we think, to get away from this "regulate, litigate, regulate, litigate" syndrome that we are into; but it is not always and it is not everywhere.

As a matter of fact, our lessons learned are beginning to reveal the shape of the little corner of regulatory action that is appropriate for negotiation. And while it is small, I believe it is discrete, and the rules are becoming more and more clear as we go along. Negotiating rules is very time-intensive, and to get the people around the table that we really need, we are finding that we have to go back to the same people over and over again. That is another factor that will constrain our ability to make this a "growth industry." So I have become fond of saying that regulatory negotiation is essential, but it is the flagship, not the fleet, of our regulatory work burden. And we think it is vital as a visible sign of EPA's interest in getting the contention out of our rulemaking process to the extent that we can.

We are finding that much of the benefit is in the spillover effects: the relationships, the good will, the ability to talk to people quietly and without contention about a lot of other matters that affect the regulatory agenda.

Our summary comment on S. 1504 is that it really is a very good idea. That is probably because we think it supports our agenda, and anything that supports what we are trying to do is a good idea, as far as we are concerned! We think that ACUS can play a very constructive role, and we are pleased to see them moving closer to a facilitative leadership role in this process. We think that the whole point of the bill ought to be to make it easier, to reduce the number of leaps and hurdles some of them psychological, some of them administrative, some of them cultural-that Federal agencies have to take in order to enter what to many still seems to be a totally new area.

We recognize that regulatory negotiation cannot replace traditional rulemaking. I guess one concern I would have about the legislation is that it might tend to over-emphasize it and push people to try it where it may not work. That would be one caution that I would suggest to you. I think also the role of ACUS needs to be very carefully described so that burdens and obstacles are removed rather than raised in the process.

One last small comment. I did listen very carefully to your remarks, and you used the term "mediator" as the title of the individual who would be providing services within the course of a negotiation. In one of our technical comments, we point out that we think it important to identify that role as one of a "facilitator", because traditionally a mediator gets involved in active negotiation of issues. We think the facilitator needs to be neutral and work with the process and not the substance. Other than that and a few other suggestions, we think you have got a very good bill.

Thank you.

Senator LEVIN. Mr. Kelly, we thank you and Mr. Breger, both. We welcome your comments and your suggestions, many of which we happen to agree with and we can incorporate in the bill.

Mr. Breger, first, let me ask you how you would respond to the argument that some people are making, that we do not need a statutory framework, we do not need a law, because reg neg is still too

new a process and because the agencies use reg neg, at least some agencies, without a statutory framework.

Mr. BREGER. Our reading of the Federal Advisory Committee Act would allow agencies to develop regulatory negotiations without statutory change.

However, there are agencies that have taken a different position, and have said that they would require explicit statutory approval to enter into reg neg.

Secondly-and if I may say, as important-the explicit statutory approval takes away an important area of concern, uncertainty, and a prudential decision not to go into an area that might cause trouble, and makes it much easier for agencies that want to move forward with a reg neg to get permission to do so.

So that explicit statutory endorsement assists in overcoming a bureaucratic culture that may not be as sensitive to the need for the reg neg as people in this room. And I think that is, in a practical sense, is as important as the strict legal question.

Mr. PRITZKER. Mr. Chairman, there has also been in some agencies a problem with consideration of up-front costs. the long-term savings, in terms of reduced compliance costs, and reduced expectation of need for litigation are not always easily balanced by the agencies against the up-front commitment of costs.

In addition, many participants, who are absolutely.essential to make the process work, have said that the burden upon them is so intensive that they would need some assistance, and, clearly, the process is not going to work, without having represented at the negotiating table, representatives of all affected interests.

Therefore, the fact that this bill would provide a small but, in terms of the need, relatively large boost in financial assistance is something that would be very helpful in inducing agencies to proceed with it.

Senator LEVIN. What about the relationship with FACA? Is one of the useful aspects of this bill that it clarifies the FACA connection?

Mr. BREGER. Very much so. As I said, many general counsels are concerned and worried about FACA exposure. People who are less enthusiastic about the reg neg will point to that as a reason why we should not go forward, or why one should not go forward. What this bill does is provide a level of comfort to those who are supportive of a reg neg, and reduces the objections, or the possibility of objections on the strictly legal grounds, the technical grounds of FACA exposure, by those who, in general, may not be sympathetic to the approach.

Senator LEVIN. Thank you. Mr. Kelly, just a few questions. If EPA decides to initiate a negotiated rulemaking, what kind of assurance do you give to participants that you'll likely use the rule that they draft in the proposed rule for publication?

Mr. KELLY. My understanding is that we give each participant our full assurance that the product of a consensus will be the basis of a proposal. When I say that, I want to make sure that that product of consensus is understood in the same sense that Mr. Breger described earlier-that the agency, EPA, which is representing the Federal interest, and which is ultimately responsible for the product of rulemaking, has to be a party to that consensus.

Senator LEVIN. What role do you believe an agency should play in furnishing technical data and other resources to participants in the negotiated rulemaking?

Mr. KELLY. My personal belief is that we ought to provide the negotiating committee with the full technical resources that we would make available to our own staff if we were operating under traditional rulemaking.

Senator LEVIN. In order that we can try to meet all of our commitments, we are going to stop there. We will probably have additional questions for the record for the witnesses. We appreciate very much your testimony, your support, the constructive suggestions for changes, and your willingness to participate.

Our second panel consists of Philip Harter, an attorney in Washington; Kelly Brown, executive engineer, Ford Motor Company; Dave Doniger who is a senior staff attorney with the Natural Resources Defense Council; and David Zoll, vice president and general counsel, the Chemical Manufacturers Association.

I do not know that there is any great logic to the order that their names are printed on this schedule. I will assume there is since our staff acts with such logic consistently, except when they do not, [laughter] so I will call on Mr. Harter first.

TESTIMONY OF PHILIP HARTER, ATTORNEY AT LAW,

WASHINGTON, DC 1

Mr. HARTER. Thank you. I would like to begin by thanking you, Senator Levin, for your leadership in this whole area. My involvement in it really did begin as a result of the bill you introduced in 1980. I had long been interested and intrigued by the relationship between private efforts and Government regulation. I was firmly of the view that regulation could be improved by tapping the expertise of the private sector.

I thought your bill was an interesting approach. I wanted to analyze it a little more and meld it with traditional concepts of administration law, so I talked with the folks at the Administration Conference about that, and the report that I prepared for them and their recommendations resulted directly from that bill you had introduced. The bill we are addressing here is several evolutionary steps later.

Frankly, when I undertook that effort, I thought, rather firmly, that nobody would take it seriously. I thought it was probably too radical, too far out, too nontraditional as compared to the thenevolving hybrid rulemaking process.

But that the fact that we are here today is an acknowledgment that it has caught on and has been successfully proven.

In looking back over the ones that I have participated in, I think they have demonstrated that it is a powerful tool to address regulations that have a significant factual basis, but that are not driven by the facts-those in which if only you do enough research you will have an answer that will be codified in a regulation. But there are still complex factual matters that will also require a value judgment for their resolution. Moreover, there are other areas

1 See p. 182 for Mr. Harter's prepared statement.

where for some reason or another, the rules have become politicized-they are controversial-and people are haggling and using all kinds of weapons to achieve their goal.

Basically, I think that is because the whole process is an adaptation of the legislative one, where representatives of the parties get together and work out a legislative accommodation. In this case, of course, it has to be against the backdrop of statutory requirements since the agency itself is not sovereign.

Overall, the success of that process in taking on those relatively large, complex rules, has been quite happy.

Even where the committee itself has not been successful in reaching an agreement-and there certainly have been several of those-the process really should be deemed a success. One does not measure the success of a regulatory negotiation only by a signed agreement at the end. For example, one of the most successful ones was by the FAA in developing its flight duty status time, a rule that had eluded revision for 20 years; every time they tried to revise it, somebody or another would shoot down the effort. The agency had had to issue 1,000 pages of complex "interpretations" because their rule was so complicated and controversial.

They empanelled a regulatory negotiation, and although they did not come to agreement, within a year the FAA had its new rule and from all reports it is working really quite successfully.

OSHA's benzene negotiations did not reach agreement. The agency itself missed its own deadline by 3 years, but it is interesting to note that benzene, once issued by OSHA, has become the first rule issued by that agency not to be subjected to judicial review.

Turning to the bill itself, it is important to emphasize-as has been done again, but we would hope that any report, or the bill itself that agencies are authorized under current law to conduct these negotiations.

This is simply an explicit authorization since some agencies apparently remain nervous about the process-you have to piece together various strands of administrative law, and apparently some agencies either cannot find them, or are reluctant to make that kind of interpretation. Having a codified procedure may help overcome that reticence. The bill does an admirable job of capturing the best of current practice, and so I encourage it and applaud it for that reason.

It is also important, either in the bill itself or certainly in any accompanying Senate report, to emphasize that it does not foreclose experimentation with other procedures. I would hate to see a codification of this process foreclose other kinds of procedures that are currently authorized by law. For example, other uses of FACA, perhaps a slightly modified kind of process that does not conform to one or another requirement in the bill, but still may be authorized by current law. We should make clear that this is a sufficient but not a necessary process, and it does not foreclose anything by implication.

I have one final point that I want to raise that is not in my written testimony. I have submitted a supplemental comment on it,

that is actually related to a set of hearings you're holding on FACA at the moment.1

This bill would authorize the compensation of participants in the rulemaking committees. That is an important aspect since the overall experience has been that agencies are likely to save significant time and resources by using one of these committees, but, on the other hand, it can require a significant upfront commitment of resources by some organizations that that would be a large chunk out of their budget.

The compensation is, therefore, a legitimate expense of the rulemaking process. Unfortunately, in the Byzantine workings of FACA, currently, if a participant were to receive compensation under this bill, or from any other means, they may be foreclosed by the criminal code from subsequently representing their own employer in the ensuing rulemaking proceeding.

So that if, for example, David Doniger were to participate on a reg neg committee, under the current rules he would not be allowed to file comments for NRDC in response to the notice of proposed rulemaking, or if someone else were to sue it he could not file an amicus brief. That seems to me to be a strange anomaly and I think that ought to be corrected, and I have suggested a sentence in my supplemental testimony to take care of that.

Senator LEVIN. We appreciate that supplemental testimony. We think it is a problem we can fix.

Mr. HARTER. Thank you. The other problem is that, frankly, those prohibitions are not publicly available. You have to be a Government employee, and somewhere buried in a Government personnel office to know that that law even exists.

Senator LEVIN. It may be a Byzantine law, by the way, but we will be relying on it heavily in about an hour on the floor. Thank you for your testimony and your supplemental testimony, too. They are both welcomed, and of course your testimony will be made a part of the record.

Mr. Brown, you are next.

TESTIMONY OF KELLY M. BROWN, EXECUTIVE ENGINEER, FUEL ECONOMY, EMISSIONS, AND NOISE CONTROL PROGRAM, FORD MOTOR CO. 2

Mr. BROWN. Thank you, Senator Levin. I have a shortened statement in addition to the longer version I submitted to the committee.

On behalf of Ford Motor Company, I appreciate the opportunity to present our views on negotiated rulemaking and offer comments on S. 1504, The Negotiated-

Senator LEVIN. Mr. Brown, I am afraid I am going to have to interrupt you. They need me on the floor now, and we are going to have to take a short recess. I am not sure how long that short recess is going to be, but hopefully not much more than 10 minutes or so. I apologize to all of you but you are all used to this, I know. [Recess.]