[Senate Hearing 114-167]
[From the U.S. Government Publishing Office]
S. Hrg. 114-167
EXAMINING THE USE OF AGENCY REGULATORY GUIDANCE
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HEARING
BEFORE THE
SUBCOMMITTEE ON
REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
OF THE
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 23, 2015
__________
Available via http://www.fdsys.gov
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and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Laura W. Kilbride, Chief Clerk
Lauren Corcoran, Hearing Clerk
SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT
JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio JON TESTER, Montana
MICHAEL B. ENZI, Wyoming CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
John Cuaderess, Staff Director
Eric Bursch, Minority Staff Director
Rachel Nitsche, Chief Clerk
C O N T E N T S
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Opening statement:
Page
Senator Lankford............................................. 1
Senator Heitkamp............................................. 3
Senator Ernst................................................ 15
Senator Alexander............................................ 18
Senator Daines............................................... 20
WITNESSES
Wednesday, September 23, 2015
Michelle A. Sager, Director, Strategic Issues, U.S. Government
Accountability Office.......................................... 6
Mary Beth Maxwell, Principal Deputy Assistant Secretary for
Policy, U.S. Department of Labor............................... 8
Amy McIntosh, Principal Deputy Assistant Secretary Delegated the
Duties of the Assistant Secretary, Office of Planning,
Evaluation, and Policy Development, U.S. Department of
Education...................................................... 10
Alphabetical List of Witnesses
Maxwell, Mary Beth:
Testimony.................................................... 8
Prepared statement........................................... 59
McIntosh, Amy:
Testimony.................................................... 10
Prepared statement........................................... 64
Sager, Michelle A.:
Testimony.................................................... 6
Prepared statement........................................... 41
APPENDIX
Statement submitted for the Record from the National Association
of Chemical Distributors....................................... 67
Department of Education word cloud............................... 69
Department of Labor word cloud................................... 70
Responses to post-hearing questions for the Record:
Ms. Sager.................................................... 71
Ms. Maxwell.................................................. 77
Ms. McIntosh................................................. 92
EXAMINING THE USE OF AGENCY REGULATORY GUIDANCE
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WEDNESDAY, SEPTEMBER 23, 2015
U.S. Senate,
Subcommittee on Regulatory,
Affairs and Federal Management,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 11:06 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. James
Lankford, Chairman of the Subcommittee, presiding.
Present: Senators Lankford, Ernst, and Heitkamp.
Also present: Senators Alexander and Daines.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Good morning, everyone. Welcome to the
Subcommittee's sixth discussion today on the regulatory State.
We are examining today Federal agencies' use of guidance in
the regulatory process. Guidance is one of the most common ways
that agencies communicate with the American public and one that
receives little oversight.
In order to better understand how guidance fits into our
regulatory scheme, it might first help to take a step back and
look at the full picture, and that always begins with us, with
Congress writing and passing laws that provide statutory
authority to agencies to implement our intent. It is one of the
areas that the Ranking Member and I have talked about often,
that the Congress has a responsibility to be able to write
clear statutes. Agencies have only as much rulemaking power as
we grant them, so it is incumbent on us to use our legislative
power judiciously while simultaneously exercising the oversight
of how those agencies use their regulatory authority.
Agencies, armed with rulemaking authorities, promulgate
regulations. Regulations are legally binding statements of
policy that are legally enforceable, and those who fail to
comply face consequences such as a hefty fine or even jail.
When Congress granted agencies this expansive rulemaking power,
it also placed some requirements on the promulgation of
regulations. Many of these requirements can be found in the
Administrative Procedure Act (APA).
The Administrative Procedure Act requires agencies to
publish a Notice of Proposed Rulemaking in the Federal Register
and receive public comment before they promulgate rules. Notice
and comment is critical for the agency to gain feedback from
potentially regulated parties, and it is likewise critical to
the American people to ensure that rulemaking is transparent
and fair. In order for the Federal Government to work for the
people, the people must have a voice in the rulemaking.
Congress, cognizant of the complexity of administrative law
and the need to get certain timely information out to the
affected parties, also provided in the APA an exception to
rulemaking requirements for interpretative rules and general
statements of policy. These terms are often grouped together
under the umbrella of guidance. Guidance is a helpful tool
when, for example, agencies merely wish to clarify or define a
point of ambiguity in existing regulation. The APA acknowledges
that agency guidance is useful by exempting it from its notice
and comment requirements. Therefore, when an agency chooses to
issue a guidance document in lieu of rulemaking, it may, for
example, publish it on its website and do that immediately.
But the benefit of guidance that it bypasses notice and
comment and, therefore, can be readily issued comes with a
catch. Guidance may not impose legal obligations on the agency
or on the parties it regulates beyond those inherent in the
rule that it clarifies.
Given these characteristics that guidance is not legally
binding but merely rearticulates a regulation's existing legal
requirements and regulated parties' obligations under those
requirements, it can be very difficult even for experts to
determine or discern when a document can be rightly called a
guidance and when it should go through the rigor of APA notice
and comment rulemaking. In fact, the Government Accountability
Office (GAO) in its most recent report found that legal
scholars and Federal courts grapple with these very
determinations.
I do believe that agencies may issue guidance documents
with the best of intentions, to clear up confusion or to
provide timely information. However, I also understand the
concerns and frustration of regulated entities that must sift
through the huge stacks of guidance with widely varying names
to ensure that they are appropriately complying with standards.
For example, the Department of Labor (DOL) has issued
guidance documents under various headings, such as ``Advisory
Opinions,'' ``Notices to Interested Persons,'' ``Brochures,''
``Policy Directives,'' ``Bulletins,'' ``Questions and
Answers,'' and ``Circulars,'' just to name a few. Likewise, the
Department of Education issues guidance under the headings such
as ``Dear Colleague Letters,'' ``Memoranda,'' ``Best
Practices,'' ``Frequently Asked Questions,'' ``Program Memos,''
and ``Manuals.''
I hope the discussion we have today will be of service of
ensuring that guidance is properly and selectively issued going
forward. Today's concern lies with the process by which the
decision to issue guidance is made. Circumventing the
rulemaking process robs the public of congressionally mandated
notice and comment and it is wrong in and of itself, even if
the substance of the policy it articulates is sensible.
In the past, for example, independent watchdog
organizations and congressional Committees have expressed
concerns with particular Department of Education guidance. In
2010, 2011, and in 2014, the Department's Office of Civil
Rights issued guidance dubbed as ``Dear Colleague Letters'' on
bullying, sexual assault, and school discipline in higher
education. The letters served to significantly expand
prohibited conduct and the way in which disciplinary procedures
could be conducted and the scope of school liability for
failing to prevent prohibited conduct.
Especially troubling is the Department of Education is
rarely challenged on its guidance, likely because of the
Department's powerful position. Schools frequently follow
improperly issued guidance without question for fear of an
investigation that may damage their academic reputation or
recision of Federal funding. Because of this, the Department
may continue to improperly issue guidance in circumvention of
notice and comment, unchecked by the courts.
More recently, the Labor Department's Occupational Health
and Safety Administration (OSHA) issued problematic guidance on
process safety management and standards. OSHA issued three
process safety management (PSM) standards or memoranda, in June
and July of this year. The memoranda subjected many previously
unregulated parties to newly burdensome requirements and
compounded their compliance costs. To maintain the integrity of
the Federal rulemaking process, I hope the Department of Labor
seriously reconsiders the manner in which it effectively
regulated stakeholders within its jurisdiction. Principles of
good governance require that the policies in these memoranda
are subject to the procedures mandated by the APA.
We have a GAO witness present today to discuss these and
other findings on use of guidance. I am grateful for her
office's work and look forward to her testimony.
Also with us today are officials from the Department of
Labor and Education. In May, Senator Alexander, Chairman of the
Health, Education, Labor, and Pensions (HELP) Committee, and I
wrote to the Departments of Labor and Education asking their
Departments to determine when to issue guidance in lieu of
rulemaking. In response, they provided some helpful agency-
specific insights and I look forward to expanding on some of
those insights today. I look forward to a detailed discussion
on these issues with our witnesses.
This is something that is a serious issue that is not just
these two agencies. This is a bigger issue. And even in the
letter that we promulgated and in other questions that we have,
this is not picking on two agencies. This happened to be two
agencies that, obviously, there are a lot of questions and that
a lot of guidance documents come out of.
As I mentioned before, some of these guidances are good
policy. It is the process that we are talking about, to make
sure that people are actually included into it, and ask the
question, where do we go from here.
With that, I would like to recognize Ranking Member Heidi
Heitkamp for an opening statement.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. Thank you, Mr. Chairman, and thanks for
calling this hearing.
Agency use of guidance documents may not sound like the
most riveting topic, but it is one of incredible--we are like
the rules nerds, so we get very excited about all these topics.
[Laughter.]
But, obviously, this is one of incredible importance and
one that affects so many of our businesses and so many of our
schools and pretty much the entire regulatory community.
As I have said many times, regulations underpin almost
everything our Nation and our citizens do. Regulations keep our
products and food safe. Regulations work to prevent fraud and
keep our economy and Americans working. However, sometimes, the
language agencies use creates confusing and seemingly
conflicting standards.
Guidance is the means by which businesses can get the
clarity and answers they are searching for. It gives them
certainty. Guidance removes ambiguity and helps clarify
expectations. Guidance is the conduit for informational
exchanges and a tool to streamline processes. Guidance allows
businesses to better understand their relationship with the
regulator. Guidance is not, nor should it be, substantive
rulemaking.
It is important to recognize that, more often than not,
guidance comes at the request of the regulated parties. Any
work that we do here must not chill that exchange, for it is a
valuable tool for both business and government.
There is more to guidance than simply clarifying views and
expectations. The creation of guidance must take into account
the effects these documents will have on the affected parties.
Although guidance cannot change laws, it has the power to
influence markets. It is incredibly important that we ensure
regulated entities are given an opportunity to voice their
concerns, share data, and submit comments. In order for this to
be a truly exceptional process, we must ensure that there are
seats for all interested parties at the table, and that seat
must be a real seat.
However, there is a difference between having a seat at the
table and getting one's own way. Many times, agencies are
handcuffed and the Congress holds the key. Sometimes agencies
simply do not have the authority to alter a regulation due to a
statutory mandate. In these instances, it is up to Congress to
be vigilant. It is up to everyone on this dais to ensure that
we listen to agencies and we listen to businesses and we listen
to those who are regulated. It is up to us to be willing to
work together to tweak and amend legislation when necessary.
And it is up to us to ensure that good intentions do not overly
burden our economy.
In reviewing the testimony and reports in preparation for
this hearing, it seems that there is much we can do as a
chamber to ensure that guidance published is of the highest
quality. It is important that there is consistency across
agencies. And as the Chairman noted, although we have two
agencies represented here, we are not looking just at two
agencies. We are looking at--and that is the role of this
Committee, to look more at a systemic view. However, these
illustrations can, in fact, help inform us on the types of
reforms that we may be advancing out of this Committee.
Small businesses do not always have the staff or the time
to sift through pages and pages--in fact, I can guarantee you,
they do not have the staff or the time to sift through pages of
confusing and dissimilar fact sheets, administrator
interpretations, directives, information memorandums, and
program instructions spread across multiple websites and
multiple pages. We need to work to make sure that guidance is
accessible to the public. We need to ensure that one does not
need to have intimate knowledge of the regulatory State to
understand what is and what is not a guidance document. We need
to simplify terms and create consistencies. We need to ensure
that it is an inclusive system where impacted parties have a
real voice. This is how we ensure positive outcomes moving
forward.
I look forward to examining this guidance process. I look
forward to hearing from our witnesses and, hopefully, having a
fairly lively debate on what we could all learn from these
examples and move forward to amend the system when it is not
working.
Thank you, Mr. Chairman.
Senator Lankford. Thank you.
At this time, we will proceed to testimony from our
witnesses, and as I mentioned to the witnesses earlier, it is
the tradition of this Committee that we have two rounds of
questions. The first round of those questions will be a very
structured 5-minute time period after your oral testimony is
given. So, we will go around the dais here and do 5 minutes at
a time.
The second round will be open. That is, the microphones
will all be turned on and we will have open dialogue, so any
member can jump in at any point and to have dialogue and to be
able to follow up on question and answer. So, it will be more
of an open conversation in the second round, but the first
round will be very structured, and I hope that makes sense.
Let me introduce our witnesses, then we will ask you to be
sworn in, as well.
Michelle Sager is the Director of Strategic Issues at the
U.S. Government Accountability Office. In that capacity, Ms.
Sager manages a range of cross-cutting regulatory,
intergovernmental, and budget issues spanning multiple Federal
agencies. Previously, she held positions as an Adjunct Faculty
Member at Johns Hopkins University Institute for Policy Studies
as well as George Mason University's School of Public Policy.
Mary Beth Maxwell is the Principal Deputy Assistant
Secretary for Policy at the U.S. Department of Labor.
Previously, she was the Deputy Chief of Staff for the
Department's Senior Advisor to the Secretary of Labor and
Acting Deputy Administrator for the Wage and Hour Division
(WHD).
Amy McIntosh is the Deputy Assistant Secretary Delegated
Duties of the Assistant Secretary at the Department of
Education's Office of Planning, Evaluation, and Policy
Development. Your card must have two sides to have your title
on it. [Laughter.]
Use both the front and the back.
In this capacity, Ms. McIntosh oversees policy development
on all aspects of education, from pre-kindergarten through
higher education, and leads the policy and program studies
services. Previously, she was the Principal Deputy Assistant
Secretary for P through 12 Education Policy at the Office of
Planning, Evaluation, and Policy Development. Before that, she
served in various capacities in New York State, in New York
City's Department of Education.
Thank you all for appearing before us today. It is the
custom of this Subcommittee to swear in all witnesses before
they appear before us, so if you do not mind, please stand and
raise your right hand.
Do you swear that the testimony you are about to give
before this Subcommittee is the truth, the whole truth, and
nothing but the truth, so help you, God?
Ms. Sager. I do.
Ms. Maxwell. I do.
Ms. McIntosh. I do.
Senator Lankford. Thank you. You may be seated. Let the
record reflect the witnesses answered in the affirmative.
We will be using a timing system today. I would ask that
your oral testimony be no more than 5 minutes. Before we begin,
I would like to request unanimous consent for Senators
Alexander and Daines to be recognized before the Subcommittee
today. Much of what we discuss today will relate directly to a
May 7 letter that Senator Alexander and I sent to our witnesses
at the Departments of Education and Labor. Senator Alexander's
leadership at the helm of the HELP Committee has been
extraordinary, and I am happy to have him here today. Senator
Daines has also taken leadership roles in these issues and we
welcome him, as well, here today.
Without objection, so ordered.
Ms. Sager, you are first up to give oral testimony, so
thank you very much.
TESTIMONY OF MICHELLE A. SAGER,\1\ DIRECTOR, STRATEGIC ISSUES,
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Sager. Thank you. Good morning, Chairman Lankford,
Ranking Member Heitkamp, Senator Ernst, Senator Alexander, and
Senator Daines. Thank you for the invitation to appear before
you today to discuss GAO's work on regulatory guidance
processes.
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\1\ The prepared statement of Ms. Sager appears in the Appendix on
page 41.
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My remarks today will explain this aspect of agency
communication and highlight answers to four key questions that
were covered in our April 2015 report on this topic. First,
what is regulatory guidance? Second, how do agencies use
regulatory guidance? Third, how do agencies determine when to
undertake rulemaking or when to issue guidance? And, fourth,
how can agencies ensure more effective guidance processes that
adhere to applicable criteria?
So, first, in terms of what regulatory guidance is,
regulatory guidance is an important communication tool that
agencies use to communicate about the implementation of
regulatory and grant programs to regulated parties, to
grantees, and to the general public. One of the main purposes
of guidance is to explain and help regulated parties comply
with agencies' regulations. Regulatory guidance can take a
variety of formats and names, including directives,
interpretive memos, frequently asked questions, and fact
sheets, to name just a few.
Guidance policies help agencies move quickly, often more
quickly than may be possible using rulemaking. Even though
guidance is not legally binding, guidance can have a
significant effect on regulated entities and the public, both
because entities rely on large volumes of guidance documents
and because the guidance can prompt changes in the behavior of
regulated parties and the general public.
Second, in terms of how agencies use regulatory guidance,
in our report, we focused on four agencies and we found that
officials at the Departments of Agriculture (USDA), Education,
Health and Human Services (HHS), and Labor used guidance for a
number of purposes, including to explain or interpret
regulations, to clarify policies in response to questions from
regulated entities, and also to disseminate suggested practices
or leadership priorities. Departments typically identified very
few of their guidance documents as significant, which is
defined by the Office of Management and Budget (OMB) as
guidance with a broad and substantial impact on regulated
entities.
Third, in terms of the decision of whether to issue
guidance or undertake rulemaking, officials considered a number
of factors before making this decision. Key among those factors
was whether or not they intended for the guidance document to
be legally binding. Officials said that they generally
understood when guidance was inappropriate and when it was more
appropriate to undertake rulemaking.
Fourth, in terms of how agencies can ensure that their
guidance processes adhere to applicable criteria, we found that
agencies did identify standard practices to follow when they
were developing their guidance. We also found that they could
strengthen their internal control, or management control,
processes to ensure that their guidance processes achieved
desired results and also prevent errors. In the absence of
specific government standards for non-significant guidance,
which is, in fact, the majority of issued guidance, the
application of internal controls is particularly important.
The 25 agency components within the four agencies included
in our review addressed some control standards more regularly
than others. So, for example, very few components had written
procedures that governed their guidance production processes.
However, all components could describe some sort of review
process that they did follow for management approval of their
guidance.
We recommended that agencies consistently adhere to OMB
requirements for significant guidance and also strengthen their
internal controls for guidance production processes. The
agencies generally agreed with the recommendations in our
report and reported that they were taking actions to comply
with these recommendations.
In summary, agencies must exercise diligence in issuing
guidance. Although it is not legally binding, guidance
documents can affect the actions of stakeholders and other
interested parties by articulating agencies' policy choices as
well as their interpretations of existing and forthcoming
regulations. The potential effects of these documents and the
risks of legal challenges to agencies underscore the need for
consistent and well-understood processes for the development,
review, dissemination, and evaluation of guidance.
This concludes my prepared statement. I look forward to any
questions that you may have. Thank you.
Senator Lankford. Thank you. Ms. Maxwell.
TESTIMONY OF MARY BETH MAXWELL,\1\ PRINCIPAL DEPUTY ASSISTANT
SECRETARY FOR POLICY, U.S. DEPARTMENT OF LABOR
Ms. Maxwell. Good morning, Mr. Chairman, Ranking Member
Heitkamp, Members of the Subcommittee, Senators. Thank you for
the opportunity to testify on the Department of Labor's efforts
to develop and disseminate accurate, helpful guidance that
informs our stakeholders about their rights and
responsibilities and to do so in a way that complies with all
applicable laws and procedures.
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\1\ The prepared statement of Ms. Maxwell appears in the Appendix
on page 59.
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Congress has charged the Department with administering and
enforcing more than 180 Federal laws that cover 10 million
employers and 125 million workers. The Department takes this
seriously, including by issuing regulations that give
employers, workers, and the workforce system the information
they need to comply with the law and achieve safety and
security in the workplace.
Employers, workers, job seekers, and retirees regularly
seek additional guidance to further clarify requirements that
are set out in statutes and regulations. In deciding when to
issue guidance, we consider the letters and phone calls that we
receive from Members of Congress, from the public, advisory
Committee reports, listening sessions with stakeholders,
regular requests for information, and more, depending on the
situation.
The Department's guidance can serve any number of different
purposes, clarifying regulations, providing information on
promising practices, providing assistance on grant
administration, responding to specific stakeholder questions,
and directing stakeholders to compliance assistance resources.
We strive to issue guidance that is clear and accessible to
members of the public, who may not all be experts and who
should not have to hire a lawyer to understand the law. For
example, the Wage and Hour Division created a handbook about
rights and responsibilities under the Family and Medical Leave
Act (FMLA) that lays out the most common types of requests for
leave and what people should consider in responding to
requests.
Guidance also helps us to maintain the flexibility to
respond to stakeholder questions or current and emerging
challenges. For example, the Occupational Safety and Health
Administration coordinated the worker safety and health aspects
of our domestic response to last year's Ebola outbreak. OSHA
and its partners released numerous guidance documents that
focused on safer work practices for workers at risk of Ebola
exposure in health care, laboratories, waste management, and a
variety of other industries.
Of course, there are situations in which we more formally
seek public comments on a guidance document because of its
significance. We abide by the Administrative Procedure Act and
OMB's Good Guidance Bulletin, and we are pleased that GAO's
recent multi-agency audit found that the Department
consistently applied OMB Bulletin requirements for public
access and feedback for significant guidance.
And, so, an example of that this past spring is that the
Department published for comment our proposed guidance to
assist the contracting community in applying population Obama's
Fair Pay and Safe Workplaces Executive Order (EO), including
evaluating the severity of labor law violations. The proposed
guidance was published alongside the Federal Acquisition
Regulatory (FAR) Council's proposed fair pay regulations, with
concurrent comment periods providing 90 days to weigh in on the
full implementation picture.
As GAO noted in its multi-agency audit, the Department
strives to make guidance easily accessible from the home page
of each of our component agencies, and we do work hard to use
technology to share guidance.
While we focus on agency-specific guidance, we know that
many visitors to our website do not know where to go to find
answers to their questions, and so accordingly, another really
important Department-wide resource is our Employment Laws
Assistance for Workers (ELAWS) and Small Businesses Program. It
is an interactive website that enables the public, including
workers and employers to find information about their rights
and responsibilities.
The ELAWS advisors are unique web-based interactive tools
that provide easy-to-understand information about Federal
employment laws. Each advisor simulates an interaction you
might have so you could actually ask a question and get an
answer, and even feature being able to e-mail and file DOL
forms online. Our ELAWS advisors receive over 44,000 visits a
day, which is a remarkable number for a single program, which
signals that employers and workers are finding the site and
finding it useful.
We are always committed to finding ways to improve.
Building upon helpful recommendations from GAO, we are
reviewing and updating our written procedures for how we review
and approve significant guidance. The Department has convened a
working group of senior policymakers from all our component
agencies and that group is sharing best practices right now for
more consistent application of internal controls in developing
guidance. The Department is also identifying ways to improve
our website so that the public can more easily access and
comment on our guidance.
The Department remains committed to our broad efforts to
develop and disseminate accurate, timely, and helpful guidance
that informs all of our stakeholders of their rights and
responsibilities under the numerous laws that we administer and
enforce.
Mr. Chairman, Ranking Member Heitkamp, Senators, thank you
again for the opportunity to testify today. I am happy to
answer your questions.
Senator Lankford. Great. Thank you. Ms. McIntosh.
TESTIMONY OF AMY MCINTOSH,\1\ PRINCIPAL DEPUTY ASSISTANT
SECRETARY DELEGATED THE DUTIES OF THE ASSISTANT SECRETARY,
OFFICE OF PLANNING, EVALUATION, AND POLICY DEVELOPMENT, U.S.
DEPARTMENT OF EDUCATION
Ms. McIntosh. Chairman Lankford, Ranking Member Heitkamp,
Senator Ernst, Senator Alexander, my name is Amy McIntosh and I
am proud to represent the Department of Education today and I
appreciate the opportunity to be here to testify about our
issuance of guidance.
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\1\ The prepared statement of Ms. McIntosh appears in the Appendix
on page 64.
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Guidance is an important tool that the Department uses to
communicate timely and consistent information to the diverse
groups that we serve--students, parents, teachers, States,
schools and school districts, institutions of higher education,
advocates, and the general public. In particular, we use
guidance to assist our partners and stakeholders in
understanding and complying with the laws of Congress and with
related regulatory requirements.
The Department uses guidance to promote transparency and to
assist and guide stakeholders, not to create new rules. We use
the rulemaking process, not guidance, when we need to issue
legally binding rules to carry out the Department's mission.
We find it helpful to issue guidance for various reasons,
including explaining new regulations in plain language,
responding to questions from external stakeholders, clarifying
policies in response to compliance findings, and identifying
best practices relating to the topics in the guidance.
The Department is committed to issuing guidance that is
well developed and responsive to grantee and stakeholder needs,
reflects appropriate review, and is properly disseminated to
reach the relevant audiences.
The OMB's 2007 Bulletin established policies and procedures
for the development, issuance, and use of significant guidance
documents, and the GAO report that was just referenced found
that the Department, and I quote, ``had written Departmental
procedures for the approval of significant guidance, as
directed by the OMB Bulletin, and consistently applied other
OMB Bulletin requirements on public access and feedback for
significant guidance.'' Guidance that does not meet the OMB
Bulletin's definition of significant guidance is left to agency
discretion for procedural development.
Because the importance and scope of guidance varies,
procedures also may vary slightly among the different offices
within the Department, but we encourage all offices that want
to issue guidance to consider input from the intended
audiences, to go through several levels of internal review for
clarity and consistency and effectiveness, and, where
appropriate, the Office of General Counsel will be part of that
review process to ensure legal sufficiency. Program offices
also may informally engage with external stakeholders during
the development of guidance to seek their views and expertise.
The Department believes that our internal controls for
developing and producing guidance are effective, but we are
committed to continuous improvement of our processes. We
appreciate the guidance that was provided in the GAO report and
we are taking its recommendations into consideration. We are
currently in the process of reviewing the procedures in our
offices for the development and production of all guidance,
significant or otherwise, and we will use our findings to
provide offices with standard protocols that they can use to
clarify management roles, document management review and
approval of guidance.
The Department will also review our presentation of
guidance on the Department's website and identify best
practices to improve the online presentation and accessibility
of guidance documents.
The Department is committed to ensuring that guidance is
used in a way that will best assist our stakeholders and inform
the public. We believe we have done a good job implementing the
OMB Bulletin on good guidance practices, and we are committed
to working toward implementing the recommendations made by GAO.
So, thank you, Chairman Lankford, Ranking Member Heitkamp,
other Senators, for the opportunity to be here, and I will be
glad to answer any questions from the Committee.
Senator Lankford. Thank you, all of you, and I am going to
do a quick set of questions here and we will go through at a
pretty rapid pace on this and then start moving around.
Again, I want to reemphasize that a lot of the issues we
are going to talk about today are not about the rules
themselves. They are about the process of it, and we will get a
chance to talk through some of that.
Just to set some of this up, and then we will come back in
the second round and I will ask some other additional questions
on this to be able to build on it, Ms. Maxwell and Ms.
McIntosh, because you are both experts in the guidance process
in your agencies, I want to get your perspective on a couple
specific guidance things that have come out. I have a thought
that might have gone through notice and comment we can talk
about more later on it and actually go through the rulemaking
process.
Ms. Maxwell, let me turn to you first. On June 5 of this
year, OSHA issued a memorandum with the subject line for,
Recognized and Generally Accepted Government Engineering
Practices (RAGAGEP), which has got to be one of the worst
acronyms in government--``RAGAGEP and Process Safety Management
Enforcement.'' Are you familiar with this memorandum?
Ms. Maxwell. I am.
Senator Lankford. Do you believe that memo is an agency
guidance? Is that the perspective that it is a guidance
document, not a new regulation, when that came out?
Ms. Maxwell. Yes.
Senator Lankford. OK. Now, if you will turn your microphone
on, too, I want to go through that----
Ms. Maxwell. I am sorry.
Senator Lankford. That is all right. June 5, OSHA issued a
memorandum with the subject line, ``Process Safety Management
of Highly Hazardous Chemicals and Covered Concentrations of
Listed Appendix A Chemicals.'' Are you familiar with that
memorandum?
Ms. Maxwell. Yes.
Senator Lankford. Do you believe that is also agency
guidance?
Ms. Maxwell. Yes.
Senator Lankford. OK. July 22, OSHA issued a memorandum
with the subject line, ``Process Safety Management of Highly
Hazardous Chemicals and Application of the Retail Exemption.''
Are you familiar with that one?
Ms. Maxwell. Yes.
Senator Lankford. OK. Same thing. Do you think that is
agency guidance on that one?
Ms. Maxwell. Yes.
Senator Lankford. OK. Ms. McIntosh, let me bounce through a
few, as well, and I think you are prepared for these, also.
October 25, 2010, the Department of Education's Office for
Civil Rights published a ``Dear Colleague Letter on Bullying.''
Are you familiar with that letter?
Ms. McIntosh. Yes, I am.
Senator Lankford. Do you believe that is agency guidance
for that?
Ms. McIntosh. Yes, I do.
Senator Lankford. OK. April 4, 2011, Department of
Education's Office for Civil Rights published a ``Dear
Colleague Letter for Sexual Assault and Harassment.'' Are you
familiar with that letter, as well?
Ms. McIntosh. Yes, I am.
Senator Lankford. Is that one also agency guidance?
Ms. McIntosh. Yes, it is.
Senator Lankford. OK. January 8, 2014, Department of
Education's Office for Civil Rights, DOJ's Civil Rights
Division, published a ``Dear Colleague Letter on Administering
School Discipline.'' Are you familiar with that letter?
Ms. McIntosh. Yes.
Senator Lankford. OK. Also, is that one agency guidance?
Ms. McIntosh. Yes.
Senator Lankford. OK. Thank you.
Ms. Maxwell, on OSHA's guidance on recognizing Generally
Accepted Good Engineering Practices, this wonderful RAGAGEP we
talked about before, was RAGAGEP intended to be a performance-
based standard with flexibility for regulated parties to choose
among industry's best practices that were most appropriate for
their business? When that was originally set out there, was it
performance-based to give flexibility so that they would have
that? If so, is that still continuing even under the guidance?
Ms. Maxwell. Senator Lankford, I think that the specificity
of your question is kind of beyond my personal expertise on
that particular issue. But the memo was designed to give
guidance to the field on implementing the standard.
Senator Lankford. OK. The concern that I have is that the
new guidance document seems to remove flexibility that
previously existed, and when we try to look at what is guidance
and what is regulation and where should we have gone out, it
seems that the regulation gave flexibility to say you have this
Generally Recognized Engineering Practices, go by those, or you
can create your own process. You just have to be able to show
that it is a good process. This new guidance seems to remove
that ``or'' and say, no, everything has to shift over to this
other standard and the flexibility seems to go away.
The reason I draw that out is that seems to be one of those
things that would look like that would be a regulation that
would need to go through the notice and comment rather than
just someone receive it, as well. If it is intended as a
flexible enforcement standard, this June 5 seems to take that
away.
So, the question really is a process question.
How was that determined this is going to be a guidance
rather than a rule that would go out?
Ms. Maxwell. So, to begin, we follow the APA and the OMB
Bulletin in all of these determinations. We are committed to
very carefully following the rules and procedures for making a
decision between notice and comment rulemaking and the issuing
of guidance, and if there is ever any question, that is done in
consultation with our Solicitor and with OMB.
We are confident in this situation, when we were responding
to the terrible tragedy of an explosion that took 15 lives and
injured hundreds of more people, that when we looked and were
responding to an Executive Order then issued by the President
to say, close the gaps, right, we have to take action and make
sure that a preventable explosion like this does not happen
again, close those gaps--when our folks looked at the
regulation to look at the question of, is there a need for new
notice and comment rulemaking, very clear that the regulation,
both the preamble and the reg text were clear, but guidance was
not. And, so, there was a need to update that guidance to
clarify it.
If there are specific questions that you have about the
RAGAGEP memo, I want to be sure that I get you an accurate
answer.
Senator Lankford. Sure, and we will definitely go pursue
that----
Ms. Maxwell. OK.
Senator Lankford [continuing]. And we will follow up on
that. But the real issue is here there seems to be a change in
the reg on it, and I understand a response to what happened in
the explosion. The reg seemed to shift before we even
determined all of the reasons for that. Was it the assumption,
then, of the agency that the reason for that explosion is that
they were not following the RAGAGEP standards, that they had
done their own process? Is that why this shift occurred?
Ms. Maxwell. Yes. We do not think that any of these memos
represented any change in the regulation.
Senator Lankford. So, then, could the enforcement--I guess
that is really the issue, then. Ms. Sager talked about binding,
whether it is legally binding or not. If an entity created
their own process, could there be a court challenge to them
creating their own regulatory process, because previously, that
was allowed. Would that still be allowed now, for them to be
able to create their own process?
Ms. Maxwell. I am going to be honest with you. Your
question about them creating their own regulatory process, I am
feeling like is getting into something outside my area----
Senator Lankford. That is OK. And we can come back----
Ms. Maxwell. Yes.
Senator Lankford [continuing]. And we will talk about it
more in the second round. But previously, there were two
options. You could follow the set of standards on it or you
could develop your own process as long as it meets this,
because the end was what they were after. Does it provide the
safe management process on it. Now, developing their own
process seems to go away and you just have to do it this way,
and that is what we are trying to figure out. What just
happened? If many companies that have created their own
process, now that is suddenly not legal, there seems to be a
legal shift that has occurred there, and we will follow up on
that in the days ahead--or not in the days ahead, but we will
follow up with letters on it, but talk about it in the second
round, as well.
Ms. Maxwell. OK.
Senator Lankford. I would like to recognize Ranking Member
Heitkamp.
Senator Heitkamp. Thank you, Mr. Chairman, and I know we
will get into more in depth on this.
On this particular guidance, I think the disturbing piece
of this for so many people is we thought we were in compliance.
No rule changed. Now we get a letter saying we are not in
compliance. It seems like the rule changed. If we were in
compliance before doing what we are doing, then how can we so
dramatically be out of compliance right now?
And I think you can understand the confusion, because
usually if that changes that dramatically and it changes how
you implement a law that dramatically, people might turn back
and say, that seems to be something that should have been
noticed or something that should have been handled by Congress.
But to simply unilaterally, without comment or process, change
the rules does not seem to be what a guidance should do. And, I
think that brings us to this discussion.
But I want to maybe back away from these regulations a
little bit and talk more about guidance, and I think, Ms.
Sager, obviously, you had a chance to look across agencies and
had a chance to think about what these guidance documents ought
to be and what they ought not to be. As you look at the growth,
and I think there is a chart over there that shows you this
informal process, where do you think we need to tweak or change
either the OMB Directive or take a look at legislating in this
area? What recommendations would you make?
Ms. Sager. Thank you for the question, Senator Heitkamp,
and the answer to this question is not a bright line, if you
will, in part because guidance provides agencies with the kind
of flexibility that we just heard about from all the witnesses.
At the same time, if there is a bright line, to the extent
there is one, it is that the guidance not be legally binding.
Where the difficulty comes in is that as agencies are issuing
guidance to explain their regulations, to the extent that the
regulated parties are held accountable and then believe that
those guidance documents go beyond the regulations, that is
where the difficulty occurs.
So, in terms of next steps, I think there are a number
available. One that we talked about in our report is making
sure that agencies have the internal controls, the management
controls, in place to be very clear about the choices that they
are making and who is signing off on those choices.
Certainly, additional oversight offers another possible
next step. Our report looked at these four agencies and we
simply do not know the extent to which what we found at these
four agencies is or is not consistent with other Federal
agencies.
And then certainly another option could be looking at the
OMB memo and perhaps codifying certain aspects of that memo, to
the extent it is appropriate Government-wide, and again, that
is where there is no clear agreement on what action is
necessary or appropriate.
Senator Heitkamp. This becomes the age-old definitional
process when the Supreme Court says, I know obscenity when I
see it.
Ms. Sager. Exactly.
Senator Heitkamp. I cannot describe it for you, but I know
it when I see it, and we all may have a different line in terms
of where we think guidance may cross over to substantive
rulemaking.
But, it makes it extraordinarily difficult, and one thing
that I struggle with as a former tax regulator, I know the
benefit of informal rulings. I know the benefit of a letter
ruling in terms of creating certainty as a taxpayer moves
forward, giving that taxpayer the ability to rely on a letter
ruling so that they can, in fact, make economic decisions for
their business.
If we move too far to prohibit guidance or to too narrowly
define guidance, we may be, in fact, acting against the best
interest of the regulated entities who desperately need to have
this information.
And, so, I mean, I think one of the problems that I have
had reading and thinking about this issue coming to this has
really been definitional.
Ms. Sager. Yes.
Senator Heitkamp. And everybody has a different line, and
we are going to have to kind of navigate that. But one thing we
do not want to have happen is for people's relationship with a
regulated agency to materially change as a result of a guidance
and dramatically shift, because then we start thinking, that is
not the right way to make that decision. This is probably
something that needs a greater period of comment, more of a
substantive rulemaking process.
And, so, we are going to continue to kind of work through
this, and I hope, as the expert at GAO on this, that we might
be able to rely on the expertise of that agency as we think
about definitional changes or we think about what might, in
fact, be the right response to some of these concerns.
Senator Lankford. Senator Ernst.
OPENING STATEMENT OF SENATOR ERNST
Senator Ernst. Thank you to all of our witnesses for being
here today.
I am going to spend the bulk of my time getting into some
of the specifics, but I wanted to express the frustration that
I am hearing from so many of my constituents on some of these
very issues that are in front of us today. I hear from them
that they feel the government is really out to get them through
some of these memorandums and changes.
And, as we look at the proposed guidances, like the ones
that we have today, our farmers, our ranchers, and the industry
in Iowa are finding them, the changes, to be economically
significant and they are just really fueling skepticism and
distaste for our government. And it seems no matter what the
issue of the day is, this Administration seems to be making a
habit of circumventing the American people and the right to
comment before they make these changes. So, we need to really
address that.
The memorandum, and you mentioned it, Ms. Maxwell, about
the process safety management of highly hazardous chemicals and
application of the retail exemption issued by the Department of
Labor in July, it does reclassify the majority of traditional
farmers' cooperatives in Iowa, and these farmer-owned
businesses warehouse and distribute crop nutrients, including
anhydrous ammonia, at hundreds of sites across the State. And,
in fact, Iowa uses more anhydrous ammonia than any other State,
as it is the most cost-effective form of nitrogen for farmers
to utilize in producing the affordable food and fuel for a
growing population.
The changes OSHA has made will be difficult, if not
impossible, for the companies to implement within the 6-months
provided for in the guidance and will yield little, if any
safety benefits. Further, they will cost these retailers tens
of thousands of dollars per site, and costs that will
ultimately be passed on to the farmers, the family farms that
they serve.
Unfortunately, since the Department of Labor did not go
through the formal rulemaking process, these key stakeholders
were not afforded the opportunity to comment on the impact
these changes in regulation will have on their livelihoods.
So, going back to the anhydrous ammonia safety, the July 22
memorandum, what prompted the change in the retail exemption to
do away with the 50 percent rule?
Ms. Maxwell. Thank you very much, Senator, for your
question. Let me talk a little bit about the process and what
led to that, and because the Senators, I am sure, are aware, as
well, that these guidance documents are now the subject of
litigation. So, I can talk really about the process and
probably not appropriately about the substance of the specifics
of those.
As we all know, this was in response to this tragic
explosion in West, Texas, right, that killed 15 people, injured
hundreds more. Reuters reported $100 million in damage. West,
Texas, will never be the same. And all of us, I know, are
committed to preventing any such catastrophic tragedy from
happening again. So, how do we work together to make that
happen?
I think there really was a very robust stakeholder
engagement process as we embarked on following that. This began
with an Executive Order from the President, right, saying to
look at the gaps, a careful look at the regulation, and a
conclusion that the guidance was out of date.
We then embarked on a very robust stakeholder engagement
process. We published a request for information (RFI) in the
Federal Register that clearly forecast that we were looking at
the retail exemption, that we were looking at the hazardous
chemicals percentages, right----
Senator Ernst. OK.
Ms. Maxwell [continuing]. So really communicated to the
community, this is what we are looking at.
Senator Ernst. Right.
Ms. Maxwell. We are publishing an RFI in the Federal
Register.
Senator Ernst. And----
Ms. Maxwell. We are getting these comments back.
Senator Ernst. I will stop you right there. One, then, it
sounds like maybe we should have gone through the rulemaking
process rather than doing a memorandum on this if we are
engaging the public in such a manner.
Ms. Maxwell. No, I think this is a case where we looked at
the requirements for OMB on significant guidance. This did not
meet those requirements, but we knew that this was a really
important issue that would benefit from more public input, and
so we pursued strategies that would get that. We also had
meetings and webinars that involved, thousands of folks.
Senator Ernst. OK. And----
Ms. Maxwell. So we really worked hard to get input.
Senator Ernst. And this was in response to the West,
Texas----
Ms. Maxwell. Yes.
Senator Ernst [continuing]. Explosion?
Ms. Maxwell. Yes. Then----
Senator Ernst. That was determined to be ammonium nitrate,
not anhydrous ammonia. Those are two entirely separate
substances. So, again, my question would be, why the change in
the 50 percent rule for a substance that was not even involved
in that incident?
Ms. Maxwell. Thank you for clarifying that it was in
response to West, Texas, and other chemical explosions, but
looking at we needed to have some common sense practical
approach to make sure that we were actually implementing the
intent of that PSM standard and those regulations, that we were
giving clear guidance to the regulated community about what we
need to be doing differently to keep people safe and to prevent
an explosion like this from happening again.
Senator Ernst. OK. But, again, two separate substances, and
we are responding to a situation that certainly needed some
guidance to fill some gaps, but what the agency ended up doing
was covering a whole other group of chemicals where there has
not been incidents.
Ms. Maxwell. And we were charged with looking at those
regulations. Was the guidance actually effectuating Congress's
intent, right, of these standards? There were gaps to be
closed, and that is what we worked to do, and worked very hard
over a 2-year process to have a lot of stakeholder engagement--
--
Senator Ernst. And, again----
Ms. Maxwell [continuing]. Transparent----
Senator Ernst [continuing]. I guess my point would be back,
then, if we are going through a 2-year process engaging the
public, then it should be through a formal rulemaking process.
If it is that lengthy, we are engaging thousands of people,
they need the formalized rulemaking process. If we are taking
that time, we might as well do it in a way that we are able to
engage all of the stakeholders, especially when it is so
economically impactful to their livelihoods. But, again, it was
done through a more informal process where the agency was able
to determine that even substances that were not involved in
such a significant accident are included. I guess that would be
my point, that if we are taking the time to do this, it should
be through formalized rulemaking.
Thank you, Mr. Chairman.
Senator Lankford. Senator Alexander.
OPENING STATEMENT OF SENATOR ALEXANDER
Senator Alexander. Thanks, Mr. Chairman. Thank you for
including me in your hearing today. I appreciate it very much,
and I congratulate you for your leadership on this subject, you
and Senator Heitkamp both. It may not be the sexiest topic in
Washington, but it is at home. I mean, I think in all of our
States, at least in Tennessee, Washington, D.C., looks like a
Mount Vesuvius of rules, regulations, guidances, spewing forth
from all directions, and it is what I hear about as much as any
other issue. So, thank you for the subject and thank you for
your leadership.
Let me ask Ms. McIntosh about the Department of Education.
In June of last year, at a hearing of our HELP Committee,
Catherine Lhamon, the Assistant Secretary for the Office of
Civil Rights in the Department was testifying, and this was the
exchange we had.
``Alexander: Ms. Lhamon, you talk about something called
guidance, and I have here about 66 pages of guidance under
Title IX. Now, do you expect institutions to comply with your
Title IX guidance documents?
``Lhamon: We do.
``Alexander: You do? What authority do you have to do that?
``Alexander: Why do you not go through the same process of
public comment, rule and regulations that your Department is
going through under the Clery Act?
``Lhamon: Well, we would if they were regulatory changes.
``Alexander: Why are they not regulatory changes? You
require 6,000 institutions to comply with this, correct?
``Lhamon: We do.
``Alexander: Then who gave you the authority to do that?
``Lhamon: Well, with gratitude, you did when I was
confirmed.''
Now, Ms. McIntosh, do you believe that we gave Ms. Lhamon
the authority to make Title IX guidance binding on 6,000 higher
education institutions?
Ms. McIntosh. Thank you, Senator Alexander, for that
question. As you know, I was not there during----
Senator Alexander. I know, but I read the exchange.
Ms. McIntosh [continuing]. During that exchange. Let me
assure you, I tried to be very clear in my opening statement
that guidance that the Department issues does not have the
force of law.
Senator Alexander. But this is the Assistant Secretary of
the Department with Title IX, which affects 6,000 institutions,
100,000 public schools, and she apparently has not gotten the
word. Who is going to tell her?
Are you?
Ms. McIntosh [continuing]. As she knows and as I know,
Title IX is the binding law that applies in the cases that
you----
Senator Alexander. So, guidance under Title IX is not
binding, is that correct?
Ms. McIntosh. Guidance under Title IX is not binding.
Guidance helps the many people who are subject to Title IX
understand what they need to do to comply with the law.
Senator Alexander. Right. Who is going to----
Ms. McIntosh. But it does not----
Senator Alexander. Who is going to tell Ms. Lhamon this?
Ms. McIntosh. I have had the discussion with Ms. Lhamon and
she is fully agreeing with----
Senator Alexander. Well, did she just----
Ms. McIntosh [continuing]. the statement that I----
Senator Alexander [continuing]. Have a lapse of memory that
day?
Ms. McIntosh. I cannot speak to what happened that day.
Senator Alexander. Well, let me pursue this. The Chairman
mentioned a bullying guidance. Now, that is a guidance, right,
under the Department?
Ms. McIntosh. Yes.
Senator Alexander. On the website, it is not listed as a
significant guidance, am I correct about that?
Ms. McIntosh. I do not have it on my list of significant
guidance, but let me describe the process that----
Senator Alexander. Well, before you do that, if it is a
significant guidance, according to the Office of Management and
Budget, there ought to be some input, right, from those
affected?
Ms. McIntosh. The procedures for significant guidance are
very clear in the OMB Bulletin----
Senator Alexander. Right.
Ms. McIntosh [continuing]. And we follow those----
Senator Alexander. But, apparently this was not a
significant guidance. Now, that is odd to me, because bullying
is a big subject. We have had a big debate on it in the U.S.
Senate. We just passed in the Senate a reauthorization of
higher education, Elementary and Secondary Act (ESEA), which
got 81 votes, 83 if all the Senators had been there. It was
bipartisan. And the one overriding subject that we agreed on
both sides of the aisle was we did not want a national school
board, and we did not have any agreement among ourselves on
whether we should be telling 100,000 public schools what their
discipline and bullying policies should be.
So, where does the Department of Education get the
authority even to issue a guidance, or even a rule or
regulation, on bullying? Where is that in the law if the U.S.
Senate thinks that it is making the law on bullying or not?
Ms. McIntosh. Well, first of all, Senator Alexander, thank
you very much for your leadership on the bipartisan work that
the Senate has done toward a new ESEA bill. I think the
bullying guidance that you are talking about stems from civil
rights law that is also a law of Congress, and when----
Senator Alexander. But it----
Ms. McIntosh [continuing]. When the bullying----
Senator Alexander. It does not say anything about bullying,
and you are talking about Title VI, is it, of the Civil
Rights----
Ms. McIntosh. I think you would agree that bullying could
be a serious problem and a civil rights issue----
Senator Alexander. It is a serious problem, but the U.S.
Senate does not agree that the Federal Government ought to be
telling the local school what its bullying policy ought to be.
So, how does the Department of Education get the right to make
a guidance, which would be under Title IX, when the head of
Title IX thinks everybody she issues a guidance to has to do
what she says?
Ms. McIntosh. So, the Office of Civil Rights, according to
the laws of Congress, gets complaints about civil rights
violations from schools, from higher ed institutions, from
students, all over the place. Some of those complaints relate
to bullying, and it is up to the Office of Civil Rights to
follow up on all complaints about civil rights violations----
Senator Alexander. But, Ms. McIntosh--and my time is up--it
is not up to the Office of Civil Rights to make a law when the
Federal law does not say anything about bullying, and the U.S.
Congress is still debating it. Then off she goes as a national
school board telling 100,000 schools, whether they are a Native
Alaskan school or whether they are in the mountains of
Tennessee, this is how you ought to handle your discipline
problems.
Ms. McIntosh. And, Senator, we did not make any new law or
any new binding requirements with the bullying----
Senator Alexander. Well, she says her edicts are binding
and she issued a guidance on bullying, and to me, that is not
appropriate.
Ms. McIntosh. And I have been----
Senator Alexander. But my time is up, Mr. Chairman.
Senator Lankford. Senator Daines.
OPENING STATEMENT OF SENATOR DAINES
Senator Daines. Thank you, Mr. Chairman, and I want to
thank the Chairman as well as Ranking Member Heitkamp for
coordinating this hearing and allowing a couple of adoptees
here today, Senator Alexander and myself, to be on this dais
and be part of this hearing.
I would completely agree with Senator Alexander's comments
about what I hear back home in Montana. I hear more about
regulations and concerns and ambiguity and the force of such an
impact on the small businesses than I do about taxes as I
travel every corner of our State. So, I applaud the Chairman
and the Ranking Member for moving forward here with these
discussions, because I do believe this matter of regulatory
oversight and accountability is perhaps one of the most
fundamental of Congress's responsibilities, and our dialogue
here today is of great importance.
My concerns are that agencies oftentimes use these
interpretive rules to expand regulations rather than merely
provide clarification. Since interpretive rules are not
required to undergo notice and comment, this often allows a
channel for unvetted regulation to negatively affect unknowing
small businesses. A more transparent and a more predictable
process for widely promulgated interpretive rules would resolve
this dilemma and, I think, encourage business growth and job
creation.
A question for Ms. Maxwell. In your written testimony, you
state that, and I quote, ``effective regulations help achieve
Congress's objective to invest in human capital, to build a
skills infrastructure that supports business growth,'' and
there does seem to be a positive link between regulatory
transparency and job creation.
A restaurant franchisee business owner in my home State,
from Billings, Montana, is named Brad Anderson. He has got
Buffalo Wild Wings all over the State. He provides jobs to
allow oftentimes college students the ability to make a wage
and put themselves through college. They are great businesses.
And, let me quote what Brad said to me.
He said, ``Interpretive rules are changing the nuts and
bolts operations of how restaurants operate. When the
Department of Labor issues interpretive rules on a regular
basis and unpredictability is the norm, you better believe it
causes businesses like mine to think twice about considering
automating processes over making the additional hire.
Interpretive rules simply discourage job creation.''
Ms. Maxwell, how do you reconcile the statement from your
testimony with the economic reality my constituent is facing?
Ms. Maxwell. Thank you, Senator, very much for your
question. When I spoke in my opening testimony about the work
that we do to invest in the skills infrastructure to make sure
that workers have the skills they need to compete in the 21st
Century global economy and that employers have the skilled
workforce that they need, it speaks to the real diversity and
range of the responsibilities of the Department of Labor. I
think it speaks a little bit, even, to the diversity of all the
different guidance documents, because we are a Department that
enforces many labor standards, laws that are passed by the U.S.
Congress, but we are also the Department that invests in the
workforce system through the Employment and Training
Administration. So, we have a really wide range of
responsibilities that Congress entrusts in us to implement, and
I really do think that speaks some to the range of the kind of
guidance documents that you see.
Senator Daines. Yes, but when I hear that these
interpretive rules are incentivizing replacing these jobs with
automation, does that suggest that DOL's regulations are,
perhaps, ineffective as we think about trying to stimulate job
growth?
Ms. Maxwell. So, we work so hard, again, as we said
earlier, to make sure that this guidance is not making any new
requirements, right. That is against--we follow the rules. We
follow the APA and the OMB Bulletin. Guidance is designed to
meet the needs of stakeholders, to clarify expectations, to
hear from them what we need to do better and differently.
And I would also say, Senator, an open door, like we would
happily make time to hear from that constituent in your
district and to hear about how any of our guidance documents
are impacting them.
Senator Daines. And we are going to be talking in a little
bit about creating more transparency----
Ms. Maxwell. Yes.
Senator Daines [continuing]. And collaboration,
particularly in the interpretive rulemaking, as well.
I have a question for Ms. Sager, and I am running out of
time. Ms. Sager, you mentioned in your testimony the legal
precedent prior to the March 9, 2015, Supreme Court Perez v.
MBA decision, which overturned longstanding precedent to
subject modified interpretive rules to notice and comment. Do
you believe the Perez v. MBA ruling made the regulatory
business environment more or less predictable?
Ms. Sager. Thank you for the question, Senator Daines. The
nature of the Perez decision is something that we did note in
our report. GAO does not reinterpret legal rulings, but as we
discussed in Senator Heitkamp's question as well as----
Senator Lankford. Ms. Sager, before you go on, is the light
on on your microphone, there? It sounds a little--the light
should be on.
Ms. Sager. The green light is not coming on. Here we go.
Senator Lankford. There you go. It is on.
Ms. Sager. All right. Thank you. Sorry about that.
Senator Daines. But, in your opinion, as you look at it, do
you think it made it--the business environment, the regulatory
environment--more or less predictable?
Ms. Sager. Well, the very nature of this entire topic is
fraught with difficulty, to the extent there is something that
is certain, it is that the regulations are binding. Agencies
then have a tremendous amount of discretion in issuing
guidance. That is by design, so that they have flexibility in
getting information out to affected parties in a timely manner.
By the same token, depending on how extensive the agencies'
efforts are to communicate with stakeholders, stakeholders may
or may not be aware of what guidance documents agencies are
issuing or what their responsibilities are in complying with
the guidance.
Senator Daines. Yes. I can tell you, the feedback from the
folks in the trenches who are trying to grow jobs and to make
their small businesses work tell me he made it less
predictable. And I have introduced a bill, the Regulatory
Predictability for Business Growth Act, that would reinstate
the previous court precedent, because I think the precedent
actually helped provide better predictability in this process,
and that is what we are going to be continuing dialogue on and
hope to have a legislative fix to what happened in the court
here earlier this year.
Ms. Sager. Thank you.
Senator Daines. I think I am out of time.
Senator Lankford. Let me explain again, we are going to
open up all microphones. This will be more of a free-flowing
conversation. Members need not have to wait on each other and
time. Let us just have an open dialogue on some of this, and it
will be the same for any of our witnesses, as well, for you to
be able to interject at any point if you want to be able to add
to the comment.
I want to make a quick comment on what Senator Daines just
said and ask one question, and let me just open this up, as
well. I do share some concerns on the Perez v. Mortgage Bankers
decision, and I do not think I am alone on that. Let me mention
a couple of things.
Justice Sotomayor made a comment where she said there may
be times when an agency's decision to issue an interpretive
rule rather than a legislative rule is driven primarily by a
desire to skirt notice and comment provisions. Justice Scalia
made the statement, ``To expand this domain, the agency need
only write substantive rules more broadly and vaguely, leaving
plenty of gaps to be filled in later using interpretive rules
unchecked by notice and comment. The APA does not remotely
contemplate this regime.''
So, this is an issue that I have a concern, and it is one
of the reasons we are having this hearing today, is to say we
have to get ahead of this so that in the days ahead, we are
very clear on what is a guideline, what is guidance, and what
is a rule, and when do we go through notice and comment. We are
still a Nation of the people, by the people, for the people,
which would mean people should still have engagement with their
government. If their government notifies people how they are
going to run their business, rather than businesses work with
government to be able to tell what is the best regulatory
scheme, the whole thing is on its head.
So, let me also make a quick comment here just to be able
to back up some from my questions earlier on this. Trying to
get a complete list of guidance--and let me give you an
example. A new compliance person comes in at a university. The
previous person did not take good notes, and so you have a
brand new compliance person that walks into a university. They
can easily go to the Federal Register and be able to find all
of the regulations, but looking up the ``Dear Colleague
Letters'' from as far back as they want to go and trying to
determine where all the guidance documents----
A new person comes into compliance at a fertilizer
facility, at a retail or at a chemical plant, and they are
trying to find it all. Where would they go to get all the
previous guidance, and how far do they have to go back to get
that?
It is one of the questions that Senator Alexander and I
asked when we actually wrote to the Secretary of Education,
saying, how do we get a complete list of guidance? Now, the
challenge was, we asked all the different entities, give us all
of your guidance so we can take a look at it. What we got back
was a list of hyperlinks to websites that we got many of these
different hyperlinks. They were not all connected to each
other. There was no central location. Some of the hyperlinks
did not work. They used all sorts of different terms, so you
really could not tell what is a guidance and what is not a
guidance on it.
And even one of the simple questions that we asked in our
letter was, tell us any complaints that have come in about
guidance, and shockingly, since 2007, Department of Education
shared with Senator Alexander and I there had been no
complaints on any guidance. We got nothing back as a complaint.
So, while I find that striking, knowing some of my own fellow
Oklahomans, we seem to find a lot of things to complain about
when there is time to complain about something. I am stunned
that 300 million Americans have no complaint on any guidance
coming from the Department of Education.
So, let me ask the general question here, then we will just
launch in. How would someone go get guidance so they know they
have a complete, comprehensive, they have all guidance
documents from either Education or Department of Labor? Where
would they go to get that?
Ms. McIntosh. So, I will start. So, the new person in a
university does not need to get all of the guidance that we
have ever issued. They need to go and find the documents that
are relevant to someone in that position, and they would find
them on our website. All the significant guidance is clearly
labeled and in one place on the websites relating to people
from universities are references to other kinds of ``Dear
Colleague Letters'' and guidance.
I would argue that it is most important that that person
start with understanding which laws apply, because many of the
guidance documents that we issue might not be relevant. What is
relevant to them is what laws apply, and then the guidance can
help that person sort out what they need to do.
I would also say that----
Senator Lankford. But, you said yourself earlier----
Ms. McIntosh [continuing]. It is very important--and let me
add this one thing----
Senator Lankford. OK.
Ms. McIntosh [continuing]. That the GAO report does point
out for many of our agencies that it can be a little difficult
to get everything in one place, and as a result, we are
committed to taking a good hard look at the usability of
guidance documents on our websites and to analyzing the data
about usage that comes from them to make sure that people are
able to find the documents.
And then the last thing I would say is that you asked about
guidance documents and whether they close the door to public
comment, and I would strongly disagree. Almost every guidance
document either starts from a set of questions that come from
constituents. In many cases, we engage with external audiences
during guidance. And then every guidance document opens up
another opportunity for comment and feedback, because all of
our guidance documents have links to communicate back with us
and we take all those additional questions and thoughts and
work on whether we need to update or revise guidance or do a
webinar, which is another form of guidance. So, it is a
continuous process of back and forth with our constituents.
Senator Lankford. And I understand that. The challenge is,
for a new person, new entity trying to actually get that
information, the assumption is made, of course, everyone is
keeping up to date with our guidance, that we have done this
for years, and as new people move into different universities,
or new people are in compliance in a different company, they do
not have that previous experience and there is no centralized
place to be able to go to find out what connects to them, and
that is a major issue for us.
And there is an expectation, as you mentioned before, there
are very few significant guidance documents. The agencies
rarely put out something they call significant, and we will
talk about that more, I am sure, in a moment. So, to say all
the significant guidance is over here, they need to know all
the guidance related to that.
Department of Labor, you want to get a chance to mention
where they would go to be able to get guidance?
Ms. Maxwell. Yes. Thank you very much for the question,
Senator.
For starters, I would say I think the GAO audit did find
that, actually, DOL does a pretty good job on most of the
components' websites of clearly marking where things are,
although I would also note, we take really seriously and are
really committed to getting you the information that you need,
and so if there were gaps in our response to you, we commit to
following up with you to make sure that you have the
information that you need in that regard.
And the piece that I would say to this question of how
people find what they need and this question of the fullest of
guidance documents, I would just draw on, I grew up in Omaha,
Nebraska. I have not lived most of my life in the Beltway. I
bring that perspective to my work every single day. And where I
grew up and where most of my folks still live, people do not
know the APA, they do not know the OMB bulletin, they do not
know what is significant guidance compared to all this other
guidance. It is just real people in a myriad of different
situations that are running a business, or are a worker working
in a business, or a State agency running a program, and they
just want to understand, right, what their rights and
responsibilities are.
Senator Lankford. Correct.
Ms. Maxwell. They want to be in compliance, right. And that
is the purpose of guidance, right. That is our purpose in that.
People may or may not know to call it guidance, or I do not
know that they would look on the website for guidance per se.
It is absolutely our responsibility that we take really
seriously that we do this well, that, absolutely, we are
following the rules, but that we do it well, that we are
hearing from the people that are affected by these programs,
who are affected by these laws and regulations. They want to be
in compliance. It is our obligation to help them be in
compliance and for us to hear about when we do not get it
right.
We are absolutely taking seriously some of the
recommendations from GAO. There are some things we could do
better on our websites to make it easier for people to find.
And then, I would also note, the website is certainly not
the sum total of how we make that information available. We
work really hard not just to wait for people to come to us, but
for us to go out to people, to be in conversations. So, through
listening sessions and our field staff in communication with
folks, hearing from our investigators, who will tell us--our
investigators have some of the most important information. This
is not clear to people. We send those guidances out proactively
through the newsletter, through e-mail blasts. Our agency heads
go to trade association events to be in dialogue----
Senator Lankford. I am going to keep going. There are
multiple conversations.
Ms. Maxwell. Yes.
Senator Lankford. I get that. The challenge is trying to
find it if you are the new person----
Ms. Maxwell. Yes.
Senator Lankford [continuing]. If you are trying to get
something started, and let me just give you a quick example of
this, and I am going to open this up and have everybody else
engage in the conversation.
We did go to the site and were able to look at the
Department of Labor site, and it lists out where would you find
agency guidance pages, and there is not even a link to get to
OSHA guidance at all. So, there are things that we look at and
say, either from this list OSHA does not have any guidance
documents, or significant guidance documents, but there is not
even a link to it at all. There is, Employment Benefits
Security Assistance, Office of Federal Contract Compliance,
Mine Safety, Wage and Hour Division, but nothing from OSHA, for
instance.
Ms. Maxwell. And, so, it is a great question and it speaks
to some of the recommendations in the GAO report that we are
working on. I think, intuitively, most of those documents have
been housed on a particular agency website. So, if you are
looking for OSHA, you go to the OSHA website. But, in part
because of our dialogue with you and some of the questions that
you are raising, we are looking at, do we need to create a new
web portal, that would link the various----
Senator Lankford. Just some way to be able to get it all,
because, again, we put these word clouds\1\ up here, because
when we got the information back from both of you and we went
to all of those hyperlinks, we started asking the question,
what is called guidance. These are the words that were used.
And, so, again, people do not even know what is guidance. Is it
a ``Dear Colleague? '' Is that a guidance document? What
standard does this have? What enforcement does it have? It is
that kind of stuff. So, we are going to have to find a way to
be able to make it clear to someone who is new coming into
this, the Federal Government is engaged in all of this.
---------------------------------------------------------------------------
\1\ The word clouds appear in the Appendix on page 69 and 70.
---------------------------------------------------------------------------
And, again, I am hogging the time here.
Senator Heitkamp. Well, and I want to follow up a little
bit on Senator Alexander's direction and maybe this is just a
really simplistic way of looking at this, but it seems to me
that we pass a statute, that is binding. That has got the full
force and effect of law. You go through a formal rulemaking
process, full force and effect of the law.
A guidance should not hurt you, right. A guidance should
only help you be able to meet the requirements that are set out
in the statute and in the substantive rule process. Where we
are getting concerned here and what you are hearing is when
guidance seems to hurt us. I mean, it should be instructive. It
should be helpful in meeting the requirements.
But, we should know what those requirements are from both
the statute and the substantive rulemaking, and when it seems
like we cross that rubicon, when we stop thinking that this is
helpful in interpretation and it seems to change the
interpretation, or it changes what has been known historically
to be the traditional kind of regulatory environment that
Senator Ernst talked about, then we start thinking, that does
not look like it is helpful interpretative, help me get through
the morass of regulation.
Ms. McIntosh. Yes.
Senator Heitkamp. This looks like it is a shortcut, right.
It looks like it is a shortcut to changing the rule.
And, so, I am back, Ms. Sager, can you help me understand
how we can make those delineations more certain, because when
somebody, and, you had an exchange here, but when somebody at a
very high level tells someone that an interpretive rule has the
full force and effect of law, we are not really communicating
what an interpretative, or not an interpretative rule, but what
a guidance is, right. I mean, we all agree, hopefully, here
that a guidance does not have the full force and effect of law,
right? Can we all----
Ms. McIntosh. Yes.
Senator Heitkamp. Let the record reflect we all agree on
that. But, yet, it seems like it does. And, so, help me think
about this in the context of how we can more clearly delineate
what a guidance is.
Ms. Sager. Thank you for the question. A couple of options
are available. Certainly, I think this kind of oversight calls
attention to the importance of the topic. Of course, in the
absence of a congressional hearing, or a GAO study to evaluate
a topic such as regulatory guidance over time, it is easy for
this kind of layering on of guidance documents to happen.
You mentioned that you are regulatory geeks. Certainly at
GAO, sometimes we might describe ourselves as internal control
geeks, and what I mean by that is that as my written statement
point out having a control process in place, even something as
simple as having a periodic evaluation, the kind of
retrospective review you have talked about for the regulatory
process, having a similar kind of process in place for guidance
documents where agency officials review the cumulative effect
of their guidance documents, see if it is current, see if the
links work, see what an affected party would be able to take
away from that cumulative body of information, is very helpful.
So, for example, one of the components that we looked at in
our report was the Office of Federal Contract Compliance Policy
(OFCCP). They initiated a process such as this. It was actually
a multi-year process. And in doing so, they eliminated 85
percent of the guidance documents that they had. And I use that
as an illustration of the potential real value of just making
sure that each agency has something like that in place, and not
just at the Department level, but at every individual
component.
Senator Heitkamp. Something that provides internal control,
some kind of written policy on this is what we are going to do
to review, this is what we are going to do to find out if our--
I mean, I would add to this FAQs. I mean, they can be
extraordinarily helpful. I have used them in private life. But,
yet, you kind of sometimes wonder if they have not crossed that
line again. And, so, to have a review process where people
really look at guidance in the framework of are these helpful
to the regulated industry.
Ms. Sager. Exactly, and thinking about yourself as a
private citizen, as a small business owner, somebody coming
into a particular topic area, perhaps not having full
information, what lens would you look at that through? It can
be extraordinarily helpful, having that regular review process.
Senator Lankford. Well, since we are jumping in here, can I
just ask a quick follow up. How many agencies have a process
where they are systematically going back through their guidance
documents to be able to evaluate them, a retrospective review
of their guidance?
Ms. Sager. We did not hear many examples of that kind of
systematic process, particularly having a written documentation
of that process as well as the levels of review.
Senator Lankford. OK.
Senator Heitkamp. That is one of your recommendations in
your report, is that we actually look at written policies as it
relates to guidance----
Ms. Sager. Right.
Senator Heitkamp [continuing]. That agencies have a
responsibility to actually have their own, not just say we are
APA compliant or we are OMB compliant, but to actually have a
written policy as it relates to guidance.
Senator Alexander. Let me ask, what was the agency that you
described that got 85 percent?
Ms. Sager. OFCCP, part of the Department of Labor.
Senator Ernst. I would like to jump in again and talk about
some of the process, as well. So, we have all agreed today that
the guidance is non-legally binding, and yet with the--I am
going to go back to my folks in Iowa. The retail exemption
memorandum that came out on July 22, it is requiring these
retailers who are now reclassified to follow this regulatory
process through reclassification, and OSHA has estimated that
the cost of compliance for each of the retailers would be
$2,100 per site to come into compliance.
But those retailers, those on the ground where the rubber
meets the road, they have actually calculated it could cost up
to $25,000 per retailer. And, again, that is significant cost.
If you look at the retailers and the areas that they cover in
Iowa, that is a big cost. That is a really big cost.
So, in light of that, is it possible to go back and have
OSHA go through the proper rulemaking process so that it is
enforceable? If we are truly trying to correct a problem, then
why do we not go through the rulemaking process and make sure
that we understand what it takes to go into compliance, open
that up for public comment and review? Is that something that
OSHA would be willing to do?
Ms. Maxwell. So, I think in this case, we were really clear
that we were following the APA and the OMB Bulletin in the
course that we pursued on this guidance and that the RFI and
the long public comment period was designed specifically to get
that feedback. We are always, though, Senator, always open door
and want to continue to be in dialogue with folks about this,
and, in fact, it is partly why OSHA has a delayed enforcement
policy around this, to give people more time to come into
compliance and to give additional compliance assistance to
those----
Senator Ernst. OK. Six months for compliance to bring these
ag retailers--and, again, this is a manufacturing rule that is
now extended to retailers where there is absolutely no
manufacturing process. They are not mixing chemicals. They are
distributors. And, so, I think whoever went ahead with this
guidance maybe does not fully understand what these ag
retailers do.
So, I am encouraging OSHA to open this up to formal
rulemaking, and it sounds like--you said extended periods of
time, there was a lengthy comment process. It sounds like you
are trying to get around rulemaking. It is a rulemaking process
without the full enforcement of rulemaking, so, again, a way to
circumvent actually reaching out to the American public and
extending an invitation to everyone to comment on these
practices and the cost to them in doing business.
My original point was, if you are doing that, why not
formal rulemaking, where everyone can engage in an open
dialogue and process and ensure that their comments are being
heard? I think that seems very common sense.
Ms. Maxwell. Thank you for your question, Senator, and I
will just say this. We would never be circumventing the formal
rulemaking process. It would not be appropriate and we would
not do it. But we are totally committed to working with you and
following up with you on this issue.
Senator Ernst. Thank you. I appreciate that.
Senator Lankford. Senator Ernst, can I make a comment on
that, as well. Some of the challenge that we have on this as we
look at it, these were entities that were exempted before that
are now drawn into it. When you put out a request for
information, exempted entities do not respond to that. They are
exempted. They do not assume that, suddenly, they are going to
be drawn in. If there is a request for information that goes
out, if even I am a retailer and would even notice that--now,
we can go through the process of how they would even know that.
As shocking as it may seem, most Americans do not read
Executive Orders and requests for information. As we mentioned
before, they are living their lives and doing their businesses.
Ms. Maxwell. Right.
Senator Lankford. Now, suddenly, you have a group of folks
that were exempted that you are saying, we did an extensive 2-
year comment period and we put out a request for information.
If they were exempted, they would not think to respond to that,
and now they are suddenly looped in.
Some of the challenge on this is when you do a guidance, it
assumes, No. 1, there is not $100 million in impact.
Ms. Maxwell. Right.
Senator Lankford. This has every appearance that it does
have $100 million worth of impact across the country. And if
you go down the list there, it also is not new or novel. It is
not drawing in new people that were previously unaffected,
which this does.
So, again, as I mentioned at the beginning, this is nothing
about the rule itself or this guidance. This is about the
process. And if we are going to do that, should we not actually
go through the full process and to be able to say, new people
are affected by this that were not previously affected. They
did not have the opportunity to have notice and comment, and
there was $100 million worth of impact, clearly, on the Nation
with this. That sounds like that should go through the APA
process.
And I know you say you are committed to doing the APA. We
are looking at it and saying, this does not feel like it went
through APA if you are those affected.
Senator Heitkamp. And, if a guidance does not have the
force and effect of law, how could it change my legal status,
whether I am exempt or not exempt? That is really what we are
grappling with, and no one is--I mean, this is probably a topic
for the Agriculture Committee, it is probably a topic for the
Environmental and Public Works Committee (EPW). But it does
illustrate for us this--if I think I understand the regulation
and the law in a way that is adequate, I should never have to
read your guidance. I should not care what your guidance says,
because I can read and analyze.
And, so, what we are having here is that in order for them
to even know that now they are not exempt and that that rule
they were operating under, now they have an obligation, they
have to read a guidance and that does not sit very well with
people when we start with the premise that a guidance does not
have any force or effect in law.
Do you see what I am saying, Mary Beth?
Ms. Maxwell. I do, Senator. And, again, I would just speak
to--I want to make sure that we are the most responsive to your
concerns and get you the most accurate information. So, I do
think one of the things I am going to want to do is follow up
with colleagues so that we can share with you--I mean, this
really was a very robust engagement process----
Senator Lankford. Right.
Ms. Maxwell. We feel very confident about that----
Senator Lankford. You know what would be helpful?
Ms. Maxwell [continuing]. But we understand we need to
engage in that dialogue.
Senator Lankford. It would be helpful if we knew how that
process worked, and right now, that is a black box to us. We
know that somewhere in the agency, there is a discussion, is
this going to be a guidance or a rule. We do not know how that
works, because that will help us in this. So, if you could do
this. If you could follow up for this particular rule, the
three that I listed earlier in my first original questions, and
we will follow up and get it written out to you. How did that
process of the decision actually happen? Who was it that made
the decision, this is going to be guidance, not a rule? And the
process of how that decision was made.
Because one of the things that we have looked at and what
GAO identified, as well, is there does not seem to be a clear
list in several agencies--and some of your agencies do have it.
The Department of Labor apparently has a very outdated system
of how they actually go through the process of determining, is
this going to be a guidance or is this going to be a rule and
where is the check box, for instance, to say, $100 million
worth of impact on the Nation, clearly, that goes into the
rulemaking side. It is novel. This is something not previously
discussed in a regulation. Clearly, that goes over. So, we are
trying to figure out that.
So, could you help us determine what is the checklist and
where do you go for that, and who is involved in that
decisionmaking process?
Ms. Maxwell. I absolutely commit to you, I will bring that
back to the Department and we will----
Senator Lankford. Good. Ms. McIntosh, can you provide
those?
Ms. McIntosh. We will follow up, but let me make it very
clear one more time. We go through rulemaking when we need to
create a new binding requirement. When there are no new binding
requirements and we are simply following up with questions or
explaining existing rules or regulations, then we use guidance.
And we have written procedures for our significant guidance and
they are largely followed for other guidance, where we notice--
we have a centralized process for reviewing guidance documents
that often involves our General Counsel. We have many eyes on
the question of whether this guidance was appropriately issued
before it goes out. And if it is significant guidance, we give
OMB the chance----
Ms. Maxwell. Oh, yes.
Ms. McIntosh [continuing]. Again to make sure that we are
properly following the rules. And as you, yourself, noted, we
have not received complaints saying that we have issued
guidance where we should have issued rules, and----
Senator Lankford. No, I said, we have not received from
you----
Ms. McIntosh. Well, and we have----
Senator Lankford. I do not know. As far as I can tell----
Ms. McIntosh [continuing]. No examples where our guidance
has been challenged in courts and we have been told we should
have issued rules.
Senator Lankford. Let me just bring up a couple thoughts on
that----
Ms. McIntosh. Mm-hmm.
Senator Lankford [continuing]. And, again, I do not want to
hog all this time. We can have this open conversation.
The 2011 rule on dealing with the sexual assault
disciplinary process, when the standard was changed from
``clear and convincing'' to ``preponderance of evidence,''
professors at the University of Pennsylvania, Harvard
professors, came out pretty quickly with op-eds saying there is
some legally questionable stuff with this. That was an
immediate challenge that came out.
When we look at the process of how that was done, that was
a guidance that was put out. In fact, I think that was one of
the famous ``Dear Colleague Letters,'' here is a new set of
guidance for you on something that changed a standard. Even the
Department of Education put out a press release related to that
saying that this is groundbreaking. Now, that implies to me
this is something new, or this is a real change, whether you
call it significant or not.
But, when you put out a guidance document saying this is
groundbreaking and a press release, and you have professors
coming out and saying, wow, I wish they would have gotten some
input on this because there are some issues here--again, there
are none of us that are disagreeing that universities need to
have clear sexual assault policies. The question is how this
was done. Was input actually engaged into the process? And when
does this become regulatory and a rulemaking rather than
guidance or a ``Dear Colleague Letter? ''
Ms. McIntosh. So, let me point out that the Office of Civil
Rights gets hundreds of complaints alleging civil rights
violations, and around the time of this particular piece of
guidance, there was an escalating series of complaints, and as
required by law, the Office of Civil Rights has to investigate
and follow up on complaints and, at times, take enforcement
action. Without guidance, then it is more likely that
universities would run afoul of the laws of Congress and we
would have a ``gotcha'' moment.
Senator Heitkamp made a point a minute ago that guidance
should not hurt people. Well, understanding and knowing how to
comply with law and how to avoid running afoul of civil rights
laws can reduce the ``gotcha'' moments, and that is what our
sexual violence guidance was inclined--was intended to do, and
we were hearing from universities that they needed help in this
very complicated issue that involves many people and is a very
serious problem.
Senator Heitkamp. I think sometimes people who write press
releases should be more controlled in what they say----
[Laughter.]
Because this should not have been new. It should have been
clarification of responsibilities under the law. As a result of
enforcement actions taken, we now see that this is something
that might be helpful. People can agree or disagree, and if you
disagree with the interpretation, you run the risk that you
might be wrong in terms of whether that is a correct
interpretation. But, you should never be acting like you are
enforcing the guidance. Being guidance is not enforceable. That
is what we are trying to get at here.
And, so, when the guidance changes what seems to be the
legal relationship, then it goes beyond what a guidance should
do. We need to make sure that what we are doing with all of
this body of work is not taking shortcuts, and that is why we
are here. We are trying to figure out how not just these two
agencies, but all agencies actually are not shortcutting the
process that is set out in law that is providing the regulated
Americans the opportunity to at least weigh in and access their
government.
And, this is like everything else. I think we have probably
been pretty aggressive as a Committee looking at all of these
issues, and every time we turn around, what we see is a body of
problems that are historic. And we have got to not only try and
delineate what the process is going forward, but we have to
deal with all of that stuff in the back.
And, so, like the Chairman said on the front end, we are
not doing an oversight hearing on your regulation. We are
trying to figure out----
Ms. Maxwell. Yes.
Senator Heitkamp [continuing]. How some of this became
guidance when it seems to us that some of it might have been
better done in a substantive rulemaking, or better done in the
bullying process by Congress. As Senator Alexander said, this
was a big debate, and, in fact, a bullying amendment----
Senator Alexander. It is still going on.
Senator Heitkamp. Right. And a bullying amendment failed on
the floor of the Senate to get enough votes to actually be
included. So, it then becomes, for us, to sit down--and I
understand and appreciate that bullying can, in fact, be a
civil rights violation, so then you end up with that problem,
which is enforcement is put ahead of public policy. We do not
like that any more than we like guidance being put ahead of
public policy decisions.
But, I am trying to, once again, figure out how we can be
instructive without throwing the baby out with the bathwater,
because if, in fact, I now have someone who says, well, boy, I
used to get these notices and they were really helpful in
implementing. Now the agency says, because Heidi Heitkamp and
James Lankford were mean, evil members of this Committee, we no
longer get this guidance. We do not want that. We do not want
things that are helpful to be changed. But, we do want a clear
delineation, or as clear of a delineation as what we can get,
on expectations between us and the agencies on what constitutes
guidance.
Senator Alexander. Mr. Chairman, if I could weigh in on
that just for a minute, say I am the compliance officer at
Maryville College in my home town and one of 6,000 colleges and
universities, and I get a guidance telling me that in a sexual
assault case we are dealing with clear and convincing evidence,
that makes a change in whether it is clear and convincing or a
preponderance of the evidence, and I hear an Assistant
Secretary of Education tell the Chairman of the Education
Committee that she expects everybody to follow that, to me,
that is a change in the law that, in the first place, should
not have been made by guidance, and in the second place, should
not be enforced.
In a practical sense, if I am the compliance officer at
Maryville college, I am not going to take the risk of not
following that guidance. I am going to assume that that is the
law, and it is not supposed to be.
Let me shift over to the Labor Department, if I may, Mr.
Chairman, just for a second. On August 27, the National Labor
Relations Board (NLRB) created a big fuss in a case called the
Browning-Ferris case, and it got into the area of what we call
joint employer. And for those who are worried about the case,
the joint employer issue means that, for the first time, in my
view, since 1984, the NLRB said that a franchisee, let us say a
McDonald's franchisee, and a McDonald's franchiser are a joint
employer if--and it created a new standard for that, in my
view, by saying that indirect control--let me get the exact
word, a new standard by saying if the corporate entity,
McDonald's, exercises direct or indirect control over, say, pay
or working conditions, or even has the unexercised potential to
do that, then McDonald's and the McDonald's franchisee are
treated as a single employer.
And the problem with that for 780,000 franchises across the
country is that encourages McDonald's to own all their own
stores in all the small towns in America, and the big towns,
too. You have fewer franchise opportunities, fewer contractors,
because the big boys and girls do not want to run the risk of
delegating all that to a franchisee. So, that is a big change
in the labor law.
Yet, the day before, there was a draft guidance from the
Department of Labor instructing OSHA and its investigators to
look at the same new test for joint employer that was leaked
out to Politico. Now, OSHA is supposed to be looking at health
and safety violations, I thought.
So, I guess I have two questions, Ms. Maxwell. One is, is
that draft guidance something that you plan to make final? And,
second, if you are going to change the OSHA law, which goes
back to 1970, to say instead of looking at health and safety,
you suddenly want to have your investigators looking at a test
for whether a franchisee and a franchisor are joint employers,
do you not think that ought to be a change in the law that
Congress makes or at least a rule or a regulation? How could it
possibly be done in a guidance?
Ms. Maxwell. Thank you, Senator, for your question, and I
certainly cannot speak to any decision that the NLRB made about
this or about the Ferris case.
Senator Alexander. Kind of suspicious if they made the
decision one day and this was leaked the day before from OSHA.
It looks like a coordinated effort to change the law, to me,
but go ahead.
Ms. Maxwell. So, actually, for over 10 years, the case law
under the OSH Act has explicitly recognized that there is a
concept of joint employment that applies, and there are many
different work arrangements, so that when OSHA is going to a
workplace to protect the health and safety of workers, they do
have to look at these different work arrangements. There are
temporary workers, there are subcontractors, franchising
arrangements come into that, and there are elements of joint
employment that could be implicated in that.
Senator Alexander. Well, wait just a minute. We are talking
about health and safety, right? Is that not what OSHA is
interested in?
Ms. Maxwell. Yes. Absolutely.
Senator Alexander. And you have a multi-employer test that
you sometimes may use, especially with contractors, and you may
say that this contractor and this contractor, and one might be
a franchisor or one might be a franchisee, but it does not make
any difference whether one has control over working conditions
or pay or menus in that restaurant, does it? Why would you be
looking at whether the franchisor is looking at the menu if all
you are caring about is health and safety?
Ms. Maxwell. All we were doing in this, and I would say
this was not a guidance document, this was a draft document of
questions to teach investigators the kinds of things that they
should be looking for. This is really important, because you
need investigators having a consistent approach when they are
going into a workplace and asking questions. That is what it
was designed to do. And it was for that investigator to be able
to be asking concrete questions about what they are seeing----
Senator Alexander. But since when did OSHA get in the
business of trying to figure out whether you are a joint
employer or not? Why does OSHA care about that? Why is OSHA not
interested in health and safety? My father was the first
Chairman of the OSHA Board in Tennessee. He was a safety
director for many years. He was interested in health and
safety, not whether a franchisor is in charge of a franchisee.
Why would your investigators be looking at that?
Ms. Maxwell. So, there are some--OSHA absolutely is work--
their focus is the health and safety of those workers, and in
asking those questions, it is simply trying to better
understand who is responsible for the health and safety of
those workers. And if this is a topic that you would like to do
additional follow up with us on, we are committed to having
more of a conversation with you about that.
Senator Alexander. Well, I would like to do a lot of follow
up on the joint employer rule, because I think it is the
biggest attack on the opportunity for small businessmen and
women in this country to make their way into the middle class
that we have seen in a long time, and to have OSHA perhaps
through guidance join in with the NLRB is even more of a threat
to--well, several hundred thousand franchisees and millions of
contractors across the country.
Mr. Chairman, that is all I have.
Senator Lankford. No, I would have to agree. This is
something we have had a hearing on and have conversations on,
as well, in Appropriations, where Senator Alexander and I also
serve together. The concern on this is how many people that
this really affects.
Ms. Maxwell. Mm-hmm.
Senator Lankford. We have millions of Americans that want
to start a business that now, suddenly, every franchiser is
deciding, I am not sure I want to have that. We have millions
of Americans that are self-employed that suddenly they are at
risk in this. And you have every company that does temporary
work that has helped people that are currently unemployed get
employment that are suddenly at risk with a change in NLRB.
And, so, yes, the enforcement of this and the process of this
had better be right or it will do serious damage to the economy
and to millions of Americans that are either trying to start a
business for the first time or to actually get employment for
the first time.
Ms. Maxwell. Mm-hmm.
Senator Lankford. And, so, I know that exceeds where we are
as far as the rule, but I can tell you, there will be a lot of
attention to that, because that rule as it stands now, and that
conversation about that from the NLRB, could have some of the
most significant long-term impact on our economy that we have
had in quite a while and changing how we do business as America
and how people actually get out of the middle class and
actually start businesses and be able to have the opportunity
to rise. That closes the door to rising, and that is a serious
problem.
Let me go over to Education and get a chance to bring this
up, as well, and I have several other questions we will try to
run through quickly. When we talked about the bullying
standard, that guidance changed the prior test of bullying from
``severe, pervasive, and objectionably offensive'' to
behavior--this is the change--that is ``severe, pervasive, or
persistent.'' Now, that is a pretty significant shift on that,
to say there is a three-part test to now to say there is the
one-part test on it, and if any one of these, then this
triggers into bullying on that.
Tell me about the input that you received in advance of
that, and again, the notice and comment that went out, and I
understand people were contacting saying there is bullying at
the school. I get that. It is the solution that I am trying to
get the input on. How did that happen?
Ms. McIntosh. So, I cannot speak to the details of that
point you made about one standard versus another, but what I
can say is that when we issued that guidance document, it was
first in response to what the Office of Civil Rights was seeing
from complaints about bullying coming from all over the
country, what enforcement decisions they were making according
to the laws of Congress, and the guidance was intended to help
schools comply with the law and, therefore, reduce bullying and
avoid having to be in a position of enforcement.
Senator Lankford. By the way, I do not have any doubt, we
want kids to be out of an environment that is dangerous for
them.
Ms. McIntosh. Right.
Senator Lankford. There is no question on that. Again, we
are back to process.
Ms. McIntosh. Right. So, in terms of the process, any
guidance document that we issue, and that one, I am confident
can say went through multiple layers of review within our
agency, including many different lawyers making very certain
that no new requirements were being created by that piece of
guidance, and it was cleared internally. That was not, I think,
a significant document, so I do not know. It may have had OMB
review, but it was not required to have OMB review.
Senator Lankford. Again, we are back to the same question
on this----
Ms. McIntosh. But let me make----
Senator Lankford. Hold on for just a moment.
Ms. McIntosh. Mm-hmm.
Senator Lankford. The statement, it does not add any new
criteria on it, there is a three-standard test that changed to
a one-standard test.
Ms. McIntosh. Right.
Senator Lankford. So, you literally had entities that
were--previously, let us say, two of those were met, but not
three. They are not affected. Now, they are affected.
Ms. McIntosh. Right.
Senator Lankford. So, you are changing not only the
standard there, but you are changing the number of people that
are affected. Does that make sense?
Ms. McIntosh. So----
Senator Lankford. That is a change, where someone who is
not under it now suddenly is under it by a shift, by design.
Ms. McIntosh. So, I cannot speak to the details on that. I
would be very happy to follow up in writing with a clear answer
about that particular part of the guidance and why we
determined that it was a proper use of guidance.
Senator Lankford. OK. So, here is what I would like to be
able to walk through. It is this, how do we actually get to
this spot, and it is who does this.
Ms. Sager, if we are going to have a clear set of guidance
to agencies on how to do guidance--I know OMB attempted to do
this, I think it was in 2007, if I remember correctly. They
attempted to be able to put a structure together to say, if you
are going to do guidance, it is going to be under this. Has
that been revised since 2007?
Ms. Sager. No. We met with OIRA officials as part of our
review and the OMB memo, M-07-07, the OMB bulletin on guidance
practices was still in effect.
Senator Lankford. OK. So, let me just go through some
basics, the basics you had mentioned before. Is it legally
binding? If it is legally binding, clearly, that goes over in
the regulatory side from there.
Ms. Sager. Yes.
Senator Lankford. Is it novel, I think has been listed
there, as well. So, is this something new, correct?
Ms. Sager. Right.
Senator Lankford. Is it $100 million worth of economic
impact.
Ms. Sager. Right.
Senator Lankford. OK. Then let us go through a couple of
things. Does it expand a rule, or is it just reinterpreting a
rule.
Ms. Sager. Yes.
Senator Lankford. Are we on track with that? Does it affect
new entities. Is that clearly put out there, so if someone who
is previously not regulated is now looped in so now they are
regulated.
Ms. Sager. That could be considered part of the novel or
legal policy, yes.
Senator Lankford. OK. If they are changing a discretionary
issue to a mandatory. In other words, if it used to say ``may''
and now it says ``shall.''
Ms. Sager. Then that is something that should be subject to
OMB OIRA review.
Senator Lankford. OK. All of those things--I think we
should be able to get a clear list to be able to come back and
say, here is how we can make sure that everyone knows, because
at the end of the day, I do not find a lot of Americans that
say, do you know what I really want? I want an unsafe working
environment.
Ms. Maxwell. Right.
Senator Lankford. I want unsafe schools. No one says that.
But what I do hear all the time from entities, and I would say
that I hear it from university folks from a lot, this simple
phrase. Make it stop. Every time I turn on my computer in the
morning, there is a new set of guidance that are coming down to
me. There is a new hint coming down to me of something else to
do, and I cannot run my university anymore because I am hiring
so many compliance people, and they feel they cannot complain
because those are the folks that also control a lot of their
Federal funding and a lot of grants, and so they are in this
weird catch-22.
They have no problem complaining to the Department of
Labor, I am confident, because they do not get all their
funding from the Department of Labor and their accreditation
and everything else is not connected to this group of
individuals. With Education, it is, and I hear an awful lot
from university folks that are concerned that there are all
these guidances that, No. 1, they had no input on, but they
also feel like they really cannot come back and complain.
Ms. McIntosh. So, our door is wide open to everyone in the
university community. Our Secretary has made it very clear that
he wants all of us to be in touch with our constituents. I know
that----
Senator Lankford. Which I would highly commend.
Ms. McIntosh [continuing]. We have many forums where we
hear directly from university personnel and we take all those
very seriously. So, we certainly do understand universities'
worries about burden and worries about making it easy for them
to comply with the laws of Congress, but I think that is
enough.
Senator Lankford. The cumulative effect, as it is with your
agency in requirements for promulgating rules and everything
else, stacks up and slows everything down. The cumulative
effect for them has the same thing. So, this is not just an
issue of a law that has been passed, because for many of these
issues, there is new guidance over a law that is 30 and 40
years old. It is a new interpretation. It is a new
understanding. It is a new enforcement process that goes in,
and that is their concern, is that this is not coming out of a
new statute. This is a new understanding of a statute that is
20 or 30, 40 years old.
That is what we have to be able to find the balance for,
just simply for this one thing, that people know that they can
actually have input in their government and they know how to do
it, and they do not suddenly show up and say, last week, I was
not affected by this regulation and now suddenly I am hearing
that I am affected by it and I did not even have anyone to be
able to talk to and I did not know it was coming. That is the
unaffected party in this.
So, let me just walk through a couple of things and we will
follow up in writing to walk through this process, trying to
determine a complete list of guidance that people can access,
where that would come from, trying to determine when people
have a question or a concern about a guidance, how would they
voice that. How would they express that before the guidance
comes out and then actually after the guidance is out, how that
would actually change, because it is one thing to say, here is
the guidance, and someone responds back to you and says, this
is nonsensical. Now you have to either go through a guidance
for the guidance, or you have to be able to revise it when it
might have been better to just let people know in advance and
so they can be engaged on that.
How often do we actually review guidance and the process of
that? What would be advisable to when we do that? Who makes the
final decision on guidance? And the simple statements of, when
do we know what is the process of making that decision? Where
is the checklist? If any of these are a ``yes,'' then we know
this cannot be guidance, this has to be a rule, and to be able
to go through the process and who actually does that.
And then here is one that is difficult for us, the cost-
benefit, because some of these guidances obviously have a clear
cost that is attached to it, as well, and my perception is, and
you can correct me if I am wrong on this, for most of these
guidance documents, there is not a cost-benefit analysis that
is run on this. There is an estimation, maybe internally, to
say this probably will not cost very much, but when you do
``probably will not cost much'' times 6,000 universities, that
is a lot of money, or we are at times multi-thousands of
different entities of retail or chemical manufacturing
locations, that gets up in a hurry. There is this $100 million
figure that is sitting out there.
For any of the rules or the guidance documents that I
mentioned before on some of the process management, did any of
those go through a cost-benefit analysis before they were
actually put out, those guidance documents?
Ms. Maxwell. Cost-benefit analysis is a really specific
term that is used in the process of rulemaking.
Senator Lankford. So, was there an estimation on the cost
or effect? There is this sense of $100 million of effect on the
economy that is out there that is a pretty clear bright line.
Was there a thought of how much this would cost on the economy?
Ms. Maxwell. I think we were very clear that it was well
below that $100 million, but in the interest of getting you a
more accurate answer, let me go back and check with my
colleagues on that----
Senator Lankford. OK, let us do, and what I would like to
know is how that determination was made that it was well below
the $100 million figure. There are several entities that are
out there that have seen this and have in some way been
extremely concerned that this does exceed $100 million worth of
cost and it would be economically significant to be able to
make that change. So, I think that is a fair question to ask
when they, again, find out one day that there is suddenly a
very expensive rule that is going to cost them and their
consumers a tremendous amount of money for something they wish
they would have had input on, and could have had input on if it
was actually a rule, which is part of the issue here, that
people want to know if it is going to have this binding effect,
if it is going to actually change something, if I used to be
exempt and now I am not exempt, if I used to have flexibility
and now I cannot have flexibility, and the old rule that I had
that gave me flexibility, now I am non-compliant on and I have
got make this shift and it is going to have this cost. Those do
have real life effects.
So, again, no one is arguing on safety issues, but we are
arguing on process to be able to make sure that we can get
that.
Let me give one more thing. As you all are walking through
your entities, how do you define ``significant guidance''
versus just ``guidance,'' because both your agencies have very
few rules that you declare significant. What is the bright line
for you on what is significant and non-significant?
Ms. McIntosh. So, in Education, we follow the procedures
that are laid out in the Bulletin for determining what is
significant guidance, and we have an internal check process to
make sure that we are properly classifying our guidance as
significant or otherwise. And I know of no case where someone
has complained that we should have labeled something
significant guidance.
Ms. Maxwell. That is the same for us. It is a legal
question that is done in consultation with the Solicitor and
with OMB, and I think the reason, actually, Senator, that you
see so few examples of significant guidance on our list is
because, typically, when something is going to have that great
of an impact, we are pursuing notice and comment rulemaking.
Senator Lankford. Correct.
Ms. Maxwell. Significant and guidance is really the
exception, not the rule.
Senator Lankford. Correct, and should be, by the way.
Ms. Maxwell. Yes.
Senator Lankford. And I would agree with that. When you get
into something that is significant guidance, it does beg the
question very quickly, why is this not just a reg, and to be
able to go through this process.
The last question that I know of, and I am asking staff on
this in just a moment, as well, but non-policy issuance versus
policy issuance. How do you actually determine what is a non-
policy guidance and what is a policy guidance? Do you have a
point of demarcation on that internally, because there seems to
be, when I went through some of the guidance-type documents to
say, well, this one is not a policy one. This one is a non-
policy one.
Ms. Maxwell. I am not sure I understand the question.
Ms. McIntosh. I am not familiar with----
Senator Lankford. OK.
Ms. McIntosh [continuing]. Those terms and do not know if
we use those.
Senator Lankford. I was not, either, on that one, and that
is why I wanted to pull it out and say, I am finding some
things that say, well, that was a non-policy issue, to be able
to find out if there is a separate set of standards. We will
follow up on that, as well, and see if we can get any other
detail on that one, as well.
Hold on for just a moment.
[Pause.]
I appreciate the conversation on this. I had promised to
keep you here 5 hours, and I am sorry I did not fulfill that
promise. [Laughter.]
I am actually a little short on this today.
We will follow up in writing. I am going to leave the
record open for up to 15 days for other Members to be able to
submit questions or statements for the record.
I really do appreciate the witnesses coming and your
preparation. This is the beginning of a journey for us, and as
you notice from GAO, we had asked them to actually pull through
four different agencies. You all just got the lucky draw of
being the two that got a chance to be here today to walk
through the process. This is an issue governmentwide. We do
have to solve this, because I can tell you, over and over
again, Americans are saying, I am getting guidance things that
I do not know what to do with that seems to be a new obligation
that I am trying to figure out, where did this come from, and
just the sheer volume of them and the number of layers from
multiple entities that actually do regulations for them are
causing some major issues for them. So, this is one we will
continue to stay on and we will work with other agencies, as
well as follow up with you all in the days ahead on it. So, I
appreciate very much your testimony today.
This hearing is adjourned.
Ms. Maxwell. Thank you.
Ms. Sager. Thank you.
Ms. McIntosh. Thank you, Senator.
[Whereupon, at 1:03 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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