    [Senate Hearing 115-110]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-110

            A GROWTH AGENDA: REDUCING UNNECESSARY REGULATORY BURDENS

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

                                    HEARING

                                   before the

                             COMMITTEE ON COMMERCE,
                          SCIENCE, AND TRANSPORTATION
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                FEBRUARY 1, 2017

                                   __________

        Printed for the use of the Committee on Commerce, Science, and Transportation

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     U.S. GOVERNMENT PUBLISHING OFFICE

     27-464 PDF                 WASHINGTON : 2017
    ____________________________________________________________________
     For sale by the Superintendent of Documents, U.S. Government Publishing Office,
    Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
      Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001

           SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                       JOHN THUNE, South Dakota, Chairman
    ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
    ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
    TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
    DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
    JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
    DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
    DEAN HELLER, Nevada                  CORY BOOKER, New Jersey
    JAMES INHOFE, Oklahoma               TOM UDALL, New Mexico
    MIKE LEE, Utah                       GARY PETERS, Michigan
    RON JOHNSON, Wisconsin               TAMMY BALDWIN, Wisconsin
    SHELLEY MOORE CAPITO, West Virginia  TAMMY DUCKWORTH, Illinois
    CORY GARDNER, Colorado               MAGGIE HASSAN, New Hampshire
    TODD YOUNG, Indiana                  CATHERINE CORTEZ MASTO, Nevada
                           Nick Rossi, Staff Director
                     Adrian Arnakis, Deputy Staff Director
                        Jason Van Beek, General Counsel
                     Kim Lipsky, Democratic Staff Director
                  Chris Day, Democratic Deputy Staff Director
                          Renae Black, Senior Counsel

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on February 1, 2017.................................     1
    Statement of Senator Thune.......................................     1
        Susan Young, Executive Manager, Power Tool Institute,
          prepared statement.........................................   142
        Letter dated February 1, 2017 to Hon. John Thune and Hon.
          Bill Nelson from Edward R. Hamberger, President and CEO,
          Association of American Railroads..........................   144
        Letter dated February 1, 2017 to Hon. John Thune and Hon.
          Bill Nelson from Cal Dooley, President and CEO, American
          Chemistry Council..........................................   145
        Letter dated January 31, 2017 to Hon. John Thune and Hon.
          Bill Nelson from Ken Wasch, President, Software &
          Information Industry Association (SIIA)....................   145
        Essay dated January 30, 2017 by Joseph P. Mohorovic,
          Commissioner, U.S. Consumer Product Safety Commission......   146
    Statement of Senator Nelson......................................     3
        Letter dated January 3, 2017 from Elizabeth B. Thompson,
          President, Environmental Defense Action Fund...............    73
        Letter dated January 3, 2017 from William Samuel, Director,
          Government Affairs Department, AFL-CIO.....................    74
        Letter dated January 3, 2017 from Scott Frey, Director of
          Federal Government Affairs, AFSCME.........................    74
        Letter dated January 3, 2017 from Harold P. Wimmer, National
          President and CEO, American Lung Association...............    75
        Letter dated January 3, 2017 from Georges C. Benjamin, MD,
          Executive Director, American Public Health Association.....    75
        Letter dated January 3, 2017 from Robert Weissman, President,
          Public Citizen; and Chair, Coalition for Sensible
          Safeguards.................................................    76
        Letter dated January 3, 2017 from Andrew A. Rosenberg, Ph.D.,
          Director, Center for Science and Democracy, Union of
          Concerned Scientists.......................................    78
        Letter dated January 3, 2017 from Andrew A. Rosenberg, Ph.D.,
          Director, Center for Science and Democracy, Union of
          Concerned Scientists.......................................    78
        Letter dated January 3, 2017 from Rachel Weintraub,
          Legislative Director and General Counsel, Consumer
          Federation of America......................................    79
        Letter dated January 3, 2017 from Rachel Weintraub,
          Legislative Director and General Counsel, Consumer
          Federation of America......................................    80
        Letter dated January 3, 2017 from Laura MacCleery, Vice
          President, Consumer Policy and Mobilization, Consumer
          Reports; George P. Slover, Senior Policy Counsel, Consumers
          Union; and William C. Wallace, Policy Analyst, Consumers
          Union......................................................    81
        Letter dated January 3, 2017 from Lauren Saunders, Associate
          Director, National Consumer Law Center.....................    82
        Letter dated January 4, 2017 from Americans for Financial
          Reform.....................................................    83
        Letter dated January 4, 2017 from Harold P. Wimmer, National
          President and CEO, American Lung Association...............    83
        Opposition letter dated January 4, 2017 in regards to the
          Floor vote of the Midnight Rules Relief Act of 2017........    84
        Letter dated January 4, 2017 from Kim Glas, Executive
          Director, BlueGreen Alliance...............................    86
        Letter dated January 4, 2017 from Laura MacCleery, Vice
          President, Consumer Policy and Mobilization, Consumer
          Reports; George P. Slover, Senior Policy Counsel, Consumers
          Union; and William C. Wallace, Policy Analyst, Consumers
          Union to U.S. House of Representatives.....................    86
        Letter dated January 4, 2017 from Gene Karpinski, President,
          League of Conservation Voters to Representative of the
          United States House........................................    87
        Letter dated January 4, 2017 from Lauren Saunders, Associate
          Director, National Consumer Law Center to Representative of
          the U.S. House of Representatives..........................    88
        Letter dated January 4, 2017 from Family Equity Council,
          GLSEN, Lambda Legal, National Asian Pacific American
          Women's Forum, National Center for Lesbian Rights, National
          Center for Transgender Rights, National Coalition for LGBT
          Health, National Healh Law Program (NHelP), National LGBTQ
          Task Force Action Fund, Pride at Work, Sexuality
          Information and Education Council of the U.S. (SIECUS), The
          Trevor Project and Witness to Mass Incarceration to Hon.
          Nancy Pelosi and Hon. Steny Hoyer, U.S. House of
          Representatives............................................    89
        Letter dated January 4, 2017 from Scott Slesinger,
          Legislative Director, Natural Resources Defense Council....    91
        Letter dated January 4, 2017 from Josh Nassar, Legislative
          Director, International Union, United Automobile, Aerospace
          & Agricultural Implement Workers of Aemerica--Law (UAW)....    92
        Letter dated January 4, 2017 from Leo W. Gerard,
          International President, United Steelworkers to U.S. House
          of Representatives.........................................    92
        Letter dated January 5, 2017 from the American Heart
          Association, American Lung Association, and Campaign for
          Tobacco-Free Kids..........................................    93
        Letter dated January 5, 2017 from David Levine, CEO and Co-
          founder, American Sustainable Business Council.............    94
        Letter dated January 10, 2017 from William Samuel, Director,
          Government Affairs Department, AFL-CIO.....................    95
        Letter dated January 10, 2017 from Harold P. Wimmer, National
          President and CEO, American Lung Association...............    96
        Letter dated January 10, 2017 from Andrew A. Rosenberg,
          Ph.D., Director, Center for Science and Democracy, Union of
          Concerned Scientists.......................................    97
        Letter dated January 10, 2017 from Laura MacCleery, Vice
          President, Consumer Policy and Mobilization, Consumer
          Reports; George P. Slover, Senior Policy Counsel, Consumers
          Union; and William C. Wallace, Policy Analyst, Consumers
          Union......................................................    99
        Letter dated January 10, 2017 from Rachel Weintraub,
          Legislative Director and General Counsel, Consumer
          Federation of America......................................   100
        Letter dated January 10, 2017 from Robert Weissman,
          President, Public Citizen; and Chair, Coalition for
          Sensible Safeguards........................................   101
        Letter dated January 10, 2017 from Lauren Saunders, Associate
          Director, National Consumer Law Center.....................   103
        Letter dated January 11, 2017 from AFL-CIO, Americans for
          Financial Reform, California Reinvestment Coalition, Center
          for Popular Democracy CPD Action, Center for Responsible
          Lending, Communications Workers of America, Consumer
          Action, Consumer Federation of America, Corporation for
          Enterprise Development, Institute for Agriculture and Trade
          Policy, Interfaith Center on Corporate Responsibility, Main
          Street Alliance, Massachusetts Community Action Network,
          Michael Greenberger, University of Maryland School of Law,
          NAACP, National Association of Consumer Advocates, National
          Consumer Law Center (On behalf of its low income clients),
          National Consumers League, National Fair Housing Alliance,
          Public Citizen, Public Investors Arbitration Bar
          Association, and U.S. PIRG.................................   104
        Letter dated January 11, 2017 from the Americans for
          Financial Reform...........................................   105
        Letter dated January 11, 2017 from Allergy & Asthma Network,
          Alliance of Nurses for Healthy Environments, American Heart
          Association, American Lung Association, American Public
          Health Association, American Thoracic Society, Asthma and
          Allergy Foundation of America, Health Care Without Harm,
          National Association of County & City Health Officials,
          Physicians for Social Responsibility, Public Health
          Institute, and Trust for America's Health..................   107
        Letter dated January 11, 2017 from Josh Nassar, Legislative
          Director, International Union, Unite Automobile, Aerospace
          & Agricultural Implement Workers of America--UAW...........   108
        Letter dated January 30, 2017 in regards to the Use of the
          Congressional Review Act to repeal public protections......   108
        Letter dated January 31, 2017 from Ken Wasch, President,
          Software & Information Industry Association (SIIA) to Hon.
          John Thune and Hon. Bill Nelson............................   111
        Letter dated February 1, 2017 from Fernando Stein, MD, FAAP,
          President, American Academy of Pediatrics to Hon. Mitch
          McConnell, Majority Leader, U.S. Senate and Hon. Charles
          Schumer, Minority Leader, U.S. Senate......................   112
        Prepared statement of Joyce Davis (Mother of Garret).........   113
        Prepared statement of Timothy Frink (Grandfather of Brianna).   114
        Information from the U.S. Energy Information Administration..   118
    Statement of Senator Udall.......................................    56
        Letter dated February 1, 2017 to Hon. Mitch McConnell, Hon.
          Lisa Murkowski, Hon. Chuck Schumer and Hon. Maria Cantwell
          from Tom Udall, Ron Wyden, Michael Bennet, Patty Murray,
          Edward J. Markey, Debbie Stabenow, Elizabeth Warren,
          Richard Blumenthal, Benjamin L. Cardin, Patrick Leahy, Cory
          A. Booker, Dianne Feinstein, Brian Schatz, Sheldon
          Whitehouse, Al Franken, Mazie K. Hirono, Martin Heinrich,
          Tammy Baldwin, Kirsten Gillibrand, Jeanne Shaheen, Chris
          Van Hollen and Chris Coons.................................    59
    Statement of Senator Blumenthal..................................    63
    Statement of Senator Schatz......................................    65
    Statement of Senator Blunt.......................................    67
    Statement of Senator Markey......................................    69
    Statement of Senator Inhofe......................................    70
    Statement of Senator Hassan......................................   126
    Statement of Senator Wicker......................................   127
    Statement of Senator Cruz........................................   128
    Statement of Senator Moran.......................................   130
    Statement of Senator Sullivan....................................   132
    Statement of Senator Peters......................................   135
    Statement of Senator Young.......................................   140

                                   Witnesses

    Jack N. Gerard, President and CEO, American Petroleum Institute..     4
        Prepared statement...........................................     6
    Rosario Palmieri, Vice President, Labor, Legal and Regulatory
      Policy, National Association of Manufacturers..................     7
        Prepared statement...........................................     9
    Gary Shapiro, President and CEO, Consumer Technology Association.    16
        Prepared statement...........................................    18
    Adam J. White, Research Fellow, Hoover Institution...............    22
        Prepared statement...........................................    24
    Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of
      Law, Georgetown University Law Center..........................    29
        Prepared statement...........................................    30

                                    Appendix

    Letter dated January 31, 2017 to Hon. John Thune and Hon. Bill
      Nelson from Matthew M. Polka, President and CEO, American Cable
      Association....................................................   153
    Letter dated February 1, 2017 to Hon. John Thune and Hon. Bill
      Nelson from Bobby Franklin, President and CEO, National Venture
      Capital Association............................................   155
    Letter dated February 1, 2017 to Hon. John Thune and Hon. Bill
      Nelson from Meredith Attwell Baker, CTIA.......................   156
    Letter dated February 1, 2017 to Hon. John Thune and Hon. Bill
      Nelson from Steven K. Berry, President and CEO, Competitive
      Carriers Association...........................................   177
    Response to written questions submitted to Jack N. Gerard by:
        Hon. John Thune..............................................   180
        Hon. Deb Fischer.............................................   182
        Hon. Dean Heller.............................................   183
        Hon. Bill Nelson.............................................   185
    Response to written questions submitted to Rosario Palmieri by:
        Hon. John Thune..............................................   187
        Hon. Deb Fischer.............................................   190
        Hon. Bill Nelson.............................................   190
        Hon. Amy Klobuchar...........................................   191
        Hon. Richard Blumenthal......................................   191
        Hon. Brian Schatz............................................   192
    Response to written questions submitted to Gary Shapiro by:
        Hon. John Thune..............................................   192
        Hon. Deb Fischer.............................................   193
        Hon. Dean Heller.............................................   194
        Hon. Bill Nelson.............................................   194
        Hon. Brian Schatz............................................   195
    Response to written question submitted to Adam J. White by:
        Hon. John Thune..............................................   195
        Hon. Deb Fischer.............................................   196
    Response to written questions submitted to Lisa Heinzerling by:
        Hon. Deb Fischer.............................................   197
        Hon. Bill Nelson.............................................   197
        Hon. Amy Klobuchar...........................................   199

            A GROWTH AGENDA: REDUCING UNNECESSARY REGULATORY BURDENS

                                  ----------

                          WEDNESDAY, FEBRUARY 1, 2017

                                           U.S. Senate,
            Committee on Commerce, Science, and Transportation,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:04 a.m. in
    room SH-216, Senate Hart Office Building, Hon. John Thune,
    Chairman of the Committee, presiding.
        Present: Senators Thune [presiding], Nelson, Udall,
    Blumenthal, Schatz, Blunt, Markey, Inhofe, Hassan, Wicker,
    Cruz, Moran, Sullivan, Peters, Young, Cantwell, Klobuchar,
    Booker, Cortez Masto, Duckworth, Heller, Fischer, Johnson,
    Gardner, Capito, and Lee.

                 OPENING STATEMENT OF HON. JOHN THUNE,
                     U.S. SENATOR FROM SOUTH DAKOTA

        The Chairman. Good morning. This hearing will come to
    order. Today we are diving into an issue that's dominated much
    of the recent debate about Washington: the unnecessary and
    burdensome regulations that stifle growth in America without
    offsetting benefits to Americans.
        ``I believe a thriving private sector is the lifeblood of
    our economy. I think there are outdated regulations that need
    to be changed. There is red tape that needs to be cut.'' That
    statement of belief, however, is not my own. Those exact words
    were spoken by President Obama in his last State of the Union
    address.
        Despite these laudable sentiments, the American Action
    Forum has reported that just since Election Day on November 8,
    2016, the Obama administration issued rules with $157 billion,
    with a ``B,'' in regulatory costs. And in December alone, the
    last administration approved 99 new regulations.
        My hope is that today's hearing will examine how we can
    make the rhetoric of regulatory reform a reality. Let me start
    by stating my belief that not all regulations are bad. In fact,
    there are many rules on the books that are necessary for
    economic growth and for the life and liberty of the American
    people. For instance, our Federal agencies enforce critical
    rules to protect the health and safety of our citizens, ensure
    fairness in the marketplace, and provide important protections
    for the environment.
        But there are also unbalanced regulations that provide
    negligible net benefits, raise barriers to entry for startups,
    restrain would-be job creators, and expose firms and employees
    to unnecessary burdens, from increased paperwork to onerous
    requirements to avoidable exposure litigation.
        A regulatory overhaul, though clearly necessary, must be
    thoughtful. We need to avoid a chaotic process, which would
    result in uncertainty for businesses in the public. We must
    also be mindful that any action at the Federal level could
    result in a confusing patchwork of regulations as states move
    in to fill the voids.
        We begin this new Congress with a mandate to do our part to
    provide relief from excess regulation. Together, with the new
    administration and effective stakeholders, including the
    public, we need to undertake a review of the regulations
    enforced by agencies under the jurisdiction of this Committee.
    We will seek to identify what works, what doesn't, what should
    be scrapped, and what can be improved upon.
        Many of these regulations have been on the books for years.
    Some, as I've noted, were newly enacted in the final days and
    hours of the previous administration, and some are not yet
    finalized. Accordingly, I applaud President Trump for making
    this issue a top priority. One of his first official acts as
    President on January 20 was to issue a memorandum entitled,
    ``Regulatory Freeze Pending Review.'' This memo, which is
    consistent with longstanding bipartisan precedent, ensures both
    the President's appointees and the Congress will have an
    opportunity to review new and pending regulations.
        And on Monday, the President issued an Executive Order
    entitled, ``Reducing Regulation and Controlling Regulatory
    Costs.'' This Order instructs Federal departments and agencies
    to identify at least two prior regulations for elimination for
    each new regulatory proposed, with certain exceptions. There
    will still be much more work for Congress to do, though, since
    the Order does not apply to independent agencies, such as the
    Federal Communications Commission.
        Today, we'll be hearing directly from stakeholders about
    specific regulations issued by the Federal administrative
    agencies under the jurisdiction of the Senate Commerce
    Committee to assess their usefulness, balance, and day-to-day
    impact on the regulated entities subject to these rules.
        Federal rulemaking procedures dictate a so-called ``notice
    and comment'' process for agencies to hear from the regulated
    community and other stakeholders about proposed regulations. In
    theory, these requirements constitute procedural safeguards to
    ensure that the American public has a voice in the process. In
    practice, however, we know that some agencies choose to provide
    only perfunctory responses to critical comments rather than
    engaging with stakeholders in a meaningful effort to improve
    noticed regulations.
        The same can be said of other regulatory requirements
    designed to produce thoughtful regulations that provide a net
    benefit to the American people. For more than 30 years,
    Presidents of both parties have promoted the idea that
    regulatory benefits should outweigh costs, but agencies are not
    always rigorous in conducting such analyses. We have seen
    agencies attempt to manipulate the process by cherry-picking
    available evidence or relying on outdated or incomplete data.
    And we have sometimes seen regulatory overreach where agencies
    attempt to promulgate rules outside of their jurisdiction or
    beyond their particular statutory grant of authority. These
    practices result not only in unbalanced rules with specious net
    benefits to Americans, but also embroil agency resources in
    costly litigation for which the American taxpayers must foot
    the bill.
        I began my remarks today with a quote from President Obama,
    and I would like to finish with a comment from Professor Cass
    Sunstein, who led the Office of Information and Regulatory
    Affairs for the last administration. About a year ago, looking
    ahead to areas of possible common ground on regulatory reform,
    he wrote, and I quote, ``The good news is that across
    ideological divides, there's a lot of room for bipartisan
    reform that would significantly cut costs and burdens and do so
    without compromising safety, health, and environmental goals.''
    Well, let's prove that he's right.
        To help us begin this discussion, we've invited a
    distinguished group of witnesses to testify today: Mr. Jack
    Gerard is President and CEO of the American Petroleum
    Institute; Ms. Lisa Heinzerling is the Justice William J.
    Brennan, Jr., Professor of Law at the Georgetown University Law
    Center; Mr. Rosario Palmieri is the Vice President for Labor,
    Legal, and Regulatory Policy at the National Association of
    Manufacturers; Mr. Gary Shapiro is the President and CEO of the
    Consumer Technology Association; and Mr. Adam White is a
    Research Fellow at the Hoover Institution.
        And I want to thank you all for being here today, and I
    look forward to hearing your testimony.
        And we'll turn now to our Ranking Member, Senator Nelson,
    for any opening remarks that he would like to make.

                    STATEMENT OF HON. BILL NELSON,
                       U.S. SENATOR FROM FLORIDA

        Senator Nelson. Thank you, Mr. Chairman. And you can see by
    the size of the audience and the fact that so many Committee
    members are here, this is a topic of enormous interest and
    import. And over the last two years, you and I have worked in a
    bipartisan manner to identify and, when appropriate, remove
    outdated, duplicative, or overburdensome rules. For example,
    during last year's FAA bill, we crafted a provision that
    streamlined the aircraft certification process and would likely
    have spurred job growth in the aviation industry. And while the
    House balked at the provision, it serves as an example of how
    this Committee has come together in the past to remove the
    unnecessary burdens to commerce.
        At the same time, Mr. Chairman, this Committee has taken
    numerous bipartisan actions to protect the health and safety of
    all Americans. For example, we have witnessed numerous injuries
    and deaths from dangerous toys and children's products due to
    weak government oversight. I'll never forget the research lab
    of the Consumer Product Safety Commission. About 10 years ago,
    it was a card table with toys thrown on top of it.
        And this culminated in the disastrous 2007 summer of
    recalls for a variety of children's products. One young child,
    who died as a result, was named Garret Davis. Garret was a four
    and half-month-old who suffocated on an unsafe mattress in a
    portable crib during a trip to my state in 2000. Garret's
    mother, Joyce, is in the audience today, and I want to thank
    her for tirelessly advocating for tougher product safety
    standards.
        And we also have the Hartung family here, whose daughter,
    Abigail, was injured by a defective crib in 2007.
        And Tim Frink, whose granddaughter, Brianna, was killed by
    unsafe window blinds in 2012 in Tennessee while her parents
    were serving in the Army at Fort Campbell. We have a picture of
    Tim. Her parents are here, and they are seated in the second
    row.
        And it's tragedies such as these that remind us of the
    human costs when we fail to address dangerous products. They
    are why this Committee responded by enacting the Consumer
    Product Safety Improvement Act of 2008, which gave regulators
    the power to quickly enact rules when there is a danger to
    children's safety. And while we've made strides, there are
    still so many areas in which we have to be vigilant.
        Take, for example, the ongoing saga of Takata airbags. It
    seems like every week there's a new story in the newspapers
    about additional recalls, and those recalls worldwide could be
    hundreds of millions of vehicles--more than 40 million vehicles
    have already been recalled just in the U.S. More than two years
    ago, this Committee heard testimony from Lieutenant Stephanie
    Erdman, who was seriously injured when her Takata airbag
    exploded in her face. She almost lost her eye, and she almost
    lost her career in the Air Force as a result of that accident.
        If you fast-forward to today, it is hard to believe that we
    still have no government rules to ensure the safety of these
    airbags--despite 11 deaths in the U.S., hundreds of injuries,
    and the single largest recall in history.
        Well, I could go on and on with other examples. How about
    the Deepwater Horizon explosion? Eleven people were killed, the
    seafood and tourism industry in many parts of the Gulf were
    destroyed. That explosion occurred because BP cut corners.
        So, Mr. Chairman, while I look forward to working with you
    to identify common sense regulatory reforms, I strongly urge
    the Committee members to refrain from taking a wrecking ball to
    regulations that protect the health and safety of all
    Americans.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Nelson.
        We will now proceed to our panel, and we'll start on my
    left and your right, Mr. Gerard, and if each of you would
    proceed in order and confine your remarks as close to 5 minutes
    as possible, and then we'll get a chance to ask some questions.
        So, Mr. Gerard, please proceed.

       STATEMENT OF JACK N. GERARD, PRESIDENT AND CEO, AMERICAN
                          PETROLEUM INSTITUTE

        Mr. Gerard. Thank you, Chairman Thune and Ranking Member
    Nelson and members of the Committee. It's a pleasure to be here
    today and to speak about the opportunities to promote a pro-
    growth agenda while reducing regulatory burdens and to discuss
    areas where we can collaborate to create a more workable
    regulatory framework.
        America is now the world's leading producer and refiner of
    oil and natural gas, a reality that was unimaginable just a
    decade ago. We have transitioned from an era of energy scarcity
    and dependence to one of energy abundance and security. The
    developments of the past decade have brought cost savings for
    American consumers, good paying jobs, renewed opportunities for
    U.S. manufacturing, a stronger economy, and greater national
    security. And record U.S. production refining is happening
    alongside greater environmental progress: CO2 from
    power generation is down to 25-year lows, thanks primarily to
    greater use of clean-burning natural gas.
        In 2015, energy-related savings put an extra $1,337 back in
    the pocket of the average American family. AAA reports that
    drivers saved as much as $550 a year in fuel costs. Energy
    abundance is helping to cut energy and material costs for
    America's manufacturers and to attract manufacturing back to
    the United States. Electricity costs for domestic manufacturers
    are 30 to 50 percent lower than our foreign competitors. And
    overall manufacturing costs are now 10 to 20 percent lower than
    those in Europe and could be 2 to 3 percent lower than in China
    by 2018, a significant competitive advantage.
        Technological innovations and industry leadership have
    propelled the oil and gas industry forward despite the
    unprecedented onslaught of 145 new and pending Federal
    regulatory actions targeting our industry.
        The time has come to review these regulations and to have a
    frank discussion about the costs and the benefits to the
    American people. For example, on methane, the previous
    administration proposed an expensive and unnecessary regulatory
    approach that ignored industry's accomplishments in favor of a
    government-run program that could mean an additional $800
    million in annual costs. Industry's own leadership brought the
    emissions down by 15 percent in real terms while increasing
    production of natural gas by 45 percent.
        Then the BLM, a public lands agency, decided they wanted to
    step in and regulate methane as well, adding another $400
    million in costs. It's no wonder that from 2010 to 2015, U.S.
    Federal onshore natural gas production decreased 18 percent,
    while production on state and private lands increased 55
    percent.
        Other actions by the previous administration that should be
    reviewed include removing leased areas from the 5-year plan,
    resulting in 94 percent of Federal offshore being off limits
    now to energy discovery and development. These decisions place
    a roadblock in front of a potential for nearly 840,000 new jobs
    and $200 billion in cumulative government revenue through 2035
    while largely ignoring America's strategic energy future.
        In another example under this Committee's jurisdiction,
    PHMSA has strayed from its risk-based approach in regulating
    natural gas transmission rules and guidelines, moving away from
    highest risk to one-size-fits-all, all risks.
        The EPA, Coast Guard, and 20 states have formed a confusing
    patchwork, and I would like to thank the Chairman, Senator
    Nelson, and many others on this Committee for passage of the
    Commercial Vessel Incidental Discharge Act just last week to
    address this patchwork of conflicting costly regulation.
        This week, we support the efforts of the Congress now as it
    takes its first step to pull back on a number of these ill-
    considered and hasty regulations under the Congressional Review
    Act.
        The oil and natural gas industry remains committed to
    regulatory structures that promote safety, environmental
    protection, and responsible operations, and it continues to
    look for ways to collaborate with regulators. Some might be
    surprised to know that since 1924, API has been the leader in
    developing industry standards that promote safety and
    reliability through the use of proven engineering practices
    under an ANSI-accredited process. Nearly 400 API standards are
    cited throughout Federal and state regulations.
        Federal regulatory policy can either strengthen or weaken
    the U.S. energy renaissance, with impacts that extend far
    beyond our industry. Regulatory actions should be rooted in
    sound science and data with consideration of the costs and
    benefits. With these goals in mind, we stand ready to work with
    the Congress, with you, and with the administration to find
    reasonable solutions to the challenges before us.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Gerard follows:]

           Prepared Statement of Jack N. Gerard, President and CEO,
                          American Petroleum Institute
        Good morning Chairman Thune, Ranking Member Nelson, and members of
    the Committee. Thank you for the invitation to speak today about the
    opportunities to promote a pro-growth agenda by reducing regulatory
    burdens and to discuss areas where we can collaborate to create a more
    workable regulatory framework.
        The American Petroleum Institute is the only national trade
    association representing all facets of the oil and natural gas
    industry, which supports 9.8 million U.S. jobs and 8 percent of the
    U.S. economy. API's more than 625 members include large integrated
    companies, as well as exploration and production, refining, marketing,
    pipeline, and marine businesses, and service and supply firms.
        America is now the world's leading producer and refiner of oil and
    natural gas, a reality that was unimaginable just a decade ago. We've
    transitioned from an era of energy scarcity and dependence to one of
    energy abundance and security. The developments of the past decade have
    brought cost savings for American consumers, good paying jobs, renewed
    opportunities for U.S. manufacturing, a stronger economy and greater
    national security. And record U.S. production and refining is happening
    alongside greater environmental progress: CO2 from power
    generation is down to 25 year lows, thanks in large part to greater use
    of natural gas. Also, cleaner burning transportation fuels and industry
    investments in emissions reducing technologies have enabled reduced
    emissions of criteria air pollutants.
        In 2015, energy-related savings put an extra $1,337 back in the
    pocket of the average American family, and AAA reports that drivers
    saved as much as $550 in fuel costs. Energy abundance is helping to cut
    energy and material costs for American manufacturers and to attract
    manufacturing back to the U.S. Electricity costs for domestic
    manufacturers are 30-50 percent lower than our foreign competitors, and
    overall manufacturing costs are now 10 to 20 percent lower than those
    in Europe and could be 2 to 3 percent lower than in China by 2018, an
    important competitive edge.
        Technological innovations and industry leadership have propelled
    the oil and gas industry forward despite the unprecedented onslaught of
    145 new and pending Federal regulatory actions targeting our industry.
    The time has come to review these regulations and to have a frank
    discussion about the costs and the benefits to the American people.
        For example, on methane, the previous administration proposed an
    expensive and unnecessary regulatory approach that ignored industry's
    accomplishments in favor of a government-run program that could mean an
    additional $800 million in annual costs. Industry's own leadership on
    emissions have led to a 15 percent reduction in total annual methane
    emissions since 1990, even as U.S. natural gas production increased 45
    percent.
        Then, the BLM, an agency with limited regulatory authority over air
    emissions, stepped in with its own methane regulation, which could cost
    more than $400 million per year. It's no wonder that from 2010-2015,
    U.S. Federal onshore natural gas production decreased 18 percent while
    production on state and private lands increased 55 percent.
        Other actions by the previous administration that should be
    reviewed include removing lease areas from the Five-Year Plan,
    resulting in 94 percent of Federal offshore acreage being off-limits to
    energy development. These decisions place a roadblock in front of a
    potential for nearly 840,000 new jobs and $200 billion in cumulative
    government revenue through 2035 while largely ignoring America's
    strategic energy future.
        In another example, directly under this Committee's jurisdiction,
    PHMSA has strayed from a risk-based approach in its proposed natural
    gas transmission rule that diverts resources from areas of highest risk
    to areas of lower risks. The EPA, Coast Guard, and more than 20 states
    have formed a confusing patchwork of rules that defines the current
    regulatory framework for ballast water treatment on vessels that are
    needed to transport our products to consumers. I'd like to extend a
    thank you to Chairman Thune, Ranking Member Nelson and this committee
    for passage of the Commercial Vessel Incidental Discharge Act last week
    to address these concerns.
        This week, we support the efforts of Congress as it takes the first
    step to pull back a number of these ill-considered and hasty
    regulations under the CRA. These include Section 1504 of Dodd-Frank,
    which places U.S.-based energy companies at a competitive disadvantage
    in the world marketplace, and BLM's methane regulations, which are
    technically flawed and redundant to state regulation. Furthermore, we
    look forward to the anticipated CRA resolution on EPA's redundant and
    unnecessary Risk Management Program rulemaking.
        The oil and natural gas industry remains committed to regulatory
    structures that promote safety, environmental protection, and
    responsible operations and it continues to look for ways to collaborate
    with regulators. Since 1924, API has been the leader in developing
    industry standards that promote safety and reliability through the use
    of proven engineering practices under an ANSI-accredited process.
    Nearly 400 API standards are cited throughout Federal and state
    regulations.
        Our industry actions and standards go above and beyond the
    regulatory framework. For example, before PHMSA issued its recent tank
    car rule, industry had already adopted and started implementing a
    standard that exceeded Federal requirements. One of the industry's
    hallmark standards, Pipeline Safety Management Systems, ushered in a
    culture of safety that can be applied broadly across our industry.
        Federal regulatory policy can either strengthen or weaken the U.S.
    energy renaissance, with impacts that extend far beyond our industry.
    Regulatory actions should be rooted in sound science and data, with a
    consideration of the costs and benefits. With these goals in mind, we
    stand ready to work with Congress and the administration to find
    reasonable solutions to the challenges before us.

        The Chairman. Thank you, Mr. Gerard.
        Mr. Palmieri.

             STATEMENT OF ROSARIO PALMIERI, VICE PRESIDENT,

                  LABOR, LEGAL AND REGULATORY POLICY,

                 NATIONAL ASSOCIATION OF MANUFACTURERS

        Mr. Palmieri. Thank you for the opportunity to testify
    today. The U.S. is the world's largest manufacturing economy,
    producing more than $2 trillion in value each year and directly
    employing nearly 12 million Americans and supporting 18 million
    jobs in the economy.
        Manufacturers believe regulation is critical to the
    protection of worker and consumer safety, public health, and
    our environment. We believe some critical objectives of
    government can only be achieved through regulation. But that
    does not mean our regulatory system is not in need of
    considerable improvement and reform. Regulations are often
    unnecessarily complex, duplicative, and ineffectively achieve
    their benefits. Excessive regulatory changes and uncertainty
    impose high costs, especially on small businesses. And small
    businesses bear a disproportionate burden of regulation because
    of the often high fixed costs of compliance not subject to
    economies of scale.
        While the NAM's membership is affected by all areas of the
    Committee's jurisdiction, including aviation, highway safety,
    the digital economy, and pipelines, I've been asked to focus my
    remarks on consumer product safety.
        Manufacturers of consumer products are committed to
    producing safe products. In 2008, as identified by Ranking
    Member Nelson in the wake of intolerable lapses in children's
    product safety, the Consumer Product Safety Improvement Act was
    passed. The NAM supported that law and provisions that would
    give the CPSC more staff and financial resources to deal with
    the dramatic rise in imported consumer products and globalized
    supply chains.
        Since the CPSC's creation, the private sector has worked
    hand-in-hand with the agency to protect consumers. A key
    principle of the Consumer Product Safety Act is that the
    Commission rely upon voluntary consumer product safety
    standards when it will adequately address risks. The safety of
    consumers for thousands of product categories depend on those
    voluntary standards.
        Unfortunately, the CPSC has engaged in a series of highly
    controversial rulemakings without engaging stakeholders and
    often exceeded its statutory authority. Here are a couple
    examples.
        The CPSC proposed a rule to change the voluntary recall
    process. It's the process whereby a company works with the CPSC
    to voluntarily recall a product. This might be initiated by a
    company after receiving adverse reports or in discussions with
    the CPSC after they've investigated a concern. Speed and
    effectiveness of the recall are the two most important
    attributes. The proposed rule would have added legal complexity
    and harmed the company's defenses if litigation arose. Each one
    of these changes would lengthen the negotiation process and
    actually put in jeopardy the CPSC's award-winning fast track
    recall program. It was concerning. Even a former Democratic
    Chairwoman of the CPSC and Democratic Senators recommended a
    halt to the proposal.
        Another example, the CPSC will soon vote to issue a
    proposed mandatory rule on table saws. There are strong
    voluntary standards in place that continue to be strengthened.
    Safety concerns are mostly a result of improper use of the
    product, and significant redesigns have been completed to
    increase safety. Unfortunately, the Commission fell in love
    with a patented technology that would increase the price of
    these products by $1,000, pricing a new product out of the
    market for most consumers and eliminating a whole segment of
    this category.
        Picking a technology winner is not what the CPSC is
    supposed to do; it's supposed to set performance standards and
    allow competition and innovation to deliver increasingly safer
    products to customers.
        The CPSC also went down this path with recreational off-
    highway vehicles. The Commission presented proposals, including
    statutorily prescribed design standards to achieve questionable
    results. Ultimately, the Commission acceded to the industry's
    voluntary standards, but have failed to terminate the
    rulemaking.
        To reduce unnecessary burdens at the CPSC and across this
    Committee's jurisdiction, we recommend the following: encourage
    the current Chairman of the CPSC to step aside and confirm a
    new Chair; encourage the Commission to focus on its mandate and
    address serious risks; encourage better benefit-cost analysis
    and interagency coordination at the Commission and across
    government by having independent regulatory agencies submit
    their regulations for third-party review to OIRA, CBO, or some
    other body; give Congress an analytical office to review the
    costs and benefits of regulation like in Senator Klobuchar's
    SCORE Act; encourage the CPSC and other agencies to improve
    their scientific analysis and risk assessment through peer
    review; encourage better retrospective review of rules by
    planning for reviews at the time a rule is written, like in
    Senator Heitkamp's and Senator Lankford's Smarter Regulations
    Through Advanced Planning and Review Act; improve small
    business impacts analysis through passage of legislation like
    the Small Business Regulatory Flexibility Improvements Act;
    strengthen and support institutions like OIRA and the SBA's
    Office of Advocacy to help single-mission agencies have a
    broader view.
        These and other reforms before the Senate and House will
    help us to achieve our regulatory objectives without imposing
    unnecessary burdens. Thank you again for this opportunity.
        [The prepared statement of Mr. Palmieri follows:]

     Prepared Statement of Rosario Palmieri, Vice President, Labor, Legal
          and Regulatory Policy, National Association of Manufacturers
        Chairman Thune, Ranking Member Nelson and members of the Committee
    on Commerce, Science, and Transportation, thank you for the opportunity
    to testify about Federal regulations and how the rulemaking process
    impacts businesses in the United States. I am pleased to provide this
    testimony on the regulatory agenda of the U.S. Consumer Product Safety
    Commission (CPSC) and the impact of its regulations on manufacturers
    and other stakeholders.
        My name is Rosario Palmieri, and I am the vice president of labor,
    legal and regulatory policy for the National Association of
    Manufacturers (NAM). The NAM is the Nation's largest industrial trade
    association and voice for more than 12 million men and women who make
    things in America. The NAM is committed to achieving a policy agenda
    that helps manufacturers grow and create jobs. Manufacturers appreciate
    your attention to the regulatory burdens that are impacting their
    competitiveness and growth. In particular, we thank the Chairman and
    Ranking Member for their efforts to improve our regulatory system.
    Manufacturers that produce finished goods or component parts regulated
    by the CPSC and their suppliers account for 6.5 million jobs in the
    United States in 2015.\1\
    ---------------------------------------------------------------------------
        \1\ Source: U.S. Census Bureau, Annual Survey of Manufacturers,
    Retrieved from https://factfinder.census.gov/
    ---------------------------------------------------------------------------
        The Committee's attention to the impact of agency regulations on
    manufacturers in the United States is extremely important, and the NAM
    is pleased that special attention has been focused on the CPSC. As an
    independent regulatory agency, the CPSC is not bound by orders that
    direct Executive Branch agencies to employ sound regulatory principles,
    and the justifications and data the CPSC uses for its regulatory are
    not subject to any substantive review by an objective third party.
    Manufacturers greatly appreciate the efforts by Chairman Thune and
    Senator Moran, Chairman of the Subcommittee on Consumer Protection,
    Product Safety, Insurance and Data Security, to hold the CPSC
    accountable so that its resources are devoted to efforts that would
    enhance consumer safety and advance its mission as Congress has
    intended.
    I. Manufacturing in the United States
        Manufacturing in the United States lost 2.3 million jobs in the
    past recession. Since then, we have gained back 822,000 manufacturing
    jobs. Yet, the sector has struggled over the past two years from global
    headwinds and economic uncertainties. Manufacturing employment declined
    by 45,000 in 2016, with essentially stagnant production growth.
        On the positive side, signs at year's end indicated that business
    leaders and consumers were more upbeat about activity in 2017,
    especially since the election. To ensure that demand and output improve
    this year, the United States needs not only improved economic
    conditions but also government policies more attuned to the realities
    of global competition.
        Manufacturing has the highest multiplier effect of any economic
    sector. For every $1.00 spent in manufacturing, another $1.81 is added
    to the economy. In addition, for every worker in manufacturing, another
    four employees are hired elsewhere. In 2015, manufacturers in the
    United States contributed $2.17 trillion to the economy (or 12.1
    percent of GDP), and the average manufacturing worker in the United
    States earned $81,289 annually, including pay and benefits--27.4
    percent more than the average nonfarm business worker.
        Nearly 95 percent of all manufacturers in the United States have
    fewer than 100 employees, and the Small Business Administration defines
    a small manufacturer as a firm with fewer than 500 employees. To
    compete on a global stage, manufacturers in the United States need
    policies that enable them to thrive and create jobs. Growing
    manufacturing jobs will strengthen the U.S. middle class and continue
    to fuel America's economic recovery. Manufacturers appreciate the
    committee's focus on ways to reduce regulatory burdens. Unnecessarily
    burdensome regulations place manufacturers of all sizes at a
    competitive disadvantage with our global counterparts.
    a. Regulatory Burdens Facing Manufacturers
        Manufacturers face more environmental and safety regulations than
    other businesses. The NAM issued a study \2\ on the expansive set of
    Federal regulatory requirements that are holding manufacturers back.
    Manufacturers face 297,696 restrictions on their operations from
    Federal regulations. Eighty-seven percent of manufacturers surveyed as
    part of our study indicated that if compliance costs were reduced
    permanently and significantly, they would invest the savings on hiring,
    increased salaries and wages, more research and development and/or
    capital investment. Regulations impose real costs that impact a
    company's bottom line, so it is extremely important that our regulatory
    system be transformed so that we are effectively protecting health and
    the environment while minimizing and seeking to eliminate unnecessary
    burdens. Despite the acknowledgment of lawmakers of the problems with
    our regulatory system, things are getting worse. Ninety-four percent of
    manufacturers surveyed said the regulatory burden has gotten higher in
    the past five years, with 72 percent reporting that the burden is
    ``significantly higher.''
    ---------------------------------------------------------------------------
        \2\ NAM. Holding Us Back: Regulation of the U.S. Manufacturing
    Sector. January 2017. Retrieved from http://www.nam.org/Data-and-
    Reports/Reports/Holding-Us-Back--Regulation-of-the-U-S--Manufacturing-
    Sector/
    ---------------------------------------------------------------------------
        Manufacturers, particularly small manufacturers, know very well the
    importance of allocating scarce resources effectively to achieve
    continued success, which includes increased pay and benefits for
    employees. Every dollar that a company spends on complying with an
    unnecessary and ineffective regulatory requirement is one less dollar
    that can be allocated toward new equipment or to expand employee pay
    and benefits. Government-imposed inefficiencies through poorly designed
    and inefficient regulations are more than numbers in an annual report.
    They are manifested in real costs borne by the men and women who work
    hard to provide for their families.
    b. Regulatory Environment and the Need for Reform
        Our regulatory system is in need of considerable improvement and
    reform. New regulations are too often poorly designed and analyzed and
    ineffectively achieve their benefits. They are often unnecessarily
    complex and duplicative of other mandates. Their critical inputs--
    scientific and other technical data--are sometimes unreliable and fail
    to account for significant uncertainties. Regulations are allowed to
    accumulate with no real incentives to evaluate existing requirements
    and improve effectiveness. In addition, regulations many times are one-
    size-fits-all without the needed sensitivity to their impact on small
    businesses. We can do better.
        The complexity of rulemaking and its reliance on highly technical
    scientific information has only increased since the passage of the
    Administrative Procedure Act (APA) in 1946. Whereas independent
    regulatory agencies like the CPSC, the National Labor Relations Board
    and the Securities and Exchange Commission are not bound by Executive
    Branch orders, memorandum and guidance, these agencies are required to
    comply with the APA.
        As the modern Federal regulatory state expanded, Congress grew
    increasingly concerned about the significant regulatory and paperwork
    burdens imposed on the public, particularly small businesses. In
    September 1980, the Regulatory Flexibility Act (RFA) was signed into
    law and requires Federal agencies--including independent regulatory
    agencies--to thoughtfully consider small businesses and other small
    entities when developing regulations. If an agency determines that a
    regulation is likely to have a ``significant economic impact on a
    substantial number of small entities,'' the agency must engage in
    additional analysis and seek less burdensome regulatory alternatives.
    In addition to requiring improved regulatory analysis to better
    determine the small entity impact, the RFA attempted to improve public
    participation in rulemaking by small businesses. It also requires
    agencies to publish an agenda semiannually, listing expected
    rulemakings that would impact small businesses and to conduct ``look-
    back'' reviews--required under Section 610 of the law--of regulations
    that affect small entities to identify rules in need of reform.
        There have also been presidential directives aimed at improving the
    regulatory state. The NAM welcomed efforts by President Barack Obama to
    reduce regulatory burdens. The president signed executive orders, and
    the Office of Management and Budget (OMB) issued memoranda on the
    principles of sound rulemaking, considering the cumulative effects of
    regulations, strengthening the retrospective review process and
    promoting international regulatory cooperation. Executive Order 13563
    affirmed the principles of sound rulemaking, and Executive Order 13579
    strongly encouraged independent regulatory agencies like the CPSC to
    comply with those provisions. The former order states,

            Our regulatory system must protect public health, welfare,
            safety and our environment while promoting economic growth,
            innovation, competitiveness and job creation. It must be based
            on the best available science. It must allow for public
            participation and an open exchange of ideas. It must promote
            predictability and reduce uncertainty. It must identify and use
            the best, most innovative and least burdensome tools for
            achieving regulatory ends. It must take into account benefits
            and costs, both quantitative and qualitative. . . . It must
            measure, and seek to improve, the actual results of regulatory
            requirements.

        Manufacturers and the general public agree with these principles
    and believe the regulatory system can be improved in a way that
    protects health and safety without compromising economic growth.
    Unfortunately, this initiative and others of past administrations have
    not yielded real cost reductions for manufacturers or other regulated
    entities.
        Agencies are failing in their responsibility to conduct analysis
    that would better assist them in understanding the true benefits and
    costs of their rules and how to best achieve policy objectives. Despite
    existing statutory requirements and clear directives from the President
    to improve the quality of regulations, manufacturers face an
    increasingly inefficient and complex myriad of regulations that place
    unnecessary costs on the public.
    c. Improving Regulations Issued by the CPSC
        The president does not exercise similar authority over independent
    regulatory agencies like the CPSC as he does over other agencies within
    the executive branch. Independent agencies are not required to comply
    with the same regulatory principles outlined in executive orders and
    OMB guidance as Executive Branch agencies and often fail to conduct any
    analysis to determine expected benefits and costs.
        Congress should require independent regulatory agencies to conduct
    robust cost-benefit analyses of their significant rules and subject
    their analysis to third-party review through the Office of Information
    and Regulatory Affairs (OIRA) or some other office. Congress should
    also confirm the President's authority over these agencies. If there is
    consensus that this process makes Executive Branch rules better, why
    would we not want to similarly improve the rules issued by independent
    regulatory agencies? Consistency across the government in regulatory
    procedures and analysis would only improve certainty and transparency
    of the process.
        Independent regulatory agencies are required to comply with the
    RFA, but agencies are adept at utilizing loopholes in current law to
    escape many of the substantive requirements as Congress intended. Since
    independent regulatory agencies are not accountable to the OIRA nor do
    they participate in interagency review of their rules, accountability
    mechanisms to ensure Executive Branch agency compliance with the RFA do
    not exist for them. A stronger RFA is necessary because the courts are
    the only backstop to noncompliance by independent agencies. Congress
    should reform the RFA and close loopholes in the law so that agencies
    conduct robust analysis of their rules and issue more efficient and
    effective regulations.
    II. Regulatory Activity by the CPSC
        The CPSC was created in 1972 with the enactment of the Consumer
    Product Safety Act (CPSA), which established the authority for the CPSC
    to regulate consumer products and pursue recalls. In the wake of
    intolerable lapses in children's product safety, the Consumer Product
    Safety Improvement Act (CPSIA) was passed in 2008, amending the CPSA
    and providing the agency additional regulatory and enforcement
    authority. The NAM supported the law and provisions that would give the
    CPSC more staff and financial resources to deal with the dramatic rise
    in imported consumer products and globalized supply chains.
        Since the CPSC's creation, the private sector has worked hand-in-
    hand with the CPSC in protecting consumers. The founding principle of
    the CPSA makes clear that product safety is best achieved through a
    cooperative relationship with the private sector. Congress further
    asserted this principle when it amended the CPSC's governing statute
    through enactment of the CPSIA in 2008. Manufacturers and the CPSC have
    a shared commitment to product safety, and we firmly believe that any
    significant changes to policies and processes should be developed
    cooperatively as Congress intended. Unfortunately, the CPSC has engaged
    in a series of highly controversial rulemakings without engaging
    stakeholders and is evolving into a command-and-control regulatory
    agency, which is antithetical to the longstanding intent of Congress.
        The success of the U.S. regulatory system for protecting consumers
    relies heavily on a cooperative relationship between the CPSC and all
    stakeholders, including manufacturers, retailers, importers, consumer
    groups and others. Over the past decade, the CPSC has seemingly ignored
    this important principle. It has unilaterally issued proposed
    regulations that exceed its statutory authority or are in violation of
    the CPSA. This aggressive agenda diverts important resources that
    should be devoted to protecting consumers. Meanwhile, the CPSC has all
    but ignored a congressional mandate \3\ that it reduce the regulatory
    burdens imposed by third-party testing.
    ---------------------------------------------------------------------------
        \3\ Pub. Law 112-28
    ---------------------------------------------------------------------------
    a. Failure to Engage Stakeholders
        Manufacturers of consumer products and other stakeholders support a
    collaborative effort between the CPSC and industry to promote product
    safety for consumers. This is particularly important as the agency
    considers significant changes in its longstanding policies on engaging
    with stakeholders on important activities, such as voluntary recalls,
    corrective action plans (CAPs), the public disclosure of information
    and import risk assessment. However, many of these regulatory proposals
    are drafted behind closed doors with no input from manufacturers,
    retailers, importers or other impacted entities.
        Over the past three and a half years, the NAM, other interested
    parties and Congress have requested that the CPSC improve its
    engagement with stakeholders. These requests have been ignored or
    dismissed. In July 2016, the House-passed Financial Services and
    General Government Appropriations Act for Fiscal Year 2017 (H.R. 5485)
    would have dedicated $1 million of the CPSC's funding toward the
    creation of advisory committees with the goal of improving stakeholder
    participation in key policy decisions made by the CPSC. Though the
    provision was not included in the continuing resolution passed at the
    end of the previous session of Congress, the intent of Congress is
    clear: engagement with stakeholders is critical for the agency to
    understand complex international supply chains and consumer behavior.
    Instead of issuing rulings and policies from an isolated ivory tower,
    such engagement would enable the agency to formulate regulations that
    will quickly, effectively and efficiently enhance product safety
    without unduly burdening the regulated community. Transparency is
    critical for the regulated community and consumer advocates to
    understand the CPSC's expectations and priorities.
    b. Proposed Rule on Voluntary Recalls
        Since enactment of the CPSIA, the most controversial regulation put
    forth by the CPSC arguably has been a proposed rule known as the
    ``voluntary recall rule.'' Published in November 2013, the proposed
    rule \4\ would negatively impact the CPSC's voluntary recall process
    and would place significant burdens on manufacturers and retailers of
    consumer products. The proposed rule, among other things, would make
    voluntary CAPs and voluntary recalls legally binding, remove a
    company's ability to disclaim admission of a defect or potential hazard
    and empower CPSC staff to include compliance programs in CAPs. If
    finalized, firms could face increased enforcement jeopardy and legal
    consequences in product liability, other commercial contexts or a civil
    penalty matter. The rule would also violate protections guaranteed
    under the First Amendment by prohibiting firms from making truthful
    public statements expressing their views regarding the existence of a
    safety defect. From a policy standpoint, the paramount concern of
    manufacturers, retailers and others is that the rule would harm the
    CPSC's and industry's efforts to protect consumers effectively. Nearly
    all public comments to the proposed rule expressed this concern.
    ---------------------------------------------------------------------------
        \4\ 78 Fed. Reg. 69793
    ---------------------------------------------------------------------------
        Instead of enhancing consumer protections, the proposed changes
    would extend the period of negotiation between a subject firm and CPSC
    staff, slowing down or impeding agreement on CAPs. Any delays in
    implementing a recall can increase the risk to consumers. The proposal
    also seriously threatens the Fast-Track recall program--an expedited
    recall process which the agency touts as a model of good governance.
    The concern is so significant that former Democratic CPSC Chair Ann
    Brown and Senators Angus King (I-ME), Bob Casey (D-PA) and Pat Toomey
    (R-PA) submitted letters expressing concern over the proposed rule and
    the impact it would have on the Fast-Track program.
        The CPSC developed this monumental proposed change to the voluntary
    recall process without any input from stakeholders and to date has not
    sought any stakeholder feedback outside of the 2013 notice. The CPSC
    also has rebuffed repeated requests by lawmakers and interested
    parties, including the NAM, to engage stakeholders on ways to improve
    recall effectiveness and the voluntary recall process. Common sense
    dictates that the CPSC, at a minimum, should participate in a
    constructive dialogue with industry partners who are primarily
    responsible for conducting recalls.
        The CPSC also conducted no regulatory analysis to assist it in
    developing a regulatory proposal that would effectively meet its goal
    of improving recall effectiveness. To the contrary, the NAM and nearly
    every other commenter discussed ways in which the proposed rule would
    actually harm the CPSC's and industry's abilities to conduct recalls
    effectively. In its notice of proposed rulemaking, the CPSC provides no
    data or information supporting its conclusion that the proposal is
    necessary or that there is a problem that the CPSC does not already
    have the tools to address. Interestingly, the CPSC asserts that it is
    not required to comply with the procedural requirements of the APA and
    the analytical requirements of the RFA because it determined its
    proposal is an ``interpretative rule.'' However, the substantive
    provisions of the proposed regulation would place new obligations on
    companies, implement fundamental changes of longstanding practice and
    processes, establish new rights and responsibilities on regulated
    entities and legally bind subject firms in ways not currently provided.
    Moreover, because the proposed rule would be the basis for enforcement
    decisions and would broaden existing legal requirements, the CPSC
    should comply with both the rulemaking procedures established by the
    APA for substantive rules and the analytical requirements of the RFA.
        CPSC Chairman Elliot Kaye has repeatedly stated that the rule is
    not safety-focused in his opinion and was not a priority. In an October
    2015 hearing before the Commerce Committee's Consumer Protection,
    Product Safety, Insurance and Data Security Subcommittee, Chairman Kaye
    committed to Subcommittee Chairman Moran that he would keep the
    committee fully informed if there were any changes in his intentions to
    move forward on this proposal. Manufacturers and others were then
    alarmed when the CPSC announced at an August 31, 2016, decisional
    meeting that it intended to consider a final version of this proposal.
    There had been no indication--and no outreach to stakeholders--that the
    CPSC would consider a final rule.
        As the CPSC continues with this rulemaking, it is ignoring clear
    direction from Congress that the rule be withdrawn. The joint
    explanatory statement for the FY 2015 omnibus appropriations bill (H.R.
    83) clearly expressed bipartisan opposition to the proposed rule. In
    recent years, the House has twice passed amendments to the Financial
    Services and General Government funding bills, which would prevent the
    agency from proceeding on this rule.
        The NAM stands united with private-sector stakeholders in urging
    the CPSC to withdraw this misguided proposal and work cooperatively
    with interested parties to develop strategies that will improve the
    effectiveness of recalls and accomplish the desired policy objectives.
    We further ask the CPSC to formalize stakeholder engagement on this and
    other important issues. Through formal engagement with manufacturers,
    retailers, consumer advocacy organizations and others, the CPSC can
    better maximize the effectiveness of product safety programs and
    minimize unnecessary burdens on both regulated entities and CPSC staff.
    It will also provide the CPSC with additional resources for responding
    to emerging issues, whether they be product-focused or a newly
    identified need to modify CPSC policies and processes.
    c. Proposed Mandatory Standards for Table Saws
        The CPSC will soon vote on a motion to issue proposed mandatory
    safety standards for table saws. The briefing package \5\ was made
    publicly available on January 18. The CPSC initiated the rulemaking in
    October 2011 with an advance notice of proposed rulemaking,\6\ which
    followed a 2006 CPSC vote granting a petition to impose mandatory
    standards that could be achieved only through the use of one claimed
    patented technology owned by the person who submitted the original
    petition in 2003.
    ---------------------------------------------------------------------------
        \5\ CPSC Briefing Package. ``Proposed Rule: Safety Standard
    Addressing Blade-Contact Injuries on Table Saws.'' January 2017.
    Retrieved from https://www.cpsc.gov/Newsroom/FOIA/Report
    List?field_nfr_type_value=commission
        \6\ 76 Fed. Reg. 62678
    ---------------------------------------------------------------------------
        If the CPSC were to proceed with this rulemaking, it would create a
    government-mandated monopoly run by the petitioner, who possesses more
    than 100 granted patents related to the technology that the CPSC would
    mandate. Currently, the most popular table saw models can be purchased
    for a couple hundred dollars. In its briefing package, the CPSC
    acknowledges that the least expensive model on the market employing the
    technology it would mandate is $1,300, contradicting its own claim that
    the least expensive table saws under a mandatory standard would
    increase in price by only $300. Table saws incorporating the patented
    technology would increase in price by approximately $1,000--four times
    the average price and an $875 million impact only for the benchtop
    category of table saws. This would essentially eliminate or ban cost-
    effective models from the market, significantly harming businesses that
    use the machines. Such a burden is not justifiable for do-it-yourself
    or small contractor customers.
        The CPSA requires the CPSC to conduct regulatory analysis,
    including potential costs and benefits when issuing a proposed rule.\7\
    The analysis relies on inadequate and outdated data as justification
    for its monopoly-setting standard. For example, the CPSC's estimate for
    anticipated increases in the retail costs for table saws is based on
    information provided by the petitioner and owner of the patented
    technology the CPSC seeks to mandate. This rulemaking illustrates a
    trend at the agency where the CPSC has failed to conduct adequate cost-
    benefit analyses with its rulemakings and imposes prohibitive costs on
    manufacturers and consumers without accounting for the actual risks
    associated with the products.
    ---------------------------------------------------------------------------
        \7\ 15 U.S.C. 2058(c)(1)
    ---------------------------------------------------------------------------
        Regulation should not be used to advantage one technology or one
    company over another. The CPSA dictates that the CPSC can issue a
    mandatory standard only on a finding that an existing voluntary
    standard would not prevent or adequately reduce the unreasonable risk
    of injury in a manner less burdensome than the proposed CPSC mandatory
    standard. If the CPSC proceeds with a mandatory standard, such action
    would undermine the industry's incentive to develop new alternative
    table saw safety technology, cause companies to exit the table saw
    market and impose unnecessary and significantly increased costs on
    consumers.
    d. Proposed Rule on the Public Disclosure of Information, Section 6(b)
        In February 2014, the CPSC issued a proposed interpretative rule
    that would significantly alter its policy on publicly disclosing
    information on companies and products. Section 6(b) of the CPSA
    requires the CPSC to ``take reasonable steps to assure'' any disclosure
    of information relating to a consumer product safety incident is
    accurate and fair. The congressionally mandated protections of Section
    6(b) are critical as they encourage companies to report potential
    product hazards and defects voluntarily and work cooperatively with the
    CPSC. With enactment of the CPSIA in 2008 and H.R. 2715 as recently as
    2012, Congress chose to preserve Section 6(b) and the protections it
    provides manufacturers.
        The proposed rule would undermine a successful and cooperative
    process that has been in place for more than 30 years. The CPSC's
    proposal is not aligned with the intent of Section 6(b) and would limit
    the protections afforded to manufacturers when the CPSC publicly
    discloses information. If finalized, the rule would significantly
    narrow the information that is subject to Section 6(b) requirements and
    permit the CPSC to not notify firms when releasing information that is
    ``substantially the same as'' information it previously disclosed. A
    company also would not be allowed to request notification that the CPSC
    plans to subsequently disclose similar information. The rule would also
    eliminate protections for the disclosure of information subject to
    attorney-client privilege and limit a company's ability to have
    comments withheld. Importantly, the CPSC is proposing to exempt from
    Section 6(b) information that is publicly available, including
    information that is available on the internet.
        As with the voluntary recall rule, the CPSC developed its proposed
    changes to Section 6(b) behind closed doors with absolutely no input
    from the stakeholders who would be directly impacted by the rule. We
    strongly urge the CPSC to withdraw this rule. Yet, the CPSC announced
    this past August its desire to finalize the rule. We believe that the
    private sector and the CPSC share a common goal to better protect
    consumers and lessen the burdens associated with the Section 6(b)
    process on CPSC staff, while ensuring the CPSC complies with the
    statutory requirements that information it releases is fair and
    accurate. Without stakeholder engagement, the CPSC's advancement of
    this rule could chill the strong and cooperative relationship it has
    with businesses--a relationship that is a fundamental element of the
    CPSC's and industry's success in protecting consumers from potentially
    hazardous products.
    e. Proposed Mandatory Standard for Recreational Off-Highway Vehicles
            (ROVs)
        In October 2014, the CPSC proposed a mandatory standard for ROVs
    despite admitting that it had no evidence showing its proposed changes
    would improve safety. If the CPSC continues with its rulemaking, it
    would be a precedent-setting maneuver in that it is forcing the
    industry to accept unproven changes under the threat of a mandatory
    standard rulemaking. A mandatory rule would also violate the CPSA
    requirement that the CPSC defer to voluntary standards.\8\
    ---------------------------------------------------------------------------
        \8\ 15 U.S.C. 2056(b)(1)
    ---------------------------------------------------------------------------
        The industry has recently updated voluntary consensus standards to
    address many of the safety concerns that have been raised by CPSC staff
    over the past few years. The ROV industry is highly innovative and
    employs extensive safety measures through advancements in research and
    technology. The industry uses engineering and the consideration of
    vehicle use (including driver preferences and the conditions in which
    vehicles are driven) to make ROVs the safest possible. If the CPSC
    finalizes its proposed rule, it would violate the CPSA by establishing
    a design mandate, directing companies on what features vehicles should
    have and how those vehicles should be manufactured.
        On January 25, the CPSC voted against a motion to terminate the ROV
    rulemaking, despite the implementation of a robust new voluntary
    standard. The failure to terminate this rulemaking unmistakably
    conflicts with the CPSA's requirements that the CPSC defer to voluntary
    standards and terminate a rulemaking proceeding when voluntary
    standards would address concerns the CPSC may have.
    f. Proposed Rule on the Prohibition of Children's Toys and Child Care
            Articles
            Containing Specified Phthalates
        The CPSIA established the Chronic Hazard Advisory Panel (CHAP) to
    study the effects of all phthalates and phthalate alternatives used in
    children's toys and child care articles. The law \9\ further directs
    the CPSC to issue a final rule based on the panel's findings and
    recommendations. The CHAP issued its report and recommendations in July
    2014, more than three years after the statutory deadline. On December
    30, 2014, the CPSC published a proposed rule to implement the CHAP's
    recommendations. The CHAP report relied on outdated data and was not
    subject to an open public comment period in accordance with guidelines
    set forth in the OMB's ``Final Information Quality Bulletin for Peer
    Review'' and was only subjected to a nonpublic peer review. The OMB
    bulletin establishes strict minimum requirements for the peer review of
    highly influential scientific assessments, including a requirement that
    an agency ``make the draft scientific assessment available to the
    public for comment at the same time it is submitted for peer review . .
    . and sponsor a public meeting where oral presentations on scientific
    issues can be made to the peer reviewers by interested members of the
    public.''
    ---------------------------------------------------------------------------
        \9\ 15 U.S.C. 2057c
    ---------------------------------------------------------------------------
        The need for more rigorous peer review is essential because the
    CPSC's proposed rule is predicated on a precedent-setting cumulative
    risk assessment used by the CHAP as it developed its recommendations.
    The CPSC should ensure that the data and analysis used to support
    regulatory activity complies with the OMB's and the CPSC's own
    information quality guidelines, which state that the CPSC will apply
    ``risk assessment practices . . . that are widely accepted among
    domestic and international public health agencies.'' When misapplied
    within the regulatory process, this cumulative risk assessment
    methodology could have broad implications across different agencies and
    numerous regulatory programs and for all manufacturers of industrial
    chemicals and consumer products.
    III. Conclusion
        Chairman Thune, Ranking Member Nelson and members of the Committee,
    thank you for the opportunity to testify today and your attention to
    these issues. The CPSC's aggressive regulatory agenda would establish
    significant challenges in meeting the consumer protection objectives
    that manufacturers, retailers and others share with the CPSC. The CPSC
    should embrace the prospect of developing regulatory proposals
    cooperatively with impacted stakeholders, including manufacturers,
    retailers, consumer advocacy organizations and others.
        We urge the CPSC to formalize proactive engagement with interested
    parties so that its commitment is realized in actions and not just
    words. We are committed to working together with the CPSC and other
    stakeholders to advance consumer protections and improve its processes.

        The Chairman. Thank you, Mr. Palmieri.
        Mr. Shapiro.

        STATEMENT OF GARY SHAPIRO, PRESIDENT AND CEO, CONSUMER
                         TECHNOLOGY ASSOCIATION

        Mr. Shapiro. Thank you, Chairman Thune and Ranking Member
    Nelson, for the opportunity to testify about how regulation
    stifles innovation. Also, thank you both for sponsoring the
    MOBILE NOW Act, which focuses directly on broadband and
    innovation.
        The Consumer Technology Association represents over 2,200
    companies across the U.S. consumer technology industry. We also
    own and produce the world's largest business event, the CES,
    held each January in Las Vegas. Our mission is simple, to
    promote innovation.
        We are the most innovative nation on Earth, but I believe
    that the changes in technology benefiting mankind are actually
    just beginning. And it's not just the big flashy companies;
    over 80 percent of our members are small businesses and
    startups. For them, the cost of overregulation may mean the
    difference between survival and failure.
        The cost and complexity of following Federal rules slows
    product launches, hurts the hiring of Americans, and is a drag
    on innovation. It has created a lawyer tax on American
    companies. Simply put, every dollar a company spends hiring
    lawyers is a dollar not spent hiring productive Americans. In
    fact, according to the Competitive Enterprise Institute, since
    2009, Federal regulators have issued more than 20,000 rules,
    costing at least $100 billion annually in new compliance costs.
        Every regulator means well, but many of the regulations
    have unintended consequences. For example, rules barring unpaid
    student internships, rules encouraging promiscuous student
    loans for any course of study, rules mandating health care for
    any hire working more than a few months, and rules requiring
    overtime for anyone making less than $47,000 have combined to
    dampen prospects for recent college graduates and probably
    contributed to the fact that over half of the student loans, 3
    years out of college, are not even being timely repaid.
        While a Federal court recently struck down the overtime
    rule, just planning for it frustrated entrepreneurs who work
    day and night to get their products to market. They don't
    understand why the Federal Government insists they pay overtime
    to young professionals eager to get experience or take a risk
    with their friends on a new venture.
        And Federal mandates don't just impact the labor market,
    they also limit the ability of companies of all sizes to
    develop new products. Take self-driving cars. We're engaged
    with the DOT and NHTSA on the Federal Automated Vehicles
    Policy, and we're very actually encouraged by their focus on a
    national policy and the safety of self-driving vehicles, which
    allows innovation and competition.
        While NHTSA has been forward-looking on self-driving cars,
    it has totally overstepped its authority by issuing guidelines
    seeking to regulate every device and application that a driver
    can simply carry into the car. By issuing guidelines on how
    smartphones and tablets and even wearable fitness devices
    function near a driver, NHTSA has exceeded its authority and
    invited uncertainty in litigation.
        There are positive models. One bipartisan model where
    reason prevails has been the Federal Trade Commission. Acting
    FTC Chairman Maureen Ohlhausen describes her approach as
    follows: first, approach issues with regulatory humility,
    recognizing the fundamental limits of regulation; second,
    prioritize action to resolve areas of real consumer harm; and,
    third, use the appropriate tools.
        Chairman Thune, you've spoken about updating the
    communications laws, and we look forward to working closer with
    you. We also look forward to working with Chairman Pai as we
    look at the 1996 Act and revise it. That Act encourages new
    technology and innovation.
        Now, a few weeks ago at CES in Las Vegas, we saw
    developments in health care, security, food production, and
    education, which will improve lives, and they all rely on
    artificial intelligence, deep data, and Internet connectivity.
    The Internet of Things is actually what describes how
    incredibly low-cost sensors connected to the Internet will
    change how we manufacture, travel, learn, stay healthy, become
    educated, and even our safety, but a 2015 Politico
    investigation revealed that IoT neighbor technologies occurred
    by at least 2 dozen Federal agencies and more than 30
    congressional committees. We welcome the efforts of Senators
    Fischer, Booker, and Schatz on the DIGIT Act, which creates
    greater coordination with the U.S. Government on IoT.
        Regulation is a blunt and static instrument. Unnecessary
    mandates not only waste taxpayer money, they impose burdens
    that slow innovation, stifle creativity, reduce consumer
    choice, and ultimately threaten jobs and our economy. And, I
    give President Trump credit for highlighting that business
    leaders have an ethical obligation to our country that
    transcends the morass of highly detailed rules every U.S.
    business must follow, but by removing unjustified rules and
    encouraging reasonable bipartisan consumer protections and
    competition will free up companies to spend less on lawyers and
    more on hiring Americans.
        Another approach, welcomed by the FTC, is for industry to
    set guidelines and standards so that government does not
    intervene. For example, we certify installers of car
    technology, and we have developed privacy guidelines for
    fitness wearable device makers. Government should step in only
    if business fails to or if it sets unfair barriers to industry.
        Our industry supports more than 15 million American jobs,
    and we do what we do best, develop new technologies that
    improve lives when people with big dreams have the flexibility
    to innovate.
        We look forward to working with you to ensure the U.S.
    remains a world technology and innovation leader.
        [The prepared statement of Mr. Shapiro follows:]

            Prepared Statement of Gary Shapiro, President and CEO,
                        Consumer Technology Association
    About CTA and CES
        Thank you for Chairman Thune and Ranking Member Nelson for the
    opportunity to testify about how over-regulation stifles innovation. I
    am Gary Shapiro, President and CEO of the Consumer Technology
    Association (CTA)TM.
        CTA represents more than 2,200 member companies who comprise the
    $292 billion U.S. consumer technology industry, which supports more
    than 15 million American jobs. We work to advance public policy that
    fosters innovation, advances competitiveness and promotes job and
    business creation. Our members touch every aspect of tech and
    innovation including traditional consumer technology companies, sharing
    economy and Internet companies, and auto manufacturers and suppliers.
    Eighty percent of our member companies are small businesses and
    startups. For these businesses, the cost of over-regulation means the
    difference between survival and failure. In fact, CTA recently surveyed
    our member companies in November on public policy priorities and over-
    regulation was raised as one of their primary business challenges in
    growing jobs and continuing innovation in the United States.
        CTA also owns and produces CES--the world's largest business
    event, held every January in Las Vegas. At CES 2017, less than one
    month ago, we celebrated 50 years as the largest global gathering of
    innovation and connectivity. With more than 3,800 exhibiting companies
    stretching across more than 2.6 million net square feet, this year's
    CES showcased how our industry is bettering the world through
    connectivity and innovation, touching every facet of our lives--and the
    lives of those around the world.
        I've been at the helm of CTA for more than 20 years, and from this
    vantage point, I have had the good fortune of having a front row seat
    each day as our members develop and introduce innovative and life-
    changing products and services, create jobs and grow our economy. But
    tech companies--startups and Fortune 500s alike--need flexibility to
    innovate.
    Examples of Over-regulation
        The simple fact is, over-regulation stifles growth and harms
    innovation. Since 2009, Federal regulators have issued 20,642
    regulations, increasing regulatory compliance costs by more than $100
    billion annually. Independent estimates suggest total regulatory costs
    exceed $2 trillion annually, with small businesses shouldering a
    disproportionate share of the burden--36 percent more than the
    regulatory cost facing large firms.
        Overtime Rule: The Obama Administration's overtime rule, which
    would have doubled the overtime floor from $23,660 to $47,476 per
    year--is a prime example of good policy intentions with harmful
    regulatory results. Increasing the minimum exemption eligibility for
    white-collar employees may seem beneficial to workers. However, the
    consequences would have been devastating for small businesses, startups
    and the people they want to hire.
        The Department of Labor's proposed rule disregarded the realities
    of running a small business or startup and ignored how the rule would
    choke U.S. innovation. Startups--especially tech firms--are a primary
    source of job creation in the U.S., but most of them cannot pay the
    higher salaries of more-established companies. The one-size-fits-all
    mandate left virtually no flexibility for startups--especially
    technology companies--that don't rely on a traditional timecard pay
    structure. Fortunately, a Federal court judge granted a preliminary
    injunction of the entire rule prior to its December 1 effective date.
        The overtime rule is not an exception. Over the last eight years
    we've seen regulatory overreach on everything from student loans to
    banning unpaid internships keeping useful work experiences from those
    seeking to learn. These new rules, combined with the rising costs of
    the Affordable Care Act, have contributed to bleak training and job
    prospects, particularly in the tech workforce.
        Conflict Minerals: Another well-intended law with a tremendously
    adverse impact is the Conflict Minerals Provision of the Dodd-Frank
    Wall Street Reform and Consumer Protection Act of 2010. In an attempt
    to improve human rights in one African nation (the Democratic Republic
    of the Congo), the provision requires that any publicly listed company
    using a variety of raw materials comply with a series of onerous and
    costly certification and auditing mandates. Oversight of this major new
    obligation was delegated to the Securities and Exchange Commission, an
    already-overburdened agency with no experience overseeing manufacturing
    or import-exports. The National Association of Manufacturers reports
    compliance costs to the U.S. economy between $9 and $16 billion each
    year. Ironically, by incentivizing manufacturers to avoid minerals from
    the Congo, the Conflict Minerals rule has apparently harmed the
    Congolese economy and worsened the humanitarian situation.
    CTA Regulatory Engagement with Departments and Agencies Under
      Jurisdiction of Senate Commerce, Space, and Transportation Committee
        CTA works closely with a number departments and regulatory agencies
    under the jurisdiction of the Senate Commerce, Space, and
    Transportation Committee to advance pro-innovation policy and reduce
    regulatory barriers to entry. We also work with other departments and
    agencies not under the Committee's jurisdiction which present
    regulatory burdens in need of attention. While we have worked
    successfully with many departments and agencies to advance innovation,
    I appreciate the opportunity to highlight particular instances of over-
    regulation and urge regulatory humility on others.
    U.S. Department of Transportation, NHTSA--Federal Automated Vehicles
            Policy
        CTA represents a broad cross-section of the vehicle technology
    ecosystem including mapping companies, suppliers, automakers,
    aftermarket suppliers and installers. As vehicle and self-driving
    technology continue to evolve, automakers, technology companies and
    startups are partnering on new approaches to vehicle and transportation
    network design. At CES 2017, our members showcased the latest
    transportation technology that will increase safety and accessibility,
    positively disrupt legacy markets, create new employment opportunities,
    and revolutionize the way we do business and operate on-the-go. We are
    actively engaged with the Department of Transportation and the National
    Highway Traffic Safety Administration (NHTSA) on its Federal Automated
    Vehicles Policy and are encouraged by its recognition of the need for
    consistency for self-driving vehicles and the importance of flexibility
    for the industry to continue to innovate.
    U.S. Department of Transportation, NHTSA--Phase II Driver Distraction
            Guidelines
        Without question, distracted driving is unsafe and unacceptable. A
    driver's highest priority must be maintaining safe control of the
    vehicle at all times. CTA has been engaged with NHTSA on its Phase II
    voluntary guidelines to address driver distraction. Our member
    companies have created driver-assist technologies and apps that reduce
    or eliminate distractions such as drowsiness, in-car adjustments or
    texting while driving. Other innovations like Bluetooth solutions and
    do-not-disturb apps assist in initiating corrective actions when
    drivers lose focus. In addition to innovations within the car
    environment, the technology industry has made considerable strides to
    raise awareness of the dangers of distracted driving through
    initiatives and campaigns such as ``It Can Wait.'' More, we are working
    to advance the ultimate solution to distracted driving--the rapid
    rollout of self-driving cars.
        CTA shares NHTSA's concerns about the hazards of distracted
    driving. However, we believe the Phase II Guidelines take the wrong
    approach to technology, both in substance and by impermissibly reaching
    beyond NHTSA's statutory authority under the National Traffic and Motor
    Vehicle Safety Act (``Safety Act''). NHTSA does not have the authority
    to dictate the design of smartphone apps and other devices used in
    cars--its legal jurisdiction begins and ends with motor vehicle
    equipment. This regulatory overreach could thwart innovative safety
    solutions from ever coming to market. NHTSA's regulatory premise is
    dangerously expansive, representing the worst of government overreach.
    Under NHTSA's vision, it could have the effect of influencing the
    design of technology products down to the fitness tracker worn on a
    driver. Such a vast and extreme expansion of NHTSA's authority, if it
    were to happen, would have to be explicitly granted by Congress.
        Further, NHTSA justifies this overreach by arguing that the
    proposed guidelines ``are voluntary and nonbinding, they will not
    require action of any kind, and for that reason they will not confer
    benefits or impose costs.'' This may be true in a technical sense;
    however, in practice the existence of Federal guidelines creates
    tremendous pressure for industry to adhere to them. NHTSA's intention
    to monitor compliance with the guidelines may create a particular kind
    of pressure for industry to adhere, rather than risk the appearance of
    disagreement with or disregard for the agency's perspective. The bottom
    line is agency pronouncements have the power to induce or coerce
    industry action; if they did not, then there would be no point to the
    agency's lengthy and involved process of developing the proposed
    guidelines.
    Federal Aviation Administration--Unmanned Aircraft Systems (Drones)
        I would like to highlight the positive example the Federal Aviation
    Administration has set in handling the emerging drone technology
    industry. FAA's early and ongoing engagement with the drone industry
    and user community is to be commended, and I hope, replicated by other
    departments and agencies approaching new industries. FAA reached out to
    the emerging industry early, appointing staff to engage directly and
    keeping the path of communication open. They solicit feedback from
    industry and stakeholders regularly, even appointing an advisory
    committee (the Drone Advisory Committee) to assist the agency with key
    issues. However, even with this orientation and approach, regulatory
    flexibility for FAA is needed as they still must work through a
    regulatory regime established long before consumer and commercial
    drones took to the air.
    Federal Communications Commission--Broadband Privacy Rules
        Late last year and over many objections, the Federal Communications
    Commission (FCC) adopted privacy rules for broadband and
    telecommunications services related to its broader Open Internet Order.
    Unfortunately, in adopting new broadband privacy rules the FCC took
    actions that threaten the current and future viability of and the
    innovations that have come from a vibrant internet. While the rules
    only apply to Internet service providers, it may establishes a
    dangerous precedent for the entire Internet ecosystem. CTA, along with
    Internet and telecommunications entities, petitioned the FCC to
    reconsider its rules given they substantially differ from the time-
    tested and successful Federal Trade Commission (FTC) framework and fail
    to ensure a coherent and consistent approach to privacy. As an example,
    the FCC broadband privacy rules classify Web-browsing and application
    (app) usage information that carriers currently collect as sensitive
    and thus subject to opt-in consent for most usage and disclosures. This
    threatens to undermine the innovation and competition within the
    vibrant Internet ecosystem which has greatly benefited consumers and
    the U.S. economy. Even more, the FTC--the primary government agency
    responsible for privacy--provided expert recommendations urging a
    sensitivity-based approach to information consistent with the FTC's
    current and successful privacy regime that the FCC failed to adopt. The
    FCC also disregarded the FTC's concerns about ``notice fatigue'' of
    receiving too many notices resulting in consumers ignoring important
    notices. The result is broad regulatory overreach over the Internet by
    the FCC that creates legal uncertainty compared to the more studied
    consultative approach of the FTC which looks at real harm to real
    Americans.
        CTA has joined with a number of telecommunications, technology and
    Internet companies and organizations in support of congressional
    efforts to use the congressional review act to vitiate the FCC's
    broadband privacy rules.
        CTA continues to believe that an ``actual harm''-based approach
    toward regulation is more effective in protecting consumers, rather
    than the ex ante regulations that the FCC has more recently favored.
    Further, in the words of Acting FTC Chairman Maureen Ohlhausen, it is
    imperative that regulators practice ``regulatory humility'' when doing
    their jobs. As Commissioner Ohlhausen has so aptly stated: ``First,
    approach issues with regulatory humility, recognizing the fundamental
    limits of regulation. Second, prioritize action to resolve areas of
    real consumer harm. Third, use the appropriate tools.'' I agree with
    Acting FTC Chairman Ohlhausen's view that ``these principles apply to
    regulation generally, but that they are particularly critical for
    technology or other fast-moving industries.''
    Federal Communications Commission--Communications Act Rewrite
        Chairman Thune has indicated the importance of updating our
    communications laws, and we look forward to working closely with the
    Senate Commerce Committee to advance communications policy that
    advances innovation and doesn't stifle the next wave of technology and
    Internet company founders and application developers. Twenty years
    after it became law, the 1996 Telecom Act still helps encourage new
    technology and innovation. As I said at the time, the Act would aid our
    successful transition to HDTV, move in the right direction on spectrum
    and enable flexibility in product offering and consumer choice. In the
    last two decades, the Act has not hindered companies from creating new
    products and services, and thanks to the internet, new services and
    business models have benefitted the American people.
        As we seek to improve upon the 1996 Telecom Act, we welcome the
    opportunity to ensure that any updates continue to enable regulatory
    flexibility. We also look forward to working with FCC Chairman Ajit Pai
    to ensure that the commission is focused on regulations that promote
    innovation and flexibility.
    Department of Commerce, NTIA, and NIST--The Internet of Things (IoT)
        This year's CES showcased the power of innovation and connectivity,
    and how it's changing our lives for the better. Whether it's called the
    Internet of Things, the Connected World, or the Internet of Everything,
    this rapidly expanding connectivity among our everyday devices is
    improving our efficiency, our sustainability and the way we interact
    with people. This connectivity will save consumers time and money,
    drive economic growth and enhance the United States' role as a global
    leader in technology if we continue to exercise regulatory humility and
    not curb current and future innovations.
        CTA recently released a White Paper, ``Internet of Things: A
    Framework for the Next Administration'' in which we addressed both the
    opportunities and challenges of IoT consumer applications, and address
    ways policymakers can encourage and support their growth.
        The opportunities and benefits of the IoT are clear. In modernizing
    our homes, we'll be able to monitor systems to alert us to intruders,
    or if the family pet has wandered off. An app--designed with veterans
    in mind--can track the symptoms of post-traumatic stress disorder
    (PTSD) during sleep in order to wake PTSD sufferers out of their night
    terrors. Remote health monitoring devices can reduce the need for
    doctor's visits and allow us to care for our loved ones even if we're
    not there. Connected blood glucose meters can upload readings in real
    time to the cloud and provide diabetes patients with instant feedback.
    The IoT implemented In self-driving vehicles can expand mobility and
    independence for seniors and the visually-impaired, while improving
    safety for all. And connected cars with vehicle-to-vehicle sensors will
    improve real-time information on hazards ahead, enhancing safety.
        A significant challenge presented by the IoT is the fragmented
    approach of Federal Government agencies toward its development. A 2015
    POLITICO investigation revealed that ``new networked-object
    technologies are covered by at least two dozen separate Federal
    agencies--from the Food and Drug Administration (FDA) to the NHTSA,
    from aviation to agriculture--and more than 30 different congressional
    committees.''
        We welcome the efforts of Senator Deb Fischer (R-NE), Senator Cory
    Booker (D-NJ), and Senator Brian Schatz (D-HI) on S.88, the Developing
    Innovation and Growing the Internet of Things (DIGIT Act) that seeks to
    create greater coordination within the U.S. Government. This bill would
    create a working group that would address challenges facing IoT, such
    as ensuring Federal agencies are prepared to adopt the IoT and
    identifying spectrum needs.
        Government must allow consumers and the market to decide IoT
    winners and losers, rather than dictating outcomes itself. In this way,
    regulation is on its own a challenge spurred by rapid IoT developments.
    Government can serve as either an enabler or an inhibitor to achieving
    the IoT's promise. And it can be an unintentional inhibitor, chilling
    innovation, when it sends mixed messages through various government
    agencies engaging in uncoordinated oversight activities.
    Regulation and the Jobs of the Future
        As has happened since the industrial revolution, innovation is
    changing the structure and skills required for employment. For example,
    more Americans are now opting for independent and flexible work
    arrangements. This choice is made possible by online platforms that
    allow individuals to be entrepreneurs using resources they own. These
    new employment options should be embraced by Congress, and we must
    ensure that our health care and employment benefits policies reflect
    the realities of the new employment marketplace. What we should not do
    is attempt via regulation to shoehorn these new models into regulations
    designed for employment structures of the past.
        Disruption by its very nature is unsettling to the status quo and
    incumbent players. At CTA we embrace disruption and support disruptive
    companies through our Disruptive Innovation Council. The Council
    includes companies that were not household names five years ago, but
    are now dominating their respective industries and creating new
    economic opportunities and solutions to a variety of challenges across
    the country.
        Regulation can often be used by incumbent players to protect their
    business models. We've seen this activity in states and municipalities,
    where policymakers have gone after ridesharing and home-sharing
    companies in an attempt to protect incumbent competitors, but instead
    have artificially limited consumer choice and closed off new job
    prospects for sharing economy workers. Innovation will continue to
    create new economic possibilities, and inevitably will create some
    challenges.
        More, many of these new technologies allow users and providers to
    rate each other. For example, a potential ride-service user can see how
    previous riders have rated the driver, and the driver can see a similar
    rating for the passenger. Based on this information, both participants
    can decide whether they wish to continue the transaction or not. This
    obviates one of the key ``consumer protection'' rationales for
    regulation, where the government was required to guarantee the quality
    and integrity of market participants.
        Rather than reacting to any challenges with restrictive regulation,
    government should exercise regulatory humility to work with industry to
    make sure Americans across the country are best able to take advantage
    of the opportunities created by new technologies.
    Conclusion
        Tech is a major driver of U.S. jobs and economic activity. Our
    industry directly and indirectly accounts for 10 percent of our
    country's gross domestic product. In 2015 alone, the tech sector
    generated $413 billion in taxes, created $3.5 trillion in economic
    output and supported 15.3 million U.S. jobs.
        More, technology is improving lives and transforming our society in
    a positive way. Self-driving cars will soon drastically reduce the
    number of Americans who perish tragically every year on our Nation's
    highways. Sensors will enable our cities to efficiently manage energy
    usage, reducing carbon emissions and making our environment cleaner.
    New medical advances promise to revolutionize the detection and
    treatment of cancer and other diseases.
        Americans like, trust and eagerly adopt our industry's products and
    services. Indeed, our members are at or near the top of virtually every
    list of America's most trusted companies. The technology business is
    uniquely dynamic and fiercely competitive. Companies rise to the top
    only to be quickly displaced. If users judge that a company fails to
    meet expectations--by, for example, failing to adequately safeguard
    consumer data--the consumer response is swift and severe. The powerful
    incentive that ensures our members meet consumer needs isn't
    regulation, but the nature of the innovation marketplace itself.
        Regulation is a blunt and static instrument. Unnecessary mandates
    not only waste taxpayer money--they impose burdens that slow
    innovation, stifle creativity, reduce consumers' choices and ultimately
    threaten jobs and the economy. By addressing new technologies with a
    smart, flexible and light-touch regulatory approach, Congress and the
    administration can allow businesses leaders to invest time and
    resources into growing their companies and creating high paying new
    jobs.
        Our industry does what it does best--empower entrepreneurs, grow
    companies and improve lives--when people with big dreams have the
    flexibility to innovate. We look forward to working with you to ensure
    that the United States remains the world's technology leader.

        The Chairman. Thank you, Mr. Shapiro.
        Mr. White.

             STATEMENT OF ADAM J. WHITE, RESEARCH FELLOW,
                           HOOVER INSTITUTION

        Mr. White. Chairman Thune, Ranking Member Nelson, and other
    Members of the Committee, thank you for inviting me to testify
    today on this issue of profound national importance. The modern
    administrative state's ever-growing burdens on the American
    economy have been the focus of serious national debate in
    agency proceedings, on the campaign trail, and even in the
    Supreme Court. But it is crucial for these issues to be
    discussed here in the first branch, for Congress is ultimately
    responsible for establishing the agencies, for empowering and
    funding them, and, when necessary, for modernizing and
    reforming them. And today, reform is badly needed.
        As Chief Justice Roberts recently observed, ``[t]he
    administrative state wields vast power that touches almost
    every aspect of daily life . . . The Framers could hardly have
    envisioned today's vast and varied Federal bureaucracy and the
    authority that administrative agencies now hold over our
    economic, social, and political activities. . . . The
    administrative state, with its reams of regulations, would
    leave them, the Framers, rubbing their eyes.''
        In other words, the present crisis is not just a failure of
    public administration; rather, the modern administrative state
    reflects a profound failure of Republican self-government. And,
    as I note in my written testimony, the burdens of this failure
    fall more heavily on some people and businesses than others.
    Big businesses can afford armies of lawyers, lobbyists, and
    compliance officers; small businesses only wish they could.
        As one prominent CEO remarked just a few years ago, a flood
    of regulatory requirements becomes, in his word, the moat that
    protects the biggest companies from new competitors. Please, I
    urge you, drain that moat. While our country needs big and
    small businesses alike, we especially need small businesses to
    fuel the American economic recovery.
        With that in mind, my written testimony offers three
    reforms I hope you'll consider.
        First, Congress needs to reform and modernize the statutes
    that create, empower, and limit agencies. Many of them, like
    the FCC, operate under antiquated statutes enacted decades and
    decades ago. They need to be reformed and modernized to reflect
    current circumstances and Congress's modern legislative
    intentions.
        Second, Congress should require agencies to look back at
    their old regulations. Specifically, agencies should look back
    at the analyses and predictions that they used to justify
    regulations in the first place, to see what predictions proved
    right and which proved wrong. Only when agencies confront their
    own failures and successes will they begin to approach future
    rulemakings with a truly open mind and modesty.
        Finally, Congress should require agencies to modernize
    their compliance frameworks, to rely more effectively on modern
    technology, to minimize compliance burdens on both the public
    and the agencies.
        Let me close with this: opponents of regulatory reform
    often complain that Congress should not modernize the statute's
    governing agencies because this would burden the agencies' own
    freedom and discretion. Those are important concerns, but I
    urge you to also have the same concerns for the burdens and
    limits that agencies themselves put on American people and
    businesses.
        Perhaps the biggest cost of overregulation is the
    opportunity cost, the economic growth that is stifled, the new
    technologies that would have improved or saved lives, but are
    never invented. You can't photograph these lost opportunities,
    you can't describe them, but they are costs all the same.
        I'm not opposed to regulations or to agencies, but just as
    we count on agencies to regulate us in the public interest, we
    need Congress to regulate the regulators in the public
    interest. In carrying out that responsibility, Congress should
    ignore legal fictions and long-outdated notions of what the
    administrative state was 70 years ago. Instead, Congress must
    grapple with today's administrative reality.
        Thank you.
        [The prepared statement of Mr. White follows:]

          Prepared Statement of Adam J. White, Hoover Institution \1\
    ---------------------------------------------------------------------------
        \1\ Research Fellow, the Hoover Institution; Adjunct Professor, the
    Antonin Scalia Law School at George Mason University; Council Member,
    the ABA's Section of Administrative Law and Regulatory Practice. He is
    of counsel to the firm of Boyden Gray & Associates PLLC in a case
    involving the FCC's spectrum incentive auction, as described in this
    testimony. The views expressed in this testimony are mine alone, and
    are not offered on behalf of the Hoover Institution or any other
    organization.
    ---------------------------------------------------------------------------
        Chairman Thune, Ranking Member Nelson, and other members of the
    Committee, thank you for inviting me to testify today on an issue of
    such immediate national importance: the modern administrative state's
    heavy burdens on the American people and American businesses. This has
    been a subject of particularly intense national debate in recent years,
    in a variety of forums: in Congress; in agency proceedings; on the
    presidential campaign trail; and even in the Supreme Court and other
    Federal courts.
        Indeed, this problem was diagnosed candidly by President Obama just
    six years ago, in his 2011 executive order directing agencies to reduce
    their existing regulatory burdens. ``Our regulatory system must protect
    public health, welfare, safety, and our environment while promoting
    economic growth, innovation, competitiveness, and job creation,'' he
    said. To that end, agencies ``must promote predictability and reduce
    uncertainty,'' and ``must identify and use the best, most innovative,
    and least burdensome tools for achieving regulatory ends.'' And because
    ``[s]ome sectors and industries face a significant number of regulatory
    requirements, some of which may be redundant, inconsistent, or
    overlapping,'' President Obama further recognized that ``[g]reater
    coordination across agencies could reduce these requirements, thus
    reducing costs and simplifying and harmonizing rules,'' and so he
    directed the agencies to promote ``coordination, simplification, and
    harmonization,'' and to ``identify, as appropriate, means to achieve
    regulatory goals that are designed to promote innovation.'' \2\
    ---------------------------------------------------------------------------
        \2\ Exec. Order 13563 (Jan. 18, 2011).
    ---------------------------------------------------------------------------
        The failures and errors of today's administrative state are not
    simply problems of public administration. More fundamentally, today's
    administrative state is a profound failure of republican self-
    governance under a Constitution of limited Federal powers. As Chief
    Justice Roberts observed recently, ``[t]he administrative state wields
    vast power and touches almost every aspect of daily life. . . . The
    Framers could hardly have envisioned today's vast and varied Federal
    bureaucracy and the authority administrative agencies now hold over our
    economic, social, and political activities. . . . The administrative
    state with its reams of regulations would leave them rubbing their
    eyes.'' \3\
    ---------------------------------------------------------------------------
        \3\ City of Arlington, Tex. v. FCC, 133 S. Ct. 1863, 1878 (2013)
    (Roberts, C.J., dissenting) (quotation marks, brackets, and citations
    omitted).
    ---------------------------------------------------------------------------
        But however true and important such statements from the executive
    and judicial branches are, it is even more important for these matters
    to be discussed here in the First Branch--for Congress truly is the
    primary source of the modern administrative state. While the Executive
    Branch instills ``energy'' in the myriad Federal agencies, and the
    judicial branch's deferential habits have for decades facilitated the
    agencies' expansive assertions of power, the legislative branch bears
    ultimate responsibility for empowering agencies and, when necessary,
    reining them back in.
        As the Supreme Court once observed, ``an agency literally has no
    power to act . . . unless and until Congress confers power upon it.''
    \4\ Congress has conferred immense power on the agencies--and over the
    last century it has often legislated such grants in words so capacious
    that the agencies have found great success securing judicial deference
    to regulators' unabashed reach for even greater powers well beyond
    Congress's original intentions. By the same token, it must fall to
    Congress to reform those grants of power to reflect the modern
    administrative, legal, economic, social, and technological reality.
    ---------------------------------------------------------------------------
        \4\ La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 374 (1986).
    ---------------------------------------------------------------------------
    I. Drain the ``Moat'': Modern Regulation Disproportionately Burdens
            Small Businesses
        Much of the cost of regulations--in billions or trillions of
    dollars, or in thousands of pages of regulations, or in countless man-
    hours dedicated to compliance with all of the regulations--is evident
    in myriad reports by scholars and policy analysts studying regulatory
    burdens,\5\ and my fellow witnesses surely have examples from their own
    industries.
    ---------------------------------------------------------------------------
        \5\ Some of these studies and reports, by the George Washington
    University Regulatory Studies Center, Mercatus Center, Competitive
    Enterprise Institute, Heritage Foundation, American Action Forum, are
    noted in the new book that I co-authored with Oren Cass and Kevin
    Kosar, titled Policy Reforms for an Accountable Administrative State.
    Published by National Affairs, the book is freely available online at
    http://www.nationalaffairs.com/publications/page/regulation-policy-
    book.
    ---------------------------------------------------------------------------
        But before turning my focus to some of the legal and policy reforms
    needed to alleviate those regulatory burdens, I think it is important
    to stress one of the most regrettable and regressive aspects of those
    burdens: they fall disproportionately on small businesses, precisely
    the businesses on whom the Nation is counting to spur a wide-reaching
    economic recovery.
        I came to see this firsthand in my time as a practicing lawyer.
    Before joining the Hoover Institution, my law-firm colleagues and I
    were hired as co-counsel to a small community bank from Big Spring,
    Texas, in a Federal lawsuit challenging the Consumer Financial
    Protection Bureau's unprecedented (and, we argued, unconstitutional)
    structure.\6\ We saw the immense costs that our client was bearing from
    the CFPB's aggressive regulatory agenda, but we also saw that bigger
    banks found the regulatory burdens much more sustainable. In fact, the
    biggest banks did not hesitate to boast that regulatory burdens were
    the big banks' competitive advantage. The CEO of JPMorgan Chase told
    analysts in 2013 that new financial regulations could serve as the
    ``moat'' that would make the industry (in the analysts' words) ``more
    expensive and tend to make it tougher for smaller players to enter the
    market.'' \7\ Goldman Sachs's CEO made the same point two years later,
    in 2015: ``More intense regulatory and technology requirements have
    raised the barriers to entry higher than at any other time in modern
    history,'' he told an investor conference. ``This is an expensive
    business to be in, if you don't have the market share in scale.
    Consider the numerous business exits that have been announced by our
    peers as they reassessed their competitive positioning and relative
    returns.'' \8\
    ---------------------------------------------------------------------------
        \6\ The case, still pending in the U.S. District Court for the
    District of Columbia, is State National Bank of Big Spring v. Lew. In
    recent months the D.C. Circuit declared the CFPB's structure
    unconstitutional, in another case in which we participated, PHH Corp.
    v. CFPB, 839 F.3d 1 (D.C. Cir. 2016) (petition for reh'g en banc
    pending). While Boyden Gray & Associates continues to represent the
    plaintiffs, I am no longer counsel to the plaintiffs in that case or in
    any other challenge to the CFPB.
        \7\ Citi Research, JP Morgan Chase & Co. (JPM): Meeting Notes w/CEO
    Jamie Dimon; Reiterate Buy and $53 Target as Solid Execution Drives
    Double-Digit Returns in 2013 (Feb. 3, 2013), quoted in John Carney,
    ``Surprise! Dodd-Frank Helps JPMorgan Chase,'' CNBC (Feb. 4, 2014), at
    http://www.cnbc.com/id/100431660; see also Hugh Son, ``Dimon Says Banks
    to Gain as Crisis-Era Rules Sting Poor,'' Bloomberg (Apr. 10, 2014), at
     https://www.bloomberg.com/news/articles/2014-04-10/dimon-says-banks-
    to-gain-as-crisis-era-rules-sting-poor.
        \8\ Editorial, ``Regulation Is Good for Goldman,'' Wall St. Journal
    (Feb. 11, 2015), at https://www.wsj.com/articles/regulation-is-good-
    for-goldman-1423700859.
    ---------------------------------------------------------------------------
        And the facts suggest that the Jamie Dimon's and Lloyd Blankfein's
    predictions were well founded. As the Mercatus Center, AEI, and others
    have reported, the years since Dodd-Frank have witnessed significant
    consolidation in the banking industry, as community banks give up and
    merge.\9\ While community banks and financial regulation fall outside
    of this Committee's jurisdiction, the lessons that that industry has
    learned from Dodd-Frank should inform regulatory reform across
    industries.
    ---------------------------------------------------------------------------
        \9\ Hester Peirce et al., How Are Small Banks Faring Under Dodd-
    Frank?, Mercatus Working Paper No. 14-05 (Feb. 2014), at https://
    www.mercatus.org/system/files/Peirce_SmallBank
    Survey_v1.pdf; Tanya D. Marsh & Joseph W. Norman, AEI (May 2013), at
    http://www.aei.org/wp-content/uploads/2013/05/-the-impact-of-doddfrank-
    on-community-banks_164334553537.pdf
    ---------------------------------------------------------------------------
        Another example I witnessed firsthand hits closer to this
    Committee's home. Before I joined the Hoover Institution, my law-firm
    colleagues and I became counsel to parties challenging the FCC's orders
    establishing the unprecedented broadcast spectrum incentive auction, in
    which the FCC would conduct a reverse auction to buy back spectrum
    usage rights from licensees, then reorganize the available spectrum,
    and finally auction spectrum usage rights back to the public for new
    non-television uses.\10\ In the Spectrum Act, which Congress legislated
    to authorize to the FCC to undertake an incentive auction, Congress
    took care to expressly protect the spectrum usage rights of low-power
    television (LPTV) stations, which tend to broadcast for religious or
    ethnic communities that would otherwise go unserved by major
    broadcasters. Specifically, Congress provided in the Spectrum Act that
    ``[n]othing in this subsection shall be construed to alter the spectrum
    usage rights of low-power television stations.'' \11\ But the FCC
    radically reinterpreted that provision to presume that LPTV stations
    actually have no spectrum usage rights that prevent the FCC from
    unilaterally taking away their licenses without compensation, even when
    the LPTV stations' broadcasts have not interfered with the broadcasts
    of other licensees; and the D.C. Circuit ultimately affirmed the FCC's
    interpretation of what the court held to be ambiguous statutory
    language.\12\ That regrettable outcome--which threatens to force the
    shutdown of many LPTV stations, by the FCC's own admission \13\--
    highlights another major disadvantage that smaller companies face in
    the regulatory context: when Congress legislates in broad terms, it
    gives regulators much more discretion to impose their own policy
    preferences with the added benefit of significant judicial deference.
    In that context, small companies are left to fend for themselves in
    agency proceedings, where they enjoy far fewer of the resources and
    tools wielded by their much larger competitors.
    ---------------------------------------------------------------------------
        \10\ I continue to be ``of counsel'' to Boyden Gray & Associates,
    and to the clients, in their ongoing challenge to the FCC's spectrum
    auction orders.
        \11\ 47 U.S.C. Sec. 1452(b)(5).
        \12\ Mako Communications v. FCC, 835 F.3d 146 (D.C. Cir. 2016). Our
    own parallel case, Free Access & Broadcast Telemedia, LLC v. FCC, was
    dismissed on jurisdictional grounds.
        \13\ 27 FCC Rcd. 12357, 12528  30 (2012).
    ---------------------------------------------------------------------------
        Thus, for all of the talk today of ``economic inequality''--of
    structural biases that systematically benefit the richest instead of
    the poorest--I would urge you to keep in mind the modern problem of
    ``regulatory inequality'': the structural biases that systematically
    benefit the biggest businesses, who fare much better before Federal
    regulators than their smaller competitors do. Because the prospects for
    economic recovery depend so heavily on the fate of small businesses, I
    urge you to keep in mind the need to focus especially on reforms to
    relax the significant regulatory burdens on small businesses--which
    requires, as I've noted here, fundamental reform of the modern
    administrative state. Let me now offer a few general suggestions for
    regulatory reform.
    II. Modernize the Statutes that Empower and Limit the Agencies
        As I noted above, one of the major challenges of modern
    administration is the fact that Congress long ago delegated regulatory
    power to administrative agencies in astonishingly broad terms. And
    today's administrative agencies rely on those open-ended statutory
    authorizations to justify regulatory programs far beyond anything that
    the past Congresses could have expected. The FCC, for example,
    formulated an unprecedented assertion of regulatory power over
    broadband Internet service providers--the Orwellian-named ``Open
    Internet Order,'' often called ``net neutrality''--based on not just
    the decades-old Telecommunications Act of 1996 but also the eighty-
    year-old Communications Act of 1934. Using old terms of art, such as
    ``the public interest'' or ``public convenience and necessity,'' that
    long ago came unmoored from their originally understood meanings and
    contexts, the FCC and other agencies use these vague grants of power to
    impose the policies of their own choosing, and judicial deference to
    the agencies' interpretations of these ``ambiguous'' statutes gives the
    agencies immense discretion to do so. In that context, there is little
    or no law constraining the agencies or anchoring the agencies to
    Congress's original mandates--and thus the regulated public and
    companies must fend for themselves in the agency process.
        While the agency process itself (under the antiquated
    Administrative Procedure Act of 1946) desperately needs reform,\14\ the
    most important reform will be for Congress to modernize and reform the
    statutes delegating power to the agencies in the first place. Only by
    updating old statutes to more accurately reflect Congress's intent, in
    light of modern economic, social, and regulatory realities, can
    Congress sustainably reform the costs of regulation. The point is not
    to end regulation, but rather (as President Obama observed in his
    aforementioned executive order) to ``protect public health, welfare,
    safety, and our environment while promoting economic growth,
    innovation, competitiveness, and job creation,'' to ``promote
    predictability and reduce uncertainty,'' and to ``identify and use the
    best, most innovative, and least burdensome tools for achieving
    regulatory ends.'' Congress should take up President Obama's own
    challenge to the agencies, and reform regulatory programs that are
    ``redundant, inconsistent, or overlapping.'' \15\ While it may fall to
    other parts of Congress to take the lead on reforming the
    Administrative Procedure Act and other parts of administrative law, it
    falls squarely within this Committee's jurisdiction to take the lead on
    reforming the statutes that empower Federal agencies in the first
    place.
    ---------------------------------------------------------------------------
        \14\ My co-authors and I propose many such reforms in Policy
    Reforms for an Accountable Administrative State, a new book published
    by National Affairs, freely available online at http://
    www.nationalaffairs.com/publications/page/regulation-policy-book.
        \15\ Exec. Order 13563 (Jan. 18, 2011).
    ---------------------------------------------------------------------------
    III. Improve the Regulatory Process by Helping the Agencies to Remember
            the Importance of Modesty
        I am proud to serve on the leadership council of the American Bar
    Association's Administrative Law Section. Before last year's election,
    the council drafted a Report to the President-Elect of the United
    States, suggesting a number of important reforms for him or her to
    undertake in the next four years, to improve the administrative
    process.\16\ Among those reforms, we urged the next President to
    require agencies to regularly conduct ``retrospective review'' to
    calculate the costs imposed by old regulations, to calculate the
    benefits produced by those regulations, and to compare those results to
    the agencies' original forecasts.
    ---------------------------------------------------------------------------
        \16\ The report is available at http://bit.ly/2jQEqPB.
    ---------------------------------------------------------------------------
        This was not an original or radical idea. President Obama called on
    his agencies to conduct such retrospective reviews in his Executive
    Order 13563, and again (for ``independent'' agencies) in Executive
    Order 13579. His OIRA Administrator, Cass Sunstein, sent the agencies a
    memorandum further explaining how the agencies should conduct such
    reviews.\17\ And the vaunted Administrative Conference of the United
    States has also recommended that agencies undertake retrospective
    reviews; indeed, ACUS has reported on the significant benefits that
    agencies have reaped from reviewing their own past work.\18\
    ---------------------------------------------------------------------------
        \17\ Sunstein's memorandum, issued October 26, 2011, is archived at
    https://obamawhite
    house.archives.gov/sites/default/files/omb/assets/inforeg/
    implementation-of-retrospective-review-plans.pdf.
        \18\ See ACUS Recommendation 2014-5, Retrospective Review of Agency
    Rules, at https://www.acus.gov/research-projects/retrospective-review-
    agency-rules; see also ACUS Consultant Report of Joseph E. Aldy,
    Learning from Experience: An Assessment of the Retrospective Reviews of
    Agency Rules and the Evidence for Improving the Design and
    Implementation of Regulatory Policy, at https://www.acus.gov/report/
    retrospective-review-report.
    ---------------------------------------------------------------------------
        My fellow reformers often promote retrospective review as a tool
    for identifying and repealing outdated or counterproductive
    regulations. And while that is a benefit of retrospective review, it's
    not the most important benefit. Retrospective review's biggest benefit
    is actually forward-looking.\19\
    ---------------------------------------------------------------------------
        \19\ The discussion that follows is adapted from my recent online
    essay, ``Retrospective Review, for Tomorrow's Sake,'' published on the
    Yale Journal on Regulation's ``Notice & Comment'' blog: http://
    yalejreg.com/nc/retrospective-review-for-tomorrows-sake-by-adam-j-
    white/.
    ---------------------------------------------------------------------------
        That is, by forcing agencies to look back at their previous
    rulemakings and analyze their costs and benefits today, the
    Administration would force agencies and the public to confront how
    accurate or inaccurate the agencies' own projections were in
    forecasting the rules' impacts in the first place.
        As scholars and policy analysts have often observed, agencies'
    forecasts of costs and benefits are woefully inaccurate. Former OIRA
    Administrator Susan Dudley colorfully described agencies' tendency
    ``perpetuate puffery'' by exaggerating rules' benefits and understating
    their costs.\20\ She's not alone in making these claims. In testimony
    last year before the Senate Committee on Homeland Security and
    Government Reform's Subcommittee on Regulatory Affairs and Federal
    Management, I cited several other reports--from ACUS to the CFTC's
    Inspector General--criticizing agencies for haphazard analysis.\21\ And
    as Resources for the Future's scholars observed a few years ago,
    independent agencies' cost-benefit analyses are especially
    questionable.\22\
    ---------------------------------------------------------------------------
        \20\ Susan E. Dudley, Perpetuating Puffery: An Analysis of the
    Composition of OMB's Reported Benefits of Regulation, 47 Bus. Econ. 165
    (2012); Susan E. Dudley, ``OMB's Reported Benefits of Regulation: Too
    Good to Be True?,'' Regulation (Summer 2013).
        \21\ See Adam J. White, ``Reviewing Independent Agency
    Rulemaking,'' Written Testimony before the Senate Committee on Homeland
    Security and Government Affairs, Subcommittee on Regulatory Affairs and
    Federal Management (Sept. 8, 2016), at https://www.hsgac.senate.gov/
    hearings/reviewing-independent-agency-rulemaking.
        \22\ Arthur Fraas & Randall Lutter, On the Economic Analysis of
    Regulations at Independent Regulatory Commissions, RFF Discussion Paper
    11-16 (Apr. 2011), at http://www.rff.org/files/sharepoint/WorkImages/
    Download/RFF-DP-11-16_final.pdf.
    ---------------------------------------------------------------------------
        Whatever the reason for the underwhelming quality of agencies' own
    predictive analyses, retrospective review offers a useful antidote. By
    forcing agencies to go back and review their own work, under the
    public's watchful eye, agencies may learn from their past mistakes,
    identify their own biases and blind spots, and thus become more modest
    and lest prejudiced in their own predictions and policy preferences
    going forward. Once agencies are made to grapple seriously with the
    ways in which their rules' actual impacts resemble or depart from the
    agencies' own original predictions, those agencies should demonstrate
    greater ``epistemic modesty'' in making new predictions next time.
        This is one of the major lessons to be found in Superforecasting,
    the widely acclaimed 2015 book by Philip Tetlock and Dan Gardner,
    following the authors' decades of close study of forecasters.
    Reflecting on the experience of the national intelligence agencies,
    Tetlock and Gardner urge that forecasters should keep score of their
    predictive successes and failures, and that they should be held
    meaningfully accountable--and ``meaningful accountability requires more
    than getting upset when something goes awry. It requires systemic
    tracking of accuracy[.]'' \23\ At the end of their book, they tell
    aspiring ``superforecasters'' to look back at their own past errors
    (though without hindsight bias): ``Don't try to justify or excuse your
    failures. Own them! Conduct unflinching postmortems: Where exactly did
    I go wrong? And remember that although the more common error is to
    learn too little from failure and overlook flaws in your basic
    assumptions, it is also possible to learn too much (you may have been
    basically on the right track but made a minor technical mistake that
    had big ramifications). Also don't forget to do postmortems on your
    successes too.'' \24\
    ---------------------------------------------------------------------------
        \23\ Philip E. Tetlock & Dan Gardner, Superforecasting (2015), p.
    (emphasis in original).
        \24\ Id. at 283.
    ---------------------------------------------------------------------------
        This is advice that agencies need as much as anyone. Agencies are
    in the prediction business. The public interest depends upon the
    agencies becoming as accurate as possible in making those predictions.
    Retrospective review--institutionalized, rigorous retrospective
    review--is an indispensable step toward that goal. Only once agencies
    are forced to confront their own predictive successes and failures will
    they learn to be more modest in future regulatory proceedings--and only
    then will the regulatory process become more transparent, more honest,
    more open-minded, and less dominated by the unconscious (or conscious)
    biases of regulators.
        Again, while other parts of Congress may take the lead on reforming
    the Administrative Procedure Act, this Committee can and should reform
    the agencies' own substantive statutes to incorporate retrospective-
    review requirements. And this Committee can also use its oversight
    power to challenge agencies to rigorously scrutinize their own previous
    analyses.
    IV. Eliminate Truly Unnecessary Regulatory Burdens by Modernizing the
            Compliance System
        Modern regulation places immense compliance burdens on American
    businesses. Some of those burdens are truly unavoidable: companies must
    take the time and effort to identify whether their operations and
    services comply with the law, and then they must explain themselves to
    Federal regulators. And then Federal agencies must labor to review and
    react to all of that material.
        But much of today's compliance burden--on the regulators and
    regulated alike--is utterly unnecessary. Today's technology offers
    significant opportunities to reform and improve Federal regulatory
    compliance, eliminating myriad redundancies and automating the
    submission of compliance data. The Data Coalition, a trade group,
    highlighted these opportunities in a December 2016 preview of
    forthcoming research paper on ``Standard Business Reporting.'' \25\ The
    Data Coalition argues that if Federal agencies would reform their
    regulatory compliance frameworks to rely more on standardized, freely-
    available data (also known as ``Open Data''), then companies'
    regulatory compliance costs would be cut in at least two ways: ``First,
    if government agencies standardize data fields and formats for the
    information they collect, rather than expressing that information as
    unstructured documents, businesses' software can automatically compile
    and report it, reducing manual labor. Second, if multiple agencies
    align their fields and formats with one another, by adopting universal
    standards for overlapping information collections, software can
    automatically comply with multiple reporting requirements at once,
    eliminating the duplicated effort of overlapping reporting
    requirements.''
    ---------------------------------------------------------------------------
        \25\ Hudson Hollister, Data Coalition, ``Standard Business
    Reporting: Open Data to Cut Compliance Costs'' (Dec. 3, 2016), at
    https://www.datacoalition.org/standard-business-reporting-open-data-to-
    cut-compliance-costs/.
    ---------------------------------------------------------------------------
        And, the Data Coalition further observed, a shift to Open Data
    would cut the agencies' own costs, by allowing the agencies to review,
    analyze, and share compliance data much more efficiently. This would
    help to alleviate some of the most significant burdens on the agencies'
    own budgets--and, thus, on Congress's budget, and on the taxpayers. The
    Data Coalition points to the experience of Australia, which moved to
    embrace ``Standard Business Reporting'' in recent years, and which
    claimed to have reduced compliance burdens on both the government and
    the regulated public by more than $1 billion in 2015-2016.\26\
    ---------------------------------------------------------------------------
        \26\ See id.
    ---------------------------------------------------------------------------
        Of course, there are limits on the extent to which regulatory
    compliance can be automated; compliance often requires nuanced
    judgments that cannot be reduced to raw data. But to the extent that
    compliance does depend on regulated people and companies submitting raw
    data, it is incumbent upon Congress to help promote a modernized,
    streamlined approach to regulatory compliance that takes advantage of
    today's technology.
                                    *  *  *
        Today's administrative agencies should use 21st century technology
    to administer 21st century statutes, not 1990s technology to administer
    1930s statutes. Thank you for inviting me to testify today.

        The Chairman. Thank you, Mr. White.
        Professor Heinzerling.

                     STATEMENT OF LISA HEINZERLING,

           JUSTICE WILLIAM J. BRENNAN, JR., PROFESSOR OF LAW,

                    GEORGETOWN UNIVERSITY LAW CENTER

        Ms. Heinzerling. Thank you for the opportunity to testify
    before you today.
        ``Regulation'' seems to have become a four-letter word in
    some political circles today, and it's a little hard to
    understand why. Regulation, after all, is just another word for
    ``law,'' and law is, given humans' propensity to hurt each
    other in the absence of constraints on their behavior, a
    predicate for human freedom. To the extent that we cannot trust
    that the water we drink, the air we breathe, the cars we drive,
    the planes we fly, and the drugs we take are safe, we are less
    free.
        Regulation promotes multiple and diverse human interests
    and prevents multiple and diverse human harms. Regulation saves
    consumers money, protects companies that sell safe and honestly
    marketed products from unfair competition from those that do
    not, prevents human illnesses, saves lives, and much more.
        Yet discussions about regulation often ignore its benefits
    and fixate solely on its costs. To have a conversation about
    regulation, without talking about what regulation is for, is
    not very illuminating. To the extent the debates, like the ones
    today, over the scope and shape of the regulatory state ignore
    or dismiss the benefits of regulation, they lead us badly
    astray.
        The problem is compounded by a marked tendency to overstate
    the costs of regulation. When it comes to individual
    regulations, costs estimated in advance of regulation are often
    overstated. Information about costs often comes from the
    regulated industry itself, which has an incentive to overstate
    costs in the hopes of preventing regulation. In addition,
    industry and regulators alike often underestimate the extent to
    which industry will innovate in the face of regulation, and
    that will lower the costs of regulation in operation.
        When it comes to estimating the total costs of regulation
    to our society, the errors are even more glaring. One perennial
    favorite of those trying to make regulation look outlandishly
    expensive is a study that purports to estimate the total annual
    cost of regulation in this country. The study has most recently
    surfaced again as a report prepared for the National
    Association of Manufacturers. It estimates that regulation
    costs us $2 trillion a year. This report is, however, not a
    credible account of the costs of regulation in this country.
    There are many flaws in the report and its previous iterations,
    detailed in my written statement and its attachment.
        I'll rest with one example here. For environmental
    regulation, the report tallies up the costs and benefits of
    major rules, as reported in annual reports issued by the Office
    of Management and Budget. The trouble is many of these rules do
    not exist. Many have been withdrawn. Some have been overturned
    by the courts. Some are decades old and fully implemented. The
    report, in other words, is simply not a reliable account of
    what we spend on regulation today. To the extent that critiques
    of the regulatory state rely on such flawed statistics, and
    they often do, they are not credible.
        The practice of ignoring benefits and overstating costs has
    led to numerous proposals, as we've heard this morning, to fix
    the regulatory system. Some of these proposals would reform the
    regulatory process by piling on even more layers of analytical
    requirements to the already time-consuming and laborious
    process of developing a rule. It takes many years, often, to
    develop and issue a single rule. Adding to these procedures
    will add little in the way of illumination, but will certainly
    make it harder to issue the rules we need to protect us.
        Other ideas are, to use the words of the Administrative
    Procedure Act itself, utterly arbitrary and capricious. If an
    agency itself announced that from here on out it would repeal
    two rules for every rule issued, I have little doubt that a
    court would find this policy arbitrary. This rigidly anti-
    regulatory policy makes the very mistake I've been criticizing
    here: it assumes that regulation is all costs with no benefits.
        Thank you.
        [The prepared statement of Ms. Heinzerling follows:]

      Prepared Statement of Lisa Heinzerling, Justice William J. Brennan,
            Jr., Professor of Law, Georgetown University Law Center
        Mr. Chairman and Members of the Committee, thank you for giving me
    the opportunity to testify before you today.
        I am the Justice William J. Brennan, Jr., Professor of Law at the
    Georgetown University Law Center. My primary expertise is in
    administrative law and environmental law. My work in these fields
    includes four books and dozens of law review articles and book
    chapters. From January 2009 to December 2010, I took a leave of absence
    from Georgetown to serve first as Senior Climate Policy Counsel and
    then as head of the Office of Policy at the U.S. Environmental
    Protection Agency. I am a member scholar of the Center for Progressive
    Reform, a public member of the Administrative Conference of the United
    States, and the chair of the board of directors of the Center for
    Science in the Public Interest.
    I. Introduction
        No one in the public debate over the proper role of regulation in
    our society has argued in favor of a stagnant economy or ``unnecessary
    regulatory burdens.'' Reasonable people can disagree about the
    appropriate scope, shape, and pace of regulation, and a debate on these
    issues is healthy. Unfortunately, however, the debate over regulation
    is often not framed in a reasonable or even honest way. All too often,
    in fact, the debate recklessly ignores the many benefits of regulation
    and inaccurately reports its costs. And all too often, the debate skips
    over the fundamental reasons why we turn to regulation in the first
    place. At such a moment, it is worthwhile to return to first
    principles: why do we regulate? My remarks begin with a review of the
    purposes and benefits of regulation and then turn to prominent examples
    of dissembling on the matter of regulatory costs. I conclude with
    observations about the regulatory process itself.
    II. The Benefits of Regulation \1\
    ---------------------------------------------------------------------------
        \1\ The discussion in this section draws heavily on an Issue Brief
    I wrote in November 2011 for the American Constitution Society; this
    Issue Brief is available at https://www.acslaw.org/sites/default/files/
    Heinzerling_-_Missing_a_Teachable_Moment.pdf.
    ---------------------------------------------------------------------------
        It is hard to improve upon James Madison's reminder about why we
    have both government and constraints on government: ``If men were
    angels, no government would be necessary. If angels were to govern men,
    neither external nor internal controls on government would be
    necessary.'' \2\ Yet recent debates over the scope and shape of the
    regulatory state have fixed on the second insight in Madison's famous
    passage while ignoring the first. Proposals to rein in administrative
    agencies--to slash their budgets, veto their rules, undo their legal
    authority, hamstring them with multiple new procedural requirements--
    are offered as though rules governing human behavior produce all costs
    and no gains. They proceed as if people will not hurt other people if
    government steps aside. People are angels, in other words, outside of
    government; they mostly just go about their business, not trying to
    hurt anybody. We gain nothing by constraining their behavior.
    ---------------------------------------------------------------------------
        \2\ The Federalist No. 51 (1787).
    ---------------------------------------------------------------------------
        Lost in this rosy vision are three simple facts.
        First, people are not angels. It is not just that people can be
    cruel and vindictive. It is also that they can be greedy, selfish,
    careless, and callous. Even when they do not set out to harm other
    people, they can end up doing so through greed and neglect. The
    financiers who helped bring the U.S. economy to its knees did not mean
    to hurt anyone; U.S. utilities would surely prefer that the pollution
    from their power plants did not kill thousands every year; the makers
    of small spherical magnets surely do not desire that children swallow
    them and suffer horrific internal injuries. A great deal of human
    suffering, in fact, has nothing to do with maliciousness and everything
    to do with avarice and indifference. But pursuing profit in the face of
    a known risk to others is not angelic.
        Recent history gives us examples, moreover, of corporations and
    corporate officials deliberately choosing to pursue profits at the
    expense of the public good. Corporate officials who worked for the auto
    parts maker Takata have been criminally charged with fabricating safety
    test data to cover up a lethal defect in the airbags made by the
    company. Takata itself has paid $1 billion in fines and restitution
    arising out of these actions. The automaker Volkswagen will pay over $4
    billion in criminal and civil penalties after pleading guilty to
    installing software in its vehicles in order to cheat Federal pollution
    limits for motor vehicles. Volkswagen executives have also been
    criminally charged. These events should give pause to anyone tempted to
    argue that we should leave public protection up to corporations and
    their executives.
        Second, given that people are not angels, a basic purpose of
    government is to protect people from being hurt by other people. And,
    far from illegitimately constraining freedom, law actually promotes
    freedom when it protects people from being hurt by other people. As
    John Locke--whose views on the purposes of government greatly
    influenced this country's founding generation--put it: ``Where there is
    no law, there is no freedom. For liberty is to be free from restraint
    and violence from others, which cannot be where there is no law.''
    Discussants in current debates over the regulatory state seem to forget
    that ``regulation'' is just another word for ``law,'' and that law is a
    predicate for human freedom.
        Third, protecting people from being hurt by other people is also
    the predominant purpose of the kinds of regulation now subject to some
    of the most vociferous attacks--consumer, health, safety, and
    environmental regulation. Consider the example of the Clean Air Act,
    one of the most embattled sources of regulatory authority in government
    today. The terms ``public health'' and ``public welfare'' appear like
    mantras throughout the Act; at its core, the Act aims to protect people
    from dying or falling ill, or suffering other, welfare-based harms such
    as damage to water, soils, crops, and wildlife, due to air pollution.
    What is more, by targeting specific sources of pollution and by
    generally requiring that these sources do their level best to control
    their pollution, the Act aims to prevent the people in charge of these
    sources--the ones who choose and control the mechanisms of pollution--
    from hurting other people. Seen in this light, the Clean Air Act and
    other like modern laws follow in a direct line from the framers and
    their ambitions for government, by constraining human behavior in a way
    that promotes human freedom. Yet the Clean Air Act is one of the laws
    often held up as an example of the kind of regulation we would be
    better off without--even though careful retrospective studies of the
    costs and benefits of regulations issued under the Act have repeatedly
    shown that the Act returns up to 90 times more in quantified benefits
    than it imposes in costs.\3\
    ---------------------------------------------------------------------------
        \3\ EPA, The Benefits and Costs of the Clean Air Act from 1990 to
    2020 (2011), available at https://www.epa.gov/clean-air-act-overview/
    benefits-and-costs-clean-air-act-1990-2020-second-prospective-study.
    ---------------------------------------------------------------------------
        In explaining why we regulate and what regulation does for us, it
    is also important to describe the exact harms that will befall people
    if we do not regulate. That is, in addition to discussing the human
    role in creating these harms, we should also identify the harms
    themselves.
        These harms are many and varied.
        One category of harms avoided through regulatory intervention is an
    especially clear-cut counterpoint to the economic costs of regulation:
    sometimes, consumers and others directly lose money in the absence of
    regulation. Or, put another way, regulation sometimes saves people
    money. Fuel economy standards for motor vehicles save consumers
    thousands of dollars in gasoline costs over the life of their
    vehicles.\4\ When the Federal Trade Commission sued a marketer of
    dietary supplements for offering ``free trials'' of dietary supplements
    that came paired with recurring charges that were very difficult to
    avoid, it took aim at a problem that cost consumers over $30 million in
    one year alone; and this is just one of some 60 like cases brought by
    the FTC in the last decade.\5\ Likewise, when the FTC cracked down on
    companies making false promises of employment and business success to
    people who were unemployed or otherwise falling behind in the economic
    downturn, it sought to control practices that also cost consumers tens
    of millions of dollars; the agency charged that one company alone had
    bilked consumers out of $40 million.\6\ Rules issued in the last 20 or
    so years by the Department of Energy, setting efficiency standards for
    household appliances, will have saved consumers over $100 billion by
    2030. Far from taking money out of consumers' pockets, these kinds of
    legal efforts put money back in them--or make sure it doesn't leave in
    the first place.
    ---------------------------------------------------------------------------
        \4\ See, e.g., Consumers Union, Consumer Savings from 2025
    Corporate Average Fuel Economy Standards (CAFE) (2016), available at
    http://consumersunion.org/research/cafe-2025-consumer-savings/.
        \5\ FTC news release, available at http://www.ftc.gov/opa/2010/08/
    acaicolon.shtm.
        \6\ FTC news release, available at http://www.ftc.gov/opa/2011/03/
    emptypromises.shtm.
    ---------------------------------------------------------------------------
        Regulation can also save people money more indirectly. When a
    person does not have to go to the hospital because a rule has reduced
    the air pollution that would have made her sick, or when she does not
    miss work for the same reason, the rule has saved her the expense of a
    hospital visit or wages lost due to missed work. Similarly, when a
    person does not have to go to the hospital or miss work because--
    although she has been in a car accident--a vehicle safety feature
    mandated by a rule protected her from serious injury, the rule has
    saved her money. Indeed, in examples too numerous to list here, rules
    that protect health and safety also protect pocketbooks, as they
    alleviate the costs of doctor's visits, medicines, hospital stays, lost
    work days, and other interventions and disruptions associated with ill
    health and inadequate safety.
        Beyond saving money, directly and indirectly, regulation also
    protects people from harms that are not fully captured as ``money
    saved.'' Cancers of all kinds, heart attacks, asthma attacks, and more
    are prevented by environmental rules. Occupational safety rules can
    help prevent people from being electrocuted or crushed by heavy
    equipment. Vehicle safety rules can help drivers not back over people
    (especially children) who are difficult to see in an ordinary rearview
    mirror. Rules on rail safety help prevent deadly or otherwise injurious
    train accidents. The full range of human illness and suffering
    alleviated by regulation is huge.
        Regulation also, of course, often prevents (or at least forestalls)
    the ultimate adverse event, death. In this domain, it is especially
    important to remember the link between human behavior and human harm;
    our legal and ethical norms make proceeding in the face of known and
    avoidable risks of death an especially egregious form of behavior. Yet
    sometimes even large numbers of saved lives fail to persuade the anti-
    regulatory crowd that regulation is a good idea; some embattled rules,
    for example, are expected to save many thousands of lives every year,
    yet embattled they remain.
        To summarize: regulation promotes multiple and diverse human
    interests and prevents multiple and diverse human harms. To the extent
    that current debates over the scope and shape of the regulatory state
    ignore these benefits of regulation, they will lead us badly astray.
    III. The False Narrative About Regulatory Costs \7\
    ---------------------------------------------------------------------------
        \7\ The first part of this discussion is drawn from Lisa
    Heinzerling and Frank Ackerman, The $1.75 Trillion Lie, 1 Mich. J.
    Envtl. & Admin. Law 127 (2012). This article is provided as an
    attachment to this testimony.
    ---------------------------------------------------------------------------
        Keeping regulation at bay requires hard work. Disastrous failures
    of regulation lie just beneath such spectacularly bad problems as the
    climate crisis, the financial breakdown, the Flint drinking water
    disaster, and more. It takes constant vigilance to prevent a public
    outcry for more and better regulation. It also often takes phony
    numbers.
        Often, the phony numbers relate to regulatory costs. One of the
    favorite phony numbers circulated by the anti-regulatory crowd is the
    figure of $2 trillion--supposedly the amount we in the United States
    spend every year on Federal regulations. The figure on total regulatory
    costs has been widely cited and credulously accepted. It has been
    wheeled out both to try to defeat new regulatory initiatives and to
    scale back existing ones. It has also been deployed in the service of a
    legislative agenda aimed at thwarting the regulatory agencies
    responsible for these purportedly massive costs.
        The latest iteration of this number comes from a report prepared in
    2014 for the National Association of Manufacturers (NAM).\8\ Authored
    by Lafayette College economists Nicole V. Crain and W. Mark Crain, the
    report concludes that $2 trillion is the combined annual cost of
    complying with economic regulations, environmental regulations, the
    Federal tax code, occupational safety and health regulations, and
    homeland security regulations.
    ---------------------------------------------------------------------------
        \8\ W. Mark Crain and Nicole V. Crain, The Cost of Federal
    Regulation to the U.S. Economy, Manufacturing and Small Business
    (2014), available at http://www.nam.org/Data-and-Reports/Cost-of-
    Federal-Regulations/Federal-Regulation-Full-Study.pdf.
    ---------------------------------------------------------------------------
        The Crain and Crain report is not, however, a credible account of
    the costs of regulation in this country. Several critiques of an
    earlier Crain and Crain report, which used similar methodologies, have
    pointed out that not only did that report completely omit discussion of
    the benefits of regulation--thus providing an entirely one-sided
    picture of regulatory consequences--it also used evidence not intended,
    nor suitable, for the purposes to which Crain and Crain put it.\9\ It
    also explained away its own potential cost overestimation by
    asserting--contrary to existing evidence \10\--that regulatory agencies
    tend to underestimate regulatory costs.
    ---------------------------------------------------------------------------
        \9\ For a detailed critique of the previous iteration of this
    study, see Sidney A. Shapiro et al., Setting the Record Straight: The
    Crain and Crain Report on Regulatory Costs (2011), available at http://
    www.progressivereform.org/articles/
    SBA_Regulatory_Costs_Analysis_1103.pdf.
        \10\ Shapiro et al., at 7-9.
    ---------------------------------------------------------------------------
        The economist Frank Ackerman and I have taken another, even deeper
    plunge into Crain and Crain's earlier estimates of costs and have found
    equally troubling problems.\11\ We focused on Crain and Crain's
    estimates of the costs of economic regulation, environmental
    regulation, and workplace safety and health regulation. Together, these
    categories accounted for approximately $1.6 trillion of Crain and
    Crain's earlier $1.75 trillion estimate.
    ---------------------------------------------------------------------------
        \11\ Lisa Heinzerling and Frank Ackerman, The $1.75 Trillion Lie, 1
    Mich. J. Envtl. & Admin. L. 127 (2012). This article is provided as an
    attachment to this testimony.
    ---------------------------------------------------------------------------
        Ackerman and I found numerous problems in Crain and Crain's earlier
    study, problems that continue in their more recent report written for
    NAM. For example, Crain and Crain's estimates of the costs of
    environmental regulation are deeply troubled. For environmental rules
    issued before 1988, they rely on a single study published in 1991 that
    uses a general equilibrium model to spin out a conjecture about a
    possible impact of early 1980s regulations as a whole: if regulatory
    costs raise prices in general, then real wages will drop; at lower real
    wages, textbook economics implies that workers will choose to work
    less, reducing output and incomes. For regulatory costs of
    environmental rules issued after 1988, Crain and Crain--among other
    mistakes--claim costs for regulations that no longer exist because the
    agency itself pulled them back; they include costs of rules that no
    longer exist because the courts overturned them; they double count by
    including sets of rules that all have the same regulatory end; and they
    include the costs of regulations issued many years, sometimes decades,
    ago, the current costs of which (if they still even exist) cannot be
    fairly attributed to regulatory programs.
        In estimating the cost of workplace rules, Crain and Crain rely--
    indirectly, after laundering it through several more recent studies
    from marginally less partisan sources--on a study done in 1974 by the
    National Association of Manufacturers. Beyond reliance on an outdated
    and highly partisan source, Crain and Crain's estimates of the costs of
    workplace rules also suffer from the same flaws embodied in their
    estimates of the costs of environmental rules.
        Added to the numerous flaws revealed by other commentators, the
    problems Frank Ackerman and I found with Crain and Crain's estimate of
    regulatory costs raised a disturbing possibility: the mistakes were so
    many, cut in only one direction so thoroughly, and could have been
    discovered by the authors so easily, that one is pressed to conclude
    that the study was designed to produce a really big number. The number
    is a rhetorical device, a talking point, a trope; it is not the product
    of sound analysis.
        The development and wide circulation of misleading statistics,
    supposedly showing the foolishness of regulation, is not a new
    phenomenon. Previous periods of discontent with the scope and content
    of regulatory activity have also featured arresting statistics that,
    all by themselves, appear to make the case for regulatory reform:
    Federal regulations spend hundreds of millions, even billions, of
    dollars to save a single human life;\12\ regulation ``statistically
    murders'' 60,000 people a year by directing limited resources to very
    expensive life-saving measures rather than to cheaper ones;\13\ once a
    regulation costs more than a certain amount (estimates ranged from $3
    to $50 million) to save a life, people are killed through this cost
    alone because it prevents spending money on other life-saving measures
    like health care.\14\ Just as the $2 trillion figure has been served up
    as an exhibit in the case for regulatory reform, so these previous
    statistics were offered to prove that the regulatory system had gone
    badly awry. The trouble was, these statistics were no more reliable
    than the statistics offered by NAM's study on regulatory costs.\15\
    ---------------------------------------------------------------------------
        \12\ John F. Morrall III, A Review of the Record, Regulation, Nov.-
    Dec. 1986, at 25, 30-31.
        \13\ Tammy O. Tengs & John D. Graham, The Opportunity Costs of
    Haphazard Social Investments in Life-Saving, in Risks, Costs, and Lives
    Saved: Getting Better Results from Regulation 167, 172 (Robert W. Hahn
    ed., 1996).
        \14\ Randall Lutter et al., The Cost-Per-Life-Saved Cutoff for
    Safety-Enhancing Regulations, 37 Econ. Inquiry 599 (1999); W. Kip
    Viscusi, Risk-Risk Analysis, 8 J. Risk & Uncertainty (Special Issue) 5
    (1994).
        \15\ For previous critiques, see Frank Ackerman & Lisa Heinzerling,
    Priceless: On Knowing the Price of Everything and the Value of Nothing
    (The New Press 2004); Lisa Heinzerling, Five Hundred Life-Saving
    Interventions and Their Misuse in the Debate Over Regulatory Reform, 13
    Risk, Safety & Env't 151 (2002); Lisa Heinzerling & Frank Ackerman, The
    Humbugs of the Anti-Regulatory Movement, 87 Cornell L. Rev. 648 (2002);
    Lisa Heinzerling, Regulatory Costs of Mythic Proportions, 107 Yale L.J.
    1981 (1998).
    ---------------------------------------------------------------------------
        Another charge that has been leveled against regulation in recent
    years is that it kills jobs. Indeed, the claim has become so prevalent
    that it sometimes seems that the word ``regulation'' simply must be
    preceded by the phrase ``job-killing.'' Here, too, however, the actual
    evidence does not support this broad critique. In a 2011 briefing paper
    prepared for the Economic Policy Institute by Isaac Shapiro and John
    Irons, the authors reviewed the literature on the relationship between
    regulation and employment.\16\ They began by reminding readers that
    regulation often is designed to prevent market failures that will
    themselves lead to unemployment, giving as their prime examples the
    financial crisis, the BP oil spill of 2010, and the market-reassuring
    provisions of the Food Safety Modernization Act. They then canvased the
    literature on regulation and employment, finding that economy-wide
    studies have ``failed to find significant employment effects'' and that
    ``a surprising number'' of industry-specific studies have shown that
    ``regulations have a small positive net effect on employment'' and that
    even studies showing some local employment effects ``suggest that
    regulations regulations had either a close to neutral or small positive
    effect on employment levels.'' \17\
    ---------------------------------------------------------------------------
        \16\ See Isaac Shapiro & John Irons, Regulation, Employment & and
    the Economy: Fears of Job Loss Are Overblown (Economic Policy
    Institute, Briefing Paper No. 305, 2011), available at http://
    epi.3cdn.net/961032cb78e895dfd5_k6m6bh42p.pdf; see also Frank Ackerman
    & Rachel Massey, Prospering with Precaution: Employment, Economics, and
    the Precautionary Principle (Global Dev. & Env't Inst., Working Paper,
    2002), available at http://www.healthytomorrow.org
    /attachments/prosper.pdf.
        \17\ Id. at 3.
    ---------------------------------------------------------------------------
        Shapiro and Irons also remind us of the spotty track record of
    regulatory opponents in estimating the economic effects of regulation.
    They report: ``Claims by opponents of regulations that new rules will
    have significant and destructive effects on the economy and on jobs
    have often been exaggerated, sometimes dramatically so.'' \18\
    According to Shapiro and Irons, a notable cause of the overestimates of
    regulatory costs has been the underestimation of industry's own power
    to innovate.\19\
    ---------------------------------------------------------------------------
        \18\ Shapiro & Irons, at 24.
        \19\ Id.
    ---------------------------------------------------------------------------
        The specific numbers change from time to time, but the game remains
    the same: make regulation look outlandish by claiming costs and
    consequences for it that are not real. This is not a sound basis on
    which to evaluate the regulatory state.
    IV. The Regulatory Process
        One of the current critiques of regulation has it that regulations
    are the product of a slapdash, almost random process, in which
    regulators ignore the facts and law and come up with rules that simply
    reflect their political preferences. This is not true.
        Regulations in this country emerge from a careful process of
    initial study, preliminary proposals, public comment, and final
    decisions, which explain the agency's reasoning process and its
    responses to the public's concerns. Producing a final rule can take
    years. One of the most ironic sources for showing the out-of-control
    nature of the regulatory state is the number of pages in the Federal
    Register, the publication that contains agencies' explanations of their
    proposals and rules.\20\ In fact, this statistic reveals exactly the
    opposite of what its publicists contend: the Federal Register has grown
    in volume not because agencies are behaving arbitrarily or
    capriciously, but because they are making an effort to explain their
    decisions in reasoned terms. The Federal Register could be a very short
    publication indeed if agencies did not do this.
    ---------------------------------------------------------------------------
        \20\ See, e.g., Adam J. White, Republican Remedies for the
    Administrative State (2017), available at http://
    www.nationalaffairs.com/docLib/20170111_Booklet2_chap1.pdf.
    ---------------------------------------------------------------------------
        Bills circulating in Congress, including S. 2006 in the Senate,
    would pile on even more obstacles to regulatory actions. S. 2006 would
    add new analytical requirements for agency rules, more elaborate
    hearing procedures, and substantive requirements that agencies adopt
    the ``least burdensome'' regulatory measures and that they show that
    the benefits of their rules justify the costs. Almost amusingly, S.
    2006 also would require agencies--already straining to complete their
    analytical tasks within a reasonable time period--not only to add these
    time-consuming obstacles to their rulemaking process, but also to start
    all over if they cannot manage to complete the process within two
    years. Such procedural innovations threaten to delay and even block
    entirely the many benefits of regulation I have described here.
        Attachment: Lisa Heinzerling and Frank Ackerman, The $1.75 Trillion
    Lie (2012)
                                     ______

                             The $1.75 Trillion Lie

                          Lisa Heinzerling*
    ---------------------------------------------------------------------------

        \*\ Professor of Law, Georgetown University.
    ---------------------------------------------------------------------------

                          Frank Ackerman**
    ---------------------------------------------------------------------------

        \**\ Senior economist, Stockholm Environment Institute--U.S.
    Center, Tufts University.

        A 2010 study commissioned by the Office of Advocacy of the U.S.
    Small Business Administration claims that Federal regulations impose
    annual economic costs of $1.75 trillion. This estimate has been widely
    circulated, in everything from op-ed pages to Congressional testimony.
    But the estimate is not credible. For costs of economic regulations,
    the estimate reflects a calculation that rests on a misunderstanding of
    the definition of the relevant data, flunks an elementary question on
    the normal distribution, pads the analysis with several years of near-
    identical data, and fails to recognize the difference between
    correlation and causation. For costs of environmental regulation, the
    bulk of the estimate relies on decades-old studies of decades-old
    rules, suggesting that voluntary unemployment is the real culprit in
    today's regulatory environment. The remainder of it is filled with non-
    existent rules and other phantoms--as is the flawed estimate of the
    costs of workplace safety and health rules.
        It would be bad enough if this were a private study, undertaken
    with private funds. Even then, the viral spread of the utterly
    unfounded $1.75 trillion estimate would be worrying enough. But this is
    a study requested, funded, reviewed, and edited by a government agency,
    the Small Business Administration's Office of Advocacy. The Office of
    Advocacy's sponsorship and official embrace of the study--including
    defense of the study in testimony before Congress even after it had
    been severely criticized--embroils this public agency in an unwholesome
    blend of ineptitude and bias. The Office of Advocacy should acknowledge
    the study's many failings and publicly disavow it.

    Introduction

        I. Getting to No: How Crain and Crain Reach $1.75 Trillion

            A.  Economic Regulations

            B.  Environmental Regulations

            C.  Workplace Regulations

        II. The Many Shortcomings of Crain and Crain's Estimate

            A.  Economic Regulation

                    1.  Why Be Normal?

                    2.  Padding the Evidence

            B. Environmental Regulation

                    1.  Old Data on Old Rules

                    2.  Is Our Real Problem Voluntary Unemployment? Really?

                    3.  Piling On: Crain and Crain's Use of OMB Reports on
                    the Costs of Environmental Rules

            C. Workplace Safety and Health

    Conclusion
                                     ______

    Introduction
        Keeping regulation at bay requires hard work. Disastrous failures
    of regulation lie just beneath such spectacularly bad problems as the
    financial breakdown,\1\ the oil spill in the Gulf,\2\ the nuclear
    meltdown in Japan,\3\ the climate crisis,\4\ and more.\5\ It takes
    constant vigilance to prevent a public outcry for more and better
    regulation. It also often takes phony numbers.
    ---------------------------------------------------------------------------
        \1\ See, e.g., Anthony Faiola et al., What Went Wrong, Wash. Post,
    Oct. 15, 2008, at A1.
        \2\ See, e.g., John Wyeth Griggs, BP Gulf of Mexico Oil Spill, 32
    Energy L.J. 57, 66, 79 (2011).
        \3\ See, e.g., James Glanz & Norimitsu Onishi, Japanese Rules for
    Nuclear Plants Relied on Old Science, N.Y. Times, Mar. 27, 2011, at A1
    (discussing underestimation of tsunami risk to nuclear reactors by
    Japanese regulators and industry); Daniel Kaufmann & Veronika
    Penciakova, Preventing Nuclear Meltdown: Assessing Regulatory Failure
    in Japan and the United States, Brookings (Apr. 1, 2011), http://
    www.brookings.edu/opinions/2011/0401_nuclear_meltdown
    _kaufmann.aspx.
        \4\ See, e.g., Lisa Heinzerling, Health Regulation and Governance:
    Climate Change, Human Health, and the Post-Cautionary Principle, 96
    Geo. L.J. 445, 455-58 (2008) (discussing years of missed opportunities
    to act on climate change).
        \5\ Sidney Shapiro et al., Saving Lives, Preserving the
    Environment, Growing the Economy: The Truth About Regulation 7-9
    (2011), available at http://www.progressive
    reform.org/articles/RegBenefits_1109.pdf (discussing the cost of
    various failures to regulate).
    ---------------------------------------------------------------------------
        The latest and biggest phony number being circulated by the anti-
    regulatory crowd is the figure of $1.75 trillion--supposedly the amount
    we in the United States spend every year on Federal regulations.\6\
    This figure has been widely cited and credulously accepted. It has been
    wheeled out both to try to defeat new regulatory initiatives and to
    scale back existing ones.\7\ It has also been deployed in the service
    of a legislative agenda aimed at hamstringing the regulatory agencies
    responsible for these purportedly massive costs.\8\ It has even become
    part of the rhetoric of the race for the presidency.\9\
    ---------------------------------------------------------------------------
        \6\ Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs
    on Small Firms, at iv (2010). The study was developed under contract
    number SBAHQ-08-M-0466 for the Small Business Association's (SBA)
    Office of Advocacy.
        \7\ As the blog for the Center for Progressive Reform has observed,
    one recent congressional hearing prominently featured the $1.75
    trillion figure. Ben Somberg, Debunked SBA Regulatory Costs Study Front
    and Center at House Energy & Commerce Committee Hearing, CPRBlog (July
    15, 2011), http://www.progressivereform.org/
    CPRBlog.cfm?idBlog=2E0DC7E3-B914-9703-69CC0D539EF8EC34; see also The
    Views of the Administration on Regulatory Reform: Hearing Before the H.
    Comm. On the Energy and Commerce, Subcomm. On Oversight and
    Investigation, 112th Cong. 3 (2011) (statement of the U.S. Chamber of
    Commerce by William L. Kovacs, Senior Vice President, Environment,
    Technology and Regulatory Affairs); Thomas M. Arnold & Jerry L.
    Stevens, Mixed Agendas and Government Regulation of Business: Can We
    Clean Up The Mess?, 45 U. Rich. L. Rev. 1059, 1073 (2011); James L.
    Gattuso et al., Red Tape Rising: Obama's Torrent of New Regulation,
    Heritage Found. Backgrounder, Oct. 26, 2010, at 1, available at http://
    thf_media.s3.amazonaws.com/2010/pdf/bg2482.pdf; Phil Kerpen, Op-Ed.,
    Regulatory State Needs More Than a Trim, Wash. Times, Jan. 24, 2011, at
    B3; Mark R. Warner, Op-Ed., Red-Tape Relief for a Sluggish Recovery,
    Wash. Post, Dec. 13, 2010, at A19; Glenn Kessler, Is Obama Bad for
    Business?, Wash. Post (Jan. 14, 2011, 6:00 AM), http://
    voices.washingtonpost.com/fact-checker/2011/01/
    is_obama_bad_for_business.html (quoting Thomas Donohue, President of
    the U.S. Chamber of Commerce, and Rep. Darrell Issa (R-Calif.),
    Chairman of the House Oversight Committee, who both cite Crain and
    Crain's study).
        \8\ See, e.g., Wayne Crews & Ryan Young, Op-Ed., Regulation Without
    Representation, Investor's Bus. Daily, Feb. 9, 2011, at A13; Thomas A.
    Hemphill, REINing in Regulation, Am. Enterprise Inst. (Nov. 22, 2010),
    http://www.american.com/archive/2010/november/reining-in-regulation.
        \9\ See, e.g., Mitt Romney, Op-Ed., Romney: My Plan to Turn Around
    the U.S. Economy, USA Today, Sept. 6, 2011, at A11 (``With scant regard
    for the costs imposed on consumers and businesses, President Obama has
    vastly expanded the regulatory reach of government. The Federal
    Government has estimated the price tag for its regulations at $1.75
    trillion.''); Tim Pawlenty, Former Governor of Minnesota and Former
    2012 Presidential Candidate, Economic Policy Remarks at the University
    of Chicago: A Better Deal (June 7, 2011) (transcript available at
    http://blogs.wsj.com/washwire/2011/06/07/text-of-pawlentys-speech-on-
    his-economic-plan/) (``But the fact is--federal regulations will cost
    our economy 1.75 trillion dollars this year alone. It's a hidden tax on
    every American consumer. Built into the price of every good and service
    in the economy.'').
    ---------------------------------------------------------------------------
        The number comes from a report commissioned, reviewed, edited, and,
    despite withering criticisms of it, defended by the Office of Advocacy
    of the U.S. Small Business Administration (SBA). Authored by Lafayette
    College economists Nicole V. Crain and W. Mark Crain, the SBA-sponsored
    report concludes that $1.75 trillion is the combined annual cost of
    complying with economic regulations, environmental regulations, the
    Federal tax code, occupational safety and health regulations, and
    homeland security regulations.\10\
    ---------------------------------------------------------------------------
        \10\ Crain & Crain, supra note 6, at iv, 5.
    ---------------------------------------------------------------------------
        The Crain and Crain report is, as Obama regulatory czar Cass
    Sunstein put it in recent congressional testimony, ``deeply flawed.''
    \11\ Several previous critiques of the report have pointed out that not
    only does the report completely omit discussion of the benefits of
    regulation--thus providing in entirely one-sided picture of regulatory
    consequences--it also uses evidence not intended, nor suitable, for the
    purposes to which Crain and Crain put it.\12\ It also explains away its
    own potential cost overestimation by asserting--contrary to existing
    evidence \13\--that regulatory agencies tend to underestimate
    regulatory costs.\14\ The nonpartisan Congressional Research Service
    (CRS) undertook its own regression analysis using almost the same data,
    but much sounder methods than those used by Crain and Crain, and found
    that, with those adjustments, a central component of Crain and Crain's
    analysis (the ``regulatory quality index'' developed by the World Bank
    for a different purpose) ceased having the effect Crain and Crain
    claimed for it.\15\
    ---------------------------------------------------------------------------
        \11\ See, e.g., Jessica Randall, OIRA Administrator Sunstein Calls
    Crain & Crain Report `Deeply Flawed,' OMB Watch (June 23, 2011), http:/
    /www.ombwatch.org/node/11742 (discussing the oral testimony given by
    Sunstein on June 23, 2011 at the hearing before the Senate Committee on
    Homeland Security and Governmental Affairs).
        \12\ See, e.g., Austin Goolsbee, A 21st Century Regulatory System,
    White House Blog (June 23, 2011, 3:08 PM), http://www.whitehouse.gov/
    blog/2011/06/23/21st-century-regulatory-system. For a detailed critique
    making these and other points, see Sidney A. Shapiro et al., Setting
    the Record Straight: The Crain and Crain Report on Regulatory Costs
    (2011), available at http://www.progressivereform.org/articles/
    SBA_Regulatory_Costs_Analysis_1103.pdf.
        \13\ See Shapiro et al., supra note 12, at 7-9; Isaac Shapiro &
    John Irons, Regulation, Employment, and the Economy: Fears of Job
    Losses Are Overblown 21-23 (2011), available at http://www.epi.org/
    files/2011/BriefingPaper305.pdf.
        \14\ Crain & Crain, supra note 6, at 27, 28 n.27.
        \15\ Curtis W. Copeland, Cong. Research Serv., R41763, Analysis of
    an Estimate of the Total Costs of Federal Regulations 27-28 (2011).
    ---------------------------------------------------------------------------
        Our Article takes another, even deeper plunge into Crain and
    Crain's estimates of costs, and finds even more troubling problems. We
    focus on Crain and Crain's estimates of the costs of economic
    regulation, environmental regulation, and workplace safety and health
    regulation. Together, these categories account for approximately $1.6
    trillion of Crain and Crain's $1.75 trillion estimate.\16\
    ---------------------------------------------------------------------------
        \16\ Crain & Crain, supra note 6, at 31 tbl.6.
    ---------------------------------------------------------------------------
        For economic regulation, we find that Crain and Crain come up with
    a breathtaking $1.24 trillion in estimated aggregate costs--seventy
    percent of their entire numerical picture of regulatory burden--from a
    single, poorly designed equation which they built on a
    misinterpretation of a World Bank database. They take this equation as
    proof that better ``regulatory quality'' causes higher incomes; and
    they read the World Bank data quite incorrectly to say that there is a
    well-defined maximum for regulatory quality which the United States
    falls far below. We will identify four serious errors in the Crain and
    Crain treatment of economic costs; each of these errors alone is
    sufficient to invalidate their analysis.
        Crain and Crain's estimates of the costs of environmental
    regulation are also deeply troubled. For environmental rules issued
    before 1988, they rely on a single study published in 1991 \17\ that
    uses a general equilibrium model to spin out a tortuous conjecture
    about a possible impact of early 1980s regulations as a whole: if
    regulatory costs raise prices in general, then real wages will drop; at
    lower real wages, textbook economics implies that workers will choose
    to work less, reducing output and incomes. For regulatory costs of
    environmental rules issued after 1988, Crain and Crain--among other
    mistakes--claim costs for regulations that no longer exist because the
    agency itself pulled them back; they include costs of rules that no
    longer exist because the courts overturned them; they double count by
    including sets of rules that all have the same regulatory end; and they
    include the costs of regulations issued many years, sometimes decades,
    ago, the current costs of which (if they still even exist) cannot be
    fairly attributed to regulatory programs.
    ---------------------------------------------------------------------------
        \17\ Id. at 25 (noting their reliance on Robert W. Hahn & John A.
    Hird, The Costs and Benefits of Regulation: Review and Synthesis, 8
    Yale J. on Reg. 233 (1991) for cost estimates on environmental
    regulations).
    ---------------------------------------------------------------------------
        In estimating the cost of workplace rules, Crain and Crain rely--
    indirectly, after laundering it through several more recent studies
    from marginally less partisan sources--on a study done in 1974 by the
    National Association of Manufacturers.\18\ Beyond reliance on an
    outdated and highly partisan source, Crain and Crain's estimates of the
    costs of workplace rules also suffer from the same flaws embodied in
    their estimates of the costs of environmental rules.
    ---------------------------------------------------------------------------
        \18\ Id. at 30 n.29 (noting that they rely on Joseph M. Johnson, A
    Review and Synthesis of the Cost of Workplace Regulations, in Cross-
    Border Human Resources, Labor and Employment Issues 433 (Andrew P.
    Morriss & Samuel Estreicher eds., 2005)). Johnson's study relies on
    Harvey S. James, Jr., Estimating OSHA Compliance Costs (1996), a policy
    study conducted for the Center for the Study of American Business,
    which, finally, directly relies on the 1974 study by the National
    Association of Manufacturers.
    ---------------------------------------------------------------------------
        Added to the numerous flaws already revealed by other commentators,
    the problems we have found with Crain and Crain's estimate of
    regulatory costs raise a disturbing possibility: the mistakes are so
    many, cut in only one direction so thoroughly, and could have been
    discovered by the authors so easily, that one is pressed to conclude
    that the study was designed to produce a really big number. The number
    is a rhetorical device, a talking point, a trope; it is not the product
    of sound analysis.
        We have been here before. Previous periods of discontent with the
    scope and content of regulatory activity have also featured arresting
    statistics that, all by themselves, appear to make the case for
    regulatory reform: Federal regulations spend hundreds of millions, even
    billions, of dollars to save a single human life;\19\ regulation
    ``statistically murders'' 60,000 people a year by directing limited
    resources to very expensive life-saving measures rather than to cheaper
    ones:\20\ once a regulation costs more than a certain amount (estimates
    ranged from $3 to $50 million) to save a life, people are killed
    through this cost alone because it prevents spending money on other
    life-saving measures like health care.\21\ Just as the $1.75 trillion
    figure is being served up now as Exhibit 1 in the case for regulatory
    reform,\22\ so these previous statistics were offered to prove that the
    regulatory system had gone badly awry.
    ---------------------------------------------------------------------------
        \19\ John F. Morrall III, A Review of the Record, Reg., Nov.-Dec.
    1986, at 25, 30-31.
        \20\ Tammy O. Tengs & John D. Graham, The Opportunity Costs of
    Haphazard Social Investments in Life-Saving, in Risks, Costs, and Lives
    Saved: Getting Better Results from Regulation 167, 172 (Robert W. Hahn
    ed., 1996).
        \21\ E.g., Randall Lutter et al., The Cost-Per-Life-Saved Cutoff
    for Safety-Enhancing Regulations, 37 Econ. Inquiry 599 (1999); W. Kip
    Viscusi, Risk-Risk Analysis, 8 J. Risk & Uncertainty (Special Issue) 5
    (1994).
        \22\ See supra note 7 and accompanying text.
    ---------------------------------------------------------------------------
        We have challenged the empirical basis for these previous numbers
    at length elsewhere,\23\ and we will not repeat our criticisms here. It
    is worth noting, though, that in our long experience with fantastical
    numbers offered in the service of an anti-regulatory agenda, we have
    not seen anything quite like Crain and Crain's number. The new high
    figure for regulatory costs marks a new low in anti-regulatory
    analysis.
    ---------------------------------------------------------------------------
        \23\ Frank Ackerman & Lisa Heinzerling, Priceless: On Knowing the
    Price of Everything and the Value of Nothing (2004); Lisa Heinzerling,
    Five Hundred Life-Saving Interventions and Their Misuse in the Debate
    Over Regulatory Reform, 13 Risk, Safety & Env't 151 (2002) [hereinafter
    Five Hundred Life-Saving Interventions]; Lisa Heinzerling, Regulatory
    Costs of Mythic Proportions, 107 Yale L.J. 1981 (1998); Lisa
    Heinzerling & Frank Ackerman, The Humbugs of the Anti-Regulatory
    Movement, 87 Cornell L. Rev. 648 (2002).
    ---------------------------------------------------------------------------
    II. Getting to No: How Crain and Crain Reach $1.75 Trillion
        Before turning to our critique, we need to explain how Crain and
    Crain reached their estimates of regulatory costs.
        Crain and Crain divide regulatory costs into several different
    categories (economic regulations, environmental regulations, the
    Federal tax code, occupational safety and health regulations, and
    homeland security regulations), and use several different
    methodologies, depending on the category, for estimating these
    costs.\24\ We assess the estimates pertaining to economic regulations,
    environmental regulations, and occupational safety and health
    regulations. Together, these categories make up over ninety percent of
    Crain and Crain's overall estimate of annual United States regulatory
    costs.\25\
    ---------------------------------------------------------------------------
        \24\ Crain & Crain, supra note 6, at 31 tbl.6.
        \25\ See id.
    ---------------------------------------------------------------------------
    A. Economic Regulations
        The $1.24 trillion supposedly lost to economic regulations is
    described as an estimate of the costs of compliance, but no specific
    regulations are described in any detail, and no costs are presented for
    any actual compliance activities. Rather, the entire $1.24 trillion
    comes from a single equation formulated by Crain and Crain, using
    comparative international data on per capita incomes and a World Bank
    ``regulatory quality index'' (RQI), among other variables.\26\ The
    equation finds a positive relationship between income per capita and
    the RQI. The United States received a very good, but not perfect, score
    on the RQI; if it had received a perfect score, the equation seems to
    imply that GDP would have been $1.24 trillion higher.
    ---------------------------------------------------------------------------
        \26\ See id. at 21-22.
    ---------------------------------------------------------------------------
        The RQI is one of six ``governance indicators'' calculated by World
    Bank researchers Daniel Kaufmann, Aart Kraay, and Massimo
    Mastruzzi.\27\ They define ``regulatory quality'' as ``capturing
    perceptions of the ability of the government to formulate and implement
    sound policies and regulations that permit and promote private sector
    development.'' \28\ The other five indicators are voice and
    accountability, political stability and absence of violence, government
    effectiveness, rule of law, and control of corruption. Values of these
    six indicators are available for more than 200 countries, starting in
    1996 and appearing annually since 2002.\29\
    ---------------------------------------------------------------------------
        \27\ Worldwide Governance Indicators, World Bank Grp., http://
    info.worldbank.org/governance/wgi/pdf/wgidataset.xls (last visited Nov.
    19, 2011).
        \28\ Daniel Kaufmann et al., The Worldwide Governance Indicators:
    Methodology and Analytical Issues 4 (World Bank Dev. Research Grp.,
    Policy Research Working Paper No. 5430, 2010), available at http://
    siteresources.worldbank.org/INTMACRO/Resources/WPS5430.pdf.
        \29\ Worldwide Governance Indicators, supra note 27.
    ---------------------------------------------------------------------------
        As explained in their paper on methodology, Kaufmann, Kraay, and
    Mastruzzi collect information from thirty-one different data sources,
    including commercial business information providers, surveys, NGOs, and
    public sector sources.\30\ Each individual observation is converted
    into a numerical score, with higher values for better outcomes.\31\ The
    authors then make what they call the ``innocuous'' assumption that the
    true quality of governance in each area (the quality of regulation, for
    the RQI) is ``a normally distributed random variable with mean zero and
    variance one. This means that the units of our aggregate governance
    indicators will also be those of a standard normal random variable,
    i.e., with zero mean, unit standard deviation, and ranging
    approximately from -2.5 to 2.5.'' \32\ The final portion of this
    quotation simply reflects a well-known mathematical result: about
    ninety-nine percent of the time, a random variable with a normal
    distribution falls within 2.5 standard deviations of the mean.
    ---------------------------------------------------------------------------
        \30\ Kaufmann et al., supra note 28, at 2.
        \31\ Id. at 8.
        \32\ Id. at 9.
    ---------------------------------------------------------------------------
        Crain and Crain evidently misread this statement; they reported
    that the RQI ``is scaled to have values that range from -2.5 to 2.5.''
    \33\ Since they reported \34\ that the United States had a RQI of 1.579
    in 2008, it appeared to them that it would have been possible to
    improve our regulations up to a level that received a 2.5. Therefore,
    they constructed a regression analysis to estimate the economic benefit
    that would result from improving the U.S. RQI from 1.579 to 2.5.
    ---------------------------------------------------------------------------
        \33\ Crain & Crain, supra note 6, at 21.
        \34\ The World Bank Group updates RQI data from time to time; the
    United States' RQI for 2008 is now 1.550 per the data we downloaded in
    November 2011. Worldwide Gov-ernance Indicators, supra note 27.
    ---------------------------------------------------------------------------
        The equation used in Crain and Crain's regression analysis
    expresses GDP per capita as a function of the RQI and several other
    variables: foreign trade as a share of GDP, total population, primary
    school enrollment as a share of the eligible population, and broadband
    subscribers as a share of the population. This selection of variables
    is explained only by the statement that they ``are drawn from the
    empirical literature that examines differences in economic levels
    across countries and over time.'' \35\ The equation is estimated using
    seven years of annual data, from 2002 through 2008, for twenty-five
    countries that belong to the Organization for Economic Cooperation and
    Development (OECD)--an organization whose membership is roughly, though
    no longer exactly, synonymous with high-income, developed countries.
    ---------------------------------------------------------------------------
        \35\ Crain & Crain, supra note 6, at 21-22.
    ---------------------------------------------------------------------------
        The regression results show that GDP per capita is positively
    related to the RQI, to the share of foreign trade in GDP, and to the
    proportion of broadband subscribers in the population. It also shows
    that GDP per capita, in this data set, is significantly negatively
    related to the fraction of the population in primary education.\36\
    Thus if this regression were accurate, and if correlation always
    implied causation, GDP per capita could be increased by raising the
    RQI, the dependence on foreign trade, or the number of broadband
    subscribers, or by decreasing enrollment in primary education. Judging
    by Crain and Crain's regression results, the relationship between
    broadband connections and per capita income is by far the most reliable
    of these links.\37\
    ---------------------------------------------------------------------------
        \36\ Id. at 23 tbl.2.
        \37\ Table 2 in Crain and Crain's report shows a t statistic of
    8.89 for the relationship of broadband subscription rates to GDP per
    capita, far above any other t statistic in the table. Id. The t
    statistic is a measure of the statistical significance of a
    relationship: the larger the t statistic, the less likely it is that
    the observed relationship occurred by chance.
    ---------------------------------------------------------------------------
        Using these regression results and holding all other data constant,
    Crain and Crain reported that an increase of 0.92 in the RQI (from
    1.579 to 2.5) would correspond to an 8.7 percent increase in GDP per
    capita, or a $1.236 trillion increase in total U.S. GDP in 2008,
    measured in 2009 dollars.\38\
    ---------------------------------------------------------------------------
        \38\ Id. at 24. The actual calculation of $1.236 trillion is not
    well explained. Our attempt to reproduce it, using their assumptions,
    yielded $1.30 trillion.
    ---------------------------------------------------------------------------
    B. Environmental Regulations
        Crain and Crain estimate the current annual cost of United States
    environmental regulation to be $281 billion.\39\ To reach this number,
    Crain and Crain add up all of the costs presented in the Office of
    Management and Budget's (OMB) 2001 to 2009 reports on the costs and
    benefits of Federal regulations (and adjust them for inflation).\40\
    OMB's reports from 2002 through 2009 estimate the total costs and
    benefits of the previous year's regulations by compiling estimates--
    with some adjustments--from agencies' Regulatory Impact Analyses (RIA)
    for rules costing $100 million or more per year.
    ---------------------------------------------------------------------------
        \39\ Id. at 31 tbl.6 (reporting costs in 2009 dollars).
        \40\ Id. at 26 tbl.3.
    ---------------------------------------------------------------------------
        OMB's 2001 report, relied upon by Crain and Crain for the vast bulk
    of the costs they attribute to environmental regulation,\41\ took a
    different tack. In this report, OMB estimated costs for rules issued
    from the beginning of the modern environmental era all the way through
    the first quarter of the year 2000.\42\ For rules issued prior to 1989,
    OMB based its high-end estimate on a 1991 article by Robert Hahn and
    John Hird,\43\ which itself relied on a 1990 study by Michael Hazilla
    and Raymond Kopp.\44\ Almost half of Crain and Crain's estimate of the
    current annual costs of environmental regulation--$132 out of $281
    billion--comes from Hahn and Hird's estimate of the costs of rules
    issued over twenty-five years ago.\45\
    ---------------------------------------------------------------------------
        \41\ Id. (reporting high-end cost estimates of almost $192 billion
    (in 2001 dollars) based on OMB's 2001 report; this is approximately
    $230 billion in 2009 dollars).
        \42\ Office of Mgmt. & Budget, Making Sense of Regulation: Report
    to Congress on the Costs and Benefits of Federal Regulations and
    Unfunded Mandates on State, Local, and Tribal Entities 10 n.7, 11 tbl.2
    (2001) [hereinafter OMB 2001 Report]. OMB's 2001 report actually relies
    on OMB's 2000 report for this estimate. Id. at 11 tbl.2 (referring, in
    the source note, to Office of Mgmt. & Budget, Report to Congress on the
    Costs and Benefits of Federal Regulations tbls.1, 2 & 3 (2000)
    [hereinafter OMB 2000 Report]).
        \43\ Crain & Crain, supra note 6, at 25; Hahn & Hird, supra note
    17, at 256 tbl.2.
        \44\ Michael Hazilla & Raymond Kopp, The Social Cost of
    Environmental Quality Regulations: A General Equilibrium Analysis, 98
    J. POL. ECON. 853, 865 tbl.2 (1990).
        \45\ See Crain & Crain, supra note 6, at 27 (utilizing the high end
    of the cost range provided in Hahn & Hird, supra note 17, at 256
    tbl.2); OMB 2000 REPORT, supra note 42, at 20 tbl.1 (reporting a high-
    end cost estimate of $99 billion (in 1996 dollars) for environmental
    rules as of 1988 based on Hahn and Hird, supra note 17; in 2009
    dollars, this is $132 billion); infra note 82 and accompanying text.
    ---------------------------------------------------------------------------
        Hazilla and Kopp used general equilibrium analysis to estimate the
    costs of environmental regulation. They modeled the economy as it
    existed from 1958 to 1974 in order to establish a pre-regulation
    baseline. They then re-ran the model, this time incorporating the
    Environmental Protection Agency's (EPA) 1984 estimate of the costs of
    compliance with the Clean Air Act and the Clean Water Act, based on the
    regulations in place as of December 1982. In their analysis, the direct
    costs of regulation raise prices throughout the economy. Higher prices
    cause lower real wages, inducing workers to work less (in the language
    of economics, households choose to substitute leisure for labor). The
    reduction in labor decreases income, consumption, and savings, relative
    to the pre-regulation baseline. Lower savings means less investment,
    slowing the economy's rate of growth and causing decreases in
    production that are compounded over time. Simulating outcomes from 1981
    through 1990, Hazilla and Kopp estimated that household labor supply
    would decrease by about 1 percent, and real (inflation-adjusted) gross
    national product would decrease by 2.4 percent in 1981, and 5.8 percent
    in 1990.\46\
    ---------------------------------------------------------------------------
        \46\ Hazilla & Kopp, supra note 44, at 867 tbl.3.
    ---------------------------------------------------------------------------
        For the environmental rules issued between 1989 and 2000, OMB's
    2001 report (and, by extension, Crain and Crain) relied on OMB's 2000
    report, which itself relied on a report OMB issued in 1996 (estimating
    costs for rules issued from 1987 to 1994), along with estimates of the
    costs of rules from 1995 to 1999.\47\
    ---------------------------------------------------------------------------
        \47\ OMB 2001 Report, supra note 42, at 11 tbls.1 & 2.
    ---------------------------------------------------------------------------
    C. Workplace Regulations
        Crain and Crain estimate costs of $64.313 billion for occupational
    safety and health regulations issued prior to 2001, and $471 million
    for such regulations issued between 2001 and 2008.\48\ For the costs of
    rules issued before 2001, Crain and Crain rely on an analysis published
    in 2005 by Joseph M. Johnson.\49\ Johnson estimated the costs of
    workplace safety and health rules by multiplying earlier estimates of
    these costs by 5.55, based upon findings in a 1974 study conducted by
    the National Association of Manufacturers.\50\ For the costs of rules
    issued between 2001 and 2008, Crain and Crain use an aggregate estimate
    provided in OMB's 2009 report on the costs and benefits of Federal
    regulation.\51\ OMB's estimate is based on the RIA the Occupational
    Safety and Health Administration (OSHA) filed for major rules issued in
    the relevant years.
    ---------------------------------------------------------------------------
        \48\ Crain & Crain, supra note 6, at 30 tbl.5 (reporting costs in
    2009 dollars).
        \49\ Id.
        \50\ Johnson, supra note 18, at 455 & n.37.
        \51\ Crain & Crain, supra note 6, at 30 tbl.5.
    ---------------------------------------------------------------------------
    II. The Many Shortcomings of Crain and Crain's Estimate
        Crain and Crain's study is littered with misunderstandings,
    mistakes, and double counting. At every step of the way, they choose
    data and assumptions that make the costs climb higher and higher. At
    every step of the way, they also make outright, objective errors that
    have the same effect. The result is a mix of apparent bias and
    ineptitude that make their estimate of $1.75 trillion wholly
    unreliable.
        We begin by discussing the flaws in Crain and Crain's estimate of
    the costs of economic regulation, and then turn to the flaws in their
    estimates regarding environmental and workplace regulations.
    A. Economic Regulation
        Crain and Crain's one-equation analysis of economic regulation has
    at least four fatal flaws, any one of which would be enough to destroy
    its prediction of a $1.24 trillion loss. First, Crain and Crain have
    misunderstood the scale of the RQI and the meaning of the number they
    treat as a perfect score. Second, they have inappropriately lumped
    together seven years of extremely similar data in the same equation,
    creating a spurious appearance of statistical significance. Third,
    there is in fact no correlation between the RQI and per capita income
    among high-income countries. Fourth, correlation is not causation: if
    the RQI does show that the United States has a higher quality of
    regulations than some middle-income countries, this could mean either
    that better regulations create higher incomes, or that higher incomes
    allow the creation of better regulations.
    1. Why Be Normal?
        The normal distribution--also known as the Gaussian distribution or
    the bell curve--is one of the most familiar and frequently used
    distributions in statistics. As is well known, it has no maximum or
    minimum value; rather, values farther and farther away from the mean
    become less and less probable. Thus it is common to describe the
    probability of a normally distributed variable falling within a certain
    distance from the mean. For example, there is a ninety-five percent
    probability that a randomly chosen value of a normally distributed
    variable falls within 1.96 standard deviations of the mean. Or, in the
    example used by the authors of the RQI, there is a ninety-nine percent
    probability of such a variable falling within about 2.5 standard
    deviations of the mean.
        Crain and Crain missed this elementary fact about distributions,
    and assumed that 2.5 standard deviations is an absolute upper limit and
    -2.5 is an absolute lower limit. They are wrong both in theory and in
    the empirical description of the RQI (which, as noted above, is defined
    as a normally distributed variable with a mean of zero and standard
    deviation of one). For the 207 countries for which the World Bank
    researchers reported an RQI value for 2008, the RQI ranged from -2.66
    in Somalia to 1.98 in Hong Kong. The highest RQI on record is 2.23 for
    Singapore; since 2002, no country has received an RQI of 1.99 or
    higher.\52\ If, instead of the arbitrary target of 2.5, Crain and Crain
    had assumed that the best the United States could do was to match the
    best existing performance on the RQI--reaching the state of regulatory
    nirvana achieved by Hong Kong--then the potential improvement, and
    hence the estimated costs of economic regulation, would have been cut
    roughly in half. That is, even if one accepted the rest of their
    methodology, about $600 billion of Crain and Crain's supposed costs of
    regulation would be eliminated, with no change in information about any
    United States regulations, simply by reading the international RQI data
    in a more measured and defensible manner.
    ---------------------------------------------------------------------------
        \52\ See Worldwide Governance Indicators, supra note 27.
    ---------------------------------------------------------------------------
        More broadly, Crain and Crain use the RQI with little thought about
    its limitations. As two of the developers of the World Bank's
    governance indicators (including the RQI) have written, ``Governance
    indicators can be used for regular cross-country comparisons . . .
    [but] they often remain blunt tools for monitoring governance and
    studying the causes and conse-quences of good governance at the country
    level.'' \53\ They further caution users, noting:
    ---------------------------------------------------------------------------
        \53\ Daniel Kaufmann & Aart Kraay, Governance Indicators: Where Are
    We, Where Should We Be Going?, 23 World Bank Res. Observer 1, 25
    (2008).

            All governance indicators include measurement error and so
            should be thought of as imperfect proxies for the fundamentals
            of good governance. . . . Whenever possible, such margins of
            error should be explicitly acknowledged, as they are in the WGI
            [the database that includes the RQI], and taken seriously when
            the indicators are used to monitor progress on governance.\54\
    ---------------------------------------------------------------------------
        \54\ Id. at 26.

        The RQI estimates are published with standard errors, implying that
    the authors of the database believe that about two-thirds of the time,
    the true value will fall within one standard error of the reported
    value. For the United States in 2008, the RQI is 1.55 and the standard
    error is 0.22, implying that there is a two-thirds probability that the
    ``true'' United States
        RQI is between 1.33 and 1.77.\55\ Of the 207 countries with RQI
    values for 2008 reported in the World Bank database, there were only
    fourteen with RQI above the United States value of 1.55, and just six
    with RQI above 1.77, the upper limit of the United States confidence
    interval: Denmark, Hong Kong, Ireland, New Zealand, Singapore, and the
    United Kingdom.\56\ The evidence is meager that the United States lags
    significantly behind other countries in the quality of its regulations
    as measured by the World Bank's RQI. Yet the unexplained hope for a
    great leap forward in the RQI, well beyond all worldwide experience to
    date, is the fulcrum for most of Crain and Crain's estimated regulatory
    costs.
    ---------------------------------------------------------------------------
        \55\ See supra note 34 and accompanying text.
        \56\ See Worldwide Governance Indicators, supra note 27.
    ---------------------------------------------------------------------------
        The RQI is just one of the World Bank's regulatory indicators;
    another one, the ``doing business indicator,'' is explicitly designed
    to measure how easy it is to set up and run a business in 183 countries
    around the world.\57\ The doing business indicator confirms that the
    United States is close to the top, ranking fifth in the world behind
    Singapore, Hong Kong, New Zealand, and the United Kingdom.\58\ The
    ranking is purely ordinal, with no theoretical maximum. The United
    States could aspire to be number one, but there is no way to tell what
    economic consequences, if any, might be associated with making it
    easier to do business here than in all 182 other countries in the
    database, rather than just 178. Thus a broader look at the World Bank's
    regulatory indicators provides no basis for Crain and Crain's
    presumption that measurable increases in the United States' regulatory
    quality could boost our rate of economic growth.
    ---------------------------------------------------------------------------
        \57\ The ``doing business indicator'' is a tool developed by the
    Doing Business Project and is available at Doing Business, http://
    www.doingbusiness.org (last visited Nov. 4, 2011).
        \58\ Economy Rankings, Doing Business, http://
    www.doingbusiness.org/rankings (last visited Sept. 19, 2011).
    ---------------------------------------------------------------------------
    2. Padding the Evidence
        Crain and Crain use seven years of data, annually from 2002 through
    2008, on the RQI, per capita incomes, and other variables. This
    artificially boosts the reported significance of the results; it is a
    violation of standard statistical practice, which makes the regression
    results misleading.
        To see why this matters, consider the results of a coin toss.
    Suppose that a penny is flipped once and lands heads up. This is
    clearly not a statistically significant result; it is a random event,
    expected to occur half the time. Now suppose that a penny is flipped
    seven times in succession, landing heads each time. In contrast to the
    single toss, seven identical tosses are very significant. The chance of
    getting seven heads in a row is one in 128; in other words, we are more
    than ninety-nine percent sure that seven successive tosses will not all
    be heads. Spend all day flipping pennies, and seven successive heads
    will probably happen at some point; but if it happens on the first
    seven flips, it might lead to questions about whether the penny is
    weighted or the experimenter is biasing the results.
        Now imagine a research paper reporting seven separate observations
    of a single coin toss as if they were independent events. This would
    mislead-ingly convert an ordinary, random event--the single toss--into
    something that appears to be highly significant and unlikely to occur
    by chance alone.
        Crain and Crain combine seven years of annual data for twenty-five
    OECD countries on GDP per capita, the RQI, and other variables. Both
    GDP per capita and the RQI, however, change very little from year to
    year. For the OECD countries, the correlation between GDP per capita in
    2007 and 2008 has an adjusted r\2\ of 0.999;\59\ even for the first and
    last years in the Crain and Crain sample, 2002 and 2008, the
    correlation between GDP per capita has an adjusted r\2\ of 0.982. Thus,
    the seven years of data on GDP per capita, treated by Crain and Crain
    as separate observations, contain virtually identical information about
    the relative affluence of OECD countries. The RQI is also highly
    correlated from year to year: for the OECD countries, the correlation
    between the 2007 and 2008 RQIs has an adjusted r\2\ of 0.944, falling
    to 0.815 for the RQIs of 2002 versus 2008.\60\
    ---------------------------------------------------------------------------
        \59\ In an ordinary regression analysis, r\2\ measures how much of
    the variation in one variable (shown on the left-hand side of the
    equation) can be predicted by assuming a linear relationship with the
    other variables in the equation. The adjusted r\2\ of 0.999 reported
    here means that 99.9 percent of the variation among OECD countries in
    GDP per capita in 2008 can be predicted from their GDP per capita in
    2007.
        \60\ These calculations are based on GDP per capita at market
    exchange rates downloaded from the World Bank website in January 2011
    and RQI data downloaded in November 2011 for all thirty-four OECD
    member nations. See Worldwide Governance Indicators, supra note 27.
    Adjusted r\2\, discussed supra note 59, is used here to adjust for a
    small sample size. The more familiar, unadjusted r\2\ would be larger
    in every case.
    ---------------------------------------------------------------------------
        In short, the data used by Crain and Crain are much more like seven
    observations of the same coin toss, not seven independent observations
    of new information about the world. As a result, the correlation they
    report between RQI and GDP per capita is spuriously high.
        There are econometric techniques designed for datasets like this
    with serial correlation between observations. Crain and Crain mention,
    with little explanation, that they included country fixed effect
    variables.\61\ This might be part of an appropriate methodology, but it
    alone is far from suffi-cient. Readers interested in pursuing this
    question should consult the CRS study, which repeats the Crain and
    Crain analysis with a rigorous econo-metric methodology--and finds no
    significant relationship between GDP per capita and RQI.
    ---------------------------------------------------------------------------
        \61\ Crain & Crain, supra note 6, at 22.
    ---------------------------------------------------------------------------
    3. Inside the OECD
        Crain and Crain focus on countries in the OECD, which is often
    taken to be synonymous with high-income, industrialized countries. The
    organization, however, has diversified its membership to include a
    number of middle-income countries, including Turkey, Mexico, Chile, and
    several eastern European nations. Some of the middle-income OECD
    members, notably Turkey and Mexico, do have much lower RQI scores.
    Within the high-income OECD member countries, on the other hand, there
    is literally no relationship between income and RQI.
        If we restrict our attention to the nineteen OECD countries with
    per capita GDP above $20,000 in 2008 \62\--including northern and
    western Europe, Australia, Canada, Israel, Japan, and the United
    States--then the correlation between RQI and the logarithm of per
    capita GDP (the form of the data used by Crain and Crain) for 2008 has
    an adjusted r\2\ of -0.06. This puzzling result means that there is
    less relationship between these two data series than would be expected
    by chance alone; the unadjusted r\2\ 0.000003.\63\
    ---------------------------------------------------------------------------
        \62\ See GDP per Capita (Current US$), World Bank, http://
    data.worldbank.org/indicator/NY.GDP.PCAP.CD (last visited Nov. 4,
    2011).
        \63\ In the regression of log GDP per capita versus RQI for these
    countries, the slope has a t statistic of -0.008 and a p value of 0.99,
    implying there is an ninety-nine percent probability of getting a
    relationship at least this good by chance alone, e.g., when comparing
    two series of random numbers. In general, a negative value for adjusted
    r\2\ means that there is a better than fifty percent probability of
    getting a relationship this good by chance alone.
    ---------------------------------------------------------------------------
        A graph of the data, highlighting the position of the United
    States, is presented in Figure 1. The absence of a trend is visible in
    these data.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    4. Correlation Is Not Causation
        A correlation can be found between RQI and income only by comparing
    countries at very different income levels;\64\ we have seen that this
    relationship disappears within the world of countries above about half
    the United States' level of income.\65\ Suppose, for the sake of the
    argument, that the RQI measures something meaningful about the quality
    of regulation (determining exactly what the RQI measures is an
    important issue which we do not address). Turkey and Mexico, two of the
    lowest-income members of the OECD, also have the lowest RQI scores in
    the OECD. This does not tell us that the quality of regulation makes a
    country richer or poorer; the reverse could equally well be true.
    ---------------------------------------------------------------------------
        \64\ OECD membership now includes thirty-four countries at varying
    income levels. Crain and Crain used twenty-five of these countries in
    their analysis; the CRS study used thirty. See COPELAND, supra note 15,
    at 27; CRAIN & CRAIN, supra note 6, at 21. Neither study reported which
    countries they included. The previous section of this Article referred
    only to the nineteen highest-income OECD members--a group that
    corresponds, we believe, to the common (mis)understanding of OECD
    membership as a synonym for high income. This section discusses our
    exploration of the data for all thirty-four countries; it does not
    include the other explanatory variables used by Crain and Crain and by
    the CRS study, so it is not directly comparable to those results.
        \65\ United States GDP per capita was $38,345 in 2008, according to
    the World Bank. GDP per Capita (Current US$), supra note 62.
    ---------------------------------------------------------------------------
        The United States is much richer than Turkey or Mexico, and,
    according to the RQI, has much better regulations. Does this mean that
    better regulation made the United States richer? Or does it mean that
    being richer enabled the United States to adopt better regulations? Or,
    since the RQI is based on the perception of regulatory quality by a
    number of observers, does the greater wealth of the United States lead
    to a perception that it has better regulations than Turkey or Mexico?
    Even if the Crain and Crain calculation was reliable and problem free
    (which it definitely is not, as seen above), it would founder on this
    shoal: their estimate of regulatory costs depends on the unstated
    premise that causation is all one way, from regulatory quality to
    income. If, instead, wealth creates better regulation, their entire
    argument sinks beneath the waves.
        If correlation implied causation, in the manner assumed by Crain
    and Crain, then their curious finding of negative correlation between
    GDP per capita and primary school enrollment would suggest another low-
    cost route to wealth: throw kids out of school. We almost hesitate to
    mention this, given the viral spread of Crain and Crain's implausible
    conclusions throughout current political debates. We trust that it is
    self-evident that the error lies in giving credence to Crain and
    Crain's calculations, not in the idea of educating children.\66\
    ---------------------------------------------------------------------------
        \66\ Crain and Crain never precisely defined their educational
    enrollment variable, but they reportedly told CRS that their negative
    coefficient on educational enrollment could reflect ``aging pyramid''
    effects. Copeland, supra note 15, at 27. If lower-income OECD nations
    such as Turkey and Mexico have younger populations than other OECD
    members, then school-age children, and hence school enrollment, may be
    a larger percentage of the total population in the lower-income
    countries. This could create a negative correlation between educational
    enrollment and income per capita in the Crain and Crain dataset.
    ---------------------------------------------------------------------------
    B. Environmental Regulation
        Crain and Crain's estimates of the costs of environmental
    regulations likewise suffer from several basic flaws. First, they are
    based on evidence--and regulations--so old as to be unreliable, as OMB
    itself has acknowledged.\67\ Second, they rely heavily on an outdated
    version of general equilibrium analysis, analysis which, even if
    updated to reflect the current state of the art, would nonetheless
    remain deeply problematic in its assumptions. Third, these estimates
    contain objective errors, such as double counting of the same costs and
    inclusion of costs for rules that do not exist.
    ---------------------------------------------------------------------------
        \67\ See Office of Mgmt. & Budget, Stimulating Smarter Regulation:
    2002 Report to Congress on the Costs and Benefits of Regulations and
    Unfunded Mandates on State, Local, and Tribal Entities 40 (2002)
    [hereinafter OMB 2002 Report] (describing plans for subsequent
    reports).
    ---------------------------------------------------------------------------
    1.  Old Data on Old Rules
        Crain and Crain's estimates of the costs of environmental
    regulations come from OMB's 2001-2009 reports on Federal regulation.
    The earliest of these reports provide estimates of regulatory costs
    going back decades. In 2003, OMB stopped providing such estimates for
    the costs of regulations that had been issued more than ten years
    before, explaining that long-ago estimates were not reliable guides for
    current policy.\68\ Several years before, OMB had explained that it was
    hard to justify continuing to debit such costs to the Federal
    Government's regulatory program, as it was unlikely that if the
    regulations were pulled, businesses would actually withdraw whatever
    protections they had installed in response to the relevant
    regulations.\69\ In its 2002 report, moreover, OMB had cast a skeptical
    eye on aggregate cost estimates that attempted to announce an overall
    figure for the costs of old and new regulations, observing:
    ---------------------------------------------------------------------------
        \68\ See id.; see also Copeland, supra note 15, at 21.
        \69\ Copeland, supra note 15, at 24-25 (citing Office of Mgmt. &
    Budget, Report to Congress on the Costs and Benefits of Federal
    Regulations (1997)).

            We included these aggregate estimates in the appendix rather
            than the text to emphasize the quality differences in the two
            sets of estimates. The estimates of the costs and benefits of
            Federal regulations over the period of April 1, 1995, to March
            31, 2001, are based on agency analyses subject to public notice
            and comments and OMB review under E.O. 12866. The estimates . .
            . for earlier regulations were based on studies of varying
            quality. Some are first-rate studies published in peer-reviewed
            journals. Others are non-random surveys of questionable
            methodology. And some esti-mates are based on studies completed
            20 years ago for regulations issued over 30 years ago, whose
            precise costs and benefits today are unknown.\70\
    ---------------------------------------------------------------------------
        \70\ OMB 2002 Report, supra note 67, at 39.

        By 2003, these older estimates had disappeared entirely from OMB's
    report, and they have not come back.
        Despite OMB's admonition against using cost estimates that are over
    ten years old, Crain and Crain use OMB estimates of regulatory costs
    going back more than twenty years. In using Hazilla and Kopp's
    estimates for rules issued prior to 1988, they go back to the very
    beginning of United States environmental law. As OMB itself has
    observed, costs going back this far are unreliable.\71\ The great bulk
    of Crain and Crain's estimate of the costs of environmental regulation
    comes from numbers generated so long ago that OMB does not now use them
    in its own calculations. Crain and Crain should not have used them
    either. If Crain and Crain had followed OMB's cautions about the
    unreliability of these old estimates, and elimi-nated them from their
    estimate, the total cost of environmental regulation would have fallen
    from $281 billion to $48 billion.\72\
    ---------------------------------------------------------------------------
        \71\ Id. at 40.
        \72\ This is based on converting Crain and Crain's estimate of
    costs ``through 2000'' to 2009 dollars. See CRAIN & CRAIN, supra note
    6, at 26 tbl.3.
    ---------------------------------------------------------------------------
        As we explain below, even this much smaller figure contains large
    errors.
    2. Is Our Real Problem Voluntary Unemployment? Really?
        Crain and Crain's calculations for rules adopted before 1988 relied
    on the Hazilla and Kopp study \73\--which is, strictly speaking, an
    estimate of potential economic consequences, from 1981 through 1990, of
    major environmental rules in effect in 1982. To make that estimate,
    Hazilla and Kopp applied a general equilibrium framework, familiar in
    textbook economics, in which economic changes are often governed by
    household responses to small price differentials, including the
    (voluntary) choice between leisure and labor.\74\
    ---------------------------------------------------------------------------
        \73\ Hazilla & Kopp, supra note 44, at 856-57.
        \74\ Hazilla and Kopp's description of their model begins with a
    discussion of the importance and the challenge of modelling household
    preferences correctly, and cites numerous other economic models in a
    similar vein. Id. at 857-62. They observe that their model ``is
    suitable for assessing long-run impacts of regulatory programs on
    neoclassical economic growth,'' i.e., impacts on abstract economic
    models. Id. at 859.
    ---------------------------------------------------------------------------
        Even within the narrow field of abstract economic models of
    regulatory costs, Hazilla and Kopp's 1990 paper no longer represents
    the state of the art. Newer work has identified many subtleties in the
    modeling of environmental regulations, and leads to a surprisingly wide
    range of possible outcomes, including ones quite different from Hazilla
    and Kopp's estimates.\75\ Nonetheless, Crain and Crain chose to rely on
    Hazilla and Kopp, not on newer work in this field.
    ---------------------------------------------------------------------------
        \75\ See, e.g., Don Fullerton & Garth Heutel, The General
    Equilibrium Incidence of Environmental Mandates, Am. Econ. J.: Econ.
    Pol'y, Aug. 2010, at 64.
    ---------------------------------------------------------------------------
        Although the Hazilla and Kopp estimate of regulatory costs is
    driven by a decrease in employment, this is not involuntary
    unemployment, of the sort seen in recessions and all too well known in
    reality today. The general equilibrium framework used in economics
    typically assumes that all markets clear--that is, supply equals demand
    for every commodity and for factors of production such as labor.\76\
    Instead, the reduction in employment of interest to Hazilla and Kopp
    stems from a voluntary choice: looking at the higher prices, and
    consequently lower real wages, that result from environmental
    protection costs, households decide that they would prefer to reduce
    their aggregate hours of work by about one percent.\77\ Leisure is
    presumably just as rewarding as ever, but labor is slightly less
    rewarding at the slightly lower real wages, so rational utility
    maximizers (the only species of human beings found in the model) choose
    to work slightly less. For someone working a forty-hour, fifty-week
    year, one percent less work is a reduction of twenty hours, or 2.5
    days, per year. All the costs of pre-1989 regulations, for Crain and
    Crain, are consequences of this minor, voluntary adjustment in working
    hours.
    ---------------------------------------------------------------------------
        \76\ Hazilla and Kopp are not explicit about their labor market
    assumptions. The paper they cite as the source of their model includes
    the possibility of involuntary unemployment, but does not discuss it.
    It does, however, highlight the household decision about voluntary
    leisure time. Edward A. Hudson & Dale W. Jorgenson, U.S. Energy Policy
    and Economic Growth, 1975-2000, 5 Bell J. Econ. & Mgmt. Sci. 461
    (1974).
        For a discussion on the limitations of general equilibrium models
    for policy analysis, with an emphasis on trade policy, see Frank
    Ackerman & Kevin Gallagher, The Shrinking Gains from Global Trade
    Liberalization in Computable General Equilibrium Models: A Critical
    Assessment, 37 Int'l J. Pol. Econ. 50 (2008). For a discussion on the
    limitations of the underlying economic theory, see Frank Ackerman,
    Still Dead After All These Years: Interpreting the Failure of General
    Equilibrium Theory, 9 J. Econ. Methodology 119 (2002).
        \77\ Labor supply in the environmental cost scenario is 0.84
    percent lower than in the no-regulation baseline in 1981, and 1.18
    percent lower in 1990. Hazilla & Kopp, supra note 44, at 867 tbl.3.
    ---------------------------------------------------------------------------
        Since it is a voluntary choice, why complain about workers choosing
    more leisure? The problem, for Hazilla and Kopp, is as old as the
    Protestant ethic: more work means more income, some of which is saved
    and can be invested in capital goods, leading to faster economic
    growth--but more leisure just means another 2.5 days at the beach. In
    the folkloric tradition of kingdoms lost for a nail, it is the
    imposition of environmental regulations--which raised prices, which
    lowered real wages, which made workers choose more leisure, which
    lowered incomes, which lowered savings, which lowered investment, which
    caused slower economic growth--which imposed such burdensome costs on
    the economy.
        What's wrong with this long and winding tale of economic causation?
    One might well question the real-world relevance of a model of
    automatic full employment. In a world with business cycles and
    involuntary unemployment, it is quite possible that regulatory costs
    could lead to increased expenditures and employment.\78\ Beyond such
    fundamental questions about general equilibrium modeling, there are
    several additional problems with the Hazilla and Kopp analysis.
    ---------------------------------------------------------------------------
        \78\ When, as at present, businesses are earning significant
    profits but not investing them due to a lack of demand for their
    products, regulations could force businesses to spend some of those
    profits on pollution controls; that spending would create an economic
    stimulus.
    ---------------------------------------------------------------------------
        For one thing, there is no sign of awareness of any possible
    benefits of regulation--to human health, to nature, or even to the
    economy. Hazilla and Kopp analyzed the economic impact of the earliest
    regulations adopted under the Clean Air Act and the Clean Water Act--
    rules that save thousands of people per year from dying of lung
    disease, prevent rivers from catching fire, and keep lead out of
    gasoline. Is the main economic impact of these sweeping changes in our
    conditions of life really a slight increase in prices that inspires
    workers to do one percent less work? Even in narrowly economic terms,
    healthier people, with fewer respiratory diseases, are more productive
    workers, and children growing up free of exposure to lead have, on
    average, higher IQs and higher lifetime earnings prospects.\79\
    ---------------------------------------------------------------------------
        \79\ E.g., Shapiro et al., supra note 5, at 11 (estimating that
    regulation saves $76 billion in child healthcare costs, $38 billion
    dollars in municipal charges, and thousands of lives); EPA, The
    Benefits and Costs of the Clean Air Act: 1990 to 2010, at 75 (1999),
    available at http://www.epa.gov/oar/sect812/1990-2010/chap1130.pdf
    (estimating the benefits of Clean Air Act regulations to be $110
    billion).
    ---------------------------------------------------------------------------
        More broadly speaking, the benefits of clean air and clean water
    are immensely valuable, and widely valued. In EPA's retrospective cost-
    benefit analysis of the early stages of the Clean Air Act, the
    estimated value of the benefits is more than forty times the costs, and
    more than enough to outweigh Hazilla and Kopp's estimates of regulatory
    costs.\80\ Crain and Crain, following in Hazilla and Kopp's footsteps,
    were happy to use calculations based on EPA's estimates of the costs of
    regulation, but entirely ignored EPA's much larger estimates of the
    benefits of the same rules.\81\
    ---------------------------------------------------------------------------
        \80\ See Retrospective Study--Study Design and Summary of Results,
    EPA, http://www.epa.gov
    /air/sect812/retro.html (last visited Nov. 4, 2011).
        \81\ The OMB reports on which Crain and Crain rely for their
    estimates of the costs of rules issued after 1988, Crain & Crain, supra
    note 6, at 26 tbl.3, themselves rely on EPA's estimates of costs as
    reflected in their RIAs for major rules. Id. at 25.
    ---------------------------------------------------------------------------
        Another problem is that Hazilla and Kopp's projections of the costs
    of regulations grow rapidly over time, and should by now be vastly--but
    laughably--larger than Crain and Crain's estimate. The number used by
    Crain and Crain to represent the current costs of environmental
    regulations adopted before 1989 is in fact Hazilla and Kopp's estimate
    of costs as of 1985 (adjusted for inflation), mislabeled as the cost in
    1988.\82\ There is, however, no reason to stop in 1985: the Hazilla and
    Kopp cost estimate is much larger for 1990, the last year in their
    analysis, than for 1985 \83\--and the logic of their model implies that
    the costs resulting from 1980s regulations should have continued to
    escalate, considerably faster than inflation, beyond 1990.
    ---------------------------------------------------------------------------
        \82\ The error in dates occurs in Hahn and Hird's treatment of the
    Hazilla and Kopp estimate. In the appendix explaining their numbers,
    Hahn and Hird recognized that they were using an inflation-adjusted
    version of Hazilla and Kopp's estimate for 1985. Hahn & Hird, supra
    note 17, at 272 & n.224 (explaining their $77.6 billion figure). In the
    body of their article, however, Hahn and Hird inserted the same number,
    without comment or adjustment, into a table of regulatory costs and
    benefits in 1988. Id. at 256 tbl.2.
        \83\ Hazilla and Kopp, supra note 44, at 865 tbl.2.
    ---------------------------------------------------------------------------
        The rapid, ongoing escalation can be seen in a comparison of
    Hazilla and Kopp's social cost projections to EPA's estimates of direct
    compliance costs. The true social cost of early 1980s clean air and
    clean water rules, according to Hazilla and Kopp, was 67 percent of
    EPA's estimate of direct compliance costs in 1981, rising to 126
    percent in 1985 and 258 percent in 1990.\84\ Hazilla and Kopp's social
    costs were lower than direct compliance costs in 1981, the first year
    of the rules they analyzed, because they subtracted the assumed value
    of the increase in leisure. Yet, over time, the cumulative, dynamic
    effects of reduced labor become steadily more important. Every year
    that workers work less, thereby reducing income, savings, investment,
    and growth, the next year's GDP becomes smaller than it would have
    been. As time goes on, the reductions in income and growth are
    compounded, so the regulatory cost scenario falls farther and farther
    behind the no-regulation baseline. As a result, the social cost of
    regulation, defined as the gap between the baseline and regulatory cost
    scenarios, grows ever larger.
    ---------------------------------------------------------------------------
        \84\ Calculated from id.
    ---------------------------------------------------------------------------
        From 1981 to 1985, Hazilla and Kopp's social cost estimate,
    measured in constant (inflation-adjusted) dollars, grows by an average
    of 20.5 percent per year. From 1985 to 1990, the growth rate is only
    slightly slower, at 18.8 percent per year.\85\ Nothing is said in the
    article (or in the subsequent articles citing it) about what growth
    rates to expect beyond 1990; two hypothetical examples, however,
    demonstrate the importance of this question. First, if the post-1985
    rate of growth, 18.8 percent annually, continued into the future, then
    by 2009 the social cost of early-1980s environmental regulation would
    have reached $8.8 trillion, well over half of the GDP. Second, if the
    rate of growth continued to decline by 1.7 percentage points every five
    years, as it did from the early- to late-1980s in Hazilla and Kopp's
    analysis, then the social cost of early-1980s regulations would have
    been ``only'' $4.5 trillion by 2009, nearly one-third of the GDP.\86\
    Surely these numbers are large enough to fail the laugh test: they are
    humorously, absurdly wrong on their face. In order to make sensible,
    contemporary use of the Hazilla and Kopp estimates, it would be
    necessary to explain why their growth decelerates or stops--an
    explanation which is not present in Hazilla and Kopp, or in Crain and
    Crain.
    ---------------------------------------------------------------------------
        \85\ Calculated from the ``Social Cost'' estimates, id., converted
    to constant dollars.
        \86\ Calculated by applying the indicated growth rates to the
    Hazilla and Kopp estimate of social costs in 1990, id., converted to
    2009 dollars.
    ---------------------------------------------------------------------------
        Within the (limited, as we have seen) logic of this model, what
    prevents the costs of a fixed set of regulations from growing without
    limit? Hazilla and Kopp are not alone in having missed an obvious
    answer: high initial costs of regulatory compliance create an incentive
    for innovation, which lowers future costs. General equilibrium analyses
    frequently focus on the implications of consumers' and workers'
    responses to small price changes, such as the one percent reduction in
    working hours modeled by Hazilla and Kopp. Yet they typically omit the
    comparable response of engineers and entrepreneurs to regulations: if
    compliance costs are high enough, there are profits to be made by
    inventing cheaper alternative technologies. Why should entrepreneurs,
    who are in the business of seeking out new opportu-nities for profits,
    be less sensitive to price incentives than households? Innovation may
    seem less predictable than changes in consumer purchases or workers'
    desire to work--but the assumption that regulation creates an incentive
    for innovation makes sense out of the repeated empirical finding that
    regulatory costs turn out to be lower than predicted in advance.\87\
    ---------------------------------------------------------------------------
        \87\ See e.g., Shapiro et al., supra note 5, at 2; Frank Ackerman,
    The Unbearable Lightness of Regulatory Costs, 33 Fordham Urb. L.J.
    1071, 1083 (2006); Thomas O. McGarity & Ruth Ruttenberg, Counting the
    Cost of Health, Safety, and Environmental Regulation, 80 Tex. L. Rev.
    1997, 1998 (2002).
    ---------------------------------------------------------------------------
        The argument that regulations create important incentives for
    innovation exists in economics literature. The ``Porter hypothesis''
    claims that well-designed regulations can prompt enough innovation to
    increase the competitiveness of regulated firms.\88\ This idea has been
    controversial among economists, since it implies that, prior to
    regulation, the firms were not maximizing profits. There is, however,
    extensive empirical evidence to support the hypothesis. At a macro
    level, Germany's large, longstanding trade surplus suggests that the
    country's famously strict regulations do not destroy
    competitiveness.\89\
    ---------------------------------------------------------------------------
        \88\ Michael E. Porter & Claas van der Linde, Toward a New
    Conception of the Envi-ronment-Competitiveness Relationship, 9 J. Econ.
    Persp. 97, 97-98 (1995).
        \89\ For a historical analysis of Germany's institutional framework
    and its positive relationship to economic growth, see Wendy Carlin,
    West German Growth and Institutions, in Economic Growth In Europe Since
    1945, at 455 (Nicholas Crats & Gianni Toniolo eds., 1996). For an
    attempt at quantitative analysis of the effects of German regulations
    on economic growth, finding a positive effect on growth from
    environmental regulations and a negative effect from capital market
    regulations, see Helge Berger, Regulation in Germany: Some Stylized
    Facts About its Time Path, Causes, and Consequences, 118 Zeitschrift
    fur Wirtschafts- und Sozialwissenschaften [J. Applied Soc. Sci. Stud.]
    185 (1998) (Ger.).
        Germany's trade surplus is documented in the numerous statistical
    reports available from the World Trade Org., http://www.wto.org (last
    visited Nov. 19, 2011). For example, in 2009, Germany had a merchandise
    trade surplus of $188 billion, second only to China's $196 billion. See
    World Trade Org., International Trade Statistics 2010, at 13 tbl.I.8
    (2010), available at http://www.wto.org/english/res_e/statis_e/
    its2010_e/its2010_e.pdf.
    ---------------------------------------------------------------------------
        The article introducing the Porter hypothesis cites Hazilla and
    Kopp as an example of a study that is biased against regulation by its
    failure to consider the incentives it creates (as well as the failure
    to evaluate any benefits of regulation).\90\ A more empirically-
    grounded account of the economic impact of 1980s regulations, the
    subject of Hazilla and Kopp's analysis, would include, for example, the
    unexpectedly low cost to society of removing lead from gasoline, since
    the catalytic converters introduced by automobile manufacturers at
    about that time required unleaded gasoline.\91\
    ---------------------------------------------------------------------------
        \90\ Porter & van der Linde, supra note 88, at 108.
        \91\ See e.g., Frank Ackerman et al., Applying Cost-Benefit
    Analysis to Past Decisions: Was Environmental Protection Ever a Good
    Idea?, 57 Admin. L. Rev. 155, 164-65 (2005); Jamie Lincoln Kitman, The
    Secret History of Lead, Nation, Mar. 20, 2000, at 11.
    ---------------------------------------------------------------------------
        By the 1990s, unleaded gasoline had become the universal standard,
    and it was no longer meaningful to say that its costs were higher than
    the baseline (as assumed in the Hazilla and Kopp cost estimates). Once
    there was no longer any leaded fuel option available on the market, no
    one could save money by going back to it; the only baseline worth
    talking about was the new, healthier world of unleaded gasoline.\92\
    ---------------------------------------------------------------------------
        \92\ The Clean Air Act banned the sale of leaded gasoline as of
    1996, and other countries around the world took similar actions. As of
    June 2011, the only countries relying exclusively on leaded gasoline
    were Myanmar (Burma) and Afghanistan; the only other countries still
    selling any leaded gasoline for road use were Algeria, Iraq, North
    Korea, and Yemen. Robert Taylor & Zac Gethin-Damon, Countries Where
    Leaded Petrol is Possibly Still Sold for Road Use as at 17th June 2011
    [sic], The LEAD Grp. (June 17, 2011), http://www.lead.org.au/fs/
    fst27.html.
        California banned the sale of leaded gasoline in 1992, four years
    earlier than the Federal Government, and found that the initiative had
    no statistically significant effect on the price of gasoline in
    California. Hayley H. Chouinard & Jeffrey M. Perloff, Gasoline Price
    Differences: Taxes, Pollution Regulations, Mergers, Market Power, and
    Market Conditions, 7 B.E. J. Econ. Analysis & Pol'y 1, 12, 20 tbl.5
    (2007).
    ---------------------------------------------------------------------------
        Yet phony numbers have a life of their own; repetition of Hazilla
    and Kopp's estimate, passed from Hahn and Hird to OMB to Crain and
    Crain, continued even as the innovative processes of the real-world
    economy eliminated the costs that were estimated, so long ago, in such
    a biased manner.
    3. Piling On: Crain and Crain's Use of OMB Reports on the Costs of
            Environmental Rules
        In their tallies of total costs, Crain and Crain always use the
    high end of the range of OMB's cost estimates. They explain that
    agencies underestimate costs and that this justifies use of high-end
    estimates.\93\ But the empirical evidence that exists on actual
    regulatory costs--limited though it may be--does not support Crain and
    Crain's assertion that agencies underestimate regulatory costs. Indeed,
    the evidence that exists tends to point in the opposite direction.\94\
    Although the refrain that agencies have an incentive to underestimate
    costs pervades discourse on the costs of regulation,\95\ in fact at
    least EPA often has exactly the opposite incentive. Much environmental
    regulation stems from laws directing EPA to set limits based on the
    best available technology for pollution control.\96\ A primary
    consideration in determining which technology is available is economic
    affordability.\97\ In anticipating the inevitable legal challenge to a
    rule generated within this legal framework, EPA has an incentive to
    overestimate rather than underestimate the costs of the technology. If
    the technology is affordable even based on an overly-high cost
    estimate, then it should survive legal attack.\98\ Whether EPA does
    more harm than good to itself when it deliberately highballs its
    estimates of costs, the fact remains that it does so, and this belies
    the claims that the agency aims at the low end in estimating costs.
    ---------------------------------------------------------------------------
        \93\ Crain & Crain, supra note 6, at 27.
        \94\ See, e.g., Shapiro et al., supra note 5, at 7; Ackerman, supra
    note 87, at 1083.
        \95\ See, e.g., Morrall, supra note 19, at 29.
        \96\ See, e.g., Cass R. Sunstein, Administrative Substance, 1991
    Duke L.J. 607, 627-31.
        \97\ See, e.g., Effluent Limitations Guidelines and Standards for
    the Construction and Development Point Source Category, 74 Fed. Reg.
    62,996, 63,002 (Dec. 1, 2009) (to be codified at 40 C.F.R. pt. 450);
    Effluent Limitations Guidelines and New Source Performance Standards
    for the Airport Deicing Category, 74 Fed. Reg. 44,676, 44,678 (Aug. 28,
    2009) (to be codified at 40 C.F.R. pt. 449).
        \98\ Shapiro et al., supra note 12, at 7 (citing McGarity &
    Ruttenberg, supra note 87, at 2011, 2044-45).
    ---------------------------------------------------------------------------
        It must be remembered, moreover, that the cost estimates in EPA's
    RIAs always go through OMB review.\99\ OMB has no incentive to allow
    EPA to underestimate costs, and, indeed, OMB stands ready to direct the
    agency to change cost estimates in the RIAs that accompany major rules
    sent to OMB for review. OMB staff members are not shy about insisting
    on significant changes to RIAs as a condition of OMB clearance.\100\
    Thus, although the cost estimates in OMB's recent reports all come from
    the agency's own RIAs, those RIAs reflect OMB's prior input; they are
    not the work product of the agency alone.
    ---------------------------------------------------------------------------
        \99\ By definition, RIAs are done for economically significant
    rules, and OMB reviews economically significant rules.
        \100\ For a particularly dramatic example of changes made to an RIA
    during OMB review, see Sidney Shapiro, Back to the Future: OMB
    Intervention in Coal Ash Rule Replicates the Bush Administration's Way
    of Doing Business, CPRBlog (Jan. 1, 2010), http://www.progressive
    reform.org/CPRBlog.cfm?idBlog=1DDEA50F-E885-B550-C04BDE576F2C0B6E.
    ---------------------------------------------------------------------------
        Crain and Crain also justify the use of high-end estimates by
    emphasizing that OMB's annual reports count the costs only of major
    rules that cost $100 million or more per year, and exclude regulatory
    programs (like Superfund) that do not rely on rules as their
    predominant regulatory mechanism.\101\ Crain and Crain are correct in
    saying that OMB's reports do not cover the regulatory waterfront.
    Insofar as OMB estimates only the costs and benefits of major rules, it
    does not capture the costs and benefits either of rules costing less
    than this or of regulatory programs that are not primarily implemented
    through rulemaking.
    ---------------------------------------------------------------------------
        \101\ Crain & Crain, supra note 6, at 4, 26.
    ---------------------------------------------------------------------------
        But OMB itself has concluded that major rules account for the
    ``vast majority'' of the total costs of Federal rules.\102\ And Crain
    and Crain themselves tell only a tiny part of the story. As others have
    observed, they completely omit regulatory benefits, as if Federal
    regulatory programs cost money but give us nothing in return.\103\ More
    subtly, they completely ignore the fact that many Federal programs in
    fact provide money to, rather than just taking money from, the very
    industries covered by the regulatory programs they criticize. Direct
    and indirect subsidies cost taxpayers billions of dollars every year,
    yet these costs do not figure at all in Crain and Crain's report.\104\
    ---------------------------------------------------------------------------
        \102\ OMB 2002 Report, supra note 67, at 38.
        \103\ Copeland, supra note 15, at 12-13; Shapiro et al., supra note
    12, at 1-2, 6.
        \104\ See, e.g., Autumn Hanna et al., Green Scissors 2011: Cutting
    Wasteful and Environmentally Harmful Government Spending (2011),
    available at http://heartland.org/sites/default/files/
    _Green_Scissors_2011_Web_(2)_pdf; Lisa Heinzerling, New Directions in
    Environmental Law: A Climate of Possibility, 35 Harv. Envtl. L. Rev.
    263, 268-69 (2011).
    ---------------------------------------------------------------------------
        Then there are outright errors that further inflate Crain and
    Crain's figures on regulatory costs. Table 3 of the study reports the
    costs of rules issued ``[through 2000, Q1'' and the costs of rules
    issued from April 1999 to September 2001. This double counts the costs
    of rules issued between April 1, 1999 and March 31, 2000. It is
    difficult to know exactly how large a difference this double counting
    makes in Crain and Crain's estimates because the OMB reports from which
    Crain and Crain draw do not provide annualized costs for all of the
    rules issued in the period of overlap.\105\ But we do know the
    difference is large. Just considering the costs of the rules for which
    OMB does provide annualized cost estimates, we can see that the costs
    Crain and Crain double count amount to over $3 billion (in 2009
    dollars).\106\ And this does not include two rules that together,
    several years out, were estimated to cost almost $10 billion.\107\ For
    the period October 2003 to October 2004, Crain and Crain report the
    costs of all federal rules and not just EPA rules.\108\ The cost of
    this mistake is just over $1 billion.\109\ These errors together
    account for well over $4 billion of the annual costs Crain and Crain
    attribute to environmental rules for the ten-year period from 1999
    through 2008.
    ---------------------------------------------------------------------------
        \105\ OMB 2001 Report, supra note 42, at 22-28 tbl.4 (reporting
    costs of rules issued between April 1, 1999 and March 31, 2000, some
    annualized and some single-year).
        \106\ See id. (providing the costs of storm water discharges (phase
    II), handheld engines, and section 126 petitions for purposes of
    reducing interstate ozone transport). All of our subsequent estimates
    of the effect, in dollars, of double counting and other errors on Crain
    and Crain's total estimates are stated in 2009 dollars.
        \107\ See id. (noting the Tier 2/new motor vehicle emissions
    standards at a cost estimate of $5.3 billion per year (1997 dollars) in
    2030 and the regional haze rule at a high-cost estimate of $4.4 billion
    per year (1990 dollars) in 2015).
        \108\ Crain and Crain report a high-cost estimate of just over $4
    billion for this period. Crain & Crain, supra note 6, at 26 tbl.3. This
    is the same as OMB's estimate for the costs of all Federal regulations
    for this same period. Office of Mgmt. and Budget, Validating Regulatory
    Analysis: 2005 Report to Congress on the Costs and Benefits of Federal
    Regulations and Unfunded Mandates on State, Local, and Tribal Entities
    12 tbl.1-3 (2005) [hereinafter OMB 2005 Report].
        \109\ $862 million in 2001 dollars.
    ---------------------------------------------------------------------------
        Crain and Crain also include the costs of many rules that no longer
    exist. Some of these rules were never put into effect because EPA chose
    to reconsider them. These include air toxics rules on boilers \110\ and
    plywood,\111\ a New Source Performance Standard for petroleum
    refineries,\112\ and the National Ambient Air Quality Standard (NAAQS)
    for ozone set in 2008.\113\ In including rules that the agency itself
    has pulled, Crain and Crain over-state actual regulatory costs for the
    relevant period by almost $11 billion.
    ---------------------------------------------------------------------------
        \110\ See National Emission Standards for Hazardous Air Pollutants
    for Industrial, Commercial, and Institutional Boilers and Process
    Heaters, 69 Fed. Reg. 55,218 (Sept. 13, 2004) (to be codified at 40
    C.F.R. pt. 63); OMB 2005 Report, supra note 108, at 13 tbl.1-4 (noting
    a high-end cost estimate of $876 million in 2001 dollars).
        \111\ See National Emission Standards for Hazardous Air Pollutants:
    Plywood and Composite Wood Products; List of Hazardous Air Pollutants,
    Lesser Quantity Designations, Source Category List; Reconsideration, 70
    Fed. Reg. 43,820 (July 29, 2005) (to be codified at 40 C.F.R. pt. 63);
    OMB 2005 Report, supra note 108, at 13 tbl.1-4 (noting a high-end cost
    estimate of $291 million in 2001 dollars).
        \112\ See Standards of Performance for Petroleum Refineries, 73
    Fed. Reg. 55,751 (Sept. 26, 2008) (granting reconsideration and stay of
    the effective date); Office of Mgmt. and Budget, 2009 Report to
    Congress on the Benefits and Costs of Federal Regulations and Unfunded
    Mandates on State, Local, and Tribal Entities 16 tbl.1-4 (2010)
    [hereinafter OMB 2009 Report] (noting a cost estimate of $7 million in
    2001 dollars).
        \113\ See OMB 2009 Report, supra note 112, at 16 tbl.1-4 (noting a
    high-end cost estimate of $7.73 billion in 2001 dollars).
    ---------------------------------------------------------------------------
        Similarly, Crain and Crain also include rules that no longer exist
    because the courts have overturned them. Rules invalidated by the
    courts, yet embraced within Crain and Crain's estimates of today's
    regulatory costs, include the Bush administration's Clean Air Act rule
    governing mercury from power plants,\114\ its Clean Water Act rules on
    concentrated animal feeding operations,\115\ and rules on cooling water
    intake structures at power plants and other facilities.\116\ The cost
    of including these rules in Crain and Crain's cost estimates is almost
    $6 billion. It is also worth noting that two of the rules most cited in
    industry complaints about the aggressiveness of the Obama EPA are do-
    overs of these two invalidated rules--the proposed new rules on air
    toxics from power plants and on cooling water intake structures.\117\
    Crain and Crain use defunct cost estimates associated with past,
    invalidated incarnations of these rules, and many observers have then
    taken Crain and Crain's flawed cost estimates as a reason to caution
    against the new rules in this administration--which include new
    versions of these very same rules.\118\ If ever there was double
    counting, this surely is it.
    ---------------------------------------------------------------------------
        \114\ See Office of Mgmt. & Budget, 2006 Report to Congress on the
    Benefits and Costs of Federal Regulations and Unfunded Mandates on
    State, Local and Tribal Entities 9 tbl.1-4 (2007) [hereinafter OMB 2006
    Report] (noting a high-end cost estimate of $500 million).
        \115\ See Office of Mgmt. & Budget, Progress in Regulatory Reform:
    2004 Report to Congress on the Benefits and Costs of Federal
    Regulations and Unfunded Mandates on State, Local and Tribal Entities
    18 tbl.4 (2004) (noting a cost estimate of $360 million).
        \116\ See Waterkeeper Alliance, Inc. v. EPA, 399 F.3d 486 (2d Cir.
    2009) (vacating rule); National Pollutant Discharge Elimination
    System--Final Regulations to Establish Requirements for Cooling Water
    Intake Structures at Phase II Existing Facilities, 69 Fed. Reg. 41,576
    (July 9, 2004) (to be codified at 40 C.F.R. pts. 9, 122-125); OMB 2005
    Report, supra note 108, at 13 tbl.1-4 (noting a high-end cost estimate
    of $383 million).
        \117\ See, e.g., Am. Legislative Exch. Council, EPA's Regulatory
    Train Wreck: Strategies for State Legislators 12-13, 15 (2011),
    available at http://timeopinions.files.wordpress.com/2011/10/epa-train-
    wreck-2011-final-full-printres.pdf.
        \118\ See supra text accompanying notes 7-9.
    ---------------------------------------------------------------------------
        Crain and Crain also double count by including rules that together
    aim at the same regulatory end point. They include the 2006 NAAQS for
    particulate matter\119\ and the implementation plans for meeting these
    standards,\120\ while at the same time including other rules that also
    target the same emissions of particulate matter.\121\ Likewise, Crain
    and Crain include both the estimated costs of the 1997 ozone NAAQS
    \122\ and rules designed to meet those very standards.\123\ OMB, for
    its part, eschews this kind of double counting.\124\ The cost of Crain
    and Crain's double counting here is well over $10 billion.
    ---------------------------------------------------------------------------
        \119\ See National Ambient Air Quality Standards for Particulate
    Matter, 71 Fed. Reg. 61,144 (Oct. 17, 2006) (to be codified at 40
    C.F.R. pt. 50); Office of Mgmt. & Budget, 2007 Report to Congress on
    the Benefits and Costs of Federal Regulations and Unfunded Mandates on
    State, Local, and Tribal Entities 9 tbl.1-4 (2008) [hereinafter OMB
    2007 Report] (noting a high-end cost estimate of $2.83 billion in 2001
    dollars, equivalent to $3.42 billion in 2009 dollars).
        \120\ See Office of Mgmt. & Budget, 2008 Report to Congress on the
    Benefits and Costs of Federal Regulations and Unfunded Mandates on
    State, Local, and Tribal Entities 11 tbl.1-4 (2009) (noting a high-end
    cost estimate of $7.32 billion in 2001 dollars).
        \121\ Rules on regional haze, boilers, petroleum refineries,
    automobile emissions, and more: all share particulate matter emissions
    as one of their regulatory targets.
        \122\ See Office of Mgmt. & Budget, Report to Congress on the Costs
    and Benefits of Federal Regulations 79 tbl.15 (1998) (noting a cost
    estimate of $4.5 billion in 1996 dollars, equivalent to over $6.1
    billion in 2009 dollars).
        \123\ See OMB 2006 Report, supra note 114, at 8 tbl.1-4 (noting a
    cost estimate of $1.89 billion in 2001 dollars for the Clean Air
    Interstate Rule Formerly Titled: Interstate Air Quality Rule); OMB 2000
    REPORT, supra note 42, at 38, 39 (noting a cost estimate of $1.7
    billion in 1990 dollars for the NOX SIP Call).
        \124\ See OMB 2007 Report, supra note 119, at 36.
    ---------------------------------------------------------------------------
        All told, these mistakes add up to over $30 billion out of the $48
    billion Crain and Crain report for the costs of environmental
    regulation from 1999 to 2008.\125\ And this only accounts for Crain and
    Crain's double counting and their inclusion of nonexistent rules, not
    for the likely overestimation of regulatory costs in RIAs \126\ or for
    any other contestable part of their analysis. No one, we hope, would
    argue that it is acceptable to count the costs of the same rule more
    than once in estimating actual regulatory costs. Nor, we hope, would
    anyone argue that the costs of nonexistent rules should figure in
    estimates of actual regulatory costs. Taking out these phantom costs
    cuts Crain and Crain's estimate of the costs of environmental
    regulation post-2000 by two-thirds.
    ---------------------------------------------------------------------------
        \125\ The figures are converted from Crain & Crain, supra note 6,
    at 26 tbl.3, which were reported in 2001 dollars, to 2009 dollars based
    on the figures reported in Crain & Crain, supra note 6, at 31 tbl.6,
    which were reported in 2009 dollars.
        \126\ See supra text accompanying notes 94-100.
    ---------------------------------------------------------------------------
        We have not toted up every single possible instance of double
    counting or of counting the costs of rules that are not in force. Once
    we discovered the magnitude of the errors in Crain and Crain's
    analysis, it seemed like overdoing it to chase after more double
    counted or miscounted millions when we had found so many double counted
    and miscounted billions.
        But be assured: there are more millions, and even billions, to be
    found, and excised from Crain and Crain's estimates. For example: OMB's
    1998 report estimates an annual cost of $17 billion in 1996 dollars for
    the 1997 particulate matter NAAQS ($23.28 billion in 2009 dollars).
    This estimate is carried over into Crain and Crain's estimates through
    their use of OMB's 2001 report. Yet Crain and Crain also include the
    costs of many rules that reduce particulate matter and are aimed in
    large part at attaining that 1997 standard. If the 1997 NAAQS rule is
    removed from Crain and Crain's aggregate cost estimate, that estimate
    declines by over $23 billion. And another example of many millions left
    on our cutting room floor: Crain and Crain's estimates surely include
    the costs of EPA's 1989 ban on asbestos--overturned in court almost
    twenty years ago.\127\
    ---------------------------------------------------------------------------
        \127\ These costs are included in OMB's 2001 report (incorporated
    by Crain and Crain) through use of estimates compiled in 1996 for major
    rules issued between 1987 and 1994. The asbestos ban was issued in
    1989, Asbestos Ban and Phaseout Rule, 40 C.F.R. Sec. 763 (1989), and
    estimated (on the high end, which is what Crain and Crain used) to cost
    approximately $62 million per year. If Crain and Crain's analysis is to
    be believed, we are still paying over $100 million a year (based on
    adjusting the $62 million figure for inflation, as Crain and Crain do)
    for this ban, which was overturned by the courts in 1991. See Corrosion
    Proof Fittings v. Envtl. Prot. Agency, 947 F.2d 1201 (5th Cir. 1991).
    For the anti-regulatory crowd, this defunct ban is certainly the gift
    that keeps on giving. See Five Hundred Life-Saving Interventions, supra
    note 23, at 156 (criticizing the invalidated asbestos ban in one-third
    of the environmental measures discussed).
    ---------------------------------------------------------------------------
    C. Workplace Safety and Health
        Crain and Crain estimate costs of $64.3 billion for occupational
    safety and health regulations issued prior to 2001, and $471 million
    for such regulations issued between 2001 and 2008.\128\ For the costs
    of rules issued before 2001, Crain and Crain rely on a book chapter
    published in 2005 by Joseph M. Johnson.\129\ As Sidney Shapiro and his
    co-authors from the Center for Progressive Reform have tellingly
    observed, Johnson's figure has an exceptionally dubious provenance:
    Johnson aggregates cost estimates for occupational safety and health
    rules through 2001, then multiplies them by 5.55 based on a 1996 study
    \130\ which itself relied on a 1974--yes, 1974--estimate of compliance
    costs (``unpublished and otherwise unavailable,'' Shapiro et al., point
    out) by the National Association of Manufacturers.\131\ Despite these
    awkward origins, Crain and Crain apparently think so highly of the
    Johnson estimate that they report they used the Johnson calculations
    ``where possible, that is, until 2001.'' \132\ Apart from showing a
    strange preference for calculations of dubious quality, Crain and
    Crain's suggestion that it was not possible to use the Johnson estimate
    for rules after 2001 betrays a lack of understanding of how that
    estimate was derived. All Crain and Crain had to do, if they really
    believed in the Johnson estimate as much as they appeared to, was to
    multiply the cost estimates for rules issued after 2001 by 5.55!\133\
    ---------------------------------------------------------------------------
        \128\ Crain & Crain, supra note 6, at 30 tbl.5 (reporting cost in
    2009 dollars).
        \129\ Id. (citing Johnson, supra note 18).
        \130\ James, supra note 18.
        \131\ Shapiro et al., supra note 12, at 9.
        \132\ Crain & Crain, supra note 6, at 31.
        \133\ Crain and Crain also are mistaken to say that the figure they
    report for OMB's estimates of the costs of OSHA rules run from 2001 to
    2008. Crain & Crain, supra note 6, at 30 tbl.5. Actually, the OMB
    source they cite covers rules from 1998 to 2008. OMB 2009 Report, supra
    note 112, at 10-11 tbl.1-2.
    ---------------------------------------------------------------------------
        One of us has previously criticized this multiplier, which comes
    from a study by Harvey James:\134\
    ---------------------------------------------------------------------------
        \134\ James, supra note 18.

            Harvey James estimates the costs of compliance with 25 OSHA
            regulations as of 1993. But he also observes that the cost per
            firm was 5.5 times higher in a 1974 study of OSHA compliance
            costs done by the National Association of Manufacturers. James
            then simply asserts that the costs per firm could not be lower
            today than in 1974. On that basis, he multiplies his 1993
            numbers by 5.5--thereby eliminating all empirical content in
            his study of 1993 costs, and simply recycling a 1974 estimate
            by an anti-regulatory industry group.\135\
    ---------------------------------------------------------------------------
        \135\ Ackerman, supra note 87, at 1085-86; see also Shapiro et al.,
    supra note 12, at 9.

        It is worth noting that James himself had more modest claims for
    his own study, cautioning that his cost calculations were ``estimates
    only . . . and not measures of actual expenditures.'' \136\ He
    emphasized that the rules he studied had been issued in ``different
    time periods'' and that ``estimates of the compliance costs of OSHA do
    not take into account new rules, changes in existing regulations, or
    old rules no longer aggressively enforced by the agency.'' \137\ None
    of these cautions reappears in Crain and Crain's wholesale adoption of
    James's estimates.\138\
    ---------------------------------------------------------------------------
        \136\ James, supra note 18, at 10.
        \137\ Id. at 5.
        \138\ Nonexistent rules make an appearance here, too: Johnson
    (based on James) includes over $1 billion (in 2009 dollars) in costs
    for OSHA's air contaminants rule. Johnson, supra note 18, at 34 tbl.10.
    The rule was overturned almost twenty years ago in AFL-CIO v.
    Occupational Safety & Health Admin., 965 F.2d 962 (11th Cir. 1992).
    ---------------------------------------------------------------------------
        Crain and Crain's estimate for the costs of rules on workplace
    safety and health regulation issued from 2001 to 2008 has the same
    basic flaw as many of their estimates of environmental regulatory
    costs: the estimate includes costs that do not exist.\139\ To take one
    example, a good portion--$327 million out of $470 million--of the costs
    Crain and Crain report for workplace rules from 2001 to 2008 comes from
    just one rule: OSHA's rule setting limits for hexavalent chromium.\140\
    After this rule was issued, the parties challenging the rule agreed to
    significant changes in the rule to make it more flexible and less
    costly.\141\ But Crain and Crain use the previ-ous version of the rule
    in their analysis.\142\ Here, too, Crain and Crain report the costs of
    a rule that does not exist in the form they assume.
    ---------------------------------------------------------------------------
        \139\ Crain and Crain also repeat here the error of double counting
    the costs of some years' regulatory output. Crain and Crain report that
    their estimates from OMB's annual reports cover the years 2001 to 2008.
    Crain & Crain, supra note 6, at 30 tbl.5. In fact, those reports cover
    the years 1998 to 2008 and thus overlap for three years with the period
    covered in the James study. OMB 2009 Report, supra note 112, at 10
    tbl.1-2.
        \140\ See OMB 2007 Report, supra note 119, at 9 tbl.1-4 (reporting
    a high-end cost estimate of $271 million in 2001 dollars for this rule,
    which works out to approximately $327 million after adjusting for
    inflation).
        \141\ See Settlement Agreement, Surface Finishing Indus. Council v.
    Occupational Safety & Health Admin., No. 06-2272 and Pub. Citizen
    Health Research Grp. v. Occupational Safety & Health Admin., No. 06-
    1818 (3d Cir. Oct. 25, 2006), available at http://www.osha.gov/SLTC/
    hexavalentchromium/elect_sign_steelworkers.html.
        \142\ Crain and Crain rely on OMB's 2007 estimate of the cost of
    this rule, which itself used OSHA's estimate of the cost of the
    original rule and not the rule as changed after settlement. See
    Occupational Exposure to Hexavalent Chromium, 71 Fed. Reg. 10,100,
    10,263 (Feb. 28, 2006) (reporting a cost estimate of $288 million per
    year in 2003 dollars, which works out to OMB's cost of $271 million
    when 2001 dollars are used); OMB 2007 Report, supra note 119, at 9
    tbl.1-4 (reporting a cost estimate of $271 million).
    ---------------------------------------------------------------------------
    Conclusion
        If statistical analysis required a driver's license, Crain and
    Crain could have theirs revoked for reckless and dangerous driving. On
    economic regulation, their one-equation calculation, worth $1.24
    trillion in their fantasy of regulatory costs, rests on
    misunderstanding the definition of their data, flunking an elementary
    question on the normal distribution, padding the analysis with seven
    years of near-identical data, and failing to recognize the difference
    between correlation and causation. Their methods could just as easily
    be read as claiming that economic benefits would result from cutbacks
    in education as from cutbacks in regulation--yet, no one has argued
    that is a credible position.
        On environmental regulation, Crain and Crain wheel out decades-old
    studies of decades-old rules. The bulk of their estimate rests on the
    idea that voluntary unemployment is the real culprit in today's
    regulatory environment. The remainder of it is filled to the brim with
    nonexistent rules and other phantoms--as is their flawed estimate of
    the costs of workplace safety and health rules.
        It would be bad enough if this were a private study, undertaken
    with private funds, lacking any official imprimatur. Even then, the
    viral spread of the utterly unfounded $1.75 trillion estimate through
    the public sphere would be worrying enough. But this is a study
    requested, funded, reviewed, and edited by a government agency, the
    SBA's Office of Advocacy.\143\ Taxpayers shelled out almost $100,000
    for this nonsense.\144\ More fundamentally, the Office of Advocacy's
    sponsorship and official embrace of the study--running all the way from
    initially conceiving the study, funding it, reviewing it, and editing
    it, to officially defending the study in testimony before Congress even
    after it had been severely criticized \145\--embroils this public
    agency in an unwholesome blend of ineptitude and bias. Before funding
    any more anti-regulatory research that threatens to repeat the same sad
    story,\146\ the Office of Advocacy should officially, emphatically, and
    loudly disown the methodology and findings of Crain and Crain's
    problematic report. ``Advocacy'' is not an excuse for phony numbers.
    ---------------------------------------------------------------------------
        \143\ Crain & Crain, supra note 6, at cover page (stating that
    report was ``reviewed and edited by officials of the Office of
    Advocacy,'' though hedging as to whether the ``final conclusions'' of
    the report reflected the views of that office).
        \144\ $99,500, to be exact. See, e.g., Contract between U.S. Small
    Bus. Administration, Office of Procurement & Grants Mgmt., & Mark Crain
    for the Impact of Regulatory Costs on Small Firms (Sept. 24, 2008),
    http://www.progressivereform.org/articles/
    Crain%20and%20Crain_20Contract
    .pdf.
        \145\ See Assessing The Impact Of Greenhouse Gas Regulations On
    Small Business (Part 2 of 2) (House Oversight Committee broadcast Apr.
    6, 2011, 1:03:33), available at http://www. archive.org/details/
    gov.house.ogr.ra.20110406.2 (oral testimony by Claudia R. Rodgers,
    Deputy Chief Counsel for Advocacy, SBA Office of Advocacy). Rodgers
    defends the Office of Advocacy's failure to ask Crain and Crain to
    report on benefits of regulation, stating that the Office of Advocacy
    is ``not required to ask for [the underlying] data'' when it sponsors
    studies, defends the peer review process for the study, and defends the
    study as having the ``exact same methodologies'' as previous studies
    sponsored by the Office of Advocacy. Id.
        \146\ James Goodwin, On Heels of Debunked Report, SBA's Office of
    Advocacy Solicits More Anti-Regulatory Research, CPRBlog (Aug. 16,
    2011), http://www.progressivereform.org/CPRBlog
    .cfm?idBlog=CF8517C8-C94D-590E-C7AD9962D431FB0A.

        The Chairman. Thank you, Professor Heinzerling.
        Let me just ask, and I'll direct this to Mr. White and Mr.
    Palmieri, could you speak to ways in which we could improve the
    implementation of the Regulatory Flexibility Act to better
    account for and address its impacts on small business?
        Mr. Palmieri. Thank you, Mr. Chairman. The Regulatory
    Flexibility Act, a bipartisan law passed in 1980, sponsored by
    a Democrat from Iowa, Senator Culver, and its amendments in
    1996, have literally saved at a cost of somewhere around $130
    billion in reduced regulatory costs for small businesses
    because of the process, and that's recorded by President
    Obama's SBA's Office of Advocacy, President Bush's, President
    Clinton's, and so forth.
        The House has a proposal to close some of the loopholes
    which have prevented agencies from doing this type of analysis.
    A thoughtful paper in the Administrative Law Review by Connor
    Raso said that over a 5-year period, fewer than 8 percent of
    all the rules found in the regulatory agenda went through the
    Regulatory Flexibility Act Small Business Impact Analysis.
        Closing some of these loopholes that prevent agencies from
    actually doing this analysis for rules that do impact small
    businesses, for example, the ``Waters of the U.S.'' rule, the
    EPA claimed that it would not have a significant impact on a
    substantial number of small entities, which is the definition
    in the law.
        So closing a variety of these loopholes, supporting
    legislation like the House's legislation I referenced in my
    opening statement, would go a long way toward improving
    analysis. And, again, it doesn't force the agency to take any
    particular action other than to think through the analysis. It
    was modeled on the National Environmental Policy Act, just a
    requirement for agencies to think through what it's doing.
        As Cass Sunstein would say, look before you leap. What are
    you doing to small businesses? And I think that would be a very
    helpful reform.
        The Chairman. Mr. White.
        Mr. White. If I may briefly, I have two suggestions. The
    first is more searching judicial review of the agencies'
    analysis under the Regulatory Flexibility Act. I think it's
    always best that students not grade their own homework, and by
    the same token, I think it's best when agencies aren't the
    exclusive reviewers of their own work. To the extent that
    judicial review can shine a spotlight on the agencies' work--
    not micromanage it, but kick the tires--I think it would be
    useful.
        Second, I think my earlier request for greater statutory
    requirements or retrospective review are important to teach the
    agencies better modesty. They treat these things, like the
    Regulatory Flexibility Act, as the caboose that just follows
    the policy that they've already predetermined.
        The Chairman. Mr. Shapiro, you noted in your testimony that
    we've seen agencies issue guidance documents, directives, and
    memoranda that attempt to function like regulations. Unlike
    regulations, however, these guidance documents often do not
    provide analysis or opportunities for public comment, and they
    are not subject to the same transparency and review standards.
        Have you seen any abuses in these types of agency guidance
    in your industries? And if so, what have been the effects? And
    if others on the panel would like to respond to that, please
    feel free to do so.
        Mr. Shapiro. Well, the challenge of a guidance document, if
    it's prescriptive, is that it creates potential liability. It's
    catnip to trial lawyers. So when NHTSA went forward and said
    every device coming into a car that a driver could use should
    follow these rules, that was an invitation to trial lawyers to
    sue any device maker, and there was no notice and comment.
    There was not really any process at all, and it's clearly
    beyond their statutory authority. But it's not, I guess, beyond
    some right that they have to issue their opinion that this is
    the way it should be.
        So I think it's dangerous for them to exceed it. I think
    they're creating potential liability, or at least creating the
    possibility of a lawsuit, and it's very unhealthy. And I would
    urge agencies to stay away from it. And so I think it's an
    appropriate role for Congress to ask them to stay away from
    going outside the normal administrative protections that we--
    that have served us for a very long time in terms of
    rulemakings.
        The Chairman. Mr. Gerard, Mr. Palmieri, anything to add to
    that?
        Mr. Gerard. I'll just add, Senator, I think this is an area
    where there needs to be more congressional oversight. For those
    of us who work day-to-day with entities, with agencies, who
    require us to seek permits, we're constantly seeking
    clarification. What does this mean? What does this require us
    to do?
        So we don't want to stifle the interaction, we want to have
    collaboration in the regulatory process, but I think what Mr.
    Shapiro says, though, we've also got to be careful that you
    don't unintentionally empower a regulator to go off beyond
    their authority, and all of a sudden now you've got an entity
    with a mandate that has no, if you will, public review or
    oversight of. And I think that's an area we should look at
    closely and the interrelationship between the regulator and the
    regulated.
        The Chairman. Mr. Shapiro, in a recent petition of the FCC,
    your organization said the agency's controversial 2016 privacy
    regulations, and I quote, ``threaten to undermine the
    innovation and competition in the dynamic Internet ecosystem
    that has greatly benefited consumers and the U.S. economy.''
    This Order, however, only applies to Internet service
    providers, not to the technology companies that you represent.
    But in your testimony, you noted CTA's concern that this rule
    may establish a dangerous precedent for the entire Internet
    ecosystem. Can you explain why CTA is so engaged on an issue
    that many assume is just a problem for broadband providers?
        Mr. Shapiro. Well, full disclosure, I should reveal that
    some of the Internet service providers are members of ours as
    well. But nonetheless, look, the Federal Trade Commission has
    done an amazing job focusing on privacy. They actually focus on
    actual harm, and there's a give-and-take and a balance, and
    it's bipartisan. These are not contested issues between
    Republicans and Democrats, and they've done a great job by
    almost every account.
        For the FCC to step in and bootstrap its authority off the
    Open Internet Order from the judge and say therefore we can
    control everything having to do with the content going over the
    broadband system is just confusing, it promotes uncertainty in
    the marketplace, and we see basically a war between an agency
    that has done a great job by every account versus one that
    wants to grab some authority and come in and do something in a
    very uncertain way at the very last minute of the Obama
    administration, throwing all sorts of things in there, not
    following any process, to leave its legacy for history? It's
    just wrong.
        The Chairman. Senator Nelson.
        Senator Nelson. Mr. Chairman, I'm going to yield to our
    Committee members so that they can have the first questions. I
    just want to say that, as we discuss this, there's a tendency
    to talk as if this is an either-or. It's not an either-or. We
    ought to be using common sense. Does anyone really suggest that
    we shouldn't have safety standards for the small mattress that
    took Garret Davis's life or that cribs shouldn't have mandatory
    safety standards? Of course not.
        I can give you an example on the other side, though it's
    outside the jurisdiction of this Committee. Dodd-Frank was a
    reaction to huge excesses on Wall Street. Regulations applying
    to big banks became too burdensome when they were applied to
    community banks. So it's a question of balance and common
    sense.
        And I want to particularly yield to Senator Udall, because
    he has got a commitment that he has to leave for.
        The Chairman. OK.

                     STATEMENT OF HON. TOM UDALL,
                      U.S. SENATOR FROM NEW MEXICO

        Senator Udall. Thank you very much, Senator Nelson, for
    your courtesies there. And I couldn't agree more with what
    you've said. It's a matter of balance.
        And I would like to go specifically to the heart of the
    issue here with Mr. Gerard. The industry is advocating, under
    the Congressional Review Act, that we repeal the Bureau of Land
    Management's Methane and Waste Prevention Rule, as you know.
    And in my look at this, there hasn't been, when almost exactly
    the same thing has been done at the state level, any loss of
    jobs.
        Do you know how much taxpayer-owned natural gas has been
    wasted that has vented, flared, and leaked since 2009? I'll
    tell you the answer: 375 billion cubic feet, enough to provide
    energy for 5.1 million homes for one year. It has been totally
    wasted--released into the atmosphere, where it becomes
    pollution.
        This right here, this photograph, is gas, as you know,
    being flared. So every bit that's being flared into the air is
    wasted. And when it goes into the air, it becomes pollution,
    and that's what the BLM methane rule is targeting. And I'll
    just give you an example in New Mexico. This happens on a
    yearly basis. In one year, $100 million are lost by the
    taxpayers of New Mexico.
        So, in my view, the oil and gas operations should have
    clear Federal standards to minimize the waste of publicly-owned
    natural gas that is vented, flared, or leaked from the systems.
    And, as you know, two big oil and gas states, Wyoming and
    Colorado, have passed rules to reduce methane emissions and cut
    waste. In fact, the BLM rule is modeled to a great degree on
    Colorado's rule, Regulation 7. Wyoming's rule was adopted in
    2015; Colorado's was adopted in 2014.
        Do you have any published data--and this is what, Senator
    Nelson and Senator Thune, this is what we need to get down to--
    that you can share with this Committee about whether any jobs
    have been lost as a direct result of Wyoming and Colorado's
    waste prevention rules?
        Mr. Gerard. I'll go back, Senator, and I'll provide all the
    data we have. There are a variety of points here. Can I respond
    to that generally, Senator?
        Senator Udall. Well, I want to know the hard data.
        Mr. Gerard. OK.
        Senator Udall. That's because you all are in here telling
    us that these regulations are over the top and we're losing
    jobs. I'm picking a regulation. You tell me the hard data.
        Mr. Gerard. OK. Let me----
        Senator Udall. If you have hard data, tell it now because
    I'm going to give you the hard data.
        Mr. Gerard. OK. Let me give you a couple data points. The
    first----
        Senator Udall. Yes. The hard data on job losses.
        Mr. Gerard. Yes. The one data point I'll give you is the
    revenue impact. This rule is estimated to cost us $400 million.
    Now, the reason that's so important is there is also an
    underlying EPA rule that does the same thing this rule does, as
    imposed by the BLM, which costs us $800 million.
        Our point here, Senator, we might agree on this, in a state
    like yours, a big energy producer, you've now got three
    regulatory bodies looking at the same issue. You've got the
    state. You've got the EPA imposing a Federal standard, I might
    add something we collaborated with the agency on to develop
    best practices as they sought to regulate methane. They went
    further than we would recommend----
        Senator Udall. I'm going to interrupt you there because
    you're not giving me any hard data, and I only have a minute
    here left in my time. There is no evidence that there have been
    any job losses in Colorado as a result of Regulation 7. The
    Colorado Business Review in 2016 took a look at this issue and
    found that there weren't any job losses.
        Mr. Chairman, I would like to enter into the record a
    letter that I am sending today with over 20 Senators to the
    Senate leadership and the Energy Committee Chair and Ranking
    Member. There is an aggressive industry lobbying campaign to do
    away with the BLM's methane rule, but repeal does not hold up
    under scrutiny. If the public interest is considered, erasing
    this rule would result in the waste of taxpayer resources and
    dollars, hinder job growth in a new and growing sector, and
    pose a public health hazard. And there is no evidence that this
    is a job destroyer. This, in fact, is a job creator, Mr.
    Gerard.
        And so I think we need to look at these not in this big
    global way, as the witness at the end of this panel said,
    adding up a bunch of figures. But is it balanced, is it headed
    in the right direction, and is it doing something constructive?
        I see my time is finished, and I thank Senator Nelson very
    much.
        [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Senator Udall. And we'll make sure
    that letter gets in the record.
        I have Senator Blumenthal up next.

                 STATEMENT OF HON. RICHARD BLUMENTHAL,
                     U.S. SENATOR FROM CONNECTICUT

        Senator Blumenthal. Thanks, Mr. Chairman. Does anyone here
    have a figure on the number of jobs lost in Connecticut as a
    result of any regulation in particular?
        [Witnesses shaking their heads.]
        Senator Blumenthal. The record should reflect that all the
    witnesses are shaking their heads.
        Does anyone here have a figure for the Nation as to how
    many jobs were lost?
        [Witnesses shaking their heads.]
        Senator Blumenthal. The record should reflect they're
    shaking their heads.
        Mr. Gerard. Lost as a result of what, Senator? Generally?
        Senator Blumenthal. As a result of regulation, a total
    number.
        Mr. Gerard. We've got lots of data. I don't have it with
    me, Senator----
        Senator Blumenthal. I know you have lots of data and----
        Mr. Gerard. And I'll--and I'll----
        Senator Blumenthal. And I'm going to interrupt you again
    because my time is limited.
        Mr. Gerard. I'll get it to you.
        Senator Blumenthal. So if nobody has a number, I think the
    record should reflect that fact.
        Now, I'd like to ask whether you believe that the existing
    regulation that requires consideration of costs, issued first
    by President Reagan, takes account of cost-benefits?
        Professor?
        Ms. Heinzerling. Yes. It's famously strict on consideration
    of costs of major rules by agencies, and rules will not pass
    unless an agency does that.
        Senator Blumenthal. So instead of the blunderbuss,
    draconian, mindless approach of simply eliminating two rules
    for every new one, the existing approach actually seeks to take
    account of cost versus benefit. Is that correct?
        Ms. Heinzerling. That's correct.
        Senator Blumenthal. Thank you. You know, I would just like
    to offer one example as a microcosm of the difficulty of
    assessing costs when human life is at stake. For years,
    consumer advocates have been trying to make cords and window
    blinds safer. And the example is one young life cut short on
    July 11, 2012. Brianna is pictured here. She was three years
    old when she died by strangulation. I'm willing to bet that the
    vast majority of people in this room have no idea about the
    danger of blinds on windows and the cords that strangle an
    average of 12 children every year, one per month. Brianna was
    one of them. Her grandfather is with us today, I believe, if he
    would please stand.
        [Grandfather standing.]
        Senator Blumenthal. I'm going to quote you sir. ``No
    business has the right to sell a product that can kill children
    and destroy their families. If these businesses will not listen
    to our cries for help, there must be regulation, there must be
    restraint, there must be controls to keep these big businesses
    from destroying lives so needlessly.''
        Mr. Palmieri, how do you measure the cost of Brianna's
    life?
        Mr. Palmieri. In the wake of any tragedy, I don't think
    there is almost anything that can be said that can set right
    the death or injury to a child from any product.
        Senator Blumenthal. Wouldn't you agree that some rule or
    standard--nobody likes the word ``regulation'' these days--that
    could help save children's lives ought to be implemented?
        Mr. Palmieri. And it's my understanding that that's exactly
    what the CPSC and industry and consumer groups are all working
    toward.
        Senator Blumenthal. Right. We are working toward it, but
    over the opposition of the industry. And that's why I am
    sending today a letter to the CPSC and the WCMA asking that
    they finally, finally implement a standard that will save
    children's lives, literally 12 per year, at absolutely minimal
    cost.
        I don't know whether any of our witnesses here today have a
    better answer than Mr. Palmieri's.
        Mr. White?
        Mr. White. I don't know if it's a better answer, but if I
    may offer one. I mean, to be clear, all life is precious. I
    have four daughters and a son. All their lives are precious.
    And by the same token, just as hard as it is to value the lives
    of all----
        Senator Blumenthal. If you came home, as Brianna's mother
    did--by the way, her mother, Christi, is an Iraq war veteran
    who has served two deployments and who found her daughter in
    the family living room hanging by a window blind. If you were
    told that there's a very simple fix, which is to eliminate the
    cords, that would save 12 lives every year and prevent
    countless injuries, wouldn't you agree it's worth doing?
        Mr. White. I can't begin to imagine what that was like.
    And, of course, we need to take measures to protect human life.
    By the same token, lost economic growth, lost life-saving and
    life-extending technologies, they also--the absence of those
    technologies cost lives as well and they're just as invaluable
    and just as precious.
        Senator Blumenthal. I know that you're offering that answer
    in good faith. It's an abstract, abstruse answer that frankly I
    find equally unsatisfactory as a Senator and as a human being.
    And I am in no way being dismissive or critical of your concern
    for jobs and economic growth. I share those concerns. But there
    is a better way to achieve both--product safety and economic
    growth and jobs--than simply to abolish two regulations
    whenever a new standard like this one that would save lives is
    instituted.
        Mr. Chairman, I apologize that I've gone over my time.
    Thank you.
        Senator Nelson. It's called common sense and balance.
        The Chairman. Thank you, Senator Blumenthal.
        Senator Schatz.

                    STATEMENT OF HON. BRIAN SCHATZ,
                        U.S. SENATOR FROM HAWAII

        Senator Schatz. Thank you, Mr. Chairman. I want to talk
    about the most economically significant new regulation that was
    established since January 20. On Friday at 8 p.m., President
    Trump signed an Executive Order banning refugees and anyone
    from seven Muslim majority countries from entering the United
    States. This impacted at least 90,000 individuals. It has
    impacts in tourism, aviation, certainly labor, and higher
    education. Countrywide there are impacts.
        Several members of the National Association of
    Manufacturers have made statements expressing their opposition
    to the ban. For example, General Electric's CEO, Jeff Immelt,
    weighed in. Because the company has many employees from the
    countries named in the ban, and GE does business all over the
    region, he stated, ``These employees and customers are critical
    to our success and they are our friends and our partners, and
    GE will stand with them.''
        There were also statements by companies such as Merck,
    Allergan, Ford, and Microsoft. These companies have employees
    who may be impacted, and they are committing resources to
    provide legal assistance to those employees. And they are
    worried about their ability to attract new talent going
    forward.
        A tweet from the CEO of Allergan said, ``We are strong and
    bold because of our diversity. We oppose policy that puts
    limitations on our ability to attract the best and diverse
    talent.''
        I also want to note that around $20 billion worth of
    Boeing's commercial aircraft orders are at risk and may be
    canceled.
        And so my question, Mr. Palmieri, is do you think this ban
    is good for business?
        Mr. Palmieri. So I hope Mr. Shapiro also participates in
    the answer to this question. I'm not our immigration expert,
    but what I would say is that the NAM has long been a supporter
    of a comprehensive immigration reform proposal.
        Senator Schatz. Do you think the ban is good for business?
    Has the organization taken a position or just your member
    organizations? Where are you in this process?
        It seems to me that in addition to dealing with rules and
    regulations and the CPSC and all the rest of it, that this is
    the elephant in the room when it comes to America's business
    reputation, when it comes to our core values, when it comes to
    your members. It's odd to me that you either haven't taken a
    position or don't yet want to articulate it.
        Mr. Palmieri. And, again, I just--I can't speak to it, but
    I'm happy to get your answer.
        Senator Schatz. Why not?
        Mr. Palmieri. Simply because that's not an area that I
    specialize in and can't tell you.
        Senator Schatz. Let me ask you a question. How does the
    National Association of Manufacturers come to a decision on a
    policy issue? Do you have a policy committee? Is it staff
    driven?
        Mr. Palmieri. Sure. Of course.
        Senator Schatz. So where are you on that?
        Mr. Palmieri. Our Board of Directors sets the policy,
    reviews it consistently over time. We have policy committees
    made up of our members that recommend what rule----
        Senator Schatz. Sorry, I just want to drill down in terms
    of the way your organization works. Do you send out a staff
    recommendation, and then the Board of Directors approves the
    staff recommendation?
        Mr. Palmieri. The Board of Directors meets in person. Our
    Policy Committee meet in person.
        Senator Schatz. How often?
        Mr. Palmieri. Our Board of Directors meets twice a year.
    Our policy committees meet multiple times throughout the year.
        Senator Schatz. Do you think this is an appropriate issue
    for the Board of Directors to consider?
        Mr. Palmieri. And all I can tell you is that I'm happy to
    get back to you with an answer. I'm just not the person who has
    the answer for you.
        Senator Schatz. Who is the person that would have an
    answer?
        Mr. Palmieri. Any one----
        Senator Schatz. I mean, you're the Vice President for
    Labor. That seems to have pretty serious labor implications.
        Mr. Palmieri. And my colleague who handles human resources
    policy and covers immigration might have that answer for you.
        Senator Schatz. Might?
        Mr. Palmieri. Honestly, sir, I just don't know.
        Senator Schatz. Why not? No, I'm serious. Why don't you
    know? I mean, it seems to me that this is ``the'' thing
    happening to the American economy right now. And the National
    Association of Manufacturers has no position on this matter?
        Mr. Palmieri. All I can say is that we didn't issue a
    statement on it. We might have a policy. We might be having
    conversations. I'm not the person who can give you that answer.
    And I'll--we'll get back to you.
        Senator Schatz. Mr. Shapiro, is this good for business?
        Mr. Shapiro. No, it is not, sir. America's strategy for
    years has been to attract the best and the brightest, and we
    are a nation that doesn't rely upon old buildings and thousands
    of years of history to define ourselves. We are an immigrant
    country, and we are--our strength is our diversity. And we've
    sent a message to the world which is very strong, that the
    welcome mat is being pulled away.
        Now, I am not--I do not have access to what President Trump
    has to in regards to security concerns, and it is his job
    foremost to protect us and make decisions that do protect us.
    But for this--and it's not only the technology industry, the
    meetings industry is--worldwide repercussions about events
    coming to the U.S. that are pulling out. Other--it's just not
    technology, it's automobiles. Every business in America has
    immigrants. Twenty percent of the workforce are immigrants.
        Senator Schatz. Thank you, Mr. Shapiro. I'll just add that
    Mr. Palmieri and the entire panel--and actually to the entire
    private sector community--we're going to need your leadership,
    too, on this issue. Some of these questions are now
    intersecting. The moral questions, the national security
    questions, the homeland security questions, and the business
    questions are intersecting. There is not going to be a safe
    space where you can hide and say we want to repeal regulations,
    however, this big regulation we don't want to touch because
    it's politically hot. We're going to need your leadership in
    this space.
        And I thank the Chairman for the additional minute.
        The Chairman. Thank you, Senator Schatz.
        Senator Blunt.

                     STATEMENT OF HON. ROY BLUNT,
                       U.S. SENATOR FROM MISSOURI

        Senator Blunt. Thank you, Chairman.
        To get back to the regulations that really are designed to
    impact what you all do every day, I think, Mr. Shapiro, your
    group joined a pretty broad coalition of associations that were
    critical of the FCC, their regulations on privacy, data
    security, and breach notification. Give us a summary of the
    concerns that you all had about those FCC regulations.
        Mr. Shapiro. Well, we and just about everyone else has been
    working with the Federal Trade Commission for many, many years,
    and they take a case-by-case approach. They have broad
    authority in this area, and they focus on actual consumer harm.
        Now, privacy is something we all care about. We got
    together, the manufacturers of devices, in our world, wireless
    fitness devices, and we agreed as an industry about how our
    obligation to the consumer to have clear language about what
    we're doing, to allow consumers to opt out of anything, to be--
    to disclose, to not sell to third parties, and that has been a
    standard.
        And, in fact, most of the things which happen, and this
    goes to the bigger regulatory discussion, and I agree with what
    Senator Nelson says, it's about balance, because most of the
    regulations and rules in this country are really coming from
    industry themselves, they're self-regulating, they're creating
    standards, they're creating certification schemes, they're
    doing all sorts of things. It's how Alexis de Tocqueville
    envisioned America, that we are a country where people get
    together voluntarily and do things that are right.
        Senator Blunt. So do you think the FTC is a better
    regulator of those issues than the FCC?
        Mr. Shapiro. It doesn't even come close. Yes, the FTC is
    much better because they have a history of bipartisan
    cooperation, of focusing on actual harm. They don't go thinking
    about the whole big future, about everything, and cutting off
    levels of innovation. And they're known as a very effective
    agency.
        The FCC obviously has much more tenuous authority. They've
    reached out on a basically bootstrap authority that they got
    through a court decision involving the Open Internet Order, and
    they've issued something very quickly and it was just recent in
    the last 30 or 40 days or so.
        So I would say that they have definitely caused confusion
    because there are two different agencies now, the Federal
    Government saying two different things, and that's not healthy
    for business.
        And so my point in being up here is not to say that
    regulation is bad. Regulation is really good. And I would say,
    going to some of the questions we had earlier, when you're
    involving health and safety, there is more of a bias towards
    regulation than when you're dealing with some of the other
    economic issues and some less harm. It is a balance. But I
    think generally industry should be given the opportunity to
    come up with its own way of regulating because we're also
    facing the prospect of litigation.
        Senator Blunt. Beyond the different regulations between the
    FCC and the Federal Trade Commission, the other issue we've
    been trying to deal with on data breach standards would be to
    have a single, consistent standard rather than to have what
    currently would be about 51 different standards. Now, there are
    areas where many of us think the state is a much better
    regulator than the Federal Government, but there are other
    areas where it's just impossible to comply with 50 or 51
    standards on that topic of data breach and data security. Is
    there merit for us to try to establish one standard rather than
    have the states all develop their own standards?
        Mr. Shapiro. I think there's a merit in new areas for this
    potential. For example, I don't think anyone even disputes on a
    partisan basis that cars should be regulated nationally, nor
    that drugs should be regulated nationally. There is greater
    expertise centrally, and to sell efficiently and have lower
    costs for consumers, you need national regulation when you're
    talking about safety and health.
        When you're talking about data breach, you have an area of
    new technology, and it's the same type of thing, though. If you
    have a national standard, for example, what Congress did with
    credit cards about 45 or 50 years ago, it was a national
    standard and it changed how we do business, it changed
    convenience, and it worked really well, and it protected
    consumers.
        So having national regulation makes sense when there's new
    technology and there's also--or there is danger of physical
    harm. So in terms of data breach, obviously it would be more
    comfortable for everyone doing business to say, ``Here's the
    national standard and we'll follow it.'' It's much more
    expensive to follow 50 different standards, and it requires a
    lot of lawyers and a lot more work and a lot more cost to
    consumers ultimately.
        Senator Blunt. And it's a lot more likely that you won't
    meet all the standards because somebody has changed one or
    they're at variance with each other. This is an area I think we
    have to get much more focused on as we look at cyber theft and
    all of our cyber concerns--to have one standard.
        Mr. White, do you want to weigh in on that topic? And then
    I think my time will be gone.
        Mr. White. I was only going to say between the FCC and the
    FTC, I would suggest that ultimately we should be agnostic as
    to which agency it is. I'm in favor of this being regulated by
    the agency that has been vested with power from you, clear
    direction on the policy to carry out Congress's intent. Whether
    it's the FCC or the FTC ultimately doesn't matter.
        Senator Blunt. But it does matter if there is more than one
    agency trying to do the regulating?
        Mr. White. Absolutely.
        Senator Blunt. OK. Thank you, Chairman.
        The Chairman. Thank you, Senator Blunt.
        Senator Markey and then Senator Inhofe.

                   STATEMENT OF HON. EDWARD MARKEY,
                    U.S. SENATOR FROM MASSACHUSETTS

        Senator Markey. Thank you, Mr. Chairman, very much.
        I would like to just begin by responding to a comment made
    by Mr. Shapiro earlier and say that the FCC's privacy rules are
    important protections that safeguard sensitive personal
    information of tens of millions of Americans who use broadband
    in our country. Furthermore, it was completely within the
    jurisdiction of the FCC to put these essential rules on our
    books. And I will fight any efforts in Congress, whether by the
    CRA or otherwise, to roll back these pro-consumer rules.
        We can talk about cybersecurity and foreign nations and
    other entities trying to crack into the privacy of Americans in
    our country, and that's important. And we should work together
    on a bipartisan basis to make sure that no one does crack into
    the privacy of our country. Vladimir Putin is teaching us a
    great lesson, but the same thing is true for American companies
    or foreign companies. When they get ahold of the privacy
    information of Americans, they, too, should be bound by what
    they can do with that information; they, too, should not be
    able to use it for their own commercial purposes without the
    permission of those consumers. There's no difference from a
    consumer's perspective who is cracking into their information.
    They want their privacy.
        These rules on the books are very important. And everything
    that we learn about the international hacking of our country
    once again reinforces the need for Americans to be given the
    privacy protections that we need. That's what the FCC did.
        Mr. Gerard, I know that Senator Schatz asked Mr. Shapiro
    and Mr. Palmieri the question about the Muslim ban and whether
    or not it was good for business, whether or not you support, as
    an organization, the Muslim ban. How does the Muslim ban affect
    the petroleum industry, Mr. Gerard?
        Mr. Gerard. It has had some impact on some of our
    companies, and I think you've seen that in some of the public
    reports. As the API, we don't deal with immigration policy, so
    we haven't taken a position on it, but you've seen some of the
    public reports of individuals getting held up in various areas.
    Obviously, we're a global industry, we travel globally, we have
    a lot of individuals around the world moving, so there has been
    some impact on our sector.
        Senator Markey. And how has that impacted you?
        Mr. Gerard. It's hard to tell to date how big that impact
    is. Like I said, I've read one or two press reports. Other than
    that, I'm not sure, Senator, how big it is.
        Senator Markey. Many of the countries within which the
    American Petroleum Institute's members work are obviously
    Muslim majority countries. And so the travel that would occur
    between the United States and those countries has a real role
    in whether or not our companies are able to conduct their
    business in the most effective way possible consistent with
    national security, but not sending a signal that, from my
    perspective, is unconstitutional, immoral, and un-American,
    that we're creating a suspect category of Muslims. That
    absolutely, in my opinion, will create a chilling effect.
        So I would urge you, Mr. Gerard, that if this is bad for
    business, that your industry stand up and your industry make it
    clear that it is bad for business and it could hurt your
    industry.
        Professor Heinzerling, I would like to talk a little bit,
    if I could, about fuel economy standards. It was my law in
    2007, which passed, that lifted the fuel economy standards and
    created a new mandate that the Department of Transportation
    move forward. It was at least 35 miles per gallon by the year
    2020, and it has moved beyond that now to 54.5 miles per gallon
    by the year 2025.
        In your written testimony, you pointed out that these
    regulations are a good example of how regulations can, in fact,
    comport with national security. We still import five million
    barrels of oil a day into the United States. We import three
    million of those barrels from OPEC countries--from Saudi
    Arabia, from Algeria, from Iraq--and so that clearly is
    something that we want to reduce and eliminate, especially as
    we export young men and women over there to defend those
    shipments of oil coming into our country.
        Can you talk about the importance of those regulations?
        Ms. Heinzerling. These are a great example of the kinds of
    regulations I was talking about that create multiple and
    diverse benefits. Consumers save money because they pay less in
    gasoline costs. The environment is helped by a reduction in air
    pollution. The climate is helped by a reduction in greenhouse
    gases. And so there are all sorts of ways. There are the
    national security concerns that you talk about. And so there's
    not just one dimension along which these regulations operate,
    but multiple dimensions along which they operate, and can
    actually save people money rather than, as we are talking about
    today, cost them.
        Senator Markey. And the industry was not increasing fuel
    economy standards until those regulations were passed.
        Ms. Heinzerling. The industry was, I would say, almost at
    war against fuel economy standards for a long time.
        Senator Markey. So meaning they were at war against our
    breaking our dependence upon imported oil, against doing
    anything about climate change, or reducing costs for consumers
    by having more efficient vehicles. So, from my perspective,
    those regulations broke a 40-year logjam from 1975 until 2009,
    where there had been no change in the regulations, and as a
    result, no change in the average fleet economy standards. So I
    agree with you, and I thank you for your testimony.
        I yield back the balance of my time. Thank you.
        The Chairman. Thank you, Senator Markey.
        Senator Inhofe.

                     STATEMENT OF HON. JIM INHOFE,
                       U.S. SENATOR FROM OKLAHOMA

        Senator Inhofe. Thank you, Mr. Chairman. For the benefit of
    our distinguished panel and anyone who may be in the audience,
    the reason the Republicans are in and out is because
    simultaneously we are having the Environment and Public Works
    Committee, which I chaired for a number of years, and they are
    considering the nomination of Scott Pruitt. So this isn't the
    only place things are happening right now. So I do apologize
    for that.
        I want to mention that while I was chairing that committee,
    I kind of felt that most of the overregulations really come
    from that committee because they have jurisdiction over the
    Environmental Protection Agency, and things like the water
    issue, the WOTUS, the Clean Power Plan, those were in that
    particular committee. However, there are several other
    overregulations that we need to deal with.
        One actually came from Dodd-Frank. Section 1504 in the
    Dodd-Frank legislation, or rules, require U.S. publicly listed
    energy companies to report project level payments to foreign
    governments opening our best companies' playbooks for
    information that can be highly confidential. For example, if we
    have our oil and gas industry competing with a national company
    from China for a project in Tanzania, they would have the
    advantage of knowing what we--what went into our bid and our
    calculation.
        So, Mr. Gerard, this does affect a lot of companies that
    you deal with on a regular basis. Kind of give us an idea how
    the CRA that I'm introducing on Section 1504 of the Dodd-Frank
    rule would affect our companies.
        Mr. Gerard. Well, thank you, Senator. This is another
    example where, as well-intentioned as it may be, it's having
    adverse impacts. As you pointed out, as part of Dodd-Frank, why
    it was in Dodd-Frank, I assume that was the vehicle that was
    available at the time, they passed a provision that requires us
    to disclose--requires publicly traded companies to disclose our
    payments to foreign governments.
        Now, the issue here to keep in mind, 75 percent of all oil
    reserves around the world are controlled by what we call NOCs,
    national oil companies, or foreign governments. They are not
    publicly traded. So the net effect of this rule requires our
    American companies, if you will, to disclose the details, the
    terms and conditions, of their relationships to bid on
    projects, so their competitors can take that information and
    compete against them in an unfair way from our perspective.
        So what happened when the SEC first proposed the rule, a
    Federal court threw it out and said they didn't address the
    issues, it required the public release of this information they
    shouldn't have, and said their activities were arbitrary and
    capricious. We have worked with the SEC trying to fix this.
    We've developed a model. We support transparency, the industry
    does.
        So what your CRA approach effectively does is it sets aside
    this rule, it doesn't change the statute, it sets aside this
    rule, and allows us to work with the SEC to develop a rule to
    accomplish their purposes without putting us at an unfair
    competitive disadvantage in the global marketplace.
        Senator Inhofe. Yes.
        Mr. Gerard. So we thank you for your leadership. A perfect
    example of where a regulator overstepped their bounds, even
    inconsistent with the statute, and your oversight and your
    action will help us get this back on track.
        Senator Inhofe. I appreciate it. That's a very articulate
    answer. That's much better than I did on the floor. Thank you.
        [Laughter.]
        Mr. Gerard. You're kind, Senator.
        Senator Inhofe. Mr. Shapiro, let me--I understand that
    while we were off in the other committee that you had some
    statements made about cost-benefit analysis and you didn't have
    an opportunity to respond. If you would like to have some time
    to respond to that, I would be very happy to give you this
    time.
        Mr. Shapiro. Thank you very much. I greatly appreciate
    that. According to the National Association of Manufacturers,
    there are 297--696 restrictions on manufacturers on their
    operations from Federal regulations. That's 297,000.
        So one of the questions was about jobs per state, and
    obviously that translates to jobs. It will be an imperfect
    analysis, but those restrictions cost money to comply to. A lot
    of them are probably very good and safety related, but a lot of
    them probably should not be on the books anymore. It is
    expensive to just try to comply with all the rules that are out
    there.
        So there are jobs that are being lost, and whether you
    could come up with some numbers per state, I'm sure you could.
    They won't be precise, and they will be estimates.
        The other way of looking at cost-benefit analysis and jobs
    is to focus--is to try to come up with numbers you can't come
    up with. What are the areas of innovation you don't go in?
    Where are the estimates that you can't--the new projects that
    are never started?
        I was very much involved in the Supreme Court case
    involving the legitimacy of the Sony Betamax. If that case had
    gone the other way, and it was a 5-4 decision, frankly, we
    wouldn't have a lot of the technology we enjoy today. And when
    we try to say what--if one vote had made such a difference, how
    could we have projected where the Internet had gone and
    camcorders and the MP3 players and smartphones and things like
    that, all which relied on this one Supreme Court decision? You
    can't estimate the billions and trillions of dollars which put
    the U.S. ahead of the rest of the world because of one court
    decision, our Magna Carta.
        So when we say that jobs are lost, of course jobs are being
    lost. We have to be reasonable, as Senator Nelson has said, we
    have to use our best judgment. And we're losing jobs all over
    the place because of simply the Federal rules that are out
    there.
        You talked about Dodd-Frank. The compliance costs of one
    provision of Dodd-Frank having to do with conflict minerals,
    which is irrelevant to the whole bill, frankly, but was thrown
    in there because there was concern about what was happening in
    the Congo. And it said basically that every publicly traded
    company that makes anything has to trace back all these
    different minerals that are used in building something to the
    source so it's not from the Congo. That's like tracing water.
    That's cost hundreds of millions of dollars, actually, billions
    of dollars, in annual compliance costs for companies, and it
    was thrown at the SEC, which is totally incapable of dealing
    with it.
        So when we talk about this form of regulatory
    sequestration, which was raised earlier, of two for one, which
    President Trump has proposed, it is a blunt instrument. On the
    other hand, it's going to force a review that is necessary and
    long overdue of a lot of rules which just shouldn't be on the
    books among those 298,000 or so.
        Senator Inhofe. Yes, well, thank you for that explanation,
    Mr. Shapiro.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Inhofe.
        Senator Nelson.
        Senator Nelson. Mr. Chairman, since I deferred my questions
    to the Members, I'm going to get into a number of things.
    First, some housekeeping. I ask consent to enter these letters
    of concern into the record from consumer groups and other
    organizations regarding reforms targeting health and safety
    regulation. They include statements from Joyce Davis, the
    mother of Garret, and Tim Frink, the grandfather of Brianna.
        The Chairman. Without objection.
        [The information referred to follows:]

                              Environmental Defense Action Fund
                                                        January 3, 2017

    Dear Representative:

        The Environmental Defense Action Fund strongly opposes the
    Regulations from the Executive in Need of Scrutiny Act of 2017 (REINS
    Act) and the Midnight Rules Relief Act of 2017, both expected to be on
    the House floor for a vote this week.
        The REINS Act and the Midnight Rules Relief Act are direct and
    radical threats to public health and the environment and would have
    broad overreaching implications and unintended consequences.
        The REINS Act would prevent the Federal Government from carrying
    out actions mandated by Congress, including laws with strong bipartisan
    support, resulting in the failure to implement critical public health
    and safety protections. The Act would require both houses of Congress
    to approve a major rule within a 70-day window. If one or both chambers
    failed to approve that rule, the rule would not take effect and would
    be tabled until the next congressional session. Congress would, by
    taking no action, prevent existing laws from being carried out,
    resulting in gridlock at an unprecedented scale. This would effectively
    give one chamber of Congress veto power over any new significant public
    health and safety protection, no matter how non-controversial or
    sensible it may be.
        The REINS Act would result in the rehashing of old congressional
    debates, reopen hard fought compromises, waste time and money, and
    paralyze agencies that employ scientific and technical experts. It
    would give special interests even more influence over the regulatory
    process.
        The Midnight Rules Relief Act, which would allow disapproval of
    multiple rules finalized near the end of a presidential term, is based
    on the flawed premise that regulations finalized during the last months
    of an administration are rushed and inadequately vetted. Yet in
    reality, rules promulgated during the transition period have taken
    longer to complete--an average 3.6 years compared to the 2.8 years for
    all other rules. Thus, numerous carefully crafted public safeguards
    could be permanently blocked by a single vote.
        Furthermore, bundling multiple rules together will prevent each
    rule from being carefully considered on its own merits, with Members
    forced to vote on a package even if they have differing opinions on
    each individual rule.
        Congress should be searching for ways to ensure that Federal
    agencies work efficiently to reasonably enforce laws designed to
    protect our health and safety from the food we eat to the water we
    drink to the air we breathe. Instead, the REINS Act and the Midnight
    Rules Relief Act throw up unprecedented and dangerous roadblocks and
    delays to sensible safeguards that protect the American people. For
    these reasons, we strongly urge you to oppose the REINS Act and the
    Midnight Rules Relief Act.
                Sincerely,
                                         Elizabeth B. Thompson,
                                                             President,
                                         Environmental Defense Action Fund.
                                     ______

                                                        AFL-CIO
                               Legislative Alert
                                                        January 3, 2017

    Dear Representative:

        I am writing to express the strong opposition of the AFL-CIO to the
    Regulations from the Executive in Need of Scrutiny Act of 2017 (the
    REINS Act), which is scheduled to be voted on by the House of
    Representatives this week. This is an extreme measure that would make
    it virtually impossible for agencies to issue any meaningful rules,
    threatening the health and safety of workers and the public. I urge you
    to vote against this legislation.
        The REINS Act would radically alter the regulatory process by
    requiring Congress to vote to approve all major rules before they can
    go into effect. Rules not affirmatively acted on by both the House and
    the Senate within 70 legislative days would die. Under the REINS Act,
    politics not scientific judgement or expertise would dictate all
    regulatory actions. Corporate opposition and influence would swap the
    public's interest and block needed protections.
        The REINS Act would cripple a regulatory process that already
    causes excessive delays in the issuance of crucial worker and public
    protections. For example, the 2010 Occupational Safety and Health
    Administration's (OSHA's) construction safety standard on cranes and
    derricks took 10 years to finalize, even though this rule had unanimous
    support from industry and labor. OSHA's 2016 silica standard, which
    will protect workers from deadly silica dust and prevent 700 deaths a
    year, took nearly 19 years. Under REINS, Congressional inaction could
    simply kill such commons sense life-saving rules.
        The legislation is impractical, unworkable and unnecessary.
    Congress has neither the time nor expertise to consider and act on
    detailed, technical and scientific issues. Moreover, the Congress
    already has the authority to disapprove rules through the Congressional
    Review Act or block the implementation by withholding funding.
        The REINS Act represents a grave threat to our government's ability
    to protect workers and the public from harm. The AFL-CIO urges you to
    oppose this dangerous bill.
                Sincerely,
                                                William Samuel,
                                                              Director,
                                             Government Affairs Department.
                                     ______

                                                         AFSCME
                                                        January 3, 2017
    Dear Representative:

        I am writing on behalf of 1.3 million working and retired members
    of the American Federation of State, County, and Municipal Employees to
    urge you to oppose the Midnight Rules Relief Act of 2017. The
    legislation would amend the Congressional Review Act to allow blanket
    disapproval of all regulations finalized near the end of presidential
    terms.
        The proposed legislation is based on a dangerously flawed idea--
    that regulations which are proposed or finalized during the so-called
    ``midnight'' rulemaking period are rushed and inadequately vetted. In
    fact, the very opposite is true. There are currently dozens of public
    health and safety regulations that have been in the regulatory process
    for years or decades, including many that date from the Obama
    administration's first term or implement laws passed in the first term.
    And many of these regulations are mandated by Congress and have missed
    rulemaking deadlines prescribed by Congress. Referring to regulations
    that have been under consideration by Federal agencies for years, and
    in some instances decades, as ``rushed'' is misleading and false.
        At risk in this legislation is the Obama administration overtime
    rule. Congress must stand to protect the health and safety of American
    workers. AFSCME urges you to OPPOSE the Midnight Rules Relief Act of
    2017.
                Sincerely,
                                                    Scott Frey,
                                Director of Federal Government Affairs.

    SF:KS:rf
                                     ______

                                      American Lung Association
                                                        January 3, 2017

    Dear Representative;

        The American Lung Association urges you to oppose the REINS Act.
    The bill is a dangerous attack on critical public health protections,
    including for lung health.
        The REINS Act would delay or stop meaningful oversight of tobacco
    products. When the Congress acted in a bipartisan fashion in 2009 to
    give the Food and Drug Administration oversight over tobacco products,
    it did so to empower FDA to implement commonsense safeguards to protect
    children from predatory tobacco industry marketing, to set meaningful
    product standards, and--for the first time--to provide oversight of
    tobacco products.
        Congress should not create new barriers to saving lives from
    tobacco, but rather should permit FDA to act to implement the Family
    Smoking Prevention and Tobacco Control Act with the urgency that
    Congress recognized is necessary to address the cancer, heart disease,
    chronic obstructive pulmonary disease, and health care costs caused by
    tobacco use in America.
        The REINS Act would also block critical clean air protections. Air
    pollution can harm anyone's health, but children, seniors, and people
    living with lung and heart disease are especially vulnerable. Air
    pollution can even kill. The U.S. Environmental Protection Agency has a
    track record of cost-effectively saving lives and improving public
    health under the Clean Air Act. The REINS Act would block or delay
    critical dean air protections against deadly pollutants, as well as the
    pollution that causes climate change.
        In fact, the REINS Act would permanently weaken every Federal
    agency's ability to implement and enforce the law to protect public
    health. The current regulatory process is transparent, deliberate,
    based on independent expertise, and responsive to public input. It
    currently takes years for federal agencies to propose and finalize
    rules required by law, even non-controversial rules. By requiring
    positive votes in Congress to approve of every single major rule, the
    REINS Act would grind the legally required, lifesaving work of Federal
    agencies to a halt, resulting in premature deaths and health problems
    that could have been prevented.
        We urge you to oppose this sweeping, damaging attack on lifesaving
    public health protections.
                Sincerely,
                                              Harold P. Wimmer,
                                            National President and CEO,
                                                 American Lung Association.
                                     ______

                             American Public Health Association
                                        Washington, DC, January 3, 2017
    U.S. House of Representatives
    Washington, DC.

    Dear Representative:

        On behalf of the American Public Health Association, a diverse
    community of public health professionals who champion the health of all
    people and communities, I write in strong opposition to the Regulations
    from the Executive in Need of Scrutiny (REINS) Act and the Midnight
    Rules Relief Act. These ill-conceived bills would allow Congress to
    ignore scientific evidence and permanently block or delay important
    health and safety regulations intended to improve the health of the
    American public.
        The REINS Act would require congressional approval of all new major
    rules, without any changes, within 70 days. Failure to approve the rule
    within the time limit would prevent the rule from taking effect. Most
    rulemaking is directly tied to legislation already enacted by Congress,
    so this legislation would essentially give Congress veto power over
    laws enacted in the past without members of Congress having to cast a
    single vote to repeal those laws. For example, this bill would allow
    Congress to block important rules under the Clean Air Act that protect
    the public's health from dangerous air pollution. A rigorous, peer
    reviewed analysis, The Benefits and Costs of the Clean Air Act from
    1990 to 2020, conducted by the U.S. Environmental Protection Agency,
    found that the air quality improvements under the Clean Air Act will
    save $2 trillion by 2020 and prevent at least 230,000 deaths annually.
    The REINS Act would also allow Congress to block other future major
    public health rules including those intended to protect the Nation's
    food supply, ensure worker safety and protect the public from toxic
    substances.
        The Midnight Rules Relief Act would also threaten public health by
    allowing Congress to use the Congressional Review Act to disapprove
    multiple rules finalized near the end of a presidential term at once.
    The bill falsely assumes that regulations finalized toward the end of
    an administration have been rushed through the regulatory process, when
    in fact, regard less of when a rule is finalized, it has likely been in
    the regulatory process for a number of years, with multiple
    opportunities for public input along the way. Important rules intended
    to protect the public's health and safety could all be at risk.
    Congress recently used the CRA to try to overturn the Clean Power Plan
    which will reduce deadly air pollution from power plants and greenhouse
    gas emissions that contribute to climate change. Expanding the use of
    the CRA to disapprove multiple rules at once would significantly
    undermine efforts to protect the public from serious health threats.
        Protecting the health of American families is one of the most basic
    responsibilities of government, including members of Congress. The
    REINS Act and the Midnight Rules Relief Act would not only create
    roadblocks to our ability to move forward in protecting public health,
    but would also unravel years of progress. We urge you to stand up for
    the health of American families and oppose these bills.
                Sincerely,
                                       Georges C. Benjamin, MD,
                                                    Executive Director.
                                     ______

                              Coalition for Sensible Safeguards
                                                        January 3, 2017

    RE: Floor vote of the Midnight Rules Relief Act of 2017

        The Coalition for Sensible Safeguards (CSS), which includes more
    than 150 diverse labor, environmental, consumer, public health, food
    safety, financial reform, faith, and scientific integrity groups
    representing millions of Americans, strongly opposes the Midnight Rules
    Relief Act of 2017 (MRRA).
        MRRA would amend the Congressional Review Act to allow disapproval
    en banc of all regulations finalized near the end of presidential
    terms.
        The proposed legislation is based on a fatally flawed premise--
    namely, that regulations which are proposed or finalized during the so-
    called ``midnight'' rulemaking period are rushed and inadequately
    vetted. In fact, the very opposite is true. There are currently dozens
    of public health and safety regulations that have been in the
    regulatory process for years or decades, including many that date from
    the Obama Administration's first term or implement laws passed in the
    first term. Some even predate the Obama Administration entirely.
        In July 2016, Public Citizen released a report \1\ that compared
    rulemaking lengths for rules finalized in the ``midnight'' or
    presidential transition period to those that were finalized outside of
    this period. The results were noteworthy. The report found that rules
    issued during the presidential transition period spent even more time
    in the rulemaking process and received even more extensive vetting than
    other rules.
    ---------------------------------------------------------------------------
        \1\ Public Citizen, Shining a Light on the ``Midnight Rule''
    Boogeyman: An Analysis of Economically Significant Rules Reviewed by
    OIRA, (July, 2016), http://citizen.org/documents/Midnight-Regs-Myth.pdf
    ---------------------------------------------------------------------------
        After examining all economically significant rulemakings that have
    been finalized since 1999, Public Citizen's report found that rules
    issued during the transition period took on average 3.6 years to
    complete--almost an entire presidential term--compared to 2.8 years for
    all other rules. Likewise, the time it took the U.S. Office of
    Information and Regulatory Affairs (OIRA) to review midnight rules was
    no shorter, and in some cases longer, than non-midnight rules.
        In addition, many of these regulations are mandated by Congress and
    have missed rulemaking dead lines prescribed by Congress. Referring to
    regulations that have been under consideration by Federal agencies for
    years, and in some instances decades, as ``rushed'' is misleading and
    false.
        Prominent administrative law experts have also concluded that the
    concerns regarding these regulations are not borne out by the evidence.
    For example, in 2012 the Administrative Conference of the United States
    (ACUS) conducted an extensive study of regulations finalized near the
    end of previous presidential terms and found that many ``midnight
    regulations'' were ``relatively routine matters not implicating new
    policy initiatives by incumbent administrations.'' \2\
    ---------------------------------------------------------------------------
        \2\ Administrative Conference Recommendation 2012-2, Midnight
    Rules, Adopted June 14, 2012, pp. 1-2, at http://www.acus.gov/wp-
    content/uploads/downloads/2012/06/Final-Recommendation-2012-2-Midnight-
    Rules.pdf
    ---------------------------------------------------------------------------
        ACUS also found that the ``majority of the rules appear to be the
    result of finishing tasks that were initiated before. the Presidential
    transition period or the result of deadlines outside the agency's
    control (such as year-end statutory or court ordered deadlines).'' ACUS
    concluded that ``the perception of midnight rulemaking as an unseemly
    practice is worse than the reality.''
        Indeed, opponents of midnight regulations have not presented any
    persuasive empirical evidence supporting claims that regulations
    finalized near the end of presidential terms were rushed or did not
    involve diligent compliance with mandated rulemaking procedures.
    Instead, those opponents make unsubstantiated claims based solely on
    when a regulation was finalized, ignoring the marathon rulemaking
    process that those rules underwent.
        In reality, compliance with the current lengthy regulatory process
    prevents agencies from finalizing new regulations efficiently, and thus
    earlier in presidential terms. This is because many of the regulations
    that Congress intended to provide the greatest benefits to the public's
    health, safety, financial security, and the environment currently take
    several years,\3\ decades in some instances, for agencies to implement
    due to the extensive and, in many cases, redundant procedural and
    analytical requirements that comprise the rulemaking process.
    ---------------------------------------------------------------------------
        \3\ Public Citizen, Unsafe Delays: An Empirical Analysis Shows That
    Federal Rulemakings to Protect the Public Are Taking Longer Than Ever
    (June, 2016), http://www.citizcn.org/documents/Unsafe-Delays-Report.pdf
    ---------------------------------------------------------------------------
        Indeed, CSS maintains that the inherent inefficiency of the current
    regulatory process, leading to regulatory delays and paralysis across
    agencies, is the primary area in most of need of urgent attention and
    reform by this Congress.
        In the end, it is difficult to overlook the tragic irony at the
    heart of MRRA. The bill would empower Congress to use the Congressional
    Review Act (CRA) a process that is rushed and nontransparent and that
    discourages informed decision making to block at the 11th hour rules
    that have completed the journey through the onerous rulemaking process.
        Unlike the CRA's expedited procedures, agency rules are subjected
    to myriad accountability mechanisms, and, for each rule, the agency
    must articulate a policy rationale that is supported by the rulemaking
    record and consistent with the requirements of the authorizing statute.
    In contrast, members of Congress do not have to articulate a valid
    policy rationale--or any rationale at all--in support of CRA
    resolutions of disapproval. Quite simply, they can be, and often are,
    an act of pure politics.
        MRRA would make the situation even worse. It would, in effect,
    demand that all members of Congress have adequate expertise on all of
    the rules that would be targeted by a single en banc disapproval
    resolution. Such a scenario would be highly unlikely.
        It would also risk encouraging members to engage in ``horse
    trading'' to add still more rules to the en banc disapproval resolution
    until enough votes have been gathered to ensure the resolution's
    passage. Surely, this approach to policymaking cannot be defended as
    superior to that undertaken by regulatory agencies.
        The Obama Administration ends on January 20, 2017. It is incumbent
    on them to do their constitutional duty to implement the laws of
    Congress until that date. CSS urges members to reject both the bill and
    false and misleading rhetoric that bears no reality to the real
    problems of excessive and systemic delay in the regulatory process.
        We strongly urge opposition to Midnight Rules Relief Act of 2017.
                Sincerely,
                                               Robert Weissman,
                                                             President,
                                                            Public Citizen,
                                                                 Chair,
                                         Coalition for Sensible Safeguards.

        The Coalition for Sensible Safeguards is an alliance of consumer,
    labor, scientific, research, good government, faith, community. health,
    environmental. and public interest groups, as well as concerned
    individuals, joined in the belief that our country's system of
    regulatory safeguards provides a stable framework that secures our
    quality of life and paves the way for a sound economy that benefits us
    all.
                                     ______

                                  Union of Concerned Scientists
                                                        January 3, 2017
    Dear Representative:

        The Union of Concerned Scientists, with more than 500,000 members
    and supporters throughout the country, strongly opposes H.R. 21, the
    Midnight Rules Relief Act of 2017. The proposed legislation would
    hasten the already rushed procedures in the Congressional Review Act
    (CRA) to enable Congress to block science-based public health, safety,
    and environmental safeguards finalized near the end of presidential
    terms en banc, with zero accountability.
        H.R. 21 is the CRA on steroids. If passed, H.R. 21 would allow
    Congress to further circumvent legislative procedure and diminish the
    capacity of Federal agencies to create much needed regulations that
    safeguard public health and the environment while undermining robust
    scientific research and data in the process.
        What H.R. 21 does do is perpetuate the disproven myth of ``midnight
    regulations,'' \1\ or the idea that rules finalized near the end of
    presidential terms are being rushed to completion and are therefore
    inadequately vetted. Contrary to what the proposal would suggest, the
    majority of regulations are not expedited at the end of an
    administration.
    ---------------------------------------------------------------------------
        \1\ http://www.politico.com/agenda/story/2016/08/the-myth-of-
    midnight-regulations-000194
    ---------------------------------------------------------------------------
        A recent report \2\ found empirical evidence that significant
    regulations finalized near the end of an administration spent more than
    three years on average in Federal rulemaking pipeline, including going
    through a public comment period that allows for all impacted
    stakeholders to provide feedback to agencies, before being finalized.
    Referring to these safeguards as ``midnight regulations'' is a false
    narrative not rooted in reality.
    ---------------------------------------------------------------------------
        \2\ http://citizen.org/documents/Midnight-Regs-Mvth.pdf
    ---------------------------------------------------------------------------
        H.R. 21 is a rad ical proposal that provides another opportunity to
    allow regulated industries to drown out the voices of the people who
    will be hurt the most by rolling back these vital science-based public
    health, safety, and environmental protections. If H.R. 21 were to pass,
    many science-based regulations vital to protecting the health and
    safety of Americans, especially black and Latino communities who often
    face the biggest public health and environmental threats could be
    dismantled.
        Instead of addressing the real problem--the extensive procedural
    hurdles that Federal agencies face to develop and finalize
    congressionally-mandated and science-based public health, safety, and
    environmental protections without delay--H.R. 21 is a dangerous
    solution in search of a nonexistent problem.
        H.R. 21 could undermine years of progress on science-based public
    health protections, worker safety, and environmental stewardship. It
    fails to put the health and safety of communities ahead of narrow
    corporate or ideological interests. This is not just an attack on the
    regulatory process, but an attack on transparent, science informed
    policymaking. We strongly urge you to vote 'no' on H.R. 21.
                Sincerely,
                                    Andrew A. Rosenberg, Ph.D.,
                            Director, Center for Science and Democracy,
                                             Union of Concerned Scientists.
                                     ______

                                  Union of Concerned Scientists
                                                        January 3, 2017

    Dear Representative:

        The Union of Concerned Scientists, representing more than 500,000
    members and supporters across the country, strongly opposes H.R. 26,
    the Regulations From the Executive in Need of Scrutiny Act of 2017
    (``REINS'' Act).
        This bill is a radical threat to the integrity of the Federal
    regulatory process and would eviscerate the ability of Federal agencies
    to use science to protect public health, safety, and the environment.
    In reality, H.R. 26 is a one-way ticket to failing to protect Americans
    from public health and safety dangers, and simply a recipe for
    stymieing regulatory action.
        H.R. 26 would politicize the regulatory process by requiring any
    major science-based public health, safety, and environmental safeguard
    to be approved by both houses of Congress within a narrow timeline of
    70 legislative days. If both houses of Congress failed to approve, the
    rule would not only be prevented from taking effect, but also tabled
    until the next congressional session, no matter how vital it was to
    protecting public health, safety, and the environment.
        Congress writes the laws to ensure access to clean air and water,
    safe consumer products, and untainted food and drugs. However, Federal
    agencies are responsible for using scientific and technical expertise
    to develop regulations to implement those mandates. Congress does not
    have near the capacity to adequately review hundreds of science-based
    safeguards within such a tight deadline. And under this proposal, by
    doing nothing, Congress would prevent millions of Americans, especially
    the most vulnerable populations who face the gravest health and
    environmental threats, from getting the protection afforded to them by
    existing laws.
        Further, Congress already has significant authority when it comes
    to agency rulemaking, making this proposal even more illogical. Federal
    agencies only act to implement laws passed by Congress. In addition,
    Congress can at any time block implementation of a regulation by
    passing a resolution of disapproval under the procedures set forth in
    the Congressional Review Act. H.R. 26 is merely an attempt to add yet
    another roadblock in using science to protect the public. It is a
    solution in search of a problem.
        Currently, Federal agencies propose regulations that are based on
    independent science and are subject to an extensive multi-year review
    process with several opportunities for public comment for all
    stakeholders. And while this process is far from perfect, H.R. 26 would
    override the entire process by imposing a Congressional review with no
    articulated standards or goals.
        The ill-advised H.R. 26 would jeopardize the public interest and
    radically alter the separation of powers. It would block agencies from
    using the best available science to safeguard public health, safety,
    and the environment as mandated by the laws Congress has passed.
    Furthermore, the bill would increase uncertainty in the rulemaking
    process by highly politicizing what should be science-based decisions.
        In sum, H.R. 26 does not improve or even streamline the regulatory
    system. Rather, it rigs the rules to provide Congress an opportunity to
    undermine its own landmark public health, safety, and environmental
    laws in favor of industry interests. The protections afforded to us by
    our popular science-based laws such as the Clean Air Act, the Clean
    Water Act, the Safe Drinking Water Act, and others, would all be
    targeted under this absurd proposal. This is why we strongly urge a no
    vote on H.R. 26.
                Sincerely,
                                    Andrew A. Rosenberg, Ph.D.,
                            Director, Center for Science and Democracy,
                                             Union of Concerned Scientists.
                                     ______

                                 Consumer Federation of America
                                        Washington, DC, January 3, 2017

    RE: Oppose the Midnight Rules Relief Act of 2017 that will Undermine
                Crucial
                Consumer Protections

    Dear Representative:

        The Consumer Federation of America (CFA) \1\ writes to express our
    strong opposition to a bill that will undermine important consumer
    protections and that will be voted on this week. The Midnight Rules
    Relief Act of 2017 (MRRA) would undercut the ability of Federal
    agencies to protect consumers from unsafe food, predatory financial
    products and schemes, and dangerous consumer products. The Federal
    rulemaking process is already lengthy and difficult. This bill will
    make it even more difficult and burdensome for Federal agencies to
    implement consumer protection measures. The end result will be harm to
    American consumers.
    ---------------------------------------------------------------------------
        \1\ CFA is an association of more than 250 non-profit consumer
    organizations that was established in 1968 to advance the consumer
    interest through research, advocacy and education. Member organizations
    include local, state, and national consumer advocacy groups, senior
    citizen associations, consumer cooperatives, trade unions and food
    safety organizations.
    ---------------------------------------------------------------------------
        The MRRA would amend the Congressional Review Act to allow
    disapproval of a number of regulations, all at once, finalized near the
    end of presidential terms.
        This bill seeks to solve a problem that does not actually exist:
    that rules finalized at the end of an administration are hurried and
    not appropriately evaluated. According to both the Administrative
    Conference of the United States (ACUS) and Public Citizen, however,
    this is not the case. ACUS found, in a 2012 study \2\ that regulations
    that were finalized during the end of presidential terms were
    ``relatively routine matters not implicating new policy initiatives by
    incumbent administrations'' and that ``the majority of the rules appear
    to be the result of finishing tasks that were initiated before the
    Presidential transition period or the result of deadlines outside the
    agency's control (such as year-end statutory or court-ordered
    deadlines.'' In a July 2016 study, Public Citizen released a report \3\
    that found that rules issued during the end of a Presidential term took
    an average of 3.6 years to complete compared to 2.8 years for other
    rules. Thus, these studies found that these ``midnight rules'' are not
    rushed nor the result of a non deliberative rulemaking process.
    ---------------------------------------------------------------------------
        \2\ Administrative Conference Recommendation 2012-2,Midnight Rules,
    Adopted June 14, 2012, pp. 1-2, at http://www.acus.gov/wp-content/
    uploads/downloads/2012/06/Final-Recommendation-2012-2-Midnight-
    Rules.pdf.
        \3\ PUBLIC CITIZEN, SHINING A LIGHT ON THE ''MIDNIGHT RULE''
    BOOGEYMAN: AN ANALYSIS OF ECONOMICALLY SIGNIFICANT RULES REVIEWED BY
    OIRA, (July, 2016), http://citizen.org/documents/Midnight-Regs-
    Myth.pdf.
    ---------------------------------------------------------------------------
        The MRRA seeks to bundle numerous Congressional Review Act
    disapprovals in one resolution. In one sweeping measure, Congress could
    usurp the expertise, knowledge, and deliberative process of many
    agencies to entirely stop sensible safeguards that Americans expect and
    depend upon to keep their families safe and secure, their privacy
    protected, and their financial services fair and transparent.
    Ironically, this bill would enable Congress to use a rushed, non-
    deliberative process to upend critical necessary protections.
        Congress already has numerous methods for holding agencies
    accountable for their actions. The Midnight Rules Relief Act of 2017
    would further thwart the rulemaking process, waste Federal resources,
    minimize the ability of Federal agencies to do their jobs to protect
    the public and ultimately harm American consumers.
        We strongly urge you to oppose this harmful bill.
                Sincerely,
                                              Rachel Weintraub,
                              Legislative Director and General Counsel.
                                     ______

                                 Consumer Federation of America
                                        Washington, DC, January 3, 2017

    RE: Oppose The Regulations from the Executive in Need of Scrutiny Act
    (REINS Act), Legislation that will Undermine Crucial Consumer
    Protection Regulations

    Dear Representative:

        The Consumer Federation of America (CFA) \1\ writes to express our
    strong opposition to a bill that will undermine impm1ant consumer
    protections and that will be voted on this week. The Regulations from
    the Executive in Need of Scrutiny Act (REINS Act) would undercut the
    ability of Federal agencies to protect consumers from unsafe food,
    predatory financial products and schemes, and dangerous consumer
    products. The Federal rulemaking process is already lengthy and
    difficult. This bill will make it even more time-consuming, expensive,
    and burdensome for Federal agencies to implement consumer protection
    measures. The end result will be harm to American consumers.
    ---------------------------------------------------------------------------
        \1\ CF A is an association of more than 250 non-profit consumer
    organizations that was established in 1968 to advance the consumer
    interest through research, advocacy and education. Member organizations
    include local, state, and national consumer advocacy groups, senior
    citizen associations, consumer cooperatives, trade unions and food
    safety organizations.
    ---------------------------------------------------------------------------
        The REINS Act would require that any agency that issues a rule with
    an economic impact of $100 million or more must obtain approval from
    both Houses of Congress of the entire rule without changes, within 70
    legislative days of the rule being received by Congress. This would
    affect all major rules; even the many that are not controversial. With
    few exceptions, if Congress fails to act in the allotted time, the rule
    could not be brought up again until the next Congress and would not be
    implemented.
        This hurdle would be virtually impossible for important consumer
    protection rules to overcome. The bill strips away the authority of
    Federal agencies that Congress created to develop expertise on how to
    protect American consumers from dangerous products, tainted food and
    deceptive financial services products. If an agency does persist in its
    efforts, it faces the prospect of squandering enormous resources to
    research, write and evaluate an important consumer protection rule,
    because opponents of the effort have been able to bottle it up in a
    single House of Congress over a short period of time.
        Congress already has numerous methods for holding agencies
    accountable for their actions. The REINS Act would further delay the
    rulemaking process, waste Federal resources, minimize the ability of
    Federal agencies to do their jobs to protect the public and ultimately
    harm American consumers.
        We strongly urge you to oppose this harmful bill.
                Sincerely,
                                              Rachel Weintraub,
                              Legislative Director and General Counsel.
                                     ______

                                  Consumer ReportsTM
                                                        January 3, 2017

    U.S. House of Representatives
    Washington, DC

    Dear Representative:

        Consumer Reports and its policy and mobilization arm, Consumers
    Union, strongly urge you to vote no on H.R. 21, the so-called
    ``Midnight Rules Relief Act.'' This bill would severely undermine
    accountability to the public regarding important protections and
    safeguards.
        Although the rules targeted by this legislation were finalized
    relatively recently, many have been under development for several
    years. Consumers Union has provided public comment on several of these
    regulations that were designed to protect consumers against unsafe
    products, dishonest business dealings, and other hazards in the
    marketplace that place their health, safety, or well-being at risk.
    Agency experts carefully examined these hazards and considered various
    alternative approaches to address them. They sought input and guidance
    from businesses, consumer organizations, outside scientific and legal
    experts, and the public at large, and ultimately developed final rules,
    explaining publicly the basis and rationale for the adopted approach.
        The Federal law known as the Congressional Review Act (CRA) already
    permits a regulation carefully developed over many years to be erased
    by Congress, in a rushed process that does riot reflect the same level
    of expertise or careful consideration. Congress could even rescind a
    rule for reasons that might be based not on any broader interests of
    the public, but on the narrower, private special interests of those
    seeking to avoid having appropriate obligations imposed on their
    profit-making activities.
        The potential for the CRA to be employed in the service of special
    interests is at least somewhat held in check by the fact that the law
    currently requires separate congressional action for erasing each
    regulation. A regulation considered for erasure under the CRA must be
    brought to the House and Senate in its own separate resolution, given
    its own debate and vote, and sent to the President for its own
    signature or veto. All officials involved in considering whether to
    erase the regulation and its protections are thus put on record, and
    can be held accountable for their positions and the consequences.
    Perhaps for this reason, there has only been one regulation rescinded
    under the CRA in its 20-year history.
        This important accountability check would be removed under the
    ``Midnight Rules Relief Act.'' By allowing erasure of multiple
    regulations en bloc, this bill would enable Members of Congress and the
    President to evade public accountability for what could be ill-
    considered, politically motivated decisions that result in devastating
    consequences. Under the bill, no Member would ever have to be on record
    regarding any specific regulation being erased. In fact, any Member who
    actually wants to cast a more selective vote, to erase certain
    regulations but not others, would be unable to do so.
        We are somewhat encouraged that the House Majority, after initially
    acting behind closed doors to weaken the Office of Congressional
    Ethics, has reversed course in light of major concerns raised about the
    impact on congressional accountability. We urge all Members to also
    recognize the damaging effects that this bill would have on
    accountability and on the ability of the American public to trust their
    elected representatives. We strongly urge you to vote no on the
    ``Midnight Rules Relief Act.''
                Sincerely,

    Laura MacCleery,

    Vice President,

    Consumer Policy and Mobilization,

    Consumer Reports.

    George P. Slover,

    Senior Policy Counsel,

    Consumers Union.

    William C. Wallace,

    Policy Analyst,

    Consumers Union.

                                     ______

                                   National Consumer Law Center
                                                        January 3, 2017

    RE: Oppose H.R. 26, the Regulations from the Executive in Need of
                Scrutiny Act (REINS Act)

    Dear Representative:

        The National Consumer Law Center (NCLC), on behalf of its low
    income clients, strongly opposes H.R. 26, the Regulations from the
    Executive in Need of Scrutiny Act (REINS Act). Since 1969, the
    nonprofit NCLC has worked for consumer justice and economic security
    for low-income and other disadvantaged people, including older adults,
    in the U.S. through its expertise in policy analysis and advocacy,
    publications, litigation, expert witness services, and training.
        The REINS Act is a radical threat to the government's ability to
    protect the public from harm in areas ranging from financial services
    to health to safety. The bill would spread congressional paralysis to
    Federal agencies. allowing politics, partisanship, inaction and
    arbitrary and capricious opinions to trump scientific expertise and
    careful rulemaking, even on noncontroversial bipartisan matters. The
    bill would require both houses of Congress to approve a major rule,
    with no alterations, within a 70 day window. If both chambers are
    unable to approve a major rule, it would not take effect and would be
    tabled until the next congressional session. In other words, by doing
    nothing, Congress would prevent existing laws from being effectively
    implemented. It would stop all major rules, including the large number
    of non controversial rules agencies produce every year, from going
    through.
        Currently, it takes years for a Federal agency to produce the rules
    necessary to implement and enforce public safeguards and protections.
    The Administrative Procedures Act and other legislation require
    agencies to carefully consider facts, evidence, costs, benefits, and
    viewpoints from a wide range of the public before implementing a rule.
    These procedures take time and effort but they create transparency,
    prevent arbitrary and capricious actions, and give the public input.
        For example, the recently implemented EPA standards on greenhouse
    gas emissions and fuel economy for light vehicles took years of
    development--despite being supported by both environmental groups and
    the auto industry--before Federal regulators finally got a rule on the
    books. REINS would allow congressional inaction to block such common-
    sense, non controversial rules.
        Congress already has the first and last word when it comes to
    agency rulemaking, making the REINS Act needless and redundant.
    Agencies can only exercise authority that has been delegated by
    Congress in authorizing legislation. Any agency attempt to overstep
    these bounds is likely to result in judicial scrutiny and reversal of
    the agency action. And under the Congressional Review Act, Congress
    already has the authority to review and nullify a rule by passing a
    resolution of disapproval. The REINS Act would force Congress to
    refight its previous debates, wasting time and money and paralyzing
    agencies and Congress itself.
        The REINS Act would inappropriately--but deliberately--inject
    political considerations into a regulatory process that is supposed to
    be based on objective agency science and expertise. Federal agencies
    employ personnel with policy, scientific, and technical expertise to
    produce smart and sensible regulations. Allowing Congress to have the
    final say on regulations would give lobbyists, special interest groups,
    and those who provide legislators with campaign contributions even more
    influence in shaping a rule.
        Simply put, the REINS Act would make the dysfunction and
    obstructionism that plague our political process even worse by giving
    one chamber of Congress veto power over any new significant public
    health and safety protection, no matter how non-controversial or
    sensible it maybe.
        Congress should be searching for ways to ensure that Federal
    agencies enforce Jaws designed to protect our food supply, water, air
    quality, financial security and much more, not throwing up roadblocks
    to sensible safeguards that protect the American people. For these
    reasons, we strongly urge you to oppose the REINS Act.
                Sincerely,
                                               Lauren Saunders,
                                                    Associate Director.
                                     ______

                                 Americans for Financial Reform
                                                        January 4, 2017

    Dear Representative,

        On behalf of Americans for Financial Reform (AFR), we are writing
    to strongly oppose I-IR 26, the ``Regulations from the Executive In
    Need of Scrutiny Act of 2017,'' also known as the REINS Act.\1\
    ---------------------------------------------------------------------------
        \1\ Americans for Financial Reform is an unprecedented coalition of
    more than 200 national, state and local groups who have come together
    to reform the financial industry. Members of our coalition include
    consumer, civil rights, investor, retiree, community, labor, faith
    based and business groups. A list of coalition members is available at
    http://ourfinancialsecurity.org/about/our-coalition/
    ---------------------------------------------------------------------------
        The REINS Act is radical legislation that would upend decades of
    administrative law practices dating back to the New Deal era in the
    1930s. The bill requires explicit approval of any ``major regulation''
    by both the House and Senate within 70 days in order for that rule to
    take effect This requirement would create crippling barriers to
    administrative actions necessary to protect the public and implement
    the law.
        The REINS Act would affect the full range of Federal regulations,
    including rules that ensure consumer products are safe for children,
    rules that protect worker safety in coal mines, environmental rules
    that protect the safety of our air and water, financial regulations,
    and many more. However, AFR's major focus is on rules that safeguard
    the financial system and financial consumers. The crisis of 2008
    demonstrated that a failure to properly regulate Wall Street can result
    in trillions of dollars of economic damages and the loss of millions of
    jobs. The continuing series of scandals since that time, ranging from
    manipulation of markets to consumer fraud at Wells Fargo, further
    demonstrates the need for strong rules governing the financial system.
        If the REINS Act passes, significant rules governing the financial
    sector will not go into effect unless both Houses of Congress vote
    again to approve each individual rule and the President once again
    approves the rule even though the laws authorizing these rules have
    already been passed by Congress and the President. Administrative rules
    are necessary to give laws actual effect. This massive presumption
    against actually putting rules in place will be an enormous barrier to
    agency actions that protect the public from irresponsible or
    exploitative behavior by financial institutions.
        Congress already has the power to overturn any agency rule, or to
    repeal the legislation that authorizes the rule. The additional REINS
    Act requirement that Congress must specifically approve each individual
    rule passed in implementing a law is a transparent effort to sabotage
    the ability of government to stand up for the public and against big
    banks. If the REINS Act passes, in order to take action in areas such
    as reforming Wall Street, it will be necessary to both pass a law and
    to return to Congress for the approval of both houses for each
    individual regulatory step in implementing the law. The entire process
    could be halted at any point by Congressional inaction.
        The process of rulemaking under our current system is already far
    too slow and cumbersome, involving administrative procedures that take
    years and frequent court challenges. The REINS Act would bring that
    process to an effective halt and further empower business interests to
    block any rule that impacted their profits, even if it brought far
    larger benefits to the public.
        No one who believes in protecting the public from the effects of
    dangerous and irresponsible corporate misbehavior should vote for this
    bill. We urge you to oppose it.
                Sincerely,
                                Americans for Financial Reform.
                                     ______

                                      American Lung Association
                                                        January 4, 2017
    Dear Representative:

        The American Lung Association urges you to oppose H.R. 21, the so
    called Midnight Rules Relief Act of 2017. Under this bill, Congress
    could permanently block multiple critical public health protections
    with a single vote.
        H.R. 21 is based on a misguided perception that rules finalized
    toward the end of a presidential administration have not been fully
    formed or vetted. The reality is that these rules, many of which
    protect public health, are often the product of years of work and
    public input.
        H.R. 21 would expand the Congressional Review Act to allow en bloc
    disapproval of all regulations finalized near the end of a president's
    term. The CRA is an extreme tool--it allows Congress to, with a vote of
    disapproval, not only erase a regulation, but also prevent the Federal
    Government from issuing any rule that is ``substantially the same'' in
    the future. Allowing an en bloc vote to permanently block a group of
    regulations is reckless and extreme.
        If it became law, H.R. 21 could be used to block lifesaving public
    health protections that prevent death and disease caused by air
    pollution and tobacco.
        We urge you to oppose this attack on lifesaving public health
    protections.
                Sincerely,
                                              Harold P. Wimmer,
                                            National President and CEO,
                                                 American Lung Association.
                                     ______

                                                        January 4, 2017
    RE: Floor vote of the Midnight Rules Relief Act of 2017

        We, the undersigned consumer, small business, labor, good
    government, financial protection, community, health, environmental,
    civil rights and public interest groups, strongly urge you to oppose
    the Midnight Rules Relief Act of 2017 (MRRA).
        H.R. would amend the Congressional Review Act (CRA) to allow en
    bloc disapproval of all regulations finalized near the end of
    presidential terms. This bill would jeopardize public protections
    affecting public health, safety, and the environment that often are
    years, if not decades, in the making.
        The proposed legislation is based on a flawed premise--namely, that
    regulations which are being finalized during the so-called ``midnight''
    rulemaking period are rushed and inadequately vetted.
        In fact, the opposite is generally the case. The vast majority of
    the public health and safety regulations this bill would target have
    been in the regulatory process for years or decades, including many
    that date from the Obama Administration's first term or that implement
    laws passed in the first term. Some even predate the Obama
    Administration entirely.
        In addition, many of these regulations are mandated by Congress and
    have missed rulemaking deadlines prescribed by Congress. Referring to
    regulations that have been under consideration by Federal agencies for
    years, and in some instances decades, as ``rushed'' is misleading and
    inaccurate.
        More generally, opponents of midnight regulations have not
    presented any persuasive empirical evidence supporting claims that
    regulations finalized near the end of previous presidential terms were
    rushed or did not involve diligent compliance with mandated rulemaking
    procedures. Instead, those opponents make unsubstantiated claims based
    solely on when a regulation was finalized, ignoring the marathon
    rulemaking process that those rules likely underwent.
        In reality, compliance with the current lengthy regulatory process
    prevents agencies from finalizing new regulations efficiently, earlier
    in presidential terms. This is because many of the regulations that
    Congress intended to provide the greatest benefits to the public's
    health, safety, financial security, and the environment currently take
    several years, decades in some instances, for agencies to implement due
    to the extensive and, in many cases, redundant procedural and
    analytical requirements that comprise the rulemaking process.
        It is difficult to overlook the tragic irony at the heart of MRRA.
    The bill would empower Congress to use the CRA--a process that is
    rushed, nontransparent, and discourages informed decision-making--to
    block, at the 11th hour, rules that have completed the journey through
    the onerous rulemaking process.
        Unlike the CRA's expedited procedures, agency rules are subjected
    to a myriad of accountability mechanisms, and, for each rule, the
    agency must articulate a policy rationale that is supported by the
    rulemaking record and consistent with the requirements of the
    authorizing statute. In contrast, members of Congress do not have to
    articulate a valid policy rationale--or any rationale at all--in
    support of CRA resolutions of disapproval.
        A small sampling of long-delayed but now finalized public
    protections that could be blocked by MRRA illustrates what kind of
    important public protections are at stake:

       Environmental Protection Agency's truck greenhouse gas
            emissions rule will make tomorrow's trucks run cleaner and go
            farther on a gallon of fuel

       Department of Labor's fair pay and safe workplaces
            protection rule helps to eradicate all forms of discrimination
            in the workplace and promote good jobs for women

       Health and Human Services' nursing home standard banning the
            use of forced arbitration in contracts will improve the care
            and safety for nearly 1.5 million Americans in long-term care
            facilities

       Department of Education's gainful employment rule will
            protect student borrowers against misleading and predatory
            practices by shoddy postsecondary institutions and clarify a
            process for loan forgiveness in cases of institutional
            misconduct

       Environmental Protection Agency's Risk Management Program
            regulations for chemical facilities will reduce the likelihood
            of accidental releases at these sites and improve emergency
            response activities

        This bill would throw all these protections into jeopardy. It
    would, in effect, presume that all members of Congress have adequate
    expertise on the complexities of all of the rules that would be
    targeted by a single en bloc disapproval resolution on which they would
    be voting. Such a scenario would be highly unlikely.
        The bill would also risk encouraging members of Congress to engage
    in ``horse trading'' to add still more rules to the en bloc disapproval
    resolution until enough votes have been gathered to ensure the
    resolution's passage. Surely, this approach to policymaking cannot be
    defended as superior to the careful process undertaken by regulatory
    agencies for each separate rule.
        It is also crucial to underscore the far-reaching and negative
    consequences that such en bloc disapproval resolutions would have.
    According to the CRA, resolutions of disapproval not only nullify the
    regulation in question, but also prohibit a Federal agency from issuing
    another regulation that is ``substantially the same'' in the future,
    unless specifically authorized to do so by a future act of Congress.
    Accordingly, broad en bloc disapproval resolutions could significantly
    curtail agencies' ability to address pressing public threats,
    indefinitely, potentially forever. That would be a drastic consequence
    from an act of Congress that is sure to be highly politicized and
    unlikely to receive appropriately careful consideration.
        This Administration ends on January 20, 2017. It is incumbent on
    Administration officials to do their constitutional duty to exercise
    their authority to execute the laws as entrusted by Congress until that
    date.
        We strongly urge you to oppose the Midnight Rules Relief Act and to
    reject the false and misleading rhetoric behind it, which bears no
    relation to the real problems of excessive and systemic delay in the
    regulatory process.
        We strongly urge opposition to the Midnight Rules Relief Act of
    2017.

    AFL-CIO
    AFSCME
    Alaska Public Interest Research Group
    Alliance for Justice
    American Association for Justice
    Americans for Financial Reform
    Asbestos Disease Awareness Organization (ADAO)
    Center for Food Safety
    Center for Justice & Democracy
    Center for Progressive Reform
    Clean Water Action
    Connecticut Council on Occupational Safety and Health (ConnectiCOSH)
    Consumer Federation of America
    Consumers for Auto Reliability and Safety
    Consumers Union
    Daily Kos
    Earthjustice
    Economic Policy Institute
    Greenpeace
    Homeowners Against Deficient Dwellings
    Institute for Agriculture and Trade Policy
    International Union, United Automobile, Aerospace & Agricultural
    Implement Workers of America (UAW)
    League of Conservation Voters
    Massachusetts Consumers Council
    MassCOSH
    National Association of Consumer Advocates
    National Consumer Law Center (on behalf of its low income clients)
    National Council for Occupational Safety and Health (COSH)
    National Council of Jewish Women
    National Council of La Raza
    National Employment Law Project
    National Employment Lawyers Association
    National Women's Law Center
    Natural Resources Defense Council
    NETWORK Lobby for Catholic Social Justice
    Project On Government Oversight (POGO)
    Public Citizen
    Public Justice Center
    Public Knowledge
    SafeWork Washington
    U.S. PIRG
    Union of Concerned Scientists
    Virginia Citizens Consumer Council
    Women's Voices for the Earth
    Worksafe

                                     ______

                                             BlueGreen Alliance
                                                        January 4, 2017
    Dear Representative:

        As a coalition of the Nation's largest labor and environmental
    groups, collectively representing millions of members and supporters,
    we urge you to oppose H.R. 21, the ``Midnight Rules Relief Act of
    2017'' and H.R. 26, the ``Regulations from the Executive in Need of
    Scrutiny (REINS) Act of 2017.'' These bills would fundamentally gut the
    Federal regulatory process as well as rules meant to protect public
    health, the environment, consumer and worker safety, and good jobs
    across the country.
        The Midnight Rules Relief Act of 2017 would amend the Congressional
    Review Act to make an already extreme act even more disastrous. This
    bill would allow Congress to bundle together all regulations
    promulgated by Federal agencies within the last 60 legislative days of
    a President's final term and vote to disapprove of them all at once.
    This would enable Congress to--in one vote--overturn many of the
    critical public health and worker safety standards finalized towards
    the end of the Obama administration. This includes a number of
    standards that were under development for years that will not only
    protect the environment and improve public health, but also create
    quality jobs in American manufacturing and low carbon and clean energy
    technologies. Furthermore, this bill would undermine the stability that
    American businesses have come to rel y on. Passage of this bill would
    facilitate politics at its worst--allowing political score--settling at
    the expense of the American public.
        The REINS Act of 2017 would require any rule with an impact of $100
    million or more on the economy to be approved by Congress within 70
    legislative days, without alterations, in order to take effect. This
    process would empower Congress to be the gatekeeper on Federal
    protections and allow politics to play a heavy hand in determining
    which regulations see it through to implementation, rather than
    science, law, or public interest. The REINS Act would fundamentally
    undermine the Federal Government's ability to set standards of all
    kinds. This includes those that protect public health, the environment
    and worker safety, many of which also have a long track record of
    creating quality jobs and boosting economic growth.
        These bills are dangerous proposals for public health, workers, and
    the environment. Under the guise of streamlining the regulatory
    process, they would undermine bedrock environmental and public safety
    laws that protect communities and workers across the country and
    overturn protections that American people--and the economy--depend on.
        We strongly urge you to oppose the Midnight Rules Relief Act of
    2017 and the Regulations from the Executive in Need of Scrutiny Act of
    2017.
                Sincerely,
                                                      Kim Glas,
                                                    Executive Director,
                                                        BlueGreen Alliance.
                                     ______

                                  Consumer ReportsTM
                                                        January 4, 2017

    U.S. House of Representatives
    Washington, DC

    Dear Representative:

        Consumer Reports and its policy and mobilization arm, Consumers
    Union, strongly urge you to vote no on H.R. 26, the Regulations from
    the Executive in Need of Scrutiny (REINS) Act of 2017. This bill would
    hamstring Federal agencies in their work to protect consumers from
    dangers such as tainted food, dirty air and water, invasions of
    privacy, and predatory financial schemes. It would recklessly undermine
    existing laws and further paralyze the government.
        H.R. 26 would require all ``major rules'' to receive the approval
    of both the House and Senate within 70 legislative days in order to
    take effect. With few exceptions, if Congress failed to act in time,
    the rule could not be brought up again until the next Congress. This
    requirement would delay or halt the implementation of existing Federal
    statutes simply through congressional inaction. It would unjustifiably
    obstruct the President's constitutional duty to ``take care that the
    laws be faithfully executed.'' Federal agencies issuing rules
    responsibly follow numerous procedural requirements established by
    Congress and the Constitution, exercising authority Congress has
    already granted them. This bill would create gridlock and dysfunction
    on a scale unprecedented in our country in modern times.
        H.R. 26 would empower either chamber to unilaterally and silently
    stop a rule, no matter how sensible, important, urgent, or non-
    controversial it is. A rule could be indefinitely placed on hold even
    if Congress had required the agency to issue that particular rule.
    Under REINS, science and expertise would not be the driver of
    regulatory outcomes, and congressional gridlock could waste important
    resources that should be used in performing an agency's mission.
        H.R. 26 is a dangerous proposal that would tie up the regulatory
    process and work against the interests of consumers. We strongly urge
    you to stand up for critical public protections and vote no on the
    bill.
                Sincerely,

    Laura MacCleery,

    Vice President,

    Consumer Policy and Mobilization,

    Consumer Reports.

    George P. Slover,

    Senior Policy Counsel,

    Consumers Union.

    William C. Wallace,

    Policy Analyst,

    Consumers Union.

                                     ______

                                  League of Conservation Voters
                                        Washington, DC, January 4, 2017

    United States House
    Washington, DC

    Re: Oppose H.R. 21 & 26--Radical Attacks on Public Protections

    Dear Representative:

        On behalf of our millions of members, the league of Conservation
    Voters (LCV) works to turn environmental values into national, state,
    and local priorities. Each year, LCV publishes the National
    Environmental Scorecard, which details the voting records of members of
    Congress on environmental legislation. The Scorecard is distributed to
    LCV members, concerned voters nationwide, and the media.
        LCV urges you to vote NO on H.R. 21, the Midnight Rules Relief Act
    and H.R. 26, the REINS Act. LCV joins our partners in the Coalition for
    Sensible Safeguards--an alliance of consumer, public health, labor,
    good government, environmental, and scientific groups--in strongly
    opposing this pair of extreme bills that have far-reaching and damaging
    consequences for vital public health and environmental safeguards.
        H.R. 26, the REINS Act,requires both houses of Congress to
    affirmatively approve all significant new public protections before
    they take effect. This is nothing more than a tool for polluters to
    scuttle new health and environmental safeguards. Furthermore, the REINS
    Act is redundant and unnecessary, given that Congress already has the
    first and last word on agency rulemaking. The REINS Act would
    effectively delay or even shut down the implementation of existing
    laws, which could mean more premature deaths, illnesses, and other
    health impacts on the American people at the hands of polluters dumping
    toxins into our air and water.
        H.R. 21, the Midnight Rules Relief Act would allow en bloc
    disapproval of all regulations finalized near the end of presidential
    terms. This bill is based on the unfounded premise that these rules are
    somehow rushed or not vetted, when in reality these rulemakings are
    often years in the making and involve extensive public input by the
    responsible Federal agencies. By contrast, H.R. 21 would allow a
    multitude of rules to be overturned using an expedited legislative
    process under the Congressional Review Act that by its design is
    rushed, lacks transparency, and has limited debate.
        LCV urges you to REJECT H.R. 21 & 26 and will strongly consider
    including votes on these bills in the 2017 Scorecard. If you need more
    information, please call my office at (202) 785-8683 and ask to speak
    with a member of our Government Relations team.
                Sincerely,
                                                Gene Karpinski,
                                                             President.
                                     ______

                                   National Consumer Law Center
                                                        January 4, 2017
    Representative
    U.S. House of Representatives
    Washington, DC

    RE: Oppose Midnight Rules Act, H.R. 21

    Dear Representative,

        The National Consumer Law Center (NCLC), on behalf of its low
    income clients, strongly opposes H.R. 21, the Midnight Rules Relief Act
    (MRRA), which would amend the Congressional Review Act (CRA) to allow
    disapproval en masse of all regulations finalized near the end of
    presidential terms. Since 1969, the nonprofit NCLC has worked for
    consumer justice and economic security for low income and other
    disadvantaged people, including older adults, in the U.S. through its
    expertise in policy analysis and advocacy, publications, litigation,
    expert witness services, and training.
        The MRRA is based on a fatally flawed premise--namely, that
    regulations which are proposed or finalized during the so-called
    ``midnight'' rulemaking period are rushed and inadequately vetted. In
    fact, the very opposite is true. There are currently dozens of public
    health and safety regulations that have been in the regulatory process
    for years or decades, including many that date from the Obama
    Administration's first term or implement laws passed in the first term.
    Some even predate this Administration entirely.
        A Public Citizen report \1\ found that rules issued during the
    presidential transition period spent even more time in the rulemaking
    process and received even more extensive vetting than other rules.
    After examining all economically significant rulemakings that have been
    finalized since 1999, Public Citizen's report found that rules issued
    during the transition period took on average 3.6 years to complete--
    almost an entire presidential term--compared to 2.8 years for all other
    rules. Likewise, the time it took the U.S. Office of Information and
    Regulatory Affairs (OIRA) to review midnight rules was no shorter, and
    in some cases longer, than non-midnight rules.
    ---------------------------------------------------------------------------
        \1\ Public Citizen, Shining A Light On The ``Midnight Rule''
    Boogeyman: An Analysis Of Economically Significant Rules Reviewed By
    OIRA (July, 2016), http://citizen.org/documents/Midnight-Regs-Myth.pdf.
    ---------------------------------------------------------------------------
        In addition, many of these regulations are mandated by Congress and
    have missed rulemaking deadlines prescribed by Congress. Referring to
    regulations that have been under consideration by Federal agencies for
    years, and in some instances decades, as ``rushed'' is misleading and
    false.
        Prominent administrative law experts have also concluded that the
    concerns regarding these regulations are not borne out by the evidence.
    For example, in 2012 the Administrative Conference of the United States
    (ACUS) conducted an extensive study of regulations finalized near the
    end of previous presidential terms and found that many ``midnight
    regulations'' were ``relatively routine matters not implicating new
    policy initiatives by incumbent administrations.'' \2\
    ---------------------------------------------------------------------------
        \2\ Administrative Conference Recommendation 2012-2, Midnight
    Rules, Adopted June 14, 2012, pp. 1-2, at http://www.acus.gov/wp-
    content/uploads/downloads/2012/06/Final-Recommendation-2012-2-Midnight-
    Rules.pdf
    ---------------------------------------------------------------------------
        ACUS also found that the ``majority of the rules appear to be the
    result of finishing tasks that were initiated before the Presidential
    transition period or the result of deadlines outside the agency's
    control (such as year-end statutory or court-ordered deadlines).'' ACUS
    concluded that ``the perception of midnight rulemaking as an unseemly
    practice is worse that the reality.''
        Indeed, opponents of midnight regulations have not presented any
    persuasive empirical evidence supporting claims that regulations
    finalized near the end of presidential terms were rushed or did not
    involve diligent compliance with mandated rulemaking procedures.
    Instead, those opponents make unsubstantiated claims based solely on
    when a regulation was finalized, ignoring the marathon rulemaking
    process that those rules likely underwent.
        In reality, compliance with the current lengthy regulatory process
    prevents agencies from finalizing new regulations efficiently, and thus
    earlier in presidential terms. This is because many of the regulations
    that Congress intended to provide the greatest benefits to the public's
    health, safety, financial security, and the environment currently take
    several years,\3\ decades in some instances, for agencies to implement
    due to the extensive and, in many cases, redundant procedural and
    analytical requirements that comprise the rulemaking process.
    ---------------------------------------------------------------------------
        \3\ Public Citizen, Unsafe Delays: An Empirical Analysis Shows That
    Federal Rulemakings To Protect The Public Are Taking Longer Than Ever
    (June 2016), http://www.citizen.org/documents/Unsafe-Delays-Report.pdf.
    ---------------------------------------------------------------------------
        In the end, it is difficult to overlook the tragic irony at the
    heart of the MRRA. The bill would empower Congress to use the rushed
    and nontransparent CRA process to block at the 11th hour rules that
    have completed the journey through the onerous rulemaking process.
        Unlike the CRA's expedited procedures, agency rules are subjected
    to myriad accountability mechanisms, and, for each rule, the agency
    must articulate a policy rationale that is supported by the rulemaking
    record and consistent with the requirements of the authorizing statute.
    In contrast, members of Congress do not have to articulate a valid
    policy rationaler any rationale at all-in support of CRA resolutions of
    disapproval. Quite simply, they can be, and often are, an act of pure
    politics.
        The MRRA would make the situation even worse. It would, in effect,
    demand that all members of Congress have adequate expertise on all of
    the rules that would be targeted by a single en masse disapproval
    resolution. Such a scenario would be highly unlikely.
        It would also risk encouraging members to engage in ``horse
    trading'' to add still more rules to the en masse disapproval
    resolution until enough votes have been gathered to ensure the
    resolution's passage. Surely, this approach to policymaking cannot be
    defended as superior to that undertaken by regulatory agencies.
        We strongly urge opposition to the Midnight Rules Relief Act.
                Sincerely,
                                               Lauren Saunders,
                                                    Associate Director.
                                     ______

                             National Center for Lesbian Rights
                                                        January 4, 2017
    Hon. Nancy Pelosi,
    U.S. House of Representatives,
    Washington, DC.

    Hon. Steny Hoyer,
    U.S. House of Representatives,
    Washington, DC.

    RE: Floor vote of the Midnight Rules Relief Act of 2017 (H.R. 21)

    Dear Democratic Leader Pelosi and Democratic Whip Hoyer:

        The undersigned lesbian, gay, bisexual, transgender, and queer
    (LGBTQ) and allied organizations, strongly oppose H.R. 21, the Midnight
    Rules Relief Act of 2017, which is being voted on in the House today.
        H.R. 21 would amend the Congressional Review Act to allow
    disapproval en banc of all regulations finalized near the end of
    presidential terms.
        The proposed legislation is based on a fatally flawed premise-
    namely, that regulations which are proposed or finalized during the so-
    called ``midnight'' rulemaking period are rushed and inadequately
    vetted. In fact, the very opposite is true. There are currently dozens
    of public health and safety regulations that have been in the
    regulatory process for years or decades, including many that date from
    the Obama Administration's first term or implement laws passed in the
    first term. Some even predate the Obama Administration entirely.
        In July 2016, Public Citizen released a report \1\ that compared
    rulemaking lengths for rules finalized in the ``midnight'' or
    presidential transition period to those that were finalized outside of
    this period. The results were noteworthy. The report found that rules
    issued during the presidential transition period spent even more time
    in the rulemaking process and received even more extensive vetting than
    other rules.
    ---------------------------------------------------------------------------
        \1\ PUBLIC CITIZEN, SHINING A LIGHT ON THE ``MIDNIGHT RULE''
    BOOGEYMAN: AN ANALYSIS OF ECONOMICALLY SIGNIFICANT RULES REVIEWED BY
    OIRA, (July, 2016), http://citizen.org/documents/Midnight-Regs-Myth.pdf
    ---------------------------------------------------------------------------
        After examining all economically significant rulemakings that have
    been finalized since 1999, Public Citizen's report found that rules
    issued during the transition period took on average 3.6 years to
    complete--almost an entire presidential term--compared to 2.8 years for
    all other rules. Likewise, the time it took the U.S. Office of
    Information and Regulatory Affairs (OIRA) to review midnight rules was
    no shorter, and in some cases longer, than non-midnight rules.
        In addition, many of these regulations are mandated by Congress and
    have missed rulemaking dead lines prescribed by Congress. Referring to
    regulations that have been under consideration by Federal agencies for
    years, and in some instances decades, as ``rushed'' is misleading and
    false.
        Prominent administrative law experts have also concluded that the
    concerns regarding these regulations are not borne out by the evidence.
    For example, in 2012 the Administrative Conference of the United States
    (ACUS) conducted an extensive study of regulations finalized near the
    end of previous presidential terms and found that many ``midnight
    regulations'' were ``relatively routine matters not implicating new
    policy initiatives by incumbent administrations.'' \2\
    ---------------------------------------------------------------------------
        \2\ Administrative Conference Recommendation 2012 2,Midnight Rules,
    Adopted June 14, 2012, pp. l-2, at http://www.acus.gov/wp-content/
    uploads/downloads/2012/06/Finai-Recommendation-2012-2-Midnight-
    Rules.pdf
    ---------------------------------------------------------------------------
        ACUS also found that the ``majority of the rules appear to be the
    result of finishing tasks that were initiated before the Presidential
    transition period or the result of deadlines outside the agency's
    control (such as year end statutory or court-ordered deadlines).'' ACUS
    concluded that ``the perception of midnight rulemaking as an unseemly
    practice is worse than the reality.''
        Indeed, opponents of midnight regulations have not presented any
    persuasive empirical evidence supporting claims that regulations
    finalized near the end of presidential terms were rushed or did not
    involve diligent compliance with mandated rulemaking procedures.
    Instead, those opponents make unsubstantiated claims based solely on
    when a regulation was finalized, ignoring the marathon rulemaking
    process that those rules underwent.
        In reality, compliance with the current lengthy regulatory process
    prevents agencies from finalizing new regulations efficiently, and thus
    earlier in presidential terms. This is because many of the regulations
    that Congress intended to provide the greatest benefits to the public's
    health, safety, financial security, and the environment currently take
    several years,\3\ decades in some instances, for agencies to implement
    due to the extensive and, in many cases, redundant procedural and
    analytical requirements that comprise the rulemaking process.
    ---------------------------------------------------------------------------
        \3\ PUBLIC CITIZEN, UNSAFE DELAYS: AN EMPIRICAL ANALYSIS SHOWS THAT
    FEDERAL RULEMAKINGS TO PROTECT THE PUBLIC ARE TAKING LONGER THAN EVER
    (June, 2016), http://www.citizen.org/documents/Unsafe-Delays-Report.pdf
    ---------------------------------------------------------------------------
        Indeed, we maintain that the inherent inefficiency of the current
    regulatory process, leading to regulatory delays and paralysis across
    agencies, is the primary area in most of need of urgent attention and
    reform by this Congress.
        In the end, it is difficult to overlook the tragic irony at the
    heart of H.R. 21. The bill would empower Congress to use the
    Congressional Review Act (CRA) a process that is rushed and
    nontransparent and that discourages informed decisionmaking to block at
    the 11th hour rules, such as the Department of Labor rule protecting
    employees of Federal contractors and subcontractors from discrimination
    based on their sexual orientation or gender identity, that have
    completed the journey through the onerous rulemaking process.
        Unlike the CRA's expedited procedures, agency rules are subjected
    to myriad accountability mechanisms, including the requirements to
    notify the public about potential rulemaking and provide the public
    with an opportunity to comment. Also, for each rule the agency must
    articulate a policy rationale that is supported by the rulemaking
    record and consistent with the requirements of the authorizing statute.
    In contrast, members of Congress do not have to articulate a valid
    policy rationale--or any rationale at all in support of CRA resolutions
    of disapproval. Quite simply, they can be, and often are, an act of
    pure politics.
        H.R. 21 would make the situation even worse. It would, in effect,
    demand that all members of Congress have adequate expertise on all of
    the rules that would be targeted by a single en banc disapproval
    resolution. Such a scenario would be highly unlikely.
        It would also risk encouraging members to engage in ``horse
    trading'' to add still more rules to the en banc disapproval resolution
    until enough votes have been gathered to ensure the resolution's
    passage. Surely, this approach to policymaking cannot be defended as
    superior to that undertaken by regulatory agencies.
        The Obama Administration ends on January 20, 2017. It is incumbent
    on them to do their constitutional duty to implement the laws of
    Congress until that date. We urge members to reject both the bill and
    false and misleading rhetoric that bears no reality to the real
    problems of excessive and systemic delay in the regulatory process.
        We strongly urge opposition to H.R. 21, the Midnight Rules Relief
    Act of 2017.
                Sincerely,

    Family Equality Council
    GLSEN
    Lambda Legal
    National Asian Pacific American Women's Forum
    National Center for Lesbian Rights
    National Center for Transgender Rights
    National Coalition for LGBT Health
    National Health Law Program (NHeLP)
    National LGBTQ Task Force Action Fund
    Pride at Work
    Sexuality Information and Education Council of the U.S. (SIECUS)
    The Trevor Project
    Witness to Mass Incarceration

                                     ______

                                                        January 4, 2017
    Dear Representative,

        On behalf of our 2.4 million members and activists, we strongly
    urge you to oppose the so called Midnight Rules Relief Act of 2017.
    This bill is designed to make it easier to repeal public safeguards put
    in place by the Obama Administration. It would amend the Congressional
    Review Act (CRA) to enable Congress to repeal many regulations at once
    by packaging them in a single resolution that would get expedited
    consideration and require only a majority of votes for passage in the
    Senate.
        The bill would allow Congress to block crucial public health,
    environmental, safety, consumer and financial safeguards without due
    consideration. Its goal is not to address last minute regulations. It
    is to dismantle reasonable and effective public protections for the
    benefit of narrow special interests.
        The Midnight Rules Relief Act is based on several faulty premises,
    starting with its name. First, the bill applies to any action an
    Administration has taken during its entire last year in office. The
    bill is not targeted at any last-minute actions but seeks to deny the
    President the authority he was elected to use for an entire year, in
    effect reducing his term to three years--just as the Senate did by
    blocking consideration of Merrick Garland for the Supreme Court.
        Second, even regulations issued in the last months of a term are
    not last minute exercises, but the culmination of years of work and
    public process. Often, they did not become final until recently because
    of review or discussion of comments submitted by industry. An extensive
    body of statutes already avoids hasty rulemaking and requires
    transparency and public participation. These laws include the
    Administrative Procedure Act, the Regulatory Flexibility Act, the
    Unfunded Mandates Reform Act, and the Paperwork Reduction Act. These
    laws along with longstanding executive orders require that agency
    actions meet a very high threshold of due diligence and complex
    analysis. In fact, those regulations that are issued late in an
    administration are often those that have received the most preparation
    and analysis.
        The term ``midnight regulation'' is simply an effort to cast a
    stigma on public protections from the past year that have gone through
    a process that is no different from that for any other safeguard.
        Moreover, the bill is simply an effort to actually reduce--not
    enhance scrutiny of rules. The CRA has many problems but at least it
    requires regulations to be considered individually. This is important
    given the CRA's expedited procedures, its inflexibility--rules can only
    be repealed in their entirety, not altered and its potential
    implications--passage of a CRA repeal prevents an agency from ever
    doing something ``substantially the same'' ever again.
        This bill would throw such caution to the winds. An unlimited
    number of disparate regulations could be packaged together, making
    focus on any specific regulation difficult, if not impossible, and
    trying to lure Congress into voting down many regulations if they want
    to repeal any single measure in the package. This is the very type of
    ``omnibus'' legislating that conservatives and the Republican
    leadership often decry.
        Midnight Rules Relief Act is the opposite of a ``good government
    reform'' bill. It would make it easier to repeal protections the public
    supports by making it harder for Congress to consider--and easier for
    Congress to hide--the impacts of its actions. We urge you to oppose the
    Midnight Rules Relief Act and reject the false premise behind it.
                Sincerely,
                                               Scott Slesinger,
                                                  Legislative Director,
                                         Natural Resources Defense Council.
                                     ______

             International Union, United Automobile, Aerospace
             and Agricultural Implement Workers of America--UAW
                                        Washington, DC, January 4, 2017

    Dear Representative,

        On behalf of the more than one million active and retired members
    of the International Union, United Automobile, Aerospace and
    Agricultural Implement Workers of America, UAW, we strongly urge you to
    oppose the Regulations from the Executive in Need of Scrutiny (REINS)
    Act of 2017 (H.R. 26). The REINS Act is an extremely egregious bill
    that would effectively prevent the Federal Government from doing its
    job to protect the public interest.
        The REINS Act would make it nearly impossible to ensure the health
    and safety of the American public. Americans have an expectation that
    their government works for them and will protect them from toxic food,
    air, water and products that they use in their daily lives. If the
    REINS Act becomes law, It would absolve Congress of some of its
    constitutional duties and responsibilities AND put the public at risk.
        Under this bill, major regulation would not take effect unless it
    were approved by both chambers of Congress within a limited period
    oft''1me, thus amending every existing regulatory statute, including
    those that we know protect the water that we drink and the very air
    that we breathe.
        The updated version of this draconian bill cynically adds a one-
    year delay that would all but ensure that REINS could not get in the
    way of vigorous efforts to repeal regulations that help workers and
    consumers.
        UAW urges you to vote NO on this misguided bill and instead work to
    strengthen worker and consumer protections. Thank you for considering
    our views on this matter.
                Sincerely,
                                                   Josh Nassar,
                                                  Legislative Director.
                                     ______

                                                        January 4, 2017
    VIA E-MAIL
    U.S. House of Representatives
    Washington, DC

    Dear Representative:

        Welcome to the 115th Congress. In this first week of session, on
    behalf of the members of the United Steelworkers union (USW), I write
    in opposition to the Regulations from the Executive in Need of Scrutiny
    Act of 2017 (``REINS Act'') and the Midnight Rules Relief Act of 2017.
        Regulations are indispensable for protecting public health,
    welfare, safety, and our environment. For our members, regulations
    allow them to work and live in safer, cleaner, more prosperous
    communities across the country. In most cases, the benefit of
    regulations outweigh the costs.
        Congress has granted Federal agencies authority to promulgate and
    enforce regulations using agency policy, scientific, and technical
    expertise. In some cases, Congress has required agencies to issue
    certain rules. The rulemaking process already requires extensive
    review, public input, and scrutiny over several years to finalize a
    regulation.
        However, the REINS Act would obstruct the ability of Federal
    agencies to enact rules by inappropriately injecting Congress and
    political considerations into the regulatory process. The REINS Act
    would require both houses of Congress to approve every major regulation
    within 70 days before it can take effect. By doing nothing or through
    partisan gridlock, Congress could stop all major regulations from being
    finalized, including those that are not controversial.
        The Midnight Rules Act is based on the flawed premise that
    regulations finalized at the end of an Administration are rushed and
    inadequately vetted. In fact, regulations take many years to complete--
    on average 3.6 years for economically significant rules. This bill
    would amend the Congressional Review Act to allow disapproval en banc
    of all regulations finalized near the end of presidential term without
    regard for the merits of individual rules.
        The American people and American businesses need smart and sensible
    regulation, not rash political decisions. Congress should be acting to
    improve the regulatory system rather than working to dismantle it. The
    REINS Act and the Midnight Rules Act will benefit only those who oppose
    all regulation at all costs. Our union urges you to vote ``NO'' on the
    REINS Act and the Midnight Rules Relief Act.
                Sincerely,
                                                 Leo W. Gerard,
                                               International President.
    LWG/cdk
                                     ______

                                                        January 5, 2017
    Dear Representative:

        Our organizations write to you today to oppose so-called regulatory
    reform legislation including H.R. 26, the Regulations from the
    Executive in Need of Scrutiny Act of 2017 and H.R. 5, the Regulatory
    Accountability Act. These bills could block or weaken commonsense
    safeguards that protect our nation's health from the dangers of
    tobacco.
        The burden caused by tobacco use is staggering. Each day about 400
    teens and children become regular, daily smokers; half will die
    prematurely as a result. And each year, almost half a million Americans
    die from tobacco, costing our economy and health care system
    approximately $170 billion annually. Productivity losses from premature
    death caused by tobacco total an additional $150 billion annually, with
    another $5.6 billion in productivity losses due to secondhand smoke
    exposure.
        These bills would result in redundant reviews, analyses or
    processes that would tie the hands of Federal agencies, including the
    Food and Drug Administration (FDA), leaving the agencies unable to
    effectively implement the law and thereby creating opportunities for
    tobacco industry lobbyists to influence and stall much-needed rules to
    protect our Nation from the dangers of tobacco use.

       H.R. 26, the REINS Act, would require all new economically
            significant regulations to be approved within a narrow window
            of time by both chambers of Congress before taking effect.
            Congressional inaction would constitute a legislative ``veto''
            of any important new regulation or safeguard.

       H.R. 5, the Regulatory Accountability Act, would add more
            than 80 burdensome and time consuming hurdles to the Federal
            rule-making process--paralyzing FDA and other agencies and
            limiting their ability to respond to public health threats. It
            would eliminate the historic deference the courts have given to
            technical experts at Federal agencies.

        In 2009, an overwhelming bipartisan majority in Congress passed the
    Family Smoking Prevention and Tobacco Control Act of 2009 to curb the
    leading preventable cause of death--tobacco use. With passage of this
    law, Congress empowered FDA to implement commonsense safeguards to
    protect children from predatory tobacco industry marketing, to set
    meaningful product standards, and, for the first time, to provide
    oversight over all tobacco products.
        Current law requires Federal agencies to carefully consider all
    relevant information and to address public comments before finalizing a
    new rule. The process is transparent and open and permits participation
    and comments from all stakeholders--the public, scientific and public
    interest, and public health organizations, as well as industry.
    Congress should not create new barriers to saving lives from tobacco,
    but rather should permit the FDA to act to implement the Family Smoking
    Prevention and Tobacco Control Act with the urgency that Congress
    recognized is necessary to address the cancer, heart disease, chronic
    obstructive pulmonary disease, and health care costs caused by tobacco
    use in America.
        Our organizations ask you to oppose H.R. 26 and H.R. 5 and any
    other legislation that would delay or halt meaningful oversight of
    tobacco products and other critical public health regulations,
    including the implementation of the Family Smoking Prevention and
    Tobacco Control Act.
                Sincerely,

    American Heart Association
    American Lung Association
    Campaign for Tobacco-Free Kids
                                     ______

                          American Sustainable Business Council
                                        Washington, DC, January 5, 2017

    Dear Representative:

        I write to urge you to vote no on the Regulations from the
    Executive In Need of Scrutiny (REINS) Act of 2017 (H.R. 26). The
    passage of REINS would unnecessarily complicate the development of
    common sense marketplace rules that businesses need and will allow
    Congress to delay the creation of Federal standards and safeguards
    which promote a healthy environment for responsible businesses to
    succeed.
        The anti-regulatory policy this bill represents constitutes a shift
    away from 40 years of regulatory precedent that protects the public
    against a range of market imperfections. The bill would have the
    unintended consequence of shifting the burden of proof for
    environmental, health and safety issues back to taxpayers and away from
    powerful corporate interests. Eroding the operational capacity of
    regulatory agencies to do their jobs, as this bill appears designed to
    do, would not foster productive growth among small and mid-sized firms.
    Instead these actions would allow the largest firms to further dominate
    the marketplace.
        The American Sustainable Business Council (ASBC) is a growing
    national coalition of businesses and business organizations committed
    to advancing policies that support a vibrant and sustainable economy.
    ASBC, through its partner organizations, represents over 200,000
    businesses and more than 325,000 business professionals, including
    industry associations, local and state chambers of commerce, micro-
    enterprise, social enterprise, green and sustainable business, local
    living economy groups, woman and minority business leaders, and
    investor networks.
        As I have written before, ASBC has a different view than some
    inside the Beltway who claim that regulations are holding back our
    economic recovery. ASBC, along with other small business organizations,
    released a national, scientific poll of small business owners, which
    found that small businesses don't see regulations as a major concern.
        The polling confirmed that small business owners value regulations
    if they am well-constructed and fairly enforced. It is important to
    note that the majority of those polled were Republican, further
    emphasizing that this is more about what is fair and good for all
    business

       Small business owners believe certain government regulations
            play an important role.

       86 percent believe some regulation is necessary for a modern
            economy and 93 percent of respondents believe their business
            can live with some regulation if it is fair and manageable.

       78 percent of small employers agree regulations are
            important in protecting small businesses from unfair
            competition and to level the playing field with big business.

       79 percent of small business owners support having dean air
            and water in their community in order to keep their family,
            employees and customers healthy.

       61 percent support standards that move the country towards
            energy efficiency and clean energy.

        Supporting the ASBC poll is a Wells Fargo/Gallup poll of small
    businesses conducted October 2014, which found that only seven percent
    mentioned regulations as being an important challenge.
        The REINS Act goes too far and undermines the Federal regulatory
    process. By giving Congress authority to invalidate rules it doesn't
    like undercuts the integrity of the process that relies on subject
    matter experts and public comment.
        Blocking, weakening or delaying critical standards and safeguards
    for political reasons will only worsen the uneven economic playing
    field that leaves many responsible businesses at a competitive
    disadvantage. It also inhibits innovation in new technologies that can
    create good, sustainable jobs and create safer products, workplaces and
    communities. I urge you to vote against H.R. 26.
                Sincerely,
                                                  David Levine,
                                                    CEO and Co-founder.
                                     ______

                                                        AFL-CIO
                                                       January 10, 2017
                               Legislative Alert
    Dear Representative:

        On behalf of the AFL CIO, I am writing to express our strong
    opposition to H.R. 5, the Regulatory Accountability Act of 2017. This
    sweeping bill, which packages six anti-regulatory measures passed by
    the House in the last Congress, would upend 40 years of labor, health,
    safety and environmental laws, threaten new needed protections leaving
    workers and the public in danger. The AFL CIO urges you to oppose this
    harmful legislation.
        The Regulatory Accountability Act (RAA) is drafted as an amendment
    to the Administrative Procedure Act (APA), but it goes far beyond
    establishing procedures for rulemaking. The RAA acts as a ``super
    mandate'' overriding the requirements of landmark legislation such as
    the Occupational Safety and Health Act and Mine Safety and Health Act.
    The bill would require agencies to adopt the least costly rule, instead
    of the most protective rule as is now required by the OSH Act and MSH
    Act. It would make protecting workers and the public secondary to
    limiting costs and impacts on businesses and corporations.
        The RAA will not improve the regulatory process; it will cripple
    it. The bill adds dozens of new analytical and procedural requirements
    to the rulemaking process, adding years to an already slow process. The
    development of major workplace safety rules already takes 810 years or
    more, even for rules where there is broad agreement between employers
    and unions on the measures that are needed to improve protections.
    OSHA's silica standard to protect workers from deadly silica dust took
    nearly 19 years and the beryllium standard 15 years. The RAA will
    fm1her delay needed rules and cost workers their lives.
        The RAA substitutes formal rulemaking for the current procedures
    for public participation for high impact rules and other major rules
    upon request. These formal rulemaking procedures will make it more
    difficult for workers and members of the public to participate, and
    give greater access and influence to business groups that have the
    resources to hire lawyers and lobbyists to participate in this complex
    process. For agencies that already provide for public hearings, such as
    OSHA and MSHA, the bill would substitute formal rulemaking for the
    development of all new rules, overriding the effective public
    participation processes conducted by these agencies.
        H.R. 5 would subject all agencies--including independent agencies
    like the Securities and Exchange Commission, the National Labor
    Relations Board (NLRB), Consumer Product Safety Commission (CPSC), and
    the Consumer Financial Protection Bureau (CFPB) to these new analytical
    and procedural requirements. It would be much more difficult for
    agencies to develop and issue new financial reform rules and consumer
    protection rules required under recently enacted legislation.
        This radical legislation doesn't just apply to regulations; it
    would also require agencies to analyze the costs and benefits of major
    guidance documents, even though these documents are non-binding and
    have no legal force. Guidance documents are an important tool for
    agencies to disseminate information on significant issues and hazards
    quickly in order to protect the public and workers. For example, in
    response to the Ebola virus threat, the Centers for Disease Control
    (CDC) issued critical guidance documents in order to prevent the spread
    of disease, including recommendations for infection control and
    protections for healthcare workers and emergency responders. Similar
    guidance was issued was issued to prevent transmission of the Zika
    virus. Under the RAA's provisions, CDC would be required to assess the
    costs and benefits of these major guidance documents, making it
    virtually impossible to provide information and recommendations in a
    timely manner.
        H.R. 5 also includes a grab bag of other harmful anti-regulatory
    measures that thwart, weaken and undermine protections. The Separation
    of Powers Restoration Act abolishes judicial deference to agencies'
    statutory interpretations in rulemaking requiring a court to decide all
    relevant questions of law de novo, allowing courts to substitute their
    own policy judgements for the agencies' expert policy determinations.
    The Small Business Regulatory Flexibility Improvements Act (SBRFIA)
    imposes numerous unnecessary new analytical and procedural requirements
    on all agencies. It gives the Chief Counsel of the Small Business
    Administration's (SBA) Office of Advocacy, which in practice operates
    largely as a mouthpiece for large business interests, new broad powers
    to second guess and challenge agency rules. The Require Evaluation
    before Implementing Executive Wish lists Act (REVIEW Act) would
    automatically stay the implementation of any rule with an estimated
    annual cost of$1 billion that has been challenged, precluding courts
    from making this decision, and delaying protections. Other titles add
    even more unnecessary requirements to the rulemaking process.
        The Regulatory Accountability Act would gut the Nation's safety,
    health and environmental laws, stripping away protections from workers
    and the public. It would tilt the regulatory process solidly in favor
    of business groups and others who want to stop regulations and make it
    virtually impossible for the government to issue needed safeguards. The
    AFL-CIO strongly opposes H.R. 5 and urges you to vote against this
    dangerous legislation.
                Sincerely,
                                                William Samuel,
                                                              Director,
                                             Government Affairs Department.
                                     ______

                                      American Lung Association
                                                       January 10, 2017
    Dear Representative:

        The American Lung Association urges you to oppose H.R. 5, the
    Regulatory Accountability Act of 2017. Despite its name, the bill does
    not ensure regulatory accountability; rather, it represents a sweeping
    attack on the Federal Government's ability to set lifesaving public
    health protections.
    Standard of Least Costly for Industry Jeopardizes Health of Americans
        H.R. 5 directs Federal agencies to default to adopting the least
    costly standard for industry--not the standard that best protects
    health, even though existing statues require the tatter. This is a
    dangerous giveaway to polluters and the tobacco industry that penalizes
    the American people.
        Costs are already appropriately addressed in the Clean Air Act.
    Forty seven years ago, Congress intentionally wrote requirements in the
    Clean Air Act for the U.S. Environmental Protection Agency (EPA) to set
    standards that indicate what level of pollution is harmful to human
    health, based solely on health and medical science. Congress required
    that EPA work with states to implement cost effective cleanup measures
    to meet those standards. H.R. 5 would distort this process and could
    force EPA to prioritize costs to the industry over scientific evidence.
        With the Family Smoking Prevention and Tobacco Control Act,
    Congress tasked the Food and Drug Administration (FDA) with protecting
    the public from the proven dangers of tobacco use, including death from
    lung disease, cancer and heart disease, based on what is appropriate
    for the protection of the public health--not the tobacco industry. H.R.
    5 could force FDA to make decisions based on the cost to the tobacco
    industry instead of the public health--ignoring the tremendous human
    and economic toll tobacco inflicts on our Nation each year.
    Additional Unnecessary Requirements Delay Health Protections
        H.R. 5 would also impose dozens of procedural requirements that
    would increase costs of critical safeguards, or worse, delay or
    completely block lifesaving protections. Federal rules already go
    through extensive review, expert input, and public comment before they
    are finalized. The numerous additional analysis, reporting, and
    planning requirements imposed by this bill duplicate many existing
    requirements and amount to red tape that will hinder agencies from
    setting safeguards under the law to protect the public.
        H.R. 5 would also automatically halt enforcement of ``high impact''
    rules until all litigation on them is resolved. This unnecessary
    provision could delay lifesaving health protections, including against
    tobacco and outdoor air pollution, for years.
        The courts already have the ability to stay a rule being litigated
    if they determine that the party opposing the rule is likely to succeed
    on the merits. Automatically staying enforcement of all ``high impact''
    rules creates an incentive for frivolous lawsuits, even if the suit is
    unlikely to succeed, to avoid having to comply with the rule--
    potentially for years.
    Repeal of Judicial Deference to Agency Expertise
        H.R. 5 would also reverse a longstanding and well-established court
    decision, additionally delaying critical health protections for the
    public. When Congress writes a statute with unmistakable terms that
    reflect a dear policy intent, Executive Branch agencies are required to
    follow those terms and intent exactly. However, sometimes Congress
    intentionally writes a statute to be flexible or ambiguous, recognizing
    that it does not have the expertise to anticipate or address every
    contingency--especially for a statute that is designed to be flexible
    and effective over time, with changing circumstances. Agencies have
    extensive experience with the statutes they administer, as well as
    superior expertise on the scientific and technical matters that are at
    the heart of the actions carried out by the agencies.
        In 1984, the United States Supreme Court upheld this approach,
    confirming that when Congress is silent or ambiguous, deference is
    given to agencies for administrative interpretations.\1\ HR 5 would
    abandon this longstanding and well-established framework by mandating
    that the courts give less judicial deference to agencies with the
    relevant subject matter expertise. The bill would require a de novo
    standard of review--allowing the court to substitute its own
    judgement--for all relevant questions of Jaw, including the
    interpretation of constitutional and statutory provisions, and rules
    made by agencies.
    ---------------------------------------------------------------------------
        \1\ Chevron, U.S.A., Inc. v. Natural Resources Defense Council,
    Inc., 467 U.S. 837, 843 (1984).
    ---------------------------------------------------------------------------
        For example, FDA's Center for Tobacco Products has hundreds of
    scientists, epidemiologists, public health professionals,
    communications experts and others on staff to implement the Family
    Smoking Prevention and Tobacco Control Act FDA has been directed by
    Congress to make science based decisions that are ``appropriate for the
    protection of the public health,'' Inherent in the standards
    established by Congress, public health expertise is both necessary and
    required in order to carry out the law over time--expertise that the
    judicial branch is unlikely to possess in almost all cases.
        In the Clean Air Act, Congress intentionally directed the EPA to
    set limits on specific air pollutants so that the limits ``protect
    public health with an adequate margin of safety.'' EPA has established
    a multi-year process to review the thousands of health and medical
    studies that must inform that decision. During that process, EPA
    produces detailed analyses of the science and policy implications,
    which are reviewed multiple times by an independent panel of outside
    scientists and physicians. EPA further incorporates public comment on
    these analyses as scores of EPA researchers and, ultimately, the
    Administrator makes the final determination.
        If passed, this bill would require judges to make decisions far
    outside their areas of expertise and with limited access to
    information, rather than continue to defer to the professional and
    informed decisions of scientists, physicians, economists, engineers,
    and other professional experts that work within these agencies. This is
    an unprecedented and dangerous move away from traditional judicial
    deference that has been successful and effective for more than three
    decades.
        We urge you to oppose H.R. 5. This bill would make it harder to
    protect the health of Americans from the dangers of unhealthy air and
    tobacco by imposing years of delays, rejecting science, and burying
    Federal agencies in unnecessary red tape.
                Sincerely,
                                              Harold P. Wimmer,
                                            National President and CEO,
                                                 American Lung Association.
                                     ______

                                  Union of Concerned Scientists
                                                       January 10, 2017
    Dear Representative:

        The Center for Science and Democracy at the Union of Concerned
    Scientists, representing more than 500,000 members and supporters
    across the country, strongly opposes H.R. 5, the Regulatory
    Accountability Act of 2017. H.R. 5 should be named the Regulatory
    Impossibility Act, as it would bring our science-based system of
    protecting the public from health, safety, and environmental dangers to
    a grinding halt.
        H.R. 5 resurrects and combines a number of ill-advised and radical
    proposals that would together create excessive delays and extreme
    hurdles in the regulatory process, discouraging or preventing agencies
    from developing and finalizing crucial public protections. It is
    irresponsible and undemocratic to rush through, in the second week of a
    new Congress, a complicated and radical legislative proposal without
    giving any new members the opportunity to evaluate what they are voting
    on.
        At the center of H.R. 5 is a version of the Regulatory
    Accountability Act (RAA) of 2015. This title will impose at least 70
    new burdensome and time consuming procedural requirements on resource-
    strapped agencies. These onerous requirements not only fail to make any
    real improvements or efficiencies in the regulatory system, but they
    would inevitably lead to significant delays to a rulemaking process
    that is already cumbersome and lengthy. This result, which seems to be
    the real intention of the RAA, leads to ever more procedural
    requirements that add no new information or perspective but simply
    requires agencies to jump through needless additional hoops to protect
    the public.
        Furthermore, the RAA provision would force agencies to ignore
    science by requiring them to finalize rules that are the least costly
    to industry. This means that agencies would be required by law to
    protect your constituents from dangerous chemicals based on what is
    least costly to industry instead of what doctors determine adequately
    protects the American people.
        The Union of Concerned Scientists is particularly concerned about
    the impact H.R. 5 would have on how science informs the policymaking
    process. Because the legislation allows for limitless delays through
    repetitive and redundant comment and response requirements, we are
    concerned that fundamental public health and safety protections will be
    delayed or abandoned. Last year, Congress overwhelmingly voted to
    remove similar language from a law that paralyzed the ability of
    Federal agencies to regulate known carcinogens. If this language were
    to be applied to all agency rulemaking, agencies would be compromised
    from protecting the public, despite clear scientific evidence of major
    health risks for decades.
        Overall, the RAA proposes changes to the rulemaking process that
    would further stack the deck in favor of regulated industries, which
    already enjoy significant influence over the rulemaking process, and
    give wealthy corporations increased leverage to challenge and undermine
    science-based safeguards during rulemaking and in court.
        Other provisions in H.R. 5 that would paralyze the development of
    science-based safeguards include:

       A provision that would abolish agency deference, a well-
            established framework under Chevron U.S.A. Inc. v. Natural
            Resources Defense Council\1\ which allows Federal agencies that
            have sufficient scientific and technical expertise to interpret
            and administer laws passed by Congress. Not only would judges
            would be given the authority to override scientific expertise
            and the administrative record and substitute their own inexpert
            view, but agencies would be hamstrung waiting for interpretive
            clarity before moving forward with urgently needed health,
            safety and environmental protections. Courts should defer to
            agency technical experts for landmark health, safety, and
            environmental laws to be implemented effectively.
    ---------------------------------------------------------------------------
        \1\ 467 U.S. 837 (1984)

       A provision that would require a court reviewing a ``high-
            impact'' rule to automatically block its enforcement until
            litigation is resolved. This tactic could extend implement
            crucial public health safeguards by years, encouraging more
            litigation and needlessly exposing the public to threats. It is
            notable that this is a one-sided requirement. It would not
            prevent a polluter or other regulated entity from moving
    ---------------------------------------------------------------------------
            forward with their plans until all litigation is resolved.

        H.R. 5 is particularly harmful because of its impact on science-
    based, bipartisan laws, such as the Clean Water Act and Clean Air Act
    which enjoy widespread public support. These laws direct Federal
    agencies to uphold core national values such as ensuring access to
    clean air and drinking water. If Congress wants to roll back these
    laws, it should do so directly, not through deceptively named
    ``regulatory reform'' legislation.
        Science-based regulations are vital to protecting the health and
    safety of all Americans, but especially African American and Latino
    communities, which often face disproportionate public health and
    environmental threats. The legislation would therefore exacerbate
    existing racial disparities. Many of these communities, often on the
    ``fenceline'' of major industrial facilities, have been waiting for
    decades to address major health and safety issues. The changes proposed
    in H.R. 5 will inevitably extend those delays even further, with no
    relief in sight.
        Do not be fooled. H.R. 5 does not improve our regulatory system. It
    would cripple the ability of Federal agencies protect the public,
    making it nearly impossible for the Federal Government to implement
    strong, science based safeguards. This bill puts constraints on Federal
    science and would essentially nullify popular, long-standing laws. It
    would shift the burden of dealing with public health and environmental
    threats from those who create them to American taxpayers. For all of
    these reasons, we strongly urge you to vote no on H.R. 5.
                Sincerely,
                                    Andrew A. Rosenberg, Ph.D.,
                              Director, Center for Science & Democracy,
                                             Union of Concerned Scientists.
                                     ______

                                  Consumer ReportsTM
                                                       January 10, 2017
    U.S. House of Representatives
    Washington, DC

    Dear Representative:

        Consumer Reports and its policy and mobilization arm, Consumers
    Union, urge you to vote no on H.R. 5, the Regulatory Accountability Act
    of 2017. This dangerous proposal would do severe damage to protections
    consumers depend on for health, safety, and honest treatment.
        Congress has charged Federal agencies with protecting the public
    from threats such as tainted food, hazardous products, dirty air and
    water, and predatory financial schemes. It established these agencies,
    such as the Food and Drug Administration, Consumer Product Safety
    Commission, Environmental Protection Agency, and Consumer Financial
    Protection Bureau, so that public protections could be overseen by
    professional civil servants with specific technical and scientific
    expertise. In developing regulations, agencies must act in accordance
    with the statute and with established rulemaking procedures that
    require transparency and full opportunity for public input, including
    input from the industry that will be subject to the regulation.
        We agree that the regulatory process can certainly be improved. We
    stand ready to support constructive efforts to reduce delays and costs
    while preserving important protections.
        However, rather than streamlining and improving the regulatory
    process, the Regulatory Accountability Act of 2017 would make current
    problems even worse. Under H.R. 5, agencies would be required to
    undertake numerous costly and unnecessary additional analyses for each
    rulemaking, which could grind proposed rules to a halt while wasting
    agencies' resources. Collectively, these measures would create
    significant regulatory and legal uncertainty for businesses, increase
    costs to taxpayers and businesses alike, and prevent the Executive
    Branch from keeping regulations up to date with the rapidly changing
    modern economy.
        One of the most damaging effects of H.R. 5 is that it would, with
    only limited exceptions, require Federal agencies to identify and adopt
    the ``least costly'' alternative of a rule it is considering.
    Currently, landmark laws like the Clean Air Act, Consumer Product
    Safety Act, and Securities Exchange Act require implementing agencies
    to put top priority on the public interest. H.R. 5 would reverse this
    priority by requiring agencies to value the bottom line profits of the
    regulated industry over their mission to protect consumers and a fair,
    well-functioning marketplace.
        H.R. 5 also includes several other damaging measures that have not
    been included previously as part of the Regulatory Accountability Act.
    These measures would add unjustifiable costs and unce11ainty to the
    rulemaking process, and greatly impair regulatory agencies' work.
        Contrary to its name, the ``Separation of Powers Restoration Act''
    (Title II of H.R. 5) would disrupt the carefully developed
    constitutional balance between the legislative, executive, and judicial
    branches. Courts giving appropriate deference to reasonable agency
    interpretations of their own statutes, as reflected in Chevron U.S.A.,
    Inc., v. NRDC, 467 U.S. 837 (1984), is a well-settled approach that
    promotes sound and efficient agency enforcement, with effective
    judicial review. Under the Chevron doctrine, courts retain full
    judicial power to review agency legal interpretations, but do not
    simply substitute their own judgment for an agency's. Chevron
    recognizes that agencies accumulate uniquely valuable expertise in the
    laws they administer, which makes deference from reviewing courts-which
    do not have that expertise appropriate.
        Overturning this approach would lead to disaster. It would severely
    hamper effective regulatory agency enforcement of critical protections
    on which consumers depend. As the Supreme Court stated in City of
    Arlington, Tex. v. F.C.C. C., 133 S. Ct. 1863, 1874 (2013): ``Thirteen
    Courts of Appeals applying a totality-of-the-circumstances test would
    render the binding effect of agency rules unpredictable and destroy the
    whole stabilizing purpose of Chevron. The excessive agency power that
    the dissent fears would be replaced by chaos.'' Such a move also would
    needlessly force the courts to repeatedly second-guess agency decisions
    that the courts have already concluded the agency is in the best
    position to make.
        The REVIEW Act and the ALERT Act (Titles IV and V of H.R. 5) would
    cause additional needless and damaging delays to public protections.
    The REVIEW Act--which would block ``high-impact'' rules until every
    industry legal challenge has run its full course--would tie up agencies
    in court indefinitely, potentially making it impossible to address
    pressing national problems. The ALERT Act would subject most new rules
    to a delay of at least six months, and require agencies to waste
    resources complying with repetitive reporting requirements.
        Like the bill's proponents, we believe regulations should be smart,
    clear, and cost effective. However, H.R. 5 does not accomplish this
    objective. Instead of improving the regulatory process, the Regulatory
    Accountability Act of 2017 would make it dramatically slower, more
    costly to the nation, and far less effective at protecting health,
    safety, and other essential consumer priorities.
        We strongly urge you to stand up for critical public protections
    and vote no on H.R. 5.
                Sincerely,

    Laura MacCleery,

    Vice President,

    Consumer Policy and Mobilization,

    Consumer Reports.

    George P. Slover,

    Senior Policy Counsel,

    Consumers Union.

    William C. Wallace,

    Policy Analyst,

    Consumers Union.

                                     ______

                                 Consumer Federation of America
                                       Washington, DC, January 10, 2017

    RE: OPPOSE LEGISLATION ON HOUSE FLOOR TO UNDERMINE CRUCIAL CONSUMER
                PROTECTIONS: H.R. 5

    Dear Representative:

        The Regulatory Accountability Act of 2017 (H.R. 5) would handcuff
    all Federal agencies in their efforts to protect consumers. H.R. 5 is a
    vastly expanded version of previous versions of the Regulatory
    Accountability Act (RAA). H.R. 5 not only significantly and
    problematically amends the Administrative Procedures Act (APA) which
    has guided Federal agencies for many decades but also now incorporates
    five additional bills that thwart the regulatory process: the Small
    Business Regulatory Flexibility Improvement Act; the Require Evaluation
    before Implementing Executive Wishlists Act (REVIEW Act); the All
    Economic Regulations are Transparent Act (ALERT Act); the Separation of
    Powers Restoration Act; and the Providing Accountability Through
    Transparency Act. These titles make an already damaging bill even
    worse.
        Specifically, the RAA would require all agencies, regardless of
    their statutorily mandated missions, to adopt the least costly rule,
    without consideration of the impact on public health and safety or the
    impact on our financial marketplace. As such, the RAA would override
    important bipartisan laws that have been in effect for years, as well
    as more recently enacted laws to protect consumers from unfair and
    deceptive financial services, unsafe food and unsafe consumer products.
        For example, the RAA would likely have prevented the Federal
    Reserve from adopting popular credit card rules under the Truth in
    Lending Act in 2008 that prevented card companies from unjustifiably
    increasing interest rates and fees on consumers. This is because these
    far reaching changes to abusive practices that were widespread in the
    marketplace were not the ``least costly'' options that were considered,
    although they were arguably the most cost-effective.
        The RAA would have a chilling impact on the continued promulgation
    of important consumer protections. Had it been in effect, for example,
    the RAA would have severely hampered the implementation of essential
    and long-standing food safety regulations, such as those requiring
    companies to prevent contamination of meat and poultry products with
    deadly food borne pathogens. In fact, the Centers for Disease Control
    and Prevention has credited the implementation of regulations
    prohibiting contamination of ground beef with E. coli 0157:H7 as one of
    the factors contributing to the recent success in reducing E. coli
    illnesses among U.S. consumers.\1\ But such benefits are impossible to
    quantify before a rule is enacted.
    ---------------------------------------------------------------------------
        \1\ http://www.cdc.gov/mmwr/preview/mmwrhtml/mm6022a5.htm?s_cid-
    mm6Q22a5_w
    ---------------------------------------------------------------------------
        Further, had the RAA been in effect the necessary child safety
    protections required by the Consumer Product Safety Improvement Act of
    2008 (CPSIA) may have never been implemented. For example, between 2007
    and 2011 the Consumer Product Safety Commission (CPSC) recalled 11
    million dangerous cribs. These recalls followed 3,584 reports of crib
    incidents, which resulted in 1,703 injuries and 153 deaths.\2\ As a
    direct result of the CPSIA, CPSC promulgated an effective mandatory
    crib standard that requires stronger mattress supports, more durable
    hardware, rigorous safety testing, and stopped the manufacture and sale
    of drop side cribs. If the RAA were implemented, such a life saving
    rule could have been delayed for years or never promulgated at all, at
    countless human and financial cost.
    ---------------------------------------------------------------------------
        \2\ http://www.consumerfed.org/pdf/crib-standards-press-release-6-
    28-11.pdf
    ---------------------------------------------------------------------------
        The RAA also would add dozens of additional substantive and
    procedural analyses, as well as judicial review to the rulemaking
    process for every major rule. It would: expand the kind of rules that
    must go through a fonnal rulemaking process; require agencies to
    determine ``indirect costs'' without defining the term; require an
    impossible-to-conduct estimation of a rule's impact on jobs, economic
    growth, and innovation while ignoring public health and safety
    benefits; and expand the powers of the White House's Office of
    Management and Budget's Office of Information and Regulatory Affairs to
    throw up numerous rulemaking roadblocks, including requiring them to
    establish guidelines for conducting cost-benefit analysis. This would
    further delay or prevent the promulgation of much needed consumer
    protections.
        The new titles of H.R. 5 also add numerous roadblocks to the
    promulgation of necessary consumer protections. The Separation of
    Powers Restoration Act (Title II) eliminates judicial deference that
    agencies are granted when rules are challenged in court. This allows
    judicial activism and political considerations to trump agency
    expertise. The Small Business Regulatory Flexibility Improvement Act
    (Title III) would increase regulatory delays and create new
    opportunities for court challenge to regulations. The Require
    Evaluation before Implementing Executive Wishlists Act (REVIEW Act)
    (Title IV) would encourage frivolous legal challenges and infuse the
    regulatory process with years of delay by requiring eou11s reviewing
    ``high impact'' regulations to automatically ``stay'' or block the
    enforcement of such regulations until all litigation is resolved. The
    All Economic Regulations are Transparent Act (ALERT Act) (Title V)
    would also blatantly and purposefully lengthen the regulatory process
    by requiring a six-month delay in the development of regulations.
        We urge you to oppose this significant threat to consumer
    protection, a fair marketplace, health, and safety posed by H.R. 5. If
    adopted, this proposal would waste Federal resources, minimize the
    ability of Federal agencies to do their jobs, grind the regulatory
    process to a halt, and infuse the regulatory process with roadblocks
    preventing the protection of the public and ultimately putting American
    consumers at risk.
        We strongly urge you to oppose this harmful bill.
                Sincerely,
                                              Rachel Weintraub,
                              Legislative Director and General Counsel,
                                            Consumer Federation of America.
                                     ______

                              Coalition for Sensible Safeguards
                                                       January 10, 2017

    RE: Floor vote of H.R. 5, the Regulatory Accountability Act of 2017

    Dear Representative;

        The Coalition for Sensible Safeguards (CSS), an alliance of over
    150 labor, scientific, research, good government, faith, community,
    health, environmental, and public interest groups, strongly opposes
    H.R. 5, the Regulatory Accountability Act of 2017 (RAA), which will be
    voted on this week.
        H.R. 5 is a compilation of radical and harmful legislative
    proposals that will permanently cripple the government's ability to
    protect the public by rigging the regulatory process against new
    regulatory safeguards in favor of deregulation or regulatory inaction.
    The bill is just as dangerous and extreme as the REINS Act (H.R. 26)
    and the Midnight Rules Relief Act (H.R. 21).
        All of these bills are designed to make it as difficult as possible
    for Federal agencies to implement existing or new laws that ensure our
    access to clean air and water, safe workplaces, untainted food and
    drugs, safe toys and consumer goods, and a stable financial system free
    of Wall Street recklessness. On the other hand, deregulatory actions
    that repeal existing rules are exempt by virtue of the legislation's
    myopic focus on ``costs'' to corporate special interests instead of
    ``benefits'' to the public. In short, the legislation will create a
    double standard in our regulatory system that systematically favors
    deregulation over new public protections and ``fast tracks'' the repeal
    of rules while paralyzing the creation of new ones.
        The new version of the RAA, introduced in this Congress, takes the
    previous RAA legislation and folds in several destructive pieces of
    other so-called regulatory reform bills including: the misleadingly
    named Small Business Regulatory Flexibility Improvements Act, the
    Require Evaluation before Implementing Executive Wishlists Act (REVIEW
    Act), the All Economic Regulations are Transparent Act (ALERT Act), the
    Separation of Powers Restoration Act and the Providing Accountability
    Through Transparency Act. These pieces of other bills seek to worsen an
    already destructive bill and add several more corrosive layers
    intending to dismantle our public protections.
        The current rulemaking process is already plagued with lengthy
    delays, undue influence by regulated industries, and convoluted court
    challenges. If passed, Title I of this bill would make each of these
    problems substantially worse and would undermine our public protections
    and jeopardize public health by threatening the safeguards that ensure
    our access to clean air and water, safe workplaces, untainted food and
    drugs, and safe toys and consumer goods.
        Rather than enhancing protections, it does the exact opposite. It
    adds 80 new analytical requirements to the Administrative Procedure Act
    and requires Federal agencies to conduct estimates of all the
    ``indirect'' costs and benefits of proposed rules and all potential
    alternatives without providing any definition of what constitutes, or
    more importantly, does not constitute an indirect cost. The legislation
    would significantly increase the demands on already constrained agency
    resources to produce the analyses and findings that would be required
    to finalize any new rule. Thus, the RAA is designed to further obstruct
    and delay rulemaking rather than improve the regulatory process.
        This legislation creates even more hoops for ``major'' or ``high
    impact'' rules--i.e., rules that provide society with the largest
    health and safety benefits. It would allow any interested person to
    petition the agency to hold a public hearing on any ``genuinely
    disputed'' scientific or factual conclusions underlying the proposed
    rule. This provision would give regulated industries multiple
    opportunities to challenge agency data and science and thus further
    stretch out the already lengthy rulemaking process.
        H.R. 5 would also create a restrictive mandate of a ``one-size fits
    all'' directive that every Federal agency adopt the ``least costly''
    alternative. This is a profound change and effectively creates a
    ``super mandate'' for all major regulatory actions of executive and
    independent agencies which overrides twenty-five existing statutes,
    including the Clean Air Act, the Clean Water Act, the Occupational
    Safety and Health Act, and the Consumer Product Safety Improvement Act.
    These laws prioritize public health, safety, and economic security, not
    the cost concerns of regulated entities.
        Title II of H.R. 5 is the Separation of Powers Restoration Act
    piece which seeks to destroy the Chevron deference principal. It would
    remove the judicial deference that agencies are granted when their
    regulations are challenged in court. This would be a radical change
    that upends one of the fundamental principles in administrative law,
    namely that courts should not second guess scientific and technical
    expertise at Federal agencies. Overly intrusive judicial review is one
    of the primary reasons for regulatory delay and paralysis and this
    legislation would make those problems much worse.
        The misleadingly named Small Business Regulatory Flexibility
    Improvements Act (Title III) is a Trojan horse that would expand the
    reach and scope of regulatory review panels, increase unnecessary
    regulatory delays, increase undue influence by regulated industries and
    encourage convoluted court challenges--all in the name of helping
    ``small business,'' but so expansively applied that mostly big
    businesses would benefit. Because the bill mandates that these panels
    look at 'indirect costs,' which are defined very broadly, it could be
    applied to virtually any agency action to develop public protections.
        The REVIEW Act (Title IV) would make our system of regulatory
    safeguards weaker by requiring courts reviewing ``high impact''
    regulations to automatically ``stay'' or block the enforcement of such
    regulations until all litigation is resolved, a process that takes many
    years to complete. It would add several years of delay to an already
    glacially slow rulemaking process, invite more rather than less
    litigation, and rob the American people of many critical upgrades to
    science based public protections, especially those that ensure clean
    air and water, safe food and consumer products, safe workplaces, and a
    stable, prosperous economy.
        The ALERT Act (Title V) is designed to impede the government's
    ability to implement critical new public health and safety protections
    by adding a six month delay. This amounts to a six month regulatory
    moratorium, even after the often lengthy period required for developing
    and finalizing these regulations. Such delays could extend well beyond
    that initial six month period should the OIRA Administrator fail to
    post the required information in a timely manner.
        This new version of the RAA would override and threaten decades of
    public protections. The innocuous sounding act is, in reality, the
    biggest threat to public health standards, workplace safety rules,
    environmental safeguards, and financial reform regulations to appear in
    decades. It acts as a ``super mandate,'' rewriting the requirements of
    landmark legislation such as the Clean Air Act and the Occupational
    Safety and Health Act and distorting their protective focus to instead
    prioritize compliance costs.
        We strongly urge opposition to H.R. 5, the Regulatory
    Accountability Act of 2017.
                Sincerely,
                                               Robert Weissman,
                                                             President,
                                                            Public Citizen,
                                                                 Chair,
                                         Coalition for Sensible Safeguards.

        The Coalition for Sensible Safeguards is an alliance of consumer,
    labor, scientific, research, good government, faith, community, health,
    environmental, and public interest groups, as well as concerned
    individuals, joined in the belief that our country's system of
    regulatory safeguards provides a stable framework that secures our
    quality of life and paves the way for a sound economy that benefits us
    all.
                                     ______

                                   National Consumer Law Center
                                                       January 10, 2017
    Representative
    U.S. House of Representatives
    Washington, DC

    RE: H.R. 5, the Regulatory Accountability Act of 2017 (oppose)

    Dear Representative:

        The National Consumer Law Center (NCLC), on behalf of its low
    income clients, strongly opposes H.R. 5, the Regulatory Accountability
    Act of 2017 (RAA), which will be voted on this week. Since 1969, the
    nonprofit NCLC has worked for consumer justice and economic security
    for low-income and other disadvantaged people, including older adults,
    in the U.S. through its expertise in policy analysis and advocacy,
    publications, litigation, expert witness services, and training.
        H.R. 5 is a compilation of radical and harmful legislative
    proposals that will permanently cripple Congress' ability to protect
    the public. The bill rigs the system against new safeguards in favor of
    paralysis and elimination of important protections. The bill is just as
    dangerous and extreme as the REINS Act (H.R. 26) and the Midnight Rules
    Relief Act (H.R. 21), which we also oppose.
        All of these bills are designed to make it as difficult as possible
    for Federal agencies to implement existing or new laws to protect the
    public from dangerous financial products, pollutants in our air and
    water, hazards in the workplace, tainted food and drugs, or unsafe toys
    and consumer goods. On the other hand, deregulatory actions that repeal
    existing protections are exempt by virtue of the legislation's myopic
    focus on ``costs'' to corporate special interests instead of
    ``benefits'' to the public. In short, the legislation will create a
    double standard in our system that favors industry calls for
    deregulation over new public protections, ``fast-tracking'' the repeal
    of rules while paralyzing the creation of new ones.
        The new version of the RAA, introduced in this Congress, takes the
    previous RAA legislation and folds in several destructive pieces of
    other so-called regulatory reform bills including: the misnamed Small
    Business Regulatory Flexibility Act, the Require Evaluation before
    Implementing Executive Wishlists Act (REVIEW Act), the All Economic
    Regulations are Transparent Act (ALERT Act), the Separation of Powers
    Restoration Act and the Providing Accountability Through Transparency
    Act. These pieces of other bills seek to worsen an already destructive
    bill and add several more corrosive layers seeking to dismantle our
    public protections. TI1e current rulemaking process is already plagued
    with lengthy delays, undue influence by regulated industries, and
    convoluted court challenges.
        Title I of this bill would make each of these problems
    substantially worse. It adds 74 new bureaucratic analytical
    requirements to the Administrative Procedure Act and requires Federal
    agencies to conduct estimates of all the ``indirect'' costs and
    benefits of proposed rules and all potential alternatives without
    providing any definition of what constitutes, or more importantly, does
    not constitute an indirect cost. The legislation would significantly
    increase the demands on already constrained agency resources to produce
    the analyses and findings that would be required to finalize any new
    rule. Thus, the RAA is designed to further obstruct and delay
    rulemaking rather than improve the regulatory process.
        This legislation creates even more hoops for ``major'' or ``high-
    impact'' rules--i.e., rules that provide society with the largest
    health and safety benefits. It would allow any interested person to
    petition the agency to hold a public hearing on any ``genuinely
    disputed'' scientific or factual conclusions underlying the proposed
    rule. This provision would give regulated industries multiple
    opportunities to challenge agency data and science and thus further
    stretch out the already lengthy rulemaking process.
        H.R. 5 would also create a restrictive mandate of a ``one-size-
    fits-all'' presumption that every Federal agency must adopt the ``least
    costly'' alternative. This is a profound change that prevents agencies
    from adopting the most effective and appropriate way of protecting the
    public.
        Title II of H.R. 5 is the Separation of Powers Restoration Act
    piece which seeks to destroy the Chevron deference principal. It would
    remove the judicial deference that agencies are granted when their
    regulations are challenged in court. This would be a radical change
    that upends one of the fundamental principles in administrative law,
    namely that courts should not second-guess agency expe1tise. Overly
    intrusive judicial review is one of the primary reasons for regulatory
    delay and paralysis and this legislation would make those problems much
    worse.
        The misnamed Small Business Regulatory Flexibility Improvements Act
    piece of H.R. 5 (Title III) is a Trojan horse that would expand the
    reach and scope of regulatory review panels, increase unnecessary
    regulatory delays, increase undue influence by regulated industries and
    encourage convoluted court challenges--all in the name of helping
    ``small business,'' but so expansively applied that mostly big
    businesses would benefit. Because the bill mandates that these panels
    look at `indirect costs,' which are defined very broadly, it could be
    applied to virtually any agency action to develop public protections.
        The REVIEW Act segment of H.R. 5 (Title IV) would make our system
    of regulatory safeguards weaker by requiring courts reviewing ``high-
    impact'' regulations to automatically ``stay'' or block the enforcement
    of such regulations until all litigation is resolved, a process that
    takes many years to complete. It would add several years of delay to an
    already glacially slow rulemaking process, invite more rather than Jess
    litigation, and rob the American people of many critical upgrades to
    science-based public protections, especially those that ensure clean
    air and water, safe food and consumer products, safe workplaces, and a
    stable, prosperous economy.
        The ALERT Act portion of H.R. 5 (Title V) is designed to impede the
    government's ability to implement critical new public health and safety
    protections by adding a six-month delay. This amounts to a six month
    regulatory moratorium, even after the often lengthy period required for
    developing and finalizing these regulations. Such delays could extend
    well beyond that initial six-month period should the OIRA Administrator
    fail to post the required information in a timely manner.
        This new version of the RAA would override and threaten decades of
    public protections. The innocuous sounding act is, in reality, the
    biggest threat to financial reform regulations, environmental
    standards, workplace safety rules and public health to appear in
    decades.
        We strongly urge opposition to H.R. 5, the Regulatory
    Accountability Act of 2017.
                Sincerely,
                                               Lauren Saunders,
                                                    Associate Director.
                                     ______

                                 Americans for Financial Reform
                                                       January 11, 2017
    Dear Representative:

        This week the House is voting on three pieces of legislation--HR 5
    (the Regulatory Accountability Act), HR 78 (the SEC Regulatory
    Accountability Act), and HR 238 (the Commodity End User Relief Act)--
    that would severely damage the capacity of the Federal Government to
    protect the public. This legislation would disastrously weaken
    oversight of major Wall Street institutions and financial markets.
    Proper oversight of big banks and financial markets is crucial to the
    economic well-being of workers, families, and communities.
        On behalf of the twenty-one undersigned organizations, representing
    millions of Americans, we urge you to vote against all of these bills.
        The Regulatory Accountability Act would have a crippling impact on
    the ability of any Federal regulatory agency to pass a significant rule
    or guidance. This legislation would impose dozens of additional
    analytic requirements before an agency could take action to protect the
    public. Any disagreement by a regulated entity with agency findings
    related to any of these requirements could be the basis for a lawsuit
    that would halt or overturn the rule. Courts would not be required to
    defer to agency judgement in any way in deciding these lawsuits. The
    barriers to agency action in the Regulatory Accountability Act are so
    extensive and so open to manipulation that they would give regulated
    businesses effective veto power over government rules that affect them,
    even if such rules were authorized by statute and justified to protect
    the public.
        The SEC Regulatory Accountability Act would mandate that the
    Securities and Exchange Commission identify every ``available
    alternative'' to a proposed regulation or agency action and
    quantitatively measure the costs and benefits of each such alternative
    prior to taking action. Since there are always numerous possible
    alternatives to any course of action, this requirement alone could
    force the SEC to complete dozens of additional analyses before passing
    a rule or guidance, any of which could be the basis for a lawsuit. The
    SEC would also be required to review every single regulation in effect
    within one year after the passage of this Act, and again every five
    years thereafter, with an eye to weakening or eliminating such
    regulations.
        The Commodity End User Relief Act would freeze the funding of the
    Commodity Futures Trading Commission (CFTC) at its current inadequate
    level of $250 million annually for the next five years. Such a funding
    freeze would greatly weaken the CFTC's ability to carry out its
    responsibilities, which range from regulation of hundreds of trillions
    of dollars in complex financial derivatives to oversight of commodity
    markets that determine prices of everyday goods ranging from gasoline
    to groceries. The legislation also imposes numerous additional cost
    benefit requirements on the agency, in addition to the extensive
    analytic requirements that already apply to CFTC rulemaking. HR 238
    would also restrict agency discretion in a number of critical areas,
    including by sharply limiting the ability of the CFTC to regulate risky
    derivatives activities conducted by foreign affiliates of major Wall
    Street banks. Such foreign subsidiary activities were a significant
    contributor to the financial crisis of 2008.
        The 2008 financial crisis demonstrated beyond doubt that the well-
    being of America's working families is dependent on strong and
    effective regulation of Wall Street financial markets. These three
    pieces of legislation would cripple the capacity to properly regulate
    such markets. We urge you to reject all three.
                Sincerely,

    AFL-CIO
    Americans for Financial Reform
    California Reinvestment Coalition
    Center for Popular Democracy CPD Action
    Center for Responsible Lending
    Communications Workers of America
    Consumer Action
    Consumer Federation of America
    Corporation for Enterprise Development
    Institute for Agriculture and Trade Policy
    Interfaith Center on Corporate Responsibility
    Main Street Alliance
    Massachusetts Community Action Network
    Michael Greenberger, University of Maryland School of Law
    NAACP
    National Association of Consumer Advocates
    National Consumer Law Center (On behalf of its low income clients)
    National Consumers League
    National Fair Housing Alliance
    Public Citizen
    Public Investors Arbitration Bar Association
    U.S. PIRG

                                     ______

                                 Americans for Financial Reform
                                                       January 11, 2017

    Dear Representative:

        On behalf of Americans for Financial Reform (AFR), we are writing
    to urge you to oppose HR 5, the ``Regulatory Accountability Act of
    2017'', or RAA.\1\
    ---------------------------------------------------------------------------
        \1\ Americans for Financial Reform is an unprecedented coalition of
    over 250 national, state and local groups who have come together to
    reform the financial industry. Members of our coalition include
    consumer, civil rights, investor, retiree, community, labor, religious
    and business groups. A list of AFR coalition members is available at
    http:1/ourfinancialsecurity.org/about/our-coalition/.
    ---------------------------------------------------------------------------
        This legislation could instead be entitled the ``End Wall Street
    Accountability Act of 2017'', since this would be one of its major
    effects. This legislation would require regulatory agencies, including
    those charged with oversight of our largest Wall Street banks and most
    critical financial markets, to comply with a host of additional
    bureaucratic and procedural requirements that would make effective
    action virtually impossible. By doing so it would tilt the playing
    field still further in the direction of powerful Wall Street banks, and
    against the public interest. It would paralyze the ability of
    regulators to protect consumers from financial exploitation and prevent
    another catastrophic financial crisis.
        There is overwhelming agreement that the lack of adequate
    regulation of the financial markets has cost the U.S. economy millions
    of jobs and many trillions of dollars in bst wealth. While Wall Street
    profits have recovered, many Americans are still struggling. Support
    for this legislation is support for eliminating the ability of
    regulators to prevent the next financial crisis.
        This legislation would burden financial regulators with over 70 new
    procedural and analytical requirements that must be completed before
    they could pass significant rules or guidance. For example, the
    legislation requires agencies to identify and analyze any theoretical
    alternative to imposing a regulation, and analyze the costs and
    benefits of each alternative in detail. Since there are always numerous
    possible alternatives to any course of action, this requirement alone
    could force agencies to complete dozens of additional analyses prior to
    proposing a regulation. The bill also includes an unprecedented mandate
    on agencies to determine all ``indirect'' costs from their proposed
    regulation, with no guidance to agencies as what counts as an
    ``indirect'' cost.
        Should any of the mandated analyses be found to be inadequate by a
    court, the court could then overturn the regulation. Furthermore, Title
    2 of the bill specifies that the court would not be required to defer
    to the agency in any way, and could freely substitute its own judgement
    for that of agency experts. Thus, even if an agency manages to satisfy
    the dozens of additional requirements imposed by this legislation and
    publish a final rule, the courts would have effectively unlimited
    opportunities to second-guess and overturn the agency's decision.
        Even if the agency could run the gauntlet of procedural mandates
    and court challenges, any regulated company could force agencies to
    engage in a formal adversarial hearing process. This process would
    require agencies to formally demonstrate that their chosen rule had
    lower net costs than any alternative proposed by private industry. Such
    a demonstration would also be subject to judicial review, without any
    requirement for the court to defer to the agency's professional
    judgment. This formal hearing process would amount to a de facto Wall
    Street veto of regulatory oversight. Any bank would simply have to
    propose that the agency analyze an additional regulatory option in
    order to freeze the regulatory process in place, send the agency back
    to the drawing board, and gain a new opportunity to overturn agency
    rules in court.
        Adding to the devastating impact of this legislation, Title IV of
    the bill would require courts to stay enforcement of a regulation until
    all litigation challenging the regulation was completed. When combined
    with the almost limitless opportunities for litigation created by the
    rest of HR 5, this provision would ensure that it was effectively
    impossible to enforce rules opposed by industry interests.
        The misguided premise of this legislation is that regulations are
    inevitably costly to the economy, while regulatory inaction is not. Yet
    analyses have shown that basic health, safety, and environmental
    regulations typically bring far greater economic benefits than costs.
    It is clear that the costs of failing to provide adequate oversight of
    Wall Street are enormous. The financial crisis of 2008 cost the U.S.
    economy trillions of dollars and millions of jobs, and led to millions
    of families losing their homes. Nonpartisan experts have estimated the
    costs of the crisis to the U.S. as $6 to $14 trillion in lost economic
    output alone.\2\
    ---------------------------------------------------------------------------
        \2\ The costs of the 2008 financial crisis are analyzed in an AFR
    briefing paper available at http://ourfinancialsecurity.org/wp-content/
    uploads/2012/09/Costs-of-The-Financial-Crisjs-September-20142.pdf
    ---------------------------------------------------------------------------
        In the face of the overwhelming costs of regulatory inaction, we
    cannot afford to hamstring our financial regulatory agencies. The
    needless litigation and delay that will result from enactment of this
    bill will serve only to halt critical safeguards for our economy and
    the public. According to recent polling data, 78 percent of Americans
    favor tougher rules and enforcement for big Wall Street banks.\3\ This
    legislation would cripple the ability of regulators to institute any
    new oversight on our largest banks, and it must be rejected.
    ---------------------------------------------------------------------------
        \3\ See response to Question 2 in CRL/AFR Poll of 1000 Likely
    Voters, June 25-30, 2014, available at http://ourfinancialsecurjty.org/
    blogs/wp-content/ourfinancialsecurity.org/uploads/2014
    /07/toplines.AFR.public.071714.pdf.
    ---------------------------------------------------------------------------
                Sincerely,
                                            Americans for Financial Reform.
                                     ______

                                                       January 11, 2017
    Dear Representative:

        The undersigned public health and medical organizations urge you to
    oppose H.R. 5, the Regulatory Accountability Act of 2017. The bill is a
    sweeping attack on the Federal Government's ability to set lifesaving
    public health protections.
        H.R. 5 would undermine proven public health protections by
    requiring Federal standards to be based on industry cost estimates, not
    what best protects the public. For example, H.R. 5 would force EPA and
    FDA to prioritize the historically overstated estimates of costs to
    industry over scientific evidence and public health.

       Under the Clean Air Act, Congress required the U.S.
            Environmental Protection Agency (EPA) to set standards that
            indicate what level of pollution is harmful to human health,
            based solely on health and medical science, and then work with
            states to implement cost effective cleanup measures to meet
            those standards.

       With the Family Smoking Prevention and Tobacco Control Act,
            Congress tasked the Food and Drug Administration (FDA) with
            protecting the public from the proven dangers of tobacco use,
            including death from lung disease, cancer and heart disease,
            based on what is appropriate for the protection of the public
            health--not the costs to the tobacco industry.

        H.R. 5 would also impose dozens of procedural requirements that
    would increase costs of critical safeguards, or worse, delay or
    completely block lifesaving protections before they can be implemented.
    Federal rules already go through extensive review, expert input, and
    public comment before they are finalized. The numerous additional
    analysis, reporting, and planning requirements imposed by this bill,
    some of which duplicate existing requirements, would hinder agencies
    from setting safeguards under the law to protect the public.
        H.R. 5 would also automatically halt enforcement of ``high-impact''
    rules until all litigation on them is resolved. The courts already have
    the ability to stay a rule in litigation if they determine that the
    party opposing the rule is likely to succeed on the merits.
    Automatically staying enforcement of all ``high-impact'' rules creates
    an incentive for frivolous lawsuits simply to avoid having to comply
    with the rule--potentially for years. The result Americans would suffer
    illnesses and premature deaths that could have been prevented, and
    communities and industry that seek certainty to know how to proceed
    would be left in unnecessary limbo for far too long.
        H.R. 5 would also reverse a longstanding court decision that
    recognizes the unique experience Federal agencies have with these
    often-complex issues. Sometimes Congress intentionally writes a statute
    to be flexible or ambiguous, recognizing that it does not have the
    expertise to anticipate or address every contingency. Federal agencies
    have extensive experience with the statutes they administer, as well as
    superior expertise on the scientific and technical matters that are at
    the heart of the actions carried out by the agencies.
        H.R. 5 would mandate that the courts give less judicial deference
    to agencies with the relevant subject matter expertise. If passed, this
    bill would require judges to make decisions far outside their areas of
    expertise and with limited access to information, rather than continue
    to defer to the professional and informed decisions of scientists,
    physicians, economists, engineers, and other professional experts that
    work within these agencies. This unprecedented and dangerous move
    reverses traditional judicial deference that has been successful and
    effective for more than three decades.
        Our organizations urge you to oppose H.R. 5. This bill would make
    it harder to protect the health of Americans from the dangers of air
    pollution and tobacco by allowing polluters and the tobacco industry to
    influence and delay critical health safeguards.
                Sincerely,

    Allergy & Asthma Network
    Alliance of Nurses for Healthy Environments
    American Heart Association
    American Lung Association
    American Public Health Association
    American Thoracic Society
    Asthma and Allergy Foundation of America
    Health Care Without Harm
    National Association of County & City Health Officials
    Physicians for Social Responsibility
    Public Health Institute
    Trust for America's Health

                                     ______

         International Union, United Automobile, Aerospace and
                 Agricultural Implement Workers of America--UAW
                                       Washington, DC, January 11, 2017

    Dear Representative,

        On behalf of the more than 1 million active and retired members of
    the International Union, United Automobile, Aerospace and Agricultural
    Implement Workers of America, UAW, I am writing to urge you to vote
    against the Regulatory Accountability Act (RAA), H.R. 5. The RAA is a
    compilation of radical and harmful provisions that would hinder the
    Federal Government's ability to do their job and protect the public
    interest. This misguided bill would benefit powerful special interest
    groups at the expense of working people.
        The dangerous bill would override and threaten decades of hard-
    fought protections that have saved lives and improved the quality of
    life for millions of Americans. For example, workplace safety rules,
    clean water requirements, and regulations to reign in reckless lending
    practices on Wall Street would all be threatened by this harmful bill.
        H.R. 5 acts as a ``super-mandate,'' rewriting the requirements of
    landmark legislation such as the Clean Air Act and the Occupational
    Safety and Health Act to prioritize compliance costs instead of
    protecting workers and consumers. It would also create a restrictive
    mandate of a ``one-size-fits-all'' presumption that every Federal
    agency adopt the ``least costly'' alternative. This is a profound
    change in that the financial costs of compliance would be given a
    higher priority than protecting the public's safety and health.
        We all know that our rulemaking process does not move swiftly and
    is vulnerable to an array of well-known delay tactics. Sadly, passage
    of the RAA would make this problem much worse by adding 74 new
    analytical requirements to the Administrative Procedure Act. The bill
    requires Federal agencies to conduct estimates of all the ``indirect''
    costs and benefits of proposed rules and all potential alternatives
    without providing any definition of what constitutes or, more
    importantly, does not constitute an indirect cost.
        UAW urges you to vote NO on the RAA and instead work to strengthen
    worker and consumer protections. Thank you for considering our views.
                Sincerely,
                                                   Josh Nassar,
                                                  Legislative Director.
                                     ______

                                                       January 30, 2017
    RE: Use of the Congressional Review Act to repeal public protections

    Dear Senator,

        We, the undersigned consumer, small business, labor, good
    government, financial protection, community, health, environmental,
    civil rights and public interest groups urge you strongly to oppose the
    use of the Congressional Review Act (CRA) to repeal public protections
    that are critical to the public's health and safety, the environment,
    and a stable financial system that works for Main Street and not Wall
    Street.
        The CRA is an unreasonably blunt instrument that threatens to deny
    consumers tens of billions of dollars in pocketbook savings over the
    next few decades from rules that were fully vetted and considered over
    a long period of time. These rules enjoyed substantial support across
    all stakeholder communities.
        By promising to use the CRA to indiscriminately block a variety of
    crucial public safeguards, the leadership of the 115th Congress has
    made clear that catering to special interests take precedence over
    public protections to ensure:

       clean air, water and climate change action,

       much-needed reforms to Wall Street to prevent the next
            financial crisis,

       banks are held accountable when they deceive customers,

       workplaces are safe from toxic chemicals,

       non-discrimination and fair pay are guaranteed for all,

       affordable access to broadband and secure communications,

       natural resource revenues are used to benefit citizens,

       heavy duty truck rule and air conditioner rule that increase
            efficiency and save consumers money,

       common-sense gun control measures for individuals with
            severe and disabling mental health issues,

       people can see the health care provider of their choice,

       paid sick days for employees of Federal contractors, and

       schools are held accountable for fraud and students are not
            left stuck under mountains of debt when schools defraud them or
            abruptly close.

        It is irresponsible for Congress to use the CRA to repeal important
    public protections that are supported by bipartisan majorities of the
    public.\1\ The CRA allows Congress to overturn a recently finalized
    rule major or otherwise-through an expedited process called a
    Resolution of Disapproval. In the U.S. Senate, these resolutions only
    require a simple majority vote to adopt and then cannot be filibustered
    or amended.
    ---------------------------------------------------------------------------
        \1\ http://www.epi.org/files/2016/LRP-
    EWG%20Messaging%20Handout.f19-Dec-16.pdf
    ---------------------------------------------------------------------------
        Once a rule is overturned, it may be difficult for an agency to
    advance the objectives of the overturned rule in the future. The CRA
    allows agencies to finalize a rule in the future, but only if that rule
    is not ``substantially similar'' to the one that was disapproved.
    Because the scope of the ``substantially similar'' language has not yet
    been tested in any meaningful way, we have massive uncertainty around
    necessary future regulations that implement laws passed by Congress and
    address pressing health, safety, financial and environmental risks to
    consumers and the public.
        If Congress decides to use the CRA to repeal public protections
    that save lives, protect our environment, prevent discrimination or put
    money back into the pocket of consumers, those who voted for repeal in
    Congress will be responsible for the consequences to their
    constituents. In the absence of strong and effective public
    protections, Congress will revert back to a system of ``self-
    regulation,'' which shifts costs on to the public. As a result, regular
    Americans wind up paying the price.
        Those in Congress pushing to use the CRA rely on two demonstrably
    false claims. First, critics of public protections claim that potential
    CRA challenges in the beginning of the 115th Congress will only apply
    to ``midnight'' regulations that were rushed at the end of the Obama
    administration. The truth is that virtually all of these standards are
    better characterized as ``marathon'' regulations since they were under
    development for years, if not decades, and are thus the very opposite
    of rushed. Rules issued at the end of administrations take longer to
    finish than rules issued outside of this period.\2\ Such rules also
    underwent longer, not shorter, review by the U.S. Office of Information
    and Regulatory Affairs (OIRA).
    ---------------------------------------------------------------------------
        \2\ http://www.citizen.org/documents/Midnight-Regs-Myth.pdf
    ---------------------------------------------------------------------------
        Additionally, critics claim that regulations cost jobs and
    repealing them will create jobs. The truth is that all studies which
    linked new regulations to job loss claims have been debunked by
    independent experts and none of the numerous assertions in the past
    about job losses due to regulations have come true. For example, the
    recently finalized U.S. Department of Interior's (DOI) stream
    protection rule is crucial to making sure streams around coal mining
    projects are not impacted by toxic coal waste that can then pollute
    downstream water sources. Critics of the rule, including U.S. Sen.
    Mitch McConnell (R-Ky.), have claimed it will lead to job losses in the
    coal industry. Yet, even Sen. McConnell conceded that repeal of
    regulations such as the stream protection rule will not bring back coal
    jobs because market forces are pushing the energy industry away from
    coal.\3\
    ---------------------------------------------------------------------------
        \3\http://www.kentucky.com/news/politics-government/
    article114197923.html
    ---------------------------------------------------------------------------
        Voters in thjs election did not vote for deregulation of Wall
    Street, more polluted air and water, inaction on climate change, unsafe
    workplaces, fewer protections against discrimination and unequal pay,
    more food safety scandals, the gutting of consumer protections, and
    more. In fact, this election was a referendum on the need to hold big
    interests accountable. Unfortunately, using the blunt instrument of the
    CRA rejects the electoral message and moves in the wrong direction by
    rolling back and undermining public protections.
        We strongly urge you to reject the use of the CRA to undermine
    critical consumer, public and environmental protections. Please do not
    repeal rules that enforce the law and protect public health, safety,
    financial security and our environment.
                Thank you,
    9to5, National Association of Working Women
    Action on Smoking & Health
    AFL-CIO
    AFSCME
    Alaska Wilderness League
    Alliance for Appalachia
    American Association for Justice
    American Association of University Women (AAUW)
    American Family Voices
    American Federation of Teachers
    American Forests
    Americans for Democratic Action (ADA)
    Americans for Financial Reform
    Arkansans Against Abusive Payday Lending
    Asbestos Disease Awareness Organization (ADAO)
    Catskill Citizens for Safe Energy
    Center for Biological Diversity
    Center for Digital Democracy
    Center for Economic Integrity
    Center for Justice & Democracy
    Center for Large Landscape Conservation
    Center for Media Justice
    Center for Progressive Reform
    Center for Responsible Lending
    Center for Science in the Public Interest
    Civil Justice, Inc.
    Clean Air Task Force
    Clean Water Action
    Connecticut Association for Human Services
    Consumer Action
    Consumer Federation of America
    Consumer Federation of California
    Consumer Law Office of William E. Kennedy
    Consumers for Auto Reliability and Safety
    Corporate Accountability International
    Corporation for Enterprise Development (CFED)
    Daily Kos
    Dann Law Firm
    Demand Progress
    Donovan Litigation Group, LLC
    Earthjustice
    EarthRights International
    Earthworks
    Economic Policy Institute Policy Center
    Environment America
    Environmental Integrity Project
    Equal Rights Advocates
    Equal Rights Advocates
    Florida Alliance for Consumer Protection
    Floyd W. Bybee, BYBEE LAW CENTER, PLC
    Food & Water Watch
    Free Press Action Fund
    GLMA: Health Professionals Advancing LGBT Equality
    Global Witness
    GOLDSMITH & ASSOCIATES, LLC
    Green America
    Greenpeace
    Health Justice Project
    Higher Ed, Not Debt and Generation Progress
    Housing and Economic Rights Advocates (HERA)
    Indiana Consumer Law Group
    Institute for Agriculture and Trade Policy
    Interfaith Center on Corporate Responsibility
    International Union, United Automobile, Aerospace & Agricultural
    Implement Workers of America (UAW)
    Janelle Mason Mikac, J. Hegg Law, PLLC
    Jared M. Hartman, Esq., Hartman Law Officesm Inc., Semnar & Hartmen,
    LLP
    The Leadership Conference on Civil and Human Rights
    League of Conservation Voters
    League of Women Voters of the United States
    Leonard Gryskewicz, Jr., Sabatini Law Firm, LLC
    Lyons Law Finn, P.A.
    Main Street Alliance
    Mark F. Anderson / Anderson, Ogilvie & Brewer LLP
    MFY Legal Services, Inc.
    Micah S. Adkins, The Adkins Firm
    National Association for College Admission Counseling
    National Association of Consumer Advocates
    National Black Justice Coalition
    National Center for Law and Economic Justice
    National Center for Lesbian Rights
    National Center for Transgender Equality
    National Coalition Against Domestic Violence
    National Coalition for the Homeless
    National Consumer Law Center (on behalf of its low income clients)
    National Consumers League
    National Council of Jewish Women
    National Council of La Raza
    National Employment Law Project
    National Employment Lawyers Association
    National Fair Housing Alliance
    National Law Center on Homelessness & Poverty
    National LGBTQ Task Force Action Fund
    National Parks Conservation Association
    National Partnership for Women & Families
    National Women's Law Center
    Natural Resources Defense Council
    Nature Abounds
    New America's Open Technology Institute
    North Carolina Justice Center
    Oceana
    People's Action Institute
    Physicians for Social Responsibility
    Planned Parenthood Federation of America
    Progressive Congress Action Fund
    Public Citizen
    Public Knowledge
    Publish What You Pay--United States
    River Network
    Secular Human Rights Worldwide
    SEIU
    Tennessee Citizen Action
    The Greenlining Institute
    The National Consumer Voice for Quality Long-Term Care
    The Wilderness Society
    TURN-The Utility Reform Network
    Union of Concerned Scientists
    United Church of Christ, OC Inc.
    US PIRG
    Virginia Citizens Consumer Council
    Voices for Progress
    West Virginia Center on Budget and Policy
    Western Environmental Law Center
    Women Employed
    Woodstock Institute

                                     ______

                    Software & Information Industry Association
                                       Washington, DC, January 31, 2017

    Hon. John Thune,
    Chairman, Commerce Committee,
    United States Senate,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member, Commerce Committee,
    United States Senate,
    Washington, DC.

    RE: SIIA Supports Focus on Regulatory Reform, Impact on Innovation

    Dear Chairman Thune and Ranking Member Nelson,

        On behalf of the Software & Information Industry Association
    (SIIA), thank you for holding the upcoming hearing, ``A Growth Agenda:
    Reducing Unnecessary Regulatory Burdens.'' SIIA shares your concern
    about the unforeseen negative impact of various regulations on
    businesses and the economy. This is not only the case for the
    industrial and manufacturing sectors, but also for the technology
    sector, which is a major economic growth engine of the future.
        SIIA is the principal trade association for the software and
    digital information industries. The more than 800 software companies,
    data and analytics firms, information service companies, and digital
    publishers that make up our membership serve nearly every segment of
    society, including business, education, government, healthcare and
    consumers. As leaders in the global market for software and information
    products and services, they are drivers of innovation and economic
    strength--software alone contributes $425 billion to the U.S. economy
    and directly employs 2.5 million workers and supports millions of other
    jobs.
        SIIA has written about the tremendous opportunities of Data-Driven
    Innovation and the Internet of Things (IoT).\1\ Economic benefit from
    the IoT ranges from $4 trillion to $11 trillion through 2025.\2\
    Businesses will be the top adopter of IoT solutions, leading the three
    key positive impacts on economic activity: (1) lowering operating
    costs; (2) increasing productivity; and (3) expanding to new markets or
    developing new product offerings.\3\
    ---------------------------------------------------------------------------
        \1\ SIIA white papers on Data-Driven Innovation and the Internet of
    Things.
        \2\ McKinsey & Company. ``Unlocking the Potential of the Internet
    of Things.'' June 2015
        \3\ Business Insider. ``How the `Internet of Things' will impact
    consumers businesses, and governments in 2016 and beyond.'' John
    Greenough; July 2016.
    ---------------------------------------------------------------------------
        However, in this era of rapid technological development, ill-suited
    or outdated regulations can in some cases have a chilling effect on
    innovation and economic production. To maximize economic growth
    throughout the 21st Century, policymakers must not only be prudent
    about creating new regulations, but also conduct a thorough review of
    existing regulations. Many of the regulations governing industry today
    derive from statutes that are more than a decade old. In these cases,
    regulations either suffer from being outdated, or they have been
    revised by agencies to retrofit the evolution of technology, without
    clear guidance from Congress.
        Therefore, regulatory reform should focus not only on ill-conceived
    regulations adopted in recent years, but also those that are well
    intended but no longer can be applied effectively to the 21st Century
    technology landscape. To create an environment better suited to
    economic and job growth, a rigorous cost-benefit analysis should be
    applied in the assessment of current and proposed regulations. The
    benefit of regulations must outweigh the limits to innovation and
    potential economic or consumer welfare that can be derived from new
    products and services.
        As this Committee, as well as other congressional committees and
    the Trump Administration, assesses the impact of regulations on
    economic growth and job creation, we appreciate the focus on technology
    innovation by U.S. businesses, particularly small and medium-sized
    businesses that often disproportionately suffer from cumbersome
    regulations. We look forward to working with you to balance the need
    for regulations to continue protecting consumers, workers and the
    environment, while also maximizing innovation in a hyper-innovative loT
    environment.
                Sincerely,
                                                     Ken Wasch,
                                                             President.
    cc: Members of the U.S. Senate Committee on Commerce
                                     ______

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

                                                           Feb. 1, 2017
              Prepared Statement of Joyce Davis (Mother of Garret)
        Thank you, Senator Thune, and the esteemed members of the Senate
    Committee on Commerce, Science, and Transportation for convening this
    full committee hearing about Reducing Unnecessary burdensome
    regulations.
        My name is Joyce Davis and I am here as a real life example that
    not all regulations are burdensome, especially those regulations that
    focus on unsafe baby products that can kill babies.
        Allow me a brief moment to tell my story. Sixteen years ago, in the
    year 2000, I put my four month old baby boy, Garret, to sleep in a
    portable crib with a supplemental mattress. While sleeping, Garret
    rolled over and wedged face down between the side of the supplemental
    mattress and the soft side of the portable crib. He suffocated in his
    sleep. Needless to say, my life and that of my family drastically
    changed.
        From this tragedy, I founded Keeping Babies Safe (KBS for short), a
    non-profit organization that fights to keep dangerous baby products off
    the market and to advocate for safe sleep education for infants.
        Of particular concern to KBS, is the availability of supplemental
    mattresses in the market. Yes, the same supplemental mattress that
    killed my son--and many other babies--remains available for sale in the
    market today. The industry--via the ASTM--has adopted required warning
    labels to warn parents NEVER to use any other mattress other than the
    original mattress provided with the portable crib.
        Yet, in spite of warning labels on portable cribs to not use a
    supplemental mattress, manufacturers and retailers continue to
    manufacture, market and sell these deadly mattresses for use with a
    portable crib . . . And, why do they do this you ask?? They do this . .
    . because they can. They do this for pure profit. They do this because
    there's no regulation saying they can't! Until regulations (or a ban in
    this case) are adopted by legislatures, manufacturers and retailers
    will continue to manufacture and sell these mattresses and babies will
    continue to die.
        Currently, the U.S. Consumer Products Safety Commission has
    docketed our petition for a ban of the sale of supplemental mattresses
    and we anxiously await its regulatory decision. But we know from the
    CPSC's website and public statements that--and I'll quote--Only use the
    mattress pad provided with the play yard.
        But we can't--in good conscious--sit and wait for the necessary
    Federal regulation to ban supplemental mattresses--and watch while
    other families go through the same tragedy we experienced. Instead, we
    at KBS have been steadfast in fighting for the removal of this
    dangerous product from every store shelf in America by directly
    reaching out to retailers to warn them that they are selling a product
    that is being used against industry warning labels. We have been
    successful, to a point, with responsible corporate citizens such as
    retailers like Target, Toys R Us, Sears, Kmart, buy buy Baby and
    Wayfair--agreeing to stop selling supplemental mattresses. However,
    other major retailers--like Amazon and Walmart--still continue to sell
    supplemental mattresses for portable cribs, in spite of the warning
    labels not to use them on the very product they are sold to be used
    with.
        Without a Federal regulation banning the supplemental mattress, KBS
    is left to try to work with each of the 50 States, to try to obtain
    state bans on this product. KBS has started with its home State--New
    Jersey and we have been successful lobbying the legislature on a bill
    to ban supplemental mattresses in New Jersey. I am proud to say that
    our bill has so far received unanimous bi-lateral support in the
    legislature. However, even if we are successful, the ban would only
    apply to sales of supplemental mattresses in New Jersey.
        KBS has very limited resources and trying to obtain a ban state by
    state will be extremely difficult. A Federal regulation on the issue
    would not only be efficient but more importantly--a Federal ban would
    save lives.
        This is why Federal regulations are so critical. Federal
    regulations can do what our small organization cannot do.
        It is my hope that my appearance here today helps further raise
    awareness that regulations are a critical piece of protecting the
    public from death and injury.
        Thank you.
                                     ______

          Prepared Statement of Timothy Frink (Grandfather of Brianna)
                                 Brianna Jones
                          March 27, 2009-July 10, 2012
        My daughter Christianna met Christopher Jones in the Army military
    police training school in early summer of 2008. They had both been in
    the military before joining the Army. Christopher was a Marine but then
    transferred to the Army and served a tour in. Christianna served 2
    deployments as a medical technician in the Air Force and had helped
    take care of wounded soldiers transported from Iraq to Germany and in
    the Hurricane Katrina evacuation effort.
        Their first daughter, Brianna Jones, was born on March 27, 2009,
    where they were stationed in El Paso, Texas. Her little sister, Alexis
    Jones, was born 14 months later in May, 2010. Shortly afterwards they
    were transferred to Fort Campbell Kentucky. When Christi and
    Christopher got orders to go back to Iraq in February, 2011, we all
    agreed to have their children stay with Christi's mother's family and
    with us for the nine months they would be gone.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        At first I couldn't believe they wanted to leave their precious
    little girls with us and go off to war together rather than having one
    parent go away and the other take care of the children. But they
    thought it would be the least stressful on their marriage and their
    children to serve their tours at the same time have us grandparents
    take care of the girls. It turned out to be one of the greatest years
    of our lives, a year we will never forget.
        Parenting young grandchildren can be a very challenging experience
    as some of you may already know. Their energy, their emotions, their
    challenges can really stretch grandparents to the limit. But reliving
    the early years with our own girls, and experiencing the joys and the
    delights that you can have with these precious little children is
    beyond imagination.
        Here are a few entries from my journal in that first year when they
    lived with us. I share them to help you see how extraordinary a little
    girl Brianna Jones truly was.
        ``Brianna, when you first came to Maryland you were just 23 months
    old and your sister nine months old. I used to come home early from
    work and watch you for two hours till your grandmother picked you up. I
    would hold you and read you stories and take you up to the school to
    play. You amazed me with your strength and agility as you climbed the
    monkey bars like a big kid. You could even go across the monkey bars
    rung by rung with a little help from Grandpa.''
        ``You loved the big bad wolf story and the two little kids.
    Whenever we played big bad wolf in our playground fort you'd say,
    ``Don't be afraid big bad wolf; don't be afraid!'' when you were the
    one half terrified.''
        ``You were only two years old, but you loved to fly a kite. I
    remember when we went to Leonardtown after Hurricane Irene and the wind
    was blowing so strong. You wanted to fly my kite because you were a big
    girL You took that string and ran and ran and ran across that huge,
    long field and watched in utter delight as the kite soared behind you,
    while I chased after you calling, ``Brianna come back.'' You never look
    back once you were captivated by that kite.''
        ``You were so good with words and expressing yourself at such a
    young age. You always amazed us with your delightful expressions. I'll
    never forget the first time we were driving to the top of the bridge to
    Solomon's Island and you first looked and beheld the beautiful view of
    the Patuxent River and the Chesapeake Bay. From the back seat we heard
    your joyful exclamation as you threw your arms out and proclaimed
    ``It's amazing.'' I remember one time we were playing cards and you
    held out a handful of cards and you said ``pick a card, any card'' as
    though you were professional card shark in Las Vegas.''
        You were wise beyond your years and so mature. I remember the time
    you were disappointed that we couldn't go swimming at the pool, even
    though you said, ``but I love swimming'', and then we couldn't go to
    the playground and you said, ``but I love playgrounds'', and finally we
    didn't have time to go shopping, and you said, ``but I love shopping.''
    Instead of throwing a temper tantrum like a normal 2 year old who is
    utterly frustrated you sat quietly in the backseat and I heard you say,
    ``I am so mad, I feel like hitting the car!!''
        You loved to ride on the top of my shoulders and shout out with
    glee, ``Look how high my are.'' You loved to play games and have fun,
    and dance like a princess. I remember at your Aunt Katie's wedding that
    you danced non-stop for almost 2 hours, even joining the bride and
    groom for their special dance. You were a bright ray of sunshine,
    giving us joy and delight. Whenever I see a golden butterfly, I think
    of you, because you loved our flower garden and the multitude of
    butterflies that were there that magical summer.''
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        When Christi and Chris returned from Iraq in December, 2011, we
    were so thankful for their safe return. The family was reunited for
    seven months and lived in Clarksville, Tennessee, where they were
    stationed at Fort Campbell. On July 10, 2012, while I was in Houston
    Texas on a business conference I received horrible news that my
    granddaughter Brianna Jones had been strangled to death by a blind cord
    in the upstairs den.
        Here is what occurred in Christi's home that day. She and Chris
    awoke to another day of military service and caring for Brianna, 3, and
    Alexis, 2. Brianna put on her bride costume and coaxed Daddy into
    marrying her with Mommy officiating, one of her favorite pretend games.
    Then Daddy went off to the base, and Mommy had the day off to spend
    with the girls. Later that day, Christi was in the kitchen with Alexis
    doing some mother-daughter baking. Brianna was just at the top of the
    stairs in the family den watching her favorite TV show. When Christi
    hadn't heard any jumping or singing for a while, she headed up the
    stairs to investigate what Brianna might have gotten into.
        You cannot imagine the shock and horror my daughter felt when she
    went upstairs to check on Brianna and discovered her limp body hanging
    there strangled to death by a blind cord? Christi, having military
    training in rescue and CPR grabbed my precious granddaughter and began
    life-saving procedures, all the time knowing it was too late. She
    called Chris and he raced home just in time to see the ambulance take
    his new little bride away forevermore.
        Here is an entry for my journal that night after I had just got the
    call about Brianna's death. ``No, no, no, no, no!!!! This can't be
    real. She can't be dead. Brianna Jones, my precious granddaughter, my
    delight is gone. Why, why, why, why??? My heart is broken, my head
    hurts from so many tears I can't hardly think. Poor Christi, poor
    Chris. I hurt so bad for them, for their loss, for their pain. I can't
    imagine the hell they are experiencing right now. If my soul is crushed
    beyond words how sad, forlorn and desperate they must be. A crushing
    grief like the blackest night takes my breath away. Oh God, why have
    you taken my precious grandbaby away???''
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We survived this horrible experience and have gone on with our
    lives. You see we not only lost our granddaughter, but we felt like we
    lost our own child. However the impact upon our kids was devastating
    beyond words; you never fully recover from the sudden death of a child,
    or even of a grandchild. Christopher retired on disability from the
    Army due to PTSD and very serious injuries suffered in Iraq to both
    knees. Christiana suffered from severe PTSD from her war experiences
    and the devastating loss of her precious little princess. She too lost
    her Army career and is now retired on disability, and four years later
    she still walks with her emotional scars and deep pain in her soul.
    They were extremely fortunate that their love and commitment to each
    other was so strong that they didn't lose their marriage also like
    almost all families that have lost young children.
        Our family will never be the same. We all have been broken by one
    of the most heart-wrenching experiences any family can experience. We
    are heartsick that companies continue to make window blinds with cords
    that kill and maim precious little children. There are so many other
    products on the market that are safer and have no life threatening
    cords.
        I agree with Vice President Mike Pence; I am a Christian first, I
    am a conservative second, and finally a Republican. I am strongly
    prolife and I am very pleased that President Trump is also committed to
    the lives of unborn babies. I strongly urge that actions are taken to
    save the lives of all children whether born or not yet born.
        I am for limited government regulation of our personal lives and
    business. But no business has the right to sell a product that can kill
    children and destroy their families. If these businesses will not
    listen to our cries for help, there must be regulation, there must be
    restraint, there must be controls to keep these big businesses from
    destroying lives so needlessly. Please help us and save the lives of
    dozens of children in years to come.
                Sincerely,
                                                  Timothy Frink
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Nelson. And, Mr. Chairman, also I would like to
    enter information from the Energy Information Administration on
    oil exports into the record.
        The Chairman. Without objection.
        [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

        Senator Nelson. And because of that, Mr. Gerard, one thing
    in your testimony that you didn't mention that does affect your
    members in the American Petroleum Institute is that, since
    1994, exports of crude and petroleum products from the United
    States to Mexico have increased by a factor of six, and exports
    to Canada have increased even more. So as you discuss your
    concern about the talk of tariffs or other trade barriers, that
    could definitely negatively impact the members of your
    institute. Isn't that right?
        Mr. Gerard. Yes. There are implications on our members who
    operate in a global setting. I will add, Senator, just for
    clarification, the crude oil export ban was only lifted a year
    ago. Prior to that, we had restrictions on our ability to
    export that product.
        Senator Nelson. But now there's a proposal to do a tariff
    on any import from Mexico and others. That's not going to sit
    too well with, I would assume, your members, given the history
    that we have.
        Now, Senator Blumenthal applied the label of ``mindless''
    to the President's Executive Order signed Monday that says that
    two rules ought to be repealed for every new rule implemented.
    Maybe in the President's mind that might be good politics, but,
    that Executive Order says that agencies can only take into
    account the cost to industry of a new rule. What about the
    benefits?
        So, Professor, does that make sense?
        Ms. Heinzerling. No, sir, I don't think it does make any
    sense. I think the number two to one is pulled out of a hat. I
    think it makes a better sound bite than a regulatory plan. The
    Executive Order, as you say, speaks only about costs, and so
    one could have a marvelously beneficial rule that is also
    costly. Often costs and benefits run together that way, and if
    that's right, an agency could simply decide to repeal that very
    beneficial rule on account of the costs that it imposes. There
    is nothing in the Executive Order that requires or even,
    frankly, allows an agency to do anything different.
        Senator Nelson. Does anybody want to object to the idea
    that when you're considering cost, you ought to also consider
    benefits? I don't want any long speeches because I have
    additional questions. Anybody agree? I see. Let the record show
    Mr. White is shaking his head. OK.
        All right. Mr. Palmieri, you were very critical of changes
    the CPSC is considering to the rule that governs its ability to
    disclose information about product defects to the public. The
    requirement, Section 6(b), essentially requires that the
    Commission get clearance from a company before disclosing any
    information about one of its products to the public.
        Now, Mr. Palmieri, your written statement indicates that
    you even oppose efforts to modify this rule so that the
    Commission can talk about product safety incidents that are
    already being discussed on the Internet. So, for example, it
    seems that if the CPSC discovered a lithium-ion battery on the
    Internet that was catching on fire and could injure someone or
    even bring an airplane down, you would make the CPSC wait for
    clearance from the company before reporting that information to
    the public?
        Mr. Palmieri. So the Section 6(b) protections that you
    mentioned are part of the delicate balance that Congress struck
    to make sure that companies, retailers, everybody in the supply
    chain, turn over every bit of information, including
    confidential business information, as quickly as possible. And
    to be able to do that, there was a requirement that there be
    some confidence that the agency not distribute that information
    without some notice.
        Now, I think that the objections from the CPSC are really
    overwrought. I think they have not had trouble speaking about
    true risks and problems with a range of products.
        Senator Nelson. Let me just----
        Mr. Palmieri. Yes, please.
        Senator Nelson. Don't you see the ridiculousness of this?
    Again, we get polarized in the extremes and we lose sight of
    what we're doing. And I've already given you examples on both
    sides, so I'm trying to be balanced in my approach.
        Mr. Palmieri. Absolutely.
        Senator Nelson. All right. Let me ask Mr. Gerard. I can't
    help but note that your testimony reminds me of things that you
    said just before the Deepwater Horizon rig exploded. Now, I get
    a little intense when it comes to this because it had a rather
    considerable effect on the part of the country that I
    represent, not to speak of the 11 lives that were lost and
    fouling one of the most productive ecosystems in a pretty large
    oil disaster.
        Now, you said in March 2010 that the oil and natural gas
    industry has a proven track record of safe oil and natural gas
    development. A year prior, the Montara drill rig had a blowout
    on a well in the East Timor Sea, and it was the worst oil
    disaster in that region of the world. And then 20 days after
    your assertion about the safety of offshore oil drilling, the
    Deepwater Horizon incident happened off of Louisiana.
        Several of your organization's members' companies were
    involved. So in the last eight years, two of the worst oil
    drilling disasters in history have threatened all of the things
    that we've enumerated.
        Now, I'm not sure that the API industry standards that you
    claim to promote of safety and reliability were successful. And
    so I want to say that I strongly disagree--and I said I'm
    intense about this because of the effect that I've seen in my
    part of the world--I strongly disagree with you that the oil
    and gas industry has a proven track record of safety. And from
    this Senator's perspective, leaving the oil industry to police
    its own safety is going to result only in all of the
    consequences that we've seen.
        And may I remind everyone, thank goodness the wind stopped
    blowing toward the east. The oil got as far as Pensacola Beach,
    which was blackened. It got to Destin's beaches. But the tar
    balls only got as far east as Panama City Beach. But what it
    did, it shut down the tourism industry of the entire Gulf Coast
    of Florida, all the way down to Marco Island in the south for
    an entire season because people thought that oil was on the
    beaches, not even to speak of the fishery closures, and the
    tragic consequences for humans.
        So what is a reasonable amount of time without an oil spill
    for API to prove that drilling is safe?
        Mr. Gerard. Well, Senator, I think you see it demonstrated
    in our actions as an industry. First, our goal and objective is
    zero incidents. We produce hundreds of millions of barrels on a
    daily basis, as you know. Today, we provide over 60 percent of
    the energy that fuels our entire economy. So as we work
    together and collaborate, and to your point, and I appreciate
    the spirit of your earlier comment, that we need to find ways
    to harmonize or to balance the regimes as we move forward.
        As it relates to the API, we've done a number of things. In
    fact, our standards setting organization has been around since
    1924, is the most cited standards in the world to constantly
    improve our practices and to focus on safety.
        As a result of the tragic incidents you've cited, Senator,
    we've set up an independent center for offshore safety now
    where we bring in third-party auditors to look at our
    operations in the Gulf of Mexico.
        So we learned from our incidents, but we are committed to
    zero incidents. We take safety as a top priority. We've
    developed safety management systems. We just developed another
    one for pipelines in this country, that the regulators working
    with us, our processes that are accredited by outside sources,
    tell us we have some of the best in the country, and we bring
    in academics, we bring in critics, we bring in
    environmentalists and others to do these. So we are constantly
    pushing to do better, Senator, and I will commit to you that's
    the goal and objective of our industry, to always be safe in
    our operations.
        Senator Nelson. I'll just close, Mr. Chairman, by saying
    that way down below the surface, because that cutoff mechanism
    did not work, almost 5 million barrels spilled into the Gulf.
    And, oh, everything was working fine, everything was working
    fine. No, it was only 1,000 barrels a day until this Senator
    got the video of what was happening way below the surface of
    the Earth. And once this Senator put it up on his website so
    that people could see in real-time how much oil was coming out,
    suddenly the amount of oil spilling was escalated.
        It's a part of being truthful and balanced and using some
    common sense. And if we're ever going to get to the question
    of, ``What's the right amount of regulations?'' you've got to
    inject that into the record.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Nelson.
        Senator Hassan and Senator Wicker.

                   STATEMENT OF HON. MAGGIE HASSAN,
                    U.S. SENATOR FROM NEW HAMPSHIRE

        Senator Hassan. Well, thank you very much, Mr. Chair, and
    thank you to all the panelists for being here today. And I'm
    sorry to be a late arrival, and I'm going to have to leave in
    just a couple of minutes.
        So I wanted to focus my single question here on the
    importance of government being nimble as we go through a
    regulatory framework or partnership.
        And so, Professor Heinzerling, this is really, I think, a
    question for you. We often hear that government moves too
    slowly and causes problems for our people, our entrepreneurs,
    and our businesses. In an age of really rapid technological
    innovation, I believe it's really critical to ensure that
    government can keep pace and that regulations are effective so
    entrepreneurs aren't burdened by outdated ones.
        It's also essential that we can respond quickly and
    effectively to emergency situations. So, for example, in my
    home state, something I worked on and focused on every day in
    New Hampshire was our heroin and opioid crisis. It is our top
    public safety and public health concern, and it's actually
    impacting our economy and our businesses. Our employers are
    finding it difficult to hire people. So it has been a real
    source of concern.
        And so in response to the heroin and opioid crisis, and in
    response to requests from Governors and advocates and families,
    the United States Department of Health and Human Services
    recently changed its rules to allow doctors to provide certain
    medication-assisted treatments to a greater number of patients.
    And delaying that rule change could have cost lives.
        So are you concerned, Professor, that by slowing down the
    process for making these kinds of changes, we risk making
    government responses slower and impeding our ability to
    appropriately respond to changing circumstances?
        Ms. Heinzerling. Yes, absolutely. The process, as I
    mentioned, is already lengthy and labor intensive, it can take
    years, and to add to it is just going to slow down the kinds of
    responses, as you say, make us less nimble. I'm always
    surprised when people complain about delays and bureaucracy in
    government, and then the first response is to pile on delays
    and bureaucracy. So, yes, I am concerned about that. And I will
    say that that worry is not helped by starving agencies of
    resources to do their jobs.
        Senator Hassan. Well, thank you very much. I appreciate
    that.
        And thank you, Mr. Chair.
        The Chairman. Thank you, Senator Hassan.
        Senator Wicker.

                  STATEMENT OF HON. ROGER F. WICKER,
                     U.S. SENATOR FROM MISSISSIPPI

        Senator Wicker. Mr. Shapiro, let me ask you about the net
    neutrality regulation. You know, net neutrality sounds so
    sensible and harmless, and yet actually what it means is that
    instead of the light touch approach to FCC regulation of
    broadband that we had before 2015, under net neutrality, it's
    now reclassified under an outdated Title II regime more like a
    utility or a telecommunications service.
        The advocates of so-called net neutrality rules say that
    this is necessary to advance Internet openness. Give us your
    views on this, and how can we advance this openness without
    relying on Title II regulation?
        Mr. Shapiro. Thank you for that question, Senator Wicker.
    I've been engaged on this issue a long time as a request of the
    FCC to develop principles encouraging broadband investment and
    broadband competition, and that was the status quo for many,
    many years. I believe it was under Chairman Powell at the FCC,
    and said here's what we're trying to accomplish; we're not
    issuing a rule; we're not doing anything; but this is generally
    good principles that folks follow. And it was followed, and
    there was no real harm done that anyone could talk about.
        And then I think Candidate Obama made a promise, and his
    appointed FCC Chair felt obliged to follow up on it. And it
    ended up in, frankly, 8 years of a lot of lobbying and
    political capital.
        But I think the goal really here is a shared goal of
    everyone. We want to promote innovation. We want our consumers
    to get service in broadband. We want competition in broadband.
    You know, we have great broadband in the United States, but the
    fact is in Europe they have lower prices because they have a
    lot more competition than we do.
        So how do we get companies to invest in broadband? Well,
    that requires some legal certainty, it requires a return on
    investment, and it requires as much competition as possible.
        To me, the whole issue of net neutrality will go away if we
    have multiple broadband providers, they say what they're going
    to do, consumers can get out of their contracts if they change
    what they're doing, and there's real competition. And that
    should be our goal as a nation: fast broadband, competition,
    lower prices. And that's something I think that that should be
    the national goal, because otherwise we're going to have a very
    divisive battle over net neutrality when basically people
    understand--agree on the results, which is consumers having
    access to what they want to have access to on the Internet.
        Senator Wicker. What can we learn from our European friends
    in this regard?
        Mr. Shapiro. You know, they have lower broadband prices
    because they have a lot more competition, and I think that's--I
    think we need competition among broadband providers, frankly.
    It was great when Verizon came into the market with Fios. It's
    great that we have, in a sense, the smartphone itself is a form
    of broadband competition. And WiFi is the best thing that's
    ever happened. That was a--that came out from industry, it used
    unlicensed spectrum, and it has been a safety valve for
    everything we do in broadband, and it's allowed us to all enjoy
    the Internet.
        So you could also have broadband over power line, you could
    have it obviously over cable, and certainly you could even do
    it with broadcasts and satellite dishes. So the more broadband,
    the more competition, the better, and I think that's a goal we
    can all work on.
        Senator Wicker. Thank you very much.
        Mr. Gerard, you touched on commercial Vessel Incidental
    Discharge, VIDA, in your testimony. Can you expound on how
    ballast water discharge regulations impact your industry and
    impact the economy?
        Mr. Gerard. Well, thank you, Senator, for the question. And
    let me thank the Committee on a bipartisan basis for your
    leadership on this issue. This is, in our mind, a perfect
    example of ways we need to oversee the regulatory processes.
        Under the Vessel Incidental Discharge, as you know, we had
    two Federal entities. We had a global international standard
    and 20 different state standards. So until the Committee
    intervened in this process, we were trying to comply with all.
    You can imagine in our business trying to ship product all
    around the country and all around the world. We're moving
    throughout these jurisdictions almost on a daily basis, so
    anytime we enter a new one and the rules change, it impacts our
    ability in foreign commerce or even in domestic commerce.
        So your efforts to consolidate that to make the U.S. Coast
    Guard the lead on this to push other agencies like the EPA to
    work with the Coast Guard in a single uniform standard is
    critically important because it does impede commerce, it has
    direct impacts on our ability to bring energy to the
    marketplace, like I say, both domestically and internationally.
        Thank you for your leadership.
        Senator Wicker. Thank you.
        And thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Wicker.
        Senator Cruz is up next.

                      STATEMENT OF HON. TED CRUZ,
                        U.S. SENATOR FROM TEXAS

        Senator Cruz. Thank you, Mr. Chairman. Thank you to each of
    the witnesses for testifying on this very important topic.
        Mr. Gerard, I would like to start with you. Having the
    privilege of representing the state of Texas, I know firsthand
    the incredible potential energy has, the incredible number of
    jobs that our energy sector produces. And I would ask you to
    share with this Committee, in your views, what can we look
    forward to over the next 4 years if we have a Federal
    Government that reduces the burdens on energy? What potential
    is there for economic growth, for jobs, for wages rising, for
    manufacturing jobs increasing? What can developing the energy
    resources we have in this country do for working men and women
    in America?
        Mr. Gerard. Thank you, Senator. A quick brief history I
    think puts it all in context. Ten years ago, I don't think
    anybody here or even in our industry would have predicted we
    would be where we are today. The U.S. is now the world's number
    one oil producer, number one natural gas producer, and number
    one refiner of product.
        We now have, in addition to assisting bringing the
    manufacturing community back, when you talk to the
    manufacturers and others, they will tell you the number one
    driver in bringing those jobs back to America is energy costs.
    And if you look across the front, you look at the American
    people today, it's estimated that the average family now saves
    $1,300 a year in their energy costs, an additional $550 a year
    just at the gas pump.
        So with that brief bit of history, we just need to project
    that forward now and say, what is the potential? The potential
    is huge. As I commented earlier, one of the parting efforts of
    the previous administration was to take 94 percent of our Outer
    Continental Shelf and make it off limits to any energy not only
    development but to understanding of what's there. The Atlantic
    coast, we haven't looked into with modern technologies for 40
    years as to what our capacity is. We're the only developed
    country in the world that does that.
        My simple point is economic analysis shows that we could
    create 800,000 new jobs--I might add, as you know, in Texas,
    our jobs pay somewhere between 50 and 100 percent more than the
    average job in the country--800,000 new jobs, an additional
    $200 billion in revenue to the Federal coffers. But the things
    we don't often think about, think about poverty, think about
    income and equality.
        We talk about a good standard of living. Experts will tell
    you by 2040, over 60 percent of our energy will still be oil
    and gas. We can produce that domestically, put downward
    pressure on price. It benefits all of us and makes us
    nationally secure.
        Senator Cruz. Well, thank you, Mr. Gerard. As someone who
    grew up with my parents as small business owners owning a small
    seismic data processing company, I've grown up firsthand seeing
    the benefits of a robust energy economy, and I very much hope
    that the issue you highlighted of the Administration's abuse of
    its power, taking the vast majority of offshore resources
    offline from even seismic exploration, I hope that those
    policies will be reviewed and reversed by the new
    Administration, and I look forward to working with you to help
    that happen.
        Let me shift to one of the most burdensome regulations that
    was promulgated by the prior Administration, which was the so-
    called Clean Power Act, which has been estimated to impose $7.2
    billion in annual costs, which is north of $70 billion, if my
    math is right, over 10 years, which is an enormous regulatory
    cost.
        Last year, I chaired a hearing in a subcommittee of this
    full Committee focusing on the burdens of overregulation on
    minority communities. And in particular, the National Black
    Chamber of Commerce testified about the Clean Power Plan, that
    it would impose severe and disproportionate economic burdens on
    poor families, especially minorities, and, in particular, the
    proposed rule would impose the most harm on residents of seven
    states with the highest concentrations of African Americans and
    Hispanics, and, indeed, the National Black Chamber of Commerce
    estimated that just this one EPA rule would increase African
    American poverty by 23 percent, Hispanic poverty by 26 percent,
    and by the year 2035, if fully implemented, would result in job
    losses of 7 million African Americans losing their jobs, and
    nearly 12 million Hispanics losing their jobs.
        Do you agree with the assessments about the harm that this
    overburdensome regulation could cause?
        Mr. Gerard. Absolutely, Senator. In fact, the unfortunate
    thing we often forget about, those on fixed income, those who
    can afford it the least, are the most impacted because energy
    is something we all use every day, in everything we do. It's
    part of our clothing, our materials, and our energy efficiency.
    It all comes, by and large, from petroleum products.
        The other thing I would just note here on your question is
    when you look at the Clean Power Plan, today, the United States
    has reduced our carbon emissions, we're at 25-year lows. The
    Clean Power Plan is not in effect yet. We accomplished that
    because we're producing vast amounts of clean-burning natural
    gas that's being consumed, that brought the price of gas down
    so all of our consumers benefit from that. We've already
    accomplished a significant portion of what the Clean Power Plan
    was intended to do.
        And this is an area we need to look at. If you've got
    government regulators out there driving an agenda--and I wasn't
    given an opportunity earlier to address Senator Udall's
    question, but methane is a perfect example. We've got three
    regulatory bodies now imposing the same standard, yet each one
    of them brings added cost. We can regulate thoughtfully, to
    Senator Nelson's point, in a commonsense, smart fashion without
    adding these extra costs. Why? Because they impact people, they
    impact Americans. And unfortunately, it impacts job creation
    and our opportunity to have affordable, reliable energy.
        Senator Cruz. Thank you.
        The Chairman. Thank you, Senator Cruz.
        And before I go to Senator Moran quickly, with respect to
    what Senator Cruz, his line of questioning, earlier today I
    think many of you were asked by Senator Blumenthal about
    figures regarding possible job losses attributable to
    unnecessary regulations, and I think you wisely declined to
    speculate about the numbers, but if you would like to
    supplement your answers, as you have an opportunity to review
    the data for the record, you certainly would be encouraged to
    do that.
        Senator Moran.

                    STATEMENT OF HON. JERRY MORAN,
                        U.S. SENATOR FROM KANSAS

        Senator Moran. Mr. Chairman, thank you. And in that regard,
    and perhaps following up on what Mr. Gerard said, one of the
    things I've discovered in my time in Congress is those who
    claim to be the most caring among--about the poorest among us
    often are the ones who promote the policies that are the most
    damaging financially to the poorest among us. And it is
    something to keep in mind about the consequences are disparate
    in the way they affect people.
        Let me turn to Mr. Palmieri. I chair the Subcommittee on
    Consumer Protection, and we've been paying attention here at
    the end of 2016 to CPSC and what their regulations might be as
    the administration comes to an end. I was pleased in a
    conversation I had with Chairman Kaye that he informed me that
    in December that he would not be pursuing the Voluntary Recall
    Rule for the duration of his term. It doesn't appear, however,
    that Chairman Kaye is departing from the CPSC, and I look
    forward to having him in front of our Subcommittee in the near
    future so that we can hear from him as to what his agenda might
    be.
        But I wondered if you would tell me what actions you
    believe that CPSC should take or Congress could or should take
    that will help spur job creation at the same time as protecting
    consumer safety.
        Mr. Palmieri. Sure. We appreciate your work and leadership
    in this area. It's critically important. We also appreciate the
    commitment you've gotten from Chairman Kaye about the Voluntary
    Recall Rule, although it's still in the operating plan, and one
    of the commissioners has still made it one of his most
    important priorities and had suggested that he was bringing
    forth a proposal soon. So I hope that commitment continues to
    be honored.
        We also think that Chairman Kaye, like his colleague at the
    SEC and the FCC, should step aside and let the Vice Chair take
    over, and this Committee should promptly confirm a new Chair,
    once nominated.
        I think one of the things that we think is most important
    to do and that Congress has directed the CPSC to do multiple
    times is to engage stakeholders in a really robust process. I
    talked about the kind of cooperation that manufacturers in the
    CPSC have had for decades, and we want that to continue. The
    only way that we're going to continue to innovate and quickly
    and rapidly continuously improve the safety standards and
    design of all of our products is if we're working together
    hand-in-hand, and unfortunately too often that's not been the
    case with the current makeup of the Commission.
        Senator Moran. Chairman Kaye indicated to me that when he
    testified last before our Subcommittee, which was I think about
    15 months ago now, that efforts would be increased to have
    shareholder, stakeholder input. That hasn't happened from your
    point of view?
        Mr. Palmieri. No, sir.
        Senator Moran. OK. We'll follow up.
        Let me go to Mr. Shapiro. The National Highway Traffic
    Safety Administration has the authority to regulate technology
    devices, I want to say--let me rephrase that. Do you believe
    they have the authority to regulate those devices just because
    they happen to be in vehicles? And if NHTSA can regulate mobile
    phones, can it also regulate other consumer electronics that
    might be brought into the vehicle?
        Mr. Shapiro. Thank you, Senator, for that question. I do
    not believe they have authority to regulate products unless
    those products happen to be cars or other vehicles. And the
    position they've taken, though, is that they can regulate
    anything that goes into the vehicle, at least any device, and
    so that means that they have taken--asserted jurisdiction over
    everything from smartphones to tablets to wearable devices. And
    they have issued guidelines saying how these devices should be
    built, as well as their----
        Senator Moran. Do you have concern about that?
        Mr. Shapiro. I have grave concern about it. I think they've
    ignored the fact that--first of all, like all regulators, they
    mean well. Driver distraction does kill people, and it's bad,
    and we should do everything we can. There's a whole range of
    products in the marketplace to help on that, and certainly, the
    quicker we get to self-driving cars, the better off--we'll
    solve that problem. So this is a temporary period of obviously
    many years, but it's still temporary, before we get to a much
    lower death rate and accident rate, where 35,000 people are
    dying a year.
        But on the other hand, I think these devices have purposes.
    For example, if you're a parent with a babysitter or you're a
    doctor on call, you need to be able to get information in your
    car today. And it's also difficult to distinguish the driver's
    device from other people's device. And, frankly, I think
    they've been a little negligent because drunken driving could
    have been regulated by technology years ago, and it never has
    been, and that type of technology which either locks down a
    car, it doesn't work, or gives you a test or whatever before
    you get into it, that's out there, and drunken driving has
    killed a lot of people over the years.
        So I think they're just picking and choosing, and I don't
    think it's responsible, and they're doing something they have
    no authority to do.
        Senator Moran. Thank you, Mr. Shapiro.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Moran. And let me just
    say, too, in follow-up, that every loss of life is tragic, and
    if there are things that we can do and smart regulations to
    prevent that, we want to do it. And you noted the 35,000 or so
    that are killed on America's highways every year. This
    Committee has under its jurisdiction those issues, those safety
    issues. And so we're constantly looking at ways in which
    technology can help prevent those tragedies. And obviously as
    we look at those issues, we want to look at them in a way that
    is sensible, is reasonable, is balanced, and leads to not only
    protection of people's health and safety, but also hopefully
    regulations that are easier to comply with, that make sense,
    and that don't wreck the economy at the same time, and that's I
    think the balance we're trying to achieve.
        Senator Sullivan.

                    STATEMENT OF HON. DAN SULLIVAN,
                        U.S. SENATOR FROM ALASKA

        Senator Sullivan. Thank you, Mr. Chairman.
        And, Mr. Gerard, I really want to let you know how much I
    appreciate your testimony, all the witnesses here, but in
    particular I think it's so important what you're laying out in
    terms of what the oil and gas industry, what the energy
    industry does in terms of the benefits to middle class
    families, to manufacturing, to jobs, to national security, to
    greenhouse gas emissions. I mean, it's not always out there,
    it's certainly not out here enough, I think, in the Congress.
    You mentioned in your testimony, is it 10 million direct jobs
    or is that direct and indirect jobs?
        Mr. Gerard. Direct and indirect, it's about 9.8 million.
        Senator Sullivan. OK. And close to--you said about 8
    percent GDP for the----
        Mr. Gerard. Yes.
        Senator Sullivan. And we anticipate that to rise probably,
    hopefully, if we're increasing our--and those are good jobs,
    aren't they?
        Mr. Gerard. Absolutely. If you look on a national scale,
    Senator Sullivan, I look at various states as we go, and your
    state is a good example of that, that the median wage we pay or
    average wages overall are significantly higher than what median
    wages are in other industries. The reason I point that out is
    because it comes to the broader question of how we benefit the
    middle class----
        Senator Sullivan. Right.
        Mr. Gerard.--how we grow society. We work a lot with the
    organized labor folks, as a Senator pointed out earlier,
    Senator Cruz did. We're reaching out. We have relationships
    with the Hispanic community, African American community, and
    others because our workforce, about 50 percent of it, is going
    to turn over in the next 10 years.
        Senator Sullivan. Let me just give you an opportunity to
    kind of talk a little bit more about the jobs and the people in
    your industry because I've been in the Senate for 2 years, and
    one of the most surprising things that I've seen is how much
    some of my colleagues, particularly on the other side of the
    aisle, love to vilify the oil and gas industry. I mean, you
    name it, right? ``You're polluters,'' ``You're bad actors.''
        I represent thousands, thousands of people in the oil and
    gas industry, Democrats, and Republicans. These are really,
    really good, hard-working people who are producing an
    incredibly important service to our country. Can you talk a
    little bit about these? Are they bad actors? Are they evil
    people? Are they polluters? Are they--I mean, this--look, you
    hear it every darn day. I'm sorry, but it's the truth.
        Mr. Gerard. Well, it's really unfortunate, Senator, that we
    stoop to those levels of conversation and we don't keep it at
    the high ground and talk about the reality. The reality is
    today that over 60 percent of all the energy we consume in the
    United States is oil and natural gas, and it's literally in
    everything we do. It's the makeup of our society, it's the
    makeup of our economy.
        Senator Sullivan. But the people in the industry, what are
    they like? You represent them.
        Mr. Gerard. The people in the industry are fabulous, as you
    know. They're Democrats, they're Republicans, they're
    independents, they're Little League coaches, they're local
    pastors in the churches, they're just like all others----
        Senator Sullivan. I just think it's helpful here to when we
    hear our colleagues do their shtick, not all of them, but some
    of them, it's important to push back. These are Americans,
    these are great Americans, and they represent all elements of
    the political spectrum. And in my experience, 2 years in the
    Senate, there is just too much vilification of people in an
    industry that really, really help the country.
        Let me mention another area where I think it's not often
    known where this industry does help the country. You talk about
    the offshore that's been taken off the table by the former
    Obama administration, 840,000 potential jobs. As you know, a
    lot of that was off the coast of my state.
        Mr. Gerard. Yes.
        Senator Sullivan. The Chukchi and Beaufort Seas. But I
    think most people would agree the Arctic is going to be
    developed. Would you agree with that?
        Mr. Gerard. Oh, absolutely. It's already being developed.
        Senator Sullivan. So it's either going to be in
    jurisdictions like Alaska, that have the highest environmental
    standards in the world. I guarantee you, there is more oil
    dripped in the parking lots in Walmart in L.A. every day than
    there is oil dripped on the North Slope of Alaska. It's a very,
    very environmentally responsible place to develop oil and gas.
        So when we take it off the table, not we, when the Obama
    administration takes all that development off the table in the
    jurisdictions with the highest standards in the world, are we
    protecting the environment? Aren't we just shifting investment
    and production, oil production, in the Arctic to places like
    Russia, which, with all due respect to the Russians, maybe not
    due respect because in some ways they don't deserve due
    respect, but their environmental standards and their ability to
    enforce them are much, much less than ours, aren't they?
        Aren't we harming the environment by driving investment to
    the jurisdictions that have the least environmental standards
    as opposed to encouraging development in the jurisdictions that
    have the highest environmental standards?
        Mr. Gerard. Senator, here's the reality, and this is the
    most recent economic analysis done by the Obama administration
    prior to departure. By the year 2040, close to 70 percent of
    all of our energy will still be oil and natural gas. If you
    look at it on a global scale, it's over 78 percent will still
    be oil and natural gas. The question becomes, Who's going to
    provide that?
        One of the great things this Congress did was lift the
    crude oil export ban to allow us to create American jobs under
    the toughest environmental standards in the world, put that
    product into the global marketplace, and I will add, as many of
    you know, from a foreign relations perspective, you have people
    clamoring, particularly for our natural gas. Those in Eastern
    Europe would love to have an alternative to their current
    provider of natural gas.
        If you look at it from an environmental perspective, I
    believe one of the great things we missed when we went to Paris
    is we didn't go over and talk about the American vision, the
    American accomplishment, in lowering our greenhouse gas
    emissions by using and consuming clean-burning natural gas.
        These are all realities, and unless we're trying to drive
    up the cost to consumers, which I don't think we are, we need
    to be thoughtful and mindful about our own domestic resource,
    how we put our people to work, we benefit our own society, our
    own people, and at the same time, we can benefit the global
    world through free trade.
        Senator Sullivan. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Sullivan.
        Senator Peters.

                    STATEMENT OF HON. GARY PETERS,
                       U.S. SENATOR FROM MICHIGAN

        Senator Peters. Thank you. Thank you, Mr. Chairman. Thank
    you to all of our panelists. Interesting testimony, and I
    appreciate you being here as we try to sort through this issue
    and try to find balance between protecting the public and
    making sure that we're streamlining operations as well and
    operating efficiently.
        And I'm going to pick up on some of the comments that the
    Chairman, and Mr. Moran as well, made about the auto industry,
    and Mr. Moran as well, given that's a very important industry
    in my state of Michigan.
        And as all of you know, the auto industry is certainly a
    regulated industry. The industry builds vehicles according to
    the Federal Automotive Vehicle Safety Standards set by NHTSA
    through a notice and comment rulemaking process, and then the
    automakers self-certify that those vehicles comply with the
    standards, and then their vehicles enter the stream of commerce
    as a result of that.
        I believe and hope that all of you would agree that these
    regulations provide certainty, not just for the companies, but
    for their consumers, so that they know that the car that
    they're driving with their children in the back seat will be
    safe and they'll be able to get to their destination safely.
    And from my work with the auto companies, they are all
    committed to that goal as well and work on a cooperative basis
    with regulators to make sure regulations are working in a way
    to keep their customers and passengers in their cars safe.
        The one issue that this Committee will be working a great
    deal on, and one that I personally have been focusing a great
    deal on, is the new technology that will radically transform
    the auto industry in ways as big as when Henry Ford had the
    first car come off of the assembly line. The move to self-
    driving vehicles will substantially reduce accidents and, in
    fact, could potentially eliminate most all accidents on the
    roadway through connected and automotive vehicles.
        However, the current regulatory scheme that we have for
    automobiles doesn't really fit with these new technologies. The
    current rules require steering wheels and brake pedals and
    other things that will not be part of a self-driving vehicle.
        Mr. Shapiro, I know that you have spent some time working
    and thinking about these issues. Do you believe there needs to
    be a new Federal motor vehicle safety standard promulgated by
    NHTSA for these new technologies developed by your membership
    as well as others? And what sort of thoughts do you have on how
    we find that and strike that balance?
        Mr. Shapiro. Thank you, Senator Peters, for your thoughtful
    leadership on this. Obviously, Michigan, where I also live, is
    a wonderful state for car manufacturing, and I'm impressed,
    even though manufacturers have been around a while, the
    industry, and you particularly, have grabbed the issue and said
    we are going to the future, we're not going to fight it as a
    legacy industry.
        It's a great example of an older industry responding to
    amazing change in innovation, and with great benefits, not only
    to the 35,000 people a year who we could avoid their deaths,
    but also to elderly, to the disabled, it frees up. It's green,
    there will be less energy used, sorry. But it's something which
    will change how we go about work and empower people, and I
    think it's a very worthy goal for this country to have. But it
    does require a change because all our laws are based on this
    four-tire car that has a driver and a steering column.
        And when Mark Fields, of Ford, announced that we're going
    to go--they're going to go forward and eliminate the--by 2021,
    eliminate the driver's column, produce cheaper fleet cars at
    least, and have them self-driving, it was very, very
    forelooking.
        It does require a change in the law. I know that you are
    circulating a draft bill, and that bill really talks about
    taking the necessary steps for NHTSA and others so that we
    could test these vehicles so they could exempt certain
    vehicles, and even so suppliers can test the vehicles, which is
    very important, in a very reasonable way. And we look forward
    to working with you in that process.
        One of the things we are interested in is getting there as
    quickly as possible, not only with the auto industry, but with
    after-market products, because the sooner we get to self-
    driving cars, the more lives we save, the more injuries we
    avoid, the quicker people are empowered who are elderly or
    disabled.
        Senator Peters. Well, I appreciate those comments. I think
    you're right. We do have to get there quicker. We have to get
    to what they call Stage 4 and 5 automobiles that really do
    drive themselves. As you know, there are some automobiles on
    the road that I think as a result of perhaps some marketing are
    making some promises that are not really achievable by the
    technology that currently is in those vehicles. And accidents
    occur, and that could result in pushback from consumers who
    believe they may have a self-driving car when in reality it's
    not.
        So it's important for us to get to that stage. The most
    dangerous part is the part between where you are in full
    command of your automobile. You have some equipment that takes
    over some parts of it, and then the driver thinks that they
    don't have to pay attention anymore, and then that can be
    catastrophic. So that's why we need legislation, to your point,
    that moves us as quickly as possible into that Stage 4 and 5
    there to make sure we have the consumer's acceptance for this
    technology, and knowing when that occurs, we're going to save
    tens of thousands of lives.
        Mr. Shapiro. I agree with everything you said. I would only
    add that we cannot make the perfect the enemy of the great.
        Senator Peters. Right.
        Mr. Shapiro. Any system for many years will not be perfect,
    and there will be accidents, there will be weather situations,
    there will be sudden ditches, but we are quickly getting--
    already today there is active collision avoidance systems which
    are being put in many cars, and we're going to get there very,
    very quickly, but there will be accidents along the way, and
    there will be a tragic loss of life, but we have to look at all
    the lives we're saving by going there, even today already.
        Senator Peters. Right. And I agree. And I appreciate it.
    Thank you for your testimony.
        The Chairman. Thank you, Senator Peters. And I would point
    out, of that 35,000 or so accidents that happen every year, 90
    percent are caused by human error in some fashion, distracted
    driving, driving under the influence. And so I think we can do
    considerably better than that, and I believe, in the long term
    at least, that the technologies are going to get us there.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman. And I
    appreciate your being so generous with your time. And I want to
    thank the witnesses for your time in being here today. I
    recognize that we're dealing here with a very serious topic
    where we need to strike a balance and preserve public health
    and safety, but at the same time, be mindful about the effects
    on employment and avoid excessive or unnecessary regulation,
    which I prefer to call standards or rules rather than
    regulation.
        And I think we can all agree, I hope we can agree, that
    accurate disclosure, truth-telling, is common ground. Nobody
    can disagree with that point. And so when companies like Takata
    or VW lie to consumers or to the United States, it ought to be
    punished. I don't think anybody would disagree with that point,
    especially since there are such humongous costs to that
    nondisclosure or misrepresentation. And that's the reason that
    executives in those companies are being prosecuted criminally,
    and they should be.
        But the results of that nondisclosure and of action taken
    also, by the way, can create jobs. Takata airbags have to be
    replaced. More people will be working to manufacture the
    products to replace those airbags, particularly if Takata
    shares its proprietary information with other manufacturers,
    which I have long advocated. VW cars can be returned and
    replaced or repaired so that the defect in the emissions system
    can be corrected. Correcting those defects are job creators,
    correct? I don't think anybody is disagreeing.
        Yes, sir?
        Mr. Shapiro. I wouldn't use that as a model for job
    creation, so I'm reluctant to keep shaking my head as you're
    talking, but nothing you've said I totally disagree with.
        Senator Blumenthal. Right. It's not the best way to create
    jobs, but the point is that enforcement of rules and standards
    does not necessarily destroy jobs. In fact, a report from the
    Bureau of Labor Statistics found that 2.3 million individuals
    were laid off and claimed unemployment insurance in 2012.
    According to a survey of employers themselves, less than .3
    percent of layoffs are due to, ``government regulations or
    intervention.'' Employers reported that lack of business
    demand, ``business demand,'' actually accounted for nearly 39
    percent of the workers laid off. It makes sense--doesn't it?--
    that consumer demand is more important and impactful because of
    employment or non-employment than regulation.
        So when we measure the costs of regulation, and I asked you
    earlier about the costs of death, and I think you answered as
    best you could. There really is no good answer to that kind of
    question. So you did the best you could, and I respect you for
    trying to answer it. But regulations that prevent fraud can
    save consumers money, can prevent economic crisis, as during
    the financial meltdown, when distortion, misrepresentation, or
    lies in effect impacted the entire economy. Industry innovation
    ought to be lauded for its public benefit, and so should job
    creation, and I think we can work together to require more
    truth, more accuracy, so that defects in products are disclosed
    and injuries and death prevented. I think we can all agree on
    that point.
        And in terms of just accuracy, Mr. Palmieri, I've been
    through the report that your organization prepared, and just to
    be clear, the 297,696 regulations or restrictions included--did
    they not?--guides and guidelines, for example, guides against
    deceptive pricing, guides for the advertising of warranties and
    guarantees, guidelines on discrimination. Guides and guidelines
    are included, are they not?
        Mr. Palmieri. It only included items published in the Code
    of Federal Regulations. And so most guidance is not published
    in the CFR, but some are.
        Senator Blumenthal. And so you counted those guides and----
        Mr. Palmieri. Absolutely. And just to be clear, there is
    nothing about that number that says that's the wrong number,
    there's nothing about any number we've ever produced on the
    cost of regulation that says it's too much. It's just an
    evaluation of what the cumulative current burden of regulation
    and restrictions are on manufacturing.
        And so it doesn't carry with it the secondary value
    judgment that some of those critical protections, as I
    mentioned in my opening statement, should be repealed or
    removed. It is simply to say here is the starting point when we
    add that next incremental burden, and just to help us talk
    about it and think through it, other than just by pure
    anecdote.
        Senator Blumenthal. So you're not saying in effect that
    there is some magic number of regulations----
        Mr. Palmieri. No, sir.
        Senator Blumenthal. And so when President Trump says let's
    cut two regulations every time we create a new one, that kind
    of rule really has no basis in common sense or fact, does it?
        Mr. Palmieri. I think I would just say because we've
    counted before on the concept of regulatory budgeting, that
    there is some sense that often government agencies with zero
    constraints are not getting the balance right on those
    unnecessary burdens that we can all agree should be eliminated.
        Senator Blumenthal. But I think we can all agree that the
    number of regulations is not itself a goal, it's the wisdom and
    efficacy of those regulations.
        Mr. Palmieri. Absolutely.
        Mr. Shapiro. I'm sorry. I don't want to be part of the ``we
    can all agree.''
        Senator Blumenthal. Oh, OK. Sorry.
        Mr. Shapiro. When you have 297,000 restrictions, when we
    have more lawyers than any other country in the world, and
    those are jobs, I don't think those are good jobs. We are
    overemployed with lawyers here. We should ship them to Iraq,
    frankly, if we want to change what we're doing because we are
    an overlawyered country, and we keep creating more rules and
    more rules.
        And the number one complaint I hear from my members is that
    they can't even spend the time to figure out how many rules
    there are without hiring bunches of lawyers. It's a barrier to
    entry for competition. It's not the biggest issue for the large
    companies, but it is for the smaller, the startups, and others,
    because you're always violating some law, and you don't even
    know what it is.
        So, yes, we have too many. And I applaud President Trump
    for coming up with a forced triage system for Federal
    rulemaking. It smells a little bit like rulemaking
    sequestration, and it is coarse, but it does force you to focus
    on, as an agency, what is really important to accomplish their
    mission.
        Senator Blumenthal. OK. Thank you for your comment. I'm
    surprised you didn't quote Shakespeare, first kill the lawyers.
    I think that was his comment, but I won't take it personally.
    And we do have some lawyers on the Committee.
        [Laughter.]
        Senator Blumenthal. But let me just ask, just for
    clarification, Mr. Palmieri, guides and guidelines do not have
    the force of law, do they?
        Mr. Palmieri. No, but too often agencies attempt to do
    rulemakings that have the equivalent force of law through
    guidance, and that's a problem we talked about earlier on this
    panel as well.
        Senator Blumenthal. And when you reached that number, you
    counted as units for purposes of reaching 297,000-plus rules
    and regulations, each part of any regulation. So, as you know,
    the CFR divides regulations into chapters, subchapters, parts,
    subparts, and sections. You counted every part of those
    regulations as a separate unit of analysis, correct?
        Mr. Palmieri. Absolutely. What we asked our author and
    researcher to do was to go through the entire manufacturing
    process from the sourcing of raw materials to the
    transportation of finished goods, to go through the entire Code
    of Federal Regulations and identify each of those restrictions
    on manufacturing. And just to be helpful, even more coarse than
    that, it's about the restrictive language in each one of those
    parts and sections. And so, again, it is not in any way to
    indicate what the right number is, it's just to establish a
    baseline or a starting point from where we are.
        The Chairman. Senator, we need to move on.
        Senator Blumenthal. Yes, I apologize, Mr. Chairman. I'm way
    over my time. And I----
        The Chairman. You're not way over; you're way, way over.
        [Laughter.]
        Senator Blumenthal. Well, I hope I'm not sent to Iraq as a
    result.
        [Laughter.]
        The Chairman. Let me just point out quickly, because it has
    gotten a lot of discussion here today, two observations really
    before we go to Senator Young, about the Executive Order. One,
    it does build in flexibility for OMB; there's waiver authority
    included in that. And I think, second, as has been pointed out
    by members of this panel, it's animated by a desire to ensure
    that agencies regularly review the impact of these past
    regulations.
        And perhaps it does sound like a blunt instrument, but it
    is--that's got to happen. And President Obama said that's got
    to happen. Cass Sunstein said that's got to happen, and that it
    doesn't happen.
        So, you know, sometimes it takes something that really gets
    people's attention in order to facilitate what probably should
    have been happening anyway.
        Senator Young.

                     STATEMENT OF HON. TODD YOUNG,
                       U.S. SENATOR FROM INDIANA

        Senator Young. I thank the Chairman for holding this
    hearing. I represent the state of Indiana. As I travel around
    the state, I talk about job creation and concerns about wage
    growth with small businesses, large businesses, and, more
    importantly, rank-and-file Hoosiers, and one of the things I
    hear most often from business owners and managers is that even
    though they may have half their profits taxed away through our
    current less-than-optimal tax code, it's actually the unseen
    taxations, the regulatory burdens, that are of greater concern
    to them, and surveys from the NFIB and others sort of bear that
    out.
        So oftentimes, it's bad process that leads to a bad work
    product, and I think that's definitely the case with respect to
    our regulatory atmosphere.
        And so with respect to process, Mr. White, in keeping with
    your book, Policy Reforms for an Accountable Administrative
    State, where you present prescriptions to reform the
    administrative state, you propose continuing Chevron deference.
    This is a topic which is quite timely right now on account of
    the announcement of a new Supreme Court nominee, who has spoken
    out quite forcefully on this topic.
        But you indicate that you believe that under certain
    limited circumstances, I don't want to mischaracterize your
    position, I'll give you an opportunity to clarify if so, but
    there should be some continuance of this deference to
    administrative interpretation of the laws that we pass.
        And I just want to know why you believe it's important to
    retain that Chevron deference. And is there something that
    perhaps we could do moving forward to make sure that we follow
    the law, as written, which I know is what the nominee's
    emphasis is, but effect the sort of policy goals that you're
    concerned about?
        Mr. White. Well, thank you. Thank you very much. And thank
    you for mentioning the book. I hate to lawyer--I'm afraid to
    lawyer this up, I may be sent out of the country now.
        [Laughter.]
        Mr. White. But just to clarify the position, Chevron
    deference, the doctrine, has had benefits and it has drawbacks,
    drawbacks that are ever clearer.
        In our book, our first proposal is to increase the
    procedural requirements on agencies, the Regulatory
    Accountability Act.
        The main criticism of the Regulatory Accountability Act is
    that agencies, when faced with these increased burdens, these
    procedural burdens, will try to just evade rulemaking.
        So our proposal in this book is to use Chevron deference as
    a tool to incentivize agencies to go through the notice and
    comment process.
        That is, Congress should make Chevron deference available
    for agency interpretations that come out of the notice and
    comment process. They should prohibit it in all other contexts,
    interpretations and guidance, in agency adjudications, other
    agency vehicles that didn't go through notice and comment. And
    that way, Chevron deference becomes a tool to incentivize the
    agencies to go through a better process at the front end.
    That's our proposal.
        Senator Young. You'll be encouraged, I'm going to continue
    on the topic of your book and some of the things you discuss.
    So you discuss the flaws of the Administrative Procedure Act in
    modern times by agencies adopting rules without procedural
    requirements on the front end.
        You proceed to discuss a need for Congress to impart cease
    the delegation of power to regulatory agencies through
    legislation such as the REINS Act. The REINS Act is a piece of
    legislation I introduced in the last couple of Congresses in
    the House of Representatives. I look forward to working with
    Senator Paul to hopefully get it passed out of the Senate.
        Could you please speak to the impact you believe that the
    REINS Act would have on how government employees develop rules
    if they knew that congressional consent would ultimately be
    required at the end of the process to implement those rules?
        Mr. White. Well, thank you. Studies have shown that agency
    personnel are very aware of the administrative law that
    surrounds their own regulation writing, just as Members of
    Congress and congressional staff are well aware of a lot of
    these rules when they draft legislation.
        I think the REINS Act is one of several productive ways to
    reform delegations of rulemaking power to the agencies. You can
    either narrow the substantive acts themselves, such as the
    Clean Air Act: you can narrow them, further specify them,
    reform them, or, in addition to that, you can make a preemptive
    withdrawal of rulemaking authority for rules above a certain
    cost level. I think it's a great way to focus responsibility
    back in Congress, but also, as you said, to properly align the
    incentives of the agency personnel themselves.
        Senator Young. My bias, of course, would be toward a
    systemic change with respect to how we make rules that would
    impact the incentives of the rule drafters and the legislators
    alike. I think we too frequently delegate the very difficult
    decisionmaking in the sweeping bills we pass to the
    administrative branch as opposed to making those decisions on
    the front end as the people's branch of government.
        I think if we knew in the end we would have to vote in a
    standalone way on some of these more controversial measures,
    which is exactly what would happen under a REINS Act regime, we
    would end up with better law in the end. So thank you very much
    for your testimony.
        I yield back.
        The Chairman. Thank you, Senator Young.
        I think we're ready to wrap up. I do want to submit for the
    record some letters and some testimony that we received that
    was not submitted orally obviously today, but from the Power
    Tool Institute, the Association of American Railroads, the
    American Chemistry Council, the Software Information Industry
    Association, and the CPSC Commissioner Joe Mohorovic concerning
    his thoughts for improving the regulatory process at
    independent agencies. So we'll include those without objection.
        [The information referred to follows:]

             Prepared Statement of Susan Young, Executive Manager,
                              Power Tool Institute
        Chairman Thune, Ranking Member Nelson, thank you for the
    opportunity to submit testimony to the United States Senate Committee
    on Commerce, Science and Transportation. My name is Susan Young and I
    serve as the Executive Manager of the Power Tool Institute (PTI). PTI
    is a voluntary trade organization representing major manufacturers of
    portable and stationary power tools. PTI has nine member companies,
    which employ over 13,000 people with facilities in 40 states and
    employees in all 50 states. PTI and its members are dedicated to the
    safe use of power tools. As such, PTI is heavily involved in the
    voluntary standards process with UL, and PTI serves as secretariat of
    the IEC committee for power tools, which is the international standards
    setting organization. Our members adhere to rigorous safety standards
    and contribute extensive resources to educating consumers on the safe
    use of power tools.
        Since the hearing today is focusing on burdensome regulations and
    how they impact a healthy manufacturing base, I would like to share
    with you PTI's most recent interaction with the U.S. Consumer Product
    Safety Commission in regards to its table saw rulemaking. On January
    17, 2017, just days before the inauguration, CPSC Staff released a
    briefing package on table saws recommending the Commission issue a
    notice of proposed rulemaking (NPR). A Staff briefing and Commission
    vote are now pending in early to mid-February. Since 2003, one company
    (SawStop) has attempted to persuade the CPSC to mandate its patented
    technology on all table saws. It is our belief that such a mandate
    remains unjustified and is detrimental to industry and consumers, and
    that CPSC is expediting the rulemaking now for political reasons.
        As it stands, the briefing package and proposed rule would mandate
    injury mitigation requirements on all table saws within 3 years. The
    package mentions multiple technological solutions, which have not been
    invented, as possibly being able to meet a mandatory rule, however this
    is not now the case and will not be the case in the next three years.
    Additionally, the briefing package selectively uses statistics and
    data, and omits studies, information and data that do not support CPSC
    staff's findings. Finally, the package relies on injury data that does
    not fully account for more recent table saw guard safety enhancements
    that are now part of the effective voluntary safety standard,
    acknowledges that recent incident studies compiled by CPSC have
    problematic methodologies, and fails to adequately address the
    possibility that only the petitioning company's patented technology
    will be able to comply with the rule, thereby creating a monopoly in
    the table saw market.
        Shockingly, the briefing package acknowledges the following:

       SawStop, the company that petitioned the CPSC to adopt a
            mandatory rule, could have a monopoly due to its patents, and
            has not licensed its technology to other table saw
            manufacturers

       It is possible that any injury mitigation system may
            infringe on these patents

       The rule may result in $30-35 million annual royalties to
            patent holders

       Many manufacturers may have to exit the table saw market

       The price of table saws will increase significantly

       There will be significant impacts on cost, utility and
            availability of table saws

       There will be a likely decline in sales following
            promulgation of the rule

       The number of table saws sold annually could decrease by 90-
            250,000 units

       The impact of increasing table saw production costs on
            consumers would be considerable

       Small manufacturers would reduce table saw offerings or exit
            the market

       Firms might reduce or eliminate offerings of table saws to
            the U.S. market

       The rule may result in lost production, lost sales and loss
            of employment

       The costs of the proposed rule would be $140-290 million
            annually.

        Despite the above, and the previously noted request of the new
    administration to reduce the regulatory burden on industry, the CPSC
    staff is still recommending the rule to the Commission. Throughout this
    rulemaking process, PTI has worked extensively with CPSC, responding to
    the 2003 petition and 2011 Advanced Notice of Proposed Rulemaking
    (ANPR), meeting multiple times with the Commissioners and Staff to
    educate them on our efforts and concerns with the petition. In the
    meantime, PTI continued work on the voluntary standards process and
    organized joint ventures to conduct research and development, all with
    the ultimate goal of improving table saw safety. The costs of the
    proposed rule are in addition to the hundreds of millions of dollars
    already spent by the industry on these issues, which have now spanned
    nearly 20 years.
        While this work was occurring, SawStop's owner, Dr. Stephen Gass,
    who himself is a patent attorney, filed over 140 U.S. patent
    applications and now has over 100 issued U.S. patents which pertain to
    the SawStop technology. Dr. Gass has told the CPSC that they should
    assume no manufacturer will be able to introduce injury mitigation
    technology that does not infringe his patents. In the absence of a
    government mandate, Dr. Gass has stated he is unwilling to provide a
    license.
        In addition to the petition filed with CPSC, Dr. Gass has attempted
    to introduce legislation in the state of California, served as an
    expert witness in hundreds of product liability cases, filed a lawsuit
    against the USPTO, filed an unsuccessful antitrust case against the
    power tool manufacturers, filed a complaint against a manufacturer with
    the U.S. ITC seeking to bar entry of a competitive saw into the United
    States, and filed a patent infringement complaint in Oregon seeking a
    permanent injunction and damages. Many of these issues are ongoing and
    the complexities in this case will not be resolved by a mandatory CPSC
    action. In addition, the International Body of Experts has evaluated
    whether injury mitigation technology should be included in the IEC
    standard but determined it should not be included as a mandatory
    requirement. Therefore a mandatory CPSC rule would put U.S. consumers
    and industry at a competitive disadvantage to other countries.
        It should be clear that due to patent concerns, as well as
    deficiencies in the briefing package, a decision by the CPSC to move
    forward with the rulemaking would be reckless and damaging. The
    Commission received an unprecedented 1,600 public comments to the ANPR
    on this matter, and under 2 percent of these comments were in support
    of the rule. Instead, the Commission heard from manufactures from all
    across the country that voiced concern over how overregulation would
    lead to their companies being forced out of business.
        Job loss, a reduction of choice in the marketplace, price
    increases, and a government mandated monopoly are all very real
    concerns of a mandatory table saw rulemaking moving forward. As this
    hearing seeks to highlight ways in which burdensome regulations can
    have dire consequences for our manufacturing sector and the American
    economy as a whole, we hope the Senators will remember that the
    otherwise thriving power tool industry is currently at risk of this
    exact situation. We urge the Senate Committee to direct the CPSC to
    halt or delay the upcoming Commission vote and continue to work with
    industry and the voluntary standards process to address table saw
    safety.
        Thank you for your time and consideration.
                                     ______

                                                       February 1, 2017
    Hon. John Thune,
    Chairman,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Dear Chairman Thune and Ranking Member Nelson:

        Thank you for taking the time to address the critical topic of
    regulatory reform today. On behalf of the freight rail industry, I
    write you to offer our perspective on this important debate. As one of
    America's oldest industries, the freight railroads especially
    understand the proper balance between government oversight and
    ineffective intervention.
        The world today is much different than it was even five years ago,
    and disruptive innovation will only accelerate greater change. This is
    especially clear in the transportation and logistics sectors, where
    industry, in cooperation with the Federal Government, nears deployment
    of autonomous highway vehicles that can talk with each other and to
    infrastructure.
        For our part, railroads are installing Positive Train Control (PTC)
    technology, which will essentially automate certain safety-critical
    train operations. But we are also developing and using other innovative
    technologies--like wayside detectors that can hear flat spots on wheels
    as they go by or sense an overheated wheel, and ultrasonic rail
    inspection machines that can see defects in a steel rail too small for
    the human eye--to spot issues before they become problems and enhance
    safety and efficiency on the network. Today's railroads are in the
    technology business.
        Such a dynamic environment requires a nimble and flexible
    regulatory structure. We cannot continue to strangle innovation with
    regulation.
        As policymakers reform regulations, freight railroads propose the
    following broad principles for consideration:

       Regulations should be based on a demonstrated need, as
            reflected in current and complete data and sound science. They
            should have a well-defined and measurable objective, and be
            regularly evaluated as to their effectiveness in achieving it.

       All components of an agency's decision-making should be
            transparent to the public and subject to meaningful analysis
            and comment before the rule is finalized.

       Non-prescriptive regulatory tools, like performance-based
            regulations, should be deployed wherever possible to align the
            interests of the regulator and the industry, and to foster and
            facilitate innovation to achieve well-defined policy goals.

       Regulations should provide benefits outweighing their costs,
            and the cumulative impact with other regulations should be
            considered in every rulemaking.

       Use of ``guidance'' should be limited to appropriate
            situations and time periods.

       Waivers and pilot programs should be a viable path for
            industry to innovate without being tied down by archaic and
            outdated rules currently on the books.

                Sincerely,
                                           Edward R. Hamberger,
                                                     President and CEO,
                                         Association of American Railroads.
                                     ______

                                     American Chemistry Council
                                                       February 1, 2017

    Hon. John Thune,
    Chairman,
    Senate Committee on Commerce, Science, and Transportation,
    Washington, DC.
    Hon. Bill Nelson,
    Ranking Member,
    Senate Committee on Commerce, Science, and Transportation,
    Washington, DC.

    RE: Committee Hearing, ``A Growth Agenda: Reducing Unnecessary
                Regulatory Burdens''

    Dear Chairman Thune and Ranking Member Nelson,

        Thank you for convening this important hearing on regulatory
    burdens. The American Chemistry Council appreciates the opportunity to
    submit information for the record on issues impacting our member
    companies. This submission focuses on regulatory actions related to the
    transportation of chemical products.
        ACC and its members are committed to the safe transportation of
    both hazardous and non-hazardous materials. Our member companies devote
    significant resources toward emergency response training and tank car
    safety. We support the Federal Government's comprehensive regulatory
    framework to mitigate safety and security risks. By working with
    carriers, policy makers and emergency responders, we have been able to
    help reduce the number of accidents and their impacts.
        ACC has identified a number of regulatory actions by the Department
    of Transportation (DOT) that add unnecessary regulatory burdens without
    advancing safety. These actions include regulatory provisions as well
    as DOT interpretations and enforcement policies. The attached document
    outlines these specific concerns and suggests potential reforms.
        Again, we commend the Committee for conducting this hearing. We
    look forward to working with the committee to further address a broad
    range of regulatory burdens facing our industry.
                Sincerely,
                                                    Cal Dooley,
                                                     President and CEO,
                                                American Chemistry Council.
                                     ______

                    Software & Information Industry Association
                                       Washington, DC, January 31, 2017

    Hon. John Thune,
    Chairman, Commerce Committee,
    United States Senate,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member, Commerce Committee,
    United States Senate,
    Washington, DC.

    RE: SIIA Supports Focus on Regulatory Reform, Impact on Innovation

    Dear Chairman Thune and Ranking Member Nelson,

        On behalf of the Software & Information Industry Association
    (SIIA), thank you for holding the upcoming hearing, ``A Growth Agenda:
    Reducing Unnecessary Regulatory Burdens.'' SIIA shares your concern
    about the unforeseen negative impact of various regulations on
    businesses and the economy. This is not only the case for the
    industrial and manufacturing sectors, but also for the technology
    sector, which is a major economic growth engine of the future.
        SIIA is the principal trade association for the software and
    digital information industries. The more than 800 software companies,
    data and analytics firms, information service companies, and digital
    publishers that make up our membership serve nearly every segment of
    society, including business, education, government, healthcare and
    consumers. As leaders in the global market for software and information
    products and services, they are drivers of innovation and economic
    strength--software alone contributes $425 billion to the U.S. economy
    and directly employs 2.5 million workers and supports millions of other
    jobs.
        SIIA has written about the tremendous opportunities of Data-Driven
    Innovation and the Internet of Things (IoT).\1\ Economic benefit from
    the IoT ranges from $4 trillion to $11 trillion through 2025.\2\
    Businesses will be the top adopter of IoT solutions, leading the three
    key positive impacts on economic activity: (1) lowering operating
    costs; (2) increasing productivity; and (3) expanding to new markets or
    developing new product offerings.\3\
    ---------------------------------------------------------------------------
        \1\ SIIA white papers on Data-Driven Innovation and the Internet of
    Things.
        \2\ McKinsey & Company. ``Unlocking the Potential of the Internet
    of Things.'' June 2015
        \3\ Business Insider. ``How the `Internet of Things' will impact
    consumers, businesses, and governments in 2016 and beyond.'' John
    Greenough; July 2016.
    ---------------------------------------------------------------------------
        However, in this era of rapid technological development, ill-suited
    or outdated regulations can in some cases have a chilling effect on
    innovation and economic production. To maximize economic growth
    throughout the 21st Century, policymakers must not only be prudent
    about creating new regulations, but also conduct a thorough review of
    existing regulations. Many of the regulations governing industry today
    derive from statutes that are more than a decade old. In these cases,
    regulations either suffer from being outdated, or they have been
    revised by agencies to retrofit the evolution of technology, without
    clear guidance from Congress.
        Therefore, regulatory reform should focus not only on ill-conceived
    regulations adopted in recent years, but also those that are well
    intended but no longer can be applied effectively to the 21st Century
    technology landscape. To create an environment better suited to
    economic and job growth, a rigorous cost-benefit analysis should be
    applied in the assessment of current and proposed regulations. The
    benefit of regulations must outweigh the limits to innovation and
    potential economic or consumer welfare that can be derived from new
    products and services.
        As this Committee, as well as other congressional committees and
    the Trump Administration, assesses the impact of regulations on
    economic growth and job creation, we appreciate the focus on technology
    innovation by U.S. businesses, particularly small and medium-sized
    businesses that often disproportionately suffer from cumbersome
    regulations. We look forward to working with you to balance the need
    for regulations to continue protecting consumers, workers and the
    environment, while also maximizing innovation in a hyper-innovative IoT
    environment.
                Sincerely,
                                                     Ken Wasch,
                                                             President.
    cc: Members of the U.S. Senate Committee on Commerce
                                     ______

                        U.S. Consumer Product Safety Commission
                                         Bethesda, MD, January 30, 2017

                       Essay Regarding Regulatory Reform

        This essay was published on January 9 and 10, 2017, at
    www.regblog.org (a publication of the University of Pennsylvania
    Program on Regulation).
        As a Commissioner of the U.S. Consumer Product Safety Commission
    (CPSC), I have found that we could greatly improve the Agency's
    functioning by adopting several rulemaking procedures. Some of these
    procedures, like the publication of a regulatory agenda, are time-
    honored principles espoused by a long line of executive orders, while
    others, such as pay-go requirements that force agencies to consider the
    collective economic costs of their rules, are emerging practices used
    in other countries. Four key procedural steps could greatly improve
    rulemaking at CPSC and other independent agencies.
        First, independent agencies like CPSC should be expected to improve
    the accuracy and timeliness of their regulatory agendas. The regulatory
    agenda concept began with Executive Order 12044, issued by President
    Jimmy Carter in 1978. Its plainly stated purpose was ``to give the
    public adequate notice'' of how agencies would be spending their time
    in the near term, which would allow for and encourage meaningful public
    participation in the regulatory process. The Regulatory Flexibility Act
    (RFA) extended the regulatory agenda requirement to all agencies,
    including independent agencies.
        President Ronald Reagan's Executive Order 12291 retained the agenda
    requirement and broadened it from significant rules to all rules.
    President Bill Clinton's Executive Order 12866 added a requirement for
    the issuance of a regulatory plan, which would highlight ``the most
    important significant regulatory actions that the agency reasonably
    expects to issue in proposed or final form in that fiscal year.'' Most
    recently, President Barack Obama's Executive Order 13563 expressly
    reaffirmed the principles and requirements of Executive Order 12866.
        Despite a forty-year history of presidents and Congress uniformly
    endorsing the principle behind regulatory agendas so interested parties
    can plan their participation in the regulatory process, CPSC appears
    not to have endorsed that principle. CPSC's regulatory agenda contains
    regulatory projects that have been entirely stagnant for years--some
    that have been around for decades. It also includes proposals that have
    been described as not being among the Agency's priorities, yet our
    attempts to align the agenda with the Agency's actual work have too
    often been summarily rebuffed. As a result, stakeholders must piece
    together disparate, and sometimes conflicting, statements from a
    variety of sources, rather than simply relying on the Agency's
    regulatory agenda to identify the Agency's priorities. The Agency's
    outdated agendas run the risk of not only under-informing the public,
    but also actively misleading them as to what projects the Agency will
    spend its time on in the coming year.
        Second, in addition to issuing more accurate regulatory agendas,
    independent agencies' proposed rules should be subjected to external
    review. Executive orders have established that the Office of
    Information and Regulatory Affairs (OIRA) must review all of Executive
    Branch agencies' significant regulatory proposals--which are generally
    those that have an annual economic impact of $100 million or more. This
    external review requirement currently does not extend to independent
    agencies. However, some legislative proposals would provide for
    independent agencies to submit some or all of their proposed rules to
    OIRA for review.
        Such legislation is needed because the principles that support
    external review of executive agencies' proposed rules also apply to
    independent agencies. For example, CPSC's proposed revisions to its
    Certificates of Compliance rule have been the target of substantial
    criticism in part because of assumptions surrounding the rule's
    regulatory burden. If OIRA or another external reviewer had vetted the
    proposal, that reviewer might have identified problems with those
    assumptions and allowed us to present a sounder proposal.
        This is not to suggest that CPSC or any other agency is sloppy in
    its work. To the contrary, talented, dedicated public servants draft
    CPSC's rules that staff believe are in citizens' best interests.
    However, even experts with the best intentions can make mistakes. CPSC
    does not have a monopoly on good ideas, and we should seek wisdom
    wherever we can find it.
        Moreover, on occasion I have seen staff's analysis function less as
    the objective opinion of experts and more as a post hoc justification
    of a decision that had already been made based on political
    considerations. Independent review will help ensure that CPSC's
    decisions are based on career technical staff's expertise, not on
    politics.
        Review by an outside entity can also provide a more holistic view
    of the regulatory landscape by incorporating views of other parts of
    government. As former OIRA Administrator Cass Sunstein has written,
    OIRA serves as ``an information aggregator.'' Particularly in an area
    like product importation--where CPSC shares the regulatory space with
    dozens of partner agencies that are led by U.S. Customs and Border
    Protection--OIRA's administrative omniscience can ensure we neither
    duplicate nor contradict the messages stakeholders receive from other
    agencies.
        Third, CPSC and other independent agencies should do a better job
    implementing best practices for public participation in the rulemaking
    process. Too often, CPSC has failed to go beyond the minimum
    requirement for public participation established under the notice-and-
    comment structure in the Administrative Procedure Act (APA). As a
    result, CPSC has forsaken opportunities to obtain critical public input
    that could have greatly enhanced regulatory decision-making.
        For example, the advisory panel report underlying CPSC's proposed
    rule on phthalates in some children's products only underwent a closed,
    invitation-only peer review, rather than public peer review of the kind
    that for some instances is expressly recommended in the Office of
    Management and Budget's (OMB) Final Information Quality Bulletin for
    Peer Review. OMB's recommendations, of course, do not apply to
    independent agencies like CPSC, but their lack of legal or
    administrative force does not diminish their wisdom.
        In the phthalates rulemaking, the result was that the advisory
    panel's failure to consider vital data was repeated in the Agency's
    notice of proposed rulemaking, forcing the Chairman to direct staff to
    fill in that data gap and re-open the comment period. Thanks to the
    Chairman's intervention, we were able to develop the record with public
    comment on all the data. However, earlier public participation--such as
    the kind of public peer review recommended by OMB--could have spared
    the Agency embarrassment and improved the quality of our work.
        Finally, in addition to deploying best practices for regulatory
    agendas, external review, and public participation, both executive and
    independent agencies should consider the use of an emerging regulatory
    practice known as ``pay as you go.'' Colloquially shortened to ``pay-
    go,'' this requirement would force agencies to view regulation-imposed
    economic costs as a finite resource and thoughtfully consider how they
    use that resource. A pay-go requirement would demand that agencies
    remove commensurate cost burdens from their books for each additional
    cost burden they create through a new rule. A related concept of a
    ``regulatory budget'' would set a maximum amount of economic costs that
    could be imposed through regulation.
        Pay-go and regulatory budgets could be applied either at an agency
    or government-wide level. For example, in an agency-level pay-go model,
    before promulgating a new rule, CPSC would have to repeal a current
    rule or rules that impose a comparable economic burden. A government-
    wide model would allow the repeal of a rule promulgated by another
    agency to offset the costs of a new CPSC mandate. Under either model,
    agencies--either individually or collectively--would have to prioritize
    their activities and decide where they want to allocate their finite
    burden resources.
        The pay-go model has been resoundingly successful in the United
    Kingdom. What began as a ``One-in, One-out'' program evolved to ``One-
    in, Two-out,'' which ``meant that for every pound of cost that new
    domestic regulation imposed on business, two pounds of cost had to be
    removed through deregulation.'' As a result of this program, ``the
    Government has reduced the annual cost to business of domestic
    regulation by almost  2.2 billion.'' Moreover, the reforms
    have improved not just the economic climate but the economic mood as
    well, as the percentage of businesses that find government regulation
    ``fair and proportionate'' has risen from under 40 to over 60 percent
    over the course of seven years. In fact, this program has been so
    successful, that the UK has now moved to ``One-in, Three-out.''
        It remains to be seen whether the precise structure of ``One-in,
    Two-out''--or any pay-go model--is appropriate for the American
    regulatory state. However, the United Kingdom's experience demonstrates
    that when agencies face the same kinds of constraints their
    constituents face, they will do what their constituents must do: adapt
    and survive.
        Codifying the four reforms proposed here would go a long way toward
    improving the rulemaking process at independent agencies and helping
    ensure that the public can be better protected and the economy less
    burdened. However, as CPSC's failure to use its Regulatory Agenda for
    its intended purpose underscores, the codification of new procedures
    will not be enough. The RFA already imposes a statutory obligation for
    CPSC to issue regulatory agendas, but this has not been enough to
    compel CPSC's full obedience with the spirit of that requirement. Even
    if every reform I have described in this essay is enacted, they will
    remain paper reforms unless supported by the continued attention of a
    watchful Congress.
        When conducting the analysis needed to inform sound regulatory
    decision-making, independent agencies could benefit from following key
    analytical standards that over the years have been imposed on Executive
    Branch agencies by executive orders. As a Commissioner of the U.S.
    Consumer Product Safety Commission (CPSC), too often I have seen my
    Agency depart from these analytical best practices, which then can lead
    to misinformed and even unnecessary regulations. Regulatory decision-
    making at independent agencies like CPSC would benefit from adherence
    to four main analytic requirements contained in executive orders.
        First, independent agencies should be required to identify a market
    failure before promulgating a new regulation. Currently, Executive
    Order 12866, which applies to executive but not independent agencies,
    provides that regulation can be justified on the basis of ``material
    failures of private markets to protect or improve the health and safety
    of the public.'' CPSC's authorizing legislation does state that the
    Agency can only issue mandatory product safety standards if either no
    voluntary standard addresses a detected risk or if industry fails to
    comply with an existing standard. However, this legislation does not
    expressly limit the Agency to stepping in only where private markets
    have failed.
        Too often, CPSC focuses on regulation in the absence of a
    demonstrated market failure. For example, many have called on CPSC to
    address the significant number of hand and finger injuries among users
    of table saws. Those advocates want us to mandate the use of Active
    Injury Mitigation (AIM) technology to prevent many of these serious
    injuries. This technology, they argue, is already on the market, with
    versions from two different manufacturers, so compliance with a future
    mandate would be feasible.
        However, the fact that two companies already make AIM-equipped saws
    actually suggests that we do not need a rule: The market has not
    failed. Consumers are well aware of the risk that a spinning blade
    poses, and they can already choose an AIM-equipped saw to mitigate that
    risk. If they do not choose such a saw--whether because they do not
    like the technology or because they do not believe that the benefits
    justify the added cost--their informed choice is part of a functioning
    market, not a failed one.
        If CPSC were to require AIM technology on all saws, we would not be
    repairing the market but rather impairing it. We would be favoring two
    firms over their competitors, imposing a cost that informed consumers
    can presently choose to avoid. If the ``market failure'' language of
    Executive Order 12866 applied to CPSC by statute, we would have to
    demonstrate that the consumers were being harmed because they lacked
    the information to make a choice, not just that consumers are making
    choices we do not like.
        Second, the kind of cost-benefit analysis required of Executive
    Branch agencies would lead to better rules at CPSC and other
    independent agencies. For example, starting in 1981, Executive Order
    12291 called for executive agencies ``to maximize the net benefits to
    society.'' Although this order was subsequently replaced by Executive
    Order 12866, which was later supplemented with Executive Order 13563,
    these more current orders also state that agencies should choose
    regulations that ``maximize net benefits.'' A similar concept is
    Executive Order 12866's principle that ``each agency . . . tailor its
    regulations to impose the least burden on society,'' a principle that
    Executive Order 13563 retains.
        When developing product-specific safety standards, CPSC already
    operates under even clearer mandates than these executive orders
    provide. Under Section 9 of the Consumer Product Safety Act (CPSA), in
    order to mandate a safety standard for a particular product or product
    category, CPSC must analyze the costs and benefits of the proposed
    standard, must explore any alternatives, must ensure the costs bear a
    reasonable relationship to the benefits, and must select the least
    burdensome option.
        The value of Section 9 is not just that it provides an analytical
    framework, but also that it allows for judicial review, as we saw
    recently in the 10th Circuit's decision to strike our magnet rule
    because of uncertainty in our cost-benefit analysis. Although having a
    rule thrown out is not pleasant for the agency, if we take to heart
    this reminder of the importance of the Section 9 analysis, our future
    rules will be better and sounder for the effort.
        For any of our rules that are not product safety standards,
    however, no similar requirement for cost-benefit analysis applies.
        As a result, CPSC fell short of standard cost-benefit principles in
    developing its rule detailing the testing that children's product
    manufacturers must undertake to certify that their products comply with
    applicable safety standards. The Consumer Product Safety Improvement
    Act (CPSIA) required such testing and certification, and it required
    the Agency to issue a rule setting forth the ``protocols and
    standards'' for the testing. The Agency dutifully issued a testing
    rule, but it pointedly did not undertake a full cost-benefit analysis.
    Indeed, in response to comments suggesting cost-benefit analysis, the
    Agency flatly refused, noting that because the rule was not a safety
    standard under Section 9 of the CPSA the Agency was not required to
    complete a cost-benefit analysis.
        Even if a law does not require cost-benefit analysis, it is still
    prudent for an agency to undertake one. CPSC's testing rule would have
    been better informed by analyzing manufacturers' compliance costs and
    the benefits consumers would get in exchange. We owe it to consumers to
    ensure that regulations will maximize their best interests. Even if a
    full cost-benefit analysis would have only supported the Agency's
    testing rule, we would still have had the benefit of added confidence
    in our decision.
        Third, agencies--whether executive or independent--should be
    expected to assemble the best available scientific evidence to inform
    their regulatory decisions. Executive Orders 13563 and 12866 recognize
    this principle, observing that ``our regulatory system . . . must be
    based on the best available science.'' Executive Order 12866 calls upon
    agencies to ground their decisions on the ``best reasonably obtainable
    scientific, technical, economic, and other information.'' During his
    first term, President Barack Obama also issued a memorandum requiring
    that executive agencies put in place rules and procedures that ensure
    the use of the highest quality science in regulatory development.
        At CPSC, the Chronic Hazard Advisory Panel (CHAP) report on
    phthalate exposure is an example of the desire for new regulations that
    do not reflect current science. Despite the availability of data on the
    current state of phthalate usage by manufacturers, the CHAP chose to
    use data that were nearly a decade old. An outside review found that
    ``the CHAP report is not a systematic review of the available
    scientific evidence and, as such, is of questionable reliability and
    validity, lacking in the objectivity and transparency generally
    recognized as critical by the scientific community.''
        CPSC staff, at the Chairman's direction, have accepted this
    criticism and undertaken an internal review using more recent data;
    however, other problems remain. The final rule may go beyond our
    statutory mandate by using a novel, unproven cumulative risk assessment
    as a way to justify banning certain phthalates. Mere novelty is, of
    course, not a reason to disregard an analytical method or its
    conclusions. However, when novel concepts form the core of a regulatory
    effort, agencies should take extra care to ensure those methods bear
    the hallmarks of scientific validity.
        Unfortunately, the sound science requirements contained in the
    Information Quality Act do not ``explicitly provide for judicial
    review.'' Codifying the best sound science practices found in executive
    orders and in President Obama's memorandum on scientific integrity,
    along with providing for more robust judicial review of agencies'
    scientific analysis, would help ensure independent agencies like CPSC
    use the best available data and methods when crafting new rules.
        Finally, President Obama's Executive Order 13610 calls for
    executive agencies to engage in retrospective review of existing
    regulations and report on their progress to the White House Office of
    Information and Regulatory Affairs. No matter how thoughtful an
    agency's promulgation of a rule may be, there will always be potential
    for improvements. Agencies' vision can be obscured by market
    complexities, unquantifiable forces, or emerging trends. Although human
    beings may be naturally inclined both to resist change and to prefer
    the allure of solving a new problem instead of revisiting their
    solution to an old problem, agencies need to set those inclinations
    aside if they wish to ensure their regulations function properly as a
    whole.
        CPSC has had a mixed history with retrospective review. Even prior
    to the issuance of President Barack Obama's call for retrospective
    review, CPSC had conducted its own retrospective examinations. However,
    the resource demands of the myriad rules required under the CPSIA
    diverted the Agency's focus, and its retrospective review program was
    dormant for several years. Spurred by the Obama Administration's
    emphasis on retrospective review, the Agency sought to revive its
    retrospective review efforts, but the Commissioners were initially
    unable to reach consensus on how to proceed. Recently, CPSC unanimously
    adopted an important plan that does comply with the spirit of Executive
    Order 13610. That plan includes additional elements of an institutional
    culture of review, such as calling for the Agency to incorporate
    ``retrospective review provisions in new rulemakings.'' I hope CPSC can
    become a leader in this regard as it puts its retrospective review plan
    into action.
        Overall, independent agencies would do well to adopt all four
    requirements currently applicable to Executive Branch agencies. They
    should be expected to make a threshold finding of market failure before
    proposing new regulations, conduct robust cost-benefit analysis of new
    rules, take steps to rely only on the best available science, and put
    in place plans to undertake serious retrospective review of existing
    regulations. In these ways, agencies like CPSC can better ensure that
    their regulations are truly working to serve the public's best
    interests.

                                           Joseph P. Mohorovic,
                                                          Commissioner.

        The Chairman. I just want to point out in closing, too,
    because of a lot of discussion about this today, and I don't
    think this needs to be, and shouldn't be, a Republican versus
    Democrat or big government versus small government argument;
    this ought to be about smart regulation and doing things that
    make sense.
        And I just want to say again, President Obama's Cass
    Sunstein, he was the top overseer of Federal regulations for
    much of the Obama administration, he wrote in January of last
    year about agency compliance with this requirement that's been
    in place for a long time, going back to President Reagan. He
    said, and I quote, ``Agencies don't always obey them, and
    sometimes they aren't transparent enough about the costs and
    benefits of new rules.'' And I think that's something that we
    ought to take as a cautionary note from someone who was in a
    position to know.
        And then he went on to say that he recommended requiring
    every regulatory agency, by statute, to produce an annual
    report on its progress in cutting regulatory costs. And, in
    fact, the Obama administration claimed $22 billion in savings
    from its own regulatory lookback.
        So all we're simply saying here is this ought to be
    something that we do to try and ensure that the regulations
    that are there, that are designed to promote and protect public
    health and safety are just that, but that regulation for
    regulation's sake can be excessive, and it has a consequence,
    it always has a cost, and I think that that cost is borne by a
    lot of individuals, in my state, farmers and ranchers and small
    business people.
        I can tell you, I probably, in traveling my state last
    year, because I was running for reelection, have never had a
    time where I've had more just people volunteer to me when you
    talk about issues, and it didn't matter whether it was
    agriculture or energy or manufacturing, it always came back to
    regulations and the cost of regulation.
        And so I think this is a serious issue, and I certainly,
    and I think Members on both sides take it seriously, but we can
    do a much better job, and hopefully in a way that preserves the
    important elements of our regulatory environment in this
    country, but that does away, pares back, a lot of this stuff
    that just ends up adding tremendous cost to our economy and
    sacrificing economic growth, which ultimately is, again, paid
    by consumers in this country in the form of lower wages and
    fewer better paying jobs and a lower standard of living.
        So I appreciate everybody's testimony today. There will be
    an opportunity if you would like to submit additional
    questions. Senators are encouraged to do that for the record.
    And then I would ask our panelists, upon receiving those, to
    submit their written answers to the Committee as soon as
    possible.
        And with that, this hearing is adjourned. Thank you.
        [Whereupon, at 12:31 p.m., the hearing was adjourned.]

                                A P P E N D I X

                                     American Cable Association
                                       Pittsburgh, PA, January 31, 2017

    Hon. John Thune,
    Chairman,
    Senate Committee on Commerce, Science, and Transportation,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member,
    Senate Committee on Commerce, Science, and Transportation,
    Washington, DC.

    Dear Chairman Thune and Ranking Member Nelson:

        The American Cable Association (ACA) wishes to express its support
    for this Committee's hearing on the negative impacts of unnecessarily
    burdensome regulations on diverse sectors of our Nation's economy,
    including the communications sector in which ACA's members operate. ACA
    represents roughly 750 small and mid-sized companies that offer video,
    broadband Internet, and telephony services to nearly 19 million homes
    nationwide, including in rural areas that are unserved by larger
    providers.
        To supplement the hearing's record, ACA identifies in this letter
    several outdated and burdensome regulations that especially affect
    smaller telecommunications service providers that should be modified or
    eliminated. ACA has previously identified these regulations to the
    Federal Communications Commission (FCC) as part of its 2016 Biennial
    Review of Telecommunications Regulations. These regulations are by no
    means a complete list of the undue regulatory burdens faced by ACA
    members in their provision of video, broadband, or telephone
    services.\1\ This is, however, a good starting point for what we hope
    will be an ongoing effort to eliminate or modify regulations to spur
    economic growth and innovation in the communications industry and
    beyond.
    ---------------------------------------------------------------------------
        \1\ The regulations identified in this letter only include those
    that apply to the operations or activities of telecommunications
    service providers, which were the regulations for which the Commission
    sought comment in the 2016 Biennial Review Public Notice.
    ---------------------------------------------------------------------------
        Universal Service Fund Contribution Requirements. ACA has proposed
    several changes to the Universal Service Fund (USF) contribution
    requirements that would reduce regulatory burdens on smaller
    telecommunications providers. First, ACA recommends increasing the USF
    de minimis exemption from its current contribution-based threshold of
    $10,000 to a revenue-based threshold of $200,000. The existing
    contribution-based de minimis exemption creates administrative burdens
    and uncertainty for many qualifying providers, who must still file the
    quarterly Telecommunications Reporting Worksheet and contribute on a
    quarterly basis if they are unsure whether they will meet the existing
    de minimis threshold. By raising the threshold and using a revenue-
    based, rather than a contribution-based, threshold would relieve
    operators of many of the associated administrative requirements, and
    would protect against the effective reduction of the threshold in the
    future if contribution rates continue to grow as they have over the
    past decades.
        Second, ACA recommends a downward revision of the safe harbor for
    allocating VoIP traffic as interstate communications from 64.9 percent
    to 22.1 percent.\2\ In determining how to calculate its required
    universal service contributions, a VoIP provider may either provide
    studies of their actual traffic patterns, or they may rely on the safe
    harbor established by the FCC. The existing safe harbor, which was
    created in 2006, is a highly inflated proxy for interstate revenues
    that does not accurately reflect today's mix of VoIP traffic. Although
    many larger providers opt not to use the safe harbor because it is so
    uneconomical, smaller operators do not have the resources necessary to
    prepare and file the multiple traffic studies that are required to
    demonstrate their actual traffic ratios. Thus, these small operators
    are placed at a competitive disadvantage, and their customers are
    forced to overpay the universal service contribution (and other fees
    keyed to the Form 499).
    ---------------------------------------------------------------------------
        \2\ In 2012, the FCC indicated that ``the average percentage of
    VoIP traffic studies is 22.1 percent interstate/international, with the
    media study reporting 14.7 percent interstate/international.''
    Universal Service Contribution Methodology, A National Broadband Plan
    for Our Future, WC Docket No. 06-122, GN Docket No. 09-51, Further
    Notice of Proposed Rulemaking, FCC 12-46,  125 (rel. Apr. 30, 2012).
    ---------------------------------------------------------------------------
        Relatedly, ACA recommends a repeal of the unnecessary traffic study
    requirements for providers that seek to allocate the jurisdictional
    percentages of their VoIP revenue. At present, VoIP providers who wish
    to use this method of calculating their interstate contributions must
    submit a traffic study with each quarterly Form 499-Q, which imposes a
    significant administrative burden and legal cost. Instead, small
    providers should be permitted to rely on the prior year's traffic study
    when preparing Form 499-Qs and require only one traffic study filing
    annually in connection with the Form 499-A. Additionally, a VoIP
    provider that determines its jurisdictional allocations by measuring
    100 percent of its traffic for the reporting period should not be
    required to file a traffic study.
        Broadband Reporting Form 477. In 2013, the FCC assumed
    responsibility for the collection of broadband deployment data, and
    revised its Form 477 collection, which is mandatory for all wireline
    and mobile wireless providers. In adopting its rules, the FCC sought to
    alleviate burdens on filers, but did not provide any exemptions or
    additional relief for small providers, claiming that the benefits of
    collecting information from small providers outweighed the costs. ACA
    believes that the FCC could relieve the burdens on smaller operators
    while still maintaining sufficiently accurate data by instituting an
    annual, rather than biannual, filing process for small providers. Over
    the past several years, the FCC has developed a sound database of
    deployment data, including deployment trends. Further, the Broadband
    Data Improvement Act only requires the FCC to make an annual
    assessment, so there is no need to require small providers to file
    twice a year.
        Rural Call Completion. In establishing rules to address concerns
    about call completion in rural areas, the FCC sought to balance its
    need to collect complete data with the significant burdens the new data
    collection and reporting requirements would impose on smaller
    providers. Accordingly, it limited its definition of Covered Provider
    to providers that make the initial long distance call path choice for
    more than 100,000 domestic retail subscriber lines. ACA supported this
    outcome, providing evidence that the ``proposed monitoring and
    reporting requirements would be onerous for ACA members'' and noting
    that the quality of the data collection would suffer little since the
    vast number of voice subscriber lines are controlled by mobile wireless
    operators (about 75 percent) and the top ten multiple system operators
    controlled more than 95 percent of the lines supplied by cable
    operators. Nonetheless, ACA members with more than 100,000 subscriber
    lines still find that the burdens of compliance are significant. Thus,
    ACA proposes that the Covered Provider threshold be increased to at
    least 250,000 subscriber lines, if not more. Such an increase would be
    consistent with the definition of--and exemption for--small broadband
    Internet access providers in legislation passed in the House of
    Representatives this year and a bill approved by this Committee last
    year. ACA also suggests creating a safe harbor for compliance for
    Covered Providers with more than the threshold number of lines so long
    as they require in their access tariff or via contracts with long
    distance providers that the long distance provider complete calls they
    originate in compliance with the Commission's rules.
        Thank you again for the opportunity to provide this Committee with
    information regarding some of the unnecessarily regulatory burdens
    faced by small telecommunications providers. ACA looks forward to
    working with this Committee in the future as it seeks to explore how a
    smarter regulatory approach can create jobs and spur economic growth.
                Sincerely,
                                              Matthew M. Polka,
                                                     President and CEO,
                                                American Cable Association.
                                     ______

                           National Venture Capital Association
                                                       February 1, 2017
    Hon. John Thune,
    Chairman,
    Senate Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.
    Hon. Bill Nelson,
    Ranking Member,
    Senate Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Dear Chairman Thune and Ranking Member Nelson:

        On behalf of our Nation's venture capital investors and the
    entrepreneurs they support, thank you for calling a hearing on ``A
    Growth Agenda: Reducing Unnecessary Regulatory Burdens.'' We welcome
    the opportunity to share our perspective on regulatory challenges faced
    by startups and their investors that are within the Committee's
    jurisdiction.
    Government procurement of advanced technology
        Venture-backed startups are pushing boundaries with new
    technologies and work tirelessly to deliver new products and services
    into the hands of consumers. We are witnessing the rapid adoption of
    these products and services in the private sector, but unfortunately
    the Federal Government is often behind in acquiring the best technology
    due to government procurement challenges encountered by startups. The
    unfortunate reality is U.S. procurement law and policy favors large
    companies with teams of lawyers and compliance officers and disfavors
    small, but growing, startups that often have the most innovative
    products. By working to improve the procurement process for agencies
    within its jurisdiction, the Committee can promote dynamic, young
    companies and ensure our government is using the best technology as it
    works to safeguard the Nation.
        We suggest two approaches the Committee can take to improve
    acquisition law and policy. First, the Committee can use its oversight
    function to encourage various departments to avail themselves of
    startup technology. Some departments are better than others are at
    building relationships into the entrepreneurial community to source new
    technology rather than continue to purchase from established players.
    For example, the Department of Defense established the Defense
    Innovation Unit Experimental (DIUx) to ``continuously iterate on how
    best to identify, contract, and prototype novel innovations through
    sources not traditionally available to the Department of Defense.'' \1\
    With offices in Silicon Valley and Boston, DIUx has been successful at
    building strong contacts with venture capitalists and startup founders
    to determine what technology is coming next and how the Department of
    Defense can acquire it for the war fighter. We believe this is a model
    that can be replicated within other Federal agencies and encourage the
    Committee to advocate as such with the agencies within its
    jurisdiction.
    ---------------------------------------------------------------------------
        \1\ Defense Innovation Unit Experimental, ``Mission,'' available at
    https://www.diux.mil/.
    ---------------------------------------------------------------------------
        Second, the Committee should work with agencies within its
    jurisdiction to modify procurement practices to encourage startup
    engagement. In 2015, the Department of Homeland Security (DHS)
    developed ``an Innovation framework to be implemented utilizing the
    flexibility of an Other Transaction Solicitation (OTS) to engage non-
    traditional Government contractors, including start-up companies.'' \2\
    DHS believes that ``[t]hrough non-dilutive funding and providing
    opportunities for operational testing and market access [it can]
    incentivize product developers to open the aperture of their
    development roadmaps to include homeland security solutions.'' \3\ DHS
    has further explained that
    ---------------------------------------------------------------------------
        \2\ Department of Homeland Security Science and Technology (S&T)
    Directorate; Silicon Valley Office 5-Year Innovation Other Transaction
    Solicitation (OTS), HSHQDC-16-R-B0005, available at file:///C:/Users/
    jeff.farrah/Downloads/DHS_ST_Innovation_5-Yr_OTS_v3_12-09-2015
    .pdf.
        \3\ Id. (Emphasis in original)

            [t]his Innovation OTS will employ a streamlined evaluation
            approach where, in response to a call, vendors submit a short
            written application, and, at DHS' discretion, the vendor may be
            subsequently asked to provide an oral presentation or pitch . .
            . the anticipated time to award after notification that an
            application has been selected for funding is 30 days.\4\
    ---------------------------------------------------------------------------
        \4\ Id.

        We commend DHS's efforts to ease the procurement process for
    startups and believe Federal departments within the Committee's
    jurisdiction would also benefit from such an approach.
    Fintech and regulatory uncertainty
        Financial technology (or, ``FinTech'') is an area of significant
    interest to venture capital investors that shows great promise for the
    American consumer. Venture investment into FinTech reached $6.6 billion
    in 2015, up dramatically from just over $1 billion in 2011.
        The public is witnessing tremendous innovation and growth with
    fintech startups. However, as technology companies operating in the
    financial services space, a number of regulatory agencies are wading
    into these waters. With the attention of each different regulatory
    agency comes new uncertainty. The Federal Trade Commission (FTC) has
    organized a number of fintech forums focusing on regulatory issues. We
    welcome the FTC's approach to listening and collecting information on
    the industry, but we caution against any regulatory action directed at
    these companies without a comprehensive look at regulatory activities
    by other agencies, as well as evaluating the state-by-state regulatory
    requirements that many of these companies go to great lengths to ensure
    compliance.
        The entrepreneurial ecosystem thanks you for your leadership in
    calling attention to regulatory challenges. We stand ready to assist
    the Committee as you further examine this important policy matter.
                Sincerely,
                                                Bobby Franklin,
                                                     President and CEO.
                                     ______

                                                           CTIA
                                       Washington, DC, February 1, 2017

    Hon. John Thune,
    Chairman,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member,
    Committee on Commerce, Science, and Transportation,
    United States Senate,
    Washington, DC.

    Dear Chairman Thune and Ranking Member Nelson,

        Thank you for convening today's hearing in the U.S. Senate
    Committee on Commerce, Science, and Transportation to examine the
    impact of unnecessarily burdensome regulations on our Nation's economy
    and explore how a smarter regulatory approach would create jobs and
    spur economic growth. The U.S. wireless industry serves as an integral
    driver of America's economy, investing over $300 billion in America's
    infrastructure and economy in the past ten years alone.
        The U.S. mobile ecosystem leads the world and the next generation
    of wireless networks, 5G technology promises up to 3 million new
    American jobs according to a recent study by Accenture Strategy.
    Remarkably, 1 out of every 100 Americans will have a new 5G job. 5G
    will also contribute an additional $500 billion in U.S. GDP. In
    addition to unlocking substantial growth and economic gains in
    communities across the country, 5G powered Smart City solutions will
    produce $160 billion in benefits and savings by reducing energy usage,
    decreasing traffic consumption, and lowering fuel costs.
        Encouragingly, your hearing is focused on how we ensure our
    regulations help facilitate this type of next-generation investment in
    American jobs and communities. To realize our full potential, we need
    greater access, cost-based fees, and streamlined processes that reflect
    new technologies and will help make 5G and the Internet of Things a
    reality. Specifically, we must improve access to government-owned
    infrastructure, like utility poles and rights of way. Second, we must
    ensure reasonable rates for accessing this infrastructure that reflect
    the economics and architecture of today and tomorrow's wireless
    networks. Finally, we must simplify zoning processes with reasonable
    timetables and more uniform procedures for approving wireless
    infrastructure deployments.
        Thank you again for convening this hearing and for your leadership
    in ensuring that regulatory and infrastructure policies will facilitate
    job creation and economic growth. I respectfully request that this
    letter and the attached Accenture Strategy study. ``Smart Cities, How
    5G Can Help Municipalities Become Vibrant Smart Cities'' be submitted
    for the record at today's hearing. We look forward to working with you
    on a comprehensive growth agenda moving forward to promote innovation
    and investment in our mobile-first lives.
                Sincerely.
                                        Meredith Attwell Baker.
                                   Attachment
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

                               Competitive Carriers Association
                                       Washington, DC, February 1, 2017

    Hon. John Thune,
    Chairman,
    Committee on Commerce, Science, and Transportation,
    U.S. Senate,
    Washington, DC.

    Hon. Bill Nelson,
    Ranking Member,
    Committee on Commerce, Science, and Transportation,
    U.S. Senate,
    Washington, DC.

    Dear Chairman Thune and Ranking Member Nelson:

        Competitive Carriers Association (CCA) respectfully submits this
    letter for the record regarding today's hearing on ``A Growth Agenda:
    Reducing Unnecessary Regulatory Burdens.'' CCA is the Nation's leading
    association for competitive wireless providers and stakeholders across
    the United States. CCA's membership includes nearly 100 competitive
    wireless providers ranging from small, rural carriers serving fewer
    than 5,000 customers to regional and national providers serving
    millions of customers. CCA also represents close to 200 associate
    members, including vendors and suppliers that provide products and
    services throughout the mobile communications ecosystem.
        From our members' experience constructing networks and providing
    wireless service to consumers across the country, we have seen
    firsthand how regulatory burdens can impact wireless innovation,
    competition, and growth. In turn, unnecessary or poorly tailored
    regulations negatively affect the economy as a whole, especially in
    rural America. The cost of complying with unnecessary or poorly
    tailored regulations has skyrocketed and diverted resources away from
    wireless providers' investment in, for instance, rural infrastructure
    and job growth. On the other hand, the wireless industry has faced
    massive consolidation over the last several years, with two companies,
    AT&T and Verizon Wireless, emerging as the dominant players by any
    relevant measure. As a result of this consolidation and market
    concentration, market forces in lieu of regulation are insufficient in
    some instances to ensure that consumers continue to receive the
    benefits of innovation and competition. Accordingly, CCA urges Congress
    to carefully consider what regulatory burdens are appropriate in a
    consolidated industry where the primary input, spectrum, is finite and
    available only through government allocations. The United States
    demonstrates global leadership on mobile broadband issues, and is at
    the forefront of 5G development. To maintain this leadership, Congress
    should support a procompetitive regulatory regime.
        Accordingly, it is of the upmost importance to remove regulations
    that harm competition among wireless operators and that slow the
    deployment of wireless networks, especially in rural or hard to reach
    locations, but it is also necessary to maintain and create rules that
    nurture competition and improve wireless services in rural or hard to
    reach locations. Baseline rules and safeguards are essential to
    enabling competition in the wireless industry, and fostering market
    conditions that enable many operators to provide innovative and
    meaningful competition is necessary to avoid the need for a more heavy-
    handed and burdensome regulatory structure in the future.
        It is within this context that CCA offers these comments on
    reducing unnecessary regulations.
    Regulations That Unnecessarily Hinder Access To or Use of Spectrum
        Access to spectrum is critical to all wireless services and to
    ensuring competitive service availability, continued investment, and
    growth. CCA encourages close examination of any regulations that
    prevent equitable access to spectrum and make it more difficult and too
    costly for competitive wireless providers to provide new innovative
    services.
        First, Congress should direct the Federal Communications Commission
    (FCC) to eliminate the regulations that require carriers to obtain
    approval for block-for-block spectrum swaps within the same markets.
    The FCC's current filing requirements for spectrum swaps within the
    same markets and for the same spectrum impose an unnecessary and
    burdensome review on transactions that are otherwise straightforward.
    In place of the approval requirement, the FCC should adopt a
    streamlined process and grant pro forma treatment of block-for-block
    spectrum swaps within the same markets. These swaps are important for
    efficient allocation and use of valuable resources and should be
    considered presumptively competitive. However, this process must
    account for the differences between high-band and low-band spectrum.
    For example, competitive concerns must be balanced when reviewing
    spectrum swaps that entail the exchange of less valuable spectrum for
    more valuable spectrum.
        Second, the FCC's rules for spectrum lease approvals are overly
    complicated and unnecessary, and can disincentivize spectrum license
    holders from entering into agreements that could otherwise partition or
    disaggregate spectrum to make it available for use in rural areas.
    Particularly for straightforward spectrum leases that do not raise
    competitive concerns, these approvals should be eliminated. Instead,
    there should be a simple rule requiring prior notification of a
    spectrum lease for temporary leases ahead of a secondary market sale
    and for temporary leases that do not raise competitive concerns or
    undermine enhanced factor standards of review. The FCC should continue
    to review secondary market transactions that trigger a more rigorous
    competitive impact evaluation, to avoid aggressive concentration of the
    market. In the alternative, and under appropriate circumstances, the
    FCC should utilize its immediate approval procedures for temporary
    spectrum leases prior to a secondary market transaction. Technology and
    network efficiency requires spectrum harmonization between and among
    spectrum users. The FCC should prioritize efficient utilization of
    finite spectrum resources.
        Third, the Commission should reform its spectrum licensing rules to
    permit electronic filing of spectrum subleasing applications. Requiring
    filings to be submitted through paper copies causes delay and is more
    burdensome for licensees.
    Regulations That Frustrate Wireless Infrastructure Buildout and
            Deployment
        Investment in wireless infrastructure is key to the Nation's
    economy and job growth. All corners of the country must have access to
    robust wireless services capable of supporting high-speed broadband
    service. Regulations that impede mobile broadband infrastructure
    investment, buildout, and deployment must be removed and, where
    necessary, replaced with light-touch regulations that restore and
    promote competition.
        Close scrutiny of all infrastructure approval processes is urgently
    needed. For example, every wireless facility siting is considered a
    ``federal undertaking'' and subject to an extensive review process for
    historic preservation purposes. However, the current rules were
    developed for much larger wireless facilities, such as full-sized
    towers, and are ill-suited for the now-typical small wireless sites,
    which are far less obtrusive, if at all. In particular, it is highly
    unlikely that mounting a small facility would have any negative impact
    on historic preservation, and accordingly, requiring such a review
    unnecessarily imposes an expensive and time-consuming burden on
    providers.
        Congress also should review the current barriers to deploying
    infrastructure on Federal lands and facilities. This is a huge
    impediment to rapid deployment of high speed mobile broadband in rural
    America. Carriers must have certainty regarding the process and
    timeline for application review when seeking to deploy on Federal lands
    and facilities, and unnecessary red tape, burdens, or open-ended
    timeframes frustrate efforts to expand mobile broadband, especially in
    rural areas. Congress must establish clear guidance that wireless
    coverage should be a top priority for all Federal land managers.
    Application challenges, from review times to inconsistent fees,
    increase the burdens on carriers exponentially as carriers work to
    densify their networks or can be prohibitively challenging where
    carriers seek to deploy services to unserved, high cost areas. These
    are just some examples of the many regulatory barriers to
    infrastructure deployment that competitive wireless providers face.
    Review of all barriers to infrastructure deployment is urgently needed,
    and policies should be uniformly applied and adhered to in order to
    streamline and simplify expanding mobile broadband to all parts of the
    country.
        CCA commends the Committee and your leadership in reporting S. 19,
    the MOBILE NOW Act, to the full Senate and supports its swift passage.
    MOBILE NOW contains several key provisions that will reduce burdens and
    increase certainty for carriers seeking to deploy mobile broadband
    infrastructure, particularly in rural areas and on Federal lands and
    facilities.
    Universal Service Regulations That Are Outdated and Unnecessary
        Universal service policies are critical to providing broadband in
    rural and high cost areas. Competitive carriers must have long term
    certainty regarding Universal Service Fund support to maintain,
    upgrade, and expand their networks. This includes both a sufficient
    Mobility Fund Phase II and long term certainty regarding phasing out
    legacy support over the next several years.
        Red tape and documentation for Eligible Telecommunications Carrier
    support should be reduced. In particular, the FCC should remove the
    annual state certification requirement, which no longer serves a
    function since the FCC can monitor compliance on Form 481. In addition,
    the Universal Service Fund (USF) high-cost and Lifeline voice service
    requirements in areas where carriers do not receive support are
    unnecessary and highly burdensome to wireless providers and hinder
    their ability to support consumers in these areas. In addition, the
    current USF contribution regulations are complex and at times require
    costly compliance obligations, and the current mechanisms for
    calculations are outdated and incomplete. A full review of the USF
    contribution system is needed to ease administrability of the fund and
    to identify ways to reduce the contribution factor that ultimately
    creates a high cost to consumers.
    Administrative Requirements That Are Burdensome
        There are numerous reporting requirements imposed by the FCC that
    generate duplicative or unnecessary reports. Specifically, the FCC
    should rescind unnecessary or duplicative reporting requirements
    related to location accuracy compliance, network outage requirements,
    Wireless Emergency Alert notifications, and filing paper copies of
    licenses. Many of these recordkeeping requirements have not yet been
    modernized consistent with the current wireless industry. Likewise,
    such reporting requirements result in substantial burdens and resource
    costs for wireless providers, often during times of disasters and
    emergencies. The FCC should modify or repeal these rules consistent
    with its goals to facilitate information sharing and strengthen and
    expand network buildout.
        The FCC also should repeal rules requiring pre-closing
    authorization of pro forma transactions, such as transferring a license
    from one wholly-owned subsidiary to another. The rules are inconsistent
    depending on the type of license, most of which do not require pre-
    closing authorization. The FCC should simplify its filing requirements
    for such transactions, allowing post-closing notification in a single
    update. To the extent that express forbearance authority would be
    necessary, Congress should grant such authority, as it did for
    commercial mobile radio service and common carrier rules.
    Enhanced Open Internet Transparency and Other Requirements for Small
            Providers
        The FCC's 2015 Open Internet Order imposed numerous regulatory
    obligations on providers of broadband, including enhancements to the
    existing transparency rules that governs the content and format of
    disclosures made by both wireline and wireless broadband providers. In
    recognition of the compliance burden concerns raised by smaller
    providers, the FCC granted a temporary exemption to certain small
    broadband providers. However, this exemption has expired, and as a
    result, small broadband providers are forced to take up the onerous
    reporting requirements. CCA commends Chairman Pai for his announcement
    on Monday that he has circulated an order that will extend and expand
    the exemption for five years. CCA is hopeful that this exemption will
    be swiftly adopted, and appreciates bipartisan Congressional support to
    exempt small business providers from these rules, including the
    Committee passage of the Small Business Broadband Deployment Act in the
    114th Congress.
        In addition, there needs to be a review of all regulatory burdens
    that impact small companies inordinately, using small business size
    standards as defined by SBA, and the FCC should ease regulatory burdens
    placed on smaller participants whose costs of compliance are
    exponentially greater. Regulations must be structured so that they
    support competition, rather than place far higher or unnecessary
    burdens on smaller carriers.
    FCC Privacy Rules that are Burdensome and Unnecessary
        Congress should address the FCC's recently-adopted privacy rules.
    By departing from the Federal Trade Commission (FTC)'s proven privacy
    regime, the FCC's rules create a harmful competitive disparity between
    ISPs and edge providers, and will sow confusion among consumers seeking
    to exercise control over their information online. The rules also
    create substantial costs and business disruptions, requiring new
    mechanisms and updates to hardware and software assets, and revisions
    to internal and external procedures, for compliance with these
    provisions, including to manage consents to use customer data. Perhaps
    worse, the Commission failed to comply with the Regulatory Flexibility
    Act (``RFA''), making no attempt to examine how its rules might impact
    small carriers. Specifically, the Initial Regulatory Flexibility
    Analysis (``IRFA'') accompanying the FCC's Notice of Proposed
    Rulemaking did not describe and assess the economic impact of the
    Commission's proposals on small entities, nor did the IRFA propose or
    even discuss alternative rules that might address small-business-
    specific regulatory burdens. The IRFA included an estimation of the
    number of small BIAS providers that may be impacted by the rules, but
    did not, as required by law, provide ``a quantifiable or numerical
    description of the effects of a proposed rule or alternatives to the
    proposed, or more general descriptive statements if quantification is
    not practicable or reliable.''
        The Small Business Administration (``SBA'') noted the same. In a
    letter to the FCC, SBA stated that ``the FCC failed to comply with the
    RFA's requirement to quantify or describe the economic impact that its
    proposed regulations might have on small entities.'' The bipartisan
    leadership of the House Small Business Committee later raised similar
    concerns. While the FCC responded by enacting ``numerous measures in
    [the Report and Order] to alleviate burdens for small providers,''
    these measures did not go far enough to adequately accommodate small
    business providers' limited staff and capital resources, particularly
    for companies that may not collect or use data for the purposes the
    rules seek to address. The lack of a good faith effort to comply with
    the RFA, along with ignoring significant industry outcry, especially
    those representing small businesses, underscores the need for Congress
    to address the FCC's misguided privacy rules.
    Tower Lighting and Marking that is Unnecessary
        Wireless carriers, as well as other telecommunications providers,
    undergo significant notice, application, and review processes in
    construction and maintenance to site towers and specific rules
    regarding tower marking and lighting. The Federal Aviation
    Administration (FAA) Extension, Safety, and Security Act of 2016
    contains a section directing the FAA to issue regulations directing the
    marking of certain towers between 50 and 200 feet. If promulgated,
    these regulations would impose significant costs on carriers and create
    new burdens while potentially putting the towers in conflict with other
    zoning requirements that do not allow for lighting or marking of towers
    or specifically require camouflaging techniques. Before the FAA issues
    regulations, Congress should ensure that any rules are appropriately
    tailored to capture safety concerns associated with portable or
    temporary towers, such as meteorological evaluation towers, without
    imposing unnecessary burdens on wireless carriers that would divert
    limited resources away from maintaining and expanding mobile broadband,
    especially in rural areas.
        CCA appreciates the opportunity to assist your efforts to reduce
    unnecessary regulatory burden and welcomes any questions or comments
    you may have.
                Sincerely,
                                               Steven K. Berry,
                                                     President and CEO,
                                          Competitive Carriers Association.
                                     ______

         Response to Written Questions Submitted by Hon. John Thune to
                                 Jack N. Gerard
        Question 1. In December 2014, President Obama observed that, at
    times, ``the regulatory agencies treat every problem like a nail and
    only have a hammer, and aren't engaging with industry enough to think,
    all right, here is the problem we're trying to solve, is there a
    smarter way of solving it.'' How effective have regulators been in
    working with industry and incorporating their perspectives?
        Answer. Unfortunately, we often find that regulators impose
    requirements that are either not achievable, not cost-effective, or
    that will not achieve the intended results. This often leads industry
    to litigate such flawed final rules to obtain the necessary relief from
    agency actions.
        Technological innovations and industry leadership have propelled
    the oil and gas industry forward despite the unprecedented onslaught of
    145 new and pending Federal regulatory and other administrative actions
    targeting our industry. The oil and natural gas industry remains
    committed to regulatory structures that promote safety, environmental
    protection, and responsible operations and it continues to look for
    ways to collaborate with regulators.
        API has long supported and continues to support reducing the
    regulatory burdens on industry and urges Congress and the
    Administration to take measures to lower the cost to businesses while
    protecting workers, consumers, communities and the environment. We have
    also urged OMB to ensure that existing and future regulations are
    consistent with their authorizing statutes.
        API has been active in previous regulatory relief efforts. In 2011
    and 2015 we submitted suggestions for regulatory reform to the
    Administration, but were disappointed that this led to only small
    changes in regulation. We think that many opportunities still exist.
        Wood Mackenzie evaluated the impact on the U.S. economy of various
    pro-development policies and regulatory constraints in the oil and
    natural gas sectors. See http://www.api.org/news-policy-and-issues/
    american-jobs/comparison-of-us-oil-and-gas-policies

       API requested Wood Mackenzie investigate the impact of
            potential changes to various oil and natural gas-related
            policies at both a Federal and state level

       The positive impacts of a series of pro-development policies
            were evaluated, alongside the detrimental impacts of a number
            of proposed and recently enacted regulatory constraints

       The impacts are characterized in terms of jobs, GDP,
            government revenues, and household income and energy
            expenditure

       Both upside and downside scenarios were compared to a
            Baseline forecast that excludes the listed pro-development
            policies and the regulatory constraints

        The table below highlights key differences that pro-development
    approach could bring.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As is clear, pro-development policies could lead to more
    production, more jobs, more government revenue and reduced household
    energy expenses.

        Question 2. It is critically important that our energy products get
    to market safely and efficiently. Last Congress, this Committee
    approved several safety improvements to crude-by-rail transportation in
    the bipartisan FAST Act, signed into law in December 2015. What is the
    status of industry compliance with those new requirements, and how you
    expect them to improve safety?
        Answer. Safety is our industry's number one priority. API has been
    a proponent of a thoughtful, comprehensive and data-driven safety
    approach in order to improve on the 99.997 percent safety record of
    freight rail to reach our goal of zero accidents. Over the past several
    years, we've been working collaboratively with regulators, railroads,
    tank car builders, and other shippers to improve the safety of crude-
    by-rail transportation. Those efforts were furthered by the
    finalization of the tank car standards laid out in the FAST Act which
    included requirements for thermal insulation for DOT 117 and 117R cars
    and top fittings protection for retrofitted cars.
        API has also supported the upgrading of the tank car fleet and
    would like to see these upgrades completed as quickly and as
    realistically possible. The industry is progressing with the retrofits
    and replacements of older tank cars. According to data from the Railway
    Supply Institute (RSI), the new DOT 117 standard now represents 14
    percent of the crude oil fleet, up from 4 percent last year. At the
    same time, DOT 111's now represent only 3 percent of the fleet. (http:/
    /www.tankcarresource
    center.com/wp-content/uploads/2014/07/FASTAct_ImplementationUpdate.pdf)

        Question 3. Apart from those discussed in your testimony and at the
    hearing, are there any other examples of areas in which we can reform
    our transportation regulations to help get our goods to market more
    efficiently without compromising safety?
        Answer. As an industry, we are committed to delivering 100 percent
    of our product to its destination without incident, and that is why we
    have been in agreement with the Pipeline and Hazardous Material Safety
    Administration and supported the development of effective and efficient
    natural gas and liquid pipeline rules to address pipeline safety.
    Unfortunately, the agency's proposed pipeline rules in some instances
    undermines the very safety efforts we are trying to bolster by applying
    a prescriptive one-size-fits-all approach that requires the shift of
    valuable industry resources away from potentially higher to low
    consequence, low risk areas. So, I would re-emphasize the point that it
    makes little sense to advance rules that will weaken and water down
    safety. In the case of the hazardous liquid and natural gas pipeline
    safety rules, we look forward to working with PHMSA in further
    analyzing and improving both rules to more effectively help guide the
    industry's attention and resources to those safety areas that can truly
    advance safety.
                                     ______

        Response to Written Questions Submitted by Hon. Deb Fischer to
                                 Jack N. Gerard
        Question 1. Mr. Gerard, you mentioned concerns with PHMSA's
    proposed natural gas transmission rulemaking, particularly as it
    relates to the agency's cost-benefit analysis and industry stakeholder
    estimates that found the rule would cost $33.4 billion to implement.
    How do you think that PHMSA and other agencies could strengthen their
    cost-benefit analysis to better analyze the impact of regulations?
        Answer. Reflecting on recent cost-benefit analyses done by PHMSA,
    there are a number of items Federal agencies can do better to analyze
    the costs and benefits of regulations. One of the first steps should be
    to ensure that proposed rules are drafted as clearly as possible.
    Ambiguity is the enemy of accurate analysis. When a rule is written in
    a manner that allows vastly different interpretations, it is impossible
    to conduct a cost-benefit analysis that all parties will agree upon. In
    a similar vein, agencies should endeavor to fully understand how
    industry operates and how changes in regulations would change these
    operations. Failing to do this would result in incorrect baseline
    assumptions that doom the analysis from the start. The impact is
    compounded when the activity being regulated is already governed by an
    industry standard. The impact of forcing a change in how the industry
    operates can reverberate through the supply chain in unexpected ways.
        There are a number of more specific suggestions inspired by the
    PHMSA analyses. First, agencies should be skeptical of cost estimates
    provided by vendors for new technologies. Regulations routinely call
    for the deployment of novel and commercially untested technologies. Few
    vendors have real world estimates of how much these technologies will
    actually cost. Agencies should also recognize that vendors likely have
    an incentive to underestimate these costs and should account for that
    in their analysis. Second, agencies should base benefit estimates on
    actual incident rates.
        When a catastrophic event occurs, there appears to be a tendency to
    assume that accidents of that magnitude are now more likely without
    presenting compelling analysis to support that claim.
        Third, agencies need to abide by OMB Circular A-4 in applying the
    same range of interest rates to costs and to benefits. Currently
    agencies, including PHMSA, are estimating benefits using the Social
    Cost of Carbon/Methane (which is calculated at 5 percent) and comparing
    those benefits against costs that have been discounted at 7 percent.
    Fourth, agencies should consider the impact of the proposed regulation
    on small entities. Even if the overall costs of a provision do not
    appear excessive, the costs at the company-level can be well beyond the
    operating capacity of many small businesses. As an example, according
    to ICF's analysis on the natural gas transmission and gathering line
    rule, small gathering line operators are disproportionately
    disadvantaged. The estimated annual compliance costs for small
    companies nearly equals estimated annual revenues from gathering fees.
    Lastly, agencies should be encouraged to perform cost-effectiveness
    analysis, per the direction provided in OMB Circular A-4, in
    conjunction with cost-benefit analysis to determine if there are less
    costly ways of achieving the same outcome.

        Question 2. Mr. Gerard, in your written testimony you commented
    that the Pipelines and Hazardous Materials Safety Administration
    (PHMSA) has ``strayed from a risk based approach'' as it relates to the
    proposed natural gas transmission rule. As you are aware, in 2016,
    Congress passed the PIPES Act, bipartisan legislation I authored to
    strengthen risk management at PHMSA. The bill included a GAO assessment
    of the risk-based integrity management programs at PHMSA. Would you
    please provide more details about your concerns about PHMSA's risk
    based approach? How can Congress work to strengthen this approach at
    PHMSA?
        Answer. API members are dedicated to a risk-based approach to
    pipeline safety--one that strives for continuous improvement through
    addressing known, quantifiable issues. Importantly, that is the same
    approach that Congress has used over the decades in its directives to
    the Department of Transportation (DOT) and PHMSA for regulating
    pipeline safety. However, API believes that the proposals in the
    natural gas transmission and gathering lines NPRM do not reflect a risk
    management approach, as directed by Congress, targeted toward
    eliminating the most significant risks posed to public safety and the
    environment.
        With regards to integrity management, the natural gas transmission
    and gathering rule sets forth prescriptive repair criteria requirements
    following pipeline inspections. According to the NPRM, if an operator
    discovers an anomaly in their pipeline, the operator is not allowed to
    holistically assess the conditions of their pipeline and operate
    conservatively based on available data. The operator is instead forced
    to repair all discovered anomalies despite the level of risk posed to
    the pipeline. As such, the proposal is not based on risk but is instead
    based on a misguided principle that more is better without grounding
    that determination in potential pipeline safety improvements and
    benefits to the public and the environment.
        PHMSA also proposes to regulate small-diameter rural gathering
    lines without regard to congressional mandates that required adequate
    data collection, appropriate risk-based analysis completion, and
    demonstrated increase to public safety or the environment. PHMSA did
    not conduct a thorough analysis of the existing rules as required by
    the 2011 PSA. Nor did they provide any qualitative or quantitative data
    demonstrating that such gathering lines pose a direct risk to the
    public. API requests that PHMSA allow operators to focus resources on
    the highest risks to their pipelines and maintain the flexibility to
    apply these requirements to operating pipeline systems.
        Further, PHMSA should develop regulations based on comprehensive
    data and corresponding risk analyses.

        Question 3. As it relates to regulatory reform, I've been a strong
    proponent of transparency, better cost-benefit analysis, and more
    stakeholder participation in the process. As chair of the Surface
    Transportation Subcommittee, I've convened hearings on performance-
    based regulations, whereby agencies set goals or benchmarks and allow
    flexibility in achieving those goals. From your perspectives, what are
    the benefits of moving away from prescriptive regulations towards more
    goal-oriented regulations?
        Answer. PHMSA's integrity management regulations are built on the
    performance-based regulatory model which allows operators a variety of
    options to apply minimum safety standards to the specific
    characteristics of their pipeline systems. These regulations have been
    extremely successful in improving pipeline safety since their
    implementation in 2004. Pipeline systems are complex and vary greatly
    from operator to operator and system to system. Each pipeline operates
    uniquely; therefore, companies need flexibility to manage their assets
    appropriately and safely. For example, one operator may have a pipeline
    located in rocky soil that requires specific protective measures from
    dents. Alternatively, an operator may have a pipeline in sandy soil,
    where dents are not a concern; however, measures must be taken to
    address subsidence. Again, current Integrity Management regulations
    provide operators with that flexibility to determine which methods are
    appropriate to meet minimum pipeline safety standards, while
    encouraging technological advancements. It would be impossible for one
    agency to provide prescriptive criteria for any situation that may be
    encountered in pipeline operation. API and its members strongly support
    continued reliance on the current performance-based regulatory scheme
    because it is essential to improving pipeline safety and advancing
    pipeline technologies.
                                     ______

         Response to Written Question Submitted by Hon. Dean Heller to
                                 Jack N. Gerard
        Question. Over the past few weeks, I have been traveling through
    some of Nevada's eastern rural counties, like Elko, Eureka, and White
    Pine. Many of our local elected officials have been trying to provide
    their constituents access to natural gas.
        Many of these rural communities rely on propane, which as you know
    is significantly more expensive for the consumer. It is beginning to be
    a hindrance to economic development. For example, Wells and West
    Wendover, Nevada have attracted the interest from some significant
    manufacturing companies that could bring jobs and economic development
    to the communities that need it the most. Unfortunately, the lack of
    natural gas infrastructure is proving to be a deal breaker.
        The President has called for legislation that would make
    significant investments in infrastructure, both transportation and
    energy development.
        Should this type of legislation occur, what type of regulatory
    reform would make the investment in rural communities more attractive?
    What are some of the government deterrents that prohibit some of your
    member companies from making these types of investments?
        Answer. Investments in pipeline infrastructure are typically funded
    by long-term precedent agreements between pipelines and private
    companies. As such, certainty in the regulatory process is critical to
    incentivize these types of investments in all areas, be it rural,
    urban, or suburban. We often find that regulators impose requirements
    that are either not achievable, not cost-effective, or that will not
    achieve the intended results. This often leads industry to litigate
    such flawed final rules to obtain the necessary relief from agency
    actions.
        Technological innovations and industry leadership have propelled
    the oil and gas industry forward despite the unprecedented onslaught of
    145 new and pending Federal regulatory and other administrative actions
    targeting our industry. The oil and natural gas industry remains
    committed to regulatory structures that promote safety, environmental
    protection, and responsible operations and it continues to look for
    ways to collaborate with regulators.
        API has long supported and continues to support reducing the
    regulatory burdens on industry and urges Congress and the
    Administration to take measures to lower the cost to businesses while
    protecting workers, consumers, communities and the environment. We have
    also urged OMB to ensure that existing and future regulations are
    consistent with their authorizing statutes.
        API has been active in previous regulatory relief efforts. In 2011
    and 2015 we submitted suggestions for regulatory reform to the
    Administration, but were disappointed that this led to only small
    changes in regulation. We think that many opportunities still exist.
        Wood Mackenzie evaluated the impact on the U.S. economy of various
    pro-development policies and regulatory constraints in the oil and
    natural gas sectors. See http://www.api.org/news-policy-and-issues/
    american-jobs/comparison-of-us-oil-and
    -gas-policies

       API requested Wood Mackenzie investigate the impact of
            potential changes to various oil and natural gas-related
            policies at both a Federal and state level

       The positive impacts of a series of pro-development policies
            were evaluated, alongside the detrimental impacts of a number
            of proposed and recently enacted regulatory constraints

       The impacts are characterized in terms of jobs, GDP,
            government revenues, and household income and energy
            expenditure

       Both upside and downside scenarios were compared to a
            Baseline forecast that excludes the listed pro-development
            policies and the regulatory constraints

        The table below highlights key differences that pro-development
    approach could bring.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As is clear, pro-development policies could lead to more
    production, more jobs, more government revenue and reduced household
    energy expenses.
                                     ______

        Response to Written Questions Submitted by Hon. Bill Nelson to
                                 Jack N. Gerard
        Question 1. In a 1968 report to the American Petroleum Institute
    (API), the Stanford Research Institute said, ``In summary . . . man is
    now engaged in a vast geophysical experiment with his environment, the
    earth. Significant temperature changes are almost certain to occur by
    the year 2000 and these could bring about climatic change.''
    Furthermore, ``If the earth's temperature increases significantly, a
    number of events might be expected to occur, including the melting of
    the Antarctic ice cap, a rise in sea levels, warming of the oceans, and
    increase in photosynthesis.'' However, it was not until 2016 that API
    finally formed a climate change task force, issuing the following
    statement acknowledging the severe threat of climate change: ``It is
    clear that climate change is a serious problem that requires research
    for solutions and effective policies that allow us to meet our energy
    needs while protecting the environment.''
        Why did it take so long for API to acknowledge what it knew almost
    five decades ago?
        Answer. It appears that the referenced Stanford Research Institute
    report was a climate-related literature search. We do not have a copy
    on file here at API and are not familiar with its findings. That said,
    we have accessed the report online from https://www.smokeandfumes.org/
    documents/16. The quote in Senator Nelson's question that industry
    supposedly knew that climate change was caused by fossil fuels (``In
    summary . . . man is now engaged in a vast geophysical experiment with
    his environment, the earth. Significant temperature changes are almost
    certain to occur by the year 2000 and these could bring about climatic
    change.'') is not a conclusion of the researchers themselves, but a
    quote from one of the studies they were evaluating (specifically
    Revelle, as noted on page 109).
        Further, note that page 110 identifies the uncertainty inherent in
    the literature: ``we are unsure as to what our long-lived pollutants
    are doing to our environment.''
        So, the premise of the question is flawed. The Stanford Research
    Institute report does not make the broad conclusions alleged in Senator
    Nelson's question. Of course, over recent decades the Federal
    Government has funded millions if not billions of dollars on research
    to understand better the role of greenhouse gases in the atmosphere and
    address some of the uncertainties in the science.
        API has regularly reviewed its positions on the greenhouse gas
    issue and on other major public policy issues, and will undoubtedly do
    so in the future. API will continue to participate in the public
    discourse on this and other major issues.

        Question 2. I take seriously my oversight responsibility for
    pipeline safety. That is why last year the Senate passed a bill that
    would give the Ranking Member the same access to unredacted oil spill
    response plans as the Chairman. As you know, these plans have been
    severely flawed in the past.
        Your organization expressed concerns that expanding Congress'
    access to unredacted oil spill plans could result in the leak of that
    information. Can you explain to me why I should not be given access to
    those plans?
        Answer. As we saw last October when environmental activists
    coordinated attacks on five major oil pipeline valve stations, oil
    pipelines continue to be targets for anti-oil activism. These events
    are a major concern for the industry and for pipeline operators in
    particular. In those attacks, the perpetrators clearly had specific
    knowledge of the valve location, facility operations and their role in
    the systems. It's with this in mind that we continue to believe
    protecting sensitive pipeline system data within operator specific
    pipeline spill response plans, as required under 49 CFR 194, is so
    important. Previous language introduced in the 114th Congress as part
    of the PIPES Act lacked clear or specific limitations on public
    disclosure of un-redacted pipeline spill response plans provided to
    Congressional members. API is supportive of sharing this type of
    information with those members of Congress or their staff who have
    legislative oversight for plans and plan requirements as long as there
    is strict adherence to non-disclosure procedures outlined under
    existing laws and regulations. Accidental disclosure of sensitive
    pipeline information to the general public could potentially pose
    significant safety, human health and environmental risks.

        Question 3. In your written statement to this Committee, you note
    that ``America is now the world's leading producer and refiner of oil
    and natural gas, a reality that was unimaginable just a decade ago''
    and that we have ``transitioned from an era of energy scarcity and
    dependence to one of energy abundance and security.'' You continue,
    ``Developments of the past decade have brought cost savings for
    American consumers, good paying jobs, renewed opportunities for U.S.
    manufacturing, a stronger economy and greater national security,'' and
    ``record U.S. production and refining is happening alongside greater
    environmental progress.''
        Given these remarkable developments over the last ten years, what
    exactly do you think the Federal Government has been doing that has
    hindered the growth of your industry?
        Answer. The remarkable developments of the past decade were
    achieved in spite of government policy that sought to restrict
    development. Technological innovations and industry leadership have
    propelled the oil and gas industry forward despite the unprecedented
    onslaught of 145 new and pending Federal regulatory and other
    administrative actions targeting our industry. The oil and natural gas
    industry remains committed to regulatory structures that promote
    safety, environmental protection, and responsible operations and it
    continues to look for ways to collaborate with regulators.
        Wood Mackenzie evaluated the impact on the U.S. economy of various
    pro-development policies and regulatory constraints in the oil and
    natural gas sectors. See http://www.api.org/news-policy-and-issues/
    american-jobs/comparison-of-us-oil-and-gas-policies

       API requested Wood Mackenzie investigate the impact of
            potential changes to various oil and natural gas-related
            policies at both a Federal and state level

       The positive impacts of a series of pro-development policies
            were evaluated, alongside the detrimental impacts of a number
            of proposed and recently enacted regulatory constraints

       The impacts are characterized in terms of jobs, GDP,
            government revenues, and household income and energy
            expenditure

       Both upside and downside scenarios were compared to a
            Baseline forecast that excludes the listed pro-development
            policies and the regulatory constraints

        The table below highlights key differences that pro-development
    approach could bring.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As is clear, pro-development policies could lead to more
    production, more jobs, more government revenue and reduced household
    energy expenses.
                                     ______

         Response to Written Questions Submitted by Hon. John Thune to
                                Rosario Palmieri
        Question 1. As I understand it, the Executive Order issued by the
    White House on January 30, 2017, does not apply to independent
    agencies. Your testimony highlighted the limits on the Executive
    Branch's ability to direct independent agencies, such as Consumer
    Product Safety Commission, to help reduce the overall regulatory
    burden. Can you elaborate on additional steps Congress may need to take
    to ensure that independent agencies are regulating in a way that
    promotes U.S. manufacturing without compromising safety?
        Answer. President Trump's Executive Order 13771, entitled
    ``Reducing Regulation and Controlling Regulatory Costs,'' establishes
    the framework for the President's ``one in-two out'' regulatory reform
    initiative. As you note, the Order does not apply to independent
    regulatory agencies. Though the interim guidance implementing the
    Order's provisions effecting Fiscal Year 2017 regulatory costs
    encourages independent regulatory agencies to comply, it is unclear
    whether these agencies actually will.
        The President does not exercise similar authority over independent
    regulatory agencies--such as the National Labor Relations Board, the
    Securities and Exchange Commission and the Consumer Product Safety
    Commission--as he does over other agencies within the executive branch.
    The rules issued by these agencies can impose significant costs on
    manufacturers. These agencies are not required to comply with the same
    regulatory principles as Executive Branch agencies and often fail to
    conduct any analysis to determine expected benefits and costs.
        Congress should require independent regulatory agencies to conduct
    cost-benefit analyses of their significant rules and subject their
    analysis to third-party review conducted by the Office of Information
    and Regulatory Affairs (OIRA) within the Office of Management and
    Budget or some other office. Consistency across the government in
    regulatory procedures and analysis would only improve certainty and
    transparency of the process. The case for the inclusion of independent
    regulatory agencies in a centralized review of regulations is clear,
    and Congress should act to make it certain.
        There are several legislative proposals that would improve the
    quality of regulations issued by independent regulatory agencies. Last
    Congress, Senators Rob Portman (R-OH), Mark Warner (D-VA) and Susan
    Collins (R-ME) introduced the Independent Agency Regulatory Analysis
    Act of 2015 (S. 1607, 114th Congress), which would provide the
    President authority to require independent regulatory agencies to
    conduct benefit-cost analysis for significant rules and submit them to
    OIRA for third-party review. Senator Portman is also lead sponsor of
    the Regulatory Accountability Act (S. 2006, 114th Congress), which
    would codify analytical requirements and sound regulatory processes for
    all agencies, including independent regulatory agencies. Senator Amy
    Klobuchar (D-MN) has introduced the SCORE Act (S. 2294, 114th
    Congress), which would establish a Regulatory Analysis Division within
    the Congressional Budget Office to conduct analysis of the prospective
    impact of economically significant rules, including rules issued by
    independent regulatory agencies.

        Question 2. In December 2014, President Obama observed that, at
    times, ``the regulatory agencies treat every problem like a nail and
    only have a hammer, and aren't engaging with industry enough to think,
    all right, here is the problem we're trying to solve, is there a
    smarter way of solving it.'' How effective have regulators been in
    working with industry and incorporating their perspectives?
        Answer. The Administrative Procedure Act requires Federal agencies
    to publish in the Federal Register a general notice of proposed
    rulemaking for substantive rules and provide the public an opportunity
    to participate in the rulemaking (5 U.S.C. 553). Unfortunately,
    regulators often make their regulatory determinations (e.g., how and
    who to regulate) before issuing a notice of proposed rulemaking and
    before they receive valuable feedback from those entities that are
    directly impacted by the agency's action. Last Congress, Senators James
    Lankford (R-OK) and Heidi Heitkamp (D-ND) introduced the Early
    Participation in Regulations Act (S. 1820, 114th Congress), which would
    require an agency to publish an advance notice of proposed rulemaking
    when it considers a major rule. Such a requirement would force agencies
    to seek public input before they make regulatory decisions.
        Congress should also reform current statutory requirements that are
    designed to improve how agencies interact with stakeholders. The
    Regulatory Flexibility Act (RFA) requires Federal agencies to
    thoughtfully consider small businesses when developing regulations. If
    an agency determines that a regulation is likely to have ``significant
    economic impact on a substantial number of small entities,'' then the
    agency must engage in additional analysis and seek less burdensome
    regulatory alternatives. In addition to requiring improved small
    business analysis, the RFA intended to improve public participation in
    a rulemaking. The law was amended in 1996 to require the Environmental
    Protection Agency and the Occupational Safety and Health Administration
    to empanel a group of small business representatives to help those
    agencies better consider a rule's impact before it is proposed. In
    recognizing the importance of this panel process, Congress expanded
    this requirement to include the Consumer Financial Protection Bureau
    when it passed the Dodd-Frank Wall Street Reform and Consumer
    Protection Act.
        The RFA's provisions have received universal support from
    lawmakers, but Congress needs to strengthen the law and close loopholes
    that agencies use to avoid its requirements.
        Unfortunately, agencies are able to avoid many important RFA
    requirements--including holding small business panels--by simply
    asserting that a rule will not impact small businesses significantly.
    The law does not explicitly define a ``significant economic impact on a
    substantial number of small entities,'' so agencies have great
    discretion in deciding when the RFA would apply to a proposed or final
    rule. Furthermore, only a small number of regulations require small
    business-oriented analysis because ``indirect effects'' cannot be
    considered. One of the original authors of the RFA, Sen. John Culver
    (D-IA), intended that the scope of the RFA include direct and indirect
    effects.\1\ The law should be amended to ensure that indirect effects
    are considered by agencies as Congress intended.
    ---------------------------------------------------------------------------
        \1\ 126 Cong. Rec. 21,456 (1980).
    ---------------------------------------------------------------------------
        The RFA's requirements are especially important to improving public
    participation and the quality of regulations, and have saved billions
    of dollars in regulatory costs for small businesses. In January 2017,
    Small Business Administration's Office of Advocacy, which monitors
    compliance with the RFA and assists agencies in meeting the law's
    requirements, issued its annual report indicating that it helped save
    small businesses $1.4 billion in regulatory costs.
        Moreover, Advocacy has saved businesses cumulatively $130 billion
    in regulatory costs since it began tracking regulatory cost savings in
    1998. Imagine the positive impact on regulations if agencies were not
    able to avoid the RFA's requirements so easily. In addition, despite
    the success of the small business panel process, it only applies to
    three agencies.

        Question 3. Apart from those discussed in your testimony and at the
    hearing, are there any other examples of areas in which we can reform
    our transportation regulations to help get our goods to market more
    efficiently without compromising safety?
        Answer. The Department of Transportation (DOT) needs to keep its
    regulatory agenda in check so that critical transportation services on
    which manufacturers rely are not hampered by additional red tape. Some
    DOT regulations have made transporting finished goods to a consumer and
    component parts to a shop floor more difficult and more costly.
        Regulatory requirements for prescriptive activities are not the
    best way to improve safety if measuring safety outcomes can provide
    better incentives and flexibility. Positive Train Control (PTC) is one
    of the best examples of how a technology mandate could have been more
    performance-based, which could have achieved better safety outcomes
    sooner. Had Congress and the Federal Railroad Administration (FRA)
    required performance standards for the types of incidents prevented by
    PTC, then railroads could have identified and implemented the best way
    to achieve those goals, which would have included PTC in tandem with
    other processes and technologies.
        Additionally, on May 1, 2015, the Pipeline and Hazardous Materials
    Safety Administration (PHMSA) and the FRA issued a final rule mandating
    that trains hauling certain hazardous materials must install a braking
    system known as electronically controlled pneumatic (ECP) brakes, which
    the industry has tested for many years in actual revenue service and
    largely rejected as unreliable. The U.S. Government Accountability
    Office has criticized the lack of transparency in the agency's
    decision-making, and the National Academy of Sciences recently
    identified weaknesses and gaps in the FRA's analysis and modeling of
    the technology. This rule would impose a specific solution on the
    railroad industry that has been shown to provide minimal safety gains
    at great cost while negatively impacting rail operations.
        On March 14, 2016, the FRA issued a notice of proposed rulemaking
    that would mandate a minimum of two persons must be in the locomotive
    cab for railroad operations, despite the absence of any sound science
    that suggests a safety gain would result. Freight railroads currently
    operate with two person crews in keeping with collectively bargained
    work arrangements. This command-and-control approach makes more
    difficult a glide path to technological innovation allowing railroads
    to gain necessary efficiencies to compete in the marketplace, at a time
    when policy makers are encouraging and incentivizing such advancements
    on the Nation's roadways. The railroad industry strongly opposes moving
    forward on a crew size rule that is not the product of collaborative
    industry stakeholder discussion.
        Granting waivers is a measured approach to bridging past with
    present and help make regulatory evolution possible. The FRA's waiver
    authority is appropriately very broad. The regulations provide that,
    ``the Secretary may waive compliance with any part of a regulation
    prescribed or order issued under this chapter if the waiver is in the
    public interest and consistent with railroad safety.'' The Secretary of
    Transportation and the FRA Administrator should review existing
    waivers, streamlining them as appropriate and making some permanent in
    order to provide certainty to the industry and stakeholders. Typically
    waivers are granted for no longer than five years. The department
    should expeditiously consider and act on pending waivers, especially
    those that promote innovation, demonstrate technology or proof of
    concept, or allow operating practices that are more efficient and
    consistent with railroad safety, and promptly grant them when
    appropriate. The FRA should reform the process for granting new waivers
    with a focus on efficiency, prioritizing technology and collaboration.
        Today's manufacturers rely on interstate and global movements of
    goods and services. Patchwork state regulations and incompatible
    international standards disrupt supply chains and increase costs for
    manufacturers, yet have become all too common. Manufacturers support
    the primacy of the Federal Government in the regulation of interstate
    commerce. Manufacturers appreciate the Committee's approval of the
    Commercial Vessel Incident Discharge Act (S. 168), which would
    eliminate a regulatory burden hindering interstate and international
    commerce by replacing multiple Federal and state regulations with a
    single national standard for the regulation of ballast water and other
    discharges incidental to normal vessel operations. Additionally, as the
    Committee considers Federal Aviation Administration (FAA)
    reauthorization legislation, there is an opportunity to improve the FAA
    certification process for manufactured aviation products. Additionally,
    any new regulation of the air transport of lithium batteries should
    ensure that manufactures are in harmony with international standards.
    The NAM looks forward to working with this Committee to make the United
    States the best place in the world to build and make things that keep
    our economy moving.
                                     ______

         Response to Written Question Submitted by Hon. Deb Fischer to
                                Rosario Palmieri
        Question. As it relates to regulatory reform, I've been a strong
    proponent of transparency, better cost-benefit analysis, and more
    stakeholder participation in the process. As chair of the Surface
    Transportation Subcommittee, I've convened hearings on performance-
    based regulations, whereby agencies set goals or benchmarks and allow
    flexibility in achieving those goals. From your perspectives, what are
    the benefits of moving away from prescriptive regulations towards more
    goal-oriented regulations?
        Answer. Regulators often issue rules that are inefficient, impose
    unnecessary burdens and harm our ability to innovate and create jobs.
    If we are to succeed in creating more jobs and growing our economy, we
    must reform our regulatory system so that manufacturers can innovate
    and make better products instead of spending hours and resources
    complying with inefficient, duplicative and unnecessary regulations.
    For an agency to improve the effectiveness and efficiency of a
    regulation, it must define the problem that the rule would address.
    Then, as President Obama asserted in Executive Order 13563, the agency
    ``must identify and use the best, most innovative and least burdensome
    tools for achieving regulatory ends.''
        Poorly designed regulations can inhibit innovation and actually
    make it more challenging to efficiently meet regulatory objectives.
    Therefore, it is vital that agencies employ sound regulatory principles
    including the use of performance measures in place of technology or
    process mandates. Regulated entities will often find more efficient
    ways to achieve the regulatory objective than regulators could have
    planned for in advance of implementation. Regulators should, among
    other things, use the best available science, better calculate the
    benefits and costs of their rules, improve public participation and
    transparency, use the least burdensome tools for achieving regulatory
    ends and specify performance objectives rather than a particular method
    of compliance to improve the effectiveness of regulatory measures.
    Agency adherence to each of these regulatory principles is vital if we
    are to implement fundamental change to our regulatory system that
    improves the effectiveness of rules in protecting health, safety and
    the environment while minimizing the unnecessary burdens imposed on
    regulated entities.
                                     ______

         Response to Written Question Submitted by Hon. Bill Nelson to
                                Rosario Palmieri
        Question. Just last April, President Obama signed into law the
    Child Nicotine Poisoning Prevention Act. I authored this law, which
    requires child-resistant packaging standards for liquid nicotine
    products, because the Consumer Product Safety Commission's (CPSC)
    statute--which you believe is overly broad--did not allow the agency to
    regulate liquid nicotine products. It took well over a year to get this
    bill passed, and while it was pending, many children were injured and a
    1-year-old in New York died after ingesting a lethal dose of liquid
    nicotine.
        You stated in your written testimony that Congress and the Office
    of Management and Budget should have more power to review and delay
    rules from CPSC and other safety regulators.
        Under this framework, how can CPSC quickly respond to new, and
    often very serious, product safety issues?
        Answer. Under existing law, the CPSC has the authority it needs to
    quickly respond to new and serious safety issues. The Consumer Product
    Safety Act (CPSA), as amended, provides the Commission with the
    authority to issue product bans to stop the distribution of harmful
    products. The agency's recall authority, for both voluntary and
    mandatory recalls, allows it to target products that are already in the
    possession of consumers. None of these actions would be subject to
    third-party review by the Office of Management and Budget or other
    body.
        When the Commission has reason to believe a product presents a
    substantial product hazard, the agency can ask the court for a
    preliminary injunction to cease distribution of that product. Moreover,
    when a product poses an imminent hazard, the agency is given further
    authority to ask the court to grant ``such temporary or permanent
    relief as may be necessary to protect the public from such risk.'' (5
    U.S.C. 2061(b)(1)). These actions also would not be subject to third-
    party review.
                                     ______

        Response to Written Question Submitted by Hon. Amy Klobuchar to
                                Rosario Palmieri
        Question. Mr. Palmieri, thank you for highlighting my SCORE Act in
    your testimony. I apologize that I had to leave for a vote in the
    Judiciary Committee before I had the chance to ask you a follow-up
    question. As you mentioned, the bill would establish a Regulatory
    Analysis Division within the Congressional Budget Office.
        How do you think this office could lead to more efficient
    regulation of manufacturers and other segments of the economy?
        Answer. Congress is at the heart of the regulatory process and
    produces the authority for the agencies to issue rules, so it is also
    responsible, along with the executive branch, for the current state of
    our regulatory system. While Congress does consider some of the impacts
    of these mandates it imposes on the private sector through regulatory
    authority it grants in law, it has less institutional capability for
    analysis of those mandates than the executive branch. Congress does not
    have a group of analysts who develop their own cost estimates of
    proposed or final regulations.
        As you mention, the SCORE Act (S. 2294, 114th Congress) would
    establish a Regulatory Analysis Division within the Congressional
    Budget Office to conduct analysis of the prospective impact of
    economically significant rules. Not only would this office give
    lawmakers better information about the potential impacts of a proposed
    regulation, but it would also provide agencies with analysis conducted
    by an objective third party. This is an important rethinking of the
    institutional design of our regulatory system and could lead to
    regulations that more effectively meet policy objectives while reducing
    unnecessary burdens. We support this legislation
                                     ______

     Response to Written Questions Submitted by Hon. Richard Blumenthal to
                                Rosario Palmieri
        Question 1. In January, the National Association of Manufacturers
    published a report entitled ``Holding Us Back: Regulation of the U.S.
    Manufacturing Sector.'' This report says, ``Manufacturers face 297,696
    restrictions on their operations from Federal regulations.''
        During the hearing, you admitted that the report also included
    ``Guides'' and ``Guidelines'' that do not have the force of law, if
    they were published in the CFR. However, the report's ``Methodology''
    on page 11 still says, ``Guidance documents that pertain to specific
    regulatory programs, and sometimes have the effect of a regulation,
    were excluded [emphasis added].''
        Will NAM issue a correction that ``federal regulations'' for the
    purpose of your report also includes guidance documents?

        Question 2. Will NAM issue a correction that the report's
    methodology includes guidance documents?
        Answer 1-2. The NAM study is a comprehensive review of restrictions
    from Federal regulations contained in the Code of Federal Regulations.
    During my testimony, I accurately described the scope of the Code of
    Federal Regulations as inclusive of agency promulgated regulations and,
    in rare instances, the codification of guidance documents. The
    Administrative Procedure Act (APA) defines a rule as ``an agency
    statement of general or particular applicability and future effect
    designed to implement, interpret, or prescribe law or policy.  . . .''
    Rules that have the force of law are required to be issued with notice
    and comment procedures as outlined in Sec. 553 of the APA. Interpretive
    rules, guidance and statements of policy which do not have the force of
    law have no such requirement.
        Unfortunately, agencies will frequently issue ``legislative rules''
    which have the force of law disguised as guidance or an interpretive
    rule. As a result, courts have devised tests to identify what types of
    rules issued as guidance have the force of law. In American Mining
    Congress v. MSHA \1\ the court set out a four-part test in which
    meeting any one of the parts indicated that a rule was a legislative
    rule. The four criteria included whether or not the rule was published
    in the Code of Federal Regulations, noting that 44 U.S.C. Sec. 1510
    limits publication in that code to rules ``having general applicability
    and legal effect'' as well as whether or not the agency guidance had
    ``binding effect'' that does not leave the agency discretion. The
    methodology of the study only includes rules which have the force of
    law because it only includes language that has ``binding effect'' and
    is published in the Code of Federal Regulations. No guidance, which is
    merely interpretive or a general statement of policy and thus lacks the
    force of law, was included in this study. Our description of the
    methodology is accurate.
    ---------------------------------------------------------------------------
        \1\ American Mining Congress v. MSHA, 995 F.2d 1106 (D.C. Cir
    1993).
    ---------------------------------------------------------------------------
                                     ______

        Response to Written Questions Submitted by Hon. Brian Schatz to
                                Rosario Palmieri
        Question 1. At the hearing, I asked if NAM had taken a position on
    President Trump's executive order banning travelers and immigrants from
    seven Muslim-majority countries and you offered to find out NAM's
    position. To follow up, I have the following requests:
        Please provide a list of your member companies that have publicly
    opposed the travel and immigration ban and a list of the companies that
    have not.
        Answer. Membership lists of the National Association of
    Manufacturers are confidential. A list of the NAM Board of Directors
    membership is public and available on our website.

        Question 2. How many member companies must support a position for
    NAM to make it a priority?
        Answer. The policy positions of the NAM are developed by our member
    companies and approved by the association's Executive committee and
    Board of Directors. A list of the NAM's Executive Committee and Board
    of Directors is available on our website, as is the approved policy
    positions of the association.

        Question 3. Does the travel and immigration ban negatively impact
    your member companies?

        Question 4. Has NAM taken an official position on the ban? If not,
    please let me know when NAM plans to take an official position.
        Answer 3-4. The Executive Order issued on January 27 is currently
    enjoined by the U.S. Court of Appeals for the Ninth Circuit.
                                     ______

         Response to Written Question Submitted by Hon. John Thune to
                                  Gary Shapiro
        Question. In December 2014, President Obama observed that, at
    times, ``the regulatory agencies treat every problem like a nail and
    only have a hammer, and aren't engaging with industry enough to think,
    all right, here is the problem we're trying to solve, is there a
    smarter way of solving it.'' How effective have regulators been in
    working with industry and incorporating their perspectives?
        Answer. The Consumer Technology Association (CTA) has had the
    opportunity to work with Federal regulators under the jurisdiction of
    the Senate Commerce Committee to advance pro-innovation policies. Our
    experience to date has been varied.
        CTA's work with the U.S. Department of Transportation's National
    Highway Traffic Safety Administration (NHTSA) is a prime example of
    this varied experience. CTA is working with NHTSA on its Federal
    Automated Vehicles Policy and is encouraged by its receptiveness to
    industry's perspective and recognition of the need for consistency for
    self-driving vehicles and the importance of flexibility for the
    industry to continue to innovate.
        However, CTA is also working with NHTSA on its Phase II Driver
    Distraction Guidelines. CTA shares NHTSA's concerns about the hazards
    of distracted driving. But we believe the Phase II Guidelines take the
    wrong approach to technology, both in substance and by impermissibly
    reaching beyond NHTSA's statutory authority under the National Traffic
    and Motor Vehicle Safety Act (``Safety Act''). In this instance, CTA
    would have encouraged greater incorporation of industry's expertise and
    perspective. In the end, NHTSA does not have the authority to dictate
    the design of smartphone apps and other devices used in cars--its legal
    jurisdiction begins and ends with motor vehicle equipment. This
    regulatory overreach could thwart innovative safety solutions from ever
    coming to market.
        Examples of positive industry engagement set by Federal agencies
    include the work of the Federal Aviation Administration (FAA) on drone
    policy. FAA's early and ongoing engagement with the drone industry and
    user community is to be commended and should be replicated by other
    departments and agencies approaching new industries. FAA reached out to
    the emerging industry early, appointing staff to engage directly and
    keep the path of communication open.
        They regularly solicit feedback from industry and stakeholders,
    even appointing an advisory committee (the Drone Advisory Committee) to
    assist the agency with key issues. However, even with this orientation
    and approach, regulatory flexibility for FAA is needed, as they still
    must work through a regulatory regime established long before consumer
    and commercial drones took to the skies.
        While my written and oral testimony expressed deep concern with the
    Federal Communications Commission's (FCC) broadband privacy rules and
    their effect on future innovation, CTA continues to work closely and
    cooperatively with the FCC on other matters. As one of many examples,
    when Congress passed the 21st Century Communications and Video
    Accessibility Act of 2010 (CVAA), industry was deeply involved in the
    legislative process. Similarly, industry has worked closely with the
    FCC to ensure the rules are implemented in way that balances the needs
    of industry and the needs of consumers with disabilities. Thus far, we
    have succeeded in striking a balance. Industry also worked closely and
    successfully with the FCC to craft rules that enabled the commission to
    conduct the world's first voluntary TV broadcast spectrum incentive
    auctions.
                                     ______

        Response to Written Questions Submitted by Hon. Deb Fischer to
                                  Gary Shapiro
        Question 1. Mr. Shapiro, in your written testimony, you observed
    how numerous agencies and committees may have potential jurisdiction
    over the Internet of Things. I am concerned that this disjointed
    approach could lead to conflicting or duplicative regulations being
    imposed on companies due to agencies operating in silos. Do you believe
    the Internet of Things will be enabled or inhibited by the imposition
    of new regulations? Given how many agencies could claim some basis for
    regulating the Internet of Things, how do we streamline the way that
    agencies and Congress are approaching the Internet of Things?
        Answer. A myriad of overlapping and contradicting regulations will
    inhibit growth of the Internet of Things (IoT). For example, a startup
    developing a new wireless device may not know that there are FCC rules
    on equipment authorization and spectrum use. Meanwhile, IoT wearable
    devices offered by health care providers fall under the Health
    Insurance Portability and Accountability Act (HIPAA), while the same
    devices purchased from a retail store are regulated in an entirely
    different manner by the Federal Trade Commission (FTC). The FTC, the
    Federal agency most involved in exploring IoT, increasingly shares
    jurisdiction with other agencies that lack expertise in consumer
    privacy issues. To comply with the myriad of possible regulations
    requires the expertise of lawyers, and startups rarely have the
    resources needed to hire a team of legal experts.
        The technology industry has considered how to navigate the
    fragmented approaches to IoT within the government, specifically within
    the legislative branch. Policymakers and regulators should avoid
    creating regulatory ``silos'' that confuse industry and consumers.
    Regulatory responsibilities should be clarified to avoid duplication
    among agencies.
        CTA supports implementation of a consistent approach to privacy and
    security, building on the expertise of cross-cutting agencies such as
    the FTC, the National Institute of Standards and Technology (NIST), and
    others as appropriate.
        CTA applauds the creation of the bipartisan Senate IoT Working
    Group, which aims to educate members and bring them ``up to speed on
    this technology and its impact on the modern economy and consumers.''

        Question 2. Mr. Shapiro, your testimony highlighted the obstacles
    faced by members of your association that you characterize as
    ``disruptive companies.'' I agree with your view that policymakers
    should exercise regulatory humility so new business models can grow and
    thrive. Is there a role for Congress to play in eliminating regulations
    that could stifle innovation by disruptive companies? Are there
    specific laws you would like to see passed or regulations you want to
    see eliminated?
        Answer. Congress can enable disruptive innovators in several ways.
    First, change outmoded rules that inadvertently suppress current
    business models. For example, the Senate could pass the Modernizing
    Government Travel Act enabling Federal employees to use ridesharing
    services while on official government business.
        Second, Congress can promote a business climate conducive to risk-
    taking and innovation. For example, startups are disproportionately the
    victims of patent trolls. Cracking down on patent abuse would save
    entrepreneurs time and resources fighting frivolous patent lawsuits.
        Third, Congress and policymakers can use their ``bully pulpit'' to
    embrace innovation and explain how new technologies benefit our
    communities and our lives.

        Question 3. As it relates to regulatory reform, I've been a strong
    proponent of transparency, better cost-benefit analysis, and more
    stakeholder participation in the process. As chair of the Surface
    Transportation Subcommittee, I've convened hearings on performance-
    based regulations, whereby agencies set goals or benchmarks and allow
    flexibility in achieving those goals. From your perspectives, what are
    the benefits of moving away from prescriptive regulations towards more
    goal-oriented regulations?
        Answer. Over-regulation is always a danger, but the impact is more
    acute on a dynamic, rapidly-evolving industry such as technology.
    Ideally, regulation will be goal-oriented and focus narrowly on
    specific health and safety concerns or harms. This ``light touch''
    approach will allow potentially life-saving innovations such as
    driverless cars to be deployed as quickly as possible.
                                     ______

        Response to Written Questions Submitted by Hon. Dean Heller to
                                  Gary Shapiro
        Question 1. For tech companies like those at the Consumer
    Electronics Show, what regulations are doing the most harm to their
    business?
        Answer. Several regulations present challenges to our members and
    the thousands of companies that exhibit at CES. One particularly
    onerous mandate was the Obama Administration's Department of Labor
    decision to increase the annual salary threshold, used to determine
    which employees are eligible for overtime pay, from $23,660 to $47,476.
    In startup culture, many employees knowingly join a new venture at a
    low salary, with the expectation of a substantial payoff should the
    venture succeed. Many times these initial employees are the friends--or
    even dorm-mates--of the founder. The massive expansion of overtime
    eligibility upends this business model and makes it unaffordable for
    many startups.
        Another is the Securities and Exchange Commission (SEC) requirement
    for conflict mineral disclosure. As minerals are like water, disclosure
    is difficult to trace and the laws have been more harmful than helpful.
    Congress should eliminate that requirement.

        Question 2. Are there any regulations coming out of the Federal
    Communications Commission (FCC) that you believe are harmful to
    innovation?
        Answer. The FCC's most recent Order on broadband privacy failed to
    justify the FCC's decision to depart from longstanding precedent and
    FTC recommendations with respect to what information should be
    considered sensitive and thus subject to opt-in consent. To the
    contrary, the Order summarily dismissed record evidence that
    demonstrates how the Commission could institute a sensitivity-based
    framework that is consistent with the FTC's framework and with the goal
    of providing appropriate privacy protections to consumers across the
    Internet ecosystem. In sum, the FCC's latest broadband privacy rules
    will chill innovation across the entire Internet ecosystem.
                                     ______

        Response to Written Questions Submitted by Hon. Bill Nelson to
                                  Gary Shapiro
        Question 1. In your written testimony, you state that the cost of
    regulatory compliance has gone up more than $100 billion annually.
    However, I do not see any quantification of the potential benefits of
    regulations, which include injuries prevented and lives saved.
        How do you believe we should analyze and balance benefits against
    costs?
        Answer. We encourage regulators to use rigorous cost-benefit
    analysis to determine the impact of a regulation to society as a whole.
    The generally accepted method is to assign a monetary value to all
    predicted costs and benefits of a regulation including the potential
    impact on the economy, business, government, the environment and
    individual citizens.

        Question 2. How do you propose that we calculate the value of lives
    saved or injuries prevented?
        Answer. Protecting the health and safety of citizens is a basic and
    essential function of government. We encourage regulators to look at
    the full picture, including the health and safety benefits brought
    about by new technologies. For example, every year more than 30,000
    people are killed in auto accidents on U.S. roads. Most of these deaths
    are caused by human error and could likely be prevented by self-driving
    cars and new mobility technologies. Therefore, government must ensure
    that life-saving innovations are made available to the public as
    expeditiously as possible.

        Question 3. The development and application of drone technology
    holds great promise. I understand that at least some members of your
    association are involved in the rapidly evolving drone industry. New
    regulations governing the commercial use of small drones were crafted
    by the Federal Aviation Administration (FAA), and those new regulations
    took effect last August. Industry response to FAA's drone regulations
    seems to be generally positive. What is the view of your association?
        Answer. CTA appreciates the FAA's inclusive approach to drone
    policy. The FAA has engaged industry early and often, forming the Drone
    Advisory Committee and consulting the industry on policy needs and
    priorities. We appreciate the Part 107 rules, which have been welcomed
    by our members, and look forward to working with the FAA to expand
    operations so we can make full use of this technology. We urge the FAA
    to move quickly to finalize rules regarding flights over people,
    flights beyond line of sight and at night, and other expanded
    operations.
                                     ______

        Response to Written Question Submitted by Hon. Brian Schatz to
                                  Gary Shapiro
        Question. Unlicensed spectrum bands have empowered innovators--
    including many CTA Members--to deliver millions of new products which
    have enabled more than 70 million American homes that use Wi-Fi to
    connect to the Internet. What should Congress and the Administration do
    to make sure we can make more unlicensed bands available for
    innovation?
        Answer. The need for additional spectrum to meet the ever-growing
    consumer and business demands for broadband services and applications
    is undisputable. CTA estimates unlicensed spectrum generates over $62
    billion per year for the U.S. economy. The economic impact of
    unlicensed spectrum based on a device's incremental retail sale value,
    is a metric that takes into account only the fraction of the sales
    price attributable to unlicensed spectrum.
        Unlicensed spectrum, as a complement to licensed spectrum, is
    critical to enabling the provision of robust mobile broadband services.
    It plays an important role in addressing spectrum constraints,
    especially in higher bands, and promotes innovation and investment.
    Making Federal spectrum available for commercial use is a critical
    element in addressing this need. To meet this objective, Congress and
    the Administration must develop incentive mechanisms that encourage
    Federal agencies to relinquish or share spectrum, and assure these
    agencies they can continue to meet their mission-critical communication
    needs.
                                     ______

         Response to Written Question Submitted by Hon. John Thune to
                                 Adam J. White
        Question. Even when agencies do perform full cost-benefit analyses
    of their proposed rules, they may still not capture the full regulatory
    burden on businesses when the full history of cumulative rules are
    taken into account. How effective have agencies been in assessing the
    cumulative burdens of, in some cases, decades of rules?
        Answer. Agencies have not been successful in assessing the
    cumulative burdens of regulations--let alone reducing those burdens.
    The Administrative Conference of the United States diagnosed this
    problem well in 2014:

            Traditionally, Federal regulatory policymaking has been a
            forward-looking enterprise: Congress delegates power to
            administrative agencies to respond to new challenges, and
            agencies devise rules designed to address those challenges.
            Over time, however, regulations may become outdated, and the
            cumulative burden of decades of regulations issued by numerous
            Federal agencies can both complicate agencies' enforcement
            efforts and impose a substantial burden on regulated
            entities.\1\
    ---------------------------------------------------------------------------
        \1\ ACUS, Retrospective Review of Agency Rules, Recommendation
    2014-5 (Dec. 4, 2014); see also Dudley, ``Considering the Cumulative
    Effects of Regulation,'' GWU Regulatory Studies Center (Aug. 11, 2015).

        To identify the agencies' failure on this point is not to ``blame''
    them. As former OIRA Administrator Cass Sunstein observed, ``[i]n
    principle, a competent analysis of costs might be able to capture those
    [cumulative] costs, but it is exceedingly hard to do so in the context
    of particular rules.'' \2\ While it was good for the White House and
    Sunstein's OIRA to order agencies to look back at old regulations and
    attempt to quantify cumulative burdens,\3\ one must concede the
    challenges inherent in that task.
    ---------------------------------------------------------------------------
        \2\ Sunstein, The Regulatory Lookback, 94 B.U. L. Rev. 579, 588-89
    (2014)
        \3\ Exec. Order 13563 Sec. Sec. 1(b) & 3; OIRA, Memorandum to the
    Heads of Departments and Agencies, and of Independent Regulatory
    Agencies, M-11-10 (Feb. 2, 2011).
    ---------------------------------------------------------------------------
        The task of quantifying cumulative burdens is all the more
    difficult when one looks beyond the cumulative burdens imposed by a
    single agency, and considers the needless costs of redundant regulatory
    burdens across multiple agencies, or between Federal and state
    government, or even at the international level. Still, experts have
    offered hope that such analysis can be done, even if there is no single
    ``silver bullet'' for easily accomplishing the task.\4\
    ---------------------------------------------------------------------------
        \4\ Bull, Controlling the Cumulative Costs of Regulation: Exploring
    Potential Solutions (2015), available at http://www.thecre.com/forum2/
    ?p=1052; Weiss, Regulatory ``Look Back'' in Practice: Deployment of the
    Single Window, Yale. J. Reg.'s Notice and Comment (Dec. 10, 2015), at
    http://yalejreg.com/nc/regulatory-look-back-in-practice-deployment-of-
    the-single-window-by-jeff-weiss/.
    ---------------------------------------------------------------------------
        Given the challenges inherent in precisely calculating cumulative
    burdens, perhaps the solution lies in creating an incentive for
    agencies themselves to identify cumulative burdens as eagerly as
    possible. And that is a virtue of ``regulatory budgets'': by putting a
    cap on an agency's cumulative burdens, the agency itself has an
    incentive to identify excessively burdensome rules among its stock of
    existing regulations, and to reform or repeal them before imposing new
    regulatory burdens.\5\ President Trump already has begun to impose
    regulatory budgets on agencies through an executive order,\6\ but if
    Congress wants to reduce cumulative regulatory burdens then it should
    consider imposing regulatory budgets through legislation.
    ---------------------------------------------------------------------------
        \5\ My co-authors, Oren Cass and Kevin Kosar, both highlighted the
    benefits of regulatory budgeting in our recent book, Policy Reforms for
    an Accountable Administrative State (2017); see also Jeff Rosen,
    ``Putting Regulators on a Budget,'' National Affairs (Spring 2016).
        \6\ Exec. Order 13771 Sec. 2 (Jan. 30, 2017).
    ---------------------------------------------------------------------------
        Congress should also look for opportunities to reduce cumulative
    regulatory burdens at the international level through trade agreements,
    as well as cumulative regulatory burdens between the Federal and state
    governments.
                                     ______

         Response to Written Question Submitted by Hon. Deb Fischer to
                                 Adam J. White
        Question. As it relates to regulatory reform, I've been a strong
    proponent of transparency, better cost-benefit analysis, and more
    stakeholder participation in the process. As chair of the Surface
    Transportation Subcommittee, I've convened hearings on performance-
    based regulations, whereby agencies set goals or benchmarks and allow
    flexibility in achieving those goals. From your perspectives, what are
    the benefits of moving away from prescriptive regulations towards more
    goal-oriented regulations?
        Answer. In my prior legal practice, I worked on energy
    infrastructure issues, and so I am familiar with the benefits and
    limits of performance-based regulation (PBR).\7\
    ---------------------------------------------------------------------------
        \7\ See, e.g., Lowry & Kaufmann, Performance-Based Regulation of
    Utilities, 23 Energy L.J. 399 (2002); Coglianese et al., Performance-
    Based Regulation: Prospects and Limitations in Health, Safety, and
    Environmental Protection, 55 Admin. L. Rev. 705 (2003); Aggarwal &
    Burgess, New Regulatory Models (white paper) (Mar. 2014).
    ---------------------------------------------------------------------------
        In general, I think that PBR offers great promise, by creating an
    environment in which humankind's capacity for innovation and
    technological advancement is given space and incentive to find the best
    path toward achieving overarching goals. This strikes me as more
    promising than the agencies' traditional method of dictating specific
    standards for agencies to comply with. And we must always keep in mind
    that regulations are not an end in themselves--they are a means to the
    greater end of positive outcomes. If PBR is a better way of achieving
    those outcomes, then PBR should supplement the traditional regulatory
    approach of setting myriad minutely-detailed standards.
        That said, specific regulatory standards have a virtue: namely,
    they are precise and transparent, and thus they can be administered
    more easily and predictably. If, as Justice Scalia once suggested,
    ``the rule of law'' is ``a law of rules,'' then we should hesitate
    before discounting altogether the value of rules-based system.\8\ The
    rules that bind the regulated community also bind the regulators.
    ---------------------------------------------------------------------------
        \8\ Scalia, The Rule of Law as a Law of Rules, 56 U. Chi. L. Rev.
    1175 (1989).
    ---------------------------------------------------------------------------
        Because there are both benefits and drawbacks to PBR, I would urge
    Congress to promote greater use of PBR but with an experimental
    mindset. Instead of prescribing greater use of PBR across all agencies
    and programs, consider targeting specific agencies and programs where
    PBR seems especially promising. If those programs are successful, then
    Congress could consider expanding the experiment to all agencies and
    programs.
                                     * * *
        Thank you, again, for the opportunity to testify.
                                     ______

         Response to Written Question Submitted by Hon. Deb Fischer to
                                Lisa Heinzerling
        Question. As it relates to regulatory reform, I've been a strong
    proponent of transparency, better cost-benefit analysis, and more
    stakeholder participation in the process. As chair of the Surface
    Transportation Subcommittee, I've convened hearings on performance-
    based regulations, whereby agencies set goals or benchmarks and allow
    flexibility in achieving those goals. From your perspectives, what are
    the benefits of moving away from prescriptive regulations towards more
    goal-oriented regulations?
        Answer. For many years, a recurring debate over regulation has
    involved the comparative costs and effectiveness of ``performance''
    standards and ``design'' standards. Performance standards specify, for
    regulated entities, an outcome-based standard to meet, but they do not
    specify the means of meeting that standard. Design standards, in
    contrast, specify particular means regulated entities must use in order
    to achieve the underlying goals of regulation, such as pubic health and
    safety.
        Proponents of performance standards have argued, often reasonably,
    that such standards allow regulated industry to meet regulatory goals
    more cost-effectively because they give industry flexibility to figure
    out how best to meet those goals. Performance standards do not lock in
    any one technological or other means of attaining regulatory goals, but
    make room for innovation in working toward these goals.
        Sometimes, however, design standards may be preferable to
    performance standards. Sometimes it is difficult to describe desirable
    performance with the degree of specificity and accuracy necessary to
    develop an effective standard. In that case, design standards may be
    superior to performance standards. Design standards may also be easier
    to develop and enforce than performance standards. On occasion, too, a
    regulatory agency may not be trusted by the legislative body to develop
    a performance standard that adequately protects public health and
    safety (perhaps because the agency has been a reluctant or timid
    regulator in the past), and in that case as well a prescriptive design
    standard may be preferable insofar as it may impose greater constraints
    on a recalcitrant agency.
        The bottom line is that it is difficult to conclude, across the
    board, that one type of regulatory standard is superior to another. The
    appropriate regulatory tool to use depends on the underlying
    circumstances, not on generalities about regulatory approaches.
                                     ______

        Response to Written Questions Submitted by Hon. Bill Nelson to
                                Lisa Heinzerling
        Question 1. In Mr. Gerard's response to Senator Inhofe's question
    regarding a Securities and Exchange Commission (SEC) rule requiring
    publicly-traded oil companies to disclose payments to foreign
    governments, he stated that a joint resolution of disapproval of this
    rule under the Congressional Review Act (CRA) ``sets aside this rule
    and allows us to work with the SEC to develop a rule to accomplish
    their purposes.'' However, the CRA states that a rule subject to a CRA
    joint resolution of disapproval ``may not be reissued in substantially
    the same form, and a new rule that is substantially the same as such a
    rule may not be issued, unless the reissued or new rule is specifically
    authorized by a law enacted after the date of the joint resolution
    disapproving the original rule.''
        If a rule is subject to a joint resolution of disapproval pursuant
    to the Congressional Review Act, can the agency reissue a similar rule?
        Answer. The introductory paragraph of this question highlights the
    provision of the Congressional Review Act that is central to the
    question: a rule subject to a joint resolution of disapproval ``may not
    be reissued in substantially the same form, and a new rule that is
    substantially the same as such a rule may not be issued, unless the
    reissued or new rule is specifically authorized by a law enacted after
    the date of the joint resolution disapproving the original rule.'' (5
    U.S.C. Sec. 801(b)(2).) This provision does appear to prohibit an
    agency from reissuing a rule that is ``substantially the same'' as a
    rule disapproved under the Congressional Review Act.
        However, two questions remain about the operation of this
    provision. First, it is not clear what ``substantially the same''
    means. The term is not defined in the Act, and it is susceptible to a
    variety of interpretations. Second, it is not clear how the provision
    on ``substantially the same'' rules would be enforced. Certainly,
    Congress itself could undo a rule on the ground that it was
    ``substantially the same'' as a disapproved rule. The courts, however,
    may not be empowered to enforce this limit on subsequent rules, as the
    Congressional Review Act provides that ``[n]o determination, finding,
    action, or omission under this chapter shall be subject to judicial
    review.'' (5 U.S.C. Sec. 805.) An agency's determination that a
    subsequent rule is not ``substantially the same'' as a prior,
    disapproved rule would appear to be a ``determination, finding, action,
    or omission'' under the Congressional Review Act and therefore not
    subject to judicial review.

        Question 2. In your testimony, you explained how industry often
    talks as though rules produce all costs and no benefits. In fact, some
    regulations, such as fuel efficiency standards, actually save consumers
    money. As was discussed at the hearing, some regulations even save
    lives.
        It is my understanding that the ``regulatory budget'' portion of
    President Trump's recent Executive Order would allow only for
    consideration of costs to industry of a new rule. Benefits to the
    public would not be considered.
        Is that correct and, if so, what are the implications?
        Answer. President Trump's Executive Order on regulatory costs,
    titled ``Reducing Regulation and Controlling Regulatory Costs,''
    addresses only the costs, and not the benefits, of regulation. It
    instructs agencies to eliminate at least two regulations for every new
    regulation they issue and to offset the private costs of any new
    regulation by eliminating the existing costs of prior regulations. The
    Executive Order does not mention, let alone require agencies to
    consider, the benefits of new rules to the public.
        The Acting Administrator of the Office of Information and
    Regulatory Affairs has issued interim guidance on implementing this
    Executive Order. This guidance states that ``[t]he regulatory cost cap
    has no effect on . . . the consideration of regulatory benefits in
    making regulatory decisions.'' In addition, the guidance generally
    precludes agencies from considering cost savings (such as future energy
    costs savings) that arise from rules as offsets to the costs of those
    rules. Agencies may not, in other words, ``pay for'' the costs to
    private entities of a new rule by pointing to the benefits to the
    public of that rule.
        The implication of the Executive Order's failure to address the
    public benefits of rules is that agencies may eliminate highly
    beneficial rules in order to achieve the cost savings mandated by the
    Order. The Executive Order also embraces the common, flawed assumption
    I criticized in my testimony: that regulation produces all costs and no
    benefits.

        Question 3. Is it true that our current regulatory process has no
    way of adequately measuring the benefits accrued from regulations and
    that the costs of regulatory compliance are often overstated?
        Answer. It is true that our current regulatory process cannot
    adequately measure the benefits of many regulations. Many benefits
    remain unquantified and unmonetized in regulatory analysis. In
    conditions of uncertainty, agencies must often rest with qualitative
    descriptions of the benefits a regulation aims to achieve. Many
    benefits that can be quantified, moreover, are only problematically
    translated into monetary terms. There are continuing challenges, for
    example, with representing the value of human life with a precise
    monetary figure. Even outside the context of life-saving rules,
    problems remain. When the Department of Justice issued rules
    implementing the Prison Rape Elimination Act, for example, it produced
    an economic analysis that offered monetary values for 17 different
    types of sexual abuse. Much of the analysis was predicated on the
    assumption that the victims of sexual abuse were in the position of
    having to pay their abusers to refrain from abusing them. This is just
    one example of the ways in which measuring the benefits of regulation
    by monetizing them can deeply misunderstand both the problems giving
    rise to regulation and the values underlying the impulse to regulate.
        Apart from inadequately measuring the benefits of regulation,
    regulatory analysis also frequently overstates the costs of regulation.
    Regulated industries have an incentive to overstate costs to stave off
    proposed regulation, and both government and industry often
    underestimate the cost-saving innovation that will take place once
    regulation is in place.

        Question 4. How do you propose that the benefits to American
    families that result from safety regulations--from hospital visits
    avoided to deaths that are prevented--be measured to adequately capture
    their value to us all?
        Answer. I believe the best way to capture the value of the benefits
    of safety regulation for American families is to describe them as
    simply and clearly as possible. This means describing them in ``natural
    units,'' or terms in which laypeople would describe them. For example,
    if human lives are expected to be saved by a regulation, I would
    propose describing them as human lives. If illnesses are prevented, I
    would propose estimating the number of illnesses and describing the
    human effects of those illnesses as clearly and as fully as possible. I
    think confusion can result when, instead of describing regulatory
    benefits in terms we all can understand, we describe them as dollars or
    as other proxies for the actual benefits.

        Question 5. Can you provide any examples of significant economic
    savings that accrue to families as a result of Environmental Protection
    Agency regulations?
        Answer. The fuel efficiency standards issued during the Obama
    administration offered significant economic savings to families as a
    consequence of lowering fuel costs for automobiles. For example, the
    standard increasing fuel economy to over 54 miles per gallon by model
    year 2025 would, by 2025, on average, save families more than $8,000
    over the lifetime of a vehicle. And this is on top of the health and
    environmental benefits of the rule, which themselves also have embedded
    in them economic savings to families, in the form of lowered health
    care costs, fewer lost work days, and more.
                                     ______

       Response to Written Questions Submitted by Hon. Amy Klobuchar to
                                Lisa Heinzerling
        Question 1. Americans expect a common sense approach to regulation,
    one protecting consumers and the public interest, without stifling
    innovation and economic growth. We need to protect consumers with
    clarity and consistency, not endless red tape. This is especially
    important to me because, before coming to the U.S. Senate, I spent 13
    years as an attorney representing companies in regulatory areas.
        How can we ensure that regulations protect the public interest,
    health, and safety without stifling innovation and growth?
        Answer. First, we can recognize that the effects of regulation on
    innovation and growth are often overstated, especially insofar as
    regulatory critics ignore the innovation-forcing tendencies and the
    economic benefits of a good deal of regulation. Second, we can be
    mindful of a range of possible regulatory responses, from information
    provision to technology-based regulation to outright bans, and tailor
    regulatory responses, if possible given the underlying law, to take
    advantage of the creative impulses unleashed by regulatory strategies
    that allow firms some flexibility in choosing the means of compliance.
    This approach will not be desirable in all circumstances, but it is
    often a sensible approach. Third, it is always worth remembering that
    Congress is the body responsible for charging agencies with particular
    regulatory tasks, and thus it is Congress that decides, in the first
    instance, how to balance the values you describe.

        Question 2. How do we strike the right balance between over-
    regulation on the one hand and under-regulation on the other?
        Answer. We can begin to answer this question only by recognizing,
    first, that one person's ``over-regulation'' may be another person's
    ``under-regulation.'' For example, the coal industry generally regards
    the Obama administration's Clean Power Plan as over-regulation, while
    many in the environmental community regarded it as under-regulation due
    to its modesty in comparison to the global climate threat we face. We
    must also recognize that the forces charging ``over-regulation'' are
    almost invariably better-funded, better-resourced, and more politically
    connected than the forces pressing for more regulatory action. It is
    easy, as a result, to hear the message of over-regulation more clearly
    than the message of under-protection.
        Having said that, we should of course be on the lookout for both
    genuine over-regulation and genuine under-regulation. I believe that
    Congress, in the first instance, is the institution best suited to
    determining the methods by which we will evaluate potential regulatory
    frameworks. Some of these methods, such as technology-based regulation
    of environmental problems, may seem unduly rigid and yet they have
    yielded remarkable overall benefits to the public. They are not
    predicated on a case-by-case cost-benefit balancing of individual
    policies, but on an overall, legislative judgment that we have too much
    pollution of the air, water, and land, and that we should use the
    technologies we have to reduce it. The judgment about the appropriate
    balance between over-regulation and under-regulation is necessarily a
    judgment about underlying values, and as such I do not believe it is
    possible to set out an overarching framework for determining when we
    have gone too far in regulating and when we have not gone far enough.