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


 
 ELIMINATING JOB-SAPPING FEDERAL RULES THROUGH RETROSPECTIVE REVIEWS--
                  OVERSIGHT OF THE PRESIDENT'S EFFORTS

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           SEPTEMBER 21, 2011

                               __________



                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               


            Small Business Committee Document Number 112-036
          Available via the GPO Website: http://www.fdsys.gov


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
                       ROBERT SCHILLING, Illinois

               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                         JANIS HAHN, California
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Graves, Hon. Sam.................................................     1
Velazquez, Hon. Nydia M..........................................     2

                                WITNESS

The Honorable Cass Sunstein, Administrator, Office of Information 
  and Regulatory Affairs, Office of Management and Budget, 
  Washington, DC.................................................     3

                                APPENDIX

Prepared Statements:
    The Honorable Cass Sunstein, Administrator, Office of 
      Information and Regulatory Affairs, Office of Management 
      and Budget, Washington, DC.................................    24


 ELIMINATING JOB-SAPPING FEDERAL RULES THROUGH RETROSPECTIVE REVIEWS
                  OVERSIGHT OF THE PRESIDENT'S EFFORTS


                     WEDNESDAY, SEPTEMBER 21, 2011

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1 p.m., in room 
2360, Rayburn House Office Building. Hon. Sam Graves (chairman 
of the Committee) presiding.
    Present: Representatives Graves, Bartlett, Tipton, West, 
Herrera Beutler, Ellmers, Hanna, Velazquez, Clarke, and Owens.
    Chairman Graves. Good afternoon. We'll call the hearing to 
order. And I appreciate everyone being here.
    On January 18, 2011, the President issued Executive Order 
No. 13,563 mandating that agencies review the economic 
consequences of their existing rules. In this regard, President 
Obama follows a very well-trodden path that started with 
President Carter and has been followed by each succeeding 
president. President Obama, like his predecessors when calling 
for a review of regulations, noted the special importance of 
small businesses in the economy and the potential adverse 
consequences of imposing unnecessary and unduly burdensome 
rules on small businesses. At the same time he issued that 
Executive Order, the President also released a memorandum 
reminding agencies of the importance of assessing the impact of 
regulations on small businesses through compliance with the 
Regulatory Flexibility Act. Despite these reviews, the Code of 
Federal Regulations now extends to about 26 linear feet. Of 
course, this excludes the potentially hundreds of thousands of 
pages of guidance documents interpreting those 26 feet of 
regulations.
    This complexity imposes serious strains on small 
businesses. They have to divert limited management resources 
from running their business to understanding how they must 
comply with federal regulations. And once they figure out how 
to comply, they must expend scarce capital on the cost of 
compliance, be it modifications to facilities or new data 
systems to maintain those records. Since small businesses 
represent the bulk of entities subject to regulation and 
generate the most new jobs, I believe that it is very 
appropriate to focus the regulatory review on small businesses.
    I will close with the admonition from Albert Einstein that 
it is easy to make things bigger and more complex, but it takes 
a touch of genius and courage to move in the opposite 
direction. I hope that the Administrator can provide that touch 
of genius and courage to reduce the complexity of federal 
regulation and eliminate unnecessary burdens on small 
businesses so that they can create jobs and put Americans back 
to work.
    With that I will recognize the ranking member for her 
opening statement.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Small businesses are critical to the economy, creating 
nearly 70 percent of new jobs, generating more than 50 percent 
of GDP. The contributions are needed now more than ever but 
rising regulatory costs threaten to undermine this important 
role. With the total cost of regulations equal to an estimated 
$1.75 trillion, this has become a real headwind that small 
businesses face day-to-day.
    Over time, this burden has grown, regardless of the 
political stripes of the White House. Recent research shows 
that between 2004 and 2008, the cost of regulation rose from 
$12,000 per U.S. household to $16,000. Many of these costs have 
come from major regulations and there were 72 between 2001 and 
2008, while there were 32 in 2008-2009. While benefits far 
exceeded costs each year for these major rules, this is no 
excuse to avoid reducing this cost further. With the weight of 
compliance continuing to rise, it will take substantial efforts 
from all those involved to ease this impact.
    One such way to minimize this burden is to ensure that 
regulations are reviewed after they have been in force for 
several years. This makes sense because it is nearly impossible 
to understand how a particular rule will fully impact society 
at the time it becomes final. Such retrospective examinations 
are critical to reducing compliance costs, while ensuring that 
a regulations benefit is still realized.
    Over the last 30 years, the efforts have been far and wide 
to impose a workable and successful regulatory look back 
process. Presidents from Carter through Bush have called for 
reviews of existing regulations. At the same time, Congress 
passed the Regulatory Flexibility Act in 1980, giving small 
businesses greater influence in the regulatory process. In 
Section 610, the RFA also included its own periodic review 
process.
    While these efforts have produced some positive results, 
regulatory costs have continued to grow annually. This year an 
additional tool was put forth to deal with this issue. 
Executive Order 13,563 required agencies to produce a plan to 
review existing regulations with a particular focus on 
promoting economic growth, innovation, competitiveness, and job 
creation. For many agencies, the level of public engagement in 
the development of these strategies was impressive, culminating 
in their release last month.
    Many of these plans were far-reaching and include noble 
approaches to reducing regulatory burden. However, it is 
important for everyone in the room to realize that many of 
these suggestions require investment from the government to 
implement a technology-based system or change complex reporting 
processes. That means reducing the compliance burden for the 
private sector entails higher costs for the public sector and 
the taxpayers who foot the bill.
    In addition, a plan is only as good as its execution. Given 
past failures and loopholes in the review of existing 
regulations, I think we are all interested in how it will be 
different this time. With no real consequences for agency 
inaction, many of these plans may end up being pipedreams that 
do little but collect dust on the shelves. Irrespective of 
these concerns, reducing burden is a laudable, if elusive, 
goal. It is something that we all must work toward and 
constantly improve as the regulatory environment evolves. With 
this in mind, I look forward to hearing from the OIRA 
administrator and I thank him for being here today.
    I yield back, Mr. Chairman.
    Chairman Graves. I will now introduce the Honorable Cass 
Sunstein, who is the administrator of the Office of Information 
and Regulatory Affairs within the Office of Management and 
Budget. He is the official responsible for oversight of the 
President's regulatory agenda and agency compliance with 
Executive Order 13,563.
    Mr. Sunstein, your written statement will be entered into 
the record and you may proceed. And you have all the time you 
want.

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

    Mr. Sunstein. Thank you very much, Mr. Chairman.
    Ms. Velazquez. Mr. Chairman, I just would like to make an 
inquiry.
    Chairman Graves. Sure.
    Ms. Velazquez. I feel that part of the agreement for him to 
be here today was that you will sing him Happy Birthday.
    Chairman Graves. Is today his birthday?
    Ms. Velazquez. Yes.
    Chairman Graves. Do you want to lead that?
    Ms. Velazquez. No.
    Chairman Graves. Administrator, I'll tell you what, we'll 
wish you an official Happy Birthday and enter that into the 
record as well.

                   STATEMENT OF CASS SUNSTEIN

    Mr. Sunstein. Thank you very much for that. I had almost 
forgotten myself that it was my birthday and I'm grateful to be 
reminded that 29 years ago today something happened. Maybe not 
my birthday.
    It is, birthday or no birthday, an honor to be here. And 
this is the perfect occasion for this. I have been looking 
forward to this discussion greatly because of the current 
economic situation and the opportunities that we have.
    In light of the Executive Order to which both of you 
referred, we have been able to make a lot of progress in a 
relatively short time to eliminate unjustified regulatory costs 
imposed on small businesses. In the future we are hoping to do 
a great deal more and we are expecting to be able to achieve 
that.
    Section 6 of the new Executive Order calls for the 
development of agency plans to reduce burdens in general. And 
one of our particular emphases has been on small business in 
the last months. Last May, agencies released over two dozen 
preliminary plans, and this is the first time that a president 
has actually had the plans go out to the public, including to 
the business community for their scrutiny and review. What the 
agencies did in releasing the plans was very publicly to ask 
small business, large business individuals about existing 
burdens and to help identify ways to ratchet up the burden 
reduction effort.
    As noted by the ranking member, last month over 2,000 
agencies released their preliminary plans. They span over 805 
pages. This could be a book, though we will not publish it in 
order to ensure compliance with the Paperwork Reduction Act. We 
are keeping it online. They include over 500 initiatives that 
will simplify the system and eliminate redundancy and 
inconsistency.
    What I would like to emphasize is that as the plans 
demonstrate, a lot has already been achieved. These are not 
just promissory notes. They are initiatives that have been 
finalized or publicly proposed from just a handful of agencies 
that are expected to save over $6 billion over the next five 
years. That is a down payment. It is not enough but it is very 
far from trivial.
    A final ruling from the Department of Health and Human 
Services reduces costs and improves access to care in rural 
areas by permitting hospitals to use telemedicine to obtain 
services from practitioners credentialed at distant hospitals. 
This is going to save money, including for small businesses 
that depend on or actually operate hospitals, and it is also 
going to help patients.
    The Department of Labor in an initiative that was 
particularly welcomed by the business community--in fact in my 
own communications with people in the business community there 
was a degree of astonishment that this actually happened--the 
Department of Labor finalized, didn't propose, finalized a rule 
eliminating nearly two million annual burden hours imposed on 
employers. It is going to save hundreds of millions of dollars 
over the next five years.
    The EPA finalized, finally--the small business community 
had been urging this for a long time--finalized, finally, a 
rule excluding all milk and milk product containers from its 
oil spill rules. This is going to save $700 million over the 
next five years.
    The relevant reforms, as even a glance at the plan 
suggests, span a wide range. What we heard in our outreach to 
the small business community is that many are burdened by 
paperwork and reporting requirements that turn out in theory to 
be innocuous and helpful, but on the ground in practice, as the 
ranking member suggested, to be a hardship and sometimes 
incomprehensible. Many of our other initiatives are eliminating 
redundancy or regulatory burdens that just aren't justified 
anymore.
    The Department of Defense recently issued----this is 
finalizing a new rule to accelerate payments on contracts to as 
many as 60,000 small businesses, improving their cash flow in 
an economically difficult time, to help small business 
borrowers who are struggling, many of them. The Small Business 
Administration is adopting a new electronic application to 
reduce the paperwork burden now imposed on certain lenders. 
That is going to help borrowers who seek small amounts of 
capital to grow and to succeed.
    I would like to draw attention in particular to the plan of 
the Department of Transportation, which lists over two dozen 
reforms specifically tailored to impositions on small business 
with an effort to relieve them of existing burdens. Every 
single one of the plans recognizes that this lookback 
enterprise is not a one-shot endeavor. What I am particularly 
excited about is that the plans encode the creation of teams or 
frameworks or working groups ensuring that there is a listening 
process that is ongoing. If the plans do not have initiatives 
that should be included, then we are all ears. We want to see 
what would be a good way of reducing burdens now, and the 
agencies are available to hear the concerns. I would like to be 
cc'd on any suggestions for additions.
    Many people have expressed concern with the flow of new 
rules, not just the existing stock of rules. And I can give you 
some details about things we have done in the recent past to 
get a good control on the stock. There was a reference both the 
chairman and the ranking member made to the President's January 
18th memo on small business, which not only reflects the 
Regulatory Flexibility Act. In important ways it goes beyond it 
and imposes requirements that are supplemental that are already 
helping to reduce the flow of new rules.
    What the President said in January of this year is, `` We 
can make our economy stronger and more competitive while 
meeting our fundamental responsibilities to one another.'' We 
are going to continue to eliminate unjustified regulatory 
costs--this process has just started--and thus strengthen our 
economy in an economically challenging time.
    Thank you so much, and I am much looking forward to your 
questions.
    [The statement of Mr. Sunstein follows on page 24.]
    Chairman Graves. Thank you, Administrator. I am going to 
open up with Representative West.
    Mr. West. Thank you, Mr. Chairman, and also Madam Ranking 
Member and Honorable Cass Sunstein. It is a pleasure to have 
you here today.
    One of my concerns is we have had many people come here, 
especially from the Office of Advocacy, and testify that their 
greatest concern is that they are getting backdoored by the 
federal government as far as implementing a lot of new 
regulations. One of the things that I am concerned about is 
there are approximately 4,300 regulatory actions that are 
waiting in the pipeline right now, and 219 of those are 
considered economically significant, meaning they can have more 
than $100 million of impact on our private sector, especially 
on small businesses.
    The number one thing when we go back and we talk to the 
people down on the ground is the regulatory environment and 
especially when you talk to small banks, community banks with 
Dodd-Frank and a lot of the means by which they have been 
caught in there, can you really tell us and give us an 
understanding of what the federal government is doing to not 
allow the agencies to do--I call it behavior modification 
through regulation. What they could not get through the 
legislative process it seems they are doing through the 
regulatory process. So can you kind of lay out the plan that 
you all have?
    Mr. Sunstein. Great. The first point is that anything that 
is done by the Executive Branch has to comply with the law and 
within the boundaries that you set out. Article 1, that is 
legislative power in the Congress of the United States. That is 
the first substantive sentence in the Constitution. The 
executive----
    Mr. West. But let me interrupt you. I will give you a great 
example. Numeric nutrient criteria, which is something that the 
EPA sent down, I don't think anyone up here, you know, there is 
no law that, you know, complies with that. And that is 
something that the EPA has instituted. And as a matter of fact, 
in the state of Florida there is a lawsuit that is being 
brought against the state when it comes to that. So.
    Mr. Sunstein [continuing]. Okay. The big numeric criteria 
rule from EPA was numeric limits for stormwater. And that--I 
don't know if you saw EPA actually withdrew it in a way that 
produced a great deal of applause from the National 
Homebuilders saying this is a great thing for the economy, for 
people who want to buy homes, and for people who build homes. 
It was completely withdrawn.
    Mr. West. But not for farmers.
    Mr. Sunstein. No, it was completely withdrawn for 
everybody. The stormwater rule was completely withdrawn.
    Mr. West. Okay.
    Mr. Sunstein. I can give you a bunch of other examples of 
cases where we are all working together to address the problem 
that you mentioned. Winslow Sargeant, who is the chief 
consulate of the SBA, is a close partner. His February 2010 
report emphasizes the big impact and the growing impact that 
SBA has been having on federal rule-making. It applauds the 
trend line. And since then, or contemporaneous to then, a 
number of things have happened. You may have noticed just a few 
days ago the Department of Labor withdrew its very 
controversial fiduciary rule. That was a rule that got a lot of 
concern from members of the House and also from the small 
business community. That has been withdrawn. They are going to 
re-propose that.
    The Department of Labor also had a rule involving 
musculoskeletal disorders, a new reporting rule, where the 
Office of Advocacy and the small business community were both 
very troubled. They did not know what it meant. What is a 
musculoskeletal disorder? And they thought that it would be 
burdensome. Are they going to have to hire doctors to test all 
of their employees who have back pain? That one was withdrawn. 
And the Department of Labor is working well with SBA. There was 
a noise interpretation from OSHA that the small business 
community was very concerned about just this year. OSHA 
withdrew that one also.
    So the number of rules that are being carefully 
reconsidered by--I have given you four examples just now. I 
could multiply that by three if you like. In response to the 
current economic situation and the very clear direction the 
president has given me and all of us to make sure that what we 
are doing on the regulatory side is consistent with the 
economic recovery. If there are other areas where we are not 
being sufficiently responsive, gosh, I would love to hear it 
because this is the time.
    Mr. West. Okay. The last question that follows along with 
that, you know, right now it looks like we are on a track to 
have full-time regulatory employees expected to reach a level 
of 291,676. Is there a way that we can freeze the hiring of new 
regulatory employees?
    Mr. Sunstein. Well, that is your lane and mine is the 
implementation job. I work at the Office of Management and 
Budget but the budget, the B-side, is not something that I am 
directly involved in. I can tell you, you referred to the 219 
economically significant rules so called in the pipeline. The 
number is a little confusing because these are things that are 
under general contemplation by the agencies. They are not in 
the pipeline. They are not pending. They are not proposed. They 
are kind of like--as if there is a law that one of you is 
thinking about and you give a heads-up to the public. It does 
not mean it is going to come. And I can assure you those 219 
are not going to see the light of day unless they can pass very 
careful scrutiny in terms of the new direction the president is 
giving us this year.
    Mr. West. Thank you very much. And I yield back, Mr. 
Chairman.
    Chairman Graves. Ms. Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman. And welcome, 
Administrator.
    We have been here before and from Carter on, everyone has 
checked that list on regulation and impact on small businesses. 
What would you tell the Committee this time it is going to be 
different? And how would you get the 26 federal agencies to get 
with this issue in a way that produced the results that are 
expected, especially at this time when we are facing this 
economic downturn?
    Mr. Sunstein. Okay. The first thing that we have done that 
no previous president did was to have public plans that 
actually have concrete details with schedules and timelines in 
many cases for taking action. So I actually had the privilege 
of working in the Reagan Administration. I was six years old at 
the time, as you can tell from earlier. But in the Reagan 
Administration there was a very firm effort to discipline 
regulatory burdens. And he deserves a lot of credit for that. 
He did not have a sustained lookback effort to this sort. 
President Bush had an effort in the domain of manufacturing, 
but the agencies did not come up with plans.
    So the fact that there are plans with timelines promotes 
accountability. What we are doing on our side is not just 
having, you know, plans and aspirations but trying actually to 
take action. So there are things that have been done by the 
Department of Transportation, taking hundreds of millions of 
costs away and a proposed rule just a while ago. The Department 
of Health and Human Services is going to try to free up 
hospitals and doctors from regulatory requirements that have 
not been revisited. That is a $600 million annual savings that 
is well beyond the planned stage. That is actually a rule under 
review and that is no secret here. That is a rule under review 
at OIRA today.
    The Environmental Protection Agency has finalized rules. 
This is not just a wish list. And what we are trying to develop 
is fast track procedures for the cost reduction initiatives 
that we see on the plans. So some of them have actually been 
proposed, some of these things, which means they are going to 
be finalized in the relatively near future. Others already have 
been finalized. And if you see things that you really like on 
the plans--maybe they are the export initiatives, some of which 
have been finalized proposed--please let us know if they really 
have an impact. And then we can see if we can do them quickly.
    Ms. Velazquez. Would you have a mechanism in place to 
evaluate the work of the federal agencies?
    Mr. Sunstein. Yeah. We do. We have an informal process in 
my office where we are very alert to the 500 reforms on the 
plans and looking carefully at what stage each of them is at. 
And so the ones that are proposed, like the Department of 
Transportation rule which eliminates hundreds of millions of 
dollars and costs, we are looking to see how quickly that can 
go. There is an OSHA rule that is going to eliminate over $500 
million in annual costs. That one has been proposed. We are 
looking to see if we can finalize that pretty quickly.
    And for everything on the 800 pages that looks really 
promising, we are engaged in an ongoing monitoring exercise. It 
is a little lonely, so if you would like to join us and help 
monitor and expedite, that would be very welcome.
    Ms. Velazquez. Thank you.
    Agencies reach out to the public in particularly innovative 
ways. And you mentioned some of those like EPA held 20 public 
meetings, as well as participating in the Department of 
Transportation's meeting where participants could attend those 
meetings over the Internet. The Department of Labor designed a 
website that permitted participants to post suggestions, 
respond to other posts, and agree or disagree with submissions. 
It seems that those agencies that had low public participation 
rates could benefit from those ideas. And so are you 
considering sharing these outreach strategies across agencies?
    Mr. Sunstein. Yes. What we encourage them all to do--we had 
some guidance documents during the initial phases of the 
lookback process where we encouraged everyone to engage the 
public because as you said, often the people who are faced by 
rules and burdened by them have the best insights about how 
they are adversely affecting operations. So we have encouraged 
public outreach. We have tended to the fact that a number of 
agencies--and this also is new. For all their good work, prior 
presidents did nothing like this--have websites that are 
specifically dedicated to business outreach to see how we can 
simplify and streamline the regulatory process. Those are 
ongoing. And we have encouraged agencies to follow the model 
that several agencies, including the Department of 
Transportation and EPA, have.
    What I am very hopeful about is that there is a cultural 
change, which was started within the agencies, where each of 
them has either a formal or an incipient institution that is 
particularly dedicated to eliminating regulatory burdens. And 
they might be burdens that have been in place for 30 years. 
They might be burdens that have been in place for a couple of 
months and that just are causing unintended or unexpected harm. 
And maybe that can be fixed quickly.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Chairman Graves. Mr. Bartlett.
    Mr. Bartlett. Thank you very much.
    In a former life as a small business person and now nearly 
20 years in the Congress, I have been watching the creation and 
the application of these rules and regulations. And I have 
noted a phenomenon that results in increased regulations, and I 
am wondering if you have a solution to this problem.
    Initially, very rational, simple rules and regulations are 
enacted, and then when they are used, applied, some modest 
deviation from the intended response of the regulated is 
observed. And the usual response to that is more regulations. 
We do not want that to happen again, do we? And frequently 
these increased regulations pass over the line of the 
rationable and/or reasonable, and there appears to be no 
attempt to do a cost benefit analysis. Is the benefit we might 
get from these increased regulations really going to be 
justified by the economic effects and just the harassment of 
the poor business trying to succeed in a tough economic 
environment? How can we get our people to do a rational cost 
benefit analysis? The old farmer says why would you do it if 
the juice is not worth the squeezing? For many of these 
increased regulations, the juice is not worth the squeezing.
    Mr. Sunstein. Great. What President Reagan inaugurated in 
the early '80s was cost benefit analysis as a test for 
regulatory proposals and final rules. President Obama had a 
very clear embrace of cost benefit analysis in his executive 
order this past January. And we are taking cost benefit 
analysis extremely seriously. I do not believe you will see a 
single rule issued in the last eight months that fails cost 
benefit analysis, and you will see very few in the last two and 
a half years. I think there is only one that clearly fails cost 
benefit analysis and that one was a congressional mandate on 
safety on trains. And we did the best we could to reduce costs. 
As noted, you could have a rule that survives cost benefit 
analysis but still the costs are too high. It could have higher 
net benefit if you scaled the costs back. But basically, the 
president has given us extremely clear guidance on following 
cost benefit analysis, and we are responding to his direction.
    You may have noticed--this has got a lot of attention--the 
president directed me to issue a return letter on the EPA's 
draft ozone rule. The bulk of that return letter was 
emphasizing some very specific points that bore on the rule in 
particular, but the next to last paragraph emphasized more 
generally apart from the ozone rule. The president has directed 
me to take strong steps to diminish regulatory costs and to 
make sure they were really justified going forward.
    And that commitment to cost benefit analysis you will see 
in every rule we have issued so far. You will see it in the 
reconsideration of certain rules. The fiduciary rule, which was 
of very grave concern to a number of businesses, would expand 
the definition of fiduciary. It had some--well, I think what 
everyone agrees are some strong, well motivated arguments in 
it. But it was not really ready yet and the Department of Labor 
said we are going to do a new analysis, analyze the costs and 
benefits, and see what really the best proposal would be. And 
it is not identical to what they originally proposed.
    But the examples I gave are rules that have been taken 
back, are frequently taken back in order to get the analysis of 
costs and benefits as accurate as possible. And one of the most 
important parts of the new executive order says agencies are 
not supposed to proceed unless there is a reasoned 
determination that the benefits justify the costs.
    Mr. Bartlett. How could you have even in the back of your 
mind this notion that there ought to be a cost benefit analysis 
and the side that spilled milk was an oil spill? Is that an 
anomaly that will not happen again?
    Mr. Sunstein. Well, that was not the--I am pleased to say 
that that was not a government regulation. That was a statute 
and it was an old statute.
    Mr. Bartlett. It was our fault? We did that?
    Mr. Sunstein. No one in this room had anything to do with 
it.
    Mr. Bartlett. But we, the Congress, did that?
    Mr. Sunstein. Yes. That is correct.
    Mr. Bartlett. Oh, my.
    Mr. Sunstein. It was----
    Mr. Bartlett. Please help us to keep from doing dumb 
things.
    Mr. Chairman, thank you very much.
    Mr. Sunstein [continuing]. I don't think anyone intended to 
include milk. It was an artifact of the definition.
    Well, there is some fat in milk and that is in oil.
    Mr. Bartlett. You got it.
    Mr. Sunstein. It was a stretch, isn't it?
    Mr. Bartlett. Exactly. But you gave us a chance to fix it 
and we did.
    Chairman Graves. Ms. Clarke.
    Ms. Clarke. Thank you, Mr. Chairman and Ranking Member 
Velazquez.
    I want to thank you, Administrator Sunstein--Sunstein or 
Stine?
    Mr. Sunstein. Sunstein.
    Ms. Clarke. Got it.
    We are from New York. Well, I am from New York. So is the 
ranking member, so we just wanted to get that correct.
    Clearly, we recognize the need to streamline regulatory 
obligations, especially when and if they interfere with the 
viability of the small business community.
    And just sort of picking up on Mr. Bartlett's train of 
thought, I wanted to ask could you briefly explain or distil, 
if you will, your cost benefit--excuse me, the rubric, the 
general rubric used to--through your cost benefit analysis to 
determine what costs, whatever they may be, outweigh the 
benefits or the benefits outweigh the burdens?
    Mr. Sunstein. Okay. Thank you for that. That is fundamental 
to what we are trying to do. Sometimes we will have a rule that 
will impose costs, let's say, on companies that have to adopt 
certain management practices to ensure that people are not 
going to get salmonella from their eggs. Okay? And that maybe 
we will be able to have a cost estimate that industry will be 
informative on. And we might find that it is going to cost, 
let's suppose, $100,000 a year, in which case it is 
economically significant.
    If it is going to cost $100 million a year, we need a full-
born regulatory impact analysis as it is called, which gets a 
full account of the costs and the benefits.
    Now, if it is going to involve salmonella, let's say, it is 
going to prevent a certain number of diseases in a case of one 
rule we had, which incidentally exempted small business because 
they were not the problem.
    It is going to cause a certain--prevent a certain number of 
deaths from salmonella food poisoning, and it is going to cause 
a certain number of diseases averted. Economists have some 
tools for giving an economic value to the diseases averted and 
the mortalities avoided. And there is something a little, you 
know, a little mechanical, maybe, about turning diseases and 
lives into dollar amounts. But if you do not do that then you 
might be spending a zillion dollars for something that is 
actually a low level risk. So these are tools that are used.
    In cases that are sometimes a bit easier we will have a 
rule, like the milk rule, which will eliminate costs or save 
people money, and then you don't have to do any translation of 
health problem into dollar equivalents; you will just have 
dollars. And so for some of our deregulatory initiatives, some 
of our initiatives that involve saving consumers money from 
various rules that reduce the costs they face, then it is 
dollars. And what we try to do is do our best techniques for 
turning all the benefits into dollar equivalents. The president 
has called for quantification in ways that have gone beyond 
even what President Reagan did. If we have something where the 
costs are higher than the benefits, let's say it is going to 
cost $100 million and the best account of the benefits is it is 
$50 million, that is a really serious problem. And we are going 
to try to work on that rule to get those $100 million costs 
down to $40 million. Then the benefits will justify the costs. 
But as the ranking member suggested, it may be that that $40 
million is too high and you can get the same, let's say, health 
benefit for $30 million or $10 million.
    And so a lot of our time is spent seeing ways to achieve 
the same goal less expensively. And you have seen in the last 
eight months a number of rules where the agencies have gone 
forward but the final rule was far less burdensome than the 
proposed rule. And one reason is typically that the small 
business community will say, ``What are you doing here?'' So 
there was an EPA rule involving lead renovation for homes where 
kids can get, you know, sick if the lead levels are high. The 
small business community, including the Office of Advocacy, 
said you have some--it is called a `` dust white'' procedure, 
which is really expensive and it is not worth it given the 
relatively marginal, as the EPA ultimately concluded, health 
benefits of that procedure. So the EPA took it away. And the 
small business community said now you have something that we 
can work with. And that is an example of where cost reduction, 
as part of cost benefit analysis, can lead to a rule that's 
economically maybe more rational.
    Chairman Graves. Mr. Hanna. Mr. Tipton.
    Mr. Tipton. Thank you, Mr. Chairman, Ranking Member. 
Appreciate you being here.
    Mr. Sunstein. Thank you.
    Mr. Tipton. You know, I was just out in Colorado. We held a 
Small Business Subcommittee Hearing, and the constant rejoinder 
that we heard through that was government regulation. It was 
not a stepping stone to success and to be able to create jobs 
but it was a stumbling block. In fact, you may have seen this 
report just came out, recent study, and it's showing that the 
regulatory burden on the American people cost approximately 
$1.75 trillion annually. That's with full knowledge. We need 
some regulations. But the overreach of this, when we get this 
down to actual dollars, when we're talking about creating jobs 
which is something that the president has indicated that he is 
in favor of--I am certainly in favor of doing--is we are seeing 
$160,000 each year that businesses are having to pay for 
regulatory costs. When we distill that down to small businesses 
according to this report, each employee--each employee of the 
business is having to pay $10,585 for regulatory costs per 
employee. This must stop. We are, and I truly respect your 
comment of trying to clean it up and maybe we really need some 
legislation because when you're talking about President Reagan, 
you're talking about President Obama, we're actually looking at 
executive orders as opposed to legislative direction that is 
coming out.
    But I do have a question. Reading through your testimony, I 
want to go back actually to the milk regulations that you had 
brought up. I am very curious because you state that, and this 
perplexes me, that the EPA estimates--you noted this was a law 
and you just clarified with the regulation--but you further 
stated that this milk exemption will actually save our economy 
over $700 million over the next five years. How can we save 
what we never spent, what was never incorporated?
    Mr. Sunstein. Okay. There are a lot of great points there 
so let me say a little bit.
    In terms of the report, the $1.75 trillion report, the 
general concern that regulatory costs on small business and the 
economy are too high and that we should be doing a lot to 
reduce those costs, I agree with completely. That $1.75 
trillion figure is in the nature of an urban legend as a report 
by the Congressional Research Service recently laid out. It is 
based on an assumption, some analysis of a World Bank study 
that confuses regulatory quality and regulatory stringency. And 
if the study is right, then the U.S. GDP would be higher if we 
had a regulatory system like Sweden and Canada. I do not think 
anybody thinks that is true. So the $1.75 trillion probably to 
say it should be treated with a grain of salt is too weak; it 
should be treated as, you know, not a reliable number.
    Having said that, the general thrust of your question I 
completely agree with. On the milk rule, what happened was 
there was a formal requirement in the law that the milk 
producers be subject to this oil spill rule. And we had heard, 
as the Bush Administration had heard from the agricultural 
community, this is a looming, serious problem for us. 
Enforcement, as I understand it, of the requirements of the 
milk producers was weak for understandable reasons. It just 
didn't make much sense. But no one had taken care of the 
problem, and this was a very significant cost.
    Mr. Tipton. How does that still save $700 million? It was 
never spent. That is the claim that you were making.
    Mr. Sunstein. Because it was a regulatory requirement 
imposed on them that would have imposed burdens.
    Mr. Tipton. Would have, but it was not. So how are we 
claiming $700 million in savings?
    Mr. Sunstein. No, it would have in the sense that the 
formal law required it. And if we had not done anything about 
it, under the formal law----
    Mr. Tipton. So it is really--and when we are talking about 
an urban legend, the $700 million in savings is actually a mute 
point.
    Mr. Sunstein [continuing]. No. That is an accurate number. 
And the agricultural community, which celebrated with great 
enthusiasm, what the EPA did to take away that cost----
    Mr. Tipton. No. I applaud it.
    Mr. Sunstein [continuing]. Did not deny that the cost was 
taken away. They had worked for years to get the cost taken 
away. You are right in one sense. The cost--the requirement of 
the law was not being enforced. So what it was meaning on the 
ground is a reasonable question to ask. Nonetheless, the 
industry's own plea, and ultimately very enthusiastic reaction, 
is suggestive that there was a problem that needed to be 
solved. I can say while the Bush Administration commendably 
started the effort that we completed, our final rule is 
actually significantly more deregulatory than the Bush 
proposal.
    Mr. Tipton. We are running out of time but I know you have 
a complex job but we are looking at 3,573 new final rules and 
you are talking about the complexity of you and it is your job 
keeping up with it. How in the world can small business keep up 
with this? Because we are creating uncertainty.
    Mr. Sunstein. I completely agree that is the problem. Three 
thousand, five hundred seventy-three new final rules. I wonder 
where that comes from. In the last two and a half years the 
rules that have been through my office are not that numerous. 
In fact, we have finalized fewer rules in our first two years 
than the Bush Administration did on average in its eight. 
Nonetheless, the concern that there should be great care and a 
reduction in regulatory complexity uncertainty, that is 
something the president has directed us to do. And I would love 
to get your ideas about how we can make the lookback process as 
effective and full as it can possibly be.
    Mr. Tipton. Mr. Chairman, I yield back time I do not have.
    Chairman Graves. Mr. Owens.
    Mr. Owens. Thank you, Mr. Chairman. Mr. Sunstein, thank you 
for testifying today.
    If you could just walk through with me the process that a 
small business goes through in communicating to your office an 
issue related to a regulation, I think that would be very 
helpful.
    Mr. Sunstein. Okay, great. What we have available now, this 
is actually one of the first things we did, was to create on a 
website called reginfo.gov, complete visibility into what rules 
are now before the Office of Information and Regulatory 
Affairs. So this to my dismay is not the most popular website 
on the Internet, reginfo.gov, but I wish it would be very 
popular for small businesses because if there is any rule that 
is with us, they can see immediately.
    Now, that gives two opportunities for them to communicate 
with us. One is a letter to Yours Truly is going to be read 
very carefully. And if it refers to concerns that the small 
business community has about a rule under review, I can assure 
you it is going to be read very carefully in view of the fact 
that small businesses are the principal job creators in the 
country. In fact, in our data call as it is described to the 
agencies asking them to tell us what they are contemplating for 
the next year, we, this past summer, asked them specifically to 
call out and list separately whatever they are doing that would 
have an effect on small business. So we are available by letter 
with respect to anything.
    But we are doing better than that actually in availability, 
and I do not think this is widely known. I wish it would be. If 
any member of the small business community wants to talk to us 
about a rule under review, our doors are open. We have 100 
percent availability. If people want to come and tell us that 
this rule is trouble, maybe it has been proposed and there are 
concerns about it, maybe people do not want it to be proposed 
because they think the very proposal will create uncertainty, 
to the congressman's point just a moment ago, we are available. 
And my staff is--in these meetings they are called not so 
charmingly, 12866 meetings under the executive order that makes 
them possible. People can come in. And if there is a legitimate 
concern as there not infrequently is, it is really going to be 
given attention. And that mechanism of face-to-face contact, I 
think it is insufficiently understood that it is there. The 
agency, by the way that is in support of the rule, will be 
there, too. And not infrequently the agency will say, oh, this 
is going to have this adverse effect; maybe we can change the 
rule so that it achieves its goal without having that adverse 
effect.
    Mr. Owens. Thanks. You indicated that your website may not 
be the most popular on the Internet. Do you have an 
approximation of the number of hits you get on a weekly or 
monthly basis?
    Mr. Sunstein. It is a lot. I do not have it in my head but 
we would be happy to get that to you. I can tell you one thing 
we noticed was when we went to a somewhat technical 
presentation to this very clear graphical presentation where 
you just see colors and it says EPA and it will have the 
number. HHS, it will have the number. Small Business 
Administration has a number. You can click on it and see every 
rule that they have before my office. The numbers spiked. We 
saw a very significant spike in usage.
    Mr. Owens. Is there an average lag time between the 
enactment of legislation and the enactment of a rule 
interpreting the legislation?
    Mr. Sunstein. I am sure there is. It would vary depending 
on whether there is a statutory deadline. So when there is 
legislation that says we have to do something by a certain 
date, that is taken really seriously. Every time we have a rule 
that comes before us that has a statutory deadline, that is one 
of the first questions we ask.
    Mr. Owens. Understand.
    Mr. Sunstein. So our average review time is about 51 days, 
roughly. That is part of the lag but because rules typically 
are proposed and then finalized, a number of months. Of course, 
the urgency of the problem really matters. So if it is 
something where life is at stake, then the likelihood of a 
relatively prompt rule increases.
    Mr. Owens. Thank you very much. I yield back.
    Chairman Graves. I am going to jump in here for a second 
because you are painting a picture that we are seeing less and 
less regulations actually being passed. But to get very 
parochial for just a second, when it comes to the FAA, and some 
of this has security aspects, but you have got the Large 
Aircraft Security Proposal being put out there; you have got 
the BART Program being eliminated by the Department of 
Transportation; you have got security badges in general 
aviation at airports that security is not an issue; you have 
got aircraft certification standards that are changing all the 
time; you have got airworthiness standards that are changing 
for aircraft or being proposed to be changed considerably which 
will hamper operators and air shows in a big way; you have got 
letter of authorization changes for certification for pilots to 
be able to fly these aircraft; you have got fuel issue changes 
that are happening from the EPA. And that is coming down hard 
and fast and there are lots and lots of regulations out there. 
And I see nothing but proliferation of regulations when it 
comes to aircraft and flying. And it is concerning the aviation 
community in a huge way because it can cripple that industry in 
a huge way. And that is one area that the United States is 
blowing everybody else around the world out when it comes to 
exports and when it comes to production, when it comes to an 
entire industry, but I would be real interested on your 
comments there.
    Mr. Sunstein. I do agree that there are some sectors that 
are facing cumulative burdens that are not welcome, and there 
are other sectors that are facing overlapping redundant or 
inconsistent burdens which can cause a real hardship. And in 
the area you are describing in particular, I do not know what 
the trendline is for the volume of rules over, let's say, the 
last eight years, but I do know that there is an acute concern 
about what you exactly said. And we are working really hard to 
try to make sure that the problem of cumulative burdens 
inconsistency is addressed.
    If there are particular rules that you think have been 
issued in the recent or even distant past that are not worth 
it, that is a terrific candidate for inclusion in DOT's 
lookback plan. And in fact, if you look at DOT's plan you will 
see the FAA has some very promising candidates. And if you see 
rules coming down the pike that ought not to be issued in your 
view or that ought to be issued in a way that meshes better 
with other rules or ought to be harmonized to use the word of 
the president's executive order, we would love some help on 
that.
    I would not want to say that the, you know, anything 
general about a diminution of rulemaking on the airline 
industry. Every single one has to pass a series of filters. All 
I wanted to say with respect to the volume of rules is that the 
number of final economically significant rules in the first 
years of the Obama Administration--this is not widely known--
but it is actually lower than the preceding two years and lower 
than the average under President Bush. That is not to say that 
we have the right level of rules. And one of our principal 
goals these days is to reduce regulatory costs. So the $6 
billion over the next five years is a down payment but we hope 
to be able to do a lot better than that in reducing regulatory 
costs. And on the airline industry in particular, that is 
something we are looking very carefully at.
    Chairman Graves. Well, all of these aspects that--or these 
areas that I put out do not have anything to do with the 
airline industry; it is all about general aviation, which is 
going to have a huge--again, a huge impact. And what we are 
finding from, whether it is the Department of Transportation or 
it is the FAA, which is a division of the Department of 
Transportation or even the EPA, we are not getting any interest 
in listening to our concerns. They are moving forward and not 
going to take the concerns into account and that is very 
frustrating for me. And it is not just this Administration; it 
has happened in other administrations. And they are not 
interested in listening. And that is very frustrating, 
particularly when you have an industry that could be impacted 
as greatly as general aviation. And again, that is--every bit 
of this has to do with GA. And when I say GA, I am talking 
about business aviation all the way down to your weekend flyer. 
And every business that is associated with that around the 
airport and in those companies that are in those business parks 
and everything else, it is going to have huge impacts.
    Mr. Sunstein. Okay. I hear you, Mr. Chairman. If you would 
write me or write the FAA and cc me, I promise you, you are 
going to get our attention. You know, the EPA withdrew its 
stormwater rule. It decided it had to reconsider it. The Labor 
Department withdrew its fiduciary rule. We have a bunch of 
things that have been rethought in the recent past and if there 
is something that is not thought through very well we will get 
a handle on it.
    Chairman Graves. Ms. Herrera Beutler.
    Ms. Herrera Beutler. Thank you, Mr. Sunstein. I appreciate 
your time. I have a couple things I want to get to so we will 
have to be a little brief.
    Generally, what rule does congressional review play in your 
decision-making process? For instance, Congressman Schrader and 
I, a congressman from Oregon, introduced a bill that exempts 
certain force activities from being regulated essentially like 
an industrial type. You have a private forest, we do not 
believe you should have to get the same permits that an 
industrial site would have to get to operate. Right? In the 
Pacific Northwest we have lots of water rules.
    So for 35 years that is how EPA has looked at this. They 
are now moving to regulate it, and rules like that cost jobs, 
especially, again, in the Pacific Northwest where we have 
hundreds of thousands of dollars in jobs on the line when it 
comes to our forest economy. Will legislation like this and the 
tremendous amount of support it has received from labor, from 
business, be taken into consideration in your review process?
    Mr. Sunstein. The law is authoritative. So if that law is 
enacted, that is it. New trumps everything. So the legal 
constraints on regulatory action, that is a trump card.
    Ms. Herrera Beutler. So would your office be willing to 
help promote this or at least be favorable as we work it 
through the process?
    Mr. Sunstein. When the lane--the Office of Information 
Regulatory Affairs has a narrow lane which is implementation, 
we do not get involved in what legislation the administration 
supports, or if we do it is--we play a very modest role in 
that. So there are others at OMB who would have the lead on 
that.
    Ms. Herrera Beutler. Okay. Well, we would like the chance 
to submit for your consideration and possibly if you need to 
move it up or down or laterally we would love to have your help 
in that.
    Mr. Sunstein. I can get you in touch with the right people.
    Ms. Herrera Beutler. With that, and I do applaud the 
president's decision to again--he said it in the State of the 
Union, he made the case about a week ago, two weeks ago now--
that he wants to review and I think it is incredibly important. 
One of the things I would like to have you consider, it is not 
just not implementing a rule. In many cases it is the 
indefinite delay that is causing a problem. You know, I think 
of certain things. I think of Boilermate. I think of others. 
Yes, we are glad that the job-killing rule did not go into 
place, that is good. But then sitting on it for three years, or 
what have you, causes business to continue to constrict. I 
mean, the uncertainty is just as deadly as the rule itself 
would be. And you said--we were talking about general 
contemplation. When you kind of put out there that you are 
thinking of something, it has that same paralytic effect. We do 
not actually float that we are going to release bills that we 
really do not have the intention, or at least the more cautious 
legislators do not do that because we know it will have an 
impact just floating the idea. And so I would ask as you are 
considering these things, do not float something that you--just 
because it is not in the pipeline does not mean that it is not 
going to add to the uncertainty that our small business owners 
are feeling.
    Mr. Sunstein. You are clearly right that there is a 
tradeoff between transparency--this is under consideration--and 
adverse effect.
    Ms. Herrera Beutler. Now, if you are going to be taking 
action, it is different than general contemplation. Like, there 
is an issue we would like to consider versus, hey, maybe we 
will add another, you know, person on--like you do not have 
enough to do.
    Mr. Sunstein. I appreciate the concern and we are--we are 
going to see what we can do on this.
    Ms. Herrera Beutler. With that, a couple more things. You 
know, I know the executive order requires agencies to review 
regulations. What is their timeframe or required reporting 
process? Do they report back to you at a certain time? Is this 
a general ongoing thing?
    Mr. Sunstein. Okay, great. So what the executive order 
required was within 120 days they had to submit to the public 
really preliminary plans. And as noted, before they did that 
actually with our encouragement, they had public meetings, 
websites, engagement, or what should be on the preliminary 
plans. That happened in May. Then they had another 80 days to 
finalize the plans. And so in late August, August 22nd, I think 
it was, they issued final plans to the public. Every single one 
of the plans says that this is an ongoing process and that the 
plans can be supplemented if there are new ideas. What we are 
focused on now is taking those of the 500 reforms that are 
particularly promising and well enough along that we can 
expedite them and get them out and deliver some relief.
    We calculate up to $10 billion in monetizable savings over 
the next five years from a small subset of the reforms where 
monetization is possible. We would like to see progress on 
those, finalization of those in the near future.
    Ms. Herrera Beutler. Great. And one final parting thought. 
As you are doing that we want to help. You offered several 
times. If you want help, go ahead and kick those things to 
Congress for an up or down vote and we will let you know 
whether you think moving forward you are on track.
    Mr. Sunstein. And thank you for that.
    Ms. Herrera Beutler. You asked, so we are offering.
    Thank you, Mr. Chairman.
    Chairman Graves. Ms. Ellmers.
    Ms. Ellmers. Thank you, Mr. Chairman. And thank you, Mr. 
Sunstein, for being here today.
    I would like to follow up on one of the comments. You had 
mentioned that if any small business, small business owners, 
would like to sit down with you, that your door is open to 
them. You know, right now in our economy, with our unemployment 
rate where it is and it is sustained, one of the things that I 
have heard consistently in talking with my constituents, and I 
know this goes across the country, you know, in North Carolina 
and throughout, regulations are killing us is the number one 
issue. Does that call to action--do you hear that? Are you 
aware of that? And is that promoting you to move forward on 
more things?
    Mr. Sunstein. Yes. I hear that every day, not just on my 
birthday, that regulations are causing problems. That is--I 
think killing us is the strongest phrasing but I have heard 
that a lot also. I would say if I hear that only once a day it 
is an unusual day.
    And because of the historic role of the Office of 
Information and Regulatory Affairs created in its current form 
by President Reagan, that is something that we are intensely 
focused on. So there are two ways that we focus on that. One is 
this unprecedentedly ambitious lookback process where we are 
trying to go forward with 500 reforms that will be helpful in 
eliminating regulatory burdens. And the Occupational Safety and 
Health Administration elimination of nearly two million burden 
hours, when I've talked to the business communities, is 
regulation killing us, the reaction I have gotten to that one 
is you are kidding. You actually did that? You took away 
reporting and paperwork burdens? That was greeted 
enthusiastically. So a lot of what we are trying to do is take 
away justified burdens.
    The other thing we are trying to do is to make sure that 
regulations going forward, which in some cases are the bulk of 
the concern, have--if they are going to go forward they better 
have commensurate benefits. They better be saving lives or 
doing something great. And even if they are, maybe they can 
accomplish the same goal more cheaply and in some cases maybe 
they ought not to go forward at all.
    So the fact that you have seen many of the rules, not all 
to be sure, but many of the rules that have been of particular 
concern to the small business community being withdrawn for 
further engagement with the small business community, the most 
prominent of these was the Labor Department's musculoskeletal 
disorder reporting rule where the Office of Advocacy of the SBA 
and the small business community in general found it confusing. 
And what happened to that is it was withdrawn. There was an 
EEOC rule implementing the statute that enacted the Americans 
with Disabilities Act amendments which when proposed 
encountered a great deal of concern from the business community 
saying this is confusing, regulatory uncertainty, and 
overreach. As it was finalized after a great deal of engagement 
under the--with reference to the president's executive order on 
regulation, the Chamber of Commerce said you heard us. It is 
good. This is very reasonable. We applaud this final rule. And 
that is a model where the disability community thought this was 
a good implementation and the business community thought it is 
okay. It is fine. That is a model that would be nice to follow.
    Ms. Herrera Beutler. I have one more specific question. One 
of the issues that has been brought to my attention are on 
private right of actions in the regulatory agencies being 
forced to overregulate for fear of lawsuits. If this were 
something that were removed, do you see that this would 
decrease the amount of regulation moving forward?
    Mr. Sunstein. I think the answer to that is clearly yes. 
Sometimes Congress likes private rights of action as a 
supplement to federal regulatory actions. Sometimes Congress 
hates private rights of action as a recipe for overregulation. 
And sometimes Congress is neutral. So fundamentally it is in 
your hands.
    Ms. Herrera Beutler. Well, thank you very much. I 
appreciate that. And I yield back the remainder of my time.
    Chairman Graves. Ms. Velazquez.
    Ms. Velazquez. No, I do not have any more questions. Thank 
you.
    Chairman Graves. Mr. Tipton.
    Mr. Tipton. Thank you, Mr. Chairman.
    Just a couple of other questions. As I was listening to 
your comments in terms of inviting us, and it goes back to 
Congressman Beutler's statement as well, in terms of the 
lookback that is going on, does it really--when we are hearing 
about all the challenges that small businesses, in particular, 
are facing, very shallow pools of money to be able to pay in 
and they are paying it out for regulations, does it really make 
sense to you that the only real lookback going on right now is 
the same agency that created the rules?
    Mr. Sunstein. Well, I take your point. The way the process 
works is a little better than that, I think. The agency that is 
doing the lookback per OIRA guidance actually, is strongly 
encouraged to make sure that the rulemaking officials are not 
the ones looking at the rules for your reason that within the 
agency there is a kind of separation between the rule makers 
and the rule evaluators. That is the first point.
    The second point is that the lookback process has been 
greatly informed, not by the agency's own soul searching but by 
engagement with the public that is subject to the rules. So 
there is a process you may know about called Start Up America, 
and I have actually traveled myself to ask members of the small 
business community what is causing problems. And a lot of the 
ideas on the rules and in a number of cases this is 
specifically called out, they do not come from the agencies 
themselves; they come from members of the public who have said 
this is causing a problem for us.
    The milk one to which you referred, the source of the 
concern was the agricultural industry. We have a rule 
eliminating redundant air pollution control requirements 
imposed on local gas stations, and the gas stations have said 
this is a very good thing. So it is not just the agency's own 
internal mechanism; it is also a process within the executive 
branch. In some cases members of Congress have said this is 
something you should look back at; this is a cause for concern. 
The fiduciary rule, which has been revisited, it does not look 
back in the same sense of eliminating rules on the books but it 
is a lookback in the sense of reassessing a proposal. And many 
members of Congress said to the Department of Labor, we are 
worried about cost and benefits and unintended adverse 
consequences.
    Mr. Tipton. You know, I certainly went after the thought if 
you want to try on something experimentally before you go 
active with rules, bring them back to the Committee, and we 
would take a look.
    One other point that I would--we did hold a Subcommittee 
hearing that I had the privilege of being able to chair and it 
was in regards to the GIPSA rule. There have been three recent 
studies that have been conducted showing that the costs on the 
GIPSA rule will well exceed $100 million, which crosses the 
threshold to have this re-examined by the agency. Are you 
looking back at the GIPSA rule now?
    Mr. Sunstein. Not the slightest. And the Department of 
Agriculture is very much engaged in assessing costs and 
benefits.
    Mr. Tipton. Okay. Great. Thank you, Mr. Chairman. I yield 
back.
    Chairman Graves. Mr. Hanna.
    Mr. Hanna. Thank you, Mr. Chairman.
    I am generally curious. It has been widely stated here that 
rules and regulations are killing us. How do you personally 
feel about that? Do you think that is a fair estimate, a fair 
interpretation?
    In coupling with that, how much of what is done in your 
office is subjective? What type of people do this?
    Mr. Sunstein. Those are great questions. Thank you.
    I generally do not talk in the terms of regulations killing 
us. That just would not be my preferred phrasing, but it is 
extremely important in an economically hard time to reduce 
unjustified regulatory costs and to make sure benefits justify 
costs. Absolutely. So the fact that we are able to save 
billions of dollars in regulatory costs, that is a very good 
thing.
    In the SBA's report in February 2010, what they said was 
their own interventions have contributed to the elimination of 
$14 billion in regulatory costs. That is a very good thing. So 
the fact that certain rules are being reconsidered to engage 
with the cost issue is really important. The President said 
just a few nights ago that regulations should be issued only if 
they are necessary, and that is phrasing that is orienting all 
of our efforts.
    So the idea of getting a hold of the regulatory process to 
make sure the benefits justify the costs to scale back on 
justified requirements, that is a very high priority. To get a 
hold of the problem of regulatory uncertainty for small 
business in particular, that is something the President has 
directed all of us to pay very careful attention to.
    In terms of the people at the office, there is an 
extraordinary staff at the Office of Information and Regulatory 
Affairs. They are not political. Many of them have been there 
for a number of years going back across administrations. They 
are typically first-rate technical analysts whose basic job is 
to think what are the impacts of this rule going to be? How 
much does it cost? What are the benefits? Are the costs real? 
Are the benefits real? How can we do it in a way that is as 
cost effective as possible? And they have been doing this work 
in some cases for a couple of years and in some cases for a lot 
longer than that. And they are highly professional.
    Mr. Hanna. Which way would you describe the subjective 
momentum of what they do in terms of regulation? Would you 
suggest that--would you say that it is generally more or less 
or----
    Mr. Sunstein. Well, I think the goal is to be as objective 
as possible. And with respect to regulation where the 
anticipated cost is between let's say $100 million and $500 
million, we want to get as close as we can to the objective 
account. And it would not be shocking for a random regulation, 
if those who were excited about it, let's say in a community 
outside government think the costs are going to be lower than 
we expect, and if those who are nervous about it think the 
costs are going to be bigger and we work really closely with 
the Council of Economic Advisors, which is an indispensible 
partner in getting the economic analysis right, so I would say 
that really our goal is to get the numbers right. Subjectivity 
is hard to eliminate from human life but objectivity is our 
goal.
    Mr. Hanna. And do you think that at the end of the day it 
is a pretty balanced approach and that that would be your 
opinion?
    Mr. Sunstein. Well, I am honored to serve with a staff of 
professionals at this office, who have been under multiple 
administrations, and I think they are really good.
    Mr. Hanna. You said it took a couple of years to withdraw 
the milk rule?
    Mr. Sunstein. Well, this rule, there was--the EPA proposed 
it, I believe it was in the last couple of weeks of the Bush 
Administration. There were a series of public comments. 
Agencies have a lot of activity, some deregulatory, some 
regulatory. We work very hard to make the deregulation as 
expansive as possible, and yeah, it took a while. Sometimes the 
fact that rulemaking takes a while is not ideal, either because 
it would deliver excellent public protections or because it 
would produce big savings. But sometimes the machinery works 
pretty quickly.
    Mr. Hanna. Thank you. I yield back.
    Chairman Graves. A couple of last questions. Do you think 
that the agencies are going to have problems with the current 
budgetary issues that we have when it comes to doing their 
retrospective review?
    Mr. Sunstein. Oh, on the retrospective review? I am very 
optimistic that even in the current budgetary environment we 
are going to be able to see a lot of progress in a short time.
    Chairman Graves. And my next question deals with the 
guidance documents, which can be just as big a problem as the 
proposed rule itself.
    Mr. Sunstein. Yeah.
    Chairman Graves. Is anything being done about that?
    Mr. Sunstein. Yes. I agree completely with the concern as 
some of the Courts of Appeal have said that a guidance document 
is actually a rule. And a few things have been done. The former 
head of OMB, Peter Orszag, in a very short but really important 
document said that significant guidance documents just like 
rules should come into the Office of Information and Regulatory 
Affairs for review. And we have worked very hard to make sure 
that guidance documents when they go out are not rules in 
sheep's clothing, and to make sure that they are really styled 
as, and going to operate as, non-binding. And in cases where 
that cannot be done, the best course is to make it a real rule.
    Chairman Graves. Okay. And last question. What about the 
outside independent agencies, like the SEC? Is there anything 
you can do there?
    Mr. Sunstein. Yes. The President issued actually an 
historic executive order. I think it is 13,579, which says that 
the independent agencies should follow the cost saving burden 
reducing requirements of his January executive order and should 
engage within 120 days in the retrospective review. So that no 
president had done before. It is an executive order. We have 
already seen some activity from the Federal Communications 
Commission in particular, which has announced, I believe, 83 
burden-reducing initiatives. They finally got rid, by the way, 
of the Fairness Doctrine formally under the impetus of or in 
parallel certainly with the President's actions. And with your 
help, there is limited presidential authority over the 
independent agencies. We think that there is real opportunity 
for cost saving initiatives from the independents.
    Chairman Graves. I want to thank you for coming in. I 
appreciate it. And I would ask that you maintain contact with 
the Committee to update us on the progress of the retrospective 
reviews.
    And with that I would ask unanimous consent that all 
members have five legislative days to review and extend their 
remarks. Without objection----
    Ms. Velazquez. Mr. Chairman, I would like to ask unanimous 
consent that--to submit for the record a report on two surveys 
conducted by FIB and the Chamber of Commerce that shows that 
regulation is not the number one issue impacting or facing 
small businesses, but consumer spending, economic uncertainty, 
and taxes. And since some members have continued to state that 
this is the number one issue, I just would like to ask 
unanimous consent to enter that into the record.
    Chairman Graves. Without objection, so ordered on both 
consents.
    With that, the hearing is adjourned. Thank you very much.
    [Whereupon, at 2:19 p.m., the Committee hearing was 
adjourned.]

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