we're waiting on some republican members so if anybody in the interim would like to tell a story or sing a song is that a problem here in d c and maryland the power went off in part of downtown memphis on saturday night so i guess it's you know it's just we haven't gotten into the new power grid but we will that's part of the ira where ahead of the game you're democratic hundred eleventh congress working to make the future better nobody has a story they want to tell a regulatory one a regulatory one sounds like a but disenroll thing we don't need to discuss in public well now that the distinguished ranking member of the subcommittee of the full committee and a distinguished member has arrived mr smith of san antonio we will commence this hearing with the banging up the ga without objection the chair be authorized fair recess the hearing i will now recognize myself for a brief statement each year federal regulatory agencies create thousands of new rules that affect our lives likely regulations that impact the environment the economy and the health and safety of our citizens transparency and public participation in the process of issuing those rules and regulations are essential both of the quality of regulations and the legitimacy of regulatory proceedings the office of information and regulatory affairs here and after known as a wire up has played a central role in the federal rule making process for more than twenty five years there are competing views about the nature of federal rule making and a wire as proper role some argue the federal rule making is essentially presidential and nature and that because a wire is part of the executive office the president helps to ensure the rules of covered agencies reflect the president's policies and priorities other observers view iraq as having a shared allegiance between the president and the congress and emphasize that all wire was created by congress and has been given a number of statutory responsibilities through the paperwork reduction act and other laws with both statutory and executive order responsibilities to wire embodies a broader tension between congress and the president for control of administrative agencies of course congress also creates courts but congress has an open responsibility or right to deal with the courts there are things called separation of powers we remember those how look forward to hearing from our witnesses about this delicate balance and the proper role of government within our constitutional framework of a separation of powers that we revere and salute on many occasions and the proper role of all our in the federal process there have been concerns expressed in previous administrations about the lack of transparency of all ira's regulatory reviews i understand this administration has been working hard to promote greater transparency and i'm interested in learning more about what a wire is doing and plans to continue doing in this administration to promote transparency and facilitate public participation in the regulatory process also look forward to hearing about the status of any upcoming changes to the existing executive order or the career creation of new executive orders or memorandum or other guidance to assist the federal regulatory process in this administration on january thirty two thousand and nine president obama issued a memorandum to the heads of executor departments and agencies instructing the director of o m b in consultation with representatives of regulatory agencies to quote produce within one hundred days a set of recommendations for a new executive order on federal regulatory review unquote on february twenty sixth two thousand and nine the director will be published in the us in the federal register requesting comments from the public on how to improve the regulatory review process the director noted that although executive orders are not subject to notice and comment procedures and public comments are not normally invited the ratio and so and he was doing so in this case because there had been unusually high level of public interest and because of the eviden interest groups academicians and other individuals today no new executive order has been issued and i'm interested in learning more about the status of a new order or other guidance that might be forthcoming finally i'm looking forward to a discussion of the implementation of the congressional review act which requires pedal agencies to submit all of their final rules to both houses of congress and the government accountability office before they take effect i'm especially interested in the opinion of our witnesses for the proper role of congress and a lawyer with respect to guidance on an implementation of the constitutional review act i thank the witnesses for appearing today look forward to their testimony i will now recognize my colleague mr franks who knows when to make an entrance the distinguished ranking member of the subcommittee for his opening remarks thank you mr chairman and thank you mr sunstein for being here mr chairman federal rule making in the regulatory process are indeed immensely important topics and i welcome the opportunity to dedicate our attention to them first these topics bring front and center so many of the issues that are most important americans and their concerns about government and it's in this process now during the new deal the seat of federal power began to seep more and more away from americans elected officials and to the unelected unaccountable federal bureaucracy as the new deal era begin to give way to the great society and the regulatory initiatives of the one nine hundred seventy s congress aggressively abetted this power shift and it did so through statute after a statute that governor public acclaim for congress but broadly addressed essentially national concerns but also granted the real decision making power to the federal agencies only when these agencies fill in the content of myriad statutes through the rule making process did the federal government's full decision emerge in full view now ron reagan the conservative movement and millions and millions of americans rightly sensed the disturbing nature of this trend which was gradually corroding the clore of our constitutional democracy through the deregulation strengthened presidential oversight of the rule making process the reagan administration begin to reverse this trend is on account of this effort at the white house office before us today the office of information regulatory affairs actually exists in the first place this office is the threshing floor on which the white house is supposed to separate sensible federal regulations from those that serve no sufficient need produce too little benefit for their costs or otherwise excessively burden the american people and the american economy and this brings me to the second most important reason that we return our attention to the regulatory process in particular to the office of information and regulatory affairs today perhaps never before has this nation so needed this office to zealously perform its mission growing consensus holes that is the obama administration's vast new regulatory activity in uncertainty over how much more and how much more costly regulation is to come that is frozen our economy's ability to create jobs if business men cannot know what future costs will be they cannot rationally invest and create new jobs the uncertainty is such an enemy to economy and i say that mr chairman is as a former businessman myself the osce office of information regulatory affairs is not charged with scaling back the scope of the administration's regulatory but it is charged with a new regulations under this administration pass a rigorous cost benefit analysis that their cost effective are least burdensome and are clear and certain in their terms for there is the job of the office of information regulatory affairs to rein in the agency's regulatory impulses when cold hard analysis shows that it would be better to have no regular regulations in the regulations agencies actually propose what it ministration or cass s to charge the office of information regulatory affairs republicans took some heart in the past administrator sunstein had been a prominent proponent of cost benefit analysis and less intrusive federal regulation republicans reached out to the administrator and offer cooperation in efforts to reform the regulatory process but the out reach met with no reply mr chairman moreover reports have reached us that the office of information regulatory affairs is at best half heartedly performing  its core mission of regulatory review its ceding power to white house ours and in short is doing little to mitigate the cloud of regulation and regulatory uncertainty that hangs over our economy paralyzing the power of free enterprise to create new jobs so desperately needed today mr chairman finally let me just say that i think sometimes it conservatives are castigated for being so focused on competition in the economy that  overlook the greater substance of economy and that that makes it work well and that is this thing called trust if people in the economy those with capital to risk those with dreams and hopes to make a business if they believe that they can trust the regulatory framework of government if they believe that they can have their contracts enforced and if they believe that government will not confiscate everything that they earn then there is some motivation for them to go forward in their endeavors but if they are convinced that they're just shooting in the dark then they're hesitant and i would just suggest that there's nothing more damaging to our business environment right now than uncertainty and a lack of trust in government so that i look forward to questions that forward to talking to the administrator sunstein about these concerns and hearing from our distinguished witnesses today and thank you mr chairman i yield back thank you mr franks i'd like to ask if the other members would like to introduce statements or make statements and we always entertain statements from the distinguished member from san antonio the home of the alamo where so many tennesseans gave their lives thank you m for promoting tourism in the san antonio pre show that mr chairman as we near the midpoint of the obama administration the american economy continues to lose not create private sector jobs there are a number of reasons for this chronic unemployment and the failure of the administration to create jobs beginning with the ineffective stimulus bill that legislation siphoned close to a trillion dollars of capital away from the private sector the administration promised it would keep unemployment below eight percent unemployment instead rose to almost ten percent the private sector has lost two and a half million jobs since the stimulus bill became law the federal government has gained over four hundred thousand jobs but those jobs came at the expense of the private sector after all the private sector has to spend capital on taxes not investment if government jobs are to be funded perhaps it is no coincidence that four out of every five jobs the administration claims to have created or saved are public sector jobs also at the head of the job killing impact the regulatory policies of this administration americans ask daily where are the jobs but the answer from washington too often is here are the regulations and there are plenty more coming the wave of regulations killing private sector jobs rules adopted by the administration so far like the environmental protection agency's carbon dioxide endangered meant finding already tell businesses that their cost will rise and rules coming down the pike tell them that their costs will only continue to rise under this administration these rules include hundreds do under the health care and financial reform legislation and then cleared many many more feared under pending cap and tax legislation and other expansions of the federal government's power rules that increase cost kill jobs americans now hold rules that will increase costs still more in the future kill the creation of new jobs how can businesses make the investments that they will create new jobs if they cannot tell whether the host of new regulations will turn potential profits into certain losses the equation is simple when washington reduces regulatory overreach and regulatory uncertainty jobs will return one part of the white house that unquestionably should listen is the office of information and regulatory affairs this white house office assures that federal agencies do not regulate when they do not need to regulate only in ways that are cost beneficial adopt only the most cost effective regulations do not compound existing problems with unsound regulation and regulate with consistency across the executive branch yet according to reports the office of information and regulatory affairs is missing in action the number of rules that cross the office desk is substantially on the rise yet the amount of time the office takes to consider them is considerably on the decline and the number of rules the office returns to agencies for improvement is minimal and non existant there is no excuse for this as the burden in uncertainty of regulation contributes to a regrettable jobless economy as you chairman alula that i appreciate your statement if not  and i would like to thank you one question sir did you say there was a billion dollars in the stimulus that's getting out of the private sector is what i said close to that's correct i think it was seven eighty seven billion and i think thirty five percent of it i think we were rounding to the nearest trillion on that you're and that's not including the interest thank you japan just under forty percent of it was tax cuts so that went back to the private sector which leaves forty percent to seventy eighty seven would leave about four hundred and something would round it off to the nearest so we're deficit you're working on the deficit the stimulus bill was really you know cost more harm than good you're right mr chairman thank you sir and i now would like to recognize all other statements can be entered for the record we've got a system here that most of you know about that's a lighting system and when i start this and it's green it means you've got five minutes when it gets to yellow it means your last minute and then when it gets to read it means you should be finished in your case mr sunstein will give you a few extra seconds but you should be rounding up  off the we'll have five minutes to ask you questions and subject to the same five minute rule and then we when we finish we can submit other questions to ask you to respond to later you'll never be finished with justice thurgood marshall of the united states supreme court and he did not make it into the play but i'm sure that was an omission and he worked as an attorney advisor in the office of legal counsel of the u s department of job he was a faculty member of university of chicago law school from hundred one to two thousand and eight to period of time in which the chicago white sox were victorious mr sunstein has testified before congressional committees on many subjects and he has been involved as an advisor in constitution making and law reform activities in a number of nations especially some astray of law regulatory policy and behavioral economics mr sunstein is the author of many articles and a number of books you know the name of  reducing paperwork burdens on the american public and taking advantage of current technological possibilities note what just happened to have been high priorities for us in the last months we've taken numerous steps to promote these goals associated with the paper reduction act in april we issued data call to agencies calling for new burden reduction initiatives in the underlined those words burden reduction initiatives we asked agencies to develop new steps to standardize inconsistence processes and requirements to eliminate duplicative reporting requirements to eliminate unnecessary complexity to improve coordination among multiple offices with particular emphasis by the way on small business we also asked agencies initiatives the take advantage of electronic filing increase simplification and simply put reduce burdens regulatory review of significant rules as the opening comments suggest may well be the most visible of our functions and let me spend the rest of my time in these brief remarks on that topic as i see it such a review review of regulations has three key functions first it helps to ensure that regulations are consistent with the law are lodestar and with the principles and priorities of the president of the united states second regulatory review promotes coordination among different parts of the executive branch some statutes require consul sots consultation among multiple agencies during the development of regulations and even in cases where statutes don't require such consultation the positions of one agency are frequently usefully illuminated by the views of other agencies that have relevant experience and expertise third in a function that picks up on some of your opening remarks regulatory review helps to improve the analysis that lies behind rules and thus helps to improve rules this includes careful attention to both costs and benefits oh ira oversees a process of interagency review that promotes compliance with these requirements so that agencies look before they leap since i was confirmed in september a wire has devoted attention to three topics special attention to these three first promoting open government and transparency including attention to the views of affected stakeholders second improving regulatory analysis so the rules have a solid foundation third improving disclosure policies and increasing simplification for the american people we work very closely in the domain of open gov with others in the executive office of the president and with agencies multiple agencies to ensure disclosure that have never been public before they can be found thousands of them on data dot gov we have also worked together with more than two dozen agencies to produce open government plans we believe that the result of this process this process that has no predecessors has been a dramatic increase in openness and transparency both for the american people and for american businesses for over three decades through five administrations starting as noted with president reagan regulatory impact analysis including discussion of costs and benefits has played an important role in the assessment and design of significant rules as the president said on may second sometimes regulation fails and sometimes its benefits do not justify its costs in two thousand and nine in our report to congress we link the interest in regulatory and alice and attention to costs and benefits with our interest in open government we said that openness about costs and benefits helps to reduce the risk of insufficiently justified regulation imposing serious burdens and costs for an adequate reason we believe that regulatory analysis should be developed and designed in a way that fits with the commitment to open government we've taken our own advice seriously recently creating a regulatory dashboard which offers a clear and novel vivid picture of federal rule makings under oh i review with a very quick glance at the america and get a picture of what's under formal review from a large number over two dozen agencies and have a sense of what's coming thus promoting the goal of predictability and participation notice of what's coming and participated in its room and this new dashboard is just a beginning but we hope that it's a step toward greater transparency in a way that unifies our interest in open government with our interest in smart affective regulation i look forward to answering your questions thank you mr sunstein and i will start the questioning and the first question i guess who was your predecessor in the previous administration susan dudley is my immediate predecessor and before that john graham and they both were during the bush administration that's correct what changes have taken place in the office since the change of administrations if you look at our website you'll see we've done several things as noted under the paperwork reduction act we've issued a data call to try to have burden reduction initiatives which don't look like i hope they're consistent with the previous interest in burden minimisation but they don't like like anything that's been seen before we've also taken steps to bring the paperwork reduction act in the twenty first century both by making it clear and predictable by the way both for agencies and for businesses there's never been a clear statement of what the paper reduction act requires and doesn't require that's right up there we've also had new efforts to introduce  clarity with respect to the relationship between the paperwork reduction act and modern technology so guidance to that effect of course the office is operated within the broad framework set by the president of the united states and our approach to regulation is consistent with his and in that sense you'll see some differences but you will see something that i think will be no worthies to those who are concerned about overregulation which is than our first year we have actually a better record in terms of net benefits than the first year of either clinton administration or the bush administration they were in the red with respect and that benefits hundred million dollars in the red we're in the black we're three point one billion dollars positive in two thousand and nine and when you say net benefits we take account as some of the opening remarks emphasize of the costs the social cost of regulation so businesses are facing new costs as a result of our regulations that's something we calculate we publicize we try to find ways of working with agencies to reduce those costs to make sure they're smaller and then the social costs are calculated as costs that there might be social benefits regulation for example can remove burdens if you save people's lives or if you improve people's health that produces benefits there are real challenges with monetization but we try to include everything that we can up with those figures in the first instance they come the cost benefit figures from agencies themselves and then the analysis like the rules  subject to an interagency process of review so the council of economic advisers in the obama administration i believe this is true in this predecessors to plays a significant role in making sure that the cost benefit figures are accurate  the national economic council other agencies participate there's also a great deal of public participation in this calculation so if it turns out that affected stakeholders are just interested citizens think we don't have the numbers right we're listening and they'll get better you mentioned that the obvious changes with the previous administration and yours and i think what you were saying is in substance and how you look at the different policies and whatever but have a procedure have there been any changes  since this administration came into the procedures of oara the major one that is external our dealings with disclosure to the public of what we're all about and that's the so we have now anyone can  see a snapshot of what's before o iraq and people can see everything at a glance we've also issued in the domain of transparency two bits of guidance which you have to be a better i think to be as excited about as i am but i think they are kind of exciting one is requires a regulatory identifier number on regulations throughout the process so that people who are interested in a regulation that will affect them or that matters to them can see it at every stage and not get lost in the bureaucratic process so we've required that regulatory identifier number to be on all records at every stage that's a significant step forward in terms of transparency we've also require everything to be up on regulations dot gov that can feasibly be up there so that if businesses are concerned or if environmentalist are concerned about the information on which the agency is relying they get a chance to see  and comment on that so we are trying to bring really the federal rule making process step by step into the twenty first century with these two as i say in my view significant guidance documents and it hasn't been anything status of that effort and plan to revise or offer new guidance on that particular thank you mr chairman you referred to the fact that we received one hundred eighty three public comments and we got a great number of helpful suggestions about what to do i would put the bulk of the suggestions in the following categories first scientific integrity the central of objectivity with respect to scientific findings should be a given in the regulatory process second transparency and openness there was a widespread plea for more clarity with respect to the rule making process and as just noted we've done a few things third there there was widespread approval not universal but widespread approval of the time honored function in assessing costs and benefits and bringing what's learned to bear on regulatory judgments forth there was not universal but widespread approval of coordination of a process of interagency review as noted we get lots of comments by other agencies on what an agency proposes to do we've taken every one of those four themes really seriously scientific integrity has been something to which we've been greatly committed in the in the last months as bedrock we have been taking transparency  much further than ever before with the open government directive which actually was issued by the office of management and budget and played a role in implementing that directive we have taken cost benefit analysis very seriously as a number of commenters emphasized that we ought to with respect to the executive order itself we're operating under the one that president clinton president bush operated under and it's up to the president the united states to decide whether to amend it now thank you my time is expired and your questions have been so complete and your statement so complete that i suspect that we know questions from the other side therefore i recognize mr frank well thank you mr chairman and seen i know that you probably were not in the middle of the the regulatory bills that just passed the congress and so i'll try to avoid death but i do want to say that i think that like a train coming and business sees it and they're trying to get the heck off the tracks fast and i think that bodes a pretty grave situation for two thousand and eleven for a lot of business interests it is i know a basic crucible of contention between the two parties as to the impact of regulation and the cost it having a reciprocal impact on the actual hiring of people but it is a mathematical reality obama administration's agency rules on jobs and job creation when i put congressman is that i spend every day trying to make regular make sure that regulations are first lawful second consistent with the commitments of the president and third justified by reference to cost and benefits so we do everything we can to try to make sure that the benefits are strong enough to justify the costs and to try to reduce the costs if we can consistently with the requirements to which i referred well i guess the hard and i ask you to grant me diplomatic immunity here the hard and risk corresponding question jobs and job creation well the way i'd put it is in the process sometimes i forget to try to stay out of the metaphysical trap to mention here i'm just asking you how many have you have you rejected personally well personal rejections are rare all right let me let me shift to how many at bomb administration rules has you or your staff recommended to be rejected because they didn't rest on adequate analysis of their impacts on jobs and job creation  forgive me and tell me this is a satisfactory answer we worked repeatedly with agencies to make sure that regulations were drawn up so that they are compatible with the concerns to which you but have you rejected any of them even ron well the word rejected doesn't really fit with how well i read as if you're subject to the way you look at regulation i mean the regulations even for sure it is and so i mean it has a big impact alternately i take the point a regulation can take multiple different forms and the point of the oh i reprise standardly is to ensure that it takes the right form all right and i see if i can rephrase it how many bomb administration rules have you or your staff person rejected because they impact adversely impact jobs and job creation other words make it really clear here i mean is there one that you found that you've rejected because it had an adverse impact on jobs and job creation but i can say is that i wouldn't want to get into a deliberative process like well that's a problem we're not very deliberative in government i mean i don't mean i don't mean to be hard on you here but it's ok because i wouldn't want to be in your position i'd probably be pretty inadequate in that situation but have you rejected we're going to run administration rule because it had an adverse effect on jobs and job creation that's if that's a yes or no we've worked with agencies to make sure that rules are designed in such a way as i wouldn't want to attribute to iraq the change because often it comes from the agency itself which will decide in the process that we can do it in a less burdensome way or the council of economic advisers or some other sibling agency so if you're asking how many rules are improved with a view toward economic concerns as a result of the deliberative process it's not zero well i won't put you on the questioning the test and you know that in europe they had some recent regulatory reform where they tried to subject the banks to sort of a stress test to see if they could survive and ironically the put this new protocol in place and there were all of them were fine and so they began to question the test because we know that that's not the case and i guess i just again i put it in my words in and you could you two to edit them if they're if if i'm saying something  not true what i'm hearing is that there's not one of the obama administration rules or regulatory rules have been put in place that your office thought that enough negative impact on jobs and job creation that it was worth rejecting and that's putting a lot of faith in administration that has forgive me shown arrogance to competency ratio that is catastrophic lee out of balance and  say you know someone that's been in business i've just got to tell you when when regulations and additional costs come to us it has an impact on who we can hire and an economy sometimes we get to thinking it's well  numbers but ultimately it's about people producing goods and services and that's translated jobs and i just feel like we're headed in a terrible direction here with jobs and i talking to the regulatory agency and there's not one regulation that you can say that you've rejected because of negative impact on jobs and i find that sort of astonishing is it helpful to say that number of regulations have been changed in a way that is attentive to economic concerns and burdens as a result of a process overseas well i think i'm going to have to accept that as the as the best that can be offered and i again with great respect for you do respect for you i just got to believe that there would have been one from this administration especially that would have been testimony talk about nine hundred significant rules that your agency has reviewed since taking into bottom instruction took office and let me just be clear on how the process at least the way i understand the process works congress passes a law president signs the bill the agency who's got jurisdiction over the bill would take the health care bill is h h s has jurisdiction they put together a set of rules those rules then come to you what is the authority or power that you have can you say as the ranking member was was alluding to in his question can you say no can you just flat out reject them or do you not even have that power there's authority to issue return letters subject ultimately to the  yes you can flat out say this rule does not comply with the intent of congress the will of the president when he signed the law and we we think that rule is is is not consistent at all so you can do that that's correct of the nine hundred rules that you have reviewed since a new way of taking two thousand one taking office how many times have you done just what you describe you're allowed to do well i haven't issued return letters but if so then the answer is just to get be clear with where the ranking member was the answer is clearly zero nine hundred rules zero times no time have you done a letter saying that rule does not comply with the intent of congress in the world the president says you are times you've done that well there are two different questions one question is how many times have you shoot a public return letter but just to be clear that's that's what you said when i said do you have the power to reject you said yes we can do this this type of letter and then the follow up question was have you done that type a letter and your answer was no so the obvious conclusion is zero times significantly as a result of exactly the concerns to which you're pointing and i wouldn't want to give a wire or the creditors of law so what that how does it work you say with this this does not comply with what congress intended this is not comply with the will the president so let's instead of me doing this my worst is to work on is there an official thing you do or do you just kind of is it all bureaucratic i thought bureaucratic talking back and forth how does it work i think it's very much like the way this is i defer to you about how your office works but my guess is it's very similar to how your office works where there will be ideas that are floated to you and that you might say no forget about it but if you trust your staff you're more likely to say well maybe you can do it this way maybe this way is better and then something will emerge from that process of discussion which will produce something you're comfortable with does the public know you talked about this identifier number you talked about transparency and that's all i'm a good member glad that's that's part of the process does the public know which route your take or do they they know like look we don't like this we're asking them to change short of doing the letter of rejection that you're capable of doing there are a couple great things i can tell you about that are responsive to that one is what really matters within a rule with the rule is is not how it's proposed but how it comes out and you will see a number of rules that have already been finalized in the obama administration that come out as a result of concerns about economic considerations very differently from how they were proposed so that's completely publicly available so they're ones just with last week's where the proposal live very different from the final and that's a wonderful opportunity for members of congress affected small business with respect to o ira's own process the public can find it we make available the difference between how the rule comes in and how it came out so you can see that ok that's the least somewhat positive thing let me  a little bit one of the things i've heard from business owners across the fourth district of ohio and frankly business owners in general the business roundtable a few weeks ago made some statements about some of the things they see coming from this administration this congress is the uncertainty that business owners see with what may happen next from congress are in fact they're going to be the tax into our the bush tax cuts the zero one zero three tax cuts going to expire it is in fact this health care bill how it's implemented what's going to the uncertainty that's out there many businesses this is not jim jordan conservative government making this is people talking to me saying look i'm nervous about what may happen next how all this is going to get implemented the rules that will come down that uncertainty is having i believe a direct impact on people's willingness to take risk in our economy willingness to hire individuals in our economy willingness to call people back to work they've had to let go during this tough economic time so talk to me about if you think you think that's a valid valid concern because i'm certainly here and it and your thoughts on how that impacts and impacts your agency you know well i do i think business uncertainty is definitely not desirable and in fact executive order one two eight six six refers explicitly the one under which we operate to the need to minimise uncertainty i'll tell you some of the things we're doing to try to avoid that we're relying very heavily on the notice and comment process to make sure that members of the public emphatically including the business community get a chance to see what's being proposed including the economic analysis and get a chance to weigh in and change it so one thing that's been a very high priority since i've been confirmed is to  e up as we say the various options the analysis the possibilities and to have discussed public discussion so nobody's going to be surprised another thing we're really trying to do is to get in very plain executive summaries in tables a statement of exactly what is expected to be expected of people under proposed the proposal and exactly what we think the burdens are going to be so they can see that and we're also trying to get alternatives proposed so that if and agencies have been very enthusiastic about this so if one is going to create uncertainty impose big burdens sometimes we'll go the other way and we've done that there's a chance i could general knowledge for one for the question  strategy of not outright rejecting rules nine hundred times has come to you and you've not once said we reject a bill you've taken a different approach to to arrive at what you believe would be the best best process and the best  outcome but is there something to be said for maybe sending a message to the agent sees no we flat out reject what you have sent us there's a new sheriff in town and we think that all the uncertainty that you just described it's out there that i've heard from constituent do you think there's ever maybe the other approach might be better where you say look this is saying on the fly and we're telling you outright no right from the get go now go back and do it right and you send that message to the bureaucracy to to the entire federal bureaucracy well it's a good question but the pattern that we've set out which is working with the agencies to try to get it right emphatically with reference to cost and burden that's a central concern of ours that was the pattern basically in the bush administration in the clinton administration and the reagan administration as well that is the way of lyra normally operates is through you know an informal improvement rather than public no questioning and we appreciate your testimony and if their members have questions they will submit it to you in writing and we ask you some comply with those writing in the soonest possible time they have five minutes to do so thank you will now handle the second  i'm now pleased to introduce a second witness panel to hear their testimony for today's hearing our first witnesses miss sally cats and cats and serves as the protested group's executive managing director a difficult task managing mr  podesta testified before congress sixty six times on a broad range of federal government activity to serve on panels for the national academy of sciences her career the federal government was eight years in the clinton administration as deputy director for management at the office of management and budget as deputy assistant to the president for economic policy and deputy director of the national economic council and as administrator of iraq was the first female partner wilmer kupper in pickering and is a well respected professor having taught at george washington michigan george mason pennsylvania and georgetown law schools in addition to smith college johns hopkins and the michigan and washington program welcome back mr caps and will you please proceed with your testimony thank you very much mr chairman ranking member jordan i appreciate very much the invitation to testify today this committee has been terrific in promoting the integrity of the federal regulatory process and i thank you for having this delegated the rulemaking story and to evaluate how those agencies are doing i think it's necessary to have a baseline so where were they in january two thousand and nine well in addition to having been a  administrator for five years during the clinton administration i was privileged to serve in the obama biden transition with responsibilities to executive office president and all regulatory issues what i saw during the transition was not a pretty picture during the preceding eight years the regulatory agencies were required to do more research more analysis more consultation more review with fewer resources fewer le support in many regulatory agencies the staff was depleted in virtually all it was demoralized it was overall a dismal state of affairs now the obama administration took office with a renew dedication to the regulatory agencies missions and a deep respect for agency folks who do the work but with very few new resources because of the economic situation there was not money to make up for the shortfall and with very few new leaders the nomination confirmation process is interminable even today their regulatory agencies do not have confirmed appointees in all their leadership positions now that said i think the regulatory agencies have done quite well and in my excuse me in my written testimony i discussed how they dealt with them in the regs and at the same time began to move forward what about o r a which has been charged by both republican and democratic administrations over the last three decades to review the regulatory activities in my written testimony i provide a lot of information about the executive orders that govern and i look forward to any questions you may have  that i want to use this time to make basically four points about the present and the future first centralize review bio i read now extends to executive branch agencies i believe it should be extended to the independent regulatory commissions as well those multi headed agencies like the f c c f c c f t c whose members do not serve at the pleasure of the president can only be removed for cause they are not subject to review on the executive orders either the reagan or the clinton executive order and that was not because of a conclusion but there i'm now triple negative the the draftsman were told by the legal advisers that there was legal authority to extend the review the i r c s but the decision not to was made for political reasons i would receive that with the benefit of hindsight because if you think about the problems that plague this nation they do not fit neatly into one agency consider the recent financial meltdown which implicated both executive branch agencies like the treasury and independent agencies like the f t c and even shall i say the said what have we done we combine two executive branch agencies the o c c listed and at the same time we've created a new agency as a bureau in an independent regulatory commission the fed because they go about rulemaking in the same way there should not be a problem with review but because of the way they are structured situated with respect to the president the review the type of review might be different congress thought about this under the paperwork reduction act and had a really clean scheme elegant quite elegant scheme and in my written testimony i go through that the second point is the orientation of oara all the discussion in the preceding panel had to do with review of individual regs it's a transaction oriented process i think that is important indeed essential and would disagree with some of my colleagues who would like to see that diminished but it shouldn't be soley transaction oriented i think there should be an opportunity for review of areas to create a construct if you will a framework for the review of of the regulator it's in a particular area ensuring a comprehensive and coherent regulatory solution rather than a one off and what do we think about this one there is a provision in the executive order section fo which goes to planning that is the basis for this and i would encourage that to be pursued the third point i want to make has to do with the meetings that a lawyer has with respect to outsiders and there is a provision in the executive order that sets up a process which was the practice during the clinton administration and in the bush administration they started to make changes which have continued and accelerated and i think mr best might be able to expand on that finally i just want to mention a rule making i was very honored to chair a blue ribbon commission under the auspices of the american bar association there is we talk a lot about data decision data driven decision making the value of public participation the potential for harnessing technology to produce a more efficient and effective government i mean the single most obvious manifestation of the can grow instead of these in the federal regulatory process is the rule making i would urge this committee to consider having a hearing specifically on that subject because it seems to me it is an opportunity not only to improve the regulatory process but also congressional oversight and the implementation of the congressional review act i thank you very much for your kind attention to my be a nonprofit research and advocacy or has and that promotes greater government accountability and transparency and increased citizen participation in public policy decisions prior to founding a webby watch not to be confused with timex dr vass was president of human services information center where he wrote two books and they were on human service issues he also serves as director of liaison for the international year of disabled persons worked as a consultant on several projects in special education members much of the conversation today has focused on one type of stakeholder which is the business community i'd like to talk about it from the perspective of people who benefit from the regulations and give a little bit of a backdrop we've gone through nearly  almost a decade eight years of really a weakening of our regulatory apparatus within government people who came in to oversee the regulatory agencies that often come from agencies from companies and now regulating those same industries are companies creating sort of a foxes in the hen house kind of model those regulations that did make it out were weaker and benefited mostly the regulated industries those regulations that were in place the enforcement was greatly reduced and made minimal that was almost a wink and a nod when the obama administration took over they had to largely address this kind of weakening of the regulatory agencies they have put in place excellent people bring qualified very skilled they begin building the regulatory apparatus and they have begun thinking about how to strengthen force and i raise this because it is in this context of a weakening it regulatory enviro i meant that the country and the people in this country have faced situations where workers in the public have died where people have been displaced in terms of their economic and livelihood general social livelihood and i'm referring to a whole series of major crises have been occurring whether it's the collapse of mines with the massey energy situation in west virginia whether it is the problem of toyota recalls whether it is the issue of the disaster of the b p deepwater horizon or you could look around to daily newspapers and see both food and consumer products daily having many problems it is in this context that we now see if you will a further agenda from the business community to deregulate it is and i should say in the context of jobs as we've been talking about today it is rather surprising that the business roundtable put out if i will a hit list of more than two hundred rules in the last two weeks that should be deregulated covering virtually every aspect of our lives whether it's environment whether it's worker protections whether it be financial reform all of these were on the list the u s chamber of commerce followed that and made the threat of moving jobs offshore if the administration did not deregulate on top of that minority leader john boehner came out and endorsed a one year moratorium on most new regulations all of this is in the context where people's lives are at stake what we need is just the reverse we need a strong congress and we need a strong administration to put in place a rule making apparatus that will protect the public on top of it this discussion about harm to jobs and job ration i'd like to see some data on that we also have data that show otherwise there is not a rule that has been in place in the past years where the business community didn't scream bloody murder that it would hurt and in the end there has been adapted technologies and adaptive ways to live with those rules and make the economy go i'm just thinking of the clinton years for example where the business community complained bitterly that the clinton administration was a regulatory presidency and yet the economy just rolled along swimmingly ok so in that context moving back to a wire a i have four suggestions one is that what we need to do is i would disagree with katz and around the centralized review notwithstanding that i do agree one hundred percent with our comment about the transactional reviews we need the zero wire administrator to focus on these big picture problems we need to connect the dots we need to get this regulatory machine working in a way that is respectful of business and respectful of the beneficiaries of the regulations by focusing on transactional reviews we will never get to that point of seriously looking at the regulatory problems in this country the second thing i would recommend is to the extent that these transactional reviews are occurring the administrator needs to be involved in meetings with public stakeholders the history on this was to ensure that the civil service staff that work at o ira are not the ones meeting with the public because of all the politics that are involved in that over the years particularly starting in the bush administration that is shifted so that the administrator is nap and meeting with the staff  need we need to shift that direction which happened today as many in the public interest community no longer even request meetings the third point i would make him in a straighter sunstein talked a great deal about transparency and he should be congratulated as well as the  ministration should be congratulated for all they have done i would incur urge more an example would be to the extent that the kind of dialogue that was discussed between the wire and the agencies occur even before formal review happens their agency should be disclosing that kind of communication the dashboard that he was describing that administrator sunstein was describing should have benchmarks so the public can know how to assess whether or not the administration is moving in the right direction my final point is congratulations to you congress and to you mr chairman for hosting this hearing today i think much more needs to be done the issues i've described which are catastrophic the public demands and  protections and needs congress to step in to think through the right way to make that happen i'll be it with the balance of business interests and the public interest so i thank you for hearing me out today welcome dr bass appreciate your testimony our next witness will be dr richard williams who was somewhat alun is now in good health and we thankful for that at the time of our last hearing which had to be put off dr williams the managing director of the regulatory studies program and government accountability project at the berkeley center prior to joining the market a center research director for social sciences the center for food safety and applied nutrition of the food and drug administration for twenty seven years service for the harvard center for risk analysis and taught economics at yale dr williams is an expert on benefit cost analysis risk analysis particular associate food safety nutrition has published and risk analysis in the journal of policy analysis and management has addressed numerous international governments includ united kingdom south korea yugoslavia and australia thank you dr williams thank you and thank you for the invitation to testify before the committee today i am retired from the federal government first in the us with the us army in vietnam and then for twenty seven years in the food and drug administration working in regulatory policy in particular dealing with economics and risk analysis i think the goal of everybody here today is to discuss how we can get the best possible regulations my concern however is that we may be regulating in haste and without sufficient oversight by a wire or the outcome will be to repent at leisure according to the evidence the administration has put forward there's been both a reduction in the number of economic analyses produced by the agencies and diminished oversight by our bio ira for example compared to two thousand and seven in which every single economically significant regulation had a regulatory impact analysis in two thousand and nine one in five had no analysis meanwhile a wire has reduced the amount of time they were spending on or viewing individual regulations down about thirty five percent in two thousand and nine from the previous two years and finally as has been mentioned after having reviewed nine hundred regulations since taking office they have decided that not one rule needs to be returned to the agencies the problem is that if agencies are failing to do the analyses or doing a bad job of them we will have rules that fail to achieve their objectives this three reasons why we need strong oversight from wairoa first we want to agencies to focus and make rules based on their area of expertise and in fact they do my focus at f d a since one thousand nine hundred was to try and understand the risk  economics issues associated with food safety in nutrition but we didn't for example consider how our rules would affect international competitiveness job loss or unintended consequences outside of our agencies review and it could be argued that no one did over time however as a wire began to play a larger role in oversight these concerns began to be addressed they would push back on us to assure that our decision makers knew the opportunity cost of for example making food a little bit safer relative to other social investments and also to make sure that we had a solution that actually worked in fact ira pushed just a promulgated one of the most cost beneficial rules we'd ever done requiring that food manufacturers label trans fatty acids a second reason we need a wire to provide oversight is that agencies can become captive to special interests either the industries they regulate or activists with narrow agendas by ensuring that agencies have carefully examined the benefits and costs of their actions can make sure that when these forces at work are regulations or wise investments that benefit the entire american public not just the special interests finally my research and my own experience shows that too often agency decision makers either ignore the findings of regulatory impact analyses or worse direct the outcomes to support a premature decision returning a rule to an agency has an amazing ability to correct this type of behavior our research is shown that good regulatory analysis can improve regulations but it is also shown that these analyses have an even quality and do not rise to a standard of excellence specified by president clinton's economic executive order in fact one of the biggest problems we have uncovered so far is that is that even for economically significant regulations agencies are often unable to articulate a systemic problem that they're trying to solve too often the agencies appear to be content just reciting anecdotes or offer legal authority the problem is if you don't know what problem you're trying to solve it doesn't give you much of much bill if you're confident that you'll actually solve anything mr sun se vascular ship supports better analysis producing better rules as a president's call for a dispassionate and analytical second opinion on agency actions we need those second opinions now more than ever at a time when american businesses are uncertain about whether or not to invest their capital in the united states because they fear a vast new slate of regulations and part of that uncertainty maybe that a wire is not ensuring that new regulations are subject to critical economic analysis a vigorous oara can reduce that uncertainty and ensure that we are producing effective rules that advance our national interests however they must be allowed to take the time necessary to do the job thoroughly and return rules that did not measure up thank you dr williams for shit your previously testified for the subcommittee he's held a variety of positions the government accountability office over twenty three year period receive his ph d from the university of north texas formerly known as north texas state the flying eagles and the school that has a master review act which was enacted in one thousand nine hundred six to give congress more control over agency rulemaking the first sentence of the c r a requires agencies to submit all of their final rules to g a o and both houses of congress before they can take effect at its own initiative g a o has been checking the federal register to determine whether agencies have in fact submitted all of their rules as it turns out they have been between one thousand nine hundred nine and two thousand and eight g a o senate lease five letters to a thousand substantive rules that had not been submitted g a o said oh ira didn't respond to any of these letters and g a o our officials said that they were not aware of any efforts by our to contact federal agencies regarding these missing rules also did not send any of these letters to congress or congressional committees and did not notify the public about these and submitted rules and may two thousand and nine g a o sent another letter to ira listing a hundred one substantive rules published during fiscal year two thousand eight that had not been submitted the department of agriculture had the largest number of rules on the lists the subjects cover covered by the rules varied widely and included a final list of chemicals of interest as part of the department of homeland security's anti terrorism standards and several rules designating endangered species habitat when contacted by c r s so our initial he said it had no record of having received a rose may two thousand and nine letter later however a lawyer sent an e mail to the federal agencies telling them to contact g a o to find out which rules were missing certainly their after the agency's began submitting their missing rolls however as of as of this month forty nine of the hundred one missing rules from fiscal year two thousand and eight were still had not been submitted to and ten g a o sent another letter to iraq listing thirty one rules published during the school year two thousand and nine that it had not received today also sent letters to each of the agencies with missing rules again the department of agriculture had the most missing girls as of last week however all but three of the thirty one missing rules had in fact been submitted to g a o although the c r a says rules can't take effect until they're submitted to g a o and congress it appears that federal agencies are implementing most if not all of these rules anyway section eight zero five of the c r a says that no action or omission under the act can be the subject of judicial review and the issue of whether a court can prevent enforcement of an submitted rules has not been resolved conclusively the c r a says that a member of congress can introduce a resolution of disapproval as soon as a rule is submitted to congress therefore by not submitting their rules to congress the agencies have arguably prevented congress from using the expedited procedures in the c r a to disapprove their rules congress may conclude that agency's non submission of their cover rules does not wire congressional action after all the number of n submitted rules went down from one hundred one in fiscal year two thousand and eight to nine also the agencies seem to be more responsive in submitting their rules after notification by g a o however congress wants to take action several options are available last june the house of representatives r twenty two forty seven the congressional review act improvement act which you sponsored mr chairman the legislation would eliminate the requirement that rules be sent to congress and instead would require submission only to g a o this change would make it easier for agencies to submit their rules electronically so much they cannot currently do to the house and senate and therefore could improve the rate of rule submission h r twenty two forty seven was referred to the senate committee on governmental homeland security and governmental affairs in june two thousand and nine but it has not been act could take other actions for example it could require g a o to continue identifying missing rules and could require a wired to take certain actions to improve agencies compliance with the c r a also g a o could be required to provide congress with a copy  iraq compliance letters publish them in the federal register a publish a list of missing rules and jails website this is chairman that concludes my statement to be happy to answer any question thank you for your testimony and your service  senate's problem  i don't know i have not been in contact with folks in the senate does anybody know what the senate's problem is either no universal way or in a specific way relating to this bill or this katz and you suggested something about extending these rules to the independent agencies the f c c and cetera all the stuff and generally has been done through executive orders has there ever been legislation proposed to do such there's been legislation proposed both to codified the executive order and to other aspects of it it could be done under the existing executive order it could be done not directly the way oh are currently reviews executive branch agencies where they say and it's done mostly through negotiations but when congress and acted the paperwork reduction act which applies to government forms for both executive branch agencies and the independent regulatory commissions they said that while o r a could review executive branch regulation paperwork directly the decision with respect to paperwork was to be sent to the agency or the commission or the board which could void any disapproval by a full meeting presumably in public under the sunshine act and the reasons there for a similar type of response could be applied here where bio are would send to the c it's written comments they would be presented in an open meeting of the f c c and the f c c would have to vote as the commission whether to accept or reject this would enhance not only the transparency process but should also louis lead to better decision making because if you look at the rules proposed by independent regulatory commissions they do not do as a general rule the type of rigorous analysis that has come to be expected for an accepted for executive branch agencies so bringing them into the fold should inhance their place right now there there is no action taking place that i know of when when president obama in january thirtieth two thousand and nine called for comments on a potential new executive order this was subject was discussed by some of the commentators that since we haven't seen an executive order it could be done by a no and b memorandum it could also be done as you suggest through legislation whereby oara would be authorized to have this type of oversight just from your general overall knowledge of politics in the world do you think that would be something that would be a bipartisan effort would there be any reason anybody to object to that you mentioned at the outset separation of powers and there are many in congress on both the sides of the aisle who feel strongly that the independent regulatory commission are independent of the president and more the   i don't think i could could predict where his votes would lie but it is an issue i'm not saying it's unsurmountable and in fact you could get bipartisan support i noticed that some of your colleagues on this panel listened with interest as i described the situation but i don't know that it's a dare i use the express slam dunk yes understand that that is obviously this is because mr has not and i think mr jordan's question rejected any of the rules could it not be possible that the agencies are just doing a much better job in proposing the rules and th nothing really needs to be summarily rejected in my opinion that's unlikely but it's possible anything's possible and dr bass would you say it's possible or unlikely i think is quite possible dr copeland from possible to unlikely because you repeat the question i was looking at the numbers that the fact that they have been summarily dismissed and rejected these letters to say hey not going to do it could the agencies be doing a better job in promulgating there are rules and regulations such that they are not inconsistent with the administration's policy objectives and could they are creating jobs and they are doing you know america's work certainly possible with the quality of the rules coming in the door better than the number of rejections would certainly go down thank you and mr katz and to close first of all during the last twenty years there has been no lyra and so the agencies have gotten better at doing their job and the second data point is that even during the bush administration it will be the george w bush administration the administrators stopped usually the rejections as you call them or the returns are to get the agency's attention and say you're going to have to live up to our standards and talk to us about what you're doing and once that message is received and it can be received with a stick or care right then the agencies normally do come to the table so i would say it is definitely possible that the agencies are doing a much better job you mean a rejection actually got their attention and i think that's a rather poor funny that we should all dwell on  say it's possible that no regulations at this point need to be changed because of this epiphany that the agencies have come to i think is my broad minded view i think it's really reaching but i  guess my question to you sure the white house chief of staff has said that the president is beginning his own personal review of whether there are things that the agency rules could do the more you know these agency rules could be done in a more sensible that to use his quote in a more sensible way and you heard professor son seems defense of the white house earlier today what do you think president obama needs to do or to look at to determine whether the regulations under his administration could be done in a more sensible way other than resign of their i think the first thing that they can do is to make sure that for all the significant regulations that they actually have a regulatory impact analysis as i mentioned in my testimony even for economically significant regulation that's those that cost the economy over one hundred million dollars and either costs or benefits produced one in five didn't have any sort of analysis at all i think you also find if you look at the independent agencies the federal reserve produced eighty six economically significant rules within the last year or two they produced zero economic analysis so the first thing is make sure the analyses are there the second thing they can do is they've they've got to take the time to review those analyses review those regulations they're large some of them are many thousands of pages there was one regulation on these website that cost over a billion dollars it was reviewed in one day by a wire or they simply have to take more time than that to review those regulations and finally as i mentioned in my testimony many of the decision makers and regulatory agencies and i know this from my own personal experience basically discount regulatory impact analyses and findings they make their decision and then they turn around and ask their economists can you please produce an analysis that supports my decision well when you work for those decision makers it's pretty difficult to say no to that request and what that ends up doing is it ends up producing a weak analysis that informs no one the way you get around that is you have to return rules that tends to wake decision makers up that says we need to have good analysis and you need to pay some attention to it and let me just make sure i understood what you said is forcing the returning the rules  sunstein suggested that he hadn't done any of that but early in your testimony you said as far as economic analysis is the at the end analysis that even that started out strong and then hasn't been done since can you give me  the chronology of that again yes well we first started doing really significant economic analysis in one thousand nine hundred one with the president reagan's executive order and we were doing strong regulatory impact analyses as a wire moved more and more into overseeing regulatory agencies became a stronger oversight agency there was more and more of a demand for better analysis and when that didn't happen rules were returned and with every new and you know every four years we got new political decision makers we sort of needed that sort of we sort of needed those returns in order for them to wake up and go this analysis is important this is what the president this is how the president is directing us to make decisions that tended to change their behavior they tended to  pay more attention those analyses and we got better analyses with inform not just them but the congress and the american public i am concerned where we have gone now nearly two years without a single return of rules my suspicion sir would be  that in fact the regulatory impact analyses are worse not better well it sounds like to you may have some potential resonance on the on the rest of the panel here not not all of them so we try not to get anybody jump out of their chair here but that there are some but business has some realities to deal with and it seems to be one of the you know there's nothing so tragic in this life is a beautiful little theory that's totally destroyed by an unruly set of facts but it happens so often and in this case what what do you think could be done to to keep from paralyzing the job market i think several things first of all ensure that regulatory agencies actually or address addressing a systemic problem make sure that they have done a fire that make sure that they have a solution i spoke with many businesses in the food industry they said they're happy to comply with regulations they want to make sure though that they work that they're addressing a real problem and a novel idea and that they work i think the other thing as this captain mentioned is that you need to make sure in some way or another that the independent agencies are performing those analyses that well as well as chairman my time's expired thing with their testimony today and without objection to members of five