[Senate Hearing 114-477]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-477

                REVIEWING INDEPENDENT AGENCY RULEMAKING

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

                                 HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
               REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 8, 2016

                               __________

                   Available via http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs
                        
                        
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                  Christopher R. Hixon, Staff Director
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
                     Laura W. Kilbride, Chief Clerk


       SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                   JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona                 HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio                    JON TESTER, Montana
MICHAEL B. ENZI, Wyoming             CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska
                     John Cuaderess, Staff Director
                  Eric Bursch, Minority Staff Director
                      Rachel Nitsche, Chief Clerk
                            
                            
                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Lankford.............................................     1
    Senator Heitkamp.............................................     3
    Senator Ernst................................................    10
    Senator Portman..............................................    11
Prepared statement:
    Senator Lankford.............................................    31
    Senator Heitkamp.............................................    33

                               WITNESSES
                      Thursday, September 8, 2016

Robert R. Gasaway, of Counsel, Kirkland & Ellis, LLP.............     5
Adam White, Fellow, Hoover Institution...........................     7
Cary Coglianese, Ph.D., Edward B. Shils Professor of Law and 
  Professor of Political Science, Director, Penn Program on 
  Regulation, University of Pennsylvania Law School..............     8

                     Alphabetical List of Witnesses

Coglianese, Cary Ph.D.:
    Testimony....................................................     8
    Prepared statement...........................................    69
Gasaway, Robert R.:
    Testimony....................................................     5
    Prepared statement...........................................    34
White, Adam:
    Testimony....................................................     7
    Prepared statement...........................................    48

                                APPENDIX

Report submitted by Adam White...................................    87
Responses to post-hearing questions for the Record:
    Mr. White....................................................   121
    Mr. Coglianese...............................................   126

 
                REVIEWING INDEPENDENT AGENCY RULEMAKING

                              ----------                              


                      THURSDAY, SEPTEMBER 8, 2016

                                 U.S. Senate,      
                        Subcommittee on Regulatory,        
                      Affairs and Federal Management,      
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
room 342, Dirksen Senate Office Building, Hon. James Lankford, 
chairman of the Subcommittee, presiding.
    Present: Senators Lankford, Portman, Ernst and Heitkamp.

             OPENING STATEMENT OF SENATOR LANKFORD

    Senator Lankford. Good morning. Welcome to today's 
Subcommittee hearing entitled ``Reviewing Independent Agency 
Rulemaking.'' This is the 13th hearing in the regulatory 
process that this Subcommittee has held during this Congress. 
All our prior hearings the Subcommittee has reviewed the 
regulatory actions of executive branch agencies. Today we turn 
to the rulemaking record of independent regulatory agencies.
    First of all, I want to recognize Senator Portman for his 
work on this topic, and as the Subcommittee moves toward 
addressing shortcomings independent agencies regulate, we have 
Senator Portman to thank for his tireless work in this area and 
the foundation he has laid regarding common sense solutions to 
fixing problems associated with independent agency rulemaking.
    Independent regulatory agencies were conceived to 
accomplish varied missions, but they have one thing in common. 
They were structured to be somewhat independent from the 
influence of the President, the Administration, or originally, 
the Judiciary. However, independent agencies should not be 
exempt from oversight. When an agency is independent of the 
executive branch, it does not require that they are also 
independent of Congress and the American people. Congress 
created each independent agency and Congress still has the 
authority to oversee the agency they created. No public entity 
should be exempt from oversight.
    Independent agencies take regulatory action just like their 
executive branch counterparts. They promulgate rules, issue 
guidance, take enforcement actions. Accordingly, independent 
regulatory agencies should be held to the same procedural 
standards as executive branch agencies. I would actually argue 
that independent regulatory agencies require a heightened level 
of oversight over their regulatory regimes because the 
Executive Orders (EO) that have structured every aspect of the 
rulemaking process for executive branch agencies, and have been 
endorsed by both Democrat and Republican administrations for 
decades, do not apply to independent regulatory agencies.
    Part of the question we will have today is why not? 
According to the Office of Management and Budget (OMB's) 2015 
Report to Congress on the benefits and costs of Federal 
regulations from 2005 through 2014, Federal agencies issued 549 
major rules. Independent regulatory agencies were responsible 
for 141 of these rules, which equates to roughly 25 percent of 
rulemaking.
    There is cause for concern when it comes to the analysis to 
support those rules. In the same report, OMB found that in 
2014, only 10 of the 16 major rules issued by independent 
agencies provided some information on the benefits of the cost 
of regulation and that independent agencies continue to 
struggle in providing monetized estimates of benefits of cost 
and regulation.
    Another study published by the independent well-respected 
Administrative Conference of the United States in 2013 found 
that no major rule issued by an independent agency in 2012 
contained a complete cost benefit analysis. Many of these rules 
that are issued without a cost benefit analysis are financial 
regulations issued by the Consumer Financial Protection Bureau 
(CFPB), the Commodity Futures Trading Commission (CFTC), the 
Securities and Exchange Commission (SEC) and the Federal 
Deposit Insurance Corporation (FDIC) and have a direct impact 
on the smaller community banks that small business owners and 
farmers depend on.
    Take for example the CFPB's qualified mortgage rule. CFPB 
designed this in an attempt to extend credit only to those who 
can afford to repay a mortgage, preventing another mortgage 
crisis. Instead, the agency failed to monetize any of the costs 
and benefits and issued a one-size-fits-all rule that has 
crippled the ability of community banks to issue mortgages. 
Rules like this show that when agencies are not required to 
conduct a full cost benefit analysis before issuing a 
regulation, unintended consequences were likely to follow, such 
as uncertainty among community banks that limits their ability 
to issue credit to farmers and small businesses. Although 
community banks account for only 22 percent of all current 
loans, they hold three-quarters of all agricultural loans and 
half of all small business loans. Uncertainty for community 
banks means uncertainty for job creation.
    This Administration has made efforts to urge independent 
regulatory agencies to improve some of their regulatory 
processes. In July 2011, the President issued Executive Order 
13579, which urged independent regulatory agencies to comply 
with the analytical requirements that applied to executive 
branch agencies. Requiring independent regulatory agencies to 
follow the analytical requirements of Executive Order 12866 and 
13563 would be a reasonable and significant step toward 
achieving transparency and predictability for regulatory 
entities.
    We are pleased to have three witnesses today, and I look 
forward to hearing from each of you and what Congress can and 
should do to ensure that all agencies work for and hold 
accountable these independent agencies for the American people. 
With that, I recognize Ranking Member Heitkamp for her opening 
remarks.

             OPENING STATEMENT OF SENATOR HEITKAMP

    Senator Heitkamp. Thank you, Mr. Chairman. Today's hearing 
builds on the Subcommittee's thorough investigation of the 
current State of Federal rulemaking. Together, we have explored 
virtually every aspect of the rulemaking process in a 
comprehensive and, I believe, bipartisan way. We have sought 
out views and opinions from individuals across the political 
spectrum in order to identify sensible steps Congress should be 
able to agree upon to make needed improvements to the 
regulatory system.
    Our focus today is independent agencies which occupy a 
unique position in our national government. They were 
deliberately, deliberately established by Congress to operate 
independent of the President. Among other things, they are 
charged with vital public health and safety functions, ensuring 
economic and financial stability and serving as stewards and 
guardians of fairness and equity on a wide range of public 
policy issues. These are critical responsibilities and those 
responsibilities will certainly require independent agencies to 
issue regulations when authorized or required by statute.
    What I want to explore today is how Congress can ensure 
such rulemaking is of the highest quality. I remain committed 
to making the Nation's regulatory system more transparent, 
efficient, effective and certainly accountable. First, Congress 
cannot lessen its own authority through inaction on critical 
issues by blurring the lines between legislative, judicial and 
executive functions. In some cases though, excessive delegation 
to agencies, I think Congress has ceded their responsibility. I 
do not think there is any doubt about it.
    The clearest example that I can provide is Waters of the 
United States, where clearly over decades of litigation and 
decades of rulemaking there is not a clear answer. One would 
imagine in that factual situation Congress would see the 
important role of stepping in and providing the guidelines that 
need to be provided, the laws that need to be provided. But yet 
we do not do it because we would rather pound the table and 
complain about regulatory agencies.
    Simply stated, Congress must pass good laws by taking full 
responsibility for clearly articulating priorities and goals in 
legislation. If our statutory directives are unambiguous, we 
will not see as many claims of agency overreach. Second, while 
rulemaking is often mandated by statute, we must continue to 
understand the benefits and costs of regulation. That means 
that Congress must fulfill its obligation to the American 
people through oversight of the regulatory process and this has 
to include independent agencies whose rules in many cases have 
more impact on today's business world and today's health and 
safety world.
    To be clear, independent agencies face significant 
challenges in quantifying costs and benefit in the same manner 
as executive agencies. Nevertheless, in my opinion, their 
regulatory decisions should be based upon good regulatory 
analysis. It is not always easy to quantify cost and benefits. 
Decades of scholarship have revealed that it is often far 
easier to tabulate costs for regulation and much harder to 
capture benefits and quantify benefits.
    That just means that there will always be a role for 
quantifying cost and benefits in the regulatory analysis. We 
should be wary of imposing a one-size-fits-all requirement 
which would have serious unintended consequences. We must also 
be mindful of the regulatory resources if we expect agencies to 
compete and complete regulations in a timely fashion.
    Today I want to hear from our witnesses, all enormously 
gifted and knowledgeable in this area, on how to improve the 
regulatory process for independent agencies, with a focus on 
how best to improve congressional oversight. I look forward to 
continuing my work with Senator Lankford and the rest of my 
colleagues on these important issues, and I look forward to the 
testimony today and our continuing dialogue. Thank you, Mr. 
Chairman.
    Senator Lankford. Thank you. At this time, we will proceed 
with testimony from our witnesses. Robert Gasaway is of Counsel 
at Kirkland & Ellis, specializing in appellate litigation, 
where he represents clients before the Federal and State court 
and administrative agencies. He clerked for Judge James Buckley 
of the U.S. Court of Appeals for the D.C. Circuit. He has twice 
been recognized as one of the top lawyers in the country by the 
Legal 500.
    Adam White is a fellow at the Hoover Institution, adjunct 
professor at George Mason's Scalia Law School, and of counsel 
at Boyden Gray & Associates. He serves on the leadership 
council of the American Bar Association (ABA), of the 
Administrative Law and Regulatory Practice, and on the 
executive committee of the Federalist Society's Administrative 
Law and Regulatory Practice Group. He clerked for Judge David 
Sentelle; is that correct?
    Mr. White. Sentelle.
    Senator Lankford. Sentelle, of the U.S. Court of Appeals to 
the D.C. Circuit. Cary Coglianese is the Edward Shils Professor 
of Law and professor of political science at the University of 
Pennsylvania, where he serves as the director of the Penn 
Program on regulation. He specializes in the study of 
regulation and regulatory process with an emphasis on the 
empirical evaluation of alternative regulatory strategies and 
the role of public participation, negotiation and business and 
government relations and policymaking. He holds an M.P.P., J.D. 
and Ph.D. from the University of Michigan.
    I would like to thank all of our witnesses for not only 
your preparation, your written testimony, but also being here 
personally for your oral testimony as well. It is the custom of 
this Subcommittee to be able to swear in all witnesses that 
appear before us. I would like you to please stand, raise your 
right hand so you can be sworn in for your testimony.
    Raise your right hand, please. Do you swear the testimony 
you will give before this Subcommittee will be the truth, the 
whole truth and nothing but the truth, so help you, God?
    Mr. Gasaway. I do.
    Mr. White. I do.
    Mr. Coglianese. I do.
    Senator Lankford. Thank you. You may be seated. Let the 
record reflect all witnesses answered in the affirmative.
    We are using a timing system today. You will see it in 
front of you with a 5-minute countdown to it. We will be 
somewhat lenient on that, merciful, maybe 4 or 5 seconds or so 
past. But we are trying to stick as close as we can so we can 
have a lot of questions and dialogue. The goal of this 
conversation will be not only receiving your testimony, your 
input, which has been excellent for all three of you, but it is 
also for us to have an open dialogue on some of these issues.
    So with that, Mr. Gasaway, we would be honored to be able 
to receive your oral testimony first.

   TESTIMONY OF ROBERT R. GASAWAY,\1\ OF COUNSEL, KIRKLAND & 
                           ELLIS, LLP

    Mr. Gasaway. Thank you very much, Chairman Lankford. And 
Senator Heitkamp, thank you as well. I am going to try to be 
very brief and give an overview and pick up on the statements 
that we just heard, both from you Senator Lankford and Senator 
Heitkamp. These are incredibly important hearings. We have a 
number of different issues in the administrative state. Some of 
them are chronic syndromes and some of them are breaks and 
sprains.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gasaway appears in the Appendix 
on page 34.
---------------------------------------------------------------------------
    We are going to talk a little bit about breaks and sprains 
in the independent agencies, some of the specific issues that 
go to them. And these are very critical issues and they need to 
be addressed, but I think there are easy issues and easy things 
that can be done to address them. But I think you also have to 
look at the harder issues, the chronic syndromes. They are 
particularly acute in the administrative agencies for reasons 
that Senator Heitkamp referred to. They are independent of the 
executive branch, largely the Congressional Branch, and 
political accountability.
    And then we have to tie that back in, as Senator Heitkamp 
said, to the larger issues of this hearing. So see if I can do 
that with the remaining 4 minutes. First of all, the issue 
extending the Executive Orders 12866 and 13563, I think that is 
on the level of a no-brainer. More information is better 
information. I think it would clearly make a difference in 
agency decisionmaking. I do not think there is any good reason 
for exempting them. Their independence can be preserved through 
a carve-out, as has been effected in other statutes, and I do 
think it would make a difference.
    The American Equity Investment Life Insurance Company case 
is one, where as you know, under Section 2(b) of the Exchange 
Act, economic analyses are required because there was no Office 
of Information and Regulatory Affairs (OIRA) review, because 
there were no standards at that time at the SEC. They committed 
a very remarkable error of failing to measure the effects of 
their program against the existing legal baseline of State 
regulation. I think those are exactly the kinds of mistakes 
that would not happen if the Executive Orders were extended by 
statute.
    And again, there have been carve-outs in other statutes to 
preserve independence. I think that could be done. There are 
technical issues to be sure, and Professor Coglianese has 
looked at some of them. What is the threshold? Do you use cost 
or benefits? I like costs because they are more measurable. Is 
it adjusted for inflation? What is an independent agency? But 
those are all technical issues.
    The no-brainer is you should go ahead and do it. OIRA has 
an extraordinary wealth of capability. There would be an 
extraordinarily greater degree of coordination and the 
technical issues can be overcome.
    Now segueing briefly, I think that you also have to look at 
wider issues of actually bringing them under congressional 
control. And I stated briefly in my written testimony that I 
think an adaptation of the Red Tape Act that Senator Sullivan 
has introduced could function that way. I think, obviously, 
there are some challenges and there is a discussion that needs 
to be made. But the key point there is you overcome this 
cultural problem--and I will come back to that--that you see in 
Professor Coglianese's testimony. He says retrospective review 
is not part of the culture of agencies. We want to push our 
agencies forward.
    The great thing about the Red Tape Act, the one-in, one-
out, is that retrospective review is bound up with the 
prospective review, right? You have to take regulatory costs 
off the table to move it forward. So now everybody's pushing 
together. And that division that we see reflected in Professor 
Coglianese's testimony becomes unified. Looking at old 
regulations, doing new regulations all become one. So I would 
greatly encourage all the Members of the Committee to take a 
hard look at how that legislation could be adapted.
    And then third, I do have to go back very briefly within my 
time to the issues that you have been struggling with, the mega 
issues of over-delegation, and I will just hit on them briefly 
there. The ``Chevron'' issue and over-delegation, Non-
Delegation Doctrine in the Supreme Court is one of the 
challenges of this Congress and of our time. I am 
extraordinarily impressed with the testimony the Committee has 
received. I have tried to summarize that testimony in a new way 
and crystalize it in a new way, and I would urge the Committee 
to go back to previous witnesses and see if I have that right. 
Because if I do, ``Chevron'' is extraordinarily vulnerable and 
candidly more vulnerable than I expected when I first came to 
this Committee record.
    Second, very briefly, I emphasize that Congress does have 
to get back into the game. I put a couple novel proposals on 
there for using fast track administrative processes, just like 
you have fast track processes in the trade area.
    And then finally, I want to return to that word 
``culture.'' Professor Herz gave testimony that it was a quote 
``completely infelicitous phrase, a completely infelicitous 
choice of language in 'Chevron' to say administrators are freed 
unless Congress has quote, 'spoken to precise issues.'"
    He is absolutely correct about that. It has had pervasive 
cultural effects in independent agencies and executive agencies 
alike, and I would urge the Committee to return attention to 
that issue. Thank you.
    Senator Lankford. Thank you. Mr. White.

     TESTIMONY OF ADAM WHITE,\1\ FELLOW, HOOVER INSTITUTION

    Mr. White. Chairman Lankford, Ranking Member Heitkamp, and 
other Members of the Subcommittee, thank you for inviting me to 
testify today. In my written statement, I try to make three 
basic points. First, I recognize that so-called independent 
agencies have a long and varied history in American government. 
Nevertheless, the justifications for their independence from 
the President reflect largely a bygone era.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. White appears in the Appendix on 
page 48.
---------------------------------------------------------------------------
    Today, the rules of most independent agencies are largely 
indistinguishable from those of executive agencies, whose major 
rules are subject to full cost benefit analysis under OIRA's 
oversight. 35 years ago, the Reagan Administration made a 
prudential choice not to subject independent agencies to OIRA 
oversight because those agencies were at the time relatively 
unimportant.
    Today the regulatory world is completely different, with 
independent agencies like the Federal Reserve Board (FRB) of 
Governors, the SEC, the CFPB, the Federal Communications 
Commission (FCC) and even the Federal Energy Regulatory 
Commission (FERC), making immensely consequential policy 
decisions. Independent agencies issued at least 17 major rules 
from October 2013 through September 2014, according to OIRA and 
the Government Accountability Office (GAO). It is time for the 
Congress and the President to take down the artificial and 
increasingly arbitrary wall that insulates independent agencies 
from OIRA's review, as both the American Bar Association 
Section on Administrative Law and the Administrative Council of 
the United States have both long urged.
    My second point, we now see clearly what happens when 
independent agencies' cost benefit analyses do not face 
meaningful review or interagency coordination. As to meaningful 
review, I cite criticism of the Government Accountability 
Office, the CFTC's Inspector General (IG), the D.C. Circuit, 
and others who have found independent agencies' analyses 
woefully lacking.
    This week my wife and I are sending our kids back to 
school, and just as our schools do not trust students to grade 
their own homework, we should not leave the independent 
agencies free to grade their own homework. This is not intended 
to cast aspersion on the agencies motives or their dedication, 
but only to point out a basic fact of human nature: We do our 
best work when we know that someone else will eventually grade 
it.
    And as to interagency coordination, this is perhaps the 
most important role that OIRA plays, even more than cost 
benefit analysis. The OIRA framework facilitates an interagency 
dialogue that helps to coordinate agency policies, but also to 
ensure that each agency is getting the best possible expertise 
and advise from its sister agencies in the context of White 
House, OIRA oversight. Independent agencies should be fully 
incorporated into the OIRA framework for precisely this reason.
    The third point that I make in my testimony, as you focus 
on subjecting independent agencies to greater OIRA oversight 
perhaps, I urge you to subject independent agencies to greater 
congressional oversight, and not just in terms of oversight 
hearings, but more importantly, in terms of the way that you 
structure independent agencies and fund them. I think right now 
the trend is in the wrong direction in terms of giving 
independent agencies too much independence, not just from the 
President but also structurally and financially from Congress.
    If I may add just one final note to reemphasize the basic 
point of my testimony and what I see to be the crux of the 
issue before the Subcommittee. Cost benefit analysis and 
interagency coordination are not simply ends in and of 
themselves. The point of cost benefit analysis, as I see it, is 
not to come up with some precise, absolutely correct numerical 
answer. As Senator Heitkamp noted in her opening remarks, I 
doubt that is even possible. I doubt the cost benefit analysis 
could even accomplish this, even if we wanted it to.
    And I think there is risk in putting too much faith in 
seemingly objective economic analysis. Rather, the point of 
cost benefit analysis, as I see it, is the process. It creates 
a framework for agencies to think through these issues 
rigorously, think through the impacts of their decisions, and 
just as importantly, to look back at their analyses years down 
the road to see where their previous assumptions were right and 
where they were wrong.
    That is the retrospective reviews that my fellow witnesses 
have mentioned. This process should teach agencies and all of 
us to be more modest in our predictions and our arguments and 
to be more accountable to the public. Thank you.
    Senator Lankford. Dr. Coglianese.

    TESTIMONY OF CARY COGLIANESE, PH.D.,\1\ EDWARD B. SHILS 
PROFESSOR OF LAW AND PROFESSOR OF POLITICAL SCIENCE, DIRECTOR, 
  PENN PROGRAM ON REGULATION, UNIVERSITY OF PENNSYLVANIA LAW 
                             SCHOOL

    Mr. Coglianese. Chairman Lankford, Ranking Member Heitkamp, 
and other Members of the Subcommittee, thank you for the 
opportunity to be here today. And let me also thank you for 
your service to the Nation. I am pleased to talk about ways 
that Congress might help encourage independent agencies to 
engage in smarter regulation. Smarter regulation requires sound 
analysis, both upfront before rules are adopted prospectively 
as well as rigorous research after rules are adopted, to find 
out how well they are working, or retrospective analysis.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Coglianese appears in the 
Appendix on page 69.
---------------------------------------------------------------------------
    With respect to prospective analysis, as has already been 
indicated, one option would be for Congress legislatively to 
codify the outline of and requirements in Executive Order 12866 
and apply them to independent agencies. This would have the 
advantage of making symmetrical the analytical requirements 
between independent and executive agencies, but it would mark a 
major shift in the norms of independent decisionmaking by 
independent agencies. That is because Executive Order 12866 not 
only contains requirements for prospective analysis, but also 
establishes an institutional structure that places the 
President, and the president's staff, in a more central role in 
regulatory decisions.
    This option would also require a major increase in funding 
and staffing for OIRA.
    Let me suggest an alternative to that, which would have a 
similar advantage of creating symmetry in regulatory analysis 
requirements between independent and executive agencies, but 
would not bring with it the kinds of institutional changes and 
challenges that would accompany the first option. The 
alternative would be to eliminate the exemption in the Unfunded 
Mandates Reform Act (UMRA) for independent agencies. The 
Unfunded Mandates Reform Act simply imposes a requirement that 
all agencies, for certain rules, apply benefit-cost analysis to 
them, and that requirement is something that is enforceable 
through judicial review.
    The courts can make sure that the agencies have done that 
analysis, and then the quality of that analysis would form part 
of the standard arbitrary and capricious review that courts 
would give.
    If Congress should go forward with either of these options 
and apply a new mandate to independent agencies, it obviously 
should keep in mind that effectively implementing any such 
mandate will require resources by independent agencies, and 
even with these resources and the stronger incentives that a 
mandate would bring, regulatory analysis will always remain 
somewhat provisional. A mandate should not expect agencies 
always to be able to monetize costs and benefits, or at least 
all costs and all benefits, for every regulation.
    Let me turn in my remaining time briefly to retrospective 
analysis and possible steps to be taken to improve agencies 
study of their rules after they are adopted. Such analysis is 
absolutely vital to inform prospective analysis and it is 
something that is underproduced by both executive agencies and 
independent agencies.
    The Obama Administration's Look Back Initiative has been a 
good move forward in this regard. And Congress, I think, could 
help by codifying a model like that Initiative and applying it 
to independent agencies, which have been exempt from the 
regular status reporting that executive agencies have had to 
make on their retrospective reviews.
    I would also suggest that requiring all agencies to develop 
some kind of structural evaluation plans at the time they adopt 
new rules would help shape their thinking about evaluation 
early on in the process, as well as form a basis for more 
rigorous review after the fact. The very frameworks that are 
called for in the Smarter Regs Act of 2015, for example, strike 
me as quite useful.
    Finally, as with prospective analysis, of course, ensuring 
high quality retrospective analysis requires resources, and 
Congress would need to allocate those as well. In these various 
ways, and for the reasons I have elaborated in my written 
testimony, Congress has an opportunity to strengthen the 
capacity for smarter regulatory decisions by the Nation's 
independent agencies, by both encouraging better prospective 
and better retrospective analysis.
    Thank you very much for your time and dedication to these 
issues.
    Senator Lankford. Thank you, all three of you. The ranking 
member and I are going to defer our questions to the end, and I 
recognize Senator Ernst.

               OPENING STATEMENT OF SENATOR ERNST

    Senator Ernst. Thank you very much. I appreciate that. And 
thank you, gentlemen, for appearing before us today. I am going 
to take just a moment and kind of set the stage, walk you 
through an issue that I have seen, and then certainly get your 
feedback on it.
    As you may know, in February, the FCC published its Notice 
of Proposed Rulemaking on the Set-Top Boxes that are now 
required. And I have received several letters from small cable 
companies in my State that are very concerned, serious concerns 
about what this rule means for the vitality of their business, 
some of which have been family owned for many decades.
    According to the Small Business Administration (SBA's) 
Office of Advocacy, the FCC published an Initial Regulatory 
Flexibility Analysis (IRFA), with its notice of proposed 
rulemaking (NPRM). However, the FCC did not attempt to quantify 
or describe the economic impact that its proposed regulation 
might have on small entities. SBA goes on to say that the FCC's 
analysis ``Simply describes compliance requirements without 
making any attempt to explain what kinds of costs small multi 
channel video programming distributor (MVPDs) might incur in 
order to comply, and without any discussion of how those costs 
might be disproportionately burdensome for small entities.''
    So my questions to you are two-fold. Can either of you, Mr. 
White or Mr. Gasaway, comment on the FCC ruling and the quality 
control of that economic analysis, and with your experience and 
background, would you believe further defining what an economic 
analysis should entail from the Regulatory Flexibility Act side 
and how it could improve economic analysis of those independent 
agencies? How can we do better, if you would please?
    Mr. Gasaway. Well, I will take a crack at that. Senators, 
first of all, let me say that I am aware that that rule is out 
there. I have not studied it and so it is hard for me to talk, 
but I am a lawyer, so I will talk at length.
    Senator Ernst. Thank you. Of course.
    Mr. Gasaway. It is hard for me to talk about. I would be 
surprised if there was a quality Small Business Regulatory 
Enforcement Fairness Act (SBREFA) analysis. It could well be 
that that is the case. But unless there is a reason for doing a 
quality SBREFA analysis, often times it gets lost in the fact 
that there are limited resources at agencies, and I think the 
empirical work at independent agencies shows that many times 
they cut short those types of analyses.
    So I would not be at all surprised if in fact it was cut 
short. I do think the types of steps that we are talking about 
today can help. One of them, obviously, is subjecting SBREFA 
type analysis or other type of analysis to either the Small 
Business Administration Office of Advocate or Counsel of 
Revenue. It would be tying that more closely, tying it more 
closely to OIRA.
    But I would again say that there is not going to be better 
decisionmaking until there is some sort of fundamental reform. 
Now, one reform that people often think about is just making 
SBREFA judicially enforceable. And if you had only one card in 
your deck that might do it there. And I always support positive 
incremental reforms. But without spinning out of control, I do 
think that it shows the larger problems of administrative 
agencies and the larger problems this Committee has been 
dealing with.
    Remember, the FCC or any other agency is going to be 
thinking, I have a programmatic mandate, and my programmatic 
mandate is not to promote small businesses; it is to promote 
good telecommunications. And promoting good telecommunications 
requires the small Set-Top Box rule. So the SBREFA requirements 
are always going to be the caboose, and what I was trying to 
suggest with some of my broader reforms in my testimony is if 
you are going to change that culture, that word that I 
appropriated from my fellow witness, you are going to have to 
think very seriously about one of these other proposals that 
are on the table and these larger issues.
    I do not think there is a clear answer to that, but I do 
see the problem.
    Senator Ernst. Very good. And Mr. White, I cannot help but 
notice those Iowa Hawkeye cufflinks. They are glaring at me. 
This is a Cy-Hawk weekend, right?
    Mr. White. I know, Senator. Thank you, and thank you very 
much for bringing the Committee to my hometown of Dubuque, Iowa 
last month. Thank you very much.
    If I may just add very briefly to what my friend just said.
    Senator Ernst. Absolutely. Thank you.
    Mr. White. I think the key word, if I heard it correctly 
from the SBA, was the FCC did not attempt an economic analysis. 
And that is key. It is not even that they did it and did it 
poorly. It is that they did not even attempt it, which I think 
goes to the cultural, the regulatory culture issue that Mr. 
Gasaway mentioned.
    I read a recent report by an economist named Hal Singer--I 
am sorry. I do not have it off the top of my head, but I would 
be happy to submit it for the record\1\--focusing on the 
broader problems of the lack of economic analysis at the FCC. 
The FCC's former chief economist called the recent Open 
Internet Order, he quipped that it was an economics free zone. 
And I think that is from the FCC's own former chief economist. 
I think the same could be said for a lot of what the FCC is 
doing.
---------------------------------------------------------------------------
    \1\ The report submitted by Mr. White appears in the Appendix on 
page 87.
---------------------------------------------------------------------------
    Senator Ernst. OK. Thank you, gentlemen, very much. Thank 
you.
    Senator Lankford. Senator Portman.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Well, first of all, thank you very much 
for holding the hearing. I mentioned to Senator Heitkamp a 
moment ago, I hold these two up as my model at other hearings. 
I chair the PSI Subcommittee, saying that they allow Members to 
come and ask their questions and leave, because our lives are 
all so crazy and busy rather than monopolize the microphone. So 
thank you for letting me ask a question. I did just get here, 
so I missed some of your opening remarks. I did have a chance 
to look through your testimonies.
    Senator Lankford. You missed all my kind remarks about all 
your work for independent agencies. We talked about you 
positively even when you were not here.
    Senator Heitkamp. Major moment of suck up.
    Senator Portman. I missed it, but exactly, I heard about 
it, and I was not going to suck up again, as you--no, no. 
Seriously, thank you for mentioning that. And look, we have 
been working this a long time. Senator Warner deserves a lot of 
credit too, and I know some of you have disagreements with us 
in the way in which we make these agencies accountable, but 
give me a break. I mean, the American people are shocked to 
learn that independent agencies who play a bigger and bigger 
role in all of our lives do not have to go through a basic cost 
benefit analysis. I mean, they are shocked by that. And we have 
to figure this out.
    I am looking at some of these comments about how 
independent agencies are not subject to any influence from the 
White House. That is just not true. I mean, I would point you 
to April, when President Obama publicly announced his support 
for the FCC Set-Top Box proposal. I mean, Homeland Security 
Committee, this Committee, issued a report finding that the 
White House had duly influenced the FCC's decisions to 
reclassify broadband Internet under Title II.
    I mean, there is influence. I wish there was not that kind 
of influence, but there is. So this notion that they are 
somehow not subject to any kind of political pressure, 
unfortunately they are, but they do not have the same 
accountability. And I just think people really are ready to 
come up with some way. We can look, do the benefits outweigh 
the costs or not? And I think that is the least we should be 
asking for.
    So the way Senator Warner and I approach it is, as you 
know, is to have the independent agencies at least provide 
information to OIRA and have OIRA play an advisory role. There 
are various ways to do this, but I hope you will work with us 
on this. The President said that he is for it. All we really 
want to do is codify what the President has said through his 
Executive Order, and it has to be done legislatively because 
these are independent agencies.
    OMB found that 10 of the 16 major rules issued by 
independent agencies in 2014, which is the last year we have 
data for, included some information. That means six contained 
no information on cost or benefits and zero included a full 
analysis of the type of analysis required by executive 
agencies, zero.
    So I think we have a real problem here, and this 
Subcommittee has been terrific at focusing on it. We had hoped 
to get this Independent Agency Regulatory Analysis Act as part 
of a broader package on maybe six or seven bills. It seemed to 
have some bipartisan consensus. We were not able to get that 
done. Senator Heitkamp was helpful in trying to get that done, 
by the way, as were other Democrats, but there were others who 
just could not go along with the broader package. But I hope 
this is something that this Subcommittee can continue to work 
on and push on so we can get it done.
    I guess, Mr. White, if I could just ask you a couple 
questions, I would appreciate it. You have been at this for a 
while. I read your testimony. I thought it was very 
informative, very well done. I think our legislation is pretty 
modest. It does not go as far as maybe you would like us to go 
and some others would.
    The American Bar Association, the Justice Department under 
President Reagan and President Clinton, the Administrative 
Conference of the United States, legal scholars across the 
spectrum, including Cass Sunstein, who all of you know, have 
said that the President, as head of the executive branch, has 
the authority to bring independent agencies under the same 
regulatory analysis and review framework that applies to 
executive agencies.
    And as you said, agencies currently are able to grade their 
own homework. Can you explain what you see as the benefits of 
having an outside entity review an independent agencies cost 
benefit analysis in terms of how it increases the quality of 
their work, and perhaps tell us the problems that come from a 
lack of accountability.
    Mr. White. Sure. Well, with respect to the benefits, I 
think that oversight, while it provides an accountability 
mechanism for the people, I think it also helps make the 
agencies the best version of themselves when they know that 
they will have to explain and justify their analysis to a 
superior authority, whether it is in the White House or a 
Federal court, not to be micro-managed by the White House or 
the court, but just have someone kicking the tires seriously on 
their analysis and questioning their assumptions. I think that 
will spur the agencies to do better work.
    The Set-Top Box example, which again, I am not an expert 
on, but I have heard a lot about, is a worrisome example. The 
Open Internet Order, which I am involved in in litigation, I 
should make clear, is another example where everybody from the 
dissenting commissioner, Ajit Pai, to the dissenting judge, 
Judge Steve Williams of the D.C. Circuit, who is a former 
regulatory scholar himself, all had serious, serious criticism 
of the assumptions and often self-contradictions within the 
meager economic analysis that the FCC undertook. I think it is 
a glaring example of the need for serious accountability and 
cost benefit analysis before these rules are imposed on the 
public.
    Senator Portman. Thank you. I do not want to overindulge 
you guys. Thank you for letting me come and ask the question, 
and I look forward to hearing more from you guys with other 
questions. And thank you, Mr. Chairman.
    Senator Lankford. Senator Heitkamp.
    Senator Heitkamp. Thanks so much. We have covered kind of 
the whole watershed here from regulatory analysis to where that 
needs to be done all the way through judicial review and 
``Chevron.'' I want to focus on independent agencies, because 
of all of the things that we have worked on, taking Senator 
Portman, and Senator Warner's bill, trying to sell it in a 
political sense, has been a lot tougher than I ever thought it 
would be, because it seems so common sense to me that if you 
have a major rule that is being promulgated, no matter who is 
promulgating it, all the rules should be the same for major 
rules, and that is not what we have.
    And so I am going to offer you some of the criticisms that 
we have heard from the independent agencies about that concept 
and ask you to kind of help me work through--if we are going to 
do a full frontal attack, right, and say we are going to do 
this no matter what, and it is going to go to OIRA, then we are 
going to lose politically, I can tell you that.
    We have already been--I know it is hard to imagine, because 
when you look at it and you look at the history of this, it has 
been very bipartisan. But it has been very difficult. And so 
let us walk through some of the criticism that we have 
received. First off, OIRA is an agency, a sub agency of OMB and 
under the control of the President, and simply giving 
regulatory review to OIRA under this procedure would in fact 
interject and interfere with independence.
    Now, what we have tried to do in response to that is look 
at another agency, whether it is the IGs, whether it is GAO, 
take a look at some other place where we could put that kind of 
regulatory analysis. Because I agree with you, Mr. White, I 
mean, none of this is ever going to be perfect, but if there is 
no level of scrutiny or analysis, work can be pretty sloppy, 
right? Your dog ate your homework every day, right?
    So how do we overcome, or how do we respond to an argument 
that OIRA is a sub-agency of the President and interference 
would be--Mr. Gasaway?
    Mr. Gasaway. With the Paperwork Reduction Act (PRA) 
precedent. You just say this is for analysis purposes only. 
There is a carve-out. It has to go to the expert agency within 
the Federal Government on regulatory analysis for their 
comments.
    Senator Heitkamp. That makes a lot of sense. However, the 
bill is very modest in terms of--I mean, it does not say they 
can stop the regulation.
    Mr. Gasaway. Non-binding.
    Senator Heitkamp. Yes, it is not binding. There is nothing 
in this legislation that would give OIRA any authority to stop 
the regulation. It just would give them review authority. And 
we still hear the argument that it is over-burdensome and 
attacks the independents.
    Mr. Gasaway. Well, then I would say this is like sending a 
medical question to the experts at the National Institutes of 
Health (NIH), or something like that, for non-binding review. 
The greatest repository of medical information in our 
government, I think, is at NIH. And maybe somebody is taking a 
policy decision and they need medical input. You do not have to 
do what they say, but you have to ask the question.
    OIRA is a terrific agency with a terrific bipartisan level 
of competence. And obviously, Professor Sunstein is great, but 
many of his predecessors are. And it is absolutely 
inconceivable to me, if I were the United States senator, which 
I am not, that I would want independent agencies to avail 
themselves of that expertise. And that is what I would say. Do 
you really just want them to not avail themselves of that 
expertise?
    Senator Heitkamp. I am looking for an alternative word, 
because we have said all these things. That is not the problem. 
The problem is not that we are not graded arguing our position. 
The problem is that we have reached this impasse that we need 
to somehow get over. And Mr. White, I am curious, I forget 
which witness talked about the need for coordination. I think 
it was you. Obviously, OIRA has a much better handle on all of 
the agency major rulemaking and probably is the best place to 
balance, what is the Department of Commerce doing against what, 
the Consumer Finance Protection Bureau might be doing.
    So it is dangerous to take it out of OIRA, but yet we need 
to get this kind of review. We need to change the culture of, I 
should not say lack of accountability, but kind of this, we 
have our own funding stream, we have our own--once we get an 
appointment and confirmation, which is getting tougher to get 
because of these issues, in my opinion, so now hands off, we 
are in charge.
    And so we are trying to get beyond that. How do we find a 
mechanism or find a way to do a work-around that would 
accommodate what we all here believe needs to happen?
    Mr. White. Well, if I may, I want to make clear, I do not 
mean to focus on OIRA to the exclusion of anything else. 
Whether it is accountability to the executive branch or to 
Congress, either through existing mechanisms or some new 
congressional office of regulatory review, or through the 
courts, at the end of the day, for me the most important point 
is there being a measure of accountability and oversight, not 
one particular branch doing it.
    And so I am open-minded on all these proposals.
    Senator Heitkamp. One of the concerns that I have about 
leaving this up to judicial review, and I am not being 
critical, and maybe I am, but you will hear agency heads 
saying, we are going to implement this rule. If the court does 
not issue a stay on the rule, then the rule is going to take 
effect even though the rule was bad. So it is not a process 
that provides for immediate reaction or some kind of 
contemporary analysis. And so it fails. Judicial review fails 
and should be a last resort. That is my position.
    The Chairman and I have had long debates about reform of 
judicial review, but I am looking for some way to get this 
concept over the finish line in a way that we have legitimacy 
to the argument that we are not imposing Presidential review on 
an independent agency.
    Mr. White. If I may just add on that point, at the end of 
the day, like I said, this is about accountability, not just to 
Congress, but to the people. In the last few years, especially 
in the aftermath of Dodd-Frank, where independent agencies on 
financial policy have had ever greater power, you see so many 
of these regulations. No matter what they say in terms of 
marketing them as anti-Wall Street, ultimately these 
regulations benefit the biggest banks and the biggest companies 
first and foremost, whether it is because of the compliance 
burdens that the community banks and other small entities face, 
whether it is through the Financial Stability Oversight Council 
and others seeming to place a too big to fail stamp on the 
biggest players.
    At the end of the day, if an agency is truly independent 
and not accountable to the people, there is the greater risk 
that the biggest, most influential corporate players will have 
a disproportionate voice on policymaking, and whether it is 
through the President or Congress or through the courts, if the 
people do not have a real means of accountability for these 
agencies, at the end of the day, they will have a 
disproportionately quieter voice relative to the bigger 
players.
    Senator Heitkamp. I would like your thoughts.
    Mr. Coglianese. Yes. Well, first, let me just say that from 
a constitutional structure point of view, if a president wanted 
to apply OIRA review just to a single agency----
    Senator Heitkamp. He could.
    Mr. Coglianese [continuing]. He could, right. The Executive 
Order is the president's prerogative to design however he or 
she would like. The fact is that there is one piece of 
legislation that requires agencies to provide statements of 
cost and benefits of major rules, a piece of legislation that 
Congress has expressly exempted independent agencies from.
    So one way of making a cultural change might be for the 
Congress to say fundamentally, in what we have required of all 
other agencies, we are going to require of independent agencies 
as well. That would be a step forward. And it would address 
something that one reads time and again in responses by general 
counsel or others at independent agencies on these issues that, 
``oh, we are not required, we have no legal obligation''. 
Amending the Unfunded Mandates Reform Act would, at least for 
those rules that pass that threshold, eliminate the ability to 
make that excuse.
    So that is one step, I think, that could be taken by the 
Congress that would also avoid the kinds of political issues 
that you have talked about, Senator Heitkamp. There are 
obviously limitations, right? I mean, this is not maybe 
providing the optimal level of oversight, peer review, and so 
forth. But the possibility exists for there to be judicial 
review, and the ex-post threat of judicial review does offer 
some ex-ante incentive for agencies upfront to do their 
homework.
    With respect to homework, I think the way I would 
characterize this is, yes, it would be great to get feedback 
from a teacher, but what is different about Executive Order 
12866 is it involves not just a grade from the teacher, but 
also permission to graduate to the next grade. So there is this 
lever, the hammer that hangs over it, and that is causing the 
kind of constraints and responses that you are talking about, 
Senator Heitkamp.
    One other possible approach, and it is not mutually 
exclusive, might be for Congress to impose on, quite frankly, 
all agencies, something along the lines of the peer-review 
guidelines that OIRA has in place already for various 
scientific analyses that agencies are conducting. This would 
bolster the Information Quality or Data Quality Act provisions 
where agencies could in real time get that kind of feedback 
through a peer-review process.
    Maybe that peer review could come from other agencies. 
Maybe it could come from outside experts, but at least there 
would be some process of someone reviewing, providing feedback 
if indeed the option of having analysis reviewed by the White 
House staff is not politically feasible or wise for other 
reasons.
    Senator Lankford. I want to open this up and I want to open 
it up for the full dais to be able to talk about questions, be 
able to interact, but I want to give you a broad philosophical 
question that you are going to think I am kidding, but I am 
not. Independent of who? They are an independent agency. 
Independent of who?
    Mr. Gasaway. I will give the answer. I think it is not 
independent of who but independent for what? To exercise 
independent judgment. And I think the key word there is 
judgment and I think the key thought is in Adam's testimony. 
They are originally thought of as kind of specialized courts, 
not as specialized legislatures. And I think unless you go back 
to that model of more an independent court with more 
circumscribed jurisdiction, I think you are going to have 
problems.
    Senator Lankford. I ask that question because the common 
question here is we cannot impose 12866 on them, we cannot put 
them in UMRA, we cannot put them in all these things because 
they are independent of the executive agencies and independent 
of Congress, and it is always they are independent of who. I 
think we have lost the why they were created, because they were 
supposed to be non-political, supposed to give faster judgments 
with greater expertise than what the Federal courts could do or 
other entities.
    They were going to be specialized in their area to be able 
to get faster, non-political responses, and now we have 
independents like the FCC where it is really a five-member 
board, that three members are selected by the president's party 
and by the president, and so they are not non-political, they 
are not faster, and they are not cheaper.
    And so we are back to the same issue. We still have these 
independent entities that Congress seems to argue about who are 
they independent from and we have lost the why that they ever 
existed as an independent. And I think the argument really 
boils down to a philosophical argument of if we are going to 
determine what to do with the agencies that are creating 
billions of dollars in regulatory schemes and giving answers to 
people based on statutes that we are at a loss to figure out 
where it connected actually to statutes, then we have to figure 
out if they are really independent.
    Independent of who? Is it independent of Congress, 
independent of the executive branch, independent of the 
Judicial Branch, independent of the American people? Who are 
they independent of, and then how are they going to actually be 
formed? I know that may be a bigger philosophical argument, but 
we have not resolved that basic question, quite frankly, as a 
Congress, and if we can ever resolve that issue, I think it is 
going to go to the next step.
    Do we need agents to have better independent agencies 
anymore, and if we do, how do we reform them? Because they are 
not functioning as apolitical bodies any more. They very much 
seem to have a political agenda in their timing and their cost 
seems to be equated to other Federal benches. Mr. White.
    Mr. White. I agree with all of that. And if I may add a 
further point, as I said earlier, I think the trend line is in 
the wrong direction with respect to independence from Congress. 
Independence from the president raises a whole host of 
questions in and of itself, but independence from Congress 
should not be a question at all. These agencies should be 
accountable.
    But in recent years, from Sarbanes-Oxley to the Affordable 
Care Act to Dodd-Frank, the move has been to make these 
agencies structurally independent from Congress, and that is 
very dangerous, and not just for these particular agencies but 
going forward. The New Deal era agencies and the ones before, 
from the Federal Trade Commission (FTC), the FCC and so on, 
they basically set the paradigm for the next 60 years or more. 
That defined what the benchmark for independent agencies would 
be. And if Congress does not take steps to correct the 
structural mistakes that it made, with all due respect, in the 
Sarbanes-Oxley Act, the Affordable Care Act, and Dodd-Frank in 
making these agencies even more independent, that will become 
the paradigm for independent agencies going forward. The next 
independent agencies will not be modeled on the FTC. They were 
modeled on, for example, the CFPB. I think that is very 
dangerous.
    Senator Lankford. And the CFPB, as of now in Oklahoma, 24 
percent of our commercial banks no longer do home mortgages 
strictly based on the issues that Consumer Financial Protection 
Bureau created these set of regulations. There is so much 
liability now, they walked away from doing mortgages. 24 
percent of our banks in Oklahoma. It is becoming more and 
difficult, especially in rural areas of my State, to be able to 
get a home loan because the banks have walked away from doing 
that because people have seasonal income, because their income 
does not come in every month in a predictable format that CFBP 
wants. It comes in when the crops come in or when there is a 
sale. So that seasonal income not consistent, too much risk. 
Those are things that should have been determined in a cost 
benefit analysis that should have oversight, and CFPB, as we 
all know extremely well, has no oversight.
    So I am back to the same issue. How do we get to a set of 
independents, that there is a sense that they are not 
independent of the American people? Congress created them. They 
are not independent of Congress' oversight by far. If Congress 
created them, Congress can turn it off as well. But there has 
to be some level of oversight. All of us have oversight, and if 
there is an entity that has no oversight, that is more 
independent than our Constitution ever conceived of in any 
mindset.
    Does anyone want to make a quick comment on that, just----
    Mr. Coglianese. You have asked a great question, and one of 
the reasons it is challenging, just to pick up on your last 
point about the Constitution, it really speaks to the 
independence from factions, if we go back to Madison. Both 
factional influences through political branches of government 
and through influence by private interests, through, say, 
regulatory capture-- both of those speak to the type of 
independence that is reflected in the concern that motivates 
independence for agencies.
    I think that the formal structures are not always fully 
aligned with actual independence. It was mentioned before--I 
think Chairman Lankford you mentioned the comments by a 
president reflecting a policy preference for what action the 
FCC might take, and the FCC then pursuing that action. There 
are opportunities for influence, I agree, Senator Portman, for 
influence by members of either Article I institutions or 
Article II institutions to influence independent agencies.
    And there are also some executive branch agencies that 
operate with a great deal of actual practical autonomy. I think 
ultimately it is a challenging question because we are looking 
for something where there is at least independence on factual 
determinations, expert judgment. We want that to be pure and 
based on sound scientific assessment. We do not want that to be 
influenced. But on the other hand, we are a democracy and 
agencies must make value choices. The fundamental values that 
are reflected in policy choices that independent agencies make 
should indeed reflect those of the Congress and the elected 
officials.
    Senator Lankford. So should we assume that executive 
agencies then will not have bipartisan or will not have non-
political answers that are based on sound science and only 
independence can do that? Or should we assume that for both?
    Mr. Coglianese. No, I think that is not the implication--I 
mean, the Food and Drug Administration (FDA) has historically 
had a very strong reputation for operational independence on 
making those kinds of scientific judgments.
    Senator Lankford. So I am back to the same issue. Where we 
have evolved at this point in the structure of independent 
agencies and what has happened, whether it be Mr. White in all 
of your very good analysis just on the history and what 
happened in the Reagan Administration and opting out from OIRA 
at that time and some of the decisions that have been made and 
then the acceleration since then, is there a reason that we 
should have independent agencies separate from executive 
agencies, that they have two different structures due to 
operations?
    Because as all three of you noted in your written 
testimony, it is tough to get even a definition of what an 
independent agency is. I mean, there is the 19 that are listed, 
but operationally, it is ``can the president fire the head of 
it without cause just to fire the head of it'', and ``are they 
under OIRA review'' are the basics of it. But even that has 
some breakdown in some of the agencies that are called 
independents.
    So the issue is at this point, why do we have some entities 
now under current operation that are called independent and 
some are called an executive and have two sets of rules under 
them when they are all processing the same regulations? Mr. 
White.
    Mr. White. While we are talking now about rulemaking, it is 
important to keep in mind that independent agencies do a lot of 
adjudication. The FTC and some of the other agencies do a lot 
of case by case adjudication. That really was in the core 
function of independent agencies at their origin, and I do 
think some measure of independence, a limited measure of 
independence is important for those functions.
    And another word----
    Senator Lankford. But independent from who at that point?
    Mr. White. Right. Again, at that point, it is independent 
from direct control and decision by the president, or at least 
insulation from it. And I am not saying that the president is 
constitutionally barred from getting involved in that. I am 
just saying I understand why that is a specific subset of 
agency action that might justify some measures----
    Senator Lankford. Because it is more judicial?
    Mr. White. It is more judicial. As they used to say, it is 
quasi-judicial, which was the whole justification for their 
independence, and the Humphrey's Executor case that recognized 
agency independence. And I will say with the independent 
commissions, when you have a multi-member structure, that does 
help build in an internal check and balance, right? At the very 
least, when the FCC makes a decision, you might have two 
dissenting commissioners who, like judges on a court, are going 
to have dissenting opinions and in some limited ways, force a 
dialogue within the agency.
    I think that is a very important and very good aspect of 
independent regulatory commissions, that they have that multi-
member body. And so that is a useful function, especially in 
that quasi-judicial context.
    Senator Lankford. So how are they functioning different 
than an administrative law judge, which is also quasi-judicial, 
but they are in executive agencies?
    Mr. White. Well, that is a very fair point. I might say in 
the independent agencies, it is like the difference between a 
court of appeals and district court judge. An administrative 
law judge (ALJ) makes an independent decision and then it goes 
on to the multi-member head. But you are right, in the 
executive agencies, that is a very good question why that 
should go directly to an executive branch official.
    Senator Lankford. Other thoughts?
    Mr. Gasaway. I will just say that I think you are hitting 
the nail right on the head, and I think these are very, very 
complicated and critical issues and I do not have a blithe 
answer to them other than just to say that I do worry about 
giving too much in legislation and trying to extend this, 
because if you extend it only in a way that preserves too much 
independence, you are in a sense sending a signal that they 
really are independent.
    Senator Lankford. Yes, and that is really the concern for 
me, is that we are creating more and more sense that they 
really are truly independent of everyone, and with no 
accountability, we have a big issue. When you get to CFPB, that 
their funding does not connect to Congress, their oversight is 
not here, there is no oversight in the presidency, no board 
even to be able to check a single member of that same leader, 
you really have created a fourth branch of government in some 
ways that has very little to no restrictions around them. And 
even if they want to reinterpret some of their own originating 
statute, they have the opportunity to be able to do that, and 
that is a big concern for me.
    One quick question. Let me open this up for broader 
conversation, because I do not want to hog all the 
conversation. Does any of the three of you have an issue with 
codifying 12866 for both executive entities and for independent 
agencies, that that would move from being an Executive Order to 
being codified?
    Mr. White. I do not. I would welcome it.
    Senator Lankford. OK. All right. Let me open this up. I do 
not want to hog the time, because I know several others that 
may have questions and thoughts.
    Senator Portman. I think it is a very interesting 
conversation about what constitutes independence, and 
obviously, CFPB is sort of one end of the spectrum without 
having the board or commission that Mr. White talked about and 
not only that, having no appropriations. So, the congressional 
purse strings are not attached.
    Again, I think the reforms that we are talking about are 
pretty modest. One we have talked about with CFPB is how about 
an inspector general? I mean, they do not have an IG that 
relates to them and their work. It seems to me that is kind of 
a minimum thing that we should be requiring that would allow 
them to continue their independence, but to have some check on 
their work.
    But let us get back to this issue of OK, without calling 
into question the whole notion of independent agencies, the 
fact is having some sort of a way to look at the cost and 
benefits everyone seems to agree on. The question is who should 
do it? I like what Mr. Gasaway said, that there is expertise 
actually in the Federal Government to do this. Unfortunately, 
it is not at GAO, it is not at the Congressional Budget Office 
(CBO). It is not at the IGs now. It could be created. It would 
be another expense to the taxpayer, and the question is whether 
you get the kind of smart career people that are at OIRA, who I 
used to have the honor of working with, to be able to do this.
    And we are not talking about a lot of rules. I mean, again, 
this is a modest proposal. We are talking about over $100 
million per year in impact. It is roughly 12 to 15 rules per 
year. And it is advisory. And Senator Heitkamp is actually 
right on that; it is non-binding. But the agency does have to 
respond to it. So when OIRA takes this on, they have a short 
period of time, 90 days max, to do it.
    And this notion that it is going to slow everything down, 
it is just not accurate. I mean, there is a deadline and, we do 
this with the executive agencies every day. But when they do 
get a non-binding analysis back, there has to be a response 
from the agency, which is part of this accountability we are 
talking about, and it is transparent. So as taxpayers, my 
constituents get to see it. As Members of Congress, we get to 
see it. As experts, you get to see it. I do think that it would 
have a very positive effect on coming up with some standards 
that are, viewed as reasonable in terms of looking at a cost 
versus a benefit.
    There is another criticism that we have seen out there, 
which is that somehow the individual statutes that have cost 
benefit within them would be overridden. We wrote the language 
explicitly to avoid that problem. It states that, and I quote, 
``The president may by Executive Order require an independent 
agency to comply, to the extent permitted by law, with 
regulatory analysis requirements applicable at other 
agencies.''
    This mirrors the qualifying language that is in President 
Clinton's Executive Order, the 12866 we talked about. And 
everybody, including by the way, Elena Kagan, when she was a 
professor explained that to the extent permitted, a relevant 
statute means that, you would not be overriding those statutes.
    So again, kind of to Senator Heitkamp's point, we have sort 
of gone through them. We have answered all these questions, and 
yet there just seems to be this concern out there that somehow 
these independent agencies should be able to be out on their 
own freelancing, and whatever we come up with, there seems to 
be some concern. So again, but I think we have responded to 
very specifically.
    One of the issues that is broadly talked about is that the 
accountability of independent agencies would somehow be 
reduced. To me that is also crazy. I mean, this adds more 
accountability. And I guess the argument there is that there 
would be less accountability to Congress and more to OIRA, more 
to the executive branch. Congress needs to take its role 
seriously, which this Subcommittee does, to do the oversight, 
and it should have, I think, the obvious intent of this, to 
have more accountability. And again, we would know then what 
the analysis was and how it was not meeting what OIRA does for 
all the executive branch agencies.
    So again, I thank you guys for being here. I hope that you 
will continue to work with us on this and help us to be able to 
get the word out broadly. I do think Senator Heitkamp is right. 
We sort of make all these arguments, we are not succeeding. But 
part of it is maybe we are not making the arguments as 
effectively as we could and not doing it to the American 
people, who I think would be shocked to understand that there 
is this, lack of analysis at a time when so many of our 
businesses back home tell us the regulatory burden is making it 
difficult for them to add a job, to expand plant and equipment. 
We have an economy growing at 1.5 percent. We have flat wages. 
We have a middle class squeeze that is very real out there, and 
the regulatory burden is part of it.
    You mentioned the banks in Oklahoma, they are no longer 
offering mortgages. I would like to say that the community 
banks in Ohio are consolidating. What does that mean? That 
means there are fewer loans being available at the local level 
for smaller businesses. Where there is a personal relationship, 
there is less involvement in the community, and this is a 
function of regulations.
    They tell me that with very specific numbers this is what 
they had to put aside for compliance 5 years ago, his is what 
they are doing today. And they simply cannot be competitive 
with these levels of compliance and the regulatory burden, that 
sometimes it is more than one regulator, particularly with CFPB 
being involved.
    So thank you very much for coming in. I appreciate you guys 
having this hearing, and I hope we can get this legislation 
moving in the new Congress on a bipartisan basis.
    Senator Heitkamp. I do too. The luxury that we have on this 
Committee is that we are trying to design a highway. We are not 
putting the cars on the highway. We are trying to design a 
highway that is safe, secure and accountable for agencies so 
everybody knows the rules.
    The problem that we have is we get mired down in analyzing 
this rule that someone does not like or that rule that someone 
does not like, and all of a sudden, this turns into a 
discussion about this agency or that agency. And we have not 
had a lot of good luck in saying, imagine that the president is 
of a different political party than yours. What do you want the 
rules to be? What do you want the accountability to be?
    Because this is not about partisan politics. This is about 
accountability on how we interact with the American people as 
the Federal Government. And it is enormously frustrating to 
keep--you see this very modest proposal somehow getting painted 
even in ``The New York Times'' as a huge giveaway, to some big 
corporate interest that will result in financial mayhem in 2 
weeks if we do it.
    And so we are in this highly hyper-partisan exaggerated 
world trying to make common sense rules about how we move 
forward, and no one, if they really sat down like we do on this 
Committee and analyzed the rules, analyze the growth of what is 
happening with independent agencies, would ever think that they 
should not be subject to the same kind of rules or regulations 
of other executive agencies.
    I mean, this just does not make a lot of common sense, but 
yet we have created this culture that somehow, as the chairman 
has said, that to have any kind of influence eliminates 
independence. And everybody loves independence because we all 
know what that means, independent from politics. Well, there is 
nothing in this town that is independent from politics. Get in 
the real world.
    We have to have rules that prevent overbroad political 
opinions from basically being embedded in so many of these 
rules. And so, we need to--the idea of regulatory reform has 
become so politicized that the common sense aspects of 
regulatory reform, whether it is a look back, we are working on 
a number of retroactive provisions, a number of look-back 
provisions, whether it is a cost benefit analysis which has 
progressed. From my days in law school in the 1970s, when we 
first started talking about cost benefit analysis, it was like 
this magic world.
    I think it has become much more professional. We have a 
whole society that is dedicated to improving the quality of 
cost benefit or benefit cost analysis. However, we want to 
structure that. So we just have not made the factual argument 
very well, it seems to me, because we keep running into the 
political argument. We keep running into the hyper argument.
    When we can sit down, Mr. White, and you and I nod our 
heads in total agreement about kind of where we are, 
recognizing that we may not agree on everything as a matter of 
politics, we know that we have some fertile ground here to 
actually get something done. But we are not going to get it 
done if we have the constant sniping at this, as this is just a 
way to shut down this agency or shut down that agency or 
restrict that agency.
    We are not trying to shut down, restrict, or do any of 
that. What we are trying to do is say, justify to us the 
decision that you made and the analysis that you did. And we do 
not want just you, to say do not worry, I got it. We want there 
to be someone who is changing the culture that--we all know 
that when we have accountability, we perform better, we make 
better decisions.
    And so that is the problem that we have, is that this 
enormously modest proposal was at the heart of really an op-ed 
in ``The New York Times'' before we even got the proposal off 
the ground. And, shame on us that we did not anticipate that 
this would be this controversial. It should not be 
controversial, because I just keep asking my colleagues, you 
could have a president that is not a Democrat. What oversight, 
what accountability do you want for the decisions that are 
going to be made in that case?
    And when you can answer that question, then we can get to 
common ground. But we need people to really help us kind of 
bridge these gaps and create some momentum without having a 
package that has become so highly politicized. I think we have 
the elements of a pretty good regulatory reform package that 
would in fact amend the APA, would in fact do the things that I 
think any--80 percent of people who live in the common sense 
world that we live in, and places like North Dakota would say, 
well that should be a no-brainer.
    We have 80 percent of the no-brainer stuff, but we cannot 
get political consensus here to get it done, and it is 
enormously frustrating. And I think it is because, I guess my 
family taught me that if I am failing, I should look at what I 
need to do differently. And so it is not just about these 
people cannot agree with me. It is how do I get this done in 
the face of this opposition?
    And so we are really in need of a broader kind of academic 
consensus out there that these are the five things. No matter 
which side of the political aisle you are on, how you view the 
world, these are five really good reform packages. And I guess 
that is what we are kind of asking, is how do we build that 
kind of consensus within a broad spectrum of political thought 
on what change should look like in terms of regulatory reform?
    And I cannot leave it without saying this because I think I 
say it at every one of these hearings: Congress needs to start 
doing its job. When we have things that are in litigation for 
30 years on definitional provisions of the Clean Water Act 
(CWA), maybe it is time for Congress to actually do its job and 
provide the lane or the framework for what constitutes things 
like Waters of the United States.
    And until we figure out how to do our job here, we are 
going to continue to over-delegate responsibility, I think, to 
executive and independent agencies. And then it is just a lot 
more comfortable for us to beat up on the agencies than to turn 
the finger pointing back at us to say, well, I guess we were 
not very clear in what we said. Maybe we ought to change that, 
because that is a lot of hard work. So much for my rant.
    Mr. Coglianese. May I make a comment?
    Senator Lankford. I am going to take up an offering after 
that.
    Mr. Coglianese. May I make a comment? If I could just add 
to the virtues that have been mentioned for the approach that 
Senator Portman was discussing. In addition to the modesty of 
that approach, as you said, Senator Heitkamp. There is another 
virtue that I think should go noted here, and it does address 
Chairman Lankford's question earlier about whether it would be 
appropriate to adopt wholesale Executive Order 12866. I think 
that that approach would be problematic in some of the 
institutional aspects or design aspects of 12866. In 
particular, I am just not sure how practical the conflict 
resolution mechanism would work with multi-member commissions, 
if 12866 were to become binding legislation imposed on those 
commissions. Just as a practical matter, it is hard to see the 
commissions going back and forth.
    So one of the virtues of the approach that Senator Portman 
was taking, where an OIRA review would lead to an advisory 
statement that then would need to be responded to, is that 
there is time for that, and you avoid the practical challenges 
that would be associated with a back and forth, which is how 
the Executive Order is really structured, but which is not 
going to work as well. It would be much more cumbersome with 
the multi-member commissions, and commissions by the way that 
are headed by individuals who in many cases cannot be removed 
at will by the president.
    Senator Lankford. But are often partisan placements.
    Mr. Coglianese. In some ways, one of the ironies of all of 
this is that with multi-member commissions, particularly where 
there are bipartisan requirements, but even without that, in 
any multi-member body, when you have multiple people who have 
to vote on something, that becomes a bit like a mini-
legislative process. And there is a tension here that should 
not go unnoticed between setting up agencies that have that 
kind of collective decisionmaking structure and analysis which 
is supposed to be expert and non-political.
    So there is a deeper tension here as well. Again, that is 
why, if nothing else, I think it is important for Congress to 
go on the record in saying, if we are requiring cost benefit 
analysis in UMRA of executive agencies we could eliminate that 
exemption for independent agencies.
    Senator Lankford. I would have no issue eliminating that 
for Unfunded Mandates Reform Act because again, that was a 
compromise that was made years ago that has proved to be an 
error, because it does exempt out a whole group of folks that 
think the rule does not apply to them. Really, I think that was 
a compromise at that moment that should not have been done.
    It goes back to the same issue with the Reagan 
Administration not including OIRA connection to the executive 
branch, to those independent agencies. They could have at that 
moment. I wish they would have. But now we have several decades 
of history to be able to overcome, and I believe in some of the 
agency culture that they are independent of everyone, and they 
are not a fourth branch of government.
    We are incredibly grateful--and this is something we have 
talked about often. These are experts in the field in decisions 
that have to be made, that Congress is not the expert, the 
Federal courts are not the expert, and different agency folks 
are not the expert. These folks are, and we are grateful they 
are serving the American people in that spot. But there is a 
need to have accountability in every part of that, and I think 
that is the issue. You cannot be independent of everyone. There 
has to be a built-in accountability structure.
    Senator Heitkamp. And it is not even accountability. It is 
transparency.
    Senator Lankford. True.
    Senator Heitkamp. So who knew? I mean, how do you even have 
accountability when you do not know the rationality or the 
rationale--why they made decisions that they made.
    Senator Lankford. And that is the lowest tier on the 
judicial review.
    Senator Heitkamp. Right.
    Senator Lankford. It is just ``did you do everything you 
said you were going to do'' ? Not even do we agree or disagree 
with it. Did you check the boxes to actually work through to be 
able to get the information? Can we see the homework?
    Senator Heitkamp. It just seems to me that we are in a 
hyper-partisan environment dealing with an issue that should 
be, very bipartisan and very clear what rules we want to 
guarantee, that all sides have an opportunity to be heard and 
that we actually have a foundation in which to judge the 
decisionmaking that went into, in many cases, very expensive 
determination. And we just cannot get there because we get 
mired down in individual cases that then become, oh, you do not 
like this agency or you do not like that person, that is why 
you wanted to change the rule.
    That is not why I want to do any of this. It is not because 
I do not trust anyone or I do not like anyone. It is that I 
believe that we have a responsibility in the U.S. Senate and in 
this Congress and in this government to hold agencies and 
government decisions accountable and to understand why they 
decided what they decided. And I think they will, Mr. White, 
make much better decisions when they know that there is someone 
who is going to have the ability to judge the judgers, and that 
is the challenge we have.
    Mr. Gasaway. OK, now I will try to give you a practical 
solution. I gave you my political solution. The only thing I 
can think of would be to have it take effect some years in the 
future, if you say, I do not know who is going to control 
Congress the next day, I do not know who is going to be 
president. All I know, next date I want this to be the rule, 
because whoever is in those positions now.
    Senator Heitkamp. So then it does not become personal.
    Mr. Gasaway. So it does not become personal. It does not 
become partisan. If people say you are taking a shot at my 
former colleague Rich Cordray, you say, I do not know what Rich 
is going to be doing the next date. This is not about Rich. 
This is not about anybody else. So that is my only practical 
suggestions, Senator.
    Senator Heitkamp. Yes.
    Mr. White. It is about the third time in this hearing that 
Rob has beaten me to the punch on a good idea. I would like to 
reiterate that, that independent agencies are doing a lot right 
now and they will be doing a lot in coming years. If the 
legislation even said we are not going to go into effect for 
eight, 12 years, I will still take that. I think that would be 
a great improvement, because it gets around this problem of the 
immediate political ramifications.
    But one other point, Senator Heitkamp, that you raised a 
little bit ago, and I really do not want to let it go by, where 
you said about Congress doing its job. So much of Congress' 
relationship to the issue of independent agencies and the 
administrative state in general comes back to appropriations. I 
ended my written statement with a quote from Madison, 
Federalist 58, the power of the purse. It is hard for me to go 
through any one of these, writing a testimony like this without 
quoting that. It is so important, the power of the purse.
    And I think meaningful regulatory reform requires not just 
reforming the Administrative Procedure Act requirements. It is 
about seriously rethinking the way that appropriations work 
with the agencies. And now we are obviously biting off 
something even bigger than just administrative law. But the 
appropriations process right now, this annual sort of race for 
a single vote on a budget, almost a cliff scenario of solving 
the funding for agencies that really does complicate even more 
the problems of Congress' oversight of agencies.
    And when there comes a day when Congress is appropriating 
the agencies in a much more iterative process, much more tied 
to legislation and oversight, I think that is important, 
because at the end of the day, Congress' job involves 
legislation and the appointments process and the appropriations 
process, and all three of those are crucial in Congress doing 
its job.
    Senator Lankford. By the way, there are some proposals that 
are floating around now that a group of us have floated on 
reforming the budget process. If anyone is keeping score on 
this, it has been 20 years since Congress has passed a budget 
without a CR before it. Since 1974, when the Budget Act was 
passed, the Budget Act has only worked four times since 1974. 
So at some point, Congress has to admit that post-Watergate 
process that was created did not work as they hoped it would, 
and it does have to be reformed.
    But that is a different hearing for a different day.
    Senator Heitkamp. The Budget and Impoundment Act, we are 
going to repeal it?
    Senator Lankford. We can fix it.
    Mr. Coglianese. One other, if I may, outside the box 
suggestion that I think is feasible to consider, but it is a 
long-term strategy as well, and that is to foster research. Let 
us just not there are just very clear research limitations well 
at issue in getting better analysis at these agencies. And I 
know that we have been talking here about legal structures and 
organizational structures that might encourage agencies to 
produce that work themselves.
    But there is another way of thinking about this, not 
mutually exclusive, but another way, that would say let us 
also, at the same time we are thinking about institutional 
structures, think about other ways of resolving some of the 
fundamental research questions that need to be answered in 
order to do good prospective analysis of financial regulation.
    Now, there is a big debate right now in the academic 
literature about whether financial regulation can be subjected 
to meaningful benefit cost analysis, whether we can actually 
get good estimates or not. And there is one side that sort of 
says ``no, it is just not even possible'', and there is another 
side that says, ``yes, it is feasible''.
    I think even the side that says it is feasible would agree 
that we are not anywhere near the level of sophistication or 
rigor in understanding the implications of financial 
regulations and how they affect financial markets to be able to 
make reliable forecasts as often as we would need to in order 
to get analysis to a level where some of the best executive 
agencies have it.
    I know from having taught environmental law that in the 
early days, in the 1970s, there were lots of analytical 
questions that were unanswered, and we just did not know a lot. 
Part of the reason why today we have much better consensus 
about how to estimate the benefits and costs of environmental 
regulations, is in part because of work that agencies have 
done, but it is also in part of funding and studies that have 
been done by the National Academies of Sciences and funding 
through the National Science Foundation. And to the extent that 
those institutional avenues could help. I do not think they 
should be neglected. They could be used to bring up the level 
of the state-of-the-art thinking about these issues. Then it 
will be harder for agencies to say, well, we just do not know 
how to do this.
    And part of what they are saying today is ``we are not 
required to do it'', but ``we do not know how to do it'', 
``there is not enough time'', ``we do not have the tools yet''. 
Let us build a collective knowledge base then. That is 
something that could be done wholly apart from administrative 
law reforms through targeted and strategic funding initiatives 
through other scientific enterprises.
    Senator Lankford. I think you could also accomplish some of 
those same things with advanced Notice of Proposed Rulemaking 
and get more people at the table earlier and so that they 
actually receive input from people that are affected. If you 
get the people that are affected at the table, they can give 
you a pretty good estimate of how it is going to actually--I 
cannot even begin to tell you the number of times I have talked 
to someone in business that said, X, Y, Z Agency estimated it 
would cost this much, just our business, it will cost three 
times that, just for our business not counting everyone else.
    And so when you do not get all the people at the table 
early with advanced Notice of Proposed Rulemaking, then you get 
a best guess from academics rather than from practitioners.
    Mr. Coglianese. Some of the questions might though take 
years to resolve. So I mean, one issue in the environmental 
context, how do you value the benefits of reducing air 
pollution over the Grand Canyon? There is not a market that one 
could refer to; you would normally like to use market values to 
input into a benefit analysis there.
    So there have been years of study of what are called 
contingent valuation techniques and a consensus emerging over 
that. And similar questions arise in other areas of regulation 
that need answers, and there are opportunities, I think, to 
make progress in those areas, as well.
    Senator Heitkamp. But there also is an opportunity for 
everybody to recognize that some benefits cannot be monetized. 
And so, I think that everybody thinks that we are trying to put 
monetary values on things like a view shed, what does that mean 
that we can still see the Grand Canyon as a country? That has 
value. That is not easily monetized, but we can all agree it 
has intangible value, right?
    Mr. Coglianese. Oh, absolutely. And this is one of the 
things, in going forward legislatively that I would urge you to 
think about retaining in 12866 and in UMRA, which is a 
recognition that it is not always possible to get good 
estimates of these things, and that benefits should justify the 
cost, but that does not necessarily mean that we always have 
fully monetized benefits that outweigh fully monetized costs. 
There are sometimes going to be decisions that regulators have 
to make in the face of uncertainty.
    Senator Lankford. So quick comment on that, then I want to 
be able to wrap this up. We are at 11:30 and I appreciate 
everyone's time.
    Cost benefit analysis, as several of you have brought up, 
is to inform rather than to check the box and to justify. It 
should not be the we want to do this regulation and so we are 
going to create a cost benefit analysis that then benefits the 
regulation that we want to create. It should inform to say we 
are thinking about this. We go and check it and say, you know 
what, that is not a good option. Let us look for other options, 
and I think we are missing that.
    And some of the conversation and some entities, it seems to 
be a justification to do what they want to do rather than 
informing the best solution. The intent of it was, is this the 
best option. If we go down this track and the cost is so high 
and the benefit does not seem to do it, then let us find other 
alternatives to do it.
    So at some point, I hope we can get back to that, where it 
is an educational experience and a targeting different options 
rather than a justification to be able to do what we want to 
do. There are some pieces of common ground that I heard today 
from all of us in this conversation. There are things that I 
hope that we can continue to build on on these issues.
    Let me open this up to final comments that anyone wants to 
be able to have on some of the issues. Mr. Gasaway, I just want 
you to know, I showed my absolute best restraint not to drift 
into a ``Chevron'' deference conversation when you had a 
significant part of your written testimony dealing with 
``Chevron,'' which we will reserve for another day. But I do 
appreciate your comments in your written testimony adding to it 
and referring to other things. We appreciate that as an 
unresolved issue. But again, another conversation for another 
day.
    Any other comments? Mr. White.
    Mr. White. Just on your last point, I think it is very 
important, like you said, that on the one end, it cannot just 
be a box-checking exercise. That 2011 CFTC inspector general 
report I cite is just devastating, where the CFTC repeatedly 
treats economic analysis as a caboose on the process, run by 
lawyers more than economists.
    At the other end, it is important that the economist not 
get so fixated on technical precision that they lose sight of 
the bigger picture. I studied economics in college and the old 
joke was an economist is someone who knows the price of 
everything but the value of nothing. And I think that that is 
important here, that at the end of the day, cost benefit 
analysis, the numbers are important, but the most important 
thing is the process and the exercise of thinking through these 
things rigorously to inform the value judgments.
    Mr. Coglianese. And if I may add also one thought about 
that, which I agree completely. The goal of the analysis should 
be learning and informing and making better decisions. That is 
just another factor that would weigh in favor of an approach 
that would have less of a hammer behind it, rather than more of 
a hammer. That is, if you want agency officials really to 
internalize and take seriously and act earnestly to use 
analysis to learn, they have to own it. And there is a risk, 
and we know this from a variety of research on performance 
measurement in organizations, that once you put high stakes 
associated with measurement, then you create incentives for 
gaming and box checking and not doing what, Chairman Lankford, 
you so rightly said, taking it seriously to make better 
decisions, to learn and not just to cover up and paper over 
decisions you already want to make.
    Senator Heitkamp. Just one more observation, and I think 
when you get down to it, this is not an exact science. And if 
people want to kind of say, you missed the boat. But the other 
piece of this that is so critical, and it goes back to the 
other pieces we are trying to pull together, is the 
retrospective review. And so we have a bill that received 
unanimous approval in the Committee that would require every 
new major rule have a provision in it that was noticed. That 
would require retrospective review within the provisions of 
that new rule.
    We have to deal with the body of work that is out there, 
but if we do not have retrospective review, we do not learn 
about the mistakes that we made in the last cost benefit 
analysis, and so we do not improve the quality of that work 
overall, because there is never a look back or a judgment.
    And so these are--we keep trying to compartmentalize these, 
but the package itself is what is going to get us where we need 
to be. And we laugh because the one area where we probably have 
some of the most interesting discussions between the chairman 
and the ranking member is ``Chevron.'' So just to give you a 
little insight.
    Senator Lankford. Just needs to be fixed, that is all it 
is. Just one little word change.
    Senator Heitkamp. I guess we all agree with you, right?
    Senator Lankford. How about just switching it judicially to 
``probable construction''. Just that would probably fix this. 
But that is a whole different conversation.
    On the OIRA conversation as well and the cost benefit, the 
benefit of going through OIRA with everybody is cumulative 
effects. If independents are independent, we cannot get 
cumulative effects, and everyone says all these regs came down 
at different times, different deadlines, different authorities. 
Nothing seems to be coordinated. It is one of the many reasons 
independents need to go through OIRA, so someone can check 
cumulative effects. And it is very helpful to have somebody 
just talk and say, great, what other options did you look at, 
and how did the cost benefit work on the other options. That is 
a tremendous benefit just to have that conversation that 
currently we do not get.
    But hopefully in the days ahead we can, because as I remind 
everyone, independents are not independent of the American 
people. They are still all a part of us and we are grateful 
that they serve the way they do, but we have to all be 
connected and get on the plane together.
    So with that, thank you very much for your testimony and 
your preparation. I look forward to an ongoing conversation in 
the days ahead. I hope you will maintain the ongoing 
relationship you have with us and with our staff so we can get 
a chance to gather your ideas in the days ahead.
    Let me do a final closing statement. I think I have to get 
some deadlines in here. The next time that we are together as a 
subcommittee is the 22d of September. We will continue our 
examination of agency use of regulatory guidance in a hearing 
titled ``Continued Review of Agency Regulatory Guidance, Part 
3.'' At the upcoming hearing, it will be the Department of 
Education, Department of Labor, and the Office of Information 
Regulatory Affairs, which we have discussed at length today.
    That concludes today's hearing. I would like to thank all 
of our witnesses. The hearing record will remain open for 15 
days, to the close of business on September 23rd for the 
submission of statements and questions for the record. This 
hearing is adjourned.
    [Whereupon, at 11:38 a.m., the Subcommittee was adjourned.]

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