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







REGULATION NATION: THE OBAMA ADMINISTRATION'S REGULATORY EXPANSION VS. 
                       JOBS AND ECONOMIC RECOVERY

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

                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 20, 2012

                               __________

                           Serial No. 112-148

                               __________

         Printed for the use of the Committee on the Judiciary





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      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
















                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 20, 2012

                                                                   Page

                           OPENING STATEMENTS

The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Chairman, Committee on the Judiciary.......     1
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     3

                               WITNESSES

John B. Taylor, George P. Schultz Senior Fellow in Economics at 
  the Hoover Institution, and Professor of Economics at Stanford 
  University, CA
  Oral Testimony.................................................     7
  Prepared Statement.............................................    10
C. Boyden Gray, Boyden Gray and Associates, Washington, DC
  Oral Testimony.................................................    21
  Prepared Statement.............................................    23
Lisa Heinzerling, Professor, Georgetown University Law Center, 
  Washington, DC
  Oral Testimony.................................................    36
  Prepared Statement.............................................    38
Robert L. Luddy, Founder and President, CaptiveAire, Inc., 
  Raleigh, NC
  Oral Testimony.................................................    78
  Prepared Statement.............................................    80

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................     3
Material submitted by the Honorable Lamar Smith, a Representative 
  in Congress from the State of Texas, and Chairman, Committee on 
  the Judiciary..................................................   101
Material submitted by the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Member, 
  Committee on the Judiciary.....................................   115
Prepared Statement of the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Member, Committee on the Judiciary.........................   126

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................   131
Material submitted by the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Member, Committee on the Judiciary, on behalf of the 
  Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Chairman, Committee on the Judiciary.......   144

 
REGULATION NATION: THE OBAMA ADMINISTRATION'S REGULATORY EXPANSION VS. 
                       JOBS AND ECONOMIC RECOVERY

                              ----------                              


                      THURSDAY, SEPTEMBER 20, 2012

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 10:06 a.m., in room 
2141, Rayburn Office Building, the Honorable Lamar Smith 
(Chairman of the Committee) presiding.
    Present: Representatives Smith, Coble, Goodlatte, Lungren, 
Chabot, King, Jordan, Griffin, Marino, Adams, Conyers, Scott, 
Jackson Lee, Cohen, and Chu.
    Staff present: (Majority) Richard Hertling, Staff Director 
and Chief Counsel; Travis Norton, Counsel; Daniel Flores, 
Counsel; John Hilton, Counsel; David Lazar, Clerk; (Minority) 
Perry Apelbaum, Staff Director and Chief Counsel; Danielle 
Brown, Counsel; James Park, Counsel; and Susan Jensen-Lachmann, 
Counsel.
    Mr. Smith. The Judiciary Committee will come to order.
    Without the objection, the Chair is authorized to declare 
recesses of the Committee at any time.
    We welcome everyone here today. I am going to recognize 
myself for an opening statement, then the Ranking Member, then 
we will introduce the witnesses.
    Four years into the Obama administration, the outlook for 
jobs in the American economy is disheartening and bleak. There 
are fewer jobs in America than when President Obama took 
office. Unemployment has been over 8 percent for a record 43 
straight months. The percentage of American workers who are 
unemployed or underemployed is nearly 15 percent.
    In August alone, 368,000 workers abandoned the workforce. 
The percentage of Americans who participate in the workforce is 
the lowest since 1981.
    In 2008, the U.S. economy was rated the most competitive in 
the world. Since then, it has fallen to 7th place. The United 
States' credit rating has been downgraded and another downgrade 
has been threatened. This is not what the Obama administration 
promised for economic recovery when it took office. President 
Obama stated during an interview in 2009, ``If I do not have 
this done in 3 years, then there is going to be a one-term 
proposition.''
    Why is unemployment still so high? A large part of the 
answer can be found in the Administration's historic expansion 
of regulations and business owners' uncertainty over what 
regulations might come next. In his 2011 State of the Union 
Address, President Obama promised to fix ``rules that put an 
unnecessary burden on businesses.'' And in his September 2011 
address to a Joint Session of Congress, the President declared 
that ``We should have no more regulation than the health, 
safety, and security of the American people require.''
    But his actions speak louder than his words. Rather than 
lighten regulatory burdens to promote recovery, President Obama 
has turned America into a regulation Nation. We need to 
encourage small businesses to expand, not tie them up with red 
tape. America's job creators do not need more government 
regulation. They need fewer burdens, lower costs, and an 
environment in which they can predict whether they can hire and 
make a profit.
    A Heritage Foundation study found that in his first 3 years 
in office, President Obama adopted 106 major rules that impose 
$46 billion in additional regulatory costs on the private 
sector. That is a new record. To make matters worse, the 
Administration's latest regulatory agenda identifies over 200 
major rules that are planned or have just been completed. Each 
of these rules will affect the economy by $100 million or more 
every year.
    A recent Gallup poll found that among the 85 percent of 
U.S. small business owners who are not hiring, nearly half of 
these cited being ``worried about new government regulations'' 
as the reason they are not hiring.
    To help solve America's economic troubles, the House 
Judiciary Committee passed a comprehensive package of 
regulatory reform bills this term of Congress. These bills have 
all passed the House as well. They promise to lower regulatory 
costs and uncertainty and still protect public health, safety, 
and welfare. The Regulatory Accountability Act, for example, 
requires agencies to show that the benefits of new regulations 
justify their costs when the regulations are adopted.
    The Judiciary Committee's legislation also includes the 
Regulatory Freeze for Jobs Act, which halts unneeded new major 
rules unless unemployment drops to 6 percent; the Regulatory 
Flexibility Improvements Act, which makes sure agencies account 
for the needs of small businesses before they adopt new rules; 
the Sunshine for Regulatory Consent Decrees and Settlements 
Act, which prevents collusion between special interests and 
agencies to force new regulations on the public; the REINS Act, 
which restores Congress' accountability for new major 
regulations; and the RAPID Act, which streamlines permitting 
for new construction projects.
    America's economic recovery depends on job creators, not 
Federal regulators. We need to lift the burden on small 
businesses and free them up to spend more, invest more, produce 
more, and create more jobs. Despite his promises to lighten the 
regulatory load, President Obama has threatened to veto every 
one of these bills. And the Senate has not taken any up any of 
them. But the Judiciary Committee will continue to push for 
their enactment because of America's urgent need for new jobs 
and economic growth.
    Now that concludes my opening statement. And the gentleman 
from Michigan, the Ranking Member of the Judiciary Committee, 
is recognized for his.
    Mr. Conyers. Thank you, Chairman Smith. It is 
understandable that the political atmosphere would force the 
Chairman into a very unusual state of affairs. This is the 16th 
anti-regulatory hearing that we have conducted in the 112th 
Congress, and I ask unanimous consent to put them in the 
record.
    [A list of the hearings follows:]
    


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--------
The hearings referred to in the list can be accessed at: http://
judiciary.house.gov
                               __________

    Mr. Smith. Without objection.
    Mr. Conyers. And I want to welcome the majority witnesses. 
One is an economic advisor for Mitt Romney campaign, and he 
also co-founded a group called Economists for Romney. Welcome, 
sir.
    We have another witness who has contributed $50,000, which 
is his right, to Restore our Future, a Romney campaign PAC.
    And then we have another witness who we welcome and who is 
the chair of the North Carolina Catholics for Romney Committee.
    So you can see what we are in for this morning, and I am 
perfectly willing to indulge in the tactics of the Chairman of 
this Committee.
    Now, today's hearings are based on a premise and 
assumptions that are simply false. The majority makes or the 
Chairman makes the first assumption that regulations inhibit 
job creation even though there is absolutely no credible 
evidence so far establishing the fact that regulations have any 
substantive impact on job creation. That is not my opinion. 
This is what a senior political analyst in the Reagan and 
George H.W. Bush administration, Mr. Bruce Bartlett, explains. 
And this is a quote: ``Republicans have a problem. People are 
increasingly concerned about unemployment.'' This is him saying 
that. This is a quote. ``But Republicans have nothing to offer 
them. The GOP opposes additional government spending for jobs 
programs, and, in fact, favors big cuts in spending that would 
be likely to lead to further layoffs at all levels of 
government.''
    This is quote, too. The quote continues: ``These 
constraints have led Republicans to embrace the idea that 
government regulation is the principal factor holding back 
employment. They assert that Barack Obama, [the President], has 
unleashed a tidal wave of new regulations which has created 
uncertainty among businesses and prevents them from investing 
and hiring.''
    The quote continues. It is italicized. ``No hard evidence 
is offered for this claim, it is simply asserted as self-
evident and repeated endlessly throughout the conservative echo 
chamber.'' That is the end of the quotations.
    All of that I have been citing is from the senior policy 
analyst in the Reagan and George H.W. Bush administrations, 
Bruce Bartlett, a senior policy analyst.
    Now the majority's own witness, distinguished though he is, 
clearly debunked the myth that regulation stymie job creation 
at a legislative hearing held last year. Christopher DeMuth, 
with the American Enterprise Institute, stated in his prepared 
testimony that the ``focus on . . . jobs can lead to confusion 
in regulatory debates.'' The quote continues, ``the employment 
effects of regulation, while important, are indeterminate.''
    Another unsubstantiated claim that the majority claims in 
support of its anti-regulatory agenda is that regulatory 
uncertainty is hurting the business community. Once again, 
Bruce Bartlett, the senior economic official for the Reagan and 
Bush administrations, responds. ``Regulatory uncertainty is a 
canard invented by Republicans that allows them to use current 
economic problems to pursue an agenda supported by the business 
community year in and year out. In other words, it is a simple 
case of political opportunism, not a serious effort to deal 
with high unemployment.'' So make no mistake, ladies and 
gentlemen.
    Today's hearing is yet another example of the political 
opportunism recognized and described by Mr. Bartlett. And 
perhaps the biggest canard in the majority's argument for so-
called regulatory reform is the purported $1.75 trillion dollar 
cost of regulation based on a single study. Please give me a 
break. This figure is utterly unreliable and meaningless.
    Again, this is not just my opinion. The non-partisan 
Congressional Research Service conducted an extensive 
examination of the study and found much of its methodology to 
be flawed. Moreover, the Congressional Research Service noted 
that the study's authors themselves acknowledged that their 
analysis was ``not meant to be a decision making tool for 
lawmakers or Federal regulatory agencies to use in choosing the 
`right' level of regulation.''
    Our witness today has published well-researched material 
that will go further into it. So I hope my colleagues on both 
sides of the aisle will listen very closely to the testimony 
that she presents. And I conclude, and I thank the Chairman for 
the additional time he has generously afforded me.
    I conclude with the final reason to reject this meaningless 
figure. It completely and blatantly ignores the overwhelming 
benefits of the regulations, which is 25 times more than the 
net benefits during the 3 years of the George W. Bush 
administration.
    I will insert the rest of my statement in the record, and 
again thank Chairman Smith for the generous time that he has 
afforded me.
    Mr. Smith. Thank you, Mr. Conyers. That was a fulsome 
statement, but always appreciate your comments.
    Let me proceed to introduce our witnesses today. And our 
first witness is Professor John Taylor. He is the George P. 
Schultz Senior Fellow in Economics at the Hoover Institution, 
and Professor of Economics at Stanford University. He was 
director of the Stanford Institute for Economic Policy Research 
and founding director of Stanford's Introductory Economic 
Center.
    Professor Taylor has a distinguished record of public 
service. He served as a member of the President's Council of 
Economic Advisors from 1989 to 1991, and as Under Secretary of 
the Treasury for International Affairs from 2001 to 2005. He 
has been a member of the California Governor's Council of 
Economic Advisors. I want Mr. Conyers to be aware of the fact, 
Professor Taylor, that you are bipartisan when it comes to your 
good economic advice.
    Professor Taylor received a Bachelor's degree in economics 
from Princeton University and a Ph.D. in economics from 
Stanford University. In recognition of his many achievements, 
in 2010, he received the prestigious Bradley Prize.
    Our next witness, Ambassador C. Boyden Gray, served as 
White House Counsel for President George H.W. Bush. During the 
Reagan administration, he served as counsel to then-Vice 
President George H.W. Bush and as counsel to the Presidential 
Task Force on Regulatory Relief. More recently, he served as 
Special Envoy for Eurasian Energy Diplomacy and Special Envoy 
for European Union Affairs, as well as U.S. Ambassador to the 
European Union in Brussels.
    Ambassador Gray practiced as a partner at the Wilmer, 
Cutler, Pickering, Hale, and Dorr law firm in Washington, D.C. 
Currently, he is a founding partner of the D.C.-based law firm, 
Boyden Gray and Associates, LLP.
    He earned his Bachelor's degree from Harvard University and 
his Juris Doctor from the Law School of the University of North 
Carolina at Chapel Hill. Following his graduation, Ambassador 
Gray served in the U.S. Marine Corps. After law school, he 
clerked for Earl Warren, Chief Justice of the United States 
Supreme Court.
    Our next witness, Lisa Heinzerling, is a Professor of Law 
at Georgetown University. Her specialties include environmental 
and natural resources law, administrative law, the economics of 
regulation and food and drug law.
    From 2009 to 2010, Professor Heinzerling served first as 
Senior Climate Policy Counsel to the Administrator of the U.S. 
Environmental Protection Agency, and later as Associate 
Administrator of the EPA's Office of Policy. She has been a 
visiting professor at Harvard, Vermont, and Yale Law Schools. 
She clerked for Justice William J. Brennan, Junior, of the U.S. 
Supreme Court and Judge Richard A. Posner of the U.S. Court of 
Appeals for the 7th Circuit.
    She received her Bachelor's degree from Princeton 
University and her J.D. from the University of Chicago.
    Our final witness, Robert L. Luddy, is the Founder and 
Chairman of CaptiveAire Systems, Inc., a leading manufacturer 
of commercial kitchen ventilation systems, and a leader of the 
Job Creators Alliance. CaptiveAire employs over 600 people and 
maintains over 80 sales office in the U.S. and Canada.
    Mr. Luddy is a lifelong entrepreneur. At the age of 20, 
while attending LaSalle University in Philadelphia, Mr. Luddy 
opened a fiberglass manufacturing business. Later, Mr. Luddy 
purchased a sheet metal shop and transformed it into 
CaptiveAire Systems, Inc.
    In 2006, he won the Ludwig von Mises Institute's first ever 
``Mises Entrepreneurship Award'' for 3 decades of leadership at 
CaptiveAire and for exemplary ``dedication to learning, 
prosperity, and freedom.''
    And we welcome you all, and, Professor Taylor, we will 
begin with you.

TESTIMONY OF JOHN B. TAYLOR, GEORGE P. SCHULTZ SENIOR FELLOW IN 
ECONOMICS AT THE HOOVER INSTITUTION, AND PROFESSOR OF ECONOMICS 
                   AT STANFORD UNIVERSITY, CA

    Mr. Taylor. Thank you very much, Chairman Smith, Ranking 
Member Conyers, other Members of the Committee, for inviting 
me.
    Mr. Conyers. Pull your mic up a little closer, sir.
    Mr. Smith. Before you begin, Professor Taylor, I want to 
recognize a colleague, Randy Hultgren, who just joined us. He 
is sitting on the front row. He has been a leader in Congress 
when it comes to regulatory reform legislation. We appreciate 
his attendance and his leadership, again, on that issue.
    Professor Taylor, please begin.
    Mr. Taylor. So I am going to begin with, in some sense, the 
obvious, and that is the economy is in very bad shape. Growth 
is under 2 percent. Unemployment stays high, especially long-
term unemployment. We have a very weak recovery compared to 
other deep recessions, and I point to the recovery in the early 
80's in my testimony quite extensively where growth was 5.7 
percent over that period, and it has only been 2.2 in this 
period.
    Many people have tried to understand what the reasons for 
this very poor economy are. Some say it is because we had a 
deep recession. I do not agree with that because generally 
speaking in American history, deep recessions are followed by 
very fast recoveries. Some people says it is because there was 
a big financial crisis. I do not see that either because 
previous history shows that even recoveries from financial 
crises are much more rapid than this one.
    So considering all the possibilities, I have come to the 
conclusion that government policy is a source of the very weak 
recovery, and in particular, part of government policy as a 
regulatory policy.
    My colleagues and I have just finished a book on this 
called Government Policies and the Delayed Economic Recovery. 
In that book, there are studies, for example, by Baker, Bloom, 
and Davis, which have tried to quantify the impact of the 
policy uncertainty that is associated with government policy. 
In my testimony, I have some examples of the data they use, tax 
uncertainty in particular. And they find it has a negative 
effect on growth. Correlations are not always causation, but 
they have looked at the timing, and I think it is convincing.
    Another piece of research in this project is by Ellen 
McGrattan and Edward Prescott. They give examples of the 
regulatory expansion both in terms of the amount spent and in 
terms of the number of workers involved in regulatory 
activities in the Federal Government, and point to that 
correlation with a very weak recovery. And again, I have in my 
testimony a chart--it is on page 6, Mr. Chairman--which shows 
the real, I think, explosion in terms of the number of Federal 
workers involved in regulatory activity. I tried to take out 
the TSA workers and control for that, and you can really see 
what a remarkable increase. There is of course a lot of 
corroborative research that supports the work in that book.
    In looking over the legislative record of this Congress, in 
particular this session, I have noted a lot of efforts to 
contain this expansion of regulation. The Red Tape Reduction 
and Small Business Job Creation Act, which of course includes 7 
different bills, including this moratorium proposal that aims 
at the unemployment rate, extending cost benefit analysis 
requirements to the SEC and CFTC, dealing with the unfunded 
mandates simply by being transparent about them. It seems to me 
these bills and the ones in the previous session emphasize 
transparency, accountability, the use of cost benefit analysis 
and sound data. These are the kind of things that good 
government requires. I think they are important.
    By blocking these bills, it seems to me those people who 
have blocked them have really blocked jobs bills effectively.
    I want to just give some data. Economists refer to data all 
the time, and you sometimes do not how to interpret it. But I 
made a big point in my testimony and a just a minute ago about 
how weak this recovery has been compared to the strong recovery 
from an equally deep recession in the early 80's--5.7 percent 
then, 2.2 percent now.
    Think of what has happened in the regulatory area. The 
number of Federal workers involved in regulatory activities in 
that expansion period in the early 80's declined by 22,000. In 
this recovery in this period in the last 5 or 6 years, they 
have increased by 54,000. If you look at the number of pages in 
the Federal Register, in the previous period basically where we 
had a good recovery, the number of pages in the Federal 
Register each year went down by 24,000. Recently that has gone 
up by 4,000.
    If you look at data like that, it makes you worry that this 
activity, this regulatory expansion, is holding back on the 
economic expansion. And it seems to me every effort that the 
Congress can take to be careful about this, to contain this 
regulatory expansion, will make it better to have a stronger 
economic expansion.
    Thank you very much.
    [The prepared statement of Mr. Taylor follows:]


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                               __________
    Mr. Smith. Thank you, Mr. Taylor.
    Ambassador Gray.

   TESTIMONY OF C. BOYDEN GRAY, BOYDEN GRAY AND ASSOCIATES, 
                         WASHINGTON, DC

    Mr. Gray. Thank you, Mr. Chairman, Mr. Conyers, for the 
opportunity to appear. I appreciate coming after John Taylor 
because as an economist, he is in a better position to give you 
the quantification of how regulation impacts adversely the 
economy. But my simple point is it is a huge wet blanket on 
economic growth. And it does not mean that you do not have any 
regulation. It means that you do it in a much smarter way.
    I think in terms of quantification, I am going to give a 
couple of examples at the end of where history I think makes 
clear how big a problem this is.
    The problem is at least two-fold. You have regulatory costs 
that are imposed on businesses here that may not be imposed in 
China or in other competing countries. So you have a question 
of pricing ourselves out of international markets in the global 
economy. That does not mean you get rid of regulation. It just 
means you do it better.
    We tried to market incentives with the acid rain program in 
the Clean Air Act of 1990. The costs came in at about a fifth 
of what they were supposed to come in at, what command and 
control would have provided. And it did not harm or pull back 
on the recovery that turned out to be one of the greatest booms 
in America history throughout the 90's and the first decade of 
this century.
    The other problem is uncertainty. Again, hard to quantify, 
but I cite a study of a team of Stanford and Chicago economists 
on page of my testimony trying to quantify what this 
uncertainty does in terms of economic growth. I do not want to 
waste time giving the facts here, but it is there at page 3.
    There is a tendency, and this is partly, I think, Congress' 
fault, a tendency to delegate huge amounts of unlimited 
discretion to bureaucrats because it is easier than resolving 
it here in the Committees that have jurisdiction over the 
various substantive statutes. And the result is unfortunately a 
lack of guidance to the business community. They do not know 
what it is going to take to comply.
    You have Mr. Cordray at the Consumer Bureau saying I am not 
going to go and issue rulemaking to give people notice in 
advance of what conduct is expected of them. That fair notice 
is really the heart of the Administrative Procure Act. That is 
the heart of our administrative law system. I am going to do it 
by enforcement. I am going to do it after the fact. I am going 
to let you know what it is when I think I have seen it. This is 
not conducive to job growth or investment.
    There are some good answers to this: not wiping out 
regulation, but making it better. There are many bills pending 
in Congress here in the House. Some of them have been discussed 
already by the Chairman. They would include suggestions that 
John Taylor has made: clear cost benefit analysis and 
requirements; clear guidance, and instruction, and details from 
the Congress itself to inform the regulatory agencies how to 
issue rulemaking to give the kind of guidance and notice to the 
public that is affected; the use of market incentives and 
performance standards so as to reduce the discretionary 
micromanagement by agencies, and give the complying public the 
choice of how to meet the goals that should be clearly stated 
rather than left to the discretion of the executive branch.
    Now what examples would I choose? I served in the Reagan 
administration. We went through a really bad recession, double-
digit inflation, double-digit interest rates. It is kind of 
hard to believe how bad it was. But the Reagan program of 
regulatory reform I think works, and we snapped back with one 
of the greatest recoveries and greatest booms in U.S. history.
    As a result of my service in Europe, I am fond of asking 
the question who was the sick man of Europe when I first went 
there. The sick man of Europe in 2006 was Germany. Now it 
became the colossus of Europe in less than a year, year and a 
half. Why? Because of regulatory reform, a little bit of 
Reagan/Thatcher, a little bit of labor law, a little bit of 
welfare reform, and a little bit of labor law restrictions 
lifted. And now it has rocketed. And that is all Germany wants 
the rest of Europe to try to emulate. And if it did and we 
corresponded and worked with the Europeans transatlantically to 
reduce regulatory burdens, you could add 1 or 2 points of GDP 
growth, and this has been documented by the OECD.
    So we have examples of how this works, and I think we ought 
to get on with it. And I appreciate your interest in this 
subject matter. Thanks.
    [The prepared statement of Mr. Gray follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Smith. Thank you, Mr. Gray.
    Professor Heinzerling.

TESTIMONY OF LISA HEINZERLING, PROFESSOR, GEORGETOWN UNIVERSITY 
                   LAW CENTER, WASHINGTON, DC

    Ms. Heinzerling. Mr. Chairman, Mr. Conyers, Members of the 
Committee, thank you very much for giving me this opportunity 
to testify here today.
    As has become typical in discussions criticizing 
regulation, we have heard this morning about the cost of 
regulation, but very little about the benefits. Yet regulation 
promotes multiple and diverse human interests and prevents 
multiple and diverse human harms.
    Regulation is, after all, just another word for ``law,'' 
and law is, given humans' propensity to hurt each other in the 
absence of constraints on their behavior, a predicate for 
freedom. Regulation saves consumers money, prevents human 
illnesses, saves lives, and much more.
    To have a conversation about regulation without talking 
first about what regulation is for is not very illuminating. 
Consider the example of the Clean Air Act, one of the more 
embattled sources of regulatory authority in government today. 
The terms ``public health'' and ``public welfare'' appear like 
mantras throughout the Act. At its core, the Act aims to 
protect people from dying, or falling ill, or suffering other 
harm, such as damage to water, soils, crops, property, 
vegetation, and more due to air pollution. What is more, by 
targeting specific sources of pollution and by generally 
requiring that these sources do their level best to control 
their pollution, the Act aims to prevent the people in charge 
of these sources, the ones who choose and control the 
mechanisms of pollution, from hurting other people.
    Seen in this light, the Clean Air Act and other like modern 
laws, follow in a direct line from our framers and their 
ambitions for government by constraining human behavior in a 
way that promotes human freedom. To the extent the debates over 
the scope and shape of the regulatory state ignore these 
benefits of regulation, they will lead us badly astray.
    On the other side of the ledger, overstating the costs of 
regulation has become a dismayingly effective way of making 
regulation look foolish, but that does not make the 
overstatements any more accurate. A recent example is the one 
we have heard about already this morning, the study 
commissioned by the Small Business Administration's Office of 
Advocacy. This study claims that Federal regulation costs $1.75 
trillion per year in this country. This figure has been widely 
cited and credulously accepted. It is has been wheeled both to 
try to defeat new regulatory initiatives and to scale back 
existing ones.
    The report is not, however, a credible account of the costs 
of regulation in this country. There are many, many flaws in 
the report. They are detailed in my written statement and the 
attachment to that statement.
    I will rest with one example here. For environmental 
regulation, the report tallies up the costs and benefits of 
major rules as reported in annual reports issued by the Office 
of Management and Budget. The trouble is many of these rules do 
not exist. Many have been withdrawn. Some have been overturned 
by the courts. Some were issued decades ago and are fully 
implemented at this time.
    The report is simply not a credit account of what we spend 
on regulation in this country today. To the extent that 
critiques of the regulatory state rely on such flawed 
statistics, they are not credible.
    We have heard this morning about a cascade of bills passed 
in this chamber, which we are told would improve upon the 
supposedly dismal state of regulation in this country. The 
bills pile procedure on procedure and analysis on analysis in a 
system already overburdened with procedural dictates and 
analytical complexity. The regulatory system, we are told, is 
too uncertain and too complicated, and produces just to many 
pages in the Federal Register.
    Cost benefit analysis, we are also told, just cannot be 
trusted any more now that the Obama administration is in 
charge. But the praised this morning would do little except add 
to the uncertainty, complexity, and sheer prolixity of the 
regulatory system. And they would deepen, rather than limit, 
the system's reliance on the cost benefit analysis elsewhere 
critiqued.
    The challenge then, I think, is to answer the question, 
what would these bills do. One answer is clearly right: they 
would slow down, complicate, maybe even paralyze the system we 
have for making rules governing harmful human behavior. Thank 
you very much.
    [The prepared statement of Ms. Heinzerling follows:]


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                               __________
    Mr. Smith. Thank you, Professor Heinzerling.
    Mr. Luddy.

     TESTIMONY OF ROBERT L. LUDDY, FOUNDER AND PRESIDENT, 
                 CAPTIVEAIRE, INC., RALEIGH, NC

    Mr. Luddy. Thank you, Chairman Smith, and Ranking Member 
Conyers, and distinguished Members of the Committee for the 
opportunity to be here today.
    I founded CaptiveAire Systems in 1976 with an investment of 
$1,300. Over the last 35 years, we have become the leading 
producer of commercial kitchens ventilation in North America. 
We have 80 U.S. sales offices, 5 manufacturing facilities in 
North Carolina, Iowa, Oklahoma, California, and Pennsylvania, 
and we employ over 700 people. That feat would be hard to 
repeat today based on modern regulation.
    I am also a member of the Jobs Creators Alliance, a group 
formed by entrepreneurs to give small business a growth, 
America's primary growth creators, job creators.
    Regulations disproportionately and adversely impact small 
businesses. Over the last several decades, the number and scope 
of Federal regulations has expanded exponentially, stunning job 
creation, economic growth, and placing an undue burden on 
entrepreneurial America.
    The commercial kitchen ventilation industry has a myriad of 
current regulations for performance, safety, and energy 
savings. Beginning with the industry group, ASHRAE, which 
develops energy and design standards, which are the best in the 
world, and adopted into the codes. Mechanical codes, such as 
IMC, UMC, NFPA 96, et cetera, are the national codes, but these 
codes are further modified by virtually every State, and then 
further modified by cities and counties and local authorities 
having jurisdiction.
    Also within our industry, we have groups, such as UL, ASTN, 
and AMCA, which develops testing standards and have made the 
American product the best in the entire world. Those were also 
eventually adopted into the codes over time.
    As regulation increases, more cost and development time has 
to be shifted to deal with this regulation as opposed to 
working in innovative products, which is really what drives 
business. If you look at government intervention in the kitchen 
ventilation business, it goes back to 1950, and essentially 
what happened is they mandated very high exhaust flow rates in 
restaurants, which is the bane of energy efficiency.
    Beginning in 1970, with the help of UL, new standards were 
developed, eventually approved by the code, which reduced 
exhaust flow rates and saved energy. But we still have areas, 
like the City of Chicago that has not adopted modern codes, 
and, therefore, energy savings are not possible there.
    Now we have the U.S. Department of Energy that wants to 
regulate exhaust fans and blowers. Fans and blowers in a 
commercial restaurant comprise less than 2 percent of the 
energy used. And fans are very efficient because we have a 
fiercely competitive industry. They are in the range of 50 to 
70 percent efficiency versus a nuclear power plant that is 
about 36 percent efficient. So we are in a very good industry.
    Private sector innovation to save energy is making dramatic 
progress in our industries. I will give you a few examples. 
Demand ventilation, which allows us to modulate fans up, down, 
and off when they are not needed is now becoming commonplace in 
the market. Electronically-controlled motors are 80 percent 
efficient, and as the cost is driven down, become more 
prevalent in the market. And the real opportunity for savings 
are solid state controls.
    Next year, we will introduce control systems that report to 
the web and have the opportunity to save up to 20 percent of 
all HVAC energy within a restaurant. They will also report on a 
real-time basis data to owners and users so that they can 
better manage a restaurant and design restaurants better in the 
future.
    The best way to empower entrepreneurs and encourage small 
business owners is to establish a moratorium on new regulation. 
The pros of any regulation impacts industry in many ways. It 
really stifles initiative within the industry, it creates 
barriers for entry, and potentially causes the loss of U.S. 
jobs because small manufacturers will not be able to meet these 
regulations.
    The creative genius of free market entrepreneurs cannot be 
stifled, but it can be slowed down by regulation, and that is 
exactly what happens. Products that we have introduced into the 
market have streamlined the cost and production of kitchen 
hoods that are much energy efficient. Control systems for 
indirect fired heaters, and we have introduced a revolutionary 
new fire protection product, which eventually we think will be 
the standard of the world.
    Further regulation by government will hurt small business, 
impede innovation, stunt growth, reduce exports, reduce job 
creation, and essentially trample on entrepreneurial America.
    Thank you very much for the opportunity to testify, and I 
look forward to your questions.
    [The prepared statement of Mr. Luddy follows:]


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                                APPENDIX


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                               __________

    Mr. Smith. Thank you, Mr. Luddy.
    I will recognize myself to ask questions. But first I want 
to put into the record, without objection, a study that was 
just released yesterday.
    [The information referred to follows:]


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                               __________

    Mr. Smith. And this was a study that was done by a former 
CBO director, and let me read a sentence out for all of us. 
``Based on data from the Government Accountability Office, GAO, 
and regulations published in the Federal Register, the 
Administration has published more than $488 billion in 
regulatory costs since January 20, 2009, $70 billion in 2012 
alone,'' which of course has not yet ended. That just confirms 
of course what many of us have been saying. And again, this is 
a former CBO director relying upon data from the Government 
Accountability Office.
    Professor Taylor, let me direct my first question toward 
you, but you have actually done a good job of answering my 
question. I was going to ask you what the impact of the record 
number of regulations and the atmosphere of uncertainty they 
have created for business has been on the economy. You gave a 
lot of statistics I think pointing that out.
    Is there anything you want to add more generally about the 
impact on the economy, or how the economy might have performed 
if we had not have had these stifling regulations imposed on 
businesses?
    Mr. Taylor. I think I could add one----
    Mr. Smith. Turn on your mic, if you will.
    Mr. Taylor. Other recent study by some researchers at the 
Federal Reserve Bank of San Francisco that tried to quantify 
the policy uncertainty as well that corroborates some of the 
research I referred to.
    It is always difficult to judge what would have been had 
there not been what I consider this expansion of regulatory 
activity in the last few years. And to me, the best thing you 
can do is look at history, and I think Mr. Gray and I both 
referred to the expansion in the early 1980's. And this is '83, 
'84, '85. And it was a good expansion. Growth, 5.7 percent on 
average during that period compared to 2.2 percent now.
    And if you look at the regulatory part of that, it is quite 
striking. That was a period where it was a reaction to the 
excesses in the 70's. This should not be partisan. It began to 
be addressed at the end of the Carter administration, and 
regulations were adjusted, and the number of Federal workers 
came down involved in this activity. And the number of pages in 
the Federal Register came down.
    And that was part of the reason--not the whole reason that 
was part of the reason why that expansion was so strong I 
think. And more recently you have the opposite, and this 
expansion is slow. And it is not just the regulatory activity 
of government. I think it is other aspects of government as 
well. I would mention the uncertainty about the tax policy, the 
fiscal cliff, the uncertainty about these stimulus packages--
Cash for Clunkers. It all adds up, I think, to be quite 
remarkable when you look at history. And I think it is a big 
factor.
    Mr. Smith. Okay. Thank you, Professor Taylor.
    Ambassador Gray, you mentioned in your testimony the 
various pieces of legislation that this Committee has approved 
that have also passed the House floor. Had those bills been 
enacted, what impact do you think they would have had on the 
regulatory atmosphere or the uncertainty that businesses face 
in regard to regulations?
    Mr. Gray. I think they would have had a very beneficial 
impact on what we now see. It is again difficult to quantify, 
but we do have these examples from the Reagan period, from 
Europe, fairly recently in Germany. We have the now unified 
west by the European business community to work out 
arrangements that would codify much of what you have already or 
this House and this Committee in this House has already adopted 
in terms of providing clear guidance to regulators to eliminate 
their unbridled discretion, to make sure that benefits exceed 
costs.
    It is not to eliminate regulation, but it is to make it 
something that a businessman, an investor, small or medium or 
large, can predict in trying to determine how to create jobs.
    Mr. Smith. Okay. Thank you, Ambassador Gray.
    Mr. Luddy, thank you for the practical experience you bring 
to the table today. I am tempted to call Mr. Entrepreneur. You 
and your colleagues or other business owners, and operators, 
and founders have been the mainstay of our economy ever since 
the founding of our country.
    My question for you is basically, how much more difficult 
have the implemented regulations and the proposed regulations 
made it for individual entrepreneurs to start a business in 
America today compared to before these regulations went into 
effect?
    Mr. Luddy. Substantially more difficult and very 
frustrating because, first of all, it is hard to determine what 
the regulation means on the ground, because in terms of code 
authorities, you have the written code, you have approval of 
the code, and then you have a local authority having 
jurisdiction making a final decision at inspection.
    So what happens is everybody focuses on trying to please 
these people rather than saying how can we produce the best 
possible system in the world. It takes away from the innovative 
focus. For smaller companies to meet these requirements without 
a substantial amount of money and expertise, it just really 
cannot be done.
    Mr. Smith. Okay. Thank you, Mr. Luddy. That concludes my 
time. And the gentleman from Michigan, Mr. Conyers, is 
recognized for his questioning.
    Mr. Conyers. Thank you, Chairman Smith. Professor 
Heinzerling, could you help Mr. Luddy, who we praise for his 
inventiveness and ingenuity, feel a little better about the 
regulatory process and how he thinks it has curtailed the 
inventive spirit here in this country?
    Ms. Heinzerling. I hope so.
    Mr. Conyers. Give it a try.
    Ms. Heinzerling. I think that one piece of advice I would 
have in that spirit would be as I said at the outset, to focus 
on the good things that regulation does. Regulation is aimed 
at, in large part, economic problems and problems that even 
though not, strictly speaking, are economic. They are aimed at 
cleaner air, cleaner water, things that I think entrepreneurs 
even find satisfactory and good. And so it seems to me that 
there is not a necessary inconsistency between that kind of 
spirit and the spirit of regulation.
    I will also say that having spent 2 years at EPA, I will 
say that there is an entrepreneurial spirit there as 
overregulation well. And it often gets overlooked in these 
debates, but what I saw every day were people trying to make 
regulations as creative, as flexible as they could. And that 
those two things combined--the regulatory benefits, the aims of 
regulations, and I think the spirit among the agencies of 
trying to help unleash flexibility, but within the constraints 
of protecting people against harm--seem to me may be a little 
hopeful.
    Mr. Conyers. Thank you so much. I wanted to compliment Mr. 
Gray, who very specifically said that this is not a hearing 
against all regulations per se. It is a matter of 
reasonableness in regulations, and that some regulations are 
necessary and important. And I thought that that was a good way 
to frame the basis of your remarks.
    Now could I ask you, Professor, another question about what 
triggered the depression of '29 and the current great 
recession? And was there any role of a regulation or non-
regulation involved in these two great disasters in American 
economic history?
    Ms. Heinzerling. I will say I am a law professor. I am not 
an economist. But what I understand is that some de-regulation 
preceded both economic crises, or at least a lack of regulation 
preceded both. And what we saw in the period following the '29 
crash and the following depression is a wave of regulatory 
activity that was we called a New Deal, that was intended to 
correct for the economic problems that had occurred, and so 
that it would not be surprising at all to see what we are 
seeing today, which is an effort to correct for the lack of 
oversight and a lack of regulation that helped, in part at 
least, get us where we are today.
    And it always surprising to me to hear testimony that 
sounds like it is suggesting that the way to get out of our 
current crisis is to return to the conditions that immediately 
preceded it.
    Mr. Conyers. Thank you. I want to ask this question and 
invite any of our distinguished witnesses to respond, even more 
than one if they care to. And it concerns the former Federal 
Reserve chairman Alan Greenspan's remarks. He opposed 
regulation of the practices that allowed subprime mortgages to 
be bundled into larger securities and sold to investors.
    He later testified, ``I made a mistake in presuming that 
the self-interests of organizations, specifically banks, and 
others were such as that they were best capable of protecting 
their own shareholders and their equity in the firms.''
    Do any of you concur with Chairman Greenspan's change of 
heart in the aftermath of the great economic downturn that we 
recently experienced?
    Mr. Luddy. All industries make mistakes, sometimes terrible 
mistakes. But they correct for those mistakes. If the 
government passes a new law every time we make a mistake, and 
eventually we will not make any more mistakes because we cannot 
do anything.
    Mr. Conyers. Anyone else have a response? Yes, sir, Mr. 
Taylor.
    Mr. Taylor. In my testimony, I refer quite extensively to 
Mr. Greenspan's views of the recent regulatory changes in the 
financial area. And I think that is important to add to what 
you say. He is very concerned that there are so many rules that 
have to be written now by the regulatory agencies that it is 
really a major interference in the financial system. And he 
speaks from experience. When he was chairman, he would have to 
write 3 or 4 rules a year. And now they have 200 or more to 
write. So it is a massive undertaking.
    And I think the problem here is, of course we should 
regulate. Of course we should regulate. But we have gotten to 
the point where we so much micromanaging in the regulation that 
we are interfering with how businesses operate. So there are 
alternatives to do this. And with respect to financial 
institutions, more capital requirements and adequacy rather 
than so many rules being written.
    So I think that is important to add, sir.
    Mr. Conyers. Thank you. Mr. Gray?
    Mr. Gray. I am not sure that Mr. Greenspan really was 
taking the full picture into account. The fact of the matter is 
that Fannie Mae and Freddie Mac and some of the U.S. policies 
were so welcoming to these subprime mortgage package deals--
Countrywide was a favorite partner of Fannie Mae and Freddie 
Mac--could not have done what they did without the 
encouragement and partnership of Fannie Mae and Freddie Mac, 
which was, of course, a government supported entity.
    And they invited the banks in, and I am not sure I really 
blame the banks for taking the invitation to this government 
largesse, complicated by the fact that the rating agencies, 
another government monopoly, without competition, were rating 
these packages as triple A when they were clearly not.
    I think that Dodd-Frank would have been much more 
responsive had it dealt directly with the Fannie Mae problem 
and not dealt with a lot of other issues that had nothing to do 
with the crisis itself.
    Mr. Conyers. Thank you, Mr. Gray. The last word goes to 
Professor Heinzerling, if you would like to comment, ma'am.
    Ms. Heinzerling. I think that kind of turnabout and change 
of heart is worth paying attention to.
    Mr. Conyers. Thank you very much. Thank you, Mr. Chairman.
    Mr. Coble. [Presiding.] Thank you, Mr. Conyers. I apologize 
for my belated arrival. I had 2 other hearings to go to. I 
would remiss if I did not especially welcome the entire panel, 
but particularly 2 North Carolinians. Good to have you both 
here. Good to have all 4 of you here.
    I will delay my questioning until later, and will recognize 
the distinguished gentleman from Arizona for 5 minutes.
    Mr. Franks. Well, thank you, Mr. Chairman. Thank all of you 
for being here.
    Mr. Luddy, my first question is first to you. I was very 
impressed with your record as a small businessperson and the 
jobs you have created, the way that you done things. I happen 
to have come from the same kind of background. I did not create 
quite as many jobs as you did, but it was something that gives 
me a sense of the challenges that you faced.
    And I know what it is like to be up against a Federal 
Government that is mostly comprised of folks who have not had 
to walk in your shoes. They have not had to be accountable to 
regulators or even to employees. They have not had to make 
payroll. The existing head of state I do not think has ever had 
to make payroll in his life before entering the White House.
    The regulators seem to consider regulation sometimes in a 
vacuum and with no consideration for the uncertainty that 
regulations create. And while regulators are generally required 
to consider the cost of their regulations, it is the cost that 
are obvious and quantifiable. The larger costs to people like 
you or me or the American worker may be intangible, 
unquantified costs of uncertainty.
    Where there is uncertainty, a small businessman or woman 
cannot plan for the future, as you know. It is impossible 
really to know if you can afford to expand operations or hire 
employees or if you simply do not.
    So my question is, have you found this to be true? What is 
the impact of this uncertainty in your line of business or 
among small businesses across the country, this uncertainty 
factor? How much do you emphasize that, and how does regulation 
bring that about, and how much does it affect you in your small 
business?
    Mr. Luddy. Well, it is absolutely huge when you think about 
when we design jobs all over North America. Almost down to the 
zip code, we have to determine what that code official is going 
to expect for a particular job. So if you, an engineer, are 
designing for national chains, he has got to be up to speed on 
every one of those, and he is not going to be right all the 
time. So it is a formidable challenge.
    To give you an example on environmental permits to build a 
simple building, which used to cost about $10,000 in 
engineering now costs between $100 and $150,000. I think the 
engineering community loves it because obviously they are 
taking in a huge amount of revenue. But for a building owner, a 
lot of buildings are stocked in the tracks right there because 
a small businessperson does not have that kind of money. That 
promulgates to HR, building codes, et cetera.
    So the challenge are formidable. And you have to also 
remember that the challenges of running a business without all 
the regulation are formidable to begin with. As you lop on more 
and more regulation, for the average person it becomes very 
hard to build a large business.
    Mr. Franks. Yeah. Well, I wish more people had your 
perspective and could understand the challenges you face, and 
that you are the core building block of this economy. And I 
certainly appreciate your testimony today.
    I will shift my questions to Professor Taylor. You wrote in 
a recent Wall Street Journal op-ed that the solutions to our 
economic problems are, to use your quote, ``blindingly 
obvious.'' I happen to agree with you. But do those solutions 
in your mind include the regulatory reform legislation that 
this Committee has passed? Could that be part of that?
    Mr. Taylor. Yes, sir. I think looking through the actions, 
as I mentioned in my testimony. They are focused on 
accountability, transparency, emphasizing what good economics 
is, cost benefit analysis. And, in addition, calling for the 
best data possible. So it seems to me that is really, in terms 
of the regulatory area, what we need.
    And of course when we say ``cost benefit,'' we emphasize 
the benefits, too. But the point here is when there is so 
little accountability or there is not emphasis on this, we are 
leading, I think, to the excesses that are a big factor in the 
slow recovery we have.
    Mr. Franks. Well, let me follow up a little more on that. 
You know, President Clinton claimed that no President could 
have repaired all the damage of the recession in his 4 years. 
But my memory says that Ronald Reagan repaired similarly severe 
damage in much less time. And was regulatory reform not a big 
part of how President Reagan was able to repair that damage? 
And could regulatory reform like this Committee has passed not 
be a big part of repairing the damage in this economy?
    Mr. Taylor. Yes, I believe so. I think the regulatory 
reform should be viewed as another way to have a stronger 
economy and create more jobs. And if you look at the period you 
are referring to, the recovery from a very deep, serious 
recession in the early 80's, part of that was a period of 
reducing the regulatory excesses in the 70's where they grew 
dramatically. And so it was an offset to that.
    And there is data that show what happened in terms of 
regulatory activity. It is remarkable. And we had a strong 
recovery. We cannot prove that is the reason. I think it is a 
big factor. There are other factors, too. And now we have a 
weak recovery, and we are, if you like, re-regulating. All the 
measures we have show a greater degree of regulation, and I 
think that should be a real concern.
    And so in my testimony, when I mentioned efforts to block 
regulatory reform, to me, to be candid, are efforts to block 
job creation bills. And I think that is the way it should be 
examined.
    Mr. Franks. Well, thank you. And thank you, Mr. Chairman. 
Thank you all for being here.
    Mr. Coble. I thank the gentleman. Professor Taylor, I am 
told you that you have a flight to catch, so I would ask 
Members if we could to confine our questioning to 5 minutes if 
that can be done to get you in the air in a timely way.
    The distinguished gentleman from Virginia, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. Professor Heinzerling, 
what would be the consequences to public health and safety if 
one or more of the regulatory bills mentioned by your fellow 
witnesses were actually to be enacted?
    Ms. Heinzerling. I think they would be bad the consequences 
for public health and safety. These bills, if you read them end 
to end, they are incredible in their imposition of further 
analytical requirements on agencies. As I said, agencies are 
already overburdened with their requirements.
    Each of these bills or many of them favor cost benefit 
analysis, which is uniquely equipped to make the benefits of 
environmental regulation look small and make costs look larger 
than they are. And I have written about this in a book called 
Priceless. But it is skewed against regulation.
    To the extent that you further entrench that methodology in 
judging regulation, I think that the consequences for health 
and safety regulation will be dire.
    Mr. Scott. And what is the problem with letting the private 
marketplace protect our health and safety?
    Ms. Heinzerling. I think that you can look all around you 
and see the consequences of that in unsafe products, in food 
safety scares, real problems. You can see that in the pollution 
that we endure. You can see that every time we are told that we 
should not go outside because the pollution is too bad in the 
summer.
    There are many different ways in which these problems 
exists and cry out for an answer. And almost by definition, the 
market will not take care of them because the market does not 
encourage entities that are responsible for the problems to 
take into account those kinds of social consequences.
    Mr. Scott. How does the present regulatory process 
differentiate good, cost-effective regulations that protect 
health and safety from unnecessary regulations that destroy 
jobs and do nothing to protect health and safety?
    Ms. Heinzerling. There are many, many safeguards built into 
the current system. Again, I think there are more safeguards 
than there need to be. If you look at the number of different 
analyses that are necessary for any rule to come out, it is a 
wonder that anything gets done.
    But the safeguards that are built in are analytical 
requirements. This White House, I am happy to hear about the 
benefits of the Reagan regulatory reform plan because that is 
essentially what the Obama administration has done with respect 
to regulation is to impose a cost benefit framework on 
regulation. And so that to me, the current system has many 
safeguards in place against unnecessary regulation, against 
ineffective regulation. It has many encouragements of more cost 
effective regulation as well.
    Mr. Scott. What would happen if we allowed, as some of the 
bills would do, any private party ``affected by potential 
regulatory action'' intervene in a lawsuit?
    Ms. Heinzerling. You know, that is a striking proposition 
to me. If you just step back and think about what these 
lawsuits are, they are aimed at agencies that have deadlines, 
deadlines set by Congress. Congress has set those deadlines.
    And when the agency decides to settle one of those 
lawsuits, what it basically is thinking is we do not really 
have a good defense to delay action forever. And so they try to 
come up with a schedule for regulating. If you allow 
intervention, you just complicate the process.
    One of the things that is striking to me is if you talk 
about uncertainty, in many cases that is really just a byword 
or a substitute for de-regulation. The kind of uncertainty that 
is talked about here really cuts only in one direction. We like 
it when it leads to less regulation and not when it leads to 
more.
    Mr. Scott. Thank you, Mr. Chairman. I yield back.
    Mr. Coble. I thank the gentleman from Virginia.
    The distinguished gentleman from Iowa. Did you hear what I 
said about Professor Taylor, Steve? He has a flight to catch, 
so we will try to move it along.
    Mr. King. Okay. Thank you, Mr. Chairman, and I will do my 
best to do that.
    I would first point out that as I have watched the----
    Mr. Coble. If I can suspend for a moment, we will keep the 
record open for 5 days in any event, but proceed.
    Mr. King. Thank you, Mr. Chairman. I have watched this 
regulation grow and the burden of regulation grow. I started a 
business in 1975. I found out some years later that there were 
43 different government agencies regulating my trade. It was 
impossible for me to know all of those regulations.
    I would point out that there is probably not a single 
company in the United States of America that has a little 
banner on their website that says ``Notice we are in compliance 
with all Federal regulations.'' The reason for that is because 
if they did so, Federal regulators would go in and prove them 
wrong. It is not a very good cost benefit and return to do such 
a thing.
    And so we have brought some things that incrementally 
addressed the regulation and the overregulation of the Federal 
Government. But I sometimes like to take a look at what would 
be the optimum that we can do? How would you get this to 
perfection, and then how do you move in that direction so that 
we have got a target?
    And it looks to me like this, that Congress has handed over 
the rulemaking to the agencies because they did not want to 
deal with all of the components of that. It was too burdensome. 
And so we have regulations that go on in perpetuity that are 
not challenged again, and the only way you really do that is to 
mount a national movement to try to get the votes here on the 
floor to nullify a rule. I actually have brought one of those 
nullifying pieces on capping the calories of our kids in school 
just here within the last few weeks.
    But what is optimum? And I want to pose this and ask the 
witnesses down on the panel for your reaction, and that is my 
legislation, which is the Sunset Act does this: it sunsets 
incrementally all Federal regulations over a period of 10 
years, asking the agencies directing them to offer up 10 
percent of their rules per year for a period of 10 years where 
Congress could reauthorize them, all on en bloc, or a Member 
can separate a rule out and have a separate vote on that rule, 
or amend that rule.
    I think it does 2 things: it gets a lot of the 
overregulation out of the books, and it makes the bureaucrats 
then listen to the people who are affected by those rules 
before they write them, because they know that those people 
that are the subject of the rules can then come back to a 
Member of Congress and ask them to bring that rule out and pull 
it out separately for a separate vote.
    I mean, that is a big concept to toss out here, and I know 
that I have not made it available to any of you. But I would 
like to start, if I could, on my left, Professor Taylor, and if 
I could ask the witnesses to comment on such a concept to try 
to clean this up so the voice of the people is better heard 
within our regulators.
    Mr. Taylor. Well, from what you said, it seems to me it is 
making a good effort to deal with this real difficult problem 
of the Congress stating in broad terms what should be done and 
delegating to the agencies the details. And that is always a 
problem.
    I think in the case of the recent financial legislation, it 
is just so obvious that too much has been delegated, if you 
like. Hundreds of rules have been asked to be written very 
quickly.
    So I think a suggestion like that makes sense. I would have 
to look at the details before us, but it really gives the 
Congress back the responsibility to considering the rules in a 
kind of a regular, sensible basis.
    Mr. King. Thank you, Professor. Mr. Gray.
    Mr. Gray. I agree with that answer. I would add that 
reviewing old regulations, whether it is at the agency or 
Congress, may be better to have the regulation come up in here 
in Congress. It would be very salutary. Regulations attract, 
like a ship does barnacles, certain special interests, and they 
favor special interests over small businesses who want to get 
into the business. And rules really should be reviewed by 
Congress on a periodic basis.
    Mr. King. Thank you, Mr. Gray. Professor Heinzerling?
    Ms. Heinzerling. I would like to say 2 things. One is that 
the----
    Mr. Coble. Professor, pull your mic a little closer. 
Professor?
    Ms. Heinzerling. Yes?
    Mr. Coble. If you would, pull the mic a little closer to 
you.
    Ms. Heinzerling. I cannot. It is stuck.
    Mr. Coble. Oh, I am so sorry. Okay.
    Ms. Heinzerling. But now it is on.
    Mr. King. That helps. I can hear you.
    Ms. Heinzerling. The power rests with you. You do not need 
a new statute in order to take back the authority that you 
have. You have that authority. And so with any regulation that 
you do not like, you always can overturn it. That is within 
your power. I think Congress should act more. We should have 
more of a debate about exactly what regulations should do and 
what it should not do rather than this debate.
    The first thing is without that statute, you have that 
power. The second thing, if you are worried about uncertainty, 
I would think that you would be worried about a statute like 
that that will take effect with unpredictable consequences on 
existing regulation, that people have already spent money 
getting up to speed on. And so you will have some people up to 
speed, some people not. People who are up to speed may feel 
unfairly treated if it is pulled back.
    It just seems if uncertainty is the concern, I am not sure 
it is the best fit.
    Mr. King. Thank you. Mr. Luddy?
    Mr. Luddy. The pace of innovation is so quick today that I 
agree with your idea. Ten years to me is a long time because 
innovation is so rapid. If you look at the case I cited, City 
Chicago has 1950 ventilation rules. We are 60 yeas down line 
from then, so a 10-year statute might have corrected that 
problem.
    We lobby with these groups to update their codes, but it is 
not an easy thing to do for any small business, or even a big 
business.
    Mr. King. Thank you, Mr. Luddy. And, Mr. Chairman, that is 
H.R. 6333, the Sunset Act. I thank the witnesses and you, and 
yield back the balance of my time.
    Mr. Coble. Thank the gentleman from Iowa.
    The distinguished lady from Texas, Ms. Jackson Lee.
    Ms. Jackson Lee. Thank you very much. I thank the Chairman 
and the Ranking Member for this hearing, and I thank all the 
witnesses for their presentation today, and express always an 
interest in creating opportunities, Mr. Luddy, for small 
businesses. I imagine that most Members would consider 
themselves champions of small businesses. In fact, for the 
record, I consider them the economic engine of this country, 
and the potential job creators going into the 21st century.
    I think at that point we may have a difference of opinion 
in terms of framework. I truly believe that the concerns of 
small businesspersons as the regulatory scheme is structured 
should be responded to and it should be monitored.
    And I would just ask you this brief question: would it be 
responsive that as the huge Federal Government regulates and 
passes regulations, and as the comment period that goes along 
with the regulatory structure, would it also be of help to have 
a more rapid response to the concerns of small businesses when 
they note that the regulatory structure in place intended for 
good may have a negative impact? Do you also see the issue of 
response time that could be improved?
    Mr. Luddy. Certainly it could. But keep in mind that a 
small businessperson, it is almost impossible for them to deal 
with the Federal Government. It is too vast. They do not have 
the resources. They do not have the time. They are literally 
just hoping to survive another day, another week, and another 
month. So to have them part of that process is extraordinarily 
challenging. Yes, improved response would be very helpful.
    Ms. Jackson Lee. My point would be, and I think every time 
I have seen a small business issue, most times I have seen 
large associations, which they can be a member of. Certainly 
the individual in their house with a computer and a desk might 
be a little challenging. But what I am suggesting is that most 
times, for example, if you see a McDonald's, you know that they 
are part of a franchise, though that may be an individually-
owned McDonald's. You know that McDonald's speaks for those 
owners here in Washington. So I do think there are lines of 
communication.
    And the point I am just making is that if there is anything 
that I think would be important out of this hearing would be 
the fact that a listening ear to the issues being raised after 
there is the recognition that there is a negative impact.
    I do not agree with the premise of this hearing that the 
regulatory scheme hinders, if you will, the economic 
opportunities of Americans. And I raise as the point of 
contention is whether or not we could look at the landscape of 
Spain and Greece and Italy and suggest that their economy has 
been totally related to the lack of the over excessive 
regulatory scheme. Or in the alternative, you could look at 
developing Nations who are attempting to establish OSHA rules, 
i.e., safety rules as I have traveled internationally and seen 
clean water rules, regulations for food, to make them more of a 
developed Nation.
    So the regulatory structure from my perspective is 
valuable. So let me just add for the record, if I could put 
into the record ``Regulatory Nonsense.'' Mr. Chairman, I ask 
unanimous consent to put this article into the record. Can I 
put this into the record?
    Mr. Coble. Without objection, it will be entered into the 
record.
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    Ms. Jackson Lee. Thank you so very much. So let me proceed 
with my questions. I do want to thank Mr. Gray. I have seen him 
often. Thank him for his service to the Nation and others.
    There was a quote made that ``Companies went through 
bankruptcy. Now they are back on their feet. That was the right 
course. It was the course that I fought for.'' Do you know who 
made that comment, Mr. Gray? That was the presidential 
candidate, Mr. Mitt Romney. I think it is the gentleman who 
offers that he does not represent 47 percent.
    And the reason why I have raised that is because these are 
kinds of, I think, destructive comments that play into, if you 
will, the not seeing as an even playing field, that regulations 
have their role. And what I believe we should be addressing is 
that whenever we pass legislation, a bipartisan Congress should 
respond to Mr. Luddy. It should respond to smaller community 
banks under the Dodd-Frank bill that argues about the 
regulatory impact on their ability to have a greater role in 
giving access to credit. I am willing to listen to that, but I 
cannot tolerate any idea to suggest that regulations are the 
main factor in undermining our economy.
    So I am going to go first to Professor Heinzerling and just 
say, what would we be--right now we are fighting the West Nile 
epidemic. We just fought E.coli. Where would we be without a 
strong regulatory structure of oversight to enhance the quality 
of life of Americans?
    Ms. Heinzerling. Well, I think that we would be in trouble. 
That what we would see are more polluted waters, more polluted 
air, more unsafe products, less safe food, less safe drugs, 
along the whole range of human activity and market activity. I 
think that we would see what we have seen in any period that 
precedes a regulatory intervention, which is harm--harm to 
humans, harms to the environment, harm to the economy from 
those things.
    And so I think that you see when you have unconstrained 
behavior by humans, what you will end up seeing is harm.
    Ms. Jackson Lee. And harm to children.
    Ms. Heinzerling. Yes.
    Ms. Jackson Lee. Right. Do you see any impact on small 
businesses in terms of if you are weighing, is it so drastic 
that it is not something that could be fixed within the 
regulatory scheme?
    Ms. Heinzerling. No, I think it can be fixed. I think a lot 
of the, for example, the report that I cited earlier on that 
talks about the cost of regulation per year, uses those same 
flawed statistics I mentioned to try to derive an estimate of 
the cost of regulation per firm, and from that then per small 
business. And from that says, well, these burdens are very 
great.
    But you cannot pile nonsense on nonsense and get a sensible 
result. And so the statistics that, again, try to show that 
these costs are excessive are not credible.
    Ms. Jackson Lee. I yield back, Mr. Chairman. Thank you for 
your courtesy.
    Mr. Coble. I thank the gentlelady.
    The distinguished gentleman from Pennsylvania.
    Mr. Marino. Thank you, Mr. Chairman. Good morning to folks. 
It is a pleasure to be here with you.
    Professor, I tried to take down some notes, and I want to 
make sure what I think you said you said. And I would like you 
to respond to my question on that, please.
    I think it was a few minutes ago you said that, and I am 
just taking hand notes here, some of the regulatory reform 
bills that we have passed in the House would be bad for 
agencies because they impose, and I think the important term 
here is ``new requirements and burdens on the agencies.'' And I 
find it a bit ironic that on one hand you say that we should 
not burden the agencies with requirements, but agencies are 
burdening small business with excessive regulation that has not 
seemed to be reviewed. I mean, how do you think the people in 
my district in eastern Pennsylvania, which is mostly farmers 
and small business, respond to that? Let us let unfettered 
rulemaking take place in the agencies, and not respond to what 
negative effects it has on the small business owner and the 
farmer? Do you want to clarify that a little bit, please?
    Ms. Heinzerling. Absolutely. I think I would explain the 
apparent tension that you see in these two things by saying 
that the agencies are there actually for the same people you 
are discussing. That it is not because I am worried about 
agencies being burdened that I worry about these bills. It is 
that I am worried about agencies not being able to do work for 
the American people. That is what they are there for. That is 
what you all have put them there for.
    Mr. Marino. Well, that is what they are supposed to be 
there for, but I can give you some primary examples. For 
example, the roofing industry in my area has come to see me on 
numerous occasions. There has been vast changes concerning 
harnesses and restraints concerning roofers, anywhere from 6 to 
8 to 10 to 12 feet. I have had several roofers in my district 
who have been fined over $50,000 because of apparatus that they 
are supposed to have now, which proves to be, at least from the 
people in my district, even more hazardous because there are 
more ropes and more lines crossing one another where those 
roofers are tripping over those ropes and lines, even though it 
is only 8 feet off the ground on a flat roof.
    So do you not think the agencies have a responsibility to 
come back and review that legislation and rules and regulations 
to actually talk to--I mean, I have been out on the sites with 
my people. I have been on the roofs, and I have been at the 
farms. And I see what regulation does. I live out in the 
country, and I love to see the bear and the deer come through 
my yard. I am on a well, and I want clean water, and I do not 
want anybody messing with it. But I think we should think in 
terms of once something is implemented, then we have to see 
what the results, are they efficient and effective. And you can 
respond to my comment if you would like to.
    Ms. Heinzerling. Yes, I would like to. You have the power. 
You have the power to undo any rule you want to undo.
    Mr. Marino. And as a freshman, I am taking advantage of 
that.
    Ms. Heinzerling. And you can step in right now. It is not 
the agencies. The agencies exist because Congress has given 
them the power and has given them certain missions. Any time 
you want you can take that away.
    Mr. Marino. I understand that, and I know the process by 
which we can take that away. But other comments have been made 
to people in my district when questioning the OSHA inspector 
that comes by, or the EPA individual, and trying to ask them 
questions as to, okay, what do you see here that I should be 
doing that I do not know that I should be doing, the individual 
says, well, I cannot answer that question. I am just told to 
find as many, as much as possible.
    Ms. Heinzerling. I would not be surprised, maybe not in 
your district, but in other districts in the country, I would 
not be surprised if there are other stories to be told about 
businesses where there were no inspectors, and people were hurt 
or killed on the job, and they wish that actually somebody had 
been there to prevent.
    Mr. Marino. Oh, I am sure you can come up with those as 
well. But I think there are far less than what regulatory 
agencies have done to this country. And one of my colleagues 
who just left wanted to find it appropriate to throw in a quote 
from Governor Romney, but I will throw you a quote out from Mr. 
Obama that I just read. And I usually verify these, but I will 
go back and do that. He was questioned that I have coal mines 
and coal producing electric companies in my district. And the 
President was asked about such regulation on coal mining and 
the use of coal. And his comment was what appeared to be in a 
somewhat arrogant way, I am not trying to shut down the coal 
industry. They can create as many mines and as many electrical 
plants that run on coal as they want. But they are going to go 
bankrupt doing it because of regulation. So with that, I hear--
--
    Mr. Coble. The gentleman's time has expired.
    Mr. Marino. I yield back.
    Mr. Coble. Thank the gentleman. The gentlelady from 
California is recognized for 5 minutes.
    Ms. Chu. Thank you, Mr. Chair. Well, before I begin, I 
would like to take a moment to express my disappointment with 
today's hearing. We are using our full last full Judiciary 
Committee hearing before long recess to discuss the Obama 
administration's regulations when we have had already 16 
hearings in this Committee to discuss regulations. And here 
again we are wasting time and money rehashing on these partisan 
issues that have already been discussed at great length. I 
think we should be using our time more wisely tackling the 
issues that are very key and critical to our constituents.
    Well, I would like to talk first about one area and ask Ms. 
Heinzerling a question. I am a strong supporter of the Clean 
Air Act of 1970, and the benefits of this Act have far exceeded 
the costs associated with it by a factor of 30 to 1. Not only 
has this Act been proven to have resulted in a 1.5 percent 
increase in GDP in 2010, but it has also resulted in preventing 
9,000 premature deaths every year, generating more productive 
workers, and creating a better environment.
    Ms. Heinzerling, as an expert on environmental 
administrative law, can you explain to me how such an act, how 
environmental regulations could save lives?
    Ms. Heinzerling. Well, without the regulation, one would 
have likely uncontrolled pollution. The more we know about 
pollution, it seems like the more harmful it becomes in our 
eyes. And so that without that, we would have uncontrolled 
pollution.
    As you just cited, a number of statistics from the EPA 
about both the monetary benefits and the benefits in terms of 
lives saved from the Clean Air Act. And without it, I think 
that we would have the reverse would be true; that is, we would 
have many more people sick, many people die earlier, many more 
economic harms than we have with the presence of that statute.
    Ms. Chu. Thank you. And on small business, I know that in 
the small community--I am Member of the House Small Business 
Committee--that the issue of regulations is always debated. But 
I note that there is one regulation that helps small businesses 
greatly, and that is the set aside of 23 percent for Federal 
contracts to be put there for small business.
    You know, we have a substantial amount of dollars in 
Federal contracts--$535 billion. So the fact that small 
business can get 23 percent gives it a fair shake. And, in 
fact, I am part of a bipartisan bill that has increased the 
regulation to go from 23 to 25 percent so that they can even 
get a greater fair shake.
    Can you explain how such regulations actually could help 
small businesses?
    Mr. Luddy. In my opinion, it is always challenging to deal 
with any governmental entity. And it is especially challenging 
for small businesses. So for those businesses that choose to 
specialize in governmental contracts that very well may help 
them, in terms of the general business, the amount of time 
required, we think it is generally not worth it.
    Mr. Chu. So you would actually not have any set asides for 
small business.
    Mr. Luddy. I would not.
    Ms. Chu. That is really a shocking statement. Five hundred 
and thirty-five billion dollars, and you would not give small 
business a fair shake.
    Mr. Luddy. I am a free market----
    Ms. Chu. I am going to move on to another question, which 
is how different regulations can help consumers save money. The 
rules issued in the last 20 years by the Department of Energy 
set efficiency standards for household appliances, and it would 
save consumers over $100 billion by 2030.
    Ms. Heinzerling, can you speak about one efficiency 
standard of the Department of Energy which would save consumers 
millions of dollars, and what would happen if the standard was 
not in place?
    Ms. Heinzerling. Yeah, and if I may, I would even expand 
the category to include things like the fuel efficiency 
standards that the Obama administration has put in place. These 
kinds of standards--the Department of Energy efficiency 
standards, the fuel efficiency standards set by EPA and the 
Department of Transportation--all save consumers money by 
either eliminating or limiting the amount of electricity they 
use or eliminating the amount of fuel that they use.
    And so it really puts money in the pockets of consumers 
rather than takes money out as we have been hearing about on 
the other side this morning.
    Ms. Chu. Well, let us go the opposite way. Can you give an 
example of when consumers have lost money in the absence of a 
regulation?
    Ms. Heinzerling. Well, in a way you would have--there are 2 
examples--one, your example about efficiency. To the extent 
that consumers do not know about the benefits of efficiency, 
have short time frames that they think over, then the 
regulation helps them save money. They would lose money in the 
absence of a nudge from government to save them money.
    Other things are a little bit more direct. There are a lot 
of regulations that are aimed at fraud and misrepresentation by 
various entities that save consumers money because they prevent 
those kinds of activities and behaviors.
    Ms. Chu. Thank you. I yield back.
    Mr. Coble. Thank the gentlelady. Without objection, I want 
to introduce my opening statement and letters from trade 
associations into the record. And so moved.
    [The prepared statement of Mr. Coble follows:]


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                               __________

    Mr. Coble. Thank you again for being here. Professor 
Taylor, I am determined to get you on that flight, and I think 
we can do it.
    It is my belief, folks, that--well, strike that. Let me say 
it in a different way. I am not averse to regulations that are 
sound and efficient. We have too many that are neither sound 
nor efficient. I think regulatory shackles can impede the flow 
of commerce, particularly as far as small businesses are 
concerned.
    Let me put this question both to Mr. Gray and to Professor 
Taylor. If this Committee's bills had already been introduced 
or enacted, would there be any need for regulations still have 
been able to achieve needed benefits?
    Mr. Gray. Would there be any need for?
    Mr. Coble. I did not state the question artfully. If this 
Committee's bills had already been enacted, would any needed 
regulation still have been able to achieve needed benefits?
    Mr. Gray. Well, sure. There is no question that needed 
regulation could have done, could do, would be able to do, what 
is necessary to achieve the benefits that are being sought. I 
will just give one example. There is no reason really in the 
world why the EPA could not do more with economic incentives 
that I think were authorized by the 1990 amendment.
    Now it may be that because of court rulings there are some 
statutory inhibitions, but there never has really been an 
effort by the current Administration or by EPA that I know of 
to seek the statutory fix which I think Congress would be 
willing to provide that would allow the use of the incentives 
that bills that have already been adopted by this body would 
have encouraged.
    So I think that the needed benefits could have been 
provided, could be provided, under every single bill that this 
House has adopted.
    Mr. Coble. Thank you, Mr. Gray. Mr. Taylor, I will get with 
you in just a second.
    For those who share my view in opposing inefficient and 
unsound regs, oftentimes we are accused of opposing all regs. 
And that is indeed unfortunate because some regs are in order, 
but the unsound ones and inefficient ones are not in order.
    Professor, do you want to add to that?
    Mr. Taylor. Well, I understand the question is we are not 
talking about, and these bills are not talking about, stopping 
regulation or ignoring the benefits. In fact, on the contrary, 
they have emphasized more cost-benefits, for example, SEC, 
CFTC. They have emphasized transparency, so for example, the 
cost of the unfunded mandates would be reported.
    So it seems to me it is really a straw man or straw woman 
to put out ideas that this is eliminating the benefits of 
regulation. They are basically making the regulatory process 
work better, more efficient, and it seems to me that is what 
the goal should be, especially in this environment where job 
growth is so abysmal.
    Mr. Coble. Again, thank you all for your participation and 
input today. And I am going to yield the gavel and the floor to 
the distinguished gentleman from Arkansas.
    Mr. Griffin. [Presiding.] Thank you all. Thank you, Mr. 
Coble. I am going to keep this short. I was told that somebody 
on the panel has a flight to catch.
    I want to just to quickly make a few points, and then maybe 
ask a question or two. I have a 2-year-old and a 5-year-old, 
and I want them to have clean air, and I want them to have 
clean water. The idea that people on this side of the aisle are 
anti-regulations per se is just nonsense. That is a straw man 
drawn up for the purposes of demagoguery.
    I am for reasonable regulations. I am for regulations that 
make sense. I am for regulations that do not crush businesses 
in the name of covering a hypothetical that may never happen. 
It is the excessive and overly burdensome regulation that we 
are concerned with.
    I will give you an example. And let me just say this: with 
all due respect to all the occupations of everybody, I am glad 
to see that people are working regardless of what they do. And, 
you know, I was a lawyer and apologize for that. But when I 
want to know what regulations do to job creators, I ask them, 
like this gentleman here. They, not people who work in 
bureaucracies up here, are the experts on how they are impacted 
by regulations because they live it every single day.
    And I just left a room full of 13 bankers--community 
bankers, small town bankers--from Arkansas that are dealing 
with a nightmare of Dodd-Frank. It is a disaster. They are 
being punished for something they never did. They were crossing 
the Ts and dotting the Is, no matter what was going on on Wall 
Street. And now they have to hire people to comply with a bunch 
of regulations that control almost every decision they make. It 
is unbelievable. And, you know, I still hear people trying to 
say that regulations do not have an impact on business. It is 
unbelievable.
    I went and toured a fledgling business in Little Rock, and 
it is in an old industrial site. And I walked out on their 
loading dock, and they had a 50-foot ramp for wheelchairs. We 
are all for disabled folks having access to whatever building 
they need to access. I am for that. But it struck me as odd 
that a wheelchair ramp would go to a loading dock where no one 
ever enters the building.
    Funny the people that own the business had the same 
concern. I said, why do you have a 50-foot wheelchair ramp 
going to your loading dock? Would you ever use that? Well, we 
were required to build that--$5,000 that they did not have. 
Why? Because the Federal Government wants to regulate for every 
contingency that might ever happen, even if it only happens 
once in 100 years. They want you to spend money to make it 
right. What a crock. It is unbelievable.
    And my constituents back in Arkansas and all over this 
country are spending money on that type of nonsense that is 
promulgated up here in this city. And for people to deny that 
that has an impact is outrageous. Ask the job creators.
    I had a conference at the Clinton Library with Democrats 
and Republicans. I invited business leaders--big business, 
small business, you name it. The number one problem they said 
that was serving as an obstacle to job creation was economic 
uncertainty created by overregulation from Washington. Period. 
Now that is not a question.
    You know where I stand on this, but I will just tell you, I 
am so sick and tired of hearing people say that regulations are 
job creators. I understand that regulations are needed in some 
areas, and I am for common sense regulations. But that is not 
what we are talking about. We are talking about a tsunami of 
nonsense coming out of this city.
    Let me ask you this. What is the question, the answer to 
which is, we need another Federal agency to regulate the 
financial industry? What is the question? Someone was sitting a 
room and said, we do not have enough bureaucracy. We do not 
have enough regulation. We must create another multibillion 
dollar entity and hire a bunch of new people, because we just 
cannot make the 10 other ones that already regulate them work.
    It is a joke. It is an absolute joke. And I do not guess I 
have any questions. I appreciate you all coming to testify, and 
I am glad I got to Chair this hearing.
    I would like to thank our witnesses for their testimonies 
today.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    This hearing is adjourned.
    [Whereupon, at 11:44 a.m., the Committee was adjourned.]








                            A P P E N D I X

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               Material Submitted for the Hearing Record



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 Material submitted by the Honorable Howard Coble, a Representative in 
Congress from the State of North Carolina, and Member, Committee on the 
Judiciary, on behalf of the Honorable Lamar Smith, a Representative in 
   Congress from the State of Texas, and Chairman, Committee on the 
                               Judiciary


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