[Senate Hearing 114-545]
[From the U.S. Government Publishing Office]
S. Hrg. 114-545
CONTINUED REVIEW OF AGENCY REGULATORY GUIDANCE, PART III
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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 22, 2016
__________
Available via http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
23-559 PDF WASHINGTON : 2017
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Washington, DC 20402-0001
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 Mairella, Chief Clerk
C O N T E N T S
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Opening statement:
Page
Senator Lankford............................................. 1
Senator Heitkamp............................................. 1
Prepared statement:
Senator Lankford............................................. 41
Senator Heitkamp............................................. 44
Senator Tester............................................... 46
WITNESSES
Thursday, September 22, 2016
Hon. Howard Shelanski, Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget............ 2
Hon. M. Patricia Smith, Solicitor of Labor, U.S. Department of
Labor.......................................................... 4
Amy McIntosh, Principal Deputy Assistant Secretary Delegated the
Duties of the Assistant Secretary, U.S. Department of Education 6
Alphabetical List of Witnesses
McIntosh, Amy:
Testimony.................................................... 6
Prepared statement........................................... 59
Shelanski, Hon. Howard:
Testimony.................................................... 2
Prepared statement........................................... 47
Smith, Hon. M. Patricia:
Testimony.................................................... 4
Prepared statement........................................... 51
APPENDIX
Responses to post-hearing questions for the Record:
Mr. Shelanski................................................ 62
Ms. Smith.................................................... 69
Ms. McIntosh................................................. 80
CONTINUED REVIEW OF AGENCY REGULATORY GUIDANCE, PART III
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THURSDAY, SEPTEMBER 22, 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 3 p.m., in room
SD-342, Dirksen Senate Office Building, Hon. James Lankford,
Chairman of the Subcommittee, presiding.
Present: Senators Lankford, Heitkamp, Tester, and Carper.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Good morning--good afternoon, I should
say, to everyone. I guess it is morning somewhere but not here
currently. Good afternoon.
I am going to begin this hearing. This is a hearing before
Regulatory Affairs, Federal Management Subcommittee on the
continuing review of agency regulatory guidance. This is the
third in our series, to be able to walk through just guidance
and regulations, how it comes about, and the process and the
decisionmaking, obviously the interaction with the Office of
Information and Regulatory Affairs (OIRA) and all the agencies,
and the American people.
I am going to put my opening statement into the record\1\
for the benefit of time. And we have blocked off about two
hours of time to be able to go through this conversation. So to
be able to honor and get to our questions faster, I am going to
put this toward the record for my opening Statement.
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\1\ The prepared statement of Senator Lankford appears in the
Appendix on page 41.
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With that, I would recognize the Ranking Member.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. And in the interest of time and great
gratitude to our witnesses, who I understand are a little time-
crunched, I am going to do the same. So I will submit my
opening statement for the record.\2\
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\2\ The prepared statement of Senator Heitkamp appears in the
Appendix on page 44.
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Senator Lankford. Great.
At this time we will proceed to testimony from our
witnesses. Let me introduce all three of them.
Do you want to be able to make an opening statement?
Senator Tester. I would like to submit my opening statement
for the record\1\ too, Mr. Chairman.
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\1\ The prepared statement of Senator Tester appears in the
Appendix on page 46.
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Senator Lankford. You are welcome to be able to put your
opening statement in the record.
At this time we will proceed with testimony from our
witnesses. We have three witnesses here.
Howard Shelanski is the Administrator of the Office of
Information and Regulatory Affairs, a post he has held since
confirmation in June 2013.
Patricia Smith is Solicitor for the Department of Labor
(DOL). Before assuming this post in 2010, Ms. Smith served as
the New York State Commissioner of Labor. Ms. Smith also served
as the Chief of the Labor Bureau in the Office of New York
State Attorney General for eight years, and as the Deputy
Bureau Chief and Section Chief for the Labor Bureau before
that.
Amy McIntosh is the Deputy Assistant Secretary, delegated
duties of Assistant Secretary, at the Department of Education's
Office of Planning, Evaluation, and Policy Development--which,
as we mentioned before, her business card has two sides.
[Laughter.]
In this capacity, Ms. McIntosh oversees policy development
on all aspects of education, from pre-kindergarten through
higher education, and leads Policy Program Study Services.
I appreciate all three of you here. It is the custom of
this Subcommittee to swear in witnesses before they testify. I
would ask you to please stand and raise your right hand.
Do you swear the testimony that you are about to give
before the Subcommittee is the truth, the whole truth, and
nothing but the truth, so help you, God?
Mr. Shelanski. I do.
Ms. Smith. I do.
Ms. McIntosh. I do.
Senator Lankford. Thank you. You may be seated. Let the
record reflect all three answered in the affirmative.
We are using a timing system today. You will see that
count-down clock. All three of you are familiar with the timing
clock on that, and I will ask you to honor that and leave
plenty of time for our questions.
Mr. Shelanski, you are recognized first.
TESTIMONY OF THE HONORABLE HOWARD SHELANSKI,\2\ ADMINISTRATOR,
OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Shelanski. Thank you very much.
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\2\ The prepared statement of Mr. Shelanski appears in the Appendix
on page 47.
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Chairman Lankford, Ranking Member Heitkamp, and Members of
the Subcommittee, thank you for the invitation to appear before
you today. I am pleased for this opportunity to discuss the
role of the Office of Information and Regulatory Affairs, in
the development of Good Guidance Practices for Federal
agencies.
OIRA's role with respect to guidance documents is twofold.
We advise agencies regarding best practices for developing and
issuing guidance and we also review of subset of those guidance
documents.
Agencies issue guidance to explain existing regulatory or
statutory requirements, often at the public's request, or to
make non-binding policy statements and recommendations. These
documents provide substantial value to the regulated community.
They can increase efficiency and help the public understand the
full scope of applicability and available compliance options
for current statutes and regulations.
Agency guidance practices should be transparent,
consistent, and require agency accountability. In 2007, the
Office of Management and Budget (OMB) published a bulletin in
the Federal Register titled ``Agency Good Guidance Practices to
Establish New Policies and Procedures for the Development,
Issuance, and Use of Significant Guidance Documents.''
This bulletin, which remains in effect, establishes
policies, practices, and procedures for guidance documents that
executive branch agencies identify as significant or
economically significant. Designations that arise from criteria
are very similar to those for regulatory significance.
Those criteria include whether a guidance may reasonably be
anticipated to cause changes that have a $100 million annual
economic impact, have material budget effects, implicate
interagency interest, or otherwise raise novel legal or policy
issues.
For the subset of guidance documents that agencies
designate as significant, the 2007 bulletin sets forth the
general policies and principles for agencies to help ensure
quality and transparency. These include adoption of written
internal approval procedures at each agency; establishing a
website that lists all significant guidance documents, in
effect, and that specify how the public can comment on them,
request modifications or rescissions or submit a complaint; and
following a notice and comment process for economically
significant guidances.
The bulletin also reminds agencies that the Administrative
Procedure Act (APA) generally requires notice and comment when
an agency establishes new requirements that it treats as
binding. In addition to the procedures required by the 2007
bulletin, OIRA also works with agencies to identify significant
guidance documents that will undergo interagency review.
Once a guidance document is under interagency review, OIRA
plays two roles. The first is to coordinate the review. OIRA
circulates the guidance to other agencies in the executive
branch whose own policies, expertise, or responsibilities may
in some way interrelate with the draft guidance document.
The second role that OIRA plays is to ensure that the
guidance embodies the relevant principles laid out in Executive
Orders (EO) 12866 and 13563, including whether the guidance is
both necessary and consistent with applicable statutes and
regulations.
OIRA reviews economically significant guidance documents as
well, although such guidance documents have been relatively
uncommon. In OIRA's experience, and based on agency analysis,
the behavioral impacts associated with non-binding guidance
documents do not often exceed $100 million in a given year.
One example where this could happen is when an agency
issues guidance on emergency or disaster preparedness to State
and local authorities. Even though the guidance is not binding,
if the guidance is sound, many States might be expected
willingly to follow such recommendations and change their
behavior accordingly.
The implementation of governmentwide Good Guidance
Practices continues to be a priority for OMB and OIRA. Agency
guidance documents serve an important role in the regulatory
sphere. The Good Guidance Practices set forth in the 2007
bulletin serve as a useful tool for agencies in setting the
appropriate scope for their guidance documents and in deciding
whether regulation would be a more appropriate mechanism. OIRA
will continue to work with agencies, as appropriate, on the
review of the various kinds of significant guidance documents
that the agencies issue.
Thank you for your time and attention. I would be happy to
answer any questions you may have.
Senator Lankford. Thank you. Ms. Smith.
TESTIMONY OF THE HONORABLE M. PATRICIA SMITH,\1\ SOLICITOR OF
LABOR, U.S. DEPARTMENT OF LABOR
Ms. Smith. Thank you. Chairman Lankford, Ranking Member
Heitkamp, and Members of the Subcommittee, I am pleased to
testify before you today on the Department of Labor's efforts
to ensure that we develop guidance which is accurate, helpful,
and appropriate; that informs workers and employers and all of
our stakeholders about their rights and responsibilities under
the laws that we administer and we enforce.
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\1\ The prepared statement of Ms. Smith appears in the Appendix on
page 51.
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We take seriously our obligation to develop regulations
that implement laws. The Department issues effective
regulations to help achieve Congress' objectives to do things
like invest in human capital to build a skills infrastructure
that helps American businesses. Our regulations also ensure
that employers and workers have the information they need to
better understand their rights and responsibilities, to improve
compliance with worker protection laws, and to achieve safety
and security in the workplace. We developed those regulations
consistent with governing laws and executive orders.
While the Department strives for full clarity in its
regulations, we know from long experience that our regulations
cannot seek to speak to every scenario in our complex economy.
And with any other governmental agencies, our stakeholders
often have legitimate questions about practical implications of
our regulations.
Therefore, we issue guidance to our stakeholders to clarify
either statutory requirements or our regulations. Our guidance
often includes answers to frequently asked questions about how
the rules apply to specific circumstances, or examples of best
practices for compliance and implementation.
We strive to issue guidance that is timely as well as
responsive to stakeholders, and one that is applicable to a
broad range of stakeholders. I can tell you firsthand how well-
drafted guidance can really help increase efficiency and reduce
stakeholder confusion, and reduce the need for enforcement.
We strive to issue guidance that is clear and accessible to
members of the public who are not subject matter experts and
who should not have to retain a lawyer to understand their
rights and responsibilities. Many guidance documents aim to
inform employers about their rights and responsibilities in
plain language, focusing on their most common concerns and
questions.
For example, the Department's Wage and Hour Division has
created a fact sheet and handbook about rights for workers and
responsibilities for employers under the Family Medical Leave
Act (FMLA) that lay out together the most common types of
requests for familial leave and what FMLA requires that
employers should do in response to those requests.
Another important aspect of Department guidance is that we
must provide timely assistance that is responsive to
stakeholder questions or emerging challenges. For example, in
April of this year, the Occupational Safety and Health
Administration (OSHA) and the National Institute for
Occupational Safety and Health issued interim guidance on
protecting workers from occupational exposure to the Zika
virus.
The Department of Labor remains committed to continuously
working to improve our guidance process. Following helpful
recommendations from the Government Accountability Office (GAO)
over the past year, the Department has pursued multiple
improvements in our issue of guidance. We have adopted
procedures to assure that, in accordance with OMB's Final
Bulletin for Agency Good Guidances Practices, the Department's
written procedures for approval of significant guidance are
made available to component agency staff.
We shared best practices on the development of non-
significant guidance among our component agencies and created a
checklist document that provides questions based on best
practices for agencies to consider when developing guidance. We
developed additional materials to assist agencies in developing
internal control procedures for guidance development.
And, finally, we conducted training and developed best
practices and tools to assist agencies in using and
interpreting Web metrics for guidance documents on their agency
websites, including ensuring that the documents are up to date,
relevant, and easy to access on the Department's website.
The Department remains committed to our broad efforts to
develop and disseminate accurate, timely, helpful, and lawful
guidance that informs our stakeholders of their rights and
responsibilities under the laws that we administer and enforce.
We continue to look forward to having a dialogue with you and
the public to discuss ways to improve our processes.
Thank you, and I am pleased to answer any questions you may
have.
Senator Lankford. Thank you. Ms. McIntosh.
TESTIMONY OF AMY McINTOSH,\1\ PRINCIPAL DEPUTY ASSISTANT
SECRETARY, DELEGATED THE DUTIES OF THE ASSISTANT SECRETARY,
OFFICE OF PLANNING, EVALUATION, AND POLICY DEVELOPMENT, U.S.
DEPARTMENT OF EDUCATION
Ms. McIntosh. Hello, Chairman Lankford and Ranking Member
Heitkamp. I appreciate the opportunity to appear before you
again to testify about the Department of Education's issuance
and use of guidance.
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\1\ The prepared statement of Ms. McIntosh appears in the Appendix
on page 59.
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The Department uses guidance to communicate timely and
consistent information to the diverse groups that we serve. In
general, we communicate with our stakeholders and the public
through a variety of forms, and guidance documents are one
important tool.
Guidance provides useful information about the statutes,
regulations, and programs that we administer. In addition,
guidance often responds to stakeholders' questions, helps them
understand and comply with the laws of Congress and related
regulations, and communicates best practices.
The Department uses guidance to promote transparency and
assist and guide our stakeholders, not to create new rules. We
use the rulemaking process, not guidance, when we need to issue
legally binding rules to carry out the Department's mission.
The Department is committed to issuing guidance that
reflects appropriate review and is well-developed, responsive
to grantee and other stakeholder needs, and appropriately
disseminated. We appreciate and often seek the opportunity to
hear from members of the public about their views before and
after the issuance of guidance.
The Department fully adheres to OMB's Bulletin on Good
Guidance Practices. As confirmed in the recent GAO report, the
Department has established written procedures for the approval
of all significant guidance. We have also compiled a list of
the Department's significant guidance documents, posted it in a
central location on our website, and update it periodically.
The Department often issues new or revised guidance to
respond to questions and feedback that program offices receive
from stakeholders. In some cases, the development of new
regulations may serve as the impetus for developing new
guidance. As the Department indicated to GAO, we make every
effort to issue guidance documents that restate the statute or
regulation in plainer language, that summarize requirements and
suggest ways to comply with the new regulation or offers best
practices.
The Department believes that its internal controls for
developing and producing guidance are effective, but we are
committed to continuous improvement of our internal control
processes and we appreciate the recommendations provided in the
GAO report. We have a plan approved by GAO that is in place and
we have made progress on implementing it since I last
testified. For example, we are finalizing new protocols for our
offices to use to clarify management roles and document
management review and approve all types of guidance beyond
those that are deemed significant.
Regarding significant guidance documents, we have recently
begun to require that all documents include a prominent
statement clarifying the purpose of the guidance and explaining
that it is not legally binding, nor does it have the force or
effect of law.
Additionally, we now more prominently encourage the public
to comment on each document and we explain how they can submit
comments. Also, we have recently created a separate page on our
website that explains, in general, the role of guidance and how
the public can provide feedback.
Finally, we have provided Department of Education staff
with a new best practices document about how best to most
effectively present guidance documents online.
The Department is committed to using guidance in a way that
will best assist our stakeholders and inform the public. We
believe we have done a good job implementing the OMB bulletin
and will continue with the recommendations made by GAO.
Thank you for the opportunity to testify today about the
Department's use of guidance documents, and I, too, would be
glad to answer any questions from the Committee.
Senator Lankford. Thank you.
I would like to first recognize the Ranking Member for
questions.
Senator Heitkamp. Thank you, Mr. Chairman.
And we on this Committee do not do, necessarily, oversight
on individual guidances or regulations, but sometimes getting
into the details of those guidance does, in fact, help us
evaluate where the issues may be with blurring the lines
between guidance and rulemaking taking shortcuts.
It is no surprise to the panel here that I have deep
concerns about the OSHA regulation as it relates to anhydrous
ammonia. And I think--I do not intend this to be an oversight
hearing on that, and I just want to make that clear, Ms. Smith,
but I think it does--I am trying to understand how we got to
the point that this was a guidance and not a rulemaking.
First I am going to ask Mr. Shelanski. In my opening
statement, I talked about a survey that the Department of
Agriculture (USDA)--the State Department of Agriculture--did on
the OSHA guidance and asked, what are the impacts, because I
wanted some kind of comparable analysis to what information we
have received from OSHA.
I want to just kind of give you some statistics: Only four
companies representing 11 facilities--that was 3 percent of the
North Dakota overall facilities--state that they are prepared
to be compliant October 1 of this year. Twenty-six companies
representing 67 facilities--which is 2 percent of the North
Dakota facilities--indicated that they will not be in
compliance by October 1. Eighteen companies representing 31
facilities--which is roughly 9 percent of North Dakota
facilities--indicated that they will, in fact, shut their door
if OSHA begins enforcement on October 1.
The estimate that we got from OSHA about costs of
compliance was about $2,100 and some change. Each one of these
companies that answered this survey and reported that they
believe that their compliance costs are in the neighborhood of
$25,000 to $50,000.
Now, I want to set the context that these are folks who
have been operating for a lot of years, in fact as many years
as what some of these staff people have been born, under the
same regulation, under the same rule. Nothing has changed. But
now a guidance has been issued that results in them believing
they have to shut their doors or incur $25-to $50,000 worth of
costs to be in compliance.
In your opinion, Mr. Shelanski, do you believe that this is
non-significant guidance? Senator Lankford asked this question
for the record. I think that it is fair to say OSHA did not
give us a direct answer. But given what I am telling you about
the attitude of this and the appearance of cost on the ground,
I mean, would you say this is non-significant?
Mr. Shelanski. Thank you very much, Senator.
I will just start by saying I will treat the question as
asking about whether it should be economically significant,
just because ``significant'' and ``economically significant''--
--
Senator Heitkamp. Yes.
Mr. Shelanski [continuing]. Are two different categories.
Senator Heitkamp. That is a fair point.
Mr. Shelanski. Certainly the guidance--just to start with
the basic principle--I think was significant in that there was
interagency interests in that guidance. And that is one of the
reasons that the Department of Labor I think brought it to OIRA
for review at the time that it came in.
It can be quite hard, especially with guidance, which
already has a pre-existing regulation that it is interpreting,
to know at the time of review what the costs will be. And I
think that, in this particular case, at the time that--and I
will refer you to DOL and to OSHA for the particulars of their
process, but certainly when it came to OIRA--and we coordinated
the interagency review process--I do not think that we had the
kind of data that you just articulated before us.
And one of the good things about guidance is that it is
flexible. There is the opportunity for the public to come back
to the agency and bring this kind of information forward. So I
would have to look at what the current state of the numbers are
and what the current evidence is to know whether or not the
guidance would be economically significant, but I think at the
time it was treated as a significant guidance but not an
economically significant one.
Senator Heitkamp. Yes, I think we would concede that there
probably is $100 million worth of impact. But my concern is
that if guidance is simply clarification under, kind of
everybody--and does not have the force and effect of law--that
guidance cannot change the law, cannot change a regulation; it
can clarify--how can implementation of a guidance shut down a
business?
Mr. Shelanski. I think in this particular case----
Senator Heitkamp. Legally.
Mr. Shelanski. In this particular case there was an
underlying regulation that at one point had been interpreted to
have an exemption--a particular exemption--that was in place
under which many of these businesses operated, or at least to
some extent operated. And then this was an interpretation that
changed, is my understanding, what the earlier interpretation
had been.
Senator Heitkamp. Yes, and this is a problem because we
give deference--and I do not mean to give the Chairman any more
ammunition than what he already has on deference--but we give
deference to longstanding interpretations of agencies. We say,
look, if Congress believed that should change, they have had
notice over a long period of time that this is the
interpretation, it is entitled to deference. It is how we have
interpreted this rule.
When we change how we interpret either rules or statutes,
and the change has a dramatic impact on the livelihood of
business people, we get a little suspicious that that does not
look much like a guidance and it is not a legitimate new
interpretation that somehow we have been wrong these 20-plus
years and now we are right.
And so, I think that this is the kind of example that leads
people to really question all the good work that can be done in
guidance. And I would be the first one to argue I think we need
guidance. I think that guidance is extraordinarily valuable. I
have seen it work, especially in the tax arena when we think
about tax letters and giving certainty so people can move
forward. But I am really concerned about putting a label on an
agency interpretation that changes a longstanding
interpretation and that has this kind of impact in the
marketplace.
And so I want to just want to kind of go through where we
are at, Ms. Smith, because I want to acknowledge some of the
work that OSHA has done in response to probably this Committee
more than almost anything. And so I want to say, both the
Chairman and I wrote letters which resulted in six months' stay
of enforcement and OSHA attendance at the Anhydrous Ammonia
Dealers Conference in Mandan, North Dakota, which I greatly
appreciate.
The Fiscal Year 2016 Omnibus Appropriations bill included
report language that restricted implementation of the guidance
that resulted in reclassification of retail facilities. It is
my understanding that OSHA considered it report language and
not legal language and announced that it will begin enforcement
on October 1. On May 6, OSHA announced the convening of a panel
and is asking that panel to make recommendations.
I guess my question is, this might be a path forward. And,
if the best thing that we can do is just two more months of
forbearance while we work through some of these issues--I know
you
guys--October 1 is around the corner, but it would be
extraordinarily helpful for us as we work through this.
So I want to know where the panel is in process. And what
can you tell me about the work that you are doing? How will the
results of the panel affect the decisions that you make at OSHA
going forward? And is OSHA planning to commence enforcement
next Saturday?
Ms. Smith. I am having problems pushing the right button.
So, thank you, Senator, for those questions.
The OSHA rulemaking process, as you probably know, is
long and complicated, longer and more complicated than most.
Before they engage in rulemaking, they have to go to the small
business--called a Small Business Regulatory Enforcement
Fairness Act (SBREFA) panel and basically ask the panel what is
their opinion about whether they should engage in rulemaking.
That is a required first step to rulemaking.
So we have gone to that panel. We have not gone through
that process--it can be a lengthy process--and we will take the
recommendations of that panel into serious consideration. We
cannot do rulemaking until we go to that panel. So that is the
first thing.
And the second thing is, it is true that we at the Labor
Department did not consider the report language legally
binding. However, given the facts that you have, given the
interest that Congress has had, we did agree that we would
abide by the report language and not do any enforcement before
October 1, 2016.
My understanding is that the text of the continuing
resolution (CR) was released this afternoon. I have not seen
it. I do not know if that report language continues. And,
honestly, I have not been able to consult with my colleagues in
OSHA to determine--if there is report language, they clearly
will follow it. If there is not report language, I honestly do
not know what they are thinking of doing.
Senator Heitkamp. And I would say this: I do not think that
at this point, although this is a moving--it is an instrument
in process, so we do not know what the final CR is going to
look like, but I do not think you need a CR to say, look, we
may have been too hasty in making a determination.
And I get safety. I mean, anyone who lives in farm country
the way I do--I basically was on the board of directors of an
entity that manufactured anhydrous. I understand what anhydrous
ammonia is and I understand the risk. So the net result is when
you do not have retailers who are managing it at that level,
you have direct sales off semis in a farmstead. So let's just
presuppose that that might even be more dangerous. In the law
of unintended consequences, that might be actually even more
dangerous than what you are proposing.
And so, I do not think you need Congress to tell you not to
do this. I think what you need to say is, guidance should be
interpretive. Guidance should not change the status quo in a
dramatic way. We need to rethink our cost estimates, and that
we are going to make an election to delay the implementation of
this guidance.
I mean, if you have the authority to issue it, you have the
authority to delay it. That is just law 101. If you just do
that, and even if it is just until the end of the year while we
work through this, that would go a long way toward people in
rural America,
who already have a whole lot of stress right now, given the
economics--people saying, well, at least they listened and we
have a chance to actually have a conversation.
And I recognize all the statements, especially yours, Ms.
McIntosh, about, we want access to letting people know, but,
guidance--if you said, as a lawyer, we issued a guidance, I go,
hmm, guidance does not have the force and effect of law. If I
only have so much time and so many billable hours to my client,
am I going to read a guidance or am I going to read a proposed
rule?
And so, just understand the frustration that I have
defending this kind of action when I believe that it has an
economic consequence issued in a guidance, not in a rule, and
as a result we are going to put people in North Dakota out of
business. It is just tough.
Ms. Smith. So, Senator, I appreciate your comments and I
will take them back to my colleagues in OSHA. Obviously, I am
not the Assistant Secretary for OSHA so I cannot make any
commitments to you, but one thing I would like to point out,
which is that I think OSHA did recognize the seriousness of
these changes and they did put out a request for information.
They put out, in the Federal Register, notice to the regulated
community that they were considering making these changes. They
asked for comments on these changes. They got a lot of comments
on these changes, including from many of the trade
associations.
Senator Heitkamp. You know you are just arguing that this
should have been a rules change.
Ms. Smith. I am not arguing. [Laughter.]
I am arguing that we go above and beyond----
Senator Heitkamp. Yes, you are convincing me it should have
been a rule change.
Ms. Smith. We go above and beyond what we are required to
do.
Senator Heitkamp. I think you did less than what was
required. And that is our difference of opinion on--and it
leads this Committee to think, guidance, boy, that does not
look like guidance, because something that should not have the
force and effect of law, simply provides some structure to a
regulation, should not change the status quo the way this has
changed the status quo.
And I do not want to beat a dead horse here. I would like
an answer on whether you guys are going to--regardless of what
happens with the CR, whether your colleagues at OSHA are going
to delay implementation of this guidance as we work through
some of these additional issues and as we get a response to
some of the concerns that I have raised today and that have
been raised across rural America.
Ms. Smith. Senator, like I said, I can commit to you that I
will take these remarks back to OSHA and discuss this with them
very seriously.
Senator Lankford. OK, as is the tradition of the Committee,
I am going to open up the microphone just for an open
conversation here between the two of us and other Members as
they join us in the conversation as well.
But, Mr. Shelanski, let me start with you. Are you
confident that OIRA sees all the agency guidance documents that
could potentially be significant? Are you confident you are
seeing all those now in all definitions of ``significant''?
Mr. Shelanski. No, we do not, and I do not think that we
would expect to. The number of guidances that we would review I
think is just a subset even of significant guidances.
Agencies are required, under the 2007 Good Guidance
Practices, or are advised under the 2007 Good Guidance
Practices, to follow certain procedures and develop certain
procedures for significant guidances. But I think it would get
in the way of the real benefits of guidance if all such
significant guidances were to come through OIRA for review, or
any entity for review.
Senator Lankford. So what is the standard of what the
agency should send to you for review?
Mr. Shelanski. Well, certainly the economically significant
guidances are ones that they must take notice and comment on,
and those are the ones that we want to see. As I said, those
are relatively uncommon.
The ones we tend to see--I would say the largest categories
of the documents that we tend to see are ones that just
agencies are interested in getting additional input on and help
in developing clarity, so they will voluntarily bring a number
of them with us.
Guidances that are associated with a rule that we have
under review or have recently had under review tend to be ones
that we would see as a matter of course and that we ask the
agencies to submit to us because they are closer related to
something that is really very much our core function of
reviewing the executive branch regulations.
Senator Lankford. But you are looking for overlap as well,
and what I am trying to figure out is--I would assume you are
trying to get as many significant guidance documents as
possible, because if three different entities are all putting
out some sort of rule that affects the same industry at nearly
the same time, possibly different deadlines--which has happened
before--you are the person that is supposed to help sort that
out and to say, pause, wait, somebody else is doing this; let's
coordinate this together.
Mr. Shelanski. Right. That is exactly right. And the third
category I think that is, one of the very common ones where we
would see a guidance document is where there are those
interagency kinds of interests, and we want to make sure that
the agencies are coordinated.
Senator Lankford. But they would only know if they actually
sent it to you. What I am trying to figure out is if--you have
an interest in seeing as many as possible. If I am an entity
and I have my own process in place for developing--whether it
is significant or not; I look at it as significant--I would
assume that is coming to you, not assume I have it. It sounds
like you are saying, it would be nice if they sent it to us,
but they do not have to unless it is economically significant.
Mr. Shelanski. They do not have to unless--if we get a
request that as----
Senator Lankford. But then who is sorting out the
conflicting guidances that may come out or the conflicting
deadlines that may come out from multiple entities because they
do not know someone else is doing this unless you flag them to
it.
Mr. Shelanski. So I think there are two ways for that to be
sorted out.
In the time that I have been in the job, I have not seen
instances where a guidance that affects another agency's
similar guidance has failed to come through us. We tend to see
those because agencies bring them to us, or the agency that has
not promulgated a guidance but regulates in the same area will
contact us and say, we know that Department X is developing a
guidance on a topic that is relevant for us; we would like to
see it.
I think the other very important way that this kind of
thing gets sorted out is, under the 2007 Good Guidance
Practices and under a lot of the practices that the GAO
identified and that the departments are developing, there is a
lot of feedback--even on guidances that do not go out for
formal notice and comment and for guidances that we do not
review--for the public to submit comments, concerns,
complaints, inconsistencies so that those guidances can be
coordinated.
So there is, I think, a pretty good system in place without
our intervention for making those corrections.
Senator Lankford. It gets noisy in a hurry when industry,
individuals, employers, employees suddenly realize, I have two
or three bosses here all telling me to do different things.
Their perception, rightfully so, is no one is watching. And so
the opportunity for those things to be able to come to you
first rather than individuals having to raise it and know the
right person to call and to say, this is a problem, we have two
different deadlines that conflict or two different guidances,
would be helpful.
Let me ask a question with that same thing on what you were
just saying on working at deconflicting. If a guidance is
promulgated by any entity and, fairly quickly, industry,
businesses, whoever it may be, States--contacts you and say,
this has above $100 million of cost, and they can show you
pretty quickly how and why, is there a position from OIRA to
then stop and say: This is economically significant, or it
could be. Was there a study done? Let's pause on this guidance.
Let's make sure that it is done--just make sure this should
have not been a regulation rather than a guidance document.
Because you go back into some of the process safety
management (PSM) rules and other things that we have discussed,
pretty quickly it was learned this is well in excess of $100
million. But to be able to raise some issues up and to say,
well, this is guidance, we are going to keep pressing it as
guidance, who has the pause button to say, we have to relook at
this as economically significant?
Mr. Shelanski. Thank you, Senator.
If we get information from the public--if industry contacts
us or stakeholders of any kind contact us to let us know that a
guidance has gone out that is either having the effect of new
law, so really is not on the side of the line of guidance but
more of regulation, or is having an economically significant
effect and did not go through the notice and comment
requirements of the 2007 Good Guidance Practices, we are in a
position to ask the agencies to please come in to talk to us
about the guidance. And once we get a better picture of what is
going on, we can call that guidance in for review.
Senator Lankford. Do you have the ability to be able to
force a pause? It sounds like a very polite process: We can ask
them to go back and review on that. Who has the ability to be
able to say this is an issue? Is that an outside court? Is that
working with the agency? Is that OIRA? Who has it?
Mr. Shelanski. I do not know the extent to which I can say
I have an--I can absolutely stop something.
Senator Lankford. I am just saying it is not hypothetical,
obviously.
Mr. Shelanski. No.
Senator Lankford. We can all go through multiple guidances
that when it went out and came out, agencies all said, I do not
think this is economically significant, did not come to OIRA so
therefore was not open to the Congressional Review Act (CRA),
for instance, and could have the possibility of skirting
Federal law. There are so many different things that go out.
And immediately it comes up and individuals say, just in my
company that will cost $20 million. So it is easily above $100
million nationwide.
How do we pause and say, let's do this right; I think we
put out something that is economically significant without good
input?
Mr. Shelanski. I think at that point there are two
processes that can be in place. I do not think an agency would
refuse our request to look at the guidance to determine whether
or not there was a likelihood that it was economically
significant and then to consider what remedial steps should be
taken.
Senator Lankford. Do you have an example of when that might
have happened or--I mean, I am not trying to put you on the
spot on it, but just, is there one that you know of at this
point that has happened like that?
Mr. Shelanski. There are times when we have known that
agencies were working on guidances that could possibly have a
significant effect on the public, a significant economic
effect, and we have asked the agencies not to issue it without
interagency review, and the agency has said OK and submitted it
to us.
A recent example of that would be the Food and Drug
Administration (FDA's) sodium guidance. It is a guidance that
sets no thresholds; it sets no sodium reduction methods. It
makes recommendations. We do not know the extent to which
restaurants or food manufacturers will follow those
recommendations, but there is a reasonable chance that one
could anticipate they would take a number of steps that could
cost quite a bit of money.
We therefore asked for that guidance to come through
review. We put it through review and now it is out for notice
and comment, which is how we would treat a guidance that either
will have or has a reasonably good possibility of having an
economically significant effect.
Senator Lankford. Because there are guidance documents that
are going out that are not coming through OIRA, do you have a
concern that there may be some guidances being promulgated and
put out there that are economically significant that might
bypass the CRA legal requirement for the Congressional Review
Act, and to say: We are putting this out; it is not
economically significant so it is not exposed to the
Congressional Review Act?
Mr. Shelanski. I think that would be--I have not
encountered such a situation.
Senator Lankford. So that is not a concern to you that that
would come out?
Mr. Shelanski. I think it would be a very unlikely event
that that would happen. If it happens, I think it is extremely
rare and unusual.
Senator Lankford. I hope you are correct on that. The
question is the unknown part of it. There is a concern to say,
if something looks significant, there is a benefit for the
agency to go within the executive branch and ask the second
opinion. That is why the process was set up in the first place,
not to bog you down.
But you are seen by everyone within industry and across the
United States--that know you are an incredibly important but
invisible agency in many ways. You are seen by the entity as
being the gatekeeper to make sure there are no conflicting
rules, there is not significant things that come out, that
everybody is following the law through the process.
The agencies see the thing that has to be done, you see the
way that it has to be done, and I think there is a great
benefit of the design of it to make sure that there is a check.
And my concern is--it is right to be able to run it through you
whenever it gets close, and my perception--and you can tell me
I am wrong--my perception is, because there are so many rules
that are coming out, there is not time to be able to run
through all of them so set up a process in the agency and we
will trust you on it, when really everybody else is trusting
you on it.
Do you have a thought on that?
Mr. Shelanski. Yes. My thought is this: I think while there
is the theoretical possibility and maybe the occasional example
of where that has happened, I think it is unusual for two
reasons. Agencies do not want their guidances to be held in
abeyance, whether by a court or Congress or some other process.
They therefore are interested--I think if they are concerned
that there would be that kind of public response--to get that
cleared up ahead of time. So I think in most cases agencies
would bring those kinds of guidance documents to us.
Because guidance is, by its nature, non-binding and should
not be creating new legal obligations----
Senator Lankford. That is the theory.
Mr. Shelanski [continuing]. I think the number of guidance
documents that would, themselves, separately from the
underlying regulation, create a lot of economic impact are very
limited.
And I would point out that the one case that we have talked
about today, I think we and the agency heard rather quickly
what the public concern was about that guidance, which is one
of the reasons it has not gone in to effect. So I suggest that
there are some pretty good safeguards.
Senator Lankford. Well, I would say only this: That public
consternation that came back at the agency and entities
obviously floods into our office when they raise the question,
what is the Federal Government doing to us rather than for us?
And it begged for early notice and comment rather than late
having to fight it.
I can assure you, Americans are not excited about fighting
their own government. Once it is out there, there is a
perception that they are now fighting it. If you can help them
in the process to go, this is going to be a fight, this is
economically significant, you can certainly help resolve a lot
of the frustration across the ``fruited plain'' just because
people want their government to help them, not do something to
them on that. And I get that.
Let me ask you a question just on exemptions. In 1993, OMB
gave exemptions to the Internal Revenue Service (IRS) from a
lot of the process of going through OIRA. It was an interesting
letter. And it was obviously OMB had the opportunity to be able
to give exemptions based on the statute and they did that. They
still hold on that today. Do you think it is appropriate for
the IRS to be exempt from OIRA review?
Mr. Shelanski. Thank you, Senator.
I want to clarify first that the IRS is, in fact, not
exempt from OIRA review. We do review some IRS regulations.
Senator Lankford. Make a guess on a percentage.
Mr. Shelanski. Oh, it is small, but that has to do with the
nature of IRS rulemaking.
Senator Lankford. Sure, and I understand a lot of their
rules are very specific in their letters, as we have talked
about before.
And by the way, I am not trying to cut off those letters
because they do help provide clarity. I am trying to figure out
oversight.
Please go ahead. Continue.
Mr. Shelanski. Thank you.
I think the purpose of that Memorandum of Understanding
(MOU) with the Treasury Department was that many of the IRS
rules--in fact, the vast majority--really are purely
interpretive rules that are rather directly implementing
statutory directives from Congress into the tax code. And often
those have to be put in place rather quickly so people can do
new tax planning, and there is very little value to another
layer of review.
So I think the decision was reached for the interpretive
rules of the IRS to be outside of the OIRA review process. On
the other hand, rules that do not fit that description do come
to OIRA for review. The IRS just does rather few of those.
Senator Lankford. Right. Well, the question that hangs out
there, though, is the GAO just did this study where they
determined that the IRS really does not document their analysis
of their economic impact. They basically refer that there is
not an economic impact. Or if they have it, they are not
documenting it.
And so it is the unknown that hangs out there as well that,
again, the GAO determined IRS is not really tracking this. And
OIRA is in a position to say, we are only looking at what they
have tracked. There seems to be no gatekeeper in between the
two. That is my concern.
Senator Heitkamp. I guess, Mr. Shelanski, one of the IRS
rules that is--or IRS interpretive changes that we have seen
has been the inversion, the change in terms of how we are
dealing with inversions, corporate inversions. Is that a change
that came to OIRA?
Mr. Shelanski. So we have had two rules from the IRS
related to inversions and they did come through for review.
Senator Heitkamp. OK. So that would be a good example of
something that would reach that level of review at OIRA?
Mr. Shelanski. Yes, those would not fall within the
exemption or the Memorandum of Understanding that was issued in
the early 1990s, because those do not fit the definition of
interpretive rules that are really dictated by the statutory
changes.
Senator Heitkamp. I think that we all know that financial
and commercial paper changes, the nature of it changes. There
has to be some flexibility that they have because they have to
make those determinations. They cannot wait five years. I mean,
the tax returns have to be filed.
And so I can appreciate it, but I do believe that there are
things that are done at the IRS that need maybe a second look,
especially when people believe that they have relied on
longstanding interpretation and that interpretation now is
changing.
And that is--it goes back to--and I do not mean to beat a
dead horse, but you did say, that very quickly you realized
that there was a significant impact, a lot of significant
interests that implantation has been delayed. It is not exactly
true. We are up against the wire, again October 1. And, we
still have not satisfied the public that they have had adequate
input in this process.
And so, would you join me in encouraging OSHA to delay
implementation of that regulation, or that guidance?
Mr. Shelanski. Well, I think one of the things that I think
OSHA has done that is really heartening is that they did
initiate the SBREFA panel to make recommendations.
Senator Heitkamp. Right.
Mr. Shelanski. And I think that they did that because they
heard this kind of----
Senator Heitkamp. But if I can--I mean, I am going to add
to this because so often what we hear is that: We go to court
but in the meantime the court does not stay the implementation.
The process goes on. So even if we win through that review
process, even if we win in court, we have already changed and
implemented and spent this money, so we were not given an
opportunity to really have input before the economic input hit
us.
So I think that is the case here, and I think we need to be
really careful. You say, well, we are heartened that they
started this process. So, fine, let's say that through this
process they reverse it but they are going to do enforcement
October 1 and you already have some people who have changed
their operation to facilitate the change. Is that really the
kind of relationship we want with the public as it relates to
an interpretive change that we see in this case?
Mr. Shelanski. I think that certainly the public feedback
and acting in an accountable way on that public feedback is
important to all of our regulatory system.
Senator Heitkamp. Yes.
Mr. Shelanski. And I will look forward to discussing the
matter with our colleagues at the Department of Labor and OSHA
in the wake of this hearing.
Senator Heitkamp. Yes. And, it has to be done fairly soon.
Is it the 21st today?
Senator Lankford. Twenty-second.
Senator Heitkamp. Twenty-second, so we have 8 days.
Senator Lankford. Just following up on that same issue--we
obviously talked about this last year as well and it is still
an ongoing issue, and it is a good example of process and how
the process works or does not work on determining guidance or
non-guidance.
So the last time that we actually talked through this with
the wonderful Recognized and Generally Accepted Good
Engineering Practices (RAGAGEP), which has the worst possible
acronym ever out there----
Senator Heitkamp. I could not agree more.
Senator Lankford [continuing]. Yes--the chemical
concentrations and the retail exemption. We in this Committee
challenged all three of those, saying these do not smell like
guidance. These look like regulations to us but they are being
given out as guidance.
Obviously OSHA and the Department of Labor dealt with
multiple lawsuits. This was not just industry saying, hey,
there is a problem. It all goes to court. Tremendous amount of
cost and expense both to the Federal taxpayer and outside
industry to be able to fight against that. And since that time,
we have delayed enforcement of the retail exemption. And we
received at this Committee a very interesting letter from the
Department of Labor coming back and saying, we are now putting
this out for notice and comment.
And then we have had a settlement dealing with the
Recognized and Generally Accepted Good Engineering Practices
piece in the chemical concentrations, which again look like
regulations to me when it is all said and done because those
were pulled out, gone to a court; with that court and those
group of individuals that were in the lawsuit, created a
settlement and came out with a decision, and then now are
giving it to everyone.
That looks like a new regulatory process to us to say: We
needed a regulation. We put out a guidance. We went to a
lawsuit, did a settlement, then came out with a piece. It just
looks like a faster way to create a regulation in a different
route to be able to get there.
And it also comes back to us and reaffirms our question
from a year ago. These smell like regulations and it certainly
looks like they ended up acting like regulations, based on just
not only cost but what they did and how they were treated once
they left off here. What am I missing?
Ms. Smith. Both the RAGAGEP guidance, the original
guidance, and the Appendix A guidance were guidance documents.
They were never legally binding.
When the Department of Labor was asked to look into that by
the President's Executive Order, we did go above and beyond
what we thought and put out, for notice and comment that we
were thinking of changing these guidance documents. We then did
change the guidance documents after we got notice and comments.
And, yes, we were sued. The plaintiffs in both the lawsuits
that we settled, although their original claims were that we
had to
go through notice and comment, in the end the plaintiffs who
were--the trade associations representing most of the regulated
industry, the plaintiffs were willing to basically say: If you
make certain changes in these guidance documents we are happy
with them.
Senator Lankford. Again, that is only those individuals
that were in the suit.
Ms. Smith. Right.
Senator Lankford. That is part of the challenge. It created
a new process but not everyone was privy to the conversation.
Those that had enough money, and through the trade association,
were able to do the lawsuit. They got to negotiate that rather
than everybody.
Ms. Smith. Well, everyone could have negotiated it. I mean,
we would have been perfectly happy with OSHA, that if those
individuals had come in to us and say, we think there are some
problems with the guidance; we want to make changes to the
guidance, we would have sat down and talked to them. We have
made changes to other guidances when individuals have come in
after the guidances were done and they tell us that. But----
Senator Lankford. But you know--I am sorry to interrupt--
you know as well as I do, those were coming out very rapidly
after the fertilizer plant explosion in West, Texas. And what
we heard in this Committee and what was out in the public was:
This is an emergency. We have to do this. Let's get it done
quickly and let's get the process started. Of course, now we
have learned the West plant was actually intentionally set
fire, not an industrial accident after all. But the perception
at the time was, we are running; we are going.
And so I understand industry stepping in, raising their
hand and saying, include us in the conversation, but it seemed
to take a lawsuit to be included, not just a, hey, let's sit
down at the office and talk.
Ms. Smith. With all due respect, Senator, after the
explosion the President put out an Executive Order. We did put
out the request for information, specifically saying that we
were considering changing the three guidances. And we waited
three months for comments from the public. We got a lot of
comments. We then extended
it--at the public's request we extended the comment period even
further for about three weeks. And then we sat back and we
analyzed the comments and put out the guidance.
Senator Heitkamp. Under the Administrative Agencies
Practice Act there is an emergency rulemaking procedure that
can be utilized in circumstances where public safety needs to
be addressed in an expedited fashion. Why wasn't that used?
Ms. Smith. Because what we were changing was guidance. We
were not changing a rule.
Senator Heitkamp. That is a problem. [Laughter.]
And, we keep going back to, what we were changing was
guidance. And, it just keeps getting to that point where had
you started with a rulemaking process, you would have a firmer
foundation for this whole structure that you have created, and
therefore more systematic support, I think.
And, we are talking in circles here because we are here to
try and figure out how we more effectively delineate between
guidance that we know--and I think it is unanimous at this
podium--that these guidances that were issued by OSHA are a
whole lot more like rules and not guidance, in our
understanding of what that means.
So, I mean, you obviously have a difference of opinion.
Just work with us to try and figure out where that line is. And
when it so dramatically affects people's livelihoods, it just
really gets us to that spot where we just go, that should not
be done. And I am not saying on a whim. I understand what you
are saying about process, Ms. Smith. I understand what you are
saying about opening it up. But it looks and reads to me like
guidance is being used as ``rulemaking light.''
Ms. Smith. Senator, I understand your point.
Two things I would like to say, which is that the original
guidances were not done through notice and comment rulemaking.
And maybe that is the problem, because we were interpreting a
rule. If we had gone through notice and comment, for all we
know we would not have put out the original guidance. We would
not have put out guidance. We might have put out a different
rule than the one that we put out. But we did not go through
notice and comment guidance when we originally put out all
these interpretations.
And I know I am being the lawyer in the room here, so I
apologize for that, but the Supreme Court has said that if you
put it out originally as guidance, you do not have to go
through notice and comment rulemaking to change that guidance.
So I wonder whether we should consider if we are putting out
guidance that is interpreting certain regulations, maybe we do
need to put more notice and comment, but we did not do notice
and comment.
And remember--Senator Lankford, I would like to say this to
you about the settlements. Yes, we settled those cases, but it
is still guidance documents. In any individual situation--if,
for instance, OSHA cites someone for violation of Appendix A,
they can contest that citation. It is not legally binding on
them. It is our interpretation. But there is a whole contest
provision that can go. And from time to time, the OSHA or the
Labor Department, either the administrative law just says, you
are wrong; your guidance is wrong.
And so that is the difference between guidance, in my
opinion, and notice and comment rulemaking. If we had gone
through notice and comment rulemaking in the beginning or the
second time, there would not be that opportunity to contest it.
Senator Heitkamp. Would you agree, as a lawyer, that
longstanding agency interpretation is given a certain level of
deference by the courts?
Ms. Smith. I would have said that 5 years ago, but given
the recent Supreme Court decisions, I am not so sure that is
true. I mean, I think the most interesting thing in the
mortgage bankers case, which is that the Court said you did not
have to go through notice and comment rulemaking to change
guidance----
Senator Lankford. Only on interpretive.
Ms. Smith. Only interpretive guidance, but it did not say
what level of deference it would give to that change in
guidance.
Senator Heitkamp. I think that there are intellectually
challenging questions here in terms of where the line is. And I
think that there is some common ground that we can achieve with
agencies, especially when we are now operating with a third
branch of government, which is the judicial branch, which you
hardly ever get clarity from, right? I mean, that takes a much
longer period of time to build the case law. That is a pretty
big ship to move.
And so, I could not agree with you more that guidance,
especially the kind of guidance that we are talking about here,
if, in fact, you have it in an agency, that you may have to
rethink whether a guidance document is the right instrument to,
in fact, provide that kind of clarity to the law, that kind of
direction, and that if this is not better done in rulemaking. I
could not agree with you more.
And maybe that is the cyclical discussion that we are
having here, because you know what you are doing in terms of
your guidance, your amending guidance, and we are saying, we do
not get how any of this can be guidance and how this cannot be
rulemaking, given the consequences of what the change means to
the industry.
Senator Lankford. OK, can I jump in here as well, just
based on what you were saying on that, because what Senator
Heitkamp is saying is the crux of the issue. It is trying to
figure this out and why this process part of this conversation
is so important. And obviously we are talking through specifics
here because they give examples, but it is much larger issue
that we are trying to get to the crux of in the definition and
how we can help provide some clarity to this.
Based on what you were just saying, Ms. Smith, on the
legally binding and going to a court to be able to review this
and to go through the process on it--Ms. McIntosh, before you
think we are just going to skip Education on this----
[Laughter.]
Let me draw back and come right off of what Ms. Smith was
just saying.
Last year Secretary King and I were having a conversation
in one of the hearings and we were talking about the 2011
``Dear Colleague Letter (DCL)'' sexual assault guidance that
was put out. The change from clear and convincing evidence--
which most universities use--to the preponderance of evidence,
and to try to figure out how this works within that
institution--Ms. Smith was alluding to something that we have
all talked about--it is not legally binding.
The question is, if a school chooses to apply clear and
convincing evidence in their issues for sexual assault, how
would the Department respond?
Ms. McIntosh. So, thank you for including me in this
conversation and for that question.
I am not a lawyer, and you did ask me before about the
change--what you determine--what you call a change in the
standard of evidence. It is my understanding that our ``Dear
Colleague'' that makes a reference to the preponderance did not
change our interpretation--longstanding interpretation----
Senator Lankford. I could introduce you to a lot of
university presidents that do not agree with that statement and
a tremendous number of law professors across the country that
do not agree with that statement. They see it as a very large
change in how evidence is handled.
Ms. McIntosh. So we may have to disagree for this moment,
but that was the evidence standard that our agency had been
using and it is what we understand many universities were
using, and we think it properly derives from the words in Title
9.
So, that said, that guidance document, again, does not have
the force of law. So the guidance document----
Senator Lankford. I am so sorry to interrupt. Can you help
me understand, from Title 9, where that comes from? And again,
not trying to put you on the spot----
Ms. McIntosh. Right.
Senator Lankford [continuing]. But you were just mentioning
you think it comes from Title 9 and from the word that is
there. I cannot seem to draw that standard from anything that I
read in Title 9.
Ms. McIntosh. So I will tell you what I believe the source
is.
So, this is our interpretation of the words ``equitable''
in the Title 9 regulation, and this burden of proof is how we,
you know--here we go. Apparently multiple administrations, not
just our administration, that for procedures to be equitable
they must use the preponderance of evidence standard. And that
that is our interpretation of Title 9.
Now, the guidance document itself simply explains that. It
does not have the force of law. So any----
Senator Lankford. So we are back to my original question.
If a university chooses to use clear and convincing standards
versus preponderance of evidence, what does the Department of
Education do with that school?
Ms. McIntosh. Well, so what would happen in all of our
enforcement is there could potentially be a complaint that
comes from someone who feels that the sexual harassment policy
in the university was violating their rights, and we would
investigate that complaint thoroughly and around all the
specific facts of that individual case. And that could take
some time. And we would then come to a determination on the
law--not about our guidance but on the law--and work with the
university to come into compliance, if that was required.
Senator Lankford. I am still waiting. I am sorry. If a
university uses clear and convincing as their evidence
standard, which many have for a long time----
Ms. McIntosh. So, I cannot answer about any hypothetical
case or example where there might be----
Senator Lankford. Well, how many----
Ms. McIntosh [continuing]. Clear and convincing.
Senator Lankford. How many lawsuits are currently pending
in the United States based on this ``Dear Colleague'' letter?
Do you know?
Ms. McIntosh. I do not know the answer to that. I can
certainly follow up.
Senator Lankford. You know what? I would be interested to
know.
Ms. McIntosh. Based on the letter or the clear and
convincing?
Senator Lankford. Correct. So, for instance, just this
week--and I am going to leave all the different universities
out--just this week I was talking with a university president,
and I mentioned that we were going to have this hearing, we
were going to talk about some of these issues, and he shook his
head and he said: I currently have two lawsuits against my
university right now because we chose to use preponderance of
evidence instead of clear and convincing, and we have lawsuits
against our university right now.
And that story is repeated over and over again from
students or former students that are challenging the new
process, and also from universities that are challenging the
Department of Education.
This has not been a simple guidance just to be able to
clarify what most universities do. This has been an enormous
change that it would have been extremely helpful not only to be
able to look at and to be able to go through a full notice and
comment, but to also be able to determine why this standard
versus this standard?
And it has created this long fight over an issue that we
all care very much about. None of us want sexual assaults on
campuses. We all want a fair process. This is often a legal
process with local police within that State, but it is also a
university issue as well and it has become a very big issue. So
if there is a way that the Department of Education can identify
for me how many lawsuits they know of across the country, that
would be helpful.
Ms. McIntosh. So, I appreciate your concern about the
prevalence of sexual harassment and sexual violence on campus
and how very important it is that our Office of Civil Rights
(OCR) maintain vigilance and investigate complaints as they
come to us. I think you know we have over 200 active
investigations about sexual harassment and sexual violence on
campuses. It is a very serious problem.
Senator Lankford. It is a very serious problem.
Ms. McIntosh. And it is something we take very seriously.
Senator Lankford. But it suddenly----
Ms. McIntosh. I cannot answer the question about other
lawsuits filed against universities on the basis of this
standard, but I will certainly take the question back and see
if I can get more information about that.
Senator Lankford. So at this point your statement would be
it does not have the force of law, but it is your
understanding----
Ms. McIntosh. Our guidance document does not have the force
of law.
Senator Lankford. So if someone has a different standard--
--
Ms. McIntosh. We would investigate complaints on a case-by-
case basis. And much of that goes well beyond the evidence
standards, all the circumstances and facts about how a
university handles sexual harassment complaints----
Senator Lankford. Sure.
Ms. McIntosh [continuing]. And work with the university to
come to a better place.
Senator Heitkamp. I think one of my concerns--and it goes
back to what I said, longstanding agency interpretation and
deference. I understand you have an opinion about what the law
provides: clear and convincing evidence versus preponderance of
the evidence. The university may have a different point of
view. Eventually we are going to be in litigation, determining
what, in fact, that standard is.
The concern is that, when you issue guidance, somehow the
courts get the idea that: We have given notice now. This is
what it is. And it is an agency interpretation that is entitled
to deference and so we are going to rule with the agency, when
that interpretation was done through a guidance and not through
a regulation where people were given an opportunity to comment.
And so, where I may divert a little bit--I understand what
you are saying. It is just: Hey, guys, this is what we think
the law says. It is not binding. You want to litigate this. You
want to have a different opinion. You can, but you run the
risk, having a different opinion, of us taking enforcement
action based on how we are interpreting the statute.
I mean, you would agree that that happens, right? So why
issue the guidance otherwise, if you are not giving them notice
that you are going to sue if they do not agree with you?
Ms. McIntosh. So, we issue the guidance so that a broader
audience can understand how we interpret the laws and the
related regulations under Title 9. If we did not issue the
guidance, we would do one complaint at a time, which would not
be an especially good use of taxpayer funds, and it would not
protect students on the very broad and serious question of
sexual harassment.
I would repeat that we do not think we have ever changed
our interpretation of the burden of proof from--we have never
changed our longstanding interpretation. So----
Senator Lankford. So why was this published, then, if that
was the assumption?
Ms. McIntosh. Well, the ``Dear Colleague'' letter about
sexual harassment covers a variety of topics related to how a
university can appropriately handle these. And that is simply
one----
Senator Lankford. But that standard of evidence was not
published before. You are saying it was the assumption, but it
has caused a firestorm across universities having to create, in
many places--I am talking about regional colleges, 2-year
colleges
having to commit a tremendous amount of individual time and
literally--as I have talked to some regional universities,
literally pulling people out of the classroom and not hiring a
professor in that spot because they had to hire additional
compliance people to be able to manage just this one ``Dear
Colleague'' statement.
Ms. McIntosh. Well, I appreciate your concern and it is
interesting to hear that feedback. I will certainly discuss it
with my colleagues.
Senator Heitkamp. I want to bring you back into this
discussion, Mr. Shelanski. Obviously you can see we are
struggling a little bit here. You are a lawyer, right? He is
like, oh, do not ask me for a legal opinion.
And I think that, given your experience and the role that
you play, maybe your insight as we try and kind of narrow this
issue or look at how we address concerns of the public about
the overreach of guidance--not overreach in terms of the
substance, but just that this should not be done with the
guidance; this should be done with more process.
I mean, how big of a problem do you think this is in agency
interpretations today, this use of guidance rather than
rulemaking?
Mr. Shelanski. Thanks, Senator.
I think that while there are certainly examples that we
have been discussing today where there has been concern over
agencies' use of guidance, I think that we should not lose
sight of the fact that the vast majority of guidances do not
raise this kind of concern, and that overall I think the
guidance system works quite well.
Senator Heitkamp. And it is welcomed by the regulated.
Mr. Shelanski. And it is welcomed by the regulated entities
because very often what they are looking for is a reasonably
fast clarification or answer or explanation of how they might
comply with existing legal obligations.
Senator Heitkamp. Yes. I do not care what the answer is;
just give me an answer so that I have certainty.
Mr. Shelanski. Right, or let me know if what I am doing is
good enough because the underlying regulation is not
sufficiently clear to me that my compliance is adequate.
So, I think that the--overall my observation, what I have
seen, is a guidance system that works quite well and is quite
healthy.
Then I think there are the, few close cases that raise hard
questions. And I think what I am hearing loud and clear from
you and from Chairman Lankford today is these close cases need
further thought in the level of process that they should go
through. And I think that raises an interesting question that
my agency colleagues and I, I am sure we will all take back to
discuss about how----
Senator Heitkamp. I mean, nobody up here wants to throw out
the baby with the bathwater.
Mr. Shelanski. Right.
Senator Heitkamp. I have long maintained that I think
guidance can be extraordinarily helpful. In fact, to eliminate
guidance could be extraordinarily disruptive. But when guidance
changes longstanding interpretation or somehow flips a switch
and we are headed in a different direction, the spider sense
takes off and we go, I am not sure that that is the right way
to do this.
Senator Lankford. Senator Carper, we are in just an open
conversation. You are welcome to be able to join us.
Senator Heitkamp. It is what we do in this Committee.
Senator Lankford. Senator Carper, who is the Ranking Member
of the full Committee, we are glad that you are here as well.
Senator Carper. I can kindly do that. Thank for holding the
hearing. All of you, thanks for coming out.
I walked in and I noticed that the Chair of the
Subcommittee has red hair and the Ranking Member. I notice the
reporter here has red hair and one our witnesses appears to
maybe have it. But I was going to ask unanimous consent for
someone who did not have red hair to have a chance to say
something. [Laughter.]
Senator Lankford. Well, let me check with Senator Heitkamp
before I give that right away.
Senator Heitkamp. I do not know. [Laughter.]
Senator Carper. OK, thanks. Thank you for--I love the
spirit with which you--the two of you work together. It is an
inspiration and a loud, good example for all of us. So thank
you for that.
Senator Heitkamp. Thank you.
Senator Carper. I wish I could say something nice about
your staffs, but I cannot do that too. [Laughter.]
Good to see you all. Thank you very much for coming, for
your service to our country.
Mr. Shelanski, you remind me a lot of a guy who sat before
us in this room not that many years ago, and I think the
President nominated you for a job over at OMB. What was it
called?
Mr. Shelanski. That was when my hair was still red, before
it was gray. [Laughter.]
Senator Carper. That is OK; you still have hair. That is a
plus.
All right, I want to go back to something the President
said in a State of the Union address. And I am not sure what
year it was. It was about five or six years ago, maybe four,
five, or six years ago. And he was talking about issuing
regulations.
And he was talking about not just, like, looking forward
but actually taking the time to look back and to see what we
had done by issuing regulations, if they were having the kind
of effect that we were hopeful for or not, and if there were
ways that we could tweak those regulations and in some cases
retire them entirely, and what would that mean for our country?
And I have heard a number, in the five or six years since
he spoke at the State of the Union, that indicate how much we
have saved in reducing just waste and, in some cases, paperwork
and so forth. But the initial number I seem to recall hearing
was like--we thought we would save, like, maybe $10-or $15
billion over five years. That was, like, a preliminary number.
And I am told that the number has gone up by quite a bit.
Would you just talk about that for us and tell us how this
has happened, because this is a number that I am seeing
advertised now. I think it is $36-or $37 billion in savings
over a five-year period. It is a good deal greater than what I
think I had earlier anticipated, but that is good. But just
talk about how we got there.
Mr. Shelanski. Thank you, Senator Carper. I appreciate the
question.
The President did issue an Executive Order 13610 that asked
agencies, all agencies, to put in place a process for
retrospectively looking at the rules they already have on the
books and to either eliminate or modify those rules that were
no longer doing their job or were unnecessarily costly.
Since that time--and a lot of----
Senator Carper. When I heard about him doing that my
thought was, do you think agencies would take this seriously or
will they hunker down and maybe after a while just it would go
away?
Mr. Shelanski. I think the agencies have taken this
seriously. And I think I actually--by the time I had arrived at
OIRA, through the hard work of my predecessor and the OIRA
staff----
Senator Carper. Cass Sunstein.
Mr. Shelanski [continuing]. Yes--they had put in place a
reporting system. And we have kept the agencies on schedule,
reporting to OIRA twice a year on their plans for retrospective
review.
Reports are easy to generate. What is harder is to
institutionalize a practice of actually acting on those
reports.
Senator Carper. Right.
Mr. Shelanski. And what we have seen in the four to five
years since this process was undertaken, is that the agencies
have--and we have asked them to--have been more specific about
what actions they have completed, what actions they are
abandoning, and an accounting for what savings they have
created.
And I think to date--I think at the time that I was going
through my confirmation hearings, the number was about $10
billion in savings were predicted. Since that time, and after
that initial ramp-up, we have hit a level of five years'
savings that we now estimate to be $38 billion and growing.
Agencies have wholesale repealed, I think, you know, dozens of
regulations and eliminated thousands of pages from the Federal
Register.
More importantly, we now have this process
institutionalized throughout the executive branch agencies and
have these agencies rather regularly dedicating resources to
retrospective review.
This is a process that we hope will continue. It is hard
work for the agencies. The agencies obviously have tight
budgets and tight staffing and they are eager to move forward
with new policies, so to get them to stop and look back at
regulations they have completed I think is difficult. I give a
lot of credit to the agencies for taking this seriously and for
achieving the benefits for the American public through
regulatory reform that we have achieved to date.
Senator Carper. If I could ask, who are some of the
agencies that seem to have taken this more seriously than
others?
Mr. Shelanski. We have really gotten very good feedback and
very good participation across the Federal Government. Some
agencies have had lower-hanging fruit than others and so have
been more able to do rules with major savings. USDA and the
Environmental Protection Agency (EPA) have been able to grab a
couple of rules that were very costly and change them early on,
the Department of Transportation (DOT) as well.
But I do not think that should signal that other agencies
with less flamboyant single results are taking this any less
seriously. We have really had very good participation, and it
is one of the things that I hope will continue into the future
and be one of this administration's positive legacies.
Senator Carper. I think that certainly has a potential for
being--is there anything that the Congress--this Committee of
the Senate, the Congress could be doing, should be doing to
make sure that this kind of good work continues?
Mr. Shelanski. I think that----
Senator Carper. Because the next President may not be all
that much interested in this stuff.
Mr. Shelanski. My hope is that the next President would be
interested in this, because I think that retrospective review
is part of good government, and I think that any President and,
frankly, anybody of any party should think that being good
stewards of the rules we have on our books is part of good
government and a healthy regulatory system.
I would be happy to give some further thought to what more
you could do to support this, because I do think it is a very
important function to carry forward.
Senator Carper. Good. Thank you.
Senator Lankford. There is a Heitkamp-Lankford bill that
would help with that, that is already sitting out there, by the
way, that our Committee has passed and you have supported. And
there are ways to be able to deal with this directly. So,
appreciate the conversation.
Ms. McIntosh, by the way, Senator Carper, you are welcome
to join in anytime in the conversation on this.
Senator Carper. Thank you.
Senator Lankford. Ms. McIntosh----
Senator Carper. In that case--no, go ahead. [Laughter.]
Senator Lankford [continuing]. Let me ask you a question
that deals with current rulemaking in some process areas.
All three of us on this dais voted for and supported a
change for the Every Student Succeeds Act last year. In fact,
85 Senators supported that, overwhelming supported in the
House, affirmed by the President. In that, we specifically put
in the ``supplement not supplant'' provision and specifically
stated that States and local entities created their own
methodologies.
Some of the earlier rules that have come out from the
Department of Education where the Department of Education has
actually given a Federal methodology rather than allowing the
local individuals--it seems to be a pretty straightforward,
plain reading that all of us supported, allowing more local
control in some of the decisions.
Tell me that process for that reg coming out, and why,
after specific statements of saying local decisionmaking on
these methodologies, there is a Federal methodology coming out.
Ms. McIntosh. So, on the topic of ``supplement not
supplant,'' I think you know that the proposed rule first went
into the negotiated rulemaking process, where people from all--
the stakeholders that deal with our Department got to discuss a
first proposal and make a number of very interesting and
helpful suggestions.
We did not reach consensus on that negotiated rulemaking,
but we did obtain quite a lot of feedback. We also obtained
feedback from Members of Congress on the authorizing Committees
and others. And after much reflection, we have a new proposal.
I am not the expert on the details on this one either, but we
have a new proposal that is now out for public comment. And it
would basically be inappropriate for me to talk too much about
how it is structured or how it might be structured in the
future. We are eager to get public comment on that rule and we
will then wrestle with those questions and of course be
interested in your input as well.
Senator Lankford. Sure. Yes, and we are glad to be able to
say--but I guess what I am trying to get at is, again, it goes
back to our Committee is not the authorizing Committee there
that wrote the Mitchell bill. We are dealing with some of the
oversight and the decisionmaking behind the scenes.
The initial proposed rule came out with a Federal guide for
that, a Federal statement on how to do it, when the law is
pretty plain there would not be one, but there was right at the
very beginning. And I guess I am trying to figure out how, in
the first version that comes out publicly, suddenly there is a
Federal ruling when everything says locals will decide the
methodology here.
Ms. McIntosh. I do not remember if it is true in the first,
but in the current proposal there are several options for
States to follow----
Senator Lankford. Yes, but----
Ms. McIntosh [continuing]. And districts to follow, so----
Senator Lankford. But any options still violates, because
it makes the statement very clearly, local decisionmakers set
this. There is not a Federal guideline for it.
Ms. McIntosh. So, I believe the Secretary has also
addressed this in some of his hearings, and we think our rule
addresses the very plain language in the statute that Federal
funding should supplement and not supplant.
Senator Lankford. Totally agree.
Ms. McIntosh. And the rest of the rule is how we are
proposing to implement that, and it is subject to Federal
comment--public comment rather now for a good long time,
another month or six weeks.
Senator Heitkamp. Just to get clarification, so if a
district does not follow one of the three options, will they be
considered to be ineligible for Federal funds?
Ms. McIntosh. I cannot answer that.
Senator Heitkamp. Well, that would be a problem.
Ms. McIntosh. First of all, it is a rule under public
comment. It has gone through extensive legal review here at
OMB. The Congressional Research Service (CRS) has taken a look.
But I could not answer that question. I would be happy to let
the experts get back to you.
Senator Heitkamp. But, I could see doing something where
you say, well, you might consider this, you might consider
that; here are some things that we would consider appropriate.
But foreclosing all other options when we say we are giving
local option, those are the kinds of things that rise to the
attention of Committees like this one and create, kind of,
mischief. And so, I hope you take back the concerns that we
have.
Ms. McIntosh. Well, thank you for the feedback.
Senator Lankford. Yes. No, please do.
And while we are talking about non-controversial topics----
[Laughter.]
Let's talk a little bit about the reinterpretation in Title
9, what is affectionately called the ``bathroom/locker room/
dorm room'' policy as it came out, dealing with gender identity
on the basis of sex.
I think it would be safe to say that many school officials
did not find the interpretation to be inherent in Title 9, just
based on their response. So many districts around the country,
thankfully, were incredibly engaged in trying to find ways
locally to be able to help transgender students not be
isolated, not be bullied, and they were already very engaged in
local districts, thankfully finding ways to be able to have a
safe environment for every single child in the school--
terrific.
Then a new interpretation came out on Title 9, which
obviously a court has now stayed and has said no. Again, it is
the thinking process of what went into this that is helpful to
us to be able to determine how that guidance came out and that
process was done.
Congress has passed legislation defining both ``sex'' and
``gender.'' It is two different sets of issues; for instance,
the Violence Against Women Act, where we have dealt with that
specifically. Clearly that was not in the previous statute and
was not clarified that way, and so I am trying to figure out
the jump.
How did it move from the assumption in the statement that
gender was always implied, when Congress has separated that out
in previous statutes and when districts all over the country
did not deal with that in the past and they already found other
ways? So help me understand the process of that decisionmaking
to suddenly include ``gender'' where it said ``sex.''
Ms. McIntosh. So, thank you for your concern about the
protection of the rights of transgender students and for
pointing out how many States and school districts are actively
engaged in trying to make sure that these students are not
bullied and have a safe and protective environment. In fact,
when we issued that ``Dear Colleague'' letter, we also put out
a guidance document that highlighted some of the excellent
practices of many of those States and school districts.
Sadly, that is not universally true, however. And through
OCR's enforcement process, where they have gotten complaints
about transgender discrimination as long ago as at least 2010,
OCR has, in their enforcement work, interpreted discrimination
on the basis of sex to include gender identity. And I think, as
you know, our ``Dear Colleague'' letter, that explains this, to
a general audience, cites a number of case law and legal
precedent that is consistent with that interpretation.
It is true, as you point out, that a Texas court has
recently stayed our work on that interpretation. And we
respectfully disagree with that decision but of course are
complying with that judge's order while we investigate our
legal options. I do not think the last legal chapter has been
written here.
Senator Lankford. No, but it is an interesting challenge
just to be able to look at five courts ruled the other
direction; one court ruled that way. Education grabbed the one
court that ruled their way, ignoring the five others. And then
a statute that did not refer to gender, all the way from the
1970s, when clearly Congress has passed statutes before that
dealt with both--I understand the dynamics and the challenges
of it. I talk to school districts, as you do as well, and there
is a very real challenge to be able to make sure that student
is protected.
The challenge is, it was not just a statement of: Make sure
that your school has a policy. It was a Federal imposition of:
We have Title 9 authority. We will remove funding from you if
you do not follow this, though it is guidance, though everyone
understands it the same. And what I hear from every district
and from every university president is: We treat ``Dear
Colleague'' as regulation because we feel like we better. And
that is a different dynamic.
Now, I do want to do something here back and forth on it. I
know, Ms. Smith--I understand you asked a month ago to be able
to go, and this has been a longstanding planning time to be
able to get to this spot. And so I do want to respect your time
on this. I know you have to slip away. We have quite a few
questions that we still have dealing with things like the
overtime rule, which has been incredibly significant, the
fiduciary rule, a lot of the challenges that we are currently
facing. So I would like to be able to submit those to the
record for you.
But I will tell you just quickly, on the overtime rule,
this has a tremendous effect for nonprofits and for
universities, and every nonprofit and university and small
business that I talk to is struggling under this tremendously,
especially nonprofits, where the nonprofits--often the people
who work there understand they are not there to get rich and
they understand the nonprofit does not have very much money,
but you put the nonprofits in a very difficult situation.
The nonprofits advertise to their donors that: We are very
efficient in the use of dollars because we have very low
overhead, because the people that work there work for very
little money and love to do it. Now you are literally making it
tougher for them to fundraise because they are going to show a
higher amount of overhead cost, which some donors do not want
to give to something with a higher overhead cost. They want to
make sure it gets directly to the place it needs to go. So it
makes it tougher for them in fundraising and makes it tougher
for the entities.
Secretary Perez and I had this conversation last year. I
brought him letters that the YWCA sent to my office saying: We
have X amount of dollars. When the overtime rule is
implemented, if it is, we will close domestic violence shelters
because we do not have enough money to run all of them and meet
the standard. We will meet the standard, but it will force the
closure of domestic violence shelters.
I hear the same thing from church employees, that rarely a
church employee makes that amount, in the Central Time Zone,
and that they are struggling on: What do I do? I love to give
my time. I am involved in this work because of my love for it.
And even dealing with how it is implemented. As you go
through the rule--which I am sure you have taken a good, hard
look and gone through the overtime rule--it is incredibly
difficult just to be able to determine, and with 25 weeks for
small businesses to be able to implement it, when you walk
through all of the exceptions--which I took some time to be
able to walk through all
the exceptions that are within it, things as simple as
commissioned sales employees, farm workers, motion picture
theater employees--which I thought was interesting--motor
carrier drivers, amusement park employees--all these brought
exemptions, the allowance to be able to do, are you a 51
percent supervisor or are you a 49 percent supervisor?
One of my favorites, as I look through it, a generally not-
exempt are registered nurses, but generally exempt are licensed
practical nurses, but--no, they are not exempt but nurses are
exempt, registered nurses. And everybody is trying to figure
this out in a 25-week time period of who is in, who is out?
Is there any chance that small business, that nonprofits,
that universities and others can get more time on this or to be
able to have some consideration within that lane? And this is a
very big issue for a tremendous number of companies, as is the
fiduciary rule, as is things like the rules dealing with
franchises. There are so many issues that are coming at so many
small businesses right now. They are having a very difficult
time maintaining this.
Ms. Smith. So that is a very large question in a very short
period of time.
Senator Lankford. Yes, ma'am. I know you are running out of
time too.
Ms. Smith. But one thing I would like to talk about for the
not-for-profits, one of the things that the Labor Department
has been doing in recognition of that is that we have been--
since the final rule has come out, and even before then, we
have been working directly with funders of not-for-profits.
We have sat down; we have had many meetings with
foundations and other funders to talk to them about why they
should increase their funding for not-for-profits so that there
would be an opportunity, and why, even though their
administrative costs are going up, it is not because they are
being frivolous in any way. We have gotten some good responses
from foundations.
Senator Lankford. How many non-for-profits are there out
there in America?
Ms. Smith. Senator, I could not tell you. I mean, I think
if I read the rule I might know. I mean, if I read in the----
Senator Lankford. How many have you met with at this point,
because there are hundreds of thousands.
Ms. Smith. Do you mean how many not-for-profits we have met
with?
Senator Lankford. Yes. No, no, no--yes, how many have you
met with, because there are hundreds of thousands of them.
Ms. Smith. Before the rule came out we had a number of
listening sessions specifically with not-for-profits. Then,
since the rule has come out, not only did we put out guidance
for not-for-profits, specific guidance, but we also had a
number of webinars specifically for not-for-profits to talk to
them about how they could implement the rule.
I mean, there is not just one way to implement the overtime
rule, and we have been giving a lot of technical assistance
both specifically to universities, as you mentioned, and higher
education, for not-for-profits, and for small businesses.
Senator Lankford. So, basically you are giving donors to
non-for-profits 25 weeks to donate more so that they can stay
open, because I am telling you, some of these domestic violence
shelters are closing because they do not have the money to be
able to run them. And this is a big issue to a lot of non-
profits in this very short window. They do not just magically
have more money in October, December.
Senator Heitkamp. If I can add to this, because I think the
nonprofits that are struggling the most with this are
nonprofits who may have 24-hour call centers. They may, in
fact--you could sit there and say, well, there is an easy way
to comply with this rule: Make sure no one works over 40 hours
a week, right?
Senator Lankford. Or donate more money.
Senator Heitkamp. Well, yes, I get that, but my point is
that very many of these nonprofits that are hit the hardest are
nonprofits that rely on call centers, rely on the ability to
call workers in at two in the morning to deal with a domestic
violence situation, deal with placement of a child.
And I think you need to understand that where the simple
answer sometimes in the overtime rule is that you can, in fact,
comply by maintaining, and I am sympathetic to your rule. I
mean, I think that when you work someone, what is it, $23,000 a
year right now----
Ms. Smith. That is correct.
Senator Heitkamp [continuing]. Somebody can be classified
as a manager and then you can work them 60 hours----
Ms. Smith. Or 80 hours.
Senator Heitkamp [continuing]. Or 80 hours. And, to me the
problem is that you are not only not paying them enough for the
40 hours, you are also taking away the advantage that they may
have of getting a second job to support their family.
So I may see this a little differently than Senator
Lankford, but I will say I think that the overtime as it
relates to on-call is very problematic.
Ms. Smith. So, thank you, Senator. I do not think I am
going to have, really, time to answer all these questions, but
I would be happy, if you wanted to submit some QFRs for the
record----
Senator Heitkamp. Yes, we will.
Senator Lankford. We will definitely do that.
Ms. Smith [continuing]. We would be happy to answer those.
Senator Lankford. Is it possible for us to be able to get
responses back--and we will be very specific--within 30 days?
Is that a reasonable time period?
Ms. Smith. We will do our level best.
Senator Lankford. Give me a percentage of what ``level
best'' looks like--80 percent chance I get those?
Ms. Smith. I guess it depends upon the number of questions.
[Laughter.]
Senator Lankford. So we will be very specific in our
questions as we walk through it.
I would tell you, December 1 is screaming at a lot of
people in my State as it is coming.
Ms. Smith. I understand that. You may or may not know,
Senator, that there were two lawsuits filed in the last two
days in an attempt to enjoin the overtime rule, so it is very
possible that, no matter what the Department of Labor would
prefer to happen as to the date, that it may be pushed back.
Senator Lankford. Well, there are a tremendous number of
people that are begging for that because it is incredibly
difficult to both understand and implement in a lot of
businesses because of the number of exceptions. And if you are
a nonprofit, especially, or a university--I have spoken with
university presidents again. They tell me tuition is going up
in the spring specifically because of this rule.
Ms. Smith. Just one last comment, Senator, which is that
the exemptions that you were talking about, those are statutory
exemptions to overtime. They are not affected one way or
another by our overtime rule, which only deals with the white
collar exemptions.
Senator Lankford. Right.
Ms. Smith. So, I understand that those exemptions are
confusing. That is because the Fair Labor Standards Act has
been amended from time to time and Congress puts in an
exemption for this one and an exemption for that one, but those
are longstanding exemptions. They are not new to this overtime
law.
Senator Lankford. But every small business employer is
right now hiring a consultant to be able to come help explain
this to them because they know what they have and they do not
know what is coming. And so they have added expense already of
that consultant, and then trying to figure out what to do on
the costs on it, or who they are going to lay off or who they
are going to keep, or who they are going to switch to hourly,
as multiple businesses I have talked to have already shifted
salary to hourly to try to make the shift.
I know you have to get gone. I am trying to honor my
commitment to everybody else that we would be done by five
and----
Ms. McIntosh. And, Senator, I am sorry, but I also
communicated a prior commitment, that I would need to leave
soon as well, although of course I would be happy to take your
comments, your questions.
Senator Lankford. Can you stay until 5 o'clock?
Ms. McIntosh. I really need to be somewhere else at 5. It
is getting very close to that. Can I take a few more questions?
And then we would certainly be very happy to answer any others
that you would like to submit to us for the record.
Senator Lankford. OK. If we can get a few more questions to
you, that would be helpful.
Ms. McIntosh. OK.
Senator Cardin. Mr. Chairman?
Senator Lankford. Yes, sir.
Senator Cardin. I have other questions. I will just ask
them for the record.
Senator Lankford. OK, thank you.
Senator Cardin. Sure. And thanks for letting me join you.
Senator Lankford. You bet. I am glad you joined us.
Senator Heitkamp, do you have anything that you would like
to start with?
Senator Heitkamp. No, you go ahead. I do not want to take
up more of Amy's time.
Senator Lankford. Well, let me try to get through a couple
of these here, because it is part of the challenge that we have
as we go through some of the ``Dear Colleague'' letters, when
they were determined--for instance, the one on the Title 9
dealing with transgender, it was determined to be a significant
guidance. My understanding was, based on the previous hearing,
that it raised a novel set of questions from the stakeholders.
What kind of processes go back and forth with OIRA when it
ends up being a significant guidance based on novel questions?
And why is that a guidance rather than a regulation?
Ms. McIntosh. Well, it is a guidance document because it is
interpreting and saying in plain language how OCR is enforcing
the law and related regulations to Title 9. We do not believe
the DCL added any new requirements.
Senator Lankford. But it started with: It is a novel piece.
Ms. McIntosh. But we deemed it--we have a centralized
process at the Department to review guidance for--based on the
bulletin, for what are the characteristics of significant
guidance, and we judged that one to be significant. And as we
do with all significant guidance documents, we offered it to
OIRA for review. And I believe OIRA accepted it in that case
because it touched on issues that were involved with other
agencies as well as--clearly we were getting a great deal of
questions and urgency from our regulated parties.
Senator Lankford. But it was the perception of the
Department of Education this was nothing new, this was always
in the statute; it had just never been enforced? Or it had been
enforced; it just needed clarification?
Ms. McIntosh. So, I think I mentioned earlier the
interpretation of Title 9, where discrimination based on sex
includes gender identity, is actually a longstanding
interpretation of the Department, backed by case law. As you--
--
Senator Lankford. When you say ``longstanding''--somebody
help me understand ``longstanding.''
Ms. McIntosh. At least 2010, arguably earlier than that.
But the specific issues around transgender students and
bathrooms in schools did increase--we got an increasing number
of complaints and questions over the last few years. And the
Office of Civil Rights was engaged in investigating and
reaching agreements with States and districts.
Because those complaints seemed to be accelerating as, in
general, the world has been paying much more attention to gay
and lesbian and transgender rights in the recent years, we felt
that it was important that we tell a broader audience than just
the audience that OCR was getting to one complaint at a time
how we were interpreting Title 9.
Senator Lankford. So you determined at that point, early
on, this is not a regulation, this is a guidance, because
internally this was always the understanding in the Department
of Labor at least since 2010.
Ms. McIntosh. So, the Department of Education. And not
internally. It was the interpretation that the Office of Civil
Rights was using in their active, ongoing, external work
investigating civil rights complaints around this issue. It was
not widely known because it was investigation-specific.
And we do not think that school districts and States, who
are not lawyers and not, deeply immersed in this law, should
have to read the resolution agreements we come up with, with an
individual investigation, and figure out how that applies to
them.
So we simply explained in this guidance document how OCR
has been doing interpreting. And, as I mentioned, we also
published examples of States and school districts who were
coming up with very excellent solutions to stay in compliance
with the law.
Senator Lankford. And by the way, I completely agree with
that. That is entirely reasonable to say: It is an expectation
that every student is able to be at school in a safe
environment for that student, free of bullying and the threats
of all those things, and here are good examples of some schools
that have done it.
That is entirely reasonable. You took the next step and
said: And here is how you are going to do it now. And it
changed dramatically and redefined a statute from the 1970s in
a new way.
Ms. McIntosh. I would respectfully point out the ``Dear
Colleague'' letter is not binding. It does not have the force
of law. And it does not specify a single way that States and
school districts can stay in compliance with the law.
Senator Lankford. I would say there are a lot of districts
that disagree with that, and we can agree to disagree.
Let me ask a question here. As well as language--and we are
back to the same issue here in just helping me understand this.
This comes from that ``Dear Colleague'' letter: ``A school may
not, however, adopt or adhere to requirements that rely on
overly broad generalizations or stereotypes about the
differences between transgender students and other students of
the same sex.'' Help me understand the term ``overly broad
generalizations.''
Ms. McIntosh. I would not be able to comment on that
specific phrase. I could certainly ask the Office of Civil
Rights to elaborate on that.
Senator Lankford. I will try to follow up on it because,
again, we are back to everyone else has to read it and to be
able to understand what it means. And clearly a guidance
document is there to be able to provide clarity. A term like
``overly broad generalizations'' really needs some clarity
itself, trying to figure out what that means because, again,
every school district lives in fear of the Department of
Education walking in and saying: You have a Title 9 violation
and your funding is at risk.
Ms. McIntosh. So I will take that input about that phrase
back to our office.
Senator Lankford. Tell me as well about--when we are trying
to deal with a new piece that has come out from the Department
of Education and the Office of Civil Rights--there was a
document that was put out saying that there is a process that
we are going through right now to be able to identify religious
discrimination or bullying based on religions, and specifically
highlighted minority religions in the United States, to make
sure that we do not have individuals that are discriminated
against, and trying to form some sort of process to be able to
collect complaints.
So I am trying to figure out where this is going and how
the process will go to collecting. Again, I am in the same
position. I do not want any kid of any faith, of any
background, of any--whoever it may be, to have an unsafe
environment. So I am trying to figure out this. How will you
collect the data based on religious discrimination in a school,
or statements about religious discrimination?
Ms. McIntosh. So, I apologize, Senator. I am not familiar
with the document or the process that you are referring to, but
I can certainly get more information for you.
Senator Lankford. I will try to send a list of questions
into you as well. Same question as well. Can I get those within
30 days responded to?
Ms. McIntosh. I will ask my colleagues. We will do our very
best.
Senator Lankford. I am back to ``our dead level best,''
yes.
The question really, then, boils down to several things we
need to deal with religious liberty on a school campus. Again,
that has been longstanding policy that individuals can both
have a faith and live their faith, especially for a student on
a campus. It has been well-protected and restated multiple
times by both courts and by Presidents, affirming over and over
again, of both parties.
I would just be interested to be able to know some of the
process of what is out there. And there are some very specific
situations that become more challenging of who this is
collected on, the process of how it is collected, and where we
go from here.
Ms. McIntosh. And we will get back to you on all your
questions.
Senator Lankford. Thank you.
Ms. McIntosh. I apologize for having to slip out. Thank you
very much for having me here.
Senator Lankford. All right, thank you. And we will follow
up with additional questions.
Mr. Shelanski, you are the last man standing. It is redhead
on redhead now. [Laughter.]
Mr. Shelanski. All right.
Senator Lankford. So my question for you is, again, back to
where we started. This is difficult in our conversation. It is
much more difficult in conversations outside of this building:
What is a regulation? What is a guidance? Which one do I
follow? Which one do I not follow?
I had a university president as recently as this week say
to me: When a ``Dear Colleague'' letter comes out, I follow
it--and his exact words were--as if it is regulation, because I
understand the price that I may pay in trying to explain to my
board in case I do not and in case the Department of Education
steps in and says, I am going to take away your funding.
This is not a level playing field where an individual can
just, as it has been argued: Well, it is not legally binding.
We are just giving you guidance. Everyone there understands
full well the consequences of not following it. And if they do
not, it is not just a court hearing; it is the possibility of
losing funding and being published as a school that has a Title
9 violation, or, in multiple cases with the Department of
Labor, having a public setting that this place is under
investigation, or now even with contracting, because some of
the new conversation is that if you are going to get a Federal
contract, you are going to have to say how many investigations
they you have been through, and that is going to count in your
scoring.
So if Department of Labor shows up at my place three times
a year and shows up at someone else's place once every three
years, you are at a much greater risk for not getting a Federal
contract because you are going to show active investigations
and they are not, though they may be exactly equal as two
entities.
These have very serious consequences both to businesses,
individuals, taxpayers--lots of litigation both for the Federal
Government and us. How do we provide clarity to this? And who
is the gatekeeper to make sure that there is a difference
between guidance and regulation and people know the difference
within the agencies? Who has that?
Mr. Shelanski. So, I think in the first instance it is up
to the agencies because the vast majority of guidances that
they are issuing are pretty clearly explanatory and
interpretive. I do think that in cases where agencies overstep,
I think there are a couple of different paths that can be
adopted.
The one thing I would note is that, in a guidance document,
what we look for first is whether or not the guidance is adding
anything by way of obligation or requirement to the underlying
law or regulation. And sometimes when the guidance is repeating
that which is already established in the underlying law and
regulation, one would expect that the recipients of the
guidance document would treat at least that part of it as
regulation, as binding, because it is a repetition of that
which went through that proper process.
After that, what we try to do--and I think what the good
guidances practices do, what the back-and-forth outreach that
agencies do in accordance the Good Guidance Practices and the
kinds of things the GAO has recommended--is to try to give
really helpful advice about alternative ways to meet those
preexisting obligations.
And so, I think it is primarily on the agencies to follow
those practices and to make sure that what they are giving to
stakeholders is something that does not go beyond that which
was previously established and which is helpful.
Senator Lankford. And if there is the perception they have
gone, it is the courts? Who do they respond back to----
Mr. Shelanski. So I think there are a couple----
Senator Lankford [continuing]. As individuals that are
affected?
Mr. Shelanski. I think there are three different routes
that one sees happening.
I think the most direct route is to go back to the agency,
because typically when an agency puts a significant guidance
out, it does provide contact and invite response. That is,
indeed, a best practice that is in the 2007 document. It was
identified by GAO. And, in fact, we have seen the two agencies
that were sitting here this afternoon increase their specific
request for that kind of feedback so that they can tune their
guidances in response to that. So number one would be the
agencies.
Another option is to come to us at OIRA and to say, we
think either that this guidance is not a guidance and should be
regulation, or it is a guidance but it is turning out to be
economically significant; it should have gone through the
notice and comment. And as stewards of the 2007 Good Guidance
Practices, we would be in a position to call the agencies in,
again, to discuss what options there might be to remedy the
problem that was brought by stakeholders. So we are another
place that stakeholders can come.
And then the final place, which we have seen in a couple of
recent examples quite clearly, are the courts.
Senator Lankford. What is the best timing in the process
for people to be able to come to you as the gatekeeper?
Mr. Shelanski. As early as possible. And so an example
would be the following: Patricia Smith identified some requests
for information that were issued to the public and a comment
period that was issued to the public when they put the public
on notice they were considering some guidance changes.
I think concern at that point about, A, whether the
document is really guidance or really should be APA rulemaking,
and,
B, whether even if a guidance--it might be economically
significant--would be things we would be interested in learning
quite early from those stakeholders, because when we can engage
before a guidance is developed and issued, we are better able
to work with the agencies and to put in place a good process.
Senator Lankford. I would also say to you--and something we
have discussed before--when the American people have the
opportunity to be able to do the same, that helps. That is one
of the reasons this Committee has promoted advanced notice of
proposed rulemaking, to get more people involved in the process
earlier so that when significant things like that come out, we
do have the opportunity to be able to get maximum amount of
input from the affected individuals.
That is a positive input. As you and I have discussed
before, we are still a nation of the people, by the people, for
the people. And when people find out about it last rather than
get the opportunity to be able to contribute first, it makes a
big difference to people in their frustration level. They do
not have money to go hire lawyers and to go chase down and do
lawsuits. They just want their own government to be responsive.
And they expect someone is watching that, and that is very
helpful to them.
One of the things that would be extremely helpful for us to
know is that OIRA is active, that when a guidance comes out and
immediately people across the country raise the issue and say,
this is more expensive than $100 million, it has the effect
that OIRA will lean in quickly and second-guess that agency and
at least ask them: Did you do cost-benefit? Where did this
stand? Why didn't we get this, and to be able to hold the
agencies to account, because that seems to have come up several
times of late where guidance is coming out and everyone says,
no one seemed to have done cost-benefit on this, or if they
did, they did not see it was $100 million and we are trying to
figure out why because this will have a dramatic effect on our
business. We will have to close, we will have to merge,
whatever this may be. That would be helpful for us to know that
OIRA is leaning in on that aspect.
Mr. Shelanski. Thank you. This is certainly something for
me to take back. We can always try to do better that which we
already do. And I think it is an important issue for me to take
back and discuss with our team about what more we can do to
make that assurance more salient for Congress and for the
American people.
Senator Heitkamp. Yes, I do not know what the rest of our
Committee schedule is in this Congress, but I want to express,
as long as we are still here, our great appreciation for your
cooperation, our interest in continuing this relationship in
the next Congress, depending upon who is sitting in either
chair here.
But I think you can tell from the way we work, we are very
serious about trying to do things that give the American public
confidence that the government actually has a level of
transparency and openness to listen to varying opinions, but
also not so hamstringing these agencies that we do not get
regulations out, which is one thing that I talk about quite a
bit, that the failure to regulate can also create huge
problems.
But I want to thank you, Howard. You have just been a great
guy to work with. And if we do not get a chance to publicly
thank you for your service to our country as this transition
moves forward and ask you to remain engaged in an intellectual
and academic way with this Committee as we move forward. Your
advice is always welcome, I think by both the Chairman and by
this Ranking Member, and we look forward to working with you
even if you are not in the capacity as head of OIRA.
Mr. Shelanski. Thank you very much, Senator. I also look
forward to that.
Senator Lankford. Yes, I would second that as well.
And do you have additional comments?
Senator Heitkamp. No, I am good.
Senator Lankford. I would say--and not looking for you to
move any place, but I am grateful to be able to have the
ongoing conversation. We do want this just to work. There are a
lot of jobs, there are a lot of businesses that are on the
line, and these decisions that are made based on preferences
here have real effect out there.
Senator Heitkamp. I----
Senator Lankford. Now, you said that was your last
statement.
Senator Heitkamp. Oh, I am sorry, but I forgot----
Senator Lankford. This is it. [Laughter.]
Senator Heitkamp. On the OSHA, just some commitment--you
said you would take that back--maybe have a discussion with
OSHA on the anhydrous guidance and see if there is a way that
we can at least delay that, because I do not know what we are
going to be able to negotiate in the CR. There is a whole lot
of discussion about something being purer than what it has been
in the past. But leaving this in limbo will create great
stress----
Senator Lankford. I agree.
Senator Heitkamp [continuing]. On businesses. And I do not
think, given what we know right now, a delay to the end of the
year is asking too much so that we can get additional dialogue.
Mr. Shelanski. Thank you, Senator.
Senator Lankford. Yes, I would agree with that completely.
I would tell you, this Committee has had a particular sense
of benefit over the past several years, now the past couple
years, by connecting with former heads of OIRA, and they have
been extremely helpful to us in multiple times and multiple
conversations because they are able to say the things as former
head they could not say as head. [Laughter.]
And so, not looking for you to leave your job, but I do
hope we maintain this relationship, because you have in your
head and from your experience a lot of things that would help
the American people for a long time. And so we hope to be able
to maintain that relationship for the sake of the American
people and for the future of how we actually operate on all
these issues.
Mr. Shelanski. Thank you, Senator.
Senator Heitkamp. And what you say will matter to us.
Senator Lankford. Yes, it will. Thank you.
Let me do a quick closing statement that I am sure will be
moving and stirring to all that hear it.
I do want to announce, on September the 29 we will hold a
hearing connected with Millennials--strategies for the Federal
Government to attract and utilize younger workers.
That concludes today's hearing. I would like to thank our
witnesses for their testimony. The hearing record will remain
open for 15 days until the close of business on October 7 for
the submission of statements, questions for the record.
Do you have a statement?
OK, the hearing is adjourned. Thank you.
[Whereupon, at 5:01 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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