    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                      REINING IN THE ADMINISTRATIVE STATE:
                         REGULATORY AND ADMINISTRATIVE
                                   LAW REFORM

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

                                    HEARING

                                   BEFORE THE

                      SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
                        REGULATORY REFORM, AND NTITRUST

                           COMMITTEE ON THE JUDICIARY

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                           TUESDAY, FEBRUARY 11, 2025

                                   __________

                                Serial No. 119-3

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via: http://judiciary.house.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    58-807                   WASHINGTON : 2025

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

                           COMMITTEE ON THE JUDICIARY

                            JIM JORDAN, Ohio, Chair

    DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking
    ANDY BIGGS, Arizona                      Member
    TOM McCLINTOCK, California           JERROLD NADLER, New York
    THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia
    BEN CLINE, Virginia                  ERIC SWALWELL, California
    LANCE GOODEN, Texas                  TED LIEU, California
    JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington
    TROY E. NEHLS, Texas                 J. LUIS CORREA, California
    BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania
    KEVIN KILEY, California              JOE NEGUSE, Colorado
    HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia
    LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina
    WESLEY HUNT, Texas                   BECCA BALINT, Vermont
    RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California
    BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida
    MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York
    ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas
    DEREK SCHMIDT, Kansas
    BRANDON GILL, Texas
    MICHAEL BAUMGARTNER, Washington
                                     ------

                   SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
                        REGULATORY REFORM, AND ANTITRUST

                       SCOTT FITZGERALD, Wisconsin, Chair

    DARRELL ISSA, California             JERROLD NADLER, New York, Ranking
    BEN CLINE, Virginia                      Member
    LANCE GOODEN, Texas                  J. LUIS CORREA, California
    HARRIET HAGEMAN, Wyoming             BECCA BALINT, Vermont
    MARK HARRIS, North Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    DEREK SCHMIDT, Kansas                ZOE LOFGREN, California
    MICHAEL BAUMGARTNER, Washington      HENRY C. ``HANK'' JOHNSON, Jr.,
                                             Georgia

                   CHRISTOPHER HIXON, Majority Staff Director
                      JULIE TAGEN, Minority Staff Director

                                C O N T E N T S

                                  ----------

                           Tuesday, February 11, 2025

                               OPENING STATEMENTS

                                                                       Page
    The Honorable Scott Fitzgerald, Chair of the Subcommittee on the
      Administrative State, Regulatory Reform, and Antitrust from the
      State of Wisconsin.............................................     1
    The Honorable Jerrold Nadler, Ranking Member of the Subcommittee
      on the Administrative State, Regulatory Reform, and Antitrust
      from the State of New York.....................................     3
    The Honorable Jim Jordan, Chair of the Committee on the Judiciary
      from the State of Ohio.........................................     5
    The Honorable Jamie Raskin, Ranking Member of the Committee on
      the Judiciary from the State of Maryland.......................     6

                                   WITNESSES

    Dr. Patrick A. McLaughlin, Research Fellow, Hoover Institution
      Oral Testimony.................................................     8
      Prepared Testimony.............................................    11
    Patrick ``Rick'' Smith, CEO, Axon Enterprise, Inc.
      Oral Testimony.................................................    17
      Prepared Testimony.............................................    19
    Magatte Wade, Senior Fellow for Initiatives for America, Atlas
      Network, Two Liberty Center
      Oral Testimony.................................................    23
      Prepared Testimony.............................................    25
    Stephen I. Vladeck, Agnes Williams Sesquicentennial Professor of
      Federal Courts, Georgetown Law
      Oral Testimony.................................................    27
      Prepared Testimony.............................................    29

              LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

    All materials submitted for the record by the Subcommittee on the
      Administrative State, Regulatory Reform, and Antitrust are
      listed below...................................................    53

    Materials submitted by the Honorable J. Luis Correa, a Member of
      the Subcommittee on the Administrative State, Regulatory
      Reform, and Antitrust from the State of California, for the
      record
        An article entitled, ``Trump's Actions Have Created a
            Constitutional Crisis, Scholars Say,'' Feb. 10, 2025, The
            New York Times
        An article entitled, ``Do Regulations Really Kill Jobs
            Overall? Not So Much,'' Sept. 21, 2011, ProPublica
        An article entitled, ``Dean Stuart Shapiro: Federal
            regulations don't really affect economic growth,'' Oct.
            23, 2023, Rutgers Edward J. Bloustein School of Planning
            and Public Policy
        An article entitled, ``The Dangers of Deregulation,'' Dec. 2,
            2019, State of the Planet: Columbia Climate School
    An article entitled, ``The Envy of the World: The American
      Economy Has Left Other Rich Countries in the Dust.'' Oct. 2024,
      The Economist, submitted by the Honorable Jamie Raskin, Ranking
      Member of the Committee on the Judiciary from the State of
      Maryland, for the record
    An article entitled, ``How a Start-Up Utopia Became a Nightmare
      for Honduras,'' Jan. 24, 2024, Foreign Policy, submitted by the
      Honorable Jesus G. ``Chuy'' Garcia, a Member the Subcommittee
      on the Administrative State, Regulatory Reform, and Antitrust
      from the State of Illinois, for the record

                     QUESTIONS AND RESPONSES FOR THE RECORD

    Questions submitted by the Honorable Scott Fitzgerald, Chair of
      the Subcommittee on the Administrative State, Regulatory
      Reform, and Antitrust from the State of Wisconsin, for the
      record
        Questions submitted to Dr. Patrick A. McLaughlin, Research
            Fellow, Hoover Institution
        Response to questions from Dr. Patrick A. McLaughlin,
            Research Fellow, Hoover Institution
        Questions submitted to Magatte Wade, Senior Fellow for
            Initiatives for America, Atlas Network, Two Liberty
            Center

                      REINING IN THE ADMINISTRATIVE STATE:
                         REGULATORY AND ADMINISTRATIVE
                                   LAW REFORM

                                  ----------

                           Tuesday, February 11, 2025

                            House of Representatives

                   Subcommittee on the Administrative State,

                        Regulatory Reform, and Antitrust

                           Committee on the Judiciary

                                 Washington, DC

        The Subcommittee met, pursuant to notice, at 10:03 a.m., in
    Room 2141, Rayburn House Office Building, the Hon. Scott
    Fitzgerald [Chair of the Subcommittee] presiding.
        Present: Representatives Fitzgerald, Jordan, Issa, Cline,
    Hageman, Harris, Schmidt, Baumgartner, Nadler, Raskin, Correa,
    Garcia, Lofgren, and Johnson.
        Mr. Fitzgerald. The Subcommittee will come to order.
        Without objection, the Chair is authorized to declare a
    recess at any time.
        We welcome everyone to today's hearing on the
    Administrative State and opportunities for reform. I will now
    recognize myself for an opening statement.
        Today's hearing will explore the Administrative State and
    look for ways that we can reform the regulatory and
    administrative law to work better for everyday Americans. It's
    no secret that regulatory burdens have reached an all-time
    high. Regulatory agencies create rules with the force and
    effect of law. The number of rules that agencies create is
    overwhelming.
        In the final year of the Biden-Harris Administration,
    unelected bureaucrats finalized over 3,000 rules. That's an
    average of eight regulations per day. By contrast, during the
    same period, Congress passed almost 150 laws. In other words,
    the Executive Branch issued mandates with the force of law over
    20 times more often than the Legislative Branch.
        According to the Competitive Enterprise Institute, these
    regulations impose a total estimated annual cost of two
    billion--excuse me, 2.1 trillion or more than $15,000 per
    American household. Some of my colleagues on the other side may
    claim that because Congress cannot pass laws, agencies feel
    empowered to take over. Congress was designed to require
    lawmakers to think deeply about these decisions. Congress was
    also designed to be accountable to the voters. If our
    constituents do not like our decisions, then we are voted out
    of office.
        Unelected bureaucrats, by contrast, are not politically
    accountable. This lack of accountability shows. When agencies
    make these rules, they not only act as a legislator for the
    country but often as prosecutors and judges through the
    administrative process.
        Agencies often bring enforcement actions into their in-
    house administrative courts. The same agency that makes the
    rules also decides to sue if a person broke them. Then, to
    prove that a person broke the rule, the agency tries the case
    before its own in-house judge in so-called, quote,
    ``independent agencies.'' Commissioners who directly prosecute
    the case also act as judges on appeal.
        The whole system defies logic at this point. The
    administrative system is set up to regulate the American people
    into submission, which is entirely at odds with the principles
    that this country was founded on. Our Founders deliberately
    split the making of laws, enforcement of laws, and judgment of
    laws into three coequal branches of government. Our Founders
    were convinced and concerned about exactly the same centralized
    power we now see in the Administrative State.
        It does not have to be this way. Last Congress, the
    Judiciary Committee marked up numerous bills aimed at reforming
    the Administrative State, the REINS Act, the Midnight Rules
    Relief Act, the Prove It Act, the Separation of Powers
    Restoration Act, and the One Agency Act, just to name a few.
    All these bills were aimed squarely at the topic we are here to
    talk about today, Reining in the Administrative State.
        I'm proud of the work this Committee undertook last
    Congress, and I hope for the sake of the American people that
    we turn these proposals into law this Congress. My colleagues
    on the other side of the aisle routinely oppose all attempts by
    Congress to rein in the Administrative State. They also
    criticize President Trump for taking steps to control the
    Administrative State. They ignore that the Constitution makes
    the President the leader of the Executive Branch.
        They will do everything in their power to protect the
    unelected bureaucrats in the Administrative State. Why? Because
    these unaccountable bureaucrats do the bidding among colleagues
    in the minority. This is true even though Americans rejected
    their views in the most recent election.
        Today we have an opportunity to hear from witnesses who
    have deep experience in the regulatory reform area.
        Ms. Wade and Mr. Smith are entrepreneurs and deal with the
    crushing weight of regulations every day. Mr. Smith has even
    faced the administrative court system and was forced to pursue
    a case all the way to the Supreme Court to vindicate his
    Constitutional rights. Dr. McLaughlin is an expert in
    regulatory and economic analysis and has written extensively on
    how damaging regulatory burdens are on the economy.
        These witnesses are perfectly prepared to supply the
    Members of the Committee with the required information to
    better inform us as we work on possible solutions and consider
    the proposals that have already been introduced. I want to
    thank the witnesses for appearing before us today and look
    forward to hearing what each of you has to say on the topic.
        I now recognize the Ranking Member, Mr. Nadler, for his
    opening statement.
        Mr. Nadler. Thank you, Mr. Chair.
        Mr. Chair, holding a hearing today on, quote, ``Reining in
    the Administrative State,'' is a bit like rearranging the deck
    chairs on the Titanic. As we speak, Elon Musk and his band of
    near-teenaged accomplices are systematically working their way
    through the Executive Branch knocking down agency after agency
    while undermining the rule of law and shredding the
    Constitution along the way.
        Musk and his team have unprecedented access to our most
    sensitive and personal data. They have gained access to
    extremely sensitive tax information at the IRS, highly
    restricted government records on millions of Federal employees
    and their families from the Office of Personnel Management, and
    personal data related to health insurance plans, workplace
    safety, and health investigations, child labor, and more from
    the Department of Labor. This is just what we've learned
    through news articles, because all these actions have been
    taken without any transparency to the American people.
        Musk and his team have access to at least 18 agencies and
    untold amounts of sensitive data that are attracted to bad
    actors here and abroad. Musk and his assistants are not just
    accessing this data. They are feeding it into AI models,
    downloading it on to commercial servers, and possibly taking it
    off premises. Because Musk and his team can also change our
    government systems, not only is the personal information of
    millions of Americans at risk, but also the systems that ensure
    our safety and core government functions.
        For example, Musk and his team have accessed four systems
    at the Federal Aviation Administration. Experts have warned
    that, quote, ``even a small system disruption could cost mass
    grounding of flights, a halt in global shipping, or worse,
    downed planes.'' Officials at the FAA warn that going into
    these systems without an in-depth understanding could result in
    death and an economic harm to our Nation.
        Nevertheless, Musk indicated that the DOGE team will aim to
    make, quote, ``rapid safety upgrades to the air traffic control
    system.'' Just in the past few weeks, we have seen what happens
    when mistakes are made in our air traffic control system when a
    Black Hawk helicopter ran into a commercial flight, resulting
    in dozens of deaths. Musk and his team are opening us up to
    more deaths and critical economic harm.
        Elon Musk is not content just to cause massive disruption
    and expose us to greater risk. No. He's also using his
    unfettered access to our agencies and our data to benefit
    himself. For example, the Department of Labor was investigating
    workplace abuse allegations at three Musk-owned companies: The
    Boring Company, SpaceX, and Tesla. So, Musk and his team
    invaded the agency and gained access to their information on
    current and past investigations.
        Just days before they got access to the Consumer Financial
    Protection Bureau, Musk finalized a deal with Visa to process
    peer-to-peer payments for a wallet feature on X. Because the
    CFEP policies--I'm sorry, because the CFBP polices such payment
    systems, the data Musk and his team accessed could give his new
    X wallet feature competitive advantage in the market.
        As a kicker, the Trump Administration instructed the CFPB
    to halt its work, thus ensuring that there's no one to keep
    Musk's new payment system from exposing personal data or
    enabling fraud. Nevermind that the CFPB has produced almost $20
    billion in consumer relief and has put millions back in the
    pockets of Americans. The agency had information Musk needed,
    so he got it. The agency would have enforced the law with a
    likely impact on his wallet, so the agency's work was halted
    instead.
        Serious concerns have been raised about whether the people
    accessing this data, many of them barely past college, have the
    appropriate training and vetting necessary to handle such
    sensitive data. That is an active data breach on a scale we
    have never experienced before, but this time the threat is
    coming from inside the house. Imagine what domestic criminals
    or foreign adversaries could do if they got their hands on this
    information. This is a clear and present danger, and yet our
    Republican colleagues do nothing.
        In addition to these structural attacks on the Executive
    Branch, the Trump Administration is also reclassifying civil
    servants as political employees who can be replaced with
    flunkies beholden to Donald Trump, imposing loyalty tests on
    national security officials, and encouraging tens of thousands
    of employees to resign with promises it has no authority to
    make. As a result, it is hollowing out the workforce and the
    decades of experience and technical expertise that comes with
    it.
        Without any authorization from Congress, the Trump
    Administration has also taken several other actions that have
    thrown the Federal Government into chaos. It attempted to
    impose, quote, ``a temporary funding freeze,'' across much of
    the Federal Government that a judge has already ruled unlawful.
    It fired duly appointed Democratic members of independent
    agencies to deprive these agencies of a working quorum and
    essentially prevent them from fulfilling their missions. To
    ensure that no one is able to hold the administration
    accountable from within the Executive Branch, the President
    fired more than a dozen inspector generals without following
    the statutory requirements for doing so. These actions are as
    unconstitutional as they are dangerous.
        While we witness these incursions on the rule of law and
    the Constitution, my Republican colleagues do nothing. In fact,
    they cheer on Elon Musk as he usurps Constitutional authority
    and navigates unprecedented power to himself.
        When Joe Biden was President, we heard stern speeches from
    our Republican friends about the need to assert our Article I
    authority. We were told that the Biden Administration was
    guilty of dangerous overreach when it attempted to help people
    drowning in student loans or protected our communities from gun
    violence or helped shield consumers from corporate abuse, but
    now that is ancient history. Now, they aid and abet shadow
    President Musk while he bulldozes his way through the
    Administrative State untenanted to any Constitutional statute
    or authorization.
        There is no check and no balance from the Republican
    Congress, just feckless inaction because it serves their
    purposes. They know that undermining the critical protection
    provided by our agencies would be deeply unpopular, so they are
    content to abdicate their responsibilities and let Elon Musk do
    their dirty work.
        I urge my Republican colleagues to stand up for this
    institution and for the people they represent.
        I yield back.
        Mr. Fitzgerald. The gentleman yields back.
        I now recognize the Chair of the Full Committee, Mr.
    Jordan, for his opening statement.
        Chair Jordan. Thank you, Mr. Chair.
        Instead of stopping the stupid spending, Democrats attack
    the guy who's exposing it. I think the taxpayers in this
    country would just as soon we stop spending their money on dumb
    things. Like, what was the example from USAID, some transgender
    comic in Ireland, spending money on Bert and Ernie and Big Bird
    on Baghdad TV. I think they would prefer we not to do that.
        Elon Musk is exposing in the Federal Government exactly
    what he exposed at Twitter when he purchased Twitter. What did
    we find out there? Big Government was pressuring Big Tech to
    censor Americans. You don't have to take my word for it. We had
    the Twitter Files. Oh, and we also had someone else in Big Tech
    send a letter to this Committee and tell us exactly what they
    were doing. Mark Zuckerberg said the Biden Administration was
    pressuring us to censor. We did it. We're sorry. We won't do it
    again. He told the whole world that in a letter to this
    Committee. So, Elon Musk is now doing that for the Federal
    Government. We think that's a good thing.
        Understand the fundamental difference the Left has with us
    conservatives. Democrats believe it is the career-elected
    bureaucrats who are supposed to run the country. We don't think
    that's the way it's supposed to work. We actually think it's
    the people who put their name on a ballot who get elected by
    ``We the People,'' who make the decisions. The guy who got 77
    million votes on November 5th, says he wants Elon Musk working
    for him--the elected Member who heads the Executive Branch--
    working for him every bit as much as the Federal employees and
    people in Treasury who were supposed to have all the answers or
    in USAID who bid the career officials working for him to expose
    stupid things our government is spending money on. The
    Democrats are going to attack that guy? Go ahead. Go right
    ahead.
        We know the real consequences of having this Administrative
    State, these bureaucrats run things. We have got two witnesses
    here who've lived it. Ms. Wade and Mr. Smith. They're here to
    talk about how that had impacted their business.
        So, I appreciate the Chair having this hearing. This is
    exactly the kind of hearing we have to have. I appreciate the
    work the President and his team are doing to expose the stupid
    things bureaucrats spend the hard-earned money of the people we
    get the privilege of representing.
        I yield back.
        Mr. Fitzgerald. The gentleman yields back.
        Now, recognize the Ranking Member of the Full Committee,
    Mr. Raskin, for his opening statement.
        Mr. Raskin. Thank you very much, Mr. Chair, and thank you
    to the Ranking Member of the Subcommittee, Mr. Nadler. Thank
    you to my colleague, Chair Jordan. Thanks to all our witnesses
    for being here with us today.
        I'm surprised to hear my friend from Ohio talking about the
    transgender comic book from, I can't remember which country,
    but if there's a form of government expenditure taking place
    that we have a problem with, isn't that why the Constitutional
    oversight function exists? Don't we have a whole Oversight
    Committee, which you serve on, which I served on, which can do
    that? Do we really need to hire a fourth Branch of Government
    called Elon Musk to go out and do it for us? We're about to
    enter into a budget process right now. We can deal with it
    ourselves.
        Mr. Chair, in the last 22 days, Donald Trump's billionaire
    government has taken a wrecking ball to public institutions and
    the rule of law in America. The agent of chaos is Elon Musk,
    quote, ``a Special Government Employee purportedly working on
    technological reform.'' More crucially, he's a big businessman
    whose floundering Tesla sales in Europe create huge financial
    pressures for him, according to The Business Press.
        Even more crucially, he's a government contractor who
    collects billions of Federal taxpayer dollars every single year
    and yet has not filed a single employee ethics disclosure form
    as required by law. He has accessed not only the computers
    controlling his own billion-dollar payments from us, the
    people, but to computers containing his contractor rivals'
    contract bids, their contracts, their invoices, and their
    payment systems. Yet, he has not shown us a single conflict of
    interest waiver form for these multiple egregious apparent
    conflicts of interest.
        He and his mutant teenage racist computer hackers have
    taken possession of financial payment systems at the United
    States Department of Treasury, meaning data access to the
    private financial records of every American citizen, every
    Member of Congress, every Federal prosecutor, every regulator
    who's supposed to be looking at what his business does, every
    private lawyer, and every Federal judge who they're now calling
    for the impeachment of because they dare to speak up for the
    rule of law. What could go wrong with this situation?
        Fortunately, we do still have an Article III, a working
    Federal judiciary, which has issued no fewer than 12
    injunctions in three weeks, 12 temporary restraining orders or
    preliminary injunctions in three weeks against the illegality
    of this arrangement, including an injunction against any
    further unlawful seizure, possession, and corruption of
    Americans' private financial data.
        Now, the Elon Musk cyber raid against our data and privacy
    infrastructure has set the stage for the administration's
    outrageous and unprecedented violation of Constitutional
    lawmaking and spending power. That's what the first hearing of
    this Subcommittee should be about, Mr. Chair, the blatantly
    illegal and quickly reversed freeze on billions of dollars in
    Federal grants already appropriated by the U.S. Congress,
    programmed by the agencies, contracted for by government
    lawyers, and in the proper pipeline for payment. The flagrantly
    illegal efforts to not pay Federal workers and honor our
    contracts for work already rendered to condition Federal funds
    on totally made-up restrictions never voted on, much less
    approved by Congress, and the scandalous effort to dismantle
    and neutralize entire Federal agencies, like NOAA, USAID, and
    the CFPB, spitting in the face of Constitutional power
    enactments and appropriations.
        An appropriations act is a Federal law like any other law.
    Like the law, for example, against violently assaulting Federal
    police officers. An appropriations act is not a recommendation
    or a bargaining maneuver with the Executive Branch. It is a
    law. It must be enforced. This administration needs a
    Constitutional refresher course, Mr. Chair.
        The Preamble to the Constitution says,

            We the people, in Order to form a more perfect Union, establish
            justice, ensure domestic tranquility, provide for the common
            defense, promote the general welfare, and preserve to ourselves
            and our posterity the blessings of liberty, do hereby ordain
            and establish the Constitution of these United States.

    The very next sentence of the Constitution establishes in
    Article I the Congress of the United States possessing all the
    legislative power.
        Some of my colleagues have taken to saying we're three
    coequal branches. I beg to differ. We're not three coequal
    branches. Not at all. First, coequal's not even a word, right?
    That's like extremely unique. It doesn't mean anything. They're
    saying three equal branches. I don't think so.
        Read James Madison, ``The Federalist Papers.'' Congress is
    the predominant branch. Congress is the lawmaking branch. It's
    Congress. Check out Article I, section 8, ``All of the powers
    we have to regulate commerce domestically and internationally,
    to pass the budget, to appropriate money.'' Congress does that.
    Then in Article I, section 8, clause 18, and ``all other powers
    necessary and proper to the execution of the foregoing
    powers.'' After all that, you get to four short paragraphs in
    Article II.
        My friend Mr. Jordan has been quoting the first sentence
    all over TV. He thinks that he somehow has a knockout argument.
    He says the executive power shall be vested in a President of
    the United States of America. Yes, indeed, Mr. Jordan, that's
    where the executive power is vested. What is the executive
    power? The core responsibility of the President of the United
    States is to take care that the laws are faithfully executed.
    Right? Not defied, not violated, not trashed, and not
    rewritten. To take care that the laws are faithfully executed,
    which is precisely what's not happening today.
        As they say, oh, well, Elon Musk, he's got all the power of
    the President. Donald Trump himself could not be doing what
    Elon Musk is doing in Washington today. He can't evaporate AID.
    He can't nullify the CFPB. He can't destroy an agency set up by
    us on a bipartisan basis in Congress. Nobody in the Executive
    Branch has that.
        Yes, the President is on top of the Executive Branch, but
    we're the lawmaking power. Who sorts out the conflict if
    there's a conflict? The courts do. What have the courts been
    saying? They've said a dozen times in three weeks that they're
    violating the Constitution of the United States and the laws
    passed by Congress.
        That's what's going on in America today. That's what we
    should be having a hearing about. Not some eerie academic
    conversation about the Administrative State, whatever they mean
    by that.
        I yield back, Mr. Chair.
        Mr. Fitzgerald. The gentleman yields back.
        Without objection, all the opening statements will be
    included in the record.
        We'll now introduce today's witnesses.
        Dr. Patrick McLaughlin. Dr. McLaughlin is a Research Fellow
    at the Hoover Institution at Stanford University and a visiting
    Research Fellow at the Pacific Legal Foundation. He authored
    more than 30 peer reviewed studies on a variety of topics,
    including regulatory economics, administrative law, and
    international trade.
        Mr. Patrick Smith. Mr. Smith is the Chief Executive Officer
    and founder of Axon Enterprise. Axon offers a variety of
    products and services, mostly law enforcement and public safety
    entities. These products and services include TASER devices,
    body cameras, de-escalation training, and evidence management
    and reporting software.
        Ms. Magatte Wade. Ms. Wade is the Cofounder of Prospera
    Africa, a governance platform for special economic zones, and a
    Senior Fellow at the Atlas Network, an organization of African
    free market think tanks. She was named by Forbes as being one
    of the 20 youngest power women in Africa. I get that right? A
    young global leader by the World Economic Forum and is a TED
    global Africa fellow.
        Professor Steven Vladeck. Mr. Vladeck is the Agnes Williams
    Sesquicentennial Professor of Federal courts at the Georgetown
    University Law Center. Professor Vladeck focuses on Federal
    courts, the Supreme Court, national security law, and military
    justice.
        We welcome our witnesses and thank them for appearing
    today.
        We will begin by swearing you in. Would you please rise and
    raise your right hand?
        Do you swear or affirm under penalty of perjury that the
    testimony you are about to give is true and correct to the best
    of your knowledge, information, and belief, so help you God?
        Let the record reflect that the witnesses have answered in
    the affirmative.
        Thank you. Please be seated.
        Please know that your written testimony will be entered
    into the record in its entirety. Accordingly, we ask that you
    summarize your testimony in five minutes.
        Dr. McLaughlin, you may begin.

                 STATEMENT OF DR. PATRICK A. McLAUGHLIN

        Dr. McLaughlin. Thank you. Chair Fitzgerald, Ranking Member
    Nadler--
        Mr. Fitzgerald. Microphone, sir.
        Dr. McLaughlin. Thank you. Chair Fitzgerald, Ranking Member
    Nadler, and the Members of the Committee, thank you for the
    opportunity to testify today. My name is Patrick McLaughlin,
    and I am a Research Fellow with the Hoover Institution and a
    visiting Research Fellow with the Pacific Legal Foundation. I
    appreciate the chance to discuss how regulatory reform can
    promote economic growth, encourage innovation, and reduce
    unnecessary burdens on businesses and consumers.
        Let's begin by acknowledging that regulations can play an
    essential role in achieving policy objectives, such as
    protecting public health and the environment. When regulations
    pile up over time, without systematic review, this regulatory
    accumulation has costly consequences. Compliance becomes more
    complex, businesses face mounting overhead costs, and
    entrepreneurs struggle to navigate the maze of over one million
    regulatory restrictions that are currently on the books.
        Projects like the RegData project, which uses AI to
    quantify various aspects of regulation and make the data
    publicly available, have permitted economists to study the
    effects of regulatory accumulation and its counterpart
    deregulation. I'd like to review some of those findings today.
        First, I want to emphasize the magnitude of the economic
    effects of regulatory accumulation or the other side of the
    same coin, deregulation. In my written testimony, I cited a
    study that I coauthored published in 2020 in the economics
    journal Review of Economic Dynamics, that this study found that
    regulatory accumulation, the buildup of rules over time,
    distorts business investments, expenditures on things like
    research and development, new machinery, and new buildings.
    These are the same activities that, in the long run, tend to
    increase productivity and drive economic growth.
        We found that, on average, Federal regulatory accumulation
    slowed overall GDP growth by eight-tenths of a percentage
    point. Considering GDP growth is, in the U.S., typically 2-3
    percent annually, losing nearly one percentage point represents
    a massive loss. Other studies have found even larger effects.
        Second, I want to highlight the regressive effects of
    regulatory accumulation. Higher levels of regulation are
    associated with increased levels of poverty and income
    inequality. Specifically, a 10 percent increase in Federal
    regulations is associated with a 2.5 percent increase in the
    poverty rate and a four-percent increase in income inequality.
        When you dig a little deeper, it's easier to understand
    why. Regulations affect households directly in many ways, even
    when those regulations are targeted at businesses. For example,
    regulations typically increase the production cost of goods,
    and some of those costs are, of course, passed on to the
    consumer in the form of higher prices.
        One study found that a 10 percent increase in total
    regulation leads to a nearly one percent increase in consumer
    prices. Furthermore, the study found that the effects of those
    price increases are regressive; that is, the poorest income
    groups experience the highest proportional increases in the
    prices they pay.
        Regulations also affect households by diminishing their
    economic opportunities. Multiple studies have found that higher
    levels of regulation are associated with fewer total firms and
    lower levels of employment.
        Finally, despite the fact that I'm an economist, I want to
    offer a positive message. We have seen these negative effects
    caused by regulatory accumulation can be reversed. Several
    States and provinces of Canada have already begun the hard work
    of reassessing existing regulations to see which ones truly
    benefit the public versus which ones are outdated, redundant,
    or impose costs that can't be justified by the benefits. By
    identifying and removing regulations that no longer serve their
    intended purpose, we can free up resources for more productive
    uses.
        Deregulatory efforts seem particularly effective when
    coupled with tools like regulatory budgeting or sunsetting. The
    Province of British Columbia, along with several other States,
    have experimented with tools like this. In British Columbia,
    they are one of the first jurisdictions to use regulatory
    budgeting to deregulate, and they cut 40 percent of regulations
    in a three-year period. Then they capped future regulatory
    growth with a one in, one out type regulatory budget. The
    result was a sustained boost to economic growth. A recent study
    found that the province's growth rate increased by just over 1
    percentage point because of the deregulatory efforts.
        In closing, deregulation has the potential to invigorate
    the economy, spur innovation, and lessen the disproportionate
    burdens placed on smaller firms and vulnerable populations.
        Thank you, and I look forward to answering any questions
    you may have.
        [The prepared statement of Dr. McLaughlin follows:]
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        Mr. Fitzgerald. Thank you, Dr. McLaughlin.
        Mr. Smith, you may begin.

                  STATEMENT OF PATRICK ``RICK'' SMITH

        Mr. Smith. Thank you, Chair Fitzgerald, Ranking Member
    Nadler, and the entire Subcommittee for having me here today.
    It's an honor. My name is Rick Smith. I am the CEO and founder
    of a company called Axon. We're an American company in Arizona
    that employs over 4,000 people today.
        I appreciate the opportunity to testify, because the
    unchecked power of the government led to serious consequences
    for my company, for my employees, and deeply for me personally.
    No bureaucracy can be allowed to act as prosecutor, judge, and
    jury without checks and balances and oversight.
        Many fine Americans work at the FTC with the best of
    intentions. Yet, the agency wields unchecked power in ways that
    can crush innovation, stifle economic growth, and deny basic
    Constitutional rights. This overreach was not the intention of
    our Founders.
        The work of this Committee is critical to ensuring that all
    Americans do receive the due process protections they deserve
    and are guaranteed under the Constitution.
        I started Axon over 30 years ago in a garage with a dream
    to bring Captain Kirk's phaser to life, to provide a real
    alternative to deadly force. We can do better than bullets.
    When I first introduced TASER technology, people laughed at the
    idea. No one thought they would work, except my dad. He put in
    his life savings. I nearly wiped him out.
        At the edge of losing everything, after seven long years,
    we finally turned the corner. Today, you see our yellow TASER
    devices on almost every police officer in America. They've been
    deployed millions of times, and together with the body-worn
    cameras, another technology that we invented, they're used
    across the globe, from the London Met to Sydney, Australia.
        I've challenged my team to go further. We've published a
    public ``moonshot goal'' to cut gun deaths in policing 50
    percent over a 10-year period. We believe we can do this
    through more effective, less lethal alternatives and changing
    police through more advanced VR training.
        These aspirations in our mission were severely disrupted
    when we came up against the unfettered power of the FTC. In May
    2018, we acquired a small, failing body camera competitor that
    was losing a million dollars a month. Competitor after
    competitor passed on this deal. For 18 months they tried to
    sell the company. We were the buyers of last resort.
        We bought this money losing company because it saved
    critical public safety agencies, including the NYPD, from
    serious disruptions if their body camera programs were allowed
    to fail. The $13 million price we paid was well below the legal
    threshold for FTC review.
        What followed were months of requests for information,
    mountains of legal filings, and a growing sense of disbelief
    that this money losing deal had drawn such a disproportionate
    government response. We offered to write off our entire
    investment. In fact, we offered to put in another $13 million
    in cash, effectively doubling our losses. Shockingly, we were
    told this was not enough. The FTC demanded that we also hand
    over our most valuable assets.
        First, license all our intellectual property creating a
    full-cloned competitor, then to hand over our most valuable
    customers to be chosen by the FTC. Most alarmingly, we were
    asked to write a blank check. This was such an outrageous
    request our lawyers said hold on, ``did you say blank check?''
    The government said ``yes, you heard us correctly, you will
    write a blank check. You will fund this new competitor until we
    tell you that you are done.'' I learned that over the previous
    20 years the FTC had won 100 percent of cases in its in-house
    forum.
        Over our dinner table at home, I shared this terrifying
    situation with my family, and my elementary school twins said,

            Hey, dad, we're learning about the Constitution and the
            Declaration of Independence. The colonists said the courts back
            then were beholden to the king, and so they set up a new
            country in the Constitution where the courts must be
            independent. This is unconstitutional. You should sue them.

    From the mouths of babes.
        I was like, wow, this is so clear and obvious that it is
    what we must do. So, we preemptively sued the FTC in Federal
    court challenging their Constitutionality and saying, hey, just
    sue us here where we've got a shot to tell our story. In April
    2023, after four years of disruptions to our business, the
    Supreme Court ruled unanimously 9-0 in our favor, allowing our
    challenges to proceed in Federal court. In response, the FTC
    dismissed its complaint against us rather than defend its
    outrageous actions and demands against us in front of an
    impartial Federal judge.
        As our 9-0 decision in the Supreme Court demonstrates, this
    is bigger than one company or one case. Every American, whether
    an individual, small or large corporation, should have the
    right to a fair trial before an independent judge before the
    government can strip them of their livelihood, their property,
    or their rights. It's a bedrock principle of justice.
        Thank you for your time, and I look forward to answering
    your questions.
        [The prepared statement of Mr. Smith follows:]
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        Mr. Fitzgerald. Thank you, Mr. Smith.
        Ms. Wade, you can begin now.

                       STATEMENT OF MAGATTE WADE

        Ms. Wade. Good morning. Thank you, Mr. Chair, for having
    me. Distinguished Members of the--sorry. Can you hear me now?
    All right.
        Thank you again, Mr. Chair, for having me here, and for the
    distinguished Members of the Committee, for this opportunity to
    testify today. This matter is a personal matter to me, and I
    want to explain why.
        My name is Magatte Wade. I'm a Senegalese-American
    entrepreneur. I've been living in the U.S. since 1998, and I
    became a U.S. citizen in 2018. I'm also an author of ``The
    Heart of a Cheetah,'' a book that talks about African
    entrepreneurship and prosperity. It has been addressed--it has
    been endorsed by Nobel laureate like Vernon Smith, development
    economist as Bill Easterly, and Whole Foods founder John
    Mackey.
        I am a cofounder of Prospera Africa, an initiative that is
    out there to create something similar to what you guys would
    call here for freedom cities in America. I have been doing
    business, obviously, both in Africa as in the U.S. In the U.S.
    in the States of California, Texas, and New York.
        Mr. Raskin, your words earlier really, really worried me,
    and I will tell you why. When you say we are here and we should
    be here to talk about Mr. Elon Musk and all the
    unconstitutional things that he's doing, and you said we
    shouldn't be here to talk about regulation or anything like
    that, first, I want to say then why did you have me here? As an
    entrepreneur, my time is valuable. I came here because I
    thought we were going to talk about the regulatory State and
    why it matters. So, you need to make up your mind on that. I'm
    deeply offended by what you said there.
        Furthermore, I will tell you why I came when I was invited
    to speak on this. Because right now, everybody in this country,
    these issues of regulation, overregulation, have been made into
    a matter of partisanship. Are you from the Left or are you from
    the Right? I don't care, because where I come from, the
    overregulation causes us to be where we are.
        My continent, Africa, is the poorest region in the world
    today because it happens to be the most overregulated region in
    the world. So, if you don't see the value of overregulation, if
    you need and want to wait until this country becomes like most
    African countries--I don't know. I love this country and I
    don't want to see it go down there.
        So, also, just so you know, what does overregulation mean
    for regular people? It means death. Death, literally. People
    are packing themselves into little fishermen's boats trying to
    leave nations that are overregulated, therefore no jobs, and
    then they have to leave and go seek jobs someplace else.
        By the way, English is only my fourth language, so when I
    trip on words, please excuse me, you all.
        So, as a consequence of this perspective of mine, I'm aware
    of the fact that even in the U.S. it is difficult for a
    businessperson to be fully compliant with all the laws. In
    Senegal, I usually have to pay lawyers to make sure that I'm
    compliant all the way. It costs a lot of money and a lot of
    time and makes me very noncompetitive.
        Everything I do is for the sake of African prosperity.
    There is no sense in which anyone can call me a greedy business
    person. Yet, most of us are subject to the potential of
    punitive power of the public officials. As an African
    immigrant, I am very familiar with the many informal small
    businesses that are run by other Africans in the U.S. Of
    course, the biggest one of them for me at least is occupational
    license. You see this hair of mine, the lady who braids it most
    of the time is an immigrant lady who got here. She's not doing
    anything criminal or anything like that, but her business is
    going to be illegal because of all the laws and the licenses
    she has to get to do this, something that she learned to do
    since she was 12 back home. Here she's sustaining herself, not
    touching the welfare or anything like that. This is paying her
    bills, the bills of her children, and the people that she had
    left home.
        Are we people that should those people be penalized? I
    don't think so.
        To take a different issue. Austin where I live right now.
    The housing prices were rapidly rising due to excessive land
    use regulations until recently. Last year, I testified for the
    Texans for Reasonable Solutions to deregulate land use
    regulations, and they made really great progress in reducing
    the growth in housing cost. We estimate that there is between
    30-40 percent of the housing costs that are due to excessive
    regulations in some areas.
        When I moved to the U.S., I lived in San Francisco. I loved
    that city, yet I can't live in that city anymore for what that
    city has become, and it primarily has to do with the high cost
    of housing due to the regulations.
        Take another example. My husband is an immigration
    entrepreneur who was a leader in the microschool space before
    it became a thing. If you want a new renaissance in education,
    you need to minimize your regulations pertaining to new school
    creation so smaller education entrepreneurs can also get in the
    game and challenge your status quo. I ask again, do we really
    want to be penalizing these entrepreneur educators?
        Mr. Fitzgerald. Ms. Wade, your time has expired. We're
    going to have some followup questions, obviously, though, but
    thank you very much.
        Ms. Wade. Thank you.
        [The prepared statement of Ms. Wade follows:]
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        Mr. Fitzgerald. Professor Vladeck, you're recognized.

                    STATEMENT OF STEPHEN I. VLADECK

        Mr. Vladeck. Thank you, Mr. Chair. Thank you for the
    opportunity to testify this morning. I must confess to at least
    a modicum of surprise that of all the topics for this
    Subcommittee to investigate at this moment in American history,
    it has picked this one.
        Certainly, we can all agree that one of Congress' and this
    Committee's most important Constitutional functions is holding
    the Executive Branch to account. I would thus happily
    celebrate, if not affirmatively endorse, well-conceived efforts
    to rein in the Executive Branch, especially in response to
    specific abuses of existing statutory and Constitutional
    arrangements, perhaps like the ones summarized by my fellow
    witnesses.
        Given what has transpired over the first three weeks of the
    new administration, a hearing focused on the proposed
    legislation being discussed this morning and not on what is
    happening across this city and across this country as we sit
    here today strikes me as far more than just a missed
    opportunity. Indeed, if this Committee was genuinely interested
    in reining in abuses by the Executive Branch, it strikes me
    that there are at least four distinct and far more pressing
    areas to which it should focus its attention.
        First, the first three weeks of the second Trump
    Administration has witnessed a more systemic and sustained
    assault on Congress' Constitutional primacy with respect to
    appropriations and spending than anything we've seen before. It
    would take more time than I have this morning to list all the
    examples, but we're seeing the Executive Branch repeatedly
    violate clear statutory spending requirements and prohibitions,
    whether under the Impoundment Control Act, various statutes
    setting up and funding the USAID, NIH appropriations riders, or
    otherwise.
        The Constitution is unusually clear about appropriations,
    Mr. Chair. Contrary to the comments made by Chair Cole last
    week, these statutes are all laws that have binding teeth for
    purposes of the Supremacy Clause. Indeed, uniquely with respect
    to appropriations, the Constitution expressly requires that
    Congress play the primary role in Federal policymaking. In each
    of these areas, then, the Executive Branch is not just breaking
    the law; it is usurping this body's single most important
    policymaking power.
        Second, we've also seen unprecedented efforts by the
    President to assert control over the entire bureaucracy and
    quite overtly to do so in the name of loyalty to the President
    rather than fidelity to the Constitution.
        Third, and speaking of unprecedented, we've seen the
    President use the guise of an office located within the
    Executive Branch to take unitary control over virtually all of
    the Federal Government spending and personnel management
    functions, again, apparently in violation of an array of
    statutes limiting who may have access to those systems and for
    which purposes.
        Finally, I'd be remiss in not also noting the various
    actions this administration's undertaken against private
    persons that flatly contravene existing statutory and
    Constitutional protections, such as the attempt to narrow the
    scope of birthright citizenship, a right protected not only by
    the 14th Amendment but by a statute Congress enacted in 1940.
        Other examples abound, but I suspect the point has been
    made. In three weeks, we have seen a more sustained assault by
    the President on this institution's Constitutional prerogatives
    than we've seen in the first 250 years of our Republic.
        To be sure, we've also seen the Federal courts pushing back
    against these abuses, in many cases aggressively, but the
    courts can't and shouldn't be expected to go it alone. Some
    have tried to defend this rash of unlawful behavior on the
    grounds that the Executive Branch is rooting out fraud and
    other abuses. Of course, if that were actually the goal, we
    should have expected some discussion by the Department of
    Defense.
        At a more basic level, this Committee and Congress as a
    whole has spent much of the last 160 years setting up
    sophisticated accountable inner branch mechanisms for holding
    the Executive Branch to account in precisely these spaces. It's
    not like fraud, waste, and abuse have became problems only over
    the last four years. That includes inspector generals. It
    includes DOJ offices designed to root out corruption and
    others.
        Rather than lean into those checks, the President's
    response has been to fire most of the inspector generals,
    including those he appointed, and the head of the government
    agency that protects whistleblowers. Maybe there's an argument
    that this is a good policy. I'm skeptical. That's an argument
    that should be made to this body in its consideration of new
    legislation, not through repeated assertions of executive fiat.
        The result of the Executive's assertion of authority and
    Congress' abdication of responsibility has been not just an
    unprecedented breakdown in the separation of powers, but a
    growing and seemingly unending list of negative real-world
    impacts on everyday people who may no longer have access to
    experimental medication, who may no longer receive timely storm
    warnings, who may no longer be able to receive the government-
    subsidized healthcare Congress has provided for more than 60
    years, and so on.
        Even farmers who signed contracts with the USDA to be
    reimbursed for modernizing their infrastructure with guarantees
    that the Federal Government would cover part of their costs are
    now on the hook for expenses they can't afford and projects
    they can't complete.
        Everywhere you look there are stories like this one. This
    is not just an administrative law crisis, Mr. Chair; it is a
    government credibility and credit crisis.
        Against that backdrop, it strikes me as more than a little
    ironic that this Committee believes the most important thing it
    can and should be discussing today is whether to enact the
    legislation being proposed. It seems to me instead that these
    topics deserve more of our attention, and I would look forward
    to participating in those discussions. Having this hearing
    sends exactly the wrong message about the institutional
    autonomy, Constitutional authority, and democratic
    responsibility of the legislature, the branch of the government
    that the Constitution quite deliberately put first.
        [The prepared statement of Mr. Vladeck follows:]
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        Mr. Fitzgerald. Thank you, Mr. Vladeck--Professor Vladeck.
        We'll proceed now under the five-minute rule with some
    questions. I'm going to recognize myself for five minutes.
        Mr. Smith, according to what you just told us in your
    testimony, Axon spent approximately $20 million defending its
    acquisition of VIEVU against the FTC, which was more than the
    acquisition price itself, I guess, is the way you described it.
    You were willing to spend that money because you believe that
    every American has the right to due process.
        Why is due process so important to you as a business owner
    having lived through it and experienced it the way you have?
        Mr. Smith. This may seem cliche, but it's more important to
    me as an American, and I hear the passion in people's voices.
    There are many things we can disagree on, but I think progress
    can happen when we can find bedrock principles that we all
    agree on. The systems of checks and balances, for example, is
    so critical to a functioning democracy. What I came to
    understand with the FTC was, in fact, there was a system that
    has gotten out of balance where there is no check and balance;
    where there is no independent judiciary; where that agency can
    act as judge, jury, and prosecutor, and they presented me with
    a situation where they either threatened me to go into court,
    where there is a zero percent chance over 20 years of having a
    fair trial where I could win, or to effectively seize my
    company's most valuable assets, give us an unlimited liability,
    and place all my 4,000 employees and all our customers at risk.
        So, that's why I'm here today is I'm now very passionate
    about this. I was disappointed when the FTC dropped their case
    against us, because I felt the system was so unfair, I wanted
    to see it make its way back up to the Supreme Court. When they
    dismissed their case, I jumped at the chance to come and
    testify before Congress today, because together we have an
    opportunity to fix the checks and balance by just simply having
    independent judges review every case when the government is
    going after an American.
        Mr. Fitzgerald. Very good.
        Dr. McLaughlin, in a lawsuit challenging the FTC's
    premerger notification rule, business groups claim that the
    FTC's rule will cost over seven times the amount that the FTC
    estimated in its final rule. This is kind of a consistent
    problem that we see. The FTC estimates that it will cost
    billions.
        The FTC has not articulated how it will use the information
    to better enforce the antitrust laws, and the FTC has never
    articulated past examples of missed enforcement that would
    justify the rule.
        Is this type of potentially burdensome regulation that
    Congress--we should sit down and analyze this and potentially
    act on it?
        Dr. McLaughlin. Thank you. You're referring to the new HSR
    rules, of course, and I did take a look at those as a reference
    point. The paperwork burden estimate from the FTC may indeed be
    low compared to what other people estimate it to be. It's worth
    pointing out that those estimates, similar to what Mr. Smith is
    pointing out, are produced by the same people who want to
    produce the rule. So, maybe there's a conflict of interest
    there.
        I would also point out that, even though that paperwork
    burden may be what the FTC estimated or may be seven times
    larger, it still is very small compared to the overall burden
    of regulation, and that's my main point here. The big burden
    here is the totality of regulation much more than any
    individual rule's consequence.
        Mr. Fitzgerald. Right. Let me just follow that up. So, the
    Separation of Powers Restoration Act, or SOPRA, would enshrine
    the Court's rejection, the Chevron deference, and clarify other
    deference's that have allowed agencies to act as informal
    legislative bodies. The key point is probably that SOPRA would
    require judges to conduct de novo review of agency statutes,
    the regs, the guidance documents.
        Can you talk about how enshrining judicial review in law
    may slow the pace of regulations for administrative agencies?
        Dr. McLaughlin. I think it would end up at least leaving
    some percentage of rules aside, and it would work like this.
    Agencies are going to now be aware that there's no deference
    anymore, no judicial deference of any sort that they can rely
    on to push a rule forward. Some percentage of rules will
    probably just not get pushed forward at all. They will choose
    not to take that risk of pushing something forward that
    previously could have stood up because of the different
    deference documents. What percentage that will be, I don't
    know.
        Mr. Fitzgerald. Yes. The delaying factor is built in to the
    system which could actually assist Congress in having the time
    to examine and take a deeper look on some of these things
    before they simply become law is the problem, right?
        Dr. McLaughlin. Yes. There's going to be plenty of room,
    hopefully, in different reforms for Congress to play a more
    active role, and I think that my research in the area has shown
    it's necessary for another set of minds to be looking at the
    different analyses and regulations coming out of the agencies.
        Mr. Fitzgerald. Thank you.
        I'll now recognize the Ranking Member for five minutes.
        Mr. Nadler. Thank you, Mr. Chair.
        Professor Vladeck, while the Republican majorities in the
    House and Senate stand aside and do nothing to stop the Trump
    Administration's incursions on Constitutional authority, the
    courts have begun to step in and block some of these unlawful
    actions. Not content merely to undermine Constitutional
    authority in the face of these, quote, ``decisions, senior
    administration officials have now tried to question the
    legitimacy of the courts themselves.''
        For example, in response to a court order blocking Elon
    Musk from accessing sensitive Treasury Department data, Musk
    said that the judge who made the ruling, quote, ``needs to be
    impeached now.'' Vice President JD Vance stated that, quote,
    ``judges aren't allowed to control the Executive's legitimate
    power.'' President Trump said, quote, ``no judge should,
    frankly, be allowed to make that kind of decision. It's a
    disgrace.'' The White House called the judgment absurd and
    judicial overreach.
        Now these vague threats to judicial independence have
    seemingly crossed the line into actual defiance of a court
    order. Yesterday, a Federal judge in Rhode Island ruled that
    the White House had defied his order to unfreeze billions of
    dollars in Federal grants.
        Can you describe the Constitutional crisis we would face if
    the Trump Administration continues to ignore valid court
    orders?
        Mr. Vladeck. Sure. Congressman, we've never seen a crisis
    quite of that scope. The famous quote about Andrew Jackson and
    John Marshall is apocryphal. Andrew Jackson actually did not
    frustrate the Supreme Court's decision in Worcester v. Georgia.
        The only example we have of a President ever openly defying
    a decision by a justice was Lincoln at the outset of the Civil
    War refusing to comply with the writ of habeas corpus issued by
    Chief Justice Taney by himself, not by the full Supreme Court.
    We've never seen a President who said, OK, the Supreme Court
    has told me I have to stop doing something, I'm going to keep
    doing it.
        The critical point at that point is we would have a
    breakdown, Congressman, not just in the rule of law and the
    separation of powers. We'd have a breakdown in the courts,
    because the Executive Branch depends on the courts when it's
    the plaintiff to prosecute crimes, to bring civil enforcement
    action.
        So, the point of no return would be a point when the courts
    are no longer willing to even do the Executive Branch's regular
    business because the Executive Branch won't abide by the
    court's judgments.
        Mr. Nadler. In your testimony, you briefly described four
    areas that this Committee should be focusing on right now to
    address the unprecedented power grab by President Trump and
    Elon Musk, or maybe I should put that in reverse order. Can you
    please elaborate on these suggestions?
        Mr. Smith. Sure. It seems to me that this Committee, both
    historically and currently, has both the power and the mandate
    to engage in rigorous oversight of what the Department of
    Justice specifically is doing; how the Executive Branch is
    complying or not complying with the various statutes; of the
    firings of inspector generals; of the firing of the Special
    Counsel Hampton Dellinger, who is the head of the
    whistleblowing agency within the Federal Government.
        This Committee has the power, of course, to consider
    whether legislation should be proposed to rein in some of these
    claims, to backstop existing statutes, or perhaps even if the
    majority is so inclined, to authorize what the President is
    doing. The point, Congressman, is that what we have seen over
    the first three weeks is the President suggesting that this
    Committee and all of Congress is completely unnecessary for him
    to do what he wants to do.
        Whether it's through oversight hearings, whether it's
    through withholding legislation, whether it's through passing
    legislation, whether it's through the bully pulpit that Members
    of this Committee on both sides are so skilled at using, it
    seems like there is a much more important story to tell about
    what is happening right now to the separation of powers in this
    country than the admittedly important stories of my fellow
    witnesses. Those are all problems, but what we're seeing is a
    structural attempt to reallocate power the likes of which we've
    never seen before, and that's where this Committee has a
    responsibility.
        Mr. Nadler. Mr. Smith has argued for an independent
    judiciary. If we allow the Trump Administration to skirt court
    orders, does the independent judiciary really function?
        Mr. Vladeck. I guess I am one, Congressman, who still
    thinks that the line is holding. We have more examples
    historically of what I would call slow walking compliance with
    court orders by the Executive Branch, the likes of which seems
    to be happening right now. I would not put it past the
    possibility, Congressman, that part of the lack of compliance
    we're seeing is because of incompetence, not malice. It seems
    to me that we are not at the point yet where the Executive
    Branch is affirmatively refusing to comply with Federal court
    orders.
        Mr. Nadler. If we get to that point?
        Mr. Vladeck. Then, it would be incumbent on this Committee
    to pursue Articles of Impeachment, and I would hope that there
    would be a sufficient Members of the Majority who would think
    that this was part of their Constitutional responsibility, that
    the politics of the moment would give way to the politics of
    our Constitutional order.
        Mr. Nadler. Thank you, Mr. Chair. I yield back.
        Mr. Fitzgerald. The gentleman's time is expired.
        Mr. Nadler. Thank you, Professor.
        Mr. Chair, I yield back.
        Mr. Fitzgerald. The gentleman's time is expired.
        Now, I'll recognize the gentlewoman from Wyoming for five
    minutes.
        Ms. Hageman. Thank you.
        I guess I would take your testimony a bit more seriously,
    Mr. Vladeck, if you actually had ever complained or brought--
    shown any light on the Biden Administration's efforts to
    forgive the student loans in violation of the law and court
    order.
        Ms. Wade, I appreciate your passion for this issue. It is
    something that is incredibly significant, and I think the
    caterwauling that you hear on the other side is what happens
    when you shine a light on the scurry little things that live
    under most rocks that most of us find rather disgusting.
        The 2024 version of CEI's 10,000 commandments found that
    Federal regulations, total compliance costs, and economic facts
    are at least $2.117 trillion annually. U.S. households pay an
    average of $15,788 annually in a hidden tax, which consumes 17
    percent of income and 22 percent of household expenses. The
    Biden-Harris Administration imposed over $1.7 trillion in
    cumulative regulatory costs on the economy, surpassing all
    predecessors.
        The issue of overregulation in this country is absolutely
    real, and it is people like you that are affected, regardless
    of whether Mr. Vladeck feels that you should have a voice in
    these proceedings.
        Mr. Smith, I want to turn to you, because I think people
    need to understand what ALJs, administrative law judges, and
    administrative law courts actually do in the system. If you
    want to talk about unconstitutionality, Article III establishes
    an independent judiciary to protect citizens from loss of life,
    liberty, and property without due process of law. Over the last
    50 years or so, a variety of Federal agencies have created
    their own court systems led by administrative law judges. It
    would come as no surprise to anyone that agencies enjoy
    outsized success in proceedings before these ALJs. After all,
    they're wearing the same jerseys. They're on the same team.
        In Article III courts as provided by the Constitution, the
    SEC only wins about 58 percent of its cases. Between Fiscal
    Year 2011-2014, the SEC, however, won an average of 90 percent
    of its cases in front of ALJs. The FTC, who you went up
    against, wins over 90 percent of its cases before its own ALJs.
    Yet, Lina Khan, who was the head of the FTC under the last
    administration, lost almost every single case she ever brought
    before an Article III case--or an Article III court.
        When Axon was forced into the FTC administrative law court
    or ALC proceedings, were you provided with the same protection
    and rights you would expect in an Article III court, such as
    due process, the right to a trial by jury, that sort of thing?
        Mr. Smith. Absolutely not. It was a foregone conclusion.
    Frankly, it was described to me by my attorneys as hopeless.
    There was a zero percent chance over the previous 20 years of
    getting a fair trial. Even once we came out, if it went to
    appeal, the appellate process would be only reviewing the FTC's
    version of events. They get to write the entire record, and you
    never get a day in court. Maybe you get an appellate review to
    see if they made an error in the law, but we would never have
    gotten a chance for an independent arbiter to hear our claims.
        Ms. Hageman. I would think that the people on the other
    side and Mr. Vladeck would be concerned about the violation in
    Constitutional rights that you just described, but apparently
    they're more concerned about protecting the unelected
    bureaucrats and their ability to send millions of dollars to
    things that we don't want to pay for, such as trans comic books
    for people in Peru.
        The FTC enjoys over 90 percent success rate in proceedings
    before the ALJs, as we just talked about. What I understand is
    that you were forced to spend $20 million defending yourself in
    these FTC proceedings. Having been an administrative law
    attorney for many years, I describe this as the process is the
    punishment. Would you agree?
        Mr. Smith. The process was a heck of a lot of punishment.
    However, it was nowhere near what was being threatened. I mean,
    for a $13 million acquisition, the government was basically
    looking to seize a billion dollars' worth of intellectual
    property, as well as half our customers and an unlimited
    liability.
        The process was terrible, but we had to go through it
    because the alternative was even worse.
        Ms. Hageman. As you likely know, in this Congress I have
    introduced the Seventh Amendment Restoration Act, which
    provides Americans with the right to remove their cases before
    an ALJ to an Article III district court.
        Do you think that this is something that would have helped
    you in pushing back and fighting back against the FTC in these
    horrific proceedings?
        Mr. Smith. I have to say that this proposal is beautiful in
    its simplicity. It actually would fit what we've all talked
    about, the system of checks and balances functioning properly,
    that an American should be able to say, my goodness, if I have
    the government coming after me, may I please have an
    independent judge where I can plead my case and have a chance
    of prevailing.
        Ms. Hageman. Thank you, Mr. Smith; thank you, Ms. Wade;
    thank you, Dr. McLaughlin for being willing to come here and
    expose this horrific situation, this horrific administrative
    situation that we're dealing with.
        I yield back.
        Mr. Fitzgerald. The gentlewoman yields back.
        We now recognize the gentleman from Maryland, the Ranking
    Member of the Full Committee, Mr. Raskin.
        Mr. Raskin. Thank you, Mr. Chair.
        In just the last 22 days, it seems at this point like 22
    months, they've sacked 17 inspector generals, the major
    corruption fighters in Federal agencies. They've illegally
    tried to freeze government spending that has been appropriated
    by the Congress of the United States. They've fired heads of
    four independent agencies, and they've shut down work
    completely, at least four agencies, paying thousands and
    thousands of Federal workers to do nothing because they want to
    try to bring the work of the Federal Government that doesn't
    directly profit from them to a screeching halt.
        Meanwhile, Musk and his completely unvetted and untrained
    night crew of assistants have gained access to at least 18
    Federal agencies, stolen reams of the American people's data
    from the agencies, and fired thousands of workers in violation
    of civil service due process, trampling all the checks and
    balances and rights to individual adjudication that Mr. Smith
    just referred to.
        All these actions are profoundly disturbing, but it's the
    data grab that is rocking the American people right now. The
    capture of this data represents an unprecedented hack into our
    most sensitive information and the profound risk it is for all
    Americans.
        Professor Vladeck, Musk and his team say that they accessed
    these sensitive and confidential data sets--some of them might
    include classified information for all we know to root out
    fraud. How do we actually root out fraud in the government?
        Mr. Vladeck. So, historically, Congressman, as you know,
    the way that we root out fraud is through a series of
    overlapping and interlocking mechanisms. The inspector generals
    are the first line of defense within the agencies. The idea is
    that their job is to provide regular audits of what the agency
    is doing.
        There are various statutes that allow private citizens to
    seek to investigate fraud and to make claims against the
    government when they think there is fraud; the False Claims Act
    at the top of that list.
        Then, Congressman, there's this Committee, and there's its
    companion Committee in the Senate that uses oversight functions
    to ensure that the government is complying with its statutory
    obligations, its obligations, Congressman, to investigate fraud
    in all its spaces.
        Mr. Raskin. Well, to illegally wipe out all these inspector
    generals--and it was in direct and admitted violation of the
    Federal statute which says that the President has to come to
    Congress first and set forth the rationale for why they're
    being fired 30 days before it happens. In doing that, what will
    the effect be on actually trying to root out waste, corruption,
    fraud, and self-dealing in the agencies?
        Mr. Vladeck. So, the reality is that you're going to have a
    split between fraud, waste, and corruption that has no
    coordination, that has no involvement from senior officials in
    the agency--which I suspect the agencies might still have some
    interest in going after fraud, waste, corruption, and abuse
    that the senior officials in the agency are aware of because
    now they're the only people in a position to do anything about
    it.
        The reason why Congress historically separated the function
    of the heads of agencies from the inspector general is that the
    inspector general would be in a position to review even the
    senior leadership of agencies when it came to these concerns.
    That's the biggest thing we lose when you fire--
        Mr. Raskin. All right. So, if they're undermining the
    infrastructure that's set up to actually try to target fraud
    and waste and abuse, why are they accessing all the data of the
    American people?
        Mr. Vladeck. That's a question this Committee ought to ask
    them, Congressman. I'll just say--and I think this is an
    important point--we can all surely agree that rooting out
    fraud, waste, and abuse in the Executive Branch is actually a
    noble goal and it's a goal that we should all be invested in.
    The way to do it is to either (1) use existing mechanisms or
    (2) come to this body, Congress, this Committee, and suggest
    why the existing mechanisms need to be reformed as opposed to
    starting from scratch.
        Mr. Raskin. Well, Elon Musk is the wealthiest person on
    Earth, or at least he was before the collapse of Tesla in
    Europe recently, but he's a very wealthy man. Could he benefit
    financially from accessing all the data in the United States
    Department of Treasury computers?
        Mr. Vladeck. I would think anyone who has contracts with
    the United States and with other governments would benefit from
    having access to that information.
        Mr. Raskin. A Federal judge in New York just ordered Musk
    to destroy the data they had illegally obtained from the
    Treasury Department. This is the judge they're all now talking
    about impeaching.
        Who can ensure that Musk has followed the order of the
    court and destroyed this data?
        Mr. Vladeck. It seems to me that there are two
    possibilities, Congressman. The courts are first, and I think
    Congress, and this Committee in particular, are second.
        Mr. Raskin. We're reading reports that Musk has fed
    Americans data, private data into AI models. He's also making a
    bid for another company in artificial intelligence, just going
    ahead and doing his business while he's purporting to do the
    business of the American people.
        What dangers are posed by the feeding of our data into an
    AI system if that were to happen?
        Mr. Vladeck. There are multiple levels of danger, and I
    know that the time has expired. I'll just say that I think the
    most obvious dangers are the possibility that this data will
    become accessible, not just to our government operations, but
    to our enemies overseas, and they'll use that for malicious
    persons.
        Mr. Fitzgerald. The gentleman's time has expired.
        I now recognize the gentleman from North Carolina, Mr.
    Harris, for five minutes.
        Mr. Harris. Thank you, Mr. Chair, and thank all you on the
    panel for sharing today.
        I want to speak to Ms. Wade for just a moment. In your
    testimony, you explain how the regulations in New York and
    California made it difficult for your businesses to flourish,
    so you moved to Austin, Texas. I just want to give you an
    opportunity, and appreciate you coming and sharing today. Was
    there a specific moment when you realized you needed to move
    your business to a more business-friendly State?
        Ms. Wade. Thank you for the opportunity.
        Yes. It started when I was in California--because first I
    was in California, then New York, and then Austin. It started
    when I was in California. When the cost of--and you see, this
    is when people ask, was it some special thing? It was not a
    special thing. It's one of those things. It's death by a
    thousand cuts, literally.
        What people don't realize is we've got millions and
    millions and millions of lines of code. Each law, each
    regulation is a line of code. To be compliant, it's almost
    impossible. I know that every day I'm probably violating the
    three violations a day thing that people talk about. I know.
        If I had some opponents, they could look easily into my
    four businesses or the nonprofits that I have and they will
    find something. Not because I was being facetious, not because
    I wanted to be against the law, but because the law is so darn
    complicated that you're bound to make mistakes, even if you
    have lawyers and attorneys. It happens all the time.
        So, at some point going to California, I eventually went to
    New York. New York was no better. Actually, I would argue--yes,
    it was definitely no better. I had to look around and really
    now take it seriously, the ranking of the freest States in the
    country. Eventually, that's how I landed in Austin, Texas,
    literally.
        Mr. Harris. Well, although you have 50 State regulatory
    environments to choose from, you're still subject to the
    Federal regulations wherever you go in the United States.
    Despite the improvements in your business since the move to
    Austin, what challenges would you share with us still persist
    even at the Federal level?
        Ms. Wade. Again, I get that question even about Africa,
    what would you address? I say to people, by now things have
    gotten so bad, Representative, but if you want to hear the
    truth from me, I believe that the best thing for me; it's no
    longer about talking about what the Fed has done wrong. It's
    talking about what they could do right going forward.
        Going forward, I would argue that the House is so--the
    foundation of the House is so rotten. The Founding Fathers
    really were going for competitive jurisdictions, and we've been
    eating away at that, eating away at that.
        Now there's cumbersomeness everywhere, so much that the
    easiest and best thing to do for Congress would be these zones
    that we call them, in my case, Prospera zones, that is what I'm
    doing in Africa. Because in Africa we have a worst-case
    situation than even the U.S. The best way to do this is to
    basically, at the Federal level, can we find zones where we
    apply a general repealer. Basically, repeal all the commercial
    laws and have a chance to start fresh.
        That's really what I'm advocating for at the Federal level
    in the United States today. Let us create these zones where we
    can actually start fresh and create areas where we have new
    miracles of growth that can happen. Now, let Texas compete with
    these zones. I think it's going to be the fastest way to clean
    things up because, otherwise, we're just going to be sitting
    here in these circles complaining all day long about this law
    here, that law here, which I would argue, that's nothing.
        At this point we've got to be radical, we've got to be
    bold. Because if something is not done quickly, radically, I'm
    afraid, Mr. Raskin, soon you're not going to have a United
    States of America to speak of. The only reason why we speak of
    the United States of America anywhere is because of the power
    of the U.S., power of the U.S., because of economic power of
    the U.S. If U.S. keep going down this path of overregulation,
    this country will be poor, and poor Nations have no say.
        That would be what I recommend. If we continue down this
    path, if we don't do anything, this country might not be spoken
    about in a few years.
        Mr. Harris. I agreed. Unfortunately, our government today
    is a far cry from what our Founders intended. Today, unelected
    bureaucrats are some of the biggest spenders in Washington, and
    Congress has got to take back the power of the purse through
    commonsense regulatory reforms. The REINS Act requires
    Constitutional approval of any Federal agency rule with an
    impact of $100 million or more before they take effect.
        Dr. McLaughlin, I want to ask you, in your view, would
    implementing the REINS Act bring Congress more in line with
    what the drafters of the Constitution intended?
        Dr. McLaughlin. Yes, it would. Ultimately, regulations stem
    from Constitutional authority, and the REINS Act lines up with
    that line of thinking.
        Mr. Harris. In your research and a lot of things you've
    spoken about the economic impact of Federal regulations, let me
    just ask, what effects on the economy would the REINS Act bring
    if it were to become law?
        Dr. McLaughlin. I think it'd be subtle. Some of the threats
    of using the REINS Act would be more effective than actually
    using it. When agencies are aware that the REINS Act can be
    used, I think they'll act differently.
        Mr. Harris. Thank you very much.
        Mr. Fitzgerald. The gentleman's time has expired.
        The gentleman from California, Mr. Correa, is--
        Mr. Correa. I want to thank you, Mr. Chair.
        I especially want to thank our witnesses for being here
    today. I appreciate your testimony today. I only have five
    minutes, so I'll try to be quick.
        I'll start out with Mr. Smith. I want to ask you a yes or
    no question, sir. The FTC started its investigation into your
    acquisition of VIEVU in 2018. Was that case started by the FTC
    under the Trump Administration?
        Mr. Smith. I'm--
        Mr. Correa. The answer would be yes.
        Mr. Smith. Embarrassingly, yes.
        Mr. Correa. Yes.
        Mr. Smith. Sorry. I was trying to do the math there.
        Mr. Correa. Thank you. It's a yes/no. Thank you.
        Ms. Wade, I'm going to agree with you. Back home, my
    neighbors in Orange County, they don't really care about the
    details of regulation. All they want to know is, is our water
    safe to drink, our cars safe to drive, our medication safe to
    take, and our children safe at school. Of course, is the air
    they breathe, is it clean and safe.
        This is a picture of Los Angeles back in the sixties and
    seventies. Regulations made this air in Los Angeles, Orange
    County, much cleaner. I was a kid then. I can tell you, trying
    to play out on the playground in those times was painful.
    Literally, you had to stop playing because your chest would
    hurt, all of us.
        Regulations, some are good, some are really good.
        Ms. Wade. May I say something to that, please?
        Mr. Correa. No, ma'am. It's my time.
        Ms. Wade. OK. I wanted it to be noted--but I wanted to say
    something and say no.
        Mr. Correa. The Supreme Court--ma'am? Ma'am? Ma'am?
        Ms. Wade. Thank you.
        Mr. Correa. You've got other people that may ask you a
    question.
        Mr. Fitzgerald. Mr. Correa, please continue.
        Mr. Correa. Thank you.
        The Supreme Court, when it comes to regulations, has made
    things worse. The Members of Congress are willing to go along
    with the President, essentially giving up more of our express
    authority to the President.
        Are there cases of overregulation? Absolutely. Full-on
    deregulation is not the answer. It'll probably create more
    havoc, uncertainty for businesses, and imperil the health and
    safety of many Americans.
        Mr. Vladeck, U.S. Government civil servants take an oath of
    loyalty to the Constitution and the United States. Does this
    oath of loyalty apply to all civil servants, including CIA,
    FBI, food inspectors, immigration frontliners, Social Security,
    and Medicare employees?
        Mr. Vladeck. Everyone.
        Mr. Correa. These civil servants could be making much more
    money in the private sector, yet they work for the Federal
    Government because they believe in the mission of helping
    citizens and small business in this great country.
        Please tell us what this oath of office means in the
    context of how civil servants should be carrying out their
    duty.
        Mr. Vladeck. Well, Congressman, for generations it is
    meant, for better or for worse, that civil servants don't work
    for the President; they work for the government. That the
    mission is to do what is in the best interest of the
    Constitution of the United States, not the best interest of the
    current holder of the Chief Executive Office.
        We won't always agree about how those civil servants carry
    out those missions. We won't always agree about what it means
    to be faithful to the Constitution. The mere agreement that
    this is the goal, the mere agreement that this is--
        Mr. Correa. The oath and loyalty to the United States.
        Mr. Vladeck. We're all going to have different visions of
    what that is, Congressman, but at least we all agreed that this
    was the purpose.
        Mr. Correa. Professor Vladeck, let me cut you off. In your
    testimony, you said, quote, paraphrase,

            In three weeks, I've seen a more sustained assault by the
            President on this institution's Constitutional prerogatives
            than we've seen in the first 250 years of this Republic.

    Please elaborate. That's a very strong statement.
        Mr. Vladeck. It is, Congressman. It's not one I make
    lightly and it's not one I wish we were in a position to have
    to even be discussing today.
        When I looked at how much power the President is claiming
    to not spend money that the Congress has appropriated, to defy
    statutory limits that Congress has imposed, to fire officials
    who Congress has insulated from removal, to take control of the
    bureaucracy in ways that politicize everything down to line
    attorneys in the Department of Justice, we might have seen
    flash points of that, Congressman--
        Mr. Correa. Professor Vladeck, everybody talks about
    inspector generals. For my folks back home, can you explain to
    us what an inspector general does?
        Mr. Vladeck. So, the inspector general is a government
    officer who is meant to look inwards at the agency of which he
    or she is the inspector general and is meant to ensure that the
    agency is not engaged in fraud, waste, or abuse. They can do
    that on their own prerogative, they can do that at the request
    of employees, they can do that at the request of outsiders.
        Mr. Correa. So, if they're fired, what's the message here?
        Mr. Vladeck. I think the message is that we don't want
    someone to look that carefully at what we're doing.
        Mr. Correa. Thank you very much, Mr. Chair. I'm out of
    time. If I can, I'd like to ask unanimous consent to have the
    following documents entered into the record.
        Mr. Fitzgerald. Granted.
        Mr. Correa. The article from The New York Times called,
    ``Trump's Actions Have Created a Constitutional Crisis,
    Scholars Say.'' Second, ProPublica article, ``Do Regulators
    Really Kill Jobs Overall? Not So Much.'' The third article
    released from Rutgers University, ``Federal regulations don't
    really affect economic growth.'' The fourth from the Columbia
    Climate School, ``The Dangers of Deregulation.''
        Thank you.
        Mr. Fitzgerald. Granted, without objection.
        Mr. Raskin. Mr. Chair, I have one UC request too, if that's
    OK.
        Mr. Fitzgerald. The gentleman is recognized, yes.
        Mr. Raskin. This is an article from The Economist last
    year, October 2024, ``The Envy of the World: The American
    Economy Has Left Other Rich Countries in the Dust.'' Cover
    story.
        Thank you.
        Mr. Fitzgerald. Granted, without objection.
        Mr. Fitzgerald. I will now recognize the gentleman from
    California, Mr. Issa, for five minutes.
        Mr. Issa. Thank you.
        I really appreciate the testimony of my colleague from
    California since it looked like it was testimony and nothing
    more.
        The interesting thing is that that oath he talked about,
    every State employee in California takes a similar oath. The
    odd thing is the district attorneys take an oath to the
    California Constitution and the United States Constitution,
    which means that they understand that sanctuary city law is
    unconstitutional, that it's wrong, and that interfering with
    Federal employees trying to execute, in fact, would be a
    conflict of their oath. So, I know the gentleman means well,
    but people sign oaths. How many take it seriously? The answer
    is not nearly enough of our Federal employees.
        Just yesterday we dealt with the recognition that some
    people at the FBI, either agents or staff, had willfully
    disclosed ICE's actions in a way that could cause them to be
    shot or killed by the MS-13 people they were attempting to
    round up as both criminals and illegal immigrants.
        Oaths are a wonderful thing, but with all due respect to my
    colleague, who's left the room, let's talk about faithfully
    executing the Constitution.
        Mr. Smith, on the subject that we're here on, are you aware
    that the Federal Trade Commission has nearly a 100 percent
    success rate in their administrative court?
        Mr. Smith. Yes, certainly.
        Mr. Issa. Are you aware that, even if an administrative
    judge was to not find you guilty, so to speak, that the
    Commission can overrule that and basically make you guilty?
        Mr. Smith. Yes. I believe they do almost all the time.
        Mr. Issa. Are you aware, under the last four years of the
    Federal Trade Commission, they had far less than a 50 percent
    chance of surviving if they went to a Federal court with a
    judge and a normal process of due process?
        Mr. Smith. I believe that.
        Mr. Issa. The reality is, you've got a kangaroo court at
    the Federal Trade Commission, and with all due respect, it
    doesn't really matter who's in the White House, the Federal
    Trade Commission has asserted its authority far beyond the
    intent of Congress.
        Mr. Smith. I agree.
        Mr. Issa. Now, in your case, you struck a chord with the
    Supreme Court. Basically, the recognition that when they start
    getting into Constitutional issues, they don't have that right,
    period, that the Article III judges do have that right, and you
    don't have to exhaust all the kangaroo court procedures before
    getting to the Article III court. Is that true?
        Mr. Smith. It is, yes.
        Mr. Issa. Let's ask the question for you and the others
    here. Wouldn't we be better off if, knowing that the Federal
    Trade Commission is not faithfully executing the intent of
    Congress, the statutes, and the Constitution, that you didn't
    have to wait and spend millions of dollars and perhaps lose an
    acquisition, and you were simply able to go to where you have a
    right, which is the Article III judges themselves if it's a
    Federal law?
        Mr. Smith. One hundred percent, yes.
        Mr. Issa. Here's the last question, and I'd like each of
    you to opine on it briefly. The REINS Act attempts to say for
    major regulations. Is there any reason that any of you can find
    that Congress should not be able to at any time by a simple
    vote second-guess, in other words, second-guess a regulation
    that has been made by an agency that says it's the will of
    Congress but, in fact, cannot substantiate that it is?
        Bearing in mind, the same numbers that it takes to pass a
    law are the same numbers it takes to object to a regulation.
    You, Mr. Smith, first.
        Mr. Smith. Seems reasonable.
        Mr. Issa. Ms. Wade?
        Ms. Wade. Likewise. Seems reasonable.
        Mr. Issa. Doctor?
        Dr. McLaughlin. Yes. Absolutely, the REINS Act--yes, I
    agree.
        Mr. Issa. Yes, sir?
        Mr. Vladeck. There's a longer conversation to have,
    Congressman, about legislative vetoes after INS v. Chadha. One
    of the things that I'm struck by is I don't know--
        Mr. Issa. Wait a second. I was asking a more narrow
    question than a legislative veto.
        If, in fact, regulations were considered by Congress de
    novo and they simply said, will we support that regulation--
    it's not a veto if you ask is that regulation consistent with
    Congress, and you go through the process of the House, the
    Senate, and the White House. Is there anything inherently
    wrong--
        Mr. Vladeck. I'm sorry, Congressman. I misunderstood. I
    thought you were skipping presentment.
        No. Of course, Congress can do anything to overturn a
    regulation through bicameralism and presentment, and I wish
    Congress would do it more.
        Mr. Issa. Right. Now, Doctor, I'm going to close with this
    very briefly. If, in fact, Congress doesn't have the will to
    sustain a regulation, effectively holding a vote and not
    getting a majority would be the equivalent of saying we don't
    want that law. Isn't that correct?
        Dr. McLaughlin. That does sound correct, yes, sir.
        Mr. Issa. Thank you. I yield back.
        Mr. Fitzgerald. The gentleman yields back.
        I now recognize the gentleman from Illinois, Mr. Garcia,
    for five minutes.
        Mr. Garcia. Thank you, Chair Fitzgerald.
        What we're experiencing right now is a five-alarm fire of
    the Administrative State, and not for the reasons that my
    colleagues across the aisle are saying. Instead, in the first
    few weeks he's been President, Trump and his pal Elon, an
    unelected bureaucrat, are bulldozing key watchdog agencies
    instead of protecting people from government overreach. They're
    destroying the mechanisms to protect them.
        As it turns out, their approach is so unpopular with the
    American people that they've had to save face a couple times by
    pretending to abandon course. That happened with the government
    funding freeze. What people want is for corporations to be held
    accountable, not for their Medicaid benefits to disappear then
    used to fund tax cuts for the ultra-wealthy.
        What my constituents want is for their civil rights and
    liberties to be respected, not Elon Musk's teenage fanboys
    prying into their personal information. What their actions
    prove is that DOGE isn't about efficiency of the Administrative
    State or for the American people. Instead, it's about allowing
    corporations to abuse workers with fewer rules and ripping off
    consumers with more impunity than they already do.
        Take the National Labor Relations Board. Since the Great
    Depression, the NLRB has had a proud history of protecting the
    rights of employees to bargain collectively. In fact, the NLRB
    has repeatedly ruled against Tesla for violating labor laws,
    including retaliating against workers for union organizing and
    focusing employees to delete pro-union tweets.
        On January 27th, the Trump Administration made the
    unprecedented decision to illegally fire NLRB board member Gwen
    Wilcox. Federal law states that the NLRB members may be removed
    for neglect of duty or malfeasance in office but no other case.
    Yet, neither was cited as the basis for Ms. Wilcox's firing.
        So, my first question for Professor Vladeck. Based on your
    legal expertise, how does this action validate statutory
    protections for independent agency members, and what does it
    mean for American workers?
        Mr. Vladeck. It's pretty clear that it violates the
    statute, Congressman. I think the question that's going to
    arise in litigation is arguments that this statute's
    unconstitutional, but we're not there yet. The courts haven't
    said as much.
        What does that mean? It means that you lose the capacity
    even in this administration to have meaningful enforcement
    through the NLRB and through its processes of our Federal labor
    laws, which, of course, tilts the scales in one direction
    toward the folks who are alleged to have violated those laws.
        Mr. Garcia. Thank you.
        Moving on to the CFPB. It's an independent agency created
    to protect consumers from predatory financial practices,
    including hidden fees and data privacy violations. It's won
    back 17.5 billion for Americans since its creation in 2008.
        In just two weeks before Trump took over, the CFPB sued
    Capital One for cheating people out of interest payments,
    ordered a major auto lender to return 10 million to customers,
    and ordered Cash App to refund 120 million to customers.
    Predictably, billionaires who want to get rich off predatory
    practices don't love this agency. As of this weekend, Trump and
    his cronies shut it down.
        Professor Vladeck, from a legal perspective, can you
    explain the importance of independent agencies like the CFPB
    which have a statutory mandate to protect consumers and when
    they're eliminated, who gets hurt?
        Mr. Vladeck. So, for over a century, Congressman, Congress'
    position has been--and I think it's been borne out--that
    independent agencies and independent commissions are better
    situated to look out for things like the securities market, to
    look out for things like consumer protection, than Presidents
    of political parties who have donors, political allies to try
    to support.
        Who gets hurt? I think the folks who get left in the
    balance are the folks who don't have access to the White House,
    the folks who don't have the ability to persuade this President
    that it's in his interest to support them. I think that's
    increasingly the members of the American working class,
    Congressmen, Democrats, and Republicans alike.
        Mr. Garcia. Thank you, sir.
        Finally, Mr. Chair, I ask unanimous consent to enter into
    the record an article from Foreign Policy, dated January 24,
    2024, that reports that the economic zones, which have been
    referenced by one of our witnesses today and she was just
    celebrating, were found to have no transparency or
    accountability mechanisms bear an astonishingly level of
    autonomy which the U.N. has expressed concern for human rights.
    They have created private courts, private police forces, and
    private ties, law systems, which have no place anywhere in the
    world and certainly not in the U.S.
        Mr. Fitzgerald. Granted, without objection.
        Mr. Garcia. Thank you, sir. The title is ``U.S. Investors
    Could Bankrupt Honduras, With Biden Administration Support.''
        I yield back.
        Mr. Fitzgerald. The gentleman yields back.
        The gentleman from Kansas, Mr. Schmidt, is now recognized
    for five minutes.
        Mr. Schmidt. Thank you, Mr. Chair.
        I want to thank all the witnesses for being here and for
    their patience.
        We heard a lot of words today. I marked these, Ms. Wade,
    when you said them the first time through. I think perhaps the
    most important words we've heard today were in your prepared
    testimony. You said,

            I'm here to provide a sense of urgency regarding the need for
            streamlined regulatory and administrative rules.

    Then, you said,

            A large powerful firms can afford armies of lawyers and
            attorneys to stay compliant; smaller entities do their best and
            try not to slip up.

    Mr. Chair, that is what this hearing is about, and I want to
    thank you for calling this today.
        Look, this stuff can get mind-numbingly dull, especially
    when you get into the academic literature surrounding
    administrative law. There's a fairly new book out. It's in
    plain English. It's not aimed at an academic audience. I don't
    know if our witnesses have had a chance yet to read Justice
    Gorsuch's new book, ``Overruled: The Human Toll of Too Much
    Law.''
        I see Mr. Vladeck has a chuckle. Apparently, he thinks
    Justice is insufficiently brilliant on this subject matter. I
    have a different point of view.
        One of the things that appears in that book is a chart
    drawn from the Regulatory Studies Center at George Washington
    University. I've asked the staff to place it on the screens for
    us. This is a chart of the number of pages in the Federal
    Register starting in 1950. Take a look at that chart. It's a
    zero-based chart. It's not cutting off the top. It's about
    10,000 pages of regulatory law in the United States in 1950.
    The year I was born, 1968, and it exploded after the Great
    Society to about 50,000 pages. It is today pushing 200,000
    pages of binding regulatory law.
        Mr. Chair, that is why the folks I represent in Kansas
    sound a whole lot more like Ms. Wade and Mr. Smith than they do
    like Professor Vladeck or some of my colleagues on this
    Committee. They're not worried about the academic impact and
    theory. They're worried about what it means for their day-to-
    day lives, and can they stay compliant, and can they continue
    to operate, and can they pursue the American Dream.
        I have a couple of questions for our witnesses. Let me
    start with Mr. Smith. Mr. Smith, as Kansas Attorney General, I
    took a number of cases all the way to the U.S. Supreme Court
    challenging various Federal regulatory actions. I know how
    burdensome it can be.
        I'm thinking of one when we challenged an Obama-era
    iteration of the Waters of the U.S. rule. We started in
    district court in Georgia, we ended up MDL in, it was Ohio,
    fighting about whether we'd started in the right court. We had
    to await a Supreme Court decision on the jurisdiction issue.
        We went back to Georgia after that all happened. We finally
    got an injunction and the administration appealed, and then we
    were three Presidents later before the political system finally
    overtook the litigation.
        You talked about how much money you spent fighting your one
    battle. Could you have used that money more effectively in some
    other manner?
        Mr. Smith. Oh, goodness yes. We could have put it into
    research and development, building new products, innovating--
    entering new markets with sales investments, lots of places
    that would have had a return for our investors.
        Mr. Schmidt. Did the regulators pay your attorney's fees
    when that was all over?
        Mr. Smith. No, sir, they did not.
        Mr. Schmidt. I see.
        Dr. McLaughlin, let me ask you this. I was intrigued by my
    colleague's, Congressman Issa, line of questioning. I was
    especially intrigued when he went down the panel, and I believe
    all four of our witnesses agreed--Professor Vladeck
    enthusiastically, if I'm not mistaken; I don't want to
    mischaracterize it. As long as there's bicameralism and
    presentment, I think your words were you would like to see
    Congress do more of overseeing and deciding whether to keep
    particular regulations.
        So, my question for you, Dr. McLaughlin, is this. The
    Congressional Review Act currently has what is functionally a
    fixed lookback window. Right now, it's a regulation came in
    around August of last year or later, we can use the CRA's
    mechanisms to decide whether we want to keep it or reject it as
    an elected body exercising the Article I power that is
    ultimately the basis for the regulatory action in the first
    place.
        Is there any reason we ought to limit ourselves to this
    functionally six-ish month lookback? We got a bill on the floor
    this week that would make it a year lookback. Would that be
    better?
        Dr. McLaughlin. There's no reason not to extend the
    lookback, in my opinion. Extending the CRA would allow more--
    we're talking about midnight regulations, effectively, that the
    CRA--
        Mr. Schmidt. We don't have to be, right? Why are we worried
    only about midnight? It's great to be worried about midnight,
    but why not 6 p.m.? Why aren't we worried about a regulation
    that was promulgated in 1994 if it no longer makes sense, and
    you have bicameralism and presentment, and this body wants to
    reject that regulation? Or in 1958? Or in 1973? What's the
    rationale?
        Dr. McLaughlin. I don't think there is a rationale for not
    extending it farther back. I think that we're just stuck in a
    situation of inertia.
        Mr. Schmidt. We've always done it this way. Would you
    encourage us to take a look at amending the Constitutional
    Review Act to give this body the authority under its procedures
    to reject agency regulations regardless of when they were
    promulgated?
        Dr. McLaughlin. Well, as a scholar, I'm hesitant to endorse
    any specific bill, but it does seem like it would have positive
    economic consequences.
        Mr. Schmidt. Just asking for the concept. Thank you very
    much.
        Mr. Chair, thank you.
        Mr. Fitzgerald. The gentleman yields back.
        I now recognize the Chair of the Full Committee, Mr.
    Jordan, for five minutes.
        Chair Jordan. Thank you, Mr. Chair.
        Ms. Wade was making this point earlier. I thought it was
    well stated, talking in a broad sense. To lead the world
    diplomatically, to lead the world militarily, you first have to
    lead the world economically. To lead the world economically,
    you need some basic things. You need readily available energy
    at affordable cost, and you need freedom. That's Ms. Wade's
    point.
        You know what? We had a lot more freedom when that chart
    that Mr. Schmidt just put up there was a lot lower in
    regulations, which would help people like Ms. Wade and Mr.
    Smith, the entrepreneurs who make our economy go and go and go,
    able to do their thing.
        Ms. Wade, you wanted to respond to one of the Democrats. I
    forget who was asking it or saying something. You wanted to
    respond. I'm going to give you a chance to respond, then I'm
    going to go to our economist and to Mr. Smith.
        Hit your microphone.
        Ms. Wade. Can you hear me?
        Chair Jordan. Yes, we got you now.
        Ms. Wade. Thank you so much.
        I want to respond to two things. Mr. Garcia is gone, but I
    wish he was here, and the same with Mr. Correa, I think it was.
        So, I'll start with Mr. Garcia when he brought up, oh,
    these prospera, these zones, she wants them here. No space for
    them here in America. Well, guess what? It is going to happen
    in America.
        That article that you brought up Foreign Policy, I just
    would like the same way that article is going to be included, I
    would like for the FAQ that I'm going to send you to be
    included in there as well so we can refute all those claims
    that are made in articles like that.
        If anything, these zones were put in place by the
    Government of Honduras itself in this situation. Government of
    Honduras. If anything, we know by now that organizations like
    the USAID, funding NGOs have been actually undermining these
    type of initiatives because these are antibusiness, NGOs. So,
    USAID is hurting us, there you go.
        Then, Mr. Correa, who is not here--I wish he was here--when
    he had the nerve to tell us that these regulations are here to
    help us. I just would like him to answer me to this situation.
    Around 1800--since the 1800s, it was known that lead pipes that
    are being used are were toxic, bad, causing probably brain
    damages in children. As early as 1800 it was known. Then, you
    tell me why until 19--it took until 1986 for it to be taken
    care of.
        In the meantime, you had the mayor of Chicago who made it
    mandatory for people--builders to use lead pipes for the water
    pipes. Where did the government really help us here? Where? I
    wish Mr. Correa was here. Government is helping us? These
    regulations are helping us? Give me a break.
        I see you looking at [inaudible] like this. I will send you
    my reports on this, Mr. Raskin.
        So, thank you so much for giving me that opportunity to
    respond, because it irks me when I see us sitting in these
    rooms and when I hear your fights, I don't hear government
    working for the people. I see government working for
    government, whatever the heck that sounds like. OK?
        I would like, for one, that it is about my my safety and
    about my well-being. In situations like this and as many others
    that--it is clear that these regulations are not put in place
    with us in mind. That needs to stop.
        The fact that, Mr. Raskin, you're here--this whole time
    we've been here, you've just been complaining about the
    process. I'll call it the process. Again, I'm not agreeing,
    disagreeing with your issues right now around Musk and the
    process, but following Mr. Vladeck, the process that you're
    following, at some point what is the end game? Isn't the end
    game to make us, the American people, better off. Isn't it?
    Isn't it?
        No. I hear you saying that the stuff that would make us
    better off doesn't matter. All you care about right now is a
    process of Musk and his associates are not doing this the right
    way. The goal--is the goal moral and right or not? If you say
    it is, as I think you should be saying, then the fight
    shouldn't be about needing to take Musk down or Trump down.
        Let us rethink that if you want, but keep your eye on the
    ball, and your ball should be me. It should be me. I'm sorry.
    It should be me.
        Chair Jordan. Yes.
        Ms. Wade. It should be me. How do we make me better off?
        Thank you, Mr. Jordan.
        Chair Jordan. You bet. By me, you mean the American people?
        Ms. Wade. That's what I mean by that.
        Chair Jordan. Dr. McLaughlin--and we appreciate that.
        Dr. McLaughlin, in college I majored in wrestling, but
    you're supposed to get a degree in college, so I got one in
    economics. One of the terms I remember was this term called
    opportunity cost. Can you tell us really quick what the
    opportunity cost is?
        Dr. McLaughlin. It's the things you don't do because
    something else requires your resources.
        Chair Jordan. It was Mr. Smith spending millions of dollars
    fighting some--
        Dr. McLaughlin. Right. Exactly.
        Chair Jordan. --stupid bureaucrat regulation where, if he
    fought it there, he'd have to go--the very bureaucrats who made
    the rule, tell him to do things, he'd have to go to their
    court, and he had to go to other courts. He could have been
    expanding our economy and building his business.
        No, he had to deal with the bureaucrats who the other side
    thinks are the experts and should run our government. Isn't
    that what opportunity cost--when you boil it all down, that's
    what Mr. Smith had to deal with. Is that right?
        Dr. McLaughlin. Yes, sir. That's what my research finds, is
    when businesses get deflected from investing in R&D and
    expansion, that big economy does not grow, and it's because
    regulations are making them spend their resources on other
    activities.
        Chair Jordan. Which makes it tougher for our country to
    lead, to Ms. Wade's point. If you're making it tougher for the
    people who grow our economy, make us stay the economic
    superpower, it's tougher than to lead militarily,
    diplomatically, and that's what it all does. That's what the
    Chair--why he's having this hearing--that's what he's trying to
    change.
        We got a bill on the floor tomorrow, midnight rules bill.
    It gets rid of a bunch of these stupid rules that these
    agencies do. We can get rid of packages of them instead of one
    at a time. That's a good thing.
        I appreciate the Chair's work on this Committee, and I
    yield back.
        Mr. Fitzgerald. The Chair yields back.
        That concludes today's hearing. We thank our witnesses for
    appearing before the Committee today.
        Without objection, all Members will have five legislative
    days to submit additional written questions for the witnesses
    and additional materials for the record.
        Without objection, the hearing is adjourned.
        [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]

        All materials submitted for the record by Members of the
    Subcommittee on the Administrative State, Regulatory Reform,
    and Antitrust can be found at: https://docs.house.gov/
    Committee/
    Calendar/ByEvent.aspx?EventID=117869.

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