Not only that, Senator, as you are aware, science has more and more come to tell us that there is no threshold kind of a corner below which you don't harm anybody and above which you do. It is a matter of balancing in terms of public health. It is perfectly proper to discuss this. Senator CULVER. Now these practices you are talking about that you say are observed, possibly, do the same standards apply to the independent agencies as opposed to what is looked upon as "within the administration."

Mr. SCHULTZE. Well, I probably ought to turn to one of my legal colleagues precisely, but as a general proposition, oversight over the independent agencies is essentially lodged in the Congress, whereas, oversight over executive branch agencies is lodged in the President and then ultimately the Congress. There is a difference.

Senator CULVER. How is that difference reflected in the way you operate?

Mr. SCHULTZE. Well, I think essentially the way it operates is we do not discuss outside of the public record with the independent agencies. That is, after the public record is closed, we don't discuss with them. Because it is a matter of congressional oversight they are independent. But I think everybody would agree that executive branch

Senator CULVER. Do you still have this same worn out messenger running over there with these various petitions you get after the public closing; do you just send it over and let them "decide the policy matter."

Mr. SCHULTZE. I know of no example in which that has occurred. Senator CULVER. In any of the independent regulatory agencies? Mr. SCHULTZE. I know of no example in which that occurred. Senator CULVER. You say that you want someone else to comment on it?

Mr. SCHULTZE. If anybody wanted to.

Dr. KENNEDY. Well, I can't give you the advertised legal view, but I can give you one more experience which I think is worthwhile. There is a very simple mechanism for handling the late arriving messenger. The late arriving messenger happens never to come to us from the White House, but we get stuff after the deadline on comments all the time. The way that any sensible agency would handle that and the way as far as I know all agencies handle it is, if it is worth serious attention, you just get it in the record and put it on display and extend the comment period and do a notice of availability. That is how any agency known to me would handle Mr. Jordan's message in your scenario, if it were worth serious attention.

If it were a post card saying, "Go to hell, insulting letter follows," you obviously wouldn't extend the comment period for that.

Senator Culver, you have been reading my mail. [Laughter.] Senator CULVER. Mr. Schultze, as you know, studies on the cost of regulation, the cost side of cost-benefit analysis, as we mentioned earlier, abound. You also are aware, I am sure, that the studies of the benefit side, with regard to cost-benefit analysis, are difficult to do and are extremely scarce. How might we insure that benefit studies are done as accurately, as enthusiastically and as vigorously as cost studies, not to mention getting a little passing political respect as the charts go up.

Mr. SCHULTZE. I am not sure how one insures it, Senator. I think it might be useful. I might make available to the committee, it would take a little time to pull together some of the studies that have been done on the methodology and others trying to estimate benefit.

Second, it has been my experience that the agencies and the regulatory analyses I have looked at do a good bit of very good work at looking at benefit assessment. Now that does not mean putting dollars on the benefits in most cases. That is not what benefit assessment means. It means assessment in terms of, for example, how many personhours of exposure to a harmful chemical or to a harmful emission are avoided, a kind of risk avoidance, by this, that or the other approach. How many tons of pollutant emission are avoided and in what regions of the country and what do we know about the health effects?

There is a tremendous amount of that done. If you actually mean benefit studies in terms of trying to tag a dollar benefit, dollar measure to the benefits, I must admit it is not terribly well done. I am not sure it ever can be terribly well done.

Senator CULVER. If that is what we are faced with, I have no reason to disagree with you at all. You have stated "economically efficient regulations have a better chance of achieving their objectives." Won't that give the upper hand to special interests when determining how safe our water, air, and workplaces will be?

What mechanism might be used to prevent the industries to be regulated from using the economic impact statement as another opportunity to assert that the regulations demand too much, and that clean air, water and safer workplaces cannot be achieved in the near future?

Mr. SCHULTZE. Senator, I have two comments to that. First, I have not observed any reticence on the part of industry before or after regulatory analysis to make those assertions.

Second, regulatory analysis well done, and I think it is getting better and better done, is not just a question as I indicated earlier, of toting up and saying, "Gee, how big these costs are." It is a question of a very careful assessment of the benefits.

Again, you have to remember these regulatory analyses are done by the agencies, initially. They are the ones who do it. We just review them. The agencies do put a lot of effort, quite obviously in terms of what they are set up for by statute. Basically, the people who are attracted to those agencies, they are very interested in the agency purpose and properly so. They do the analyses.

Senator CULVER. How many of them get caught in a whipsaw with OMB and the Congress and others saying: "Cut down on the personnel," and then at the other end getting overwhelmed with the economic resources of those who are doing the supervising of them.

Aren't we in an untenable position? The other day around here, you know, they again waived aircraft noise standards for aircraft manufacturers. I wouldn't waste any time in the lab, if I were the special interest. I would just contribute to business PAC's. It is just silly to try. It is a waste of time and effort, and you just keep pushing it off anyway.

We work to propose standards that would protect the public health, and 15 people voted against it last time. All these economic analyses do is just give them the make wait argument. There is no countering

power. There is no pressure coming in on the other side. Those that vote to waive those things haven't a pang of conscience because there is no persuasive substantive dash, there is not even a tenative suggestion of what the consequences to the quality of life in this Nation are going to be. This isn't even a ballgame. You have one team in uniform with pads and you have the others still in the locker room. So, when you see all the official power and muscle of this administration swing into action, with all due respect to this glorious goal of competence, fairness, efficiency, you know you aren't just swimming against the tide. You are going to get thrown up on the beach about 15 miles in or offshore.

You just have to occasionally concede some of us who are wrestling with these situations some credit for it, but there's not a lot of political compensation, I might emphasize, economically or at the voting booth. But we are willing in the little time we have here, to just try to make sure this competition isn't even more bizarre and absurd. Mr. SCHULTZE. Senator, again let me I cannot speak obviously to the pressures that are put upon the Congress. I can note

Senator CULVER. They don't resist them very hard.

Mr. SCHULTZE. I can't comment on that. If I could, I wouldn't. Senator CULVER. Well, you said some other things today.

Mr. SCHULTZE. Well, I understand. One does get carried away occasionally.

Again, let me stress the fact that these regulatory analyses are carried out by the regulatory agencies.

Senator CULVER. We would look on it as encouraging, you know, if you just have a handful of people with green eyeshades trying to set up the benefit side of that equation. We just would like somebody to do something other than roll them over. There are enough people waiting in the wings to roll them over without taking on their own side. That is part of it.

Dr. KENNEDY. May I make two comments, Senator? One is to stress that the regulatory analysis, as Charlie pointed out earlier, in this legislation has to do with the question of the most cost-effective way of implementing the rule, not with whether or not it ought to be implemented.

The second point I would make is that we have provided in this bill, and it is provided in the bill sponsored by Senator Kennedy and others, for public participation and funding for public participation for those who cannot otherwise participate. We think that experience indicates that it is a one-sided game in terms of participation, in terms of who has the resources in this arena, and therefore, we ought to try to balance them.

Senator CULVER. If I could just ask Mr. White something. The President is proposing that all major rules be subjected to a cost-benefit analysis. Do you really believe that we have had enough experience with this type of analysis to be able to predict its accuracy to a degree where you feel comfortable relying on the data? How much experience have we had in the use of these cost-benefit analyses under this Executive Order 12044, and on the basis of that experience, are you certain enough of the analyses effectiveness to be willing to permantly institute this requirement by legislation?

Mr. WHITE. I think the key point is that these are not cost-benefit analyses, and in point of fact, we do not have enough experience with them to put them in legislation or in the Executive order. What we are proposing, for just that reason, among others, is regulatory analysis, which is considerably short of attempting a formal cost-benefit analysis.

Senator CULVER. Do you have any evaluation reports on the effectiveness of the Executive order?

Mr. WHITE. We are preparing an evaluation now, Senator, in terms of the effectiveness.

Senator CULVER. Will you have it to us before we look seriously at any legislative proposals?

Mr. WHITE. That is our intention.

Senator CULVER. Incorporate and codify this exercise?

Mr. WHITE. Yes, sir.

Senator CULVER. You better if you expect anybody to look seriously at it.

Mr. WHITE. We will.

Senator CULVER. When were these completed? When are they going to be completed?

Mr. WHITE. We have them underway now, and I would hope that the analysis of the effectiveness could be done in the next couple of weeks.

Senator CULVER. Why are you here recommending legislative incorporation if you don't even know if it works?

Mr. WH HITE. Well, we know informally. from the agencies and through our own informal review. What we are trying to do is pull those assessments together in order to provide them in a more formal way.

Senator CULVER. Didn't you have a semiannual report to the President on the Executive order that was due May 1, for the record? Where is that?

Mr. WHITE. That hasn't been sent yet, Senator.

Senator CULVER. When are you going to have it?

Mr. WHITE. I expect we will have it in a couple of weeks, Senator. It is due this summer.

Senator CULVER. What does the President say? Is he too busy with other things to worry about it?

Mr. WHITE. No; he is vitally concerned about this area, as we are. Senator CULVER. By your letter dated March 19, 1979, you proposed a recommendation to the Administrative Conference of the United States which would seek to have Federal agencies when using a costbenefit analysis, to state the particular analytical approach to be followed, the description of the method of analysis, the agency's method for evaluating intangible cost, and benefits, and for discounting future costs and benefits as well as several other similar matters. Is that right?

Mr. WHITE. I am not certain I know what letter that is, Senator. Senator CULVER. This is a letter dated March 19, 1979, OMB opposed a proposed recommendation of the Administrative Conference of the . United States. You are unfamiliar with it?

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Any of your staff here today know about it?
Mr. WHITE. I am sorry, Senator. I am not-

Senator CULVER. Well, we will submit it for the record. I should think you would be aware of it.

Mr. WHITE. I think I should be, Senator.

Senator CULVER. That is the heart of what we are talking about.

I guess we have some other questions but we have another witness. I am sure we will be continuing on this general subject. We have a number of other questions for each of the witnesses this morning. I would very much appreciate your cooperation in getting a response back in writing. We will be working with this for several weeks. I want to thank you all for your appearance here today.

Mr. WHITE. Thank you.

Dr. KENNEDY. Thank you.

[The prepared statements of Messrs. Kennedy, Schultze, and White follow:]

PREPARED STATEMENT OF DR. DONALD KENNEDY

Mr. Chairman and members of the committee. I am Donald Kennedy, Commissioner of Food and Drugs. With me are two members of the administration who have played a leading role in developing the President's program for regulatory reform. Charles L. Schultze is the Chairman of the Council of Economic Advisers, which developed the administration's program for regulatory analyses and, through the Regulatory Analysis Review Group reviews the economically most important regulations issued by executive branch agencies. John P. White is the Deputy Director of the Office of Management and Budget, which administers the President's executive order on regulatory reform and which took the lead in developing S. 755, the administration's proposed Regulation Reform Act. Mr. White is accompanied by Judith Areen, Professor of Law at Georgetown University, who has helped prepare the administration's bill. I am accompanied by Richard Cooper, Chief Counsel of FDA.

Three years ago, Mr. Chairman, you sounded the keynote for the regulatory reform process, in an address to the National Conference on Regulatory Reform. You said:

“[O]ur task is to examine carefully the role of regulatory agencies, the industries they regulate and the interests they promote. We must also examine the range of tools available to the Government and pick the appropriate ones for particular problems. This will require hard work and continuing oversight. It will also require a pragmatic approach to problems and their solutions, not blind adherence to a philosophy of either the left or right."

In his message to the Congress on Regulatory Reform, President Carter summed up the goals of regulatory reform :

"[W]e must assure that * * * statutory mandates are executed sensibly. We must identify alternative means of achieving goals, choose efficient and effective approaches, and improve planning and coordination. We must make it easier for the public and those affected by regulations to anticipate them, comply with them, and benefit from them. We must provide common sense management for the regulatory process."

Our presentation this morning will be divided into three parts. John White will discuss the proposals to improve the management of the regulatory process. Charlie Schultze will address the economic aspects of regulatory reform, and I will discuss the President's regulatory program generally and the pending proposals to amend the Administrative Procedure Act.

We are pleased to be with you today to discuss the Administration's proposal, S. 755, to reform the Federal regulatory process; S. 262, introduced by Mr. Ribicoff and cosponsored by you and by Senators Metzenbaum, Leahy and Mathias on this committee; a draft bill prepared by the staff of this committee; and other regulatory reform proposals that are pending before the committee. I know, Mr. Chairman, that you have been a leader for several years in efforts to achieve regulatory reform, and we look forward to working with the committee on this important matter.