[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

APA AT 65: IS REFORM NEEDED TO CREATE JOBS, PROMOTE ECONOMIC GROWTH,
AND REDUCE COSTS?

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

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, COMMERCIAL
AND ADMINISTRATIVE LAW

OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

FEBRUARY 28, 2011

__________

Serial No. 112-17

__________

Printed for the use of the Committee on the Judiciary

Available via the World Wide Web: http://judiciary.house.gov

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COMMITTEE ON THE JUDICIARY

LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TOM REED, New York LINDA T. SANCHEZ, California
TIM GRIFFIN, Arkansas DEBBIE WASSERMAN SCHULTZ, Florida
TOM MARINO, Pennsylvania
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona

Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------

Subcommittee on Courts, Commercial and Administrative Law

HOWARD COBLE, North Carolina, Chairman

TREY GOWDY, South Carolina, Vice-Chairman

ELTON GALLEGLY, California STEVE COHEN, Tennessee
TRENT FRANKS, Arizona HENRY C. ``HANK'' JOHNSON, Jr.,
TOM REED, New York Georgia
DENNIS ROSS, Florida MELVIN L. WATT, North Carolina
MIKE QUIGLEY, Illinois

Daniel Flores, Chief Counsel

James Park, Minority Counsel

C O N T E N T S

----------

FEBRUARY 28, 2011

Page

OPENING STATEMENTS

The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Chairman, Subcommittee on Courts,
Commercial and Administrative Law.............................. 1
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 2

WITNESSES

Susan E. Dudley, Research Professor of Public Policy and Public
Administration, Director, Regulatory Studies Center, The George
Washington University
Oral Testimony................................................. 6
Prepared Statement............................................. 8
Jeffrey A. Rosen, Esq., Kirkland & Ellis LLP
Oral Testimony................................................. 25
Prepared Statement............................................. 27
Peter L. Strauss, Betts Professor of Law, Columbia Law School
Oral Testimony................................................. 41
Prepared Statement............................................. 43

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 4
Material submitted by the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 59

APPENDIX
Material Submitted for the Hearing Record

Post-Hearing Questions and Responses from Susan E. Dudley,
Research Professor of Public Policy and Public Administration,
Director, Regulatory Studies Center, The George Washington
University..................................................... 71
Post-Hearing Questions and Responses from Jeffrey A. Rosen, Esq.,
Kirkland & Ellis LLP........................................... 78
Post-Hearing Questions and Responses from Peter L. Strauss, Betts
Professor of Law, Columbia Law School.......................... 87

APA AT 65: IS REFORM NEEDED TO CREATE JOBS, PROMOTE ECONOMIC GROWTH,
AND REDUCE COSTS?

----------

MONDAY, FEBRUARY 28, 2011

House of Representatives,
Subcommittee on Courts,
Commercial and Administrative Law,
Committee on the Judiciary,
Washington, DC.

The Subcommittee met, pursuant to notice, at 3:10 p.m., in
room 2141, Rayburn House Office Building, the Honorable Howard
Coble (Chairman of the Subcommittee) presiding.
Present: Representatives Coble, Gowdy, Ross, and Conyers.
Staff Present: (Majority) Daniel Flores, Subcommittee Chief
Counsel; Allison Rose, Professional Staff Member; Ashley Lewis,
Clerk; (Minority) Carol Chodroff, Counsel; and James Park,
Counsel.
Mr. Coble. The Subcommittee will come to order.
One of our witnesses, Professor Strauss, encountered
difficulty with a cancelled airline flight, and he requested
that he be allowed to be interviewed telephonically, which we
granted. That seems to be not an unreasonable request. I have
been waylaid by cancelled airlines, as well.
We are going to go ahead and start. We are on a short leash
here today. But let me make my opening statement.
The Administrative Procedure Act was passed 65 years ago in
1946. It was one of the most significant statutes Congress ever
passed because it set the ground rules for legislative
rulemaking by an administrative agency. At the time, many
understood the importance of the act in governing how agencies
exercised legislative power delegated to them by Congress.
There had been a long and hotly contested debate in the
decades before the APA's passage over whether or not and to
what extent Congress could delegate its legislative power at
all. It was imperative to set forth in the APA clear rules that
stood a chance to constrain agency activity appropriately. I
doubt, however, that many foresaw in 1946 the immense amount of
legislative power that Congress would come to delegate to
Federal agencies over the succeeding decades.
For example, just during the last term of Congress, the
Obama Care legislation and the Dodd-Frank financial reform bill
granted unprecedented authority for agencies to issue
regulations in sectors equaling roughly one-third of our
economy. The overall burden of regulation on the economy and
uncertainty over what regulation is still to come over the next
2 years are often cited as reasons why our economy has not
created enough jobs and growth since the events of 2008.
Since the APA's passage, concern has risen not only over
the breadth of Congress' delegation of power to the agencies
but also whether the APA is still up to the task of
constraining how the agencies carry out those delegations.
There has long been concern that the APA's hallmark
``notice-and-comment'' procedures for informal rulemaking too
often are hollow because agencies have reached preordained
conclusions, in many instances, in discussions with interest
groups before the public even receives a notice of the proposed
rule.
After several decades of Presidential initiative, a growing
number of experts and decision-makers believe it is time for
Congress to incorporate into statute sound cost-benefit
analysis principles that Administrations of both parties have
embraced.
Many now question whether Federal agencies' clearly
exclusive use of notice-and-comment rulemaking, rather than
formal rulemaking hearings, adequately tests the facts and
premises on which regulations are based. The Environmental
Protection Agency's recent finding that carbon dioxide
endangers public health and welfare--in the face of worldwide
controversy over the science and data at issue--is a textbook
example.
Similarly, there is concern over whether the combination of
the APA's ``arbitrary or capricious'' standard and developments
in judicial deference provide a system of judicial review that
is strong enough to correct agency overreach and error
adequately.
During the 108th and 109th Congresses, the Subcommittee on
Commercial and Administrative Law explored in depth whether the
APA and other administrative law statutes should be modernized
for the 21st century. During the 110th and 111th Congresses,
these efforts were put on hold, however. As the APA approaches
its 65th anniversary and as the wave of new regulation under
the Obama administration breaks with full strength over our
economy, it is high time to renew our inquiry into whether the
APA should be reformed.
I look forward to hearing about potential reforms from our
witnesses and reserve the balance of my time.
I am now pleased to recognize the distinguished gentleman
from Michigan, the former Chairman of this Judiciary Committee,
Mr. Conyers.
And, Mr. Conyers, you may know this already. One of our
witnesses, Mr. Strauss, became a victim of a cancelled airline,
and he has requested permission that we interview him
telephonically. And I think that is a reasonable permission,
and we have requested that. So he will be--we will have him
telephonically. I think everything has been honed in.
But I now recognize the distinguished gentleman from
Michigan.
Mr. Conyers. Thank you, Chairman Howard Coble. I am very
happy to be with you again and with our witnesses, particularly
Professor Dudley.
Mr. Chairman, this is the third time in a little over a
month that our Subcommittee will consider the state of the
Nation's regulatory system. I have been informed by staff that
there isn't even legislation in on this subject yet. And the
Judiciary Committee seems to be spending an extraordinary
amount of time going over these matters, which I suppose for
some it is appropriate because that is what some of you like to
do.
Now, there were bills on the first two subjects of
regulatory regulation, but there isn't a bill on the one that
we are holding now. And you will recall last month, on the 24th
day of that month, that we had a hearing on the REINS Act,
which was the title, the acronym for ``promoting jobs and
expanding freedom by reducing needless regulations.''
Now, the proponents of the REINS Act raised concerns about
the financial cost imposed by regulations. And they cite
eyebrow-raising figures that are troubling, especially in our
current economic climate. What you will hear from at least one
witness today, however, is that sources of these numbers are
not impartial parties.
You will also hear what I think is of the utmost
importance: A discussion solely of the cost of Federal
regulation fails to paint the whole picture. In other words,
merely holding repetitive hearings about the cost of Federal
regulation misses the point. We must assess both the cost and
the benefits of Federal regulation. Hasn't anyone on this
Committee, Subcommittee, besides myself, realized that the
benefits must be calculated as well?
The Office of Management and Budget, in both the current
Administration and in the previous Bush administration, has
found that the benefits greatly exceed the costs of major
Federal regulations. For example, the regulations promulgated
over the 10-year period between 1998 through 2008 are estimated
to have cost between $51 billion and $60 billion. Notably, the
benefits associated with these very same rules are estimated to
be between $126 billion to $663 billion--more than 10 times
their cost.
The former administrator of OIRA, Sally Katzen, under the
Clinton administration, testified that OMB's report to Congress
doesn't include data on benefits, and the numbers are striking,
according to OMB.
In addition, only this month, on the 10th of February, we
had a hearing on H.R. 527, the ``Regulatory Flexibility
Improvement Act--Unleashing Small Business to Create Jobs.''
That was its title. And our Federal agencies are charged with
promulgating regulations that impact virtually every aspect of
our lives, including the air we breathe, the water we drink,
the food we eat, the cars we drive, and the play toys we give
our children. And so I would like to know if the Chairman has
any other future hearings on regulatory issues, because I have
a few subjects I would like to submit to my distinguished
Chairman.
And I thank you for the additional time, and I yield back
to the Chair.
Mr. Coble. I thank the gentleman. I will say to the
gentleman from Michigan, I am not the high sheriff, so I don't
initiate much of it.
Good to have all of you--good to have the gentleman from
South Carolina, the distinguished gentleman, Mr. Trey Gowdy.
Good to have you with us, Mr. Gowdy.
All statements will be made part of the record.

__________

Mr. Coble. We are pleased today to have three outstanding
witnesses, one in absentia: Ms. Susan Dudley, who is research
professor of public policy and public administration, director
of Regulatory Studies Center at the George Washington
University; Mr. Jeffrey A. Rosen, Esquire, who is with Kirkland
& Ellis LLP; and Professor Peter L. Strauss--Professor, can you
hear me?
Mr. Strauss. Yes, I can.
Mr. Coble. Professor, it is real good to have you with us,
albeit in absentia. You became the victim of an airline delay,
I am told. And we are pleased to be able to examine you
telephonically. It is good to have you with us, sir.
Mr. Strauss. Thanks so much.
Mr. Coble. And Professor Strauss, by the way, is the Betts
Professor of Law at the Columbia School of Law.
Ms. Dudley and Mr. Rosen, we try to impose the 5-minute
rule around here. And we impose it against ourselves, as well.
So if you can keep your questions terse, we would appreciate
that.
And when the amber light appears before you on the panel,
that is your warning that the ice on which you are skating is
getting thin. You will have 1 minute to go. When the red light
appears, that is your signal to wrap up, if you could.
So, Ms. Dudley, why don't you start us off?

TESTIMONY OF SUSAN E. DUDLEY, RESEARCH PROFESSOR OF PUBLIC
POLICY AND PUBLIC ADMINISTRATION, DIRECTOR, REGULATORY STUDIES
CENTER, THE GEORGE WASHINGTON UNIVERSITY

Ms. Dudley. Thank you, Mr. Chairman and Members of the
Subcommittee. As you said, I am Susan Dudley, director of the
George Washington University----
Mr. Coble. Ms. Dudley, pull that mike a little closer to
you.
Ms. Dudley. There. I will just repeat that I am director of
the George Washington University Regulatory Studies Center and
research professor of public policy at GW.
From April 2007 to January 2009, I oversaw the executive
branch regulations of the Federal Government as administrator
of the Office of Information and Regulatory Affairs, but the
views I express here are my own.
In my 5 minutes, I would like briefly to review some
regulatory history and offer some general thoughts on reform
that I divide into two categories: procedural and decisional.
The Administrative Procedure Act emerged in 1946 as a
result of concerns about the growing fourth branch of
government. It reflected a compromise between a respect for the
separation of powers implicit in the Constitution and the
perceived need for bureaucratic expertise in developing
administrative laws.
The APA is arguably one of the most important pieces of
legislation ever enacted. It has remained largely unchanged for
65 years despite significant transformation in the organization
and scope of government regulatory agencies.
The 1970's, in particular, witnessed a dramatic shift in
regulation. On the one hand, we saw a decline in the
traditional economic regulation that was at issue when the APA
was enacted, which controlled private-sector prices, entry, and
exit. Scholars at the time persuasively showed that economic
regulation tended to keep prices higher than necessary, to the
benefit of regulated industries and at the expense of
consumers. This led to the bipartisan movement to deregulate
such industries as airlines and trucking and abolish regulatory
agencies such as the Civil Aeronautics Board and the Interstate
Commerce Commission.
On the other hand, a new form of social regulation aimed at
addressing environmental, health, and safety concerns was
emerging, administered by newly formed agencies such as EPA,
OSHA, NHTSA, and the CPSC. Concerns over the burden of these
new regulations led President Carter to expand on procedures
begun by Presidents Nixon and Ford for analyzing the impact of
new regulations and minimizing their burdens.
Though Congress has passed legislation aimed at ensuring
cost-effective regulatory outcomes, these efforts have been
driven largely by the executive branch. Every modern President
has continued and expanded the procedural and analytical
requirements that began in the 1970's.
Despite these requirements for regulatory impact analysis,
the growth in new regulations continues, and with it, concerns
that we have reached a point of diminishing returns. The
executive and legislative requirements for analysis of new
regulations appear to have been inadequate to counter the
powerful motivations in favor of regulation.
Politicians and policy officials face strong incentives to
do something, and passing legislation and issuing regulation
demonstrates action. Requirements to evaluate the outcomes of
those actions--the benefits, costs, and unintended
consequences--tend to take a back seat.
I appreciate this Committee's interest in regulatory reform
and welcome opportunities to discuss changes to both
administrative procedures and decision rules that might alter
these incentives. There is abundant scholarship available to
the Committee, including the repository of recommendations made
over the years by the Administrative Conference of the United
States, which recently reconvened.
Unlike the scholarship regarding the traditional forms of
regulation in the 1970's, the policy literature today does not
uniformly support deregulation, but, rather, examines the
incentives provided by the different forms of regulation and
the resulting benefits and costs to society.
In the category of procedural reforms, the Committee might
consider amending the APA to expand the use of formal
rulemaking procedures, apply the ``substantial evidence'' test
for judicial review, or provide for judicial review of data and
analysis relied on in rulemakings. Applied to the most
significant regulations, these process changes could improve
the empirical accuracy of factual determinations and the rigor
and transparency of agencies' supporting analysis.
The Committee may be able to improve upon the decisional
criteria by which regulatory alternatives are evaluated by
codifying the decision requirements currently embodied in
Executive orders issued by Presidents Clinton and Obama. The
main advantages of creating a statutory obligation for meeting
these regulatory impact analysis standards would be to: one,
apply them to independent agencies; and, two, make compliance
with them judicially reviewable.
Congress will also need to decide whether these
crosscutting decisional criteria would supercede or be
subordinate to the decision criteria expressed in individual
statutes.
In closing, I am delighted that this Subcommittee is
interested in evaluating and improving the procedures by which
the U.S. Government developments and evaluates regulatory
policy. And I look forward to further discussion.
[The prepared statement of Ms. Dudley follows:]

__________

Mr. Coble. Thank you, Professor Dudley. And you ought to be
commended; you beat the illuminated red light, putting pressure
on Mr. Rosen.
Mr. Rosen, good to have you with us.

TESTIMONY OF JEFFREY A. ROSEN, ESQ.,
KIRKLAND & ELLIS LLP

Mr. Rosen. Thank you, sir. Chairman Coble and Members of
the Subcommittee, thank you for inviting me----
Mr. Coble. Mr. Rosen, pull that mike a little closer, if
you will.
Mr. Rosen. That would help, wouldn't it?
I was saying, thank you for inviting me to address today's
important topic. My name is Jeff Rosen, and I am currently a
partner at Kirkland & Ellis LLP. I also serve as a member of
the governing council of the American Bar Association's
Administrative Law Section and as co-chair of its rulemaking
committee.
I have previously served as the general counsel of the U.S.
Department of Transportation and as general counsel and senior
policy advisor at the Office of Management and Budget. But the
views and observations that I am offering today are entirely my
own.
Now, it is generally recognized that Federal Government
regulations touch upon virtually every sector of our economy.
But the enormous impact of such regulations and the regulatory
process on our national economy is not always well understood.
Sometimes the costs associated with regulations issued by
Federal agencies actually exceed the annual budgets of the
agencies that produce them. So the rulemaking authority can be
as significant as Federal spending.
In the last 2 years alone, Federal agencies issued more
than 125 final regulations that involve more than $100 million
each, and sometimes billions of dollars. And the people and
organizations who bear the cost of regulation are, themselves,
wide-ranging, such as universities, hospitals, local
governments, and businesses both large and small, among others.
So it is highly appropriate that you focus on what can be done
to improve both the regulatory process and the rules that are
promulgated.
As you know, this year marks the 65th anniversary of the
passage of the Administrative Procedure Act, a statute which
has never been significantly amended or modernized. Indeed, it
has now been more than a decade since enactment of any
significant legislative improvement to administrative law,
dating back to the year 2000 when the Information Quality Act
was passed.
But experience over both a long period of time and over the
last decade points to opportunities for improvement. Many of
these are items that represent best practices employed by
Presidents of both parties. Indeed, a number of them were
reiterated by President Obama as recently as last month when he
issued Executive Order 13563, titled ``Improving Regulation and
Regulatory Review.''
The Executive orders about regulation that were issued by
President Reagan, President Clinton, President Bush, and
President Obama all contain elements that are worthy of
legislative codification.
In my prepared statement, which you have, I tried to
address a wide range of potential improvements, but in our
limited time today I would like to focus on two issues.
The first is judicial review, which has always been a
crucial aspect of the APA because it is a check and balance on
the use of the authority delegated by Congress, itself, to
agencies that provide strong incentives for agencies to get
things right.
There is a need to clarify when judicial review is
available and, perhaps, when it is not. In particular, I would
like to suggest it would be beneficial to clarify that judicial
review is available to ensure compliance with the Information
Quality Act and to expand judicial review applicable to
compliance with the Unfunded Mandates Reform Act.
In addition, at least with regard to major, economically
significant regulations, it would have a positive effect to
enable judicial review for the aspects of regulation that I
suggest ought to be codified from existing Executive orders and
executive-branch requirements, such as the rulemaking criteria.
And that takes me to the second improvement upon which I
would like to focus, and that is expanding the occasions on
which rules that involve complex empirical and scientific
issues and that have a large impact on the economy are required
to be conducted on the record.
When the APA was enacted 65 years ago, it was expected that
some rulemakings would employ formal and hybrid rulemaking
procedures. And sometimes they did. But over time, those have
become less common, even though they are superior for resolving
contested factual and empirical issues. Again, at least for
certain kinds of major rules, Congress ought to consider
requiring that rulemaking be conducted on the record and based
only on the record.
In conclusion, I can't imagine there is anyone who thinks
there are no improvements possible to our administrative law
and regulatory processes. I hope this Subcommittee will pursue
a range of improvements that will make government agencies work
better, while enabling job growth and economic growth for our
country.
Thank you very much, and I would be happy to answer
questions at the appropriate time.
[The prepared statement of Mr. Rosen follows:]

__________

Mr. Coble. Thank you, Mr. Rosen.
Professor Strauss, can you hear me?
Mr. Strauss. Yes, I can.
Mr. Coble. Professor, you are recognized for 5 minutes.

TESTIMONY OF PETER L. STRAUSS,
BETTS PROFESSOR OF LAW, COLUMBIA LAW SCHOOL

[Mr. Strauss' testimony and answers were delivered via
telephone.]
Mr. Strauss. Thanks so much. I don't have a red light, but
I hope to stay within your constraints.
Chairman Coble, Ranking Member Cohen, and Members of the
Subcommittee, thanks so much for inviting me to testify today.
I am really sorry that the weather has kept me from physical
presence, and appreciate your willingness to hear me this way.
I am speaking just on my own and want to express some
thoughts I hope your Committee will find helpful to its
important work. June 11 will be the 65th birthday of the APA,
an appropriate time for reassessment. And I agree with so much
of the thrust of what has already been said to you, if not to
all the details.
I am going to speak only to rulemaking, as the other
witnesses have, hoping you will agree that some, though not
all, rulemaking is beneficial, either because it fulfills basic
human needs or because it creates jobs, promotes growth, and
reduces costs. The issue is finding procedures that permit
effective sifting of the wheat from the chaff.
Over 30 years ago, reacting to the Supreme Court's holding
in the Vermont Yankee Nuclear Power case that only Congress or
agencies could elaborate Section 553 simple procedures, then-
Professor Antonin Scalia called for a revision of its one-size-
fits-all nature. I might add that I was general counsel of the
NRC at the time and had the opportunity to see the ways in
which the rights to cross-examine could be used to obstruct
important proceedings. And I trust that is one consideration
the Committee will have in view.
Since that time, both the courts and our Presidents,
Republican and Democrat, have added complexities that are
described in the literature as ``ossification.'' But the
varying pattern they have created lacks the stability and sense
of a thoughtful legislative solution, makes government
inefficient in doing what it should be doing, and invites
evasion.
Quite recently, D.C. Circuit Judge Brett Kavanaugh wrote
that, ``These decisions have gradually transformed rulemaking,
whether regulatory or deregulatory, from the simple and speedy
practice contemplated by the APA into a laborious, seemingly
never-ending process. The judicially created obstacle course
can hinder executive-branch agencies from rapidly and
effectively responding to changing or emerging issues within
their authority, such as consumer access to broadband, or
effectuating policy or philosophical changes in the executive's
approach to the subject matter at hand.
``This trend,'' Judge Kavanaugh continued, ``has not been
good as a jurisprudential matter and continues to have
significant practical consequences for the operation of the
Federal Government and those affected by Federal regulation and
deregulation.''
In 2006, this Committee produced its thoughtful and
thorough bipartisan interim report considering the prospects
for rulemaking improvement. My written testimony explores a few
settings where congressional rationalization could be helpful
that I would be happy to expand on in Q and A. Let me for the
moment just tell you what they are.
First, the notice requirements of Section 553 should make
explicit that giving effective rulemaking notice requires
agencies to expose the technical data on which they might rely.
The influential 1973 opinion in Portland Cement Association
v. Ruckelshaus said it isn't consonant with the purpose of a
rulemaking proceeding to promulgate rules on the basis of
inadequate data or on data that in critical degree is known
only to the agency. And I think virtually the whole of the
academic community agrees with this. But as Judge Kavanaugh
observed in his recent opinion, put bluntly, ``the Portland
Cement doctrine cannot be squared with the text of Section 553
of the APA.''
Second, Congress should generalize the Clean Air Act's
welcome requirement to put in the rulemaking record all
documents of relevance to the rulemaking proceeding, including,
as the Administrative Conference long ago recommended,
docketing oral communications of central relevance.
Third, you might consider codifying in one statute the many
requirements for impact analysis now in place, including those
that are now elements of Executive Order 12866, to permit
needed regulation to proceed efficiently.
And shouldn't Congress also bring the independent
regulatory commissions under these mandates? Presidents haven't
done that, as I understand it, only because they fear the
political costs to their relationship with you, with the
Congress. Given the extraordinary range of rulemaking Dodd-
Frank requires of independent commissions, Congress ought to
welcome this change.
And, finally, I think it is time to bring the pre-notice
period within the APA. Often what occurs before a notice of
proposed rulemaking, as, Mr. Chairman, you noted in your
opening remarks, has been published, produces commitments that,
in the words of President George H.W. Bush's general counsel at
the EPA, ``convert notice-and-comment rulemaking into a form of
Kabuki theater, a highly stylized process for displaying in a
formal way the essence of something which in real life takes
place in other venues.''
Here I think Congress might be able to build on the
biannual regulatory agenda and the annual regulatory plan, as
well as the potentials offered by the Internet and
regulations.gov. The information age, in fact, is fundamentally
transforming the relationship between citizen and government.
Sitting at home, I can now access in seconds government
materials that I could have obtained two decades ago, if at
all, only by hiring a specialist.
As you consider the APA at 65, adapting it to these changes
has an importance of the first order.
Thank you again for the privilege of appearing before you
today, and I will be happy to answer questions.
[The prepared statement of Mr. Strauss follows:]

__________
Mr. Coble. Thank you, Professor Strauss.
And we have been joined by the distinguished gentleman from
Florida, Mr. Ross. Good to have you with us.
We will now--Members of the Subcommittee will now examine
the witnesses. And keep in mind, we apply the 5-minute rule to
ourselves, as well.
Professor Dudley, what are the most important potential ABA
reforms on which you and your fellow witnesses agree?
Ms. Dudley. Well, I would say we agree on a lot. I have
been very interested in listening to the other witnesses'
testimony.
Peter talked about greater transparency for technical
information supporting regulations. I think that is very
important, getting public comment on the technical information
and making sure that is exposed to public comment.
He talked about--I think all three of us have talked about
codifying the regulatory impact analysis requirements in
Executive orders, which I think is very important.
And bringing independent agencies under that rubric, I
agree wholeheartedly with Peter on that. And I think I will let
Jeff tell----
Mr. Coble. Thank you.
Let me go to Professor Strauss.
Professor Strauss, let me put the same question to you.
What are the most important potential APA reforms on which you
and your fellow witnesses agree?
Mr. Strauss. I think Professor Dudley put it pretty well.
As I said in my remarks, I can't agree to the suggestion of
expanding formal rulemaking. The history of that has been quite
dismal. There is a piece in the literature remarking that an
FDA formal rulemaking to determine the percentage of peanuts a
substance has to contain to be labeled ``peanut butter'' took 9
years and 20 weeks of hearings, producing an 8,000-page hearing
record to produce a 6-page opinion to justify a decision to
require at least 90 percent peanuts.
What I saw at the NRC in that respect was the use of cross-
examination by opponents of nuclear power simply to obstruct
the licensing of nuclear power plants.
Mr. Coble. Thank you, Professor.
Mr. Rosen, what differences of opinion between you and your
fellow witnesses are most important? And what are the key
issues we should consider to hopefully resolve those
differences?
Mr. Rosen. Well, I think I would echo that there is more
agreement than disagreement, that I think there were a number
of items that Professor Strauss alluded to, and Professor
Dudley, that I would agree with, as well. So there is a number
of agreements.
The only one that I have heard of, at least in the oral
discussion, probably is that Professor Strauss and I have a
different view about the on-the-record kind of formal
rulemaking. Although, it may not be as large as it could be, in
that I favor that for a very limited subset of truly major
rules where there are empirical or scientific controversies
that underlie the rules.
With regard to the length of time, that is always a concern
in rulemaking, but I would point out a couple of things. One,
there are notice-and-comment rulemakings around the Federal
Government that have taken 15 years or more. And so, time is
partly a function of management and how the activity is
managed. Two, there are formal or hybrid rulemakings that have
been conducted in a quite expeditious manner at OSHA and some
other agencies where there are still statutory requirements to
do that. And, third, I would just observe, for a small subset
of cases it can be more important to get things right than to
get them done quickly.
And so, that is why there is probably a small difference,
or I would characterize as small--Professor Strauss may have
his own view--but at least there is a difference with regard to
that issue.
Mr. Coble. I thank you, Mr. Rosen.
And, finally, in an effort to beat the red light, let me
conclude with Professor Dudley.
Professor, what are some of the foremost recent examples of
agency overreach or agency error that could have been prevented
or corrected if these reforms had been in place?
Ms. Dudley. I don't have them on the tip of my tongue. I
would expect that there are independent agency regulations
that, had they been subject to the benefit-cost analysis, the
regulatory impact analysis, that we would have had better
outcomes.
Mr. Coble. Well, the record will be open for 5 days, so you
all feel free to contribute forthwith.
I yield back. The distinguished gentleman from Michigan is
recognized for 5 minutes.
Mr. Conyers. Thank you, Mr. Chairman.
Could I ask Mr. Rosen of his familiarity or knowledge of
the 13 amendments that were passed on February 19, since the
two hearings that we have had, in which major regulatory laws
or procedures were struck down in the House of Representatives?
Mr. Rosen. I am sorry, Mr. Conyers, I don't know if I
understood the question. Could I ask you to repeat it for me?
And I will try to answer it as best I can.
Mr. Conyers. I will be happy to do that.
In H.R. 1, which was voted on at about 4 a.m. in the
morning and passed by a vote of 235 to 189, there were included
13 different amendments that hampered the implementation of
existing regulations or of future regulations, particularly
concerning environmental protection, the implementation of the
health-care reform legislation, and other measures.
Mr. Rosen. H.R. 1, if I recall correctly, is the continuing
resolution appropriations funding bill. And I am aware that
there were a large number of amendments offered during the
debate on that bill, some of which involved regulatory issues.
My understanding is those grew out of concern about some of the
very costly regulations issued in the last 2 years and beliefs
and concerns that perhaps those were not well-conceived,
carefully thought out.
And I think that maybe is an illustration of why we are all
of the view that some improvements to the regulatory process
might ensure better regulation and avoid the need for
congressional action to correct errors like that.
Mr. Conyers. Well, the question that I asked you, are you
familiar with the regulatory amendments that you hope will
improve the way that we go about doing business here today in
the Congress and in the Federal Government?
Mr. Rosen. Well, I think the answer to that is yes.
Mr. Conyers. Then you are familiar with the amendment--or
are you familiar with Amendment No. 13, introduced by our
colleague Thomas Cooley, that prohibits the use of funds from
being used to implement, administer, or enforce the EPA's rule
entitled ``Water Quality Standards for the State of Florida's
Lakes and Flowing Waters''?
Mr. Rosen. I am aware that such an amendment was offered. I
am not well-versed in the details of that particular one.
Mr. Conyers. Well, are you--there were 13 in H.R. 1. Are
you aware of any of them in particular?
Mr. Rosen. Am I aware of any other one in particular?
Mr. Conyers. Of any of them in particular.
Mr. Rosen. I was aware of a rider that dealt with the issue
of EPA's authority with regards to greenhouse gas regulation,
which would be one of the most costly, if not the most costly,
regulation in American history. I was aware of some other
riders or amendments that were offered----
Mr. Conyers. What about the health-care amendments offered
by our distinguished Member of the Judiciary Committee, Steve
King, in which we prohibited the use of funds to carry out the
provisions of the Patient Protection and Affordable Care Act?
Mr. Rosen. I would say that I am not familiar with the
details of it. I am aware, again, through really media accounts
on that particular one.
But, again, I think it highlights the point I was making,
is that many Members of Congress feel that there have been some
errors made in the regulatory process. And I think and hope
that part of what this hearing is about is to improve that
process and avoid those kind of errors.
Mr. Conyers. Well, if you are not familiar with them--and I
am not going to ask Professor Dudley the same thing--maybe
improvements are being made--that you might want to submit
additional testimony for the record to demonstrate that
improvements are being made in the direction that you would
like to go.
Mr. Rosen. Well, I would certainly be happy to do that, but
I think the bigger point is, when Members of Congress offer
amendments, that is at another level of the regulatory process
that fundamentally goes to the democratic process and the
accountability of Congress as the people's representatives,
where, in addition to technical analysis, cost-benefit and
other forms of technical analysis, it is, of course, important
that Congress reflect the wishes of the voters.
Mr. Conyers. Would you be willing to give us your
impression and whether you approve these or not in an
additional statement that you would submit to the Committee?
Mr. Rosen. Whether I agree or disagree with some of the
amendments to the bill?
Mr. Conyers. Well, yes, because these are only the
amendments that deal with regulations. And that is why we are
here. And if you don't know about them, there may be
improvements being made that you are unaware of that could
affect the nature of your testimony before the Committee today.
Mr. Rosen. Well, I don't think it would----
Mr. Coble. The gentleman's time has expired.
You may answer that question, Mr. Rosen.
Mr. Rosen. I don't actually think it would affect my
testimony, because my testimony goes to having sound procedures
that are independent of one's political views on any particular
policy issue and go to a sound process and the use of good
evidence and science and the like.
I, like everybody, have views about particular amendments
and particular proposals, and I am happy to share those when it
is appropriate. But I don't think it would change my view about
the need to have a regulatory process and an approach to
regulation that is sound and good for our economy.
Mr. Coble. The gentleman's time has expired.
The Chair recognizes the distinguished gentleman from South
Carolina, Mr. Gowdy, for 5 minutes.
Mr. Gowdy. Thank you, Mr. Chairman. I want to thank you for
presiding over this hearing.
Last week, while we were on recess, I had the pleasure of
visiting a chemical plant in Greenville, South Carolina. And I
have to confess to you, with a background in law enforcement
and not in administrative procedures, I was dumbstruck at the
labyrinthine regulatory complex that that company had to
negotiate. And I guess the example that stayed with me the most
was a six-by-six concrete building that was visited, regulated,
inspected by four different agencies. It is impossible to
explain that to average folks.
Mr. Rosen, Mr. Strauss mentioned some abuses in the formal
rulemaking process. If you were emperor for the day, what would
you do to assuage his fears of those abuses?
Mr. Rosen. I think two things. One is, I would limit it to
those situations where there is benefit to be had by on-the-
record procedures because there are empirical and scientific
kinds of issues to be resolved. So I think his concern, in
part, if I understand it, is that, were this done on too
widespread a basis, it could have negative effects. And I would
target it to where it could be most useful.
And the second is, for those of you who have a past as
trial lawyers or have some familiarity, judges all the time
have to manage trials. And a trial can, as Professor Strauss, I
think, fears, get out of control and go on too long and not be
managed well. And it can be--alternatively, it can be managed
very well, with a schedule and deadlines and cutoff periods and
process.
And I think part of what I would advocate, and perhaps
would partly address what I understand Professor Strauss'
concern to be, is ensure that when hybrid or formal rulemaking
procedures are used there are good management practices in
place so that we don't have a 9- or 10-year process.
And I can tell you, during the Bush administration, OSHA
did some hybrid rulemaking proceedings, and they didn't take 9
years. They were much, much faster than that.
Mr. Gowdy. Professor Dudley, Congress is going to be
considering a piece of legislation that deals with lasers and
aircraft. And I want you to imagine that you were empress for
the day. I believe you said that there is a strong incentive
sometimes to issue new regulations and perhaps not so much of
an incentive to later evaluate those or, frankly, to do much of
a cost-benefit analysis while you are considering them.
If you were advising us or an executive-branch agency on
something like shooting a laser at an airplane, what apparatus
would you suggest for us?
Ms. Dudley. I would suggest the procedures that have been
in Executive order since the early 1980s, and reinforced in
1993 and reinforced last month by President Obama. And that is
to first identify what the compelling need for the problem is,
what is the best way to address that, look at the data
available, what alternatives there are, and then look at the
cost and the benefits--so it is not just cost, but benefits as
well--and who would be affected, the distributional impact.
So there is a series of steps that I think all of your
witnesses agree one would go through to see what is the best
way to approach that regulation.
Mr. Gowdy. The REINS Act has a threshold of a $100 million
impact. Is that threshold appropriate, too high?
Ms. Dudley. That is the threshold that is used in Executive
order for--OMB requires regulations that hit that level to have
a more full regulatory impact analysis. I think that or a
higher threshold might be appropriate for a REINS Act. That
captures between 40 and 100 regulations a year, depending on
how you count them.
Mr. Gowdy. Thank you.
Ms. Dudley. The $100 million threshold would.
Mr. Gowdy. Mr. Strauss, I have maybe about 30 seconds left.
Can you give me some examples of unwarranted or superfluous
regulations or regulations that had, perhaps, a well-intended
intent but wound up having unintended pernicious consequences?
Mr. Strauss. No, but I want to put that in the context of
not being able to do very much in the other direction either.
Professor Dudley has been in a position to monitor those issues
and did a remarkable job at it, as I believe Professor
Sunstein, former Professor Sunstein is doing now.
I am thoroughly in favor of the OIRA process. It has been
around for a while. It is perhaps time for Congress to
domesticate it. I am not in a position to make the kind of
expert assessments that you are asking for on my own.
Mr. Gowdy. Okay.
Thank you, Mr. Chairman.
Mr. Coble. Thank you, Mr. Gowdy.
The Chair recognizes the distinguished gentleman from
Florida, Mr. Ross, for 5 minutes.
Mr. Ross. Thank you, Mr. Chairman.
Getting back to what the distinguished gentleman, the
Ranking Member, Mr. Conyers from Michigan, had inquired of you,
Mr. Rosen, being from Florida, I am somewhat familiar with the
numeric nutrient water standard criteria that is being pushed
on Florida and Florida alone. And my concern for that, of
course, is the economic impact that it has, the cost-benefit
that it has in Florida. For example, it will cost 14,000 jobs
if implemented, $1.1 billion financial impact. It will cost
$281 million to $500 million--$511 million just to monitor.
And I guess my question is, as I read the history of the
last 65 years of the APA, standing--it seems to me that, at one
time, parties had to have actual standing. And now it has been
liberalized that anybody with a tangential interest can have
standing to address either a rule--and I would like you to
speak on that, Mr. Rosen, if you will, about standing and if
you think we ought to maybe tighten up the standing
requirements in order to participate in this process.
Mr. Rosen. Well, that is an interesting point because there
is a balance to be struck between ensuring that judicial review
can occur for those who have been aggrieved and allowing just
anybody who wants to to come in and complain and what I would
regard as misuse the courts. So there is a balance.
In terms of the current state of the law, you know, the
Supreme Court has set out those requirements. And I could see
some benefit to having more statutory guidance----
Mr. Ross. The Supreme Court set the parameters for
standing, but did so without any direction from this body here.
And I guess what I am getting at is that----
Mr. Rosen. Pretty minimal, yeah. And I could see benefit to
doing that.
Mr. Ross. For example, when I was in Florida, we had a mini
APA that addressed regulations in the State of--State
regulations. But we addressed to the standing issue, because at
one point it was so liberalized that any citizen of the State
of Florida could object and thereby shut down a project, shut
down employment, you know, shut down the growth of our economy.
So we went back and we codified that.
And it seems to me that if we are talking about, you know,
regulations strangling businesses, if we are talking about the
regulatory process being open to everybody, even those that it
does not affect, I think, wouldn't you agree that we should
address the issue of standing, as a legislative body?
Mr. Rosen. In general, yes, I would see benefit to Congress
addressing that. The reason I pause is there are sometimes
different tests for different kinds of parties. And just to use
as an example, the Supreme Court in the Massachusetts v. EPA
case broadened the availability of standing for States. And so,
State attorney generals have, arguably, broader standing than
some other participants. And you would have to think carefully
about how to fix these things, because you might do something
that still leaves huge loopholes and doesn't address what your
concern is.
So, in a general way, I think I would agree with you. But
in terms of getting down to exactly how you would draft the
particulars, I think there would be a lot of work to be done.
Mr. Ross. Professor Dudley, do you have any comment on
whether we need to address the standing aspect?
Ms. Dudley. I won't because I am not a lawyer, so I will
punt to our lawyers.
Mr. Ross. Okay.
And, Mr. Strauss, how about you?
Mr. Strauss. Well, I think that one issue to think about is
that rulemaking really is open to any interested person. And I
would hope that the Congress would not change that.
I will also say that when I was at the Nuclear Regulatory
Commission, I had a chance to observe the impact of having
people come in from both sides of issues on the way the
commissioners approached their business. James Landiswrote
about the machine-gun impact of hearing only from the
regulated. From that perspective, it seems to me highly useful
to have agencies looking over their shoulders in both
directions.
Mr. Ross. Then, by way of example, when we look at what
regulations were being promulgated by OSHA the 1st of this year
that were fortunately withdrawn, dealing with the hearing
protection and dealing with the MSDs, the musculoskeletal
disorders, these were incredibly burdensome regulations that
were being promulgated and ready for publication by OSHA but
fortunately withdrawn. And it seems to me, then, that we are
either eliminating a critical aspect of the regulatory
rulemaking process, and that is that we are leaving out those
that are being affected by it.
And my concern is that--and I am out of time here, so I
guess I will stop there.
Mr. Coble. You may finish your question.
Mr. Ross. Thank you.
My concern is--and I will ask you, Mr. Rosen, because you
have experience in this regard--is there anything we can do to
make sure that those that are adversely impacted or impacted at
all by these regulations have a say early on, so that we don't
get to where we did in these last two regulations where they
were being promulgated and then suddenly withdrawn because they
realized the absurdity of their impact?
Mr. Rosen. Yes. Two thoughts on that.
One is, there could be expanded requirements for certain
kinds of rules for pre-notice-and-comment process, for the use
of ANPRMs or other kinds of pre-process, to ensure that there
is greater opportunity for public participation and input,
particularly if it could be done through the Internet or other
current technologies.
The second thing is, I do think that some of the concerns
that you are expressing go to the ultimate rules that come out
that seem to have problems. And, in some sense, if the
principles of regulation can be improved--I mean, just to pick
a couple out of President Obama's Executive order, he says that
agencies should tailor their regulations to impose the least
burden on society and that they should identify and consider
regulatory approaches that reduce burdens and maintain
flexibility.
If those principles are adhered to, I think some of the
other process points you are concerned about, such as the
standing and rights of aggrieved persons, will be mitigated.
Mr. Ross. Thank you.
Mr. Coble. The gentleman's time has expired.
Mr. Conyers has a question for Ms. Dudley. And, Mr. Gowdy,
if you and Mr. Ross have another question, you will be
recognized.
Mr. Conyers is recognized for 5 minutes.
Mr. Conyers. Professor Dudley, you were formerly with
Mercatus, and before that you were with a number of, well,
people that were opposed to a lot of regulation and rules.
And I wanted to ask you, did you come out against airbags
at one time in your career?
Ms. Dudley. Let me just clarify. I was at the Mercatus
Center at George Mason University. And before that I was a
consultant, and before that I was in the government. So I don't
think it is a fair characterization to say that I was with
people who were opposed to rules.
So let me----
Mr. Conyers. You didn't work for any of them. All right. I
am----
Ms. Dudley. I did work for the Mercatus Center, yes. I was
there for a while, and I directed their regulatory studies
program.
Mr. Conyers. All right. Well, the question--I stand
corrected. Did you come out against airbags?
Ms. Dudley. I filed a comment--I filed over 100 comments on
Federal regulations, on proposed regulations. And in each of
those, I applied the steps of analysis that----
Mr. Conyers. Just answer yes or no, please.
Ms. Dudley. It isn't a yes-or-no answer.
Mr. Conyers. You mean you didn't say--you didn't oppose or
you didn't support?
Ms. Dudley. I was critical of aspects of one airbag
regulation that was issued many years ago, yes, because it was
killing small adults and children riding in the front seat of a
car.
Mr. Conyers. Do you still take the position that ground-
level ozone is actually beneficial because it protects us from
skin cancer?
Ms. Dudley. That is a scientific fact.
Mr. Conyers. The answer is yes?
Ms. Dudley. Yes.
Mr. Conyers. Okay. Thank you.
Did you comment that the EPA should leave decisions
regarding the sulfur content of gasoline to individual States?
Ms. Dudley. I don't recall. But I do believe----
Mr. Conyers. I do.
Ms. Dudley. I do believe in Federal----
Mr. Conyers. I recall. Because I have----
Ms. Dudley [continuing]. Should be left to States.
Mr. Conyers. You can answer yes; it is okay.
Ms. Dudley. I want to be factual.
Mr. Conyers. Oh, I see.
Ms. Dudley. Although we didn't--we aren't under oath, are
we? But I am honest by nature.
Mr. Conyers. Do you oppose regulations requiring--last
question, Mr. Chairman.
Do you oppose regulations requiring industry to provide
information on toxic releases and chemical hazards?
Ms. Dudley. I actually have written extensively on that
topic, and it isn't a simple answer.
I think that the way that the information is provided is
essential. It has to be good information that shares
information on risks. People should be informed about risk.
Mr. Conyers. It sounds like a polite way of saying yes.
Ms. Dudley. It is not. I am trying to be accurate.
Mr. Conyers. Thank you, Mr. Chairman, for your generosity.
Mr. Coble. I thank you.
And I have a minute remaining. Did you want to be heard
further on your line of questioning, Ms. Dudley? Were you in
the middle of an answer?
Ms. Dudley. No, I think I am fine. Thank you, sir.
Mr. Coble. Very well.
I want to thank all of our witnesses for their testimony.
Mr. Ross, did you have another question?
Mr. Ross. No, sir, I do not.
Mr. Coble. I want to thank all of our witnesses for their
testimony today.
Without objection, all Members will have 5 legislative days
to submit to the Chair additional written questions for the
witnesses, which we will forward and ask the witnesses to
respond as promptly as they can, so that their answers may be
made a part of the record.
Mr. Conyers. Mr. Chairman, may I ask unanimous consent to
put into the record the February 26 New York Times article on
``Regulation Lax as Gas Wells' Tainted Water Hits Rivers''?
Mr. Coble. Without objection.
Mr. Conyers. Thank you.
[The information referred to follows:]

__________
Without objection, all Members will have 5 legislative days
to submit any additional materials for inclusion in the record.
Mr. Coble. With that, again, I thank the witnesses.
And this hearing is adjourned.
[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]

A P P E N D I X

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Material Submitted for the Hearing Record

Post-Hearing Questions and Responses from Susan E. Dudley, Research
Professor of Public Policy and Public Administration, Director,
Regulatory Studies Center, The George Washington University

Post-Hearing Questions and Responses from Jeffrey A. Rosen, Esq.,
Kirkland & Ellis LLP

Post-Hearing Questions and Responses from Peter L. Strauss,
Betts Professor of Law, Columbia Law School