    [Senate Hearing 114-682]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-682

         THE ADMINISTRATIVE STATE: AN EXAMINATION OF FEDERAL RULEMAKING

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

                                     HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 APRIL 20, 2016

                                   __________

            Available via the World Wide Web: http://www.fdsys.gov/

                           Printed for the use of the
            Committee on Homeland Security and Governmental Affairs

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

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

                      Christopher R. Hixon, Staff Director
         Brooke N. Ericson, Deputy Chief Counsel for Homeland Security
                  David N. Brewer, Chief Investigative Counsel
                        Scott D. Wittmann, Investigator
                          Samantha M. Brennan, Counsel
                  Gabrielle A. Batkin, Minority Staff Director
               John P. Kilvington, Minority Deputy Staff Director
     Katherine C. Sybenga, Minority Chief Counsel for Governmental Affairs
          James V. Secreto, Minority Chief Counsel for Investigations
                       Kevin R. Burris, Minority Counsel
                      Robert R. Berrios, Minority Counsel
                         Laura W. Kilbride, Chief Clerk
                       Benjamin C. Grazda, Hearing Clerk

                               C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Johnson..............................................     1
        Senator Heitkamp.............................................    16
        Senator Portman..............................................    19
        Senator Ayotte...............................................    22
    Prepared statements:
        Senator Johnson..............................................    41
        Senator Carper...............................................    43
        Senator Sasse................................................    45

                                    WITNESS
                           Wednesday, April 20, 2016

    Jonathan Turley, Shapiro Professor of Public Interest Law, George
      Washington University Law School...............................     3
    Randolph J. May, President, The Free State Foundation............     5
    Hon. Bradford P. Campbell, Counsel, Drinker Biddle and Reath,
      LLP, and Former Assistant Secretary for Employee Benefits at
      the U.S. Department of Labor...................................     7
    William J. Kovacs, Senior Vice President, Environment,
      Technology, and Regulatory Affairs, U.S. Chamber of Commerce...     9
    Robert Weissman, President, Public Citizen.......................    11

                         Alphabetical List of Witnesses

    Campbell, Hon. Bradford P.:
        Testimony....................................................     7
        Prepared statement with attachment...........................    88
    Kovacs, William J.:
        Testimony....................................................     9
        Prepared statement...........................................   110
    May, Randolph J.:
        Testimony....................................................     5
        Prepared statement...........................................    67
    Turley, Jonathan:
        Testimony....................................................     3
        Prepared statement...........................................    47
    Weissman, Robert:
        Testimony....................................................    11
        Prepared statement...........................................   141

                                    APPENDIX

    Majority Staff Report submitted by Senator Johnson...............   190
    Majority Staff Report submitted by Senator Johnson...............   230
    Minority Staff Memorandum submitted by Senator Carper............   260
    Office of Legal Counsel Opinion submitted by Senator Carper......   268
    Response to post-hearing questions for the Record:
        Mr. Campbell.................................................   281

         THE ADMINISTRATIVE STATE: AN EXAMINATION OF FEDERAL RULEMAKING

                                  ----------

                           WEDNESDAY, APRIL 20, 2016

                                         U.S. Senate,
                               Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:11 a.m., in
    room 342, Dirksen Senate Office Building, Hon. Ron Johnson,
    Chairman of the Committee, presiding.
        Present: Senators Johnson, Portman, Ayotte, Ernst,
    McCaskill, Tester, Baldwin, Heitkamp, and Peters.

                 OPENING STATEMENT OF CHAIRMAN JOHNSON

        Chairman Johnson. Good morning. This hearing is called to
    order.
        I have a little script here, which is unusual for me, so
    let me just read it. I ask unanimous consent that my full
    opening statement be entered into the record.\1\
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Johnson appears in the
    Appendix on page 41.
    ---------------------------------------------------------------------------
        Senator McCaskill. Without objection.
        Chairman Johnson. Without objection, so ordered.
        Senator Carper had a death in his family, his aunt, who he
    was very close to, so he will not be here today. We obviously
    send our sincere condolences to Senator Carper and his family,
    and I ask unanimous consent that his opening statement be
    entered into the record.\2\
    ---------------------------------------------------------------------------
        \2\ The prepared statement of Senator Carper appears in the
    Appendix on page 43.
    ---------------------------------------------------------------------------
        Senator McCaskill. Without objection.
        Chairman Johnson. Without objection, so ordered.
        I also ask unanimous consent that the following documents
    be entered into the record: The Majority Staff report\3\ titled
    ``The Labor Department's Fiduciary Rule: How a Flawed Process
    Could Hurt Retirement Savers;'' the Minority Staff memo\4\ on
    the Labor Department's financial fiduciary rule; the Majority
    Staff report titled, ``Regulating the Internet: How the White
    House Bowled Over the Federal Communications Commission (FCC)
    Independence;''\5\ and a January 14, 1991, Office of Legal
    Counsel memorandum titled, ``Ex Parte Communications During FCC
    Rulemaking.''\1\ Without objection, so ordered.
    ---------------------------------------------------------------------------
        \3\ The Majority report titled The Labor Department's Fiduciary
    Rule appears in the Appendix on page 190.
        \4\ The Minority Memorandum on the Labor Department's proposed
    conflict of interest rule appears in the Appendix on page 260.
        \5\ The Majority report titled Regulating the Internet: How the
    White House Bowled Over FCC Independence appears in the Appendix on
    page 230.
        \1\ The Minority submission of the OLC Opinion titled Ex Parte
    Communication During FCC Rulemaking appears in the Appendix on page
    268.
    ---------------------------------------------------------------------------
        I want to thank all of the witnesses for testifying here
    today and for taking the time and writing up what I think is
    some very thoughtful testimony. You did a good job, pretty
    thick testimony which will all be entered into the record. When
    you do speak, try to keep it down to about 6 minutes and then
    we will do rounds of questions.
        From my standpoint, this is just an incredibly important
    hearing. I have said repeatedly--well, first of all, this
    Committee actually has a mission statement. I come from a
    business background, so it is something Senator Carper and I
    developed. It is pretty simple, to enhance the economic and
    national security of America. Those are inextricably linked.
        How do you get a strong economy? From my standpoint, we are
    the world's largest market, which is an enormous advantage in
    the global competition. We do have cheap and abundant energy.
    We should keep it that way while we protect our environment.
        Our weaknesses are we have an onerous regulatory
    environment, and we will probably have some differences of
    opinion on that, but, numerous studies talk about how the cost
    of Federal regulations are somewhere between $1.8 and $2
    trillion. To put that number in perspective, only 9 or 10
    economies in the world exceed $2 trillion. That is an enormous
    self-inflicted wound and burden.
        And, yes, I realize we need some regulations, and they
    protect workers and they protect our environment. That is a
    good thing. But, there is a point of over-regulation. We will
    talk a little bit about that.
        We hear about income inequality, which is a real problem.
    We hear about stagnant wages. Talking to one chief executive
    officer (CEO) of a paper manufacturing company in Wisconsin, he
    did a little cost study on just four regulations issued by this
    administration, just four, and, of course, we have hundreds of
    major regulations costing over $100 million. But, just four
    regulations, the cost to this paper company was the equivalent
    of $12,000 per employee per year. So, if you are wondering why
    wages have stagnated, look no further than the regulatory
    burden placed on the private sector by big government here in
    Washington, D.C. It is an enormous burden and we have to
    recognize that fact.
        The last point I will make, the Chancellor of the
    University of Wisconsin-Madison, Rebecca Blank, has come into
    my office the last 2 years, both times asking for relief from
    regulations. This last year when she came in, she had a
    research study. It was actually called the 2012 Faculty
    Workload Survey, done by the Federal Demonstration Partnership
    Research Report from April 2014, and basically, what that
    research showed is that 42 percent of researchers' times in the
    research university are spent complying with Federal
    regulations--42 percent. Now, those research dollars, that
    grant money is spent to go into basic science, advancing human
    knowledge, curing diseases. If 42 percent of their time is
    spent just complying with Federal regulations, think of the
    opportunity cost of that.
        So, again, the regulatory burden is a serious problem. We
    are going to be talking about just three rules where I think
    there are some real questions as to whether this administration
    issued those properly, not violated the Administrative
    Procedure Act. We are going to be talking about the Fiduciary
    Rule, the Federal Communications Commission Title II Internet
    regulation, and the Waters of the United States (WOTUS). I
    mean, these are three significant rules that are going to have
    a significant impact on our economy. The number one solution
    for debt and deficit or so many problems is economic growth and
    these regulations are stifling it.
        So, with that, it is the tradition of this Committee to
    swear in witnesses, so if you will all rise and raise your
    right hand.
        Do you swear the testimony you will give before this
    Committee will be the truth, the whole truth, and nothing but
    the truth, so help you, God?
        Mr. May. I do.
        Mr. Kovacs. I do.
        Mr. Turley. I do.
        Mr. Campbell. I do.
        Mr. Weissman. I do.
        Chairman Johnson. Please be seated.
        Our first witness is Professor Jonathan Turley. Professor
    Turley is the Shapiro Professor of Public Interest Law at the
    George Washington University Law School. Professor Turley.

     TESTIMONY OF JONATHAN TURLEY,\1\ SHAPIRO PROFESSOR OF PUBLIC
         INTEREST LAW, GEORGE WASHINGTON UNIVERSITY LAW SCHOOL

        Mr. Turley. Thank you so much, Chairman Johnson and Members
    of the Committee. It is a great honor to appear before you
    today to talk about the rise of the administrative State within
    the American constitutional system.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Turley appears in the Appendix on
    page 47.
    ---------------------------------------------------------------------------
        I come to this with more of a constitutional perspective
    than an administrative law perspective. I have long been
    critical of the rise of what is often called the fourth branch
    in our system. And, while academics have good faith
    disagreements, I tend to view the rise of the administrative
    State as neither benign nor inevitable. I think it is a problem
    that we often treat this concept of administrative State as a
    fait accompli, like a reality like the weather, in our
    constitutional system. And, those of us who criticize it often
    appear quixotic, tilting at the windmills of Federal agencies.
        It is not a criticism of Federal agencies to question the
    degree of discretion and delegation that they currently enjoy,
    no more than it is to say that we need banks as an answer to
    calls for banking reform. The Federal agency is a reality of
    our system. It is part of modern government. But, the degree to
    which we have delegated authority, legislative authority, and
    discretion to the Federal agencies, in my view, is dangerous.
        Indeed, I doubt the Framers would recognize the system we
    have today. Well, they would recognize it in one sense. It is,
    in many respects, the system they sought to avoid. The Framers
    were focused on the danger of concentrated power and the need
    for participatory representative politics. Neither of that is
    present in the current system.
        Rulemaking is a virtual euphemism for agency legislation,
    and the two examples of that that I will discuss today,
    hopefully in more detail, include the United States v. Texas
    controversy over Deferred Action for Parents of Americans
    (DAPA), which showed how truly Section 553 of the
    Administrative Procedure Act (APA) has become without
    substance. The administration effectively ordered unilaterally
    changes that were denied by Congress. They did that not only
    through executive power, but, they even refused to do the
    notice and comment requirements under the APA. I have been a
    critic of the APA as a paper tiger, but in this case, it was
    not even that.
        The net neutrality controversy is another good example. I
    do not necessarily want to weigh in on the merits. There are
    smarter people that know a lot more about net neutrality and
    immigration than I do. I am much more concerned with the
    process, that is, what we have seen is the transfer of
    legislative powers to an opaque system where citizens have very
    little role or very little knowledge. The fact that you can
    have a visit with Chairman Tom Wheeler and have the change of a
    position of the FCC, it really speaks volumes to the problems
    that we are having now in terms of the shift from a
    representative democratic system to a more bureaucratic system.
        My fear is that while we can reverse this trend, we are
    fast approaching a certain constitutional failsafe line where
    the administrative state will become a fixed and unassailable
    reality of American government. I happen to agree with many
    things that President Obama has tried to achieve. I just do not
    agree with the means by which he is trying to achieve them.
        I am, in many ways, a stereotypical Madisonian scholar. I
    believe that the Legislative Branch is the thumping heart of
    our constitutional system and it is increasingly becoming
    irrelevant. I think that members are allowing the power of this
    institution to slip away into the midst of an administrative
    state.
        My testimony includes various things that can be done, but
    it cannot be done on the cheap. Congress has to join in a
    bipartisan way to fight for its authority the way the Framers
    thought that you would. This includes dealing with the
    discretion that is afforded under Chevron, the creation of non-
    delegation provisions to ensure that this body remains
    relevant, greater oversight with teeth in terms of agencies,
    the creation of an office that will focus more substantially on
    rulemaking, new APA procedures, new consent laws that have
    guillotine switches so that major regulations will come before
    this body, and finally, empowering citizens to help Congress
    monitor what has become a fourth branch in our system. All of
    these things can be done.
        I do not wish to sound particularly dire, but I believe
    this is a dire situation. I believe that what we are seeing is
    a different type of government. Now, it may be a better system
    according to some academics, but it is a system that the
    American people were never allowed to voice their view of. It
    is a substantial change in what we call the American
    governmental system. It is less representative. It is less
    transparent. And, I believe that, in the end, it is
    destabilizing.
        As my testimony states, the Legislative Branch plays a
    critical role in transforming factional disputes. On this
    table, there are experts who I look forward to hearing from who
    are going to raise very important arguments on both sides of
    these divisive questions, but the Nation is divided. And, when
    we are divided, this is the body that was designed to transform
    those factional disputes into majoritarian compromises. If you
    remove these questions from Congress, you add the very
    instability that the Framers wanted to avoid and you are
    shifting it far away from the center of power.
        So, the center of gravity in our system has changed, but we
    can regain it, and I believe that should be a matter that all
    members and all citizens should join together to see.
        Thank you very much.
        Chairman Johnson. Thank you, Professor Turley.
        Our next witness is Randolph May. Mr. May is the founder
    and President of the Free State Foundation (FSF). Mr. May
    previously served as Assistant General Counsel and Associate
    General Counsel at the Federal Communications Commission from
    1978 to 1981. Mr. May.

      TESTIMONY OF RANDOLPH J. MAY,\1\ PRESIDENT, THE FREE STATE
                               FOUNDATION

        Mr. May. Mr. Chairman and Members of the Committee, thank
    you for inviting me to testify today. I am President of the
    Free State Foundation, a think tank that focuses its research
    primarily in the communications law and policy and
    administrative law areas. I have been involved for almost 40
    years in communications law and policy in various capacities,
    including having served as Associate General Counsel at the
    FCC. My longstanding expertise at the intersection of
    communications law and policy and administrative law is
    outlined in my written testimony.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. May appears in the Appendix on
    page 67.
    ---------------------------------------------------------------------------
        The Committee's identification of the FCC's net neutrality
    rule as deserving of examination is wise. This rulemaking is
    instructive regarding the ways in which a faulty rulemaking
    process enables the growth of the administrative state and
    adversely impacts the economy, and in the case of the net
    neutrality rulemaking, compromises accepted rule of law norms.
        I want to highlight briefly in my oral testimony four areas
    in which the FCC's net neutrality rulemaking is problematic.
        First, the rulemaking truly represents a case of the
    proverbial solution in search of a problem, or, as FCC
    Commissioner Ajit Pai put it recently, the rule, ``was a 313-
    page solution that would not work to a problem that did not
    exist.'' Put bluntly, in this case, there was no meaningful
    evidence of an existing market failure or consumer harm that
    required the Commission to adopt rules applying heavy-handed Ma
    Bell-era public utility-like regulation to today's Internet
    service providers (ISPs).
        The dynamic, competitive marketplace in which Internet
    service providers operate today is far removed from the staid
    monopolistic markets for which public utility regulation was
    devised, when, for example, it was applied to the railroads in
    1887 and then to telephone and telegraph companies in 1934,
    when the Communications Act was adopted. There was no reason
    for the FCC to ignore Congress's direction in the 1996 Telecom
    Act that the Internet should remain, ``unfettered or by Federal
    or State regulation.''
        Second, as a result of the direct and indirect cost imposed
    on Internet service providers, the rules adoption most likely
    will have an adverse impact by chilling investment and
    innovation. Indeed, there is some persuasive evidence that it
    is already doing so. Of course, diminished investment in
    innovation translate into diminished jobs and consumer welfare.
        Third, the manner of President Obama's direct involvement
    in the FCC's net neutrality rulemaking in the aftermath of his
    involvement that resulted initially in confusion at the FCC,
    and then shortly afterward in an abrupt change in course that
    conformed to President Obama's specific ask, raise questions
    about the FCC's supposed independence. The manner in which the
    rulemaking was conducted serves to undermine the notion of the
    FCC's independence in an agency whose decisions are primarily
    based on its specialized expertise rather than on political
    considerations. And this, in turn, jeopardizes the public's
    confidence in the soundness of the Commission's decisions and
    the agency's institutional integrity.
        Of concern, just last week, the White House released a
    high-profile statement urging the FCC to adopt a specific
    course of action in the agency's controversial and very
    problematic video navigation rulemaking. Repeated high-profile
    Presidential interventions like this further undermine the
    notion that the FCC acts independently and free from Executive
    Branch control.
        Finally, aside from issues relating to President Obama's
    involvement, there are aspects of the net neutrality rule,
    specifically including adoption of the vague general conduct
    rule, which itself the FCC admitted is a, quote, ``catch-all
    provision,'' along with a
    catch-22 enforcement regime that the rule established, that
    call into question compliance with accepted rule of law and due
    process norms. These norms require that law be predictable and
    knowable in advance of the imposition of sanctions, which in
    the case of the net neutrality rule certainly is not the case.
    Failing to adhere to these norms also threatens to undermine
    the public's confidence in the agency's institutional
    integrity.
        Again, thank you for giving me the opportunity to testify
    today and I look forward to answering your questions.
        Chairman Johnson. Thank you, Mr. May.
        Our next witness is the Honorable Bradford Campbell. Mr.
    Campbell is the former Assistant Secretary of Labor for
    Employee Benefits. Mr. Campbell currently practices employee
    benefits law with the law firm Drinker Biddle and Reath. Mr.
    Campbell.

     TESTIMONY OF THE HONORABLE BRADFORD P. CAMPBELL,\1\ COUNSEL,
     DRINKER BIDDLE AND REATH, LLP, AND FORMER ASSISTANT SECRETARY
         FOR EMPLOYEE BENEFITS AT THE U.S. DEPARTMENT OF LABOR

        Mr. Campbell. Well, thank you, Mr. Chairman and the Members
    of the Committee, the other Senators, for the opportunity to
    testify today about the need to reform the Federal regulatory
    process.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Campbell appears in the Appendix
    on page 88.
    ---------------------------------------------------------------------------
        Before I begin, though, I want to advise you that the views
    I express today are my own, not those of any client or my firm
    or my colleagues.
        The sheer scope of Federal regulation is remarkable. What
    we eat, what we wear, what we drive, how we work, how we save,
    even the air we breathe, nearly every activity of our lives is
    now at least partially subject to Federal regulations. While
    there is, of course, a necessary role for Federal regulation in
    interstate commerce, I think it is fair to say that the current
    regulatory environment and the practices of some Federal
    regulators are in significant need of review and reform.
        The regulatory authority that Congress delegates to Federal
    agencies was never intended to allow those agencies to become
    their own quasi-legislative bodies, making new laws and
    policies as they see fit. Instead, that authority was intended
    to facilitate the practical implementation of laws passed by
    Congress so that agencies could promulgate rules consistent
    with the intent and direction of Congress, and finalized only
    after a thorough and fair consideration of the economic impact,
    costs, and the alternatives available. Unfortunately, the
    reality of the Federal regulatory process all too often does
    not actually match this intent.
        Now, I am going to focus today on a particular example of
    regulatory overreach, the recently promulgated final regulation
    by the U.S. Department of Labor (DOL) redefining fiduciary
    investment advice. This incredibly broad and far-reaching
    rulemakes the Department of Labor a primary regulator of the
    conduct and compensation of financial advisors to more than $14
    trillion--that is trillion with a ``t''--in Individual
    Retirement Accounts (IRA) and retirement plan assets, and it
    effectively allows the Department of Labor standards to trump
    the traditional role of other regulators, like the Securities
    and Exchange Commission (SEC).
        I am very familiar with this regulation and with this
    agency's authority, because as the Chairman noted, I used to
    run this agency in the prior administration.
        This fiduciary regulation highlights what I see as two
    primary issues facing the Committee when considering reform.
    First, it was legislation by rulemaking, in which an agency
    fundamentally changes the law, and in this case counter to
    Congressional intent, taking over Congress's role.
        And, second, it was an exercise of flawed regulatory
    process in which predetermined policy decisions drove the
    outcome, not real consideration of economic inputs or
    regulatory alternatives.
        Now, this real clearly is legislation by regulation. It was
    created out of whole cloth by the agency. The underlying law
    that it is reinterpreting, this potion has not changed since
    1974, when it was passed. And, in fact, the changes the rule
    ultimately makes, at least many of them, are contrary to the
    intent of Congress when it passed those laws.
        Congress created the Employee Retirement Income Security
    Act (ERISA) plans and IRAs at the same time, and it
    affirmatively chose not to apply the new fiduciary standard and
    new legal remedies that it created for ERISA plans to IRAs.
    Instead, Congress chose for IRAs to be protected through
    extensive Federal and State regulation of financial services
    with their applicable standards of care and legal remedies.
        Remarkably enough, these intentional Congressional
    decisions were cited as flaws by the Labor Department that it
    must correct to preserve Congressional intent. The Department,
    which, acting based on a Carter Administration reorganization
    of authority divided between the Labor Department and the
    Treasury Department, applied its new and very broad definition
    of fiduciary to the prohibited transaction rules in the tax
    code, and these rules apply to IRAs.
        The effect of this was to make advisor compensation that is
    legal under securities laws illegal under the tax code, and the
    Department of Labor then created an exemption, called the Best
    Interest Contact Exemption, which permitted some of that
    securities law compensation to remain legal, but only if the
    financial institution and the advisor agree to an ERISA-like
    fiduciary standard of care and to being sued in State court in
    class action litigation.
        So, in short, the Department in this regulation is forcing
    IRA advisors to accept a fiduciary standard and legal remedies
    that Congress affirmatively chose not to require, all in the
    name of Congressional intent.
        Now, whether you agree with the Department of Labor that
    IRAs should be treated more like ERISA plans or not is
    irrelevant for the purposes of this hearing. I think the issue
    should be that only Congress should overturn the prior
    judgments of Congress, not a Federal agency through a
    convoluted misapplication of its regulatory authority.
        And, further, as this Committee's report amply
    demonstrates, the Majority report the Chairman previously
    entered into the record, the Department did not follow the
    requirements of the Executive Orders (EO) and the Office of
    Management and Budget (OMB) guidance governing the proper
    development of Federal regulations, the cost estimates and
    considerations of regulatory alternatives. E-mail exchanges in
    that report between the SEC staff and Labor officials revealed
    that the Department of Labor at the proposal stage refused to
    fully consider some of the alternative regulations on the
    grounds that doing so would be too time consuming. The staff at
    the Treasury Department raised concerns about whether the
    Department's use of this authority was, in fact, consistent
    with Congressional direction in the rule.
        And the final rule continues to have unrealistic cost
    estimates, such as assuming that legal counsel that comply with
    the new rule will cost, on average, $134 an hour, which I think
    if you have gone out and priced legal counsel, particularly in
    a specialty area like ERISA, is a little bit underpriced.
        They further estimated that it would take 10 minutes of one
    lawyer's time to make certain disclosure changes, on which
    liability under a class action in State court might hinge. I
    assure you, it is going to cost more than $22.33 to analyze
    that particular provision for anyone complying with this rule.
        To conclude, as I described in more detail in my written
    testimony, I think the Committee should consider consolidating
    these fragmented requirements, some of which are in Executive
    Orders, some of which are overseen by OMB, some of which are in
    the law, to engage in a comprehensive legislative process that
    would make valid economic analysis and other essential elements
    of this process enforceable.
        Thank you very much for the opportunity and I look forward
    to any questions.
        Chairman Johnson. Thank you, Mr. Campbell.
        Our next witness is William Kovacs. Mr. Kovacs is the
    Senior Vice President for the Environment, Technology, and
    Regulatory Affairs at the U.S. Chamber of Commerce. Mr. Kovacs.

       TESTIMONY OF WILLIAM L. KOVACS,\1\ SENIOR VICE PRESIDENT,
     ENVIRONMENT, TECHNOLOGY, AND REGULATORY AFFAIRS, U.S. CHAMBER
                              OF COMMERCE

        Mr. Kovacs. Thank you, Mr. Chairman, for inviting me to
    testify on The Administrative State: An Examination of Federal
    Rulemaking.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Kovacs appears in the Appendix on
    page 110.
    ---------------------------------------------------------------------------
        Before beginning my testimony, I would like to thank the
    Committee for its bipartisan passage of the Federal permit
    streamlining legislation last year and for Chairman Johnson,
    Senators Portman and McCaskill, for their leadership on the
    effort.
        On the Waters of the United States, the Chamber greatly
    appreciates the efforts of Senator Heitkamp, a consistent
    leader on the effort, she has put forth in S. 1140 a very
    practical and workable solution to the Waters issue.
        Now, turning to examining Federal rulemaking, how Federal
    regulations are developed by agencies should be a bipartisan
    priority for Congress so as to ensure that the legislative
    powers that Congress delegates to the agencies are used to
    achieve Congressional intent.
        Controlling Federal agencies has been a challenge to
    Congress since the first agency was created in 1887. To
    circumscribe the legislative powers of agencies, Congress
    enacted the Administrative Procedures Act in 1946, and it has
    not been amended since then, to ensure fairness to affected
    parties by allowing them to test the soundness of an agency's
    proposal through exposure to public comment and to develop
    evidence in the record to support their views so that you can
    have clear judicial review.
        Unfortunately, due to the broad laws passed by Congress,
    the APA's informal rulemaking process has morphed into a
    process that allows agencies to issue very expansive
    regulations that are well beyond anything Congress intended.
    And, with the courts granting considerable deference to the
    agency decisions, agencies avoid the stringent judicial review
    that is required by an independent agency and the Constitution.
        The consequence of this is regulations like WOTUS that are
    far broader in scope than Congress ever intended. Yet, these
    regulations are imposed by agencies with little effort.
    Legislating is hard work, but agencies can legislate with
    little work.
        In the WOTUS rule, the Environmental Protection Agency
    (EPA), under the pretext of clarifying a definition, added
    several new definitions, unintelligible definitions, to
    existing definitions, thereby producing a rule so confusing and
    all encompassing that the agencies could bring their
    jurisdiction to nearly every water feature and associated land
    under its jurisdiction. In essence, EPA turned itself into a
    national zoning board.
        The WOTUS rule has resulted in such uncertainty that 30
    States and many stakeholders have filed lawsuits in 12 Federal
    District Courts and eight Federal Circuit Courts.
        EPA produced this unworkable rule by simply ignoring the
    procedures Congress had put in place for years and decades.
    They failed to evaluate the impacts under the Unfunded Mandates
    Reform Act (UMRA). They failed to look at the Information
    Quality Act (IQA). They ignored the Regulatory Flexibility Act
    (RFA). And, they failed to examine and do the analysis on job
    impacts for almost 40 years.
        Had EPA followed Congress' direction, it would have learned
    that the States, not EPA, implement 96 percent of EPA's
    delegated programs, and that by placing more and more of these
    massive regulations on the States without any new funding, it
    is straining the implementation, and that is really crucial,
    because if they are implementing 96 percent and in a 6-month
    period of time EPA put on ozone, Waters of the U.S., and clean
    power, that is amazing for a group of individuals who are not
    getting any more money than they got literally 20 years ago.
        EPA would have discovered, also, in the Waters of the
    United States, that counties--this was a point totally ignored
    by the agency, because they said we do not have to do unfunded
    mandate reviews--that counties that build and maintain almost
    half the roads in the United States, and under WOTUS, all of
    these counties, just to move dirt along the thousands of miles
    of roadside ditches that WOTUS considers tributaries, they are
    going to need a permit. And a dredge and fill permit costs
    about $150,000 per permit.
        So, moreover, the Government Accountability Office (GAO)
    then found that the millions of EPA's alleged supporters were
    the creation of social media, which was a violation of the
    anti-lobbying statute.
        Here is the challenge for Congress. You cannot look at
    every rule. You have to preserve the efficiency of the informal
    process for the vast bulk of the 4,000 rules a year. But, for
    those rules that are extraordinarily complex and costly, and
    there are not a lot of them, the agencies must be required to
    do the extra homework to consult with the various parties. And,
    again, I do not want to keep on referring to S. 1140, but it is
    one of the requirements and it is very clear, and that is so
    important to getting the rule right.
        The agencies, when they are doing this, they need to ensure
    that they are going to do the extra work, but one of the bills
    that is before this Committee, S. 2006, the Regulatory
    Accountability Act (RAA) introduced by Senator Portman and
    referred to this Committee, really strikes that balance. The
    House has passed it four times and it is really time for the
    Senate to begin taking up this, because what it does is it
    distinguishes between the 3,700 regulations that basically keep
    society running and the five to 50 regulations that really
    cause problems, and it is so important.
        And, what it does is it establishes a clear process for the
    agencies to follow and clear procedures that the courts can
    review. It requires greater transparency, more homework by the
    agencies on complex rules, discussions with impacted parties,
    and understanding of the impacts of unfunded mandates, and a
    mechanism that allows the public to question the agencies to
    ensure that Congressional intent is achieved. I recommend you
    looking at this bill in any way.
        Thank you for allowing me to testify today and I would be
    glad to answer any questions.
        Chairman Johnson. Thank you, Mr. Kovacs.
        Our final witness is Robert Weissman. You have a pretty
    short bio here. You are the President of Public Citizen. Mr.
    Weissman.

       TESTIMONY OF ROBERT WEISSMAN,\1\ PRESIDENT, PUBLIC CITIZEN

        Mr. Weissman. Thank you very much, Chairman Johnson and
    Members of the Committee. My written testimony goes into some
    detail about the three case studies of this hearing. My oral
    remarks will be focused more generally on the regulatory
    process itself.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Weissman appears in the Appendix
    on page 141.
    ---------------------------------------------------------------------------
        I wanted to make three points. The first is that although
    people focus on process all of the time, really underlying the
    thinking about process is some views about the benefits and
    costs of regulations themselves. And, so, I think we really
    should have as a starting point a recognition that regulation
    has made our country stronger, safer, more secure, cleaner, and
    healthier. It has made our economy stronger. It has reduced the
    risk of financial risk when regulations were properly
    maintained. It made our food safer, our cars safer. It made it
    easier to breathe, improved children's brain development,
    empowered disabled persons, guaranteed a minimum wage, and far
    more.
        When there are serious efforts to try to weigh the costs
    and benefit of regulation, it is a problematic exercise, but
    the best effort by far is from OMB, which uses very
    conservative accounting methods for benefits. It finds, at a
    minimum, benefits outweigh costs by 2-to-1, and maybe by as
    much as 15-to-1, consistently across time, across
    administrations.
        Chairman Johnson, you mentioned the $2 trillion figure for
    cost. I think if you examine the studies that make those claims
    in more detail, you will find that they are not credible
    studies. I am happy to discuss that further.
        Costs, it turns out, are regularly and routinely overstated
    by industry for understandable reasons. But, if we look back
    historically at most of the most severe claims about costs of
    impending regulation, it turns out retrospectively that the
    apocalyptic claims did not come true, for the environmental
    area, worker health and safety, a vast array of consumer
    protection. Many of these are detailed in my written testimony.
        Additionally, there is no good evidence that regulation
    contributes to job loss. Before ending its survey for budgetary
    reasons, the Department of Labor collected information on why
    employers laid people off, and they rarely referenced
    regulation as the reason.
        Finally, in terms of thinking about benefits and costs of
    regulation, we should recognize the cost of regulatory failure.
    And if we are thinking about the economy at all, the most
    significant fact of our recent time, or even in the last 70
    years in the economy, is the collapse in 2008. There is no way
    to understand what happened, whatever your accounting of it is,
    there is no way to understand that as anything but the result
    of a regulatory failure. The cost to the economy was on the
    order of $20 trillion, far exceeding any plausible cost of
    regulation.
        My second point, although I think it is important to
    understand the benefits of regulation, and the benefit as
    opposed to cost, there certainly are severe problems with the
    regulatory process. I think the number one for any of us
    involved in the rulemaking process is extended and unreasonable
    delay. Those delays have very real costs both in accruing the
    benefits of regulation and in denying businesses the certainty
    they need to make appropriate investment decisions.
        A bunch of case studies in my written testimony. Just to
    quickly reference two, Congress in 2008 passed a law requiring
    auto makers to install backup cameras or equivalent in their
    automobiles. You all set a statutory deadline of 2011 to do so.
    The Department of Transportation (DOT) failed to meet that
    deadline again and again and again. Only in 2014, after a
    lawsuit that my organization initiated, did the agency finally
    establish a deadline, and we will now in 2016 now have
    mandatory backup cameras going forward. The cost of that delay
    is hundreds of lives, mostly children, and tens of thousands of
    injuries that could have been averted.
        My second example, in the area of interest to many on this
    Committee, is oil trains, where the rulemaking process has been
    appallingly slow. Members on both sides of the aisle have
    complained about it, and that is not just an accident because
    the agency is inept. It is because of the rulemaking process
    itself.
        A second area of concern is weak enforcement. If we have
    existing rules, they ought to at least be enforced properly.
        And a third area, which I will just rush through because I
    am running a bit low on time, is the use of cost-benefit
    analysis moving beyond as an analytic tool but to the
    decisionmaking criteria has led to an industry slant that is
    now, I am afraid, characteristic of the entire rulemaking
    process and itself has infiltrated the judiciary.
        My third and final point, this Committee has been a welcome
    exception to much of the partisan divisiveness over the
    regulatory issue, but I do think there are areas of common
    ground for this Committee and others to explore.
        The first thing, in my view, should be the failure of
    agencies to adhere to statutory mandates. If Congress gives a
    deadline, the agencies ought to take that seriously. They do
    not, and no one in Congress should accept that.
        Second, there is a huge problem in a number of agencies
    with revolving door, people going into agencies, out of
    agencies, and into regulated industry. I think that is an area
    where there can be common ground. I know there is interest on
    that issue in this Committee.
        The third area to look at would be proper regulatory
    enforcement. As I mentioned, we have--and partly it has to do
    with regulatory budgets, but agencies are not able to enforce
    the law properly.
        And as a final point, I think there ought to be more
    attention to how regulations can advance the interests of small
    business and especially promote market competition. Markets do
    not actually just happen on their own. They require appropriate
    rules. And in the absence of intervention from the government
    to assure fair market competition, we see too many oligopolies
    and monopolistic practices in the marketplace.
        Thank you very much.
        Chairman Johnson. Thank you, Mr. Weissman.
        First of all, nobody, I think, argues that you do not need
    regulations, or government, it is a matter of over-regulation,
    regulations that create a great deal of uncertainty, and that
    is--what is happening right now is this massive government is
    flooding the zone and it is almost impossible to comply with
    everything. There was a book written, what is it, Three
    Felonies A Day. You end up not a Nation ruled by law when you
    have so many laws, so complex, enforced at the discretion of
    prosecutors and regulators. I mean, again, it creates such a
    high level of uncertainty.
        For example, with the net neutrality rule, it is dampening
    investment. It is a real concern. We saw over-regulation in
    Europe, investment in the Internet declined.
        Professor Turley, I want to talk--because you were exactly
    right. Congress has given away its authority in so many areas.
    Here is an example, and I realize these numbers are always
    subject to dispute, but it gives you some indication. When
    Obamacare was passed, there were 380,000 words--I use words,
    because page count is different. Dodd-Frank was 368,000 words.
    Now, these are not exact numbers, so a caveat when I get
    PolitiFact checked on this. Obamacare now is approaching 20
    million words. Dodd-Frank is somewhere around 15 to 16 million
    words.
        Who is writing that? It is certainly not Congress. So,
    Congress passes frameworks and basically, for a host of
    reasons--you mentioned the Chevron decision--just giving all of
    the authority to the agencies. It is giving it away. And, of
    course, the agencies have definitely accepted it.
        So, I want to talk a little bit about--you talked about the
    Administrative Procedure Act, which is supposed to try and set
    up a process for rulemaking that involves the private sector.
    What can we do to strengthen it, because if we do not catch it
    on the front end, the legal system is the only recourse, and I
    want to talk a little about that. But, let us talk about what
    we need to do on the front end, maybe at the Administrative
    Procedure Act, to prevent this type of fourth branch of
    government taking over this Nation.
        Professor Turley, can you speak to that.
        Mr. Turley. Thank you, Mr. Chairman. I think that the two
    things that the Senate needs to keep in mind is that, first of
    all, the APA was never designed to be an alterative to the
    democratic process. It was never designed for that function,
    but it is functioning that way. It is functioning as a
    governing system. People elect you. They believe that you are
    the ones that write laws. But, I think we all recognize that is
    really not the case. You actually write a very small fraction
    of the laws that affect most people.
        So, partially, which I believe is important, is that this
    Congress has in the past tried to pull back a more active role
    when it comes to major regulations. I think that is a very good
    idea, as I say in my testimony.
        The second thing is I think the Congress has to be honest
    about what is sort of a noble lie. The APA talks about the
    public participating in the regulatory process. If you take a
    look at some of our recent controversies, like the one that was
    just heard in the Supreme Court involving immigration, the
    administration asked for changes from Congress. Those changes
    were not given by Congress. And then the administration just
    declared them general statements of privacy and not only
    ordered them unilaterally, but did not even satisfy the notice
    and comment period.
        And if you take a look at the net neutrality controversy,
    no matter how you feel about net neutrality, you cannot
    possibly believe that that is a good process for the American
    people. This is a huge issue involving billions of dollars.
    Millions of people are relying on it for communications. And
    yet it is this opaque system where rules change in short order
    and you can see the total disregard of the notice/comment
    period under the APA.
        So, I think that the most important thing for this body to
    recognize is regardless of what comes out of this, the APA is
    not functioning the way it is supposed to function and this
    body needs to be more active in the lawmaking part of this
    administrative state.
        Chairman Johnson. So, again, kind of new on the scene, here
    for 5 years just watching this, not being an attorney, I am
    seeing the APA as a potential check because it is being
    violated. It is being ignored. Tell me how effective it has
    been in terms of court challenges when the administration
    violates it.
        And how long it takes.
        Mr. Turley. Well, I do not mean to laugh, but if it was not
    so sad, it would be a laughing matter. I mean, as a litigator,
    going forward on an APA claim is truly a quixotic endeavor. The
    agencies require very little for agencies to satisfy the APA.
    You have to allow for the notice and comment period. That is
    what was so shocking about United States v. Texas is that they
    were actually circumventing what is the least burdensome
    requirement in government.
        But, in reality, agencies are often criticized for reaching
    a conclusion and then sort of having this sort of Potemkin
    village of the appearance of participation and then issuing
    largely those same results.
        In my view, the APA serves very little in terms of public
    benefit, but when you go to court, as long as they check off
    those procedural requirements, which are a minimum, you are
    pretty much done. I mean, the courts do not really get into
    this very much.
        Chairman Johnson. So, if you get an injunction against a
    particular executive action because you have not followed APA
    structure, you are really ignoring the will of Congress,
    basically, is that right?
        Mr. Turley. Yes.
        Chairman Johnson. Mr. May, I want to talk a little bit
    about the independence of an agency and the FCC. Now, in our
    report, it is pretty shocking. Supposedly an independent
    agency. You take a look at the timeline of where the FCC was
    going in terms of their open Internet rule and how they turned
    on a dime in reaction to President Obama's statements on where
    he wanted to go with the regulation of this. Can you talk about
    how important it is, having been part of the FCC, to actually
    have an independent agency independent of the administration?
    Actually, by the way, the FCC is accountable to Congress, not
    the administration.
        Mr. May. Thank you, Senator Johnson, and thank you, by the
    way, for the report that the staff issued, because I know it is
    not easy getting that type of information, I assume, from the
    Commission, with those e-mails. But, they were useful and the
    report was very helpful and illuminated----
        Chairman Johnson. It is a little bit like pulling teeth.
        Mr. May [continuing]. Well, I have tried to pull a lot of
    teeth over there in the last several decades. But, anyway,
    thank you for the report.
        The question of the agency's independence, like a lot of
    these things, some of the lines are not hard and fast where you
    could draw a bright line. And to be honest with you, this
    process was troublesome, as I am going to explain. We are
    waiting for a D.C. Circuit decision that could come down any
    day on the FCC's net neutrality rulemaking, so I am a little
    reluctant to say exactly what the FCC did as, unlawful, because
    maybe, unless the Supreme Court comes up, who knows what the
    court will say.
        But, here is the problem in this particular case. First,
    the way that the President intervened was much different and
    more high profile than anything that did occur, previously, in
    my experience, long experience. And by that, I mean, typically,
    the administration would submit comments during the comment
    period, this is our view, or write a letter, and there is
    nothing improper about that in terms of compromising the
    agency's independence.
        In this case, what happened, the President released a video
    and a statement and it said in there, there is a bit of a wink
    and a nod, I know you are independent, but I am specifically
    asking that you take this course of action, which was the title
    to the public utility regulation. And then there is, as you
    know from what you uncovered, the staff had already prepared at
    Chairman Wheeler's direction a draft notice which went in the
    other direction, the more light handed regulation, just to
    simplify it.
        Well, within days, they were directed to start drafting
    another notice which did specifically what President Obama
    asked them to do, and they did not issue a further notice
    seeking public comment.
        Now, another thing that makes that problematic is that in
    the original Notice of Proposed Rulemaking (NPRM), which had
    probably 500 questions in the notice, there were only two
    paragraphs that were exploring--that asked about taking this
    Title II approach and, gazillions of others about the other
    approach.
        So, when you put that all together in terms of the context
    of what happened, it does give the appearances that the
    agency's independence was compromised, and without doing an
    administrative law lecture here, the idea of these independent
    agencies like the FCC and SEC and the Federal Trade Commission
    (FTC), as you know, when they were set up, it was to be--they
    have multi-member commissioners, staggered terms, fixed terms.
    All of that was to give them independence that is different
    from the Executive Branch agencies. The President can tell the
    head of EPA to do whatever he wants them to do. If they do not
    do it, he can fire them. That is not the case with the FCC's
    Commissioners.
        So, when you have the context and you put it all together,
    what it does, I think, at bottom, as I said in my testimony, it
    jeopardizes the appearance that the FCC is independent and is
    acting on the basis of political considerations rather than on
    the basis of, its expertise, which as Professor Turley knows,
    of course, was the premise for establishing these agencies.
        Chairman Johnson. Well, it is pretty obvious they were not
    acting independently.
        You said it is very difficult, it is like pulling teeth to
    get information. We have yet to get that draft open Internet
    order----
        Mr. May. Can I just say one thing?
        Chairman Johnson [continuing]. Or that draft Public notice.
    We cannot get it. Kind of, why is that?
        Mr. May. Just very quickly, I mentioned the high profile
    nature of this intervention. What is disturbing, too, is that
    the President also intervened in the same way in what is
    referred to as the municipal broadband preemption proceeding,
    and just last week, there is this very controversial
    proceeding, a lot of problematic areas about set-top box
    regulation, where the market seems to be working, really, fine.
    It is very dynamic. And he came out and essentially took a very
    specific position in another high profile way. And, so, I am
    worried if we see this become the pattern or the norm rather
    than historically what happened was he would file comments
    through the National Telecommunications and Information
    Administration (NTIA) in the FCC's proceeding.
        Chairman Johnson. Well, one thing I entered into the record
    here, this 1991 Office of Legal Counsel letter on ex parte
    communication. I mean, here is the quote. ``White House staff
    members should avoid even the mere appearance of interest or
    influence, and the easiest way to do so is to avoid discussing
    matters pending before the independent regulatory agencies with
    interested parties and avoid making ex parte contacts with
    agency personnel.'' I would say President Obama kind of talked
    about it. Senator Heitkamp.

                 OPENING STATEMENT OF SENATOR HEITKAMP

        Senator Heitkamp. Thank you, Mr. Chairman.
        I would suggest that we be a little careful on how we
    define ex parte contacts, given that every one of us comments
    to agencies and calls them in during their regulatory process,
    whether it is DOL or whether it is EPA. So, we need to be a
    little careful, because if you are worried about ex parte
    contacts, that could be not just the administration----
        Mr. May. But there is a specific----
        Senator Heitkamp. I have a question. Mr. Kovacs, thank you
    so much for your comments, because I think that you hit the
    nail on the head, that this is an abrogation. This is Congress
    saying, these are too tough for us to deal with. We cannot find
    common ground, so we would rather rail at the administration,
    we would rather rail at the agencies that draft these rules,
    which, oh, by the way, they are going to reflect the politics
    of whoever sits in the President's chair who appoints the
    person who sits at the cabinet table.
        So, we own this problem, in my opinion. We do not do
    things--and I go back to judicial review, and you said very
    seldom does this happen. Waters of the United States is a
    failure of judicial review to provide clear guidance. They have
    rejected the EPA definition not just once, but twice after very
    costly litigation.
        So, if I am going to solve this problem, what I am going to
    do is I am going to legislate. I mean, that is where we get
    into all of this discussion about railing against
    administrative agencies like we have no control.
        And, I would say, when we start out a sentence with,
    because of regulation, we are safer, regulation is done at the
    direction of the Congress. It should be because of legislation,
    we are safer, and we have not done what we need to do to be
    clear in legislation. Therefore, it takes hours and days, and
    you can criticize the length of the process, but I have a
    certain sympathy for agencies who cannot seem to get that work
    done when we have given them no resources to do it and these
    are such tough issues, we have dodged them, whether it is an
    issue of regulation, whether it is Waters of the United States.
        And, so, there are two issues here. No. 1, dealing with, I
    think, Mr. Kovacs, you talked about that small percentage of
    rules which really lead to a lot of the controversy and really
    having Congress take a greater role in analyzing those, but we
    should be here talking about APA changes, and we have had a
    number of discussions in the Subcommittee about what those
    changes should be, whether it is retrospective rulemaking,
    taking a look.
        We have some great legislation. Senator Portman has some
    great legislation on independent agencies. We think that we
    have done a pretty good job taking a look at appropriate pre-
    warning, whether that is Advanced Notice of Proposed
    Rulemaking, which has been criticized by the left because
    somehow they think that they do not have access to the same
    process, and depending upon who is sitting in the White House,
    we get different perspectives about what the overall process
    should be.
        I, personally, believe we need to amend the APA. We need to
    have a discussion about Advanced Notice of Proposed Rulemaking
    on major rules. We need to talk about what independent agencies
    should be required to do in terms of cost-benefit analysis, and
    for the life of me, I do not know--we are in a big debate about
    how we say that, right? I mean, that is the absurdity that we
    are at here.
        And, so, on all of these issues, if we could find common
    ground, I think that--and set a new path for amending the APA
    in areas where we can all agree, which I think there are, but
    we way too often criticize regulatory agencies when the
    criticism really should be back at Congress for failure to
    respond.
        So, if you had to list the ten rules from your perspective,
    Mr. Kovacs, what would be those ten rules that you think
    Congress should legislate a solution to?
        Mr. Kovacs. Well, you can take--here is what the difficulty
    of taking ten rules, and there are. I could go through ten.
        Senator Heitkamp. Yes.
        Mr. Kovacs. You go through Waters of the United States, you
    go through clean power, net neutrality, set-top boxes. I mean,
    we probably----
        Senator Heitkamp. Yes. DOL----
        Mr. Kovacs [continuing]. If we sat around--DOL--we would
    probably all come to an agreement on what they are.
        You hit the nail on the head when you said Congress needs
    to amend the APA. That is the bible of the administrative
    state, and you need to, frankly, tell the agency, you have to
    check off this box, this box, and not just check off. If it
    says you have to talk to small business and see if they are
    hurt, they really have to talk to them. They cannot just check
    it off and say they are not here.
        The other thing is, by doing so, you give the court clear
    standards for review, which the court does not have. So, right
    now, the court is looking at two or three million pages of a
    record, and in that record they are saying, we do not know what
    the science is. We do not know what the economics are. We are
    going to give deference to the agency. It is really up to
    Congress to say, here is what we want the agency to do to get
    to this, because after all, the goal of all of this is to get a
    rulemaking that implements what Congress wants done. And then
    the court needs to be able to look at that in a very strict
    way, not just with general deference.
        And that alone for those 5, 10, 15, 20 rules, you really
    only probably get five or six a year, and the agencies can
    handle that, because they have 4,000 rulemakings and you are
    asking them to do more. And the best example is, I think it was
    about 10 years ago when the Occupational Safety and Health Act
    (OSHA) did ergonomics. The OSHA system is something you should
    really look at, because their on-the-record rulemaking, some of
    the opponents of it would say, well, it takes too long. They
    did the entire ergonomics rule, which is a multi-billion-dollar
    rule, they did it in less than a year. They did it faster than
    if you were going to have--if you were going to go through the
    informal process where you take in millions and millions of
    comments.
        But, the other thing that is really amazing about it is
    they give a record that a court can review. Courts understand
    findings of fact and conclusions of law and the agencies have
    to give it to the records, and that is--Senator Portman's bill
    does a lot of that, to get you to that point where a court can
    actually review it.
        Senator Heitkamp. Yes. I think the interesting thing is
    that if we had a Republican administration, the dialogue might
    completely shift between what the Republicans are saying and
    what the Democrats are saying, and we cannot have that kind of
    political roller coaster based on who is sitting in the White
    House. We have to have rules of the road. Policies will change
    based on who is running the Congress. Policies will change
    based on who is the President. But, there should be a baseline,
    and I think we have lost, I think, a lot on both sides feel
    that that baseline has turned into quicksand. We do not know
    what the rules are anymore and we do not really have an
    independent place to go to get evaluation and analysis.
        And, so, we are going to continue to work on systemic
    changes. I am going to continue to work on legislating on
    Waters of the United States, because I think, ultimately,
    after, what, at least 20 years of litigation in the Supreme
    Court, we ought to take some responsibility for the definition.
        But, I really believe that this should not be as partisan
    as what it is, that we really ought to have an opportunity to
    have a broader conversation, and I am going to keep pushing for
    that here.
        Mr. Kovacs. Thank you.
        Senator Heitkamp. And, really appreciate your testimony. We
    really appreciate the work that you have done, the effort to
    kind of analyze this from, I think, a politically neutral kind
    of standpoint, because to me, this is not a political issue.
    This is about what are the rules, how are we going to evaluate
    whether people are complying with the rules, agencies are, but
    how are we going to better evaluate Congress's failure to
    provide greater guidance in all of this, thereby enabling
    agencies to legislate--in fact, not just enabling, requiring
    agencies to legislate. And, so, these are problems that we
    should not look at through a political lens.
        So, thank you, Mr. Chairman.
        Chairman Johnson. Thank you, Senator Heitkamp.
        And, by the way, I am surprised that it is partisan. I
    mean, let us face it, every one of us who serve in this body
    meets multiple times a day with groups coming in, business
    groups, universities. They all complain about the same thing
    and they are all asking for relief from the regulatory burden
    here. So, it surprised me we could not put together our
    relatively modest little package of regulatory reform bills,
    have a process of subtraction as opposed to addition, but we
    were not able to do that, so let us continue to work with you
    and Senator Lankford and your Subcommittee to make this a
    nonpartisan issue and actually get some reform. Senator
    Portman.

                  OPENING STATEMENT OF SENATOR PORTMAN

        Senator Portman. Thank you.
        Now that she is leaving, I can say good things about her.
    [Laughter.]
        As a Republican, she might not want me to say, but what
    Senator Lankford and Senator Heitkamp have done in the
    Subcommittee is extraordinarily good work, in my view. One of
    the things Mr. Kovacs has spent a lot of time on, as you know,
    is the Regulatory Accountability Act and how do we reform the
    APA for the first time in 70 years. I mean, think how the world
    has changed since then, how much more complex the issues are we
    have to face.
        And the reality is, yes, Congress has not legislated in a
    way that gives the agency the guidance that they need, and it
    is partly because of the complexity of the issue, whether it is
    with regard to net neutrality or Waters of the United States or
    the fiduciary rule or health care, and as a result, we need to
    update the APA. I mean, it is well meaning at the time, but I
    do think we have the right balance with regard to the
    Regulatory Accountability Act. It is bipartisan. It has been
    from the start. It has passed the House a few different times
    already. And it is the one broad sweeping bill.
        I want to thank Senator Johnson, because as Chairman of
    this Committee, he has tried to push these regulatory issues
    where we can find common ground, not to say we are going to go
    with the Regulations from the Executive in Need of Scrutiny
    (REINS) Act, even though there are lots of Republicans who
    support that, but how do we find something that can actually
    find common ground, and I think the independent agency part of
    the Regulatory Accountability Act is one of those relatively
    small bills that we should be able to get done, even in this
    environment. We have not been able to yet. But, I do think that
    the Regulatory Accountability Act is going to help to solve
    some of these problems.
        And, I would just ask you an interesting question right
    now, because we are in the middle of all of these very
    troubling rules. I was on a dairy farm over the weekend in Ohio
    talking about Waters of the United States. You can imagine this
    dairy farmer, who is struggling to try to keep the narrow
    margins that he has, looking at his ditch that only fills up in
    the spring with water and he is wondering whether he is going
    to have these costs imposed on him if he wants to develop that
    area or put a bridge across it or whatever. The EPA itself, I
    think, has said that the average cost is going to be $155,000
    to alter a ditch on someone's property. He does not have that
    $155,000.
        But, in your written statement, Mr. Kovacs, you talked
    about that the real victims of the Federal administrative state
    overreach are not just these individuals like this dairy
    farmer, but also our States, because the States are being asked
    to implement sweeping changes without their consultation or
    support.
        As you know, the Regulatory Accountability Act, which is
    S. 2006, you talked about, does not just update it. It ensures
    agencies are doing the legwork, have the transparency, have the
    meetings for the larger rules. As you said, there would be the
    kind of scrutiny you would expect to have with rules that have
    a greater impact at a public hearing, so there is a chance for
    a public administrative hearing to have these kind of points of
    view expressed.
        Here is my question for you. If the Regulatory
    Accountability Act had been in law at the time when the Waters
    of the United States was going through the rulemaking process,
    do you think the rule would look different than it does today?
        Mr. Kovacs. Well, it certainly would look different, just
    because of what the RAA would require. First of all, it would
    incorporate all of the provisions in the Executive Order, which
    brings in the cost-benefit analysis, the cumulative impact.
        Second, it would bring in the concepts that are in the
    Information Quality Act, which gets to the connectivity of
    water. It would require that they go through and set up the
    Small Business Regulatory Enforcement Fairness Act (SBREFA)
    panels, which are so important, because they actually bring in
    and talk to businesses. It would actually require that they
    pull in the jobs analysis that the agency has been required to
    do for 45 years and has not done.
        But, more important, what it does is it sets up the
    specific issues that a court must review. So that when EPA
    right now says there are no unfunded mandates because the State
    is going to do it and it is only a definitional change, check
    the box, its indirect effect on small business, EPA checks the
    box, the court is now able to review and say, did you do the
    kind of analysis on Waters of the U.S. that you needed, and had
    they talked to these various people, they would have talked to
    the counties and the counties would have said, my God, you have
    just made all of the ditches on the side of the road a
    tributary and do you realize it is--according to the Corps of
    Engineers, it is $155,000 per permit? Well, how many hundreds
    of thousands or tens of thousands of miles are there of
    ditches? That is just one example.
        They would have talked to the small businesses. They would
    have talked to your farmer and they would have said, well, we
    have a problem. Maybe you are going to exempt farmers from the
    dredge and fill permit, but do you realize when we apply
    pesticides, we are actually doing a discharge under the Waters
    Act. I mean, and they would have learned these things.
        They went through the rule, saying it is a definitional
    change and we are not changing anything, and so it would have
    looked dramatically different, plus a better chance for court
    review.
        Senator Portman. I think you are absolutely right, and the
    court would have been able to review the actual requirements in
    the RAA, which would have given us the basis, should the
    administrative agency overreach, to be able to have a better
    chance of overturning it.
        On the net neutrality rule, and I guess, Mr. May, you are
    the expert on that, I think it is another great example where
    if you had the RAA in effect, or even just the independent
    agency rule in effect, you would have a very different result.
    And, these numbers, but despite the President's Executive Order
    13579, where he said that independent agencies should comply
    with the Federal agency requirement to propose and adopt
    regulations only upon reasoned determination that its benefits
    justify its costs, despite that, independent agencies often
    still do not do any cost-benefit analysis for major rules.
        In fiscal year 2014, only one major rule out of 17 issued
    by independent agencies included a complete monetized cost-
    benefit analysis--only one. And if you look back over the last
    3 or 4 years, the record is no better.
        So, my question to you is sort of the same. This is an
    independent agency that did not follow this. If they had
    undertaken a more thorough cost-benefit analysis, what would we
    have ended up with? Would we have ended up with a better rule?
        Mr. May. The short answer is, yes, we may have ended up
    possibly with no rule, or almost no rule. There are aspects of
    it which might have still some relevance.
        But, I think to illustrate this in a way that paints the
    picture, in the final order, the FCC--it was all put in
    conjectural terms, what might happen, could happen as opposed
    to any type of rigorous analysis. We counted over 250 times in
    the order where the FCC said this could happen or that might
    happen, as opposed to detailing evidence of incidents, other
    than a few. There are about four acknowledged instances that
    happened that could be net neutrality-type violations that were
    quickly remedied.
        So, essentially, I do not think anyone argues there was a
    cost-benefit analysis. Presumably, had there been one, the FCC
    would have determined that the rule was not needed, or perhaps
    this FCC might not have, but then a court, at least, would have
    had a record that would have been one that would have allowed
    it to review, really, the costs and benefits.
        Senator Portman. Yes. And, judicial review of everything on
    the private sector side, and yet with these rulemakings, not
    having that judicial review is obviously a huge problem right
    now with the overreach.
        I am going to submit some more questions for the record to
    you, Mr. Campbell, because I agree with you on the fiduciary
    rule, and I also, sadly, having been at the Department of Labor
    and seeing this, you understand the impact, which is going to
    be keeping small businesses from having a plan. I think this is
    overreach into the IRAs. If you look at where their
    jurisdiction is, typically, it has been with regard to plans,
    company plans, and I think there are other concerns about the
    final rule, as well, that I am very concerned about for low-and
    moderate-income savers.
        But, I will be submitting some questions to the record for
    you. I hope you will be able to respond to those quickly and we
    will be able to better get those out.
        Mr. Campbell. I look forward to it and be happy to, sir.
        Senator Portman. Great. Thank you, Mr. Chairman.
        Chairman Johnson. Thank you, Senator Portman. Senator
    Ayotte.

                  OPENING STATEMENT OF SENATOR AYOTTE

        Senator Ayotte. Thank you, Chairman.
        I want to thank all of you for being here today. I, too, am
    an original cosponsor of the Regulatory Accountability Act. I
    would love to see us pass that and the REINS Act and many other
    efforts to reform this process.
        But, I have to ask, where do we fall in this, because it
    seems to me that we pass a lot of laws and we give the
    discretion to the agencies. I can think of many examples. I was
    not here when the Affordable Care Act (ACA) was passed,
    certainly, but there are more ``Secretary shalls'' in that.
    But, that is not the only piece of legislation that we can get
    that example. There is almost every major piece of legislation,
    we defer major decisions to these agencies.
        So, do we not have a part in this? Should we not be looking
    at more tighter drafting of the statutes that we put forward?
    Mr. May.
        Mr. May. Yes. Now, of course, it is true--I think Mr.
    Kovacs said, Congress cannot legislate all of the details of
    all regulatory programs. That is true. But, you can be more
    specific in some cases. I am going to give you an example from
    the communications area that I practice in. I know you are
    familiar with it, as well, from your Commerce----
        Senator Ayotte. Commerce Committee, yes.
        Mr. May [continuing]. Committee perch. But, the
    Communications Act, as you know, delegates to the FCC the
    authority to act, ``in the public interest,'' actually 110
    times in the Communications Act. You can see I have done a lot
    of counting of these things. But, to my way of thinking, going
    to Professor Turley's point, number one, if I were on the
    Supreme Court, that would be unconstitutional because it is a
    meaningless delegation to go act in the public interest, but
    the Supreme Court has----
        Senator Ayotte. Fairly broad, as you can imagine.
        Mr. May. Yes. I mean, the real definition of that is it
    means whatever three of the five FCC Commissioners say it does
    on any given day, and that is the truth.
        So, here is a concrete example, because I do have my
    communications expertise, and then I want to make one
    administrative law point. So, there is talk about rewriting the
    Communications Act, and when you think about that and when that
    is ultimately done next time, the Congress should specifically
    in the legislation include a requirement that FCC decisions
    should take into account marketplace competition and consumer
    welfare. Now, that sounds--I mean, that is typically what you
    are trying to figure out when you are thinking about
    legislation, but in the Communications Act, you have the public
    interest delegation rather than marketplace competition.
        But, the other thing I would say, really, is that it is
    important--so, Congress should legislate more specifically
    sometimes. But, the bills like the Accountability Act and
    things like that that at least focus attention on the major
    rules of economic significance, how those are defined, I mean,
    I think it is important that that type of legislation be passed
    so that at least the rules with the major impact can, in one
    way or another, receive more attention.
        Senator Ayotte. Mr. Campbell, I know that Senator Portman
    touched briefly on the fiduciary rule that has been issued by
    the Department of Labor. The first reiteration of the rule also
    included Employee Stock Ownership Programs (ESOPs), and I
    helped lead the effort to get the ESOPs out of it because it
    would have really undermined, if not destroyed, that model of
    employee ownership. So, we were able to get some traction there
    when they reissued the rule.
        But, on the latest version, I share many of the concerns
    that Senator Portman has raised, and, in fact, last month, the
    Senate Banking Committee held a confirmation hearing for two
    SEC nominees and both nominees commented that they were
    concerned that the fiduciary rule would make it harder for
    American families to plan and save for retirement. But, because
    the rulemaking process, to a large extent, there have been lots
    of comments submitted, and I have not just had this experience
    with the fiduciary rule, but where you have a whole host of
    comments that are submitted from a wide variety of stakeholders
    and they seem to be pretty much ignored.
        And we now, I think, also are seeing it with some of the
    new rules that DOL has issued on overtime. I have nonprofits in
    my community. Literally, my nonprofit community has been going
    crazy, saying this is really going to hurt our ability to serve
    our constituents.
        So, I would like to get your comment on the fiduciary rule,
    but what about this comment process in general, which seems to
    be largely ignored, as far as I can tell. There is once in a
    while where you can get a good example where they are taken
    into account, but for the most part, I do not see the comment
    period as--even when people legitimately participate in this
    process--having a lot of interest from the agencies issuing it
    really taking these comments in full consideration.
        Mr. Campbell. Well, I think you make a very important
    point, which is the power of an agency to proceed with its own
    policy judgment is relatively unconstrained, provided they
    check the boxes on the processes they go through, and one of
    those boxes they check is we made an opportunity for public
    comment. We looked at the public comments. We may not have
    taken any of the public comments, but we did take them and we
    did look at them. And, that is an important distinction between
    actually being informed by them, learning from them and
    adopting changes in response.
        I think the fiduciary rule is a particularly egregious
    example of this in how rapidly they went through this process
    compared to the normal Department of Labor process for
    considering comments. They closed out the comment period on
    September 24 on the most ambitious regulation making the most
    changes, I think, in the history of the agency. I think that is
    a fair assessment of the scope of this rule. And, yet, by the
    end of January, roughly 4 months later, they had completed a
    final rule, adopted a final economic analysis, and sent it to
    the White House Office of Management and Budget for review. I
    do not see how they could have done a truly credible job of
    considering those comments in that period of time given the
    scope of the comments and the number of issues in that rule.
        Senator Ayotte. Thank you, Chairman.
        Chairman Johnson. Thank you Senator Ayotte.
        Let me go right to what happens legally--I will go to you,
    Professor Turley--when an agency checks the box, gets the
    comments, potentially in some of these cases tens of thousands
    of comments, and just completely ignores it. Does that set up a
    legal challenge? Does that help them in any way, shape or form?
    Or because of the Chevron decision, it does not make any
    difference?
        Mr. Turley. Well, I think that is--you put your finger on
    the main problem facing citizens when they try to get
    responsive action from agencies, is that they run into this
    truck called Chevron. And, Chevron affords sweeping deference
    to these agencies. The courts are not going to sit there and
    say, did you really listen to them, or did you sort of listen
    to them. As long as they went through the procedural
    requirement, the courts removed themselves.
        And, the courts have adopted standards which I find are
    just completely unintelligible. The greatest example is that
    the court has said that while Congress cannot delegate its core
    authority to an agency, it can give directions as long as there
    are intelligible principles. But, that standard is actually
    unintelligible. There is no there there.
        Chairman Johnson. Well, I was expecting Congress to do so.
    [Laughter.]
        Mr. Turley. And, so, what happens is that you get to these
    courts and the courts will accept most anything as an
    intelligible principle coming from Congress, including these
    broad provisions that we talked about earlier with Randy, and
    you get hit on both ends. They get huge amounts of deference
    under Chevron and they also have these procedures that are very
    easy to satisfy, but they give nothing to people in reality in
    terms of consideration.
        And, what is happening then is that the center of gravity
    of the legislative process has moved into these agencies and
    these systems are really a Potemkin village. They give the
    appearance of listening to citizens, but these agencies have
    the ability to dictate exactly what they wanted originally, as
    long as they tell the courts, yes, we listened to them and it
    turns out we were right all along.
        Chairman Johnson. So, from what I have witnessed, it seems
    like the main benefit of the comment period is if the public
    floods an agency with comments and they are all pretty much on
    the side against the agency, there is a political effect of
    that, and sometimes agencies back off. But, when you have an
    administration that says, I do not care, push through, there is
    really no legal redress.
        Mr. Turley. There is not, and one of the things I suggest
    is that Congress can take on Chevron. I mean, Chevron, once
    again, is being treated like it is a fixed part of our system.
    It is not that old. And what preceded Chevron, the Skidmore
    standard, was not particularly onerous for agencies, but it did
    allow courts to take a serious look at what these agencies were
    doing.
        Congress actually can take measures to curtail Chevron, and
    one of them is to get a handle on this non-delegation debate by
    making it clear--I suggest a Chevron provision making it very
    clear that courts are not to give that degree of deference in
    various areas.
        Mr. May. Could I add----
        Chairman Johnson. Mr. May.
        Mr. May [continuing]. A quick word. I do not know whether
    Professor Turley will agree or not, and I do agree that taking
    Chevron is good, but as a lesser included step, I think
    Congress could say the independent agencies, like the FCC, are
    not to be accorded Chevron deference even if the executive
    agencies are not addressed, and the reason for that is when you
    look at Chevron, the primary rationale for the Chevron decision
    was that when Congress leaves an ambiguity, that you should
    look to the administration and the President. I think the
    Chevron decision refers to deference to the administration.
        Well, in line with what we have been talking about, the
    independent agencies, whatever their relationship to the
    President, is not the same as the Executive Branch agencies and
    there is a good argument that they should not receive the same
    degree of Chevron deference. Elena Kagan, now Supreme Court
    Justice, she in this law review article, long law review
    article she wrote when she left the Clinton Administration, she
    basically agreed. I have written two articles on this myself,
    but she agreed that because the independent agencies are not
    supposed to be subject to the same direction of the President,
    they should not receive the same Chevron deference.
        So, in my written testimony at footnote 27, I cite two of
    my articles on this point about Chevron deference, and I do
    think it is worth looking at that discrete issue.
        Chairman Johnson. OK. Go ahead, Mr. Campbell.
        Mr. Campbell. If I may, sir, I would say, though, that the
    comments, while they have very little effect in blunting a
    major policy or political view of an agency, do often have a
    significant effect in changing technical application. So, it is
    probably, in fairness to the agencies, the comment process is
    still useful and still something that we certainly want to
    preserve, because that does----
        Chairman Johnson. When it is not ignored.
        Mr. Campbell. When it is not ignored, which it typically is
    not on purely technical matters, but those often are quite
    important and would be expensive if they were done incorrectly.
        The other point I would make is while I agree that Chevron
    deference creates some significant concerns, I also think in
    looking at this as a matter for Congress to consider, how would
    you rewrite the law to address that, I would not want to create
    the same problem in reverse with the judiciary. I would not
    want to have the judiciary able to second guess all of these
    decisions, as well, and replace an unelected, unaccountable
    bureaucrat with an unelected, unaccountable judge. I do not
    know that that is a good tradeoff, either.
        Chairman Johnson. I think going to Professor Turley's
    point, that it really ought to be Congress that kind of is the
    melting pot in terms of settling some of these disputes. It is
    a far more democratic process than an agency or nine Justices
    of the Supreme Court.
        Mr. Turley. Yes, and if I could add, and this follows up on
    what Randy said, one of the things, I think, that this body
    should seriously consider is also the city of Arlington case.
    When we are talking about barring Chevron deference, one of the
    more shocking things that has happened in the last few years
    was the Supreme Court saying that an agency would get deference
    even in interpreting its jurisdiction.
        Many of us who have been critics of Chevron believe that
    was really the rubicon, that no matter how bad it might get, an
    agency cannot get deference in defining its own jurisdiction.
    It would become a perpetual motion machine. And, that is
    something I think Congress should make a priority, in
    establishing that it is not delegating the authority to
    agencies to make that type of decision.
        Chairman Johnson. Mr. Kovacs.
        Mr. Kovacs. Just to follow up on what has been talked
    about, are comments worth anything, the application of
    deference by itself is what allows the agencies overreach,
    because they know the court is going to go along with them
    unless they are absolutely crazy.
        And, so, the advantage of amending the APA is that the
    Congress can set out clear standards for what the agency has to
    do as part of a rulemaking and the court has the ability to
    understand what Congress tells them to do so that they can be
    the kind of check on the agency power, because after all, in
    the end of the game, it is the court that is going to be
    looking at the record.
        So, you need to do two things. You need to really, in my
    opinion, you need to, one, give clear standards for how the
    agency proceeds, what they need to do, whether it be principles
    or not, and that helps the courts, because the courts are the
    ones that apply the deference. So, it is not just Congress. We
    are sort of beating up on Congress. But, it is Congress gave
    enemies broad laws, but the court gave enemies deference. Both
    the courts and the Congress walked away and said, let the
    agencies do it, and both have to begin to getting reengaged.
        Chairman Johnson. I have a couple other lines of
    questioning, and one of the things I do want to do--just give
    you one thing to think about--I do want to go through these
    three examples, the costs and benefits, and Mr. Weissman, you
    can kind of chime in, as well, because we have been not asking
    you a whole lot of questions.
        I want to quickly go back to Professor Turley, though. You
    talked about giving deference to the jurisdiction of an agency.
    Is that not really the definition of the Consumer Financial
    Protection Bureau (CFPB)?
        Mr. Turley [Laughing.]
        Chairman Johnson. No, I am dead serious about that. I mean,
    is that not a real problem with that particular agency, which I
    think a lot of us would say is probably just an
    unconstitutional agency because it has total deference over its
    own jurisdiction?
        Its own budget?
        Mr. Turley. Well, I find it very troubling, and as you
    probably know, the D.C. Circuit panel raised questions along
    these same lines, of what a strange creature this is to find
    within our system, where it seems to be not directly
    accountable, even for in terms of budgetary requirements, to
    any branch.
        I find that deeply troubling. I do not have a dog in the
    fight in terms of the underlying merits of the Board. But, as
    someone coming from a constitutional standpoint, this is an
    entire different species. The Framers would not recognize
    creatures like this.
        Chairman Johnson. I mean, what constraint does it have? I
    know it has a name and it is supposed to be directed there, but
    it can just about go anywhere, right, and there are no
    constraints whatsoever by anybody.
        Mr. Turley. Yes, and I think I would beat up on Congress a
    little bit in this respect, and that is----
        Chairman Johnson. Be my guest.
        Mr. Turley [Laughing.] The thing is, members have been
    playing with their own obsolescence for years. It is very easy
    to create independent bodies to shove tough questions over
    there, and when things go wrong, you can criticize it. And the
    same thing is true with the President. It gives insulation to
    politicians that the Framers did not want. The Framers actually
    did not want you to be insulated in these respects.
        And, so, that is why this whole system is becoming
    something other than what was intended by the Framers, and it
    is not a better system. I mean, that is what is interesting, is
    it is showing all of the dysfunctional problems that the
    Framers thought would occur.
        And, when people say, well, this is an entirely different
    government, a different reality, it is not. I mean, the Framers
    were very familiar with giving authority to remote individuals.
    They called it a monarchy. Now, we might have a technocracy,
    but it is the same concentration of power and it is removal
    from public influence and from public observation, and I think
    that is what we are seeing.
        Chairman Johnson. Let us face it, Congress has been giving
    away its powers for decades. Power of the purse, you have two-
    thirds of the budget off-budget. So, much of the discretionary
    part is tied to mandatory spending, so the government shuts
    down and somewhere about 10 percent actually shuts down.
    Everything else just keeps moving forward. Advice and consent,
    it comes--executive agreements, we do not say, no, this is
    really a treaty. So, I am with you on that.
        As a non-lawyer, I do want to continue down just the legal
    ramifications of this and how the courts tie into this. I want
    to talk a little bit about standing. You are aware of the fact
    that I tried to sue this administration to overturn a rule from
    the Office of Personnel Management (OPM), from my standpoint,
    clearly violated the very clear language of the Affordable Care
    Act in terms of allowing Members of Congress and their staff to
    have an employer contribution into the plans purchased through
    an exchange. I could not get standing.
        Mr. Turley. Right.
        Chairman Johnson. That is also a problem in terms of these
    other laws. Sometimes, it is just very difficult to even get
    standing to challenge. Can you just kind of talk about that
    issue.
        Mr. Turley. Well, I am glad you brought it up. For one
    thing, it allows me to beat up on another branch, and that is
    when I look at the dysfunctional state of Washington today, I
    actually put the principal blame on the courts, not on the
    Legislative or Executive Branches. The reason is the courts
    have removed themselves from these disputes. Members like
    yourself have serious separation of powers questions to raise
    and courts say, I am sorry, we are just not going to let you be
    heard on the merits. And the result, then, is it reduces the
    two other branches to muscle plays. That is what we are seeing.
    But, it is that because those two branches are trying to fight
    for their institutional authority and no one in the court is
    giving them their day in court, as was the case with your
    lawsuit.
        That is the reason for years I have argued that one of the
    great solutions that we could see in our lifetime would be to
    change standing, particularly to allow legislative standing.
    Members of Congress have skin in the game. They have important,
    particularly separation of powers, questions to raise. And I
    think that the court has made an utter mess of this area.
        The standing doctrine itself, of course, does not appear in
    the Constitution. It is derived from Article III in terms of
    what is a case or controversy. But, the courts allowed the
    standing principle to become so grotesque that even Members of
    Congress that have legitimate constitutional issues, as was in
    your lawsuit, are not even being heard.
        And, the reasons for that are really, in my view,
    implausible. It is, like, well, you cannot have all Members of
    Congress sue every time they believe that the President is
    acting unconstitutionally, and my answer is, why? Even if all
    of the members became litigious, it would be a drop in the
    bucket in terms of the number of cases that the courts deal
    with.
        But, more importantly, members have the expertise, they
    have the perspective to raise separation of powers. And as
    someone who is a great advocate of a separation of powers
    doctrine, and admittedly, I am a formalist in that sense, we
    are at a new low in terms of the respect for the separation of
    powers and it is becoming more and more unstable.
        I mean, when we talk, as you have said so many times, about
    Congress just basically relenting, one of the most bizarre
    moments of my lifetime is when President Obama stood in front
    of Congress and told them, I intend to circumvent Congress
    because you failed to do what I asked you to do with the ACA
    and other areas. Now, what followed was really otherworldly.
    Half of that body applauded rapturously at the notion of their
    own obsolescence, and that is something that Madison, I do not
    think, anticipated. He really did believe ambition could fight
    ambition when it came to institutional authority.
        Chairman Johnson. Yes. The Members of Congress would
    actually hold their oath of office to support and defend the
    Constitution and jealously guard their powers, which is not
    happening.
        I wanted--and anybody who wants to comment on this--I mean,
    another, I think, incredibly dangerous process is sue and
    settle, where agencies, again, the executive, you cannot get
    Congress to pass a law so they will work with an outside group,
    get that outside group to sue the government, and then the
    agency settles, and now you have a court sanctioned result,
    again, completely circumventing this body.
        Does somebody want to speak to that? Mr. Kovacs.
        Mr. Kovacs. Sure. Well, sue and settle is obviously one of
    our large concerns, but it also relates to your standing issue.
    For example, Congress has put standing issues--has granted zone
    of interest/legislative standing to environmental groups in 20
    of its environmental laws. So, while you cannot get standing to
    argue separation of powers issues, the environmental groups get
    standing to protect their vision of what the forest looks like.
    So, that gets them into court.
        And once they sue the agency, several things happen. The
    agency consents, and by consenting and going under a court
    order, the agency has now managed to make that issue a
    priority. So, whatever monies you appropriate, the agency takes
    and redirects them because they are now under a court order.
        So, what happens is the environmental community is actually
    implementing their agenda through the sue and settle process,
    and again the courts--and we might as well just keep on beating
    up on them too--the fact is that the courts treat, sue, and
    settle, major policy disagreements like utility Maximum
    Achievable Control Technology (MACT) or the Chesapeake Bay,
    they treat them the same as if two private parties came in on a
    contract dispute and they just signed it and said, get out of
    my courtroom. They do not even look at the comments, if the
    agency ever takes comments. They do not look at them and they
    are not presented to the court. It is just, here is the consent
    decree, and they do it.
        Chairman Johnson. When was the first time this was
    initiated, do you know?
        Mr. Kovacs. Sue and settle?
        Chairman Johnson. Yes.
        Mr. Kovacs. That has been on and off for probably 20, 25
    years. The only time it has really stopped between the Carter
    Administration and today was when Ed Meese was Attorney General
    (AG), and he had stopped it for a period of 4 years. Other than
    that, it has been continuous. The only difference is it was a
    few cases a year and a few cases within a term of the
    President, and I think in the first term of the Obama
    Administration, it was, like, 115.
        And some of the courts, it is not just one regulation that
    they implement. One of the courts in the Northern District of
    California actually did 28 regulations at a time. I think that
    is the highest.
        Chairman Johnson. Well, it has literally become the method
    of governing. Mr. May.
        Mr. May. Mr. Chairman, let me just give you the FCC version
    of what you called sue and settle, and probably other agencies,
    as well. It is a big problem.
        The FCC reviews mergers in the communications industry, as
    you know. It does it under the public interest standard that I
    have talked. In other words, that is what it is basing its
    decision on. Well, of course, that is indeterminate. So, what
    really happens, to make a long story short, is when companies
    have mergers pending before the FCC, before all is said and
    done, and that is usually at least a year after they file the
    applications--they end up coming forward and, ``volunteering''
    certain conditions that, obviously, the FCC staff has
    communicated to them that they would like to see attached to
    the merger, but which may not and usually are not directly
    related to the specific competitive impact of the merger. In
    other words, they are other public interest types of things.
        So, you end up with regulation by condition. That happens
    all of the time, and I believe that is probably the equivalent
    of what you are talking about with sue and settle, and that is
    an example, again, of something that could be corrected by
    Congress if it revised the part of the Communications Act
    dealing with reviewing transactions and just made more specific
    what the FCC should look at the specific impact of that merger
    and not unrelated issues in that proceeding.
        Chairman Johnson. Does anybody else want to chime in on
    this one before I move on to the kind of cost-benefit? Mr.
    Weissman.
        Mr. Weissman. I think we probably disagree with you on
    this. I know we disagree with Mr. Kovacs. I mean, we view the,
    what is termed ``sue and settle,'' really as private
    enforcement, actually carrying out Congressional intent.
        But, I thought it might be useful to step back to the
    standing issue, and I do not know that we would have agreement
    on this issue, but I do think there is probably agreement on
    the notion that there is a problem and that standing is far too
    narrow in too many cases. I mean, I think, interestingly, the
    environmental statutes are sort of unusual in granting a
    broader framework for standing.
        As a consumer organization, we find when we are trying to
    enforce consumer or public interest in cases, we often do not
    have standing, even when industry might, and that there is a
    disparity there. Actually, sometimes industry has trouble
    getting standing, too, less so than us, but----
        Well, he and I will have coffee and talk about it later.
    But, I think it is the case that the Supreme Court has narrowed
    standing in such a way that important disputes actually are not
    able to be adjudicated, and it is an area--it is a challenging
    problem, and Professor Turley is certainly more expert than me,
    because of the constitutional doctrine, it is not obvious to me
    how Congress can solve where the court is going with this. But,
    at least it ought to be scrutinized and we ought to be seeing--
    I think that we are seeing, actually, access to the courts as a
    means to resolve important disputes and even constitutional
    claims just being shut off because of an artificially
    constricted standing doctrine.
        Chairman Johnson. I certainly learned that lesson myself.
        Does anybody else want to chime in on this before we go
    into cost-benefit? OK.
        Mr. Campbell. I would just say briefly, sir, that I think
    there is a distinction between expanding standing to include
    Congress and expanding the standing doctrine generally, which I
    think is also an important tool preventing frivolous
    litigation.
        Chairman Johnson. OK. What I would like to do is just,
    again, we have three test cases, and probably best to start
    with the potential cost and then talk about the benefit, and
    again, if that is OK with you, Mr. Weissman, it is kind of 3-
    to-1----
        Mr. Weissman. I think you get to decide that, sir.
        Chairman Johnson. So, let us start with the potential cost
    of the net neutrality rule, Mr. May, if you would like to speak
    to that, or not.
        Mr. May. No. I mean, I will, because I did during the
    proceeding. No. 1, I would just say at the outset, like someone
    else did, I am not opposed to all regulation or even all FCC
    regulation. But, in general, I do subscribe to the notion that
    if there is not a marketplace failure that is causing consumer
    harm, that is more than speculative, then you should be very
    careful about regulating, because cost--I mean, there is almost
    universal agreement among economists that costs do have an
    impact on economic activity. They tend to dampen investment.
    Now, that does not mean sometimes they cannot be outweighed by
    the benefits, particularly when we are talking about health and
    safety type regulation.
        But in the net neutrality case, there was a lot of people
    urged the FCC, that if it adopted the rule, it would have an
    adverse impact on investment and innovation, and there has
    been--it is early, but there has been some persuasive evidence,
    I think, already that is beginning to appear that it is having
    that impact on investment. Hal Singer with the Progressive
    Policy Institute, not a free market type of institute, but he
    has done a study that showed that in 2015, there was a decrease
    in the amount of investment from the 12 largest Internet
    service providers of about a half of a percent, or $250
    million. That has an impact on, obviously, the jobs that depend
    on the investment, as well.
        So, and I would just add that Commissioner Ajit Pai has
    identified, I think, eight different instances in which smaller
    Internet service providers have publicly said, announced, that
    they were cutting back on plans to increase their investment,
    as well.
        Chairman Johnson. And, by the way, this is significanct--
    because it sounds like a small reduction in investment, but the
    Internet has been a huge boon to our economy, so there have
    been all kinds of investment on an annual basis. The only time
    we really saw a reduction, I think, was after the 2009
    recession and after the dot-com bubble burst.
        Mr. May. Yes. I mean, I think almost no one disagrees that
    since going back to 2000, there has been at least $1.3 trillion
    of investment by the Internet service providers. Now, I am not
    talking about all of the other parts of what we call the
    ecosystem. I am just talking about the Internet service
    providers.
        Chairman Johnson. Right.
        Mr. May. And the only other thing I would add is you
    cannot--it is hard to measure the amount of investment that
    does not take place as a result. You try and do it, but it is
    not an exact science. But, again, it is widely understood
    that----
        Chairman Johnson. Yes, that is why I said, the fact that it
    actually declined is pretty----
        Mr. May. Yes.
        Chairman Johnson [continuing]. Pretty significant versus it
    has always been growing. Mr. Weissman.
        Mr. Weissman. Well, just look again, just focusing on the
    costs, and, of course, I think the benefits are important, as
    well, I think that data is wrong. Broadband ISP investment is
    up in the year since the rule was adopted as compared to the
    previous years. ISP profits are up and stock values, for what
    that is worth, are up, as well.
        I mean, I think one indication that the purported
    investment deterrence is actually not playing out and not
    nearly as significant at all as was claimed in advance of the
    rule is the distinction between what the companies have told--
    or said publicly about the potential impact of the rule in
    advance and what they have said in their SEC submissions, where
    they are required to be truthful. And, their SEC materials do
    not claim that the rule will have material harmful impact on
    them, and by and large say that they will be able to manage
    without any difficulty, and indeed, that has been proven true.
        I think as time goes on, the idea that this was going to
    have such a huge cost on industry is just going to float away--
    --
        Chairman Johnson. So, again, you are disputing the cost,
    but what about the benefit? Why was this issued? What is the
    benefit of what the FCC is trying to do here?
        Mr. Weissman. Well, I think the benefits are enormous. The
    benefits are enormous, both on the consumer side--and, by the
    way, it has become a partisan issue here, unfortunately. It is
    not a partisan issue among the public, with self-identified
    conservatives overwhelmingly favoring what is called the net
    neutrality rule, and that is because it is essentially a
    freedom issue first. It has to do with whether or not there is
    going to be free, unfettered traffic, information exchange,
    over the Internet without toll keepers and without corporate
    sensors in the form of ISPs, and those are principles on which
    everyone should agree, apart from trying to monetize the value.
        There are monetary benefits, too. There are monetary
    benefits to consumers in avoiding excess tolls that would have
    been imposed if the Internet moved in a different direction.
        And beyond that, there are massive pro-competitive--pro-
    innovation benefits to the rule. There had not been a ton of
    examples of blockage, but there have been a number of important
    ones where we saw ISPs trying to deter the growth of Skype,
    deter the growth of Facetime, interfere with Voice over
    Internet Protocol technology.
        And, of course, the Internet has been an area of massive
    innovation and expansion, but it actually--all of the apps that
    are going on, all of the innovation, it depends on the Internet
    being free, open, and unfettered, and not censored and not
    controlled. So, we are going to see enormous benefits. All the
    benefits we are talking about from the Internet actually would
    have been in peril if we had a whole different model of how the
    Internet was going to work.
        Chairman Johnson. Well, it depends on investment so we can
    continue to increase speeds.
        Let us talk a little bit about the fiduciary rule. Mr.
    Campbell.
        Mr. Campbell. Yes. So, the Department of Labor's rationale
    essentially is that securities laws are inadequate and that
    IRAs should be treated to a different standard, similar to
    employee benefit plans, and that as a result of that, there are
    conflicts permissible in the IRA space that would cost. And the
    estimates here became very difficult, frankly, I think, to
    agree with because they were pretty speculative. They were
    based on academic studies looking at one type of conflict and
    one type of product and whether this caused fees to be higher
    and returns to be lower, and I think it is very difficult to
    extrapolate that out. It also ignores an awful lot of other
    potentially positive effects that would go into that advisory
    relationship.
        For what it is worth, the Department did revise its
    estimates in the final rule to reduce the benefits somewhat and
    increase the costs by a proportional amount rather
    significantly, I think probably still rather significantly
    underestimating the costs. Again, in my testimony, I gave an
    example of just the legal fees alone. They look at the cost for
    particularly disclosures that they are requiring and they
    assign a number of minutes they think it is going to take an
    attorney to write that disclosure, and then they assign an
    hourly value to that attorney's time.
        And I gave the example, one of those disclosures, they
    thought would take 10 minutes to write. And at $134 an hour,
    that would be $22.33. But, if you get that disclosure wrong,
    you have potentially blown the exception and committed a
    violation of this contract, which is exposing you to a class
    action in State court over the entirety of your IRA business,
    which could be tens of billions of dollars. So, no one is going
    to spend $22 to make sure that is right. They are going to
    spend whatever it takes to make sure that is right.
        And that is just one example of the way they do these
    economic analyses, which are not rigorous and, I think, are not
    really accurate, reflecting reality.
        Chairman Johnson. It is hard to monetize both costs and
    benefits, but I think it is pretty easy anecdotally to say they
    will not spend the costs. They will exit the business. I mean,
    is that not the real concern about the fiduciary rule, is
    people will just refuse to become a fiduciary because it
    exposes them to such enormous liability, they are just going to
    stop doing it, and so you have the small to medium-sized
    investor that just will not have access to advice.
        Mr. Campbell. I absolutely believe it will reduce choices
    and increase costs, and that will drive some of these small
    accounts and small plans sort of out of the ability to get
    advice. I think it is less a question of driving service
    providers out entirely as it is imposing new costs and legal
    liabilities and ongoing compliance obligations on those service
    providers that make it unaffordable to serve small accounts.
        So, it is not that they exit the business, going to the
    gentleman's point about the SEC filings, are these service
    providers saying, oh, we are just going to have to close up
    shop. No, but that does not mean they are not going to pay a
    lot more to provide a similar service and that that is going to
    hurt people.
        Chairman Johnson. So, if you are a small investor, all of a
    sudden, you are seeing a cost of $500 or whatever, you just do
    not access the service, so it is kind of the same thing.
        Mr. Weissman, the benefit.
        Mr. Weissman. Well, first on the cost side, so the
    Department's cost estimate is really based on industry
    submitted data. It is one of the limits, by the way, of cost-
    benefit analysis. So, it is quite conservative and it really
    does rely on the framework that was provided by industry. They
    tweaked it around the edges.
        They also, by the way, as Mr. Campbell pointed out, they
    made non-trivial changes even in this current version of the
    rule in response to comments about ways they could reduce
    costs.
        In terms of the benefit, before thinking about the
    monetization, which--it is worth stepping back and thinking
    what the fiduciary rule actually is, which is a rule that
    requires investment advisors to have the interests of their
    customers at heart. That should not be that controversial. And,
    I think it is unfortunate that it has become so. And, it is for
    sure the case that consumers assume that that is the basis on
    which they are being served, even when it actually, it has not
    been.
        Now, the benefit estimate--and actually, and that in turn
    makes a difference. If you have a duty to advance the interest
    of your customer, you do not layer them with all kinds of
    hidden fees that materially reduce their returns. So, the
    estimate from the Council of Economic Advisors is about $17
    billion a year annual savings from consumers as a result of the
    rule, and even that probably is a fairly conservative estimate,
    because they are only looking at a fraction of the accounts
    that would be affected.
        Chairman Johnson. Mr. Kovacs, let us talk about Waters of
    the United States. I know in Wisconsin, we are looking at
    potentially more than 90 percent of the land mass of Wisconsin
    now being subject to EPA jurisdiction and permitting, the
    $150,000 per permit, more than $30,000 per day types of fines.
    Can you just talk about what you look at as the cost of the
    WOTUS rule.
        Mr. Kovacs. Well, you certainly hit it. You described it
    perfectly. About 90 percent of the land in the United States
    would be subject to some form of EPA regulation, just because
    of the hydrology. It is $155,000 a permit, and I do not know
    how many permits that people would need, versus highway
    administrations and farmers or whatever. You would also need
    discharge permits. And you have the $37,000 a day in fines, and
    fines goes up to a million.
        So, let me read to you--because it is only a few words--
    what the EPA says is the cost of all of this. ``The rule
    establishing the definition of Waters of the United States by
    itself imposes no direct cost.'' Then it just dismisses it and
    says, well, ``each of these programs may subsequently impose
    direct or indirect costs as they are implemented,'' and,
    therefore, they just wipe away the theory.
        And even on cost--and I am going to go back to unfunded
    mandates, because the States are really the ones getting
    saddled with this burden--if you went back to, I think it is 15
    years, EPA issued 8,400-and-some rules and they only found
    unfunded mandates in 45 of them, and they only found that the
    States had to spend more money in five. So, it gives you an
    idea that whatever you are looking at in the cost-benefit is
    whatever the agency wants to tell you.
        Chairman Johnson. And, of course, the Waters of the United
    States basically redefines what I think most of us would view
    should come under Federal jurisdiction, navigable waters,
    because if you pollute something in Wisconsin into the
    Mississippi, it affects other States. I mean, there is
    interstate commerce and that is reasonable. And it turns that
    into things like intermittent streams, playa lakes, which I had
    to look up in a dictionary. It is a bigger puddle. It is a
    puddle, but it is a big one. But, it probably does not define
    how big a puddle.
        Again, Mr. Weissman, the benefit, then, again, recognizing
    the fact that we all believe that we want a clean environment
    and it is reasonable to have EPA jurisdiction over things like
    navigable waters, true navigable waters.
        Mr. Weissman. Absolutely. Well, if you will permit me, I
    think there is--Senator Heitkamp is gone, but there is a point
    that she was raising that is important, particularly in this
    area, which is there has to be a definition. The statute exists
    and there has to be a definition, and the EPA has to figure
    something out.
        And they have been harshly criticized, by Chief Justice
    Roberts, among others, for not resolving a rule. So, the
    rulemaking had to occur. And, I think--because there had to be
    a workable definition. I mean, if you read the Chief's comments
    on this, they are very harsh criticism. They have to establish
    what the scope of the Clean Water Act (CWA) is, and it has been
    murky around the edges as a result of the last two cases.
        So, I think, before getting directly to the question, there
    really is a role for Congress to--you are not going to probably
    have that detailed a definition as EPA can possibly get, but
    you could go back and revisit it if it seems problematic.
        Chairman Johnson. Well, by the way, they did try that, the
    Clean Water Restoration Act. It was not passed. And, again, it
    tried to redefine that and it was rejected. So, there was some
    definition that had been operating for a few decades, but go
    ahead.
        Mr. Weissman. So, in terms of the costs and benefits, so
    Mr. Kovacs read that excerpt which is correct, although the
    EPA--but, first, to explain that, the EPA said, look, it is
    definitional. All we are doing is creating a definition. They
    did not deny the definition would have effects. They are saying
    the fact of creating the definition itself does not have an
    effect.
        Then they said, OK, let us go ahead and then figure out
    what the impact would be. And, they said, in contrast to what
    he has suggested, it does narrow the scope of covered waters
    compared to the statutory definition. So, they said, we could
    stop there and say it actually is going to have less cost than
    the existing statutory definition.
        But, in fact, we recognize that it does expand around the
    margins compared to existing practice. And then they,
    therefore, did conduct a rough cost-benefit and say they
    believe the benefits will outweigh the costs by about two-to-
    one.
        Chairman Johnson. OK. I will just quickly go down the table
    here. Does anybody have a final comment, something that you
    have just got to get out before we close the hearing? Let us
    start with you, Professor Turley.
        Mr. Turley. Thank you, Mr. Chairman. What I really respect
    most about this Committee and your leadership is its interest
    in developing a nonpartisan approach to these questions, and I
    think what really comes out of this hearing--so, there are good
    faith arguments on both sides of these issues, but what we
    should agree on is the way in which we resolve these issues and
    for Congress to be relevant for that process. And, I do believe
    that the RAA is a good step. I happen to think that something
    like the REINS Act is a good step.
        There is an assortment of things that Congress can do, and
    one of those, by the way, is also increasing its staff to
    specifically monitor in a more substantial way rulemaking. We
    have not talked much about that, but part of the advantage the
    administrative state has is that its sheer size overwhelms
    Congressional staffers. And, so, this almost becomes arbitrary
    as to what issues can first come to the attention of Congress
    and what issues can be addressed.
        Congress has no choice if it is going to be relevant to get
    some boots on the ground, to actually have, what I recommend is
    an actual office that will be looking at rulemaking so that
    members are not in the blind. And, I think these are the types
    of steps that I hope members can agree on in a nonpartisan way,
    that they should be informed, they should be more involved, and
    they should fulfill what is probably the sacred function of our
    Constitution. That is, this is the place where the country has
    to resolve its disputes. It does not always resolve it.
    Sometimes, the country is terribly divided, and then less gets
    done. But, this is the place where the Framers wanted those
    questions to be resolved and I think we have to move back in
    that direction.
        Chairman Johnson. We have been trying. Mr. May.
        Mr. May. Thank you, Mr. Chairman.
        I would just say this in closing, that the FCC, unlike the
    other two agencies of the case studies, is considered one of
    the independent agencies, as we have discussed, so that makes
    it different.
        I mean, I will say that the whole nature of independent
    agencies under our tripartite system of government,
    constitutional system, is a little uneasy, but once we have
    them set up as they are with the notion of independence, which
    we do, at the core of that is the idea that they will rely
    primarily on their expertise and not so much on political
    considerations as might probably be the case with the
    independent agencies.
        So, having said that, one thing that I--and we discussed
    this in the hearing, which I think was very useful, and thank
    you for that, I think it has been instructive. One thing I
    would like to see Congress think about is whether the Chevron
    doctrine which we have talked about here, if Congress does not
    change the law to even apply more broadly across all of the
    Federal agencies, whether it might be changed with regard to
    the independent agencies not to provide the same degree of
    deference that is provided in the other cases, and the
    rationale would be that these agencies are acting based on
    their expertise and not because of deference to the
    administration. Thank you.
        Chairman Johnson. Thank you, Mr. May. Mr. Campbell.
        Mr. Campbell. Well, first of all, Mr. Chairman, I very much
    appreciate the work that this Committee has done, not just on
    this issue, but specifically on the fiduciary rule. The
    documents that the Committee gathered from the SEC, from the
    Treasury Department and other entities was invaluable in
    understanding what was going on, because no one but Congress
    would have had the authority to drag that out in that point in
    the process, so we appreciate that very much.
        One issue I would raise that should be considered in part
    of regulatory reform is that there are a number of areas in the
    law, and employee benefits is one of them, where you have
    significantly overlapping jurisdictions of different agencies.
    So, you have the SEC, the Department of Labor, the Treasury
    Department, the Financial Industry Regulatory Authority
    (FINRA), all of these different groups simultaneously
    regulating the same activities, or at least aspects of those
    activities, and where those agencies do not effectively
    coordinate, the regulated community gets whipsawed in the
    middle.
        And I think that is something that as the Committee looks
    at drafting, say, comprehensive legislation or considering one
    of the bills that is out there, that there be mandatory
    coordination between those entities so that we do not have one
    entity moving forward quickly, another not moving, and none of
    us knowing where we are ultimately going to end up.
        Chairman Johnson. An interesting point. One of the hearings
    we are trying to design is get case studies where, to comply
    with this regulation, you are in violation here, and we know
    those exist and just kind of point out that enormous problem.
        Mr. Campbell. And the proposal for the fiduciary rule did
    exactly that. It required a disclosure that securities laws did
    not allow you to make. They did fix that in the final rule, but
    the fact that it was actually able to be proposed showed that
    they were not coordinating with the SEC and other entities in
    order to avoid such an obvious contradiction.
        Chairman Johnson. Mr. Kovacs.
        Mr. Kovacs. Well, again, I just want to bring up the fact
    that this Committee almost--not almost, it worked a miracle
    last year with permit streamlining. You were able to come
    together on an extraordinarily difficult regulatory issue and
    you came out with a great result, and we are working very
    cooperatively with OMB and they have the cooperation of both
    the environmental groups and the business community.
        This issue in terms of the regulatory State, this should
    truly be a nonpartisan, bipartisan issue. The importance is not
    to the Republicans or Democrats. The importance of this issue
    is to Congress. This is an institutional issue. You have to
    find and get back into what your role is. There is only one
    institution in this country that can delegate power, you
    delegate it to the agencies with guidance as to how you want
    the rules written, not specific guidance, but you have to take
    these things in to account, because after all, it is all about
    homework and getting it right. But, the guidance to the
    agencies also give clear standards to the courts so that they
    know how to review it, and that is why the Regulatory
    Accountability Act is so important.
        Chairman Johnson. I appreciate that, and by the way, I
    appreciate you pointing out the fact that this Committee has
    really tried hard to try and find areas of agreement to
    actually unify us as a result. We literally passed 69 pieces of
    legislation, most of it unanimous, a lot of it bipartisan. I
    think it is 25 that have been signed into law. So, you actually
    can get a result by using that kind of approach. And, again, so
    these types of hearings--we are trying to, literally, ferret
    out and figure out where are those areas of agreement. Mr.
    Weissman.
        Mr. Weissman. A few quick points. One is I think we have
    had a lot of discussion about the difficulty of having court
    review of regulations. From our perspective, in fact, there is
    very intense and heavy court review of most regulatory
    decisions, a lot of cases brought by the Chamber of Commerce,
    unfortunately from our point of view, with great success. I
    think just the empirical record is the courts look at these
    things very carefully and routinely strike down rules.
        A second quick point is there is more than a little bit of
    tension between the concerns about President Obama's alleged
    role in the FCC rule and sort of undermining the independence
    of the agency and the proposal of the Independent Regulatory
    Agency Review Act, which would actually make the agencies
    directly accountable to the White House itself.
        A third quick thing, just to reference a point I made
    earlier that has been lost, I do think that there is a lot--it
    would be very fruitful for the Committee to look at missed
    statutory deadlines, sort of direct issue of accountability to
    Congress.
        And the last point, just to echo some of these comments,
    whatever the differences are, I think everybody appreciates the
    tenor of the conversation in this Committee on these issues, no
    small part to your role, and we really appreciate that.
        Chairman Johnson. Well, I appreciate that.
        Again, reading through your testimony, I know you put a lot
    of work into it. I think it really helps inform the record, so
    I appreciate that time, the time you took here to testify, and
    again, great answers to our questions. I think we really helped
    this Committee understand kind of the direction we need to
    move.
        So, with that, the hearing record will remain open for 15
    days, until May 5 at 5 p.m., for the submission of statements
    and questions for the record.
        This hearing is adjourned.
        [Whereupon, at 12:10 p.m., the Committee was adjourned.]

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