I am in agreement with Senator Bumpers' bill insofar as it contemplates that the courts will not be concluded by agency rulings when it comes to questions of law, interpretation of constitutional and statutory provisions, and interpretation of agency action. But that independence of the courts is widely understood, and I do not understand it to be disputed. This requires no legislation.

The concept that there shall be de novo decision suggests that proponents of a view on these questions will be authorized to withhold pertinent material from the agency, and then present it for the first time in a court proceeding. Whatever material is presented to the court should be presented in the first instance to the agency, so that the court may have the benefit of its view.

The court does give some deference to, though it is not concluded by, an agency's interpretations of its actions and the pertinent statutes, provided they are reasonable, and not divergent from an ascertainable legislative intent. That is the teaching of the Supreme Court in such cases as Udall v. Tallman, 380 U.S. 1, 16 (1965) ; Power Reactor Co. v. Electricians, 367 U.S. 396, 408 (1961) (cited in Udall). This strikes an appropriate balance. When the legislative history is not illuminating on an issue, and when the agency had made a determination that the court finds reasonable, it is productive of orderly government for the court to accept the agency's view. It enables all interests involved-industrial, commercial, environmental, and all other elements of the public interest-to plan their activities at an early date with reasonable confidence that their investments of time and resources will not be wasted. And since a court is always there to review the reasonableness of the interpretation, the agency is not set free to act arbitrarily, or out of whim or misplaced and excessive zeal.

For similar reasons, it is my view that it would be unwise, and counterproductive of the aim of good government, to provide, as contemplated by S. 111, that a regulation shall carry no presumption of validity, and shall not be sustained unless validity is "clearly and convincingly shown."

The law now requires a statement of the basis and purpose of a regulation, along with procedures for notice and comment on proposed regulations. A regulation that complies with these procedures is entitled to the presumption of regularity that we must give to official action, respecting its presumptive authority unless some facts are adduced that call validity into question. I believe in this principle for law enforcement officials, for executive departments, as well as for independent agencies. In the last analysis all these officials derive their authority from election, or from appointment by duly elected officials, and, in the case of officials of high rank, from confirmation by elected legislators. A presumption of regularity of official action does not undercut our freedom, it rather undergirds the orderly process of government, which is essential for true freedom. There is protection against bureaucratic tyranny in that official action has only a presumption of validity. That validity can be challenged, and we have meaningful procedures in the courts for consideration of such challenges. Notwithstanding the presumption of validity, the courts have been operating with a willingness to inquire into the premises of regulation when serious questions are raised.

I have obtained the latest available annual statistics of our court (U.S. Court of Appeals for the District of Columbia Circuit). During the fiscal year October 1, 1977, through September 30, 1978, about 20 percent (31 out of 160) of the cases involving administrative agency review proceedings resulted in full or partial reversal or remand to the agency.

I may refer to Alabama Power Co. v. EPA, No. 78-1006 (D.C. Cir., June 18, 1979), as the most recent example. In that case, our court set aside and remanded in various respects EPA's 1978 PSD regulations (for prevention of significant deterioration of air quality in clean air areas) promulgated under the 1977 amendments to the Clean Air Act.

We have arrived at a balance-presumption of validity, with judicial reviewthat is reasonable and fair. It would be jeopardized by sawing off the presumption of regularity and validity that is now a widespread feature of our legal system. Question. Does the Administrative Conference of the United States carry, at the present time, enough weight with agencies to act as an effective management force of those agencies?

Answer. I have been attending meetings of the Administrative Conference, and of its Committee on Judicial Review, since 1969 when Chief Justice Burger appointed me to serve as the liaison between the Administrative Conference and the U.S. Judicial Conference.

I am impressed by the performance of the Administrative Conference. Although it is advisory, it has substantial prestige and weight. It has the advantage of a

membership that combines officials of the U.S. Government with an impressive public-member roll-one that includes knowledgeable law school professors, lawyers in private practice (including house counsel), representatives of public interest organizations, and members of State regulatory commissions. The same diversity applies, in microcosm, to the smaller membership council.

The contribution of membership is enhanced by the process of the Administrative Conference. There is careful initial inquiry by a consultant, with analysis that includes on-the-scene appraisal. The draft reports are subject to intensive study by committee members, and to wide-ranging discussion on the floor of the Conference. The result is an impressive consensus-building mechanism.

The agencies are first participatory, through their representatives, and second, responsive. Conference recommendations are well thought out, they are taken seriously, and they are often given reasonably prompt attention.

More difficult is your question as to capability of the Administrative Conference as an "effective management force." That implies some kind of responsibility for directing and supervising ongoing performance of the agencies, including, say, their programs for managing allocation of resources, for appraising performance in terms of time and resources required and results achieved.

In my view, it would be unwise to assign such responsibilities to the present Conference structure. This would undercut the prestige and effectiveness the Conference has built up as an analytical and consensus-building membership group. An effective management force might emerge through development of an executive side of the Administrative Conference, perhaps headed by a Director or Administrator. If such an approach were to be taken, it would be important to insist upon two distinct structures. When executive functions are directly combined with such functions as research and planning, there is a Gresham-like tendency for a busy executive to so comport himself that short-range matters drive out the long range, the specific drives out the general, and ultimately the less important displaces the more important. Even a division of structures may imperil the present prestige and effectiveness of the Conference as now structured, though this can be contained through planning. It may well be that any such losses will be offset by the gains of effective management. I have not as yet studied the matter to such degree as to be able to record a judgment.

Senator CULVER. Thank you.

Senator KENNEDY. Thank you.

Senator KENNEDY. We will have a panel now with Mr. Schultze, Chairman of the Council of Economic Advisers; John White, Deputy Director of the Office of Management and Budget; and Donald Kennedy, Commissioner of the Food and Drug Administration.

I think if each of you could take 6 or 7 minutes to summarize your views. Your statements will be inserted in the record at the conclusion of your oral testimony.

PANEL OF FEDERAL OFFICIALS:

STATEMENTS OF DR. DONALD KENNEDY, COMMISSIONER OF FOOD AND DRUGS; CHARLES L. SCHULTZE, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS, AND JOHN P. WHITE, DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

Dr. KENNEDY. Thank you, Mr. Chairman. You have already identified our panel. I just wanted to add to that identification that John P. White is accompanied by Prof. Judith Areen, professor of law at Georgetown University, who has helped prepare the administration's bill. I am accompanied by Richard Cooper, the Chief Counsel of the Food and Drug Administration.

Mr. Chairman, you yourself sounded the keynote for regulatory reform in your address in 1976, to the National Conference on Regulatory Reform.

The President is equally dedicated to that proposition. That is what we are all here to talk about.

The administration is committed to a program that will make sense and will be effective. The President has firmly established as the hallmarks of his administration the goals of accessibility, comprehensibility, efficiency and fairness.

Specifically, the outcomes that we hope to see from the programs we are talking about are more public participation, more effective management of the regulatory process, and I would emphasize this, improved accountability of agency heads for the processes underway in their own agencies, not merely accountability to the administration and each other, but accountability to the Congress, as well.

The core of title I, in both S. 755 and S. 262, emerges or is foreshadowed in the principles of Executive Order 12044, which provides, among other critical features, as you know, a semiannual regulatory agenda, and emphasizes the need for the personal approval of regulations by the agency head.

It also, as you know, enhances public participation, not only by that agenda-setting process, but also by a requirement for a 60-day comment period, as well as by such specific devices as advanced notices, informal hearings, getting public views early in the process and so on.

More centrally of course, that order established a regulatory analysis review group to look for cross-cutting impacts or convergent effects on the outside world that couldn't be foreseen by the head of any particular agency, and the regulatory council which grew actually out of a voluntary affiliation of regulatory agencies that were trying to manage their own processes better, has done much the same thing. I just want to report very briefly, Mr. Chairman, my own experiences as kind of a newcomer with that order and its outcomes. I must report that it has been positive.

We established a new way of internally managing regulations by a separate track called "strategy documents," of which we have done. 60 to date. They give me a personal involvement in that process at its start instead of, as was the case when I first came to the agency, after so much cost was sunk in a regulation that there was greater reluctance on the part of my managers, and I sensed even in myself, to let go of it. I think that getting hold of that process at the beginning has been enormously valuable to me as the person responsible for these developments.

I think that advance notices of proposed rulemaking, and the use of legislative hearings and of tentative final orders allow an additional opportunity for public comment. Even though these procedures aren't currently mandated, we have used each of them a number of times over the past 3 years. In each case, the use has either doubled or tripled since the Executive order.

We have made economic analyses a serious business, and we think they have provided discipline to the process of looking at what is actually going to happen as a consequence of a particular regulation, and we think we have improved consumer involvement, not only in advance of making important rules, but also as a general part of the process by which my agency sets priorities. We ask various outside groups, including regulated industry, consumers, and others, what they think our priorities ought to be.

Senate bill 755 builds on our experience with the Executive order. Charlie Schultze is going to talk about the economic aspects of the administration bill, and John White about the management aspects.

I, because I am not a lawyer, have been assigned the task of discussing the amendments to the Administrative Procedure Act. I suppose that assignment relates to our joint conviction here at this table that administrative law is much too important to be left to lawyers.

I think, Mr. Chairman, that 2 years in charge of a fairly controversial regulatory agency, for which you have oversight, along with my background of academic science, has given me a very deep set of convictions about the values of these processes that we are talking about today.

Before I discuss those very briefly and pass on to Mr. Schultze, let me just digress for a moment into the area that John White is going

to cover.

As an agency head, I feel that I need responsibility, and that my overseers, whether departmental, congressional, or ŎMB, need my accountability. We think that the management of the regulatory process should not be overseen by the courts, however clear their claim to review of substantive and procedural requirements may be.

The provision of S. 755 to protect management provisions of the bill against judicial invalidation of the regulations is thus a very important one to us.

Turning now to the APA amendments themselves, at least to this newcomer to Government, the informal rulemaking process seems to me an institution of enormous significance to the way we do business. Here I merely want to cite my general good feeling that S. 755 preserves the utility of informal rulemaking. Our view is that it needs only the finest of fine tuning. The extension of the comment period and the codification of a preamble, which is in fact a tradition that FDA has voluntarily adhered to fairly closely are things we approve of.

Now in this area, Mr. Chairman, the staff draft has several additional suggestions that we think are worth consideration. I just want to tick them off with a quick comment about each.

The requirement for advance notices for all significant rulemaking is an interesting one and we think very well intentioned. We wonder, however, whether the agenda-setting process doesn't provide the equivalent in public access.

We think that the agency should certainly invite suggestions on major proposals before hand, before starting the notice and comment process, but it would be unfortunate if that were formalized to the extent that responses to those comments were required.

We think it would be unfortunate if by mentioning in the statute that agencies may use additional procedures in rules of major impact it appeared to strip agencies of the existing authority-which is broad-to use those additional procedures in all rulemakings, not just major ones.

Finally, we do understand that the staff draft's intention is to prevent judicial second-guessing about the agency's choice of various. extra procedures in hybrid rulemaking. We agree with that. I think that it would be very difficult for me to manage the affairs of my agency, let alone its resources, under an arrangement in which there

was an uncertain roving commission on the part of the courts to tell us to go back and manage a procedure differently.

I think, Mr. Chairman, that wearing your other hat, you would recognize it as analogous to the practice of defensive medicine. We would always be ordering the procedural equivalent of unnecessary X-rays in order to prevent malpractice suits.

Just on the subject of expedited procedures, I would have to say that nothing that goes on at the Food and Drug Administration has struck me over the past 2 years as more frustrating and more of a waste of time than the overuse of trial-type proceedings in informal rulemaking. Anything we can do to cut that waste, I am for.

We have experimented successfully, I think, with summary judgment devices. The bill proposes a mix of mechanisms in which trialtype settings would be reserved for the resolution of adjudicative facts and used only where they are necessary. We think that makes sense. I would express only the reservation that summary judgment mechanisms aren't a panacea. The penalty of losing on judicial review after you have done 95 percent of the work that ultimately turns out to be necessary for a summary judgment proceeding is a very forbidding penalty because you go back to square one, you do not pass go and collect $200. Any agency is going to be quite nervous about not doing enough. There is always going to be an incentive to buy $1,000 extra in insurance. So those incentives, I think, need to be watched.

All of the bills want public participation to be supported. We favor an agency determination of need, Mr. Chairman. The Administrative Conference, in our view, would require perhaps a little too much education on the agency's business and the agency ought to have time to give to it. I think that proposal might be modified by perhaps having the administrative law judge make recommendations to the Administrative Conference about the appropriateness of a particular application and then have the Administrative Conference make the final determination..

Of course, the Administrative Conference can determine financial need. We have no problem with that.

The staff draft would have the Administrative Conference also develop some standardized agency rules of procedure. That worries us a little bit. We recognize that a similar approach has been used successfully to resolve differences in court procedures. Here, however, we doubt that it would produce an equivalent gain in uniformity, and we are troubled that it might produce a kind of succession of regulatory prebattles before the Administrative Conference.

Where it is seen that different procedures provide either a strong retarding or a strong accelerating influence favoring one or another outcome, wouldn't it be likely that such issues as environmental regulation, occupational health and safety, and nuclear power would have to be contended with at the procedural level before the conference and then the main event?

We think that the flexibility of notice and comment rulemaking is one of its real virtues. Had I time, I had been primed to quote Professor Davis approvingly. I will spare you that but just say that I am persuaded by my own experience that that kind of flexibility is important. We think that the necessary rules are in the Administrative Procedure Act or in particular statutes, and that more is not required.