    [Senate Hearing 116-37]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 116-37

                     FROM BEGINNING TO END: AN EXAMINATION
          OF AGENCIES EARLY PUBLIC ENGAGEMENT AND RETROSPECTIVE REVIEW

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

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                   REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                                     OF THE

                                  COMMITTEE ON
                             HOMELAND SECURITY AND
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 7, 2019

                                   __________

                      Available via http://www.govinfo.gov

           Printed for the use of the Committee on Homeland Security
                            and Governmental Affairs

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                                    __________

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    36-307 PDF                  WASHINGTON : 2019

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                        RON JOHNSON, Wisconsin, Chairman
    ROB PORTMAN, Ohio                    GARY C. PETERS, Michigan
    RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
    JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
    MITT ROMNEY, Utah                    KAMALA D. HARRIS, California
    RICK SCOTT, Florida                  KYRSTEN SINEMA, Arizona
    MICHAEL B. ENZI, Wyoming             JACKY ROSEN, Nevada
    JOSH HAWLEY, Missouri

                    Gabrielle D'Adamo Singer, Staff Director
                   David M. Weinberg, Minority Staff Director
                   Zachary I. Schram, Minority Chief Counsel
                         Laura W. Kilbride, Chief Clerk
                         Thomas J. Spino, Hearing Clerk

           SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                       JAMES LANKFORD, Oklahoma, Chairman
    ROB PORTMAN, Ohio                    KYRSTEN SINEMA, Arizona
    MITT ROMNEY, Utah                    THOMAS R. CARPER, Delaware
    RICK SCOTT, Florida                  JACKY ROSEN, Nevada
    MICHAEL B. ENZI, Wyoming
                          Chris White, Staff Director
                           James Mann, Senior Counsel
                    Eric A. Bursch, Minority Staff Director
          Anthony J. Papian, Minority Senior Professional Staff Member
             Mallory B. Nersesian, Subcommittee and Document Clerk

                                C O N T E N T S

                                     ------
    Opening statement:
                                                                       Page
        Senator Lankford.............................................     1
        Senator Sinema...............................................     3
        Senator Carper...............................................    11
    Prepared statement:
        Senator Lankford.............................................    25

                                   WITNESSES
                              Tuesday, May 7, 2019

    Hon. Susan E. Dudley, Former Administrator (2007-2009) of the
      Office of Information and Regulatory Affairs, Office of
      Management and Budget..........................................     4
    Hon. Sally Katzen, Former Administrator (1993-1998) of the Office
      of Information and Regulatory Affairs, Office of Management and
      Budget.........................................................     6

                         Alphabetical List of Witnesses

    Dudley, Hon. Susan E.:
        Testimony....................................................     4
        Prepared statement...........................................    28
    Katzen, Hon. Sally:
        Testimony....................................................     6
        Prepared statement...........................................    36

                                    APPENDIX

    Responses to post-hearing questions for the Record:
        Ms. Dudley...................................................    43
        Ms. Katzen...................................................    58

                     FROM BEGINNING TO END: AN EXAMINATION
          OF AGENCIES EARLY PUBLIC ENGAGEMENT AND RETROSPECTIVE REVIEW

                                  ----------

                              TUESDAY, MAY 7, 2019

                                     U.S. Senate,
                            Subcommittee on Regulatory,
                          Affairs and Federal Management,
                        of the Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10 a.m., in room
    342, Dirksen Senate Office Building, Hon. James Lankford,
    Chairman of the Subcommittee, presiding.
        Present: Senators Lankford, Scott, Sinema, and Carper.

                OPENING STATEMENT OF SENATOR LANKFORD\1\

        Senator Lankford. Good morning. Welcome to today's hearing
    entitled From Beginning to End: An Examination of Agencies
    Early Public Engagement and Retrospective Review. I would like
    to first welcome Senator Sinema to the dais. I look forward to
    working with you in the Senate, and am grateful, specifically,
    for your work that you have done on these topics in the House,
    and coming over here and working on this in the Senate. I know
    the most coveted ranking position, is to be able to work on
    this Subcommittee, working on regulatory issues and Federal
    management. And what is wonderful is that you worked on these
    issues a lot in the House, and I am grateful that you have come
    over to be able to work on this here.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Lankford appears in the
    Appendix on page 25.
    ---------------------------------------------------------------------------
        Thank you, as well, to our witnesses who bring a lot of
    expertise into this, and we are very grateful for the time that
    you have spent on it. Former Office of Information and
    Regulatory Affairs (OIRA) administrators are a very valuable
    resource to us in this Committee because you have walked
    through this process and you bring some unique insight.
        I also jokingly say all the time I can ask former
    administrators questions that they can actually answer, that
    current administrators say, ``I will have to get back to you
    with my legislative staff,'' and note that. So we are grateful
    to be able to get the insight.
        Today we are focusing on how agencies conduct public
    outreach at the beginning of a rulemaking, and how real success
    or failures are measured years later. While these could be
    considered narrow issues they are by no means small. Advance
    Notice of Proposed Rulemaking (ANPRM) are important tools that
    only a few agencies are statutorily required to actually
    utilize.
        Administrative Procedures Act (APA) sets out a process
    where agencies propose a rule, listen to comments from the
    public. They have the opportunity to make changes and then
    issue a final regulation. While the system looks good on paper,
    in practice agencies typically conduct a significant amount of
    work before formally engaging the public. They will consider
    various regulatory schemes and conduct economic analysis.
    Ideally, agencies would engage the public early, but there is
    no Administrative Procedures Act requirement to do so.
        Turning to the other end of the rulemaking process,
    retrospective review is a process to ensure rules achieve their
    intended goal in the least burdensome way. Over time, changing
    circumstances, improved technologies may render some
    regulations ineffectual or unnecessary. An agency's job is not
    done after the final rule is published. As initial estimates of
    both costs and benefits prove inaccurate, agencies should
    revisit a rule to ensure the desired effects are actually
    achieved.
        Every President since Jimmy Carter has urged agencies to
    utilized retrospective review to examine existing regulations.
    While these directives were issued with good intentions, they
    gave agencies a significant amount of discretion in selecting
    which and how many rules to review.
        The focus of this hearing is two bills that Senator Sinema
    and I will introduce shortly, that codify the best practices
    for both procedures. The Early Participation in Rulemaking Act
    direct agencies to issue advance notices for rules costing more
    than $100 million annually. The agency must outline what
    problem the rule intends to solve and listen to the public's
    input on the subject. The idea behind this bill is to require
    agencies to listen to the public before they craft the
    regulation.
        Washington does not have all the answers. Taking time to
    work with stakeholders, particularly our small businesses, is
    vital in crafting effective regulations. Less burdensome is not
    less effective. Business owners want to be good citizens,
    follow along, and have a safe and clean workspace.
        Setting Manageable Analysis Requirements in Text (SMART)
    Act, is a retrospective review bill that looks ahead. It
    requires agencies to set metrics for how a rule will be
    measured for success in the future. It is hard to imagine the
    measure of success of anything unless it is defined. This bill
    instructs regulators to define what success is for a given rule
    and then requires them to grade that rule within 10 years.
        This Subcommittee has been working on both of these issues
    for a while. Both bills have bipartisan support in the past two
    Congresses. I look forward to working with my colleagues to
    push both of them across the finish line.
        With that I would like to recognize Senator Sinema for her
    opening statement.

                  OPENING STATEMENT OF SENATOR SINEMA

        Senator Sinema. Well, thank you, Chairman Lankford, and
    thank you to our witnesses for joining us today to help fix our
    regulatory process.
        I am happy to join Chairman Lankford as the Ranking Member
    of the Regulatory Affairs and Federal Management Subcommittee.
    As a Congresswoman I promoted policies that expanded business
    opportunities and fueled innovation in Arizona and beyond, and
    my goal for this Subcommittee is to continue that work and to
    find and push for targeted common-sense reforms to regulations
    that help hard-working Arizonans build better lives.
        With Chairman Lankford's leadership we are off to a strong
    start. We have already succeeded in moving two common-sense
    regulatory transparency bills through committee markup, and
    that is only the beginning.
        The Providing Accountability Through Transparency Act and
    the GOOD Act will both help make government more accessible to
    Arizona businesses, and I am excited to accomplish even more.
        Today we continue the work of advocating for a modernized
    rulemaking process. Advance notice of proposed rulemaking
    allows agencies to engage with businesses, nonprofits,
    academics, and other everyday people, so an idea that may later
    become a rule is heading in the right direction.
        Retrospective review requires agencies to look back at a
    rule, to make sure it does what was intended and that the
    benefits outweigh the costs. Doing a retrospective review can
    be time-consuming and complex, but if an agency prepares in
    advance for the review it can be even more beneficial and
    efficient.
        Advance notice of proposed rulemaking and planning for
    retrospective review have been encouraged for decades but never
    enacted into law, and that should change. And soon I will be
    introducing the SMART Act to incorporate planning for
    retrospective review into major rules.
        Planning for the future is common sense, which is why
    planning for retrospective review has been promoted by the
    Government Accountability Office (GAO), the Administrative
    Conference of the United States (ACUS), and the American Bar
    Association (ABA). By requiring agencies to plan for review,
    the reviews will be more thorough and accurate, and less
    expensive and time-consuming. Our legislation will improve
    regulations, remove unnecessary burdens, and increase
    transparency and accessibility for Arizona businesses,
    communities, and others, and I look forward to hearing from our
    witnesses.
        Thank you, Mr. Chair.
        Senator Lankford. Let me proceed to testimony from our
    witnesses. The Hon. Susan Dudley is the Director of the
    Regulatory Studies Center and Distinguished Professor of
    Practice at the Trachtenberg School of Public Policy and Public
    Administration at George Washington (GW) University. Before
    joining the faculty at GW, she served as the Administrator of
    the Office of Information and Regulatory Affairs from 2007 to
    2009.
        The Hon. Sally Katzen is a Professor of Practice and
    Distinguished Scholar in Residence at New York University
    School of Law. She served in multiple roles during the Clinton
    Administration, including Administrator of the Office of
    Information and Regulatory Affairs, Deputy Director for
    Management of the Office of Management and Budget (OMB).
        Thank you both for bringing your experience and your
    insight, for working with our staff leading up to this hearing,
    and continuing to contribute to your Nation. Thank you for that
    continued engagement.
        As you both know, because you have both been here before,
    it is the custom of this Subcommittee to swear in all witnesses
    before they testify. So if you would please stand and raise
    your right hand.
        Do you swear that your testimony given before this
    Subcommittee will be the truth, the whole truth, and nothing
    but the truth, so help you, God?
        Ms. Dudley. I do.
        Ms. Katzen. I do.
        Senator Lankford. Thank you. You may be seated. Let the
    record reflect both answered in the affirmative.
        We are using a timing device today, and you will have 6
    minutes for your opening statement. We do have a mercy rule
    here that if you go beyond that you are fine, because we have
    this hearing to get your testimony, and so if you go a little
    bit over we are going to be OK on both of those.
        But we will be glad to be able to receive your testimony
    now. Ms. Dudley, you are first.

    TESTIMONY OF THE HON. SUSAN E. DUDLEY,\1\ FORMER ADMINISTRATOR
    (2007-2009) OF THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS
                AT THE OFFICE OF MANAGEMENT AND BUDGET.

        Ms. Dudley. Thank you. Do I get bonus points if I go under?
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Dudley appears in the Appendix on
    page 28.
    ---------------------------------------------------------------------------
        Senator Lankford. Yes, clearly.
        Ms. Dudley. Thank you very much, Chairman Lankford, Ranking
    Member Sinema, Senator Carper, and Senator Scott for inviting
    me to talk about one of my favorite subjects. I appreciate your
    interest in improving how the U.S. Government develops and
    evaluates regulatory policy. You are continuing a long
    bipartisan tradition of efforts to make regulation well
    informed, transparent, and accountable to the American people.
        Agencies have long been required to seek public comment on
    proposed regulatory notices, yet these opportunities for public
    engagement often come after agencies have made key policy
    decisions. Proposed rules are legal documents, written to
    defend a selected approach against possible litigation. So this
    motivates agencies to circle the wagons, narrowing the menu of
    alternatives and the evidence they consider before the public
    has an opportunity to engage.
        The draft Early Participation in Regulations Act would
    require agencies to issue for public comment advanced notices
    of proposed rulemakings for major rules. This could free them
    to share their early thinking on whether a problem requires a
    regulatory solution, what objectives could be achieved, and
    what different options are available.
        These ANPRMs and any differences between them and
    subsequent APA rulemaking steps are wisely exempt from judicial
    review in your draft bill. One virtue of the ANPRM is that it
    provides an opportunity for agencies to share their preliminary
    thinking about a problem and get input on potential solutions
    at a stage when they are truly open to feedback, analysis, and
    evidence. If agencies had reason to fear that this early notice
    could later be used against them in court that would discourage
    objective queries and underline those benefits.
        I do not think the ANPRM requirement would significantly
    slow agencies' rulemaking. For one thing, 90 days is not a long
    time considering that agencies often take years studying a
    problem and evaluating options before they issue that first
    proposal.
        But probably more importantly, to the extent the ANPRM
    invites comments on preliminary deliberations that would
    otherwise have taken place behind closed doors, it may make the
    overall regulatory process more efficient. So rather than
    tacking 90 days on at the end of a rulemaking--or at the
    beginning, that makes it 90 days longer, it may provide
    valuable input that ends up streamlining the subsequent notice
    and comment process. In many cases, early engagement could lead
    to more efficient analysis at the proposal stage and fewer
    surprises during public comment.
        That said, there are cases where an ANPRM would not serve
    the public interest and bill provides for exceptions for those.
        Retrospective review is also very important. Program
    evaluation has a long tradition in the private sector and in
    activities financed through the fiscal budget, but it has
    received little attention in the regulatory arena, even though
    every President since Carter has asked agencies to evaluate
    existing rules. President Obama added new emphasis on
    evaluation, yet most regulations continued to be issued without
    a plan for review.
        As ex ante analysis, regulatory impact analyses (RIAs) are
    necessarily hypotheses of the effects that regulations will
    have if implemented. Better regulatory evaluation would allow
    us to test those hypotheses against actual outcomes. That
    feedback would not only help with decisions on current policies
    but it would improve future RIAs and future regulations.
        Your draft bill would require agencies to include in major
    regulations a framework for how they will measure
    effectiveness, benefits and costs, and a plan for gathering the
    information necessary for ex post review. It would also require
    agencies within 10 years, to assess a rule's benefits and
    costs, evaluate how well it accomplishes its objectives, and
    determine whether it could be modified to achieve better
    outcomes.
        The draft bill focuses not just on reducing regulatory
    burdens but on improving outcomes by subjecting rules to
    rigorous evaluation and feedback. It could create an evaluation
    mindset where agencies learn from reviewing regulatory actions
    and apply those lessons to improve future rules.
        These two draft bills offer relatively modest yet
    potentially powerful changes to the rulemaking process. By
    engaging public input earlier in the process and providing for
    retrospective review of regulations to evaluate whether they
    are achieving their objectives, they can help ensure that
    regulations are based on the best available evidence and that
    they are working as intended. These bills could make regulatory
    decisions more transparent and accountable, leading to improved
    outcomes for the American people.
        Thank you.
        Senator Lankford. Thank you. Ms. Katzen.

      TESTIMONY OF THE HON. SALLY KATZEN,\1\ FORMER ADMINISTRATOR
    (1993-1998) OF THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS
                 AT THE OFFICE OF MANAGEMENT AND BUDGET

        Ms. Katzen. Thank you, Chairman Lankford, Ranking Member
    Sinema, Senator Scott, and Senator Carper. Thank you for
    inviting me to testify today.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Katzen appears in the Appendix on
    page 36.
    ---------------------------------------------------------------------------
        I have been generally skeptical, if not highly critical, of
    the many attempts over the last several decades to rewrite the
    APA and update the process that produces the regulations that
    translate general statutory directives into concrete
    requirements that the public must comply with. Many of those
    attempts were highly partisan and would have converted the
    regulatory roadmap into an obstacle course, with the effect, if
    not the intent, of greatly delaying or shutting down the
    regulatory process rather than contributing to good
    decisionmaking.
        I understand that the effort of this Subcommittee is
    different. I understand that you are looking for surgical fixes
    to improve discrete problems with the goal of enlisting support
    by both Democrats and Republicans, and specifically you are
    looking at the beginning and the end of the process with
    suggestions that could be achieved by legislation, by Executive
    Order (EO), by OMB guidance, by agency practices.
        But regardless of the vehicle, it is important to be clear
    about what the problem is and how to best solve that problem
    without introducing unintended consequences.
        So at the beginning, the first official step in a
    rulemaking is the issuance of a notice of proposed rulemaking
    (NPRM), lawyers in practice and the Academy generally agree
    that by the time the agency issues the NPRM, the staff involved
    have invested so much time and energy in developing the
    proposal and supporting data as they are required to do--and
    analyzing the likely effects of the proposal--as they are
    required to do--and justifying the proposal--as they are often
    called upon to do by agency decisionmakers and during OIRA
    review, that they are virtually locked into their proposal and
    are less receptive to new ideas or even significant
    modifications of their proposal.
        While all of the up-front work is desirable, it often has
    the unintended consequence of restricting the options going
    forward. As you mentioned, both Republican and Democratic
    Presidents have tried to counter this tendency by encouraging
    agencies to consult with the public even before they have made
    the decisions reflected in the NPRM. Those admonitions have
    produced some additional outreach to the public, but the effect
    has been inconsistent and less productive than had been
    expected.
        Now several agencies do use an advance notice of proposed
    rulemaking to solicit ideas at the outset, but it is not a
    universal panacea. It is especially useful when the agency is
    unsure what direction to take, what data to consider, how
    prescriptive to be. It is also useful when it is done before or
    at the outset of agency deliberations.
        It is less useful when the authorizing statute is itself
    prescriptive or there is genuine consensus about what is needed
    to respond to the identified problem. In short, it can be
    helpful at times, but at other times it may just add an
    unproductive but a time-consuming step to the already extended
    process.
        For this reason it is important that any requirement for an
    ANPRM be limited to economically significant--or you call them
    major regulations, that are required to use notice and comment,
    and second--that any such provisions not impose on the agency
    multiple requirements for explanations, analysis, data, etc.
        The purpose would be to engage those affected by the rule
    so they can contribute to its development and formulation
    before the agency settles on a particular course, not to lock
    the agency into a particular mindset before the process begins.
    The more the agency has to incorporate in an ANPRM, the more
    the agency will become invested in a particular outcome. This
    is the opposite of what it should do.
        With respect to retrospective review, for almost 40 years
    there have been concerns that there are too many rules, and so
    many of the rules in the books are obsolete, burdensome,
    unworkable. Notwithstanding the efforts of every President,
    from Reagan through Obama, we search and we search, and we do
    not find, and we do not eliminate many rules from the existing
    stock of regulations.
        Now one reason for this may be that since 1980, new
    regulations are not issued unless their benefits justify their
    costs. To eliminate such regulations would likely mean that the
    costs of rescinding the regulations would be greater than the
    benefits, which is counterintuitive. Other reasons for the
    limited success of look-back efforts are that agencies usually
    have not collected data along the way that would inform their
    retrospective reviews, and very importantly, any respective
    analysis requires resources, and for at least the last several
    decades regulatory agency budgets have generally been
    decreasing or straight-lined. Without the resources they cannot
    do the work.
        Nonetheless, there is growing support for the step that you
    are talking about here, namely encouraging agencies to plan for
    retrospective review when they are in the process of developing
    a final rule. This idea was endorsed by many of the
    organizations that you mentioned, and a report prepared by the
    Institute for Policy Integrity, which reflected the unanimous
    recommendation of almost all former OIRA administrators.
        Requiring agencies to provide a plan for later
    retrospective review of a newly issued rule would, in most
    instances, be salutary. If nothing else, it would require the
    agency personnel to focus on describing precisely what they
    want to accomplish and how to evaluate whether or not the rule
    is successful, at a time when the rule and its alternatives is
    foremost in their minds.
        It is very important, however, to provide flexibility for
    the eventual implementation of the retrospective review. The
    agency can and should commit to a framework in the proposed and
    final rule, identifying the data and the metrics it anticipates
    using for that purpose, but this should not be cast in
    concrete. We learn a lot with time, including how to better
    analyze and measure what is going on.
        This is amply demonstrated by the increased sophistication
    of cost benefit analysis itself over the last decade or two,
    and it is also demonstrated by the general preference for
    performance standards, which specify the desired results,
    rather than design standards, which lock in a particular way of
    getting there.
        In addition, while periodic review is useful, there will
    likely be some, and maybe many situations where repeated
    retrospective reviews would yield greatly diminishing returns.
    After a decade or so, if rules survive a retrospective review
    intact, they are likely to have established their worth, and it
    would be wasteful to continue retrospective review after
    retrospective review. Some escape hatch should be provided.
        I thank the Committee for its efforts and for its courtesy
    in allowing me to exceed my time limit. Because you are not
    writing on a blank slate, even this limited surgical approach
    will likely face an uphill battle. It might well, however, have
    a better chance to succeed than many that have been tried
    before. And for that I congratulate you both.
        Senator Lankford. Thank you. We will take that
    congratulations when we are done. We are in the starting block
    at this point, though.
        Thank you both for your testimony. I am going to defer my
    questions to the very end and recognize Senator Sinema.
        Senator Sinema. Thank you, Chairman. Thank you both, again,
    for being here today.
        Starting with Executive Order 12866, which directs agencies
    to make sure that regulations maximize benefits while limiting
    costs, Administrations have discussed the merits of
    retrospective review and have provided guidance to agencies
    related to the review of existing regulations, but, of course,
    these directives do not have the force of law.
        Over the years, as I mentioned in my opening statement, the
    GAO, the Administrative Conference of the United States, and
    the American Bar Association have all issued reports or made
    official comments regarding the need for post-enforcement
    analysis of the true costs and the benefits of regulations.
        So the question for both of you is considering the long-
    term support for retrospective review from the Clinton and all
    subsequent Administrations, why do we believe that this
    continues to be a challenge for agencies in our Federal
    Government?
        Ms. Dudley. I would say there are two reasons, lack of
    incentives, and then lack of data and analytical tools. I think
    your draft bill addresses both of those, and when I say lack of
    incentives for agencies--it is always more exciting to look at
    the next thing, the next problem to solve rather than to look
    back at what you have done. But it is not just the agencies
    because regulated parties also, once they have complied, they
    are not so keen on revisiting it and maybe making their
    competitor upstart not have to comply.
        So by requiring this in your bill, I think you would
    address the incentives but perhaps more importantly you would
    address the lack of data and analytical tools. As you have
    said, this bill would require agencies up front to say here are
    the data we need, here is how we will collect it, and here is
    the outcome that we are going to look to measure it against.
        Ms. Katzen. I agree with her response, as I often agree
    with things that she say. I would just simply add the lack of
    resources. It takes time. It takes money. And while you can
    frame it in terms of the new guys want to do their thing, it is
    also fair to say that relooking and relooking and relooking may
    not be as productive. But it certainly drains resources away
    from what might be the current need to address a pressing
    problem of health, safety, environment, open competition,
    whatever.
        And so you are dealing with a situation where you have
    asked an agency to do this and that and the next thing, and you
    may not have always given them enough resources to do that.
        Senator Sinema. Based on current OMB guidance, agencies are
    expected to understand the impacts of proposed regulations
    while they are still under consideration, but OMB's own
    documents related to the realized costs and benefits of
    regulation allow for a very wide range in estimates, creating
    ambiguity when agencies are estimating future impacts.
        So our legislation, the SMART Act, requires the
    solicitation of data from regulated entities to ensure that the
    regulation meets its objectives. How will the data that is
    collected to build retrospective review into rules help create
    efficiencies at agencies when it comes to creating new
    regulations or new major rules in the future?
        Ms. Katzen. I think there are two aspects. One, as Susan
    mentioned in her opening statement, as you do retrospective
    analyses you learn whether the methodology you have been
    employing in doing your ex ante analysis is actually flawed in
    any way or could be improved in some way. So that helps the
    agency in thinking it through.
        It also alerts the regulated entities that they had a hand
    in this. They have a joint responsibility. They are going to
    have to come up with the data that show what the costs truly
    are. It is an urban myth that so many of the rules that we
    establish, at the time we say it is going to cost kazillions of
    dollars, and it turns out not to cost quite that amount of
    money. We will now be able to gauge that on a real-time basis
    with the kind of information that you are calling for.
        But one of the critical dimensions of whether a rule
    achieves its objectives is whether the rule is complied with,
    and that is up to the regulated entities, in large part. There
    is not a cop on every corner. Most businesses do want to
    comply. They want to know what the rules are and they will
    follow them. But it is not universal, and unless you have
    compliance data, you are not grappling with one of the key
    conditions.
        Ms. Dudley. I agree with Sally. I think it is not just the
    compliance costs that you will be gathering through that
    process, and that is one of the things that I really like about
    this draft bill, in particular, is that it focuses on the cost,
    the benefits, and the outcomes. So it is a lot of information,
    and if agencies do not say what is expected, as Senator
    Lankford said in his opening statement, up front, how will we
    be able to measure against that?
        Oh, the other thing, I think, that is valuable in your
    rules is the definition of major. It includes more than just
    the $100 million threshold. It talks about effects on
    competition, health, safety, etc. Those are all things that
    agencies should be measuring in this planning for retrospective
    review, and I think that is all valuable.
        Senator Sinema. Thank you. I often hear from Arizona
    businesses that they are not opposed to regulations but they
    feel that the opportunities to comment during the rulemaking
    process are often for show rather than for substance. This is
    partly due, of course, to the expectation that a draft
    regulation, as provided in a notice to propose rulemaking,
    already has a selected course of action, and it usually
    includes documentation and data to support that coming
    decision.
        So my question for you is how will the Early Participation
    in Regulations Act improve agency interactions with businesses,
    communities, and other regulated entities to help shape the
    process?
        Ms. Katzen. Well, it sends a message that early
    communication is important, that information that comes at a
    very early stage will be received by the agency and understood
    by the agency. And it does that, actually, in a number of
    different ways, but probably the most important is if it is
    done early. If you wait until you have crafted the NPRM, and
    then send out an ANPRM, it is useless. It is sort of like doing
    a cost benefit analysis after you have already decided on the
    approach you want to use. You should do it at the outset, when
    you are considering all the alternatives.
        So here I would urge that you indicate--not in that
    statute, because it is just too much concrete--but generally
    suggest their agencies think about doing an ANPRM when they
    first get started, when they first send off notification to the
    Unified Agenda and say, we are about to have a rulemaking. We
    have not settled on a course yet. And if that message goes out,
    we hope it will be received and taken advantage of.
        The other thing, for all regulated entities and regulatory
    beneficiaries, is it is possible to talk to the agencies
    throughout the entire process. There are ex parte rules at some
    agencies, but not at most. And it is sometimes difficult to
    move someone off the mark, but at the same time you should not
    be shy about having your voice heard and your points made. That
    is an important part of the interaction that agencies are
    comfortable with and should be used.
        Ms. Dudley. I think that is true. I think it is important
    that it is not just businesses that will have an opportunity to
    get involved but others with information that may be relevant.
    And, in fact, I think that is what is really significant about
    the ANPRM idea. Stakeholders that have connections are involved
    at early stages in the rulemaking, working behind the scenes
    with agencies. What this does is it opens it up so that others
    that may have interesting, creative, new insights can get
    involved.
        I also, as I mentioned in my opening remarks, the fact that
    it is not judicially reviewable, agencies really will feel much
    more comfortable getting a wide range of thoughts and really
    thinking broadly about how to solve the problem at hand.
        Senator Sinema. Thank you. Thank you, Mr. Chair.
        Senator Lankford. Senator Carper.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. Thanks, Mr. Chairman. I want to commend you
    and the Ranking Member for holding this hearing. This is an
    issue of real importance. You can tell by the number of people
    who have packed this hearing room and the number of television
    cameras that are just waiting outside to interview everyone who
    has been a part of this hearing.
        You have picked a couple of witnesses here. You could not
    have picked better witnesses. The balance of having Susan
    Dudley here and Sally Katzen shows a lot of wisdom, so thank
    you for that.
        I would like to say everything I do I know I can do better.
    I think the same is true of all of us, and I think it is
    probably true of most of our laws and rules, including the way
    we create rules and regulations. So thank you for coming and
    joining us here today.
        The last thing I am going to ask you is where do you think
    that you agree on some points that are most important, and
    where do you think maybe we do not agree on some things that
    are most important, in terms of what we are discussing today?
        But the last several years this Subcommittee has focused on
    how we can work to improve the regulatory process. I have
    served on this Committee for 18 years. I love this Committee,
    and that was before it was--Homeland Security, the department
    was created. So it is a great Committee and this is an
    important part of what we do.
        But the regulatory process is not perfect. No one is
    pretending that it is. And the Administrative Procedures Act
    and subsequent Executive Orders provide us with a robust
    roadmap for ensuring that agencies are promulgating rules
    fairly and we hope efficiently. The process also ensures that
    costs to industry are thoroughly considered and that the public
    has opportunities to be heard in the process.
        However, under the Trump administration we have seen an
    unprecedented number of regulatory rollbacks, and there has
    also been unprecedented effort to skip steps in the normal
    process for considering whether the costs of regulations
    outweigh the benefits that protect consumers, that protect
    workers, protect our health, and environment.
        I am especially concerned with the Office of Information
    and Regulatory Affairs' lack of oversight of agency rulemaking
    during this Administration and with the office's unwillingness
    to cooperate with oversight watchdogs who have legitimate
    requests for information.
        For example, just last week, the Environmental Protection
    Agency Inspection General (EPA IG) sent a rare notification to
    Congress saying that the White House Office of Information and
    Regulatory Affairs was refusing to cooperate with an audit that
    Senator Udall and I had requested about EPA's proposal to
    exclude high-polluting glider trucks from emission rules.
    Glider trucks are not trucks that glide especially well. They
    are old diesel trucks that pollute a lot, and they are cloaked
    in the shell of a bright, shiny, new truck. And the idea is
    that they are going to be able to continue to pollute. One of
    the greatest sources of pollution in our environment, for air
    pollution, is diesel engines, especially those that produce
    black carbon, which is far more dangerous to us and our
    environment than regular carbon dioxide.
        But, Ms. Katzen and Ms. Dudley, do either of you recall a
    time when OIRA refused to cooperate with an agency Inspector
    General or GAO? Do you recall a time?
        Ms. Dudley. Certainly during my tenure there was never a
    request from an agency IG of OIRA, and I think it may be
    unprecedented.
        Senator Carper. Alright.
        Ms. Dudley. So that means I do not remember----
        Senator Carper. Yes. OK.
        Ms. Dudley [continuing]. Not refusing, but I also do not
    remember it ever having occurred, such a request.
        Senator Carper. Thank you. Ms. Katzen?
        Ms. Katzen. In my recollection it did not occur where OIRA
    did not comply with a legitimate request from GAO, from the
    Congress, or from an Inspector General. I think there may have
    been one but I am a tad fuzzy on that.
        Senator Carper. OK.
        Ms. Katzen. To say ``no'' to a legitimate oversight body I
    think is unprecedented, to use Susan's word.
        Senator Carper. OK. That is fine. You can hold it at that.
    Thank you.
        OIRA seems to be failing to ensure that the EPA is
    conducting the cost benefit and other analyses that the law
    requires. I am going to just briefly describe a couple of
    examples, if I could.
        First, during the interagency review of their proposal to
    exclude high-polluting glider trucks from emission rules, that
    I just mentioned, it was pointed out that EPA should have done
    more analysis because the rule was classified as, quote,
    ``significantly, economically significant.''
        Instead of requiring the analysis to be done, on the day
    before the rule was signed, OIRA allowed the rule to be
    reclassified so that analysis would no longer be required.
        Second, when the EPA proposed its repeal of the clean water
    rule, it did not do a new cost benefit analysis to justify the
    rollback. Instead, EPA just deleted the benefits column of the
    Obama cost benefits table and OIRA allowed the proposed repeal
    rule to be published.
        Finally, in the EPA's proposal to remove the legal
    underpinnings of rules to reduce emissions of mercury and other
    air toxics from power plants, OIRA allowed the agency to use
    the agency's old projected cost of compliance, that were three
    times higher than what the industry actually spent to comply
    with the rules and ignored the full benefits of that rule.
        And, if I could, I would just like to ask both of you, and
    I do not expect you to be experts on any or all of the examples
    that I have just cited, but when each of you were privileged to
    run OIRA, would you have agreed to authorize the release of
    proposed rules that failed to perform a credible cost benefit
    analysis?
        Ms. Katzen.
        Ms. Katzen. I would have fought hard to live up to what I
    thought the office stood for, which is good analysis, good
    data, and the kind of approach to rulemaking that produces good
    decisions.
        Having said that, I want to just add two qualifications.
    One, I am not there now, and if you are not there, it is
    sometimes very difficult to know what pressures are being
    exerted, who is saying what, who is doing what. In terms of
    your specific examples, however, I could give you three or four
    more.
        I am an OIRA supporter. I am an OIRA booster. It was with
    great difficulty that I actually made an address earlier this
    year to the American Bar Association Ad Law Section criticizing
    OIRA, and saying that I thought it was not doing enough to
    ensure good analysis and being faithful to the cost benefit
    regime that it has guardianship of.
        There are many disturbing stories. By the same token, when
    I was in the government I read stories that were not quite
    right. And so it is not fair, necessarily, to say that
    something is smelly in Denmark. It may well be, and I am
    concerned, as well.
        Senator Carper. OK. Thank you. Thank you.
        Ms. Dudley, this is not a trick question. I am not trying
    to put you on the spot. I think you know me. Both of you know
    me pretty well. But when you ran OIRA would you have agreed to
    authorize the release of proposed rules that failed to perform
    a credible cost benefit analysis?
        Ms. Dudley. I liked Sally's comment that I would have
    fought hard, so I agree. I would have fought hard. It is
    important to understand that OIRA does wear several hats. One
    of them is interagency coordination. Another one is the
    analysis, the requirements of Executive Order 12866. And then
    the third is that they are part of the White House, and so
    sometimes those are in conflict.
        So in my experience there--I remember times when we held
    our nose and said, alright, but before you get to the final
    stage you must do an analysis and put teed up for questions the
    things that the agency thought they needed that would allow
    them to do the analysis.
        Senator Carper. Good. Thank you for those responses. Mr.
    Chairman, thank you for being generous with the time and giving
    us a chance to actually have a conversation.
        Senator Lankford. That is great. Thank you.
        Thank you again. I am going to go ahead and say my
    questions now as well. I appreciate very much you coming
    through this process. Help us understand the inside of the
    machine. How long does it take to develop a rule and the
    economic impact, when you are talking about something that may
    be $100 million of economic impact? How much time is spent on
    the research side of that for the staff? And I know it is going
    to depend from rule to rule and agency to agency, but give me
    your ballpark guess.
        Ms. Katzen. Well, you are right that it will vary,
    depending upon the seriousness of the issue, depending upon
    whether it is a new issue or something that is being revisited,
    whether there is already expertise, or whether it has to be
    newly learned.
        It can take a year or 2 years to do the background
    research. It can also be done in 4 or 5 months. You get a lot
    of help from the outside sometimes, and a lot of obstruction
    from the outside sometimes. The whole process can take, as
    Susan said, years, occasionally.
        Senator Lankford. Susan.
        Ms. Dudley. It is hard to know exactly how long it takes,
    from the time an agency starts to think about the rule and the
    proposal. I can think of some that have been 10 years. Others
    can be shorter. There was a study that cite in my testimony
    that said, on average, 5.2 years is how long it takes before
    the proposal is issued.
        Senator Lankford. So certainly 90 days is not too much time
    to be able to block up to get additional input. My thought on
    this is how to help agencies, OIRA, the future, to be able to
    think about, when is the moment to be able to put this out
    here? If there is going to be an advance notice of proposed
    rulemaking they are going to think about it for a while, maybe
    a year even. They are doing some of their own research and then
    they decide we may be headed toward a rulemaking here. This is
    a lot of information and it is all directed toward the same
    spot.
        Where is the appropriate moment for them to go drop out an
    advance notice of proposed rulemaking to make sure that the
    insight in the information is coming at the right time, rather
    than, again, they form everything they need to do over 2 years,
    or 5 years of time, and 90 days before they plan to do it
    anyway they just drop this out there because it is formality?
        Ms. Katzen. Well, I mentioned in my testimony that I think
    it would be useful to issue an ANPRM as soon as the agency
    sends its first submission to the Unified Agenda. This is the
    document that is supposed to be available--well, it is
    available to the public. It is supposed to be a menu of
    everything that the agencies are thinking about doing. When
    they get to the point of saying, ``We are thinking about doing
    a rulemaking on this,'' that would be an appropriate time an
    ANPRM for for some rules. Again, I do not want to see too much
    of this cast in concrete----
        Senator Lankford. Right.
        Ms. Katzen [continuing]. And prescriptive. But I think once
    they know they are heading down that path, putting out an ANPRM
    would be helpful.
        Ms. Dudley. I think that is right. I think the first note
    is in the unified agenda, soon thereafter. That notice means we
    are thinking about this within the next 6 months. That would be
    a good time to do it.
        I also would hesitate to see the bill be too strict about
    that, because different agencies have different practices. But
    I think the way that you have put OIRA in charge of that, or
    OIRA as the coordinator for the ANPRM bill, that would be
    something that agencies could work with OIRA on.
        Senator Lankford. And again, the challenge that we have is
    we do not want to be prescriptive, because we cannot look in
    the future 10 years and we cannot see every rule and every
    entity. But the goal of this is to be able to get more dialogue
    early, not for the agencies to finish all their work and then
    go through the formalities.
        We are not trying to make it longer, or, as you mentioned,
    creating an obstacle course here at the end. We are trying to
    get dialogue early on, and if the dialogue is too late in the
    process it does not matter. We are still in the same spot. But
    if it is too early, we do not even know if it is a $100 million
    rule at that point. We really do not see it.
        So there has to be some level of information even to note,
    hey, I think this may be headed toward a major rule. They at
    least have to have enough information there to know what
    questions to ask, the size and complexity of it. This is a
    health and safety issue that is coming. We see some of the
    things that are going to be around it so let's get more
    information out there. Does that make sense?
        I guess I am asking a clarifying question. Are we hitting
    the right balance that we are not just creating an obstacle but
    we are getting this early enough? Should we be more
    prescriptive on when to be able to put this, or do we leave it
    at the discretion of OIRA, at a future OIRA, to say you did not
    do this ANPRM early enough and now we have a battle in the same
    process?
        Ms. Katzen. I would not be prescriptive. When I was in the
    government, in the Administration, I took committee reports
    seriously, and I think to make clear your interest in having
    this done earlier rather than later in the committee report
    would be a very useful way of sending the message. But I would
    not cast it into legislative language.
        Senator Lankford. OK. Fair enough.
        Ms. Dudley. I agree.
        Senator Lankford. OK. So let me ask you an even sillier
    question. Advance notice of proposed rulemaking just gets all
    of us excited here, as a term. Some agencies have just said
    request for information, to make it more generic and blunt.
    There have been a lot of different terms they have used, to
    basically accomplish some of the same things.
        Is this the right term? The advance notice of proposed
    rulemaking has been used before. We have it in statutory
    language. Is that the right term to be able to even use on
    this? If we want to take off our D.C. hat and to say if someone
    outside of D.C. gets an advance notice of proposed rulemaking
    they have no idea what it is. If someone gets a request for
    information everyone knows what it is. Is one better than the
    other?
        Ms. Dudley. Even though it is a mouthful I think advance
    notice of proposed rulemaking is the best--is a good way to say
    it. Agencies can always change something that they might have
    called a notice of inquiry before and just change the name.
        One thing that I think is valuable about it, that you would
    not want to lose, you would not want to make it so loose that
    agencies could just reach out to specific stakeholders.
        Senator Lankford. Right.
        Ms. Dudley. You do want this to be something that----
        Senator Lankford. It needs to be broad.
        Ms. Dudley [continuing]. Is public, yes.
        Senator Lankford. I agree. Ms. Katzen.
        Ms. Katzen. And again I would refer to the committee report
    to clarify that an advance notice of proposed rulemaking, by
    any other name, would still accomplish the same objective. And
    you could call it a request for information. You could call it
    a request for proposals. And again, that would send a message
    that I think would be helpful.
        Senator Lankford. As long as it is public and as long as it
    is broad, because one of the challenges that we have is small
    business, large business, individuals, outside groups,
    environmental groups, think tanks, whatever it may be, they all
    need to have access to be able to submit ideas to it because
    they are all going to have different ideas and thoughts.
        OK. So let me ask this. Are we overcomplicating this by
    adding another step with the advance notice of proposed
    rulemaking? Is there a way to be able to fix the notice of
    proposed rulemaking and to try to get more input from the
    public earlier in that process without having to do a formal
    process? I am willing to try to say let us go back and do it,
    because right now that process is so late in the process, or
    that product is so late in the process that a lot of decisions
    have already been made, and it is just tough to be able to
    engage with people.
        As I think both of you mentioned in your testimony, once
    folks have done their own research, bounced their own ideas,
    have gone through the obligatory, working with all their
    bosses, explaining why this is the best idea, people get more
    and more entrenched. So what I am trying to figure out, is
    there a way to fix that process rather than add a new one?
        Ms. Katzen. I think we had decades of court cases that have
    spoken to what needs to be in the NPRM itself, and how much the
    final rule can deviate from the NPRM. I am referring here to
    the ``logical outgrowth doctrine'' that says that if the agency
    changes its mind between the NPRM and the final rule, in a
    dramatic fashion, that may well have deprived the commenting
    public of an opportunity to comment on the final product----
        Senator Lankford. Right.
        Ms. Katzen [continuing]. And, therefore, it has to go back
    to the agency. And with 20, 30, or 40 years of cases having
    been built up, I would reluctantly say add a new step at the
    beginning rather than try to change the NPRM at this point in
    the face of those cases.
        Senator Lankford. OK.
        Ms. Dudley. I agree. I mean, I think it is the judicial
    reviewability of the NPRM that really forces agencies to have
    chosen what they want and defended that in a way that they are
    discarding other options.
        Senator Lankford. OK. Let me switch to the end, if I can,
    here. OIRA has the unique opportunity to be able to see
    multiple agencies simultaneous, and when we talk about
    retrospective review some of the issue is other agencies have
    now formed regulatory processes, or there is something new in
    another entity that maybe this regulation is not as pertinent
    anymore because this entity has created something that is also
    doing something similar, or whatever it may be.
        How can we help OIRA continue to be able to see all
    agencies, and when a retrospective review happens it is not
    just isolated to a particular agency but it still has that
    broad review? Is there anything that we need to build in?
        Ms. Dudley. More staff. I think that part of the reason
    that OIRA is so transactional is because their staff must
    triage always to be able to be reviewing things. So to be able
    to step back and look across, I would say more staff.
        Senator Lankford. OK.
        Ms. Katzen. In her testimony, Susan mentioned the function
    of OIRA as convening an interagency process, and I think that
    is the beginning of what you would like to lead to. If you look
    at Executive Order 12866, one of the definitions of
    ``significant'' is where there is something that an agency is
    proposing to do that is inconsistent with what another agency
    is proposing, or has already done, so that we do not have the
    Department of Labor (DOL) working on transporting hazmats, and
    the Department of Transportation (DOT) working on transporting
    hazmats, and they are at across purposes.
        I thought that that would be a good vehicle for bringing
    together different agencies that were focused on a similar
    rule, and I see that in this context of retrospective review,
    where there might be similar rules at different agencies. That
    works sometimes, but by the time they have gone through the
    process of developing their rule, and how to implement it, how
    to enforce it, they are less willing to trade it for somebody
    else's rule.
        I think additional staff would help, and I think, again,
    oversight by the committee and language in the committee report
    would be helpful to clarify that this is one Administration,
    one Executive Branch, and that the various fingers should be
    working together rather than at across purposes.
        Senator Lankford. Right.
        There is some confusion on repealing a rule and going
    through that process, only that some people outside of
    government think if you walk in and do a review, then you
    decide you do not like it, you just take it out and the next
    day it is gone. Can you walk us through a little bit of the
    process that happens to actually go through a rule repeal?
        Ms. Katzen. OK. This is under the State Farm decision of
    the Supreme Court in the 1980s, having to do with airbags. And
    what it says is that if you are going to repeal or modify a
    regulation, you have to use the same processes that you used to
    create that regulation. Therefore, if you wanted to repeal or
    modify something that is on the books, you would need a notice
    of proposed rulemaking which sets forth the objective to modify
    an existing rule. It would need to be accompanied by data that
    documents the need for, the appropriateness of, making that
    modification.
        And then you would get comments. So you have a notice of
    proposed rulemaking, and possibly now an advance notice of
    proposed rulemaking, and then the notice of proposed
    rulemaking, and then the comment period, and then the final
    rule, which would repeal the earlier rule.
        Under a different Supreme Court case called Fox News, the
    Supreme Court has said that when you are changing your mind you
    have to (1) acknowledge that you are changing positions, and
    (2) if the previous rule was based on science, engineering,
    technical information, or economic information, you must show
    how that has changed, in what way is it different, why it is
    that you no longer want to rely on the previous rule. Because
    there is new data? Because there is a new approach? Or whatever
    reason, and that explanation has to be part of the reason and
    basis, as it is called, of the new final rule.
        So that is a whole new rulemaking proceeding, which can
    take a year, 2 years, and depending upon the basis for it, the
    assemblage of a lot of information and analysis. I hope that
    was clear.
        Senator Lankford. That is exceptionally helpful, actually.
    Susan, do you want to add anything to that?
        Ms. Dudley. No. That was very clear.
        Senator Lankford. Is it the right process to go through,
    you think?
        Ms. Dudley. Yes.
        Senator Lankford. I would assume that you would say that,
    because there is a great need to be careful. When you change a
    regulatory scheme of things that affects a lot of people, and
    you want to have as much impact as you can. Taking a rule out
    is the same as putting a rule in, and that creates uncertainty
    in the environment, and you have to be able to make sure
    everyone has input through that process.
        Ms. Katzen. I agree completely.
        Senator Lankford. OK. So the question about retrospective
    review really goes back to the question of how do you determine
    whether things are working, and the metrics. I jokingly used
    the term, if there is a high school basketball team that is
    really bad at free throws, and the coach decides every time you
    miss a free throw you are going to take a lap, and that is his
    way to fix it, but a year later they are still not any better
    at free throws. They may be better cardiovascular but their
    free throws are still bad--we did one action to try to fix a
    problem but it did not work. There has to be some metrics at
    some point that have to decide, are we better at free throws on
    this?
        I look at that in the same way with regulations, to say at
    some point we have a goal to say this is what we are trying to
    do, whether it clean the air or safer work environment, more
    consistency, better science. Whatever it may be there is a
    standard for what we are trying to accomplish. I think it is
    reasonable to say 10 years from now we should go back and look
    at it, and say did it actually accomplish that? The hard part
    is developing that metric.
        So my question for you is, the developing the metric
    portion of it, is there any other definition that we need to
    put into this to give to OIRA or to the agencies to say when
    you develop a metric make sure you are thinking about this. Do
    you think what we have put into place, between Senator Sinema
    and I, is broad enough but is also clear enough that it is
    going to lay the groundwork for them to be able to do metrics,
    when you are looking a decade in advance?
        Ms. Dudley. I do think it is so important to be able to
    define clearly what outcome you expect to get from the
    regulation, and a surprisingly limited number of regulations do
    that in a clear way.
        I thought that what you had in the draft made sense. It
    covers the things that people talk about--the outcomes, which
    is general enough to cover a lot of things; benefits costs.
        I would love to take the opportunity to look at it more and
    see if I do have some specific ideas I am in a public policy
    school where a big focus is program evaluation. So some of the
    experts on that are at GW. I would love to talk with them, and
    say, ``OK, does this get you what you would need 5 or 10 years
    down the road, to be able to do that evaluation?''
        Senator Lankford. That would be great. We would be glad to
    be able to have that input.
        Ms. Dudley. OK.
        Senator Lankford. Should I put out a formal request for
    information to be able to get to that?
        Ms. Dudley. An advance notice of a formal--yes.
        Senator Lankford. OK. Thank you.
        Ms. Katzen.
        Ms. Katzen. I agree with Susan on that, and my only caveat
    would be not to be too prescriptive. Ten years is actually a
    long time, given how we learn and how we develop. And we learn
    so much that to try to be specific might be greatly
    counterproductive here.
        Senator Lankford. The hard part is trying to balance. You
    want to be specific enough that you actually know if you get
    there. I will use my free throw example. If the free throw
    percentage does not go up then that method did not work, so
    let's go back and review it because we are trying to get to the
    end method. But general enough that the unknowns that are still
    out there can still be determined.
        I guess what I am trying to say is if you make the metrics
    so vague, anything can hit it. It is not really a metric then.
    It is improved energy in the country. OK, what does that mean?
    So there has to be something specific enough.
        Ms. Katzen. I thought the proposal to include the
    objectives and the metrics at the NPRM stage was beneficial,
    because then those who are affected by the regulation, whether
    they be the regulated entities or the regulatory beneficiaries,
    will be able to comment on that during the comment period and
    lend their insight and their expertise to the agency, so that
    there would be a finite review of those two pieces when it is
    fresh in their minds, when they are still thinking about what
    they are trying to accomplish. I think that should be
    sufficient.
        Senator Lankford. OK. Great.
        Senator Sinema, you have a question as well?
        Senator Sinema. Yes. Thank you, Mr. Chairman.
        For Ms. Katzen, you discussed escape hatches for repeated
    reviews of rules. In the SMART Act we have included a provision
    that allows the agency to create a list of circumstances in
    consultation with the OIRA administrator, which would require
    the performance of a subsequent review.
        Do you think that provision adequately guards against
    unreasonable review requirements?
        Ms. Katzen. I believe so. I think the agency should be the
    responsible official who says we have looked at this, we are
    not going to make any changes, and further review would not be
    very helpful. I mean, I always use the example of airbags or
    seatbelts. Do we want to look at them in 10 years, then 10
    years more, then 10 years more? Well, assuming we do not have
    V2V, assuming we do not have autonomous vehicles--but even with
    autonomous vehicles I want my seatbelt and airbag in the car.
    Why ask the agency to go through that? I think the agency,
    Secretary of the Department or the agency official, is the
    person to be able to say enough is enough.
        Senator Sinema. Regulatory impact analysis documents, which
    accompany regulations, provide wide ranges of estimated costs
    and benefits. The uncertain nature of forecast-based analysis
    hides the true impacts and benefits for rules. So through the
    data collection requirements of the SMART Act, can we expect
    that, over time, agencies will become better positioned to
    accurately forecast both costs and benefits?
        Ms. Dudley. I would hope so. I think one of the most
    important potential outcomes of retrospective review is that it
    is going to make us better at predicting things in future
    regulations. So both thinking about the data and analysis and
    what models we use to make those predictions? They are so
    uncertain and we never go back and check. So I think that is a
    key benefit.
        Ms. Katzen. Agreed.
        Senator Sinema. A final couple of questions. In written
    testimony you discussed a number of rules that would be
    applicable under the Early Participation in Regulations Act,
    and I believe you said 70--is that correct, 70?--but that many
    rules would not benefit from the bill's requirements.
        Could you discuss these rules that would be major but would
    not benefit from an ANPRM?
        Ms. Dudley. Yes, the 70 includes all the independent
    regulatory agencies. If you just look at the Executive Branch
    agencies it is closer to 40 or 50 that would fall under the
    rule.
        One set of rules are hunting bag limits, and there probably
    a half a dozen of those every year. OIRA has long let the
    Department of Interior (DOI) use the same regulatory impact
    analyses that they probably prepared 15 or 20 years ago, as a
    regulatory analysis. That would not be the kind of thing that
    would need any advance notice.
        I would expect, although I am not positive, that a lot of
    the Medicare and Medicaid rules--the regulations that are
    determining what fees different doctors or services should
    receive--again, that is not the kind of thing that advance
    notice might be valuable for. So I can imagine that early on
    OIRA and the agencies would streamline that and identify some
    exemptions.
        Ms. Katzen. I agree with that, and in my testimony I
    mentioned that there are occasions when the congressional
    delegation, which is the basis for any rulemaking, it itself
    highly prescriptive. I am thinking of probably the unregulated
    example of positive train control, which did not give the
    agency any discretion to do anything other than what was
    specified in the statute. That being the case, an advance
    notice of proposed rulemaking would not make a whole lot of
    sense. The agency's hands are tied by its authorizing statute.
        Senator Sinema. Thank you. Thank you, Mr. Chair.
        Senator Lankford. Senator Carper.
        Senator Carper. Thank you both again for your testimony
    today. As I am sure you know, under the Paperwork Reduction Act
    (PRA), the Office of Management and Budget must review and
    approve Federal collections of information before they are, I
    guess, conducted. After reviewing the agency request, the OMB
    may approve or disapprove that request, or can go ahead and
    define conditions that need to be met for approval.
        The OMB is required to ensure that any information
    collection maximizes practical utility and public benefits and
    protects integrity, objectivity, and impartiality of collected
    statistical information.
        Last May, I led a letter with 34 of our colleagues, both in
    the House and the Senate, requesting information from the
    Commerce Department and OIRA as to how they planned to ensure
    that the Paperwork Reduction Act requirements were met with
    respect to the addition of a question on citizenship on the
    2020 Census. That was last May, a year ago. We have not
    received a response to that letter.
        Let me ask, first, if I could, Ms. Katzen, as you know,
    concerns have been raised about adding a question on
    citizenship, due to the potential negative consequences,
    including a lower self-response rate, which would lead to a
    less accurate and more costly Census. I would just ask would
    you please weigh in for us and explain OIRA's role in reviewing
    information collections, and what OIRA should be reviewing with
    respect to the citizenship question and the 2020 Census? Could
    you take a shot at that?
        Ms. Katzen. I will try. Thank you.
        Senator Carper. Thank you.
        Ms. Katzen. Under the Paperwork Reduction Act, any question
    being posed to the public, identical questions to 10 or more
    people, has to receive, in effect, a comment period by the
    agency, and then if the agency decides to go ahead with it, the
    agency will then send it to the OMB, which has a second comment
    period. And as you correctly stated, one of the conditions for
    approval by OMB is to maximize practical utility.
        There is also a requirement to minimize burden. It is a
    modified cost benefit analysis. Are we going to get something
    from this paperwork requirement that will be useful and well
    worth whatever offsetting cost there is?
        Now with the Decennial Census, for 2020, there has been a
    lot of publicity, and I have actually read the three district
    court cases, one of which is 267 pages. So I have some
    knowledge about the specifics of that particular paperwork
    requirement.
        I think the most significant aspect is that the primary
    purpose of the Decennial Census, which is embodied in the
    Constitution--it is the only paperwork requirement embodied in
    the Constitution--is for the enumeration every 10 years. That
    is the primary purpose.
        The addition of a question relating to citizenship is a
    question which, at least pretextually, has been justified by
    assisting the Department of Justice (DOJ) in better enforcing
    voting rights cases. That is a secondary purpose. If the
    secondary purpose is going to have an adverse effect on the
    primary purpose, one would have a very hard time justifying it
    under the Paperwork Reduction Act, because every past Census
    Bureau director, and vast numbers of statisticians, including
    the National Academy of Science, has said that this will
    decrease the response rate significantly for the enumeration
    purposes, and that the data are not needed in the Decennial
    Census because there are alternative places where this data
    reside, in the ACS study and other kinds of statistical
    compilations.
        With that, it is hard to see how the Decennial Census with
    the citizenship question would pass muster under the Paperwork
    Reduction Act. Now there are all sorts of politics, policies,
    whatever, but I was just trying to focus----
        Senator Carper. OK. Good.
        Ms. Katzen [continuing]. On the PRA.
        Senator Carper. Thank you. Mr. Chairman, you have been
    generous with your time. I would like to ask, if I could, for
    the witnesses to each give us like maybe one change, amendment
    that you would suggest to the legislation that Mr. Chairman has
    designed, just one change. And as I said earlier, I never
    introduced a perfect bill, or probably a perfect amendment, and
    as good as these two legislators are, these two Senators are,
    there is probably room for improvement. Can you think of one
    thing that you would suggest that we amend as we take it to
    markup?
        Ms. Dudley.
        Ms. Dudley. Perhaps that the 10-year window for review, it
    provides for one review at 10 years, and then nothing
    thereafter. And that may be appropriate for some types of
    regulations but not for others.
        So I think Sally and I disagree on this. I might like to
    see a continued requirement for that retrospective analysis
    that would continue to measure and continue to observe whether
    we are achieving the desired objective.
        Senator Carper. All right. Thank you. Just one idea, Sally,
    if you would.
        Ms. Katzen. Susan is correct that I disagree with her
    suggestion. I was looking at what was supposed to go in the
    ANPRM, and I came across something which I question its
    utility, and that was in the ANPRM to list the legal authority
    under which a major rule may be proposed. And then the
    following language: ``including whether a rulemaking is
    required by statute, and, if so, whether by a specific date,
    whether the agency has discretion to commence a rulemaking.''
        I can envision circumstances where the discretion is
    reduced with greater incidence of death or harm or safety of
    some sort. I had not really focused on that particular
    language, but I am not sure that, if I were giving you one
    thing that think I might want to change from the latest draft--
    which looks very good, indeed--it might be to stop that little
    a iii, whatever it is, little iii sooner.
        Senator Carper. Alright. Thank you.
        For some people, you remember the saying--this is about as
    exciting--talking about an experience in their life--they said
    it was about as exciting as watching wet paint dry. I suspect
    for some people a hearing on this subject is just like that. I
    think it is a terrifically exciting hearing, and I applaud our
    Chair and Ranking Member for bringing us together, and look
    forward to working with you to--what does it say in the
    Constitution?--``We the People of the United States of America,
    in order to form a more perfect union,'' to maybe work with you
    to see if we can form an even more perfect bill. Thank you.
        Senator Lankford. Sure. By the way, my oldest daughter
    graduated and is out and has a real life, and my wife and I
    repainted her sunshine-yellow bedroom into a color where guests
    could actually sleep. I put the initial primer coat on, and put
    the regular coat on, and watched the yellow disappear, and as I
    watched the paint dry I thought, I am standing here watching
    paint dry, and it is exciting. [Laughter.]
        Because I feel like we are getting a room back. So watching
    paint dry is not always bad.
        Senator Carper. Well, hopefully they will come back and
    sleep in these rooms sometime. That sounds like a lot of fun.
        Senator Sinema. I think I would like the yellow.
        Senator Lankford. The sunshine yellow?
        Senator Sinema. Yes.
        Senator Lankford. It was a happy color.
        Senator Sinema. Yes, I would like that.
        Senator Lankford. She loved it, all the way through high
    school. She loved it.
        Senator Lankford. Let me say thank you to both of you. I
    would ask you both two quick questions, and one you can think
    about and send back your ideas, just as a message to say this
    Committee is always interested in your input. So as you have
    good ideas we are always listening. So consider this your
    advance notice of proposed legislating, that we are interested
    in the ideas.
        One is, Ms. Katzen, several times you have mentioned
    surgical changes to the APA. That is what we are trying to do,
    not a massive wholesale shift but surgical changes. If you have
    thoughts on other surgical changes where we need to legislate
    on--we focused today on beginning and end, but if there are
    other areas we are interested, and we are trying to be able to
    work through to try to find ways to be able to help fix the
    process long-term. So that is my homework assignment to you. If
    you think of anything away from here, contact us or our team,
    and we would be glad to be able to hear that.
        The other one is, based on where the text is right now--I
    got your comments from Senator Carper--do you support these
    bills where they are right now, and continue to move forward in
    the process?
        Ms. Dudley. Absolutely.
        Senator Lankford. Yes.
        Ms. Katzen. I would indeed.
        Senator Lankford. Yes. Thank you. Thanks for all your
    input. You have both been exceptionally professional with our
    team in trying to be able to provide some additional input and
    thought. You both have very busy lives on your own. You do not
    work for us, but you do work for the American people still--
    that is pretty obvious--of your continuing engagement in policy
    areas. So thanks for continuing to be able to give your time,
    to be able to help the Nation in the future.
        Let me make a quick closing statement and we will shut us
    down. Before we adjourn I do want to announce that on May the
    22 this Subcommittee intends to hold a joint hearing with the
    Senate Small Business and Entrepreneurship Committee to examine
    the disproportionate impact regulations have on small
    businesses. Both of you have dealt with that quite a bit,
    actually, in your time at OIRA. All members of the Homeland
    Security and Governmental Affairs Committee (HSGAC) are invited
    to attend this hearing.
        That concludes today's hearing, though. I do want to thank
    again our witnesses for their testimony. The hearing record
    will remain open for 15 days until the close of business on May
    the 22, for the submission of statements and questions for the
    record.
        This hearing is adjourned.
        [Whereupon, at 11:20 a.m., the Subcommittee was adjourned.]

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