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


 
    THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM: AN UPDATE

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 3, 2011

                               __________

                           Serial No. 112-58


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

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

                                  (ii)

              Subcommittee on Oversight and Investigations

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

                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Cliff Stearns, a Representative in Congress from the state 
  of Florida, opening statement..................................     1
    Prepared statement...........................................     3
Hon. Diana DeGette, a Representative in Congress from the state 
  of Colorado, opening statement.................................     4
    Prepared statement...........................................     5
Hon. Michael C. Burgess, a Representative in Congress from the 
  state of Texas, prepared statement.............................     6
Hon. Henry A. Waxman, a Representative in Congress from the state 
  of California, opening statement...............................     9
    Prepared statement...........................................    10
Hon. Joe Barton, a Representative in Congress from the state of 
  Texas, prepared statement......................................    95

                               Witnesses

Cass R. Sunstein, Administrator, Office of Information and 
  Regulatory Affairs, Office of Management and Budget............    12
    Prepared statement...........................................    15
    Answers to submitted questions...............................   100
William L. Kovacs, Senior Vice President, U.S. Chamber of 
  Commerce.......................................................    54
    Prepared statement...........................................    56
James Gattuso, Senior Research Fellow, The Heritage Foundation...    73
    Prepared statement...........................................    75
David Goldston, Director of Government Affairs, Natural Resources 
  Defense Council................................................    83
    Prepared statement...........................................    85

                           Submitted Material

Article entitled, ``EPA's War on Texas,'' Wall Street Journal, 
  January 4, 2011, submitted by Mr. Burgess......................    96
Article entitled, ``Now it's time to redraft ACO rule,'' 
  Politico, June 3, 2011, submitted by Mr. Burgess...............    98


    THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM: AN UPDATE

                              ----------                              


                          FRIDAY, JUNE 3, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:32 a.m., in 
room 2123, Rayburn House Office Building, Hon. Cliff Stearns 
(chairman of the subcommittee) presiding.
    Present: Representatives Stearns, Sullivan, Murphy, 
Burgess, Blackburn, Bilbray, Scalise, Gardner, Griffith, 
Barton, DeGette, Green, and Waxman (ex officio).
    Staff Present: Carl Anderson, Counsel, Oversight; Ray Baum, 
Senior Policy Advisor/Director of Coalitions; Anita Bradley, 
Senior Policy Advisor to Chairman Emeritus; Stacy Cline, 
Counsel, Oversight; Todd Harrison, Chief Counsel, Oversight and 
Investigations; Heidi King, Chief Economist; Dave McCarthy, 
Chief Counsel, Environment and the Economy; Katie Novaria, 
Legislative Clerk; Andrew Powaleny, Press Assistant; Alan 
Slobodin, Deputy Chief Counsel, Oversight; Sam Spector, 
Counsel, Oversight; John Stone, Associate Counsel; Alex Yergin, 
Legislative Clerk; Kristin Amerling, Minority Chief Counsel and 
Oversight Staff Director; Phil Barnett, Minority Staff 
Director; Stacia Cardille, Minority Counsel; Brian Chang, 
Minority Investigations Staff Director and Senior Policy 
Advisor; Greg Dotson, Minority Energy and Environment Staff 
Director; Jocelyn Gutierrez, DOE Detailee; Karen Lightfoot, 
Minority Communications Director and Senior Policy Advisor; Ali 
Neubauer, Minority Investigator; Mitch Smiley, Minority 
Assistant Clerk; and Anne Tindall, Minority Counsel.

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

    Mr. Stearns. Good morning, everybody. And the Subcommittee 
on Oversight and Investigations will come to order. And I will 
open with my opening statement.
    We convene this hearing of this subcommittee to get an 
update on how the administration is implementing President 
Obama's Executive order announced on January 18th, entitled, 
``Improving Regulation and Regulatory Review.'' To do so, we 
welcome back Mr. Cass Sunstein, the head of the Office of 
Information and Regulatory Affairs, or, as we call it, OIRA, 
within the Office of Management and Budget.
    Mr. Sunstein testified before this committee at our first 
hearing on January 26th, a week after President Obama signed 
the order and publicly committed to striking the right balance 
between regulation and economic growth. Mr. Sunstein agreed to 
come back in 3 months to discuss how his office has improved 
the regulatory review system to reduce burdens on the American 
economy and industry.
    President Obama's Executive order affirms that agencies 
must adopt only those regulatory actions whose benefits justify 
its cost, that are tailored to impose the least burden on 
society, that take into account the cost of cumulative 
regulations, that maximize net benefits, that specify 
performance objectives, and that evaluate alternatives to 
direct regulation.
    In addition, this new Executive order calls on agencies to 
review significant regulations that are already in place. 
Expanding upon this requirement, the President announced in a 
Wall Street Journal op-ed that this action, ``orders a 
government-wide review of the rules already on the books to 
remove outdated regulations that stifle job creation and make 
our economy less competitive.''
    Now, this is incredibly important, given that the Federal 
Register stands at an all-time high of over 81,000 pages. In 
2010 alone, Federal agencies added more than 3,500 final rules 
to the books. I hope that Mr. Sunstein will share with us a 
number of examples demonstrating how this commitment has been 
put into action and how agencies will relieve small businesses 
of expensive and burdensome regulations and promote job growth.
    This morning's report of the 9.1 percent unemployment rate, 
with significantly less job creation in May than in April, adds 
to the urgency of this task. After all, regulations total $1.75 
trillion in annual compliance costs, according to the Small 
Business Administration. That is greater than the record 
Federal budget deficit, projected at $1.48 trillion for fiscal 
year 2011, and greater than annual corporate pre-tax profits, 
which totaled $1.46 trillion in 2008.
    In addition, I hope Mr. Sunstein can also give us a sense 
of how he is enforcing the other requirement of the Executive 
order. He is the traffic cop. Enormously expensive regulation 
has sped through the review process on his watch, with little 
or no opportunity for meaningful public comment. This leads me 
to believe that OIRA has either been left out of the process or 
hasn't been effective.
    On May 18th, 120 days after the Executive order was issued, 
each agency was required to submit to OIRA a draft plan 
including an initial list of regulations that were identified 
in their retrospective analysis as candidates for 
reconsideration or review. Agencies were supposed to consider 
all of the burdensome regulations identified by the 
stakeholders in the private sector before submitting their 
plans.
    Now, at our hearing on January 26th, I agreed with Mr. 
Sunstein when he said that ``One idea we have had is that the 
public has a lot more information than we do about what rules 
are actually doing on the ground.'' As I have said before, 
however, it is important that rhetoric is matched with 
measurable results.
    EPA alone has received approximately 1,500 comments on its 
rules and regulations. The Chamber of Commerce weighed in on 
roughly 20 regulations proposed or finalized over the past 2 
years at the Environmental Protection Agency. Yet EPA's plan 
for regulatory review includes only 2 of the 20 and, in both 
cases, still fails to address the fundamental complaints made 
by the industry.
    The Environmental Council of the States, a group that 
represents the secretaries of States' environmental agencies, 
identified more than 30 groups of regulations for a review. 
These are not big business leaders; these are the State 
officials that run almost all of the programs under the Clean 
Air Act and Clean Water Act and undertake about 90 percent of 
the enforcement actions.
    Unfortunately, after reviewing the plan, it appears as 
though EPA officials in Washington overwhelmingly disagree with 
or simply ignore the folks that actually implement the 
regulations that have been identified as being burdensome. Not 
only did EPA apparently ignore the stakeholders, but they have 
also imposed over 900 new regulations on the States since the 
beginning of this administration.
    Mr. Sunstein has spoken repeatedly about the need to create 
a new regulatory culture across the executive branch, and I 
think all of us will agree with him. An unprecedented amount of 
authority has been delegated to the executive agencies in this 
administration. New regulations affecting many sectors of 
industry and aspects of all the American life are being 
promulgated under the same flawed system that produced the 
regulations identified today. So, hopefully, we can take steps 
toward changing this culture. And we look forward to Mr. 
Sunstein's testimony.
    [The statement of Mr. Stearns follows:]

                Prepared Statement of Hon. Cliff Stearns

    We convene this hearing of the Subcommittee on Oversight 
and Investigations to get an update on how the Administration 
is implementing President Obama's Executive Order, announced on 
January 18, entitled ``Improving Regulation and Regulatory 
Review.'' To do so, we welcome back Mr. Cass Sunstein, the head 
of the Office of Information and Regulatory Affairs (OIRA), 
within the Office of Management and Budget. Mr. Sunstein 
testified before the Subcommittee at our first hearing on 
January 26th-a week after President Obama signed the order and 
publicly committed to striking the right balance between 
regulation and economic growth. Mr. Sunstein agreed to come 
back in three months to discuss how his office has improved the 
regulatory review system to reduce burdens on the American 
economy and industry.
    President Obama's Executive order affirms that agencies 
must adopt only those regulatory actions whose benefits justify 
its costs; that are tailored to impose the least burden on 
society; that take into account the cost of cumulative 
regulations; that maximize net benefits; that specify 
performance objectives; and that evaluate alternatives to 
direct regulation. In addition, this new Executive order calls 
on agencies to review significant regulations already in place.
    Expanding upon this requirement, President Obama announced 
in a Wall Street Journal op-ed that this action ``orders a 
government-wide review of the rules already on the books to 
remove outdated regulations that stifle job creation and make 
our economy less competitive.'' This is incredibly important 
given that the Federal Register stands at an all-time high of 
over 81,000 pages. In 2010 alone, federal agencies added more 
than 3,500 final rules to the books. I hope that Mr. Sunstein 
will share with us a number of examples demonstrating how this 
commitment has been put into action and how agencies will 
relieve small businesses of expensive and burdensome 
regulations and promote job growth. This morning's report of 
the 9.1% unemployment rate with significantly less job creation 
in May than in April adds to the urgency of this task. After 
all, regulations total $1.75 trillion in annual compliance 
costs, according to the Small Business Administration. That's 
greater than the record federal budget deficit- projected at 
$1.48 trillion for FY 2011-and greater than annual corporate 
pretax profits, which totaled $1.46 trillion in 2008.
    In addition, I hope Mr. Sunstein can also give us a sense 
of how he is enforcing the other requirements of the Executive 
Order. He is the traffic cop. Enormously expensive regulations 
have sped through the review process on his watch with little 
or no opportunity for meaningful public comment. This leaves me 
to believe that OIRA has either been left out of the process or 
has very little teeth.
    On May 18th, 120 days after the Executive Order was issued, 
each agency was required to submit to OIRA a draft plan, 
including an initial list of regulations that were identified 
in their retrospective analysis as candidates for 
reconsideration or review. Agencies were supposed to consider 
all of the burdensome regulations identified by stakeholders in 
the private sector before submitting their plans. In our 
hearing on January 26th, I agreed with Mr. Sunstein when he 
said that ``one idea we have had is that the public has a lot 
more information than we do about what rules are actually doing 
on the ground.'' As I have said before, however, it is 
important that rhetoric is matched with measurable results.
    EPA alone has received approximately 1,500 comments on its 
rules and regulations. The Chamber of Commerce weighed in on 
roughly 20 regulations proposed or finalized over the past 2 
years at the Environmental Protection Agency, yet EPA's plan 
for regulatory review includes only 2 of the 20 and in both 
cases still fails to address the fundamental complaints made by 
industry. The Environmental Council of the States, a group that 
represents the secretaries of state environmental agencies, 
identified more than 30 groups of regulations for review. These 
are not big business leaders-these are the state officials that 
run almost all of the programs under the Clean Air Act and the 
Clean Water Act and undertake about 90 percent of the 
enforcement actions. Unfortunately, after reviewing the plan, 
it appears as though EPA officials in Washington overwhelmingly 
disagreed with, or ignored, the folks that actually implement 
the regulations they have identified as burdensome. Not only 
did EPA apparently ignore the stakeholders, but they have also 
imposed over 900 new regulations on the states since the 
beginning of this Administration.
    Mr. Sunstein has spoken repeatedly about the need to create 
a new regulatory culture across the Executive Branch and, 
again, I agree with him. An unprecedented amount of authority 
has been delegated to executive agencies in this 
Administration. New regulations, affecting many sectors of 
industry and aspects of American life, are being promulgated 
under the same flawed system that produced the regulations 
identified today. Hopefully we can take a step towards changing 
that culture today.

                                #  #  #

    Mr. Stearns. And with that, I recognize the ranking member, 
Ms. DeGette.

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

    Ms. DeGette. Thank you very much, Mr. Chairman.
    In January of this year, President Obama issued an 
Executive order directing Federal agencies to develop plans for 
improving the regulatory system. As part of this order, the 
President urged agencies to expand opportunities for public 
participation in the regulatory process and to look for ways to 
make regulations more efficient and effective.
    Mr. Chairman, you will be pleased to know that both sides 
of the aisle support these goals. This subcommittee has a 
valuable role to play in reviewing implementation of the order. 
And I want to also join you in welcoming Mr. Sunstein back 
today.
    The last hearing unfortunately devolved into a picky 
criticism of individual regulations that individual Members 
might disagree with. But I think it is worthwhile for this 
committee to continue to focus on the regulatory reform efforts 
of the administration and see if we can make real progress.
    So I know, Mr. Sunstein, we are taking away, once again, 
from your efforts to implement this program, but it is 
important for us to hear it.
    Since our first hearing on the Executive order in January, 
I think, from what I have heard, executive-branch agencies have 
developed preliminary regulatory review plans that the 
administration has provided to the subcommittee and posted on 
White House Web site for public input.
    My initial review of the plans reveals a range of efforts 
to meet the Executive order's core goals: Agencies are 
streamlining and modernizing reporting requirements to save 
industry and government time and money. They are more precisely 
tailoring regulations to save money for regulated industries. 
They are creating broader opportunities for public 
participation in the design and implementation of regulations. 
And they are improving the review process.
    So I hope we can hear about some of those things today, but 
I also hope we can hear about what the administration intends 
to do next to actually streamline, now that they are taking 
this input, to streamline and modernize and even eliminate 
unnecessary regulations.
    Having said that, I will say the administration appears to 
be working very hard to implement regulatory reform. And after 
hearing the distinguished chairman's opening statement and also 
the sad unemployment news of this morning, I wish the majority, 
rather than complaining in vague terms about the regulatory 
reform efforts and the unemployment rate, would actually sit 
down with the minority and, with us, together, develop a jobs 
bill.
    We have been talking about this since January. And if we 
really want to reduce the unemployment rate, then let's stop 
niggling about the edges. Let's sit down and, together, craft a 
jobs plan. I think that that would benefit the American public. 
And if we started now, we might be able to decrease 
unemployment by the end of the year.
    And, with that, Mr. Chairman, I yield back.
    [The statement of Ms. DeGette follows:]

                Prepared Statement of Hon. Diana DeGette

    In January of this year, President Obama issued an 
Executive order directing federal agencies to develop plans for 
improving the regulatory system. As part of the order, the 
President urged agencies to expand opportunities for public 
participation in the regulatory process, and to look for ways 
to make regulations more efficient and effective.
    Both sides of the aisle should support these goals. And 
this Subcommittee has a valuable role to play in reviewing 
implementation of this Order.
    Since the Subcommittee's first hearing on the Executive 
order in January, executive branch agencies have developed 
preliminary regulatory review plans that the Administration has 
provided to the Subcommittee and posted on the White House Web 
site for public input. An initial review of the plans reveals a 
range of efforts to meet the Executive Order's core goals:
     Agencies are streamlining and modernizing 
reporting requirements to save industry and government time and 
money;
     They are more precisely tailoring regulations to 
save money for regulated industries;
     They are creating broader opportunities for public 
participation in the design and implementation of regulations; 
and
     They are improving the review process.
    I look forward to the opportunity today to ask the 
witnesses questions both about the plan contents and the 
Administration's next steps in implementing the regulatory 
review initiative.
    I hope both Republican and Democratic members of the 
Subcommittee will make this morning a productive effort to 
understand the extent to which agencies have been advancing the 
Executive order's goals and where there is room for 
improvement. I also hope we avoid what we saw in the last 
hearing, where the Subcommittee became a forum for airing 
member complaints about individual regulations and an assault 
on the concept of government regulation.
    So I want to emphasize one basic point as we begin to 
discuss the regulatory process today: regulations have both 
costs and benefits. This may seem obvious, but in the past few 
months on this Committee much of the rhetoric from the majority 
omits any recognition of the important role regulations play in 
advancing our nation's welfare.
    For example, over the past few months we have heard 
repeated Republican claims that the Environmental Protection 
Agency is strangling economic growth in its efforts to keep our 
air and water clean and combat the threats posed by climate 
change. But recent analysis by the Economic Policy Institute 
concluded that the annual benefits from final rules implemented 
by EPA in the last two years exceeded costs by as much as $142 
billion per year, with a cost-benefit ratio as high as 22 to 1.
    Earlier this year, EPA released a peer-reviewed study on 
the costs and benefits of the Clean Air Act Amendments of 1990 
that found benefits to outweigh costs by 25 to 1. Furthermore, 
it found that in 2010 alone Clean Air Act regulations saved 
160,000 lives.
    And there are similar examples across the federal 
government. Food and Drug Administration regulations protect 
children from the health effects of tobacco and help prevent 
all of us from exposure to salmonella and other food 
contaminants. New crib safety rules will prevent parents the 
agony of discovering their child has been strangled to death by 
a dangerously constructed crib. And Department of 
Transportation regulations banning texting by commercial truck 
and bus drivers will make the nation's highways safer for our 
families.
    Any meaningful discussion of costs of such regulations 
should include discussion of their benefits. I hope all members 
of the Committee will promote a balanced discussion of 
regulatory process as we hear from our witnesses today about 
the Administration's efforts to promote regulatory efficiency 
and effectiveness. I am pleased to welcome back to the 
Subcommittee Cass Sunstein, the Administrator of the Office of 
Information and Regulatory Affairs at the Office of Management 
and Budget.
    I am also glad the subcommittee will also have the benefit 
of testimony from experts on a second panel that include David 
Goldston of the National Resources Defense Council, William 
Kovacs of the Chamber of Commerce, and James Gattuso of the 
Heritage Foundation. I look forward to hearing their testimony.

    Mr. Stearns. I thank the gentlelady.
    And the gentleman from Texas, Dr. Burgess, is recognized 
for 3 minutes.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman.
    And, Mr. Sunstein, welcome back to our committee. We 
welcome you back. We are always glad to see you here. We 
welcome the changes that are coming from some of the agencies. 
I do still want to hear more about what the administration is 
doing, and if they are doing anything, to slow the continual 
onslaught of regulations that are being promulgated and 
implemented.
    Now, we went down to the White House earlier this week, the 
Republican conference on one day, the Democratic on another. 
And the President said to us that he wanted to clear out the 
regulatory underbrush, so I took that as a positive sign. He 
said the regulations should not be obscure, they should not be 
difficult for people to understand.
    What is hard to understand is how the administration wants 
to continue to be anti-employer and, at the same time, be pro-
jobs. It just doesn't seem to be working out, as we saw from 
this morning's employment numbers. And businesses across the 
country are plagued with uncertainty as to what the new 
regulations will be and what will be handed down next by 
Washington.
    I understand the use of regulations to ensure safety and to 
promote the predictability of the market, but you must know 
that, every day, people come to Washington to tell their 
Congressman or -woman their fears about the avalanche of 
regulations that will increase their compliance costs. I hear 
from business owners talking about regulations coming from HHS, 
EPA, bank examiners, and more. And, unfortunately, I don't see 
how this review is actually going to be a deliverable that will 
help them through the problems that they are having. And I 
might add, those problems are delivered by the United States 
Congress.
    While some of the regulations may be necessary, I feel that 
many in Washington don't understand or comprehend the effect 
that the regulations have on jobs and job creation. It is a 
simple fact: When compliance costs go up, that cuts into a 
business' bottom line, and that means jobs are likely to be 
lost.
    I am afraid this review has, for some purpose, perhaps just 
been for political purposes. I think that this was the reaction 
of a President who doesn't understand how to create jobs, so 
this is his attempt to appease business. After all the public 
relations and the rollout of the review, the higher-ups at the 
White House will have little interest in continuing the review, 
particularly after special interest groups and outside groups 
castigate the White House for reviewing the regulations in the 
first place.
    A specific area of the regulations that are coming out, 
like the medical loss ratio, rate review, and accountable care 
organizations--in all cases, the Federal Government has taken 
something that was working in practice and proven that it can't 
work in theory.
    Now, these pieces would ensure more consumer benefits, 
lower costs, and encourage care coordination, where patients, 
doctors, and hospitals work together for patient improvement 
and financial savings, but because of the way that the 
regulations have been written, we will still have systems that 
encourage fraud. Plan solvency will be at risk. There is the 
ultimate consumer protection. If your plan goes bankrupt, you 
don't get much health care delivered.
    And then accountable care organizations, that is the 
unicorn that turns out that nobody really--not only nobody 
really believes it exists, nobody now wants to adopt it, 
because it is just simply so difficult and so onerous.
    So I hope that you folks over at Office of Management and 
Budget and your counterparts at the Federal Trade Commission 
will understand this and perhaps allow doctors in this country 
once again to practice medicine.
    I will yield back the balance of my time, Mr. Chairman.
    Mr. Stearns. The gentleman yields back.
    And the gentlelady from Tennessee, Ms. Blackburn, is 
recognized for 1 minute.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    And, Mr. Sunstein, thank you for being with us again.
    I think everyone will agree, the number-one issue facing 
our constituents is jobs. And the greatest obstacle that we are 
hearing about jobs is regulatory overreach, uncertainty through 
the regulatory process.
    And this is not surprising. When you look at the EPA alone, 
they have finalized 928 regulations since the start of this 
administration, with more than 6,000 pages of regulations 
released last year.
    Now, saying you want to get rid of some of these 
regulations and issuing more is counterproductive to jobs. It 
is killing the growth of jobs. The figures this morning attest 
to that.
    I would encourage my colleagues to remember, you don't do a 
jobs bill to create jobs. Washington doesn't create jobs. It is 
the private sector that creates these jobs. It is our 
responsibility to create that environment for jobs growth to 
take place.
    And, Mr. Sunstein, I have to tell you, all of the 
regulations that are coming out of this town are not helping 
employers. Whether it is health care, whether it is banking, 
whether it is regulation from the FTC, the FCC, the EPA, this 
has to stop. We look forward to working with you to get these 
regulations off the books, not add more.
    And I yield back.
    Mr. Stearns. The gentlelady yields back.
    The gentleman from Louisiana, Mr. Scalise, is recognized 
for 1 minute.
    Mr. Scalise. Thank you, Mr. Chairman.
    I also want to welcome Mr. Sunstein back. Look forward to 
hearing your comments. And then we will have a dialogue. I know 
I have a lot of questions about both specific agencies and 
challenges as well as kind of a bigger-picture approach, and 
see how we can get this Executive order properly implemented.
    Because one of the concerns I have, as we have, still 
gotten in over 2\1/2\ years into this administration now, we 
still continue to see slow job growth. Today's number showed a 
dramatic decline from the numbers that just came out in May, an 
increase in unemployment yet again.
    And, frankly, when I talk to employers, not only throughout 
southeast Louisiana, but when you talk to industry groups, 
groups that represent big employers all across the country, one 
of the very first things they will tell you about the 
limitation, their inability to create jobs and, in fact, the 
biggest impediment to job creation is a lot of these 
regulations that have nothing to do with protecting people, 
protecting environment. It is about agendas that are driven by 
bureaucrats in Washington. And that is not how regulations 
ought to work.
    We have pushed legislation through to help create jobs that 
are just lingering over in the Senate. But in the meantime, you 
have the ability, you have a task to go out and actually reform 
this process, but you have the ability to do it. And I hope it 
is more than window dressing. And I look forward to the 
conversation.
    And I yield back.
    Mr. Stearns. I thank the gentleman.
    And the gentleman, the ranking member of the full 
committee, Mr. Waxman from California, is recognized for 5 
minutes.

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

    Mr. Waxman. Thank you very much, Mr. Chairman.
    The subcommittee today is returning to the subject of the 
Executive order on regulatory reform, issued in January by 
President Obama. And the implementation of this order is 
overseen by the Office of Information and Regulatory Affairs, 
or OIRA.
    And we are fortunate to have the administrator of OIRA, 
Cass Sunstein, with us, and I am pleased to welcome him to this 
hearing. He will be able to tell us about the administration's 
regulatory review activities that have occurred since our last 
hearing.
    The stated focus of this hearing is to learn more about the 
agency plans for regulatory reform, which the White House 
released for public review and comment. But if we are going to 
have an honest discussion about the costs of regulation, we 
need to consider all of the relevant facts. We should examine 
costs and reduce them wherever possible. But we also need to 
give equal consideration to benefits.
    Yesterday, we were supposed to mark up a bill called the 
TRAIN Act, which calls for an analysis of the cumulative 
impacts of EPA regulation. The markup was postponed. But the 
bill illustrates what is wrong with how we have been 
approaching regulatory reform in this committee with this 
majority.
    The TRAIN Act focuses nearly exclusively on the economic 
costs. It mandates analyses of the impacts of the regulation on 
jobs, electricity costs, manufacturing, and trade. That is all 
appropriate, but it ignores the dangers of unchecked pollution 
on health, the environment, and global climate change. The one-
sided approach is the anthesis of what we should be doing.
    And this one-sided approach, I think, was so clearly 
illustrated by the opening comments of my Republican 
colleagues. A statement was made that the great obstacle to 
jobs is regulation. I can't believe that. No economist would 
suggest that the recession is not the major reason we are 
having a problem with jobs; that regulatory overreach, as it 
has been called, is something that is not new, if it exists.
    I have heard my colleagues say that the President wants the 
slow job growth. That is absurd. No President of the United 
States wants a bad economy for the American people. This 
President inherited a terrible economy in great part because of 
the bad judgments and policies of the Bush administration.
    We need to look at both sides of the equation when we look 
at regulations. We need to maximize the benefits while 
minimizing the costs.
    And a good case in point is the Clean Air Act, which, along 
with health care, has become one of the Republicans' whipping 
boys. We have considered proposal after proposal to weaken the 
Clean Air Act on the theory that reducing pollution is a job-
killer--reducing pollution is a job-killer.
    Well, we shouldn't have to pick between jobs and clean air. 
That is a false choice. When the committee wrote the Clean Air 
Act amendments in 1990, we heard horror stories about how the 
law would impose ruinous costs on industry; it would lead to 
widespread unemployment. None of this turned out to be true.
    Ranking Member Rush and I asked the EPA to do a balanced 
analysis of both the costs and the benefits of the Clean Air 
Act. The results show that the law has been a stunning success. 
EPA found that implementing the Clean Air Act creates American 
jobs and bolsters the global competitiveness of American 
industry, even as it lowers health-care costs and protects 
American families from birth defects, illnesses, and premature 
death.
    The health benefits of the act are legion. In 1 year, the 
Clean Air Act prevented 18 million child respiratory illnesses; 
850,000 asthma attacks; 674,000 cases of chronic bronchitis; 
205,000 premature deaths. The health benefits are projected to 
reach $2 trillion by 2020. Is that something we should ignore?
    The implementation of the act also creates American jobs. 
The environmental technology industry now generates $300 
billion in annual revenues and supports 1.7 million jobs.
    I have seen the value of regulation over and over again. 
Following the collapse of the financial markets in 2008, the 
economy entered the deepest recession since the Great 
Depression. Millions of Americans have lost their jobs. The 
cause of the financial crisis was not regulation; it was the 
absence of regulation. Our hearings last year showed the 
Deepwater Horizon oil spill created widespread economic 
dislocation. This was caused by too little oversight, too 
little regulation, not too much.
    Where we can identify unnecessary regulations, they should 
be identified and eliminated. But, as this review continues, we 
should remember that sound regulations are vital in protecting 
our Nation's economy and wellbeing.
    Thank you, Mr. Chairman.
    [The statement of Mr. Waxman follows:]

               Prepared Statement of Hon. Henry A. Waxman

    Today, the Subcommittee returns to the subject of the 
Executive order on regulatory reform issued in January by 
President Obama. The implementation of this order is overseen 
by the Office of Information and Regulatory Affairs, also known 
as OIRA (``oh-eye-rah''), and we are fortunate to have OIRA 
Administrator Cass Sunstein with us today. He will be able to 
tell us about the Administration's regulatory review activities 
that have occurred since the Subcommittee took testimony from 
him in January.
    The stated focus of this hearing is to learn more about the 
agency plans for regulatory reform that the White House 
released last week for public review and comment. These plans 
and other steps the Administration is taking to review 
regulations certainly merit congressional oversight.
    But if we are going to have an honest discussion about the 
costs of regulations, we need to consider all of the relevant 
facts. We should examine costs and reduce them wherever 
possible. But we also need to give equal consideration to 
benefits.
    Yesterday, we were supposed to mark up a bill called the 
TRAIN Act, which calls for an analysis of the cumulative 
impacts of EPA regulations. The markup was postponed, but the 
bill illustrates what's wrong with how we have been approaching 
regulatory reform in this Committee.
    The TRAIN Act focuses nearly exclusively on economic costs. 
It mandates analyses of the impacts of the regulations on jobs 
. electricity costs . manufacturing . and trade. But it ignores 
the dangers of unchecked pollution on health, the environment, 
and global climate change.
    This one-sided approach is the antithesis of what we should 
be doing. We should be looking at both sides of the equation--
costs and benefits--and maximizing the benefits while 
minimizing the costs.
    A good case in point is the Clean Air Act, which along with 
health care has become the Republicans' favorite bete noire. We 
have considered proposal after proposal to weaken the Clean Air 
Act on the theory that reducing pollution is a job killer.
    We shouldn't have to pick between jobs and clean air. 
That's a false choice.
    When this Committee wrote the Clean Air Act Amendments of 
1990, we heard horror stories about how the law would impose 
ruinous costs on industry. None of them turned out to be true.
    Ranking Member Rush and I asked EPA to do a balanced 
analysis of both the costs and benefits of the Clean Air Act. 
The results show that the law has been a stunning success. EPA 
found that implementing the Clean Air Act ``creates American 
jobs and bolsters the global competitiveness of American 
industry, even as it lowers healthcare costs and protects 
American families from birth defects, illnesses, and premature 
death.''
    The health benefits of the Act are legion. In one year, the 
Clean Air Act prevented 18 million child respiratory illnesses, 
850,000 asthma attacks, 674,000 cases of chronic bronchitis, 
and 205,000 premature deaths. The health benefits are projected 
to reach $2 trillion by 2020.
    And the implementation of the Act also creates American 
jobs. The environmental technology industry now generates $300 
billion in annual revenues and supports 1.7 million jobs.
    I've seen the value of regulation over and over again 
during my career. Following the collapse of the financial 
markets in 2008, the economy entered the deepest recession 
since the Great Depression and millions of Americans lost their 
jobs. The cause of the financial crisis was not regulation; it 
was the absence of regulation. Our hearings last year showed 
that the Deepwater Horizon oil spill, which created widespread 
economic dislocation, was caused by too little oversight and 
regulation--not too much.
    That is why it so important that we put aside the partisan 
anti-regulation rhetoric and look dispassionately at both costs 
and benefits. Unnecessary regulations should be identified and 
eliminated, and I am pleased that President Obama has made this 
a priority. But as this review continues, we must remember that 
sound regulations are vital in protecting our Nation's economy 
and well-being.

    Mr. Stearns. I thank the gentleman.
    And, with that, we welcome Mr. Cass R. Sunstein, 
administrator, Office of Information and Regulatory Affairs, 
before our subcommittee.
    And, before we start, let me just make some comments 
considering your testimony.
    You are aware that the committee is holding an 
investigative hearing and, when doing so, has had the practice 
of taking testimony under oath. Do you have any objection to 
testifying under oath?
    Mr. Sunstein. No.
    Mr. Stearns. The chair then advises you that, under the 
rules of the House and the rules of the committee, you are 
entitled to be advised by counsel. Do you desire to be advised 
by counsel during your testimony?
    Mr. Sunstein. [Nonverbal response.]
    Mr. Stearns. In that case, if you would please rise and 
raise your right hand, we will swear you in.
    [Witness sworn.]
    Mr. Stearns. You are now under oath and subject to the 
penalties set forth in Title 18, section 1001, of the United 
States Code.
    You may now give a 5-minute summary of your written 
statement.

 TESTIMONY OF THE HON. CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE 
OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND 
                             BUDGET

    Mr. Sunstein. Thank you so much, Mr. Chairman.
    And thanks to you and members of the committee, not only 
for your strong commitment to the reduction of unjustified 
regulatory burdens, but also for your generosity and kindness 
to me and my staff over the last months as we try to work 
together on these issues.
    My focus in these opening remarks will be on the process of 
retrospective review of regulations, the ``lookback,'' as we 
call it, though I will devote a few words to the effort to 
control regulatory efforts going forward, something addressed 
in many of your opening remarks.
    In the January 18th Executive order, the President, in the 
first sentence, referred specifically to two topics that have 
come up in the last minutes: One is economic growth, and the 
other is job creation. Those are central factors in the process 
that he has inaugurated.
    For the process going forward--that is, with respect to new 
rules--I would like to underline four elements of the Executive 
order.
    First, it requires agencies to consider costs and benefits, 
to ensure that the benefits justify the costs, and to select 
the least burdensome alternative. Those ideas are central going 
forward, and they will be followed, to the extent permitted by 
law.
    Second, the Executive order requires unprecedented levels 
of public participation. It asks agencies, before they issue 
rules, to engage with State, local, and tribal officials. And 
there was a reference earlier to costs imposed on State and 
local government, to affected stakeholders, and to experts in 
relevant disciplines. What I would like to underline here is 
the requirement that agencies act even in advance of proposed 
rulemaking to seek the views of those who are likely to be 
affected.
    Third, the Executive order directs agencies to harmonize, 
simplify, and coordinate rules, with the specific goal of cost 
reduction.
    Fourth, the Executive order directs agencies to consider 
flexible approaches that reduce burdens and maintain freedom of 
choice for the public.
    Those are directions for all of us, going forward, within 
the executive branch.
    What many of your opening remarks focus on is the lookback 
process. Last week, in compliance with the Executive order, 30 
departments and agencies released their preliminary plans to 
this subcommittee and the public in an unprecedented process. 
Some of the steps outlined in these hundreds of pages of plans 
have already eliminated hundreds of millions of dollars in 
annual regulatory costs, including, by the way, costs imposed 
on employers.
    Over $1 billion in savings can be expected in the near 
future. So these are not mere aspirations or plans to plan; 
these are concrete products that have either been delivered 
already or that will be delivered in the very near future. Over 
the coming years, the reforms have the potential to eliminate 
billions of dollars in regulatory burdens.
    Many of the initiatives represent a fundamental rethinking 
of how things have long been done. We have heard in the last 
month since the Executive order was written that red tape and 
paperwork and reporting burdens exert a significant toll on the 
economy, including on small business. There is an effort 
throughout the plans to try to reduce those burdens. There is 
also an effort to rethink rules that require the use of 
outdated technologies in a way that is consistent with the 
innovation that is now occurring and may even promote 
innovation.
    Many of the reforms have already saved significant money. 
The EPA has recently exempted milk and dairy industries from 
its oil spill rule. There is a long tale there. The punch line 
of the tale is, over the next decade, the milk and dairy 
industries will cry not at all over spilled milk and will save 
over $1 billion in the next decade.
    A few additional illustrations: Several of you referred to 
burdens on employers. We are very alert to that. I am 
personally very alert to that. Last week, the Occupational 
Safety and Health Administration announced a final rule that 
will remove over 1.9 million annual hours of recordkeeping and 
paperwork burdens. That will save over $40 million in annual 
costs, and that may be a lowball estimate. In recent 
discussions with people in the business community, that burden-
saving measure was highlighted as an extraordinary step 
forward.
    OSHA also plans to finalize in the near future a proposed 
rule that is projected to result in over half a billion 
annualized savings for employers--not $40 million, over half a 
billion.
    To eliminate unjustified economic burdens on railroads, the 
Department of Transportation is reconsidering a rule that 
requires railroads to impose certain equipment on--to create 
certain equipment that is very expensive. This would save, 
potentially, over a billion dollars in the next 20 years.
    These are just illustrations. There was a reference by you, 
Mr. Chairman, to a cultural change. We are determined to create 
that cultural change.
    While a great deal has been done in a short time, an 
unprecedented effort, and while substantial savings have 
already been achieved, the agency plans are preliminary. They 
are just drafts. They are being offered to you, other Members 
of Congress, elected representatives at all levels, and the 
public, emphatically including the business community, for 
views and perspectives. Suggestions are eagerly welcome. We 
need your help in order to make these plans as good as possible 
and to do as much as possible to promote economic growth and 
job creations. Agencies will be carefully assessing those 
comments and suggestions before they finalize their plans. And 
we have a number of weeks, in fact months, in which to do that.
    To change the regulatory culture of Washington, we need a 
constant exploration, not a one-shot endeavor, of what is 
working and what is not. We need close reference to the 
evidence and data, and we need very close reference to the 
views of stakeholders about what is actually happening on the 
ground. To quote the opening words, we are trying to promote 
public health and also economic growth and job creations.
    I am happy to answer your questions.
    [The statement of Mr. Sunstein follows:]

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    Mr. Stearns. Thank you, Mr. Sunstein.
    The Oversight and Investigations Committee, before I start, 
is a little different than some of the other committees. We ask 
questions that pretty much are asking for ``yes'' or ``no'' 
answers. And sometimes the press would criticize, but we are 
asking for direct answers. So it is a little bit different. We 
are trying to seek information. So if we do ask, we would 
appreciate a direct answer, ``yes'' or ``no.''
    And so, just to establish the ground rules, we want to make 
sure that you are the administrator of OIRA and you comply with 
Executive orders dealing with regulatory reform. That is our 
understanding. That is correct?
    Mr. Sunstein. That would be a ``yes.''
    Mr. Stearns. OK. And, as the administrator, you have a role 
in ensuring this very important President Executive order, 
which is 13563 and 12866. Is that correct?
    Mr. Sunstein. Yes.
    Mr. Stearns. You are the man. OK.
    Now, when you have a rule and it has an economically 
significant impact in the economy, wouldn't that particular 
rule require more attention than one that is not economically 
significant? I am just trying to----
    Mr. Sunstein. Absolutely.
    Mr. Stearns. Absolutely. Because there are huge 
implications on the impact in the economy with this regulatory 
framework. And, also, there is risk analysis that should be 
done and supporting documents. So we agree there.
    OIRA officials have repeatedly claimed that, during the 
Obama administration, regulatory reviews by your office have 
been shorter than regulatory reviews of previous 
administrations. And I think that is--is that a fair claim to 
say what the administration has been touting?
    Mr. Sunstein. No.
    Mr. Stearns. No. OK.
    While the economic impacts of the rules are much larger 
than in previous administrations, your staff, I think, has 
remained--your staff has remained small. I have a graph up 
here, if it will stop wiggling. It looks like it is wigging 
quite a bit there.
    I am trying to show you two charts. I think we have it 
there. The first one shows that OIRA is reviewing more large, 
complex regulation. And the second one shows that the agency 
spends less time on the review of these regulations.
    So this would be contrary to what we just talked about and 
which you just agreed. So isn't it true that your office's 
reviews are shorter in duration----
    Ms. DeGette. Mr. Chairman?
    Mr. Stearns. Yes?
    Ms. DeGette. Do we have a printed chart we could give to 
Mr. Sunstein?
    Mr. Stearns. We do. I think we have it printed.
    Will the staff give him a chart that is not----
    Ms. DeGette. Moving.
    Mr. Stearns [continuing]. moving, quivering? OK.
    So I guess the question is, isn't it true that your office 
reviews are shorter in duration than those under previous 
administrations, based upon that graph?
    Mr. Sunstein. Well, I would want to check those numbers. I 
know----
    Mr. Stearns. OK.
    Mr. Sunstein [continuing]. in the first year we were fast. 
Whether we are as fast in the recent past, I would want to 
check.
    Mr. Stearns. OK.
    Why are so many regulations issued after short OIRA reviews 
to public comments that they violate the Executive order 
principles?
    Mr. Sunstein. I don't agree with the premise of the 
question. We have had about the same number of rules as in the 
first 2 years of the Bush administration. And, actually, 2007, 
2008, the Bush administration imposed significantly higher 
costs than we did in 2009, 2010.
    Mr. Stearns. I have here a study by the Mercatus Center 
that I will insert into the record.
    The study grades the economic analysis in reviews by OIRA. 
It shows that the quality of analysis declined when the reviews 
were shortened.
    Were you familiar with this?
    Mr. Sunstein. I am familiar with that study.
    Mr. Stearns. Do you agree with this study?
    Mr. Sunstein. Well, not really. I think the important thing 
is not how many days on the calendar are spent. The important 
thing is the degree of attention and care.
    And I believe the same study shows no diminution in quality 
between the Bush administration and the Obama administration, 
though we are eager to increase the quality and to get it 
better and better.
    Mr. Stearns. The Executive order that I cited earlier, the 
12866, section 6 requires agencies to, quote, ``identify for 
the public in a complete, clear, and simple manner the 
substantive changes between the drafts submitted to OIRA for 
review and the actions subsequently announced,'' end quote, as 
well as those changes in the regulatory action that were made 
at the suggestion or recommendation of OIRA.
    Despite claiming to be the most transparent administration 
in history, we understand that the position of the 
administration is that this requirement only applies to the 
formal regulatory review process. Is that correct?
    Mr. Sunstein. I believe that is correct, that we are 
following the practice of the Bush administration and its 
predecessor with respect to the interpretation of 12866. There 
has been continuity across Republican and Democratic 
administrations. I am not sure exactly what you mean by 
``informal,'' but what you said sounded right.
    Mr. Stearns. However, most big rules are submitted to OIRA 
on an informal basis before the draft rule is officially 
submitted. With respect to significant rules issued since the 
passage of the PPACA, would you be willing to provide the 
changes suggested by OIRA during the informal review process?
    Mr. Sunstein. It is actually very rare that a rule is 
submitted informally. That is not the normal practice. It is 
extremely unusual. And we don't make--all I would say that 
happens sometimes is there are interagency discussions about 
rules pre-submission. And we don't have the authority to make 
changes in those discussions. But sometimes the agency decides 
that the discussions are informative and goes--so, in other 
words, informal review is extremely rare.
    What is not extremely rare is their interagency 
discussions. And there are no changes made, because there is no 
rule text, typically. There is just discussion of a policy 
issue.
    Mr. Stearns. You are saying it is rare, but was it done 
with the health-care policy, PPACA?
    Mr. Sunstein. Informal review? No. There are discussions, 
but not informal--typically, not informal review of rules.
    Mr. Stearns. You are saying it is rare, but you are saying 
it did occur with the health-care review.
    Mr. Sunstein. Well, I would want to go back and see, 
because my own involvement is standardly during formal review. 
I would want to go back and see whether----
    Mr. Stearns. Well, obviously, we would probably not agree 
on that point, because we think there has been a lot in the 
health-care reform of informal.
    Mr. Sunstein. I think there is informal review, which is 
very rare, where someone sends over a rule and says, what do 
you think? In the health-care context, HHS and Labor----
    Mr. Stearns. OK. Do you mind, Mr. Sunstein, if you would 
follow up--because you are saying, yourself, right now you not 
sure you can remember this correctly--if you would follow up 
with the data, just to confirm.
    Mr. Sunstein. Delighted.
    Mr. Stearns. All right.
    With that, my questions are complete, and we recognize the 
ranking member.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Mr. Sunstein, it sounds like the definition of ``informal 
review'' is a term of art, in your mind, and that what you are 
meaning is informal review would be if somebody actually sent 
text over and it was reviewed and sent back, versus general 
discussions about potential rules and policies. Would that be 
correct?
    Mr. Sunstein. Exactly.
    Ms. DeGette. Mr. Sunstein, I would like to ask you about 
the cost of regulations because we keep hearing on the other 
side of the aisle that the annual cost of Federal regulations 
is more than $1.75 trillion. And, as I understand it, the basis 
for that figure is a September 2010 study called the Crain & 
Crain study, by Nicole and Mark Crain, that stated that the 
annual cost of Federal regulation totaled approximately $1.75 
trillion in 2008.
    OMB, though, reached a different conclusion, finding that 
regulatory costs in 2008 ranged from $62 billion to $73 
billion.
    So I guess I am wondering, how does OMB calculate its 
estimate on total regulatory costs?
    Mr. Sunstein. Thank you for that, Congresswoman.
    What we do is to aggregate the costs of all the rules in a 
year. And then, over a 10-year period, we can multiply the 
number of rules issued by the cost that we generate. And then 
you can have a 10-year aggregate cost as a result.
    The study to which you refer, with the 1.75--the 
extraordinary $1.75 trillion figure, is deeply flawed, as a 
report by the Congressional Research Service this April 
suggests. And it has become a bit of an urban legend, the 
particular number.
    We share, definitely, the concern. But one implication of 
that analysis is the United States would be richer if it 
adopted regulations more like those of Sweden or Canada, even 
though both the World Bank and the OECD rate those countries as 
having more restrictive business environments.
    Ms. DeGette. Who said that? The Crain & Crain study said 
that?
    Mr. Sunstein. The Crain & Crain study, with the $1.75 
trillion. I should say, I respect those authors----
    Ms. DeGette. So they said that we should have regulations 
more like Sweden and these other countries?
    Mr. Sunstein. No, but----
    Ms. DeGette. That is the urban myth?
    Mr. Sunstein. No, no, it is an implication of their 
analysis----
    Ms. DeGette. I see. OK.
    Mr. Sunstein [continuing]. That we would be doing better if 
we had regulations----
    Ms. DeGette. And the administration does not agree with 
that, right?
    Mr. Sunstein. We do not except that 1.7----
    Ms. DeGette. OK. And one of the reasons that what the CRS 
review showed and what others have demonstrated is that the 
estimate was so high in that study because the authors only 
utilized the highest cost estimates in their calculations, 
correct?
    Mr. Sunstein. Yes.
    Ms. DeGette. Now, additionally, what I have heard is that 
the authors of that Crain & Crain study did not calculate the 
monetary benefits of regulations where there are benefits. And 
the OMB found that in 2008 annual benefits of regulation ranged 
from $153 billion to $806 billion. Is that correct?
    Mr. Sunstein. Yes.
    Ms. DeGette. Now, can you please tell us how regulations 
could actually benefit Americans and save money?
    Mr. Sunstein. OK, there are various different ways.
    I referred to the milk rule, which is deregulatory. That 
can save money.
    There is a lot of concern about rising gasoline prices, of 
course, now. If you have a more fuel-efficient fleet, then 
consumers can save money. And we recently released a new fuel 
economy label which clarifies the savings. So, a law, a rule 
that promotes fuel economy can save consumers a lot of money.
    If you have a law that saves lives, that saves money, in 
the sense that healthier and living people are good for the 
economy and we value people's health and longevity.
    So, in those three different ways, we can have very 
significant benefits from regulation.
    Ms. DeGette. So, really, it seems to me--I don't want to be 
implying either that more regulations would save more money or 
fewer regulations would cost or save more money. In truth, you 
have to look at it on a continuum. Sometimes regulations are 
not cost-effective, and they should either be fixed or 
repealed. But sometimes regulations protect the public health 
and actually can save money.
    So you have to look at it regulation by regulation, which 
is what the administration is trying to do. Is that correct?
    Mr. Sunstein. Exactly.
    Ms. DeGette. Thank you.
    Thank you very much, Mr. Chairman. I yield back.
    Mr. Stearns. The gentlelady yields back.
    Dr. Burgess is recognized for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    Mr. Sunstein, are you familiar with the paper from 2003, 
``Lives, Life-Years, and Willingness to Pay''?
    Mr. Sunstein. I have a vague recollection of that paper.
    Mr. Burgess. On page 14 of the paper, this is quoting from 
the paper, ``Under the life-years approach, older people are 
treated worse for one reason: They are older. This is not an 
injustice.''
    So I guess the question here--I mean, some people have 
described this as sort of a senior death discount. Your office 
that oversees regulations, will you be doing an analysis of the 
upcoming Health and Human Services rule for the Independent 
Payment Advisory Board in light of this philosophy?
    Mr. Sunstein. I am a lot older now than the author with my 
name was, and I am starting to think I am not sure what I think 
of what that young man wrote.
    Things written as an academic are, you know, not a 
legitimate part of what you do as a government official, part 
of a team. So I am not focusing on sentences that a young Cass 
Sunstein wrote years ago. So the answer is ``no.''
    Mr. Burgess. But, still, it does point out an important 
philosophical approach. And many of us are concerned about the 
Independent Payment Advisory Board. Right now, this is the only 
plan, promulgated by the administration and, therefore, by the 
Democratic Party, this is the only plan put out there for 
dealing with the cost increases in the Medicare program over 
time.
    And the difficulty that a lot of--I mean, I was a physician 
in my former life. One of the difficulties I have with an 
Independent Payment Advisory Board is, now, for the first time, 
some central planner, who may be a very benevolent central 
planner, but a central planner who is pushing data points 
around on a big spreadsheet in a far-off Washington, D.C., is 
going to be able to tell me where to get my care, when to get 
my care, but the most important thing is when I have had 
enough. And if that is based upon the fact that I am old, and 
we are dealing with a health-care program that deals with 
senior citizens, that is a troubling relationship.
    But I appreciate your answer, and we will take that at face 
value and incorporate that into our evaluation of the 
Independent Payment Advisory Board that the President has 
popularized as his approach to saving money in Medicare for the 
future.
    Our last hearing, earlier this year--and, again, appreciate 
you coming back--we talked a little bit about the Texas 
flexible permitting program, so shifting gears from HHS to EPA. 
So here is another example of a mandate that is inconsistent 
with the Executive orders for regulatory efficiency.
    The EPA's proposed--their Federal implementation plan for 
greenhouse gases that would affect the State of Texas, and, to 
my read, probably exclusively the State of Texas, but a Federal 
implementation plan that is going to be implemented because 
Texas did not meet the requirements under a State 
implementation plan, and so the EPA said it was necessary to 
step in.
    But here is the problem. This is a Wall Street Journal 
editorial, ``EPA's War on Texas,'' from--I think it was from 
earlier this year, probably right before you came and testified 
to us before, that this was the result of an error that escaped 
the EPA's notice for 18 years--18 years--that the Texas plan 
did not address all pollutants newly subject to regulation, 
among them greenhouse gases.
    So, somehow, regulators in Texas 18 years ago weren't able 
to intuit congressional intent or the intent of the courts 18 
years in the future. And, as a consequence now, the EPA will 
come in and regulate at a Federal level all of the power 
production, electricity production in the State of Texas.
    This seems incomprehensible, with the Executive order that 
we are going to streamline the process.
    Mr. Sunstein. OK. Appreciate the question.
    And you are exactly right; the Executive order is designed 
to reduce costs of all rules, including rules that involve 
greenhouse gasses. That is something we are very focused on.
    My understanding of the Texas situation is this: that there 
was an intervening Supreme Court decision, a badly split Court, 
but the majority said greenhouse gasses were a pollutant within 
the meaning of the Clean Air Act.
    Mr. Burgess. No, it said the EPA could regulate. I don't 
think they said they were a pollutant.
    Mr. Sunstein. My recollection is that the Court said 
greenhouse gasses are a pollutant and the EPA could not 
conclude that they weren't.
    Mr. Burgess. We are trying to help the EPA with 
legislation.
    Mr. Sunstein. Well, Justice Scalia dissented. It is a very 
active debate within the Court. And when the Court said that--
so it wasn't as if, I hope, the EPA thought that it had been 
made a mistake for 18 years, but, instead, that it had to do 
something to allow those permits to be given out in Texas so 
people could build.
    And so it was responding to, my understanding is, a 
difficult situation caused by the confluence of the Supreme 
Court decision and the permitting practices----
    Mr. Burgess. It may be a difficult situation, if I may, 
that they made impossible. Because then they came back and 
said, ``Well, you can't do a State implementation plan. We are 
going to take that over at the Federal level.''
    Texas was the only State singled for that. In the Wall 
Street Journal article that I will submit for the record, they 
call it ``pure political revenge, an effort intimidate other 
States from joining Texas in lawsuits.''
    Mr. Sunstein. Well, I will tell you something that nicely 
connects the enterprise we are now engaged in with your 
question, which is that we are looking back at regulatory 
practices. And EPA has one rule, actually, that I hope will 
benefit Texas that is going to eliminate a redundant regulatory 
requirement that costs a lot of money. And----
    Mr. Stearns. The gentleman's time has expired.
    Mr. Sunstein [continuing]. It is completely fair game to 
raise that question.
    Mr. Burgess. And, Mr. Chairman, I would like to submit this 
for the record.
    Mr. Stearns. By unanimous consent, so ordered.
    Ms. DeGette. No, I would like to review it.
    Mr. Stearns. The ranking member----
    Ms. DeGette. Mr. Chairman, I would like to review it before 
it is submitted for the record.
    Mr. Stearns. While we are waiting for her to review it, we 
will take our next----
    Ms. DeGette. Let's just start with the next questions.
    Mr. Stearns. Yes, we will start.
    The gentleman from California, Mr. Waxman, is recognized 
for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Sunstein, I believe in government because government 
can help set the rules in place that will make this society of 
ours and our economy more productive, more competitive, provide 
for more jobs, and also protect the public health and safety. 
And that is often exactly what regulations are all about. And 
sometimes we hear such negative, anti-government, anti-
regulation statements that you would wonder what they think 
would operate in its place except for whatever industry wanted, 
which may or may not be the best for the economy and for our 
public.
    But I want to focus on what I think you are here to talk 
about, and that is efforts to ensure that executive-branch 
agencies employ a transparent regulatory process that produces 
commonsense, balanced regulations. That should be our goal. And 
I am pleased that we are going to look at this topic.
    In January, President Obama directed executive-branch 
agencies to undertake a thorough lookback at regulations within 
their jurisdictions and to examine ways to make those rules 
more efficient, more effective, more reflective of input from 
the public at large.
    At this point, you have received lookback action plans from 
30 departments and agencies; is that right?
    Mr. Sunstein. That is correct.
    Mr. Waxman. Can you tell us a little bit about some of the 
ideas that have emerged from these department and agency plans?
    Mr. Sunstein. Happy to do that.
    There has been a lot of discussion in the last decade about 
conditions of participation from the Department of Health and 
Human Services, which are conditions imposed on hospitals and 
doctors, and that a lot of these haven't been rescrutinized in 
light of what has happened on the ground and possible 
redundancy and changes in medical practice and hospitals over 
time. Hospitals are often concerned that the Federal Government 
is too hard on them, hammering them a little bit with respect 
to regulatory requirements. And HHS has a very detailed 
discussion of steps that they are taking to reconsider those 
requirements.
    We have, in the context of hazard communication from the 
Department of Labor, OSHA in particular, there has been long 
suggestion from the business community, employers in 
particular, that these requirements need to be harmonized by 
what is happening in other nations so that they can do business 
across international lines and so that things are simpler and 
less burdensome for them. They have proposed that rule, and 
their plan says they are going to finalize it in a hurry.
    There has been a great deal of discussion about medical 
devices and innovation in the United States and whether these 
often small companies which are trying to bring medical devices 
to market have an adequate process within the FDA or whether it 
is too bureaucratic and time-consuming and difficult. The FDA 
has announced a number of initiatives to try to speed up that 
process, promote competitiveness and innovation. That should 
save a lot of money.
    One thing with potentially a very large payoff involves 
exports. We know that American companies, often small 
companies, have the best opportunity to grow if they are able 
to export. One thing we have heard a great deal from, in the 
last year and a half, from small business in particular, is 
that it is too cumbersome and difficult to navigate the system, 
there are too many restrictions. And we have taken away some of 
those restrictions, and we are going to take away more. And 
that should promote economic growth, and not in the long term.
    Mr. Waxman. So we are hear from many Members who are very 
frustrated or hearing from their frustrated constituents that a 
lot of the regulations don't make sense to them. The purpose of 
the administration's review is to see if they are right and, if 
they are right, to revise those regulations and bring them up 
to date and make sure they meet basic common sense and that 
they try to accomplish both the positive economic goals as well 
as the protection of the public, which is another side of it.
    What happens next in this review process? By the end of the 
summer, do you expect the agencies to have final regulatory 
lookback plans in place?
    Mr. Sunstein. Late August.
    Mr. Waxman. And what will happen then?
    Mr. Sunstein. My expectation is that we will have in late 
August three tracks. One track will be things that are 
completed. And, as I say, we expect a billion dollars in 
savings to be able to be achieved in the very short term.
    Other things that are on fast tracks, in the sense that the 
rulemaking apparatus has already gotten moving. Maybe there is 
a proposed rule out there; maybe we can propose it relatively 
quickly. And that is the second track, which is potentially 
rapid for many of the rules.
    Then there is a third track, where the rulemaking apparatus 
has to be inaugurated. And my hope is that we will be able to 
prioritize, with the aid of the views of people on this 
committee and your constituents and affected stakeholders, and 
prioritize things that we will be able to complete in the 
relatively short term, even though the work is being 
inaugurated these days and through the summer.
    Mr. Waxman. Well, it appears to me that the President's 
regulatory review process holds the promise for creating a more 
effective, efficient, and responsive Federal Government. I 
applaud it. And it seems to me something that both sides of the 
aisle, all reasonable people who want to see government 
succeed, should welcome. So I certainly want to encourage you 
in your efforts. And we should be willing, in Congress, to do 
whatever we need to to help out.
    Mr. Sunstein. Thank you so much.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Stearns. I thank the gentleman.
    Mr. Scalise is recognized for 5 minutes.
    We have a vote. We have just under 10 minutes. And after 
Mr. Scalise, we are going to break. I remind all Members, we 
have a second panel here, and so I encourage all Members to 
come back.
    Mr. Scalise?
    Mr. Scalise. Thank you, Mr. Chairman.
    Mr. Sunstein, last time you had testified before our 
committee, I had asked you about the rule that you imposed, the 
Deepwater moratorium on drilling. And I think you said that 
that didn't fall under the purview of the types of rules you 
would review under the Executive order.
    When the rule came out, the scientific experts that the 
President himself appointed actually disagreed with it. They 
said it would reduce safety in the gulf. They said it would 
lead to some of your best rigs and your crew base leaving, 
leaving the country.
    They turned out to be true, unfortunately. We have lost 
over 13,000 jobs. We have lost about a dozen of those Deepwater 
rigs to foreign countries. So the scientific experts that the 
President appointed were actually correct, unfortunately, 
because those terrible consequences happened, and so we have 
lost those jobs. Safety was surely not improved.
    And yet, under the rule, you are still, I guess, taking the 
position that that type of rule wouldn't even fall under your 
purview.
    So what I would ask, is the rule maybe not properly drawn 
if an actual rule that has gone through the process, that cost 
our country 13,000 jobs and, according to the scientific 
experts the President appointed, would actually reduce safety, 
and it still doesn't even fall under your purview, so is that 
something that you should relook at?
    Mr. Sunstein. That is a great question.
    Anything that has an adverse job impact we are very focused 
on. Our domain is the domain of regulatory actions as defined 
under Executive Order 12866. And, for technical reasons, a 
moratorium doesn't count as regulatory actions.
    Mr. Scalise. All right, but should the Executive order be 
updated, amended, revised to take into account those types of 
rules, as well, since--again, I am talking about a rule that 
actually cost 13,000 jobs and did nothing to improve safety, 
and it didn't even fall under your purview.
    Mr. Sunstein. It is a legitimate question. And I should say 
that anything that costs jobs in that domain or any other 
domain is definitely a legitimate part of the lookback process.
    Mr. Scalise. I know the FCC is one of the entities who said 
that, even though they don't fall under the purview, they would 
like to be included. And I think there are some other 
independent agencies that said that they would voluntarily look 
to be involved in this.
    Have you gotten any requests from the FCC or any of these 
other independent agencies?
    Mr. Sunstein. We have gotten a plan, actually, from the 
NLRB. So that is significant. It is short plan----
    Mr. Scalise. I heard it was a one-page plan.
    Mr. Sunstein. Yes, short----
    Mr. Scalise. So, of all these independent agencies, you 
have one page to review? Do you just think----
    Mr. Sunstein. And we very much hope for more.
    Mr. Scalise [continuing]. This is it?
    Mr. Sunstein. We very much hope for more.
    Mr. Scalise. OK. So you haven't gotten anything from FCC? 
Beyond this one page from NLRB, you haven't gotten anything 
else?
    Mr. Sunstein. You are exactly right. The independent 
agencies have not delivered plans. But we are hopeful and we 
are encouraging them to engage in a lookback process.
    Mr. Scalise. I know we had our meeting with the President 
on Wednesday. I think you were there. One of the questions that 
was asked to the President was specifically relating to the 
EPA. And we have had this conversation with the EPA on many of 
their proposed rules and regulations that have no impact on 
improving safety. It is much more aligned with a political 
agenda, ideology, rather than safety. And, in fact, the EPA has 
almost bragged that they don't have to comply with your rule. 
We brought this to the President's attention.
    Has anything changed in that regard?
    Mr. Sunstein. The EPA is very clearly complying with the 
Executive order. And you have seen both a plan from the EPA, 
which is detailed--it has 31 suggestions for reforms, and the 
EPA will be considering what comes in in the next period to add 
to that 31--and the EPA's recent rules have been detailed in 
their compliance with the Executive order, including their 
analysis of what you point to, job impacts.
    Mr. Scalise. Can you give our committee any examples of 
where you have said ``no'' to the EPA in any of their rules or 
regulations? Or the Department of Interior, for that matter?
    Mr. Sunstein. The way we work with EPA and Interior is 
collaborative rather than anything else. And you can see that--
--
    Mr. Scalise. Well, have you all collaborated in a way where 
some of their proposals were rolled back?
    Mr. Sunstein. You can see that a number of their rules, 
when they were finalized, were far more modest than when they 
were proposed.
    Mr. Scalise. Can you send examples to our committee of 
cases, both the previous proposal and then the rolled-back 
proposal that I guess ultimately made its way into--I don't 
know if it made it all the way to regulation yet or just 
further in the process.
    Mr. Sunstein. We would be delighted to show examples. I 
know the National Association of Manufacturers particularly 
applauded the----
    Mr. Stearns. The gentleman's time has expired. And we just 
want to----
    Mr. Scalise. I appreciate that.
    Mr. Sunstein. You don't want to hear what the National 
Association of Manufacturers applauded?
    Mr. Stearns. Why don't you complete the answer, and then we 
will call it to a close.
    Mr. Sunstein. The EPA's action with respect to the Boiler 
MACT rule, which included a recent stay and also a scale-back 
in response to concerns.
    Mr. Scalise. All right. I would appreciate if you could get 
us all of that information to the committee.
    And thanks. I yield back.
    Ms. DeGette. And, Mr. Chairman, we don't have any objection 
to Mr. Burgess' article being inserted----
    Mr. Stearns. OK. By unanimous consent, Dr. Burgess' article 
will be made part of the record.
    [The information appears at the conclusion of the hearing.]
    Mr. Stearns. And we will reconvene right after the vote.
    Thank you for appearing.
    [Recess.]
    Mr. Stearns. The Subcommittee on Oversight will reconvene.
    And we will recognize for the next series of questions the 
gentleman from Pennsylvania, Mr. Murphy, recognized for 5 
minutes.
    Mr. Murphy. Thank you.
    And appreciate your being here today.
    I am reflecting back on a quote from Ronald Reagan that 
says, ``It is not my intention to do away with government. It 
is, rather, to make it work--work with us, not over us, stand 
by our side, not ride our back. Government can and must provide 
opportunity, not smother it, foster opportunity and not stifle 
it.'' He said that back in 1981, and I would think we would all 
agree.
    And, certainly, I haven't heard anybody from our side of 
aisle say we don't like regulations. We recognize they do 
provide a valuable role in health and safety.
    But there is some ambiguity added on. When the 
administration came out with its Executive order in January of 
this year, it said that regulations should be evaluated by 
values that are difficult or impossible to quantify, including 
equity, human dignity, fairness, and distributive impacts.
    Are those measures that you use when reviewing regulations?
    Mr. Sunstein. Our principal focus, as the previous sentence 
of the Executive order emphasizes, is costs and benefits and 
quantified. So our focus is, how much does this cost, what are 
the benefits, and monetizable if possible. That is our 
principal focus.
    Mr. Murphy. With that Executive order, does it is have the 
authority to overturn laws that Congress passes?
    Mr. Sunstein. Absolutely not. And the phrases you pointed 
to were actually a recognition that, under some laws, like 
those designed to prevent rape or to prevent discrimination 
against returning veterans, for example, who are in wheelchairs 
and can't use bathrooms without assistance--dignity is 
involved.
    Mr. Murphy. One of the things that we had a hearing on the 
other day had to do with Yucca Mountain. And the law very 
clearly states that, when these licenses and other things go 
forth, action is to be taken. And yet, now we hear a new 
standard coming out, that we are supposed to look at issues of 
consensus, social consensus, in those areas.
    And yet, what you just said was, you don't have the 
authority to overturn laws. I am assuming that the Department 
of Energy is one areas you can have oversight over?
    Mr. Sunstein. Yes.
    Mr. Murphy. Do you intend to have any discussion with them 
with regard to if they decide to ignore the law based upon a 
new standard that is not even in the law?
    Mr. Sunstein. Well, I should say that fidelity to law is 
our first foundation stone. That is the requirement of 
everything we do.
    We oversee DOE rulemakings. So if there is rulemaking 
activity in that domain, we would, as a matter of course, 
engage with them. And if there isn't something as a matter of 
course we would engage with them on, we would be happy to 
engage with them.
    Mr. Murphy. I think it is extremely valuable if you could 
report to this committee on that very specific issue. Because 
the law is quite clear, but the dance the Department of Energy 
is doing that is thwarting that law, adding new standards that 
are not in the law, is also quite clear. And we need to have 
your response. Will you submit it to me?
    Mr. Sunstein. Yes.
    Mr. Murphy. Thank you.
    Another issue has to do with impact of the health-care bill 
on small businesses. According to the administration's own 
estimates, its regulations are going to force half of all 
employers, or as many as 80 percent of small businesses, to 
give up their coverage in the next 2 years. And that is a big 
concern.
    Are you aware of that assessment of the negative impact?
    Mr. Sunstein. That particular number I was not aware of, 
but I certainly know of the general concern.
    Mr. Murphy. And when you look at cost-benefit analysis--and 
we are seeing numbers grow, in terms of the cost of the health-
care bill. And we see estimates that are not 9 million people 
will lose their benefits, but as many as 30 million, 40 
million, 80 million. Even those exceeding what the estimates 
are that the bill would actually provide health care, an equal 
or double that amount may lose health care.
    And so, along those lines, for PPACA or otherwise, have you 
been pushed in any way to move rules through quicker, despite 
information like that?
    Mr. Sunstein. No.
    Mr. Murphy. Can you delay finalizing any of the rules based 
upon how the agencies have handled or incorporated public 
comment and responses from the business community?
    Mr. Sunstein. The basic answer is ``yes.'' And we often 
engage for lengthy periods with agencies because of those 
public comments. In fact, I spend a lot of personal time on the 
Web site known as regulations.gov, studying those comments.
    The only qualification, as you suggest, fidelity to law is 
our first obligation. And if the law requires action or 
requires action by a date certain, then we have to respect 
that.
    Mr. Murphy. I know when Republican Members were at the 
White House this week, the President was asked questions by the 
EPA and regulations and looking at cost-benefit analysis, that 
how would we look at that in terms of the impact upon jobs, as 
well. And he said that, basically, there were mandates and 
standards of law that we had to adhere to, and if Congress 
wanted to do something otherwise, we should change those laws. 
And, certainly, I agree with him, that is, once the law of the 
land is there.
    But the question also becomes of how you act. I mean, you 
are in a position of considerable authority here. And so, on 
these areas of delays or pushback, have you ever actually done 
so, in terms of to any agency? Can you give us an example of 
how you have pushed back, how you have said, ``You need to 
delay in putting on this regulation until we analyze it or 
until you have come back with a cost-benefit analysis that is 
different''?
    Mr. Sunstein. Well, what you can see is, over 100 rules 
have been withdrawn from OIRA review. And, in many cases, the 
reason for the withdrawal is insufficient engagement with 
issues of cost and economic impacts. So you can see that.
    You can also see that, often, the final rule comes out a 
lot different from the proposed rule. Often, it is a lot less 
expensive and less burdensome. And sometimes proposed rules 
just aren't finalized because there is significant concern from 
the standpoint you have raised.
    And the interagency review, which involves not just the 
Office of Information and Regulatory Affairs but the Department 
of Commerce, the Council of Economic Advisors, plays a role.
    Mr. Murphy. But how about pushback on the health-care 
rules? Have you done any of that?
    Mr. Sunstein. Our first obligation, with respect to the 
health-care rules, is to obey the law. We are in the 
implementation phase----
    Mr. Murphy. But have you pushed back?
    Mr. Sunstein. Well, I wouldn't want to phrase it ``push 
back.'' I think we work closely with the agencies to make sure 
that the costs are as low as possible and to make sure that the 
burdens are reduced.
    And you may have noticed with respect to the grandfathering 
rule, there was an amendment to the rule that responded very 
concretely to concerns from affected stakeholders about 
excessive burdens. And there has been a lot that has been done, 
and we and others have been participating in that, in trying to 
make sure that the implementation----
    Mr. Murphy. I am not sure I am getting an answer here. Has 
it happened?
    Mr. Sunstein. Well, I wouldn't want to claim personal 
credit for anything, but what I would say--or blame--but what I 
would say----
    Mr. Murphy. Let me word it this way. Because employers 
routinely opt to change carriers but keep the same benefits, in 
order to cut health care-costs without any change coverage. 
Now, under the interim final rule, or the grandfathering plans, 
issued in June of last year, employer plans lost their 
grandfathered status for changing carriers regardless of 
whether benefits remained the same.
    So do you believe Health and Human Services should have 
instead proposed a rule open to comments from stakeholders who 
could have advised HHS of its own flawed decision before the 
problem began?
    Mr. Sunstein. What I would say about that is that the 
interim final rules receive comments, and HHS should be and is, 
has been, highly responsive to those comments. In the 
particular case you give, so responsive as to amend in a hurry 
the rule to respond to some of the concerns. And we all 
discussed that.
    It is also the case that there were Q&As and guidance 
clarifications that were very responsive to concerns raised by 
exactly the people to whom you refer. And that is good 
government.
    Mr. Murphy. Thank you.
    Thank you, Mr. Chairman.
    Mr. Stearns. I see no one on the Democrat side. We will go 
to the chairman emeritus, Joe Barton from Texas, for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman.
    Congressman Burgess was speaking to you about some rules 
that impact Texas, and I am going to follow up on that but in a 
little bit different way.
    Are you familiar with the PM2.5 and ozone transport rule 
that EPA is in the process of promulgating to replace the CAIR 
standards that were ruled not in compliance with the Clean Air 
Act several years ago?
    Mr. Sunstein. Yes, I am.
    Mr. Barton. OK.
    Are you aware that, I think just this week or maybe last 
week, EPA disallowed a Texas State implementation plan and put 
down some requirements that, if implemented, are probably going 
to shut down 25 percent of Texas' electricity generation 
capacity?
    Mr. Sunstein. Is this in the Clean Air transport rule 
draft? Is that----
    Mr. Barton. It is what just came out.
    Mr. Sunstein. Yes. That rule is under review at OIRA now. 
And so my understanding is that nothing has been done along the 
lines you have just described.
    Mr. Barton. Now, I want to give you an opportunity to 
demonstrate real accountability.
    My understanding is, the office that you hold is the 
President's direct link to reviewing all the various 
regulations except those that are specifically exempted by the 
Executive order. In other words, you are the President's man 
who makes sure that all these myriad agency regulations do pass 
some minimum tests for cost-benefit and things like that. And 
you are supposed to review every significant order, et cetera, 
et cetera.
    I want to read you what the EPA said about this interstate 
transport decision that they just handed down. It says, ``This 
proposed action is not a significant regulatory action under 
the terms of Executive Order 12866'' La di da di da. ``It is, 
therefore, not subject to review under Executive Order 12866 
and 13563.''
    It is going to shut down 25 percent of the power generation 
in Texas. That is not significant? Do you consider it 
significant?
    Mr. Sunstein. OK, that--if that has--under our Executive 
order--now I know what you are talking about.
    Under our Executive order, if it has $100 million in annual 
cost or a significant impact on a sector area, then it counts 
as significant. So, if you would like, I will definitely look 
into that.
    Mr. Barton. Now, I want you to do more than definitely look 
into it. I want you to do something about it. If your agency 
disagrees with the executive branch regulatory decision, can 
you stop it?
    Mr. Sunstein. If there is a regulatory action, we have the 
authority to stop it, to the extent consistent with law.
    Mr. Barton. Have you ever exercised that authority?
    Mr. Sunstein. Well, we have seen over a hundred withdrawals 
of rules----
    Mr. Barton. OK.
    Mr. Sunstein [continuing]. About 110. And that speaks for 
itself.
    Mr. Barton. Well, I am going to read you something. Now, 
this is generated by the State of Texas, so that is the source. 
It says, ``The only way to achieve EPA's contemplated emission 
reduction mandate by the 2012 compliance date,'' which is next 
year, ``will, in fact, be to cease operating the affected units 
for most of the year, leading to the loss of jobs, shutdown of 
lignite mines, and serious risk to electric reliability.''
    Now, keep in mind that Texas is in compliance, in terms of 
the standards. Keep in mind that the regions that are 
supposedly affected by Texas--St. Louis and, I think, Baton 
Rouge--have just been declared in compliance. And yet, EPA has 
come out in the last week and stipulated that, by next year, 
Texas has to achieve an additional 34 percent reduction in 
SO22 emissions.
    We have already achieved a 33 percent reduction in the last 
10 years. And in the next 6 months, we have to achieve 34 
percent more or shut down all these plants. I think that is 
pretty dadgum significant.
    Mr. Sunstein. I think you said one of my favorite words in 
the English language, which is the word ``proposed.'' This is a 
proposed rule, correct, not final?
    OK, well, from the standpoint of those concerns, that is 
excellent news. And it has happened in the last few years that 
something has been proposed and not been deemed significant, 
and then, as a result of further assessment and public concern, 
it has been deemed significant at the final stage, and there 
has been OIRA involvement. So----
    Mr. Barton. My time----
    Mr. Sunstein [continuing]. We will definitely take a look 
at that.
    Mr. Barton. My time has expired, but I am going to work 
with Chairman Stearns and Ranking Member DeGette and Chairman 
Upton and Ranking Member Waxman. We are going to follow up on 
this.
    Mr. Sunstein. Great.
    Mr. Barton. And we are going to expect--we are going to 
work cooperatively with you with you and your staff. But if you 
really have any authority, now is the time to exercise it.
    Mr. Sunstein. Understood.
    Mr. Barton. Thank you.
    Mr. Stearns. I thank the gentleman.
    The gentleman, Mr. Sullivan, is recognized for 5 minutes.
    Mr. Sullivan. Thank you, Mr. Chairman. Thank you for 
holding this hearing.
    And thank you, Mr. Sunstein, for being here.
    What is the process for determining whether a regulation is 
subject to Executive order?
    Mr. Sunstein. The basic idea is, is it significant? 
Meaning, does it have $100 million in annual costs on the 
economy--or benefit, by the way, and $100 million in impact--
then it can be deemed significant. Also, if it affects a sector 
or an area. So there can be something that falls short of the 
$100 million threshold that, nonetheless, has an economic 
effect. Or it can raise novel issues of policy or law.
    So the net is wide, but it doesn't include more routine or 
mechanical or, kind of, daily, mundane things.
    Mr. Sullivan. Well, I have here, right here, a proposal of 
disapproval of Oklahoma's implementation plan for regional 
haze. And I talked to you a little bit before about that 
before.
    EPA proposes to disapprove Oklahoma's plan. They did what 
they were told to do, and they achieved the goals that were 
supposed to be achieved, at much less cost. Yet, the Federal 
Government stepped in and said, no, we want to implement our 
Federal implementation plan, which has a much more aggressive 
timeline and will cost ratepayers almost $2 billion.
    And what I would like to know is, did OIRA review this 
proposal?
    Mr. Sunstein. A Federal implementation plan, as in Texas, 
we would review the decision to go forward with that. A 
disapproval of a State implementation plan isn't a rule, so 
that we would not review.
    Mr. Sullivan. You know, I have introduced a bill recently; 
it is called the TRAIN Act. And I have talked to you a little 
bit about that. It requires a cumulative analysis of the big 
regulations that impact America's manufacturing and energy 
prices to better understand how they will impact international 
competitiveness and job creation.
    Will you and the administration support this?
    Mr. Sunstein. There are three words you used--cumulative 
costs, competitiveness, and job creation--that are very much 
our focus. They are prominent in the Executive order. And this 
is something daily we are attending to.
    With respect to legislation, my own lane is the narrow one 
of implementation, and I defer to others on that issue.
    Mr. Sullivan. And I have talked to the White House, the 
President about this, too, and they seem supportive. I don't 
know if they are telling me that just to placate me or 
anything. They could be.
    But, Mr. Sunstein, you are a very intelligent man, there is 
no question about it. In the administration you are highly 
regarded. What you say carries a lot of depth and weight. And 
will you tell the President that you think he should sign that 
bill?
    Mr. Sunstein. Well, I tend not to tell the President what 
he should and shouldn't do.
    Mr. Sullivan. I think he would listen to you, though. He 
doesn't know all this stuff, like you. And if you come in 
there, Mr. Sunstein, a guy like you, he is going to say, ``Oh, 
OK, I think we will do it.''
    Mr. Sunstein. He might have done that when we were 
colleagues at the University of Chicago. He is kind of 
President now.
    Mr. Sullivan. See, you guys go way back. And he is good at 
some things; you are good at other things. And I think you 
could be a big impact on him on this.
    Mr. Sunstein. Appreciate it.
    Mr. Sullivan. And I would hope you can.
    Because I go around my district, Oklahoma, around the 
country, and I have never heard people talk about the EPA like 
they are now. I think people are tuned in that this is costing, 
and everything that is done is passed down to consumers, the 
people. It is not on the businesses; they just pass it through. 
So we have to keep that in mind. And it does affect 
competitiveness and jobs and our economy.
    And, Mr. Sunstein, you have said good things today, and I 
hope that you will support this, because I think it is 
something we should do. And I don't think it is too much to 
ask, to do these cost-benefit analyses on global 
competitiveness and jobs.
    Mr. Sunstein. Appreciate it.
    Mr. Sullivan. Thank you.
    Mr. Stearns. I thank the gentleman.
    The gentlelady from Tennessee, Ms. Blackburn, is recognized 
for 5 minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    Mr. Sunstein, I think you can tell that we are all hearing 
from our constituents that they are frustrated with what is 
coming from this administration.
    I started in January doing listening sessions with our 
employers in our district. They were jobs-related listening 
sessions. I mentioned that to you the last time we talked. And 
they are incredibly frustrated with--as one of my constituents 
said, ``You know, we used to get an update on a rule, a 
periodic, one-page update. Now the regulation comes in reams 
and reams and reams of paperwork.''
    And it is such a heavy burden that the jobs numbers today 
should not surprise you all, because what you are doing isn't 
working. So this should be instructive to you, and I hope we 
can work with you on this.
    And I know that you all are saying, well, we have draft 
proposals that are out there, we need input. And what the input 
that is coming back to you is, you are on the wrong track. So 
if you are on the wrong track, sir, please advise the 
administration to change what they are doing.
    Now, I know that the Executive order, the 13563 that we are 
discussing, independent regulatory agencies are not to be 
subject to the OIRA review. But these agencies are--and I am 
using your words--encouraged to do so on a voluntary basis and 
to perform retrospective analysis of existing rules. And you 
had hoped that they would do that. Is that correct?
    Mr. Sunstein. That is correct.
    Mrs. Blackburn. OK.
    I have a June 1st letter to the editor in the Wall Street 
Journal where Commissioner Nord from the CPSC notes that, under 
the Obama administration, CPSC has--and I am quoting her--
``ignored the recent direction to look for and eliminate 
burdensome regulations. We are just too busy putting out new 
regulations,'' end quote.
    I got to tell you, that is the kind of thing that we are 
hearing from our employers is frustrating to them.
    So let me ask you this. Among the 30 preliminary draft 
plans that are supplied by the agencies to OIRA by May 18th and 
released on the White House Web site, did any of them come from 
the FCC, the FTC, CPSC, FERC, or the NRC?
    Mr. Sunstein. No.
    Mrs. Blackburn. They did not. And, sir, what is going to be 
your next step to address it?
    Mr. Sunstein. Well, I am hopeful, and I have said in 
writing and I will say right now, that we would very much like 
the independent agencies to engage in this lookback process.
    Mrs. Blackburn. OK. I have to tell you, the American people 
are hopeful for jobs. And you all have dropped the ball. They 
are getting tired of this.
    Mr. Sunstein. Well----
    Mrs. Blackburn. And they are expecting us to take some 
action.
    Mr. Sunstein. Well, I----
    Mrs. Blackburn. And what you are doing with sending out all 
these regulations is wrong. If it is going to have a $100 
million impact, we are going to pull it in here. And we are 
going to hold you all accountable of this, and the American 
people are going to hold you accountable for this. You have to 
find a way to get these agencies to get some of this regulation 
off the book.
    Let me ask you about--1\1/2\ minutes left--the accountable 
care organizations. Health care in Tennessee is a very 
important industrial sector for us. The proposed rule on the 
accountable care organizations is incomprehensible. It is huge, 
it is incomprehensible.
    There is a group representing some of these organizations, 
such as the Mayo Clinic, that wrote the administration, saying 
that more than 90 percent of its members would not participate 
because the rules--the rules--not the law, the rules--as 
written, are so onerous that it would be nearly impossible for 
them to succeed. I am hearing the same thing from my 
constituent companies.
    In addition, the regulations were stated to be overly 
prescriptive, operationally burdensome, and the incentives are 
too difficult to achieve to make this voluntary program 
attractive. One of the major problems seems to be that the 
medical groups have little experience in managing insurance 
risk, and the administration blueprint rapidly exposes them to 
potential financial losses.
    What has OIRA's role been in reviewing this rule to date 
for the accountable care organizations?
    Mr. Sunstein. OK. The quote you gave is very reminiscent of 
some stakeholder response to the meaningful-use rule, which HHS 
proposed a while back.
    Mrs. Blackburn. And there are problems with that, too, 
aren't there, sir?
    Mr. Sunstein. As it----
    Mrs. Blackburn. We are hearing about those problems with 
the meaningful-use rule.
    Mr. Sunstein. And the lookback process can potentially help 
there.
    Mrs. Blackburn. Are we going to speed that lookback process 
up?
    Mr. Sunstein. Well, I would love--I would like nothing 
more----
    Mrs. Blackburn. How do we help you speed that process up?
    Mr. Sunstein. OK. Well, your idea--there are two things.
    First, this very hearing and your interest in making sure 
that what is on the plans and not implemented already or not on 
a very fast track, that those things are implemented in a hurry 
or put on a fast track. Your ideas about what should be on the 
plans that aren't on the plans, very welcome. With respect to 
the rule you raise, as I said, it is a little pitiful, but it--
--
    Mrs. Blackburn. Should we retrieve the rulemaking authority 
and address it statutorily?
    Mr. Sunstein. Well, I wouldn't say that. What I would say 
is the Administrative Procedure Act has a mechanism and the 
word ``proposed,'' not just because I am recently married, but 
also because the fundamentally constructive nature of proposed 
rules or interim final, where you get a chance for people to 
fix things, I have heard the concerns to which you point, and 
our role will be in trying to address those concerns and make--
--
    Mrs. Blackburn. Mr. Sunstein, my time has expired. But I 
would just like to place a motherly reminder: Actions speak 
louder than words. And the American people have gotten very 
tired. They are ill and fatigued with the talk.
    I yield back.
    Mr. Stearns. I thank the gentlelady.
    Mr. Gardner, the gentleman from Colorado, you are 
recognized for 5 minutes.
    Mr. Gardner. Thank you, Mr. Chairman.
    And thank you, Mr. Sunstein, for appearing before the 
committee today to answer some questions.
    Just a couple quick questions. Do you believe that we an 
overregulation problem in the United States?
    Mr. Sunstein. I would say--if it is a ``yes'' or ``no'' 
answer I am pleased to give yes.
    Mr. Gardner. Could you put a price to your own price tag? 
You said you disagreed with some of the others. Do you have a 
price tag in mind of that overregulation?
    Mr. Sunstein. Well, I don't. But I hope to be able to cut, 
with the leadership of the relevant agencies, to cut the re-
existing costs down very significantly.
    Mr. Gardner. But you don't know what those costs would be 
right now?
    Mr. Sunstein. Well, what we can say is that we have already 
cut hundreds of millions, and in a very short term we will be 
able to cut a billion. If we aren't able to cut billions out of 
this process, that would be a surprise.
    Mr. Gardner. Executive Order 13563 specifies that 
regulations should promote job creation and that regulations 
should impose the least burden on society.
    When will your office issue guidelines for analyses that 
will identify whether rules promote job creation or whether 
they will result in job destruction?
    Mr. Sunstein. OK, what we have been doing is working 
carefully with the agencies in--rather than the guidelines 
approach, though that is an interesting suggestion, we have 
been working carefully with agencies when a rule has potential 
job impacts to make sure that that is addressed fully. And----
    Mr. Gardner. So will you be issuing guidelines, though, for 
analyses to identify those rules?
    Mr. Sunstein. It is an interesting question, whether this 
should be done via guidelines versus a rule-by-rule basis. And 
that is one--we have been focusing on the 30 plans in the last 
months. That is a question----
    Mr. Gardner. So you will not be issuing guidelines on the 
job creation----
    Mr. Sunstein. No, I didn't say that. We are focusing, 
really laser-like, on job impacts of rules. And you can see, 
actually, with rules withdrawn or amended in the last months, 
in part because of concerns about job impacts, some of them 
very prominent. So this is something we have been doing on a 
daily basis.
    Whether this should be done through guidelines or not, it 
is an interesting question. It is consistent with the Executive 
order and also OMB Circular A-4, which has some words on this, 
to focus on job impacts of rules. Whether guidelines are useful 
or not, as I say, that is an interesting question and very 
worth considering.
    Mr. Gardner. And then, so, I mean, under the process that 
you are considering then, are you going to require methods of 
analysis that account for both direct and indirect job impacts, 
or will your office follow EPA's lead--we had testimony here 
from the assistant administrator of EPA--and ignore the job 
losses that result from shutting down facilities and increasing 
energy prices?
    Mr. Sunstein. I believe that testimony was focused on a 
rule issued before the recent Executive order. And, under the 
recent Executive order, job impacts have been and will continue 
to be discussed.
    Mr. Gardner. But it also requires a lookback, though, so 
they should have done a lookback on that.
    Mr. Sunstein. Oh, well, if EPA--the rule I think you are 
referring to is a proposed rule where there is an extensive set 
of comments, including comments that involve job impacts. And 
it would be very surprising if those impacts weren't carefully 
addressed before the rule is issued.
    In terms of the lookback process, we are very much 
concerned with prioritizing the lookback so as to get job 
growth going.
    Mr. Gardner. And so, there are a number of studies--I have 
a study right here in my hands here--a number of studies that 
show health affects associated with a job loss--health affects 
and impacts on family, impacts on education.
    If a rule is expected to shut down a facility, shut down a 
business, or reduce employment, don't you think that cost to 
Americans' health associated with that shutdown should be 
considered under the Executive order?
    Mr. Sunstein. Well, I am aware of that empirical 
literature. It is an interesting set of findings.
    What I would say is that the job impacts of rules 
definitely should be addressed. Whether health impacts that are 
a consequence of job impacts should be addressed, it is a 
little bit of a frontiers question in social science. I know 
the literature to which you are pointing. And existing OMB 
documents don't require that, but it is certainly worth 
thinking about.
    Mr. Gardner. So, right now, you are not taking into account 
impacts on children or families when they lose a job as a 
result of a regulation?
    Mr. Sunstein. Well, to take account of job impacts, which, 
as I say, is a central focus of ours, is to consider job 
impacts on families and children. The word ``job impacts,'' in 
ordinary language, especially in the current economic 
environment, even before, the word ``job impacts'' naturally 
calls up adverse effects on families and children.
    Mr. Gardner. Are you aware of rules at the Department of 
Transportation relating to new signage requirements that are 
costing counties tens of thousands, if not more, dollars each?
    Mr. Sunstein. Yes. And I am aware that the Secretary of 
Transportation is very concerned about that and pulled back on 
those rules.
    Mr. Gardner. And so, they have pulled back on those rules?
    Mr. Sunstein. Absolutely. He personally has been engaged.
    Mr. Gardner. And so that rule is no longer in effect and it 
has been stopped?
    Mr. Sunstein. Well, the rule that was causing the public 
concern was pulled back, and there is reassessment. And you can 
be sure that the most vocal and convincing concerns about 
unjustified costs have been well heard by the Department of 
Transportation.
    Mr. Stearns. Thank the gentleman. His time has expired.
    The gentleman from Virginia, Mr. Griffith, is recognized 
for 5 minutes.
    Mr. Griffith. Mr. Sunstein, Executive Order 13563 states 
that regulatory actions must be based on the best available 
science. Your office has primary responsibility for helping the 
President achieve this objective.
    You may be aware that there is a pending science policy 
decision at the National Toxicology Program that involves the 
listing status of formaldehyde in an upcoming report on 
carcinogens. This listing status is very important. It is the 
basis for regulatory actions that may be taken now or in the 
future by OSHA, EPA, and other Federal agencies and, 
additionally, may directly affect marketplace purchasing and 
legal decisions in the near future.
    My understanding is that the studies and data sets that 
were reviewed by the NTP in its ongoing decision-making process 
are the same as those used in the draft formaldehyde assessment 
by the EPA. As you may know, the National Academy of Sciences 
recently called that EPA draft assessment into question and 
raised serious concerns suggesting the draft assessment is in 
need of substantial revision, at the very best.
    I assume you agree the Federal Government must have 
consistent, clear, and coordinated scientific positions on 
matters of public health. Considering the inconsistent 
positions on fundamental science issues between these bodies, 
can you assure me that you will personally be involved in 
reviewing this issue and ensuring that any policy decision made 
by the NTP will reflect the best available in sound science, 
including recommendations and conclusions of the National 
Academies?
    Also, OIRA, from time to time, has found it useful to 
engage the National Academy of Sciences to review scientific 
evidence and provide an independent assessment. Will you engage 
the Academy on scientific questions at hand in the NTP report 
prior to its release?
    Mr. Sunstein. Thank you for that.
    Our domain, our central domain, involves regulation and 
rulemaking, and the best available science is crucial to that. 
And we care a lot about the National Academy of Sciences. I 
work closely with the President's science advisor, John 
Holdren, and the Office of Science and Technology Policy to 
make sure the science is right.
    On the particular issue you raise, it is not rulemaking in 
the sense that is our normal domain. But I can promise you 
this, that in the next 24 hours I will discuss this with John 
Holdren.
    Mr. Griffith. And let me let you know why I am concerned 
about it. We heard earlier that regulations are good. And they 
are, in some cases. I am not sure they are always good for 
jobs, but sometimes they are, sometimes they aren't.
    But formaldehyde is of great concern. In Giles County 
alone, we have an industry there that employs over 600 people. 
We are also looking at probably an announcement in the next 
week that we are going to lose some jobs in that same county. 
The county is 17,000 people. And we are looking, based on 
regulations, losing--over the course of the next couple of 
years, we have a good chance of losing, if these regulations go 
into effect, 700 jobs. And you can do the multipliers on that 
and then realize that the multiplier is higher in rural areas 
where the money tends to stay in the community.
    When I am talking about the county, we are not talking 
about one town; we are talking about all the towns add up to 
17. So the end of the county that has the 600 jobs based on an 
industry that uses formaldehyde is extremely significant. And 
it is not the only county in the Ninth Congressional District 
of Virginia where jobs can be impacted by these regulations, so 
I do ask you to look into that.
    Let me switch over to another subject of interest in the 
district, and that is the milk regulations. We do appreciate 
that the EPA did decide not to regulate. And I assume you stand 
by your statement in your opening statement, both written and 
oral, as to that, and I appreciate that.
    Let me ask you this. It is also fair to say that those 
regulations treating milk, because of the animal fats, as an 
oil never actually went into effect, that they had been--the 
phrase around here I am learning is, the can had been kicked 
down the road for some time.
    And without the April 12th EPA announcement that they were 
not going to--that they were going to exempt the milk products 
that you mentioned in your written statement, without that 
exemption, they would have been regulated in November of this 
year. Is that not correct?
    Mr. Sunstein. I believe that is mostly correct. My 
understanding is that the coverage of milk actually was real 
and in the law; enforcement--and this is a good thing--was not 
firm. So it was in kind of an enforcement limbo.
    Mr. Griffith. Yes, sir. And without the action on April 
12th, the enforcement would have begun in November?
    Mr. Sunstein. That is correct.
    Mr. Griffith. All right. I appreciate that.
    And thank you very much and appreciate your work on trying 
to save jobs. Like so many others, that is a main concern in 
our district. And we hope that you do have the President's ear 
and that you can convince him to roll back some of these 
regulations that have already gone into effect and not 
propose--or not have them go into effect where they are going 
to cost jobs, like the milk regulation would have done.
    Mr. Stearns. I thank the gentleman.
    The gentleman from Texas, Mr. Green, is recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    And thank you, Mr. Sunstein, for being here. And I would 
like to talk about the importance of regulations on protecting 
our economy.
    In advance of the hearing, both Chairman Upton and Chairman 
Stearns stated, ``We are pleased the administration is sharing 
our concerns that burdensome regulations are stifling 
investment and chasing jobs overseas.'' I have an industrial 
base, and I share that concern. Although I am concerned about 
some of my Republican colleagues believe that all regulations, 
regardless of the protections they afford, hurt the economy.
    And let me give you an example. Years of deregulation 
brought the markets to the point of collapse in 2008. The 
Federal Reserve had the authority to stop the lending practices 
that fueled the sub-prime mortgage market, but Chairman 
Greenspan refused to regulate the industry. The Securities and 
Exchange Commission relaxed its net capital rule in 2004, 
allowing investment banks to increase their leverage ratios 
33:1.
    The Treasury Department opposed legislative efforts to 
require transparency and oversight concerning trading in energy 
derivatives. The Office of Thrift Supervision and the 
Comptroller of the Currency prevented States from protecting 
home buyers from predatory lending. In what was the result, in 
the fall of 2008, the financial markets in the United States 
collapsed. This economic crisis created a recession, causing 8 
million Americans to lose their jobs and the stock market to 
lose 50 percent of its value.
    I also want to read to you conclusions from the 
congressional TARP oversight panel. They concluded that, ``Had 
regulators given adequate attention to any one of the three key 
areas of risk management, transparency, and fairness, we might 
have averted the worst aspects of the current crisis.'' Mr. 
Sunstein, this oversight panel concluded that lack of 
regulation was a primary cause of the financial crisis.
    My first question is, do you agree with the findings of the 
TARP oversight panel, and was this a case where the lack of 
regulation harmed the economy and caused the Nation to lose 
these millions of jobs?
    Mr. Sunstein. I am in general agreement with that.
    Mr. Green. OK.
    In the view of President Obama, any increase of government 
rules and regulations, do they hurt the economy?
    Mr. Sunstein. Depends on the rules and regulations. Some 
do. Some don't.
    Mr. Green. Well, and hopefully we learned our lesson, 
although sometimes we keep having to learn our lesson. We saw 
during the financial crisis targeted and effective regulations 
can provide important safeguards for our economy. And we hope 
we remember that government regulations can play an important 
role in protecting our country and our citizens.
    But also, on the other hand, I see a lot of what I think 
are really silly regulations come out and think, OK, how did 
they get to that point? And I tell people, Congress is the only 
institute known to man that can turn an elephant into a 
giraffe. Sometimes I think committees coming up with these 
regulations can do the same thing.
    Mr. Chairman, I appreciate the opportunity to ask these 
questions.
    Mr. Stearns. I thank the gentleman.
    And, Mr. Sunstein, we are going to do a second round, so we 
won't hold you too much longer. I will start out.
    I want to go back to the chart that was quivering up there. 
I think we have given you a copy of that chart. Did you know 
that that chart came from the Web page reginfo.gov, that is 
where we got it all?
    Mr. Sunstein. I did not, but reginfo.gov is one of my 
favorite Web pages, and I trust it.
    Mr. Stearns. OK. So, assuming that that information is 
correct, if you look at the graph again, you will see that the 
one graph shows the number increasing in number of regulations 
that have economic significance reviewed by OIRA from 2008, 
2009. Do you see that?
    Mr. Sunstein. I do.
    Mr. Stearns. And then you would assume--it came from your 
Web site--that that is accurate?
    Mr. Sunstein. I would.
    Mr. Stearns. OK. Then you go to the second graph, and you 
see that, during the same time, particularly in 2010 and 2009, 
the average duration for those reviews have gone down. Do you 
agree with that?
    Mr. Sunstein. That looks about right. I wouldn't put a lot 
of weight on the fact----
    Mr. Stearns. Well, let me just finish.
    So you agree that the information came from your Web site, 
that you approve, it is accurate. You agree that the first 
graph is correct and the second graph is correct.
    So I guess, going back to the first question where you 
disagreed, I guess you would now agree that the second chart 
shows you spend less time in review of these regulations and 
you would have to agree with the chart.
    Mr. Sunstein. I will tell what I would want to see before 
signing off on that. The left-hand chart says, ``economically 
significant rules reviewed by OIRA,'' and the right-hand chart 
says, ``average duration of OIRA regulatory review.'' Most of 
the rules we review are not economically significant.
    So what I believe is the case, though I would want to see 
the chart to make sure, is that in 2010 our average duration 
for rules in general is pretty close to the predecessor. I 
believe that is true, but I want to see the chart to make sure.
    Mr. Stearns. Well, I am glad you agree that the charts are 
accurate. I think you are parsing your words here by saying the 
actual wording of our titles you might not agree with.
    Mr. Sunstein. No, no, it is not semantics. It is that we 
review mostly significant rules that are not economically 
significant. So, economically significant are well under 50 
percent of the rules we review. So what we would want to 
compare is the significant rules to the average review time or 
the economically----
    Mr. Stearns. OK. All right.
    Mr. Sunstein. You get the point.
    Mr. Stearns. It sounds like a Chicago professor at law.
    I think the point we are trying to make is that, basically, 
that you have had more economically significant rules in the 
years from 2008 to 2010, and, at the same time, the actual 
review and the economic impact has gone down. So that is our 
point we want to clearly make. And we want you to understand 
that you might come back with a little different 
interpretation, but these came from your Web page.
    Let me move on to my next set of questions dealing with 
end-of-life-care rules. During your last appearance before the 
economy, you testified that the decision to include end-of-
life-care rules into a Medicare regulation was inappropriate 
and that the American people deserve to see the content of the 
rules before they are finalized. That is what you said.
    Do you still agree with that statement?
    Mr. Sunstein. Absolutely.
    Mr. Stearns. OK. But are you aware, on March 3rd, 2011, in 
an appearance before the Subcommittee on Health, Secretary 
Sebelius freely admitted that she made the decision to publish 
this regulation without notice or public comment? Were you 
aware of that?
    Mr. Sunstein. I was not aware of that.
    Mr. Stearns. OK, well, that is a fact, that based upon what 
you said, obviously she did not comply with it.
    Have you ever had any discussion with Secretary Sebelius 
about this admission?
    Mr. Sunstein. What I would say is, Secretary Sebelius was 
very responsive to the concern that this had not been 
adequately ventilated by the public. And that was promptly 
corrected on exactly the ground you state, and that was the 
Secretary's decision.
    Mr. Stearns. Yes. So here we have end-of-life-care rules in 
Medicare--controversial, to say the least. And she agreed that 
she had not even sought public notice. Don't you find that--is 
the word ``preposterous''?
    Mr. Sunstein. Well, I think what happened was that, long 
before anything like that went into effect, the correction was 
made. And that is a good thing.
    Mr. Stearns. But you agree that she was incorrect by not 
asking for public comment?
    Mr. Sunstein. Well, HHS, I think what they formally said 
was not that they hadn't asked for public comment, but that it 
hadn't been adequately ventilated by the public. This is a 
very----
    Mr. Stearns. Ventilated? Ventilated. OK.
    Mr. Sunstein. Ventilated, not in the sense of air, but in 
the sense of----
    Mr. Stearns. But don't you think those particular rules, 
end-of-life care, should certainly have asked publically for 
public comment in a very clear manner, unambiguous, so that the 
American people have confidence? I mean, that seems to be so 
basic. Wouldn't you agree?
    Mr. Sunstein. Yes. And that is why the Secretary amended 
the rule.
    Mr. Stearns. Yes.
    Was your office ever briefed on the decision to include 
this regulation?
    Mr. Sunstein. We saw the regulation. We were not----
    Mr. Stearns. Just ``yes'' or ``no.''
    Mr. Sunstein. We were not briefed on that particular issue.
    Mr. Stearns. No. The answer is ``no.''
    Were any materials provided by HHS about this regulation to 
you?
    Mr. Sunstein. The regulation was presented to us.
    Mr. Stearns. Could you please submit those for the record 
for us?
    Mr. Sunstein. The regulation is the same regulation that 
was published. So you already have it.
    Mr. Stearns. But the materials--the question I had, were 
any materials provided?
    Mr. Sunstein. Independent----
    Mr. Stearns. Not the regulation. We are talking about the 
materials----
    Mr. Sunstein. No, I don't believe any independent materials 
were provided.
    Mr. Stearns. So there is nothing you could provide.
    Mr. Sunstein. I don't believe so.
    Mr. Stearns. Has your office ever been contacted about the 
possibility of including end-of-life-care rules into future 
regulation?
    Mr. Sunstein. No.
    Mr. Stearns. OK.
    And, at this point, do you feel that the analysis for the 
end-of-life-care rules has been sufficient by the 
administration and a comment period, that it has been adequate?
    Mr. Sunstein. What I understand is that the provision to 
which you object has been eliminated. And I support the 
Secretary's decision.
    Mr. Stearns. And so we don't think it will ever come up 
again, a new rule for the end-of-life care?
    Mr. Sunstein. Well, you know, we are in the business of 
reviewing rules that come before us. I would defer to the 
Secretary's statement----
    Mr. Stearns. But your understanding is, by her amending and 
pulling this, that there is not going to be any further end-of-
life rules? Or they are going to be amended?
    Mr. Sunstein. I would defer to her on any such issues.
    Mr. Stearns. OK.
    All right, my time has expired.
    I recognize the gentlelady, 5 minutes.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Mr. Sunstein, in your testimony, you talked about how 
initiatives described in the preliminary regulatory lookback 
plans released by Federal departments and agencies can 
potentially save billions of dollars in the future.
    Can you describe some of the steps that agencies have taken 
that have already led to significant cost savings for 
individuals and businesses?
    Mr. Sunstein. Yes. We have from DHS something that happened 
in December, which was a reporting requirement imposed on 
airlines, that is 1.5 million hours. So that 1.5-million-hours 
burden has just been eliminated already.
    I mentioned the EPA milk rule. EPA also exempted biomass 
from the greenhouse-gas permitting requirement, something that 
was of great interest to the biomass industry. That is a 3-year 
exemption, potentially longer. That will have significant 
economic consequences.
    OSHA has proposed and now has announced it will finalize a 
$500 million burden-reduction initiative. And we have a number 
of initiatives that actually were announced long before the 
President's Executive order that promised over 60 million hours 
in annual burden reduction. And I don't know how much an hour 
is worth, but even if it is worth relatively little, which I 
don't believe, that 60 million hours turns into a lot of money.
    Ms. DeGette. So, as you described in your testimony, now 
that you have had this comment period and the public process, I 
think you said now through August the agencies are actually 
going to be looking at more exact ways that they can cut 
regulatory burdens and start implementing the plans, I would 
assume, August, September. Is that correct?
    Mr. Sunstein. Exactly.
    Ms. DeGette. So I hate to do this to you, but I have 
suggested to Chairman Stearns that we have you come back in the 
fall, after Labor Day, and talk to us about what progress has 
been made over the summer. Because just like you, we are very 
committed to commonsense regulatory reform.
    And like I said to you before, at least my view, I have 
always been a proponent of regulatory reform, but I don't think 
regulations are--I don't think regulations per se have values 
attached to them. I don't think that they are inherently good 
or bad. I think some regulations are helpful, and they can 
protect the public interest, and they can save money. And I 
think some are overly burdensome.
    I think that that is the view that you share and the 
administration shares, too, correct?
    Mr. Sunstein. Yes.
    Ms. DeGette. So if you can come back and let us know what 
kind of progress you have made, I think that would be helpful. 
Would you be willing to do something like that?
    Mr. Sunstein. I would be delighted.
    Ms. DeGette. OK.
    One of the priorities that the Executive order said is that 
he wants to tailor--the President wants to tailor regulations 
to impose the least burden on society. And a lot of our 
concern, on both sides of the aisle, is the concern about 
regulatory burdens on small businesses.
    So I am wondering if you can talk to me about what you have 
seen already and what you see coming ahead this summer to 
reduce regulatory burdens specifically on small businesses.
    Mr. Sunstein. OK, great.
    On the same day that the President issued the Executive 
order, he issued a memorandum on small business, protecting 
small business from unjustified regulation.
    And what the memorandum does is two things. First, it 
reiterates and underlines the requirements of the Regulatory 
Flexibility Act, an extremely important statute for small 
business. And, second, it goes further by saying, if an agency 
is not going to have flexibility for small business, such as a 
delayed compliance date, a partial or total exemption, 
simplified reporting requirements, it must specifically explain 
itself.
    Now, we have seen, in the last months, some prominent 
actions by Cabinet-level departments eliminating burdens for 
small business--sometimes reporting burdens; sometimes not 
reporting burdens, sometimes regulatory burdens--and, in two 
important cases, by pulling rules back so as to engage with the 
small business community to see if there is a way of doing it 
that would be minimally burdensome on them.
    Ms. DeGette. You know, one of the things I noticed--I was 
thinking about this. When I talk to businesses in my district, 
small and large, one of the great frustrations is obsolete 
regulations that have reporting requirements that are based on 
a lack of technology. And now that technology has moved ahead, 
they are saying, ``Why can't we just report electronically? Why 
do we have to fill out all these forms too?''
    Is the administration doing anything to specifically 
address those concerns?
    Mr. Sunstein. Absolutely. And we have heard the same thing. 
It sounds more small potatoes than it actually is. Small 
business says, ``We could do it electronically. It would be 
easy. It would take us a short time. You are having us do all 
this paperwork, which is a mess for us.''
    If you look through the plans, you will see numerous 
initiatives from numerous agencies that say, we are going to go 
from paper to electronic. And we have a little precedent here--
actually, not so little. The Department of Treasury has a 
paperless initiative that is going to save $500 million in the 
next years just by eliminating the use of paper. That is 
taxpayer dollars. We hope to transfer that to the private 
sector.
    Ms. DeGette. Let me just ask you, Mr. Sunstein. If you can 
get somebody from your staff to send us an e-mail--don't send 
us a letter----
    Mr. Sunstein. Not paper.
    Ms. DeGette [continuing]. Send us an e-mail listing all of 
those initiatives so that we can actually know what is going on 
and communicate that to our constituents.
    Mr. Sunstein. Great.
    Ms. DeGette. Thank you very much for coming back to us.
    Mr. Stearns. The gentlelady's time has expired.
    The gentleman from Texas, Dr. Burgess, is recognized for 5 
minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    And thank you again, Mr. Sunstein. We are appreciative of 
you spending so much time with us today.
    You wrote a piece for the Wall Street Journal: ``21st-
Century Regulation: An Update on the President's Reforms.'' You 
talked a little bit about, let's stop crying over spilled milk.
    But just to set the record straight, everyone in this town 
loves to blame all the problems of the world on the previous 
administration. But sometimes we need to give credit where 
credit is due to the previous administration. And the spilled-
milk rule actually was proposed in the Federal Register January 
15th of 2009, which was a few days before the President took 
the oath of office. Is that correct?
    Mr. Sunstein. Yes. And our final rule is much more 
aggressive in its deregulation than the Bush proposal.
    Mr. Burgess. All right. Well, give the former President 
credit when we talk about that.
    I do have to follow up on some of the ACO questions that 
Ms. Blackburn asked, because this is--and, Mr. Chairman, if I 
may, I would ask that today's--in today's Politico, Tevi Troy, 
a former Deputy Secretary at Health and Human Services, now 
with the Hudson Institute, senior fellow at the Hudson 
Institute, said it is time to redraft the rules that cover 
ACOs.
    It gives a very good description. ACO is actually a concept 
started with the Physician Group Practice Demonstration Project 
under Secretary Michael Leavitt in the previous administration. 
ACOs, while perhaps not my individual favorite, may have been a 
bipartisan approach to bringing down the cost of delivering 
health care in this country, particularly within the Medicare 
system. Many clinics across the country had embraced this 
concept, but they were left with a mishmash of a regulation, 
that they just threw up their hands and said, ``We can't do 
this; this doesn't work.'' And yet, it was working in their 
demonstration projects in Secretary Leavitt's administration.
    Now, one of the things Secretary Leavitt found was that 
they put a 2 percent savings--before the ACO got to participate 
in any of the shared savings, there was a 2 percent barrier. 
And under the rule, it is now 2 percent to almost 4 percent.
    So what they found under Secretary Leavitt was only 4 out 
of the 10 practices, as I recall, the Physician Group Practice 
Demonstration Project data, only 4 were actually able to meet 
that bar. And now we have, in fact, increased that bar and made 
it higher. Is that really a positive step in this regulation?
    Mr. Sunstein. The rule is proposed, and your comments and 
those of your staff, as well as those of your constituents, are 
not just welcome but needed so we get this right.
    Mr. Burgess. But, just to be clear, we have a hard 
deadline, do we not, in the Patient Protection Affordable Care 
Act of January 1, 2012? So this rule is going to have to be 
either revised or reproposed. The clinics are going to have to 
assimilate this data, digest this data, and decide whether or 
not they can meet the statutory and the financial requirements, 
which are significant, all by January 1st, 2012; is that 
correct?
    Mr. Sunstein. If we could in 4 months produce 600 pages of 
lookback plans with hundreds of rules to be revised, then we 
can get that done on the schedule.
    Mr. Burgess. You can get it done, but I am talking about 
Geisinger, I am talking about Mayo Clinic, I am talking about 
Gundersen Lutheran. Are these organizations going to be able to 
do the complex financial analysis that is going to be required 
in order to meet this January 1, 2012, deadline?
    Mr. Sunstein. The statutory deadline, yes?
    Mr. Burgess. Yes.
    Mr. Sunstein. Well, we are going to do our best we can----
    Mr. Burgess. You told Ms. Blackburn that no more statutory 
or legislative interference was necessary, but I would submit 
to you that perhaps we do need to amend this sacred document to 
allow clinics more time to analyze what you are going to put 
forward.
    Well, what is the minimum financial outlay that a clinic is 
likely going to have to come up with to institute an 
accountable care organization, by your reckoning?
    Mr. Sunstein. I don't have a figure for that. This is a 
proposed rule, where all these issues are under discussion.
    Mr. Burgess. Well, the figure that is given is, like, $1.8 
million, but the American Hospital Association estimates that 
it is going to be between $11 million and $25 million. So it is 
a significant financial investment.
    And here is one of the problems with ACOs. I am a doctor. 
Doctors should be in the driver's seat with ACOs. If they are 
going to really deliver on the promise--as a patient, I want my 
doctor to be in charge. I don't want my health plan to be in 
charge. I don't want the government to be in charge. I don't 
want the insurance company to be in charge.
    But the doctors are in a poor position to be able to manage 
the financial outlay, because not only do you have to pay the 
startup costs of all of the things--the ancillary personnel, 
the electronic health records, and all the things that are 
required for disease management, care coordination, but you 
also have to manage against the financial risk of taking on a 
group of patients who have a set of chronic illnesses, which is 
ideally what the ACO is going to be managing.
    And here is the problem that we have. We are trying to 
figure out what to do with the sustainable growth rate formula. 
And many people were thinking an ACO model may be the way we 
can pivot to a different way of Medicare payment, so we stop 
paying for stuff and pay for wellness. And you delivered to us 
a regulation that is so confusing that the people who purport 
to be able to do this are now shaking their heads and walking 
away, and we have 6 months to fix the problem.
    Mr. Sunstein. Well, I appreciate that. And you are clearly 
a specialist in this, and we need your help to get it right.
    There was a somewhat analogous controversy over an EOC 
regulation under the Americans with Disabilities Act. The 
Chamber of Commerce, incidentally, raised many questions about 
lack of clarity and overreaching. And the first people out of 
the box to celebrate what the EOC eventually finalized was the 
Chamber of Commerce.
    So our hope is we can fix this.
    Mr. Burgess. I am going to submit a question in writing 
that deals with the FDA and medical devices, because we have 
heard a lot of testimony about that in this committee. It is an 
extremely important issue, the FDA guidance documents that are 
under development by the agency and how the streamlining 
process is going to impact those. It is of critical importance, 
not for our manufacturing in this country, but for America's 
patients and America's patients in the future.
    So thank you.
    Mr. Sunstein. Thank you.
    Mr. Stearns. I thank the gentleman.
    Mr. Bilbray is recognized for 5 minutes.
    Mr. Bilbray. Thank you, Mr. Chairman.
    One of the things that has frustrated me, after 35 years in 
public life one way or the other, working with regulatory 
agencies and being in regulatory agencies, is this huge gap 
between the intention of the legislation and the actual 
application.
    A good example would be, wouldn't you agree that any 
environmental law that is deemed implemented in a manner that 
hurts the environment, you know, may not be--obviously, it was 
not being implemented in the manner that the--with the 
legislative intent.
    In other words, would you agree that no environmental law 
should hurt the environment?
    Mr. Sunstein. Sounds right.
    Mr. Bilbray. I will give you an example of what we have had 
for a long time in San Diego. The Clean Water Act requires 
going to secondary activated sludge for sewage treatment. 
Scripps Institution of Oceanography, Roger Revelle, the father 
of the greenhouse-gas issue, stood up and demanded that we take 
a second look at the law.
    And as you know, we require that you do environmental 
assessment. The environmental review said not implementing the 
law would be the best environmental option. There were negative 
environmental impacts to habitat, to the ocean introducing 
chemicals, air pollution. But the bureaucracy still is caught 
on this issue that don't confuse us with the scientific facts, 
we have the law and the law says you have got to do this no 
matter what. And we have been fighting this battle for 20 years 
and we still are running into this issue.
    Don't you think that the administration has two ways to do 
this? Either make the call like the judge did--we had to have a 
judge with the Sierra Club and the county health department 
suing EPA to force them not put this in. That is an interesting 
coalition there. Remember, the county environmental health is 
run by five Republicans. Either accept that or come back and 
ask us to change this law to allow the item to be done. How 
would you propose we handle that kind of conflict?
    Mr. Sunstein. Well, I don't know the particular 
controversy, though I know some of the names there. The first 
obligation of the executive branch is to follow the law. So it 
is profoundly to be hoped that following the law is 
environmentally desirable and, by and large, that is the case. 
The Clean Air Act as noted previously----
    Mr. Bilbray. It is the Clean Water Act.
    Mr. Sunstein. The Clean Air Act is the one that there is 
good data on overwhelming health benefits. But there is some 
good data on the benefits on the Clean Water Act also. So we 
have to follow the law. There may be no choice. It may not be 
available for the executive branch to say we are not going to 
implement the law and go to Congress.
    Mr. Bilbray. OK. Let me interrupt right there, I served 6 
years on the Air Resources Board and 10 years on Air District. 
The success of the Clean Air Act was quantified. You actually 
know, you spend this much money, you reduce this many metric 
tons, you save this many lives per million; right?
    Mr. Sunstein. Yes.
    Mr. Bilbray. The Clean Water Act does not do that. It 
predated the Clean Air Act and it is not sophisticated enough. 
When you bring that up, wouldn't you admit that maybe we ought 
to be sitting down and talking about quantifying the Clean 
Water Act because the Clean Water Act originally really was an 
Act to allow pollutants. I mean, Chicago dumping into a river 
that went into the Ohio and dumped--and polluting everybody's 
water all the way down to New Orleans rather than clean up 
their mess and from what they historically did.
    Mr. Sunstein. OIRA's role is a narrow one of implementing 
what you have told us to do. I would not want to comment just 
in my little domain on what you should do tomorrow. But I would 
say that the Executive order makes a strong plea for 
quantification of costs and benefits and that would certainly 
apply to the Clean Water Act.
    Mr. Bilbray. OK. Let me shift over. Is there anything in 
the Endangered Species Act that requires 4 or 5 to one 
mitigation for disturbing habitat?
    Mr. Sunstein. I don't believe so.
    Mr. Bilbray. No, there is not. Is there anything in the 
Endangered Species Act that requires that when you go in to 
clean out a flood control channel to you to go back and 
mitigate every few years, you have to remitigate for that 
again, even though you had originally mitigated.
    Mr. Sunstein. I am pleased to say that I am confident that 
there is nothing like that in the Act. But I just note that the 
Department of the Interior in its lookback plan has referred 
specifically to streamlining the requirements under the 
Endangered Species Act and taking another look at that.
    Mr. Bilbray. Let me tell you something. I have run into 
that where it is not only an impact on the local government and 
local communities, but it has actually displaced public space, 
park land, because you have agents under fish and game, and 
Fish and Wildlife screaming bloody murder that we have to get 
our pound of flesh from you, four on one, to make up for 
somebody else's problems. And I don't know, do you know 
anywhere in the Endangered Species Act that allows agencies to 
make a permitee mitigate for other people's violations?
    Mr. Sunstein. The way I would phrase it, it is a pretty 
short statute and I would say it does not require what you 
particularly described. I think it is authorized, the Secretary 
of Interior has a lot of authority under some broad terms. So I 
believe it is not required, but it is authorized.
    Mr. Bilbray. Mr. Chairman, I think that the one thing that 
was in the rulemaking where so many of these things were done, 
by in the rulemaking process, that was never included in the 
legislation that was passed by the representatives of the 
people of the United States. And I think this is one thing that 
Republicans and Democrats ought to be able to work at, getting 
the Act back to where it was meant to. Make sure the Clean 
Water Act is cleaning up and helping the environment, not just 
fulfilling a bureaucratic agenda and hurting it. That the Clean 
Air Act is being implementing to where it is helping public 
health and not just running up costs. I hope both sides could 
work on this and I appreciate your testimony today.
    Mr. Stearns. I thank the gentleman. The gentleman from 
Virginia is recognized for 5 minutes.
    Mr. Griffith. Thank you, and I do thank you for spending 
time here and I appreciate what you are doing. We have to roll 
back some of these regulations that are killing jobs, and it 
really does not matter to me who gets the credit as long as we 
get the job done.
    In my earlier questioning, and you were very kind to say 
that you would look into it in regard to the national 
toxicology program related to formaldehyde, that affects 
hundreds of jobs on the northern end of the district, and 
affecting thousands of jobs across the Nation, and particularly 
some well needed jobs in the southern end of my district--my 
district is about the size of the State of New Jersey--is 
styrene. Interestingly, the science is similar and it is 
believed that there may be the national toxicology program may 
be labeling that as a reasonably anticipated carcinogen, 
although there is huge debate on that. Most of the science 
indicates that it is not a problem. So if you could add that to 
the list, I would greatly appreciate it, looking at that.
    We actually, it is interesting because my predecessor and 
Congressman Shadegg wrote a letter last year that detailed some 
questions, and I will be happy to give you a copy if you would 
like. And I followed up along with Congressman Donnelly this 
year saying do you have an answer to these questions? Because 
the main thrust of those questions were we have all of these 
jobs that are going to be impacted, and yet the science does 
not seem to back up the ruling. So I do ask you to take a look 
at that.
    Also related to jobs, obviously I come from a coal district 
and I know that the rest of the committee members are surprised 
it took me this long to get to coal. But I do come from a coal 
district and as we heard today there are a lot of regulations 
out there. And I really wish we could quantify, as Congressman 
Bilbray was just saying, because we all want clean water and we 
all want clean air and we all want jobs. And what you have to 
do, as you know, is a balance to see whether or not you are 
getting a bang for your buck. And my opinion, everybody on this 
committee knows is that a lot of the regulations proposed and 
the newer regulations related to the mining of coal have very 
little positive impact on the environment. I won't say they 
don't have any, but they have very little at the cost of huge 
amounts of jobs and huge usage of coal in the district and in 
this Nation.
    And one of the things that I think is interesting, and this 
applies to both the styrene and formaldehyde. These products 
are going to be made, the question is are they made here. Now, 
if they are causing people cancer, obviously we have to put a 
stop to it. If some other country wants cancer, that is fine. 
But the bottom line is when you talk about coal and you talk 
about some of the things, and one of the things I found 
interesting we had some testimony here that we actually may be 
creating a worse problem with coal by shipping the jobs 
overseas. We are still using the products. They are still 
coming back here. They are being made in China and Kazakhstan, 
and India, and you name it. Places that I didn't know about 
when I was in high school, and now are on the map and they are 
competitors of ours. And we are shipping our coal over there 
and they are shipping their air pollution back to us, because 
as you know, it only takes a few days, 10 days according to a 
NASA study, to get the air to go from the Gobi desert to the 
eastern shore of Virginia. And as a result of that, I am 
concerned that not only are we getting a small bang for our 
buck on the regulations that are proposed and that are coming 
out and that have some that are already implemented, but we are 
actually increasing the air pollution in the United States by 
shipping these jobs off to countries where they don't have even 
the reasonable regulations that I think everybody would agree 
the Clean Air Act did bring us in its early days. So I think we 
have to be very, very careful with what we are doing.
    And we are using the Clean Water Act to actually, I think, 
in my opinion and some others who testified here, inadvertently 
with good intentions to dirty our air. Thank you, and I yield 
back my time.
    Mr. Stearns. Mr. Bilbray, you have a point of order?
    Mr. Bilbray. I just want to point out that I agree with you 
about the fact that we are here to implement the law and 
sometimes there is problems. And God knows, at Air Resources 
Board, I didn't want to touch colognes and hair sprays or 
consumer products. You start messing with a lady's Chanel No. 
9, you get into real problems. But in Arizona--the U.S. versus 
Arizona, just filed last year, this administration claims in 
that, that the executive branch has the ability to pick and 
choose which laws it wants to enforce. And I would ask you to 
take a look at that file because to me it was extraordinary, 
but that is the position of this administration. That the 
executive has the right to choose when not to enforce the law. 
And they have got that on record.
    So if it can be applied to the issue of immigration, my 
question is why wouldn't it be applicable to these other 
regulatory groups? And I leave that with you just to take a 
look at it and see how that position may affect your latitude 
and straightening out some of this problem. And I yield back.
    Mr. Stearns. The gentleman yields back. Does the 
gentlewoman ranking member have any concluding comments? I am 
going to let you go. I just have one comment. You previously 
testified that you disagreed with the Crane report that stated 
that the current regulations are costing American businesses 
$1.7 trillion. Are you aware that the Crane report was a report 
commissioned by Obama administration's Small Business 
Administration in 2009?
    Mr. Sunstein. Yes. What I would say is I wouldn't say I 
disagree, I would say--I hope this is not a subtle difference--
I don't agree. I don't think it has been supported, that number 
hasn't been supported.
    Mr. Stearns. Well, I think your answer would be that you do 
not agree with the Crane report.
    Mr. Sunstein. Yes, the number, I don't believe, has a solid 
foundation.
    Mr. Stearns. I just want to put on the record that you 
disagree with the Crane report?
    Mr. Sunstein. Yes, I disagree with the analysis in the 
Crane report.
    Mr. Stearns. All right. Thank you, Mr. Sunstein. I think 
you have won the prize here for forbearance here today. Thank 
you very much and we will welcome the second panel.
    I'm going to ask unanimous consent--Dr. Burgess asked that 
Tevi Troy's opinion in Politico be put in part of the record. 
Without objection, so ordered.
    [The information appears at the conclusion of the record.]
    Mr. Stearns. We will have you gentlemen sit down at your 
convenience, and I am going to point out who they are before I 
swear them in. Mr. James Gattuso is a senior research fellow at 
the Heritage Foundation; Mr. Williams Kovacs is a senior Vice 
President, U.S. Chamber of Commerce. And Mr. David Goldston is 
Director of Government Affairs at the National Resources 
Defense Council.
    And with that, gentlemen, you are aware that the committee 
is holding an investigative hearing and in doing so we have 
always had the practice of taking testimony under oath. Do you 
have any objection to taking testimony under oath? No? The 
chair then advises you that under the rules of the House and 
rules of the committee, you are entitled to be advised by 
counsel. Do you desire to be advised by counsel during your 
testimony today? No? In that case, please rise and I will swear 
you in.
    [Witnesses sworn.]
    Mr. Stearns. You are now under oath and subject to the 
penalties set forth in title XVIII, Section 1001 of the United 
States Code. If you would give a 5 minutes summary of your 
written statement, we would appreciate it. Mr. Kovacs, we will 
start with you.

  TESTIMONY OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, U.S. 
CHAMBER OF COMMERCE; JAMES GATTUSO, SENIOR RESEARCH FELLOW, THE 
HERITAGE FOUNDATION; AND DAVID GOLDSTON, DIRECTOR OF GOVERNMENT 
           AFFAIRS, NATURAL RESOURCES DEFENSE COUNCIL

                 TESTIMONY OF WILLIAM L. KOVACS

    Mr. Kovacs. Thank you, Mr. Chairman and ranking member. I 
appreciate being invited here to discuss Executive Order 13563 
which calls on agencies to eliminate duplicative outdated and 
unnecessary rules. This is certainly a very positive first 
step. And we have said that many times. I would like to bring 
to your attention the fact that Congress first mandated this in 
1980 in the Regulatory Flexibility Act, and it has been a 
struggle to get it implemented. So it is a good start.
    Now, having said that, one of the concerns and we hope that 
the OIRA moves forward with it, we have got a long way to go. 
If we are going to deal with the jobs issue we have to look the 
at economically significant regulations which have been defined 
by the administrator, permit streamlining, which really creates 
jobs, and frankly, we have to begin looking at the standards 
for quick review. They have a lot of implications as to how the 
regulatory process works.
    And as we are talking about jobs, I want to highlight one 
point that I have in the testimony and that is, some of the 
agencies, like the Environmental Protection Agency have, in 
each one of the environmental statutes, a congressional mandate 
to do a continuing jobs analysis. That is Section 321(a) of the 
Clean Air Act, and that goes through the rest. And, to my 
knowledge, that has never been done and it has been on the 
books for decades.
    The regulatory process has been growing for years. This is 
not new. Since 1976, we have 170,000 new regulations. But--and 
the Chamber has always said we need a lot of these regulations. 
Some of these are just business practices. So when we go into 
the regulatory process, we have to go into it in a way in which 
we understand what it is that we are trying to do.
    The concern on our part seems to be the fact that the 
economically significant regulations have increased 
dramatically; from 2005 to the present they have gone from 137 
a year to 224. These are significant because they do impact 
large parts of society and many industries.
    So when we take a step back, how did we get here? Congress 
has been addressing this issue to try to bring it to some 
control since 1946. I mean, this is 65 years of Congress doing 
this. You enacted the Administrative Procedure Act, and at that 
time, it was to bring the public in and it was to have a 
discussion of what the regulatory process is all about and to 
get the kind of comments, a lot of which frankly you are 
getting here today. But several things happened on the way to 
getting here today.
    The first is Congress actually began to pass very, very 
broad and vague laws and you asked the agencies and 
administrative bodies to begin filling in the blanks and the 
agencies were very glad to fill in the blanks. Then in the 
1970s, you had the courts in the Chevron decision for the first 
time award deference to the agencies. So two things were going 
on simultaneously. One is Congress was giving the agencies a 
lot of discretion over the vague laws and the courts were 
giving them deference.
    That literally tipped the scales as to how the regulatory 
process worked and from that point forward, Congress has 
struggled to get it back and it has been unable to. Just to go 
over it, and it's all in my testimony, but since 1980, Congress 
has enacted the Regulatory Flexibility Act, Unfunded Mandates, 
Information Quality, Data Access, Paper Reduction, Jobs 
Analysis provisions, and we could go on. And each one of these, 
the Congress has struggled to get control over this and it has 
been unable to. A few suggestions that we have, not that any 
one of them should take preference over any other one, but 
there are some, and we ought to look at this.
    And one is, if you are going to focus on the regulatory 
process, you need to focus on those few hundred regulations 
that really make a difference. You have so many things in 
place. You have cost benefits, you have jobs analysis, least 
restrictive alternatives. You have that. We've got to find a 
way to make them work. And I think you can make them work 
quicker in the 200 large regulations than the 4,000 other 
regulations that occur.
    You have got the REINS Act before Congress, certainly would 
put Congress in the driver's seat and should be considered. You 
could require economically significant rules for the agencies 
to actually have a higher standard of review. For example, all 
regulations right now, the smallest of them and the most 
minimal and the largest, are all subject to what--court review 
for what we call arbitrary and capricious, which means if the 
agency can find anything in the record--if the court can find 
anything in the record that the agency supports, the agency 
wins. That really has tipped playing field because the agency 
can always put something in the record. You might want to 
consider giving that a higher standard of review. Maybe for the 
200 economically significant regulations you put--you have a 
formal rulemaking.
    You could also up, since the courts give deference, you 
could require all regulations to be subject to substantial 
evidence. You could put judicial review on many of the 
regulatory statutes that you have already enacted. That way the 
public can help you implement the regulatory process.
    And then finally in the final analysis--I always hate 
recommending anything to Congress, but the Constitution does 
give you sole legislative power. And I think at this point in 
time, that legislative power, because of the regulatory 
process, is shared. Thank you.
    [The prepared statement of Mr. Kovacs follows:]

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    Mr. Stearns. I thank the gentleman.
    Mr. Gattuso, welcome. Your opening statement.


                   TESTIMONY OF JAMES GATTUSO

    Mr. Gattuso. Thank you, Chairman Stearns, Ranking Member 
DeGette, and members of the subcommittee, thank you for the 
opportunity to testify today on this important issue. Four 
months ago the President issued an Executive order instructing 
all executive branch agencies to submit plans for reviewing 
regulations on their books. Last week, and again this morning, 
OIRA Administrator Sunstein reported on the initial progress of 
that review at the various agencies. His report was encouraging 
as agencies have identified a substantial number of obsolete 
and unnecessarily costly regulations. At the same time the 
reforms proposed so far constitute only a very small step 
towards the rollback of red tape that the American economy 
needs. Much more substantial reform is required.
    This is not a new issue. The burden of regulation has been 
steadily increasing over the past three decades through 
Republican as well as Democratic administrations. During the 
present administration, however, the rate of increase has 
reached unprecedented levels. According to figures compiled by 
the Heritage Foundation based on data provided by the 
Government Accountability Office, Federal agencies promulgated 
an unprecedented 43 major regulations during fiscal 2010 alone, 
imposing annual costs as calculated by the agencies themselves 
of at least $28 billion. During the same period, only a handful 
of major rulemakings were completed which reduced burdens for 
the total calculated savings of about $1.5 billion.
    It is in this context that President Obama launched his 
regulatory review initiative. To address the issue, the 
President promised a governmentwide review of rules which was a 
welcomed step. But the requirement that the agencies submit 
plans for a regulatory review of agency regulations, however, 
is not a new or groundbreaking idea. In fact, agencies have 
been required to prepare such plans since 1993, under President 
Clinton's Executive order on regulatory review. There is little 
evidence that such plans have had any impact.
    Moreover, the Obama initiative was hardly government-wide. 
It excluded independent agencies such as the Federal 
Communications Commission, the Securities and Exchange 
Commission, and the new Consumer Financial Protection Bureau. 
In so doing, the President excludes from scrutiny many of the 
largest producers of red tape. And I do understand that OIRA 
invited independent agencies to submit plans on their own, and 
apparently they almost uniformly declined to do so.
    There is precedent on this. And prior reviews of 
regulations by administrations, notably in the 1991 review by 
the Bush administration, it was made clear to independent 
agencies that they should participate and they did. Frankly, 
the President, who has his appointees serving in independent 
agencies, can persuade them to participate if he expresses his 
desires strongly enough. I don't think that was done in this 
case.
    Now despite the limitations the initiative has as reported 
by OIRA Administrator Sunstein, has some meaningful results. 
Overall, the executive branch agencies identified over 100 
possible rule changes for the reported potential savings in the 
short term of about $1 billion. For an administration that up 
to now has reduced regulation on virtually nothing, this agenda 
is significant. As encouraging as that is the administration's 
explicit acknowledgment that regulations have costs and that 
regulators must make time in their day to review the 
restrictions and mandates they have imposed to determine if 
they are actually necessary and effective.
    Still, it is too soon for Americans to breathe a collective 
sigh of regulatory relief. Many of the steps last week are the 
low hanging fruit of regulatory excesses which should have been 
plucked long ago. For instance, the rule describing milk as a 
potentially dangerous oil has been in place since the 1970s and 
the request to eliminate dairy from the regulations have been 
submitted to the EPA as early as 2007. The fact that it took 4 
years to accomplish this is less a notable achievement than a 
sign of a broken regulatory system.
    Many more actions are merely suggestions for change at a 
later date. Of the 31 reforms identified in the EPA's 
regulatory plan, nearly half are termed longer term actions 
that officials have simply marked for a closer look at some 
time in the future. Moreover, these proposed regulatory 
rollbacks are far exceeded by the new regulations which have 
been, or will be promulgated. Thus, while the $1 billion in 
claimed savings from the actions identified by the 
administration is significant, it is swamped by the nearly 
dozen new rules costing more than $1 billion each which have 
been adopted in the last 2 years.
    In other words, the savings expected in this initiative in 
the near term has been counteracted 11 times over by new 
regulations that have been adopted. And there are more in the 
pipeline.
    Until this torrent of new regulation is stopped or at least 
narrowed, net regulatory burdens will continue to increase.
    Let me finish by saying that help is needed from Congress 
as well. I have my written testimony of recommendations for 
reforms that can and should be taken legislatively, including 
establishing a sunset date for Federal regulations, creating a 
Congressional Office of Regulatory Analysis to provide Congress 
with its own capability to analyze and review regulations and 
requiring congressional approval of major regulations that 
place new burdens on the private sector. Thank you for your 
time.
    [The prepared statement of Mr. Gattuso follows:]

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    Mr. Stearns. I thank the gentleman.
    Mr. Goldston, welcome for your 5 minutes.


                  TESTIMONY OF DAVID GOLDSTON

    Mr. Goldston. Thank you, Mr. Chairman, and thank you, 
Ranking Member DeGette and members of the subcommittee for 
having me here today. What I'm going to try to do is run 
quickly through 14 points to summarize some of the points in my 
testimony and issues that have come up this morning. First is 
regulation are needed to safeguard the public. Neither 
individual action nor the marketplace can yield such public 
good as clean air and clean water.
    Second, repeated studies have concluded that the cumulative 
benefits of U.S. regulations outstrip the costs.
    Third studies have generally found that the impact of 
regulation on jobs is neutral to slightly positive. The phrase 
``job-killing regulation'' may come trippingly off the tongue, 
but one gets tripped up looking for the data to back it up. And 
this doesn't even account for the indirect benefits of 
regulation such as a stable banking system or a trusted system 
for reviewing drugs.
    Fourth, studies have found that estimates of what a 
regulation will cost tend to exceed the actual cost of 
implementing a regulation often by a large factor. This is 
because the estimates cannot account well for technological 
change and they are based on information from parties with an 
interest in producing higher estimates.
    Fifth, the Congressional Research Service has found that 
the number of major regulations has not been increasing wildly 
and the CRS count of major regulations differs from the count 
in the Chamber of Commerce's testimony. There may be a 
difference in definition there perhaps.
    Sixth, looking on the basis of all that, while any 
governmental activity like any other human activity can be 
improved, there is no indication of any fundamental problem 
with the U.S. regulatory system.
    Seventh, the Obama administration lookback is a reasonable 
effort to improve safeguards and we look forward to reviewing 
the Agency's more detailed proposals when they come out in 
August.
    Eighth, industry's focus on criticizing future rules can be 
seen in part as a tacit acknowledgement that past rules did not 
turn out to be as problematic at they had predicted.
    Ninth, contrary to some of the claims the Chamber of 
Commerce makes in the testimony, EPA does not simply cave when 
lawsuits are filed and sue-and-settle narrative is faulty.
    Ten, proposals to upend the current regulatory system 
should be opposed. They run counter to historical experience, 
to public opinion, and to the public interest. Measures like 
the REINS Act, which are tantamount to dismantling the current 
system of public protection should be opposed with particular 
vigor.
    Eleven, proposals like REINS are designed to bias the 
regulatory process hopelessly in industry's favor by changing 
procedures. This is probably because the industry knows the 
public would not propose changes in the underlying laws that 
the regulations are designed to enforce.
    Twelfth, in the end, even industry would be harmed by some 
of these proposals because the system would lead to far less 
predictability than we have today.
    Thirteen, regulations by providing clear rules of the road 
helps produce a functioning marketplace and economic 
prosperity.
    And last, in conclusion, Congress should not be accepting 
claims of regulatory harms at face value and should not make 
radical changes to the regulatory system which has safeguarded 
the public at a reasonable cost. Thank you.
    [The prepared statement of Mr. Goldston follows:]

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    Mr. Stearns. I thank you, gentlemen. I will start with my 
questions. Mr. Kovacs, do the amount of current regulations 
impede the ability of businesses to hire new workers to create 
jobs? We just saw that the unemployment has raised, has gotten 
higher.
    Mr. Kovacs. Within our testimony, we have a discussion of 
what we call Project, No Project, which is what we----
    Mr. Stearns. What we do in this committee is usually ask 
for a yes or no if possible. Can you say yes?
    Mr. Kovacs. Yes.
    Mr. Stearns. OK. Is that some part of the problem with the 
current high rate of unemployment which is approaching 9.1 
percent is that your feeling is due to regulation? I know we 
had Mr. Waxman saying he believes in regulation and so forth. 
But in your opinion it contributed to the unemployment?
    Mr. Kovacs. I am not--the answer is I am not an economist. 
Yes, but look at our Project, No Project study, because I think 
that gives you the kind of answers you need.
    Mr. Stearns. That study will give more definitized 
information?
    Mr. Kovacs. Yes.
    Mr. Stearns. And the name of that study is?
    Mr. Kovacs. It is Project, No Project.
    Mr. Stearns. OK. I think both you indicated, and I think 
the third gentleman did too, the idea of these independent 
agencies, and I think all of us are concerned. Don't 
independent agencies that issue regulations also contribute 
significantly to the total burden on the economy? The 
independent? Isn't that true? I will ask each of you. Mr. 
Kovacs?
    Mr. Kovacs. Yes.
    Mr. Stearns. Mr. Gattuso.
    Mr. Gattuso. Yes.
    Mr. Stearns. Mr. Goldston, is that true that the 
regulations from the independent agencies contribute to the 
burden on the economy?
    Mr. Goldston. They contribute regulations, certainly.
    Mr. Stearns. You don't think they affect the--OK. All 
right. Were you surprised that of the 30 preliminary draft 
plans released by the White House on May 26, there were none 
from the independent regulatory agencies under this committee's 
jurisdiction such as the Federal Communications Commission, the 
Federal Trade Commission, the Nuclear Regulatory Commission, 
the Consumer Products Safety Commission, and the Federal Energy 
Regulatory Commission?
    Mr. Kovacs. No, I was not surprised.
    Mr. Stearns. Mr. Gattuso?
    Mr. Gattuso. I was surprised there was not at least one or 
two.
    Mr. Stearns. Mr. Goldston?
    Mr. Goldston. I am not sure I had an opinion on that. There 
is the constitutional issue about whether they can be required 
to do it. There is no reason that they couldn't obviously 
choose to submit plans.
    Mr. Stearns. Do you think there is anything more that OIRA 
could have done to encourage independent regulatory agencies to 
sort of voluntarily submit retrospective analyses of their 
existing rules as set out in the President's Executive order? 
Mr. Kovacs?
    Mr. Kovacs. No, the President suggested it and they decided 
not to do it.
    Mr. Stearns. Mr. Gattuso?
    Mr. Gattuso. As I said in my testimony, I think the 
President can make clear when his request is very serious and 
when it is for show. I think he could have done more.
    Mr. Stearns. Mr. Goldston?
    Mr. Goldston. I have no expertise on that, but I imagine 
they could have done more.
    Mr. Stearns. I think, Mr. Gattuso, you indicated it is too 
soon to breathe early a sigh of relief with President Obama's 
January 2011 Wall Street Journal op-ed, where he termed ``rules 
have gotten out of bounds placing unreasonable burdens on 
businesses, burdens that have had a chilling effect on the 
growth and jobs.''
    Do you think after that particular op-ed, that an Executive 
Order 13653, we're any closer to achieving what Mr. Sunstein 
has cited as has aim of nurturing, ``a consistent culture of 
retrospective review and analysis throughout the executive 
branch''?
    Mr. Kovacs. I think we are closer, but we are dealing with 
a few micro millimeters perhaps moving forward.
    Mr. Stearns. Micro millimeters? OK. Mr. Kovacs, do you 
think Congress should mandate a law that all agencies should 
conduct periodic retrospective reviews?
    Mr. Kovacs. I think you already had in 1980 with the 
Regulatory Flexibility Act, Section 610.
    Mr. Stearns. So it is not being implemented?
    Mr. Kovacs. That is correct.
    Mr. Stearns. You agree that we should--that the Agency 
should have a retrospective mandate to look at the regulatory 
environment in their department.
    Mr. Kovacs. Yes.
    Mr. Stearns. And you agree also?
    Mr. Gattuso. Definitely.
    Mr. Stearns. Mr. Goldston?
    Mr. Goldston. There is no harm in retrospective reviews if 
they don't become the whole sum and substance of what agencies 
are doing. Many statues require regulations to be updated 
periodically, which, in effect, means that the previous reg is 
being looked at.
    Mr. Stearns. You agree, Mr. Kovacs, as I understand your 
testimony, you believe there are two distinct categories of 
regulation, and the primary focus of oversight by Congress and 
the administration should be those regulations that are 
economically significant. In your view, what would be the most 
effective way to address this?
    Mr. Kovacs. There are several ways. One is that they have a 
higher standard of review within the courts. For example, when 
a court reviews a regulation, they treat--they treat their 
review the same as if it is greenhouse gases or if it is 
training for an employee. And what needs to occur, because when 
the courts gave deference to the agencies they literally tipped 
the balance in favor of the agencies and against Congress. And 
the way to address that would be to require the Agency on those 
major rules to go through a higher standard of review, which 
would be a formal on-the-record hearing or something like OSHA 
has which is a hybrid hearing and then to have the court review 
it under the substantial evidence test.
    Mr. Stearns. My time is over. It is just remarkable as you 
pointed out that the Regulatory Flexibility Act mandates that 
these agencies do it and no one is doing it. It is really 
disturbing to think that we have mandated Congress, and yet 
none of these agencies are complying.
    Mr. Kovacs. Well, the first testimony I ever gave 13 years 
ago was on that issue.
    Mr. Stearns. 13 years ago? All right. My time has expired. 
The gentlewoman is recognized for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman. Mr. Kovacs, I agree, 
regulatory reform works at a maddeningly slow rate. And I also 
agree with your written and verbal testimony, it seems to be a 
bipartisan problem. It seems to happen under Republican and 
Democratic administrations; isn't that correct?
    Mr. Kovacs. That is correct.
    Ms. DeGette. Following up on the Chairman's questions--here 
is the problem sometimes with yes or no answers. Here is a 
question for a yes or no answer. Sorry to pick on you. Is 
today's jobless number which came out which we are all upset 
about caused primarily by overregulation; yes or no?
    Mr. Kovacs. I have absolutely no idea, I am not an 
economist.
    Ms. DeGette. Right, OK. Thanks.
    Let me ask you. You said we should really target these 
economically significant regulations which have increased since 
2005, again, on a bipartisan basis. Those are regulations that 
cost $100 million or more; is that right?
    Mr. Kovacs. It is a broader group than that, but it also 
includes----
    Ms. DeGette. OK. That's a term of art?
    Mr. Kovacs. Right. Right.
    Ms. DeGette. And I can't disagree with that. I think that 
is probably a good idea. But I would also say that the 
cumulative effect of other regulations, smaller regulations can 
be, even though it is not one regulation, if a small business 
has to comply with a number of regulation, that, for them, 
might add up to a heavy burden. So we shouldn't ignore the 
smaller regulations while we're focusing on these economically 
significant regulations; correct?
    Mr. Kovacs. That's correct. And that's why I was saying the 
standard of review and the how the Agency approaches it is very 
important. And so that is one of the ways that you might be 
able to----
    Ms. DeGette. Right. And I think that is an excellent 
suggestion. One of my questions because there have been 
different legislation proposed and one of the things you and 
Mr. Gattuso also said that you supported was the idea of having 
both Houses of Congress to approve any regulation that has this 
impact that is an economically significant regulation; correct?
    Mr. Kovacs. That is one of the approaches.
    Ms. DeGette. That's correct? And in your written testimony, 
you said that there were about 180 regulations like that that 
were issued in 2008, which was the last year of the Bush 
administration; is that correct?
    Mr. Kovacs. Those are the government numbers, yes.
    Ms. DeGette. So your answer is yes?
    Mr. Kovacs. Yes.
    Ms. DeGette. OK. So here is what I am concerned about. In 
2008, that same year, we were in session 118 days but there 
were 180 such regulation. And I would assume it is not your 
view that every economically significant regulation should be 
repealed; right? Some of them are useful; right?
    Mr. Kovacs. No, we're not--I am not here today saying that 
you should repeal anything.
    Ms. DeGette. What you are saying is that there should be a 
higher standard of scrutiny which I agree with.
    Mr. Kovacs. That's correct.
    Ms. DeGette. My concern is if you require all of those 
things to come to Congress and Congress is only in session a 
few days a year, we might not get to reviewing all of those 
regulations. Do you understand that?
    Mr. Kovacs. There is nothing being proposed that would go 
retro----
    Ms. DeGette. No, let's say there is a new regulation that 
the Obama administration is proposing and it is an economically 
significant regulation. So it would come to Congress for 
review. If Congress did not review that regulation, what would 
happen is it would be null; isn't that correct? Under that 
legislation?
    Mr. Kovacs. That is correct. It wouldn't be null----
    Ms. DeGette. So--I don't have much time left. So that might 
affect a regulation that was a bad regulation or a good 
regulation; right? It's a great big mallet that comes down and 
kills that regulation.
    Mr. Kovacs. No, it puts Congress in charge of the 
legislative----
    Ms. DeGette. I hear what you're saying. Mr. Goldston, I 
wanted to ask you a couple of questions about the Clean Air 
Act. Because recently, Mr. Waxman asked the EPA to do a report 
on the Clean Air Act and what the report said was that the Act 
created American jobs, and in fact that it prevented 18 million 
child respiratory illnesses, 850,000 asthma attacks, 674,000 
cases of chronic bronchitis, and 205,000 premature deaths. And 
also there was monetary value of $2 trillion by 2020.
    Mr. Goldston, I am wondering if you can tell me whether you 
think--whether you agree with these results of this study that 
was done?
    Mr. Goldston. Most studies that have looked at the job and 
health impacts of regulations show net benefits of the health 
benefits and show----
    Ms. DeGette. Of the Clean Air Act?
    Mr. Goldston. Of the Clean Air Act in particular.
    Ms. DeGette. Now to comply with updated pollution 
standards, businesses must design, manufacture, install and 
operate pollution-reducing technologies. And so a lot of people 
argue that the Clean Air Act has created hundreds of thousands 
of domestic jobs in the field of environmental technologies, 
and generated about $300 billion in annual revenues and 
supported 1.7 million jobs.
    So my question to you is, do you think that Federal 
regulations like these can support economic growth and foster 
job creation.
    Mr. Goldston. Yes, and again, most studies have found a 
neutral to net benefit of jobs overall. That has been on the 
whole. So yes, absolutely.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Mr. Stearns. The gentlewoman's time has expired. The 
gentleman from California, Mr. Bilbray, is recognized for 5 
minutes.
    Mr. Bilbray. Thank you very much, Mr. Chairman. David, let 
me go through a scenario that I will call the good, the bad, 
and the ugly. And you know my background in California. So 
let's use California as sort of the test platform for a 
national strategy on regulatory oversight, especially 
environmental stuff.
    The Air Resources Board, one of the most successful 
environmental agencies ever implemented, has reduced pollution 
by--you know, the air in California is twice as clean as it was 
when the ARB started off. And the population is twice as much. 
Are you aware that the mandates to those of us that were at the 
ARB and are there now, there is a mandate that cost-
effectiveness must be considered before passing any reg; right?
    Mr. Goldston. I certainly take your word for that.
    Mr. Bilbray. And it obviously has not been a major barrier 
to the protection of the public health or the implementation of 
that environmental strategy?
    Mr. Goldston. Right.
    Mr. Bilbray. The success speaks for itself. And in fact, 
let me tell you as somebody who worked 6 years with that 
program. Sixteen totally, between 10 years Air District and 6 
years on the board, it actually helped us. And one of the 
things I get upset about is I find people here freak out about 
that as if it is anti-environmental, where I found that one of 
the great tools, even for myself, I got held up by that and 
stopped from doing--implementing a regulation that I thought 
was good because we had to look at that.
    Don't you think that both Democrats, Republicans and 
everybody else in Washington could learn something by looking 
at that cost-effective mandate, and the way ARB has handled it 
as being something that both sides should be able to agree 
looking at making that trying to learn from that and 
integrating it into our Federal program?
    Mr. Goldston. Everybody obviously should look the at the 
range of experiences. I think the Federal Clean Air Act has 
been effective as well, and CARB obviously is operating under 
its general auspices.
    Mr. Bilbray. But would you agree that when you say that--
and I will come back on you and say was there another agency 
that has implemented the Clean Air Act that has had as much 
reduction as CARB?
    Mr. Goldston. Not that I am aware of.
    Mr. Bilbray. Not that I am aware of either.
    Mr. Goldston. The point is under some parts of the Clean 
Air Act, the standard that is selected is based on health but 
then the decision on how to implement it, which is what you are 
talking about, economics are allowed to take into account and 
there are other parts of the Clean Air Act where economics are 
allowed to be----
    Mr. Bilbray. David, you admit that the EPA and the Federal 
Government has recognized the leadership of CARB to the point 
where we have had carveouts and not just Federal Government, 
but other States have adopted our standards as being the gold 
standard for clean air; right?
    Mr. Goldston. That is my understanding.
    Mr. Bilbray. OK. Now let's talk about the ugly. AB 32, an 
environmental strategy, was put into our legislation. But CEQA 
still applies to our implementation of our greenhouse stuff. 
Now that has created a situation where now my scientists who 
have developed alternatives to fossil fuels using California 
financing and research is forced to leave the state to go to 
production. They are actually leaving and doing their 
production in New Mexico for a good reason. Because under the 
regulations of CEQA, it will take 10 years plus to go into 
production of algae, where in New Mexico it is 9 months minus. 
Big difference.
    And this is, I would say, the bad side of it and showing 
that--now the legislature said they cared enough about the 
environment to put in AB 32, but they didn't care enough to 
exempt it from environmental regulations that would stop the 
implementation. And let me just point out this is the same 
legislature that exempted a football stadium and industry from 
CEQA. So it is not like, you know, absurd.
    Doesn't this tell us something that when we go to 
implementation or we pick our goals we have got to do what it 
takes to implementation practical?
    Mr. Goldston. I don't know the specific case that you are 
talking about. As a general rule, certainly, as a New Yorker, 
it doesn't hurt me to hear tales of the oddness of the 
California State legislature. But I don't know the specific 
case.
    Mr. Bilbray. I think it is mind-set, the problem was. Not 
understanding the great goals and standards are easy for 
legislators to do but it is tough for them to take the hit on 
the fact that regulatory obstructionism is a major barrier to 
innovative environmental and economic growth.
    I guess the other issue that I would bring up is a good 
example of, and you were aware of it because you were working 
on this, we are required to go to secondary sewage across the 
sec--with activated sludge. When you have the Scripps 
oceanographers telling us that it is going to not only to hurt 
the environment, but when we do the environmental assessment 
implementing the Federal law on secondary in certain instances 
hurts the environment to the point where the Sierra Club and 
the environmental health Department of the County of San Diego 
sued the Federal Government to stop it.
    Don't you think we really need to go back and start looking 
at that outcome base, the cost-benefit and how it really 
affects the real world and not just what it was meant to do?
    Mr. Goldston. Again, I don't know the specific case, but 
the notion of judging by outcome I think makes a lot of sense, 
yes.
    Mr. Stearns. I thank the gentleman. The gentleman from 
Virginia is recognized for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. Mr. Goldston, I 
believe, very mildly put, that rules have gotten out of balance 
placing unreasonable burdens on business, burdens that have a 
chilling effect on growth and jobs. My understanding of your 
testimony is you disagree with that?
    Mr. Goldston. I would say as a broad conclusion I disagree. 
That doesn't mean that there are no rules that could be 
changed.
    Mr. Griffith. And so that I'm being fair with you I will 
tell you that that actually is a line that I agree with. 
Probably my version would be put on steroids, but that is a 
line out of President Obama's January 2011 Wall Street Journal 
op-ed piece. So it is not just me, it is the President who 
thinks we ought to do something about this. And that is why I 
was very pleased that Mr. Sunstein spent so much time with us 
because it is probably one of the few things that I would agree 
with the President's administration on. I believe this is an 
area where we can all come together and recognize that it does 
have--these regulations do have an effect on jobs, and my 
district in particular, which is the ninth district of 
Virginia, which is a large district. Some would call it rural, 
others might not. It is heavily dependent on manufacturing and 
mining. We do have a university or two in the mix, but it is 
heavily dependent on that. And we are seeing the effects of 
these regulations.
    You indicated in your comments that you felt like that if 
we started rolling back some regulations it might make things 
less predictable. And I am just wondering if you have had the 
opportunity to hear the testimony in front of one of the 
committees where Notre Dame came in and testified that in 2004, 
they attempted to comply with what they believed the EPA 
regulations were going to be in regard to boilers. And of 
course, the EPA has backed off of its boiler MACT regulations, 
but they were very concerned about it because they spent 
millions of dollars to comply with what they thought the EPA 
wanted, only to find out a few years later that that wasn't 
good enough and they were not going to be able to qualify as a 
valid boiler if the new regulations had come into effect. And 
these are folks who were really trying. And I just can't agree 
with you. I believe that we need to do more to make things 
predictable.
    And Mr. Kovacs, if I might ask you, on page 12 of your 
prepared statement, you have got a copy, I believe I have seen 
this or a similar chart before of all the new regulations 
coming into effect at that time, and again, boiler MACT is 
not--it is on the back burner if not off the stove completely.
    But I just--you can look at all of these colors from over 
there and see. If a member of your organization, doesn't matter 
which agency, whether it is EPA or OSHA, sees that much coming 
at them, do you think they think that is predictability in 
regulation?
    Mr. Kovacs. Well, it is clearly not predictability.
    Mr. Griffith. That's why I asked it.
    Mr. Kovacs. Whatever it is going to change. I would like to 
make a point without being stuck to the yes or no. We have been 
talking about jobs all day. And if jobs are really being 
created by all of these rules, then the Environmental 
Protection Agency should be implementing the continuing jobs 
analysis that it's got under 321 and all the other rules. There 
are mechanisms.
    If you go through everything that Congress has done for the 
last 30 years, you have least restrictive alternatives. It is 
never applied. You have unfunded mandates any time it is over 
100 million dollars. There are an entire list of issues to be 
done. You have within each of the environmental statutes some 
form of this continuing jobs analysis. We have it there and it 
is not being done. So there are ways to bring resolution to 
this issue.
    But going back to your question, yes, that is an enormous 
amount of regulatory uncertainty. But if you look going forward 
between health care--which I am not an expert on--or financial 
services, we went from the 137 to 224, that chart is going to 
go this way.
    Mr. Griffith. If I understand your answer in general, and 
your other comments as well what I am hearing you say--correct 
me if I am wrong--what I'm hearing you say is if, as some would 
like to think that regulations actually create jobs, then they 
should embrace congressional requests that they establish what 
jobs they are creating and what the impact is on jobs. Because 
if these regulations are so good for jobs, a requirement to 
detail the jobs effect of the regulation would come out that 
these regulations are actually helping everybody.
    And so the EPA and the administration and all the others 
actually ought to actually get behind the TRAIN Act and other 
Acts that call for more data that show that these regulations 
are, in fact, creating job, if that is true. Is that what you 
are saying sir?
    Mr. Kovacs. Absolutely. That is what they should do. The 
Congress has already mandated it in the other statutes. But I 
would even go one step further. EPA uses proprietary models. It 
does not use the public models as required under the Data 
Quality Act. It should begin releasing all of its models so 
that we can see the assumptions. They should go in and begin 
applying the Data Quality Act, which the administrator said 
gave a hint to that, it is a good way of testing the 
statistics, the data, the information.
    The agencies have written, since Congress passed that in 
2000, the agencies have literally written that out. And the 
only thing it says is that the agencies are to open up their 
data, to use the most up-to-date data, put that data in the 
record and allow that data to be peer-reviewed and tested 
within the system. That has not occurred since the law has 
passed.
    Mr. Griffith. Thank you, sir, I see my time is up.
    Mr. Stearns. I thank the gentleman. We are ready to close. 
I think one thing I am getting out of this panel is that the 
frustration that routinely the Federal agency ignore the 
requirements contained in such laws as Mr. Kovacs mentioned, 
the Regulatory Flexibility Act, the Information Quality Act, 
and the unfunded Mandates Reform Act.
    I mean, that is a concern I think for a member of either 
party, a bipartisan issue to think that they routinely ignore 
that. And we really have a responsibility to make them comply. 
And so with that----
    Ms. DeGette. Mr. Chairman, I just would point out to the 
gentleman from Virginia, I completely agree that there should 
be some explanation by these agencies, the EPA and the other 
agencies, about, in fact, what the impact of these regulations 
should be on jobs. And that is, as Mr. Kovacs says, why most of 
the existing laws require that analysis.
    My concern about this REINS Act, which the gentleman refers 
to, is it does not just say you shall submit to Congress how 
many jobs it creates. It submits these regulations to Congress 
for approval or disapproval and if Congress just doesn't get 
around to doing it, it fails. And it might be a useful 
regulation that we all could agree on. That's the issue. It 
goes much farther than just that jobs issue. And with that, I 
yield back.
    Mr. Stearns. Does the gentleman want to comment on that?
    Mr. Griffith. Yes, Mr. Chairman, I would just say that the 
reference I made was actually to the TRAIN Act, which we had in 
subcommittee last week. I do support the REINS Act and your 
comments are valid but my reference was to TRAIN Act today.
    Ms. DeGette. Trains, reins.
    Mr. Stearns. I thank my colleagues and with that, the 
subcommittee--oh, we have 10 days to submit for the record any 
opening statements or any questions that we might further ask 
for you folks. So thank you, and the subcommittee is adjourned.
    [Whereupon, at 12:45 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared Statement of Hon. Joe Barton

    Thank you, Mr. Chairman, for holding this important hearing 
to discuss OIRA's role in reviewing proposed and final rules 
before those rules are published in the Federal Registrar. As 
the president stated, this new approach is supposed to remove 
outdated regulations that stifle job creation and make our 
economy less competitive. According to Obama's 2011 Executive 
order, agencies were required to submit to OIRA a ``preliminary 
plan'' laying out how each agency intended to review its 
existing ``significant'' regulations and determine which ones 
should be modified or repealed. On the face of it, that sounds 
great. However, after reviewing those plans, I am troubled.
    I am not sure anyone really took this seriously. Many 
agencies submitted plans that simply regurgitated the Executive 
order, claiming that they were already engaged in the process 
of reviewing their existing significant regulations. Most of 
the agencies that actually submitted a substantive ``plan'' 
focused on streamlining reporting and making information 
available online. This type of review is not the ``look back'' 
that I was hoping for, or that the President ordered.
    What I consider significant regulations, are rules that 
have a major impact on American jobs and our economic 
recovery--such as the Environment Protection Agency's move to 
regulate green house gasses, or their role in overseeing the 
implementation of Title V programs in States. Unfortunately, 
the EPA did not consider these important enough to consider in 
the near term.
    We were led to believe that agencies were directed to 
listen to the public's grievances and consider the regulations 
identified by stakeholders in the private sector before 
submitting their plans. If the EPA had actually done this, they 
would have listened to the 12 states that have already filed 
suit to protect domestic jobs. They would have also heard from 
industry, small business.
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