[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





                       ASSESSING THE OBAMA YEARS:
    OIRA AND REGULATORY IMPACTS ON JOBS, WAGES AND ECONOMIC RECOVERY

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                           REGULATORY REFORM,
                      COMMERCIAL AND ANTITRUST LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              JULY 6, 2016

                               __________

                           Serial No. 114-85

                               __________

         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

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

    Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                   TOM MARINO, Pennsylvania, Chairman

                 BLAKE FARENTHOLD, Texas, Vice-Chairman

DARRELL E. ISSA, California          HENRY C. ``HANK'' JOHNSON, Jr.,
DOUG COLLINS, Georgia                  Georgia
MIMI WALTERS, California             SUZAN DelBENE, Washington
JOHN RATCLIFFE, Texas                HAKEEM JEFFRIES, New York
DAVE TROTT, Michigan                 DAVID N. CICILLINE, Rhode Island
MIKE BISHOP, Michigan                SCOTT PETERS, California

                      Daniel Flores, Chief Counsel

                      Slade Bond, Minority Counsel
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                            C O N T E N T S

                              ----------                              

                              JULY 6, 2016

                                                                   Page

                           OPENING STATEMENTS

The Honorable Tom Marino, a Representative in Congress from the 
  State of Pennsylvania, and Chairman, Subcommittee on Regulatory 
  Reform, Commercial and Antitrust Law...........................     1
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Ranking Member, 
  Subcommittee on Regulatory Reform, Commercial and Antitrust Law     3
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     4
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     6

                               WITNESSES

The Honorable Howard Shelanski, Administrator, Office of 
  Information and Regulatory Affairs, Office of Management and 
  Budget
  Oral Testimony.................................................     7
  Prepared Statement.............................................    10
William W. Beach, Ph.D., Vice President for Policy Research, 
  Mercatus Center at George Mason University
  Oral Testimony.................................................    24
  Prepared Statement.............................................    26
Clyde Wayne Crews, Jr., Vice President for Policy/Director of 
  Technology Studies, Competitive Enterprise Institute
  Oral Testimony.................................................    32
  Prepared Statement.............................................    34
David M. Driesen, Esq., Professor of Law, Syracuse University 
  College of Law
  Oral Testimony.................................................    78
  Prepared Statement.............................................    80
Douglas Holtz-Eakin, President, American Action Forum
  Oral Testimony.................................................    90
  Prepared Statement.............................................    92

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Questions for the Record from the Honorable Howard 
  Shelanski, Administrator, Office of Information and Regulatory 
  Affairs........................................................   114
Response to Questions for the Record from William W. Beach, 
  Ph.D., Vice President for Policy Research, Mercatus Center at 
  George Mason University........................................   117
Response to Questions for the Record from Clyde Wayne Crews, Jr., 
  Vice President for Policy/Director of Technology Studies, 
  Competitive Enterprise Institute...............................   121
Response to Questions for the Record from Douglas Holtz-Eakin, 
  President, American Action Forum...............................   124
                        OFFICIAL HEARING RECORD
          Unprinted Material Submitted for the Hearing Record

Supplemental material submitted by David M. Driesen, Esq., Professor of 
    Law Syracuse University College of Law. This material is available 
    at the Subcommittee and can also be accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=105157
 
 ASSESSING THE OBAMA YEARS: OIRA AND REGULATORY IMPACTS ON JOBS, WAGES 
                         AND ECONOMIC RECOVERY

                              ----------                              


                        WEDNESDAY, JULY 6, 2016

                       House of Representatives,

                  Subcommittee on Regulatory Reform, 
                      Commercial and Antitrust Law

                      Committee on the Judiciary,

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 3:03 p.m., in 
Room 2226, Rayburn House Office Building, the Honorable Tom 
Marino (Chairman of the Subcommittee) presiding.
    Present: Representatives Marino, Goodlatte, Collins, 
Ratcliffe, Trott, Bishop, Johnson, Conyers, and DelBene.
    Staff Present: (Majority) Daniel Huff, Counsel; Andrea 
Lindsey, Clerk; (Minority) Slade Bond, Chief Counsel.
    Mr. Marino. The Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law will come to order. Without 
objection, the Chair is authorized to declare a recess of the 
Committee at any time, and that is going to take place in about 
30 minutes, 30 to 40 minutes because we will be voting.
    Welcome to this hearing entitled ``Assessing the Obama 
Years: OIRA and Regulatory Impacts on Jobs, Wages, and Economic 
Recovery.'' This topic is of the highest importance to working 
Americans. The last recession ended in 2009, but the economy 
has been limping along ever since. Job growth has been weak. 
Households' incomes have stayed put. The economy has not grown 
by more than 3 percent in any of the one of these years. One 
clear contributor is the growing Federal regulatory burden.
    Under the Obama administration, the number of major 
regulations promulgated per year has increased dramatically. In 
2015, Federal regulations imposed an estimated cost of $1.89 
trillion. To put this in perspective, U.S. regulatory costs now 
exceed the gross domestic product of both Australia and Canada. 
Numerous studies and the agencies themselves concede that on an 
industry-specific level, regulations lead to job losses. At a 
minimum, the data also establishes probable cause for concern 
that regulations decrease employment in the aggregate. Data 
shows that even where workers in regulated industries find new 
jobs, the displacement triggers a lifetime of physical and 
economic problems.
    Accordingly, as President Obama's former OIRA Administrator 
Cass Sunstein said, ``Regulators must take that possibility 
seriously.'' Unfortunately, regulators are not following this 
prudent path.
    A recent study of agencies' Regulatory Impact Analyses 
found that only approximately 20 percent qualified employment 
effects. Since 2009, the Obama administration has imposed 229 
major regulations at a cost, by its own estimate, of $108 
billion annually. Merely administrating regulations in 2015 was 
estimated to cost taxpayers over $57 billion, an 83 percent 
increase over 2001. The effects are dire.
    A September 2015 study by a Princeton Nobel laureate shows 
``shocking'' rising mortality among blue collar segments of 
society. According to the study's author, ``those are the 
people who have really been hammered by the economic malaise. 
Their wages in real terms have been going down.'' The economic 
stress is leading to drug and alcohol dependency and death, 
mental health problems, and even suicide. The Administration is 
dismissive. It circumvents reasonable procedures designed to 
limit burdensome regulations. It uses technical gimmicks to 
claim speculative benefits outweigh regulatory cost.
    Delegations of power are read broadly, while limitations 
are read narrowly. Half of the Administration's vetoes have 
been used to block congressional objections to controversial 
regulations.
    OIRA is supposed to be the gatekeeper, the entity that 
helps fight overregulation and protect small businesses and the 
American worker.
    Unfortunately, on some of the most costly and controversial 
regulations of the last 8 years, OIRA has not proven an 
effective check. For example, it never insisted upon the 
required small business impact analysis for EPA's Waters of the 
United States regulation, despite its obvious sweeping reach. 
Nor has it questioned agencies' excessive reliance on co-
benefits and performing required cost-benefit analyses. In 
fact, one of the reasons agencies have to inflate the claimed 
benefit of their rules is to outweigh skyrocketing cost because 
they are regulating well into the region of diminishing 
marginal returns where one must spend increasingly more to 
achieve increasingly less. This track record makes me concerned 
about ``Midnight Rules'' at the end of this Administration.
    Midnight Regulations impose the ongoing Administration's 
agenda on the country before an incoming Administration can 
stop it. So today, it is important to ask what serious steps 
will OIRA take to prevent this final abuse? The legacy of this 
Administration will be severe damage to hardworking Americans, 
our economy, and the rule of law.
    Discretion afforded administrative agencies by Congress has 
been abused. Major decisions were made not by the people's 
Representatives in Congress, but by unelected bureaucrats. This 
cannot stand. I hope Administrator Shelanski can offer ideas on 
making OIRA more effective. I also hope to hear from our second 
panel of witnesses about needed reforms.
    The Chair now recognizes the Ranking Member of the 
Subcommittee on Regulatory Reform, Commercial and Antitrust 
Law, the gentleman from Georgia, Congressman Johnson, for his 
opening statement.
    Mr. Johnson. I thank the Chairman. Established by the 
Paperwork Reduction Act of 1980 and empowered with centralized 
regulatory review responsibilities under President Reagan, the 
Office of Information and Regulatory Affairs, also known as 
OIRA, functions as the gatekeeper of the regulatory system for 
the most important Federal rules.
    In 1993, President Clinton issued Executive Order 12866 to 
require that OIRA review all ``significant'' regulatory actions 
between 500 and 700 a year. It additionally requires that 
Federal agencies prepare a cost-benefit analysis for 
economically significant rules.
    In January 2011, President Obama issued Executive Order 
13563, which reaffirmed the principles of Executive Order 12866 
but also requires that agencies develop plans for retrospective 
review of existing regulations to determine whether any should 
be modified, streamlined, expanded, or repealed. And finally, 
the Obama administration issued Executive Order 13610 in May 
2012 to further increase public participation in retrospective 
reviews.
    According to Mr. Shelanski's predecessor, Cass Sunstein, 
these orders have energized agencies to identify hundreds of 
outdated rules for elimination, and many agencies have already 
finalized or proposed, or formally proposed, over 100 of these 
reforms. For instance, the Department of Health and Human 
Services has finalized several rules to remove hospital and 
healthcare reporting requirements, saving $5 billion over 5 
years. These efforts have continued under Administrator 
Shelanski, and thus far, appear to be working.
    Combined, it's clear that these initiatives have already 
resulted in hundreds of formal proposals to eliminate rules 
representing billions of dollars in savings over the next 
several years and substantially more in eventual savings. I 
look forward to learning about the continuing efforts, to date, 
of the President's push to have agencies improve and modernize 
the existing regulatory system.
    In addition to conducting oversight of OIRA, witnesses on 
our second panel will also discuss larger concerns with our 
Nation's regulatory system. I would note that the most pressing 
issue facing our regulatory system today is the timely response 
to public health and safety crises through the expeditious 
promulgation of Federal rules. But sadly, it has become common 
for my colleagues to assert that the same regulations that 
protect our health, safety, environment, and our financial 
system have undermined the Nation's economic recovery and job 
growth.
    This could not be further from the truth and is simply not 
borne out by any serious research. Perhaps that is why 
conservatives also acknowledge that in light of improvements in 
the economy and the unemployment rate, it is becoming 
increasingly difficult to argue that the current regulatory 
environment has any effect on jobs or growth. Douglas Holtz-
Eakin, one of the majority's witnesses in today's hearing, 
commented last year that, ``with low employment and rising 
wages, the Republican's job gets a lot harder,'' while also 
referring to recent employment growth as promising.
    I think 20-some million new jobs created over in the 
private sector since, President Obama took office. First, it's 
a loss of a couple of million jobs during the previous 
Administration. And, with respect to those figures about rising 
mortality rates among the blue collar working group 
demographic, it's not just because wages have gone down and 
they're dying because of alcohol, drugs, and mental health.
    Certainly, wages have gone down, and they are dying of 
alcohol, drugs, and mental health disease, but also, liver and 
heart disease are taking out our fellow man, and this can all 
be attributable somewhat to the globalization of our economy, 
the movement of jobs offshore, production jobs, blue collar 
jobs, those jobs--many of those jobs have left under trade 
deals that have not worked for the American worker, and people, 
unfortunately, when they become--when they--there's a sense of 
hopelessness that starts to pervade their thinking, then they 
turn to alcohol and drugs, and they then develop liver disease, 
heart disease. But fortunately, there's treatment available for 
the millions, tens of millions who have been able to gain 
access to the healthcare system due to the passage and 
implementation of the Affordable Care Act, which my colleagues 
on the other side have tried more than 60 times to abolish with 
no plan in place to replace it.
    And, of course, we have had some regulations that have 
ensued as a result of implementation of the Affordable Care 
Act, a major piece of legislation, and also the Dodd-Frank 
financial reform bill that has attempted--or has been effective 
thus far at creating another--or enabling another too big to 
fail situation to take out the retirement earnings of our 
working people and to keep our economy moving forward.
    So I would like to say that once you set aside anti-
regulatory rhetoric, it's clear that regulated industries 
exhibit more entrepreneurship, competition, and innovation 
given the fact that Alex Tabarrok, an economics Chair at the 
Mercatus Center at George Mason, found, in a 2015 study, that 
``industries with greater regulatory stringency,'' and I am 
quoting him, ``have higher start-up rates as well as similarly 
high job creation rates.''
    So in closing, I would like to thank Administrator 
Shelanski for taking the time to appear before us today, and 
I'd like to thank the other witnesses for being here today, and 
with that, I yield back.
    Mr. Marino. The Chair now recognizes the gentleman of the 
full Judiciary Committee, Mr. Bob Goodlatte of Virginia, for 
his opening statement.
    Mr. Goodlatte. Thank you very much, Mr. Chairman. I want to 
thank you for holding this hearing, which is very timely. 
Overregulation is not a new issue, and the reason why this 
hearing is timely is it comes right after Independence Day. 
Among the grievances that the signers of the Declaration of 
Independence lodged against King George was overregulation: 
``He has erected a multitude of New Offices and sent hither 
swarms of officers to harass our people and eat out their 
substance.''
    Unfortunately, the problem has resurfaced. Last year, 
employment at regulatory agencies hit an all-time high of 
277,000. In 2014, rules from the administrative agencies 
outnumbered laws passed by Congress 16 to 1. There has been a 
dramatic power shift in these United States from elected 
officials to unaccountable bureaucrats at Federal regulatory 
agencies.
    In theory, agencies are governed by legislation, like the 
Administrative Procedure Act, as well as executive orders, 
designed to ensure transparent, quality rulemaking that is 
responsive to the people, balances costs and benefits, and is 
faithful to the intent of Congress. In practice though, too 
many Administrations have not adhered to these procedures in 
good faith.
    The Obama administration, in particular, has taken 
advantage of the system to ram through radical, controversial, 
and sweeping policy changes contrary to the will of Congress, 
and of views of large segments of the voting public. Serious 
reforms are needed to curve these abuses.
    At key stages in the rulemaking process, the Administration 
has ignored, or subverted, commonsense rulemaking procedures 
that stood in the way of their policy goals. For example, 
instead of using required regulatory impact analysis to 
determine whether regulation is necessary, agencies produce 
them in a perfunctory way, after the decision to regulate has 
already been made. A Mercatus Center study found that in 
essentially 87 percent of cases, agencies embarked on costly 
regulations without significant evidence that there was a 
problem or a precise idea of what they needed to fix. 
Similarly, agencies make questionable certifications that rules 
will not have a significant economic impact on a substantial 
number of small entities in order to avoid requirements 
designed to help rein in impacts on small businesses.
    While the Obama administration pays lip service to the 
virtues of cost-benefit analysis, it routinely uses technical 
gimmicks like non-standard discount rates and excessive 
reliance on co-benefits to ensure its preferred outcomes. The 
Administration is also exploiting the Administrative Procedures 
Act's interpretive rules exception to impose dramatic and 
controversial policy changes without notice-and-comment or 
public participation. These include an unprecedented 30 
guidance documents from the Department of Education straining 
the application of Civil Rights laws into controversial areas 
well beyond their intended scope.
    Unfortunately, whether with regard to highly controversial 
rules, like EPA's Waters of the United States rule, Clean Power 
Plan rules, or Utility MACT rule, the Office of Information and 
Regulatory Affairs (OIRA), has proven ineffective at preventing 
regulatory abuses, particularly when the costs are highest and 
it matters most.
    To be sure, in some cases, OIRA has improved the quality of 
rulemaking. However, that just underscores the need for 
fundamental regulatory reform in the face of executive branch 
abuses in the most high-profile cases.
    This hearing is an opportunity to lay before the American 
public precisely how the President's ``I have got a pen'' 
approach has exploited the weaknesses in the regulatory system. 
That is the legacy of the Obama administration. For 8 years, it 
has abused discretion that Congress delegated in good faith. 
Serious and comprehensive reform is needed, and I look forward 
to exploring with the witnesses both the problem and its 
solutions. Thank you, Mr. Chairman.
    Mr. Marino. The Chair recognizes the full Judiciary 
Committee Ranking Member, the gentleman from Michigan, 
Congressman Conyers for his opening statement.
    Mr. Conyers. Thank you, Mr. Chairman, Members of the 
Committee, and especially to our first witness, the head of the 
Office of Information and Regulatory Affairs. It's been 3 years 
since Administrator Shelanski was appointed to head OIRA, and 
I'd appreciate hearing his thoughts on the current state of 
affairs with respect to Federal rulemaking and whether 
legislative fixes are needed in his view.
    And, I'm also--I don't know how you can get all this into 5 
minutes, but I wanted to get a sense of what it was like before 
you got--before you took over so we can empathize with what it 
is you've been working on and how you've--how you've approached 
it.
    Some think the regulatory system, as you heard, is broken. 
But to that end--excuse me. They also support a series of anti-
regulatory measures, many of which would impose numerous 
procedural burdens on Federal agencies.
    Now, that's a curious difference of views that are being 
pushed by some of the same important personalities in the 
Congress. Other anti-regulatory measures would up-end the 
rulemaking process through unnecessary and costly litigation 
changes. For example, one bill, 4768, Separation Powers 
Restoration Act, is likely to be considered on the floor later 
this month, and would require Federal courts to review all 
agency rulemaking and interpretations of statutes on a de novo 
basis, resulting, of course, in a paralysis that would be out 
of sight, probably impossible, from my point of view.
    And so, there's a sort of an opportunity to press down on 
OIRA and its leadership, which I've had some indication that 
they are small and understaffed, and with this enormous 
responsibility, and I would like to get from this hearing, not 
only from the Administrator, but the panels that follow, an 
idea of how we in the Congress can make the process more 
efficient and how the Administration can make it more efficient 
without Congress intervening, if that is possible. That's why 
the hearing is important.
    The government has the obligation to protect health, 
welfare, and safety of all our citizens with the need to foster 
economic growth. And so, it's in that spirit that I come to 
this hearing to hear our Administrator describe how things work 
inside OIRA, and what the challenges are that you are faced 
with. We know that the time--that the time--period of time for 
regulation is getting pretty long, and we want you to candidly 
tell us what you can do about it, and what we should do about 
it. And so, I thank Chairman Marino for holding this hearing. 
And, like my colleague, Mr. Johnson, I look forward to the work 
product of this important coming together. Thank you, Mr. 
Chairman.
    Mr. Marino. Without objection, other Members' opening 
statements will be made part of the record. Before we break for 
voting, I would like to swear you in, sir, if you don't mind, 
so would you please stand and raise your right hand.
    Administrator Shelanski, do you swear that the testimony 
you're about to give before this Committee is the truth, the 
whole truth, and nothing but the truth, so help you God?
    Mr. Shelanski. I do so swear.
    Mr. Marino. Let the record reflect that the witness has 
responded in the affirmative, and thank you. Please be seated. 
We're going to head to vote now. We have five votes. They're 
beginning now with a 15-minute vote and then four 5-minute 
votes, so it looks like we're looking at pretty close to at 
least a half hour, and I apologize for that, but we will get 
back as soon as possible, sir.
    [Recess.]
    Mr. Marino. The hearing will now come to order and resume.
    I will now introduce our esteemed witness. And, thank you. 
I apologize again for making you wait. Dr. Howard Shelanski was 
confirmed by the United States Senate in June 2013 as the 
administrator of the Office of Information and Regulatory 
Affairs, otherwise known as OIRA. Prior to his confirmation, 
Administrator Shelanski served as the director of the FTC's 
Bureau of Economics, and as chief economist for the Federal 
Communications Commission. Administrator Shelanski also served 
as senior economist for the President's Council for Economic 
Advisers.
    Prior to working for the government, Administrator 
Shelanski practiced law and taught at both Georgetown 
University and the University of California at Berkeley. He 
received his BA from Haverford College and his J.D. and Ph.D. 
in economics from the University of California at Berkeley. 
Following law school, he clerked first at the District and the 
Appellate Courts levels and then for Justice Antonin Scalia on 
the U.S. Supreme Court.
    The witness' written statements will be entered into the 
record in its entirety. And, I ask, sir, that--you have been 
here before. You know how it works. Now, because we're not in 
the original room, we have no lights. We don't even have a 
timer. Somebody's going to sit beside me and tap me on the 
shoulders. And, when you get at about 4\1/2\ minutes, I will 
just diplomatically hold the hammer up. I will not hit anything 
or anyone, and just try to wrap up then in the next 30 seconds 
to a minute.
    So Administrator Shelanski, please.

  TESTIMONY OF THE HONORABLE HOWARD SHELANSKI, ADMINISTRATOR, 
    OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Shelanski. Thank you very much, Chairman Marino, 
Ranking Member Johnson, and Members of the Committee, for the 
invitation to appear before you today. I am pleased to have 
this opportunity to discuss recent developments at the Office 
of Information and Regulatory Affairs, OIRA, and report on the 
progress OIRA has made on the key priorities I outlined when I 
first appeared before this Committee in July of 2013.
    OIRA has a broad portfolio, but one of our main duties is 
to coordinate the review of significant regulations. The basic 
principles of regulatory development and centralized review 
have evolved in a bipartisan way over the course of the last 
few decades.
    The structure of regulatory review that we follow today was 
established by Executive Order 12866, which is quite simple and 
straightforward: Regulations should be based on a sound 
analysis of their impacts. They should be developed with public 
input and subjected to public scrutiny before they are 
finalized, and they should be reviewed by a central office to 
ensure consistency with sound regulatory practice and 
Administration priorities.
    OIRA does not review all executive branch regulations, nor 
would it be efficient for the office to do so. We review only 
significant regulatory actions. The most fundamental category 
of significant regulations are those that are economically 
significant, the threshold for which under the executive order 
is an annual effective on the economy of $100 million or more.
    Typically, an agency sends a draft of a significant 
proposed or final rule to OIRA, after which OIRA coordinates an 
interagency review process. Typically, the agency will agree 
with some but not all of the comments that it receives from 
OIRA and the other reviewing agencies. Through discussion and 
deliberation with interagency reviewers, the rulemaking agency 
ultimately produces a proposed or final regulation to be 
published in the Federal Register.
    OIRA works to ensure that the costs of new regulations that 
come to the Office of Review are justified by the benefits. To 
date, the net benefits of regulations issued through the sixth 
fiscal year of the Obama administration are about $215 billion. 
The benefits of these rules are not mere abstractions. They 
help American families every day by saving lives, preventing 
illness and injury, and protecting consumers.
    As this Administration comes to a close, we intend to 
maintain the strong regulatory review standards that have 
guided OIRA's review of regulations throughout the 
Administration. In December of 2015, I issued a memorandum to 
deputy secretaries outlining these expectations. The memo asked 
agencies to adhere to dates established in their fall 2015 
regulatory plan and agenda, and to update OIRA about any 
necessary changes.
    The memo acknowledged that agencies will issue many needed 
regulations through 2016, but requested that agencies strive to 
complete their highest priority rulemakings by this summer, 
because OIRA needs sufficient time to thoroughly review all 
regulations for compliance with applicable statutes, governing 
executive orders, and OMB circulars.
    When I became OIRA administrator in 2013, one of my goals 
was to increase the predictability of the regulatory review 
process by improving the timeliness and transparency of OIRA's 
key functions. Toward that end, and as I committed to do the 
first time I appeared before this Committee, we have published 
the regulatory plan and agenda each fall and spring, most 
recently on November 16, 2015, and May 18, 2016.
    OIRA is committed to putting out another regulatory plan 
and agenda in a timely fashion this fall. OIRA has also worked 
to improve the transparency of regulatory review. When an 
agency submits a rule to OIRA for review, the submission 
appears publicly the next day on OIRA's Web site. This posting 
provides stakeholders with notice that OIRA is initiating 
review of a regulation and is available to meet with any party 
interested in providing input on a rule under review.
    The entities with which OIRA typically meets include 
Members of Congress and their staffs, State and local 
governments, businesses, trade associations, unions, and 
advocates from a variety of organizations. OIRA posts a log of 
all such meetings on its Web site detailing the participants in 
each meeting, the organizational affiliation of the 
participant, and post any materials prior to OIRA at the 
meeting.
    One hallmark of this Administration's regulatory policy is 
our retrospective review effort. Retrospective review, which 
the President has advanced through Executive Order 13563 and 
13610, is a crucial way to ensure that our regulatory system 
remains modern and streamlined and does not impose unnecessary 
burdens on the American public. The essential idea is to 
scrutinize existing rules and assess whether in practice they 
are achieving their objectives without imposing unnecessary 
costs.
    Agencies release their most recent reports on March 4, 
2016, and will submit their next reports to OIRA this month. To 
date, this Administration's retrospective review efforts are 
expected to yield an estimated net 5-year savings of $28 
billion.
    In conclusion, regulations can and do bring great benefits 
to Americans, but they also carry costs. OIRA works every day 
to achieve the goals outlined in Executive Order 13563 to 
protect public health, welfare, safety, and our environment, 
while promoting economic growth, innovation, competitiveness, 
and job creation.
    It is critical to ensure that Federal agencies base their 
regulatory actions on high-quality evidence and sound analysis. 
It is also crucial that a culture of retrospective review is 
sustained at the agencies as any healthy organization should 
scrutinize its current approaches to see if they are still 
relevant and effective in a rapidly evolving economy.
    We look forward to continuing our efforts to meet these 
challenges. Thank you for your time and attention. I would be 
happy to answer any questions.
    [The prepared statement of Mr. Shelanski follows:]
    
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   Mr. Marino. Thank you. Now we will begin the 5 minutes of 
questioning from each of the Members. And, we will try to do 
just as well as you did, to do it within around 5 minutes.
    First thing I would like to bring to your attention and ask 
your response to, sir, is the Committee--the Subcommittee, 
which I've Chaired for the last couple of years now, asked in 
writing for a list of all proposed, or final rules reviewed by 
OMB since January of 2009 where the cost-benefit analysis, by 
one or more methods of calculation would be negative if co-
benefits were excluded. OIRA offered a generic reply that co-
benefits are discussed in an annual report.
    Would you be so kind as to commit to providing the list 
that I just asked for by July 20 of this month?
    Mr. Shelanski. Thank you, Mr. Chairman.
    I would like to take that request back and to see what it 
would take for us to compile that list, and we will get back to 
your office as quickly as possible with when we can reply.
    Mr. Marino. Do you think you will be able to get back to us 
as to when you can complete that list before July 20?
    Mr. Shelanski. Yes. I will get back to you before July 20 
with an answer as to what kind of work I think will be involved 
with that and when we can do that.
    Mr. Marino. Thank you.
    Your written testimony outlines steps you took ``to avoid 
an end-of-the-year rush,'' which we have seen concerning 
regulations with all Administrations. Essentially, you 
requested that agencies act promptly. Supposing they refuse 
your request, what consequences would they face--not could they 
face, but would they face--with you if that information is not 
put together?
    Mr. Shelanski. The memorandum that I issued in December 
makes clear that we at OIRA need time to make sure that we have 
done a thorough review. And, we will uphold the standards of 
the executive order. The consequence that agencies will face if 
they come to us too late with rules is that we may not have 
time to do that kind of thorough review, in which case their 
rule would not be completed by the end of the Administration.
    Mr. Marino. Let's expand a little bit on that question and 
your statement. You said you do not have--you may not have time 
because of what the agency has not done or fulfilled their 
request. But as the Administrator, how do you respond to that? 
It's like, you know, I ask my kids to have something done, and 
it's not done, there are consequences. Maybe we should start 
running the government a little more like we, parents, 
supervise our children.
    Mr. Shelanski. It's hard to know in advance of any rule 
being submitted what kind of shape the rule is in, or what the 
review time will be. Some rules can be reviewed thoroughly and 
completely in a relatively short period of time; others will 
take a lot more back and forth, will implicate a lot more of 
the equities of other agencies.
    So it's hard to know in advance what the consequence of a 
particular late submission will be, but--so the operative 
principle that we're using is to tell them that if you submit 
us a rule late and it's a rule that will take more time to do a 
good job on, it won't be able to be concluded on. I can't tell 
in advance before I see a rule how long it will take to review 
or what the process will be, but they are on notice that, you 
know, we can't shortcut our process and we can't rush rules 
through at the end.
    Mr. Marino. Don't you think there should be some type of--I 
don't want to use the word ``sanction,'' but some type of 
notice or warning, public notice or warning to that agency, to 
that department, that we requested this information, the time 
has lapsed, we have had no response? Or is it even a situation 
where you have requested an extension?
    I mean, the American people have to understand what is not 
taking place. And, elected officials and those that are 
appointed to office can simply just not ignore because this is 
what gets us into the problems that we're in with the debt and 
a whole litany of other issues. But there are responsibilities. 
I came from industry. You're an officer of the court. You know 
when a judge says I want this done by this date; if it's not 
done, there are sanctions. So why are the bureaucrats, why 
would the elected officials be immune from this?
    I think part of your responsibility and other 
Administrators' responsibility is to make it publicly known 
that your request wasn't fulfilled, and the agency is lacking 
in getting American people information. What say you?
    Mr. Shelanski. If an agency chooses not to send a rule to 
OIRA, that's something that's very much in their discretion. If 
it's not a rule that has a court order or a statutory deadline, 
I don't have any authority to issue a sanction because an 
agency doesn't send a rule over. But what I can do, and the 
authority that I do have is to make sure that my office 
operates in a way that it lives up to its authorizing executive 
orders.
    And so, what I can tell agencies--and again, it's not my--
you know, I can tell agencies, look, you are working on this 
rule and you say you want it done, we're running out of time. 
And, that's the kind of thing that I can tell them, and then 
they have to make a decision and be answerable to the public 
about whether or not they are going to continue with that 
particular rulemaking.
    Mr. Marino. I agree with you. I'm way over my time and I 
apologize. But what would help is probably you giving them a 
little nudge and saying, if this isn't done by a certain time, 
I'm going to send notice over to the Committee that's 
responsible for oversight or budgeting you, and explain to them 
that you're not cooperating. Maybe that's what we need.
    But with that, my time has expired. I thank you, and I now 
yield to the Ranking Member of the Subcommittee, Mr. Johnson, 
for his questioning.
    Mr. Johnson. Thank you, Mr. Shelanski.
    I have serious concerns that the cost-benefit analysis 
requirement for significant rules comes at the expense of 
Americans' public health safety and environment. How can we 
possibly quantify the benefit clean drinking water will have on 
a neighborhood when new solid waste regulations protect that 
neighborhood from coal ash dumping? How can we possibly 
quantify the benefits that clean drinking water would have, 
based on a newly promulgated rule that protects that 
neighborhood from coal ash dumping?
    How can we accurately quantify the cost of exposure to 
dangerous chemicals and toxic materials on the long-term 
development of children in low-income and minority communities? 
Repeatedly, critical public health rules are called too 
burdensome for corporations to comply with, but what about the 
communities at stake, communities who find the cost to their 
health, safety, and well-being not factored in because it does 
not have an easily quantifiable dollar figure? What about the 
burdens that those folks face?
    Regulations should act as a floor, not a ceiling. Rather 
than weakening rules to lower the cost they have on big 
business, we should be strengthening rules so the burden on the 
American public is not too costly. In light of these concerns, 
should we reform OIRA's review process so it is more reflective 
of the cost and benefits that rules have on the health and 
well-being of everyday people?
    Mr. Shelanski. Thank you very much, Mr. Johnson. That's a 
very important question.
    I do think it's very important to quantify as much as 
possible the costs and benefits of a regulation. I think it's 
important for the American public to understand what regulation 
is costing them. I think it's extremely important for the 
business stakeholders to have notice of what their compliance 
costs might be. It is important that our regulation remain 
consistent with economic growth and job creation.
    On the other hand, we well recognize, and indeed, our 
executive orders well recognize that there can be limits in our 
ability to quantify benefits. So there is not a rigid 
requirement that quantified benefits exceed quantified costs, 
because there is a recognition that in some places, there are 
benefits, benefits that can be proven to exist but, as you say, 
are hard to put a dollar figure on.
    So what we ask agencies to do is to quantify as much as 
available scientific evidence and health evidence will permit, 
what the reduced illness incidents will be, what the reduced 
death and injury incidents will be of a rule, and to quantify 
those by some very well-established techniques.
    But we also recognize that in some cases, there will be--
the evidence will be difficult to come by. And, there we look 
for a strong case that the rule will achieve its intended goal 
of, for example, clean drinking water or cleaner air, and that 
there is good evidence that those changes will be reflected in 
public health gains.
    So I do not--I would not be in favor of reforming the 
executive orders and the cost justification principles that 
underlie them. I think they are very healthy, and I think that 
they are consistent with providing the kinds of benefits that 
you articulated, sir.
    Mr. Johnson. Thank you.
    Anti-regulatory measures, such as H.R. 185, the Regulatory 
Accountability Act, and H.R. 4768, the Separation of Powers 
Restoration Act, have been proposed to heighten judicial review 
of agency rulemaking. You previously testified that you have 
grave concerns with conducting judicial review at a granular 
level because it could grind to a halt the deliberative process 
and good policy development.
    What are some examples of rulemakings that would be 
particularly sensitive to heightened review?
    Mr. Shelanski. Thank you, sir.
    My concern about judicial review is of the kind that has 
been suggested in some proposed legislation, is that it would 
put judges in the position of reviewing very detailed kinds of 
factual decisions that expert agencies typically make, and 
would really overturn decades of precedent about the 
appropriate scope of deference to fact-finding and decision-
making in the agencies. And, the result would be that it would 
be very hard to move forward in rulemaking if at every given 
stage, every determination of the agency could be second-
guessed, no matter how material on judicial review.
    So I do have some concerns about judicial review of OIRA 
determinations, or a very granular kind of agency 
determinations for the reasons that you set forth.
    Mr. Johnson. Are you concerned that heightened judicial 
review may empower courts to make substantive determinations?
    Mr. Shelanski. Yes, sir, that is one of the concerns. I 
think that the system of judicial review that is in place over 
decades of Supreme Court precedent is designed to have courts 
take one step back from those kinds of very detailed, 
substantive determinations. And, my concern would be that 
agencies would find it very difficult to make progress on 
necessary regulations, regulations that respond to pressing 
public needs, if they would face that kind of judicial review.
    Mr. Johnson. Thank you, sir. I yield back.
    Mr. Marino. The Chair recognizes the gentleman from Texas, 
Congressman Ratcliffe.
    Mr. Ratcliffe. Thanks, Mr. Chairman. Sorry, I was deep in 
thought there.
    Mr. Chairman, I appreciate you holding this hearing, and I 
will tell you that I think the work that this Subcommittee does 
is some of the most important work that we do here in Congress. 
I can tell you from the constituents that I have in Texas, the 
issues that we're talking about here, including what the 
gentleman from Georgia just referenced, are very personal to my 
constituents.
    I'm afraid that sometimes here in the Halls of Congress, 
the statistics and the numbers and the clinical terms that we 
use in these hearings desensitize all of us to the real impact 
that the policy decisions have, whereas I can tell you the 
folks back in northeast Texas aren't. They see these issues in 
very clear terms, terms like jobs and the uncertainty of their 
jobs and the stagnancy of their wages with respect to jobs and 
not getting pay raises for decades, how it impacts their 
families and their futures.
    And, from the conversations I've had with constituents, 
it's painfully clear to me that so many of the burdensome 
regulations are inflicting real harm on individuals and 
families. Making matters worse at times is the attitude of 
indifference, at best, and condescension, at worst, from 
Federal regulators. Sometimes when I ask about the consultation 
process and whether or not there has been any meaningful 
consultation with stakeholders in a respective area or 
industry, the response is too often laughter. I think that this 
concept at times isn't taken seriously by some of the 
regulators.
    The regulations--listen, I'm not against regulations. They 
certainly serve a purpose when they are done correctly. They 
can enhance consumer safety, they can promote responsible 
stewardship of resources, and they can improve the lives of 
everyday Americans. But when regulations go wrong, which is 
what we see so often today, they can be impossible to comply 
with, and impossible to rectify or to reconcile with plain-old 
common sense.
    And so, I think a great example of that is what some of the 
unelected bureaucrats are doing at some agencies impacting 
millions of Americans with misguided, misinformed approach to 
the regulatory process. Let's take the Internet. Every day 
Americans use the Internet for communication, for commerce, for 
Internet, for daily operations of their lives. And, I think 
that any regulation that is so far reaching should be done with 
extreme caution and undergo an intensive review process. 
Unfortunately, that's not what's happening.
    So last year, the FCC voted 3-2 along party lines to 
approve the Commission's net neutrality rule, or as my friend 
from Texas in the Senate calls it, ObamaCare for the Internet. 
But let's, for a second, set the policy debate about this new 
rule aside and talk just about the process.
    And, you know, the FCC is using the Communications Act of 
1934 to justify its regulation of the Internet. Bureaucrats at 
the FCC have said that it was the intention of this body of 
Congress to see that broadband Internet service was regulated 
like a telephone utility back in 1934.
    Now, I can't remember the exact year that Al Gore invented 
the Internet, but I'm pretty sure it was after 1934. I think it 
underscores the issue that we're talking about here. And, you 
know, with all due respect to the gentleman from Georgia and 
his comments about some of the legislation, admittedly, some of 
that legislation, the Separation of Powers Restoration Act, is 
my legislation, and it's aimed at exactly this problem.
    And, you know, your response, Mr. Shelanski, about judges 
not having the expertise that some of these agencies have to 
make these decisions, I would point you to the one that I just 
said to highlight the fact that unelected bureaucrats at 
agencies are not always experts on issues.
    To correct another point, my legislation does not go to 
factual findings; it goes to legal interpretations, which is 
what judges are trained, vetted, and ultimately confirmed to 
do.
    So let me ask you on this, while we're on the topic of the 
FCC, is because it's an independent agency, this enormously 
consequential rule is exempt from the cost-benefit framework 
and OIRA review. And, as a result, OIRA is not able to promote 
adherence to the review measures which are designed to ensure, 
I think, that rules that govern the lives of the American 
people have undergone a thorough cost-benefit analysis and 
determined to be the least burdensome alternative.
    As you probably know, in 2012, the President's Council on 
Jobs and Competitiveness recommended that independent agencies, 
like the FCC, be required to perform cost-benefit analysis and 
subject their regulations to OIRA review. I know that you 
previously worked at the FCC, correct?
    Mr. Shelanski. [No verbal response.]
    Mr. Ratcliffe. Do you, first of all, agree with the 
recommendations made by the President's council, and if so, how 
would this, in your opinion, change the benefit or the quality 
of independent agencies' rulemaking?
    Mr. Shelanski. Thank you very much, Mr. Ratcliffe. This 
touches on a very important issue. President Obama, in some of 
the executive orders that he has issued that govern OIRA, has 
actually very strongly encouraged the independent agencies to 
use some of the rigorous cost-benefit analysis that is--that 
executive branch agencies are subject to during OIRA review.
    I do have some concerns, separation of power concerns and 
other concerns, about subjecting independent agency rulemaking 
formally to OIRA scrutiny. I do agree, however, that the 
principles of cost-benefit analysis are ones that are good for 
any agency, whether it's executive branch or independent; and 
that encouragement of those agencies to use those kinds of 
mechanisms would benefit the quality of their rulemaking and 
the American public.
    Mr. Ratcliffe. Thank you. I see my time has expired. I will 
yield back.
    Mr. Marino. Thank you.
    The Chair now recognizes the gentleman from Michigan, 
Congressman Trott.
    Mr. Trott. Thank you, Chairman, and also, Ranking Member, 
for organizing this hearing.
    And, Mr. Shelanski, thank you for appearing today and for 
your work on behalf of our country. You have a very impressive 
background, so there's no question. A Ph.D. in economics from 
Berkeley, and clerking for Scalia, of Counsel to Davis Polk, 
and many great accomplishments. Have you ever run a business 
though?
    Mr. Shelanski. I have not run my own business, sir.
    Mr. Trott. You spent 2 years in private practice, right?
    Mr. Shelanski. That's correct, sir.
    Mr. Trott. So never signed a paycheck. Never managed to a 
bottom line or a budget?
    Mr. Shelanski. Just the household, sir.
    Mr. Trott. Okay. So I took a family business with six 
people, grow it into companies with about 2,000 people. We 
couldn't have done it today. Couldn't have done it. Even if we 
could've done it and made a profit, wouldn't have wanted--their 
heavily regulated businesses wouldn't have wanted to take the 
risk.
    So let me share with you--at a high level, do you think 
that--you know, you cited in your opening statement that over 
the last 6 years, all the benefits to the economy with 
President Obama's regulatory efforts. Do you think, with 
respect to small businesses in our country today, over the past 
6 years, that the regulatory environment is supportive, or is 
it too onerous or just about right? Kind of the Goldilocks 
question for you.
    Mr. Shelanski. Thank you. I think that that's a hard 
question. I will say this: Small businesses face unique 
challenges, and we have a system of regulatory review that is 
set up to try to take specific note of those. And, we do work 
closely with the Office of Small Business Advocacy to try to 
understand the specific effects that will occur on small 
businesses. So we certainly work to try to make it just about 
right.
    Mr. Trott. Well, so that's a good segue. So last weekend in 
the district, I met with some independent party store and gas 
station owners. And, I was impressed with their knowledge. I 
thought only people in Washington understood all of our 
acronyms, but they had all the acronyms down. And, during the 
course of the meeting, they said to me, We cannot continue, 
Would never open another party store or gas station in today's 
environment--these are independent business owners in my 
district--because of the following acronyms: EPA, FDA, ACA, and 
of course, the Department of Labor and some of their rules and 
regulations coming at them.
    So when I go home, I hear three questions: Why can't you 
get anything done in Congress? Why can't you stop President 
Obama? So I'm not going to ask you to opine on the first two 
questions. But if you give me some insight into the third 
question I get asked, which is, Can't you get Washington out of 
the way? I can't run my business in today's environment. What 
should I say to those folks about the future of small business 
in America and free enterprise, which I believe is the reason 
why we're the greatest country in the world?
    Mr. Shelanski. I think that the problem you allude to is a 
problem of cumulative burdens of regulation----
    Mr. Trott. No doubt.
    Mr. Shelanski [continuing]. That each regulation in itself 
may have a justification and may look fine, but by time you're 
a business starting up and you have got multiple regulations 
that you need to address, it becomes a very difficult 
enterprise. I think that to deny that this is a critically 
important challenge for regulatory review and for agency 
rulemaking would not be candid.
    We do strive at OIRA, when we meet with stakeholders and 
when we work with agencies, to try to get agencies to look more 
broadly outside of their rule to understand what this rule does 
to add to the effects on profit margins in a particular sector.
    So it is within our mandate, and it is something that we 
have worked very hard to do. The best answer I can give you is, 
this is an area in which we continue to work with agencies. I 
will agree with you that more attention needs to be paid to how 
we can account for cumulative burdens.
    Mr. Trott. Okay. So let's talk about major impact and rules 
that have major impact, which is the focus of your office. And, 
in connection with that, let's talk about the REINS Act. You're 
familiar with the REINS Act?
    Mr. Shelanski. Yes, sir.
    Mr. Trott. So tell me why that's a bad idea.
    Mr. Shelanski. The Administration has issued its view on 
the REINS Act, and I think that what underlies that view is a 
concern that Congress has the authority already to disapprove 
any major regulation under the Congressional Review Act.
    Mr. Trott. That hasn't gone so well because half of the 
President's vetoes have been of resolutions that we passed 
under the CRA, right?
    Mr. Shelanski. Yep. So one of the concerns is, under the 
REINS Act, an agency would issue a major rule, and then there 
would have to be a majority of Congress to ratify that rule. I 
think my concern is that this could really make it very 
difficult for important major rules to get done because they 
would--they could be done very well. They could meet a very 
specific need, and then still not marshal the necessary 
majority.
    Mr. Trott. But you would concede, if we had the REINS Act 
in place, it would give me a better answer when I go home, and 
I have to explain to small businesses why we haven't been 
able--we, the elected representatives of the people--haven't 
been able to weigh in on regulations that have an impact of 
over $100 million on our economy? I mean, that's a disconnect 
for me, because all I can point to is the fourth branch of 
government, that growing bureaucracy--which is, again, one of 
the questions I get hit with a lot, why has Washington gotten 
so big.
    And, then the other--and I run out of time--but the other 
question I get when people come visit here, tourists and come 
to see our Capitol and the White House, is they comment on all 
the cranes that are in Washington. They have never seen so many 
cranes. We all know Washington didn't have a recession like 
Detroit did, and we all know that Washington continues to grow 
because government just grows and grows beyond--but I thank you 
again for being here, sir, and I yield back my time.
    Mr. Shelanski. Thank you.
    Mr. Marino. Seeing no other Members on the dais, this 
concludes today's first panel.
    Administrator, I want to thank you so very much for being 
here. And, once again, I apologize for the delay. I want to 
thank you for agreeing to get that information to me before the 
20th. I really appreciate that. You are excused, sir.
    Mr. Shelanski. Thank you, sir.
    Mr. Marino. And, would the second panel please come up to 
the hearing table.
    We are missing one of the witnesses, but we're going to get 
started in the interest of time.
    I would ask the gentlemen at the table, would you please 
stand and raise your right hand to be sworn in. Do you swear 
that the testimony you're about to give before this Committee 
is the truth, the whole truth, and nothing but the truth so 
help you God? Thank you. Please be seated and let the record 
reflect that the witnesses have acknowledged in the 
affirmative.
    Mr. Crews, if you would just continue standing and raise 
your right hand. We just swore the other witnesses in. Do you 
swear that the testimony you're about to give before this 
Committee is the truth, the whole truth, and nothing but the 
truth so help you God? I do. Let the record reflect that the 
witness has acknowledged that he does affirm in the positive.
    The four distinguished members of this area of expertise to 
testify before us today, and I will begin with introducing Dr. 
William Beach.
    Mr. Beach. That's correct.
    William Beach is the Vice President for Policy Research at 
their Mercatus Center at George Mason University. Dr. Beach 
previously served as the chief economist for the Senate Budget 
Committee Republican staff. Prior to that position, he was the 
Lazof Family Fellow in Economics at the Heritage Foundation, 
and director of the Center for Data Analysis.
    Prior to joining Heritage in 1995, Dr. Beach served as a 
senior economist in the corporate headquarters of Sprint 
United, Incorporated, and from 1991 to 1995, as the president 
of the Institute for Humane Studies at George Mason University. 
Dr. Beach received his bachelor's degree from the Washburn 
University in Topeka, Kansas; his master's degree in the 
history of economics from the University of Missouri-Columbia; 
and a Ph.D. in economics from Buckingham University in Great 
Britain.
    Welcome, Doctor.
    Mr. Beach. Thank you very much.
    Chairman Marino, Ranking Member----
    Mr. Marino. Sir, I'm going to just go through everybody's.
    Mr. Beach. Is that held against my time?
    Mr. Marino. It's not. We will start from ground zero.
    Our next invitee is Mr. Clyde Wayne Crews, Jr. Mr. Wayne 
Crews is vice president for policy and director of technology 
studies at the Competitive Enterprise Institute, a former Cato 
Institute scholar as well as a Senate and FDA staffer. He is 
widely published and a frequent speaker on a range of policy 
issues at venues, including the National Academies, European 
Commission-sponsored conferences, and the Spanish Ministry of 
Justice.
    Mr. Crews is co-editor of the books ``Who Rules the Net?: 
Internet Governance and Jurisdiction,'' and ``Copy Fights: The 
Future of Intellectual Property in the Information Age.'' His 
other works are cited in dozens of law reviews and journals. 
Mr. Crews is a father of five, received his B.S. From Lander 
College and his MBA from William & Mary.
    Welcome, sir.
    The next witness is Professor David M. Driesen. Is that 
correct, sir?
    Mr. Driesen. Driesen, that's correct.
    Mr. Marino. Driesen. Thank you, sir.
    David M. Driesen is a university professor at Syracuse 
University, the 13th person in the history of the university to 
receive this honor, and a member scholar of the Center for 
Progressive Reform. He teaches environmental law, and his 
scholarship focuses primarily on law and economics and 
environmental law, including a substantial body of work on 
OIRA, or otherwise known as OIRA, review, and cost-benefit 
analysis.
    His books include ``The Economic Dynamics of Environmental 
Law'' and ``Economic Thought in U.S. Climate Change Policy.'' 
He sits on the editorial board of the various international and 
environmental law journals. Professor Driesen holds a 
bachelor's degree in music from Oberlin College, a master's 
degree in music from the Yale School of Music, and earned his 
J.D. At the Yale Law School.
    Welcome, Professor.
    Mr. Driesen. Thank you.
    Mr. Marino. Our final witness is Dr. Holtz-Eakin, built an 
international reputation as a scholar doing research in areas 
of applied economics policy, econometrics methods, and 
entrepreneurship. He began his career at Columbia University in 
1985, and moved to Syracuse University from 1990 to 2001. 
During 2001 to 2002, he was a chief economist of the 
President's Council of Economic Advisers. From 2003 to 2005, he 
was the sixth director of the nonpartisan Congressional Budget 
Office, which provides budgetary and policy analysis to the 
U.S. Congress.
    Currently, he is the president of the American Action 
Forum, and recently was a commissioner on the congressionally-
chartered Financial Crisis Inquiry Commission. Dr. Holtz-Eakin 
received his B.A. From Denison University and his Ph.D. from 
Princeton University.
    Welcome, Doctor. Thank you, all, for being here.
    Now, Dr. Beach, you're up.

TESTIMONY OF WILLIAM W. BEACH, Ph.D., VICE PRESIDENT FOR POLICY 
      RESEARCH, MERCATUS CENTER AT GEORGE MASON UNIVERSITY

    Mr. Beach. Thank you very much. Chairman Marino, Ranking 
Member Johnson, Congressman Trott, it is really a great 
pleasure to be here with you today. I'm going to testify about 
OIRA and cumulative cost and what we can do in terms of 
asserting Congress' authority in these areas, particularly in 
regulatory budget. But I would like to start with just a 
statement about the economy.
    The economic role changes most and for the good in 
economies where rivalrous economic behavior is allowed most to 
flourish, that is in economies devoted to free enterprise. 
Congress has no end of the number of things it has to do. I 
should know; I was once working, not so long ago, in the 
Senate. But near the top of the list of to-dos is the 
protection of this amazing process of value creation through 
innovation, discovery, and competition.
    We depend utterly on the private sector to produce nearly 
all of the material things we value. While the public sector is 
necessary as a partner in the production of these, by providing 
public goods, courts, highways, and so forth and so on, you 
wouldn't want it any other way, the betterment of the American 
people since 1900 is almost wholly the accomplishment of 
competition between entrepreneurs trying to obtain the 
consumer's attention for their products and services.
    Given the vital place of the competitive economic world in 
bettering the general public, Congress must be especially 
vigilant of the regulatory burden it imposes on the economy. In 
this vain, I am particularly eager to draw the Committee's 
attention to three areas of regulatory policy where I have some 
concerns: One, the decay of regulatory impact analysis; two, 
the economic effects of regulation, the cumulative costs of 
regulation; and three, the growing absence of Congress in 
directing the future developments of the administrative state.
    And, let me briefly mention all of these in turn on the 
regulatory impact analysis. Policymakers in Congress would 
largely be in the dark, Mr. Chairman, about the expected 
effects of regulatory policy changes were it not for the 
development of regulatory impact analysis, cost-benefit 
analysis it's also called.
    The Administration's oversight of RIA's is lodged, as we 
heard, in OIRA. Under normal circumstances, this small office 
would have trouble enough monitoring the adequacy of these many 
rules. But I would like to point out to you that it has some 
difficulty doing it because its staffing has been halved. It 
started off in 1981 with 90 people. It now has exactly 50 
percent of that at 45. So one of the things we can do to stop 
the hollowing out of our cost-benefit analysis is to adequately 
staff OIRA.
    So what should we do to improve the quality of regulatory 
impact analysis, cost-benefit analysis? You asked that, 
Congressman Johnson, in your opening remarks. First, improve 
OIRA's resources. Without adequate staffing and other 
resources, the Office's capacity to improve RIA quality, cost-
benefit analysis will be substantially compromised.
    Two, implement the process reform described in the recently 
passed House bill, the Administrative Procedures Act, that 
requires agencies to produce preliminary regulatory impact 
analysis and submit that to public comment before sending in 
its final RIA cost-benefit analysis to OIRA. Our research 
indicates that preliminary analysis with public comment yields 
much better final results.
    And three, Congress should require all agencies to perform 
cost-benefit analysis when proposing major regulations.
    Let me go to my second point: The increasing effect of 
regulations on the economy. I'm with everyone who has, so far, 
spoken today in being a fan of regulations. You can look at one 
regulation in one area, one regulation of another, and always 
make a good case. But there is a mounting likelihood that the 
cumulative effect of regulation is slowing the economy.
    We have just finished some research in this area: How much 
declining growth have we experienced because of the cumulative 
rapid rise of regulation? My colleague, Patrick McLaughlin, who 
couldn't be here today, and his coauthors, recently used a 
growth model of the U.S. economy in a peer-reviewed piece of 
research and data from the Code of Federal Regulations to 
estimate is that there's a $4 trillion loss in GDP in the base 
year of 2012.
    Now, what does that mean? That is, had regulations remained 
the same as they were in the heavily regulated year of 1980, 
the economy in 2012 would be $4 trillion higher than it 
actually was. Now, that's a decrease of 25 percent from what it 
potentially could have had. There were 135 million employees 
working in 2012. That means, if you do the math, 25 percent 
more employees. We are missing 34 million jobs.
    Finally, I would like to say a quick word about regulatory 
budgeting. At issue in my two previous points, importance of 
RIA work and the mounting case for regulations are, in net, 
harmful to economic growth, is the need for congressional 
policymakers to attend to the more regulations than they have 
in the past.
    So what I'm advocating here is that Congress be a little 
more assertive in terms of what it does to authorize the 
spending of agencies that are pushing more regulations on us. A 
regulatory budget is an idea whose time maybe has come. It was 
first proposed by Lloyd Bentsen, and there are a number of 
Members who are very interested in regulatory budgeting as a 
way to contain and control the growth of regulations.
    I've got a good deal more in my written testimony which has 
been submitted for the record. Thank you very much.
    [The prepared statement of Mr. Beach follows:]
    
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  Mr. Marino. And, let me remind everyone--and thank you for 
the reasonable time--there are timing lights in front of you. I 
think those of you who have testified here before, if there is 
someone here that hasn't, I'm just going to say you have three 
lights. By the time that gets to the last red light, that means 
your time is up. The light before that gives you 1 minute. 
Please try to stay within that period of time, and if you need 
to express anything, we can give you some time during the 
question-and-answer session.
    So Mr. Crews.

TESTIMONY OF CLYDE WAYNE CREWS, JR., VICE PRESIDENT FOR POLICY/
    DIRECTOR OF TECHNOLOGY STUDIES, COMPETITIVE ENTERPRISE 
                           INSTITUTE

    Mr. Crews. Thank you. I'm Wayne Crews, Vice President for 
Policy at the Competitive Enterprise Institute, a libertarian 
policy and advocacy group. I thank the Committee for the 
invitation to address regulatory oversight.
    $19 trillion Federal debt notwithstanding, when 
policymakers neglect regulation, they ignore, arguably, 
government's greatest influence in the economy. Both spending 
and regulation reorients societal resources and priorities. 
Yet, members may have noticed there's still no sign of the 2016 
OIRA report to Congress, so what reviewed regulatory cost 
figures we have are nearly 2 years old.
    Last year's report was the latest ever. Congress confessed 
to over-delegation last month in last month's Article I task 
force report, so code law is here to stay for the moment. OIRA 
should help lawmakers create a regulatory transparency 
supernova to spur economic liberalization.
    I was struck by a businessman writing in the Financial 
Times. He said, when I am 100 percent utterly and completely 
certain that it is an absolute certainty that it is an absolute 
necessity that I need to recruit a new employee, I go to bed, 
sleep well, and hope the feeling is passed by morning.
    While those doing the regulating see no problems, 
exasperation is rampant. Home Depot co-founder Bernie Marcus 
said the company couldn't succeed if started today. Other polls 
say businessmen wouldn't do it again, and startup rates and 
part-time employment rates affirm this.
    Unemployment, like poverty, doesn't have causes. Both are 
the default state of mankind. Only wealth and production have 
causes, and regulatory zeal can derail enterprise. Problem is, 
legislatures rarely control spending, let alone the regulatory 
enterprise, and OIRA's central review machinery can't overcome 
presidents who deprioritize oversight or a regulatory system 
that frontally benefits rent-seeking special interests.
    Over 3,000 rules are finalized annually, but only 13 rules 
in the 2015 OIRA report reviewed cost and benefits. The 
proportion of all rules with OIRA-reviewed cost-benefit 
analysis is less than 1 percent. On the rest, we don't have 
cost-benefit analysis; we have agency selfies. The 800-pound 
gorilla independent agencies get no OIRA scrutiny, nor do the 
thousands of guidance documents and memoranda that I've taken 
to calling regulatory dark matter.
    Such chasms weaken the OIRA report's authority as a 
comprehensive survey of regulatory impact, especially since 
unmeasured categories of regulation propel cost as well, such 
as antitrust, the locking up of western lands, or the 
reluctance since the 1890's to move spectrums and other commons 
into market disciplines.
    When government steers cross-sectorally, as it does today, 
it creates mounting costs, even if no future rules are issued, 
such as Congress' delivery of the Internet and, as of 2 weeks 
ago, drones into century-old public utility models. Also new is 
EPA's central planning of electric charging and hydrogen 
fueling stations in the wake of the Volkswagen settlement. 
Alas, much is beyond OIRA's scope.
    Businessmen want to create jobs, but everything has limits. 
Jobs are a cost, they are a liability, and policymakers should 
recognize that. While a Vanguard study blamed hundreds of 
billions in cost on regulatory uncertainty, it said that 
sometimes the certainty of regulation is worse.
    My optimism stems from knowing there will always be an 
America, even if it's not here, but I do not believe members 
wish to go to the mat maintaining regulatory overreach, and I 
hope members will jointly think through some North Star goals 
to enhance OIRA.
    Ronald Reagan's Executive Order 12291 that energized OIRA 
in the first place showed the so-called pen and phone can also 
expand liberty by reducing Federal Register page counts and 
numbers of rules. Members can work with OIRA to enforce and 
codify the regulatory review executive orders, address 
independent agency costs, and illuminate regulatory dark 
matter.
    Other steps noted in my written testimony include boosting 
OIRA resources and free market law and economics staff at 
agencies, pausing regulation, and implementing the bipartisan 
Regulatory Improvement Commission.
    I highlight also the former regulatory program of the U.S. 
Government, a model by which OIRA could compile an annual 
regulatory transparency report to parallel the historical 
tables in the Federal budget. Optimally, reporting separately 
on economic, health, and safety, paperwork, and environmental 
and other costs.
    So while central review hasn't worked, just possibly it 
could. When it comes to economic expansion, you don't have to 
tell the grass to grow, but you do have to take the big rocks 
off of it. So why not use OIRA as a lever?
    Thank you very much.
    [The prepared statement of Mr. Crews follows:]
    
    
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    Mr. Marino. Thank you.
    Professor Driesen.

TESTIMONY OF DAVID M. DRIESEN, ESQ., PROFESSOR OF LAW, SYRACUSE 
                   UNIVERSITY COLLEGE OF LAW

    Mr. Driesen. Chairman Marino, Ranking Member Johnson, 
Members of the Committee, thank you for inviting me to testify.
    I think a key question we need to ask is whether OIRA helps 
us confront the major challenges that government standards 
address, such as global terrorism and climate disruption. I'm 
going to suggest today that OIRA has not helped us confront 
those challenges, and propose some reforms that would make the 
process more efficient.
    OIRA has not helped us confront these and other key 
challenges because it always delays standards, usually 
needlessly, while doing nothing, and never speeds them up. And, 
because when it does recommend changes, in almost every case 
the changes proposed weaken the standards.
    Now, government agencies already face substantial pressures 
to inadequately protect public health, the environment, and our 
safety, because regulated companies file voluminous comments, 
meet with agency officials, get concessions from them, sue them 
anyway, and then the courts make them do this all over again if 
they did not respond adequately to any of these comments. And, 
these are very well-funded interests, and we don't need yet 
further gauntlets to interfere with these vital protections.
    The primary justification for OIRA reviewers, I think 
you've heard today, is the idea that an office of economist 
should help government agencies use cost-benefit analysis to 
improve the most expensive standards. OIRA, however, focuses 
mostly on standards where no cost-benefit analysis can be 
completed, because none of the benefits are quantifiable. And, 
it overwhelmingly focuses on rules that are not economically 
significant, that generate costs less than the $100 million 
threshold in the law.
    So I have the following recommendations to streamline the 
process and make it much more efficient: First, OIRA should be 
permitted only to review standards that generate cost of $100 
million or more. This would force the agency to prioritize, and 
allow its small staff to review rules in a timely manner.
    Second, we should exempt rules that address terrorism and 
global climate disruption from the review process. These are 
cases where cost-benefit analysis cannot be helpful because it 
is radically incomplete on the benefits side, in both of these 
cases. And, these are areas where it cannot afford the delays 
that are routine in the OIRA process because there are risks of 
catastrophes that--and we don't know when they might occur. So 
in these cases, there should be no OIRA review.
    We also should demand that OIRA not review agency risk 
assessments. This is an office of economists. Risk assessment 
requires scientific expertise that the agencies possess, but 
OIRA does not. And risk assessment, by the way, is the way that 
we come up with a number of lives saved, a number of illnesses 
avoided, and so on. Monetization, economists know about that, 
but risk assessment they don't.
    Fourth, when a cost-benefit analysis shows that the 
monetized benefits exceed the monetized cost, OIRA should be 
pushing for stricter standards because those maximize net 
benefits. They do not follow economic theory in this respect, 
never have, except on one occasion I can think of.
    The other thing we need to do is instruct the agency to 
ignore--the agencies to ignore OIRA's input if the review 
process lasts more than 90 days. The current executive order 
has sought to limit the time of review. OIRA has evaded these 
limits. So we need a simple rule, and we need an enforcement 
mechanism.
    So my conclusion is that OIRA review has not helped us 
address key challenges that government standards address, 
including climate disruption and global terrorism, and that we 
need a much more efficient streamlined processes so that OIRA's 
resources will be used properly and not produce inordinate 
delays.
    Thank you very much for your attention, and I welcome your 
questions.
    [The prepared statement of Mr. Dreisen follows:] *
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    *Note: Supplemental material submitted by this witness is not 
printed in this hearing record but is on file with the Subcommittee, 
and can also be accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=105157

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    Mr. Marino. Thank you. Dr. Holtz-Eakin.

 TESTIMONY OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION 
                             FORUM

    Mr. Holtz-Eakin. Thank you, Chairman Marino, Ranking Member 
Johnson, Congressman Trott, for the privilege of being here 
today. You have my written statement. Let me make three brief 
points:
    Point Number 1 is there has been a clear explosion of 
regulatory burdens in the Obama administration. OIRA reports 
that it has issued 453 economically significant regulations. 
That's 38 percent more than the Bush administration. That's 41 
percent more than the Clinton administration. It's above 
historic norms by a large margin.
    At the American Action Forum, my colleague, Sam Batkins and 
his staff, do a comprehensive review of regulatory issuance, 
they read every single final regulation, and the agency self-
reported compliance cost. Over the 7\1/2\ years of the Obama 
administration, the total is $800 billion in new regulatory 
burdens. That's about $250 for every house, every person in the 
United States, and given the concerns that have been expressed 
by the Chairman and others about the pace of midnight 
rulemaking, that total is certainly going to go up perhaps 
dramatically.
    The second point is that these burdens do not disappear. 
They have economic consequences. The regulatory burden has to 
show up in the form of higher consumer prices, or has to show 
up in the form of lower wages in employment, or reduce profits 
and the ability of firms to survive, or even desirability to 
enter.
    American Action Forum looked at 36 major regulations, as I 
indicated in my testimony, and found that they raised consumer 
prices by a cumulative $11,000. These are significant impacts 
on prices. This isn't AAF alone thinking this. When the 
Department of Labor issued a silica rule that had a $9 billion 
cost, it pointed out that for some of the smaller firms, those 
costs would represent 90 percent of their profits, but that it 
was not to worry. That would simply be passed on to consumers.
    If it doesn't go to consumers, it's got to go somewhere 
else, so in work, we looked at the impact of the 2008 ozone 
rule, and if you look at nonattainment counties compared to 
those in attainment, the impact is about $56.5billion in wages, 
or about $700 per worker, and a loss of something like 240,000 
jobs.
    So you're going to see these burdens in prices or wages and 
employment, or just in general economic growth. I mean, if you 
look at $800 billion, that's $100 billion a year and 60 million 
paperwork hours a year. You have to believe that if we had $100 
billion tax increase every year, everyone in America would know 
it, it wouldn't be a hidden cost, and a lot of people would be 
saying, Gee, I'm not so sure that's a good idea. This has been 
a terrible recovery by historical standards.
    And, I think it is no coincidence that for the past 3 
years, for the first time, the rate of birth of new firms in 
the U.S. economy has dropped below the rate at which firms 
fail. We are not seeing the traditional American entrepreneurs 
who show up in the data, and the regulatory burden, I think, is 
contributing to that.
    Final point is that the retrospective review process is not 
taking away existing regulations, so this is just new layers of 
burden on top of the old. The President signed, as has been 
mentioned, Executive Orders 13563 and 13610. If you look at our 
analysis of the impacts of those EOs, they raise the cost of 
the regulatory state by $16 billion. It went the wrong 
direction from a retrospective review point of view.
    And, one of reasons is new regulations, things like the 
gainful employment rule or new greenhouse gas controls are 
being classified as retrospective, when, in fact, they're new 
regulations, and all of this suggests that the EO process, not 
just with President Obama, with previous presidents, is not a 
powerful enough tool for retrospective review, and that 
Congress should think about an alternative mechanism, whether 
it be the SCRUB Act or other legislation I know the Committee 
has considered. I thank you for the chance to be here today, 
and I look forward to your questions.
    [The prepared statement of Dr. Holtz-Eakin follows:]
    
    
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    Mr. Marino. Thank you. I will start by questioning the 
witnesses for my 5-minute period.
    Dr. Holtz-Eakin, what are some potential reforms that could 
stem midnight regulations?
    Mr. Holtz-Eakin. There are a range, and I think the 
question is which ones would be the most desirable. So you 
know, sometimes people want to just put a freeze on 
regulations. I think that's too blunt an instrument. I prefer 
to have changes to the regulatory process that would sort of 
make the midnight rush impossible.
    So for example, there is the ALERT Act that the House has 
looked at. That kind of transparency, knowing what's coming 
down the line, the timetables for rulemaking would, in fact, 
styme--stymie the midnight activities. And so, I think look to 
the entire regulatory process, reform that and stop the 
midnight rush in the process.
    Mr. Marino. Dr. Beach, when the Administration, whatever 
the Administration it happened to be, at the end of their 
period, imposes major changes through guidance or other 
regulatory dark matter, is the damage--is there damage to the 
economy and is there damage to our government and our 
liberties?
    Mr. Beach. Yes, I happen to believe that. I think that when 
you have an accumulation of regulations, whether it be in the 
major rules, it be in the minor rules or be in the dark matter 
that Wayne has so eloquently developed, these add to the cost 
of investment, they add to the cost of labor, they add to all 
those costs which go into the operation of a business.
    One of the reasons, as Doug pointed out, we have such a low 
level, a stunningly low level of firm creation has to be in the 
barriers which we've set up on the cost side, with all good 
intentions of helping people protect themselves against health 
and other kinds of injuries. It has prevented a lot of 
entrepreneurship. I'm very concerned about that.
    Mr. Marino. Mr. Crews, would you care to respond to my 
question?
    Mr. Crews. The same. Yeah, well, it's one of the things 
that you look at what OIRA's purview is. There are 3,400 or so 
rules that go through every year, and OIRA looks at about 500 
of them. There are about 60 that it looks at, including budget 
rules where there are just transfers involved, but then, it's 
just a very small handful that get any cost analysis at all.
    But on top of that, as the economy gets more complex, I 
think there is a concern now--there was a hearing in the Senate 
last week on this, of so-called--of agency guidances and 
memoranda and notices and bulletins. There's a whole word cloud 
of these things that agencies are using now to effectuate 
policy, and I think that matters a lot.
    We do have some review at OIRA. We didn't talk about it 
earlier when the administrator was here, but there is a good 
guidance practices memo from OIRA by which agencies can, they 
don't have to, present their so-called economically significant 
guidance. By my brief inventory of it, there are 580 pieces of 
that, but that's equivalent to the number of major rules at 
that go through every year. But those are scattered all over 
the place in terms of where you can find them on agency Web 
sites, so it's very, very difficult.
    We've got a very complex economy now. We've got a lot of 
new high technologies coming across the board. The FAA just 
dropped its drone rule 2 weeks ago, and I was just curious 
about this guidance issue. And, I just glanced--it's a 500-page 
rule, but I glanced through it quickly, you know, doing some 
word searching, and there are at least six substantive areas in 
there where the agency says, Well, we're just going to issue 
guidance in the future.
    The same thing has occurred with the Dodd-Frank law and the 
Unfair Deceptive Trade Practices principles there, not 
regulations forthcoming, but the administrator saying: We're 
not going to issue regulations. You just need to check with us.
    FCC was brought up earlier. Page 88 in the 400-page Federal 
Communications rule on net neutrality, it says: Well, from now 
on, we're going to be using these administrative notices like 
the FCC--like the FTC does with respect to antitrust. So you 
see, we've got a complex economy now that's increasingly at 
risk of being regulated, not by laws passed by this Congress, 
not even by the regulations that go through the Administrative 
Procedure Act but more of this guidance. So that's why I think 
some of the guidance materials is of great concern.
    OIRA does have some authority and even some ability, or it 
could just take the initiative to look at it and make the 
disclosure of it much more transparent.
    Mr. Marino. Professor Driesen, I--tell me if I've 
understood you correctly. You were saying that there's no need 
for OIRA at all?
    Mr. Driesen. No. I think we could do without OIRA, but 
that's not what I've suggested today. What I suggested is that 
it focus only on these rules that cost over $100 million a 
year, and that it get out of the couple of areas that are 
really vital to safeguarding America from real economic 
calamity like we experienced when we had the deregulation 
causing the financial crisis, that is, climate disruption and 
terrorism where the cost-benefit analysis is not going to do us 
any good because it's too incomplete, and where the science of 
climate says there're tipping points out there that could set 
off runaway warming, but we don't know where they are.
    And, terrorism is the same way. You don't know what the 
next thing is going to be, and for that reason you can't 
quantify the benefits. And there are potential disasters here. 
So I'm suggesting this now.
    Mr. Marino. Dr. Holtz-Eakin, you heard Professor's comment 
about quantifying cost, but there are, in my opinion, many 
other areas where we can quantify cost, and particularly when 
it comes to jobs, and more so, small businesses. You know, what 
say you about regulations that have come down at--with this 
Administration beyond what we've seen in the past, but other 
Administrations as well, what's it doing to our jobs in the 
United States, and particularly, small business jobs?
    Mr. Holtz-Eakin. I think it's been quite damaging. I 
understand the argument that says there are the benefits out 
there that need to be quantified as well, and I want echo what 
I believe Administrator Shelanski said very well, which is, you 
should try to quantify everything you can, and that imposes a 
discipline on the rulemaking process that's actually very 
important.
    But it is easy to quantify cost. We take the agencies at 
face value. I'm not even sure they're right, but even with 
those estimates, $800 billion of cumulative burden in 7\1/2\ 
years is just like putting $800 billion of taxes onto America's 
businesses and small businesses, and the evidence on that 
impact on jobs, wages, growth, is unmistakably bad.
    Mr. Marino. My time is more than expired, and I now ask 
Congressman Johnson for 5 minutes of questioning, or 6.
    Mr. Johnson. Thank you. Thank you, sir.
    Dr. Holtz-Eakin, do you have any evidence whatsoever that 
the Obama administration plans a midnight rush of regulations, 
prior to its exit from the presidency?
    Mr. Holtz-Eakin. We know only that in past Administrations, 
this phenomenon has happened.
    Mr. Johnson. You don't see any evidence that this is going 
to happen in this Administration, do you?
    Mr. Holtz-Eakin. And, we have some suggested evidence 
presented in the written testimony of trying to sort of get 
things out before May, which is likely when the Congressional 
Review Act hits.
    Mr. Johnson. There's certainly no new evidence----
    Mr. Holtz-Eakin. That's what we know.
    Mr. Johnson [continuing]. Of a midnight rush. That's kind 
of like a--kind of like a hidden kind of situation that's 
sprung on people at the last minute, they can't do anything 
about it. We don't have any evidence that that's what the Obama 
administration is planning?
    Mr. Holtz-Eakin. If they're planning, they didn't call me.
    Mr. Johnson. Okay. Well, so you have no evidence. Isn't 
that correct?
    Mr. Holtz-Eakin. The evidence I have I told you about. We 
have a chart----
    Mr. Johnson. You have no evidence?
    Mr. Holtz-Eakin [continuing]. And, we have history.
    Mr. Johnson. Okay. All right. Well, let me ask you this: 
You remember when Alan Greenspan came to testify before 
Congress back in 2008 about the fact that he had made a mistake 
in believing that banks and operating--that banks operating 
in--would be operating in their own self-interest and thus 
would--it would be not necessary for the government to protect 
their shareholders and institutions. You remember that?
    Mr. Holtz-Eakin. I remember he testified. I don't remember 
the details of it.
    Mr. Johnson. And, do you remember he did say that he made a 
mistake about thinking that we didn't need any regulations?
    Mr. Holtz-Eakin. I'll take your word for that. I'm----
    Mr. Johnson. Well, that's what he said. I mean, you 
remember more than the fact that he testified before Congress. 
I know you remember that he did a mea culpa, and he, said, 
Look, I made a mistake. You don't remember that?
    Mr. Holtz-Eakin. Everybody makes mistakes. I don't find 
that a shocking statement.
    Mr. Johnson. Well, the mistake that he made was, he said 
that the government should play a much more active regulatory 
role over financial firms. Do you think that that was wise in 
the light of the Great Recession that he was talking about?
    Mr. Holtz-Eakin. I think that it's too simple to pin the 
Great Recession on financial regulation, and the reason it's 
too simple--if I could finish.
    Mr. Johnson. Do you believe----
    Mr. Holtz-Eakin. Is that----
    Mr. Johnson [continuing]. That it occurred due to lack of 
regulation----
    Mr. Holtz-Eakin. No.
    Mr. Johnson [continuing]. Or overregulation?
    Mr. Holtz-Eakin. There was overregulation at Fannie and 
Freddie.
    Mr. Johnson. Overregulation.
    Mr. Holtz-Eakin. There was underregulation in some cases. 
The issuers of subprime mortgages at the State level were often 
very unregulated. We saw some really bad mortgage origination.
    Mr. Johnson. So regulation would have helped that, wouldn't 
it?
    Mr. Holtz-Eakin. In some cases, with better prudential 
regulations, it helped. In some cases, we overregulated.
    Mr. Johnson. And, it was the lack of regulation that 
enabled it to happen. That's what Greenspan was talking about, 
correct?
    Mr. Holtz-Eakin. You can question him about his views. What 
I'm saying is my experience on the Commission is that----
    Mr. Johnson. Let me ask----
    Mr. Holtz-Eakin [continuing]. There were evidence of both 
overregulation and underregulation.
    Mr. Johnson. Let me ask one of the other hostile witnesses, 
if I will.
    Mr. Crews, would you agree that Professor--or that Mr. 
Greenspan was correct when he said that we needed more 
regulation in the financial markets to prevent a reoccurrence 
of the Great Recession that threatened to become a Great 
Depression?
    Mr. Crews. The financial markets have been heavily 
regulated for 100 years. The Federal--we have a Federal 
Reserve. The Federal Government sets interest rates and money 
supplies. We testified, I don't know what Committee it was, but 
in 1999, making the case that the government--that government-
sponsored entities that were extending homeownership beyond 
what could be handled was going to lead to problems. It's in 
the record. You can see that. So yet----
    Mr. Johnson. But there have been some----
    Mr. Crews. You asked the question about----
    Mr. Johnson. There have been some----
    Mr. Crews. Your choice.
    Mr. Johnson [continuing]. Regulations that resulted in some 
harm, but I'm asking you about the lack of regulation that 
resulted in harm.
    Mr. Crews. I don't understand----
    Mr. Johnson. I don't think that it----
    Mr. Crews [continuing]. Talk of a lack of regulation 
because in free markets, there's no such thing as a lack of 
regulation. Laissez faire doesn't mean companies get to run 
around and do whatever they want to do.
    Mr. Johnson. Well, that's exactly what would happen.
    Mr. Crews. You said--no, I just said we had a heavily----
    Mr. Johnson. The financial part.
    Mr. Crews [continuing]. Regulated financial sector. But you 
have a lot of forces that are arrayed against companies that 
misbehave if you're not thinking that a central regulator is 
going to take care of the problem, and I don't think that they 
are.
    Mr. Johnson. You're talking about----
    Mr. Crews. Media, Wall Street, consumers.
    Mr. Johnson [continuing]. Free market forces?
    Mr. Crews. A lot of them.
    Mr. Johnson. That would cover----
    Mr. Crews. Consumers, media, exactly.
    Mr. Johnson. Well, let me ask you this, Mr. Crews, since 
I'm talking to you. The Washington Post awarded the famous two 
Pinocchio's to claims based on your report on regulatory costs. 
Ten Thousand Commandments was the name of it. They called it 
misleading, unbalanced, and--well, idiosyncratic guesstimate 
with serious methological problems. What is your response to 
their characterization of your Ten Thousand Commandments paper 
which they gave it two Pinocchio's?
    Mr. Crews. Well, maybe that they should have read the 
subtitle. This is The Washington Post. The paper that they're 
referencing was called, ``Tip of the Cost-berg.'' It's a 
working paper compiling OMB numbers on the cost of regulations 
on environment, health and safety, and OMB has quit compiling 
the paperwork cost that it ought to be compiling, and the 
economic regulatory cost that it ought to be compiling.
    Nobody sees the same rainbow. We all look through different 
drops when we see it, and nobody sees the same costs and 
benefits of regulation. I use a low ball figure for the cost of 
regulation of 1.9, which OMB's numbers, back at the turn of the 
century, were over a trillion. There have been a lot more 
regulation since then, and these days, the NAM has a cost study 
on regulatory cost, annual regulatory cost of over $2 trillion, 
Mercatus has a new study with substantial cost for regulation. 
There's another----
    Mr. Johnson. You're getting a little----
    Mr. Crews [continuing]. Study of the cost of regulation 
that would put cost over 50 trillion a year.
    Mr. Johnson. You're starting to dazzle me now. I just have 
one last question.
    Mr. Crews. Good.
    Mr. Johnson. I'll try to make it as clear as I can. Tom 
Donohue, the President and CEO of the Chamber of Commerce, is 
quoted as saying that ``we need'' many of the regulations 
included in your antiregulatory report, and that they are 
important for the economy, and we support them.
    That's what Tom Donohue, CEO and President of the Chamber 
of Commerce said. I want to know if you agree with that, and I 
also, I want to get your comment about the fact that prior 
versions of your Ten Thousand Commandments report admitted that 
it was not scientific, and it was back of the envelope, but 
that language did not appear in the most current version, the 
one that was given the two Pinocchio's, and I wanted to know 
why did you remove those caveats from the two Pinocchio's, Ten 
Thousand Commandments report.
    Mr. Crews. I didn't remove them. It's still all in there. 
The Ten Thousand Commandments report is citing the Cost-berg 
figures where I have all those disclaimers there. I cannot go 
below those figures. Those are--those are using largely 
government's own numbers for the cost of regulation and then 
other compilations that are out there. As for--as for 
Donohue's----
    Mr. Johnson. Do you disagree with what Tom Donohue said?
    Mr. Crews. Yeah. As for what he said, Ten Thousand 
Commandments is not an antiregulatory report, and the 
Competitive Enterprise Institute is not an antiregulatory 
group, and the majority here is not an antiregulatory entity. 
This is an OIRA hearing. We're talking about your job of 
reviewing the regulatory state and what the regulators, who are 
not elected, are doing.
    So that's the purpose of the hearing. But the Ten Thousand 
Commandments is not an antiregulatory report. Your question is 
what does the best regulation? Is it always going to be a 
political system that does the best regulation, or do you need 
other kinds of disciplines to play a role?
    Mr. Johnson. Well, Mr. Crews, you've been quite gracious in 
your responses, and Mr. Chairman, you've been quite gracious 
with the time. I'm way, way over the limit, and with that, I 
will yield back.
    Mr. Marino. I have another question I'd like to ask, and if 
you would like to, Hank, you certainly can.
    Even I don't consider Professor Driesen to be hostile, so 
this will pertain to you as well, sir, if you care to. Can you 
give me an end-of-term grade that would assign--that you would 
assign to the Obama administration for its performance in 
regulating without inflicting unnecessary economic harm or 
imposing unnecessary regulations?
    Dr. Beach?
    Mr. Beach. I'd give it a C minus or a D plus. I think the 
regulations which have been produced out of the recession, 
well-meaning, as they were, were done without due regard for 
the cumulative cost and the effects on the enterprise system.
    Mr. Marino. Thank you. Dr. Crews--Mr. Crews.
    Mr. Crews. I think looking at cumulative effects of 
regulations matter a lot, and even what Mr. Johnson said, what 
you said about OIRA's role in looking at and reviewing 
regulations, I think matters a great deal.
    Mr. Marino. Professor Driesen.
    Mr. Driesen. Well, with the caveat that that's a really 
difficult question to answer, none of us here have read all 
these rules. I would say that the ones I know about seem 
sensible to me and look like an A. I've seen them going after 
things that really need the attention and seem to be doing it 
in a reasonable way.
    Mr. Marino. Dr. Holtz-Eakin.
    Mr. Holtz-Eakin. I guess I'm in the vicinity of a C, C 
minus. I'd say the--the break they deserve is that a lot of 
this comes from the Dodd-Frank Act and the Affordable Care Act, 
which were drafted very poorly by the U.S. Congress and have 
led to some real regulatory problems in filling that out.
    The thing I think they did most poorly was to not keep 
track of the breadth of the regulatory burden. That's been 
unusually active, not just at HHS and at the SEC and CFTC, but 
the Department of Labor, the FCC, you know, the Department of 
Energy, sort of every agency has issued regulations that are 
remarkable, right, and I think it is OIRA and the 
Administration's responsibility to look at that and modulate 
its impact on the economy, and they did a bad job there.
    Mr. Marino. Mr. Crews, did I not hear you give a grade? If 
I did not hear you, then my ear is as bad as my arm.
    Mr. Crews. I did.
    Mr. Marino. You did or didn't?
    Mr. Crews. Yeah.
    Mr. Marino. You did. I think--what was yours? I'm sorry.
    Mr. Crews. I just said I think the presentation of the--
there need to have been a lot more review of regulations than 
it was, and I wish that we could use OIRA more effectively to 
govern that.
    Mr. Marino. So is that an A, C, or an E?
    Mr. Crews. I've got to say a C, because----
    Mr. Marino. Okay. Now, one more thing I want to ask each of 
you to respond to. How important to each--how important is the 
fact that we must look at the economics involved when it comes 
to job creation or job loss in regulation, if it's important, 
in your opinion, at all?
    Dr. Beach.
    Mr. Beach. Well, yes. It's something we haven't talked 
about today is the important to whom, and it's largely 
important to people who are low and moderate incomes. They 
are--they bear a disproportionate share relative to their 
income, of the cost of regulation. So when we impose well-
meaning regulations and it does what it does, we need to keep 
them in mind. It's called regressive effects, and I think 
they're--they're much in your mind in other areas as well, 
certainly.
    Mr. Marino. Mr. Crews.
    Mr. Crews. One thing related to that, too, in terms of job 
effects of regulation, it'd be good to look at how regulations 
might stack up as a small firm grows. Mr. Trott had mentioned 
growing a business and had mentioned I couldn't do it today if 
I were setting out in this kind of a regulatory enterprise.
    Well, if we disagree about that, let's find out why we 
disagree about it. Let's look at what laws are taking effect as 
this firm hits four employees, five employees, 10, and 49, and 
see what adds up, and look at it from the statutory side and 
from the regulatory side and see what we--what kind of 
inventory we have of how these things stack up when a small 
firm grows and affects job creation and job growth.
    Mr. Marino. Professor Driesen.
    Mr. Driesen. I do not think regulation is a--at least 
overregulation has not been a significant factor in causing job 
loss. Underregulation has, because we legalized subprime 
mortgages, which were illegal at one point. We allowed large 
firms to get into the--large banking firms that got them into 
the subprime business. When they were separated, there was no 
problem. I can give you the whole--I wrote an article to spell 
it out for you.
    So deregulation has caused a financial crisis. Regulation 
has a tiny effect on jobs, and in the environmental area, it's 
a small net positive. And, we used to have statistics on this 
from the Bureau of Labor Standards, but Congress has defunded 
it.
    Now, what those statistics shows is that environmental 
public health and safety was about 0.2 percent of mass layoffs. 
Mergers and acquisitions were a big cause of unemployment. And 
so, if you're going to get serious about unemployment, you've 
got to stop hammering away at regulation, refund BLS and look 
at what's really causing it, and I don't think you're going to 
find regulation to be prominent among the problems of job loss.
    Mr. Marino. Dr. Holtz-Eakin.
    Mr. Holtz-Eakin. So as I said, I think you should quantify 
everything you can so that you understand the comprehensive 
benefits and costs of a rulemaking process, but certainly, you 
should always place priorities on the most pressing issues. 
And, in the past, from the end of World War II to 2007, this 
economy grew fast enough that even with population growth, the 
standard of living doubled every 35 years, roughly, one working 
career.
    The projections are that this economy will grow only at 2 
percent, and if you roll in population growth, that means the 
standard of living doubles every 75 years. I believe that's the 
primary domestic economic policy problem that we have, and that 
we should devote all of our attention in the regulatory tax and 
budgetary process to solving that problem.
    Mr. Marino. Thank you. Mr. Johnson, do you have any 
questions?
    Mr. Johnson. Thank you, yes. Dr. Beach, with respect to the 
assertion that you just made and you also made it in your 
written testimony----
    Mr. Beach. Yes, sir.
    Mr. Johnson [continuing]. That regulations 
disproportionately burden low income populations and undermine 
economic productivity, and you said that citing studies 
conducted by the Mercatus Center. I just want a note from you 
whether or not the lead in the contaminated water in Flint was 
the result of overregulation?
    Mr. Beach. I'm not an expert on how it got there. I'm very 
concerned about it, as I'm sure you are as well.
    Mr. Johnson. Well, was it overregulation that was one of 
the factors----
    Mr. Beach. I'm not the best one to answer that question.
    Mr. Johnson [continuing]. That contributed to lead getting 
into the----
    Mr. Beach. It could have been a number of factors. I'm not 
sure. It could have been the land. Who knows? I'm an economist.
    Mr. Johnson. It wasn't overregulation, was it?
    Mr. Beach. Well, who knows. I mean, it could have been--it 
could have been this. For example, if you have a municipality 
that has a lot of--in a State that has the burden of a lot of 
regulation, that can undermine the tax base. If the tax base is 
undermined, you might not take care of your infrastructure. 
I've known lots of cities that have had poor infrastructure, 
which gets into things leaching into the water supply. So 
unless you--or and I are experts on now it actually got there, 
I could make an argument that yes, it could have been because 
of overregulation.
    Mr. Johnson. Well, if there were no regulations, then, of 
course, you would have all kinds of contaminants in the water. 
Isn't that correct?
    Mr. Beach. That doesn't necessarily follow. You could----
    Mr. Johnson. So in other words, you're saying in an 
environment with no regulations, you're going to always have 
safe drinking water.
    Mr. Beach. Absolutely not. We need--we need the regulations 
we have around----
    Mr. Johnson. Need the regulations.
    Mr. Beach [continuing]. Around the drinking water today. 
They've been very effective.
    Mr. Johnson. And those regulations----
    Mr. Beach. Yeah.
    Mr. Johnson [continuing]. Do not hurt, or 
disproportionately burden anybody, much less low income people?
    Mr. Beach. Exactly. Right. And so they, in fact, they 
benefit everybody, but my point is this: If you have----
    Mr. Johnson. That is the point that I want to make.
    Mr. Beach. If you have a slow economy because of a 
regulatory--cumulative regulatory burden, then wages grow 
slowly in the bottom half of the distribution. Now, they, of 
course, benefit from the clean water just like the top half, 
but they don't have the benefits of the growing economy like 
the top half does.
    Mr. Johnson. Well, I mean, but you can have a couple of 
companies making a gazillion dollars, and then you have the 
consumers, the people who purchase the product or service dying 
at an early age, as we heard someone say today, we've got 
people dying at an early age. I mean, what is best? I mean, 
should we just have an unregulated environment and a free 
market system to let the buyers beware, and let the companies 
do whatever they want to do, and there's no regulations?
    Mr. Beach. I think we're past that, aren't we, Congressman? 
I said in my remarks----
    Mr. Johnson. From what I'm hearing from the Republican 
witnesses and from the messaging from that side of the aisle is 
that we are overregulated, all of these regulations need to be 
abandoned, and we need to get government off the backs of the 
business community so that they can make more money, and it 
doesn't matter the health, safety of the people.
    Mr. Beach. Of course, health and safety matters a great 
deal, and we are----
    Mr. Johnson. How can you quantify that on a cost-benefit 
analysis?
    Mr. Beach. Well, I think it can and should be done so that 
you have the best advice possible for making decisions, as you 
must make, between spending on A, B, and C. If you----
    Mr. Johnson. Do you think the regulators should have that--
--
    Mr. Beach. I think we should all do----
    Mr. Johnson [continuing]. Ability?
    Mr. Beach. Yeah, cost-benefit analysis needs to be done in 
much more than it's being done now.
    Mr. Johnson. Well, I'm going to--I'm going to yield back 
the balance of my time, and I thank you all for your testimony.
    Mr. Beach. Thank you.
    Mr. Johnson. I'm sorry I didn't get to you, Mr. Driesen. 
Thank you.
    Mr. Marino. Thank you all for being here. This concludes 
our hearing, and without objection, all Members will have 5 
legislative days to submit additional written questions for the 
witnesses or additional materials for the record. The hearing 
is adjourned.
    [Whereupon, at 5:52 p.m., the Subcommittee was adjourned.]

                            A P P E N D I X

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               Material Submitted for the Hearing Record

    Response to Questions for the Record from the Honorable Howard 
 Shelanski, Administrator, Office of Information and Regulatory Affairs


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



Response to Questions for the Record from William W. Beach, Ph.D., Vice 
    President for Policy Research, Mercatus Center at George Mason 
                               University


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Response to Questions for the Record from Clyde Wayne Crews, Jr., Vice 
   President for Policy/Director of Technology Studies, Competitive 
                          Enterprise Institute


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Response to Questions for the Record from Douglas Holtz-Eakin, 
                    President, American Action Forum


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                                 [all]