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



 
 OFFICE OF INFORMATION AND REGULATORY AFFAIRS: FEDERAL REGULATIONS AND 

            REGULATORY REFORM UNDER THE OBAMA ADMINISTRATION

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


                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON COURTS, COMMERCIAL

                         AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 21, 2012

                               __________

                           Serial No. 112-102

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania             JARED POLIS, Colorado
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
MARK AMODEI, Nevada

           Richard Hertling, Staff Director and Chief Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel
                                 ------                                

       Subcommittee on Courts, Commercial and Administrative Law

                 HOWARD COBLE, North Carolina, Chairman

               TREY GOWDY, South Carolina, Vice-Chairman

ELTON GALLEGLY, California           STEVE COHEN, Tennessee
TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
DENNIS ROSS, Florida                   Georgia
BEN QUAYLE, Arizona                  MELVIN L. WATT, North Carolina
                                     JARED POLIS, Colorado

                      Daniel Flores, Chief Counsel

                      James Park, Minority Counsel



                            C O N T E N T S

                              ----------                              

                             MARCH 21, 2012

                                                                   Page

                           OPENING STATEMENTS

The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Courts, 
  Commercial and Administrative Law..............................     1
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     3
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Ranking Member, Subcommittee on Courts, 
  Commercial and Administrative Law..............................     8
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Chairman, Committee on the Judiciary.......    10

                               WITNESSES

The Honorable Cass R. Sunstein, Administrator, Office of 
  Information and Regulatory Affairs
  Oral Testimony.................................................    11
  Prepared Statement.............................................    14
John D. Graham, Dean, Indiana University School of Public and 
  Environmental Affairs
  Oral Testimony.................................................    27
  Prepared Statement.............................................    28
Sally Katzen, Visiting Professor of Law, New York University 
  School of Law
  Oral Testimony.................................................    36
  Prepared Statement.............................................    38
Richard A. Williams, Director of Policy Research, The Mercatus 
  Center, George Mason University
  Oral Testimony.................................................    44
  Prepared Statement.............................................    47

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................     4

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable Steve Cohen, a Representative 
  in Congress from the State of Tennessee, and Ranking Member, 
  Subcommittee on Courts, Commercial and Administrative Law......   139
Response to Post-Hearing Questions from the Honorable Cass R. 
  Sunstein, Administrator, Office of Information and Regulatory 
  Affairs........................................................   140
Response to Post-Hearing Questions from John D. Graham, Dean, 
  Indiana University School of Public and Environmental Affairs..   142
Response to Post-Hearing Questions from Sally Katzen, Visiting 
  Professor of Law, New York University School of Law............   144
Response to Post-Hearing Questions from Richard A. Williams, 
  Director of Policy Research, The Mercatus Center, George Mason 
  University.....................................................   145
Material submitted by the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Chairman, Subcommittee on Courts, Commercial and 
  Administrative Law.............................................   149


 OFFICE OF INFORMATION AND REGULATORY AFFAIRS: FEDERAL REGULATIONS AND 

            REGULATORY REFORM UNDER THE OBAMA ADMINISTRATION

                              ----------                              


                       WEDNESDAY, MARCH 21, 2012

              House of Representatives,    
                    Subcommittee on Courts,
                 Commercial and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 1:32 p.m., in 
room 2141, Rayburn Office Building, the Honorable Howard Coble 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Coble, Smith, Gowdy, Franks, Ross, 
Cohen, and Conyers.
    Staff present: (Majority) Daniel Flores, Subcommittee Chief 
Counsel; Johnny Mautz, Counsel; Allison Rose, Professional 
Staff Member; Rachel Dresen, Professional Staff Member; Bobby 
Cornett, Professional Staff Member; Omar Raschid, Professional 
Staff Member; Ashley Lewis, Clerk; (Minority) James Park, 
Subcommittee Chief Counsel; Susan Jensen-Lachmann, Counsel; and 
Rosalind Jackson, Professional Staff Member.
    Mr. Coble. This Subcommittee will come to order.
    I am told that there will be a vote on or about 2 o'clock, 
and that will probably keep us on the floor about 30 to 45 
minutes. So we will stand in recess during that time.
    And I am furthermore told that a couple of our witnesses 
have airplane reservations. So we will try to accommodate that 
in due time.
    The Judiciary Committee has approved a number of regulatory 
proposals--the Regulatory Flexibility Improvement Act, the 
Regulatory Accountability Act, and the Regulations in Need of 
Scrutiny Act, REINS--all of which have been approved by the 
House. Improving our regulatory system has been a top priority 
for the Subcommittee and the full Committee in the 112th 
Congress.
    Now, as many of you likely know, there are a number of 
people in Congress who would reject every proposed regulation 
that surfaced regardless of its merit. They don't like 
regulations. Conversely, there is a group that would embrace 
every prospective regulation that surfaced, whether it had 
merit or not. They simply do like regulations. I believe those 
two groups, however, do not speak for the majority of the 
Congress. I think there is some balance that must, indeed, be 
struck.
    Some regulations are necessary. They protect our health and 
safety. They ensure that future generations will inherit a land 
and society that we hope is as bountiful as the one that we 
have inherited. But in order for our regulations to be 
successful, they must be effective and they must be efficient, 
and oftentimes effectiveness and efficiency is subject to 
personal interpretation. I think that goes without saying.
    I am deeply concerned, however, about our regulatory 
process and perhaps our regulators have lost touch with the 
American people. There seems to be a lack of accountability, 
lack of oversight, too much influence by special interests, and 
some poor judgment. Time and again we read reports about unwise 
regulations. Typically they create unnecessary red tape, have 
futile or duplicative requirements, or ignore lower cost 
alternatives.
    For instance, the EPA has proposed rules that would be an 
economic catastrophe for my district and perhaps other 
districts: the Boiler MACT rule, the Utility MACT rule, the 
Cement MACT rule, and greenhouse gas rules. Businesses in my 
district or representatives thereof have told me and the EPA 
that they would simply cease operations if some of these rules 
are implemented as proposed. Other larger businesses warned 
that they will likely move operations to another country. This 
is not a scare tactic. It is a reality. And my fear is that 
these plans may already be in the works due to the cost of 
energy which is also being driven by regulatory costs.
    Rules such as these are being prepared by the Obama 
administration at an alarming rate. In President Obama's first 
3 years in office, 78 more major rules were issued than were 
issued during the first 3 years of President Bush's 
administration. It is also important to note that the attacks 
on 9/11 occurred during this time and resulted in a dramatic 
increase in homeland security-related regulations.
    The Heritage Foundation estimates that the Obama 
administration is responsible for $426 billion in new yearly 
regulatory costs. This estimate does not account for all the 
non-major rules.
    In late August, the Obama administration notified the 
Congress that it has several multi-billion rules in development 
and an additional 3,118 rules in the pipeline. 167 of these 
rules are expected to have a major impact on the economy, this 
is in addition to the 1,010 regs that have already been 
completed.
    Perhaps folks I may be old-fashioned, or perhaps my 
information may be inaccurate. But it appears that the 
Administration has become obsessed with regulations. There are 
countless polls and surveys that illustrate general dismay 
about our regulatory system. Businesses, large and small, 
routinely say the greatest economic challenge in America is our 
regulatory system. It is unpredictable and oftentimes 
inefficient.
    Despite attempts by the Administration to implement 
policies through executive order and memoranda, our Federal 
regulators continue to impose and implement rules that 
oftentimes ignore the economic effect thereof. Many of these 
rules probably should not have been proposed, and while there 
may be no recourse to hold the individuals who created the bad 
regulations accountable, the Administration can certainly 
control what rules are implemented. The bureaucracy is enormous 
and regulatory independence is a force to be reckoned with, 
even within the Administration.
    I appreciate the effort of Administrator Sunstein to join 
us today, as well as our other witnesses, and I hope at the 
conclusion of the hearing, we will have a better grasp on how 
we can help the Office of Information and Regulatory Affairs 
prevent bad regulations from being proposed and implemented.
    I am now pleased to recognize the distinguished gentleman 
from Michigan, the former full Committee Chairman, Mr. Conyers, 
for an opening statement.
    Mr. Conyers. Thank you, Chairman Coble.
    I am going to be brief because I wanted to get the benefit 
of our witness, Professor Sunstein's remarks before a vote 
interrupts us.
    But in summary, we marked up two bills yesterday: 
Regulatory Freeze for Jobs Act and the Sunshine for Regulatory 
Decrees and Settlement Act. Actually that was premature. We 
should have had this hearing today and then after today, we 
could have gone on to the bills after we have heard from you. 
We have done legislative work and now we are going to hear from 
not only our distinguished first witness, but other witnesses 
that are very important as well.
    Now, we were able to get the title of the bill changed. I 
thank Chairman Coble for that.
    What we are here today doing is trying to examine, among 
other things, why the Judiciary Committee has had more than 12 
hearings on the subject of regulations. It has become an 
obsessive mania that I think we need to examine as we are 
moving through the titles.
    I think the Administration has demonstrated a competent 
ability to balance the Government's obligation to protect the 
health, welfare, and safety of Americans. I do not know of 
anybody in the Congress that likes regulations and wants more 
of them as a matter of their philosophy.
    And so the only other thing I might want to add before our 
witness begins is that the Office of Management and Budget has 
concluded that the net benefits of regulations issued during 
the third fiscal year of the current Administration exceeded 
$91 billion, including not only monetary savings but the value 
of the lives saved and the injuries prevented. This is far more 
than any other Administration.
    And so it is important that we realize that some of the 
studies--and I can't help but mention the Crain and Crain study 
because it has been the subject of criticism by numerous 
sources, including the Congressional Research Service, the 
Center for Progressive Reform, the Economic Policy Institute, 
among others.
    The Heritage Foundation has a regulations report, released 
only last week, and it was clear that the data and methodology 
were subject neither to peer review or public comment. Please. 
Some of the evidence cited is very important.
    And the last thing I will ask to put in the record is a 
communication released by Professor Sunstein only yesterday 
that just came to our attention, and with the consent of the 
Chairman, I will include that in the record with the rest of my 
statement.
    Mr. Coble. Without objection.
    [The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative 
 in Congress from the State of Michigan, and Ranking Member, Committee 
                            on the Judiciary
    As some of you may know, the House Judiciary Committee yesterday 
marked up two bills intended respectively to restrain the rulemaking 
process by the imposition of an indefinite moratorium and to impose a 
series of burdensome requirements on agency consent decrees and 
settlement agreements.
    Indeed, the markup of H.R. 4078, the ``Regulatory Freeze for Jobs 
Act of 2012,'' and H.R. 3862, the ``Sunshine for Regulatory Decrees and 
Settlements Act of 2012,'' was premature.
    At least we should have waited to hear what the Administration has 
been doing to address concerns about redundant or costly regulations 
before resorting to drastic statutory measures.
    These bills are part of a series of anti-regulatory measures 
considered by the Committee during this Congress.
    Indeed, today's hearing is the 12th regulatory hearing this 
Subcommittee has held on the regulatory and administrative law process.
    I would, however, like to thank Subcommittee Chairman Coble for 
revising the title of today's hearing.
    While the former title appeared to convey a predisposition against 
the Obama Administration's regulatory accomplishments, the present 
title better reflects what this hearing should be about, namely, to get 
the facts about the following matters.
    To begin with, my colleagues and I want to know what the 
Administration has been doing to make the regulatory process better. I 
am sure Mr. Sunstein will be able to enlighten us about this matter.
    I believe all of us on this Subcommittee can agree that good 
regulations are necessary and that unnecessary regulations are 
burdensome to all.
    The Obama Administration has demonstrated a remarkable ability to 
balance the Government's obligation to protect the health, welfare, and 
safety of Americans with the need to foster economic growth. This 
accomplishment is all the more remarkable in light of the fact that it 
inherited the most devastating economic crisis since the Great 
Depression.
    Just last week, the Office of Budget and Management, or OMB, issued 
a draft Report to Congress on the Benefits and Costs of Federal 
Regulations that reflects the numerous steps the Administration has 
undertaken to reduce unjustified regulatory costs.
    For example, this Report finds that the anticipated annual benefits 
of major federal regulations range between $141 billion and $700 
billion, which substantially dwarfs the anticipated costs that range 
between $43.3 billion and $67.3 billion.
    The OMB report also concluded that the net benefits of regulations 
issued through the third fiscal year of the current Administration 
exceed $91 billion. This includes not only monetary savings, but 
reflects lives saved and injuries prevented.
    And, this amount is 25 times more than the net benefits of 
regulations for the same period for the prior Administration.
    These are indeed laudable accomplishments, but, of course, more 
needs to be done, which leads me to my second thought.
    How much should we trust the evidence used in debates about the 
proper way to regulate?
    We have heard over the course of these prior 11 hearings from our 
friends on the other side of the aisle that the Nation's regulatory 
system is severely broken.
    At nearly every hearing, we have heard serious complaints about the 
alleged costs of regulations and that they exceed $1.75 trillion, a 
number that comes from the Crain and Crain study.
    Of course, I have repeatedly pointed out that the Crain study has 
been debunked by numerous sources, including the Congressional Research 
Service, the Center for Progressive Reform, and the Economic Policy 
Institute.
    Even the authors of the study told CRS that it was never meant to 
be used in regulatory debates, as it did not consider any benefits of 
regulation.
    We have heard that regulations kill jobs and result in crippling 
uncertainty.
    And, just yesterday, we heard about a Heritage Foundation Report 
that claims the current Administration has ``unleashed 106 new major 
regulations that increased regulatory burdens by more than $46 billion 
annually, five times the amount imposed'' by the prior Administration.
    While this report was released only last week, it is clear that its 
data and methodology were not subject to peer review or public comment. 
Therefore, its conclusions should be approached with skepticism.
    Some of the evidence that has been cited in support of these 
arguments has already been thoroughly debunked. I hope all of the 
panelists will provide some more enlightenment on these allegations.
    Finally, I want our witnesses to contribute their thoughts on real 
regulatory reform, concepts that our colleagues on both sides of the 
aisle can embrace.
    Given the stature and experience of the witnesses on both panels, I 
am optimistic that they will have some pragmatic and meaningful 
recommendations for reform.
    To that end, I am again encouraged that President Obama has 
preemptively begun this process by the issuance of Executive Order 
13563, ``Improving Regulation and Regulatory Review,'' which requires 
agencies to assess the costs of cumulative regulations.
    In particular, this Order requires agencies to identify sectors and 
industries that face redundant, inconsistent, or overlapping 
regulations. In addition, it directs these agencies to promote 
``coordination, simplification, and harmonization.''
    And, just yesterday, Mr. Sunstein issued guidance pursuant to this 
Order that directs agencies to reduce cumulative costs. These 
directives ask agencies to:

          consult with affected stakeholders early in the 
        process well in advance of proposing new rules;

          specifically consider with respect to small 
        businesses and start-ups the cumulative effects of regulations 
        on these entities;

          analyze the relationship between new regulations and 
        those regulations currently in effect when determining costs 
        and benefits; and

          identify opportunities to harmonize the requirements 
        of new and existing rules in order to eliminate inconsistency, 
        excessive cost, and redundancy.

    I should also note that this guidance is immediately effective.
    Efforts like these are to be applauded and encouraged by my 
colleagues on both sides of the aisle.
    I would like to hear from our witnesses today additional ways that 
we can make our Nation's regulatory system even better.

                               ATTACHMENT





                               __________

    Mr. Conyers. I thank the Chair.
    Mr. Coble. I thank the distinguished gentleman from 
Michigan.
    We have been joined by Mr. Ross, the distinguished 
gentleman from Florida. Good to have you with us, Dennis.
    Mr. Ross. Thank you, Mr. Chairman.
    Mr. Coble. Our first witness is the Honorable Cass 
Sunstein, known to all of us. He is the Administrator of the 
Office of Information and Regulatory Affairs. Prior to becoming 
Administrator, he was Felix Frankfurter Professor of Law at 
Harvard Law School. He clerked with Judge Benjamin Kaplan of 
the Massachusetts Supreme Judicial Court and Justice Thurgood 
Marshall on the U.S. Supreme Court and then worked as an 
attorney-advisor in the Office of the Legal Counsel of the U.S. 
Department of Justice. He was also a faculty member of the 
University of Chicago School of Law until 2008.
    Mr. Sunstein has testified before congressional Committees 
on many subjects. He has been involved as an advisor in 
constitution making and law reform activities in a number of 
Nations. A specialist of administrative law, regulatory policy, 
and behavioral economics, Mr. Sunstein is the author of many 
articles and a number of books. The Honorable Mr. Sunstein 
graduated in 1975 from Harvard College and in 1978 from the 
Harvard Law School magna cum laude.
    Mr. Sunstein, good to have you with us, but in the interim, 
we have been joined by our distinguished friend from Tennessee 
who is the Ranking Member of the Subcommittee. Mr. Cohen, good 
to have you with us and I recognize you for an opening 
statement before we hear from Mr. Sunstein.
    Mr. Cohen. Thank you and I apologize for being a little bit 
late, but it is good to be here with each of you. And thank 
you, Mr. Chairman.
    Mr. Coble. Thank you.
    Mr. Cohen. It has been about a year and a half since the 
last time Mr. Sunstein testified on the initiatives of OIRA, 
and we have had a lot happen since then.
    On January 18 of 2011, the President issued Executive Order 
13563 which supplemented, reaffirmed the principles of 
Executive Order 12866 issued by President Clinton. The most 
current recent executive order added emphasis on increasing 
public participation in the rulemaking process and identifying 
ways to reduce costs and simplify and harmonize rules through 
interagency coordination. And those are wonderful goals, and I 
think that is the reason Mr. Sunstein is where he is because he 
is doing those things and sometimes ruffling the feathers of 
people who you know would be his and the President's natural 
allies, but he calls things the way he wants to and the way he 
sees them, which should be to the favor of the Republican side 
too. So that is a wonderful thing.
    This particular order clarifies that agencies must identify 
and consider regulatory approaches that reduce burdens and 
maintain flexibility and freedom of choice for the public, 
including considering alternatives to mandates, prohibitions, 
and command-and-control regulation. Most significantly, it 
requires agencies to develop a plan and conduct a periodic 
review of existing significant regulations that may be 
outmoded, ineffective, insufficiently or excessively burdensome 
and to modify, streamline, expand, or repeal them in accordance 
with what has been learned.
    Mr. Sunstein has issued a number of guidance memoranda 
regarding that order. In particular, it is a requirement that 
agencies conduct a periodic review of existing significant 
regulations, emphasize the need to consider strengthening, 
complementing, or modernizing rules where necessary or 
appropriate including, if relevant, undertaking new rulemaking.
    As recently attorneys general as yesterday, Mr. Sunstein 
issued another guidance memorandum addressing this order and 
this requirement that agencies work to address the potential 
cumulative effects of regulations. I look forward to learning 
the results to date for the President's push to have agencies 
improve and modernize the existing regulatory system.
    Based on some of the statements that I have heard recently 
from some of my colleagues, I imagine we will be discussing the 
volume and cost of regulations under the Obama administration, 
which has been part of the mantra that we have heard emanating 
from the other side of the aisle. I note that according to the 
Office of Management and Budget's 2012 draft budget, a report 
on the benefits and costs of Federal regulations, that the net 
benefits of regulations the first 3 years total $91 billion, 25 
times greater than during the comparable period under the Bush, 
the second, Administration. Moreover, fewer final rules have 
been reviewed by OIRA and issued by an executive agency in the 
first 3 years of the Obama administration than the comparable 
period of the Bush administration. Interesting facts, 
considering what we hear.
    As to the regulatory costs, the costs of economically 
significant rules reviewed by OIRA were highest in fiscal year 
2007 which was during the Bush administration. In fact, the 
cost of regulations were higher in the last 2 years of the Bush 
administration than during the first 2 years of the Obama 
administration.
    So, Mr. Sunstein has done his job.
    Finally, I would like to know from all of our witnesses 
what steps Congress can take to better help OIRA to its job, 
including whether Congress should provide OIRA with more 
resources.
    I will be asking Mr. Sunstein about some rules that have 
really hurt the citizens in my district greatly, some EPA rules 
that have required people not to be able to get their licenses 
to drive their cars because their check engine light does not 
go off. Even me, yes. My check engine light did not go off. It 
stayed on. I was told I cannot get my tags. I have to go to my 
mechanic. My mechanic said it would cost me $800 to get my 
check engine light off. So being that I am who I am, I asked 
the City of Memphis to let me go and have a tailpipe test, the 
old, traditional way of determining whether you were emitting 
carbon to ruin the atmosphere, which I am very concerned about. 
They put the rod in my tailpipe and that came out perfect. They 
said you are emitting nothing. You are great. I still had to 
pay to get my check engine light off.
    That seems like a rule that is overly, overly, overly 
deemed toward some type of mechanical determination and not 
considering individuals that cannot afford it in my district to 
have to go get their engine light off. And we should not have 
machines controlling our lives and costing us to pay mechanics 
so we can get our licenses.
    So at some point, I will continue on that theme. We want to 
get rid of that rule.
    With that, I yield back the remainder of my time and look 
forward to Mr. Sunstein and his helping the poor people of 
Memphis who have check engine lights on not have to deal with 
that. I yield back the balance of my time.
    Mr. Coble. I thank the gentleman from Tennessee. And you 
echoed some of the comments I made prior to your arrival.
    Folks, I think we have a vote on now, do we not?
    We have been joined by the distinguished gentleman from 
South Carolina, Mr. Gowdy, and the distinguished gentleman from 
Texas, Mr. Smith, who I believe has an opening statement as 
well.
    Mr. Smith. Thank you, Mr. Chairman. I do. If I may be 
recognized.
    Mr. Coble. Pardon?
    Mr. Smith. Am I recognized for my opening statement?
    Mr. Coble. I think so.
    Mr. Cohen. I recognize him. He is Lamar. [Laughter.]
    Mr. Coble. I will recognize him as well. I think we all 
recognize the Chairman.
    Mr. Smith. Thank you, Mr. Chairman.
    Speaking of all this, I like Mr. Cohen's three ``overlys'' 
description of some regulation, and I concur with him in that 
regard.
    Mr. Chairman, as America's small businesses and job 
creators work to recover from a slack economy, a tide of new 
regulations and red tape constantly threatens to set them back. 
In its first 3 years, the Obama administration has imposed 106 
new major regulations on the private sector, which costs $46 
billion annually. That is four times the number of major 
regulations the Bush administration imposed on the private 
sector in a similar period at more than five times the cost. It 
is no wonder that small business owners say that Government 
regulations are the single most important problem they face.
    In 2011, the Obama administration's agenda had over 200 
economically significant new rules, each of which typically 
affect the American economy $100 million or more each year.
    I have sponsored regulatory reform bills that lighten this 
load. The Regulatory Accountability Act of 2011 builds on and 
codifies proven regulatory reform principles. It guarantees 
that the benefits of all new regulations will justify the cost 
and that agencies will choose less burdensome regulations when 
possible. It also increases accountability, public 
participation, and transparency in the rulemaking process.
    The Regulatory Flexibility Improvements Act of 2011 reforms 
rulemaking specifically to help small businesses strained under 
the regulatory burden. It forces agencies to account for and 
minimize the impacts of new regulations on small businesses. It 
gives small business owners more opportunities to be heard as 
regulations are written, and it forces agencies to look harder 
at ways to cut the cost of regulations already on the books.
    Finally, the REINS Act guarantees that Congress will vote 
up or down before new, major regulations can take effect. The 
REINS Act restores accountability for decisions to impose 
large, new burdens on small businesses and job creators.
    Each of these bills passed the House of Representatives 
with bipartisan support and each enjoys companion legislation 
in the Senate. Yet, when the Judiciary Committee offered to 
work with the Administration to find mutually agreeable 
legislative terms, the Administration refused. And when each 
bill came to the House floor, the Administration suggested that 
the President's advisors would recommend that he veto the bill.
    This is inconsistent with the President's own statements on 
regulatory reform. In the January 25, 2011, State of the Union 
Address, the President said that, ``when we find rules that put 
an unnecessary burden on businesses, we will fix them.'' The 
House-passed legislation does just that.
    In his September 8, 2011, address to a joint session of 
Congress, the President agreed that, ``there are some rules and 
regulations that do put an unnecessary burden on businesses at 
a time when they can least afford it.'' He also stated that, 
``we should have no more regulation than the health, safety, 
and security that the American people require. Every rule 
should meet that common sense test.'' I agree and the House-
passed legislation assures that result.
    I urge the Administration to reconsider its positions on 
these bills and work with Congress to make their reforms a 
reality. The Administration's unilateral efforts to achieve 
regulatory reform under executive orders and presidential 
memoranda have produced very few results. What is truly needed 
is legislative action. If Washington does not adopt definitive 
regulatory reform, new regulatory burdens will continue to keep 
private sector capital on the sidelines and we will not be able 
to expect new jobs.
    Thank you, Mr. Chairman. I will yield back.
    Mr. Coble. I thank the Chairman. Thank you as well.
    Mr. Sunstein, we are now pleased to recognize you for your 
statement.

  TESTIMONY OF THE HONORABLE CASS R. SUNSTEIN, ADMINISTRATOR, 
          OFFICE OF INFORMATION AND REGULATORY AFFAIRS

    Mr. Sunstein. Thank you very much, Mr. Chairman and Members 
of the Committee.
    Mr. Coble. Mr. Sunstein, if you can pull that mic a little 
closer to you.
    Mr. Sunstein. One more time?
    Mr. Coble. That is better. Thank you.
    Mr. Sunstein. Thank you, Mr. Chairman, for that assist, and 
thank you, Members of the Committee, for your remarks and for 
hosting me on this very important topic.
    It is an honor really to be here to talk about regulation, 
and my focus will be on the President's executive order known 
internally as Executive Order 13563, and our efforts in 
particular to try to look back at existing regulations to 
remove red tape and also to discipline the flow of new rules 
going forward.
    As I am sure you are aware, the President ordered in 
January of last year an ambitious Government-wide review of 
rules on the books. The goal was to eliminate rules that do not 
make sense and to eliminate paperwork requirements that are--I 
think these are the President's words--just plain dumb.
    In August of last year, no fewer than 26 agencies released 
their review plans. Those plans included over 500 reforms, many 
of which will reduce costs, simplify the regulatory system, and 
help small business in particular. That is one of our principal 
concerns in this challenging economic time.
    What I would like to emphasize is that just a small 
fraction of the reform initiatives, already finalized or 
formally proposed to the public, are expected to save more than 
$10 billion over the next 5 years. That is a small fraction of 
the reforms on the plans. Ultimately, we expect to be able to 
do a lot better than that.
    In terms of what has happened in formal proposals or 
finalization, the Occupational Safety and Health Administration 
is often criticized for imposing too much red tape. Well, they 
heard the concerns and they have eliminated--this is final--
over 1.9 million hours in annual red tape imposed on American 
employers.
    The Department of Agriculture has for years been aware of 
concerns on the part of the agricultural community that the 
poultry inspection requirements are outdated, kind of 1950's 
carcass-by-carcass inspections. And they have said can you 
relieve us from this outdated requirement. The Department has 
proposed to do exactly that with a rule that would produce 5-
year savings in excess of $1 billion. That is big money.
    The Department of Health and Human Services is soon going 
to finalize rules to eliminate a series of regulatory 
requirements that have accreted on hospitals and doctors over 
many years. That will save over $5 billion over the next 5 
years. And as I say, that is expected quickly.
    All of the plans recognize that regulatory reform, our 
lookback exercise, is not just a one-time endeavor. Agencies 
are required now by recent guidance from my office to provide 
regular updates to the American people with time tables on 
reforms and to listen to the public about new ideas for 
streamlining rules on the books. And we heard from 
Representative Cohen an example that is a candidate.
    If any Members of the Committee have ideas for rules on the 
books that should be eliminated or streamlined, we are all 
ears. That is a top priority for my office.
    In terms of the flow of new regulations, the President has 
offered new discipline. He has asked agencies--not just asked--
directed them--to take steps to harmonize and simplify and 
coordinate rules. He has asked them to consider flexible 
approaches that reduce burdens and maintain freedom of choice 
for the public, and he has placed new emphasis on our lodestar, 
which is careful consideration of costs and benefits and 
selection of the least burdensome alternative. That is built 
into the fabric of our regulatory system and it is newly 
reaffirmed by a guidance document issued by my office yesterday 
which is about cumulative burdens with particular reference to 
the cumulative burdens on small business.
    There is a lot of concern about costs of regulations. I 
share that concern. That is motivating our lookback effort. I 
would just note, while there is more work to be done in 
eliminating unjustified costs, the Obama administration has yet 
to hit the highs reached respectively by the Reagan 
administration, the Clinton administration, the Bush 
administration, and the other Bush administration in their high 
years. Each of them in their high year was significantly above 
our high years. In fact, in the last decade, the highest costs 
were imposed in fiscal year 2007.
    A final point. Many of your comments suggest the 
extraordinary importance of listening to public comments about 
rules that are creating problems, whether it is for individual 
citizens trying to operate their cars on the street, little 
businesses trying to work without having to deal with 
bureaucrats, or just ordinary citizens trying to understand 
what the Government is up to.
    One of our top priorities is to alter the interface between 
the American people and the regulatory system through changing 
regulations.gov and reginfo.gov. Those are our principal 
portals. They are a whole lot better now than they were a few 
years ago, and we would love your help in making them better 
still.
    We look forward to working with the Committee and with your 
constituents to reduce regulatory costs and to strengthen our 
economy while protecting public health and safety in an 
economically challenging time.
    Thank you.
    [The prepared statement of Mr. Sunstein follows:]
    
    
    
    
    
    
    
    
    
    
                               __________

    Mr. Coble. Thank you, Mr. Sunstein. I appreciate your 
comment.
    Mr. Sunstein, we try to impose the 5-minute rule against us 
and you almost met the 5-minute rule without imposition. So you 
are a jump ahead of the game.
    The Obama administration, Mr. Sunstein, has issued many 
statements about the need to restrain unnecessary regulatory 
costs, but during the Administration's first 3 years in office, 
it issued 106 major rules that impose $46 billion in new annual 
regulatory burdens and $11 million more in one-time 
implementation costs.
    Can you commit to us today that you will do everything 
within your power to at least slow down or de-accelerate the 
growth of new major rules and regulatory costs?
    Mr. Sunstein. Absolutely.
    Mr. Coble. And, sir, I am not talking about compromising 
health or safety features.
    Mr. Sunstein. Yes, I understand.
    I would just make a little footnote as a former professor 
which is that $46 billion figure comes from a study which has, 
on the right-hand side, the words ``talking points.'' And one 
thing that I have learned in Washington is that if there is a 
document that has ``talking points'' on the right-hand side, it 
might not be entirely accurate. And that particular study has a 
series of inaccuracies that suggest--that mean that the number 
is not reliable.
    Nonetheless, I take your point and I am happy to make that 
commitment.
    Mr. Coble. And I thank you for that.
    You mentioned that the Bush years had more regulations 
during a certain period of time as opposed to the Obama years. 
Am I correct--I am doing this from memory now, Mr. Sunstein, so 
it may be inaccurate. But I think the Bush trend as opposed to 
the Clinton trend was down, and I think President Obama's trend 
is up compared to the Bush years. Am I right about that?
    Mr. Sunstein. I believe that is correct. Sitting behind me 
are the OIRA administrators under President Bush and President 
Clinton, and I would defer to them on the numbers.
    Mr. Coble. We will visit that when they take your chair.
    Mr. Sunstein, what have you done to make sure that the 
adverse jobs impact of some of these regulations were assessed 
and minimized before the regulations were issued?
    Mr. Sunstein. Okay, great. The President's executive order 
uses in the first sentence the words ``job creation.'' That is 
an unprecedented emphasis on the importance of promoting job 
creation in the regulatory arena as everywhere else.
    There are a few things we have done. We have not gone 
forward with certain regulations in part because of expressed 
concerns that seemed reasonable about job creation.
    More particularly in response to your question, in rules 
that come from a multitude of agencies, there is careful 
analysis in what we call the regulatory impact analysis of the 
anticipated job impacts of rules, and that analysis is subject 
to public scrutiny. If there is any rule that we are issuing 
that looks like it is going to have adverse job impacts, to the 
extent permitted by law, that is something that is exposed to 
public scrutiny and carefully considered in deciding whether to 
go forward.
    Mr. Coble. I thank you, sir.
    Throughout this Administration, Mr. Sunstein, we have seen 
effective unemployment rates approaching 20 percent. What have 
you and your office done to ensure that these 106 new major 
rules are based on the less burdensome regulatory alternative 
or impact?
    Mr. Sunstein. Okay. I would emphasize that at least of the 
category of rules called ``major rules,'' a large number of 
them are benefits programs, e.g., to farmers, as required by 
Congress and in some cases benefits programs under the Medicare 
and Medicaid statutes. So a lot of the major rules aren't 
regulatory in the standard sense, though they do go through our 
office.
    We are acutely aware that the problem of economic growth is 
real and serious after the very difficult circumstances from 
which we are recovering and that the unemployment situation is 
as it is. What that means is that we look very carefully at two 
things in thinking about rules. One is the total costs and 
which way we can, as you suggest, identify to go forward while 
reducing those costs. There are a number of rules that have 
issued that were proposed, very expensive, and then were 
finalized much less expensive, or proposed in a way that the 
business community found vague and then finalized in a way that 
the business community found clear. And as I say, if there is a 
rule that finds adverse employment impacts, that is something 
that not only the public scrutinizes closely, that is something 
that we scrutinize closely.
    Mr. Coble. I thank you, sir.
    I see my amber light has illuminated, so I recognize the 
distinguished gentleman from Tennessee.
    Mr. Cohen. Thank you.
    I am going to try to be real quick in the allotted 5-minute 
time in here.
    The Heritage Foundation did a study that basically accused 
the regulations of Obama costing $46 billion annually, five 
times the amount during the Bush administration. OMB has come 
up with some studies that say that the benefits of regulation 
far outweigh the costs. And the Crain study says that 
regulations cost $1.75 billion. Tell us what your way that 
you--consider all three of those opinions and which one is more 
accurate than the other.
    Mr. Sunstein. Okay. A lot of numbers. There is a study done 
by two people, that might be related even, named Crain and 
Crain that says that the total costs of regulation are $1.75 
trillion. That is an alarming number. It was criticized sharply 
by the Congressional Research Service in an explanation of why 
the number is in the nature of what I would call an urban 
legend. And one of the authors of the World Bank study on which 
Crain and Crain relied said this really is not the right use of 
our study. I will go into details if you want on that. The 
costs of regulation are not infinitesimal by any means, but 
that $1.75 trillion is an urban legend.
    With respect to The Heritage Foundation study, I have a lot 
of respect for The Heritage Foundation and for the author, so I 
want to preface that. And I also want to emphasize that they 
are right to say that we have had fewer regulations in our 
period than the Bush administration did in its period. So they 
rightly say that.
    The $46 billion number, as I say, did not go through public 
scrutiny or peer review, and it is based on a series of errors. 
There are a couple of rules that are in that $46 billion number 
that have actually been stayed or not issued by the relevant 
agencies, and there are other rules that The Heritage 
Foundation, while generally relying on the agency estimate--
they have an estimate that is much higher than the agency 
estimate.
    So the real number is--we are going through peer review and 
public scrutiny. So our draft number for 3 years is about $19.8 
billion. So that is the number. The $19.8 billion for 3 years 
is in line with historical figures, and as I say, we have yet 
to have a year that is as high as the highest years under the 
previous four Presidents.
    Mr. Cohen. Thank you, sir.
    Yesterday this Committee marked up a bill called the 
Regulatory Freeze for Jobs Act. It would essentially impose a 
moratorium on most major rulemaking until the unemployment rate 
dips to 6 percent. It is alleged that you said a moratorium 
would not be a scalpel or machete, it would be more like a 
nuclear bomb in the sense that it would prevent regulations 
that cost very little and have very significant economic or 
public health benefits.
    Would you like to explain your nuclear comment?
    Mr. Sunstein. That was colorful language.
    Mr. Cohen. Explosive language.
    Mr. Sunstein. Okay. The motivation for a moratorium we 
appreciate, which is about excessive regulatory costs. So that 
is a shared concern.
    There are a few problems with a moratorium. First, I just 
referred to three lookback initiatives that are de-regulatory. 
A moratorium could easily sweep up a series of de-regulatory 
initiatives that are actually cost savers and potentially 
beneficial for both growth and employment. An initiative of 
this sort, a moratorium, that is, could stop us from proceeding 
with a number of rules that industry actually actively seeks 
and comes to us saying will you please get this one out quickly 
under circumstances in which they need it in order to simplify 
their operations, say, by getting a general permit or to come 
up with some certainty in the face of, let's say, something 
coming from other States which will create complication until 
the Federal Government acts. So in a number of cases, rules are 
actually actively sought by industry.
    It is also the case, as you say, that there are rules that 
have very high net benefits and a moratorium would cut hard 
against those. It is a great achievement of both Republican and 
Democratic administrations that the number of deaths on 
highways in the United States right now is at an all-time low 
in recorded history. That is, in 60 years fewer people have 
died on the highways than ever before. That is in part a 
product of public/private partnership and safety rules and 
probably people that I am looking at right now--people and 
their family or close friends who avoided death or serious 
injury as a result of those rules which are typically, by the 
way, producing benefits far in excess of costs.
    Mr. Cohen. So it is good. Even if you consider it good 
intent, the implementation would not work. It would mitigate 
against the intent.
    Mr. Sunstein. That is the nuclear point, which is 
provocative language, I acknowledge, but it cuts too crudely to 
come to terms sufficiently with what is admittedly something 
that we need to be very careful about.
    Mr. Cohen. Thank you, sir.
    I have got two more questions, but we have rules and 
regulations here and I do not want to get beyond them. And the 
wonderful Chairman is too nice. So I yield back the remainder 
of my time.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from Florida, Mr. Ross, is 
recognized for 5 minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    And thank you, Mr. Administrator, for being here.
    Interesting on your comments there. I understand and, 
believe me, I think regulations have a limited role especially 
when it comes to protecting consumers. But I also understand 
that industries, such as auto industries, have done well 
because they realize that in order to have the best product out 
there, they have to make safety features. Even the insurance 
industry has complemented that well and market forces, market 
factors also enter into play where the regulatory environment 
did not need to enter into.
    With that being said, as you know, I am from Florida, and 
in Florida we have had an issue going on called the Numeric 
Nutrient Water Criteria, which I am sure you are very familiar 
with, and I guess right now it is in a state of abeyance 
pending--now the Florida Department of Environmental Protection 
has passed its water standards, signed into law by the 
Governor. Hopefully the EPA will accept that and we can move 
on.
    But my concern about that is how we even got to this point 
in the first place. Under the Numeric Nutrient Water Criteria, 
estimated impacts on Florida alone--Florida citrus would have a 
capital cost for compliance of $325 million, annual cost of 
compliance over $100 million. The dairy industry would have 
over $220 million of capital costs for compliance, annual costs 
of over $70 million. The impact was staggering. Annual cost, 
impact on Florida's economy was $1.148 billion and loss of 
full-time and part-time jobs, 14,545. And yet, I look at the 
executive order and it has, as you indicate, must consider both 
benefits and costs and use the least burdensome tools to 
achieve that end.
    If that is the case, how did the NNC issue ever get to the 
extent it is? Were there job impact studies done on that?
    Mr. Sunstein. I appreciate the question. My recollection is 
that this particular regulation was issued before Executive 
Order 13563.
    Mr. Ross. Correct.
    Mr. Sunstein. That was one that was under a legal cloud; 
that is, the failure to issue the rule was under a legal cloud. 
The rule was very much influenced by the fact that there was a 
pending legal proceeding that put a great deal of pressure----
    Mr. Ross. And a consent decree eventually or a consent 
judgment was entered into that did not include the State of 
Florida as a party.
    Mr. Sunstein. I believe, though--correct me if I am 
mistaken--that the particular rule was preceded by a legal 
proceeding that had a deadline on it, and that put pressure on 
the Administration to act.
    What I would say, with respect to the numbers you give, 
there are legal constraints both from the court and from the 
underlying statute on exactly what flexibilities there are. But 
as you began this very important point, my understanding is 
that this is currently in the process of discussion, and the 
circumstance to which you refer--it is a very unusual one where 
there is that level of legal pressure to issue something where 
the cost/benefit relationship isn't what we normally like----
    Mr. Ross. Correct.
    And just getting back to my initial comments, I mean, as a 
native of the State of Florida, we are surrounded by water. We 
have salt water. We have tremendous fresh water. Recreational, 
commercial livelihoods are dependent on our water criteria. I 
firmly believe that there is no better steward of our resources 
than those whose livelihoods depend on it, and that is where I 
talk about market forces and market factors coming into play 
where the regulatory environment can be a watch dog but not an 
everyday intrusionary component.
    Mr. Sunstein. Well, I spent a lot of time at the University 
of Chicago where what you just said is our favorite song; that 
is, that market forces are often very beneficial to safety and 
public goals.
    The only thing I would add is I was recently talking to 
some State and local officials in Colorado where there is a 
similar issue, as you are about to see. I mentioned our 
lookback. They did not know what I was talking about. But then 
I said remember that rule that came from a prior Administration 
that required street signs to be redesigned with different 
fonts and the traffic control devices to be altered with 
deadlines, and did you know we changed that? And everyone in 
the room knew what I was talking about because it is an 
analogous thing where it was a State and local issue that the 
Department of Transportation in good faith had affected. And 
Secretary LaHood, as part of the President's lookback, hearing 
the concerns, actually had a very ambitious set of revisions to 
what prior Administrations had done basically saying in this 
economically challenging time----
    Mr. Ross. Let me ask you a quick question before my time 
runs out because when we talk about economically challenging 
times and market forces, I look at it globally. I see some 
industries considering whether they can afford the investment 
of dollars and time of 3 to 4 years for the environmental 
impact studies to build or manufacture here and instead decide 
to go overseas or elsewhere outside the country. Are these 
factors not given consideration when promulgating and 
implementing these rules?
    Mr. Sunstein. Well, it is a great point, and I really 
appreciate it. And if there are rules that we are not doing 
properly for failure to consider that, please talk to us.
    Mr. Ross. I will.
    Mr. Sunstein. I will tell you the President's new executive 
order has the word ``competitiveness'' in the first sentence, 
and we just issued a rule that allows American companies not to 
meet separate standards with respect to hazard warnings for 
workers, whether they are in Canada or the United States. And 
the Chamber of Commerce had very favorable reactions to this 
because it takes down a trade barrier. So to the extent that 
there is a rule here that would make people not want to do 
business in the United States, if the law permits us to worry 
over that, gosh, we are going to worry over that.
    Mr. Ross. Then I look forward to working with you, Mr. 
Administrator. I thank you for your time and I yield back.
    Mr. Coble. Thank you, Mr. Ross.
    The distinguished gentleman from Michigan, Mr. Conyers, is 
recognized.
    Mr. Conyers. Thank you, Chairman Coble.
    Thank you for your testimony, sir. We are always pleased 
when you can come to the Congress.
    How do you see the challenge of being at the head of the 
Office of Information and Regulatory Affairs? How do you see 
that as a challenge in a career as varied as yours and more 
than often not a governmental one?
    Mr. Sunstein. I will tell you a story. When I first went 
into Government, what I tried to do is write a document that 
maybe would be a guidance document from our office. I meant it 
as a very early draft for people to consider, and often it was 
about something that I thought would make regulation better, 
but people would look at it and think what is he doing. And I 
was finally given very good advice for someone who goes into 
Government on the executive branch side, and the advice was 
meet and then write. Meet with people first before you write 
because if you write something that is maybe not well thought 
out, they will think you mean it when in fact it is just an 
invitation to talk.
    So what I have learned is the immense importance--and this 
bears on the topic of over-regulation and getting regulation 
right. You have got to listen to people. In academic life, you 
probably should listen to people, certainly your students, but 
it is not the kind of minute-by-minute imperative that it is 
for someone who is working for the American people.
    Mr. Conyers. Do you envision any recommendations for 
changes in the way the Office of Information and Regulatory 
Affairs works now, or do you think that it is set up in a way 
that meets your approval?
    Mr. Sunstein. Well, I would really give a tip of the hat to 
my predecessors in the office and this Committee in particular 
for its support of the office across partisan lines. I think 
the office is an extraordinarily important part of the 
operations of Government regardless of who is privileged to be 
its administrator.
    I do think that there are improvements that can be made. 
Yesterday's guidance document emphasizing attending to 
cumulative burdens which are often a problem for small 
businesses, I am sure in Florida, as well as other States. And 
the point of that document is to say you have something that on 
its own makes sense but maybe in concert with other things 
starts to overwhelm people. If we can make progress on that 
one, that would be a big step forward.
    Mr. Conyers. Thank you.
    Can you talk about the Administration's proactive approach 
toward addressing regulatory issues in terms of your views and 
theirs?
    Mr. Sunstein. I can tell you about mine, which is that the 
one thing, going to your first question as well as this one, 
that has been most vividly new to me is that public comments 
are crucially important to getting rules right. You all 
interact with constituents, so you know a lot more than some of 
us who are basically in our offices now. We need to know what 
things are going to mean on the ground. So in terms of my 
interactions with the operations of my office, I find it is 
crucial to read personally public comments on rules. So I need 
to read with my own eyes. If people are enthusiastic about a 
proposal, if they think it is going to be great for public 
safety and health and explain why, I need to know that. If 
there are companies who say there is a less restrictive--going 
to the Chairman's first point--less restrictive way of 
achieving your goal where you can protect safety but it will 
cost half as much, I need to read that. So the engagement with 
public comments on proposed rules is foremost for me.
    Mr. Conyers. I want to thank you for your refreshing point 
of view that you bring to OIRA. The Judiciary Committee looks 
forward to working closely with you in the future. Thank you 
very much.
    Mr. Sunstein. Thank you, sir.
    Mr. Coble. Thank you, Mr. Conyers.
    Folks, we have votes on the floor. So we will stand in 
recess subject to the call of the Chair. We should be back 
within approximately 40 to 45 minutes. So if you all would just 
stand easy during that time, the Subcommittee stands in recess.
    [Recess.]
    Mr. Coble. We need two Members on the podium before we can 
resume the hearing. So if you all bear with me. I see the 
Chairman over there now, so we can start. We will suspend the 
recess and we will come back to order.
    And no one else is here. I am inclined to think our best 
bet is probably to excuse you, Mr. Sunstein, because no one 
else has come back. We will check again. I do not want to shut 
anybody off, but we will see if anybody is on their way.
    John, I figure if you and I can make it, anybody can make 
it. Right? [Laughter.]
    I am inclined to dismiss you, Mr. Sunstein, because you 
have given your testimony and only Mr. Conyers and I are back. 
So you may be excused. If further questions are forthcoming, we 
can communicate that to you and you can respond accordingly.
    Mr. Sunstein. Thank you, sir. Thank you for your kindness 
today.
    Mr. Coble. Thank you, sir. Thank you for being with us.
    We will call our second panel to the table. Refresh my 
memory, folks, who has the travel commitments. Well, I think 
what we will do, without objection, is we will hear from the 
two travelers and then let them submit to examination. It is 
sort of irregular, but I do not want to slow them down. Does 
that suit you, Dr. Williams? You concur with that?
    Well, let me read the bios on members of our second panel.
    John Graham is Dean of the School of Public and 
Environmental Affairs at Indiana University, one of the largest 
public policy schools in the United States. Dr. Graham has a 
bachelor's degree in politics and economics from Wake Forest 
University and a master's degree in public affairs from Duke 
and a Ph.D. in urban and public affairs from the Carnegie-
Mellon University.
    Dean, do you have North Carolina connections other than 
those two institutions of higher learning?
    Mr. Graham. I have a feeble golf game.
    Mr. Coble. So do I and I represent Pinehurst and they have 
never forgiven me for not being a golf player.
    Dr. Graham's professional experience in the field of cost/
benefit analysis spans the theoretical and the practical. As a 
tenured professor in the Harvard School of Public Health, which 
he attained at the age of 34, Dr. Graham founded and led the 
Harvard Center for Risk Analysis, the author and editor of 
numerous books, articles and academic papers from 2001 to 2006. 
Dr. Graham served as the Administrator of the Office of 
Information and Regulatory Affairs in the Office of Management 
and Budget in this capacity. Dr. Graham furthermore worked to 
slow the growth in regulatory costs by 70 percent by 
simplifying hundreds of regulations and designing valuable new 
rules on clean air, auto fuel economy, and food safety.
    Dr. Graham, good to have you with us.
    Our second witness is Dr. Richard Williams, the Mercatus 
Center's Director of Policy Research. He served in the Office 
of Management and Budget for 27 years and as the Director of 
Social Sciences at the Center for Food and Applied Nutrition in 
the Food and Drug Administration. Dr. Williams is an expert in 
benefit/cost analysis and risk analysis, particularly relating 
to food safety and nutrition. He has published a risk analysis 
and general policy analysis and management and has consulted 
with foreign governments, including the United Kingdom, the 
South Korea, and Australia.
    A Vietnam veteran, Dr. Williams received his Ph.D. and his 
M.A. in economics from Virginia Tech and his B.S. in business 
administration from the Old Dominion University. He has served 
as an advisor to the Harvard Center for Risk Analysis and 
taught economics at the Washington Lee University.
    Good to have you with us as well, Dr. Williams.
    Our third and final witness is Ms. Sally Katzen, who is 
Senior Advisor at the Podesta Group and visiting professor at 
New York University School of Law. Sally Katzen has enjoyed a 
distinguished career in legal practice, government services, 
and academia. The first female partner at the law firm of 
Wilmer, Cutler & Pickering, Ms. Katzen also has served as 
section chair of the American Bar Association's Admin Law and 
Regulatory Practice Group. Ms. Katzen served for 8 years in the 
Clinton administration, including 5 years as Administrator for 
the Office of Information and Regulatory Affairs and in the 
Office of Management and Budget.
    Ms. Katzen holds a bachelor's degree from Smith College and 
a J.D. from the University of Michigan School of Law. She has 
taught law at George Washington University, the University of 
Michigan, George Mason University, the University of 
Pennsylvania, and Georgetown University schools of law and 
currently is a visiting professor at NYU School of Law.
    Ms. Katzen, good to have you as well.
    Dr. Graham, why don't you start us off? Then it will be 
followed by Ms. Katzen. Then we can have you all submit to 
examination, again if that sits with your itinerary, Dr. 
Williams. If you can, try to limit it to 5 minutes. When the 
red light illuminates, you will not be keel-hauled at that 
point, but it will be your warning that the ice on which you 
are skating is thin. Good to have you all with us. Dean Graham, 
you are recognized.

TESTIMONY OF JOHN D. GRAHAM, DEAN, INDIANA UNIVERSITY SCHOOL OF 
                PUBLIC AND ENVIRONMENTAL AFFAIRS

    Mr. Graham. Thank you, Mr. Chairman.
    Let me start with the congratulations to Professor Sunstein 
and the OMB staff for the hard work they have on their desks on 
regulatory reform. As a former OIRA Administrator, I have tire 
tracks on my chest to prove the difficulty of the job they 
faced, and I praise them for their efforts.
    Question for reflection: If the benefits from regulation 
are so huge and the costs are so modest, as we have heard 
today, what is all the concern about? In my testimony, I try to 
explain some of that.
    There is a vast network of regulatory activities outside of 
OMB oversight and outside of cost/benefit review that are 
experienced by businesses and the American people but are not 
in the numbers that OMB is telling you about. I will give two 
illustrations, one in the coal industry and one in the 
automotive industry.
    Example one. There is currently being implemented a de 
facto ban on mountaintop mining for coal throughout the 
Appalachian States of West Virginia, Ohio, Kentucky, and 
Pennsylvania. This is a controversial issue and an interesting 
one. On the benefits side, you have valuable low sulfur coal 
for steel making and electric power, and you also have 14,000 
direct jobs in rural Appalachia. On the risk side, you have 
mountaintops being leveled, rock and dirt being put into valley 
fills which are burying streams and creating aquatic toxicity 
and water problems. You have requirements for reclamation and 
mitigation that have uneven effectiveness depending on the 
particular site.
    What is happening? The Army Corps, Interior, and EPA have 
adopted, at the beginning of this Administration, a major shift 
in energy policy to restrict mountaintop mining of coal.
    How was it accomplished? Press release, memo, guidance 
document. No cost/benefit analysis, no rulemaking, and in fact 
permits began to be stopped for new mining operations and even 
existing mining operations, which had been previously 
approved--had their permits revoked.
    There is now massive litigation underway. Basically the 
Federal regulators are at war with business and labor in 
Appalachia, and who knows where this issue is headed.
    Example number two. Recent, very recent, California 
regulations requiring at least 15 percent of cars sold in 
California to have zero pollution by 2025. Now, you have to 
keep in mind what zero pollution means in a California 
regulatory setting. It means basically an electric car or maybe 
a fuel cell vehicle, but we know they are not zero pollution. 
There is pollution back at the power plant when these vehicles 
are actually recharged.
    You might ask, well, why do we have to have these 
California regulations? The Obama administration already has a 
national policy toward electric vehicles. We are requiring 50-
mile-per-gallon vehicles by 2025. We are offering compliance 
incentives for manufacturers. They can count an electric car 
twice compared to a gasoline-powered car when they calculate 
their compliance. And we have $7,500 Federal income tax credits 
for people who buy an electric car, and President Obama wants 
to make it $10,000 in his latest proposal.
    Is there any cost/benefit analysis behind this California 
zero emission vehicle mandate? Well, their own numbers from the 
California regulators are they expect 1.4 million electric cars 
at a cost premium of $10,000 per vehicle. That is a $14 billion 
regulation, larger than virtually everything that Professor 
Sunstein talked about, one regulation in the State of 
California.
    Well, consumers want a payback for their investment in 
these vehicles. There is an effort in the California document 
to say that within 10 years consumers will save enough on 
energy to pay for this. But as I explained in my written 
testimony, if you look at the hard calculations, it does not 
add up. These vehicles are very unlikely to pay for themselves.
    But won't we protect the environment with these electric 
cars? Well, if automakers are forced to sell more electric cars 
in California, they earn compliance credits under Obama 
administration rules under the national program. The result? 
Automakers are entitled to sell more high-emitting cars in all 
50 States of the country. There is no basis for believing the 
environment is going to be any cleaner after California's 
regulation.
    Which regions of the country will bear this cost? It won't 
be California because they don't assemble cars in California. 
But their own analysis shows there will be more jobs in 
California because they sell more recharging equipment from 
companies based in California.
    Where will the costs be incurred? They will be in the 
Midwest and the South where automobiles are manufactured and 
assembled.
    You might ask me, why blame Washington? This is a 
California problem. The Federal Government has the power, if 
they choose to use it, to prevent California from implementing 
this regulation, and they have never even analyzed it from a 
cost/benefit perspective. No document you will find in the 
Federal Government analyzes the zero emission vehicle rule in 
the State of California. And even if the executive branch 
can't, the Congress certainly would have the ability to rein in 
this type of regulation if they were motivated to do so.
    Details are in the written testimony, but there is a lot 
going on in burdensome regulation that is not even covered in 
the numbers that you have heard today.
    [The prepared statement of Mr. Graham follows:]
          Prepared Statement of John D. Graham, Ph.D., Dean, 
     Indiana University School of Public and Environmental Affairs
    My name is John D. Graham. I am Dean of the School of Public and 
Environmental Affairs (SPEA) at Indiana University and former 
Administrator of the Office of Information and Regulatory Affairs, OMB 
in the George W. Bush administration (2001-2006). SPEA is one of the 
largest schools of public affairs in the country and, just one week 
ago, the new graduate-school rankings of U.S. News and World Report 
rated SPEA's Master's of Public Affairs (MPA) degree program as second 
in the country out of 266 total programs. Prior to serving at Indiana 
University and OMB, I was a tenured faculty member and founding 
director at the Center for Risk Analysis, Harvard School of Public 
Health (1985-2001). My technical expertise is in the application of 
risk analysis and benefit-cost analysis to health, safety and 
environmental issues. I have published eight books and over two hundred 
articles in this field. Several years ago, I was awarded the 
Distinguished Lifetime Achievement Award by my professional society, 
the Society for Risk Analysis. I earned my BA degree (economics and 
politics) at Wake Forest University (1978), my MA in public affairs at 
Duke University (1980), and my Ph.D. in public affairs at Carnegie-
Mellon University (1983). My doctoral dissertation was a benefit-cost 
analysis of automobile airbag technology. Before joining the faculty of 
the Harvard School of Public Health in 1985, I was a post-doctoral 
fellow at Harvard in environmental health (1983-84).
    I have been asked to speak today about benefit-cost analysis of 
regulation and how the regulatory reform initiatives of the Obama 
administration can be buttressed and extended. The theme of my 
testimony is that a substantial amount of costly regulatory activity is 
occurring without any requirement for benefit-cost analysis or OIRA 
oversight. I shall illustrate my concerns with case studies of the 
coal, automotive and housing industries. To rectify the current 
situation, I recommend that Congress consider legislation that would 
broaden the scope of federal agency actions that are subject to cost-
benefit justification and/or OIRA review.
    First, federal regulators are issuing press releases, memoranda of 
understanding, policy statements, and guidance documents with 
burdensome impacts on specific industries, yet these quasi-regulatory 
actions are often not subject to any formal benefit-cost analysis and/
or OIRA review.
    A vivid illustration of this behavior is the recent use of quasi-
regulatory documents by federal regulators to institute dramatic 
changes in the policy toward granting permits for surface coal mining 
operations in Appalachia, especially new mining projects in Kentucky, 
Ohio, Pennsylvania, and West Virginia. Before considering the policy 
change, I consider why mountaintop mining is undertaken in the first 
place.
    Over the last twenty years, coal mining in Appalachia has changed 
due to new technology, efforts to minimize labor costs, and the safety 
concerns about underground mining. While the practice of underground 
mining still accounts for almost 60% of the coal mined in Appalachia, 
surface mining at the top of mountains--often called ``mountaintop 
mining''--already accounts for more than 40% of the coal mined in 
Appalachia and 45% in West Virginia (NMA, 2009). The coal mined in 
Appalachia is used as fuel for electric power plants in the United 
States, as in input to iron making in the United States, and as a 
valuable export to countries in the world that cannot mine enough coal 
to meet their own needs for electric power and steel making.
    Both forms of mining in Appalachia are associated with risk: 
underground mines, even when operated properly, entail a certain amount 
of risk to the safety of coal miners; mountaintop mining, even when 
conducted with proper reclamation practices, entails a risk of surface 
water contamination and ecosystem damage. Thus, there is no such thing 
as zero-risk coal mining.
    Specific mining projects, including reclamation plans, need to be 
analyzed for benefit, risk, and cost, and this project-by-project 
analysis has historically occurred at the state level under guidance 
and oversight from federal officials at the Army Corps of Engineers/
Department of Defense, the Department of Interior and the Environmental 
Protection Agency. From 2000 to 2008, for example, about 511 mining 
reclamation projects were approved in the state of West Virginia alone 
under procedures spelled out by the Army Corps of Engineers in 
Nationwide General Permit 21. A key principle of this Permit is that 
mountaintop mining may proceed as long as adverse aquatic impacts are 
minimized through reclamation and mitigation measures (Copeland, 2010).
    Mountaintop mining is controversial because there are important 
stakes on both sides of the issue. It is estimated that the practice 
creates about 14,000 direct jobs and 60,000 indirect jobs, with average 
salaries ($66,000) that are relatively high for rural Appalachia. In 
the state of West Virginia alone, almost 10% of the state's tax revenue 
is linked to the economic stimulus of mountaintop mining (NMA, 2009).
    On the other hand, by its very nature the practice of mountaintop 
mining has adverse ecological impact. The tops of mountains are leveled 
(to access coal seams) and the excess dirt and rock is disposed of in 
the valley fills on the sides of the mountains. Entire streams are 
often buried. Although only a small percentage of streams in Appalachia 
are impacted by mountaintop mining, the impacted streams are a 
significant environmental concern. In theory, mines are reclaimed and 
disrupted streams are mitigated on at least a one-to-one basis. Buried 
streams are replaced, or new streams are created in another location, 
or already degraded streams are improved. However, reclamation and 
mitigation efforts are sometimes inadequate, and continued damages are 
found after mines have been abandoned (GAO, 2010). Recent evidence 
suggests that even reclaimed areas can become a significant source of 
surface water contamination, and the extent of contamination is 
proportional to the amount of mountaintop mining in the area (Lindberg 
et al, 2011). In some cases, contamination continues almost two decades 
after reclamation plans were implemented. The impacted streams have 
been shown to experience aquatic toxicity and other forms of ecological 
damage (GAO, 2010). More study is needed to determine how the precise 
placement and treatment of rock spoil in valleys affects the mobility 
and transport of pollutants in impacted watersheds.
    A big change in regulatory policy occurred soon after President 
Obama took office. In June 2009 EPA issued a press release entitled 
``Obama Administration Takes Unprecedented Steps to Reduce 
Environmental Impacts of Mountaintop Coal Mining, Announces Interagency 
Action Plan to Implement Reform'' (EPA, 2009). A memorandum of 
understanding signed by EPA, the Corps and the Office of Surface Mining 
and Reclamation and Enforcement (OSM) in the Interior Department 
accompanied the press release. Although the interagency plan contained 
a significant shift from existing regulatory policy defined in the 
Corps Nationwide General Permit 21, there was no prior request for 
public comment on the new plan and no benefit-cost analysis was 
conducted to support the major shift in policy toward more restrictions 
on mountaintop mining. While the Corps did formally propose a 
suspension of General Permit 21 (as applied to mountaintop mining) in 
July 2009 (EPA, 2009), the action was not finalized until June 2010, 
many months after regulators had changed their approach to issuing 
permits (EPA, 2010).
    Basically, the Obama administration authorized EPA to make project-
by-project determinations on water-quality issues rather than rely 
primarily on the states and the Army Corps of Engineers. Industry 
complained that the criteria for EPA's project-by-project 
determinations were not clear, and thus developers of mining projects 
did not know what was expected of them (Fahrenthold, 2010). Ultimately, 
after many months of uncertainty, on April 21, 2010, EPA issued a 31-
page guidance document that did not prohibit mountaintop mining but 
called for minimal or no filling of valleys with mining debris (EPA, 
2010). The guidance was effective immediately, even though no public 
comments were solicited and no benefit-cost analysis was undertaken. In 
particular, the new guidance expects mining projects to adhere to 
strict limits on conductivity levels in streams (a measure of salinity 
in water). But EPA's numeric approach was based on two draft scientific 
documents that were not yet finalized (Copeland, 2012).
    A year earlier (October 2009), EPA also stunned the industry by 
reversing a 2007 decision of the Army Corps of Engineers to approve a 
2,300-acre mining operation in Logan County, West Virginia (Ward, 2009; 
Copeland, 2010). The Spruce #1 Mine in Logan County, which had been 
scaled back to address environmental concerns, was still the largest 
mountaintop removal mine in West Virginia history (Ward, 2009). 
Meanwhile, EPA took more than a year to make decisions on 175 proposed 
mining sites. It ultimately signed off on only 48 (EPA IG, 2011; 
Quinones, 2011; Fahrenthold, 2010). EPA argued that it was using legal 
authority under the Clean Water Act and its new technical approach to 
assessing water quality impacts. The industry countered that EPA's new, 
unprecedented regulatory approach would effectively prohibit a majority 
of surface coal mining in Appalachia, and the entire matter is now the 
subject of expensive, time consuming litigation in multiple federal 
courts (Copeland, 2011).
    A key lesson from this example is that changes in regulatory policy 
accomplished through press releases, memoranda of understanding, policy 
statements and guidance documents can have the same costly impact, at 
least in the short run, as an official rulemaking under the 
Administrative Procedure Act. Congress should require agencies, when 
making significant shifts in regulatory policy, to support those shifts 
with a benefit-cost analysis that is informed by a public comment 
process. In effect, what is now required for rulemakings should apply 
to regulatory policy shifts initiated through press releases, memoranda 
of understanding, policy statements, and guidance documents.
    Second, federal regulators are refusing to use their power to 
restrict or reform regulatory activities by the states that are 
unnecessarily costly to industry. Of particular concern are arbitrary 
inconsistencies in state regulations that burden companies that sell 
products across state lines. In some cases, federal regulators 
collaborate with state regulators in the promulgation of overly costly 
rules that completely evade benefit-cost requirements and/or OIRA 
review.
    A sobering example of this behavior is the recent decision of 
federal regulators to allow the State of California to require that 
automakers produce an increasing number of zero-emission vehicles 
(ZEVs) from 2018 to 2025. (As a practical matter, a ZEV under 
California criteria is likely to be a plug-in vehicle that is powered 
entirely or partly by electricity, though some hydrogen-powered 
vehicles also qualify). By 2025, each major automaker doing business in 
California is required to sell enough ZEVs to comprise at least 15% of 
their new-vehicle sales in California (CARB, 2011). Since the cost of 
producing a ZEV is currently $10,000 to $20,000 per vehicle greater 
than the cost of producing a similar gasoline-powered vehicle, the ZEV 
program is certainly worth reviewing from a cost-benefit perspective. 
If California succeeds in compelling the sale of 1.4 million ZEVs by 
2025 at an extra cost of $10,000 per vehicle, the overall cost to 
consumers will be in the neighborhood of $14 billion.
    According to the State of California, the ZEV program is evolving 
from a traditional focus on public health protection from localized air 
pollution (smog and soot) to a new focus on control of greenhouse gases 
linked to the global phenomenon of climate change. Both rationales 
remain but, due to the dramatic progress in reducing smog and soot from 
new gasoline-powered vehicles, California regulators acknowledge that 
the future rationale for the ZEV program will be the control of 
greenhouse gases (CARB, 2011).
    Under the national Clean Air Act, California regulators are given 
special regulatory privileges because of the poor air quality in 
southern California but California is not permitted to issue its own 
rules without permission from the federal government. Congress wanted 
to make sure that California's regulatory actions are necessary and 
appropriate, since automakers might be forced to design and produce a 
different fleet of cars and trucks for California than for other 
states. (There are about ten states that have chosen to align with 
California's standards but I shall simplify the presentation by 
referring to compliance in California). Moreover, the statute 
underpinning the Department of Transportation's Corporate Average Fuel 
Economy (CAFE) program prohibits all 50 states (including California) 
from adopting any regulatory programs ``related to'' the fuel economy 
of vehicles, since that is the province of CAFE. There may be creative 
legal arguments that can rescue an unnecessary and costly California 
ZEV program from litigation trouble, but surely Congress, through new 
legislation, has the power to subject California's ZEV program to 
serious cost-benefit analysis and OIRA review under a national 
regulatory reform statute. So the key legislative questions are: Is the 
California ZEV program necessary and appropriate, and does it have any 
plausible benefit-cost justification?
    The case for the California ZEV rule is certainly questionable, 
given the force of the following arguments:

        -- California regulators cannot slow global climate change to a 
        meaningful degree unless China and India control their 
        greenhouse gas emissions but the California ZEV program does 
        not--and cannot--cover China and India;

        -- The Obama administration, through a joint rulemaking of EPA 
        and DOT, has already mandated a sharp reduction in greenhouse 
        gases from new cars and light trucks for model years 2017 to 
        2025 through a performance standard, a numeric standard based 
        on carbon emissions that allows automakers to undertake some 
        averaging of low-emitting and high-emitting vehicles (EPA-
        NHTSA, 2011);

        -- The joint EPA-DOT rule already provides generous compliance 
        incentives for manufacturers who offer ZEVs (e.g., a ZEV's 
        ``upstream'' emissions at the electric power plant are ignored 
        and each ZEV may be counted more than once in the compliance 
        process) to supplement the federal government's generous $7500 
        income tax credit to purchasers of ZEV-like vehicles;

        -- The California ZEV program may not accomplish additional 
        greenhouse-gas control (beyond the control achieved by the EPA-
        DOT joint rule) because any extra ZEVs produced and sold due to 
        California's rule will be offset in the production plans of 
        automakers by extra sales of more high-emitting vehicles in the 
        50 states covered by the EPA-DOT rule; and

        -- The California ZEV program, by forcing automakers to sell 
        more expensive vehicles that are cheaper to operate, will 
        exacerbate greenhouse gas emissions due to two perverse 
        behavioral responses: some consumers will hold on to their old, 
        high-emitting vehicles longer than they would otherwise 
        (Gruenspecht, 2001), and those consumers who do purchase an 
        expensive ZEV will drive them more miles each year because 
        electricity is cheaper than gasoline (Tierney, 2011; Bialik, 
        2009).

    Even if these arguments are overstated, and the ZEV program is 
determined to be a promising contributor to global greenhouse gas 
control, it is highly unlikely that the program would pass a cost-
benefit test under the official technical guidance in OMB Circular A-4, 
which governs regulatory analysis in the federal government.
    The staff of the California Air Resources Board released in 
December 2011 a rudimentary analysis aimed at providing some analytic 
justification for the tighter ZEV requirements for model years 2018 to 
2025. The basic result of the staff analysis is that the energy savings 
provided by ZEVs, accumulated over the vehicle's life, are about equal 
to the $10,000 additional cost of producing a ZEV (CARB, 2011, Table 
5.7).
    The State of California does not have an OIRA-like office and thus 
CARB staff have considerable analytic discretion, more than EPA or DOT 
analysts have. Based on a careful read of the CARB analysis, I noted 
several analytical assumptions that would be unlikely to survive a 
careful OIRA review under OMB Circular A-4.
    1. The cost of producing ZEVs will decline by about 40% between 
today and 2025 due to learning by doing in the manufacturing process. 
The 40% figure is at the top of the range of estimates in the 
literature on learning by doing in the manufacturing sector. However, 
the battery advances necessary to satisfy the consumer's demand for 
driving range may cause the cost of future ZEVs to increase, not 
decline. CARB staff have also ignored the possible increase in prices 
of rare earths and lithium--these are inputs to lithium ion batteries 
and electric motors--that may result from Chinese actions, once the 
U.S. transport sector becomes significantly dependent on ZEVs. Rare 
earths and lithium currently account for a small percentage of the cost 
of producing a ZEV but that percentage could rise significantly in ways 
that are difficult for the United States to control. The Obama 
administration has recently joined with the EU and other nations in a 
WTO action against China, citing Chinese price manipulation of rare 
earths through export restrictions (Lee, 2012).
    2. The ZEV will last for an average of 14 years and be driven for 
186,000 miles. These figures are on the high end of the range of 
estimates of average light-duty vehicle lifetime and mileage.
    3. A 5% real discount rate is applied to future fuel savings to 
express them in present value. A 7% discount rate is typically applied 
to future fuel savings. Changing this assumption alone is likely to 
reverse the conclusion of CARB's ``payback analysis''.
    4. A long-term gasoline price of $4 per gallon is assumed. This 
figure could be too low or too high in the short run but fuel prices in 
the USA can be brought well below $4 per gallon over the 2018-2050 
period if the US enacts enlightened energy policies (e.g., expanded oil 
and gas production in the USA in conjunction with the tighter CAFE 
standards and other consumer-focused conservation measures to reduce 
demand for oil).
    Overall, based on the implausibility of CARB's assumptions, it 
seems unlikely that a ZEV mandate would pass a careful payback analysis 
from the consumer's perspective, at least not ZEVs produced in the pre-
2025 period. Consumers may be further disinclined to purchase PEVs if 
the federal and state tax incentives are reduced for fiscal reasons 
(California has already reduced its ZEV rebate from $5,000 to $2,500 
and the U.S. Congress has not renewed the $2,000 tax credit for the 
costs of installing a recharging system in one's home).
    If ZEVs prove to be a loser in the eyes of the consumer, automakers 
and dealers will have a difficult time selling them. The early 
commercial experiences with the Nissan Leaf and the Chevrolet Volt 
suggest that commercialization of ZEVs will not be easy. Moreover, 
surveys of consumers indicate that they are not willing to pay a large 
price premium to obtain the advantages of a plug-in vehicle (White, 
2012; Woodyard, 2011; Child and Sedgwick, 2012). Under these 
circumstances, either the ZEV mandate will have to be relaxed (as has 
occurred in the past) or automakers and dealers will have to cut prices 
of ZEVs, incur substantial losses on each ZEV that is sold, and raise 
prices on all non-ZEV products to cover the losses. In effect, the ZEV 
mandate will become a price increase on all new vehicles sold in the 
United States (a troubling scenario that is acknowledged in the CARB 
document). If this occurs, the result will be fewer new vehicle sales 
throughout the United States and fewer jobs at plants where new non-ZEV 
vehicles are produced and at plants of suppliers of non-ZEV vehicles.
    The job losses from the ZEV mandate are unlikely to occur in the 
State of California because very few automotive suppliers and vehicle 
assembly plants are located in California. This is a point noted in the 
CARB document. Here are some examples of plants that might be adversely 
impacted, since they are busiest North American plants that assemble 
non-ZEV vehicles (measured by 2011 production levels).

     1. VW/Puebla, Mexico
                                            514,910
     2. Ford/Kansas City, Missouri
                                            460,338
     3. Nissan/Aguascalientes, Mexico
                                            410,693
     4. GM/Oshawa, Ontario
                                            380,149
     5. Ford/Dearborn, Michigan
                                            343,888
     6. Hyundai/Montgomery, Alabama
                                            342,162
     7. Nissan/Smyrna, Tennessee
                                            333,392
     8. Ford/Hermosillo, Mexico
                                            328,599
     9. Toyota/Georgetown, Kentucky
                                            315,889
    10. Ford/Louisville, Kentucky
                                            310,270

    The supplier community for non-ZEV vehicles also has a broad 
geographic distribution (including many plants outside the United 
States) but many suppliers locate their plants near assembly plants in 
the United States (e.g., in the Midwest and the South).
    The CARB analysis does not make employment forecasts outside of 
California with and without the ZEV regulation. CARB does, however, 
forecast positive job impacts in California because a variety of the 
companies that makes recharging equipment for electric vehicles are 
located in California (CARB, 2011, 68-9). I think it is fair to say 
that the employment analysis of the California ZEV mandate, if had been 
conducted under OIRA review, would have looked at many more regions of 
the United States than the state of California.
    In summary, federal regulators have permitted the State of 
California to promulgate a costly ZEV mandate that, in reality, may do 
little or nothing to protect the world against the forces of global 
climate change. The economic impacts of the California program are 
likely to be significant and nationwide in scope. A comprehensive 
benefit-cost analysis of the ZEV program has not yet been performed, 
yet the program is already on a clear path toward implementation.
    Congress can address this problem in a general regulatory reform 
bill. In particular, federal agencies should be required to use their 
powers to restrict or reform state regulatory actions to ensure that 
regulatory benefits justify costs. When a federal agency decides to 
allow state regulators to issue rules with national economic 
ramifications, the agency should be required to justify the decision 
with a benefit-cost analysis under OMB Circular A-4.
    Third, federal regulators are issuing hazard determinations that 
appear to be at tension with findings reported by committees of the 
U.S. National Research Council/National Academy of Sciences. A hazard 
determination is a claim that exposure to a technology or chemical 
substance is known to be hazardous to human health. Congress can 
address this problem by requiring OIRA and/or the White House Office of 
Science and Technology Policy (OSTP) to resolve disputes about hazard, 
at least in cases where there have been clear determinations by NRC/
NAS.
    The federal government's recent handling of formaldehyde 
illustrates this conundrum. Formaldehyde is a widely used industrial 
chemical that is useful in activities ranging from housing construction 
to health care services. Each year sales of formaldehyde are worth 
about $1.5 billion and products that make use of formaldehyde are 
linked to about four million jobs and $145 billion in economic 
activity. It is estimated that, if formaldehyde had to be substituted 
in the U.S. economy, consumers would incur costs of about $17 billion 
per year. The industrial sector where formaldehyde generates its 
largest economic value is the housing industry.
    Human exposures to formaldehyde are already heavily regulated by 
multiple federal agencies because high doses of formaldehyde are known 
to cause irritation of the respiratory system and a rare form of nasal 
cancer. Spurred by a provocative report (IARC, 2004) from an 
international organization in Lyon, France, EPA--through the Integrated 
Risk Information System--made a preliminary determination in 2010 that 
formaldehyde exposure is known to cause leukemia as well as nasal 
cancer (EPA, 2010). If the scientific evidence is definitive, EPA 
should make a definitive hazard determination, since it may help 
trigger a variety of regulatory and market-based actions that offer 
additional protection to workers, consumers, and the general public.
    A hazard determination should not, however, be based on 
inconclusive scientific information. An official determination that 
formaldehyde exposure causes leukemia has the potential to cause a 
variety of adverse impacts on industry (e.g., lawsuits among people who 
have leukemia and may have been exposed to formaldehyde, and voluntary 
product withdrawals), even before any new federal regulation is 
adopted. The stigma of a hazard determination, once imposed, is very 
difficult to erase, even if the technology or substance is completely 
exonerated through additional scientific research.
    In this case, industrial scientists were skeptical of EPA's 
preliminary determination because the epidemiological literature on 
formaldehyde is difficult to interpret with confidence and the 
biological mechanism (i.e., how formaldehyde causes leukemia) is not 
clear. They persuaded Congress to compel EPA to subject their 
scientific evidence and reasoning to independent review by a panel of 
the National Research Council/National Academy of Sciences, an official 
scientific advisory group to the federal government. In a rather 
critical report, the NRC/NAS panel raised serious questions about EPA's 
theory that formaldehyde exposure causes leukemia while reaffirming the 
known link between formaldehyde exposure and respiratory cancer (NRC, 
2011; Jacobs, 2011). NRC/NAS also raised broader questions about the 
scientific credibility of EPA's IRIS process since there is a pattern 
of NRC/NAS questions about EPA's hazard determinations (e.g., in the 
cases of dioxin and perchlorate).
    Before EPA could respond to the NAS/NRC report, an entirely 
different federal agency--the Department of Health and Human Services' 
National Toxicology Program (HHS-NTP)--included in its Annual Report to 
Congress an addendum on formaldehyde. The addendum makes a strong claim 
about the formaldehyde-leukemia link that is similar to the preliminary 
EPA claim (NTP, 2011). NTP makes a limited effort to reconcile its view 
with the view of NRC/NAS but ultimately acknowledges that it agrees 
with NRC/NAS's view that it is not known--from a biological mode of 
action perspective--how formaldehyde is causing leukemia. NTP takes the 
position that a substance can be known to cause cancer even if the 
biological mode of action is unknown.
    A key question becomes who in the federal government should be in 
charge of managing and resolving these issues. The actions of EPA and 
HHS-NTP may not appear to be ``regulations'' but they are ``science-
policy'' determinations that can have the practical impact of a 
regulation (e.g., economic burdens). Before making these kinds of 
determinations, agencies should be expected to make an assessment of 
whether significant economic impact may result. If the impact is likely 
to be significant, an independent review by an organization such as 
NRC/NAS should be required, and federal agency compliance with the 
findings of the NRC/NAS panel should be overseen by OIRA and/or OSTP in 
consultation with other interested federal agencies.
    In order to play this role effectively, OIRA and OSTP will need a 
modest increase in scientific staffing above their current levels. 
However, it is important to recognize that the roles of OIRA and OSTP 
are not to redo the agency's hazard determination. Instead, the OIRA/
OSTP role is to determine whether a hazard determination should be 
referred to NRC/NAS and, if so, whether the agency has adhered to the 
determinations made by NRC/NAS in the agency's final determination. 
OIRA and OSTP will also supervise interagency discussions of these 
matters, since multiple federal agencies may have an interest.
    Finally, federal regulators, after being sued by pro- or anti-
regulation activist groups, are entering into binding agreements with 
litigants that call for new rulemakings within specified deadlines. The 
rulemaking commitments are being made prior to any benefit-cost 
analysis or public comment and without OIRA review. Sometimes the 
deadlines are set in a manner that ensures that benefit-cost analysis 
and OIRA review will be compromised. Congress should constrain agency 
powers to enter into such settlements without first conducting 
appropriate analysis (to determine whether a rule is necessary and 
desirable) and seeking public comment. Congress should require that 
ample time be made available for OIRA review.
    During my tenure at OMB, I experienced the consequences of 
``regulation by consent decree'' on several occasions. For example, EPA 
entered into a litigation settlement that virtually committed the 
agency to an expensive rulemaking aimed at reducing mercury emissions 
from coal-fired power plants. When EPA staff briefed me on the benefit-
cost basis for the mercury rule, it became clear that many of the 
emissions reductions expected from the mercury rule were already to be 
accomplished by another rule aimed at reducing nitrogen dioxide 
emissions from coal plants. (The same control technology that reduces 
nitrogen dioxide also reduces oxidized mercury but not elemental 
mercury). According to EPA staff, the residual benefits (of reducing 
elemental mercury) were not sufficient to justify the entire cost of 
the mercury rule, yet the agency was legally committed to issuing a 
rule by a fixed deadline, and expectations for a rule had been 
established in the environmental advocacy community. EPA tried to craft 
a different rationale for the mercury rule based on the ``co-benefits'' 
resulting from simultaneous control of a different pollutant, 
particulate matter. In principle, co-benefits should be considered in 
such a rulemaking. The obvious counterargument to this position is that 
direct regulation of particulate matter from many sources (not just 
coal plants) might be a more cost-effective method of capturing those 
benefits. With a judicial deadline forcing our hand, we did work with 
EPA to issue a mercury rule but it had a weak benefit-cost 
justification. The rule was ultimately overturned in court for reasons 
unrelated to the benefit-cost issue.
    The lesson I drew from this example is that regulators are not 
necessarily reluctant, during settlement negotiations, to commit 
themselves to rulemakings that have not yet been analyzed from a cost-
benefit perspective. If we are serious about regulatory reform, this 
practice needs to be restrained. I am pleased that legislators are 
already looking for solutions. For example, I understand that 
Congressmen Ben Quayle, Dennis Ross and Howard Coble have introduced 
H.R. 3862 ``Sunshine for Regulatees and Settlements Act of 2012'' and 
this bill has already been discussed at a separate hearing.
    Thank you for the opportunity to submit this testimony.
                               references
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Bialik, C. To Gauge Oil Savings, Economists Road Test the ``Rebound 
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California Air Resources Board. Advanced Clean Cars. Staff Report: 
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        7, 2011.

Child, C, Sedgwick, D. Conti Joins EV Battery Makers, Aims to be Among 
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Copeland, C. Mountaintop Mining: Background on Current Controversies. 
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Copeland, C. The Army Corps of Engineers: Nationwide Permits Program--
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        December 1, 2011.

Fahrenthold, D. EPA Crackdown on Mountaintop Coal Mining Criticized as 
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        Assurances for, and Long-Term Oversight of, Mines with Valley 
        Fills in Four Appalachian States, January 2010.

Global Insight Inc. Economic Primer on Formaldehyde. March 2006.

Gruenspecht, H. Zero-Emission Vehicles: A Dirty Little Secret. 
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        2004.

Jacobs, JP. NAS Reviewers Slam EPA's Formaldehyde Assessment. New York 
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Lee, D. U.S. Confronts China on Rare Earth Exports. Los Angeles Times. 
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Lindberg, T Ty and others. Cumulative Impacts of Mountaintop Mining on 
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        Carcinogens. Formaldehyde. U.S. Department of Health and Human 
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Quinones, M. State Officials Fume as Obama Administration Scrutinizes 
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        20, 2011.
                               __________

    Mr. Coble. You beat the red light. I was asleep at the 
switch. I didn't know you had concluded. Thank you, sir.
    Professor Katzen?
    I mean, you were finished, were you not, Dean? You were 
through with your testimony, or did I cut you off?
    Mr. Graham. Yes, sir. I was through. I did not conclude 
very eloquently, though.
    Mr. Coble. Pardon?
    Mr. Graham. I did not conclude very eloquently.
    Mr. Coble. Well, you did it very well.
    Professor Katzen, you are recognized for 5 minutes.

TESTIMONY OF SALLY KATZEN, VISITING PROFESSOR OF LAW, NEW YORK 
                    UNIVERSITY SCHOOL OF LAW

    Ms. Katzen. Thank you, Mr. Chairman, and I do appreciate 
the opportunity to be here today.
    As you noted in your opening comments, there have been a 
lot of polls and surveys and rhetoric about the increase of 
regulation under the Obama administration and the resulting 
drain on the economy. And apparently from the earlier 
discussion, everybody has a set of data that they can cite to 
with regard to the costs and the numbers of regulations. The 
credible data that I have looked at makes one point that I do 
not think was disputed earlier and that is that the net 
benefits of the regulations issued during the first 3 years of 
the Obama administration are quite substantial and that society 
is better off as a result.
    Now, there are obvious difficulties of and limitations on 
quantifying and monetizing the consequences of regulation. But 
if one is going to talk about the costs and one is going to 
champion cost/benefit analysis, then I think equal attention 
should be paid to the benefits.
    President Obama has taken several steps to ensure that the 
regulations that his Administration issues protect the public 
health, safety, and the environment while promoting economic 
growth. I believe the record of his Administration is strong 
and positive and the path charted during the last few years is 
the right path to pursue. He has put more emphasis and energy 
into the lookback initiative than any of the former 
Administrations that undertook such an effort, including the 
one that I served in and the one that Dr. Graham served in. And 
President Obama has been more aggressive than his predecessors 
in extending sound regulatory principles to the independent 
regulatory commissions, and this brings me to my second point.
    Dr. Graham speaks of broadening the scope of Federal agency 
action and you asked what can the Congress do. I would suggest 
that the place to start is with the IRC's. There is 
considerable public support across the spectrum for extending 
executive order requirements to the independent regulatory 
commissions. And the President's Council on Jobs and 
Competitiveness included this as one of its recommendations for 
regulatory reform, calling on Congress to take the lead rather 
than the President.
    The concern is well documented, and that is that IRC's do 
not typically engage in the analysis that we have come to 
expect of executive branch agencies. This is troubling because 
there is likely to be a lot of regulations issued pursuant to 
the Dodd-Frank Act, much of which will be generated by the 
IRC's.
    Past Presidents of both political parties have been 
reluctant to extend executive order requirements for economic 
analysis and OIRA review to the IRC's out of deference to 
Congress. So a sense of the Congress that such a course would 
be desirable would go a long way to ameliorate any concerns in 
this area, or Congress could simply pass a bill authorizing the 
President to take such action.
    Third, President Obama has focused needed attention on the 
issue of cumulative costs of regulation. Often an industry or 
sector is subject to regulation under various programs from a 
single division, under various divisions within a single 
agency, or by several agencies. And over time, the risk of 
contradictory or inconsistent requirements or unreasonable 
cumulative requirements becomes more of a possibility. The 
President's Council noted its concern with cumulative costs of 
regulation, and you heard earlier that OIRA has now issued 
guidance to the agencies providing various steps for them to 
take, and factors for them to consider, to give more content to 
the words of the executive order.
    In my written testimony, I suggest that OIRA could go 
further and use the planning process in section 4 of EO 12866 
to construct a framework for addressing the problems of 
cumulative costs. Currently both executive branch agencies and 
IRC's provide semiannually a summary of the most important 
regulatory actions they expect to issue in proposed or final 
form in that fiscal year or thereafter. These are published in 
the regulatory agenda, but the exercise is more of a paper 
exercise than an analytical tool. I would hope that the 
Administration would use this tool to better assess cumulative 
burdens, and I spell this out in my written testimony, which 
brings me to my last point.
    Resources. It was mentioned in a couple of the opening 
statements. When President Reagan tasked OIRA with the 
responsibility for centralized review of regulations, there 
were over 80 professionals at OIRA. The current number is 
roughly half of that. Meanwhile over the years, Congress has 
assigned OIRA substantial additional responsibilities, 
including administering various provisions of the Unfunded 
Mandates Reform Act, the Reg Flex Act, the Information Quality 
Act, and compiling and filing various reports to Congress. Now, 
the same can be said for the regulatory agencies; they have 
been asked to do more with the same or fewer resources as we 
straight-line or chip away their budgets.
    But the focus of this hearing is on OIRA where the 
disparity between responsibilities and resources is very clear. 
In fact, each of us here is suggesting that OIRA do even more, 
and I think the answer is they need more. resources I 
understand the appeal for smaller Government, but having the 
privilege of having served as an Administrator of OIRA, I 
believe that the OIRA staff is the best investment we have in 
further progress in the regulatory area. Again, the President's 
Council called for an increase in resources, and I strongly 
concur with that recommendation.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Katzen follows:]
Prepared Statement of Sally Katzen, Visiting Professor of Law, New York 
   University School of Law, and Senior Advisor at the Podesta Group
    Chairman Coble, Ranking Member Cohen, Members of the Subcommittee. 
Thank you for inviting me to testify today about the Office of 
Information and Regulatory Affairs (OIRA) and the state of federal 
regulatory policy and practice under the Obama Administration. The last 
oversight committee hearing was in July 2010, and much has happened 
since then. I believe that the record is strong and positive, and the 
path charted during the last few years is the right path to pursue.
    I served as the Administrator of OIRA at the Office of Management 
and Budget (OMB) for the first five years of the Clinton 
Administration, then as the Deputy Assistant to the President for 
Economic Policy and Deputy Director of the National Economic Council, 
and then as the Deputy Director for Management of OMB. After leaving 
the government in January 2001, I taught administrative and 
constitutional law courses at various law schools and courses in 
American Government at several undergraduate institutions. Currently I 
am teaching a seminar in advanced administrative law and a first-year 
course, the Administrative and Regulatory State, as a Visiting 
Professor at NYU School of Law. I am also a Senior Advisor at the 
Podesta Group here in Washington. Before entering government service in 
1993, I was a partner at Wilmer, Cutler & Pickering, specializing in 
regulatory and legislative issues, and among other professional 
activities, I served as the Chair of the American Bar Association 
Section on Administrative Law and Regulatory Practice (1988-89). During 
my government service, I was the Vice Chair (and Acting Chair) of the 
Administrative Conference of the United States (ACUS). Since leaving 
the government in 2001, I have written articles for scholarly 
publications and have frequently been asked to speak on administrative 
law in general and rulemaking in particular.
    There has been a great deal of rhetoric about the increase of 
regulations, and the drain on the economy of the resulting regulatory 
burden, under the Obama Administration. There have, however, been very 
few facts to support these assertions or to put the available data in 
context. The data that I have seen--filed in Reports to Congress by OMB 
and in testimony and other statements by those who have compiled and 
analyzed the information--tell a very different story.
    Last Friday, March 16th, OIRA posted to its website a draft of its 
2012 Report to Congress on the benefits and costs of federal 
regulation, which contains the latest available data. [These Reports to 
Congress have been submitted annually for over a decade now, by 
administrations of both political parties, presenting consistent data 
sets compiled by the career staff using the same methodology over the 
years.] The draft 2012 Report shows that while the number of 
significant rules issued in the first three years of the Obama 
Administration was higher than the number issued during the last three 
years of the Bush Administration, the estimated total cost of those 
rules was virtually the same. More importantly, the total estimated 
benefits of the rules issued during the first three years of the Obama 
Administration was significantly greater than the costs of those rules, 
leading to substantial net societal benefits from the rules issued 
during the Obama Administration. The draft Report candidly discusses 
the difficulties of and limitations on monetizing costs and benefits, 
but clearly if one is going to speak of regulatory costs, and embrace 
cost/benefit analysis, then it is critical that one also acknowledge 
regulatory benefits.
    It was interesting to note that, contrary to the claims of ever 
increasing regulatory activity by the Obama Administration, the data in 
the draft Report show that the number and costs (but not the benefits) 
of significant rules issued in 2011 was actually lower than those 
issued in 2010. It is possible that the number and/or cost of 
regulations would increase in 2012 (although I would be surprised if 
the net benefits would not also increase significantly). I say this 
because the 111th Congress enacted several major pieces of legislation, 
including the Patient Protection and Affordable Care Act and the Dodd-
Frank Wall Street Reform and Consumer Protection Act, both of which 
include delegations of authority to federal agencies and called for 
hundreds of regulations to implement these laws. That is what the 
Constitution assigns to the Executive: ``to take care that the laws be 
faithfully executed.'' (Art. II, Sec. 3.) There may be some in the 
current Congress who want to repeal these laws, but their efforts to 
that end have so far been unsuccessful, and as long as the laws are on 
the books, the agencies are responsible for issuing implementing 
regulations giving effect to the legislative mandates.
    Since the last oversight hearing, there have been other events 
involving OIRA that are worth mentioning. The most important is 
President Obama's signing Executive Order 13563, which called for 
restoring a proper balance in regulations (protecting public health, 
safety and the environment while promoting economic growth) and which 
reaffirmed the importance of centralized review and OIRA's role in that 
effort. It is obvious from a number of well publicized actions that 
these directives are having an effect. It is also obvious that the 
agencies are taking seriously the President's directive to engage in a 
retrospective review of existing regulations to reduce, improve or 
eliminate those regulations that are outmoded, ineffective or unduly 
burdensome. I should note that every recent President has called for a 
review of existing regulations, including Presidents Clinton and George 
W. Bush, but I have never seen the emphasis and energy that the current 
Administration is putting into this effort.
    President Obama has also been more aggressive than his predecessors 
in extending sound regulatory principles to the Independent Regulatory 
Commissions (IRCs)--those multi-headed agencies, such as the SEC, FCC, 
FTC, FEC, etc., whose members do not serve at the pleasure of the 
President and can be removed only for cause. Since the inception of 
centralized regulatory review by OIRA, the IRCs were treated 
differently than Executive Branch agencies. Neither President Reagan's 
Executive Order (EO 12291) nor President Clinton's Executive Order (EO 
12866) extended the requirements for economic analysis or OIRA review 
of proposed rules to the IRCs (although President Clinton did include 
the IRCs in Section 4's Planning Mechanism provisions of EO 12866). In 
both 1981 and 1993, the legal advisors to the executive order draftsmen 
concluded that the President had authority to impose these analytical 
requirements and review the rules of IRCs, but they decided not to do 
so for political reasons--namely, out of deference to the Congress.
    Like his predecessors, President Obama did not extend centralized 
review to the IRCs in EO 13563. But he did issue an Executive Order in 
July 2011 (EO 13579) urging the IRCs to ``promote th[e] goal'' in EO 
13563 of producing a regulatory system protecting ``public health, 
welfare, safety and our environment while promoting economic growth, 
innovation, competitiveness, and job creation.'' Moreover, he singled 
out the requirements concerning ``public participation, integration and 
innovation, flexible approaches, and science'' and stated that ``[t]o 
the extent permitted by law, independent regulatory agencies should 
comply with these provisions.'' In addition, he directed the IRCs to 
develop plans within 120 days for retrospective review of their 
existing rules, ``consistent with law and reflecting [their] resources 
and regulatory priorities and processes.''
    I would encourage the President to go further and extend the 
provisions of the applicable Executive Orders relating to economic 
analysis and OIRA review of proposed regulations to the IRCs. There is 
considerable support across the political spectrum for such an effort, 
and the President's Council on Jobs and Competiveness specifically 
included this as one of its recommendations for regulatory reform in 
both its interim and final reports (although it called on Congress, 
rather than the President, to take the lead on this issue). About a 
year ago, Resources for the Future (a centrist think tank) held an all-
day conference where various scholars and former government officials 
(from both sides of the aisle) from five different IRCs explored the 
status of IRC analysis in rulemaking and the agencies' potential to do 
more. The materials compiled for that conference would provide a solid 
foundation for your further consideration of this issue.
    The concern is that the IRCs do not typically engage in the 
analysis that has come to be expected for Executive Branch agencies. 
For example, in the draft 2012 OMB Report to Congress referred to 
earlier, it appears that roughly half of the rules developed by the 
IRCs over a ten-year period have no information on either costs or 
benefits, and those that do have very little monetization of benefits 
and costs; the draft cites the Government Accountability Office (GAO) 
for reporting that ``none of the 17 rules [issued during FY2011] 
assessed both anticipated benefits and costs.'' This is very troubling 
because, as noted above, there is likely to be a large increase in 
regulations under the Dodd-Frank Act, the vast majority of which will 
be originating from IRCs.
    While there appears to be a growing consensus on requiring IRCs to 
conduct economic analyses in developing their rules, there is less 
agreement on whether and, if so, what entity should review and critique 
those analyses the way OIRA reviews the work of Executive Branch 
agencies. It is generally accepted that nothing focuses the mind like 
knowing that someone will be reading (or listening) to your paper (or 
presentation), and that such review virtually always improves the 
product. For all practical purposes, the way Executive Branch agencies 
and IRCs conduct rulemaking is the same, but the differences between 
the two types of agencies in terms of their structure and their 
relationship to the President have led me to conclude that the review 
process or the ``enforcement'' of any requirement for economic analysis 
should not--possibly, cannot--be the same without compromising the 
independence of the IRCs when they do not acquiesce in OIRA's 
assessment.
    Congress confronted this very question in the Paperwork Reduction 
Act, where it provided for OIRA review of information collection 
requests (i.e., government forms) from all agencies, Executive Branch 
and IRCs. The solution Congress adopted was to authorize OIRA to 
approve or disapprove paperwork from Executive Branch agencies directly 
(Sec. 3507(b) and(c)), but to allow IRCs to void any disapproval by 
majority vote, explaining the reasons therefor (presumably in a public 
meeting) (Sec. 3507 (f)). A variation on that approach could be used 
for regulatory review, whereby OIRA would provide its views of the 
underlying analysis in writing to the IRC, and that document would be 
presented to the Commission (presumably in a public meeting), where the 
critiques/suggestions could be discussed and disposed of (accepted or 
dismissed) per the will of the Commission before final approval of the 
regulatory action.
    As noted above, past presidents of both political parties have been 
reluctant to extend executive order requirements for economic analysis 
and centralized review by OIRA to the IRCs out of deference to 
Congress. A Sense of the Congress that such a course would be desirable 
would go a long way to ameliorate any concerns in that regard. Or 
Congress could pass a bill authorizing the President to take such 
action, which I think the President would likely sign. Alternatively, 
Congress could designate an entity outside the Executive Branch as the 
reviewer of the economic analysis undertaken by the IRCs. Two obvious 
candidates are the GAO and the Congressional Budget Office (CBO). The 
former was given a limited (check the box) role in reviewing and 
commenting (to Congress) on the regulations issued by IRCs under the 
Congressional Review Act, and the latter already has analytical 
capacity that could be directed to this effort. Both of these entities 
would need additional staff and resources if they were assigned this 
task, as would OIRA. While neither GAO nor CBO has OIRA's level of 
expertise or experience with reviewing economic analyses, both have the 
``virtue'' of being identified with Congress rather than the President, 
which may be important to those who read ``independent regulatory 
commission'' as independent of only one and not the other political 
player.
    President Obama has also focused needed attention on the issue of 
the cumulative costs of regulation. Often an industry or a sector of 
the economy is subject to regulation under various programs--indeed, 
under various offices or divisions within a single agency or by several 
agencies. Over time, the risk of contradictory or inconsistent 
requirements or unreasonable cumulative requirements becomes more of a 
possibility. EO 12866 mentioned ``the costs of cumulative regulations'' 
toward the end of a statement of principles governing rulemaking. 
(Sec.1 (b) (11).) EO 13563 gave it more prominent attention. (Sec.1 (b) 
(2).) But more can and should be done to give content to these words.
    OIRA has traditionally focused virtually all of its time and 
resources on the review of individual regulatory actions developed by 
the agencies--one at a time (except where two or three arrive in close 
proximity to one another). While this review is critical not only in 
providing a dispassionate and analytical ``second opinion'' on an 
agency's significant regulatory actions and in ensuring that each new 
significant regulatory action is consistent with the President's 
policies and priorities (as well as coordinating regulatory policy 
within the Executive Branch through the inter-agency process over which 
it presides), I think OIRA should do more than just one-by-one reviews. 
The issues plaguing our country are not likely to be solved by a single 
regulatory action, nor do they always fit neatly in one agency. Whether 
it be clean air, worker safety, food purity, energy efficiency, or a 
host of other issues that are of concern, it is often essential to look 
beyond the specific proposal du jour and consider the broader picture--
in effect, construct a framework for addressing the problem, allocating 
resources, and ensuring a coherent and comprehensive regulatory 
solution.
    The mechanism for embarking on and developing such an approach is 
already in place--Section 4 of Executive Oder 12866, ``Planning 
Mechanism.'' Under sub-section (c), ``The Regulatory Plan,'' both 
Executive Branch agencies and IRCs must send to OIRA (for OIRA review 
and circulation to other interested agencies) a document that includes 
a statement of the agency's regulatory objectives and priorities as 
well as a summary of ``the most important significant regulatory 
actions that the agency expects to issue in proposed or final form in 
that fiscal year or thereafter.'' These materials are published in the 
semi-annual Unified Regulatory Agenda, but the process itself has 
become more of a paper exercise than an analytical tool. This is not 
new; before, during and after my tenure at OIRA, the focus was on the 
transactions. But it does not have to be that way. Professor Peter 
Strauss of Columbia law School and others have called for OIRA to put 
meat on the bones of this planning process. I concur.
    This initiative and extending OIRA review to the IRCs are, in my 
view, definitely worth pursuing. But OIRA cannot take on these tasks 
with its existing resources. When President Reagan signed EO 12291, 
there were over 80 professionals at OIRA; the current number is roughly 
half of that. I understand the widespread appeal for smaller government 
as an abstract concept. But it would, in my opinion, be penny-wise and 
pound foolish to seek to apply that concept indiscriminatorily across 
all programs and agencies. As the President's Council on Jobs and 
Competitiveness stated in its final report: ``Thorough review by OIRA 
improves the quality of regulatory analysis and decisions . . . . Even 
modest improvements in regulations can yield billons of dollars in 
benefits to the public.'' Having had the privilege of serving as 
Administrator of OIRA, I am convinced that the staff of OIRA is one of 
the best investments we can make to continue progress in the regulatory 
arena. For that reason, I agree with the Council's recommendation that 
``OIRA's staff be increased to a level that will permit it to conduct 
meaningful review of both executive branch and independent agency 
regulations.''
    Thank you again for inviting me to participate in this hearing, and 
I look forward to answering any questions you may have.
                               __________

    Mr. Coble. Thank you, Professor Katzen.
    Good to have all three of you with us.
    Dean Graham, the Obama administration and OIRA--it has been 
said that they have failed to assess both the cost and the 
benefits of new major regulations. Is that because of lack of--
well, first of all, do you agree with it? Is it because of lack 
of techniques to identify costs and benefits, a lack of 
willpower at OIRA, or a lack of adequate staff at OIRA, or a 
combination of all of the above?
    Mr. Graham. Well, the easy answer is it is a combination of 
all of the above.
    And having heard the testimony from earlier in the hearing, 
I think one thing that is important to keep in mind is a lot of 
the impetus for this regulation--and I do not mean to say this 
too loudly since we are in the Congress, but it does come from 
the Congress. When I came to OIRA as an administrator, it was 
2001, and I was with a team of conservative deregulators and we 
were going to get rid of all this regulation. And then what 
happened? 9/11 happened, and all of a sudden I was approving 
all kinds of regulations. So the political winds go back and 
forth on this subject.
    But it is without question, if you just look at the raw 
data, that you are seeing a lot of regulatory activity in the 
Obama administration. And I think the thing that is 
particularly concerning given where we are in the economic 
recovery is you have a lot in the pipeline, whether it be 
through Dodd-Frank, whether it be the environmental 
regulations, whether it be the Obamacare regulations. And that 
is the part of it that is concerning because you have got a lot 
of that coming down the pike and we are not really sure what 
its impact is going to be.
    Mr. Coble. I thank you, Dean.
    Professor Katzen, I agree with your well-made suggestion 
that independent agencies be brought within the scope of the 
OIRA regulatory review process. Do you think that Congress 
should consider extending OIRA's authority to independent 
agencies through legislation?
    Ms. Katzen. I think the President has the authority to do 
it, but past Presidents--and there have been several now, 
including the current President--have not taken that step. 
President Reagan was told he had the legal authority and he 
declined to do it. President Clinton was told he had the legal 
authority and he declined to do it. And President Obama has 
declined to do it. I think that is because of deference to 
Congress. Independent agencies are some strange creatures that 
we have in our administrative state, and I think that a sense 
of the Congress, a joint resolution by the Congress that the 
President could do it, would help, or Congress could do the 
legislation itself as long as it was targeted on just that one 
issue. What has happened with many of the regulatory bills that 
we have seen is that they begin attracting a lot of other 
issues and that could bog it down, but if it were limited to 
the IRC's only, I believe that it would have support across the 
spectrum and probably would be signed by the President.
    Mr. Coble. Thank you, Professor.
    Dean, you may recall my comment to Mr. Sunstein regarding 
the trend, the President's trend--strike that--President Bush's 
trend as opposed to the Clinton number of regulatory bills 
versus the Obama trend compared with the Bush. And my 
conclusion was--and I was doing it from memory--that the Bush 
trend is lower than President Obama's trend. Is that accurate?
    Mr. Graham. I would have to go back and look at the 
specific numbers. One thing to keep in mind here is that the 
two Administrations--they were implementing regulations with 
different types of legislation behind them, and how much of it 
was the executive branch and how much of it was Congress, and 
the two situations I think has to be looked at carefully. To be 
honest with you, I do not have a firm answer for you on that.
    Mr. Coble. Okay.
    Mr. Graham. Give me a question and I will do best to figure 
it out for you.
    Mr. Coble. I thank you, sir.
    The distinguished gentleman from South Carolina is 
recognized, Mr. Gowdy, from the land of the palmetto.
    Mr. Gowdy. Thank you, Chairman Coble, my friend from the 
great State of North Carolina. And, Mr. Chairman, I had some 
questions for Professor Sunstein and it is my fault, not his, 
that I was detained coming back from votes.
    But I may, nonetheless, since we have a panel of equally 
bright people on the second panel--I may try to go ahead and 
ask them anyway. Mr. Graham, I will start with you.
    I seem to remember the President in his State of the Union 
saying he had identified 500 rules or regulations that could be 
rescinded. Did I dream that or was that actually said?
    Mr. Graham. First of all, it is good to see you again.
    Mr. Gowdy. Thank you.
    Mr. Graham. It has been a good 8 or 10 years. You are 
looking extremely good. I wish I could say the same for myself.
    I remember vividly working on 500 existing regulations for 
President Bush that we had identified, and I believe they were 
predominantly in the manufacturing sector of the economy. And 
in the final analysis, my recollection is after all of our 
battles with the agencies and trying to get it done, we had 
about one in four success rate on those 500 regulations.
    You know, in this town, you think OMB, OIRA--they can just 
do whatever they want and these people are so powerful. But in 
reality, the agencies, you know, both at the career level and 
the political level--they are very savvy. They have a lot 
invested in a lot of these regulations, and even when you have 
a President who is deeply interested in it, you have an OIRA 
staff who is charged to do it, and you work on these things, it 
is a pretty tough slog. That is a one in four hit rate. It 
would be interesting to compare that to what we have going in 
this Administration.
    Mr. Gowdy. Just for purposes of the record, something came 
up--I cannot recall when--earlier with respect to a bill--the 
chief sponsor is the gentleman from Arkansas, former United 
States Attorney Tim Griffin. And, Mr. Chairman, just for the 
record, I wanted to make it clear because I think Professor 
Sunstein cited one of the problems with the bill would be the 
inability to do what you and I were just discussing, which is 
to rescind a rule or regulation, but the bill was prescient 
enough to take care of that because it specifically says that 
it does not prohibit any substantive action by an agency for 
repealing a rule. It also allows the President to make 
exceptions if he wants to.
    I want to ask you about another bill. Sue and settle 
agreements where you file the complaint with a settlement 
agreement contemporaneous. Nobody has a chance to object to it. 
There is a bill that we marked up yesterday. What are your 
thoughts on that as a form of rulemaking to sue a friendly 
agency and settle it before anybody knows what is going on?
    Mr. Graham. Well, I think it is an excellent question, and 
I will share an experience I had as OIRA Administrator with 
what we used to call the ``Mercury Rule'' that dealt with 
mercury emissions from coal-fired power plants. I think they 
now call it the Utility MACT Rule or something like that.
    But basically we were on a judicially set deadline to do 
that regulation before there had been a cost/benefit analysis 
of whether a regulation was even appropriate or whether or not 
the existing regulations that we were implementing on nitrogen 
dioxide and sulfur dioxide would have sufficient control on 
mercury as well, so that you wouldn't even need to have a 
separate regulation. Yet ultimately, to be candid, we ended up 
signing off and clearing a substantial mercury rule that really 
have a very solid cost/benefit analysis behind it because we 
had basically an agency that had signed a judicial order or a 
consent decree with a deadline that basically jammed OIRA in 
its ability to review a regulation like that. It does happen 
with some frequency.
    So I think the general idea of trying to find a way to get 
some public comment in the process before you sign one of these 
deals and making sure that a judge respects OIRA review time 
when they do these types of orders--I think both of those would 
be extremely helpful.
    Mr. Gowdy. I was trying to think back to the old job I had 
where the tool that was used most often to try to elucidate the 
truth was cross-examination. I cannot imagine having a trial 
where defense counsel was not able to cross-examine the lead 
case agent.
    But in a hearing not similar to this and with none of the 
participants that we have now--I will make that very clear--
there was a witness from the minority who said that science 
matters should not be subject to cross-examination, that we 
should just accept them because somehow science--the truth has 
already been elucidated, which I found amazing because my guess 
is that fingerprint experts, DNA experts, blood spatter 
experts, all of which fall under science would be cross-
examined.
    My time is up, but can you comment on what is the down side 
of allowing cross-examination during the rule or regulatory 
process because I think it is not always used? So why would we 
create a system where you couldn't use the power of cross-
examination?
    Mr. Graham. Well, I think it is another good question. I 
guess I would start by saying in the history of regulation, 
there were periods when so-called formal rulemaking with cross-
examination was more common. And my understanding is that 
agencies currently have the ability to go that direction if 
they really want to, but they find it much more efficient, 
meaning get more regulations out faster, to do the informal 
rulemaking process.
    I think it would be interesting to touch base with the key 
interest groups, both pro-regulation interest groups and groups 
that are burdened by regulation and have them give their views 
on whether they feel the process of merely electronic comment 
is sufficient or adequate compared to the cross-examination you 
are talking about.
    One thing is clear that would be very different. A 
scientist or an economist at a regulatory agency cannot really 
be subject to cross-examination in an informal rulemaking 
context. So really, you change the dynamics significantly in 
the burden on the agency--their technical people--to defend 
what they are doing when you have that cross-examination 
opportunity.
    Mr. Gowdy. Mr. Chairman, thank you for calling this 
hearing. Again, we had a wonderful panel, both sets of panels 
who are experts in the field.
    Mr. Coble. And, Trey, I thank you, sir. You will be pleased 
to know we are going to keep the record open 5 days so you and 
Mr. Sunstein will be able to communicate.
    Mr. Gowdy. I am sure he will be glad to hear that, Mr. 
Chairman. Thank you.
    Mr. Coble. Now, let me say to our two travelers, you all 
are invited to stay while Dr. Williams testifies, or if you 
must depart, you may be excused, but that will be your call.
    Ms. Katzen. We will stay till 4.
    Mr. Coble. And we appreciate that.
    Dr. Williams, good to have you, and we will hear from you 
now.

TESTIMONY OF RICHARD A. WILLIAMS, DIRECTOR OF POLICY RESEARCH, 
          THE MERCATUS CENTER, GEORGE MASON UNIVERSITY

    Mr. Williams. Good afternoon and thank you, Mr. Chairman, 
for the opportunity to testify today. I am Richard Williams, 
Director of Policy Research at the Mercatus Center at George 
Mason University. My testimony today is based on 30 years of 
experience and research on regulations, 27 of which were spent 
at the Food and Drug Administration. Today I want to address 
why we cannot solely look to the executive branch to improve 
regulations.
    During the last year of his presidency, President Carter 
said although he knew from the beginning that dealing with the 
Federal bureaucracy would be one of the worst problems he would 
have to face, the reality had been even worse than he had 
anticipated.
    President Obama may be drawing the same conclusion. Despite 
his expectations that careful consideration will be given to 
the benefits and costs of proposed regulations, he acknowledged 
just a few months ago that sometimes these rules have gotten 
out of balance, placing unreasonable burdens on business, 
burdens that have stifled innovation and have had a chilling 
effect on growth and jobs.
    Why have Presidents been so unsuccessful at managing 
executive branch agencies? One reason is that agencies have a 
monopoly on analyzing their own regulatory decisions. 
Oftentimes this results in decisions more about what is 
perceived as good for the agency than fulfilling the 
President's goals or meeting the needs of the American public. 
Nevertheless, for the past 15 years, OMB has provided Congress 
with reports on the combined annual benefits and costs of 
Federal agency regulatory programs. All have reported benefits 
exceeding costs. But these reports are misleading for two 
reasons. I am putting a chart up.
    First, in every year, the actual number of regulations that 
have quantified benefits and costs is a tiny fraction of the 
overall number of final rules. For example, in the fiscal year 
2010 report, there were over 3,000 final rules and only 18 of 
them had quantified benefits and costs.
    The second reason is for those that they do analyze, the 
quality of the analysis is low. Since 2008, the Mercatus Center 
has been analyzing all of the economically significant proposed 
regulations, 127 of them so far. The standard for our review is 
based on the executive branch's own guidance to agencies. Over 
this 4-year period, which covers two Administrations, the 
average score is 28 points out of a possible 60 points. And 
despite good intentions, the Obama administration had an 
average score last year of 29, again out of 60.
    But why should the agencies try to do good quality 
analysis? After all, good analysis can expose regulations that 
only benefit special interests and aren't necessarily good for 
the public at large.
    In 1981, 30 years ago, President Carter created the Office 
of Information and Regulatory Affairs, otherwise known as OIRA, 
to try and capture some measure of control over the agencies, 
particularly ensuring that they do a good job on regulatory 
analysis. While OIRA has enjoyed some success, our report card 
shows it is clearly not sufficient. In fact, as Professor 
Katzen said, OIRA staff has been made harder. They have been 
reduced from a staff of about 90 to 45 while staffing at the 
executive branch that they oversee has more than doubled to 
277,000 employees.
    In my written testimony, I have outlined a number of steps 
that Congress can take toward remedying this situation.
    First, make regulatory impact analysis mandatory under law. 
If agencies had a statutory obligation to produce complete 
regulatory analysis, they would pay more attention to it. A 
current example is the Securities and Exchange Commission. 
Congress made it a law that they analyze the economic 
consequences of their rules. And after having lost three court 
cases in a row based on poor analysis, they must now take 
action to seriously measure and consider the benefits and costs 
of their rules.
    Second, give stakeholders and OIRA a chance to comment 
early on the really big rules before the agencies choose a 
course of action and dig their heels in. This can be 
accomplished by requiring agencies to publish an advance notice 
of the problem they are trying to solve, along with the 
benefits and costs associated with various ways to solve it.
    Third, Congress can also establish a minimum review time 
for OIRA to review economically significant rules. For some of 
the most significant rules that this Administration has passed, 
eight interim final rules implementing the health care law, 
OIRA had an average review time of only 5 days. Is it because 
the Department of Health and Human Services did great analysis? 
No. The average score for these economically significant rules 
was 18 points out of 60. This is truly regulating in the dark.
    Despite repeated attempts to use small legislative fixes 
and executive orders to improve the regulatory process, the 
improvements have not materialized. It is time to establish 
statutory standards that can incentivize agencies to produce 
quality regulatory analysis and use them to advance social 
welfare.
    I finished before my time.
    [The prepared statement of Mr. Williams follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Coble. Thank you, Dr. Williams. I appreciate that. I 
appreciate the testimony from all of you.
    Doctor, what do you believe would be the benefits of 
allowing OIRA to perform cost/benefit and other review of new 
rules from independent agencies?
    Mr. Williams. As Professor Katzen says, I think there would 
be a tremendous benefit. Right now, as we get ready to 
implement the Dodd-Frank law--in fact, it is already taking 
place now. They are producing like one rule a day. None of 
those rules are going to be analyzed unless they come from the 
Department of Treasury. So I think it would make sense to 
either have the agencies review them, do them, or to give OIRA 
a chance to review them.
    I will say I do think it is always a problem when the 
agencies are analyzing their own decisions. Their incentives 
are not to do otherwise than to define the benefits exceeding 
costs. So the decisions they tend to make very early.
    Mr. Coble. Doctor, I have heard criticism--and perhaps you 
all have as well--alleging that the Obama administration has 
not been as diligent as it could in the matter of regulatory 
reform. Between the Obama administration's executive orders, 
presidential memoranda, and guidance on regulations and 
regulatory review, has the Obama administration added anything 
new to the regulatory review process that has teeth or has 
muscle?
    Mr. Williams. I would say no. In fact, the most recent 
executive order, the one that requires an analysis of 
cumulative costs--that is just a repetition of the executive 
order that was produced under President Clinton. Apparently the 
agencies are not paying any attention to it. They have not paid 
any attention to it since 1993. I can't imagine they are going 
to pay much attention to it now.
    So I don't think that anything new has been added, and I 
think that is the problem. The executive orders that the 
President issued are never going to solve the problems that we 
have. We have to change the underlying institutions if we are 
going to begin to address these problems.
    Mr. Coble. Thank you, Dr. Williams.
    Dean Graham or Professor Katzen, do you all have any 
closing remarks prior to departure?
    Ms. Katzen. I would like to address a few things, if you 
will permit me.
    First of all, I think there have been real results. We saw 
this summer a major Environmental Protection Agency regulation 
was withdrawn. I am speaking of the Ozone NAAQS. It was sent 
back to EPA to be reconsidered and it was withdrawn. There was 
a noise regulation that was proposed by OSHA that was 
withdrawn. And these are just two of the most well publicized 
withdrawals. There have been a series of individual 
transactions that have made a difference, and I think that the 
regulatory lookback itself, as I said in my comments, has 
gotten far more emphasis and energy than under any of the 
previous Administrations, all of whom tried it.
    And lastly, I would like to state for the record that the 
amount of time for review may be important; it may be telling, 
but it is not necessarily dispositive. In many of the 
instances, especially the ones that Dr. Williams referred to 
from the Affordable Care Act, these come from a very 
prescriptive statute with very tight dates due for the 
resulting regulations. There would not be a lot of opportunity 
to make a lot of changes, even if there were the most robust 
and most technically proficient cost/benefit analyses attached 
to them.
    Similarly, his figure that there were 18 regulations out of 
3,000 final rules is off the mark. Of the 3,000 final rules, 
fewer than 100 are economically significant. Most of the 3,000 
are relatively mundane, if not ministerial, and it would not 
make any sense in a cost/benefit calculation to do a cost/
benefit analysis for whether you want to change the time for 
filing your tax returns from April 15th to April 16th if the 
15th falls on a Sunday. You do not need to do cost/benefit 
analyses for a lot of these final rules.
    Looking at the rules where CBA is required, my recollection 
is that there were roughly 50 that were economically 
significant--rounding--of which 30 were transfer rules. These 
transfer rules were rules that did not impose any costs on the 
private sector. They were giving benefits to people from 
taxpayer money, and they are specified by Congress. So a cost/
benefit analysis for a transfer rule does not make sense.
    If we could focus on where the problems are, I think that 
would be highly beneficial. And while there are some poster 
children, I think they should be addressed individually.
    I thank you for your patience.
    Mr. Coble. Thank you, Professor.
    Dr. Williams or Dean Graham, any final words?
    Mr. Graham. Very quickly just to endorse Sally's comment 
about the need for some attention to OIRA staffing. It may be 
at the 45 level close to its all-time low, maybe not exactly 
low, but very, very low compared to historically.
    And the second point is Sally did mention appropriately the 
return of the ozone rule that casted at the instruction of 
President Obama--I read very carefully the language in that 
because it is the only return letter that I have seen in this 
Administration. And basically what it says is not that the 
cost/benefit analysis wasn't done well or not that the costs 
and benefits weren't in sync, but that politically this is not 
a good time to do this kind of regulation. I mean, so basically 
you don't have a single case yet where OIRA has said in a 
return letter this regulation has costs in excess of benefits. 
We are not going to do this one. I must have had like 2 dozen 
of those in the first 6 months that I was at OIRA. So it is a 
totally different kind of situation. It should be concerning.
    Mr. Coble. Pardon?
    Mr. Graham. It should be of concern.
    Mr. Coble. Thank you, Dean.
    Dr. Williams, a final word?
    Mr. Williams. Yes, just two points on the health care 
rules. Our analysis showed that they did, in fact, miss 
significant opportunities, alternatives that would have been 
much more efficient than the ones they chose. So it was not 
just that those things were statutorily defined and they didn't 
have much wiggle room.
    The second thing is basically on the lookback. We now have 
165,000 pages of rules in the Code of Federal Regulations. If 
you sat down to read them, it would take you approximately 3 
and a half years. I don't think that requiring agencies to look 
at them rule by rule is ever going to get us very far. I think 
we have got to find an alternative measure.
    Mr. Coble. Well, folks, you all will recall, as I said at 
the outset, I am not anti regulations. I am anti sloppy 
regulations. And I think we can do better.
    And I think this has been a very distinguished panel. I 
apologize again for the delay with voting, but you assume that 
risk when you come to this Hill. You may have a delay put 
together. But I thank you again.
    Without objection, all Members will have 5 legislative days 
to submit to the Chair additional written questions for the 
witnesses, which we will forward and ask the witnesses to 
respond as promptly as they can so that their answers may be 
made a part of the record.
    Without objection, all Members will have 5 legislative days 
to submit any additional materials for the record.
    And prior to adjournment, I would like to, without 
objection, introduce four articles applicable to regulatory 
matters from the Forbes Magazine, from Gallup, from The 
Heritage Foundation, and two from the Economist, and the 
Washington Times. I think that is all of them.*
---------------------------------------------------------------------------
    *See Appendix.
---------------------------------------------------------------------------
    Again, thanks to you all and I thank the witnesses. Have 
safe travels, particularly to my travelers. Dr. Williams, you 
arrive safely as well.
    We stand adjourned.
    [Whereupon, at 3:53 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

 Prepared Statement of the Honorable Steve Cohen, a Representative in 
Congress from the State of Tennessee, and Ranking Member, Subcommittee 
              on Courts, Commercial and Administrative Law
    It has been a little over a year and a half since the last time we 
had Cass Sunstein before us to testify about the initiatives of the 
Office of Information and Regulatory Affairs, and a lot has happened 
since then in terms of the President's efforts to enhance review of 
regulations.
    On January 18, 2011, President Obama issued Executive Order 13563, 
which supplemented and reaffirmed the principles of Executive Order 
12866, issued by President Clinton. EO 13563 added an emphasis on 
increasing public participation in the rulemaking process and 
identifying ways to reduce costs and simplify and harmonize rules 
through inter-agency coordination.
    EO 13563 clarifies that agencies must identify and consider 
regulatory approaches that reduce burdens and maintain flexibility and 
freedom of choice for the public, including considering alternatives to 
mandates, prohibitions, and command-and-control regulation.
    Perhaps most significantly, EO 13563 requires agencies to develop a 
plan to conduct a periodic review of existing significant regulations 
that ``may be outmoded, ineffective, insufficient, or excessively 
burdensome, and to modify, streamline, expand, or repeal them in 
accordance with what has been learned.''
    Mr. Sunstein issued a number of guidance memoranda regarding EO 
13563 and particularly its requirement that agencies conduct periodic 
review of existing significant regulations, emphasizing the need for 
agencies to ``consider strengthening, complementing, or modernizing 
rules where necessary or appropriate--including, if relevant, 
undertaking new rulemaking.''
    Just yesterday, Mr. Sunstein issued another guidance memorandum, 
this time addressing another aspect of EO 13563, which is the 
requirement that agencies work to address the potential cumulative 
effects of regulations.
    I look forward to learning the results to date of the President's 
push to have agencies improve and modernize the existing regulatory 
system.
    Based on some of the statements I have heard recently from some of 
my colleagues, I imagine we will also be discussing the volume and 
costs of regulations under the Obama Administration.
    I note that according to the Office of Management and Budget's 2012 
Draft Report on the Benefits and Costs of Federal Regulations, the net 
benefits of regulations in the first three years of this Administration 
totaled $91 billion, which is 25 times greater than during the 
comparable period under the Bush Administration.
    Moreover, fewer final rules have been reviewed by OIRA and issued 
by executive agencies during the first three years of the Obama 
Administration than in the comparable period of the Bush 
Administration.
    As to regulatory cost, the costs of economically significant rules 
reviewed by OIRA were highest in fiscal year 2007, during the Bush 
Administration. In fact, the costs of regulation were higher during the 
last two years of the Bush Administration than during the first two 
years of the Obama Administration.
    Finally, I would like to know from all of our witnesses what steps 
Congress can take to better help OIRA do its job, including whether 
Congress should provide OIRA with more resources.
    I thank our witnesses for being here today and look forward to 
their testimony.

                                

Response to Post-Hearing Questions from the Honorable Cass R. Sunstein, 
      Administrator, Office of Information and Regulatory Affairs






                                

     Response to Post-Hearing Questions from John D. Graham, Dean, 
     Indiana University School of Public and Environmental Affairs






                                

         Response to Post-Hearing Questions from Sally Katzen, 
      Visiting Professor of Law, New York University School of Law




                                

 Response to Post-Hearing Questions from Richard A. Williams, Director 
    of Policy Research, The Mercatus Center, George Mason University










                                

 Material submitted by the Honorable Howard Coble, a Representative in 
 Congress from the State of North Carolina, and Chairman, Subcommittee 
              on Courts, Commercial and Administrative Law










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