[House Report 112-461]
[From the U.S. Government Publishing Office]


112th Congress                                            Rept. 112-461
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 2

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



 
                 REGULATORY FREEZE FOR JOBS ACT OF 2012

                                _______
                                

 July 20, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Issa, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4078]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Oversight and Government Reform, to whom was 
referred the bill (H.R. 4078) to provide that no agency may 
take any significant regulatory action until the unemployment 
rate is equal to or less than 6.0 percent, having considered 
the same, report favorably thereon with amendments and 
recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     3
Section-by-Section...............................................     6
Explanation of Amendments........................................     7
Committee Consideration..........................................     8
Rollcall Votes...................................................     8
Application of Law to the Legislative Branch.....................     8
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     8
Statement of General Performance Goals and Objectives............     8
Federal Advisory Committee Act...................................     9
Unfunded Mandate Statement.......................................     9
Earmark Identification...........................................     9
Committee Estimate...............................................     9
Budget Authority and Congressional Budget Office Cost Estimate...     9
Minority Views...................................................    14
  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Regulatory Freeze for Jobs Act of 
2012''.

SEC. 2. MORATORIUM ON FINAL SIGNIFICANT REGULATORY ACTIONS.

  An agency may not take any final significant regulatory action during 
the period beginning on the date of the enactment of this Act and 
ending on the date that is the earlier of--
          (1) two years after such date of enactment; or
          (2) the date on which the national unemployment rate, as 
        published by the Bureau of Labor Statistics, is first equal to 
        or less than 6.0 percent.

SEC. 3. WAIVERS AND EXCEPTIONS.

  (a) In General.--Notwithstanding any other provision of this Act, an 
agency may take final significant regulatory action only in accordance 
with subsection (b), (c), (d), or (e) during the period described in 
section 2.
  (b) Presidential Waiver.--An agency may take final significant 
regulatory action if the President determines that the final 
significant regulatory action is--
          (1) necessary because of an imminent threat to health or 
        safety or other emergency;
          (2) necessary for the enforcement of criminal laws;
          (3) necessary for the national security of the United States; 
        or
          (4) issued pursuant to any statute implementing an 
        international trade agreement.
  (c) Deregulatory Exception.--An agency may take a final significant 
regulatory action if the Administrator of the Office of Information and 
Regulatory Affairs of the Office of Management and Budget certifies in 
writing that the final significant regulatory action is limited to 
repealing an existing rule.
  (d) Exception for the Department of Defense and the Department of 
Veterans Affairs.--The Department of Defense and the Department of 
Veterans Affairs may take a final significant regulatory action if such 
action affects the health or safety of members of the Armed Forces or 
veterans.
  (e) Exception for Equal Protection and Civil Rights.--An agency may 
take a final significant regulatory action if such action is to 
establish or enforce any statutory rights against discrimination on the 
basis of age, race, religion, gender, national origin, or handicapped 
or disability status except such final significant regulatory actions 
that establish, lead to, or otherwise rely on the use of a quota or 
preference based on age, race, religion, gender, national origin, or 
handicapped or disability status.

SEC. 4. DETERMINATION OF MAJOR GUIDANCE.

  Before the issuance of any guidance, the head of an agency shall 
transmit any proposed guidance to the Administrator of the Office of 
Information and Regulatory Affairs of the Office of Management and 
Budget, who shall make a finding as to whether such proposed guidance 
is a major guidance.

SEC. 5. JUDICIAL REVIEW.

  (a) Review.--Any party adversely affected or aggrieved by any rule or 
guidance resulting from a final significant regulatory action taken in 
violation of this Act is entitled to judicial review in accordance with 
chapter 7 of title 5, United States Code. Any determination by either 
the President or the Secretary of Labor under this Act shall be subject 
to judicial review under such chapter.
  (b) Jurisdiction.--Each court having jurisdiction to review any rule 
or guidance resulting from a final significant regulatory action for 
compliance with any other provision of law shall have jurisdiction to 
review all claims under this Act.
  (c) Relief.--In granting any relief in any civil action under this 
section, the court shall order the agency to take corrective action 
consistent with this Act and chapter 7 of title 5, United States Code, 
including remanding the rule or guidance resulting from the final 
significant regulatory action to the agency and enjoining the 
application or enforcement of that rule or guidance, unless the court 
finds by a preponderance of the evidence that application or 
enforcement is required to protect against an imminent and serious 
threat to the national security of the United States.
  (d) Reasonable Attorney's Fees for Small Businesses.--The court shall 
award reasonable attorney's fees and costs to a substantially 
prevailing small business in any civil action arising under this Act. A 
small business may qualify as substantially prevailing even without 
obtaining a final judgment in its favor if the agency that took the 
final significant regulatory action changes its position after the 
civil action is filed.
  (e) Limitation on Commencing Civil Action.--A party may seek and 
obtain judicial review during the 1-year period beginning on the date 
of the challenged agency action or within 90 days after an enforcement 
action or notice thereof, except that where another provision of law 
requires that a civil action be commenced before the expiration of that 
1-year period, such lesser period shall apply.
  (f) Small Business Defined.--In this section, the term ``small 
business'' means any business, including an unincorporated business or 
a sole proprietorship, that employs not more than 500 employees or that 
has a net worth of less than $7,000,000 on the date a civil action 
arising under this Act is filed.

SEC. 6. DEFINITIONS.

  In this Act:
          (1) Agency.--The term ``agency'' has the meaning given that 
        term under section 551 of title 5, United States Code, except 
        that such term does not include--
                  (A) the Federal Election Commission;
                  (B) the Board of Governors of the Federal Reserve 
                System;
                  (C) the Federal Deposit Insurance Corporation; or
                  (D) the United States Postal Service.
          (2) Final significant regulatory action.--The term ``final 
        significant regulatory action'' means the promulgation of any 
        major rule or the issuance of any major guidance.
          (3) Major guidance.--The term ``major guidance'' means any 
        guidance that the Administrator of the Office of Information 
        and Regulatory Affairs of the Office of Management and Budget 
        finds is likely to result in--
                  (A) an annual effect on the economy of $100,000,000 
                or more;
                  (B) a major increase in costs or prices for 
                consumers, individual industries, Federal, State, or 
                local government agencies, or geographic regions; or
                  (C) significant adverse effects on competition, 
                employment, investment, productivity, innovation, or on 
                the ability of United States-based enterprises to 
                compete with foreign-based enterprises in domestic and 
                export markets.
          (4) Major rule.--The term ``major rule'' means any rule that 
        the Administrator of the Office of Information and Regulatory 
        Affairs of the Office of Management and Budget finds is likely 
        to result in--
                  (A) an annual effect on the economy of $100,000,000 
                or more;
                  (B) a major increase in costs or prices for 
                consumers, individual industries, Federal, State, or 
                local government agencies, or geographic regions; or
                  (C) significant adverse effects on competition, 
                employment, investment, productivity, innovation, or on 
                the ability of United States-based enterprises to 
                compete with foreign-based enterprises in domestic and 
                export markets.
          (5) Rule.--The term ``rule'' has the meaning given that term 
        under section 551 of title 5, United States Code.

  Amend the title so as to read:

    A bill to provide that no agency may take any final 
significant regulatory action for two years or until the 
unemployment rate is equal to or less than 6.0 percent, 
whichever occurs earlier, and for other purposes.

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    H.R. 4078, the Regulatory Freeze for Jobs Act, aims to 
stabilize the economy by establishing a moratorium on the 
finalizing of significant regulatory actions (i.e., regulations 
and guidance) for a period of two years. The moratorium would 
terminate sooner, however, if the unemployment rate were to 
fall to 6.0 percent or less before the two years have passed. 
The President may waive the moratorium for purposes of an 
imminent threat to health or safety, the enforcement of 
criminal laws, national security, or pursuant to an 
international trade agreement. A significant regulatory action 
finalized during the moratorium period is subject to judicial 
review, and a small business may recover attorney's fees if 
successful.

                  BACKGROUND AND NEED FOR LEGISLATION

    Since the beginning of the 112th Congress, the Oversight 
and Government Reform Committee has shone a spotlight on the 
manner in which regulations impact the economy and job 
creation. On this topic, the Committee has held seven full 
committee hearings and nearly 20 subcommittee hearings, issued 
two staff reports,\1\ and sent numerous letters to agencies. 
The Administrator of the Office of Management and Budget Office 
of Information and Regulatory Affairs (OIRA), Cass Sunstein, 
has called the Committee's work on this subject 
``constructive'' and ``important.''\2\
---------------------------------------------------------------------------
    \1\H. Comm. on Oversight & Gov't Reform Preliminary Staff Report, 
Assessing Regulatory Impediments to Job Creation, 112th Cong. (2011) 
available at http://oversight.house.gov/wp-content/uploads/2012/02/
Preliminary_Staff_Report_Regulatory_Impediments_to_Job_Creation.pdf.; 
H. Comm. on Oversight & Gov't Reform Staff Report, Broken Government: 
How the Administrative State has Broken President Obama's Promise of 
Regulatory Reform, 112th Cong. (2011) available at http://
oversight.house.gov/wp-content/uploads/2012/01/
9.13.11_Broken_Government_Report1.pdf.
    \2\``How a Broken Process Leads to Flawed Regulations'': Hearing 
Before the H. Comm. on Oversight & Gov't Reform, 112th Cong. (2011) 
(testimony of Cass Sunstein, Administrator, Office of Information and 
Regulatory Affairs).
---------------------------------------------------------------------------
    Several regulations that regulated entities brought to the 
Committee's attention were subsequently struck down by the 
courts or significantly scaled back by federal agencies. For 
example, federal courts vacated a Securities and Exchange 
Commission (SEC) ``proxy access rule'' because the court found 
the SEC acted ``arbitrarily'' in its analysis of costs and 
benefits,\3\ overturned the Environmental Protection Agency's 
(EPA) decision to revoke a mining permit in West Virginia 
because the court found the EPA's action was ``contrary to the 
language, structure, and legislative history of section 404 [of 
the Clean Water Act],''\4\ and delayed implementation of a 
notice posting rule because it was found the National Labor 
Relations Board (NLRB) ``lack[ed] authority . . . to promulgate 
the rule.''\5\ Moreover, the Department of Transportation 
altered its hours of service rule to cut the costs nearly in 
half,\6\ the Department of Agriculture scrapped the most 
controversial parts of its ``GIPSA rule,''\7\ and the 
Department of Interior reduced the number of species proposed 
to be covered by the Lacey Act, which will help limit the 
impact on small businesses specializing in the reptile 
industry.\8\ It is unfortunate that litigation and 
congressional oversight were needed to put a halt to these 
excessive regulations.
---------------------------------------------------------------------------
    \3\Business Roundtable and Chamber of Commerce of the United States 
v. SEC, No. 10-1305 (D.C. Cir. July 22, 2011).
    \4\Alan Kovski, Federal Court Strikes Down EPA Decision To 
Retroactively Veto Dredge-and-Fill Permit, BNA (Mar. 26, 2012) 
available at http://www.bna.com/federal-court-strikes-n12884908597/.
    \5\Chamber of Commerce of the United States and South Carolina 
Chamber of Commerce v. National Labor Relations Board, Order, No. 2: 
11-cv-02516-DCN (SC Dist. Ct. Apr. 13, 2012).
    \6\News Release, U.S. Department of Transportation Takes Action to 
Ensure Truck Driver Rest Time and Improve Safety Behind the Wheel, Dec. 
22, 2011.
    \7\Capital Update, New GIPSA Rule Issued, National Pork Producers 
Council, Dec. 9, 2011.
    \8\News Release, Salazar Announces Ban on Importation and 
Interstate Transportation of Four Giant Snakes that Threaten 
Everglades, Jan. 17, 2012.
---------------------------------------------------------------------------
    Disturbingly, burdensome regulations continue to plague the 
economy. A recent Gallup poll found that nearly half of small 
businesses are not hiring because they are ``worried about new 
government regulations,''\9\ and 44 percent of likely voters 
believe EPA regulations and actions hurt the economy.\10\ 
According to the National Federation of Independent Business, 
``regulations and red tape'' is the ``single most important 
problem'' for small business.\11\ Meanwhile, the federal 
regulatory state under the Obama Administration continues to 
grow. From 2010 to 2011, the number of final rules issued by 
federal agencies rose from 3,807 to 3,573--a 6.5 percent 
increase. During the same time frame, the number of proposed 
rules increased 18.8 percent.\12\ Moreover, according to the 
Heritage Foundation, the Obama Administration issued 106 new 
major rules in its first three years that collectively cost 
taxpayers more than $46 billion annually.\13\ To compare, this 
is nearly four times the number and higher than five times the 
cost of major rules issued by the George W. Bush Administration 
during its first three years.\14\ Further, in the past decade, 
the number of economically significant rules--those that could 
cost $100 million or more annually--published in the Unified 
Agenda of Regulatory and Deregulatory Activity has increased by 
more than 137 percent, rising from 56 in the spring of 2001 to 
133 in the fall of 2011.\15\ These numbers make claims by the 
Obama Administration that it is issuing fewer regulations than 
did the George W. Bush Administration misleading.\16\
---------------------------------------------------------------------------
    \9\Dennis Jacobe, Health Costs, Gov't Regulations Curb Small 
Business Hiring, Gallup, Feb. 15, 2012 available at http://
www.gallup.com/poll/152654/health-costs-gov-regulations-curb-small-
business-hiring.aspx.
    \10\44% Think EPA Actions Hurt The Economy, Rasmussen Reports, Apr. 
10, 1012 available at http://www.rasmussenreports.com/public_content/
politics/current_events/environment_energy/
44_think_epa_actions_hurt_the_economy.
    \11\William C. Dunkelberg and Holly Wade, NFIB Small Business 
Economic Trends, NFIB Research Foundation (May 2012).
    \12\Wayne Crews, Ten Thousand Commandments: An Annual Snapshot of 
the Federal Regulatory State, Competitive Enterprise Institute (2012).
    \13\James Gattuso and Diane Katz, Red Tap Rising: Obama-Era 
Regulation at the Three-Year Mark, The Heritage Foundation (Mar. 13, 
2012).
    \14\Id.
    \15\Id.
    \16\See Josh Hicks, Who has the better regulatory record--Obama or 
Bush?, The Washington Post, Mar. 27, 2012.
---------------------------------------------------------------------------
    OIRA Administrator Sunstein has said that expensive 
regulations can ``increase prices, reduce wages, and increase 
unemployment (and hence poverty).''\17\ Indeed, OIRA's 2012 
Draft Report to Congress on Federal Regulations reports that 
``regulations . . . can place undue burdens on companies, 
consumers, and workers, and may cause growth and overall 
productivity to slow.''\18\ In the draft report, OIRA admits 
that ``evidence suggests that domestic environmental regulation 
has led some U.S. based multinationals to invest in other 
nations, and in that sense such regulation may have an adverse 
effect on domestic growth.''\19\ OIRA also admits that 
``regulations can also impose significant costs on businesses, 
potentially damaging economic competition and capital 
investment,'' if not carefully designed.\20\
---------------------------------------------------------------------------
    \17\Robert W. Hahn & Cass R. Sunstein, A New Executive Order for 
Improving Federal Regulation? Deeper and Wider Cost-Benefit Analysis, 
150 U. Pa. L. Rev. 1489 (2002).
    \18\U.S. Office of Mgmt. & Budget, Office of Information and 
Regulatory Affairs, Draft 2012 Report to Congress on the Benefits and 
Costs of Federal Regulations and Unfunded Mandates on State, Local, and 
Tribal Entities (March 2012).
    \19\Id.
    \20\Id.
---------------------------------------------------------------------------
    Placing a temporary moratorium on finalizing the most 
expensive rules injects ``predictability'' and ``certainty'' 
into the regulatory system--features that even the Obama 
Administration admits are ``highly desirable.''\21\ The 
moratorium in this legislation achieves predictability and 
certainty by ensuring regulated entities get a reprieve from 
the most costly rules until the economy improves. According to 
economists, a healthy U.S. economy would feature a 5.0 percent 
to 6.0 percent unemployment rate.\22\ The unemployment rate 
today stands at 8.1 percent.\23\ In March 2012, analysts 
expected that employers would add over 200,000 jobs; yet, only 
120,000 were added.\24\ This particular moratorium on rules is 
a balanced approach because it will allow federal agencies to 
proceed with the rulemaking process. Agencies will be permitted 
to engage in a meaningful and thorough dialogue with regulated 
industries and impacted parties--they will simply be unable to 
finalize any significant regulatory action until the end of the 
moratorium period.
---------------------------------------------------------------------------
    \21\Id.
    \22\Alisa Roth, What's a realistic `normal' unemployment rate?, 
Marketplace, Nov. 24, 2010.
    \23\Economic News Release, The Employment Situation--April 2012, 
Bureau of Labor Statistics, May 4, 2012.
    \24\Mark Memmott, Just 120,000 Jobs Added, But Jobless Rate Dips to 
8.2 Percent, NPR, Apr. 6, 2012.
---------------------------------------------------------------------------

                          LEGISLATIVE HISTORY

    H.R. 4078, the Regulatory Freeze for Jobs Act of 2012, was 
introduced on February 17, 2012, by Representative Tim Griffin 
(R-AR) and referred to the Committee on Oversight and 
Government Reform and the Committee on the Judiciary. On 
February 27, 2012, the Committee on the Judiciary's 
Subcommittee on Courts, Commercial and Administrative Law held 
a hearing on the bill. On March 30, 2012, the Committee on the 
Judiciary marked up H.R. 4078 and ordered it to be reported, as 
amended, by a vote of 15-13. On April 26, 2012, the Committee 
on Oversight and Government Reform marked up H.R. 4078 and 
ordered it to be reported favorably, as amended, by a vote of 
21-16.
    On July 28, 2011, Senator Ron Johnson (R-WI) introduced S. 
1438, the Regulation Moratorium and Jobs Preservation Act of 
2011, a companion bill to H.R. 4078.

                           Section-by-Section


Section 1. Short title

    This Act may be cited as the ``Regulatory Freeze for Jobs 
Act of 2012.''

Section 2. Moratorium on final significant regulatory actions

    This section provides that an agency may not finalize any 
significant regulatory action (i.e., rule or guidance) for 2 
years or until the unemployment rate falls to 6.0 percent or 
less, whichever occurs first.

Section 3. Waivers and exceptions

    This section provides that an agency may finalize a 
significant regulatory action during the time period described 
above if the President determines that it is necessary for 
purposes of an imminent threat to health or safety, the 
enforcement of criminal laws, national security, or pursuant to 
an international trade agreement. This section also provides 
that an agency may finalize a significant regulatory action if 
the Administrator of the Office of Information and Regulatory 
Affairs (OIRA) determines that the significant regulatory 
action is deregulatory in nature.

Section 4. Determination of major guidance

    This section provides that before an agency issues guidance 
it must first submit it to the OIRA Administrator, who shall 
determine whether the guidance is major guidance.

Section 5. Judicial review

    This section provides that the bill shall be subject to 
judicial review.

Section 6. Definitions

    This section provides that a significant regulatory action 
is a major rule or guidance that the OIRA Administrator finds 
is likely to result in the following:
          (A) an annual effect on the economy of $100,000,000 
        or more;
          (B) a major increase in costs or prices for 
        consumers, individual industries, Federal, State, or 
        local government agencies, or geographic regions; or
          (C) significant adverse effects on competition, 
        employment, investment, productivity, innovation, or on 
        the ability of United States-based enterprises to 
        compete with foreign-based enterprises in domestic and 
        export markets.
    This section defines agency to include executive branch and 
independent agencies. Exempted from the definition are the 
Federal Election Commission, the Federal Reserve, the Federal 
Deposit Insurance Corporation, and the United States Postal 
Service.

                       Explanation of Amendments

    An amendment in the nature of a substitute (ANS) offered by 
Chairman Issa was adopted. The provisions of the ANS are 
described in the section-by-section.
    Two additional amendments to the ANS were adopted. An 
amendment by Mr. Yarmuth was adopted by voice vote to exempt 
from the moratorium final significant regulatory actions by the 
Department of Defense and the Department of Veterans Affairs 
that affect the health or safety of members of the Armed Forces 
or veterans. Another amendment, by Ms. Maloney, was adopted by 
voice vote to exempt a final significant regulatory action if 
such action establishes or enforces any statutory rights 
against discrimination on the basis of age, race, religion, 
gender, national origin, or handicapped or disabled status, 
unless such action establishes, leads to, or otherwise relies 
on the use of a quota or preference based on age, race, 
religion, gender, national origin, or handicapped or disability 
status. The Committee intends this amendment to encompass 
regulatory actions that enforce existing statutory rights 
against discrimination concerning pay disparities, retaliatory 
discharge, hostile work environments, sexual harassment, voting 
rights, or access to education.

                        Committee Consideration

    On April 26, 2012, the Committee met in open session and 
ordered reported favorably the bill, H.R. 4078, as amended, by 
a roll call vote of 21-16, a quorum being present.

                             Rollcall Votes

    1. Mr. Cummings offered an amendment to the Issa ANS 
regarding exception for the health or safety of children. The 
amendment was defeated by a recorded vote of 16 Yeas to 20 
Nays.
    Yeas: Cummings, Towns, Norton, Kucinich, Tierney, Clay, 
Lynch, Cooper, Connolly, Quigley, Davis, Braley, Welch, 
Yarmuth, Murphy and Speier.
    Nays: Issa, Burton, Turner, Jordan, Chaffetz, Mack, 
Walberg, Lankford, Amash, Buerkle, Gosar, Labrador, Meehan, 
DesJarlais, Walsh, Gowdy, Ross, Guinta, Farenthold and Kelly.
    2. Mr. Kucinich offered an amendment to the ANS regarding 
exception for limiting oil speculation. The amendment was 
defeated by a recorded vote of 16 Yeas to 20 Nays.
    Yeas: Cummings, Towns, Norton, Kucinich, Tierney, Clay, 
Lynch, Cooper, Connolly, Quigley, Davis, Braley, Welch, 
Yarmuth, Murphy and Speier.
    Nays: Issa, Burton, Turner, Jordan, Chaffetz, Mack, 
Walberg, Lankford, Amash, Buerkle, Gosar, Labrador, Meehan, 
DesJarlais, Walsh, Gowdy, Ross, Guinta, Farenthold and Kelly.
    3. The bill, H.R. 4078, was ordered reported favorably to 
the House, as amended, by a recorded vote of 21 Yeas to 16 
Nays.
    Yeas: Issa, Burton, Mica, Turner, Jordan, Chaffetz, Mack, 
Walberg, Lankford, Amash, Buerkle, Gosar, Labrador, Meehan, 
DesJarlais, Walsh, Gowdy, Ross, Guinta, Farenthold and Kelly.
    Nays: Cummings, Towns, Norton, Kucinich, Tierney, Clay, 
Lynch, Cooper, Connolly, Quigley, Davis, Braley, Welch, 
Yarmuth, Murphy and Speier.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill establishes a moratorium on the finalizing of 
significant regulatory actions for a period of two years. As 
such this bill does not relate to employment or access to 
public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    H.R. 4078 does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 4078. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

           Budget Authority and Congressional Budget Office 
                             Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 4078 from the Director of 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 20, 2012.
Hon. Darrell Issa,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4078, the 
Regulatory Freeze for Jobs Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Anders.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 4078--Regulatory Freeze for Jobs Act of 2012

    Summary: H.R. 4078 would prohibit most federal agencies 
from taking most final significant regulatory actions until 
either the unemployment rate falls to 6.0 percent or less or 
two years pass after enactment of the legislation. The 
legislation would affect many regulatory actions that vary 
greatly in nature and scope. CBO and the staff of the Joint 
Committee on Taxation (JCT) cannot determine the budgetary 
effects of delaying final significant regulatory actions, but 
we expect that enacting H.R. 4078 would have effects on both 
direct spending and revenues. Pay-as-you-go procedures apply 
because enacting the legislation would affect direct spending 
and revenues.
    CBO expects that implementing H.R. 4078 also could have a 
significant impact on spending subject to appropriation, 
although we cannot determine the magnitude of that effect.
    CBO expects that the provisions of H.R. 4078 would impose 
no intergovernmental or private-sector mandates as defined in 
the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government:

Background

    H.R. 4078 would prohibit agencies from taking final 
significant regulatory actions until the earlier of: (1) the 
date on which the national unemployment rate is 6.0 percent or 
less, or (2) two years after the enactment of the legislation. 
If an agency were to pursue a final significant regulatory 
action in violation of H.R. 4078, any party adversely affected 
by that action would be entitled to judicial review.
    H.R. 4078 includes several exemptions. The legislation 
would exempt final significant regulatory actions taken by the 
Federal Election Commission, Board of Governors of the Federal 
Reserve System, Federal Deposit Insurance Corporation, and 
United States Postal Service. Further, H.R. 4078 would exempt 
certain final significant regulatory actions related to the 
health and safety of members of the Armed Forces or veterans, 
equal protection and civil rights, and the repeal of existing 
rules. Finally, H.R. 4078 would exempt final significant 
regulatory actions that the President determines are necessary 
for one of four reasons: (1) to respond to an imminent threat 
to health or safety, (2) to enforce criminal laws, (3) to 
protect national security, or (4) to implement an international 
trade agreement.
    H.R. 4078 defines a final significant regulatory action as 
the promulgation of any major rule or the issuance of any major 
guidance that the Office of Management and Budget (OMB) finds 
is likely to result in:
           An annual effect on the economy of 
        $100,000,000 or more;
           A major increase in costs or prices for 
        consumers; individual industries; federal, state, or 
        local government agencies; or geographic regions; or
           Significant adverse effects on competition, 
        employment, investment, productivity, innovation, or 
        the ability of United States-based enterprises to 
        compete with foreign-based enterprises in domestic and 
        export markets.\25\
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    \1\H.R. 4078 adopts the definition of major rule originally set by 
the Congressional Review Act of 1996 (see 5 USC Sec. 804(2)) and 
defines major guidance using the same criteria.
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    Looking to recent major rules as a way to estimate the 
number of future final significant regulatory actions that 
would be affected by H.R. 4078 is difficult because the 
legislation applies to guidance in addition to rules, some 
major rules would fall under one of the exemptions listed 
above, and agencies might change course following the enactment 
of the bill. However, historical data shows that federal 
agencies published 80 major rules in 2011 and 84 major rules, 
on average, for the past five full calendar years.\2\ Examples 
of major rules published in 2011 include: required warnings for 
cigarette packages and advertisements, Medicare payment rates 
for inpatient psychiatric facilities, and national emission 
standards for hazardous air pollutants from industrial, 
commercial, and institutional boilers.
---------------------------------------------------------------------------
    \2\See GAO Federal Rules Database, http://www.gao.gov/legal/
congressact/fedrule.html.
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    H.R. 4078 would delay final significant regulatory actions 
until either two years pass following enactment of the 
legislation or the unemployment rate is 6.0 percent or lower. 
Under CBO's most recent economic forecast based on current law, 
the unemployment rate would remain above 6.0 percent until late 
2016.\3\ Therefore, under CBO's current projections, final 
significant regulatory actions would be delayed for two years 
after enactment of the legislation (assuming enactment later 
this year). However, final significant regulatory actions could 
be delayed by less than two years if the unemployment rate 
drops much more rapidly than CBO projects.
---------------------------------------------------------------------------
    \3\See Congressional Budget Office, The Budget and Economic 
Outlook: Fiscal Years 2012 to 2022 (January 2012), Appendix E.
---------------------------------------------------------------------------

Impact on direct spending

    The budgetary consequences of delaying final significant 
regulatory actions, as defined by H.R. 4078, would vary 
tremendously because the budgetary impact of different rules 
varies considerably. For example, of the three rules mentioned 
above, only one--Medicare payment rates for inpatient 
psychiatric facilities--has a significant federal budgetary 
impact.
    Delaying or preventing some final significant regulatory 
actions would result in costs to the federal government, while 
delaying or preventing others would result in savings. On net, 
CBO estimates that enacting H.R. 4078 would have a significant 
effect on direct spending, but we cannot determine the 
magnitude or sign of those changes. Short-term effects would be 
driven by: (1) preventing annual updates to payment schedules 
for certain Medicare services and other routine revisions to 
aspects of selected government programs, including payment rate 
reductions scheduled to take place under the Medicare physician 
fee schedule, and (2) altering the implementation of new 
federal programs with substantial budget effects.
    Routine Updates to Government Programs. Many final 
significant regulatory actions that occur routinely are health-
related and in particular pertain to Medicare. Some examples 
include rules that establish annual updates to payment rates 
for services provided by hospitals, physicians, and other 
Medicare providers. Enacting H.R. 4078 would freeze payment 
structures for those providers at current levels. Similarly, 
payment rates (such as the annual benefit amount for each 
individual) under some other federal programs might also be 
temporarily frozen under the bill. CBO cannot estimate the net 
impact of all such changes.
    Many programs, such as Social Security, make annual 
adjustments in the benefits that are paid, often referred to as 
a cost-of-living adjustment. The new amounts are published in 
the Federal Register, but do not rise to the level of final 
significant regulatory action. Thus, under the bill, CBO 
expects that these types of programs would continue to operate 
as they normally do, though agencies would not be able to make 
significant changes to the programs while the moratorium was in 
effect.
    Implementation of New Federal Programs. Enacting H.R. 4078 
might also affect the implementation of new programs. For 
example, additional rules and guidance related to the 
implementation of the Affordable Care Act are expected in 
coming months. Many of these anticipated regulatory actions are 
consequential for health insurance exchanges, which are to 
become operational in 2014 under current law. Delaying those 
regulatory actions could delay implementation of health 
insurance exchanges, which would in turn result in significant 
savings to the federal budget, relative to spending expected 
under current law.
    H.R. 4078 might also delay the issuance of non-major 
guidance because the legislation would require applicable 
agencies to submit all guidance to OMB prior to issuance so 
that OMB may determine whether the guidance is major or not. 
This additional step of review, which does not exist under 
current law, might slow the implementation of new laws or 
updates to existing programs.

Impact on revenues

    Enacting H.R. 4078 also would affect revenues, and JCT 
expects that delaying final significant regulatory actions of 
the Internal Revenue Service could reduce collections of 
revenues in some cases and increase collections in other cases. 
JCT cannot determine the sign or magnitude of the possible 
effects on revenues.

Impact on spending subject to appropriation

    H.R. 4078 also would affect programs for which spending is 
subject to the annual appropriations process. However, CBO 
cannot determine the magnitude of that effect. For example, if 
the Environmental Protection Agency were prohibited from 
issuing final rules for the lesser of two years or while the 
unemployment rate exceeds 6.0 percent, there could be 
reductions in spending for the agency, subject to appropriation 
action. A second example involves annual calculations made by 
the Department of Housing and Urban Development (HUD) of the 
fair-market rents that it uses to determine rental subsidies 
for low-income individuals. We expect that the bill would 
prohibit those calculations from being made and implemented, 
which would prevent the rental subsidy from adjusting for 
changes in market conditions. Any increase in rents would be 
paid for by the tenant and not by HUD and if tenants were 
unable to pay the increased rent, some landlords would likely 
leave the program.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Pay-as-you-go procedures apply to H.R. 4078 because 
enacting the legislation would affect direct spending and 
revenues. CBO and JCT cannot determine the sign or magnitude of 
those effects.
    Intergovernmental and private-sector impact: CBO expects 
that the provisions of H.R. 4078 would impose no 
intergovernmental or private-sector mandates as defined in 
UMRA. By delaying final significant regulatory actions, the 
bill could affect public or private entities in a number of 
other ways, including slowing reimbursements and eliminating 
regulatory requirements. Such effects would not be mandates as 
defined in UMRA because they would not impose enforceable 
duties on public or private entities. Depending on the types 
and number of regulations affected, the costs and savings of 
those effects could be significant. However, CBO has no basis 
for estimating either the overall direction or magnitude of 
those effects on public or private entities because of 
uncertainty about the nature and number of regulations that 
would be affected.
    Previous CBO estimate: On April 20, 2012, CBO transmitted a 
cost estimate for H.R. 4078, as ordered reported by the House 
Committee on the Judiciary on March 20, 2012. There are several 
notable differences between the version ordered reported by the 
House Committee on Oversight and Government Reform and the 
Judiciary Committee's version:
     First, the Oversight Committee's version uses a 
definition of significant regulatory action that is narrower in 
scope than the definition of significant regulatory action 
adopted by the Judiciary Committee's version.
     Second, the two bills differ in the types of 
exemptions allowed. For example, the Oversight Committee's 
version includes exemptions for regulations affecting certain 
populations or specific agencies, such as the Board of 
Governors of the Federal Reserve System, that are not included 
in the Judiciary Committee's version. However, unlike the 
Judiciary Committee's version, the Oversight Committee's 
version does not include an avenue through which Congress could 
expeditiously consider exemptions requested by the President 
for significant regulatory actions that do not fall into one of 
the four exemption categories discussed above.
     Finally, the Oversight Committee's version delays 
final significant regulatory actions for a maximum of two years 
after enactment, whereas the Judiciary Committee's version 
delays significant regulatory actions until the unemployment 
rate is 6.0 percent or less. Under CBO's latest economic 
forecast, the Judiciary Committee's version of H.R. 4078 would 
delay significant regulatory actions for a longer period than 
the version ordered reported by the Oversight Committee.
    As a result of these differences, while both versions of 
H.R. 4078 would affect direct spending and revenues, the 
budgetary effects could be very different.
    Estimate prepared by: Federal Costs: Sarah Anders; Impact 
on State, Local, and Tribal Governments: Elizabeth Cove 
Delisle; Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                             MINORITY VIEWS

    H.R. 4078, the Regulatory Freeze for Jobs Act of 2012, is 
based on the false premise that business investment and hiring 
is being held back by uncertainty over future regulations. The 
bill disregards evidence from economists on both sides of the 
political spectrum that regulations do not negatively impact 
the economy or job growth.\1\
---------------------------------------------------------------------------
    \1\See, e.g., Economic Policy Institute, Regulatory Uncertainty: A 
Phony Explanation for Our Jobs Problem (Sept. 27, 2011) (online at 
www.epi.org/publication/regulatory-uncertainty-phony-explanation/); 
House Committee on Education and Workforce, Testimony of Jared 
Bernstein, Hearing on Expanding Opportunities for Job Creation, 112th 
Cong. (Feb. 1, 2012) (citing evidence that it is weak demand rather 
than regulation that is preventing faster job creation.); 
Misrepresentations, Regulations and Jobs, New York Times (Oct. 4, 2011) 
(``regulatory uncertainty is a canard invented by Republicans that 
allows them to use current economic problems to pursue an agenda 
supported by the business community year in and year out'') (online at 
www.economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/
?smid=tw-nytimes& seid=auto).
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    Supporters of this bill argue that regulation is impeding 
job creation and injuring small businesses, but small 
businesses have directly disputed this premise. Recent surveys 
by the American Sustainable Business Council, the Main Street 
Alliance, and the Small Business Majority show that the vast 
majority of small business owners believe weak demand is the 
primary problem their businesses currently face.\2\
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    \2\House Committee on the Judiciary, Subcommittee on Courts, 
Commercial and Administrative Law Written Testimony of Robert Weissman, 
President, Public Citizen, Hearing on H.R. 4078, the Regulatory Freeze 
for Jobs Act of 2012 (Feb. 27, 2012).
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    The regulatory moratorium included in this legislation is 
misguided and will produce terrible results for the American 
people. As Cass Sunstein stated at an Oversight Committee 
hearing last September:

          A moratorium would not be a scalpel or a machete, it 
        would be more like a nuclear bomb, in the sense that it 
        would prevent regulations that . . . cost very little, 
        and have very significant economic or public health 
        benefits.\3\
---------------------------------------------------------------------------
    \3\Senate Committee on the Budget, Testimony of Douglas Elmendorf, 
Congressional Budget Office, Hearing on Policies for Increasing 
Economic Growth and Employment in 2012 and 2013, 112th Cong. (Nov. 15, 
2011) (online at budget.senate.gov/democratic/index.cfm/files/serve? 
File_id=795c2267-9349-4c2c-a488-262dfd346a2c).

    The Congressional Budget Office (CBO) has found that the 
bill would freeze routine updates to government programs. For 
example, payment rates for services provided by hospitals, 
physicians, and Medicare providers would be frozen at current 
levels, interfering with access to quality healthcare for 
seniors.
    Although the Committee has held more than 20 hearings on 
regulations so far this Congress, the majority has emphasized 
the costs of regulation while disregarding the much more 
significant benefits that have resulted from all major rules 
issued over the past ten years.\4\
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    \4\Office of Management and Budget, 2011 Report to Congress on the 
Benefits and Costs of Federal Regulations and Unfunded Mandates on 
State, Local, and Tribal Entities (June 24, 2011) (online at 
www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/ 
2011_cba_report.pdf).
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    Freezing all significant regulatory activity would do great 
harm to our economy and the health and safety of millions of 
Americans. It is critical that agencies have the ability to 
issue protections that carry out the laws Congress passes. 
Regulations save lives, protect the health and safety of 
hundreds of millions of Americans, and provide protections that 
are critical to the functioning of a healthy economy.

                                        Elijah E. Cummings,
                                                    Ranking Member.

                                  
