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. $ S. Hrg. 104-419 REGULATORY REFORM 104-419 4.G 74/9: S. HRG. gulatory Reform S.Hrg. 104-419* . HEARINGS BEFORE THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED FOURTH CONGRESS FIRST SESSION FEBRUARY 7, 8, 15, AND MARCH 8, 1995 Printed for the use of the Committee on Governmental Affairs JUL 1 6 jagg ept. S. Hrg. 104-419 REGULATORY REFORM HEARINGS BEFORE THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED FOURTH CONGRESS FIRST SESSION FEBRUARY AND MARCH 7, 8, 15, 8, 1995 Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 88-236cc WASHINGTON 1996 : ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-052527-6 COMMITTEE ON GOVERNMENTAL AFFAIRS WILLIAM V. ROTH, Jr., Delaware, Chairman TED STEVENS, Alaska JOHN GLENN, Ohio WILLIAM S. COHEN, Maine SAM NUNN, Georgia FRED THOMPSON, Tennessee CARL LEVIN, Michigan THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas JCHOAHRNLMEcSCAE.ING,RAArSiSzLoEnaY, Iowa JDOASNEIEPLH KI..LAIKEABKEAR,MAHaNw,aiCionnecticut BOB SMITH, New Hampshire BYRON L. DORGAN, North Dakota Franklin G Polk, StaffDirector and ChiefCounsel Paul R. Noe, Counsel Leonard Weiss, Minority StaffDirector Michal Sue Prosser, ChiefClerk (ID CONTENTS Opening statements: * Page SenatorRoth 1, 37, 95, 141 Senator Cochran 7 SenatorThompson 9 Senator Cohen 35, 144 Senator Grassley 146 Senator Glenn 2, 37, 95, 142 Senator Levin 6 Senator Lieberman 145 Prepared statement: Senator Pryor 52 WITNESSES Tuesday, February 7, 1995 Hon. Don Nickles, a U.S. Senator from the State ofOklahoma 10 Hon. RobertDole, a U.S. Senatorfrom the State ofKansas 13 Hon. Kay Bailey Hutchinson, a U.S. Senator from the State ofTexas 19 Hon. Richard C. Shelby, a U.S. Senatorfrom the State ofAlabama 29 Hon. Christopher S. Bond, a U.S. Senator from the State ofMissouri 30 Wednesday, February 8, 1995 Hon. Frank H. Murkowski, a U.S. Senatorfrom the State ofAlaska 38 John A. Georges, Chairman of the Board and CEO, International Paper, and Member, The Business Roundtable 41 Hon. George McGovern, former U.S. Senator from the State ofSouth Dakota 58 . Michael O. Roush, National Federation ofIndependent Business 69 Richard Lesher, President, U.S. Chamber ofCommerce 72 Thomas D. Hopkins, Rochester Institute ofTechnology 80 Carl Pope, Executive Director, Sierra Club 83 Paul R. Portney, Resources for the Future 84 RobertW. Hahn, American Enterprise Institute 87 Wednesday, February 15, 1995 Bob Crandall, Senior Fellow, The Brookings Institute 96 Kip Viscusi, Professor, Duke University 102 John Graham, Ph.D., Director, Harvard Center for RiskAnalysis 118 Linda Greer, Ph.D., Senior Scientist, Natural Resources Defense Council 120 Don Elliott, Senior Partner, Fried, Frank, Harris, Shriver and Jacobson 123 Jerry Jasinowski, Chairman, Alliance for Reasonable Regulation, and Presi- dent, National Association ofManufacturers 127 Wednesday, March 8, 1995 Carol M. Browner, Administrator, Environmental ProtectionAgency 147 Sally Katzen, Administrator, Office of Information and Regulatory Affairs, Office ofManagement and Budget 150 C. Boyden Gray, Chairman, Citizens for a Sound Economy 174 Frederick L. Webber, President and ChiefExecutive Officer, Chemical Manu- facturersAssociation; accompanied by David Sigman, Exxon Chemical Com- pany 176 Gary J. Edles, General Counsel, Administrative Conference of the United States 177 (III) IV Page Peter L. Strauss, Betts Professor ofLaw, Columbia Law School, and Former Chair, Section on Administrative Law and Regulatory Practice, American BarAssociation 179 David C. Vladeck, Director, Public Citizen Litigation Group 181 Alan J. Krupnick, Senior Fellow, Resources for the Future 190 Joseph Goffman, SeniorAttorney, Environmental Defense Fund; accompanied by Karen Florini, SeniorAttorney, Environmental Defense Fund 192 Jonathan B. Wiener, Associate Professor, School ofLaw, Duke University 194 Alphabetical List of Witnesses Bond, Hon. Christopher S.: Testimony 30 Browner, Carol M.: Testimony 147 Prepared statement 429 Crandall, Bob: Testimony 96 Prepared statement 301 Dole, Hon. Robert: Testimony 13 Prepared statement 16 Edles, GaryJ.: Testimony 177 Prepared statement (with attachments) 456 Elliott, Don: Testimony 123 Prepared statement 324 Georges, John A.: Testimony 41 Prepared statement (with attachments) 199 Goffman, Joseph: Testimony 192 Prepared statement (with attachments) 510 Graham, John: Testimony 118 Prepared statement 308 Gray, C. Boyden: Testimony 174 Prepared statement 439 Greer, Linda: Testimony 120 Prepared statement 313 Hahn, RobertW.: Testimony 87 Prepared statement 293 Hopkins, Thomas D.: Testimony 80 Prepared statement (with attachments) 279 Hutchinson, Hon. Kay Bailey: Testimony 19 Jasinowski, Jerry: Testimony 127 Prepared statement(with attachments) 329 Katzen, Sally: Testimony 150 Prepared statement 433 Krupnick, Alan J.: Testimony 190 Prepared statement 507 Lesher, Richard: Testimony 72 Prepared statement 276 McGovern, Hon. George: Testimony 58 Prepared statement 60 V Page Murkowski, Hon. Frank H.: Testimony 38 Prepared statement 40 Nickles, Hon. Don: Testimony 10 Prepared statement 11 Pope, Carl: Testimony 83 Prepared statement 285 Portney, Paul R.: Testimony 84 Prepared statement 289 Roush, Michael O.: Testimony 69 Prepared statement 271 Shelby, Hon. Richard C: Testimony 29 Strauss, PeterL.: Testimony 179 Prepared statement 480 Viscusi, Kip: Testimony 102 Prepared statement 305 Vladeck, David C: Testimony 181 Prepared statement 491 Webber, Frederick L.: Testimony 176 Prepared statement 443 Wiener, Jonathan B.: Testimony 194 Prepared statement 573 APPENDDC Prepared statements ofwitnesses 199 White Paper entitled "Toward Smarter Regulations" submitted by Mr. Georges 204 Thomas O. McGarity, W. James Kronzer Chair in Law, University of Texas School ofLaw, prepared statement 349 Lester B. Lave, University Professor and Higgins Professor of Economics and Finance, Carnegie Mellon University 358 Charles A. Samuels, Government Relations Counsel, and Jennifer Casey, Government Relations Director, on behalfofthe Association ofHome Appli- ance Manufacturers (AHAM), Washington, D.C., prepared statement 364 James C. Dinegar, Vice President, Government and Industry Affairs, on be- half of the Building Owners and Managers Association (BOMA), Washing- ton, D.C., prepared statement 365 Commission on Risk Assessment and Risk Management (with attachments), GApOrepRaerpeodrtsteantteitmleendt"Regulatory Reform—Information on Costs, Cost Effec- 367 tiveness, and Mandated Deadlines forRegulations," March 1995 383 Citizens for Sensible Safeguards 504 Supplemental Testimony of the Environmental Defense Fund on titles I, II, and III of S. 291 prepared by Karen Florini, Senior Attorney, Ellen Silbergeld, Senior Toxicologist and David Roe, SeniorAttorney 515 Investing in Prevention: Opportunities to Reduce Disease and Health Care Costs Through Ident—ifying and Reducing Environmental Contributions to Preventable Disease A Report to the Health Care Commission by Ellen K. Silbergeld, PhD., Environmental Defense Fund Toxic Chemicals Program and University of Maryland Medical School Department of Epidemiology and Preventive Medicine dated May 15, 1993 522 REGULATORY REFORM TUESDAY, FEBRUARY 7, 1995 U.S. Senate, Committee on Governmental Affairs, Washington, D.C. The Committee met, pursuant to notice, at 10:00 a.m., in room SD-342, Dirksen Senate Office Building, Hon. William V. Roth, Jr., Chairman ofthe Committee, presiding. Present: Senators Roth, Stevens, Cochran, Thompson, Glenn, Levin, and Dorgan. OPENING STATEMENT OF SENATOR ROTH Chairman Roth. The Committee please be in order. Today, we are beginning a series of hearings on regulatory reform. The purpose of these hearings is to catalyze our legislative effort to build a smarter, more cost effective regulatory process. We need to reduce the regulatory burdens, while still providing nec- essary protections and benefits to the public. It is a privilege to commence these hearings with the testimony of my colleagues. They are here because they clearly have heard the public outcry and because they have assumed a leadership role in working toward meaningful regulatory reform. My only regret is that more of my colleagues, especially on the minority side, could not be here today due to scheduling conflicts. As we embark upon our task, we must balance the need for prompt action with the need for due deliberation. Many ofthe principles for regulatory reform are complex and will have far-reaching impacts on government, the regulated community, as well as the public. The upcoming hearings will focus on certain fundamental principles for designing a smarter regulatory process. These principles include: cost/benefit analysis; risk analysis; market incentives; regulatory accounting; and periodic review ofexisting regulations. These principles represent smarter r—egulation, and smarter regulation is better regulation for all ofus the public; businesses, both small and large; and governments at all levels. In developing smarter regulation, we want to work with all interested parties to fashion the best possible regulatory reform legislation. Many mem- bers in both the Senate and the House are committed to regulatory reform, and the public demands action. We must act before our window of opportunity closes. We must accomplish the ends ofgovernment in a more cost-effective manner. We do not want to bring government or business to a halt. We do (1) not want to lose important safeguards for the public. What we want is smarter regulation. Senator Glenn? OPENING STATEMENT OF SENATOR GLENN Senator Glenn. Thank you, Mr. Chairman. We meet today to consider the state ofour regulatory process, and while partly fueled by the political changes of the last year, this has been an ongoing issue in our Committee for a long, long time, back even before I was Chairman, which I was for some 8 years. We have been into regulatory matters since I first came on the Committee in the mid 1970's. From our landmark regulatory reform study in 1977 through legislation and more than a decade of oversight of OMB paperwork and regulatory review, and now to the consideration of an array of new legislative proposals, regulatory reform has long been a central issue for the Governmental Affairs Committee. Regulation is important because rules are needed to implement most laws. I think many people that don't follow the legislative process very carefully think we pass a law and that is it. Actually, when we pass a law here on Capitol Hill, it is just the beginning. The law to be implemented goes over to the agencies or to a department where the rule and regulation writers then put flesh on what is usually a bare-bones piece oflegislation. They go back through all the legislative history, the debate on the floor, and so on, to get an impression of what the will of the Congress was. Then they write the rules and regulations. Too often, I think, in their own interest in a particular subject, they put their own spin on it sometimes, and so the regulatory process is something we have to look at very, very carefully. There is no way around it. Public health and safety, environmental protection, equal opportunity in education and empl—oyment, stability in agriculture and other sectors of our economy each area has shown that it needs the help oflegislation and regulation. But reform is important, too, because regulations do not come free. Their costs are weighing down the American people. Businesses, private citizens, univer- sities, and State and local governments all complain that too many regulations go too far and theyjust aren't worth it. To my mind, our job in these hearings is to find a balance that recognizes both the essential role played by regulations in the work of government and the social and economic price paid by an over- reliance on regulation. There is a real conflict here. I was reading a book this past week- end, a little short book called "The Death of Common Sense." I think the author was Mr. Howard. It was reviewed, about four or five full pages, in, I believe, U.S. News and WorldReport last week. He contrasts what happens sometimes between trying to make rules and regulations that cover every possible contingency, that may arise in the workplace or wherever, as opposed to giving a little bit more flexibility and using some bit ofcommon sense. That is the basic theme ofthe book, and I must say I recommend it for people who are going to be working on this and my colleagues here. It is not long; it is only about 180 pages, a small book. I think