[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/

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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\
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    \1\ The prepared statement of Senator Johnson appears in the 
Appendix on page 41.
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    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.
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    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.
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    \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.
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    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.
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    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.
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    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.
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    \1\ The prepared statement of Mr. Campbell appears in the Appendix 
on page 88.
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    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.
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    \1\ The prepared statement of Mr. Kovacs appears in the Appendix on 
page 110.
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    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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