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S. Hrg. 114–418 

TOWARD A 21ST CENTURY REGULATORY SYSTEM 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 25, 2015 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

SATYA THALLAM, Chief Economist 

GABRIELLE A. BATKIN. Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

KATHERINE C. SYBENGA, Minority Senior Counsel 

TROY H. CRIBB, Minority Chief Counsel for Governmental Affairs 

LAWRENCE B. NOVEY, Minority Chief Counsel for Governmental Affairs 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator Carper ................................................................................................. 2 

Senator Lankford .............................................................................................. 18 

Senator Ernst .................................................................................................... 21 

Senator Portman .............................................................................................. 23 

Senator Heitkamp ............................................................................................ 27 

Senator Ayotte .................................................................................................. 30 

Prepared statements: 

Senator Johnson ............................................................................................... 43 

Senator Carper ................................................................................................. 44 

WITNESSES 

WEDNESDAY, FEBRUARY 25, 2015 

Douglas Holtz-Eakin, Ph.D., President, American Action Forum ....................... 5 

Jerry Ellig, Ph.D., Senior Research Fellow, Mercatus Center, George Washington University ................................................................................................. 7 

Michael Mandel, Ph.D., Chief Economic Strategist, Progressive Policy Institute ........................................................................................................................ 9 

Hon. Sally Katzen, Professor, New York University School of Law, Former 

Administrator of the Office of Information and Regulatory Affairs at the 

Office of Management and Budget ..................................................................... 11 

ALPHABETICAL LIST OF WITNESSES

Ellig, Jerry, Ph.D.: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 56 

Holtz-Eakin, Douglas, Ph.D.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 47 

Katzen, Sally: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 72 

Mandel, Michael: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 62 

APPENDIX 

Chart submitted by Senator Johnson .................................................................... 46 

Responses to post-hearing questions for the Record: 

Mr. Holtz-Eakin ................................................................................................ 86 

Dr. Ellig ............................................................................................................. 89 

Dr. Mandel ........................................................................................................ 95 

Ms. Katzen ........................................................................................................ 99 

(1) 

1The chart referenced by Senator Johnson appears in the Appendix on page 46. 

TOWARD A 21ST CENTURY REGULATORY 

SYSTEM 

WEDNESDAY, FEBRUARY 25, 2015 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Portman, Lankford, Ayotte, Ernst, 

Sasse, Carper, Heitkamp, Booker, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. This hearing will come to order. 

I want to welcome all the witnesses. Thank you for your thoughtful testimony, and I am looking forward to this hearing. 

Coming from a business background, I have done a lot of strategic planning, and I have thought about this in terms of the Federal Government. In a business setting, I know a lot of people here 

in Washington have not heard of a strengths, weaknesses, opportunities, and threats (SWOT) analysis. And, if you were to do a 

SWOT analysis on the American economy, it is actually pretty easy 

to do. 

From my standpoint, the greatest strengths we have in this Nation is we are the world’s largest economy. If you are a manufacturer, and I come from a manufacturing background, you want to 

be close to your customers. So, it is a huge economic advantage we 

have in this country. And, then, we have relatively low energy 

prices. Also from a manufacturing background, if you are going to 

manufacture things, you need power. Cheaper power is better than 

expensive power. We should try and do everything we can to lower 

the cost of energy. And, so, those are our strengths. 

Our weaknesses, well, a huge weakness is the subject of this 

hearing here today, our regulatory burden. It is huge, and, of 

course, we have a very uncompetitive tax system. I do want to put 

up a chart1 that, I think, pretty well describes what business organizations, what any organization is up against in terms of trying 

to expand, trying to create good paying jobs. It is the regulatory 

burden. 

Now, I realize the numbers from the National Association of 

Manufacturers, of the Competitive Enterprise Institute in terms of 
2 

their estimate, their cost estimate of how much it costs per year 

to comply with the Federal regulations, I realize those are estimates. I realize people dispute that. But, I think it is still good to 

put that estimate up against the size of our economy, just to put 

it in perspective. 

So, whether you agree or disagree, the regulatory burden is huge. 

These estimates are somewhere between $1.75 and over $2 trillion 

per year. Now, compare that to the size of the American economy. 

Last year, it was $16.8 trillion. So the regulatory burden, potentially—again, this is a projection—potentially could be more than 

12 percent the size of our economy. That is a massive burden on 

job creators and we need to recognize that is a huge weakness. 

That is something that this Committee can really concentrate on, 

because there have literally got to be thousands of regulations that 

are hampering the ability of businesses in red States and blue 

States, and certainly what I have asked the Members of this Committee is, let us identify those. Let us work together. We do not 

have to ask anybody to violate their principles. We can find those 

areas of agreement for regulatory reform, whether it is streamlining, modernizing, just outright eliminating those regulations, it 

would be very helpful to our American economy. 

The last point I want to make in terms of the actual size is we 

have listed the GDPs, the size of the economies of the 10 largest 

economies in the world. You will notice our regulatory burden is as 

large as all but 10 economies in the world. I mean, that is what 

we are burdening job creators with and I think that is a pretty significant burden. 

I do want to point out that Senator Lankford is here. I appreciate 

that. He is going to be chairing a Subcommittee of this Committee 

that is really going to be focusing on regulatory reform. So, this is 

sort of the Committee-level kick-off meeting, let us put it that way, 

and Senator Lankford is really going to be lasering in on this and, 

again, trying to find those areas of agreement, so I appreciate that, 

and you will be sitting in the chair here for a few moments while 

I go to the Budget Committee. 

The last point I want to make, to indicate the level of burden 

here, and again, this is not perfect, but if you take a look at the 

number of Federal Register pages published—now, this is actually 

published versus what is the Federal regulations in a particular 

year—on an annual basis, during the FDR administration, it was 

about 15,000 per year. Under Nixon, it was 45,000. Today, we are 

publishing about 80,000. So, we are just kind of ramping up this 

potential problem. Again, just trying to put some perspective to the 

regulatory burden. I think Mr. Holtz-Eakin will speak a little bit 

more to some of these metrics. 

With that, I will turn it over to our Ranking Member. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman. 

It is very nice to see you all today. Thank you so much for coming, for preparing, and for presenting, and for responding to our 

questions. I think we are going to have a good conversation and a 

timely one, as well. 
3 

I heard of the word aphorism earlier this week. You do not hear 

that word every day. It is a fairly simple statement that conveys 

a principle, a hopefully significant principle. And, one of my favorite aphorisms is about job creation. Guys like me, people who serve 

in these roles, we do not create jobs. I was a Governor for 8 years. 

A lot of jobs were created in my State during those 8 years. I did 

not create them. Presidents do not create jobs. Mayors do not create jobs. What we do is create a nurturing environment for job creation. That is the aphorism. Help to create a nurturing environment for job creation. 

That includes access to capital. That includes reasonably priced 

electricity, health care. That includes public safety, transportation 

infrastructure, cybersecurity protection, protection against those 

kinds of attacks. Somebody who is going to bat for us to make sure 

we can export our goods and services into foreign markets, all that 

stuff. Part of it is a reasonable tax burden. But, also, part of it is 

common sense regulations, and that is all part of the nurturing environment. And, we have to find the right balance in a lot of those, 

and today’s hearing, I think, will help us find that balance. 

I thank the Chairman for bringing us here and thank all of my 

colleagues for joining us here today. I think it is an important 

hearing because regulations are important. We issue them for a 

number of reasons, including to better protect our health, our safety, our environment, and the economy. So, whether or not we are 

aware of it, regulations do play a role in our daily lives, a necessary role, not always, but usually in a positive way. 

We enjoy the benefits of regulations every time we have a drink 

of water, every time we drive a car or go to the bank. And, while 

there may be disagreements on occasions about certain rules, I believe everyone generally agrees that some regulation is necessary 

and good. 

It is important to note that regulations sometimes come in response to court orders. People go to court and they sue because 

they feel like an agency is not complying with a law that has been 

passed and the courts order regulations to be either issued or modified. 

Regulations also exist because we pass and the President signs 

a law that draws lines between what is acceptable and what is not 

in our society, and that directs an agency to take a certain action. 

But, those of us in Congress cannot legislate every detail of a 

particular matter, even if we tried, and legislative language cannot 

possibly take into account every situation that may arise as a result of enactment of a law. So, we have to leave some of the details 

to the regulatory process. And, sometimes, the way we write the 

laws, we make that very difficult, as you know. 

The regulatory process can be time consuming. It is also more 

difficult to understand and follow than the legislative process, and 

that is saying something. It should be our goal, though, to have the 

most effective, efficient, and transparent regulatory process we can 

have and to ensure that process results in common sense regulations that achieve the objectives laid out in the laws that we have 

passed in this Congress. 

While some people think we need to choose between regulations 

and having a robust, growing economy, I think that is a false 
4 

choice. We do not have to make that choice. But, it is important 

that what do we say in the Constitution, the Preamble to the Constitution, ‘‘In order to form a more perfect Union.’’ It does not say 

a ‘‘perfect Union,’’ a ‘‘more perfect Union.’’ So, our goal should be 

to try to pass laws that enable us to use common sense and provide 

common sense legislation and, hopefully, common sense regulations 

to accompany those. 

For example, by advocating a common sense, cost effective approach to our Nation’s environmental and energy challenges, we 

can reduce harmful pollutions. We can live healthier lives. We can 

lower our energy costs. And, we help put Americans to work manufacturing new products. Regulations also often provide the stability 

and predictability that businesses need, and they can help instill 

consumer confidence in the products they buy. 

Of course, many regulations do, by necessity, impose requirements and additional costs on businesses and others that must 

comply with them. And it is not always easy for those of us who 

want to participate in the process to have a say in a regulation 

they may be interested in as it is developed and finalized. So, I believe it is also important to conduct oversight of the regulatory 

process to ensure that we try to reduce burdens and ensure transparency where we can while achieving the greatest public benefit. 

I have been encouraged by the Administration’s work in this 

area. I have also been impressed by the personal commitment the 

President has shown to his administration’s efforts to identify existing regulations that should be reexamined or even repealed. It 

is my understanding that these retrospective reviews have already 

identified ways to reduce burdens and to save billions of dollars, 

and I expect these look-back efforts to continue to bear fruit. 

Finally, as I often say when it comes to issues like this that come 

before our Committee, we need to figure out what works and do 

more of that. That is another aphorism. But, this applies to regulatory reform, as well, and I hope that as our Committee continues 

to discuss these issues, we take a real look at this process, and that 

the Administration’s ongoing efforts to acknowledge what is working and help them do more of it. 

I want to thank our Subcommittee Chairman over here on my 

left flank for his commitment to working on these issues, as well, 

and we look forward to the fruits of your labors. 

Thanks, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Carper. 

Let me quickly introduce the witnesses before I swear them in. 

Our first witness will be Douglas Holtz-Eakin. He is the President 

of the American Action Forum. He has previously served as Commissioner on the congressionally chartered Financial Crisis Inquiry 

Commission, an economist at the White House Council of Economic 

Advisors, and as Director of the Congressional Budget Office from 

2003 to 2005. 

Our next witness will be Jerry Ellig, a Senior Research Fellow 

at the Mercatus Center at George Mason University. He has previously served as Acting Director of the Office of Policy Planning 

at the Federal Trade Commission and as Senior Economist for the 

Joint Economic Committee. 
5 

1The prepared statement of Mr. Holtz-Eakin appears in the Appendix on page 47. 

Our next witness will be Michael Mandel. He is the Chief Economic Strategist at the Progressive Policy Institute and President 

of South Mountain Economics. He was previously Chief Economist 

at Business Week. 

And, our final witness will be Sally Katzen. She is a Visiting Professor at NYU Law School and a Senior Advisor at the Podesta 

Group. She has previously served as Administrator of the Office of 

Information and Regulatory Affairs and Deputy Director for Management of the Office of Management and Budget. 

It is the tradition of this Committee to swear in witnesses, so if 

everybody would rise and raise their right hand. 

Do you swear the testimony you will give before this Committee 

will be the truth, the whole truth, and nothing but the truth, so 

help you, God? 

Mr. HOLTZ-EAKIN. I do. 

Dr. ELLIG. I do. 

Dr. MANDEL. I do. 

Ms. KATZEN. I do. 

Chairman JOHNSON. Thank you. 

We will start with Mr. Holtz-Eakin. 

TESTIMONY OF DOUGLAS HOLTZ-EAKIN,1 PH.D., PRESIDENT, 

AMERICAN ACTION FORUM 

Mr. HOLTZ-EAKIN. Well, thank you, Mr. Chairman, Ranking 

Member Carper, Members of the Committee, for the privilege of 

being here today to talk about Federal regulatory reform. You have 

my written testimony. Let me just touch on three points briefly and 

then I look forward to answering your questions. 

Point No. 1 is that, as the Chairman has pointed out, the regulatory burden continues to grow. If you look, for example, at the paperwork burdens of cabinet-level agencies since fiscal year (FY) 

2000, they have increased by 30 percent. They are now 9.3 billion 

hours. And if you look at 2010 as an example, in that year, there 

were 100 major rules, which is the most in the history of the Congressional Review Act. These are strikingly large regulatory initiatives. 

The second major point I would like to make is that those kinds 

of measures only scratch the surface of the implications of the regulatory burden. Like taxes, which people are very familiar with, 

regulations have a burden on the economy and they distort the natural organization of the economy and make it less efficient. We 

have seen examples of this in recent years, as well. 

Since 2008, the American Action Forum estimates that we have 

increased the annual regulatory burden by about $100 billion in 

annualized costs. For perspective, that increase exceeds the higher 

estate taxes, capital gains taxes, dividend taxes that were part of 

the 2010 so-called fiscal cliff. And, so, these are an important impact on the economy. 

And, they will do two things. No. 1, they will be paid for by 

someone in the U.S. economy. It will show up in the form of higher 

prices for products. It may show up in part as lower wages paid 

or fewer people hired. Or, it could be less capital investment and 
6 

lower profits. But, this cost will be borne by the economy and the 

American public in some form. 

And, the second thing it does is it does shift the composition of 

economic activity and the regulations in that way make our economy less efficient than it would otherwise be. If you look, for example, at some important prices that Americans pay, the $100 billion 

increase since 2008 has translated into about $3,100 increase in 

the price of a passenger vehicle. It is a $360 increase in the mortgage for every mortgage every year. It looks like about $135 a year 

in higher energy costs for Americans, or $108 a year in higher 

health care costs for Americans. These are price impacts of the increased regulatory burden we have seen just since 2008. 

The other kind of example of the impact of regulations, you can 

look in the State of Ohio as a random example, Senator Portman, 

and since—the BLS reports that there have been 1,100 fossil fuel 

electricity jobs lost in the State of Ohio, while, on the flip side, we 

have seen employment in solar energy employment rise sharply. 

That is the regulatory results of shifting the composition of activity 

away from what the market had otherwise established. Those are 

important implications for the scale of regulation in the United 

States. 

So, the things that I would recommend to the Committee and to 

your efforts, Senator Lankford, would be to have some principles 

for regulatory reform, and first and foremost would be to codify the 

various Executive Orders (EO) that have existed for a long time 

and to insist on benefit-cost analysis in every Federal agency, including the so-called independent agencies, not going on at the moment. And, allow for judicial review if the agencies fail to conduct 

legally required analyses. At the moment, there is literally no penalty for violating the order to conduct a benefit-cost analysis. 

It would be useful to insert principles in future legislation that 

say there will be time lines for the regulatory implementation of 

this legislation. There will be a requirement for benefit-cost review. 

And, there will be limits on the amount of regulation that the legislation is about to produce. Those would provide for a better system. 

And, then, there should be a more formal process of retrospective 

review than the one we have at the moment. I know other witnesses are going to talk about that. 

The last thing I would say is to note that the United States is 

not alone. I thought the chart was very important in this regard. 

The other nations on that chart, the United Kingdom, the OECD 

countries, have all recognized the importance of regulatory review 

and reform and they are undertaking serious efforts to minimize 

their regulatory burden. I think the United States should follow 

suit, and I look forward to working with the Committee in that regard. 

Thank you. 

Chairman JOHNSON. Thank you, Mr. Holtz-Eakin. 

Our next witness is Dr. Ellig. 
7 

1The prepared statement of Dr. Ellig appears in the Appendix on page 56. 

TESTIMONY OF JERRY ELLIG, PH.D.,1 SENIOR RESEARCH 

FELLOW, MERCATUS CENTER, GEORGE MASON UNIVERSITY 

Dr. ELLIG. Thank you, Chairman Johnson, Ranking Member Carper, Members of the Committee. I am also happy to be able to be 

here and talk with you today about regulatory reform, and particularly the role of regulatory impact analysis in regulatory reform. 

I work at a university. That means I am for knowledge and I am 

against ignorance. I think that the regulators and other decisionmakers have a moral responsibility to make decisions based on actual knowledge of the likely effects of a regulation and its alternatives, not just based on intentions or assumptions. A decisionmaker’s failure or refusal to obtain this information is a willful decision to act based on ignorance. 

The tool that generates and organizes our knowledge about the 

effects of regulation and alternatives is called regulatory impact 

analysis. Unfortunately, regulatory impact analysis produced by 

Federal agencies is often not done very well and it often seems to 

have little effect on agency decisions. We are not likely to see substantial improvement in the quality of regulatory impact analysis 

unless we see legislation that turns it into a statutory requirement 

and provides for some type of judicial review to ensure that the 

analysis meets some minimum standard of quality. 

Now, let me expand on these points. A good regulatory impact 

analysis does at least four things. First, it assesses and identifies 

and traces the root cause of the problem the agency is trying to 

solve. 

Second, it outlines alternative solutions, and then it evaluates 

the benefits of the different alternatives and the costs of the different alternatives. When regulators have this information, they 

have a better shot at writing regulations that actually solve real 

problems at an acceptable cost. 

But, Congress should also have this information. Under the Congressional Review Act, Congress has an expedited process for 

vetoing regulations that Congress has decided it does not want to 

allow agencies to issue. Under the proposed REINS Act, Congress 

would play an even bigger role in regulatory decisionmaking by 

having to affirmatively vote before certain types of regulations take 

effect. 

Now, honestly, I do not know, if I were called to make a yes or 

no vote to approve or disapprove a regulation, I do not know how 

I could claim that I was making an informed decision if I did not 

know whether the regulation was solving a real problem and 

whether there were better alternatives out there. A yes or a no vote 

would be buying a pig in a poke if I did not have that information. 

Oversight Committees also should be able to find this kind of information useful. Oversight Committees look at what Federal regulatory agencies do to see if they are doing their job well and see 

if they are producing good results for the public. It is a lot easier 

to do oversight when you have access to a good regulatory impact 

analysis where the agency has declared, here are the results we are 

trying to achieve with our regulations, so that then there is some 
8 

kind of a standard or a scoreboard where you can say, OK, did you 

achieve it or did you not achieve it? Let us go look. 

Let me give you a couple of examples of what happens when the 

analysis is not up to snuff. A few years ago, the Food and Drug Administration (FDA) proposed a rule that essentially required anyone who produces or transports or handles animal food has to have 

processes and procedures in place to make it as safe as human 

food, and the FDA did not trace any kind of problem to its root 

cause, did not estimate the benefits. One of my colleagues who 

spent a number of years in the FDA, though, took a look at it and 

found that pretty much all the benefits of the regulations come 

from preventing transmission of salmonella from pet food to human 

beings. So, the real problem was pet food, not animal feed. And, if 

the FDA had done a thorough analysis of alternatives and traced 

the problem to its root cause, the FDA would have discovered that 

it could have issued a much more carefully tailored regulation that 

was a lot less costly and still accomplished all the public health 

benefits. 

That is not an isolated example. In a project that I have run at 

the Mercatus Center since 2009 called the Regulatory Report Card, 

we evaluate the quality of analysis that agencies conduct when 

they issue really big regulations, the economically significant regulations. We find that, typically, on average, the quality of the analysis is not very good. On the four major items that are supposed 

to be in a regulatory impact analysis, we usually find that agencies 

earn about 60 percent of the possible points or less, and in my 

book, 60 percent or below is basically an F. I do not know that we 

should be making regulatory decisions based on information of that 

poor quality. This is consistent with the research of other scholars 

who have examined the quality of regulatory impact analysis. 

What can we do about it? What can Congress do about it? The 

first step in solving the problem is understanding that it is not the 

fault of a particular political party or a particular administration. 

My research, ‘‘research by other scholars’’ finds that there are deficiencies in regulatory impact analysis under Republican administrations, Democratic administrations, administrations under various Presidents. So, it is not a partisan or political problem. It is 

an institutional problem that requires an institutional solution. 

The current enforcement mechanism is review of regulations in 

the Executive Branch by the Office of Information and Regulatory 

Affairs (OIRA). There is evidence that OIRA review improves the 

quality of regulatory analysis, but it falls far short of what you 

would expect if you have read 40 years’ worth of Executive Orders 

and the Office of Management and Budget (OMB) guidance that 

tell agencies what they are supposed to be doing. OIRA does help 

improve things, but we are still far short of where we ought to be. 

The most obvious solution, to me, is a statutory requirement that 

agencies conduct regulatory impact analysis, that traces problems 

to their root cause, explores alternative solutions, and evaluates 

the benefits and the costs of alternatives, coupled with some type 

of judicial review to ensure that that analysis meets some minimal 

quality standards. We need to improve the quality of regulatory impact analysis because good intentions do not automatically create 
9 

1The prepared statement of Dr. Mandel appears in the Appendix on page 62. 

good results. Decision makers should act based on genuine knowledge, not just hopes or assumptions or good will, good wishes. 

That is why the real conflict in the debate over regulatory reform 

should not be Republicans versus Democrats, liberals versus conservatives, business versus the public. The real conflict is knowledge versus ignorance, and I urge you all to choose knowledge. 

Thank you. 

Senator CARPER [presiding]. Senator Johnson has asked me to 

turn to the next witness, Congressman Lankford. Do you want to 

do it with me? 

Senator LANKFORD. Sure. Let it rip. 

Senator CARPER. All right. You are on, Dr. Mandel. 

TESTIMONY OF MICHAEL MANDEL,1 PH.D., CHIEF ECONOMIC 

STRATEGIST, PROGRESSIVE POLICY INSTITUTE 

Dr. MANDEL. Senator Carper, Senator Lankford, Members of the 

Committee, thank you very much for the opportunity to address 

the question of how to design a 21st Century Regulatory System. 

My remarks today will focus on retrospective regulatory review and 

offer up an alternative mechanism for reducing the burden of regulation without losing its benefits. 

My testimony is drawn from a series of policy briefs on regulatory improvement issued by the Progressive Policy Institute 

(PPI), where I am the Chief Economic Strategist. PPI stresses the 

importance of growth and innovation for lifting the living standards of all Americans. We are especially concerned with regulatory 

policy as an untapped tool for accelerating innovation and growth. 

Regulation, as you know, is essential for our whole economy. 

However, if policymakers allow the regulatory burden to become 

too heavy, innovation and entrepreneurial energy can be suppressed. As I noted in a recent essay, even the most regulation 

minded can see how the accumulation of well-intentioned rules can 

have a pervasive and negative effect on innovation. One useful 

analogy is that of a small child tossing pebbles in a stream. One 

or two or even 10 pebbles will not make an obvious difference in 

the flow of the stream, yet accumulating gradually over the years, 

thousands of pebbles an make an effective dam. 

One logical way to fix the regulatory system is to go back and 

review old rules. This process of retrospective review has been embraced by every President from Jimmy Carter to Barack Obama. 

Administratively, retrospective review seems simple. Executive 

agencies are ordered to make a list of regulations that are candidates for reform. They then go down the list one by one and ask 

if the benefits exceed the costs. This procedure seems fool proof, 

and yet with no exceptions, several studies have shown that these 

attempts at retrospective review have fallen far short of the desired 

result. 

I am going to argue here that retrospective review is a seriously 

flawed process that cannot by itself provide the answer to regulatory accumulation. In my written testimony, I give four reasons. 

I am going to focus on two of these here. 
10 

First, we must recognize that assessing the costs and benefits of 

an existing regulation is far more expensive and time consuming 

than projecting the costs and benefits of a prospective rule. When 

an agency is first considering a new rule, it can use whatever limited evidence exists from academic studies and existing research. 

By contrast, after a major regulation has been in effect for years, 

the amount of potentially relevant real world data is enormous, expensive to collect, and potentially burdensome for companies. 

So, it actually turns out that retrospective review, if you did it 

right, imposes more burdens on the companies to provide the information. It is not very easy to design studies that actually fairly test 

whether a regulation is working or not because you have to figure 

out what would have happened without the regulation in terms of 

technology, in terms of investment, in terms of how the market 

would have developed. 

Equally important, retrospective review is inherently focused on 

assessing individual regulations. However, the impact of regulations is cumulative and non-linear. That means as rules pile up, 

they interact with each other to create more of an impediment, 

even if each rule makes sense on its own. Now, the fact is, both 

Democrats and Republicans have agreed on the impact of accumulation of regulations. The OIRA under Cass Sunstein published a 

memorandum on this. But, in fact, pretty much all agencies do not 

take regulatory accumulation seriously in any way, and neither, 

apparently, does OIRA. 

So, to augment the formal process of retrospective analysis, 

which does have its benefits, we see the need for a low-cost, nonbureaucratic channel for improving regulations and taking into account regulatory accumulation. A 2013 paper by myself and a colleague, Diana Carew, proposed a Regulatory Improvement Commission (RIC) that would be authorized by Congress for a fixed 

length of time and consist of a panel appointed by the President 

and by Congressional leaders of both parties. The Regulatory Improvement Commission, would have a limited period of time to 

come up with a package of regulations to be eliminated or improved, drawing on public suggestions. The package would then be 

sent to Congress for an up or down vote and then on to the President for signing. This complements retrospective review. It deals 

with some of the issues that retrospective review cannot get to. 

A version of the RIC was introduced in the Senate and in the 

House in the last 2 years with bipartisan sponsorship in both 

cases. It has the virtue of embodying regulatory reform that can be 

embraced by both Democrats and Republicans, and if I dare may 

say, could conceivably be enacted even in today’s political climate. 

Let me mention several important characteristics of the RIC. 

First, it is specifically designed not to eliminate any Congressional 

prerogatives. Indeed, Congress gets two bites at the apple, once 

when RIC is authorized and again when the package of proposed 

rule changes come through. 

Second and related—and this is very important—the RIC does 

not lean exclusively on a supposedly objective measure, such as 

cost-benefit analysis. Instead, the RIC embraces the idea that regulations are a joint creation of the Executive and Legislative 

Branches with politics deeply embedded. 
11 

1The prepared statement of Ms. Katzen appears in the Appendix on page 72. 

Finally, the RIC is about small steps to build trust rather than 

big dramatic changes. The Regulatory Improvement Commission is 

designed to show voters that Washington can get things done. Retrospective regulatory review sounds good and has the benefit that 

it can be implemented unilaterally by the Executive Branch. However, we know from repeated uses that it falls short of expectations 

for what it can achieve for fundamental reasons. We have to have 

another mechanism that complements retrospective review, and we 

suggest that at the appropriate time the Committee seriously considers the RIC legislation when it is reintroduced. 

Thank you. 

Chairman JOHNSON [presiding]. Thank you, Dr. Mandel. Ms. 

Katzen. 

TESTIMONY OF SALLY KATZEN,1 PROFESSOR, NEW YORK 

UNIVERSITY SCHOOL OF LAW 

Ms. KATZEN. Thank you, Chairman Johnson, Senator Carper, 

Members of the Committee. I appreciate your inviting me to testify 

today. 

It is my strong belief that the regulatory system and the rules 

that it produces is an integral component of governance and one of 

our country’s strengths. Echoing what Senator Carper said, Congress makes the law, but it typically does not have the time, expertise, or sometimes the ability to identify or resolve all of the details. That responsibility is usually delegated to the agencies, which 

issue regulations that translate general statutory directives into 

concrete requirements or prohibitions with which the public must 

comply. 

We have heard a lot about the increased burden of regulations 

since the 1970s, and in my written testimony, I discuss several 

metrics for measuring that activity and whether they support the 

allegation that this administration is engaged in an unprecedented 

and unjustified amount of regulatory activity. I do not think they 

make that case. 

There are, essentially, two measures the critics of regulation cite. 

First is the volume, as in pages in the Federal Register or the number of regulations, and second, calculations of the cost of new or 

total rules. Both can be large, if not scary, but neither really tells 

us very much about the extent or nature of an administration’s regulatory activity. 

Two points worth emphasizing. First, the fallacy of focusing on 

the length of the rule itself—how many lines, how many pages— 

is that, often, the length is driven by the need or desire to carve 

out exceptions or waivers. The Internal Revenue Code, for example, 

would be a lot shorter if there were no deductions or credits, or oil 

and gas depletion allowances, or accelerated depreciation, or alternative minimum taxes. 

And, also, think about the rules that set up government programs for benefits or for subsidies, from Food Stamps to Small 

Business loans. Detailed and, hence, lengthy eligibility standards 

and reporting requirements are often critical for accountability and 

a hedge against waste, fraud, and abuse. 
12 

And, finally, brevity may not be a blessing in the world of regulations. A one-liner can ban a product, much more draconian than a 

very lengthy, complex set of rules about who can use it, when they 

can use it, how they can use it. 

Second about the numbers, it masks what they do. It may shock 

some people that the vast majority of rules are ministerial or routine, like changing the day for filing your income tax to Monday if 

April 15 falls on a Saturday or Sunday. 

Others are as non-controversial as they are necessary. I refer 

here to the Federal Aviation Administration (FAA) airworthiness 

directives. Should we stop them, or the FAA’s rule this past year 

to stop ongoing flights over the Simferopol area because of the wars 

in Crimea, or the DOI rule which sets the bag limit for shooting 

fowl traveling north and south under the Migratory Bird Treaty. 

Without a limit, no one could enjoy that spot. 

So, it may be counterintuitive, but there are some, in fact, a lot 

of regulations that people actually want and that they need. This 

would include those structuring programs, this would be leveling 

the playing field. A lot of businesses ask for rules and regulations 

to provide certainty of operations for their activities. 

Now, a lot of these are major rules and are included in those vast 

numbers we see, because major rules are not just rules that have 

$100 million or more in an annual impact, but are rules that have 

$100 million or more in benefits, or rules that have a novel legal 

or policy issue involved, or have a material effect on the budget. 

Because my time is so short, I am not going to talk about the 

retrospective review or the RIAs, although I think it really is important to note on the RIAs, and I have been in this field now for 

a number of years, that the quality of the work done by the agencies is, indeed, mixed, as you would expect, because the agencies 

are mixed. They have different missions, different cultures, different budgets, different resources. And, so, to have them all performing at the same level would be unexpected, at best. But, what 

I have also seen over the years is that they have improved. They 

have come a long way since the 1980s when they were asked to 

start this effort. 

On the retrospective review, I will try to address that in the 

questions and answers. 

But, I, too, wanted to offer some general principles or framework 

for evaluating various regulatory reform bills that are likely to 

come before this Committee. Now, I fully recognize that Congress, 

unlike Federal agencies, is not constrained from enacting legislation that it deems salutary. But, as a prudential matter, I think 

this Committee, before it endorses a particular regulatory reform 

bill, should ask and answer some of the questions that Dr. Ellig 

had posed. What is the compelling need? How significant is it? Are 

there alternatives? That is what a Federal agency does in rulemaking. I think this Committee should think in that context rather 

than going to the bottom line. 

It is worth noting that Congress has imposed a series of process 

and analytical requirements on the Federal agencies over the last 

30 years and has not increased the resources that the agencies 

have to do that work. Asking them to do more with less is simply 
13 

not sustainable over the long term. Congress has other alternatives, as well, as Senator Carper indicated. 

I have tried today to emphasize that regulations are an important, valuable force in our society and are the reason that the air 

we breathe, and the water we drink is clean, our food and medicine 

is safe, our workplaces are secure, our markets operate as advertised, and our values are embodied in our public and our private 

institutions. That is why I think it is a strength, not a weakness, 

of our country. 

Now, we talk about the international scene and how everybody 

is engaged in trying to do better. I would tell you, they are trying 

to become us. We are the gold standard. We have the most transparent regulatory process in the world. We have the most accountable regulatory process in the world. And, the benefits of that system inure to all of us. 

Thank you. I appreciate your time. 

Chairman JOHNSON. I would like to thank all the witnesses for 

their thoughtful testimony. 

Dr. Ellig, like you said, you have to start with information. I 

would argue that the first step in solving any problem is you have 

to admit you have one. The reason we try and grapple with some 

kind of metrics, whether it is pages or whether it is dollars, is we 

are trying to describe a problem that exists. Now, I realize they are 

all imperfect measures. 

I was trying to get my staff to quickly come up with the exact 

numbers, but let me lay out part of the problem, is Congress now 

passes frameworks for the regulatory agencies to write the laws 

and the rules and regulations. We all agree, a job with the Federal 

Government should be providing a legal and regulatory framework 

to provide certainty for our economy, so you understand what the 

rules of the road are, like the Uniform Commercial Code. The problem is, we have passed so many, they are so confusing, they are 

conflicting, it is not providing that kind of certainty, not by any 

stretch of the imagination. 

Two examples. Both Obamacare and Dodd-Frank, when they 

were written, they were a few hundred thousand words—I do not 

have the exact numbers right now—a couple hundred thousand 

words apiece. The last time I looked, Dodd-Frank, in terms of regulatory number of words, was over 15 million. Obamacare was over 

12 million. So, again, those are the large metrics to try and describe the problem that our private sector is trying to grapple with 

as they are trying to grow and produce good paying jobs. 

Anecdotally, I have had small banks in Wisconsin come up to me, 

small bankers, and say, ‘‘Senator, I had to fire, layoff a loan officer 

because I had to hire a compliance officer.’’ I am having banks say, 

‘‘I cannot survive as a single-branch bank anymore. I have to consolidate just to be able to afford and comply with all the regulations.’’ So, whether it is anecdotally or this is from a macro sense, 

this is just a real problem. 

I think one of the problems we have in terms of regulatory agencies—and again, I am very impressed with the quality of the Federal workforce. That is just true. I am a limited government guy, 

but I am impressed with the people, the dedication, their intelligence. The problem is, I am concerned about their experience. 
14 

How many regulators, what percentage—and I do not think anybody has this, but I want one of you to speak to the problem of regulators who have very little experience in the private sector understanding—for example, having the George McGovern moment. Do 

you remember when Senator McGovern ended up starting up a 

bed-and-breakfast, and I think his comment was, ‘‘If I had only 

known.’’ If I had only known what all these rules and laws and regulations and how difficult it was to comply. 

So, can somebody speak to just the private sector experience that 

is lacking in the regulatory community? Mr. Holtz-Eakin, you are 

looking away, but—— 

Mr. HOLTZ-EAKIN. I do not have any metrics, which is what you 

would like to know. But, certainly, the anecdotal evidence is exactly what you described, that those who walk from one side of this 

line to the other are stunned at how misinformed they were about 

the burdens that the regulations impose on people. 

Ms. KATZEN. Well, with respect, I think that that is one of the 

reasons we have public participation in rulemaking. Agencies have 

to say what it is they intend to do, and they have to provide all 

of the data and all of the analyses that they rely on. And then 

there is an opportunity for comment, and at least during my tenure 

at OIRA, and I had some private sector experience before I went 

into the government, businessmen would come in and say, there is 

a problem, and we would listen and we would respond. It is not a 

closed, mindless exercise. So, I cannot give you a percentage, but 

I can give you a cultural attitude of openness and inclusion for information. 

Chairman JOHNSON. Sir. 

Dr. MANDEL. Just to add one sentence here, part of the problem 

is the intersection of different regulations. So, what happens is that 

the regulatory agencies focus on—when they are developing regulations, they think about the impact of that single regulation. They 

do not think about the overlaps and the intersections and the problems that it causes with other regulations. And, when I talk to 

business people, a lot of what they complain about, they can deal 

with any single regulation. It is when they start layering on top of 

each other that it becomes a real problem. And we have to think 

about what we do in response to this. It is the intersection not just 

in the Federal level, but the State and local level, as well. 

Chairman JOHNSON. Yes. It is the conflicting regulations. I 

mean, you are damned if you do, damned if you do not, that type 

of problem. 

By the way, I do not think anybody here is claiming this is just 

an Obama Administration problem. This has been a problem as the 

fourth branch of government has grown exponentially in terms of 

the regulatory burden over the years. This is on a bipartisan basis. 

Ms. Katzen, you mentioned about the notice and comment period. 

I think we have witnessed—I do not have the exact numbers, but 

I have seen numbers in the past—I think we have witnessed lack 

of notice and lack of comment, and I actually want to ask somebody 

to explain the substantive rule requirement in terms of notice and 

comment period. 

Ms. KATZEN. [Laughter.] I laugh only because I devote two full 

classes in my admin law class to this. 
15 

Chairman JOHNSON. Very good. 

Ms. KATZEN. The APA is quite clear that where there is a substantive rule that is binding—it has the force and effect of law— 

there must be notice and opportunity for comment. The APA explicitly carves out general statements of policies and interpretative 

rules, and as to those, there is no requirement for notice and comment, although OMB has a policy that if it is a statement of policy 

with significant economic impact, there should be a modicum of opportunity for public participation. 

Now, that issue is actually before the Supreme Court today. It 

was argued in December in the Perez case and we should have a 

decision by the end of the year as to whether those words in the 

APA, in fact, mean what they say. 

Chairman JOHNSON. Now, a Federal judge did actually rule—— 

Ms. KATZEN. He did. 

Chairman JOHNSON [continuing]. I think, last week that President Obama’s executive actions as regards to deferred action on— 

or we will call it executive amnesty, because it is easier to say— 

was a substantive rule and required notice and comment period 

and there was none, is that not correct? 

Ms. KATZEN. That is what he—— 

Chairman JOHNSON. Would you challenge—— 

Ms. KATZEN. Yes. 

Chairman JOHNSON [continuing]. That interpretation? 

Ms. KATZEN. Yes, I would, and I think the Obama Administration will be challenging that, and I think that, in fact, his view of 

the law is not correct. 

Chairman JOHNSON. Can anybody else comment on that? Is anybody else qualified to speak to that? 

Dr. Ellig, you wanted to chime in—— 

Dr. ELLIG. Oh, on—— 

Chairman JOHNSON [continuing]. On something else. 

Dr. ELLIG. I am sorry. On your earlier question, I wanted to 

mention, I worked in a regulatory agency and the sum total of my 

prior private sector experience was cleaning hamster cages at a 

Woolworth’s store and dressing up as Santa Claus at Christmas in 

the same place. But, I think—— 

Chairman JOHNSON. That is better than none, by the way. 

Dr. ELLIG. But, I think, even if you have regulatory agencies 

largely staffed by folks like us on the panel who have pursued pretty much analytical, policy oriented careers, there are certain fundamental questions that come out of how to do good policy analysis 

that agencies ought to be asking and answering that they are not 

always asking, like, what is the root cause of the problem we are 

trying to solve. And, so, I am not sure if you have to have a lot 

of people with private sector experience, but you at least ought to 

have people who know how to do good policy analysis. 

Chairman JOHNSON. And value good information. Thank you. 

Senator Carper. 

Senator CARPER. Thanks. I said to Senator Johnson, this is a 

good hearing, and a timely hearing. I think we have the four right 

people in front of us. 

I am reminded, though, that sometimes we do not make, as legislators, we do not make it easy for folks who are writing regula-
16 

tions. And you know, sometimes we are trying to find a compromise and it is maybe inartful, but we have to get some kind of 

agreement so we can pass a bill and then we say, you guys clean 

it up when you write the regulations. We are guilty of that, so we 

have some responsibility. So, it is a shared responsibility, if you 

will. 

Ms. Katzen, given your time at OIRA, I know you fully understand the details of assessing the cost and benefits of some rules. 

For example, it is difficult for the Environmental Protection Agency 

(EPA) to assess the benefits of regulating certain toxins, including 

lead and mercury. Science is clear that these toxins impact our 

health, especially our children’s health and their IQs, but calculating the direct dollar benefit of a smarter, healthier child just is 

not easy to do. 

Conversely, estimating the cost is not always easy. Agencies 

often end up overstating the cost. I believe the estimated cost of 

the acid ran program launched by former President George Herbert 

Walker Bush, I think they estimated the cost of the acid rain program, to be 50 percent higher than what it turned out to be. And 

actually, we got it done in, like, half the time. It is pretty amazing. 

During your time at OIRA, did you work on a rule that ended 

up having far more benefits and far less costs than estimated, and 

what should agencies do when it is difficult to determine estimated 

costs and benefits? 

Ms. KATZEN. Well, Senator Carper, it has traditionally always 

been easier to quantify and monetize costs than benefits. We have 

done a lot of work, and there has been a lot of thoughtful analysis 

that has enabled us to do better analysis of benefits, although some 

are still escaping us, like invasions of privacy. How do you value 

that? How do you value national security? If you harden one site, 

terrorists can move to another site, so what is the reduction in risk 

of reducing an attack on a particular site? This is the Homeland 

Security Committee. These are things you deal with all the time. 

It is very difficult and we are sometimes not very sophisticated. 

But, we have made a lot of progress and OIRA does a lot of analysis, and the answer to your specific question is, yes, we always 

look to see that the benefits justify the costs—not outweigh as 

though it is some mathematical precision formula, but, rather, do 

they justify the costs. It should be informative but not necessarily 

dispositive. There are some things that are difficult to monetize. 

Nonetheless, even with only monetized benefits, reports have 

shown for the last two decades that the regulations that are adopted and issued by both Republican and Democratic Administrations—George W. Bush, the end of Clinton, and now Obama—the 

benefits clearly exceed the costs. Our regulations produce estimated 

net benefits to our country on an annual basis that is consistent 

and verifiable. 

Now, are they the benefits we will actually see, and this is the 

reason that you hear calls for retrospective review? No. These are 

estimates at the time and more work has to be done. 

Senator CARPER. OK. 

Ms. KATZEN. And, I would not deny that there is more progress 

that can be made to the system and that there are improvements 

to be had. 
17 

Senator CARPER. Good. Thank you. Just hold it at that. That was 

great. 

Dr. Ellig—when people in Delaware spell their name E-l-l-i-g, we 

pronounce it ‘‘Aay-league.’’ Would that be all right, to call you Dr. 

Ellig? I just want to say, you convey a sense of optimism and almost a sense of joy in attacking an issue that a lot of people find 

pretty boring—— [Laughter.] 

And, I said to the Chairman, how—— 

Dr. ELLIG. Well, somebody has to make it interesting. 

Senator CARPER. That is good. Well, you do. And, I wrote down— 

I have a new aphorism here. I wrote down—this was before you got 

here, Heidi—I wrote down, you said, ‘‘I am for knowledge and 

against ignorance.’’ Is that not good? So, I wrote that one down. I 

will use that about 10 times today. [Laughter.] 

But, Dr. Ellig, you indicated in your statement that you think 

that codifying the requirement that agencies conduct cost-benefit 

analysis would improve the process. Could you just expand on that 

for a little bit, and why do you believe that is necessary? 

Dr. ELLIG. Well, happy to. Yes. I think the problem is, we have 

a fairly weak enforcement mechanism in OIRA review because 

OIRA is part of the Executive Branch and it is fairly clear from my 

research and other folks’ research that when there is a conflict between analysis and an administration’s political priorities, it is an 

administration’s political priorities that will often win. That is why 

I think some type of quality control needs to occur outside of the 

Executive Branch rather than having the Executive Branch review 

its own analysis and say, ‘‘what do you know. This looks pretty 

good.’’ 

Then the question is, where is the logical place for that, and typically, the logical place for that kind of review has been, if there is 

a problem with a regulation, it violates the law or whatever, you 

take the agency to court. So, it seems sensible to have a statutory 

requirement that agencies have to conduct analysis that covers certain topics, together with some kind of a check through the court 

system on the quality of that analysis. 

And, I want to emphasize, I am not saying that judges ought to 

be free to second-guess the agencies’ policy decisions or impose 

their own view of what the regulation should have been. But, surely, courts ought to be capable of looking at the evidence in front 

of the agency and saying, yes, that looks like a decent amount of 

evidence and the agency has done enough homework, or, no, that 

does not really look like enough. That is the kind of procedural review that I was thinking about. 

Senator CARPER. Good. Thanks. 

And, Ms. Katzen, would you just briefly respond to any views, 

any comments you have on this particular issue that Dr. Ellig has 

spoken to, any views that you might have. Do you agree that codifying these requirements would improve the regulatory impact assessments, and the regulatory process as he seems to be suggesting? 

Ms. KATZEN. Actually, I do not think codification would go a long 

way, because I think it is a cultural issue. I think it is a resource 

issue. Congress has enacted a lot of statutes telling agencies what 

to do and how to do it. And, as the agencies face straight lined and 
18 

decreasing budgets, compounded by CRs and sequestration, they 

simply do not have the ability to do the kind of analysis that is 

called for. And, I think, casting it in a statute only compounds the 

problems, because so many terms—like quantifying costs, what 

does that mean and how would somebody say that is sufficient? He 

says that he does not want the courts to look at the quality, but 

at some point, it is more than just did the agency do anything. He 

does want them to look at the quality and that requires something. 

Senator CARPER. Good. Thanks. Thank you so much. Thank you 

both. 

Chairman JOHNSON. Senator Lankford. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Thank you. I really do look forward to the 

ongoing part of this conversation. And, for the Ranking Member 

and his comment about trying to bring some happiness to a topic 

that can be boring, I looked at Senator Heitkamp and said, welcome to our Subcommittee. [Laughter.] 

We are going to focus on these issues a lot and spend a lot of 

time on them, because—— 

Senator CARPER. Maybe you should just invite Dr. Ellig a lot. 

[Laughter.] 

He can come to every hearing. 

Senator LANKFORD. He is a great witness and a great conversation. 

The struggle that we have is, is because it is so real life. Up 

here, we talk about the regulatory issues. But, I just sat down and 

jotted down some of the conversations I had in Oklahoma last 

week, so let me just give you a couple quick, brief comments about 

things that came up last week. 

I had a company that approached me that said they did not notify an agency last year that they had nothing to report, and so 

they just received a fine of half-a-million dollars for not reporting 

they had nothing to report and they are trying to figure out what 

to do with this. 

Multiple universities I talked to last week are very concerned 

about some of the new regulations or possible regulations that are 

coming down on them. 

I talked to some county commissioners in my State that have 

just put millions of dollars into a beetle farm rather than building 

a bridge in their county because they had to do beetle mitigation 

for a beetle population that is actually dramatically increasing in 

their county, but they are saying the beetle populations are decreasing in other counties and so they have to pay mitigation fees 

in their county because it is decreasing somewhere else. They are 

having a real struggle with that. 

A doctor’s office that talked to me that said he has been waiting 

months for a Medicare number because of a new requirement that 

has come down on that and he has not been reimbursed since October. 

Duplication of forms—one different trucking company said that 

they have two different agencies that are asking for the exact same 

information, and they have spent hours and hours and hours filling 
19 

out the same form for two different agencies because the agencies 

would not share that information. 

A small rural bank that said they have now stopped doing rural 

small home loans because of the cost of regulation, saying, basically, they cannot break even for all the compliance costs on it. 

There was also a disagreement that one of the companies had 

with an agency and they asked for a review of that and where do 

they go, and they were told someone else in the same agency would 

review it, and so they just gave up. 

That was last week. This is a constant issue in the national conversation that I think we do need to address. 

I do not know of anyone that I have served with that wants no 

regulation. There needs to be clear boundaries. There needs to be 

clear guidelines. All the good actors want to make sure there is 

regulation so the bad actors are not in there messing up their business and messing with families. So, we need to have good, clear 

boundaries. But, the boundaries need to stay consistent. 

We need to decide who is actually the right one to make that decision. Is it the Federal Government? Is it the State? That is a 

large responsibility we have to set. We have to deal with the issues 

of primacy and all the regulatory agencies, of what role does the 

State have in actually implementing this. We have a lot of issues 

on judicial review and retrospective review, cost-benefit analysis. 

We have to deal with the purpose of fines and fees. Who sets 

those? Where does that money go? Who gets to change those? How 

do we actually walk through that review? This does, at some point, 

to some company, feel like extortion when they say that your 

money will not come back to you after 4 years of audits, or we will 

settle with you now if you will take a 40 percent amount. At some 

point, that just does not smell right to most people. 

So, a lot of these are issues that we have to resolve in the days 

ahead, and I really do look forward to in our Subcommittee getting 

down and trying to resolve some of these issues, not picking on any 

one agency, not picking on any political party or the Administration. This is not about those things. Some of these cumulative effects have built up over years and years. 

So, I want to say to the Chairman that we look forward to walking through some of these processes and trying to see what we can 

do to be able to help not only keep people safe in the country and 

deal with things in an appropriate way, but also trying to resolve 

some of these issues in the days ahead, so let me just bounce a couple questions to you in the minutes that I have. 

Dr. Ellig, you had made a comment about some of the quality of 

analysis. Is there a consequence for any agency if they do a sloppy 

review? So, I understand if they do the review just to check the box 

and say, ‘‘I did it,’’ and then you go back and look at it later and 

find out it really was not good, is there a consequence for that? 

Dr. ELLIG. Well, if it is a big enough problem and things line up 

right, the Administrator of OIRA may return the regulation and 

say, hey, you have to go back. Go back and do more work on this. 

The problem is, OIRA is seriously outmanned and outgunned. 

There are a couple of hundred thousand people in regulatory agencies. There are 40 employees in OIRA. Now, granted, not everybody 

in regulatory agencies is writing regulations, but there is still a sig-
20 

nificant imbalance there, and these people are working really hard 

to try to improve things, but it is a heck of an uphill battle. 

That is why I think having some kind of review outside the Executive Branch, or at least outside the agency that issued the regulation, is a pretty important thing, and to have some sort of consequence if the analysis is not particularly good, does not answer 

the questions that ought to be answered before a responsible decisionmaker would make a decision. 

Senator LANKFORD. Right. So, we struggle with the costs of actually reviewing, and several of you mentioned this issue about cost. 

When you actually try to do a review in real time, now you have 

real information, the cost goes up dramatically. Someone had mentioned even that the problem really becomes one when it is more 

burdensome to actually do the review than it does to actually walk 

through the process on it. So, the issue is, how do you do that, because there is a best guess at some point. If that guess is wrong, 

we have to be able to determine, hey, this was a bad idea. We need 

to review it. 

Dr. MANDEL. That is right. Now, one of the things, when you are 

talking about all the people that are businesses and organizations 

that are complaining about regulations, it would be good to have 

a central place to collect all these complaints, so we know what is 

actually wrong out there. 

Senator LANKFORD. It is actually me and Senator Heitkamp’s office. [Laughter.] 

Dr. MANDEL. OK. Your office? [Laughter.] 

Senator HEITKAMP. His first. [Laughter.] 

Dr. MANDEL. Yes, his first. But, a central place that is actually 

tasked with the idea of assembling them so you can tell these—— 

Senator LANKFORD. Should that not be OIRA right now? 

Dr. MANDEL. No, it should not be. 

Senator LANKFORD. OK. 

Dr. MANDEL. OIRA is not tasked with that. 

Senator LANKFORD. OK. 

Dr. MANDEL. OK. It should—— 

Senator LANKFORD. So, you are saying no one is tasked with 

that. 

Dr. MANDEL. No one is tasked with that at this point. One of the 

central problems with the regulatory system we have today is that 

it has no place of central touch, where people can—— 

Senator LANKFORD. But, every agency has a responsibility to do 

retrospective review. That is an Executive Order that has been put 

out for a long time, that every agency is required to do that. 

Dr. MANDEL. But, remember—— 

Senator LANKFORD. So, it is not just the agency. You are saying 

an entity beyond all those agencies—— 

Dr. MANDEL. Because when you talk about those multiple forms, 

those forms are coming from multiple agencies. So, we went to one 

agency and we say, oh, yes, we sent that form. What is wrong with 

that? But there is no one anywhere in the system who is tasked 

with—where the people that were complaining to you could go and 

say, we have this problem here. We have multiple forms. Can we 

not do something about it? 
21 

Now, there have been States and localities that have assembled 

agencies like this to do this, but on the Federal level, on the national level, nothing. 

Senator LANKFORD. OK. My time has expired. I yield back. 

Chairman JOHNSON. Senator Ernst. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. First, I would like to thank Senator Johnson 

and, of course, Senator Carper for calling this meeting. This has 

been very interesting. 

And, I want to thank the witnesses here today. Really lively discussion on, you are right, on an issue that many would not find as 

fascinating, maybe as some of us. So, thank you. This is a very 

timely hearing. 

Regulatory reform is an issue that I am extremely interested in, 

and during the course of the past year or so as I traveled across 

Iowa, that is what I heard about. Concerns coming from everyday 

Iowans—our small business owners, our individuals, our farmers, 

our ranchers, and the burdens that are placed on them, and then 

how we respond as a Congress to their needs or what might not 

be their needs. But, they are very, very concerned about the costs 

of the bureaucracy, what the bureaucracy is doing to their livelihoods. 

So, one thing that I heard over and over again is that when you 

talk about the comment periods, many of them do issue comments. 

They will go online and they will put their comments out there, but 

they feel those comments, those concerns are not being heard by 

bureaucrats here, and not having responses back to them and why 

it is significant that these rules are in place, why maybe they could 

do something different. 

And, because these people feel that they are not being listened 

to, they really do not trust the government and they do not trust 

these agencies. They do not feel like they are being heard. So, the 

sentiment from my constituents is that the government is really 

out to get them, and that is an unfortunate situation to be in. 

And, it does make me reflect back on a line that President 

Reagan had used many years ago. The nine most feared words in 

the English language are, ‘‘I am here from the government and I 

am here to help.’’ When you hear that, it puts the fear of God, I 

think, in some of these folks. 

Unfortunately, that is how many Iowans feel, is that there are 

regulations out there, but they are not really there to help them. 

So, it is a difficult situation to be in. 

The other day, I did send a letter to the EPA Administrator, 

Gina McCarthy, just inviting her to come to Iowa and see the impacts that some of the rules and regulations proposed, or those that 

are already in existence, are having on our communities, whether 

it is the county levels, whether it is the individual farmer or rancher, whether it is the small business owner. We have seen the Waters of the U.S. situation. We have seen the Renewable Fuel Standard. And, these two particular examples are creating a lot of uncertainty in Iowa. 

And just yesterday, as I sat in the Agriculture Committee, we 

had a hearing and an Iowan farmer—corn, soybeans—I asked him, 
22 

what are the impacts to you, and because of the uncertainty with 

the rules and regulations moving forward, he does not know what 

he needs to produce. He does not know what his production level 

needs to be. And, he does not know how best to manage his farm, 

especially when it comes to the Waters of the United States. So, 

we are creating big problems out there. 

And, it is not just rules and regulations by bureaucrats. It is this 

governing body also proposing legislation. So, we really do need to 

pay attention to that, but we need to hear from our constituents. 

So I am asking the full panel, please, to let us know what we 

can do better. How can agencies do better in listening to constituents all across the United States? 

Dr. ELLIG. Well, if I may, I think this highlights also a problem 

with the current approach to retrospective review, because agencies 

are supposed to retrospective review regulations. They are told to 

do so by Executive Orders. In some cases, they are told to do so 

by legislation. Agencies put a notice in the Federal Register saying, 

hey, does anybody have problems with this regulation or this group 

of regulations? But, who is going to notice that and respond? 

The folks who are likely to notice and respond are typically going 

to be large entities—either large companies or maybe some State 

governments, if they are affected, who already have invested in the 

staff to follow regulation and figure out the process. And, the firms 

who have already figured out how to cope with regulation are not 

necessarily going to be eager to recommend that anything should 

be changed to make it easier for their competitors who have not 

figured out how to cope with things. 

So, if we are relying on the regulated entities, large and small, 

to tell us what is wrong with regulation and what needs to be reviewed retrospectively, we are going to get kind of a biased response or maybe no response at all, and that is why I agree with 

Dr. Mandel that the impetus for retrospective review has to come 

from outside the agency and not just counting on put a notice in 

the Federal Register and see who responds. 

Dr. MANDEL. Can I add one thing to that? I think you are absolutely right. We have to have a way of listening constructively to 

the complaints, OK, and not even as part of the official process. 

There has to be a place that people can bring, where they know 

they are going to be listened to, and that it is going to be collated 

so we know that it is just not a single person or a single organization, that it is put together and we can see across agencies, across 

regulations, that this one is actually creating lots of problems for 

people. 

And, so, we have to have a kind of an official mechanism, and 

I would not even call it retrospective review, I would not call it prospective, but some way that people can know that they are being 

listened to and that the complaints are being collated and somebody is going to have a mechanism for doing something about it. 

Senator ERNST. Yes, I would agree, and there has to be a way 

to double-check regulations and rules from one agency to another, 

because oftentimes, there will be a rule that will come from one 

agency that is in direct conflict with another agency. And, I use, 

for example, positive train control. There is one agency saying, you 
23 

must put these control poles in the ground, and you have the FCC 

saying, no, you cannot do that. 

Dr. MANDEL. If I just can say one thing—— 

Senator ERNST. Yes, please. Thank you. 

Dr. MANDEL. I am going to say something nice about your organization, the Mercatus Center. This is where big data and technology 

can come to our aid, which is that if you can collate all the regulations into one big database—— 

Senator ERNST. Mm-hmm. Correct. 

Dr. MANDEL [continuing]. There are actually ways now of testing 

these against each other so you can catch these things more or less, 

I would not say automatically, but there is no excuse in this day 

and age that these conflicts occur without us knowing about it. 

Senator ERNST. Great. My time has expired. Thank you, Mr. 

Chairman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Chairman JOHNSON. Senator Portman. 

Senator PORTMAN. Thank you, Mr. Chairman. Thanks for holding 

this hearing and for your work in this area. I am really looking forward to the opportunity to work with the members of this panel 

and that panel to try to get some stuff done here in the next 18 

months. I think we have a window of opportunity here with Democrats and Republicans alike interested in this issue. 

there has been a lot of discussion today about whether we have 

too many regulations and what the impact is. I think it goes without saying that, yes, we need regulations, but, yes, we have real 

problems in our system. Sally, who was head of OIRA at one point, 

and I had the honor of being Director of the Office of Management 

and Budget and had responsibility for OIRA, can tell you there is 

a real tug-of-war sometimes with the agencies and with OIRA. But, 

you said it well, and you are the defender of some of this regulatory 

process that we have currently on this panel. You said that we 

need to make better progress and more improvements in the regulatory process. So, I think there is an understanding of that and 

the question is, what do we do that actually moves the ball forward? 

We all hear about this when we are home, all the time. Today, 

I had my weekly coffee, and, of course, people came forward with 

why do we do this, why do we do that. The one recently was somebody who had a coal mine in Ohio, and the guy has been there over 

40 years as engineer, so he has some perspective, and he says, here 

are the two notebooks, and they were big notebooks, like, much bigger than this one, like, five times this size, and sort of plopped 

them down on the desk. ‘‘Here is my permitting regulations,’’ he 

said. ‘‘I remember when it was two dozen pages.’’ ‘‘A lot of this is 

duplicative,’’ he said. ‘‘A lot of it is a waste of time and causes more 

compliance costs, and some of it just makes no sense and it is driving jobs out of,’’ in this case, the coal business in Ohio. 

But, we hear it constantly, and let me give you one data point 

that I think is interesting. The Code of Federal Regulations (CFR), 

in 1960 had approximately 22,000 pages. By the end of 2013, it was 

180,000 pages. And, so, Sally said earlier, and I think she is right, 

we do not want to just judge this based on volume, but, wow, that 
24 

is a pretty big increase. We are talking about, what is that, eight 

times larger. 

There are some studies out there, and I know Doug Holtz-Eakin 

has done some of this good work, but that the accumulation of all 

these regulations—that is one of the points that you made in your 

testimony, Dr. Mandel—is resulting in less economic growth and 

fewer jobs. So, this study in 2013 by Dawson and Seater, between 

1949 and 2005 that they had the data for, accumulation of Federal 

regulations slowed economic growth by an average of 2 percent per 

year. So, we are talking millions of jobs here. So, I think we all understand that, and the question is, what do we do? 

As you all know, I have three bills that are bipartisan that we 

have been promoting that meet a lot of the requirements that you 

all have laid out. Doug Holtz-Eakin, you talked about the fact that 

we should be doing cost-benefit analysis codification. I assume you 

are focused primarily on the regulatory impact analyses. We should 

be handling independent agencies, bringing them into the cost-benefit world. And, by the way, Ms. Katzen has also talked about that 

and has supported that. And, you talked about judicial review. You 

talked about time lines, comment period. 

All of that is in the Regulatory Accountability Act, and it has 

been bipartisan. We have introduced it in the last two Congresses. 

We are about to introduce it in this Congress. It also has more 

transparency, more early public outreach, use of best available 

data, more thorough processes on particularly major rules. And, 

this is one that I hope we will be able to move forward again, even 

in this highly partisan atmosphere we find ourselves in, one that 

seems to have bipartisan support. 

The other is Independent Agency Regulatory Analysis Act. It is 

a piece of this larger bill, just to deal with the independent agencies. Again, this is also part of the RAA, but this is just to say, let 

us codify what the President wants to do. The President’s Job 

Council recommended this. Former OIRA heads have from both Republican and Democrat administrations, including Ms. Katzen, as 

I talked about. We introduced it last Congress, Mark Warner and 

I did. We are going to introduce it again this Congress. We are trying to help the President be able to do what he cannot do by Executive Order, because he has to have us pass a law in order to enforce 

this on the independent agencies. 

And then, finally, is the Federal permitting, which goes to that 

coal example I used, and we can talk more about that. You all are 

not necessarily here to talk about Federal permitting, but, wow, 

what an opportunity. That legislation, we have introduced. Claire 

McCaskill, who is on this Committee, and I have introduced it. The 

AFL–CIO Building Trades are very interested in it, as is the 

Chamber of Commerce, because we are falling behind in terms of 

permitting as a country and losing jobs and investment. 

So, I guess my first question would be to all of you just on this 

issue of codification. We heard some different aspects of it, and 

maybe we will just go left to right. Should we be codifying the RIA 

process as it currently exists. Just give a brief answer, if you 

would, because I want to leave room for Ms. Katzen at the end to 

have her argument be heard, which is, I think, probably why it 

should not be codified. But, Dr. Holtz-Eakin. 
25 

Mr. HOLTZ-EAKIN. I have said yes. My biggest complaint with our 

regulatory system is it is not systematic. We have different agencies doing different things, and there is no consequence in some 

cases. There are consequences with OIRA, but for other agencies, 

none. And, so, codification of the requirement of doing a legitimate 

RIA, some judicial review so there is a consequence for failure to 

meet the standard. This would improve the quality of what we do 

enormously, I think. 

Senator PORTMAN. Dr. Ellig. 

Dr. ELLIG. Yes. I agree, and a few years ago when we first started our research on the quality of regulatory impact analysis and 

then realized we had a problem and tried to figure out why, my colleagues at the Mercatus Center sat down and tried to figure out, 

OK, what are all of the different ways that you might improve the 

quality of analysis, and it kept coming back to it has to be some 

kind of requirement and review that happens outside the Executive 

Branch. 

Senator PORTMAN. Mm-hmm. And, also, just briefly on this codification for the independent agencies, more and more of the major 

rules are coming out of the independent agencies. 

Dr. ELLIG. Yes. 

Senator PORTMAN. They are not under the control of the Executive Branch in the same way that an executive agency is, so the 

President cannot require them to go through the cost-benefit analysis, the least burdensome alternative, jobs analysis without codification, is that not correct? 

Dr. ELLIG. That is correct. Now, the Securities and Exchange 

Commission (SEC) has some language in its authorizing statute—— 

Senator PORTMAN. Right. 

Dr. ELLIG [continuing]. That has turned into a requirement for 

benefit-cost analysis, and after losing several court cases, the SEC 

in 2012 issued new guidance that said, OK, we are going to do good 

benefit-cost analysis and we are going to do it in accordance with 

the principles of Executive Order 12866, and I hope a few years 

from now, we will be able to look and report and say, hey, it has 

actually gotten better. 

Senator PORTMAN. Yes. Dr. Mandel. 

Dr. MANDEL. So, I actually have nothing to say for or against 

codification in particular. In principle, it is a good idea, but it will 

not actually solve the problems that your constituents are having, 

OK, because what they are having is the problem of permitting—— 

Senator PORTMAN. Yes. 

Dr. MANDEL. Their problem is they are being hit down from multiple agencies and multiple places and—— 

Senator PORTMAN. Thirty-five different agencies—— 

Dr. MANDEL [continuing]. What are they complaining about—— 

Senator PORTMAN [continuing]. One project—— 

Dr. MANDEL [continuing]. And what your constituents are complaining about is not going to be dealt with by the codification. In 

fact, the codification may make it worse by putting on another 

layer of regulation. I hate to say this, but it has that possibility. 

We have to have something, a back-channel that exists outside of 

the codification process that is a way of collecting the complaints 
26 

that are unanticipated and figuring out which ones need to be dealt 

with first. 

I am an economist. I hate coming out against cost-benefit analysis. Somebody is going to take me outside and shoot me after I 

come out of here. [Laughter.] 

OK. I had to sign a paper saying I believe in cost-benefit analysis. [Laughter.] 

And, in theory, I can do cost-benefit analysis as well as the next 

person can. But, the fact is, when you think about what your constituents are complaining about, they are not complaining that the 

cost-benefit analysis was not good enough. They are complaining 

about the layering of regulations, which codification is not going to 

deal with. And, there are a lot of different ways of dealing with the 

regulatory accumulation process, but you should not tell yourself 

that codification is going to deal with that. 

Senator PORTMAN. I will make two quick comments. One, Dr. 

Mandel, this is not just about codifying existing practice, but it is 

improving it, as Dr. Katzen talked about—— 

Dr. MANDEL. Improving it—— 

Senator PORTMAN [continuing]. Because there does need to be 

less bureaucracy and more inputs, including the impact on jobs, by 

the way, which is in our legislation. So, it is not just cost-benefit, 

but what is the actual impact on jobs. 

Second, I would tend to disagree with you that some of what we 

do here is about that, what is the benefit of this legislation? I know 

what the cost is, because Dr. Holtz-Eakin talked about the thousand jobs being lost in Ohio. We are losing 15 power plants this 

year. And then the question is, how do you come up with a better 

analysis of what the actual benefits are? So, there is an analysis 

there that needs to be consistent, standard, high quality, and, let 

us face it, agencies take it more seriously when it is a law than 

when it is an Executive Order. 

Ms. KATZEN. And, first of all, thank you for letting me come talk 

to your class. 

Ms. KATZEN. It was a pleasure and they loved you. 

As you know, I agree with you on a lot of the general concerns 

that exist in this area, and we share, I think, some common beliefs. 

In particular, I think the work on the permitting process is very 

important and on the independent regulatory commissions. These 

are modest improvements at the margins, but I think could go a 

long way. 

Why I resist codification and something like the Regulatory Reform Accountability Act, or what its name is now, is because they 

are extraordinarily broad—comprehensive by their terms—applying 

to all agencies in all situations. And, they will cut across from 

USDA and EPA to DHS and DOD, and those agencies are very different. And, just as there are individual problems, which I do not 

deny need to be rectified and should be worked on, I do not think 

the best approach is a one-size-fits-all large rewrite of the Administrative Procedure Act. 

You identified some of the pieces in there, but you also said 

‘‘more thorough processes,’’ and this is inside-the-Beltway talk or 

inside an administrative law classroom—like a 556–557 administrative hearing in the middle of a rulemaking hearing. That is an 
27 

adjudicatory hearing with discovery, witnesses, on and on and on, 

and that has been put in the middle of the rulemaking process. 

Senator Ernst would like to see the RFS rules come out. A lot 

of people want to see those rules come out. Those rules would never 

see the light of day if they had to be subjected to all of the more 

thorough processes that are included in that particular bill. 

Now, are there pieces that might make sense and that could be 

applied in some instances? That is what you and I have worked on 

in the past and I would want to continue working on, because I, 

too, want to see improvements in this area. 

Senator PORTMAN. Well, thank you. I am over time. I apologize. 

I guess I would summarize by saying the legislation is intended to 

ensure that, given the impact of these regulations, that we measure twice and cut once. I look forward to continue to work with you 

and others on the panel. Thank you. 

Chairman JOHNSON. Senator Heitkamp. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Mr. Chairman. 

Just a couple quick stories, and it will kind of give you a context. 

I, once upon a time, ran a regulatory agency. It was a State regulatory agency. And I, during a campaign, heard all about the regulations on charitable gambling. I thought, how bad could they be? 

And, I showed up and this small industry in North Dakota dealing 

mainly with minimum wage workers had a 500-page—or, 300-page 

book of regulations. And, I brought the young man down who was 

responsible and I said, who do you think reads these? He kind of 

shrugged his shoulders and I opened it up and I said, why do you 

have this one? He said, ‘‘Because some person up in Cando, North 

Dakota, did this and we thought we needed a regulation.’’ 

Every time we did it, my realization was, those regulations were 

written to write a perfect world. We are never going to have a perfect world through regulation. So, what we are trying to do is get 

down to the essential, and that is what I told him. I said, take 

these back. Give me what is essential for our doing our job to maintain the integrity of charitable gaming. He came back and it was 

down to about a third of what it was. 

And, it is that kind of analysis that we need to undergo, and we 

have been talking a lot about new regulation. There are two issues 

with new regulation. No. 1, we do not do it quickly enough, going 

to your point, which is let us take, for instance, the 1232 tank car 

issue we have now. We probably are going to see a regulation retrofitting 1232s when the Department of Transportation (DOT) should 

have been engaging earlier on to avoid that misstep. So, now, because we did not have regulation, people have made investments 

that are going to need to be retrofitted, OK. So, not getting regulation done on time can be just as injurious to the economy as getting 

regulation done in a thoughtful, stretched out process. 

So, we have regulation that does not happen on time, and we 

have regulation that does not exist in the existing world, that no 

one could—you heard the examples that my colleague from Oklahoma gave you, and no one can argue with a lot of what he said. 

This is not a partisan issue. The last time we reinvented government, you might recall, was when Al Gore took on this challenge 
28 

as Vice President for President Clinton and came out and actually 

had a reasoned discussion that did two things. No. 1, probably not 

well enough, taking a look at how do we deal with new regulation, 

and I think the first step, never mind the agency, the first step 

ought to be telling Congress, when you pass this law, here are the 

list of regulations you are telling us to adopt within this time period. So, we need a little training in the U.S. Congress about what 

our expectations are, right, whether it is a farm bill that Senator 

Ernst talked about, whether it is positive train control that FCC 

has to get approval from every Tribe in America—that was the 

problem. We are beyond that now with positive train control. 

So, I guess, my point is we need to have a comprehensive look 

at what the problems are, and the problems in many cases are 

right here in the U.S. Senate or in the Congress when we set out 

expectations, and I think that is what you are getting to, Ms. 

Katzen, and I really appreciate that. But, it does not mean that we 

should not also be doing a huge project on look-backs. 

One of the frustrations that the American public has, rightful, 

and, I think, meaningful frustration, is they do not know what is 

coming next. They do not know what is out there that is going to 

get them. They are going about their business without any real 

knowledge of what is going to get them. 

And, so, how do we do a better job, No. 1, identifying what the 

regulatory burdens are that we are putting on the agencies to 

adopt regulation when we adopt legislation? 

No. 2, what do we do to have a meaningful discussion to prevent 

the perfect world mentality of people who write regulation? 

And, the third thing is, what do we do to have a meaningful lookback process that is going to respond to legitimate concerns for 

which there is no venue at this point? I totally agree with you, Doctor. Where is the venue for people to complain broadly about what 

this is, other than our offices, and we would like to see something 

maybe other than our offices, because we would be inundated. We 

do not have enough staff to deal with all the concerns that will 

come. 

And, so, this is one of many discussions that we are going to 

have, but we have to get this right. We have to make sure that 

whatever we do actually adds value to the process, actually 

changes the process and does not prolong or have unintended consequences. 

So, not a partisan issue, not something that can be done quickly 

without really thinking about what is the problem we are seeking 

to solve, because there is a range of problems we are seeking to 

solve, and then how can we come to a consensus on how we can 

improve within those three categories. I do not have a lot of time 

left, because I yakked on and on, which is a familiar place sometimes for those of us in the U.S. Congress, but I would like just to 

have feedback on how I have laid this issue out and whether you 

could debate that or offer some additional suggestions. 

Mr. HOLTZ-EAKIN. Well, I think you have articulated quite clearly. The cumulative impact and the fact that there is no venue 

to—— 

Senator HEITKAMP. I do not mean to interrupt, but I also want 

to add another dynamic to this. Everybody talks about Federal reg-
29 

ulation, but it is on top of local standards, it is on top of State 

standards, and that is another complication of dealing with this 

issue. 

Mr. HOLTZ-EAKIN. Yes. So, I think the notion of having a venue 

to voice concerns is an important one and would look forward to 

working with the Committee on that. 

There is another alternative that has been proposed about the 

cumulative burden, which is essentially a regulatory budget that 

simply says, this is how much burden we are going to place on the 

American public, and if we hit that cap, it will force something to 

go away if we put something else in. Now, the United Kingdom has 

taken a very extreme version of this with two out for every one in 

on business regulation, but that is something that would be good 

food for thought in your deliberations on how to deal with the burden issue and force people to make tradeoffs, and that is really 

what we want them to do. 

Dr. ELLIG. Yes. I would just mention your example of the charitable gambling regulations as a great example of regulations being 

made in response to anecdotes about bad behavior rather than 

making regulations in response to actual evidence that there is a 

significant, widespread problem, with an understanding of what 

caused it and then a regulation that addresses that cause. So, yes, 

sounds like a great example of failure to ask the most fundamental 

question that regulators ought to ask, which also happens to be the 

question that Federal agencies tend to spend the least time on 

when they are doing regulatory impact analysis. That is a problem. 

Dr. MANDEL. Let me talk briefly about the venue for complaints. 

We have the technological capabilities now for taking in a lot of 

complaints and sorting them out and figuring out what the patterns are. It is great that your office is here, but because there is 

no central point, we do not actually know what regulations should 

we fix or improve first. I cannot answer that question because we 

do not actually have comprehensive information across all the regulations about what, in fact, people are complaining about. And 

what happens, is your offices are some of the best places to get 

some of the interesting changes that could be made without harming the underlying goals. 

And, so, one of the things that this Committee or the Subcommittee should consider is how to structure a central location for 

complaints so that it does not have to be just restricted to Federal, 

but it can be Federal, State, and local, as well, so that we have a 

comprehensive view across agencies. I am sorry Senator Portman 

left, because what I meant to say about cost-benefit analysis was 

really cost-benefit analysis right now is applied within an agency. 

It is not applied across agencies. It is not applied across the regulatory accumulation. So, it is significant missing a lot of the key 

factors that your constituents are complaining about. 

And, frankly, the place where I start on this is, having started 

a small business at one point and realized that, oh, my God, it is 

impossible for me to comply with everything I am being asked to 

do. We need some way that is constructive and technological at this 

point to handle the volume of complaints and collate them so we 

can see patterns. 
30 

Ms. KATZEN. I think you raised very important questions. And, 

I am sorry for my voice, but I woke up with a cold this morning 

and it is cracking all over the place. But, I think you presented 

some of the challenges that are real and that need to be addressed. 

I actually was in the administration when Vice President Gore 

launched the other version of NPR and I went through that experience where there was a request for people’s input to try to answer 

these questions. 

But, the hardest question is when and how to regulate. I used 

in my testimony that derivatives were creative and exciting until 

all of a sudden we had a financial crisis. Drones—who knew 

drones—no one thought drones were a problem until they became 

one by falling on people’s property, or by interfering with commercial airlines, and—— 

Senator HEITKAMP. We call them remotely piloted aircraft in 

North Dakota. [Laughter.] 

Ms. KATZEN. Oh, thank you. I will try to follow that. But, I think 

these are very important questions that Senator Lankford’s Subcommittee are going to be dealing with, with your help, and others, 

and I just encourage you to keep trying, because they are important and they are very difficult. 

Chairman JOHNSON. Senator Ayotte. 

OPENING STATEMENT OF SENATOR AYOTTE 

Senator AYOTTE. I want to thank the Chairman. I want to thank 

all of you for being here. I think this is a very important hearing. 

Here is what I am interested in. I always feel like it is Groundhog Day, because the bottom line is, I go out—my husband is a 

small business owner, and so when you said, Dr. Mandel, about 

small businesses, I live it. And then I go in a State where a lot of 

our businesses are small businesses, and there is not a business I 

visit, small or large, that does not have some regulatory story to 

tell me where the Federal Government is doing things that make 

it harder for them to put people to work or to grow in a way that 

just does not make sense. 

And, so, why I say it is Groundhog Day is where I think all of 

you can very much help this Committee is if you were in our position, what are the top two things you would do to change the dynamic that we are in, because the dynamic that we are in, I think, 

really is harming our economy, and that is the bottom line. And, 

it is harming the people who are interested in starting the next 

business, because it becomes discouraging to want to do that. And, 

so, I would love to hear from the four of you, what are the two 

things you would do if you were in our position that we could do 

that would make a difference? 

And, let me just add to that, something I think we should do is 

look in the mirror on ourselves a little bit, too, because we pass 

this legislation. In so many instances, we are deferring major decisions to regulatory agencies in the regulatory context that, frankly, 

should be made by us, the Congress. So, as I look at ourselves in 

the mirror here, we should be giving less authority to regulatory 

agencies, especially on critical issues where we should be weighing 

in to ensure that our policy decisions are clear on what we are intending. And, I think a lot of what I hear, too, is things that are 
31 

done by agencies that certainly I would be shocked if they were intended by the Congress when things were passed. 

So, I am just going to turn it over to you. You are here. You have 

become a U.S. Senator, and I would like to know—we want to 

make it better collectively, as a group. Instead of having Groundhog Day and listening, what can we do to make a difference, to 

make this better? 

Mr. HOLTZ-EAKIN. So, I just want to say, I started a business 5 

years ago, the American Action Forum. We are up to 30 full-time 

employees. I am very happy about that. 

Senator AYOTTE. Congratulations. 

Mr. HOLTZ-EAKIN. I am tired of paying lawyers to deal with all 

this stuff. It is a tough fundraising ask when you say, what is this 

for? 

Senator AYOTTE. I am a recovering lawyer, so I understand. 

[Laughter.] 

Mr. HOLTZ-EAKIN. So, the No. 1 thing that I would ask you to 

do would be to cap the total burden. I am a fan of regulatory budgets. They are highly imperfect, but it cannot just keep going up. 

Senator AYOTTE. And, who does that? 

Mr. HOLTZ-EAKIN. You have to have a cap. 

Senator AYOTTE. Who does the regulatory budget in—— 

Mr. HOLTZ-EAKIN. It does not exist right now, so it would have 

to be created—— 

Senator AYOTTE. But, who would do it? Who would you recommend does it? 

Mr. HOLTZ-EAKIN. You should pass every year, as you should 

pass a financial budget—— 

Senator AYOTTE. So, the Budget Committee would do two forms 

of budget. We would do a regulatory budget—— 

Mr. HOLTZ-EAKIN. The Congress should pass budgets. 

Senator AYOTTE. OK. 

Mr. HOLTZ-EAKIN. And, this is another cost of running the government and you should control that cost, No. 1. 

Senator AYOTTE. I think it is a great idea, because it would show 

more honesty to the American people that we are looking at the big 

picture on this. 

Mr. HOLTZ-EAKIN. The second is, I would like more uniformity. 

Independent agencies, cabinet agencies should be treated the same. 

That is a lot of the spirit of the discussion I had with Senator 

Portman. We have one tax system to fund spending programs. 

Every agency runs its own tax system by running its own regulatory system and that does not make sense to me. We should have 

some more uniformity. Standardize things. 

And, the last is the sentiment of Senator Heitkamp, do not let 

the perfect rule this. I mean, they just put out an ozone rule where 

100 National Parks are not in compliance. The Cape Cod National 

Seashore is not in compliance. Sequoia National Park is not in 

compliance. Death Valley National Park is not in compliance. How 

are they going to come into compliance? The rule says, unknown 

technologies. Good luck. 

Senator AYOTTE. Yes. That really shows the absurdity of it. 

So, Dr. Ellig, what would your top two be? That was great. 

Thank you, Doctor. 
32 

Mr. ELLIG. If I had to boil it down to the top two, I would say, 

establish a retrospective review process that puts responsibility for 

review outside of the agencies that issued the regulations, and 

have a uniform requirement for regulatory impact analysis for all 

agencies for regulations above a certain size. 

Senator AYOTTE. Mm-hmm. 

Dr. MANDEL. Two simple ones. One is, as I have been saying, establish a venue for collecting complaints. I do not mean a little office but something that has enough technological power to collate 

patterns so we can understand where the big problems are because 

right now, all we have is anecdotes. We have a lot of anecdotes, but 

all we have is anecdotes. 

And, second, to come along with that, you talk about a retrospective review agency. I would suggest something that is actually able 

to make recommendations about how to improve regulations. We 

talk about regulatory reform, and every time I heard the word ‘‘reform,’’ that has the Groundhog Day quality to it. I think we should 

start thinking about a continuous process of regulatory improvement, not of reform. I would like to move back to the language of 

business, as Chairman Johnson says, and think about continuous 

improvement. 

Ms. KATZEN. I guess if I am to provide two, I would say to provide more resources to OIRA, and, on a directed basis, to the agencies to be able to do some of the things that we want them to do. 

And, the second is for all of us to stop playing ‘‘gotcha,’’ stop finding easy points to score, stop the 30-second sound bites on a very 

complicated but very critical component of our country’s government. 

Senator AYOTTE. Thank you all for being there. I think these 

suggestions that we heard are really helpful as this Committee 

moves forward to try to put in some legislation with teeth to make 

a difference for businesses across the country and to be more transparent in this regulatory process. So, I thank the Chairman and 

Ranking Member for having this hearing today. 

Chairman JOHNSON. Thank you, Senator Ayotte. 

Dr. Mandel, I do like the phrase ‘‘continuous improvement.’’ You 

do get that inbred in you in the private sector, certainly in the 

manufacturing setting. It is about continuous improvement. 

One thing I would like to point out, though, too, is when you 

come here from the private sector, one thing you notice about government, the Federal Government particularly, is everything here 

is additive. I mean, I get the point about having, whether it is the 

GAO, the Inspectors General, OIRA, or some of these agencies or 

offices within departments and agencies that are really tasked with 

auditing and trying to make government more efficient, that they 

need to be resourced. But, my problem is that there is just no process—and, again, that is another word that is music to my words— 

there is no process for subtraction. 

Mr. Holtz-Eakin, you mentioned the one in—I thought it was the 

one in, one out rule. I would love a one in, ten out rule, but I would 

settle for a one in, two out rule. There has to be a process of subtraction. There has to be a process of continuous improvement. 

And, I agree, if it is within the agencies, again, we have been trying to do this for decades. It has not worked. 
33 

One of the first proposals I made—and, trust me, has not gotten 

traction—was a bicameral Sunset Committee, whose only task was, 

on a regular basis, rotating basis, go through a group of agencies 

over a number of years, and, really, the only task was subtraction, 

taking a look at the rules and regulations that were outdated or 

that were harmful and either update them, streamline them, modernize them, or eliminate them, and I think that is the kind of 

process we have to start looking at. 

It is, quite honestly, disappointing. I know our leader, Leader 

McConnell, was with President Obama in the White House and apparently President Obama said, do not even consider regulatory reform. Not interested in it. I hope that is not his real attitude. 

Certainly, the bipartisanship of this Committee, I have heard it. 

Senator Booker walked out and tapped me on the shoulder and he 

said, ‘‘Boy, we have some real opportunities for some bipartisan 

agreements.’’ Now, maybe not overall regulatory reform, like a 

REINS Act or Senator Portman’s permitting act, but at least a rifle 

shot approach where we can take a look at the individual regulations and, like, again, on a bipartisan basis, hopefully with unanimous consent, if we do our job—and that was one of the aspirational goals that I set out for this Committee in our organizational 

business meeting, was in order to pass something in the Senate, we 

are going to need at least six Democrats. We have seven on this 

Committee. If we can get all seven Democrats and all nine Republicans in agreement, hopefully, we can get some of these marginal 

improvements, the continuous improvement, I will take any step 

we can take, and we have really got to direct that. 

But, again, it is about getting the information. I know Senator 

Carper was definitely taken with your, we want knowledge, not ignorance. I did pull up one of my favorite quotes from Thomas Jefferson. He said, ‘‘If a nation expects to be ignorant and free, in the 

State of civilization, it expects what never was and never will be.’’ 

So, this is about information. We are the perfect conduit, trust 

me. Every day, every Member of Congress hears from constituents 

who come into our office with their tale of woe of a regulation that 

is doing great harm to their ability to improve, to grow, to create 

jobs. And, yes, there are regulations that do great jobs in terms of 

we have dramatically increased environmental protections, dramatically increased—or decreased the level of pollution. Those are 

good things. We all support that. 

But, there is a point of diminishing returns. There really is. And, 

I think in many cases, like Senator Heitkamp was talking about, 

too, is in our quest for a completely risk-free society, which also 

will never exist—never was, never will be—we have reached that 

point of diminishing returns, and I think the return on investment 

in terms of regulatory cost is dramatically diminishing, and, I 

would say, it has certainly overtaken the benefit. 

Mr. Holtz-Eakin, having been former CBO Director, you are talking about a regulatory budget. I mean, I love the concept. Again, 

a lot of people have criticized the $1.82 trillion regulatory burden. 

Again, these are projections. How could you come to agreement? 

How could you calculate that? 

Mr. HOLTZ-EAKIN. So, at present, agencies self-report the compliance costs, the burdens they will impose. Those are not all in eco-
34 

nomic measures of cost and we should not pretend they are, but 

they are something that the agencies do and you could take those 

at face value, knowing that there is some multiple of them that is 

the actual economic cost, but just cap those. Provide some uniformity to the process of delivering those. 

I think Ms. Katzen is right about OIRA. If you are going to put 

all the independent agencies in there and have a more systematic 

process of delivering the information for a budget, it will have to 

be better staffed and that is a fact people are going to have to understand. 

But, I do not want to hold out the congressional budget process 

as the model, since it has all sorts of flaws. But, the idea that you 

systematically collect the information and measure something will 

give you the capacity to manage it is the appeal there. And, it is 

the cumulative. You can add it all up. That is the other appeal. 

Chairman JOHNSON. Dr. Mandel, I certainly agree with you. I 

think a number of people made this comment, that the review process has to be outside the agencies. Does it also have to be outside 

government? I mean, you are talking about a Regulatory Improvement Commission. Would that commission or committee, would 

that be outside of government, just set up by government and pretty much independent until it makes its recommendations? 

Dr. MANDEL. That is basically right. It would be modeled after 

the Base Closing Commissions, where you would bring in distinguished people from the outside, appointed by the President and 

leaders of the Congress, and they would be able to make their decisions, their proposals, independent of anything else. Presumably, 

though, since it has to go through Congress, they would be sensitive to the politics of the situation and what can be passed and 

what cannot. 

Now, I have to make one point here, which is the Regulatory Improvement Commission can go on top of any of these other proposals. It is not, in fact, a substitute. It could go on top of the regulatory budget. It could go on top of Senator Portman’s proposal. It 

is about setting up a back-channel and a place for complaints that 

everybody can use for any of these proposals. 

Chairman JOHNSON. Do you not think you would need Improvement Commissions? Would we not literally need dozens of these 

things, that they are actually focused and they have experts in particular areas of the private sector? 

Dr. MANDEL. I am trying to think of things that can actually get 

passed under the current situation, So, the nice thing about the 

Base Closing Commissions is they were a limited term. You passed 

them. They did the job. They disappear. And then if there is an 

idea that it was good, you go and do it again. 

In today’s situation, nobody really wants to layer on another 

level of permanent bureaucracy. It seems self-defeating. It seems 

ironic and paradoxical. So, let us go ahead and we will set this up, 

see if it works, see if we are happy with what it does—it is a small 

bite to build trust—and then go on from there. Like I said, it does 

not take the place of any of these other big picture. 

Chairman JOHNSON. No, I mean, my point being is what we 

would do is I would pick the low-hanging fruit. Let us find an area 

that really needs regulatory reform, something relatively simple, 
35 

and let us get some experts in that particular area, set up an ad 

hoc commission, and have it operate and report back to—it is really 

what I was—the concept was with the bicameral Sunset Committee, where you do this on a revolving basis over a number of 

years—— 

Dr. MANDEL. Yes. 

Chairman JOHNSON [continuing]. And I guess what I would like 

from the panel is, think about that. What would be the best example? What would be the one area where we know we have expertise 

that is just crying for this type of commission to improve the regulatory environment outside of government, that can come in, report 

in, make recommendations. 

Dr. MANDEL. I think that is an excellent idea, Senator. This can 

be structured that way and you can set up a couple, parallel to 

each other, but it is controllable. 

Chairman JOHNSON. Think about that. Senator Carper. 

Senator CARPER. I am going to ask all of you—I have one specific 

question, and then I am going to ask all of you the last question. 

The last question, so you can be thinking about it, is I like to, when 

we have a panel like this with so many smart people, with some 

different views but well informed views, one of the things I like to 

do is ask for each of you to give me something that you think you 

all agree on, because one of the things we are looking for here is 

consensus. Just be thinking about that. What do you think could 

be one point that you all agree on? That would be helpful for us 

as closing words of advice. 

But, the question I want to go back to, I have been in and out 

of the room. I apologize for that. We have another hearing going 

on on transportation policy, so I apologize. But, I want to come 

back to retrospective review, if I could. When agencies are drafting 

regulations, there are a lot of steps to that process. They need to 

make sure that they know the law and the requirements that are 

placed on them, and they get input from stakeholders, they analyze 

the data, they draft the regulations, they get more input from 

stakeholders, and then they try to finalize the rule and promulgate 

it. But, that is not really the end of the process. When agencies 

learn more and when regulations have been around for a while, it 

is important to take a look and see, well, how well is it working? 

A number of our witnesses have discussed the lack of progress 

various Administrations have had in reviewing existing regulations. However, it is my understanding that this Administration, 

including the President himself, is actually committed to making 

progress in this area. And, I have heard him talk about it in State 

of the Union Address and I have talked with people like Cass 

Sunstein and others that seem to think that there is a real commitment. 

I would ask, Ms. Katzen, in your testimony, you said that you 

believe this Administration’s efforts at retrospective review seem to 

be much more aggressive than some previous efforts, and that has 

been my impression, too. Could you please discuss what you think 

this Administration is doing right in this area, and if you think the 

stronger effort will be more successful, and, finally, what more 

would you suggest that they do to ensure success as they continue 

this effort? Please, and thank you. 
36 

Ms. KATZEN. Thank you, Senator Carper. I think any such effort 

requires leadership, which the President has shown. He issued not 

one, but actually three Executive Orders, and he convened a cabinet meeting where he spoke to the members of the cabinet, saying 

this is real and this is important to me. This is a serious effort. 

OIRA provided guidance and several data calls and is now organizing outreach to a lot of the stakeholders so that they can hear 

some of the stories that we heard this morning that will help inform them of where they should be looking for potential improvement. 

I think there is a lot of know how out there. The Administrative 

Conference of the United States (ACUS), just issued best practices 

recommendations, which are quite good. The one thing that is 

missing, and this is a theme I have harped on, unfortunately, several times today, is resources, in that the agencies are caught betwixt and between. There are people pushing them forward and 

people telling them to look backwards. Do they have sufficient resources to do that, and how do they make those choices. 

Will it provide success? I was part of the Clinton look-back experience and I had high hopes and we did not produce a whole lot, 

I will confess. I think it is a very difficult thing because there is 

not a whole lot of low-hanging fruit out there in the Federal regulatory system, in large part because some of the onerous or burdensome or costly regulations, as they are called, require capital investments up front and those are now sunk costs. You do not get 

them back. So I say in my written testimony, if you take seat belts 

out of cars or scrubbers out of smoke stacks, you are just going to 

have to incur costs to change the assembly line, or reconstruct the 

building. 

Where you get, I think, the biggest bang for the buck is in continuing operating and maintenance expenses and reporting, which 

can be done electronically. The references earlier to big data and 

being able to coordinate—two agencies should not be asking for the 

same information that we heard Senator Lankford talk about. And, 

in fact, DOT just issued a rule that eliminated the requirement to 

report that there is nothing to report for truck motor carriers who 

otherwise were having to do this kind of reporting. 

Those need to be flagged. They need to be immediately rectified. 

And, there is a will here. So, I am sanguine that we will get something. I am just not sure how much. 

Senator CARPER. Thank you. Thanks very much. 

I ask, Doug, if you would just lead us off, that final question. 

Pick one area where you think you all agree that we should take 

real note of. What would that be? 

Mr. HOLTZ-EAKIN. I think that everyone at this table would acknowledge that OIRA has been an improvement in the regulatory 

process, and it does send back regulations to agencies and it does 

engage in an attempt to improve the quality of regulation. So, 

going forward, look at the areas of success and imagine bringing 

OIRA to scale to encompass the entire regulatory burden and that 

would be a step in the right direction. 

Senator CARPER. OK. Thanks. Dr. Ellig. 

Dr. ELLIG. I think we agree on some problems, particularly that 

there are problems with the quality and the completeness of the 
37 

analysis that agencies conduct that is supposed to inform their decisions about regulations. We may not agree on all the solutions. 

I think maybe another thing that we all agree with, although I 

am not sure everybody has spoken to it, is the idea that, yes, independent agencies ought to be gathering the same kind of information and doing the same kind of analysis that Executive Branch 

agencies are required to do. 

Senator CARPER. OK, thanks. 

Dr. Mandel. 

Dr. MANDEL. I think that we all agree that the regulations can 

be improved, and that continuous improvement would actually benefit all of us. We have to take a lot of regulations and boiling them 

down to a smaller number as opposed to just plucking at them one 

by one. 

Senator CARPER. OK, thanks. Ms. Katzen. 

Ms. KATZEN. And, finally, I think all of us would subscribe to the 

notion that economic analysis is good. I think we will all be in 

favor of knowledge, not ignorance. And, I am glad to hear my copanelists all support OIRA, because I think OIRA is good. 

Senator CARPER. All right. 

Ms. KATZEN. Not surprising. 

Senator CARPER. Good. Well, my closing thought would be here— 

this is one of my new aphorisms. I wrote it down. It is, I am for 

knowledge and against ignorance. So, that is another one of my 

good take-aways. I thank you all for that. I told the Chairman, I 

said, I will use that often in the days ahead. I will never acknowledge where it came from. [Laughter.] 

No, I will. Thanks so much. This was great. 

Chairman JOHNSON. He will use it again. Senator Lankford. 

Senator LANKFORD. Yes, just a couple of quick questions. Dr. 

Mandel, just a process thing. As you talk about this gathering organization, trying to filter it, the first regulation that came to mind 

for me was actually an obscure regulation dealing with 316(b) 

water rules. That was for, basically, power plants that have a lake 

around them. They have to take the water in. It is not the water 

that comes out as steam, it is just cooling in their facility. It had 

a pretty significant cost increase. 

They asked the question—because there were fish being impinged, that means trapped against the screen as they are coming 

in. In Oklahoma, all these lakes were manmade by the power 

plants. They were all stocked with fish by the powerplants. Most 

of the fish that were being impinged were minnows, which, by the 

way, 100 percent of minnows that you put a hook through their eye 

and throw it in the water when your fish, die. So, this is a fish that 

is replaceable in that sense. They did millions of dollars of work to 

try to do that. 

Now, that is a very small group of folks that are complaining 

about it. It is a very large, as Ms. Katzen said, capital cost up 

front. You are not going to undo that, because once they are required to do millions of dollars of work, 2 years later when they 

say, just kidding, you do not have to do that. Actually, what you 

can do is if 5,000 minnows die on the screen that year, you can just 

put 5,000 minnows back in the lake and that will work fine, which 

would cost about $50 to do. But, that was not an option that was 
38 

given to them. It was millions of dollars worth of rescreening and 

concrete work and everything else in their lake to accomplish that. 

How would that instance rise to the level of response when you 

are gathering things from all over the place? You are not talking 

about frequency on that one. That is a small group of folks, but it 

is a big issue to them. 

Dr. MANDEL. So, one of the nice things that we could not do before is actually identify patterns that are very important to a small 

number of people, so that if you have big data techniques, you have 

an ability to sift through that and pick out things like that. I actually think that a lot of what we are going to find is that, to the 

extent that there is low-hanging fruit, they are going to be of that 

nature, small things that, without an organization collecting this in 

particular, would never rise to the level of doing anything about it. 

So, what I would say is that an organization to collect complaints 

would be intensely focused exactly on finding situations like this, 

small situations where you can fix a regulation and genuinely deal 

with a problem. 

Senator LANKFORD. But, again, that is supposed to be when they 

are promulgating the rule. That is the notice and comment. People 

are coming at them and saying, this is a bad idea. You are not giving us the least intrusive option, basically. We are getting a more 

expensive option when there is a cheaper option. When that is ignored, the rule comes out. They have limited time. Now, you are 

trying to argue about it. Going back to Ms. Katzen’s statement, 

well, they have a huge capital cost. You are not going to—— 

Dr. MANDEL. I think there are things that need to be caught at 

the beginning, but I would actually put that in the class of if you 

flag that afterwards, it might improve the quality of future rules. 

I think we do not actually have a feedback learning loop where we 

learn from our mistakes in the past to talk about what is going to 

happen in the future. Your constituents on this would actually be 

happy knowing that somebody was listening so the next rule that 

came along that potentially was like this—— 

Senator LANKFORD. Is not as bad. 

Dr. MANDEL [continuing]. Is not as bad. 

Senator LANKFORD. Right, and we have notice of common issues 

and everything else. 

Let me make one quick statement on this, as well. We talk a lot 

about problems. I would like to identify who is doing a good job on 

this, especially on the retrospective review. Is there any agency in 

particular that you could identify and say, that agency is more diligent than other agencies on doing a retrospective review and trying 

to evaluate where there are problems and getting rid of it? So, 

what I would like to know is, obviously, those are agency heads we 

would want to visit with and see if there are areas that we can 

learn and gain from, as well. So, what agency is doing a good job 

at retrospective review and dealing with this? 

Dr. ELLIG. A couple of years ago, Dr. Randy Lutter, who formerly 

worked at OIRA, now at Resources for the Future, did a study for 

Mercatus Center looking at agency retrospective review to try to 

figure out who is doing a good job and he did not find many. He 

did find, though, that, for some reason, the National Highway Traffic Safety Administration does have a longstanding program of ret-
39 

rospective review of regulations that they issued, and that was the 

only one he could find where he could name an agency that does 

this consistently over a long period of time. 

Senator LANKFORD. But, back to Dr. Mandel’s comments, that is 

an agency that they have State individuals that are watching for 

it all the time. They are always looking for ways to be able to find 

that, so it is a limited customer base, I guess, at that point, that 

is processing that. But, I am glad to hear that. 

Dr. MANDEL. The only one that I am aware of, it actually comes 

out of the same study. 

Senator LANKFORD. OK. 

Dr. MANDEL. OK. Most of the studies that have looked at this 

does not pick out ones that have done things especially well. 

Senator LANKFORD. OK. Other ideas or thoughts from you on 

this? 

Ms. KATZEN. Well, I think it is an ongoing process now, and if 

I could get back to you—— 

Senator LANKFORD. Sure. 

Ms. KATZEN [continuing]. I would be happy to do so. But, I am 

not familiar with the ins and outs currently—— 

Senator LANKFORD. Let me just say, this Committee would always be willing to be able to hear about good stories, what we are 

doing well, because that is the kind of story, whether you are in 

a neighborhood that has extensive poverty and all kinds of crime 

and you find a few families that are succeeding, to be able to find 

out, how are they succeeding and how do you multiply that in the 

neighborhood, or whether it is within agencies that are doing a 

good job in this process. We want to multiply and elevate the folks 

that are doing a good job with it. 

Ms. KATZEN. That is so constructive. Thank you. 

Senator LANKFORD. OK. 

Dr. MANDEL. You mentioned the report that was recently done 

on best practices. Let me actually just read you a short excerpt 

from that report. In 2014, Executive Branch agencies issued 24 

major rules. Not one regulation included a plan for retrospective review of the rule in the future, even though that was mandated by 

the Executive Orders from the President. 

Senator LANKFORD. OK. We will get back to you. Thank you. 

With that, I yield back, and I appreciate the conversation of the 

panel today. 

Chairman JOHNSON. Thank you, Senator Lankford. And, there is 

no doubt about it, if you want to achieve continuous improvement, 

analyzing best practices is probably one of the best, most efficient 

ways of doing that. 

We have a couple more minutes, and Ms. Katzen, I know you 

have to catch a flight, but without taking too much time, if I were 

in your chair, I would be sitting here going, OK, there is one thing 

I just wanted to get out and I did not get asked the question. I will 

give each one of you the opportunity, if there is something—you do 

not have to answer, but if there is something that you just want 

to talk about here and get it on the record before we close out the 

hearing. 

Mr. HOLTZ-EAKIN. Just as a matter of the self-reported compliance burdens, I respect the Administration’s intent with the retro-
40 

spective review and every President issues Executive Orders on 

this front, but if you actually look at the regs revisited under retrospective review, the self-reported compliance costs went up, not 

down, as a result of that process, and I think that tells you a lot 

about how hard it is to get this right. 

Chairman JOHNSON. Thank you. Dr. Ellig. 

Dr. ELLIG. Yes. Several members earlier in the hearing mentioned specifically issues with banks, which triggered something 

that I forgot to mention earlier. The Mercatus Center, some of my 

colleagues did a survey of community banks and how they are affected by Dodd-Frank, because, in theory, they are not regulated by 

Dodd-Frank, but in practice, Dodd-Frank regulates products and 

services and if they sell those products and service, such as mortgages and other loans, in effect, they have to comply with DoddFrank. 

And, I think that is a really good example of why it is important 

to understand what caused the problem we are trying to solve, because if the main point of Dodd-Frank was to try to prevent a financial crisis, I think we have to really ask carefully, what is the 

evidence that community banks caused the financial crisis. 

And, the more general point is if you have a set of regulated entities, or who would be regulated, who are not contributing to the 

problem you are trying to solve, why does the regulation need to 

apply to them to begin with? 

Chairman JOHNSON. By the way, I am the one that raised the 

community banks, and I will guarantee you, they feel like they are 

being affected dramatically by Dodd-Frank. 

Dr. ELLIG. Yes. 

Chairman JOHNSON. Dr. Mandel. 

Dr. MANDEL. I just want to make a point about language. I think 

we should start thinking about regulatory improvement rather 

than regulatory reform—— 

Chairman JOHNSON. OK. 

Dr. MANDEL [continuing]. Because regulatory reform puts us all 

to sleep and it does sound like Groundhog Day, and regulatory improvement is something that it can actually gather more bipartisan 

support. 

Chairman JOHNSON. That is a good suggestion. Words matter. 

Ms. Katzen. 

Ms. KATZEN. I would just like to thank the Chairman and the 

other Members of the Committee. I thought that what you brought 

to the table today was highly constructive and forward looking, and 

I think that is critically important in this area, that we recognize 

what we have and we build on our successes, and I thank you for 

the approach that you are demonstrating in this area. 

Chairman JOHNSON. Well, I appreciate those kind comments. 

And, by the way, this has been an excellent Committee since I have 

been serving here in the Senate for 4 years, very bipartisan, very 

collegial. And, I am trying to maintain that tradition that I have 

witnessed with Senators Lieberman and Collins, and Senators Carper and Coburn, trying to do the same thing with Senator Carper 

now. 

And, these hearings, when you have excellent witnesses that provide thoughtful testimony, that provide thoughtful answers to, I 
41 

think, some pretty thoughtful questions, I want it to continue. So, 

in other words, you do not just leave this table and go home and 

forget about it. Keep thinking about it. For example, if we want to 

set up one of these test commissions, that would be a good thing. 

So, keep collaborating. Keep thinking about these things. You are 

all obviously involved in this issue. Stay in communication with 

this Committee. 

So, again, I really do appreciate your thoughtful testimony, your 

answers. 

This hearing record will remain open for 15 days, until March 12 

at 5 p.m., for the submission of statements and questions for the 

record. 

This hearing is adjourned. 

[Whereupon, at 12:11 p.m., the Committee was adjourned.] 

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100 

Æ