    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

              THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM

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

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                                JANUARY 26, 2011

                                   __________

                                Serial No. 112-1

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

           FRED UPTON, Michigan
                  Chairman
    JOE BARTON, Texas
      Chairman Emeritus
    CLIFF STEARNS, Florida
    ED WHITFIELD, Kentucky
    JOHN SHIMKUS, Illinois
    JOSEPH R. PITTS, Pennsylvania
    MARY BONO MACK, California
    GREG WALDEN, Oregon
    LEE TERRY, Nebraska
    MIKE ROGERS, Michigan
    SUE MYRICK, North Carolina
      Vice Chair
    JOHN SULLIVAN, Oklahoma
    TIM MURPHY, Pennsylvania
    MICHAEL C. BURGESS, Texas
    MARSHA BLACKBURN, Tennessee
    BRIAN BILBRAY, California
    CHARLIE BASS, New Hampshire
    PHIL GINGREY, Georgia
    STEVE SCALISE, Louisiana
    BOB LATTA, Ohio
    CATHY McMORRIS RODGERS, Washington
    GREGG HARPER, Mississippi
    LEONARD LANCE, New Jersey
    BILL CASSIDY, Louisiana
    BRETT GUTHRIE, Kentucky
    PETE OLSON, Texas
    DAVID McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    MORGAN GRIFFITH, Virginia            HENRY A. WAXMAN, California
                                           Ranking Member
                                         JOHN D. DINGELL, Michigan,
                                             Chairman Emeritus
                                         EDWARD J. MARKEY, Massachusetts
                                         EDOLPHUS TOWNS, New York
                                         FRANK PALLONE, Jr., New Jersey
                                         BOBBY L. RUSH, Illinois
                                         ANNA G. ESHOO, California
                                         ELIOT L. ENGEL, New York
                                         GENE GREEN, Texas
                                         DIANA DeGETTE, Colorado
                                         LOIS CAPPS, California
                                         JANE HARMAN, California
                                         JAN SCHAKOWSKY, Illinois
                                         CHARLES A. GONZALEZ, Texas
                                         JAY INSLEE, Washington
                                         TAMMY BALDWIN, Wisconsin
                                         MIKE ROSS, Arkansas
                                         ANTHONY D. WEINER, New York
                                         JIM MATHESON, Utah
                                         G.K. BUTTERFIELD, North Carolina
                                         JOHN BARROW, Georgia
                                         DORIS O. MATSUI, California
    _________________________________________________________________

                               Professional Staff

        Gary Andres, Staff Director
    James D. Barnette, General Counsel
    Philip S. Barnett, Minority Staff
                 Director

                                      (ii)
                  Subcommittee on Oversight and Investigations

                             CLIFF STEARNS, Florida
                                     Chairman
    SUE MYRICK, North Carolina           DIANA DeGETTE, Colorado
    MARSHA BLACKBURN, Tennessee            Ranking Member
    LEE TERRY, Nebraska                  JAN SCHAKOWSKY, Illinois
    JOHN SULLIVAN, Oklahoma              MIKE ROSS, Arkansas
    TIM MURPHY, Pennsylvania             ANTHONY D. WEINER, New York
    MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
    BRIAN BILBRAY, California            GENE GREEN, Texas
    PHIL GINGREY, Georgia                CHARLES A. GONZALEZ, Texas
    STEVE SCALISE, Louisiana             JOHN D. DINGELL, Michigan
    CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex
    MORGAN GRIFFITH, Virginia                officio)
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Cliff Stearns, a Representative in Congress from the State
      of Florida, opening statement..................................     2
        Prepared statement...........................................     3
    Hon. Diana DeGette, a Representative in Congress from the State
      of Colorado, opening statement.................................     5
        Prepared statement...........................................     6
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     7
        Prepared statement...........................................     8
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, opening statement.......................................     8
        Prepared statement...........................................     9
    Hon. Cory Gardner, a Representative in Congress from the State of
      Colorado, opening statement....................................    10
        Prepared statement...........................................    11
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................    12
        Prepared statement...........................................    13
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, prepared statement................................    24
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, prepared statement.....................................    25

                                   Witnesses

    Cass R. Sunstein, Administrator, Office of Information and
      Regulatory Affairs.............................................    28
        Prepared statement...........................................    31
        Answers to submitted questions...............................   113

                               Submitted Material

    Supplemental memorandum, dated January 26, 2010, submitted by Mr.
      Waxman.........................................................    15
    ``Toward a 21st-Century Regulatory System,'' article dated
      January 18, 2011, by Barack Obama, Wall Street Journal.........    78
    ``The EPA's War on Texas,'' article dated January 4, 2011, Wall
      Street Journal.................................................    80
    Subcommittee exhibit binder......................................    82
    ``EPA `confident' Obama reg policy won't affect new climate
      rules,'' article dated January 18, 2011, by Andrew Restuccia,
      The Hill.......................................................   118

              THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM

                                  ----------

                          WEDNESDAY, JANUARY 26, 2011

                      House of Representatives,
                      Committee on Energy and Commerce,
                  Subcommittee on Oversight and Investigations,
                                                       Washington, D.C.
        The subcommittee met, pursuant to call, at 10:02 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Cliff
    Stearns (chairman of the subcommittee) presiding.
        Members present: Representatives Stearns, Terry, Sullivan,
    Murphy, Burgess, Blackburn, Myrick, Bilbray, Gingrey, Scalise,
    Gardner, Griffith, Barton, McKinley, Upton (ex officio),
    DeGette, Schakowsky, Weiner, Markey, Green, Gonzalez, Dingell,
    and Waxman (ex officio).
        Staff present: Karen Christian, counsel; Stacy Cline,
    counsel; Todd Harrison, chief counsel; Sean Hayes, counsel;
    Alan Slobodin, deputy chief counsel; Sam Spector, counsel;
    Peter Spencer, professional staff member; Kristin Amerling,
    minority chief counsel; Karen Nelson, minority deputy committee
    staff director, health; Karen Lightfoot, minority
    communications director and senior policy advisor; Greg Dotson,
    minority chief counsel, energy and environment; Alexandra
    Teitz, minority senior counsel; Stacia Cardille, minority
    counsel; Tiffany Benjamin, minority counsel; Anne Tindall,
    minority counsel; Ali Neubauer, minority investigator; Brian
    Cohen, minority senior investigator and policy advisor;
    Jennifer Berenholz, minority chief clerk; Lindsay Vidal,
    minority deputy press secretary; and Mitchell Smiley, special
    assistant.
        Mr. Stearns.  Good morning everybody, and let me welcome
    all of you to the Subcommittee on Oversight and Investigations.
    We appreciate your early attendance, and if possible, we would
    like to start promptly at 10:00. I would also like to point out
    that Chairman Upton has indicated that this will be a very
    active subcommittee. It is a very important subcommittee. I
    think most of us on both sides of the aisle realize that
    Congress, the House of Representatives, has a very important
    role in oversight of the Executive Branch. In this case, there
    are many areas that we can explore both in a way that is
    substantive and at the same time, I think, in a bipartisan way
    to have a better understanding of where there is error, where
    there is complement, and in the long run to give full oversight
    to the Executive Branch according to the Constitution. So I
    welcome this opportunity as chairman of this very important
    subcommittee, and I thank Mr. Upton, our chairman of the Energy
    and Commerce Committee, for this distinct honor to be able to
    be chairman.
        And of course, on the Democrat side, they have had some
    very illustrious people as Oversight and Investigations
    chairmen, including Mr. Dingell and Mr. Waxman and others, so I
    look forward to this opportunity for the next term and I
    welcome from both sides of the aisle any comments or feedback.
        Let me open with a little bit of procedure. All members
    will have 5 days to make their opening statements part of the
    record by unanimous consent. Also, we have agreed under our
    procedures that there will be no opening statements except for
    the chairman and the ranking member, Ms. DeGette, and then she
    will allot 5 minutes to her members for another additional 5
    and then I will do the same on this side. So again, I will do
    my 5 minutes, Ms. DeGette will do her 5 minutes, then I have 5
    minutes that I have allocated to members on this side, and then
    you will have the same thing. With that, let me proceed to my
    opening statement.

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        We convene this hearing of the Subcommittee on Oversight
    and Investigations today to gather information concerning the
    Administration's views and plans for regulatory reform. Now, we
    can all agree that this is a critically important topic, worthy
    of being the Energy and Commerce Committee's first hearing
    under the new Majority leadership.
        Over the past 2 years, as the American public confronted
    the worst unemployment crisis in a generation, it
    simultaneously has faced an onslaught of federal regulations,
    with more yet to come. While the growth of the regulatory state
    has been a continuous concern over the past 2 decades, the pace
    in recent years has been breathtaking, given the Nation's dire
    economic situation.
        According to the OMB data compiled by the Heritage
    Foundation, in fiscal year 2009, which spanned both the Bush
    and Obama Administrations, major rules added $13 billion in new
    costs to the economy. In fiscal year 2010 alone, federal
    agencies promulgated 43 major rules that imposed compliance
    costs estimated by the regulators themselves at almost $27
    billion, the highest annual level since 1981. And we know
    agencies' estimates of costs may often be just the tip of the
    iceberg when it comes to the economic impact on jobs,
    competitiveness and innovation.
        Now, along with all of these major rules come daunting
    levels of red tape, the costs of which cannot easily be
    counted. The Obama Administration's regulatory agenda released
    this past fall identifies 4,225 rules under development. The
    EPA alone has finalized 928 regulations since the start of this
    Administration, and it has also proposed a number of expensive
    and complex new rules affecting our energy system, our
    industrial and manufacturing infrastructure, and even the
    electric power we rely upon every day.
        On top of this, new rules related to the expansive new
    health care law and the financial services reforms are
    certainly looming on the horizon, with regulatory impacts on
    many different aspects of our lives. From our health to our
    wealth to the freedom to live our lives the way we want, the
    federal regulatory state continues to grow and intrude.
        Of course, many regulations, derived from the laws Congress
    enacted, are essential to protect the public health and welfare
    and ensure free markets. While appropriate implementation of
    these laws is essential for these purposes, appropriate
    consideration of the economic and employment impacts of the
    regulations is essential for protecting the Nation's economic
    health and individual freedom. I am concerned that this balance
    has not properly been struck during the apparent rush to
    regulate over the past 2 years.
        Against this backdrop, we consider today the President's
    new Executive order, initiatives relating to regulatory review
    and his stated focus on reducing the economic burdens of
    regulations and promoting job growth. Now, this focus is to be
    commended. We hope it will lead to meaningful results.
        To this end, we seek to understand specifically how the
    Administration performs its regulatory reviews and what changes
    we can expect that will reduce the regulatory burden,
    especially in the areas of this Committee's jurisdiction. We
    will hear testimony and ask questions of a single witness
    today: Mr. Cass Sunstein, the current Administrator of the
    Office of Information and Regulatory Affairs, within OMB. Mr.
    Sunstein's office serves as the intersection of the
    Administration's rulemaking review process. In some respects,
    his office serves or can serve as a regulatory traffic cop,
    carefully reviewing significant rules to ensure that they are
    consistent with the law, the President's policies and
    priorities and that they receive appropriate review and
    analysis from other federal offices and agencies. He is
    especially qualified to explain the prospects and limits of the
    Administration's regulatory reform plans.
        My colleagues, it is important that rhetoric is matched
    with measurable results and actions. For example, after the
    Bush Administration took office in 2001, it made little change
    to the existing regulatory guidance, but it made extensive use
    of the available tools to return rules, ask questions and
    prompt additional review. It took an active role, sending 19
    so-called return letters in the first 2 years of the
    Administration. The present Administration has not even sent
    one return letter. We will gather information about this today.
        We will also gather information to help us to understand
    the substance of the plans for retrospective regulatory review
    called for by the President. We should seek to understand the
    limits of the review ordered by the President. Rules issued by
    independent agencies like the FCC, the BCFP, CFTC, CPSC, FERC,
    FTC, SEC, FDIC, and the Federal Reserve and the NRC, among
    others, have apparently been placed beyond the purview of the
    President's review, and thus will not be affected by this
    initiative.
        The information we gather today should help this
    committee's various oversight projects in the coming session of
    Congress. We have much ground to cover.
        [The prepared statement of Mr. Stearns follows:]

                    Prepared Statement of Hon. Cliff Stearns

        We convene this hearing of the Subcommittee on Oversight
    and Investigations today to gather information concerning the
    Administration's views and plans for regulatory reform. We can
    all agree this is a critically important topic, worthy of being
    the Energy and Commerce Committee's first hearing under the new
    Majority leadership.
        Over the past 2 years, as the American public confronted
    the worst unemployment crisis in a generation, it
    simultaneously has faced an onslaught of federal regulations,
    with more yet to come. While the growth of the regulatory state
    has been a continuous concern over the past 2 decades, the pace
    in recent years has been breathtaking, given the nation's dire
    economic situation.
        According to the OMB data compiled by the Heritage
    Foundation, in fiscal year 2009, which spanned both the Bush
    and Obama Administrations, major rules added $13 billion in new
    costs to the economy. In fiscal year 2010 alone, federal
    agencies promulgated 43 major rules that imposed compliance
    costs estimated by the regulators themselves at almost $27
    billion, the highest annual level since 1981. And we know
    agency estimates of costs may often be just the tip of the
    iceberg when it comes to the economic impact on jobs,
    competitiveness, and innovation.
        Along with all of these major rules come daunting levels of
    red tape, the costs of which cannot easily be counted. The
    Obama Administration's regulatory agenda released this past
    fall identifies 4,225 rules under development.
        The EPA alone has finalized 928 regulations since the start
    of this Administration. And it has also proposed a number of
    expensive and complex new rules affecting our energy system,
    our industrial and manufacturing infrastructure, even the
    electric power we rely upon every day.
        On top of this, new rules related to the expansive new
    health care law and the financial services reforms are looming
    on the horizon, with regulatory impacts on many different
    aspects of our lives. From our health to our wealth to the
    freedom to live our lives the way we want, the federal
    regulatory state continues to grow and intrude.
        Of course, many regulations--derived from the laws Congress
    enacted--are essential to protect the public health and welfare
    and ensure free markets. While appropriate implementation of
    the laws is essential for these purposes, appropriate
    consideration of the economic and employment impacts of the
    regulations is essential for protecting the nation's economic
    health and individual freedom. I am concerned that this balance
    has not properly been struck during the apparent rush to
    regulate over the past 2 years.
        Against this backdrop, we consider today the President's
    new Executive order and initiatives relating to regulatory
    review and his stated focus on reducing the economic burdens of
    regulations and promoting jobs growth. This focus is to be
    commended; we hope it will lead to meaningful results.
        To this end, we seek to understand specifically how the
    Administration performs its regulatory reviews and what changes
    we can expect that will reduce the regulatory burden,
    especially in the areas of this committee's jurisdiction. We
    will hear testimony and ask questions of a single witness: Mr.
    Cass Sunstein, the current Administrator of the Office of
    Information and Regulatory Affairs (OIRA), within OMB.
        Mr. Sunstein's office serves at the intersection of the
    Administration's rulemaking review process. In some respects,
    his office serves or can serve as a regulatory traffic cop,
    carefully reviewing significant rules to ensure they are
    consistent with the law, the President's policies and
    priorities, and that they receive appropriate review and
    analysis from other federal offices and agencies. He is
    especially qualified to explain the prospects and limits of the
    Administration's regulatory reform plans.
        It is important that rhetoric is matched with measurable
    action and results. For example, after the Bush Administration
    took office in 2001, it made little change to the existing
    regulatory guidance, but it made extensive use of the available
    tools to return rules and ask questions and prompt additional
    review. It took an active role--sending 19 so-called return
    letters in the first 2 years of the Administration; the present
    Administration has not even sent one return letter. We will
    gather information about this today.
        We will also gather information to help us to understand
    the substance of the plans for retrospective regulatory review
    called for by the President. We should seek to understand the
    limits of the review ordered by the President. Rules issued by
    independent agencies--FCC, the BCFP, CFTC, CPSC, FERC, FTC,
    SEC, FDIC, the Federal Reserve, the NRC, among others--have
    apparently been placed beyond the purview of the President's
    review, and thus will not be affected by this initiative.
        The information we gather today should help this
    Committee's various oversight projects in the coming Session of
    Congress. We have much ground to cover; so let me recognize,
    with pleasure, our new Ranking Member, Ms. DeGette.

        Mr. Stearns.  It is my pleasure to recognize our new
    ranking member, Ms. DeGette.

     OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Ms. DeGette.  Thank you very much, Mr. Chairman. I am
    excited about the opportunity to serve in the 112th Congress as
    the ranking member of this esteemed committee. As you
    mentioned, Mr. Chairman, this is one of the most effective
    committees in the House, and in my 14 years on this
    subcommittee, it can also be one of the most bipartisan
    committees, and I look forward to working with you and my
    colleagues on both sides of the aisle both on new initiatives
    and also to follow up on some of the key investigations that we
    were working on in the last session of Congress. I also want to
    thank my chairman, Mr. Waxman, and my chairman emeritus, Mr.
    Dingell, for their fine investigative work on this subcommittee
    over the years.
        Both Democrats and Republicans have supported laws to
    protect the health, environment, financial security, and safety
    of the American people. Today's hearing is about how to ensure
    that the regulatory system that implements these laws functions
    as effectively and efficiently as possible. This is a laudable
    goal that both sides of the aisle should support and which I
    personally support wholeheartedly. I was encouraged by the
    President's announcement last night in the State of the Union
    about his new initiative to streamline and modernize
    government, which is way overdue in many cases.
        The President's new Executive order on improving regulation
    and regulatory review is an excellent starting point in this
    process. The order is based on such sound principles as the
    regulatory system must be based on the best available science,
    regulations protect public welfare while promoting economic
    growth and job creation should be retained, and the process
    must allow for public participation and open exchange of ideas,
    and the process must take into account both cost and benefits.
    Consistent with this directive, the Obama Administration has
    already identified several regulations that could be refined or
    cut, and I expect that we will hear from our witness today
    about additional areas where we can look at regulations.
        I commend the Administration for this effort, and I hope
    that we can work together to support cost-effective
    implementation of the laws Congress has enacted to protect the
    American public's health, financial safety and security and
    their personal safety. These sensible safeguards are vitally
    important to the American people.
        We must recognize, however, that regulations per se are not
    the problem. The mantra that all regulations are inherently bad
    and kill jobs is wrong and dangerous. Just 2-and-a-half years
    ago, for example, our financial system virtually collapsed
    following years of deregulatory efforts by Congress. The
    Securities and Exchange Commission and other federal financial
    regulators sat on the sidelines while flawed and unchecked
    financial practices robbed Americans of their retirement
    savings and caused our economy to nearly collapse. It wasn't
    regulations that caused the financial collapse and the deepest
    economic recession since the Great Depression, it was unbridled
    deregulation.
        For too long, big polluters have been allowed to dump toxic
    mercury into the air, resulting in birth defects and
    developmental problems for children in affected communities.
    Finally, after years of delay, the Administration is taking
    action to rein in this toxic contamination, and we should all
    support these efforts. Again, it is not regulations that caused
    these problems, it is the lack of regulations.
        At the direction of the Supreme Court, the EPA has recently
    set standards to cut carbon pollution from cars and trucks.
    This regulation is a win-win. Not only does it cut pollution
    responsible for climate change, it saves 1.8 billion barrels of
    oil, making the Nation more energy-independent and secure and
    saving American families money at the pump.
        Regulations to protect children from the health effects of
    tobacco and to prevent another salmonella outbreak in eggs or
    other threats to food safety are also important examples of
    where these problems have not been caused by an excess of
    regulations but rather a lack of regulations. So when you
    examine the details of these and other safeguards, you find
    that there is a real need for government action.
        Now, I look forward to hearing from our witness today
    regarding the implementation of the Obama Administration's
    Executive order on improving regulations and the regulatory
    process. It is a commonsense plan to cut outdated regulations
    and promote transparency. I also look forward to working with
    all members of this subcommittee to examine regulatory reform
    in a sensible way. Thank you, Mr. Chairman.
        [The prepared statement of Ms. DeGette follows:]

                    Prepared Statement of Hon. Diana DeGette

        Both Democrats and Republicans have supported laws to
    protect the health, environment, financial security, and safety
    of the American public. Today's hearing is about how to ensure
    that the regulatory system that implements these laws functions
    as efficiently and as effectively as possible.
        This is a laudable goal that both sides of the aisle should
    support. The President's new Executive order on improving
    regulation and regulatory review is an excellent starting
    point. The order is based on sound principles such as:
         The regulatory system must be based on the best
    available science;
         Regulations protect public welfare while promoting
    economic growth and job creation;
         The process must allow for public participation
    and the open exchange of ideas; and
         The process must take into account both costs and
    benefits.
        Consistent with this directive, the Obama Administration
    has already identified several regulations that could be
    refined or cut.
        I commend the Administration for this effort. And I hope
    that we can work together to support cost-effective
    implementation of the laws Congress has enacted to protect the
    American people's health, financial security, and safety. These
    sensible safeguards are vitally important to the American
    people.
        We must recognize, however, how important regulations are
    to our national welfare. The mantra that regulations are
    inherently bad and kill jobs is wrong and dangerous.
        Just 2-and-a-half years ago, our financial system virtually
    collapsed. Following years of deregulatory efforts by Congress,
    the Securities and Exchange Commission and other federal
    financial regulators sat on the sidelines while flawed and
    unchecked financial practices robbed Americans of their
    retirement savings and caused the our economy to collapse.
        It wasn't regulations that caused our financial collapse
    and the deepest economic recession since the Great Depression.
    It was unbridled deregulation.
        For too long, big polluters have been allowed to dump toxic
    mercury into the air--resulting in birth defects and
    developmental problems for children in affected communities.
    Finally--after years of delay--the Administration is taking
    action to rein in this toxic contamination. We should all
    support these efforts.
        At the direction of the Supreme Court, EPA has recently set
    standards to cut carbon pollution from cars and trucks. This
    regulation is a win-win. Not only does it cut pollution
    responsible for climate change, it saves 1.8 billion barrels of
    oil--making the nation more secure and saving American families
    at the pump.
        Regulation to protect children from the health effects of
    tobacco and to prevent another salmonella outbreak in eggs or
    other threats to food safety are other important examples of
    where government is on schedule to act and must do so.
        When you examine the details of these and other safeguards,
    you find that there is a real need for governmental action and
    that action will substantially benefit the public and the
    nation.
        I look forward to hearing from our witness regarding
    implementation of the Obama Administration's Executive order on
    improving regulations and the regulatory process. This is a
    common sense plan to cut outdated regulations and promote
    transparency. In contrast, the Republican plan to eliminate
    safeguards vital to the welfare of Americans makes absolutely
    no sense at all.

        Mr. Stearns.  I thank the gentlelady.
        And now, according to our procedures, we have 5 minutes on
    this side, and they will be allocated to Mr. Upton, the
    chairman, at 1 minute, Mr. Barton, 2, Mr. Burgess, 1, and Mr.
    Gardner, 1. So the chairman, Mr. Upton, is recognized for 1
    minute.
        Mr. Upton. Well, thank you, Mr. Chairman, and I would ask
    unanimous consent that my full statement be made part of the
    record.
        Mr. Stearns.  By unanimous consent.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Thank you for your very quick efforts to begin
    work in this 112th Congress. We have a lot to accomplish over
    the next 2 years, and this subcommittee will certainly play a
    key role.
        Let me begin by welcoming our witness today, Mr. Cass
    Sunstein of the Office of Information and Regulatory Affairs.
    It is fitting that our first hearing is focused squarely on job
    creation and economic consequences of burdensome regulations
    that stifle investment and shift jobs overseas. Our Majority
    has made it clear that jobs are priority number one in this
    Congress. We can create a climate of job growth by cutting
    spending, by limiting the size and scope of government. I have
    asked our committee members to track down burdensome
    regulations that choke investment and destroy jobs, so we will
    identify these regulations, shine a light on them and then seek
    their repeal.
        I welcome the President's announcement that his
    Administration plans to evaluate regulations to ensure that the
    benefits justify the costs and federal rules are tailored to
    impose the least burden on society, and I would ask again that
    the rest of my statement be made part of the record. I yield
    back.
        [The prepared statement of Mr. Upton follows:]

                     Prepared Statement of Hon. Fred Upton

        Thank you, Mr. Chairman, and thank you for your quick
    efforts to begin the work of the 112th Congress. We have a lot
    to accomplish over the next 2 years, and this Subcommittee will
    play a key role.
        Let me begin by welcoming today's witness, Mr. Cass
    Sunstein of the Office of Information and Regulatory Affairs.
    Mr. Sunstein is the Administration's point person on regulatory
    issues, which makes him the ideal witness for today's hearing
    on recent changes--announced last week by President Obama--to
    the Administration's regulatory stance.
        It is fitting that our first hearing is focused squarely on
    job creation and the economic consequences of burdensome
    regulations that stifle investment and shift jobs overseas. Our
    majority has made it clear that jobs are priority number one
    for the 112th Congress. We can create a climate of job growth
    by cutting spending, and by limiting the size and scope of
    government. I have tasked our Committee Members to track down
    burdensome regulations that choke investment and destroy jobs.
    We will identify these regulations, shine a light on them, and
    then seek repeal.
        I welcome the President's announcement that his
    administration plans to evaluate regulations to ensure the
    benefits justify the cost and federal rules are tailored to
    impose the least burden on society.
        I also hope today's hearing will shed light on the many
    unanswered questions about the new Executive order. How does it
    differ from practices currently in place? How will the
    administration's regulatory approach change for the thousands
    of pages of forthcoming regulations as a result of legislation
    enacted last year?
        Last year more than 6,000 pages of regulations were
    released to implement the health care law. Next month, the EPA
    will issue Boiler MACT rules, an earlier version of which were
    estimated by the agency itself to cost thousands of jobs.
        We will also explore what this Executive order means for
    the litany of other regulatory policies in the pipeline, from
    greenhouse gas standards to government regulation of the
    internet. With 20 consecutive months of near double digit
    unemployment, the public expects, and demands, that we do
    better.
        Thank you. I yield back.

        Mr. Stearns.  The gentleman yields back.
        The gentleman from Texas is recognized for 2 minutes.
        Mr. Barton.  Mr. Chairman, do you want to go back and
    forth?
        Mr. Stearns.  No, we are going to take our full 5 minutes
    on this side and then she is going to do her 5 minutes.
        Mr. Barton.  OK. I ask unanimous consent that my entire
    statement be put in the record, Mr. Chairman.
        Mr. Stearns.  Consent granted.

       OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Barton.  Let me congratulate you on being the chairman
    of this subcommittee. It is one of the important, if not the
    most important subcommittee of what I consider to be the best
    committee in the House. In a previous majority, I was
    subcommittee chairman of this subcommittee for 4 years and
    enjoyed it immensely. I have worked with numerous other
    subcommittee chairmen in Oversight.
        The importance of congressional oversight cannot be
    overstated. In my opinion, the last 2 years under Mr. Waxman,
    Subcommittee Chairman Stupak was not aggressive in subjecting
    the Obama Administration to stringent oversight. I am sure you,
    Mr. Chairman, are going to correct that. As chairman emeritus
    of this committee, I stand with Chairman Upton and yourself in
    support of immediate and ongoing oversight of the Obama
    Administration and its practices and policies. Congressional
    oversight, if effective, leads to better functioning of
    government, one that protects the taxpayers by identifying
    excessive government spending, abusive regulatory regimes, and
    discovering ways to decrease spending and stimulate the
    economy.
        Today we are going to discuss the President's Executive
    order entitled ``Improving Regulation and Regulatory Review.''
    The order instructs federal agencies to develop plans to ensure
    that past, present and new regulations protect the public
    health, safety and welfare, and the environment while at the
    same time promoting economic growth. Who can be opposed to
    that, Mr. Chairman? However, having said that, in the last year
    alone, I have sent three letters calling attention to the lack
    of such analysis. I sent a letter to the White House concerning
    the impact of the Environmental Protection Agency's
    CO2 endangerment finding. I sent another letter to
    the EPA regarding the proposed economic impact of proposed
    ozone standards, and this September I sent a letter to Chairman
    Waxman asking that he schedule a hearing on the
    Administration's decisionmaking and consideration of job
    impacts in connection with a major rulemaking and other
    regulatory initiatives that might adversely affect employment
    in the United States.
        I see my time has expired, Mr. Chairman, so I am going to
    yield back and ask that the rest of my statement be put in the
    record.
        [The prepared statement of Mr. Barton follows:]

                     Prepared Statement of Hon. Joe Barton

        Thank you Mr. Chairman for holding this important hearing,
    which marks the first oversight hearing of the 112th Congress.
    The importance of congressional oversight of the Executive
    branch cannot be overstated. For the past 2 years, the Obama
    Administration has not been subject to stringent oversight. As
    Chairman Emeritus, I stand with Chairman Upton and Subcommittee
    Chairman Sterns in support of immediate and ongoing oversight
    of the Obama Administration and its practices and policies.
        Effective oversight leads to a better functioning
    government-one that protects taxpayers by identifying excessive
    government spending and abusive regulatory regimes and
    discovering ways to decrease spending and stimulate the
    economy.
        Today we are here to discuss President Obama's Executive
    order entitled ``Improving Regulation and Regulatory Review.''
    The order instructs federal agencies to develop plans to ensure
    that past, present, and new regulations protect the public's
    health, welfare, safety, and environment while at the same time
    promoting economic growth and job creation. In theory I agree
    with the President's order. However, for the past two years the
    Obama Administration has pursued an aggressive agenda of
    regulatory expansion. Regulations were passed prior to the
    completion of a meaningful cost-benefit analysis that weighed
    the proposed benefit to the public against the actual cost to
    the economy.
        Last year alone, I sent three letters calling attention to
    the lack of this analysis. In January, I sent a letter to the
    White House concerning the impact of the Environmental
    Protection Agency's CO2 endangerment finding on
    American jobs. In June, I sent a letter to EPA regarding the
    economic and job impacts of proposed ozone standards. And, in
    September, I sent a letter to then Committee Chairman Waxman
    requesting the Majority schedule a hearing to examine
    Administration decision-making and consideration of job impacts
    in connection with major rule-making and other regulatory
    initiatives that may adversely affect employment in the United
    States. I am glad that the President is finally asking for some
    kind of cost-benefit review and I look forward to our
    discussion on how his Administration plans to do this today.
        I want the public to know what I stand for. I support
    government regulations that equate to effective protection of
    the public's health and safety. I do not support those that
    suppress innovation and unnecessarily burden small businesses.
    I support government regulations that are based on sound
    science. I do not support those that are based on bureaucrats'
    opinions. And, as long as I serve the American public I will do
    my best to ensure that good governance prevails over lofty
    ideological goals.

        Mr. Stearns.  By unanimous consent, will do. I thank the
    gentleman from Texas and recognize Dr. Burgess for 1 minute.
        Dr. Burgess.  Thank you, Mr. Chairman, and I also want to
    welcome our witness here today. An important subject, improving
    the regulatory environment. In our country, in fact, the
    President himself penned an op-ed in the Wall Street Journal on
    January 18th. Quoting from the President, ``Over the past 2
    years the goal of my Administration has been to strike the
    right balance, and today I am signing an Executive order that
    makes clear this is the operating principle of our
    government.'' It is too bad that we didn't have that principle
    2 weeks prior, because in another editorial in the Wall Street
    Journal on January 4th they talked about the EPA violating
    every tenet of administrative procedure to strip Texas of its
    authority to issue air permits that are necessary for large
    power and industrial plants. Going on, the best the EPA could
    offer up as a legal excuse for voiding Texas permitting
    authority last Thursday was that the EPA had erred in
    originally improving the State's implementation plan in 1992.
    The error that escaped the EPA's notice for 18 years was that
    the Texas plan did not address all pollutants. Back then, Texas
    hadn't complied with regulations that didn't exist and wouldn't
    exist for an additional 18 years.
        I will yield back the balance of my time, Mr. Chairman.
        I would ask that both of these be made part of the record,
    these reprints from the Wall Street Journal.
        [The information appears at the conclusion of the hearing.]
        Mr. Stearns.  I thank the gentleman, and I want to welcome
    two freshmen on the Oversight and Investigation Subcommittee:
    Morgan Griffith from Virginia and Cory Gardner from Colorado,
    and at this point allow Mr. Gardner 1 minute.
        Ms. DeGette.  First of all, would the gentleman yield?
        Mr. Stearns.  I would be glad to yield.
        Ms. DeGette.  This is the first I can remember we have had
    two Coloradoans on this committee, and so I also want to
    welcome my neighbor to the north and also our other new
    freshman, but particularly Cory.
        Mr. Stearns.  Good. Mr. Gardner, you have 1 minute.
        Mr. Gardner.  Thank you, Mr. Chairman, and thank you,
    Congresswoman DeGette. Thank you very much for the time to be
    here. Thank you to the witness. And I ask unanimous consent
    that my statement be entered in its entirety in the record.
        Mr. Stearns.  By unanimous consent.

      OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Mr. Gardner.  Thank you. Each day I am in town, my staff or
    I sit down with about five businesses from Colorado, and every
    business that we meet with talks about the concern that they
    have that this Administration is regulating them out of jobs
    and out of business, and those that aren't already being
    regulated out of business are fearful that the proposed rules
    will put them on that path. We exist in an environment where
    government regulation is the answer to all of our problems.
    Congress can't get both the House and the Senate to pass a bill
    so the Administration does it, and they do it without having a
    process through Congress. The people speak through their
    representatives and then the Administration circumvents the
    people's representative. The process must be fixed and it must
    be fixed here.
        The Executive order is the Administration's attempt to
    clean the regulatory house, so to speak. It is a directive to
    agencies that they must provide a cost-benefit analysis when
    justifying regulations and reduce the burdens on small
    businesses that are forced to comply. The question I have,
    though, is, how do you define benefits and what constitutes a
    burden? The last 2 years have shown that the Administration has
    a very different view of what benefits our economy and our
    working families.
        So today is the first step that we have to go back to our
    hardworking constituents with the answers that are presented to
    every member here. We need to examine these sweeping federal
    rule changes that have the potential to cripple various sectors
    of our economy and negatively affect every business.
        I thank you, and I hope we move away from ``when all fails,
    regulate.''
        [The prepared statement of Mr. Gardner follows:]

                    Prepared Statement of Hon. Cory Gardner

        Mr. Chairman, I've been in office for about 3 weeks now.
    Each day I'm in town, I, or my staff, sit down with at least 5
    businesses that operate in and out of Colorado. We have met
    with a cement production company, various municipalities trying
    to find ways to deal with water shortages, mining operations,
    manufacturing companies, and the list goes on.
        Every business that talks to my office has the same
    complaint: the Administration is regulating them out of jobs
    and out of business. And those that aren't already being
    regulated out of business are fearful that proposed rules will
    put them on that path.
        We exist in an environment where government regulation is
    the answer to all our problems. Congress can't get both the
    House and the Senate to pass a bill like cap and trade so the
    Administration does it--and they do it behind closed doors
    without having had an open and honest vetting process. What
    kind of democracy is that? The people speak through their
    representatives, and then the administration circumvents the
    people's will. The process must be fixed and it must be fixed
    here.
        Executive Order 13563 is the Obama Administration's attempt
    to clean the regulatory house, so to speak. It's a directive to
    agencies that they must provide a cost-benefit analysis when
    justifying regulations, and reduce the burdens on small
    businesses that are forced to comply. The question I have is:
    how do you define benefits and what constitutes a burden? The
    last 2 years have shown that the administration has a very
    different view of what benefits our economy, our culture, and
    our working families. I define benefits by protecting the
    environment that has been given to us, providing affordable
    healthcare to those that want it, while at the same time
    keeping Americans at work, and allowing businesses to prosper.
    I define burden as something that will put so much pressure on
    industries that they must let go many of their employees, pay
    fines that put them way behind production, litigate until they
    can't afford it anymore, or worse--shut down entirely.
        Today is the first step in addressing the concerns of my
    hard-working constituents and those of every member present. We
    need to examine sweeping federal rule changes that have the
    potential to cripple various sectors of our economy and
    negatively affect Colorado businesses.
        I hope that this new Executive order is an indication that
    the administration believes the same thing, but I am skeptical
    that they are wed to the traditions of the past 2 years: when
    all else fails, regulate. This cannot continue and I look
    forward to hearing the witness's answers to many of our
    questions on how it will assess pending and future regulations.
        Thank you, Mr. Chairman. I yield back my time.

        Mr. Stearns.  I thank the gentleman, and I recognize Ms.
    DeGette.
        Ms. DeGette.  Mr. Chairman, I will recognize our ranking
    member of the full committee, Mr. Waxman, for our additional 5
    minutes.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman.  Mr. Chairman, I am a strong opponent of
    unnecessary regulations. In my years of service on this
    committee and on the Oversight and Government Reform Committee,
    I led numerous oversight and legislative efforts to promote
    government efficiency and eradicate wasteful spending and
    programs. In fact, in the 1990s, I served on the Advisory
    Committee for the corrections calendar set up by Speaker Newt
    Gingrich to identify outdated and pointless regulations so they
    could be quickly eliminated. I believe eliminating unnecessary
    government regulation is integral to ensuring effective
    government, but this is an area where it is easy to paint with
    too broad a brush. We need to remember that federal regulations
    also play a vital role in growing our economy and protecting
    our health and environment.
        That is why I am concerned that much of the rhetoric we are
    hearing from the Republican side of the committee is a repeat
    of what happened the last time the Republicans took control of
    Congress. In 1995, the newly elected Republican majority
    conducted an all-out assault on regulations. They told alarming
    anecdotes about the impact of senseless government regulation.
    We were told that the Consumer Product Safety Commission
    required holes in the bottoms of buckets and that OSHA killed
    the tooth fairy by preventing parents from taking home their
    children's baby teeth from the dentist's office. These stories
    share two traits. They sounded compelling and they were simply
    not true. Now we are hearing repeated claims that regulations
    destroy jobs and stymie economic growth, and this is another
    myth.
        Consider the collapse of the financial markets in 2008.
    This meltdown on Wall Street threw our economy into the deepest
    recession since the 1930s. Millions of Americans lost their
    jobs and it cost U.S. taxpayers billions of dollars to bail out
    AIG and Wall Street banks. The cause wasn't regulation. It was
    the absence of regulation. As Alan Greenspan testified before
    me and other members of the Oversight Committee, he said he
    made a mistake in promoting deregulation. He said he had found
    a flaw looking back over the situation in his free market
    ideology and was in a state of shock and disbelief.
        The Deepwater Horizon oil spill, which Chairman Stupak held
    hearings on in this subcommittee as well as on food safety as
    well as on automobile problems, that Deepwater Horizon oil
    spill wreaked havoc on the economies of the Gulf States. It was
    caused by too little oversight and regulation, not too much.
        Members who were on this committee last Congress may
    remember our very first hearing. We brought in the CEOs from
    our Nation's leading manufacturing and energy companies to
    testify. What they told us is that they needed Congress to pass
    comprehensive energy legislation so they could plan and invest
    for the future. Jim Rogers, CEO of Duke Energy, told us: ``It
    is critical we know the rules of the road of climate change as
    soon as possible to make sure that we are making the right
    investments. Regulatory uncertainty is postponing investments
    and is postponing the creation of jobs from apprentices to
    engineers to Ph.Ds.'' Jeffrey Immelt, chairman and CEO of
    General Electric, who last week was asked by President Obama to
    lead the Council on Jobs and Competitiveness, told us:
    ``Certainty in the investment world is critical to success and
    what we lack today is certainty. I am a capitalist pure, plain
    and simple, and I just want the system we have today not to be
    untenable over the long term insofar as the science is
    compelling on global warming.'' What these CEOs were telling us
    is that they needed more energy and carbon regulation, not
    less, so they would know the rules and plan and invest for the
    future.
        Subcommittee Ranking Member DeGette and I circulated a
    memorandum to our Democratic members that provides more detail
    about these examples and others, and Mr. Chairman, I ask
    unanimous consent that this memorandum be included in the
    record to today's hearing.
        Mr. Stearns.  Granted.
        Mr. Waxman.  Thank you.
        As we commence this new Congress, let us put aside the
    false and hyperbolic claims about regulations killing jobs. By
    all means, let us prune unnecessary regulations where we find
    them but let us also not hesitate to regulate where needed to
    protect our economy and our children's future. There is no
    doubt that anybody would understand if you don't regulate to
    protect the environment, it is going to be at a disadvantage
    for a company to put in pollution control if their competitors
    don't do the same thing. Regulations can make the market work
    better for everybody while at the same time protecting the
    public interest. Yield back my time.
        [The prepared statement of Mr. Waxman follows:]

                   Prepared Statement of Hon. Henry A. Waxman

        Mr. Chairman, I am a strong opponent of unnecessary
    regulations. In my many years of service on the Committee on
    Oversight and Government Reform, I led numerous oversight and
    legislative efforts to promote government efficiency and
    eradicate wasteful spending and programs.
        In the 1990s, I also served on the Advisory Committee for
    the Corrections Calendar, an initiative established by Speaker
    Newt Gingrich to identify outdated and pointless regulation so
    it could be quickly eliminated.
        I believe eliminating unnecessary government regulation is
    integral to ensuring effective government.
        But this is an area where it is easy to paint with too
    broad a brush. We need to remember that federal regulations
    also play a vital role in growing our economy and protecting
    our health and environment.
        That is why I am concerned that much of the rhetoric we are
    hearing from the Republican side of the Committee is a repeat
    of what happened the last time the Republicans took control of
    Congress.
        In 1995, the newly elected Republican majority conducted an
    all-out assault on regulations. They told alarming anecdotes
    about the impact of senseless government regulation. We were
    told that the Consumer Product Safety Commission required holes
    in the bottom of buckets and that OSHA killed the tooth fairy
    by preventing parents from taking home their children's baby
    teeth from the dentist.
        These stories shared two major traits: they sounded
    compelling, but they were simply not true.
        Now we are hearing repeated claims that regulations destroy
    jobs and stymie economic growth. This is another myth.
        Consider the collapse of the financial markets in 2008.
    This meltdown on Wall Street threw our economy into the deepest
    recession since the Great Depression. Millions of Americans
    lost their jobs and it cost U.S. taxpayers billions of dollars
    to bail out AIG and Wall Street banks.
        The cause wasn't regulation; it was the absence of
    regulation. As Alan Greenspan testified before me and other
    members of the Oversight Committee, he had ``made a mistake''
    in promoting deregulation. He said he had ``found a flaw'' in
    his free-market ideology and was in ``a state of shocked
    disbelief.''
        The Deepwater Horizon oil spill wreaked havoc on the
    economies of Gulf states. It was caused by too little oversight
    and regulation--not too much.
        Members who were on this committee last Congress may
    remember our first hearing. Like today's hearing, our focus two
    years ago was on how to build a strong economic future for our
    country. We invited nine CEOs from our nation's leading
    manufacturing and energy companies to testify.
        And what they told us was that they needed Congress to pass
    comprehensive energy legislation so they could plan and invest
    for the future. The told us that sensible, market-based
    regulation of carbon emissions would spur billions of dollars
    in new investments.
        Here is what Jim Rogers, the CEO of Duke Energy, told us:
    ``It is critical we know the rules of the road of climate
    change as soon as possible to make sure that we are making the
    right investments. Regulatory uncertainty is postponing
    investments and [i]t's postponing the creation of jobs from
    apprentices to engineers to Ph.Ds.''
        Jeffrey Immelt, Chairman and CEO of General Electric, was
    asked last week to lead the President's Council on Jobs and
    Competitiveness. He told us the same thing: ``Certainty in the
    investment world is critical to success. And what we lack today
    is certainty. I am a capitalist, pure, plain, and simple. And I
    just think the system we have today is untenable over the long
    term insofar as the science is so compelling on global
    warming.''
        What these CEOS were telling us is that they needed more
    energy and carbon regulation--not less--so they would know the
    rules and plan and invest for the future.
        They understood what Alan Greenspan forgot: regulation is
    often needed to promote jobs and economic prosperity.
        Subcommittee Ranking Member DeGette and I circulated a
    memorandum to our Democratic members that provides more detail
    about these examples and others. I ask unanimous consent that
    this memorandum be included in the record of today's hearing.
        As we commence this new Congress, let's put aside the false
    and hyperbolic claims about regulations killing jobs. By all
    means, let's prune unnecessary regulations where we find them.
    But let's also not hesitate to regulate where needed to protect
    our economy and children's future.
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        Mr. Stearns.  I thank the distinguished member.
        I ask unanimous consent that the written opening statements
    of all members who so desire be introduced into the record.
    Without objection, the documents will be entered into the
    record.
        [Additional statements submitted for the record follow:]

                   Prepared Statement of Hon. John D. Dingell

        Thank you, Mr. Chairman.
        I thank you for holding today's hearing, and look forward
    to hearing from Administrator Sunstein.
        Today's hearing topic is an important one. Executive
    departments and agencies serve a critical role in our governing
    process, promulgating rules and regulations as required in the
    laws written here by Members of Congress.
        But our responsibilities as Members of Congress do not end
    when the President places his signature on a piece of
    legislation. I have long held that it is our responsibility as
    Members of Congress to ensure that the regulations and rules
    laid forward as a result of legislation allow for public
    comment, do not adversely impact our state and local
    governments and business community, provide a benefit to
    economic growth--not hinder it--and above all protect the
    public good.
        I commend President Obama for calling on the departments
    and agencies to reform their regulatory process to increase
    transparency, efficiency, coordination and public
    participation, as well as to ensure that regulations and rules
    protect public health, welfare, safety and our environment,
    while also allowing for economic growth and job creation.
        I also commend the President for taking into consideration
    the impact regulations have on our small businesses, who serve
    a vital role as engines of job creation in our communities.
    Allowing for regulatory flexibility for small employers,
    assures that small employers can comply with the letter of the
    law without endangering their business.
        Of some concern to me, is the President's directive for a
    government-wide review of regulations and rules deemed to be
    outdated or ineffective. I agree that we must constantly review
    our programs to determine whether they are working effectively
    or efficiently and to determine where gaps, if any, exist, and
    I believe that this provision will further that goal.
        However, we must ensure that the public participation
    mandate is heeded to when departments or agencies determine
    certain rules or regulations must be withdrawn or repealed.
        George Santayana said something which I thought was very
    interesting. He said, ``Those who cannot remember the past are
    condemned to repeat it."
        We have seen what happens when careful consideration is not
    given to deregulation, most recently in the unholy alliance
    between Wall Street and Bush-era policies that resulted in the
    2008 financial crisis.
        Moving forward we must strive to ensure that there is a
    balance between our responsibilities as the federal government
    to regulate effectively, while also protecting the good of the
    public.
        Thank you, and I look forward to hearing from Administrator
    Sunstein.
                                  ----------

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        Mr. Stearns. Also, I ask unanimous consent that the
    contents of the document binder be introduced into the record.
    Without objection, the documents will be entered.
        [The information appears at the conclusion of the hearing.]
        Mr. Stearns.  Now, we get to our witness, and let me
    welcome the Administrator, Cass Sunstein, to our witness stand.
    I thought before we move forward I would give you a little
    brief background. I know oftentimes we have the witnesses and
    we don't know a lot about them, but I thought it would be very
    illustrative for all of us to hear a brief summary of his
    resume. Before he became Administrator, Mr. Sunstein was the
    Felix Frankfurter Professor of Law at Harvard Law School. He
    graduated in 1975 from Harvard College and in 1978 from Harvard
    Law School. After graduation, he clerked for Justice Benjamin
    Kaplan of the Massachusetts Supreme Judicial Court and Justice
    Thurgood Marshall of the United States Supreme Court, and then
    he worked as an attorney advisor in the Office of Legal Counsel
    of the U.S. Department of Justice. He was a faculty member at
    the University of Chicago Law School from 1991 to 2008. A
    specialist in administrative law, regulatory policy and
    behavioral economics, he is the author of many articles and
    books. And so Mr. Sunstein, I welcome you to the subcommittee's
    hearing.
        As you know, the testimony that you are about to give is
    subject to Title 18, section 1001 of the United States Code.
    When holding an investigative hearing, this committee has the
    practice of taking testimony under oath. Do you have any
    objection to testifying under oath?
        Mr. Sunstein.  None at all, Mr. Chairman.
        Mr. Stearns.  All right. The Chair then advises you that
    under the rules of the House and the rules of the committee,
    you are entitled to be advised by counsel. Do you desire to be
    advised by counsel during your testimony today?
        Mr. Sunstein.  I do not.
        Mr. Stearns.  In that case, if you would please rise and
    raise your right hand?
        [Witness sworn.]
        Mr. Stearns.  We welcome your 5-minute opening statement.

        TESTIMONY OF CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE OF
                   INFORMATION AND REGULATORY AFFAIRS

        Mr. Sunstein.  Thank you, Mr. Chairman. Thank you, other
    Mr. Chairman. There are several other Mr. Chairmen. Thanks to
    all of you. I am grateful and greatly honored to have the
    opportunity to appear today to discuss our new Executive
    order--it has a new number, 13563, on improving regulation and
    regulatory review--and also our new Memorandum from the
    President on small business and job creation, and I will have a
    few words to say about that memorandum in a moment.
        The President has made clear that these documents are meant
    to create foundations for a regulatory system that protects
    public health and welfare while promoting economic growth,
    innovation--a key word in his State of the Union address--
    competitiveness and job creation as several of you have just
    emphasized. The Executive order and the Presidential Memorandum
    require a number of concrete steps to achieve that overriding
    goal.
        By way of background, let me briefly note that since 1993,
    the process of regulatory review has operated under Executive
    order under 12866 from President Clinton, which builds very
    directly on an Executive order issued by President Reagan in
    1981 called Executive Order 12291. The Clinton Executive order
    sets out a number of principles and requirements that were in
    operation both under President Clinton and President Bush.
    Among other things, it calls for careful consideration of costs
    and benefits, for tailoring regulations to impose the least
    burden on society, and for selecting the approach that
    maximizes net benefits. It also calls for a process of
    interagency review coordinated by the Office of Information and
    Regulatory Affairs. That process has been in place for nearly
    30 years.
        The new Executive Order 13563 has six provisions that are
    designed to supplement and improve the process. First, it
    reaffirms the basic principles and structures of Executive
    Order 12866. In doing so, it emphasizes a point to which
    several of you have just pointed: the need for predictability
    and certainty. That is right out front in the new Executive
    order. It also emphasizes the importance of using the ``least
    burdensome tools for achieving regulatory ends.'' That is a
    quotation. It emphasizes finally what hadn't been in his
    predecessor Executive orders, the need to ``measure and seek to
    improve the actual results of regulatory requirements.'' That
    is the beginning.
        Second, the new Executive order calls for public
    participation. It tries to bring rulemaking into the 21st
    century by requiring use of the Internet to promote an open
    exchange of ideas and perspectives. It also directs agencies to
    act before they commence rulemaking to seek the views who are
    likely to be affected, including those would be burdened by
    regulatory requirements. Public participation is front and
    center.
        Third, and a point that has received considerable attention
    over the last several years, indeed decades, the new Executive
    order asks agencies to try to harmonize, simplify, and
    coordinate rules. It emphasizes that some sectors and
    industries face inconsistent, overlapping and redundant
    requirements. To reduce burdens and costs and to promote
    simplicity, it calls for greater coordination across the
    Federal Government. That is designed explicitly to promote
    innovation.
        Fourth, the new Executive order asks agencies to consider
    flexible approaches that maintain freedom of choice for the
    public. Approaches that are choice preserving include, for
    example, provision of information rather than foreclosure of
    decisions through mandates and commands. This is more than a
    plea, a direction for flexibility.
        Fifth, as noted, Executive Order 13563 calls for scientific
    integrity. It directs each agency to ensure the objectivity of
    information on which it relies.
        Sixth and finally, what has been most publicized in the
    week since the Executive order was signed, it calls for
    retrospective analysis of existing rules. It is concerned about
    rules that may be outmoded, ineffective, or excessively
    burdensome. It directs agencies to produce preliminary plans
    for periodic review of significant rules and to submit them to
    the Office of Information and Regulatory Affairs within 120
    days, a pretty tight time frame. In this way, the Executive
    order is aimed at the stock of existing requirements as well as
    the flow of new requirements. Both are covered by the new
    Executive order.
        The Presidential Memorandum on Small Business and Job
    Creation emphasizes the essential role that small businesses
    play in the American economy. With job creation in the title
    and economic growth in the body of the memorandum, the
    President has insisted as he wrote in the Wall Street Journal
    on federal agencies doing more to account for and reduce the
    burdens regulations may place on small businesses. To do that,
    he has emphasized of the Regulatory Flexibility Act and
    directed agencies specifically to explain themselves whenever
    in proposed rules or final rules they fail to provide
    flexibilities to small businesses in the form, for example, of
    partial or total exemptions, simplified reporting requirements
    or delayed compliance dates.
        Taken as a whole, Executive Order 13563 and the new
    Memorandum on Small Business and Job Creation create strong
    foundations for improving regulation and regulatory review. I
    am looking forward to answering your questions.
        [The prepared statement of Mr. Sunstein follows:]
        [GRAPHIC] [TIFF OMITTED] 64695.048

        [GRAPHIC] [TIFF OMITTED] 64695.049

        [GRAPHIC] [TIFF OMITTED] 64695.050

        Mr. Stearns.  I thank the witness.
        Let me, before we start, perhaps set the tone here. You saw
    that Mr. Sunstein, we sort of changed the rules here to
    expedite things, and it is important, I think, to stress that
    the members' questions that they are going to ask get a direct
    answer from you. All of us have been in hearings where we just
    have 5 minutes and it is very difficult to get an answer, and I
    think that the questions that are going to be asked of you
    reflect that we are willing to do away with our opening
    statements so we can provide more time for testimony and
    questioning. Therefore, I just ask to make it as productive as
    possible if when you answer the questions you can answer yes or
    no. Some members will ask you these type of questions, and I
    know it is going to be difficult but we ask for your patience
    and forbearance that you would answer yes or no to these
    questions, and I thank you in advance for doing that. And with
    that in mind, let me be the first one to ask you questions.
        The Obama Executive order was issued but the comments from
    organizations representing all the stakeholders and the job
    creators in this country, a lot are concerned with the Obama
    order: that there were a lot of independent regulatory agencies
    not part of the OIRA review. So my question for you, Mr.
    Sunstein, is, are the regulatory actions of the independent
    regulatory agencies such as the SEC, the FCC, the Federal Trade
    Commission, FERC and others, subject to OIRA regulatory review.
    Are they, yes or no?
        Mr. Sunstein.  No.
        Mr. Stearns.  I am also concerned about what appears to be
    a sort of amorphous type of standards that was articulated by
    the President. This is what is quoted in the Executive order:
    ``Where appropriate and permitted by law, each agency may
    consider and discuss values that are difficult or impossible to
    quantify including equity, human dignity, fairness, and
    distributive impacts.'' Now, these are all subjective terms so
    you are going to make a decision on regulatory reform based
    upon human dignity, fairness, and distributive impacts, which I
    assume means distribution of income. Is my interpretation
    correct when you say distributive impacts, yes or no? Does that
    mean distribution of income?
        Mr. Sunstein.  That wasn't our intent.
        Mr. Stearns.  You are saying no. OK. But these standards, I
    mean, just looking at it, any rational cost-benefit analysis is
    going to be tossed out the window instead of saying does this
    economically make sense, what you can quantify. These agencies
    are going to be using these amorphous methods to determine the
    economic value of a regulation, and they are subjective. As you
    know, we are all inherently involved with either ideology or
    political correctness, so I guess the question is, won't these
    standards make it very difficult for any rational cost-benefit
    analysis to be implemented?
        Mr. Sunstein.  That would be a no.
        Mr. Stearns.  OK. By April 2010, the Administration had
    issued 190 economically significant regulations or regulations
    having an economic impact of $100 million or more. Is that
    correct?
        Mr. Sunstein.  I want to double-check that number.
        Mr. Stearns.  Sure. I appreciate that. And by December,
    that number was up to 224.
        Mr. Sunstein.  I want to double-check that number as well.
        Mr. Stearns.  So the number of regulations the
    Administration is issuing, in our humble opinion, is rising,
    not falling. That is just a comment.
        Mr. Sunstein.  No, that is actually not true. The number of
    regulations issued in the last 2 years is about the same or
    slightly lower than the last 2 years of the----
        Mr. Stearns.  OK. And if you could just follow up with the
    information to confirm what I asked you earlier, that would be
    helpful.
        Mr. Sunstein.  Absolutely. That would be yes.
        Mr. Stearns.  OK. Good for you. So in our opinion, these
    numbers represent a new amount of regulations including
    regulations into, I think, new areas such as the FCC regulation
    of the Internet for the first time. Will these regulations that
    have been issued in the last 2 years be subject to review under
    the President's new standard?
        Mr. Sunstein.  Yes.
        Mr. Stearns.  OK. And we expect to see more regulations
    issued by Health and Human Service to comply with the new
    health care law, new financial regulations to comply with the
    Dodd-Frank law, and new regulations from the EPA. Now, will
    these regulations be subject to review by OIRA?
        Mr. Sunstein.  I believe you referred to non-independent
    agencies, and thus the answer is absolutely yes.
        Mr. Stearns.  What we have seen from the Administration in
    the last 2 years is, in our opinion not a full exercise in
    responsibility to review these regulations. Are you aware that
    in the first 2 years of the Bush Administration, the agency
    issued 19 return letters to agencies, letters rejecting
    agencies' regulations while this Administration has issued zero
    return letters in the same period?
        Mr. Sunstein.  I would say yes, I am aware of that. Would
    you like an elaboration?
        Mr. Stearns.  We will keep going here. I think when the
    Democrats have a chance, they are going to give you a chance
    for elaboration.
        Given that we have seen agencies respond to the Executive
    order by stating that they don't need to make any changes, I
    think this is what really concerns me and seems not to change
    anything in terms of how much control your office will really
    have. I think as a Congress we reach out to bureaucracies and
    lots of times we see these bureaucracies unable to act. Back in
    2003, in your book Risk and Reason, you wrote, ``All in all,
    President Clinton's Executive orders did not seem to have much
    impact. OIRA was largely passive and toothless, serving a
    coordinating function without trying to steer regulation in any
    particular direction.'' That is your quote in your book. The
    President's new policy reaffirms this very Executive order you
    have referred to as toothless and not performing, in our
    opinion. Would you think what you said in your book is
    applicable to what happened under the Obama Administration?
        Mr. Sunstein.  Absolutely not.
        Mr. Stearns.  OK. And let me just ask my last question
    here. Do you see that there in tab #3 in the binder before you
    is the President's Memorandum of January 30, 2009, on
    regulatory review? In it, he directs the director of OMB to
    produce within 100 days a set of recommendations for a new
    Executive order on federal regulatory review. The question I
    have for you is, were the set of recommendations produced
    within 100 days of the President's directive?
        Mr. Sunstein.  Yes.
        Mr. Stearns.  OK. That completes my time, and Ms. DeGette.
        Mr. Sunstein.  Thank you for enabling me to be brief.
        Mr. Stearns.  That completes my questions. Ms. DeGette.
        Ms. DeGette.  Thank you, Mr. Chairman. Opening statement
    might have been a better description. Actually on the Minority
    side, we would like to hear some answers to some of these
    questions, so Mr. Sunstein, I have a series of questions I
    would like to ask you.
        The first one is, OIRA was created in 1980 to oversee
    certain agencies, correct?
        Mr. Sunstein.  That is correct.
        Ms. DeGette.  And----
        Mr. Sunstein.  By the Paperwork Reduction Act.
        Ms. DeGette.  Yes, and it was created by Congress. Is that
    right?
        Mr. Sunstein.  That is correct.
        Ms. DeGette.  So President Obama and the Administration
    could not in and of themselves change the jurisdiction of
    OIRA--only Congress could do that, right?
        Mr. Sunstein.  That is correct.
        Ms. DeGette.  And all of these agencies that Mr. Stearns
    mentioned that are exempt from the President's Executive order
    are exempt from it because OIRA does not have congressional
    jurisdiction to oversee those agencies, correct?
        Mr. Sunstein.  The basic answer is yes, but if I could
    elaborate slightly, if you would permit?
        Ms. DeGette.  Sure.
        Mr. Sunstein.  Under the Paperwork Reduction Act, OIRA does
    oversee the independent agencies' information-gathering
    requests, and actually we have taken strong steps in the last
    months to try to reduce paperwork burdens on the American
    people, including from the independent agencies.
        With respect to the applicability of the Executive order,
    what President Obama has done is followed the practice of
    President Reagan, who initiated the application of the
    Executive order to the executive agencies because of legal and
    political concerns about overreaching presidential authority.
    Both President Bushes went along with President Reagan on that
    issue.
        Ms. DeGette.  OK. Thank you.
        Now, I want to talk for a few minutes about an issue that I
    think we are going to be hearing a lot about in this
    subcommittee, and that is the EPA regulations. The first target
    that I have heard about is large industrial boilers and the EPA
    proposed regulation to limit the emissions of toxic air
    pollution like mercury, lead, and dioxin. Are you familiar with
    that proposed rule, Mr. Sunstein?
        Mr. Sunstein.  Yes.
        Ms. DeGette.  And are you aware that EPA's proposed rule
    would potentially save thousands of lives per year and protect
    children from neurotoxins because the benefits are projected to
    be about 14 times greater than the cost?
        Mr. Sunstein.  I don't have the exact number before me but
    I am aware of numbers in that vicinity in the proposed rule.
        Ms. DeGette.  Did the Administration engage in an open
    regulatory process in working on promulgation of that rule?
        Mr. Sunstein.  Absolutely, and it continues.
        Ms. DeGette.  Yes. In fact, the chairman of this committee
    has said that there were flawed regulatory tactics, so I want
    to talk for a minute about the EPA process that you just
    referred to. After proposing the rule last April, EPA received
    over 4,800 comments on the proposal from stakeholders including
    a large amount of data from industry on the capabilities and
    costs of various pollution-control options. Are you aware of
    that data that the EPA received?
        Mr. Sunstein.  Yes, I am aware of the sheer volume of
    comments.
        Ms. DeGette.  OK. And are you aware, sir, that in
    September, Administrator Jackson of the EPA sent a letter to
    Congress indicating that the EPA was going to give more time to
    look at this because there were so many comments that were
    being received?
        Mr. Sunstein.  Yes.
        Ms. DeGette.  And are you aware that on September 7th last
    year, EPA asked the court for an extension of time to continue
    the process but the extension given by the court was only very
    short?
        Mr. Sunstein.  Yes, 30 days.
        Ms. DeGette.  Thirty days. And are you aware that the EPA
    has suggested that if all the comments cannot be addressed in
    the final rule, the parties may petition the EPA to reconsider
    the rule and the EPA has the authority to stay the rule pending
    the reconsideration? Is that correct?
        Mr. Sunstein.  I remember something very close to that, and
    that may be precisely what the EPA said.
        Ms. DeGette.  OK. Now, do you think that the EPA's efforts
    to respond to the comments on the proposed boiler MACT are in
    line with this Executive order that is the subject of this
    hearing today?
        Mr. Sunstein.  I would say very much that the EPA's careful
    consideration of public comments is in line with section 2 of
    the Executive order.
        Ms. DeGette.  Section 2. OK. Do you think that the EPA's
    request for an extension was in any way an admission of failure
    of the regulatory process?
        Mr. Sunstein.  No.
        Ms. DeGette.  And can you explain why you believe that?
        Mr. Sunstein.  Well, it is perfectly legitimate as some of
    the opening comments have suggested to try to take account of
    public concerns and comments to respond to stakeholder data or
    stakeholder perspectives and sometimes that takes a long time.
    There is a tradeoff between doing things and doing things
    right.
        Ms. DeGette.  And finally, do you think that criticizing
    the EPA's efforts on this rule is consistent with calls for
    greater process and transparency?
        Mr. Sunstein.  What I would say is that greater
    transparency is exceedingly important and the EPA's effort to
    take account of public comment is admirable.
        Ms. DeGette.  Thank you. I yield back.
        Mr. Stearns.  I thank the gentlelady.
        The chairman of the full committee, Mr. Upton from
    Michigan, is recognized for 5 minutes.
        Mr. Upton. Well, thank you, Mr. Chairman, and again, I want
    to compliment you on the hearing. As I learned when I was
    chairman of the Oversight and Investigations Subcommittee, we
    are to identify problems and then come back with legislation to
    fix them. I think that what is happening is that we are finding
    a number of agencies that are exempt from OIRA's process, and
    this is something we ought to look into and we ought to come
    back with bipartisan legislation to fix that, give this
    Administration and any future Administration the ability to
    oversee all the regulations that are there. No agency should be
    exempt.
        I want to compliment the President on his Wall Street
    Journal op-ed from this last week. I think many of us here
    would agree with some of the comments that he made when he
    wrote that we have to have the proper balance. Sometimes these
    rules have gotten out of balance, placing unreasonable burdens
    on business, which has had a chilling effect on growth and
    jobs. We need to promote economic growth. Sometimes regulations
    are not worth the cost, which is just plain dumb. I think a
    number of us welcomed that piece.
        But I want to go back to the boiler MACT regulations here
    for a moment. EPA, as you know, estimated that the new rules
    would impose new capital costs of $12.6 billion, annual costs
    of over $3 billion. A study by the Council of Industrial Boiler
    Owners concluded that the true economic costs would in fact be
    $113.5 billion. The rules would place some 337,000 or more jobs
    at risk. So as you know, on January 21st, the court rejected
    EPA's request for a 15-month extension to finalize the boiler
    MACT rules and directed EPA to issue final rules by February
    21st. My first question is, when OMB cleared the proposed rules
    last year, did OMB have concerns about the economic impacts
    given the state of the economy, particularly related to the
    numbers that I just cited?
        Mr. Sunstein.  Any rule that imposes significant cost, we
    have significant concerns about.
        Mr. Upton. Is OMB now working with EPA to make changes to
    bring down the costs and ensure that the final rules will not
    create those risks?
        Mr. Sunstein.  The EPA said in court filings that the rule
    would look significantly different, the final, and we are
    working closely with EPA to try to put it in the best form
    possible, and that work will be undertaken in line with the
    President's Executive order, which calls for careful attention
    to cost.
        Mr. Upton. So knowing all the comments that have been made,
    all the work that has been done, particularly over this last
    year, the admonition in essence by EPA in December that they
    need 15 more months: do you believe that you can do all that
    work in the next 3 weeks?
        Mr. Sunstein.  It would be premature to say exactly how
    much can be achieved in the next 3 weeks.
        Mr. Upton. I used to work at OMB so I know how many people
    are there.
        Mr. Sunstein.  I know you did. You know how hard people
    work. What I would say is that engagement with affected
    stakeholders, with you, with members of your staff is most
    welcome in the period we have, that EPA, as the earlier line of
    questioning suggests, is completely alert to the concerns that
    have been expressed about cost. The Administrator has been
    clear on that. And we are going to do the best we can to get it
    right and to keep the costs down, to take account of objections
    and perspectives in the time that remains, and look forward to
    working with you on that.
        Mr. Upton. Knowing that you have got 3 weeks to go, would
    OMB welcome a congressional delay to give the agency more time
    to do its work on the rule that EPA in essence said will take
    it 15 more months? It is just hard to believe that EPA says
    that it needs 15 more months, the court says no, you are going
    to do it in 30 days, and now you say that we are going to get
    it done in 3 weeks even though your agency initially said it
    would take 15 months?
        Mr. Sunstein.  Our focus, as your question suggests, is on
    implementing the law, taking account of costs and concerns, and
    complying with the court order. That is what we are focusing
    on. With respect to congressional responses, that is not
    exactly my lane. We are going to focus hard on implementation
    and try to get it right.
        Mr. Upton. Last question: would you like to have more time
    if given an opportunity?
        Mr. Sunstein.  We agreed with the EPA that to get more time
    of the length that the EPA sought was a very reasonable
    request. So the EPA's request to the court, we supported.
        Mr. Upton. Yield back.
        Mr. Stearns.  Thank you, distinguished Chairman.
        I recognize Ms. DeGette.
        Ms. DeGette.  Mr. Waxman.
        Mr. Waxman.  Thank you very much, Mr. Chairman.
        Mr. Sunstein, I appreciate your answers. The question that
    was just being pursued was over the boilers under the Clean Air
    Act. Now, let us not forget the purpose of it. The purpose of
    the regulation is not to cost a lot of money to business which
    might lead them to reduce jobs. The purpose is to reduce
    mercury and lead damage which when it affects our children can
    lead to lack of brain development. Dioxin causes cancer. These
    industrial boilers are the second largest source of mercury
    emissions in our country. So when the EPA has proposed a rule,
    it has to be reviewed in terms of the costs and the benefits,
    and at the same time under your new procedures you are trying
    to fine-tube it to be sure it is the least costly way for
    business to comply. Isn't that correct?
        Mr. Sunstein.  Exactly.
        Mr. Waxman.  Now, I know that no one here would support
    duplicative and pointless regulations, but I worry a lot of
    what we are going to hear the rest of this hearing are not
    those regulations, they are going to single out important
    regulations. Some Republicans are even saying that we shouldn't
    regulate the most abusive and risky Wall Street practices, even
    though those practices ended up nearly driving our economy over
    a cliff. Regulations don't just prevent harm, they can also
    help our economy. And the boiler one was to prevent harm.
        But there are some regulations that really are important
    for business. One example of that is a carbon pollution
    standard for vehicles issued by the EPA and the National
    Highway Traffic Safety Administration April 2010. I understand
    that these standards improve national security by reducing our
    dependence on oil. They reduce carbon pollution and improve
    public health. They save consumers a lot of money, far more
    than manufacturers will spend building more efficient cars. I
    understand that these rules will save 1.8 billion barrels of
    oil. Is there any other action by this Administration or its
    predecessors that is even in this ballpark in terms of reducing
    our oil dependence?
        Mr. Sunstein.  Offhand, I don't think there is an example
    that is as impressive.
        Mr. Waxman.  So this regulation is to reduce our dependence
    on oil, and in fact, as a result of it, for the first time
    America's oil consumption is flat. Right now even though the
    DOE regularly says that our consumption of oil was going to go
    up, it is not increasing. We are projected to use less oil in
    2020 than in 2007. So if we are concerned about oil exports
    propping up unsavory governments around the world, which is
    certainly the case, then this rule is very good news.
        Mr. Sunstein, I also understand this rule will reduce U.S.
    greenhouse gas emissions by 960 million metric tons, reducing
    overall greenhouse gas pollution from light-duty vehicles by
    about 20 percent by 2030. How does this compare with other
    actions this or other Administrations have taken to tackle the
    climate issue?
        Mr. Sunstein.  I think this is the prize winner on that
    count as well.
        Mr. Waxman.  So these benefits don't cost the consumer a
    thing. In fact, they save consumers money. The majority of
    consumers will pay less overall for running their cars. On
    average, consumers will save $3,000 over the life of the
    vehicle. You are a nationally acclaimed expert on cost-benefit
    analysis. Are these estimates solid? Will people really be
    better off with these regulations in place?
        Mr. Sunstein.  We don't have any serious question that this
    rule survives cost-benefit balancing.
        Mr. Waxman.  My understanding is that these cost savings
    are based on assumed gas prices ranging from $2.61 per gallon
    in 2012 to $3.60 per gallon in 2030, and we are seeing gas
    prices go up. In fact, if they go up, it will produce even
    greater net benefits of roughly $140 to $190 billion.
        Now, we talked about the benefits to our national security
    and the environment but the rule also benefits the auto
    industry because it will harmonize State and federal standards
    across the country, and that is why the industry strongly
    supported these regulations. It provided certainty for them,
    clear paths for innovation, and it will make their job better
    as they try to innovate. EPA's contribution to these standards
    produced benefits 30 percent higher if we just had the NHTSA
    portion in place. Any effort to remove the EPA standard or its
    statutory authority would severely undermine the benefits of
    this rule. This is just one example. Overall, the benefits of
    the Clean Air Act vastly outweigh its costs by a ratio of 32 to
    1. Rather than being a drag on the economy, these critical
    regulations improve our lives just as they are intended to do,
    and that is the whole point of having regulations in the first
    place.
        Thank you very much, Mr. Chairman.
        Mr. Stearns.  I thank the gentleman.
        The gentleman from Texas is recognized for 5 minutes.
        Mr. Barton.  Thank you, Mr. Chairman. Timing is impeccable.
    I am supposed to be doing a live radio interview right now; we
    planned it very carefully that I can't do that.
        There has been an explosion of regulation and regulations
    issued in the first years of the Obama Administration. Quite
    frankly, I don't see that your organization has done anything
    to slow that down. I don't see that you have done anything to
    actually do what the existing Executive order says. What gives
    us the confidence to think that this new Executive order is
    going to be any different? Does this Executive order require or
    will your office require agencies to determine the net job gain
    or loss of past, current, or new regulations?
        Mr. Sunstein.  OK. If I may, can I discuss the idea of
    explosion? Actually----
        Mr. Barton.  Well, discuss it very quickly because I have
    only got 3 minutes.
        Mr. Sunstein.  I will be very fast. The number of
    regulations issued in the last 2 years is approximately the
    same as the number of regulations issued in the last 2 years of
    the Bush Administration. The total costs of regulation in the
    last fiscal year are lower than the total costs of regulations
    in the executive agencies in fiscal year 2007.
        Mr. Barton.  Just the regulations issued under the new
    health care law are in the thousands.
        Mr. Sunstein.  The numbers that have been issued in the
    last months are not in the thousands, so in terms of finalized
    economically significant rules, I don't think the data supports
    the claim.
        Mr. Barton.  But what is the answer to the question? Is
    this new Executive order going to require a determination by
    your group, your agency of the net job gain or loss of past,
    current, and new regulations?
        Mr. Sunstein.  We will be focusing very much on job loss as
    a result of regulations. The Executive order----
        Mr. Barton.  So the answer is yes?
        Mr. Sunstein.  Well, there are some technical reasons--
    that----
        Mr. Barton.  So the answer is no?
        Mr. Sunstein.  Well, I am afraid that the answer to this
    one uniquely thus far is neither yes or no.
        Mr. Barton.  Well, that is a very evasive answer, and the
    President is going to give you an A plus for evading a straight
    question.
        Mr. Sunstein.  Well, if I can explain----
        Mr. Barton.  Let me go on because I have only got 2 minutes
    and 39 seconds.
        You are aware, I am sure you are conversant with the
    endangerment finding that was issued the first 90 days by the
    EPA Administrator?
        Mr. Sunstein.  I am aware of it.
        Mr. Barton.  Are you aware of any cost-benefit analysis
    that went into that endangerment finding?
        Mr. Sunstein.  A scientific finding is not a regulatory
    action so----
        Mr. Barton.  So the answer is, there was none?
        Mr. Sunstein.  There couldn't be at that time. The
    regulatory action that followed the scientific finding was full
    of cost-benefit analysis.
        Mr. Barton.  Do you agree that that endangerment finding if
    actually implemented would cost millions of jobs to the U.S.
    economy and hundreds of billions of dollars?
        Mr. Sunstein.  The endangerment finding by itself costs no
    money and no jobs. It is a scientific finding.
        Mr. Barton.  That is not my question.
        Mr. Sunstein.  If implemented, meaning if followed by
    regulatory action?
        Mr. Barton.  Well, if implemented, if actually put into
    practice.
        Mr. Sunstein.  Well----
        Mr. Barton.  Every independent analysis has said it would
    cost millions of U.S. jobs and hundreds of billions of
    dollars----
        Mr. Sunstein.  What I will tell you is----
        Mr. Barton [continuing]. Per year.
        Mr. Sunstein [continuing]. what we and the EPA are
    determined to do and with the new emphasis in the Executive
    order which I am grateful for your enthusiasm for is to try to
    minimize burdens and----
        Mr. Barton.  I have 1 minute and 13 seconds. In Monday's
    Wall Street Journal, an EPA spokesman was quoted as saying that
    President Obama's new Executive order that you are here to
    testify on will not affect the EPA at all. Do you agree or
    disagree with the attestation of the spokesperson at the EPA?
        Mr. Sunstein.  The Executive order will affect all agencies
    to which it applies, including the EPA.
        Mr. Barton.  So you will send a letter to the EPA and
    inform them that they are going to be subject to this order?
        Mr. Sunstein.  It is clear on the face of the Executive
    order that the EPA----
        Mr. Barton.  So the EPA spokesperson just misspoke?
        Mr. Sunstein.  I would like to see exactly what the EPA
    spokesperson said, but it is as clear as day----
        Mr. Barton.  It is clear as day?
        Mr. Sunstein [continuing]. That the Executive order applies
    to the EPA.
        Mr. Barton.  My last question. Would you support an
    amendment to the Clean Air Act that would require the EPA to do
    a true cost-benefit analysis of any proposed regulation it
    proposes to implement under that Act?
        Mr. Sunstein.  We are in favor of cost-benefit analysis of
    any regulatory action, and that is already required by the
    Executive order.
        Mr. Barton.  So the answer to that is yes?
        Mr. Sunstein.  With respect to legislative action, that is
    not quite my lane. We are in the implementation business. So on
    the general idea of cost-benefit analysis for regulatory
    actions, absolutely.
        Mr. Barton.  Thank you. I yield back.
        Mr. Stearns.  I thank the gentleman.
        The gentleman from Michigan, Mr. Dingell, is recognized for
    5 minutes.
        Mr. Dingell.  Thank you, Mr. Chairman.
        I am interested in the last question just raised. Under the
    Clean Air Act, EPA is required to consider first, the health
    implications, and second, the best and the most economic way of
    accomplishing that purpose. Is that right?
        Mr. Sunstein.  It depends on the----
        Mr. Dingell.  Yes or no.
        Mr. Sunstein.  Not quite, no.
        Mr. Dingell.  Oh, yes, quite, because I helped write that
    law.
        Mr. Sunstein.  No. If you need more than a yes or no
    answer, no, that's not correct.
        Mr. Dingell.  What is wrong with it?
        Mr. Sunstein.  Under the National Ambient Air Quality
    Standards, cost is not relevant. It is only a scientific
    interpretation.
        Mr. Dingell.  Dearly beloved friend, I said that the first
    step taken is to comply with the law and address the health
    care questions. The second question that is addressed is to do
    it in the most efficient and economic way. Is that right?
        Mr. Sunstein.  I don't think that is quite right either.
        Mr. Dingell.  I would suggest strongly you go back and take
    a look at it because that is the way we wrote it.
        Now, let me go into some matters here of concern. OIRA is
    required under the Executive order to submit a preliminary plan
    to review rules and regulations for the purposes of modifying,
    streamlining, expanding, and repealing. Do you believe that 120
    days is sufficient time for the agencies to conduct such a
    review and to prepare an appropriate plan? Yes or no.
        Mr. Sunstein.  Yes.
        Mr. Dingell.  All right. Next question. Will these plans be
    subject to public notice and comment requirements of the
    Administrative Procedure Act?
        Mr. Sunstein.  It is not a rule so no, but we do hope to
    have a high degree of public engagement.
        Mr. Dingell.  Well, the Administrative Procedure Act
    requires these things to be subject to public notice and
    comment, does it not?
        Mr. Sunstein.  No, it does not apply to preliminary plans.
        Mr. Dingell.  All right. Now, will the agencies be required
    to have a public notice and comment period for any rules or
    regulations that are withdrawn or repealed? Yes or no.
        Mr. Sunstein.  Yes.
        Mr. Dingell.  Given the intent to reduce federal non-
    security spending in fiscal year 2008 levels, do you believe
    federal agencies will have the funding necessary to complete
    the required look-back of existing rules and regulations, yes
    or no?
        Mr. Sunstein.  Yes.
        Mr. Dingell.  Do you believe that the agencies have the
    personnel resources necessary to complete the look-back and do
    the other things that they must do? Yes or no.
        Mr. Sunstein.  Yes.
        Mr. Dingell.  Do you anticipate that the regulatory
    reviews, for example, by the Department of Health and Human
    Services will prevent the agency from completing the
    rulemakings required in and hinder the general implementation
    of the Affordable Care Act? Yes or no.
        Mr. Sunstein.  No.
        Mr. Dingell.  Similarly, will regulatory reviews prevent
    the Food and Drug Administration from completing the
    rulemakings required in and hinder general implementation of
    the Food Safety Modernization Act passed by the Congress in the
    last session? Yes or no.
        Mr. Sunstein.  No.
        Mr. Dingell.  Thank you, Mr. Chairman. I have stayed within
    my time.
        Mr. Stearns.  I thank the gentleman from Michigan.
        Mr. Sullivan is recognized for 5 minutes. We have a vote,
    and we are going to continue on, and then I urge everybody to
    come back. We need just a couple members. So we will adjourn
    after this vote and then come back. We don't have a series of
    votes until 3:00, I believe, so we should be able to get
    through the hearing. I recognize Mr. Sullivan.
        Mr. Sullivan.  Thank you, Mr. Chairman, and thank you, Mr.
    Sunstein, for being here today.
        The EPA responded to the President's new Executive order
    last week by saying that they were confident it wouldn't need
    to alter a single current pending rule. EPA's statement went on
    to say that in fact EPA's rules consistently yield billions in
    cost savings that make them among the most cost-effective in
    government. Do you agree with the EPA's statement on this new
    Executive order review rule?
        Mr. Sunstein.  The Executive order applies to the EPA. The
    retrospective analysis it requires is new so the EPA will have
    to do something new, and it welcomes that retrospective
    analysis, and the various provisions of the Executive order
    emphatically do apply to the EPA.
        Mr. Sullivan.  So it is yes?
        Mr. Sunstein.  Well, anything involving greenhouse gases or
    air pollution or water pollution, and what I would want to
    emphasize is the provision calling for integration and
    harmonization. So sometimes sectors and industries are faced
    with overlapping and redundant requirements, and EPA I know
    welcomes the opportunity and direction to try to promote
    greater simplicity, reduce burdens, and promote greater
    certainty, a point which has had a lot of emphasis in this
    hearing.
        Mr. Sullivan.  Do you believe that all of the pending
    economically significant rules before the EPA as currently
    drafted will yield taxpayer savings?
        Mr. Sunstein.  I would have to look at them all to make a
    judgment.
        Mr. Sullivan.  Are you involved in that process, though?
        Mr. Sunstein.  We look at them when they come over
    typically to our office so the ones that are in the early
    stages of development where sometimes the EPA won't even decide
    to send the rule over because it needs to do more work. We
    don't typically engage with the agency before they have
    something that they are able to submit to us.
        Mr. Sullivan.  Do you believe that all of the pending rules
    before the EPA as currently drafted will create jobs which we
    need desperately in this country?
        Mr. Sunstein.  It would be--I do not believe that every
    rule that any agency is considering is likely to create jobs.
        Mr. Sullivan.  So your answer is no?
        Mr. Sunstein.  I do not believe that every rule that the
    EPA is considering is likely to create jobs.
        Mr. Sullivan.  Do you disagree with the EPA then, for
    example?
        Mr. Sunstein.  I am reluctant to disagree with newspaper
    accounts of spokespeople, so I would need to see the quotation
    and I would need to see what its accuracy is. It is true that a
    number of EPA rules have benefits well in excess of costs.
        Mr. Sullivan.  And your boss seems to think that too.
        Mr. Sunstein.  Seems to think a number of EPA rules have
    benefits well in excess of cost?
        Mr. Sullivan.  No, that he is concerned about our economy
    and that some of these regulations might hurt jobs.
        Mr. Sunstein.  Oh, we very much--you are exactly right,
    Congressman. That is our focus. That is the focus of this
    Executive order, to make sure that regulations are helpful to
    economic growth.
        Mr. Sullivan.  I hope so.
        The President's new Executive order says that agencies must
    consider equity, human dignity, fairness, and distributive
    impacts in determining cost-benefit of regulations. I have no
    idea what that actually means in bureaucratic language but say
    for example your cost-benefit test imposed $110 billion in hard
    costs to the economy but supposedly result in a $1 trillion
    increase in human dignity. What does this mean, and please
    explain this to me as I have several companies in my district.
    Mr. Gardner pointed that out. They're scared to death. They
    really are. They bring this up all the time--town hall
    meetings, meetings in my office, chemical companies, Oklahoma
    energy companies, trucking companies. And how do I explain all
    this gobbledy gook and stuff that you talk about? I mean, can
    you break it down on simple terms for me so I can go home to
    Oklahoma and talk about this?
        Mr. Sunstein.  I am extremely grateful for that question
    because it is very important, and I understand the concerns to
    which it might give rise.
        Mr. Sullivan.  There are a lot of concerns.
        Mr. Sunstein.  Let me explain if I may.
        Mr. Sullivan.  It is the most concerning thing to this
    economy and business right now.
        Mr. Sunstein.  I think it ought not to be, and let me
    explain why. The sentence right before the one that refers to
    human dignity says ``quantify in the most accurate way possible
    costs and benefits using the best available techniques.'' That
    is a firmer statement in favor of quantification than any
    American President has made.
        With respect to equity, here is an example. We have a rule
    that has been proposed that involves children being run over--
    this is an immense tragedy--by their own parents because there
    isn't visibility, they can't see behind in the cars, and we had
    parents begging Congress to have a law that would save hundreds
    of children from being killed in those accidents. This rule,
    which is directly implementing a statute, it is about equity.
    It is about children typically. I have a son myself who is not
    quite 2. The children are typically around that age just
    learning to walk and getting hit. That is about 45 percent of
    those who are hurt in those accidents. That is equity. That
    plays a role.
        With respect to human dignity, we do not mean this as an
    all-purpose qualifier of cost-benefit analysis, which is the
    foundation of the Executive order. We do mean it as a
    recognition that if you have a regulation or a law that is
    helping people who are wheelchair-bound--often they are
    veterans, by the way--to have access to bathrooms, there is a
    dignitary concern there. It is about human dignity, not just
    about----
        Mr. Sullivan.  I understand that, but someone keeping their
    job is dignity too.
        Mr. Sunstein.  Absolutely, and that is why----
        Mr. Sullivan.  It is a dignified thing to do.
        Mr. Sunstein.  That is why job creation is in the first
    sentence of the Executive order.
        Mr. Sullivan.  Thank you. I yield back.
        Mr. Stearns.  I thank the gentleman. We will temporarily
    put the subcommittee into recess until 11:35, 11:40. Coming up
    on the Democrat side is Mr. Gonzalez and Mr. Green, and then on
    our side would be Burgess and Blackburn. So I urge everybody to
    return.
        [Recess.]
        Mr. Stearns.  The subcommittee will reconvene, and the
    chairman recognizes Ms. Schakowsky from Illinois for 5 minutes.
        Ms. Schakowsky.  Thank you, Mr. Chairman.
        I wanted to thank you, Mr. Sunstein, for mentioning the
    requirement now to have some rearward visibility in cars. Along
    with Republican Peter King of New York, that was my legislation
    that would require some rulemaking, and I am very grateful for
    the lives that will be saved and injuries that will be
    prevented because of the regulation.
        I am wondering, one way to judge, I suppose, how we are
    doing with regulation is just to count the numbers, but I think
    another way would be to look at what are the net benefits of
    those regulations, and I am wondering if you could describe
    that and perhaps even compare that to prior Administrations.
        Mr. Sunstein.  Thank you for that question. In the first
    year of the Clinton Administration, the net benefits of final
    regulations were minus $400 million. In the first year of the
    Bush Administration, the net benefits of regulations were minus
    $300 million. In our first year, 2009, the net benefits of
    regulations were plus $3.1 billion, and it is going to look a
    lot better for 2010. So our net benefits are way ahead of our
    predecessor Administrations.
        In terms of human realities behind the numbers, which your
    question points to, the rear visibility rule, which hasn't been
    finalized yet but it has been proposed, will save hundreds of
    lives or serious injuries, a plurality of which occur to
    children. We have a rule involving salmonella and eggs which
    will prevent 79,000 diseases, protect Americans a number of
    whom would die without the rule. We have rules involving
    stopping distance for trucks so they don't crash into people,
    so they stop more quickly. This will save hundreds of lives. So
    we are looking very carefully at the cost side, but as your
    question suggests, it is sometimes worth incurring a cost if
    you can save significant lives, prevent injuries, prevent
    diseases and illnesses.
        Ms. Schakowsky.  I would also like you to describe the
    process. Clearly, OIRA doesn't always agree with regulations
    that are proposed, and again, there are a number of ways to
    measure that but I am wondering if you could describe your
    process and what the effect has been when you don't agree with
    regulations that have been proposed.
        Mr. Sunstein.  Thank you for that question. The OIRA
    process which has been built up really since President Reagan
    and has had bipartisan approval involves agencies' submission
    of rules, proposed or final, to the Office of Information and
    Regulatory Affairs and then we coordinate a process of
    interagency analysis. So different parts of the government with
    different perspectives and expertise will weigh in on the
    proposed rule, and we have a period when the proposed rule is
    with the Office of Information and Regulatory Affairs when we
    are available to members of the public including stakeholders,
    including Congressional staffs, who can come over to us and
    frequently do to weigh in on rules.
        There was a reference to the return letter and the absence
    of one from the Obama Administration thus far. That is a
    nuclear option, and if you look at the practice under the Bush
    Administration and the Clinton Administration and the Bush
    Administration before, the return letter is a very rarely used
    tool. I think the median number in the Bush Administration
    certainly in its last 5 or 6 years was one or two for thousands
    of rules. What more typically happens is a collaborative
    process by which the agency responds to the concerns expressed
    in the review process, and in our Administration, 75 percent of
    the time, three-quarters of the time the rule has been
    concluded on, meaning approved, consistent with change, meaning
    in the overwhelming majority of cases when the rule is
    concluded on, it has been altered, not necessarily by the
    Office of Information and Regulatory Affairs, but as a result
    of the process, typically by the agency itself which sees maybe
    there is a less burdensome way to do it, maybe we can cut costs
    this way, maybe this will have less of an adverse potential
    effect on jobs. Also, agencies not infrequently withdraw their
    rules when they conclude on the basis of what they have heard
    that it is not appropriate to go forward, and the withdrawal is
    a much more collaborative and constructive approach than the
    return letter, and I am sure previous OIRA administrators would
    agree with that. We have had at last count 99 rules that were
    submitted to the Office of Information and Regulatory Affairs
    withdrawn.
        Ms. Schakowsky.  So the record of this collaborative effect
    is to actually get rid of some potential rules and to
    significantly change a number of them?
        Mr. Sunstein.  Absolutely.
        Ms. Schakowsky.  In the very few seconds I have left, let
    me just associate myself with the President's remarks yesterday
    that he would not hesitate to enforce commonsense safeguards to
    protect the American people. That is what we have done in this
    country for more then a century, and I think that is the way we
    should go forward. So I thank you very much.
        Mr. Stearns.  I thank the gentlelady.
        The gentlelady from Tennessee, Ms. Blackburn, is
    recognized.
        Ms. Blackburn.  Thank you, Mr. Chairman. I appreciate that,
    and I thank our witness for being here. I do have about three
    questions that I want to move through as quickly as possible.
        We have discussed these orders that have been given, and
    one is entitled Regulatory Flexibility, Small Business, and Job
    Creation. In it, the President states that his Administration
    is, and I am quoting, ``firmly committed to eliminating
    excessive and unjustified burdens on small businesses.'' Now,
    this is important to me because small business is our main
    employer in Tennessee. So as the President states in his memo,
    isn't it true that eliminating burdens on small business is the
    purpose of the Regulatory Flexibility Act?
        Mr. Sunstein.  Absolutely correct.
        Ms. Blackburn.  OK. Under this Act, if any agency's
    proposed regulation will have a--quoting from the Act--
    ``significant economic impact on a substantial number of small
    entities'' an agency must conduct a regulatory flexibility
    analysis, correct?
        Mr. Sunstein.  That is correct.
        Ms. Blackburn.  But isn't it true that in the vast majority
    of cases, the agency does not end up performing that analysis
    because it determines that its own regulation will not have a
    significant impact on small businesses?
        Mr. Sunstein.  That is correct, with the qualification that
    the agency's determination to that effect is subject to a
    public and internal scrutiny including from the Office of
    Advocacy, which is an important partner in the regulatory
    process.
        Ms. Blackburn.  Well, I would point out to you also that a
    GAO report showed that 89 percent of its rules were certified
    as not having a significant impact. This is from the time
    period from 1994 to 1999. So the EPA was doing the analysis
    only 10 percent of the time. So do you have any current data on
    how often agencies are making this determination and therefore
    avoiding the requirement to fulfill that regulatory flexibility
    analysis?
        Mr. Sunstein.  I don't have a number offhand but we can----
        Ms. Blackburn.  Would you submit for the record?
        Mr. Sunstein.  Absolutely.
        Ms. Blackburn.  OK. Also in the memo regarding small
    business, it directs agencies to give, quoting, ``serious
    consideration to reducing burdens on small businesses only in
    those cases where the agency is conducting a regulatory
    flexibility analysis,'' correct?
        Mr. Sunstein.  That is correct.
        Ms. Blackburn.  But since these agencies rarely do it, it
    sounds like this memorandum won't really have much impact on
    small businesses. Do you agree with that?
        Mr. Sunstein.  No, that I don't agree with, and you can
    just see in the last week two rules from the Occupational
    Safety and Health Administration have been withdrawn in order
    to engage with small business.
        Ms. Blackburn.  Do you make the determination that
    withdrawing those has a potential impact on small businesses'
    ability to conduct business?
        Mr. Sunstein.  I don't personally make a determination that
    the withdrawal will have a positive impact but the Department
    of Labor----
        Ms. Blackburn.  But, sir, you are our witness today.
        Second question that I'd like to go to with you. One of the
    protections for small business found in current law is the
    Small Business Regulatory Enforcement Act, and under that Act,
    EPA and OSHA must notify the SBA before publishing the
    regulatory flexibility analysis for a proposed rule so that an
    advocacy panel, which you just mentioned, can be convened to
    review it and provide feedback on its impact on small business.
    Recently, the new governor of Tennessee, Bill Haslam, issued a
    45-day freeze on all new regulations and rules as part of a
    top-to-bottom review to fully understand new burdens being
    placed on businesses in our State. Regulatory reviews like the
    one that Tennessee is undergoing are important because States
    and small businesses are concerned that agencies are ignoring
    their feedback and the feedback that comes from the advocacy
    panel. I do think this is a problem that you all have and needs
    to be addressed. Here is an example. The EPA did not follow the
    recommendation of the advisory panel with respect to the boiler
    MACT rule, instead issuing a standard that many small
    businesses feel and have spoken out on that it is impossible to
    satisfy regardless of the cost. So who reviews the agency's
    decision with respect to how it considers the panel's advice?
    Does OIRA do that? What is the role here?
        Mr. Sunstein.  We participate in that. There is a group, we
    participate in that, and you can be confident given the recent
    Presidential Memorandum and Executive order, and not just that,
    but concrete actions in the recent past that the concerns of
    small business will be very much taken into account.
        Ms. Blackburn.  Your consideration of it, do you consider
    it to be objective or subjective?
        Mr. Sunstein.  Consideration of the significant impact on a
    substantial number?
        Ms. Blackburn.  Yes.
        Mr. Sunstein.  To the best of our ability, that is an
    objective determination.
        Ms. Blackburn.  I have other questions. I will submit them
    to you in writing and ask for your timely response in writing.
        Mr. Sunstein.  You will have that.
        Ms. Blackburn.  Thank you, sir. Yield back.
        Mr. Stearns.  Mr. Green is next. Mr. Green, you are
    recognized for 5 minutes.
        Mr. Green.  Thank you, Mr. Chairman.
        Mr. Sunstein, some of the regulations that raise the most
    ire of my Republican colleagues are regulations that are
    designed to implement the new health care reform law. In fact,
    you have to have regulations to implement a law typically. I am
    trying to think of an example that you don't. But Republicans
    have voted to repeal the entire law but a close look at these
    regulations shows that they will make insurance better and less
    expensive for patients for companies that provide workers with
    their insurance. On November 22, 2010, the Obama Administration
    issued a regulation implementing the medical loss ratio
    provision of the Affordable Care Act. This regulation will make
    the insurance marketplace more transparent and make it easier
    for consumers to purchase plans that provide better value for
    their money. The guts of the regulation require that insurance
    companies provide more value for their premium dollar by
    actually spending your health insurance costs on health care.
    Such a novel issue for a health care company, I think, and to
    have a regulation that actually requires that, and not inflated
    administrative costs or excessive executive salaries. Mr.
    Sunstein, do you think that these rules would establish greater
    transparency and accountability for insurers, that they will
    guarantee Americans receive more value for their premium dollar
    and they will even give more Americans a rebate of some of
    their insurance premiums? Now, again, without the regulations
    that law would not be effective. Is that correct?
        Mr. Sunstein.  That's correct.
        Mr. Green.  These all seem like they are good people who
    need health insurance. Isn't there a good example of
    regulations helping consumers, for example? Another regulation
    put in effect as a result of the health care reform law is the
    so-called grandfathering clause. This rule protects the ability
    of individuals and businesses to keep their current plan. It
    provides important consumer protections that give Americans
    rather than insurance companies control over their own health
    care. And it provides stability and flexibility to insurers and
    businesses that offer insurance coverage as the Nation
    transitions into a more competitive marketplace in 2014.
        My question is, let me ask you about this rule. Isn't there
    a good example of regulations helping consumers and providing
    certainty for businesses?
        Mr. Sunstein.  Absolutely that is a good example.
        Mr. Green.  Can you give us any insight here where there
    have been so many attacks on commonsense regulations that help
    consumers? Again, this is something that we have it in the law,
    and if the Administration didn't promulgate the regulations, I
    think you would not be doing your job.
        Mr. Sunstein.  Well, we have a rule that has been issued
    that is going to help consumers make choices about tires by
    giving information--it is not a mandate, it is not very
    expensive--about safety, fuel economy and durability, and that
    is part of consumer protection providing information so that
    people can make their own choices.
        Mr. Green.  There are rules, and these are good examples of
    how regulations can actually help the American public and our
    constituents. They give Americans better value for their health
    insurance dollar and give businesses certainty about the
    insurance that they are paying for for their employees. It
    would seem like we should be cheering those kind of regulations
    instead of saying no, we want to abolish them. Now, we can take
    votes up here and you are not involved in that, but if you are
    not promulgating the regulations, again, the Administration
    would not be doing their job, and that is true whether it is
    President Obama, President Bush, President Clinton, or all the
    way back to President Reagan that promulgated regulations that
    was the intent of the law. Is that correct?
        Mr. Sunstein.  Yes. Our first obligation is to respect the
    law.
        Mr. Green.  Thank you.
        Mr. Chairman, I have no other questions but I would be glad
    to yield my 1 minute left to our ranking member.
        Ms. DeGette.  Thank you for yielding.
        Let me just follow up on a couple of questions or maybe
    one. Mr. Sunstein, you were asked earlier about the direction
    in the Executive order to consider values that are difficult to
    quantify like human dignity. Can you elaborate for about 40
    seconds on the intent of this direction?
        Mr. Sunstein.  Yes. The idea is to recognize that under the
    law as the previous question suggested, human dignity is
    sometimes something that agencies are supposed to consider.
    Just this week, the Department of Justice issued a rule
    involving rape, and in the analysis of the rule the agency paid
    careful attention to monetizable costs and benefits. That is
    very important, but it recognized that the act of rape involves
    an assault to human dignity and it is not reducible just to
    numbers.
        Ms. DeGette.  Thank you.
        Mr. Stearns.  Dr. Burgess is recognized for 5 minutes.
        Dr. Burgess.  Thank you, Mr. Chairman.
        Mr. Sunstein, we were all grateful when the President
    signed an extension of the sustainable growth rate law in
    December, but I think as we all recognize, access for our
    seniors to physicians of their choice is being adversely
    affected by what we know of as the sustainable growth rate
    formula, the formula by which Medicare pays physicians. Now, is
    it the President's intention to follow through on his promise
    that this formula abnormality be fixed in this 13-month time
    interval that we have given ourselves?
        Mr. Sunstein.  I greatly appreciate the questions. It is a
    bit out of my domain as OIRA Administrator but----
        Dr. Burgess.  You do work in Office of Management and
    Budget, correct?
        Mr. Sunstein.  I do.
        Dr. Burgess.  Is it likely to be in the President's budget
    request to Congress that there is some type of relief on the
    sustainable growth rate formula?
        Mr. Sunstein.  I would have to defer to the director of the
    Office of Management and Budget lacking clarity on the right
    answer to that one.
        Dr. Burgess.  Do you have a sense whether it is the
    President's commitment to follow through on this?
        Mr. Sunstein.  My belief is that anything the President has
    made a commitment to, he is likely to follow through on.
        Dr. Burgess.  Well, as you know, I mean, the price tag for
    this varies depending on who you talk to, but you get figures
    from $200 billion to nearly $400 billion over the 10-year
    budgetary cycle. Do you have an idea, a sense as to what
    programs the President is looking at cutting or replacing in
    order to come up with this figure?
        Mr. Sunstein.  Actually on the budgetary side, there is an
    army of people who are working and that is not a side that the
    Office of Information and Regulatory Affairs works with at that
    level of detail. So in particular budgetary requests, we are
    respecting the workload of others.
        Dr. Burgess.  Perhaps we can get that information from
    another source. But I do want you to understand that the
    Administration has made a commitment on this and America's
    doctors are looking to the Administration to fulfill that
    commitment.
        On the issue of regulations, there was an entirely new
    federal agency that sprang up like mushrooms after a spring
    rain after the health care law was signed, and this was the
    Office of Consumer Information and Insurance Oversight. I
    talked to some of the people who were at the head of that
    agency in the fall and they could not identify for me where the
    authorization language existed in the Patient Protection
    Affordable Care Act for that new federal agency. I asked if
    there were not other areas of HHS that might do this same
    activity, and they said oh, no, this is an entirely new
    activity that we will be undertaking. Never before has the
    Federal Government regulated private insurance on a national
    level. That has always been left up to the States. So in this
    new climate of regulatory reform, is this a good idea to be
    going in this direction?
        Mr. Sunstein.  As I say, the lane of the Office of
    Information and Regulatory Affairs is relatively narrow so
    issue of organization within HHS or DHS or others----
        Dr. Burgess.  Let me interrupt you. Never mind that,
    because they actually have reorganized since we started asking
    questions and it is now in a different part of HHS, but just
    overall, if we are looking at a new climate of perhaps easing
    some of the regulatory burden, your words, not mine, is it a
    good idea to be instituting an entirely new federal agency that
    will perform this function?
        Mr. Sunstein.  What I would say in the spirit of the
    Executive order just signed is that any decision with respect
    to regulation should be connected with the principles that the
    President has laid out, and that includes structural decisions.
        Dr. Burgess.  Well, of course, it would have been helpful
    if we could have had those individuals in front of us for an
    oversight hearing during the fall. We were not permitted to do
    that. I suspect we will be now under Chairman Stearns'
    leadership. But again, in the interest of this new climate of
    regulatory reform, it seems like this is something where your
    office should take a direct interest. I mean, we are told, for
    example, that you can't sell insurance policies over State
    lines because that has always been a State regulated function
    and yet this individual is telling me that for the first time
    there is now going to be a national regulation of private
    insurance that has never existed in this country before. If
    that is OK, then maybe it is OK that we sell insurance across
    State lines, that that may be a logical follow-on that perhaps
    we should explore. But from the regulatory side, I do hope that
    your agency will take at least some passing interest and have
    some curiosity into this new agency that has been set up and
    now been absorbed into CMS but it is still there. The purpose
    is still there.
        Mr. Sunstein.  I appreciate it.
        Mr. Stearns.  I thank the gentleman.
        Mr. Weiner from New York is recognized.
        Mr. Weiner.  Thank you. Let me begin by congratulating you,
    Mr. Chairman, on this hearing. You are showing you are running
    a very efficient, quick hearing, so quick in fact that it is
    uncontaminated by actual testimony from the witness in most
    cases.
        We are learning a little bit about this Congress, which is
    that we have lurched so quickly into a very successful campaign
    by my Republican friends that all of the slogans are just being
    transplanted. We are having committee hearings and we are
    starting to see the slogans don't really hold up. For all this
    talk about excessive regulation, the first thing that Mr. Issa,
    a chairman of another committee, says is, hey, guys, tell us if
    there are any regulations you don't like because we don't know
    any. We hear my colleagues, particularly some of my freshmen
    colleagues, talk about how small businesses always tell me
    about regulations and how bad things are. Well, let us take a
    look at the record. The record is that the Dow Jones has had a
    better year than they have had any time in the last 12 years,
    that we have now businesses sitting on over $1 trillion of cash
    that they have done pretty well with, that we have now created
    more private-sector jobs in 2 years of Obama than 8 years of
    President Bush. So this whole idea of, my goodness, the
    crushing regulations, and then the first exchange between
    Chairman Stearns and Mr. Sunstein was interesting. He asked a
    question or postulated something. Mr. Sunstein rebutted it and
    then he returned and said well, let us assume I am right. Well,
    OK, we can do that, or we can actually listen to the evidence.
    There are no more regulations in these 2 years than there have
    been in the past 2 years.
        But let me just ask, perhaps to put into context, this idea
    of regulation. No one likes bad regulations but regulation to
    try the price on it is kind of a hard thing to do. For example,
    when there was this big effort on the part of financial
    services companies to change the capital requirements to allow
    them to keep less capital, have more debt on their books, they
    said that this regulation was costing us an enormous amount of
    money. Well, I am curious. How do you calculate the cost of
    easing that regulation? Well, you have to count the TARP fund,
    750-some-odd billion dollars, but how do you count the pain
    that it causes some person who did nothing wrong, whose home is
    not foreclosed, who is not underwater but lives on a block now
    with five foreclosed homes because capital requirements weren't
    lived up to? How do you count that? Let us assume each house is
    a $200,000 house. You can say well, there is the $200,000 home
    that is foreclosed on but how do you assess the value to the
    community that has lost the tax base? How do you assess the
    value of that homeowner who did nothing wrong, who took out no
    extra loans but now whose property value has plummeted 75
    percent? How do you say to the rest of the economy that small
    business guy that because the bank has gone under because that
    requirement has been eased, now he can't get a loan?
        The fact is, ladies and gentlemen, that these regulations
    are in place and they seem so onerous and burdensome sometimes
    but what they are intended to do is stop real damage to our
    economy. The very same Wall Street people who advocated for the
    lessening of the net capital rule are the ones who are now
    unemployed. They thought they were doing a great, smart thing,
    advocating to loosen that rule. We did it, and now their
    company, Bear Stearns, doesn't exist. Now, would you rather
    have a small regulation and have a beautiful company that is
    employing lots of people and giving loans or get rid of that
    burdensome, onerous regulation that requires this silly thing
    like they keep enough money in their bank before they start
    giving loans? Would you rather have a regulation that says all
    hospitals have to have electronic recordkeeping so they can
    share information or do you want to try to figure out the cost
    that it is when someone is given the wrong drug and goes into
    seizure? Yes, it may cost a little bit more money to have these
    regulations in place, but if you are really going to do the
    mathematic calculation that Mr. Stearns alluded to and others
    have alluded to, how exactly do you do that? I think it would
    be helpful, Mr. Chairman, for us to have a hearing on exactly
    how it is you assess these costs. Let us see how much the cost
    is on having a lead in toys regulation. Let us see. How do you
    figure out the cost of brain cancer in a 6-year-old as opposed
    to a 3-year-old? Huh. Let us put that in a ledger and see how
    that works out. But the regulation is so burdensome and
    onerous. Well, to that family, that is the difference between
    their child having a lifetime illness and not, you know what?
    That regulation seems OK. Maybe it is not so bad for a toy
    company to have to not put lead in their toys.
        So if we are really going to do the math, I think we should
    have a hearing here perhaps when Mr. Sunstein can come back. He
    clearly has a lot he wants to get off his chest, and I am not
    giving him much opportunity here either, but let us really see
    what that ledger looks like and let us be honest about it. Let
    us get past the campaign rhetoric.
        Mr. Stearns.  Ms. Myrick is recognized for 5 minutes.
        Mrs. Myrick.  Thank you, Mr. Chairman.
        I wanted to go back to the NHTSA rulemaking, and I am going
    to ask you to submit some of this for the record because I have
    got another question and I will be out of time, so I appreciate
    it.
        The proposed rulemaking that does say, rear visibility
    system and then cameras inside the car, etc., supposedly what I
    have been told is that the accidents that did happen were in
    large trucks and SUVs and vans, bigger vehicles, where the rule
    says it has to go in every car, and my question on the cost-
    benefit analysis again, believe me, I don't want children to
    lose their lives and there is nothing more unimaginable than
    losing a child, and if we can save millions of lives, I support
    saving millions of lives. But when you look at the change that
    the Administration says they want to do in the rulemaking and
    try and put cost-benefit analysis into it, the NHTSA's own
    modeling that they use says that it isn't cost beneficial to do
    it.
        And then the other question is, if you do put this across
    the board to all the cars, does it raise the price of the cars
    to a point where people can't buy them and then you have still
    got accidents because they don't have availability? So for the
    sake of time, if you would be willing to answer that for me to
    submit for the record, and then also, did you have consultation
    with NHTSA before this happened, I mean, before the proposed
    rulemaking on the----
        Mr. Sunstein.  Yes.
        Mrs. Myrick [continuing]. Cost benefit?
        Mr. Sunstein.  Always with rules, we review the proposed
    rules before they go out.
        Mrs. Myrick.  Thank you. My next question is on billion-
    dollar costs to the economy on rulemaking. I know you were
    asked by Speaker Boehner and some other House members last year
    to tell them how many billion-dollar rules the Administration
    is preparing, and they didn't receive any answers to my
    knowledge, which has caused a lot of uncertainty in the
    business community. I know Mr. Weiner says everybody is doing
    wonderful but the reason they have got that cash setting aside
    is because they are afraid to invest it, not knowing what
    regulations are going to come down the pike. So, do you have an
    answer today? Can you tell us how many billion-dollar rules
    that you are planning?
        Mr. Sunstein.  I can tell you how many billion dollars we
    have done, and it is a very small number. Planning, as our
    discussion suggests thus far, requires the process of
    interagency review, public review, cost reduction, so the
    number of rules that are planned in any strong sense that cost
    over $1 billion is very hard to specify. Often they are rules
    that are under discussion but they weren't really planned and
    they might come in like a lion and go out like a lamb.
        Mrs. Myrick.  But perhaps we can get back with you on that
    later after a couple months or so.
        Mr. Sunstein.  Yes.
        Mrs. Myrick.  The other thing that I wanted to ask is, when
    you look back on the regulations that have been issued during
    the Administration, can you identify any in which it has been
    determined that the benefits have not justified the cost? Do
    you have that kind of analysis that you could share with us?
        Mr. Sunstein.  Yes. There is only one big one that comes to
    mind. It is called Positive Train Control, and it is a
    statutory requirement, and the Department of Transportation had
    to issue it as a matter of law even though the monetizable
    benefits are lower than the monetizable costs. There aren't a
    lot like that.
        Mrs. Myrick.  Would you be willing to submit again for the
    record?
        Mr. Sunstein.  Unquestionably.
        Mrs. Myrick.  I would appreciate a full answer and
    explanation on that particular situation.
        With that, I yield back the rest of my time, Mr. Chairman.
        Mr. Stearns.  I thank the gentlelady.
        The gentleman from Massachusetts, Mr. Markey, is
    recognized.
        Mr. Markey.  Thank you, Mr. Chairman, very much.
        So we all know what the reality of this hearing is. The
    Republicans hope that they can use the Regulatory Flexibility
    Act to turn the United States into a health, environment,
    safety, and consumer protection regulation-free zone, and the
    presumption is that regulation is bad. But obviously that is
    not necessarily the case. For example, we have heard a lot
    about how EPA's efforts to regulate global warming pollution
    will lead to an economic catastrophe but this is just not borne
    out by the facts.
        Before the Obama Administration's global warming
    regulations for cars and SUVs were announced in 2009, the auto
    industry in this country was literally in the tank before the
    regulations were in fact promulgated. More than 300,000 jobs
    lost, two American companies in bankruptcy and consumers no
    longer willing to buy the gas-guzzlers that the domestic
    automakers had bet the bank on. And what has happened since the
    regulations were announced? Well, in 2010 auto sales went into
    overdrive and soared more than 11 percent, snapping the
    industry out of its 4-year decline. Companies were rehiring
    thousands of workers, and there has been a proliferation of new
    companies that plan to make and market electric vehicles and
    other advanced vehicles. So this Groundhog Day recitation of
    how regulations will destroy the economy and jobs has already
    been shown to be flat-out wrong.
        So I have some questions about EPA's future global warming
    regulations that perhaps you could help me with, Mr. Sunstein.
    Will regulations that seek to limit global warming pollution
    from power plants or refineries also take into account the
    increase in jobs that could result from the development and
    installation of new clean energy technologies?
        Mr. Sunstein.  Yes.
        Mr. Markey.  Yes. Isn't it true that regulations to curb
    dangerous air pollutants could result in quantifiable cost
    savings in the form of medical expenses that won't be incurred
    or environmental damages that won't need to be mitigated?
        Mr. Sunstein.  Yes.
        Mr. Markey.  Installing pollution control technologies on
    power plants could also lead to increases in the efficiency of
    the facilities and significant cost savings for companies. Will
    you be quantifying these and other benefits as part of any
    regulatory analysis?
        Mr. Sunstein.  These are not multiple-choice questions, and
    the answer is yes.
        Mr. Markey.  Thank you. The EPA recently announced that it
    would only issue its proposal to regulate global warming
    pollution from refineries and power plants after meeting with
    business leaders and other stakeholders to solicit their input.
    Is this consistent with the President's Executive order
    requiring agencies to seek the views of those who might be
    impacted by regulations before proposing them?
        Mr. Sunstein.  Under section 2, absolutely.
        Mr. Markey.  EPA has also issued a rule that ensures that
    millions of smaller sources of global warming pollution are
    exempted from a requirement to obtain Clean Air Act permits and
    that the requirements for medium and larger emitters would be
    phased in over a period of several years. Is this consistent
    with the President's requirement that regulations take the
    special needs of small businesses into account?
        Mr. Sunstein.  Yes.
        Mr. Markey.  Are EPA's actions also consistent with the
    President's Executive order requiring agencies to promulgate
    regulations that impose the least burden on society and
    maximizing the net benefits to society?
        Mr. Sunstein.  That was the goal of the PSD tailoring rule.
        Mr. Markey.  Thank you. EPA recently proposed a rule to
    regulate air emissions from cement kilns. In its analysis, EPA
    found that the health benefits of the rule would yield between
    $17 and $18 for every $1 in cost. Do you think that this sort
    of return on a regulatory investment is a good one?
        Mr. Sunstein.  It sounds like it would be a very good
    investment.
        Mr. Markey.  Historically speaking, have industries
    typically overestimated the costs of new regulations?
        Mr. Sunstein.  That is frequently the case.
        Mr. Markey.  Now, for the cement kiln rule, EPA didn't even
    consider the benefits of reducing emissions of hazardous
    substances like lead, chromium or arsenic. Historically
    speaking, have agencies typically underestimated the benefits
    of new regulations?
        Mr. Sunstein.  Often they have. We need to be very
    systematic and not answer the question typically.
        Mr. Markey.  I thank you for that precision in your answer,
    but I think the larger point is true, that our lives are longer
    and safer and better because of a regulatory scheme that began
    to be put in place in 1900. Average age of death in the United
    States in 1900 was 48 years of age. These regulations that have
    gone on the books from the Garden of Eden until 1900, 48 years
    of age, now it's 79 years of age, 31 bonus years. Something
    happened in the last 100 years and we exported it around the
    world that we got all those extra years, and a lot of it is
    protecting the health, the safety, the environment and ensuring
    that those regulations are there to protect everyone, not just
    the wealthy, which is what the first 5,000 years of humanity
    was really focused on.
        I thank the gentleman.
        Mr. Stearns.  I thank the gentleman. The gentleman is very
    active and interested in baseball, and in this case he has
    offered Mr. Sunstein a lot of softball questions.
        Dr. Gingrey for 5 minutes.
        Dr. Gingrey.  Thank you, Mr. Chairman.
        Mr. Sunstein, obviously it would appear on the Democratic
    side of the aisle that all regulations and regulatory regimes
    are good and they are suggesting that on our side of the aisle
    they are all bad when obviously it is somewhere in between, and
    really the purpose of this hearing and your testimony, we want
    to glean the truth because clearly some regulatory rules are
    bad, and in regard to the issue of human dignity and consumer
    protection, let me reference last year the Administration
    included an end-of-life Medicare payment rate for physician
    services in its final rule at literally the last minute without
    allowing for a period of public comment. Only after a large
    public outcry did the Administration own up to its actions and
    indeed reversed itself.
        Section 1 of the President's recent Executive order states
    that our regulatory system, and I quote, ``must allow for
    public participation and an open exchange of ideas.'' I want a
    yes or no answer. In your opinion, did the Administration allow
    for public participation in the crafting of this regulation as
    spelled out in section 1 of the Executive order? Yes or no.
        Mr. Sunstein.  As the repeal of the original rule suggests,
    the judgment of HHS was that there had not been an adequate
    opportunity for public comment.
        Dr. Gingrey.  So the answer is no?
        Mr. Sunstein.  Yes.
        Dr. Gingrey.  Thank you. Another yes or no question. Do you
    or OMB know who in the Administration made that decision to not
    allow public participation, instead slipped this regulation
    into the rule in the dark of night? Yes or no?
        Mr. Sunstein.  I don't personally know.
        Dr. Gingrey.  OK. Another yes or no. Do you know which
    individuals within the Administration would have the authority
    to slip a regulation into a final rule in the dark of night
    without allowing for this public comment?
        Mr. Sunstein.  I don't think anyone has that authority.
        Dr. Gingrey.  So the answer is?
        Mr. Sunstein.  No, I don't know. There are people--the
    Secretary of HHS has considerable authority over her rules and
    she does not slip things in in the dark of night.
        Dr. Gingrey.  Well, it certainly does appear that the
    Administration purposely avoided obtaining Congressional
    approval for an unpopular regulation that they could not sell
    to the American people last Congress. So instead, the measure
    was inserted into this morass of regulations in the hope that
    no one would notice. Do you believe that the American people
    deserve to know why they were not allowed to publicly view this
    regulation before the Administration published it? Yes or no.
        Mr. Sunstein.  I think the American people deserve to see
    the content of rules before they are finalized.
        Dr. Gingrey.  So the answer is yes. Thank you. Again, would
    this recent Executive Order 13563 prevent the Administration
    from enforcing a regulation without allowing public
    participation in the future?
        Mr. Sunstein.  That is correct.
        Dr. Gingrey.  Can you assure us here today, Mr. Sunstein,
    that this Administration will not attempt such an illegal end
    run in the future? Yes or no.
        Mr. Sunstein.  Yes.
        Dr. Gingrey.  Thank you. And finally--and I will yield back
    some time, Mr. Chairman.
        Mr. Stearns.  I thank the gentleman.
        Dr. Gingrey.  If the witness would answer this last
    question? Would you agree this shows how regulations can make
    unpopular actions possible without Congress having to support
    political risky positions? Yes or no.
        Mr. Sunstein.  Well, if I have to answer yes or no, I would
    answer yes to that one.
        Dr. Gingrey.  Thank you. You have been a great witness, and
    I will yield back to the chairman.
        Mr. Stearns.  I thank the gentleman, and now we will move
    on to Mr. Scalise, who is recognized for 5 minutes.
        Mr. Scalise.  Thank you, Mr. Chairman, and Mr. Sunstein, I
    appreciate you coming before the committee.
        I want to start asking about regulations regarding oil and
    gas drilling operations, and I think you touched on some of
    that but does OMB actually go and review the rules from the
    Department of the Interior concerning oil and gas regulations?
        Mr. Sunstein.  If they are significant regulatory actions,
    yes. So it depends on their nature but some of them, the answer
    is yes.
        Mr. Scalise.  OK, some of them. When the Department of the
    Interior came out with the moratorium on drilling, did you
    review that?
        Mr. Sunstein.  No, that wasn't a regulatory action within
    the meaning of Executive Order 12866 so we did not review the
    moratorium.
        Mr. Scalise.  At least that is your feeling that it wasn't?
        Mr. Sunstein.  No, it is just, it doesn't fit easily within
    the definition of a significant regulatory action.
        Mr. Scalise.  Why would you not think that would be
    significant, the President literally shutting down an entire
    industry?
        Mr. Sunstein.  OK, I----
        Mr. Scalise.  And which cost billions of dollars.
        Mr. Sunstein.  I completely understand appreciate the
    question. The answer is somewhat technical, which is the
    foundation for authority is rules within the meaning of the
    Administrative Procedure Act. A moratorium isn't a rule within
    the meaning of the Administrative Procedure Act. We do extend
    review somewhat beyond that significant----
        Mr. Scalise.  When you look at--I will just bring you back
    to President Clinton's Executive Order 12866, which is still in
    effect and part of your department's purview. If it has an
    annual effect on the economy of $100 million or more or more
    adversely affects in a material way, I mean, we are talking
    about a major policy decision that had an impact on well over
    $100 million and in fact is one of the reasons that we are
    seeing the price of oil approach $100 a barrel. Would you
    consider that first of all a major economic impact of $100 or
    more?
        Mr. Sunstein.  Yes, though the ``it'' which is the
    reference is to regulatory actions, as I mentioned, and that is
    a term of art under the Executive order. The moratorium didn't
    quite fit under that.
        Mr. Scalise.  And I would reference you to also go back and
    look at the federal judge's ruling, who felt that the
    Department did go outside of their purview----
        Mr. Sunstein.  That is correct.
        Mr. Scalise [continuing]. In issuing that, and I would be
    curious to see what your relationship with those reviews was,
    and I would be surprised if you didn't feel that it was
    something that your department should have had review over. As
    it relates to the current regulatory scheme, are you in review
    of those rules?
        Mr. Sunstein.  Yes. Anything that counts as a rule under
    the Administrative Procedure Act, absolutely, significant
    guidance documents and interpretative statements under March
    2009 memorandum by the director of OMB, we review this also.
        Mr. Scalise.  Is it true that the Department did not
    perform a regulatory flexibility analysis regarding its impact
    on small businesses?
        Mr. Sunstein.  I don't recall the answer to that one. What
    are----
        Mr. Scalise.  I will help you. This is from OMB. This is an
    OMB document that actually says that the oil and gas operations
    on the Outer Continental Shelf, the actions that they took did
    not require--according to your office, did not require--
    flexibility analysis.
        Mr. Sunstein.  Are you referring to the moratorium or are
    you referring to a rule?
        Mr. Scalise.  Their increased safety measures, as they
    referred to them.
        Mr. Sunstein.  Oh, OK. Well, if it is a rule, then there
    has to be an analysis to that effect, and my recollection is
    that the small business impacts were not significant enough to
    require that analysis.
        Mr. Scalise.  And who is that based on?
        Mr. Sunstein.  That is based in the first instance under
    the Regulatory Flexibility Act on the judgment of the relevant
    department.
        Mr. Scalise.  So you just take their word for it if they
    say it won't have $100 million impact? Clearly, and I will just
    run you off some numbers that the White House has actually
    confirmed. It has cost up to 12,000 jobs that our economy has
    lost because of that action. It has cost about 12 percent of
    our current U.S. oil production and about $70 billion of
    investment which there have been a number of private research
    that has been done to show that, $70 billion, so you just took
    their word that it wouldn't cost over $100 million?
        Mr. Sunstein.  OK. If you are referring to the moratorium,
    as I say, that was not subject to our review under our
    Executive order. If you are referring to some rules that we
    have had----
        Mr. Scalise.  The overall rules.
        Mr. Sunstein.  Well, the moratorium is distinct from the
    rules. I don't believe, though I might be wrong on this, that
    the rules are anticipated to have significant adverse job
    impacts. One of them is----
        Mr. Scalise.  Well, it already has. I mean, that has been
    documented by the White House, so when you come out with
    flexibility analysis, and you determine or you take their word
    that they don't need to do one under the law----
        Mr. Sunstein.  No. I said in the first instance, which is a
    very important qualification, we do not take their word as
    authoritative and we engage with the Office of Advocacy and the
    Small Business Administration very carefully.
        Mr. Scalise.  And I would like to get any kind of
    documentation, e-mails, correspondence that you had with them
    in relation to these rules and the determination not to do a
    flexibility analysis by your department because that was a
    ruling that your department----
        Mr. Sunstein.  I believe you are referring, though I am not
    sure, to the moratorium, which, as I say, we didn't review. If
    you are referring to the rules, then we did review at least
    two----
        Mr. Scalise.  And did you review----
        Mr. Sunstein [continuing]. With full analysis of costs and
    benefits.
        Mr. Scalise.  Did you review the 30-day safety report that
    the President's own scientific commission--because one of your
    challenges or your tasks is to base this on science, and his
    scientists actually said it would reduce safety in the Gulf.
    The scientists said it would reduce safety in the Gulf to
    impose the moratorium. That was in the 30-day safety report
    that came out.
        Mr. Sunstein.  The 30-day safety report isn't a regulatory
    action subject to formal OIRA review.
        Mr. Scalise.  Right. But it was doctored by, from every
    report we have gotten from the climate czar, who is
    conveniently leaving, but that document was doctored to imply
    that the scientists said that the science backed it up when in
    fact the scientists said it actually would reduce safety to
    impose that, and that is what the Department of the Interior
    used as the basis. So do you look at any underlying documents?
    If a department says we are going to make a rule and we are
    going to base it on underlying documents, do you look at those
    underlying documents?
        Mr. Sunstein.  I was about to say I am very grateful that
    is not a yes or no question, but it ended up being a yes or no
    question. If it is not a regulatory action, then we don't have
    formal review though there may be some participation by some of
    OIRA's staff. Our lane is the lane of regulatory action with
    central feature being rules. Reports of that sort, we may have
    some informal----
        Mr. Scalise.  And I know I am out of time, but the
    regulatory actions are costing jobs in the thousands right now.
        Mr. Sunstein.  That is----
        Mr. Scalise.  That is something we will have to follow up
    on.
        Mr. Sunstein.  That is so appreciated, and at the core of
    the small business memorandum and the Executive order is
    insistent focus on job creation.
        Mr. Scalise.  Thank you, Mr. Chairman. I yield back.
        Mr. Stearns.  Mr. Scalise asked for some documents. I think
    you might provide him, at his request, with some of those
    documents.
        Mr. Gardner is recognized for 5 minutes.
        Mr. Gardner.  Thank you, Mr. Chairman, and thank you, Mr.
    Sunstein, again for your testimony before this committee.
        I just want to talk a little bit about how something is
    reviewed under these Executive orders and hoping to have you
    help me understand what takes place. Could you explain briefly
    how your office would review a regulation under Executive Order
    12866 and what are the key components of your review?
        Mr. Sunstein.  OK. Thank you for that. What we would do
    first is explore with other agencies which are going to see the
    rule whether the requirement of consideration of alternatives
    has been met, whether the agency has done a careful analysis of
    costs and benefits, whether the agency has justified its
    reasoned determination that the benefits justify the cost,
    whether the agency has shown that there is a compelling reason
    for federal action, whether the agency has considered reliance
    on the market, reliance on State authority, as some of the
    earlier questions suggested----
        Mr. Gardner.  So it is safe to say that there are basically
    three core components where you identify and assess available
    alternatives to direct regulation dealing with alternative
    forms of regulation and of course getting to impose the least
    burden on society including individuals and businesses?
        Mr. Sunstein.  Yes, and we recently issued a checklist that
    basically puts in a page-and-a-half our essential inquiries.
        Mr. Gardner.  So if you take a real-world example of the
    EPA and greenhouse gas regulations, how did your office use
    those requirements when carrying out that rule review?
        Mr. Sunstein.  Well, the most costly of the greenhouse gas
    rules is the one that there is considerable enthusiasm for,
    which is the fuel economy rule, and what we did for that one
    was to investigate the costs of the rule, the benefits of the
    rule, to think of what alternatives there are in terms of
    stringency, to consider what kind of flexibilities might be
    provided for small business and others, to ensure that there
    was full public participation so that people could comment on
    the options, and to try to come up with the approach that
    maximizes net benefits.
        Mr. Gardner.  And 12866 also says that the underlying
    analysis of costs and benefits of potentially effective and
    reasonably feasible alternatives to the planned regulation
    identified by the agencies or the public, it goes on to say,
    and an explanation why the planned regulatory action is
    preferable to the identified potential alternatives. Did the
    EPA provide and did you review an analysis of the reasonably
    feasible alternatives----
        Mr. Sunstein.  Yes.
        Mr. Gardner [continuing]. For the endangerment finding and
    the subsequent greenhouse gas regulations?
        Mr. Sunstein.  Yes. That is laid out in great detail in the
    regulatory impact analysis and it is also in the preamble to
    the rule.
        Mr. Gardner.  And what alternatives then did the EPA
    provide to you?
        Mr. Sunstein.  The EPA and NHTSA discussed different levels
    of stringency and explained that a more stringent approach
    would run into serious concerns about feasibility and cost.
        Mr. Gardner.  And that was your evaluation of each as well?
        Mr. Sunstein.  We concurred with the evaluation. We thought
    it was a very reasonable evaluation.
        Mr. Gardner.  The testimony that we have heard today from
    members of the committee as well as our colleagues on the other
    side of the aisle seemed to, as the gentleman from Georgia
    stated, be an extreme left to the right. What am I supposed to
    tell my constituents when it comes to those who come to me and
    say these regulations are costing me jobs? I mean, are they
    wrong? Are they wrong that this is costing them jobs? Do they
    not know what they are talking about?
        Mr. Sunstein.  Well, we need to know what regulation it is,
    but I think the first thing you should say to them, as
    reflected in your opening remarks, is that there are two sets
    of concerns. One is about fear of what is coming and the other
    is trouble caused by what is there. On fear of what is coming,
    you have a very strong signal from the President of the United
    States with respect to small business in particular, and that
    is a document----
        Mr. Gardner.  So they are just fearful?
        Mr. Sunstein.  Well, that is not all. I am using your
    words. And that is a legitimate fear that regulation can be
    harmful. So you asked what should you say to your constituents.
    I think you can say that both your subcommittee is on this
    issue and the President of the United States and the
    Administrator of the Office of Information and Regulatory
    Affairs share this concern, and with respect to fear of what is
    coming, we want to work directly with you to make sure things
    are going right rather than wrong.
        Mr. Gardner.  So will you then make the commitment----
        Mr. Sunstein.  Let me say with respect to the current
    regulations, I am very glad you introduced that because the
    president has called for a look-back at existing regulations
    that cause trouble, and you can find things in the very recent
    past where agencies actually have looked back, including the
    EPA----
        Mr. Gardner.  Who triggers the look-back? Who does that?
        Mr. Sunstein.  The look-back is a process that the Office
    of Information and Regulatory Affairs is helping to coordinate.
        Mr. Gardner.  So you will request the look-back of the
    agency?
        Mr. Sunstein.  Well, the President has requested the look-
    back.
        Mr. Gardner.  But you will request to the regulatory agency
    what rule to review?
        Mr. Sunstein.  They have to submit plans to us within 120
    days, and we will work closely with them to figure out what
    the----
        Mr. Gardner.  But looking back, you will request those
    rules that are already in effect?
        Mr. Sunstein.  We will be participants in the process of
    figuring out what to look back on. I hope you will be a
    participant also.
        Mr. Gardner.  Will you make a commitment today then during
    this time of economic crisis that you will use your power to
    make sure that the Administration doesn't put its stamp of
    approval on any regulation that costs American jobs?
        Mr. Sunstein.  Well, what I would say if there is----
        Mr. Gardner.  That can be a yes or no question pretty
    easily.
        Mr. Sunstein.  A yes answer would be preposterous. If there
    is a regulation that is saving 10,000 lives and costing one
    job, it is worth it. But what I would make a commitment to do
    is to focus every day on job creation and the urgent need, as
    the President emphasized last night, to square everything we
    are doing with the overriding imperative of promoting
    competitiveness, economic growth, and helping people get good
    jobs.
        Mr. Gardner.  Thank you, Mr. Chairman.
        Mr. Stearns.  I thank the gentleman.
        I recognize Mr. Griffith.
        Mr. Griffith.  Thank you, Mr. Chairman.
        If I might follow up on that question and ask you, are you
    all taking a look at the--when you are looking at that job
    loss, are you taking a look at the benefit not only in this
    country but the cost of sending those jobs overseas? I mean,
    one of the things that we worry about in my district when
    people are talking about regulations, is this product is going
    to be made and sold in the United States, the question is
    whether or not it is made in the United States or whether or
    not it is made in China or some other country where they don't
    have these regulations, and so when you are looking at this, my
    question to you is, are you looking at what other nations are
    doing? Because if we having a small benefit but we are sending
    the job overseas and we are still going to get the product but
    now instead of having the jobs we have gotten a small benefit
    and no jobs, and do you all take that into account when you are
    looking at these regulations, and particularly the EPA?
        Mr. Sunstein.  Yes. We had in our 2010 report to you all,
    our annual report to Congress, a detailed discussion of the
    risk of job loss from regulations that might send jobs
    overseas, and we continue to be very focused on that risk.
        Mr. Griffith.  Well, I understand that, but are you
    marrying the two concepts? OK, we are worried about sending
    jobs overseas but are you also looking at what is the net
    benefit to the United States and then are we looking at what is
    the net benefit in the world environment? Because if the
    benefit is, is that we are going to clean up the air a little
    bit but we are sending all the jobs to China where they won't
    even have the regulations we currently have, aren't we in
    effect, if we aren't marrying those two, so question number one
    of this would be, are we marrying them, and number two is, are
    we in effect making the environment of the world worse in many
    ways if we send these jobs offshore where they won't follow the
    same rules that we have?
        Mr. Sunstein.  That is a great question. It is a fabulous
    question, and it has been raised in the context of some rules
    where it may be that the environment, the world environment is
    actually worse off as a result of what we do. Our basic source
    of what we should consider and lay out is legal requirements,
    so it may be that some of the environmental harms done
    elsewhere in the world aren't really legally relevant. They are
    not part of the statutory apparatus under which we are
    operating. And thank you for letting me elaborate a bit on
    this, but if you had asked me a yes or no question, I would
    have said with slight embarrassment because it is too simple,
    but I would have said yes.
        Mr. Griffith.  And let me ask this because it has just been
    troubling me, and you have heard these questions before from
    some of the other members about the EPA. Its spokesman has said
    that they don't think that this will affect them, in essence,
    and you have made it very clear that yes, the President's
    Executive order does apply and that you all are looking at
    those regulations as well but clearly somehow they got the word
    they didn't. Do you know whether or not there was a private
    ``get out of jail free'' card or a wink and a nod that would
    say that they don't have to--we are going to come look but
    don't worry, everything is going to be OK?
        Mr. Sunstein.  I am confident there was no wink or nod or
    side conversation.
        Mr. Griffith.  All right. I yield the rest of my time back,
    Mr. Chairman.
        Mr. Stearns.  I thank the gentleman.
        Mr. Terry is recognized for 5 minutes.
        Mr. Terry.  Thank you, Mr. Chairman, and I appreciate you
    being here today. It has been helpful.
        First of all, I want to comment on a couple of things from
    three of my colleagues on the other side. Do you believe that
    this side of the aisle are regulatory anarchists and want toxic
    materials thrown into rivers and----
        Mr. Sunstein.  If I may say, I think the questions--it is
    an honor to talk with any of you about these things, and the
    questions have been excellent and you deserve an answer, so I
    see no evidence of----
        Mr. Terry.  And you have done well in that area. Let me
    follow up one question from Mr. Markey. Do you think banning
    all use of fossil fuels would yield positive health for human
    beings?
        Mr. Sunstein.  All things considered, no.
        Mr. Terry.  What do you mean by, all things considered? I
    mean, would it be healthier for our people if there were no
    fossil fuels used?
        Mr. Sunstein.  On one dimension, it would be healthier
    because the pollution would go down but the economic hardship
    would be unhealthy.
        Mr. Terry.  And balance is the issue here, so we can't deal
    in extremes is my point.
        Mr. Sunstein.  That is right.
        Mr. Terry.  Cost-benefit analysis is appropriate. And the
    President's Executive Order 13563 includes a cost-benefit
    analysis, correct?
        Mr. Sunstein.  Yes.
        Mr. Terry.  And you testified at the beginning that his
    Executive order does not apply to independent agencies?
        Mr. Sunstein.  That is correct. Following President
    Reagan's lead, really----
        Mr. Terry.  Well, yes, it doesn't. So the FCC--I am vice
    chairman of Communications and Technology, so my focus is with
    the FCC. So the Executive order does not apply to the FCC?
        Mr. Sunstein.  It does not.
        Mr. Terry.  And----
        Mr. Sunstein.  In the small business memorandum, the
    President requests that the independent agencies comply with
    the----
        Mr. Terry.  And has the FCC said they will comply to that
    order?
        Mr. Sunstein.  We have not heard.
        Mr. Terry.  OK. And in that regard, we have talked about,
    or you mentioned that the Executive order would help the
    Administration reach that cost-benefit analysis where you weigh
    both sides, so do you feel as you sit here today in your
    position, not as a law review author but in your capacity today
    that that would beneficial for the Administration if the
    Executive order would apply to the independent agencies?
        Mr. Sunstein.  I believe that cost-benefit analysis is a
    helpful tool for any government actor, and in that sense, I
    believe that its use by the independent agencies would be
    informative.
        Mr. Terry.  Would it be helpful to you in determining
    whether to give advice and counsel from OMB on behalf of the
    Administration through those agencies?
        Mr. Sunstein.  We are very respectful of the independence
    of the Federal Reserve, the FCC, the FTC, which have
    independence as a matter of legal authority. It would be
    helpful to us, I will tell you in one domain that is
    exceedingly important though slightly technical. We provide
    annual reports to you all on the costs and benefits of
    regulation. You have asked us to provide information on the
    costs and benefits of regulations by the FCC, the FTC, all of
    the independents. More often than not, we don't have anything
    to tell you because there isn't a cost-benefit analysis, and--
    --
        Mr. Terry.  I would appreciate it. Is there a separate of
    powers or constitutional issue here in your view?
        Mr. Sunstein.  There is certainly an issue in the sense
    that the President's legal authority over the independent
    agencies has occupied many less than fascinating pages of law
    reviews.
        Mr. Terry.  But can that be resolved by congressional
    action or is there are still in your opinion----
        Mr. Sunstein.  You could resolve it.
        Mr. Terry.  I know you are not a Nebraska graduate so we
    have to question your academic history, but nonetheless, in
    your esteemed opinion.
        Mr. Sunstein.  I think the professors at the University of
    Nebraska would agree that whether the independent agencies are
    subject to presidential control is ultimately up to Congress.
        Mr. Terry.  So congressional authority would be necessary.
    Is that something that the President would request of us?
        Mr. Sunstein.  I am not aware that the President has a view
    on that issue.
        Mr. Terry.  And the independent agencies still have to
    provide regulatory plans?
        Mr. Sunstein.  That is correct.
        Mr. Terry.  Did the FCC provide you a regulatory plan that
    included net neutrality in 2010?
        Mr. Sunstein.  I believe so. I know they provided a plan
    but I don't recall its exact ingredients.
        Mr. Terry.  My time is--would you submit that for the
    record?
        Mr. Sunstein.  I would be delighted.
        Mr. Terry.  Thank you.
        Mr. Stearns.  Mr. Terry's time has expired, and the
    gentleman from California, Mr. Bilbray, is recognized.
        Mr. Bilbray.  Thank you.
        Mr. Sunstein, last night the President proposed building a
    high-speed rail system in America that would cover 80 percent
    of the people and do it within 25 years. Do you believe under
    existing regulatory realities that that is possible?
        Mr. Sunstein.  As I noted, the OIRA lane is narrow. We
    review existing regulations, so that is beyond my authority and
    my knowledge base.
        Mr. Bilbray.  OK. Let me just say, as somebody who has
    built a rail system, I think that is where you need to--people
    like yourself need to be able to address that issue. When the
    President proposes something and it is not just money, is it
    legal to do it? And as somebody who has built a rail system, my
    opinion, of somebody who has actually done it, is that no, it
    is not legally possible under existing regulatory structure to
    build the system that the President proposed, which places all
    of us in the challenge of, do we not only talk about how much
    it spends but how much regulatory reform we need to make it
    possible? Do you have any experience in implementing projects
    such as transit, such as sanitation, such as building a
    factory? Do you have any experience in going through the
    regulatory process as a participant of that process?
        Mr. Sunstein.  Any citizen has at least some experience in
    navigating the regulatory process, but my own experience with
    the regulatory process has been a participant over the last 2
    years in making sure that the burdens to which you refer are as
    streamlined and navigable as possible, and the most important
    part of my experience in that domain, something that hasn't
    gotten much publicity--I hope it is an answer to your
    question--is that we quietly asked every agency of the Federal
    Government including the independent agencies for burden
    reduction----
        Mr. Bilbray.  Whoa, whoa, whoa. See, you are asking about
    the process and you are doing it as a regulatory member. I am
    asking you, though, have you been the applicant, have you
    personally been through the gauntlet or have you observed it
    from an administrative point of view?
        Mr. Sunstein.  Does my dad count? My dad had a small
    construction company.
        Mr. Bilbray.  No, your dad doesn't count. We don't allow
    crime of blood or benefits of blood on this issue.
        Mr. Sunstein.  My own career has not been navigating
    regulatory processes but I am trying to make them easier for
    people who do.
        Mr. Bilbray.  As somebody who has been on both sides, this
    is where I see a real problem. If you haven't walked the mile,
    if you haven't gone through the frustration, if you haven't
    seen the obstructionism, you really don't understand how to
    correct the problem appropriately, and I think you and I would
    agree if the plumbing in your house was backed up, you would
    not call a doctor or a lawyer to address that issue, and the
    fact is--I would ask you a question. Let me back off and say
    this. Do you believe there are environmental laws on the books
    today that are hurting the environment with their enforcement?
        Mr. Sunstein.  Well, I do believe there are environmental
    laws on the books today that can be significantly improved from
    both the economic and environmental standpoint.
        Mr. Bilbray.  My question is, do you believe that there are
    environmental regs on the books today that their enforcement is
    actually hurting the environment rather than helping it?
        Mr. Sunstein.  It would be most surprising if the answer
    weren't yes for at least some.
        Mr. Bilbray.  OK. Then my question to you is, when we get
    into these review of assuming that the law's intention is
    actually being fulfilled, wouldn't you agree that that is a
    wrong assumption to make from the get-go, that laws' intentions
    are assumed to be effective rather than questioning are they
    effective so that there is a burden of proof of existence of
    those laws need to consistently be tested for their
    effectiveness and efficiency?
        Mr. Sunstein.  Well, the President gave a clear yes answer
    in the Executive order which said we need to measure the actual
    results of regulations and the look-back is intended to do
    that.
        Mr. Bilbray.  OK. Do you know what the reductions for
    vehicle was projected with the new environmental regs on auto
    manufacturers?
        Mr. Sunstein.  The reduction per vehicle? I don't have the
    number. The reduction of emissions per vehicle?
        Mr. Bilbray.  Yes. What was the goal with that reg? That is
    a pretty big reg. We ought to know what the number was.
        Mr. Sunstein.  Per vehicle? I know that the number----
        Mr. Bilbray.  OK. I will give you per vehicle or fleet
    reduction.
        Mr. Sunstein.  Well, the emission reduction?
        Mr. Bilbray.  Yes.
        Mr. Sunstein.  I don't have the exact number.
        Mr. Bilbray.  I am just asking for a percentage.
        Mr. Sunstein.  The goal is about 36.5 miles per gallon.
        Mr. Bilbray.  And what percentage is that a reduction they
    are looking at?
        Mr. Sunstein.  We would have to do a little arithmetic to
    get it right.
        Mr. Bilbray.  OK. What if I told you that scientists are
    already telling us that we can reduce emissions and auto
    emissions by 22.6 percent and Washington has done nothing to
    consider that cost-effectiveness program while it is putting
    burdens on the production of automobiles in this country?
        Mr. Sunstein.  If I may ask, what is the cost-effective
    program you are----
        Mr. Bilbray.  The cost-effective program is for us to go
    back and look at traffic control operated by government that is
    inappropriate.
        Mr. Sunstein.  Oh, we are interested in any method that is
    cost-effective, cost-justified, to make this situation----
        Mr. Bilbray.  Wouldn't that be the kind of savings that we
    need to do more of with our cost-effective analysis?
        Mr. Sunstein.  It sounds like something very much worth
    investigating, yes.
        Mr. Stearns.  I thank the gentleman, and I ask unanimous
    consent to let Mr. McKinley ask questions. He is on the full
    committee but he is not on the subcommittee. Without objection,
    so ordered.
        Mr. McKinley, thank you for taking the time to come down.
    You are recognized for 5 minutes.
        Mr. McKinley.  Thank you. Thank you, Mr. Chairman.
        Thank you for being here. I have a series of questions more
    specific, and they deal with the Spruce Mine in West Virginia.
    You are familiar with that?
        Mr. Sunstein.  That is not something----
        Mr. McKinley.  Can you give me some volume, please?
        Mr. Sunstein.  OK. Sorry. That is not something within our
    purview. We review regulations and regulatory actions. I
    believe what you are pointing to isn't something that is within
    the domain of the Office of Information and Regulatory Affairs.
        Mr. McKinley.  But this was a retroactive veto. Are you
    aware of that?
        Mr. Sunstein.  I have a recollection from newspaper
    accounts, but this isn't something within our authority. We do
    look at rules that have effects in this area but what you are
    referring to, I don't believe is a regulatory action under
    Executive Order 12866.
        Mr. McKinley.  Were you aware of this veto prior to it
    happening?
        Mr. Sunstein.  No.
        Mr. McKinley.  You were not aware?
        Mr. Sunstein.  No.
        Mr. McKinley.  Do you have any idea why the EPA came to
    that decision?
        Mr. Sunstein.  This is something which would be good to
    engage the people who made the decision for their explanation.
        Mr. McKinley.  Were you aware that the EPA has made this
    determination to do it retroactive based on some new science?
        Mr. Sunstein.  Because this wasn't regulatory action under
    12866, if I am following, this wasn't something that we saw in
    advance in any way.
        Mr. McKinley.  Do you think that it is something that they
    should have checked with you about before they embarked on
    something that was so draconian to West Virginia?
        Mr. Sunstein.  Well, one thing I will say which is that in
    the regulatory domain, anything that is draconian for West
    Virginia or anything else is of keen concern to us, but that
    thing had better be under the new Executive order as under the
    old a regulatory action within the meaning of both documents,
    and so I wouldn't want to comment on the decision or the
    process because my understanding is that this was not something
    that is subject to our review.
        Mr. McKinley.  But you have enough awareness of it, so
    now--and the last question has more to do with, is it possible
    that if the regulatory bodies think that they can do this
    retroactively to a specific site in West Virginia, it is only
    in the Appalachian district they are doing this in the mines
    and they have applied it--the first application has been in the
    mines in West Virginia. If they feel they have the jurisdiction
    to be able to do that, could they not also do that in other
    markets like, for example, the chemical industry?
        Mr. Sunstein.  What I would say in our domain is that
    rulemaking is not retroactive. Actually, the Supreme Court has
    said that rulemaking is presumed not to be legitimately
    retroactive and that under the President's new Executive order,
    not only are rules not retroactive but they also must be
    preceded by a period of public comment so stakeholders can see
    it. Not only that, the agency is supposed to engage
    stakeholders including those who would be adversely affected
    before they even propose a rule. So that is our policy with
    respect to rulemaking.
        Mr. McKinley.  Do you think that this was a violation then
    if they made this retroactive?
        Mr. Sunstein.  Well, as I say, this is not our lane or our
    area so I wouldn't want to speak to it absent authority or a
    full account.
        Mr. McKinley.  Do you think if they--if rulemaking can
    occur like this in a retroactive fashion directed to the coal
    industry, would it not also apply to petroleum, chemical, other
    industries as well?
        Mr. Sunstein.  The Supreme Court said in a decision a few
    years ago retroactivity is disfavored, and to answer that
    question, I want to know what exactly was the situation here
    and whether there was something unique to it that justified the
    action and whether----
        Mr. McKinley.  From what I understand, sir, there was new
    science introduced but that new science was funded by the EPA.
    The study was funded by the EPA. I don't know whether that
    would--I am an engineer. I don't know that that would
    necessarily--if I fund something whether I am--that is new
    science. That is bolstering my cause.
        Mr. Sunstein.  I greatly appreciate the question, and with
    your indulgence I would want to stay away from an area that I
    don't have authority over and that I haven't studied. I would
    say that with respect to the scientific issue generally, under
    section 5 of the new Executive order, there is strong emphasis
    on objective science and scientific integrity, and that is
    something in the rulemaking area which is our domain that we
    are taking exceedingly seriously.
        Mr. McKinley.  Since you have heard of this now, are you
    going to look into it?
        Mr. Sunstein.  If you would like me to, I would be----
        Mr. McKinley.  I would love to have you look into it.
        Mr. Sunstein [continuing]. Delighted to have you put in
    contact with the people who have----
        Mr. McKinley.  I would like to know more about what the
    repercussions of this are. Thank you very much.
        Mr. Sunstein.  And thanks to you.
        Mr. Stearns.  I thank the gentleman. We are going to go a
    second round of questions. I ask for your help here. It is just
    a few more and then----
        Mr. Sunstein.  Are you asking me yes or no questions?
        Mr. Stearns.  Say again?
        Mr. Sunstein.  Are you going to ask me yes or no questions,
    Mr. Chairman?
        Mr. Stearns.  I try. There is something here I want to ask
    you. It is a basic question. How many new government
    regulations have been enacted since your appointment?
        Mr. Sunstein.  I believe the number of final regulations is
    going to be approximate.
        Mr. Stearns.  No, I know.
        Mr. Sunstein.  It is about 500.
        Mr. Stearns.  Five hundred. OK. And do you perhaps have any
    idea how many new regulations will be necessary because of the
    new health care bill and because of the new financial service
    bill?
        Mr. Sunstein.  I don't have that number. I would say that
    our number----
        Mr. Stearns.  If you could venture a guess, that would be
    really fine.
        Mr. Sunstein.  I wouldn't want to venture a guess because
    there is a fact of the matter, and one doesn't want to guess
    about things when the fact of the matter is not difficult to
    find.
        Mr. Stearns.  I am just being a little humorous. I will
    give you a range. Over 5,000 for health care?
        Mr. Sunstein.  It would surprise me if it is that high.
        Mr. Stearns.  And over 5,000 for the financial bill?
        Mr. Sunstein.  It would surprise me if it is that high.
        Mr. Stearns.  OK. Earlier I asked you this question and you
    said yes. The director of OMB produced a set of recommendations
    for a new Executive order within 100 days of the President's
    January 30, 2009 directive. That means that the OMB
    recommendations were sent to the President around May 2009. I
    thought you said yes. Is that correct?
        Mr. Sunstein.  Yes.
        Mr. Stearns.  But the new Executive order wasn't issued
    until January 18, 2011--I had staff check that out--after the
    election. So your yes doesn't seem to comply with the facts.
        Mr. Sunstein.  Ah, OK. No, what the President asked for in
    his memorandum to which you point, the early one, was not a new
    Executive order for issuance. It was recommendations for a new
    Executive order, and what we did was to run processes for a
    significant period under the Clinton Executive order under
    which President Bush also operated and acquired experience. We
    had a public comment period. We got a lot of comments from
    affected stakeholders, some from Members of Congress, there
    were informal and formal communications, and the process of
    acquiring information, learning from the agencies and from our
    own processes what works well and what doesn't ran its course
    such that we were able to issue the Executive order last week.
        Mr. Stearns.  In your testimony today, several times you
    mentioned that ``retrospective'' review will be done of
    regulations. It hasn't been defined in my mind: when does that
    begin? Does it include regulations issued during the Obama
    Administration or are you going back to the Bush
    Administration? Are you going back to the Clinton
    Administration? Maybe you might define what ``retrospective''
    means.
        Mr. Sunstein.  The Executive order says significant
    regulations that are on the books so everything is fair game.
        Mr. Stearns.  How far does that go back, in your mind?
        Mr. Sunstein.  It could go back to the 1920s if there is a
    regulation that is costly and not helping people.
        Mr. Stearns.  It could go back to FDR?
        Mr. Sunstein.  It certainly could go back to FDR.
    Everything is fair game. Needless to say, regulations that have
    been issued within the last weeks and months wouldn't be the
    first candidates for retrospective review because they were
    reviewed very recently, but we are eager to get ideas from you,
    Mr. Chairman, affected stakeholders, members of the public. We
    really need your help to identify regulations that should be
    revisited, and if they are doing harm but they are from 1945,
    then by all means let us revisit it as much as we would if they
    were doing harm in 1982.
        Mr. Stearns.  I commend you. You are the first person from
    the Administration I have heard that said they were willing to
    go back and look at regulations from FDR, so that is quite a
    statement.
        Now, will this review apply equally to all the agencies or
    just certain agencies that you are focusing on? I imagine that
    looking at all the agencies would be a mammoth job.
        Mr. Sunstein.  As you said, the independent agencies
    following President Reagan's lead are not covered but all the
    executive agencies are covered.
        Mr. Stearns.  You are promulgating vehicle fuel efficiency
    standards. Did the agency consider the cost of additional
    injuries and deaths stemming from the use of lighter vehicles?
        Mr. Sunstein.  Yes, that was investigated with great care.
        Mr. Stearns.  When you talk about this retrospective
    review, how are you proposing to bring in the public? The
    gentleman from West Virginia indicated that we had a company
    that got approval for a license and then retrospectively EPA
    revoked its license. Now the company is in jeopardy after
    investing millions of dollars, and employees will lose their
    jobs. Who would think that that could happen, especially after
    the government gave it a license? How are you getting the
    public to interface with you?
        Mr. Sunstein.  It is a tremendous question, and we love
    your ideas. I will give you a few preliminary thoughts. One
    idea we have had is that the public has a lot more information
    than we do about what rules are actually doing on the ground.
        Mr. Stearns.  I agree with that.
        Mr. Sunstein.  So we need their help. It has happened
    already in this very early time that we have gotten a lot of
    communication from the public. The public has not been silent
    about rules that are causing trouble. I think you can expect in
    the relatively near future one very important Cabinet agency
    going out to the public and asking for ideas about
    retrospective analysis, what rules are causing trouble. I think
    you can also expect a high degree of openness both with respect
    to asking for ideas about rules that no longer warrant public
    approval and also for ventilation of the plans, which are due,
    mind you, in 120 days. I would love it if some of those plans
    would beat that deadline and be out to the public before 120
    days but my expectation is that the plans which will include
    candidates will be made public and there will be a period of
    comment, and as Chairman Dingell suggested, there is a full
    process of comment and review as rules get repealed, so that
    will also involve a high degree of public participation.
        Mr. Stearns.  Thank you. My time has expired.
        Dr. Burgess, second round.
        Dr. Burgess.  Thank you, Mr. Chairman.
        In reference to Dr. Gingrey's question about the regulation
    that went forward without a period of public comment, are you
    aware that there are in fact at least 10 such regulations under
    the health care law, the Patient Protection and Affordable Care
    Act, at least 10 such rules that were created without a period
    of public comment?
        Mr. Sunstein.  Yes. What I am aware of is that some laws,
    and this is one of them, have for some rules time constraints
    that are so severe that the only option is to do what is called
    an interim final rule rather than go out for public comment,
    and that is a result of legal compulsion. What is noteworthy
    about interim final rules, and we have paid a great deal of
    attention to this, is they are interim rules.
        Dr. Burgess.  Well, let me just--you offered just a moment
    ago that you would follow up with us. I actually look forward
    to you joining us again in about 3 months' time. If you would
    be willing to do that, maybe we could talk about some of the
    public comment that has come in on some of the interim final
    rules because it is important that this process be open and
    transparent and that people be able to communicate with the
    regulatory agencies and their government. I know I have heard
    from a lot of providers, hospitals, and patients that this is
    something that they would like to see.
        Mr. Sunstein.  Absolutely. I spend a lot of my own time,
    sad but true, on regulations.gov where you can see those
    comments on interim final rules and I am quite aware that some
    rules have produced a lot of public interest.
        Dr. Burgess.  I provided to you--I apologize that it wasn't
    in the briefing binder but something prepared by the Business
    Council, the Business Roundtable, policy burdens inhibiting
    economic growth. Did you have a chance to just glance at that
    while we were at the vote?
        Mr. Sunstein.  I did glance at it.
        Dr. Burgess.  And I appreciate you being willing to do
    that. Of course, our purpose here today is to talk about the
    regulatory burden and what we might do. This paper was
    prepared, interestingly enough, last June at the request of the
    Obama Administration, difficulty in this economic climate
    creating jobs, and the Obama Administration asked the private
    sector, provide us some guidance on what the Obama
    Administration might do to facilitate job creation. So I think
    that was a good idea. The question I have is, why are we
    ignoring some of the more important things that were put
    forward in that monograph? We have, and I referenced this in my
    opening statement, the new source review aspect that was talked
    about in that paper was concerned about the fact that Texas
    does seem to be singled out for some special attention on
    taking its flexible permitting process and that other States
    that are using this were not subjected to the same constraints
    that Texas has been. Do you think this is helpful in creating a
    climate for job creation that Texas be singled out in this way?
        Mr. Sunstein.  I should say that the document to which you
    point has a lot of concerns and that that has been reviewed
    carefully by relevant officials trying to make sure we do the
    best we can for the country. Singling out any State, in some
    ways Texas in particular, is not a good idea. Everyone should
    be treated similarly. What I would say about the particular
    example, I will give you my understanding, is that 49 States
    all complied with the EPA's permitting rule in the sense that--
    --
        Dr. Burgess.  My time is pretty limited. Let me just ask
    you a more specific question.
        Mr. Sunstein.  This was an effort to help people in Texas
    get permits. In order to go forward, there had to be some
    permitting process, and the court approved it.
        Dr. Burgess.  Well, that was under the greenhouse gas
    requirement, but did anyone at EPA consult with the Office of
    Management and Budget or the White House before moving forward
    with taking over the flexible permitting program under the
    Clean Air Act?
        Mr. Sunstein.  That one was something that we were involved
    in, yes, and this was an effort, as I say, to permit people to
    get permits in Texas so they could go forward with
    construction, etc. That is my understanding.
        Dr. Burgess.  And what is the status of that today?
        Mr. Sunstein.  The court has approved it.
        Dr. Burgess.  Let me ask you a question that is in a
    different direction. Do you think there should be any
    legislative effort to regulate broadcasting in the interest of
    democratic principles?
        Mr. Sunstein.  What I would say is that as the
    Administrator of the Office of Information and Regulatory
    Affairs, I am focused on the Paperwork Reduction Act and on the
    recent Executive order and Small Business Memorandum. I think
    you might be referring to some academic writing that might have
    had my name attached to it but academic speculations by anyone
    including yours truly just aren't relevant to the current job.
        Dr. Burgess.  But still, there is some talk about people
    who want to bring back the Fairness Doctrine and some people do
    see that as a restriction on free speech. Would that be
    something that would come through your regulatory agency if
    that occurred?
        Mr. Sunstein.  No, we have no role, and I am on record as
    opposing the Fairness Doctrine.
        Dr. Burgess.  Thank you, Mr. Chairman. I will yield back.
        Mr. Stearns.  Mr. Griffith, you are recognized for 5
    minutes.
        Mr. Griffith.  Thank you, Mr. Chairman.
        If I could go back to some of Congressman McKinley's
    questions relating to the mine closure in West Virginia, and I
    know that what actually may have happened may not be under your
    watch, but wouldn't it be true under the Executive order that
    you would need to look at that? Because as I understood the
    President's comments last night in regard to the salmon, that
    one of the things that he wants to do is to make sure we don't
    have agencies having jurisdiction over what most people would
    think would be the same thing, and in that particular case,
    would you not agree with me that it didn't meet the
    circumstances? The facts didn't meet with what the President
    has said, even in section 1 of his Executive order because for
    that mine, it didn't promote predictability and reduce
    uncertainty, it created more uncertainty for everybody in
    central Appalachia because of that ruling. Would you not agree?
        Mr. Sunstein.  I appreciate the question. I am reluctant to
    say anything critical of colleagues in any agency when I just
    don't know the underlying situation and it isn't something
    within our authority. I can say that EPA in the rulemaking
    domain has been extremely careful and scrupulous about ensuring
    that there is public comment before it goes forward with rules,
    and we had an earlier colloquy about the EPA's insistence
    that----
        Mr. Griffith.  But wouldn't you agree with me that when the
    Army Corps of Engineers signs off on it and says everything is
    fine and then some 18 months to 2 years later the EPA comes in
    and yanks the licenses out, that that does not promote
    predictability and does promote uncertainty?
        Mr. Sunstein.  I would need to know more about the
    particulars. I certainly agree with your emphasis on
    predictability and certainty, which are upfront in the new
    Executive order.
        Mr. Griffith.  And wouldn't you agree that at least on the
    face of it that such action is not plain and easy to
    understand?
        Mr. Sunstein.  Well, I am very concerned about clarity. The
    Plain Writing Act is something that is within our domain. We
    recently issued guidance on it. But I have learned from my
    period in Washington that things that are on the face a certain
    way sometimes aren't fully a certain way and so if you will
    forgive me, I like to be cautious before speaking on that.
        Mr. Griffith.  Well, I understand being cautious but you
    can appreciate that the uncertainty that has now been created
    in the entire region about even attempting to invest money in
    opening up a new mine that has been caused by the actions that
    were taken, and isn't that something that under the Executive
    order that you all should be looking at?
        Mr. Sunstein.  The Administration as a whole is committed
    to promoting certainty, so to look at something that is raising
    concerns along that front is completely appropriate.
        Mr. Griffith.  All right. I thank the gentleman.
        Mr. Stearns.  I thank the gentleman.
        I now recognize the gentlelady, Ms. DeGette.
        Ms. DeGette.  Thank you very much, Mr. Chairman.
        Mr. Sunstein, I really want to thank you for coming and
    testifying today. I found your testimony very illuminating and
    helpful, and I think this subcommittee is going to want to have
    ongoing conversations with you.
        You know, we all agree that unnecessary regulations should
    be repealed and new regulations should not be overly burdensome
    on business or anybody else. I mean, that is a fundamental.
    Listening to the questioning on the other side of the aisle
    today, I kind of realize that there is this assumption that may
    have some vague historic basis but certainly with this new
    Administration and with my colleagues on the Democratic side of
    the aisle, we don't believe in overregulation and we don't
    believe that regulations should be burdensome, especially right
    now with unemployment still over 9 percent. We need to make
    sure that regulations are sensible, that they protect the
    public health and wellbeing and are not overly burdensome.
        I was particularly interested--and I think, so there is
    some thinking since there is a Democratic Administration, we
    are just overregulating, but in fact, when you look at the
    actual facts and statistics, this is not the case. I was
    particularly interested in your comment earlier that the total
    number of rules in the first 2 years of the Obama
    Administration is comparable to the number of rules in the last
    2 years of the Bush Administration, so about the same. And if
    you look at the number for the EPA specifically, which seems to
    be a great concern on the other side of the aisle, the
    comparison between the Administrations is very noteworthy. The
    EPA has finalized or proposed fewer Clean Air Act rules over
    the last 21 months than in the first 2 years of either
    President George W. Bush's Administration or President
    Clinton's Administration. President Bush finalized or proposed
    146 Clean Air Act rules while president Clinton issued only
    115, and President Obama has issued just 87, and frankly, some
    of the Obama Administration's rules, as you can attest, are
    trying to clean up the mess left by the previous
    Administration.
        So let me give an example of that. A federal court threw
    out President Bush's rule to cut toxic mercury emissions from
    power plants in February 2008 because frankly, it was illegal
    under statute. So what it would have done would have been to
    let infants and children vulnerable to mercury pollution. So
    President Obama and his Administration were then forced to go
    back to the drawing board and repromulgate those rules because
    they were illegal the first time.
        And so frankly, I think that, you know, Mr. Stearns and I
    are both eager to talk about regulations that might be
    burdensome and we are eager to work with you and the
    Administration to do that. We were just saying that we would
    welcome suggestions by members on both sides of the aisle and
    we would love to sit down and meet with you and your staff to
    propose anything that we think is overly burdensome because
    frankly, we are not facing a regulatory avalanche. These are
    safeguards for the American public, but I know that you and
    your staff intend to promulgate them in a way that is the least
    burdensome possible. So I just wanted to say that.
        And Mr. Chairman, I just wanted to ask the Majority a
    question, and maybe you know the answer but if not, maybe your
    staff or somebody else can tell me. The Republican have said
    several folks on your side of the aisle have said that an EPA
    spokesman said that the Executive order won't matter with
    respect to the EPA regulations, and I don't know who that--we
    are unaware of any statement like that on this side of the
    aisle, and I am wondering if your staff or the members who said
    that could tell us who that spokesperson was so that we could
    set the Administration straight that the Executive order is
    going to apply to all regulations of agencies within the
    purview of Mr. Sunstein and his staff.
        Mr. Stearns.  We would be glad to provide it for you. It is
    in The Hill, January 18.
        Ms. DeGette.  Thank you. And what is the name of the
    person?
        Mr. Stearns.  Betsaida Alcantara, and the statement said
    that the agency has already been following many of the
    protocols formalized Tuesday, and so we would be glad to give
    The Hill article to you.
        Mr. Sunstein.  May I----
        Ms. DeGette.  Wait a minute. This doesn't say that the
    Executive order doesn't apply to EPA regulations, and Mr.
    Chairman, I would ask unanimous consent to submit this article
    for the record.
        Mr. Stearns.  I would be glad to, by unanimous consent.
        Ms. DeGette.  Thank you.
        [The information appears at the conclusion of the hearing.]
        Mr. Stearns.  But I think we have given you a name. It is
    your interpretation.
        Ms. DeGette.  Yes, you didn't, but it doesn't say anything
    about the Executive order and whether it applies.
        Mr. Stearns.  That is your interpretation.
        Mr. Sunstein.  May I make one brief addition to your
    excellent remarks?
        Mr. Stearns.  Sure.
        Mr. Sunstein.  Which is, if you look at the most expensive
    fiscal year of the last ones, it hasn't been 2010, it hasn't
    been 2009, it was 2007.
        Mr. Stearns.  OK. The gentlelady's time has expired.
        OK. Let me close. Mr. Sunstein, thank you for your patience
    and forbearance while we went and voted. Let me just ask you a
    question to clarify what Ms. DeGette was talking about. In the
    first 2 years of the Bush Administration, how many regulations
    were issued compared to the first 2 years of the Obama
    Administration?
        Mr. Sunstein.  We will have to get that number.
        Mr. Stearns.  OK. That is important because I think what
    she is alluding to--I think those facts are now apples and
    apples instead of apples and oranges.
        Let me also point out that when Ms. DeGette talks about
    deregulation, on this committee we had a cap-and-trade bill we
    passed which the Senate didn't agree with. We had a health care
    bill pass. The Congress under the Democrats' majority had a
    financial bill. They also had bailouts. And so during that
    entire process, when you pass those four major pieces of
    legislation, you are going to have more regulation. And this is
    what I would like to conclude with. You had indicated that
    there should be a comment period for the citizens of this
    country to tell you and OMB that these regulations are killing
    them, and you are saying that you are willing to listen. So can
    I suggest that we sit down with you and we notify our members
    both on the Democrat and Republican side that you have made
    this very auspicious, generous offer to take seriously some of
    the problems? Now, the gentleman from West Virginia pointed out
    that this company has lost its license after getting approved
    by EPA and that is a problem. That is losing jobs. That is
    exactly what I think the President is talking about. So can we
    have your agreement then today that you would sit down with
    this committee at a later date, not in a hearing but an
    opportunity where Ms. DeGette and I can present you with
    regulations that we think indeed are hurting this country and
    should be repealed?
        Mr. Sunstein.  I would welcome that.
        Mr. Stearns.  Well, I think you suggested the idea, so we
    just want to follow up on it.
        Let me conclude by saying members have 10 days to submit
    questions for the record, and if there is no further comment,
    the subcommittee is adjourned, and thank you.
        [Whereupon, at 1:19 p.m., the subcommittee was adjourned.]
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