oversight mechanisms from both Congress and the executive and the great search within agencies for areas where they can operate more freely.
So it's something ACUS might look at; that is, the relationship between adding more analytic requirements and agencies feeling the need to go elsewhere, that is, operate through consent decrees, use exceptions that they can drive a truck through. These are related. And ACUS can look at that in a more comprehensive way than somebody who does a piecemeal study, part by part.
And the very last thing, the problem, the PR problem with administrative law, this is a failureI hate to admit thisof law schools. It's a failure of policy schools, it's a failure of public administration schools, because we have not developed a robust capacity to talk about how Government's working.
We talk about Congress plenty and we talk about judges a lot. But we do not focus on the heart and soul of the Federal Government, and that is the rulemaking and adjudicatory processes. And ACUS can be a spark to reignite interest in this important topic.
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Mr. WATT. Mr. Chairman, I've gone way over my time. I'll just close by saying, ACUS ASAP. Yield back.
Mr. CANNON. And that ''P'' probably needs to stand for private funding or some other source of funding, because we need to talk about it. Thank you very much, Mr. Watt.
And we want to thank the panel. It is very insightful. We've, I think, learned a lot here today. I have. And we look forward to working with you over a long term on this, and maybe we can come up with some ways of actually getting people to realize that 10 percent of the economy is a lot more than whatever judges do or that these elections for Congress aren't really very important in that context either.
Thank you a lot. We appreciate it. And see you soon.
[Whereupon, at 11:32 a.m., the Subcommittee was adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
RESPONSES TO ADDITIONAL QUESTIONS FROM MORTON ROSENBERG, ESQUIRE, SPECIALIST IN AMERICAN PUBLIC LAW, AMERICAN LAW DIVISION OF THE CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS
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RESPONSES TO ADDITIONAL QUESTIONS FROM J. CHRISTOPHER MIHM, MANAGING DIRECTOR OF STRATEGIC ISSUES, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE
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RESPONSES TO ADDITIONAL QUESTIONS FROM JEFFREY S. LUBBERS, FELLOW IN LAW AND GOVERNMENT PROGRAM, WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY
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RESPONSES TO ADDITIONAL QUESTIONS FROM JODY FREEMAN, HARVARD LAW SCHOOL
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