Jack Reed

Mr. REED

Mr. REED. Mr. Chairman, I concur with the gentleman. We have worked with these issues which are very important, but technical, together with the majority and minority staffs. I think we have reached a good balance between the need to make this a streamlined, effective procedure, and this amendment is a good one, and I would urge passage, and I believe that the gentleman would also recognize my colleague, the gentleman from Ohio. I would also urge that his proposal be supported. amendment offered by mr. traficant to the amendment offered by mr. gekas

Mr. REED. Mr. Chairman, will the gentleman yield?

Mr. REED. The gentleman makes a point, a suggestion that our interest is to protect in some way the bureaucrats. That is not the point at all. I think the gentleman realizes that those small businesspeople out in Iowa and throughout this country pay the taxes that support this Government and that will be called upon to send these individuals around the country to argue these disputes. The other point I would raise, because the gentleman brought up the Bank Holding Company Act, there is an example where a small businessman, perhaps, might want to challenge a regulation, any type of regulation, and yet he would have to go, or she would have to go to the location of the Federal court of appeals, which we only have seven circuits. They are not in every community. What the gentleman from North Carolina [Mr. Watt] is suggesting to do, I think, is a cost-efficient, sensible approach to make sure that we can save taxpayers' dollars; we can get one resolution. Again, I remind all of the Members that we are talking about now a check on whether this flexibility analysis is done. I thank the gentleman for yielding.

Mr. REED. Mr. Chairman, will the gentleman yield?

Mr. REED. The gentleman from North Carolina has raised a very excellent point and I think it goes to making the system more efficient, more predictable, and more comprehensible. If there are opportunities to challenge regulations, and we are just talking about the procedure for doing a regulatory flexibility analysis throughout the country, you would have various conclusions and also, frankly, you would be requiring to send agency lawyers from Washington all around the country, which the taxpayers are paying, when in fact they could simply take their own vehicle or a cab or a subway to the district court here in Washington and litigate this issue. Again, we have to recognize what we are talking about here is not the substance of any of these rules. We are talking about a determination of whether the agency acted arbitrarily or capriciously in not doing a regulatory flexibility analysis or in doing one that was so insufficient that it demonstrated such arbitrary and capricious behavior. I think this amendment is a wise one. I would hope that the gentleman from Pennsylvania might accept it.

Mr. REED. Mr. Chairman, will the gentleman yield?

Mr. REED. Mr. Chairman, I move to strike the requisite number of words. I yield to the gentleman from Missouri [Mr. Volkmer].

Mr. REED. Reclaiming my time, I appreciate the sentiments of the gentleman. I believe the 180 days is a very reasonable, responsible balance between the view the gentleman proposed, whether is it multiple appeals for substantive challenges to the legislation or the procedural rule. And I believe if we stick to that we will be in good shape. amendment offered by mr. volkmer to the amendment offered by mr. ewing

Mr. REED. Mr. Chairman, I yield to the gentleman from Illinois [Mr. Ewing].

Mr. REED. Reclaiming my time, as the statute is drafted, as it exists today, it is 180 days or the lesser period allowed under substantive review statute. What we tried to do is to combine these judicial protests, reviews, appeals, into one or two at the moment, and not have an endless string of procedural delays. The other thing I would suggest also, and I think this is very important, is that we are very conscious of, and I know I think I speak for myself and the majority, we are conscious of the different time limits with respect to the statute. That is why we specifically include at page 5 making the regulator flexibility part of the record on final review. Therefore, when someone comes in and challenges that rule, and the gentleman from Texas [Mr. DeLay] has indicated he wants the Americans to be able to challenge rules, so do we, but we want to be able to do it efficiently in one forum so we can go ahead and get all the bang for the buck. So I think we have addressed the variable lengths of review in this language. I am every comfortable with it as written. I applaud the gentleman for trying to push it further. But as I indicated in my remarks, I think that will simply cost more money and be really an opportunity for exploiting the system, slowing things down, and I know the duty of what we have been sent here to do, get good regulations for people.

Mr. REED. I yield to the gentleman from Illinois [Mr. Ewing].

Mr. REED. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, all of us on both sides, at least the vast majority, believes judicial review is very, very important. That is a concept that has been embraced by both the majority and the minority and that forms the core of title I. But I think it is important to understand specifically what title I does and why this amendment, I do not think, aids in adequate judicial review. In fact, it might create a situation where the system can be exploited to get 1, 2, 3, bites of the apple rather than an efficient system which allows everyone--small business people, ordinary American citizens--to go ahead and make sure regulations are sensible. Judicial review is part of title I. It is triggered by a claim that procedurally the agency did not effectively institute a regulatory flexibility analysis. An agency director, when trying to promulgate regulations, must consider the impact on small business under the regulatory flexibility analysis or decide there is no significant impact and certify such a fact. At that point, when that decision is made under the present statute, an affected entity has 180 days to appeal. The remedy is a determination by the court whether or not the agency performed its procedural duty, i.e., it did confront the regulatory flexibility analysis or no such analysis was required. The problem with extending this time period for one year is the problem that was alluded to by my colleague challenge to regulations, the actual regulations, those rules and regulations that the small business owners object to, when someone comes into their shop or business facility, those substantive regulations have to be challenged in a much shorter time period. Specific statutes allow 30, 60, 90 days. What this amendment would do is create the anomalous situation where a substantive challenge has already been made, it may have failed, yet still there is a procedural challenge simply on whether or not the agency performed the regulatory flexibility analysis. I would also like to point out to my colleagues that the specific language of the bill includes consideration of this regulatory flexibility analysis when regulations are challenged substantively in a court of law. On page 5, and I will quote, ``In an action for the judicial review of a rule,'' i.e., this rule is bad, it does not meet the substance, it fails the substance, it imposes undue costs on small business, we can do it a better way. In such a review on the merits, any regulatory flexibility analysis in such rule, including an analysis, pursuant to subsection A(5), ``shall constitute part of the whole record of agency action in connection with such review.'' Therefore, a judge considering an appeal of a regulation, not just the procedure but, ``Are these regulations good or bad,'' as my colleague from Illinois pointed out, that is what small business people are alarmed with. They do not care about the procedure. They are listening to this debate and they are saying, ``What are we debating about? If regulation hurts me, I don't just want to go back and do a flexibility analysis and say let us do something along the way. I want to fix the regulation.'' Well, this legislation, as it stands today, not only allows but makes part of the record of review the record of the flexibility analysis. So what I would suggest is that the 180-day limit here provides an adequate time to review that one procedural preliminary step. Failing that, there is ample opportunity throughout the process to decide whether or not the agency has conducted an adequate review and it published, more importantly, a rule. I just hasten to add, the bottom-line test for our constituents is not that we followed scrupulously and minutely all these turns in the regulatory process, the bottom line is do these regulations make sense in the context of the business? The point the gentleman from Missouri [Mr. Volkmer] tried to make is if they do not make sense, simply having this option out there for a year is not going to provide a remedy. The other point I would like to make about this process is that there is a real value to finality, there is a real value to having small business, medium business, large business, individuals, say at a date certain these are the regulations that are in effect. I am not going to invest in a $200,000 septic system or water purification system and find out 30 or 60 days later that the regulations have been challenged and clouded because they failed to take a reg-flex step a month ago.

Mr. REED. Mr. Chairman, I yield myself the balance of my time. This has been the process of working together cooperatively over the last several weeks to develop legislation that will meet the needs of small businesses throughout the United States and meet the needs of taxpayers throughout the United States, to develop a regulatory system which is streamlined, efficient and provides for the protection of the public good. And we have reached, I think, major accommodations in terms of language. Today I hope we can reach additional accommodations in terms of providing a system that will protect the public good and save money. I am encouraged by the process. I hope in the next few hours we can make changes that will make this legislation even better for the benefit of all of our citizens. Again, I thank and commend the gentleman from Pennsylvania for his help and effort during this process.

Mr. REED. Mr. Chairman, I yield 3 minutes to the gentleman from Oregon [Mr. Wyden].

Mr. REED. Mr. Chairman, may I inquire as to how much time I have remaining?

Mr. REED. Mr. Chairman, I yield 3 minutes to the gentleman from Ohio [Mr. Traficant]. (Mr. TRAFICANT asked and was given permission to revise and extend his remarks.)

Mr. REED. Mr. Chairman, I yield 3 minutes to the gentleman from Missouri [Mr. Skelton].

Mr. REED. Mr. Chairman, I yield 3 minutes to the gentleman from Missouri [Mr. Volkmer].

Mr. REED. Mr. Chairman, I yield 5\1/2\ minutes to the gentleman from North Carolina [Mr. Watt].

Mr. REED. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I want to first thank the gentleman from Pennsylvania, Chairman Gekas. We were able to work together in a cooperative and bipartisan process and although we have some principal disagreements, I believe the legislation has been made better because we were able to work together constructively and cooperatively, and at the end of today regardless of the outcome I think we can be very proud of this bipartisan process. Both of us agree that steps need to be taken to make the regulatory process more sensitive to the needs of small businesses. Small businesses lack the staff and resources to track the daily comings and goings of the Federal Register. They are less likely to have their interest represented by trade associations and lobbyists and may have a more difficult time meeting the costs imposed by regulators. Costs that seem minuscule to General Motors are insurmountable to some small businesses throughout the United States. Title I addresses this concern by strengthening the Regulatory Flexibility Act which direct agencies to consider the impact of their regulations on small entities and, where possible, make special considerations for small businesses. I want to thank my colleagues, the gentleman from Missouri, Ike Skelton, and the gentleman from Illinois, Tom Ewing, for working so hard on this issue and for sharing their expertise with us when they testified before the subcommittee. The core of title I is based on their bill, H.R. 830 from the last Congress. Mr. Skelton, as chairman of the Small Business Subcommittee on Exports Tourism and Special Problems, found that those agencies that complied with the Regulatory Impact Act had done so successfully. They established procedures that saved time, money, and litigation headaches. Unfortunately, other agencies have been able to escape compliance and they have been able to do that because regulatory flexibility analysis did not include judicial review. We are remedying that situation today and I join the gentleman from Missouri [Mr. Skelton] and the gentleman from Illinois [Mr. Ewing] in support of this section of the bill. The regulatory flexibility analysis in an important weapon in our efforts to reduce the regulatory burden on small businesses and we need to ensure that it is implemented governmentwide. I also support title III of the bill. This title would create a code of conduct for regulators in their dealings with the American people and it emanated from a proposal made originally by the gentleman from Texas [Mr. DeLay]. It has been thoroughly reviewed and we have reached I think a very sensible position in the bill in title III's provisions which I support with enthusiasm. However, I do have serious concerns about title II, especially now that we have completed action on H.R. 1022. Initially, both H.R. 1022 and H.R. 926 were part of the same contract bill, H.R. 9. Unfortunately, their provisions overlap and conflict. I think it is a mistake to pass both bills in the hopes that the Senate will sort out these conflicts and inconsistencies, a step that undermines the ability of Members of this House to act on these issues sensibly with some type of overall cohesive purpose. The rulemaking process has been criticized as overly prescriptive, expensive and overburdened with useless paperwork. Title II exacerbates these problems by creating a costly, time consuming process that does nothing to streamline Government or roll back redtape. The New York Times just published a diagram of the rulemaking steps required by this bill, entitled ``A Rule Making Maze.'' It resembled a Rube Goldberg contraption in its inticracy and complexity. My colleague from Florida, John Mica, just sent around a ``Dear Colleague'' containing an excerpt from Philip Howard's book, ``The Death of Common Sense.'' I wanted to quote from it, because I think it makes my point: Important, often urgent projects get held up by procedural concerns. Potentially important breakthroughs in medicine wait for years at the Food and Drug Administration. Even obviously necessary safety projects can't break through the thick wall of process. (Here he cites New York's difficulty in extending a runway at La Guardia airport that is too short for safe landings) . . . The irony he points out of our obsession with process is that it has not prevented sharp operators from exploiting the governments contracting system, as the weapons procurement scandals of the 1980's showed us. Its dense procedural thicket is a perfect hiding place for those who want to cheat * * *''. Title II is exactly what he is talking about. It extends the time line for regulations by about 2 years by establishing a series of procedural hurdles, sweeps administrative rules, such as the regulations that open duck hunting season, into costly regulatory impact analysis, and enables sharp business owners to stall regulatory changes that benefit themselves by letter writing campaigns and filing multiple lawsuits. All of these procedures will apply to deregulation, as well as regulation. They will apply to new regulations that aim to help small business become more competitive. I do not believe that 2 years from now Members will want to read in their local paper that we forced the Department of the Interior to spend several hundred thousand dollars to perform a regulatory impact analysis, followed by the costs of defending lawsuits by animal rights activists, when they are simply trying to open duck hunting season, or to replay this scenario when we try to prevent fisheries from being overfished, or to compensate veterans for gulf war syndrome. We will have amendments today that address some of the flaws in title II, and I hope Members from both sides of the aisle will listen to the arguments and vote to improve this legislation. I think we can make progress to create, I hope, a bill that we can all support. But we have principal disagreements which we will debate vigorously on the floor today. Mr. Chairman, I reserve the balance of my time.

Mr. REED. Mr. Chairman, this amendment goes to a very important issue, the issue of the standard by which the regulator will choose a particular process of regulation, a particular path to implement the law that that individual has been entrusted with by the Congress. The present language of the bill requires that the regulator adopt the least costly approach. It has a rather superficial appeal. We all want things to be done at the lowest cost. But I think the problem is that this particular expression, ``least costly'' approach, fails in any way to require a consideration of the benefits. What I think we have learned over the last several decades in terms of regulatory reform is that regulations, laws, should balance cost and benefits. Preoccupation with just benefits leads, in many cases, to excessively expensive regulations. On the other hand, a preoccupation with just the lowest cost could lead to a situation where we do not get the most for our dollar. A very simple example would be that there could be two different approaches to achieve a regulatory goal. One might be costs, say, that require, for example, $3 to achieve. That would be in contrast to something that cost $3.20. Yet the $3.20 approach yields, 7, 8, 9 times the benefit. I think we all can understand that language. That is why cost-benefit analysis, not just cost analysis, is so critical. The problem I have with the legislation is it does not make sensible, reasonable people make a judgment about regulations to consider the benefits, to take not the least costly approach but the most cost- effective approach, one that for the dollar gets the biggest benefit. I honestly believe that is what the American people want us to pursue. You know, the old saying, ``penny-wise and pound-foolish.'' I believe that is exactly what the present language in the bill would require all of our administrators to be, penny-wise and pound-foolish, get the cheapest approach even if it gives marginal benefits, but ignore, in fact, legislatively be unable to adopt, an approach that may be marginally more costly but significantly more beneficial to the whole country. So I would very much urge that we consider this provision. I would be very generally interested in the comments of the chairman as to whether we could at this point, or going forward, really, work on getting in the bill not this least costly analysis, but a true cost-benefit analysis.

Mr. REED. Reclaiming my time, I am very sensitive to shrinking anything. So I do not want to shrink judicial review. I am a supporter of judicial review. I just want to make sure the review is efficient, cost effective, and reaches the merits on a final point and not several points in the process. I believe with the gentleman's proffer of working together, we can work out these details. I hope I can persuade the gentleman this language or some version will be an improvement and not a detriment. Mr. Chairman, I ask unanimous consent to withdraw the amendment.

Mr. REED. I yield to the gentleman from Pennsylvania.

Mr. REED. Mr. Chairman, I demand a recorded vote.

Mr. REED. There very well might be an issue that I would raise but not with the anticipation of calling for a vote or actually formally presenting an amendment, but I would like to reserve that right, if I may. I am also told that the ranking member, the gentleman from Michigan [Mr. Conyers] has an amendment and he is not here yet, but I am sure he will be here. I cannot speak for the ranking member.