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




 
  UNFUNDED MANDATES, REGULATORY BURDENS AND THE ROLE OF THE OFFICE OF 
                   INFORMATION AND REGULATORY AFFAIRS

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

                                HEARING

                               before the

                SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
                POLICY, INTERGOVERNMENTAL RELATIONS AND
                           PROCUREMENT REFORM

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 25, 2011

                               __________

                           Serial No. 112-56

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

   Subcommittee on Technology, Information Policy, Intergovernmental 
                    Relations and Procurement Reform

                   JAMES LANKFORD, Oklahoma, Chairman
MIKE KELLY, Pennsylvania, Vice       GERALD E. CONNOLLY, Virginia, 
    Chairman                             Ranking Minority Member
JASON CHAFFETZ, Utah                 CHRISTOPHER S. MURPHY, Connecticut
TIM WALBERG, Michigan                STEPHEN F. LYNCH, Massachusetts
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
PATRICK MEEHAN, Pennsylvania
BLAKE FARENTHOLD, Texas


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 25, 2011.....................................     1
Statement of:
    Sunstein, Cass R., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget........    16
Letters, statements, etc., submitted for the record by:
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............    13
    Lankford, Hon. James, a Representative in Congress from the 
      State of Oklahoma, prepared statement of...................     5
    Sunstein, Cass R., Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................    18


  UNFUNDED MANDATES, REGULATORY BURDENS AND THE ROLE OF THE OFFICE OF 
                   INFORMATION AND REGULATORY AFFAIRS

                              ----------                              


                        WEDNESDAY, MAY 25, 2011

                  House of Representatives,
   Subcommittee on Technology, Information Policy, 
Intergovernmental Relations and Procurement Reform,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
room 2154, Rayburn House Office Building, Hon. James Lankford 
(chairman of the subcommittee) presiding.
    Present: Representatives Lankford, Kelly, Chaffetz, 
Labrador, and Connolly.
    Also present: Representatives Issa and Cummings.
    Staff present: Sharon Casey, senior assistant clerk; Adam 
P. Fromm, director of Member liaison and floor operations; Ryan 
Little, manager of floor operations; Justin LoFranco, press 
assistant; Kristina M. Moore, senior counsel; Kristin L. 
Nelson, professional staff member; Laura L. Rush, deputy chief 
clerk; Becca Watkins, deputy press secretary; Peter Warren, 
policy director; Jeff Wease, deputy CIO; Ronald Allen, minority 
staff assistant; Krista Boyd, minority counsel; Jaron Bourke, 
minority director of administration; Lucinda Lessley, minority 
policy director; and Adam Miles, minority professional staff 
member.
    Mr. Lankford. Good morning. The Unfunded Mandates, 
Regulatory Burdens and the Role of the Office of Information 
and Regulatory Affairs hearing will come to order this morning.
    The Oversight Committee mission statement, we begin every 
single one of our meetings with it. We exist to secure two 
fundamental principles: first, Americans have the right to know 
that the money Washington takes from them is well spent; 
second, Americans deserve an efficient, effective government 
that works for them. Our duty on the Oversight and Government 
Reform Committee is to protect these rights.
    Our solemn responsibility is to hold government accountable 
to taxpayers because taxpayers do have the right to know what 
they get from their government. We will work tirelessly in 
partnership with citizen watchdogs to deliver the facts to the 
American people and bring genuine reform to the Federal 
bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    Specifically, today we are dealing with the Unfunded 
Mandates Reform Act of 1995 [UMRA]. It was to set the Federal 
mandates on State, local, and tribal governments and the 
private sector by shedding light on the expected economic 
impact of pending statutes and regulations. Under UMRA, each 
agency is to assess the effect of each type of non-Federal 
entity regulatory actions it plans to take.
    UMRA was to help inform Congress of the potential burden of 
laws and regulatory actions might impose so that those could be 
weighed against the potential benefits. But in the 
subcommittee's two prior hearings on UMRA, we heard from 
representatives of State and local governments and the private 
sector that UMRA is not identifying all of the unfunded 
mandates being imposed on them and it does not always capture 
the full cost of those mandates that it does identify.
    In fact, in the past 10 years, only four rules have been 
classified as constituting unfunded mandates in State, local 
and tribal governments under UMRA. Further, only 13 of 66 major 
rules issued in 2010 were classified as unfunded mandates; only 
1 of the 13 was identified as intergovernmental mandate.
    I have two different slides I want to be able to show on 
that one. The first one deals with just the number of 
economically significant rules in the pipeline. You will see 
that has continued to grow over the years. And the second one 
gives us a snapshot of the major economically significant 
regulations from 2006 to 2010.
    In the purple there, you will see those are regulations 
subject to UMRA review, that very small little part; the red 
there is major regulations reviewed by OIRA; and in the green 
there major regulations that have been issued as a whole. So 
obviously we have several that are slipping through the mix 
here, that are not being evaluated by UMRA.
    While I appreciate President Obama's recognition of the 
burdens the Federal Government puts on State, local, and tribal 
governments in his Presidential Memorandum on Administrative 
Flexibility, Lower Costs and Better Results for State, Local, 
and Tribal Governments, this is not a substitute for 
legislation to ensure the burdens placed on the agenda, these 
are fully recognized and taken into account.
    As the charts that we just looked at show, when you look at 
the number of major regulations in the pipeline and those 
reviewed by OIRA, you see a rising trend of major regulations 
from the Federal Government. This is one recent indication that 
the UMRA statute is failing to live up to its promise of 
reducing unfunded mandates.
    It is time to look at closing some of UMRA's loopholes, 
exemptions, and exceptions that this subcommittee has heard 
about from its previous two hearings on unfunded mandates. We 
need to examine whether cost estimates under UMRA are being 
accurately reflected. UMRA only captures direct costs or 
expenditures, not the total effects on the economy, as required 
under Executive Order 12866. UMRA thresholds are based on 
adjustments for inflation. It is my understanding that is not 
the case for Executive Order 12866. UMRA also does not take 
into account the need to prepare for an unfunded mandate by a 
local government or private business.
    During the first UMRA hearing in February, the subcommittee 
heard testimony from the Government Accountability Office, 
local government representatives, and the former OIRA 
Administrator, Susan Dudley. Ms. Dudley, who served as the OIRA 
Administrator from 2007 to 2009, provided expertise and insight 
into the process by which the Federal Government imposes 
unfunded mandates on non-Federal parties. She also described 
widely recognized flaws that exist within the current UMRA 
statute and suggested multiple remedies and potential 
legislative solutions to address the concerns addressed by many 
affected parties.
    At the subcommittee's second hearing on UMRA in March, the 
subcommittee heard from witnesses representing State 
governments and the private sector. During the hearing, the 
subcommittee heard from the chief economist of the Small 
Business Entrepreneur Council regarding how unfunded mandates 
and regulations continually stifle private sector growth and 
economic expansion.
    I am glad to see that President Obama shares the same 
concerns that Mr. Keating articulated to the subcommittee at 
our March hearing. I welcome his Executive Order 13563 and the 
public statements on regulations. Indeed, the President has 
stated that sometimes rules have just gotten out of balance, 
placing unreasonable burdens on businesses, burdens that have 
stifled innovation and have had a chilling effect on growth and 
jobs.
    Further, President Obama made it crystal clear to the 
American people in a Presidential Memorandum that my 
administration is firmly committed to eliminating excessive and 
unjustified burdens on small businesses, and to ensure that 
regulations are designed with careful consideration of their 
effects, including their cumulative effects on small 
businesses.
    In light of this backdrop, it seems very appropriate that 
we look at reforming UMRA, not only in the context of State, 
local and tribal governments, but also with the private sector 
as well. Many regulations that are on tap will not be covered 
by UMRA in its current form or, for that matter, in Executive 
Order 12866.
    For example, the U.S. Chamber of Commerce estimates the 
Dodd-Frank Wall Street Reform Act and Consumer Protection Act, 
signed into law by the President, contains 259 unmandated 
rulemakings, 188 suggested rulemakings, 63 reports, and 59 
studies. Most of these rules, those not issued by the Treasury 
Department, will be issued through independent regulatory 
agencies such as the SEC, Commodities Future Trading 
Commission, FDIC, Federal Reserve, and the newly created CFPB, 
which are exempt from the requirements of UMRA, as well as 
Executive Orders 12866 and 13563. All these new rulemakings 
create potential for the issuance of more unchecked, unfunded 
mandates.
    Indeed, in light of the Presidents' recent statements, it 
is curious that a recent report by George Washington University 
Regulatory Studies Center and the Weidenbaum Center at 
Washington University in St. Louis finds that a number of staff 
employed on regulatory matters within the Federal Government is 
on schedule to grow at a rate of about 10,000 new regulatory 
employees per year in 2011 and 2012. The number of full-time 
regulatory employees is expected to reach an all-time high of 
291,676 in 2012. The authors of the report, which include 
former OIRA Administrator Susan Dudley, believe this data 
offers useful information on the composition and evolution of 
Federal regulation over the past 52 years and serves as a 
barometer of future regulatory activity.
    I have stated before, and will state again with this 
hearing, like other hearings, this is not an attack on the 
current administration. Many of the issues we will deal with 
today did not originate during this administration, and the 
solutions we propose will extend well beyond this 
administration. It is essential that we look at the bigger 
picture and the long-term effects of our Federal involvement in 
State, local, and tribal governments and private business 
operations. But it is also essential that each agency is 
evaluated on their results, not just their rhetoric.
    Today's hearing is designed to be another teachable moment 
to discover the facts to assist us in developing solutions. It 
is the role and responsibility of this subcommittee and 
Congress as a whole to ensure this administration is regulating 
in the best interest of the American people. I am here to make 
certain in this modern regulatory environment the Federal 
Government does not overstep its clearly defined constitutional 
boundaries and well-intentioned bureaucrats don't impose their 
preferences on State, local, and tribal governments and private 
industry. It is my hope that we can also discern issues that 
must be addressed in a legislative solution to our unfunded 
mandates.
    I would like to now recognize the distinguished ranking 
member, Mr. Cummings, for an opening statement.
    [The prepared statement of Hon. James Lankford follows:]

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    Mr. Cummings. Thank you very much, Mr. Chairman. I want to 
thank you and our ranking member, Mr. Connolly, for this 
hearing.
    This is the third hearing this subcommittee has held on the 
Unfunded Mandates Reform Act. Having heard from State, local, 
and tribal officials at previous hearings, I am grateful that 
Mr. Sunstein is here today to provide us with the 
administration's perspective on this important issue.
    The original purpose of UMRA, which was passed in 1995, was 
to make Congress more accountable when imposing new Federal 
mandates on State, local, and tribal governments. As a former 
member of the Maryland House of Delegates, I am sensitive to 
the budgetary pressures facing State and local governments. It 
is important for Congress and agencies to carefully evaluate 
and balance the potential impact before imposing new 
requirements on small governments.
    However, this is also the fourth hearing in which this 
subcommittee has stressed only the burdens imposed by 
regulations. There is a common assumption in the titles and the 
focus of these hearings that regulations are burdensome and 
hinder economic recovery. Yet we know that regulations are 
necessary to protect the health, welfare, and safety of the 
American public, of our constituents, by the way. As Mr. 
Sunstein has often stated, we also know that some regulations 
create jobs.
    As I have said in the past, I fully support a comprehensive 
review of regulations to ensure that they are effective and 
efficient. That must be a very balanced review. But a review 
cannot be one-sided. It is important that we base any review on 
the facts rather than the rhetoric. Here are the facts:
    In 2011, the Office of Information and Regulatory Affairs 
estimates that the annual benefits of major Federal regulations 
issued between 2000 and 2010 are between $136 billion and $651 
billion. In contrast, the estimated annual costs are between 
$44 billion and $62 billion. In other words, the economic 
benefits of regulations are up to 10 times the costs.
    This conclusion is not limited to the Obama administration. 
In 2008, the Bush administration estimated that the annual 
benefits of regulations issued between 1997 and 2007 ranged 
from $122 billion to $656 billion, while the estimated annual 
costs range was from $46 billion to $54 billion.
    According to both the Obama and Bush administrations, the 
benefits of these regulations greatly outweigh the costs.
    In the context of UMRA, the reality is that State and local 
governments are often the direct beneficiaries of Federal 
regulation. We must ensure that industry addresses the costs 
they impose on society in the form of pollution, effective or 
deceptive products, and unsafe workplaces, again, to protect 
the American people, our constituents. This can and does save 
local governments from significant expenses they otherwise 
would have to bear themselves to protect the health and well-
being of their citizens.
    Administrator Sunstein, I look forward to your testimony 
today and I look forward to hearing more about your office's 
role in the regulatory process, its role in ensuring that 
Federal agencies are conducting a balanced review of existing 
regulations and Executive Order 13563, and your efforts to 
improve the cost-benefit analysis.
    Finally, Mr. Chairman, I hope we can and I agree with you 
this must be a bipartisan effort. We must leave our political 
hats at the door. So I hope that we can take a fair and 
balanced view of regulations and that we can all work together 
to identify ways to help create jobs and support the work of 
the State and local governments, while making sure that 
Americans are able to live and work in safe and healthy 
communities.
    I have often said, when I look at the worker and people 
that these regulations often protect, I respect those people 
who get up early in the morning and go to their jobs, looking 
forward to coming home to their families. I do not want a 
situation where we disregard important regulation or try to do 
away with important regulations that are needed to protect 
them. I want them to come home to their families and I do not 
want them to be shipped home to their families in a coffin. And 
I will say that over and over again because I have seen it so 
many times.
    So I look forward to the testimony, and with that I yield 
back, and I want to thank the chairman for his courtesy.
    Mr. Lankford. Absolutely. Thank you, Mr. Cummings, who is 
the ranking member of the full OGR Committee.
    Now I would like to recognize Mr. Connolly, who is the 
ranking member of our subcommittee.
    Mr. Connolly. Thank you. Thank you, Mr. Chairman.
    Welcome, Mr. Sunstein.
    I appreciate, Mr. Chairman, your continued interest in this 
subject and I also hope we will have some subcommittee hearings 
in Technology and Procurement at some point in the near future, 
issues very dear to my home district.
    For this hearing, it is appropriate we are hearing from the 
Director of the Office of Information and Regulatory Affairs, 
the arm of OMB which was used to propose agency regulations. 
During the previous administration, OIRA intervened to block 
proposed regulations of greenhouse gas pollution under the 
Clean Air Act amendment. The consequences of failing to prevent 
global warming could be severe.
    Recently, the Director of the Climate Analysis Section of 
the National Center for Atmospheric Research stated given that 
global warming is unequivocal, the null hub hypothesis should 
be that all weather events are affected by global warming. 
According to the global insurance company Munich Ray, the only 
plausible explanation for the rise in weather-related 
catastrophes is in fact climate change.
    Unprecedented tornadoes killed hundreds of Americans 
recently in Missouri, Alabama, and my home State of Virginia, 
and I will include for the record a recent Washington Post 
article discussing the connection between climate change and 
extreme weather. Extreme drought rivaling even the dust bowl is 
threatening viability in agriculture in the southwest. The 
acidity of the ocean has increased 30 percent due to higher 
atmospheric carbon concentrations, threatening coastalries from 
Florida to Australia. Sea levels are rising in the Atlantic and 
Chesapeake Bay, threatening critical infrastructure, including 
National Airport and Norfolk Naval Base.
    As recent extreme weather has demonstrated, the devastation 
of climate change can reach biblical proportions. Meanwhile, 
opponents of regulation ignore both the benefits of regulation 
and the cost of failing to regulate when regulation is 
necessary. Empirical data repeatedly and consistently suggests 
that the benefits of Federal regulations outweigh the costs by 
considerable margins. The ranking member of the full committee 
just went through some of those statistics, but other examples 
exist as well.
    For example, the vehicle efficiency standards enacted in 
the Clean Air Act will save consumers $3,000 per vehicle by 
improving the average vehicle's efficiency by 30 percent. In 
aggregate, OMB says this regulation will produce $12.4 billion 
in benefits for consumers for only $3.7 billion in costs, a 4 
to 1 ratio.
    As this subcommittee contemplates changes to UMRA, we must 
also include an estimate of the benefits of new regulations to 
the private sector, as well as States and local governments. 
Based on the data, many of these regulations create significant 
private sector savings, and we should understand those so we do 
not delay meritorious regulations in the manner that the 
previous Bush administration blocked regulation, for example, 
of greenhouse emissions.
    In addition to understanding the benefits, as well as the 
costs, of regulations, we need to do a better job understanding 
that new costs could be imposed, unfunded mandates could be 
imposed on State and local governments by curtailing Medicare, 
Medicaid, and Social Security, as some have suggested. For 
example, under the Ryan budget plan, passed on a strict party 
line vote, Federal Medicaid payments would be cut by 35 to 49 
percent, or $771 billion, over the next 10 years, putting 
enormous stress on States, localities, and families.
    Medicaid primarily benefits children of poor parents, 
seniors in nursing homes, and disabled individuals. To 
illustrate how important Medicaid is to seniors in nursing 
homes, consider these examples from my district in Northern 
Virginia. Renaissance Gardens at Greenspring has 148 seniors, 
all of whom receive Medicaid. Fairfax Nursing Center has 200 
residents, 134 of whom receive Medicaid; Leewood Health Center 
has 132 residents, 91 of whom receive Medicaid; the Iliff 
Nursing and Rehabilitation Center has 132 residents, 91 of whom 
receive Medicaid.
    Based on data from the American Communities Survey, 
approximately 13\1/2\ percent of my constituents totally 
receive Medicaid. That is 132,000 residents of Fairfax and 
Prince William Counties alone.
    The cruelty and political toxicity of Chairman Ryan's 
proposed privatization of Medicare has received a great deal of 
attention in the press, but the evisceration of Medicaid would 
have a similar negative effect on individuals, and especially 
unfunded mandates in State and local governments. If the 
Federal Government cuts Medicaid by 35 to 49 percent, who is 
going to foot the bill for nursing home costs? Do our 
colleagues propose to put seniors out on the street or do they 
expect local and State governments to pick up the tab and raise 
taxes to cover those costs?
    Ultimately, slashing Medicaid is a shell game in which the 
House majority would shift costs to the States and localities 
and the families of America. The cruel proposal would create an 
unfunded mandate and, more troubling, return America to the era 
of the poor farm.
    I think we need to look at that aspect of this subject as 
well, Mr. Chairman, and with that I yield back.
    [The prepared statement of Hon. Gerald E. Connolly 
follows:]

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    Mr. Lankford. Thank you, Mr. Connolly.
    All Members will have 7 days to submit opening statements 
and other extraneous materials for the record.
    We will now recognize our panel. We have one witness today, 
the Honorable Cass Sunstein. He is the Administrator of the 
Office of Information and Regulatory Affairs from the Office of 
Management and Budget. Glad to be able to have you here today.
    Pursuant to committee rules, we do swear in all witnesses 
before they testify, so if you would please rise and raise your 
right hand. Thank you, sir.
    [Witness sworn.]
    Mr. Lankford. Let the record reflect the witness answered 
in the affirmative.
    You may be seated. Thank you. In order to allow time for 
discussion, I am going to ask you to be able to limit your 
opening statement. We have already discussed it would be around 
6 minutes long or so, and that is very appropriate. We are 
honored to be able to receive your statement as part of the 
record at this moment. Thank you.

    STATEMENT OF CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE OF 
 INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND 
                             BUDGET

    Mr. Sunstein. Thank you, Mr. Chairman. I will try to beat 
the 6-minute constraint, because I am eager to hear your 
questions and concerns.
    I am very grateful to be here. This is a timely hearing on 
a crucially important topic. As the opening remarks suggest, a 
central goal of UMRA is to minimize burdens on State, local, 
and tribal governments and also on the private sector, and to 
make sure that those burdens are imposed only after informed 
and careful consideration.
    What I will be emphasizing here is the very close 
relationship between the goals of UMRA and the goals of the 
Presidential Memorandum on Administrative Flexibility from 
February and the goals of the Executive order on regulation and 
regulatory review from this past January.
    As you are aware, Title II of UMRA, our principle focus 
here, imposes reporting and consultation requirements with 
respect to certain rules imposing mandates that may result in 
the annual expenditure of $100 million or more on State, local, 
and tribal governments or on the private sector, all of those. 
These reporting requirements involve, among other things, a 
careful assessment of costs and benefits, as well as an 
accounting of various potential effects on the economy.
    In these respects UMRA, from 1995, has a clear relationship 
to President Reagan's Executive Order 12291 from the early 
1980's. The Office of Management and Budget, where I am 
privileged to work, is directed to provide annual reports to 
Congress on new regulations covered by UMRA, so there is an 
important information on reporting rule that my office has.
    Insofar as the statute is designed to require analysis of 
the effects of rules in advance, and to try to reduce burdens 
and costs, it has clear connection with Executive Order 12866 
from the Clinton administration, which has long governed the 
process of regulatory review. More recently, President Obama 
has issued Executive Order 13563, which reaffirms the 
requirements of 12866 and also contains a number of revisions 
that bear directly on the goals of UMRA. I would like to give 
particular attention to four of those provisions from this 
January to underline their relationship with UMRA.
    First, the new Executive order specifically directs 
regulations to be based on the open exchange of information and 
perspectives among State, local, and tribal officials, and the 
public as a whole. With this direction, what the Executive 
order is trying to do is to ensure consultation in advance with 
those who are likely to be affected by regulation.
    Second, the Executive order, the new one, requires that 
before even issuing a Notice of Proposed Rulemaking, before 
anything appears in the Federal Register, the agencies are 
supposed to seek the views who are likely to be affected, 
including those who are potentially subject to the relevant 
rulemaking. What this means is that the President has required, 
with clarity beyond that we have seen from any previous 
president, advanced consultation with those who are potentially 
burdened by rules.
    Third, the Executive order takes new steps to require 
burden reduction and minimization of costs. Agencies are 
directed to select the least burdensome approaches; to minimize 
cumulative costs; to simplify and harmonize overlapping 
regulations, which can often be confusing and very expensive; 
and to identify and consider flexible approaches that maintain 
freedom of choice for the American public. It is clear that 
these requirements bear directly on rules that affect State, 
local, and tribal governments, as well as the private sector.
    Fourth, and finally, the new Executive order requires a 
regulatory look-back through the creation of plans by which 
agencies and departments will eliminate excessive costs and 
burdens, revise rules that are too complicated and confusing, 
streamline rules that have too much red tape; and that applies 
directly to State, local, and tribal government, as well as the 
private sector.
    There is a sibling to the Executive order, the Presidential 
Memorandum on Administrative Flexibility, which draws explicit 
attention to requirements that have been sometimes ``onerous'' 
and ``unnecessary.'' With references of that sort, the 
memorandum seeks to increase flexibility for non-Federal 
entities. To that end, it directs the Office of Management and 
Budget, the Director, in fact, to lead a process of 
consultation to promote increased flexibility. The Presidential 
Memorandum also requires agencies to work with State, local, 
and tribal governments to improve program outcomes, including 
reduction and streamlining of duplicative reporting, paperwork, 
and regulatory requirements.
    It should be clear that UMRA, the new Executive order, and 
the Administrative Flexibility Memorandum are mutually 
reinforcing. We are greatly looking forward to working with you 
on implementing and promoting the purposes of the three sets of 
requirements, and I look forward now to answering your 
questions.
    [The prepared statement of Mr. Sunstein follows:]

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    Mr. Lankford. Thank you, sir, and you did successfully beat 
your time there.
    I am going to yield myself 5 minutes in the question time. 
We will probably do two rounds of questions, as I mentioned to 
you before. If there are additional things, we will continue to 
hold our conversation.
    Can I just give you a general statement that we also gave 
to Susan Dudley when she was here? What have you learned from 
the unfunded mandates, the application of 12866 and now for the 
13563 Executive orders that you would suggest goes into an 
updated writing of an UMRA law, that you would say these are 
deficiencies, this existed in UMRA or did not exist in UMRA, it 
does exist in the Executive orders, or these are ways to be 
able to fix it? So that is just a general question to you.
    Mr. Sunstein. I will tell you the most important thing I 
have learned that bears on all of those, and that is the 
crucial importance of public participation to good regulatory 
outcomes. I taught administrative law for many years. There is 
a cliche among administrative law professors: that by the time 
a rule goes out for public comment, it is baked, it is cooked, 
and the public comments are not that important. I have learned 
that cliche is false. And to get rules right, it is very 
important to engage with the public.
    Mr. Lankford. OK. With that, I heard you mention that as 
well, how do you select who gives the public comments? Since 
this is not an open, large-scale process, it is not already out 
there, obviously, there has to be some sort of notification 
behind the scenes to get the public comment. If it a State, 
tribal government, if it is a private entity, who selects that?
    Mr. Sunstein. The best way is connected with the Executive 
orders' reference to freedom of choice for the American public. 
So the best way is to let people who have interests and 
concerns voice those interests and concerns, rather than having 
bureaucrats select people. There are two mechanisms for that 
are built into the existing process, of which UMRA is a 
significant part.
    One is the rule goes out for public notice, and then 
people, and sometimes many thousands of people, suggest their 
comments; and no one asks them or chose them, they chose 
themselves. The second is our office is--and this is very 
important for those concerned about regulatory burdens to be 
aware of--our office is open, our doors are open to those who 
think that a proposed rule or a final rule is a problem, and we 
want to hear what they have to say.
    Mr. Lankford. So in that conversation back and forth, you 
mentioned specifically using the term onerous. If a regulation 
in a look-back, or whatever stage of the process it may be, 
whether it is already on the books and we are looking back at 
it, or whether it is a proposed rule, if some groups consider 
it onerous and other groups do not. Let me give you a for 
instance. If a private entity or a State or local government 
says this is a really onerous rule and the Federal agency says 
no, it is not, who arbitrates that?
    Mr. Sunstein. Thank you for that. That is a crucial thing 
for my office and you all who have lawmaking authority to try 
to get right. What we try to do is have both an internal and 
external process of peer review. So if a rule comes in with, 
let's say, a low cost estimate, and then people in the private 
sector or State and local government have said at some part of 
the process that is inaccurate, we have an internal process 
which involves the Council of Economic Advisors, the National 
Economic Council, economists, and informed people within the 
government who try to make an assessment.
    And there is not always literal peer review, but there is a 
form of external peer review, speaking colloquially, in the 
sense that the regulatory impact analysis goes out for public 
review and not infrequently people who are affected say that 
cost estimate is inaccurate, and the question is what is their 
evidence, and sometimes they have pretty good evidence.
    Mr. Lankford. So who do they appeal up to? When there is a 
disagreement, there is public comment, there is all that back, 
is it within that same agency or does it come to OIRA or is a 
judicial review? Who reviews it and says, no, an outside 
arbitrator?
    Mr. Sunstein. It definitely, the ultimate decision is made 
by the agency working with OIRA, so we ultimately have the 
authority not to approve a regulatory impact analysis, and that 
means that it will be a consensual process to make sure we get 
it right.
    Mr. Lankford. OK, let me ask a couple questions as well, 
then I am going to defer my time as well. The private sector, 
you mentioned that multiple times. In UMRA it is very clear 
that it is State, local, tribal governments, and the private 
sector. It mentions it multiple times; it defines it clearly in 
UMRA and the law. That is included.
    You also made the statement several times; the President 
has made the statement several times. What are your thoughts on 
the private sector and regulations that are coming down on 
them, as well as the public sector? Is there a difference? Do 
we need to evaluate it the same?
    Mr. Sunstein. It is a great question. We are very 
concerned, in this economic environment, with any form of 
costs. State and local government are particularly strapped, so 
if there is a rule that burdens them economically, the choice 
of the least burdensome alternative, as the Executive order and 
UMRA require, and even the best alternative may not be to 
impose the burden at all. So that is one set of----
    Mr. Lankford. Would that be true for the private sector as 
well as the State and local governments?
    Mr. Sunstein. Absolutely. What I was going to say is that 
even though each raises distinctive concerns, I wouldn't want 
to rank one higher in the hierarchy. If you are hitting small 
business hard in an economically challenging time, that is a 
problem.
    Mr. Lankford. OK, thank you.
    I now recognize Mr. Connolly for 5 minutes.
    Mr. Connolly. Thank you, Mr. Chairman.
    Presumably, Mr. Sunstein, we hear a lot of talk in this 
Congress about the burden of regulation, but there is also 
benefit to be derived from regulation and protecting the 
public, and sometimes in concrete savings, is that not true?
    Mr. Sunstein. Absolutely.
    Mr. Connolly. And certainly your office looks at the 
benefits as well as the costs.
    Mr. Sunstein. Under the President's Executive order, 
benefits are as highlighted as costs.
    Mr. Connolly. For example, in agreeing to new fuel 
efficiency standards, which certainly has an impact both in the 
public and private sector, EPA projects that over the lifetime 
of a model, a 2016 model, the average consumer will save $3,000 
and the United States will save 1.8 billion barrels of imported 
oil. Is that a benefit?
    Mr. Sunstein. No question.
    Mr. Connolly. Do we put a number on that benefit?
    Mr. Sunstein. Yes.
    Mr. Connolly. And we certainly consider that as we 
contemplate new regulations.
    Mr. Sunstein. Absolutely.
    Mr. Connolly. So there is an example where we are weighing 
costs and benefits. In looking at light bulb standards, the 
same thing. EPA came up with--or DOE came up with an analysis 
that said we could save $1.4 billion with new energy efficient 
standards for light bulbs. That would be another benefit, 
presumably, from a regulation.
    Mr. Sunstein. Energy efficiency standards have benefits and 
imposed costs.
    Mr. Connolly. Now, when one looks at--let me ask does your 
office also look at the risks of cost shifting? For example, I 
spent 14 years in local government. Sometimes my State 
government conveniently would shift costs onto the local 
governments and it would become our burden, and that has a real 
cost to it.
    I mentioned in my opening statement that in the partisan 
budget that passed the House here a few months ago, it slashes 
Medicaid funding 35 to 49 percent. That has the effect of 
shifting the cost of Medicaid onto State and localities, and 
indeed even the private sector. Has your office looked at that 
issue of cost shifting as, in effect, an unfunded mandate?
    Mr. Sunstein. That is not a standard part of what our role 
is under the Executive order and under the Unfunded Mandates 
Act, but there is a role for the analysis to which you point, 
under the rubric of distributional impacts. So if it is the 
case that a cost is shifted from one sector to another sector, 
and that is a consequence of a rule, that is appropriate to lay 
out.
    Mr. Connolly. Now, that same budget also, in many respects, 
eviscerated the ability of EPA to continue to regulate under 
the Clean Air Act. Has your office looked at the cost benefit 
analysis over the years of the Clean Air Act?
    Mr. Sunstein. We look at the costs and benefits of 
particular rules issued under the Clean Air Act. EPA has 
recently issued a general report on costs and benefits. Our 
analysis tends to be rule-by-rule, though we do some cataloging 
in our annual report to you.
    Mr. Connolly. For example, do you also look at 
externalities? I know when you start to get into something like 
global warming, it is a little harder, we know what the 
problems are, it is a little harder to put a value on averting 
something or mitigating something, but does your office also do 
that analysis as well?
    Mr. Sunstein. Absolutely. That is a significant part of the 
analysis of rules under the Clean Air Act, the externality 
which comes from mortality and morbidity effects from high 
levels of air pollution.
    Mr. Connolly. What about more physical things like rise in 
sea levels and potential damage to coastal areas and 
infrastructure?
    Mr. Sunstein. The global warming issue poses very difficult 
conceptual and empirical challenges in terms of monetization. 
What has happened in the last years is there is an effort to 
build on existing scientific models, not to do significant 
departures from the existing models, and to incorporate them 
into our analysis, and they do include economic costs of rising 
sea levels.
    Mr. Connolly. And when we look at this undue burden on the 
private sector, and certainly none of us want an undue burden, 
for example, look at the liability cap, regulatory liability 
cap on oil companies for oil spills is at $75 million. 
Obviously, if we don't address that inadequacy, all it does is 
shift the cost of cleanup when an oil spill occurs, such as did 
at Deepwater Horizon, onto the public, is that not correct?
    Mr. Sunstein. That particular issue isn't one that my 
office sees because our role is to look over regulations, 
rather than legislation, but you are absolutely right that if 
there is a regulation that prevents some significant economic 
or public health related harm, that is part of the analysis.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Lankford. I would like to now go for questioning to the 
chairman of the full committee, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman. I will be brief with 
this question.
    After the election that created an opportunity for Mr. 
Connolly to start calling anything that passes by the majority 
as a partisan budget and eviscerating and so on, right after 
that, November 15th, I sent your department a letter with a 
series of questions, and in December I got a quick response 
that basically said here is the public record, we will give you 
no more. We have twice since requested responses. Will you 
commit today to answer questions that were asked and that you 
agreed to answer as early as December, but have not yet 
answered?
    Mr. Sunstein. Thank you for that, Mr. Chairman. I am very 
focused on your concerns about regulatory costs and burdens. I 
want to see what questions exactly, but----
    Mr. Issa. We will give you the questions, but they are the 
questions from November 15th.
    Mr. Sunstein. I would be very happy to engage with you on 
questions involving regulatory burdens. I don't have the piece 
of paper in front of me right now.
    Mr. Issa. So it never got to you or it has been forgotten 
since November 15th of last year?
    Mr. Sunstein. I have a pretty good memory, but I don't 
remember exactly what the questions were.
    Mr. Issa. No, I understand that you wouldn't remember the 
questions, but it is your signature responding on this--
unfortunately, it is an undated letter, but it came in to us in 
December, in which you said you would give us the rest of the 
responses. I am just saying will you commit today to keep that 
promise from December of last year.
    Mr. Sunstein. I think if there is a promise there that my 
office made, I can commit to following through.
    Mr. Issa. OK, then I will take that as a yes, that what you 
signed and said you would do you will now do in a timely 
fashion.
    Let me just ask a basic question. You referred to the 
previous administration more than any other administration. Let 
me ask a question, though, about this whole idea of announcing 
you are going to go through a rule process or an executive 
order and then basically consulting. That is a great thing and 
I think all of us on the dais would commend that, but if in 
fact an agency announces that they are going to do something 
and then begins effectively compelling States or individual 
parties to live up to the proposed rule, isn't that contrary to 
good government?
    Mr. Sunstein. Well, it is very important for agencies to 
listen to what people have to say, so if the agency hasn't 
carefully considered comments, then that would not be 
consistent with the spirit of the President's Executive order 
or the Administrative Procedure Act.
    Mr. Issa. So if the administration wanted to make it clear 
that they were looking at something but did not want to have it 
be compelled as though it was a rule, they should say so in the 
process, shouldn't they?
    Mr. Sunstein. I am not sure I understand exactly----
    Mr. Issa. Well, let me just make it clear. EPA has a policy 
that now what they do is they announce or give guidance to what 
may someday be rules, and if they get enough compliance from 
the States and other stakeholders, they never have to issue a 
rule that they have changed things without ever having it.
    That seems to be a part of this administration's direction, 
and I am asking you shouldn't the administration, any agency be 
clear that if rulemaking is the appropriate goal, that they 
make it clear that they are not looking for change in advance 
of rulemaking unless there is a real emergency and that 
emergency is stated and stated here on the Hill?
    Mr. Sunstein. I fundamentally agree with what you have just 
said, and what I would say is the Administrative Procedure Act 
makes a clear distinction between guidance documents and rules. 
Guidance documents lack the force of law; they are not binding; 
they have an advisory quality; and under a memorandum from 
March 2009, guidance documents are subject to OIRA review, as 
are rules, and we work very closely with agencies to make sure 
the guidance documents don't become rules.
    Mr. Issa. And the guidance from the previous 
administration, 13422, you revoked it, you have gone your own 
way. Let me ask a broader question, though, in addition to 
that, since the time is limited. Yesterday we had the EPA 
Administrator repeatedly tell us that something was from the 
previous administration, in other words, permits, rules, 
studies, and so on; and that they automatically appear to have 
been set aside to start over anew simply because this is a new 
administration. Don't you believe that, for the most part, 
there is a binding authority, unless justified for a change, 
from previous administrations, whether they be republican or 
democratic?
    Mr. Sunstein. My mind is going through. I taught 
administrative law for many years and, as you are aware, there 
is a jurisprudence on exactly that question.
    Mr. Issa. Certainly, if a permit is granted under one 
administration, wouldn't you think that permit is a contract 
with the government and should not be essentially revoked 
simply because there has been a change in party? That is pretty 
Third World, isn't it?
    Mr. Sunstein. Rulemaking is my lane, and what I can tell 
you is that rules issued under the Bush administration are 
binding on everybody until they are changed.
    Mr. Issa. Changed by a full rulemaking procedure.
    Mr. Sunstein. Absolutely. Interpretive rules and guidance 
documents can be changed more quickly, but rules typically are 
binding until changed.
    Mr. Issa. Thank you.
    Thank you, Mr. Chairman.
    Mr. Lankford. I would like to recognize the ranking member 
of the full committee, Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Mr. Sunstein, today I come concerned about Medicaid, as Mr. 
Connolly. I want to pick up on some of the things that he was 
talking about. As you know, Medicaid is a vital program that 
serves the most vulnerable Americans in this country. As a 
matter of fact, Medicaid accounts for 42 percent of long-term 
care spending. And in a time when there are those on the other 
side of the aisle who want to eliminate the traditional 
Medicare, put private insurance companies in charge of health 
benefits, and costing users to pay more for their health care, 
I am concerned about the shifting to States with regard to our 
seniors.
    It is the No. 1 topic when I go into my district. As you 
know, programs like Medicaid and No Child Left Behind are not 
technically covered by UMRA; however, we also know that the 
Federal Government can impose significant costs on States when 
it changes the conditions required to receive Federal aid.
    The Republican budget resolution would dramatically change 
Medicaid from an entitlement program into a block grant, 
essentially removing any guaranty of care for those least 
likely to be able to care for themselves, people like my 
mother, who is 85 years old. Medicaid would be cut by $771 
billion over the next 10 years. The Congressional Budget 
Office's analysis of the Republican budget plan estimates that 
the Federal Medicaid funding to States would be cut by 35 
percent in 2022 and by 49 percent in 2030. Whether technically 
covered by UMRA or not, these changes would impose a remarkable 
unfunded mandate on States that would like to continue to 
provide the same level of existing coverage for their most 
vulnerable citizens.
    Now, this subcommittee has held three hearings on unfunded 
mandates and offered rhetorical support for relief from Federal 
mandates. But when it comes to their budget resolution, it is 
clear that the Republicans have no problem whatsoever imposing 
greater costs on States and local governments. The drastic cuts 
to Medicaid would add significant burdens on State budgets to 
maintain current coverage or cover a consequent increase in 
emergency room visits by previously Medicaid eligible people.
    Administrator Sunstein, have you considered how converting 
Medicaid into a block grant would impact the ability of States 
to provide care to their citizens?
    Mr. Sunstein. Thank you, Congressman, for that. That 
question I want to defer to some of my OMB colleagues.
    Mr. Cummings. OK.
    Mr. Sunstein. That is their business, not quite mine.
    Mr. Cummings. All right. Let me ask you this. If States are 
given less money from the Federal Government as part of a 
Medicaid block grant, what kind of budget pressures would 
States likely face in maintaining existing levels of care and 
coverage for their most vulnerable citizens?
    Mr. Sunstein. Again----
    Mr. Cummings. That same answer?
    Mr. Sunstein. Yes. My boss, Jack Lew, is the expert on----
    Mr. Cummings. OK. I am sure we will be talking to Mr. Lew 
at some point. Let me ask you this. What would happen to 
Medicaid beneficiaries who are forced out of coverage because 
of program cuts or if funds from the block grant simply run 
out?
    Mr. Sunstein. Same answer.
    Mr. Cummings. The Federal Government increased its 
percentage of contribution for Medicaid costs as the recession 
hit. This increase resulted in States receiving an estimated 
$107 billion in additional funding to help defray the costs 
associated with increasing Medicaid enrollment. According to 
the Kaiser Foundation, Mr. Sunstein, for every 1 percent 
increase in national unemployment, Medicaid enrollment 
increases by 1 million individuals. Does the Republican budget 
block grant plan include any funding contingencies in the event 
of another economic downturn or a natural disaster similar to 
Hurricane Katrina?
    Mr. Sunstein. With your indulgence, I would like to note 
that the Office of Information and Regulatory Affairs, we have 
a defined narrow rule and there are budget colleagues who 
specialize in that sort of question.
    Mr. Cummings. Well, let me ask you this, Mr. Sunstein. Some 
have suggested the UMRA be modified by expanding its judicial 
review provision to allow agency rules to be delayed or 
invalidated if an agency fails to adequately perform the 
required analysis. UMRA currently includes language expressly 
providing that an agency's failure to perform any estimate 
analysis statement or description under UMRA cannot be used as 
a basis for delaying or invalidating a rule. Removing this 
language limiting judicial review would be a significant change 
to UMRA. In 2009, GAO issued a report on rulemaking process. In 
that report, GAO found that, of the agencies reviewed, the 
average time needed to complete a rulemaking was 4 years.
    If UMRA was amended to allow rules to be delayed by legal 
challenges, what kind of impact could that have on agencies' 
ability to issue rules in a timely manner?
    Mr. Sunstein. It is a very important question and it is a 
pervasive question whether judicial review is worth a candle, 
whether it provides sufficient safeguards to rely on self-
policing or whether a judicial check is an important 
supplement. On that question you pose a crucial empirical 
question, and I just don't have the data on that.
    Mr. Cummings. Very well. Can you get back to me on that 
one?
    Mr. Sunstein. We can----
    Mr. Cummings. That is within your purview, is it not?
    Mr. Sunstein. Well, I should say that it is in my purview, 
though I don't know if the information is available on what 
kind of incremental delay you get from judicial----
    Mr. Cummings. Well, do the best you can.
    Thank you very much, Mr. Chairman, for your indulgence.
    Mr. Lankford. Thank you.
    I want to now yield 5 minutes to the Vice Chair of this 
committee, Mr. Kelly.
    Mr. Kelly. Professor, thanks for being here, and I 
appreciate your indulgence as we test out campaign strategies 
for the 2012 elections.
    But more directly, as evidence of Executive Order 13563 in 
President Obama's recent announcement that he will propose a 
package of regulations to delineate in the coming weeks, would 
you agree that the President has clearly recognized that at 
least some regulations and businesses are having a negative 
effect?
    Mr. Sunstein. Yes.
    Mr. Kelly. OK, thank you. And isn't it true that one of the 
purposes of UMRA is to assist Congress in its consideration of 
proposed legislation containing Federal mandates in the private 
sector?
    Mr. Sunstein. Yes, absolutely.
    Mr. Kelly. In fact, the law states that each agency shall 
assess the effects of the Federal regulatory actions on State, 
local, tribal governments, and the private sector, isn't that 
correct?
    Mr. Sunstein. Yes.
    Mr. Kelly. OK. So if the President has made that 
commitment, and we all agree that there is this overwhelming 
amount of regulation that comes out, and I have to tell you, 
coming from the private sector and somebody who actually funds 
all these programs that are mandated, and a lot of these 
unfunded mandates in the direction we go, I want to ask you is 
there any remedial process at all, having sat through many, 
many, many, many audits myself, both in my private life and 
serving in a city council, where is the remedial process?
    Mr. Sunstein. OK. Well, since the President issued 
Executive Order 13563, we have seen some significant 
developments. Dairy farmers and the milk industry have not been 
thrilled at the fact that milk has been defined as oil under 
the oil spill rule, and there were concerns and references to 
expenses, and the EPA recently exempted milk and dairy from the 
oil spill rule. That saves $140 million annually.
    Mr. Kelly. I understand. Let me just, if I could, because 
we really run short in this and I don't want to be 
disrespectful to you, and I know you are being asked questions 
that absolutely have nothing to do with what we are talking 
about today, but these committees' agencies that come in and 
the oversight that takes place or the audits that take place, 
my concern has always been in the private sector, that where is 
the private sector's role on these committees and when do we 
get a chance to weigh in?
    Because most of the time the people that come in have never 
actually done what the people that they are overseeing have 
done and actually haven't walked in their shoes, so really 
don't know what it takes to run these different entities, and 
yet they are being regulated and mandated to do things that in 
some cases can't be done for a number of reasons. So is there a 
process----
    Mr. Sunstein. Yes.
    Mr. Kelly [continuing]. That we actually can come to the 
table? I have never been invited, that is why I ask.
    Mr. Sunstein. Oh, for members. Oh, OK. Well----
    Mr. Kelly. Not for Members of Congress. I am talking about 
people in the private sector.
    Mr. Sunstein. OK, well, what we have done for the 
regulatory look-back is to ask the public for ideas, and we 
have gotten a lot, about rules that are causing the sorts of 
problems to which you point, and those ideas have come in and 
they are reflected in the agency plans that will be released 
soon.
    Mr. Kelly. OK, I know you said we have asked the public, 
but have we actually engaged those people who are actually 
doing what it is that we are overseeing or regulating to be at 
the table to have some input as to what is being asked of them?
    Mr. Sunstein. Yes. There are a few mechanisms for that. We 
are available, that is, the Office of Information and 
Regulatory Affairs is available for meeting with people 
certainly on rules under review. If there are concerns about a 
rule on the books or a coming rule, then if a letter is sent to 
me, the chance that I will read it is 100 percent.
    Mr. Kelly. Would it happen during the regulatory process?
    Mr. Sunstein. Yes. If a rule goes out for public comment, 
then there----
    Mr. Kelly. I am not talking about public comment. What I am 
speaking of, and I mean specifically because I am involved in a 
lot of these different things, the private sector is really not 
consulted on a cost-benefit analysis. In fact, in your 
testimony it says the agency, at its sole discretion. So what 
that says to me is it will determine.
    Again, I am very leery of a government that thinks it can 
do better than anybody else and thinks it is smarter than 
anybody else, but has actually never done what it is that they 
are trying to regulate, and it drives the cost of that up. Now, 
we talk about cost savings and cost benefits. I would suggest 
to you that is not always the case. At the end of the day, the 
government decides what it is going to be, and those people who 
are left holding the bag, are left holding the bill, are not 
really brought to the table; and I would say that is more the 
case than not the case.
    Mr. Sunstein. OK, you are absolutely right. For some of the 
high profile, high expense rules, including the CAFE rule, the 
fuel economy rule, where the benefits were really high and 
costs were a lot lower, people were brought to the table, the 
automobile industry was brought to the table to ask what is 
feasible and what is reasonable, and that is happening on an 
ongoing basis.
    Mr. Kelly. And I understand it, being an automobile dealer. 
But while they are brought to the table, they are pretty much 
told what the gas mileage is going to be, and there are 
unintended consequences. As we know, a lot of the things that 
are funded in the highway transportation are revenues derived 
from the sale of gasoline. So when you eliminate one source, it 
has to come up someplace else.
    And we have this habit down here to try and place the blame 
on, when you are up to your rear end in alligators, who was 
supposed to drain the swam; and I think it is a little bit of 
bass-ackwards way of doing things, and I would just suggest 
that while you have this ability, please, let's make sure that 
we get the private sector to the table. Let's get their input 
before we impose regulations and costs to them that are really 
burdensome and cannot be done.
    Mr. Sunstein. I agree completely and I would love to 
explore ways to do that going forward.
    Mr. Kelly. I will work with you on that. Thank you.
    I yield back, Mr. Chairman.
    Mr. Lankford. Thank you, Mr. Kelly.
    I would like to recognize Mr. Chaffetz for 5 minutes.
    Mr. Chaffetz. Thank you.
    Thank you, Administrator, for being here. In a 2007 speech 
I believe you said, ``We ought to ban hunting.'' Is that 
something you or anybody in the administration is working on at 
this point?
    Mr. Sunstein. Absolutely not.
    Mr. Chaffetz. You had said, in your book, written in your 
book Radicals and Robes, ``Almost all gun control legislation 
is constitutionally fine. And if the court is right, then 
fundamentalism does not justify the view that the Second 
Amendment protects an individual's right to bear arms.'' Is 
that something that you or anybody in the administration is 
working on?
    Mr. Sunstein. No. That quotation, actually, was from a 
position, not a position I held at the time, I was describing a 
position that some other people held. In any case, one thing 
that is very clear is what academics write in their academic 
capacity has exactly no appropriate bearing on what government 
officials do in their governmental capacity.
    Mr. Chaffetz. And I appreciate that. That is why I am 
asking you if those previous positions are something that you 
are currently working on now. I believe you had said, ``Animals 
should be permitted to bring suit with human beings as their 
representatives.'' Is that something you are working on or 
anybody in the administration is working on?
    Mr. Sunstein. I am working on implementation of Executive 
Order 13563, and not on those issues.
    Mr. Chaffetz. Let me ask one more specific one. This is 
something, again, the rights of animals, ``There should be 
extensive regulation of the use of animals in entertainment 
scientific experiments and in agriculture.'' Is that something 
you or anybody in the administration is working on or has 
worked on?
    Mr. Sunstein. Well, I can't speak for all of the 
administration----
    Mr. Chaffetz. To the best of your knowledge.
    Mr. Sunstein [continuing]. But I would be very surprised, 
and I am certainly not working on those issues.
    Mr. Chaffetz. At an earlier hearing the GAO testified that 
one of the most frequently cited reasons that a rule was not 
considered to be an unfunded mandate was the fact that the rule 
did not go through the proposed rule stage, meaning that the 
agency skipped the regular process and, instead, issued an 
interim final or direct final rule. Do you find concurrence 
with that view, of what GAO came up with in their conclusion?
    Mr. Sunstein. I don't actually know about the numbers, but 
I do know that the general claim about the law is correct, that 
if there is no proposed rule stage, then UMRA doesn't apply.
    Mr. Chaffetz. So they can just bypass that whole thing 
and----
    Mr. Sunstein. Well, in a sense it is bypassing; in a sense 
it is built into the fabric, it is kind of hardwired into UMRA, 
which applies only when there is a proposed rule stage.
    Mr. Chaffetz. One of the other concerns here is that the 
major exclusions from UMRA is the status of an agency as 
``independent.'' If the issuing agency is considered to be an 
independent regulatory agency, they are not required to conduct 
an UMRA analysis, so this would include the SEC, the FCC, the 
FTC, the CFTC, the new Consumer Financial Protection Bureau. 
All are not subject to UMRA.
    Mr. Sunstein. That is correct.
    Mr. Chaffetz. But why? I mean, I realize we are looking 
back, but moving forward it seems that these are some of the 
agencies that are some of the most egregious in just unilateral 
rulemaking that is bypassing the Congress and causing chaos.
    Mr. Sunstein. Well, it is a very important question. The 
Office of Information and Regulatory Affairs has an 
implementation rule. To answer that important question, there 
would be an independent process where, of course, this would be 
Congress's judgment, and I am sure the executive branch would 
have a view.
    Mr. Chaffetz. There are some of us that are really 
struggling to understand where rulemaking should stop and 
where, really, Congress should have the ability to write the 
laws of the land. Do you see any conflict with the rules as it 
relates to the separation of powers and Congress's ability and 
mandate to actually institute the laws of the land?
    Mr. Sunstein. Well, if it were the case that rulemaking 
were done without congressional authorization, that would be a 
serious problem. So the first question we ask, the first 
question I personally ask is is there legal authority from 
Congress to act. That is the foundation stone for every 
exercise of rulemaking authority that the executive branch 
legitimately engages in.
    Mr. Chaffetz. OK, so the other end. And, again, I am just 
doing a hypothetical. You said there aren't going to be any 
rulemaking authority, it all has to go through Congress. What 
you are saying, though, right now is that Congress has given 
the executive branch too much of this power.
    Mr. Sunstein. Well, I wouldn't want to say too much, but I 
would say that the exercises of legitimate rulemaking authority 
are congressionally authorized.
    Mr. Chaffetz. Are there any exceptions that you see to 
that?
    Mr. Sunstein. Well, the President has some constitutional 
authorities that may relate to rulemaking, but that would be 
very limited.
    Mr. Chaffetz. Thank you. My time has expired.
    I yield back.
    Mr. Lankford. Thank you, Mr. Chaffetz.
    I yield to Mr. Labrador.
    Mr. Labrador. Mr. Chairman, I have no questions. I yield 
back to the Chair.
    Mr. Lankford. Thank you.
    Let me followup on a few things Mr. Chaffetz was saying. It 
is hard for me to find a rule out there that I couldn't find, 
at some point, some benefit for. If I look hard enough and you 
allow me to be able to pick the assumptions, I can say this 
will prolong life for certain people; this will help the 
economy in some country, ours or some other place; this will 
help, somehow, the global environment.
    Just about everything that we could do, if you allow me to 
create the assumptions, I could come up with enough benefit to 
say, yes, we should do this. I know it is going to cost $75 
million, but we should do this because it will benefit the 
economy over the next 50 years, $75 million. So the cost-
benefit weighs out. The difficulty of this becomes how do we 
evaluate that.
    And the previous question that you were just referring to, 
do we have authority to do this, is this constitutional, is 
this the right thing to do within our free republic, or are we 
imposing arbitrary rules on people because we have a preference 
and we think, at this point, this is a good idea, knowing full 
well if the politics change and the presidency changes and the 
Executive Office changes, they may switch it right back, as 
this administration released some of the old rules and said, 
no, we are not going to do those, we are going to do it 
differently. What we want to have is a stable environment that 
is not just at the whims of the executive branch, constantly 
moving on State and local governments, tribal governments, and 
private business. How do we balance that out, where it is not 
preference-based with some benefits out there in the sky?
    Mr. Sunstein. Great. The new Executive order, I think for 
the first time, actually, has prominent references to 
predictability and reduction of uncertainty. So especially in 
this economic environment, to have people surprised by rules or 
hit on the left and hit on the right by rules, that is a real 
problem. In terms of the avoidance of arbitrariness, you are 
clearly right that costs and benefits can be in the eye of the 
beholder, and it is possible to have manipulation of the 
process.
    Mr. Lankford. Correct. If I say that global warming is 
caused by manmade pollution, suddenly everything that we do 
that ever relates to global warming, it is we are saving the 
planet. What value can you put on the earth? So everything, 
whether it is $100 billion, it doesn't matter, we are saving 
the planet.
    Mr. Sunstein. Yes. What we have tried to do, and I think 
there is real continuity, actually, over many years in this 
effort, is to have pretty disciplined method, at least in the 
domains that are the kind of staple of government rulemaking, 
so that if someone says, I guess your number was something like 
$70 million that we have over the next 50 years, $70 million of 
benefit to justify that, that $70 million can't be just 
asserted or a political preference, it has to be earned by 
reference to evidence. So the fuel economy rule is pretty 
strong, this isn't weak stuff. The benefit figures that we are 
given have been through the wringer.
    Mr. Lankford. Correct. But in the same preference there, as 
Mr. Kelly was referencing before, those rules, if you change, 
for instance, fuel economy standard, which does save us fuel, 
which does all of those great dynamics over the life of a car, 
if it also makes a lighter weight car and someone dies in a 
crash, how do you evaluate the benefit?
    Mr. Sunstein. That is an extremely important question and 
that is something that we, meaning not just the Office of 
Information and Regulatory Affairs, but the Department of 
Transportation, the Environmental Protection Agency, and the 
Council of Economic Advisors, look extremely carefully at.
    Mr. Lankford. But that is the challenge, because once you 
start getting into those assumptions and you start evaluating 
it, it is very difficult for me to be able to say let's hand 
that to an agency and if private industry or if the government, 
State, local, tribal government, has a problem with that, 
considers it onerous, then the agency itself evaluates it and 
says, no, we like our rule, we are going to keep it.
    Mr. Sunstein. I tell you something----
    Mr. Lankford. And I know it is not that simplistic, but 
they go through the feedback to go through the end of it, but 
at the end of the day they can still say, no, we are keeping 
it.
    Mr. Sunstein. It is a very important point, and if you look 
at our guidance on the regulatory look-back, that is, the 
guidance the Office of Information and Regulatory Affairs 
issued, it tried to produce independence between those 
evaluating the effects of the rules and those who wrote the 
rules, just because of the concern you mentioned.
    Mr. Lankford. Still within the same agency, though.
    Mr. Sunstein. It can be still within----
    Mr. Lankford. So it is down the hall, but it is still 
within the same agency.
    Mr. Sunstein. Well, there is some separation. And note that 
if the numbers aren't good, there are checks, both internal and 
external. So there are a number of occasions where a projection 
of costs has been, let's say, optimistic and internal or 
external review has helped.
    Mr. Lankford. But you would not suggest that we have a 
judicial review process or a legislative review that may come 
back over here, if there is a question that it comes back over 
for a legislative determination to say this was the 
legislation, the regulation is written and it doesn't fulfill 
legislative intent?
    Mr. Sunstein. I think judicial review generally is required 
by the Administrative Procedure Act; it has bipartisan support. 
On the particular question----
    Mr. Lankford. Not in UMRA, though.
    Mr. Sunstein. That is a question for people who have other 
roles than my implementation role.
    Mr. Lankford. OK, thank you. Just to be able to catch you 
up, we have gone through the initial round. Mr. Labrador just 
deferred his question to me, now we are going to start the 
second round. So I get to reload and do 5 minutes again.
    Thank you. Let me get a chance to continue on, then. 
Referencing something, you noted the 13563 on predictability 
and uncertainty. Is there a benefit in setting rules when they 
are set, whether they be UMRA and they are an unfunded mandate 
that is coming down or whatever significant rule may be coming 
out and also giving a time line that lengthens that out?
    For instance, where a State government that only meets 
every 2 years in their legislative branch, if they suddenly 
have a rule that is now going to start 18 months from now, but 
they just finished their legislative session, they have to call 
in a special session to figure out how to be able to budget for 
something that is coming down on them. How is that warranted 
and how do we start establishing a time period for these?
    Mr. Sunstein. That is a great point. One place where the 
President has clearly signaled this in the small business 
memorandum, where he called out that part of the Regulatory 
Flex Act that refers to delayed compliance dates.
    Mr. Lankford. But is that a waiver that needs to be done or 
is that something that needs to be established as a process to 
say regulation cannot go into effect until----
    Mr. Sunstein. OK, great. OK, so the first question is 
whether the law allows consideration of delayed compliance 
dates for small businesses or for anybody else, State and local 
government in particular, and not infrequently the law does 
give the executive branch some discretion in terms of timing. 
So that is the first question.
    Then the second question is whether the delayed compliance 
date is important to protect predictability, especially perhaps 
in a very difficult economic time, or whether, in some cases, 
it would delay very important public health benefits; and that 
is an assessment that is common.
    Mr. Lankford. Right. Well, there is a significant challenge 
for a local municipality that the Department of Transportation 
says your street signs are not reflective enough, so you have 
to change all of your street signs. They get some allotment to 
be able to do that through a grant, there is not enough, and 
now they are having to determine to make the deadline do I pay 
police officers and firefighters or do I put in new street 
signs. It suddenly becomes this whole challenge of if they are 
given more time.
    Now, the battle of that is you shouldn't also have 1,000 
waivers sitting on your desk and be able to decide back and 
forth who gets it and who doesn't, but to establish some sort 
of process for that. That is what I am suggesting.
    Bringing back up the independent agencies, we have a lot of 
independent agencies, and, by the way, this was very helpful. 
This is your book, Risk and Reason, going through a prospective 
in 2002 that you wrote about OIRA, and some of the details in 
that was very helpful to be able to go through in preparation.
    But you made a statement in there about OIRA should also 
see as one of its central assignments the task of overcoming 
governmental tunnel vision by ensuring that aggregate risks are 
reduced and that agencies focus on particular risks, and that 
does not mean their ancillary risks are ignored or increased. 
So avoiding this governmental tunnel vision. I think that is a 
great statement to be able to make.
    The difficulty becomes in the independent agencies. How do 
we engage with oversight in the independent agencies, and do 
you see one of the independents that is out there that you 
would say they should not have oversight, they should have 
tunnel vision and be allowed to have that?
    Mr. Sunstein. Well, because the independent agencies aren't 
covered by the Executive order----
    Mr. Lankford. Correct, or UMRA.
    Mr. Sunstein [continuing]. Or UMRA, I will have to be a 
little cautious in discussing them. I would just add two 
points. One is that noticing concerns of the sort to which you 
just pointed--and my voice is genuinely failing, it is not 
failing because of the difficulty of the question----
    Mr. Lankford. It wasn't that hard of a question, so I 
wouldn't worry about it.
    Mr. Sunstein [continuing]. We have asked the independent 
agencies voluntarily to comply.
    Mr. Lankford. How many of them have voluntarily complied?
    Mr. Sunstein. At this date we haven't gotten the returns 
in, but if past history is prologue, the likelihood of 100 
percent compliance is not something you would want to bet on--
--
    Mr. Lankford. OK.
    Mr. Sunstein [continuing]. With the request. So our, that 
is, the Office of Information and Regulatory Affairs, has 
limited tools given----
    Mr. Lankford. And that is part of my concern. Let me give 
you a for instance. The new CFPB group. They would be exempt 
from the executive orders and oversight; they would be exempt 
from UMRA as they come in as an independent. How do we keep a 
group with so much authority and so little accountability from 
getting this tunnel vision that you talk about in your book?
    Mr. Sunstein. It is a very important question and since we 
are narrowly focused on implementation as an OIRA 
administration, I don't have a position on that, but it is a 
very important question, and if there is legislation that is 
proposed, I am sure the appropriate people would be----
    Mr. Lankford. There will obviously be significant rules 
that will come out of those, many of them with millions of 
dollars of impact on the economy, just based on the basis of 
how it comes out with Dodd-Frank. We suddenly have a group with 
no accountability to anyone, and when there is an issue that 
arises, who checks unfunded mandates with an agency that is 
that large?
    So with that I would like to be able to defer to Mr. 
Connolly, my ranking member, for 5 minutes of questions.
    Mr. Connolly. Thank you again, Mr. Chairman.
    Mr. Sunstein, a couple of things. I am sorry our full 
committee chairman, Mr. Issa, is not here, but he took some 
exception to the characterization of the adoption of H.R. 1 
earlier this year as a partisan budget. When only Members of 
one party vote for it and not a single Member of the other 
party vote for it, I don't know that is a normative statement; 
I think it is just a factual statement, it is a partisan 
budget.
    He made reference to a shift in direction from the Bush 
administration to the Obama administration, and his specific 
reference, I believe, had to do with a mining issue, the issue 
of permits under regulatory review. Now, it is my understanding 
that some of the strip mining permits granted under the 
previous administration were in fact in violation of Federal 
law under the Clean Water Act. Is that the case?
    Mr. Sunstein. You know, our role is not in--we don't have a 
role over permits except insofar as there are rules behind the 
permit process. So I would plead limited role with respect to 
that question.
    Mr. Connolly. But you might agree that if a subsequent 
administration finds that, deliberately or inadvertently, there 
is in fact, by the issuance of a permit, the circumvention of 
existing statutory framework with respect to regulation, it is 
incumbent upon that administration to enforce the law.
    Mr. Sunstein. I would agree with that.
    Mr. Connolly. And, therefore, the issuance of permits be 
revoked.
    Mr. Sunstein. Well, on that question I would want to look 
in the details.
    Mr. Connolly. With respect to this subject, mining, have 
there been any loss of human lives in the mining industry in 
the last 10 years?
    Mr. Sunstein. Yes.
    Mr. Connolly. Does Federal regulation cover that industry?
    Mr. Sunstein. Yes.
    Mr. Connolly. Does it constitute an undue burden on the 
mining industry?
    Mr. Sunstein. The rules that have been proposed and issued 
in this administration have been carefully scrutinized to make 
sure there is compliance with the law and with existing 
executive orders, and insofar as they are not finalized but 
proposed, we are eager to hear what people have to say.
    Mr. Connolly. But presumably, again, we use that word 
externalities, but, I mean, the value of a human life, the 
prevention of the loss of it has to factor in to the decision 
about whether or not A, to enforce regulations and/or new 
regulations, I mean, to impose, and second, to enforce those 
that are existing, is that not correct?
    Mr. Sunstein. That is a crucially important point, and the 
fact is that the net benefits of regulations in the first 2 
years of this administration are significantly higher, actually 
three times those under the Clinton administration, more than 
three times those in the first years of the Clinton 
administration, and the main reason is lifesaving initiatives.
    Mr. Connolly. I wasn't clear on your response to our 
friend, my colleague, Mr. Kelly, his questions. Like him, I 
spent 20 years in the private sector, more in the technology 
realm, so I intersected with the Federal Government regulatory 
frameworks in technology before I came here to Congress, but I 
also served, like he did, in local government for 14 years. 
Could you expand a little bit on what is the current process 
for the opportunity of the private sector or, for that matter, 
the public sector, to participate in the formulation of new 
regulations or a review of existing ones to streamline or 
eliminate or make better?
    Mr. Sunstein. OK, great. Thank you for that. I will give 
you a bunch of opportunities people have, and they won't be in 
sequence, but they are all really important. If there is a rule 
pending before the Office of Information and Regulatory 
Affairs, we have about 125 right now, our doors are open at 
both the proposed and final stage for people to come in and 
express their concerns. This is very important and perhaps not 
sufficiently appreciated, the availability of the process. By 
the way, the agency, the rulemaking agency will be present also 
to hear the concerns, and that is something that happens a 
great deal; it could happen more.
    Under the President's Executive order, before a rule is 
proposed, if feasible, agencies should be engaging with State 
and local officials to see whether the rulemakes sense. So for 
rules that affect their interest--and that could be well under 
$100 million annually, it could be an exemption for one or 
another reason from the UMRA--there is supposed to be 
engagement before the fact.
    Then there is an opportunity, after the rule is proposed, 
to engage through the comment process. And while it seems a 
little dry and perhaps formal, one thing I have learned in 
government is, yes, it is dry, but it is not formal in the 
sense of empty; it really matters. Many people in agencies, and 
I personally, spend a lot of time--it is a little pathetic on 
my part, to be sure, to be studying Regulations.gov and the 
comments that come in from State and local government at night, 
but I actually do because you often learn a great deal about 
something that is maybe not going in quite the right direction, 
and you can make it better. So there is that stage of 
commenting.
    Then at the final stage agencies not infrequently engage, 
before they write the final rule, with State and local 
government, and that is consistent with the President's 
Executive order. And also when the final rule comes over to 
OIRA there is an additional bite at the apple.
    Now, you referred to the look-back process, which is an 
unprecedented and, in that sense, historic effort to look at 
the regulations now on the books, and this has gotten a lot of 
bipartisan enthusiasm. The agencies went out to the private and 
public sectors, most cabinet level departments and agencies, 
asking for comments by the Federal Register.
    But that is just the beginning. The plans that will be 
announced soon are under the Executive order, by design, 
preliminary plans, and under guidance we issued, taking note of 
many of the points that have come up today, and maybe we will 
be able to do a better job now that I and we in back of me have 
heard these concerns, will have a public process where, if 
people think the plans are too aggressive, maybe, in the 
deregulatory area, then that is important to hear. If they 
think they are too weak, if they have other ideas for cost 
reduction, then there is a great opportunity.
    So this is really taking the open government goal with a 
new level of seriousness in the rulemaking process.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Lankford. Thank you.
    I defer to Mr. Labrador for 5 minutes.
    Mr. Labrador. Thank you, Mr. Chair. I just have a quick 
question.
    Is there a point of diminishing returns in regulation?
    Mr. Sunstein. Yes.
    Mr. Labrador. And when does that point occur?
    Mr. Sunstein. Offhand, where the costs of increased 
stringency are higher than the benefits.
    Mr. Labrador. OK, I will give you an example. A lot of the 
mayors in my cities in Idaho are complaining, and these are 
bipartisan, Republicans, Democrats, Independents, they are 
complaining because they are being asked to clean the water and 
get rid of phosphorus in the water, and they are going to be 
spending billions of dollars over the next 10 years, and the 
improvement is going to be 0.5 percent. So from something like 
2 percent of phosphorous in the water to 1\1/2\ percent. And 
obviously this is going to cost money to fix it, and it is 
going to cost businesses. At what point do we start realizing 
the difference between 2 percent and 1\1/2\ percent is not 
worth the cost?
    Mr. Sunstein. That is a really important point, and on the 
particulars I would want to study the details. But if it turned 
out that it cost billions of dollars over the next 10 years, 
then the question is what do you get on the other side. Is it 
significant ecological and human health benefits? That would be 
one thing. If it is not, that would be another thing.
    Mr. Labrador. So how do we study that and is that something 
that we can send to you and you can look at?
    Mr. Sunstein. We would be happy to look at it. If it stems 
from a rule, then that is really our lane. We would be happy to 
look at it and engage with the agency. But the question you are 
asking is under the President's Executive order, our staple, 
which is is that increased level of stringency really 
protective, is it really expensive, is it worthwhile.
    Mr. Labrador. OK, thank you.
    I yield the balance of my time to the chairman.
    Mr. Lankford. Thank you.
    We will have the same challenge dealing with that same 
issue on it. It could be that we require every single traveler 
and passenger of every single vehicle in America to also wear 
bubble wrap suits while they drive and say that not just 
seatbelts, but bubble wrap. At some point it gets absurd. But 
you can always say, but it will save it a life. So we have to 
require that in balancing out the freedom of our Nation with 
any kind of onerous requirement. And evaluating who determines 
whether it is onerous or not becomes the other challenge.
    You also mentioned the historic nature of the look-back. I 
would agree that it is historic. But there will also be a lot 
of people very attuned to seeing what the agencies consider as 
things to be able to kick out. If they are choosing only 
certain regulations that came down during certain political 
times in our Nation's history and say, OK, this one, this one 
and this one we no longer prefer, then that definitely becomes 
even more historic, where we are now clearing the deck of 
everything that doesn't meet our personal preferences of the 
day. So that is part of the challenge as well and part of the 
anxiety of watching the look-back. It is a good idea. The 
application of it, though, will be interesting to see if it has 
political consequences with it as well.
    We had spoken before about the issue of $100 million or $50 
million in UMRA in those requirements and as it is allotted for 
inflation as well. Do you think that number is still the right 
number? 12866 just does $100 million, period, without the 
inflation on it. Is that too high, is that too low? Should it 
be $20 million? What becomes an unfunded mandate and 
economically significant?
    Mr. Sunstein. I think what I can tell you is kind of our 
day-to-day operation and how it bears on that question. If, 
under the President's Executive order, incorporating 12866, the 
$100 million threshold not adjusted for inflation is met, then 
there has to be a whole apparatus, including a regulatory 
impact analysis, to try to make sure we have what you are 
concerned about, which is an objective and kind of scrutinized 
analysis of costs and benefits. The President's reaffirmation 
of the $100 million threshold fits well, I think, with our best 
practices in this----
    Mr. Lankford. So that number you think is about right?
    Mr. Sunstein. I think it is fine. The only thing I would 
add is that if there is a $40 million or $50 million 
expenditure, under the Executive order, that is, we look 
carefully at that too. So that is a lot of money.
    Mr. Lankford. So just to clarify on it, $100 million 
nationwide, so $2 million per State, added altogether in 
aggregate, that suddenly becomes an unfunded mandate.
    Mr. Sunstein. That would be--under UMRA, you would have to 
adjust for inflation.
    Mr. Lankford. Correct.
    Mr. Sunstein. But with that qualification, yes.
    Mr. Lankford. Right. Well, in UMRA the standard would 
actually be even lower because for State and local governments 
it is actually $50 million, adjusted for inflation.
    Let me ask this. Regulation is the fulfillment of a piece 
of legislation. Would you agree with that? Legislation comes 
first; regulation is filling in the details from there. When 
there is a question about regulation, and if it is appropriate 
or inappropriate, who do you think is the best entity to 
determine whether that regulation fulfills the legislative 
intent?
    Mr. Sunstein. Well, ultimately the best is the Federal 
courts. That is what they are there for. Before that, then the 
relevant lawyers or the Justice Department and the General 
Council's Office, including the OMB General Council's Office, 
have a role.
    Mr. Lankford. Do you sense the judicial branch, not just 
determining whether this is constitutional or whether the 
actions are consistent with the law, but is there a gain to be 
able to go back to the legislative branch to say what was the 
intent here, or do you think you ask the administration can't 
determine what the intent is and so you go to a third party and 
ask them what the intent is? Is there a gain to just sending it 
back to the people who wrote it and say, what is the intent 
here?
    Mr. Sunstein. Well, a little out of my OIRA lane on that 
question, but the courts' view is that the best indicator of 
the views or intentions of the enacting Congress is the 
language and supporting materials of the enacting Congress, and 
the courts are typically wary of what a subsequent Congress, 
which may have either different membership or different 
attitudes, thinks about the judgments of its predecessor.
    Mr. Lankford. Just to be clear on it, when we are dealing 
with the Judicial Branch reviewing the regulatory intent, you 
would think that is appropriate. But if you are dealing with an 
agency doing something that the private sector or a State 
considers onerous, you think the agency should be the one to 
settle that, not the Judicial Branch?
    Mr. Sunstein. Well, ultimately on onerousness Congress has 
the final say.
    Mr. Lankford. So that one should come back to the 
legislative branch.
    Mr. Sunstein. Well, to determine reasonableness and 
legitimacy, the lawmaking authority is final. To determine 
legality, then the judicial judgment is the one. But we have 
had occasions over the last years where an administrative 
action doesn't fit with the views of the current Congress and 
then the current Congress makes a change.
    Mr. Lankford. OK. Terrific.
    With that----
    Mr. Connolly. Can I----
    Mr. Lankford. Yes, you sure may.
    Mr. Connolly. I just wanted to ask one followup to your 
line of questioning, Mr. Chairman.
    Given your answer to the chairman with respect to what 
constituted an unfunded mandate, would No Child Left Behind 
become an unfunded mandate?
    Mr. Sunstein. You know, that one I would want to look at 
the particular regulations and whether they meet the statutory 
requirements. The regulations under that statute have not 
fallen within the Unfunded Mandates Act. In fact, as the 
chairman said, we have only had four in the last 10 years, none 
under that statute.
    Mr. Connolly. Well, if I could commend it to your review, 
as somebody who ran the eleventh largest school district in 
America, it costs a lot of money to implement No Child Left 
Behind, well in excess of $100 million. And given the 
timeliness of it, the President himself has recognized some of 
the flaws in the legislation and many of us certainly hear from 
our respective school districts about the fact that good 
intentions, though it may represent, it is an onerous burden.
    And remember that in lean times for State and local 
governments and school systems, it also represents an 
opportunity cost; every dollar I have to spend implementing 
that, in addition to the cash outlay, is a dollar I am not 
investing somewhere else in the school system. So I would urge 
OMB to look at No Child Left Behind in a timely fashion so the 
Congress can benefit from your analysis before we consider 
legislation later this year. Thank you very much.
    Mr. Sunstein. Thank you.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Lankford. You are very welcome. And I would recommend 
to you, you just said it is an onerous regulation. You don't 
get to pick if it is an onerous regulation, only the agency 
does. Just a little joke for you.
    Can I mention one thing with that as well? Then I would 
like to be able to close out. Is there the opportunity you 
sense for an agency to say here is a larger regulation, we 
think this is going to be over $100 million. If we break this 
up into five pieces of $20 million each, it is basically not 
taking an aggregate, is it possible for an agency to break up a 
piece into multiple sections and to now say it is under the 
threshold because it is not one big piece, it is five smaller?
    Mr. Sunstein. It is possible. We haven't seen it.
    Mr. Lankford. OK. Well, hopefully we never will on that 
one.
    Thank you very much for coming and being able to testify 
today. Appreciate your input on this as we try to settle this 
issue. This is a piece of legislation that desperately needs 
repair, and I am sure we will have very robust conversations on 
the solutions to repair it. Thank you very much for this.
    We stand adjourned.
    [Whereupon, at 11 a.m., the subcommittee was adjourned.]

                                 
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