[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE VIEWS OF THE INDEPENDENT AGENCIES ON REGULATORY REFORM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JULY 7, 2011
__________
Serial No. 112-71
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky EDWARD J. MARKEY, Massachusetts
JOHN SHIMKUS, Illinois EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
MARY BONO MACK, California BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
SUE WILKINS MYRICK, North Carolina DIANA DeGETTE, Colorado
Vice Chairman LOIS CAPPS, California
JOHN SULLIVAN, Oklahoma MICHAEL F. DOYLE, Pennsylvania
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas CHARLES A. GONZALEZ, Texas
MARSHA BLACKBURN, Tennessee JAY INSLEE, Washington
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
EONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
(ii)
Subcommittee on Oversight and Investigations
CLIFF STEARNS, Florida
Chairman
LEE TERRY, Nebraska DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma Ranking Member
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas MIKE ROSS, Arkansas
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
SUE WILKINS MYRICK, North Carolina EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California GENE GREEN, Texas
PHIL GINGREY, Georgia DONNA M. CHRISTENSEN, Virgin
STEVE SCALISE, Louisiana Islands
CORY GARDNER, Colorado JOHN D. DINGELL, Michigan
H. MORGAN GRIFFITH, Virginia HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Cliff Stearns, a Representative in Congress from the state
of Florida, opening statement.................................. 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Prepared statement........................................... 5
Hon. Lee Terry, a Representative in Congress from the state of
Nebraska, opening statement.................................... 6
Hon. Henry A. Waxman, a Representative in Congress from the state
of California, opening statement............................... 8
Prepared statement........................................... 9
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, prepared statement................................... 10
Hon. Sue Wilkins Myrick, a Representative in Congress from the
state of North Carolina, prepared statement.................... 11
Witnesses
Robert S. Adler, Commissioner, Consumer Product Safety Commission 13
Prepared statement........................................... 16
Answers to submitted questions............................... 244
Anne Northup, Commissioner, Consumer Product Safety Commission... 29
Prepared statement........................................... 31
Answers to submitted questions............................... 247
Robert McDowell, Commissioner, Federal Communications Commission. 54
Prepared statement........................................... 56
Answers to submitted questions............................... 264
Jon Wellinghoff, Chairman, Federal Energy Regulatory Commission.. 87
Prepared statement........................................... 88
Answers to submitted questions............................... 277
Philip D. Moeller, Commissioner, Federal Energy Regulatory
Commission..................................................... 97
Prepared statement........................................... 99
Answers to submitted questions............................... 277
Jon Leibowitz, Chairman, Federal Trade Commission................ 106
Prepared statement........................................... 110
Answers to submitted questions............................... 288
William E. Kovacic, Commissioner, Federal Trade Commission....... 106
Prepared statement........................................... 110
Answers to submitted questions............................... 295
Submitted Material
Memorandum, dated February 2, 2011, from Cass R. Sunstein,
Administrator of Office of Information and Regulatory Affairs,
submitted by Mr. Stearns....................................... 152
Report, dated July 2011, entitled, ``Evaluation of the Consumer
Product Safety Database,'' submitted by Ms. DeGette............ 158
Report, dated September 2010, entitled, ``The Impact of
Regulatory Costs on Small Firms,'' submitted by Mr. Scalise.... 161
THE VIEWS OF THE INDEPENDENT AGENCIES ON REGULATORY REFORM
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THURSDAY, JULY 7, 2011
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:35 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Cliff
Stearns (chairman of the subcommittee) presiding.
Members present: Representatives Stearns, Terry, Burgess,
Blackburn, Bilbray, Scalise, Gardner, Griffith, Barton,
DeGette, Schakowsky, Castor, Markey, Green, Christensen, and
Waxman (ex officio).
Staff present: Allison Busbee, Legislative Clerk; Stacy
Cline, Counsel, Oversight; Todd Harrison, Chief Counsel,
Oversight & Investigations; Brian McCullough, Senior
Professional Staff Member, Commerce, Manufacturing, and Trade;
Andrew Powaleny, Press Assistant; Alan Slobodin, Deputy Chief
Counsel, Oversight; Sam Spector, Counsel, Oversight; Kristin
Amerling, Democratic Chief Counsel and Oversight Staff
Director; Michelle Ash, Democratic Chief Counsel, Commerce,
Manufacturing, and Trade; Phil Barnett, Democratic Staff
Director; Tiffany Benjamin, Democratic Investigative Counsel;
Jocelyn Gutierrez, DOE Detailee; Karen Lightfoot, Democratic
Communications Director, and Senior Policy Advisor; Felipe
Mendoza, Democratic Counsel; Ali Neubauer, Democratic
Investigator; and Roger Sherman; Democratic Chief Counsel,
Communications and Technology.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Good morning, everybody. The Subcommittee on
Oversight and Investigation will come to order, and there will
be an opportunity for each of us to give an opening statement,
and I shall open with mine.
President Obama's Executive Order 13563 states that
agencies must take into account the costs and benefits of
proposed regulations; use the least burdensome methods to
achieve regulatory goals; maximize net benefits; and evaluate
alternatives to direct regulation.
The Order also requires agencies to conduct periodic
reviews of significant regulations to determine whether they
are outmoded, ineffective, insufficient, or excessively
burdensome. These retrospective reviews have been required for
more than 30 years, and if conducted as intended, could be a
crucial tool in reducing the burden of regulation on our
economy today.
As chairman of this subcommittee, I have set out to ensure
that these goals are simply achieved. Regulations cost money,
and in today's weak economy, we cannot afford such burdens when
they are totally unnecessary. During our June 3rd hearing, Mr.
Cass Sunstein of OMB indicated that although independent
agencies were not bound to comply with the Executive order, he
believed that they should.
Unfortunately, none of the independent agencies under the
committee's jurisdiction have to date complied with the
Executive order.
We are holding this hearing today to ask the CPSC, the FCC,
the FTC and FERC to explain why they did not submit a
regulatory review plan to Cass Sunstein by May 18th, as they
were asked to do. While each of these agencies engages in some
degree of regulatory review, none of them conduct the kind of
top-to-bottom, regular retrospective review that will help to
unburden our economy.
The CPSC, perhaps more than any other agency today, seems
determined, in our opinion, to pass regulations without even a
hint of regulatory humility. Commissioner Northup will testify
that CPSC regulations are estimated to cost industry billions
of dollars with no cost-benefit analysis done to justify those
regulations and no analysis done to show improved safety for
our children. Commissioner Northup has also submitted for the
record today a list of businesses that have closed their doors
in part because of CPSC regulations.
Now, we realize many of the CPSC's most damaging
regulations are required by the CPSIA, which has had a number
of unintended consequences. Until Congress can act to reform
that law, we would hope the CPSC would use its discretion where
possible to comply with the President of the United States
Executive order. Where CPSC doesn't have discretion, we would
hope the CPSC Democrat commissioners would be cooperative in
helping this committee identify where they need more discretion
rather than sending last-minute partisan letters meant to
derail the reform process.
Meanwhile, Congress asserted deregulatory goals in regard
to the FTC decades ago, removing its authority to operate under
the Administrative Procedure Act and instead instituting Mag-
Moss procedures, created under a Democratic Congress to halt
the agency from further significant rulemaking. Today, the
agency resorts to rulemaking through orders and guidelines that
do not undergo a notice and comment process.
Although FERC does not issue a large number of regulations,
there is room to improve in its rulemaking and regulatory
review also. FERC regulations call for broad ranges of data
sets without a clear indication on how the agency utilizes this
information. It has not conducted a top-to-bottom review of its
regulations since the Clinton Administration. And it is unclear
what, if any, cost-benefit analysis is done of the impact its
policies have on the energy industry and consumers.
Now, as for the FCC, in drafting both the Communications
and Telecommunications Acts, Congress emphasized the importance
of deregulation. The FCC is required to review its
telecommunications regulations every 2 years and its media
ownership rules every 4 years. But these reviews fall short of
what the President and this committee have asked agencies to
do. They only cover a narrow set of rules at the FCC and the
commission can't seem to get these reviews done on time, and
the commission hasn't repealed or modified any significant
regulations in recent review periods. Perhaps that is because
the commission is too busy taking conclusion-driven actions,
such as the Net Neutrality Order and the Chairman's Section 706
report.
So my colleagues, I look forward to learning more about
what each agency will do to adopt the principles of the
President's Executive order. I hope the format of this hearing
gives you all the opportunity to learn about what other
agencies are doing to improve these processes.
[The prepared statement of Mr. Stearns follows:]
Prepared statement of Hon. Cliff Stearns
President Obama's Executive Order 13563 states that
agencies must take into account costs and benefits of proposed
regulations; use the least burdensome methods to achieve
regulatory goals; maximize net benefits; and evaluate
alternatives to direct regulation. The Order also requires
agencies to conduct periodic reviews of significant regulations
to determine whether they are outmoded, ineffective,
insufficient, or excessively burdensome. These retrospective
reviews have been required for more than 30 years, and if
conducted as intended, could be a crucial tool in reducing the
burden of regulation on our economy.
As Chairman of this Subcommittee I have set out to ensure
that these goals are achieved. Regulations cost money, and in
today's economy we cannot afford such burdens when they are
unnecessary. During our June 3 hearing, Cass Sunstein of OMB
indicated that although independent agencies were not bound to
comply with the Executive order, he believed that they should.
Unfortunately, none of the independent agencies under the
Committee's jurisdiction have to date complied with the
Executive order.
We are holding this hearing today to ask the CPSC, FCC,
FTC, and FERC to explain why they did not submit a regulatory
review plan to Cass Sunstein by May 18, as they were asked to
do. While each of these agencies engages in some degree of
regulatory review, none of them conduct the kind of top to
bottom, regular retrospective review that will help to unburden
our economy.
The CPSC, perhaps more than any other agency here today,
seems determined to pass regulations without even a hint of
regulatory humility. Commissioner Northup will testify that
CPSC regulations are estimated to cost industry billions of
dollars with no cost benefit analysis done to justify those
regulations and no analysis done to show improved safety for
children. Commissioner Northup has also submitted for the
record today a list of businesses that have closed their doors
in part because of CPSC regulations.
We realize many of the CPSC's most damaging regulations are
required by the CPSIA, which has had a number of unintended
consequences. Until Congress can act to reform that law, we
would hope the CPSC would use its discretion where possible to
comply with the President's Executive order.
Where CPSC doesn't have discretion, we would hope the CPSC
Democrat Commissioners would be cooperative in helping this
Committee identify where they need more discretion rather than
sending last minute partisan letters meant to derail the reform
process.
Meanwhile, Congress asserted deregulatory goals in regard
to the FTC decades ago, removing its authority to operate under
the Administrative Procedure Act and instead instituting Mag-
Moss procedures--created under a Democratic Congress to halt
the agency from further significant rulemaking. Today, the
agency resorts to rulemaking through Orders and Guidelines that
do not undergo a notice and comment process.
Although FERC does not issue a large number of regulations,
there is room to improve in its rulemaking and regulatory
review. FERC regulations call for broad ranges of data sets
without a clear indication on how the agency utilizes this
information. It has not conducted a top to bottom review of its
regulations since the Clinton Administration. And it's unclear
what (if any) cost-benefit analysis is done of the impact its
policies have on the energy industry and consumers.
As for the FCC, in drafting both the Communications and
Telecommunications Acts, Congress emphasized the importance of
deregulation. The FCC is required to review its
telecommunications regulations every two years and its media
ownership rules every four years. But these reviews fall short
of what the President and this Committee have asked agencies to
do. They only cover a narrow set of rules at the FCC. The
Commission can't seem to get these reviews done on time. And
the Commission hasn't repealed or modified any significant
regulations in recent review periods. Perhaps that's because
the Commission is too busy taking conclusion driven actions,
such as the Net Neutrality order and the Chairman's Section 706
report.
I look forward to learning more about what each agency will
do to adopt the principles of the President's Executive order.
I hope the format of this hearing gives you all the opportunity
to learn about what other agencies are doing to improve their
processes.
Mr. Stearns. With that, I yield to the ranking member, Ms.
DeGette.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you so much, Mr. Chairman.
This is the fourth in a series of hearings examining the
government's regulatory review process, and I frankly am
pleased to hear you today embrace the President's Executive
order that sets forth principles of regulation protecting
public health, welfare, safety and the environment while at the
same time promoting economic growth and competitiveness. I
thought that Cass Sunstein was an excellent witness talking to
us about how we can all agree on a bipartisan basis that we
should eliminate unnecessary regulations at the agencies.
Now, today we have witnesses, and I am happy to welcome all
of them, particularly our former colleague, Congresswoman
Northup, and these witnesses represent four important
independent federal agencies: the Consumer Product Safety
Commission, the Federal Energy Regulatory Commission, the
Federal Communications Commission, and the Federal Trade
Commission. Now, Congress created these agencies as independent
entities, and so therefore, as you noted, Mr. Chairman, they
are not covered explicitly by the President's Executive order
on regulatory review. But it is important, though, for the
subcommittee and the public to understand whether the
independent regulatory review processes at these agencies are
effective and efficient.
I would like to correct the record. Mr. Sunstein when he
testified, he said he had urged these independent agencies to
conduct regulatory review processes but he did not say that
they should submit reports to him like the agencies under the
purview of the Executive order, so I was a little confused, Mr.
Chairman, when you had said that somehow they should submit
reports because not only are they not required to but Mr.
Sunstein himself does not believe that these agencies are
directly subject to the Executive order and that is an order to
pervert any President, Democrat or Republican, from
overreaching their authority.
Now, as we hear from these agencies on their regulatory
review efforts, I think we need to keep a few thoughts in mind.
First of all, these agencies were created originally as
independent entities to insulate them from political influence
and we have given them decision-making flexibilities that other
agencies do not have. Secondly, irrespective of the Executive
order, as I mentioned, there are a number of statutory
requirements concerning transparency and efficiency in the
regulatory process that already apply to the independent
agencies. For example, the Regulatory Flexibility Act requires
federal agencies, including independent agencies, to analyze
the impact of their rules on small organizations. The
Administrative Procedure Act broadly lays out the scheme under
which agencies propose and finalize regulations, and provides
for public participation in the rulemaking process.
Finally, it is important to remember that the underlying
mission of all of the agencies before us today is to ensure the
safety and the health of all of our citizens. While we should
make sure that the regulations they propose are well crafted
and not overly burdensome, we should also acknowledge the
importance of the work hey do and the regulations they
promulgate. For example, this year, the FCC issued a report and
order to adopt a rule requiring mobile providers to enter data
roaming arrangements with other providers, allowing consumers
to remain connected when they travel outside of their
provider's coverage area. FTC recently established the Do Not
Call registry, which lets consumers choose whether they want to
receive calls from telemarketers. This is wildly popular with
my constituents, by the way. And every day, FERC acts as a
neutral adjudicatory body handling extremely complicated
technical issues on the electricity market.
But I want to talk just in the last minute that I have
about the recent proposals on the other side of the aisle that
would undermine the Consumer Product Safety Commission and some
of the other good work that they have done. Three years ago,
this committee and this Congress worked hard in a significantly
bipartisan manner to put meaningful reforms for consumers into
the Consumer Product Safety Improvement Act. This has yielded
unbelievable benefits. The CPSC has initiated a wide range of
recent efforts to protect children from mandatory standards to
cribs to the problem of dangerous toys to banning certain
phthalates, and on and on. And this evidence shows that it is
beginning to happen.
So I think it is important to notice that these reforms
were worked out by this committee in one of the last great
efforts that was completely bipartisan. We should embrace that.
If there are problems with the way the regulations are being
promulgated, we need to talk about that, but eliminating these
important consumer product safety provisions is simply not an
option.
Thank you, Mr. Chairman.
[The prepared statement of Ms. DeGette follows:]
Prepared statement of Hon. Diana DeGette
Today, we are holding the fourth in a series of hearings
examining the Federal Government's regulatory review process.
The Subcommittee has been focused in particular on President
Obama's Executive order setting forth principles of regulation
that include protecting public health, welfare, safety, and the
environment while promoting economic growth and
competitiveness; and providing for public participation and
transparency.
The witnesses before us today represent four important
federal agencies: the Consumer Product Safety Commission, the
Federal Energy Regulatory Commission, the Federal
Communications Commission, and the Federal Trade Commission.
Because Congress created these agencies as independent
entities, they are not covered by the President's Executive
order on regulatory review. It is important, however, for the
Subcommittee and the public to understand whether the
regulatory process employed by each of these agencies is
effective and efficient.
As we hear from these agencies on their regulatory review
efforts, we should keep a few thoughts in mind. First, Congress
created these agencies as independent entities to insulate them
from political influence and granted them decisionmaking
flexibilities other agencies do not have.
Second, irrespective of the Executive order there are a
number of statutory requirements concerning transparency and
efficiency in the regulatory process that already apply to the
independent agencies. For example, the Regulatory Flexibility
Act requires federal agencies, including independent agencies,
to analyze the impact of their rules on small organizations.
The Administrative Procedure Act broadly lays out the scheme
under which agencies propose and finalize regulations, and
provides for public participation in the rulemaking process.
Finally, it is important to remember that the underlying
mission of all of the agencies before us today is to ensure the
health and safety of our citizens. While we should make certain
the regulations they propose are well crafted, we must also
acknowledge the importance of the work that they do and the
regulations they promulgate. For example:
o This year, FCC issued a report and order to adopt a rule
requiring mobile providers to enter data roaming arrangements
with other providers, allowing consumers to remain connected
when they travel outside of their provider's coverage area.
o FTC recently established the Do-Not-Call registry,
allowing consumers to choose whether they want to receive calls
from telemarketers.
o CPSC has initiated a wide range of recent efforts to
protect our children, from developing mandatory standards for
cribs . to addressing the problem of dangerous toys . to
banning certain phthalates in children's products.
o And every day, FERC acts as a neutral adjudicatory body
handling extremely complicated technical issues concerning our
electricity market. Through its work the Commission limits
regional disparities in electricity, natural gas, and oil
pricing.
I am pleased that we have before us today Commissioners
from both parties. One of the ways Congress ensured bipartisan
input at these agencies was to provide that no more than three
Commissioners at the agencies can be of the same party. I hope
that the Subcommittee will use this opportunity to hear a
variety of perspectives on how to best ensure an effective
regulatory process at the independent agencies, and that avoid
focusing on policy or personality disagreements among
Commissioners. I look forward to hearing from our distinguished
witnesses.
Mr. Stearns. I thank the gentlelady.
The gentleman from Nebraska, Mr. Terry, is recognized for 3
minutes.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Well, thank you, Mr. Chairman. I appreciate you
holding this important regulatory reform hearing.
I applauded the President when he issued his Executive
order creating this cost-benefit analysis and look towards
creation of jobs versus elimination of jobs by regulation, and
I feel that it is time that the independent agencies adopt this
and that is why I have introduced H.R. 2204, the Employment
Act, which will require that all major regulations include a
statement of the number of jobs created, lost, or sent overseas
because of the new rules and regulations. Under this Act, all
major federal action significantly affecting jobs and job
opportunities require rigorous analysis compared to that given
to the environmental impacts, and this legislation would
establish a policy that jobs are important as is public health
and the environment. And this would be an issue of, you could
take into effect the jobs lost by certain American toy
companies when we figure out that children don't eat ATVs but
yet banning children ATVs could have an impact on jobs.
Now, we have already seen the problems caused by regulators
not paying enough attention to the effect their actions have on
jobs. In my own district, regulations enacted by the Consumer
Product Safety Commission acting far beyond its authority or
intent of this law, what I feel isn't one of the most important
ones, it is important but I think it may be an example of one
of the most poorly written bills too. For example, Wes and
Willie's. I shouldn't have used their name but it is a local
small business making children's clothes, some of which they
have contracted to have done in China as well as Omaha. Does it
really make sense that the same design has to be tested on
every size of tee shirt, different color of tee shirts? Does it
make sense that they have to add 10 tee shirts together
assuming a child is going to completely eat 10 tee shirts in
one sitting? None of this really makes sense.
So this type of system where it is one size fits all,
Mattel versus Wes and Willie's, it really doesn't make a lot of
sense. I have found out the irony is that many of these rules
don't really protect the consumers but just make it more
difficult to do their job, really putting small businesses in
particular on the brink of extinction because of these
unnecessary rules and regulations.
So I appreciate this hearing so we can protect, and I will
give my time back to the chairman.
Mr. Stearns. I thank the gentleman, and I yield 2 minutes
to the gentlelady from Tennessee, Mrs. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman, and welcome to our
witnesses. We appreciate that you are here to talk with us
about the President's Executive Order 13563 and its non-
application to the independent agencies.
These agencies have refused to voluntarily comply with the
order to require justification for the cost and the burdens of
their regulations. Some agencies believe that their political
ends justify their regulatory means and that their insulation
from the traditional checks and balances is a blank check for
them to pursue hyperactivist causes. Bureaucrats bolted a
restrictor plate to our economic engine and they really have
flagged private sector job growth to the pits and now they are
resisting voluntary compliance with the Obama order because
failing to justify their costly regulations means Congress and
the American people are going to raise more questions instead
of delegating more power and authority.
Now, these agencies don't know how to make the best
individual decisions for us, what foods we eat, what toys we
buy, what privacy settings we want on our mobile devices or
what light bulbs we prefer to use in our homes. These agencies
that use explicit regulatory intimidation and threats of
government taking to impose voluntary regulations on job
creators aren't even willing to hold themselves to the same
standard. They refuse. We need to hold these agencies
accountable. Let us ensure greater efforts are taken to balance
the economic harms with the agencies that these agencies are
causing on our economic growth and jobs, and I yield back.
Mr. Stearns. The gentlelady yields back, and I recognize
the distinguished ranking member, Mr. Waxman, for 5 minutes for
his opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman.
This is the fourth hearing this subcommittee has had on the
issue of regulations. The others have been on the President's
Executive order, and the third focused on health regulations
that were recently adopted. Now we are looking at the
independent regulatory agencies. The President's Executive
order applies to those agencies that are under the Office of
Management and Budget. They are not independent. The agencies
before us are determined by law to be independent. That doesn't
mean they don't take into consideration costs and benefits when
they issue regulations. They have to have notice and comment
and get full input. I think that what we need to do is to make
sure we don't have regulations that are unnecessary but these
hearings that we have had devolved into forums for questioning
health, environment, and consumer protection laws that my
colleagues on the Republican side of the aisle find
objectionable. I was struck by the comments of the last speaker
that we don't want these independent agencies, they don't make
good decisions, they don't know how to make the best decisions,
they are using regulatory intimidation on jobs creators. I can
think of no other expression of hyper view of all this. We
shouldn't have a lopsided focus on the costs with no seeming
consideration of the benefits, and we haven't had hearings that
have resulted in any substantial legislation or important
oversight findings.
Now, the four independent agencies have done a lot to make
the lives of American citizens better. The Consumer Product
Safety Commission recently launched a new consumer complaint
database, which allows parents and concerned consumers to
obtain important product safety information and which will
improve CPSC's ability to identify trends in product hazards
more efficiently. Just this morning, I released the first
analysis of the product safety database. We found that in its
first 3 months of operation, the database has already logged
over 1,600 incident reports, including reports of almost 500
injuries or fatalities. And consumers visiting the online
database have conducted almost 1.8 million product searches.
Now, maybe some of these manufacturers don't want anybody
looking over their shoulder but that is not the job of these
agencies to do what the manufacturers want. Their job at the
CPSC is to protect the consumers.
Mr. Chairman, I would ask unanimous consent that this
report be included as part of the committee record.
Mr. Stearns. Will the gentleman hold? I think we just have
a copy of it.
Mr. Waxman. I will withdraw my----
Mr. Stearns. Just withdraw until we have a chance to look
at it.
Mr. Waxman. The FCC just proposed rulemaking to require
cell phone companies to provide usage alerts that warn
consumers of unexpected charges on their bills. Less than 7
months ago, the agency adopted a crucial rule to protect the
openness of the Internet. I think these are two very important
accomplishments, and Ms. DeGette pointed out others. The FTC
has recently adopted rules to protect homeowners from scams
falsely promising relief from mortgage payments. In the last
year alone, the FTC's Bureau of Consumer Protection filed over
60 cases to protect the rights of consumers. Is this
intimidation? It seems to me these agencies are doing their
job, and we want to keep them independent from the political
pressure that you can see clearly in the comments of members of
this committee. FERC protects consumers from price gouging in
the electricity and energy markets.
These accomplishments are important. They save money for
the American public, prevent fraud and improve public safety
and public health. They may offend powerful companies that
would like to take advantage of consumers, and which may have
support by some members of Congress in carrying their water,
but that is no reason for us to browbeat the agencies. The
focus of our oversight should be to help these agencies advance
the goal of enhancing the lives of the American family.
Our committee is responsible in the area of legislation in
some key areas: health care for seniors, setting our Nation's
energy policy, promoting telecommunications innovation and
competitiveness, and ensuring appropriate consumer protections
for American families and children. The oversight work of this
subcommittee should shed light on how to best legislate in
these and other important subjects.
That is why there are real costs when this committee
focuses its time on partisan wheel spinning and messaging. We
lose the opportunity to move legislation that will promote
jobs, promote economic security and protect the health, safety
and welfare of the American public.
I hope that we make good use of our time today with the
commissioners, and I urge the chairman and all members to
support their efforts on behalf of the American public, and I
yield back the balance of my time.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
Today, this subcommittee is holding its fourth hearing on
regulatory reform. The first two hearings focused on the
President's Executive order on regulatory review. The third
hearing focused on the Administration's recent health
regulations.
This time we are focusing on four independent agencies--the
Consumer Product Safety Commission, the Federal Communications
Commission, the Federal Energy Regulatory Commission, and the
Federal Trade Commission--which are not subject to the
President's Executive order.
I support efforts to ensure that federal regulations are
clearly drafted and narrowly tailored, and I believe in
transparency and eliminating needless regulation. But the focus
of the Subcommittee's hearings on regulatory review thus far
has not been on improving the regulatory process. These
hearings have devolved into forums for questioning health,
environment, and consumer protection laws that my colleagues on
the other side of the aisle find objectionable. These sessions
also have been marked by a lopsided focus on costs with no
seeming consideration of benefits. And they have not resulted
in any substantial legislation or important oversight findings.
The four independent agencies before us have done a lot to
make the lives of American citizens better.
The Consumer Product Safety Commission recently launched a
new consumer complaint database, which allows parents and
concerned consumers to obtain important product safety
information and which will improve CPSC's ability to identify
trends in product hazards more efficiently. Just this morning,
I released the first analysis of the product safety database.
We found that in its first three months of operation, the
database has already logged over 1,600 incident reports,
including reports of almost 500 injuries or fatalities. And
consumers visiting the online database have conducted almost
1.8 million product searches.
Mr. Chairman, I ask that this report be included as part of
the Committee record.
The FCC just proposed a rule to require cell phone
companies to provide usage alerts that warn consumers of
unexpected charges on their bills. Less than 7 months ago, the
agency adopted a crucial rule to protect the openness of the
Internet.
The FTC has recently adopted rules to protect homeowners
from scams falsely promising relief from mortgage payments. In
the last year alone, the FTC's Bureau of Consumer Protection
filed over 60 cases to protect the rights of consumers.
And FERC protects consumers from price gouging in the
electricity and energy markets.
These accomplishments are important. They save money for
the American public, prevent fraud, and improve public safety
and public health. They may offend powerful companies that
would like to take advantage of consumers, but that is no
reason for us to browbeat the agencies. The focus of our
oversight should be to help these agencies advance the goal of
enhancing the lives of American families.
Our Committee is responsible for forging legislation in key
areas: providing health care for seniors; setting our nation's
energy policy; promoting telecommunications innovation and
competitiveness; and ensuring appropriate consumer protections
for American families and children. The oversight work of this
Subcommittee should shed light on how to best legislate in
these and other important areas.
That is why there are real costs when the Committee focuses
its time on partisan wheel-spinning and messaging: we lose the
opportunity to move legislation that will promote jobs, promote
the economic security, and protect the health, safety, and
welfare of the American public.
I hope the Subcommittee makes good use of our time today
with the Commissioners, and I urge the Chairman and all members
to support their efforts on behalf of American families.
Mr. Stearns. I thank the gentleman, and all opening
statements are concluded.
I ask unanimous consent that the written opening statement
of Mr. Upton and others who wish to provide opening statements
for this hearing be made part of the record. Without objection,
the documents will be entered into the record.
[The prepared statements of Mr. Upton and Mrs. Myrick
follow:]
Prepared statement of Hon. Fred Upton
In January, President Obama issued Executive Order 13563
and joined a government-wide dialogue about regulatory reform.
While he is not the first president who has tried to tackle
this challenge, his stated commitment to reining in
overregulation was a hopeful first step this year. Regulatory
relief is essential to a strong economic recovery and boosting
job creation. That's why it plays a leading role in the GOP's
Plan for America's Job Creators.
Five months later, however, I must say that I am
disappointed with the Executive order's results. The
President's stated goals are far from being realized and
nowhere is that more true than among the independent regulatory
agencies.
The Office of Information and Regulatory Affairs estimates
that independent agencies have a $230 billion a year impact on
the U.S. economy--not an insignificant figure. Nevertheless,
Executive Order 13563, like those which preceded it, does not
expressly apply to these agencies.
According to a February guidance memo sent by OIRA
Administrator Cass Sunstein, the independent agencies ``are
encouraged to give consideration to all [of the Executive
order's] provisions. . .Such agencies are encouraged to
consider undertaking, on a voluntary basis, retrospective
analysis of existing rules.'' Shamefully, at this
Subcommittee's June 3, 2011 hearing, Mr. Sunstein confirmed for
us that not one of the independent agencies under this
Committee's jurisdiction had voluntarily submitted to his
office such a plan.
In a June 1st letter to the editor printed in the Wall
Street Journal, Nancy Nord, a Commissioner of the Consumer
Product Safety Commission, noted that, under the Obama
administration, CPSC has ``ignored the recent direction to look
for and eliminate burdensome regulations. We are just too busy
putting out new regulations.'' Two of Ms. Nord's fellow CPSC
Commissioners are here today, along with several other
representatives from independent agencies. I hope they can
provide us with an update on their efforts to provide
regulatory relief and answer troubling questions about what
appears to be inaction until now in complying with the letter
and spirit of the President's Executive order.
Independent regulatory agencies contribute their fair share
of burdensome regulations that affect all aspects of our
economy and stifle job creation. The President's push for
regulatory reform is meaningless if independent regulatory
agencies are left out of this effort.
----------
Prepared statement of Hon. Sue Wilkins Myrick
I appreciate the Subcommittee's examination of how
independent agencies are approaching the ``Improving Regulation
and Regulatory Review'' Executive order issued by President
Obama. As we're all well aware, regulations can create
unnecessary burdens that hinder economic development and job
creation.
An electric utility headquartered in my home state of North
Carolina is tangled up in an ongoing hydropower relicensing
problem which I think exemplifies the real world detriment that
can result from a lack of coordination at the federal level.
As I understand it, Duke Energy is trying to relicense a
set of dams in the Catawba-Wateree river basin in South
Carolina. Working with local stakeholders and the local office
of the National Marine Fisheries Service (NMFS), the Federal
Energy Regulatory Commission (FERC) agreed to incorporate a set
of recommendations to protect the endangered short-nose
sturgeon as part of the project's Final Environmental Impact
Statement for the project. Unfortunately, the regional NMFS in
St. Petersburg, Florida ultimately recommended a different set
of recommendations that continue to delay the relicensing
process.
Not only does this seem to be a case in which two federal
entities cannot agree on the appropriate path forward, it
highlights a case in which two offices within the same agency
cannot agree. A NMFS office several hundred miles away is
substituting its judgment for a local office that has been
involved throughout the process.
Aside from affecting utility rates paid by consumers in
North Carolina and South Carolina, the provisions sought by the
regional NMFS office could potentially jeopardize a carefully-
negotiated water rights apportionment settlement.
Sadly, the Catawba-Wateree relicensing issue is just one of
many situations in which federal regulatory actions harm
Americans. It is my hope that today's hearing will lead to
improvements in the regulatory environment.
Mr. Stearns. Now it is my opportunity to welcome our
distinguished panel. I don't remember in my experience in
Congress where I have ever seen these many agencies collected
together, and I don't think there ever has been, at least in my
experience. So it is a very auspicious occasion to have this
distinguished group here to meet, and we appreciate you coming.
I thought for the members I would just give you a brief bio
of each of the witnesses. Commissioner Robert Adler, Consumer
Product Safety Commissioner, is a commissioner at the United
States Consumer Product Safety Commission. He was appointed in
August 2009. Prior to assuming office, he served as a professor
of legal studies at the University of North Carolina at the
Luther Hodges Junior Scholars in Ethics in Law at Chapel Hill's
Kenan-Flagler Business School. At the University of North
Carolina, he served as the Associate Dean of the MBA program as
Associate Dean of the school's bachelor of science in business.
Welcome.
Commissioner Anne Northup is the honorable--in fact, she
serves the 3rd Congressional District of Kentucky representing
Louisville district in the United States House of
Representatives as a Republican from 1997 to 2006. Before her
tenure in Congress, she served in the Kentucky House of
Representatives for 9 years from 1987 to 1996. On July 30,
2009, President Obama nominated her to a seat on the Consumer
Product Safety Commission and was confirmed by the Senate on
August 7, 2009. Welcome, Anne.
Commissioner Robert McDowell was first appointed to a seat
on the Federal Communications Commission by President Bush in
2006. He was reappointed to the commission by President Barack
Obama in 2009. He brings over 16 years of private sector
experience in the telecommunications industry to the
commission. Welcome.
Chairman Jon Wellinghoff was named chairman of the Federal
Energy Regulatory Commission, FERC, the agency that oversees
wholesale electric transaction and interstate electric
transmission and gas transportation in the United States by
President Obama on March 19, 2009, a member of the commission
since 2006. The U.S. Senate confirmed him to a full 5-year FERC
term in December 2009. He is an energy specialist with more
than 34 years experience in the field. Welcome.
Commissioner Philip Moeller is currently serving his second
term on the commission of FERC, having been nominated by
President Obama and sworn in for a term expiring on June 30,
2015. He was first nominated to FERC by President Bush in 2006
and sworn into office on July 24, 2006. From 1997 through 2000,
he worked in Congress, serving as an energy policy advisor to
Senator Slade Gordon, where he worked on electricity policy.
And then we have Chairman Jon Leibowitz from the Federal
Trade Commission. He served as chairman of this commission
since February 2009. He was appointed to the FTC as
commissioner in the fall of 2004. Before coming to the
commission, he had a long career in the public sector, working
for the U.S. Senate Judiciary Committee for almost 10 years,
and prior to that, in the office of Senator Paul Simon.
Welcome.
Commissioner William Kovacic served on the Federal Trade
commission since January 2006 and served as chairman from March
2008 to March 2009. He was the FTC's General Counsel from 2001
through 2004 and worked for the commission from 1979 until
1983. He has been a professor of law at George Washington
University Law School and has also taught law at George Mason
University School of Law. Welcome.
As you know, the testimony that you are about to give is
subject to Title 18, section 1001 of the United States Code.
When holding an investigative hearing, this committee has the
practice of taking testimony under oath. Do any of you have any
objection to testifying under oath? No? OK.
The Chair then advises you that under the rules of the
House and the rules of the committee, you are entitled to be
advised by counsel. Do you desire to be advised by counsel
during your testimony today? If not, then if if you would
please rise and----
Mr. Bilbray. Mr. Chairman.
Mr. Stearns. Yes?
Mr. Bilbray. I hate to interrupt right now, but one thing I
would ask, at least of one member here, is that pictures are
not taken while they are being sworn in. I know this is done,
but I just think that is unfair to the witnesses. I think it
sends a message that it is not appropriate and I would ask the
camera people not to take a picture of individuals with their
right hand raised. I just think it is used to often to send the
wrong message to the public. Everyone here is voluntarily
participating and we should not be giving a false impression to
the public. That is just one member's statement but I think in
the environment of fairness on both sides, I am going to raise
this issue again and again, and I am doing that today, and I
apologize.
Mr. Stearns. I thank the chairman, and as you know, he and
I are good friends. Unfortunately, I will have to overrule you.
I think the press has a right to take pictures when they want,
and I think that is probably what I have seen in my experience
being involved with so many Oversight and Investigation
hearings as well as others that it is customary to let the
press have access, so I am sorry to have to overrule you. And
if all of you would please stand up and raise your right hand?
[Witnesses sworn.]
Mr. Stearns. Well, it is my pleasure now to start with the
opening statements, and Mr. Adler, we welcome you and look
forward to your statement.
TESTIMONY OF ROBERT S. ADLER, COMMISSIONER, CONSUMER PRODUCT
SAFETY COMMISSION; ANNE NORTHUP, COMMISSIONER, CONSUMER PRODUCT
SAFETY COMMISSION; ROBERT MCDOWELL, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION; JON WELLINGHOFF, CHAIRMAN, FEDERAL
ENERGY REGULATORY COMMISSION; PHILIP D. MOELLER, COMMISSIONER,
FEDERAL ENERGY REGULATORY COMMISSION; JON LEIBOWITZ, CHAIRMAN,
FEDERAL TRADE COMMISSION; AND WILLIAM E. KOVACIC, COMMISSIONER,
FEDERAL TRADE COMMISSION
TESTIMONY OF ROBERT S. ADLER
Mr. Adler. Thank you very much, and good morning, Chairman
Stearns, Ranking Member DeGette and the members of the
Subcommittee on Oversight and Investigations. Thank you for the
opportunity to testify along with my colleague, Anne Northup,
on behalf of the Consumer Product Safety Commission. My name is
Bob Adler and I have been a commissioner at the agency since
August of 2009.
I am honored to sit in the company of so many of my fellow
independent agency commissioners, and I bring you regrets from
Chairman Tenenbaum, who is not able to be here today.
In order for me to respond to the subcommittee's request
for the agency's response to Executive Order 13563 and similar
Executive orders, I briefly need to review a few critical
points about rulemaking at the CPSC. I do so to make the point
that we have undertaken the promulgation of regulations and
their retrospective review in the full spirit of the policies
incorporated in the Executive orders despite our being exempt
from the orders, so I would like to make a few observations and
I promise I will be brief.
First, since 1981, the CPSC has been required under
amendments to the Consumer Product Safety Act and to the other
acts that it enforces to conduct an exhaustive cost-benefit
analysis when we write safety rules. Under these amendments,
our cost-benefit approach is as comprehensive, if not more so,
as that set forth in any Executive order issued by the Office
of the President, and I think in the case of any other agency.
In fact, over the years, in part because of the detailed and
lengthy cost-benefit procedures contained in our laws, the
commission has actually promulgated very few mandatory safety
rules under these procedures.
Now, I did a count, so I could be off by one or two, but by
my count, in 30 years we have issued a grand total of nine
mandatory safety standards, or about one every 3\1/3\ years,
which has meant we have had to turn to alternative approaches,
one of which is working with the voluntary standards sector to
promulgate voluntary standards and to upgrade voluntary
standards. The other thing that we have done is to work through
a very successful corrective action recall program, and I think
that has been successful.
With respect to regulatory review, you did note the passage
of the Regulatory Flexibility Act in 1980. At that time, the
CPSC choose to undertake a retrospective review of every safety
rule under its jurisdiction from the very beginning, not just
those identified as having a significant impact on a
substantial number of small economic entities. Since this
review, we have continued for the past 30 years to comply with
the requirements for retrospective review of our regulations
under the Regulatory Flexibility Act.
In addition to conducting a retrospective review of
regulations under the RFA, the CPSC has voluntarily undertaken
a comprehensive review of its regulations beginning in 2004 and
temporarily suspended in 2007 in a spirit consistent with
Executive Order 13563. In fact, in conducting our review, we
have committed the agency to using OMB's assessment tool. The
only departure from our approach arises because of the
enactment of the Consumer Product Safety Improvement Act in
2008. In response to its grave concerns about the need to
protect the lives of young children, Congress voted
overwhelmingly, and in the House it was a vote of 424 to 1, to
set a number of very tight guidelines for the commission to
meet. Our general counsel did a count of the number of
deadlines imposed on us. There were 42 separate deadlines
imposed by the Consumer Product Safety Improvement Act.
But recognizing the difficulty of meeting these guidelines,
Congress streamlined our rulemaking authority when writing
these children's safety rules and limited the requirements in
the CPSIA for economic analysis of the impact of the rules. The
streamlined procedure directed to regulate hazardous children's
products such as infant bath seats, baby walkers and cribs, all
of which were associated with an unacceptable number of
fatalities and serious injuries has, I believe, resulted in
significantly more expeditious and protective safety standards
that should save numerous lives in the coming years and could
not have been accomplished otherwise.
I particularly want to note the commission's new crib
standards, which was unanimously approved by all of our
commissioners and became effective last Tuesday, June 28. This
standard sets the most stringent safety requirements for cribs
in the world and ensures that the place that infants spend the
most time and the most time alone will be the safest place in
their homes. Having noted that, I hasten to add that even with
this new authority under CPSIA, the commission remains
obligated to conduct economic analyses under the Regulatory
Flexibility Act assuring that our most vulnerable small
business sector is safeguarded along with safeguarding our most
vulnerable young consumers.
The commission is well on its way to meeting the deadlines
imposed under the CPSIA. We haven't met all of them, and we are
going to miss a few more, but as we wind down the bulk of our
CPSIA rulemaking, it is my understanding that Chairman
Tenenbaum has directed staff to develop options to restart the
retrospective review process.
In closing, notwithstanding that independent agencies do
not fall under the direct purview of Executive orders like
13563, we at CPSC have always tried to implement the wisdom
contained in those Executive orders and to coordinate our
efforts in the spirit of such orders to the best of our
ability.
Finally, I note that CPSC's jurisdiction is very broad.
Roughly speaking, if you walk into a department store, a
sporting goods store, a hardware store, a toy store or you go
to a school, that is us. Those products that are in those
institutions are the things we regulate. But we are an agency
that has barely above 500 people and a budget just about $118
million. In other words, I am sitting at a table with agencies
that are between two and a half and three times our size. But
given these limits on our resources, I think we have done a
good job in advancing consumer safety, and thank you very much.
[The prepared statement of Mr. Adler follows:]
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Mr. Stearns. I thank the gentleman.
Ms. Northup, welcome. It is particularly nice to have a
former member.
TESTIMONY OF ANNE NORTHUP
Ms. Northup. Thank you. Chairman Stearns and Ranking Member
DeGette, thank you so much for the opportunity to testify in
front of you, and I am delighted to be back on Capitol Hill
with you. I have great respect and appreciation for the
challenges you face every day and the decisions you make. I do
appreciate the opportunity to come and give you some idea of
what it looks like from the other side, from a regulatory
agency.
You just heard an excellent history of review of the
Consumer Product Safety Commission and the past, the way they
operated, primarily through the development of voluntary
guidelines, through risk assessment and intervention when there
were real risks based on science and the ability to intervene
when they were dangerous products. However, all of what was
said about the reviews of our regulations and the
reasonableness of that changed in 2008 when the Consumer
Product Safety Improvement Act went into effect, and in fact,
very little of that would be present today. As a matter of
fact, we no longer have the option to consider risk in most of
the things we do. We are required to write rules based on
numbers that were given to us in the CPSIA but that hasn't
stopped us in the regulatory process of casting a wider net
including maybe more toys and more children's products or more
products than the law requires us to do to make steps where the
testing is more rigid than required by the law. And so while
the law is very difficult, it has been very hard for small
businesses in particular to comply with it, we have at the
agency, in my opinion, gone beyond what the law has required us
to do.
Let me just give you some idea. In the time since the CPSIA
passed, we have been involved in about 50 rulemakings if you
include the statements of policies, the notice of requirements
and lab accreditations, and by the way, lab accreditations are
huge because any time we do a notice of requirements for labs
to be accredited, within 6 months every product under that
category has to begin sending every component and every part of
their product to a lab for a third-party test and certify based
on those tests and label their product to reflect what those
certifications are.
So in truth, while I appreciated what Representative Waxman
said about big companies complaining, it is actually the
opposite. Very few of our largest companies complain. Most of
them make products in such large numbers that they can spread
their costs around, and what we have really done is put out of
competition the smaller businesses that made things primarily
in this country. Those are the people that we hear from because
they cannot spread their costs over so many products.
You know, I hear so often people say oh, yes, that is the
law we passed to decrease the number of things coming in from
China or that is the law we passed to make the big companies
comply, but in fact, the effect of the cost of these
regulations has been the burden that has put many, many small
businesses out of business. It has caused those smaller
businesses to leave the children's product market. We have the
public that has fewer choices than they have ever had in the
past and we are told that if we--our four, by the way, biggest
rules are still to come. They are expected to come before
December 31st or to take effect by December 31st.
I thought I would share with the committee one that I
anticipate that we will agree on, the majority. I expect it to
be a 3-2 vote, and that is allowing the parts per million of
lead in any component of a child's product to reduce to 100
parts per million as of August 15th. This is what our economic
team said about this: ``Economic impacts are likely to occur.
They are going to have to use more expensive low-lead materials
rather than the non-conforming materials used today. The cost
associated with the reengineering products to make the new
materials, the cost to make leaded components that are
inaccessible, the increased testing costs, the increased
consumer products, the reductions in the types and quantities
of the children's products available to consumers, businesses
that are exiting the children's product market, manufacturers
going out of business, reduction in the utility of products and
the reduction in the durability of products.'' This is all for
this one rule that we are about to--or this one step-down that
we are about to take effect, and it says there is no
anticipated benefit in health to children because of this. And
so I would just point out to you that 10 out of 40 of the small
manufacturers of bicycles left the market with the original
step-down. We anticipate more will exit the market. And my
question, I guess, is, what sort of regulation sort of
rationalization can be brought to this process. I have proposed
many times ways to within the limits of the law to lessen the
impact of this, and I am disappointed that we haven't done more
of that at the commission. Thank you.
[The prepared statement of Ms. Northup follows:]
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Mr. Stearns. Commissioner McDowell.
TESTIMONY OF ROBERT MCDOWELL
Mr. McDowell. Thank you, Mr. Chairman and Ranking Member
DeGette and all members of the committee for having me here
today.
During my 5 years at the FCC, I have supported policies
that promote consumer choice through abundance and competition
in lieu of regulation whenever possible. I therefore welcome
today's dialog on regulatory reform.
Fifty years ago, there were only 463 pages in the FCC's
portion of the Code of Federal Regulations, the C.F.R. During
this period, Americans only had a choice of three TV networks
and one phone company. Today, over-the-air TV, cable TV,
satellite TV and radio, and the millions of content suppliers
of the Internet offer consumers with an abundance of choices.
In other words, the American communications economy was far
less competitive in 1961 than it is today yet it operated under
fewer rules.
In contrast, by late 1995, the FCC's portion of the C.F.R.
had grown to 2,933 pages, up from 463 34 years earlier. As of
the most recent printing of the C.F.R. last October, it
contained a mind-numbing 3,695 pages of rules. Even after
Congress codified deregulatory mandates with the landmark
Telecommunications Act of 1996, the FCC still managed to add
hundreds more pages of rules.
To put it another way, the FCC's rules measured in pages
have grown by almost 800 percent over the course of 50 years,
all while the communications marketplace has enjoyed more
competition. During this same period of regulatory growth,
America's GDP grew by a substantially smaller number, 357
percent. In short, this is one metric illustrating government
growth outpacing economic growth.
To be fair, some of those rules were written due to various
congressional mandates and sometimes the FCC does remove
regulations on its own accord or forbear from applying various
mandates in response to forbearance petitions. But all in all,
the FCC's regulatory reach has grown despite congressional
attempts to reverse that trend. At the same time, Congress has
given the FCC ample authority to deregulate. The legislative
intent of key parts of the 1996 act such as sections 10, 11,
202H and 706, just to name a few, was to reduce the amount of
regulation in telecommunications, broadcasting and information
services. For instance, Congress ordered the FCC through
section 10 of the 1996 act to forbear from applying a
regulation or statutory provision that is not needed to ensure
that telecom carriers' market behavior is reasonable and not
necessary for the protection of consumers. Similarly, section
11 requires the FCC to conduct reviews of telecom rules every 2
years to determine whether any such regulation is no longer in
the public interest as a result of meaningful economic
competition and to repeal or modify any regulation it
determines to be no longer necessary in the public interest.
Removing unneeded rules can liberate capital currently
spent on lawyers and filing fees, capital that would be better
spent on powerful innovations. Accordingly, it is my hope that
the FCC stays faithful to Congress's intent as embodied in
section 11 by promptly initiating a full and thorough review of
every FCC rule, not just those that apply to telecom companies
but all rules that apply to any entity regulated by the
commission. The presumption of the FCC's review should be that
a rule is not necessary unless we find compelling evidence to
the contrary.
The first set of rules I would discard of course would be
the recently issued Internet network management regulatory
regime, also known as net neutrality. As I have stated many
times before, those rules are unnecessary at best and will
deter investment in badly needed next-generation infrastructure
at worst. No evidence of systemic market failure exists to
justify these overly burdensome regulations.
Furthermore, the FCC has too many forms. To give you some
examples, there is form 603, form 611T, form 175, form 601,
form 492, form 477, form 323 and forms 396, 396C--I am not sure
what happened to 396A and B--form 397 and 398, among many, many
others. While a few forms may be necessary, many could be
eliminated or simplified. Similar repeal initiatives should be
on our plate soon. For example, as I noted in a speech in May,
the so-called fairness doctrine is literally still codified in
the C.F.R. The doctrine regulated political speech. Political
speech is core protected speech under the First Amendment and
the doctrine is patently unconstitutional, as the FCC found in
1987.
Chairman Genachowski recently informed your committee that
he supports removing references to the doctrine and its
corollaries from the C.F.R. and intends to move forward on this
effort in August. I look forward to helping him fulfill that
promise.
In the same spirit, it is time to eliminate the outdated
newspaper-broadcast cross-ownership rule in the upcoming review
of our media ownership regulations. Evidence suggests that the
old cross-ownership ban may have caused the unintended effect
of reducing the number of media voices, especially newspapers
in scores of American communities. Overall, however, what is
needed is a comprehensive and sustained effort to repeal or,
where appropriate, streamline unnecessary, outdated or harmful
FCC rules. All future regulatory proceedings should start with
a thorough market analysis that assesses the state of
competition in a sober and clear-eyed manner.
In the absence of market failure, unnecessary regulations
in the name of serving the public interest can have the
perverse effect of harming consumers by inhibiting the
constructive risk-taking that produces investment, innovation,
competition, lower prices and jobs. In sum, decreasing the
burdens of onerous or unnecessary regulations increases
investment, spurs innovation, accelerates competition, lowers
prices, creates jobs and serves consumers.
I look forward to working with all of you in pursuit of
these goals. Thank you, Mr. Chairman.
[The prepared statement of Mr. McDowell follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. I thank the gentleman.
Welcome, Chairman Wellinghoff, for your opening statement.
TESTIMONY OF JON WELLINGHOFF
Mr. Wellinghoff. Thank you, Chairman Stearns, Ranking
Member DeGette and members of the subcommittee. I want to thank
you all for having us here today, and my colleague,
Commissioner Moeller, to discuss our views on regulatory reform
in independent agencies. We have submitted full testimony here
that I would like to have entered into the record, and I will
summarize my testimony.
The commission continually seeks to streamline its
regulations in order to foster competitive markets and
facilitate enhanced competition to minimize consumer costs.
Implementing the statutory authority provided by Congress, I am
committed to assisting consumers in obtaining reliable,
efficient and sustainable energy services at a reasonable cost
for appropriate regulatory and market means. Fulfilling this
mission involves pursuing two primary goals: ensuring that
rates, terms and conditions are just and reasonable and not
unduly discriminatory or preferential, and promoting the
development of safe, reliable and efficient infrastructure that
serves the public interest. The commission has taken and
continues to take a number of steps to make certain that its
regulations meet the fundamental objectives set forth by
Congress without imposing undue burdens on regulated entities
or unnecessary costs on those entities or their customers.
For example, the commission has taken several steps to
remove barriers to entry of new businesses and technologies
which facilitate competitive markets and can lower consumer
costs. The commission also seeks out ways to help entities,
particularly small ones, navigate the federal regulatory
process. The commission has also recently reduced burdens on
applicants, speeding up processes of filings and improved
public access to documents.
In sum, I support the goals of Executive Order 13563. I
have directed the commission staff to conduct review of the
commission's regulations with the goals of the Executive order
in mind. This direction is consistent with the commission's
practice of engaging in constant self-review to avoid red tape
or unnecessary regulation that would impose undue burdens on
the energy industry and its consumers.
Thank you, and I look forward to answering any questions.
[The prepared statement of Mr. Wellinghoff follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. I thank the gentleman.
Commissioner Moeller, welcome.
TESTIMONY OF PHILIP D. MOELLER
Mr. Moeller. Thank you, Mr. Chairman, Ranking Member
DeGette, members of the committee. I appreciate the chance to
be before you today to talk about these important issues. I
welcome your oversight, and I will summarize my written
comments with a brief history, I guess, of how our regulations
have evolved at the commission and then give you three examples
of where I think we kind of struggle with balancing the need to
ensure that our services are provided safely at fair and just
rates but also making sure that we are protecting and not
unduly burdening the entities that we regulate.
The Federal Power Commission, our predecessor, really came
into its own after the passage of the 1935 Federal Power Act
and the 1938 Natural Gas Act, and as regulators then, the
commission was highly relating these entities because they were
monopoly providers of services that were deemed essential but
over the decades and particularly in the last 25 years,
regulation has evolved so that more competitive forces can
provide consumers with frankly lower prices at better service.
These came through two landmark orders on the natural gas side,
436 and 636, which restructured the pipelines, and then on the
electric side, orders 888 and 2000 that set up regional markets
and allowed for open access of the transmission systems. Again,
these have had great benefits for consumers but our
responsibilities as regulators in monitoring these markets have
increased substantially since then.
Three areas where we particularly spend time, the first of
which I will say is the reliability area of assuring the
reliability of the bulk power system. Now, the origins of this
issue came from the 1965 Northeast blackout a voluntary set of
regulations came about after that, but as time went on,
particularly in the late 1990s, it was clear that a mandatory
system was going to be necessary, some kind of a cop on the
interstate electric highway, and although there was legislation
in the late 1990s, eventually it took the 2003 blackout and the
2005 Energy Policy Act before you as Congress directed us to
create a national electric reliability organization with eight
regional entities, and in the meantime, we have adopted 101
national standards, 11 regional standards, and we have had a
very active enforcement process on those standards. In fact, we
have had 7,000 violations to date since they became mandatory
in June of 2007. And frankly, we are struggling with our role,
the role of NERC, the role of the regional entities because we
have a bit of a backlog on these violations. They are about to
about 3,200.
I think the good news, though, is that through NERC, or
through our direction to NERC, they are working to make sure
that it is a better streamlined process so that we can
eliminate the backlog and essentially share the best practices
amongst the entities we regulate on the bulk power system.
A second area is related to that and that is with our new
powers of enforcement that you gave us in the 2005 Energy
Policy Act, partly emanating from the Western crisis in 2000
and 2001. You gave us the kind of major league enforcement
authority that few agencies have. We can fine entities up to $1
million per day per violation. And initially when we put out
some of our rulings with some significant fines, there was some
criticism from the industry that we lacked transparency in the
process and lacked priorities, and I am happy to say that our
office of enforcement under the urging of several of us on the
commission has opened up that system so that we are a much more
transparent system now. We adopted annual priorities in terms
of enforcement, adopted guidelines based on the U.S. Sentencing
Commission, and essentially have processes and policies in
place that allow anyone under investigation to know at certain
times that they are and give them the certain rights that other
agencies give them. So we are making progress there.
The third area I would note, because I come from the
Pacific Northwest, is the hydropower system. We regulate 2,500
hydropower dams throughout the Nation and some have complained
that that processing of licensing or, more often, re-licensing,
is both costly and time consuming, and that much is true, but I
don't think much of that can be put on FERC. I think actually
the laws itself that govern the process of re-licensing are
worth looking at if this is something that inspires you because
we actually I think do a good job under the current system of
setting timetables but often the resource agencies don't have
any consequence to missing the timetables involved.
In the meantime, though, I think we have tried as an agency
to develop small hydropower systems through MOUs with various
states that are interested. We have tried to open up the
process to stakeholders and developers that are interested in
small hydropower development and we have come up with a pilot
licensing process for the new hydrokinetic technologies of in-
stream power, ocean power and tidal power, again in a way
through our regulations to try and encourage an industry to
move forward.
And finally, I will send a compliment to our colleagues at
the Federal Trade Commission. They have been active in some of
our rulemakings, and their perspectives are always very
valuable.
Thank you for the opportunity again to testify, and I look
forward to answering any questions.
[The prepared statement of Mr. Moeller follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. I thank the gentleman.
Chairman Leibowitz, welcome.
TESTIMONY OF JON LEIBOWITZ AND WILLIAM E. KOVACIC
Mr. Leibowitz. Thank you, Chairman Stearns, Ranking Member
DeGette, Mr. Barton, Dr. Burgess, Mr. Terry, members of the
subcommittee. Let me thank you for the opportunity to appear
here today with my friend and my colleague, Bill Kovacic, to
discuss the FTC's longstanding regulatory review program. It
has been and it is a bipartisan priority for us as well as our
plans for ensuring that this program continues to protect
American consumers while minimizing burdens on American
businesses.
Today, the FTC is announcing additional measures to
strengthen our regulatory review process including an expedited
schedule for reviewing rules and guides to meet the demands of
the marketplace, a new streamlined form for pre-merger filings,
a new page on our Web site to provide greater transparency and
public participation in reviews and a sort of review of the
reviews, that is, we are asking stakeholders how we can make
our review process even better. In that same spirit, we are
also seeking to identify acts of Congress that appear to be of
little value but that impose burdens on businesses,
particularly small businesses and the commission.
So let me give you a brief overview of the FTC before
Commissioner Kovacic describes the history and nature of FTC
regulatory reviews. After he is finished, I will tell you a
little more about what the commission is doing today to enhance
and improve our approach to regulations.
Simply put, we are building on our longstanding regulatory
housecleaning efforts over the years under which we have
eliminated outdated rules from the Mad Men era including those
addressing extension ladders, fiberglass curtains and frosted
cocktail glasses. That is true.
As you know, the Federal Trade Commission is the only
federal agency with both consumer protection and competition
jurisdiction in broad sectors of the economy, and our work
touches the lives of virtually every American. We are primarily
a law enforcement agency but we perform our mission using other
tools as well including rulemakings from time to time, either
when Congress asks us or when additional clarity is needed in
the marketplace. Most of our rules, by the way, are a result of
directives from Congress because you have recognized that they
would be valuable to consumers and businesses alike by
protecting all of us from unfair and deceptive acts or
practices and by leveling the playing field so that legitimate
businesses aren't at a competitive disadvantage from the bottom
feeders who don't always play fair, and with that, I would like
to turn it over to Commissioner Kovacic.
Mr. Stearns. Mr. Kovacic, go ahead. Just for members'
information, the two gentlemen from the Federal Trade
Commission are going to split their 10 minutes so they will be
going back and forth, as I understand. Welcome.
Mr. Kovacic. Thank you, Mr. Chairman, Madam Ranking Member
and your colleagues for the opportunity to speak here today.
Although the Executive order that we have been focusing on
doesn't bind independent agencies, the FTC does endorse its
goals, and in particular, we endorse the intuition that
changing market conditions dictate ongoing efforts to determine
whether existing rules have become outdated, unduly burdensome
or simply ineffective.
To ensure that our work meets this objective, since 1992 we
have had a voluntary program to review our rules and guides. We
examine each regulation and rule in a 10-year cycle. Each year
we publish a schedule of review and we begin the examination of
each rule or guide by publishing a Federal Register notice, and
this notice seeks comment on the continuing need for the
regulation or the guide and an examination of its costs and
benefits to consumers and businesses. We also ask whether
consequent economic developments call for changes in the rule
or its outright abolition. We also consider whether the measure
conflicts with other intervening State, local or national legal
commends.
We use these comments and we use the results of workshops
that we conduct from time to time to decide whether there is a
continuing need for the regulatory command or guideline and how
needless burdens could be avoided, and if adjustments are
warranted, we start proceedings to modify or appeal the rule or
guide. As John mentioned, through this process, we have
repealed 37 rules and guides. We haven't repealed one outright
since 2004. I think we did look at the most serious cases first
but we have undertaken modifications with respect to others
since that time. We now have 12 reviews in place. In one
proceeding, we are considering amendments to the labeling
requirements for the alternative fuels and alternative-fueled
vehicles, and here we are assessing how to eliminate the need
for firms to apply redundant labels that are mandated by
different agencies. In another instance, we have accelerated
the review of our Hart-Scott-Rodino mechanism for mandating the
notification and reporting of mergers, and we intend to
initiate reviews of 11 more rules or guides by the year's end.
Comments provided in this process I think overwhelmingly
show business support for not only the mechanism we have used
but for the rules and guides themselves, and our guidelines in
particular stand out as means to reduce business burdens by
clarifying what we regard to be the line that separates
appropriate from inappropriate behavior, and in doing so, we
think we have significantly reduced the cost of complying with
what you know to be the exceedingly broad general mandates that
appear in our statutes.
My colleague will now explain recent measures that we have
taken to enhance this review process, and I look forward to
your questions and comments later. Thank you.
Mr. Leibowitz. As Commissioner Kovacic has explained, we
have long had a program for reviewing our guides and our
regulations. You noted, Chairman Stearns, in your opening
statement the importance of taking costs and benefits into
account and we do do that. It is critically important to us.
All of our work including the guides is done publicly with
input from stakeholders.
But earlier this year, we began examining what more we
could do to improve these rules and really relieve undue
burdens on industry, so as part of this effort and very much in
the spirit of the President's Executive order, here is what we
are doing. First, as Commissioner Kovacic noted, we are
undertaking a review of 23 rules and guides. That is more than
a third of all the rules we administer, rules and guides we
administer. As announced in our Federal Register notice today,
six of the rules under review have been accelerated to take
into account for rapid changes in the marketplace.
Congresswoman DeGette, you mentioned the Do Not Call Rule, and
we recently strengthened the Do Not Call Rule, the
Telemarketing Sales Rule, which Do Not Call is part of. It has
200 million, actually now more than 200 million registered
phone numbers, and Dave Barry has called it the most effective
government program since the Elvis stamp.
Second, our Federal Register notice asked for the public to
comment on the FTC's 20-year program of reviewing its rules.
Businesses have generally been, as Commissioner Kovacic noted,
supportive of our regulatory reviews but we nevertheless asked
a number of questions. For example, how often should the
commission review rules and guides, how can we modify programs
to make them even more responsive to the needs of consumers of
businesses.
Third, the FTC's new regulatory reform Web site just went
live today because not everyone reads the Federal Register,
although I know many of you do. It serves to provide--and many
of us do. It serves to provide greater transparency for members
of the public to understand our regulatory review efforts. It
allows them to more easily comment on our ongoing rule reviews
as well as on the FTC's process to review its rules. It also
contains links to the 37 rules the commission has eliminated
over the years as well as easy links to other resources like
the new 10-year review schedule and the streamlined HSR, Hart-
Scott-Rodino, pre-merger form.
Fourth, commission staff are seeking to identify statutes
that might impose undue burdens on businesses or on the
commission. Although a law's goals may be laudable, some
statutes passed by Congress, as we know, can detract from other
beneficial work, and I think Commissioner Moeller sort of
alluded to this with respect to licensing issues. So one
example is the FACT Act, which was passed in 2003, Fair and
Accurate Credit Transactions Act, and it came out of the
Financial Services Committee, and it required the FTC to
conduct 30 separate rulemakings, studies and reports, 30. Some
of those obligations of course make sense, but at one point
around 2005, and this was shortly after I came to the
commission, about a third to half of our financial practices
staff, and these are the folks who go after mortgage fraud,
were actually spending time writing reports because they were
obligated, and we do what Congress tells us to do. Now, we have
been writing reports since 1914, we are very good at it, but in
fact our staff should have been spending more time going after
the bad guys who were preying on American homeowners. So
consistent with the goal of reducing unnecessary burdens,
commission staff is now working to identify reports required by
statute, and I think statutes themselves that divert businesses
or commission resources from more pressing work, and the staff
has identified sort of two such reports at least preliminarily.
So year after year, the mandated ethanol industry report has
shown that there is almost no concentration in the ethanol fuel
market. The report doesn't appear to provide significant value
to the public but it does impose burdens on small businesses
because they have to respond to inquiries from the FTC, and so
our staff is proposing that the report be eliminated or at the
very least that the frequency be reduced to every 3 years.
Additionally, while the FTC, the DOJ, the Department of
Education are very involved in fighting scholarship scams, and
for the FTC's part, we compile complaints, the annual report
about scholarship scams, the annual report that the three
agencies must jointly produce each year on the topic which is
required by statute, doesn't appear to FTC staff to advance any
real or significant goals.
So Mr. Chairman, through these four initiatives, we are
working to improve the FTC's review program. We will do our
best going forward and working with this committee to ensure
that all of our regulations protect American consumers while
minimizing burdens on businesses. Thank you. Of course, we are
happy to answer questions.
[The prepared statement of Mr. Leibowitz and Mr. Kovacic
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Stearns. Mr. Kovacic, do you have anything briefly you
would want to add since Chairman Leibowitz had most of the
time?
Mr. Kovacic. No, I don't. Thank you.
Mr. Stearns. All right. With that, I will start with
opening questions. I think before I start, I would like to put
on the record Mr. Cass Sunstein's memorandum of February 2,
2011. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. And I understand the ranking gentlelady has a
document, ``Evaluation of Consumer Product Safety Database,''
that she would like to put in.
Ms. DeGette. That is correct.
Mr. Stearns. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. Chairman Leibowitz, before I start my
questions, I think myself and staff are a little struck that
you have voluntarily stepped up to the plate and sort of
followed the spirit of this Cass Sunstein letter right there,
and I think it is interesting when you look at the letter I
just put in the record, he said in particular such agencies,
talking about the independent agencies, are encouraged to
consider undertaking retrospective analysis of the existing
rules. You have stepped up to the plate to do it. Not all the
independent agencies have done it. You have actually identified
some areas that you think you have to do where you don't think
you should be doing it, so I guess the question from Members of
Congress is, what would you like us to do to help you?
Mr. Leibowitz. Well, I think having oversight hearings like
this is useful. It sort of shines a public light on regulations
that do work because of course regulations are very important
and ones that need to be modified. You know, look, we are a
very bipartisan consensus-driven agency. We work together. We
try to do regulatory reviews because we know they are really,
really----
Mr. Stearns. Well, you have identified some things that I
think you would like some legislation to----
Mr. Leibowitz. And yes, and we have identified----
Mr. Stearns. We will follow up on that.
Mr. Leibowitz. That would be terrific, Mr. Chairman.
Mr. Stearns. Commissioner McDowell, I couldn't help but
take your comments ``sober and clear manner'' when you talked
about over 50 years regulations have gone up 800 percent. Is
that true? That is 16 percent a year in the law of 72. That
means every 4\1/2\ years these regulations are doubling. That
is really staggering to think that that is occurring. Is that
an accurate explanation of what you said, that regulations
could possibly be doubling every 4\1/2\ years based upon 800
percent increase for 50 years?
Mr. McDowell. That would appear to be the case, yes.
Mr. Stearns. Let me move, based upon what--I just put a
letter in from Cass Sunstein where he said these independent
agencies should step up and voluntarily--that is the spirit of
what he is talking about. Obviously, President Obama has
indicated he wants that done, and he didn't include the
independent agencies but I would like, if you would, just to
answer some questions yes or no just for the limited amount of
time. So Commissioners Adler and Northup, yes or no, did the
CPSC submit a regulatory review plan to OMB? Just yes or no.
Mr. Adler. No.
Mr. Stearns. OK.
Ms. Northup. No, it didn't.
Mr. Stearns. Yes or no, has the CPSC publicly committed to
conduct a review of all existing regulations in accordance with
the Executive order? Yes or no.
Mr. Adler. As far as I am concerned, yes.
Ms. Northup. No, I have not been informed that we are
having any review.
Mr. Stearns. OK. Mr. Adler, if you answer yes, as you did,
why hasn't there been a notice so that Commissioner Northup
would know about it if you answered yes?
Mr. Adler. Well, first of all, with respect to submitting a
formal plan to Cass Sunstein, he is actually a hero of mine as
a former academic, but in order to preserve independence----
Mr. Stearns. You said you have issued a public notice?
Mr. Adler. What I said was, we had begun a retrospective
review beginning----
Mr. Stearns. But you haven't issued a public notice?
Mr. Adler [continuing]. In 2004 that was temporarily
suspended in 2007, and as soon as Chairman Tenenbaum gets back,
I anticipate we will resume that process.
Mr. Stearns. So you personally believe the CPSC should
conduct a review?
Mr. Adler. Oh, yes, sir.
Mr. Stearns. OK. CPSC used to conduct regulatory reviews
but has stopped in recent years. Is that a fair statement?
Mr. Adler. They stopped in 2007 under then-Acting Chairman
Nord, and I believe it was because of passage of the Consumer
Product Safety Improvement Act, and just competition for
resources within a very tiny agency.
Mr. Stearns. OK. Commissioner McDowell, do you believe the
reviews the FCC conducts under the Telecommunications Act take
the place of the kind of look-back the President and this
committee has asked for?
Mr. McDowell. No.
Mr. Stearns. You also state in your testimony that net
neutrality is the first rule you would discard upon the agency
review of its regulation. Is that true?
Mr. McDowell. Yes.
Mr. Stearns. I agree with you. Chairman Genachowski hails
the net neutrality rulemaking proceedings as a test case for
openness. However, I believe there were some bad precedents set
in this proceeding. Commissioner McDowell, do you believe you
were able to review the record in the net neutrality docket or
were there items placed late into the docket that made it very
difficult to review before the vote?
Mr. McDowell. There are about 3,000 pages of documentation
placed into the record in the final 2 or 3 days or 4 days.
Mr. Stearns. And you had no opportunity to review those?
Mr. McDowell. Well, there was opportunity but there wasn't
enough time.
Mr. Stearns. As a commissioner, when was the first time you
saw the net neutrality order that you voted against on December
21, 2010, and was it the same rules proposed in October 2009?
Mr. McDowell. There were several drafts, of course, the
first in October of 2009, but we got the final draft about
quarter to midnight the night before the vote.
Mr. Stearns. I understand although the agency passed its
net neutrality rules in December, the docket to reclassify
broadband services under Title II remains open. I think this is
surprising, as Chairman Genachowski has made efforts to close
other dockets opened at the FCC. Do you believe this docket
should be closed?
Mr. McDowell. Yes.
Mr. Stearns. Are you aware of any reason why this docket
remains open?
Mr. McDowell. Only speculation. I have no firsthand
knowledge.
Mr. Stearns. Chairman Wellinghoff, in your testimony you
say you support the goals of the Executive order and have
directed commission staff to conduct a review of existing
regulations with the goals of the Executive order in mind. Why
didn't you submit a regulatory review plan to OMB?
Mr. Wellinghoff. Because I believe that we weren't subject
to the Executive order under OMB.
Mr. Stearns. Notwithstanding what Cass Sunstein had sort of
directly, the spirit of the law was for you to comply?
Mr. Wellinghoff. I believe in fact we are complying with
the spirit of the law by directing the regulatory review that I
have directed staff to do.
Mr. Stearns. Have you submitted a notice for public comment
on this review?
Mr. Wellinghoff. My general counsel has indicated that is
not necessary to staff review.
Mr. Stearns. Well, let me ask you personally. Do you
believe FERC should conduct a retrospective review in the
spirit of the Executive order?
Mr. Wellinghoff. Yes, we are doing that. I have directed my
staff to do that.
Mr. Stearns. OK. My time is expired.
Ms. DeGette. Thank you, Mr. Chairman.
Mr. Chairman, my recollection of what Cass Sunstein said is
that the independent agencies should comply with the spirit of
the law, not the specific legal requirements, and I guess I
will ask you, Chairman Leibowitz, since your agency is supposed
to be the paragon of virtue today, have you submitted a plan to
OMB? Has your agency submitted a plan to OMB?
Mr. Leibowitz. We have not submitted a plan to OMB.
Ms. DeGette. And that is because you are not legally
required to, right?
Mr. Leibowitz. And that is because we are not legally
required to, although as you know----
Ms. DeGette. But that doesn't mean you are not doing
regulatory reform, correct?
Mr. Leibowitz. No, no, no. I think as everyone knows, we
are doing a lot of regulatory reform.
Ms. DeGette. And Commissioner Adler, also your agency,
although it hasn't submitted a plan to OMB, you are doing
regulatory reform too?
Mr. Adler. That is correct.
Ms. DeGette. Thank you.
Now, Chairman Leibowitz, something you said was very
interesting to me. You talked about how a lot of the
regulations that you do is a result of statutes passed by
Congress directing you to do regulations, correct?
Mr. Leibowitz. That is correct.
Ms. DeGette. And you gave several examples of that, right?
Mr. Leibowitz. Yes.
Ms. DeGette. Now, Commissioner Northup, you talked about a
lot of the regulations that the CPSC is promulgating as a
result of the statute that Congress passed, correct? Like the
lead standards and other regulations.
Ms. Northup. That is correct.
Ms. DeGette. So Mr. Chairman, one thing I am concerned
about, you can't really talk about regulatory reform in a
vacuum without looking at the statutes that Congress has passed
but ask these agencies, and so I think there are two levels
here. There is the regulations themselves, which may be overly
burdensome, but there is also statutes that I think we should
look at, and I know, Chairman Leibowitz, you had actually come
up with a list of some statutes that you think could be
streamlined so that the agencies, whether they are the
independent agencies or not, could also streamline their
regulations, correct?
Mr. Leibowitz. That is correct.
Ms. DeGette. Would you be willing to submit a copy of those
statutes to this committee so that we could then look at those
statutes within the purview of this committee and think about
ways to fix them so that we can reduce the burden of
regulations?
Mr. Leibowitz. It sounds like very much a bipartisan effort
on this subcommittee, and we would be glad to do that.
Ms. DeGette. OK. For the rest of the commissioners who are
here, I would just ask for a yes or no answer. Would you be
willing to also submit a similar list of statutes that your
agency deals with that you think could be streamlined so the
regulatory process could be streamlined? Commissioner Adler?
Mr. Adler. Yes.
Ms. DeGette. Commissioner Northup?
Ms. Northup. I have.
Ms. DeGette. Oh, you have? Great. I would love to get a
copy of that.
Mr. McDowell?
Mr. McDowell. Yes.
Ms. DeGette. Chairman?
Mr. Wellinghoff. Yes.
Ms. DeGette. Commissioner?
Mr. Moeller. Yes.
Ms. DeGette. Chairman?
Mr. Leibowitz. Yes.
Ms. DeGette. And Commissioner Kovacic?
Mr. Kovacic. My list is the same as Jon's.
Ms. DeGette. OK. Great. This is a good effort down here at
the end of this table.
And I wanted to ask you, Commissioner McDowell, because you
had listed off numbers of regulations. I don't think that you
think that--first of all, are all those regulations that you
listed--I don't know them by heart--are they all duplicative or
unnecessary regulations, the ones you listed?
Mr. McDowell. Are you talking about the number of pages I
cited?
Ms. DeGette. Well, you listed some different sections. You
just threw out a whole bunch of regulations.
Mr. McDowell. The sections I cited were statutory sections
that gave us the power to deregulate on our own, and I also
listed----
Ms. DeGette. No, no, but----
Mr. McDowell [continuing]. The forms----
Ms. DeGette [continuing]. You said there--oh, the forms.
Just because there is a form, doesn't mean that it is per se
unnecessary, correct?
Mr. McDowell. No, and I didn't imply that.
Ms. DeGette. So the numbers of the forms that you listed,
are those particular forms unnecessary in your view?
Mr. McDowell. Not all of them necessarily.
Ms. DeGette. OK. So you were----
Mr. McDowell. That is what I said in my testimony.
Ms. DeGette. That was kind of a figure of speech that you
were talking about a lot of forms, right?
Mr. McDowell. I think that my testimony speaks for itself.
It is a lot of forms.
Ms. DeGette. Well, here is my question to you. Have you
compiled a list of regulations for your agency that you think
are duplicative or overly burdensome?
Mr. McDowell. Yes, ma'am, it is in my testimony.
Ms. DeGette. OK. That is the comprehensive list. And has
everybody else----
Mr. McDowell. It is not the complete list but there is----
Ms. DeGette. Could you get us your complete list? That
would be really helpful.
Mr. McDowell. Sure.
Ms. DeGette. You know, along with our brand-new member from
Colorado, Mr. Gardner, my neighbor to the north and others, we
are trying to develop bipartisan legislation, and to be honest,
as you see from these folks down here, regulatory reform is not
a partisan issue. I mean, nobody wants to have overly
burdensome regulations, and so I guess what I would ask
everybody here from all of these agencies, as well as a list of
statutes that you think lead to overly burdensome regulations,
if you can give us a list of regulations that you think are
overly burdensome, that would be helpful too.
Commissioner Adler, would you be willing to do that?
Mr. Adler. I am speaking only for myself, but for myself,
yes.
Ms. DeGette. OK. Commissioner Northup, I believe you have
probably already done that.
Ms. Northup. I have. It is part of my testimony but I have
also previously sent to the Hill a list of----
Ms. DeGette. If you could get that to our staff too, that
would be great.
And Commissioner McDowell?
Mr. McDowell. Absolutely.
Ms. DeGette. Mr. Chairman?
Mr. Wellinghoff. Yes.
Ms. DeGette. And Commissioner Moeller?
Mr. Moeller. Yes.
Ms. DeGette. And then----
Mr. Leibowitz. We certainly will, although we have
eliminated a lot of regulations. We do ongoing regulatory
reviews pretty rigorously.
Ms. DeGette. OK. Thank you very much.
Mr. Stearns. The gentleman from Texas, Mr. Barton, is
recognized for 5 minutes.
Mr. Barton. Well, thank you. I would stipulate that all the
individuals before us are paragons of virtue today because they
are subject to the Energy and Commerce Committee and that
recognition makes you a paragon.
I think we need to repeat, this is kind of a hearing that
is unusual in that this Executive order that we are asking you
folks to comment on explicitly excludes you, and as we all know
in Washington, not too many commissioners and chairmen
voluntarily comply with things that they don't have to. Those
of us that have been around a little bit understand that.
So my first question is, what should this committee do in
the absence of statutory language that would force compliance
with something similar to the Executive order? Should we pass
some sort of a statutory requirement that you all do similar
things that the President says in his Executive order or should
we let the sleeping dog lie? Let us try Chairman Wellinghoff.
He doesn't come before us too often.
Mr. Wellinghoff. Thank you, Mr. Barton. I don't have any
specific recommendation for you, sir. I think in fact, as I
have indicated in my testimony, we are going to comply with the
spirit of it and in fact have a staff review, and I think our
agency certainly as an economic regulatory agency, each and
every regulation that we institute do in fact take into account
whether rates are just and reasonable and services are, and we
also provide the industry with an opportunity to fully comment
on those regulations and determine ultimately whether the
regulations are burdensome based upon those comments and
information that we gather. So I don't have any specific
recommendation for you.
Mr. Barton. Mr. Leibowitz?
Mr. Leibowitz. I would say this. You know, we comply with
the spirit of the Executive order. I think it is a terrific
Executive order. We go beyond it because I think only four of
our rules would be sort of within reg flex, and we do reg
reviews of all of rules and all of our guides, but I also think
it is important to preserve the independence of agencies too,
and as you can see, you know, agencies provide--by having
members not of the President's party, agencies as a sort of
institutionalized matter provide checks and balances, and they
are independent voices. And so I understand what you are saying
because I think you believe that the Executive order has a lot
of good things in it, and we agree.
Mr. Barton. The Republicans think what the President says
he is doing, we are not sure he is doing it, but what he says
he wants to do, we think is a good thing. And so you folks say
the right words, you are comply with the spirit and you agree
in general, but the truth is, you are not going to do anything
unless you absolutely have to. The question is, should I get
with Ms. DeGette and Mr. Stearns and put together a bipartisan
bill that would make it a requirement?
Mr. Leibowitz. Let me defer to Commissioner Kovacic because
I know he wants to add something here.
Mr. Kovacic. Congressman Barton, I would like to quarrel
with your suggestion that we only do what the gun at the head
compels us to do. I was a junior case handler at the FTC for
the first time in 1979, and I think it has been in the DNA of
the agency internally, partly because of our structure, partly
because we have a large team of economists to do this kind of
introspective work as long as I have known the agency, and I
would emphasize, I think that would be very constructive would
be two things. First is for us to have perhaps a more frequent
conversation in settings like this with your staff about we do.
In 2008, 2009, we did a comprehensive self-study of our agency.
We benchmarked ourselves with 40 of our counterparts overseas.
We talked extensively with our counterparts at Federal, State
government, and we did a substantial publicly available
assessment of how we are doing. I think it would be helpful on
one front to have a more extensive continuing conversation with
the committee about the measures we do take that aren't
obliged, and the second is, to go back to something that
several of you have mentioned----
Mr. Barton. You are going to have to be quick, because I
have got 20 seconds and I have got one more question.
Mr. Kovacic. The other thing is to think more in the design
of legislation itself about what burdens it will impose.
Mr. Barton. I want to ask Commissioner McDowell--I can't
let him sit here and not ask him some question. The pending
regulation regulating the Internet under Title II is still
pending at the FCC. Do you have any information for us what
Chairman Genachowski intends to do with that? Is he going to
withdraw it or push forward with it? What is your view on that?
Mr. McDowell. Sir, just to be clear, the open proceeding to
regulate the Internet under Title II, I don't have any
information as to whether or not he is going to withdraw it or
what the reasoning might be for keeping it open.
Mr. Barton. Don't you think he should withdraw it?
Mr. McDowell. I do.
Mr. Barton. That is the right answer. Thank you, Mr.
Chairman.
Mr. Stearns. I thank the gentleman.
I think the next speaker on this side is Mr. Green. You are
recognized for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
First, I want to take the opportunity to thank all our
commissioners for being here. Those of us who have been on this
committee a number of years welcome back our colleague from
Kentucky. What you do every day is very important in ensuring
the health and safety of our citizens, particularly consumer
protection, but everything. FERC, obviously from Texas, FERC is
very important to what we do, and the FCC and of course FTC.
Mr. Leibowitz, in your testimony you discuss the children's
online privacy protection rule or regulation your agency
promulgated that helps protect privacy of children online. Can
you please tell us more about this rule and does it ensure that
children are protected while using the Internet?
Mr. Leibowitz. Well, it was a bipartisan piece of
legislation passed out of this committee, but we also
understand that the Internet has changed and technology has
changed the way children use the Internet dramatically in the
last few years, and that is why we actually moved up our
regulatory review of COPPA by 5 years, and so we are working
with stakeholders. We put out a sort of notice of inquiry and
we will have proposed COPPA improvements, draft legislation. We
always put out--I am sorry, draft rule. We put that out. We
take comments again, hopefully within the next few weeks by the
end of the summer.
Mr. Green. And I know for all the agencies, and this is
just an example, there is a lot of concern about agency
regulation, but so much of what you do is in response to
legislation, whether it is new legislation or previous
legislation or may have been amended, and this is a good
example of a rule that frankly as a father, or a grandfather
now, I can't possibly monitor what my grandchildren may be
doing on the Internet but we do need to have protection from an
entity other than just the family.
Mr. Leibowitz. Right, and the whole notion of COPPA, which
is that if you are 12 years old or younger, you shouldn't be
able to give consent to have your personal information go to
companies on the Internet, you need to have parental consent,
is a really good one, and that is the bedrock of COPPA, the law
you passed.
Mr. Green. Some of us might move that age a little higher,
but I appreciate it.
Mr. Leibowitz. Some of us might encourage you to do that.
Mr. Green. And beyond issuing standards that require safety
such as that, you have done children's cribs. Consumer
protection safety works on manufacturers to organize recalls
and remove dangerous products from the market.
Mr. Adler, a recall authority has the potential to save
lives, doesn't it?
Mr. Adler. It certainly does, sir, and I believe we have
saved many lives.
Mr. Green. And other agencies have tools to help consumers
too. For example, the FCC has taken steps against consumer
fraud and deceptive practices through its enforcement powers.
Mr. Adler. All the time.
Mr. Green. Mr. Leibowitz, in your understanding, in fiscal
year 2010 your agency initiated 66 court cases to protect the
rights of consumers. How valuable is that enforcement action?
Mr. Leibowitz. Well, we think they are critically--we are
principally an enforcement agency. We do rules, mostly when you
tell us to, but what we really do on both the antitrust and the
consumer protection side is go to court to stop unfair or
deceptive acts or practices and to stop people who engage in
unfair methods of competition, and we have brought a variety of
cases protecting privacy, stopping mortgage scams. That is what
we do.
Mr. Green. The lawsuits you file can have real impact on
individual lives. Is that correct?
Mr. Leibowitz. Yes, I mean, often getting redress if we win
a case or if we settle one for injured victims, yes.
Mr. Green. So there is a positive byproduct of agencies
issuing regulations and enforcing regulations that are based on
what Congress passes and the President signs?
Mr. Leibowitz. Absolutely.
Mr. Green. Mr. McDowell, I was pleased that the chairman of
the FCC announced that the commission would comply with the
President's Executive order on regulatory review. It is
important that that review is as comprehensive as possible, and
I am looking forward to seeing the streamlining of the FCC,
which I am sure as commissioners you would love to have. Given
the constant change and the growing competition in the
communications market, do you agree that the FCC should be
diligent in reviewing and potentially eliminating regulations
that no longer protect the public interest?
Mr. McDowell. Absolutely, in a comprehensive way.
Mr. Green. The biannual review requirement is the
commissioner's major tool to accomplish this. Is this correct?
Mr. McDowell. It is, but only for telecom companies, not
for media companies or information service providers, etc.
Mr. Green. Over the past 10 years, the commission has
complied with its statutory duty to prepare and submit a
biannual review?
Mr. McDowell. Yes, sir.
Mr. Green. Do you believe the biannual review requirement
should be amended to include other entities?
Mr. McDowell. I do.
Mr. Green. And would you submit your recommendations for
the record?
Mr. McDowell. Yes, sir, and it is my testimony but I will
reiterate it too.
Mr. Green. OK. I appreciate it.
Mr. Chairman, I will yield back my time.
Mr. Stearns. The gentleman yields back his time, and the
gentleman from Nebraska is recognized for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman. Let me first start by
thanking Jon Leibowitz. First of all, I like the little play
between the two of you because it kind of signals that you work
with both sides and work together, and Mr. Kovacic, the way
that you have answered questions, you are telegraphing or
telling us that you two actually work together, and I really
appreciate that. I think that is the way America expects our
agencies to work. So I want to thank you for that. And Jon, you
are doing a good job. I like that you are actually----
Mr. Leibowitz. Is this a setup? Because----
Mr. Terry. No, there is no ``comma but'' coming here. I
like that you are already attacking the issue of finding the
regulations that are not very useful anymore and don't serve
the purpose. So good job. That is exactly what my bill that is
in a different committee wants every agency, independent agency
to do, and it is to provide the flexibility.
Commissioner Northup, we can sit here and say good job on
cribs but it is amazing to me that we are sitting here talking
about bicycles and ATVs and large cars and trucks that, you
know, 6- and 7-year-olds play with but don't eat but yet we are
regulating them.
So you have to admit, Mr. Adler, there is some absurdity to
the law. Do you agree with the rules and regulations----
Mr. Adler. I think that Congress basically got the law
right, and by the way, what you are talking about is a mandate
that Congress imposed, not that the commission imposed, but
there are always some portions of the law that need to be
reexamined, and the issue you raised with bicycles and ATVs is
one of those that we are actually taking a look at.
Mr. Terry. And in regard to the absurdity of Congress's
mandate--and by the way, I list this as one of those votes that
I thought if I had to take back, we should have really fought
harder on this one to make it a better law.
So Anne, do you have specific requests for us of where we
should change the Consumer Product Safety Improvement Act?
Ms. Northup. Well, let me just said if I had been there, I
wasn't, but I can imagine that I would have voted for the law.
I certainly would expect I would have. When I was being
confirmed by the Senate, I read the law. It seemed like such a
good law. I was supportive. So many of the Senators at the
confirmation hearing said we want you to use all the
flexibility we gave you to rationalize this law; we believe
that bicycles and ATVs and scooters--I mean, it goes way beyond
those two--carving them out may be some people happy, but like
you say, trucks kids play with, the axles in those trucks, if
they bend, what good are they, but the problem is, when you try
to--when we have tried to find flexibility, there just hasn't
been three out of five votes for that. So it is going to take a
change in the law. The discouraging part is that even the
commissioners can't seem to agree how sweeping a change they
would support but we desperately need----
Mr. Terry. Well, do you have flexibility on, for example,
third-party testing? I think there was an incident when this
bill was being developed by a toy manufacturer that
manufactured in China that perhaps there was accusations that
their data in-house was not correct, so if you are a large
international company, mandating third-party testing when you
found out your in-house testing was inaccurate, but do it on a
10-person company in Omaha, Nebraska, on tee shirts where on
every size and every color doesn't make sense to me. Do you
have the flexibility to----
Ms. Northup. No, we don't have that flexibility.
Mr. Terry. Is that an area that we should look at?
Ms. Northup. It is an area. In fact, today there are vast
new ways to enforce the law. We track things coming in from
overseas, tools that we didn't have in 2008. And I would give
the commission the ability, the flexibility to require third-
party testing where they think there is risk and they think it
will be effective to enforce it. It is one of the proposals I
have made. It would make a huge difference in the cost of this
because as you say, every small business is telling us when
they have to third-party test every single component
individually for lead, when they have to then do random----
Mr. Terry. Or phthalates.
Ms. Northup [continuing]. When they have to do phthalates,
when they have to do it to the toy standard, it is extremely
expensive.
Mr. Terry. Well, and one quick point on that. Do you guys
try and obtain data, for example, when the third-party testers
are telling a small company that prints motorcycles on tee
shirts that asking that they test the cumulative effects of 10
tee shirts of the same color and size, do you ask, produce one
piece of evidence that a child has eaten ten tee shirts?
Ms. Northup. The problem here is that if there is, say, a
dot of blue paint on that, they need enough blue paint to test
to have a quantity of blue paint. I will tell you, I have
pushed for a component part testing allowing somebody to--and I
think we are going to pass this, and this is the flexibility
that I think would be--is probably the most flexible regulation
we have where you can take your blue paint and test it and then
you can put it on every tee shirt and you don't have to tear up
the tee shirt.
But when you talk about bikes, for example, that have 141
parts to them and every part, every time you change the
shipment of spokes, the shipment of pedals, you have to have a
new test for that, then you have to change the label so it
reflects the component test that was used, it is very
complicated.
Mr. Stearns. The gentleman's time has expired, and Ms.
Schakowsky, the gentlelady, is recognized for 5 minutes.
Ms. Schakowsky. Thank you.
You know, I think we all here agree that it is important
for regulatory agencies to be efficient and mindful of the
impact of regulations on businesses, and I think we all agree.
I helped negotiate this bill. I am very proud of the
legislation. But Henry Waxman introduced legislation that would
deal with some of the unintended consequences. I think maybe we
as a committee ought to take another look at that legislation,
and I know that the commission would be willing, as I
understand it. Is that not true, Mr. Adler, on behalf of Mr.
Tenenbaum and Ms. Northup? I think we ought to look at that.
But let me just say, to go back to risk-based assessment,
that is what we had before, and I think that what we have found
is that why we regulate and that is because time and time again
industry has shown that they aren't going to police themselves,
and that we need to do it, and one of the issues is the
industry standard for cribs, and we had a press conference with
the attorney general in Illinois on June 28th when the crib
standard went into effect, and I congratulate all of you on
that, although I have to say, I was disappointed to see the
press release that went out that, you know, we didn't give
people enough time when of course you had said earlier that you
wished it had gone into effect the next day so that parents
could be sure when we put our kids to bed alone or
grandchildren that they are going to be safe.
So let me ask you, Mr. Adler, do you consider the crib
standard to be an example of a victory for the Consumer Product
Safety Improvement Act?
Mr. Adler. I think it is one of the finest things that has
been done under the Consumer Product Safety Improvement Act. It
is taking children who are our most vulnerable involuntary risk
takers who are put in cribs that have to be the safest place in
the home because they are there for long periods of time with
no supervision, and it is saying that we have the most
stringent safety standard in the world. I think it is really a
magnificent achievement and I commend the Congress for
directing us to----
Ms. Schakowsky. And in fact, in the regulation, you did
give some places that might have cribs some time to comply. Is
that not true?
Mr. Adler. We did, and I am delighted to respond to the
issue that Commissioner Northup and I disagree on with respect
to the independent retailers. I think that we had a group that
said we need more time but we had another group that said
please, please, please do not give more time, we have compliant
cribs and we are prepared to sell them right now.
Ms. Schakowsky. I ant to mention on the database, I have an
op-ed from a gentleman in New Jersey whose daughter was injured
by a crib in 2007. He called the manufacturer and asked if they
had any other complaints about the crib and was told no, there
weren't any, but actually found out that there were 84 reports
to similar problems. Fortunately, his daughter was not hurt
very bad.
So Mr. Adler, the public information database was created
by the CPSIA because previously, manufacturers would not, and
the CPSC could not share lifesaving information with consumers.
Is that correct?
Mr. Adler. That is correct. I think the database is one of
the finest pieces of the Consumer Product Safety Improvement
Act.
Ms. Schakowsky. So do you think that it actually is serving
the function of making consumers more aware?
Mr. Adler. It is, and I might just quickly point out that
it is modeled after a similar database at the National Highway
Traffic Safety Administration. Ours actually has more due-
process rights for manufacturers than they do at NHTSA, and I
think it is a very balanced piece that provides the proper
attention to disclosure to protect consumers with the rights of
manufacturers to make sure that the information is correct.
Ms. Schakowsky. Do you think that Congress should force the
Consumer Product Safety Commission to do a full cost-benefit
analysis every time it takes steps to protect children from
harmful products no matter how dangerous those products are?
Mr. Adler. I actually think Congress got it right. Congress
didn't say regulate with no attention to the economic impact.
Congress said that when we regulate with respect to children,
that we need to follow the dictates of the Regulatory
Flexibility Act, and one of the things I like about that is, it
is focused on vulnerable small business. That is the group that
we are supposed to make specific economic findings with respect
to when we are trying to protect our most vulnerable consumers.
Ms. Schakowsky. I think I will yield back the 2 seconds I
have. Thank you, Mr. Chairman.
Mr. Stearns. I thank the gentlelady. The gentleman from
Texas, Dr. Burgess, is recognized for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman, and Commissioner
Northup, it is good to see you here.
Ms. Northup. Thank you.
Mr. Burgess. It is amazing you got confirmed by the Senate,
so congratulations on that. What an accomplishment.
And I apologize for being late. We had a Health
Subcommittee hearing going on simultaneously. Can you give us
an idea of the scope of the effect on the retail industry on
this crib ban that has now gone into effect? I mean, I realize
that the other commissioner said a cost-benefit analysis is not
necessary but still, there has got to have been an impact.
Ms. Northup. Let me just say, first of all, the regulatory
flex analysis that we do is only--it is like checking a box.
Sometimes it is a paragraph, sometimes it is a page. It says
that small businesses are going to be affected, we are going to
put some out of business, but we go right ahead and regulate.
There is nothing, there is no requirement that it be cost-
effective.
What happened with the crib standard was, is that we issued
it and we considered at the request of manufacturers how long
it would take for them to get the new qualifying cribs tested,
third-party tested, and into the market. Six months was
decided. We didn't really think about retailers. There was one
sentence in our rule that said we think 3 to 6 months is enough
for retailers too. Unfortunately, it took longer to get them
developed, it took longer to get them tested, and by the time
they got them to the retail stores, the retail stores, some of
the orders they had placed last November arrived a week before
the new standard took effect. They were not third-party tested,
and so they were junk to them. How many? Well, we know that one
group of retailers that did a survey had 17,000 of them. We
know that we called five, not our biggest stores but five major
retailers; they had 100,000 as of the 1st of June. That comes
to about $32 million worth of materials that will have to be
thrown away if they are not--and these are not drop-side cribs.
These are not even cribs that are almost identical to the
standard. They haven't been third-party tested or certified.
But the new crib standard that went in in 2009 was the basis of
our crib standard. And let me just say, if these are unsafe,
then why we would have allowed daycare centers, the motel-hotel
industry, leasers 2 years before they had to place them? It is
because we did not believe they were unsafe.
Mr. Burgess. That is a valid question.
In the winter of 2008, it was kind of a bleak time up here
on the Hill, and with no thought to my personal safety, I took
a trip to the CPSC and looked at the testing facility. It is
remarkable in that it is very Spartan. There are certainly no--
--
Ms. Northup. We have a new one now.
Mr. Burgess. Oh, you do have a new one?
Ms. Northup. Yes. We just moved 3 weeks ago.
Mr. Burgess. This was an old missile base, as I recall,
when I went out there, and I was struck that the folks there
were working diligently and they were quite inventive and
innovative, and I actually took a great deal of confidence away
from that, but at the same time, I will never forget sitting in
that press conference that the people on the youth motorcycle
thing put together a couple of years ago, a beautiful little
blond-haired boy about 10 years old in full motocross regalia
standing at the microphone and said Mr. Congressman, if you
will let me ride my bike, I promise I won't eat the battery
when I am finished. And you know, that is the level of
absurdity to which we have sunk.
Ms. Northup. This testimony today has been fascinating,
hearing the agency talking about the DNA, the DNA of the CPSC
is really fabulous, but that has all changed because of the
Consumer Product Safety Improvement Act and the rulemaking that
we have done in compliance with levels and requirements that
are unrelated to risk. For years this agency was risk-based, it
worked with the Voluntary Standards Committee, which is very
important because products emerge, they evolve, and these
voluntary standards keep up with these evolutions. Any time we
didn't think they were strong enough, we had the right to
intervene, and we did, as my colleague pointed out.
Mr. Burgess. Let me just briefly, I do need to ask our
friend from the Federal Trade Commission a question on the--
familiar with the ACO--if you read the Federal Register, you
may be aware that there was a health care law signed last year
that has caused some of us some grief, and when this new
accountable care organization reg came through, did you guys
participate in the writing of that regulation?
Mr. Leibowitz. Well, we participated. It is principally
from CMS, as you know, and we participated----
Mr. Burgess. Well, what I know is, when we had the
briefing, they had one guy from CMS and two guys from the
Federal Trade Commission.
Mr. Leibowitz. One from the Federal Trade Commission and
one from the Department of Justice because we wrote it with the
Department of Justice, or maybe two from the Federal Trade
Commission and one from the Department of Justice. So we did
the antitrust component, and their draft guys were taking
comments, we did a workshop. And can I just say one other
thing? And I will turn it back over to you.
We believe that competition is critically important to
health care, not regulation, and so what we are trying to do
with the ACO implementation--you know, ACOs are a brave new
world and very uncertain, but what we are trying to do is make
sure that competition principles remain.
Mr. Burgess. Look, you give the antitrust exemption to
Major League Baseball, the National Football League, but here
is the deal. The 21st century health care model, and this was
started in the previous Administration with Secretary Leavitt,
has been continued with Don Berwick at CMS, and now we have got
an ACO rule that doesn't work in actuality. The rule is--you
put something that was working in practice and rendered in
invaluable in theory, and that is the problem that I see with
what you have done.
Mr. Leibowitz. Well, look, we have certainly--one of the
reasons we put out draft guidance--and again, we have a small
component of it. It is only the competition portion. One of the
reasons why we put out draft guidance and why we are meeting
feverishly with all stakeholders is, we want to make sure that,
you know, to the extent that there is an uptake on ACOs, the
notion, you pick up vertical efficiencies by putting together,
as you know, different doctor practices, lab testing facilities
and a hospital, is not a bad one. We want to make sure that you
don't have one dominant provider so that it soaks up all the
efficiencies, and we also----
Mr. Burgess. What about the Karen Ferguson? I mean, you
give a dominant provider status to insurance companies.
Mr. Stearns. The gentleman's time has expired.
Mr. Leibowitz. We will just point out, we cannot review the
insurance industry. We are exempted from that. But yes, I hear
what you are saying. I don't think we are in disagreement. We
are going to try and make it work better.
Mr. Stearns. The gentlelady, Ms. Christensen, is recognized
for 5 minutes.
Mr. Christensen Thank you, Mr. Chairman, and I want to also
add my thanks to all of the commissioners for being here, and
as I listen to the testimony, it seems that all of the
independent agencies that you represent have been undergoing
some regulatory reform and even though you are not under the
Executive order, that you have really gone beyond what you had
been doing to keep in spirit with the Executive order, and I
commend you for that.
I sat on the Small Business Committee for about 10 years,
and each of you is governed by the Regulatory Flexibility Act,
and so you are required to look at how the impact of your
regulations on small business reviewed. I was going to ask
Commissioner Northup, my classmate----
Ms. Northup. Yes.
Mr. Christensen [continuing]. About the effectiveness, but
you have already kind of said that it is not effective. Is it
the experience of the other commissioners that the Regulatory
Flexibility Act does not do enough to protect small businesses?
Mr. Adler. I don't agree with my colleague about that. I
think that especially with respect to the impact of the
Regulatory Flexibility Act on our agency, I think it has been a
very good provision. I was just reviewing section 604 of the
Regulatory Flexibility Act, and to me, it is a smaller but
focused cost-benefit analysis and it is something I think the
commission has done very conscientiously.
Mr. Christensen Did I misinterpret what you said?
Ms. Northup. No. It is often just a paragraph in a long
rule, and even if we find that it will impact small businesses,
it is not even--it doesn't require us to decide it is still
worth going forward to make any changes to our rules. It has no
impact on the rules that I--one or two maybe but very few that
I can remember ever.
Mr. Christensen Does anyone else have that experience that
RFA----
Mr. McDowell. I find it to be toothless, and if you look at
it from an appellate perspective, the appellate courts agree,
there is really nothing the courts can do to make agencies
change their rules based on the RFA.
Mr. Christensen That would be very disappointing, but it
seems as though most agencies have had--most of the commissions
have had good experience with the act.
Mr. Kovacic. I think, Madam, that it has some limited
effect in focusing our attention on things that are important
but I think there are a number of other things we have done
that have tended to be more significant and have come from
within, and we would be glad to share those with you at your
pleasure.
Mr. Christensen Thank you. And what I have been hearing is
that most of the commissions have gone beyond what really has
been required, and I appreciate that.
Commissioner McDowell, on June 20th, you wrote a letter to
Chairman Genachowski offering several recommendations on how
the FCC should be reformed. You suggested reforming it to be
more transparent, efficient, accountable and fiscally
responsible, and from prior testimony to date, we have learned
that Chairman Genachowski has proactively implemented some of
those changes to facilitate your suggested reforms. Through
these reforms, the FCC has improved external communications by
creating a more user-friendly Web site which includes providing
live streams of all public workshops and meetings. Do you think
this new Web site has enhanced public participation and access
to FCC activities?
Mr. McDowell. Well, the FCC's Web site right now is a bit
controversial. It depends on which segment of the audience that
uses it you ask.
Mr. Christensen You don't think that it has enhanced public
participation?
Mr. McDowell. Certainly in general, I think, Chairman
Genachowski has taken some discreet steps on an ad hoc basis
but I would like to see more comprehensive reform done.
Mr. Christensen But the FCC has also made effort to collect
broader input from the public and industry, which included
having more than 85 staff-led public forums and reinvigorating
external advisory committees. Do you think these efforts have
allowed for an increase in public participation?
Mr. McDowell. Absolutely.
Mr. Christensen In fact, you have had several workshops on
the national broadband plan to discuss potential reforms to the
Universal Service Fund. Do you think that those workshops have
been helpful?
Mr. McDowell. They have, certainly.
Mr. Christensen OK. And although the FCC is not subject to
President Obama's Executive order on regulatory reform, the FCC
initiated their own look-back process which also is included in
the statute. According to a letter Chairman Genachowski sent to
Chairman Upton and Chairman Walden, this effort has resulted in
the agency's eliminating and/or revising 49 regulations and
identifying more than 20 sets of unnecessary data collection
requirements for possible elimination. Is that correct?
Mr. McDowell. I don't know. I haven't seen the list of the
49 or the 20, so I am not quite sure.
Mr. Christensen Does it sound reasonable?
Mr. McDowell. And I don't know if some are mainly data
collection. I think the proceeding, as I understand, under
section 11 that was initiated really was focused primarily on
data collection, although it has general language in there, but
the thrust of it was data collection and not just a
comprehensive review of all of our rules that apply to all the
entities regulated by the commissioner.
Mr. Christensen Well, our information is that 49
regulations and identifying maybe 20 sets of unnecessary data.
So it seems to me that the FCC's current leadership has been
really successful in implementing new ideas on how to improve
current regulations, and I look forward to hearing more from
the commission and their continued focus on ensuring public
participation and open exchange of ideas that improve the work
of our government.
My time is up. I yield back.
Mr. Stearns. I thank the gentlelady, and the gentleman from
California, Mr. Bilbray, is recognized for 5 minutes.
Mr. Bilbray. Thank you.
Mr. Adler, you were bringing up this issue of trying to
make sure that we have the safest cribs in the world, as we
say. What percentage of the cribs that are on the market in the
United States have elevated platforms or are made of a hard
material--wood, plastic, steel?
Mr. Adler. I don't know the answer to that. I would be
delighted to----
Mr. Bilbray. Would it be fair to say the overwhelming
majority of them have elevated platforms or are made of hard
material?
Mr. Adler. I think that makes sense.
Mr. Bilbray. And wouldn't you agree that any elevated
platform or material when you have a child, you have a
potential for injury because of dropping off of an elevated
platform or injury because some activity that may end up
meaning impact with the hard material, so there is a risk in
both of those design features?
Mr. Adler. That is an excellent point, and the commission
standard is addressed to what we consider the unreasonable
risks, but I don't think we could make that a fatality-free
zone under all circumstances.
Mr. Bilbray. OK, and that is the point, is what is a
reasonable level. You know, you could sit there and say that
because we do not require all cribs to be on the ground, we do
not require all cribs to be made of inflated material or soft
material, it is not the safest it could be. It is
reasonableness, and I think that is a determining factor.
Wouldn't you agree?
Mr. Adler. I would absolutely agree with that, but what we
have done is make the cribs that are produced in the United
States the safest within the types of fatalities that we think
that----
Mr. Bilbray. I just think that--and I appreciate that,
making sure that, you know, we make these claims and these
statements and elected officials or as public officials but it
is reasonableness that really is the determining fact, and that
is where the judgment issue has to come down.
Let us talk reasonableness, Mr. McDowell. You recently
discovered that the so-called Fairness Doctrine was still on
your books, almost a quarter of a century after it was
abandoned. Do you think it is reasonable that a federal agency
has basically misinformation, if not, some people may say the
lingering lie of the Fairness Doctrine on your books? Do you
think it is reasonable that almost a quarter of a century after
a regulation isn't there, it still is being stated as being
part of the process?
Mr. McDowell. I don't think it is reasonable that the
language remains on the books, if that is your question.
Mr. Bilbray. And what are we doing to make sure that this
mistake isn't throughout your regulatory guidelines so the
public and the business community can read something and find
out is it the gospel or isn't it?
Mr. McDowell. Exactly. If the commission has opted not to
enforce the rule, the rule should disappear from the books.
Mr. Bilbray. OK. Let us get down to the fact that the FCC
has taken nearly 12 months--and I will say this. I spent
decades in regulatory agencies so I understand how tough it is
when you are in a regulatory agency of trying to take the
theory of legislation and make it a practical application. But
when you have got decisionmaking that is delayed for over 12
months, you know, and there is nothing on the books that
requires you to make a decision in what is a reasonable time
period, don't you think--is there anything to make you make a
decision in less than 12 months?
Mr. McDowell. Certainly, statutory language helps. There is
nothing like the force and effect of law. But even that
sometimes is not observed. For instance, the video competition
report we are required to produce every year, the last time I
think I voted on one was in 2007.
Mr. Bilbray. OK. So in other words, we need to basically
tighten it up but also have some enforcement on that
tightening. I will just tell you, somebody that built the light
rail system in San Diego, we abandoned any federal funding just
so we could avoid the regulatory oversight, and we built that
system under budget and on time because we didn't take federal
funding, and I think that is one of the things we don't talk
enough about. People want transit, they want this, they want
that. Sometimes the most important component to get the public
the services that you claim you care about is getting the
federal regulatory agencies out of the way so you can get the
job done, and that is why I would just like to state down the
line.
Mr. Moeller, you were talking about hydroelectric. When you
are reviewing the hydroelectric and the relicensing, are you
required to consider the no-project option and the
environmental damage done if you don't approve it? Things like
climate change, emissions, pollution, and that kind of thing,
are you required to basically take a look at this and
understand that if you do not approve it, it will have an
adverse impact because the alternative-energy capabilities or
generation is going to cause pollution where the hydroelectric
is not.
Mr. Moeller. Well, typically, I think of the no-action
alternative as truly no action as opposed to perhaps modifying
or taking out a dam and then the consequence being that it
would be a result of more generation that would be less
environmentally friendly than hydro. But typically I think it
essentially doesn't get to that. It is a long settlement
process where----
Mr. Bilbray. But you don't have a specific requirement that
you have to consider offsets for shutting down a plant?
Mr. Moeller. Not that I am aware of.
Mr. Bilbray. Well, that is one of those things that I think
we need to talk about, Mr. Chairman, more, is that, you know,
when you don't improve a road improvement, you should have to
offset the pollution caused by the congestion rather than
always we look at all of the emissions that happen for
construction. But the no-project option and the environmental
and economic and social impact of that need to be considered
but the environmental impact is one that if individual a real
hypocrisy that you want to have offsets for the emissions
caused for building the project but nobody who is stopping the
project has to account for the environmental pollution by not
finishing the project, and I yield back, Mr. Chairman.
Mr. Stearns. I thank the gentleman, and the gentleman from
Louisiana, Mr. Scalise, is recognized for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
holding this hearing. I appreciate all of the commissioners who
have come here to participate and talk about the costs of
regulations, especially how it impacts people, and when you
look at lot of the intent and what is usually said about
regulations that come out, they all sound really good and,
usually the name of a bill, you can tell how bad it is by how
good the name sounds. It is usually an inverse proportion.
And so as I talk to people, our economy is still very
sluggish right now, and of course, in many cases, when you talk
to small business owners, when you talk to American job
creators, as many of us do, the first thing they will tell you
that is the biggest impediment to job creation in America are
federal regulations. You know, all of the other things that get
in their way, they can manage. It seems like the federal
regulations have become the biggest burden to creating jobs in
America today, and so when you look at some of these
regulations, you definitely want to look and see what is the
real impact, are they even achieving some of the results that
they were intended to, and in many cases you find out they are
not, and then you look at some of these agencies, and we have
had a number of hearings and I appreciate the chairman having
the hearings that we have had going through various agencies,
even looking at the President's Executive order, and we have
seen and it has been pointed out even by some of the people
implementing it the shortcomings of the President's Executive
order, how it doesn't really get at the cost of regulation, and
I read, there was a report that was recently done by the Small
Business Administration that is titled the Impact of Regulatory
Costs on Small Firms, and this really looked at how it impacts
our small businesses, the people that actually create the bulks
of the jobs in our economy and, you know, I guess it is not
surprising for those of us that have been in some of these
hearings but they talk about the cost of federal regulations to
small businesses is over $1.7 trillion, and how does that break
down? I broke it down per family. Over $15,000 per family is
the cost to small businesses of these regulations. And so when
you look at the regulations and when you look at the impact and
how it is not only affecting jobs, it is a major impacter that
is costing us jobs but it also costs every American family over
$15,000. You say where is the bang for the buck.
And I want to ask Commissioner Northup, you touched on this
in your opening testimony. You talked about some of the things
you have seen, and you have seen businesses go under, actually
go bankrupt because of some of these regulations, and in many
cases had actually no health impact, you know, bills that were
sold and regulations that were sold as helping the health of
children had actually nothing to do with health and it just had
to do with some kind of radical policy somebody had that didn't
help anybody's health, it just made a company go bankrupt. Can
you expand on some of the things you have seen in terms of how
these regulations not only impact the businesses that you have
talked about but also how in many cases there is not even a
relationship between health and----
Ms. Northup. Well, I will give you two quickly. One of them
is the--in the bill that you passed, you had exclusions with
the lead limit for electrical products, and we have a whole
cutout for that. You had exclusion for inaccessible parts, and
we have addressed that. You also had an exclusion for lead
where not any lead could be absorbed. I assume you meant for
some things to be included in that, perhaps screws, nuts and
bolts that are holding a crib together, maybe the handlebars of
a bike because lead in the handlebars, if you suck on it,
unlike paint, it is trapped in that metal. You can't suck out
the lead. But our agency, even though I proposed a de minimis
standard where if you rub the handlebars and less than a
molecule could be gotten off that, it couldn't possibly change
your blood lead content, that absorbability exclusion that you
wrote in the bill, I intended you meant for it to apply to
something. And the rest of the commissioners decided no, and so
basically they have found that even though you wrote in the
non-absorbability exclusion, that it applies to nothing, that
there is not one material that it applies to.
If we had nuts, screws, bolts, things that can't be
swallowed, things that have small amounts in them that are in
lead, trapped in--excuse me--trapped in steel, that those
things would have been excluded from this law. It would have
made a huge difference.
Mr. Scalise. Let me ask, and I am running out of time. I
want to ask just by a show of hands how many people have
actually read this report that came out just a few months ago
on the impact to small businesses of the regulations? Can I get
a show of hands? Not one person on the panel read this. I think
it should be required reading for all regulators. But if I can
ask unanimous consent to submit this into the record?
A final question, if I can ask----
Mr. Stearns. Before we put it in the record, the minority
would like to look at it.
Mr. Scalise. Sure. I will be happy to hand that over. It is
a report that was published in September of 2010. It cites a
number of sources but goes into very good detail on sector of
breakdowns, also differential between large businesses and
small, how they differentially fall higher even on our small
businesses.
Commissioner McDowell, you gave an assessment on the things
that the FCC did to take into consideration. It was looking at
both net neutrality and data roaming rules. Did they look into
and do proper market analysis, in your opinion, to look at the
impact how that would be on our job creators?
Mr. McDowell. There was no proper market analysis, no
finding of market power. In fact, the order, the net neutrality
order says as much, that there was no market analysis
conducted.
Mr. Scalise. See, that is the problem with a lot of these
regulations that come down. They have dramatic impacts on job
creators and they cost us jobs, run jobs to other countries,
and yet it just seems like the regulators kind of go into their
own shell and are oblivious to the actual impact on our
economy, so hopefully we can shift that course, and I
appreciate the chairman for having this hearing and more like
it to get our economy back on track.
Thanks. I yield back.
Mr. Stearns. And the minority has looked at this, so by
unanimous consent, this will be made part of the record, so I
thank you for bringing this.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. The gentlelady from Tennessee, Ms. Blackburn,
is recognized for 5 minutes.
Mrs. Blackburn. Thank you all for your patience in being
here.
Commissioner McDowell, I want to stay with you. On that net
neutrality order, no market analysis done, no look-ahead at
what the cost-benefit analysis was going to be. If there had
been that analysis done, do you believe the commission would
have gone ahead and issued that order?
Mr. McDowell. I think so. I think that whole proceeding was
outcome based, outcome driven.
Mrs. Blackburn. Chairman Leibowitz, I want to come to you.
I am concerned about the FTC's food guidelines, food marketing
guidelines. I have two grandchildren. They are age 3 and age 2.
And so things of this nature really I pay a lot of attention
to. You know, you think about the unintended consequences that
are going to come forward with this, and I think that you may
see is that an unintended consequence could be seen as
hampering free speech, harming our economy and not having a
significant reduction in childhood obesity, and one of the
things that I have found recently is that the food currently
sold through the WIC program, which is designed by USDA experts
to provide a healthy diet for young children, could no longer
be marketed under this proposal. So you claim these proposed
food marketing restrictions are voluntary but aren't these
government standards going to form the basis for NGO attacks?
And then also talk about what you think--I think that you could
see there should be consider about shareholder actions, so if
you will address that quickly, please?
Mr. Leibowitz. Thank you, Congresswoman. Well, first, as
you know, this was an obligated requirement. We are not the
only agency. We do the marketing side. We don't do the science
side. That is the agriculture department, the CDC and the FDA.
But it was a Sam Brownback, Tom Harkin obligation in our
appropriations bill. We are obligated to do what Congress tells
us to do. It is voluntary. So in that sense, there is no
enforcement mechanism. We are taking comments from
stakeholders. And let me just say, and you recognize, as we all
do, there is an obesity crisis and there are twice as many
obese children as there were a generation ago, but speaking
only for myself, you know, I try to take a sort of pragmatic
approach here. If my kids eat Special K with yogurt in the
morning, which actually wouldn't quite meet the nutrition
guidelines, I am pretty happy, because you know what? I think
that is better than what else they might eat or better than not
eating anything at all. So my understanding is that within the
next week--first of all, we will be getting comments and we
will be reviewing those comments very seriously from
stakeholders, but within the next week, my understanding is
that the food marketing companies are going to come up with
some proposed standardized or uniform guidelines. If they come
up with guidelines that are good, and I think they will, then
we ought to take that into account going forward member of the
working group, and we will.
Mrs. Blackburn. Let me shift gears with you. I want to go
to the privacy issues that are out there, and we know that the
Internet online advertising is really an economic engine in
this country and the industry is beginning to voluntarily enter
into some self-regulatory structures when it comes to privacy.
Do you believe the FTC should impose a top-down technology
mandate on the Internet governing the privacy issue?
Mr. Leibowitz. It is the last thing we want to do, no.
Mrs. Blackburn. OK. Thank you for that. I appreciate that.
I think that just as I said with Chairman McDowell, if you were
to look at the net neutrality issue, if there had been a robust
review of cost-benefit analysis, I think that it would have
been determined that the net neutrality order, especially
paragraph 84, was going to be detrimental to our economy, and I
think that a heavy hand on the privacy issue would likewise.
I have got less than a minute. I want to ask each of you,
just a show of hands, how many of you have read the Executive
order that we are discussing and have been through the process
of reviewing that? OK. So all of you have. All right. How many
of you disagree with any part of that order? Is there any part
of that order that you have disagreement with? Yes, sir, go
ahead.
Mr. Kovacic. I don't think--I think a number of the
provisions aren't very well specified. I think it could have
benefited from a much fuller discussion about how it intended
specific tradeoffs that are implicit in the order were to be
made. There has been subsequent guidance, subsequent
commentary. It is a nice start.
Mrs. Blackburn. OK. Anyone else? Commissioner?
Mr. McDowell. I would agree. I think it could be broader
and more comprehensive and more aggressive.
Mrs. Blackburn. OK. Any other addition to that? Thank you
all for your patience. Yield back.
Mr. Stearns. The gentlelady's time is expired. The
gentleman from Virginia, Mr. Griffith, is recognized for 5
minutes.
Mr. Griffith. Thank you, Mr. Chairman.
Commissioner McDowell, it is nice for me to be able to say
that in a formal setting in my new role. When I look at the
FCC's merger review process under Republican and Democrat
Administrations, I see a process that appears to be broken. The
XM and Sirius merger took way too long. The Comcast-NBC merger
took way too long. There is simply too much discretion for the
commission to halt the timeline for the review of the transfer
of control of licenses in an expeditious manner. Is there
something we can to provide applicants with certainty regarding
the timing of the FCC review process?
Mr. McDowell. And Congressman Griffith, it feels good to
say that as well, my first time saying that publicly, so
congratulations. Yes, the FCC has an 180-day shot clock that is
honored more in the breach that in the rule to get mergers
done. I read yesterday also that the Assistant Attorney General
for Antitrust, Christine Varney, is stepping down and there is
a big merger, the AT&T and T-Mobile merger, that needs a fair,
thorough and expeditious review, and I would hope that her
stepping down doesn't delay that. I think we could get that
done by the end of the year in a fair, thorough manner.
But I have been in a dialog with Chairman Genachowski about
making sure that we move as quickly as we can on our merger
review process. I think there are a lot of problems with how
the commission under both Republicans and Democrats have
conducted themselves in terms of taking too long or imposing
conditions that have absolutely nothing to do with the
substance of the merger itself. So Congress could look at that.
There could be a statutory provision certainly, but the best
thing to do would be for the FCC to honor its own 180-day shot
clock.
Mr. Leibowitz. So Congressman, may I just add something?
Mr. Griffith. Yes, please.
Mr. Leibowitz. We do from time to time work with the FCC on
merger reviews, and I think from our perspective, you don't
deserve a particular outcome but you do deserve sort of a
speedy resolution. Sometimes it takes a little longer with
documents, but that is what you deserve, so I think that is a
reasonable point.
Mr. McDowell. And I agree.
Mr. Griffith. And I think most of us would agree with that
as well.
Commissioner Northup, do you think Congressman Waxman's
proposed legislation will actually ease any burdens under the
Consumer Product Safety Improvement Act?
Ms. Northup. No, I don't think it goes nearly far enough,
and in fact, he has proposed previously a functional purpose
exemption which I have to say is like picking winners and
losers. If you think a part--first of all, it says it can't be
harmful to children and then it says if it serves a function,
for example, on a bicycle and is necessary, then we can exempt
it. Well, if it doesn't harm a child, why do we have to then
exempt it in part by part? It means that big companies that
have lots of product or big expensive products can afford to
get a functional exemption because it is a very complicated
petition you would have to file with us. They can afford to
file the petition and all the supporting work and everything
and then we can exempt them but for small needs for these same
exact materials that do not harm a child, I don't think that,
you know, they probably would be able to afford either the wait
for us to act on it or the cost to put the petition together.
So that in particular to me is, you know, not a good way to go
about easing this. Making the absorbability a useful exception
would make a huge difference.
Mr. Griffith. Did you want to add onto that?
Mr. Adler. Well, I wanted to disagree.
Mr. Griffith. Somebody else may give you time to do that
but let me--I have got one more thing I want to say and if I
could take back my time because I am running out of time. I did
hear from several of you as I was listening to the testimony
that you all, at least a couple of you, made mention that
perhaps the legislation created more of the problem than the
agency created and that we should be careful when we craft
legislation that that may be costing jobs as well as the
regulations costing jobs that are ultimately awarded, and while
in some cases it may be an agency that is pushing the envelope
and some cases it is just the agency following exactly what
Congress told them to do, and I do appreciate that. I yield
back my time.
Mr. Stearns. The gentleman yields back the balance of his
time. The gentleman from Colorado, Mr. Gardner, is recognized
for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman, and thank you for
your time and testimony today.
Chairman Wellinghoff, in developing energy policies such as
policies to support the integration of renewables, demand
response or the deployment of smart grid technologies, does
FERC evaluate the impact that increased energy price, evaluate
the impact that increased energy prices resulting from the
implementation of these policies will have on jobs?
Mr. Wellinghoff. The policies that we implement aren't
directed to specific technologies but rather directed to the
integration of all technologies into competitive marketplace.
We believe, and I think my colleague, Commissioner Moeller, I
think would agree, we believe that competition is good for
consumers and so to the extent that we can maximize
competition, we can increase the types of resources that are
available in the market, whether they be coal or nuclear or
natural gas or solar, geothermal, hydroelectric or any of these
resources, and also to the extent that we can do things like
incorporate in demand response and energy efficiency which
usually at the lowest cost resources, the whole mix of those
resources in a competitive environment allowed to compete
fairly in that competitive environment will in fact produce the
lowest cost for consumers.
Mr. Gardner. So do you do an analysis that these policies,
the impact they will have on jobs?
Mr. Wellinghoff. We don't a specific impact on----
Mr. Gardner. So you don't do an analysis then?
Mr. Wellinghoff. We don't do a specific analysis.
Mr. Gardner. A specific analysis on jobs? You do not do a
specific analysis on jobs?
Mr. Wellinghoff. We don't, but we do believe that----
Mr. Gardner. So in terms of----
Mr. Wellinghoff. Excuse me, if I could finish. We do
believe----
Mr. Gardner. Actually, reclaiming my time. In terms of the
Executive order, so you do not believe that the Executive
order, which I think you said you believe in the spirit of, you
do not believe that it requires you to look at jobs? I
understand that you are exempted from it but you believe, you
said you want to follow the spirit of it. Do you think you
ought to be concerned about jobs and looking at the job impact?
Mr. Wellinghoff. I think we are always concerned about jobs
to the extent that we can drive down prices in a competitive
atmosphere and allow for the economy to have access to low-cost
power. To the extent that we can provide low-cost competitive
power within the economy, we are going to create jobs and we
are going to maintain jobs.
Mr. Gardner. But you don't do an analysis to know that or
not?
Mr. Wellinghoff. My basic economics, what I know if basic
economics, tells me that if we can lower costs for electricity,
we are going to have the ability to increase jobs.
Mr. Gardner. Would you commit today to start beginning a
jobs analysis when you make decisions?
Mr. Wellinghoff. I certainly have no problem looking at
jobs. I believe, for example----
Mr. Gardner. But shouldn't that be our----
Mr. Wellinghoff [continuing]. Your colleague from
Louisiana, for example, was talking about this issue with
respect to jobs and regarding that, Entergy, which is one of
the utilities in Louisiana, has chosen to join a competitive
market, Myso. An analysis was done that showed by joining that
competitive market, something over $700 million could be saved.
I think there is a lot of money if you can take that money and
save it for Louisiana consumers and others throughout the
region. It wasn't just Louisiana but spread out the region.
That additional money in the pockets of consumers is going to
help them create jobs and invest back in the economy in ways
that more jobs will be created. So I think that is a very valid
example of the types of things that FERC is doing to the
regulations and the competitive structures that we are putting
in place to ensure that in fact we can create more jobs.
Mr. Gardner. Well, and then so what you are telling the
committee then, and I believe what you just said, though, when
it comes to developing energy policies like integration of
renewables, demand response or the deployment or smart grid
technologies, then you are saying today that you will do a jobs
analysis on these decisions?
Mr. Wellinghoff. I am saying that to the extent that it is
possible to do so, we certainly will in fact look at the impact
on jobs.
Mr. Gardner. I think we ought to be looking at the impact
on jobs no matter what we do so that we have an idea of----
Mr. Wellinghoff. I absolutely agree.
Mr. Gardner. And so Commissioner Moeller, do you care to
comment on this?
Mr. Moeller. I generally want to associate my remarks with
the chairman because we are believers in competitive wholesale
markets and those ultimately are what benefit consumers the
most and allow more resources. I think we should always be
cognizant of the employment impact we have on rising energy
prices because it can be substantial.
Mr. Gardner. Thank you, Commissioner Moeller.
I see my time is expired and I yield back.
Mr. Stearns. I thank the gentleman for his questions. I
think we are completed with our first round. I think the
ranking member and I have talked that we are going to ask a few
more questions and then wrap up.
I don't think there has ever in my experience been such a
distinguished group of people that could make an impact on
deregulation in America as you folks today so we are here with
a certain humility in asking you what is the best way for us to
move forward. As Mr. Scalise pointed out with that Small
Business Administration report, had every U.S. household paid
an equal share of the federal regulatory burden, each household
would pay $15,586. That was in 2008. And when you compare that
with what we spent for health care costs in 2008, the federal
regulatory burden exceeded by 50 percent the private spending
on health care, which equaled $10,500. So it is within your
power to deregulate and to get rid of burdensome regulations,
which would spur the economy. So we are not talking about
something insignificant.
So I guess the larger question is, we passed in 1980 the
Regulatory Flexibility Act. Obviously that is not applicable
today and it is not working, so the question is for you is sort
of a wrap-up understanding, the President reached out with his
Executive order that did not apply to the independent agencies
in some of your opinions. We think Cass Sunstein's letter did
imply but we don't seem to have you jumping to the forefront to
try to deregulate. Should Congress should either statutes or
legislation provide, one, either more flexibility to you or
should we update the Regulatory Flexibility Act of 1980? So we
are reaching out for you to tell us, one, should we do some of
the things I mentioned, and secondly, would you be willing to
help us in terms of providing us documentation on what we
should do? I will start with Commissioner Adler.
Mr. Adler. Mr. Chairman, the devil is always in the
details. I would be delighted to look at anything you drafted
and to respond to it.
Mr. Stearns. So you think that we should take the
Regulatory Flexibility Act of 1980 and update it in Congress?
Mr. Adler. Actually, I am probably a bigger fan of the
Regulatory Flexibility Act than some folks here. As I read it,
I think it is a fairly useful tool, especially in terms of what
we do when we are trying to regulate and we are looking
particularly at the impact on small business. That is actually
something that both Commissioner Northup and I agree on is that
we do have to worry about the impact on small business.
Mr. Stearns. Commissioner Northup?
Ms. Northup. Yes, but unfortunately, it has no teeth in it.
No matter what the regulatory analysis is, if you decide in our
agency that you should go ahead and regulate, it almost has no
impact on what we do. So unless we are required to justify the
cost with the benefit, adding that to it, I think that would be
an important improvement, but other than that, it is a box we
check and it doesn't have an effect.
Mr. Stearns. Just for your information, I checked the
Consumer Product Safety Improvement Act. Everybody in Congress
voted for it under the Bush Administration except one, and that
was Ron Paul. So you probably would have been like most----
Ms. Northup. I am sure I would have, and, like I said, when
I first read it before my confirmation, I was really very
excited about it.
Mr. Stearns. Commissioner McDowell?
Mr. McDowell. I think statutory action is the best way to
sort of cut through this Gordian knot of regulation and
statutory provisions that have built up over the years and so I
would be happy to work with you on something like that.
Mr. Stearns. Mr. Wellinghoff, Commissioner, Chairman?
Mr. Wellinghoff. Yes, Chairman Stearns. As I indicated to
Congressman Barton, I don't have any specific recommendation
for you. However, certainly anything that the committee decided
to draft, we would be happy to work with you in any way.
Mr. Stearns. Commissioner Moeller?
Mr. Moeller. Mr. Chairman, I generally think a government
of both legislative and regulatory bodies should periodically
review legislation and regulations, so if that is in order, I
would certainly endorse that. And as our chairman said, I had a
specific example about hydropower re-licensing that I would be
happy to provide to you. It would be quite complicated, given
the number of federal laws involved, but any help that we can
provide, we would be happy to do so.
Mr. Stearns. Chairman Leibowitz?
Mr. Leibowitz. I am also happy to work with you, although
as my colleague, Commissioner Kovacic, pointed out, I think
only four rules that we have actually are within reg flex but
we do do, you know, reg reviews and rule reviews. In fact, we
are in the middle of 23 of them now, so I will defer to my
colleague, Mr. Kovacic.
Mr. Kovacic. Mr. Chairman, if I could just underscore a
couple of themes that have come up already today. One, the
enormous value of having committees and the Congress all assess
before the fact the likely impact in regulation writing of
legislation adopted. Second, the custom you are developing in
this hearing of making a regular question for all of us how
much are you spending in each budget cycle to look at
evaluation and the assessment of effects, not just to measure
accomplishment by activity itself but looking at actual impacts
and ask us how much are you setting aside in each budget cycle
to do this. And last, we do an enormous amount of work as
advocates for competition and better consumer protection
techniques before the government agencies, before our State
governments, and this perhaps provides specific suggestions
that we would be happy to share with you about how adjustments
in national and State legislation could improve productivity
and improve economic performance.
Mr. Stearns. I am going to yield to the ranking member, but
I think each of you have indicated you will help us. You are
saying something should be done. So I am going to presuppose
that all of you will submit to us some specifics that we could
incorporate and still working as the Energy and Commerce
Committee towards this.
The gentlelady from Colorado.
Ms. DeGette. Thank you, Mr. Chairman, and I agree. I had
asked them for that information earlier, and I really look
forward to working with all of you because as we all said--no,
actually it was one of you who said the devil is in the details
of these regulations. You can say we are all for regulatory
reform. We also probably need to streamline some of the
statutes because a lot of the regulations flow from the
statutes and so I think we need to look at all of those.
I have been sitting up here thinking about this lead
standard with the CPSIA. I was on the conference committee with
Chairman Barton and others, and Mr. Chairman, you are exactly
right. There was only one no vote on that bill in the House,
and Chairman Barton and Ranking Member Waxman and a bunch of
us, and even the other body sat around for a long time trying
to figure out what to do with this lead standard. I remember it
so clearly, and when we drafted the new lead standards, what we
decided was, was that determining total lead content was
preferable to risk assessment because what happened with risk
assessment is, it was dependent on a product-by-product
determination which you couldn't do because of the large number
of children's products in the marketplace, and so in addition,
although with most chemicals a traditional risk-based model can
work, if you have persistent bioaccumulative toxins like lead,
science has demonstrated that traditional models are
inappropriate and exposures inevitable, and we spent a lot of
time in that conference committee talking about what we do
about bikes and ATVs and things like that. So it is not like
Congress never talked about these things.
I think what we need to do now that we have passed this--
and it wasn't one of these provisions slipped in in the middle
of the night either. We really, really hammered this out on a
bipartisan, bicameral basis. So now I think what we need to do,
given the experience that the CPSC has had in trying to draft
the regulations, is sit down and figure out what about that new
lead standard might work, what might not work, and this is what
led to this effort by then-Chairman Waxman last year to develop
this legislation everybody has been talking about. The staff
undertook a consultative shareholder process with small
business and others to try to figure out what we do about the
ATVs, the bicycles, the tee shirts with the blue ink and things
like that. He did release a consensus discussion draft of a
document to try to figure out how to address these concerns
because we need to do it but unfortunately your side of the
aisle, Mr. Chairman, rejected that.
And so we can sit down and talk about it. We did do that.
We did that when the Republicans were in the majority in the
Congress and when we had President Bush in the White House, but
we can't devolve to the stage where we say oK, we are the
majority, we are just going to do it our way and to heck with
you, and vice versa. We really need to work together on how to
make this work for small businesses and most importantly for
consumers. So as someone who has fortunately or unfortunately
been in those trenches, sometimes these regulations actually
came from scientific basis and it is going to take some really
hard work to fix it. I think every witness here would agree
with that on some of these harder regulations that might be
more burdensome.
And just one last thing, Mr. Chairman. Ms. Christensen was
asking a question about Chairman Genachowski's efforts to
eliminate outdated and unnecessary regulations at the FCC, and
he had sent a letter to the subcommittee, to you and to me,
outlining the efforts which noted that they eliminated 50
outdated regulations and identified 25 sets of data collection
that are no longer necessary. So Mr. Chairman, I would like to
ask unanimous consent to put that letter into the record.
Mr. Stearns. Will the gentlelady let us take a few moments
to review it?
Ms. DeGette. Yes.
Mr. Stearns. What is the date of this? I don't see the date
on this.
Ms. DeGette. Today.
Mr. Stearns. Oh, it is today's date? OK. I would say at
this point there is some concern that is really perhaps some of
it is applicable but there is others that is concern on this
committee we talked about earlier, the fact that Chairman
Genachowski was invited as chairman to come up. He said he
could not come, and so it is customary if he doesn't come, we
do not respectfully take his statement and make it part of the
record since he didn't show, and we are a little concerned that
this might in fact be part and parcel of his opening statement.
So I think at this----
Ms. DeGette. Mr. Chairman, I would just point out, it is
not an opening statement, it is a letter to us, and we
generally----
Mr. Stearns. I think the staff is interpreting it as an
opening statement and so I am just saying at this point we are
not able to rule in favor of that and so I think we are just
going to hold off and not put it part of the record.
At any rate, I will close by saying that civilizations rise
and fall because of burdensome regulation. It is in your hands,
you people, to do as much as you can to make the small
businessperson succeed so that we can have innovation in this
country.
I thank you for your time, and the subcommittee is
adjourned.
[Whereupon, at 1:07 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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