[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
    
    
    
    
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       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\
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    \1\ Source: U.S. Census Bureau, Annual Survey of Manufacturers, 
Retrieved from https://factfinder.census.gov/
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    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.''
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    \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/
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    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.
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    \3\ Pub. Law 112-28
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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.
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    \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
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    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.
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    \7\ 15 U.S.C. 2058(c)(1)
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    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
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                                 ______
                                 
                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
                                 ______
                                 
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                                 ______
                                 
                                                       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.
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    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.''
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    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???''
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    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
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    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:]

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                                 ______
                                 

    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
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                                 ______
                                 
                           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.