[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
   REGULATORY REFORM: ARE REGULATIONS HINDERING OUR COMPETITIVENESS?

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 27, 2005

                               __________

                           Serial No. 109-108

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

                   Subcommittee on Regulatory Affairs

                 CANDICE S. MILLER, Michigan, Chairman
GINNY BROWN-WAITE, Florida           STEPHEN F. LYNCH, Massachusetts
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
LYNN A. WESTMORELAND, Georgia

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                       Ed Schrock, Staff Director
               Joseph Santiago, Professional Staff Member
                           Alex Cooper, Clerk
                     Krista Boyd, Minority Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 27, 2005....................................     1
Statement of:
    Copeland, Curtis W., Specialist in American National 
      Government, Congressional Research Service; J. Christopher 
      Mihm, Managing Director, Strategic Issues, Government 
      Accountability Office; Marlo Lewis, Jr., senior fellow in 
      environmental policy, Competitive Enterprise Institute; and 
      Erik Olson, senior attorney, Natural Resources Defense 
      Council....................................................    33
        Copeland, Curtis W.......................................    33
        Lewis, Marlo, Jr.........................................    82
        Mihm, J. Christopher.....................................    51
        Olson, Erik..............................................   101
    Hayworth, Hon. J.D., a Representative in Congress from the 
      State of Arizona; Hon. Sue W. Kelly, a Representative in 
      Congress from the State of New York; and Hon. Robert W. 
      Ney, a Representative in Congress from the State of Ohio...     8
        Hayworth, Hon. J.D.......................................     8
        Kelly, Hon. Sue W........................................    15
        Ney, Hon. Robert W.......................................    20
Letters, statements, etc., submitted for the record by:
    Copeland, Curtis W., Specialist in American National 
      Government, Congressional Research Service, prepared 
      statement of...............................................    36
    Hayworth, Hon. J.D., a Representative in Congress from the 
      State of Arizona, prepared statement of....................    11
    Kelly, Hon. Sue W., a Representative in Congress from the 
      State of New York, prepared statement of...................    18
    Lewis, Marlo, Jr., senior fellow in environmental policy, 
      Competitive Enterprise Institute, prepared statement of....    84
    Mihm, J. Christopher, Managing Director, Strategic Issues, 
      Government Accountability Office, prepared statement of....    53
    Miller, Hon. Candice S., a Representative in Congress from 
      the State of Michigan, prepared statement of...............     3
    Ney, Hon. Robert W., a Representative in Congress from the 
      State of Ohio, prepared statement of.......................    24
    Olson, Erik, senior attorney, Natural Resources Defense 
      Council, prepared statement of.............................   103
    Westmoreland, Hon. Lynn A., a Representative in Congress from 
      the State of Georgia, prepared statement of................     7


   REGULATORY REFORM: ARE REGULATIONS HINDERING OUR COMPETITIVENESS?

                              ----------                              


                        WEDNESDAY, JULY 27, 2005

                  House of Representatives,
                Subcommittee on Regulatory Affairs,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:30 a.m., in 
room 2247, Rayburn House Office Building, Hon. Candice Miller 
(chairman of the subcommittee) presiding.
    Present: Representatives Miller, Westmoreland, and Lynch.
    Staff present: Ed Shrock, staff director; Rosario Palmieri, 
deputy staff director; Dena Kozanas, counsel; Joseph Santiago 
and Erik Glavich, professional staff members; Alex Cooper, 
clerk; Krista Boyd, minority counsel; and Jean Gosa, minority 
clerk.
    Ms. Miller. The subcommittee will come to order.
    I apologize for being late.
    I think America is at a crossroads. We can continue down a 
path that weakens our international competitiveness, or we can 
recognize our responsibility for reducing the cost of doing 
business in the United States. America should be the very best 
place in the world to manufacture goods, to create jobs. We are 
here today to discuss some options that the Congress could 
consider for reforming our regulatory process. This hearing 
will provide us with an opportunity to evaluate existing 
initiatives, consider new proposals, and develop a regulatory 
reform agenda for the 109th Congress as well.
    I certainly want to say how glad I am to have my colleagues 
Representatives Hayworth, Kelly, and Ney with us today. These 
are three Members of Congress who really do understand this 
issue, and they know how critical it is to improving our 
Nation. I want to thank you all for being here. I am also 
pleased to mention that my subcommittee colleague 
Representative Ginny Brown-Waite has proposed her own piece of 
legislation to address the issue of regulatory burden on the 
American public.
    Regulation is one of the tools used by the Government to 
implement public policy. It is necessary because laws may lack 
the details required to address the various circumstances that 
they were designed to correct. Every year, over 60 Federal 
departments, agencies, and commissions dedicate actually over 
240,000 full time employees to write and enforce regulations 
that range from allowing fireworks displays over rivers to 
registering food facilities to protect them from bioterrorism. 
Combined, these agencies annually issue thousands of new rules 
and their costs for regulatory operations during fiscal year 
2004 actually exceeded $39 billion, just to put it in 
perspective.
    According to one estimate, the total regulatory burden on 
the American public exceeded $850 billion per year, which is 
almost the equivalent of what Americans pay in income taxes. 
Government regulations cost American small businesses 60 
percent more per employee than the cost incurred by larger 
businesses. And, for every dollar devoted by the Federal 
Government to regulatory activity, American businesses spent 
$45 just to comply with those regulations.
    At $8,000 per employee, domestic manufacturers assume 
almost twice the average cost for all U.S. industries. 
Workplace regulations alone cost manufacturers $2.2 million per 
firm per year, which is roughly about $1,700 per employee. Our 
global competitors of course do not have this large of a 
burden, so it is no wonder that our Nation continues to bleed 
jobs, unfortunately, to competing nations.
    During the past 50 to 60 years, Congress and various 
Presidents have developed procedures to guide the Federal 
rulemaking process with the goal of reducing the amount of 
regulatory burden imposed on the American public and 
businesses. Those in favor of regulatory reform argue that 
Federal regulations are too costly, time consuming, complex, 
duplicative, burdensome, and intrusive for businesses and other 
regulated entities. However, there are those who would argue 
that regulatory reform efforts focus too much on the costs of 
regulations and do not focus enough on the benefits derived 
from them.
    Make no mistake, I think everybody on this panel, everybody 
in this room is a person that wants to protect the environment, 
the health, and safety of the workers. I am a defender of 
regulations that watch over consumers and safeguard our natural 
resources. I spent actually almost three decades in public 
office as an advocate of our environment. However, I think that 
excessive and unnecessary regulatory burdens can cause 
substantial harm by limiting economic growth, by slowing job 
growth, as well as by hindering America's ability to compete in 
the global marketplace and the global economy. And as I have 
said many times, I think our standard needs to be what is 
reasonable.
    So I am eager to have a dialog about how best to improve 
the Federal regulatory process for the benefit of all 
Americans. In particular, I am hopeful that this hearing this 
morning will present us with suggestions that will help 
Congress address the flaws of our regulatory system. I am 
extremely troubled by the number of regulations that could have 
an impact on our ability to remain competitive with our key 
trading partners. Streamlining the regulatory process to limit 
unnecessary regulatory burdens on the American public is a very 
powerful force for reinvigorating our economy, small 
businesses, and our competitiveness on the international stage.
    So I do look forward to the testimony of all of our 
witnesses here today. I would like to recognize now Mr. Lynch 
for his opening statement.
    [The prepared statement of Hon. Candice S. Miller follows:]

    [GRAPHIC] [TIFF OMITTED] T5529.001
    
    [GRAPHIC] [TIFF OMITTED] T5529.002
    
    Mr. Lynch. Thank you, Madam Chair. First of all, I want to 
welcome my colleagues who are here with us this morning to 
offer their proposals to reform the regulatory process; 
Chairwoman Kelly, who I serve with in the Financial Services 
Committee, along with Chairman Ney, and my pal Representative 
J.D. Hayworth, and we are also going to hear from a very 
energetic member of this subcommittee, Ms. Brown-Waite, with 
her proposal as well. We do appreciate your taking the time to 
come here today and also to spend your energies on a good 
cause. I think we can all agree there is a general consensus 
that we can do a lot more to improve the regulatory process; no 
question about it.
    While I embrace the notion that we can do much more to 
improve the process, I believe a lot can also be said for using 
some of the tools that we have right now at our disposal to 
cause agencies to follow the spirit and the letter of the laws 
that we pass, to act consistently with legislative intent, and 
also to follow the constitutional protocols that we dictate in 
that legislation. We have seen departures from that on many 
occasions.
    I believe that Congress already has the constitutional 
authority to oversee these agencies and to guide them. For 
example, last month it was revealed that the EPA plans to issue 
a draft rule, which would allow pesticides to be tested on 
humans. Since 2001 when the Administration reversed EPA's 
moratorium on using human pesticide experiments, EPA's position 
on this issue has been the subject of some controversy. Now, 
EPA plans to issue a proposed rule that fails to include 
necessary safeguards. For example, EPA's rule would not fully 
protect children and other vulnerable populations.
    However, the Energy and Commerce Committee, with its full 
schedule, has not been able to have a hearing on EPA's proposed 
rule allowing the testing of pesticides on humans. On the other 
hand, we did find time in the Congress in previous sessions to, 
for example, spend 104 hours of congressional hearing time on 
examining whether or not President Clinton had abused his 
Christmas card privileges. So sometimes our oversight time is 
not well-spent.
    Congress, and this committee in particular, will have an 
opportunity to investigate important examples of regulatory 
abuse and to help guide those regulatory agencies. We should 
also look at the pattern in which regulated industries have had 
an inappropriate influence on the EPA and other agencies' 
rulemaking activities. We are seeing, for example, significant 
delays in agency rules that are required by statute. A major 
cause of this delay appears to be OMB's failure to review 
agency rules in a timely manner.
    To the administration's credit, the Bush administration has 
favored a rule implementing the Clean Air Act standards for 
fine particulate matter. I think most Members of Congress, 
Democrat and Republican, have said that this rule is favorable 
and has an important and positive health benefit. EPA sent that 
proposal to OMB formally in October 2004, but OMB still has not 
released the rule. This is an example where even when we have 
consensus among Democrats and Republicans, we have inactivity 
by OMB.
    Congress has a Constitutional responsibility to conduct 
oversight of Federal agencies. In addition to a standing 
committee with jurisdiction on certain laws, the Committee on 
Government Reform has a responsibility of overseeing whether 
agency laws, programs, and rules are being implemented and 
carried out according to legislative intent. Hopefully, now 
this newly constituted subcommittee under the guidance of 
Chairwoman Miller can make us all more effective toward that 
end.
    Again, my thanks to my colleagues and all the witnesses 
testifying here today. We welcome you and look forward to your 
testimony. Thank you, Madam Chair.
    Ms. Miller. Thank you very much. Are there any other 
opening statements?
    Mr. Westmoreland. I would like to make one, thank you.
    Ms. Miller. I recognize Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Madam Chairman. I am grateful 
that we are having this hearing and I appreciate my colleagues 
coming to testify.
    One of the reasons that first motivated me to get involved 
in politics, being in the building business, was all the 
government regulations that myself and my industry face. Many 
businesses today spend so much time and money complying with 
regulations that they are unable to focus on their core 
business. And we not only have to deal with impact on 
businesses themselves, but also on the oversight necessary to 
enforce these regulations. Many times we were put under 
regulations to file papers that were just put in storerooms and 
never looked at, only to later be used as evidence against us 
for not complying or complying wrongly with the regulations 
that we were under.
    One study placed the number of full time Federal employees 
necessary to write and enforce Federal regulations at 240,000. 
This is just unthinkable that the number would be this high, 
especially when so few of the individuals who write the 
regulations, as honorable as their intentions surely are, have 
no real world experience in the areas that they regulate.
    I look forward to us evaluating various proposals before 
the committee today, and I am especially interested in 
legislation that gets a real cost-benefit analysis done for the 
impact of regulations on businesses across our Nation. Again, 
thank you, Madam Chairman, for having the hearing.
    [The prepared statement of Hon. Lynn A. Westmoreland 
follows:]

[GRAPHIC] [TIFF OMITTED] T5529.003

    Ms. Miller. Thank you.
    To our witnesses, the Government Reform Committee insists 
that we swear in all of our witnesses, even Members of 
Congress. So if you will all rise, please, I will swear you in.
    [Witnesses sworn.]
    Ms. Miller. Our first witness that the subcommittee is 
going to hear from is my distinguished colleague, 
Representative J.D. Hayworth from the Fifth Congressional 
District of Arizona. Congressman Hayworth, in his fifth term, 
has become a leading advocate certainly on regulatory reform. 
He has sponsored the Congressional Responsibility Act, which 
improves accountability in the legislative process. J.D. is 
also a member of the House Ways and Means Committee and also 
serves on the House Resources Committee. Congressman Hayworth, 
we welcome you to our committee hearing this morning and look 
forward to your testimony, sir.

STATEMENTS OF HON. J.D. HAYWORTH, A REPRESENTATIVE IN CONGRESS 
FROM THE STATE OF ARIZONA; HON. SUE W. KELLY, A REPRESENTATIVE 
IN CONGRESS FROM THE STATE OF NEW YORK; AND HON. ROBERT W. NEY, 
      A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

                STATEMENT OF HON. J.D. HAYWORTH

    Mr. Hayworth. Madam Chair, thank you very much. I would ask 
unanimous consent that my complete statement be made part of 
the record.
    Ms. Miller. Without objection.
    Mr. Hayworth. At the conclusion of the testimony, Madam 
Chair, unfortunately, given the vagaries of the schedule and 
the challenges of time, I will have to depart. But I do look 
forward to reviewing all that transpires in today's hearing.
    Madam Chair, members of the subcommittee, and distinguished 
guests, thank you for affording me this opportunity to discuss 
one of the most fundamental reforms that this Congress can 
undertake: ending the unconstitutional delegation of 
legislative powers.
    As was mentioned in opening statements on both sides of the 
aisle, reducing regulatory red tape will increase the ability 
of American businesses to compete in the world market. 
Unfortunately, government regulation and bureaucracy are 
significant impediments to the success of every business.
    For too long Congress has ceded its lawmaking authority to 
unaccountable, unelected employees in the executive branch. Not 
only does this contradict the Constitution's ``separation of 
powers'' by making the executive branch the maker and enforcer 
of law, but it violates Article 1, Section 1 of our 
Constitution which states quite clearly: ``All legislative 
powers herein granted shall be vested in a Congress of the 
United States.'' My testimony focuses on the 
unconstitutionality of delegation and why it makes for bad 
government.
    My testimony focuses on H.R. 931, the Congressional 
Responsibility Act. As my colleagues would note, and as that 
wonderful baseball star Yogi Berra would say, ``it is deja vu 
all over again.'' We have been steadfast in our insistence on 
trying to reign in this unconstitutional and unintended 
delegation.
    I believe our Founders understood the negative implications 
of delegation of power. For this reason, our Founders defined 
the various roles of the three branches of government and 
emphasized their separations of power.
    For the first 150 years of our existence as a republic, the 
Supreme Court held that the transfer of legislative powers to 
another branch of government was unconstitutional. But in the 
late 1930's, the Court reversed itself and upheld laws by which 
Congress merely instructed agencies to make decisions that 
served ``the public interest.'' Since then, we in Congress have 
ceded basic legislative responsibility to executive agencies 
that craft and enforce regulations with the full force of law.
    The Supreme Court has not invalidated a single delegation 
of power since 1935. Lawmaking was never intended to be in the 
hands of executive branch employees. As the Constitution 
enumerates, the power to make laws was solely vested in 
Congress because Congress is directly accountable to the 
people.
    Delegation gives life to bad laws because it allows 
legislators to craft ambiguous legislation, legislation for 
which legislators can take credit without taking responsibility 
for the legal consequences or their costs. Congress can reap 
the benefits of delegation and its excesses by helping 
constituents through the complexities of Federal regulations at 
the same time those of us in public office can blame 
bureaucrats for misinterpreting our intentions in legislation.
    So for purposes of full disclosure, regardless of political 
party or philosophy, the legislator basically can play both 
sides against each other and win. But the real loser in all of 
this is the electorate, the American people.
    H.R. 931 will rightly return legislative powers to the 
Congress by requiring Congress to vote on all rules and 
regulations, as defined in Section 551, Subchapter 4 of Title 5 
of the United States Code, except those regulations of 
particular applicability, any interpretive rule, general 
statement of policy, or any regulation of agency organization, 
personnel, procedure, or practice. My legislation will apply 
only to new regulations and will not be retroactive.
    Detractors say there is no way Congress has the time to 
review all rules and regulations that are promulgated by the 
executive branch. But regardless of the time it takes, I would 
maintain it is the duty of Congress to review rules and 
regulations, as enumerated in Article 1, Section 1 of the 
Constitution.
    Moreover, I have had the honor to serve as Speaker Pro Temp 
of the House of Representatives and, on more than one occasion, 
I have presided over a largely ceremonial debate in which we 
took several hours to name Federal installations after 
noteworthy Americans. My colleagues, I ask you, if we can name 
courthouses, airports, military bases, and other places, do we 
not have enough time to vote on rules and regulations that 
profoundly affect the citizens of this country?
    With these time constraints in mind, however, the 
Congressional Responsibility Act provides an expedited 
procedure for considering rules and regulations. Within 3 days 
after an agency promulgates a rule, the Majority Leaders of 
both the House and Senate, by request, must introduce a bill 
comprised of the text of the legislation. If the bill is not 
introduced in 3 days, any Member thereafter may introduce the 
bill. The bill is not referred to a committee unless a majority 
of Members agree to send it through the normal legislative 
process.
    Within 60 days of being introduced, however, the 
legislation must come before the respective chamber for a vote. 
The bill shall be limited to 1 hour of debate and cannot be 
amended. If a majority of Members of the body vote for the 
bill, it is sent to the other body for approval. And upon 
approval of both bodies, the legislation is sent to the 
President to sign or to veto.
    Other opponents of this legislation argue that this would 
delay the implementation of rules and regulations. But in 
reality, I suggest that it would not. Rules and regulations are 
often the subject of countless and seemingly endless lawsuits. 
For example, the final rule for unleaded gasoline took nearly 
10 years to promulgate because it was the focus of intense 
litigation. Congress becomes the final arbiter in rulemaking 
and the Congressional Responsibility Act states that a 
regulation contained in the bill is not an agency action for 
the purpose of judicial review under Chapter 7, Title 5 of the 
United States Code. This would bring to a halt litigation that 
delays implementation of regulations.
    Finally, opponents of this legislation will say this is a 
backhanded attempt at regulatory reform or ripping the entire 
notion of regulation out of government. No, no, no. Our 
Founders were right, the Constitution makes it clear all 
legislative powers shall be vested in Congress. Article 1 
asserts that this legislative power includes the power to 
regulate. By returning the power to regulate to Congress, we 
make Congress accountable to the people for Federal laws. This 
will make for a better government, a laudable goal that we as 
well as the American people desire.
    Ladies and gentlemen, this has a broad coalition of 
support. In fact, even Nadine Strossen of the ACLU, we got 
together about 10 years ago, said, ``I cannot exactly go with 
you on this but I agree with the sentiment of the bill,'' and 
conservatives such as Judge Robert Bork, and, interestingly 
enough, it was now Justice Stephen Breyer who wrote in 1984 how 
the legislative veto should be replaced by an expedited 
procedure for Congress to pass rules and regulations.
    Let me end by quoting John Locke's admonition that ``the 
legislative cannot transfer power of making laws to any other 
hands.'' Delegation without representation is as wrong today as 
taxation without representation was in the 1700's. It is time 
Congress took back its Constitutionally granted powers to make 
law.
    Madam Chairwoman, members of the subcommittee, thank you so 
much for your time and your attention.
    [The prepared statement of Hon. J.D. Hayworth follows:]

    [GRAPHIC] [TIFF OMITTED] T5529.004
    
    [GRAPHIC] [TIFF OMITTED] T5529.005
    
    [GRAPHIC] [TIFF OMITTED] T5529.006
    
    [GRAPHIC] [TIFF OMITTED] T5529.007
    
    Ms. Miller. Thank you very much. We certainly do appreciate 
your time here today and your introduction of H.R. 931 and your 
explanation as well. I recognize that you have other scheduling 
pressing matters, so we certainly excuse you. Thank you very 
much.
    Mr. Hayworth. Thank you, Madam Chair.
    Ms. Miller. Our next witness is another one of my 
distinguished colleagues, Representative Sue Kelly from the 
19th Congressional District of the State of New York. 
Congresswoman Kelly is in her sixth term. She has certainly 
been an advocate for many, many years of small businesses and 
small business owners and their employees.
    She was the chief author of the Truth in Regulating Act of 
2000 that created a new way of assessing the impact of new 
Federal regulations. Representative Kelly has introduced a bill 
now amending the Truth in Regulating Act that enhances 
congressional responsibility for regulatory decisions developed 
under the laws enacted by Congress.
    We welcome you to our hearing today and look forward to 
your testimony.

                 STATEMENT OF HON. SUE W. KELLY

    Mrs. Kelly. Thank you very much, Madam Chairwoman. It is a 
pleasure to be here. I appreciate your interest in this.
    My bill, H.R. 1167, the Cut Unnecessary Regulatory Burden 
for Small Business [CURB] Act, demands that GAO, at the request 
of a subcommittee or full committee chairman in Congress, 
evaluate any promulgated rules and regulations that would have 
an annual effect on the economy of more than $100 million. This 
bill gives Congress proper oversight because a request by 
Congress would require the GAO to do a cost-benefit analysis as 
well as something that is equally important--looking at these 
rules and regulations for redundancy and overlap.
    Congress, through the GAO, would have the knowledge of and 
the ability to fully evaluate unfair costs or impacts on small 
businesses before the new rules are implemented. Most 
importantly, GAO's analysis would allow Congress to submit more 
informed and more influential comments on the cost, scope, and 
content of proposed rules during the public comment period, and 
to hold hearings on these rules and regulations, if necessary.
    Since the 104th Congress, I have led the fight for a 
Congressional Office of Regulatory Analysis. As you may know, 
those efforts resulted in the passage of something called the 
Truth in Regulating Act of 2000. President Clinton signed it 
into law. TIRA authorized a 3-year pilot project adding a 
function at the GAO to respond to congressional requests and 
provide for such congressional oversight. It now has sunsetted.
    Last Congress, the House passed the Paperwork and 
Regulatory Improvements Act, which contained a similar 
provision that would have made permanent this pilot program. 
That bill never passed the Senate.
    Thus, I have introduced the CURB Act, which tries again to 
make permanent the TIRA bill that was passed in 2000 and to 
fund that bill.
    The oversight mechanism in H.R. 1167 is tailored to 
specifically protect small businesses from burdensome and 
duplicative regulations. In New York's Hudson Valley, where I 
represent the small business owners, they have reiterated to me 
time and time again that their paperwork is unreasonable, they 
feel the government regulations are redundant, and the most 
severe problem they face almost every day is trying to figure 
out how to fill out these forms. They are begging for relief, 
and I do not think this is any surprise. The burden of 
regulatory compliance on small businesses is so much. Most 
people do not realize it is as much as 50 percent more than for 
larger companies.
    The increased workload and the time commitment is not the 
only concern. Cost is also an issue. Troublesome and 
duplicative regulations cost the average small business in this 
Nation almost $7,000 per employee per year. Rather than using 
this money to hire new employees, as well as create and enhance 
customer relations, small businesses are forced to lose this 
money by complying with excessive regulation.
    Passage of H.R. 1167 is important for small businesses 
across the Nation. They are the primary engine of our economic 
growth in our communities. We cannot go without the 7 out of 10 
new jobs created each year by small businesses. If you stop and 
think about it, by reducing the regulatory burden, there could 
even be more jobs created by our small businesses.
    This legislation is trying to help solve the dilemma of 
overly burdensome regulatory schemes in a number of ways. The 
CURB for Small Business Act improves the transparency of the 
decisions at the Federal agencies. In doing so, it enhances the 
efficiency in the way regulations are designed and implemented. 
It leads to competent, economical use of our government 
resources, and most importantly, provides sensible rules for 
small business that have to comply.
    The act promotes valuable congressional oversight. Because 
Congress provides the authority for the administrative agencies 
to create the regulations, it makes sense that Congress should 
retain some of the ability to make certain the regulations do 
not create waste in government, or worse, redundant and 
unnecessary rules for small businesses.
    The bill also increases the accountability of Congress. 
This is one method of assuring that not only are Federal 
administrative agencies doing their job, but it also encourages 
Congress to keep up with its obligation in providing the 
authority to the agencies. Agency personnel are not elected, as 
my colleague pointed out. Because we in Congress are, we have 
to answer to our small business owners, and they are begging us 
for relief.
    The CURB for Small Business Act is a positive step in 
helping small businesses and keeping regulations fair. In 
Congress, we should have the oversight over the thousands of 
rules and regulations established by government agencies. The 
last time I looked, government agencies were promulgating rules 
and regulations at the rate of about 4,000 rules and 
regulations a year. There is definitely redundancy, there is 
definitely overlap, and no one has the authority at the present 
moment to do a cost-benefit analysis of these rules and 
regulations with regard to what their effect is on small 
business.
    We have to help our small businesses. This piece of 
legislation I am offering does just exactly that.
    Thank you very much for allowing me to testify in front of 
the committee today. I appreciate your concern, I appreciate 
your interest, and I look forward to your support on this bill.
    [The prepared statement of Hon. Sue Kelly follows:]

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    [GRAPHIC] [TIFF OMITTED] T5529.009
    
    Ms. Miller. Thank you very much. We certainly appreciate 
that testimony.
    The subcommittee will hear from another one of our 
distinguished colleagues, and this is Representative Bob Ney 
from the 18th Congressional District of Ohio. Congressman Ney 
is serving his fifth term in Congress. He is also the chairman 
of the House Administrative Committee of which I am proud to 
serve alongside of him; we fondly refer to him as the Mayor of 
Capitol Hill. He is also an advocate for reform of the Federal 
regulatory system. He has introduced the Joint Committee on 
Agency Rule Review Act, which would provide for greater 
congressional accountability in the regulatory process.
    We want to thank you for being here at our hearing today, 
and we look forward to hearing your testimony.

                STATEMENT OF HON. ROBERT W. NEY

    Mr. Ney. Thank you, Madam Chairman, and we appreciate your 
service on House Administration. You are a new member and you 
have quickly brought a lot of good insight to the committee. 
And thank you Ranking Member Lynch and also the gentleman from 
Georgia, Congressman Westmoreland. I want to thank you for the 
opportunity to discuss this bill. I think it is important.
    Congresswoman Kelly and Congressman Hayworth and I came at 
the same time 10 years ago to the Congress and this was talked 
about at that point in time, and I am going to mention in a 
minute, of course, the CRA, Congressional Review Act. But the 
bill I have is H.R. 576. Let me begin by discussing the current 
regulatory climate and how the Federal Government currently 
addresses new rules before proceeding on how this bill would 
improve these procedures and strengthen the congressional 
oversight.
    In 2004, Congress passed, and the President signed, 299 
bills that are now law. Over that same period of time in 2004, 
regulatory agencies issued 4,104 final rules versus our 299 
bills. I personally find the difference between these numbers 
staggering. Unfortunately, they are not atypical of the current 
system. Recent reports show that 4,266 more regulations are 
presently in the different stages of development as we speak, 
and 135 of those 4,266 are economically significant rules which 
will have an impact of at least $100 million each.
    In fact, the Office of Information and Regulatory Affairs 
at the White House estimates that regulations adopted over the 
last 10 years cost Americans between $34 billion and $38 
billion annually. Some reports show the total impact of all 
Federal regulations to be ten times this amount each year. And 
it is not going to go down.
    Quite honestly, these regulatory costs have substantial 
effect on our economy and the small businesses that drive it, 
and obviously, most importantly, for the workers of the United 
States. A recent World Bank study titled ``Doing Business 2004: 
Understanding Regulation'' shows that cumbersome regulations 
are associated with lower productivity, increased abuse, higher 
costs, and longer delays. It was stated by this very committee 
that the structural costs of American products compared with 
our foreign competitors is 22 percent higher due to Federal 
regulations.
    I appreciate, by the way, the committee drawing attention 
to this matter. I think it is important to show that 
regulations increase costs to small business, and in a global 
economy these regulations affect competitiveness. At a time 
when we are fighting for our lives with China to eliminate 
unfair trading practices and open markets to U.S. products, it 
simply does not make sense to make our products less desirable 
by increasing the overhead costs to American small businesses 
and driving up the cost of their products.
    Now not all regulations are bad, we know that. Nor do they 
all have a negative effect. I believe some regulations are 
warranted, meet the intent of Congress, and have a positive 
cost-benefit relationship. Now regulations should not be in the 
eye of the beholder, and that is where I will get to the point 
of what this does, which I think is fair to all the 
regulations.
    But my concern is with our ability as an institution to 
review 4,000 rules a year. One thing I tell constituents back 
home is that you can question how a Member votes. You know, 
people watch C-Span and say why does this person vote that way, 
but one thing I think you cannot question of this body is the 
incredible amount of hours and tough schedule that everybody I 
think puts in around here. And, so how do we review 4,000 rules 
a year as a body?
    Independent of Members' individual reviews on a specific 
regulation, the avenues available to Congress under the 
Congressional Review Act to address costly rules are limited 
and rarely utilized. In the 8 years since the CRA took effect, 
Federal agencies have submitted 34,000 rules to Congress. Of 
these rules, 535 were major rules having impact of at least 
$100 million. Over this period of time, approximately 30 
Congressional Review Act joint resolutions of rule disapproval 
have been introduced, regarding more than 20 of these 34,000 
rules, but only one rule was overturned through CRA's 
procedures.
    This legislation, House Resolution 576, would address this 
problem by establishing a special joint committee between the 
House and the Senate that would be tasked with reviewing all 
regulations proposed by a Federal agency. This Joint Committee 
on Agency Rule Review, in Ohio we call it JCARR, would vote in 
disapproval of the regulation if it violates the intent of the 
law it is supposed to implement. Then a disapproval resolution 
under the Congressional Review Act would be introduced in each 
chamber with guidelines established for expedited 
consideration.
    This process works in my State; I was on it. I think, Mr. 
Lynch, you were on a similar type of body in Massachusetts from 
1994 to 1996. I do not know exactly how it works, and I am told 
the research shows that many other States have similar types of 
mechanisms.
    This process works. My State of Ohio has had this since 
1977, and this JCARR committee has played an important role in 
ensuring the accountability of State agencies while limiting 
the power of State bureaucrats.
    Here is a brief example of how JCARR would work if enacted 
into law. In this scenario the EPA is proposing a regulation 
that could be harmful and threaten hundreds of jobs. Here is 
the step-by-step of how a review would work:
    The EPA publishes a final regulation that is bad, we will 
call it Regulation A in this example. Under the law, Regulation 
A must be submitted to JCARR when it is published. JCARR, the 
House and Senate panel, which is 12 Members of the House, 12 of 
the Senate here, is then required to give the committees of 
jurisdiction copies of the proposed regulation.
    Once the rule is submitted to JCARR, a 60 day clock runs 
where the committee has time to consider Regulation A. Days 
where either house is out of session, the House or the Senate, 
for more than 3 days does not count toward the 60 day clock.
    Now if JCARR takes no action and the clock runs out, 
Regulation A takes effect. Simple as that. However, if JCARR 
votes to disapprove Regulation A--and I would note a lot of 
committee Chairs and Ranking Members would have input into 
JCARR, because that is one of the concerns, that you are taking 
away jurisdiction and you are really not. Most of the time we 
fight these rules or opinions through letters that are sent 
around.
    If JCARR votes to disapprove Regulation A, a joint 
resolution of disapproval is reported to the Congress. If a 
majority of the House and Senate Members vote to disapprove, 
the resolution goes to both chambers; however, if a majority of 
just one chamber's Members vote in disapproval, the resolution 
is reported only in that chamber.
    In the House, once the resolution is reported, the House 
has 3 days to bring the resolution to the floor, otherwise it 
is in order for any Member to make a privileged motion to 
consider it if the House does not do that. These are expedited 
procedures. In the Senate, most of the expedited procedures are 
already in place because of the Congressional Review Act. If 
the joint resolution goes to both houses and passes, it goes to 
the President for his signature.
    If the President signs the resolution, Regulation A will 
have no effect and will not take effect. If the President 
vetoes it, Congress has 30 days to vote to override the veto if 
they want to try again to stop the regulation. If either 
chamber fails in a vote to override the veto, Regulation A 
takes effect immediately.
    I have kind of simplified this process. But if enacted, 
JCARR would help to ensure that the regulations implementing 
laws passed by Congress adhere to the spirit of the legislation 
and are not detrimental to our Nation's economy. I hope you 
will be able to look at this. Let me just conclude, I want to 
thank one of our staff, Brian Petersen, for putting a 
tremendous amount of time in on this and who has worked with 
other staffs.
    I just want to end with an example. Powhatan Point, OH, 
which now Congressman Strickland represents but I used to 
represent actually 24 years ago as State Representative and 
then in Congress for a while, they had a major flood down 
there. Powhatan is a poor community, like a lot of communities 
in Appalachia I represent.
    There was a rule so that if the people took their trailers 
and moved them off the trailer court so they would not flood, 
when they wanted to bring them back FEMA said you can bring 
them back if you build concrete blocks and put the trailer on 
top of the concrete blocks, so they will be out of the way of 
the next flood. Of course, that means that you have to run 
pipes up there, build the concrete blocks and it is raised up 
there, and you would have to build a porch.
    We tried with the Federal Government to say why not just 
let them do what they do every couple of years, put a hitch to 
the trailer and take it out of harm's way. I fought 10 years. I 
was finally successful last year in getting something in the 
flood insurance bill. Ten years.
    If you look at some of these rules, again, they are not all 
bad, but I just think it has gotten so out of control. This is 
a process that will not take away Chairs' or Ranking Members' 
jurisdiction. But the bottom line of JCARR, why it has worked 
so well in Ohio, is the staff, trained professional staff, and 
pretty soon the agencies start to get used to the fact that 
they better think these rules out because they are going to run 
into a lot of interference if they do not. So I think this 
enhances the abilities of the Chairs and ranking members.
    Thank you for your time.
    [The prepared statement of Hon. Bob Ney follows:]

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    [GRAPHIC] [TIFF OMITTED] T5529.011
    
    [GRAPHIC] [TIFF OMITTED] T5529.012
    
    Ms. Miller. Thank you very much. I found your testimony 
really fascinating. In fact, when we thought about having this 
hearing we were sort of looking for some of the various 
innovative pieces of legislation that Members of Congress had 
introduced in regards to regulatory reform. We looked at yours, 
in particular, as sort of a best practices because you had 
experience with it in Ohio as well.
    I was interested to note in your testimony, you mentioned 
about China. Here we are fighting with China. In one of our 
hearings previously we had invited my former Governor, John 
Engler, who is now the executive director of the National 
Manufacturers Association, in which he very interestingly 
talked about a study that NAM has done that shows the 
structural cost of all American goods are about 22-23 points 
higher than any of our foreign competitors principally because 
of regulatory burdens that we put on ourselves.
    So as we are unfortunately bleeding manufacturing jobs to 
China or Mexico or whatever? Guess what: they did not put all 
these regulatory burdens on us, we have done this to ourselves.
    That is why I say I think the standard has to be 
reasonable. And we look to the States very often, I think as 
incubators for some of the best practices that the Federal 
Government could implement as well. And as you talked about 
your bill, H.R. 576, could you flesh out perhaps a little bit, 
for us, some of the principal differences you might see in how 
the JCARR worked in the State of Ohio as opposed to an analogy 
of how you see your bill working here at the Federal level?
    Mr. Ney. One nice thing about Ohio, and this could be 
adapted, parts of it could, we have Chapter 119 code, so the 
agencies have to go through some pretty set procedures. When 
they come to JCARR where you have six State Representatives and 
six State Senators all equally divided, this is totally 
bipartisan, you have 12 and 12, all equal division, and when 
they would bring a rule, if they had not followed all of the 
procedures or the public testimony, we could actually sit there 
and say why not take this rule back, take another look at it.
    Most of the time the agencies would say fine. Every once in 
a while they would still proceed, and then we could make a 
motion to throw it to the floor within 3 days in the House and 
Senate. Now once we disapproved it, we did not need the 
signature of the Governor, which was, I think, good, because it 
has your balance between the executive and the legislative. We 
did not need the signature of the Governor. In this case, you 
need the signature of the President. I think that is one big 
difference probably.
    When I first, 10 years ago, went to the leadership and 
other people, the committee Chairs said, this is taking away 
our authority. And like I said earlier, with the schedules, 
tell me how many times, and I Chair a committee and we oversee 
the Federal Elections Commission, how many rules, since you 
have been on the committee, have we sat and reviewed? We really 
do not. We will interact and have opinions, but we really do 
not review it.
    So I view this House-Senate body as not usurping. And in 
Ohio, that is the way the psyche worked with this. In fact, we 
were happy to have JCARR because we could say, hey, I chair--at 
that time I chaired appropriations--and I could say to JCARR, 
why not take a look at this, and the staff really worked with 
us and enhanced us. It was very bipartisan.
    So I think the difference is here you still need the 
President to sign off. It puts a lot of pressure, I think, on 
the executive to have a little bit more responsibility. They 
are just churning out rules and regulations and we catch this 
or do not catch that. I also wanted to mention approaches--
Congresswoman Kelly has an approach, J.D. Hayworth has an 
approach--I think there are a lot of good approaches out there, 
but I think you are seeing this start to bubble up because of 
the problems. So those are just a few differences in Ohio's 
JCARR, being that the main difference is the Governor is not 
involved.
    Ms. Miller. I appreciate that. Talking about paperwork, I 
have this question for you, Representative Kelly, because you 
mentioned about the paperwork burden that all your small 
businesses are complaining about.
    Actually, the staff has heard me make this comment 
previously, but in light of the shuttle launch, my dad was an 
aeronautical engineer and worked with Wernher von Braun at 
Redstone and at the very early days of rocket science where 
they were shooting off rockets. He always said it was very 
exciting until the Federal Government got involved, at which 
time they said with all the paperwork that was required they 
would never shoot off a missile until the weight of the 
paperwork equalled the weight of the rocket.
    And I think that is probably what happens now. But we also, 
under this subcommittee and our full committee, look at the 
Paperwork Reduction Act and it is something that is coming 
through as well.
    Under your legislation, how would you see the Congressional 
Office of Regulatory Analysis [CORA], would they have a role in 
evaluating, reviewing the paperwork burden on small businesses?
    Mrs. Kelly. CORA is not the actual bill that passed. TIRA 
is the bill that passed and was signed into law. Congressman 
Ney has a Cadillac, I have a sports car. And the reason I say 
that is, it is something that would set aside an office in the 
GAO. The GAO exists. They already have experts, and basically 
they would do the analysis and then report to Congress so that 
the analysis that would be done would not only be cost-benefit, 
but it would be redundancy and overlap.
    If you run a small business, as I did and as my family 
does, you have constant interference from the Federal 
Government asking for forms to be filled out, for your 
employees, for any impact you may have if you have trucks, 
cars. There is just a huge number of forms you are constantly 
being asked for from the Federal Government.
    It seems to me if you look at redundancy and overlap, which 
my bill does, we as Congresspeople are going to be able to go 
back to an agency and say, why are you asking in agriculture 
for something that commerce is asking for also, can we not 
combine these two requests into one request and let the small 
businesses comply with that electronically, and then let each 
agency go to the electronics that were filed.
    In other words, it is a way of shrinking paperwork and 
shrinking a lot of what the Government is doing in terms of 
interfering with the way that small businesses do business 
because of these constant demands with paperwork.
    Ms. Miller. Thank you very much. Representative Lynch.
    Mr. Lynch. Thank you, Madam Chair. Chairwoman Kelly, just 
to follow the procedure here, the bill that you did get passed, 
which was a sound one, the TIRA, was never funded. You proposed 
a 3-year pilot program, and it was never funded. Now we are 
sort of leapfrogging and this new bill is actually to make TIRA 
permanent without going through that 3 year pilot.
    Would it not give us the benefit of looking at that program 
for 3 years if it were in fact funded? What I am asking is, I 
think your original idea was a good one, and I am just 
questioning why we are departing from that and instead trying 
to put this in permanently? Is it just frustration with the 
fact that they did not fund it to begin with?
    Mrs. Kelly. I started this bill within 6 months of my 
freshman year in Congress. I have been in Congress 10\1/2\ 
years and I have been pushing this for a very long period of 
time. Before I leave Congress, I would like to actually do 
something to reduce paperwork and the burden of costs on small 
business. If we make TIRA permanent and we fund it, we have a 
built-in situation at the GAO where it can work and it could 
start work tomorrow.
    I would like to see it go beyond just a pilot bill. I think 
now the pain that small businesses in this Nation suffer from 
all of this tremendous burden of paperwork, the enormous number 
of Federal regulations that are going after them day after day, 
it needs to be lifted, and it needs to be lifted on a permanent 
basis.
    When you stop and think about the fact, if you have been a 
small business person, as I have, I have run a small business, 
I know that I did not have time to sit down and read the 
Federal Register, which is where most of this stuff is 
published. I never found out about most of the regulations that 
were hitting my business until somebody from the Federal 
Government came in and said, oh, by the way, you did not file 
form JHQ137. Well, I did not know I needed to file that because 
I was busy running my business. And, yes, I did file it.
    But there is no reason why that should occur. That sort of 
thing should be restricted by us; we are elected by these 
people to represent them. It is our duty to try to help them do 
what they do best, which is generate jobs, shore up our 
economy. It seems to me that if we make this permanent and we 
fund it, we have done just that.
    Mr. Lynch. OK. My question was one around strategy and I 
think you have explained it.
    Mr. Ney, first, I think you correctly recognize that there 
will be some concern around jurisdiction. I think the one 
benefit that we do have with committees of jurisdiction is that 
they deal with the substance of particular bills. In Financial 
Services, Sarbanes-Oxley, those folks lived with it for I do 
not know how long, and so they have this very profound 
understanding of the legislative intent and the workings of the 
bill.
    And so I think, in the first instance, it is probably 
better to have them deal with a resolution for disapproval. But 
on the other hand, I do recognize--you know, the numbers that 
you cited--only 30 disapproval resolutions referred, only 1 
successful on ergonomics, that may be the flaw in the CRA, the 
Congressional Review Act, is that it is everybody's job, but it 
is nobody's job; anybody can do it, but nobody has to do it.
    And so that the model that you set up on the Ohio model 
makes it the responsibility of this committee. And maybe the 
value is in that, that we actually have somebody who we have 
named as gatekeeper for the regulatory process so that somebody 
has to look at it. And if they abdicate their responsibility to 
review it, so be it, but it is their responsibility.
    So I think that has an attractiveness to it that there is 
accountability and responsibility delegated to a certain group 
in the process that we do not have right now. That is all I 
have.
    Mr. Ney. Madam Chair.
    Ms. Miller. Yes.
    Mr. Ney. I thank the gentleman for his comments. Actually, 
differences, there are a couple of things, and without 
objection, if I could submit this for the record.
    Ms. Miller. Without objection.
    Mr. Ney. There are some things I did not mention, because 
there are some differences. There are 24 members here, 10 
members in Ohio. But I would note something which is of 
interest and food for thought. The criteria for recommending 
disapproval or validating a rule in H.R. 576 is not stated in 
there. In Ohio, it is if it exceeds the rulemaking authority or 
if they did not follow the proper procedure and intent.
    Ohio has an interesting part I did not put in this bill, 
which is, if the intent of the bill is there. You know, all of 
a sudden around here, somebody will say we wrote the bill, here 
we are, this was our intention, and over here it sort of does 
not matter to the agencies, it is well, that is fine, OK, go 
away and we will do what we want. Whereas in Ohio, intent could 
be a reason.
    Now one other thing too, in this bill there is nothing 
short of disapproval. In Ohio, they can actually pick up the 
phone, see if they can resolve part of it, and it can also be 
partial, part of the rule can be dismantled if you want to.
    So I just wanted to mention there were some differences. I 
also do not go retroactively back. This is forward. But in 
regards to what you said, I think that you have to watch the 
jurisdiction. But as chairman of a committee and knowing other 
committees, there is just so much that cannot be caught. So if 
you worked it the right way, I think it would be an enhancer to 
the committee process.
    But you are right, you have that expertise within, like 
Sarbanes-Oxley, of debating, I think Section 418 or 404, I 
thought I would say that in my sleep, I thought I would never 
forget it, but debating what was the intent, what was done. So, 
yes, there are some levels of expertise in the committees.
    But I think the staffs would also interact a lot with this 
staff. And I have to stress, too, as it was in Ohio, you picked 
up the phone, you interacted with the staff, they were all 
there for JCARR, and it kept any amount of partisan bickering 
down.
    Ms. Miller. Very well. Representative Westmoreland.
    Mr. Westmoreland. Thank you. Mr. Ney, just to kind of 
finish up on what Mr. Lynch said. What my experience has been 
in the past of rules being approved, we have environmental 
health districts in the State of Georgia and it is composed of 
the school superintendent, a registered nurse, a doctor, a 
mental health advocate, and so forth, and yet the septic tank 
regulations have to be approved by this group.
    These people would not know a septic tank if they saw one. 
And so what happens is you may get a guy coming in and he can 
tell them anything, they think he is an expert in the 
situation, and so they say, yes, this rule sounds good when it 
really may go against the manufacturer's recommendation of even 
how to put in the system.
    I think what Mr. Lynch said maybe about the committee of 
jurisdiction, because they have heard testimony, they have 
actually heard all the different reasons why or why not we 
should have the law that we are passing, they may have more 
insight into the rules or the regulations that were being 
written to make sure this law was being abided by more than 
maybe some elected officials that may depend on staff or 
whatever to do that.
    Do you see that as a problem? I know that in Ohio this 
thing, evidently, was quite successful. I agree with what you 
are trying to do, but did you ever give any consideration to it 
being the committee of jurisdiction that would actually look at 
these things?
    Mr. Ney. Yes, I thought about that because, again, when I 
first got out here I was just told this is mixing in 
everybody's business; no, the committees handle it. After a 
couple of years I looked around and we started asking staffers, 
you all can take your own experiences in how long you have been 
here, how many times did you actually have hearings on rules? I 
was stunned when Brian in our office did this research. I was 
stunned at that. I had no concept there had been that many and 
4,600 in 2004. So, yes, we thought about it.
    Actually, when JCARR is functioning here, it will go to the 
committees, it will be submitted, and they can do something if 
they want to. But a lot of committees are just absolutely too 
busy, and they cannot handle thousands of them. And as you just 
gave an example in your statement, I think it is the small 
ones, too, that escape us.
    I am sure you all have been through this, you go home and 
somebody says what is wrong with you, why on Earth did you do 
this to us, or I am down at the local union and they will ask 
me a question, and I will say, I did not do that, and then you 
go back and you find out it was an agency that did it last 
year; we did not know.
    I will give you one concrete example. I live in St. 
Clairsville, OH. When I was a State Senator, Natural Resources 
said you have to have composting because we do not want these 
grass clippings thrown all over the place. So they had 
composting, and we agreed with that; I think it was a good 
thing. Then they came back, and they announced that every town 
had to hire a compost manager and assistant compost manager.
    My advice to the mayor is let everybody throw them all over 
the hill, because it is 4,000 people, and you are going to pay 
$40,000 for a compost manager. People agreed to do composting. 
So you can find those.
    Now, a lot of people did not know that existed but because 
of the way JCARR worked, basically they called up ODNR and 
said, if you would like to continue down this path, we can tort 
you all day long with hearings because JCARR has the time to do 
it. The staff attorneys, the professional staff just keep at 
this all day with the bureaucracy. That is a true example. And 
ODNR got hold of itself and said, OK, we will rethink that. 
They are going way beyond even the scope of law or the intent 
of law.
    But we thought about individual committee jurisdiction. It 
will still go there under this. I just think there is not 
enough time in the day.
    Mr. Westmoreland. I appreciate what both of you are trying 
to do. I had a similar situation. I went home, and being in the 
building business, I had a gentleman that had a dual wheel 
truck and was pulled over by the State Patrol and given a 
ticket because he did not have his company name on the side of 
the truck and he had not had a physical, and also because of a 
homeland security issue on the size of trucks and the fact that 
you would have to have your name and phone number.
    He does not advertise his business, but yet now he has a 
sign on his door that identifies his company with a phone 
number and he had to go pay $300 to get a physical to be able 
to get the driver's license to drive that size of truck. It is 
just really a normal truck, and how the State patrolman knew 
how much it weighed is beyond me, but it was part of that 
homeland security.
    So there are consequences that we never think of that we do 
up here when we pass laws. And I want to commend both of your 
for your effort, and I hope I am on both of those bills.
    Ms. Miller. We certainly thank you both so very much for 
graciously sharing your time with us. All of us, I think, have 
various examples that we can cite. Back home, I have to tell 
you, my stump speech when I am out speaking to Rotaries or 
Kiwanis or whoever and I tell them I am subcommittee Chair of 
Regulatory Affairs now, and they say what is that, and you 
start talking about some of these different regulations.
    The one I always cite is something that was told to us, and 
we will probably be hearing about it in this committee at some 
point in the future from the American Bakers Association, where 
you have a situation where the Federal Government has decided 
there is a molecule that is released when there is fresh baked 
bread with a beautiful aroma emanating, and the Federal 
Government has determined that the aroma of fresh baked bread 
is smell pollution and they are now regulating these small 
bakeries literally out of business.
    So I think people understand, they can grasp that some of 
these regulations are nonsensical in many ways, and they are 
not achieving the objective that we are all looking for.
    So, again, thank you very much for your time. Hopefully, we 
can help these bills to become enacted. Thank you so much.
    We will take a 2-minute recess while we empanel our next 
panel of witnesses.
    [Recess.]
    Ms. Miller. The committee will come to order.
    It is our practice here to swear in our witnesses. So if 
you would all rise to take the oath.
    [Witnesses sworn.]
    Ms. Miller. Thank you very much. Our first witness of our 
second panel is Dr. Curtis Copeland. Dr. Copeland is currently 
a specialist in American government at the Congressional 
Research Service. His specific area of expertise is Federal 
rulemaking and regulatory policy. Prior to moving to CRS in 
January 2004, Dr. Copeland was an Assistant Director at the 
Government Accountability Office for 23 years working on a 
variety of issues from Federal personnel policy to regulatory 
policy. He has received his Ph.D. from the University of North 
Texas in 1980 in political science.
    Dr. Copeland, we appreciate your attendance here today and 
look forward to your testimony, sir.

   STATEMENTS OF CURTIS W. COPELAND, SPECIALIST IN AMERICAN 
    NATIONAL GOVERNMENT, CONGRESSIONAL RESEARCH SERVICE; J. 
    CHRISTOPHER MIHM, MANAGING DIRECTOR, STRATEGIC ISSUES, 
  GOVERNMENT ACCOUNTABILITY OFFICE; MARLO LEWIS, JR., SENIOR 
    FELLOW IN ENVIRONMENTAL POLICY, COMPETITIVE ENTERPRISE 
 INSTITUTE; AND ERIK OLSON, SENIOR ATTORNEY, NATURAL RESOURCES 
                        DEFENSE COUNCIL

                STATEMENT OF CURTIS W. COPELAND

    Mr. Copeland. Thank you very much. Madam Chairman, members 
of the subcommittee, I am pleased to be here today to discuss 
previous efforts to reform the Federal rulemaking process.
    Although those efforts have had vastly different purposes, 
almost all of them bear one common characteristic--they have 
not been as effective as their authors had hoped. There appear 
to be at least four general reasons why this is so.
    One reason is the amount of discretion that is sometimes 
left in the hands of agencies to implement the reforms. For 
example, the Regulatory Flexibility Act of 1980 requires 
Federal agencies to assess the impact of their forthcoming 
regulations on small businesses and other small entities.
    But it says they do not have to conduct the analysis if the 
head of the agency certifies that the rule would not have a 
``significant economic impact on a substantial number of small 
entities.'' The act does not define what a ``significant 
impact'' or a ``substantial number'' means, thereby giving 
Federal agencies discretion to determine when the act's 
requirements are triggered, and the agencies often use that 
discretion.
    For example, in 1999 the Environmental Protection Agency 
issued a proposed rule that would have significantly lowered 
the threshold for reporting the use of lead under the Toxic 
Release Inventory program. By EPA's estimate, this report would 
take more than 100 hours to fill out the first time, and EPA 
said lowering the reporting threshold would have swept in more 
than 5,000 additional small businesses, costing each of them 
$7,500 in the first year. Nevertheless, EPA said this was not a 
``significant economic impact'' or a ``substantial number of 
small entities'' and exempted the rule from the Regulatory 
Flexibility Act.
    From 1996 through 1999, EPA as a whole exempted 96 percent 
of its rules from the act, and two offices within the Agency, 
the Office of Pesticides and the Office of Solid Waste, 
exempted 100 percent of the rules.
    A second reason why some reform measures have not worked as 
well as expected is they were built on the flawed foundations 
of other reforms. For example, section 610 of the Regulatory 
Flexibility Act requires agencies to review their rules within 
10 years of issuance to determine if they should be retained, 
eliminated, or changed. However, this look-back requirement is 
triggered only when Federal agencies determine that their rules 
have a significant impact on small entities.
    Similarly, section 212 of the Small Business Regulatory 
Enforcement Fairness Act requires agencies to publish small 
entity compliance guides, but again only when the agency 
determines that the rules have a significant impact on small 
entities. Section 212 has other problems.
    For example, the statute does not require agencies to 
consult with small entities to develop the compliance guides, 
it gives agencies total discretion to determine whether they 
have to be written in plain language, and does not indicate 
when the compliance guides have to be developed. Therefore, an 
agency could develop a hard to understand compliance guide 
years after a final rule is published with no input from small 
entities and still be considered in compliance with section 
212.
    Other regulatory reforms appear to flounder because they 
are limited in terms of the agencies or rules covered. For 
example, the Unfunded Mandates Reform Act of 1995 does not 
cover any rules issued by independent regulatory agencies like 
the Federal Communications Commission or the Securities and 
Exchange Commission, even though those agencies clearly issue 
some rules that some affected parties consider mandates. The 
act also does not apply to any rules issued without a previous 
Notice of Proposed Rulemaking, even though half of all final 
rules are issued without a Notice.
    Finally, political and structural limitations sometimes 
make it difficult or impossible for regulatory reforms to 
achieve their intended purposes. The 1996 Congressional Review 
Act was initially viewed as a way for Congress to reassert 
itself in the rulemaking process.
    However, the reality, as we have heard earlier, is it has 
been well short of that goal. Only 1 of the more than 39,000 
rules submitted to Congress since 1996 has been disapproved. 
The primary reason appears to be the balance of power between 
Congress and the President. Because of the votes required to 
overcome a Presidential veto, it is very difficult for Congress 
to use the act to disapprove a rule that the President would 
like to see go into effect.
    So, based on this history, how can regulatory reform be 
more effective in the future? The short answer is to avoid the 
problems that I just mentioned. First, Congress and other 
regulatory reformers could be as specific as possible regarding 
what agencies are to do, defining key terms and avoiding broad 
loopholes; second, avoid linking reforms to other reforms that 
have not been effective; and third, do not exclude any rules or 
agencies unless there is a good reason for doing so. And 
finally, there should be a realistic assessment of the 
Constitutional and statutory boundaries that exist.
    Madam Chairman, thank you again for inviting me to appear 
today at this hearing. I would be happy to answer any questions 
you might have.
    [The prepared statement of Mr. Copeland follows:]

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    Ms. Miller. Thank you. We appreciate that very much.
    Our next witness this morning is Chris Mihm. Mr. Mihm is 
the Managing Director for Strategic Issues at the GAO. In this 
capacity, he leads the GAO's work on governmentwide longer term 
broader issues designed to support the transition to a more 
results oriented and accountable Federal Government. He is also 
a fellow of the National Academy of Public Administration.
    I want to thank you for your participation and welcome you 
to the committee hearing this morning. We look forward to your 
testimony, sir.

                STATEMENT OF J. CHRISTOPHER MIHM

    Mr. Mihm. Thank you, ma'am, I appreciate it.
    Madam Chairman and Mr. Lynch, I am honored to be here today 
to discuss efforts to improve the Federal regulatory process 
and to suggest some outlines for a possible reform agenda as 
you move forward. I also must add, as you mentioned in your 
introduction of Curtis, it is a great pleasure to be here today 
with my former colleague from the Government Accountability 
Office, then it was General Accounting Office.
    In that spirit, I am also happy to acknowledge that many of 
the reports and testimonies that form the basis of my statement 
were written by Curtis when he was at GAO. So it is all in the 
family, a lot of it, here today.
    As you mentioned in your opening statement, Madam Chairman, 
Federal regulation is a basic tool of government. Agencies 
issue thousands of rules and regulations each year to implement 
the statutes enacted by Congress and the public policy goals. 
Benefits of regulation include, among other things, ensuring 
that the workplaces, air travel, food, and drugs are safe; that 
the Nation's air, water, land are not polluted; and that the 
appropriate amount of taxes are collected. The costs of these 
regulations, as you also noted, are estimated to be in the 
hundreds of billions of dollars, and the benefit estimates are 
equally high.
    My bottom line today is that the recent regulatory reform 
initiatives have yielded mixed results. On the one hand, there 
have been real and important benefits associated with these 
initiatives that Congress has put in place, while on the other 
hand, they have often been less effective than were intended.
    And also as a key point to consider as we move forward, 
while many of the initiatives have added more requirements at 
the beginning of the regulatory process, fewer of their 
provisions have focused on evaluating the actual benefits and 
costs of rules once implemented and using such information to 
revise existing regulations and inform future action. Our 
suggestion will be that this is where we need to augment that 
part of the regulatory process to have more of the 
retrospective and look-back provisions across the current array 
of regulations.
    Given the size and the impact of the Federal regulations, 
it is no surprise that Congresses and Presidents over the last 
25 years have sought to refine and reform the regulatory 
process. One goal of such initiatives has been to reduce 
regulatory burdens, but other purposes have also played an 
important part. Among these are efforts for more rigorous 
analysis of proposed rules and better information to 
decisionmakers, enhancing oversight of rulemaking by Congress, 
including what you heard from the first panel today, and the 
President, and to promote greater transparency and 
participation in the process.
    Our reviews done over the years at the request of Congress 
suggest that there are four overall strengths or benefits from 
the regulatory reform initiatives that have been put in place: 
First, they have certainly increased the attention directed to 
rules and to the rulemaking process; second, there has been 
increased expectations regarding the analytic support for 
proposed rules; third, they have encouraged and facilitated 
greater public participation in rulemaking; and fourth, they 
have improved transparency of the rulemaking process.
    Despite these important strengths, the overall 
effectiveness of the regulatory reform initiatives, as I 
mentioned, has been mixed. This may be particularly true when 
results are compared to the originally established goals and 
purposes, and for many of the issues that Curtis raised. For 
example, despite the paperwork reduction goals under the 
Paperwork Reduction Act, we have repeatedly testified about the 
growth and burden hours imposed by the Federal information 
collections; I know this is a key initiative of this 
subcommittee, including hearings that you have recently had.
    We have similarly reported that initiatives such as the 
Unfunded Mandates Reform Act [UMRA], the Executive orders on 
federalism, and requirements imposed under Section 610 of the 
Regulatory Flexibility Act for reviews of existing rules, have 
had, on balance, little impact on agencies' rulemaking.
    Our reviews have identified at least four general reasons 
that might explain why these initiatives have not been 
successful. First, the limited scope and coverage of the 
various requirements; second, a lack of clarity regarding key 
terms and definitions, a point again that Curtis was making; 
third, uneven implementation across agencies; and fourth, a 
predominant focus on just one part of the regulatory process, 
that is agencies' development of rules.
    As this subcommittee begins to develop its own regulatory 
agenda, two avenues provide a useful starting point in our 
view. First, the subcommittee may wish to broadly revisit the 
procedures, definitions, exemptions, and other provisions of 
existing initiatives to determine what changes are needed to 
achieve those goals.
    And second, greater evaluation, often referred to as 
retrospective analysis or look-backs, of existing regulations 
and lessons learned is needed to keep the regulatory process 
focused on the current results that are being achieved, or not, 
as the case may be, and identifying successful practices in 
meeting emerging challenges.
    With that, let me conclude. Obviously, I would be happy to 
take any questions that you or Mr. Lynch may have.
    [The prepared statement of Mr. Mihm follows:]

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    Ms. Miller. Thank you very much.
    Our next witness is Marlo Lewis. Dr. Lewis is a senior 
fellow at the Competitive Enterprise Institute where he writes 
on global warming, energy policy, and other public policy 
issues as well. Actually, during the 106th Congress he served 
as a staff director on the House Government Reform 
Subcommittee, at that time it was called the Subcommittee on 
National Economic Growth, Natural Resources, and Regulatory 
Affairs. So it is, I suppose, a little bit back to the future 
for you, Dr. Lewis, to be here.
    He has also published in the Washington Times and 
Investor's Business Daily, and the National Review. He holds a 
Ph.D. in government from Harvard University, and a B.A. in 
political science from Claremont McKenna College. We welcome 
you back to the subcommittee and look forward to your 
testimony.

                 STATEMENT OF MARLO LEWIS, JR.

    Mr. Lewis. Well it is certainly a pleasure to be back here. 
Thank you, Madam Chairman and Ranking Member Lynch, for 
inviting me to testify today. I want to commend the 
subcommittee not only for holding this hearing, but for your 
vigilant oversight. And more oversight by Congress I think is 
the short answer to the question of how we improve Federal 
regulations.
    A lot of the statements today have already made the point 
that Federal regulatory costs are large, they are growing, with 
4,000 new rules each year, they are also really uncontrolled in 
the sense that elected officials never make explicit choices 
about how large the regulatory burden should be in relation to 
the economy.
    Over the years, Congress has adopted, debated, or 
considered numerous reform initiatives to try to in some way 
discipline the regulatory process. The specific elements of 
these proposals typically fall into one or two categories, 
which, for want of a better term, I would call policing reforms 
and checks and balances reforms. By that I mean this, policing 
reforms aim via rules of rulemaking and centralized review to 
regulate the regulators; checks and balances reforms seek to 
increase Congress' responsibility for regulation, foster 
interagency competition, or enable outside experts to compete 
with agency experts.
    Both types I think will be needed to make the regulatory 
system more affordable and accountable. However, a word of 
caution is in order, and I think this segues very nicely into 
what Curtis had to say. In the past, reformers have relied 
heavily on policing reforms. Pinning their hopes on what James 
Madison called ``parchment barriers,'' they have proceeded as 
if agencies could be legislated or managed into practicing 
sound science and economics.
    In general, the results have been disappointing because 
rules of rulemaking are not self-enforcing, and OMB is a 
watchdog in constant danger of becoming a rubber stamp because 
the OMB Director and the agency heads are all appointed by the 
same President and work for the same administration.
    A recent and highly effective checks and balances reform is 
President Bush's Executive Order 13272, proper consideration of 
small entities in rulemaking. This EO enables the SBA's Office 
of Advocacy to play a wide-ranging role in rulemaking. Advocacy 
provides partial relief to the monopoly that each agency 
otherwise maintains over its rulemaking activity. Advocacy 
saves small businesses billions of dollars each year in avoided 
regulatory costs.
    Now, I am pleased to say that all the bills that the 
subcommittee is considering today aim to build Congress' 
capacity to check and balance regulatory agencies. I think that 
is the right goal.
    Also worthy of consideration is a modest proposal by former 
OIRA economist Richard Belzer. The aim of this initiative is to 
open the market for regulatory analysis. Various statutes and 
Executive orders create a huge demand or market for regulatory 
analysis, but it is a market in which agencies face little 
competition. The public is free to submit alternative cost-
benefit analyses, but the agencies ultimately decide which 
estimates are best.
    In effect, the agencies have the final say in grading their 
own work. They monopolize the scoring of their own regulatory 
proposals. But the agencies have no monopoly on regulatory 
expertise. Industry, the non-profit sector, State and local 
governments employ hundreds, perhaps thousands, of 
professionals trained in economic and scientific analysis.
    To open the marketplace, Congress should require OMB each 
year to hold contests to pick the best analyses of specific 
major rules. OMB would be forbidden to split the difference 
between estimates or combine elements of different analyses. In 
each contest, OMB would have to pick one winner and explain the 
reasons to Congress for its choice.
    What would this accomplish? Agencies would come under 
strong pressure to produce credible analyses to have at least a 
realistic chance of winning. An agencies' analysis would, at a 
minimum, have to conform to OMB's best practices guidelines and 
information quality guidelines.
    Now some might object that making OMB the judge would give 
undue influence to the President or his appointees. I think 
that is a reasonable concern, but it is also easily addressed. 
If for whatever reason, you do not have sufficient trust in 
OMB's judgment, Rick Belzer remarks, ask GAO to evaluate the 
same information and reach its own conclusions. Even OMB can 
benefit from some competition.
    Again, thank you for the opportunity to testify. I would be 
happy to answer any questions.
    [The prepared statement of Mr. Lewis follows:]

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    Ms. Miller. Thank you very much.
    Our final witness this morning is Erik Olson. Mr. Olson is 
a senior attorney at the Natural Resources Defense Council, 
which he joined in 1991. His specialty is public health issues, 
including drinking water, pesticides, toxics, and food safety. 
From 1984 to 1986, Mr. Olson served in the Office of General 
Counsel for the EPA. He received his law degree from the 
University of Virginia, his undergraduate degree in 
environmental biology and management from Columbia College at 
Columbia University.
    Mr. Olson, we certainly appreciate your coming. We look 
forward to your testimony.

                    STATEMENT OF ERIK OLSON

    Mr. Olson. Thank you for inviting me. I appreciate the 
opportunity to testify.
    I wanted to back up just for a second and talk about the 
goals of all the legislation that is pending before the 
subcommittee. I think the two major goals are accountability 
and urging more effective, more beneficial regulation. I do not 
think anyone can disagree with that. The issue is how do we 
achieve that.
    We have to keep in mind, first of all, that the Chief 
Executive is also elected, just as Members of Congress are, and 
ultimately the Chief Executive is responsible and accountable 
for regulations adopted by his or, someday, her administration. 
In addition, on the issue of whether we are ensuring more 
beneficial and more cost-effective rules, our concern with the 
legislation that is pending is a fewfold. One is that we feel 
that it is often duplicative of existing statutes that could be 
better implemented, and is fairly costly and burdensome to 
implement.
    Second, we have heard repeatedly this morning discussion of 
what the costs are of all these regulations. I have not heard a 
single witness speak about the benefits of the regulations.
    I just wanted to quote one of my favorite people, John 
Graham at OMB. His recent report to Congress, the 2005 Draft 
Report, found that the aggregate benefits of Federal regulation 
are $12 billion to $108 billion in the most recent timeframe he 
looked at, whereas the costs were $3.8 to $4.1 billion. So the 
benefits are far higher than the costs. What we need to do is 
be talking not just about how much it costs business, but how 
the American people benefit.
    In addition, many of these pieces of legislation, as our 
written testimony lays out, raise substantial Constitutional 
issues in our view. For example, there are substantial 
``separation of powers'' issues if the Chief Executive can no 
longer execute laws by promulgating rules without Congress 
ratifying them; there are issues of bicameral powers being 
removed by a joint committee that has been proposed; and also 
due process issues if we remove all judicial review of Federal 
regulations, which some of the legislation pending would do. 
These are very powerful tools that are being proposed and 
subject to abuse we are afraid. We are concerned that the cure 
may be worse than the disease.
    Now, let us talk about the assumption that I think is 
underlying this, which is that regulations are impairing our 
competitiveness. This subcommittee held an earlier hearing 
where Professor Sid Shapiro from Wake Forest testified that 
there are numerous academic studies by independent academics 
that demonstrate that regulations are not the cause of 
competitive problems, that less than 1 percent of the cost of 
manufacturing is regulation.
    And I do not think any of the sponsors of this kind of 
legislation is suggesting that we want to relax our regulations 
to the point where we have the same rules as our competitors. 
Do we want Chinese labor policies or Chinese environmental 
policies? I do not think that is what we are aiming for. We 
have to look at the health benefits, the safety benefits, the 
environmental benefits of these rules.
    Now specifically with respect to some of the legislation.
    H.R. 931, the Hayworth bill, we are concerned that it 
basically rests on some questionable Constitutional theories 
and also is duplicative of what the Congressional Review Act 
would authorize. If Congress really has problems with specific 
rules, there is already something in place. Thirty-seven times 
a Member of Congress has proposed a resolution of disapproval.
    So clearly, there is an opportunity to do that. What this 
legislation does is it would force Congress to review over 
4,000 regulations with up to 1 hour of debate for each rule. 
This we fear would shut down Congress as well as shut down the 
Federal executive branch.
    We think it raises substantial Constitutional issues. 
Again, Article 2, Section 3 of the Constitution says it is the 
President's responsibility to faithfully execute the laws. 
Congress passes the laws, the President executes them. If the 
President has no authority to execute the laws, we think there 
are Constitutional issues. And also questions of judicial 
powers under Article 3, because the courts are supposed to 
adjudicate whether laws and regulations are appropriate and 
Constitutional. The legislation we think would remove that 
authority.
    Other issues with the other legislation are laid out in our 
written statement. And I would be glad to answer questions 
about them. Thank you.
    [The prepared statement of Mr. Olson follows:]

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    Ms. Miller. Thank you all very much.
    It is interesting to listen to your various recommendations 
here. Mr. Lewis is saying that more congressional oversight is 
the short answer to the question, and Mr. Olson mentioning H.R. 
931, J.D. Hayworth's bill, which I think is a very interesting 
bill, but if you think about 4,000 regulations a year, perhaps 
we do not have the time to review every one of them but perhaps 
it could be fine tuned with some specific criteria or 
something.
    I guess my question is, I will just throw this out 
generally to the panelists, how can we actually achieve the 
proper balance as Members of Congress for congressional 
oversight, that we do have the proper oversight initiatives 
here at the same time that we are not wanting to tie the 
agencies' hands completely as well?
    Mr. Lewis. There are a variety of ways of streamlining or 
limiting congressional review, even under Representative 
Hayworth's proposal. It was mentioned earlier that there are 
something like 135 economically significant rules under various 
stages of development in the most recent unified agenda of the 
Federal Government.
    I do not know exactly how many of those are completed 
regulatory actions, but I do know how many were completed 
actions in the 2003 edition when there were 127 economically 
significant rules at the pre-rule, proposed rule, final rule 
completed, and long-term stages. That was 22. So we are talking 
about two dozen economically significant rules a year probably 
that are finalized and go into effect that year.
    I think it is unquestionable that Congress could find the 
time to review and actually vote on two dozen, maybe even three 
dozen economically significant rules, especially when you 
consider how much time is devoted to matters of lesser 
importance, as Congressman Lynch and others have pointed out.
    I also think that even though I am not quite clear about 
all the details of Congressman Ney's proposal, that the basic 
idea is entirely sound. Everybody knows who works here 
certainly, but even people who do not, who have just taken 
college political science, that the work of Congress is done by 
committees. And, so if something is really important and is to 
get done by Congress, it has to have an institutional basis in 
a committee structure, in a committee system.
    And we also know when you have a committee, then you have 
professional staff and they develop institutional memories, and 
for these staff to justify their existence that committee 
really has to take action. And so it is not surprising that 
only 37 resolutions of disapproval have been introduced. As 
Congressman Lynch said, if it is everybody's responsibility, it 
is nobody's.
    But if you give a specific committee an assignment to 
monitor rules for the purpose of developing resolutions of 
disapproval, I think we will find that we get a lot more than 
37 over time.
    Mr. Copeland. One thought. This balance is a tricky thing 
trying to determine what controls need to be placed on 
regulatory agencies without hindering them so much that they 
cannot really act. But I do not think hardly anyone would 
expect agencies to put out rules without issuing some clear 
guidance as to how they are supposed to be implemented.
    And Section 212 of the Small Business Regulatory 
Enforcement Fairness Act, which required compliance guides but 
allowed agencies to opt out of that process whenever they 
determined that the rules do not have a ``significant impact on 
small entities,'' points out the problem or part of the 
problem, in that if an agency has that much discretion, then it 
is basically up to them to decide what they get to do or what 
they have to do.
    There is currently a bill before the House, Congressman 
Manzullo's bill, that would require the SBA Office of Advocacy 
to define that term or at least come up with rules to define 
that term. That would at least set some parameters so that if 
it is more than a certain amount, 1,000 small businesses 
affected to the tune of $5,000 apiece, above that is 
automatically going to be considered a significant economic 
impact on a substantial number. So there needs to be some 
clarity with regard to that, and there are opportunities 
legislatively to do that.
    On the Senate side, Senator Snow has a bill that would 
require agencies when they issue a compliance guide to issue it 
contemporaneous at least with the effective date of the rule. 
So that you cannot have instances where compliance guides are 
issued years after rules have already taken effect. That, to 
me, makes some sense. So there are some tweaks to the existing 
reforms that can also be made.
    Mr. Olson. I would like to just add one point, which is, 
two of the bills that we have been talking about that create 
this joint committee, I do have concerns both about the impact 
of that on committee jurisdiction, the Energy and Commerce and 
other committees, what the implications of that would be.
    It would seem that where you have committee staff and 
Members that already have developed expertise, the idea of 
sending these to the committee of jurisdiction makes a lot more 
sense. We have concerns that if it is difficult for the 
committee of jurisdiction to develop the expertise to review a 
rule, how can one committee review all the regulations of all 
the agencies. I think it becomes very difficult. So, perhaps 
some solution is to involve the committees of jurisdiction in 
making those determinations.
    I think also the committee that has been proposed has a 7-5 
majority-minority split, which is unlike the Ohio one as I 
understand it. In addition, there are issues about bicameral 
authority. For example, a majority of Senators could force 
something to be done in the House through a vote of this joint 
committee, which I think raises substantial Constitutional 
questions.
    Mr. Mihm. What you are hearing, ma'am, I think is that 
there is a series of initiatives Congress could take that 
basically fall out along a continuum; at one end, some of the 
legislative proposals that you have heard this morning, which 
obviously will need some debate and careful consideration, but 
at the other end there are some issues or some steps that 
Congress could take relatively quickly, and I do not want to go 
too far and imply that they would be without debate or smooth 
sailing, but where there is a greater degree of consensus on 
many of the issues, a couple of things that Curtis mentioned.
    In addition, we had a forum at GAO several months ago in 
which we pulled together a wide array of stakeholders on 
regulatory reform issues looking at the unfunded mandates. One 
of the key issues that came out of that was just the 
opportunities for better definitions and better clarity about 
what we are looking for and what would be an unfunded mandate 
and not an unfunded mandate.
    Again, it is not at the end of the day as though everyone 
agreed on everything, but there was a general consensus of we 
can get people together, we can continue the conversation, we 
might be able to make some real substantive steps. And so my 
point is, there is a whole series of very important but still 
smaller baby steps that Congress could take before you have to 
grapple with some of the more difficult issues.
    Ms. Miller. All right. Thank you very much.
    Representative Lynch.
    Mr. Lynch. Thank you, Madam Chair. I want to thank you each 
for participating and for your help. I have been reading a lot 
of your stuff recently, especially of Mr. Copeland. Very, very 
helpful. It has been very educational on my part; I am a new 
member of this committee.
    There are 1,000 ways that we could go here. But Mr. Mihm, 
you described this continuum where we can actually be more 
specific with our legislation, to begin with, which would 
provide more specific guidance to agencies so they would not 
wander afield. And then we have a couple of opportunities I 
think during the proposed draft public comment process, and 
then again in the final rule draft we have another opportunity. 
Then the Congressional Review Act gives us an opportunity for 
this resolution of disapproval, if you will, which is 
cumbersome and it is not anybody's central job to review it. 
But in back of all that, the assessment that we are making of 
each of these regulations, good or bad.
    Mr. Lewis, maybe you could speak to Mr. Olson's point about 
how we fall into a pattern of talking about regulations solely 
as a burden. I am an ironworker, spent 20 years in the 
business. We have regulations now that were not in place when I 
was ironworking, where they actually have nets so people do not 
fall to their deaths.
    When I was ironworking, we had the dubious distinction of 
having more people killed and injured on the job than any other 
industry in the United States. We were in this bizarre, macabre 
competition with coal miners who would die years later of black 
lung or collectively in cave-ins back in the day; ironworkers 
died one at a time, but continually.
    And then they came up with regulations that required safety 
belts, hard hats, nets that have a cost. They have a cost. But 
if you look at the productivity of ironworkers, it has gone 
straight up since I left. Hopefully, there is no cause and 
effect of that. [Laughter.]
    But there is a benefit to some of this regulation. And so 
to just sweep it all aside, as Mr. Olson has articulated, I 
think is wrong and ignores the benefit that we gain from some 
of these regulations.
    And I was fascinated by your proposal, Mr. Lewis, to open 
up competition to this analyses that we have going on, there is 
a certain monopoly there among OMB and GAO, whatever, and to 
open that up. Now we open that up, but we also have industry 
out there, people that want to tell us that smoking is actually 
good for you, you know, the tobacco industry and all that, but 
you do have industries out there that would want to sell you a 
bad bill of goods, and they would sponsor research. Maybe we 
ought to take a look at that in a separate hearing at some 
point.
    But what would be part of that analysis? Would we invite 
this competition and have people try to quantify the costs and 
benefits of the regulation in a real way, in a meaningful way? 
Because we are sort of hung up on that.
    Mr. Lewis. Yes, I quite agree with you that regulations 
have benefits, and included among those is saving lives. 
Sometimes regulations have unintended consequences, and they 
actually increase fatalities and casualties. Fuel economy 
standards, for example, of automobiles has resulted in the 
downsizing of cars, and NHTSA in several studies has determined 
that, yes, that contributes to highway fatalities.
    But of course, the purpose of health and safety regulation 
is to make people healthier and safer, and the purpose of 
environmental regulation is to make the environment cleaner, 
and I am in no way disputing that.
    The competition proposal that I was discussing would be one 
in which people would be able to submit their own cost and 
benefit estimates and have it go toe-to-toe with an agency's 
estimate. It would not be quite a level playing field because 
in this particular formulation of this proposal, and there 
might be other ideas, like putting it in front of a Blue Ribbon 
panel or something, it would be OMB that would be one of the 
judges, at least.
    I think it would be great to have GAO also judging and 
making its own independent determination of who the winner is, 
but OMB definitely I think has a bias in favor of the agencies 
that are all part of the same administrative team. But, see, 
you could also do this with independent agency rulemakings, and 
maybe OMB would be a little bit more impartial there.
    The idea would be to allow really a public debate and 
conversation on an agency analysis that would be excited by a 
contest. There is nothing, as some people have said, there is 
nothing like a good brawl to draw a crowd. And why is it 
Americans love sports? Why is it that so many millions of 
people watch football? Because Americans love contests and 
contests bring out the best in people.
    Mr. Lynch. If I may interject, though. Using that same 
analogy, it is the George Steinbrenners who have the most money 
that buy the best players that win. And I am just concerned 
that the greatest incentive would be to industry--the coal 
industry, the automobile industry, the tobacco industry--to 
weigh in against GAO or OMB, and so the public, you know, Joe 
Schmoe and Mary Schmoe, who do not have an advocate on their 
side, their interest is subverted or ignored completely.
    Mr. Lewis. Well I think they are lost in the shuffle today. 
I think the difference here is that you would have State and 
local governments weighing in, they also have their regulatory 
experts, and you would have small business associations 
weighing in. It would be a public contest and OMB would finally 
have to judge whose analysis is best.
    See, right now, Mr. Olson cited John Graham's testimony to 
the effect that the benefits swamp the costs. But if you read 
the fine print in OMB's 2005 Draft Report, and in fact all of 
their reports under the Regulatory Right to Know Act going back 
over the years, they do not do anything like an audit of the 
agencies' estimates, they just compile them. And so what they 
are taking is the agencies' estimates, which, let us face it, 
have to be to some extent self-serving because a cost-benefit 
analysis is a justification for actions the agency wants to 
take, and they just aggregate them.
    So here, you know, you would actually get OMB not just 
reporting what the agency said were the cost and benefits of a 
rule, but OMB having to pick that estimate versus the estimates 
that could be submitted by a small business group, by a State 
government regulatory expert, or an association of State 
governments. I just think that this kind of more open 
marketplace for regulatory analysis--and we would not be 
requiring the agency to accept the cost-benefit analysis of 
anyone else.
    We are just saying let us have your expert and the other 
fellow's expert present your material and have judges decide. 
That in itself would generate a tremendous amount of oversight 
and interest on the part of Congress and the public and I think 
it could just have a healthy result overall.
    Mr. Lynch. Interesting. I do not know if anybody else wants 
to----
    Mr. Mihm. Mr. Lynch, since GAO was mentioned in this 
context, I would add just a couple of seconds on this, not so 
much on the broad merits of what has been discussed. But our 
longstanding belief and Congress' belief as well has been that 
the appropriate role for GAO is not to be an independent judge 
in these types of situations, but rather this would be an 
executive function to be judging, to the extent you wanted to 
go down that road, among competing cost-benefit analyses.
    The more appropriate role, if Congress would want GAO to do 
that, would be then to kind of weigh in on the merits of the 
debate after it took place rather than to be an active party in 
that debate. It also would have a series of resource 
implications that, depending on if you want to advance this, 
that we would like to engage in that discussion with you as 
well.
    Mr. Olson. Could I just add briefly. It is important to 
keep in mind that, according to a CBO review, just doing one of 
these cost-benefit analyses costs on average about $570,000 and 
can cost several million. I mean, Joe Schmoe and Mary Schmoe 
are not going to pay that kind of money to run one of these 
things.
    So I think one of these competitions that has been 
suggested would end up being just completely disproportionate, 
that the industry that is well-funded would come in with a 
higher rack of economists, attack the agency--which they 
already do, there already is an opportunity for them to 
comment--and try to shoot down the agency and bog it down.
    The other point I would make is that OMB absolutely does do 
reviews of the agency's regulatory impact analyses and often 
comments on them and says that they are no good and go back to 
the drawing board. So, it is not quite accurate to say there is 
no OMB review of these RIAs.
    And finally, I think one idea, the TIRA, the Truth in 
Regulating Act, that already is law, that theoretically is a 
pilot--it sort of reminds me, my son just got his learner's 
permit to start driving and----
    Mr. Lynch. My condolences. [Laughter.]
    Mr. Olson. It is like giving him the keys to a Mazaratti or 
something and just saying go ahead and drive. We have not test 
piloted this thing yet. It has never been funded. Why not sort 
of see whether this pilot program starts working, start looking 
at whether a pilot can work before we start throwing this out 
into a full-blown, full-time kind of an approach.
    Mr. Lewis. Could I comment?
    Ms. Miller. Mr. Lewis.
    Mr. Lewis. I think that Congresswoman Kelly's proposal is 
exceedingly moderate, you could describe it as tame. And I 
understand why she is proposing something so tame. It is 
because she did not get very far with something more ambitious. 
Nonetheless, I think it is useful to lay out the ultimate goal 
here, and I think the ultimate objective is to have a 
counterpart to the Congressional Budget Office. Congress would 
be at the mercy of the White House, OMB, and the executive 
branch if you did not have CBO to do its own assessment of 
taxes and spending. Regulation is, if not equal in size in 
terms of the overall cost on the American economy or benefit of 
spending programs, it is certainly quite substantial. It is a 
gigantic part of the overall activity of government.
    I see no reason why Congress should not have its own 
independent institution dedicated to regulatory affairs, just 
the way it does to budget affairs. And that, I think, would 
make it a lot easier for you folks to do all kinds of 
oversight. And that would also, it seems to me, be the proper 
institution for providing an alternative judgment to OMB's 
judgment as to whose cost-benefit estimate is best.
    Ms. Miller. Do you have any other questions?
    Mr. Lynch. No. Mr. Copeland, I did not know if you wanted 
to comment.
    Mr. Copeland. I think it is an interesting concept, the 
layout in terms of competing economic analyses. I would point 
out that GAO has weighed in on agencies' economic analyses in 
the past; I have been part of a few of those efforts. And what 
those typically look at is, are the underlying data 
appropriate, are they sound, are the assumptions that the 
agencies are making in the absence of data sound, and have they 
considered all the available alternatives? Those are reasonable 
questions that can be asked.
    And we did in the context of the TRI lead rule that I 
mentioned a while ago, where we found that EPA in their 
economic analysis said that the rule would affect 60 different 
SIC codes, they only had data on 30, so they left the other 30 
completely away. And we said even making some modest 
assumptions about how many small businesses would be affected 
there, the number of small businesses could be much larger than 
what EPA had estimated. But on the other hand, we said EPA has 
the complete right to certify under the Regulatory Flexibility 
Act to saying that the rule would not have a significant 
economic impact because Congress has never defined that term.
    Mr. Lynch. All right. Fair enough. Thank you, Madam Chair.
    Ms. Miller. Thank you. Again, we want to thank all the 
witnesses. Your testimony was certainly fascinating, 
particularly as you were talking about some of the various 
approaches to the cost-benefit analysis of these regulatory 
kinds of things.
    I think it was last week, at our last hearing at any rate, 
we picked one particular issue to look at, something that OSHA 
is looking at right now and promulgating a rule for, and this 
is hexavalent chromium. And it was interesting. They are going 
from a standard that we have had for quite a few decades I 
suppose of 50 milligrams per billion, I suppose that is the way 
they measure it, down to 1. We looked at all of our various 
foreign competitors and what their standards were, etc.
    But the cost-benefit analysis by OSHA was I think $200 
million, and the industry's was billions and billions and 
billions. So it is a balancing act I think for Members of 
Congress just to try to understand it and try to do our very 
best job here.
    But we certainly appreciate all of your time. You are 
gracious to come here and give of your time and your testimony 
as well. We appreciate that very much. Thank you.
    With that, we will adjourn the meeting.
    [Whereupon, at 12:20 p.m., the committee was adjourned.]
    [Additional information submitted for the hearing record 
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