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ASSESSING THE OBAMA YEARS: 

OIRA AND REGULATORY IMPACTS ON JOBS, 

WAGES AND ECONOMIC RECOVERY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JULY 6, 2016 

Serial No. 114–85 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

MIMI WALTERS, California 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

DANIEL FLORES, Chief Counsel 

SLADE BOND, Minority Counsel 
(III) 

C O N T E N T S 

JULY 6, 2016 

Page 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 3 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 4 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 6 

WITNESSES 

The Honorable Howard Shelanski, Administrator, Office of Information and 

Regulatory Affairs, Office of Management and Budget 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 10 

William W. Beach, Ph.D., Vice President for Policy Research, Mercatus Center at George Mason University 

Oral Testimony ..................................................................................................... 24 

Prepared Statement ............................................................................................. 26 

Clyde Wayne Crews, Jr., Vice President for Policy/Director of Technology 

Studies, Competitive Enterprise Institute 

Oral Testimony ..................................................................................................... 32 

Prepared Statement ............................................................................................. 34 

David M. Driesen, Esq., Professor of Law, Syracuse University College of 

Law 

Oral Testimony ..................................................................................................... 78 

Prepared Statement ............................................................................................. 80 

Douglas Holtz-Eakin, President, American Action Forum 

Oral Testimony ..................................................................................................... 90 

Prepared Statement ............................................................................................. 92 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from the Honorable Howard Shelanski, 

Administrator, Office of Information and Regulatory Affairs .......................... 114 

Response to Questions for the Record from William W. Beach, Ph.D., Vice 

President for Policy Research, Mercatus Center at George Mason University ......................................................................................................................... 117 

Response to Questions for the Record from Clyde Wayne Crews, Jr., Vice 

President for Policy/Director of Technology Studies, Competitive Enterprise 

Institute ................................................................................................................ 121 

Response to Questions for the Record from Douglas Holtz-Eakin, President, 

American Action Forum ....................................................................................... 124 
(IV) 

OFFICIAL HEARING RECORD 

UNPRINTED MATERIAL SUBMITTED FOR THE HEARING RECORD

Supplemental material submitted by David M. Driesen, Esq., Professor of Law Syracuse University College of Law. This material is available at the Subcommittee 

and can also be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=105157 
(1) 

ASSESSING THE OBAMA YEARS: OIRA AND 

REGULATORY IMPACTS ON JOBS, WAGES 

AND ECONOMIC RECOVERY 

WEDNESDAY, JULY 6, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 3:03 p.m., in Room 

2226, Rayburn House Office Building, the Honorable Tom Marino 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Collins, Ratcliffe, 

Trott, Bishop, Johnson, Conyers, and DelBene. 

Staff Present: (Majority) Daniel Huff, Counsel; Andrea Lindsey, 

Clerk; (Minority) Slade Bond, Chief Counsel. 

Mr. MARINO. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law will come to order. Without objection, the 

Chair is authorized to declare a recess of the Committee at any 

time, and that is going to take place in about 30 minutes, 30 to 40 

minutes because we will be voting. 

Welcome to this hearing entitled ‘‘Assessing the Obama Years: 

OIRA and Regulatory Impacts on Jobs, Wages, and Economic Recovery.’’ This topic is of the highest importance to working Americans. The last recession ended in 2009, but the economy has been 

limping along ever since. Job growth has been weak. Households’ 

incomes have stayed put. The economy has not grown by more than 

3 percent in any of the one of these years. One clear contributor 

is the growing Federal regulatory burden. 

Under the Obama administration, the number of major regulations promulgated per year has increased dramatically. In 2015, 

Federal regulations imposed an estimated cost of $1.89 trillion. To 

put this in perspective, U.S. regulatory costs now exceed the gross 

domestic product of both Australia and Canada. Numerous studies 

and the agencies themselves concede that on an industry-specific 

level, regulations lead to job losses. At a minimum, the data also 

establishes probable cause for concern that regulations decrease 

employment in the aggregate. Data shows that even where workers 

in regulated industries find new jobs, the displacement triggers a 

lifetime of physical and economic problems. 
2 

Accordingly, as President Obama’s former OIRA Administrator 

Cass Sunstein said, ‘‘Regulators must take that possibility seriously.’’ Unfortunately, regulators are not following this prudent 

path. 

A recent study of agencies’ Regulatory Impact Analyses found 

that only approximately 20 percent qualified employment effects. 

Since 2009, the Obama administration has imposed 229 major regulations at a cost, by its own estimate, of $108 billion annually. 

Merely administrating regulations in 2015 was estimated to cost 

taxpayers over $57 billion, an 83 percent increase over 2001. The 

effects are dire. 

A September 2015 study by a Princeton Nobel laureate shows 

‘‘shocking’’ rising mortality among blue collar segments of society. 

According to the study’s author, ‘‘those are the people who have 

really been hammered by the economic malaise. Their wages in 

real terms have been going down.’’ The economic stress is leading 

to drug and alcohol dependency and death, mental health problems, and even suicide. The Administration is dismissive. It circumvents reasonable procedures designed to limit burdensome regulations. It uses technical gimmicks to claim speculative benefits 

outweigh regulatory cost. 

Delegations of power are read broadly, while limitations are read 

narrowly. Half of the Administration’s vetoes have been used to 

block congressional objections to controversial regulations. 

OIRA is supposed to be the gatekeeper, the entity that helps 

fight overregulation and protect small businesses and the American 

worker. 

Unfortunately, on some of the most costly and controversial regulations of the last 8 years, OIRA has not proven an effective check. 

For example, it never insisted upon the required small business impact analysis for EPA’s Waters of the United States regulation, despite its obvious sweeping reach. Nor has it questioned agencies’ 

excessive reliance on co-benefits and performing required cost-benefit analyses. In fact, one of the reasons agencies have to inflate 

the claimed benefit of their rules is to outweigh skyrocketing cost 

because they are regulating well into the region of diminishing 

marginal returns where one must spend increasingly more to 

achieve increasingly less. This track record makes me concerned 

about ‘‘Midnight Rules’’ at the end of this Administration. 

Midnight Regulations impose the ongoing Administration’s agenda on the country before an incoming Administration can stop it. 

So today, it is important to ask what serious steps will OIRA take 

to prevent this final abuse? The legacy of this Administration will 

be severe damage to hardworking Americans, our economy, and the 

rule of law. 

Discretion afforded administrative agencies by Congress has been 

abused. Major decisions were made not by the people’s Representatives in Congress, but by unelected bureaucrats. This cannot stand. 

I hope Administrator Shelanski can offer ideas on making OIRA 

more effective. I also hope to hear from our second panel of witnesses about needed reforms. 

The Chair now recognizes the Ranking Member of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, 
3 

the gentleman from Georgia, Congressman Johnson, for his opening statement. 

Mr. JOHNSON. I thank the Chairman. Established by the Paperwork Reduction Act of 1980 and empowered with centralized regulatory review responsibilities under President Reagan, the Office of 

Information and Regulatory Affairs, also known as OIRA, functions 

as the gatekeeper of the regulatory system for the most important 

Federal rules. 

In 1993, President Clinton issued Executive Order 12866 to require that OIRA review all ‘‘significant’’ regulatory actions between 

500 and 700 a year. It additionally requires that Federal agencies 

prepare a cost-benefit analysis for economically significant rules. 

In January 2011, President Obama issued Executive Order 

13563, which reaffirmed the principles of Executive Order 12866 

but also requires that agencies develop plans for retrospective review of existing regulations to determine whether any should be 

modified, streamlined, expanded, or repealed. And finally, the 

Obama administration issued Executive Order 13610 in May 2012 

to further increase public participation in retrospective reviews. 

According to Mr. Shelanski’s predecessor, Cass Sunstein, these 

orders have energized agencies to identify hundreds of outdated 

rules for elimination, and many agencies have already finalized or 

proposed, or formally proposed, over 100 of these reforms. For instance, the Department of Health and Human Services has finalized several rules to remove hospital and healthcare reporting requirements, saving $5 billion over 5 years. These efforts have continued under Administrator Shelanski, and thus far, appear to be 

working. 

Combined, it’s clear that these initiatives have already resulted 

in hundreds of formal proposals to eliminate rules representing billions of dollars in savings over the next several years and substantially more in eventual savings. I look forward to learning about 

the continuing efforts, to date, of the President’s push to have 

agencies improve and modernize the existing regulatory system. 

In addition to conducting oversight of OIRA, witnesses on our 

second panel will also discuss larger concerns with our Nation’s 

regulatory system. I would note that the most pressing issue facing 

our regulatory system today is the timely response to public health 

and safety crises through the expeditious promulgation of Federal 

rules. But sadly, it has become common for my colleagues to assert 

that the same regulations that protect our health, safety, environment, and our financial system have undermined the Nation’s economic recovery and job growth. 

This could not be further from the truth and is simply not borne 

out by any serious research. Perhaps that is why conservatives also 

acknowledge that in light of improvements in the economy and the 

unemployment rate, it is becoming increasingly difficult to argue 

that the current regulatory environment has any effect on jobs or 

growth. Douglas Holtz-Eakin, one of the majority’s witnesses in today’s hearing, commented last year that, ‘‘with low employment 

and rising wages, the Republican’s job gets a lot harder,’’ while also 

referring to recent employment growth as promising. 

I think 20-some million new jobs created over in the private sector since, President Obama took office. First, it’s a loss of a couple 
4 

of million jobs during the previous Administration. And, with respect to those figures about rising mortality rates among the blue 

collar working group demographic, it’s not just because wages have 

gone down and they’re dying because of alcohol, drugs, and mental 

health. 

Certainly, wages have gone down, and they are dying of alcohol, 

drugs, and mental health disease, but also, liver and heart disease 

are taking out our fellow man, and this can all be attributable 

somewhat to the globalization of our economy, the movement of 

jobs offshore, production jobs, blue collar jobs, those jobs—many of 

those jobs have left under trade deals that have not worked for the 

American worker, and people, unfortunately, when they become— 

when they—there’s a sense of hopelessness that starts to pervade 

their thinking, then they turn to alcohol and drugs, and they then 

develop liver disease, heart disease. But fortunately, there’s treatment available for the millions, tens of millions who have been able 

to gain access to the healthcare system due to the passage and implementation of the Affordable Care Act, which my colleagues on 

the other side have tried more than 60 times to abolish with no 

plan in place to replace it. 

And, of course, we have had some regulations that have ensued 

as a result of implementation of the Affordable Care Act, a major 

piece of legislation, and also the Dodd-Frank financial reform bill 

that has attempted—or has been effective thus far at creating another—or enabling another too big to fail situation to take out the 

retirement earnings of our working people and to keep our economy 

moving forward. 

So I would like to say that once you set aside anti-regulatory 

rhetoric, it’s clear that regulated industries exhibit more entrepreneurship, competition, and innovation given the fact that Alex 

Tabarrok, an economics Chair at the Mercatus Center at George 

Mason, found, in a 2015 study, that ‘‘industries with greater regulatory stringency,’’ and I am quoting him, ‘‘have higher start-up 

rates as well as similarly high job creation rates.’’ 

So in closing, I would like to thank Administrator Shelanski for 

taking the time to appear before us today, and I’d like to thank the 

other witnesses for being here today, and with that, I yield back. 

Mr. MARINO. The Chair now recognizes the gentleman of the full 

Judiciary Committee, Mr. Bob Goodlatte of Virginia, for his opening statement. 

Mr. GOODLATTE. Thank you very much, Mr. Chairman. I want to 

thank you for holding this hearing, which is very timely. Overregulation is not a new issue, and the reason why this hearing is timely 

is it comes right after Independence Day. Among the grievances 

that the signers of the Declaration of Independence lodged against 

King George was overregulation: ‘‘He has erected a multitude of 

New Offices and sent hither swarms of officers to harass our people 

and eat out their substance.’’ 

Unfortunately, the problem has resurfaced. Last year, employment at regulatory agencies hit an all-time high of 277,000. In 

2014, rules from the administrative agencies outnumbered laws 

passed by Congress 16 to 1. There has been a dramatic power shift 

in these United States from elected officials to unaccountable bureaucrats at Federal regulatory agencies. 
5 

In theory, agencies are governed by legislation, like the Administrative Procedure Act, as well as executive orders, designed to ensure transparent, quality rulemaking that is responsive to the people, balances costs and benefits, and is faithful to the intent of Congress. In practice though, too many Administrations have not adhered to these procedures in good faith. 

The Obama administration, in particular, has taken advantage of 

the system to ram through radical, controversial, and sweeping policy changes contrary to the will of Congress, and of views of large 

segments of the voting public. Serious reforms are needed to curve 

these abuses. 

At key stages in the rulemaking process, the Administration has 

ignored, or subverted, commonsense rulemaking procedures that 

stood in the way of their policy goals. For example, instead of using 

required regulatory impact analysis to determine whether regulation is necessary, agencies produce them in a perfunctory way, 

after the decision to regulate has already been made. A Mercatus 

Center study found that in essentially 87 percent of cases, agencies 

embarked on costly regulations without significant evidence that 

there was a problem or a precise idea of what they needed to fix. 

Similarly, agencies make questionable certifications that rules will 

not have a significant economic impact on a substantial number of 

small entities in order to avoid requirements designed to help rein 

in impacts on small businesses. 

While the Obama administration pays lip service to the virtues 

of cost-benefit analysis, it routinely uses technical gimmicks like 

non-standard discount rates and excessive reliance on co-benefits to 

ensure its preferred outcomes. The Administration is also exploiting the Administrative Procedures Act’s interpretive rules exception to impose dramatic and controversial policy changes without 

notice-and-comment or public participation. These include an unprecedented 30 guidance documents from the Department of Education straining the application of Civil Rights laws into controversial areas well beyond their intended scope. 

Unfortunately, whether with regard to highly controversial rules, 

like EPA’s Waters of the United States rule, Clean Power Plan 

rules, or Utility MACT rule, the Office of Information and Regulatory Affairs (OIRA), has proven ineffective at preventing regulatory abuses, particularly when the costs are highest and it matters most. 

To be sure, in some cases, OIRA has improved the quality of 

rulemaking. However, that just underscores the need for fundamental regulatory reform in the face of executive branch abuses in 

the most high-profile cases. 

This hearing is an opportunity to lay before the American public 

precisely how the President’s ‘‘I have got a pen’’ approach has exploited the weaknesses in the regulatory system. That is the legacy 

of the Obama administration. For 8 years, it has abused discretion 

that Congress delegated in good faith. Serious and comprehensive 

reform is needed, and I look forward to exploring with the witnesses both the problem and its solutions. Thank you, Mr. Chairman. 
6 

Mr. MARINO. The Chair recognizes the full Judiciary Committee 

Ranking Member, the gentleman from Michigan, Congressman 

Conyers for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman, Members of the Committee, and especially to our first witness, the head of the Office 

of Information and Regulatory Affairs. It’s been 3 years since Administrator Shelanski was appointed to head OIRA, and I’d appreciate hearing his thoughts on the current state of affairs with respect to Federal rulemaking and whether legislative fixes are needed in his view. 

And, I’m also—I don’t know how you can get all this into 5 minutes, but I wanted to get a sense of what it was like before you 

got—before you took over so we can empathize with what it is 

you’ve been working on and how you’ve—how you’ve approached it. 

Some think the regulatory system, as you heard, is broken. But 

to that end—excuse me. They also support a series of anti-regulatory measures, many of which would impose numerous procedural burdens on Federal agencies. 

Now, that’s a curious difference of views that are being pushed 

by some of the same important personalities in the Congress. Other 

anti-regulatory measures would up-end the rulemaking process 

through unnecessary and costly litigation changes. For example, 

one bill, 4768, Separation Powers Restoration Act, is likely to be 

considered on the floor later this month, and would require Federal 

courts to review all agency rulemaking and interpretations of statutes on a de novo basis, resulting, of course, in a paralysis that 

would be out of sight, probably impossible, from my point of view. 

And so, there’s a sort of an opportunity to press down on OIRA 

and its leadership, which I’ve had some indication that they are 

small and understaffed, and with this enormous responsibility, and 

I would like to get from this hearing, not only from the Administrator, but the panels that follow, an idea of how we in the Congress can make the process more efficient and how the Administration can make it more efficient without Congress intervening, if 

that is possible. That’s why the hearing is important. 

The government has the obligation to protect health, welfare, 

and safety of all our citizens with the need to foster economic 

growth. And so, it’s in that spirit that I come to this hearing to 

hear our Administrator describe how things work inside OIRA, and 

what the challenges are that you are faced with. We know that the 

time—that the time—period of time for regulation is getting pretty 

long, and we want you to candidly tell us what you can do about 

it, and what we should do about it. And so, I thank Chairman 

Marino for holding this hearing. And, like my colleague, Mr. Johnson, I look forward to the work product of this important coming 

together. Thank you, Mr. Chairman. 

Mr. MARINO. Without objection, other Members’ opening statements will be made part of the record. Before we break for voting, 

I would like to swear you in, sir, if you don’t mind, so would you 

please stand and raise your right hand. 

Administrator Shelanski, do you swear that the testimony you’re 

about to give before this Committee is the truth, the whole truth, 

and nothing but the truth, so help you God? 

Mr. SHELANSKI. I do so swear. 
7 

Mr. MARINO. Let the record reflect that the witness has responded in the affirmative, and thank you. Please be seated. We’re 

going to head to vote now. We have five votes. They’re beginning 

now with a 15-minute vote and then four 5-minute votes, so it 

looks like we’re looking at pretty close to at least a half hour, and 

I apologize for that, but we will get back as soon as possible, sir. 

[Recess.] 

Mr. MARINO. The hearing will now come to order and resume. 

I will now introduce our esteemed witness. And, thank you. I 

apologize again for making you wait. Dr. Howard Shelanski was 

confirmed by the United States Senate in June 2013 as the administrator of the Office of Information and Regulatory Affairs, otherwise known as OIRA. Prior to his confirmation, Administrator 

Shelanski served as the director of the FTC’s Bureau of Economics, 

and as chief economist for the Federal Communications Commission. Administrator Shelanski also served as senior economist for 

the President’s Council for Economic Advisers. 

Prior to working for the government, Administrator Shelanski 

practiced law and taught at both Georgetown University and the 

University of California at Berkeley. He received his BA from Haverford College and his J.D. and Ph.D. in economics from the University of California at Berkeley. Following law school, he clerked 

first at the District and the Appellate Courts levels and then for 

Justice Antonin Scalia on the U.S. Supreme Court. 

The witness’ written statements will be entered into the record 

in its entirety. And, I ask, sir, that—you have been here before. 

You know how it works. Now, because we’re not in the original 

room, we have no lights. We don’t even have a timer. Somebody’s 

going to sit beside me and tap me on the shoulders. And, when you 

get at about 41⁄2 minutes, I will just diplomatically hold the hammer up. I will not hit anything or anyone, and just try to wrap up 

then in the next 30 seconds to a minute. 

So Administrator Shelanski, please. 

TESTIMONY OF THE HONORABLE HOWARD SHELANSKI, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY 

AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET 

Mr. SHELANSKI. Thank you very much, Chairman Marino, Ranking Member Johnson, and Members of the Committee, for the invitation to appear before you today. I am pleased to have this opportunity to discuss recent developments at the Office of Information 

and Regulatory Affairs, OIRA, and report on the progress OIRA 

has made on the key priorities I outlined when I first appeared before this Committee in July of 2013. 

OIRA has a broad portfolio, but one of our main duties is to coordinate the review of significant regulations. The basic principles 

of regulatory development and centralized review have evolved in 

a bipartisan way over the course of the last few decades. 

The structure of regulatory review that we follow today was established by Executive Order 12866, which is quite simple and 

straightforward: Regulations should be based on a sound analysis 

of their impacts. They should be developed with public input and 

subjected to public scrutiny before they are finalized, and they 
8 

should be reviewed by a central office to ensure consistency with 

sound regulatory practice and Administration priorities. 

OIRA does not review all executive branch regulations, nor would 

it be efficient for the office to do so. We review only significant regulatory actions. The most fundamental category of significant regulations are those that are economically significant, the threshold for 

which under the executive order is an annual effective on the economy of $100 million or more. 

Typically, an agency sends a draft of a significant proposed or 

final rule to OIRA, after which OIRA coordinates an interagency 

review process. Typically, the agency will agree with some but not 

all of the comments that it receives from OIRA and the other reviewing agencies. Through discussion and deliberation with interagency reviewers, the rulemaking agency ultimately produces a 

proposed or final regulation to be published in the Federal Register. 

OIRA works to ensure that the costs of new regulations that 

come to the Office of Review are justified by the benefits. To date, 

the net benefits of regulations issued through the sixth fiscal year 

of the Obama administration are about $215 billion. The benefits 

of these rules are not mere abstractions. They help American families every day by saving lives, preventing illness and injury, and 

protecting consumers. 

As this Administration comes to a close, we intend to maintain 

the strong regulatory review standards that have guided OIRA’s review of regulations throughout the Administration. In December of 

2015, I issued a memorandum to deputy secretaries outlining these 

expectations. The memo asked agencies to adhere to dates established in their fall 2015 regulatory plan and agenda, and to update 

OIRA about any necessary changes. 

The memo acknowledged that agencies will issue many needed 

regulations through 2016, but requested that agencies strive to 

complete their highest priority rulemakings by this summer, because OIRA needs sufficient time to thoroughly review all regulations for compliance with applicable statutes, governing executive 

orders, and OMB circulars. 

When I became OIRA administrator in 2013, one of my goals was 

to increase the predictability of the regulatory review process by 

improving the timeliness and transparency of OIRA’s key functions. Toward that end, and as I committed to do the first time I 

appeared before this Committee, we have published the regulatory 

plan and agenda each fall and spring, most recently on November 

16, 2015, and May 18, 2016. 

OIRA is committed to putting out another regulatory plan and 

agenda in a timely fashion this fall. OIRA has also worked to improve the transparency of regulatory review. When an agency submits a rule to OIRA for review, the submission appears publicly the 

next day on OIRA’s Web site. This posting provides stakeholders 

with notice that OIRA is initiating review of a regulation and is 

available to meet with any party interested in providing input on 

a rule under review. 

The entities with which OIRA typically meets include Members 

of Congress and their staffs, State and local governments, businesses, trade associations, unions, and advocates from a variety of 
9 

organizations. OIRA posts a log of all such meetings on its Web site 

detailing the participants in each meeting, the organizational affiliation of the participant, and post any materials prior to OIRA at 

the meeting. 

One hallmark of this Administration’s regulatory policy is our 

retrospective review effort. Retrospective review, which the President has advanced through Executive Order 13563 and 13610, is 

a crucial way to ensure that our regulatory system remains modern 

and streamlined and does not impose unnecessary burdens on the 

American public. The essential idea is to scrutinize existing rules 

and assess whether in practice they are achieving their objectives 

without imposing unnecessary costs. 

Agencies release their most recent reports on March 4, 2016, and 

will submit their next reports to OIRA this month. To date, this 

Administration’s retrospective review efforts are expected to yield 

an estimated net 5-year savings of $28 billion. 

In conclusion, regulations can and do bring great benefits to 

Americans, but they also carry costs. OIRA works every day to 

achieve the goals outlined in Executive Order 13563 to protect public health, welfare, safety, and our environment, while promoting 

economic growth, innovation, competitiveness, and job creation. 

It is critical to ensure that Federal agencies base their regulatory 

actions on high-quality evidence and sound analysis. It is also crucial that a culture of retrospective review is sustained at the agencies as any healthy organization should scrutinize its current approaches to see if they are still relevant and effective in a rapidly 

evolving economy. 

We look forward to continuing our efforts to meet these challenges. Thank you for your time and attention. I would be happy 

to answer any questions. 

[The prepared statement of Mr. Shelanski follows:] 
10 
11 
12 
13 
14 
15 

Mr. MARINO. Thank you. Now we will begin the 5 minutes of 

questioning from each of the Members. And, we will try to do just 

as well as you did, to do it within around 5 minutes. 

First thing I would like to bring to your attention and ask your 

response to, sir, is the Committee—the Subcommittee, which I’ve 

Chaired for the last couple of years now, asked in writing for a list 

of all proposed, or final rules reviewed by OMB since January of 

2009 where the cost-benefit analysis, by one or more methods of 

calculation would be negative if co-benefits were excluded. OIRA offered a generic reply that co-benefits are discussed in an annual report. 

Would you be so kind as to commit to providing the list that I 

just asked for by July 20 of this month? 

Mr. SHELANSKI. Thank you, Mr. Chairman. 

I would like to take that request back and to see what it would 

take for us to compile that list, and we will get back to your office 

as quickly as possible with when we can reply. 

Mr. MARINO. Do you think you will be able to get back to us as 

to when you can complete that list before July 20? 

Mr. SHELANSKI. Yes. I will get back to you before July 20 with 

an answer as to what kind of work I think will be involved with 

that and when we can do that. 

Mr. MARINO. Thank you. 

Your written testimony outlines steps you took ‘‘to avoid an endof-the-year rush,’’ which we have seen concerning regulations with 

all Administrations. Essentially, you requested that agencies act 

promptly. Supposing they refuse your request, what consequences 

would they face—not could they face, but would they face—with 

you if that information is not put together? 

Mr. SHELANSKI. The memorandum that I issued in December 

makes clear that we at OIRA need time to make sure that we have 

done a thorough review. And, we will uphold the standards of the 

executive order. The consequence that agencies will face if they 

come to us too late with rules is that we may not have time to do 

that kind of thorough review, in which case their rule would not 

be completed by the end of the Administration. 

Mr. MARINO. Let’s expand a little bit on that question and your 

statement. You said you do not have—you may not have time because of what the agency has not done or fulfilled their request. 

But as the Administrator, how do you respond to that? It’s like, you 

know, I ask my kids to have something done, and it’s not done, 

there are consequences. Maybe we should start running the government a little more like we, parents, supervise our children. 

Mr. SHELANSKI. It’s hard to know in advance of any rule being 

submitted what kind of shape the rule is in, or what the review 

time will be. Some rules can be reviewed thoroughly and completely in a relatively short period of time; others will take a lot 

more back and forth, will implicate a lot more of the equities of 

other agencies. 

So it’s hard to know in advance what the consequence of a particular late submission will be, but—so the operative principle that 

we’re using is to tell them that if you submit us a rule late and 

it’s a rule that will take more time to do a good job on, it won’t 

be able to be concluded on. I can’t tell in advance before I see a 
16 

rule how long it will take to review or what the process will be, but 

they are on notice that, you know, we can’t shortcut our process 

and we can’t rush rules through at the end. 

Mr. MARINO. Don’t you think there should be some type of—I 

don’t want to use the word ‘‘sanction,’’ but some type of notice or 

warning, public notice or warning to that agency, to that department, that we requested this information, the time has lapsed, we 

have had no response? Or is it even a situation where you have requested an extension? 

I mean, the American people have to understand what is not taking place. And, elected officials and those that are appointed to office can simply just not ignore because this is what gets us into the 

problems that we’re in with the debt and a whole litany of other 

issues. But there are responsibilities. I came from industry. You’re 

an officer of the court. You know when a judge says I want this 

done by this date; if it’s not done, there are sanctions. So why are 

the bureaucrats, why would the elected officials be immune from 

this? 

I think part of your responsibility and other Administrators’ responsibility is to make it publicly known that your request wasn’t 

fulfilled, and the agency is lacking in getting American people information. What say you? 

Mr. SHELANSKI. If an agency chooses not to send a rule to OIRA, 

that’s something that’s very much in their discretion. If it’s not a 

rule that has a court order or a statutory deadline, I don’t have any 

authority to issue a sanction because an agency doesn’t send a rule 

over. But what I can do, and the authority that I do have is to 

make sure that my office operates in a way that it lives up to its 

authorizing executive orders. 

And so, what I can tell agencies—and again, it’s not my—you 

know, I can tell agencies, look, you are working on this rule and 

you say you want it done, we’re running out of time. And, that’s 

the kind of thing that I can tell them, and then they have to make 

a decision and be answerable to the public about whether or not 

they are going to continue with that particular rulemaking. 

Mr. MARINO. I agree with you. I’m way over my time and I apologize. But what would help is probably you giving them a little 

nudge and saying, if this isn’t done by a certain time, I’m going to 

send notice over to the Committee that’s responsible for oversight 

or budgeting you, and explain to them that you’re not cooperating. 

Maybe that’s what we need. 

But with that, my time has expired. I thank you, and I now yield 

to the Ranking Member of the Subcommittee, Mr. Johnson, for his 

questioning. 

Mr. JOHNSON. Thank you, Mr. Shelanski. 

I have serious concerns that the cost-benefit analysis requirement for significant rules comes at the expense of Americans’ public health safety and environment. How can we possibly quantify 

the benefit clean drinking water will have on a neighborhood when 

new solid waste regulations protect that neighborhood from coal 

ash dumping? How can we possibly quantify the benefits that clean 

drinking water would have, based on a newly promulgated rule 

that protects that neighborhood from coal ash dumping? 
17 

How can we accurately quantify the cost of exposure to dangerous chemicals and toxic materials on the long-term development 

of children in low-income and minority communities? Repeatedly, 

critical public health rules are called too burdensome for corporations to comply with, but what about the communities at stake, 

communities who find the cost to their health, safety, and wellbeing not factored in because it does not have an easily quantifiable dollar figure? What about the burdens that those folks face? 

Regulations should act as a floor, not a ceiling. Rather than 

weakening rules to lower the cost they have on big business, we 

should be strengthening rules so the burden on the American public is not too costly. In light of these concerns, should we reform 

OIRA’s review process so it is more reflective of the cost and benefits that rules have on the health and well-being of everyday people? 

Mr. SHELANSKI. Thank you very much, Mr. Johnson. That’s a 

very important question. 

I do think it’s very important to quantify as much as possible the 

costs and benefits of a regulation. I think it’s important for the 

American public to understand what regulation is costing them. I 

think it’s extremely important for the business stakeholders to 

have notice of what their compliance costs might be. It is important 

that our regulation remain consistent with economic growth and 

job creation. 

On the other hand, we well recognize, and indeed, our executive 

orders well recognize that there can be limits in our ability to 

quantify benefits. So there is not a rigid requirement that quantified benefits exceed quantified costs, because there is a recognition that in some places, there are benefits, benefits that can be 

proven to exist but, as you say, are hard to put a dollar figure on. 

So what we ask agencies to do is to quantify as much as available scientific evidence and health evidence will permit, what the 

reduced illness incidents will be, what the reduced death and injury incidents will be of a rule, and to quantify those by some very 

well-established techniques. 

But we also recognize that in some cases, there will be—the evidence will be difficult to come by. And, there we look for a strong 

case that the rule will achieve its intended goal of, for example, 

clean drinking water or cleaner air, and that there is good evidence 

that those changes will be reflected in public health gains. 

So I do not—I would not be in favor of reforming the executive 

orders and the cost justification principles that underlie them. I 

think they are very healthy, and I think that they are consistent 

with providing the kinds of benefits that you articulated, sir. 

Mr. JOHNSON. Thank you. 

Anti-regulatory measures, such as H.R. 185, the Regulatory Accountability Act, and H.R. 4768, the Separation of Powers Restoration Act, have been proposed to heighten judicial review of agency 

rulemaking. You previously testified that you have grave concerns 

with conducting judicial review at a granular level because it could 

grind to a halt the deliberative process and good policy development. 

What are some examples of rulemakings that would be particularly sensitive to heightened review? 
18 

Mr. SHELANSKI. Thank you, sir. 

My concern about judicial review is of the kind that has been 

suggested in some proposed legislation, is that it would put judges 

in the position of reviewing very detailed kinds of factual decisions 

that expert agencies typically make, and would really overturn decades of precedent about the appropriate scope of deference to factfinding and decision-making in the agencies. And, the result would 

be that it would be very hard to move forward in rulemaking if at 

every given stage, every determination of the agency could be second-guessed, no matter how material on judicial review. 

So I do have some concerns about judicial review of OIRA determinations, or a very granular kind of agency determinations for the 

reasons that you set forth. 

Mr. JOHNSON. Are you concerned that heightened judicial review 

may empower courts to make substantive determinations? 

Mr. SHELANSKI. Yes, sir, that is one of the concerns. I think that 

the system of judicial review that is in place over decades of Supreme Court precedent is designed to have courts take one step 

back from those kinds of very detailed, substantive determinations. 

And, my concern would be that agencies would find it very difficult 

to make progress on necessary regulations, regulations that respond to pressing public needs, if they would face that kind of judicial review. 

Mr. JOHNSON. Thank you, sir. I yield back. 

Mr. MARINO. The Chair recognizes the gentleman from Texas, 

Congressman Ratcliffe. 

Mr. RATCLIFFE. Thanks, Mr. Chairman. Sorry, I was deep in 

thought there. 

Mr. Chairman, I appreciate you holding this hearing, and I will 

tell you that I think the work that this Subcommittee does is some 

of the most important work that we do here in Congress. I can tell 

you from the constituents that I have in Texas, the issues that 

we’re talking about here, including what the gentleman from Georgia just referenced, are very personal to my constituents. 

I’m afraid that sometimes here in the Halls of Congress, the statistics and the numbers and the clinical terms that we use in these 

hearings desensitize all of us to the real impact that the policy decisions have, whereas I can tell you the folks back in northeast 

Texas aren’t. They see these issues in very clear terms, terms like 

jobs and the uncertainty of their jobs and the stagnancy of their 

wages with respect to jobs and not getting pay raises for decades, 

how it impacts their families and their futures. 

And, from the conversations I’ve had with constituents, it’s painfully clear to me that so many of the burdensome regulations are 

inflicting real harm on individuals and families. Making matters 

worse at times is the attitude of indifference, at best, and condescension, at worst, from Federal regulators. Sometimes when I 

ask about the consultation process and whether or not there has 

been any meaningful consultation with stakeholders in a respective 

area or industry, the response is too often laughter. I think that 

this concept at times isn’t taken seriously by some of the regulators. 

The regulations—listen, I’m not against regulations. They certainly serve a purpose when they are done correctly. They can en-
19 

hance consumer safety, they can promote responsible stewardship 

of resources, and they can improve the lives of everyday Americans. 

But when regulations go wrong, which is what we see so often 

today, they can be impossible to comply with, and impossible to 

rectify or to reconcile with plain-old common sense. 

And so, I think a great example of that is what some of the 

unelected bureaucrats are doing at some agencies impacting millions of Americans with misguided, misinformed approach to the 

regulatory process. Let’s take the Internet. Every day Americans 

use the Internet for communication, for commerce, for Internet, for 

daily operations of their lives. And, I think that any regulation that 

is so far reaching should be done with extreme caution and undergo an intensive review process. Unfortunately, that’s not what’s 

happening. 

So last year, the FCC voted 3-2 along party lines to approve the 

Commission’s net neutrality rule, or as my friend from Texas in the 

Senate calls it, ObamaCare for the Internet. But let’s, for a second, 

set the policy debate about this new rule aside and talk just about 

the process. 

And, you know, the FCC is using the Communications Act of 

1934 to justify its regulation of the Internet. Bureaucrats at the 

FCC have said that it was the intention of this body of Congress 

to see that broadband Internet service was regulated like a telephone utility back in 1934. 

Now, I can’t remember the exact year that Al Gore invented the 

Internet, but I’m pretty sure it was after 1934. I think it underscores the issue that we’re talking about here. And, you know, with 

all due respect to the gentleman from Georgia and his comments 

about some of the legislation, admittedly, some of that legislation, 

the Separation of Powers Restoration Act, is my legislation, and it’s 

aimed at exactly this problem. 

And, you know, your response, Mr. Shelanski, about judges not 

having the expertise that some of these agencies have to make 

these decisions, I would point you to the one that I just said to 

highlight the fact that unelected bureaucrats at agencies are not always experts on issues. 

To correct another point, my legislation does not go to factual 

findings; it goes to legal interpretations, which is what judges are 

trained, vetted, and ultimately confirmed to do. 

So let me ask you on this, while we’re on the topic of the FCC, 

is because it’s an independent agency, this enormously consequential rule is exempt from the cost-benefit framework and OIRA review. And, as a result, OIRA is not able to promote adherence to 

the review measures which are designed to ensure, I think, that 

rules that govern the lives of the American people have undergone 

a thorough cost-benefit analysis and determined to be the least 

burdensome alternative. 

As you probably know, in 2012, the President’s Council on Jobs 

and Competitiveness recommended that independent agencies, like 

the FCC, be required to perform cost-benefit analysis and subject 

their regulations to OIRA review. I know that you previously 

worked at the FCC, correct? 

Mr. SHELANSKI. [No verbal response.] 
20 

Mr. RATCLIFFE. Do you, first of all, agree with the recommendations made by the President’s council, and if so, how would this, 

in your opinion, change the benefit or the quality of independent 

agencies’ rulemaking? 

Mr. SHELANSKI. Thank you very much, Mr. Ratcliffe. This touches on a very important issue. President Obama, in some of the executive orders that he has issued that govern OIRA, has actually 

very strongly encouraged the independent agencies to use some of 

the rigorous cost-benefit analysis that is—that executive branch 

agencies are subject to during OIRA review. 

I do have some concerns, separation of power concerns and other 

concerns, about subjecting independent agency rulemaking formally to OIRA scrutiny. I do agree, however, that the principles of 

cost-benefit analysis are ones that are good for any agency, whether it’s executive branch or independent; and that encouragement of 

those agencies to use those kinds of mechanisms would benefit the 

quality of their rulemaking and the American public. 

Mr. RATCLIFFE. Thank you. I see my time has expired. I will 

yield back. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from Michigan, Congressman Trott. 

Mr. TROTT. Thank you, Chairman, and also, Ranking Member, 

for organizing this hearing. 

And, Mr. Shelanski, thank you for appearing today and for your 

work on behalf of our country. You have a very impressive background, so there’s no question. A Ph.D. in economics from Berkeley, 

and clerking for Scalia, of Counsel to Davis Polk, and many great 

accomplishments. Have you ever run a business though? 

Mr. SHELANSKI. I have not run my own business, sir. 

Mr. TROTT. You spent 2 years in private practice, right? 

Mr. SHELANSKI. That’s correct, sir. 

Mr. TROTT. So never signed a paycheck. Never managed to a bottom line or a budget? 

Mr. SHELANSKI. Just the household, sir. 

Mr. TROTT. Okay. So I took a family business with six people, 

grow it into companies with about 2,000 people. We couldn’t have 

done it today. Couldn’t have done it. Even if we could’ve done it 

and made a profit, wouldn’t have wanted—their heavily regulated 

businesses wouldn’t have wanted to take the risk. 

So let me share with you—at a high level, do you think that— 

you know, you cited in your opening statement that over the last 

6 years, all the benefits to the economy with President Obama’s 

regulatory efforts. Do you think, with respect to small businesses 

in our country today, over the past 6 years, that the regulatory environment is supportive, or is it too onerous or just about right? 

Kind of the Goldilocks question for you. 

Mr. SHELANSKI. Thank you. I think that that’s a hard question. 

I will say this: Small businesses face unique challenges, and we 

have a system of regulatory review that is set up to try to take specific note of those. And, we do work closely with the Office of Small 

Business Advocacy to try to understand the specific effects that will 

occur on small businesses. So we certainly work to try to make it 

just about right. 
21 

Mr. TROTT. Well, so that’s a good segue. So last weekend in the 

district, I met with some independent party store and gas station 

owners. And, I was impressed with their knowledge. I thought only 

people in Washington understood all of our acronyms, but they had 

all the acronyms down. And, during the course of the meeting, they 

said to me, We cannot continue, Would never open another party 

store or gas station in today’s environment—these are independent 

business owners in my district—because of the following acronyms: 

EPA, FDA, ACA, and of course, the Department of Labor and some 

of their rules and regulations coming at them. 

So when I go home, I hear three questions: Why can’t you get 

anything done in Congress? Why can’t you stop President Obama? 

So I’m not going to ask you to opine on the first two questions. But 

if you give me some insight into the third question I get asked, 

which is, Can’t you get Washington out of the way? I can’t run my 

business in today’s environment. What should I say to those folks 

about the future of small business in America and free enterprise, 

which I believe is the reason why we’re the greatest country in the 

world? 

Mr. SHELANSKI. I think that the problem you allude to is a problem of cumulative burdens of regulation—— 

Mr. TROTT. No doubt. 

Mr. SHELANSKI [continuing]. That each regulation in itself may 

have a justification and may look fine, but by time you’re a business starting up and you have got multiple regulations that you 

need to address, it becomes a very difficult enterprise. I think that 

to deny that this is a critically important challenge for regulatory 

review and for agency rulemaking would not be candid. 

We do strive at OIRA, when we meet with stakeholders and 

when we work with agencies, to try to get agencies to look more 

broadly outside of their rule to understand what this rule does to 

add to the effects on profit margins in a particular sector. 

So it is within our mandate, and it is something that we have 

worked very hard to do. The best answer I can give you is, this is 

an area in which we continue to work with agencies. I will agree 

with you that more attention needs to be paid to how we can account for cumulative burdens. 

Mr. TROTT. Okay. So let’s talk about major impact and rules that 

have major impact, which is the focus of your office. And, in connection with that, let’s talk about the REINS Act. You’re familiar 

with the REINS Act? 

Mr. SHELANSKI. Yes, sir. 

Mr. TROTT. So tell me why that’s a bad idea. 

Mr. SHELANSKI. The Administration has issued its view on the 

REINS Act, and I think that what underlies that view is a concern 

that Congress has the authority already to disapprove any major 

regulation under the Congressional Review Act. 

Mr. TROTT. That hasn’t gone so well because half of the President’s vetoes have been of resolutions that we passed under the 

CRA, right? 

Mr. SHELANSKI. Yep. So one of the concerns is, under the REINS 

Act, an agency would issue a major rule, and then there would 

have to be a majority of Congress to ratify that rule. I think my 

concern is that this could really make it very difficult for important 
22 

major rules to get done because they would—they could be done 

very well. They could meet a very specific need, and then still not 

marshal the necessary majority. 

Mr. TROTT. But you would concede, if we had the REINS Act in 

place, it would give me a better answer when I go home, and I have 

to explain to small businesses why we haven’t been able—we, the 

elected representatives of the people—haven’t been able to weigh in 

on regulations that have an impact of over $100 million on our 

economy? I mean, that’s a disconnect for me, because all I can 

point to is the fourth branch of government, that growing bureaucracy—which is, again, one of the questions I get hit with a lot, why 

has Washington gotten so big. 

And, then the other—and I run out of time—but the other question I get when people come visit here, tourists and come to see our 

Capitol and the White House, is they comment on all the cranes 

that are in Washington. They have never seen so many cranes. We 

all know Washington didn’t have a recession like Detroit did, and 

we all know that Washington continues to grow because government just grows and grows beyond—but I thank you again for 

being here, sir, and I yield back my time. 

Mr. SHELANSKI. Thank you. 

Mr. MARINO. Seeing no other Members on the dais, this concludes today’s first panel. 

Administrator, I want to thank you so very much for being here. 

And, once again, I apologize for the delay. I want to thank you for 

agreeing to get that information to me before the 20th. I really appreciate that. You are excused, sir. 

Mr. SHELANSKI. Thank you, sir. 

Mr. MARINO. And, would the second panel please come up to the 

hearing table. 

We are missing one of the witnesses, but we’re going to get started in the interest of time. 

I would ask the gentlemen at the table, would you please stand 

and raise your right hand to be sworn in. Do you swear that the 

testimony you’re about to give before this Committee is the truth, 

the whole truth, and nothing but the truth so help you God? Thank 

you. Please be seated and let the record reflect that the witnesses 

have acknowledged in the affirmative. 

Mr. Crews, if you would just continue standing and raise your 

right hand. We just swore the other witnesses in. Do you swear 

that the testimony you’re about to give before this Committee is 

the truth, the whole truth, and nothing but the truth so help you 

God? I do. Let the record reflect that the witness has acknowledged 

that he does affirm in the positive. 

The four distinguished members of this area of expertise to testify before us today, and I will begin with introducing Dr. William 

Beach. 

Mr. BEACH. That’s correct. 

William Beach is the Vice President for Policy Research at their 

Mercatus Center at George Mason University. Dr. Beach previously 

served as the chief economist for the Senate Budget Committee Republican staff. Prior to that position, he was the Lazof Family Fellow in Economics at the Heritage Foundation, and director of the 

Center for Data Analysis. 
23 

Prior to joining Heritage in 1995, Dr. Beach served as a senior 

economist in the corporate headquarters of Sprint United, Incorporated, and from 1991 to 1995, as the president of the Institute 

for Humane Studies at George Mason University. Dr. Beach received his bachelor’s degree from the Washburn University in Topeka, Kansas; his master’s degree in the history of economics from 

the University of Missouri-Columbia; and a Ph.D. in economics 

from Buckingham University in Great Britain. 

Welcome, Doctor. 

Mr. BEACH. Thank you very much. 

Chairman Marino, Ranking Member—— 

Mr. MARINO. Sir, I’m going to just go through everybody’s. 

Mr. BEACH. Is that held against my time? 

Mr. MARINO. It’s not. We will start from ground zero. 

Our next invitee is Mr. Clyde Wayne Crews, Jr. Mr. Wayne 

Crews is vice president for policy and director of technology studies 

at the Competitive Enterprise Institute, a former Cato Institute 

scholar as well as a Senate and FDA staffer. He is widely published and a frequent speaker on a range of policy issues at venues, 

including the National Academies, European Commission-sponsored conferences, and the Spanish Ministry of Justice. 

Mr. Crews is co-editor of the books ‘‘Who Rules the Net?: Internet Governance and Jurisdiction,’’ and ‘‘Copy Fights: The Future of 

Intellectual Property in the Information Age.’’ His other works are 

cited in dozens of law reviews and journals. Mr. Crews is a father 

of five, received his B.S. From Lander College and his MBA from 

William & Mary. 

Welcome, sir. 

The next witness is Professor David M. Driesen. Is that correct, 

sir? 

Mr. DRIESEN. Driesen, that’s correct. 

Mr. MARINO. Driesen. Thank you, sir. 

David M. Driesen is a university professor at Syracuse University, the 13th person in the history of the university to receive this 

honor, and a member scholar of the Center for Progressive Reform. 

He teaches environmental law, and his scholarship focuses primarily on law and economics and environmental law, including a 

substantial body of work on OIRA, or otherwise known as OIRA, 

review, and cost-benefit analysis. 

His books include ‘‘The Economic Dynamics of Environmental 

Law’’ and ‘‘Economic Thought in U.S. Climate Change Policy.’’ He 

sits on the editorial board of the various international and environmental law journals. Professor Driesen holds a bachelor’s degree in 

music from Oberlin College, a master’s degree in music from the 

Yale School of Music, and earned his J.D. At the Yale Law School. 

Welcome, Professor. 

Mr. DRIESEN. Thank you. 

Mr. MARINO. Our final witness is Dr. Holtz-Eakin, built an international reputation as a scholar doing research in areas of applied 

economics policy, econometrics methods, and entrepreneurship. He 

began his career at Columbia University in 1985, and moved to 

Syracuse University from 1990 to 2001. During 2001 to 2002, he 

was a chief economist of the President’s Council of Economic Advisers. From 2003 to 2005, he was the sixth director of the non-
24 

partisan Congressional Budget Office, which provides budgetary 

and policy analysis to the U.S. Congress. 

Currently, he is the president of the American Action Forum, 

and recently was a commissioner on the congressionally-chartered 

Financial Crisis Inquiry Commission. Dr. Holtz-Eakin received his 

B.A. From Denison University and his Ph.D. from Princeton University. 

Welcome, Doctor. Thank you, all, for being here. 

Now, Dr. Beach, you’re up. 

TESTIMONY OF WILLIAM W. BEACH, Ph.D., VICE PRESIDENT 

FOR POLICY RESEARCH, MERCATUS CENTER AT GEORGE 

MASON UNIVERSITY 

Mr. BEACH. Thank you very much. Chairman Marino, Ranking 

Member Johnson, Congressman Trott, it is really a great pleasure 

to be here with you today. I’m going to testify about OIRA and cumulative cost and what we can do in terms of asserting Congress’ 

authority in these areas, particularly in regulatory budget. But I 

would like to start with just a statement about the economy. 

The economic role changes most and for the good in economies 

where rivalrous economic behavior is allowed most to flourish, that 

is in economies devoted to free enterprise. Congress has no end of 

the number of things it has to do. I should know; I was once working, not so long ago, in the Senate. But near the top of the list of 

to-dos is the protection of this amazing process of value creation 

through innovation, discovery, and competition. 

We depend utterly on the private sector to produce nearly all of 

the material things we value. While the public sector is necessary 

as a partner in the production of these, by providing public goods, 

courts, highways, and so forth and so on, you wouldn’t want it any 

other way, the betterment of the American people since 1900 is almost wholly the accomplishment of competition between entrepreneurs trying to obtain the consumer’s attention for their products and services. 

Given the vital place of the competitive economic world in 

bettering the general public, Congress must be especially vigilant 

of the regulatory burden it imposes on the economy. In this vain, 

I am particularly eager to draw the Committee’s attention to three 

areas of regulatory policy where I have some concerns: One, the 

decay of regulatory impact analysis; two, the economic effects of 

regulation, the cumulative costs of regulation; and three, the growing absence of Congress in directing the future developments of the 

administrative state. 

And, let me briefly mention all of these in turn on the regulatory 

impact analysis. Policymakers in Congress would largely be in the 

dark, Mr. Chairman, about the expected effects of regulatory policy 

changes were it not for the development of regulatory impact analysis, cost-benefit analysis it’s also called. 

The Administration’s oversight of RIA’s is lodged, as we heard, 

in OIRA. Under normal circumstances, this small office would have 

trouble enough monitoring the adequacy of these many rules. But 

I would like to point out to you that it has some difficulty doing 

it because its staffing has been halved. It started off in 1981 with 

90 people. It now has exactly 50 percent of that at 45. So one of 
25 

the things we can do to stop the hollowing out of our cost-benefit 

analysis is to adequately staff OIRA. 

So what should we do to improve the quality of regulatory impact 

analysis, cost-benefit analysis? You asked that, Congressman Johnson, in your opening remarks. First, improve OIRA’s resources. 

Without adequate staffing and other resources, the Office’s capacity 

to improve RIA quality, cost-benefit analysis will be substantially 

compromised. 

Two, implement the process reform described in the recently 

passed House bill, the Administrative Procedures Act, that requires 

agencies to produce preliminary regulatory impact analysis and 

submit that to public comment before sending in its final RIA costbenefit analysis to OIRA. Our research indicates that preliminary 

analysis with public comment yields much better final results. 

And three, Congress should require all agencies to perform costbenefit analysis when proposing major regulations. 

Let me go to my second point: The increasing effect of regulations on the economy. I’m with everyone who has, so far, spoken 

today in being a fan of regulations. You can look at one regulation 

in one area, one regulation of another, and always make a good 

case. But there is a mounting likelihood that the cumulative effect 

of regulation is slowing the economy. 

We have just finished some research in this area: How much declining growth have we experienced because of the cumulative 

rapid rise of regulation? My colleague, Patrick McLaughlin, who 

couldn’t be here today, and his coauthors, recently used a growth 

model of the U.S. economy in a peer-reviewed piece of research and 

data from the Code of Federal Regulations to estimate is that 

there’s a $4 trillion loss in GDP in the base year of 2012. 

Now, what does that mean? That is, had regulations remained 

the same as they were in the heavily regulated year of 1980, the 

economy in 2012 would be $4 trillion higher than it actually was. 

Now, that’s a decrease of 25 percent from what it potentially could 

have had. There were 135 million employees working in 2012. That 

means, if you do the math, 25 percent more employees. We are 

missing 34 million jobs. 

Finally, I would like to say a quick word about regulatory budgeting. At issue in my two previous points, importance of RIA work 

and the mounting case for regulations are, in net, harmful to economic growth, is the need for congressional policymakers to attend 

to the more regulations than they have in the past. 

So what I’m advocating here is that Congress be a little more assertive in terms of what it does to authorize the spending of agencies that are pushing more regulations on us. A regulatory budget 

is an idea whose time maybe has come. It was first proposed by 

Lloyd Bentsen, and there are a number of Members who are very 

interested in regulatory budgeting as a way to contain and control 

the growth of regulations. 

I’ve got a good deal more in my written testimony which has 

been submitted for the record. Thank you very much. 

[The prepared statement of Mr. Beach follows:] 
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Mr. MARINO. And, let me remind everyone—and thank you for 

the reasonable time—there are timing lights in front of you. I think 

those of you who have testified here before, if there is someone 

here that hasn’t, I’m just going to say you have three lights. By the 

time that gets to the last red light, that means your time is up. 

The light before that gives you 1 minute. Please try to stay within 

that period of time, and if you need to express anything, we can 

give you some time during the question-and-answer session. 

So Mr. Crews. 

TESTIMONY OF CLYDE WAYNE CREWS, JR., VICE PRESIDENT 

FOR POLICY/DIRECTOR OF TECHNOLOGY STUDIES, COMPETITIVE ENTERPRISE INSTITUTE 

Mr. CREWS. Thank you. I’m Wayne Crews, Vice President for Policy at the Competitive Enterprise Institute, a libertarian policy and 

advocacy group. I thank the Committee for the invitation to address regulatory oversight. $19 trillion Federal debt notwithstanding, when policymakers neglect regulation, they ignore, arguably, government’s greatest influence in the economy. Both spending and regulation reorients societal resources and priorities. Yet, members may have noticed 

there’s still no sign of the 2016 OIRA report to Congress, so what 

reviewed regulatory cost figures we have are nearly 2 years old. 

Last year’s report was the latest ever. Congress confessed to 

over-delegation last month in last month’s Article I task force report, so code law is here to stay for the moment. OIRA should help 

lawmakers create a regulatory transparency supernova to spur economic liberalization. 

I was struck by a businessman writing in the Financial Times. 

He said, when I am 100 percent utterly and completely certain that 

it is an absolute certainty that it is an absolute necessity that I 

need to recruit a new employee, I go to bed, sleep well, and hope 

the feeling is passed by morning. 

While those doing the regulating see no problems, exasperation 

is rampant. Home Depot co-founder Bernie Marcus said the company couldn’t succeed if started today. Other polls say businessmen 

wouldn’t do it again, and startup rates and part-time employment 

rates affirm this. 

Unemployment, like poverty, doesn’t have causes. Both are the 

default state of mankind. Only wealth and production have causes, 

and regulatory zeal can derail enterprise. Problem is, legislatures 

rarely control spending, let alone the regulatory enterprise, and 

OIRA’s central review machinery can’t overcome presidents who 

deprioritize oversight or a regulatory system that frontally benefits 

rent-seeking special interests. 

Over 3,000 rules are finalized annually, but only 13 rules in the 

2015 OIRA report reviewed cost and benefits. The proportion of all 

rules with OIRA-reviewed cost-benefit analysis is less than 1 percent. On the rest, we don’t have cost-benefit analysis; we have 

agency selfies. The 800-pound gorilla independent agencies get no 

OIRA scrutiny, nor do the thousands of guidance documents and 

memoranda that I’ve taken to calling regulatory dark matter. 

Such chasms weaken the OIRA report’s authority as a comprehensive survey of regulatory impact, especially since 
33 

unmeasured categories of regulation propel cost as well, such as 

antitrust, the locking up of western lands, or the reluctance since 

the 1890’s to move spectrums and other commons into market disciplines. 

When government steers cross-sectorally, as it does today, it creates mounting costs, even if no future rules are issued, such as 

Congress’ delivery of the Internet and, as of 2 weeks ago, drones 

into century-old public utility models. Also new is EPA’s central 

planning of electric charging and hydrogen fueling stations in the 

wake of the Volkswagen settlement. Alas, much is beyond OIRA’s 

scope. 

Businessmen want to create jobs, but everything has limits. Jobs 

are a cost, they are a liability, and policymakers should recognize 

that. While a Vanguard study blamed hundreds of billions in cost 

on regulatory uncertainty, it said that sometimes the certainty of 

regulation is worse. 

My optimism stems from knowing there will always be an America, even if it’s not here, but I do not believe members wish to go 

to the mat maintaining regulatory overreach, and I hope members 

will jointly think through some North Star goals to enhance OIRA. 

Ronald Reagan’s Executive Order 12291 that energized OIRA in 

the first place showed the so-called pen and phone can also expand 

liberty by reducing Federal Register page counts and numbers of 

rules. Members can work with OIRA to enforce and codify the regulatory review executive orders, address independent agency costs, 

and illuminate regulatory dark matter. 

Other steps noted in my written testimony include boosting 

OIRA resources and free market law and economics staff at agencies, pausing regulation, and implementing the bipartisan Regulatory Improvement Commission. 

I highlight also the former regulatory program of the U.S. Government, a model by which OIRA could compile an annual regulatory transparency report to parallel the historical tables in the 

Federal budget. Optimally, reporting separately on economic, 

health, and safety, paperwork, and environmental and other costs. 

So while central review hasn’t worked, just possibly it could. 

When it comes to economic expansion, you don’t have to tell the 

grass to grow, but you do have to take the big rocks off of it. So 

why not use OIRA as a lever? 

Thank you very much. 

[The prepared statement of Mr. Crews follows:] 
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Mr. MARINO. Thank you. 

Professor Driesen. 

TESTIMONY OF DAVID M. DRIESEN, ESQ., PROFESSOR OF LAW, 

SYRACUSE UNIVERSITY COLLEGE OF LAW 

Mr. DRIESEN. Chairman Marino, Ranking Member Johnson, 

Members of the Committee, thank you for inviting me to testify. 

I think a key question we need to ask is whether OIRA helps us 

confront the major challenges that government standards address, 

such as global terrorism and climate disruption. I’m going to suggest today that OIRA has not helped us confront those challenges, 

and propose some reforms that would make the process more efficient. 

OIRA has not helped us confront these and other key challenges 

because it always delays standards, usually needlessly, while doing 

nothing, and never speeds them up. And, because when it does recommend changes, in almost every case the changes proposed weaken the standards. 

Now, government agencies already face substantial pressures to 

inadequately protect public health, the environment, and our safety, because regulated companies file voluminous comments, meet 

with agency officials, get concessions from them, sue them anyway, 

and then the courts make them do this all over again if they did 

not respond adequately to any of these comments. And, these are 

very well-funded interests, and we don’t need yet further gauntlets 

to interfere with these vital protections. 

The primary justification for OIRA reviewers, I think you’ve 

heard today, is the idea that an office of economist should help government agencies use cost-benefit analysis to improve the most expensive standards. OIRA, however, focuses mostly on standards 

where no cost-benefit analysis can be completed, because none of 

the benefits are quantifiable. And, it overwhelmingly focuses on 

rules that are not economically significant, that generate costs less 

than the $100 million threshold in the law. 

So I have the following recommendations to streamline the process and make it much more efficient: First, OIRA should be permitted only to review standards that generate cost of $100 million 

or more. This would force the agency to prioritize, and allow its 

small staff to review rules in a timely manner. 

Second, we should exempt rules that address terrorism and global climate disruption from the review process. These are cases 

where cost-benefit analysis cannot be helpful because it is radically 

incomplete on the benefits side, in both of these cases. And, these 

are areas where it cannot afford the delays that are routine in the 

OIRA process because there are risks of catastrophes that—and we 

don’t know when they might occur. So in these cases, there should 

be no OIRA review. 

We also should demand that OIRA not review agency risk assessments. This is an office of economists. Risk assessment requires 

scientific expertise that the agencies possess, but OIRA does not. 

And risk assessment, by the way, is the way that we come up with 

a number of lives saved, a number of illnesses avoided, and so on. 

Monetization, economists know about that, but risk assessment 

they don’t. 
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*Note: Supplemental material submitted by this witness is not printed in this hearing record 

but is on file with the Subcommittee, and can also be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=105157 

Fourth, when a cost-benefit analysis shows that the monetized 

benefits exceed the monetized cost, OIRA should be pushing for 

stricter standards because those maximize net benefits. They do 

not follow economic theory in this respect, never have, except on 

one occasion I can think of. 

The other thing we need to do is instruct the agency to ignore— 

the agencies to ignore OIRA’s input if the review process lasts more 

than 90 days. The current executive order has sought to limit the 

time of review. OIRA has evaded these limits. So we need a simple 

rule, and we need an enforcement mechanism. 

So my conclusion is that OIRA review has not helped us address 

key challenges that government standards address, including climate disruption and global terrorism, and that we need a much 

more efficient streamlined processes so that OIRA’s resources will 

be used properly and not produce inordinate delays. 

Thank you very much for your attention, and I welcome your 

questions. 

[The prepared statement of Mr. Dreisen follows:] * 
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Mr. MARINO. Thank you. Dr. Holtz-Eakin. 

TESTIMONY OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, 

AMERICAN ACTION FORUM 

Mr. HOLTZ-EAKIN. Thank you, Chairman Marino, Ranking Member Johnson, Congressman Trott, for the privilege of being here 

today. You have my written statement. Let me make three brief 

points: 

Point Number 1 is there has been a clear explosion of regulatory 

burdens in the Obama administration. OIRA reports that it has 

issued 453 economically significant regulations. That’s 38 percent 

more than the Bush administration. That’s 41 percent more than 

the Clinton administration. It’s above historic norms by a large 

margin. 

At the American Action Forum, my colleague, Sam Batkins and 

his staff, do a comprehensive review of regulatory issuance, they 

read every single final regulation, and the agency self-reported 

compliance cost. Over the 71⁄2 years of the Obama administration, the total is $800 billion in new regulatory burdens. That’s about 

$250 for every house, every person in the United States, and given 

the concerns that have been expressed by the Chairman and others 

about the pace of midnight rulemaking, that total is certainly going 

to go up perhaps dramatically. 

The second point is that these burdens do not disappear. They 

have economic consequences. The regulatory burden has to show 

up in the form of higher consumer prices, or has to show up in the 

form of lower wages in employment, or reduce profits and the ability of firms to survive, or even desirability to enter. 

American Action Forum looked at 36 major regulations, as I indicated in my testimony, and found that they raised consumer prices 

by a cumulative $11,000. These are significant impacts on prices. 

This isn’t AAF alone thinking this. When the Department of Labor 

issued a silica rule that had a $9 billion cost, it pointed out that 

for some of the smaller firms, those costs would represent 90 percent of their profits, but that it was not to worry. That would simply be passed on to consumers. 

If it doesn’t go to consumers, it’s got to go somewhere else, so in 

work, we looked at the impact of the 2008 ozone rule, and if you 

look at nonattainment counties compared to those in attainment, 

the impact is about $56.5billion in wages, or about $700 per worker, and a loss of something like 240,000 jobs. 

So you’re going to see these burdens in prices or wages and employment, or just in general economic growth. I mean, if you look 

at $800 billion, that’s $100 billion a year and 60 million paperwork 

hours a year. You have to believe that if we had $100 billion tax 

increase every year, everyone in America would know it, it 

wouldn’t be a hidden cost, and a lot of people would be saying, Gee, 

I’m not so sure that’s a good idea. This has been a terrible recovery 

by historical standards. 

And, I think it is no coincidence that for the past 3 years, for the 

first time, the rate of birth of new firms in the U.S. economy has 

dropped below the rate at which firms fail. We are not seeing the 

traditional American entrepreneurs who show up in the data, and 

the regulatory burden, I think, is contributing to that. 
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Final point is that the retrospective review process is not taking 

away existing regulations, so this is just new layers of burden on 

top of the old. The President signed, as has been mentioned, Executive Orders 13563 and 13610. If you look at our analysis of the impacts of those EOs, they raise the cost of the regulatory state by 

$16 billion. It went the wrong direction from a retrospective review 

point of view. 

And, one of reasons is new regulations, things like the gainful 

employment rule or new greenhouse gas controls are being classified as retrospective, when, in fact, they’re new regulations, and all 

of this suggests that the EO process, not just with President 

Obama, with previous presidents, is not a powerful enough tool for 

retrospective review, and that Congress should think about an alternative mechanism, whether it be the SCRUB Act or other legislation I know the Committee has considered. I thank you for the 

chance to be here today, and I look forward to your questions. 

[The prepared statement of Dr. Holtz-Eakin follows:] 
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Mr. MARINO. Thank you. I will start by questioning the witnesses 

for my 5-minute period. 

Dr. Holtz-Eakin, what are some potential reforms that could 

stem midnight regulations? 

Mr. HOLTZ-EAKIN. There are a range, and I think the question 

is which ones would be the most desirable. So you know, sometimes 

people want to just put a freeze on regulations. I think that’s too 

blunt an instrument. I prefer to have changes to the regulatory 

process that would sort of make the midnight rush impossible. 

So for example, there is the ALERT Act that the House has 

looked at. That kind of transparency, knowing what’s coming down 

the line, the timetables for rulemaking would, in fact, styme—stymie the midnight activities. And so, I think look to the entire regulatory process, reform that and stop the midnight rush in the process. 

Mr. MARINO. Dr. Beach, when the Administration, whatever the 

Administration it happened to be, at the end of their period, imposes major changes through guidance or other regulatory dark 

matter, is the damage—is there damage to the economy and is 

there damage to our government and our liberties? 

Mr. BEACH. Yes, I happen to believe that. I think that when you 

have an accumulation of regulations, whether it be in the major 

rules, it be in the minor rules or be in the dark matter that Wayne 

has so eloquently developed, these add to the cost of investment, 

they add to the cost of labor, they add to all those costs which go 

into the operation of a business. 

One of the reasons, as Doug pointed out, we have such a low 

level, a stunningly low level of firm creation has to be in the barriers which we’ve set up on the cost side, with all good intentions 

of helping people protect themselves against health and other kinds 

of injuries. It has prevented a lot of entrepreneurship. I’m very concerned about that. 

Mr. MARINO. Mr. Crews, would you care to respond to my question? 

Mr. CREWS. The same. Yeah, well, it’s one of the things that you 

look at what OIRA’s purview is. There are 3,400 or so rules that 

go through every year, and OIRA looks at about 500 of them. There 

are about 60 that it looks at, including budget rules where there 

are just transfers involved, but then, it’s just a very small handful 

that get any cost analysis at all. 

But on top of that, as the economy gets more complex, I think 

there is a concern now—there was a hearing in the Senate last 

week on this, of so-called—of agency guidances and memoranda 

and notices and bulletins. There’s a whole word cloud of these 

things that agencies are using now to effectuate policy, and I think 

that matters a lot. 

We do have some review at OIRA. We didn’t talk about it earlier 

when the administrator was here, but there is a good guidance 

practices memo from OIRA by which agencies can, they don’t have 

to, present their so-called economically significant guidance. By my 

brief inventory of it, there are 580 pieces of that, but that’s equivalent to the number of major rules at that go through every year. 

But those are scattered all over the place in terms of where you 

can find them on agency Web sites, so it’s very, very difficult. 
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We’ve got a very complex economy now. We’ve got a lot of new 

high technologies coming across the board. The FAA just dropped 

its drone rule 2 weeks ago, and I was just curious about this guidance issue. And, I just glanced—it’s a 500-page rule, but I glanced 

through it quickly, you know, doing some word searching, and 

there are at least six substantive areas in there where the agency 

says, Well, we’re just going to issue guidance in the future. 

The same thing has occurred with the Dodd-Frank law and the 

Unfair Deceptive Trade Practices principles there, not regulations 

forthcoming, but the administrator saying: We’re not going to issue 

regulations. You just need to check with us. 

FCC was brought up earlier. Page 88 in the 400-page Federal 

Communications rule on net neutrality, it says: Well, from now on, 

we’re going to be using these administrative notices like the FCC— 

like the FTC does with respect to antitrust. So you see, we’ve got 

a complex economy now that’s increasingly at risk of being regulated, not by laws passed by this Congress, not even by the regulations that go through the Administrative Procedure Act but more 

of this guidance. So that’s why I think some of the guidance materials is of great concern. 

OIRA does have some authority and even some ability, or it could 

just take the initiative to look at it and make the disclosure of it 

much more transparent. 

Mr. MARINO. Professor Driesen, I—tell me if I’ve understood you 

correctly. You were saying that there’s no need for OIRA at all? 

Mr. DRIESEN. No. I think we could do without OIRA, but that’s 

not what I’ve suggested today. What I suggested is that it focus 

only on these rules that cost over $100 million a year, and that it 

get out of the couple of areas that are really vital to safeguarding 

America from real economic calamity like we experienced when we 

had the deregulation causing the financial crisis, that is, climate 

disruption and terrorism where the cost-benefit analysis is not 

going to do us any good because it’s too incomplete, and where the 

science of climate says there’re tipping points out there that could 

set off runaway warming, but we don’t know where they are. 

And, terrorism is the same way. You don’t know what the next 

thing is going to be, and for that reason you can’t quantify the benefits. And there are potential disasters here. So I’m suggesting this 

now. 

Mr. MARINO. Dr. Holtz-Eakin, you heard Professor’s comment 

about quantifying cost, but there are, in my opinion, many other 

areas where we can quantify cost, and particularly when it comes 

to jobs, and more so, small businesses. You know, what say you 

about regulations that have come down at—with this Administration beyond what we’ve seen in the past, but other Administrations 

as well, what’s it doing to our jobs in the United States, and particularly, small business jobs? 

Mr. HOLTZ-EAKIN. I think it’s been quite damaging. I understand 

the argument that says there are the benefits out there that need 

to be quantified as well, and I want echo what I believe Administrator Shelanski said very well, which is, you should try to quantify 

everything you can, and that imposes a discipline on the rulemaking process that’s actually very important. 
105 

But it is easy to quantify cost. We take the agencies at face 

value. I’m not even sure they’re right, but even with those estimates, $800 billion of cumulative burden in 71⁄2 years is just like putting $800 billion of taxes onto America’s businesses and small 

businesses, and the evidence on that impact on jobs, wages, 

growth, is unmistakably bad. 

Mr. MARINO. My time is more than expired, and I now ask Congressman Johnson for 5 minutes of questioning, or 6. 

Mr. JOHNSON. Thank you. Thank you, sir. 

Dr. Holtz-Eakin, do you have any evidence whatsoever that the 

Obama administration plans a midnight rush of regulations, prior 

to its exit from the presidency? 

Mr. HOLTZ-EAKIN. We know only that in past Administrations, 

this phenomenon has happened. 

Mr. JOHNSON. You don’t see any evidence that this is going to 

happen in this Administration, do you? 

Mr. HOLTZ-EAKIN. And, we have some suggested evidence presented in the written testimony of trying to sort of get things out 

before May, which is likely when the Congressional Review Act 

hits. 

Mr. JOHNSON. There’s certainly no new evidence—— 

Mr. HOLTZ-EAKIN. That’s what we know. 

Mr. JOHNSON [continuing]. Of a midnight rush. That’s kind of 

like a—kind of like a hidden kind of situation that’s sprung on people at the last minute, they can’t do anything about it. We don’t 

have any evidence that that’s what the Obama administration is 

planning? 

Mr. HOLTZ-EAKIN. If they’re planning, they didn’t call me. 

Mr. JOHNSON. Okay. Well, so you have no evidence. Isn’t that 

correct? 

Mr. HOLTZ-EAKIN. The evidence I have I told you about. We have 

a chart—— 

Mr. JOHNSON. You have no evidence? 

Mr. HOLTZ-EAKIN [continuing]. And, we have history. 

Mr. JOHNSON. Okay. All right. Well, let me ask you this: You remember when Alan Greenspan came to testify before Congress 

back in 2008 about the fact that he had made a mistake in believing that banks and operating—that banks operating in—would be 

operating in their own self-interest and thus would—it would be 

not necessary for the government to protect their shareholders and 

institutions. You remember that? 

Mr. HOLTZ-EAKIN. I remember he testified. I don’t remember the 

details of it. 

Mr. JOHNSON. And, do you remember he did say that he made 

a mistake about thinking that we didn’t need any regulations? 

Mr. HOLTZ-EAKIN. I’ll take your word for that. I’m—— 

Mr. JOHNSON. Well, that’s what he said. I mean, you remember 

more than the fact that he testified before Congress. I know you 

remember that he did a mea culpa, and he, said, Look, I made a 

mistake. You don’t remember that? 

Mr. HOLTZ-EAKIN. Everybody makes mistakes. I don’t find that 

a shocking statement. 

Mr. JOHNSON. Well, the mistake that he made was, he said that 

the government should play a much more active regulatory role 
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over financial firms. Do you think that that was wise in the light 

of the Great Recession that he was talking about? 

Mr. HOLTZ-EAKIN. I think that it’s too simple to pin the Great 

Recession on financial regulation, and the reason it’s too simple— 

if I could finish. 

Mr. JOHNSON. Do you believe—— 

Mr. HOLTZ-EAKIN. Is that—— 

Mr. JOHNSON [continuing]. That it occurred due to lack of regulation—— 

Mr. HOLTZ-EAKIN. No. 

Mr. JOHNSON [continuing]. Or overregulation? 

Mr. HOLTZ-EAKIN. There was overregulation at Fannie and 

Freddie. 

Mr. JOHNSON. Overregulation. 

Mr. HOLTZ-EAKIN. There was underregulation in some cases. The 

issuers of subprime mortgages at the State level were often very 

unregulated. We saw some really bad mortgage origination. 

Mr. JOHNSON. So regulation would have helped that, wouldn’t it? 

Mr. HOLTZ-EAKIN. In some cases, with better prudential regulations, it helped. In some cases, we overregulated. 

Mr. JOHNSON. And, it was the lack of regulation that enabled it 

to happen. That’s what Greenspan was talking about, correct? 

Mr. HOLTZ-EAKIN. You can question him about his views. What 

I’m saying is my experience on the Commission is that—— 

Mr. JOHNSON. Let me ask—— 

Mr. HOLTZ-EAKIN [continuing]. There were evidence of both overregulation and underregulation. 

Mr. JOHNSON. Let me ask one of the other hostile witnesses, if 

I will. 

Mr. Crews, would you agree that Professor—or that Mr. Greenspan was correct when he said that we needed more regulation in 

the financial markets to prevent a reoccurrence of the Great Recession that threatened to become a Great Depression? 

Mr. CREWS. The financial markets have been heavily regulated 

for 100 years. The Federal—we have a Federal Reserve. The Federal Government sets interest rates and money supplies. We testified, I don’t know what Committee it was, but in 1999, making the 

case that the government—that government-sponsored entities that 

were extending homeownership beyond what could be handled was 

going to lead to problems. It’s in the record. You can see that. So 

yet—— 

Mr. JOHNSON. But there have been some—— 

Mr. CREWS. You asked the question about—— 

Mr. JOHNSON. There have been some—— 

Mr. CREWS. Your choice. 

Mr. JOHNSON [continuing]. Regulations that resulted in some 

harm, but I’m asking you about the lack of regulation that resulted 

in harm. 

Mr. CREWS. I don’t understand—— 

Mr. JOHNSON. I don’t think that it—— 

Mr. CREWS [continuing]. Talk of a lack of regulation because in 

free markets, there’s no such thing as a lack of regulation. Laissez 

faire doesn’t mean companies get to run around and do whatever 

they want to do. 
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Mr. JOHNSON. Well, that’s exactly what would happen. 

Mr. CREWS. You said—no, I just said we had a heavily—— 

Mr. JOHNSON. The financial part. 

Mr. CREWS [continuing]. Regulated financial sector. But you have 

a lot of forces that are arrayed against companies that misbehave 

if you’re not thinking that a central regulator is going to take care 

of the problem, and I don’t think that they are. 

Mr. JOHNSON. You’re talking about—— 

Mr. CREWS. Media, Wall Street, consumers. 

Mr. JOHNSON [continuing]. Free market forces? 

Mr. CREWS. A lot of them. 

Mr. JOHNSON. That would cover—— 

Mr. CREWS. Consumers, media, exactly. 

Mr. JOHNSON. Well, let me ask you this, Mr. Crews, since I’m 

talking to you. The Washington Post awarded the famous two 

Pinocchio’s to claims based on your report on regulatory costs. Ten 

Thousand Commandments was the name of it. They called it misleading, unbalanced, and—well, idiosyncratic guesstimate with serious methological problems. What is your response to their characterization of your Ten Thousand Commandments paper which they 

gave it two Pinocchio’s? 

Mr. CREWS. Well, maybe that they should have read the subtitle. 

This is The Washington Post. The paper that they’re referencing 

was called, ‘‘Tip of the Cost-berg.’’ It’s a working paper compiling 

OMB numbers on the cost of regulations on environment, health 

and safety, and OMB has quit compiling the paperwork cost that 

it ought to be compiling, and the economic regulatory cost that it 

ought to be compiling. 

Nobody sees the same rainbow. We all look through different 

drops when we see it, and nobody sees the same costs and benefits 

of regulation. I use a low ball figure for the cost of regulation of 

1.9, which OMB’s numbers, back at the turn of the century, were 

over a trillion. There have been a lot more regulation since then, 

and these days, the NAM has a cost study on regulatory cost, annual regulatory cost of over $2 trillion, Mercatus has a new study 

with substantial cost for regulation. There’s another—— 

Mr. JOHNSON. You’re getting a little—— 

Mr. CREWS [continuing]. Study of the cost of regulation that 

would put cost over 50 trillion a year. 

Mr. JOHNSON. You’re starting to dazzle me now. I just have one 

last question. 

Mr. CREWS. Good. 

Mr. JOHNSON. I’ll try to make it as clear as I can. Tom Donohue, 

the President and CEO of the Chamber of Commerce, is quoted as 

saying that ‘‘we need’’ many of the regulations included in your 

antiregulatory report, and that they are important for the economy, 

and we support them. 

That’s what Tom Donohue, CEO and President of the Chamber 

of Commerce said. I want to know if you agree with that, and I 

also, I want to get your comment about the fact that prior versions 

of your Ten Thousand Commandments report admitted that it was 

not scientific, and it was back of the envelope, but that language 

did not appear in the most current version, the one that was given 

the two Pinocchio’s, and I wanted to know why did you remove 
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those caveats from the two Pinocchio’s, Ten Thousand Commandments report. 

Mr. CREWS. I didn’t remove them. It’s still all in there. The Ten 

Thousand Commandments report is citing the Cost-berg figures 

where I have all those disclaimers there. I cannot go below those 

figures. Those are—those are using largely government’s own numbers for the cost of regulation and then other compilations that are 

out there. As for—as for Donohue’s—— 

Mr. JOHNSON. Do you disagree with what Tom Donohue said? 

Mr. CREWS. Yeah. As for what he said, Ten Thousand Commandments is not an antiregulatory report, and the Competitive Enterprise Institute is not an antiregulatory group, and the majority 

here is not an antiregulatory entity. This is an OIRA hearing. 

We’re talking about your job of reviewing the regulatory state and 

what the regulators, who are not elected, are doing. 

So that’s the purpose of the hearing. But the Ten Thousand Commandments is not an antiregulatory report. Your question is what 

does the best regulation? Is it always going to be a political system 

that does the best regulation, or do you need other kinds of disciplines to play a role? 

Mr. JOHNSON. Well, Mr. Crews, you’ve been quite gracious in 

your responses, and Mr. Chairman, you’ve been quite gracious with 

the time. I’m way, way over the limit, and with that, I will yield 

back. 

Mr. MARINO. I have another question I’d like to ask, and if you 

would like to, Hank, you certainly can. 

Even I don’t consider Professor Driesen to be hostile, so this will 

pertain to you as well, sir, if you care to. Can you give me an endof-term grade that would assign—that you would assign to the 

Obama administration for its performance in regulating without inflicting unnecessary economic harm or imposing unnecessary regulations? 

Dr. Beach? 

Mr. BEACH. I’d give it a C minus or a D plus. I think the regulations which have been produced out of the recession, well-meaning, 

as they were, were done without due regard for the cumulative cost 

and the effects on the enterprise system. 

Mr. MARINO. Thank you. Dr. Crews—Mr. Crews. 

Mr. CREWS. I think looking at cumulative effects of regulations 

matter a lot, and even what Mr. Johnson said, what you said about 

OIRA’s role in looking at and reviewing regulations, I think matters a great deal. 

Mr. MARINO. Professor Driesen. 

Mr. DRIESEN. Well, with the caveat that that’s a really difficult 

question to answer, none of us here have read all these rules. I 

would say that the ones I know about seem sensible to me and look 

like an A. I’ve seen them going after things that really need the 

attention and seem to be doing it in a reasonable way. 

Mr. MARINO. Dr. Holtz-Eakin. 

Mr. HOLTZ-EAKIN. I guess I’m in the vicinity of a C, C minus. I’d 

say the—the break they deserve is that a lot of this comes from the 

Dodd-Frank Act and the Affordable Care Act, which were drafted 

very poorly by the U.S. Congress and have led to some real regulatory problems in filling that out. 
109 

The thing I think they did most poorly was to not keep track of 

the breadth of the regulatory burden. That’s been unusually active, 

not just at HHS and at the SEC and CFTC, but the Department 

of Labor, the FCC, you know, the Department of Energy, sort of 

every agency has issued regulations that are remarkable, right, 

and I think it is OIRA and the Administration’s responsibility to 

look at that and modulate its impact on the economy, and they did 

a bad job there. 

Mr. MARINO. Mr. Crews, did I not hear you give a grade? If I did 

not hear you, then my ear is as bad as my arm. 

Mr. CREWS. I did. 

Mr. MARINO. You did or didn’t? 

Mr. CREWS. Yeah. 

Mr. MARINO. You did. I think—what was yours? I’m sorry. 

Mr. CREWS. I just said I think the presentation of the—there 

need to have been a lot more review of regulations than it was, and 

I wish that we could use OIRA more effectively to govern that. 

Mr. MARINO. So is that an A, C, or an E? 

Mr. CREWS. I’ve got to say a C, because—— 

Mr. MARINO. Okay. Now, one more thing I want to ask each of 

you to respond to. How important to each—how important is the 

fact that we must look at the economics involved when it comes to 

job creation or job loss in regulation, if it’s important, in your opinion, at all? 

Dr. Beach. 

Mr. BEACH. Well, yes. It’s something we haven’t talked about 

today is the important to whom, and it’s largely important to people who are low and moderate incomes. They are—they bear a disproportionate share relative to their income, of the cost of regulation. So when we impose well-meaning regulations and it does 

what it does, we need to keep them in mind. It’s called regressive 

effects, and I think they’re—they’re much in your mind in other 

areas as well, certainly. 

Mr. MARINO. Mr. Crews. 

Mr. CREWS. One thing related to that, too, in terms of job effects 

of regulation, it’d be good to look at how regulations might stack 

up as a small firm grows. Mr. Trott had mentioned growing a business and had mentioned I couldn’t do it today if I were setting out 

in this kind of a regulatory enterprise. 

Well, if we disagree about that, let’s find out why we disagree 

about it. Let’s look at what laws are taking effect as this firm hits 

four employees, five employees, 10, and 49, and see what adds up, 

and look at it from the statutory side and from the regulatory side 

and see what we—what kind of inventory we have of how these 

things stack up when a small firm grows and affects job creation 

and job growth. 

Mr. MARINO. Professor Driesen. 

Mr. DRIESEN. I do not think regulation is a—at least overregulation has not been a significant factor in causing job loss. Underregulation has, because we legalized subprime mortgages, which 

were illegal at one point. We allowed large firms to get into the— 

large banking firms that got them into the subprime business. 

When they were separated, there was no problem. I can give you 

the whole—I wrote an article to spell it out for you. 
110 

So deregulation has caused a financial crisis. Regulation has a 

tiny effect on jobs, and in the environmental area, it’s a small net 

positive. And, we used to have statistics on this from the Bureau 

of Labor Standards, but Congress has defunded it. 

Now, what those statistics shows is that environmental public 

health and safety was about 0.2 percent of mass layoffs. Mergers 

and acquisitions were a big cause of unemployment. And so, if 

you’re going to get serious about unemployment, you’ve got to stop 

hammering away at regulation, refund BLS and look at what’s 

really causing it, and I don’t think you’re going to find regulation 

to be prominent among the problems of job loss. 

Mr. MARINO. Dr. Holtz-Eakin. 

Mr. HOLTZ-EAKIN. So as I said, I think you should quantify everything you can so that you understand the comprehensive benefits and costs of a rulemaking process, but certainly, you should always place priorities on the most pressing issues. And, in the past, 

from the end of World War II to 2007, this economy grew fast 

enough that even with population growth, the standard of living 

doubled every 35 years, roughly, one working career. 

The projections are that this economy will grow only at 2 percent, and if you roll in population growth, that means the standard 

of living doubles every 75 years. I believe that’s the primary domestic economic policy problem that we have, and that we should devote all of our attention in the regulatory tax and budgetary process to solving that problem. 

Mr. MARINO. Thank you. Mr. Johnson, do you have any questions? 

Mr. JOHNSON. Thank you, yes. Dr. Beach, with respect to the assertion that you just made and you also made it in your written 

testimony—— 

Mr. BEACH. Yes, sir. 

Mr. JOHNSON [continuing]. That regulations disproportionately 

burden low income populations and undermine economic productivity, and you said that citing studies conducted by the Mercatus 

Center. I just want a note from you whether or not the lead in the 

contaminated water in Flint was the result of overregulation? 

Mr. BEACH. I’m not an expert on how it got there. I’m very concerned about it, as I’m sure you are as well. 

Mr. JOHNSON. Well, was it overregulation that was one of the 

factors—— 

Mr. BEACH. I’m not the best one to answer that question. 

Mr. JOHNSON [continuing]. That contributed to lead getting into 

the—— 

Mr. BEACH. It could have been a number of factors. I’m not sure. 

It could have been the land. Who knows? I’m an economist. 

Mr. JOHNSON. It wasn’t overregulation, was it? 

Mr. BEACH. Well, who knows. I mean, it could have been—it 

could have been this. For example, if you have a municipality that 

has a lot of—in a State that has the burden of a lot of regulation, 

that can undermine the tax base. If the tax base is undermined, 

you might not take care of your infrastructure. I’ve known lots of 

cities that have had poor infrastructure, which gets into things 

leaching into the water supply. So unless you—or and I are experts 
111 

on now it actually got there, I could make an argument that yes, 

it could have been because of overregulation. 

Mr. JOHNSON. Well, if there were no regulations, then, of course, 

you would have all kinds of contaminants in the water. Isn’t that 

correct? 

Mr. BEACH. That doesn’t necessarily follow. You could—— 

Mr. JOHNSON. So in other words, you’re saying in an environment with no regulations, you’re going to always have safe drinking water. 

Mr. BEACH. Absolutely not. We need—we need the regulations 

we have around—— 

Mr. JOHNSON. Need the regulations. 

Mr. BEACH [continuing]. Around the drinking water today. 

They’ve been very effective. 

Mr. JOHNSON. And those regulations—— 

Mr. BEACH. Yeah. 

Mr. JOHNSON [continuing]. Do not hurt, or disproportionately 

burden anybody, much less low income people? 

Mr. BEACH. Exactly. Right. And so they, in fact, they benefit everybody, but my point is this: If you have—— 

Mr. JOHNSON. That is the point that I want to make. 

Mr. BEACH. If you have a slow economy because of a regulatory— 

cumulative regulatory burden, then wages grow slowly in the bottom half of the distribution. Now, they, of course, benefit from the 

clean water just like the top half, but they don’t have the benefits 

of the growing economy like the top half does. 

Mr. JOHNSON. Well, I mean, but you can have a couple of companies making a gazillion dollars, and then you have the consumers, 

the people who purchase the product or service dying at an early 

age, as we heard someone say today, we’ve got people dying at an 

early age. I mean, what is best? I mean, should we just have an 

unregulated environment and a free market system to let the buyers beware, and let the companies do whatever they want to do, 

and there’s no regulations? 

Mr. BEACH. I think we’re past that, aren’t we, Congressman? I 

said in my remarks—— 

Mr. JOHNSON. From what I’m hearing from the Republican witnesses and from the messaging from that side of the aisle is that 

we are overregulated, all of these regulations need to be abandoned, and we need to get government off the backs of the business 

community so that they can make more money, and it doesn’t matter the health, safety of the people. 

Mr. BEACH. Of course, health and safety matters a great deal, 

and we are—— 

Mr. JOHNSON. How can you quantify that on a cost-benefit analysis? 

Mr. BEACH. Well, I think it can and should be done so that you 

have the best advice possible for making decisions, as you must 

make, between spending on A, B, and C. If you—— 

Mr. JOHNSON. Do you think the regulators should have that—— 

Mr. BEACH. I think we should all do—— 

Mr. JOHNSON [continuing]. Ability? 

Mr. BEACH. Yeah, cost-benefit analysis needs to be done in much 

more than it’s being done now. 
112 

Mr. JOHNSON. Well, I’m going to—I’m going to yield back the balance of my time, and I thank you all for your testimony. 

Mr. BEACH. Thank you. 

Mr. JOHNSON. I’m sorry I didn’t get to you, Mr. Driesen. Thank 

you. 

Mr. MARINO. Thank you all for being here. This concludes our 

hearing, and without objection, all Members will have 5 legislative 

days to submit additional written questions for the witnesses or additional materials for the record. The hearing is adjourned. 

[Whereupon, at 5:52 p.m., the Subcommittee was adjourned.] 
(113) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
114 

Response to Questions for the Record from the Honorable Howard 

Shelanski, Administrator, Office of Information and Regulatory Affairs 
115 
116 

f 
117 

Response to Questions for the Record from William W. Beach, Ph.D., Vice 

President for Policy Research, Mercatus Center at George Mason University 
118 
119 
120 

f 
121 

Response to Questions for the Record from Clyde Wayne Crews, Jr., Vice 

President for Policy/Director of Technology Studies, Competitive Enterprise Institute 
122 
123 

f 
124 

Response to Questions for the Record from Douglas Holtz-Eakin, 

President, American Action Forum 
125 

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