[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
REGULATORY ACCOUNTABILITY ACT OF 2013
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
REGULATORY REFORM,
COMMERCIAL AND ANTITRUST LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
ON
H.R. 2122
__________
JULY 9, 2013
__________
Serial No. 113-37
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
LAMAR SMITH, Texas Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
SPENCER BACHUS, Alabama ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio JUDY CHU, California
TED POE, Texas TED DEUTCH, Florida
JASON CHAFFETZ, Utah LUIS V. GUTIERREZ, Illinois
TOM MARINO, Pennsylvania KAREN BASS, California
TREY GOWDY, South Carolina CEDRIC RICHMOND, Louisiana
MARK AMODEI, Nevada SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina
DOUG COLLINS, Georgia
RON DeSANTIS, FLORIDA
JASON T. SMITH, Missouri
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Regulatory Reform, Commercial and Antitrust Law
SPENCER BACHUS, Alabama, Chairman
BLAKE FARENTHOLD, Texas, Vice-Chairman
DARRELL E. ISSA, California STEVE COHEN, Tennessee
TOM MARINO, Pennsylvania HENRY C. ``HANK'' JOHNSON, Jr.,
GEORGE HOLDING, North Carolina Georgia
DOUG COLLINS, Georgia SUZAN DelBENE, Washington
JASON T. SMITH, Missouri JOE GARCIA, Florida
HAKEEM JEFFRIES, New York
Daniel Flores, Chief Counsel
James Park, Minority Counsel
C O N T E N T S
----------
JULY 9, 2013
THE BILL
H.R. 2122, the ``Regulatory Accountability Act of 2013''......... 3
OPENING STATEMENTS
The Honorable Spencer Bachus, a Representative in Congress from
the State of Alabama, and Chairman, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 1
The Honorable Steve Cohen, a Representative in Congress from the
State of Tennessee, and Ranking Member, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law................ 37
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Committee on the Judiciary 39
WITNESSES
Robert A. Sells, President, Titan America Mid-Atlantic Business
Division
Oral Testimony................................................. 44
Prepared Statement............................................. 47
Jeffrey A. Rosen, Partner, Kirkland & Ellis LLP
Oral Testimony................................................. 51
Prepared Statement............................................. 53
Keith Hall, Mercatus Center at George Mason University
Oral Testimony................................................. 66
Prepared Statement............................................. 69
Diana Thomas, Department of Economics and Finance, Huntsman
School of Business
Oral Testimony................................................. 76
Prepared Statement............................................. 78
David Goldston, Director of Government Affairs, Natural Resources
Defense Council
Oral Testimony................................................. 84
Prepared Statement............................................. 86
Ronald M. Levin, William R. Orthwein, Distinguished Professor of
Law, Washington University in St. Louis
Oral Testimony................................................. 89
Prepared Statement............................................. 91
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 41
Material submitted by the Honorable Spencer Bachus, a
Representative in Congress from the State of Alabama, and
Chairman, Subcommittee on Regulatory Reform, Commercial and
Antitrust Law.................................................. 123
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Steve Cohen, a Representative
in Congress from the State of Tennessee, and Ranking Member,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 149
Supplemental Statement of Robert A. Sells, President, Titan
America Mid-Atlantic Business Division......................... 151
Supplemental Material submitted by Jeffrey A. Rosen, Partner,
Kirkland & Ellis LLP........................................... 159
Supplemental Material submitted by Ronald M. Levin, William R.
Orthwein, Distinguished Professor of Law, Washington University
in St. Louis................................................... 201
Material submitted by C. Boyden Gray............................. 251
Statement of Administration Policy on H.R. 3010.................. 280
Letter of Opposition to H.R. 3010................................ 281
Response to Questions for the Record from David Goldston,
Director of Government Affairs, Natural Resources Defense
Council........................................................ 288
Response to Questions for the Record from Ronald M. Levin,
William R. Orthwein, Distinguished Professor of Law, Washington
University in St. Louis........................................ 294
REGULATORY ACCOUNTABILITY ACT OF 2013
----------
TUESDAY, JULY 9, 2013
House of Representatives,
Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:04 a.m., in
room 2141, Rayburn Office Building, the Honorable Spencer
Bachus (Chairman of the Subcommittee) presiding.
Present: Representatives Bachus, Goodlatte, Issa, Holding,
Collins, Smith, Cohen, and DelBene.
Staff Present: (Majority) Daniel Flores, Chief Counsel;
Ashley Lewis, Clerk; and (Minority) James Park, Minority
Counsel.
Mr. Bachus. Good morning. The Subcommittee on Regulatory
Reform, Commercial and Antitrust Law hearing will come to
order.
Without objection, the Chair is authorized to declare
recesses of the Committee at any time. We don't anticipate any
recesses. We ought to go straight through.
We welcome all of our witnesses today. I am going to
recognize myself for an opening statement, and other Members
for an opening statement. And then the panel will give their
opening remarks.
From the onset of this Committee's work on regulatory
reform this Congress, I have stressed that the argument is not
that we don't need any relations at all. Reasonable rules
provide clear rules of the road for businesses, so they have
some certainty and know what to expect. They provide safeguard
for consumers and protections for the environment.
But clear, reasonable rules of the road that provide
certainty are not what we have gotten from this Administration.
And that has been a major contributing cause to the continuing
underperformance of the U.S. economy.
To a considerable degree, President Obama has expressed
agreement that regulations should be more reasonable. For
example, in 2011, the President ordered regulatory agencies to
consider costs and benefits, and choose the least burdensome
path. The order continued: The regulatory process must be
transparent and include public participation.
This sounds very commendable, but the devil is always in
the details. It is in the implementation stage where the
promises have failed to pan out.
Many of the new regulations fall most heavily on small
businesses that are the job creators for over two-thirds of the
jobs in our economy. They can be a source of tremendous cost
and frustration--that is, the regulations.
Let me quote from an opinion article published in the
Birmingham News this past Sunday, July 7, that was written by
the Alabama state director of the National Federation for
Independent Business, Rosemary Elebash. She said, and I quote,
``Sometimes I think of the Federal Government as a bad boss. It
barks an order, gives you an unrealistic deadline, and doesn't
have a clue how you will make it happen. But if things are not
absolutely perfect, there will be heck to pay.''
The cost of regulatory compliance has been estimated at
about $11,000 per worker. This is real money that is then not
available to be reinvested to help a business grow and hire
more workers. Such regulatory trade-offs do not only affect
business owners and employers. They affect the employees and
individuals.
If a regulation increases the price of a needed product
without corresponding benefit, it takes away money that a
person could spend elsewhere that would have a greater health
or safety benefit. This is especially affects low-income
Americans, for whom money is already tight.
The current regulatory system clearly has shortcomings.
Federal agencies need to do a much better job of determining
when regulation is needed and proposing smarter regulations
when warranted. And when forming regulations, we absolutely do
have to consider the consequences on jobs and the economy,
because it is the foundation on which everything else rests.
The Regulatory Accountability Act, reintroduced this term
by Chairman Bob Goodlatte, goes a long way toward ensuring that
this will happen. It remedies many of the system's most glaring
weaknesses, and it does so based on bipartisan regulatory
reform principles.
This is sound legislation that I am proud to cosponsor and
invite all of my colleagues to join me in supporting this bill.
At this time, I will recognize our Ranking Member, Mr.
Steve Cohen of Tennessee, for his opening statement.
[The bill, H.R. 2122, follows:]
__________
Mr. Cohen. Thank you. I appreciate the Chairman's opening
statement and his recognition. And in my position as the
Ranking Member, and in my philosophical position, which is what
puts me on the side of the aisle, I think that what he said was
wrong.
But I have said that before, and I will say again, we will
remain friends.
We have similar bills marked up regularly that do damage to
the regulatory structure that we have in this country, and it
is the whole question of balancing issues, and safety vs. due
process and fairness, and all those things. And it just kind of
depends where you come down. And the other side tends to come
down on the side of business who doesn't want to deal with
regulations, but do want due process and fairness, as they see
it. And then the other side looks at the public and consumers,
and what is going to be fair and bright and save lives and
purify the air and the water and make life better for
everybody.
So it is just kind of whether you are looking at a holistic
way at what is good for everybody as a family, or whether you
are looking at it just for the folks who are individually
particularly concerned.
And that is what we have pretty regularly in this Committee
and kind of in this Congress.
The Administrative Procedure Act is really a constitution
of administrative procedures. And to amend it, you have to have
a high burden of proof, just as you should have a high burden
of proof to amend the United States Constitution. You shouldn't
be doing that without particularly good reasons, and I don't
think the burden of proof which you would have in amending the
Constitution, which has very high thresholds, has been met by
the proponents of this bill that may have changes that need to
be made in the APA.
We have all kinds of situations. We can show that workplace
safety is important, and there are problems that we have now.
There were 4,693 workplace deaths in 2011, according to the
Bureau of Labor Statistics. That is a lot of deaths.
And not that they would all be alive and living and
breathing if we had a process of regulations in place to save
them. We had those, but they are there to save people and to
make conditions better. And there will be more deaths, I think,
if we have less regulation and less oversight at OSHA and other
places.
The National Institute for Occupational Safety and Health,
the American Cancer Society, and Emory School of Public Health,
say they estimate 50,000 to 70,000 deaths from occupational-
related diseases in the United States annually. And that is
sufficient--overly sufficient.
And the joint study by the Liberty Mutual Insurance Company
and health economists at UC Davis say that we have $250 billion
of workplace-related injuries. Only 25 percent is covered by
workers comp.
In addition, several provisions in this bill concern me.
H.R. 2122's expanded use of formal rulemaking procedures for
high impact rules is, to me, an unnecessary procedural
expansion that will not serve to improve the quality of
rulemaking, while at the same time would add major cost to the
process, and effectively grind the process of rulemaking to a
halt, which is probably the intent and motive of the law.
Furthermore, rulemaking largely fell out of favor more than
a generation ago as its costs became were evident. Consensus
developed that the notice and comment rulemaking procedures of
553, the APA, which are themselves fairly proceduralized,
combined with the APA analytical requirements struck a better
balance in ensuring a fair and accurate rulemaking process
while maintaining agency effectiveness.
The proponents of this bill offer no study or other data
indicating the use of cross-examination and other facets of the
formal rulemaking process are the more effective tools for
making scientific and policy judgments than the current
process. If anything, history says the opposite.
An infamous example of the rulemaking procedure was before
the FDA. It took more than 10 years to determine whether the
FDA should require that peanut butter contain 90 percent
peanuts, as opposed to 87 percent peanuts.
A government witness was examined and cross-examined for an
entire day about a survey of cookbook and patented peanut
butter formulas, missing recipes, and his personal preferences
for peanut butter, crunchy or smooth.
While I make no judgments about crunchy or smooth, or about
how many peanuts should be in peanut butter, I do think that
government could do better to spend its resources than devoting
10 years to decide the question of peanut butter and peanuts.
We ought to not be returning to those days, and be wary of
it.
Another concern with H.R. 2122 is its codification of
overly burdensome cost-benefit analysis requirements.
Every President since Ronald Reagan has required that
executive agencies conduct cost-benefit analysis, and that
support for such requirements has been bipartisan.
Nonetheless, the particular agency determinations required
under this bill and the requirements that all these
determinations be made for all rules would cause unnecessary
delay and cost tremendous taxpayer resources.
I do not see the net benefit of expanding cost-benefit
analysis requirements to nonmajor rules, or to guidance
documents, which do not have the force of law.
Perhaps we should have a better cost-benefit analysis done
of H.R. 2122, go to the source of the matter. It wouldn't be
res ipsa. It could be res ipsa, the thing speaks for itself.
There are other concerns that I will not delve into in
these brief opening remarks, including the bill's provision
establishing less deferential judicial review under which
judges could second-guess an agency's cost-benefit analysis and
substitute their policy judgments for those of agency experts.
This bill does nothing to improve the rulemaking and will
only serve to stymie agencies from ensuring that health safety
and welfare of the American people are protected.
It will also go nowhere in the Senate. It will not become
law. We are supposed to be lawmakers and not messengers.
And, therefore, I close my message and urge my colleagues
to be in opposition to this bill, and this message.
I yield back the balance of my time.
Mr. Bachus. Thank you, Mr. Cohen.
I would now like to recognize the Chairman of the full
Committee, Mr. Bob Goodlatte, for his opening statement.
Mr. Goodlatte. Mr. Chairman, thank you very much for
holding this hearing on H.R. 2122, the ``Regulatory
Accountability Act of 2013.''
For over 4 years, since the great recession officially
ended, America's workers and small businesses have waited for
real recovery to take hold. Last week, a new jobs report once
again offered superficial reason to think good news might be
growing. In June, the number of jobs added to the economy grew
slightly. The number of long-term unemployed fell. And the
labor force participation rate grew by \1/10\ of 1 percent.
But over 4 years into nominal recovery, these signs of
improvement are still far too weak. What is worse, lurking
beneath the surface, bad news continues to come.
The June jobs report showed an increase of 240,000 in the
number of discouraged workers, those who have simply quit
looking for a job out of frustration or despair.
The number of people working part-time but who really want
to full-time work passed 8.2 million. That represents a jump of
322,000 in just 1 month.
Worst of all, the truest measure of unemployment, the rate
that includes both discouraged workers and those who cannot
find a full-time job, continues to exceed 20 million Americans,
and that rate rose from 13.8 percent back to 14.3 percent in
June.
This continuing lag in recovery is distressing for all
Americans. And the reason recovery has yet to fully arrive is
all too easy to see: Real historical economic growth rates are
missing. They have been ever since the great recession.
Some say that this is a new normal, a yearly growth rate on
the order of 2 percent in contrast to America's historically
higher growth rate. But a new normal of suppressed growth,
lowered expectations, and more than 20 million Americans
unemployed or underemployed, is something America's workers and
small businesses can't accept, and America's leaders must
reject.
The American people urgently need the jobs that only
greater economic growth can give. One of the biggest obstacles
standing in the way of growth and job creation is the growing
wall of Federal regulation being built in Washington.
The Small Business Administration and the Competitive
Enterprise Institute have both estimated that Federal
regulations now cost our economy well over $1 trillion per
year. Yet the Obama administration is continuing to add
historically high numbers of new major regulations. It has just
launched a new regulatory initiative that is sure to increase
energy costs for America's families and job creators. This is
progress in the wrong direction.
As long as America's small businesses and manufacturers
continue to tell us that a hostile regulatory environment is
one of the biggest challenges they face, we must look for ways
to reduce unnecessary regulatory burdens.
Regulations surely has a role to play in ensuring public
health, safety, and welfare. But there is no reason Americans
need to choose between having regulations that keep us safe and
having economic growth that allows us to prosper.
That is why I reintroduced the Regulatory Accountability
Act this Congress. Its reforms to the Administrative Procedure
Act, the constitution of Federal regulation, are some of the
most important regulatory reforms we can pass.
Simply put, the Administrative Procedure Act is out of date
and encourages regulatory overreach and excessive regulatory
costs.
Enacted in 1946, it places only a handful of light
restrictions on the Federal rulemaking process. Congress wrote
it long before anyone imagined the reach and expense of the
modern regulatory state.
The APA does not require agencies to identify the costs of
their regulations before they impost them. It does not require
agencies to consider reasonable lower-cost alternatives. The
APA does not even require agencies to rely on the best
reasonably obtainable evidence.
While the APA does require agencies to give notice of
proposed rulemaking, and receive public comment on their
proposals, too often that is an after-the-fact exercise.
Frequently, agencies predetermine the outcomes of
rulemakings, and notice and comment serves only to paper over
the record.
The Regulatory Accountability Act fixes this problem by
bringing the APA up-to-date. Under its provisions, agencies are
required to assess the costs and benefits of regulatory
alternatives. Unless interests of public health, safety, or
welfare require otherwise, agencies must adopt the least cost
alternative that achieves the regulatory objectives Congress
has established.
The Regulatory Accountability Act contains common-sense
reforms that have bipartisan support in both the House and the
Senate. In large part, that is because so many of its
provisions are modeled on the terms of executive orders that
Presidents Reagan, Clinton, Bush, and Obama have issued to
compensate for the APA's weaknesses.
Over the past 3 decades, these bipartisan executive orders
have proved that the principles of the Regulatory
Accountability Act work. But the executive orders are not
permanent, not judicially enforceable, do not bind independent
agencies, and are too often honored in the breach.
Under the Regulatory Accountability Act, the principles of
these orders would at least become binding law. Sound decisions
that meet statutory objectives while they respect the economy's
needs would be the order of the day, not the rare occurrence.
American jobs, American growth, and American
competitiveness would all be better for it, and I urge all of
my colleagues to join me and do all we can to pass the
Regulatory Accountability Act.
Mr. Chairman, I am very pleased that you are holding this
hearing. I am looking more forward to hearing the testimony of
the witnesses.
I am particularly glad to have with us Mr. Bob Sells of
Titan American Corporation, which operates a great facility in
Botetourt County, Virginia, manufacturing an essential
ingredient for American growth, cement.
Thank you.
Mr. Bachus. Thank you.
I noticed he is the Tennessee Volunteer. Being a University
of Alabama graduate, it was too late to scrub you from the list
of witnesses. Since you had a business in Roanoke, I decided to
not even try.
You know I am joking. It is a very stellar, Auburn and
Alabama----
Mr. Cohen. Mr. Chairman, if I can interrupt this SEC talk,
Mr. Conyers has a----
Mr. Bachus. Absolutely. Without objection, Mr. Conyers'
opening statement, he is the full Committee Ranking Member,
will be made a part of the record.
And all Members' statements will be made a part of the
record, opening statements, without objection.
[The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, Ranking Member, Committee on
the Judiciary, and Member, Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
The so-called ``Regulatory Accountability Act''--which effectively
will prevent agencies from issuing regulations--is among the most
seriously flawed bills we have considered to date.
My greatest concern is that H.R. 2122 will have a pernicious effect
on the public health, safety, and well-being of Americans.
The ways in which it does this are almost too numerous to list
here, so I will just mention a few.
For instance, H.R. 2122 would override critical laws that prohibit
agencies from considering costs when public health and safety are at
stake.
These statutes include the Clean Air Act, the Clean Water Act, and
the Occupational Safety and Health Act.
This means that agency officials will now be required to balance
the costs of an air pollution standard with the costs of how many
anticipated lives and illnesses that will result in the absence of such
regulations.
At the hearing on this bill's predecessor in the last Congress, our
witness testified that if this measure were in effect in the 1970's,
the government ``almost certainly would not have required the removal
of most lead from gasoline until perhaps decades later.''
This is because the bill imposes numerous procedural hurdles on the
rulemaking process, a process that most experts agree is already too
ossified.
The bill adds roughly 60 additional analytical requirements to the
already substantial analytical process, which threatens ``paralysis by
analysis.''
By delaying the rulemaking process, we ultimately put American
citizens at risk.
Worse yet, some of these new requirements have been soundly
rejected by respected administrative law academics and practitioners,
such as the bill's mandate requiring formal rulemaking.
As our witness observed at this prior hearing, ``Almost no serious
administrative law expert regards formal rulemaking as reasonable, and
it has been all but relegated to the dustbin of history.''
This explains why more than 40 leading administrative law academics
and practitioners as well as the American Bar Association have raised
serious concerns about these new requirements.
My second concern is that many provisions in the bill will
facilitate greater influence of business interests on rulemaking and
agencies.
We already know that the ability of corporate and business
interests to influence agency rulemaking far exceeds that by groups
representing the public.
But rather than leveling the access playing field, H.R. 2122 will
further tip the balance in favor of business interests by giving them
multiple opportunities to intervene at various points in the rulemaking
process, including through less deferential judicial review.
Finally, the bill is based on the faulty premise that regulations
result in economically stifling costs, kill jobs, and promote
uncertainty.
While supporters of H.R. 2122 will undoubtedly cite a study
claiming the cost of regulations exceed $1.7 trillion, the
Congressional Research Service, Center for Progressive Reform, and the
Economic Policy Institute found the study to have been based on
incomplete and irrelevant data.
With respect to the impact that regulations have on job creation,
then-Chairman Smith said during the hearing on H.R. 2122's precedessor
in the last Congress that the ``American people urgently need jobs that
only economic growth can give. Standing in the way of growth and job
creation is a wall of federal regulation.''
But the Majority's own witness at that hearing, Christopher DeMuth,
who appeared on behalf of the conservative think tank American
Enterprise Institute, clearly debunked this argument. He said that the
``focus on jobs . . . can lead to confusion in regulatory debates'' and
that the employment effects of regulation ``are indeterminate.''
Another argument--regulatory uncertainty hurts businesses--has
similarly been debunked.
Bruce Bartlett, a senior policy analyst in the Reagan and George
H.W. Bush Administrations has observed:
[R]egulatory uncertainty is a canard invented by Republicans that
allows them to use current economic problems to pursue an agenda
supported by the business community year in and year out. In other
words, it is a simple case of political opportunism, not a serious
effort to deal with high unemployment.
Regulations that promote the health of our citizens and ensure the
safety of American-made products will unquestionably lead to job
creation and protect the competitiveness of our businesses in the
global marketplace.
Not surprisingly, the Administration issued a veto threat in the
last Congress regarding the bill's substantively identical predecessor
stating that it ``would seriously undermine the ability of agencies to
execute their statutory duties'' and that it also ``would impede the
ability of agencies to provide the public with basic protections,''
among other concerns.
Rather than heeding these serious concerns, my colleagues simply
want to push forward with a bill that has absolutely no political
viability.
It is a shame that we again will waste our time on legislation that
has no future.
__________
Mr. Cohen. Thank you.
Mr. Bachus. Thank you.
Is there anyone else who would like to make an opening
statement?
Mr. Cohen. Since you all talked about Alabama and UT, I
would like to hear about Vanderbilt. Excellent, thank you. That
is good, that is where I went to school. It costs a lot of
money, but you get good students and you get good grades and
they educate you well. And we are starting to do good sports
too, but academics is first.
We don't get into how we do against Alabama and UT on the
scores, because it would not be any contest.
Mr. Goodlatte. Mr. Chairman, with all this great connection
that Mr. Sells has to Tennessee both as a Volunteer and his
daughter attending the outstanding school of Vanderbilt, I hope
that the Ranking Member will listen intently to his testimony.
Mr. Cohen. With bated breath. [Laughter.]
Mr. Bachus. We have Virginia, Purdue graduates. We will not
get too much into the Big Ten.
But we do have a panel from all over the country, including
here in Washington, so it is a distinguished panel.
And I will start by introducing Mr. Sells. He is president
of the mid-Atlantic business unit of Titan America, a heavy
construction material producer in eight states employing 1,600
Americans. Titan America produces cement, concrete, concrete
block, aggregates, sand, and beneficiated coal ash.
Mr. Sells joined Titan America in 2001 as V.P. of Florida
Concrete Products and assumed the role of mid-Atlantic business
unit president in 2007, making him responsible for the Roanoke
Cement Company, Titan, Virginia, Ready Mix, S&W Ready Mix, and
Powhatan Ready Mix.
Mr. Sells earned his B.A. in civil engineering, and his
M.S. in engineering from the University of Tennessee
Mr. Jeffrey Rosen is a senior partner in the Washington,
D.C., office of Kirkland & Ellis. Mr. Rosen practiced law on a
wide array of areas at Kirkland & Ellis for 21 years before
leaving in 2003. He rejoined the firm in 2009 focused on
regulatory and litigation matters. From 2003 to 2006, he served
as general counsel for the U.S. Department of Transportation.
As general counsel, he was responsible for the department's
regulatory program, enforcement and litigation activities,
legal issues, and legislative proposals.
From 2006 to 2009, Mr. Rosen served as general counsel and
senior policy advisor for the White House Office of Management
and Budget, OMB, as we call it, making him the Administration's
lead lawyer for regulatory and fiscal issues.
Appreciate your being here.
Dr. Keith Hall is a senior research fellow at Mercatus
Center at George Mason University. Prior to joining the
Mercatus Center, Dr. Hall served as the 13th commissioner of
the Bureau of Labor Statistics. In this role, he headed the
principal fact-finding agency in the Federal Government in the
broad field of labor economics and statistics.
Prior to his service at BLS, Dr. Hall served as chief
economist with the White House Council of Economic Advisors,
where he analyzed a broad range of fiscal, regulatory, and
microeconomic policies, and directed a team that monitored the
state of the economy and developed economic forecasts.
Dr. Hall received his B.A. from the University of Virginia,
and his M.S. and Ph.D. degrees in economics from Purdue
University.
Dr. Diana Thomas is an assistant professor of economics and
finance at Utah State University's Jon M. Huntsman School of
Business. Dr. Thomas' primary fields of research include public
choice, development economics, and Australian economics--oh,
you are conservative?
Prior to joining the Huntsman staff, Dr. Thomas worked as a
junior portfolio manager at Allianz Global Investors in
Frankfurt, Germany. Dr. Thomas earned her B.S. in finance, her
M.A. in economics, and her Ph.D. in economics from George Mason
University.
Maybe I shouldn't assume that just because she studied
Australian--I mean Austrian economics.
Dr. Goldston is director of government affairs for the
National Resources Defense Council in Washington, D.C., and
responsible for its governmental strategies.
Prior to joining NRDC, Mr. Goldston served as project
director for the Bipartisan Policy Center report ``Improving
the Use of Science in Regulatory Policy.'' Mr. Goldston also
served as chief of staff of the House Committee on Science from
2001 to 2006.
He has been a visiting lecturer at Princeton, Harvard, and
a columnist for journal Nature. He received his B.A. in history
from Cornell University and completed coursework for a Ph.D. in
American history at the University of Pennsylvania.
We welcome you, Mr. Goldston.
Finally, Mr. Ronald Levin has testified many times before
our Committee. He is the William R. Orthwein Distinguished
Professor of Law at Washington University in St. Louis. Mr.
Levin is a co-author of a casebook, ``State and Federal
Administrative Law.''
Previously, he chaired the section of administrative law
and regulatory practice of the American Bar Association, a
group of which he is still an active member. He served as the
ABA's advisor to the drafting committee to revise the model
state Administrative Procedure Act.
He also serves as a public member of the Administrative
Conference of the United States and chair of its Judicial
Review Committee. Before joining the law faculty, Mr. Levin
clerked for the Honorable John C. Godbold of the U.S. Court of
Appeals for the Fifth Circuit and practiced in the Washington,
D.C., firm of Sutherland Asbill & Brennan.
When did you clerk----
Mr. Levin. 1975 to 1976 in Montgomery, Alabama. The Fifth
Circuit at that time included Alabama.
Mr. Bachus. Yes, he is a very distinguished judge.
Mr. Levin received his B.A. from Yale and J.D. from
University of Chicago.
I was trying to figure out if I had tried cases maybe when
you were a clerk.
Mr. Levin. Hopefully, you had that privilege.
Mr. Bachus. But that is a tremendously distinguished panel.
At this time, Chairman, do you have any questions you would
like to ask?
Wait, we have to have our opening statements.
Barney Frank used to start asking questions before we heard
the opening statements. I can't believe I just did it.
[Laughter.]
Barney lives. His ghost, he came back. We had his portrait
unveiling last week.
TESTIMONY OF ROBERT A. SELLS, PRESIDENT,
TITAN AMERICA MID-ATLANTIC BUSINESS DIVISION
Mr. Sells. Thank you, Chairman Bachus.
Distinguished Congressional Committee Members, my name, as
the Chairman mentioned, is Robert Sells. I serve as president
of the mid-Atlantic business unit of Titan America, a heavy
construction material producer in eight states. We employ over
1,600 Americans, and Titan America does produce cement,
concrete, concrete block, aggregates, sand, and beneficiated
coal ash, which are vital materials America needs as it
recovers from the great recession and moves forward in a new
era of resilient, sustainable construction and infrastructure.
The construction materials we produce create the foundation
of America. As a business that is highly regulated under
Federal agencies, Titan America supports H.R. 2122, the
Regulatory Accountability Act. We believe the process for
justifying regulations, identifying the alternatives,
evaluating the impact on jobs and the economy, assessing the
cost-benefit impact of the regulations, and incorporating input
from the regulated business community will be more robust and
transparent under this legislation.
The result will be greater certainty in business for
planning new investments, expansion, and job creation.
While at times we have enjoyed good working relationships
with agencies such as EPA, MSHA, OSHA, and the DOT, there are
times, particularly during rulemaking, where the input of the
regulated community has not been sufficiently requested,
accepted, or considered, resulting in regulations requiring
significant revisions or that ultimately are challenged in
court and remanded or vacated.
One example is the Portland cement NESHAP rule finalized in
2010, which included some conditions that were technically
unattainable and other conditions that were not considered in
or vastly changed from the final proposal.
After various challenges, this rule was reconsidered in
2013, but is now under legal challenges from environmental
groups.
Another example is MSHA's pattern of violations rule.
Safety is our number one value at Titan America. This rule was
implemented this spring and goes too far in removing due
process and could close a business without the opportunity to
contest the allegations. At the present time, when a MSHA
citation is issued, the company is required to implement the
MSHA officer's corrective action before the company can protest
the citation.
Under H.R. 2122, legislation would provide greater
opportunities to consider input from the regulated community to
make more achievable and rational regulations.
We believe it is important for a regulation to be justified
by aspects directly related to the regulatory statute for the
regulation in question.
However, co-benefits for aspects that are not attributable
to a given regulatory statute are often used as justification.
We experienced this in the Portland cement NESHAP, where a
limit on hydrochloric acid, which was previously determined to
be less than health-based standards, is now justified because
of the co-reduction of sulfur dioxide, which is regulated under
other statutes. There are cases where cement plants have
naturally low sulfur dioxide emissions, and there is little if
any co-benefit for meeting an arbitrarily low costly
hydrochloric acid limit.
If there is a benefit for reducing sulfur dioxide
emissions, then it should be addressed under the statutes for
that emission, not by an expensive backdoor approach.
This legislation will require that regulations be justified
by their own direct benefits and that proper rulemaking be
followed if there is justification for co-benefits.
Greater input from the regulated community earlier in the
process through advanced notice of proposed rulemaking and
hearings during the proposed rule stage will provide the
regulators with greater understanding of how the proposed
regulations may impact businesses, what alternatives may be
applicable, and what obstacles may prevent effective
implementation of the regulations.
Often, inconsistencies between regulations, and sometimes
just lack of common sense, create complications for business
without creating any additional benefit or protection intended
by the regulation.
One example is cement kilns using tires as an alternative
fuel, which has many positive environmental benefits. If a tire
is from a State collection program, it is legitimate fuel. But
the exact same tire from a tire dump or landfill triggers a
completely different set of regulations.
Another example is DOT's hours of service regulations,
which were intended to provide adequate rest for over-the-road
drivers. This has affected our local delivery professionals who
spend less than 40 percent of their time behind the wheel.
Finally, this legislation addresses the propensity of
agencies to issue guidance and move formal rules, with the
effect being that regulators at State and regional levels use
this guidance with the weight of regulations. We have seen this
in draft guidance and judicial waters.
In closing, I would like to thank this Committee for
hearing my testimony and would like to thank each of you for
your service in the United States Congress, representing the
citizens of your district and our great Nation.
I will be happy to answer questions at the end of our
testimony.
[The prepared statement of Mr. Sells follows:]*
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*See Appendix for supplemental statement submitted by this witness.
__________
Mr. Bachus. Thank you.
Mr. Rosen?
TESTIMONY OF JEFFREY A. ROSEN, PARTNER,
KIRKLAND & ELLIS LLP
Mr. Rosen. Chairman Bachus, Ranking Member Cohen, Chairman
Goodlatte, and other distinguished Members of the Subcommittee,
thank you for inviting me here today to address the Regulatory
Accountability Act, which represents an important set of well-
considered improvements to administrative law and regulatory
practice.
My name is Jeff Rosen. I am currently a partner at the law
firm of Kirkland & Ellis. And as you heard, I previously served
as general counsel at the U.S. Department of Transportation,
and as general counsel and senior policy advisor at the White
House Office of Management and Budget.
The views and observations I am offering today, however,
are entirely my own, based on my own experiences in and out of
government.
So let me say first, the regulatory process is one that is
not always well understood, but it often produces results that
produce strong reactions. Some rules are sensible and
beneficial. Others are not.
We need to remember that regulation affects not only
businesses but also municipalities, hospitals, universities,
farmers, airports, and others, including individuals.
Now, when the Administrative Procedure Act was enacted in
1946, it was meant to restrict some excesses and arbitrariness.
And in many ways, the APA has worked well. But over time,
agencies have been able to promulgate more and more costly
regulations with seemingly few real inhibitions or meaningful
restrictions on their doing so.
The Code of Federal Regulations is now 238 volumes and
nearly 175,000 pages. That troubles people who agree with
Winston Churchill's warning back in 1949 that ``if you make
10,000 regulations, you destroy all respect for the law.''
And even individual Federal rules can be hugely
consequential to our economy.
For example, in 2011, EPA proposed and then postponed a new
rule regarding ozone. The agency itself had estimated the rule
could have added cost of as much as $90 billion per year, even
though there are States like California that have not even
complied with the existing ozone rule.
Consider this, Federal agencies by rulemaking can issue new
laws involving costs of more than $1 billion with only 30 days'
public notice and only one chance for public comment with no
hearing, no rebuttals of comments submitted by others, and no
other debate or dialogue of any kind.
Last December, the GAO even reported that during a 7-year
time period in which it reviewed rules from 52 Federal
agencies, the agencies did not even provide advanced public
notice or allow any public comment for approximately one-third
of major rules that involved more than $100 million each.
That is probably not the best way for things to work,
especially when the stakes to our economy our highest.
Sometimes, the existing process works fine. But for
significant rules, we need more opportunities for public input,
more assurances of the accuracy of the information being relied
upon, more basis to know the rules don't impose more costs than
is necessary or worthwhile, and some strengthening of the
checks and balances on regulations that are already in place.
The Regulatory Accountability Act addresses these issues
with about a half-dozen really key improvements, which are
described in my written statement. These involve the use of
advanced notices for significant rules, requiring cost-benefit
analysis by all agencies using guidelines set by OMB, applying
the Information Quality Act to rulemaking, allowing focused
hearings for rules involving more than $1 billion of impacts,
giving OMB additional authority over agency guidance documents,
and strengthening judicial review in some circumstances.
These build on existing law and practice, including
requirements of executive orders from Presidents of both
parties over the last 30 years, and the improvements are well-
grounded in actual experience and in common sense.
It is also a virtue of this bill that it has bipartisan
sponsors both in the House and in the Senate.
With respect, I will say there are always some who will
oppose any change to the Administrative Procedure Act, just as
there were some who opposed the APA itself in 1946.
But the Regulatory Accountability Act represents a very
useful step forward. It deserves to move ahead in this
Congress.
So thank you for the opportunity to appear here today. And
I will look forward to addressing any questions you may have.
[The prepared statement of Mr. Rosen follows:]*
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*See Appendix for supplemental material submitted by this witness.
__________
Mr. Bachus. Thank you.
Dr. Hall, you are recognized.
TESTIMONY OF KEITH HALL, MERCATUS CENTER
AT GEORGE MASON UNIVERSITY
Mr. Hall. Chairman Goodlatte, Ranking Member Conyers,
Subcommittee Chairman Bachus, Subcommittee Ranking Member
Cohen, and Members of the Committee, thank you for the chance
to discuss regulations and the current state of the U.S. labor
market. I appreciate the opportunity to testify today.
It has now been a full 4 years since the end of the great
recession. Unfortunately, the U.S. labor market is far from
recovery. At the end of the recession, just 59.4 percent of
working age Americans had employment. Today that number is even
lower at 58.7 percent.
Over 100 million people are now jobless, and there are
about 4.5 million long-term unemployed, and there are likely
millions more long-term jobless that are not being counted.
We may well be looking at a decade before the labor market
is fully recovered. Even then, many of the long-term jobless
may never fully recover their lost earnings or even find
employment. Our primary focus should be on encouraging the
economic growth that we need to push our labor market into full
recovery mode.
The biggest problem with the U.S. labor market is a lack of
economic growth. According to our biggest job creators, small-
business owners, government is playing a role in holding back
the economy.
Remarkably, surveys of small-business owners show they are
more worried about the government than the weak economy.
For example, according to the Gallup-Wells Fargo Small
Business Index, a third of respondents reported that their most
important challenge is government regulation, taxes, health
care/Obamacare, or just government generally, more than are
concerned about attracting new customers or the economy
generally.
According to the National Federation of Independent
Business, nearly half of all small-business owners cite either
taxes or government regulation as their biggest single problem.
According to both surveys, only 6 percent of owners are
primarily worried about the quality of their employees.
The most important thing we can do now is to eliminate the
tremendous amount of uncertainty over economic policy that is
holding back consumers and the economy.
One serious concern of business seems to be the potential
for new regulations. It is clear that poorly designed
regulation can cause significant economic distortions that
affect labor market. It is also true that even a well-designed
regulation where there are significant benefits has an economic
cost that needs to be considered.
Any regulation that raises the cost of production for an
industry lowers productivity and likely creates unemployment.
Unemployment at anytime is costly for those involved. But
in a bad labor market like today's, it can be devastating.
For decades now, there has been a significant amount of
economic evidence that unemployment results in a significant
and sustained earnings loss for individuals. The immediate
impact of job loss includes lost wages, job search costs, and
retraining costs. Even after being reemployed, the permanent
lost earnings for the jobless will be significant.
Studies have shown it can take as long as 20 years for
reemployed workers to catch up on lost earnings, largely due to
skill mismatches between the jobs lost and the new jobs created
in the economy.
These losses occur for workers with different lengths of
previous job tenure and all major industries, and for workers
of any age.
I anticipate that the poor performance of the labor market
over the past 4 years will lead to an even greater earnings
loss for the currently unemployed.
At this time, we should also be particularly concerned with
who bears the unemployment burden of regulatory changes. Youth
and older workers have been particularly hard-hit by the
recession and weak economic recovery.
Youth have a higher unemployment rate, and despite their
youth, are overrepresented in the long-term unemployed.
For older workers, unemployment can be even costlier. It
now takes an average of over 30 weeks for someone over 55 years
old to find new work.
Despite clear evidence of the devastating effects of
unemployment on U.S. workers, it is routine practice for
regulatory agencies to estimate the benefits and costs of
regulatory changes under what economists generally refer to as
the full unemployment assumption.
This is literally the view that involuntary unemployment
never exists because any individuals that become unemployed are
instantly and costlessly reemployed in nearly identical jobs.
If ever it was obvious that this is an inappropriate
assumption, it is now in the aftermath of the great recession.
This of course results in a systematic and significant
underestimation of the cost of regulatory change.
I have several recommendations for consideration.
First, regulatory changes create unemployment, and
unemployment in a bad labor market is much costlier than at
other times. We should, therefore, consider suspending all but
the most important regulatory changes until we are much further
along into a labor market recovery.
Second, I don't know of a single instance where a
regulatory agency estimated that unemployment cost of a
regulatory change. This practice is misleading to the public
and to Congress. It should stop. Every new and significant
regulatory change proposal should be accompanied by an economic
impact analysis that includes a genuine attempt to project its
unemployment costs.
Third, when regulatory agencies estimate the cost of
unemployment, they shouldn't limit themselves to the employment
effect within the regulated industry. The unemployment created
by regulatory changes can be much higher outside the regulated
industry than inside.
Fourth, we should stop discussing hiring created by
regulations as if that is part of the economic benefit. It is
not. It is part of the cost. Every compliance job lowers
productivity and output in the regulated industry. It therefore
comes at the expense of production jobs. The goal of any
regulation should be to achieve its goals with the least use of
additional resources, including labor resources.
And fifth, since agencies make no effort to estimate the
unemployment effect of regulations, they have no idea of who
loses work and, therefore, of who is bearing the economic
burden through job loss.
Since regulation impacts industries unevenly, there may
sometimes be real issues about its distribution effects,
exactly what occupations are impacted, and where the jobs are
currently located.
Thank you.
[The prepared statement of Mr. Hall follows:]
__________
Mr. Bachus. Thank you.
Dr. Thomas?
TESTIMONY OF DIANA THOMAS, DEPARTMENT OF ECONOMICS AND FINANCE,
HUNTSMAN SCHOOL OF BUSINESS
Ms. Thomas. Chairman Goodlatte, Ranking Member Conyers,
Subcommittee Chairman Bachus, and Subcommittee Ranking Member
Cohen, and Members of the Committee, thank you for the chance
to testify on the effects of regulation on low-income
households today. I appreciate the opportunity to be here.
My research shows that regulation has unintended
consequences that are particularly detrimental to low-income
households. These unintended consequences are as follows.
Regulation of health and safety and the environment often
represents the preferences of high-income households, but it
increases prices and lowers wages for all households. As a
result, low-income households are forced to pay for the
mitigation of risks that are not their priorities.
In this sense, regulations can have a regressive effect.
Because of this regressive effect, it should be subject to a
cost-benefit test that takes into consideration potential
regressive effects.
So let me explain that in a little bit more detail.
According to the CDC, the top two causes of death in the United
States are cancer and heart disease. And we spend billions of
dollars every year to try to privately mitigate those risks. In
doing so, we have some effect at least on the risk that we
face.
Just to give you a point of reference, in 2002, the
mortality risk associated with heart disease was roughly 19 in
10,000 of population, so 19 individuals out of 10,000 died from
heart disease.
Regulation, on the other hand, often addresses risks that
are significantly lower. There are numerous OSHA rules that
address occupational safety, but work-related fatalities only
happen with the frequency of roughly 0.36 in 10,000 of
population, so much lower.
When people make private decisions to reduce risks, they
start out with the highest risks that affect them the most.
That just makes sense. As your income increases, you will also
consider lower probability risks. What that means is then
ultimately high-income households will already be concerned
with low-probability risks, but low-income households are still
dealing with high-probability risks that affect them the most.
When regulation is directed at small probability risks that
are costly to mitigate, it, therefore, represents the
preferences of the wealthy. But it applies to everybody,
regardless of income. So that means everybody has to pay the
higher prices.
Because low-income households have limited resources, that
means that regulation forces them to transfer resources from
mitigating high-probability, high-priority risks to the
mitigation of low-priority, low-probability risks.
Essentially, they have less money to spend on the
mitigation of risk that actually matters to them because they
are forced to pay for the priorities of higher income
households.
Take, for example, the 2005 removal of the essential use
designation for CFC as a propellant in medical inhalers by the
FDA. CFC is a greenhouse gas, and it was regulated because of
its consequences on the ozone layer. Medical inhalers that use
CFC had previously been exempted from the 1987 Montreal
Protocol, which phased out ozone-depleting substances, and the
Montreal Protocol was actually pretty successful at achieving
its goal. The World Meteorological Organization estimated in
2002 that the ozone layer is expected to return to pre-1980
levels by the middle of the 21st century.
Now that same research report also pointed out that
additional reduction in CFC emissions would produce only small
improvements, and that nonindustrial sources of CFC emissions
were insignificant.
So basically, what the WMO research indicated was that the
benefits of banning CFCs as a propellant in medical inhalers
were uncertain and at best negligible. The cost of the ban to
consumers were real and significant, however. The price of the
asthma inhalers, for example, have roughly tripled since this
rule has been implemented. And that affects several million
Americans. And low-income households, in particular, as you can
imagine, are affected by this a lot.
So when regulation is directed at small risks that are
expensive to mitigate, it can have regressive effects on
household income. And low-income households have fewer
resources on hand to address their private high-priority
concerns a result of that.
This unintended consequence of regulation is real, but it
is foreseeable, which is why it is important for agencies who
are tasked with public welfare to consider the regressive
effects of the regulations that they are considering, and to
analyze the cost and benefit before they make decisions that
affect people.
Thank you very much for the opportunity to testify, and I
look forward to your questions.
[The prepared statement of Ms. Thomas follows:]
__________
Mr. Bachus. Thank you.
Mr. Goldston?
TESTIMONY OF DAVID GOLDSTON, DIRECTOR OF GOVERNMENT AFFAIRS,
NATURAL RESOURCES DEFENSE COUNCIL
Mr. Goldston. Thank you, Mr. Chairman, Mr. Cohen, Chairman
Goodlatte, and Members of the Committee. Thank you for inviting
me to testify today.
NRDC believes H.R. 2122 is a fundamentally flawed bill.
Though designated the Regulatory Accountability Act, the
measure might be better named the ``regulatory atrophy act''
because its primary effect would be to prevent the government
from exercising its responsibility and duty to protect the
public.
The title is also misleading because it implies that the
current system lacks checks and balances when, in reality,
Congress and the courts already have ample authority to hold
agencies to account, and the entire system gives industry and
others numerous opportunities, formal and informal, to
influence the development of regulations.
But the bill is not designed to codify an objective sense
of accountability in any event. There is nothing in the bill
that would enable anyone to take an agency to task if it failed
to recognize a problem or to safeguard the public. No provision
of the bill would make an agency more likely to, say, deal with
shoddy lending practices that could cause an economic meltdown
or prevent an outbreak of a foodborne illness or limit
emissions of a pollutant.
H.R. 2122 instead would make it much more difficult and
time-consuming to address such problems.
Indeed, the bill is a kind of anthology of bad ideas that
have already proven to interfere with efforts to protect the
public.
For example, H.R. 2122 would require agencies to hold
formal hearings on many proposals. Formal hearings are a
procedure that fell into disuse years ago because experience
showed that they ate up huge quantities of time without
contributing much to the quality of regulations. But
apparently, the potential for inordinate delay is a good enough
reason to bring hearings back with a vengeance in H.R. 2122.
Even more pernicious is the reasonable sounding requirement
that agencies ``adopt the least costly rule'' to deal with the
problem. Now, no one objects to the notion that safeguards
should achieve their goals as inexpensively as possible, and
there are plenty of existing incentives, administrative and
political, to do just that.
But the bill's language sets up a nearly impossible legal
hurdle. For a rule to be upheld, the agency would have to prove
that it had carried out an exhaustive analysis of virtually any
and every alternative, including any alternative thrown in its
way to sidetrack the process.
We don't have to guess what the impact of this would be,
because similar language has already made a dead-letter of key
provisions of TSCA, the Toxic Substances Control Act. A court
ruled that EPA could not ban asbestos, a material with cancer-
causing properties that are beyond dispute, because it could
not prove that it had analyzed every alternative.
It is ironic, if unsurprising, that some conservatives are
embracing alternatives analysis in H.R. 2122 given that, at the
same time, they are trying to remove the much simpler and more
reasonable alternatives analysis from NEPA, and there will be a
hearing before the Subcommittee on that on Thursday.
But that is just more evidence that the alternatives
provision in H.R. 2122 are expected to be hurdles to block
progress rather than pathways to facilitate reaching a goal.
There are other ironies in H.R. 2122. Conservatives often
make a whipping boy of the Federal courts, but the bill
requires the courts to take on a more activist role,
substituting their judgment for the agency's, even on highly
technical and scientific matters.
And the bill claims to seek transparency, requiring
agencies to make public virtually anything they have touched
during the regulatory process, yet H.R. 2122 shields the
involvement of the Office of Information and Regulatory
Affairs, OIRA, from scrutiny, even while expanding its role and
enshrining it in law.
Under the bill, OIRA will likely play the most political
and determinative part in the entire regulatory process, yet
its guidelines are not subject to comment and its workings can
remain private.
All of this would be inexplicitly inconsistent if its
overall purpose were not so abundantly clear, to block new
safeguards with an ornate process and to slow anything that
cannot be stopped entirely.
This is not accountability, not an effort to ensure that
agencies are effectively and efficiently carrying out their
legal duties. Rather, this is an effort to amend and weaken
existing law, and future statutes to boot, by overlaying a
suffocating blanket of anti-regulatory bias.
The result will be fewer needed safeguards despite public
support for protection, and study after study showing that the
benefits of regulation far outweigh the cost.
Moreover, studies have found regulation to have a neutral
to positive impact on employment.
Time prevents me from describing all the problematic
provisions of H.R. 2122, which I should say include overriding
many existing statutes, including provisions of the Clean Air
Act.
But let me close by saying that it is appropriate to hold a
hearing during the summer movie season. H.R. 2122 has a plot a
bit like a summer suspense movie or novel, where a pleasant-
seeming character insinuates his way into a household and
slowly but surely begins annihilating it.
H.R. 2122 traffics in reasonable concepts and unthreatening
language, but its cumulative effects on regulatory law will
leave agencies hamstrung and the public exposed.
Thank you.
[The prepared statement of Mr. Goldston follows:]
__________
Mr. Bachus. Thank you.
Professor Levin, I want to apologize to you. I was reading
your bio, but I think I called you ``Levine.''
Mr. Levin. Levin is correct.
Mr. Bachus. I know it is Levin, so I want to apologize. It
is Ron Levin. I am reading your biography like I don't know who
you are.
Mr. Levin. No offense taken.
Mr. Bachus. I apologize for that.
TESTIMONY OF RONALD M. LEVIN, WILLIAM R. ORTHWEIN,
DISTINGUISHED PROFESSOR OF LAW, WASHINGTON UNIVERSITY IN ST.
LOUIS
Mr. Levin. Chairman Goodlatte, Chairman Bachus, Ranking
Member Cohen, and Members of the Subcommittee, thank you for
inviting me to testify before you again.
My primary message today is one of caution. The bill before
you has some positive features, but it also contains a host of
provisions that would burden and disrupt the rulemaking
process, or that do not seem very well thought out.
The corresponding bill in the previous Congress, H.R. 3010,
raced through the House in only 3 months from introduction to
final passage. And the House did not respond to numerous
criticisms from administrative lawyers. So I hope the current
bill will get closer vetting this time around.
I do not have time to discuss all aspects of the bill, but
I want to commend to your attention the comments of the ABA
Administrative Law Section, which did analyze H.R. 3010 in
detail 2 years ago. I have appended that report to my
testimony. I am not speaking for the ABA or the section today,
but I did work actively on those comments. So if you questions
about the issues the section raised, I would probably be in a
good position to respond as an individual.
For now, I want to highlight a few key troubling areas in
the bill. My core concern about the bill is that it would
greatly complicate the rulemaking process and make it
impossible for agencies to carry out the missions that Congress
has assigned to them.
Many students of the administrative process believe that
rulemaking is already too cumbersome. I believe that 2 weeks
ago, Public Citizen presented a humongous chart* documenting
all that. I think you saw it at that time.
---------------------------------------------------------------------------
*The Public Citizen chart referred to is not reprinted in this
hearing record but is available at http://www.citizen.org/documents/
Regulations-Flowchart.pdf (7/18/13).
---------------------------------------------------------------------------
That is the chart, in case you don't remember it.
But this bill would make Section 553--it does. But that is
the modern rulemaking process.
But this bill would make Section 553 ten times longer and
it would aggravate that situation enormously. One way it would
do this is by specifying a range of considerations that an
agency would have to take into account in every rulemaking
proceeding, whether it is significant or not, including costs
and benefits of the proposed rule and all reasonable
alternative rules; estimated effect of the rule on jobs,
innovation, and competitiveness; whether the agency thinks it
is required to adopt the rule or merely has discretion to adopt
it; whether existing rules created the problem; and so forth.
And some of those inquiries would be fine in a proceeding
to consider a very elaborate and costly rule. But it is
wasteful to require them in every rulemaking proceeding.
Usually, if an issue is relevant and important to a
particular rulemaking, some stakeholder will raise the issue in
the comment period and the agency will then be required under
current law to respond. But this bill requires the agency to
address every item on the laundry list, whether it is
significant in that case or not. And this is a waste of limited
resources, which is especially worrisome in these days of
serious budget-cutting.
Second, the bill instructs agencies to consider some of
these factors, even where the agency's enabling statute would
otherwise forbid it to consider them. Super-mandates of this
kind, as they are called, not only oversimplify the enormously
diverse range of problems that various agencies regularly face,
but also would give rise to a large amount of confusion and
litigation. So unelected judges would have to sort out those
mixed congressional messages.
Third, for high-cost rules, parties would have the right to
trigger trial type hearings under the APA's formal rulemaking
provisions. Over 30 years' time, courts, agencies, scholars,
and professional organizations have overwhelmingly concluded
that formal rulemaking is obsolete, and they have abandoned it
where they are not required to use it by statute.
They conclude the courtroom methods are usually not
effective tools for resolving highly technical policy disputes
in regulatory contexts, but they do lead to unwarranted delays
in completing the agency's business.
And formal rulemaking is also subject to ex parte contact
rules that would impede agency decisionmakers from conducting
free-flowing dialogue with the public, with OIRA, and with
Congress itself.
But nevertheless, this bill would bring this dinosaur back
from near extinction.
Fourth, the bill contains some truly radical provisions
expanding judicial review of agency action. These provisions
would turn courts into policymakers in various contexts,
although judges don't have political accountability or subject
matter specialization to assume that role.
In all of these areas and others we might have a chance to
discuss today, I hope the Subcommittee will tread carefully and
make sure the balance between accountability and effectiveness
doesn't become skewed as this bill threatens to do.
And with that, I will conclude my remarks and be happy to
respond to your questions.
[The prepared statement of Mr. Levin follows:]*
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See Appendix for supplemental material submitted by this witness.
__________
Mr. Bachus. Thank you.
At this time, we will recognize Members for their
questions. And I will start by recognizing the Chairman of the
full Committee, Mr. Goodlatte.
Mr. Goodlatte. Thank you very much, Mr. Chairman. I
appreciate your recognizing me.
And I want to thank all of our witnesses for their
testimony. I do have some questions for them.
First of all, again, welcome Mr. Sells. I appreciate your
testimony. And I wonder if you would tell us if the terms of
the Regulatory Accountability Act were enacted and enforceable
by judicial review, do you think that agencies would promulgate
more flexible regulations that would make it easier for you and
business people like you to grow your businesses and create
jobs?
Mr. Sells. Congressman, that would be a direct result of
H.R. 2122.
We feel like common sense and the issues that you bring up
there would be beneficial to us in moving forward and making
investments, growing our businesses, and growing jobs.
Mr. Goodlatte. Do you think that the legislation would also
produce more efficient and effective regulations, and promote
more buy-in and compliance by regulated entities, which would
then improve the achievement of the regulatory objectives in
the first place?
Mr. Sells. Yes, sir, they would. One of the things that we
believe very openly about is transparency needs to be in all of
these aspects.
When you give the business community opportunity to meet
with the regulators, meet with environmental groups, and
discuss what the issues are, and what the end result, the
endgame is that you are trying to achieve, which is the health
and well-being of society, the growth of our economy, and
employment of American citizens, then you can bring all these
things together. And by allowing that information to come
forward early in the system, it would allow for better
regulations.
Mr. Goodlatte. Thank you.
Mr. Rosen, doesn't the Regulatory Accountability Act align
rulemaking incentives in the right direction by encouraging a
race between agencies and stakeholders to see who can propose
the lowest-cost alternatives and create the most possible
benefits?
Mr. Rosen. That is right, Mr. Chairman. I would agree with
that, Mr. Chairman.
That is one of the big benefits of increasing public
participation, is trying to find solutions that accomplish the
statutory regulatory objectives, but do so in a way that is
more efficient, more effective, and better for everybody.
Mr. Goodlatte. Thank you.
Mr. Goldston, your central criticism of the Regulatory
Accountability Act is that it hampers regulations by
``overlaying a suffocating blanket of procedures on agency
rulemaking.'' But isn't that the same as claiming the bill
would overregulate the regulators?
I mean, the fact of the matter is, put yourself in Mr.
Sells' shoes and figure out what is going on in terms of the
operation of his business when confronted with the massive
regulations that come out at him literally every day of every
business day of the year that they have to confront and deal
with. Shouldn't there be some greater sense brought to that
regulatory process than what I would call overkill that is
taking place right now?
Mr. Goldston. Thank you, Mr. Chairman.
I would say the issue right now isn't whether there are any
possible reforms to the regulatory system, but whether this
bill would actually reform the regulatory system. So I would
say, in this particular case, this bill is indeed overkill.
First of all, as Professor Levin mentioned----
Mr. Goodlatte. Well, let's go to your first comment. What
are the regulation changes that you could support that would
make this environment better?
We are here to learn from you.
Mr. Goldston. Excuse me?
Mr. Goodlatte. We are here to learn from you. This bill
could conceivably be improved, if you could point us in the
right direction of how to deal with what many of us perceive to
be regulatory overkill in a way that makes more sense to you. I
want to hear that.
Mr. Goldston. So I would say we would start by saying that
the approach shouldn't be to add as many new requirements as
possible, particularly requirements whose only purpose seems to
be to drag out----
Mr. Goodlatte. Are you saying instead we should make it
easier to get regulations out the door?
Mr. Goldston. I think in some cases, with the help of both
parties----
Mr. Goodlatte. Let me just throw out a statistic here. In
the past 10 years, final rules--in other words, you have
completed the regulatory process--with the effect of law from
administrative agencies have outnumbered laws passed by the
Congress by 223 to 1. For every one law that this Congress
passes, the massive Federal bureaucracy puts out 223
regulations.
This Congress is not shy about passing laws either. We
usually produce 300 or so new laws each Congress. So you are
talking 60,000 new regulations each 2-year cycle.
And we need to make it easier to produce those, so that
businesses like Mr. Sells' have to confront more than 60,000
new regulations every 2 years?
Mr. Goldston. Mr. Chairman, all those regulations are
promulgated pursuant to Federal statutes enacted by the
Congress. The agencies are not willy-nilly doing that.
If Congress doesn't----
Mr. Goodlatte. That is why we are here today, because we
think they have carried that ball way too far, and there needs
to be a check on what they are doing to make sure they are more
efficient and more effective and more cost-effective and more
responsive to the people who have to carry these out and have
to adjust their business models and have to cut back on
employment when they can't afford to meet the regulations. That
is why we are here.
Mr. Goldston. Mr. Chairman, if I may, the way to handle
that, if there are problems with the----
Mr. Goodlatte. We have to pass 60,000 new laws curtailing
the 60,000 regulations? I don't think so. I think we have to
have a more pragmatic way to do that.
Mr. Goldston. With all due respect, I don't think it
requires 60,000 new laws. These are not being done each one by
a different law.
If, for example, there are problems with the Clean Air Act
in your view, then you should try to pass those changes. In
reality, those changes don't tend to be passed through Congress
because the public support isn't there to amend the Clean Air
Act.
Mr. Goodlatte. In reality, the Congress has ceded so much
authority to the executive branch that it is an absolute
impracticability to go through those one law by one law.
If I might, Mr. Chairman, if I could ask one more question
of Mr. Levin, then I will not ask for anything more here.
Mr. Cass Sunstein, the former Obama administration OIRA
administrator, and perhaps the single most prominent
administrative law professor in the country, told the
Commercial and Administrative Law Subcommittee in 2010 that the
basic principles of the executive orders on rulemaking were
important and should be a permanent part of the regulatory
system.
Do you disagree with him?
Mr. Levin. Actually, I don't. I support the executive
orders. What I am concerned about is----
Mr. Goodlatte. Making them a permanent part of the
regulatory system, which is what this legislation is to do.
Mr. Levin. With nonreviewability in the courts, as the
orders provide, with a balanced list of factors to consider as
the executive orders provide, but this bill would not, yes, I
think those should remain. But I don't think they should be
codified.
Mr. Goodlatte. Thank you, Mr. Chairman.
Mr. Bachus. Thank you.
Mr. Cohen, the Ranking Member, is recognized for 6 or 7
minutes.
Mr. Cohen. Thank you, sir. I probably will not take that.
Dr. Thomas, first, I would like to ask you, was your work
on German beer, medieval beer, did that relate to regulations?
Ms. Thomas. Yes, it did.
Mr. Cohen. How did regulations affect German medieval beer?
Ms. Thomas. Well, most of the time, they regulated the
space in which the beer could be sold, so geographically
constrained it. And that was hindering to competition.
Mr. Cohen. Which is generally what happens, that
legislation is passed that restricted, the regulations to
benefit somebody.
But let me ask you, your statement was all about
regressivity. The whole world is regressive. You understand
that, don't you?
Ms. Thomas. Yes.
Mr. Cohen. And I don't understand what you are saying, that
all this is about high-income people's preferences and what
they desire to the detriment of low-income folks, because it is
regressive on them, and high-income people have these--it is
almost sounds like some kind of socialist-type statement that
you are making.
Should the whole world be taken down to the basic minimum
quality?
Ms. Thomas. What I am suggesting is that when regulation
addresses low-probability risks, it represents the preferences
of the wealthy. And in those cases----
Mr. Cohen. How do you know it represents the preferences of
the wealthy?
Ms. Thomas. Well, like I said in my testimony, households
will address the highest probability risks before they address
lower probability risks.
So just by the nature of things, low-income households
don't have the resources to address low probability.
Mr. Cohen. Right, because they are poor, or lower income.
Ms. Thomas. That is right.
Mr. Cohen. So let me ask you this, at the Mercatus group
that you work with, Mercatus Institute, what have you all done
in studies about regressivity in taxes, so that we can see to
it that maybe people who are poor don't have to pay more burden
of taxes, which is what this allows them, because they don't
have that income, because it is a regressive tax system, to
have those choices.
Do you have any papers that you all have done on regressive
taxes?
Ms. Thomas. I don't actually work for the Mercatus Center.
I work for the university. I am just under contract with the
Mercatus Center.
Mr. Bachus. That is Dr. Hall.
Mr. Cohen. Have you done any work at all on regressive
taxes?
Ms. Thomas. No, I haven't.
Mr. Cohen. You haven't.
Ms. Thomas. What my work shows is the regressive effects of
regulation are to take money from the poor that they would be
spending on high-probability risks that they could mitigate
privately and reduces their income, essentially.
Mr. Cohen. Mr. Goldston, what do you think about this
premise?
Mr. Goldston. Well, a couple things. One, there are ways to
address regressivity.
But I would say that, first of all, many of the things that
poor people would do to address the high risks, such as
stopping smoking, actually don't cost more money. My
understanding of some psychological literature is that people
don't necessarily start by addressing the higher risks.
But the main point is two things. One, low-income people
are often actually the primary beneficiaries of important
Federal regulations, such as the Clean Air Act, because low-
income people actually often face higher rates of asthma and,
therefore, regulations that reduce the chance of asthma attacks
actually disproportionately probably benefit lower income
people.
Mr. Cohen. And they are more likely to live in the inner
city where the pollutants are more likely to occur.
Mr. Goldston. Exactly.
So I question some of the assumptions about regressivity.
And it seems to me that if there are economic consequences
to be dealt with, those should be dealt with separately after
taking care of these broad health changes that the regulations
can provide.
Mr. Cohen. Do you think that maybe a better way to address
this problem of regressivity might be to pass a jobs bill and
put people to work?
Mr. Goldston. Well, I would agree that, looking at
regressivity solely through the lens of regulation is a
particularly distorted way to do it, given that there are tax
consequences, budget consequences, in terms of regressivity. It
would probably swamp anything in regulation, which, again,
often benefits low-income people, and where there are other
ways to take care of environmental justice issues.
Mr. Cohen. Mr. Sells, are you by chance the swimmer?
Mr. Sells. Yes, sir.
Mr. Cohen. What do you think about swimming regulations,
like regulations to say that you have to put the depth of the
pool so you don't dive into a pool and it was 2-feet deep and
hit your head? Do you think that is a good regulation?
Mr. Sells. Yes, it is.
Mr. Cohen. And how about regulations that put fences
around, so kids can't get into the swimming pools?
Mr. Sells. That is a very good thing.
Mr. Cohen. Yes. And maybe the amount of chlorine that goes
into the water, so when you are doing your butterfly or
whatever it be, that you are safe?
Mr. Sells. Yes, sir.
Mr. Cohen. So some regulations are good, and it just
depends----
Mr. Sells. Some regulations are good, and the ones you are
pointing to are common sense. And that is what we are asking,
as far as the business community is concerned, common sense and
input from the business community, so that the impacts are
appropriate for the business that we are trying to do.
Mr. Cohen. And when you swam at U.T., you beat Alabama
swimmers, didn't you?
Mr. Sells. Yes, sir, I did. We lost on one occasion also.
Mr. Cohen. Did you?
I yield back the balance of my time.
Mr. Bachus. All right, thank you.
Mr. Holding?
Mr. Holding. Thank you, Mr. Chairman.
Mr. Rosen, you and other witnesses have discussed the
Regulatory Accountability Act and the transparency provisions
there to put businesses on notice what regulations are coming.
So I would like to get a little bit more specificity, so if
you would tell us what kind of transparency reforms would be
helpful to address the issue of this systemwide lack of
transparency throughout the entire regulatory process.
So if you could address that with some specificity rather
than just general terms.
Mr. Rosen. Sure. I alluded in my written statement to the
fact that sometimes one of the frustrating aspects of debates
about regulation writ large, the regulatory process, is
unavailability of some kinds of data. And that is because there
isn't full transparency, even though, on the whole, the Federal
Government is actually pretty effective at collecting and
publishing data in a lot of areas. But in the area of
regulations, we are a little short.
So there are improvements that could be done to make the
regulatory process, just in an information sense, more
transparent.
You have, by executive order, twice a year OMB publishes a
regulatory agenda. But the agenda could be much more robust in
terms of what is disclosed in the agenda as to the various
rules that have entered the pipeline, where they stand.
It could be more frequent. It could be more detailed in
terms of covering more aspects. It could be broken out with
greater specificity as to cost levels that are anticipated, the
source of the authority, the timetables, and what stage it is
at.
It could also, after rules are done, is where the
government isn't so good at publishing aggregate data. And
there are trade groups and nonprofits and others who try to
collect that. But it is a difficult task to get it accurate as
to what was done the prior year, how many rules of a different
type. And there could be more transparency as to the cost-
benefit studies that are done.
I think our academic colleagues in particular could
probably profit from that, because the way it works now, the
Agriculture Department does a cost-benefit study for a
particular rule. It is in the docket for that rule. If the
Transportation Department does one, it is in the docket for
that rule.
But if you are trying to access the larger mass of how many
were done last year and what is the quality of them, it is a
fishing expedition. I mean, you have to learn a lot about how
to master the various dockets and things.
So it could be made a lot more transparent by providing, in
essence, a central repository and linkage to that.
There other kinds of information that aren't very
transparent. Each agency has what is called a regulatory policy
officer. Those could be identified to the public, as an
example, as to who they are, so if you have an issue, you can
go to them.
I could probably detail more than I have some of the
specificity that you could get both out of the agenda and the
annual----
Mr. Holding. Well, how about in respect to timing. It is a
biannual requirement now. What about if we had monthly updates?
You could post them on the Internet and keep a running monthly
update.
Mr. Rosen. That would be a big improvement.
Mr. Holding. Do you think it would be burdensome to do a
monthly update? Or do you think they do them internally,
anyway?
Mr. Rosen. Exactly. If an agency is working on rules, it
has to know it is working on them. Its leadership has to be
able to track them. If they are not doing it, I would be
surprised, because all the ones I am familiar with were.
But if they are not, it would be a good tool to make them
to it.
And so I don't think it would be very burdensome, because
it is being done, for the most part, already. It is just not
made public, although some agencies do. DOT is a good example.
They publish a monthly report. But most don't.
So making that a monthly update to the agenda, putting it
on the Internet, a big improvement.
Mr. Holding. A final question: Do you think if the
Regulatory Accountability Act had been in place since the late
1960's, early 1970's, when our modern regulatory authorities
were fully starting to take shape, do you think we would be
where we are now with the regulatory cost of $1.75 trillion per
annum to comply with regulations?
Mr. Rosen. I don't, and the reason I say that is I think
there are rules out there that are inefficient, ineffective,
and overly costly. And many of those would have been caught in
a better process, like the Regulatory Accountability Act would
establish.
Mr. Holding. Thank you.
Mr. Chairman, I yield back.
Mr. Bachus. Thank you.
Ms. DelBene?
Ms. DelBene. You are getting closer.
Mr. Bachus. I have been practicing.
Ms. DelBene. DelBene.
Mr. Bachus. DelBene.
Ms. DelBene. I was born in Alabama, too, so I appreciate it
is hard to say. Closer.
Thank you, Mr. Chairman, and thanks to all of you for being
here and taking time out of your day to be with us today. I
really appreciate it.
Professor Levin, you talked about the additional
complications that would come with this bill, and that it would
require many rulemaking considerations that may not be relevant
in the context of particular rules, and create a very labor-
some process that isn't necessary.
So, given that, and that this bill kind of puts that in
place, if you are going to set aside this legislation, and if
the Subcommittee asked for your input on creating a more
efficient regulatory system that provided additional safeguards
for small businesses, how would you start? And would you make
any changes to the APA? Or would you recommend any changes to
the APA?
Mr. Levin. Well, on the matter of rulemaking
considerations, I would refer you to the passage in the ABA
comments, which I think potentially could have bipartisan
support.
And what the section recommended was that Congress and the
executive branch should get together to harmonize the
conflicting mandates and impact analysis requirements and
factors in a host of statutes, a host of orders. And agencies
have trouble figuring out what they are supposed to do, because
they are all going in different directions. If you put them
into a common structure, it would make things clearer for
agencies.
And what the section recommended was that it should be no
more burdensome than we have now, or if possible, less
burdensome. But if you harmonize them, you would make it a more
efficient structure.
Ms. DelBene. And when my colleagues are talking about the
cost of the regulatory process, your testimony seems to
indicate you think that the particular bill would make it even
more costly for us to implement the recovery process.
Mr. Levin. Oh, absolutely. And in Democratic and Republican
administrations alike.
Ms. DelBene. Thank you.
Mr. Goldston, I guess Dr. Hall was talking about the impact
on employment with respect to the regulatory environment. And
you made a statement saying that you actually thought that
regulations could have a positive impact on employment. I
wondered if you would give kind of where that information comes
from and what is your point of view compared to Dr. Hall's.
Mr. Goldston. Sure. And what I was saying was that the
literature has tended to show very little effect on employment.
It could be slightly positive. I am going now, among other
things, from a paper put out by the Wharton Center on
Regulation, which definitely tries to look at both sides. And
it summarizes the four major papers that have been done over
the years looking at regulation and employment.
And the primary one that is most cited is Morgenstern,
Pizer, and Shih, which is from Resources for the Future, that,
again, basically found, looking across several industries, no
overall effect on employment with slightly positive effect on a
few industries, particularly petrochemicals. And most of the
other studies have shown the same kind of minimal effect across
the board.
Ms. DelBene. So neutral is what you are saying the studies
would show?
Mr. Goldston. That regulation doesn't have a big effect on
overall employment one way or another, and certainly isn't
responsible for the recession, or our inability to quickly
recover from a recession.
Ms. DelBene. And in earlier comments, when you were talking
about the rulemaking process with respect to implementing
legislation that Congress has brought forward, do you feel like
Congress could do a better job, in terms of how we provide
legislation that would also----
Mr. Goldston. Well, Congress could give more direction,
obviously. I just think that these agencies are not acting by
fiat. They are acting in response to statutes that direct them
to put out regulations to protect the public. And if there are
problems with those underlying statutes, then that is what
should be addressed and debated. This kind of sweeping bill,
which as Professor Levin mentioned, has super-mandates that
single-handedly override statutes simply by the short phrase
``notwithstanding any other provision of the law,'' that is not
the way to do it.
I would also, if I might, say a comment or response to Mr.
Holding's questions. We also would like to see, and this in
some ways gets at one thing Chairman Goodlatte was asking about
also, we would love to see more transparency in the way OIRA
does it work.
That entity has become more and more powerful. It should be
more transparent. And yet, OIRA is the one entity not required
to be more transparent under this bill. It is able to provide
guidelines that courts have to defer to. In the past, OIRA
guidelines have been reviewed by the National Academy of
Sciences. And the National Academy of Sciences said they should
be withdrawn because they weren't properly done. OIRA is just
as fallible as any other entity.
And while every other agency has to be transparent under
this bill, the bill says OIRA, it is at the discretion of the
director. So a change that maybe we would all agree on is
greater transparency for OIRA which this bill stands in the way
of, actually.
Ms. DelBene. Thank you.
Thank you, Mr. Chair.
Mr. Bachus. We have allowed other people to go over, so if
you have another question?
All right, thank you. I think the lady from Washington.
And now our newest Member of the Committee, the gentleman
from Missouri, Mr. Jason Smith.
Mr. Smith. Thank you, Mr. Chairman.
Mr. Rosen, I think you would probably be a good one to ask,
but back in my district, in fact, EPA has had a rule that was
in effect for nearly 40 years that affected dairy farmers. And
it required that they were compared under the same act as oil
spills, and it would cost roughly some of them $10,000 a year.
Do you believe that if this act was in place, if that rule
would never have been on the books?
Mr. Rosen. If I understand the rule that you are talking
about, I think it would have had a negative cost-benefit and
that alone would have been a problem for it.
Mr. Smith. I agree. Earlier, there was also some talk about
the rulemaking on the peanut butter situation.
The time-consuming process allegedly demonstrated that
formal regulatory hearings for proposed rules would be
impractical. Are you familiar with the peanut butter example?
Mr. Rosen. Yes. And it is one of the great myths that is
thrown up as criticism of allowing hearings in rulemaking.
So I am glad you raised that, because the famous FDA peanut
butter rulemaking that took 10 years, the part of it that
involved a hearing was 30 days. And they did not even have the
hearing until 5 years into the rulemaking, actually 6, over 6
years in. And then after they had the hearing, they delayed
some more.
And so the problem of delay exists in all rulemaking. It
has nothing to do with whether there are hearings or formal
rulemaking or hybrid rulemaking. The peanut butter rulemaking
actually stands for a different proposition, which is that
agencies are often inefficient and slow. I can cite chapter and
verse of notice and comment rulemakings that took 7, 10, 12
years.
When I got to the Department of Transportation in 2003,
there were a half-dozen rules that were pending more than a
dozen years, and none of them had hearings.
So it is a big myth and a distraction. There have been
formal rulemakings conducted on the record that were done in
roughly a year or just over a year, which is extremely fast for
rulemaking.
The Agriculture Department during the Bush years did one on
milk marketing orders. The Commerce Department did one
extremely fast under the Marine Mammal Protection Act,
involving I think they were beluga whales.
So these anecdotes that are used to criticize the bill,
they just don't hold up. And when you have $1 billion at stake,
the whole idea that you could make a law with no hearing, no
notice, nothing, involving $1 billion and 30 days' notice, that
is not what was intended when the APA was promulgated.
And so we are talking about a small subset to deal with
factual issues where the premise, if it is mistaken, will
produce a $1 billion error. It is not very much to ask that if
someone has evidence that $1 billion error is about to be made,
they get a chance to tell the agency so. That is not a big
thing to ask.
Mr. Smith. Thank you.
Professor, earlier, I believe that I wrote this down right,
you said that if the Regulatory Accountability Act passed, that
this would be more costly on the agencies. Is that correct?
Mr. Levin. Yes.
Mr. Smith. So, would it be least costly on the small
businesses if this were in place?
Mr. Levin. Would it lower costs on small businesses?
Mr. Smith. With less regulations.
Mr. Levin. It would not directly affect them, but it would
mean that either Republican or Democratic administrations could
not get done what they need to do. A Republican administration
or any Administration that wants to deregulate small business
would have many more hoops to jump through also.
So I think what you are doing is stymieing the
administrative process for good or for ill, in whatever
direction. You should make the judgment of what your policies
are going to be on substantive grounds, but not mess up the
process of decision.
Mr. Smith. So it would cost agencies more money and the
small businesses not as much?
Mr. Levin. No, I was not testifying to that. I am saying
that it would cost the agencies more money and, therefore,
reduce their efficiency. And who knows what the effect would be
on affected entities, because the effect of the bill would
simply slow things down no matter what direction a conservative
or liberal Administration wants to go.
Mr. Smith. It would take longer for more regulations to be
put on small businesses and family farmers, correct?
Mr. Levin. Yes, as well as regulations that would relieve
their burdens.
Mr. Smith. Thank you, Mr. Chairman. I yield my time.
Mr. Bachus. Thank you.
There is some discussion, Mr. Goldston, you were talking
about discussion of impact on the poor and my take was you were
discounting Dr. Thomas' comments, what she described, inhalers,
bronchial dilators.
And I think she in her testimony, whether she said this or
not, but I do know, because there have been several articles
that the new regulations, the effect of their discharge on the
ozone. But it did quadruple the cost of most of those dilators.
Is that your understanding, that it tripled or quadrupled
the cost?
Mr. Goldston. Mr. Chairman, I would like to get back to you
on that on the record, because we do have an expert who
actually has written extensively on this issue.
My understanding, which I will double check, is that, first
of all, most people have moved away from the ozone-based
inhalers that the companies had many years to prepare, and then
the concern is obviously not just the use of the inhaler
themselves, but the production, because it keeps CFCs in
production and so forth.
But let me get back to you with a more extensive answer,
because we do already have material on that that I am not fully
familiar with.
Mr. Bachus. I am aware that oral medications, there have
been some substitutes----
Mr. Goldston. As I understand it, they are more effective.
Mr. Bachus. Or immunization. We have long-term, I guess you
would say, a series of immunization.
But still, in several diseases, even degenerative diseases,
particularly. And the cost has gone up.
And I do know that the agency did not consider that, that
they at least said that was not part of their consideration. Do
you think they should have considered that fact?
Mr. Goldston. Again, I would have to look at what was
actually done. Again, the industry was given a particularly
long period of time in which to phase these out. So in that
sense, the agency did take into account. It did not say
tomorrow these kinds of inhalers are not available.
Mr. Bachus. They are still dispensed in the hundreds of
thousands every month, I think, and the cost has gone up. I
mean, it has to drive up the cost.
Would you say the cost to those who need that medication,
and most of them critically, can be the difference between
being able to actually breathe or not? Do you think that ought
to be considered?
Mr. Goldston. I think the cost to consumers ought to be
considered. I think it is.
But again, I would like to get back on the specific--my
understanding is that actually a more effective medication was
developed over that period for reasons beyond just the CFC
concerns.
Mr. Bachus. Okay.
Mr. Goldston. On the larger issue, though, again, I think
there are other ways to deal with regressivity and looking at
regressivity just in terms of what is reduced by regulations--
--
Mr. Bachus. Sure. I know you talked about smoking. And
smoking obviously can result in and I guess aggregate emphysema
and aggravate asthma. But people are usually born with asthma.
They either have it or they don't.
Mr. Goldston. Rates have been going up for reasons that are
not completely understood. We do know what causes more asthma
attacks, which includes dirty air.
Mr. Bachus. Okay. And obviously, the pollution is
aggravating source.
I know you are, Mr. Sells, in the concrete business. I was
amazed, and again, anyone of you want to comment, when I had
the EPA in my office and they were proposing some changes in
arsenic levels and precipitants in the air that were indeed
something we don't want in our air.
There was a chart that showed that the occureence of
arsenic and some of those matters was heaviest on the West
Coast and along the Gulf of Mexico, along the Texas border, the
Mexico-Texas border, tremendous concentrations there, and along
the Gulf Coast.
When I asked in a hearing, what is the source of this
matter or material, it was Mexico and China. And yet, the
regulation was directed at cement plants all over the country,
including those in the East, where there is almost no arsenic
in the air, even around the cement plants in my district, which
is having to spend millions of dollars.
And I asked, well, what about China and Mexico? They said
they couldn't consider it. They don't have any control over
China and Mexico.
But they also, in that report, said that they would
eliminate as much as a third of the production in the United
States, but that it could be easily be replaced from Mexico.
And that is the type of thing that I think frustrates us.
Mr. Goldston. Mr. Chairman, again, I will get back to you
in greater deal in detail for the record. But my understanding
is, first of all, that the regulations concerning arsenic are
maximum achievable control technologies, so that is not
concerned with the overall amount in the air, but actually what
can be affordably achieved at a given----
Mr. Bachus. No. Absolutely, let me say this, it absolutely
can be achieved. But the cost was so prohibitive that even the
EPA said it would shut a third of our production down. I mean,
that was a part of their finding.
Mr. Goldston. But my understanding, again, on these rules
is actually the EPA concluded that there were not likely to be
any plant closures from the rule, that there were some--and
that, indeed, the rules have since been weakened to the point
which, as Mr. Sells mentioned, some in the environmental
community are actually suing, arguing that EPA weakened the
rule----
Mr. Bachus. They are. You are absolutely right. And I can
tell you well aware.
But they were weakened as a result of people raising hell
and saying, this is going to cost--we are going to lose jobs.
Mr. Goldston. But if the argument is that the current
system doesn't allow for any information to be given to an
agency, doesn't allow for give-and-take, then whatever the pros
and cons of the specific cement rule, it certainly shows a lot
of process where there are already abilities for the company to
have recourse.
Mr. Bachus. Actually, the agency, it was only a tremendous
outcry by people that said you didn't consider this. They said
they couldn't. Only because, I think both President Bush and
President Obama people said we can't do that.
Mr. Sells?
Mr. Sells. If I may, Mr. Chairman, mercury is the big
issue. And to your point, EPA's own data indicates that 85
percent of the mercury deposition in the United States comes
from offshore sources.
For the cement industry, we have, currently, about 105
cement plants in this country. And over the next 3 or 4 years,
with the implementation of the latest NESHAP, approximately 12
to 15 of those facilities will close in this country.
Now, when we were at our peak, our demand for cement in
this country and construction at that time was 130 million
tons. We only have capacity in this country for 105 million
tons.
So in the same period of time, the last decade, where we
have permitted three cement plants, which basically replaced
most of the capacity in this country, the Chinese have gone
from 1 billion tons, metric tons, of cement to 1.8 billion tons
of cement.
So there is tremendous increase in what they have done. I
always use the analogy that we have the Olympics in Atlanta and
the sky was blue, and we didn't close any industries. When we
went to China and Beijing, they closed industry within 100
miles, limited traffic, and they still couldn't get the skies
clean.
Mr. Bachus. I will tell you, Mr. Goldston, the Lehigh
Cement Plant in Leeds, Alabama, they would have to spend, to
comply with the regulations, some of which have been withdrawn
on mercury and arsenic----
Mr. Goldston. They really haven't been withdrawn, sir. They
have been delayed.
Mr. Bachus. Been delayed.
It would have cost them--they have made no profits in 4
years. I mean, they have lost money in 4 years. So it was not
that they would have to take all their profit. They would have
to take all their revenues for 3 years, which was an impossible
task.
It is those types of things, when they tell us they can't
consider that it will be replaced, it will come from Mexico and
China----
Mr. Goldston. Mr. Chairman, obviously, I can't speak to the
specific plant that you are referring to. But for the industry
as a whole, the industry is highly profitable.
That doesn't mean that costs ought not to be considered as
allowed under the law, but I am not sure what the moral is of
Mr. Sells' story.
It is true that China has horrible pollution because it
doesn't regulate plants. Presumably, the answer to that isn't
to create the same situation here.
Mr. Bachus. Well, the moral is, is that we are going to
shut down American jobs, American companies. It will be
produced in Mexico and China. And it will increase mercury in
our air in the United States.
Mr. Goldston. Well, presumably the huge increase in Chinese
cement plants is due to the extraordinary construction boom in
China, not the----
Mr. Bachus. Well, they are increasing their imports to us
and Mexico. I mean, we are getting more for Mexico.
In fact, in Mexico, they made so much money, the Mexican
cement plant, they started buying our cement companies with the
profits they are making because they don't have the
environmental----
Mr. Goldston. Then they apparently didn't feel that it was
too much of a burden to comply with American regulations when
they were buying those plants.
Mr. Bachus. Well, they are making so much money by not
complying in Mexico.
But I am just saying it ought to be considered.
We did look at the chart, Mr. Levin. And what we are
talking about here our jobs. And we couldn't find anywhere on
the chart where it says that the agencies are required to
assess job loss or job impacts.
Do you know where that is on the chart? Are you aware where
they have to assess adverse job impact?
Mr. Levin. Well, as I mentioned, it's Public Citizens'
chart, not mine. But I think you are correct, that there is no
positive law requirement that they do that.
Mr. Bachus. Yes, do you agree there should be?
Mr. Levin. I don't think it should be part of the law for
every rule in every agency, because I do favor impact
requirements with regard to major rules. But this would apply
to every regulation that----
Mr. Bachus. Well, what about--I mean it may not be every
job in an every industry, but that is somebody's job.
Mr. Levin. What about rules----
Mr. Bachus. For somebody, that is 100 percent of their pay.
Mr. Levin. What about rules on Medicare, rules on Indian
tribes, rules on homeland security?
Mr. Bachus. Again, I think job impacts ought to be
considered along with anything else.
What do Republicans and Democrats agree on? Jobs, jobs,
jobs. The President has used that term. John Boehner has used
that term. Bob Goodlatte has used that term. Jobs, jobs, jobs.
That is what our economy needs. If we have more jobs, we
will have better health. We will have better crime rates. We
will lower that. It will make a safer country.
Mr. Levin. Mr. Chairman, I agree with that sentiment, and
agree with that issue as one that is before the country. But I
believe this isn't legislation that is well tailored to address
that.
Mr. Bachus. I see. Okay.
Let me say this, as the Chairman said, we would like to
work with the American Bar Association and other groups,
because some of these executive orders, we appreciate your
willingness to work with us.
Mr. Levin. I just want to clarify again, I am not a
spokesman today for the----
Mr. Bachus. I understand that, but you are an expert on
administrative law. You have written a leading casebook.
Mr. Levin. I would like it to be leading, yes.
Mr. Bachus. It is a very good casebook. Thank you.
Mr. Cohen. Mr. Chairman, can I ask a question?
Mr. Bachus. Mr. Cohen, you said you did not want to--no,
you can ask as many questions as you want.
Mr. Cohen. You brought up a good point.
What if we just took this bill and made it into a bill that
said that when you have these regulations, that they have to
talk about jobs, and just synthesize it down to that. We might
be able to pass it.
What about that?
And I think it is interesting that you mentioned that one
job, that is one person's job, and I agree with you. But at the
same time, Dr. Thomas' paper writes about how few lives would
be saved, because of these rearview mirrors or rearview cameras
in cars. And that life is somebody's life.
Mr. Bachus. And I said esoterically one job. It is probably
not one job. It is probably going to be thousands of jobs on
every regulation.
Mr. Cohen. Right. But it is a balancing point.
Mr. Bachus. But it is sort of like, if you are that 1
percent, it is 100 percent to you.
Mr. Cohen. Exactly. The same thing with your life.
Mr. Goldston. Mr. Cohen, the other factor obviously is how
good or bad the economic analysis is at this point in terms of
being able to actually estimate jobs, even with cost, which is
somewhat easier. Again, one RFF study showed that, in the vast
majority of cases, initial cost estimates overestimate what the
cost will be.
So I think I agree that the concerns with this bill is not
that it mentions the word job, as Professor Levin mentioned. We
are all concerned about jobs, but the fact that it turns it
into a kind of requirement, and then adds all these other
layers to that. We also need to be realistic about how good
this estimating is before we place overreliance on it.
Mr. Bachus. All right, Mr. Collins----
Mr. Cohen. I think Professor Levin, a student of Charles
Burson's, I think, has a comment.
Mr. Levin. Yes, I am. A great Tennessean.
Mr. Cohen. A great Tennessean. And no controlling legal
authority. All right.
Mr. Levin. I just wanted to follow up briefly on that
discussion.
In the given rule, if somebody thinks that there will be an
adverse affect on jobs, they can submit a comment to that
effect to the agency, and the agency is required by the caselaw
to respond.
So that is taken care of.
You also have rules where it is entirely speculative, what
the effect on jobs will be, because it isn't economic
regulation at all. And yet this bill would require them, and
everybody else in the government that is promulgating a rule,
to address this issue that may have very little relevance, and
about which there is very little information. But they have to
go out and research the information before they adopt the rule.
And I think that is wasteful because the system itself is
self-correcting, where there is a controversy about jobs, it
can be brought forward in the regular process.
Mr. Bachus. I can tell you that with breathalyzers and with
the cement industry, their way of addressing it was delaying
it. But even during the delay, companies are having to make
economic decisions on whether they want to modernize a plant or
shut it down and locate that production overseas, or use a
source overseas. And even a delay costs jobs.
Or in the case of the breathalyzers, people are paying more
money every day. And most of them, if they are not poor, they
are not healthy, and that is going to lead, as we all know, to
at least a financial problem.
Mr. Collins?
Mr. Collins, the gentleman from Georgia, is recognized for
5 minutes.
Mr. Collins. Thank you, Mr. Chairman.
Mr. Bachus. Or six or 8 minutes.
Mr. Collins. I think one of the things that we have here,
and I appreciate the Chairman, yielding, I think we just have a
differing opinion of what regulations and how they affect on
what they go by.
To me, regulations look about like you all sitting at that
table, overcrowded and not sure which person is doing which,
and which papers are whose, and that translates out to
business, who has problems figuring out where they are in this
process.
And the other thing I think, Mr. Goldston, you had said
something just a second ago that struck me. And I think one of
the things is that we are all concerned about jobs. And I will
agree with you. Probably the first time you and I are going to
agree on something today, but we will agree on this concern
about jobs.
However, I think the concern that I think your job is, is
more jobs in government. My concern is more jobs in private
enterprise for enforcing regulations.
So I have a few questions for you, and I will follow up on
Chairman Goodlatte's line of questioning.
Do you think the current body of regulation is sufficient,
or do you truly believe that there needs to be new or even more
regulations put forth by agencies?
Mr. Goldston. First let me say, I was talking about private
sector jobs.
Mr. Collins. The only thing that is growing much right now
is government jobs in this area.
Mr. Goldston. I am not sure that is accurate.
So in terms of your question, I think there are areas that
need greater regulation. Not every area, but absolutely.
Mr. Collins. Can you give me an example of an unregulated
industry right now?
Mr. Goldston. I think food safety. I think----
Mr. Collins. That is unregulated?
Mr. Goldston. Climate and the financial sector. I think
those are all areas that actually do need further regulation.
Mr. Collins. So then I will follow up to that question. I
apologize for interrupting. Those are where you think there
needs to be new regulations.
Is there an unregulated industry that is dying to be
regulated, in your opinion?
Mr. Goldston. I don't know that there is an entire industry
that is unregulated that is looking for regulation.
Mr. Collins. Is there another area you believe that needs
to be regulated?
Mr. Goldston. I am sorry, I----
Mr. Collins. Is there another area that needs to be
regulated that is not being regulated right now?
Mr. Goldston. I am not--how is that different from the
question you asked me earlier?
Mr. Collins. You said I want to see if there are even more.
I'm saying you're saying there needs to be more regulations. I
am asking is there another industry that isn't being regulated
right now that you think needs to be.
Mr. Goldston. Off the top my head, I can't think of an
entire industry that is unregulated now.
Mr. Collins. Okay. And I appreciate that. Thank you.
Do you believe that every regulation of the book serves the
best interest of American families and small businesses?
Mr. Goldston. I would not take a position on every
regulation on the books, given the numbers Chairman Goodlatte
cited. I would say that the regulatory system as a whole has
repeatedly been shown by both Republican and Democratic
administrations to have benefits that outweigh the costs
significantly.
Mr. Collins. Okay. And again, like you said, we are going
to disagree on a lot of this.
Do you believe it should be easier for basically agencies
and unelected officials in these agencies to put forth
regulations that financially impact small businesses?
Mr. Goldston. I think there are some barriers to
regulations, that there are a set of conditions under Regulate
Paperwork Act, and so forth, that sometimes unnecessarily slow
the process. That doesn't mean that there shouldn't be analysis
of the regulations and that there shouldn't be transparency.
So again, not suggesting that the system is perfect, but
there are cases where important regulations get held up for
many years.
Mr. Collins. I have one final, and Mr. Rosen, I am coming
to you, so that we are all effective here.
The question that I am seeing, especially in my area, and
we are dealing with water runoff, storm runoff. We dealt with
this a lot. We are getting to the point where many of the
regulations are getting to the point where they are just unable
to actually test for the levels that are prescribed.
At what point in time do you really just like, especially
like phosphates and other things we are testing--and I used to
work in this industry with stack monitoring and other things--
that you really get to the point where you cannot with
certainty actually test to the levels that are now being
prescribed. Is there just at a certain point in time, you just
say this is as good as we get?
Mr. Goldston. Sure, there is a question all the time about
how clean is clean. In the case, again, of phosphates and
things like that, there are actual provable problems with water
quality that result from water pollution runoff and so forth.
Again, the issue, though, is does this bill actually in a
targeted way take care of the kinds of concerns you are talking
about. Or, and this is sort of implicit in Mr. Smith's
question, does it just slow down the system so, yes, fewer
things will get out just because the system now will be so
clogged up with process that isn't necessarily targeted to any
of the problems that you were just referencing.
Mr. Collins. All right, thank you.
Mr. Rosen, if Regulatory Accountability Act had been in
place in the late since the late 1960's, early 1970's, when our
modern regulatory authorities began to take shape, do you think
the cost to Federal regulation would be anywhere near the
current estimate of $1.75 billion to $1.8 trillion?
Mr. Rosen. I think it would be less than it is today.
Mr. Collins. Okay, explain how it would be less.
Mr. Rosen. That the Regulatory Accountability Act creates
mechanisms to ensure better factual accuracy of information
that is being used in rulemaking, and better analytic
evaluation of both costs and benefits. Therefore, it would have
screened out some bad rules that are on the books.
Mr. Collins. And I want to finish up, Mr. Chairman, and I
will yield back, there are probably common ground even with Mr.
Goldston and Mr. Levin, that we can find in this. I think the
problem that we are getting into is the real concern that, and
I heard it even in this Committee room on this Committee,
saying, well, it doesn't have adverse effects on jobs. Well, I
invite you, and I will pay your ticket to come down to the
Ninth District, and I will take you to businesses that it does
affect, that it is real world.
It isn't in the Beltway. The Beltway isn't real world. This
is fantasyland. Go back out into the real world where people
actually produce and do these things. This is where my concern
is.
And Mr. Cohen and I can actually agree on something, that I
agree, finding ways to actually put this in cost and fiscally
responsible ways to do this.
When we look at that, then we regain the trust of American
business in looking at the process of government. They don't
look at it as intrusive.
These are the things that I appreciate this bill coming up,
I appreciate that Chairman bringing forward, and our Chairman
of the main Committee, Mr. Goodlatte, his input in this, and
Chairman Bachus as well, and the Ranking Member.
We have to continue to look at this, because I believe it
does matter. I believe this is what people are talking about
around the kitchen tables, about their jobs. I believe this
isn't the only, but it is one impact that is causing our
economy to be in trouble right now, among all issues.
And I appreciate your answers, and I appreciate your being
here today.
Mr. Chairman, I yield back.
Mr. Bachus. Thank you.
Mr. Rosen. Mr. Chairman, I was just going to observe
Mr. Bachus. Yes, Mr. Rosen?
In fact, if we don't mind, we can give each panelist a
minute just to make comments.
Would you object to that?
Mr. Cohen. A minute and 15.
Mr. Bachus. A minute and 15, you know, minute, minute and a
half.
But, Mr. Rosen, you can respond.
Mr. Rosen. Yes, the comment that I was just trying to
emphasize is, sometimes people think that this only about
business. It is certainly business matters and is a key
underpinning of our economy.
But regulation affects, as I said at the outset, it affects
municipalities, it affects hospitals, universities, farmers,
airports, all kinds of entities, some of which do employ
people. Most of those do employ people.
It involves individuals subject to regulations.
So I reject the suggestion that I sometimes hear that this
bill is about delay. I don't think this bill needs to produce
any delay relative to the current system. Most of the delay
that occurs in the regulatory process occurs for two reasons,
working out policies within an agency, and absence of good
information and the need to either do some testing or gather
some data or statistics or whatever. The part that involves
complying with the analytic requirements and with the process
through OIRA and the notice and comment, that is the tail on
the dog.
And so the real thing is to get these rules right, and it's
not just to create delay for business. That is nonsense. It is
to get the rules right for everybody, for the businesses for
sure. But as I say, the airports, the municipalities, the
hospitals, the universities, and the individuals that are the
American public.
Mr. Bachus. Thank you.
And we will start with Mr. Sells, whom Mr. Cohen tells me
was an All-American swimmer at the University of Tennessee.
Mr. Sells. Yes, that was a few decades ago. And, believe
me, a few pounds.
Thank you, Mr. Chairman, Mr. Cohen. Thank you for the
opportunity to be here today.
I think it is extremely important, and I made this comment,
and Mr. Rosen backed this up, we are looking for common sense
and common-sense approaches here. We believe in this country,
as the cement industry, that we actually have the cleanest
cement plants literally in the world.
But we have to compete with those who don't comply in that
arena, don't comply. And if our jobs are shipped overseas, they
are lost forever. And it isn't just the cement industry. It is
the steel industry. It is the lumber industry.
Those are the things that made our country great,
agriculture, mining, manufacturing, industry. And we believe
there is appropriate regulations, common sense, that can work.
As an example, one of the things that was mentioned,
really, EPA has not weakened what they are asking our industry
to do. There has been a slight delay, but it is because a lot
of these things we are asking for were technically not
achievable. And so the systems and the things that were asked
for not even being used worldwide, hadn't even come out of the
lab.
So thank you for the time, for the opportunity. And once
again, thank you for your service in the United States
Congress.
Mr. Bachus. Thank you.
Let me comment on the one thing. The standards that we are
talking about, you look at the EU. Our standards that they are
proposing are much tighter than the European Union.
And that obviously calls into question--it ought to send a
red flag up.
Mr. Rosen. I think I had my turn, so I will let others
speak here.
Mr. Bachus. Let me just comment, I sued the railroads. I
had a different attitude toward them, when I then started
representing them. But you saw a different side.
But I can remember when the Department of Transportation
FRA director was testifying before us about the whistle rule.
And he was explaining why they needed it, and my first response
was, I said, well, you have been in a cabin, the cab of a
diesel engine. I was going to kind of walk him through what
goes on. And his response was, no, he never had.
But he was testifying about what the engineer and the
conductor in the cab would do and what they saw. But here was
the person who had never been in a cab.
And I was just stunned that that was actually, that he
was--and I asked him did his agency if they had done that, and
he was not aware that anyone had. And that to me--I mean, it is
partly a blind spot. I mean, the engineer and the conductor in
that cab can tell you more about that rule, and the effect of
it, than anybody else.
Mr. Hall?
Mr. Hall. Sure. Let me say, I had a career of conducting
economic impact studies, and I know a lot about labor markets.
Of course, regulatory agencies could conduct analysis of
the employment impact of regulatory changes. And the evidence
is very strong, in fact, there is unemployment created by
repertory changes. The literature that people cite show this,
as a matter fact. There is a great deal of misunderstanding of
what that literature says, especially by noneconomists.
For example, the Morgenstern, Pizer, and Shih article, the
economic impact on industry regulation on the labor market is
not rocket science. Regulation can raise the cost in an
industry. That is what Morgenstern, Pizer, and Shih found. It
raised the cost on an industry. The industry has to spend more
money to make the output.
Part of that cost is they have to hire extra people in
compliance jobs. When the costs go up, prices go up, people buy
less of the product. When people buy less of the product, they
produce less and people in production jobs lose their jobs.
Morgenstern, Pizer, and Shih found that tens of thousands
of people lost jobs, production jobs in the industries they
looked at. What they also found was that the number of extra
people hired to reduce productivity in compliance roughly was
sometimes as much as the production jobs that were lost.
Because the two net out doesn't mean production jobs are not
lost. Those people lost their jobs. They are unemployed. They
had to pay a huge amount personally from the unemployment to
find new work, find less important work.
In addition, this work and other work only focus on the
regulated industry. One of the most important impacts of
regulatory change is outside the industry. When you raise
prices, you raise prices for other industries that consume your
product. It works like a tax. It is regressive like a tax, by
the way.
When you raise prices, it creates higher prices than other
industries. That has an employment effect, and people lose
their jobs in those other industries.
For example, I looked at a 2011 study by the EPA on a
regulation that was going to raise the price of electricity
they estimated by 4 percent. By their own research, they found
that 19 other industries would have reduced output because of
the higher energy prices.
I carried their research one step further and for every job
that would be lost in electrical generation industry, 11 jobs
will be lost outside the regulated industry because of higher
prices.
None of that was taken into account in the Morgenstern,
Pizer, and Shih. But they did in fact find tens of thousands of
people lost their jobs in that research. And this other
research shows the same thing.
Mr. Bachus. Thank you.
Dr. Thomas?
Ms. Thomas. There are unintended consequences of regulation
that go beyond the employment effects that have been discussed
here today. There are real effects on low-income households.
And the fact that there are other kinds of regressive effects,
as Mr. Goldston points out, just reemphasizes the need for
agencies to actually look at the effects of regulations on low-
income households in all of their decisionmaking processes.
The consequences of many rules that apply to all of us that
address specifically low risks or low-probability risks are
harmful to the weakest members of our society, and we should
all be concerned with those or about those.
We need to focus on the outcome of regulation, not just on
intentions. Agencies should consider their regressive effects.
Mr. Bachus. Mr. Goldston?
Mr. Goldston. Thank you, Mr. Chairman.
And thank you for taking my testimony, despite coming from
a Northeastern school.
I did go to Huntsville, Alabama, a couple times when I was
overseeing NASA.
Mr. Bachus. Well, Cornell is a very good school.
Mr. Goldston. A couple things. Let me start with some
general points. Let me start actually, as Dr. Hall rightly, of
course, said, these studies don't find that there are no job
losses. They are looking at macro losses across the industry.
And again, as you said, at the polluting industries.
I think, if I remember correctly, the Morgenstern study,
part of the rationale is not just additional hiring because of
regulation, but that regulatory costs actually are very small
percentage, especially manufacturing often, of overall costs to
the industry.
The main point I would like to make a closing is that even
if one shares your view, and the views expressed by others here
in terms of skepticism about regulation, I think there is still
reason to have deep concerns about this bill, because, again,
it overrides other laws. It doesn't treat OIRA the way it
treats other entities. It creates additional burdens that when
they are imposed on everybody, on all agencies at once, such as
the way the least-cost rule actually works, and the regulatory
hearings, is not a targeted approach to take care of the kind
of problems that have been mentioned here, but rather are a way
to just kind of gum up the works. And they are ways that, when
they have been tried in the past, have been shown only to have
that effect.
So I don't think the issue here is whether there is
anything that can be changed with the regulatory system, but
whether this bill would make the system better or worse for the
public at large. And our view is that, overall, this bill,
regardless of what you think about the overall state of the
regulatory system, would be damaging to the public at large
because of the way in which it is not targeted and overreaches.
And I guess I would just add that, in my years on the
Republican staff of the House, we were often confronted with
this, where efforts to reform basically overreached and instead
of actually trying to come up with targeted solutions,
basically tried to shut down the system. And that actually put
us in a position often where we just had to say no, rather than
actually having a discussion of reform, because there was so
much overreaching in the approach that was taken.
And I think with this bill, even more with the REINS Act,
that is the case here, that it is not a targeted solution, even
if one accepts everything that has been claimed about the
failings of the regulatory system.
Thank you.
Mr. Bachus. Professor Levin?
Mr. Levin. My sentiments are similar to those of Mr.
Goldston, so I will just try to be brief.
We have heard a lot today about regulatory policy disputes,
and I see those largely as questions to be worked out in the
political sphere.
But I think that this act is not the right vehicle for
having that debate. I think it is a misdirected approach to
complicate the legislative process.
Mr. Rosen has made the case to you that there is no real
threat of delay here. But I think the concerns about delay are
very widespread in the administrative law community. I think he
has a minority view, but the American Bar Association and the
Administrative Conference have passed resolutions stating their
view that the rulemaking process is already too complicated.
Scholars have looked at the Regulatory Accountability Act,
and scores of them have signed letters of opposition. I know of
none whatever in the legal-academic sphere who have endorsed
the bill.
I was here a few months ago, testifying about the REINS
Act, and there is a scholarly dispute about it. There is really
argument on both sides among the academic community on that
point.
But I think this bill has brought together scholars with
regard to the Regulatory Accountability Act, because I have
talked about it in various forums and can't find any other
legal academic who endorses the bill.
So I think that the issue of jobs has been before you
today. I think it is important for Congress to keep its eye on
the ball in that regard. But I think this law is not the right
vehicle for that.
And I think you should redirect your attention to matters
that would speak more directly to the actual issue involved
that would avoid crippling side effects and that have a good
chance of passage. I don't think this bill meets any of those
criteria.
I do thank you for the opportunity to testify, and I hope
you will find it useful.
Thank you.
Mr. Bachus. I thank you.
And this will conclude our hearing.
But before I do, at this time, customarily, we introduce,
for the record, different letters of either support or
opposition. And of those letters, I would like unanimous
consent to introduce several letters.
Actually, Mr. Levin, one of these letters is the June 6,
2011, letter to the Judiciary Committee in support of this
legislation, and I was looking at over three pages of people
that signed this letter, associations, and you are correct in
that I don't see the Bar Association on this list or any legal
society listed in over three pages.
But what I do find is almost every other association that
employs people in the United States is on this list. I mean, if
you name one, it is on here. Medical, dental, repair shops,
aeronautical, architects, bakers, boatbuilders, coatings,
composites, concrete, engineering industry, feed industry,
forest industry, foundry industry, you can just go on and on.
I don't know of one that is not on this list.
So there is a divide between----
Mr. Goldston. Mr. Chairman, if I could just say, that is
not particularly surprising. I think everybody pro and con
agrees that this bill would hold up regulation.
And industry understandably would prefer to be unregulated.
Our argument is that----
Mr. Bachus. They all are regulated.
Mr. Goldston [continuing]. Good and bad. Less regulated.
Mr. Bachus. Yes, they are pretty heavily regulated.
Mr. Goldston. Fair point. Less regulated.
Mr. Bachus. It closes with the window industry. Windows are
pretty important.
But anyway, I would like to introduce this, along with
several other, credit unions, and several others. I would like
to thank the NFIB for their statement and the Chamber of
Commerce representing small business and other business.
So, without objection, I would like to introduce these in
the record.
Mr. Cohen. I won't object if you will give me extra time to
round up the usual suspects and put in letters against.
Mr. Bachus. Sure You might actually want to read this list.
Even the flower industry. Flowers and flour.
Mr. Cohen. No objection.
[The information referred to follows:]
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Mr. Bachus. This concludes today's hearing.
Thanks to all of our witnesses for attending, and this is a
strikingly good panel. All Members I think have brought some
tremendous points before us, and I thought it was well-
balanced.
Without objection, all Members will have 5 legislative days
to submit additional written questions to the witnesses or
additional materials for the record.
This hearing is adjourned.
[Whereupon, at 12:12 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Prepared Statement of the Honorable Steve Cohen, a Representative in
Congress from the State of Tennessee, and Ranking Member, Subcommittee
on Regulatory Reform, Commercial and Antitrust Law
As Judiciary Committee Chairman Bob Goodlatte rightly pointed out
just a few weeks ago during our markup of the FARRM Act, the
Administrative Procedure Act is an ``administrative Constitution'' that
attempts to strike a balance between the need for due process and
fairness, on the one hand, and the need for agencies to be able
effectively to carry out their policymaking responsibilities, on the
other.
As with the Constitution itself, we must approach proposals that
would make dramatic changes to the APA with caution, if not some
considerable skepticism.
The proponents of H.R. 2122, the ``Regulatory Accountability Act of
2013,'' have a high burden to meet in that regard.
Based on what I heard last Congress in our consideration of an
almost identical bill and in the many regulatory debates we have held
since then, the bill's proponents have not met that burden.
As an initial matter, whatever the merits of any of the individual
proposals contained in H.R. 2122, I am concerned that the cumulative
weight of all of the bill's changes to the APA would simply serve to
stifle agency rulemaking, threatening to hamper the promulgation of
important public health and safety rules.
As I said at last week's hearing on another bill, regulations are
critical to protecting the American people from a vast array of harms,
including dirty air and water, dangerous toys, reckless financial
behavior, and unsafe workplaces.
This is not an abstract notion. On the question of workplace
safety, for instance, the Bureau of Labor Statistics reports in its
2011 Census of Fatal Occupational Injuries that there were 4,693
workplace deaths in 2011.
According to researchers from the National Institute for
Occupational Safety and Health, the American Cancer Society, and Emory
University's School of Public Health, there are an estimated 50,000 to
70,000 deaths from occupation-related diseases in the United States
annually.
In addition concern about the cumulative weight of H.R. 2122,
several provisions in particular raise concern. First, H.R. 2122's
expanded use of formal rulemaking procedures for ``high-impact'' rules
strikes me as an unnecessary procedural expansion that would not serve
to improve the quality of rulemaking while at the same time adding
major costs to the process and would effectively grind agency
rulemaking to a halt.
Formal rulemaking fell out of favor more than a generation ago as
its costs became more evident. A consensus developed that the notice-
and-comment rulemaking procedures of Section 553 of the APA--which
themselves are fairly heavily proceduralized, especially when combined
with non-APA analytical requirements--struck a better balance between
assuring a fair and accurate rulemaking process while maintaining
agency effectiveness.
H.R. 2122's proponents offer no study or other data indicating that
the use of cross-examination and other facets of the formal rulemaking
process are the more effective tools for making scientific and policy
judgments than the current process.
If anything, history suggests the opposite. In an infamous example,
one formal rulemaking proceeding before the Food and Drug
Administration took more than 10 years to determine whether the FDA
should require that peanut butter contain at least 90% peanuts as
opposed to 87% peanuts. A government witness was examined and cross-
examined for an entire day about a survey of cookbook and patented
peanut butter formulas, missing recipes, and his personal preferences
in peanut butter.
While I make no judgments about how many peanuts should be in
peanut butter, I do think that government could better spend its
resources than devoting 10 years to decide that question. We ought to
be wary of returning to those days.
Another concern with H.R. 2122 is its codification of overly
burdensome cost-benefit analysis requirements.
I recognize that every president since Ronald Reagan has required
that executive agencies conduct cost-benefit analyses, and that support
for such requirements has been bipartisan.
Nonetheless, the particular agency determinations required under
H.R. 2122, and the requirement that all of these determinations be made
for all rules, would cause unnecessary delay and cost tremendous
taxpayer resources.
I do not see the net benefit in expanding cost-benefit analysis
requirements to non-major rules or to guidance documents, which do not
have the force of law.
Moreover, we should be wary of overruling existing statutory
provisions that prohibit agencies from considering costs when
fashioning a rule. These provisions, like those in the Clean Air Act
and the Occupational Health and Safety Act, represent carefully
considered legislative judgments made by our predecessors.
Perhaps we should have a cost-benefit analysis done of H.R. 2122.
There are numerous other concerns that I will not delve into in
these brief remarks, including the bill's provision establishing
expanded and less deferential judicial review, under which judges could
second-guess agencies' cost-benefit analyses and substitute their
policy judgements for those of agency experts.
This bill does little to improve rulemaking and will only serve to
stymie agencies from ensuring that the health, safety, and welfare of
the American people are protected. I urge my colleagues to join me in
opposition to this bill.
Supplemental Statement of Robert A. Sells, President,
Titan America Mid-Atlantic Business Division
Supplemental Material submitted by Jeffrey A. Rosen, Partner,
Kirkland & Ellis LLP
Supplemental Material submitted by Ronald M. Levin, William R.
Orthwein, Distinguished Professor of Law, Washington University in St.
Louis
Material submitted by C. Boyden Gray
Statement of Administration Policy on H.R. 3010
Letter of Opposition to H.R. 3010
Response to Questions for the Record from David Goldston,
Director of Government Affairs, Natural Resources Defense Council
Response to Questions for the Record from Ronald M. Levin, William R.
Orthwein, Distinguished Professor of Law, Washington University in St.
Louis