    [Senate Hearing 114-904]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-904

                        EXAMINING THE FEDERAL REGULATORY
                       SYSTEM TO IMPROVE ACCOUNTABILITY,
                          TRANSPARENCY, AND INTEGRITY

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

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 10, 2015

                                   __________

                               Serial No. J-114-21

                                   __________

             Printed for the use of the Committee on the Judiciary

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    52-980                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                           COMMITTEE ON THE JUDICIARY

                      CHARLES E. GRASSLEY, Iowa, Chairman
    ORRIN G. HATCH, Utah                 PATRICK J. LEAHY, Vermont, Ranking
    JEFF SESSIONS, Alabama                   Member
    LINDSEY O. GRAHAM, South Carolina    DIANNE FEINSTEIN, California
    JOHN CORNYN, Texas                   CHARLES E. SCHUMER, New York
    MICHAEL S. LEE, Utah                 RICHARD J. DURBIN, Illinois
    TED CRUZ, Texas                      SHELDON WHITEHOUSE, Rhode Island
    JEFF FLAKE, Arizona                  AMY KLOBUCHAR, Minnesota
    DAVID VITTER, Louisiana              AL FRANKEN, Minnesota
    DAVID PERDUE, Georgia                CHRISTOPHER A. COONS, Delaware
    THOM TILLIS, North Carolina          RICHARD BLUMENTHAL, Connecticut

                    Kolan L. Davis, Majority Staff Director
                    Kristine Lucius, Minority Staff Director

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Grassley, Hon. Charles E.........................................     1
        Prepared statement...........................................    34
    Leahy, Hon. Patrick
        Prepared statement...........................................    37
    Cornyn, Hon. John................................................     5
    Vitter, Hon. David
        Prepared statement...........................................    39
    Whitehouse, Hon. Sheldon.........................................     3

                                   WITNESSES

    Cooper, Charles J................................................    13
        Prepared statement...........................................   219
        Responses to written questions...............................   242

    Kovacs, William L................................................     7
        Prepared statement...........................................    41
        Responses to written questions...............................   259

    Parenteau, Patrick...............................................    12
        Prepared statement...........................................   211
        Questions submitted with no response returned................   240

    Steen, Ellen.....................................................    10
        Prepared statement...........................................   108
        Responses to written questions...............................   295

    Weissman, Robert.................................................     9
        Prepared statement...........................................    66
        Questions submitted with no response returned................   241

                                    APPENDIX

    Items submitted for the record...................................    33

                        EXAMINING THE FEDERAL REGULATORY
                       SYSTEM TO IMPROVE ACCOUNTABILITY,
                          TRANSPARENCY, AND INTEGRITY

                                  ----------

                            WEDNESDAY, JUNE 10, 2015

                                  United States Senate,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10 a.m., in Room
    226, Dirksen Senate Office Building, Hon. Charles E. Grassley,
    Chairman of the Committee, presiding.
        Present: Senators Grassley [presiding], Hatch, Cornyn,
    Flake, Perdue, Tillis, Whitehouse, Coons, and Blumenthal.

             OPENING STATEMENT OF HON. CHARLES E. GRASSLEY,

                 A U.S. SENATOR FROM THE STATE OF IOWA

        Chairman Grassley. Good morning, everybody. The Senate has
    a constitutional duty to conduct oversight, and, of course,
    that is oversight of the executive branch, and in doing that,
    we want to ensure that the Federal regulatory system remains
    accountable, and, of course, transparency brings about
    accountability. Today's hearing gives us a chance to take a
    broad look at where things stand.
        We all remember from civics classes that under our
    constitutional separation of powers, Congress makes the laws,
    the executive branch enforces, and the judicial branch
    interprets. If only it were that straightforward.
        According to Professor of Law Jonathan Turley, quote, ``Our
    carefully constructed system of checks and balances is being
    negated by the rise of a fourth branch, an administrative state
    of sprawling departments and agencies that govern with
    increasing autonomy and decreasing transparency'', end of
    quote.
        The Federal Register indicates that there are over 430
    departments, agencies, and sub-agencies in the Federal
    Government. The pronouncements of this ever-expanding
    administrative state impact nearly every aspect of Americans'
    daily lives.
        Data support this. The 113th Congress enacted just under
    300 laws. Over the same 2-year period, the Federal bureaucracy
    finalized 7,000 regulations. Just looking at these numbers,
    there is no denying that unelected bureaucrats are a real
    lawmaking force in our country.
        If you remember, in 1946, why Congress passed the
    Administrative Procedure Act because of growing power of the
    Federal bureaucracy, and they did this to help ensure that
    regulations are crafted in an open, accountable, and
    transparent manner, and that agency actions are reviewable by
    the courts to ensure compliance.
        Among the protections built into the APA is the public
    notice-and-comment rulemaking process, whereby Americans can
    weigh in on regulations, and agencies must objectively take
    those concerns into account before finalizing. This process is
    supposed to provide a meaningful opportunity for the public to
    hold regulators accountable and to help insure that regulations
    are crafted in the public interest and according to law rather
    than tailored to special interests. The Judiciary Committee has
    primary jurisdiction over the Administrative Procedure Act, and
    we need to improve our oversight of it.
        Unfortunately, we see repeated efforts today by agencies to
    undermine the public's role in rulemaking and tactics that
    render the notice-and-comment process a formality.
        Some agencies resort to litigation tactics like sue and
    settle to speed up the rulemaking process and to keep affected
    members of the public--and even the States--away from the table
    when key regulatory decisions are being negotiated behind
    closed doors.
        These tactics often result in consent decrees or settlement
    agreements between an agency and like-minded interest groups,
    committing the agency to actions that have not been publicly
    scrutinized. In February, I introduced the Sunshine for
    Regulatory Decrees and Settlements Act, a bill that would shine
    light on these tactics and provide much needed transparency.
    That is just one part of the issue.
        We also see agencies going through the motions of notice-
    and-comment rulemaking, yet the public's role in the process
    appears to be anything but meaningful. The EPA's recent
    finalized Waters of the U.S. rule stands out as a sweeping
    example of that problem.
        Instead of attempting to address the legitimate concerns
    raised during the open comment period, the EPA and its allies
    in the professional advocacy community pushed a narrative that
    portrayed critics of the rule as misinformed, nutty, or in
    favor of water pollution.
        Agencies are supposed to remain objective during the
    notice-and-comment period. The EPA's efforts to drive support
    for its own rule--while belittling the concerns of the public--
    indicate that it had a clear end goal in mind, regardless of
    public opinion or the rule of law.
        According to the New York Times--now, take this into
    consideration. In the New York Times, quote ``the EPA's tactics
    in supporting the rule are clearly designed to move public
    opinion, at a time when Congress was considering legislation to
    block the agency from putting the rule into effect,'' end of
    quote.
        I share the concerns of folks in my State of Iowa with the
    Waters of the U.S. rule. Its sweeping scope has left farmers in
    limbo about what they can and cannot do on their own land. The
    indifferent attitude the EPA took toward agriculture is a real
    concern for my constituents who understand the impact that
    agriculture has on the State's economy. It is just like the EPA
    does not know that only God determines if it rains 10 minutes
    or 10 inches in one night.
        More broadly, it is a real concern for just how
    unaccountable our regulatory system has become. Congress
    recognized early in the threat of agency overreach.
    Accordingly, the APA provides for judicial review.
        However, as the influence and reach of the administrative
    state grows, it seems like the ability and willingness of the
    Federal courts to hold it accountable has diminished. Over 30
    years ago, the Supreme Court articulated the now famous Chevron
    doctrine, whereby Federal courts largely defer to an agency's
    legal interpretation of a statute it administers.
        Recently, the Supreme Court determined that such heavy
    deference extends even to an agency's interpretation of the
    scope of its own jurisdiction.
        Placing such questions of law into the hands of those who
    also write and enforce laws raises serious concerns. I often
    quote James Madison, so let me do it again: quote, ``The
    accumulation of all powers, legislative, executive, and
    judiciary, in the same hands, whether of one, a few, or many .
    . . may justly be pronounced the very definition of tyranny,''
    end of quote.
        It is important that we consider these issues carefully. It
    is equally important that Congress recognize its own
    responsibility on the expansion of rulemaking. For too long,
    Congress has delegated in broad strokes, asking the agencies to
    sort out details. If Congress is going to ask courts to tackle
    the tough questions, it needs to be willing to do so itself by
    reasserting its lawmaking power and by speaking clearly and
    precisely when it chooses to use that power.
        What is clear is that the status quo is not acceptable.
    Today small businesses and entrepreneurs operate in a
    regulatory environment that provides little relief from
    excessive red tape, and one that offers little certainty upon
    which to base risk and investment. Agencies are falling far
    short of their duties to weigh the costs and benefits of new
    regulations, and there is little the courts seem to want to do
    to hold them accountable. Regulations with hundreds of
    millions--and even billions--of dollars in impact are being
    imposed on the U.S. economy, all without a sufficient check.
        We have this hearing, and I call on my Ranking Member, who
    may have different views on this issue, but he and I get along
    very well. I hope you understand that.

             OPENING STATEMENT OF HON. SHELDON WHITEHOUSE,

             A U.S. SENATOR FROM THE STATE OF RHODE ISLAND

        Senator Whitehouse. I understand it very well, Mr.
    Chairman. I enjoy working with you, but as you predicted, we do
    have very different views on this particular topic.
        I thank the witnesses for joining us, and I thank Chairman
    Grassley for calling attention to the important topic of
    Federal regulation.
        The title of this hearing sounds neutral enough. Who can
    argue against transparency and integrity? I am concerned that
    its purpose is simply to further my Republican colleagues'
    relentless and extreme anti-regulatory, pro-big-business
    polluter agenda. It is an agenda with which, according to
    polls, most Americans disagree but which special interests
    love. Whether we are talking about environmental or health or
    consumer or financial regulations, today's Republican Party,
    unlike previous Republican Parties, seems determined to roll
    back important public protections, and often in very misleading
    terms.
        Over in another room in this building today, we are marking
    up what is Orwellianly called the ``Federal Water Quality
    Protection Act,'' a bill whose purpose is to take down Federal
    water quality protections.
        The arguments tend to be one-sided, highlighting potential
    jobs lost, while completely ignoring potential jobs created and
    economic and health gains, and railing against overzealous
    regulation while never acknowledging the role of overly lax
    regulation in contributing to recent crises and disasters.
        Regulatory agencies have through our lifetimes provided
    vital protection to the American people, and we in Congress
    should exercise our oversight responsibly, focusing on
    realities rather than on rhetoric.
        One of the majority's case studies for overzealous
    regulation today is the rule recently finalized by EPA and the
    Army Corps of Engineers to define Waters of the United States
    under the Clear Water Act. This rule was developed over many
    months, following more than 400 meetings across the country,
    review of over 1 million public comments, and vigorous
    grassroots outreach.
        In my home State of Rhode Island, this rule is going to
    protect small streams and wetlands that are vital for our fish
    and wildlife. Rhode Island residents and nonresidents spend
    hundreds of millions yearly on wildlife recreation, including
    $130 million on fishing alone. More than 400,000 Rhode
    Islanders participated in wildlife recreation activities in
    2011 when the sample was taken. This rule is good economic news
    in Rhode Island, and actually probably good economic news in
    most places around the country. That is why the American
    Sustainable Business Council, which represents 200,000
    businesses that rely on clean water, supports the Clean Water
    Rule. A polling commissioned by the council found that 89
    percent of small business owners, including 78 percent of
    Republicans, favor Federal rules like those proposed by the EPA
    to protect upstream headwaters; 71 percent of small business
    owners agree that clean water is necessary for jobs and the
    economy; 67 percent are concerned that water pollution could
    hurt their business in the future. Of course, others pushing
    for this Clean Water Rule are the American Fisheries Society,
    the American Fly Fishing Trade Association, Back Country
    Hunters and Anglers, the Berkley Conservation Institute, the
    Bull Moose Sportsmen's Alliance, the Dallas Safari Club, the
    Izaak Walton League of America, the National Wildlife
    Federation, Theodore Roosevelt Conservation Partnership, and
    Trout Unlimited.
        Attacks on this rule often seem based more in terms of
    conspiracy theory than factual accuracy. Here is just a
    sampling of what some Republican colleagues have said about the
    proposed rule.
        Here is one: ``Under this plan, there would be no body of
    water in America, including mud puddles and canals, that would
    not be at risk from job-destroying Federal regulation.'' That
    is former Representative Doc Hastings.
        House Small Business Committee Chairman Sam Graves:
    ``Permits may be required for activities such as removing
    debris and vegetation from a ditch, applying pesticides,
    building a fence, or pond, or discharging pollutants''--well,
    maybe discharging pollutants.
        Republican Representative Glenn Thompson of Pennsylvania
    calls the rule, ``a historic power grab that poses,'' get this,
    ``a fundamental threat to our economy and way of life.''
        ``Brazen effort'' is another phrase that has been used.
    ``Gross Federal overreach''; ``would require cost-prohibitive
    Federal permits for any proposal tangentially affecting
    virtually any body of water in the United States.'' We have
    even heard from colleagues on the EPW Committee that the rule
    might jeopardize fireworks on the 4th of July.
        In fact, the rule maintains the exclusion of prior
    converted cropland, meaning over 50 million acres of Clean
    Water Act permitting is still not required. It excludes the
    vast majority of roadside ditches and ditches on agricultural
    lands. It eliminates jurisdiction over artificially irrigated
    areas, constructed stock watering ponds, irrigation basins, and
    the like. It fully preserves the permitting exemptions for
    farming, ranching, and forestry, and it clearly states that the
    Clean Water Act does not apply to groundwater.
        Unfortunately, this does not stop the histrionics. When the
    final rule came out, House Speaker Boehner said this rule,
    quote ``is a raw and tyrannical power grab that will crush
    jobs,'' and that, and I'll quote again ``the rule is being
    shoved down the throats of hardworking people with no input''--
    no input. What was it, 400 million outreaches, meetings? --
    ``and places landowners, small businesses, farmers, and
    manufacturers on the road to a regulatory and economic hell.''
        Mr. Chairman, the only people who think clean streams and
    rivers are economic hell are deep-pocketed polluters, and I am
    confident that there will be fireworks on the 4th of July after
    this rule goes into effect.
        Thank you.
        Chairman Grassley. We are not going to put you down on the
    undecided list.
        [Laughter.]
        Thank you.
        Senator Whitehouse. Thank you, sir.
        Chairman Grassley. Normally I do not call on other Members,
    but I want to call on Senator Cornyn because he has had an
    interest in this for a long time and helped us get this moving.
        Senator Cornyn. Thank you, Mr. Chairman, and I promise to
    be brief.
        Senator Whitehouse. Would the Senator yield just for one
    moment? The EPW is marking up the Federal--humorously called
    ``Federal Water Quality Protection Act,'' so, I have to go back
    and forth. Forgive me if I get up and come back and forth. It
    has nothing to do with what any Senator or any witness has
    said.
        Chairman Grassley. Thank you. Go ahead.

                 OPENING STATEMENT OF HON. JOHN CORNYN,

                 A U.S. SENATOR FROM THE STATE OF TEXAS

        Senator Cornyn. Thank you, Mr. Chairman. I think this is
    perhaps one of the most profound and least well understood
    issues confronting our self-governing democracy today, and I
    realize that is a dramatic statement, but I believe it is
    actually true. Increasingly, as you point out, regulatory
    agencies have become the lawmaker, the judge, the jury, and the
    executioner, rhetorically speaking, when it comes to the
    administrative state.
        I am particularly troubled, as you pointed out, with the
    decisions by the courts which have shown deference to the legal
    interpretation of the agencies' own jurisdiction and own
    authorities. That is a power, I believe, reserved to the
    judiciary and not to an administrative agency.
        As you point out, this has become a fourth branch of
    Government which serves very useful purposes if kept within its
    proper bounds. Unfortunately, it has become a runaway train
    with no accountability and the kind of accountability that we
    experience, which is entirely appropriate, that when people
    disagree with us and what we do, they vote us out of office.
    They vote against us. You cannot do that to a nameless and
    faceless bureaucrat.
        Most recently this has come to my attention when, of
    course, the Securities and Exchange Commission decided to take
    its administrative appeals in-house because of their losing
    streak in the courts. Recently a Federal judge ruled this
    decision likely--to move in-house to more favorable
    circumstances and venue for the administrative agency--one
    Federal judge said that that was likely unconstitutional.
        There is an important role that the regulatory agencies
    play in our lives, and contrary to Senator Whitehouse's
    statements, this is not about no regulation or overregulation.
    This is about keeping it within its proper bounds.
        I very much appreciate your holding this hearing because I
    think this is one of the most profound issues confronting our
    self-governing democracy today, and, unfortunately, it is one
    of the least well understood. Thank you for giving me a chance.
        Chairman Grassley. I am about ready to introduce the
    witnesses, but a couple housekeeping matters.
        I will be here for about half of this hearing, and then
    Senator Hatch is going to take over because I have constituent
    meetings. Of course, as always, the record will remain open 1
    week for the submission of written questions and other
    materials, and we would appreciate the witnesses' responding to
    those.
        I will now introduce William Kovacs, senior vice president
    for Environmental, Technology & Regulatory Affairs, Chamber of
    Commerce. He leads the Chamber's efforts on comprehensive
    energy legislation, environmental rulemaking,
    telecommunications reform, emergency technologies, and the
    application of sound science to the Federal rulemaking process.
        Robert Weissman is president of Public Citizen, a consumer
    and public interest advocacy group, very well noted here on the
    Hill and throughout the country. He is also co-chair of the
    Coalition of Sensible Safeguards.
        Ellen Steen, general counsel and secretary of the American
    Farm Bureau Federation. Prior to Farm Bureau affiliation, she
    was a partner in the Environmental and Natural Resource Group
    of the law firm of Crowell and Moring. Her practice primarily
    focused on policy litigation, enforcement defense,
    administrative advocacy concerning Federal water quality,
    particularly issues involving the validity and interpretation
    of the Clean Water Act.
        Professor Patrick Parenteau, who is professor of law and
    senior counsel, Environmental and Natural Resources Law Clinic
    at Vermont Law School, previously serving as vice president for
    conservation with National Wildlife Federation, regional
    counsel to New England Regional Office of the EPA, and
    commissioner of the Vermont Department of Environmental
    Conservation.
        Charles Cooper is a founding member and chairman of Cooper
    & Kirk, a litigation firm specializing in commercial,
    regulatory, and constitutional disputes. He has over 35 years
    of legal experience, both Government and private practice, with
    several appearances before the Supreme Court. In 1985,
    President Reagan appointed him to the position of Assistant
    Attorney General, Office of Legal Counsel, U.S. Department of
    Justice.
        I welcome all of you, and most importantly, thank you all
    for the long statements that you are submitting for the record
    and the 5 minutes in which you are testifying and being here to
    answer questions. We will start as I introduced you, from my
    left to my right. Mr. Kovacs.

                 STATEMENT OF WILLIAM L. KOVACS, SENIOR

                VICE PRESIDENT, ENVIRONMENT, TECHNOLOGY

                   & REGULATORY AFFAIRS, U.S. CHAMBER

                      OF COMMERCE, WASHINGTON, DC

        Mr. Kovacs. Senator Grassley and Members of the Committee,
    thank you for inviting me to testify today on examining the
    Federal regulatory system to improve accountability,
    transparency, and integrity. These are perhaps the three most
    essential characteristics for the proper functioning of the
    regulatory process.
        While we have interest groups and, frankly, Members of
    Congress fighting every day over the benefits and costs of
    specific regulation, there is an unfortunately little attention
    paid to how the process works and how regulations are
    developed.
        The rule book, as Senator Grassley stated, was written in
    1946 by Congress when it enacted the Administrative Procedure
    Act. At that time, there were very few agencies and far less
    complexity.
        How rules are developed should be the absolute top priority
    of Congress since how regulations are developed is essential to
    ensuring that the powers Congress delegates to agencies are
    used to achieve congressional intent.
        The regulatory process is massive with almost 200,000
    regulations that impact every sector of society. However, when
    the Chamber did an analysis of all of what we would call the
    regular rules, the major impact rules, and the high impact
    rules, we came to the conclusion that the rulemaking process
    works reasonably well for what we would call routine matters.
    However, there are deficiencies in the process that allow
    agencies to enact very broad and costly regulations that are
    not based on the words of a statute but are considered by the
    courts to be quote, unquote, ``permissible'' in the reading of
    a statute. These regulatory laws, such as net neutrality or
    Waters of the U.S., are far broader than Congress could ever
    enact in this present political environment. Yet they are
    imposed upon us by heads of agencies with little effort.
        Our Founders intended the lawmaking process to be difficult
    for Congress, but with Congress passing these broad and vague
    laws that delegate great discretion to agencies to enact wide-
    ranging laws through regulation, lawmaking has become
    extraordinarily easy.
        Adding to the ease of lawmaking through regulations, the
    courts have extended deference to agency action, thereby
    insulating agency decisions from stringent judicial review
    needed as a check on the abuse of power. Congress has been
    recognized that Congress can delegate, and that when it
    delegates, whatever interpretation the agency provides is
    permissible. Then when you add court deference to agency
    action, you have completely taken the checks out of the system.
        The challenge, therefore, is for Congress to preserve the
    efficiency of the informal rulemaking structure for the vast
    bulk of the 4,000 regulations issued every year while ensuring
    that when agencies engage in broad-based lawmaking, that the
    agencies establish that rule in a way in which Congress
    intended.
        Several suggestions for achieving the accountability,
    transparency, and integrity of the regulatory process.
        First, we strongly support and urge you to support the
    Regulatory Accountability Act, which has already passed the
    House of Representatives. It skillfully addresses the few
    regulations a year costing over $1 billion and having
    nationwide impact. I say a few, because out of the 4,000, when
    you analyze it, you have about 3,700 that are what we would
    call run-of-the-mill, standard-setting, and routine. You have
    about 300 that are called major and significant in the sense
    that they cost over $100 million or more. Then you have
    literally three or four that are what we call the high impact.
    These are Waters of the U.S., net neutrality, the Clean Power
    Plan. These are the regulations that are nationwide
    rulemakings, and they need different attention. Over the last
    15 years, there have only been 30 of these. The Regulatory
    Accountability Act accomplishes this goal by requiring more
    disclosure up front, integrating the Information Quality Act as
    part of the rulemaking process, and imposing the same
    requirements on independent agencies as executive agencies. It
    also establishes requirements for a more stringent
    administrative record and sets a higher standard for court
    review.
        We would also recommend passage of the Federal Permitting
    Improvement Act of 2015, which was passed out of Committee by a
    vote of 12-1. It provides timelines for agencies for reviewing
    permits and reduces the statute of limitations for bringing a
    lawsuit from 6 years to 2 years.
        We also strongly support S. 378, Senator Grassley's
    Sunshine for Regulatory Decrees, which addresses the sue and
    settle issue, which I am sure I will have questions on.
        We would also recommend that you take the citizen suits
    which are scattered throughout the entire code and codify them
    in Title 28. The purpose of codifying them in Title 28 is so
    you can undertake the kind of oversight that you really need on
    citizen suits because they have greatly changed who has access
    to the courts and who has standing to be in court.
        Thank you very much.
        [The prepared statement of Mr. Kovacs appears as a
    submission for the record.]
        Chairman Grassley. Thank you, Mr. Kovacs. Mr. Weissman.

                     STATEMENT OF ROBERT WEISSMAN,

               PRESIDENT, PUBLIC CITIZEN, WASHINGTON, DC

        Mr. Weissman. Thank you very much, Mr. Chairman.
        I think the starting point for a discussion about the
    regulatory process should be a recognition of how important
    regulation is in preserving our standard of living. Much of
    what we take for granted on a day-to-day basis is due to
    effective regulation. As a result of regulations adopted over
    the last many decades, our food is safer, our air is cleaner to
    breathe, our water safe to drink; the disabled have better
    access to facilities across the country; consumers have been
    saved countless billions of dollars; workers are guaranteed a
    minimum wage, safe workplaces. The benefits of regulations
    adopted over the last decade as well as earlier vastly outweigh
    the costs even by corporate-friendly accounting measures.
        These are not just historic gains. These are ongoing gains.
    Recent rules have benefited consumers and the environment by
    improving auto fuel efficiency. Rules have been adopted to
    implement your very important Physician Payments Sunshine Act,
    and many other developments in the last several years.
        We know as well that regulatory failure comes with enormous
    costs, both through deregulation, the failure to adopt
    appropriate regulation, and especially the failure to enforce
    existing regulatory rules. There are different stories for what
    caused the Great Recession, but they all essentially involve
    massive abuse by Wall Street and the failure of regulators to
    control Wall Street.
        It is important to recognize the costs associated. Millions
    of people were thrown out of work; millions lost their homes.
    The economy lost $20 trillion, according to the GAO, a number
    that vastly exceeds anything that could ever be attributed to
    the cost of regulation with reasonable accounting measures.
        We have a whole series of recent disasters that should be
    properly understood as regulatory failures: the BP oil blowout;
    the GM ignition switch disaster, killing more than 100 people;
    the Takata air bag scandal; the New England Compounding
    pharmacy disaster; and many others. That is what happens when
    we do not have a properly functioning regulatory system.
        As those comments suggest, underscoring the importance of
    regulation does not mean that the regulatory system is working
    effectively as it is. And in my written testimony, I outline a
    number of areas for improvement. I wanted to focus just briefly
    in my oral comments on two crucial areas.
        The first is the need to improve regulatory enforcement in
    a variety of ways. Various inspection agencies are massively
    underresourced and cannot possibly do their job of protecting
    workers, the food supply, the safety of our medicines, and many
    others.
        Additionally, I think we have seen in the last decade a
    very disturbing trend regarding criminal prosecution for
    corporate wrongdoing, or I should better say criminal
    nonprosecution for corporate wrongdoing. The Justice Department
    has evolved a pattern over the last decade or more of entering
    into deferred and nonprosecution agreements with corporate
    wrongdoers basically engaging in regulatory-type violations but
    violations of the criminal law. These giant corporations, large
    banks especially but not only, are able to escape the kinds of
    criminal penalties that would apply to a street criminal.
        We have also seen, particularly in the last few weeks, some
    criminal prosecutions, but the accompaniment of those criminal
    prosecutions by waivers of the sanctions that would normally
    apply--the Securities and Exchange Commission and potentially
    elsewhere. I hope the Committee can focus great attention on
    this. It is really a double standard that has now become
    systemic to favor large businesses, not available to small
    companies, not available to individuals.
        A second area that I wanted to focus on of a serious
    problem in the current regulatory system is delay. It takes a
    long time to issue regulations. Regulatory delay is pervasive
    in the system, and agencies, moreover, routinely fail to meet
    congressional directives for specific deadlines to issue rules.
    The submitted testimony from the Chamber of Commerce says that
    the EPA misses targeted deadlines more than 90 percent of the
    time. Five years after the passage of Dodd-Frank, more than a
    third of the required rules with targeted deadlines have not
    been met. It routinely takes the Occupational Safety and Health
    Administration 8 or 12 years to get rules out. We were involved
    in a case discussed in my testimony that it has taken 20 years
    to get a rule for truck driver safety training that is still
    not issued.
        This delay leads to both regulatory uncertainty and lost
    benefits to society. Its causes, I think, are excessive
    industry influence at the agencies, but also too many analytic
    requirements imposed on the agencies, and I think the one thing
    Congress should not do in this regard is impose additional
    requirements that would certainly mean additional delay at the
    agencies.
        There is much more to be said, as you indicated in your
    opening remarks. This is a very broad topic, and we look
    forward to further conversation. Thank you very much.
        [The prepared statement of Mr. Weissman appears as a
    submission for the record.]
        Chairman Grassley. Thank you, Mr. Weissman. Ms. Steen.

                   STATEMENT OF ELLEN STEEN, GENERAL

                  COUNSEL AND SECRETARY, AMERICAN FARM

                    BUREAU FEDERATION, WASHINGTON DC

        Ms. Steen. Chairman Grassley and Members of the Committee,
    thank you for the opportunity to testify on behalf of the
    American Farm Bureau Federation and the Nation's farmers and
    ranchers. My name is Ellen Steen, and I am the general counsel
    and secretary of AFBF. I have spent roughly two decades
    immersed in the development, implementation, and judicial
    review of EPA rules and policies under the Clean Water Act. I
    have been involved in dozens of agency rulemakings, litigated
    the validity and interpretation of EPA rules, and experienced
    firsthand the deference that courts extend to Agency
    regulations and to Agency interpretations of their rules.
        I am here today because of my organization's experience
    over the past year with a major new Clean Water Act rulemaking
    by EPA and the U.S. Army Corps of Engineers. This is a rule of
    extraordinary practical importance for farmers, ranchers, and
    most anyone else who grows, builds, or makes anything in this
    Nation. After carefully studying the proposed rule about a year
    ago, we at AFBF concluded that the rule's vague and broad
    language would define Waters of the United States to include
    countless land areas that are common in and around farm fields
    and ranches across the countryside. These are areas that do not
    look a bit like water. They look like land, and they are
    farmed. By defining them as Waters of the U.S., the rule would
    make it illegal to farm, yes, build a fence, cut trees, build a
    house, or do most anything else there without first navigating
    a costly and complex permitting regime.
        From the day it first issued the proposed rule, EPA behaved
    like an advocate for a decision that was already made, willing
    to say most anything to achieve the desired result. It waged a
    public relations campaign aimed directly at farmers and
    ranchers, providing false and misleading assurances in speeches
    and in blogs that the rule will not increase permitting
    requirements for farmers or get in the way of farming.
        Those of us who have litigated Agency rules and Agency
    interpretations of their rules know that courts will not give
    weight to today's speeches and blogs. Our experience is that
    EPA and the Corps will interpret their rules broadly, not
    narrowly. In the enforcement proceedings that are sure to come,
    with an agency, a judge, and an ambiguous regulation, the
    Agency's interpretation will be unassailable.
        EPA also engaged in an extraordinary social media campaign
    aimed at a different audience: the broader public. That
    campaign consisted almost entirely of nonsubstantive platitudes
    about the importance of clean water, which no one disputes. It
    used simplistic blogs, tweets, and YouTube videos to generate
    purported support for the rule among well-intended people who
    have absolutely no idea what the rule would actually do or what
    it will cost.
        EPA later claimed public support for the rule, even though
    the vast majority of those who actually read the rule--State
    and local governments, businesses, and organizations
    representing virtually every sector of the American economy--
    vehemently opposed it.
        Regardless of whether you support it, oppose, or never
    heard of the Waters rule, I would hope that many of you would
    agree that this is not how rulemaking should be conducted. Call
    me old-fashioned, but I believe agencies should try to keep an
    open mind or at least the appearance of an open mind during
    rulemaking. They should try to be honest and transparently
    account for the regulatory impact and the cost of their
    actions, even when they expect opposition. I hope this
    Committee's efforts will lead us in that direction.
        Thank you.
        [The prepared statement of Ms. Steen appears as a
    submission for the record.]
        Chairman Grassley. Thank you, Ms. Steen. Professor
    Parenteau.

                    STATEMENT OF PATRICK PARENTEAU,

                  PROFESSOR OF LAW AND SENIOR COUNSEL,

                  ENVIRONMENTAL AND NATURAL RESOURCES

                    LAW CLINIC, VERMONT LAW SCHOOL,

                        SOUTH ROYALTON, VERMONT

        Professor Parenteau. Thank you, Mr. Chairman and Members of
    the Committee. I appreciate the opportunity to be here. I would
    note the irony. I am going to address specifically the Waters
    of the U.S. rule. The irony here is that the Supreme Court
    refused to give the agencies deference under Chevron and also
    was unable to come to any consensus on the Supreme Court as to
    where the limits of Federal jurisdiction were. That is why it
    fell to EPA to write the rule. Chief Justice Roberts was very
    pointed in his concurring opinion in Rapanos, saying the
    agencies have the discretion to write a rule, you should do
    such a thing. That recommendation was joined by Justice Breyer.
    It was joined by Justice Alito in a subsequent case.
        EPA and the administration went to Congress, asked for a
    bill to clarify the scope of Federal jurisdiction under the
    Clean Water Act to address the concerns raised by the Supreme
    Court in the Rapanos case, but, of course, those bills went
    nowhere.
        It is a real irony that the responsibility for resolving
    what has been a very, very unfortunate 10 years of confusion,
    uncertainty, and frustration has fallen to EPA. In my judgment,
    EPA has made a good-faith effort, has gone well beyond any
    standard under the Administrative Procedure Act that you could
    possibly require an agency to do.
        You might think of a benchmark. In response to the Rapanos
    decision, the George W. Bush administration issued a set of
    guidance documents. There was no public participation on that
    guidance. There were no meetings, no outreach, no public
    comments, no scientific analysis. The guidance was issued, and
    the response from nearly everyone was, we do not need guidance,
    we need a rule. We need a rule that is based on science. We
    need a rule that takes account of the unintended consequences
    that might occur if it is not well-crafted. We need you to take
    the time to do it right.
        In my judgment, Mr. Chairman, that is exactly what EPA has
    done here. Nothing in the law requires 400 meetings across the
    country with stakeholders, with local officials, with farmers,
    and others concerned about this rule. Nothing in the
    Administrative Procedure Act or law requires 207 days of public
    comment. That is four times the amount of public comment period
    that is the standard under the Administrative Procedure Act.
        Nothing in the Administrative Procedure Act, the Clean
    Water Act, or any other law required EPA to commission a 300-
    page scientific assessment of where to draw some of these very
    complicated, difficult lines. Nothing in the law required EPA
    to have that scientific study peer-reviewed by the Scientific
    Advisory Board, which is a body that exists for that purpose
    but does not usually do that for rules like this.
        EPA in every measure went beyond what the law requires,
    what history and practice had been, and did the very best job
    it possibly could. It is not surprising that not everybody is
    satisfied with it. There are many in the environmental
    community that are not satisfied with it, I can assure you. In
    many respects, EPA listened to what people were saying, the
    criticisms that it got. It made major changes in the final
    rule. I can say this after 40 years of dealing with this
    statute, I have never seen the Agency be clearer and more
    quantitative and draw brighter lines on the limits of Federal
    jurisdiction than what I see in this final rule. It will now be
    subject to judicial review, and there will be a number of
    challenges. Those who say that it is an overreach by the
    Agency, that it is a violation of the Clean Water Act, that it
    is a violation of the Constitution, that it is confiscating
    people's private property, that it is regulating puddles,
    whatever it is that they say and have said consistently through
    the comment period, now they will have their day in court. They
    will have the opportunity to put on the record the facts and
    the law to back up the allegations that have been made about
    the deficiencies in this rule. That is our system. For better
    or for worse, that is our system.
        I have been on both sides of the deference issue. I have
    argued in favor of it; I have argued against it. I have won
    some; I have lost some. That is the way it works in our system
    of three-part Government.
        I think it says something when three former EPA
    Administrators of different administrations, bipartisan, all
    three of them--Christie Todd Whitman, Carol Browner, Bill
    Reilly--all three of them said EPA in this instance has gone
    above and beyond what EPA has done before in outreach to the
    public. The group that is the advisory group to EPA on local--
    consultation and outreach with local officials praised EPA for
    its collaborative partnership approach, and that began in 2013,
    long before the formal rulemaking process began.
        I think it is time to let this rule work. You could have
    had 401 meetings. You could have had 500 meetings. It would not
    have satisfied those that are opposed to broad Federal
    jurisdiction. It is time to give EPA's rule a chance to work.
        Thank you, Your Honor.
        [The prepared statement of Professor Parenteau appears as a
    submission for the record.]
        Chairman Grassley. Thank you. Mr. Cooper, now go ahead.

                    STATEMENT OF CHARLES J. COOPER,

                     FOUNDING PARTNER AND CHAIRMAN,

                  COOPER & KIRK, PLLC, WASHINGTON, DC

        Mr. Cooper. Good morning, Chairman Grassley and Senator
    Hatch and other distinguished Members of the Committee, and
    thank you for inviting me to appear in this important hearing.
        As Chief Justice Roberts has recently lamented, ``The
    Framers could hardly have envisioned today's `vast and varied
    Federal bureaucracy' and the authority administrative agencies
    now hold over our economic, social, and political activities.''
    The modern administrative state has become a sovereign unto
    itself, a one-branch Government whose regulatory grasp reaches
    virtually into every human activity.
        The focus of my remarks this morning will be on the Chevron
    doctrine, a judge-made rule of judicial deference to agencies
    that, when it was decided in 1984, placed the administrative
    state's regulatory power on steroids.
        Chevron requires courts to read any ambiguity in a Federal
    statute as an implicit congressional delegation authorizing the
    administering agency to fill a gap left open by Congress with
    the agency's own interpretation of the statute, an
    interpretation that the courts are bound to accept and to
    enforce, so long as it is reasonable.
        In the three decades since Chevron was decided, Chevron and
    its progeny have transformed the administrative state into a
    kind of super court, vested with the last word, binding even on
    the U.S. Supreme Court as to the meaning of ambiguous statutory
    and regulatory provisions.
        Since the early part of the 20th century, the
    administrative state has been permitted to accumulate and
    exercise legislative, executive, and judicial power, despite
    the Constitution's careful allocation of these powers
    exclusively in the Congress, the President, and the courts.
    Although the powers wielded by the administrative state are
    vast, it is politically accountable neither to the Congress
    nor, for the most part, to the President. Chevron exacerbates
    these serious separation of powers concerns by ensuring that
    the administrative state also largely escapes legal
    accountability to the courts.
        I believe that Chevron's doctrine of deference is at war
    both with the Administrative Procedure Act itself and with the
    Constitution's separation of powers.
        Turning first to the APA, Chevron is flatly inconsistent
    with the plain text of Section 706, which instructs the
    reviewing court to decide all relevant questions of law and to
    interpret any statutory provisions. The language is imperative,
    commanding that courts shall decide all questions of law. Under
    Chevron, the agency under review, not the reviewing court,
    authoritatively decides the relevant questions of law. Chevron
    simply cannot be squared with this language in Section 706.
        Nor can Chevron be squared with our constitutional
    structure. It has been clear since Marbury v. Madison that the
    authority conclusively to say what the law is is a judicial
    power, one that Article III vests exclusively in the judicial
    department, not the executive. Since the Constitution also does
    not give the legislative branch any share of the judicial
    power, Congress cannot delegate that power to an agency.
        It follows, I would submit, that courts must retain the
    sole authority to issue binding interpretations of law, not
    only by Congress' express direction in the APA itself, but by
    constitutional command. Chevron, by licensing the wholesale
    transfer of this authority to agencies, is at war with both.
        I want to close by urging Congress to act to abrogate
    Chevron and enforce our Constitution's fundamental design. Of
    course, abrogating Chevron will not alone reform the
    administrative state. A broader reform effort is required and
    should be undertaken, an effort that should include careful
    consideration of pending legislation like the SCRUB Act, the
    REINS Act, the Sunshine Act--Senator Grassley--all of which
    seek to curb different pathologies of the fourth branch. No
    reform of the administrative state will be adequate without
    addressing Chevron. Congress has the power to abrogate Chevron
    simply by amending Section 706 of the APA to add language
    making explicit--I should say, rather, making even more
    explicit that reviewing courts must decide all questions of law
    without according any deference to an agency, and by further
    providing that any ambiguity in a statute shall not be
    construed as a delegation to an agency of either lawmaking or
    interpretive power. By abrogating Chevron in this way, Congress
    not only would reaffirm its original command in the APA that
    reviewing courts rather than the agencies under review decide
    all questions of law, but it would also restore one of our
    Nation's most basic constitutional principles.
        Thank you.
        [The prepared statement of Mr. Cooper appears as a
    submission for the record.]
        Chairman Grassley. Before I start my questioning, I
    announced that Senator Hatch was going to take over because I
    had constituent meetings. I just want to thank Senator Hatch--
    he is so busy as Chairman of the Finance Committee--that he
    would do that, so thank you very much, Senator.
        Before I question, I would like to back up to what Mr.
    Cooper said by quoting Senator McCarran's remark about Section
    706, which reads--this is what comes from, I think, the
    Congressional Record: ``To the extent necessary to decision,
    and when presented the reviewing court shall decide all
    relevant questions of law, interpret constitutional and
    statutory provisions, and determine the meaning for the
    applicability of the terms of an agency action.'' That goes
    back to when the Act was passed.
        Mr. Kovacs, I am particularly concerned about the practice
    of sue and settle. It is a litigation process to negotiate
    agreements behind closed doors, as I have said. I am concerned
    that the practice keeps affected parties away from the process.
    Could you speak specifically to the ways that sue and settle
    tactics undermine the transparency and accountability needed--
    built into the APA? I think more importantly than that question
    is how the practice of sue and settle is inconsistent with how
    the APA was envisioned to work.
        Mr. Kovacs. Yes, Senator, the APA, after having been fought
    out in Congress for almost 18 years, really was an attempt to
    have the agencies for the first time become transparent and to
    put the regulated industries on an equal footing with the
    agencies, and that information was to be disclosed.
        What sue and settle does is more than just affecting the
    agencies and the APA. It literally affects all of federalism.
    For example, when sue and settle occurs, you have a private
    party dealing with an agency, and the private party says you
    have missed a deadline, or we think you ought to do this
    particular regulation.
        What happens in that situation is when you have an agency
    like EPA, which Mr. Weissman says--and he quotes our
    testimony--``misses the deadline 98 percent of the time,'' the
    sue and settle agreement takes 1 of the 400 rules that EPA may
    issue in a year, 1 of the 400 or 2 of the 400, 5 of the 400,
    and puts them under court supervision with a consent decree, at
    the top of the list. What you are doing at that point is,
    rather than having the Agency acting as an independent neutral
    party, deciding how to prioritize many duties, with sue and
    settle, you have interest groups coming in and getting the
    court to sign off the consent decree and prioritize specific
    regulations.
        The interest groups have actually taken control over the
    Agency through this process.
        Chairman Grassley. Ms. Steen, I have had the same concerns
    about Waters of the U.S. expressed by my constituents, and
    under current judicial deference doctrines, agencies have wide
    discretion interpreting their own regulations. Question: Are
    you concerned that courts will grant broad deference to EPA's
    interpretation of its own rules and then for your members and
    even business owners and others who are not your members will
    be left with little certainty about whether their actions are
    in compliance with the law?
        Ms. Steen. Yes, sir, that is a huge concern of ours,
    because this new rule is going to get a lot of deference from
    the courts. EPA's interpretation of the rule is going to get
    almost complete deference from the court. The traditional
    agricultural exemptions that EPA keeps referring to throughout
    this rulemaking process have been extremely limited by the
    agencies and their interpretations of the law over the years.
    That is why we know, we read this rule, and we can see--anyone
    who practices law in this area can see where this train is
    headed, and it is headed toward wide-scale permitting
    requirements for farmers and ranchers. Any practitioner under
    the Clean Water Act knows that. EPA officials in this town will
    acknowledge it in private conversations, and yet the talking
    points and the speeches by the Agency in this rulemaking have
    denied it. They have denied it to farmers and ranchers. They
    have provided misleading assurances that farmers and ranchers
    are not going to face increased permit requirements.
        Those statements are not going to be before the court. What
    is going to be before the court is the text of the rule, the
    Federal Register preambles, and all of those documents have
    been carefully set up to invite--not just allow but invite the
    interpretation that land that is farmed today can be farmed no
    longer without a Federal permit for farmers and ranchers.
        If you think that is a good idea, if you want wide-scale
    permitting, Federal permitting under the Clean Water Act for
    farming activities, fine, let us have that discussion. Let us
    look at the cost. Let us look at the impact on the 96 percent
    of U.S. farmers who are family owned and operated small
    businesses. Let us look at the effect on those operations. Let
    us look at the effect. What will the effect be on forcing
    consolidation within agriculture, forcing larger farms? Because
    small farms have very little ability to deal with these types
    of regulatory programs. EPA has refused to look at those costs
    and to look at those impacts, denying that they exist, and
    going forward with a rule that they know is going to have that
    result. That is infuriating to me.
        Chairman Grassley. I am going to yield the floor, the
    Chairmanship, to Chairman Hatch.
        I am sorry I did not do this before. I have a statement by
    the Ranking Member, Senator Patrick Leahy, to put in the
    record. Without objection.
        [The prepared statement of Senator Leahy appears as a
    submission for the record.]
        Chairman Grassley. Thank you, Senator Hatch.
        Senator Hatch. Thank you.
        Chairman Grassley. I will have questions to submit to the
    rest of you. I am sorry I did not get further. Go ahead.
        Senator Hatch [presiding.] Let me ask this of you, Mr.
    Cooper. Federal regulations today impose by some estimates a
    burden of $1.86 trillion on the economy. That is roughly
    $15,000 per household and more than corporate and individual
    income taxes combined. Too much regulation, especially too much
    outdated regulation, means higher prices, lower paychecks, and
    fewer jobs for hardworking Americans.
        Every President since Jimmy Carter has agreed on the need
    to review our existing regulations to make sure that they are
    efficient and are no more intrusive and burdensome than is
    absolutely necessary. Nevertheless, the regulatory burden keeps
    growing year after year. The Code of Federal Regulations, now
    more than 175,000 pages long, contains more than 200 volumes.
        According to the study by the American Action Forum, the
    Obama administration's efforts to review old rules actually
    added more than $23 billion in costs on the economy and nearly
    9 million hours of paperwork.
        To turn this long-standing bipartisan commitment into a
    reality, we need to take the responsibility of reviewing old
    rules away from the bureaucrats who keep failing at that task.
    That is why I introduced the SCRUB Act, which uses the
    successful model of the independent BRAC commission and applies
    it to our existing regulatory burden.
        Mr. Cooper, as an expert on administrative law, do you
    agree that it is time we take a different approach to tackling
    this problem with outdated red tape burdening our economy so
    that we can actually get some things done in this country and
    get some of this regulatory burden off our backs?
        Mr. Cooper. Senator Hatch, I very much agree with those
    propositions. I think there may be some irony, I guess, in
    someone who decries, as I do, the breadth and the growth of the
    administrative state to support the addition of another
    commission to that body. The purpose of this commission, as I
    understand it, under the SCRUB Act, would be to examine the
    administrative state, examine retroactively, which has never
    been done, examine retroactively in a systematic fashion the
    regulatory burdens that these thousands and thousands, 176,000
    pages, as I understand it, of regulations imposed upon our
    economy and the American people. I think that would be an
    excellent place to start anyway with regulatory reform.
        It also, I think, respects our constitutional system of
    separation of powers. Nothing would come out of this
    commission, as I understand it, without--its actions would be
    recommendations, just like the BRAC commission, as you said,
    Senator Hatch. They would come to the Congress, and they would
    be enacted under fast-track procedures, to be sure, but enacted
    or not enacted. The Constitution's structure is respected.
        Yes, Senator Hatch, I do certainly embrace that reform.
        Senator Hatch. Thank you.
        Mr. Kovacs, your testimony identified a whole range of ways
    in which the current process by which agencies make regulations
    is utterly broken, from curtailing the opportunity for
    meaningful input from the public to flouting the legal
    requirements for transparency and accountability. Given this
    mess, the courts are often the only practical means of holding
    this out-of-control bureaucracy accountable.
        Does not excessive deference by the courts to the agencies
    critically--does that not critically limit the opportunity to
    hold the agencies accountable and instead has not this
    deference allowed the agencies to expand the scope of their
    power dramatically?
        Mr. Kovacs. Certainly, Senator Hatch, once you have
    deference, the agency really does not have a check on it. I
    mean, I think most of us would agree with that. It would be
    unfair to say that getting rid of deference would solve all the
    problems. Congress has delegated very broad authorities to the
    agencies. The Supreme Court has recognized the delegation.
    Congress has imposed or has legislated citizen suits and really
    since the time they were enacted has not had any oversight on
    them. The standing provisions, because of the citizen suit and
    who can get into court, are substantially different for the
    business community than they are for the environmental
    community. There have been statistics showing that it is about
    a 2:1 ratio in terms of who has standing. Then on top of that,
    you add deference.
        This hearing is very important because there are ways in
    which we could begin to address this, especially with--and I
    keep on saying--the Regulatory Accountability Act.
        Senator Hatch. Thank you. My time is up. Senator Perdue, we
    will turn to you next.
        Senator Perdue. Thank you, Mr. Chairman.
        You know, the U.S. economy has actually shrunk in the
    last--first part of this year. The liberal economic policies of
    this administration, which includes the most draconian
    overreach of the regulator force, regulator agencies, that have
    occurred in my lifetime, have absolutely served to destroy this
    economy. This administration is failing the very people it
    champions--the middle class--the working middle class it claims
    to champion.
        I can tell you from my trips home that bankers, farmers,
    manufacturers, doctors, retailers, anybody that I talk to tells
    me the number one issue in Washington is not their dysfunction,
    not their gridlock, but the effects of this dramatic and
    combative and punitive overreach of Federal regulators. We have
    created the fourth arm of Government: the regulators. They
    create more laws than we do in Congress. The economy, our free
    enterprise system, is the one that is being impacted the most,
    and the people who work in that economy.
        It is hard to underestimate--or overestimate the burden
    that the Federal regulators are putting on our economy today.
    We do not have the luxury in a competitive world to do this.
    Nobody wants to destroy our water, our air, our environment.
    The people, in my experience, who do the best job of protecting
    that are the farmers, and they are the ones that are out-crying
    the most right now about this overreach on the U.S. waters act,
    and I have a question about that for Ms. Steen.
        According to a recent study, a very respected study done by
    a national association, our regulation costs our businesses
    $2.1 trillion annually. That is almost 12 percent of our GDP,
    or $10,000 for every employee in America per year. Of course we
    want rules. We have had those since our beginning. Of course,
    we want regulation. This dramatic overreach is killing American
    business and our ability to compete abroad.
        It is just a fact that Federal regulation
    disproportionately hurts small businesses. It takes 17 percent
    of small businesses' revenue right now just to deal with
    Federal regulation. That does not account for State regulation.
    Those are just the economic burdens. The loss of productive
    man-hours and associated drag on innovation and entrepreneurial
    energy and to push countries--companies to leave our country
    for this very reason.
        These side effects and unintended consequences are
    unimaginable. When I was a kid working on a farm growing up,
    the ag agent would show up and actually help us understand how
    to comply. I actually worked in a dairy for a while, and they
    showed us how to comply. Today those same agents are looking to
    put people out of business. The punitive nature is
    unacceptable. More than 40 years I have worked in the private
    sector, and I have dealt firsthand with this overreach. I have
    never seen it to be more aggressive, more punitive, more
    combative than it is today in the last 5 or 6 years.
        I have seen what excessive Federal regulation can do to a
    business' productivity, profitability, and its job-creating
    ability. Right now we have had for a few years the most
    overreaching impact on our businesses due to our regulators.
        Combating this enormous regulatory burden and actually
    shrinking it is one of the main reasons I personally came to
    Washington and give up my life to do this.
        I want to thank the Chairman for holding this hearing. I
    think this is the single most important issue and poses the
    biggest threat to our free enterprise system today, second
    probably only to our national debt.
        Turning to Waters of the U.S., Ms. Steen, very quickly, I
    am very concerned about this. This is unprecedented. It is a
    radical assertion of agency jurisdiction and would have a
    dramatic impact on my State, Georgia farmers particularly. This
    is a letter that I received from a board of commissioners of
    one of the largest counties in our State. These are not radical
    people, and the sarcasm from the other side that tells me
    that--or tells the public that anybody that disagrees with the
    Waters of the U.S. impending regulation is ignorant and self-
    serving and, you know, just the marginalizing condescension is
    intellectually insulting to me.
        This is a very well thought out letter. They have over
    3,000 miles of roads in that county, 1,500 miles of streams,
    almost 1,000 miles of ditches on the right-of-ways of those
    roads, and 1,400 miles of additional drainage ditches that
    would come under the purview of this law. Frankly, the way the
    EPA marketed--you mentioned this earlier, Ms. Steen--and
    promoted this rule in social media just boggles my mind. This
    was not notice-and-comment rulemaking. Yes, they talked to 400
    people out there--400 meetings, and then they promptly ignored
    most of it. This was not notice and comment at all. This was a
    political campaign that the Obama administration was running
    from the very get-go through the EPA, just like when they could
    not get cap and trade, they told the EPA to kill coal, and they
    did it in a year.
        Ms. Steen, about the Waters of the U.S., have you seen
    other agencies behave like this in your career? You have got a
    long, distinguished career. Can you put in context for us these
    actions and the dramatic broad-reaching impact with respect to
    this rulemaking?
        Ms. Steen. I would like to be able to do that more broadly
    beyond EPA, but my career has focused on EPA. What I can say is
    that throughout my career of dealing with EPA regulations--and
    I have always been on the industry side. I have always been on
    the regulated side of the issues, and many of those issues and
    rulemakings have been very hotly contested over the years. What
    I have never seen even from EPA is the level of gamesmanship
    and deception that I have seen going on in this rulemaking. For
    those who believe that there should be an open and honest
    discussion with the public, with Congress, an open and honest
    analysis on the front end of the cost and the impact of new
    regulations, it is frightening, and it is disheartening, and it
    is disillusioning. No, I have never seen anything like it
    before.
        Senator Perdue. Thank you.
        Mr. Kovacs, I would like to go back to sue and settle. This
    is a question that I think bears a lot of comment and thought.
    I would like to address how litigants are able to game the
    regulatory system by using citizen suits and, as has recently
    been the case, work with sympathetic agency officials,
    sometimes past co-workers, who are not interested in normal
    notice-and-comment procedures. Do we have any idea what the
    overall impact of these types of sue-and-settle cases is on the
    regulatory framework?
        Mr. Kovacs. Certainly, just--and this sort of dovetails
    nice with Ellen's comments. We went back and did an analysis of
    all the--what we call the high-impact rules, those over $1
    billion between 2000 and 2013. There were 30 of them from all
    of the Federal agencies. Seventeen of them came out of EPA, and
    most of them were related to sue and settle. That is the
    impact. They are able to begin prioritizing the Agency agenda,
    and that I think is a much bigger problem than anything else,
    because they literally not only own the Agency and their
    priorities, but they also have a court that is supervising the
    Agency, and the only party that can actually intervene into the
    court proceeding is either the environmental group or the
    Agency. We are locked out because we do not have standing.
        Senator Perdue. Thank you.
        Mr. Chairman, I am over my time, but I just want to make
    one last comment. I really applaud the Chairman for conducting
    this hearing. I think we need to have further hearings on this.
    I will submit other questions, but I would love to talk about
    not just the EPA but what the NLRB is doing, the CFPB, and
    other regulators out there. This is having a dramatic impact on
    our ability to drive a recovery and get people back to work
    again. Thank you, Mr. Chairman.
        Senator Hatch. I sure agree with you. Senator Tillis.
        Senator Tillis. Thank you, Mr. Chair.
        While the Senator from Rhode Island was reading his
    statement, I almost felt guilty because I realized that I have
    made some statements and not properly attributed the other
    Senators who had used the comments before, because I associate
    myself with a lot of the concerns that other Senators have
    expressed about regulatory overreach.
        I was the Speaker of the House down in North Carolina for 4
    years before I came into the Senate back in January, and we, in
    4 successive years, implemented regulatory reform that has, I
    think, been one of the single greatest stimulators for our
    economy. We are outperforming almost every other State in the
    Southeast as a result of right-sizing reforms. We did simple
    things like saying you cannot promulgate new regulations in
    excess of Federal standards unless you consult with the
    legislature, have a business case, demonstrate the
    environmental or other benefit for the regulation versus the
    cost, commonsense reforms like that that I think this Congress
    needs to take a look at.
        I have just a few brief questions. I think the first one
    may be most appropriate for Ms. Steen or Mr. Kovacs. You know,
    I think the other thing that is lost in the discussion, we talk
    about regulatory abuse and corporate greed. In North Carolina,
    80 percent of the jobs that are created are created by small
    businesses. A lot of these are mom-and-pop shops that do not
    have the advantage of large departments of regulatory affairs.
        A lot of the jobs that have been created over the past
    couple of years have been hundreds of thousands of jobs in
    regulatory affairs departments. Not a single hour of
    productivity is created by these jobs. We all high-five and we
    say hundreds of thousands of jobs have been created. Go take a
    look at those jobs and understand why we are not increasing
    productivity, why we are not seeing capital investments, why we
    are not seeing savings applied to productive ends.
        Back in these small businesses, the thing that I worry
    about when I talk to farmers, and I talk to small businesses,
    they do not have the benefit--Ms. Steen, I will star with you.
    They do not really have the benefit to engage on a proactive
    basis in the public comment period to really be able to
    articulate at their level the damaging effects, depending upon
    where you go with regulation, some of which are needed. Do
    you--and, Mr. Kovacs, you can chime in as well. Do you all have
    any suggestions on ways that we could really improve more
    genuine and meaningful input of these folks that oftentimes do
    not even hear about the regulations or the promulgation or the
    potential implementation of the regulations until it is too
    late for them to provide meaningful, practical input? Any
    suggestions on the process? We will start with you, Ms. Steen,
    and then we will come to Mr. Kovacs.
        Ms. Steen. I wish I could think of a fantastic new idea for
    how to improve the voice of those ordinary Americans in the
    process. I think with respect to farmers and ranchers, many of
    them rely on groups like ours to dissect the new regulations,
    to make sense of it, to translate it into terms that a non-
    Clean Water Act practitioner can understand, and then to help
    them have that voice. We try to do a good job of that.
        What is so frustrating is that--and we had a really
    important conversation with our stakeholders, with farmers and
    ranchers across the country during this process, and many of
    them did get very active, very vocal to try to speak out on the
    rule. When you speak out and the response back from the Agency
    is, ``That is silly,'' ``That is silly,'' ``That is
    ludicrous,'' ``You do not need a permit now, you are not going
    to need one later,'' what do you, an ordinary person, say when
    the Administrator of the EPA says that to you?
        Senator Tillis. Mr. Kovacs.
        Mr. Kovacs. Senator, this is truly one area where Congress
    has really tried to have input. If you go through--for example,
    you enacted the Regulatory Flexibility Act, which was
    specifically to empanel businesses to have them talk to the
    Agency. For both Waters of the U.S. as well as the others, the
    Agency refused to go through this panel process.
        To involve States, Congress has enacted the Unfunded
    Mandates Reform Act. Any regulation over $100 million, the
    Agency has to determine whether it is an unfunded mandate on
    the State. The agencies have refused to undertake this process.
    Thirty-five years ago, Congress was so concerned about the
    regulatory impact on jobs that it mandated that EPA do a
    continuing evaluation of the impact on employment, and it has
    never done one in 35 years.
        You have got a process where the agencies have completely
    separated themselves from Congress, and they really do not feel
    as though they have to do this for you, and because the courts,
    unlike with NEPA where the courts have actually grafted on a
    private right of action, the courts have not grafted on a
    private right of action for UMRA or Regulatory Flexibility or
    for the employment impacts.
        So, it's much deeper. This is some kind of disregard, where
    they don't even attempt to do what you have asked them to do,
    so they get all the facts as part of the process.
        Senator Tillis. Thank you. Thank you, Mr. Chair. I have
    several questions that I am going to submit, and hopefully we
    can get your feedback. One that I find particularly disturbing
    or offensive as a nonlawyer is the sue and settle practice and
    some ideas on how we may be able to get more active involvement
    and other third parties or the courts in that. I will submit
    those for the record and look forward to all of your feedback.
    We submit it to each and every one of you for your feedback.
        Senator Tillis. Thank you. Thank you, Mr. Chair.
        Senator Hatch. Thank you, Senator. Senator Whitehouse.
        Senator Whitehouse. Thank you very much. Sorry I have had
    to be in and out. We have actually been marking up the bill
    that is to some degree the subject of this hearing over in the
    EPW, so I have had to be back and forth.
        Professor Parenteau, could you just give us a quick
    overview of the--on the Clean Waters rule, the backdrop from
    the U.S. Supreme Court that constrains and informs what EPA is
    obliged to do under this rule and how that has played out in
    the rule? Sometimes people commenting on this rule act as if
    the EPA had a free hand to do anything, to ignore certain types
    of pollution, to ignore certain types of effects on waterways
    and so forth. In fact, the Supreme Court has spoken pretty
    strongly about this, and under our system of Government,
    administrative agencies are obliged to follow what the U.S.
    Supreme Court has said.
        Professor Parenteau. Correct, Senator Whitehouse, and the
    seminal decision is the Riverside Bayview case from 1985. That
    is the first time the U.S. Supreme Court squarely addressed the
    question of what did Congress intend to cover when it enacted
    the 1972 Clean Water Act. It was a unanimous decision. You do
    not see that very often anymore--a unanimous decision 9 to 0
    from the U.S. Supreme Court, authored by Justice White, a
    westerner, who understands water, if anybody did. The decision
    is worth reading, and I commend it to every Member of the
    Committee, because the U.S. Supreme Court read and interpreted
    Congress' intent in 1972 to give a very broad definition to the
    term ``Waters of the United States'' and grounded that
    interpretation on science.
        The opinion really was a foreshadowing of what we now think
    of as more of the ecological age. Justice White went on about
    the functions and values of streams and wetlands to public
    health, to recreation, to fisheries, to economic interests, to
    the national interest, and it is a ringing endorsement of
    strong Federal involvement in the effort to restore and
    maintain the chemical, physical, biological integrity of the
    Nation's waters.
        From that very high point of jurisprudence under the Clean
    Water Act in 1985, we go to the 2001 decision in SWANCC, in the
    Rehnquist Court, and in that decision Justice Rehnquist was
    able to garner a majority, 5 to 4, a narrow decision, to say we
    are not going to give Chevron deference to the Agency's
    interpretation of the scope of the Clean Water Act. We cannot
    decide for ourselves exactly what the scope of that Act is, but
    we know that whatever the Corps is using at the time is not it.
    Then we had a hiatus period between 2001 and 2006 when the
    Rapanos case came down, where people were trying to figure out
    what is the meaning of the SWANCC decision? It dealt with a
    very atypical situation of an abandoned sand and gravel pit in
    northern Cook County, Illinois, and no hydrologic connection to
    any other water, totally intrastate, nonnavigable, and the
    Corps had asserted jurisdiction based on migratory bird use.
    So, a very narrow decision by the Court.
        In Rapanos, once again you had another wetlands question,
    and once again a narrow--this time actually a fractured
    decision where no majority of the Court could agree on where
    the line should be drawn. Again, refusing to grant the Agency's
    interpretation any deference, but unable to come up with a
    judicial definition and a default. That is where Chief Justice
    Roberts squarely said to the agencies you have to engage in a
    rulemaking. Justice Kennedy said that rulemaking has to be
    grounded in science. It has to be grounded in the functions and
    values of the streams and wetlands you are talking about. It
    has to be qualitative. It has to be rigorous. EPA has picked up
    that challenge. That is what they have done in this rule.
        Senator Whitehouse. Did the Supreme Court give any
    instructions about the extent to which economic considerations
    had to be balanced into that equation?
        Professor Parenteau. Of course, the Supreme Court is always
    saying Congress has more than one purpose in mind with every
    statute, including the Clean Water Act, and the EPA has to take
    into account the impacts on the regulated community and others
    from rules that are adopted in interpreting the law. EPA is
    always caught in the middle. There are people pushing EPA to
    restrict the jurisdiction of the Act, people pushing EPA to
    extend it, people saying, ``I rely on clean water.'' We had
    testimony before EPW, as you will recall, Senator Whitehouse,
    from the brewing industry saying, ``God help us if we do not
    have clean water to make beer.'' We had testimony from the
    fishing industry saying, ``God help us if we do not have clean
    water to support our fisheries, and if we do not have streams
    where the fish can spawn, and if we do not have wetlands that
    provide the nutrients for the fisheries to grow. Please protect
    these economic assets for our business interests.''
        These are complex issues. There are a lot of winners and
    losers, if you want to look at it that way. Some people benefit
    from strong regulation; some people benefit from weak
    regulation. The Agency is caught in the middle, always, in
    trying to balance these competing concerns. There is no perfect
    outcome, there is no formula for this. You do the best that you
    can, and I think EPA did.
        Senator Hatch. Thank you, Senator. The Senator from
    Arizona.
        Senator Flake. Thank you. I also am very concerned about
    the EPA's Waters of the U.S. rule. Coming from Arizona, we have
    a lot of dry river beds that have somehow been caught up in
    this as well, and the logic just seems beyond most of us for
    this.
        I recently introduced the Defending Rivers from
    Overreaching Politics Act of 2015 with Senator McCain and
    Senator Fischer. I think the bill is necessary because the
    science behind the rule is essentially unfinished.
        The Assistant Secretary of the Army Corps, I think it was
    Jo-Ellen Darcy, stated the regulations were based on the
    Scientific Connectivity Report. They claimed the report showed
    connections between nearly all water bodies, but the proposed
    rule was drafted before the science on which the proposed rule
    was based had been reviewed by the Scientific Advisory Board of
    the EPA. I do not think it makes sense to most of us to
    promulgate a rule before the science is more settled in this
    regard.
        Do you want to comment on that, Ms. Steen? Have they gotten
    ahead of some of the science here?
        Ms. Steen. Well, I think they have taken a very aggressive
    approach to the science, and I think they have done it--of
    course, science is relevant to the question of what is a
    jurisdictional water, and this report's cases support that. I
    think the Agency has taken the opportunity to take the science
    and use it to extend the law right back to where it was before
    those Supreme Court decisions to encompass essentially any
    water, any water feature within the United States if the Agency
    chooses to do that. I do not think that is what Congress meant
    in 1972, and I do not think that any amount of science about
    the interconnectedness of things would persuade anyone that in
    1972, when it wrote the Clean Water Act, Congress had in mind
    that you might take that and regulate a small dip in the
    landscape where water simply channels and flows when it rains
    and at no other time. In my opinion, the Agency has taken the
    opportunity to cloak the rule in science because science is
    very difficult to challenge in court.
        Senator Flake. Mr. Cooper, do you have any thoughts on this
    with regard to science?
        Mr. Cooper. Senator Flake, I am going to defer to Ms.
    Steen's response to the specific study on that question.
        Senator Flake. All right. A question for you, Mr. Cooper.
    As everybody here has testified to, there are a number of
    requirements on agencies to improve transparency and
    accountability when issuing regulations such as the notice-and-
    comment process. However, we are seeing a practice among
    agencies of pursuing quasi-regulatory strategies such as
    memoranda, policy statements, and guidance in an attempt to
    effect policy change without triggering some of the
    requirements with regard to notice. Do you want to comment on
    that? Is that a real problem?
        Mr. Cooper. It is a very serious problem, Senator Flake.
    Just in the context of my own experience as a practitioner and
    litigator, I am involved in a lawsuit challenging what is
    called Operation Choke Point, a situation in which the banking
    regulatory agencies along with the Department of Justice have
    sought very aggressively to try to cutoff, to choke off the
    financial access of certain disfavored businesses; perfectly
    lawful but disfavored businesses in this country. They have
    done that not through notice-and-comment rulemaking but through
    backroom types of pressure on the banks, the banks they
    regulate, to try to terminate--terminate the relationships that
    the banks have and the access to critical financial services of
    these disfavored businesses that the banks have banking
    relationships with.
        Senator Flake, I would also add that the authority that the
    regulators have, the administrative state has, not only to
    interpret the statutes under which they are authorized, but to
    also interpret authoritatively the regulations that they then
    enact under those provisions creates a kind of a domino effect,
    giving them just enormous, enormous powers. They get not only
    to write the rules, they can interpret the rules that they
    actually write.
        Senator Flake. Thank you, Mr. Chairman.
        Senator Hatch. Thank you. The Senator from Delaware.
        Senator Coons. Thank you, Senator Hatch. To the witnesses
    today and Senators, I come to the Senate with myself having
    some experience in business, having spent 8 years as in-house
    counsel at a company, a multinational where compliance with
    regulations was a challenge for us and was a cost and something
    that we wrestled with at times. As a Senator and former county
    executive, I have heard complaints from businesses large and
    small about compliance costs, complexity, difficulty, whether
    EPA or OSHA. I am well aware that regulations sometimes cause a
    cost and headaches and concerns that corporations would rather
    not pay.
        I have also had the opportunity, just as a citizen as well
    as an elected official, to see instances where corporations cut
    corners and ruined lives, and we are all aware of the
    regulatory capture that facilitated some of the Deepwater
    Horizon disaster, which fouled the gulf coast and caused more
    than $50 billion in damages and closed thousands of small
    businesses. I am wary of legislative proposals that try to roll
    back agency action on the basis that industry does not have
    enough say in rules. I think we need to both respect the needs
    of business and their legitimate concerns, but not lose sight
    of the fact that the first goal of regulations ought to be to
    protect the public health and safety.
        Mr. Weissman, if I might, I just wanted to open with a
    question about the cost of regulation, which is a common
    complaint that I have heard and experienced. An OMB analysis
    suggested in 2013 regulatory benefits for major rules exceeded
    total regulatory costs by several multiples, somewhere between
    2 and 14 times. Can you talk to how Federal regulatory agencies
    consider costs and benefits when deciding whether to go forward
    with a regulation? How does that assessment of costs and
    benefits differ from how a business might look at it?
        Mr. Weissman. Thank you very much, Senator Coons. The
    idea--I would say as a starting point that agencies by and
    large are deeply sensitive to compliance costs of the rules
    they issue, in our view often too sensitive and often too close
    to the industries that are complaining about it.
        For rule from the executive branch, they are subjected to
    review by the OMB through the OIRA Office, and they go through
    one or another version of cost-benefit analysis where there is
    very careful consideration of costs and actually, I must say,
    less careful consideration of benefits. I detail the disparity
    between the two in my written testimony.
        Looking at the aggregate picture, as you point out, the
    actual documented cost of significant rules versus the actual
    documented benefit of significant rules over the last decade,
    the benefits vastly exceed the cost. You take the low-end
    benefit and the high-end cost, it is about 2-1/2 times. If you
    go to the other spectrum, it is now 15 times in the last report
    from OMB. The benefits of rulemaking using narrow accounting
    measures really are significant for society. Those I think
    undercount--they overcount costs because they often rely on
    cost estimates from industries that do not take into account
    technological dynamism, economies of scale, the ability to
    adapt, and, retrospectively, costs are usually far less than
    they were predicted to be. They also undercount on the benefits
    side second-order effects, but also all kinds of things that
    are not quantitative. It is hard to reduce health, safety,
    privacy, democracy, fairness, sense of community to dollar
    terms, but that is what they are forced to do when they are
    looking across that. I think from a social point of view, there
    is no question about this.
        You are correct that businesses may look at the cost issue
    differently. A technological standard that may impose a cost on
    one firm, say $1 million, that firm might reasonably just look
    at it as a $1 million cost. That is, in fact, how it will be
    counted in a cost-benefit analysis. From a social point of
    view, there may be so many offsetting benefits just from that
    cost, which is to say they are investing, they are buying some
    new technology, someone is innovating to respond to that
    technology. There may be all kinds of economic benefits--even
    though there is a cost to the firm, there may be social--
    offsetting social benefits, social and economic benefits for
    society.
        Senator Coons. I would assume that all of us would agree
    that a Federal agency, when going through rulemaking, should
    consider the costs and benefits to all affected Americans, not
    just or solely the corporations that are affected.
        Just as a closing comment, with the indulgence of the
    Chair, my twins just turned 16. I am particularly sensitive to
    the fact that automobile accidents claim 30,000 lives a year
    and are the leading cause of death for young people. As a
    perhaps overly concerned parent, Public Citizen was founded in
    large part to promote commonsense automobile regulations in the
    face of strong resistance because of implementation costs.
    Since Public Citizen's founding, automobile deaths have
    declined 60 percent. This is a per capita population basis. Is
    that an example of regulatory success or failure?
        Mr. Weissman. I would say that is an example of enormous
    regulatory success, but there are some failures that are worth
    pointing out. The GM ignition switch failure, which has cost
    more than 100 lives, that is an example of regulatory failure.
    The agency should have done a better job, and it is now saying
    so in a recent report.
        I also detail in my testimony the failure of the agency to
    adhere to congressionally mandated deadlines to impose a back-
    over rule that would prevent accidents where people are
    unable--drivers are unable to see what is behind them and back
    into usually small children or sometimes the elderly. We had to
    sue the agency to get a rule out of the Department of
    Transportation. The effect of that delay was about 100 lives a
    year or more because the agency failed to act. Why did the
    agency fail to act? Partly because of misguided cost-benefit
    analysis and maybe especially because of undue political
    interference from the auto industry.
        Senator Coons. Thank you, Mr. Weissman. I see I have
    exceeded my time. Thank you for your work.
        Senator Hatch. Thank you, Senator. Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        You know, when I think about rulemaking, I often think
    about the tragedy that occurred at L'Ambiance Plaza in
    Bridgeport, Connecticut. I do not know how many of you are
    familiar with what happened in 1987, or with the 28 men who
    never came home that day, men like Mike Adona, who left his
    wife and his three daughters to go to work. He never came home.
    Like 27 of his co-workers, he was killed when a half-finished
    structure that he was building collapsed on him, killing 28 of
    them. His employer had been using a method known as ``lift slab
    construction.'' The Occupational Safety and Health
    Administration knew that lift slab construction was dangerous.
    In 1982, in fact, it initiated a rulemaking designed to
    strictly regulate that process. 1982. It knew that similar use
    of that construction process had led to deaths around the
    country, but it did nothing, partly because of burdensome
    procedural requirements. Partly because of special interest
    pushback, partly because of a lack of will on the part of the
    agency, those regulations had not been finalized on the day
    that Mr. Adona lost his life in 1987. That death--his death--
    was preventable, so were the deaths of 27 of his co-workers, if
    the regulatory process had worked.
        Regulations have real-life consequences. They have real-
    life costs in dollars and lives. Delay has costs as well when
    agencies have to jump through hoop after hoop after hoop and
    fail to do their job.
        I have just come from a hearing of the Commerce Committee
    where we were discussing the issue of positive train control, a
    technology that has been in existence for years and years and
    years. The deadline for implementing it is approaching at the
    end of 2015. Most railroads will have failed to adopt it, and
    the FRA, a Federal agency, has failed to take sufficient action
    to enforce that deadline, as well as some 60 or 70 other
    recommendations from the NTSB for rail safety.
        I think that the blame will be on Congress as well as the
    FRA and the railroads for failing to implement stronger
    measures that will impose fines and penalties for failure to
    meet regulatory deadlines.
        I would like to ask, Mr. Weissman, if your authority to
    implement citizen suits is taken away, will there be a
    sufficient check on the Government to meet these deadlines?
        Mr. Weissman. I should say, first of all, we do not have
    nearly the authority as a public interest advocacy group that
    has been characterized here. In contrast to what Mr. Kovacs
    said, in general, regulated industry has standing always to
    bring challenges. Public interest groups have a difficult time
    bringing cases on behalf of a general public interest rather
    than a particularized one. Exactly as you say, regulatory delay
    has real human cost, and I think we cannot do enough to tell
    the stories that you are telling because they remove us from
    the statistical abstractions that make it easy to avoid the
    real-life consequences.
        The cases that we bring or the cases that are really
    regulatory accountability, agency accountability cases, that
    are misnamed ``sue and settle,'' those are cases designed to
    force agencies to comply with deadline as Congress has
    instructed them to do overwhelmingly. What we see in case after
    case is that the agencies feel free to ignore congressional
    deadlines until there is a subsequent judicial order. The
    agencies will tell you that. Those cases are really vital.
        The examples you highlighted--and just to go back to this
    back-over rule case, which you know a great deal about, and I
    think is really infuriating, congressional mandate to take
    action, and the regulators were slow-walking it. They did not
    like the cost-benefit analysis. They were not thinking about
    the real lives at stake. Had we not brought litigation to force
    a rule out, we would still be waiting for that rule, and we
    would probably be waiting for that rule in 2020.
        Senator Blumenthal. I appreciate that very excellent
    answer.
        Mr. Kovacs, can you discuss the contention that sue and
    settle lawsuits undermine public participation in rulemaking?
        Mr. Kovacs. Certainly. We--the issue is that EPA, and I
    think there is agreement on it, misses somewhere between 85
    percent and 98 percent of all of its deadlines. What happens
    when you have a sue and settle and you have a court order
    ordering the Agency to do a certain thing, those rules actually
    then become the priority. What happens is the Agency itself,
    instead of being this independent actor deciding what the
    priorities are based on what you in Congress give them as a
    budget and what they think you are directing them to do, are
    now pigeonholed into dealing with a certain group of cases
    because they have a court order. Under the Administrative
    Procedure Act, we all should have an equal access to both the
    Agency as well as to the court.
        The second point there is a law review article where they
    did a statistical analysis, and the business community was
    denied standing 50 percent more of the time than the public
    advocacy side.
        Senator Blumenthal. Any other comments in response to that
    question? Thank you, Mr. Chairman.
        Senator Hatch. Thank you, Senator--did you want to say
    something?
        Mr. Weissman. I would like to say something, if I might,
    Mr. Chair. It is not the case that the agency has discretion to
    choose to follow congressional orders. There is no discretion
    in these cases. The agency does not get to choose its
    priorities. The agencies are supposed to do what Congress has
    instructed them to do.
        Senator Blumenthal. Because it is the law of the land.
        Mr. Weissman. Because it is the law. The lawsuits are
    intended to enforce congressional will. There is no agencies
    run amok. There are no special powers conferred on public
    interest groups. We are trying to help enforce congressional
    will on the agencies.
        Senator Blumenthal. Essentially, the lack of Federal
    enforcement means that either citizens or State attorneys
    general or others take the place of those Federal agencies that
    are neglecting their duty.
        I think there was one more comment.
        Professor Parenteau. Thank you, Senator Blumenthal. Just a
    very quick one, and that is to say that in no circumstance
    could a court ever enter an order that would bind an agency in
    a future rulemaking, period. Under the Meese memorandum, the
    Department of Justice incorporates--and I have seen every one
    of them--the Department of Justice incorporates in every single
    decree a requirement that if rulemaking is anticipated as a
    result of the settlement agreement, that rulemaking will be
    conducted under the Administrative Procedure Act. Nothing that
    is done in the consent decree can bind the agency in any way,
    shape, or form, so public participation is protected in these
    decrees.
        Senator Blumenthal. I think that answers the question that
    I raised about the effect on public participation. Thank you.
        Senator Hatch. Thank you, Senator.
        Mr. Cooper, in his seminal opinion in Marbury v. Madison
    that secured the principle of judicial review, Chief Justice
    John Marshall wrote, quote, ``It is emphatically the province
    and duty of the judicial department to say what the law is'',
    unquote. Is Chevron compatible with Justice Marshall's words?
    Or is Chevron better described as commanding the judiciary to
    say what the law is almost anything that a Federal agency wants
    the law to be?
        Mr. Cooper. Senator Hatch, Chevron is not at all compatible
    with Marbury v. Madison. That was one of the opening points I
    tried to emphasize in my statement. The Court made clear that
    it is the province, peculiar province, of the judiciary to say
    what the law is, and in that regard they were relying on
    Alexander Hamilton's famous statement in Federalist No. 78.
        Contrast that with the Chevron doctrine where, despite the
    language of Section 706 of the APA which directs, consistent
    with the separation of powers, that the reviewing court rather
    than the reviewed agency, the reviewing court shall decide all
    questions of law and, therefore, to interpret the statutes
    before them. Contrast that with Chevron, which demands that the
    courts actually accept agency interpretations notwithstanding
    the fact that they think they are wrong, they think they are
    wrong, they are not the best understanding using the
    traditional tools of statutory construction, the best
    understanding of Congress' meaning, the meaning of the statute,
    Congress' intent. So long as the agency is somewhere on the
    target--somewhere on the target--Senator Hatch, the courts must
    defer to that even though, again, they believe they are wrong.
    That includes the U.S. Supreme Court. It is the reviewing--it
    is now the agency that has the last word, and that cannot be
    squared with Marbury v. Madison or our separation of powers.
        Senator Hatch. Mr. Kovacs, and also you, Mr. Cooper, would
    you identify some of the most unreasonable cases that you have
    encountered over the years in which Chevron is used as an
    excuse to allow an agency to defy the law? One example that
    readily comes to my mind is the King v. Burwell case that is
    before the Supreme Court right now, which is heard by the Court
    this term, and which the fourth circuit below ratified HHS'
    effort to rewrite what I consider to be the unambiguous text of
    the Obamacare statute using Chevron deference. I will turn to
    you first, Mr. Kovacs.
        Mr. Kovacs. I think when you get into the deference issue,
    it is more of--yes, it is case by case and it is what the
    courts are doing, but it is more of the psychology of the
    agency. There is no check in the system. Some courts do not
    always apply deference but most do. What happens is the agency
    knows that they can push the limits of their rulemaking and
    there is really not going to be a check because the agency
    knows that the court is generally going to apply the deference.
    I think that is the bigger problem that is driving this. It
    just unlocks any inhibitions the agency has to ignoring
    congressional intent.
        Senator Hatch. Could you list a few unreasonable cases?
        Mr. Kovacs. I will give you--send you a response to that in
    writing, and we will give you three or four of them.
        Senator Hatch. That would be fine.
        Mr. Cooper. Senator Hatch, let me give you a concrete
    example of the liberating effect that I would submit to you
    Chevron has on the administrative state and all of the agencies
    within it. In a case called Utility Air Regulatory Group v.
    EPA, decided just, I guess, last term actually, the term
    before, perhaps, the issue was whether the EPA could
    effectively and, you know, quite straightforwardly ignore
    numerical requirements in a statute. The statute itself imposed
    permitting requirement on all stationary sources emitting 100
    or 250 tons of air pollutants per year. The EPA, in regulating
    greenhouse gas emissions, could not live with those numerical
    requirements, and so it simply rewrote them to require permit
    applications relating to 82,000 tons of air pollution a year.
        The Supreme Court rejected that use of the Agency's
    interpretive authority saying now they have gone beyond even
    where Chevron allows them to go. But that case was 5 to 4.
    There were four Justices prepared to accept under Chevron
    deference an agency's actually rewriting interpreting numerical
    requirements to be something other than what they are.
        There are legions--legions of cases, Senator Hatch, that
    show the Agency is quite understandably extending their
    interpretive authority to the very extent of its limits, and
    its limits are very wide--anything that is reasonable, any
    interpretation that is within the permissible scope of
    Congress' possible meaning.
        It is hard enough, Senator Hatch, when an agency or a court
    attempts in good faith using the traditional tools of statutory
    construction to discern the meaning as best they can, the best
    meaning of a statute. With the agencies being given essentially
    carte blanche authority to get anywhere on the target, they
    will always get as close to the edge as they can that advances
    their particular bureaucratic agenda. That is understandable,
    and I do not blame them for that. The problem is there is no
    judicial check on that activity.
        Senator Hatch. Mr. Kovacs, proponents of increased
    regulation frequently frame their efforts as an attack on big
    business. Isn't it true that a lot of small businesses are
    affected and that many of these expensive new rules hurt small
    businesses the most, and farmers and ranchers and others,
    because they cannot afford the expensive compliance
    infrastructure of larger businesses? Moreover, isn't it worth
    considering how the costs of regulations get passed on to
    ordinary Americans in the form of higher prices, smaller
    paychecks, fewer job opportunities? I could go on and on.
        Mr. Kovacs. Senator, as you know, Congress in the passage
    of the Regulatory Flexibility Act required the Small Business
    Advocacy Group to meet with the agencies on regulations that
    have a substantial impact on a large number of small
    businesses, and, for example, in the WOTUS rule, EPA refused to
    meet with any of the panels. They did the same thing in the
    Clean Power Plan, and they did the same thing with ozone. They
    took the position that there was absolutely no cost on small
    business.
        Again, going back to Chevron and the psychology, you have
    an agency that says, ``We just do not have to comply,'' and
    that is a little bit different than saying that they should
    care.
        The second part is, 35 years ago, Congress in all of the
    environmental statutes put in this requirement on EPA to do
    this continuous evaluation on employment and job impacts. For
    35 years, the Agency has refused. What happens is when you go
    back to the 1970s and you look at what really the structure of
    the deal was between Democrats and Republicians--Congress
    recognized that regulations would have an impact on jobs, and
    it would have an impact on industry because they were going to
    be expensive. In return, Congress asked for this continuing
    evaluation. Congress got the regulations. Congress never got
    the evaluation. To some extent, you are dealing without the
    information you have asked for 35 years to have.
        The second thing in terms of the modeling, we did a very
    extensive study on how EPA uses modeling, and out of the 56
    rules that would have had to be modeled just because of their
    cost, 54 of the rules used what they call the ``partial
    economic analysis.'' Partial economic analysis only estimates
    how many new jobs you would put into a facility just to comply
    with the regulation. They did not use the whole economy
    modeling, which would have actually looked at, well, what is
    the cost of the new jobs, what is the cost of the new product,
    and how does that cost travel through the economy?
        One quick example. On the utility MACT, for example, EPA
    estimated, I believe, that there were going to be 8,000 jobs
    created by the regulation; they would be the consultants. When
    we did the whole economy modeling and we actually took EPA's
    numbers and just ran it with the whole economy model, it came
    out to, I think, about 85,000 lost jobs.
        Even in the model--and the Senate has taken care of a lot
    of that, you and Senator Vitter have got the SAB doing now this
    whole economy modeling to find out why the Agency is not using
    it more.
        Senator Hatch. Thank you.
        Mr. Cooper, just another question to you. Would you discuss
    your views on the Skidmore decision? Compare it to the Chevron
    deference. Is Skidmore an improvement over Chevron, or does it
    suffer from the same faults?
        Mr. Cooper. Senator Hatch, I believe Skidmore is a large
    improvement over Chevron. Chevron essentially liberated the
    agencies from Skidmore. Skidmore had been the governing
    standard of judicial review of agency action.
        Do not misunderstand me, though. Skidmore was not--was
    framed in vague enough language that it, too, obscured what in
    my opinion should be the goal of any agency and should be the
    standard of review of any court reviewing agency interpretation
    of ambiguous statutory provisions, which is: What is the right
    answer? What is the answer that, again, using the traditional
    tools of statutory construction, best captures the meaning of
    the provision that Congress intended?
        Skidmore--Skidmore essentially says to put it in bottom-
    line terms. The Court will review anything that the agency
    considered, including its consistency with its own prior
    practices, that is persuasive to the Court that the agency got
    it right. That is an improvement on Chevron, but it is not, in
    my opinion, the right standard.
        Senator Hatch. There are a whole bunch of other questions I
    would like to ask, but I think we have kept you all here long
    enough, so I will submit those in writing.
        Senator Hatch. This is an important hearing, and, of
    course, we are trying to find some effective solutions that
    will work for everybody rather than just one side or the other,
    because right now it is not working. Right now, bureaucracy
    tends to engulf everything in our lives, and somehow or other
    we have got to get back to where statutes mean what they say
    and we do not have unelected bureaucrats deciding all these
    laws the way they are today and imposing them upon everybody at
    a cost of trillions of dollars over the years.
        This is important stuff, and I just want to thank all of
    you for being here and for taking time off of your busy
    schedules to help us on the Committee to understand a little
    bit more about what this is all about.
        Thanks for your time, and we appreciate your effort, and
    with that--I do not see anybody else here--we will adjourn
    until further notice. Thank you.
        [Whereupon, at 11:52 p.m., the hearing was adjourned.]
        [Additional material submitted for the record follows.]

                                A P P E N D I X

    Submitted by Senator Leahy:

     Former EPA Administrators........................................   306

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]