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






REQUIRE EVALUATION BEFORE IMPLEMENTING EXECUTIVE WISHLISTS (REVIEW) ACT 
 OF 2015; AND THE REGULATORY PREDICTABILITY FOR BUSINESS GROWTH ACT OF 
                                  2015

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                           REGULATORY REFORM,
                      COMMERCIAL AND ANTITRUST LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                        H.R. 3438 and H.R. 2631

                               __________

                            NOVEMBER 3, 2015

                               __________

                           Serial No. 114-51

                               __________

         Printed for the use of the Committee on the Judiciary

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      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
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                            C O N T E N T S

                              ----------                              

                            NOVEMBER 3, 2015

                                                                   Page

                               THE BILLS

H.R. 3438, the ``Require Evaluation before Implementing Executive 
  Wishlists (REVIEW) Act of 2015''...............................     3
H.R. 2631, the ``Regulatory Predictability for Business Growth 
  Act of 2015''..................................................     6

                           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     8
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     9

                               WITNESSES

Edward Brady, President, Brady Homes Illinois, testifying on 
  behalf of the National Association of Home Builders
  Oral Testimony.................................................    12
  Prepared Statement.............................................    14
Paul R. Noe, Esq., Vice President for Public Policy, American 
  Forest & Paper Association
  Oral Testimony.................................................    25
  Prepared Statement.............................................    27
Jeffrey Bossert Clark, Sr., Esq., Partner, Kirkland & Ellis, LLP
  Oral Testimony.................................................    32
  Prepared Statement.............................................    34
William W. Buzbee, Professor of Law, Georgetown University Law 
  Center
  Oral Testimony.................................................    47
  Prepared Statement.............................................    49

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary, submitted by 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    60

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Questions for the Record from Edward Brady, 
  President, Brady Homes Illinois, testifying on behalf of the 
  National Association of Home Builders..........................    82
Response to Questions for the Record from William W. Buzbee, 
  Professor of Law, Georgetown University Law Center.............    84
                        OFFICIAL HEARING RECORD
          Unprinted Material Submitted for the Hearing Record

Material submitted for the Hearing Record by the Honorable Hank 
    Johnson, Jr., a Representative in Congress from the State of 
    Georgia, and Ranking Member, Subcommittee on Regulatory Reform, 
    Commercial and Antitrust Law. These submissions are available at 
    the Subcommittee and can also be accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=104126.

Material submitted for the Hearing Record by the Honorable Tom Marino, 
    a Representative in Congress from the State of Pennsylvania, and 
    Chairman, Subcommittee on Regulatory Reform, Commercial and 
    Antitrust Law. These submissions are available at the Subcommittee 
    and can also be accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=104126.

Material submitted for the Hearing Record by Paul R. Noe, Esq., Vice 
    President for Public Policy, American Forest & Paper Association. 
    These submissions are available at the Subcommittee and can also be 
    accessed at:

    http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=104126.

 
REQUIRE EVALUATION BEFORE IMPLEMENTING EXECUTIVE WISHLISTS (REVIEW) ACT 
 OF 2015; AND THE REGULATORY PREDICTABILITY FOR BUSINESS GROWTH ACT OF 
                                  2015

                              ----------                              


                       TUESDAY, NOVEMBER 3, 2015

                       House of Representatives,

                  Subcommittee on Regulatory Reform, 
                      Commercial and Antitrust Law

                      Committee on the Judiciary,

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10:05 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Tom 
Marino (Chairman of the Subcommittee) presiding.
    Present: Representatives Marino, Goodlatte, Issa, Collins, 
Walters, Ratcliffe, Trott, Bishop, Johnson, DelBene, Jeffries, 
and Peters.
    Staff Present: (Majority) Daniel Flores, Chief Counsel; 
Andrea Lindsey, Clerk; and (Minority) Slade Bond, Counsel.
    Mr. Marino. The Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law will come to order. My colleagues 
are on their way. But I usually give at least 5 minutes. We've 
given 7. So we'll get started. I know your schedules are as 
hectic as ours.
    Without objection, the Chair is authorized to declare a 
recess of the Committee at any time.
    We welcome everyone to today's hearing on H.R. 3438, the 
``Require Evaluation before Implementing Executive Wishlists 
(REVIEW) Act of 2015,'' and H.R. 2631, the ``Regulatory 
Predictability for Business Growth Act of 2015.'' And I now 
recognize myself for an opening statement.
    Today, this Subcommittee continues its overall regulatory 
reform agenda by examining the targeted reforms to the U.S. 
regulatory process contained in two, straightforward bills. I'm 
honored that we can take a good look at H.R. 2631, the 
``Regulatory Predictability for Business Growth Act of 2015,'' 
a bill offered by my colleague, Congressman Steve Russell of 
Oklahoma.
    H.R. 2631 addresses a recent Supreme Court decision that 
upended the process by which agencies can change its own 
interpretive rules. How to address this change is an important 
question for us to consider today.
    Today this Subcommittee will also examine my bill, the 
REVIEW Act. Over the last decade, our Nation has faced a costly 
and unprecedented regulatory onslaught. During this period, the 
size and scope of Federal regulation has ballooned to epic 
proportions. Longstanding Executive Branch policies have 
mandated additional scrutiny for ``significant regulatory 
action,'' i.e., those rules with an annual effect on the 
economy of $100 million or more.
    But regulatory uberous has flown past these commonsense 
concerns as agencies more frequently propose mega-rules with 
annual cost in excess of $1 billion. But as these monstrous 
regulations become more frequent, an average of three per year 
during the Obama administration, and six in 2014 alone, it 
almost seems that nothing can curtail these potential to damage 
our economy. This bill is one more step in this Subcommittee's 
continued effort to put forth commonsense regulatory reform 
measures for the benefit of American workers.
    The REVIEW Act presents a simple premise that massive $1 
billion regulations should face full and thorough review by the 
courts before they become effective and force compliance costs 
on businesses across the country. It achieves this goal through 
a simple and straightforward mechanism, a mandatory stay of any 
$1 billion rule if it is challenged in court within 60 days of 
its promulgation.
    Some observers might insist that the reforms in this bill 
are unnecessary. But just this summer, in the Supreme Court's 
decision in Michigan v. EPA, we saw firsthand that irreparable 
harm can occur as a result of expansive, costly, and poorly-
crafted regulation.
    In this case, the court found that the EPA has promulgated 
its Utility MACT rule through a faulty process and on legally 
infirm grounds because it chose not to consider costs when 
promulgating the rule. In this case, the costs of the rule were 
estimated by the EPA itself as $9.6 billion per year. In return 
the EPA's best estimate of potential benefits were in the range 
of a mere $4 million to $6 million annually.
    As Justice Antonin Scalia wrote in his opinion for the 
court, ``One would not say that is even rational, never mind 
appropriate, to impose billions of dollars in economic cost in 
return for a few dollars in health or environmental benefits.'' 
Unfortunately for workers, homeowners, and taxpayers across the 
country, the Utility MACT rule remained in effect as litigation 
took years to work itself to a final decision at the Supreme 
Court.
    Over this time, electricity providers were forced to close 
power plants as they faced uncertain compliance burdens. Jobs 
were lost, and electricity costs to consumers rose as a result. 
Until recently, regulations with $1 billion annual price tags 
were a rare occurrence. Since 2006, however, we have seen 26 in 
total.
    The REVIEW Act is a step in the right direction to address 
this growing concern. It also provides a bit of certainty to 
the American people that massive $1 billion regulations must 
pass legal muster before their costs are passed on. I thank the 
Chairman for joining me on this bill, and I look forward to 
hearing from today's esteemed panel.
    [The bills, H.R. 3438 and H.R. 2631, follow:]
    
    
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    Mr. Marino. The Chair now recognizes the Ranking Member of 
the Subcommittee on Regulatory Reform, Commercial, and 
Antitrust Law, Mr. Johnson of Georgia, for his opening 
statement.
    Mr. Johnson. Thank you, Mr. Chairman.
    Today's hearing provides this Subcommittee with an 
important opportunity to consider two regulatory reform 
proposals that would affect divergent aspects of the rulemaking 
system. The first of these proposals is H.R. 2631, the 
``Regulatory Predictability for Business Growth Act of 2015,'' 
which would require agencies to undertake notice and comment 
under section 553, the Administrative Procedures Act, prior to 
revising interpretive rules that are older than 1 year.
    An interpretive rule is any nonlegislative rule issued by 
an agency to clarify its views on a subject matter. These rules 
are usually issued in direct response to requests by regulated 
firms that want more clarity and transparency in a subject 
area. Because the rule has no binding legal effect, the parties 
are not bound by an agency's expression of its current rules.
    Simply put, H.R. 2631 would impose immense procedural and 
analytical burdens on agencies seeking to provide regulatory 
clarity through interpretive rules. Not only would this 
requirement severely burden agencies' existing practice of 
issuing timely, interpretive rules, but it would also wreak 
havoc on the entire rulemaking system.
    As Donald Elliott, a professor of law at Yale Law School, 
noted in 1992, ``Imposing a notice-and-comment requirement on 
nonlegislative rules would literally grind the modern 
administrative process to a halt.''
    In an Amicus brief filed in Perez v. Mortgage Bankers, 
where the Supreme Court unanimously rejected a judicial 
doctrine requiring notice and comment for revisions to 
longstanding interpretive rules, a group of leading 
administrative law experts similarly argued that this 
requirement would be ``burdensome, costly, and time consuming 
for agencies.''
    The second regulatory reform proposal before us today is 
H.R. 3438, the ``Require Evaluation before Implementing 
Executive Wishlists Act of 2015,'' or otherwise known as the 
``REVIEW Act,'' which would automatically stay high-impact 
rules that a party challenges within 60 days of an agency's 
adoption of the rule. Under current law, both courts and the 
agency issuing a rule may stay the effective date of a rule.
    While agencies have broad discretion in postponing the 
effective date of a rule, a court considers several factors in 
deciding whether to stay a rule, including whether the party is 
likely to succeed on the merits. Unlike current law, the REVIEW 
Act would require that agencies automatically delay the 
effective date for rules exceeding $1 billion in costs, 
regardless of whether the party challenging the rule has any 
likelihood of success on the merits, is actually harmed by the 
rule, or whether staying the rule would be contrary to the 
public interest.
    This guarantees that virtually every regulated firm would 
challenge high-impact rules through frivolous litigation, 
creating further delays for these rules, which, in many cases, 
have already taken years to promulgate. But the bill wouldn't 
just apply to these rules; rather, it would likely apply to 
transfer rules, which involve the transfer of funds for 
budgetary programs as authorized by Congress, such as transfer 
rules involving the Medicare program or the Federal Pell Grant 
program.
    In closing, I look forward to our esteemed panel's 
testimony today, and I yield back.
    Mr. Marino. Thank you.
    The Chair now recognizes the Chairman of the full Judiciary 
Committee, Mr. Bob Goodlatte of Virginia, for his opening 
statement.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Today's hearing continues the Judiciary Committee's efforts 
to deliver urgently needed reforms of Washington's regulatory 
system--a system that virtually every day places new obstacles 
in the path of American jobs and economic growth.
    We consider today two bills: Subcommittee Chairman Marino's 
REVIEW Act; and Representative Russell's ``Regulatory 
Predictable for Business Growth Act.'' These are new bills 
developed in response to Supreme Court decisions issued during 
the Court's 2014 term.
    The REVIEW Act contains a simple common-sense reform 
responding to a problem highlighted by the court's decision in 
the case of Michigan v. EPA. The problem is that, too often, 
new regulations that impose enormous costs on our society are 
successfully challenged in court, but are not stayed while 
litigation is pending.
    When these regulations are ultimately overturned, but 
compliance with them has been required while litigation is 
pending, there can be no question that large amounts of 
precious resources have been wasted--resources that could've 
been spent creating jobs, investing in development, and growing 
America's economy for the benefit of all.
    The REVIEW Act solves this problem with a simple bright-
line test that says, if a new regulation imposes $1 billion or 
more in annual costs, it will not go into effect until after 
litigation challenging it is resolved. Of course, if the 
regulation is not challenged, it may go into effect as normal.
    This is a balanced approach. And, it provides a healthy 
incentive for agencies to promulgate effective but lower-cost 
regulations that are more legally sound to begin with.
    The other bill we are examining, the Regulatory 
Predictability for Business Growth Act, responds to the case of 
Perez v. Mortgage Bankers Association. The bill would make sure 
that, notwithstanding the court's decision finding a current 
gap in the provisions of the Administrative Procedures Act, 
agencies will provide notice to the public and an opportunity 
for comment before they change longstanding interpretive 
regulations.
    This is only fair. Job creators must live day-to-day with 
the interpretations agencies espouse, and the broader public 
relies on agencies' good-faith adherence to sound and settled 
interpretations of law. Both deserve notice and a chance to 
comment on changes in interpretive rules before those changes 
are made.
    These are simple but powerful reforms that will help to 
improve Americans' daily lives. I urge my colleagues to 
consider well and support these important pieces of 
legislation.
    I look forward to hearing the testimony of our witnesses 
today, and yield back. Thank you, Mr. Chairman.
    Mr. Marino. Thank you, Chairman.
    Mr. Conyers, the Ranking Member of the full Judiciary 
Committee, will be on his way shortly. And I'm going to reserve 
the time for his opening statement for when he gets here.
    And without objection, other Members' opening statements 
will be made part of the record.
    And I will begin by swearing in our witnesses before 
introducing them. If you would please stand and raise your 
right hand.
    Do you swear that the testimony you're about to give is the 
truth--before this Committee--the whole truth and nothing but 
the truth so help you God?
    Let the record reflect that all the witnesses responded in 
the affirmative. Please be seated.
    We have a distinguished panel with us today, and I want to 
thank the Members for being here. Seated to my left, the first 
gentleman, Mr. Brady is the president and founder of Brady 
Homes Illinois, and the second vice chairman of the National 
Association of Homebuilders.
    He is a second-generation homebuilder. Brady Homes Illinois 
is a small, single-family building and development company that 
since its founding by his father, William Brady, Sr., in 1962, 
has become one of the largest homebuilding firms in central 
Illinois.
    Mr. Brady has served on the NAHB board of directors for 
more than 10 years and has also held seats on several 
committees and task forces, including the NAHB Federal 
Government Affairs Committee and the Budget and Finance 
Committee. Mr. Brady has been a trustee and chairman of Build-
PAC, NAHB's Political Action Committee.
    Outside of NAHB, Mr. Brady has worked on many boards and 
commissions including serving on the board of directors, on the 
Federal Home Loan Bank of Chicago, in the Jack Kemp Foundation. 
And as a member of the Bloomington Planning Commission, and the 
Bipartisan Policy Center Housing Commission. Mr. Brady earned 
his bachelor's degree in political business from Illinois 
Wesley University.
    Welcome, sir.
    Mr. Brady. Thank you.
    Mr. Marino. Mr. Noe is the vice president for public policy 
at the American Forest and Paper Association, and is also 
testifying today on behalf of the American Wood Council. At 
AF&PA, he works on a wide variety of issues, including 
environmental regulation, regulatory reform, renewable energy, 
biomass carbon neutrality, chemicals and product stewardship 
and sustainability.
    Before joining AF&PA, Mr. Noe had extensive experience in 
public policy issues, including as vice president of regulatory 
affairs at the Grocery Manufacturers Association; in private 
practice, and in public service as counsel to the administrator 
in the Office of Regulation and Regulatory Affairs Office of 
Management and Budget from 2001 to 2006; as well as senior 
counsel to the U.S. Senate Committee on Governmental Affairs 
under Chairman Fred Thompson--and we all extend our sincere 
condolences to the Thompson family. He was truly a great man--
Ted Stevens, and Bill Roth, from 1995 to 2001.
    Mr. Noe earned his bachelor's degree, Phi Beta Kappa, from 
Williams College and is a graduate of the Georgetown University 
Law Center, where he was an Olin Fellow in law and economics. 
Welcome, sir.
    Our next witness is Mr. Clark. He is a partner at the law 
firm of Kirkland & Ellis, LLP, and specializes in complex trial 
and appellate litigation. Mr. Clark has been with the firm 
since 1996, with the exception of 2001 to 2005, when he was 
appointed to serve as deputy assistant attorney general in the 
environment and natural resources division of the Justice 
Department.
    During his appointment, Mr. Clark supervised the division's 
appellate section--it contained 50 lawyers and staff members--
and Indian resources section with another 25 lawyers and staff. 
He has argued and won the noted Massachusetts v. EPA case in 
the D.C. circuit and is rated, and I quote, ``AV preeminent,'' 
5.0 out of 5 by Martindale-Hubbell, the highest level of 
professional excellence.
    Prior to joining Kirkland & Ellis, Mr. Clark was a law 
clerk for Judge Danny J. Boggs, of the United States Court of 
Appeals for the Sixth Circuit. He has written and appeared 
extensively in public on topics in energy efficiency, clean air 
and water law, administrative law, and constitutional law.
    Mr. Clark is an elected member of the governing counsel of 
the ABA administrative law section and is currently serving as 
co-chair of the ABA section of administrative law and 
regulatory practices committee on environmental and natural 
resources regulation.
    Mr. Clark graduated with an AB in economics and Russian/
Soviet history, cum laude from Harvard University, an MA in 
urban affairs and public policy, summa cum laude from the 
University of Delaware, and J.D. Magna cum laude from 
Georgetown University Law Center. Welcome, sir.
    Our next witness, Professor Buzbee is a professor of law at 
Georgetown University Law Center. Prior to joining Georgetown, 
Professor Buzbee worked at Emory Law School where he was a 
professor of law, directed Emory's environmental and natural 
resources law program, founded and oversaw its Turner 
environmental law clinic, and co-directed Emory's Center on 
Federalism and Intersystemic Governance. That's a tough one to 
say, but impressive. He is also a founding member, scholar of 
the Center for Progressive Reform, a Washington, D.C.-based 
regulatory think tank.
    Before becoming professor, he was a law clerk for Judge 
Jose A. Cabranes at the United States Court of Appeals for the 
Second Circuit; and attorney fellow at the Natural Resources 
Defense Council; and also performed environmental law, land 
use, and litigation work for the New York City law firm 
Patterson, Belknap, Webb & Tyler.
    Professor Buzbee has published scholarly works, many of 
which have appeared in journals, books, news outlets, and 
blogs. He has assisted with appellate and Supreme Court 
environmental federalism and regulatory litigation and provided 
expert testimony before congressional Committees on 
environmental and regulatory matters.
    Professor Buzbee graduated magna cum laude with his BA from 
Amherst College, and his J.D. From Columbia Law School. 
Welcome, sir.
    Each of the witnesses' written statements will be entered 
into the record into its entirety. I ask that each witness 
summarize his or her testimony in 5 minutes or less, and to 
help you stay within the time, there is a timing light in front 
of you. The light will switch from green to yellow indicating 
that you have 1 minute to conclude your testimony. When the 
light turns red, it indicates that your 5 minutes have expired.
    And what I also do is, you're so intent, as I am, on 
wanting to communicate and read and talk to us that no one pays 
attention to the lights. Even I am guilty of that. So I will 
diplomatically and politely raise the gavel, just twirl it 
around a little bit to get your attention, and if you are just 
so that intent on looking I'll just give a nice little tap and 
ask you to please wrap up. If you would kindly do that.
    Okay, we will begin with Mr. Brady and his opening 
statement.

  TESTIMONY OF EDWARD BRADY, PRESIDENT, BRADY HOMES ILLINOIS, 
   TESTIFYING ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME 
                            BUILDERS

    Mr. Brady. Well, thank you Chairman Marino, Ranking Member 
Johnson, and Members of the Subcommittee. I'm pleased to appear 
before you today on behalf of the National Association of 
Homebuilders to discuss H.R. 3438 and H.R. 2631, both of which 
would help repair our broken Federal regulatory rulemaking 
system.
    As the Chairman said, my name is Ed Brady, and I am a small 
homebuilder from Bloomington, IL. Perhaps it was a simpler time 
when my father founded our family homebuilding business in 
1962, but the complexities of regulation facing our industry 
today makes it difficult for a small business to survive.
    Regulations imposed by government, at all levels, account 
for 25 percent of the final price of a new single-family home. 
Certainly we need to protect the environment, we need to 
protect worker safety, but we also need to return some 
sensibility and sanity to the process. Unfortunately, Federal 
agencies under both Republican and Democratic administrations 
have increasingly sought to skirt the rules set up by the 
Administrative Procedures Act and diminish public participation 
in rulemaking.
    The bills we will discuss today represent significant 
progress toward restoring the public participation. Congress 
intended and provided judicial protections when a rule is 
challenged in court. NAHB is particularly concerned about the 
reliance by Federal agencies on guidance rather than going 
through the formal rulemaking process. That is why we strongly 
support H.R. 2631, which would ensure that the public has input 
on significant changes to existing, longstanding interpretive 
rules.
    For an example of why this bill is needed, let's look for a 
moment at the ongoing struggle with the EPA and the Army Corps 
to define the scope of waters protected under the Clean Water 
Act. Prior to the regulation that was finalized earlier this 
year, the most recent Clean Water Act regulation addressing the 
scope of jurisdiction was finalized in 1986.
    For 29 years, the EPA and the Corps relied on several 
interpretive rules, despite two Supreme Court rulings that 
significantly limited the scope of the Clean Water Act. Those 
interpretive rules had the same effect and force as a 
regulation, but never went through the formal rulemaking 
process. Most troubling is that there is little judicial 
oversight over the use of guidance.
    Before we could challenge that, this guidance acted as 
improper rulemaking, we would first have to seek a ruling over 
the very issue of whether the guidance is ``final agency 
action,'' subject to the court scrutiny. The outcome of this 
would be very uncertain. And while we would prefer that the 
rulemaking process to work as Congress intended with public 
input, a cost-benefit analysis, and an examination of 
alternative options so the agency gets it right the very first 
time, sometimes we need to turn to the courts for relief.
    The second bill before you today, H.R. 3438, provides for a 
stay of enforcement for high-cost regulations pending judicial 
review. This is a commonsense approach that would spare small 
businesses the significant and irretrievable cost of compliance 
in the event a pending rule is overturned.
    While courts issue preliminary injunctions when a rule 
faces legal review, these injunctions are unusual and extremely 
difficult for businesses to obtain. Courts require businesses 
to show that the regulation would impose irreparable harm, but 
generally do not include the monetary costs associated with 
compliance as meeting that standard, even though small 
businesses have no realistic means of seeking repair from the 
compliance cost for the rule later thrown out by the courts.
    For example, the U.S. Department of Labor has recently 
proposed new overtime regulations, which would make 116,000 
construction workers eligible for overtime, according to our 
analysis. Yet these costs would not likely be considered by the 
courts as imposing irreparable harm. And even if challenged in 
court, the rule might still be allowed to go into effect. But 
if the rule goes into effect, it would immediately alter how 
small homebuilders do business.
    It is simply unfair for businesses to impose the compliance 
cost of a new regulation while it's under judicial review. The 
regulatory process is failing us and we need to repair it. 
These bills are a good start, and I urge this Subcommittee to 
support them. Thank you again for the opportunity to testify 
today, and I'd be happy to answer any questions.
    Mr. Marino. Thank you, Mr. Brady.
    [The prepared statement of Mr. Brady follows:]
    
    
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                               __________
    Mr. Marino. Mr. Noe.

   TESTIMONY OF PAUL R. NOE, ESQ., VICE PRESIDENT FOR PUBLIC 
          POLICY, AMERICAN FOREST & PAPER ASSOCIATION

    Mr. Noe. Thank you. Chairman Marino, Ranking Member 
Johnson, and Members of the Subcommittee, my name is Paul Noe, 
and I want to thank you for the opportunity to be here today on 
behalf of the American Forest and Paper Association, the 
American Wood Council, and their members on two bills to make 
important reforms to the Federal rulemaking process.
    We applaud these bills because we believe they are 
important steps to increase regulatory transparency and 
fairness, harmonize regulatory requirements, avoid wasting 
limited resources, and increase regulatory certainty. H.R. 2631 
would require public notice and comment when agencies issue an 
interpretive rule that conflicts with, or is inconsistent with 
a, previous longstanding interpretive guidance.
    This is consistent with the principles of due process, 
transparency, and accountability that are the foundation of the 
APA. After the Supreme Court's Mortgage Bankers decision, it is 
clear that an agency can reverse the binding policy reflected 
in a longstanding, definitive interpretive rule by simply 
issuing a contrary interpretive rule. In other words, an agency 
can change its binding policy from ``X'' to ``not X'' without 
having provided the public notice and an opportunity for 
comment.
    As a practical matter, by regulating through interpretive 
guidance rather than legislative rules, an agency often can 
avoid not only public review but OMB review, court review, and 
congressional oversight. That is not good government. As the 
D.C. circuit put it, the phenomenon we see in this case is 
familiar.
    Congress passes a broadly-worded statute. The agency 
follows with regulations containing broad language, open-ended 
phrases, ambiguous standards, and the like. Then as years pass, 
the agency issues circulars or guidance or memoranda 
explaining, interpreting, defining, and often expanding the 
commands and the regulations. Law is made without notice and 
comment, without public participation, without publication in 
the Federal Register, or the code of Federal regulations.
    Many authorities have gone beyond H.R. 2631 to recommend 
pre-adoption notice and comment for all significant guidance, 
including the administrative conference of the United States, 
the U.S. Food and Drug Administration, and the American Bar 
Association. H.R. 2631 has a more modest scope by proposing 
pre-adoption notice and comment for interpretive rules, not 
policy statements, that conflict with or are inconsistent with 
prior interpretive guidance that have been in effect for a year 
or more. This bill is a good step toward addressing the problem 
of regulation by guidance.
    The other bill, H.R. 3438 would, pending judicial review, 
postpone the effective date of high-impact rules that may 
impose an annual cost on the economy of not less than $1 
billion. This bill would promote certainty, efficiency, and 
legal integrity in the regulatory process.
    All too often regulations requiring major capital 
investments are struck down in court, and this is an increasing 
trend, I believe. H.R. 3438 would avoid wasting resources, 
stranding assets, and ensure that rules are legally sound 
before billions of dollars in investment are made.
    One example of how this rule effects the U.S. forest 
products industry is EPA's Boiler MACT rules. In 2007, about 
$200 million in compliance investments were stranded in the 
paper and wood products industry when a court struck down the 
2004 Boiler MACT rules just 3 months before the compliance 
deadline.
    When the rules were reissued in 2013, the new standards had 
changed significantly, and previous investments proved to be 
the wrong approaches to achieve compliance. Wasting limited 
capital undermines the competitiveness of U.S. businesses and 
impedes growth in job creation. One suggestion I would submit 
for the Subcommittee to consider is to broaden the definition 
of high-impact rules to ensure that highly consequential rules, 
such as the Boiler MACT rules, are covered.
    In conclusion, H.R. 2631 and H.R. 3438 take important steps 
to promote transparency, certainty, efficiency, and fairness in 
the regulatory process. We support these efforts, and we would 
be happy to work with the Committee as it advances these 
proposals through the legislative process.
    Mr. Chairman, I request permission to include in the record 
documents referenced in my testimony. I thank you.
    Mr. Marino. Without objection. And I apologize, sir, I 
believe your name is pronounced Noe?
    Mr. Noe. Yes, sir.
    Mr. Marino. I apologize for that.
    Mr. Noe. Thank you.
    [The prepared statement of Mr. Noe follows:]
    
    
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                               __________
    Mr. Marino. Mr. Clark.

    TESTIMONY OF JEFFREY BOSSERT CLARK, SR., ESQ., PARTNER, 
                     KIRKLAND & ELLIS, LLP

    Mr. Clark. Good morning, Chairman Marino, and Ranking 
Member Johnson, and honorable Members of the Subcommittee.
    I'm very pleased to be here today. And in addition to 
coming to help however I can with my testimony, I wanted to 
note that my wife and oldest daughter are in the room. I 
thought it would be a good civics lesson, especially with it 
being voting day in my home State of Virginia.
    And also, Ranking Member Johnson, my wife lived for a long 
time, including when we were married 20 years ago in your 
district, in Stone Mountain, Georgia. And she came there after 
she immigrated from Korea.
    So with that little introduction out of the way, I can draw 
a straight line, I think, between my law school experiences in 
front of Judge Silverman, as I noted in my written testimony, 
to my career here at DOJ, and to sitting here with you today. 
And, you know, if I were a half generation younger, I'm sure I 
would've had Professor Buzbee as one of my professors, so I'm 
honored to sit alongside of him.
    Administrative law really is constitutional law. It's 
suffused with the separation of powers, with due process 
concerns, and with guaranteeing Democratic accountability. And 
I think both of the bills that you have before you today are 
excellent bills that would help to accomplish promoting those 
constitutional ends.
    The first bill, H.R. 2631, really is the product, I think, 
of you trying to solve a negative synergy between a number of 
administrative law doctrines and current provisions in the APA 
that the Paralyzed Veterans case enforced, and those rules are 
553(b), which is what got enforced in Mortgage Bankers, 
Seminole Rock deference and its potential for abuse, and 
Chevron.
    The combination of those rules really let agencies turn on 
a dime and defeat reliance interests by individuals in 
businesses like the NAHB and their members. And by imposing 
this new requirement that resurrects the Paralyzed Veterans 
doctrine, you would help to counteract all of those negative 
synergies.
    In addition, I think there is several other advantages, 
which I lay out in my written testimony. I think it advances 
your power to, as Congress, write the laws. The argument that 
we often hear from the professoriate that agency processes will 
be ossified, I think, has really become a tired canard at this 
point. You get to define the Nation's policies and legislation, 
not really the Executive Branch or the professoriate.
    Second, I think that these bills, the first bill 
especially, the one that reverses Paralyzed Veterans, helps to 
enhance the separation of powers, because it gives time for 
mistakes to be corrected. It doesn't allow agencies to turn on 
a dime. It allows agencies that are acting closer in time to 
the law that they passed--that was passed that, you know, is 
being interpreted, and so that harmonizes agency action more 
with congressional will.
    And third, by giving that time period and making sure that 
there's notice and comment, you establish that there's an 
adversary process, an adversary process that can inform 
judicial review and, thereby, also enhance the separation of 
powers through the process of judicial oversight. Of course, 
the fact that you have notice and comment enhances due process 
and accountability, and it helps to protect reliance interests.
    In addition, it protects both public property and private 
property, not just private property, because many agencies 
regulate the actions of other Executive Branch agencies.
    And third--I'm sorry, and lastly, it's not a perfect 
solution to the abuses of Seminole Rock deference, but it's 
kind of a very good second best. It's a very good first start 
to try to reverse those abuses.
    And, you know, I note that Professor Buzbee had indicated 
that, you know, perhaps you might be open to seeing, you know, 
that bigger step of reversing Seminole Rock deference. But in 
the short term, I think this is a good first step toward that.
    Turning to the second bill, the REVIEW Act of 2015, you 
know, I started my testimony with the apocrypha from Senator 
Dirksen of, you know, $1 billion here, $1 billion there, and 
pretty soon you're talking, you know, real money. I think that 
providing an automatic legislative stay that will be in place 
to allow the courts to test the legality of rules, you know, 
before they actually go into effect when they cross such a 
monumental threshold is a very good step in the right 
direction.
    And I'll tell you in my experience as a practitioner that 
getting stays from the court process are very tough. I tell my 
clients that there's almost a macro that spits out that just 
says in a few paragraphs, stay denied. There's not a lot of 
judicial consideration of those stays, and so providing for an 
automatic stay in the very limited circumstance where you have 
a $1 billion rule is a very good step in the right direction.
    Thank you.
    Mr. Marino. Thank you, Mr. Clark.
    [The prepared statement of Mr. Clark follows:]
    
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    Mr. Marino. Professor Buzbee.

 TESTIMONY OF WILLIAM W. BUZBEE, PROFESSOR OF LAW, GEORGETOWN 
                     UNIVERSITY LAW CENTER

    Mr. Buzbee. Chairman Marino, Ranking Member Johnson, and 
Members of the Subcommittee, thank you for the opportunity to 
discuss my views of bills under consideration.
    And is this working okay?
    Mr. Clark. Yes.
    Mr. Buzbee. Okay. H.R. 2631, as indicated by the opening 
statements, would require agencies to engage in notice-and-
comment rulemaking before they could revise longstanding rules, 
interpretive rules, and, I think clearly, as everyone has 
indicated, this relates to the Supreme Court's Perez decision.
    And I think, furthermore, these statements of the 
witnesses, indicate clearly, this is motivated by concerns with 
excessive regulatory power. But a few things are neglected: 
First, most interpretive rules are issued at the behest of 
businesses seeking consistency and clarity in the law. And I 
think that this proposal is a bad idea, especially for 
businesses, and I also think it would predictably backfire by 
creating incentives for behavior that nobody here would like.
    Okay. First, there's an important problem with this bill, 
which is the very definition of interpretive rules. 
Interpretive rules are not defined in the APA, and there are a 
wide array of rule-like documents that agencies issue that 
could be called interpretive rules but also might not be. If a 
bill like this is to proceed, we really need to have a clear 
definition of interpretive rules and what do not count as 
interpretive rules.
    Second, interpretive rules address a pervasive problem and 
legal challenge. There's a lot of work for lawyers because 
statutes and regulations leave difficult questions, and 
businesses seek clarity and they seek certainty. So they ask 
questions, and ask agencies to commit and to give some kind of 
guidance, and agencies often will do so.
    However, if you require all longstanding interpretive rules 
to go through notice and comment, this will not lead to a wave 
of notice-and-comment proceedings; instead, interpretive rules 
would become rigidified, they would not be changed. 
Interpretive rules also would cease to be issued, or agencies 
would be much more likely to shift into more ad hoc modes of 
policy making or policy making through adjudications. This is 
not desirable.
    Second----
    Mr. Johnson. Pull that microphone a little closer to you.
    Mr. Buzbee. Okay. Sure. Thank you.
    In addition, the Perez case, which everyone mentioned, 
actually made a bill like this less necessary. Although the 
Supreme Court struck down the Paralyzed Veterans doctrine, it 
included strong language about the limited legal power of 
interpretive rules, taking a string of mostly lower court law, 
and making very clear that these kind of interpretive rules are 
not law. They don't have the sort of powerful effect.
    Similarly, Supreme Court doctrine in recent years has made 
clear that interpretive rules do not receive the same kind of 
deference from the courts. Basically there is not need for this 
bill, and it would have bad effects that would really have the 
opposite effects I think people desire here.
    Let me turn to H.R. 3438, the ``REVIEW Act of 2015.'' I 
think this is a simple bill and I applaud its elegance, but I 
think it could have devastating effects on the law and also 
could cause massive economic, environmental, and health harms, 
as well as create legal uncertainty.
    So first, virtually all high-stakes bills are challenged by 
someone. This bill would stay any bill--any regulation simply 
upon the filing of such a challenge. The net effect would be to 
put regulations in abeyance, usually for years on end, 
regardless of the merits or seriousness of the challenge.
    Second, most bills with high-stakes regulations have their 
own mandatory lead time or a period where people kind of phase 
in a regulation. An important issue of clarity is how would the 
tolling or the staying of lacking the effect of a regulation 
apply to bills and regulations with lead time.
    Third, rules of broad impact are typically addressing huge 
risks to the population or the environment. So what are viewed 
as costs here also are accompanied by costs imposed on people 
or things that are protected. If a regulation is stayed, those 
harms will continue during the pendency of any legal 
challenges.
    Cost-benefit analysis, many people debate it, but one basic 
fundamental rule of cost-benefit analysis is you have to 
consider cost and benefits of regulation. This bill only looks 
at the cost side of the ledger. Justice Scalia--a friend of 
several members of the panel here--recently said in Michigan v. 
EPA case that, reasonable regulation requires paying attention 
to the advantages and disadvantages of agency decisions.
    Lastly, H.R. 3438 could be seen as an indirect effort to 
derail bills that could not be attacked directly. If there is a 
direct democratically-accountable challenge to a statute or 
regulation based on the merits, then people will know what is 
at stake. To simply stay a regulation upon a challenge would 
have an indirect effect and would not enhance democratic 
accountability.
    Thank you very much.
    Mr. Marino. Thank you.
    [The prepared statement of Mr. Buzbee follows:]
    
    
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                               __________
    Mr. Marino. We will now begin our 5 minutes each of 
questioning, and I will recognize myself to start the process.
    Mr. Clark, you suggested that judicial stays are hard to 
come by, even of high-cost rules, and that they may be getting 
even harder to come by. Could you provide me with more details 
about how hard it is and the trend that has been set?
    Mr. Clark. Sure, Your Honor. Sure. I'm sorry, Chairman 
Marino. I have an argument tomorrow in the Fifth Circuit so I'm 
in ``Your Honor'' mode. My apologies.
    Mr. Marino. Understood.
    Mr. Clark. But I would say, yes, in my experience, it's 
very difficult to get stays. You know, the most regularized 
jurisprudence in that area is from the D.C. circuit. And there 
really is an almost form order that they issue that's just a 
few paragraphs long. So it's not like, even if you're talking 
about a rule of Earth-shattering costs, you know, benefit 
implications or the ability to devastate an entire industry 
that you're going to get an opinion from the D.C. circuit about 
whether a stay will be granted or not.
    Essentially, all of the balancing of the four equitable 
factors takes place behind closed doors, and you just get a 
result of really stay yes or stay no. Or if there is a stay, 
some kind of definition of, you know, what exactly is being 
stayed if it's not the entire rule.
    And I think that one of the benefits of the bill that you 
have in front of you to do the automatic stay is that you're 
showing value judgment, which I think is entirely appropriate 
for Congress to make, that if you're talking about a rule that 
has enormous costs of $1 billion or more that those should 
essentially be not, you know--they wouldn't begin to be 
implemented until after the judicial review process is closed. 
I think that's entirely appropriate and would be an improvement 
over the current system.
    Mr. Marino. Thank you.
    Mr. Noe, your statement talks about rules for which it 
would be important to have protections like those in the REVIEW 
Act that doesn't rise quite to the revenue act of a $1 billion 
threshold. What kind of refinements or alternative tests could 
be added to the terms already in the bill to make sure that we 
are covering all the rules that really need this kind of 
automatic stay protection?
    Mr. Noe. Well, one suggestion that I would make, Mr. 
Chairman, is to focus not on the annual cost but the total 
capital cost. As I understand the bill, a large part of the 
driver here is to avoid some capital in complying with a rule 
that is then determined to be unlawful.
    And if you key it to total capital costs of not less than 
$1 billion, you would have captured the Boiler MACT rules I 
referred to. They had a capital cost of over $1.7 billion. But 
annualized over a 20-year period, as EPA does, they were 
estimated to be $860 million annually. So it would not have 
passed that test.
    One other suggestion I would make is to clarify that the 
cost includes both direct and indirect costs, because agencies 
sometimes say, well, it's not this, you know, national ambient 
air quality standard that caused the cost; it's implementation 
of it. And so direct and indirect cost, I think, would be 
helpful to capture that as well. But I'd be happy to work with 
your counsel on some specific language.
    Mr. Marino. Thank you.
    Mr. Brady, you alluded in your statement from your 
experience what regulation has done to the construction 
business. Could you elaborate on what you've experienced 
because of the regulation?
    Mr. Brady. A couple things. Thank you, Mr. Chairman. The 
regulation and changes in regulation are uncertainties in small 
business. Many of you probably have experience in small 
business, and any uncertainties is very difficult for a small 
business to perpetuate itself, whether there's jobs on the line 
or the regulation adds additional costs in the middle of a 
project or something like that is catastrophic to the small 
business.
    As an example, most recently, the DOL suggested the 
overtime, the new overtime rule. I have superintendents, and as 
I said in my statement, over 100,000 superintendents in our 
industry would be affected by that. And so I have to go back in 
my office and say, is it better for me to hire and keep that 
person on payroll or go into a subcontract position or a 
contract position?
    My superintendents have flexibility. They're salaried. They 
have flexibility on the workday. Many times they work during 
the weekends to get projects done, but they have flexibility to 
go take their kids to school or pick their kids up from the 
doctor or whatever the case may be. And, in fact, I think that 
employee would be hindered by that type of regulation, and 
certainly my business would be hindered.
    Mr. Marino. Thank you, sir. My time has expired, and I now 
recognize the gentleman from Georgia, the Ranking Member, Mr. 
Johnson.
    Mr. Johnson. Thank you. And thank you all, gentlemen, for 
being here today. And welcome, wife and daughter.
    H.R. 3438 defines a high-impact rule as any rule that the 
administrator of the Office of Information and Regulatory 
Affairs determines may impose an annual cost on the economy of 
more than $1 billion. This determination requires only a cost 
assessment and not an assessment of the money saved or the 
benefits of a rule; is that not correct, Mr. Clark?
    Mr. Clark. That's correct.
    Mr. Johnson. And so is it your opinion that agencies should 
only consider the cost and ignore the benefits when assessing 
the value of new regulations, Mr. Clark?
    Mr. Clark. No, Representative Johnson. I think that 
agencies should do an analysis of both costs and benefits, 
although the issue of whether they do that or not depends in 
part first on whether the organic statute permits them to do 
that or not. But typically if the organic statute is silent on 
that issue, then they would need to do an analysis of both cost 
and benefits. Here----
    Mr. Johnson. Well, H.R. 3438 would abandon any obligation 
to look at benefits and just simply impose the responsibility 
of determining whether or not the costs exceeds $1 billion. And 
if it does, then the law would require upon filing of a lawsuit 
within the 60-day period after adoption that the rule be 
stayed.
    Mr. Clark. So in response to that, I think I'd like to make 
two points: First is, it's not accurate that it would remove a 
consideration of benefits. That would remain part of the 
judicial review process.
    Mr. Johnson. Well, not a part of the administrative process 
in issuing a stay automatically upon filing of a lawsuit.
    Mr. Clark. Right. As a matter of the stay, it would focus 
only on costs. I would submit to you that I think that's an 
appropriate thing for Congress to do, one because----
    Mr. Johnson. Let me ask you this: Let me ask you this, if 
that law, if H.R. 3438 had been in effect at the time the 
National Highway Traffic Safety Administration issued the rule 
requiring air bags in automobiles, then there would have been 
an automatic stay applied to the adoption of that rule once the 
auto manufacturers filed a lawsuit. Correct?
    Mr. Clark. I don't know exactly what the cost impact of 
that would have been and----
    Mr. Johnson. Assuming that it would've had a $1 billion 
cost.
    Mr. Clark. For the sake of argument, grant that that was 
true, what I was about to say based on your prior question was 
that one of the other constitutional values I think, that this 
automatic stay serves are the kinds of values that go to the 
vesting clause, the fact that you are the law makers and not 
the agency.
    Mr. Johnson. Well, certainly. Certainly.
    Mr. Clark. So all that this does is reinforce essentially 
kind of nondelegation values.
    Mr. Johnson. Well, what this does is puts adoption of a 
rule into the purview of whatever the opposing party of the 
rule decides, whether or not to file a lawsuit or not. I mean, 
it would just automatically stay adoption of the rule.
    Now, Professor Buzbee, what is your assessment of what we 
have just heard from Mr. Clark?
    Mr. Buzbee. Well, I agree with your view that, a regulation 
needs to be assessed for both the cost and the benefits, and 
having an asymmetrical examination only if costs with an 
automatic stay basically doesn't follow the basic sound views 
about cost-benefit analysis----
    Mr. Johnson. And that's exactly what H.R. 3438 does, does 
it not?
    Mr. Buzbee. Yes, it does.
    Mr. Johnson. And with respect to H.R. 2631, isn't it a 
fact, Professor Buzbee, that parties are not bound by 
interpretation of agency rule. There's no binding legal effect 
on parties; isn't that correct?
    Mr. Buzbee. That is correct.
    Mr. Johnson. With that, I'll yield back.
    Mr. Marino. Thank you.
    The Chair recognizes the gentleman from California, 
Congressman Issa.
    Mr. Issa. Thank you.
    Mr. Johnson. Mr. Chairman, if I might----
    Mr. Marino. Just a moment.
    Mr. Johnson. Mr. Chairman, if I might, I do have some 
statements for the record: One is Ranking Member Conyers' 
statement, his opening statement.
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                               __________
                               
                               
                               
    Mr. Johnson. Also, a statement from William Funk, Louis and 
Clark Law School; also a statement from the NAACP calling on 
EPA to set a strong final ozone standard highlighting 
disparities and health impacts from air pollution. And also a 
letter from 40 health labor faith-based environmental justice 
and frontline community organizations calling on the EPA to set 
a strong final ozone standard; also a letter from 16 public 
health and medical organizations opposing any attempts to 
block, weaken, or delay Clean Air Act protections; and last but 
not least, an article in The Hill entitled ``Arguing About the 
Cost of Regulation But Ignoring the Benefits,'' by Stewart 
Shapiro. I would ask that these be placed into the record by 
unanimous consent.*
---------------------------------------------------------------------------
    *Note: The material submitted by Mr. Johnson is not printed in this 
hearing record but is on file with the Subcommittee, and can be 
accessed at:

      http://docs.house.gov/Committee/Calendar/
      ByEvent.aspx?EventID=104126.
    Mr. Marino. Without objection.
    Now Mr. Issa.
    Mr. Issa. Thank you. That was well worthwhile.
    And following on Ranking Member Johnson's line of 
questioning, I think it was a good line of questioning, but I'd 
like to take it in a slightly different way. And I'll go down 
with a question for everyone.
    Mr. Buzbee, do you think that there's anything wrong today 
with the current situation in which a $1 billion or greater 
cost to the private sector can be passed on by an agency years, 
even decades, after the passage of a law by Congress and, in 
fact, you must effectively do it or be in peril until or unless 
you prevail in court, perhaps for 5 years later? Just a yes or 
no. Do you think that that status quo today is okay?
    Mr. Buzbee. Well, I think that the supposition that there 
isn't an opportunity for a stay before the courts is not 
correct. The courts will----
    Mr. Issa. No. Well, you have to go to the court and get a 
stay.
    Mr. Buzbee. That's correct.
    Mr. Issa. Very few agencies think that their new rules are 
frivolous enough for them to grant the stay. So by definition, 
you have to go to the court which means you have a period of 
time and a high standard. Just yes or no, do you think that's a 
good standard today?
    Mr. Buzbee. Well, I think many agencies actually add lead 
time----
    Mr. Issa. Professor, I want to know if you think the 
current standard, not what benevolent government bureaucrats 
do, you know. I'm not from the side of the aisle that believes 
in benevolent government bureaucrats. So excluding all the good 
things that sometimes happen, do you think the current balance 
of what can happen is okay? Yes or no, please.
    Mr. Buzbee. I believe the administrative law doctrine is 
quite sound in this area.
    Mr. Issa. Thank you.
    Mr. Clark, I would go down and just say, how would you 
answer that yes-or-no question?
    Mr. Clark. I think, Representative Issa, that that's an 
intolerable status quo.
    And if I could just supplement a little bit to the answer I 
wanted to give to Representative Johnson----
    Mr. Issa. You can in a second. Let me just get down this 
and then I'll get back to you.
    Mr. Noe. Congressman, I think the status quo is very 
problematic as well.
    Mr. Issa. Mr. Brady, you are living under these laws. I 
assume your answer is you don't think the status quo is 
particularly good.
    Mr. Brady. Status quo is not good for small business.
    Mr. Issa. Okay. So 75 percent of the audience here today 
says that they want to rebalance this.
    Now, the act moves the burden, if in a sense, the other 
direction, doesn't it, in the case of multibillion. And 
agencies, including ones that my former Committee next door 
looked at, often underestimate. So a multibillion dollar one 
effecting dust for farmers and so, can sometimes be guessed at 
a very low level and thus circumvent the $1 billion 
responsibilities.
    Mr. Clark, you're familiar with some of those cases where 
they guess low?
    Mr. Clark. Yes. Or the cost-benefit analysis, in my view, 
sometimes is often deliberately skewed.
    Mr. Issa. So as we look at this legislation, I'm going to 
ask you a series of--one question. I'm going to get back to Mr. 
Clark, give you that opportunity to follow up.
    But as we look at the rebalancing, isn't the obligation of 
this Committee, recognizing we're only dealing with regulations 
that come out that essentially are adding to a law that is more 
than a year old, a new regulation in which they did not do it 
in the original passage of law--I think it's important, that 
limitation. We're not dealing with the act of Congress and then 
the rulemaking afterwards. We're dealing with second guessing 
and new thoughts on legislation that could be decades old.
    Should we consider for a smaller than $1 billion still 
having an expedited ability to get to the court for that 
decision, and if so, should we consider that the court instead 
of having the burden be irreparable harm have a simple balance 
of cost and benefit?
    And I ask that for a reason, because if it's $100 million 
and on balance it costs more than it saves, it may not be 
irreparable harm. But as was said by the Chairman in the 
opening statement, currently, just having it cost you a lot of 
money and doing very little benefit doesn't happen to be a 
standard that the court would consider. So as much as I like 
the billion, I like the shifting.
    My question to you, and I'll start with Mr. Clark is, 
should we consider a balance that puts the court in an 
expeditious fashion in a position to evaluate sooner and on an 
expeditious basis, even if it's below $1 billion? Mr. Clark.
    Mr. Clark. I think expedition would be helpful. Although I 
would say that since a lot of these rules go to the D.C. 
circuit, it's not as if their caseload is particularly high. 
And then I'd also say that----
    Mr. Issa. I don't believe it--they're still working on fast 
and furious from 2010.
    Mr. Clark. True enough.
    Mr. Issa. Mr. Noe.
    Mr. Noe. I like the idea, Congressman, and I'm happy to 
welcome Professor Buzbee to the regulatory reform movement. It 
sounds like he likes cost-benefit analysis, and I would 
encourage Congress to require that by statute.
    Mr. Issa. As do I.
    Mr. Brady, you have to live under these laws, regulations 
that agencies come up with years after laws are passed. How do 
you feel about them?
    Mr. Brady. Well, you're exactly right. And the one case 
that I quoted earlier is the Department of Labor on the 
overtime. They scored it at a $200 million impact cost. That 
was a direct administrative cost. They didn't take into effect 
the cost that an employer pays the employee, which is well over 
$1 billion. So yes, we would support--this is a great first 
step, but we would support looking at that cost-benefit 
analysis even under $1 billion.
    Mr. Issa. Mr. Chairman, I think Mr. Buzbee wanted to weigh 
in, and I don't want to cut him off unfairly. But Thank you, 
Mr. Chairman.
    Mr. Marino. Go ahead, Mr. Buzbee.
    Mr. Buzbee. No, thank you.
    Mr. Marino. No? All right.
    The Chair now recognizes the gentleman from New York, 
Congressman Jeffries.
    Mr. Jeffries. Thank you, Mr. Chairman. And I want to thank 
the witnesses for their presence here today, their testimony.
    Let me just start with Mr. Buzbee. Am I correct that most 
interpretive rules are promulgated most often at the request of 
the industry?
    Mr. Buzbee. Yes, that is correct.
    Mr. Jeffries. And these requests are generally made to 
address regulatory uncertainties; is that correct?
    Mr. Buzbee. That's correct, it's both to address regulatory 
uncertainty and then, agencies also usually desire to have 
consistency and implementation and enforcement and, hence, both 
business and agency see benefits to clarity in their 
interpretive rules.
    Mr. Jeffries. So what would the risk be, if any, if we were 
to move forward and subject revisions to the interpretive rules 
related to notice-and-comment rulemaking?
    Mr. Buzbee. I think the most predictable effect is the 
backfiring I talked about. If you add process, impose new 
process on agencies, you know, examination of past, similar 
proposals so that agencies will avoid that additional process, 
so instead of having lots more notice and common rulemaking, 
you probably have fewer of these clarifying interpretive rules 
and more policymaking through adjudications and more ad hoc 
conversations.
    Mr. Jeffries. And what, if any, benefits are there as it 
relates to interpretive rules for both agencies, but more 
significantly to industries that they regulate?
    Mr. Buzbee. In my experience, both as a professor and then 
also when I was advising the industry, is there's great 
difficulty getting, figuring out the answer to particular 
questions, so typically agencies seek--sorry. Businesses seek 
more guidance, not less, and they really would like to have 
agencies say what they wanted.
    I was at a proceeding years ago, and a home builder said, I 
don't care what the rules are. I want to know what the rules 
are, and if I can know what the rules are, then I can comply. 
And interpretive rules tend to bring that sort of clarity, and 
that's the idea behind them.
    Mr. Jeffries. Now, Mr. Brady, you mentioned that, I think, 
uncertainty is catastrophic to a small business; is that 
correct?
    Mr. Brady. Yes.
    Mr. Jeffries. And would you say that there's uncertainty as 
it relates to the period of time in early 2013 as to whether we 
were going to fall over the fiscal cliff or not? Is that 
uncertainty that was----
    Mr. Brady. There was a lot of uncertainty.
    Mr. Jeffries. And would you say there was uncertainty as 
relates to the impact of the sequestration cuts that have been 
imposed upon this country as a result of a deal that was struck 
several years ago that creates a climate that could be adverse 
to small businesses in America?
    Mr. Brady. In regards to the sequester?
    Mr. Jeffries. Yes.
    Mr. Brady. Potentially, yes.
    Mr. Jeffries. When the government shut down in October of 
2013, which I believe it was 16 days, it cost the economy about 
$24 billion in lost economic productivity, was there 
uncertainty as to the chaos that was imposed upon us as a 
result of this addiction with the Affordable Care Act repeal? 
Was that uncertainty problematic in terms of the government 
shutdown?
    Mr. Brady. Yes.
    Mr. Jeffries. And we've been engaged in this process of 
serial flirtation with defaulting on our debt, which would be 
the first time that we would default in our Nation's history 
were that to happen, even though we're charged constitutionally 
with protecting the full, faith, and credit of America. Does 
the serial flirtation with not raising the debt ceiling and 
defaulting on our debt, aside from the catastrophic economic 
consequences that would be caused, does that create a level of 
uncertainty that is problematic for small businesses across 
America?
    Mr. Brady. We are a little over my pay grade on the debt 
limit, but I must----
    Mr. Jeffries. I think that's the easiest question of all.
    Mr. Brady. But I must answer the interpretive--there's 
uncertainty in interpretive rules. And for 29 years we worked 
under interpretive rules. Those interpretations can change from 
Administration to Administration, and that's the uncertainty 
with an interpretive rule that hasn't gone through the 
rulemaking process, there's uncertainty.
    Mr. Jeffries. Now Professor Buzbee, you mentioned that H.R. 
3438 would cause legal uncertainty. Can you just elaborate on 
that dynamic and why that would be problematic for the 
industries that are seeking relief from regulation?
    Mr. Buzbee. Well, one important aspect is by not defining 
what counts as cost. If this became law, there's a lot of 
different ways you can define cost. Some people call for cost-
effective regulation. Virtually everyone says that if you're 
going to be cost-benefit analysis, you don't just look at 
direct effects, you look at all of societal costs and benefits. 
Mr. Noe, years ago worked on the idea that you should look at 
all societal costs and benefits and then look at the net of 
them to figure out if regulation is a good idea. This bill, by 
saying you stay any regulation by just looking at costs might 
stay a regulation that might be incredibly important and leave 
people very vulnerable.
    Mr. Jeffries. Thank you, Mr. Chairman. I yield back.
    Mr. Marino. Thank you. The Chair now recognizes the 
gentleman from Michigan, Congressman Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. And thank you to the 
panel for being here today, and I appreciate your testimony.
    I'd like to begin, if I could, with Mr. Clark. Critics of 
the REVIEW Act say that it will stop urgent rules in their 
tracks. Professor Buzbee indicated that that added process 
might discourage rulemakers also. But in your written 
testimony, I thought you provided the perfect answer for that, 
that statement, when you indicated that if a legislative rule--
if a rule was that important, that Congress should take 
initiative and pass the statute as provided in our 
constitutional duty. I just want you, if you wouldn't mind, to 
expound upon that. And doesn't your answer highlight how upside 
down our modern concept of how to legislate and how the process 
works? And it seems to me that--of course, I'm new here, so I'm 
learning as I go, but as I sit through these hearings, I note 
that the power of Congress has slowly been handed over to 
unaccountable bodies, and we in Congress have very little 
authority to step in.
    And I listened to the questioning earlier from my colleague 
across the aisle, who suggested that all these other 
uncertainties, when he's talking to Mr. Brady out there, that 
were caused by Congress. Certainly, there are uncertainties, 
but at the same time Congress is accountable. Ultimately, we 
have to face the people that brought us--that sent us here. 
Agencies don't have that same accountability.
    So I would like you to talk a little bit about that answer. 
And if you wouldn't mind, just expound upon your thought on the 
current state of our system.
    Mr. Clark. Yes. Thank you, Representative Bishop. I agree 
with all of those remarks. And I think it's precisely true. If 
you're talking about a monumental regulation that would impose 
more than a billion dollars of costs, to essentially, you know, 
say if that truly is seen as something that's urgent, you must 
have whatever the health and safety benefits or other benefits 
of the rule are, that the easy answer to any objection like 
that is for Congress to pass that law, that is clearly more 
legitimate under our constitutional system than to have it be 
done by a delegated power.
    And this allows me I think, to provide the rest of the 
answer to Representative Johnson, which is, it's not unfair to 
have an asymmetric consideration of costs here, because all you 
are doing as Representative Issa recognized, is flipping the 
burden of proof. And I think you're flipping the burden of 
proof to be more in the constitutional direction. If a rule 
imposed more than a billion dollars in costs, make the 
regulators--don't presume that they are correct in their cost 
benefit analysis. Make them prove that the benefits exceed the 
costs through the judicial process, and don't let a rule like 
that go into effect until the judiciary has agreed, as an 
independent check on that delegated power with the agency 
imposing a rule of that magnitude.
    Mr. Bishop. Thank you very much.
    I think, if I could, also to turn to Mr. Brady. And I want 
to thank you for being here. And thank you for representing 
small business, because I know that small business is really 
the most impacted by this increased regulation and this 
regulatory environment.
    In your testimony, you stated that for 29 years the EPA 
used various interpretive rules in lieu of going through the 
rulemaking process for the Clean Water Act. And we hear, in our 
districts, all about that process, especially with regard to 
the Clean Water Act. And I'm wondering if, after all this, did 
that period offer any clarity or certainty in your industry?
    Mr. Brady. The interpretive rules?
    Mr. Bishop. Yes.
    Mr. Brady. Well, it produces clarity at the moment. What it 
also produces uncertainty as to where it's moving. I mean, the 
Supreme Court issued two rulings on interpretive rules, on the 
Clean Water Act, and yet, those interpretive rules were not 
substantially changed according to the Supreme Court's rules. 
And there was no public hearing, no requirement to create or 
give input from the public as the EPA is supposed to do. And so 
those regulations, interpretive, do not necessarily create the 
clarity long term that a business needs.
    I will also say that one shoe doesn't fit all. And as 
somebody suggested earlier, interpretive rules are based on 
industry asking questions for clarity, and that may be clarity 
to a large business, but not a small business.
    Mr. Bishop. Thank you, sir. And I yield back.
    Mr. Marino. Thank you. The Chair now recognizes the 
gentleman from California, Congressman Peters.
    Mr. Peters. Thank you, Mr. Chairman. My colleagues know 
that I practiced law in this field before I got into 
government, and so I'm pretty sympathetic with some of the 
stuff that you are talking about.
    And, Mr. Brady, I want to ask you a question, couple of 
questions, just to make sure I understand what the objection 
is.
    You gave an example about overtime rules that might take 
effect for a business who's maybe already into a project, and 
so I understand the problem is the law or the courts. And you 
couldn't recover those. Obviously, if you were forced to pay 
these wages because a new rule came into effect, you were to 
pursue, overturn the rule, you would still be out the money. 
Would that not be irreparable harm under the law, and you are 
just not getting an injunction from the court?
    Mr. Brady. I think that it would be irreparable harm, but 
that is a very tough thing to prove and a very tough thing for 
a small business to get a stay based on that.
    Mr. Peters. Right. But I'm thinking that maybe the 
objection is more that the courts are not doing their jobs 
under the current standard by recognizing, this is irreparable 
harm; this is money I can't get back, might be a lot of money. 
In this micro level, forget about the billion dollars, it's 
irreparable harm to that business. And I would say that I would 
agree with that, but the problem is maybe the courts aren't 
observing that.
    Mr. Brady. Well, from the law perspective, I don't mean to 
speak from an expert position, but, again, you're right, the 
courts have not been willing to issue those stays----
    Mr. Peters. Okay.
    Mr. Brady [continuing]. When we argue irreparable harm.
    Mr. Peters. Okay. The other thing is you talked about the 
idea of a law coming into effect while a project was going on. 
Has there ever been an attempt to grandfather projects that 
are, say, permitted or under construction so that they are not 
subject to new regulations, and is that something that you 
think would be constructive?
    Mr. Brady. It could be constructive, but this law, the 
overtime law, is indexed every year per the law. So that means 
that we have to change those--we don't know what that index is 
until January 1st.
    Mr. Peters. Well, in this particular case, there would be--
that wouldn't be applicable. But I guess the question you 
raised in my mind was whether, you know, you're doing a project 
and all of a sudden the law changes, maybe the project would be 
protected from that through the duration of the permitting?
    Mr. Brady. On a long-term project, that may be able to be--
--
    Mr. Peters. That's not the issue.
    Mr. Brady. But from a short-term perspective, there's still 
that uncertainty as to what you are dealing with. And whether 
or not that person is an employee still, versus a contract 
person.
    Mr. Peters. Right.
    Mr. Noe, I wanted you to give you a chance to respond to 
Professor Buzbee. So with respect to these letters that you get 
from an agency, it was often my experience that you desperately 
wanted the agency to tell you what they meant by this, how they 
were going to treat it so you can count on it. And I understand 
the frustration you state of, you know, you have been relying 
on a particular interpretation for many years, all of a sudden 
the agency changes it, and that's got to stink. I get that.
    But on the other side, how do you deal with the fact that 
you might further bureaucratize this process by telling them 
that if you do give us an answer to this question, we might sue 
you? And the thing we talk a lot about here is empowering 
people to make decisions. And it seems to me--so I would just 
like you to sort of respond to the professor about how that 
would be----
    Mr. Noe. Yes. Thank you for that question, Congressman. And 
I would say that of the witnesses here who work in the business 
community, we all support these bills. And the reason is, yes, 
we want clarity; yes, we do ask agencies for interpretations, 
but we also want due process. And I think that's what the bill 
would provide.
    We also find it very hard to operate in a regulatory system 
where there's actually now an incentive and agencies are going 
in this direction to hollow out their legislative rules. A lot 
of the controversial issues are not in those rules. They pass 
through a one view review. You don't have an objection here, 
because once they're object to and along comes an interpretive 
rule, without due process, without notice and comment, and then 
they can do a 180 and say one day our policy was X, and the 
next day it's not X.
    I can give you a specific example where you can imagine an 
agency issuing a broadly-worded legislative rule with a 
preamble that says, what we mean is X. They could come out, 
under mortgage bankers, later with a letter or something that 
says not X.
    Mr. Peters. I actually think we--I agree on the phenomenon, 
and I actually have a lot of examples that I get steamed about 
where the government gets away from what Congress intended, the 
government actually is fighting with its own citizens of its 
own businesses. It drives me crazy.
    I just want to--I have 14 seconds left, so I won't be able 
to talk about it now. But I would love to talk to you more 
about how to preserve the flexibility, to answer a small 
business's question about what the heck am I supposed to do, 
because that's often how it comes up, without doing this thing 
that you describe, which is to really--to be unfair, to be 
inconsistent with the law, which is something that deserves a 
remedy. I just don't think we've landed the plane on that yet 
and I would like to talk about it more.
    Mr. Chairman my time has expired.
    Mr. Marino. The Chair now recognizes the gentleman from 
Georgia, Congressman Collins.
    Mr. Collins. Thank you, Mr. Chairman.
    Again, this is--and I go out to both Mr. Bishop and also 
Mr. Peters in his question. I think this is a problem that most 
people are just struggling. Mr. Brady, that's why in a panel 
like this I appreciate you being here and actually having the, 
you know, what I call the boots on the ground. You have to live 
with this all the time.
    I've had in my office just recently--it's not just a matter 
of also the interpretive language, it's also the matter of 
getting the actual agencies, if they are going to do a rule to 
actually do the rule. And I've got businesses right now that 
are having to make multi-million dollar decisions based on the 
salt or lack of salt in processed foods that are going to 
school lunch programs. They are having to make the decision 
now, because actually, business understands that you actually 
have to plant your crop before you get a harvest. Government 
doesn't understand that.
    Government, if you work in the little cubicles down, which 
God love them, they are great folks, they need to be smaller in 
size, but they work down here for the good of folks, that's not 
the way it happens. They just can go on because they are never 
held accountable to any standard. They are accountable to a 
piece of paper that's brought out at the end of the day.
    Mr. Buzbee, you said something that is really interesting 
to me. How in the world--and again, you have to understand, if 
you've heard me on the floor, and you've heard me here, I am 
not at all concerned about imposing a little bit of work on an 
agency. That is not a problem. Okay. My problem is when you 
said to impose due process or a substance, actually would be a 
problem, because then they would begin to skirt. I want you to 
explain a little bit more what you were saying there?
    Mr. Buzbee. Sure.
    Mr. Collins. Because that right there is just terrible.
    Mr. Buzbee. Sure. I would be happy to. Supreme Court 
doctrine going back, actually, 1940's and 1950's which make 
clear, agencies can make policies in several different modes 
and Administrative Procedure Act has also long recognized that. 
And so when you add a regulatory burden on one of the options 
here, interpretive rules, agencies will look at the other 
options they have. And one of the options agencies have is to 
do things in a more ad hoc basis, or possibly, other the other 
forms of non-notice and comment rules. And so what may end up 
happening is more ad hoc and less known law, and that's been 
long established that agencies have that choice.
    The law doesn't force them to do notice-and-comment 
rulemaking, even if people think that would be a good idea in 
some areas. Some statutes do. Some statutes say regulations in 
a particular area have to go through notice-and-comment 
rulemaking, and often with deadlines, and then agencies do 
them. But a lot--usually interpretive rules are two or three 
layers down below a high-stakes promulgated regulation.
    I just have one example that there was mention of the 
waters of the United States rule in Rapanos. The Supreme Court 
came with an extremely confusing decision. The Army Corps of 
Engineers and EPA immediately, or within a few months, tried to 
come out with a guidance document interpreting that ruling so 
people would understand how they understood an extraordinarily 
confusing decision. And not everyone would have necessarily 
agree with all aspects of it, but it brought greater clarity to 
the law.
    Mr. Collins. But I think what we're looking at here, and, 
Mr. Brady, actually brought that--you know, even though you had 
a Supreme Court ruling that did sort of lay it out and, 
frankly, there were many people who understood what the Supreme 
Court was doing. I mean, we can lawyer everything, I lawyer 
everything to death, and you can as well. That's why there's a 
lot of problems in this.
    The problem is interpretive rules have the full--they 
formally through court cases, lack the full force and effect of 
the law.'' But, you know, from a builder perspective, how many 
times have you had a building inspector come to your home or 
your building and give you an interpretive ruling on how high a 
fence was to be or how much--who is the law at that point?
    Mr. Brady. Well, they are usually the law, because they 
won't give me the sticker unless I interpret it the same way 
that they do.
    Mr. Collins. Exactly. This is the problem we're getting at. 
And I'm not even sure anybody would like to take this on, is 
when we're looking at these, there could be issues--and, Mr. 
Clark, I think you had brought up an issue of actually doing it 
below a billion. Real quickly, is there a place where you would 
draw the line, on--Mr. Noe, either one--that would broaden the 
applicability of the REVIEW Act to below $1 billion. Is there a 
line below $1 billion? Like a number, do you have a number in 
mind? Mr. Clark. Mr. Noe.
    Mr. Noe. I would recommend--you know, I respect if the 
Committee wants to have it only apply to the very small handful 
of rules it applies to now, but I would hope a least it's clear 
that it's total capital cost, whatever the number is. I think, 
frankly, there are a number of rules, though, that could effect 
small business or other entities that when it hit that 
threshold. So it's for you to consider whether you'd want to 
lower that further.
    Mr. Collins. Do all have a number in mind? Mr. Clark, do 
you?
    Mr. Clark. Yes, I would say that, you know, just as a 
quick, you know, thing. Suppose you considered it to be half, 
you know, $500 billion on a threshold that's ties to small 
business where that--you know, an impact of that magnitude 
could be catastrophic for small businesses so that you have 
sort of one speed for large businesses and one speed for small 
businesses.
    Mr. Collins. Well, I think the biggest thing here, and I 
tried to get something from all of you here, as I'm closing up 
here is, simply is these rules, these interpretive rules, 
whether it's before the billion cap, non-billion cap, we're 
dealing with issues of real-world significance on. There is a 
cost-benefit analysis. There is something that to say that you 
do need this billion dollars and decide if we are going to have 
a suit or not, because otherwise, you can stop things. And for 
the interpretive reason, this says we need to take a look back. 
And I don't see anything wrong with an agency of any kind doing 
a comment open period so that we can get some of this 
clarified.
    This is a good reason for this hearing, and, Mr. Chairman, 
I yield back.
    Mr. Marino. The Chair now recognizes the gentleman from 
Texas, Congressman Ratcliffe.
    Mr. Ratcliffe. Thank you, Chairman Marino.
    Gentlemen, thank you all for being here today. The 
industries that you represent are essential to manufacturing in 
this country both with respect to job creation and economic 
growth, and they're certainly vital to the families in the 
fourth congressional district of Texas, which I'm honored to 
represent. So from my perspective, this hearing couldn't be 
more timely or more critical.
    And, frankly, in hearings like this, I'm at a loss when I 
hear my colleagues on the other side of the aisle express 
concern about reforms that would force regulatory agencies to 
be more deliberative and more thoughtful, as if that's 
troubling or a bad thing. And I couldn't agree with you more, 
Mr. Clark, when you said that this is really a separation of 
powers issue. And I would certainly hope that folks on both 
sides of the aisle would agree that we'd be better off in this 
country if we were solving the problems that need solving in 
our communities, not by regulations legislated by unelected 
bureaucrats at unaccountable agencies, but instead by statutes 
legislated by an accountable Congress.
    So let me turn to you, Mr. Noe, because the impact of your 
members, those in the paper and the wood products manufacturing 
industry, is a big economic driver in the fourth congressional 
district of Texas. I want to make sure that those businesses 
and the families that they represent aren't crushed by 
regulations that require not just millions, but in some cases 
billions of dollars in compliance costs. In your testimony, you 
talked about sustainability efforts that the paper and wood 
products manufacturing industry has had to take in recent 
years, and you talked about costly regulations from the Federal 
Government, and additional $10 million in new capital 
obligations that you expect will come in the coming years, and 
that that is a regulatory burden that you called unsustainable.
    With that in mind, do you think that the REVIEW Act that 
we're considering, H.R. 3438, would actually incentivize 
agencies to work with stakeholders in the paper and wood 
manufacturing industry before issuing regulations thereby 
resulting in more legally sound rules and, in fact, 
significantly reducing regulation that we have in this country?
    Mr. Noe. I absolutely do, Congressman, and I think you make 
a good point. I think what's being lost in the discussion about 
you should consider benefits as well as costs, is that we're 
talking about regulations that are later declared to be 
unlawful. Okay. And that creates tremendous waste of limited 
resources, which effects ability to hire, capital expansion. In 
other countries, to your point, my understanding, and I'm not 
an expert in foreign regulation, but there's much more of an 
accommodation, the regulators working with the industry on 
capital planning for highly costly rules. We have a very 
adversarial legal system where that doesn't happen as much as 
it should. And when it does happen, the stakes can be avoided.
    The airbags rule that Ranking Member Johnson referred to, 
for example, you know, NHTSA actually originally made a mistake 
in those rules. And it considered the risks from high-force 
airbags, and there were a number of fatalities because of that. 
I'm not saying--I don't know enough of that to say the REVIEW 
Act could have to avoid that, but I know it would avoid 
mistakes that are made. And so we're talking about a bill that 
could lead to sustainable regulation, increase the legal 
soundness of it and really avoid mistakes, and that's where 
you're going to get real benefits.
    If I could, I just want to show you from a distance. This 
is a picture of the clean air regulations, just one program of 
one agency that our industry faces in the next 10 years. This 
is what people face when they run companies in this country, 
and it's a scary picture
    Mr. Ratcliffe. Thank you, Mr. Noe.
    Mr. Brady, your industry, the home builders that is 
important in my district and every district I would hope in 
this country. I want to give you an opportunity to expound on 
Mr. Noe's comments and answer the same question.
    Mr. Brady. Well, when I suggest 25 percent of the costs of 
a home is regulatory, it can tell you the burden that the 
regulatory environment puts on the cost of a product, which is 
an affordable housing issue, being able to produce a product in 
an affordable price. It affects the amount of people that I can 
put on the payroll, the amount of houses that I build and 
employ people to build those.
    The regulatory burden--and as I said in my statement, we 
need to protect workers; we need to protect the environment, 
but the regulatory burden on our industry alone, is cutting 
affordability; it's cutting job creation. We have 240 members 
of our association 6, 7 years ago. We have 140,000 now, because 
many of those businesses, they are not around any more, in part 
because of the regulatory burden they have to live by.
    Mr. Ratcliffe. Well, I thank the gentleman. I wish I had 
more time to expound and highlight on these issues today. But I 
see my time has expired, so with that, I yield back Mr. 
Chairman.
    Mr. Marino. Thank you. Seeing no other Members present, 
this concludes today's hearing. I want to thank the witnesses 
for being here. It's very enlightening.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record. This hearing is adjourned.
    [Whereupon, at 11:31 a.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 Edward Brady, President, 
Brady Homes Illinois, testifying on behalf of the National Association 
                            of Home Builders


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     Response to Questions for the Record from William W. Buzbee, 
           Professor of Law, Georgetown University Law Center


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 [all]