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

THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM: AN UPDATE

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

HEARING

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

JUNE 3, 2011

__________

Serial No. 112-58

Printed for the use of the Committee on Energy and Commerce

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COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan HENRY A. WAXMAN, California
Chairman Ranking Member
JOE BARTON, Texas JOHN D. DINGELL, Michigan
Chairman Emeritus EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
MARY BONO MACK, California ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
LEE TERRY, Nebraska DIANA DeGETTE, Colorado
MIKE ROGERS, Michigan LOIS CAPPS, California
SUE WILKINS MYRICK, North Carolina MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JAY INSLEE, Washington
MICHAEL C. BURGESS, Texas TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee MIKE ROSS, Arkansas
BRIAN P. BILBRAY, California ANTHONY D. WEINER, New York
CHARLES F. BASS, New Hampshire JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey
BILL CASSIDY, Louisiana
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

(ii)

Subcommittee on Oversight and Investigations

CLIFF STEARNS, Florida
Chairman
LEE TERRY, Nebraska DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma Ranking Member
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas MIKE ROSS, Arkansas
MARSHA BLACKBURN, Tennessee ANTHONY D. WEINER, New York
BRIAN P. BILBRAY, California EDWARD J. MARKEY, Massachusetts
PHIL GINGREY, Georgia GENE GREEN, Texas
STEVE SCALISE, Louisiana DONNA M. CHRISTENSEN, Virgin
CORY GARDNER, Colorado Islands
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)

C O N T E N T S

----------
Page
Hon. Cliff Stearns, a Representative in Congress from the state
of Florida, opening statement.................................. 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the state
of Colorado, opening statement................................. 4
Prepared statement........................................... 5
Hon. Michael C. Burgess, a Representative in Congress from the
state of Texas, prepared statement............................. 6
Hon. Henry A. Waxman, a Representative in Congress from the state
of California, opening statement............................... 9
Prepared statement........................................... 10
Hon. Joe Barton, a Representative in Congress from the state of
Texas, prepared statement...................................... 95

Witnesses

Cass R. Sunstein, Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget............ 12
Prepared statement........................................... 15
Answers to submitted questions............................... 100
William L. Kovacs, Senior Vice President, U.S. Chamber of
Commerce....................................................... 54
Prepared statement........................................... 56
James Gattuso, Senior Research Fellow, The Heritage Foundation... 73
Prepared statement........................................... 75
David Goldston, Director of Government Affairs, Natural Resources
Defense Council................................................ 83
Prepared statement........................................... 85

Submitted Material

Article entitled, ``EPA's War on Texas,'' Wall Street Journal,
January 4, 2011, submitted by Mr. Burgess...................... 96
Article entitled, ``Now it's time to redraft ACO rule,''
Politico, June 3, 2011, submitted by Mr. Burgess............... 98

THE VIEWS OF THE ADMINISTRATION ON REGULATORY REFORM: AN UPDATE

----------

FRIDAY, JUNE 3, 2011

House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:32 a.m., in
room 2123, Rayburn House Office Building, Hon. Cliff Stearns
(chairman of the subcommittee) presiding.
Present: Representatives Stearns, Sullivan, Murphy,
Burgess, Blackburn, Bilbray, Scalise, Gardner, Griffith,
Barton, DeGette, Green, and Waxman (ex officio).
Staff Present: Carl Anderson, Counsel, Oversight; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Anita Bradley,
Senior Policy Advisor to Chairman Emeritus; Stacy Cline,
Counsel, Oversight; Todd Harrison, Chief Counsel, Oversight and
Investigations; Heidi King, Chief Economist; Dave McCarthy,
Chief Counsel, Environment and the Economy; Katie Novaria,
Legislative Clerk; Andrew Powaleny, Press Assistant; Alan
Slobodin, Deputy Chief Counsel, Oversight; Sam Spector,
Counsel, Oversight; John Stone, Associate Counsel; Alex Yergin,
Legislative Clerk; Kristin Amerling, Minority Chief Counsel and
Oversight Staff Director; Phil Barnett, Minority Staff
Director; Stacia Cardille, Minority Counsel; Brian Chang,
Minority Investigations Staff Director and Senior Policy
Advisor; Greg Dotson, Minority Energy and Environment Staff
Director; Jocelyn Gutierrez, DOE Detailee; Karen Lightfoot,
Minority Communications Director and Senior Policy Advisor; Ali
Neubauer, Minority Investigator; Mitch Smiley, Minority
Assistant Clerk; and Anne Tindall, Minority Counsel.

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA

Mr. Stearns. Good morning, everybody. And the Subcommittee
on Oversight and Investigations will come to order. And I will
open with my opening statement.
We convene this hearing of this subcommittee to get an
update on how the administration is implementing President
Obama's Executive order announced on January 18th, entitled,
``Improving Regulation and Regulatory Review.'' To do so, we
welcome back Mr. Cass Sunstein, the head of the Office of
Information and Regulatory Affairs, or, as we call it, OIRA,
within the Office of Management and Budget.
Mr. Sunstein testified before this committee at our first
hearing on January 26th, a week after President Obama signed
the order and publicly committed to striking the right balance
between regulation and economic growth. Mr. Sunstein agreed to
come back in 3 months to discuss how his office has improved
the regulatory review system to reduce burdens on the American
economy and industry.
President Obama's Executive order affirms that agencies
must adopt only those regulatory actions whose benefits justify
its cost, that are tailored to impose the least burden on
society, that take into account the cost of cumulative
regulations, that maximize net benefits, that specify
performance objectives, and that evaluate alternatives to
direct regulation.
In addition, this new Executive order calls on agencies to
review significant regulations that are already in place.
Expanding upon this requirement, the President announced in a
Wall Street Journal op-ed that this action, ``orders a
government-wide review of the rules already on the books to
remove outdated regulations that stifle job creation and make
our economy less competitive.''
Now, this is incredibly important, given that the Federal
Register stands at an all-time high of over 81,000 pages. In
2010 alone, Federal agencies added more than 3,500 final rules
to the books. I hope that Mr. Sunstein will share with us a
number of examples demonstrating how this commitment has been
put into action and how agencies will relieve small businesses
of expensive and burdensome regulations and promote job growth.
This morning's report of the 9.1 percent unemployment rate,
with significantly less job creation in May than in April, adds
to the urgency of this task. After all, regulations total $1.75
trillion in annual compliance costs, according to the Small
Business Administration. That is greater than the record
Federal budget deficit, projected at $1.48 trillion for fiscal
year 2011, and greater than annual corporate pre-tax profits,
which totaled $1.46 trillion in 2008.
In addition, I hope Mr. Sunstein can also give us a sense
of how he is enforcing the other requirement of the Executive
order. He is the traffic cop. Enormously expensive regulation
has sped through the review process on his watch, with little
or no opportunity for meaningful public comment. This leads me
to believe that OIRA has either been left out of the process or
hasn't been effective.
On May 18th, 120 days after the Executive order was issued,
each agency was required to submit to OIRA a draft plan
including an initial list of regulations that were identified
in their retrospective analysis as candidates for
reconsideration or review. Agencies were supposed to consider
all of the burdensome regulations identified by the
stakeholders in the private sector before submitting their
plans.
Now, at our hearing on January 26th, I agreed with Mr.
Sunstein when he said that ``One idea we have had is that the
public has a lot more information than we do about what rules
are actually doing on the ground.'' As I have said before,
however, it is important that rhetoric is matched with
measurable results.
EPA alone has received approximately 1,500 comments on its
rules and regulations. The Chamber of Commerce weighed in on
roughly 20 regulations proposed or finalized over the past 2
years at the Environmental Protection Agency. Yet EPA's plan
for regulatory review includes only 2 of the 20 and, in both
cases, still fails to address the fundamental complaints made
by the industry.
The Environmental Council of the States, a group that
represents the secretaries of States' environmental agencies,
identified more than 30 groups of regulations for a review.
These are not big business leaders; these are the State
officials that run almost all of the programs under the Clean
Air Act and Clean Water Act and undertake about 90 percent of
the enforcement actions.
Unfortunately, after reviewing the plan, it appears as
though EPA officials in Washington overwhelmingly disagree with
or simply ignore the folks that actually implement the
regulations that have been identified as being burdensome. Not
only did EPA apparently ignore the stakeholders, but they have
also imposed over 900 new regulations on the States since the
beginning of this administration.
Mr. Sunstein has spoken repeatedly about the need to create
a new regulatory culture across the executive branch, and I
think all of us will agree with him. An unprecedented amount of
authority has been delegated to the executive agencies in this
administration. New regulations affecting many sectors of
industry and aspects of all the American life are being
promulgated under the same flawed system that produced the
regulations identified today. So, hopefully, we can take steps
toward changing this culture. And we look forward to Mr.
Sunstein's testimony.
[The statement of Mr. Stearns follows:]

Prepared Statement of Hon. Cliff Stearns

We convene this hearing of the Subcommittee on Oversight
and Investigations to get an update on how the Administration
is implementing President Obama's Executive Order, announced on
January 18, entitled ``Improving Regulation and Regulatory
Review.'' To do so, we welcome back Mr. Cass Sunstein, the head
of the Office of Information and Regulatory Affairs (OIRA),
within the Office of Management and Budget. Mr. Sunstein
testified before the Subcommittee at our first hearing on
January 26th-a week after President Obama signed the order and
publicly committed to striking the right balance between
regulation and economic growth. Mr. Sunstein agreed to come
back in three months to discuss how his office has improved the
regulatory review system to reduce burdens on the American
economy and industry.
President Obama's Executive order affirms that agencies
must adopt only those regulatory actions whose benefits justify
its costs; that are tailored to impose the least burden on
society; that take into account the cost of cumulative
regulations; that maximize net benefits; that specify
performance objectives; and that evaluate alternatives to
direct regulation. In addition, this new Executive order calls
on agencies to review significant regulations already in place.
Expanding upon this requirement, President Obama announced
in a Wall Street Journal op-ed that this action ``orders a
government-wide review of the rules already on the books to
remove outdated regulations that stifle job creation and make
our economy less competitive.'' This is incredibly important
given that the Federal Register stands at an all-time high of
over 81,000 pages. In 2010 alone, federal agencies added more
than 3,500 final rules to the books. I hope that Mr. Sunstein
will share with us a number of examples demonstrating how this
commitment has been put into action and how agencies will
relieve small businesses of expensive and burdensome
regulations and promote job growth. This morning's report of
the 9.1% unemployment rate with significantly less job creation
in May than in April adds to the urgency of this task. After
all, regulations total $1.75 trillion in annual compliance
costs, according to the Small Business Administration. That's
greater than the record federal budget deficit- projected at
$1.48 trillion for FY 2011-and greater than annual corporate
pretax profits, which totaled $1.46 trillion in 2008.
In addition, I hope Mr. Sunstein can also give us a sense
of how he is enforcing the other requirements of the Executive
Order. He is the traffic cop. Enormously expensive regulations
have sped through the review process on his watch with little
or no opportunity for meaningful public comment. This leaves me
to believe that OIRA has either been left out of the process or
has very little teeth.
On May 18th, 120 days after the Executive Order was issued,
each agency was required to submit to OIRA a draft plan,
including an initial list of regulations that were identified
in their retrospective analysis as candidates for
reconsideration or review. Agencies were supposed to consider
all of the burdensome regulations identified by stakeholders in
the private sector before submitting their plans. In our
hearing on January 26th, I agreed with Mr. Sunstein when he
said that ``one idea we have had is that the public has a lot
more information than we do about what rules are actually doing
on the ground.'' As I have said before, however, it is
important that rhetoric is matched with measurable results.
EPA alone has received approximately 1,500 comments on its
rules and regulations. The Chamber of Commerce weighed in on
roughly 20 regulations proposed or finalized over the past 2
years at the Environmental Protection Agency, yet EPA's plan
for regulatory review includes only 2 of the 20 and in both
cases still fails to address the fundamental complaints made by
industry. The Environmental Council of the States, a group that
represents the secretaries of state environmental agencies,
identified more than 30 groups of regulations for review. These
are not big business leaders-these are the state officials that
run almost all of the programs under the Clean Air Act and the
Clean Water Act and undertake about 90 percent of the
enforcement actions. Unfortunately, after reviewing the plan,
it appears as though EPA officials in Washington overwhelmingly
disagreed with, or ignored, the folks that actually implement
the regulations they have identified as burdensome. Not only
did EPA apparently ignore the stakeholders, but they have also
imposed over 900 new regulations on the states since the
beginning of this Administration.
Mr. Sunstein has spoken repeatedly about the need to create
a new regulatory culture across the Executive Branch and,
again, I agree with him. An unprecedented amount of authority
has been delegated to executive agencies in this
Administration. New regulations, affecting many sectors of
industry and aspects of American life, are being promulgated
under the same flawed system that produced the regulations
identified today. Hopefully we can take a step towards changing
that culture today.

# # #

Mr. Stearns. And with that, I recognize the ranking member,
Ms. DeGette.

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO

Ms. DeGette. Thank you very much, Mr. Chairman.
In January of this year, President Obama issued an
Executive order directing Federal agencies to develop plans for
improving the regulatory system. As part of this order, the
President urged agencies to expand opportunities for public
participation in the regulatory process and to look for ways to
make regulations more efficient and effective.
Mr. Chairman, you will be pleased to know that both sides
of the aisle support these goals. This subcommittee has a
valuable role to play in reviewing implementation of the order.
And I want to also join you in welcoming Mr. Sunstein back
today.
The last hearing unfortunately devolved into a picky
criticism of individual regulations that individual Members
might disagree with. But I think it is worthwhile for this
committee to continue to focus on the regulatory reform efforts
of the administration and see if we can make real progress.
So I know, Mr. Sunstein, we are taking away, once again,
from your efforts to implement this program, but it is
important for us to hear it.
Since our first hearing on the Executive order in January,
I think, from what I have heard, executive-branch agencies have
developed preliminary regulatory review plans that the
administration has provided to the subcommittee and posted on
White House Web site for public input.
My initial review of the plans reveals a range of efforts
to meet the Executive order's core goals: Agencies are
streamlining and modernizing reporting requirements to save
industry and government time and money. They are more precisely
tailoring regulations to save money for regulated industries.
They are creating broader opportunities for public
participation in the design and implementation of regulations.
And they are improving the review process.
So I hope we can hear about some of those things today, but
I also hope we can hear about what the administration intends
to do next to actually streamline, now that they are taking
this input, to streamline and modernize and even eliminate
unnecessary regulations.
Having said that, I will say the administration appears to
be working very hard to implement regulatory reform. And after
hearing the distinguished chairman's opening statement and also
the sad unemployment news of this morning, I wish the majority,
rather than complaining in vague terms about the regulatory
reform efforts and the unemployment rate, would actually sit
down with the minority and, with us, together, develop a jobs
bill.
We have been talking about this since January. And if we
really want to reduce the unemployment rate, then let's stop
niggling about the edges. Let's sit down and, together, craft a
jobs plan. I think that that would benefit the American public.
And if we started now, we might be able to decrease
unemployment by the end of the year.
And, with that, Mr. Chairman, I yield back.
[The statement of Ms. DeGette follows:]

Prepared Statement of Hon. Diana DeGette

In January of this year, President Obama issued an
Executive order directing federal agencies to develop plans for
improving the regulatory system. As part of the order, the
President urged agencies to expand opportunities for public
participation in the regulatory process, and to look for ways
to make regulations more efficient and effective.
Both sides of the aisle should support these goals. And
this Subcommittee has a valuable role to play in reviewing
implementation of this Order.
Since the Subcommittee's first hearing on the Executive
order in January, executive branch agencies have developed
preliminary regulatory review plans that the Administration has
provided to the Subcommittee and posted on the White House Web
site for public input. An initial review of the plans reveals a
range of efforts to meet the Executive Order's core goals:
Agencies are streamlining and modernizing
reporting requirements to save industry and government time and
money;
They are more precisely tailoring regulations to
save money for regulated industries;
They are creating broader opportunities for public
participation in the design and implementation of regulations;
and
They are improving the review process.
I look forward to the opportunity today to ask the
witnesses questions both about the plan contents and the
Administration's next steps in implementing the regulatory
review initiative.
I hope both Republican and Democratic members of the
Subcommittee will make this morning a productive effort to
understand the extent to which agencies have been advancing the
Executive order's goals and where there is room for
improvement. I also hope we avoid what we saw in the last
hearing, where the Subcommittee became a forum for airing
member complaints about individual regulations and an assault
on the concept of government regulation.
So I want to emphasize one basic point as we begin to
discuss the regulatory process today: regulations have both
costs and benefits. This may seem obvious, but in the past few
months on this Committee much of the rhetoric from the majority
omits any recognition of the important role regulations play in
advancing our nation's welfare.
For example, over the past few months we have heard
repeated Republican claims that the Environmental Protection
Agency is strangling economic growth in its efforts to keep our
air and water clean and combat the threats posed by climate
change. But recent analysis by the Economic Policy Institute
concluded that the annual benefits from final rules implemented
by EPA in the last two years exceeded costs by as much as $142
billion per year, with a cost-benefit ratio as high as 22 to 1.
Earlier this year, EPA released a peer-reviewed study on
the costs and benefits of the Clean Air Act Amendments of 1990
that found benefits to outweigh costs by 25 to 1. Furthermore,
it found that in 2010 alone Clean Air Act regulations saved
160,000 lives.
And there are similar examples across the federal
government. Food and Drug Administration regulations protect
children from the health effects of tobacco and help prevent
all of us from exposure to salmonella and other food
contaminants. New crib safety rules will prevent parents the
agony of discovering their child has been strangled to death by
a dangerously constructed crib. And Department of
Transportation regulations banning texting by commercial truck
and bus drivers will make the nation's highways safer for our
families.
Any meaningful discussion of costs of such regulations
should include discussion of their benefits. I hope all members
of the Committee will promote a balanced discussion of
regulatory process as we hear from our witnesses today about
the Administration's efforts to promote regulatory efficiency
and effectiveness. I am pleased to welcome back to the
Subcommittee Cass Sunstein, the Administrator of the Office of
Information and Regulatory Affairs at the Office of Management
and Budget.
I am also glad the subcommittee will also have the benefit
of testimony from experts on a second panel that include David
Goldston of the National Resources Defense Council, William
Kovacs of the Chamber of Commerce, and James Gattuso of the
Heritage Foundation. I look forward to hearing their testimony.

Mr. Stearns. I thank the gentlelady.
And the gentleman from Texas, Dr. Burgess, is recognized
for 3 minutes.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS

Mr. Burgess. Thank you, Mr. Chairman.
And, Mr. Sunstein, welcome back to our committee. We
welcome you back. We are always glad to see you here. We
welcome the changes that are coming from some of the agencies.
I do still want to hear more about what the administration is
doing, and if they are doing anything, to slow the continual
onslaught of regulations that are being promulgated and
implemented.
Now, we went down to the White House earlier this week, the
Republican conference on one day, the Democratic on another.
And the President said to us that he wanted to clear out the
regulatory underbrush, so I took that as a positive sign. He
said the regulations should not be obscure, they should not be
difficult for people to understand.
What is hard to understand is how the administration wants
to continue to be anti-employer and, at the same time, be pro-
jobs. It just doesn't seem to be working out, as we saw from
this morning's employment numbers. And businesses across the
country are plagued with uncertainty as to what the new
regulations will be and what will be handed down next by
Washington.
I understand the use of regulations to ensure safety and to
promote the predictability of the market, but you must know
that, every day, people come to Washington to tell their
Congressman or -woman their fears about the avalanche of
regulations that will increase their compliance costs. I hear
from business owners talking about regulations coming from HHS,
EPA, bank examiners, and more. And, unfortunately, I don't see
how this review is actually going to be a deliverable that will
help them through the problems that they are having. And I
might add, those problems are delivered by the United States
Congress.
While some of the regulations may be necessary, I feel that
many in Washington don't understand or comprehend the effect
that the regulations have on jobs and job creation. It is a
simple fact: When compliance costs go up, that cuts into a
business' bottom line, and that means jobs are likely to be
lost.
I am afraid this review has, for some purpose, perhaps just
been for political purposes. I think that this was the reaction
of a President who doesn't understand how to create jobs, so
this is his attempt to appease business. After all the public
relations and the rollout of the review, the higher-ups at the
White House will have little interest in continuing the review,
particularly after special interest groups and outside groups
castigate the White House for reviewing the regulations in the
first place.
A specific area of the regulations that are coming out,
like the medical loss ratio, rate review, and accountable care
organizations--in all cases, the Federal Government has taken
something that was working in practice and proven that it can't
work in theory.
Now, these pieces would ensure more consumer benefits,
lower costs, and encourage care coordination, where patients,
doctors, and hospitals work together for patient improvement
and financial savings, but because of the way that the
regulations have been written, we will still have systems that
encourage fraud. Plan solvency will be at risk. There is the
ultimate consumer protection. If your plan goes bankrupt, you
don't get much health care delivered.
And then accountable care organizations, that is the
unicorn that turns out that nobody really--not only nobody
really believes it exists, nobody now wants to adopt it,
because it is just simply so difficult and so onerous.
So I hope that you folks over at Office of Management and
Budget and your counterparts at the Federal Trade Commission
will understand this and perhaps allow doctors in this country
once again to practice medicine.
I will yield back the balance of my time, Mr. Chairman.
Mr. Stearns. The gentleman yields back.
And the gentlelady from Tennessee, Ms. Blackburn, is
recognized for 1 minute.
Mrs. Blackburn. Thank you, Mr. Chairman.
And, Mr. Sunstein, thank you for being with us again.
I think everyone will agree, the number-one issue facing
our constituents is jobs. And the greatest obstacle that we are
hearing about jobs is regulatory overreach, uncertainty through
the regulatory process.
And this is not surprising. When you look at the EPA alone,
they have finalized 928 regulations since the start of this
administration, with more than 6,000 pages of regulations
released last year.
Now, saying you want to get rid of some of these
regulations and issuing more is counterproductive to jobs. It
is killing the growth of jobs. The figures this morning attest
to that.
I would encourage my colleagues to remember, you don't do a
jobs bill to create jobs. Washington doesn't create jobs. It is
the private sector that creates these jobs. It is our
responsibility to create that environment for jobs growth to
take place.
And, Mr. Sunstein, I have to tell you, all of the
regulations that are coming out of this town are not helping
employers. Whether it is health care, whether it is banking,
whether it is regulation from the FTC, the FCC, the EPA, this
has to stop. We look forward to working with you to get these
regulations off the books, not add more.
And I yield back.
Mr. Stearns. The gentlelady yields back.
The gentleman from Louisiana, Mr. Scalise, is recognized
for 1 minute.
Mr. Scalise. Thank you, Mr. Chairman.
I also want to welcome Mr. Sunstein back. Look forward to
hearing your comments. And then we will have a dialogue. I know
I have a lot of questions about both specific agencies and
challenges as well as kind of a bigger-picture approach, and
see how we can get this Executive order properly implemented.
Because one of the concerns I have, as we have, still
gotten in over 2\1/2\ years into this administration now, we
still continue to see slow job growth. Today's number showed a
dramatic decline from the numbers that just came out in May, an
increase in unemployment yet again.
And, frankly, when I talk to employers, not only throughout
southeast Louisiana, but when you talk to industry groups,
groups that represent big employers all across the country, one
of the very first things they will tell you about the
limitation, their inability to create jobs and, in fact, the
biggest impediment to job creation is a lot of these
regulations that have nothing to do with protecting people,
protecting environment. It is about agendas that are driven by
bureaucrats in Washington. And that is not how regulations
ought to work.
We have pushed legislation through to help create jobs that
are just lingering over in the Senate. But in the meantime, you
have the ability, you have a task to go out and actually reform
this process, but you have the ability to do it. And I hope it
is more than window dressing. And I look forward to the
conversation.
And I yield back.
Mr. Stearns. I thank the gentleman.
And the gentleman, the ranking member of the full
committee, Mr. Waxman from California, is recognized for 5
minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Waxman. Thank you very much, Mr. Chairman.
The subcommittee today is returning to the subject of the
Executive order on regulatory reform, issued in January by
President Obama. And the implementation of this order is
overseen by the Office of Information and Regulatory Affairs,
or OIRA.
And we are fortunate to have the administrator of OIRA,
Cass Sunstein, with us, and I am pleased to welcome him to this
hearing. He will be able to tell us about the administration's
regulatory review activities that have occurred since our last
hearing.
The stated focus of this hearing is to learn more about the
agency plans for regulatory reform, which the White House
released for public review and comment. But if we are going to
have an honest discussion about the costs of regulation, we
need to consider all of the relevant facts. We should examine
costs and reduce them wherever possible. But we also need to
give equal consideration to benefits.
Yesterday, we were supposed to mark up a bill called the
TRAIN Act, which calls for an analysis of the cumulative
impacts of EPA regulation. The markup was postponed. But the
bill illustrates what is wrong with how we have been
approaching regulatory reform in this committee with this
majority.
The TRAIN Act focuses nearly exclusively on the economic
costs. It mandates analyses of the impacts of the regulation on
jobs, electricity costs, manufacturing, and trade. That is all
appropriate, but it ignores the dangers of unchecked pollution
on health, the environment, and global climate change. The one-
sided approach is the anthesis of what we should be doing.
And this one-sided approach, I think, was so clearly
illustrated by the opening comments of my Republican
colleagues. A statement was made that the great obstacle to
jobs is regulation. I can't believe that. No economist would
suggest that the recession is not the major reason we are
having a problem with jobs; that regulatory overreach, as it
has been called, is something that is not new, if it exists.
I have heard my colleagues say that the President wants the
slow job growth. That is absurd. No President of the United
States wants a bad economy for the American people. This
President inherited a terrible economy in great part because of
the bad judgments and policies of the Bush administration.
We need to look at both sides of the equation when we look
at regulations. We need to maximize the benefits while
minimizing the costs.
And a good case in point is the Clean Air Act, which, along
with health care, has become one of the Republicans' whipping
boys. We have considered proposal after proposal to weaken the
Clean Air Act on the theory that reducing pollution is a job-
killer--reducing pollution is a job-killer.
Well, we shouldn't have to pick between jobs and clean air.
That is a false choice. When the committee wrote the Clean Air
Act amendments in 1990, we heard horror stories about how the
law would impose ruinous costs on industry; it would lead to
widespread unemployment. None of this turned out to be true.
Ranking Member Rush and I asked the EPA to do a balanced
analysis of both the costs and the benefits of the Clean Air
Act. The results show that the law has been a stunning success.
EPA found that implementing the Clean Air Act creates American
jobs and bolsters the global competitiveness of American
industry, even as it lowers health-care costs and protects
American families from birth defects, illnesses, and premature
death.
The health benefits of the act are legion. In 1 year, the
Clean Air Act prevented 18 million child respiratory illnesses;
850,000 asthma attacks; 674,000 cases of chronic bronchitis;
205,000 premature deaths. The health benefits are projected to
reach $2 trillion by 2020. Is that something we should ignore?
The implementation of the act also creates American jobs.
The environmental technology industry now generates $300
billion in annual revenues and supports 1.7 million jobs.
I have seen the value of regulation over and over again.
Following the collapse of the financial markets in 2008, the
economy entered the deepest recession since the Great
Depression. Millions of Americans have lost their jobs. The
cause of the financial crisis was not regulation; it was the
absence of regulation. Our hearings last year showed the
Deepwater Horizon oil spill created widespread economic
dislocation. This was caused by too little oversight, too
little regulation, not too much.
Where we can identify unnecessary regulations, they should
be identified and eliminated. But, as this review continues, we
should remember that sound regulations are vital in protecting
our Nation's economy and wellbeing.
Thank you, Mr. Chairman.
[The statement of Mr. Waxman follows:]

Prepared Statement of Hon. Henry A. Waxman

Today, the Subcommittee returns to the subject of the
Executive order on regulatory reform issued in January by
President Obama. The implementation of this order is overseen
by the Office of Information and Regulatory Affairs, also known
as OIRA (``oh-eye-rah''), and we are fortunate to have OIRA
Administrator Cass Sunstein with us today. He will be able to
tell us about the Administration's regulatory review activities
that have occurred since the Subcommittee took testimony from
him in January.
The stated focus of this hearing is to learn more about the
agency plans for regulatory reform that the White House
released last week for public review and comment. These plans
and other steps the Administration is taking to review
regulations certainly merit congressional oversight.
But if we are going to have an honest discussion about the
costs of regulations, we need to consider all of the relevant
facts. We should examine costs and reduce them wherever
possible. But we also need to give equal consideration to
benefits.
Yesterday, we were supposed to mark up a bill called the
TRAIN Act, which calls for an analysis of the cumulative
impacts of EPA regulations. The markup was postponed, but the
bill illustrates what's wrong with how we have been approaching
regulatory reform in this Committee.
The TRAIN Act focuses nearly exclusively on economic costs.
It mandates analyses of the impacts of the regulations on jobs
. electricity costs . manufacturing . and trade. But it ignores
the dangers of unchecked pollution on health, the environment,
and global climate change.
This one-sided approach is the antithesis of what we should
be doing. We should be looking at both sides of the equation--
costs and benefits--and maximizing the benefits while
minimizing the costs.
A good case in point is the Clean Air Act, which along with
health care has become the Republicans' favorite bete noire. We
have considered proposal after proposal to weaken the Clean Air
Act on the theory that reducing pollution is a job killer.
We shouldn't have to pick between jobs and clean air.
That's a false choice.
When this Committee wrote the Clean Air Act Amendments of
1990, we heard horror stories about how the law would impose
ruinous costs on industry. None of them turned out to be true.
Ranking Member Rush and I asked EPA to do a balanced
analysis of both the costs and benefits of the Clean Air Act.
The results show that the law has been a stunning success. EPA
found that implementing the Clean Air Act ``creates American
jobs and bolsters the global competitiveness of American
industry, even as it lowers healthcare costs and protects
American families from birth defects, illnesses, and premature
death.''
The health benefits of the Act are legion. In one year, the
Clean Air Act prevented 18 million child respiratory illnesses,
850,000 asthma attacks, 674,000 cases of chronic bronchitis,
and 205,000 premature deaths. The health benefits are projected
to reach $2 trillion by 2020.
And the implementation of the Act also creates American
jobs. The environmental technology industry now generates $300
billion in annual revenues and supports 1.7 million jobs.
I've seen the value of regulation over and over again
during my career. Following the collapse of the financial
markets in 2008, the economy entered the deepest recession
since the Great Depression and millions of Americans lost their
jobs. The cause of the financial crisis was not regulation; it
was the absence of regulation. Our hearings last year showed
that the Deepwater Horizon oil spill, which created widespread
economic dislocation, was caused by too little oversight and
regulation--not too much.
That is why it so important that we put aside the partisan
anti-regulation rhetoric and look dispassionately at both costs
and benefits. Unnecessary regulations should be identified and
eliminated, and I am pleased that President Obama has made this
a priority. But as this review continues, we must remember that
sound regulations are vital in protecting our Nation's economy
and well-being.

Mr. Stearns. I thank the gentleman.
And, with that, we welcome Mr. Cass R. Sunstein,
administrator, Office of Information and Regulatory Affairs,
before our subcommittee.
And, before we start, let me just make some comments
considering your testimony.
You are aware that the committee is holding an
investigative hearing and, when doing so, has had the practice
of taking testimony under oath. Do you have any objection to
testifying under oath?
Mr. Sunstein. No.
Mr. Stearns. The chair then advises you that, under the
rules of the House and the rules of the committee, you are
entitled to be advised by counsel. Do you desire to be advised
by counsel during your testimony?
Mr. Sunstein. [Nonverbal response.]
Mr. Stearns. In that case, if you would please rise and
raise your right hand, we will swear you in.
[Witness sworn.]
Mr. Stearns. You are now under oath and subject to the
penalties set forth in Title 18, section 1001, of the United
States Code.
You may now give a 5-minute summary of your written
statement.

TESTIMONY OF THE HON. CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE
OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
BUDGET

Mr. Sunstein. Thank you so much, Mr. Chairman.
And thanks to you and members of the committee, not only
for your strong commitment to the reduction of unjustified
regulatory burdens, but also for your generosity and kindness
to me and my staff over the last months as we try to work
together on these issues.
My focus in these opening remarks will be on the process of
retrospective review of regulations, the ``lookback,'' as we
call it, though I will devote a few words to the effort to
control regulatory efforts going forward, something addressed
in many of your opening remarks.
In the January 18th Executive order, the President, in the
first sentence, referred specifically to two topics that have
come up in the last minutes: One is economic growth, and the
other is job creation. Those are central factors in the process
that he has inaugurated.
For the process going forward--that is, with respect to new
rules--I would like to underline four elements of the Executive
order.
First, it requires agencies to consider costs and benefits,
to ensure that the benefits justify the costs, and to select
the least burdensome alternative. Those ideas are central going
forward, and they will be followed, to the extent permitted by
law.
Second, the Executive order requires unprecedented levels
of public participation. It asks agencies, before they issue
rules, to engage with State, local, and tribal officials. And
there was a reference earlier to costs imposed on State and
local government, to affected stakeholders, and to experts in
relevant disciplines. What I would like to underline here is
the requirement that agencies act even in advance of proposed
rulemaking to seek the views of those who are likely to be
affected.
Third, the Executive order directs agencies to harmonize,
simplify, and coordinate rules, with the specific goal of cost
reduction.
Fourth, the Executive order directs agencies to consider
flexible approaches that reduce burdens and maintain freedom of
choice for the public.
Those are directions for all of us, going forward, within
the executive branch.
What many of your opening remarks focus on is the lookback
process. Last week, in compliance with the Executive order, 30
departments and agencies released their preliminary plans to
this subcommittee and the public in an unprecedented process.
Some of the steps outlined in these hundreds of pages of plans
have already eliminated hundreds of millions of dollars in
annual regulatory costs, including, by the way, costs imposed
on employers.
Over $1 billion in savings can be expected in the near
future. So these are not mere aspirations or plans to plan;
these are concrete products that have either been delivered
already or that will be delivered in the very near future. Over
the coming years, the reforms have the potential to eliminate
billions of dollars in regulatory burdens.
Many of the initiatives represent a fundamental rethinking
of how things have long been done. We have heard in the last
month since the Executive order was written that red tape and
paperwork and reporting burdens exert a significant toll on the
economy, including on small business. There is an effort
throughout the plans to try to reduce those burdens. There is
also an effort to rethink rules that require the use of
outdated technologies in a way that is consistent with the
innovation that is now occurring and may even promote
innovation.
Many of the reforms have already saved significant money.
The EPA has recently exempted milk and dairy industries from
its oil spill rule. There is a long tale there. The punch line
of the tale is, over the next decade, the milk and dairy
industries will cry not at all over spilled milk and will save
over $1 billion in the next decade.
A few additional illustrations: Several of you referred to
burdens on employers. We are very alert to that. I am
personally very alert to that. Last week, the Occupational
Safety and Health Administration announced a final rule that
will remove over 1.9 million annual hours of recordkeeping and
paperwork burdens. That will save over $40 million in annual
costs, and that may be a lowball estimate. In recent
discussions with people in the business community, that burden-
saving measure was highlighted as an extraordinary step
forward.
OSHA also plans to finalize in the near future a proposed
rule that is projected to result in over half a billion
annualized savings for employers--not $40 million, over half a
billion.
To eliminate unjustified economic burdens on railroads, the
Department of Transportation is reconsidering a rule that
requires railroads to impose certain equipment on--to create
certain equipment that is very expensive. This would save,
potentially, over a billion dollars in the next 20 years.
These are just illustrations. There was a reference by you,
Mr. Chairman, to a cultural change. We are determined to create
that cultural change.
While a great deal has been done in a short time, an
unprecedented effort, and while substantial savings have
already been achieved, the agency plans are preliminary. They
are just drafts. They are being offered to you, other Members
of Congress, elected representatives at all levels, and the
public, emphatically including the business community, for
views and perspectives. Suggestions are eagerly welcome. We
need your help in order to make these plans as good as possible
and to do as much as possible to promote economic growth and
job creations. Agencies will be carefully assessing those
comments and suggestions before they finalize their plans. And
we have a number of weeks, in fact months, in which to do that.
To change the regulatory culture of Washington, we need a
constant exploration, not a one-shot endeavor, of what is
working and what is not. We need close reference to the
evidence and data, and we need very close reference to the
views of stakeholders about what is actually happening on the
ground. To quote the opening words, we are trying to promote
public health and also economic growth and job creations.
I am happy to answer your questions.
[The statement of Mr. Sunstein follows:]

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Mr. Stearns. Thank you, Mr. Sunstein.
The Oversight and Investigations Committee, before I start,
is a little different than some of the other committees. We ask
questions that pretty much are asking for ``yes'' or ``no''
answers. And sometimes the press would criticize, but we are
asking for direct answers. So it is a little bit different. We
are trying to seek information. So if we do ask, we would
appreciate a direct answer, ``yes'' or ``no.''
And so, just to establish the ground rules, we want to make
sure that you are the administrator of OIRA and you comply with
Executive orders dealing with regulatory reform. That is our
understanding. That is correct?
Mr. Sunstein. That would be a ``yes.''
Mr. Stearns. OK. And, as the administrator, you have a role
in ensuring this very important President Executive order,
which is 13563 and 12866. Is that correct?
Mr. Sunstein. Yes.
Mr. Stearns. You are the man. OK.
Now, when you have a rule and it has an economically
significant impact in the economy, wouldn't that particular
rule require more attention than one that is not economically
significant? I am just trying to----
Mr. Sunstein. Absolutely.
Mr. Stearns. Absolutely. Because there are huge
implications on the impact in the economy with this regulatory
framework. And, also, there is risk analysis that should be
done and supporting documents. So we agree there.
OIRA officials have repeatedly claimed that, during the
Obama administration, regulatory reviews by your office have
been shorter than regulatory reviews of previous
administrations. And I think that is--is that a fair claim to
say what the administration has been touting?
Mr. Sunstein. No.
Mr. Stearns. No. OK.
While the economic impacts of the rules are much larger
than in previous administrations, your staff, I think, has
remained--your staff has remained small. I have a graph up
here, if it will stop wiggling. It looks like it is wigging
quite a bit there.
I am trying to show you two charts. I think we have it
there. The first one shows that OIRA is reviewing more large,
complex regulation. And the second one shows that the agency
spends less time on the review of these regulations.
So this would be contrary to what we just talked about and
which you just agreed. So isn't it true that your office's
reviews are shorter in duration----
Ms. DeGette. Mr. Chairman?
Mr. Stearns. Yes?
Ms. DeGette. Do we have a printed chart we could give to
Mr. Sunstein?
Mr. Stearns. We do. I think we have it printed.
Will the staff give him a chart that is not----
Ms. DeGette. Moving.
Mr. Stearns [continuing]. moving, quivering? OK.
So I guess the question is, isn't it true that your office
reviews are shorter in duration than those under previous
administrations, based upon that graph?
Mr. Sunstein. Well, I would want to check those numbers. I
know----
Mr. Stearns. OK.
Mr. Sunstein [continuing]. in the first year we were fast.
Whether we are as fast in the recent past, I would want to
check.
Mr. Stearns. OK.
Why are so many regulations issued after short OIRA reviews
to public comments that they violate the Executive order
principles?
Mr. Sunstein. I don't agree with the premise of the
question. We have had about the same number of rules as in the
first 2 years of the Bush administration. And, actually, 2007,
2008, the Bush administration imposed significantly higher
costs than we did in 2009, 2010.
Mr. Stearns. I have here a study by the Mercatus Center
that I will insert into the record.
The study grades the economic analysis in reviews by OIRA.
It shows that the quality of analysis declined when the reviews
were shortened.
Were you familiar with this?
Mr. Sunstein. I am familiar with that study.
Mr. Stearns. Do you agree with this study?
Mr. Sunstein. Well, not really. I think the important thing
is not how many days on the calendar are spent. The important
thing is the degree of attention and care.
And I believe the same study shows no diminution in quality
between the Bush administration and the Obama administration,
though we are eager to increase the quality and to get it
better and better.
Mr. Stearns. The Executive order that I cited earlier, the
12866, section 6 requires agencies to, quote, ``identify for
the public in a complete, clear, and simple manner the
substantive changes between the drafts submitted to OIRA for
review and the actions subsequently announced,'' end quote, as
well as those changes in the regulatory action that were made
at the suggestion or recommendation of OIRA.
Despite claiming to be the most transparent administration
in history, we understand that the position of the
administration is that this requirement only applies to the
formal regulatory review process. Is that correct?
Mr. Sunstein. I believe that is correct, that we are
following the practice of the Bush administration and its
predecessor with respect to the interpretation of 12866. There
has been continuity across Republican and Democratic
administrations. I am not sure exactly what you mean by
``informal,'' but what you said sounded right.
Mr. Stearns. However, most big rules are submitted to OIRA
on an informal basis before the draft rule is officially
submitted. With respect to significant rules issued since the
passage of the PPACA, would you be willing to provide the
changes suggested by OIRA during the informal review process?
Mr. Sunstein. It is actually very rare that a rule is
submitted informally. That is not the normal practice. It is
extremely unusual. And we don't make--all I would say that
happens sometimes is there are interagency discussions about
rules pre-submission. And we don't have the authority to make
changes in those discussions. But sometimes the agency decides
that the discussions are informative and goes--so, in other
words, informal review is extremely rare.
What is not extremely rare is their interagency
discussions. And there are no changes made, because there is no
rule text, typically. There is just discussion of a policy
issue.
Mr. Stearns. You are saying it is rare, but was it done
with the health-care policy, PPACA?
Mr. Sunstein. Informal review? No. There are discussions,
but not informal--typically, not informal review of rules.
Mr. Stearns. You are saying it is rare, but you are saying
it did occur with the health-care review.
Mr. Sunstein. Well, I would want to go back and see,
because my own involvement is standardly during formal review.
I would want to go back and see whether----
Mr. Stearns. Well, obviously, we would probably not agree
on that point, because we think there has been a lot in the
health-care reform of informal.
Mr. Sunstein. I think there is informal review, which is
very rare, where someone sends over a rule and says, what do
you think? In the health-care context, HHS and Labor----
Mr. Stearns. OK. Do you mind, Mr. Sunstein, if you would
follow up--because you are saying, yourself, right now you not
sure you can remember this correctly--if you would follow up
with the data, just to confirm.
Mr. Sunstein. Delighted.
Mr. Stearns. All right.
With that, my questions are complete, and we recognize the
ranking member.
Ms. DeGette. Thank you very much, Mr. Chairman.
Mr. Sunstein, it sounds like the definition of ``informal
review'' is a term of art, in your mind, and that what you are
meaning is informal review would be if somebody actually sent
text over and it was reviewed and sent back, versus general
discussions about potential rules and policies. Would that be
correct?
Mr. Sunstein. Exactly.
Ms. DeGette. Mr. Sunstein, I would like to ask you about
the cost of regulations because we keep hearing on the other
side of the aisle that the annual cost of Federal regulations
is more than $1.75 trillion. And, as I understand it, the basis
for that figure is a September 2010 study called the Crain &
Crain study, by Nicole and Mark Crain, that stated that the
annual cost of Federal regulation totaled approximately $1.75
trillion in 2008.
OMB, though, reached a different conclusion, finding that
regulatory costs in 2008 ranged from $62 billion to $73
billion.
So I guess I am wondering, how does OMB calculate its
estimate on total regulatory costs?
Mr. Sunstein. Thank you for that, Congresswoman.
What we do is to aggregate the costs of all the rules in a
year. And then, over a 10-year period, we can multiply the
number of rules issued by the cost that we generate. And then
you can have a 10-year aggregate cost as a result.
The study to which you refer, with the 1.75--the
extraordinary $1.75 trillion figure, is deeply flawed, as a
report by the Congressional Research Service this April
suggests. And it has become a bit of an urban legend, the
particular number.
We share, definitely, the concern. But one implication of
that analysis is the United States would be richer if it
adopted regulations more like those of Sweden or Canada, even
though both the World Bank and the OECD rate those countries as
having more restrictive business environments.
Ms. DeGette. Who said that? The Crain & Crain study said
that?
Mr. Sunstein. The Crain & Crain study, with the $1.75
trillion. I should say, I respect those authors----
Ms. DeGette. So they said that we should have regulations
more like Sweden and these other countries?
Mr. Sunstein. No, but----
Ms. DeGette. That is the urban myth?
Mr. Sunstein. No, no, it is an implication of their
analysis----
Ms. DeGette. I see. OK.
Mr. Sunstein [continuing]. That we would be doing better if
we had regulations----
Ms. DeGette. And the administration does not agree with
that, right?
Mr. Sunstein. We do not except that 1.7----
Ms. DeGette. OK. And one of the reasons that what the CRS
review showed and what others have demonstrated is that the
estimate was so high in that study because the authors only
utilized the highest cost estimates in their calculations,
correct?
Mr. Sunstein. Yes.
Ms. DeGette. Now, additionally, what I have heard is that
the authors of that Crain & Crain study did not calculate the
monetary benefits of regulations where there are benefits. And
the OMB found that in 2008 annual benefits of regulation ranged
from $153 billion to $806 billion. Is that correct?
Mr. Sunstein. Yes.
Ms. DeGette. Now, can you please tell us how regulations
could actually benefit Americans and save money?
Mr. Sunstein. OK, there are various different ways.
I referred to the milk rule, which is deregulatory. That
can save money.
There is a lot of concern about rising gasoline prices, of
course, now. If you have a more fuel-efficient fleet, then
consumers can save money. And we recently released a new fuel
economy label which clarifies the savings. So, a law, a rule
that promotes fuel economy can save consumers a lot of money.
If you have a law that saves lives, that saves money, in
the sense that healthier and living people are good for the
economy and we value people's health and longevity.
So, in those three different ways, we can have very
significant benefits from regulation.
Ms. DeGette. So, really, it seems to me--I don't want to be
implying either that more regulations would save more money or
fewer regulations would cost or save more money. In truth, you
have to look at it on a continuum. Sometimes regulations are
not cost-effective, and they should either be fixed or
repealed. But sometimes regulations protect the public health
and actually can save money.
So you have to look at it regulation by regulation, which
is what the administration is trying to do. Is that correct?
Mr. Sunstein. Exactly.
Ms. DeGette. Thank you.
Thank you very much, Mr. Chairman. I yield back.
Mr. Stearns. The gentlelady yields back.
Dr. Burgess is recognized for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Sunstein, are you familiar with the paper from 2003,
``Lives, Life-Years, and Willingness to Pay''?
Mr. Sunstein. I have a vague recollection of that paper.
Mr. Burgess. On page 14 of the paper, this is quoting from
the paper, ``Under the life-years approach, older people are
treated worse for one reason: They are older. This is not an
injustice.''
So I guess the question here--I mean, some people have
described this as sort of a senior death discount. Your office
that oversees regulations, will you be doing an analysis of the
upcoming Health and Human Services rule for the Independent
Payment Advisory Board in light of this philosophy?
Mr. Sunstein. I am a lot older now than the author with my
name was, and I am starting to think I am not sure what I think
of what that young man wrote.
Things written as an academic are, you know, not a
legitimate part of what you do as a government official, part
of a team. So I am not focusing on sentences that a young Cass
Sunstein wrote years ago. So the answer is ``no.''
Mr. Burgess. But, still, it does point out an important
philosophical approach. And many of us are concerned about the
Independent Payment Advisory Board. Right now, this is the only
plan, promulgated by the administration and, therefore, by the
Democratic Party, this is the only plan put out there for
dealing with the cost increases in the Medicare program over
time.
And the difficulty that a lot of--I mean, I was a physician
in my former life. One of the difficulties I have with an
Independent Payment Advisory Board is, now, for the first time,
some central planner, who may be a very benevolent central
planner, but a central planner who is pushing data points
around on a big spreadsheet in a far-off Washington, D.C., is
going to be able to tell me where to get my care, when to get
my care, but the most important thing is when I have had
enough. And if that is based upon the fact that I am old, and
we are dealing with a health-care program that deals with
senior citizens, that is a troubling relationship.
But I appreciate your answer, and we will take that at face
value and incorporate that into our evaluation of the
Independent Payment Advisory Board that the President has
popularized as his approach to saving money in Medicare for the
future.
Our last hearing, earlier this year--and, again, appreciate
you coming back--we talked a little bit about the Texas
flexible permitting program, so shifting gears from HHS to EPA.
So here is another example of a mandate that is inconsistent
with the Executive orders for regulatory efficiency.
The EPA's proposed--their Federal implementation plan for
greenhouse gases that would affect the State of Texas, and, to
my read, probably exclusively the State of Texas, but a Federal
implementation plan that is going to be implemented because
Texas did not meet the requirements under a State
implementation plan, and so the EPA said it was necessary to
step in.
But here is the problem. This is a Wall Street Journal
editorial, ``EPA's War on Texas,'' from--I think it was from
earlier this year, probably right before you came and testified
to us before, that this was the result of an error that escaped
the EPA's notice for 18 years--18 years--that the Texas plan
did not address all pollutants newly subject to regulation,
among them greenhouse gases.
So, somehow, regulators in Texas 18 years ago weren't able
to intuit congressional intent or the intent of the courts 18
years in the future. And, as a consequence now, the EPA will
come in and regulate at a Federal level all of the power
production, electricity production in the State of Texas.
This seems incomprehensible, with the Executive order that
we are going to streamline the process.
Mr. Sunstein. OK. Appreciate the question.
And you are exactly right; the Executive order is designed
to reduce costs of all rules, including rules that involve
greenhouse gasses. That is something we are very focused on.
My understanding of the Texas situation is this: that there
was an intervening Supreme Court decision, a badly split Court,
but the majority said greenhouse gasses were a pollutant within
the meaning of the Clean Air Act.
Mr. Burgess. No, it said the EPA could regulate. I don't
think they said they were a pollutant.
Mr. Sunstein. My recollection is that the Court said
greenhouse gasses are a pollutant and the EPA could not
conclude that they weren't.
Mr. Burgess. We are trying to help the EPA with
legislation.
Mr. Sunstein. Well, Justice Scalia dissented. It is a very
active debate within the Court. And when the Court said that--
so it wasn't as if, I hope, the EPA thought that it had been
made a mistake for 18 years, but, instead, that it had to do
something to allow those permits to be given out in Texas so
people could build.
And so it was responding to, my understanding is, a
difficult situation caused by the confluence of the Supreme
Court decision and the permitting practices----
Mr. Burgess. It may be a difficult situation, if I may,
that they made impossible. Because then they came back and
said, ``Well, you can't do a State implementation plan. We are
going to take that over at the Federal level.''
Texas was the only State singled for that. In the Wall
Street Journal article that I will submit for the record, they
call it ``pure political revenge, an effort intimidate other
States from joining Texas in lawsuits.''
Mr. Sunstein. Well, I will tell you something that nicely
connects the enterprise we are now engaged in with your
question, which is that we are looking back at regulatory
practices. And EPA has one rule, actually, that I hope will
benefit Texas that is going to eliminate a redundant regulatory
requirement that costs a lot of money. And----
Mr. Stearns. The gentleman's time has expired.
Mr. Sunstein [continuing]. It is completely fair game to
raise that question.
Mr. Burgess. And, Mr. Chairman, I would like to submit this
for the record.
Mr. Stearns. By unanimous consent, so ordered.
Ms. DeGette. No, I would like to review it.
Mr. Stearns. The ranking member----
Ms. DeGette. Mr. Chairman, I would like to review it before
it is submitted for the record.
Mr. Stearns. While we are waiting for her to review it, we
will take our next----
Ms. DeGette. Let's just start with the next questions.
Mr. Stearns. Yes, we will start.
The gentleman from California, Mr. Waxman, is recognized
for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
Mr. Sunstein, I believe in government because government
can help set the rules in place that will make this society of
ours and our economy more productive, more competitive, provide
for more jobs, and also protect the public health and safety.
And that is often exactly what regulations are all about. And
sometimes we hear such negative, anti-government, anti-
regulation statements that you would wonder what they think
would operate in its place except for whatever industry wanted,
which may or may not be the best for the economy and for our
public.
But I want to focus on what I think you are here to talk
about, and that is efforts to ensure that executive-branch
agencies employ a transparent regulatory process that produces
commonsense, balanced regulations. That should be our goal. And
I am pleased that we are going to look at this topic.
In January, President Obama directed executive-branch
agencies to undertake a thorough lookback at regulations within
their jurisdictions and to examine ways to make those rules
more efficient, more effective, more reflective of input from
the public at large.
At this point, you have received lookback action plans from
30 departments and agencies; is that right?
Mr. Sunstein. That is correct.
Mr. Waxman. Can you tell us a little bit about some of the
ideas that have emerged from these department and agency plans?
Mr. Sunstein. Happy to do that.
There has been a lot of discussion in the last decade about
conditions of participation from the Department of Health and
Human Services, which are conditions imposed on hospitals and
doctors, and that a lot of these haven't been rescrutinized in
light of what has happened on the ground and possible
redundancy and changes in medical practice and hospitals over
time. Hospitals are often concerned that the Federal Government
is too hard on them, hammering them a little bit with respect
to regulatory requirements. And HHS has a very detailed
discussion of steps that they are taking to reconsider those
requirements.
We have, in the context of hazard communication from the
Department of Labor, OSHA in particular, there has been long
suggestion from the business community, employers in
particular, that these requirements need to be harmonized by
what is happening in other nations so that they can do business
across international lines and so that things are simpler and
less burdensome for them. They have proposed that rule, and
their plan says they are going to finalize it in a hurry.
There has been a great deal of discussion about medical
devices and innovation in the United States and whether these
often small companies which are trying to bring medical devices
to market have an adequate process within the FDA or whether it
is too bureaucratic and time-consuming and difficult. The FDA
has announced a number of initiatives to try to speed up that
process, promote competitiveness and innovation. That should
save a lot of money.
One thing with potentially a very large payoff involves
exports. We know that American companies, often small
companies, have the best opportunity to grow if they are able
to export. One thing we have heard a great deal from, in the
last year and a half, from small business in particular, is
that it is too cumbersome and difficult to navigate the system,
there are too many restrictions. And we have taken away some of
those restrictions, and we are going to take away more. And
that should promote economic growth, and not in the long term.
Mr. Waxman. So we are hear from many Members who are very
frustrated or hearing from their frustrated constituents that a
lot of the regulations don't make sense to them. The purpose of
the administration's review is to see if they are right and, if
they are right, to revise those regulations and bring them up
to date and make sure they meet basic common sense and that
they try to accomplish both the positive economic goals as well
as the protection of the public, which is another side of it.
What happens next in this review process? By the end of the
summer, do you expect the agencies to have final regulatory
lookback plans in place?
Mr. Sunstein. Late August.
Mr. Waxman. And what will happen then?
Mr. Sunstein. My expectation is that we will have in late
August three tracks. One track will be things that are
completed. And, as I say, we expect a billion dollars in
savings to be able to be achieved in the very short term.
Other things that are on fast tracks, in the sense that the
rulemaking apparatus has already gotten moving. Maybe there is
a proposed rule out there; maybe we can propose it relatively
quickly. And that is the second track, which is potentially
rapid for many of the rules.
Then there is a third track, where the rulemaking apparatus
has to be inaugurated. And my hope is that we will be able to
prioritize, with the aid of the views of people on this
committee and your constituents and affected stakeholders, and
prioritize things that we will be able to complete in the
relatively short term, even though the work is being
inaugurated these days and through the summer.
Mr. Waxman. Well, it appears to me that the President's
regulatory review process holds the promise for creating a more
effective, efficient, and responsive Federal Government. I
applaud it. And it seems to me something that both sides of the
aisle, all reasonable people who want to see government
succeed, should welcome. So I certainly want to encourage you
in your efforts. And we should be willing, in Congress, to do
whatever we need to to help out.
Mr. Sunstein. Thank you so much.
Mr. Waxman. Thank you, Mr. Chairman.
Mr. Stearns. I thank the gentleman.
Mr. Scalise is recognized for 5 minutes.
We have a vote. We have just under 10 minutes. And after
Mr. Scalise, we are going to break. I remind all Members, we
have a second panel here, and so I encourage all Members to
come back.
Mr. Scalise?
Mr. Scalise. Thank you, Mr. Chairman.
Mr. Sunstein, last time you had testified before our
committee, I had asked you about the rule that you imposed, the
Deepwater moratorium on drilling. And I think you said that
that didn't fall under the purview of the types of rules you
would review under the Executive order.
When the rule came out, the scientific experts that the
President himself appointed actually disagreed with it. They
said it would reduce safety in the gulf. They said it would
lead to some of your best rigs and your crew base leaving,
leaving the country.
They turned out to be true, unfortunately. We have lost
over 13,000 jobs. We have lost about a dozen of those Deepwater
rigs to foreign countries. So the scientific experts that the
President appointed were actually correct, unfortunately,
because those terrible consequences happened, and so we have
lost those jobs. Safety was surely not improved.
And yet, under the rule, you are still, I guess, taking the
position that that type of rule wouldn't even fall under your
purview.
So what I would ask, is the rule maybe not properly drawn
if an actual rule that has gone through the process, that cost
our country 13,000 jobs and, according to the scientific
experts the President appointed, would actually reduce safety,
and it still doesn't even fall under your purview, so is that
something that you should relook at?
Mr. Sunstein. That is a great question.
Anything that has an adverse job impact we are very focused
on. Our domain is the domain of regulatory actions as defined
under Executive Order 12866. And, for technical reasons, a
moratorium doesn't count as regulatory actions.
Mr. Scalise. All right, but should the Executive order be
updated, amended, revised to take into account those types of
rules, as well, since--again, I am talking about a rule that
actually cost 13,000 jobs and did nothing to improve safety,
and it didn't even fall under your purview.
Mr. Sunstein. It is a legitimate question. And I should say
that anything that costs jobs in that domain or any other
domain is definitely a legitimate part of the lookback process.
Mr. Scalise. I know the FCC is one of the entities who said
that, even though they don't fall under the purview, they would
like to be included. And I think there are some other
independent agencies that said that they would voluntarily look
to be involved in this.
Have you gotten any requests from the FCC or any of these
other independent agencies?
Mr. Sunstein. We have gotten a plan, actually, from the
NLRB. So that is significant. It is short plan----
Mr. Scalise. I heard it was a one-page plan.
Mr. Sunstein. Yes, short----
Mr. Scalise. So, of all these independent agencies, you
have one page to review? Do you just think----
Mr. Sunstein. And we very much hope for more.
Mr. Scalise [continuing]. This is it?
Mr. Sunstein. We very much hope for more.
Mr. Scalise. OK. So you haven't gotten anything from FCC?
Beyond this one page from NLRB, you haven't gotten anything
else?
Mr. Sunstein. You are exactly right. The independent
agencies have not delivered plans. But we are hopeful and we
are encouraging them to engage in a lookback process.
Mr. Scalise. I know we had our meeting with the President
on Wednesday. I think you were there. One of the questions that
was asked to the President was specifically relating to the
EPA. And we have had this conversation with the EPA on many of
their proposed rules and regulations that have no impact on
improving safety. It is much more aligned with a political
agenda, ideology, rather than safety. And, in fact, the EPA has
almost bragged that they don't have to comply with your rule.
We brought this to the President's attention.
Has anything changed in that regard?
Mr. Sunstein. The EPA is very clearly complying with the
Executive order. And you have seen both a plan from the EPA,
which is detailed--it has 31 suggestions for reforms, and the
EPA will be considering what comes in in the next period to add
to that 31--and the EPA's recent rules have been detailed in
their compliance with the Executive order, including their
analysis of what you point to, job impacts.
Mr. Scalise. Can you give our committee any examples of
where you have said ``no'' to the EPA in any of their rules or
regulations? Or the Department of Interior, for that matter?
Mr. Sunstein. The way we work with EPA and Interior is
collaborative rather than anything else. And you can see that--
--
Mr. Scalise. Well, have you all collaborated in a way where
some of their proposals were rolled back?
Mr. Sunstein. You can see that a number of their rules,
when they were finalized, were far more modest than when they
were proposed.
Mr. Scalise. Can you send examples to our committee of
cases, both the previous proposal and then the rolled-back
proposal that I guess ultimately made its way into--I don't
know if it made it all the way to regulation yet or just
further in the process.
Mr. Sunstein. We would be delighted to show examples. I
know the National Association of Manufacturers particularly
applauded the----
Mr. Stearns. The gentleman's time has expired. And we just
want to----
Mr. Scalise. I appreciate that.
Mr. Sunstein. You don't want to hear what the National
Association of Manufacturers applauded?
Mr. Stearns. Why don't you complete the answer, and then we
will call it to a close.
Mr. Sunstein. The EPA's action with respect to the Boiler
MACT rule, which included a recent stay and also a scale-back
in response to concerns.
Mr. Scalise. All right. I would appreciate if you could get
us all of that information to the committee.
And thanks. I yield back.
Ms. DeGette. And, Mr. Chairman, we don't have any objection
to Mr. Burgess' article being inserted----
Mr. Stearns. OK. By unanimous consent, Dr. Burgess' article
will be made part of the record.
[The information appears at the conclusion of the hearing.]
Mr. Stearns. And we will reconvene right after the vote.
Thank you for appearing.
[Recess.]
Mr. Stearns. The Subcommittee on Oversight will reconvene.
And we will recognize for the next series of questions the
gentleman from Pennsylvania, Mr. Murphy, recognized for 5
minutes.
Mr. Murphy. Thank you.
And appreciate your being here today.
I am reflecting back on a quote from Ronald Reagan that
says, ``It is not my intention to do away with government. It
is, rather, to make it work--work with us, not over us, stand
by our side, not ride our back. Government can and must provide
opportunity, not smother it, foster opportunity and not stifle
it.'' He said that back in 1981, and I would think we would all
agree.
And, certainly, I haven't heard anybody from our side of
aisle say we don't like regulations. We recognize they do
provide a valuable role in health and safety.
But there is some ambiguity added on. When the
administration came out with its Executive order in January of
this year, it said that regulations should be evaluated by
values that are difficult or impossible to quantify, including
equity, human dignity, fairness, and distributive impacts.
Are those measures that you use when reviewing regulations?
Mr. Sunstein. Our principal focus, as the previous sentence
of the Executive order emphasizes, is costs and benefits and
quantified. So our focus is, how much does this cost, what are
the benefits, and monetizable if possible. That is our
principal focus.
Mr. Murphy. With that Executive order, does it is have the
authority to overturn laws that Congress passes?
Mr. Sunstein. Absolutely not. And the phrases you pointed
to were actually a recognition that, under some laws, like
those designed to prevent rape or to prevent discrimination
against returning veterans, for example, who are in wheelchairs
and can't use bathrooms without assistance--dignity is
involved.
Mr. Murphy. One of the things that we had a hearing on the
other day had to do with Yucca Mountain. And the law very
clearly states that, when these licenses and other things go
forth, action is to be taken. And yet, now we hear a new
standard coming out, that we are supposed to look at issues of
consensus, social consensus, in those areas.
And yet, what you just said was, you don't have the
authority to overturn laws. I am assuming that the Department
of Energy is one areas you can have oversight over?
Mr. Sunstein. Yes.
Mr. Murphy. Do you intend to have any discussion with them
with regard to if they decide to ignore the law based upon a
new standard that is not even in the law?
Mr. Sunstein. Well, I should say that fidelity to law is
our first foundation stone. That is the requirement of
everything we do.
We oversee DOE rulemakings. So if there is rulemaking
activity in that domain, we would, as a matter of course,
engage with them. And if there isn't something as a matter of
course we would engage with them on, we would be happy to
engage with them.
Mr. Murphy. I think it is extremely valuable if you could
report to this committee on that very specific issue. Because
the law is quite clear, but the dance the Department of Energy
is doing that is thwarting that law, adding new standards that
are not in the law, is also quite clear. And we need to have
your response. Will you submit it to me?
Mr. Sunstein. Yes.
Mr. Murphy. Thank you.
Another issue has to do with impact of the health-care bill
on small businesses. According to the administration's own
estimates, its regulations are going to force half of all
employers, or as many as 80 percent of small businesses, to
give up their coverage in the next 2 years. And that is a big
concern.
Are you aware of that assessment of the negative impact?
Mr. Sunstein. That particular number I was not aware of,
but I certainly know of the general concern.
Mr. Murphy. And when you look at cost-benefit analysis--and
we are seeing numbers grow, in terms of the cost of the health-
care bill. And we see estimates that are not 9 million people
will lose their benefits, but as many as 30 million, 40
million, 80 million. Even those exceeding what the estimates
are that the bill would actually provide health care, an equal
or double that amount may lose health care.
And so, along those lines, for PPACA or otherwise, have you
been pushed in any way to move rules through quicker, despite
information like that?
Mr. Sunstein. No.
Mr. Murphy. Can you delay finalizing any of the rules based
upon how the agencies have handled or incorporated public
comment and responses from the business community?
Mr. Sunstein. The basic answer is ``yes.'' And we often
engage for lengthy periods with agencies because of those
public comments. In fact, I spend a lot of personal time on the
Web site known as regulations.gov, studying those comments.
The only qualification, as you suggest, fidelity to law is
our first obligation. And if the law requires action or
requires action by a date certain, then we have to respect
that.
Mr. Murphy. I know when Republican Members were at the
White House this week, the President was asked questions by the
EPA and regulations and looking at cost-benefit analysis, that
how would we look at that in terms of the impact upon jobs, as
well. And he said that, basically, there were mandates and
standards of law that we had to adhere to, and if Congress
wanted to do something otherwise, we should change those laws.
And, certainly, I agree with him, that is, once the law of the
land is there.
But the question also becomes of how you act. I mean, you
are in a position of considerable authority here. And so, on
these areas of delays or pushback, have you ever actually done
so, in terms of to any agency? Can you give us an example of
how you have pushed back, how you have said, ``You need to
delay in putting on this regulation until we analyze it or
until you have come back with a cost-benefit analysis that is
different''?
Mr. Sunstein. Well, what you can see is, over 100 rules
have been withdrawn from OIRA review. And, in many cases, the
reason for the withdrawal is insufficient engagement with
issues of cost and economic impacts. So you can see that.
You can also see that, often, the final rule comes out a
lot different from the proposed rule. Often, it is a lot less
expensive and less burdensome. And sometimes proposed rules
just aren't finalized because there is significant concern from
the standpoint you have raised.
And the interagency review, which involves not just the
Office of Information and Regulatory Affairs but the Department
of Commerce, the Council of Economic Advisors, plays a role.
Mr. Murphy. But how about pushback on the health-care
rules? Have you done any of that?
Mr. Sunstein. Our first obligation, with respect to the
health-care rules, is to obey the law. We are in the
implementation phase----
Mr. Murphy. But have you pushed back?
Mr. Sunstein. Well, I wouldn't want to phrase it ``push
back.'' I think we work closely with the agencies to make sure
that the costs are as low as possible and to make sure that the
burdens are reduced.
And you may have noticed with respect to the grandfathering
rule, there was an amendment to the rule that responded very
concretely to concerns from affected stakeholders about
excessive burdens. And there has been a lot that has been done,
and we and others have been participating in that, in trying to
make sure that the implementation----
Mr. Murphy. I am not sure I am getting an answer here. Has
it happened?
Mr. Sunstein. Well, I wouldn't want to claim personal
credit for anything, but what I would say--or blame--but what I
would say----
Mr. Murphy. Let me word it this way. Because employers
routinely opt to change carriers but keep the same benefits, in
order to cut health care-costs without any change coverage.
Now, under the interim final rule, or the grandfathering plans,
issued in June of last year, employer plans lost their
grandfathered status for changing carriers regardless of
whether benefits remained the same.
So do you believe Health and Human Services should have
instead proposed a rule open to comments from stakeholders who
could have advised HHS of its own flawed decision before the
problem began?
Mr. Sunstein. What I would say about that is that the
interim final rules receive comments, and HHS should be and is,
has been, highly responsive to those comments. In the
particular case you give, so responsive as to amend in a hurry
the rule to respond to some of the concerns. And we all
discussed that.
It is also the case that there were Q&As and guidance
clarifications that were very responsive to concerns raised by
exactly the people to whom you refer. And that is good
government.
Mr. Murphy. Thank you.
Thank you, Mr. Chairman.
Mr. Stearns. I see no one on the Democrat side. We will go
to the chairman emeritus, Joe Barton from Texas, for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman.
Congressman Burgess was speaking to you about some rules
that impact Texas, and I am going to follow up on that but in a
little bit different way.
Are you familiar with the PM2.5 and ozone transport rule
that EPA is in the process of promulgating to replace the CAIR
standards that were ruled not in compliance with the Clean Air
Act several years ago?
Mr. Sunstein. Yes, I am.
Mr. Barton. OK.
Are you aware that, I think just this week or maybe last
week, EPA disallowed a Texas State implementation plan and put
down some requirements that, if implemented, are probably going
to shut down 25 percent of Texas' electricity generation
capacity?
Mr. Sunstein. Is this in the Clean Air transport rule
draft? Is that----
Mr. Barton. It is what just came out.
Mr. Sunstein. Yes. That rule is under review at OIRA now.
And so my understanding is that nothing has been done along the
lines you have just described.
Mr. Barton. Now, I want to give you an opportunity to
demonstrate real accountability.
My understanding is, the office that you hold is the
President's direct link to reviewing all the various
regulations except those that are specifically exempted by the
Executive order. In other words, you are the President's man
who makes sure that all these myriad agency regulations do pass
some minimum tests for cost-benefit and things like that. And
you are supposed to review every significant order, et cetera,
et cetera.
I want to read you what the EPA said about this interstate
transport decision that they just handed down. It says, ``This
proposed action is not a significant regulatory action under
the terms of Executive Order 12866'' La di da di da. ``It is,
therefore, not subject to review under Executive Order 12866
and 13563.''
It is going to shut down 25 percent of the power generation
in Texas. That is not significant? Do you consider it
significant?
Mr. Sunstein. OK, that--if that has--under our Executive
order--now I know what you are talking about.
Under our Executive order, if it has $100 million in annual
cost or a significant impact on a sector area, then it counts
as significant. So, if you would like, I will definitely look
into that.
Mr. Barton. Now, I want you to do more than definitely look
into it. I want you to do something about it. If your agency
disagrees with the executive branch regulatory decision, can
you stop it?
Mr. Sunstein. If there is a regulatory action, we have the
authority to stop it, to the extent consistent with law.
Mr. Barton. Have you ever exercised that authority?
Mr. Sunstein. Well, we have seen over a hundred withdrawals
of rules----
Mr. Barton. OK.
Mr. Sunstein [continuing]. About 110. And that speaks for
itself.
Mr. Barton. Well, I am going to read you something. Now,
this is generated by the State of Texas, so that is the source.
It says, ``The only way to achieve EPA's contemplated emission
reduction mandate by the 2012 compliance date,'' which is next
year, ``will, in fact, be to cease operating the affected units
for most of the year, leading to the loss of jobs, shutdown of
lignite mines, and serious risk to electric reliability.''
Now, keep in mind that Texas is in compliance, in terms of
the standards. Keep in mind that the regions that are
supposedly affected by Texas--St. Louis and, I think, Baton
Rouge--have just been declared in compliance. And yet, EPA has
come out in the last week and stipulated that, by next year,
Texas has to achieve an additional 34 percent reduction in
SO22 emissions.
We have already achieved a 33 percent reduction in the last
10 years. And in the next 6 months, we have to achieve 34
percent more or shut down all these plants. I think that is
pretty dadgum significant.
Mr. Sunstein. I think you said one of my favorite words in
the English language, which is the word ``proposed.'' This is a
proposed rule, correct, not final?
OK, well, from the standpoint of those concerns, that is
excellent news. And it has happened in the last few years that
something has been proposed and not been deemed significant,
and then, as a result of further assessment and public concern,
it has been deemed significant at the final stage, and there
has been OIRA involvement. So----
Mr. Barton. My time----
Mr. Sunstein [continuing]. We will definitely take a look
at that.
Mr. Barton. My time has expired, but I am going to work
with Chairman Stearns and Ranking Member DeGette and Chairman
Upton and Ranking Member Waxman. We are going to follow up on
this.
Mr. Sunstein. Great.
Mr. Barton. And we are going to expect--we are going to
work cooperatively with you with you and your staff. But if you
really have any authority, now is the time to exercise it.
Mr. Sunstein. Understood.
Mr. Barton. Thank you.
Mr. Stearns. I thank the gentleman.
The gentleman, Mr. Sullivan, is recognized for 5 minutes.
Mr. Sullivan. Thank you, Mr. Chairman. Thank you for
holding this hearing.
And thank you, Mr. Sunstein, for being here.
What is the process for determining whether a regulation is
subject to Executive order?
Mr. Sunstein. The basic idea is, is it significant?
Meaning, does it have $100 million in annual costs on the
economy--or benefit, by the way, and $100 million in impact--
then it can be deemed significant. Also, if it affects a sector
or an area. So there can be something that falls short of the
$100 million threshold that, nonetheless, has an economic
effect. Or it can raise novel issues of policy or law.
So the net is wide, but it doesn't include more routine or
mechanical or, kind of, daily, mundane things.
Mr. Sullivan. Well, I have here, right here, a proposal of
disapproval of Oklahoma's implementation plan for regional
haze. And I talked to you a little bit before about that
before.
EPA proposes to disapprove Oklahoma's plan. They did what
they were told to do, and they achieved the goals that were
supposed to be achieved, at much less cost. Yet, the Federal
Government stepped in and said, no, we want to implement our
Federal implementation plan, which has a much more aggressive
timeline and will cost ratepayers almost $2 billion.
And what I would like to know is, did OIRA review this
proposal?
Mr. Sunstein. A Federal implementation plan, as in Texas,
we would review the decision to go forward with that. A
disapproval of a State implementation plan isn't a rule, so
that we would not review.
Mr. Sullivan. You know, I have introduced a bill recently;
it is called the TRAIN Act. And I have talked to you a little
bit about that. It requires a cumulative analysis of the big
regulations that impact America's manufacturing and energy
prices to better understand how they will impact international
competitiveness and job creation.
Will you and the administration support this?
Mr. Sunstein. There are three words you used--cumulative
costs, competitiveness, and job creation--that are very much
our focus. They are prominent in the Executive order. And this
is something daily we are attending to.
With respect to legislation, my own lane is the narrow one
of implementation, and I defer to others on that issue.
Mr. Sullivan. And I have talked to the White House, the
President about this, too, and they seem supportive. I don't
know if they are telling me that just to placate me or
anything. They could be.
But, Mr. Sunstein, you are a very intelligent man, there is
no question about it. In the administration you are highly
regarded. What you say carries a lot of depth and weight. And
will you tell the President that you think he should sign that
bill?
Mr. Sunstein. Well, I tend not to tell the President what
he should and shouldn't do.
Mr. Sullivan. I think he would listen to you, though. He
doesn't know all this stuff, like you. And if you come in
there, Mr. Sunstein, a guy like you, he is going to say, ``Oh,
OK, I think we will do it.''
Mr. Sunstein. He might have done that when we were
colleagues at the University of Chicago. He is kind of
President now.
Mr. Sullivan. See, you guys go way back. And he is good at
some things; you are good at other things. And I think you
could be a big impact on him on this.
Mr. Sunstein. Appreciate it.
Mr. Sullivan. And I would hope you can.
Because I go around my district, Oklahoma, around the
country, and I have never heard people talk about the EPA like
they are now. I think people are tuned in that this is costing,
and everything that is done is passed down to consumers, the
people. It is not on the businesses; they just pass it through.
So we have to keep that in mind. And it does affect
competitiveness and jobs and our economy.
And, Mr. Sunstein, you have said good things today, and I
hope that you will support this, because I think it is
something we should do. And I don't think it is too much to
ask, to do these cost-benefit analyses on global
competitiveness and jobs.
Mr. Sunstein. Appreciate it.
Mr. Sullivan. Thank you.
Mr. Stearns. I thank the gentleman.
The gentlelady from Tennessee, Ms. Blackburn, is recognized
for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman.
Mr. Sunstein, I think you can tell that we are all hearing
from our constituents that they are frustrated with what is
coming from this administration.
I started in January doing listening sessions with our
employers in our district. They were jobs-related listening
sessions. I mentioned that to you the last time we talked. And
they are incredibly frustrated with--as one of my constituents
said, ``You know, we used to get an update on a rule, a
periodic, one-page update. Now the regulation comes in reams
and reams and reams of paperwork.''
And it is such a heavy burden that the jobs numbers today
should not surprise you all, because what you are doing isn't
working. So this should be instructive to you, and I hope we
can work with you on this.
And I know that you all are saying, well, we have draft
proposals that are out there, we need input. And what the input
that is coming back to you is, you are on the wrong track. So
if you are on the wrong track, sir, please advise the
administration to change what they are doing.
Now, I know that the Executive order, the 13563 that we are
discussing, independent regulatory agencies are not to be
subject to the OIRA review. But these agencies are--and I am
using your words--encouraged to do so on a voluntary basis and
to perform retrospective analysis of existing rules. And you
had hoped that they would do that. Is that correct?
Mr. Sunstein. That is correct.
Mrs. Blackburn. OK.
I have a June 1st letter to the editor in the Wall Street
Journal where Commissioner Nord from the CPSC notes that, under
the Obama administration, CPSC has--and I am quoting her--
``ignored the recent direction to look for and eliminate
burdensome regulations. We are just too busy putting out new
regulations,'' end quote.
I got to tell you, that is the kind of thing that we are
hearing from our employers is frustrating to them.
So let me ask you this. Among the 30 preliminary draft
plans that are supplied by the agencies to OIRA by May 18th and
released on the White House Web site, did any of them come from
the FCC, the FTC, CPSC, FERC, or the NRC?
Mr. Sunstein. No.
Mrs. Blackburn. They did not. And, sir, what is going to be
your next step to address it?
Mr. Sunstein. Well, I am hopeful, and I have said in
writing and I will say right now, that we would very much like
the independent agencies to engage in this lookback process.
Mrs. Blackburn. OK. I have to tell you, the American people
are hopeful for jobs. And you all have dropped the ball. They
are getting tired of this.
Mr. Sunstein. Well----
Mrs. Blackburn. And they are expecting us to take some
action.
Mr. Sunstein. Well, I----
Mrs. Blackburn. And what you are doing with sending out all
these regulations is wrong. If it is going to have a $100
million impact, we are going to pull it in here. And we are
going to hold you all accountable of this, and the American
people are going to hold you accountable for this. You have to
find a way to get these agencies to get some of this regulation
off the book.
Let me ask you about--1\1/2\ minutes left--the accountable
care organizations. Health care in Tennessee is a very
important industrial sector for us. The proposed rule on the
accountable care organizations is incomprehensible. It is huge,
it is incomprehensible.
There is a group representing some of these organizations,
such as the Mayo Clinic, that wrote the administration, saying
that more than 90 percent of its members would not participate
because the rules--the rules--not the law, the rules--as
written, are so onerous that it would be nearly impossible for
them to succeed. I am hearing the same thing from my
constituent companies.
In addition, the regulations were stated to be overly
prescriptive, operationally burdensome, and the incentives are
too difficult to achieve to make this voluntary program
attractive. One of the major problems seems to be that the
medical groups have little experience in managing insurance
risk, and the administration blueprint rapidly exposes them to
potential financial losses.
What has OIRA's role been in reviewing this rule to date
for the accountable care organizations?
Mr. Sunstein. OK. The quote you gave is very reminiscent of
some stakeholder response to the meaningful-use rule, which HHS
proposed a while back.
Mrs. Blackburn. And there are problems with that, too,
aren't there, sir?
Mr. Sunstein. As it----
Mrs. Blackburn. We are hearing about those problems with
the meaningful-use rule.
Mr. Sunstein. And the lookback process can potentially help
there.
Mrs. Blackburn. Are we going to speed that lookback process
up?
Mr. Sunstein. Well, I would love--I would like nothing
more----
Mrs. Blackburn. How do we help you speed that process up?
Mr. Sunstein. OK. Well, your idea--there are two things.
First, this very hearing and your interest in making sure
that what is on the plans and not implemented already or not on
a very fast track, that those things are implemented in a hurry
or put on a fast track. Your ideas about what should be on the
plans that aren't on the plans, very welcome. With respect to
the rule you raise, as I said, it is a little pitiful, but it--
--
Mrs. Blackburn. Should we retrieve the rulemaking authority
and address it statutorily?
Mr. Sunstein. Well, I wouldn't say that. What I would say
is the Administrative Procedure Act has a mechanism and the
word ``proposed,'' not just because I am recently married, but
also because the fundamentally constructive nature of proposed
rules or interim final, where you get a chance for people to
fix things, I have heard the concerns to which you point, and
our role will be in trying to address those concerns and make--
--
Mrs. Blackburn. Mr. Sunstein, my time has expired. But I
would just like to place a motherly reminder: Actions speak
louder than words. And the American people have gotten very
tired. They are ill and fatigued with the talk.
I yield back.
Mr. Stearns. I thank the gentlelady.
Mr. Gardner, the gentleman from Colorado, you are
recognized for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman.
And thank you, Mr. Sunstein, for appearing before the
committee today to answer some questions.
Just a couple quick questions. Do you believe that we an
overregulation problem in the United States?
Mr. Sunstein. I would say--if it is a ``yes'' or ``no''
answer I am pleased to give yes.
Mr. Gardner. Could you put a price to your own price tag?
You said you disagreed with some of the others. Do you have a
price tag in mind of that overregulation?
Mr. Sunstein. Well, I don't. But I hope to be able to cut,
with the leadership of the relevant agencies, to cut the re-
existing costs down very significantly.
Mr. Gardner. But you don't know what those costs would be
right now?
Mr. Sunstein. Well, what we can say is that we have already
cut hundreds of millions, and in a very short term we will be
able to cut a billion. If we aren't able to cut billions out of
this process, that would be a surprise.
Mr. Gardner. Executive Order 13563 specifies that
regulations should promote job creation and that regulations
should impose the least burden on society.
When will your office issue guidelines for analyses that
will identify whether rules promote job creation or whether
they will result in job destruction?
Mr. Sunstein. OK, what we have been doing is working
carefully with the agencies in--rather than the guidelines
approach, though that is an interesting suggestion, we have
been working carefully with agencies when a rule has potential
job impacts to make sure that that is addressed fully. And----
Mr. Gardner. So will you be issuing guidelines, though, for
analyses to identify those rules?
Mr. Sunstein. It is an interesting question, whether this
should be done via guidelines versus a rule-by-rule basis. And
that is one--we have been focusing on the 30 plans in the last
months. That is a question----
Mr. Gardner. So you will not be issuing guidelines on the
job creation----
Mr. Sunstein. No, I didn't say that. We are focusing,
really laser-like, on job impacts of rules. And you can see,
actually, with rules withdrawn or amended in the last months,
in part because of concerns about job impacts, some of them
very prominent. So this is something we have been doing on a
daily basis.
Whether this should be done through guidelines or not, it
is an interesting question. It is consistent with the Executive
order and also OMB Circular A-4, which has some words on this,
to focus on job impacts of rules. Whether guidelines are useful
or not, as I say, that is an interesting question and very
worth considering.
Mr. Gardner. And then, so, I mean, under the process that
you are considering then, are you going to require methods of
analysis that account for both direct and indirect job impacts,
or will your office follow EPA's lead--we had testimony here
from the assistant administrator of EPA--and ignore the job
losses that result from shutting down facilities and increasing
energy prices?
Mr. Sunstein. I believe that testimony was focused on a
rule issued before the recent Executive order. And, under the
recent Executive order, job impacts have been and will continue
to be discussed.
Mr. Gardner. But it also requires a lookback, though, so
they should have done a lookback on that.
Mr. Sunstein. Oh, well, if EPA--the rule I think you are
referring to is a proposed rule where there is an extensive set
of comments, including comments that involve job impacts. And
it would be very surprising if those impacts weren't carefully
addressed before the rule is issued.
In terms of the lookback process, we are very much
concerned with prioritizing the lookback so as to get job
growth going.
Mr. Gardner. And so, there are a number of studies--I have
a study right here in my hands here--a number of studies that
show health affects associated with a job loss--health affects
and impacts on family, impacts on education.
If a rule is expected to shut down a facility, shut down a
business, or reduce employment, don't you think that cost to
Americans' health associated with that shutdown should be
considered under the Executive order?
Mr. Sunstein. Well, I am aware of that empirical
literature. It is an interesting set of findings.
What I would say is that the job impacts of rules
definitely should be addressed. Whether health impacts that are
a consequence of job impacts should be addressed, it is a
little bit of a frontiers question in social science. I know
the literature to which you are pointing. And existing OMB
documents don't require that, but it is certainly worth
thinking about.
Mr. Gardner. So, right now, you are not taking into account
impacts on children or families when they lose a job as a
result of a regulation?
Mr. Sunstein. Well, to take account of job impacts, which,
as I say, is a central focus of ours, is to consider job
impacts on families and children. The word ``job impacts,'' in
ordinary language, especially in the current economic
environment, even before, the word ``job impacts'' naturally
calls up adverse effects on families and children.
Mr. Gardner. Are you aware of rules at the Department of
Transportation relating to new signage requirements that are
costing counties tens of thousands, if not more, dollars each?
Mr. Sunstein. Yes. And I am aware that the Secretary of
Transportation is very concerned about that and pulled back on
those rules.
Mr. Gardner. And so, they have pulled back on those rules?
Mr. Sunstein. Absolutely. He personally has been engaged.
Mr. Gardner. And so that rule is no longer in effect and it
has been stopped?
Mr. Sunstein. Well, the rule that was causing the public
concern was pulled back, and there is reassessment. And you can
be sure that the most vocal and convincing concerns about
unjustified costs have been well heard by the Department of
Transportation.
Mr. Stearns. Thank the gentleman. His time has expired.
The gentleman from Virginia, Mr. Griffith, is recognized
for 5 minutes.
Mr. Griffith. Mr. Sunstein, Executive Order 13563 states
that regulatory actions must be based on the best available
science. Your office has primary responsibility for helping the
President achieve this objective.
You may be aware that there is a pending science policy
decision at the National Toxicology Program that involves the
listing status of formaldehyde in an upcoming report on
carcinogens. This listing status is very important. It is the
basis for regulatory actions that may be taken now or in the
future by OSHA, EPA, and other Federal agencies and,
additionally, may directly affect marketplace purchasing and
legal decisions in the near future.
My understanding is that the studies and data sets that
were reviewed by the NTP in its ongoing decision-making process
are the same as those used in the draft formaldehyde assessment
by the EPA. As you may know, the National Academy of Sciences
recently called that EPA draft assessment into question and
raised serious concerns suggesting the draft assessment is in
need of substantial revision, at the very best.
I assume you agree the Federal Government must have
consistent, clear, and coordinated scientific positions on
matters of public health. Considering the inconsistent
positions on fundamental science issues between these bodies,
can you assure me that you will personally be involved in
reviewing this issue and ensuring that any policy decision made
by the NTP will reflect the best available in sound science,
including recommendations and conclusions of the National
Academies?
Also, OIRA, from time to time, has found it useful to
engage the National Academy of Sciences to review scientific
evidence and provide an independent assessment. Will you engage
the Academy on scientific questions at hand in the NTP report
prior to its release?
Mr. Sunstein. Thank you for that.
Our domain, our central domain, involves regulation and
rulemaking, and the best available science is crucial to that.
And we care a lot about the National Academy of Sciences. I
work closely with the President's science advisor, John
Holdren, and the Office of Science and Technology Policy to
make sure the science is right.
On the particular issue you raise, it is not rulemaking in
the sense that is our normal domain. But I can promise you
this, that in the next 24 hours I will discuss this with John
Holdren.
Mr. Griffith. And let me let you know why I am concerned
about it. We heard earlier that regulations are good. And they
are, in some cases. I am not sure they are always good for
jobs, but sometimes they are, sometimes they aren't.
But formaldehyde is of great concern. In Giles County
alone, we have an industry there that employs over 600 people.
We are also looking at probably an announcement in the next
week that we are going to lose some jobs in that same county.
The county is 17,000 people. And we are looking, based on
regulations, losing--over the course of the next couple of
years, we have a good chance of losing, if these regulations go
into effect, 700 jobs. And you can do the multipliers on that
and then realize that the multiplier is higher in rural areas
where the money tends to stay in the community.
When I am talking about the county, we are not talking
about one town; we are talking about all the towns add up to
17. So the end of the county that has the 600 jobs based on an
industry that uses formaldehyde is extremely significant. And
it is not the only county in the Ninth Congressional District
of Virginia where jobs can be impacted by these regulations, so
I do ask you to look into that.
Let me switch over to another subject of interest in the
district, and that is the milk regulations. We do appreciate
that the EPA did decide not to regulate. And I assume you stand
by your statement in your opening statement, both written and
oral, as to that, and I appreciate that.
Let me ask you this. It is also fair to say that those
regulations treating milk, because of the animal fats, as an
oil never actually went into effect, that they had been--the
phrase around here I am learning is, the can had been kicked
down the road for some time.
And without the April 12th EPA announcement that they were
not going to--that they were going to exempt the milk products
that you mentioned in your written statement, without that
exemption, they would have been regulated in November of this
year. Is that not correct?
Mr. Sunstein. I believe that is mostly correct. My
understanding is that the coverage of milk actually was real
and in the law; enforcement--and this is a good thing--was not
firm. So it was in kind of an enforcement limbo.
Mr. Griffith. Yes, sir. And without the action on April
12th, the enforcement would have begun in November?
Mr. Sunstein. That is correct.
Mr. Griffith. All right. I appreciate that.
And thank you very much and appreciate your work on trying
to save jobs. Like so many others, that is a main concern in
our district. And we hope that you do have the President's ear
and that you can convince him to roll back some of these
regulations that have already gone into effect and not
propose--or not have them go into effect where they are going
to cost jobs, like the milk regulation would have done.
Mr. Stearns. I thank the gentleman.
The gentleman from Texas, Mr. Green, is recognized for 5
minutes.
Mr. Green. Thank you, Mr. Chairman.
And thank you, Mr. Sunstein, for being here. And I would
like to talk about the importance of regulations on protecting
our economy.
In advance of the hearing, both Chairman Upton and Chairman
Stearns stated, ``We are pleased the administration is sharing
our concerns that burdensome regulations are stifling
investment and chasing jobs overseas.'' I have an industrial
base, and I share that concern. Although I am concerned about
some of my Republican colleagues believe that all regulations,
regardless of the protections they afford, hurt the economy.
And let me give you an example. Years of deregulation
brought the markets to the point of collapse in 2008. The
Federal Reserve had the authority to stop the lending practices
that fueled the sub-prime mortgage market, but Chairman
Greenspan refused to regulate the industry. The Securities and
Exchange Commission relaxed its net capital rule in 2004,
allowing investment banks to increase their leverage ratios
33:1.
The Treasury Department opposed legislative efforts to
require transparency and oversight concerning trading in energy
derivatives. The Office of Thrift Supervision and the
Comptroller of the Currency prevented States from protecting
home buyers from predatory lending. In what was the result, in
the fall of 2008, the financial markets in the United States
collapsed. This economic crisis created a recession, causing 8
million Americans to lose their jobs and the stock market to
lose 50 percent of its value.
I also want to read to you conclusions from the
congressional TARP oversight panel. They concluded that, ``Had
regulators given adequate attention to any one of the three key
areas of risk management, transparency, and fairness, we might
have averted the worst aspects of the current crisis.'' Mr.
Sunstein, this oversight panel concluded that lack of
regulation was a primary cause of the financial crisis.
My first question is, do you agree with the findings of the
TARP oversight panel, and was this a case where the lack of
regulation harmed the economy and caused the Nation to lose
these millions of jobs?
Mr. Sunstein. I am in general agreement with that.
Mr. Green. OK.
In the view of President Obama, any increase of government
rules and regulations, do they hurt the economy?
Mr. Sunstein. Depends on the rules and regulations. Some
do. Some don't.
Mr. Green. Well, and hopefully we learned our lesson,
although sometimes we keep having to learn our lesson. We saw
during the financial crisis targeted and effective regulations
can provide important safeguards for our economy. And we hope
we remember that government regulations can play an important
role in protecting our country and our citizens.
But also, on the other hand, I see a lot of what I think
are really silly regulations come out and think, OK, how did
they get to that point? And I tell people, Congress is the only
institute known to man that can turn an elephant into a
giraffe. Sometimes I think committees coming up with these
regulations can do the same thing.
Mr. Chairman, I appreciate the opportunity to ask these
questions.
Mr. Stearns. I thank the gentleman.
And, Mr. Sunstein, we are going to do a second round, so we
won't hold you too much longer. I will start out.
I want to go back to the chart that was quivering up there.
I think we have given you a copy of that chart. Did you know
that that chart came from the Web page reginfo.gov, that is
where we got it all?
Mr. Sunstein. I did not, but reginfo.gov is one of my
favorite Web pages, and I trust it.
Mr. Stearns. OK. So, assuming that that information is
correct, if you look at the graph again, you will see that the
one graph shows the number increasing in number of regulations
that have economic significance reviewed by OIRA from 2008,
2009. Do you see that?
Mr. Sunstein. I do.
Mr. Stearns. And then you would assume--it came from your
Web site--that that is accurate?
Mr. Sunstein. I would.
Mr. Stearns. OK. Then you go to the second graph, and you
see that, during the same time, particularly in 2010 and 2009,
the average duration for those reviews have gone down. Do you
agree with that?
Mr. Sunstein. That looks about right. I wouldn't put a lot
of weight on the fact----
Mr. Stearns. Well, let me just finish.
So you agree that the information came from your Web site,
that you approve, it is accurate. You agree that the first
graph is correct and the second graph is correct.
So I guess, going back to the first question where you
disagreed, I guess you would now agree that the second chart
shows you spend less time in review of these regulations and
you would have to agree with the chart.
Mr. Sunstein. I will tell what I would want to see before
signing off on that. The left-hand chart says, ``economically
significant rules reviewed by OIRA,'' and the right-hand chart
says, ``average duration of OIRA regulatory review.'' Most of
the rules we review are not economically significant.
So what I believe is the case, though I would want to see
the chart to make sure, is that in 2010 our average duration
for rules in general is pretty close to the predecessor. I
believe that is true, but I want to see the chart to make sure.
Mr. Stearns. Well, I am glad you agree that the charts are
accurate. I think you are parsing your words here by saying the
actual wording of our titles you might not agree with.
Mr. Sunstein. No, no, it is not semantics. It is that we
review mostly significant rules that are not economically
significant. So, economically significant are well under 50
percent of the rules we review. So what we would want to
compare is the significant rules to the average review time or
the economically----
Mr. Stearns. OK. All right.
Mr. Sunstein. You get the point.
Mr. Stearns. It sounds like a Chicago professor at law.
I think the point we are trying to make is that, basically,
that you have had more economically significant rules in the
years from 2008 to 2010, and, at the same time, the actual
review and the economic impact has gone down. So that is our
point we want to clearly make. And we want you to understand
that you might come back with a little different
interpretation, but these came from your Web page.
Let me move on to my next set of questions dealing with
end-of-life-care rules. During your last appearance before the
economy, you testified that the decision to include end-of-
life-care rules into a Medicare regulation was inappropriate
and that the American people deserve to see the content of the
rules before they are finalized. That is what you said.
Do you still agree with that statement?
Mr. Sunstein. Absolutely.
Mr. Stearns. OK. But are you aware, on March 3rd, 2011, in
an appearance before the Subcommittee on Health, Secretary
Sebelius freely admitted that she made the decision to publish
this regulation without notice or public comment? Were you
aware of that?
Mr. Sunstein. I was not aware of that.
Mr. Stearns. OK, well, that is a fact, that based upon what
you said, obviously she did not comply with it.
Have you ever had any discussion with Secretary Sebelius
about this admission?
Mr. Sunstein. What I would say is, Secretary Sebelius was
very responsive to the concern that this had not been
adequately ventilated by the public. And that was promptly
corrected on exactly the ground you state, and that was the
Secretary's decision.
Mr. Stearns. Yes. So here we have end-of-life-care rules in
Medicare--controversial, to say the least. And she agreed that
she had not even sought public notice. Don't you find that--is
the word ``preposterous''?
Mr. Sunstein. Well, I think what happened was that, long
before anything like that went into effect, the correction was
made. And that is a good thing.
Mr. Stearns. But you agree that she was incorrect by not
asking for public comment?
Mr. Sunstein. Well, HHS, I think what they formally said
was not that they hadn't asked for public comment, but that it
hadn't been adequately ventilated by the public. This is a
very----
Mr. Stearns. Ventilated? Ventilated. OK.
Mr. Sunstein. Ventilated, not in the sense of air, but in
the sense of----
Mr. Stearns. But don't you think those particular rules,
end-of-life care, should certainly have asked publically for
public comment in a very clear manner, unambiguous, so that the
American people have confidence? I mean, that seems to be so
basic. Wouldn't you agree?
Mr. Sunstein. Yes. And that is why the Secretary amended
the rule.
Mr. Stearns. Yes.
Was your office ever briefed on the decision to include
this regulation?
Mr. Sunstein. We saw the regulation. We were not----
Mr. Stearns. Just ``yes'' or ``no.''
Mr. Sunstein. We were not briefed on that particular issue.
Mr. Stearns. No. The answer is ``no.''
Were any materials provided by HHS about this regulation to
you?
Mr. Sunstein. The regulation was presented to us.
Mr. Stearns. Could you please submit those for the record
for us?
Mr. Sunstein. The regulation is the same regulation that
was published. So you already have it.
Mr. Stearns. But the materials--the question I had, were
any materials provided?
Mr. Sunstein. Independent----
Mr. Stearns. Not the regulation. We are talking about the
materials----
Mr. Sunstein. No, I don't believe any independent materials
were provided.
Mr. Stearns. So there is nothing you could provide.
Mr. Sunstein. I don't believe so.
Mr. Stearns. Has your office ever been contacted about the
possibility of including end-of-life-care rules into future
regulation?
Mr. Sunstein. No.
Mr. Stearns. OK.
And, at this point, do you feel that the analysis for the
end-of-life-care rules has been sufficient by the
administration and a comment period, that it has been adequate?
Mr. Sunstein. What I understand is that the provision to
which you object has been eliminated. And I support the
Secretary's decision.
Mr. Stearns. And so we don't think it will ever come up
again, a new rule for the end-of-life care?
Mr. Sunstein. Well, you know, we are in the business of
reviewing rules that come before us. I would defer to the
Secretary's statement----
Mr. Stearns. But your understanding is, by her amending and
pulling this, that there is not going to be any further end-of-
life rules? Or they are going to be amended?
Mr. Sunstein. I would defer to her on any such issues.
Mr. Stearns. OK.
All right, my time has expired.
I recognize the gentlelady, 5 minutes.
Ms. DeGette. Thank you very much, Mr. Chairman.
Mr. Sunstein, in your testimony, you talked about how
initiatives described in the preliminary regulatory lookback
plans released by Federal departments and agencies can
potentially save billions of dollars in the future.
Can you describe some of the steps that agencies have taken
that have already led to significant cost savings for
individuals and businesses?
Mr. Sunstein. Yes. We have from DHS something that happened
in December, which was a reporting requirement imposed on
airlines, that is 1.5 million hours. So that 1.5-million-hours
burden has just been eliminated already.
I mentioned the EPA milk rule. EPA also exempted biomass
from the greenhouse-gas permitting requirement, something that
was of great interest to the biomass industry. That is a 3-year
exemption, potentially longer. That will have significant
economic consequences.
OSHA has proposed and now has announced it will finalize a
$500 million burden-reduction initiative. And we have a number
of initiatives that actually were announced long before the
President's Executive order that promised over 60 million hours
in annual burden reduction. And I don't know how much an hour
is worth, but even if it is worth relatively little, which I
don't believe, that 60 million hours turns into a lot of money.
Ms. DeGette. So, as you described in your testimony, now
that you have had this comment period and the public process, I
think you said now through August the agencies are actually
going to be looking at more exact ways that they can cut
regulatory burdens and start implementing the plans, I would
assume, August, September. Is that correct?
Mr. Sunstein. Exactly.
Ms. DeGette. So I hate to do this to you, but I have
suggested to Chairman Stearns that we have you come back in the
fall, after Labor Day, and talk to us about what progress has
been made over the summer. Because just like you, we are very
committed to commonsense regulatory reform.
And like I said to you before, at least my view, I have
always been a proponent of regulatory reform, but I don't think
regulations are--I don't think regulations per se have values
attached to them. I don't think that they are inherently good
or bad. I think some regulations are helpful, and they can
protect the public interest, and they can save money. And I
think some are overly burdensome.
I think that that is the view that you share and the
administration shares, too, correct?
Mr. Sunstein. Yes.
Ms. DeGette. So if you can come back and let us know what
kind of progress you have made, I think that would be helpful.
Would you be willing to do something like that?
Mr. Sunstein. I would be delighted.
Ms. DeGette. OK.
One of the priorities that the Executive order said is that
he wants to tailor--the President wants to tailor regulations
to impose the least burden on society. And a lot of our
concern, on both sides of the aisle, is the concern about
regulatory burdens on small businesses.
So I am wondering if you can talk to me about what you have
seen already and what you see coming ahead this summer to
reduce regulatory burdens specifically on small businesses.
Mr. Sunstein. OK, great.
On the same day that the President issued the Executive
order, he issued a memorandum on small business, protecting
small business from unjustified regulation.
And what the memorandum does is two things. First, it
reiterates and underlines the requirements of the Regulatory
Flexibility Act, an extremely important statute for small
business. And, second, it goes further by saying, if an agency
is not going to have flexibility for small business, such as a
delayed compliance date, a partial or total exemption,
simplified reporting requirements, it must specifically explain
itself.
Now, we have seen, in the last months, some prominent
actions by Cabinet-level departments eliminating burdens for
small business--sometimes reporting burdens; sometimes not
reporting burdens, sometimes regulatory burdens--and, in two
important cases, by pulling rules back so as to engage with the
small business community to see if there is a way of doing it
that would be minimally burdensome on them.
Ms. DeGette. You know, one of the things I noticed--I was
thinking about this. When I talk to businesses in my district,
small and large, one of the great frustrations is obsolete
regulations that have reporting requirements that are based on
a lack of technology. And now that technology has moved ahead,
they are saying, ``Why can't we just report electronically? Why
do we have to fill out all these forms too?''
Is the administration doing anything to specifically
address those concerns?
Mr. Sunstein. Absolutely. And we have heard the same thing.
It sounds more small potatoes than it actually is. Small
business says, ``We could do it electronically. It would be
easy. It would take us a short time. You are having us do all
this paperwork, which is a mess for us.''
If you look through the plans, you will see numerous
initiatives from numerous agencies that say, we are going to go
from paper to electronic. And we have a little precedent here--
actually, not so little. The Department of Treasury has a
paperless initiative that is going to save $500 million in the
next years just by eliminating the use of paper. That is
taxpayer dollars. We hope to transfer that to the private
sector.
Ms. DeGette. Let me just ask you, Mr. Sunstein. If you can
get somebody from your staff to send us an e-mail--don't send
us a letter----
Mr. Sunstein. Not paper.
Ms. DeGette [continuing]. Send us an e-mail listing all of
those initiatives so that we can actually know what is going on
and communicate that to our constituents.
Mr. Sunstein. Great.
Ms. DeGette. Thank you very much for coming back to us.
Mr. Stearns. The gentlelady's time has expired.
The gentleman from Texas, Dr. Burgess, is recognized for 5
minutes.
Mr. Burgess. Thank you, Mr. Chairman.
And thank you again, Mr. Sunstein. We are appreciative of
you spending so much time with us today.
You wrote a piece for the Wall Street Journal: ``21st-
Century Regulation: An Update on the President's Reforms.'' You
talked a little bit about, let's stop crying over spilled milk.
But just to set the record straight, everyone in this town
loves to blame all the problems of the world on the previous
administration. But sometimes we need to give credit where
credit is due to the previous administration. And the spilled-
milk rule actually was proposed in the Federal Register January
15th of 2009, which was a few days before the President took
the oath of office. Is that correct?
Mr. Sunstein. Yes. And our final rule is much more
aggressive in its deregulation than the Bush proposal.
Mr. Burgess. All right. Well, give the former President
credit when we talk about that.
I do have to follow up on some of the ACO questions that
Ms. Blackburn asked, because this is--and, Mr. Chairman, if I
may, I would ask that today's--in today's Politico, Tevi Troy,
a former Deputy Secretary at Health and Human Services, now
with the Hudson Institute, senior fellow at the Hudson
Institute, said it is time to redraft the rules that cover
ACOs.
It gives a very good description. ACO is actually a concept
started with the Physician Group Practice Demonstration Project
under Secretary Michael Leavitt in the previous administration.
ACOs, while perhaps not my individual favorite, may have been a
bipartisan approach to bringing down the cost of delivering
health care in this country, particularly within the Medicare
system. Many clinics across the country had embraced this
concept, but they were left with a mishmash of a regulation,
that they just threw up their hands and said, ``We can't do
this; this doesn't work.'' And yet, it was working in their
demonstration projects in Secretary Leavitt's administration.
Now, one of the things Secretary Leavitt found was that
they put a 2 percent savings--before the ACO got to participate
in any of the shared savings, there was a 2 percent barrier.
And under the rule, it is now 2 percent to almost 4 percent.
So what they found under Secretary Leavitt was only 4 out
of the 10 practices, as I recall, the Physician Group Practice
Demonstration Project data, only 4 were actually able to meet
that bar. And now we have, in fact, increased that bar and made
it higher. Is that really a positive step in this regulation?
Mr. Sunstein. The rule is proposed, and your comments and
those of your staff, as well as those of your constituents, are
not just welcome but needed so we get this right.
Mr. Burgess. But, just to be clear, we have a hard
deadline, do we not, in the Patient Protection Affordable Care
Act of January 1, 2012? So this rule is going to have to be
either revised or reproposed. The clinics are going to have to
assimilate this data, digest this data, and decide whether or
not they can meet the statutory and the financial requirements,
which are significant, all by January 1st, 2012; is that
correct?
Mr. Sunstein. If we could in 4 months produce 600 pages of
lookback plans with hundreds of rules to be revised, then we
can get that done on the schedule.
Mr. Burgess. You can get it done, but I am talking about
Geisinger, I am talking about Mayo Clinic, I am talking about
Gundersen Lutheran. Are these organizations going to be able to
do the complex financial analysis that is going to be required
in order to meet this January 1, 2012, deadline?
Mr. Sunstein. The statutory deadline, yes?
Mr. Burgess. Yes.
Mr. Sunstein. Well, we are going to do our best we can----
Mr. Burgess. You told Ms. Blackburn that no more statutory
or legislative interference was necessary, but I would submit
to you that perhaps we do need to amend this sacred document to
allow clinics more time to analyze what you are going to put
forward.
Well, what is the minimum financial outlay that a clinic is
likely going to have to come up with to institute an
accountable care organization, by your reckoning?
Mr. Sunstein. I don't have a figure for that. This is a
proposed rule, where all these issues are under discussion.
Mr. Burgess. Well, the figure that is given is, like, $1.8
million, but the American Hospital Association estimates that
it is going to be between $11 million and $25 million. So it is
a significant financial investment.
And here is one of the problems with ACOs. I am a doctor.
Doctors should be in the driver's seat with ACOs. If they are
going to really deliver on the promise--as a patient, I want my
doctor to be in charge. I don't want my health plan to be in
charge. I don't want the government to be in charge. I don't
want the insurance company to be in charge.
But the doctors are in a poor position to be able to manage
the financial outlay, because not only do you have to pay the
startup costs of all of the things--the ancillary personnel,
the electronic health records, and all the things that are
required for disease management, care coordination, but you
also have to manage against the financial risk of taking on a
group of patients who have a set of chronic illnesses, which is
ideally what the ACO is going to be managing.
And here is the problem that we have. We are trying to
figure out what to do with the sustainable growth rate formula.
And many people were thinking an ACO model may be the way we
can pivot to a different way of Medicare payment, so we stop
paying for stuff and pay for wellness. And you delivered to us
a regulation that is so confusing that the people who purport
to be able to do this are now shaking their heads and walking
away, and we have 6 months to fix the problem.
Mr. Sunstein. Well, I appreciate that. And you are clearly
a specialist in this, and we need your help to get it right.
There was a somewhat analogous controversy over an EOC
regulation under the Americans with Disabilities Act. The
Chamber of Commerce, incidentally, raised many questions about
lack of clarity and overreaching. And the first people out of
the box to celebrate what the EOC eventually finalized was the
Chamber of Commerce.
So our hope is we can fix this.
Mr. Burgess. I am going to submit a question in writing
that deals with the FDA and medical devices, because we have
heard a lot of testimony about that in this committee. It is an
extremely important issue, the FDA guidance documents that are
under development by the agency and how the streamlining
process is going to impact those. It is of critical importance,
not for our manufacturing in this country, but for America's
patients and America's patients in the future.
So thank you.
Mr. Sunstein. Thank you.
Mr. Stearns. I thank the gentleman.
Mr. Bilbray is recognized for 5 minutes.
Mr. Bilbray. Thank you, Mr. Chairman.
One of the things that has frustrated me, after 35 years in
public life one way or the other, working with regulatory
agencies and being in regulatory agencies, is this huge gap
between the intention of the legislation and the actual
application.
A good example would be, wouldn't you agree that any
environmental law that is deemed implemented in a manner that
hurts the environment, you know, may not be--obviously, it was
not being implemented in the manner that the--with the
legislative intent.
In other words, would you agree that no environmental law
should hurt the environment?
Mr. Sunstein. Sounds right.
Mr. Bilbray. I will give you an example of what we have had
for a long time in San Diego. The Clean Water Act requires
going to secondary activated sludge for sewage treatment.
Scripps Institution of Oceanography, Roger Revelle, the father
of the greenhouse-gas issue, stood up and demanded that we take
a second look at the law.
And as you know, we require that you do environmental
assessment. The environmental review said not implementing the
law would be the best environmental option. There were negative
environmental impacts to habitat, to the ocean introducing
chemicals, air pollution. But the bureaucracy still is caught
on this issue that don't confuse us with the scientific facts,
we have the law and the law says you have got to do this no
matter what. And we have been fighting this battle for 20 years
and we still are running into this issue.
Don't you think that the administration has two ways to do
this? Either make the call like the judge did--we had to have a
judge with the Sierra Club and the county health department
suing EPA to force them not put this in. That is an interesting
coalition there. Remember, the county environmental health is
run by five Republicans. Either accept that or come back and
ask us to change this law to allow the item to be done. How
would you propose we handle that kind of conflict?
Mr. Sunstein. Well, I don't know the particular
controversy, though I know some of the names there. The first
obligation of the executive branch is to follow the law. So it
is profoundly to be hoped that following the law is
environmentally desirable and, by and large, that is the case.
The Clean Air Act as noted previously----
Mr. Bilbray. It is the Clean Water Act.
Mr. Sunstein. The Clean Air Act is the one that there is
good data on overwhelming health benefits. But there is some
good data on the benefits on the Clean Water Act also. So we
have to follow the law. There may be no choice. It may not be
available for the executive branch to say we are not going to
implement the law and go to Congress.
Mr. Bilbray. OK. Let me interrupt right there, I served 6
years on the Air Resources Board and 10 years on Air District.
The success of the Clean Air Act was quantified. You actually
know, you spend this much money, you reduce this many metric
tons, you save this many lives per million; right?
Mr. Sunstein. Yes.
Mr. Bilbray. The Clean Water Act does not do that. It
predated the Clean Air Act and it is not sophisticated enough.
When you bring that up, wouldn't you admit that maybe we ought
to be sitting down and talking about quantifying the Clean
Water Act because the Clean Water Act originally really was an
Act to allow pollutants. I mean, Chicago dumping into a river
that went into the Ohio and dumped--and polluting everybody's
water all the way down to New Orleans rather than clean up
their mess and from what they historically did.
Mr. Sunstein. OIRA's role is a narrow one of implementing
what you have told us to do. I would not want to comment just
in my little domain on what you should do tomorrow. But I would
say that the Executive order makes a strong plea for
quantification of costs and benefits and that would certainly
apply to the Clean Water Act.
Mr. Bilbray. OK. Let me shift over. Is there anything in
the Endangered Species Act that requires 4 or 5 to one
mitigation for disturbing habitat?
Mr. Sunstein. I don't believe so.
Mr. Bilbray. No, there is not. Is there anything in the
Endangered Species Act that requires that when you go in to
clean out a flood control channel to you to go back and
mitigate every few years, you have to remitigate for that
again, even though you had originally mitigated.
Mr. Sunstein. I am pleased to say that I am confident that
there is nothing like that in the Act. But I just note that the
Department of the Interior in its lookback plan has referred
specifically to streamlining the requirements under the
Endangered Species Act and taking another look at that.
Mr. Bilbray. Let me tell you something. I have run into
that where it is not only an impact on the local government and
local communities, but it has actually displaced public space,
park land, because you have agents under fish and game, and
Fish and Wildlife screaming bloody murder that we have to get
our pound of flesh from you, four on one, to make up for
somebody else's problems. And I don't know, do you know
anywhere in the Endangered Species Act that allows agencies to
make a permitee mitigate for other people's violations?
Mr. Sunstein. The way I would phrase it, it is a pretty
short statute and I would say it does not require what you
particularly described. I think it is authorized, the Secretary
of Interior has a lot of authority under some broad terms. So I
believe it is not required, but it is authorized.
Mr. Bilbray. Mr. Chairman, I think that the one thing that
was in the rulemaking where so many of these things were done,
by in the rulemaking process, that was never included in the
legislation that was passed by the representatives of the
people of the United States. And I think this is one thing that
Republicans and Democrats ought to be able to work at, getting
the Act back to where it was meant to. Make sure the Clean
Water Act is cleaning up and helping the environment, not just
fulfilling a bureaucratic agenda and hurting it. That the Clean
Air Act is being implementing to where it is helping public
health and not just running up costs. I hope both sides could
work on this and I appreciate your testimony today.
Mr. Stearns. I thank the gentleman. The gentleman from
Virginia is recognized for 5 minutes.
Mr. Griffith. Thank you, and I do thank you for spending
time here and I appreciate what you are doing. We have to roll
back some of these regulations that are killing jobs, and it
really does not matter to me who gets the credit as long as we
get the job done.
In my earlier questioning, and you were very kind to say
that you would look into it in regard to the national
toxicology program related to formaldehyde, that affects
hundreds of jobs on the northern end of the district, and
affecting thousands of jobs across the Nation, and particularly
some well needed jobs in the southern end of my district--my
district is about the size of the State of New Jersey--is
styrene. Interestingly, the science is similar and it is
believed that there may be the national toxicology program may
be labeling that as a reasonably anticipated carcinogen,
although there is huge debate on that. Most of the science
indicates that it is not a problem. So if you could add that to
the list, I would greatly appreciate it, looking at that.
We actually, it is interesting because my predecessor and
Congressman Shadegg wrote a letter last year that detailed some
questions, and I will be happy to give you a copy if you would
like. And I followed up along with Congressman Donnelly this
year saying do you have an answer to these questions? Because
the main thrust of those questions were we have all of these
jobs that are going to be impacted, and yet the science does
not seem to back up the ruling. So I do ask you to take a look
at that.
Also related to jobs, obviously I come from a coal district
and I know that the rest of the committee members are surprised
it took me this long to get to coal. But I do come from a coal
district and as we heard today there are a lot of regulations
out there. And I really wish we could quantify, as Congressman
Bilbray was just saying, because we all want clean water and we
all want clean air and we all want jobs. And what you have to
do, as you know, is a balance to see whether or not you are
getting a bang for your buck. And my opinion, everybody on this
committee knows is that a lot of the regulations proposed and
the newer regulations related to the mining of coal have very
little positive impact on the environment. I won't say they
don't have any, but they have very little at the cost of huge
amounts of jobs and huge usage of coal in the district and in
this Nation.
And one of the things that I think is interesting, and this
applies to both the styrene and formaldehyde. These products
are going to be made, the question is are they made here. Now,
if they are causing people cancer, obviously we have to put a
stop to it. If some other country wants cancer, that is fine.
But the bottom line is when you talk about coal and you talk
about some of the things, and one of the things I found
interesting we had some testimony here that we actually may be
creating a worse problem with coal by shipping the jobs
overseas. We are still using the products. They are still
coming back here. They are being made in China and Kazakhstan,
and India, and you name it. Places that I didn't know about
when I was in high school, and now are on the map and they are
competitors of ours. And we are shipping our coal over there
and they are shipping their air pollution back to us, because
as you know, it only takes a few days, 10 days according to a
NASA study, to get the air to go from the Gobi desert to the
eastern shore of Virginia. And as a result of that, I am
concerned that not only are we getting a small bang for our
buck on the regulations that are proposed and that are coming
out and that have some that are already implemented, but we are
actually increasing the air pollution in the United States by
shipping these jobs off to countries where they don't have even
the reasonable regulations that I think everybody would agree
the Clean Air Act did bring us in its early days. So I think we
have to be very, very careful with what we are doing.
And we are using the Clean Water Act to actually, I think,
in my opinion and some others who testified here, inadvertently
with good intentions to dirty our air. Thank you, and I yield
back my time.
Mr. Stearns. Mr. Bilbray, you have a point of order?
Mr. Bilbray. I just want to point out that I agree with you
about the fact that we are here to implement the law and
sometimes there is problems. And God knows, at Air Resources
Board, I didn't want to touch colognes and hair sprays or
consumer products. You start messing with a lady's Chanel No.
9, you get into real problems. But in Arizona--the U.S. versus
Arizona, just filed last year, this administration claims in
that, that the executive branch has the ability to pick and
choose which laws it wants to enforce. And I would ask you to
take a look at that file because to me it was extraordinary,
but that is the position of this administration. That the
executive has the right to choose when not to enforce the law.
And they have got that on record.
So if it can be applied to the issue of immigration, my
question is why wouldn't it be applicable to these other
regulatory groups? And I leave that with you just to take a
look at it and see how that position may affect your latitude
and straightening out some of this problem. And I yield back.
Mr. Stearns. The gentleman yields back. Does the
gentlewoman ranking member have any concluding comments? I am
going to let you go. I just have one comment. You previously
testified that you disagreed with the Crane report that stated
that the current regulations are costing American businesses
$1.7 trillion. Are you aware that the Crane report was a report
commissioned by Obama administration's Small Business
Administration in 2009?
Mr. Sunstein. Yes. What I would say is I wouldn't say I
disagree, I would say--I hope this is not a subtle difference--
I don't agree. I don't think it has been supported, that number
hasn't been supported.
Mr. Stearns. Well, I think your answer would be that you do
not agree with the Crane report.
Mr. Sunstein. Yes, the number, I don't believe, has a solid
foundation.
Mr. Stearns. I just want to put on the record that you
disagree with the Crane report?
Mr. Sunstein. Yes, I disagree with the analysis in the
Crane report.
Mr. Stearns. All right. Thank you, Mr. Sunstein. I think
you have won the prize here for forbearance here today. Thank
you very much and we will welcome the second panel.
I'm going to ask unanimous consent--Dr. Burgess asked that
Tevi Troy's opinion in Politico be put in part of the record.
Without objection, so ordered.
[The information appears at the conclusion of the record.]
Mr. Stearns. We will have you gentlemen sit down at your
convenience, and I am going to point out who they are before I
swear them in. Mr. James Gattuso is a senior research fellow at
the Heritage Foundation; Mr. Williams Kovacs is a senior Vice
President, U.S. Chamber of Commerce. And Mr. David Goldston is
Director of Government Affairs at the National Resources
Defense Council.
And with that, gentlemen, you are aware that the committee
is holding an investigative hearing and in doing so we have
always had the practice of taking testimony under oath. Do you
have any objection to taking testimony under oath? No? The
chair then advises you that under the rules of the House and
rules of the committee, you are entitled to be advised by
counsel. Do you desire to be advised by counsel during your
testimony today? No? In that case, please rise and I will swear
you in.
[Witnesses sworn.]
Mr. Stearns. You are now under oath and subject to the
penalties set forth in title XVIII, Section 1001 of the United
States Code. If you would give a 5 minutes summary of your
written statement, we would appreciate it. Mr. Kovacs, we will
start with you.

TESTIMONY OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, U.S.
CHAMBER OF COMMERCE; JAMES GATTUSO, SENIOR RESEARCH FELLOW, THE
HERITAGE FOUNDATION; AND DAVID GOLDSTON, DIRECTOR OF GOVERNMENT
AFFAIRS, NATURAL RESOURCES DEFENSE COUNCIL

TESTIMONY OF WILLIAM L. KOVACS

Mr. Kovacs. Thank you, Mr. Chairman and ranking member. I
appreciate being invited here to discuss Executive Order 13563
which calls on agencies to eliminate duplicative outdated and
unnecessary rules. This is certainly a very positive first
step. And we have said that many times. I would like to bring
to your attention the fact that Congress first mandated this in
1980 in the Regulatory Flexibility Act, and it has been a
struggle to get it implemented. So it is a good start.
Now, having said that, one of the concerns and we hope that
the OIRA moves forward with it, we have got a long way to go.
If we are going to deal with the jobs issue we have to look the
at economically significant regulations which have been defined
by the administrator, permit streamlining, which really creates
jobs, and frankly, we have to begin looking at the standards
for quick review. They have a lot of implications as to how the
regulatory process works.
And as we are talking about jobs, I want to highlight one
point that I have in the testimony and that is, some of the
agencies, like the Environmental Protection Agency have, in
each one of the environmental statutes, a congressional mandate
to do a continuing jobs analysis. That is Section 321(a) of the
Clean Air Act, and that goes through the rest. And, to my
knowledge, that has never been done and it has been on the
books for decades.
The regulatory process has been growing for years. This is
not new. Since 1976, we have 170,000 new regulations. But--and
the Chamber has always said we need a lot of these regulations.
Some of these are just business practices. So when we go into
the regulatory process, we have to go into it in a way in which
we understand what it is that we are trying to do.
The concern on our part seems to be the fact that the
economically significant regulations have increased
dramatically; from 2005 to the present they have gone from 137
a year to 224. These are significant because they do impact
large parts of society and many industries.
So when we take a step back, how did we get here? Congress
has been addressing this issue to try to bring it to some
control since 1946. I mean, this is 65 years of Congress doing
this. You enacted the Administrative Procedure Act, and at that
time, it was to bring the public in and it was to have a
discussion of what the regulatory process is all about and to
get the kind of comments, a lot of which frankly you are
getting here today. But several things happened on the way to
getting here today.
The first is Congress actually began to pass very, very
broad and vague laws and you asked the agencies and
administrative bodies to begin filling in the blanks and the
agencies were very glad to fill in the blanks. Then in the
1970s, you had the courts in the Chevron decision for the first
time award deference to the agencies. So two things were going
on simultaneously. One is Congress was giving the agencies a
lot of discretion over the vague laws and the courts were
giving them deference.
That literally tipped the scales as to how the regulatory
process worked and from that point forward, Congress has
struggled to get it back and it has been unable to. Just to go
over it, and it's all in my testimony, but since 1980, Congress
has enacted the Regulatory Flexibility Act, Unfunded Mandates,
Information Quality, Data Access, Paper Reduction, Jobs
Analysis provisions, and we could go on. And each one of these,
the Congress has struggled to get control over this and it has
been unable to. A few suggestions that we have, not that any
one of them should take preference over any other one, but
there are some, and we ought to look at this.
And one is, if you are going to focus on the regulatory
process, you need to focus on those few hundred regulations
that really make a difference. You have so many things in
place. You have cost benefits, you have jobs analysis, least
restrictive alternatives. You have that. We've got to find a
way to make them work. And I think you can make them work
quicker in the 200 large regulations than the 4,000 other
regulations that occur.
You have got the REINS Act before Congress, certainly would
put Congress in the driver's seat and should be considered. You
could require economically significant rules for the agencies
to actually have a higher standard of review. For example, all
regulations right now, the smallest of them and the most
minimal and the largest, are all subject to what--court review
for what we call arbitrary and capricious, which means if the
agency can find anything in the record--if the court can find
anything in the record that the agency supports, the agency
wins. That really has tipped playing field because the agency
can always put something in the record. You might want to
consider giving that a higher standard of review. Maybe for the
200 economically significant regulations you put--you have a
formal rulemaking.
You could also up, since the courts give deference, you
could require all regulations to be subject to substantial
evidence. You could put judicial review on many of the
regulatory statutes that you have already enacted. That way the
public can help you implement the regulatory process.
And then finally in the final analysis--I always hate
recommending anything to Congress, but the Constitution does
give you sole legislative power. And I think at this point in
time, that legislative power, because of the regulatory
process, is shared. Thank you.
[The prepared statement of Mr. Kovacs follows:]

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Mr. Stearns. I thank the gentleman.
Mr. Gattuso, welcome. Your opening statement.

TESTIMONY OF JAMES GATTUSO

Mr. Gattuso. Thank you, Chairman Stearns, Ranking Member
DeGette, and members of the subcommittee, thank you for the
opportunity to testify today on this important issue. Four
months ago the President issued an Executive order instructing
all executive branch agencies to submit plans for reviewing
regulations on their books. Last week, and again this morning,
OIRA Administrator Sunstein reported on the initial progress of
that review at the various agencies. His report was encouraging
as agencies have identified a substantial number of obsolete
and unnecessarily costly regulations. At the same time the
reforms proposed so far constitute only a very small step
towards the rollback of red tape that the American economy
needs. Much more substantial reform is required.
This is not a new issue. The burden of regulation has been
steadily increasing over the past three decades through
Republican as well as Democratic administrations. During the
present administration, however, the rate of increase has
reached unprecedented levels. According to figures compiled by
the Heritage Foundation based on data provided by the
Government Accountability Office, Federal agencies promulgated
an unprecedented 43 major regulations during fiscal 2010 alone,
imposing annual costs as calculated by the agencies themselves
of at least $28 billion. During the same period, only a handful
of major rulemakings were completed which reduced burdens for
the total calculated savings of about $1.5 billion.
It is in this context that President Obama launched his
regulatory review initiative. To address the issue, the
President promised a governmentwide review of rules which was a
welcomed step. But the requirement that the agencies submit
plans for a regulatory review of agency regulations, however,
is not a new or groundbreaking idea. In fact, agencies have
been required to prepare such plans since 1993, under President
Clinton's Executive order on regulatory review. There is little
evidence that such plans have had any impact.
Moreover, the Obama initiative was hardly government-wide.
It excluded independent agencies such as the Federal
Communications Commission, the Securities and Exchange
Commission, and the new Consumer Financial Protection Bureau.
In so doing, the President excludes from scrutiny many of the
largest producers of red tape. And I do understand that OIRA
invited independent agencies to submit plans on their own, and
apparently they almost uniformly declined to do so.
There is precedent on this. And prior reviews of
regulations by administrations, notably in the 1991 review by
the Bush administration, it was made clear to independent
agencies that they should participate and they did. Frankly,
the President, who has his appointees serving in independent
agencies, can persuade them to participate if he expresses his
desires strongly enough. I don't think that was done in this
case.
Now despite the limitations the initiative has as reported
by OIRA Administrator Sunstein, has some meaningful results.
Overall, the executive branch agencies identified over 100
possible rule changes for the reported potential savings in the
short term of about $1 billion. For an administration that up
to now has reduced regulation on virtually nothing, this agenda
is significant. As encouraging as that is the administration's
explicit acknowledgment that regulations have costs and that
regulators must make time in their day to review the
restrictions and mandates they have imposed to determine if
they are actually necessary and effective.
Still, it is too soon for Americans to breathe a collective
sigh of regulatory relief. Many of the steps last week are the
low hanging fruit of regulatory excesses which should have been
plucked long ago. For instance, the rule describing milk as a
potentially dangerous oil has been in place since the 1970s and
the request to eliminate dairy from the regulations have been
submitted to the EPA as early as 2007. The fact that it took 4
years to accomplish this is less a notable achievement than a
sign of a broken regulatory system.
Many more actions are merely suggestions for change at a
later date. Of the 31 reforms identified in the EPA's
regulatory plan, nearly half are termed longer term actions
that officials have simply marked for a closer look at some
time in the future. Moreover, these proposed regulatory
rollbacks are far exceeded by the new regulations which have
been, or will be promulgated. Thus, while the $1 billion in
claimed savings from the actions identified by the
administration is significant, it is swamped by the nearly
dozen new rules costing more than $1 billion each which have
been adopted in the last 2 years.
In other words, the savings expected in this initiative in
the near term has been counteracted 11 times over by new
regulations that have been adopted. And there are more in the
pipeline.
Until this torrent of new regulation is stopped or at least
narrowed, net regulatory burdens will continue to increase.
Let me finish by saying that help is needed from Congress
as well. I have my written testimony of recommendations for
reforms that can and should be taken legislatively, including
establishing a sunset date for Federal regulations, creating a
Congressional Office of Regulatory Analysis to provide Congress
with its own capability to analyze and review regulations and
requiring congressional approval of major regulations that
place new burdens on the private sector. Thank you for your
time.
[The prepared statement of Mr. Gattuso follows:]

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Mr. Stearns. I thank the gentleman.
Mr. Goldston, welcome for your 5 minutes.

TESTIMONY OF DAVID GOLDSTON

Mr. Goldston. Thank you, Mr. Chairman, and thank you,
Ranking Member DeGette and members of the subcommittee for
having me here today. What I'm going to try to do is run
quickly through 14 points to summarize some of the points in my
testimony and issues that have come up this morning. First is
regulation are needed to safeguard the public. Neither
individual action nor the marketplace can yield such public
good as clean air and clean water.
Second, repeated studies have concluded that the cumulative
benefits of U.S. regulations outstrip the costs.
Third studies have generally found that the impact of
regulation on jobs is neutral to slightly positive. The phrase
``job-killing regulation'' may come trippingly off the tongue,
but one gets tripped up looking for the data to back it up. And
this doesn't even account for the indirect benefits of
regulation such as a stable banking system or a trusted system
for reviewing drugs.
Fourth, studies have found that estimates of what a
regulation will cost tend to exceed the actual cost of
implementing a regulation often by a large factor. This is
because the estimates cannot account well for technological
change and they are based on information from parties with an
interest in producing higher estimates.
Fifth, the Congressional Research Service has found that
the number of major regulations has not been increasing wildly
and the CRS count of major regulations differs from the count
in the Chamber of Commerce's testimony. There may be a
difference in definition there perhaps.
Sixth, looking on the basis of all that, while any
governmental activity like any other human activity can be
improved, there is no indication of any fundamental problem
with the U.S. regulatory system.
Seventh, the Obama administration lookback is a reasonable
effort to improve safeguards and we look forward to reviewing
the Agency's more detailed proposals when they come out in
August.
Eighth, industry's focus on criticizing future rules can be
seen in part as a tacit acknowledgement that past rules did not
turn out to be as problematic at they had predicted.
Ninth, contrary to some of the claims the Chamber of
Commerce makes in the testimony, EPA does not simply cave when
lawsuits are filed and sue-and-settle narrative is faulty.
Ten, proposals to upend the current regulatory system
should be opposed. They run counter to historical experience,
to public opinion, and to the public interest. Measures like
the REINS Act, which are tantamount to dismantling the current
system of public protection should be opposed with particular
vigor.
Eleven, proposals like REINS are designed to bias the
regulatory process hopelessly in industry's favor by changing
procedures. This is probably because the industry knows the
public would not propose changes in the underlying laws that
the regulations are designed to enforce.
Twelfth, in the end, even industry would be harmed by some
of these proposals because the system would lead to far less
predictability than we have today.
Thirteen, regulations by providing clear rules of the road
helps produce a functioning marketplace and economic
prosperity.
And last, in conclusion, Congress should not be accepting
claims of regulatory harms at face value and should not make
radical changes to the regulatory system which has safeguarded
the public at a reasonable cost. Thank you.
[The prepared statement of Mr. Goldston follows:]

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Mr. Stearns. I thank you, gentlemen. I will start with my
questions. Mr. Kovacs, do the amount of current regulations
impede the ability of businesses to hire new workers to create
jobs? We just saw that the unemployment has raised, has gotten
higher.
Mr. Kovacs. Within our testimony, we have a discussion of
what we call Project, No Project, which is what we----
Mr. Stearns. What we do in this committee is usually ask
for a yes or no if possible. Can you say yes?
Mr. Kovacs. Yes.
Mr. Stearns. OK. Is that some part of the problem with the
current high rate of unemployment which is approaching 9.1
percent is that your feeling is due to regulation? I know we
had Mr. Waxman saying he believes in regulation and so forth.
But in your opinion it contributed to the unemployment?
Mr. Kovacs. I am not--the answer is I am not an economist.
Yes, but look at our Project, No Project study, because I think
that gives you the kind of answers you need.
Mr. Stearns. That study will give more definitized
information?
Mr. Kovacs. Yes.
Mr. Stearns. And the name of that study is?
Mr. Kovacs. It is Project, No Project.
Mr. Stearns. OK. I think both you indicated, and I think
the third gentleman did too, the idea of these independent
agencies, and I think all of us are concerned. Don't
independent agencies that issue regulations also contribute
significantly to the total burden on the economy? The
independent? Isn't that true? I will ask each of you. Mr.
Kovacs?
Mr. Kovacs. Yes.
Mr. Stearns. Mr. Gattuso.
Mr. Gattuso. Yes.
Mr. Stearns. Mr. Goldston, is that true that the
regulations from the independent agencies contribute to the
burden on the economy?
Mr. Goldston. They contribute regulations, certainly.
Mr. Stearns. You don't think they affect the--OK. All
right. Were you surprised that of the 30 preliminary draft
plans released by the White House on May 26, there were none
from the independent regulatory agencies under this committee's
jurisdiction such as the Federal Communications Commission, the
Federal Trade Commission, the Nuclear Regulatory Commission,
the Consumer Products Safety Commission, and the Federal Energy
Regulatory Commission?
Mr. Kovacs. No, I was not surprised.
Mr. Stearns. Mr. Gattuso?
Mr. Gattuso. I was surprised there was not at least one or
two.
Mr. Stearns. Mr. Goldston?
Mr. Goldston. I am not sure I had an opinion on that. There
is the constitutional issue about whether they can be required
to do it. There is no reason that they couldn't obviously
choose to submit plans.
Mr. Stearns. Do you think there is anything more that OIRA
could have done to encourage independent regulatory agencies to
sort of voluntarily submit retrospective analyses of their
existing rules as set out in the President's Executive order?
Mr. Kovacs?
Mr. Kovacs. No, the President suggested it and they decided
not to do it.
Mr. Stearns. Mr. Gattuso?
Mr. Gattuso. As I said in my testimony, I think the
President can make clear when his request is very serious and
when it is for show. I think he could have done more.
Mr. Stearns. Mr. Goldston?
Mr. Goldston. I have no expertise on that, but I imagine
they could have done more.
Mr. Stearns. I think, Mr. Gattuso, you indicated it is too
soon to breathe early a sigh of relief with President Obama's
January 2011 Wall Street Journal op-ed, where he termed ``rules
have gotten out of bounds placing unreasonable burdens on
businesses, burdens that have had a chilling effect on the
growth and jobs.''
Do you think after that particular op-ed, that an Executive
Order 13653, we're any closer to achieving what Mr. Sunstein
has cited as has aim of nurturing, ``a consistent culture of
retrospective review and analysis throughout the executive
branch''?
Mr. Kovacs. I think we are closer, but we are dealing with
a few micro millimeters perhaps moving forward.
Mr. Stearns. Micro millimeters? OK. Mr. Kovacs, do you
think Congress should mandate a law that all agencies should
conduct periodic retrospective reviews?
Mr. Kovacs. I think you already had in 1980 with the
Regulatory Flexibility Act, Section 610.
Mr. Stearns. So it is not being implemented?
Mr. Kovacs. That is correct.
Mr. Stearns. You agree that we should--that the Agency
should have a retrospective mandate to look at the regulatory
environment in their department.
Mr. Kovacs. Yes.
Mr. Stearns. And you agree also?
Mr. Gattuso. Definitely.
Mr. Stearns. Mr. Goldston?
Mr. Goldston. There is no harm in retrospective reviews if
they don't become the whole sum and substance of what agencies
are doing. Many statues require regulations to be updated
periodically, which, in effect, means that the previous reg is
being looked at.
Mr. Stearns. You agree, Mr. Kovacs, as I understand your
testimony, you believe there are two distinct categories of
regulation, and the primary focus of oversight by Congress and
the administration should be those regulations that are
economically significant. In your view, what would be the most
effective way to address this?
Mr. Kovacs. There are several ways. One is that they have a
higher standard of review within the courts. For example, when
a court reviews a regulation, they treat--they treat their
review the same as if it is greenhouse gases or if it is
training for an employee. And what needs to occur, because when
the courts gave deference to the agencies they literally tipped
the balance in favor of the agencies and against Congress. And
the way to address that would be to require the Agency on those
major rules to go through a higher standard of review, which
would be a formal on-the-record hearing or something like OSHA
has which is a hybrid hearing and then to have the court review
it under the substantial evidence test.
Mr. Stearns. My time is over. It is just remarkable as you
pointed out that the Regulatory Flexibility Act mandates that
these agencies do it and no one is doing it. It is really
disturbing to think that we have mandated Congress, and yet
none of these agencies are complying.
Mr. Kovacs. Well, the first testimony I ever gave 13 years
ago was on that issue.
Mr. Stearns. 13 years ago? All right. My time has expired.
The gentlewoman is recognized for 5 minutes.
Ms. DeGette. Thank you, Mr. Chairman. Mr. Kovacs, I agree,
regulatory reform works at a maddeningly slow rate. And I also
agree with your written and verbal testimony, it seems to be a
bipartisan problem. It seems to happen under Republican and
Democratic administrations; isn't that correct?
Mr. Kovacs. That is correct.
Ms. DeGette. Following up on the Chairman's questions--here
is the problem sometimes with yes or no answers. Here is a
question for a yes or no answer. Sorry to pick on you. Is
today's jobless number which came out which we are all upset
about caused primarily by overregulation; yes or no?
Mr. Kovacs. I have absolutely no idea, I am not an
economist.
Ms. DeGette. Right, OK. Thanks.
Let me ask you. You said we should really target these
economically significant regulations which have increased since
2005, again, on a bipartisan basis. Those are regulations that
cost $100 million or more; is that right?
Mr. Kovacs. It is a broader group than that, but it also
includes----
Ms. DeGette. OK. That's a term of art?
Mr. Kovacs. Right. Right.
Ms. DeGette. And I can't disagree with that. I think that
is probably a good idea. But I would also say that the
cumulative effect of other regulations, smaller regulations can
be, even though it is not one regulation, if a small business
has to comply with a number of regulation, that, for them,
might add up to a heavy burden. So we shouldn't ignore the
smaller regulations while we're focusing on these economically
significant regulations; correct?
Mr. Kovacs. That's correct. And that's why I was saying the
standard of review and the how the Agency approaches it is very
important. And so that is one of the ways that you might be
able to----
Ms. DeGette. Right. And I think that is an excellent
suggestion. One of my questions because there have been
different legislation proposed and one of the things you and
Mr. Gattuso also said that you supported was the idea of having
both Houses of Congress to approve any regulation that has this
impact that is an economically significant regulation; correct?
Mr. Kovacs. That is one of the approaches.
Ms. DeGette. That's correct? And in your written testimony,
you said that there were about 180 regulations like that that
were issued in 2008, which was the last year of the Bush
administration; is that correct?
Mr. Kovacs. Those are the government numbers, yes.
Ms. DeGette. So your answer is yes?
Mr. Kovacs. Yes.
Ms. DeGette. OK. So here is what I am concerned about. In
2008, that same year, we were in session 118 days but there
were 180 such regulation. And I would assume it is not your
view that every economically significant regulation should be
repealed; right? Some of them are useful; right?
Mr. Kovacs. No, we're not--I am not here today saying that
you should repeal anything.
Ms. DeGette. What you are saying is that there should be a
higher standard of scrutiny which I agree with.
Mr. Kovacs. That's correct.
Ms. DeGette. My concern is if you require all of those
things to come to Congress and Congress is only in session a
few days a year, we might not get to reviewing all of those
regulations. Do you understand that?
Mr. Kovacs. There is nothing being proposed that would go
retro----
Ms. DeGette. No, let's say there is a new regulation that
the Obama administration is proposing and it is an economically
significant regulation. So it would come to Congress for
review. If Congress did not review that regulation, what would
happen is it would be null; isn't that correct? Under that
legislation?
Mr. Kovacs. That is correct. It wouldn't be null----
Ms. DeGette. So--I don't have much time left. So that might
affect a regulation that was a bad regulation or a good
regulation; right? It's a great big mallet that comes down and
kills that regulation.
Mr. Kovacs. No, it puts Congress in charge of the
legislative----
Ms. DeGette. I hear what you're saying. Mr. Goldston, I
wanted to ask you a couple of questions about the Clean Air
Act. Because recently, Mr. Waxman asked the EPA to do a report
on the Clean Air Act and what the report said was that the Act
created American jobs, and in fact that it prevented 18 million
child respiratory illnesses, 850,000 asthma attacks, 674,000
cases of chronic bronchitis, and 205,000 premature deaths. And
also there was monetary value of $2 trillion by 2020.
Mr. Goldston, I am wondering if you can tell me whether you
think--whether you agree with these results of this study that
was done?
Mr. Goldston. Most studies that have looked at the job and
health impacts of regulations show net benefits of the health
benefits and show----
Ms. DeGette. Of the Clean Air Act?
Mr. Goldston. Of the Clean Air Act in particular.
Ms. DeGette. Now to comply with updated pollution
standards, businesses must design, manufacture, install and
operate pollution-reducing technologies. And so a lot of people
argue that the Clean Air Act has created hundreds of thousands
of domestic jobs in the field of environmental technologies,
and generated about $300 billion in annual revenues and
supported 1.7 million jobs.
So my question to you is, do you think that Federal
regulations like these can support economic growth and foster
job creation.
Mr. Goldston. Yes, and again, most studies have found a
neutral to net benefit of jobs overall. That has been on the
whole. So yes, absolutely.
Ms. DeGette. Thank you very much, Mr. Chairman.
Mr. Stearns. The gentlewoman's time has expired. The
gentleman from California, Mr. Bilbray, is recognized for 5
minutes.
Mr. Bilbray. Thank you very much, Mr. Chairman. David, let
me go through a scenario that I will call the good, the bad,
and the ugly. And you know my background in California. So
let's use California as sort of the test platform for a
national strategy on regulatory oversight, especially
environmental stuff.
The Air Resources Board, one of the most successful
environmental agencies ever implemented, has reduced pollution
by--you know, the air in California is twice as clean as it was
when the ARB started off. And the population is twice as much.
Are you aware that the mandates to those of us that were at the
ARB and are there now, there is a mandate that cost-
effectiveness must be considered before passing any reg; right?
Mr. Goldston. I certainly take your word for that.
Mr. Bilbray. And it obviously has not been a major barrier
to the protection of the public health or the implementation of
that environmental strategy?
Mr. Goldston. Right.
Mr. Bilbray. The success speaks for itself. And in fact,
let me tell you as somebody who worked 6 years with that
program. Sixteen totally, between 10 years Air District and 6
years on the board, it actually helped us. And one of the
things I get upset about is I find people here freak out about
that as if it is anti-environmental, where I found that one of
the great tools, even for myself, I got held up by that and
stopped from doing--implementing a regulation that I thought
was good because we had to look at that.
Don't you think that both Democrats, Republicans and
everybody else in Washington could learn something by looking
at that cost-effective mandate, and the way ARB has handled it
as being something that both sides should be able to agree
looking at making that trying to learn from that and
integrating it into our Federal program?
Mr. Goldston. Everybody obviously should look the at the
range of experiences. I think the Federal Clean Air Act has
been effective as well, and CARB obviously is operating under
its general auspices.
Mr. Bilbray. But would you agree that when you say that--
and I will come back on you and say was there another agency
that has implemented the Clean Air Act that has had as much
reduction as CARB?
Mr. Goldston. Not that I am aware of.
Mr. Bilbray. Not that I am aware of either.
Mr. Goldston. The point is under some parts of the Clean
Air Act, the standard that is selected is based on health but
then the decision on how to implement it, which is what you are
talking about, economics are allowed to take into account and
there are other parts of the Clean Air Act where economics are
allowed to be----
Mr. Bilbray. David, you admit that the EPA and the Federal
Government has recognized the leadership of CARB to the point
where we have had carveouts and not just Federal Government,
but other States have adopted our standards as being the gold
standard for clean air; right?
Mr. Goldston. That is my understanding.
Mr. Bilbray. OK. Now let's talk about the ugly. AB 32, an
environmental strategy, was put into our legislation. But CEQA
still applies to our implementation of our greenhouse stuff.
Now that has created a situation where now my scientists who
have developed alternatives to fossil fuels using California
financing and research is forced to leave the state to go to
production. They are actually leaving and doing their
production in New Mexico for a good reason. Because under the
regulations of CEQA, it will take 10 years plus to go into
production of algae, where in New Mexico it is 9 months minus.
Big difference.
And this is, I would say, the bad side of it and showing
that--now the legislature said they cared enough about the
environment to put in AB 32, but they didn't care enough to
exempt it from environmental regulations that would stop the
implementation. And let me just point out this is the same
legislature that exempted a football stadium and industry from
CEQA. So it is not like, you know, absurd.
Doesn't this tell us something that when we go to
implementation or we pick our goals we have got to do what it
takes to implementation practical?
Mr. Goldston. I don't know the specific case that you are
talking about. As a general rule, certainly, as a New Yorker,
it doesn't hurt me to hear tales of the oddness of the
California State legislature. But I don't know the specific
case.
Mr. Bilbray. I think it is mind-set, the problem was. Not
understanding the great goals and standards are easy for
legislators to do but it is tough for them to take the hit on
the fact that regulatory obstructionism is a major barrier to
innovative environmental and economic growth.
I guess the other issue that I would bring up is a good
example of, and you were aware of it because you were working
on this, we are required to go to secondary sewage across the
sec--with activated sludge. When you have the Scripps
oceanographers telling us that it is going to not only to hurt
the environment, but when we do the environmental assessment
implementing the Federal law on secondary in certain instances
hurts the environment to the point where the Sierra Club and
the environmental health Department of the County of San Diego
sued the Federal Government to stop it.
Don't you think we really need to go back and start looking
at that outcome base, the cost-benefit and how it really
affects the real world and not just what it was meant to do?
Mr. Goldston. Again, I don't know the specific case, but
the notion of judging by outcome I think makes a lot of sense,
yes.
Mr. Stearns. I thank the gentleman. The gentleman from
Virginia is recognized for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. Mr. Goldston, I
believe, very mildly put, that rules have gotten out of balance
placing unreasonable burdens on business, burdens that have a
chilling effect on growth and jobs. My understanding of your
testimony is you disagree with that?
Mr. Goldston. I would say as a broad conclusion I disagree.
That doesn't mean that there are no rules that could be
changed.
Mr. Griffith. And so that I'm being fair with you I will
tell you that that actually is a line that I agree with.
Probably my version would be put on steroids, but that is a
line out of President Obama's January 2011 Wall Street Journal
op-ed piece. So it is not just me, it is the President who
thinks we ought to do something about this. And that is why I
was very pleased that Mr. Sunstein spent so much time with us
because it is probably one of the few things that I would agree
with the President's administration on. I believe this is an
area where we can all come together and recognize that it does
have--these regulations do have an effect on jobs, and my
district in particular, which is the ninth district of
Virginia, which is a large district. Some would call it rural,
others might not. It is heavily dependent on manufacturing and
mining. We do have a university or two in the mix, but it is
heavily dependent on that. And we are seeing the effects of
these regulations.
You indicated in your comments that you felt like that if
we started rolling back some regulations it might make things
less predictable. And I am just wondering if you have had the
opportunity to hear the testimony in front of one of the
committees where Notre Dame came in and testified that in 2004,
they attempted to comply with what they believed the EPA
regulations were going to be in regard to boilers. And of
course, the EPA has backed off of its boiler MACT regulations,
but they were very concerned about it because they spent
millions of dollars to comply with what they thought the EPA
wanted, only to find out a few years later that that wasn't
good enough and they were not going to be able to qualify as a
valid boiler if the new regulations had come into effect. And
these are folks who were really trying. And I just can't agree
with you. I believe that we need to do more to make things
predictable.
And Mr. Kovacs, if I might ask you, on page 12 of your
prepared statement, you have got a copy, I believe I have seen
this or a similar chart before of all the new regulations
coming into effect at that time, and again, boiler MACT is
not--it is on the back burner if not off the stove completely.
But I just--you can look at all of these colors from over
there and see. If a member of your organization, doesn't matter
which agency, whether it is EPA or OSHA, sees that much coming
at them, do you think they think that is predictability in
regulation?
Mr. Kovacs. Well, it is clearly not predictability.
Mr. Griffith. That's why I asked it.
Mr. Kovacs. Whatever it is going to change. I would like to
make a point without being stuck to the yes or no. We have been
talking about jobs all day. And if jobs are really being
created by all of these rules, then the Environmental
Protection Agency should be implementing the continuing jobs
analysis that it's got under 321 and all the other rules. There
are mechanisms.
If you go through everything that Congress has done for the
last 30 years, you have least restrictive alternatives. It is
never applied. You have unfunded mandates any time it is over
100 million dollars. There are an entire list of issues to be
done. You have within each of the environmental statutes some
form of this continuing jobs analysis. We have it there and it
is not being done. So there are ways to bring resolution to
this issue.
But going back to your question, yes, that is an enormous
amount of regulatory uncertainty. But if you look going forward
between health care--which I am not an expert on--or financial
services, we went from the 137 to 224, that chart is going to
go this way.
Mr. Griffith. If I understand your answer in general, and
your other comments as well what I am hearing you say--correct
me if I am wrong--what I'm hearing you say is if, as some would
like to think that regulations actually create jobs, then they
should embrace congressional requests that they establish what
jobs they are creating and what the impact is on jobs. Because
if these regulations are so good for jobs, a requirement to
detail the jobs effect of the regulation would come out that
these regulations are actually helping everybody.
And so the EPA and the administration and all the others
actually ought to actually get behind the TRAIN Act and other
Acts that call for more data that show that these regulations
are, in fact, creating job, if that is true. Is that what you
are saying sir?
Mr. Kovacs. Absolutely. That is what they should do. The
Congress has already mandated it in the other statutes. But I
would even go one step further. EPA uses proprietary models. It
does not use the public models as required under the Data
Quality Act. It should begin releasing all of its models so
that we can see the assumptions. They should go in and begin
applying the Data Quality Act, which the administrator said
gave a hint to that, it is a good way of testing the
statistics, the data, the information.
The agencies have written, since Congress passed that in
2000, the agencies have literally written that out. And the
only thing it says is that the agencies are to open up their
data, to use the most up-to-date data, put that data in the
record and allow that data to be peer-reviewed and tested
within the system. That has not occurred since the law has
passed.
Mr. Griffith. Thank you, sir, I see my time is up.
Mr. Stearns. I thank the gentleman. We are ready to close.
I think one thing I am getting out of this panel is that the
frustration that routinely the Federal agency ignore the
requirements contained in such laws as Mr. Kovacs mentioned,
the Regulatory Flexibility Act, the Information Quality Act,
and the unfunded Mandates Reform Act.
I mean, that is a concern I think for a member of either
party, a bipartisan issue to think that they routinely ignore
that. And we really have a responsibility to make them comply.
And so with that----
Ms. DeGette. Mr. Chairman, I just would point out to the
gentleman from Virginia, I completely agree that there should
be some explanation by these agencies, the EPA and the other
agencies, about, in fact, what the impact of these regulations
should be on jobs. And that is, as Mr. Kovacs says, why most of
the existing laws require that analysis.
My concern about this REINS Act, which the gentleman refers
to, is it does not just say you shall submit to Congress how
many jobs it creates. It submits these regulations to Congress
for approval or disapproval and if Congress just doesn't get
around to doing it, it fails. And it might be a useful
regulation that we all could agree on. That's the issue. It
goes much farther than just that jobs issue. And with that, I
yield back.
Mr. Stearns. Does the gentleman want to comment on that?
Mr. Griffith. Yes, Mr. Chairman, I would just say that the
reference I made was actually to the TRAIN Act, which we had in
subcommittee last week. I do support the REINS Act and your
comments are valid but my reference was to TRAIN Act today.
Ms. DeGette. Trains, reins.
Mr. Stearns. I thank my colleagues and with that, the
subcommittee--oh, we have 10 days to submit for the record any
opening statements or any questions that we might further ask
for you folks. So thank you, and the subcommittee is adjourned.
[Whereupon, at 12:45 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Prepared Statement of Hon. Joe Barton

Thank you, Mr. Chairman, for holding this important hearing
to discuss OIRA's role in reviewing proposed and final rules
before those rules are published in the Federal Registrar. As
the president stated, this new approach is supposed to remove
outdated regulations that stifle job creation and make our
economy less competitive. According to Obama's 2011 Executive
order, agencies were required to submit to OIRA a ``preliminary
plan'' laying out how each agency intended to review its
existing ``significant'' regulations and determine which ones
should be modified or repealed. On the face of it, that sounds
great. However, after reviewing those plans, I am troubled.
I am not sure anyone really took this seriously. Many
agencies submitted plans that simply regurgitated the Executive
order, claiming that they were already engaged in the process
of reviewing their existing significant regulations. Most of
the agencies that actually submitted a substantive ``plan''
focused on streamlining reporting and making information
available online. This type of review is not the ``look back''
that I was hoping for, or that the President ordered.
What I consider significant regulations, are rules that
have a major impact on American jobs and our economic
recovery--such as the Environment Protection Agency's move to
regulate green house gasses, or their role in overseeing the
implementation of Title V programs in States. Unfortunately,
the EPA did not consider these important enough to consider in
the near term.
We were led to believe that agencies were directed to
listen to the public's grievances and consider the regulations
identified by stakeholders in the private sector before
submitting their plans. If the EPA had actually done this, they
would have listened to the 12 states that have already filed
suit to protect domestic jobs. They would have also heard from
industry, small business.
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