Chairman GLENN. The hearing will be in order. I apologize for the truncated nature of the hearings this morning but that is one of the facts of life around Capitol Hill these days. We have the Defense Authorization Bill on the floor, and Senator Levin and I are both on the Armed Services Committee. We had no way of knowing that the bill was going to be in a crucial stage, and that we were both going to be involved this morning on the floor when we scheduled this hearing some time ago. I appreciate your bearing with us. I do not like to conduct hearings like this, but we are saddled with it today.

Where do we stand? Mr. Brown, you were in the middle of your testimony, I am told, so why don't you go ahead and proceed.

Mr. BROWN. I was in mid-sentence, Mr. Chairman. Maybe I'll start over.

Chairman GLENN. In mid-sentence? All right. Well, maybe you can start over with the whole paragraph at least!

Mr. BROWN. 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 Rulemaking Act.

We believe that the negotiated rulemaking process outlined in this bill can be a beneficial supplement to the conventional rulemaking process.

At times, conventional rulemaking can be complicated and even an adversarial process. In certain situations, the direct exchange of views among the affected parties can help facilitate the rulemaking process. This bill would provide guildelines to promote the use of negotiations, where appropriate.

Ford has twice participated in negotiated rulemaking. The first involved EPA rulemaking for nonconformance penalty for heavyduty truck emissions. The other involved FTC rules for informal dispute settlements.

I represented Ford in the EPA rulemaking and will focus my oral comments on that experience. I should also add that I have represented Ford in numerous rulemakings via the conventional process with EPA and in places like the State of California.

Comments relative to the FTC rulemaking are included in my written statement. The EPA rulemaking was directed at establishing nonconformance penalties, referred to as NCPs, for heavy-duty truck emissions.

EPA was directed by Congress under the Clean Air Act to establish rules for levying nonconformance penalties in instances when a manufacturer of heavy-duty trucks cannot achieve certain Federal emission standards.

Without NCPs, a manufacturer would be prohibited from producing those products that are not available to meet emission standards.

EPA first issued an advance notice of proposed rulemaking for NCPs in accordance with their statutory obligations. However, the comments received in response to the proposal were not favorable.

It was clear to EPA that it would be difficult to issue a rule by way of the conventional rulemaking process. Therefore, EPA decided to pursue negotiated rulemaking in an effort to resolve some of the differences among the affected parties.

Initial meetings were convened in April 1984. Participants included Ford and other heavy-duty truck manufacturers, the Motor Vehicle Manufacturers Association, the Automobile Importers of America, the Natural Resources Defense Council, the California Air Resources Board, a State organization, the Engine Manufacturers Association and EPA.

At the outset, exchanges among participants were somewhat tenuous and guarded, but as the interactive process envolved, there was a more open sharing of ideas, and a sense of commitment.

After numerous meetings, a consensus position was achieved in November of that year.

Two points are worthy of mention. First, there was considerable discussion on the need for compensation allowances and associated eligibility requirements.

This was resolved by agreeing to provide limited travel funds only to parties with legitimate interests that otherwise would not have been able to participate because of financial hardship.

Second, the participants were able to reach consensus on all key issues necessary to issue a final rule. The process successfully led to EPA issuing a final rule in August 1985, based largely on the negotiated recommendations.

Overall, the negotiated rulemaking process probably involved a greater commitment of time and effort in this case as compared to conventional rulemaking.

However, I believe the outcome was worth the extra effort. I also believe the process was effective in this case for the following rea

sons.

First, the parties affected were involved early in the rulemaking process. Second, participation was limited to a relatively small number of legitimate parties. Third, all of the participants were committed to working toward an equitable rule, and fourth, the process had a specified end date at which time EPA was required to issue a rule.

Ford believes S. 1504 would facilitate the use of negotiated rulemaking as a supplement to the conventional rulemaking process. In addition, the bill appropriately would delegate discretion for use of the process to the administrative agencies.

More specifically, we would like to offer comments on two areas of the bill. The first concerns references as to who should participate in the negotiations.

In some sections, the bill refers to "affected" parties; in other sections, it refers to "significantly affected" parties.

Ford believes the bill should consistently limit participation in each reference to only those parties that would be significantly affected by a proposed rule.

The second concerns the judicial review provisions of the bill. While we believe there should be a commitment on behalf of the participants to the agreements made in the consensus process, the bill would restrict judicial challenges regarding agency decisions made subsequent to the negotiations.

We believe the language should be revised to preserve legitimate judicial rights for all parties.

In summary, Ford supports the concept of negotiated rulemaking as a supplement to the conventional rulemaking process. S. 1504

would provide guidance and facilitate use of the process in situations where negotiations could help in developing a final rule. Thank you.

Chairman GLENN. Thank you, Mr. Brown. Mr. Doniger.

TESTIMONY OF DAVID DONIGER, SENIOR STAFF ATTORNEY, NATURAL RESOURCES DEFENSE COUNCIL 1

Mr. DONIGER. Thank you, Senator. I am David Doniger. I am a senior attorney with the National Resources Defense Council. We have 83,000 members and 80 professionals on our staff. We have a full range of environmental issues we work on, and negotiation of all different kinds is a part of our work in these areas, from the settlement of law suits, some of which have been very important in shaping the direction of EPA programs and others, to actual negotiations over consensus legislation, for example, in the area of national energy standards for appliances.

We have been involved in several of the EPA reg negs, and one with the Department of the Interior. We have had some good experiences where there has been success, and some experiences where it has not been successful.

I think that the negotiated rulemaking tool is turning into a niche tool of considerable importance for some class of environmental disputes. We continue to look for opportunities to use it, but in our view, negotiated rulemaking is still in a fragile and experimental stage, and the process of calling and conducting a negotiation is still largely ad hoc.

We do not know why some work and why some do not. We do not know exactly where they can be used and under what circumstances. And there are several drawbacks that come with the advantages of reg neg which need to be considered as well.

One is the danger, which I would like to speak about in a little more depth in a moment, that the process will convert agencies which have missions and mandates into brokers, in a passive way, between interest groups. A second concern is that this process is extremely expensive for the public-interest sector.

For these and other reasons covered in my prepared statement, though we very much support and look forward to participating in future reg negs, it is NRDC's view that it would be best not to legislate a specific set of procedures for negotiated rulemaking at this time. It would be better to let experimentation and learning continue. In our view, the greater use of reg neg would be fostered by a proliferation of successful experiments and satisfied customers better than by the passage of a law establishing a set of procedures. Now let me, if I may, go into a little detail on a couple of these points.

It does not seem to me that there are firm rules about what is a negotiable issue in a reg neg and what is not. There have been some second order and procedural-type issues which have turned out to be successfully negotiated through the reg neg process. And there are some examples of what would appear to be procedural issues that have eluded compromise.

1 See p. 209 for Mr. Doniger's prepared statement.

Most issues of fundamental principle-like how safe is safe, how much cancer risk from radioactive waste disposal sites is acceptible-those kinds of questions should be generally avoided like the plague in a reg neg situation. But there are some examples that have involved health issues, like the wood stove negotiations, where we were able to reach an agreement.

So I do not think we can tell right now when it will work and when it will not. That is why we need to experiment some more. One very serious concern for the environmental community is that reg neg has a tendency to convert agencies with missions into passive brokers between interest groups. Congress intended the EPA, for example, to be an advocate for protection of health and environment and yet, especially in this Administration, EPA has taken a very passive role. We are concerned that reg neg may accentuate this: that it may further encourage an agency to withdraw from the fray, and leave environmental groups and industry to fight things out in the negotiation and "let us know who wins. In this situation, environmentalists have the most to lose because we rely the most on the agency as a source of data and analysis and we need the agency to be an advocate. We have no substitute for that.

The passive broker effect has happened in some reg negs and not in others. There was a real problem of passivity in the heavy-duty truck negotiations that Kelly Brown and I were both involved in, and yet in the wood stove negotiations, EPA was at some points a real tiger, and was really properly involved in the whole process. I do not know why this happened at some times, and not at others. Turning to the question of expense, I personally devoted nearly 30 full days to the process of developing the wood stove regulations, and that is easily three to six times what it would have taken to write conventional comments. While we achieved a good outcome in that case, in other cases an equally intense effort has come to nothing. This was the case in EPA's negotiations over the underground injection rules under the Safe Drinking Water Act and RCRA, which broke down. It may be true again in regard to Department of the Interior negotiations over the air pollution from oil development off the California coast, which as of now are stalled.

In the nonprofit environmental community, we simply cannot afford this effort on a regular basis. There has been some effort to raise funds from foundations, but that is not an adequate answer and it has never yet defrayed our full cost of participation.

The bill would authorize agencies to compensate parties in our shoes, but it does not require it. I believe the Government is getting something very valuable in terms of reduced conflict and better rules, and saving resources. For this reason, if the bill does go forward, it should do more than merely repeat the existing authorization for payment of such compensation. It should, I believe, require that in appropriate circumstances public interest organizations and others with the kinds of budgets that cannot support this sort of process-but who are essential to the success of the process-have a means to get compensated for the extra time and effort that is involved in it.

One concern we have about the structure of the bill is that it assigns the final decisionmaking to the head of the agency: when to call a regulatory negotiation, who to invite, when to call it off, and so forth. To be sure, he gets advice from conveners and facilitators and so forth. But the head of the agency calls those shots.

I think one reason that people have been willing to give it a go and experiment in this area is that the process as currently preceived is extemely fragile.

It requires a continuous consent of the parties all the way through and it can't survive significant dissension.

This means that parties have a safety valve if things start to go badly in the reg neg process. They know that they can probably stop the process unilaterally if they need to. Unfortunately, the way the bill is structured, it may encourage some agency officials to press on with things in situations where it's inappropriate, and there is no judicial review provided for the reg neg decisions.

I'm not sure that the answer is here because it doesn't immediately occur to me to whom you assign the powers, if not to the head of the agency. And I'm not sure that adding another layer of judicial review, in the pre-rulemaking state, is the answer here.

But that's one reason why we believe it's better to continue experimenting with the process now, to take advantage of the fragility of the process, and to learn from the experiments.

To conclude, to use an industrial analogy, we are still at the premarket testing stage of making handcrafted prototypes and trying them out in laboratory conditions-maybe test tracks would be a good analogy. It's still premature, I think, to release this product to the market. We think it would be best to continue the experimentation, and we are going to participate in neg negs when the appropriate rules come up for them, we think the best way to sell this process is to continue the proliferation of satisfied customers. That is the better way to move reg neg forward, not to codify a set of procedures at this time.

Thank you for the opportunity to testify.

Chairman GLENN. Thank you, Mr. Doniger.

I like your analogy.

Mr. Zoll.

TESTIMONY OF DAVID F. ZOLL, VICE PRESIDENT AND GENERAL COUNSEL, CHEMICAL MANUFACTURERS ASSOCIATION 1

Mr. ZOLL. Thank you very much, Mr. Chairman.

I'm David Zoll, Vice President and General Counsel of the Chemical Manufacturers Association. Thank you for asking us to testify and thank you for taking the time of this Committee to talk about agency rulemaking proceedings, particularly with the important agenda that you have in front of you.

We are a technologically complex and scientifically complex industry, and we're very interested in giving the Government all the tools that we can to help it come out with effective rules.

Our experience has been gleaned from five regulatory negotiations in which we have participated in the health and environmen

1 See p. 223 for Mr. Zoll's prepared statement.