[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEARING ON THE
``SEARCHING FOR AND CUTTING REGULATIONS
THAT ARE UNNECESSARILY BURDENSOME
(SCRUB) ACT OF 2014''
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
REGULATORY REFORM,
COMMERCIAL AND ANTITRUST LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 11, 2014
__________
Serial No. 113-69
__________
Printed for the use of the Committee on the Judiciary
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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 ZOE LOFGREN, California
SPENCER BACHUS, Alabama SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
JASON T. SMITH, Missouri
[Vacant]
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 HENRY C. ``HANK'' JOHNSON, Jr.,
TOM MARINO, Pennsylvania Georgia
GEORGE HOLDING, North Carolina SUZAN DelBENE, Washington
DOUG COLLINS, Georgia JOE GARCIA, Florida
JASON T. SMITH, Missouri HAKEEM JEFFRIES, New York
DAVID N. CICILLINE, Rhode Island
Daniel Flores, Chief Counsel
James Park, Minority Counsel
C O N T E N T S
----------
FEBRUARY 11, 2014
Page
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 Henry C. ``Hank'' Johnson, Jr., a Representative in
Congress from the State of Georgia, and Ranking Member,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 39
The Honorable Jason Smith, a Representative in Congress from the
State of Missouri, and Member, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 40
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 41
WITNESSES
Patrick McLaughlin, Ph.D., Senior Research Fellow, Mercatus
Center, George Mason University
Oral Testimony................................................. 61
Prepared Statement............................................. 64
Sam Batkins, Director of Regulatory Policy, American Action Forum
Oral Testimony................................................. 78
Prepared Statement............................................. 80
Ronald M. Levin, Professor, William R. Orthwein Distinguished
Professor of Law, Washington University School of Law
Oral Testimony................................................. 89
Prepared Statement............................................. 91
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Discussion Draft of H.R. ___, the ``Searching for and Cutting
Regulations that are Unnecessarily Burdensome (SCRUB) Act of
2014''......................................................... 3
Material submitted by the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 43
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 58
Material submitted by the Honorable Henry C. ``Hank'' Johnson,
Jr., a Representative in Congress from the State of Georgia,
and Ranking Member, Subcommittee on Regulatory Reform,
Commercial and Antitrust Law................................... 118
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Committee on the Judiciary........................... 123
Response to Questions for the Record from Patrick McLaughlin,
Ph.D., Senior Research Fellow, Mercatus Center, George Mason
University..................................................... 125
Response to Questions for the Record from Sam Batkins, Director
of Regulatory Policy, American Action Forum.................... 133
Response to Questions for the Record from Ronald M. Levin,
Professor, William R. Orthwein Distinguished Professor of Law,
Washington University School of Law............................ 138
HEARING ON THE
``SEARCHING FOR AND CUTTING
REGULATIONS THAT ARE UNNECESSARILY
BURDENSOME (SCRUB) ACT OF 2014''
----------
TUESDAY, FEBRUARY 11, 2014
House of Representatives,
Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:03 p.m., in
room 2141, Rayburn Office Building, the Honorable Spencer
Bachus (Chairman of the Subcommittee) presiding.
Present: Representatives Bachus, Goodlatte, Farenthold,
Issa, Marino, Holding, Collins, Smith of Missouri, Johnson,
Conyers, DelBene, Garcia, Jeffries, and Cicilline.
Staff present: (Majority) Daniel Flores, Subcommittee Chief
Counsel; Ashley Lewis, Clerk; Justin Sok, Legislative Assistant
for Rep. Smith of Missouri; Philip Swartzfager, Legislative
Director for Rep. Bachus; Jonathan Nabavi, Legislative Director
for Rep. Holding; Mike Geiselhart, Intern; (Minority) Perry
Apelbaum, Staff Director & Chief Counsel; Susan Jensen,
Counsel; Slade Bond, Counsel for Rep. Johnson; and Rosalind
Jackson, Professional Staff Member.
Mr. Bachus. 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.
Our Subcommittee hearing today is being held to examine old
and outdated Federal regulations that are a barrier to the new
job creation that we so badly need in our country. Let me
commend Congressman Jason Smith from Missouri for the work he
has been doing on this issue and for legislation he will soon
be introducing, The Searching for and Cutting Regulations that
are Unnecessarily Burdensome Act of 2014, for short, the SCRUB
Act.
This Subcommittee has heard testimony which has made a
compelling case that Federal agencies do not properly account
for input from small businesses and too often ignore the cost
associated with new regulations.
Today we consider an even larger problem. What happens to
all those regulations passed long ago that no longer serve a
useful purpose or no longer provide a benefit? Ronald Reagan
once said nothing lasts longer than a temporary Federal
program. He could have added Federal regulations to that.
Nothing lasts longer than Federal regulations.
No one who has studied the regulatory structure in this
country would dispute that there are a lot of outdated Federal
regulations on the book that no longer pass a cost-benefit test
and in some cases no longer make sense. Employers spend time,
money, and resources complying with antiquated regulations that
could be better spent on hiring more workers or reinvesting in
their enterprises.
The total Federal regulatory burden has reached $1.75
trillion to $1.8 trillion by some estimates. If we remove just
part of this burden, we would see immediate economic growth.
The SCRUB Act establishes a systematic process for doing
this. It would set up a BRAC-style commission to identify
regulations that have been rendered obsolete by technology and
the markets, that have achieved their goals, or that are
duplicative or conflict with other Federal regulations. The
commission's recommendations to eliminate those unnecessary
regulations would have to be implemented by agencies unless
disapproved by a joint resolution of Congress.
There is a role for Federal regulations that provides
reasonable and clear rules of the road for businesses that
provide benefits to the public that are greater than the costs.
But we should acknowledge the unneeded burden that redundant
and obsolete regulations place on job creation and our economy.
Accordingly, I look forward to today's testimony.
At this time, I will recognize our new Ranking Member, Hank
Johnson of Georgia, for his opening statement. We would like to
say welcome as the new Subcommittee Chair to your position. So
you are recognized for your opening statement, Mr. Johnson.
[Discussion Draft of H.R. ___, the ``Searching for and
Cutting Regulations that are Unnecessarily Burdensome (SCRUB)
Act of 2014''3 follows:]
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__________
Mr. Johnson. Thank you, Mr. Chairman.
I am a little hesitant today because I have been informed
that earlier this morning a gentleman was sitting in this
chair, and the gentleman was operating this microphone and in
doing so, he sustained a shock. And so I am deeply concerned
that I may not survive this hearing.
Mr. Bachus. We have learned since then that he rests in
peace. [Laughter.]
Mr. Johnson. Well, I am hopeful that you all are praying
for my salvation.
But I am pleased to now serve as the Ranking Member on the
Subcommittee on Regulatory Reform, Commercial and Antitrust
Law. As the former Chairman of the Antitrust Subcommittee, I
know that it has a particularly exciting range of issues, many
of which should provide a pathway to work cooperatively across
the aisle. That is why I am particularly disappointed with the
process and substance of today's hearing, which is my first as
Ranking Member.
Regarding process, although today's hearing is intended to
be a legislative hearing, we did not receive a copy of the
draft legislation until Friday afternoon and did not receive a
final version of the bill until yesterday evening. This is
obviously problematic. It not only affects our ability to
adequately prepare for the hearing, but also the ability of our
witnesses to carefully analyze the legislation and draft their
testimony under severe time constraints.
As to substance, it had been my hope that the subject
matter of this hearing would have better linked itself to a
more collaborative effort. I think all would agree that
retrospective review is a good idea. There is no doubt that
out-of-date, redundant, and conflicting rules should be
eliminated. In fact, President Obama, in recognition of the
value of retrospective review, issued a series of executive
orders requiring agencies to effectuate review plans, a process
that is now in effect. This process is in addition to the self-
initiated reviews that many agencies conduct, as well as the
reviews conducted pursuant to the Regulatory Flexibility Act.
Unfortunately, the so-called SCRUB Act, which is the
subject of today's hearing, appears to be a one-way ratchet
with the sole aim of prioritizing costs over benefits. The
measure fails to give agencies the necessary resources and
guidance so that they will do an even better job of conducting
retrospective review.
Even more problematic is the fact that the SCRUB Act may
very well be plainly unconstitutional. As Professor Levin
explains in his prepared testimony, the commission, as
established by this legislation, is given comprehensive
authority to take actions that would have the force of law even
though its members are not presidential appointees subject to
Senate confirmation. I do not believe Professor Levin has
reached this conclusion without careful reflection, and I
encourage him to focus upon that issue in his oral testimony.
Compounding the problem is the fact that the bill uses
undefined terms that are inherently subjective in nature, such
as, ``excessive compliance cost,'' and ``excessively
burdensome.'' Clearly ``excessive'' can be a matter of opinion
depending on which perspective one views the issue, such as
regulations that save lives but impose certain compliance
costs. As a result of these and other serious flaws with this
legislation, it is clear that the SCRUB Act is yet another
shortsighted anti-regulatory measure that has no hope of
becoming law.
But I do have hope that I will survive this hearing, and I
hope that during this time that Chairman Bachus and I are
working together on this Subcommittee, that we will be able to
find common ground on process and substance. As we begin this
new session of Congress, I very much look forward to working
with you, Mr. Chairman.
And I yield back.
Mr. Bachus. Thank you.
Mr. Johnson, we did have a very good meeting earlier today,
and I think we mutually pledged to try to work cooperatively
together and try to find consensus on the issues. And I
appreciate your spirit of cooperation that you have shown in
the past.
And I will say to you that this bill, in its preparation,
did come late, and I think there was some, obviously, limited
time that you had to review it, and I concede that to you. In
the future, we will work together to see that that is not the
norm but that is the exception.
Mr. Johnson. Would the gentleman yield?
Mr. Bachus. Yes.
Mr. Johnson. I might add, Mr. Chairman, that I have such
great respect and admiration for you. You have been a vocal
supporter of civil rights, being an initial cosponsor of the
Voting Rights Amendments Act. This kind of conduct that you
have exemplified throughout your years in Congress is a
hallmark of civility. And so I have no doubt that whatever
happened this past week is something that happened, but we are
going to proceed on from here. And so I look forward to serving
with you, and I think everything is going to be okay if I
survive this hearing.
Mr. Bachus. Thank you. We will try, make every effort to
get you through this hearing. And I appreciate your words.
With that, I would like to recognize the sponsor of this
legislation, Mr. Jason Smith of Missouri, for an opening
statement.
Mr. Smith of Missouri. Mr. Chairman, thank you for holding
this hearing. Much appreciated.
As the former Chairman of the Joint Committee on
Administrative Rules back in the Missouri House, which I served
just over 8 months ago, I have some experience working to
reduce the regulatory burden facing families, small business
owners, and farmers.
In 2012, while serving in the Missouri House of
Representatives, I worked to pass House bill 1135, which
requires that all State rules and regulations be reviewed every
5 years. Like the bill we are discussing today, House bill 1135
required that rules be examined under various criteria to
determine if, among other things, they were effective,
obsolete, or duplicated.
The Federal Government could learn a thing or two from what
we have accomplished in the State of Missouri. It was
Missouri's over 6,000 State regulations that led me to believe
that reform was necessary. In the Code of Federal Regulations,
there are over 174,000 pages of rules and regulations. During
my short time in Congress, I have been amazed by the broad
Federal authority agencies have to write numerous new
regulations. Worse yet, Congress and the American public have
very little oversight and authority over agencies' rulemaking
process.
The Searching for and Cutting Regulations that are
Unnecessarily Burdensome Act of 2014, or SCRUB Act, creates a
bipartisan commission to examine Federal rules and regulations
that merit repeal and amendment to reduce unnecessary cost
burdens for American citizens. In addition, it requires an
automatic review on all new rules after 10 years and creates a
cut-go procedure whereby agencies need to repeal old
regulations before they can issue new ones absent congressional
consent.
I look forward to hearing from the witnesses and other
Members about ways to really tackle regulation reform and
invite input on a way to move forward.
Thank you, Mr. Chairman, for this opportunity today to
discuss this legislation.
Mr. Bachus. Thank you, Mr. Smith.
I would now like to recognize the full Committee Ranking
Member, Mr. John Conyers of Michigan, for his opening statement
and also warn you that we are getting shocks from some of these
mics. [Laughter.]
Mr. Conyers. Well, thank you very much, Chairman Bachus.
I am here to participate with a question. Why do we not
have a bill instead of a discussion draft with these
distinguished witnesses who are here?
Mr. Bachus. That is a good question, a valid question. It
is my understanding that in introducing the bill, there were
some--as my able counsel advised me, we had already sent the
witnesses notice when we realized that we were not going to be
assigned a bill number, but actually the draft before you is
the bill in its final form. It does not have a number. And I am
not sure that I can give you an explanation of that, John. I am
not going to give you an incorrect.
As I told Mr. Johnson in response to his statement, that is
an anomaly and we will try not to repeat that in the future.
Mr. Conyers. Thank you, Mr. Chairman.
Can you, Mr. Bachus, indicate to me when the bill will be
dropped and we will be able to compare the discussion draft
with the actual legislation?
Mr. Bachus. Yes. My understanding is this is the bill in
the final form. But, Mr. Smith, could----
Mr. Conyers. I will yield to Mr. Smith.
Mr. Smith of Missouri. You know, this appears to be the
bill in the final form. One of the purposes of a draft
legislation is I want some true bipartisan regulation reform,
and this is a way to start. If you all have suggestions on how
to move this forward to actually do some substantial reform,
this is the way that we can make the changes.
Mr. Conyers. Well, when will the bill be introduced?
Mr. Smith of Missouri. Well, right now, I would say as soon
as possible, but we have been working on this for some time.
Mr. Bachus. I would say this. By the time we reconvene,
after today, our next legislative session, which is about 10 or
12 days away, assuming that we address our debt ceiling today,
which I am assuming we will, when we return, we should have the
bill in final form.
Mr. Conyers. Thank you very much.
I would like to ask unanimous consent to introduce two of
President Obama's--well, actually three executive orders. Yes,
I have three executive orders outlining steps that Federal
agencies must take to formulate plans for retrospective review
of their regulations on an ongoing basis.
Mr. Bachus. Without objection.
[The information referred to follows:]
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__________
Mr. Conyers. And in compliance with these directives,
executive agencies and various independent regulatory agencies
have submitted retrospective review plans. All together, these
plans have identified numerous ways to reduce redundancy and
inconsistency among existing regulations.
As the Coalition for Sensible Safeguards notes, the
commission would itself be redundant and duplicative in light
of the President's executive orders. It should be noted that
this process comes in addition to the ongoing retrospective
review efforts that agencies have been undertaking even before
the issuance of these executive orders.
As the Government Accountability Office reported in 2007,
agencies routinely conduct these often at their own initiative,
and to that end, the GAO has made several recommendations to
improve that process, which would have been a good starting
place for any analysis.
Unfortunately, we have a one-sided, unbalanced approach
that has been alluded to by the Ranking Member from Georgia on
this Subcommittee, Hank Johnson. As a threshold matter, the
commission is plainly unconstitutional, as will be explained
very shortly, because it empowers the commission to take
actions that would have the force of law in violation of the
Constitution's Appointment Clause. And I will let him handle
that from there.
Virtually all of the bill's objectives have this one-way
approach. It is a measure designed to result in the repeal or
amendment of a rule only to eliminate or reduce costs. In
contrast, the bill does not do anything--very little or
nothing--to promote actions that would enhance the benefits of
rules.
Another point that I might want to make is that the
commission members, other than the chair, would not be required
to have any expertise in either administrative law matters or
the subject matter of the rules that they consider.
Notwithstanding that fact, the commission would be empowered to
second guess Congress with respect to the need for certain
rules, as well as the agencies with respect to the science and
analysis warranting such rule.
And the most grievous part of the bill is the so-called
cut-go offsetting provisions, which comes into play even if
Congress enacted a joint resolution to disapprove the
commission's report.
Now, after all of that, I am amazed that we are here today.
I can sympathize with the Chairman of this Subcommittee, as
does the Ranking Member, because he is held in high esteem by
his colleagues on both sides of the aisle. But this
legislation; this provisional draft is hardly a way for us to
start an important hearing like this.
And I submit the rest of my statement and I yield back the
balance of my time.
[The information referred to follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, and Ranking Member, Committee
on the Judiciary
In principle, retrospective review of existing regulations is not a
bad idea. It is hard to argue against the notion that agencies should
periodically assess whether the rules they have promulgated are as good
as they can be or whether they are even necessary in light of changed
circumstances.
Nonetheless, there are certain considerations that we must keep in
mind as we proceed with today's hearing.
To begin with, President Obama has already taken a series of
significant steps towards instituting regular retrospective reviews by
agencies.
To date, he has issued two Executive Orders outlining steps that
federal agencies must take to formulate plans for retrospective review
of their regulations on an ongoing basis.
And, he has issued a third Executive Order encouraging independent
regulatory agencies to take similar steps to plan for ongoing
retrospective reviews of their rules.
In compliance with these directives, executive agencies and various
independent regulatory agencies have submitted retrospective review
plans.
Altogether, these plans have identified numerous ways to reduce
redundancy and inconsistency among existing regulations.
As the Coalition for Sensible Safeguards notes, the Commission
would itself be redundant and duplicative'' in light of the President's
executive orders.
It should be noted that this process comes in addition to the
ongoing retrospective review efforts that agencies have been
undertaking even before the issuance of these executive orders.
As the Government Accountability Office reported in 2007, agencies
routinely conduct these, often at their own initiative. To that end,
the GAO made several recommendations to improve that process, which
would have been a good starting place for any analysis.
Accordingly, I see no reason for Congress to jump the gun in
seeking to mandate retrospective review legislatively.
At the minimum, before Congress considers imposing a legislative
mandate regarding retrospective review, it should ensure that the
President's efforts have been thoroughly evaluated and have had a
chance to fully take root.
Turning to the so-called SCRUB Act, it has numerous flaws.
As a threshold matter, the Commission is ``plainly
unconstitutional,'' as Professor Levin explains in his prepared
testimony. The legislation empowers the Commission to take actions that
would have the force of law in violation of the Constitution's
Appointments Clause.
Second, the bill unfortunately reflects a one-sided, unbalanced
approach to retrospective review.
For example, virtually all of the bill's objectives and mechanisms
are a ``one-way'' ratchet. The measure is designed to result in the
repeal or amendment of a rule only to eliminate or reduce costs.
In contrast, the bill does absolutely nothing to promote actions
that would enhance the benefits of rules.
Another problem with the bill is that the Commission members--other
than the Commission chair--would not be required to have any expertise
in either administrative law matters or the subject matter of the rules
that they consider.
Notwithstanding that fact, the Commission would be empowered to
second guess Congress with respect to the need for certain rules as
well as the agencies with respect to the science and analysis
warranting such rules.
Worse yet, the bill's so-called ``cut-go'' offsetting provisions
would come into play even if Congress enacted a joint resolution to
disapprove the Commission's report.
Finally, we must acknowledge what the real intent of this
legislation is.
This is yet another attempt to hobble the ability of agencies to
regulate and thereby prevent them from protecting public health and
safety based on unsubstantiated rhetoric that regulations inhibit
economic development.
Just yesterday, our Republican colleague, Bill Shuster, tweeted:
``As Americans, we should all feel safe to drink the water that comes
out of our faucets.''
Right now, do the citizens of West Virginia and North Carolina feel
it is safe to drink their water?
Did the contamination result from too much regulation?
What balance should be struck between preventing carcinogens from
appearing in our Nation's water supply and the cost of regulatory
compliance?
Do we want an unelected group of Commissioners to second guess the
legislative priorities of Congress and the scientific expertise of
agencies when it comes to safe drinking water standards?
These are just some of the major concerns that I have about this
legislation.
__________
Mr. Bachus. I thank you, Mr. Chairman--Mr. Ranking Member,
who I still call ``Mr. Chairman'' when I served under you.
We have a very distinguished panel today. I would like to
introduce the witnesses. Dr. Patrick McLaughlin is Senior
Research Fellow at the Mercatus Center at George Mason
University. His research focuses on regulations and the
regulatory process, with additional interest in environmental
economics, international trade, industrial organization, and
transportation economics. His research and opinions are
regularly published.
Prior to joining Mercatus, Dr. McLaughlin served as Senior
Economist at the Federal Railroad Administration in the United
States Department of the Transportation. As a former railroad
attorney in Congress, you know, railroads is probably my
favorite subject. I have followed your work there and
appreciate your work in the field of railroad transportation.
Very few people understand the railroads, understand the
tremendous economic benefit they bring. They really keep our
economy rolling, and they are one of the least understood modes
of transportation. I still get questions all the time by people
saying do the passenger trains and the freight trains run on
the same line. Normally the answer is yes, but sometimes it is
no.
Dr. McLaughlin has published in the fields of law and
economics, public choice, environmental economics, and
international trade. He holds a Ph.D. in economics from Clemson
University. So thank you.
Mr. Sam Batkins is Director of Regulatory Policy at the
American Action Forum. Mr. Batkins' research focuses on the
rulemaking efforts of administrative agencies and the related
efforts of Congress. His work has appeared in the ``Wall Street
Journal,'' the ``New York Times,'' ``The Hill,'' ``National
Review Online,'' ``Reuters,'' and the ``Washington Post,''
among other publications. In fact, you just recently published
a study that has drawn quite a lot of publicity, and there are
some rather important findings.
Prior to joining the Forum, Mr. Batkins worked at the U.S.
Chamber of Commerce, Institute of Legal Reform, and the
National Taxpayers Union. At the U.S. Chamber, he focused on
lawsuit abuse, tort reform, and Federal regulation. At the
National Taxpayers Union, he focused on State and Federal
spending.
Mr. Batkins received his B.A. in political science summa
cum laude from Sewanee University of the South. He received his
J.D. from Catholic University of America, Columbus School of
Law. And we welcome you before our Committee.
Mr. Ronald Levin, who has testified before our Committee on
several occasions, is the William R. Orthwein Distinguished
Professor of Law at Washington University in St. Louis. He is
co-author of a case book, State and Federal Administrative Law.
Professor Levin has chaired the section of administrative
law and regulatory practice of the American Bar Association, a
group to 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.
Professor Levin also serves as a public member of the
Administrative Conference of the United States and the chair of
its Judicial Review Committee.
Professor Levin clerked for the Honorable John Godbold of
the U.S. Court of Appeals for the Fifth Circuit and practiced
with the Washington, D.C. firm of Sutherland, Asbill and
Brennan.
He received his B.A. from Yale and his J.D. from the
University of Chicago, quite a distinguished academic
institution.
And that was with the Fifth Circuit in New Orleans?
Mr. Levin. It is now, but at the time----
Mr. Bachus. It was in Atlanta?
Mr. Levin. So the situation is that the Fifth Circuit was
broken into two. So at the time of my clerkship, Judge Godbold
was on the Fifth Circuit. Then after the break, he was on the
Eleventh Circuit, so he was the only judge who has ever been
chief judge of two circuits.
Mr. Bachus. So he is in Atlanta now.
Mr. Levin. At that time, his chambers were in Montgomery.
The base was New Orleans.
Mr. Bachus. Thank you. I knew, obviously, he is a very
distinguished jurist.
We will now proceed under the 5-minute rule with questions.
And I am going to recognize Mr. Smith for 5 minutes, if you are
ready to proceed. I should have given you some warning.
Mr. Smith of Missouri. Are they going to testify first?
Mr. Bachus. That is what Barney Frank used to do all the
time. Now I am doing it. I guess it must catch. I cannot
believe I did that.
Yes. Mr. McLaughlin, if you can begin your testimony. I
will have to quit following this script.
TESTIMONY PATRICK McLAUGHLIN, Ph.D., SENIOR RESEARCH FELLOW,
MERCATUS CENTER, GEORGE MASON UNIVERSITY
Mr. McLaughlin. Thank you. Chairman Bachus, Ranking Member
Johnson, and Members of the Committee, thank you for inviting
me. As an economist and senior research fellow at the Mercatus
Center at George Mason University, my primary research focuses
on regulatory accumulation and the regulatory process. So it is
my pleasure to testify on today's topic.
The accumulated stock of regulations almost certainly
contains a multitude of unnecessary burdens. As the title of
the discussed legislation implies, the current regulatory
system makes it difficult to identify and eliminate such
unnecessary burdens.
Our goal here today should be to ascertain whether the
SCRUB Act would succeed where previous efforts have failed.
To that end, first I will discuss why regulatory
accumulation is a problem, which is primarily that it creates
substantial drag on economic growth.
Second, I will discuss the search for obsolete,
unnecessary, duplicative, or otherwise non-functional
regulations covering both why similar searches in the past have
failed and what could be done differently to increase the odds
of success. In my estimation, an independent commission, as
opposed to regulatory agencies, is required to successfully
identify non-functional rules.
Third, I will address the difficulties of eliminating non-
functional rules once identified. Here I point to the wisdom of
the crafters of the BRAC process.
Finally, I will cover specific recommendations for
effectively reducing the problem of regulatory accumulation,
recommendations that are directly relevant to the SCRUB Act.
By design, regulations restrict choices. These restrictions
have accumulated for decades, exceeding 1 million by the year
2010. This accretion of restrictions is what I refer to as
regulatory accumulation. Regulatory accumulation inhibits
innovation. And I am not just talking about business ideas that
would create new products and jobs. Would-be entrepreneurs are
sometimes prohibited from pursuing ideas that could improve the
environment and consumers' quality of life. My written
testimony gives a couple real-world examples of how regulations
can actually deter environmental stewardship and prevent
companies from implementing potentially lifesaving
technologies, which I would be happy to discuss.
Through lost innovation and entrepreneurship, regulatory
accumulation negatively affects economic growth. An academic
study found that between 1949 and 2005, the accumulation of
Federal regulations has slowed economic growth by an average of
2 percent per year. Over a 57-year period, that adds up to
about $277,000 in lost annual income per household.
So how can we fix the regulatory accumulation problem? The
solution boils down to two elements. First, we must identify
non-functional rules. Second, once identified, non-functional
rules should be eliminated or modified. In my written
testimony, I have identified 11 elements that my research with
my colleague, Richard Williams, identifies as characteristics
of successful regulatory reform. I want to highlight just
three.
First, the process should entail independent assessment of
regulations. Independence is crucial. Our study documents
attempts by every Administration since Reagan's to address
regulatory accumulation. Those attempts share at least two
characteristics.
Each of them relied, at least partially, on agencies to
assess their own stocks of regulations, and each of them failed
in substantively changing the stock of regulations or the
ongoing accumulative process. If the reasons for these efforts'
limited success is the reliance on agency self-assessment, then
an independent commission could be a better alternative.
Second, the process should use a standard method of
assessment, and that method should include a focus on whether
and how rules lead to the outcomes desired. There is a
difference between outcomes and outputs. A rule may lead to an
increase in an output such as increased safety inspections, but
that does not guarantee that there has been an increase in the
outcome, safety. The assessment of rules should focus on
outcomes.
Third, congressional action, such as a joint resolution of
disapproval, should be required in order to stop the
commission's recommendations. I previously mentioned the wisdom
of the crafters of the BRAC process. Legislation addressing
regulatory accumulation must overcome similar obstacles as the
BRAC process did. One of those is the possibility of
congressional inaction. In order to stop the recommendations
put forth by the BRAC commission, the BRAC process required
Congress to pass a joint resolution of disapproval. In other
words, even if Congress did nothing, the default was
implementation of the recommendations.
These are three of the 11 elements that our research has
identified as essential to success.
Regulatory accumulation in the U.S., with its adverse
impact on economic growth, is now a widely recognized problem.
The problem has not been meaningfully addressed despite the
efforts of several Administrations. My written testimony covers
other essential elements that my research indicates are
necessary, and I have highlighted just three now.
I would be happy to answer any questions after this is
finished. Thank you.
[The prepared statement of Mr. McLaughlin follows:]
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__________
Mr. Bachus. Thank you. Your opening statement was exactly 5
minutes.
Mr. McLaughlin. I had a little bit more.
Mr. Bachus. I do not think I have ever had a 5-minute
opening statement right to the second.
Mr. Batkins? And you do not have to be right at 5 minutes.
Mr. Batkins. I probably will not replicate that.
Mr. Bachus. No, no. I am not expecting to see that again
this year.
TESTIMONY OF SAM BATKINS, DIRECTOR OF
REGULATORY POLICY, AMERICAN ACTION FORUM
Mr. Batkins. Thank you, Mr. Chairman, Ranking Member
Johnson, and Members of the Subcommittee. Thank you for the
opportunity to testify today and examine regulatory reform
opportunities.
I would like to start by highlighting the successes and
struggles of President Obama's current attempt at regulatory
reform and the potential benefits of codifying retrospective
review.
First, when President Obama continued the strong tradition
of ensuring that regulatory costs justify benefits, he called
for a periodic review of existing significant regulations.
President Obama and then-OIRA Administrator Cass Sunstein made
a very public push to highlight some of the redundant and
outmoded rules in our regulatory system, including the fabled
``Spilled Milk'' regulation. The Administration has release
plans with hundreds of possible retrospective reviews, but upon
closer scrutiny, it is clear that many of these measures are
not regulatory look-backs and they do not streamline, expand,
or repeal existing regulations.
For example, the Department of Energy lists 19 rulemakings
in its latest retrospective report. However, six of these are
new energy efficiency standards that do not appear to revisit
existing rules, but instead impose significant new costs.
Likewise, Health and Human Services included at least nine
Affordable Care Act regulations in its latest report. These
measures did not look back at existing regulations or attempt
to repeal certain regulatory provisions. Instead, they
implemented the recent health care law.
There have been successes in regulatory reform. The
Department of Transportation plans to save the trucking
industry $1.7 billion annually and cut the agency's paperwork
budget by 15 percent.
Likewise, HHS finalized a rule to reduce procedural hurdles
for hospitals and health care providers, saving approximately
$900 million annually.
However, if we examine all retrospective reports and
compare new rules that impose costs and compliance time to
rules that actually look back to streamline or eliminate costs,
the ratio is 3.7 to 1 in favor of higher costs. For paperwork,
the ratio is 6.7 to 1. In other words, retrospective reports
contain more new rules with higher costs than regulatory look-
backs with lower costs.
Regulatory reform through executive order alone has not
produced the desired results. During the past 10 years, the
Nation's cumulative paperwork burden has increased 28 percent,
or 2.2 billion hours. In the equivalent amount of time, it
would take 1.1 million new employees working 2,000 hours a year
to complete these new requirements.
Codifying retrospective review would submit more than 30
years of informal review into law. I believe legislation that
addresses the Nation's cumulative regulatory burden would have
a variety of benefits.
The Government Accountability Office, as we have noted
here, has highlighted duplication in its annual report for the
past few years. GAO found 17 areas of duplication, including
veterans employment and renewable energy. We replicated GAO's
methodology for paperwork requirements and found 990
duplicative forms and more than 642 million paperwork burden
hours. The regulatory cut-go provision in the proposed
legislation would address this duplication by allowing agencies
to choose from a range of past rules eligible for reform. To
date, the U.S. has never had a formal system to address
regulatory duplication, but if the commission is successful, it
could identify hundreds of past rules in need of reform.
To some extent, the U.S. is behind the curve on regulatory
reform. The United Kingdom has a system to remove two
regulations for every new rule. Closer to home, Indiana has
codified retrospective review for regulations 3 years after
implementation. The proposed legislation actually provides
agencies with some deal of flexibility compared to the British
one-in/two-out system.
Perhaps most importantly, the proposed bill would extend
some level of OIRA review to independent agencies, the same
regulatory bodies that govern our telecommunications and
financial system. During the past 2 years, financial regulators
have produced more than 113 regulations with quantifiable
burdens with little executive oversight. As the Administrative
Conference of the United States has noted, it is past time for
heightened regulatory scrutiny of independent agencies.
In conclusion, I would like to emphasize that retrospective
review dates back to the Carter administration and is by no
means a radical step. It is simply implementing best practices.
Thank you for your time, and I look forward to answering
questions.
[The prepared statement of Mr. Batkins follows:]
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__________
Mr. Bachus. Thank you.
Professor Levin, you are recognized.
TESTIMONY OF RONALD M. LEVIN, PROFESSOR, WILLIAM R. ORTHWEIN
DISTINGUISHED PROFESSOR OF LAW, WASHINGTON UNIVERSITY SCHOOL OF
LAW
Mr. Levin. Yes, Mr. Chairman. I apologize for arriving a
few moments late.
Mr. Bachus. You actually arrived fine.
Mr. Levin. Okay, that is good.
Chairman Bachus, Ranking Member Johnson, and Members of the
Subcommittee, thank you for inviting me to testify on
retrospective review today. I did testify on general principles
in this area in 2012 before you. It is a privilege to return to
the subject in the context of a specific bill.
As we all know, the regulatory system already has a number
of methods of inducing agencies to do more look-back review,
and they include some statutes, presidential initiatives like
the one President Obama pursued, congressional oversight, and
the ability of anyone to file a petition for revision or repeal
of a regulation and get an answer from the agency and
potentially get judicial review.
The question is whether we need to supplement these systems
with a new mechanism.
I think the case for doing that has been overstated. We
should not equate the growth of regulations with the growth of
unnecessary regulations. Many of them are directly contemplated
by legislation and confer enormous benefits on society, such as
safe skies, clean air, safe workplaces, and a sound banking
system. It is often the absence of regulations that causes harm
to our economy and society.
But we can agree that some rules are obsolete and
ineffective or cause unwanted side effects, and I would not
rule out the possibility that some new structure could be
helpful. But the one contemplated by the SCRUB Act is not it,
in my judgment.
In the first place, the commission that it would establish
does not comply with the Appointments Clause of the
Constitution. Most of its members would be appointed by House
and Senate leaders of the majority and minority parties. A
group like that can recommend, but it cannot itself exercise
significant authority under the laws of the United States. The
Supreme Court established this in Buckley against Valeo in
1976. I know Representative Johnson asked me to elaborate, but
really, the law is clear and simple, and unfortunately, this
bill is on the wrong side of it.
But let us assume that you fix that defect and look at the
bill's policy implications. The commission would still not be a
credible authority because most of its members would not need
to be experts in anything, and they could not possibly be
experts in all the areas that they would have power to affect
and that power would be breathtaking. They could order the
elimination or amendment of any rule of any agency that they
consider unnecessarily burdensome, and they could use any
methodology they want. Even soothsayers or astrological charts
would do under the bill. And nobody could prevent their
decisions from going into effect, not the courts presumably,
not the agency. OIRA and the White House would have no review.
And even if Congress passes a disapproval resolution with the
House, the Senate agreeing, with the President signing, the
commission's decisions would still be merely postponed, not
canceled. And if all that is not far-fetched enough, a minority
of the commission, outvoted, could wield these same powers. In
Justice Cardozo's phrase, this is delegation run riot.
Then the bill provides for a cut-go process in which an
agency cannot adopt a new rule without offsetting its cost with
a rule from the commission's list. The biggest problem with
that is that the commission's list itself would not be
reliable, but also this process would complicate the process of
rulemaking no matter how important or urgent the rule may be.
And finally, the bill provides that every new rule, no
matter how trivial, would have to be accompanied by a plan to
reexamine it a decade hence. That is way overbroad for most
rules. And even for important ones, it is premature to make a
plan in 2014 for how you are going to reexamine it in 2024 when
you cannot foresee what the situation a decade from now would
be.
So I really think that the Subcommittee needs to take a
pause in this area. The best thing it could do would be to wait
for the forthcoming recommendations of the Administrative
Conference, which is now launching a study, of retrospective
review, to be finished by the end of the year. See what
proposals they make. But if the Subcommittee does decide to go
forward with this bill, the bill will need a thorough and
fundamental scrubbing.
That concludes my statement, and I will be happy to take
your questions.
[The prepared statement of Mr. Levin follows:]
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__________
Mr. Bachus. Thank you, Professor.
I will recognize myself for 5 minutes for questions.
The Ranking Member talked about the Administration's
efforts to identify regulations that could be either eliminated
or amended. I will ask each of you. How does the SCRUB Act
compare to other executive branch and legislative proposals
that have been brought forth in the past? I will start with
you, Dr. McLaughlin.
Mr. McLaughlin. I think the most fundamental difference is
putting the responsibility for retrospective review in the
hands of an independent commission as opposed to leaving it in
the hands of the agencies who created the rules in the first
place. And it is my opinion that that will improve the quality
of assessment. To make a simplistic analogy here, I am a
professor as well as a researcher, and if I let my students
grade their own tests, I would expect on average their scores
to be a lot higher than if an independent arbiter were to grade
them and give an objective analysis.
Mr. Bachus. Mr. Batkins?
Mr. Batkins. I would agree with Mr. McLaughlin that there
is, I think, a need for an independent look at retrospective
review. And if you just look at all the data that we have
compiled under Executive Order 13563, there are a few
provisions that streamline, modify, reduce hours and costs, but
on net, a majority of the provisions are actually new
regulations that they are including in these retrospective
reports. It is tough to tell the difference between a regular
unified agenda of Federal regulations and a lot of these
retrospective reports. Several agencies that were reviewed did
not have a single measure that we found to actually look back
at existing regulations. So I would agree that an outside voice
is probably welcome.
Mr. Bachus. Could you give me some specifics on those
agencies that you are talking about?
Mr. Batkins. Well, sir, I mentioned Health and Human
Services. We counted, judging from the REN's from their report,
there were at least nine Affordable Care Act regulations that
they plan to implement. And for example, the Department of
Energy had several new efficiency standards for transformers,
for metal halide lamp fixtures. And a lot of agencies will
include basically a boilerplate that this rule was designed to
minimize burdens consistent with Executive Order 13563, and
that may be fine but you could have used the same minimize
burdens/maximize net benefits under Executive Order 12866 or
Executive Order 12044. So it was not necessarily a regulatory
look-back as it was implementing a new rule and putting it in
your retrospective report.
Mr. Bachus. Professor Levin?
Mr. Levin. Well, I agree with Mr. McLaughlin that the
biggest difference is that the SCRUB Act would put an
independent body into control rather than the agency. But I
think that is a vice and not a virtue.
I think the better comparison would be if he asked me to
grade his exams in his course when he is the one who runs the
course, organizes it, and I am a complete outsider.
The problem is that the agency has always been rightly
considered to be the best entity to evaluate the rules. They
have the expertise. That is why Congress created it in the
first place, to bring specialized experience to bear. They are
the ones who understand the overall program and all the
interconnections among the different parts of the program. And
they are the ones who are politically accountable in the way
that a commission would not be. So we agree on the difference,
but we do not agree as to its merit.
Mr. Bachus. Are agencies really politically accountable for
their actions?
Mr. Levin. For sure. The executive agencies are accountable
to the President. All agencies are accountable to Congress.
They are accountable at the initiation stage. Congress can
change their laws. They have oversight hearings, as you well
know, and they are part of an Administration that usually is
very cognizant of public opinion.
Mr. Bachus. Out of all the regulations that have been
passed over the years, there has been one that has been
repealed by Congress. Of course, you could look at that two
different ways. One is that they have all been appropriate and
another that Congress simply has lacked that because I think it
is fair to say that there were probably in the universe of tens
of thousands of regulations, there had to be hundreds, if not
thousands, that were probably not well thought out.
Mr. Levin. But it is not just the congressional review act
that you should take into account. Authorizing legislation will
sometimes have that effect. And informal contacts through the
oversight process will often have that effect because agencies
are dependent on Congress in so many ways.
Mr. Bachus. I think my time has expired.
At this time, I recognize the Ranking Subcommittee Member.
Mr. Johnson. Thank you.
Dr. McLaughlin, the Mercatus Center is a 501(c)(3)
nonprofit that does not receive support from George Mason
University or any Federal or State or local government and only
receives funding through donations from companies like the Koch
brothers. Is that correct?
Mr. McLaughlin. Our organization is funded by private
donations. However, we have a strict firewall between
fundraising and research.
Mr. Johnson. No, no, no.
Mr. McLaughlin. I am not familiar with the details of the
fundraising.
Mr. Johnson. But companies like Koch Industries or
companies that would be contributors or funders of your
efforts. Is that right?
Mr. McLaughlin. Again, I am not familiar with the details
of our fundraising.
Mr. Johnson. Are you aware of the fact that the Mercatus
Center moved to George Mason University after George Mason
University accepted $30 million from the Koch brothers?
Mr. McLaughlin. That was prior to my time working at the
Mercatus Center. So I did not experience that, if that is what
occurred.
Again, what matters to me at least is that we have this
firewall of separation between all of the fundraising and the
research. My research is my own. It is not influenced or
controlled by any donors.
Mr. Johnson. All right. Thank you, sir.
And, Mr. Batkins, have you ever heard of the American
Action Network?
Mr. Batkins. Pardon me? The American Action Forum. No. The
American Action Forum is a 501(c)(3). Network is a separate
organization with a separate board.
Mr. Johnson. And it is a 501(c)(4).
Mr. Batkins. Correct.
Mr. Johnson. And it is your sister organization. Correct?
Mr. Batkins. They have a separate board and a separate
president.
Mr. Johnson. But you are sister corporations basically.
Mr. Batkins. I rarely, if ever, have any interaction with
the Network, and I focus purely on the policy analysis and
regulatory policy, and I have never engaged in any political
advocacy of the kind that the Network does engage in.
Mr. Johnson. The Network and the Forum are housed in the
same offices. You are basically sharing office space with
Crossroads GPS and American Crossroads. Is that correct?
Mr. Batkins. That is not correct. American Crossroads, I
believe, is off of New York Avenue and we are a few blocks away
on Pennsylvania Avenue.
Mr. Johnson. What about Crossroads?
Mr. Batkins. No. It is just the American Action Forum, the
American Action Network.
Mr. Johnson. So you do not share office space with
Crossroads GPS?
Mr. Batkins. We do not.
Mr. Johnson. Have you ever?
Mr. Batkins. During the formation of our organization in
2010, for a few months we did.
Mr. Johnson. And Crossroads GPS/American Crossroads is, of
course, tied to Karl Rove.
Mr. Batkins. That is my understanding, yes.
Mr. Johnson. Is the Forum or the Network still tied to Karl
Rove?
Mr. Batkins. No. That is a completely separate
organization, again housed somewhere else with a separate board
and a separate staff.
Mr. Johnson. Well, now, okay.
I would like to ask Dr. McLaughlin. On page 10, the bill
uses terms such as, ``excessive compliance costs'' and also
``excessively burdensome.'' What exactly do those terms mean,
sir?
Mr. McLaughlin. I think that is a great question. I agree
with your statement that some terms could be interpreted with
subjectivity. And I actually think that on page 11 of the bill,
the statement that the commission shall establish a methodology
for conducting its review hopefully goes to some length to
addressing potential problems with subjectivity.
So it is my hope--and, in fact, I have a study that I just
released this morning where I recommend methods for addressing
the problem of regulatory accumulation, and one of the points
that I make is an objective method of assessment is key. So I
share your concerns, and I hope that can be dealt with.
Mr. Johnson. And tell me now, on page 13, the bill requires
the commission to review a rule that is identified by the
public? So does that mean that if the Mercatus Center
identifies 1,000 rules that it believes should be reviewed,
then the commission would be required to examine each and every
one of those rules?
Mr. McLaughlin. Well, I think that the provision for
allowing the public or any entity to propose a rule is designed
to make sure there is equal treatment of all. Whether one
entity attempts to dominate that is perhaps something to be
concerned with. It is similar to the current notice and comment
process that is implemented by the Administrative Procedure
Act. So if there is a problem with this, there is also a
problem with that in that any entity can dominate the
submission process.
Mr. Johnson. Thank you, sir.
And my time has expired.
Mr. Bachus. Thank you.
At this time, I recognize the gentleman from Missouri, Mr.
Smith.
Mr. Smith of Missouri. Thank you, Mr. Chairman.
Professor Levin, in the closing part of your statement,
you--I just want to correct. I think you made the statement
Federal agencies are reliant on Congress in some ways. Is that
correct?
Mr. Levin. I am not sure exactly what you are referring to,
sir.
Mr. Smith of Missouri. Just in your last few sentences, in
your comments when you were giving oral testimony, you made the
comment, Federal agencies are reliant on Congress in some ways.
Mr. Levin. I said that during my response to the Chairman.
Mr. Smith of Missouri. Okay, in your oral conversation.
Mr. Levin. Yes, sir.
Mr. Smith of Missouri. And that brings a very important
point to me that I want to make sure is on the record for this
Committee. Federal agencies are creatures of Congress. They did
not just exist. Agencies are created by Congress, and Congress
can pass whatever laws it sees fit to cabin the authority of
these agencies when they create laws. You know, Federal
agencies only exist because Congress has decided by law to
delegate its legislative power to agencies. So that statement
in saying that Federal agencies are only reliant on some ways
to Congress where that agency was created because of Congress
is a huge problem, especially coming from a gentleman that
teaches at a great university in my State.
How do you respond to that?
Mr. Levin. Sure. What I said was that they are accountable.
But I agree 100 percent with what you just said. They are
creatures of Congress and they are subject to congressional
revision, actually not 100 percent. Congress cannot pass a law
that violates the Appointments Clause or other relevant
constitutional restrictions. But broadly speaking, Congress can
adjust their mandates. So on that, I think we essentially do
agree.
Mr. Smith of Missouri. Exactly. So that goes forward with
the concern that you said that this current draft violates the
Appointments Clause, which I disagree with. But I think we both
could agree--and you even said in your testimony that there
could be areas where we could pass recommendations or we could
just, in my opinion, put it directly in the legislative branch,
much like Senator King and Blunt's bill over in the Senate.
Would you not agree with that?
Mr. Levin. That would solve the Appointments Clause problem
I believe. It would certainly not deal with all of the policy
concerns. There is a potential non-delegation constitutional
problem with what is contemplated, but it does solve the
Appointments Clause part.
Mr. Smith of Missouri. But Congress has the power to say
that we are going to create this commission to do this process,
and in regards to appointing the individuals to serve on the
commission, Congress can set the parameters. This is just a
thought off the top of my head, but could Congress say that the
President would need to appoint to this commission two out of
the four nominations that the Speaker and the Minority Leader
present to him?
Mr. Levin. The constitutional criteria for appointment are
not well defined in case law. I would think certainly the
Justice Department would tell you that that is a violation of
the President's prerogatives to appoint.
Mr. Smith of Missouri. But does the Appointments Clause not
also provide Congress has the power to decide in the
appointment process of the President, of the courts, of the
heads of departments. Correct?
Mr. Levin. Not the clause. I assume the Necessary and
Proper Clause gives them some authority.
Mr. Smith of Missouri. I am talking about the
constitutional clause of the appointments, the Appointments
Clause that you brought up.
Mr. Levin. The Appointments Clause itself says the
President shall appoint.
Mr. Smith of Missouri. But does it not say, in regards to
inferior officers, that Congress can decide by law of those
three different appointments of how they are appointed?
Mr. Levin. I do not think these are inferior officers. They
have more power probably than any agency that exists today.
Mr. Smith of Missouri. But if Congress would say that these
commissioners are inferior officers----
Mr. Levin. They would be mistaken.
Mr. Smith of Missouri. But we could do that.
So let us get to the policy process of this bill. Do you
see that there is a need to reduce obsolete and duplicated
regulations off the books?
Mr. Levin. Certainly.
Mr. Smith of Missouri. What percent would you think would
be a good target rate? You know, like 1 percent, maybe 5
percent, 10? What do you think would be a good target goal in
reducing some of these regulations off the books?
Mr. Levin. I would not set a target because I think the
process of weighing the costs against the benefits is an
enormously complex matter, and I think it would be unhelpful to
set a numerical figure.
Mr. Smith of Missouri. So you would not want to say 1
percent of the regulations are probably outdated or obsolete?
Mr. Levin. I would not want to set a target figure because
I think any such target would not be helpful in deciding which
are the ones to eliminate.
Mr. Smith of Missouri. So do you feel like 174,000 pages of
regulations is too many or not enough?
Mr. Levin. I think there are many areas where--many of them
we do not need, and there are many more we do need. So how they
net out I am not sure.
Mr. Smith of Missouri. So no response.
Thank you, Mr. Chairman.
Mr. Bachus. Thank you.
At this time, I recognize the gentleman from Michigan, our
former Chairman, Mr. Conyers.
Mr. Conyers. Thank you, Chairman Bachus. And I thank the
witnesses.
Let me ask my two friends, Mr. Batkins and Mr. McLaughlin,
if you were persuaded--and I am not saying that you are
already--that this provision could not pass constitutional
muster, would that change your support for it? I will start off
with Mr. McLaughlin.
Mr. McLaughlin. Thank you.
First, I need to clarify that I am not formally endorsing
this. I am merely comparing the components that are in the bill
to what I have laid out in my own research, elements that are
necessary for successful reform.
Secondly, I am a Ph.D. economist. I am not a constitutional
lawyer, so I do not really have the wherewithal to weigh in on
the constitutionality of the issue here. I apologize.
Mr. Conyers. Well, that is okay. There are many Members of
Congress who cannot either.
But the problem is that if you were confronted by the legal
opinions of constitutional scholars, would that affect your
opinion?
Mr. McLaughlin. My opinion is that there is a lot of merit
to addressing the problem of regulatory accumulation from an
economics perspective, and I would hope that issues like the
constitutionality of any approach could be ironed out by legal
scholars so that the issue can actually be dealt with. So my
support would go toward dealing with the problem.
Mr. Conyers. Mr. Batkins, with the American Action Forum,
how would you react to a finding of unconstitutionality on this
draft measure that we are discussing here this afternoon.
Mr. Batkins. Again, I just want to clarify that we did not
as a (c)(3) sort of formally supported the bill, but just sort
of the broad principles of retrospective review.
As to the constitutionality, that is not something that I
discussed in my testimony. I understand that there is the
presumption of constitutionality and that going forward, as
this bill progresses, if there are serious defects, I am
confident that they will probably be cured during the process.
Mr. Conyers. Well, Professor Levin, would you care to make
any comment about this issue that a number of us, including
yourself, have raised already?
Mr. Levin. About the constitutional issue? Well, just to
elaborate a little bit on this distinction that Representative
Smith made between principal and inferior officers, which I did
not address in my first remarks, but beyond the fact that any
officer who exercises a significant authority must be appointed
under the Appointments Clause, some may only be appointed by
the President with senatorial confirmation.
And to be an inferior officer, you would need a superior.
Well, this commission is not supervised by anyone. So in my
view, they would be principal officers. You would need
presidential appointment and senatorial confirmation.
Mr. Conyers. Thank you so much.
On page 10, Professor, you use the terms ``excessive
compliance costs'' and ``excessively burdensome.'' I wanted to
review those with you. It seems like there is so much
subjectivity involved that it is kind of hard for us to get it
together.
Mr. Levin. Correct. They are entirely subjective or at
least undefined.
Mr. Conyers. Exactly.
Last, but not least, on page 13, the bill requires the
commission to review a rule that is, quote, identified by the
public, unquote. So if Mercatus Center identifies 1,000 rules
that it believes should be reviewed, would the commission be
required to examine each of these rules?
Mr. Levin. Since I had only 3 days to examine the bill, I
am not sure about the specific point of what the scope would
be. I generally agree with Mr. McLaughlin that a commission
like this probably should look at submissions from the public.
My problem is not that they are willing to listen, that they
receive things from other people, but that I do not trust the
conclusions they would reach.
Mr. Conyers. Thank you so much, all of you.
I yield back the balance of my time, Chairman Bachus.
Mr. Bachus. Thank you.
At this time, I recognize Mr. Doug Collins, the gentleman
from Georgia.
Mr. Collins. Thank you, Mr. Chairman. I appreciate it.
I think this is definitely an opportunity to discuss the
issues of transparency, the issues that we are dealing with
here, and I think to include that further, I am going to yield
the balance of my time to the gentleman from Missouri, Mr.
Smith.
Mr. Smith of Missouri. Thank you, Representative.
Mr. McLaughlin, we were talking about having an independent
commission. Right now how the process is that through executive
orders, agencies monitor their own policy or ineffective or
duplicated regulations. Correct?
Mr. McLaughlin. Yes, sir. There have been a series of
executive orders dating back decades that have exhorted
agencies to review their own regulations. It is my opinion
through research that none of them has had a substantive
impact.
Mr. Smith of Missouri. So where I come from in Missouri, we
would call that the fox guarding the henhouse. And that is why
we need an independent commission that is going to do some
serious work in finding these regulations and to see if they
are doing what they are supposed to be doing.
What would you think would be a good target rate in what
percent of maybe regulations that are out there that this
commission could find that are duplicated or obsolete? Would
you say 5 percent, 1 percent, 25 percent? I would like to have
your judgment.
Mr. McLaughlin. Unfortunately, I am not going to be able to
give you a number. And I think part of the reason is we do not
know. As you have said a few times, there are over 174,000
pages in the CFR. That would take something like 2 years of
someone's life to read. So to get to the point where we know
what percentage to get rid of, it will first require a careful
assessment of what we have on the books in the first place. I
think that the assessment that is done by agencies, even if it
were to be objective, could probably not deal with the number
of rules that they have created over the decades anyway.
Mr. Smith of Missouri. Mr. Batkins, would you want to give
a target, a percentage of how many you think that may be out
there that need to be amended or repealed?
Mr. Batkins. I do not know that I could necessarily
quantify it, but I can say that there is probably a lot of low-
hanging fruit just from the reviews that I have seen from the
Administration. It is 2014. There is a lot of electronic
reporting, updating that we can do aside from the paper
filings. I know that EPA has proposed rules for its National
Pollution Discharge Elimination System and Hazardous Waste
Management System that is moving toward electronic filing that,
according to EPA, could save roughly $200 million annually. So
I think there is probably some low-hanging fruit in the CFR,
and a lot of that might just be getting technology to 2014.
Mr. Smith of Missouri. Would you want to take a guess at a
percentage?
Mr. Batkins. Like I said, I do not know that I could
necessarily quantify it.
Mr. Smith of Missouri. I am not going to hold you to it,
but say 15 percent, 20?
Mr. Batkins. I would say that the--it is not necessarily
the case, but the older provision more or less might be more
ripe for review and amendment. But again, we have added a lot
to the books just in the last few years, but again, I do not
know if I could quantify it.
Mr. Smith of Missouri. All right.
Professor Levin, have you read S. 1309, Senator King's and
Senator Blunt's review commission, because you mentioned it in
your testimony?
Mr. Levin. Yes, S. 1390, I believe it is.
Mr. Smith of Missouri. 1309.
Do you think that passes constitutional muster in the
appointment of their commission?
Mr. Levin. As I recall--and again, I did not focus on that
bill because it is not the one we are considering today, but
roughly speaking, if the commission merely makes
recommendations to Congress for Congress to act on, that is, in
general, constitutional.
Mr. Smith of Missouri. And if a commission is solely rested
within the legislative branch, would it be constitutional?
Mr. Levin. If it is solely a legislative agency, it cannot
exercise executive power.
Mr. Smith of Missouri. Exactly. If the commission was just
doing the work that was delegated to it by Congress but it sat
within the legislative branch, just like another Committee in
Congress.
Mr. Levin. It depends on what the assignment is. The
Supreme Court struck down the Gramm-Rudman Act in which power
was entrusted to the Comptroller General because his actions
were going to be legally binding, and you cannot ask the
Comptroller General to do that.
Mr. Smith of Missouri. Thank you, Mr. Chairman.
Mr. Collins. I yield back, Mr. Chairman.
Mr. Bachus. The gentleman from New York is recognized for 5
minutes.
Mr. Jeffries. Thank you, Mr. Chairman.
Dr. McLaughlin, would you say that this bill is designed to
address an urgent problem that confronts this country?
Mr. McLaughlin. I think it is a significant problem.
Regulatory accumulation, as I noted in my testimony, has been
found to slow economic growth substantially, and that harms
everyone.
Mr. Jeffries. So it is urgent because excessive regulation
exists. Is that correct in your view?
Mr. McLaughlin. In my view the regulatory process we have
in America results in consistent accumulation over decades.
There is no process for getting rid of obsolete, duplicative,
outdated, or ineffective regulations, at least no streamlined
process. And I guess one way to put this is this is an
opportunity for us to improve our economy at the rate of
which----
Mr. Jeffries. What is the adverse impact of the outdated,
cumulative, excessive regulations that you speak to that you
have characterized as a significant problem? What is the impact
on the economy?
Mr. McLaughlin. Primarily it reduces innovation and
entrepreneurship. People who would have undertaken some sort of
entrepreneurial endeavor--maybe it could be--for example, Logan
City, Utah was going to install--actually did install micro-
hydropower systems in order to create some clean energy for
local residents. But they ran into a lot of regulations that
were duplicative and not applicable to this particular
scenario. End result: the cost of this environmentally friendly
endeavor doubled.
Mr. Jeffries. Okay. We have the world's most significant
economy. I get that you are pointing to a situation in Logan
City, Utah, and I am sure that is a wonderful place. But I am
asking about the significant nature of the problem that you
have indicated and for you to be able to point to evidence that
exists as it relates to the impact of the economy. What
evidence do you have in a macro-economic way?
Mr. McLaughlin. Yes, sir. My testimony cites several
studies that have been published in peer-reviewed academic
journals, one of which is the one I cited in my testimony.
However, others have been produced by scholars at the World
Bank, the OECD. The evidence is it is wide-ranging that a
regulatory system that does not address obsolete and
duplicative or ineffective regulations----
Mr. Jeffries. Give me an example of an ineffective rule in
the food safety area, for instance.
Mr. McLaughlin. An effective regulation would be one that
does not achieve its outcomes, does not have an effect.
Mr. Jeffries. I am asking for an example.
Mr. McLaughlin. I am sorry?
Mr. Jeffries. Can you give me an example?
Mr. McLaughlin. Of a regulation in food safety? I am not an
expert in food safety.
Mr. Jeffries. Give me an example of a regulation that fits
that description of being outdated, ineffective, non-
constructive in the occupational safety area.
Mr. McLaughlin. Well, there is a regulation that I am
familiar with that is in the safety area. NHTSA, for example,
requires headlights to be designed in a certain way, high beam
and low beam, and the reason is you do not want the high beam
to blind an oncoming driver. That regulation is, in my opinion,
outdated because now adaptive headlight systems have been
created, sold in Europe, sold in Asia, but not in America
because this regulation prohibits them. This adaptive system
would allow the high beam to be dimmed for the oncoming
driver----
Mr. Jeffries. I am sorry to cut you off, but my time is
limited.
Your position is that we need a presidentially-sanctioned,
legislatively-authorized commission to deal with an outdated
high beam regulation. That is essentially what you are here to
testify to today?
Mr. McLaughlin. The regulation is still impeding progress
in our economy, and I am sure that is only one of many examples
that could be found, were we to be able to go through all
174,000 pages.
Mr. Jeffries. Can you give me an example in the consumer
safety area of an outdated regulation that is having a
devastating impact on our economy that requires us to move
forward with some degree of urgency and connected with this
legislation?
Mr. McLaughlin. Sir, I think your line of questioning is
actually underscoring the point that we do need to do a
thorough assessment of all these regulations. There is no way I
can sit here and come up with example after example after
example because I have not spent my time reading all 174,000
pages of regulations. However, we have a good suspicion, I
think, on both sides of the aisle for all parties involved that
there are some there that could be gotten rid of and could
offer chances for----
Mr. Jeffries. All right, but sir, we are here to address
problems that confront the American people, not enact
legislation in search of a problem that heretofore, for me at
least, has been ill-defined.
One last question. So you took the position that you are
not familiar with the fact that the Koch brothers have provided
funding assistance to the center that you work for. Is that
your position on the record?
Mr. McLaughlin. We have a firewall separating research from
fundraising. I am not familiar with the details of fundraising.
That is my position.
Mr. Jeffries. Thank you.
Mr. Bachus. Thank you.
Professor, there have been three executive orders by this
President to review regulations, to look for outdated
regulations, duplicative regulations, those that have more of a
detriment or cost than a benefit. Do you agree with an effort
to systematically go through all the regulations and do a
regulatory reform effort?
Mr. Levin. Mr. Chairman, I testified on this point in 2012,
and I think there are diminishing returns to looking repeatedly
at every regulation.
Mr. Bachus. I am out of order.
Mr. Cicilline from Rhode Island.
Mr. Cicilline. Mr. Chairman, thank you, and I thank the
witnesses.
I will concede for the purpose of this hearing that there
are some regulations that are duplicative and unnecessary and
obsolete and we ought to eliminate them. I think each of us
could find one.
But the notion of creating a new bureaucracy of unelected
bureaucrats with no particular experience or expertise to make
critical, often lifesaving determinations about issues ranging
from safe chemical levels to energy standards, to health care
is a frightening prospect and I think something that I would
resist with tremendous resolve.
But I want to just try to understand how it would work,
even if you had your way. Your legislation says that in this
cut-go, that the cost of any new rule to the United States'
economy has to be offset by a repeal. So I want to understand
how we would calculate the cost of a new rule. So suppose you
had a rule--and this is for you, Dr. McLaughlin--that said you
have to have a level of this particular toxin below a certain
amount because it proved to be very deadly to children. It is
in children's food. And it would add a dime to the cost of food
for children, but it would save countless lives. At high
levels, it would cause infant death. It presumably would save
thousands of lives. If you calculate the cost of the new rule
to the U.S. economy, do you take into account not just the 10
cents but there is no requirement that you net out the children
whose lives would be saved, the children who would be healthier
because they are not ingesting the toxin? Is there anything in
this legislation that would net out what the value of
regulation is? And if not, how do you possibly implement it?
Mr. McLaughlin. It is my understanding that the analysis of
costs for the cut-go portion of the bill for any new rules
proposed would actually be performed by the agency that is
proposing those. Under their methods that they use right now,
they perform regulatory impact assessment following OMB
Circular----
Mr. Cicilline. But, Dr. Levin, the statute that we are
being asked to consider says the annual costs of the new rule
to the United States' economy. There is no assurance that there
is actually even an assessment done about what the net benefit
of any regulation is. Right? And, of course, that is consistent
with what you said in your opening comment where you said
currently regulations by design restrict choices. Well, I guess
that is true. It restricts the choice of a parent to have their
child to eat food that is poisoned. But it does not just
restrict choices. It also is about keeping people safe, for
example. Would you agree? Regulations do not just restrict
choices. They also keep people safe.
Mr. McLaughlin. Regulations have both costs and benefits.
Absolutely.
Mr. Cicilline. Okay. Benefits are safety, health. Right?
Mr. McLaughlin. Regulations can----
Mr. Cicilline. And you agree we should take those into
account before we make a determination as to whether or not to
repeal a regulation. Correct?
Mr. McLaughlin. I think that benefits should be weighed
against costs.
Mr. Cicilline. And in fact, you said in a letter to the
editor to ``The Hill''--and I quote. You wrote, ``It is
unlikely that anyone knows what the actual net benefits of
regulation are although I maintain hope that further research
can produce some reliable lessons.'' Those are your words.
Mr. McLaughlin. Those are.
Mr. Cicilline. So this bill would then allow individuals
who have no expertise in a subject-matter area to make a
determination as to whether or not a regulation should be
repealed based on the offset that comes solely from the cost to
the U.S. economy without any consideration of the benefits.
Mr. McLaughlin. I do not think that is a completely correct
characterization. I do not know that it would be consisting of
people without expertise in the area. I actually tend to think
that we should make sure they have expertise in the areas being
reviewed.
Mr. Cicilline. Well, do we not have another mechanism
available to us, both through the APA and through statutory
directives, obligating people who actually have responsibility
and expertise in this area to do assessments and allowing
individuals to petition for the repeal or review? Does there
not already exist an infrastructure to do exactly what you are
advocating for?
Mr. McLaughlin. The problem with that infrastructure, sir,
is that expertise does not necessarily equate to objectivity.
So under current processes, the agencies review their own
regulations, but it is not guaranteed that you will get an
objective analysis. Agencies are stakeholders in this process.
Mr. Cicilline. But if, in fact, an agency refuses to repeal
a regulatory provision that ought to be repealed, that matter
can then be taken up by the Congress of the United States
through legislative action.
Mr. McLaughlin. Something that I think is very rare.
Mr. Cicilline. But there are mechanisms that currently
exist to address the very problem that this legislation intends
to address.
Mr. McLaughlin. And the study that I released today and
that I submitted to the record--if not already, I will make
sure it is--I have addressed these efforts, and it is my
conclusion that none of the methods that we have right now for
retrospective review are making much difference.
Mr. Cicilline. I thank you, Mr. Chairman, and yield back.
Mr. Bachus. Thank you.
There is a vote on the floor. So at this time, we are going
to wrap up.
You know, Senator Joseph McCarthy is dead, but the Ranking
Member may want to actually--you went into the Koch brothers.
You may actually want to talk to Professor Levin. He is
actually in the Anheuser-Busch Hall. You might actually want to
see if there is some tie-in with the beer industry, which I
know does not exist.
Mr. Levin. I concede that I work in Anheuser-Busch Hall,
Mr. Chairman.
Mr. Bachus. We will not to explore your beer preferences or
whether your work is influenced by being in the Anheuser-Busch
Hall.
Mr. Levin. I try to give sober assessments, sir.
[Laughter.]
Mr. Bachus. Thank you.
Mr. Johnson. Mr. Chairman, if I might, I would like to
offer, with unanimous consent, these two letters, one from the
Natural Resources Defense Council and the other from the
Coalition for Sensible Safeguards, both of which oppose the
SCRUB Act. I would like to submit those for the record.
Mr. Bachus. And the Natural Resources Defense Council--we
could have predicted that. Could we not?
Mr. Johnson. Just as we could predict that Karl Rove and
the Koch brothers are in favor of fewer rules.
Mr. Bachus. Anheuser-Busch folks--they got to be in there
somewhere.
Without objection.
[The information referred to follows:]
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__________
Mr. Johnson. Thank you.
Mr. Bachus. This hearing is adjourned.
Professor Levin, I would like to explore with you whether
there is some bipartisan way to--you talked about--to look at
these regulations.
Mr. Levin. I take it you are wrapping up, but I would be
happy to work with the Subcommittee over time in looking at
alternative ways of dealing with retrospective review.
Mr. Bachus. Thank you.
This concludes today's hearing. Thanks to all our witnesses
for attending.
Without objection, all Members will have 5 legislative days
to submit additional written questions for the witnesses or
additional materials for the record.
This hearing is adjourned.
[Whereupon, at 2:31 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Bob Goodlatte, a Representative in
Congress from the State of Virginia, and Chairman, Committee on the
Judiciary
Just over six months ago, President Obama announced that he would
once again pivot to the economy. The bottom line of his speech: after
four-and-a-half years of the Obama Administration, ``We're not there
yet.''
The President was right. We were not there yet. Regrettably, the
same can be said today. Job creation and economic growth continue to
fall short of what is needed to produce a real and durable recovery in
this country. The nominal unemployment rate is down, but that is not
because enough workers have found jobs. It is because so many
unemployed workers have despaired of ever finding new full-time work
that they have left the work force or settled for part-time jobs.
As long as this situation continues, Congress must stay focused on
enacting reforms that will stop the losses, return America to
prosperity and return discouraged workers to the dignity of a good,
full-time job.
Throughout this term of Congress, the Judiciary Committee and the
Subcommittee on Regulatory Reform, Commercial and Antitrust law has
worked hard to produce the regulatory reforms that will help to produce
these results. Today, we turn to one of the biggest remaining pieces of
the puzzle--how to clear the clutter of outdated and unnecessarily
burdensome regulations that too often keep growth and job creation
down.
For years, there has been a bipartisan consensus that this is an
important task that must be performed. But, as with so many things, the
hard part has always been the details. Different approaches have been
tried by different presidential administrations, and some solutions
have been offered by Congress. But, to date, no sufficiently meaningful
results have been produced.
In many ways, this must be because past approaches have never fully
aligned the incentives and tools of all of the relevant actors--
regulatory agencies, regulated entities, the President, the Congress,
and others--to identify and cut the regulations that can and should be
cut. On their own, regulators have little incentive to shine a
spotlight on their errors or on regulations that are no longer needed.
Regulated entities, meanwhile, may fear retaliation by regulators if
they suggest ways to trim the regulators' authorities. And the sheer
volume of the Code of Federal Regulations--which contains well over
150,000 pages of regulations--presents a daunting task for any Congress
or President to address.
The SCRUB Act represents a real step forward in our attempts to
identify a way to cut the forest of federal regulations down to size
without compromising needed regulatory objectives. By establishing an
expert commission with the resources and authority to assess
independently where and how regulations are outdated and unnecessarily
burdensome, it overcomes the disincentives for agencies and even
regulated identities to identify problem regulations.
In addition, by providing a fast-track legislative method to green-
light repeal and amendment of the highest priority regulations, the
SCRUB Act assures that we will take care of the biggest problems
quickly. Further, by instituting regulatory ``cut-go'' measures, the
bill assures that the rest of the work of cutting regulations will
finally happen.
Finally, by instituting efficient means for Congress to provide the
ultimate checks on the regulatory review exercise, it assures that the
Legislative Branch has the ultimate say over the exercise of
legislative authority it delegates to agencies.
I urge my colleagues to support the RAPID Act and cut down the time
it takes America's workers to see a real Jobs Recovery.
Response to Questions for the Record from Patrick McLaughlin, Ph.D.,
Senior Research Fellow, Mercatus Center, George Mason University
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Response to Questions for the Record from Sam Batkins,
Director of Regulatory Policy, American Action Forum
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Response to Questions for the Record from Ronald M. Levin, Professor,
William R. Orthwein Distinguished Professor of Law, Washington
University School of Law
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