The prepared statement of Mr. Simpson follows:1

PREPARED STATEMENT OF RICHARD O. SIMPSON, CHAIRMAN, U.S. CONSUMER PRODUCT SAFETY COMMISSION

Mr. Chairman, I am pleased, as Chairman of the Consumer Product Safety Commission, to have an opportunity to appear before this Committee today to express my personal views on S. 4145, a proposal to create a Commission on Regulatory Reform.

As you may be aware, I testified on similar legislation before another committee of the Senate earlier this week. I welcomed both invitations, particularly because I have been outspoken on the view that strong and vigorous oversight-which this bill in fact provides—is essential if we are to have truly regulatory commissions. May I at the outset state that I believe that such a regulatory review is not only warranted, but also highly desirable, for I believe that the people of this country are well served by the process of continuous examination of and awareness of Federal services and Federal activities.

I have noted that S. 4145 addresses itself to activities of the "Independent Regulatory Agencies", and I am pleased to note that specific agencies are not cited by name. I am pleased because, in addition to the "independent regulatory commissions" which have been clearly established and defined as such, there also exist within the broad framework of our Executive Branch, other "regulators"agencies, councils, boards, administrations, commissions, etc., that are found in cabinet level departments. All such governmental regulators should be reviewed so that their actions can be assessed; their independence established if necessary; and most importantly, the chain of accountability be clearly understood and followed.

The motivating factor in the surfacing of this legislation, as expressed by the President, is today's need for assessing the inflationary impact of such regulatory of the negative impact.

bodies upon the economy-particularly the possibility that such agencies may be inadvertently legitimatizing strictive and anticompetitive trade practices that ultimately cause elevation in prices to the consumer. A review of the economics of regulatory actions is, I believe, a valid—and needed-one. I suggest that such a study should, however, encompass the cost and benefits of regulatory actions, that is, the measurement of the positive effects of regulation, as well as the assessment of the negative impact.

The Consumer Product Safety Commission is, as you know, the newest of the regulatory commissions in Washington; one in which the Chairman has been given a mandate which one member of Congress has described as "more power than a good man should want or a bad man should have.” I agree. And because I agree, and I see that there are possibilities for abuse, for circumvention of the public interest, and for self-aggrandizement, I doubly welcome this opportunity to come before you today.

The Consumer Product Safety Commission has jurisdiction, as you know, over more than 10,000 individual consumer products, and new products are entering the marketplace continuously. The Commission is required by statute to develop and promulgate, when warranted, either from its own initiative or in response to citizen petition, safety standards to guard against unreasonable risk of injury to the consumer.

In addition, the Consumer Product Safety Act mandates a "blanket", if you will safety standard, contained in Section 15 of the statute. To paraphrase, Section 35 says that NO manufacturer shall manufacture a product which contains a defect which creates a substantial product hazard. Manufacturers (and distributors and retailers and importers) are under legal requirement to report to this Commission, under penalty of law, when they have reason to believe that such a product has been entered into commerce that could create such a hazard. The Commission, further, has the authority, after following certain procedures, to order public notice and either repair, repurchase, or replacement of the offending product, at no cost to the consumer.

At this point, the scope and authority of this Commission may appear to some to be overwhelming. It is. And yet this is but a portion of the mandate and the authority vested in this Commission. Vigorous Congressional oversight is necessary to ensure that such broad authority is properly used and not abused.

The Consumer Product Safety Act contains some unique features, one of which appears in S. 704, the Regulatory Agencies Independence Act. A copy of the comments of the Consumer Product Safety Commission, dated April 22, 1974, on this provision is attached for the interest of the Committee. This provision, requiring concurrent budget and legislation reporting is already in operation for this Commission through the provisions of Section 27 of the Consumer Product Safety Act. This unusual budget feature brings into focus the fiscal game playing that sometimes takes place among the Executive agencies, the Office of Management and Budget, and the Congress.

We, as a Commission, are currently experiencing some rough sledding, with respect to our budget, largely, I believe, because of this new concept, and we are committed to attempting to treat it in a candid and straightforward manner. Unfortunately, our most reasoned and measured fiscal requirements, however, are caught in the time-honored arena where other Federal agencies fight for funds. We find ourselves faced with extraordinary appropriations cuts, which we cannot absorb within our operating plan.

We have had only one full year of experience with the provisions of Section 27, however, and I would suggest it is too soon to draw any rational conclusion as to the merits of such a process-or the desirability of imposing such requirements on other agencies. Perhaps the road would be smoother if more were traveling it.

I feel that the question of from whom, and of what, the independent regulatory commissions are considered to be independent, is a key question and one which should be defined. It has been stated variously that such commissions are neither the child of the Executive nor the child of the Congress; that such commissions are part of the Executive, and therefore, are expected to reflect the Administration's views and advance the Administration's policies; that they are arms of the Congress, and are expected to be totally responsive to and vigorously overseen by the Congress. At the present time there is no widely agreed upon definition of to whom or to what such commissions belong. And perhaps, they should continue to exist as they are-reporting as do we, concurrently on our activities to the Executive and the Legislative, acting in our quasi-judicial capacity, and standing alone within the Government, with narrow support from without ourselves. One might speculate, however, whether this strange area is one which could become a fertile ground for special interest groups, that is, as independent commissions may find that independence does not necessarily equate with survival, and some broader base of power is needed in order to survive and grow.

I believe the Committee is aware of the "openness" policy adopted-and, we believe, effectively implemented by-the Consumer Product Safety Commission. I am proud of the Commission for adopting such a direction, and I am especially pleased to report that we feel it is working. We know we are doing the public's business, and the public has a right to know what we are doing, how we are conducting our affairs, and where we are allocating our priorities. Openness can be an effective check against the extraordinary powers vested in regulatory agencies, for the continuous scrutiny of every facet of activity, by the public, by the press, by the affected industries, by the Congress, and by other Federal agencies, leaves few if any areas unexplored and opens to discussion even the most minor of activities.

Clearly, in every agency, certain policies can—and in fact, must-be enunciated. These are visible decisions, accompanied by public announcements. Basic policy decisions, which are made by the Consumer Product Safety Commission are generally proposed for public comment prior to final adoption. I am attaching copies of such published policies of the Consumer Product Safety Commission, e.g., the Public Meetings Policy; the Freedom of Information Policy; Proposed Sampling Plan Use in Standards Policy; Staff Participation in Standards Development Policy; and various regulations implementing the authorities of the Act. The question of independence, generally, is probably one of the key questions addressed by the Consumer Product Safety Commission. This Commission, as you know, Mr. Chairman, has been engaged for more than a year in a "pulling contest" concerning five policy-oriented supergrade positions within the Commission-five positions, which, we maintain, should not be protected by the normal Civil Service, for their services are largely advisory, and oriented to the Chairman, who serves for a limited term. And yet, because the Commission is a regulatory, independent body, these positions should not, we maintain, require the political sanction or clearance, actual or pro forma, of the White House Hearings have been held in the Senate on this question, and we are advised that, at the request of the Senate Commerce Committee, the Senate Post Office and Civil Service Committee, and the Senate Government Operations Committee,

the Office of Management and Budget is studying the issue. For your interest, I am attaching for the record, a copy of my testimony at the time of the hearing in question.

I have spoken to the broad subject of regulatory commissions and my own experience as Chairman of one such commission. I would like to re-emphasize my sincere and deep conviction that consistent and vigorous oversight is not only appropriate but necessary in our system of government-and particularly so in the "middle area" of the Independent Regulatory Commissions.

Having established the need for such review, the question then arises as to the appropriate process or vehicle for such activity. In addition to the proposed "review" Commission, I would urge that consideration be given to the option of conducting such oversight in the body which has the jurisdiction for oversight, and which has traditionally exercised it—the Congress. Undoubtedly the creation of a new Commission, such as that proposed, would involve personnel and expenses of some magnitude. I would respectfully suggest that the Congress should consider seriously the option of making those moneys available to the appropriate Committees of the Congress, with a specific requirement that those Committees and their augmented Committee staffs pursue this responsibility vigorously, with a specific set of criteria and direction, and file within a prescribed period of time (perhaps 2 years) reports of findings and recommendations. At that point, or perhaps before, a Joint Committee of the Congress specifically created to address regulatory reform would accept these reports and pursue through to legislative accomplishment such changes as may be needed.

Thank you for giving me an opportunity to express my thoughts in this important area. I will be pleased to respond to any questions the Committee may wish to raise.

Enclosures:

[See attachments to Mr. Simpson's prepared statement beginning at p. 170.]

Senator METCALF. Well, we will be back to all of you in a couple of minutes, but we will go ahead now with Mr. Richard Wiley, Chairman of the Federal Communications Commission. Mr. Wiley has as much difficulty as any of you others. I have more dealings with the Federal Power Commission, but sometimes my sympathies are in your area too, Mr. Wiley. Thank you very much for coming, and we are delighted to hear from you.

STATEMENT OF HON. RICHARD E. WILEY, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION

Mr. WILEY. Thank you, Mr. Chairman.

I welcome the opportunity to appear here today to present the Commission's views on the subject of regulatory reform which is before your committee in the form of four different legislative proposals, and I also will abbreviate my statement in the interest of time. My testimony today is directed primarily to one of those proposals, S. 4145, a bill to establish a National Commission on Regulatory Reform. This past Wednesday I testified on a similar measure, Senate Joint Resolution 253, before the Subcommittee on Surface Transportation of the Senate Committee on Commerce, and I will refer that proposal in my comments on S. 4145 where I believe a comparison is particularly relevant.

With respect to the three other bills before your committee, I would note that none of the provisions of S. 3604 pertain to the FCC or to an area in which our agency has any particular expertise, and thus I have no comments on that bill. With reference to S. 770, the Commission has not taken any position on the legislation, but if the committee has any particular questions that they wish to pursue, I would be

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pleased subsequently to offer my personal observations. We have previously submitted extensive comments on S. 704 to the Subcommittee on Budgeting, Management, and Expenditures. To conserve time, I shall not reiterate those statements.

Let me say at the outset, Mr. Chairman, that the FCC supports the concept in both S. 4145 and Senate Joint Resolution 253 of establishing a National Commission on Regulatory Reform to study and to report to the President and the Congress on the performance and impact of the independent Federal regulatory agencies. We are mindful that this concept is scarcely a new one. The committees and commissions, both governmental and private, have studied and reported on the regulatory agencies with considerable frequency since their inception. Moreover, the agencies themselves are continually engaged in the review and assessment of their performance through the oversight appropriations, legislative, and judicial processes. We do believe, however, that the Commission contemplated by both of these bills can make a significant contribution to the national debate on the subject of regulatory reform and, more importantly, to appropriate congressional and administrative action.

Our support for this concept is predicated on what we understand to be the basic purposes and objectives of the Commission to be established and the intended scope of the inquiry. Although S.J. Res. 253 is perhaps broader and more detailed in its mandate, both it and S. 4145 would direct the National Commission on Regulatory Reform to study and report, with specific recommendations, on the performance of the independent regulatory agencies in terms of the impact of their activities, and in particular of their rules and regulations on the Nation's economy. Given the serious dimensions of the problem of inflation, we believe that it is clearly a paramount responsibility of the Federal Government to examine its own house to identify and revise or eliminate any regulatory rules or policies which impose undue burdens on commerce, place unnecessary restrictions on competition, or unduly increase consumer costs without any significant countervailing public interest benefit.

In this regard it may not be unfair to say that most prior reform commissions have focused primarily on nonsubstantive aspects of the regulatory agencies, such as their procedures and organization, and have largely ignored the equally, if not more important, substantive issues of regulation. These issues, for example, include the following: What is the need for particular rules and regulations; what are their consequences; who gains from particular rules and regulations, who pays for the gain; who loses and who ultimately suffers the loss; and how can agency rules and regulations be revised to meet changing circumstances or changing assessments of need?

As we understand both bills, the Reform Commission would be mandated to examine these fundamental substantive questions in the context of comparing the economic and noneconomic costs and benefits of particular regulatory activities. To the extent that the Commission would do these things and also make specific recommendations for possible congressional or administrative action, we believe that its creation would be eminently justified.

I should note here, Mr. Chairman, that the FCC is aware that neither the public interest nor the regulated industries are served by outmoded rules and overregulation. To deal with this problem we are

engaged in extensive and continuing studies in the broadcast, cable, and safety and special radio services, and indeed, throughout the Commission, designed to evaluate each and every rule in the Commission's books for its current usefulness. Is it outmoded? Is it unduly burdensome? Is it necessary? If not, then such a rule is a candidate for revised regulation, or as we have termed it, for short reregulation, or perhaps deletion altogether.

As a result of the numerous broadcast reregulation orders issued by the FCC over the past 22 years, we have amended, and in some cases, deleted, nearly 300 rules and regulations concerning radio and television stations, and I think all in the public interest. In addition to changing outmoded rules, I also believe that in the broadcast arena, for example, such factors as the size of the market, the number of stations in the market, and expecially the size of the individual licensee, should be reflected in the content and relative burdens of our rules. We simply cannot continue to regulate a tiny radio station with three or four employees in much the same manner as a large market VHF television station. The fundamental thrust of all our reregulation efforts is thus to focus regulation on specific subjects and entities where it is clearly needed, to eliminate the waste associated with unnecessary overregulation, and to enable both the FCC and those subject to its regulation to put the time and expense thereby saved to more productive ends.

Skipping over a bit in my statement here, on page 6:

While we believe that these activities represent a determined effort on the part of our agency to ensure that the regulatory product is wholly consistent with the public interest, we would, of course, fully cooperate with the proposed Reform Commission in any review of our progress and would welcome the opportunity to consider any recommendations it might make.

Before leaving the area of substantive regulation to discuss other subjects, I would like to add a few observations concerning the relationship of the regulatory process and the concept of competition. As the members of this committee may be aware, in the past several years the FCC has attempted to introduce the thrust and stimulus of competition into certain traditionally monopolistic or oligopolistic telecommunications services. We have done so not for the sake of competition per se, but in recognition of our statutory mandate to regulate in the public interest. Obviously, there are situations in which competition is not always appropriate or advisable, but we believe that where competition is feasible-that is, where no undue technical or economic harm to basic services would be caused by its introduction-the public stands likely to benefit from lower rates, improved service and more rapid innovation, as well as greater diversity of choice.

We would note at this point, Mr. Chairman, that the FCC is continually engaged in the review and revision of our administrative practices and procedures to keep pace with the burgeoning growth of the industries we regulate.

As Chairman of the FCC, it has been especially distressing for me to discover that all too often the only thing standing between an abundant demand for communications services and available supply, is administrative and bureaucratic delay.