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


 
    RAISING THE AGENCIES' GRADES--PROTECTING THE ECONOMY, ASSURING 
    REGULATORY QUALITY AND IMPROVING ASSESSMENTS OF REGULATORY NEED 

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON COURTS, COMMERCIAL
                         AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 29, 2011

                               __________

                           Serial No. 112-34

                               __________

         Printed for the use of the Committee on the Judiciary


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

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                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TOM REED, New York                   LINDA T. SANCHEZ, California
TIM GRIFFIN, Arkansas                DEBBIE WASSERMAN SCHULTZ, Florida
TOM MARINO, Pennsylvania
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona

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

       Subcommittee on Courts, Commercial and Administrative Law

                 HOWARD COBLE, North Carolina, Chairman

               TREY GOWDY, South Carolina, Vice-Chairman

ELTON GALLEGLY, California           STEVE COHEN, Tennessee
TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
TOM REED, New York                     Georgia
DENNIS ROSS, Florida                 MELVIN L. WATT, North Carolina
                                     MIKE QUIGLEY, Illinois

                      Daniel Flores, Chief Counsel

                      James Park, Minority Counsel




























                            C O N T E N T S

                              ----------                              

                             MARCH 29, 2011

                                                                   Page

                           OPENING STATEMENTS

The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Courts, 
  Commercial and Administrative Law..............................     1
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     2
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Ranking Member, Subcommittee on Courts, 
  Commercial and Administrative Law..............................    13

                               WITNESSES

Jerry Ellig, Senior Research Fellow, Mercatus Center, George 
  Mason University
  Oral Testimony.................................................    16
  Prepared Statement.............................................    18
Richard A. Williams, Director of Policy Research, Mercatus 
  Center, George Mason University
  Oral Testimony.................................................    70
  Prepared Statement.............................................    72
Robert L. Glicksman, J.B. and Maurice C. Shapiro Professor of 
  Environmental Law, George Washington University Law School
  Oral Testimony.................................................    80
  Prepared Statement.............................................    82

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................     4

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Post-Hearing Questions from Jerry Ellig, Senior 
  Research Fellow, Mercatus Center, George Mason University; and 
  Richard A. Williams, Director of Policy Research, Mercatus 
  Center, George Mason University................................   105
Response to Post-Hearing Questions from Robert L. Glicksman, J.B. 
  and Maurice C. Shapiro Professor of Environmental Law, George 
  Washington University Law School...............................   134


    RAISING THE AGENCIES' GRADES--PROTECTING THE ECONOMY, ASSURING 
    REGULATORY QUALITY AND IMPROVING ASSESSMENTS OF REGULATORY NEED

                              ----------                              


                        TUESDAY, MARCH 29, 2011

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

    The Subcommittee met, pursuant to call, at 4 p.m., in Room 
2141 Rayburn House Office Building, the Honorable Howard Coble 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Coble, Gowdy, Gallegly, Reed, 
Ross, Cohen, and Johnson.
    Also Present: Representative Conyers.
    Staff Present: (Majority) Daniel Flores, Subcommittee Chief 
Counsel; John Hilton, Counsel; Johnny Mautz, Counsel; Allison 
Rose, Professional Staff Member; Ashley Lewis, Clerk; 
(Minority) James Park, Subcommittee Chief Counsel; and Susan 
Jensen Lachmann, Counsel.
    Mr. Coble. Good afternoon ladies and gentlemen. The 
Subcommittee will come to order.
    As we strive for economic recovery, one thing is clear, 
overregulation and poor regulation can stunt economic growth; 
and, most importantly, job creation. Oftentimes when the 
Federal Government implements inefficient or unnecessary 
regulations, capital that could be used to invest in new jobs 
is alternatively used for compliance or withheld to cover 
anticipated regulatory costs.
    Recently, the Mercatus Center published the results of its 
regulatory report card project which evaluated the government's 
compliance with the rulemaking process and assessed agencies' 
performance formulating and promulgating regulations. The 
results regrettably show that the Federal agencies are not 
doing an adequate job formulating and promulgating regulations.
    According to the Mercatus study, agencies routinely fail to 
implement well, or even follow some of the basic steps of good 
rulemaking practice, including practices prescribed by 
executive orders on regulation. As one can see from the detail 
and complexity of the Mercatus report, there is no silver 
bullet that will resolve all of the problems that have been 
created by ineffective or unnecessary regulations. It is our 
hope, my hope, that we can extract a few common principles from 
today's hearing that can be incorporated into future 
legislation that will improve regulatory consistency, 
efficiency, and predictability so that it will yield better 
regulation when it is needed.
    We will also explore today two potential reforms that 
already have begun to emerge from the results of the report 
card project, our earlier hearings, and even President Obama's 
recent statements on rulemaking. The first reform would create 
an additional procedure in the rulemaking process before the 
agency has settled on its course of regulation. Professor Peter 
Strauss, a witness at our last hearing, told us that the agency 
commitments during this phase of rulemaking, before a proposed 
rule is even published, often convert the Administrative 
Procedures Act notice and comment procedures into nothing more 
than a farce.
    The second potential reform would implement stricter 
requirements for agencies to demonstrate a need to regulate 
before it issues regulations. Common sense tells us that just 
because an agency can make a new regulation does not mean that 
it should make a new regulation.
    The first step in the process should be to ask whether a 
problem exists. If no problem requiring regulation does in fact 
exist, then the agency should proceed no further, it seems to 
me, to coin the old adage, ``if it ain't broke don't fix it.'' 
You have heard that many times.
    Congress must have assumed, when it enacted the APA, that 
agencies would only regulate when they could identify a problem 
that needed regulation. Executive orders, moreover, have long 
spelled out that agencies should identify specific market 
failures before they regulate. Astonishingly, however, the 
regulatory report card project showed that the single 
rulemaking step at which agencies performed the worst is 
demonstrating that there is a need for regulation at all. This 
suggests that it is time to include in the APA itself stricter 
requirements to demonstrate regulatory need. These and other 
reforms should help us to protect the economy and improve the 
quality of the regulatory agencies' work.
    I look forward to hearing from our witnesses. I reserve the 
balance of my time.
    I am pleased to recognize the distinguished gentleman from 
Michigan, the former Chairman of the Judiciary Committee, Mr. 
Conyers.
    Mr. Conyers. Thank you, Chairman Coble. We come together 
this afternoon for the fifth consideration of the subject of 
the burden of regulation on business. The title of the hearing 
is Raising the Agencies' Grades--Protecting the Economy, 
Assuring Regulatory Quality and Improving Assessments of 
Regulatory Need.
    This is a very weighty subject since in the interim, we 
have not been creating more jobs for Americans, unemployment is 
the last economic indicia to be affected positively as we try 
to move out of a recession and in some places, a depression in 
others. We are not dealing with the 4-year ongoing mortgage 
foreclosure crisis, giving agencies less resources to protect 
health and safety of the air we breathe and the food that we 
eat.
    And so I am beginning to wonder about the objective at the 
end and the effectiveness of a cost benefit analysis because 
these unverifiable assessments are probably as good an opinion 
as anybody else's around, but it may very well not be 
dispositive.
    Now, we are in the process of trying to determine about the 
effects of regulatory failure. You know, there were regulations 
involved in the Japanese meltdown. We just heard today that 
they discovered that there are leaks that are now increasing 
the fear of contamination since they have been found in the 
foodstuffs, and other environmental tragedies.
    Only last week we observed the 100th anniversary of that 
tragic New York fire that triggered so much regulation that we 
now are worried about overburdening businesses. And so the 
benefits of regulation are not, to me, contemplated, and I 
invite my witnesses, our witnesses, to share this part of my 
presentation with the rest of the Committee because benefits 
frequently far exceed the costs of regulation. And so if we are 
only talking about costs in terms of dollars and cents, one can 
miss the full impact of regulation.
    I am hoping that this conversation will lead us to look at 
the incredible number of activities in which tragedy occurred, 
since the Triangle Shirtwaist Factory fire which has come down 
through a lot of activities, going back to the exploding gas 
tanks in the Ford Pinto discovered by a young attorney, Ralph 
Nader, the Three Mile Island nuclear meltdown, major bus 
crashes where people died because of a lack of regulating seat 
belts, coal mine explosions in West Virginia and so on. I will 
put the rest in the record.
    I welcome our witnesses to a genuine discussion about this 
matter, and I thank Chairman Coble for the generosity and the 
time that has been allotted me.
    Mr. Coble. I thank the gentleman.
    [The prepared statement of Mr. Conyers follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
                               __________

    Mr. Coble. We have now been joined by the distinguished 
Ranking Member, the gentleman from Tennessee, Mr. Cohen.
    Mr. Cohen. Thank you, Mr. Coble. Pardon my tardiness.
    Today we consider the regulatory report card project 
undertaken by the Mercatus--Mercatus Center, not exactly on the 
tip of my tongue on a regular basis. These report cards purport 
to assess the quality of agencies use of regulatory analysis by 
assigning numerical grades from zero to five for each of 12 
questions used to assess performance of agencies for a possible 
60 points if you hit the top five for 12 times. The hearing 
title implies that Mercatus' grades, ``are accurate based on 
sound methodology.''
    The title also suggests we should, therefore, focus on 
changing the existing regulatory system based on this finding 
by the Mercatus Center. By Mercatus' own admission, however, 
the report cards, ``are subjective and its grading is not 
transparent or capable of any third-party replication.''
    Although Mercatus says it has instituted a process to 
address these concerns, that process appears to involve only 
Mercatus scholars verifying each others conclusions, not any 
objective third-party analysis and intervention.
    To the extent that the majority seeks to premise changes to 
the rulemaking process based only on Mercatus' findings, I find 
this, and I think the Nation would find it troubling. Perhaps I 
would be more comforted if it were not for the fact that 
Mercatus does not approach the issue of regulatory reform with 
a neutral perspective, the way that maybe, say the 
Administrative Conference of the United States might approach 
something. Mercatus was founded and is funded by the Koch 
brothers, not the beverage that we all enjoy but Charles and 
David Koch, the owners of Koch Industries, the second largest 
privately held company in the country, a company which has 
large oil and lumber interests among others. Oil and lumber are 
industries not normally desirous of any government regulation 
at all. They like to cut trees and decide when and how they 
will replenish their forests and take from the earth as much 
oil as they can, and we saw with Deepwater Horizon how good it 
is not to regulate oil drilling. Mercatus continues to be 
heavily funded by donations from some of the Nation's largest 
corporations, all of which have an interest in stifling 
economic health and safety regulations.
    According to The Wall Street Journal, 14 of the 23 
regulations that President Bush put on his regulatory hit list 
had been recommended first by the Mercatus Center. A lawyer 
described Mercatus' strategy this way: You take corporate 
money, you give it a neutral sounding think tank, hire people 
with pedigrees and academic degrees who put out credible-
seeming studies, but they all coincide perfectly with the 
economic interests of their founders, kind of like an academic 
middle person. Mercatus' regulatory report card may or may not 
turn out to be accurate. The problem is we will never really 
know because there is no way to verify a subjective conclusion 
versus in-house doctoring.
    We need to guard against enacting what might turn out to be 
needless analytical requirements based on possibly faulty 
findings by a think tank with a known regulatory agenda and 
contributors who have a particular desired outcome that they 
seek.
    As I have said before, agencies must retain the ability to 
act to protect Americans' public health and safety and ensure 
the soundness of our Nation's economy and to guarantee that 
Americans' civil rights are not infringed upon. While 
recognizing that regulation can impose costs, we understand 
that, we should not ever forget that the benefits far outweigh 
the costs. America has had some of its greatest years of 
economic and job growth under the current regulatory system. At 
a minimum, that seems to point to the conclusion there is no 
inconsistency in the regulatory system we have and economic and 
job growth. We ought to keep that in mind and proceed 
cautiously before further hampering agency rulemaking.
    I yield back the balance of my time, and thank you for the 
allowance.
    Mr. Coble. I thank the gentleman from Tennessee. We have 
been joined by the distinguished gentleman from South Carolina, 
Mr. Gowdy, and the distinguished gentleman from Florida, Mr. 
Ross. Good to have you all with us. We will proceed with the 
hearing. I will give you some background on our witnesses who 
will appear today.
    Mr. Richard Williams is the Mercatus Center Director of 
Policy Research. He served in the Office of Management and 
Budget for 27 years as the director of Social Sciences and the 
Center For Food Safety and Applied Nutrition in the Food and 
Drug Administration. Dr. Williams is a expert in benefit cost 
analysis and risk analysis, particularly related to food safety 
and nutrition. He has published in risk analysis and the 
Journal of Policy Analysis and Management, and has counseled 
foreign governments, including the United Kingdom, South Korea, 
and Australia. A Vietnam veteran, Dr. Williams received his 
Ph.D. and his MA in economics from Virginia Tech and his B.S. 
In business administration from the Old Dominion University. He 
has served as an adviser to the Harvard Center For Risk 
Analysis and taught economics at Washington and Lee University.
    Mr. Jerry Ellig is a senior research fellow at the Mercatus 
Center at George Mason University where he has worked since 
1996. Between August 2001 and August 2003, he served as deputy 
director and acting director of the Office of Policy Planning 
at the Federal Trade Commission.
    Dr. Ellig also has served as a senior economist for the 
Joint Economic Committee on the U.S. Congress and as an 
assistant professor of economics at George Mason University. 
Dr. Ellig directed the Mercatus Center's regulatory report card 
project which assesses the quality of agency performance in 
promulgating major regulations. Dr. Ellig has published 
numerous articles on government regulation and business 
management in both scholarly and popular periodicals, and has 
coauthored and edited several books on competition, regulation, 
and environmental energy. He earned his Ph.D. degree and his 
M.A. in economics from George Mason University and his B.A. in 
economics from Xavier University.
    Our third witness is Professor Robert L. Glicksman. 
Professor Glicksman has published widely on the subject of 
environmental and administrative law. Before coming to George 
Washington University in 2009, he taught at the University of 
Kansas School of Law where he was the Robert W. Wagstaff 
distinguished professor of law. A graduate of the Cornell 
School of Law, prior to joining the academy, Professor 
Glicksman worked in private practice at a firm in Washington, 
DC where he focused on environmental, energy and administrative 
law issues.
    Professor Glicksman joined the Center For Progressive 
Reform in 2002, and has sat on its board of directors since 
2008.
    Our three witnesses bring glowing credentials to the table. 
We are glad to have you all with us. We try to go by the 5-
minute rule that we apply to you all, and we try to apply it to 
ourselves as well. You will see when the amber light appears, 
that is your notice that time is evading. You will have 1 
minute after that. When the red light appears, if you could 
wrap up shortly thereafter, we would be appreciative.
    Dr. Ellig, if you would start us off.

  TESTIMONY OF JERRY ELLIG, SENIOR RESEARCH FELLOW, MERCATUS 
                CENTER, GEORGE MASON UNIVERSITY

    Mr. Ellig. Thank you, Mr. Chairman, Ranking Member Cohen, 
Members of the Committee. My name is Jerry Ellig. I am a 
research fellow at the Mercatus Center at George Mason 
University. As the Chairman indicated in his introduction, I 
have also served in two out of three branches of the Federal 
Government. I probably won't get into the third. But each time 
I have left government and gone back to academia, I have walked 
out with a long list of studies I wished someone had done, 
experts I wished we had been able to consult if we had only 
been able to find them, to answer questions in order to make 
better policies and make better decisions in government. And 
that is really the genesis of the Mercatus regulatory report 
card, trying to figure out what is it that agencies actually do 
when they sit down to make decisions about regulation, and how 
well do agencies do the things that Presidents of both 
political parties have been telling them to do for several 
decades.
    Some time ago in our schooling, most of us probably learned 
that there are a few basic things that we are supposed to do 
before making important decisions that affect us or affect the 
lives of other people. Really basic things, like identify the 
goal that we are trying to achieve, what outcome do we want, 
identify the nature of the problem we have to overcome to 
achieve the goal. Identify the various alternative ways of 
achieving that goal, and then weigh the pros and cons of 
alternatives. You might call that Decisionmaking 101.
    Well, regulatory analysis, as required by Federal executive 
order, is simply Decisionmaking 101 applied to regulation. What 
we are trying to do in the Mercatus regulatory report card is 
assess how well agencies do these basic things that you would 
do before making any big decisions. We have examined all of the 
proposed economically significant regulations issued over the 
past few years, those are the really big ones. We used criteria 
drawn from the executive order that governs regulation, an OMB 
Circular 8-4 that lays out best practices for regulatory 
analysis. We look at the quality of the analysis, and we also 
look at the extent to which the agency claims to have used the 
analysis when it made decisions about the regulation.
    So what do we find? We find that agencies do a lot of good 
things in their regulatory analysis. We also find that the 
average quality is low, the best ones are not stellar, there is 
wide variation in the quality of regulatory analysis, we see a 
lot of best practices in agency regulatory analysis, but they 
are not widely shared and no analysis does everything well. And 
we also see that often the regulatory analysis produced by 
agencies reads as if it were written after the major decisions 
about the regulation were made.
    You might call this the ready fire aim approach to 
regulation. And these findings are consistent with the findings 
of other scholars at other institutions, other universities, 
resources for the future, other respected places, who have 
looked at smaller groups of regulations to try to figure out 
what is the quality of the analysis and what do agencies do 
with it.
    Most importantly for the topic of this hearing, the biggest 
single deficiency we find in many agency regulatory analyses, 
not all, is insufficient definition and an explanation of the 
systemic problem that the regulation is supposed to solve. Now, 
that is a big mouthful of jargon. Let me give an analogy.
    A couple of years ago I walked into the bathroom and found 
water on the floor. That wasn't the problem, that was the 
symptom. We had to do some analysis to solve the problem. We 
found out that there was a crack in a plastic pipe that, in 
turn, was caused by the fact that the toilet wasn't leveled and 
it was rocking back and forth and that is what cracked the 
pipe. After we did the analysis, we could solve the problem at 
minimal cost.
    Now when I sit down to read agency regulatory analyses, 
they frequently read like somebody walking into a bathroom 
saying well, the problem is obvious, there is water on the 
floor. And the solution is obvious. We are going to make 
everybody buy a mop, and we will now take public comment on 
what types of mops we should require people to buy and how long 
the handle should be. Anyone who disagrees with the favored 
approach is accused of wanting to allow children to slip on wet 
floors.
    Now, lest you think I am exaggerating, I have examples in 
my written testimony of a number of cases where we read agency 
regulatory analyses looking for the definition of the systemic 
problem; and essentially, there is either an assertion of a 
problem with no underlying cause-and-effect theory, no 
underlying empirical analysis, a symptom gets misdiagnosed as a 
problem, or the problem is simply stated as the purpose of this 
regulation is to implement such and such Public Law.
    More broadly, about half the regulations we looked at 
scored a zero or a one on this criterion, indicating that there 
was a little bit of a perfunctory look at a problem or an 
assertion, but not much real analysis. Now, some did well; but 
about half of them just didn't do much.
    We also find when we looked at the quality of the analysis 
that there isn't much difference across Administrations. So 
this is not a partisan issue or a political problem, it is an 
institutional problem that can only be solved with changes in 
the incentives that agencies face to do good analysis. So 
instead of ready-fire-aim, the system should be look before you 
leap.
    Thank you for your time.
    Mr. Coble. Thank you, Professor.
    [The prepared statement of Mr. Ellig follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

                               __________
    Mr. Coble. Dr. Williams.

TESTIMONY OF RICHARD A. WILLIAMS, DIRECTOR OF POLICY RESEARCH, 
            MERCATUS CENTER, GEORGE MASON UNIVERSITY

    Mr. Williams. Chairman Coble, Ranking Member Cohen, and 
Members of the Subcommittee, thank you for the invitation to 
testify today. My name is Richard Williams. I have been 
involved in rulemaking and the regulatory process for over 30 
years, first as a regulatory analyst, and then as a senior 
manager for the Food and Drug Administration, and those are 
issues I continue to care deeply about. I also worked briefly 
in the Office of Information and Regulatory Affairs. Today, I 
serve as director of policy studies at the Mercatus Center at 
George Mason University.
    From my experience in research, I believe the regulatory 
process we have today is not what was originally intended 60 
years ago when we passed the Administrative Procedures Act, 
which was to create a rational, transparent, and inclusive 
process. When the APA was passed, then-Senator Pat McCarran, 
who was the Chairman of the Committee on the Judiciary, called 
it a widely heralded advance in democratic government.
    But one of the biggest problems with our regulatory process 
is that decisions are made first without any analysis or 
whether or not we know regulation is needed. And more 
importantly, without stakeholders being involved in that 
decision. By the time a proposal is generated, most of the 
significant issues have been decided and rules are steamrolled 
through to the final rule. The reason regulatory agencies 
decide early is that their incentives are to crank out new 
regulations, whether needed or not.
    After all, passing regulations is the business of 
regulatory agencies, and their success is measured and rewarded 
based on this activity. The problem with deciding early is that 
we are regulating in the dark, that is without sufficient 
knowledge of whether a regulation is needed or will work. This 
isn't just FDA.
    In a paper I did interviewing senior economists in many 
regulatory agencies, I discovered that virtually all agencies 
make decisions early, and anyone inside or outside the agency 
who tries to suggest that regulation is not necessary generally 
finds that view unwelcomed.
    Analyzing that problem is part of what economists do in 
regulatory impact analyses; but if your goal is to regulate as 
opposed to solving a problem, there is no reason to wait for 
analysis. Perhaps that is one reason why my colleague, Dr. 
Ellig, shows that defining the problem is one of the agency's 
biggest issues: if you are vague about the problem you are 
trying to define, then no one can accuse you of failing to 
solve a problem.
    Another problem with deciding early is that stakeholders 
end up commenting on decisions, not problems. Now some 
stakeholders do get their voices heard in agencies prior to 
decisions being made, but these are often firms or activists 
who want a particular regulation to serve their own ends. As 
this also advances what the agency is trying to do, those are 
welcomed voices. But those that are confined to the comments 
after proposals have been issued will find any objections they 
raise to regulating will receive a short and decisive 
dismissal. And it normally goes something like: the agency 
disagrees or you didn't provide enough information to convince 
the agency.
    The result of all this activity is that we end up 
regulating far too often when it is not effective or not 
needed. That is why we now have 226 volumes of regulations, 
taking up 163,000 pages of rules, and we still continue to add 
4,000 new regulations each year with this broken process.
    Certainly one tragic outcome of this, beyond our effect on 
competitiveness, is we can't focus our resources on regulations 
that are truly needed and effective. We can fix this by 
changing the incentives that agencies face. However, we can no 
longer rely on executive orders as every President since 
Richard Nixon has tried to do.
    Only Congress can fix this. One way they can do it is by 
statutorily insisting that agencies start with a step to 
determine if a regulation is necessary. This would be something 
like a preproposal publication that the agency would 
investigate and contain elements like a clear definition of the 
problem that the agency seeks to solve and the evidence that it 
relied on to define the problem, an explanation of and evidence 
for why the problem warrants Federal intervention, an 
exploration of a range of options that the agency believes 
might solve the problem, and a preliminary estimate of benefits 
and costs of each option.
    All of this would be published to provide stakeholders and 
the public an opportunity to evaluate the agency's data and 
research, and contribute additional information. As OIRA 
Director Sunstein says, they can take advantage of the fact 
that knowledge is widely dispersed in society, and public 
officials can benefit from access to that dispersed knowledge. 
In commenting on a preliminary analysis like that, stakeholders 
and the public are much more likely to comment broadly from 
their collective wisdom and expertise on both what the actual 
problem is and whether or not it needs a regulatory solution. 
Use of this knowledge will help us solve our problems much more 
effectively than our current process. While much more needs to 
be done to address institutional barriers to problem-solving, 
an essential first step will be in the establishment of some 
kind of an evidence-driven and inclusive process for defining 
the problem and the potential options to address it.
    Thank you.
    Mr. Coble. Thank you, Dr. Williams.
    [The prepared statement of Mr. Williams follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

                               __________
    Mr. Coble. We have been joined by the distinguished 
gentleman from Georgia, Mr. Johnson. Good to see you, Hank.
    Professor Glicksman, good to have you with us.

 TESTIMONY OF ROBERT L. GLICKSMAN, J.B. AND MAURICE C. SHAPIRO 
 PROFESSOR OF ENVIRONMENTAL LAW, GEORGE WASHINGTON UNIVERSITY 
                           LAW SCHOOL

    Mr. Glicksman. Chairman Coble, Ranking Member Cohen, 
Members of the Subcommittee, thank you for inviting me to 
testify today.
    My name is Robert Glicksman. I am the J.B. and Maurice C. 
Shapiro Professor of Environmental Law at The George Washington 
University Law School, although I am here today strictly in my 
personal capacity.
    The premise of the Mercatus Center's regulatory report card 
project is that the Federal rulemaking process is flawed, and 
the best way to fix it is for agencies to engage in more 
rigorous regulatory analysis to provide better justifications 
of the need for and content of. More regulatory analysis, the 
idea is, particularly at the initial stages of regulation, 
would help avoid unnecessary regulation. The report card also 
reflects the conviction that cost benefit analysis is essential 
for identifying counterproductive regulations.
    My first response is that the framing of the problem is not 
one I would agree with. And to begin with, cost-benefit 
analysis, in my view, is itself a flawed technique for 
distinguishing between useful and counterproductive 
regulations. More fundamentally, the problems arising from the 
current regulatory process, for the most part, are not the 
result of regulations lacking justification or whose costs 
exceed their benefits. Instead, the primary problem is 
inadequate resources to allow agencies to fulfill their 
statutory responsibilities and fulfill their tasks of achieving 
public policy goals.
    In addition, the regulatory process already allows those 
affected by regulation to identify flaws in agency regulatory 
proposals, and affords both regulated entities and agencies 
opportunities to fix problems, such as overly costly or unfair 
regulation.
    I want to make five points.
    First, I think the presumption that we can get better 
regulation if we make cost-benefit analysis more rigorous is 
just wrong. Cost-benefit analysis is inescapably limited by the 
difficulty of predicting and quantifying regulatory costs and 
benefits. Quantifies cost-benefit analysis requires agencies to 
reduce regulatory benefits, such as lives saved, to a crude 
dollar figure, so that the monetized benefits of regulation can 
be measured against its monetized costs. Some agency estimates 
of monetized regulatory benefits are absurdly low, and I have 
given some examples in my statement.
    Beyond that, inconsistencies in how agencies monetize 
benefits cast doubt on the usefulness of the effort. Cost 
benefit figures, therefore, provide a misleading aura of 
precision and rationality. Monetization of benefits often 
depends on arbitrary assumptions that tend to undervalue social 
benefits of regulation that are hard to quantify. Efforts to 
reform the methodology for cost benefit analysis will at best 
yield only marginal improvements in regulatory decisionmaking. 
And, therefore, cost-benefit calculations should be used with 
caution and with an acknowledgment of their limitations.
    Second, the real problem to which Congress should be 
directing its attention is not insufficient agency focus on 
cost-benefit methodologies, but the destructive convergence of 
funding shortfalls, demonizing political attacks and outmoded 
legal authority, all of which have set the stage for 
ineffective enforcement and unsupervised industry self-
regulation. Examples, some of which were pointed out by 
Representative Conyers and Representative Cohen already today, 
include the Deepwater Horizon spill in the Gulf of Mexico; the 
mine disaster at the Upper Big Branch Mine, West Virginia; a 
peanut products tank tainted by salmonella; glasses 
contaminated by cadmium sold to children at fast food 
restaurants; Code Red smog days when parents are warned to keep 
their children indoors; and the recall of widely used 
pharmaceutical drugs found to create risks of heart failure.
    All of these instances reflect agencies unable to do their 
jobs in protecting the public interest. More analysis will not 
fix these flaws. If anything, more analysis will only make 
things worse by slowing agencies down without demonstrably 
improving the quality of their regulatory decisions.
    Proponents of cost benefit analysis remain focused on 
perfecting formulas, assumptions, models, and data sets. If we 
really want to fix the regulatory system, we should, instead, 
focus on finding ways to help agencies effectively and 
efficiently achieve their statutory missions of protecting and 
the environment.
    Measures that I think would move us in that direction 
include providing agencies with the resources they need and 
enhancing their legal authority in situations in which it has 
become outmoded.
    Third, current law provides ample opportunities to address 
uncertainty, unnecessary or ill-advised regulation without 
heaping on agencies already stretched to the limit more onerous 
analytical responsibilities. The Administrative Procedure Act, 
in particular, provides notice and comment process which 
affords regulated entities and others opportunity to provide 
input before a regulation goes into effect.
    Fourth, even if agencies get it wrong during initial rule 
promulgation, the regulatory process allows those affected by 
regulation in unintended or counterproductive ways to seek 
relief from the agency in the form of waivers and exceptions.
    Fifth, agencies can revise rules that don't work out as 
intended, either because they turn out to be too weak or too 
strong. And, finally, judicial review provides a check on 
unjustified regulation.
    I will just close by quoting from two former EPA 
administrators, Ruckelshaus and Whitman, who made this 
statement just last Friday in an op-ed in the Post: Our country 
today needs what it needed in 1970: a strong, confident, 
scientifically driven, transparent, fair, and responsible set 
of protective agencies, such as the EPA. Congress should help 
America achieve that.
    They also warned that those who do not support those goals 
should be aware that the American public will not long stand 
for an end to regulation that have produced their health and 
quality of life.
    Thank you for the opportunity to talk to you today.
    Mr. Coble. Thank you, Professor. And to all witnesses, 
thank you for your testimony.
    [The prepared statement of Mr. Glicksman follows:]

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                               __________

    Mr. Coble. Gentlemen, as I said, we try to apply the 5-
minute rule to us, so if you all can keep your response to a 
terse manner, we would appreciate that.
    Failure is unfortunate. Some people indicate that those of 
us who want to refine the regulatory system or improve it, 
including President Obama has said that, we are not trying to 
compromise safety in doing this. At least that is my take on 
it. I think that needs to be fully appreciated.
    Dr. Ellig, in 2008, the average Bush administration agency 
score on your report was a failing 27.31 out of 60 possible 
points. In 2009, the average Obama administration score was 
also a failing mark of 27.02 out of 60. Is it fair then to 
conclude that the failure of good decisionmaking is a 
systematic problem across the Republican and Democratic 
administrations?
    Mr. Ellig. Yes. Statistically, there is no difference 
between those two figures. We are getting about the same 
results for both years.
    Mr. Coble. Thank you, sir.
    Professor Glicksman, in your book, Risk Regulation At Risk, 
you write that agencies are more acquainted with the day-to-day 
details and difficulties of regulatory decisions than the 
communities of inquiry that operated the White House, Congress 
and the Federal judiciary, which are not specialized in the 
same way. Because agencies are much less accountable than the 
other branches of government, should we not be doing even more 
to ensure that their decisions are made transparently and on 
the record?
    Mr. Glicksman. I certainly support transparent 
decisionmaking by agencies, and the tools that are provided by 
the Administrative Procedure Act to ensure transparency. Beyond 
that, both of the other branches of government, the Congress 
and the courts, do have ways of holding agencies accountable 
through, for example, amending statutes that Congress decides 
agencies have implemented in ways that don't conform to 
congressional intent. The courts are often called upon to 
review regulations issued by agencies, and they have the 
responsibility, as well as the authority, to overturn 
regulations that lack adequate justification or are not 
supported by scientific evidence. And they do so on a regular 
basis.
    Mr. Coble. Thank you, sir.
    Dr. Williams, under your view, agencies really don't have 
an incentive to seek and heed input from those who suggest no 
regulation is needed. Instead, all of the incentives are to 
listen and those who want more regulation, whether or not more 
is needed. What are the most important ways in which we can 
reform the APA to restore agencies' incentives to solve 
problems rather than just regulate for the sake of regulating?
    Mr. Williams. Thank you for the question. I think what 
happens now is that agencies are rewarded with budgets for 
passing regulations, and they are not penalized for passing 
regulations that are ineffective or unwanted. I think the first 
thing you have to look at are what are the incentives that need 
to be changed with agencies. I would start with the process 
that I outlined earlier where you separate out agencies, 
defining the problem and taking public input on what the 
problem is before they go ahead and make a decision. But 
somewhere down the road, you are going to have to address the 
incentives that agencies face, and particularly with budgets.
    Mr. Coble. Dr. Ellig, let me try to beat that red light. 
The first and most important step in any good decisionmaking is 
to identify the problem one is attempting to solve. Is it 
really true that you found agencies did the worst job of all at 
this most basic step of decisionmaking?
    Mr. Ellig. Yes. The average score on our criterion for 
evaluating the systemic problem was around a 1.8 out of 5. So 
on average, that was with the worst criterion. And about half 
of the time we found it wasn't really that well addressed at 
all.
    Mr. Coble. I will now recognize the gentleman from 
Tennessee for 5 minutes.
    Mr. Cohen. Thank you, Mr. Chairman.
    Has the Mercatus group ever studied the Justice 
Department's regulations or policies?
    Mr. Williams. Not to my knowledge, sir.
    Mr. Ellig. We included several Justice Department 
regulations in our regulatory report card if they were proposed 
in 2008 or 2009. And at some time in the past, one of many 
independent scholars at Mercatus may have done some comments on 
Justice Department some time in the past 20 years.
    Mr. Cohen. Mercatus has been around for 20-30 years; right? 
When did you start your report card?
    Mr. Ellig. This regulatory report card project started with 
the year 2008 a couple of years ago. A precursor project 
examined the quality of analysis of all regulations issued by 
the Department of Homeland Security since its inception. And 
that was done a couple of years ago.
    Mr. Cohen. So you had a report card in 2008?
    Mr. Ellig. We started with the proposed regulations for 
2008.
    Mr. Cohen. Did you have a report card for the year 2008? Or 
was the first report card in 2009?
    Mr. Ellig. Just to clarify, we don't have really a single 
document that we call a report card. The project is a wide 
variety of evaluations of individual regulations which are all 
available on our Web site, along with a set of notes which 
justify each score. This is the most transparent way this kind 
of a project has ever been done in the United States. We have 
that.
    For the past 2 years, we have produced a paper summarizing 
the results for the year, and we have a paper from 2008 and a 
paper from 2009 that also compares the 2008 and 2009 results.
    Mr. Cohen. Who is on your board of directors?
    Mr. Ellig. Who is on our board of directors?
    Mr. Cohen. Yes.
    Mr. Ellig. I can name a few folks. Honestly, I can't name 
them all.
    Mr. Cohen. Name a few of them.
    Mr. Ellig. I can name a few. Vernon Smith, Nobel Laureate 
in economics.
    Mr. Cohen. From industry, which industry people are on your 
board?
    Mr. Ellig. From industry, the last time I looked, Charles 
Koch was on the board. Industry, I am not sure if a former Fed 
vice chairman counts as industry.
    Mr. Cohen. No, it doesn't.
    Is Charles Koch your largest funder?
    Mr. Ellig. I honestly don't know. I don't care and it is 
not----
    Mr. Cohen. I care. The issue is I care. Is he your largest 
funder?
    Mr. Ellig. I do not know.
    Mr. Cohen. Is he one of your largest funders?
    Mr. Ellig. I do not know, and it is not relevant to my 
work. On our Web site, we have a policy on the independence of 
research from funding.
    Mr. Cohen. Dr. Williams, do you know who your largest 
funders are, the largest funders of the Center?
    Mr. Williams. No, sir. I am also on the analytical side, 
and we have a very strict separation of who funds us and how we 
choose our analysis. I basically do analysis that I care deeply 
about, and most of it stems from the work I did at the Food and 
Drug Administration. And I still work intensively on those 
issues because I care about the food and safety issues.
    Mr. Cohen. The issues of food and drug, we have had spinach 
scares and we have had lettuce scares and chickens we had to 
get rid of and the Asian flu. We have had other problems with 
food. Are you concerned that a lessening of regulation might 
not subject the American people to more and more contaminated 
foods?
    Mr. Williams. No, sir.
    Mr. Cohen. You are not?
    Mr. Williams. My concern is when too often the agency 
either wants to or is forced to regulate before we have 
solutions to problems. What that means is we end up putting out 
regulations, people have to comply with those regulations, and 
we don't solve the problem. For the 27 years I was in the Food 
and Drug Administration, we did not see food-borne illness 
decrease by one food-borne illness. We put out a number of 
regulations that were ineffective. What I am here to do today 
is to try to get effective regulations; not more, not less, 
effective regulations.
    Mr. Cohen. Professor Glicksman, Robert Reich, former Labor 
Secretary, said that those who argue that regulations kill jobs 
ignore an important fact: lack of adequate regulation kills 
people. You made some reference to that in studying effects, 
whether it is just dollars and cents or human lives. Do you 
think some of the changes in regulations that have been 
proposed might affect people's lives in having more 
contaminated food?
    Mr. Glicksman. Certainly, I think watered-down regulation 
or repeal of regulation is likely to have adverse effects on 
the public health and safety and the environment, which can 
translate into a downturn in economic productivity. There is 
often a dichotomy that is set up between regulation that is 
designed to protect the health and safety and the environment 
and economic productivity. I think it is a false dichotomy. 
They go hand in hand in the same direction in many instances.
    Mr. Cohen. Thank you.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from South Carolina, Mr. Gowdy, 
is recognized for 5 minutes.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Dr. Ellig, in the course of 5 minutes, it struck me that 
both the motive and the methodology have been questioned by 
some of my distinguished colleagues from the other side. If you 
would, please, would you tell us about your methodology? Why 
who is on your board doesn't influence your research? Go ahead 
and say what you wanted to say when my colleague from Tennessee 
was questioning you.
    Mr. Ellig. Basically, the way we are set up at Mercatus, 
fundraising is separate from research. And those of us who do 
research have the freedom to call them as we see them. That is 
what I like about working there. If it were organized in some 
other way, I probably wouldn't want to work there.
    Now, as far as the scorecard goes, let me take off on the 
use of the word ``subjectivity,'' since the Ranking Member 
mentioned that in his introduction of our scorecard.
    We said in the paper we wrote that a critic might claim 
that this evaluation method is subjective and we have gone to 
great pains to try to minimize the problems that might occur as 
a result of that. And the actual word we used in our 2008 paper 
was ``intersubjective,'' which is a term from philosophy of 
science which means different people may be doing an evaluation 
and rendering a subjective opinion, but what counts for a 2 
when I look at a regulation is the same as what counts for a 2 
when Richard looks at, what counts for a 2 when our colleague 
John Morrall, a 29-year veteran of the Office of Information 
and Regulatory Affairs, looks at it, and so forth. So we try to 
get a common understanding of what types of performance in 
these analyses counts for what kind of a score.
    Then we put the scoring notes and the scores all up on our 
Web site so anybody can go look at it, and we welcome other 
folks to look at it, to read it and dialogue with us. And if 
they think we missed something, tell us. That is what it is 
about in academia. We won't get upset; but just tell us what 
the specific issue or the problem is.
    Mr. Gowdy. Well, it strikes me that you gave equally 
abysmal scores to both Administrations. So the notion that you 
are biased in favor of one Administration or the other, I would 
be embarrassed at either score that was given. Let me ask you 
this to hopefully end on a happy note. The Department of 
Justice got the highest ranking that you gave. What are they 
doing that the Social Security Administration is not?
    Mr. Ellig. I don't think we have enough data yet to say 
well, this agency generally does a good job; and this agency 
generally does a bad job. We have a small number of agencies 
that will issue six or seven or 10 big regulations a year. But 
a lot of the other ones will be one or two or three, and there 
are different sub-entities within the agencies, some of which 
may do better or worse analysis than others. I don't know that 
we can generalize from our results at this point to say this 
agency does a good job and this agency does a not-so-good job.
    Mr. Gowdy. Mr. Chairman, in a rare move, I yield back the 
balance of my time.
    Mr. Coble. I thank the distinguished gentleman from South 
Carolina.
    The distinguished gentleman from Michigan is recognized for 
5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    Members of the panel, I appreciate your comments.
    Do you have any familiarity with legislative Acts that are 
attempting to reform the regulatory process by the Congress?
    Mr. Ellig. My understanding is all kinds of stuff have been 
introduced.
    Mr. Conyers. Anything in particular?
    Mr. Glicksman. I am somewhat familiar with the proposed 
REINS Act.
    Mr. Conyers. What about you, Dr. Williams?
    Mr. Williams. I also heard about the REINS Act as well.
    Mr. Conyers. Have you heard anything good about it?
    Mr. Williams. My understanding, sir, is that Congress, a 
number a years ago, voted itself the right to turn back 
regulations, and that they have used that authority one time in 
something like 15 years. And that the Reins Act would reverse 
that.
    Mr. Conyers. Do you have any particular recollection, Dr. 
Ellig, about any proposals currently before the Congress, in 
this 112th Session?
    Mr. Ellig. I have heard of the REINS Act. I have heard of a 
piece of legislation that essentially took President Clinton's 
Order 12866 and wants to write that into law so it is a 
requirement for all agencies rather than just an executive 
order.
    I remember hearing a few days ago there was a piece of 
legislation introduced that would have--that would essentially 
almost overturn a key Supreme Court precedent on direct wine 
shipment and give the States more latitude in how they choose 
to regulate interstate commerce in alcohol. So, yes, a lot of 
different things have been introduced.
    Mr. Conyers. For experts in regulatory reform, your 
attention to some of the excessive amounts of time we spend on 
the debates is a little bit disturbing to me. This is the 
fourth hearing--this is the fifth hearing on regulatory reform. 
Have you ever heard anything about our hearings in this 
Committee, in the Judiciary Committee?
    Mr. Ellig. I am aware of one previous hearing. I have to 
say as a regulatory specialist who used to work in a Federal 
regulatory agency where the general--a lot of issues of 
regulation I work on rarely get much attention in Congress, so 
I am delighted that it is finally going to get some attention.
    Mr. Williams. My expertise is actually in regulatory 
agencies for 27 years. And the things I testified about today 
are things I came to realize over really three decades. I pay 
some attention to the bills that are going on in Congress. But 
also as an analyst, I am familiar with the fact that many bills 
are introduced but not passed.
    So my concern today is to try to fix the problems where 
agencies are making decisions first, and then getting 
stakeholder input.
    Mr. Conyers. Well, I am a little perplexed about your 
expertise, but in the storm that is going on these first 3 
months about regulatory reform, this Committee has spent more 
time on this subject than anything else. You spent your careers 
working in the field. And now we meet here this afternoon and 
you know almost little or nothing about what is being 
contemplated. How can we be expected to take your advice 
seriously if you don't even have any knowledge of what we are 
doing to try to improve the regulatory process of which you 
complain pretty strenuously?
    Mr. Williams. It is not my understanding that we were 
called here to talk about individual, proposed statutes. In 
fact, because of our status, we actually can't advocate for or 
against any particular law.
    Mr. Conyers. You can't? Well, let me ask you this: Who are 
the agencies that are doing so poorly that they get zero or one 
ratings? Are you able to reveal that?
    Mr. Ellig. Well, it is all revealed on our Web site. So, it 
is certainly already public knowledge.
    Mr. Conyers. Yes, but you are here in front of me right 
now. Let's talk about it.
    Mr. Ellig. The zeros or the ones were just on one criterion 
which was----
    Mr. Conyers. Mr. Chairman, I ask unanimous consent for one 
additional minute.
    Mr. Coble. Without objection, one additional minute.
    Mr. Conyers. Thank you very much.
    Mr. Ellig. The zeroes and the ones were on one particular 
criterion which was definition of the systemic problem.
    Mr. Conyers. Just name the agencies you are talking about?
    Mr. Ellig. An agency that had a lot of regulations that 
were zeros or ones was Department of Health and Human Services. 
Typically in the annual regulations, the Department issues 
recalculation of Medicare payment rates and various other 
things like that.
    Mr. Conyers. Thank you for that one.
    Name a second one?
    Mr. Ellig. Let's see. In 2008, there was a Social Security 
Administration regulation on setting the time and place for 
appearances before administrative law judges that just didn't 
say anything about the issue.
    Mr. Conyers. What agency are you referring to, sir.
    Mr. Ellig. Social Security Administration.
    Mr. Conyers. You have got a list of maybe about 15, I will 
just ask you to submit them for the record.
    Mr. Ellig. Each year there were about half of the 
regulations that got zeroes or ones, so that would be about 20 
to 25 a year.
    Mr. Conyers. Right. Thank you very much, Mr. Chairman.
    Mr. Coble. You are welcome. The distinguished gentleman 
from Georgia is recognized for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. With all due respect, 
I must wonder why it is that we are holding this hearing today. 
Purportedly, it is going to give the Members an opportunity to 
discuss ways in which Federal agencies can improve their grades 
on the regulatory report cards issued by the Mercatus Center. 
And this Mercatus Center was founded by Rich Fink, correct? Do 
you know who Rich Fink is?
    Mr. Ellig. Yeah, yes. I know who Dr. Fink is.
    Mr. Johnson. And Dr. Fink is former president for the Koch 
Family Foundation , isn't that correct?
    Mr. Ellig. I don't know what title, I know he works for 
Koch Industries. I don't know what other titles he might have 
accumulated.
    Mr. Johnson. Now Koch Industries is led by the brothers 
David and Charles Koch, and it is a $100 billion per year 
conglomerate. Isn't that a fact?
    Mr. Ellig. It is a big company, yes.
    Mr. Johnson. The second largest private industry in the 
United States of America.
    Mr. Ellig. Yes. Sometimes the news reports say second, 
sometimes they say first.
    Mr. Johnson. A $35 billion fortune that the brothers 
control, and out of that 35 billion, isn't it a fact that they 
contributed about $30 million to the George Mason University, 
much of which went into funding for the Mercatus Center?
    Mr. Ellig. I don't know because we keep research separate 
from fundraising, and I am on the research side of----
    Mr. Johnson. You wouldn't disagree with that, would you?
    Mr. Ellig. I am saying I do not know.
    Mr. Johnson. Okay, well, I will tell you if it is true, and 
I have reason to believe that it is, doesn't that put the 
credibility of the Mercatus Center and its report card at 
issue? Is that something that the public should be able to 
understand who is doing the grading and perhaps the fact that 
they are grading is influenced by their monetary interest in 
what they are grading?
    Mr. Ellig. Well, I don't pay any attention to it. And as 
far as whether that has any effect on the credibility, I am 
quite happy to have the credibility of this project stand on 
the quality of the research results we produce, the quality of 
the process we put together, and the reviews and comments that 
we get as we submit the papers from this project for peer 
review in academic journals.
    Mr. Johnson. Well, Dr. Williams, you have said pretty much 
essentially that agencies justify their very existence by 
issuing regulations. And oftentimes, there is no justification 
for the regulation that they promulgate. And you are saying, or 
can it be said also that legislators justify their existence by 
introducing legislation some of which may not be prudent, is 
that correct?
    Mr. Ellig. Well, what I know about is regulatory agencies. 
I have 27 years in the Food and Drug Administration.
    Mr. Johnson. Do you mean to tell me that you think that the 
average agency employee comes to work every day with the sole 
purpose of deciding what kind of regulation I am going to 
propose today?
    Mr. Williams. I can't testify to all agencies. I know that 
the employees of the Food And Drug Administration are some of 
the finest people I have ever meet. However, I do know----
    Mr. Johnson. It is the Department of Energy, though, that 
you really want to get at. Tell me this. If you really want to 
get, since the Kochs are in the energy business, have a lot of 
concerns in the energy business, you are trying to make it more 
difficult for the Department of Energy and other departments to 
issue regulations which would govern the conduct of this for-
profit corporation.
    Mr. Williams. Far from it. What I am concerned about, the 
same thing I was concerned about throughout my entire career is 
that we get effective regulations, that we not have ineffective 
regulations that crowd up compliance with the effective ones so 
that we can actually solve our social problems. That is my 
concern.
    Mr. Johnson. Thank you, sir.
    Mr. Coble. We have been joined by the distinguished 
gentleman from California, Mr. Gallegly.
    Mr. Gallegly. Thank you very much, Mr. Chairman.
    Dr. Ellig, could you maybe give us a little assessment 
about what steps the Congress should take to ensure agencies 
consider the economic impact of all regulations, report 
regulations are imposed?
    Mr. Ellig. Well, I don't think there is a silver bullet 
because the regulatory process is complex but there are some 
things that could help. One is to find some way to ensure that 
agencies actually do the analysis before they make decisions 
about regulations.
    Now, I know some folks say, oh, that is going to slow down 
the process, paralysis by analysis. I only know of one 
empirical investigation that tried to figure out whether that 
is actually true or not. It is a classic little article by a 
gentleman named Tim Muris. He is a distinguished law professor 
at George Mason. He was chairman of the Federal Trade 
Commission. And back in the 1980s, he wrote an article in which 
he looked at Federal Trade Commission rulemaking and pointed 
out that one of the most famous regulations in which the FTC 
took its time to develop a theory of the systemic problem and 
then investigate empirical evidence, the eyeglass rule to 
prevent bans on advertising of eyeglasses, the rule was done in 
3 years.
    Another rule, a famous rule the FTC issued that was not 
really accompanied by a very good systemic theory of what the 
consumer harm was and didn't have much empirical analysis and 
was essentially based on some anecdotes, was the FTC funeral 
rule. It took 10 years to issue this thing. So I would suggest 
that maybe, just maybe, agencies can sometimes do a quicker job 
or at least a better job of regulating when they actually have 
to take the steps to understand what they are doing before they 
do it.
    Mr. Gallegly. When you mentioned the concern for slowing 
down the process, I am not sure that that is necessarily a bad 
thing sometimes. In fact, it would almost appear to me that 
without doing some of this analysis, it is almost a ready-
shoot-aim type situation. And ultimately, the cure may be worse 
than the disease. So maybe there should be more of an attempt 
to understand the consequences, not that in the end the results 
may be the same, but at the same time, I would think that 
should be an integral part of the equation. I hope somebody 
agrees with that.
    Dr. Williams?
    Mr. Williams. I agree. I certainly agree and as I said in 
my testimony, I think that too frequently we are making 
decisions first without knowing what the impacts of those 
decisions are, we are basically regulating in the dark.
    Mr. Gallegly. Professor Glicksman.
    Mr. Glicksman. I would just remark the regulations which I 
am most familiar the ones issues by EPA and Federal land 
management issues the BLM, the Forest Service and the Park 
Service are not characterized by lack of identification of 
regulatory objectives. It is quite clear when you read the 
preamble to an EPA regulation that seeks to control emissions 
of a cancer-causing pollutant that what the Agency is trying to 
do is to limit exposure to dangerous chemicals emitted by 
companies that, absent regulation, have little or no incentive 
to control their emissions in ways that will increase the 
regulatory compliance costs.
    When an agency like the Forest Service issues regulations, 
it is quite clear that what they are trying to do is to enhance 
recreational opportunities for people like hikers, hunters, 
fishermen. So I just, in my experience, have not seen this 
problem of regulating without understanding what the objective 
of the regulation is going to be.
    Mr. Gallegly. I don't know that any of us would really 
object to the objectives that you have just identified with. 
However, there sometimes are other issues that the economic 
impact could be more applicable than maybe the examples that 
you used.
    Thank you very much, Mr. Chairman.
    Mr. Coble. You are indeed welcome, sir. We have been joined 
by the distinguished gentleman from New York, Mr. Reed. You are 
recognized for 5 minutes.
    Mr. Reed. I am going to yield at this point in time, Mr. 
Chairman.
    Mr. Coble. Thank you, sir. Gentlemen, we thank you for your 
testimony today. Without objection, all Members will have 5 
legislative days to submit to the Chair additional written 
questions for the witnesses which we will forward and ask the 
witnesses to respond as properly as they can do so and that 
their answers may be made a part of the record. Without 
objection, all Members will have 5 legislative days to submit 
any additional materials for inclusion in the record.
    Again, gentlemen, thanks to each of you, and this hearing 
stands adjourned.
    [Whereupon, at 5:05 p.m., the Subcommittee was adjourned.]




















                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

 Response to Post-Hearing Questions from Jerry Ellig, Senior Research 
   Fellow, Mercatus Center, George Mason University; and Richard A. 
 Williams, Director of Policy Research, Mercatus Center, George Mason 
                               University

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 Response to Post-Hearing Questions from Robert L. Glicksman, J.B. and 
 Maurice C. Shapiro Professor of Environmental Law, George Washington 
                         University Law School

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