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



 
            HOW A BROKEN PROCESS LEADS TO FLAWED REGULATIONS

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



                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT

                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 14, 2011

                               __________

                           Serial No. 112-84

                               __________

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

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




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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

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

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


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 14, 2011...............................     1
Statement of:
    Graham, John, Ph.D., dean, Indiana University School of 
      Public and Environmental Affairs; Robbie LeValley, co-
      owner, Homestead Meats and member of the Board of 
      Directors, National Cattlemen's Beef Association; David 
      Arkush, director, Public Citizen's Congress Watch; David 
      Barker, owner, Vida Preciosa International, Inc.; and 
      Mathew Palmer, flight attendant, Delta Air Lines...........    13
        Arkush, David............................................    35
        Barker, David............................................    46
        Graham, John.............................................    13
        LeValley, Robbie.........................................    29
        Palmer, Mathew...........................................    53
    Sunstein, Cass, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget........   159
Letters, statements, etc., submitted for the record by:
    Arkush, David, director, Public Citizen's Congress Watch, 
      prepared statement of......................................    37
    Barker, David, owner, Vida Preciosa International, Inc., 
      prepared statement of......................................    48
    Chaffetz, Hon. Jason, a Representative in Congress from the 
      State of Utah, letter dated September 2, 2009..............   111
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland:
        Letter dated September 13, 2011..........................   102
        Letter dated September 13, 2011..........................   105
        Prepared statement of....................................     8
    Graham, John, Ph.D., dean, Indiana University School of 
      Public and Environmental Affairs, prepared statement of....    16
    Issa, Chairman Darrell E., a Representative in Congress from 
      the State of California:
        Prepared statement of....................................     4
        Staff report.............................................    65
    LeValley, Robbie, co-owner, Homestead Meats and member of the 
      Board of Directors, National Cattlemen's Beef Association, 
      prepared statement of......................................    31
    Maloney, Hon. Carolyn B., a Representative in Congress from 
      the State of New York, Public Citizen report...............   133
    Palmer, Mathew, flight attendant, Delta Air Lines, prepared 
      statement of...............................................    55
    Sunstein, Cass, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................   162


            HOW A BROKEN PROCESS LEADS TO FLAWED REGULATIONS

                              ----------                              


                     WEDNESDAY, SEPTEMBER 14, 2011

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:33 a.m., in 
room 2154, Rayburn House Office Building, Hon. Darrell E. Issa 
(chairman of the committee) presiding.
    Present: Representatives Issa, Mica, McHenry, Jordan, 
Chaffetz, Walberg, Lankford, Amash, Labrador, DesJarlais, 
Gowdy, Guinta, Farenthold, Kelly, Cummings, Maloney, Norton, 
Tierney, Cooper, Connolly, Quigley, Davis, Welch, and Murphy.
    Staff present: Michael R. Bebeau, assistant clerk; Robert 
Borden, general counsel; Molly Boyl, parliamentarian; Lawrence 
J. Brady, staff director; Joseph A. Brazauskas and David 
Brewer, counsels; John Cuaderes, deputy staff director; Gwen D. 
Luzansky, assistant clerk; Adam P. Fromm, director of Member 
liaison and floor operations; Linda Good, chief clerk; Ryan M. 
Hambleton and Kristin L. Nelson, professional staff members; 
Christopher Hixon, deputy chief counsel, oversight; Justin 
LoFranco, press assistant; Mark D. Marin, senior professional 
staff member; Kristina M. Moore, senior counsel; Laura L. Rush, 
deputy chief clerk; Rebecca Watkins, press secretary; Peter 
Warren, legislative policy director; Krista Boyd, minority 
counsel; Ashley Etienne, minority director of communications; 
Devon Hill, minority staff assistant; Carla Hultberg, minority 
chief clerk; Paul Kincaid, minority press secretary; Chris 
Knauer, minority senior investigator; Lucinda Lessley, minority 
policy director; Dave Rapallo, minority staff director; and 
Suzanne Sachsman Grooms, minority chief counsel.
    Chairman Issa. Ladies and gentlemen, in the interest of 
time, we are assured the witness is coming, but we are going to 
go ahead and begin, and he will be sworn in separately if he 
arrives after that.
    The hearing will come to order.
    The Oversight and Government Reform Committee exists to 
secure two fundamental principles: first, Americans have a 
right to know that the money Washington takes from them is well 
spent and, second, Americans deserve an efficient, effective 
government that works for them. Our duty on the Oversight and 
Government Reform Committee is to protect these rights. Our 
solemn responsibility is to hold government accountable to 
taxpayers, because taxpayers have a right to know what they get 
from their government. We will work tirelessly in partnership 
with citizen watchdogs to deliver the facts to the American 
people and bring genuine reform to the Federal bureaucracy.
    Good morning again. Our hearing today is going to 
scrutinize agencies and the Federal regulatory process. We not 
only know on this committee that it is flawed and that it often 
punishes job creators and stifles economic growth, but 
President Obama has spoken about and even launched an effort to 
evaluate regulations that create unnecessary burdens. 
Regulatory agencies under this administration, though, have 
gone in the opposite direction.
    And understand regulatory agencies under every 
administration have a push to do more. But under this 
administration we have increased from 2,044 in 2009 to 2,439 in 
2010. Another way of putting it is they pass more laws than we 
do here in Congress. Their laws are not subject to accounting 
in the way that we are. If we cost more money, we have to find 
offsets. Regulatory agencies have an inherent right to pass on 
cost to you.
    We have seen the budgets of these regulatory agencies grow 
by 16 percent over the last 3 years. Investor's Business Daily 
summarized: If the Federal Government's regulatory operation 
were a business, it would be the fiftieth largest in this 
country in terms of revenue and the third largest in terms of 
employees. Regulators in America represent a larger work force 
than all of McDonald's workers, Ford's workers, Disney's and 
Boeing's combined. With a quarter of a million regulators, 
there is no question that job security is, in fact, growing 
their operation.
    Employment at regulatory agencies has climbed 13 percent 
since President Obama took office, and the number of staff 
working on regulatory matters is scheduled to increase at a 
rate of 10,000 new employees per year over the next 2 years. 
The number of full-time regulators now is expected to reach, in 
2012, 291,000.
    Meanwhile, since President Obama took office, private 
sector jobs have declined by 5.6 percent. We don't blame the 
President for the growth of regulation; we don't blame the 
President for the loss of jobs. But under his watch this has 
occurred. Under our watch, Mr. Cummings and myself, we have an 
obligation, with the President, to reverse this trend.
    The administration has 219 economically significant 
regulations in the pipeline right now. If finalized, these 
would cost $100 million or more each year to the economy. That 
is a minimum cost of $219 billion over 10 years. And understand 
when I said that, each of them is significant; therefore, each 
of them costs more than $100 million apiece.
    To date, the administration has already imposed 75 new 
regulations, at a cost of more than $380 billion over 10 years. 
The business owners and workers who we will hear from today are 
not Fortune 500 executives, they are Main Street business 
owners and workers from around the country. They, their 
families, coworkers, and employees bear the cost of new and 
proposed regulations. For them, the business around the country 
has a price greater than just compliance; it is in fact a 
hidden tax, uncertainty, and perhaps the loss of jobs not yet 
created or jobs that will not be retained.
    An uncertain regulatory climate breeds a market of 
uncertainty, forcing job creators' capital to wait on the 
sidelines. Making matters worse, the Federal agencies charged 
with serving as a watchdog over Federal rulemaking, OIRA, has 
failed to take meaningful action to address the breakdown in 
this process.
    One of our questions today will be if an agency says 
something is not economically significant, meaning less than 
$100 million, and later that is proven to be flawed, is there 
going to be a do-over or do we simply assume that we didn't 
catch that one and it becomes law without the scrutiny of its 
economic impact?
    Today we will hear from Administrator Sunstein and expect 
him to address specific details of why and how this has 
happened and what we can do to fix it. I would like to take 
note that the written testimony he will provide to the 
committee fails to answer the questions that we have asked. I 
intend to ask Mr. Sunstein to explain how the regulatory 
process can be circumvented, ignored, or openly flaunted by the 
bureaucracy in a manner contrary to direction given by the 
President.
    Thus far, the rhetoric we have seen from the Obama 
administration on the issue of regulatory reform has not 
matched its deeds. But we take the President at his words. We 
intend to assist in seeing that, under our watch and under the 
President's watch, we reverse this trend.
    In order to be fair to the ranking member, I will put the 
rest of my opening statement in at this time, and I recognize 
the ranking member for his opening statement.
    [The prepared statement of Chairman Darrell E. Issa 
follows:]
[GRAPHIC] [TIFF OMITTED] 71982.001

[GRAPHIC] [TIFF OMITTED] 71982.002

    Mr. Cummings. Thank you very much, Mr. Chairman, and I 
thank you for calling this hearing. I think every member of our 
committee would agree that creating jobs should be our 
committee's number one priority. The question is whether we can 
develop bipartisan solutions we can all support.
    When I go home to my district, only 40 miles away from 
here, my constituents tell me we need to find common ground; we 
need to focus on concrete proposals and we need to pass them 
now. More than 7 months ago, as one of my first actions as 
ranking member, I wrote to the chairman requesting that the 
committee hold hearings on an initiative proposed by President 
Obama in his State of the Union Address. The proposal was to 
create jobs and strengthen the economy by investing in 
America's infrastructure. This proposal was endorsed by both 
the U.S. Chamber of Commerce and the AFL-CIO.
    As I said at the time, ``These are exactly the kinds of 
bipartisan constructive initiatives our committee and Congress 
should support.'' When the chairman decided not to hold that 
hearing, I placed my statement into the record during a hearing 
just like this one, which focused on regulations. Since then we 
have held 20 more hearings on regulations, but we have held few 
hearings on bipartisan proposals to create jobs.
    In his speech to Congress and to the Nation last week, 
President Obama renewed his call for bipartisan action on his 
infrastructure proposal to create jobs by rehabilitating homes, 
businesses and communities; investing in a national 
infrastructure bank; modernizing 35,000 schools; and expanding 
access to high speed wireless. As I said in a hearing 
yesterday, we have to be very careful in our country because if 
we do not improve our infrastructure, we will be destroyed from 
the inside.
    On Friday I sent another letter to the chairman urging the 
committee hold hearings on the President's infrastructure 
proposal, as well as other components of the American Jobs Act. 
I hope this committee will hold these hearings and I hope we 
can be part of a helpful, positive solution.
    With respect to regulations, I support a balanced and 
thorough review designed to improve regulations. I think there 
is no member of this committee that would be against that. One 
of the things that we must ask as we approach this is will we 
get rid of regulations and what guarantee that jobs will be 
created? Will we be in a situation where we have no 
regulations, businesses are making big money because they have 
gotten rid of regulations, benefits of the regulations are 
gone, companies are making all kinds of money and our poverty 
rate goes up, as was reported just yesterday, at an alarming 
rate?
    As I have said before, I strongly believe that any 
responsible effort to review regulations must consider both 
costs and benefits. Today we will not hear a balanced view, by 
the way. Instead, we will hear a lopsided view about why some 
groups believe certain regulations are flawed. This approach 
narrows the information received by the committee and serves 
neither the regulatory process nor the public interest.
    If a regulation is problematic, we should hear that. But to 
ignore the benefits only fuels cynicism about how we do 
business in this Nation. On a broader level, repealing health 
and safety regulations is no silver bullet. With all due 
respect to our witnesses from the Association of Reptile 
Keepers, repealing a so-called job-killing regulation to allow 
more pythons, boa constrictors, and anacondas into the United 
States is not the kind of bold bipartisan solution Americans 
are looking for to help the economy.
    I am also concerned that the committee may be expanding 
attacks on agencies charged with protecting American workers. 
This week a witness was added to the hearing at the last 
minute. Apparently, he is a plaintiff in an ongoing lawsuit 
against the National Mediation Board, who is objecting to rule 
changes under the Railway Labor Act. The District Court for the 
District of Columbia has already ruled against this plaintiff, 
but his case is scheduled to be appealed next week.
    In my opinion, it is time to work together and take action 
on proposals we should all be able to support. That is what the 
American people want.
    Mr. Chairman, with this in mind, I want to ask you if I can 
work together with you and with the other members of our 
committee to develop a joint, a joint bipartisan committee 
report with recommendations to the Super Committee on reducing 
the debt and increasing the jobs. As you know, the law was 
established that established the Super Committee gave our 
committee the option of submitting such a report by October the 
14th. I think we would make a much more responsive contribution 
if we submit one together, with recommendations on which we all 
can agree. And I would ask, Mr. Chairman, if you would agree to 
do that. I think it is very important. I think we have a lot to 
contribute, particularly with the jurisdiction of our 
committee.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]
[GRAPHIC] [TIFF OMITTED] 71982.003

[GRAPHIC] [TIFF OMITTED] 71982.004

    Chairman Issa. I thank the gentleman and, in full answer to 
his question, I would certainly hope that we would submit joint 
suggestions and each of us, if necessary, submit separate 
suggestions. I think that all of our comments, both the 
majority, minority, and those which we can both agree on, 
should be submitted for the committee's approval, and I thank 
the gentleman for it.
    With that, I would like to recognize the gentleman from 
Florida, the chairman of the Transportation Committee, Mr. 
Mica, for his opening statement.
    Mr. Mica. Thank you, Mr. Chairman, and thank you, Mr. 
Cummings, for convening this important oversight hearing on 
regulations and its effect. I was thinking how do you get all 
these regulations. We are deluged with thousands of Federal 
regulations. Here is how we get them. It is great to follow Mr. 
Cummings, because he is on the Transportation Committee and 
talked about transportation.
    This is the list of current surface transportation programs 
and bureaucracy. This is what we deal with on our committee and 
our jurisdiction. Look at them, dozens and dozens. It started 
from less than a dozen programs. Every one of these programs 
have to produce rules and regulations. So just look at this 
chart and then look at what these people have to do. So one of 
the first things you have to do is collapse some of the 
bureaucracy.
    Some of these are duplicate activities and actually passing 
out all kinds of regulations that people have to deal with. 
Then the results are very important. And if you take something 
like Mr. Cummings talked about, transportation projects, what 
the President talked about, we can throw all the money we want 
at programs and try to say we are going to put people to work 
in transportation.
    Here is the problem we face. Shovel-ready has become a 
national joke. This is why it has become a national joke. In 
this one chart here, you see it takes you about 6 years to 
comply with regulations to get any kind of transportation 
project that involves the Federal Government. Six years. So 
shovel-ready has become just a joke because you can't do it.
    We have proposed actually to reduce the time, if you could 
do some approvals concurrently, rater than consecutively, so we 
are not accused of running over any environmental standards or 
regulations. And many of these things are important to comply 
with, but this is what you have to comply with now, all these 
rules and regulations to do a simple project.
    So the rule of thumb is if the Federal Government gets 
involved, the project takes three times as long and costs three 
times as much. Then, if you are trying to shovel money into 
these projects, which we have tried to do, and we have the 
latest proposal for, what, $450 billion, of which only 12 
percent is transportation and infrastructure. You are going to 
run into the same problem they ran into lost time. How many 
times do you have to hit your head against the wall and get a 
different result?
    But 35 percent of the $63 billion, $63 billion was the 
total out of $787 billion that went for infrastructure, $63 
billion. Thirty-five percent, September 1st, was still in 
Washington, DC; they couldn't even spend it because of the 
regulations that inhibit the ability to move forward with a 
project. So we have to change both the scope of the 
bureaucracies we have created and we have to reduce the 
regulations, or at least find some way to move forward in a 
coherent fashion if you want compliance, and people do want 
compliance with certain things, in a reasonable fashion, and 
that is what we are going to have to do.
    But I am glad you brought up the subject, Mr. Cummings. And 
thank you, Mr. Issa, for holding this hearing.
    Chairman Issa. Would the gentleman yield?
    Mr. Mica. Yes.
    Chairman Issa. We usually don't have additional opening 
statements, but I thank the gentleman because you came well 
prepared and because hopefully this committee, which represents 
the job impediments that every committee of Congress deals 
with, will benefit from that, and I want to especially thank 
you.
    Mr. Mica. Well, thank you. And this is just a little 
microcosm, transportation. But you all serve on different 
committees and deal with different issues in your communities, 
and you see how we are strangling the Nation in bureaucracy and 
regulations, and we have to attack both and this is a good 
start. Thank you.
    Chairman Issa. I thank the gentleman.
    We now recognize the gentleman from Illinois, Mr. Quigley, 
for his opening statement.
    Mr. Quigley. Thank you, Mr. Chairman. I appreciate the 
opportunity to speak.
    I think the President had it right in the State of the 
Union Address when he talked about regulation and finding a 
middle ground. We can avoid unnecessary regulation; we can 
avoid duplicative regulation. It is a tough task, but it is 
important to do.
    But I do think that there are mind-sets and there is 
legislation that is designed to eliminate any new regulation 
and to demonize it. So what I try to do is remind folks in this 
manner: try not to think about regulation at the Federal, 
State, or local level the next time you get on a commuter 
airliner. How much sleep has that pilot had? Try not to think 
about it if you are a miner in West Virginia, if you attend a 
State fair, you are a fisherman in the Gulf of Mexico, or if 
you come to my town, Chicago.
    If you breathe in Chicago, we are the asthma morbidity and 
mortality capital of the United States, the next time we have 
an ozone alert. If you want to put it off, wait until lunch, 
when you have a turkey sandwich, or tomorrow morning when you 
have your eggs. About one in six Americans has food poisoning 
every year. A million cases of salmonella. Or if you just have 
a drink of water in Chicago, where chromium levels are three 
times the healthy limit and lead levels are surprisingly high, 
depending on where you are, based on the distribution system.
    So I recognize that regulation isn't going to solve all our 
problems, but we have to constantly remind ourselves it 
shouldn't be just the day after a catastrophe that we say, 
well, we needed more government regulation. It is an even 
stream throughout our lives, recognizing that critical balance; 
not demonizing it, not cutting it off at the knees with lack of 
funding, but recognizing that middle balance that keeps us 
safe, keeps us healthy, because those catastrophes, those 
illnesses, those deaths cause us money, jobs, and it hurts the 
economy.
    I thank you and I yield back.
    Mr. Connolly. Would the gentleman yield?
    Mr. Quigley. I yield.
    Mr. Connolly. I thank the gentleman. Mr. Chairman, if 
regulations and economical growth were inversely related, then 
sub-Saharan Africa would have the most productive economy on 
earth. If regulations and economic growth were inversely 
related, then economic growth would have accelerated during the 
Bush administration and shrunken during the Clinton 
administration. In fact, median household income today has 
declined to what it was in 1997. If an efficacious National 
Labor Relations Board actually impeded economic growth, then 
the 1950's and 1960's would not have produced the most 
sustained growth in middle class incomes in American history.
    In reality, there is no empirical basis for the claim that 
government relation and economic growth are incompatible, or 
even inversely related. In fact, the evidence seems to suggest 
the contrary. Consider the automotive industry. For decades, 
the Big Three successfully resisted legislative efforts to 
establish meaningful fuel efficiency standards. Their success 
resisting legislation contributed directly to American 
automobiles losing market share to more efficient vehicles 
produced in Asia. Today, following a Federal rescue, General 
Motors and Chrysler automotive manufacturers are deploying more 
efficient, more competitive products consistent with Federal 
regulation.
    Certainly, Mr. Mica has a point that we can find ourselves 
in a regulatory bind in which regulation goes amuck or becomes 
counterproductive. But the idea that somehow it is all or 
nothing is an unacceptable economic proposition. And as my 
colleague from Illinois just pointed out, from a human health 
point of view regulation is essential because the marketplace 
is not self-correcting.
    Mr. Cummings made reference to the fact that we are now 
reduced, in this twenty-second hearing on regulation, 
propounding this etiology that regulation is strangling the 
American economy and if we only released it from regulation, 
jobs would flow and all would be well. We are now reduced to 
the point of actually hearing, no disrespect, Mr. Barker, about 
reptiles and how intrusive Federal regulation is in trying to 
protect the Everglades from now seeing pythons becoming an 
endemic species, killing off all kinds of flora and fauna that 
are native to the Everglades, and the fear that we have 
actually lost the battle because of lack of control, not 
because of too much control, of the importation of dangerous 
and foreign species into the United States.
    So I look forward to the hearing, Mr. Chairman, but I 
certainly reject the premise. Thank you.
    Chairman Issa. I thank the gentleman.
    All Members will have 7 days to submit additional opening 
statements and extraneous material for the record.
    We now recognize our first panel of witnesses. Dr. John 
Graham is dean of the School of Public and Environmental 
Affairs at Indiana University. He served as the Administrator 
of the Office of Information and Regulatory Affairs within the 
Office of Management and Budget from 2001 to 2008, and at that 
time it was easier to get through security here. You have our 
apologies for the trouble you had.
    Mrs. Robbie LeValley is a co-owner of Homestead Meats, a 
direct meat marketing business that has been in operation since 
1995. Hopefully there are no PETA people objecting to what you 
do.
    Mr. David Arkush is the director of Congress Watch at 
Public Citizen. Thank you. A returning guest.
    Mr. David Barker is owner of Vida Preciosa. Actually, I 
understand it translates to Precious International, a business 
specializing in research and captive breeding of pythons and 
boas. And I could do too much talking about those being two of 
the names in my old alarm company, but we will stay off of that 
for today.
    And Mr. Mathew Palmer, who is a flight attendant at Delta 
Airlines, testifying on his own behalf.
    And I will support the gentleman, the ranking member's 
statement. We do not have witnesses here to talk specifically 
about their litigation or to support their litigation. We 
agreed to have you here; we think it is appropriate because of 
your experience relative to the effect at Delta. But please 
understand that we will limit, on both sides of the aisle, on 
questions to not specifically pertain to any litigation.
    Pursuant to the committee rules, all witnesses are to be 
sworn. Would you all rise to take the oath?
    Raise your right hands.
    [Witnesses sworn.]
    Chairman Issa. Let the record indicate that all witnesses 
answered in the affirmative. Thank you. Please be seated.
    Now, Dr. Graham, you know the routine here pretty well, but 
for the rest of you, your entire opening statements, all of 
your printed material and any additional material you choose to 
present to the committee, will be included in the record. So 
pretty close to exactly 5 minutes you will be given to make an 
opening statement. You can read from your prepared notes. We 
strongly suggest that you use this time, though, to expand on 
what you have already presented to us so that both may be part 
of the record.
    You will see the light in front of you, basically pretty 
straight forward. If it is green, you are fine; if it is 
yellow, wrap up; if it is red, please stop at the end of the 
full sentence, and no run-on sentences.
    With that, Dr. Graham.

  STATEMENTS OF JOHN GRAHAM, PH.D., DEAN, INDIANA UNIVERSITY 
 SCHOOL OF PUBLIC AND ENVIRONMENTAL AFFAIRS; ROBBIE LEVALLEY, 
CO-OWNER, HOMESTEAD MEATS AND MEMBER OF THE BOARD OF DIRECTORS, 
NATIONAL CATTLEMEN'S BEEF ASSOCIATION; DAVID ARKUSH, DIRECTOR, 
  PUBLIC CITIZEN'S CONGRESS WATCH; DAVID BARKER, OWNER, VIDA 
    PRECIOSA INTERNATIONAL, INC.; AND MATHEW PALMER, FLIGHT 
                   ATTENDANT, DELTA AIR LINES

                    STATEMENT OF JOHN GRAHAM

    Mr. Graham. Thank you, Mr. Chairman and members of the 
committee. The hearing this morning occurs at a time of our 
country in economic distress. The unemployment rate was 5 
percent in early 2008; it rose to over 10 percent in October 
2009. Last year, it appeared the recovery was on the way, but 
now we appear to be stuck around 9 percent unemployment. And, 
as Mr. Cummings mentioned, we learned today about 15 percent of 
Americans are now officially recorded to be in poverty. Any 
sustained recovery has to have two basic things: fewer layoffs 
of people and more business investment in hiring.
    What is the connection to the regulatory system? It has 
been well accepted for decades that the regulatory climate 
affects how businesses and consumers think about their future 
decisions and their investments. Right now, virtually all major 
sectors of our economy are facing potentially big, new 
regulatory burdens. I refer to manufacturing, mining, energy, 
agriculture, and even higher education are all about to be 
subject to substantial new regulatory programs.
    Is the Obama administration and OIRA in a good position to 
handle these issues? I think we are in a good news/bad news 
situation. The good news is President Obama has personally and 
publicly expressed concern about the need for regulatory reform 
and he has put OIRA to work to try to streamline some existing 
regulations. He has also recently returned publicly a 
regulation to the Environmental Protection Agency that deals 
with ozone on the grounds that it is not a good timing from the 
standpoint of the economy. The Obama administration also has an 
administrator of OIRA, Cass Sunstein, a talented and deeply 
knowledgeable person about regulatory issues and about cost-
benefit analysis.
    The bad news we face at this time is that there is clear 
evidence that a number of costly regulations coming out of the 
Federal Government is on the rise and, perhaps more troubling, 
the number of costly regulatory proposals that are in the 
agendas of the agencies are also on the rise, and this is the 
prospect that is of concern to people who care about the 
relationship of regulation and the economy.
    Now, in fairness to the administration, their argument will 
be, and you have heard some of this already, that the benefits 
of these regulations are also growing and, in fact, in some 
cases these benefits are larger than the costs, so maybe in 
some sense we are doing better even though we are feeling 
worse. My concern, however, is that the numbers we are talking 
about, in terms of benefits and costs, it is the agencies, the 
regulators who generate these numbers, and if OMB and OIRA do 
not police these numbers, they can tell a very rosy story even 
though the facts are in fact not in their favor.
    A related concern I have is if you look at the actual 
record of the administration in returning regulations to 
agencies due to poor cost-benefit analysis, there is not a 
single case of a public return letter to a regulatory agency, 
now almost 3 years into this administration, due to poor cost-
benefit analysis.
    I included in my written statement an example where 
President Bush and President Obama basically agreed on a 
regulatory issue, the higher mileage standards for cars and 
trucks, and what I did is I showed you how the benefit and cost 
estimates for these regulations have changed simply in the two 
administrations; and all of a sudden the benefits of these 
mileage standards are much more substantial than they used to 
be. I am not sure that these changes in the way the benefit 
estimates are made have a good scientific or economic 
foundation, but we are told now by the regulators that these 
mileage standards are much more beneficial than they used to 
be.
    There are also very interesting, peculiar things going on 
in these regulations. You look, for example, at manufacturers 
who are considering whether to put a hybrid engine in or a 
diesel engine in or a natural gas engine in their cars. We now 
have a proposal from the Obama administration that if they do 
an electric car they get to count that car as two vehicles, 
instead of one, for compliance purposes; and they are also 
allowed to count that vehicle as if it emits zero pollution for 
five model years, even though we all know that pollution, to 
some extent, is generated back at the power plant, where the 
electricity comes from, and clearly that should be included in 
this type of analysis.
    So my concern is the kinds of issues that OIRA and OIRA 
staff are typically very diligent about, the cost-benefit 
analysis underlying these rules. It is not as vigilant as I 
think it needs to be, and this committee needs to take a very 
strong interest in how these analyses are done.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Graham follows:]
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    Chairman Issa. Thank you, Doctor, and thank you for being 
the consummate professional on the 5-minute rule.
    Ms. LeValley.

                  STATEMENT OF ROBBIE LEVALLEY

    Ms. LeValley. Thank you, Mr. Chairman, Ranking Member 
Cummings. I have been a beef producer all of my life and my two 
boys represent the fourth generation on our ranch. In addition 
to our ranch, my family and I are co-owners of Homestead Meats, 
a direct beef marketing business that owns and operates a 
packing plant regulated by USDA. So not only do I produce high 
quality cattle, I also took the initiative to process and 
package beef in order to provide a great eating experience for 
my customers.
    Our business is built on relationships and marketing 
alliances that allow me to produce a high quality beef that my 
customers demand, quality for which we get paid a premium for. 
The proposed GIPSA rule, however, will cripple our ability to 
market cattle the way we want, impacts our small business 
model, and limits consumer choices.
    I strongly believe in the fundamental American business 
tenet of a willing buyer and seller being able to enter into a 
private business contract because it protects my cattle 
marketing contracts and it is the heart of our small business. 
GIPSA believes my contract should be approved by the government 
and posted on the Internet. It goes on to say that because I am 
part owner in a packing plant, I should not be able to sell my 
cattle to other packers. This provision violates privacy and 
limits business opportunities.
    For years, USDA has promoted exactly what we are doing: 
sell direct to the consumer, operate as a packing plant in a 
strategic area of the country and produce local food. We 
responded to consumer demand, we followed USDA's lead, and now 
we are being punished. This is a slap in the face to innovative 
businessmen and women across the United States.
    The proposed GIPSA rule offers neither clarity nor clear 
definition in terminology. Elimination of the competitive 
injury requirement will provide a disincentive for value-added 
marketing because of fear of litigation. The vague definition 
such as ``unfair'' or ``reasonable person'' will open the door 
to an increased number of lawsuits because mere accusations 
without economic proof are enough for USDA or an individual to 
bring lawsuits against a buyer. This will be a trial lawyer's 
dream and will cause cattle prices to spiral downward.
    Does increased government intervention and litigation 
determine fairness, and who pays for this? Cattle producers 
will pay. What happens to every other industry when litigation 
increases? Creativity, partnerships, balance and the desire to 
take a chance end, which is the very basis of the 
entrepreneurial spirit of the American business owner. Do you 
truly want that for the beef industry or the livestock 
industry?
    This rule requires buyers of cattle to justify the price 
paid for my livestock. And what will be the justification and 
who sets that? This regulation seems to infer that it is the 
role of big government, and I strongly oppose the government 
setting or justifying the prices paid for my cattle.
    I have serious concerns about the process behind this rule. 
As you know, the rule is a result of language included in the 
2008 Farm Bill. However, we believe the rule published goes 
beyond the intent of Congress because it includes provisions 
that are similar to ones that were defeated by votes on the 
Senate floor or through subcommittee or through committee 
action. This rule did not include a cost-benefit analysis. NCBA 
was one of several groups that commissioned an independent 
analysis by Informa Economics to look at the impact. The report 
concluded this rule would result in the loss of over 23,000 
jobs, annual GDP loss of $1.6 billion, and annual tax revenue 
losses of $360 million. This is well over the $100 million 
threshold to be considered economically significant. But the 
rule was not treated that way.
    We appreciate the letter sent by 147 Members of the House 
of Representatives asking for a full cost-benefit analysis, but 
Secretary Vilsack has said the analysis won't be open for 
review or comment. The report also estimates annual costs of 
$62 million just to cattle producers alone. Overall, we believe 
the process in formulating the rule is flawed and broken.
    Value-based marketing has given our family and given 
families across the United States the business opportunity to 
compete for market share at the highest level. It accounts for 
62 percent of the actual cattle contracts across the United 
States, is value-based marketing. We do not need big government 
setting up shop on our farms and ranches, and government 
intrusion into the private marketplace is not the answer.
    I urge the committee to help stop this rule from being 
finalized, as it is detrimental to ranchers, consumers, and the 
entire U.S. economy. Thank you.
    [The prepared statement of Ms. LeValley follows:]
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    Chairman Issa. Thank you.
    Mr. Arkush.

                   STATEMENT OF DAVID ARKUSH

    Mr. Arkush. Thank you, Mr. Chairman. I think all of us here 
agree that the regulatory process is, in some sense, broken. I 
disagree, I think, with a lot of people here on how exactly it 
is broken. What I see in the record before this committee is 
strong evidence of enormous net benefits to health, safety, and 
the economy; and, given those benefits, it is surprising that 
we make it so hard for our public protection agencies to do 
their jobs.
    So on the benefits of regulations, there are obvious 
enormous human benefits from public protections. We are talking 
about millions of lives, people's health, children's IQ points, 
clean air, clean water. I have a lot of specifics in my written 
testimony; I am not going to go into that in any greater depth.
    It is controversial to try to put these benefits in narrow, 
economic terms because it is hard to put a price tag on them. 
It is easy to understate benefits when we look at them 
monetarily and it is easy to overstate costs. But even when you 
look at regulation and evaluate it through this narrow lens of 
economic cost-benefit analysis, the benefits are overwhelming 
and they overwhelm the costs consistently. The authoritative 
resource on this is the annual report from OMB to the Congress 
evaluating the past 10 years' major regulations.
    Across both the Bush administration and the Obama 
administration, these reports have come out every single year 
showing massive overwhelming benefits of regulations compared 
to their costs. The most recent report showed that, on average, 
over the last 10 years, health, safety, and environmental 
regulations have had benefits 7 times as great as their costs. 
That is a 700 percent return on investment. It is hard to find 
that kind of return on investment anywhere in the United 
States, but you can find it from our regulatory agencies.
    An often-overlooked benefit of regulations is that they can 
drive innovation. As Mr. Connolly was saying in his opening 
remarks, the auto industry, by fighting fuel economy standards 
for two decades, put itself at a severe disadvantage when 
consumers' preferences shifted and consumers desired much more 
fuel-efficient vehicles, and the U.S. auto industry had a 
disadvantage compared to foreign manufacturers who had been 
focusing on fuel economy. Fuel economy standards would have 
forced auto manufacturers to make the decisions that it turns 
out consumers actually wanted and bring their fuel standards 
into the twenty-first century.
    Another often missed benefit of regulation is that it can 
actually help grow jobs. In the current economy, our principle 
problem is a lack of demand. A lot of companies have idle cash 
sitting around that they are not investing in their businesses 
because they are afraid that if they invest in new products or 
services there won't be any demand for those products or 
services. It is a good time to enact public protections that 
will bring those industries into the twenty-first century in 
terms of environmental protections or worker protections and, 
in the process, use that idle cash to buy upgrades in equipment 
or hire service people or build other improvements to processes 
that will boost the economy and create jobs.
    We also shouldn't overlook the harms of deregulation. The 
big example in this area recently is the financial crisis. The 
financial sector was deregulated over the past several decades 
and, in short order, it collapsed on itself. It imploded under 
the weight of its own reckless and predatory practices in the 
absence of good government oversight. The costs are hard to 
overestimate in this area. We are 11 million jobs behind where 
we should be in the U.S. economy, if not for the great 
recession. The financial crisis evaporated trillions of dollars 
worth of wealth and cost billions and trillions of dollars of 
government bailouts and other supports.
    So here is how the system is broken. Given all the benefits 
of regulation and given the severe harms of under-regulation, 
we make it far too hard for our public protection agencies to 
do their jobs. The agencies that protect our health, safety, 
and environment are some of the most heavily regulated entities 
in the United States. They have to comply with the 
Administrative Procedure Act; the Paperwork Reduction Act, 
which creates paperwork; the Unfunded Mandates Reform Act; the 
Regulatory Flexibility Act; the Small Business Regulatory 
Enforcement Fairness Act; the Congressional Review Act; several 
executive orders; and they are subject to judicial review. In 
all, there are as many as 110 requirements an agency needs to 
comply with just to write a rule.
    As a result, even when an agency wants to write a simple, 
noncontroversial rule, it can take up to 10 years. My 
organization published a report earlier this year talking about 
one of those examples. The construction industry got together 
with labor unions and public interest groups; everybody thought 
we needed a new rule to protect crane safety. It still took 10 
years to produce because of the burdens on OSHA.
    Here is the important point. When rules have massive 
economic benefits, there are equally massive costs when we 
delay the creation of those rules. On average, the OMB 
estimates that the benefits of rules outweigh the costs by $9 
to $59 billion a year. That means that when we delay major 
rulemakings by 1 year, we are costing the U.S. economy $9 to 
$59 billion. We need to give public protection agencies the 
resources they need to do their jobs and we need to reduce 
unnecessary burdens on them.
    Thank you.
    [The prepared statement of Mr. Arkush follows:]
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    Chairman Issa. Thank you.
    Mr. Barker.

                   STATEMENT OF DAVID BARKER

    Mr. Barker. Mr. Chairman and members of the committee, my 
name is David Barker. I am a published herpetologist and an 
entrepreneur engaged in the breeding and sales of pythons and 
boas. I am grateful for this opportunity to relate some of the 
problems, legal shortcomings and job-killing aspects of the 
Interior Department's and the U.S. Fish and Wildlife Service's 
proposal to add nine species of large snakes to the Injurious 
Wildlife List under the Lacey Act.
    A listing under the Lacey Act makes it a Federal crime to 
import or export these species, or move them across State 
lines. And this would be the first time a species in common pet 
ownership was so listed. The Fish and Wildlife Service has not 
considered the economic impact of this listing, failing, as the 
Small Business Administration Office of Advocacy noted, to 
fulfill its duties under the Regulatory Flexibility Act. The 
proposed action also constitutes an inappropriate taking of 
property, impacting as many as a million Americans. Finally, it 
is based on an insubstantial scientific analysis that has not 
withstood scrutiny or subsequent review.
    Taking that last issue first, the basis for the Fish and 
Wildlife Service proposed action can be traced back to a paper 
published in early 2008 concluding that pythons would find the 
climate of the southern third of the continental United States 
to be favorable and predicting that these pythons were likely 
to invade the United States all the way from Washington, DC, to 
San Francisco.
    The two past cold winters have now laid to rest that fear. 
Pythons and boas will not survive anywhere in the continental 
United States except extreme Southern Florida. In the past 2 
years, there are four published papers that describe how 
pythons fail to survive in cold weather, and three of those 
papers are coauthored by government biologists and academics 
contracted by the Interior Department agencies.
    Second, the proposal to invoke the Lacey Act is not a valid 
use of this Federal criminal statute. The simple truth is that 
the proposed action, one, will not solve or correct any problem 
regarding these snake species in South Florida; two, it will 
destroy American businesses and it will damage hundreds of 
thousands of people economically; and, three, it threatens as 
many as a million law-abiding American citizens and their 
families with the penalty of a felony conviction for pursuing 
their livelihoods, for pursuing their hobby or for simply 
moving with their pet to a new State. States should be allowed 
the freedom to regulate this industry as they see fit, without 
heavy-handed Federal intervention.
    In my own personal circumstance, if the proposed action is 
implemented, it will directly and negatively affect my wife's 
and my incorporated small business and our family income. It 
will destroy more than 20 years of work and it essentially 
confiscates the value of our investments in breeding stock and 
equipment, and it removes all value to our colony of breeding 
animals. It will stop all of our interstate and international 
business, which is 90 percent of our business; it will 
immediately reduce our family income by 35 percent or more at a 
time when income and work come hard. It will likely ruin our 
retirement and, additionally, our business is interconnected 
with many other local businesses, large and small, that will be 
negatively affected.
    There are thousands of other families with small snake 
breeding businesses similar to ours. The Fish and Wildlife 
Service utterly failed to take any hard look at these economic 
impacts and they failed to consider reasonable alternatives to 
Federal regulation that were offered by my industry. As the 
Office of Advocacy noted, the agency failed to meet its most 
basic duties under the Regulatory Flexibility Act.
    Finally, a little discussed issue regards the disaster that 
may follow the implementation of this proposed rule. What is 
going to happen to the million or so animals that suddenly are 
without value? Many, of course, may be maintained into the 
future by their current owners, but what will be the outcome 
for the animals that are suddenly unwanted or unaffordable? The 
proposed action makes no provision for the disposal of these 
animals. Zoos will not take even one of them. Animal shelters 
are completely unprepared and generally without trained staff, 
equipment, cages, or food. The implementation of the proposed 
action may precipitate the greatest slaughter of pet animals in 
American history.
    I thank the committee for this opportunity to voice my 
concerns, and if there are any questions I will do my best to 
answer them. Thank you.
    [The prepared statement of Mr. Barker follows:]
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    Chairman Issa. Thank you.
    Mr. Palmer.

                   STATEMENT OF MATHEW PALMER

    Mr. Palmer. Good morning, Mr. Chairman. Thank you for 
inviting me to testify. My name is Mathew Palmer and I am a 
proud Delta flight attendant. I began my career with Delta in 
2008 and have been based both in New York City and Atlanta. I 
have had the privilege of visiting five continents and seeing 
more than 20 countries. I have carried celebrities, common 
folks, and even shared jet service to D.C. with President Jimmy 
Carter in route to President Obama's inauguration.
    A number of my colleagues, other Delta flight attendants 
both pre-merger Northwest and Delta alike, are here with me who 
have, like me, been harmed by government regulation. Combined, 
all of us have hundreds of years of experience as Delta flight 
attendants.
    My colleagues at Delta Airlines have three times in the 
past decade been involved in representational elections. Each 
time the Association of Flight Attendants were seekened to 
bargain on our behalf. AFA has failed each time to secure the 
votes of confidence needed to step into that role.
    The first two of these elections were conducted according 
to the 75 year old former rules of the National Mediation Board 
and the Railway Labor Act, rules supported by both Republican 
and Democratic administrations. That leads to my main concern. 
A new rule arranged by union insiders and pushed through by the 
NMB has changed the election landscape despite strong 
objections from both airlines and, more importantly, from 
thousands of employees who do not want forced union 
representation.
    When the NMB changed the election procedures to enable 
unions to be certified with a minority of a workgroup, there 
was no change to the archaic decertification process, which is 
convoluted at best and requires a ``straw man'' posing as a 
union to win an election. In fact, decertification has never 
been successfully used in a large employee group in the airline 
and railroad industries.
    When Delta and Northwest were merging into the world's 
largest airline, all signs indicated that the world's largest 
flight attendant union, the AFA, was in backdoor dealings with 
Board Members Linda Puchala and Harry Hoglander, both of whom 
previously served as AFL-CIO Union officials with the AFA and 
Airline Pilots Association, respectively. The Transportation 
Trades Department of the AFL-CIO during this time secretly 
petitioned the NMB for a change in the voting rule to organize 
a union.
    This was not disclosed to the pre-merger Delta flight 
attendants, who it was intended to affect and, more shocking, 
not to the pre-merger Northwest flight attendants, who actually 
represented them by the AFA, despite the fact that AFA 
President Patricia Friend served as Secretary of the 
Transportation Trades Department herself. Call me foolish, but 
I believe she should effectively communicate this to her 
members. Patricia Friend did not.
    So even with the rules tilted in the favor of the unions, 
in the most recent election, 94 percent of Delta flight 
attendants turned out to vote and the majority voted to reject 
AFA representation once again. Following, the AFA then had the 
gall to say that the high turnout rate indicated Delta 
interfered in the election. The argument apparently was that 
too many people voted. Now the same two members who discarded 
75 years of precedent are considering requests from the unions 
to now disregard how we voted and now force us to redo 
elections under rules that are even more favorable to unions.
    Mr. Chairman, I want the NMB to respect our vote. I want 
them to respect the votes of the majority of Delta flight 
attendants and Delta employees and other workgroups who prefer 
to have a direct relationship with our company. I believe the 
majority of my coworkers agree with me that workers should make 
decisions about their representation and a government agency 
such as the NMB should not impose its judgment on employees. 
Rather, they should be a neutral referee of elections.
    We have been held hostage by the NMB and the union for 3 
years since our merger. Our pre-merger employee group, some of 
which are here today, are forced to be kept separate so we are 
not able to get the full benefits of our merger. I cannot speak 
for Delta Airlines and I will not pretend to. In fact, despite 
my testimony echoing that of many of my colleagues at Delta, 
what I have said is only my reality.
    Frankly, I don't care whether one is pro-union or not. What 
I am concerned about is the fact of my pay, my work rules, my 
stock, my livelihood, my friends, my colleagues, and our system 
of government are all being affected by the partisanship of 
this board working to do the bidding of unions whose elections 
are supposed to be neutral. They are biased and they should not 
be. All should agree it is time they be reined in.
    I would like to thank the committee for their time.
    [The prepared statement of Mr. Palmer follows:]
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    Chairman Issa. Thank you.
    Thank you all for your statements and a near record that 
everybody was right there at or below the 5-minutes, which 
helps all of us. And I would caution all of my colleagues we 
will do the same on our questions. With that, I will now 
entertain a document, unanimous consent, if you are ready.
    Mr. Cummings. I will just submit it.
    Chairman Issa. Oh, you will. Okay. Well, then I will submit 
during my opening statement. I ask unanimous consent that the 
Committee on Oversight's staff report prepared for this hearing 
be accepted. Without objection.
    Additionally, I am submitting for unanimous consent letters 
in support of the GIPSA position. Without objection, so 
ordered.
    [The information referred to follows:]
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    Chairman Issa. I will now get past that procedure.
    Dr. Graham, I am concerned about something that is not 
directly related to this, but I am concerned, as Mr. Palmer and 
others have been, Ms. LeValley, about circumventing the 
process. Isn't one of the areas that is growing in 
circumventing sue and settled, not just EPA but throughout 
government, in which, if you settle a case, you effectively 
bypass all of the protections that are being complained about 
not being complied with here today?
    Mr. Graham. That is a good question. My experience when I 
was at OMB at OIRA is that the agencies and the Justice 
Department are responsible for developing these settlement 
agreements that commit agencies to doing certain regulations 
and, in some cases, to doing very specific content of 
regulation. Those consent decree arrangements do pose a problem 
for OMB because, in a sense, OMB doesn't have a seat at the 
table when those consent decrees are signed.
    Chairman Issa. And they are agreed to without scoring, 
effectively.
    Mr. Graham. Well, and there is no cost-benefit analysis to 
what they are agreeing to, there is no legal analysis as to 
what they are agreeing to that is independent of the parties 
who are at that table itself. So it puts OMB in a difficult 
position then to be having to review independently and 
objectively a regulation that is emerging from a consent decree 
process where OMB was not a participant.
    Chairman Issa. Isn't that also true that when agencies do 
guidance, rather than rulemaking, the same occurs, that 
implementing that guidance there is no cost-benefit, it is just 
basically if you don't comply, then the regulatory system can 
hurt you, while at the same time guidance, although 
theoretically not compelling, can cost those regulated entities 
a lot of money?
    Mr. Graham. Yes. In the bargaining and game between 
regulators and OMB, and, of course, that is a daily occurrence 
in this town, the regulators know that if they do a rule they 
have to get OMB approval. But if they just issue a policy 
statement or a guidance or an enforcement suggestion, these 
types of documents aren't covered by the Executive order, are 
not typically reviewed by OMB, and are certainly not subject to 
cost-benefit analysis.
    Chairman Issa. One other question. During your time through 
OMB, isn't it true that if guidance is implemented, then one of 
the justifications for rulemaking is it is already being done 
and, therefore, there is no incremental cost? Isn't that so to 
the other part of the backdoor, that often compliance to a 
guidance mitigates the cost and then it makes it easier to go 
to OMB for rulemaking after the fact?
    Mr. Graham. Certainly the agency can say we have our foot 
in the door, we already have this experience with this, we are 
just trying to make it mandatory now, since we are already 
doing it through guidance, supposedly. But in a lot of cases 
the guidance is itself de facto mandatory because there is an 
enforcement arm behind it.
    Chairman Issa. Lord knows that if the FDA suggests 
something and you have drugs pending, it is pretty hard not to 
take their suggestion.
    Dr. Graham, I am going to note Ms. LeValley's statement and 
predicament. During your time in government, if you found that 
there was a circumvention of a cost-benefit, in other words, 
something cost a lot more than $100 million, perhaps much more 
than a billion, it is discovered after the fact and then a 
cabinet says, well, too bad, we are not going back to look at 
it. Although you were powerless to absolutely stop that, what 
would have been the position of any previous administration 
when you discover that less than $100 million has become more 
than a billion and it wasn't taken into consideration?
    Dr. Graham? Ms. LeValley has told us pretty well that what 
is happening to her, but would this have happened in any 
previous administration that you know of?
    Mr. Graham. I really don't know, but it is a situation that 
is of concern, without doubt.
    Chairman Issa. Okay.
    Mr. Barker, I am not necessarily a fan of your particular 
advocation, but I do have an interesting question for you. Has 
there been any finding behind this that any of the reptiles 
that you have produced have ever caused any damage for which 
this proposed rule would be a cure?
    Mr. Barker. No.
    Chairman Issa. Okay.
    Mr. Barker. It wouldn't. The animals are widespread; they 
are found in 49 States in the United States. They are held by 
more than a million American citizens. The Lacey Act won't--the 
problem is a State problem that exists only in Southern 
Florida, and this is an inappropriate law that will have no 
effect whatsoever.
    Chairman Issa. If I had more time, I would have more 
questions.
    With that, I recognize the ranking member.
    Mr. Cummings. I want to pick up exactly where the chairman 
left off. Mr. Barker, you agree with the U.S. Association of 
Reptile Keepers who opposes the proposed rule for the Fish and 
Wildlife Service that bans the import and export of some 
dangerous snakes, is that correct?
    Mr. Barker. Yes, sir.
    Mr. Cummings. And you raised your concerns during the 
formal notice and comment period, again, at an OIRA meeting, 
did you not? Did you do that? Have you raised these objections 
before?
    Mr. Barker. Yes, in the public comment period, yes.
    Mr. Cummings. That is right.
    I ask unanimous consent that this letter of September 13th 
directed to the chairman from 14 organizations, including the 
Audubon Society of Florida, be admitted into the record.
    Chairman Issa. Without objection.
    Mr. Cummings. Thank you very much.
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    Mr. Cummings. Did you realize that there are organizations 
from Florida in the Everglades that are begging for these 
regulations? And let me just quote this letter. And, by the 
way, it is from the Audubon Society of Florida, Florida 
Wildlife Federation, Everglades Foundation, and I could go on 
and on. But it says, ``Florida's experience demonstrates that 
States would benefit from Federal leadership on this issue to 
ensure injurious species are restricted in a timely way before 
they become firmly established. Similar injurious status would 
be an important companion protection to Florida State rules 
appropriately govern the Federal realms of import and 
interstate commerce.''
    Are you familiar with that?
    Mr. Barker. Yes, sir.
    Mr. Cummings. The only reason I am raising this--first of 
all, I sympathize with you. I understand; I ran a business. I 
understand your concern about the welfare of your wife and your 
family. But I want to make sure that we understand there is 
another side to this. There are other people that are from your 
area who have an opposing view and they are very adamant.
    Ms. LeValley, according to your testimony, you have 
concerns about USDA's proposed rule to increase competition in 
the meat packeting market and you testified before the USDA in 
a public panel, did you not?
    Ms. LeValley. I did.
    Mr. Cummings. An essential component of a fair and working 
regulatory process is that those who are impacted by a proposal 
have an opportunity to explain their concerns to the rulemaking 
body, that is, the notice and comment period.
    You both had an opportunity to voice your concerns and 
neither of the two rules you address is final; they are both 
still in the midst of the rulemaking process, and I want to 
direct your attention to a letter which I ask be admitted to 
the record, dated September 13, 2011, addressed to the 
chairman, and it is from about 15 organizations, including the 
Campaign for Contract Agriculture Reform. I ask that it be 
admitted into the record.
    Chairman Issa. Without objection.
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    Mr. Cummings. Let me just read from this letter. Again, 
these are people who are not here. I want to make sure that 
their voices are heard, and they refer to 191 others who have 
the same opinion. It says, ``in conclusion, we urge Congress to 
allow USDA to move forward expeditiously to implement a final 
rule that will strengthen and clarify the packers and stockyard 
acts with commonsense protections for farmers and ranchers. We 
urge you to stand with our Nation's farmers, ranchers, growers, 
and consumers to oppose the efforts of meat packer and poultry 
special interests to insulate themselves from Federal scrutiny 
of their anti-competitive behavior and unfair treatment of 
farmers and ranchers. As a measure of support for the issuance 
of the GIPSA rule,'' listen to this, ``we have attached to our 
letter an August 3, 2011 letter from 190 groups submitted to 
the Senate in support of finalizing the GIPSA proposed rule. 
These groups represent thousands of farmers, ranchers and 
consumers from around the Nation.''
    Again, I just want to make sure that there is another voice 
here. There are some other folks that have a different view 
than what you have.
    Mr. Arkush, the title of today's hearing is, ``How a Broken 
Process Leads to Flawed Regulations.'' One of the things that I 
am concerned about, and you heard me say this in my opening 
statement, I have not heard too much here this morning so far 
that even if you get rid of the rules that that creates jobs. 
So do you hollow out a system, take away the regulations, take 
away the protections, businesses make more money, poverty goes 
up, income goes down for employees, regulations out of the 
window, and what is the guarantee that we get jobs? And if we 
don't know what either of these two final rules--by the way, 
this is the end of my question real quick--if we don't know 
what either of these two final rules will look like, can we 
responsibly conclude that the process is broken or the 
regulations are flawed?
    Mr. Arkush.
    Mr. Arkush. You are correct, there is no evidence, 
empirical evidence that deregulation or a lack of regulation 
creates jobs. To the contrary, there is some evidence that 
regulations can create jobs and there is overwhelming evidence, 
particularly from the financial crisis, that is the big example 
that jumps out, that a lack of regulation can be devastating to 
the economy.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Utah, Mr. Chaffetz, for 5 
minutes.
    Mr. Chaffetz. Thank you, Mr. Chairman, and thank you for 
holding this hearing; it is vitally important.
    I appreciate all of you who have traveled here to be here 
and to testify.
    Mr. Palmer, I would like to direct my questions to you, and 
I just want to make sure I have this right. You had Northwest 
and Delta, great airlines, merging together, a move that was 
widely applauded as necessary in strengthening the airline 
industry and bringing together two great organizations. That 
happened in October 2008. In September 2009 the AFL-CIO, in 
this letter that I have here and that I would ask unanimous 
consent to insert into the record--I am sure that will be okay 
with the chairman if we insert this into the record.
    Chairman Issa. I am sorry. Without objection.
    Mr. Chaffetz. Thank you.
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    Mr. Chaffetz. The AFL-CIO sent a letter to the National 
Mediation Board suggesting a rule change, that after 75 years, 
75 years of precedent, that they wanted to have these rules 
changed. My understanding is that now 3 years, 3 years into 
this merger, there still has not been a resolution.
    Mr. Palmer. There has not.
    Mr. Chaffetz. So here you have a very large industry, 
roughly $731 billion into our economy, transporting 50 tons a 
day in cargo, nearly 2 million people per day, there is this 
assertion that, well, maybe this doesn't have an effect. As the 
ranking member was saying, well, it doesn't have any effect. It 
does have an effect. My understanding is here, according to a 
CNN article, ``On average, non-unionized Delta flight 
attendants take home 12 percent more than their non-unionized 
Northwest counterparts based on a typical 75 hour a month 
schedule, they enjoy more generous profitsharing and retirement 
matches from the company, and they don't have to dole out $43 a 
month to union dues.''
    Now, Mr. Palmer, you don't strike me as an overtly 
politically engaged person who is just here with partisan 
lenses on to extol the Republican--my sense of it is that you 
are just looking at this objectively and that you want to say 
to your colleagues and to this body, to the Congress as a 
whole, we want a resolution to this. Am I overstating that or 
is that----
    Mr. Palmer. You are not. I would respectfully disagree with 
Mr. Cummings that it doesn't affect us. I will bring it down 
from the numbers that you talked about. There is approximately 
21,000 Delta flight attendants, and it affects every one of us 
every day. When you get on a Delta flight, you are going to get 
great service, but you are going to get great service from a 
Northwest crew or a Delta crew. Although our company is merged, 
we are not. So the CNN poll I am not familiar with, but I do 
know that on every level Delta flight attendants are paid more 
per hour, according to seniority; our per diem and other rates 
are higher. So we are doing the same job, we are going to the 
same destinations, but because we are in laboratory conditions 
and because the NMB and the AFA are still messing around with 
our careers, Delta is not able to merge us fully, so there are 
at least 7,000, perhaps 8,000 of the premerger Northwest this 
affects every day.
    Mr. Chaffetz. And what does that do to the morale and the 
atmosphere and the working conditions? When you are right next 
to somebody who is exactly the same, and let's pretend they are 
exactly the same in every way, what does that do to the working 
conditions there?
    Mr. Palmer. The morale is certainly an issue because, first 
of all, as I said in my testimony earlier, I began at Delta in 
2008. I was in training when that vote happened so, according 
to the rules, I was unable to vote in it. So practically my 
whole career I have been in laboratory conditions. There are 
people who have served through other mergers. Some of the other 
mergers were probably a little more smooth than this one, but 
this one is Delta is telling us they are ready to move forward; 
the AFA is saying, no, we are not going anywhere. Probably the 
best way I can describe it is non-Delta flight attendants have 
no voice in this; we can't say we are ready to vote, we can't 
petition the NMB to vote because we are not a union, don't want 
a union. Those at Northwest who were unionized, even though 
they lost their union last year because they cast their votes 
not to have it, they don't even have a voice anymore, nor do 
they have the union. So it is politics and bureaucracy and red 
tape, and there is absolutely no stability right now with us.
    Mr. Chaffetz. But my understanding is that you said, I 
believe, 94 percent of the people did participate in the last 
vote?
    Mr. Palmer. Not only was it 94 percent, but it was 94 
percent under the new rules, which were actually more favorable 
to the unions.
    Mr. Chaffetz. And what was the result of that vote, with 94 
percent voting?
    Mr. Palmer. I believe 9,500 out of us voted, 9,544 or so. 
But the AFA immediately filed interference charges with Delta--
or not with Delta, but with the NMB, perceiving that too many 
people voted, so that their polls were off. They felt they were 
going to win, but because too many people voted, they were 
wrong and, thus, there was interference.
    Mr. Chaffetz. Did you experience any interference?
    Mr. Palmer. Absolutely not.
    Mr. Chaffetz. Thank you, Mr. Chairman; my time is up. I 
yield back.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Massachusetts, Mr. Tierney, 
for 5 minutes.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Palmer, you are aware that when we have elections for 
Governor or for President or for Members of Congress, that the 
people that stay home and don't vote do not have their votes 
counted as a no?
    Mr. Palmer. I am aware of that, yes.
    Mr. Tierney. Okay. And that rule that was changed in effect 
just said that basically when you have a vote in a union 
situation in your industry, they are not going to count the 
people that stay home as a no vote anymore, right?
    Mr. Palmer. Correct.
    Mr. Tierney. Okay. Does that seem unreasonable to you?
    Mr. Palmer. It doesn't seem unreasonable to me.
    Mr. Tierney. Thank you. Now, I have seen a motion in a 
lawsuit against the National Mediation Board that lists Mathew 
R. Palmer as one of the named parties listed as intervenors in 
the suit. Is that Mr. Palmer the same person as you are?
    Mr. Palmer. I am.
    Mr. Tierney. And you intervened against the lawsuit against 
the National Mediation Board.
    Mr. Palmer. I did.
    Chairman Issa. Would the gentleman yield for just a 
question?
    Mr. Tierney. Yes.
    Chairman Issa. In my opening statement, pursuant to the 
ranking member's statement, we suggested strongly that we would 
not ask and have him answer related to the lawsuit because it 
is something that we would like to avoid this committee getting 
in the middle of, and I would ask the gentleman to try to agree 
with the ranking member.
    Mr. Tierney. If you really wanted to stay out of the middle 
of it, Mr. Chairman, Mr. Palmer wouldn't be sitting there, all 
right? So I will make sure that we ask the questions and they 
don't skirt the lawsuit stuff, but let's be serious about this 
and not try to put him on there and then claim we can't ask him 
questions. All right? He is here for a purpose, and let's 
discuss it.
    Now, as I understand it, the plaintiff's lawsuit alleged 
that two members of the National Mediation Board approached the 
rulemaking with an unalterably closed minds. You echoed that 
claim in your testimony here today. And while you write that 
all signs indicate that the world's largest flight attendant 
union, the AFA, was in backdoor dealings with Board Members 
Linda Puchala and Harry Hoglander. But the district court judge 
ruled against you and the other plaintiffs. He stated that the 
National Mediation Board provided a neutral and rational basis 
for adopting the rule, and the judge determined that your 
allegations were insufficient to support even discovery in the 
issue. You didn't get in the door with it, the judge thought it 
was so weak. So the litigation is going on right now, correct?
    Mr. Palmer. Yes, sir.
    Mr. Tierney. Okay. The plaintiffs have filed an appeal to 
the judge's ruling and you are currently scheduled for oral 
arguments before the D.C. Circuit Court on Monday, is that 
correct?
    Mr. Palmer. That is correct.
    Mr. Tierney. Now, I am surprised, in that situation, to see 
Mr. Palmer here at the hearing if you truly want to stay out of 
the litigation. It seems to me that you are doing just the 
opposite there, Mr. Chairman. You have been sensitive to this 
issue before; you were sensitive to it in the Tillman case, you 
were sensitive to it in the Blackwater employees' case on that. 
And if you really wanted to be sensitive to it here today, Mr. 
Palmer would be sitting out in the audience, not at the witness 
table.
    Mr. Palmer, do you have concerns that your participation in 
this hearing might imply in some way that this committee is 
trying to support you in your ongoing litigation against the 
National Mediation Board?
    Mr. Palmer. No. I would like to respond to your first 
question as well.
    Mr. Tierney. Well, I also--I have limited time to answer 
the questions, so I would ask you to answer my questions.
    Mr. Palmer. I understand that. No----
    Mr. Tierney. I want to examine your claim that your 
testimony that the new rules regarding union elections are 
tilted in favor of unions. We haven't seen any evidence that 
unions have won any more union elections after the 
implementation of these new rules. According to the data that 
the National Mediation Board in this fiscal year, 2011, 
provided, following the enactment of the rule change, the 
National Mediation Board has overseen 31 elections and the 
certification rate for the elections under the new rule is 
basically the same as it had been for the decade prior, raising 
by exactly 1 percentage point, from 61.5 percent to 62.5 
percent. These elections under the new rules included four 
elections involving Delta personnel. The unions lost all four 
of the Delta elections under the new election proceedings.
    Mr. Chairman, I just want to wind up my comments saying if 
Mr. Palmer wasn't supposed to be having this committee look 
like it was coming down on the side of the plaintiffs in that 
case, he shouldn't be sitting here. They clearly have lost more 
elections under the new rules, they have not been adversely 
impacted on that. Mr. Palmer has a direct interest as a 
plaintiff in that matter, and I think that this committee 
should be in the business of not interfering with litigation; 
we should not be putting these matters on here when they are 
going on, and it would have been entirely appropriate to leave 
Mr. Palmer on the bench.
    Chairman Issa. Would the gentleman yield?
    Mr. Tierney. I yield.
    Chairman Issa. I know we are going to disagree until the 
end of this hearing. Our view was that job creators and people 
impacted were coming here to give their opinions about either 
rules, proposed rules, or other things that they thought was 
impacting them. We asked Mr. Palmer, and he did so in his 
opening statement, to limit to his opinion about the effect.
    Now, I know you are a baseball fan, so I understand that if 
they change the size of the strike box it may or may not affect 
differences, but at least as to the pitchers, they would say 
their job got easier or harder with a rule change. Mr. Palmer 
is expressing his opinion about that.
    Mr. Tierney. Reclaiming my time, Mr. Chairman. You can't 
convince me that of all of the employees--there were 21,000 
employees--Mr. Palmer was the only person that could testify 
with that point of view and that was necessary to bring a 
plaintiff in a lawsuit here to testify with 20,999 others 
available to be the person to sit on that panel.
    I yield back.
    Chairman Issa. For the record, my staff indicates that at 
the tie of his invitation, we were not aware he was an 
intervenor, but when we became aware we chose to go forward, 
and I appreciate the gentleman's concern.
    With that we go to the gentleman who represents my alma 
mater, Mr. Walberg.
    Mr. Walberg. And always proud to represent Sienna Heights 
University. Thank you, Mr. Chairman.
    Mr. Palmer, appreciate you being here, and I want to give 
you an opportunity to answer a question that you did want to 
answer. All I would say is I appreciate the efforts of Delta 
and Northwest attendants and crew. You complete every week, at 
least twice, the object of my grandchildren, and that is to 
have a safely returned grandfather, because they are the only 
people in the world who truly adore me. So thank you for doing 
that.
    I am going to ask five questions, at least that is my 
intention, so if you could keep your answers as brief as 
possible, but complete as possible. I want to let you end by 
answering the basic question, any additional points or comments 
you would like to address. But let me go back.
    My Democrat colleagues state that the old rules were 
undemocratic and the elections were not how we elect government 
officials. How do you respond to that?
    Mr. Palmer. He was partly right. They are democratic, but 
they are not like we elect you, and they are not like we elect 
you for several reasons. If you underperform, then your 
constituents have a right to vote you out in a period of time. 
Also, your constituents do not pay you dues. As I have written 
in my testimony as well, besides that, the NLRB, which the NRLA 
and the NMB wanted to do, there was an equal process to 
decertify. Once you vote in a union, say Delta or Northwest 
with AFA, it is for an indefinite term. There is no equal 
process to go back. There is the convoluted straw man poll that 
I talked about. You have to get one person out of the 21,000 to 
be a straw man. We all have to identically sign cards, it has 
to be 50 percent of us plus one within a year, then hold the 
election and then hope the person that we are electing to 
replace the union will actually then step down once and if 
somehow he wins.
    Mr. Walberg. So you are captured.
    Mr. Palmer. Yes. Absolutely. Completely different.
    Mr. Walberg. Assertions have been made that Delta 
interfered in the election. Did you experience any interference 
from the company in any way?
    Mr. Palmer. I did not.
    Mr. Walberg. Is there any way for Delta to know how a 
flight attendant voted in the election?
    Mr. Palmer. There is not. I also had a Ballot Point. We 
vote online and by phone, which is another difference. We vote 
for 5 weeks, we don't vote for 12 hours on 1 day. You have 5 
weeks to vote. You can vote online or you can vote by phone. 
That allegation came up from AFA. I contacted Ballot Point, who 
coincidentally is who AFA uses for their internal elections at 
Northwest. They state that they give us a PIN, random PIN and a 
random password. They store those on two separate servers, so 
once you log in and then place your PIN, I have an email from 
them stating that not even their engineers could tell you how 
you voted. And even if they did tell you how you voted, they 
would have no clue who that PIN belonged to. So, no.
    Mr. Walberg. So no ballot identification of the voter in 
any way, shape or form.
    Mr. Palmer. No way, shape or form.
    Mr. Walberg. You mentioned that the old rules were 
consistent with the Railway Labor Act. Can you explain?
    Mr. Palmer. I can. The old rule was 50 percent plus one of 
the majority of the class, so just a round number, with 20,000 
flight attendants at Delta, if 10,001 voted, then you would be 
unionized. They have changed that now to be a minority vote, so 
if 2,000 vote and 1,001 vote in the affirmative for any union, 
not even just AFA, now you have a union for the whole group. So 
it was completely different.
    Mr. Walberg. Has the NMB ever been requested to change the 
rules before?
    Mr. Palmer. Yes, they have. Actually, there have been four 
times, and probably the most interesting time was under the 
Carter administration. They had the exact same board, it was a 
three member board; it was one Republican, two Democrats. They 
were, I believe, in the mid-1980's and the late 1970's also 
asked, and then this last time with the TTD. During the Carter 
administration, the NMB actually published in their register 
that they did not believe that they had the right, that it 
could only go by congressional law. And, again, I reiterate we 
have two Democrats and one Republican now. During the Carter 
administration it was the same thing. They refused to change it 
then; it was refused to be changed in the 1960's and refused to 
be changed in the 1980's.
    Mr. Walberg. Twenty-seven seconds. Any additional comments 
or points you would like to make on this issue that you seem 
extremely passionate about and is very personal?
    Mr. Palmer. Well, someone had mentioned earlier about that 
Americans have the right to know the inherent costs to us with 
regulations. There are $516 of dues each year, plus millions 
over the course of the years for the unions. We have a right to 
have that money and know what it is going to be used for. With 
unions we do not.
    Mr. Walberg. Thank you, appreciate your comments.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Tennessee, Mr. Cooper, for 
5 minutes.
    Mr. Cooper. Thank you, Mr. Chairman.
    It is very easy, in a hearing like this, to beat up on the 
executive branch for different problems with regulations. I 
think Congress needs to remember where the laws come from; that 
is us. And oftentimes we fail in our responsibilities to pass 
good laws, so that really makes it harder on the agencies to 
pass or formulate good regulations. An example I wanted to 
bring up in particular is the Lacey Act, and I would like to 
ask the chairman to amend the report that he has already 
submitted for the record because on page 13 of his document it 
says the Lacey Act was last amended in 1981. Well, we amended 
it in 2008; we added plant species to that act. And a Tennessee 
company recently has suffered greatly as a result of 
overzealous enforcement of that act.
    The law, as written by Congress, included no grandfathering 
whatsoever, so it literally puts at risk every serious musician 
in the United States, not just musical instruments, but 
flooring, all sorts of industries that have to deal with wood 
products or paper products, things like that. And that was a 
congressional mistake. I didn't vote for this law. The 
President actually vetoed it and Congress went to the trouble 
of overriding the veto. Now, this law was a very small part of 
a much larger farm bill. That shows the risk that we take when 
we pass a massive piece of legislation and it is hard to spot 
the individual components of it.
    Another flaw with the law as passed by Congress is it puts 
our legal fate in this country completely in the hands of 
foreign law makers in the way they come up with their laws, 
which is sometimes hard to detect in one of the, what, 220 
countries around the world.
    So the best way to reform is to start looking in the 
mirror, and we have a lot of work to do here.
    It used to be, years ago, that there were study groups in 
Congress so that we could actually have a better idea of 
knowing what we were voting on in advance, before the vote. An 
earlier speaker, Newt Gingrich, banned those organizations, and 
that ban has continued now for a decade or two. So now each one 
of us has individual staffs that try to keep up with what we 
are voting on, but it is very difficult for them to do a super-
professional job, the way it used to be done. So perhaps this 
Congress could look into reinstating those organizations, 
allowing them to form so we could have a much more professional 
look.
    The group that I particularly focused on in the past was 
called the Democratic Study Group, but, actually, Republicans 
trusted it so much they subscribed too, because this group did 
not assume that you would vote with the Democratic party at 
all; they just wanted to serve up the facts, give you the pro 
and con, and then let you make up your mind according to what 
is in the best interest of your country and your folks back 
home. That sounds a little old fashioned, but wouldn't that be 
nice, to return to ideas like that so we would actually have a 
much more solid idea of what we are voting on?
    There is a silver lining in this hearing. I think a couple 
of the witnesses and most folks on this committee realize that 
Cass Sunstein is a brilliant individual. I wish he had more 
clout and more visibility. We are going to hear from him in a 
little bit, but I think he wants to make good things happen to 
get these cost-benefit analyses right. But it is difficult to 
reform a process overnight. So hopefully with a little good 
will, a little patience we can start fixing some of these 
broken things that have been broken for a long time in this 
town, and I think Congress should start with itself.
    So thank you, Mr. Chairman. I appreciate the opportunity.
    Chairman Issa. Would the gentleman yield?
    Mr. Cooper. I would be delighted.
    Chairman Issa. First of all, we take note of the 2008 Act 
and would ask unanimous consent we be able to revise the 
document before submission. Second, I appreciate your points, 
including the unintended consequences to the Qatar industry and 
a number of others. This committee is cognizant that we have to 
do review of laws we have passed, and I hope that we continue 
to remember that many of the regulations that get created do 
start with ill-prepared legislation. And I will take to note, 
along with the ranking member, if we can address your concerns 
on the study committees, because I think there are successor 
study committees, but I would like to know more about what you 
would like to see and we will work on that.
    Thank you, gentleman.
    We now go to the other gentleman from Tennessee, Mr. 
DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman, and thanks to our 
witnesses for appearing here today.
    Mr. Arkush, as I listened to your testimony, it reminded me 
of a reality TV show that was on, I think, Ashton Kutcher, You 
Have Been Punked, and before I spend time asking you questions, 
I want to make sure you weren't punking us today with that 
testimony. Okay.
    Why do you think so many of our companies are going 
overseas to create their businesses?
    Mr. Arkush. Oh. Well, I am certainly not a multinational 
corporation myself, so I don't have a lot of personal insight 
into that. I think a lot of factors go into decisions like 
that.
    Mr. DesJarlais. Okay. Have you ever worked for the Office 
of Management and Budget?
    Mr. Arkush. No, I haven't.
    Mr. DesJarlais. Office of Information and Regulator 
Affairs?
    Mr. Arkush. No, I haven't.
    Mr. DesJarlais. Have you ever headed an executive or 
independent agency?
    Mr. Arkush. No, I have not.
    Mr. DesJarlais. Owned or operated your own small business?
    Mr. Arkush. That is a close call.
    Mr. DesJarlais. Okay. As part of the job creators tour, I 
have traveled through Tennessee and visited, oh, thirty-plus 
factories and businesses and asked them what was standing in 
the way of job creation, and their opinion is a little 
different than yours. Probably the number one answer I get is 
that we need to get government out of the way, and EPA comes up 
quite often. So clearly their opinion of regulations differs 
from yours. Do you think that all regulations are good?
    Mr. Arkush. Oh no, of course not. Anyone can make mistakes, 
and that is true of the government as well. And on the note of 
what small businesses think, there have been some interesting 
surveys recently that have shown that the number one concern of 
small businesses is poor sales. The concern is there won't be 
enough demand for their products; it is not government 
regulation.
    Mr. DesJarlais. Just to get this straight, I think you had 
said that one of the biggest problems for regulatory agencies 
is that they are overregulated.
    Mr. Arkush. That is right.
    Mr. DesJarlais. Okay. I wanted to make sure I heard that 
correctly. Doesn't that in itself suggest that the bureaucrats 
here in Washington are doing a poor job in terms of 
overregulating?
    Mr. Arkush. It suggests to me the contrary; it is that even 
when there is a commonsense rule that they want to write, that 
everyone agrees on--sometimes industry wants rules; sometimes 
industry and labor get together and they say to an agency we 
need a new rule here. Even in those instances it is too hard 
and it takes too long to write a simple noncontroversial rule, 
because there are so many administrative burdens on these 
agencies.
    Mr. DesJarlais. I hear a lot of numbers thrown around out 
there what regulations cost employers. I have heard anywhere 
from $9,000 to $12,000 per employee just the sheer number of 
regulations. Is that a number that sounds about right?
    Mr. Arkush. No, it sounds wrong to me.
    Mr. DesJarlais. Okay. Do you have a number?
    Mr. Arkush. Well, I think that number is derived from this 
study by these economists Crane and Crane. They said that 
regulations cost the economy $1.75 trillion a year. That study 
has been thoroughly discredited. It had an incomplete data set, 
it had a flawed methodology; it only looked at costs of 
regulations, it didn't look at benefits. If we looked at 
everything that way, we wouldn't buy food. I would say, well, 
my grocery bill is a little high, that is $50 a week, that is a 
big cost.
    Mr. DesJarlais. I don't disagree. Some regulations are 
good. I am not trying to sound like I am anti-regulation. But 
what I am hearing in the real world from real job creators is 
that we need to get government out of their way and they are 
overburdened. So I appreciate your testimony and being a good 
sport.
    Mr. Arkush. I do have one real world personal response to 
some of this and the Lacey Act concerns. Actually, the way in 
which I have a small business is I am a musician and I actually 
work in a band; we play weddings and bar mitzvahs, if you have 
anyone.
    Chairman Issa. Excuse me, but no soliciting here.
    Mr. Arkush. I am sorry.
    Chairman Issa. If we let it start with you, we will end up 
with Pepsi cans sitting on the----
    Mr. Arkush. With all respect, that was a joke. But I am a 
guitarist and I don't have concerns about the Lacey Act; it is 
not a problem for me, it is not a problem for my business.
    Mr. DesJarlais. I wanted to get to Ms. LeValley for a 
moment, because clearly you have a great story there. In 
testimony you indicated that the USDA previously promoted 
consumer-driven small scale processing operations. Can you 
expand on how the new rule now restricts your operation?
    Ms. LeValley. Certainly. When we go back to the proposed 
rule, what it says in the proposed language is that it bans 
packer-to-packer sales. Does not differentiate size or 
anything. Nor do I believe that differentiating size is an 
answer by any means. However, what it says is two-thirds of our 
animals actually are sold directly to a packer. Under this 
proposed regulation, it says that those packer-to-packer sales 
are banned. We are a packer. I am a packer, I am a producer, I 
am a feeder, I am a rancher, and because I am a packer, I now 
have limitations on who I can actually sell to because I cannot 
sell the rest of my animals to another packer.
    Mr. DesJarlais. Okay. The chairman has been quick with the 
gavel, but I want to just real quickly, if I get my question 
in, maybe he will let you answer. Is it true that GIPSA agreed 
to conduct a more rigorous cost-benefit analysis of the rule in 
response to the stakeholders' concerns?
    Ms. LeValley. It is true, and we appreciate that. However, 
what we would like is that that be open for review and comment. 
We know that the original economic analysis was flawed. So, 
again, just as you all have said, 147 of you have written a 
letter saying that this process should be open for public 
comment. We want that to be the case, and we have heard that 
that won't be the case as far as being open for public comment. 
That review, that cost-benefit analysis should be open for 
review and public comment.
    Mr. DesJarlais. Thank you, Ms. LeValley.
    I yield back.
    Ms. LeValley. Thank you.
    Chairman Issa. I thank the gentleman and the gentlelady.
    We now go to the gentleman from Virginia, Mr. Connolly, for 
5 minutes.
    Mr. Connolly. Thank you, Mr. Chairman. And thank you for 
allowing me my opening statement; I appreciate it.
    Mr. Barker, I listened to your testimony and I have some 
questions about it, but let me ask. You make reference to the 
Lacey Act. Am I not correct that the Lacey Act was introduced 
in 1900 by a Republican Congressman from Iowa and signed into 
law by a Republican President, William McKinley, to try to--
well, its original motivation was to try to protect endangered 
species that were being more than decimated because of the 
feather trade in women's hats at the time. Is that not correct?
    Mr. Barker. I am not expert on the history of the Lacey 
Act. I can't respond, sir.
    Mr. Connolly. Well, that act that has been on the books for 
111 years, in your view, does it represent burdensome 
regulation that should be repealed?
    Mr. Barker. Yes. At least in some cases, sir. It is a huge 
act.
    Mr. Connolly. Thank you. You made reference to the USGS 
study, and I think you said it was very unscientific. This is 
the study you are referring to?
    Mr. Barker. Yes, 302 pages published in 2009.
    Mr. Connolly. Are you aware of the fact that a number of 
scientists from all over the United States signed a letter 
praising this study and saying it most certainly is scientific 
and is relevant and ought to be taken cognizance of as we 
perform our deliberations? I am referring to a letter you may 
not have seen, be glad to share with you, to my colleague from 
Virginia, Bobby Scott, who was then the chairman of the House 
Subcommittee on Crime, Terrorism, and Homeland Security, on 
January 20th of last year. This letter is signed by PhDs, 
usually in botany or biology or natural sciences, from Waldorf 
College, University of Hawaii, University of Tennessee, Florida 
Museum of Natural History, University of Massachusetts, Texas 
Tech, Duke University, Central Lakes College, World of Wildlife 
Federation, Defenders of Wildlife, Bishop Museum in Hawaii, the 
Union of Concerned Scientists, and Auburn University. Have you 
seen that letter from these scientists?
    Mr. Barker. I don't have it with me here, but yes, I have 
seen the letter. Most of the signatories on it are people who 
would be identified professionally as invasion species 
biologists and colleagues of the authors of that paper.
    Mr. Connolly. So they are just biased?
    Mr. Barker. Some are graduate students of one of the 
authors.
    Mr. Connolly. Are you familiar with the testimony given in 
March of last year by the Director of the National Park Service 
before the House Resources Committee? He said, ``The Burmese 
python is currently well established in South Florida, 
including Everglades National Park and Big Cyprus National 
Preserve, and a population of boa constrictors is established 
south of Miami. Additionally, recent evidence strongly suggests 
a reproducing population of Northern African pythons on the 
western boundaries of Miami.''
    He is testifying here that these invasive species, these 
non-native, exotic species have now in fact established 
themselves in South Florida. Do you take any issue with that 
testimony?
    Mr. Barker. There are several issues. One is that the 
Everglades region of South Florida has more established alien 
species than any other similar ecosystem in the world. Fully 
one-third of all plants and animals that have ever been 
recorded in that area are established alien species.
    Mr. Connolly. Do you believe that the Federal Government 
has any obligation whatsoever, in concert with the State 
government of Florida, to try to hold back and if not actually 
try to improve progress in curbing both the introduction of 
exotic foreign species that could be dangerous to the habitat 
and to try to make some progress in curbing the habitat of the 
Burmese python and other reptiles?
    Mr. Barker. I don't know of anyone who is happy about 
Burmese pythons existing in the Everglades region of South 
Florida. It is a problem, but it is a very localized State 
problem; it is not a Federal problem. Burmese pythons are not 
going to spread across the United States and strike fear in the 
hearts of kindergartners everywhere. So in this case I think 
the Lacey Act is just simply the wrong piece of legislation to 
invoke.
    And I can offer as an example the fact that they are not 
going to--I disagree with some conclusions in that report and 
other people support it, but in terms of actual evidence, over 
the past 20 years a significantly larger number of Burmese 
pythons were imported into Los Angeles, and there is no 
established population of the snakes there. They have been 
maintained in large numbers, by tens of thousands of people 
across the Southern United States for 30 and 40 years. I got my 
first one 41 years ago. I don't have any now, but there are no 
other populations anywhere else in the United States, and I 
think that Florida has acted very aggressively and very 
appropriately to handle the problem at the State level, they 
have done very well. And I will mention that the African rock 
python that was included in the testimony last year is believed 
to have been extirpated from the United States now. There were 
a very small number of animals existing in a huge pile of 
lumber. The State came in, wood chipped the whole thing, didn't 
find any more animals; wiped out the thing. No animals have 
been reported in 12 months, and they are waiting another year 
to formally declare them as exterminated, but they appear to be 
gone.
    Mr. Connolly. Thank you.
    Chairman Issa. I thank the gentleman.
    We now go to the gentleman from Pennsylvania, Mr. Kelly, 
who is not going to ask questions at this time.
    We now go to the gentleman from Texas, Mr. Farenthold, for 
5 minutes.
    Mr. Farenthold. Thank you, Mr. Chairman. Being a Texas, a 
big cattle growing State, I wanted to talk to Ms. LeValley for 
a second about the effort that goes into producing cattle.
    The USDA, right now, they grade select, choice and prime, 
and that affects how much you get for your cattle. Can you tell 
us a little bit about increasing upon that and creating 
different markets with specialized product, grass-fed, Angus? I 
mean, there is some effort that goes into doing that, and the 
breeds. Can you just give me like a 30, 45 second background 
there?
    Ms. LeValley. Sure. And I appreciate the question. Sixty-
two percent, when we look at all of the marketing arrangements 
in the United States that are incurred by beef cattle 
producers, are these added value, and the added value is 
because of the way they are raised or the way they are 
processed or the quality, meaning that they are either higher 
quality, closer to grading choice or prime or that they are 
meeting a consumer demand. Because they are very specific in 
how they are raised, the processors and packers have rewarded 
that individual or that ranch by paying a higher premium price 
because it is closer to what the consumer wants. So, again, 
that price differentiation between that and just a straight 
animal that is not added any value, there is that price 
differentiation because of the added value, the added cost, and 
the added benefit, and the consumer has been the one to benefit 
with the higher quality and greater eating experience.
    Mr. Farenthold. So you get more money if you sell it to a 
gourmet restaurant, as opposed to a fast food restaurant, is a 
simple way to put that.
    Ms. LeValley. Correct.
    Mr. Farenthold. All right, so under the GIPSA regulations, 
tell me what is going to happen to that sort of business model.
    Ms. LeValley. Again, when you see the vagueness of the 
language that you see in the proposed regulation and the 
potential for increase in litigation, what you have is the 
opportunity to actually reduce the quality contracts, to reduce 
the ability to capture that market value, to actually get paid 
for the added benefit. And, again, increased litigation will 
have the USDA with the oversight of is this price fair. The 
USDA will be determining what price is fair, not looking at the 
differences in the quality of animals or the weight differences 
or the freight differences, or anything like that. USDA will be 
providing that oversight. That oversight will actually increase 
the uncertainty in the market, and when we have increased 
uncertainty in the market, we have the tendency to go to the 
lowest common denominator, price, which means there will be a 
rollback in the prices received for the beef cattle industry 
because there will be not anyone that takes the chance because 
of that increased government intervention and increased 
potential for litigation.
    Mr. Farenthold. I can't imagine any industry that would be 
happy with the government telling them how and what factors 
have to be taken in to setting their price. That kind of 
strikes me as going against the fundamental principles this 
country was founded on.
    Now, I take it you are not opposed to all USDA regulation. 
They need to be in there making sure the packing plants are 
safe and there are traditional grading methods, maybe even some 
additional grading methods. Would that be a fair statement?
    Ms. LeValley. That would be a fair statement. Every day 
there is between two and three USDA inspectors in our packing 
plant every day, and we welcome them, we work with them on all 
of our plants.
    Mr. Farenthold. All right. I appreciate it very much. Is 
there anything you wanted to add about--are you able to partner 
well with the USDA? I mean, you work well with them on most 
things, is that not correct?
    Ms. LeValley. We do. We actually do. And, again, we welcome 
that partnership in our plant. We just do not feel that they 
need to be in the pricing business or the setting of pricing 
business or have the potential for increased litigation and 
competition.
    I would like to just go back to the letter that was 
referenced that was entered into the record. I want it to be 
well known that the majority of the group that signed onto that 
letter that were in support of the GIPSA regulation were non-
producer groups and do not represent the majority of the 
livestock in the country. So I do want that reflected, that 
even though there was significant numbers, we have 84 producer 
groups that represent the majority of the livestock that is 
produced in this country that are opposed to this regulation.
    Mr. Farenthold. And what is the good outcome? Who benefits 
from this regulation? It just seems anti-competitive.
    Ms. LeValley. Again, when you look at this and when we look 
at that there is not a clear cost-benefit analysis completed, 
it will not be the individual that is out there every day 
producing the livestock, they will not benefit in any way 
because, again, the price will be rolled back because no one 
will want to pay a premium for fear of litigation. So no one, 
whether it is small, medium, or large, no one benefits from 
having this increased intervention and government litigation.
    Mr. Farenthold. Do you see a consumer benefit? To me, it 
seems like it would take away choices. Your ability to say, all 
right, I am going to do organic beef or I am just going to 
raise Angus cattle or I am going to just do grass-fed cattle. 
Do you think there is a benefit to consumers there at all?
    Ms. LeValley. No. We see a rollback with the consumer 
choices also in the outcome of this. It is unintended 
consequences with this GIPSA regulation.
    Mr. Farenthold. All right, thank you very much.
    I yield back.
    Chairman Issa. I thank the gentleman.
    We now go to the gentlelady from the District of Columbia, 
Ms. Norton, for 5 minutes.
    Ms. Norton. Thank you. Thank you very much, Mr. Chairman.
    If I may say, before I ask my question, we are having these 
regulations just as the country is recovering from an economic 
debacle that everyone agrees did not come from the usual market 
forces, but from the failure to regulate. It produced a whole 
set of regulations, Dodd-Frank, and, by the way, we were saved 
from a worse debacle because of regulations that were enacted 
75 years ago, during the 1930's.
    Now, I would like to ask a question about cost-benefit. We 
know we have had cost-benefit analysis for a very long time, 
but Mr. Graham makes a very serious charge, that there may be 
``serious and systematic flaw in the benefit and cost 
numbers,'' and even suggests that the regulatory agencies have 
their thumb on the scales.
    Now, I went and asked somebody to bring me the regulations 
themselves, the regulation at issue itself, Executive Order 
13563. It says, in applying these principles, each agency is 
directed to use the best available techniques to quantify 
anticipated, present, and future benefits and costs as 
accurately as possible.
    I would like to ask Mr. Arkush are you aware of any basis 
for this very serious charge, essentially that the agencies are 
cheating in doing the cost-benefit analysis?
    Mr. Arkush. Yes and no, but perhaps not in the way that Mr. 
Graham means it. The agencies might try to cheat, might try to 
put a thumb on the scale one way or the other. In my view and 
the view of my organization, when Mr. Graham was heading OIRA, 
the Bush administration and OIRA were putting a thumb on the 
scale against measuring benefits adequately. Now, his view, 
when he is no longer in the government, is that the Obama 
administration is putting a thumb on the scale the other way.
    There are two points here. One is that this just 
demonstrates how flawed cost-benefit analysis is as a 
methodology. It is very difficult to measure the costs and the 
benefits of a lot of very important things in the regulatory 
process; the value of lives saved, the value of health, the 
value of clean air, clean water, children's IQ points. And 
people can disagree intensely on how to measure those things.
    One of Dr. Graham's disagreements with the Obama cost-
benefit analysis on fuel economy standards is that he thinks he 
knows better what the price of gasoline is going to be in 10 or 
20 years than the Obama administration does. If he knew that, 
if any of us could know that, we would be far richer than any 
of us is.
    These are serious difficult problems that can't be resolved 
easily. There are political differences over those problems, 
and what Graham's testimony shows is when he was in charge of 
OIRA, he knew how to use his institutional power to require 
agencies to conform to his views. It doesn't mean that his 
views are right and it doesn't mean that the Obama 
administration is wrong.
    The second point is it is very difficult for agencies to 
rig the cost-benefit analysis in the manner that Dr. Graham 
says. It is hard to overstate benefits because, again, they 
tend to get understated in the economic analysis; they are hard 
to value----
    Ms. Norton. Why do they tend to get understated?
    Mr. Arkush. Because it is so hard to put a price on them. 
Again, it is hard to value the benefit of saving a life. At the 
same time, costs frequently are overstated because most of the 
information that agencies get is from industry. Industry has 
every incentive to overinflate cost estimates. And we are only 
looking at the world as it exists today when we look at costs 
of regulatory compliance. We have no way of factoring in how 
much compliance costs diminish with new innovations, new 
efficiencies. Retrospective reviews tend to show that the cost 
estimates for major regulations were vastly overstated when we 
look back at them later.
    Ms. Norton. I found another section of the Executive order 
that welcomes flexible approaches, where relevant and feasible, 
consistent with regulatory objectives. It says the agency shall 
identify and consider regulatory approaches that reduce burdens 
and maintain the flexibility and freedom of choice of the 
public, and then it gives examples: warnings, disclosure 
requirements, information to the public. That would seem to 
suggest that regulations are more flexible than has been 
alleged.
    Thank you.
    Mr. Labrador [presiding]. Thank you.
    Now we will give time to Mr. Gowdy.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Dr. Graham, the phrase cost-benefit analysis sounds 
impossible to disagree with, much like shared sacrifice and 
balanced approach and some other phrases we have heard 
recently. How could one possibly not agree with a cost-benefit 
analysis? So my question to you is can that analysis be gamed 
or manipulated? And if so, how?
    Mr. Graham. Yes, there are a lot of assumptions and inputs 
that go into a calculation of cost or benefit, and if you are 
trying to tell a good story about a regulation, you can try to 
pick the inputs that make the regulation look good. If you are 
trying to make the regulation look bad, you can try to pick 
some that makes it look bad. The key role that OMB OIRA has in 
this process is to review these cost-benefit analysis and make 
sure that they are reasonably well done.
    Mr. Gowdy. Mr. Arkush, do you agree with one famous law 
professor by the name of Cass Sunstein, who said expensive 
regulations may well increase prices, reduce wages, and 
increase unemployment? Do you agree with him?
    Mr. Arkush. I am still waiting for Mr. Sunstein to provide 
the evidence to substantiate that conclusion.
    Mr. Gowdy. So you disagree with him. Well, let me go to his 
boss, President Obama. There are some rules and regulations 
that put an unnecessary burden on a business. Is the President 
right or wrong?
    Mr. Arkush. I don't doubt that we could imagine there might 
be some, but the President hasn't----
    Mr. Gowdy. Can you name one?
    Mr. Arkush. No.
    Mr. Gowdy. Because he said he could come up with 500, 501 
if you include his salmon example from the State of the Union.
    Mr. Arkush. That is right. And the conclusion among 
consumer groups like mine and the U.S. Chamber of Congress was 
that the administration didn't find that much. There just 
aren't that many overly burdensome, unnecessary regulations.
    Mr. Gowdy. You can't think of a single solitary rule or 
regulation that is unnecessary or duplicative?
    Mr. Arkush. I didn't say I can't think of a single one.
    Mr. Gowdy. Well, name one.
    Mr. Arkush. There are 500 examples that the President--the 
President, for example, is going to make certain recordkeeping 
electronic, rather than paper. That is a great idea.
    Mr. Gowdy. Is that the only one you can think of?
    Mr. Arkush. I didn't come here to speak about examples of 
overly burdensome regulations. When the administration went 
looking, they found 500 individual ones, but none of them is 
very significant, and that is what the U.S. Chamber of Commerce 
thinks, not just me.
    Mr. Gowdy. If someone were to say we should have no more 
regulation than the health, safety, and security of the 
American people require, do you agree with that or disagree 
with that as a standard of review for regulations and rules?
    Mr. Arkush. I think it is a reasonable formulation, but it 
is a little odd. I don't think that the question is do we have 
too much regulation or too little; I think it is whether we 
have the right regulation.
    Mr. Gowdy. Do you know who said that?
    Mr. Arkush. I believe that might have been the President of 
the United States.
    Mr. Gowdy. It was. Let me ask you with respect to a couple 
of specific examples. Can you tell me how the health, safety 
and security of the American people are impacted by the NLRB's 
new quickie election rules?
    Mr. Arkush. I am actually not an expert on those rules at 
all, but I do know that union membership in this country has 
declined a lot in the last several decades----
    Mr. Gowdy. Historic low.
    Mr. Arkush. Yes, and that it is correlated with poor income 
distribution; it is correlated----
    Mr. Gowdy. So you agree that that rule is calculated solely 
to drive up union membership? That is what you just said.
    Mr. Arkush. Absolutely not.
    Mr. Gowdy. That is what you just said.
    Mr. Arkush. I was responding--I was taking for granted--I 
thought that you were saying it was a pro-union rule, and I was 
taking that for granted in my answer.
    Mr. Gowdy. But you agree that it was calculated solely to 
drive up union membership.
    Mr. Arkush. I have no idea. I am not familiar with the 
rule.
    Mr. Gowdy. Can you tell me how the posting of posters 
informing workers of their right to unionize, but not their 
right to decertify a union, impacts the health, safety or 
security of the American public?
    Mr. Arkush. I believe that all Americans should have 
adequate knowledge about their rights.
    Mr. Gowdy. Including their right to decertify if there are 
in a union?
    Mr. Arkush. They should have knowledge of any right that 
they have. I believe that unions work best when they are 
dramatic and I believe that workplaces work best when they 
respect their workers and respect the choice to join unions, if 
that is what the workers want.
    Mr. Gowdy. So you would disagree with and argue against an 
NLRB rule or regulation that only gave half of a worker's 
right, the right to unionize, but did not inform them of their 
right to decertify a union?
    Mr. Arkush. You know, in the abstract, I don't know much 
about these rules, but, sure, sounds like they should know 
about their full rights.
    Mr. Gowdy. All right, the redefining of bargaining units, 
can you tell me how that impacts the healthy, safety, or 
security of the American public?
    Mr. Arkush. I don't even know what you mean by the 
redefining of bargaining units.
    Mr. Gowdy. Reconstituting who can vote in union elections 
and the majority necessary to win. How does that impact the 
health, safety or security of the American public?
    Mr. Arkush. I would guess that--again, I don't know, I am 
not familiar with these rules, but I would guess that whoever 
put them in place has a pretty well thought out theory on how 
it helps.
    Mr. Gowdy. Could it be raising membership in unions? Could 
that be the well thought out goal?
    Mr. Arkush. That might be, and that would actually be a 
laudable goal if it were.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Mr. Labrador. Thank you.
    I now recognize the gentleman from New Hampshire.
    Mr. Guinta. No questions.
    Mr. Labrador. I will take some of this time.
    First, Mr. Gowdy, do you have any other questions? Do you 
need some additional time?
    Mr. Gowdy. Mr. Chairman, I think I have exhausted my 
questions, but thank you for your gracious offer.
    Mr. Labrador. All right.
    Dr. Graham, would you like to respond to Mr. Arkush? He 
took some issue with some of the things that you were saying in 
your testimony. I don't know if you took note of those things. 
If you would take the time to respond to him.
    Mr. Graham. Yes, just two factual things for the record. 
One of his comments was that agencies don't know how to take 
into account the fact that the costs of regulations sometimes 
decline over time as industry gets accustomed to them and 
learns how to comply. But, in fact, some of the agencies, like 
EPA, build in assumed reductions in costs over time, for 
example, in compliance with motor vehicle standards. And there 
are other cases where regulations end up being more costly than 
anticipated; and, of course, that needs to be part of the 
understanding as well.
    The second thing was my key point on the future of oil 
prices and gasoline prices. It is certainly not that I know the 
future of those prices. I would be a very wealthy person if I 
could know that much. My point is the agency, in good faith 
analysis, needs to consider the possibility that they might 
actually stabilize and decline over time as they will continue 
to rise in the future, and that is due to the slowing of the 
growth of the Chinese and Indian economy and the growing 
supplies around the world as new discoveries of oil and new 
technologies define them are invented. So we just need to take 
into account both of those possibilities.
    Mr. Labrador. Okay. Now, as you know and as was already 
mentioned, last week the President told a joint session of 
Congress that we should have no more regulation than the 
health, safety and security of the American people require; 
every rule should meet that commonsense test. Do you believe 
Federal regulatory agencies are currently meeting this 
commonsense test?
    Mr. Graham. I think it's a rule-by-rule analysis, and I 
cited one concrete example, giving special compliance credits 
for electric cars under the mileage program. It doesn't improve 
the environment, it doesn't make us any safer; it just allows 
manufacturers to produce more cars that have lower mileage to 
offset those. So counting them as zero pollution, when in fact 
pollution occurs back at the power plant, it doesn't do 
anything for the health, safety, and the environment of the 
country.
    Mr. Labrador. Okay. How would you suggest that we solve 
this problem? How can we get to--do you have any specific 
reforms that you could suggest?
    Mr. Graham. Well, I would like to start with encouraging 
the members of this committee to look very carefully at the 
operation of OIRA, of the amount of activity OIRA is engaged in 
to improve these analyses, and there are two concrete ways you 
can do that: one, you can ask OIRA to provide examples of cost-
benefit analyses that were changed because of the reviews that 
OIRA has done and how they have been improved, because after 
these rules are done, those public documents should be 
available, there is nothing deliberative about that; and, 
second of all, you should be asking for examples of regulations 
that were withdrawn or returned or whatever because of poor 
quality cost-benefit analysis. In fact, I can assure you, after 
working 6 years in the administration and working on these, it 
is very hard for these couple dozen people at OIRA to keep 
track of all of these regulations and analyses, and the number 
of them that are costly is on the rise. It is a very important 
job that OIRA plays at this time in our American economy.
    Mr. Labrador. Okay, thank you. Now, the President and his 
administration keep saying that they have had less regulatory 
burden than other past administrations. Do you agree with that?
    Mr. Graham. I haven't seen the basis for that claim, no.
    Mr. Labrador. Now, you spoke about midnight regulations in 
your testimony. Can you explain to us what that is?
    Mr. Graham. Well, at the end of Presidential 
administrations, at the end of the fourth year or the eighth 
year, there is a historic pattern that presidents and their 
regulators, they like to get out as many of the rules as they 
can right at the end of the administration. So you see, in 
Republican administrations, in Democratic administrations, that 
last 6-month period tends to be a place where a lot of these 
rules are issued.
    Mr. Labrador. Now, has the Obama administration been using 
that? Because we are not at the end, yet, of his 
administration.
    Mr. Graham. No. And I would be very surprised if this 
administration is any different than the previous ones. And 
that is another example of a time when a strong and vigorous 
OIRA is very important.
    Mr. Labrador. Okay. Thank you very much.
    I yield now to the gentlelady from New York.
    Mrs. Maloney. I thank the gentleman for having this 
important hearing and for all of your testimony. We are in 
several different hearings at once. I regret I was not here, 
but I did read it. In terms of regulation, with the financial 
crisis, it is really the first financial crisis, according to 
the Bureau of Labor Statistics, that was caused by the 
financial industry, basically unregulated aspects of the 
financial industry. And we saw through this crisis that areas 
that were regulated did not cause the problem; it was 
unregulated areas of credit default swaps and innovative new 
products that had no regulation in the past. In fact, I will 
never forget President Obama, when he came to Wall Street and 
unveiled his regulatory proposal, he quoted from the paper and 
he said many people on Wall Street are upset that these 
regulations are going to destroy their productivity, and he 
reads this long statement from the paper and then he says this 
is in 1929, 1930, after they created the FDIC, which by all 
respects performed extremely well to stabilize our markets, 
protect consumers' deposits, and move forward.
    So I would say that the FDIC was a regulation that helped 
save our economy in many ways, and their ability to wind down 
companies or to manage them in a way that kept the stability of 
the financial markets was a plus. For the unregulated areas, 
Congress had two choices: you could either bail them out, which 
is a bad choice, or you can close them down, an equally bad 
choice. The FDIC, with the regulatory tools that they were 
given and which Dodd-Frank expanded to include the coverage of 
other areas that were unregulated, you are able to manage it in 
a way that the shocks to the economy were less, and one of the 
most riveting testimonies during this time was by Christina 
Roamer, who was the head of the Economic Committee of Advisors. 
She said the shocks to the American economy during this great 
recession were three times tougher and deeper and stronger than 
they were during the Great Depression.
    So in some cases regulations can save industry and can save 
our financial markets and can protect consumers. So I would 
just like to ask are there any examples where you have seen 
regulation maybe improve the quality of life of Americans, the 
economic security of Americans? And I would like to ask Mr. 
Arkush if you could testify. I know that you came out with a 
report recently in this area and I found it a very interesting 
report, and I would like unanimous consent to put in the record 
the report that was done by Public Citizen, if that would be 
appropriate.
    Mr. Labrador. Without objection.
    Mrs. Maloney. Thank you very much.
    [The information referred to follows:]
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    Mrs. Maloney. So can you give us some examples where 
regulation has actually been helpful in making our water 
cleaner, our air cleaner, our appliances work safer, or that 
your money that you deposit in a bank might actually be there 
and not be removed or lost, so that there is economic security 
for American families? Thank you.
    Mr. Arkush. Sure. There is obviously a vast number of 
regulations that protect our air, our water, the safety of our 
deposits in banks. The report that we issued yesterday was 
talking about regulations that not only did those types of 
things, but also spurred innovation in the industries that they 
applied to. So, for example, when the EPA decided to phaseout 
CFCs in aerosol because CFCs were harmful to the ozone layer, 
industry protested, made the usual arguments about how this 
would kill millions of jobs, it would put an entire sector out 
of business. But when it finally came down to it, the day after 
EPA finalized its rule, the very next day, the inventor of the 
original aerosol announced that he had come up with a solution, 
and it actually turned out it was not a problem to comply with 
this great regulation, which prevented the destruction of the 
ozone layer.
    Another example was when OSHA moved to phaseout vinyl 
chloride, a harmful carcinogen, from the workplace. 
Manufacturers of PVC pipes said this would destroy their 
industry and cost lots of jobs. But within 3 months of the 
finalization of the rule, a company came up with a new 
manufacturing process for PVC pipe that was more efficient, 
allowed the companies to comply with the rule, and didn't 
require them to kill the manufacturing workers.
    Mrs. Maloney. Well, my time has expired, but I think if we 
are going to discuss the impact of regulations on jobs, 
shouldn't we also include information about their economic and 
social benefits, including whether they actually may create new 
products, new jobs, or protect the American citizens and the 
American economy, as they have done in terms of the deposit 
system and other areas?
    My time has expired. Thank you, Mr. Chairman.
    Mr. Labrador. Thank you.
    I will now yield to the gentleman from Pennsylvania.
    Mr. Kelly. I thank the gentleman. I will yield back my time 
to the Chair.
    Mr. Labrador. Thank you. I will take that time.
    Mr. Barker, how would the proposed rule banning the 
importation and interstate trade of snakes affect your 
business?
    Mr. Barker. Ninety percent of my business is interstate and 
a smaller percentage is international, and the Lacey Act stops 
that. The animals can't be crossed across State lines under any 
circumstances and it is a felony to do so. So whether I sell 
them or my customer gets them and then he--they just can't be 
moved across State lines.
    Mr. Labrador. And does that affect any other businesses as 
well?
    Mr. Barker. My industry is tightly interconnected with 
many, many other large and small businesses. My wife and I 
spend a lot of money at Home Depot; we spend a lot of money 
with Delta Air Cargo; we spend a lot of money with FedEx. We 
buy snake cages and they, in turn, buy stainless steel 
plastics, glass, whatever. We buy rats; the rat breeders invest 
in cages, the rat breeders buy food, the grain mills buy grain 
from--it is not--people who don't like snakes or don't know 
about snakes don't realize how widespread it is and how 
interconnected it is and how many people do it.
    Mr. Labrador. Thank you. I am not a big fan of the snake.
    Dr. Graham, you just heard the gentlelady from New York 
talking about how we needed to also discuss the benefits of 
regulation, and I am always confused when I hear that because I 
think that is implicit in the term cost-benefit analysis. I 
mean, isn't that what we are asking? We are not asking to only 
look at the cost of regulation; we are asking to look at both, 
isn't that correct?
    Mr. Graham. Yes. And when I teach my students, I use the 
phrase benefit-cost analysis because I tell them that B has the 
alphabetical advantage, and it is to remind people that 
benefits are important, as well as costs.
    Mr. Labrador. So you are not here to say that there are no 
benefits to regulation.
    Mr. Graham. No. There are often quite substantial benefits.
    Mr. Labrador. Okay.
    Mr. Arkush, I am going to ask you a few questions. I looked 
at your impressive resume and you have some great experience in 
academia; you went to some great law schools. How much 
experience have you had in the private sector?
    Mr. Arkush. Well, I have worked, I have had many jobs, and, 
as I mentioned earlier, I am actually in a----
    Mr. Labrador. In a band. Absolutely.
    Mr. Arkush. It is a lot of work.
    Mr. Labrador. It is a lot of work. How many employees have 
you had in your life?
    Mr. Arkush. I have never had a full-time employee myself.
    Mr. Labrador. So how can you sit here with all these job 
makers and say that there is no cost to the regulatory burden 
that their jobs have?
    Mr. Arkush. I certainly never said there is no cost.
    Mr. Labrador. Okay, you said that there is not a single 
regulation that you can think of that is bad. Is that correct?
    Mr. Arkush. Well, that is right, not off the top of my 
head. In fact, today I think we have only heard--all we have 
heard is repetition about two or three specific examples.
    Mr. Labrador. But we have had hundreds of hearings about 
regulations, and I think there are numerous regulations that 
are bad. But actually your testimony today actually contradicts 
what you are saying. You tell us that it was the failure to 
regulate that created a lot of the problems, but then you said 
something that I actually agreed with, but I don't think you 
realized what you were saying. You said that there is not too 
much or too little regulation; sometimes the problem is that we 
don't have the right regulation. Isn't that true?
    Mr. Arkush. Absolutely.
    Mr. Labrador. Well, if there is not too much or too little, 
it means that some of our regulations are actually not correct, 
not the ones taking care of the problem. So the problem is not 
that we don't have regulation; the problem is that we don't 
have the right regulation in some instances, correct?
    Mr. Arkush. That is sometimes right.
    Mr. Labrador. So wouldn't, by implication, that mean that 
some of the regulations that we have right now are bad?
    Mr. Arkush. I don't doubt that there are some; I just, off 
the top of my head, I don't have examples for you. And no one 
else has provided examples today either, I might point out, 
except for GIPSA and an NLRB rule and the Lacey Act.
    Mr. Labrador. Yes, because these are the things that we are 
testifying about today.
    Mr. Arkush. Well, your hearing is about the overall broken 
process and why it leads to flawed regulations. Only three have 
been mentioned.
    Mr. Labrador. And we have a whole report that has been 
entered into the record. It is 30 pages of regulations that 
actually affect. I just think, you know, when we talk about 
regulations, we have a problem because people like yourself 
come in here and say that there is no problem with the 
regulatory burden. But at the same time they are not willing to 
look at regulations that are maybe outdated, that maybe we 
should just get rid of because they are actually hurting the 
economy, they are hurting us; and you are not willing to look 
at any of those things.
    Mr. Arkush. I am absolutely willing to concede that 
obviously there could be, and there probably are, somewhere out 
there regulations that are unnecessary or burdensome, but we 
should talk about them specifically and I think we ought to fix 
them where they are. But the overwhelming weight of the 
evidence is that regulations are wildly beneficial; they have 
returned a 700 percent rate of return for us.
    Mr. Labrador. You know, and the most ironic thing about 
your testimony was, in the end, your last line in your 
testimony, Congress should get to work on reducing the 
unnecessary burdens placed on the agencies that protect our 
health and environment. And it is just really beyond the pale 
for me to think that you think it is more important for 
Congress to reduce the burden on regulators than it is to 
reduce the burden on job creators. But my time has expired and 
I will now--now it is my time and I will yield my time----
    Mr. Issa. Would the gentleman yield?
    Mr. Labrador. Absolutely.
    Mr. Issa. I thank the chairman. I am back.
    I am going to ask just a final round, and I appreciate your 
patience and your dialog here. But I am going to ask something 
that I think crosses all of you. Some of you are very young; 
some of you are a little more like me, a little less young; and 
some of you are in between. But I grew up in Cleveland, Ohio in 
the 1950's and 1960's, so I grew up at a time in which we were 
an industrial capital; auto, steel, and rubber, plenty of coal 
still burning. My grandmother actually burned coal in a plain, 
old-fashioned big thing down in the basement that just hot air 
rose through the house. Our buildings were black, and it wasn't 
until they really cleaned up the city years and years later 
that it was worth cleaning them off and showing the stone 
underneath. So I am somebody who has appreciated clean air, 
clean water, improvements. But I also have seen that Cleveland 
no longer produces cars; less engines, no rubber, no tires, 
steel mills are pretty well gone and so on. So I see the 
balance.
    I want to ask you a fairly simple question, and, Mr. 
Arkush, I will start with you. If in fact regulations 
individually all do good things, but the price of getting 
cleaner air and cleaner water and less pesticides, and 
everything else that we would like to have as goals, and 
certainly not losing species and so on, if the price is that 
our unemployment rate goes from 9 percent to 10 percent to 11 
percent to 14 percent because simply the jobs created by being 
competitive around the world are diminished and transferred to 
outside the country, are we better off? Or isn't there a 
balance that this committee and the regulatory regimen have to 
make sure are balanced of full employment, competitiveness, and 
clean air, clean water, safety and the like?
    Mr. Arkush. Mr. Chairman, that is the most difficult 
challenge facing you and facing the regulators, obviously, when 
there is a difficult decision to be made between economic costs 
or jobs and protecting the public. Fortunately, what the 
evidence shows is the cost just doesn't come up. That question 
isn't often posed by the regulations that our agencies produce; 
they overwhelmingly have benefits that outweigh the costs, even 
though the costs are much easier to quantify than the benefits.
    Mr. Issa. And I appreciate that. I want to follow up with 
you quickly. When you say costs and benefits, the current 
benefits--and Dr. Graham, I am sure, can help us with this--the 
benefits are not necessarily global competitiveness. In other 
words, you can cumulatively have benefits and cumulatively 
become less competitive and, thus, lose jobs, can't you?
    Mr. Arkush. And I think the attempt is to incorporate 
everything into the equation.
    Mr. Issa. Dr. Graham, you are not still at OMB, but were 
you able to do that during the Bush administration? There were 
increases in regulations, not quite at the rate that they are 
going now, but there were a lot of increases, and we began, 
continued losing our competitive edge against the rest of the 
world. Isn't that true?
    Mr. Graham. Well, let me start by saying I am a born and 
raised Pittsburgher family in the steel industry----
    Mr. Issa. So you have no sympathy, being that you were from 
the poor cousin of the Cleveland Browns.
    Mr. Graham. Yes. Right. [Laughter.]
    And I think that the demise of industry in cities like 
Pittsburgh and Cleveland has a complicated history and terrain, 
and it has elements of not adequate technology; it has elements 
of labor costs; it has elements of regulation. All of this is 
in the story.
    But one thing to remember is that when we do these cost-
benefit analysis, we do the analyses one at a time on 
individual regulations. What happens, however, is when you have 
a suite of regulations that simultaneously hit the same sector, 
it is hard, when we do cost-benefit analysis, to handle kind of 
the combination of that. And there are certain sectors in our 
economy, and steel is certainly among them, autos is among 
them, mining is among them, they are really under a lot of----
    Mr. Issa. Logging.
    Mr. Graham. Logging would be another example. And we should 
be candid about the fact that when we do individual cost-
benefit analyses of individual rules, we don't necessarily 
capture that combination.
    One final point. These huge benefits that you are hearing 
about from Mr. Arkush's testimony, what he is doing, he is 
taking some really wonderful regulations, clean air examples or 
automotive safety examples, he is combining them with a bunch 
of other regulations which aren't so great, and he is saying 
the overall benefits are greater than the overall costs. Well, 
that is true, but we shouldn't defend all of the weak or bad 
regulations on the grounds that there are some really great 
ones out there. And that is why it is important to look at this 
as analytically as we can.
    Mr. Issa. I want to just close by noting something, Dr. 
Graham, that you had in your opening statement. I am deeply 
concerned that the CAFE standard change was done the way it was 
because of process. I am also deeply concerned that if we fudge 
the numbers so that an electric car gets considered to have, if 
you will, no pollution, when in fact it is fed maybe by coal-
fired electric plant, that what we are doing is forcing 
ourselves into one solution that may not be as good as a 
enhanced diesel, hybrid, or even a conventional car or, for 
that matter, compressed natural gas, lots of other solutions.
    So, in closing, I appreciate the indulgence, Mr. Chairman, 
and I look forward to the next panel, and thank you.
    Mr. Labrador. Thank you very much.
    Now we would like to excuse the panel. We thank you for 
being here and we are just going to recess for a few minutes. 
Thanks.
    [Recess.]
    Chairman Issa. The committee will come back to order.
    We now recognize our second panel, the Honorable Cass 
Sunstein is the current Administrator of the Office of 
Information and Regulatory Affairs within the Office of 
Management and Budget, and we are very delighted to have you 
here today. Pursuant to the committee rules, we would 
appreciate it if you would rise to take the oath. Raise your 
right hand.
    [Witness sworn.]
    Chairman Issa. Let the record reflect the witness has 
answered in the affirmative.
    Administrator, you were here for the first panel, and I 
appreciate your being here for that entire time. I also 
appreciate your additional comments that have been made and 
your cooperation throughout this process. You are a single 
witness. We are not going to hold you to exactly 5 minutes, but 
come as close as you can. And, with that, the gentleman is 
recognized.

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

    Mr. Sunstein. Thank you very much, Mr. Chairman and members 
of the committee. It is an honor and a pleasure to have the 
chance to appear before you to discuss issues relating to 
regulation and regulatory review, and I am especially grateful 
to you, Mr. Chairman, and to the committee as a whole for its 
constructive and important work on this issue over the past 
months; it is very significant to try to get regulation in a 
place where it is helpful to the economic recovery.
    In the last 8 months, much of our work at the Office of 
Information and Regulatory Affairs has focused on the recent 
Executive order on regulation, and especially on the 
requirement of retrospective analysis of existing rules. My 
written statement deals with the 500 reform proposals that have 
now been released to the public and the associated economic 
savings, which are in the billions of dollars. It is my belief 
that these reform initiatives and this general enterprise, 
which is ongoing, is consistent with the thrust of this 
particular hearing and the policy goals that are shared on a 
bipartisan basis.
    In these oral remarks, what I am going to do is focus on 
three topics: first, the basic process of review under our 
Executive orders; second, the role of the Regulatory 
Flexibility Act focused on small businesses; and, third, an 
issue that has been discussed a great deal in the last 6 
months, that is, the relationship between OIRA and the 
independent regulatory agencies.
    Since 1993, under President Clinton, Executive Order 12866 
has established governing principles, requirements, and 
processes. It builds, incidentally, on an Executive order from 
President Reagan in 1981, which set out the fundamental 
charter, which continues to this day.
    As stated in the 1993 Executive order, and to the extent 
permitted by law, agencies must propose or adopt a regulation 
only upon a reasoned determination that its benefits justify 
its costs, a clear endorsement of cost-benefit analysis; 
second, tailor its regulations to impose the least burden on 
society; third, select among alternatives the approach that 
maximizes net benefits; and, fifth, identify and assess 
available alternatives to direct regulation. More freedom 
should be allowed if it is consistent with law.
    The same Executive order establishes the process of 
centralized review in which proposed and final significant 
rules are submitted to OIRA for an interagency process in which 
different components of the Federal Government comment on the 
rule that the agency proposes. OIRA is also available--I would 
like to underline this point--during the process to meet with 
anyone who wants to discuss regulations under review, including 
people who were on the previous panel. The meetings may involve 
business organizations, State and local governments, or 
congressional staff; and we have had some important ones in all 
of those domains over the last few years. In the vast majority 
of cases, the proposed or final rule is changed as a result of 
these processes.
    If the draft final rule follows public notice and comment, 
as is the case typically, then much of the attention of review 
is on public comments and concerns. In the recent past, those 
comments or concerns have led to fundamental rethinking of 
regulatory proposals. There has been some discussion of the 
number of rules and we very much appreciate the concern of 
excessive numbers.
    I would like to note, just as a supplemental point, that 
the number of rules issued in our first 2 years that have gone 
through our office is actually lower than the number in the 
previous 2 years under President Bush and, indeed, is lower 
than the average, at least in the second term, of the Bush 
administration.
    Okay, the interest of small business in particular are 
protected by the Regulatory Flexibility Act. The Office of 
Advocacy of the Small Business Administration plays a crucial 
role in ensuring adherence to that statute, and OIRA works very 
closely with that office to protect small business against 
unjustified rules. Of special note is that office's statement 
from just this year, just a few months ago. As a result of 
improvements to the RFA, Advocacy's work on small businesses' 
behalf has required greater involvement in Federal rulemaking. 
The Office has had more success in urging burden-reducing 
initiatives, and there is a list where the Office of Advocacy 
has had that greater success. In short, the trend is going in 
the right direction.
    As you are aware, independent regulatory agencies under 
both Democratic and Republican presidents have not been covered 
by the regulatory review process, out of respect for the legal 
independence of those agencies. Nonetheless, President Obama, 
with the enthusiastic endorsement, I know, of many on both 
sides of the aisle, took a significant and novel step with a 
different executive order which states that independent 
agencies should follow the cost-producing requirements of 
Executive order and should engage in the process of 
retrospective review.
    Our hope is that, as a consequence, a direct consequence, 
the Nation will see significant improvements and significant 
savings, significant reductions in regulatory burdens. We are 
encouraged by the early results from the independent agencies.
    With that said, I am looking forward to answering your 
questions.
    [The prepared statement of Mr. Sunstein follows:]
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    Chairman Issa. Thank you. And because Mr. Gowdy has crucial 
other committee work, I would yield first to Mr. Gowdy for 5 
minutes.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Thank you, Professor, for your testimony. This is actually 
not a trick question. I will read you the same quote I read to 
the first panel. ``We should have no more regulation than the 
health, safety, and security than the American people 
require.'' That was a quote from the President. Do you agree 
with that?
    Mr. Sunstein. I agree with my boss.
    Mr. Gowdy. That is why I said it wasn't a trick question. I 
am not trying to get anybody in trouble. At 9.2 percent 
unemployment, I don't want to add to it.
    Is there anything that should have been added to that 
series?
    Mr. Sunstein. Health, safety, security? I think it is 
pretty comprehensive.
    Mr. Gowdy. Do you know or are you familiar with someone by 
the name of Dudley Butler?
    Mr. Sunstein. I do not know that name offhand.
    Mr. Gowdy. If he were an administrator, either past or 
present, U.S. Department of Agriculture, Grain Inspection, 
Packers, and Stockyards Administration--there would be no 
reason for you to know him, I don't imagine, and you don't have 
to know him to be able to answer my question. He referred to a 
proposed rule as a plaintiff lawyer's dream. Would you agree 
that that is not an appropriate factor to be considered in the 
promulgation of a rule or regulation?
    Mr. Sunstein. I wouldn't want to say anything negative 
about a colleague whom I don't know and for which I don't know 
the context exactly. I would say, in general, the question is 
whether regulation conforms to the law and existing executive 
orders, and the question is not whether it is someone's dream.
    Mr. Gowdy. Violations of rules and regulations, are they 
ever considered evidence of negligence in civil litigation?
    Mr. Sunstein. That is possible. It depends on the context.
    Mr. Gowdy. Violations of rules and regulations, are they 
ever considered negligence per se in civil litigation?
    Mr. Sunstein. You know, I would want to bone up on my tort 
law, but it wouldn't be stunning if the answer were yes.
    Mr. Gowdy. So an ancillary reason to be concerned about 
what some perceive to be the excessive promulgation of rules 
and regulations would be that it contributes to what some 
believe is an already litigious society.
    Mr. Sunstein. This is a very important question, the 
relationship between Federal regulation and tort law, and you 
are on to something, if I may say, that would be very valuable 
for all of us to have clarity on. Sometimes what happens is a 
regulation displaces State tort law, it eliminates it; 
sometimes it, as your question suggests, it kind of puts State 
tort law on steroids because it gives a tool to the plaintiff 
that didn't exist before. And whether the preemption or the, 
let's say, enhancement of State tort law is desirable very much 
depends on the context. I do take your point that there are 
contexts in which the amplification of the civil liability 
system, the regulation, let's call it the non-preemption 
regulation creates can be harmful. There are such situations.
    Mr. Gowdy. Are you familiar with and do you support in 
theory the Raines Act, which is pending in the House?
    Mr. Sunstein. I am familiar with it. The administration 
agrees with the cost reduction goals of the advocates of the 
Raines Act. The administration does not favor the Raines Act on 
the ground that the tool it gives to Congress Congress already 
has to eliminate rules, and that there is a risk that the 
Raines Act would have unintended consequences. Just to give you 
one example, when I last looked at the text, it would sweep up 
deregulatory initiatives in its ambit, so our efforts to 
eliminate costly rules would be delayed, and possibly 
indefinitely, by this new and very dramatic departure from 
longstanding practice.
    Mr. Gowdy. Do you agree in general that Congress has 
abdicated its responsibility for filling in the details of 
legislation to executive branch entities?
    Mr. Sunstein. Well, I wouldn't want to make a general 
statement on that because there are many laws, as you know, 
which are quite detailed and prescriptive, where the Executive 
has exceedingly little discretion; there are others where it 
has large discretion. And in those cases in which it has large 
discretion, whether it is an abdication or a recognition of 
changing circumstances or the need for technical expertise 
depends on the area. I do understand that many people on both 
sides of the aisle have been concerned about excessive 
delegation under some statutes.
    Mr. Gowdy. My time has expired.
    Thank you, Mr. Chairman.
    Chairman Issa. I thank the gentleman.
    We now recognize the ranking member and would ask unanimous 
consent that he have one additional minute. I shorted or 
excessed myself at the end. Without objection, the gentleman is 
recognized.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    There is a lot of rhetoric in the committee and on the 
House floor describing regulations as job killers, but 
regulations perform a critical role in implementing some of our 
most important laws, such as the Clean Air Act. EPA estimates 
that in 2010 alone the Clean Air Act prevented over 160,000, 
160,000 premature deaths. Those are real people who are alive 
today because of these protections.
    Majority Leader Cantor sent a memo to House Republicans on 
August the 29th laying out the Republican leadership's agenda 
for the fall. The memo identifies a list of agency rules the 
Republican leadership wants to eliminate. These include rules 
aimed at protecting public health, the environment, and 
workers' rights. Mr. Cantor's memo makes assertions about the 
costs of these rules but does not discuss the benefits.
    Mr. Sunstein, shouldn't any evaluation of an agency rule 
include analysis of the benefits the rule provides?
    Mr. Sunstein. Absolutely yes.
    Mr. Cummings. Of course, I believe we can always improve 
regulations to make them better. In fact, the President issued 
an Executive order in January that required agencies to review 
existing regulations and streamline them when appropriate. In 
response, agencies developed draft plans in May and the public 
was given the opportunity to comment on those plans.
    As you highlighted in your testimony, those plans include 
over 500 initiatives that are expected to save more than $6 
billion over the next 5 years. I understand that the agencies 
were tasked with developing these plans while considering both 
the costs and benefits of these rules. How were they able to 
find such significant savings while still ensuring the health, 
safety, and protections provided by these rules? Were they just 
outdated? Did circumstances change? Did any of them have 
anything to do with new technology, then making them obsolete? 
Tell us about that, because I think that can provide us 
guidance with regard to what we are trying to do, and that is 
strike a balance between making sure that we have rules that we 
really need to protect the health, welfare, and the safety of 
Americans, but at the same time get rid of those that just 
don't make sense anymore.
    Mr. Sunstein. It is a great question, and at some point----
    Mr. Cummings. Thank you.
    Mr. Sunstein [continuing]. At some point probably a book 
will be written about it, how agencies were able to identify so 
many reforms. And the $6 billion figure identified I think we 
are going to be able to do a lot better than that; that is just 
a small fraction of the 500 reforms. Let me give you an example 
by way of getting into your question.
    The EPA has actually proposed to eliminate tens of millions 
of dollars in annual expense put on small business owners 
because of air pollution requirements for gas stations, which 
are not helpful because modern cars already control the air 
pollution; you don't need the gas stations to do it. So it is 
completely redundant. That is a case where the rule, when 
issued, at least for all I know, served a function. But it 
doesn't serve a function anymore.
    And there are other regulations like that where, at the 
origin, it made some sense, but the technology, as you say, has 
evolved. Some of the savings involved just learning from 
experience. For example, we have OSHA eliminating 1.9 million 
hours in paperwork and reporting requirements imposed on 
employers. OSHA has learned that those aren't helping worker 
safety. They are providing some information, but it is not 
information that the government needs in order to do its job. 
So that is when you learn. And I am excited about this for our 
future, unbreaking those aspects of the regulatory system that 
aren't working so well, just learning how things are operating 
on the ground.
    There are other things, and this is maybe relevant to your 
job, where a law, as enacted, may overshoot a bit because the 
text may sweep up conduct that doesn't really cause the harms 
that the law is designed to prevent. So we have an oil spill 
rule which is serving important functions, but the definition 
of oil turned out to include milk. Well, there is a difference 
between milk and oil in terms of environmental harm, and a lot 
of work had to be done to exempt milk and dairy industry from 
onerous regulatory requirements. Because Congress got alert to 
the problem, it gave EPA the authority to fix it. It took a 
while to fix it, and with the President's action it got fixed 
in a hurry.
    There are other categories of things where there are 
compliance dates, for example, or requirements that are issued 
in 1 year which, when the relevant year comes around, it just 
doesn't make much sense anymore given the economic situation. 
So you may have noticed, it got a lot of publicity, that States 
and localities all over the country were asked--and this was by 
the Bush administration acting in good faith--to change their 
street signs and traffic controls. By the time the compliance 
date came along, this new font size requires and States and 
localities are saying you are asking us to spend millions of 
dollars when there is not an ascertainable safety benefit, and 
the Secretary of Transportation, Secretary LaHood, was very 
concerned and thought, given our current situation, this is not 
what States and localities have to do. So we propose to take 
away that multimillion burden.
    Mr. Cummings. Well, the method that is being used to get to 
those kinds of situations that you just stated, I guess it is 
like a screening process, like you have tea and you have to 
pour through the tea to get what you want, but you want to keep 
something there, a strainer. Do we have a sufficient strainer? 
Do you understand what I am saying? In other words, are we 
catching? Do you feel like we have put together the mechanisms 
to catch?
    Mr. Sunstein. I don't have an abstract answer to that 
question, but I do think that it is often the case that laws, 
like regulations, have unintended adverse consequences, 
including unintended coverage. And what we found with our look-
back process, and not infrequently with our notice and comment 
process, is that if we just listen to people who are running 
businesses or otherwise affected by our rules, they can tell us 
things that can help create a good strainer.
    Mr. Cummings. Thank you.
    Thank you, Mr. Chairman.
    Chairman Issa. I thank you.
    The gentleman from Michigan, Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman.
    I thank you for being here, Mr. Sunstein. Two issues I want 
to address with you, the first being GIPSA. And I take that in 
reference to a point that Representative Gowdy was attempting 
to get out, and you appropriately chose not to answer based 
upon a colleague's statements that you clearly weren't aware 
of. But I do want, for the record, to make sure that we 
understand, in relation to this GIPSA question and the fact of 
being a former member of the House Ag. Committee that passed 
the 2008 Farm Bill and did a lot of work on making sure that 
that issue, GIPSA, was covered well and regulations were put in 
place realistically, and a concern now that USDA and GIPSA have 
gone well beyond the intent of Congress in that proposal and 
those regulations.
    Mr. Dudley Butler, J. Dudley Butler, in commenting about 
the rule and its ability to allow for more litigation in the 
future, he said this, ``When you have a term like unfair, 
unreasonable, or undue prejudice, that is a plaintiff lawyer's 
dream. We can get in front''--and that is my concern, we--``we 
can get in front of a jury with that. We won't get thrown out 
on what we call summary judgment because that is a jury 
question.'' I think you would justifiably understand our 
concern when a regulator makes that type of statement in 
relationship to GIPSA.
    Let me go on and ask a question here. As you may know, 
multiple studies have been released questioning the economic 
impact of the proposed rule and what it would be doing and the 
cost that there would be there, which would result to more than 
$100 million. Will you consider having the rule withdrawn and 
having the USDA initiate a more thorough economic impact study 
before going forward?
    Mr. Sunstein. Well, thank you for that. If the rule has 
$100 million in annual impact, then it is required to have an 
economic analysis associated with it. So that is just simple 
and straightforward. And if, originally, a rule comes in, in 
answer to the chairman's question, originally it was proposed, 
didn't look like it would have $100 million, and then it turns 
out it is going to, then at the final stage it has to have that 
analysis.
    Mr. Walberg. So even though, initially, it looked like the 
study that was done was done in a cursory fashion to make sure 
it didn't cross the $100 million level, if it ultimately shows 
that it is going to be more, you are telling me that there will 
indeed----
    Mr. Sunstein. There will be a regulatory impact analysis; 
will in italics.
    Mr. Walberg. We will certainly look for that.
    Let me move forward here on the silica issue. And I chair a 
subcommittee that deals with MSHA, and a lot of minds are 
concerned, farmers and others, because sand is certainly, as 
you know, everywhere. Currently, OIRA is reviewing OSHA's 
proposed changes to the silica standard. This proposal has been 
under review for almost 6 months, and I appreciate the fact 
that it is still under review and has not come out, because if 
it were to come out there are some significant concerns on my 
part. In August 18, 2011, I copied OMB on a letter asking OSHA 
to publish an advanced notice of proposal rulemaking in order 
to allow for stakeholders to understand what changes are being 
contemplated. I await that response. In that letter, I noted 
that the cost estimated of lowering the standard would be 
between $3 to $5 billion by a small business panel in 2003 that 
looked into it. Additionally, the lowering of the standard, 
which has been effective so far in that silicosis is going 
down, it is not going up, the lowering of the standard by half, 
which is what many in the affected industries are expecting, 
would effectively lower the limit to be virtually impossible to 
enforce.
    Can you explain how OIRA is reviewing the proposed 
regulation and its impact on job creation?
    Mr. Sunstein. Yes. I am pleased to do that. I should avoid 
discussing the details of the particular rule under review, but 
I can tell you some general principles that bear on all rules.
    The first is conformity to law. That is our number one 
priority; that is the foundation. And there are requirements in 
the Occupational Safety and Health Act, including feasibility 
requirements, that would be relevant to any OSHA rule, and many 
other agencies' rules which have a feasibility or achievability 
constraint built into the law.
    Apart from the law, there is the Executive order, which 
requires quantification, to the extent feasible, of all costs 
and benefits. That bears on the rules discussed earlier, as 
well as this one. Within the constraints of the law, there are 
principles that the new Executive order has in it, including 
public participation, engagement with relevant stakeholders, 
and open exchange of ideas, flexibility, meaning give people 
room to maneuver, because that tends to make economic sense; it 
also promotes freedom. That is in our Executive order.
    So the law would be the first requirement; our Executive 
order would set the second level of details for analysis. 
Within the framework of the Executive order, probably the most 
important point here to emphasize is even when a rule is under 
review, before it is proposed for comment--and this hasn't been 
proposed for comment--people's concerns are very welcome in the 
form of meetings, as well as letters. So we have had a number 
of meeting requests on this one in which relevant information 
has been provided, and that definitely plays a role in the 
review process.
    Chairman Issa. I thank the gentleman.
    We now go to the long-time businessman, job creator, and 
Congressman from Pennsylvania, Mr. Kelly.
    Mr. Kelly. Thank you, Mr. Chairman, and thanks for the 
long-time job creator. It has been the family business for 57 
years.
    Professor, it is nice to have you with us again, and thank 
you so much for being here. One of the things that Dr. Graham 
talked about was that the bureaucrats at EPA and NTSA 
artificially inflated the benefits of their CAFE and greenhouse 
gas rulemakings for both light-duty and heavy-duty cars and 
trucks by declaring that society would declare a social benefit 
from tighter mileage standards and assigning it a savings of 
anywhere from $21 to $45 for each ton of carbon not admitted. 
Did the agencies present any type of science to back that up?
    Mr. Sunstein. Yes. That number is a result of a very 
lengthy report that reflected the views of the Council of 
Economic Advisors, the Department of Treasury, the Department 
of Energy, the Environmental Protection Agency, the Department 
of Transportation, the Department of Commerce, as well as the 
Office of Management and Budget; and any report that gets 
consensus from that diverse set of officials either would say 
nothing or be maybe pretty solid.
    Mr. Kelly. Okay. So in that range, then, from $21 to $45 a 
ton, that is a pretty big range for all those people that 
weighed in on it.
    Mr. Sunstein. Yes. It actually is a somewhat larger range, 
where the $21 is the central value, but at the low end it goes 
well below 21; at the high end it goes into the sixties.
    Mr. Kelly. Earlier, one of our colleagues from Virginia was 
talking about had the American auto manufacturers not spun an 
end-run to get around the CAFE standards in the 1970's, they 
would not have faced some of the challenges they had. I was 
actually selling cars during that time period. CAFE standards 
really don't drive the market; the price of gasoline does. And 
I remember that very specifically, that whatever our standard 
was at that time wasn't really based on market conditions, it 
was, again, based on standards that somebody came up with that 
they thought would be better than what we were currently doing 
with the concern for we were running out of this fuel. And I 
can remember Newsweek with the needle being on E and saying we 
are running out of this and we are running out of that, and a 
lot of that stuff, since then, we are finding out that we do 
have vast stores of oil, we do have an awful lot available to 
us.
    But I am always perplexed, and you said, and I thought this 
was very good, you said we need to listen to the people who 
actually run these businesses, and I would agree with that. I 
am a guy that is a General Motors dealer. I am trying to 
understand the Chevy Volt. If it has such a great value and is 
such a significant part of our transportation strategy as we go 
forward, it should pretty much sell itself. And the fact that 
General Motors isn't putting a rebate on it, but the American 
taxpayers are putting $7,500 into every Volt that is sold, and 
these are not being bought and snapped up by people who see, 
boy, this is a great car for me to own, this is something I am 
going to run out to the dealership and buy. I mean, we are 
being asked to take this car and stock it, which is a poor 
business practice. I usually don't like to have anything on my 
shelf that I can't turn in 45 or 60 days; it has kind of led 
into our family being able to survive for 60 years in the 
business. But I have people telling me, no, no, you have to 
stock this; you don't understand, this is the way the market is 
going.
    And I am trying to understand because your comment, listen 
to the people who run these businesses, where in the world do 
we get a chance to do that?
    Mr. Sunstein. There are a couple of ways. One thing we are 
really trying to do is to spur this at our little office, which 
is when we have a rule under review, sometimes it will have 
been proposed formally to the public so people have a good 
sense of what it might look like. GIPSA is an example of that; 
that has been formally proposed. When it is out----
    Mr. Kelly. If we could, I understand those, but when we are 
talking about transportation--and most of us, at some time in 
our life, actually go into a car dealership and sit down, pick 
out a car and negotiate the price and then buy it, so I am not 
getting into the silicons and everything else; I am talking 
about specifically who were the people who were involved in 
coming up with some of this great strategy as to what we should 
be driving in the future?
    Mr. Sunstein. With respect to fuel economy?
    Mr. Kelly. With respect to the people who buy these. 
Because at some point we are legislating and we are regulating 
people out of the market. We are raising the prices of 
transportation, personal transportation so high that their only 
choice is to go to public transportation, finding another way 
to get from point A to point B, and we are going to drive them 
from their suburban settings back into the urban settings 
because they can't get there effectively; and that really does 
concern me, again, government picking and choosing the way we 
will choose our personal transportation.
    Mr. Sunstein. Okay. Well, before any rule that involves 
automobiles is finalized, and the one you are referring to is 
an example, it is presented to the public for comments, and if 
automobile companies or auto dealers have a problem with it, 
that plays----
    Mr. Kelly. That is actually not true, and you know that is 
not true. No, it is the government decides what the CAFE is 
going to be, what the gas mileage is going to be, and then 
holds the car manufacturers hostage in order to meet these 
regulations. The cost of building these vehicles, by the way, 
is going to be so burdensome that private transportation as we 
know it is no longer going to be viable. We know that. No, the 
public does not weigh in on this. This is really, when you talk 
about overregulation and a government that wields its weight 
way too much, that is exactly what is happening in private 
transportation, and I would suggest that this country, which is 
built on private transportation, needs to take a look at what 
is happening.
    Chairman Issa. I thank the gentleman.
    Mr. Kelly. And I thank you, sir. I yield back.
    Chairman Issa. Thank you.
    We now go to another past job creator, the gentleman from 
Texas, Mr Farenthold.
    Mr. Farenthold. Thank you much, Mr. Chairman.
    Mr. Sunstein, thank you for your hard work. You have taken 
on a very difficult task of weeding out some of these 
regulations. I think you are working with a scalpel. If you are 
not successful pretty soon, I think we are going to come in 
after you with a machete, because I think it is something that 
needs to be taken care of.
    I want to start off by addressing something of particular 
interest to the State of Texas, and that is specifically the 
cross-State air pollution rule. This is a symptom that we are 
seeing in multiple occasions in Texas. We saw it with the dune 
sagebrush lizard, where Texas is not originally included in the 
original proposals and not given an opportunity to take part in 
the rulemaking process, and then as the final rule comes out or 
is about to come out, all of a sudden we are thrown in there. 
About a month ago, I think almost the entire Texas delegation 
sent you a letter with respect to these cross-State air 
pollution rules. Have you had a chance to read that letter and 
follow up on your offer maybe to help us out on that?
    Mr. Sunstein. Well, yes, definitely. That letter followed a 
discussion I had with almost the entire Texas delegation, both 
Democrats and Republicans, and subsequent to receiving that 
letter I have transmitted it to the Environmental Protection 
Agency, which I can assure you is thinking intensely about the 
issues that were raised.
    Mr. Farenthold. All right, let's just step back now and 
look at a broader perspective. You are seeing now agencies, 
more and more, going into these emergency rulemaking 
procedures, where the rules take effect immediately and end up 
being, in effect, permanently. Do you think we have maybe 
broadened the definition of what an emergency is beyond what 
the average American citizen would think is an emergency?
    Mr. Sunstein. You are taking me back to my days as an 
administrative law teacher. The Administrative Procedure Act 
allows agencies to dispense with notice and comment rulemaking 
when it is a unnecessary, impracticable, or contrary to the 
public interest. That is the statutory term. Sometimes that is 
referred in shorthand as an emergency exception, which I think 
is a useful way of reminding everyone, maybe particularly 
agencies, that the ordinary course is to go through notice and 
comment.
    What I believe, and what OIRA is firmly committed to, and 
what the President, more importantly, has directed us as of 
January 18th to be firmly committed to is a 60-day notice and 
comment period unless there is some very unusual circumstance.
    Mr. Farenthold. And can you talk a little bit about sue and 
settle, where agencies are basically forced to implement rules 
as a result of a lawsuit from an activist group and basically 
sidestepping the normal procedure that way as well?
    Mr. Sunstein. Well, I think there are a couple of different 
situations that that rubric might capture. Let's describe the 
optimistic one first. The optimistic one is where the 
plaintiff, it could be a company that wants to avoid a burden, 
it could be an environmental group that wants to clean the air 
or the water, has a really good argument on the merits, let's 
suppose; and then the agency decides we are going to lose, why 
don't we enter into a settlement agreement, which will give us, 
in some cases, more flexibility and room to maneuver than could 
happen if the case went to trial. So that is completely 
legitimate. All I would say, as OIRA Administrator for that 
one, is that it should be clear that the public comment process 
and the legal requirements of the statute and the requirements 
of the Executive order, including careful cost-benefit 
analysis, choice of least burdensome alternative, etc., to the 
extent permitted by law, all have their appropriate play.
    Mr. Farenthold. I would love to sit down with you over 
coffee and have about 30 minutes to discuss that and the 
separation powers issues associated with it on a former lawyer 
to law professor level, but I only have about 30 seconds left, 
so I want to just pose one more thought for your consumption, 
as well as those that are watching.
    Historically we have had scientists that are running these 
government agencies and in leadership posts, and I think now 
more than ever we are seeing political appointees, and very 
often political appointees from activist organizations, that 
are taking over leadership roles in executive branch regulatory 
agencies. Do you see that as a trend and/or as a problem?
    Mr. Sunstein. It is a great question, and I don't have 
enough kind of data about what the trends have been. What I 
would say is it is very clear, after my 2\1/2\ years at this 
office, is the scientific issues are often fundamental to 
regulatory decisions. And I agree with you, the scientific 
decisions have to be made by scientists, not by people who are 
political.
    Mr. Farenthold. Thank you very much. I see I am out of 
time.
    Chairman Issa. That is a rare sight you have.
    Okay, well, I guess I will recognize myself for 5 minutes, 
and, if no one else returns, you are done. Bet you somebody 
else will show up, though; it just always happens. It is a busy 
day, and I appreciate your understanding of people going in and 
out.
    I am going to just do some follow-up here. In the case of 
the GIPSA situation, one in which it wasn't $100 million, now 
it is $100 million, perhaps multibillion, in addition to, 
obviously, this economic review, would you commit to ensuring 
that there is a public comment period opened, as there would 
have been had we realized that it was at least 10 times $100 
million initially?
    Mr. Sunstein. Because the Secretary of Agriculture has the 
statutory lead----
    Chairman Issa. What you mean is you have already been told 
no, so the answer is no?
    Mr. Sunstein. Definitely not. I would not say no to that, 
because the general proposition not only do I agree with, I 
think it is fundamentally important that, in general, the cost-
benefit analysis has to be exposed to the public so that you 
can figure out whether the assessment might have something 
wrong in it.
    Chairman Issa. Don't make me buy something where I find out 
the price afterwards.
    Mr. Sunstein. Exactly. Exactly. So what I will commit to is 
engaging with the USDA on exactly that issue.
    Chairman Issa. I appreciate that, and I realize under the 
law that is the most we could ask for.
    Would you agree to do essentially the same thing in the 
case of CAFE, where we sort of have the cart before the horse, 
and additional comment and process could be helpful?
    Mr. Sunstein. There is no question that before that rule is 
finalized, there needs to be a public comment process not only 
on the ultimate numbers, but on every ingredient of the number, 
as is standard.
    Chairman Issa. Okay. And as you might have heard, I know 
you heard earlier with Dr. Graham, concerns about the benefit 
analysis, particularly the weighting of electric cars as though 
they commit--you know, if you say there is no pollution when 
there is pollution, you are obviously distorting the cost-
benefit consideration, so hopefully that would be something you 
would commit to do.
    Would you say, from your position, that executive orders, 
per se, fall very far short of legislative action?
    Mr. Sunstein. In general, legislative action has more 
longevity than executive orders; that, I would say.
    Chairman Issa. Well, you know, the reason I ask you--Mr. 
Gowdy doesn't do traps; I enjoy doing this one--is my staff 
gave me this question because, in 2002, in the Law Review 
article you coauthored, it states that executive orders are 
not, per se; they are not sufficient for real change. That was 
a position that I think was accurate, that executive orders 
exist in the vacuum of something defined, and that something 
defined and put into statute in one procedure or another, 
rulemaking in some cases, and clearly legislation being 
normally the first, is the only thing that has longevity. 
Wouldn't you agree?
    Mr. Sunstein. Well, in general. It has turned out that the 
Reagan Executive order from the early 1980's, and I happened to 
be at the Justice Department at the time in the Reagan 
administration, the basic framework has lasted for decades, and 
my hope is, and my belief is that that this is now regulatory 
review in one or another form as a permanent part of our 
regulatory structure.
    Chairman Issa. Laws, like a declaration of war, are there 
until they are repealed. Executive orders, for example, the 
executive order that everyone said year after year was great, 
which is we won't assassinate a foreign head of state, it was 
only good until the first time a secret executive order said go 
get him. So the executive order actually meant nothing, nothing 
at all year after year after year. I am a little concerned that 
if we don't come to that agreement, that an executive order is 
appropriate in order to guide the executive branch in the 
absence of guidance which is appropriate, but that ultimately 
if that guidance is intended to be acted on permanently, it 
should be codified in law as a regular matter of course.
    And I will take, for example, the Mineral Management 
Service created by executive order under President Reagan--I 
think it is Reagan. Dysfunctional, hopeless organization, 
reviewed and always having problems, and part of the problem 
was that it really hadn't--it was put together conceptually and 
then never really dealt with after that; and, of course, 
President Obama made it very clear in the reorganization that 
that needed to be done now.
    Mr. Sunstein. I hear you, and the kind of statutory 
requirements that overlap with the executive order, including 
the Paperwork Reduction Act, the Unfunded Mandates Reform Act, 
and the Regulatory Flexibility Act, those are all statutory, 
and we are strongly supportive of them.
    Chairman Issa. Okay. Well, I am going to take a break on 
the first round and go to the gentleman from Maryland for a 
second round first. Go ahead.
    Mr. Cummings. This is only going to take a second.
    You know, one of the things that I am concerned about is 
how President Obama is portrayed, and I just listened to you 
talk about this whole look-back process. I hear my Republican 
colleagues beat up on President Obama, and it gets a little bit 
emotional for me, to be frank with you, because here is a 
President that is probably doing more than just about any other 
President in looking back. Am I right? Did Bush do this? Did 
President Bush do this?
    Mr. Sunstein. No one has done it in this system.
    Mr. Cummings. I mean like this.
    Mr. Sunstein. Right. Agreed.
    Mr. Cummings. So, you know, I think the President, in 
fairness to him, heard our colleagues and tried to create a 
balanced approach to trying to do this. And the reason why I 
bring this up is based upon the answers to the questions that 
you just gave to the chairman. He asked you about this rule; 
you said, okay, we are looking back. You talk about the 
screening part; we are doing that. And that is the balanced 
approach that makes sense. As a matter of fact, I think if it 
were done that way, there is not a person on this committee, I 
don't think, that would disagree with that, with the 
understanding that there are some things that become outdated. 
And you explained it quite well, why it is how you are able to 
find those kinds of rules that are outdated, that there are 
problems with, and that we need to get rid of.
    All of us want to create jobs. God knows. I have, in my 
district, probably a 35 percent African-American male 
unemployment rate, black. I want to create jobs. I also want 
them to be in safe jobs.
    Now, going back to the GIPSA rule, the letter that was 
admitted in the record a little bit earlier has a piece in here 
which I found very interesting, and I know the young lady who 
testified on this talked about there were a lot of 
organizations that were not related to this whole agricultural 
situation, but the 15 that signed this, well, maybe about 14 
that signed this letter, the Campaign for Contract Agriculture 
Reform, Center for Rural Affairs, Dakota Resource Council, 
anyway, go on and on, all of them are agriculture-related, the 
14 that signed this letter.
    But one of the things, the one that was admitted into the 
record. The question is they have a paragraph here that says, 
and this is why this is so interesting. This is part of the 
letter: ``Prior to the proposed rule, USDA held numerous 
meetings with all parties with an interest in the proposed 
rule. After issuing the proposed rule, USDA took the step of 
extending the comment period 120 days, an extraordinary period 
of time for regulatory comment period.
    ``The comment period on the proposed rule closed on 
November 22, 2011. Over 60,000 comments were submitted on the 
proposed rule, including numerous detailed comments addressing 
the potential economic benefits and costs of the proposed rule. 
USDA also responded to the requests of livestock and poultry 
packers and processors to assign the USDA chief economist to 
oversee preparation of a comprehensive economic analysis of the 
GIPSA final rule. To date, USDA has taken almost 10 months in 
its review of the public comments. The regulatory process of 
the GIPSA proposed rule has been lengthy, thorough, open and 
even-handed.''
    And even with all of that, and I am not knocking you for 
doing it, I am glad you are doing a look-back, because I want 
it to be fair, even with all of that, you are still saying, we 
will take a look at it. And I am just going on the record to 
say that I think we ought to be fair to President Obama. At 
least he is trying to look back at something, I mean, this has 
already gone through the process.
    The other problem that I see, and somebody talked about it 
a little bit earlier, and it kind of comes up in this, the 
rulemaking could take so long, and going back to what the 
chairman was saying, and I thought he made a very good point, 
is that sometimes by the time the rule comes up, it is outdated 
and it doesn't make any sense any more. So would you comment on 
that? I am not knocking the chairman or anyone. I just want a 
fair process.
    Mr. Sunstein. There are a lot of important points there. So 
it is true that sometimes the process of issuing rules is 
slower than it ought to be, including deregulatory rules. There 
is no question about that. And many people applauded our rule 
that eliminated milk producers from the oil spill rule, and 
thought, what took you so long.
    So I completely agree with that. It would be good to think 
of ways to streamline not only rules, but processes for issuing 
rules when there is good reason to think that the rules would 
do some good. If we can work together on that, it would fit 
very well with our look-back process but also where there is an 
urgent public safety or health need, that would also be a good 
thing. We got a rule out that is presenting I think 79,000 
illnesses from salmonella in eggs.
    It also exempts, by the way, small farmers who aren t the 
source of the problem. So it is protective of small business as 
well as the American public. Many people thought that that 
rule, which has benefits well in excess of costs, took too long 
to get out, the protection was slower than it ought to have 
been.
    Chairman Issa. Thank you.
    I will now recognize myself. We have spent a lot of time on 
GIPSA. Fortunately, you came very prepared, so that is helpful.
    I am sure you are familiar that in the 2008 Farm Bill, in 
the discussion draft, now just remember, not to be partisan but 
to be descriptive, Republican President but a Democratic House 
and Senate, the language included in the discussion draft at 
the Senate Committee markup of the Farm Bill included the 
provision that would have allowed for what the rule is being 
proposed to do, which is not requiring a plaintiff in order to 
have a lawsuit.
    So considered by the Democratic Senate at the time, 
rejected, law happens without it. On what basis, fundamental 
basis, does the branch of execution get to do something that 
was rejected by, or reasonably believed to be rejected by the 
body that created the law?
    Mr. Sunstein. Well, that would be hard to identify such a 
basis unless it is the case that the statutory text authorized 
the Secretary of Agriculture to do this. The earlier question 
suggested that this goes beyond congressional intent. If so, 
that is a very serious problem. If there is a delegation of 
authority to the Secretary to resolve this question, that would 
be the only possible answer.
    Chairman Issa. Let's go through something, because this is 
a unique opportunity, well, not unique, because you have been 
very generous to come here and come here again now, and we will 
ask you back again. But because of the regulatory process, and 
because quite frankly, C-SPAN and other groups sort of help us 
get out some constitutional questions, the founding fathers did 
not have regulatory language in the Constitution. They did not 
envision the executive branch passing laws. This is something 
that was created afterwards. And it didn t set limits.
    So let's go through a process. In order to make a law 
currently, the House and the Senate have to pass bills that are 
identical through an initial process or through conference. 
They then have to send it to the President and have it either 
signed or if vetoed, they must override it with two-thirds of 
both houses. That is the law.
    Once a law is in place, if the executive branch, and 
correct me if I am wrong at any point, the executive branch 
chooses to, quite frankly, extract out of pure air or thin 
cloth some ability to add another law, regulations are laws, 
rules are laws. The only way that that can be stopped is either 
through a very unusual court challenge, which is rare, because 
they defer to us to fix it, or a two-thirds majority of the 
House and the Senate telling the President he is wrong, 
effectively. We can do it through an ordinary majority, but 
then he can veto it.
    So isn t that the current status of the balance between a 
rule chosen by the President or even an executive order, is 
that he can do anything he wants to do, he being the executive 
branch, that the Congress doesn't have a two-thirds majority to 
stop? Isn t that part of the balance that currently exists?
    Mr. Sunstein. I hope that that is more pessimistic than 
reality.
    Chairman Issa. And by the way I wasn t saying this happens 
regularly, or that there wasn t consultation. But ultimately, 
isn t that one of the realities, is that the check and balance 
of, we could have oversight, but to actually say, we don't 
approve of your rule, we have to get majorities in the House 
and the Senate in order to do it and on top of that, in a 
timely fashion or we have to pass a new law, start to finish 
and strike it down?
    Mr. Sunstein. I would just add two points. One is that if a 
rule is proposed by an Executive agency, the general counsel's 
office at the department, call it the Department of 
Transportation, which has a superb general counsel, is 
carefully----
    Chairman Issa. Has a superb Cabinet officer, too.
    Mr. Sunstein. Yes, it does, absolutely. It is very much 
engaged on the question whether the rule conforms to 
congressional instructions. And so the first line of defense is 
the lawyers at the general counsel's office.
    Chairman Issa. But they are executive branch employees.
    Mr. Sunstein. Yes, though it happens time and again, I can 
say this from experience, that the general counsel's office or 
subsequent people engaged in the legal issue, will say, that is 
not what Congress meant, that is not consistent with the law.
    Chairman Issa. Well, let's go through the process. Congress 
recently acted, and we have acted previously, to set CAFE 
standards. We have in fact been the creators and the setter of 
CAFE standards, delegated to NHTSA. How did we get these CAFE 
standards this time? Didn t we get them around clear 
congressional intent, and isn t that part of why it is so 
controversial?
    Mr. Sunstein. Well, if you could imagine NHTSA doing some 
things that would be in plan violation of the underlying 
statute, and that would come out, the inconsistency with the 
underlying statute----
    Chairman Issa. But understand, the President said he did 
this without Congress. So it is very clear that the President 
did it without Congress. He did it without the process that has 
existed in the past.
    Where, to your knowledge, was there an intent of Congress 
to have the executive branch from time to time raise those 
standards on their own?
    Mr. Sunstein. That would be the fuel economy statute, which 
as you said, delegates authority to the Department of 
Transportation. So it was without Congress in one respect, that 
is, that Congress didn t particularly select levels or 
mechanisms. But it was pursuant to a delegation of authority to 
the agency, which is a constrained delegation. And in fact, 
NHTSA has run into legal challenges for, not in this 
administration but in prior administrations, for not acting 
consistently with the legal constraints, or at least so was 
challenged.
    So what is clear is that there couldn t be the creation of 
a CAFE standard just out of thin air.
    Chairman Issa. Well, yes, and my time is expired, so let me 
do this. I am going to yield to the gentleman from Pennsylvania 
and ask him if he would yield me back time. The gentleman is 
recognized.
    Mr. Kelly. I will do that, sir.
    Chairman Issa. Quickly, under the Issa Act, conveniently 
similar to my name, we prohibited EPA from doing this, and yet 
they have done it. So we can have a lot of argument, the courts 
may ultimately have arguments. But isn t it clear that the 
President's administration made a decision to do this, and they 
made a decision to do it without precedent, specifically based 
on actions that were created by Congress?
    And I know you are not a constitutional, you are a very 
good scholar, you are not a constitutional scholar per se, but 
isn t this becoming a constitutional question? And that one of 
those in which the American people have to ask, do they trust 
this administration, the next administration? You didn t trust 
the last administration in some of your writings.
    And shouldn't we ultimately seize back a great deal of this 
through some process that says, go ahead and make your rules, 
but ultimately, you have to get Congress buy-in in real time?
    Mr. Sunstein. What I would say is there are a couple of 
things that are built into our system that are responsive to 
your question. The first is, one of the President's core 
constitutional responsibilities is to take care that the laws 
be faithfully executed. So adherence to the law is at the heart 
of the Executive power under Article II.
    It is also the case that Congress has mechanisms which have 
been used to express its----
    Chairman Issa. Do you mean exactly one time wherever it 
will shut down a rule?
    Mr. Sunstein. Well, I didn t just mean the Congressional 
Review Act. I also meant offering input and criticism of the 
direction in which any executive branch is going. And we have 
seen a couple of examples in the last hours. I can't emphasize 
strongly enough that if there is a rule that is under review at 
our office, or that the Department of Transportation, let's 
say, is devising, that seems to those who are responsible for 
the legislation to be inconsistent with it. That voice matters 
greatly.
    Chairman Issa. Let me ask you one last question, and I 
appreciate the continued indulgence of the gentleman, if we 
were to pass a law today that said, the President must on a 
quarterly basis bring us his package of regulations for a 
package vote up or down, essentially give us the right to vote 
as a package and if we didn t like it, we would vote the 
package down if it was sufficient, wouldn't that make those 
regulations truly bought-in by the American people? And 
wouldn't it make it inherently harder to pass a regulation?
    And by the way, the same would be true of rolling back 
legislation. The gentleman very rightfully so said, concern 
about regulations going away. But isn t that the best way to 
have the confidence of the American people, potentially, rather 
than the arguments that have gone on here today?
    Mr. Sunstein. I don't know what would be the best way to 
have the confidence of the American people.
    Chairman Issa. Let's switch it to, wouldn't we pass less 
regs if in fact the President had to come to Congress with his 
package of regs to get codification rather than passing them 
as, if you will, sua sponte?
    Mr. Sunstein. There would be fewer regs and fewer deregs. 
Whether that diminution in number would pass the cost-benefit 
test, that is the question.
    Chairman Issa. And it is a good one. I yield back to the 
gentleman. Thank you.
    Mr. Kelly. Thanks, Mr. Chair. And Professor, again, thanks 
for your indulgence. I know this can't be easy.
    Going back to this CAFE, because I think it is important 
for the American people to understand, and my concern with all 
this is it doesn't matter what President's watch it happens on, 
whoever it is that is sitting in the chair either gets the 
praise or the blame. So really, it is truly a bipartisan 
criticism.
    With CAFE, though, what has always bothered me, we are able 
as a government to eliminate consumer choice by coming up with 
these standards. If you could just help me on that. And I think 
I have a better understanding right now after the chairman's 
last line of questioning. But it is disturbing to me, because 
we really are eliminating, we are picking and choosing what 
people are allowed to drive and not drive or purchase and not 
purchase. The market really determines that.
    And I would say that as far as gas knowledge is concerned, 
when the price of gasoline goes up, people go to smaller cars. 
It doesn't really have anything to do with CAFE. So if you 
could.
    Mr. Sunstein. The recent announcement by the President is 
the initiation of a process that will involve engagement with a 
number of the issues that have been raised today, including 
public notice and comment on issues, including consumer choice 
issues.
    What I would emphasize with respect to CAFE standards is 
that there has been kind of bipartisan enthusiasm for 
assessment of costs and benefits. And at least the CAFE 
standards that have been issued in this administration have had 
benefits very far in excess of costs, really extraordinarily 
far in excess of costs. And have also allowed very great room 
for consumer choice. So it would be one thing to say, every car 
has to get 50 miles per gallon, it would be another thing to 
say that there is a fleet-wide average of X and the number of 
cars that are on the road can span an extraordinarily wide 
range.
    And consistent with the Executive order which values 
flexibility and freedom of choice, I am with you that any CAFE 
structure should have a wide range of options, rather than be 
draconian.
    So one question which really isn t for the OIRA 
Administrator to answer, it is for the people who are 
authorized by Article I of the constitution, you all, to 
answer, the question is whether the economic energy security 
and environmental benefits of a CAFE standard justify such 
restrictions as there are on the market. And there was a 
report, I believe in the early 2000's, from the National 
Academy of Sciences, very detailed report by a wide range of 
respected people, which ultimately concluded, was supportive of 
Congress's judgment, which is in favor of CAFE standards.
    Mr. Kelly. Okay, thank you.
    Mr. Farenthold [presiding]. Thank you very much, and I will 
now recognize myself for 5 minutes. Again, I do want to thank 
you for coming up. I am sure it is never pleasant to testify 
before a congressional committee.
    According to a recent Wall Street Journal article, the 
Obama administration considered but ultimately rejected a 
partial moratorium on new regulations. Is that correct?
    Mr. Sunstein. Well, the Wall Street Journal I believe said 
that. That is correct. [Laughter.]
    Mr. Farenthold. Were you involved in any discussions about 
that?
    Mr. Sunstein. What I am aware of is that in any domain that 
bears on economic policy, a wide range of questions come up. 
Any administration that is determined to help make things 
better, as ours is, would consider every question that a 
reasonable person might ask. It is true that a number of people 
on the outside have raised that question.
    Mr. Farenthold. I don't mean to try pin you down, are you 
aware of any of the issues that were considered in not 
implementing that moratorium?
    Mr. Sunstein. I can tell you a bit about why a moratorium 
is not coming, if that would be helpful. One problem which is 
closely related to the previous chairman's your immediate 
predecessor in that chair, the executive has to take care that 
the laws be faithfully executed. A moratorium would violate the 
requirement that the laws be faithfully executed. So it would 
have to be a highly qualified moratorium.
    Second, a moratorium would sweep up deregulatory measures 
which we are pretty enthusiastic about expediting, because they 
are regulatory actions. And third, and this is an important 
point, a moratorium would not be a scalpel or a machete. It 
would be more like a nuclear bomb in the sense that it would 
prevent regulations that, let's say, cost very little and have 
very significant economic or public health benefits. So a 
moratorium would have the disadvantage of defying what every 
President since President Reagan has endorsed, which is cost-
benefit analysis.
    Mr. Farenthold. We were talking a partial moratorium, and 
it seems this administration has not been, has not stopped 
itself from picking and choosing which laws it chooses to 
effect. We have seen the administration publicly say they are 
not going to enforce the Defense of Marriage Act, for example. 
So it is something they could do, if they chose to do.
    Mr. Sunstein. What I would say is, in the regulatory 
apparatus, to say we won t issue rules that Congress has 
required us to issue, that would violate the----
    Mr. Farenthold. I am not going to advocate either side, I 
just wanted to follow up on that article. In his opening 
statement, I don't believe you were here, but the opening 
statement for the first panel, Chairman Mica of the 
Transportation and Infrastructure Committee held up a chart 
with the amount and level of government regulations associated 
with building a highway. His numbers say it takes about 6 years 
to build a highway, basically saying, shovel-ready, basically 
saying does not exist in the amount of time.
    I question how some of these regulatory agencies sleep at 
night, knowing as they delay these people who are not going 
back to work and not on a job. Do you have any solutions for 
this that we could, I realize you are working on it from your 
end. Do you have some things we could do on our end? We are 
costing ourselves money, tripling the price of highway projects 
and delaying people getting back to work.
    Mr. Sunstein. I agree completely that there is a problem 
with permitting requirements that at least in some important 
cases are having unfortunate delaying effects on desirable 
projects. I agree completely with that. If we have rules coming 
forward that add to that problem, they will have close 
scrutiny.
    What I would suggest just as in this case, a consumer 
rather than an important actor, that engagement with the 
President's Jobs Council here would be very helpful. They are 
centrally concerned about this topic. Jeff Zientz, who is the 
Deputy Director at OMB, is centrally concerned with this 
problem. It would be very good, in this current economic 
situation, this opportunity, to improve the permitting process.
    Mr. Farenthold. As a Texan, Texas kind of prides itself on 
being a business friendly, as little regulation as possible 
State. One of the ways we were able to maintain that is all 
executive agencies in Texas face a sunset process and have to 
come back before the legislature to justify their existence. Do 
you see a benefit in adopting something like that on a Federal 
level?
    Mr. Sunstein. It may be too rigid. But I will tell you what 
I do see a benefit in that is closely analogous, is to take our 
look-back process not as a one-shot endeavor, but as a location 
for the creation of teams and institutions that are constantly, 
and not just because a President says so in a prominent 
document, but are constantly looking at rules to see if they 
should be eliminated. If you look at the plans, and we could 
certainly use your help on this, they say that this is a 
continuing endeavor. If members of the public see rules, 
including permitting-related rules, that are causing harm, or 
rules that are not consistent with how technologies now 
operate, or rules that were not a good idea at the beginning, 
but were not gotten rid of because the agency issued the rule 
and then declared victory and went on, there are teams now at 
the departments that are available to try to get that fixed.
    It isn t quite a sunset provision, but it could serve many 
of the same functions.
    Mr. Farenthold. Thank you very much. Let me just ask you 
one more question, if you will indulge me. I get the sense that 
in some areas of the government, there is a, let's look for a 
solution to a problem that doesn't exist. It may be that there 
are people in jobs, say, I need to make my job relevant or some 
sort of mind set where, let's do something where there isn t a 
problem. It is probably too small potatoes to be on your plate.
    We have an example in the district I represent in South 
Texas where the National Park Service wants to lower the speed 
limit on the Padre Island National Seashore from 25 to 15 miles 
an hour to protect the endangered Kemps Ridley sea turtle, when 
there has never been one incident on the Padre Island National 
Seashore of a turtle being hit by a car.
    Do you have any thoughts on things we could do to maybe 
just change the mind set of, let's justify my job, let's have 
more regulations, let's make it harder to, if it ain't broke 
don't fix it kind of mentality?
    Mr. Sunstein. In the rulemaking area, we are very conscious 
of the need, as the President said the other night, to show 
that the rule is required. What served I think both Republican 
and Democratic administrations in good stead, in this domain, 
it is just a small part of the whole government, of course, is 
to require right off the bat a description of the market 
failure or other problem that justifies regulation. If you 
can't get over that threshold by saying, there is a market 
failure or other problem, then you probably should devote 
yourself to some other issue.
    Mr. Farenthold. I appreciate your taking the time to come 
and testify before this committee. I look forward to seeing you 
again. I would like to commend you on the job you are doing. It 
is a big one, and again, thank you very much for testifying.
    Mr. Sunstein. Thank you so much.
    Mr. Farenthold. And with that, we are done.
    [Whereupon, at 1:05 p.m., the committee was adjourned.]

                                 
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