    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                    MIDNIGHT RULEMAKING: SHEDDING SOME LIGHT

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

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                       COMMERCIAL AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                FEBRUARY 4, 2009

                                   __________

                                Serial No. 111-2

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
    MAXINE WATERS, California            DARRELL E. ISSA, California
    WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
    ROBERT WEXLER, Florida               STEVE KING, Iowa
    STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
    HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
      Georgia                            JIM JORDAN, Ohio
    PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
    LUIS V. GUTIERREZ, Illinois          JASON CHAFFETZ, Utah
    BRAD SHERMAN, California             TOM ROONEY, Florida
    TAMMY BALDWIN, Wisconsin             GREGG HARPER, Mississippi
    CHARLES A. GONZALEZ, Texas
    ANTHONY D. WEINER, New York
    ADAM B. SCHIFF, California
    LINDA T. SANCHEZ, California
    DEBBIE WASSERMAN SCHULTZ, Florida
    DANIEL MAFFEI, New York
    [Vacant]

                Perry Apelbaum, Staff Director and Chief Counsel
          Sean McLaughlin, Minority Chief of Staff and General Counsel
                                     ------

               Subcommittee on Commercial and Administrative Law

                        STEVE COHEN, Tennessee, Chairman

    WILLIAM D. DELAHUNT, Massachusetts   TRENT FRANKS, Arizona
    MELVIN L. WATT, North Carolina       JIM JORDAN, Ohio
    BRAD SHERMAN, California             DARRELL E. ISSA, California
    DANIEL MAFFEI, New York              J. RANDY FORBES, Virginia
    ZOE LOFGREN, California              HOWARD COBLE, North Carolina
    HENRY C. ``HANK'' JOHNSON, Jr.,      STEVE KING, Iowa
      Georgia
    ROBERT C. ``BOBBY'' SCOTT, Virginia
    JOHN CONYERS, Jr., Michigan

                         Michone Johnson, Chief Counsel

                        Daniel Flores, Minority Counsel

                                C O N T E N T S

                                  ----------

                                FEBRUARY 4, 2009

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Chairman, Subcommittee on Commercial
      and Administrative Law.........................................     1
    The Honorable Trent Franks, a Representative in Congress from the
      State of Arizona, and Ranking Member, Subcommittee on
      Commercial and Administrative Law..............................    18

                                   WITNESSES

    The Honorable Jerrold Nadler, a Representative in Congress from
      the State of New York
      Oral Testimony.................................................    22
      Prepared Statement.............................................    24
    Mr. Robert F. Kennedy, Jr., Chairman, Waterkeeper Alliance
      Oral Testimony.................................................    26
      Prepared Statement.............................................    30
    Dr. Gary D. Bass, Ph.D., Executive Director, OMB Watch
      Oral Testimony.................................................   177
      Prepared Statement.............................................   179
    Ms. Lynn Rhinehart, Associate General Counsel, AFL-CIO
      Oral Testimony.................................................   198
      Prepared Statement.............................................   200
    Dr. Veronique de Rugy, Ph.D., Senior Research Fellow, Mercatus
      Center at George Mason University
      Oral Testimony.................................................   209
      Prepared Statement.............................................   211
    Mr. Michael Abramowicz, Professor, George Washington University
      Law School
      Oral Testimony.................................................   236
      Prepared Statement.............................................   237
    Dr. Curtis W. Copeland, Ph.D., Specialist in American National
      Government, Government and Finance Division, Congressional
      Research Service
      Oral Testimony.................................................   243
      Prepared Statement.............................................   245

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Letter from the Competitive Enterprise Institute and
      FreedomWorks, submitted by the Honorable Steve Cohen, a
      Representative in Congress from the State of Tennesse, and
      Chairman, Subcommittee on Commercial and Administrative Law....     3
    Prepared Statement of Earthjustice, submitted by the Honorable
      Steve Cohen, a Representative in Congress from the State of
      Tennesse, and Chairman, Subcommittee on Commercial and
      Administrative Law.............................................     4
    Prepared Statement of the Honorable Trent Franks, a
      Representative in Congress from the State of Arizona, Member,
      Committee on the Judiciary, and Ranking Member, Subcommittee on
      Commercial and Administrative Law..............................    19
    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan,
      Chairman, Committee on the Judiciary, and Member, Subcommittee
      on Commercial and Administrative Law...........................    21
    Article from The Des Moines Register, dated Tuesday, May 14,
      2002, submitted by the Honorable Steve King, a Representative
      in Congress from the State of Iowa, and Member, Subcommittee on
      Commercial and Administrative Law..............................   162
    Article from The Des Moines Register, dated April 10, 2002,
      submitted by the Honorable Steve King, a Representative in
      Congress from the State of Iowa, and Member, Subcommittee on
      Commercial and Administrative Law..............................   164

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of David M. Mason, Visiting Senior Fellow, The
      Heritage Foundation, submitted by the Honorable Trent Franks, a
      Representative in Congress from the State of Arizona, and
      Ranking Member, Subcommittee on Commercial and Administrative
      Law............................................................   266
    Article from Consumer Freedom, submitted by the Honorable Steve
      King, a Representative in Congress from the State of Iowa, and
      Member, Subcommittee on Commercial and Administrative Law......   271
    Response to Post-Hearing Questions from Robert F. Kennedy, Jr.,
      Chairman, Waterkeeper Alliance.................................   272
    Response to Post-Hearing Questions from Gary D. Bass, Ph.D.,
      Executive Director, OMB Watch..................................   276
    Response to Post-Hearing Questions from Lynn Rhinehart, Associate
      General Counsel, AFL-CIO.......................................   282
    Response to Post-Hearing Questions from Veronique de Rugy, Ph.D.,
      Senior Research Fellow, Mercatus Center at George Mason
      University.....................................................   286
    Response to Post-Hearing Questions from Michael Abramowicz,
      Professor, George Washington University Law School.............   296
    Response to Post-Hearing Questions from Curtis W. Copeland,
      Ph.D., Specialist in American National Government, Government
      and Finance Division, Congressional Research Service...........   300

                             MIDNIGHT RULEMAKING:
                              SHEDDING SOME LIGHT

                                  ----------

                          WEDNESDAY, FEBRUARY 4, 2009

                  House of Representatives,
                         Subcommittee on Commercial
                                and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 11:10 a.m., in
    room 2141, Rayburn House Office Building, the Honorable Steve
    Cohen (Chairman of the Subcommittee) presiding.
        Present: Representatives Cohen, Watt, Maffei, Franks,
    Coble, Issa, Smith, and King.
        Mr. Cohen. This hearing of the Judiciary Committee's
    Subcommittee on Commercial and Administrative Law will now come
    to order.
        Without objection, the Chair will be authorized to declare
    a recess of the hearing.
        I would like to begin by welcoming everyone to the first
    hearing of the Subcommittee in the 111th Congress. In
    particular, I wish to extend warm regards to the Ranking Member
    of the Subcommittee, Mr. Franks, who I look forward to working
    with. Pretty much look forward to working with all the Members
    of the Subcommittee on both sides of the aisle. And would like
    to be welcoming our new Member, Mr. Maffei, who is not here
    yet.
        I will now recognize myself for a short statement.
        Despite the fact that many aspects of the Bush
    administration were winding down operations after the November
    4, 2008 election, administrative agencies were ramping up their
    rulemaking.
        A flurry of regulatory activity went on between the
    November presidential election and inauguration day, with the
    former Administration attempting to make a final impact.
        This midnight regulation period is a time without political
    accountability, where controversial actions will not cost the
    Administration's party votes.
        Under the cover of darkness, the Bush administration used
    the midnight regulatory period to promulgate numerous
    regulations that run counter to statutory mandates and the
    public interests.
        Other Administrations, Democrat, as well, have done the
    same, and each are wrong.
        Midnight rulemaking has been criticized as an effort of an
    outgoing Administration to tie the hands of the next
    Administration. While the tactic of flooding the Federal
    Register at the end of an Administration has been used by
    Presidents of both parties, these regulations recently
    experienced through this Bush administration have been
    particularly troubling.
        I have both procedural and substantive concerns about the
    Bush administration's use of midnight rulemaking. Regulatory
    experts across the political spectrum agree that the hurried
    process of midnight rulemaking leads to inherently flawed
    policy.
        During the end of the Bush administration, agencies
    reportedly cut corners and administrative procedure by rushing
    regulations through the system without proper regulatory
    review.
        In the case of many of the most significant rules, the
    public comment period was abridged. Significant public comments
    were ignored, and acceptable rulemaking practices were tossed
    aside.
        The Administration's desire to make it more difficult to
    revoke controversial rules led to other questionable tactics.
        In an effort to ensure that the rules would go into effect
    prior to inauguration day, the Administration reportedly
    categorized several significant rules as minor, as opposed to
    major, so that their effective dates would be 30 days after
    publication in the Federal register rather than 60 days.
        A memo issued by then White House Chief of Staff Joshua
    Bolton in May 2008 announced the end of midnight regulations,
    stating that except in extraordinary circumstances, final
    regulations should be issued no later than November 1, 2008.
        Nevertheless, the Bolton memorandum was brushed aside by
    the Bush administration, and dozens of controversial
    regulations went well beyond that deadline.
        These included regulations on the environment, civil
    rights, workplace safety, opportunities to study medical
    marijuana, abortion rights, regulatory preemption, and online
    gambling.
        Instead of implementing midnight regulations only in
    extraordinary circumstances, midnight regulations were used as
    parting gifts to favorite industries of political interests.
        As several of our witnesses will recount today, the impact
    of midnight regulations on individuals, businesses, workers,
    science and the environment is profound.
        When regulations jeopardize public health, safety and
    welfare, Congress has a duty to respond. This hearing today
    will explore whether the Congressional Review Act, the
    appropriations process or an approach like Mr. Nadler's
    legislation, H.R. 34, is the best way to proceed.
        Although we are transitioning to a new era, Congress and
    the American people have an obligation to examine and rectify
    wreckage left behind by the Bush administration, including
    those egregious midnight regulations.
        For the comfort of the minority party, I want them to know
    that I plan to introduce and will introduce into the record,
    without objection, a statement from a very much nonpartisan
    and, I think, conservative group, the Competitive Enterprise
    Institute, that specifically requests that all of our actions
    look in a bipartisan manner toward this Administration and
    future Administrations and makes sure that what is good for the
    goose is good for the gander.
        And I certainly concur in that and would like to enter the
    Freedom Works letter of February 3 into the record, as well as
    a statement from Earth Justice, that was asked to be a witness,
    but was unable to be included in our list of witnesses, and
    include its statement, with unanimous consent, into the record.
        [The information referred to follows:]

        Mr. Cohen. With those preliminary remarks, I would like to
    recognize my colleague, Mr. Franks, the distinguished Ranking
    Member of the Subcommittee, and whose Cardinals came close to a
    Super Bowl championship, for his opening remarks.
        Mr. Franks. Well, thank you, Mr. Chairman. I am just
    grateful to be here this morning. I am grateful to be here with
    you as the Subcommittee on Commercial and Administrative Law
    meets for the first time.
        I want to congratulate you on becoming the Chairman of this
    Subcommittee, and I want to warmly welcome our witnesses, if it
    so happens, and certainly welcome the opportunity to begin our
    consideration of the administrative law issues during this
    Congress.
        The Commercial and Administrative Law Subcommittee spent
    next to no time on administrative law last term. The
    Subcommittee spent more time on commercial law, but still that
    is not what absorbed the majority of the Subcommittee's
    attention.
        Instead, the Subcommittee spent the greatest portion of its
    time on bashing the Bush administration and the Bush
    administration's Department of Justice.
        Mr. Chairman, I hope today that we can turn a new page and
    that Presidents of both parties and Presidents in most modern
    Administrations, of course, we recognize that they have
    promulgated an increased number of regulations during their
    final months in office.
        In fact, it was Jimmy Carter whose Administration's end-of-
    term activity gave birth to the phrase ``midnight
    regulations.'' And President Clinton published even more.
        The George W. Bush administration, looking back on the
    Clinton debacle, took some concerted and constructive steps to
    introduce order into the end-of-term process.
        It called for all new regulations planned for the last part
    of its tenure to be proposed by June 1, 2008 and it called for
    all of these regulations to be promulgated by November 1, 2008.
        The Bush administration's policy provided for exceptions
    and some exceptions, in the end, were made. But on the whole,
    the process was more orderly than the chaos that attended the
    final days of the Clinton administration.
        Accordingly, I hope we won't spend our time on bashing the
    Bush administration for doing less of what all recent
    Administrations have done. Let us instead devote ourselves to
    the more important task.
        Presidents are elected for 4 years, and unless we are to
    craft prohibition for all regulatory activity during a second
    term, we should use this hearing as an opportunity to begin to
    build upon the improvements to the regulatory process that the
    Bush administration undertook, building on the improvements of
    previous Administrations.
        Let us, therefore, ask how can we reform the entire
    regulation-writing process, because midnight regulations are
    just one symptom of a dysfunctional and outdated administrative
    law system governed by the 63-year-old Administrative Procedure
    Act.
        Throughout the process of writing regulations, we need to
    improve procedures. We need to ensure, first, universal and
    better cost-benefit analyses; sounder science; more
    transparency; better public participation; more negotiated
    rulemaking; rights of the Fed to support e-rulemaking; stronger
    review of the agency's regulatory development processes; and,
    an end to the proliferation of supposedly nonbinding guidance
    that seeks to make an end run on the requirements of
    rulemaking.
        These are just some of the improvements that we can make to
    the rulemaking process that governs so much of the Federal
    Government's lawmaking activity.
        If we can progress on these improvements, we will reduce
    the controversy over end-of-administration rulemaking by
    bringing more transparency and objectivity into the entire
    rulemaking process, no matter when it occurs during the course
    of any Administration.
        Other reforms include improving our review of agency
    regulations under the Congressional Review Act, and, of course,
    above all, Congress can dedicate itself anew to writing
    clearer, more detailed and more definitive statutes.
        In this way, Congress can better exercise the policymaking
    authority entrusted to it by the Constitution and not transfer
    that authority excessively to administrative agencies, which
    are accountable only to the people in indirect ways through the
    President or, in the case of so-called independent agencies,
    even more indirectly.
        In the 108th and the 109th Congresses, we considered those
    topics so important that we embarked on a new special project,
    the Administrative Law Process and Procedure Project for the
    21st Century.
        This project generated a number of good proposals. We have
    yet to conclude our important work in this area. Yet, the 21st
    century marches on, Mr. Chairman, and the burden of regulations
    imposed under an outdated system grows.
        And so, sir, again, I am glad that we are here today and
    that the topic of administrative law is the first of which we
    turn in this term. And I hope that this will be a fruitful
    field of bipartisan endeavor in this term, and I look forward
    to working with you.
        Thank you.
        Mr. Cohen. I thank the gentleman for his statement.
        Without objection, other Members' statements, opening
    statements, will be included in the record.
        And I want to assure the gentleman, as I did in my opening
    statement, that I do want this to be bipartisan and to look at
    the future to all Administrations.
        [The prepared statement of Mr. Franks follows:]
     Prepared Statement of the Honorable Trent Franks, a Representative in
    Congress from the State of Arizona, Member, Committee on the Judiciary,
     and Ranking Member, Subcommittee on Commercial and Administrative Law
        Mr. Chairman, it is a pleasure to be here with you today as the
    Subcommittee on Commercial and Administrative Law meets for the first
    time in the 111th Congress. I extend a warm welcome to our witnesses.
    And I welcome the opportunity to begin our consideration of
    administrative law issues during this Congress.
        The Commercial and Administrative Law subcommittee spent next to no
    time on administrative law last term. The Subcommittee spent more time
    on commercial law, but still, that is not what absorbed the majority of
    the Subcommittee's attention. Instead, the Subcommittee spent the
    greatest portion of its time on bashing the Bush Administration and the
    Bush Administration's Department of Justice.
        Mr. Chairman, I hope that today we can turn a new page. Presidents
    of both parties, and Presidents in most modern administrations, have
    promulgated an increased number of regulations during their final
    months in office.
        In fact, it was President Jimmy Carter whose administration's end-
    of-term activity gave birth to the phrase ``midnight regulations.'' And
    President Clinton published even more.
        The George W. Bush Administration, looking back on the Clinton
    debacle, took some concerted and constructive steps to introduce order
    into the end-of term process. It called for all new regulations planned
    for the last part of its tenure to be proposed by June 1, 2008. And it
    called for all of these regulations to be promulgated by November 1,
    2008.
        The Bush Administration's policy provided for exceptions, and some
    exceptions, in the end, were made. But on the whole, the process was
    more orderly than the chaos that attended the final days of the Clinton
    Administration.
        Accordingly, let's not spend our time bashing the Bush
    Administration for doing less of what all recent administrations have
    done. Let us instead devote ourselves to a more important task.
    Presidents are elected for four years, and unless we are to craft a
    prohibition on all regulatory activity during a second term, we should
    use this hearing as an opportunity to begin to build upon the
    improvements to the regulatory process that the Bush Administration
    undertook, building on the improvements of previous administrations.
    Let us therefore ask: ``How can we reform the entire regulation-writing
    process?'' Because midnight regulations are just one symptom of a
    dysfunctional and outdated administrative law system, governed by the
    63-year-old Administrative Procedure Act.
        Throughout the process of writing regulations, we need to improve
    procedures. We need to insure:

              universal and better cost-benefit analysis;

              sounder science;

              more transparency;

              better public participation;

              more negotiated rulemaking;

              widespread ``e-rulemaking;''

              stronger review of the agencies' regulatory
            development processes; and

              an end to the proliferation of supposedly non-binding
            ``guidance'' that seeks to make an end run on the requirements
            of rulemaking.

        These are just some of the improvements that we can make to the
    rulemaking process that governs so much of the federal government's
    law-making activity. If we can make progress on these improvements, we
    will reduce the controversy over end-of-administration rule-makings by
    bringing more transparency and objectivity to the entire rule-making
    process, no matter when it occurs during the course of any
    administration.
        Other worthy reforms include improving our review of agency
    regulations under the Congressional Review Act. And, of course, above
    all, Congress can dedicate itself anew to writing clearer, more
    detailed, and more definitive statutes. In this way, Congress can
    better exercise the policy-making authority entrusted to it by the
    Constitution--and not transfer that authority excessively to
    administrative agencies accountable to the people only indirectly
    through the President or, in the case of so-called independent
    agencies, even more indirectly.
        In the 108th and 109th Congresses, we considered these topics so
    important that we embarked on a special project, the Administrative
    Law, Process, and Procedure Project for the 21st Century. This project
    generated a number of good proposals. We have yet to conclude our
    important work in this area. Yet the 21st Century marches on, and the
    burden of regulations imposed under an outdated system grows.
        So Mr. Chairman, again, I am glad that we are here today, and that
    the topic of administrative law is the first to which we turn this
    term. I hope that this will be a fruitful field of bipartisan endeavor
    this term, and I look forward to working with you.
                                   __________
        [The prepared statement of Mr. Conyers follows:]

    Prepared Statement of the Honorable John Conyers, Jr., a Representative
      in Congress from the State of Michigan, Chairman, Committee on the
     Judiciary, and Member, Subcommittee on Commercial and Administrative
                                      Law

        Let me first thank Steve Cohen, the new Chairman of the
    Subcommittee on Commercial and Administrative Law, for holding this
    timely hearing on the issue of so-called ``midnight rules.''
        No issue within the Subcommittee's jurisdiction is now more
    important. Regulations issued during the final weeks of the Bush
    Administration may have a lasting impact on the environment, on civil
    liberties at home and abroad, on the wages and working conditions of
    U.S. workers, on highway safety, and on many other matters of concern
    to the American people.
        We will hear from seven distinguished and knowledgeable witnesses
    at today's hearing. I'm interested in hearing their views on the
    following three issues:
        First, is the Bush Administration's record on midnight rulemaking
    subject to criticisms that its predecessors' records are not? In
    particular:

              Did the Bush Administration strategically issue
            midnight rules in an attempt to avoid meaningful public and
            Congressional scrutiny of its controversial policies?

              Did the Bush Administration's midnight rulemaking
            depart from well-established regulatory practices and
            procedures?

              Did the Bush Administration's midnight rulemaking
            favor special interests over the public interest, in a way that
            earlier administrations' midnight rules did not?

        Second, when and why should we be concerned about midnight rules--
    whether they spring from a Democratic or a Republican administration?
    Is midnight rulemaking an undesirable way to make public policy?
        And third, should Congress pass legislation governing midnight
    rulemaking? Or does Congress already have at its disposal effective
    tools to deal with objectionable midnight rules, including resort to
    the Congressional Review Act and appropriations restrictions? If
    legislation is needed, what particular form should it take? I
    especially look forward to hearing Jerry Nadler's views on that last
    question.
        Thank you, again, Chairman Cohen.
                                   __________
        Mr. Cohen. I am now pleased to introduce the witness for
    our first panel for today's hearing, the Honorable
    Representative Jerrold Nadler.
        Congressman Nadler represents New York's 8th congressional
    district, which includes Manhattan's west side below 89th, and
    I guess down to the battery; also, areas of historic Brooklyn.
        Congressman Nadler was first elected to the House in 1992,
    after serving 16 years in the New York State Assembly. In 2004,
    he was elected with a resounding 80 percent of the vote.
        Throughout his career, he has championed civil rights,
    civil liberties, efficient transportation, and a host of
    progressive issues, such as access to health care, support for
    the arts, and the protection of the Social Security system.
        He is a voice for the voiceless. In his roles as an
    assistant whip and a senior Member of both the House Judiciary
    and Transportation Committees, Congressman Nadler has the
    opportunity on a daily basis to craft and shape the major laws
    that govern our country.
        He currently serves as Chairman of the Constitution, Civil
    Rights and Civil Liberties Subcommittee of Judiciary, which
    considers all proposed constitutional amendments and deals with
    such issues as freedom of expression, religious freedom,
    privacy, due process, civil rights, reproductive choice, and
    lesbian, gay, bisexual and transgender rights.
        Thank you for your willingness to participate in today's
    hearing.
        And although I am sure you know the procedure, I will go
    over it for the benefit of our other witnesses.
        Without objection, your written statement will be placed
    into the record, and we would ask that you limit your oral
    remarks to 5 minutes. We have a lighting system with a green
    light, which is for go. At 4 minutes, it turns yellow, which is
    like the 2-minute mark in the NFL. Then at the 5-minute mark,
    you get a red light, which means you are about at the end of
    your testimony.
        After each witness has presented his or her testimony,
    Subcommittee Members will be allowed to ask you questions,
    subject to the 5-minute limit.
        After Mr. Nadler testifies, we might have votes, and we are
    going to try to take into consideration Mr. Kennedy's schedule
    and have him, without any objection, be our first witness and
    have questions of him so he can make an airplane and have time
    to catch a fast train. Get me a ticket back to New York.
        Mr. Nadler, will you proceed with your testimony?

    TESTIMONY OF THE HONORABLE JERROLD NADLER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEW YORK

        Mr. Nadler. Thank you, Mr. Chairman, Ranking Member Franks,
    and my fellow Members of the Judiciary Committee.
        I appreciate the opportunity to testify before you today on
    this very important issue.
        The problem of midnight rules is not a new one, but the
    practice is prone to abuse and undercuts our democratic
    process.
        That is why, on the first day of this Congress, I
    reintroduced the Midnight Rule Act, H.R. 34, which would allow
    incoming agency heads to prevent rules adopted within the last
    3 months of the previous Administration from going into effect.
        This legislation lays out an approach to enable an incoming
    President to deal with midnight rules without tying him up for
    months or years and preventing him from implementing his agenda
    or her agenda.
        When the President rushes to finalize regulations in
    advance of an incoming Administration, especially during the
    lame-duck period, that President binds the hands of his
    successor for 6 months to as long as 2 years.
        This can be accomplished with minimal political
    accountability by the outgoing President or by the President's
    party, whose members hope to retain some of their jobs.
        In this way, midnight rules differ from other executive
    actions, such as executive orders, which the new President can
    change, if he wishes, upon assuming office.
        The conduct of the outgoing Bush administration has
    highlighted the problem in several ways. First, the Bush
    administration rushed many rules through the process at an
    accelerated pace. This was facilitated by a memo issued by the
    White House chief of staff, Josh Bolton, on May 9, 2008.
        It instructed agencies to finalize regulations by November
    1, enabling the outgoing Administration to put in place
    regulations just prior to the swearing in of the new President.
        The results of the Bolton memo are clear. In October and
    November of last year, Federal agencies submitted 30 ``major
    rules,'' that is, those with an economic impact of at least
    $100 million each, to the Government Accountability Office.
        During the same period in 2007, that number was only 13.
    This represents an increase over 1 year of 130 percent.
        Similarly, the number of significant rules submitted to the
    Office of Information and Regulatory Affairs September 1, 2008
    and December 31, 2008 represents an increase of 102 percent in
    the same period in 2007, 190 significant final rules as opposed
    to 94 such rules the year before.
        Second, lack of accountability in its waning weeks enabled
    the Administration to adopt the highly controversial rules on
    family planning, endangered species and global warming, that
    may not have passed muster in the more public debate. But since
    there was no more public accountability, no election to look
    forward to, they could do what they wanted and bind the hands
    of the new Administration.
        Finally, these midnight rules allow the Administration to
    extend its policies well into the next Administration, despite
    the fact that the voters voted to move in a new direction.
        The Midnight Rule Act would address this problem in several
    ways. It would give a new agency head a limited period of time
    to review and act on regulations adopted in the final 90 days
    of a President's term.
        The new agency head would have 90 days after being
    confirmed to his office or her office to disapprove a midnight
    rule by publishing a statement of disapproval in the Federal
    Register and sending a notice of disapproval to the
    congressional Committee or Committees of jurisdiction.
        In order to address emergencies, limited exceptions are
    provided in cases of an imminent threat to health or safety,
    enforcement of criminal laws, implementation of an
    international trade agreement, and national security.
        Congress could revoke some of these rules under the
    Congressional Review Act. However, the Congressional Review Act
    requires individual votes on each rule.
        Given the sheer number of midnight rules issued by the Bush
    administration or perhaps by Administrations in the future,
    this would require more time than Congress has available, while
    we are trying to pass an economic recovery package, finalize FY
    2009 appropriations bills, and prepare for a new budget for the
    upcoming fiscal year.
        Most importantly, this proposal would place a check on
    midnight rules. The American people have a right to hear the
    views of candidates for President and other offices on very
    important issues, and then to be governed by the choice that
    they make in the election, and not to be governed by the dead
    hand of the choice they made 4 or 8 years earlier.
        The American people are entitled to alter the direction of
    their government based on new circumstances or even to change
    their minds, if they wish. That is why we have a new
    presidential election every 4 years, and that is why the
    policies of the old outgoing Administration should not be
    permitted to continue and to bind the new incoming
    Administration for 6 months to 2 years.
        I have received many helpful comments and suggestions on
    ways to clarify this legislation and I hope to work with my
    colleagues to fine-tune it.
        The core policy is that the will of the electorate should
    not be frustrated in effectuating new policy by the old
    Administration. Voters have a right to debate critical issues
    in the selection of their representatives and to have their
    choices implemented after the electoral process is finished.
        Thank you again for the opportunity to testify today and I
    look forward to working with you all to comprehensively address
    this problem in the days ahead.
        [The prepared statement of Mr. Nadler follows:]

    Prepared Statement of the Honorable Jerrold Nadler, a Representative in
                      Congress from the State of New York

        Thank you, Mr. Chairman, Ranking Member Franks, and my fellow
    members of the Judiciary Committee. I appreciate the opportunity to
    testify before you today on this very important issue.
        The problem of midnight rules is not a new one, but the practice is
    prone to abuse and undercuts our democratic process.
        That is why, on the first day of this Congress, I reintroduced the
    Midnight Rule Act, H.R. 34, which would allow incoming Agency heads to
    prevent rules adopted within the last three months of the previous
    administration from going into effect.
        This legislation lays out an approach to enable an incoming
    president to deal with midnight rules--that is, rules finalized, or
    which took effect, at the very end of his predecessor's term--without
    tying up the new president for months or years trying to implement his
    agenda.
        The 22nd Amendment to the Constitution limits a president to two
    terms in office. Midnight rules can be abused to allow a president to
    reach into a third term without any accountability.
        Past presidents have used the final weeks of their terms to take
    actions, or advance policies, that would be politically difficult prior
    to an election. It is a tradition going back to the earliest days of
    the Republic.
        When a president rushes to finalize regulations in advance of an
    incoming administration, especially during the lame duck period, that
    president binds the hands of his successor for six months to as long as
    two years. This can be accomplished with minimal political
    accountability by the president--who is leaving office--or by the
    president's party, whose members hope to retain their jobs.
        In this way, midnight rules differ from other executive actions,
    such as executive orders, which a new president can change upon
    assuming office.
        The conduct of the outgoing Bush administration really highlighted
    the problem in several ways.
        First, the Bush administration rushed many rules through the
    process at an accelerated pace. This was facilitated by a memo issued
    by the White House Chief of Staff, Josh Bolten, on May 9th, 2008. It
    instructed agencies to finalize regulations by November 1st, enabling
    the outgoing administration to put in place regulations just prior to
    the swearing-in of the new President.
        The results of the Bolton memo are clear. In October and November
    of 2008, federal agencies submitted 30 ``major rules'' (those with an
    economic impact of at least $100 million), to the Governmental
    Accountability Office. During the same period in 2007, that number was
    only 13. This represents an increase of 130%.
        Similarly, the number of ``significant rules'' submitted to the
    Office of Information and Regulatory Affairs increased by 102% between
    September 1, 2008 and December 31, 2008 over the same period in 2007
    (190 significant final rules as opposed to 94 such rules the year
    before).
        Second, the lack of accountability in its waning weeks enabled the
    Bush administration to adopt highly controversial rules that may not
    have passed muster in a more public debate.
        These midnight rules adopted by the Bush Administration will, among
    other things, curtail access to family planning services, and even to
    information about reproductive health options; weaken enforcement of
    the Endangered Species Act with respect to federal projects which might
    threaten endangered species; allow the agencies to bypass reviews of
    global warming and potential ecological impacts; and allow mining
    companies to dump toxic waste without concern for environmental harm.
        Finally, these midnight rules allow the Administration to extend
    its policies well into the new administration despite the fact that the
    voters have voted to move in a new direction.
        The Midnight Rule Act would address this problem in several ways.
        It would give a new agency head a limited period of time to review
    and act on regulations adopted in the final 90 days of a president's
    term. The new agency head would have 90 days after being appointed to
    disapprove a midnight rule by publishing a statement of disapproval in
    the Federal Register, and sending a notice of disapproval to the
    congressional committees of jurisdiction.
        In order to address emergencies, limited exceptions are provided in
    cases of an imminent threat to health or safety, enforcement of
    criminal laws, implementation of an international trade agreement and
    national security.
        Congress could revoke some of these rules under the Congressional
    Review Act. However, the CRA would require individual votes on each
    rule. Given the sheer number of midnight rules issued by the Bush
    Administration, this would require more time than Congress has
    available while we are trying to pass an economic recovery package,
    finalize FY2009 appropriations bills, and prepare for a new budget for
    the upcoming fiscal year.
        The Midnight Rule Act would give the new administration the
    opportunity to review carefully the last minute handiwork of its
    predecessor. Rulemaking is, in the first instance, a function of the
    executive. Congress and the courts would still retain their authority
    to act as a check on the executive.
        Most importantly, this proposal would place a check on midnight
    rules. The American people have a right to hear the views of candidates
    for president and other offices on these very important issues and then
    to be governed by the choice they made in the election, and not by the
    dead hand of a choice they made four years earlier. The American people
    are entitled to alter the direction of their government based on new
    circumstances, or even to change their minds. That is why we have a new
    presidential election every four years.
        I have received many helpful comments and suggestions on ways to
    clarify this legislation, and I hope to work with my colleagues to fine
    tune it.
        The core policy is that the will of the electorate should not be
    frustrated in effectuating new policy. Voters have a right to debate
    critical issues in the selection of their representatives and to have
    those choices realized though the electoral process.
        Thank you again for the opportunity to testify today, and I look
    forward to working with you all to comprehensive address this problem
    in the days ahead.
                                   __________
        Mr. Cohen. Well, I thank the gentleman for his statement.
        The Chair does not have a question of Mr. Nadler and would
    entertain questions from the Subcommittee. If not, we could
    proceed to have the second panel come forward and Mr. Kennedy
    could give his remarks first, and then he could catch his
    airplane.
        Without objection, can we let Mr. Nadler go?
        Mr. Nadler. Thank you.
        Mr. Cohen. Let my person go. Thank you.
        If the second panel would come up, we are going to forego
    the traditional introductions of the entire panel for purposes
    of trying to accommodate the airplane schedule that Mr. Kennedy
    has, introduce him, have his statement and have questions from
    the panel.
        Our second witness is Robert F. Kennedy, Jr. Mr. Kennedy is
    credited with leading the fight to protect New York City's
    water supply, but his reputation as a resolute defender of the
    environment stems from a litany of successful legal actions.
        The list includes winning numerous settlements for
    Riverkeeper, prosecuting governments and companies for
    polluting the Hudson River and Long Island Sound, arguing cases
    to expand citizen access to the shoreline, and suing treatment
    plants to force compliance with the Clean Water Act.
        Mr. Kennedy acts as chief prosecuting attorney for
    Riverkeeper. He also serves as senior attorney for the National
    Resources Defense Council. And I may say his name, in addition
    to the polar bear, forced me to write a check occasionally. And
    is the President, also, of the Waterkeeper.
        At Pace University School of Law, he is a clinical
    professor and supervising attorney at the Environmental
    Litigation Clinic in White Plains, New York.
        Earlier in his career, he served as assistant DA in New
    York City; published several books, including ``The
    Riverkeepers'' (1997), with John Cronin. His articles have
    appeared in The New York Times, The Atlantic Monthly, The Wall
    Street Journal, Esquire, The Village Voice, The Washington
    Post, et cetera.
        He has been on radio, ``Air America,'' with ``Ring of
    Fire.'' And he is the father of six children, and he hopes to
    leave an earth similar to the one that he has had the
    opportunity to inhabit.
        Mr. Kennedy, thank you for coming to our Subcommittee.

      TESTIMONY OF ROBERT F. KENNEDY, JR., CHAIRMAN, WATERKEEPER
                                ALLIANCE

        Mr. Kennedy. Thank you, Mr. Chairman, and all the Members
    of the Committee and my fellow panelists. Thanks for taking
    into account my travel schedule.
        I have filed extensive comments with the Committee, going
    through the dozens of midnight regulations passed by the Bush
    administration over the past couple of months that impact the
    environment.
        I am going to focus on four of those today very, very
    quickly, because these are regulations that we think should be
    seriously considered by your Committee and by Congress for
    review under the Congressional Review Act.
        Also, we strongly support the passage of Congressman
    Nadler's proposed legislation, which could deal with some of
    these problems.
        Very briefly, the Endangered Species Act waiver, which
    waives the Endangered Species Act requirement for the Pentagon,
    for the Energy Department, for all other government agencies to
    engage in consultations with National Marine Fisheries and Fish
    and Wildlife Service when they are going to engage in an action
    that is going to harm one of these species.
        Number two, the hazardous waste regulation, which exempts
    three million tons of most highly toxic hazardous waste from
    regulation under RCRA. It is clear that this is going to
    significantly damage public health if we allow this to
    continue.
        Number three, the CAFO rules. CAFOs are factory farms, the
    worst single polluters of water in America today. They produce
    500 million tons of waste every year.
        Smithfield Foods has one facility, called the Circle Four,
    in Utah, which has 850,000 hogs. It produces more waste than
    all the human beings in New York City combined every day.
        New York City has spent about $20 billion building sewage
    treatment plants to treat its waste so that it doesn't pollute
    the Hudson River and its environs. Smithfield simply dumps that
    waste into the environment. It is illegal. They have been able
    to corrupt public officials in order to get away with this.
        They cannot produce a pound of pork or a pound of bacon or
    a pork chop cheaper and more efficiently than a family farmer,
    a traditional farmer, unless they break the law, unless they
    shift their cleanup costs to the public. Their cleanup costs
    are much greater than those that accrue on traditional farms.
        The ``Raleigh News and Observer,'' in 1993, won the
    Pulitzer Prize for a five-part series that showed how factory
    farmers had corrupted virtually every relevant official in the
    state to get them to overlook the pollution from these
    facilities.
        Their whole business contemplates illegal behavior and
    their capacity to avoid enforcement of that. They were easily
    able to do that during the Bush administration, which was
    willing to overlook this illegal and corrupt behavior that was
    damaging communities, the environment, putting family farmers
    out of work.
        Now, the Bush administration has institutionalized that
    lack of enforcement through this bill.
        Finally, the buffer zone rule, and this, to me, is the most
    important one, Mr. Chairman. This is the rule that is the last
    barrier that imposed any controls at all on mountaintop
    removal.
        A couple of weeks ago, I flew over to Cumberland and I
    saw--if the American people could see what I saw in West
    Virginia and eastern Kentucky, there would be a revolution in
    this country.
        We are literally cutting down the Appalachian Mountains,
    these historic landscapes where Daniel Boone and Davy Crockett
    roamed, with these giant machine called draglines, which are 22
    stories high.
        I flew under one of them in a Piper Cub. They cost a half
    billion dollars and they practically dispense with the need for
    human labor, which indeed is the point.
        I remember a conversation I had with my father when I was
    14 years old, during the 1960's, when he was fighting strip
    mining in Appalachia. And he said to me, ``They are not just
    destroying the environment, but they are permanently
    impoverishing these communities, because there is no way that
    they can regenerate an economy from these landscapes that are
    left behind.''
        And he said, ``They are doing it so they can break the
    unions,'' and that is exactly what they did. When he told me
    that, there were 140,000 unionized mine workers in West
    Virginia digging coal out of tunnels in the day. Today, there
    are fewer than 11,000 miners left in the state. Almost none of
    them are unionized, because the strip industry isn't--they are
    taking more coal out of West Virginia than they were in 1968.
        The only difference is back then, at least some of that
    money was being left in the state for salaries, for pensions,
    for reinvestment in the communities. Today, it is all going
    straight up to Wall Street to the corporate headquarters of
    Massey Coal, Peabody Coal, Arch Coal, and the big banking
    houses, like Bank of America and Morgan, which own these
    operations.
        Ninety-five percent of the coal in West Virginia are owned
    by out-of-state operations, mainly on Wall Street. They are
    liquidating the state for cash, using these giant machines,
    2,500 tons of explosives that they detonate every day in the
    state of West Virginia, the equivalent of a Hiroshima bomb once
    a week.
        They are blowing the tops off the mountains to get at the
    coal seams beneath. Then they take the rock, debris and rubble
    and they plow it into the adjacent river valley.
        The bury the rivers, they flatten the hollows. They have
    already buried, according to EPA, 1,200 miles of rivers and
    streams. They have cut down the 460 biggest mountains in West
    Virginia.
        By the time they get done, within a decade, they will have
    flattened an area the size of Delaware.
        It is all illegal. You cannot, in the United States, take
    rock, debris and rubble and dump it into a waterway without a
    Clean Water Act permit, and you could never get a permit to do
    such a thing.
        So we sued them, the environmental community, Joe Lovett,
    Kentuckians for the Commonwealth, in front of a conservative
    republican Federal judge, Judge Charles Haden. And Judge Haden
    said the same thing I did.
        In the middle of that hearing, Judge Haden questioned the
    Corps of Engineers colonel who had allowed all this to happen
    and said to him, ``This is obviously illegal. How could you let
    this happen?'' And the Corps colonel said to him, ``I don't
    know, Your Honor. We just kind of oozed into it.''
        And Judge Haden ended that hearing by giving us a complete
    victory by banning all mountaintop mining, saying it is illegal
    from day one and it is illegal today, and he enjoined all of
    it.
        Two days from when we got that decision, lobbyists for
    Massey Coal and Peabody Coal met in the back door of the
    Interior Department with Stephen J. Griles, Gale Norton's first
    deputy chief, who was a former lobbyist for Massey Coal and
    Peabody Coal, and who is now serving a 10\1/2\ month jail
    sentence, and they rewrote one word, the interpretation of one
    word of the Clean Water Act, the definition of the word
    ``fill,'' to change 30 years of statutory interpretation to
    effectively overrule Judge Haden's decision and allow
    mountaintop mining, allow the disposal of rock, debris, rubble,
    garbage, any solid material into any water body of the United
    States in all 50 states today.
        One barrier that we were left with after this destruction
    that happened from the Interior Department because of Griles
    was the stream buffer rule that said you can't dispose of the
    stuff within 100 feet of a perennial or ephemeral stream.
        These are the most important streams, because they feed the
    whole watershed.
        That law was left in place. And as a favor to the industry,
    in the last days of the Bush administration, this White House,
    which was the indentured service for the worst of the worst of
    the worst of these polluters, simply got rid of that rule, the
    last barrier to cutting down the entire Appalachian Mountains.
        Let me just say one final thing. During the Pleistocene ice
    age, where my home is in Mount Kisco, New York, it was under
    two miles of ice and the rest of North America was turned into
    tundra, with no trees left.
        The last refuge for those trees, they all retreated into
    one place, which was the Appalachian Mountains of West Virginia
    and eastern Kentucky. That is where they survived the ice age.
        And when the ice withdrew, all of the forests in North
    America were reseeded from Appalachia. That is why it is the
    richest forest on earth, the richest ecosystem, temperate
    ecosystem on the face of the earth, because it is the only one
    that survived the ice age.
        And today, these companies, out of greed and ignorance, are
    doing or accomplishing what the glaciers couldn't do, which is
    flattening those mountains and stealing our forests, and this
    Congress ought to do something about it.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Kennedy follows:]

                  Prepared Statement of Robert F. Kennedy, Jr.

                                  ATTACHMENT 1

                                 ATTACHMENT 2

                                   __________
        Mr. Cohen. Thank you, Mr. Kennedy.
        I will normally ask questions first, but I am going to
    reserve that right and yield to other Members who might have
    questions.
        Mr. Franks, do you have questions? Ranking Member Franks?
        Mr. Franks. Mr. Chairman, I may have questions in a moment.
        I am going to, if it is all right, yield to my colleague,
    Steve King, here first.
        Mr. King. Thank you, Mr. Franks, our Ranking Member, and,
    Mr. Kennedy, for your testimony.
        I regret that I have not read deeply through a lot of the
    material that you have put out, but it is clear to me that you
    put a lot of material out. It is also clear to me that you have
    made a visit or two to Iowa.
        I just reflect back upon a meeting in Clear Lake a few
    years ago and a quote that I recall would be--I believe,
    actually, this would be exact--``Large scale hog producers were
    a greater threat to the United States and democracy than Bin
    Laden's terrorist network.''
        Is that an accurate quote?
        Mr. Kennedy. I don't know if that is accurate, but I
    believe it and I support it. And the reason for this is the
    same reason Teddy Roosevelt said it.
        Teddy Roosevelt said this Nation would never be destroyed
    by a foreign enemy, but he said that ``Malefactors of great
    wealth, working from within, would erode and subvert American
    democracy.''
        And if you look, again, not from me, but from the ``Raleigh
    News and Observer,'' a five-part series on ``Boss Hog,'' it
    shows how this industry meticulously subverted and corrupted
    virtually every relevant public official in the state.
        Mr. King. Mr. Kennedy, excuse me, I have got a lot of
    questions to ask. But I think----
        Mr. Kennedy. Because this----
        Mr. Cohen. Let the witness answer the question, Mr. King,
    please.
        Mr. Kennedy. I am answering your question, sir. And you
    asked me an inflammatory question, and I am giving you an
    answer for it.
        There are laws now----
        Mr. King. Your statement, Mr. Kennedy, you are telling me
    that your statement is an inflammatory question when I asked if
    you can confirm it.
        Mr. Kennedy. I am telling you that I can confirm it, and I
    am explaining it to you so that you understand what I am
    talking about.
        Mr. King. I would be happy to introduce your op-ed into the
    record, if you could just suspend for a moment.
        Mr. Cohen. If we cannot have a colloquy here--Mr. Kennedy,
    you go ahead and respond and if we need extra time for Mr. King
    to ask questions, we will provide it to Mr. King, to be fair to
    him.
        But I think it is fair that when the witness is asked a
    question, he be allowed to respond.
        Mr. Kennedy, proceed.
        Mr. Kennedy. Today, in 14 states, there are laws that make
    it illegal to criticize food from factory farms. Now, you may
    say this is anti-American. I think it is. I think it violates
    our first amendment rights.
        And you may say this couldn't be true, but ask Oprah
    Winfrey, who sent for a 6\1/2\ week jury trial to Texas,
    because she criticized, on her show, factory farm food.
        Do you think that is American? Do you think that that is
    democratic?
        And three state legislatures have now passed laws that make
    it illegal to photograph a factory farm or a factory farm
    animal from a public road. And Maryland and North Carolina,
    many other states, have laws that make it illegal for the
    public to learn where factory farms are located, even though
    the government has this information.
        This is an assault on our democracy. Wherever you see
    environmental injury, you will also see the subversion of
    democracy. And that is what I talked about when I made that
    statement.
        Osama Bin Laden has no power over this country to make us
    change our laws. We do. And the biggest threat to our country
    is if legislatures, and particularly those in the possession of
    large businesses, begin restricting our rights at home to do
    what the Constitution says that we can do.
        Osama Bin Laden can't make us alter our own Constitution,
    but that is happening in this country every day because of the
    power of this industry.
        Mr. Cohen. Thank you, sir.
        Mr. King, you are recognized, and we will give you the time
    that you need for questions.
        Mr. King. Thank you, Mr. Chairman.
        And consistent with Mr. Kennedy's response, I have in my
    hand an op-ed dated Tuesday, May 14, 2002, in The Des Moines
    Register, titled, ``I'm serious: Hog lots threaten democracy,''
    by our witness, Mr. Robert F. Kennedy, Jr., and it is part of a
    public document, but I would ask unanimous consent to enter
    that into the record, and I think that does flesh out the
    statement that he has made.
        I would also ask----
        Mr. Cohen. Without objection.
        [The information referred to follows:]

        Mr. King. Thank you. And I would also ask that a Des Moines
    Register article dated April 10, 2002, that is a news article
    that stipulates some of the same dialogue that took place in
    Iowa back then, unanimous consent to enter it into the record,
    as well.
        Mr. Kennedy. I am happy to have that entered in the record
    with the proviso that the information in that article--that
    article is not necessarily true.
        Mr. Cohen. The articles speak for themselves.
        Mr. Kennedy. It was taken from representatives of the Pork
    Producers Council and the American farmer.
        Mr. King. Point of order, Mr. Chairman.
        Mr. Cohen. Without objection, the statement will be allowed
    in and the statement only speaks to what----
        [The information referred to follows:]

        Mr. King. Point of order, Mr. Chairman.
        Mr. Cohen. Yes, sir.
        Mr. King. Is the witness allowed to object to a unanimous
    consent request?
        Mr. Cohen. Well, no, he can't and he didn't. He did, but it
    wasn't permitted, and he is out of order. But we understand
    that and that he didn't understand necessarily the rules on
    admitting something into the record, because it doesn't stand
    for the veracity of what is contained therein.
        Thank you, Mr. King. You are recognized.
        Mr. King. Thank you, Mr. Chairman, I appreciate that.
        And I would be very happy to go deeply into this hog issue,
    and I will just make this statement into the record, and that
    is that on a per head basis, today's hog production in Iowa and
    around the country is far, far more favorable to the
    environment than anything we have ever had before and it gets
    better every single day.
        Our water is cleaner. Our soil is cleaner. We are doing a
    far better job of taking care of that livestock. And we had
    more hogs in Iowa in 1952 than we have today, and they are far
    safer today than they were in 1952.
        But I think the point----
        Mr. Kennedy. You have got more family farmers----
        Mr. King. I will get to you with a question, and you will
    have an opportunity to answer, Mr. Kennedy.
        I think the point that the panel is going to be interested
    in is not so much debating the hog industry in Iowa, although I
    think----
        Mr. Cohen. Mr. King? Mr. King?
        Mr. King [continuing]. It is an industry----
        Mr. Cohen. Mr. King, for the record, without objection, you
    have an additional 3 minutes, if you so desire.
        Without objection.
        Mr. King. Thank you, Mr. Chairman.
        But I think the point that this panel is going to be
    interested in is the statement that the hog industry has
    corrupted public officials. I think at one point you said every
    public official in the state that had effect on this.
        And I think it impugns all elected public officials, and I
    think that is a very broad statement, and I think your record
    of making very broad statements, I think, causes us to take a
    look at the rest of your testimony here today with a bit of a
    jaundiced eye.
        And I will give you an opportunity to respond to that.
        Mr. Kennedy. What I said was that the ``Raleigh News and
    Observer'' concluded that--and with strong documentation, a
    five-part series that won the Pulitzer Prize--that every
    relevant public official in the state of North Carolina had
    been corrupted by that industry.
        I urge you to go read that article.
        Now, what happened, once they did it in North Carolina,
    they dropped the price of hogs to $0.08 a pound at kill weight.
    At that point, states like Iowa, like your state, where the
    public officials could not be that easily corrupted, had to
    adopt the same system or they would have been out of business.
        But it has put out, as you probably know, almost 100,000
    independent hog farmers in Iowa. It put out 28,700 independent
    hog farmers in North Carolina.
        Mr. King. Again, I am going to take it from that response
    that you do agree with the statement that every public official
    in the state had been corrupted by this process.
        Mr. Kennedy. I said that that is what the ``Raleigh News
    and Observer'' concluded.
        Mr. King. Since you have introduced that into the record, I
    am going to take it that you are endorsing that statement, and
    you believe it.
        Mr. Kennedy. I am saying that that--I didn't investigate
    every public official in the state. I am saying that is what
    the ``Raleigh News and Observer'' concluded.
        Mr. King. And I will just allow the panel----
        Mr. Kennedy. They won the Pulitzer Prize for it, and maybe
    not every single one was corrupted, I can't tell you.
        Mr. King. There may be some exceptions.
        Mr. Kennedy. I didn't do the report.
        Mr. King. Thank you. And is it also your belief that manure
    is a hazardous toxic waste?
        Mr. Kennedy. Manure, when it is applied at agronomic rates
    as a fertilizer has a beneficial use, but when it is applied
    beyond agronomic rates, then it becomes a poison to the land
    and the water and people.
        Mr. King. And you understand, Mr. Kennedy, that we do have
    regulations that limit the rate of application so that it is
    not a pollutant.
        Mr. Kennedy. If you think those regulations are enforced,
    if you think those regulations are effective, I beg you to come
    to North Carolina with me and look around. Come even to Iowa
    and look around.
        That is what the captive agencies are saying, and it is
    complete baloney.
        Mr. King. Mr. Kennedy, I would remind you that I live in
    the middle of this and the wind blows in four directions and
    the water runs downhill, and I have lived here all my life----
        Mr. Kennedy. I would ask you----
        Mr. King [continuing]. And I do not see the description you
    described to the panel, and I have got to take exception to it.
        Mr. Kennedy. I would ask you how much in contributions you
    receive from the Farm Bureau and from the Pork Producers
    Council.
        Mr. King. I would have to look. I would ask you how you got
    into this industry in the first place.
        Mr. Kennedy. How did I get into it?
        Mr. King. Yes.
        Mr. Kennedy. Because they are the worst polluter in
    America.
        Mr. King. Weren't you assigned to do some public service
    that got you started in this, Mr. Kennedy?
        Mr. Kennedy. You mean in protecting the environment? No.
        Mr. King. I mean assigned to 800 hours of public service
    that was your gateway into this Hudson River issue.
        Mr. Cohen. Time has expired.
        Mr. Kennedy----
        Mr. King. You impugn my character with your question, Mr.
    Kennedy, and I don't question yours.
        Mr. Kennedy. No. If you are asking me how I got into----
        Mr. Cohen. Time has expired, and I am afraid, while this
    was very interesting, we are not going to be able to continue
    it. It does conjure up all thoughts of Barry Goldwater and
    extremism in the defense of liberties is no vice, moderation
    should be no virtue.
        Mr. Watt, do you seek recognition?
        Mr. Watt. Yes, sir.
        Mr. Cohen. You are on.
        Mr. Watt. Thank you, Mr. Chairman. I appreciate the
    Chairman having this hearing.
        This is a classic case where we have not only gone into the
    weeds, but into the hog farms, which gets us back pretty much
    to where Mr. King ended here, because he said there were
    regulations in effect and Mr. Kennedy said those regulations
    are not being followed.
        The hearing, interestingly enough, is about whether the
    regulations even will be in effect, because when we don't
    protect ourselves from these kind of midnight rulemaking
    procedures, then we have the prospect at least that not even
    the regulations will be in effect.
        There will be a new set of regulations that have wiped out
    the past ones in the middle of the night.
        So for us to focus on any one of the particular--not that
    this testimony hasn't been interesting and entertaining, and I
    am sure there are other people here who will focus on other
    rules that were either changed or not changed at the last
    minute, the real policy question we are confronted with is how
    can we protect ourselves against this kind of midnight
    rulemaking.
        And that really has no substantive content to it. It is a
    policy content, because sometimes when we protect ourselves
    against midnight rulemaking, it will be protecting ourselves
    against rule changes that we would like to have made and
    sometimes it will be protecting ourselves against changes that
    we would not like to have made.
        And on that score, I think I am fully--although I haven't
    looked at the details of Mr. Nadler's bill, I am fully
    supportive of the concept of his bill and would just give one
    illustration where there was bipartisan agreement that the
    rules should not be changed.
        I happen to sit on the Financial Services Committee and
    chaired the Oversight Subcommittee, and we had a hearing about
    the real estate procedures, closing process.
        The rules that were proposed right at the end of the Bush
    administration, Republicans--there wasn't a single person who
    showed up who supported the changes that were being proposed,
    either Republican, Democrat, conservative, liberal however you
    wanted to categorize them.
        Everybody testified against the changes that were being
    proposed and, sure enough, in the dark of night, at a time when
    it appeared that the Administration couldn't do--the new
    Administration wouldn't be able to do anything about it, except
    in a very limited way by going within 60 days and, under the
    Congressional Review Act, going through something as difficult
    as those rules and trying to understand them, there was no way
    to reverse them.
        So the concept, the policy of having a more transparent
    process I hope Mr. King isn't disagreeing with, even though he
    might want to go at the witness on the weeds or the hogs or
    whatever it is that he was questioning.
        The real policy question is should an Administration that
    is on the way out, Republican or Democrat, because there will
    be a Democratic administration at some point, on the way out,
    remember that, is it a good policy practice to allow them just
    willy-nilly to change the rules that have been in play for so
    long?
        And I hope there is nobody here who disagrees with the
    policy that that is a bad idea, and I would have to say it is a
    bad idea whether--regardless of the content of what the new
    rule is and regardless of whether it is an outgoing Republican
    administration or an outgoing Democratic administration.
        That is what we need to be dealing with in this Committee.
        I didn't ask Mr. Kennedy any questions, but I hope you will
    just say you agree with that or you don't.
        Mr. Kennedy. The caveat I have about that is that under the
    current regimen, the way that the regulatory process works,
    there are so many obstacles to big regulations being passed
    that it takes--in fact, I had a lawsuit against the Federal
    Government, against the EPA, in which this became a contention
    and was settled by the court.
        And they said that if a regulatory agency jumps through all
    the hoops that it is supposed to do from the beginning, from
    the original notice and comment to the end of the regulatory
    process, the average regulation takes about 8 years to get
    through the regulatory process.
        Mr. Watt. But you can't have this both ways, Mr. Kennedy.
        Mr. Kennedy. No. All I am saying----
        Mr. Watt. And as a policy matter, it is hard for us to be
    on both sides of this issue.
        I understand the concern about the length of time that it
    takes to do rulemaking, but if every Administration is
    operating under the same set of procedures, they have to get
    through that process either far enough in advance of the time
    so that the new incoming Administration--or they shouldn't be
    able to do it at midnight on January 19, when they are going
    out on January 20.
        Mr. Kennedy. Here is the thing, Congressman, is that during
    the Clinton administration, many of these--the Administration
    tended to go through all of those steps carefully in the
    regulatory process and, at the end, they ended up with a big
    balloon of regulations that they had done through the last
    couple months.
        But in this Administration, a lot of these midnight regs--
    the regulatory process just began in May or June or July or
    August and in one case, the case of the Endangered Species Act,
    they received tens of thousands of comments.
        The comment reviewers had an average--had to review an
    average of nine comments per minute in order to get the
    regulations out.
        Also, they weren't doing what they were supposed to do.
    These are genuine midnight regulations that didn't receive----
        Mr. Watt. I think we are generally on the same side of the
    issue.
        Mr. Cohen. Time has expired.
        Mr. Watt. I just want to be sure that neither Democrats nor
    Republicans can game the regulatory system by doing this. That
    is the point I am trying to make.
        I yield back.
        Mr. Cohen. Thank you, sir.
        The gentleman concurs with the Ranking Member and the Chair
    in that this should be bipartisan.
        Are there others seeking recognition to question Mr.
    Kennedy?
        Mr. Franks. Mr. Chairman?
        Mr. Cohen. Ranking Member Mr. Franks?
        Mr. Franks. Thank you, Mr. Chairman.
        Mr. Chairman, first of all, I know that a Committee like we
    have is often difficult to keep bipartisan, but I think I heard
    some common ground in what Mr. Watt was saying.
        It is one of those rare moments that I want to express a
    sense of gratitude to him for that, because I know that he was
    the Ranking Member of a Committee that oversaw or essentially
    handled a special project, the Administrative Law Process and
    Procedure Project for the 21st hcentury, and I think that they
    came up with a number of very good proposals.
        And I think that he has hit on the central point here. It
    is that a lot of the conservatives had equally strenuous policy
    criticisms that we leveled against the Clinton administration
    for these midnight regulations.
        And one can debate whether these are good or bad policy
    things, but I do think that Mr. Watt is correct in that he is
    suggesting that regardless of what the policy is, we have to
    ascertain what the process should be and it, of course, has to
    be done within the constraint of the Constitution and some,
    hopefully, reasonable fashion that whoever is in the White
    House can move forward with their constitutional duties and, at
    the same time, it would be consistent, and at least everyone
    can agree on the process.
        So with that, thank you, Mr. Watt.
        Mr. Kennedy, I know that you have a number of policy
    concerns with the Bush administration's late-term regulations.
    They call them the midnight rules, I guess, if that is what
    everyone wants to call them. I hate to use that terminology.
        But can you, however, identify for us the key
    administrative process concerns that you have about the way in
    which all presidential Administrations go about promulgating
    so-called midnight rules?
        Mr. Kennedy. Well, I think you put your finger on the key
    issue, Congressman Franks, which is that there is a process in
    place and that process, if you--if that process is complied
    with, you can still pass a regulation on January 15 or January
    17, and I don't consider that a midnight regulation, if they
    have gone through the process of notice and comment and
    adequately reviewed those comments.
        It could still be a bad regulation, but at least it is
    complied with the process that is out there.
        The problem with these regulations is they didn't comply
    with the process. They skirted the process. They took
    shortcuts. They did things that they weren't supposed to do in
    order to get these out the door, because they were essentially
    gifts to these industries at the last minute.
        Mr. Franks. Mr. Chairman, I have to suggest to you that
    apart from the discussion of process, that--and I always hate
    it when we say, ``Well, they did it or they did it,'' because I
    don't think that is a good argument here.
        I think we should have principle persuasion be our
    watermark here. But I have to contend that the Bush
    administration was certainly as diligent in trying to get input
    and do these things as the other Administrations were.
        Now, again, that is not the best argument in the world,
    because I am not sure that any of the Administrations perhaps
    would have gotten all the input and specificity that some of us
    might wish, but the reality is that the Bush administration
    certainly has no apologies to offer to the Clinton
    administration or the Carter administration related to how they
    moved forward with this process.
        You can attack the policy for partisan reasons or for
    whatever reasons, whatever your convictions might be, but the
    Bush administration certainly more than comported with the
    trends of the past.
        And so I think our focus should be on reforming this
    process, and then we can debate the policy in the midst of all
    of that.
        So with that, Mr. Chairman, I would yield back.
        Mr. Cohen. Thank you, Mr. Franks.
        God has given us this place in 2009 and so this is the
    Administration we have to look to. But you are right, we should
    look prospectively at all Administrations and that two wrongs
    don't make a right and all those other things.
        Mr. Kennedy, what are the particular rules that came into
    place in the last 90 days or so that are most dangerous to the
    environment?
        Mr. Kennedy. The rules that I mentioned, which are the
    buffer zone rule that got rid of the 100-foot buffer around
    streams; the hazardous waste exemption rule, this is the rule
    that exempts hazardous waste that can be burned as fuel, that
    can be burned in incinerators, it is about three million tons
    of highly toxic hazardous waste every year.
        What we know about that waste is that about 80 percent of
    the people who handle that, now they are exempt from all the
    requirements of RCRA that they safely handle it, that they
    safely transport it, that they inventory it and document it;
    that the people who transport that, 80 percent of them have
    been cited in the past for violating the laws in this area.
        For example, trucking companies, small trucking companies
    that take a load of PCBs and instead of bringing them to the
    dump and documenting them, they just dump them out on the road
    or something like that.
        And essentially all of this waste, anything that
    essentially can be burned in an incinerator, is now exempt from
    the requirements of RCRA.
        Under the Endangered Species Act, another regulation which
    is very, very damaging, which we think, again, is one of the
    ones we have selected that ought to be reviewed under the
    Congressional Review Act.
        Normally, if the Department of Defense takes an action that
    is going to endanger a species, that is going to further
    endanger a listed species, they have to do a consultation with
    the Fish and Wildlife Service and with the Corps and with
    NIMPs.
        In the past, there have been 70,000 of these consultations
    done and only 5 percent of the actions have been altered or
    stopped. So it is not a huge administrative burden. It doesn't
    stop the agency from doing things that it wants to do, but it
    plays a valuable role.
        Now, what the new rule says is that they don't have to do
    that consultation. They can do an internal evaluation about
    whether or not there is going to be a problem and then just go
    ahead and do it, without consulting, without any public notice,
    without consulting any of the other agencies of government.
        Again, the CAFO rule, the factory farm rule is another
    critical one.
        One of the midnight rules was an oil shale leasing rule
    that waives any kind of sensible or just fundamental controls
    for oil shale drilling on 20 million acres of public land in
    the western states.
        We don't know what the oil shale drilling is going to look
    like. We don't know what the industry is going to look like.
    The industry doesn't exist today.
        We ought to be able to look at the industry, say here are
    the best available technologies, let us do this. Instead, the
    new regulation just says here are two million acres and do
    anything you want with it and we are not going to have any
    Federal controls over what you do.
        It doesn't make any sense.
        Mr. Cohen. Let me ask you this. I understand the policy
    considerations that you have and that we share. But are you
    familiar with procedural defects in the implementation of any
    of these regulations that we should specifically look at and in
    terms of reforming or repealing these regulations if there was
    due process denial?
        Mr. Kennedy. Well, yes. The endangered species regulation,
    for example, and this is in the testimony, received something
    like 150,000 in the narrow comment period that they opened and
    then each comment--some of these comments were 20 or 30 pages
    long.
        They were very well thought out. They were filed by
    interest groups all over the country.
        These comments were given, on average--the reviewers who
    were charged with reviewing them were given, on average, a
    minute to review every nine of those comments.
        Some of those comments could have been 20 or 40 pages long
    and they had to review nine a minute.
        So this is not what we think of when we think of American
    Democracy, where there is an opportunity to----
        Mr. Cohen. Was there a problem there with the regulatory
    review process that is in law or, in fact, there is a----
        Mr. Kennedy. No, there is not.
        Mr. Cohen [continuing]. Process that was used?
        Mr. Kennedy. Again, I would focus less on the process than
    on looking at some of these regulations and how they were done
    rather than reforming the whole regulatory review process,
    which I think is burdensome enough to pass the regulations.
        I would hesitate to put more burdens on passing of
    regulations. I think that it takes 8 years at this point to
    pass a regulation if you do it properly.
        What I would do is look at these specific regulations, how
    they were done, and many of this violated the current
    regulatory process in order to get passed, and I would take a
    look at that.
        That is outlined in my testimony, and I assume the
    testimony of the other panelists, that they experience the same
    kind of problems with their regulations, where there were
    shortcuts taken, where there were regulatory procedures that
    were ignored, and that these regulations just slipped through.
        They literally were midnight regulations. They weren't just
    regulations that happened to be passed during January or
    December. They were literally jammed through and ignored the
    regulatory process.
        Mr. Cohen. Does another Member of the panel seek
    recognition?
        Mr. Coble. Mr. Chairman?
        Mr. Cohen. Mr. Coble?
        Mr. Coble. Move to strike the last word.
        Mr. Cohen. Without objection.
        Mr. Coble. It is good to have the panel with us.
        Is Mr. Watt still here?
        Mr. Watt, I am going to revisit briefly the weeds and the
    hog farm just a minute.
        Mr. Kennedy, by the way, good to have all of you here.
        Mr. Kennedy, I realize you were quoting from the article,
    but I take umbrage with the conclusion that every elected
    official in North Carolina had been corrupted by that issue.
    But I realize that was not your conclusion.
        Mr. Watt. Would the gentleman yield?
        Mr. Coble. Yes, sir.
        Mr. Watt. You all are ignoring one word. It was every
    ``relevant'' government official.
        I take the word ``relevant'' to be the people who were
    actually impacting that process.
        I didn't take it personally. I am from North Carolina, too,
    and I hope the Chairman won't take it personally. Not that he
    is irrelevant, but I don't think he is relevant in the sense
    that they were talking about.
        Mr. Coble. I want to be heard on that matter.
        Mr. Chairman, this has been an enlightening hearing thus
    far. I think one of the issues that we need to--well, strike
    that. Let me say it a different way.
        You, Mr. Chairman, and the Ranking Member both indicated
    that the Bush administration did not create a case of first
    impression about midnight regulation. Many Administrations have
    done it, and I am not really that bothered by it, unless the
    process abrogates or undermines the Administrative Procedures
    Act.
        Now, that brings it right into focus, I think, if that is,
    in fact, the case.
        Mr. Kennedy, do you have any specific concerns about what
    midnight regulations that may have erupted, for more of a
    better way, in the Bush or Clinton administrations, that did
    perhaps undermine the process?
        Mr. Kennedy. Yes, sir. And again, that is outlined in
    detail for each of these regulations in my testimony, in the
    submitted testimony, the specific ways that the Administrative
    Procedure Act was undermined in order to jam through these
    regulations.
        That is why we call the midnight regulations. Listen, on
    NRDC's Web site, we have 460 just bad regulations,
    environmental rollbacks, listed there.
        We are not targeting those. We think those were bad, but
    they went through the administrative process.
        The midnight regulations that we are talking about here
    were regulations that basically skirted the process in order to
    be jammed through during the last 60 days.
        So all of them have that kind of problem.
        Mr. Coble. Well, I thank you for that.
        Mr. Chairman, I still don't believe this is a crisis. It
    may be a problem, but I don't think it is a crisis. And I look
    forward to seeing what develops subsequent.
        And I yield back.
        Mr. Cohen. Thank you, Mr. Coble.
        If there are no other Members seeking recognition--Mr.
    Franks?
        Mr. Franks. Mr. Chairman, just briefly, the one point I
    would make, a lot of these regulations take 8 years at the
    present circumstance.
        So how in the world can a President that is going to be
    here 8 years do anything but midnight regulations?
        Mr. Kennedy. Well, again, when I use the term ``midnight
    regulations,'' I am not using the term to refer to regulations
    that went through that regulatory process over the 8 years and
    then happened to be passed in the last month of his
    Administration.
        I am using the term to refer to regulations that were
    conceived and passed during the last 2 months and really
    skirted that whole administrative process.
        I think the regulatory process takes much too long, but, in
    fact, that is what happens. And if you go through that process,
    I have no complaint. I might not like the regulation, but I
    have no complaint, from an administrative point of view.
        Mr. Cohen. Mr. Kennedy, we thank you for your time.
        If there are no other questions, and with deference to
    Wilson Pickett, we will continue to refer to it as midnight
    regulations.
        You are excused, and I appreciate your time and your
    attendance.
        Mr. Kennedy. Thank you, Chairman.
        Mr. Cohen. For the rest of the panel, we will start. We
    thought we had votes 40 minutes ago, but Congress operates in
    its own.
        Our second witness will be Dr. Gary D. Bass. Dr. Bass is
    the founder and executive director of the OMB Watch, a
    nonprofit research and advocacy organization that promotes
    greater government accountability and transparency and
    increased citizen participation in public policy decisions.
        He is well known for assisting nonprofit organizations in
    better understanding Federal rules affecting their groups and
    constituencies and, in 2003, created NPA Action as a one-stop
    Web site on building nonprofit advocacy.
        He has coauthored several books. ``Seen, But Not Heard'' is
    the book in 2007; ``Strengthening Nonprofit Advocacy,'' which
    was published by the Aspen Institute.
        Prior to founding OMB Watch, Dr. Bass was president of
    Human Services Information Center, where he wrote other books
    and numerous articles on human services issues and published
    the ``Human Services Insider,'' a bimonthly newsletter on the
    politics of Federal human services programs.
        He, most notably, has worked on the preparation of the
    first annual report to Congress on implementation of IDEA,
    education for all handicapped children, and served as special
    assistant to Wilbur Cohen, then chair of Michigan's governor's
    task force on the investigation, prevention of abuse in
    residential institutions.
        Our third witness will be Lynn Rhinehart. Ms. Rhinehart is
    associate general counsel for the AFL/CIO, a federation
    representing 55 affiliated unions and 10 million working men
    and women, and has been in that position since 1996.
        Among her responsibilities is the coordination of the
    Federation's legal work on occupational safety and health
    issues, advising the Federation's health and safety department
    on legislative and regulatory issues pertaining to safety and
    health.
        Ms. Rhinehart clerked for 2 years for the Honorable Joyce
    Green on the U.S. District Court for the District of Columbia,
    and from 1987 to 1990, she worked as a professional staff
    member of the Senate Subcommittee on Labor, chaired by the late
    Howard Metzenbaum.
        She has published legal writings and has served as
    contributing author to Occupational Safety and Health Law, the
    leading treatise on workplace safety and health laws.
        Our fourth witness is Veronique de Rugy, senior research
    fellow at the Mercatus Center. She was previously a resident at
    the American Enterprise Institute, a policy analyst at the Cato
    Institute, and a research fellow at the Atlas Economic Research
    Foundation.
        Her research interests include the Federal budget, homeland
    security, tax competition, and financial privacy issues.
        Coauthor of ``Action ou Taxation,'' published in
    Switzerland in 1996; currently on the board of directors of the
    Center for Freedom and Prosperity; previously, director of
    academic programs at the Institute for Humane Studies-Europe
    and France.
        And our fifth witness is Mr. Michael Abramowicz. He
    specializes in law and economics, spanning areas including
    intellectual property, civil procedure, corporate law,
    administrative law, and insurance law at The George Washington
    Law School.
        He has published numerous law reviews, and his book,
    ``Predictocracy: Market Mechanisms for Public and Private
    Decision-Making,'' was published by the Yale University Press.
        Before coming to GW, he was at George Mason School of Law.
    He also has served as visiting assistant professor at
    Northwestern School of Law and associate professor at the
    University of Chicago School of Law.
        And our final witness will be Curtis Copeland, a specialist
    at American National Government at CRS. Dr. Copeland's
    expertise, appropriately relevant to today's hearing, is
    Federal rulemaking and regulatory policy.
        He has previously testified before this Subcommittee as one
    of three CRS experts who are assisting the Subcommittee in the
    conduct of its administrative law projects.
        His contributions to the project are deeply appreciated.
        Prior to joining CRS, he held a variety of positions at the
    Government Accountability Office over a 23-year period.
        I thank all the witnesses for being here and for
    acquiescing to Mr. Kennedy's schedule.
        With that, Dr. Bass, will you proceed with your testimony?

    TESTIMONY OF GARY D. BASS, Ph.D., EXECUTIVE DIRECTOR, OMB WATCH

        Mr. Bass. Thank you, Mr. Chairman. And I commend you and
    the Committee for having this hearing, the first out of the
    box.
        I think it is 25 years I have been following regulatory
    issues at the Federal level. This is the first time I have seen
    Congress jump in with great energy, and the last witness
    demonstrated that energy. So very interesting.
        I also want to come back to your opening comment, where you
    described this issue of midnight regulation as one of both
    procedure and substance. And I think we had this conversation
    with Mr. Kennedy's statement where both issues were being
    talked about almost simultaneously.
        The breadth of what we are calling midnight regulations is
    overwhelming, and that is why it creates an emotional issue. It
    touches not only the environmental issues that Mr. Kennedy
    talked about, but it ranges everywhere from issues dealing with
    privacy of workers under the family medical leave.
        It deals with issues all the way over to low income
    families getting health care services under Medicaid. It deals
    with a range of issues of auto protections and consumer
    protections. I am thinking of the extension, if you will, of
    the number of consecutive hours that truck drivers can drive,
    all the way down to privatizing public toll roads.
        The point is this range of midnight regulations is so
    extensive that it has engendered so much energy and emotion,
    because we have got to keep in mind, these rules affect people.
        They affect everyone in this country. And I understand the
    energy that just occurred in the interchange because of that.
        I don't think the issue is the number of rules that fall
    into this midnight regulation category. I think it is an issue
    about what impact it has had on people, and I think it is also
    about a consistent tone that Mr. Kennedy referred to about
    deregulation and serving certain interests.
        I think it is also that it wouldn't matter, in my mind,
    whether it occurred at midnight or whether it occurred at the
    beginning of an Administration or the middle.
        It is the amazing amount of regulation that was put
    together in a short time span that is reason enough for
    Congress to bring congressional oversight to this issue.
        Congressman Watt, in response to your questions, I think
    this is not just an issue about ending midnight regulation.
    Government must continue to do its work, valuable work, to
    protect health, safety, environment, consumer protection, a
    range of services on the regulatory front.
        We might be having a vastly different discussion if the
    Administratione, the last Administration used its waning time
    to address, say, financial regulatory issues or if it addressed
    chemical security or if it addressed food safety.
        It chose to use its time for these other kinds of agendas
    that make it much more troubling and make it harder to
    determine whether or not you should just end midnight
    regulation as a concept.
        We want to keep government working, we want the best of
    government, and we want to weed out the bad parts.
        Having said that, I think the Bolton memo that the Chairman
    referred to at the very opening was nothing more than
    camouflage for a strategy to tie the hands of the next
    Administration in many ways.
        The idea of that memo, although the deadlines all slipped,
    the idea of the memo was to make sure that the rules were
    published, that is, printed in the Federal Register as final,
    and made effective before the next Administration came in,
    thereby tying the next Administration's ability to undo many of
    those rules.
        Mr. Kennedy referred to the endangered species rule as
    almost a mockery of democracy, when he had nine, I had seven
    comments were reviewed per minute. I think that the Bolton memo
    established a speedy process that greatly undermined the
    ability of the agencies to do their work in the right kind of
    manner.
        While it may have not violated law in certain cases, it
    certainly violated the spirit of doing rulemaking in a prudent
    and effective manner.
        So what are we concerned about in the public interest
    world? There are really three categories of these midnight
    rules that we are concerned with--those that are still rules in
    the pipeline. That is the kind that the past Administration put
    a handcuff on one wrist of the incoming Administration.
        The second are rules that got published as final rules, but
    are not yet effective. That is putting the handcuff on the
    other wrist, too.
        Then the third category are final rules that were published
    and are effective, and that is being hogtied.
        Those are the ones--probably a bad choice of words.
        Let me just conclude by saying that the Obama
    administration fixed the first two with the Rahm Emanuel memo
    and the OMB Director Orszag memo, did not address that final
    category and that is what we need to be doing.
        [The prepared statement of Dr. Bass follows:]

                       Prepared Statement of Gary D. Bass

                                   __________
        Mr. Cohen. Thank you, Dr. Bass. Your time is up, and I
    appreciate you not using any of the language that was in the
    Rahm Emanuel memo.
        Ms. Rhinehart, will you begin your testimony?

                     TESTIMONY OF LYNN RHINEHART,
                   ASSOCIATE GENERAL COUNSEL, AFL-CIO

        Ms. Rhinehart. Thank you, Mr. Chairman and Members of the
    Subcommittee. Thank you for the opportunity to testify here
    today and for holding this important hearing.
        Representative Franks, I am sorry about the loss in the
    Super Bowl, but coming from Michigan, with the 0-16 Lions, we
    respect the fact that your team was able to get as far as it
    did.
        To fully appreciate the impact of the Bush administration's
    last-minute rules as they affect working people, it is
    important to contrast what the Administration did do in its
    final months in office with what it didn't do during the 8
    years that the Bush administration was in charge.
        The Bush administration was one that, with rare exception,
    refused to issue significant rules to protect worker health and
    safety, refused to issue rules to improve workers' wage and
    hour protections, except in unusual circumstances.
        The only major wage and hour rulemaking that the
    Administration conducted was to weaken overtime protections for
    workers.
        And then suddenly, this same Administration, ratcheted up
    its rulemaking activity in its final months and rushed out a
    number of rules that are harmful to workers.
        I have described a number of these rules in my written
    testimony, rules on conflicts of interest in providing
    investment advice to workers receiving 401(k)s; rules making it
    harder for workers to take Family and Medical Leave Act leave;
    rules that increase the number of hours truckers can be
    required to drive to the detriment of their health and the
    public's health and safety.
        But in the time that we have available this morning, I
    would like to highlight the Department of Labor's last-minute
    rules on the H2A and H2B visa programs, because I think they
    are illustrative of midnight rulemaking at its worst,
    significant rules that are rushed through the process in a
    deliberate effort to cement an outgoing Administration's policy
    views and hoist them on the incoming Administration, to the
    detriment of workers.
        The H2A and H2B visa programs provide visas to allow
    employers to hire foreign workers on a temporary basis in
    agriculture and seasonal industries, in situations where there
    are not enough workers available for the jobs.
        For years, the system had safeguards in place to protect
    U.S. and foreign workers and to prevent abuse.
        For example, there was a government pre-hire certification
    process through which the Federal Government and state agencies
    verified employers' claims that there were not enough domestic
    workers to do the jobs in question.
        The H2A question had wage standards, other labor
    protections, like the 50 percent rule, that created incentives
    for employers to hire U.S. workers rather than going and hiring
    foreign workers.
        The H2B program was limited to temporary jobs of no more
    than 10 months duration. Under the new rules, ``temporary'' has
    now been redefined as up to 3 years, which is hardly a
    temporary job.
        These protections were eliminated by the Bush
    administration in its new H2A and H2B rules, rules that were
    rushed through the process, issued in December, well after the
    supposed November 1 deadline in the Bolton memo, and allowed to
    take effect in the minimum 30 days allowed by the
    Administrative Procedure Act rather than the usual 60 or more
    days that is typical for significant rules of this nature.
        We are very concerned that these new rules are going to
    disadvantage U.S. workers, drive down wages, and weaken
    protections for both U.S. and H2B and H2A foreign workers.
        They are a prime example of midnight regulations that need
    to be stopped through a congressional rider or through
    disapproval under the Congressional Review Act.
        So what can be done about rules like this?
        As I had mentioned, Congress has tools available through
    legislative riders and through the Congressional Review Act.
    The administrative agencies also have tools available to them
    to undo what they view as problematic rules.
        As other witnesses have commented, of course, the problem
    is that doing new rulemaking takes time. And with respect to
    the H2A/H2B rules and many of these other midnight rules, the
    rules are already in effect.
        And so the clock is ticking and the harmful consequences of
    the new rules are taking hold during the time period that the
    new Administration is doing a new rulemaking to try to undo
    these harmful effects of the rule.
        So there is some urgency to taking action to address what
    are viewed as the most egregious, problematic midnight rules.
        There is also a resource impact on agencies. Every dollar
    spent by agencies undoing a bad rule is a dollar that they
    don't have available to spend on issuing new, good, protective
    rules.
        So we would urge Congress to take this into consideration
    and to make sure that the regulatory agencies have the money in
    hand to both deal with problems left by the prior
    Administration, as well as to get on with the business of
    protecting workers and the public health and environment in
    this new Administration.
        I would like to just make one last comment, which is I
    think you are hearing some agreement here today that not all
    midnight rules are the same. There are midnight rules where we
    might disagree with the policy outcome or the policy decision
    of the former Administration, and there are examples where we
    do, but the rules didn't shortcut the process.
        There were lengthy public comment periods. There was
    lengthy deliberation of the rules. Nobody was really surprised
    that the rules came out. They might have been disappointed, but
    they weren't surprised.
        I would say that the Family and Medical Leave Act rules are
    an example of that. We knew those rules were coming. We don't
    like aspects of them. We don't object to other aspects of them.
    And we hope that the new Administration, working with Congress,
    will address the problems in those rules. But they weren't
    really midnight in the same sense of the H2A/H2B rules, the
    rules on investment advice that I mentioned, that were started
    and finished and made effective in the very few last months of
    the Bush administration.
        That is the category of midnight rules that are of
    particular concern to us and I would think would be of
    particular concern to the Congress.
        Thank you.
        [The prepared statement of Ms. Rhinehart follows:]

                      Prepared Statement of Lynn Rhinehart

        Mr. Chairman and Members of the Subcommittee:
        My name is Lynn Rhinehart, and I am an Associate General Counsel
    for the AFL-CIO, a federation of 55 national unions representing more
    than 10 million working men and women across the United States. Thank
    you for the opportunity to testify today about the negative impact some
    of the Bush Administration's last-minute regulations will have on
    workers, and about the tools available to the Obama Administration and
    Congress for preventing these harms.
        It is not uncommon for outgoing administrations to produce more
    regulations at the end of their tenure.\1\ These rules are sometimes
    the product of lengthy and thoughtful rulemaking proceedings involving
    full public participation, and in that sense, it is hard to label these
    rules ``midnight.'' But the Bush Administration issued a remarkable
    number of final regulations in its final months that were truly
    ``midnight'' rules in the worst sense of the term--last-minute
    regulations on important, substantive issues that were rushed through
    the process, short-circuiting public participation along the way, in
    order to cement the outgoing administration's policy views and impose
    them (at least temporarily) on the incoming administration. The Bush
    Administration issued, or tried to issue, a disturbing number of
    midnight regulations that would undermine worker protections. The Bush
    Administration also took steps to make sure that many of its last-
    minute rules would take effect before President Obama took office,
    making it more difficult for the incoming Obama Administration to
    modify or undo these rules.
    ---------------------------------------------------------------------------
        \1\ T3See ``Cleaning Up and Launching Ahead,'' Center for American
    Progress (January 2009) (finding that regulatory output increased in
    the final years of the Reagan, George H.W. Bush, and Clinton
    administrations); ``After Midnight: The Bush Legacy of Deregulation and
    What Obama Can Do,'' Center for American Progress and OMB Watch
    (January 2009) (finding that the George W. Bush administration's
    regulatory output in 2008 far exceeded prior years).
    ---------------------------------------------------------------------------
        On May 9, 2008, White House Chief of Staff Joshua Bolten issued a
    memorandum to executive agencies that instructed agencies to avoid
    engaging in midnight rulemaking.\2\ The memo directed agencies to
    finish rules by no later than November 1, 2008 (except in extraordinary
    circumstances), and to propose rules no later than June 1, 2008 (except
    in extraordinary circumstances) if the agency wanted to finish the
    rulemaking during the Bush Administration.
    ---------------------------------------------------------------------------
        \2\ See Memorandum to Heads of Executive Departments and Agencies
    from Joshua Bolten (May 9, 2008) (``We need to . . . resist the
    historical tendency of administrations to increase regulatory activity
    in their final months.'')
    ---------------------------------------------------------------------------
        But in the waning months of the Bush Administration, it became
    clear that the Bolten memo was mere windowdressing. Agencies violated
    the Bolten memo with impunity and with no apparent consequences.
        In the final months of the Bush Administration, the Department of
    Labor pumped out numerous proposals and final rules, including many
    rules that undermined worker protections. It is important to understand
    that this activity was carried out by the same Department of Labor that
    for eight years had set a low water mark for failing to pursue
    rulemakings of significance to improve worker protections, except when
    required to act by Congress or as the result of litigation.
        Take, for example, the crucially-important area of worker safety
    and health. After President Bush took office, the Occupational Safety
    and Health Administration (OSHA) removed dozens of important workplace
    safety and health rules from its regulatory agenda and failed to issue
    any significant OSHA regulations except as a result of litigation. Yet
    in the waning months of the Bush Administration, political operatives
    at the Department of Labor tried to rush through a rule on risk
    assessment that would slow down an already-glacial OSHA standard
    setting process and impose new barriers to setting strong rules to
    protect workers from toxic substances on the job.\3\ The proposed rule
    was developed by political appointees at the Department of Labor, not
    career staff. It was never listed on the Department's semi-annual
    regulatory agenda, as required by Executive Order 12866, and literally
    came out of nowhere. In their haste to rush the rule through, DOL
    allowed interested parties only 30 days to comment on the proposed rule
    and denied requests from the AFL-CIO, other labor organizations,
    members of Congress, and public health groups, for an extension of time
    to submit comments and for a hearing on the proposed rule. The risk
    assessment rule also violated the Bolten memo, in that it was proposed
    on August 29, 2008--well after the supposed June 1 deadline for rules
    to be completed during the Bush Administration. Fortunately, the Bush
    Administration and the political appointees at the Department of Labor
    failed in their effort to rush out the secret rule on risk assessment,
    but the rulemaking is a telling illustration of midnight rulemaking at
    its worst. Hopefully the proposal will be quickly withdrawn by the
    Obama Administration.
    ---------------------------------------------------------------------------
        \3\ See 73 Fed. Reg. 50909 (Aug. 29, 2008); see also Testimony of
    Peg Seminario, Director of Safety Health, AFL-CIO, before the U.S.
    House of Representatives' Committee on Education and Labor,
    Subcommittee on Workforce Protections (Sept. 17, 2008), available at
    http://edlabor.house.gov/testimony/2008-09-17-PegSeminario.pdf.
    ---------------------------------------------------------------------------
        Another ``near miss'' involved proposed rules that made changes in
    the Department of Labor's regulations governing the Fair Labor
    Standards Act, which guarantees workers the minimum wage and overtime
    protections. Here again, these rules were proposed by a Department that
    for eight years issued no regulations to strengthen wage and hour
    protections for workers. The Bush Administration's only significant
    wage and hour rulemaking was to change the rules on overtime
    eligibility. Experts estimated that the rules could deprive more than
    six million workers of much-needed overtime pay.\4\ Against this
    backdrop, the Bush Administration's last-minute effort to weaken its
    FLSA rules is that much more objectionable. DOL described the proposed
    rules as merely updating its rules, but in reality, many of the
    proposed new rules would result in less pay for workers. For example,
    the proposed rules would make it easier for employers to take a credit
    against their minimum wage obligations for employee tips and employer-
    provided meals. The rules would make other changes that would enlarge
    the overtime exemption for some employees and limit public sector
    workers' ability to take compensatory time. Fortunately, here again,
    the political operatives at the Department of Labor were unable to rush
    out a final rule, and hopefully the proposal will be withdrawn by the
    Obama Administration.
    ---------------------------------------------------------------------------
        \4\ See Ross Eisenbrey, Economic Policy Institute, ``Longer Hours,
    Less Pay'' (2004) (estimating that DOL's changes to the white collar
    rules could eliminate overtime pay for more than six million workers).
    ---------------------------------------------------------------------------
        The Bush Administration did manage to finalize a number of rules
    that will have harmful consequences for workers. Several examples
    follow. These rules are listed in a chart attached to this testimony,
    along with additional rules issued in the final months of the Bush
    Administration that need to be strengthened (e.g., MSHA rules on Belt
    Air and Refuge Alternatives, and OSHA's rule on vertical tandem lifts).

             H2A Rules: Undermining labor standards for temporary
                         immigrant agricultural workers

        On December 18, 2008--well after the November 1 deadline set forth
    in the Bolten memo--the Department of Labor published final regulations
    that drastically lower wages, labor protections, and housing standards
    for farmworkers, severely limit the ability of U.S. workers to obtain
    employment with H2A employers, and limit the oversight and enforcement
    of the few protections that remain. The new rules replace a pre-hire
    certification process, under which DOL verified an employer's claims
    about labor shortages and wage standards, with a self-attestation
    system where employers merely attest that they have abided by the
    rules. The rules eliminate the current requirement that H-2A employers
    provide free housing that meets certain standards, replacing it with a
    voucher option. And the new rules eliminate the role of state workforce
    agencies in reviewing employers' applications.
        The new H2A rules also abolish the ``50 percent'' rule, which
    required employers to hire qualified U.S. workers who apply for work
    until half of the season has elapsed. The 50 percent rule is an
    important method for granting U.S. workers a job preference over
    imported temporary workers, and creates an incentive for pre-season
    recruitment of U.S. workers.
        In order to ensure that the new rules would take effect before
    President Obama took office, the Bush Administration allowed the rules
    to take effect in 30 days (the minimum amount of time allowed by the
    Administrative Procedure Act), and not the usual 60 days for
    significant rules of this nature. If these new rules are allowed to
    stand--which we hope they are not--agricultural employers can be
    expected to take advantage of the new ``attestation'' system to recruit
    a flood of temporary agricultural workers under potentially
    exploitative conditions, thereby driving down standards for workers in
    the agricultural industry.

            H2B: Undermining labor standards for temporary seasonal
                               immigrant workers

        The Bush Administration also rushed to get new rules in place that
    undermine labor standards for temporary seasonal workers under the H2B
    visa program. As with the H2A rules, the final rules were issued in
    violation of the Bolten memo on December 19, 2008. And, as with the H2A
    rules, the Bush Administration allowed only 30 days--until January 18,
    2009--for the new rules to take effect.
        Like the H2A rules, the new H2B rules eliminate the pre-hire
    certification process at DOL, instead allowing employers to self-attest
    that they need the temporary workers and that there are not enough able
    and qualified U.S. workers available to do the work. The role of state
    workforce agencies in reviewing employer claims with respect to their
    need for temporary workers and the unavailability of U.S. workers is
    eliminated.
        The rules also gut the requirement that H-2B workers be hired only
    into temporary, full-time jobs, thereby opening up many more U.S.
    workers to unfair competition for work. Under the prior regulations,
    DOL considered jobs that lasted up to ten months out of the year as
    ``temporary.'' The new regulations allow employers to bring in H2B
    workers for a ``temporary'' one-time need of up to three years.
        Under the new rules, employers experiencing a long-term need for a
    larger workforce could completely avoid the demands of the domestic
    labor market by serially employing H2B workers, on temporary visas, to
    meet this long-term need. This would drag down wages and working
    conditions for workers in the industry or region as a whole.
        The combination of self-attestation, the elimination of the state
    workforce agencies, and the broadened definition of ``temporary'' will
    further depress wages in the industries in which the H2B program
    operates, to the detriment of U.S. workers. And, because there is an
    endless supply of citizens of foreign countries willing to work in the
    United States, and these jobs are generally classified as unskilled,
    employers'' access to that foreign labor supply means that employers
    have little or no economic incentive to meet the economic demands of
    U.S. workers seeking a better wage. The new H2B rules need to be
    rescinded.

         Erecting Obstacles to Workers Taking Family and Medical Leave

        On November 17, 2008--after the deadline set forth in the Bolten
    memo, but just in time for the regulations to take effect before the
    end of the Bush Administration--the Department of Labor issued final
    regulations under the Family and Medical Leave Act. The new rules make
    it more difficult for employees to take family and medical leave by
    erecting new hurdles and procedural roadblocks, and the rules open the
    door to inappropriate disclosure of information to employers by
    allowing them to have direct conversations with a worker's private
    physician about the employee's need for leave. The changes were opposed
    by women's rights organizations, labor organizations, and others, but
    favored by the business community. The new FMLA rules also contain
    provisions implementing the FMLA amendments to the National Defense
    Authorization Act for FY 2008, Pub. L. 110-181, which provide for leave
    for military families to care for service members. Advocates generally
    supported the military leave provisions.

                     Undermining Trucker and Highway Safety

        On November 19, 2008, the Department of Transportation issued final
    rules increasing the allowable driving hours for truck drivers from 10
    consecutive hours to 11, and shortening mandatory rest times between
    drives. Consumer groups and labor organizations oppose these rules
    because of their adverse impact on driver health and safety, and on
    highway safety. The rules issued by DOT on November 19, 2008 are
    virtually identical to provisions that have twice been rejected by the
    U.S. Court of Appeals for the D.C. Circuit. The final rules took effect
    on January 19, 2009--the day before President Obama took office. A
    petition for reconsideration of the rules, submitted by worker and
    consumer advocates, was denied by DOT before the Bush Administration
    left office.

    Weakening Safeguards Against Conflicts of Interest in Investment Advice

        On August 22, 2008--again in violation of the Bolten memo--the
    Department of Labor's Employee Benefits Security Administration (EBSA)
    issued proposed rules that allow for money managers to give conflicted
    investment advice to workers participating in individual retirement
    account plans such as 401(k)s, even if the money manager stands to
    profit from the advice. Labor organizations, senior citizen
    organizations, members of Congress and others strongly objected to the
    Department's proposal out of concern that it opened the door to
    conflicts of interest by investment advisers. Notwithstanding these
    objections, EBSA proceeded to finalize the rule, which was sent to the
    Office of the Federal Register on the last business day of the Bush
    Administration and published on January 21, 2009--again in clear
    violation of the Bolten memo.

             Imposing New Reporting Burdens on Labor Organizations

        In stark contrast to the Bush Administration's reticence to issue
    rules improving workers' health, safety, wage and hour, or pension
    protections, the Department of Labor issued a myriad of rules requiring
    increased financial recordkeeping and reporting by labor organizations
    and union officers. During its tenure, the Bush Administration issued
    four major new rules imposing heavy reporting obligations on labor
    organizations and their officers \5\ and at the same time increased
    resources for investigation and regulation of labor organizations.\6\
    ---------------------------------------------------------------------------
        \5\ In addition to the massive expansion of the Form LM-2 described
    in the text above, in 2007 DOL promulgated a major expansion to the LM-
    30 report, which union officers and employees must file, that
    dramatically expanded the number of individuals that must file the
    reports to include union volunteers, and that dramatically expanded the
    types of transactions that individuals must report. 72 Fed. Reg. 36106
    (July 2, 2007). Also, in 2006, the Department published requirements
    for a new T-1 report for unions to file concerning ``significant trusts
    in which they are interested.'' 71 Fed. Reg. 57716 (Sept. 29, 2006). As
    with the prior version of this requirement, the new T-1 rule was struck
    down by the court. Undeterred, the Department promulgated another new
    T-1 rule in 2008, 73 Fed. Reg. 57412 (Oct. 1, 2008).
        \6\ According to an unpublished study by Professor John Lund, the
    Office of Labor Management Standards (OLMS) spends approximately $2,700
    per labor organization under its jurisdiction, while OSHA and the Wage
    and Hour Division spend $26 each per covered workplace.
    ---------------------------------------------------------------------------
        In 2003, the Bush Administration pushed through a major expansion
    of the annual financial reports that the largest labor organizations
    are required to file--called the Form LM-2. The new rules require
    unions to track and report their financial transactions in minute
    detail. This produces an avalanche of meaningless data at an enormous
    cost both to the labor organizations that must file the reports and to
    the union members whose dues pay for the new recordkeeping and
    accounting systems. The AFL-CIO's report, for example, went from
    approximately 200 pages under the old form to approximately 800 pages
    under the Bush Administration's new rule.
        Without studying whether the new forms actually provided workers
    with useful information, in May 2008, the Labor Department embarked on
    another round of LM-2 reforms, seeking even more detailed information
    from labor organizations. The new rules also proposed procedures for
    revoking the right of smaller unions to file a simplified financial
    report, if their report is delinquent or deficient. These small unions
    would then need to file the far-more complicated Form LM-2, which they
    are not set up to handle. Unions filed comments objecting to the
    proposed rule, but DOL proceeded to finalize the new rule, sending it
    to the Federal Register on the Friday before President Obama's
    inauguration so that it would be published on January 21, 2009--the
    first full day of President Obama's term. The new rules take effect on
    February 20, 2009. If allowed to stand--which we hope they are not--the
    new rules will further increase the recordkeeping and reporting burden
    on labor organizations with no apparent benefit to workers.\7\
    ---------------------------------------------------------------------------
        \7\ On February 2, 2009, the Office of the Federal Register posted
    a notice, to be published in the Federal Register on February 3, 2009,
    by the Department of Labor requesting comments on a proposed 60-day
    extension of the effective date of the new LM2/3 rules and seeking
    comments on the rule generally, including the merits of retaining or
    rescinding the rule.
    ---------------------------------------------------------------------------

             Removing Information from Contractors' Payroll Records

        The Bush Administration also rushed through a rule that allows
    contractors covered under the Davis-Bacon Act and the Copeland Anti-
    Kickback Act to omit social security numbers and home addresses of
    workers on the weekly payroll reports these contractors are required to
    maintain and provide to the government. The deletion of this
    information from the payroll reports will make it harder for the
    government to verify the accuracy of the reports. The rule was proposed
    on October 20, 2008--long after the June 1, 2008 deadline in the Bolten
    memo--and after a short 30-day comment period, final rules were issued
    on December 19, 2008, to take effect on January 18, 2009.

        Options for Addressing the Bush Administration's Midnight Rules

        It is unfortunate, given the current economic crisis and the many
    pressing issues facing our country, the new Administration, and
    Congress, that time and resources will have to be spent dealing with
    the Bush Administration's harmful midnight regulations--resources that
    should rightly be going toward the development of protective
    regulations. Fortunately both the Obama Administration and Congress
    have several options for dealing with rules that they find
    objectionable.
        In considering these options, it is important to look at each
    midnight rule to determine the best course of action for that
    particular rule. No one solution fits every situation. In some cases,
    the best solution is to revoke a midnight rule entirely. In other
    cases, the better course might be to retain the midnight rule but
    engage in rulemaking to improve upon its deficiencies. In addition, it
    is important that Congress and the Obama Administration communicate
    with each other and coordinate their efforts, in order to facilitate
    the Obama Administration's efficient and prompt response to particular
    midnight rules of concern.
        Proposed rules that were not completed by the Bush Administration,
    such as the proposals to weaken Fair Labor Standards Act protections or
    the secret rule on risk assessment, are the easiest to address. The
    Obama Administration's new Department of Labor can issue a notice in
    the Federal Register withdrawing the proposed rule in question.
        For rules that were issued in final form but have not yet taken
    effect, the Obama Administration, via a memorandum to agencies from
    Chief of Staff Rahm Emanuel and a followup memo from OMB Director Peter
    Orszag, has instructed agencies to consider extending the effective
    date of particular last-minute rules and taking public comments on
    whether to modify or repeal the rule. Agencies will need to justify
    their decisions to extend effective dates and to modify or repeal
    particular rules, but it is clear that they have legal authority to
    undertake such regulatory proceedings.
        Last-minute rules that have already taken effect are obviously the
    most problematic category of rules. The Obama Administration will need
    to quickly review these rules and undertake a new rulemaking to modify
    or repeal rules that it finds problematic. These rulemakings can be
    time-consuming and burdensome, and divert resources from other
    important agency priorities, such as proposing new rules to improve
    worker protections.
        Congress can assist the Obama Administration in dealing with these
    problematic midnight rules in a number of ways:

              Congress can adopt a rider on the relevant
            appropriations bill blocking implementation of new rules that
            it finds objectionable, which would give the Obama
            Administration breathing space to reconsider, modify, or revoke
            the rules in question;

              Congress can facilitate review of problematic rules
            by passing legislation authorizing the executive branch
            agencies to suspend immediately the effective dates of midnight
            rules (e.g., rules that violated the Bolten memo) that the
            Congress and/or the agencies find problematic;

              Congress can disapprove any of the Bush
            Administration's last-minute rules under the Congressional
            Review Act.

        In addition, Congress should appropriate sufficient funds to the
    executive branch agencies to enable them to both review and deal with
    the Bush Administration's midnight rules and engage in new, protective
    rulemaking. Rulemaking can be a resource-intensive, time-consuming
    endeavor, and it is important that these agencies have the resources
    they need both to deal with the problems left by the Bush
    Administration and to move forward with protective regulations.
        Again, thank you for the opportunity to testify today. I would be
    happy to respond to any questions.

                                   ATTACHMENT

                                   __________
        Mr. Cohen. Thank you, Ms. Rhinehart.
        And now we would proceed with the testimony of Dr. de Rugy.
    Correct?

    TESTIMONY OF VERONIQUE DE RUGY, Ph.D., SENIOR RESEARCH FELLOW,
               MERCATUS CENTER AT GEORGE MASON UNIVERSITY

        Ms. de Rugy. Absolutely, very impressed. But over the
    years, I have learned to respond to whatever name I hear.
        Chairman Cohen, Ranking Member Franks and distinguished
    Members of the Subcommittee, it is an honor to appear before
    you today to discuss the problems of and solution to the
    midnight regulation phenomenon.
        I am a senior research fellow with the Mercatus Center, a
    nonpartisan university-based research, education and outreach
    organization affiliated with George Mason University. My
    colleagues and I have worked on this issue extensively, and I
    am concerned about the effects this phenomenon has on good
    governance.
        In his inaugural address, President Obama committed to
    accountable and pragmatic government. Unfortunately, at the end
    of every presidency, agencies trample on this value, as the
    issue of last-minute regulation.
        If Congress does not reform things and the process today,
    the end of the Obama administration will likely be no different
    in this regard than those that have preceded it.
        After all, in spite of efforts within the Bush
    administration to prevent an outburst of last-minute rules,
    little has changed since the frantic last days of the Clinton
    presidency.
        The Mercatus Center's work over the years demonstrates that
    the midnight regulation phenomenon is systemic and crosses
    party lines. At the end of every Administration, Republican or
    Democrat, there is a dramatic spike in regulation.
        This spike is especially pronounced when the transition is
    to a President of the opposite party.
        The most common explanation in the literature for this
    phenomenon is the attempt by the Administration to extend its
    influence into the future.
        Knowing its successor will not share its policies or
    priorities, there is an incentive to write in stone as many of
    its policies as possible.
        There are two other reasons why midnight regulations are
    pernicious.
        First, after election day, a lame-duck President faces
    little accountability. He will never again stand for election
    and won't really have to deal with Congress in the future. This
    lack of accountability frees the President and his
    Administration to enact regulations that previously had been
    politically impossible.
        Second and more importantly, the midnight regulation
    phenomenon dilutes oversight by the Office of Information and
    Regulatory Affairs. OIRA's regulatory office exists to ensure
    that agencies have carefully considered alternative approaches
    to regulation, that they have correctly estimated the costs and
    benefits of these alternatives in order to find the most
    efficient course of action.
        By its nature, this type of reasoned economic oversight of
    proposed regulations requires time. Unfortunately, the torrent
    of regulations at the end of an Administration weakens this
    oversight.
        My colleague, Jerry Brito, and I found that in the first 7
    years of the Bush administration, OIRA reviewed an average of
    seven economically significant regulations per month. Over the
    last 3 months, however, that number had doubled to 14.
        Moreover, while the number of regulations OIRA reviewed at
    the end of the presidential term, while it spiked, its staff
    and budgets remained constant. It means basically the time it
    has to review each regulation decreases.
        Another of my colleagues, Patrick McLaughlin, has actually
    put out a study that shows that that review time is slashed in
    two.
        To address this issue, we suggest a flexible cap on the
    number of regulations that an agency can submit to OIRA at any
    one time. This cap would be tied to resources available to
    OIRA, which could be increased, if necessary.
        The midnight period, however, also highlights persistent
    problems with OIRA oversight during the regular process. Since
    its creation, OIRA staff has been cut in two and the budget, in
    constant dollars, has shrunk by about a third.
        This downward trend hampers a President's ability to
    effectively manage regulation, paperwork and interagency
    coordination.
        Any increase in staffing and spending will be useless
    unless Congress addresses a more fundamental issue. The ability
    of OIRA to carry out its mission varies both across agencies
    and across Administrations.
        Depending on the degree of latitude granted to the OMB
    director and the OIRA administrator, consistent management of
    the quality of cost-benefit analysis has been doubling
    consistently.
        For example, different agencies are given a pass on the
    quality of their regulatory analysis or on any application of
    that analysis for decision-making by a particular
    Administration. OMB is essentially told to back up in these
    cases.
        Commerce and the executive branch must give OIRA both the
    resources and the ability to hold agencies accountable for
    producing effective and cost-efficient rules. Ensuring that
    these principles apply during the midnight period when
    accountability is reduced is even more important.
        Finally, Congress should dedicate itself to writing
    clearer, more detailed and more definitive statutes that
    require sound analysis of regulation. In this way, Congress
    would better exercise the policymaking authority entrusted to
    it by the Constitution.
        Thank you.
        [The prepared statement of Dr. de Rugy follows:]

                    Prepared Statement of Veronique de Rugy

                                   __________
        Mr. Cohen. Thank you, Doctor. I appreciate your finishing
    before the red light and for your testimony.
        Professor Abramowicz?

              TESTIMONY OF MICHAEL ABRAMOWICZ, PROFESSOR,
                GEORGE WASHINGTON UNIVERSITY LAW SCHOOL

        Mr. Abramowicz. Thank you, Mr. Chairman and Members of the
    Subcommittee.
        In the first part of my remarks, I would like to focus on
    potentially negative and unforeseen consequences to legislative
    deprecation of midnight rules. I will then turn to a brief
    analysis of some of the problems that may arise from H.R. 34,
    the current proposal to allow an incoming Administration to
    disapprove of midnight rules, being passed.
        Finally, I will turn to a broader discussion of the
    administrative process and how it might be strengthened to
    reduce idiosyncratic and unadvised executive branch decision-
    making, without turning a President into a 15/16ths President,
    prohibited from exercising the full power of the executive
    branch during the so-called lame duck period.
        Proposals to deprecate midnight rules could make an
    outgoing presidential Administration less likely to pass rules
    simply designed to slow down the incoming Administration, but
    it is doubtful that enactment of such proposals would help a
    new Administration overall.
        It takes some time for an agency to become fully staffed
    and then to assess its priorities.
        Midnight rulemaking on relatively routine matters may be
    helpful to the new Administration, allowing smaller issues to
    be resolved, thus permitting focus on future challenges.
        Once deprived of their ability to have the final say on
    whether regulations are issued, administrative officials, near
    the end of a term, may feel that they will not receive credit
    for any rulemaking initiatives that would come into effect only
    should the next Administration permit them.
        Moreover, they might worry that disapproval could be
    embarrassing. As a result, they are likely to hold off even on
    many regulations that the new Administration would not
    disapprove.
        This will lead to a buildup of many low profile regulatory
    initiatives, slowing the startup time for the new
    Administration.
        The passage of legislation deprecating midnight rules might
    not even be effective in suppressing the issuance of
    controversial regulations. It might simply push the enactment
    of such regulations 90 days earlier to just before the
    presidential election. This has hazards on its own.
        Decisions on whether to complete high profile regulatory
    initiatives that have been under review would likely depend
    increasingly on partisan political concerns.
        Of course, the vast majority of regulations would fly under
    the radar of presidential politics. This, however, merely
    emphasizes the futility of any effort to eliminate the
    incentive that Administrations have to complete rulemaking
    initiatives that they have begun.
        H.R. 34 leaves many unanswered questions. Some problems
    with specific language of H.R. 34 should be easily fixable.
        For example, the current definition of a midnight rule
    applies to ``a rule adopted by an agency within the final 90
    days a President serves in office.'' Read literally, this would
    appear to apply regardless of the reason that President leaves
    office, including if he or she dies or resigns.
        Other problems might not be fixed so easily. The bill does
    not make clear whether a President's decision to make an
    exception to the midnight rulemaking ban or a subsequent
    agency's decision whether to disapprove of a regulation is
    subject to judicial review.
        A cornerstone of our administrative process is the
    requirement of reasoned decision-making and leaving these
    decisions entirely unchecked would be inconsistent with this
    requirement. Excessively intrusive judicial review, on the
    other hand, could undermine the effectiveness of its reform.
        Midnight rulemaking can be seen as problematic not so much
    in and of itself, but it is problematic in what it signals more
    generally. Because midnight regulations occur so near the
    transition may highlight the fact that different
    Administrations are likely to pursue different objectives.
        Our administrative process can be seen, in part, as a set
    of tools that ensures that much of the regulatory state's
    functioning will operate with some consistency, regardless of
    the occupants of the Oval Office.
        Because agency regulations must go through notice and
    comment, agency officials must prioritize reforms. We do not
    end up with one version of the Code of Federal Regulations for
    Democratic administrations and another version for Republican
    administrations.
        Even if one believes that administrative agencies have too
    much leeway to move policies over to their ideological
    priorities, disallowing midnight regulations is a crude
    response. It is akin to proposals to enact a moratorium on all
    rulemaking.
        Other regulatory tools can help achieve the beneficial ends
    of regulatory continuity without artificially freezing the
    administrative process. For example, the continued use and
    improvement of cost-benefit analysis and other forms of
    regulatory review can reduce the risk that regulations will
    depend on ideology or caprice, not only during the midnight
    period, but during the entirety of a presidential
    Administration.
        Thank you again.
        [The prepared statement of Mr. Abramowicz follows:]
                    Prepared Statement of Michael Abramowicz
        Thank you, Mr. Chairman and Ranking Member Franks. I appreciate
    this opportunity to testify before the Subcommittee on Commercial and
    Administrative Law on the topic ``Midnight Rulemaking: Shedding Some
    Light.'' I am pleased that the Subcommittee has chosen this important
    topic for its first hearing of the 111th Congress, and more generally
    by the interest of the Subcommittee in administrative law and
    regulatory practice.
        In the first part of my remarks, I would like to focus on
    potentially negative and unforeseen consequences to legislative
    deprecation of midnight rules. I will then turn to an analysis of some
    of the problems that may arise should H.R. 34, a current proposal to
    allow an incoming administration to disapprove of midnight rules, be
    passed. Finally, I will turn to a broader discussion of the
    administrative process and how it might be strengthened to reduce
    idiosyncratic and unadvised executive branch decisionmaking without
    aggravating the ``lame duck'' status of an outgoing President.

              1. Proposals to deprecate midnight rules in general

        Under our existing administrative system, midnight regulations
    passed by one administration become law absent congressional action
    under the same terms as regulations passed at any other time in a
    Presidential term. There are a number of ways that this might be
    changed. One could imagine a statute that simply disabled a President
    from engaging in rulemaking in the final period before a regularly
    scheduled inauguration of a new President. Alternatively, a statute
    might provide for increased judicial scrutiny of midnight rules, for
    example by requiring an increased burden of persuasion on an outgoing
    administration in the process of judicial review.
        Such proposals might have certain benefits. For example, they might
    make an outgoing Presidential administration less likely to pass rules
    simply designed to slow down the incoming administration, or to bog the
    incoming administration down in resource-consuming litigation.
    Nonetheless, there are significant drawbacks to any legislative efforts
    that would convert a President into, for administrative law purposes, a
    15/16ths President, an individual authorized to exercise the customary
    powers of the executive branch except during the last three months of
    the Presidency. Moreover, it is difficult to justify the creation of a
    15/16ths Presidency based on general concerns about the orderly process
    of the administrative state.
        Even the claim that reform would deter an outgoing administration
    from hamstringing an incoming administration is questionable. Anne
    Joseph O'Connell has shown that ``Presidents usually have started
    fewer, not more, rules through notice-and-comment rulemaking in the
    first year of their terms than in later years.'' While it is possible
    that some of this startup time is attributable to agencies' digging out
    from midnight rulemaking of the prior administration, this is likely to
    account for only a small percentage of the increase. Rather, it takes
    some time for an agency to become fully staffed and then to assess its
    priorities. Given that there is some startup time for a new
    Presidential administration to plan its most important objectives,
    midnight rulemaking on relatively routine matters may be helpful to the
    new administration, allowing smaller issues to be resolved, thus
    permitting focus on future challenges.
        It is true that even with reforms deprecating midnight rules,
    administrative agencies would still be permitted to issue regulations,
    for example with delayed effective dates, or at least to write draft
    regulations that the next administration could consider. But once
    deprived of their ability to have the final say on whether regulations
    are issued, administrative officials may feel that they will not
    receive credit for any rulemaking initiatives with delayed
    effectiveness, and moreover they might worry that disapproval could be
    embarrassing. As a result, they are likely to hold off even on many
    regulations that the new administration would not disapprove. This will
    lead to a buildup of many low-profile regulatory initiatives that must
    be shepherded through the publication process, slowing the startup time
    for the new administration.
        There is, moreover, good reason to think that the vast majority of
    regulations issued in the midnight period are relatively routine. In
    the last three months of the Clinton Administration, a record 27,000
    pages were published in the Federal Register, but in similar periods
    during the administration, 17,000 pages were published. This is
    obviously a notable increase, but many of the 17,000 pages that
    ordinarily would be published during that period presumably contained
    relatively routine rules. Even on the 10,000 additional pages of
    rulemaking, only a relatively small number of regulations (such as the
    ergonomics and arsenic regulations) were especially politically
    controversial. Much of the 10,000 pages is probably attributable simply
    to procrastination, or to a desire by agency officials to finish work
    that they have begun. If some portion of the 27,000 pages were simply
    not issued in the first place, there would have been a great deal new
    work for the incoming administration.
        One concern about midnight rulemaking is that outgoing agency
    officials may issue regulations specifically because they want to force
    the new administration to spend time undoing these regulations. But
    there are other ways that an outgoing administration could undermine a
    new administration. If new laws deprecate midnight rules, an outgoing
    administration might take an opposite approach, essentially ceasing
    work on regulations, including ones that are relatively pressing
    because, for example, of deadlines imposed by Congress or by the
    courts. These agencies might even use the legislation restricting
    midnight regulations as an excuse. Rather than simply giving a new
    administration a menu of regulations to either allow or disapprove, the
    outgoing administration might decide to let the new administration do
    the work of bringing regulations through the regulatory process. Again,
    this could create a backlog that could hamper a new administration as
    much as or even more than the issuance of midnight regulations, only a
    relatively small number of which a new administration is likely to
    invest resources in undoing. Another strategy by an outgoing
    administration would be to focus its resources on initiating
    politically controversial adjudications. Because an agency is free to
    develop policy in both adjudication and rulemaking, this can sometimes
    be an effective means of moving policy, and certainly can tie up agency
    resources in the next Administration.
        The passage of legislation deprecating midnight rules might not
    even be effective in suppressing the issuance of politically
    controversial regulations. It might simply push the enactment of such
    regulations 90 days earlier, to just before the Presidential election.
    This has hazards of its own. Decisions on whether to complete high-
    profile regulatory initiatives that have been under review would likely
    depend increasingly on partisan political concerns. Meanwhile, although
    it is useful for the electorate to focus to some extent on
    administrative issues, a quadrennial period of intense October
    rulemaking might prove to be an undue distraction from the broader
    themes of presidential campaigns.
        Of course, the vast majority of regulations would fly under the
    radar of Presidential politics, without affecting campaigns one way or
    the other. This, however, merely emphasizes the futility of any efforts
    to deprecate midnight rulemaking. There is likely still to be a bump in
    administrative activity, just a few months earlier. To be sure, the
    total volume of rulemaking in an administration might be slightly
    lower, for there will only be a guarantee of 15/16ths the time to
    engage in rulemaking. But past moratoria on regulation have proven
    excessively crude. Perhaps the bump will be a little bit less, with a
    couple of controversial and high-profile initiatives abandoned every
    four years. But even if we assume this to be a benefit, it is a small
    part of the broader regulatory picture.
        Some may argue that an early deadline just before the election
    would in fact have a broader effect on rulemaking, and that there will
    not be a considerable increase in rulemaking activity just before an
    election. One argument for this is that many midnight rules may be
    enacted only because of the relative lack of accountability of the
    executive during the midnight period. We should be skeptical, however,
    that the relative difference in degrees of accountability across time
    period makes a difference on the vast majority of rulemaking issues.
    Moreover, scrutinizing different variations of the claim that midnight
    rulemaking should be deprecated because of accountability concerns
    helps reveal weaknesses with this claim.
        One variation defines accountability as electoral accountability.
    There is a vein of administrative law scholarship, particularly the
    breakthrough work of Jerry Mashaw, that concludes that the executive
    branch is the most politically accountable branch, in part because the
    electorate is relatively more aware of actions of the President than
    actions of individual members of Congress. One might accept this
    account and then argue that accountability varies across time. The
    longer the period to an election, the smaller the degree of
    accountability. Nonetheless, it is hazardous to try to change
    administrative law based on changing degrees of accountability.
        Suppose, for example, that we consider regulations finalized not in
    January 2009, but in January 2005. In both periods, George W. Bush
    would never face re-election again, there would be two years for the
    public to forget about rules enacted in that period before a House
    electoral cycle, and there would be four years before another
    Presidential election. If deprecation of regulations is to be justified
    by electoral accountability, then perhaps we should extend it to a
    period just after a President has been re-elected. To be on the safe
    side, perhaps we should disable regulation in the entire second term of
    a Presidency. Alternatively, if the argument is that the President's
    power should be weakened after a public repudiation of his or her
    policies, perhaps we should have a system that diminishes presidential
    power if the President's party fares poorly in midterm congressional
    elections. These are, of course, facetious suggestions, but they are
    enough to show that the fact that a particular President will not again
    face the electorate cannot be a sufficient basis for making regulations
    disapprovable.
        Another variation of this argument focuses on accountability to
    Congress and more broadly on the separation of powers. One might argue,
    for example, that when the administration is not near its end, the
    President will face retaliation from acting in a way that Congress
    would not approve, for example in the form of increased congressional
    oversight of administrative agencies. Game theorists might say that the
    President and Congress are engaged in a multi-period cooperation game,
    but the midnight time frame presents a ``final period'' problem. There
    is an incentive to defect from a regime of cooperation in the last
    period. And so, the President may care less about accommodating
    congressional concerns in this final period.
        This dynamic may occur to some extent, but it is difficult to
    determine whether reduced congressional accountability for a brief
    period of time is necessarily bad. For example, as Jack Beerman has
    pointed out, midnight regulations sometimes may consist of initiatives
    that otherwise would be blocked by special interests. Similarly, such
    regulations may consist of moderately politically unpopular changes
    that are nonetheless beneficial. Admittedly, sometimes regulations are
    unpopular for good reason. It is difficult in the abstract to determine
    what is the optimal degree of special interest influence on legislation
    and ideally how much the President and administrators should pursue
    what they believe is best rather than what the less informed public
    will support. But it certainly is not clear that having a few months in
    which the President has a freer hand will generally lead to worse
    decisions rather than better ones, let alone that essentially disabling
    the President for a period of time will improve decisionmaking.
        A counterargument is that our government is a system of checks and
    balances, and that the President ought to be most restrained when such
    checks and balances are relatively impotent. But pursuing the goal of
    adjusting presidential power based on the strength of checks and
    balances would seem to suggest a range of radical policy changes. For
    example, one might imagine a regulatory regime that made it harder for
    the President to act when Congress is of the same party as the
    President. The judiciary might apply a lower standard of review to
    administrative action when government is divided, on the theory that
    congressional review will be more active and may thus serve as a
    substitute for judicial review. The ``midnight'' period cannot be
    singled out as the only period in which checks and balances are
    unlikely to be effective in limiting presidential authority.

                            2. Problems with H.R. 34

        A current bill to address the alleged dangers of midnight
    rulemaking is H.R. 34. Under the bill, ``a midnight rule shall not take
    effect until 90 days after the agency head is appointed by the new
    President.'' One danger of deprecating midnight rules through
    legislative action is that the legislation may present unanticipated
    interpretive challenges. All legislation presents this danger to some
    extent, but the costs of ambiguity are particularly high here, because
    there may be uncertainty concerning the validity of large numbers of
    regulations, and private parties may face sanctions for failing to
    comply both with the old regime and with the new one.
        Some problems with the language of H.R. 34 should be easily
    fixable. For example, the current definition of a ``midnight rule''
    applies to ``a rule adopted by an agency within the final 90 days a
    President serves in office.'' This would appear to apply regardless of
    the reason that a President leaves office, including if he or she dies
    or resigns. Another provision, governing exceptions to the statute,
    refers to a ``President serving his final term.'' This definition is
    only a little better, as it does not make unmistakable whether a
    President who has been voted out of office after one term, but could
    run for another term later, should be counted as ``serving his final
    term.'' A better definition would make clear that the legislation
    applies to every President who either has not run for re-election or
    has been voted out of office, in the 90-day period preceding the
    regularly scheduled inauguration of the next President. The statute
    also ideally would make clear that it would apply only once some
    official determination is made of who has won the Presidential
    election.
        An additional interpretive problem arises from the exceptions
    provision, what would become Sec. 555a(b)(2). The President is
    permitted to order that a midnight rule should take effect under
    several identified conditions. This raises interesting questions. Is
    this order subject to judicial review? Under what standard? If the
    President does certify a midnight rule so that it does take effect, can
    it still be disapproved by the new agency head?
        The disapproval process itself presents interpretive questions. Can
    an agency head in a multimember agency act alone to disapprove of a
    regulation, even when the various members of the agency ordinarily
    would need to vote to take agency action? What standard of judicial
    review, if any, applies to an action of disapproval? Is disapproval a
    form of administrative action that requires no justification
    whatsoever? The Administrative Procedure Act, at least in theory,
    allows challenges to be brought based on both agency action and
    inaction, so even if we count an agency's issuance of a regulation and
    then disapproval thereof collectively as inaction, it would appear that
    there might be some ground for judicial review. This is especially true
    when an agency is issuing regulations expressly required by Congress or
    the courts by a particular date. Even if a failure to issue regulations
    in the first place were effectively unenforceable, a decision to
    disapprove mandated regulations might be legally questionable.
        Finally, the retroactivity provision itself presents interesting
    issues. For example, can liability attach to a private party that has
    complied with a new regulation after its effective date but not with
    the preexisting regulation? There would appear to be strong reasons for
    providing a safe harbor to a private party that has dutifully followed
    the new regulatory regime, even if policy should subsequently revert to
    the old regulations. This is especially so where regulations have
    criminal consequences, given the constitutional proscription of ex post
    facto laws and bills of attainder. Another peculiarity of the
    retroactivity provision is that President Bush alone would be unable to
    take advantage of the exceptions provision, because the bill was not
    signed into law during his Presidential term. Does there thus remain in
    the retroactivity period any exception for regulations that may be
    necessary, for example because of an imminent threat to health or
    safety, if not so certified by the President?
        These are, of course, only some interpretive issues, and doubtless
    others will arise. At the same time, we can expect constitutional
    challenges to the creation of a 15/16ths Presidency, and considerable
    uncertainty among private parties in diverse circumstances regarding
    not merely some provision of a particular regulation, but whether an
    entire set of regulations is valid. Even if one views the 15/16ths
    Presidency as beneficial, one might think it would be better to allow
    Congress and the agencies to use ordinary procedures to undo regulatory
    initiatives that they dislike than to confront the many complications
    that would result should this statute become law. This is especially so
    for regulations passed at the end of President Bush's Administration.
    Because the political branches today are all of the same party, there
    is the least need for a crude and automatic mechanism to undo the Bush
    Administration's last rulemakings.

              3. Administrative reform with a full-term presidency

        The existence of problems in any attempt to deprecate midnight
    rulemakings does not mean that midnight rulemakings themselves are
    without their problems. Midnight rulemaking, however, can be seen as
    problematic not so much in and of itself but as problematic in what it
    signals more generally. Because midnight regulations occur so near the
    transition, they highlight the fact that different administrations are
    likely to pursue different objectives. Some may be inclined to accept
    this as democracy in action, and surely even in a hypothetical ideally
    functioning democracy, policy would change from administration to
    administration in response to the evolution of voters' views.
        But the changes in policy have historically been relatively large
    in comparison to any underlying changes in long-term popular views
    about appropriate regulatory policy. It is possible to see this not as
    a virtue of the democratic process, but as an unfortunate symptom of
    its crudeness. On this view, an ideal administrative system, while
    allowing each new administration some discretion, would also seek to
    constrain executive action so that the difference in regulatory outputs
    from one administration to another is minimized. And indeed, our
    administrative process can be seen as a tool that ensures that much of
    the regulatory state's administrative functioning will operate more or
    less the same regardless of the incumbent of the Oval Office.
        The importance of this can be seen by focusing on the few areas of
    administrative practice in which the President has the power to act
    simply by issuing Executive Orders, without public participation or
    notice-and-comment of any kind. In some of these areas, policy lurches
    from one ideological position to another as soon as the new President
    is sworn into office. One day, we have a restriction on abortion
    funding, and the next we do not, until the White House switches back to
    the other party. Yet it is remarkable how few areas of policy operate
    this way. We do not switch from a market-oriented health care system to
    a government-operated one, or between high emissions limits and low
    emissions limits the moment a new President comes into power. The
    administrative process moves slowly and consistently. Like the judicial
    doctrine of stare decisis, the existing regulatory system ensures that
    policy moves relatively slowly. The policies in place at any given time
    are some compromise among the varying ideological views of
    administrations over the previous several decades.
        Why is this? Why does an incoming administration not simply gut all
    of the regulations from its predecessors that it dislikes in favor of
    its own preferred administrative approach? Agencies cannot overturn
    statutory commands, but that is only a partial explanation, given the
    wide variety of possible approaches that statutes allow for, especially
    in our age of Chevron deference to administrative determinations.
    Rather, the answer is that changing the law is time-consuming. To issue
    regulations, an agency must go through the notice-and-comment process,
    and to pass muster under the ``hard look'' doctrine, it must provide at
    least a reasonable response to those who disagree with its approaches.
    This process ultimately will allow an agency to accomplish virtually
    anything clearly consistent with statutory requirements, but the
    process is sufficiently cumbersome that an agency faces real tradeoffs.
        Some critics have therefore decried the administrative process as
    ``ossified.'' Perhaps. But if requirements of notice-and-comment
    decisionmaking and the institution of hard look review were eliminated
    altogether, then we could expect regulation to veer from one extreme to
    another with a change in presidential administrations, in the same way
    that we seen on the small handful of issues governed by Executive
    Orders. In effect, there would be two copies of the Code of Federal
    Regulations: one for when a Democrat was in power and one for when a
    Republican was in power, with each President perhaps picking some
    regulations from the other team when taking office, in the same way
    that a President might pick one or more Cabinet members from the
    opposite political party today.
        The existing system of rulemaking avoids this, encouraging
    incremental reform. The head of an administrative agency has a budget
    to allocate to different priorities. Sometimes, an administrative
    agency head might pursue a relatively radical course in comparison to
    the preexisting regime, but relatively large changes require more
    paperwork, because there are more plausible objections to them. And so,
    in a typical administration, there may be some large-scale changes and
    a number of smaller-scale changes in the regulatory framework, but the
    overall framework typically looks more or less the same at the end of
    the administration as at the beginning. The system of hard look review
    ensures that even as the President exercises the full constitutional
    power of his office, the administrative state will move only to some
    degree in the direction of his or her preferences. For more radical
    reform without the burdens associated with notice-and-comment
    decisionmaking, the President must persuade Congress to act.
        A regulatory regime creating a 15/16ths Presidency would constrain
    the administration still further, ensuring even greater levels of
    administrative continuity. It is impossible to conclude in the abstract
    whether our administrative system allows a single administration to
    effect too much change or too little. But even if the answer is that
    administrative agencies have too much leeway to move policies over to
    their ideological priorities, disallowing midnight regulations is a
    crude response. Such an approach covers nonideological regulations
    along with politically salient ones, and it artificially freezes policy
    in favor of the status quo. It is easy to see this by imagining more
    drastic versions of the midnight rule, such as a rule that would
    invalidate rulemaking in the last year or last two years of a
    Presidential administration. Only those who are so distrustful of
    government that they are willing to void regulations sight unseen
    should be in favor of such crude approaches.
        There are other regulatory tools that can help achieve the
    beneficial ends of regulatory continuity without artificially freezing
    the administrative process. For example, recent Supreme Court efforts
    to prevent agencies from skirting the notice-and-comment process are
    likely to help promote greater consistency in administrative policy
    from one administration to another, and any legislative efforts in that
    direction could help as well. Any reforms that would increase the
    weight that administrative agencies must give to scientific consensus
    similarly could improve regulatory consistency and outcomes. In short,
    there are ways to avoid the dangers of midnight rulemaking--the
    prospect of ideological and arbitrary decisionmaking--all day long.
        I will conclude by highlighting the one area of administrative
    reform that is perhaps most likely to have these salutary consequences.
    The continued use and improvement of cost-benefit analysis and other
    forms of regulatory review can help ensure that administrative outcomes
    depend on a systematic tallying of the effects of regulations, reducing
    the risk that midnight regulations and others will depend on ideology
    or caprice. Some legal scholars have attacked President Obama's nominee
    to head the Office of Information and Regulatory Affairs in part
    because of his past support for cost-benefit analysis. Yet many of
    these scholars' critiques of cost-benefit analysis could equally be
    translated into proposed improvements to the methodology. Both Congress
    and the Administration could greatly advance the goals underlying the
    midnight rulemaking reform by strengthening both the framework of cost-
    benefit analysis and the institutional resources that OIRA has to
    review agencies' actions to ensure their consistency with the
    Administration's objectives and with our broader regulatory history and
    tradition.
        Thank you again.
                                   __________
        Mr. Cohen. Thank you, Professor Abramowicz.
        And, Dr. Copeland, you are recognized.

    TESTIMONY OF CURTIS W. COPELAND, Ph.D., SPECIALIST IN AMERICAN
         NATIONAL GOVERNMENT, GOVERNMENT AND FINANCE DIVISION,
                     CONGRESSIONAL RESEARCH SERVICE

        Mr. Copeland. Thank you. Mr. Chairman, Members of the
    Subcommittee, thank you for inviting me here today to discuss
    midnight rulemaking.
        As you mentioned in your opening statement, in May 2008,
    President Bush's chief of staff, Joshua Bolton, sent a
    memorandum to Federal agencies telling them to issue the
    Administration's final regulations by November 1.
        He said this deadline was being established to avoid the
    tendency of issuing midnight rules just before a President
    leaves office.
        Data from GAO and from OMB indicate that while the level of
    regulatory activity increased significantly in the final months
    of the Bush administration, most of those rules were published
    early enough so that they had taken effect by the time
    President Obama took office on January 20. This includes the
    four rules that Mr. Kennedy mentioned in his testimony, the
    respite rule that Mr. Watt mentioned, the H2A rule that Ms.
    Rhinehart mentioned.
        However, other final rules of concern had been published in
    the Federal Register, but had not taken effect, and this
    includes the investment advice rule that Ms. Rhinehart
    mentioned and some proposed rules that were never published as
    final rules.
        Both the Obama administration and Congress have a number of
    options on how to address these midnight regulations and the
    effectiveness of those options depends, in part, on how far
    those rules had progressed in the rulemaking process.
        One presidential approach has already been undertaken. As
    has been mentioned, on the afternoon that President Obama took
    office, White House Chief of Staff Rahm Emanuel issued a
    memorandum to Federal agencies telling them to, one, not send
    new rules to the Federal Register; two, to withdraw any rules
    that had been sent, but that had not been published; and,
    three, consider extending for 60 days the effective dates of
    rules that had been published, but that had not taken effect.
        This memorandum continued a long tradition of regulatory
    moratoria at the start of a presidency. However, the Emanuel
    memorandum does not address any of the controversial midnight
    regulations that have already taken effect.
        To stop or alter those rules, or even just to change their
    effective dates, the Obama administration will have to go
    through the notice and comment rulemaking process. While that
    process can be shortened by the agencies for good cause, courts
    have indicated that legitimate reasons must accompany such
    actions.
        On the other hand, for any rule that has been proposed, but
    not published as a final rule, the Obama administration can
    simply publish a notice of withdrawal in the Federal Register
    to prevent any future action on the rule.
        Congress also has several options to stop midnight rules.
    For example, the Congressional Review Act, or CRA, was enacted
    in 1996 to give Congress more control over agency rulemaking by
    establishing a set of fast-track disapproval procedures.
        However, because any President is likely to veto CRA
    resolutions disapproving one of his own agency's rules, the act
    has been used only once in the last 13 years.
        In fact, Congress may only be able to use the CRA after a
    presidential transition in which the party in control of the
    White House changes and the new President is of the same party
    as the majority in Congress--the very conditions that currently
    exist.
        Under the CRA's carryover provisions, any final rule that
    was issued by the Bush administration after May 15, 2008 can
    now be the subject of a resolution of disapproval.
        According to GAO's database, this timeframe includes about
    1,800 Bush administration rules, including about 700
    significant or substantive rules.
        Another congressional option is to include a provision in
    the appropriations act prohibiting the use of funds to make a
    proposed rule final, or to prohibit the implementation or
    enforcement of rules that have already taken effect.
        Although the CRA has been used only one time, Congress has
    included dozens of these types of restrictions in
    Appropriations Acts for at least the last 10 years. However,
    unlike CRA resolutions of disapproval, these appropriations
    restrictions do not eliminate the underlying rule, are
    typically only in effect for the time period covered by the
    appropriation, and have other potential limitations.
        A third hybrid approach is for Congress to give the Obama
    administration new authority to stop midnight rules. H.R. 34,
    as introduced by Representative Nadler, is an example of this
    approach. However, to have the desired effect, key terms like
    ``rule,'' ``adopted,'' and ``agency head'' will need to be
    carefully defined.
        Also, Congress will have to consider the balance of power
    ramifications of giving the President or executive branch
    officials power that it had previously reserved only to itself.
        Mr. Chairman, that completes my testimony. I would be happy
    to answer any questions.
        [The prepared statement of Dr. Copeland follows:]

                    Prepared Statement of Curtis W. Copeland

                                   __________
        Mr. Cohen. Thank you, Dr. Copeland. And I appreciate each
    of the members of the panel for their attendance and their
    remarks.
        We now will have an opportunity for questioning, and I will
    recognize myself for questioning.
        The first is for Dr. Bass. The list of 25 troublesome
    midnight regulations listed in your testimony, which do you
    believe are the most egregious and should be addressed by
    Congress and/or the new Administration?
        Mr. Bass. Of the 25, all 25. That is why we listed them.
    This is an example of the problem that we are starting to see
    more of, which is everyone wants the top one or two.
        What was so surprising about the Bush activity at the end
    of the Administration was the wealth of these rules. You heard
    Dr. Copeland talk about the numbers. It was quite a large
    number that you had mentioned that are out there.
        These 25, most all of these are now effective, minus two of
    them. It seems to me there is no one-size-fits-all solution for
    all of these.
        At this stage, we are going to have to make sure that
    Congress and the Obama administration work in a coordinated
    fashion to resolve rule-by-rule how to deal with these.
        Mr. Cohen. And when you say those 25 are troublesome, are
    you talking about procedure, as well as substance?
        Mr. Bass. A mixture of both. There were some--Mr. Kennedy
    described some rushed examples, like on the endangered species.
    I think there are others.
        For example, we may all disagree on the HHS health care
    provider conscience rule. We may have very different values
    about it. But what was striking about the process is the OMB
    review of the rule, which is usually measured in weeks or
    months, was done in hours.
        And what that meant is that agencies like the EEOC that
    normally would comment on a rule didn't get a chance to even
    comment on the rule itself. That means that it isn't a
    violation of law, it is a violation of process of good
    rulemaking.
        That is what causes the problem with many of these.
        Mr. Cohen. You mentioned that many of the Bush midnight
    regulations were favors to special interests.
        Mr. Bass. Yes.
        Mr. Cohen. Which regulations were you referring to and
    which special interests were the primary beneficiaries of Bush
    midnight rules?
        For example, Mr. William Wichterman, a former lobbyist for
    the NFL, worked in this capacity at the White House Office of
    Public Liaison on a controversial midnight regulation dealing
    with the implementation of the Internet gambling law.
        Is that one of the issues that you raised in your remarks
    that troubled you?
        Mr. Bass. We did not specifically raise that, but that
    would be an example of the kind of thing we are talking about.
        There are really three types of issues. One is the
    influence of money and politics, as you are suggesting. There
    is uncertainty when there is opacity with many of these rules
    about who is getting the best deal out of this.
        The second is industry-wide. Mr. Kennedy talked about the
    mountaintop mining as a result that services a particular
    industry. That is another type of concern.
        And then I think the third kind of issue that is at play
    here is simply the notion of a broader antiregulatory/
    deregulatory agenda. And there is some irony that the Bush
    administration--we all know the Bush administration was never
    friendly to regulation, and yet they chose to use the
    regulatory process as the vehicle for achieving much of the
    policy and priorities, which was deregulatory in the last
    stages of its Administration.
        Mr. Cohen. Professor Abramowicz, let me ask you a question.
    You had mentioned a 15/16th President. I presume you are
    assuming two terms and breaking it into half years or is that
    just kind of a----
        Mr. Abramowicz. I was assuming, if I am not wrong, but I
    was assuming if we had a 3-month period, 3 months is a fourth
    of a year. That is where the 3-month period would be 1/16th of
    a presidential term. So I was actually assuming a 4-year term.
        Of course, I recognize that the President will continue to
    exercise the powers of the office even in that last 1/16th
    beyond the executive branch. The concern is diminishing the
    powers or potentially even essentially eliminating them within
    that sphere of influence.
        Mr. Cohen. You said that you were afraid that maybe some
    folks would be embarrassed to publish last-minute regulations
    for fear they would be overturned.
        Can you cite me an example of a politician who has been
    embarrassed by something they wanted to do?
        Mr. Abramowicz. That is a good point, Mr. Chairman. I think
    that it is still possible. On many things that fly below the
    radar, officials in these agencies, who are not necessarily
    people who are running for elective office, might be concerned
    and might hold back on progressing out of concern that they
    might look bad if the regulations were disapproved.
        Mr. Cohen. And from your testimony, you see this as a
    bipartisan problem that you have seen in----
        Mr. Abramowicz. Yes. Midnight regulations have occurred in
    Republican and Democratic administrations alike.
        Mr. Cohen. Some people wonder why the interest
    organizations are not challenging each individual rule under
    the Administrative Procedure Act.
        Are these midnight regulations difficult to challenge under
    the Administrative Procedure Act and, therefore, congressional
    action might be warranted to give a more efficient process for
    challenge?
        Mr. Abramowicz. I don't think so, Mr. Chairman. I think we
    do have an ordinary litigation process in which one can raise
    procedural and substantive objections to regulations.
        And indeed, if, in fact, a regulation has not gone through
    the customary review processes, if, in fact, there had been
    completes that had been completely ignored, as, for example,
    Mr. Kennedy suggested has happened, that should considerably
    weaken the case of the agency if it subsequently attempts to
    defend the rule in court.
        If there is litigation against the agency challenging a
    particular rule, if the agency simply hasn't dotted its Is and
    crossed its Ts by responding to comments, then under the
    general hard look doctrine that the courts apply in these
    circumstances, the rule probably would be struck down by the
    courts in any event.
        So it is true certainly that Administrations may have a
    temptation to take shortcuts at the end of an Administration,
    but in doing so, they take the risk that the regulations will
    not be durable, in any event, because they will not survive
    judicial review.
        Mr. Cohen. Thank you, Professor. My time has expired.
        Mr. Franks?
        Mr. Franks. Mr. Chairman, I will be incredibly brief, and
    perhaps I could ask Professor Abramowicz for a concise answer.
        I agree with your testimony. Can you give us what you would
    consider the key constitutional and prudential prudent limits
    on the degree to which Congress could proscribe a President
    from engaging in end-of-term rulemaking and what could be done,
    in your mind, that would be within the constitutional
    constraints?
        Mr. Abramowicz. That is an excellent question. Certainly,
    some of the suggestions that Dr. de Rugy suggested, such as
    increasing funding of OIRA, clearly, within congressional
    prerogative, potentially even within administrative executive
    prerogative at the end of administration. That would certainly
    be a prudent thing to do.
        Your question, while requesting a brief response, brings up
    broad issues of a unitary executive, a very controversial area
    of constitutional law. Those who believe in a unitary executive
    might argue that some curtailment of the midnight regulation
    power could be constitutionally problematic.
        Mr. Franks. Thank you, Mr. Chairman. And I would just say
    you done good here for your first shot at the thing.
        Mr. Cohen. Thank you, sir. I appreciate the compliment, and
    I look forward to working with you and on this issue in a
    bipartisan manner, because it is the Chair's opinion, as we
    said in the opening statement, that this affects all
    Administrations.
        It is systemic, that folks want to get done what they can
    get done and sometimes Parkinson's law is in effect and the
    time and work and all those things come together.
        I would like to thank all our witnesses for their testimony
    today.
        Without objection, Members will have 5 legislative days to
    submit any additional written questions, which we will forward
    to the witnesses and ask that you answer promptly as you can,
    and they will be made a part of the record.
        Without objection, the record will remain open for 5
    legislative days for the submission of any other additional
    material.
        Again, I thank everyone for their time and patience,
    particularly our Ranking Member.
        This hearing of the Subcommittee on Commercial and
    Administrative Law is adjourned.
        [Whereupon, at 12:49 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

       Prepared Statement of David M. Mason, Visiting Senior Fellow, The
        Heritage Foundation, submitted by the Honorable Trent Franks, a
       Representative in Congress from the State of Arizona, and Ranking
           Member, Subcommittee on Commercial and Administrative Law

    Article from Consumer Freedom, submitted by the Honorable Steve King, a
        Representative in Congress from the State of Iowa, and Member,
               Subcommittee on Commercial and Administrative Law

        Response to Post-Hearing Questions from Robert F. Kennedy, Jr.,
                         Chairman, Waterkeeper Alliance

         Response to Post-Hearing Questions from Gary D. Bass, Ph.D.,
                          xecutive Director, OMB Watch

            Response to Post-Hearing Questions from Lynn Rhinehart,
                       Associate General Counsel, AFL-CIO

       Response to Post-Hearing Questions from Veronique de Rugy, Ph.D.,
       Senior Research Fellow, Mercatus Center at George Mason University

          Response to Post-Hearing Questions from Michael Abramowicz,
               Professor, George Washington University Law School

      Response to Post-Hearing Questions from Curtis W. Copeland, Ph.D.,
      Specialist in American National Government, Government and Finance
                    Division, Congressional Research Service