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THE VIEWS OF THE ADMINISTRATION ON 

REGULATORY REFORM: AN UPDATE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 3, 2011 

Serial No. 112–58 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

(II)

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

CLIFF STEARNS, Florida 

Chairman 

LEE TERRY, Nebraska 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

EDWARD J. MARKEY, Massachusetts 

GENE GREEN, Texas 

DONNA M. CHRISTENSEN, Virgin Islands 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Cliff Stearns, a Representative in Congress from the state of Florida, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Diana DeGette, a Representative in Congress from the state of Colorado, 

opening statement ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Hon. Michael C. Burgess, a Representative in Congress from the state of 

Texas, prepared statement .................................................................................. 6 

Hon. Henry A. Waxman, a Representative in Congress from the state of 

California, opening statement ............................................................................. 9 

Prepared statement .......................................................................................... 10 

Hon. Joe Barton, a Representative in Congress from the state of Texas, 

prepared statement .............................................................................................. 95 

WITNESSES

Cass R. Sunstein, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget ............................................................ 12 

Prepared statement .......................................................................................... 15 

Answers to submitted questions ...................................................................... 100 

William L. Kovacs, Senior Vice President, U.S. Chamber of Commerce ............ 54 

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

James Gattuso, Senior Research Fellow, The Heritage Foundation ................... 73 

Prepared statement .......................................................................................... 75 

David Goldston, Director of Government Affairs, Natural Resources Defense 

Council .................................................................................................................. 83 

Prepared statement .......................................................................................... 85 

SUBMITTED MATERIAL

Article entitled, ‘‘EPA’s War on Texas,’’ Wall Street Journal, January 4, 

2011, submitted by Mr. Burgess ......................................................................... 96 

Article entitled, ‘‘Now it’s time to redraft ACO rule,’’ Politico, June 3, 2011, 

submitted by Mr. Burgess ................................................................................... 98 

(1) 

THE VIEWS OF THE ADMINISTRATION ON 

REGULATORY REFORM: AN UPDATE 

FRIDAY, JUNE 3, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:32 a.m., in room 

2123, Rayburn House Office Building, Hon. Cliff Stearns (chairman 

of the subcommittee) presiding. 

Present: Representatives Stearns, Sullivan, Murphy, Burgess, 

Blackburn, Bilbray, Scalise, Gardner, Griffith, Barton, DeGette, 

Green, and Waxman (ex officio). 

Staff Present: Carl Anderson, Counsel, Oversight; Ray Baum, 

Senior Policy Advisor/Director of Coalitions; Anita Bradley, Senior 

Policy Advisor to Chairman Emeritus; Stacy Cline, Counsel, Oversight; Todd Harrison, Chief Counsel, Oversight and Investigations; 

Heidi King, Chief Economist; Dave McCarthy, Chief Counsel, Environment and the Economy; Katie Novaria, Legislative Clerk; Andrew Powaleny, Press Assistant; Alan Slobodin, Deputy Chief 

Counsel, Oversight; Sam Spector, Counsel, Oversight; John Stone, 

Associate Counsel; Alex Yergin, Legislative Clerk; Kristin 

Amerling, Minority Chief Counsel and Oversight Staff Director; 

Phil Barnett, Minority Staff Director; Stacia Cardille, Minority 

Counsel; Brian Chang, Minority Investigations Staff Director and 

Senior Policy Advisor; Greg Dotson, Minority Energy and Environment Staff Director; Jocelyn Gutierrez, DOE Detailee; Karen Lightfoot, Minority Communications Director and Senior Policy Advisor; 

Ali Neubauer, Minority Investigator; Mitch Smiley, Minority Assistant Clerk; and Anne Tindall, Minority Counsel. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning, everybody. And the Subcommittee 

on Oversight and Investigations will come to order. And I will open 

with my opening statement. 

We convene this hearing of this subcommittee to get an update 

on how the administration is implementing President Obama’s Executive order announced on January 18th, entitled, ‘‘Improving 

Regulation and Regulatory Review.’’ To do so, we welcome back Mr. 

Cass Sunstein, the head of the Office of Information and Regulatory Affairs, or, as we call it, OIRA, within the Office of Management and Budget. 

2 

Mr. Sunstein testified before this committee at our first hearing 

on January 26th, a week after President Obama signed the order 

and publicly committed to striking the right balance between regulation and economic growth. Mr. Sunstein agreed to come back in 

3 months to discuss how his office has improved the regulatory review system to reduce burdens on the American economy and industry. 

President Obama’s Executive order affirms that agencies must 

adopt only those regulatory actions whose benefits justify its cost, 

that are tailored to impose the least burden on society, that take 

into account the cost of cumulative regulations, that maximize net 

benefits, that specify performance objectives, and that evaluate alternatives to direct regulation. 

In addition, this new Executive order calls on agencies to review 

significant regulations that are already in place. Expanding upon 

this requirement, the President announced in a Wall Street Journal op-ed that this action, ‘‘orders a government-wide review of the 

rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.’’ 

Now, this is incredibly important, given that the Federal Register stands at an all-time high of over 81,000 pages. In 2010 alone, 

Federal agencies added more than 3,500 final rules to the books. 

I hope that Mr. Sunstein will share with us a number of examples 

demonstrating how this commitment has been put into action and 

how agencies will relieve small businesses of expensive and burdensome regulations and promote job growth. 

This morning’s report of the 9.1 percent unemployment rate, 

with significantly less job creation in May than in April, adds to 

the urgency of this task. After all, regulations total $1.75 trillion 

in annual compliance costs, according to the Small Business Administration. That is greater than the record Federal budget deficit, projected at $1.48 trillion for fiscal year 2011, and greater than 

annual corporate pre-tax profits, which totaled $1.46 trillion in 

2008. 

In addition, I hope Mr. Sunstein can also give us a sense of how 

he is enforcing the other requirement of the Executive order. He is 

the traffic cop. Enormously expensive regulation has sped through 

the review process on his watch, with little or no opportunity for 

meaningful public comment. This leads me to believe that OIRA 

has either been left out of the process or hasn’t been effective. 

On May 18th, 120 days after the Executive order was issued, 

each agency was required to submit to OIRA a draft plan including 

an initial list of regulations that were identified in their retrospective analysis as candidates for reconsideration or review. Agencies 

were supposed to consider all of the burdensome regulations identified by the stakeholders in the private sector before submitting 

their plans. 

Now, at our hearing on January 26th, I agreed with Mr. 

Sunstein when he said that ‘‘One idea we have had is that the public has a lot more information than we do about what rules are actually doing on the ground.’’ As I have said before, however, it is 

important that rhetoric is matched with measurable results. 

EPA alone has received approximately 1,500 comments on its 

rules and regulations. The Chamber of Commerce weighed in on 

3 

roughly 20 regulations proposed or finalized over the past 2 years 

at the Environmental Protection Agency. Yet EPA’s plan for regulatory review includes only 2 of the 20 and, in both cases, still fails 

to address the fundamental complaints made by the industry. 

The Environmental Council of the States, a group that represents the secretaries of States’ environmental agencies, identified 

more than 30 groups of regulations for a review. These are not big 

business leaders; these are the State officials that run almost all 

of the programs under the Clean Air Act and Clean Water Act and 

undertake about 90 percent of the enforcement actions. 

Unfortunately, after reviewing the plan, it appears as though 

EPA officials in Washington overwhelmingly disagree with or simply ignore the folks that actually implement the regulations that 

have been identified as being burdensome. Not only did EPA apparently ignore the stakeholders, but they have also imposed over 

900 new regulations on the States since the beginning of this administration. 

Mr. Sunstein has spoken repeatedly about the need to create a 

new regulatory culture across the executive branch, and I think all 

of us will agree with him. An unprecedented amount of authority 

has been delegated to the executive agencies in this administration. 

New regulations affecting many sectors of industry and aspects of 

all the American life are being promulgated under the same flawed 

system that produced the regulations identified today. So, hopefully, we can take steps toward changing this culture. And we look 

forward to Mr. Sunstein’s testimony. 

[The statement of Mr. Stearns follows:] 

PREPARED STATEMENT OF HON. CLIFF STEARNS

We convene this hearing of the Subcommittee on Oversight and Investigations to 

get an update on how the Administration is implementing President Obama’s Executive Order, announced on January 18, entitled ‘‘Improving Regulation and Regulatory Review.’’ To do so, we welcome back Mr. Cass Sunstein, the head of the Office 

of Information and Regulatory Affairs (OIRA), within the Office of Management and 

Budget. Mr. Sunstein testified before the Subcommittee at our first hearing on January 26th-a week after President Obama signed the order and publicly committed 

to striking the right balance between regulation and economic growth. Mr. Sunstein 

agreed to come back in three months to discuss how his office has improved the regulatory review system to reduce burdens on the American economy and industry. 

President Obama’s Executive order affirms that agencies must adopt only those 

regulatory actions whose benefits justify its costs; that are tailored to impose the 

least burden on society; that take into account the cost of cumulative regulations; 

that maximize net benefits; that specify performance objectives; and that evaluate 

alternatives to direct regulation. In addition, this new Executive order calls on agencies to review significant regulations already in place. 

Expanding upon this requirement, President Obama announced in a Wall Street 

Journal op-ed that this action ‘‘orders a government-wide review of the rules already 

on the books to remove outdated regulations that stifle job creation and make our 

economy less competitive.’’ This is incredibly important given that the Federal Register stands at an all-time high of over 81,000 pages. In 2010 alone, federal agencies 

added more than 3,500 final rules to the books. I hope that Mr. Sunstein will share 

with us a number of examples demonstrating how this commitment has been put 

into action and how agencies will relieve small businesses of expensive and burdensome regulations and promote job growth. This morning’s report of the 9.1% unemployment rate with significantly less job creation in May than in April adds to the 

urgency of this task. After all, regulations total $1.75 trillion in annual compliance 

costs, according to the Small Business Administration. That’s greater than the 

record federal budget deficit- projected at $1.48 trillion for FY 2011-and greater 

than annual corporate pretax profits, which totaled $1.46 trillion in 2008. 

4 

In addition, I hope Mr. Sunstein can also give us a sense of how he is enforcing 

the other requirements of the Executive Order. He is the traffic cop. Enormously 

expensive regulations have sped through the review process on his watch with little 

or no opportunity for meaningful public comment. This leaves me to believe that 

OIRA has either been left out of the process or has very little teeth. 

On May 18th, 120 days after the Executive Order was issued, each agency was 

required to submit to OIRA a draft plan, including an initial list of regulations that 

were identified in their retrospective analysis as candidates for reconsideration or 

review. Agencies were supposed to consider all of the burdensome regulations identified by stakeholders in the private sector before submitting their plans. In our hearing on January 26th, I agreed with Mr. Sunstein when he said that ‘‘one idea we 

have had is that the public has a lot more information than we do about what rules 

are actually doing on the ground.’’ As I have said before, however, it is important 

that rhetoric is matched with measurable results. 

EPA alone has received approximately 1,500 comments on its rules and regulations. The Chamber of Commerce weighed in on roughly 20 regulations proposed or 

finalized over the past 2 years at the Environmental Protection Agency, yet EPA’s 

plan for regulatory review includes only 2 of the 20 and in both cases still fails to 

address the fundamental complaints made by industry. The Environmental Council 

of the States, a group that represents the secretaries of state environmental agencies, identified more than 30 groups of regulations for review. These are not big 

business leaders-these are the state officials that run almost all of the programs 

under the Clean Air Act and the Clean Water Act and undertake about 90 percent 

of the enforcement actions. Unfortunately, after reviewing the plan, it appears as 

though EPA officials in Washington overwhelmingly disagreed with, or ignored, the 

folks that actually implement the regulations they have identified as burdensome. 

Not only did EPA apparently ignore the stakeholders, but they have also imposed 

over 900 new regulations on the states since the beginning of this Administration. 

Mr. Sunstein has spoken repeatedly about the need to create a new regulatory 

culture across the Executive Branch and, again, I agree with him. An unprecedented 

amount of authority has been delegated to executive agencies in this Administration. New regulations, affecting many sectors of industry and aspects of American 

life, are being promulgated under the same flawed system that produced the regulations identified today. Hopefully we can take a step towards changing that culture 

today. 

# # # 

Mr. STEARNS. And with that, I recognize the ranking member, 

Ms. DeGette. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

In January of this year, President Obama issued an Executive 

order directing Federal agencies to develop plans for improving the 

regulatory system. As part of this order, the President urged agencies to expand opportunities for public participation in the regulatory process and to look for ways to make regulations more efficient and effective. 

Mr. Chairman, you will be pleased to know that both sides of the 

aisle support these goals. This subcommittee has a valuable role to 

play in reviewing implementation of the order. And I want to also 

join you in welcoming Mr. Sunstein back today. 

The last hearing unfortunately devolved into a picky criticism of 

individual regulations that individual Members might disagree 

with. But I think it is worthwhile for this committee to continue 

to focus on the regulatory reform efforts of the administration and 

see if we can make real progress. 

5 

So I know, Mr. Sunstein, we are taking away, once again, from 

your efforts to implement this program, but it is important for us 

to hear it. 

Since our first hearing on the Executive order in January, I 

think, from what I have heard, executive-branch agencies have developed preliminary regulatory review plans that the administration has provided to the subcommittee and posted on White House 

Web site for public input. 

My initial review of the plans reveals a range of efforts to meet 

the Executive order’s core goals: Agencies are streamlining and 

modernizing reporting requirements to save industry and government time and money. They are more precisely tailoring regulations to save money for regulated industries. They are creating 

broader opportunities for public participation in the design and implementation of regulations. And they are improving the review 

process. 

So I hope we can hear about some of those things today, but I 

also hope we can hear about what the administration intends to do 

next to actually streamline, now that they are taking this input, to 

streamline and modernize and even eliminate unnecessary regulations. 

Having said that, I will say the administration appears to be 

working very hard to implement regulatory reform. And after hearing the distinguished chairman’s opening statement and also the 

sad unemployment news of this morning, I wish the majority, rather than complaining in vague terms about the regulatory reform efforts and the unemployment rate, would actually sit down with the 

minority and, with us, together, develop a jobs bill. 

We have been talking about this since January. And if we really 

want to reduce the unemployment rate, then let’s stop niggling 

about the edges. Let’s sit down and, together, craft a jobs plan. I 

think that that would benefit the American public. And if we started now, we might be able to decrease unemployment by the end of 

the year. 

And, with that, Mr. Chairman, I yield back. 

[The statement of Ms. DeGette follows:] 

PREPARED STATEMENT OF HON. DIANA DEGETTE

In January of this year, President Obama issued an Executive order directing federal agencies to develop plans for improving the regulatory system. As part of the 

order, the President urged agencies to expand opportunities for public participation 

in the regulatory process, and to look for ways to make regulations more efficient 

and effective. 

Both sides of the aisle should support these goals. And this Subcommittee has a 

valuable role to play in reviewing implementation of this Order. 

Since the Subcommittee’s first hearing on the Executive order in January, executive branch agencies have developed preliminary regulatory review plans that the 

Administration has provided to the Subcommittee and posted on the White House 

Web site for public input. An initial review of the plans reveals a range of efforts 

to meet the Executive Order’s core goals: 

• Agencies are streamlining and modernizing reporting requirements to save industry and government time and money; 

•They are more precisely tailoring regulations to save money for regulated industries; 

•They are creating broader opportunities for public participation in the design 

and implementation of regulations; and 

•They are improving the review process. 

6 

I look forward to the opportunity today to ask the witnesses questions both about 

the plan contents and the Administration’s next steps in implementing the regulatory review initiative. 

I hope both Republican and Democratic members of the Subcommittee will make 

this morning a productive effort to understand the extent to which agencies have 

been advancing the Executive order’s goals and where there is room for improvement. I also hope we avoid what we saw in the last hearing, where the Subcommittee became a forum for airing member complaints about individual regulations and an assault on the concept of government regulation. 

So I want to emphasize one basic point as we begin to discuss the regulatory process today: regulations have both costs and benefits. This may seem obvious, but in 

the past few months on this Committee much of the rhetoric from the majority 

omits any recognition of the important role regulations play in advancing our nation’s welfare. 

For example, over the past few months we have heard repeated Republican claims 

that the Environmental Protection Agency is strangling economic growth in its efforts to keep our air and water clean and combat the threats posed by climate 

change. But recent analysis by the Economic Policy Institute concluded that the annual benefits from final rules implemented by EPA in the last two years exceeded 

costs by as much as $142 billion per year, with a cost-benefit ratio as high as 22 

to 1. 

Earlier this year, EPA released a peer-reviewed study on the costs and benefits 

of the Clean Air Act Amendments of 1990 that found benefits to outweigh costs by 

25 to 1. Furthermore, it found that in 2010 alone Clean Air Act regulations saved 

160,000 lives. 

And there are similar examples across the federal government. Food and Drug 

Administration regulations protect children from the health effects of tobacco and 

help prevent all of us from exposure to salmonella and other food contaminants. 

New crib safety rules will prevent parents the agony of discovering their child has 

been strangled to death by a dangerously constructed crib. And Department of 

Transportation regulations banning texting by commercial truck and bus drivers 

will make the nation’s highways safer for our families. 

Any meaningful discussion of costs of such regulations should include discussion 

of their benefits. I hope all members of the Committee will promote a balanced discussion of regulatory process as we hear from our witnesses today about the Administration’s efforts to promote regulatory efficiency and effectiveness. I am pleased to 

welcome back to the Subcommittee Cass Sunstein, the Administrator of the Office 

of Information and Regulatory Affairs at the Office of Management and Budget. 

I am also glad the subcommittee will also have the benefit of testimony from experts on a second panel that include David Goldston of the National Resources Defense Council, William Kovacs of the Chamber of Commerce, and James Gattuso of 

the Heritage Foundation. I look forward to hearing their testimony. 

Mr. STEARNS. I thank the gentlelady. 

And the gentleman from Texas, Dr. Burgess, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman. 

And, Mr. Sunstein, welcome back to our committee. We welcome 

you back. We are always glad to see you here. We welcome the 

changes that are coming from some of the agencies. I do still want 

to hear more about what the administration is doing, and if they 

are doing anything, to slow the continual onslaught of regulations 

that are being promulgated and implemented. 

Now, we went down to the White House earlier this week, the 

Republican conference on one day, the Democratic on another. And 

the President said to us that he wanted to clear out the regulatory 

underbrush, so I took that as a positive sign. He said the regulations should not be obscure, they should not be difficult for people 

to understand. 

7 

What is hard to understand is how the administration wants to 

continue to be anti-employer and, at the same time, be pro-jobs. It 

just doesn’t seem to be working out, as we saw from this morning’s 

employment numbers. And businesses across the country are 

plagued with uncertainty as to what the new regulations will be 

and what will be handed down next by Washington. 

I understand the use of regulations to ensure safety and to promote the predictability of the market, but you must know that, 

every day, people come to Washington to tell their Congressman or 

-woman their fears about the avalanche of regulations that will increase their compliance costs. I hear from business owners talking 

about regulations coming from HHS, EPA, bank examiners, and 

more. And, unfortunately, I don’t see how this review is actually 

going to be a deliverable that will help them through the problems 

that they are having. And I might add, those problems are delivered by the United States Congress. 

While some of the regulations may be necessary, I feel that many 

in Washington don’t understand or comprehend the effect that the 

regulations have on jobs and job creation. It is a simple fact: When 

compliance costs go up, that cuts into a business’ bottom line, and 

that means jobs are likely to be lost. 

I am afraid this review has, for some purpose, perhaps just been 

for political purposes. I think that this was the reaction of a President who doesn’t understand how to create jobs, so this is his attempt to appease business. After all the public relations and the 

rollout of the review, the higher-ups at the White House will have 

little interest in continuing the review, particularly after special interest groups and outside groups castigate the White House for reviewing the regulations in the first place. 

A specific area of the regulations that are coming out, like the 

medical loss ratio, rate review, and accountable care organizations—in all cases, the Federal Government has taken something 

that was working in practice and proven that it can’t work in theory. 

Now, these pieces would ensure more consumer benefits, lower 

costs, and encourage care coordination, where patients, doctors, 

and hospitals work together for patient improvement and financial 

savings, but because of the way that the regulations have been 

written, we will still have systems that encourage fraud. Plan solvency will be at risk. There is the ultimate consumer protection. If 

your plan goes bankrupt, you don’t get much health care delivered. 

And then accountable care organizations, that is the unicorn that 

turns out that nobody really—not only nobody really believes it exists, nobody now wants to adopt it, because it is just simply so difficult and so onerous. 

So I hope that you folks over at Office of Management and Budget and your counterparts at the Federal Trade Commission will understand this and perhaps allow doctors in this country once again 

to practice medicine. 

I will yield back the balance of my time, Mr. Chairman. 

Mr. STEARNS. The gentleman yields back. 

And the gentlelady from Tennessee, Ms. Blackburn, is recognized 

for 1 minute. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

8 

And, Mr. Sunstein, thank you for being with us again. 

I think everyone will agree, the number-one issue facing our constituents is jobs. And the greatest obstacle that we are hearing 

about jobs is regulatory overreach, uncertainty through the regulatory process. 

And this is not surprising. When you look at the EPA alone, they 

have finalized 928 regulations since the start of this administration, with more than 6,000 pages of regulations released last year. 

Now, saying you want to get rid of some of these regulations and 

issuing more is counterproductive to jobs. It is killing the growth 

of jobs. The figures this morning attest to that. 

I would encourage my colleagues to remember, you don’t do a 

jobs bill to create jobs. Washington doesn’t create jobs. It is the private sector that creates these jobs. It is our responsibility to create 

that environment for jobs growth to take place. 

And, Mr. Sunstein, I have to tell you, all of the regulations that 

are coming out of this town are not helping employers. Whether it 

is health care, whether it is banking, whether it is regulation from 

the FTC, the FCC, the EPA, this has to stop. We look forward to 

working with you to get these regulations off the books, not add 

more. 

And I yield back. 

Mr. STEARNS. The gentlelady yields back. 

The gentleman from Louisiana, Mr. Scalise, is recognized for 1 

minute. 

Mr. SCALISE. Thank you, Mr. Chairman. 

I also want to welcome Mr. Sunstein back. Look forward to hearing your comments. And then we will have a dialogue. I know I 

have a lot of questions about both specific agencies and challenges 

as well as kind of a bigger-picture approach, and see how we can 

get this Executive order properly implemented. 

Because one of the concerns I have, as we have, still gotten in 

over 21⁄2 years into this administration now, we still continue to see 

slow job growth. Today’s number showed a dramatic decline from 

the numbers that just came out in May, an increase in unemployment yet again. 

And, frankly, when I talk to employers, not only throughout 

southeast Louisiana, but when you talk to industry groups, groups 

that represent big employers all across the country, one of the very 

first things they will tell you about the limitation, their inability 

to create jobs and, in fact, the biggest impediment to job creation 

is a lot of these regulations that have nothing to do with protecting 

people, protecting environment. It is about agendas that are driven 

by bureaucrats in Washington. And that is not how regulations 

ought to work. 

We have pushed legislation through to help create jobs that are 

just lingering over in the Senate. But in the meantime, you have 

the ability, you have a task to go out and actually reform this process, but you have the ability to do it. And I hope it is more than 

window dressing. And I look forward to the conversation. 

And I yield back. 

Mr. STEARNS. I thank the gentleman. 

And the gentleman, the ranking member of the full committee, 

Mr. Waxman from California, is recognized for 5 minutes. 

9 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

The subcommittee today is returning to the subject of the Executive order on regulatory reform, issued in January by President 

Obama. And the implementation of this order is overseen by the 

Office of Information and Regulatory Affairs, or OIRA. 

And we are fortunate to have the administrator of OIRA, Cass 

Sunstein, with us, and I am pleased to welcome him to this hearing. He will be able to tell us about the administration’s regulatory 

review activities that have occurred since our last hearing. 

The stated focus of this hearing is to learn more about the agency plans for regulatory reform, which the White House released for 

public review and comment. But if we are going to have an honest 

discussion about the costs of regulation, we need to consider all of 

the relevant facts. We should examine costs and reduce them wherever possible. But we also need to give equal consideration to benefits. 

Yesterday, we were supposed to mark up a bill called the TRAIN 

Act, which calls for an analysis of the cumulative impacts of EPA 

regulation. The markup was postponed. But the bill illustrates 

what is wrong with how we have been approaching regulatory reform in this committee with this majority. 

The TRAIN Act focuses nearly exclusively on the economic costs. 

It mandates analyses of the impacts of the regulation on jobs, electricity costs, manufacturing, and trade. That is all appropriate, but 

it ignores the dangers of unchecked pollution on health, the environment, and global climate change. The one-sided approach is the 

anthesis of what we should be doing. 

And this one-sided approach, I think, was so clearly illustrated 

by the opening comments of my Republican colleagues. A statement 

was made that the great obstacle to jobs is regulation. I can’t believe that. No economist would suggest that the recession is not the 

major reason we are having a problem with jobs; that regulatory 

overreach, as it has been called, is something that is not new, if 

it exists. 

I have heard my colleagues say that the President wants the 

slow job growth. That is absurd. No President of the United States 

wants a bad economy for the American people. This President inherited a terrible economy in great part because of the bad judgments and policies of the Bush administration. 

We need to look at both sides of the equation when we look at 

regulations. We need to maximize the benefits while minimizing 

the costs. 

And a good case in point is the Clean Air Act, which, along with 

health care, has become one of the Republicans’ whipping boys. We 

have considered proposal after proposal to weaken the Clean Air 

Act on the theory that reducing pollution is a job-killer—reducing 

pollution is a job-killer. 

Well, we shouldn’t have to pick between jobs and clean air. That 

is a false choice. When the committee wrote the Clean Air Act 

amendments in 1990, we heard horror stories about how the law 

10 

would impose ruinous costs on industry; it would lead to widespread unemployment. None of this turned out to be true. 

Ranking Member Rush and I asked the EPA to do a balanced 

analysis of both the costs and the benefits of the Clean Air Act. The 

results show that the law has been a stunning success. EPA found 

that implementing the Clean Air Act creates American jobs and 

bolsters the global competitiveness of American industry, even as 

it lowers health-care costs and protects American families from 

birth defects, illnesses, and premature death. 

The health benefits of the act are legion. In 1 year, the Clean Air 

Act prevented 18 million child respiratory illnesses; 850,000 asthma attacks; 674,000 cases of chronic bronchitis; 205,000 premature 

deaths. The health benefits are projected to reach $2 trillion by 

2020. Is that something we should ignore? 

The implementation of the act also creates American jobs. The 

environmental technology industry now generates $300 billion in 

annual revenues and supports 1.7 million jobs. 

I have seen the value of regulation over and over again. Following the collapse of the financial markets in 2008, the economy 

entered the deepest recession since the Great Depression. Millions 

of Americans have lost their jobs. The cause of the financial crisis 

was not regulation; it was the absence of regulation. Our hearings 

last year showed the Deepwater Horizon oil spill created widespread economic dislocation. This was caused by too little oversight, too little regulation, not too much. 

Where we can identify unnecessary regulations, they should be 

identified and eliminated. But, as this review continues, we should 

remember that sound regulations are vital in protecting our Nation’s economy and wellbeing. 

Thank you, Mr. Chairman. 

[The statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

Today, the Subcommittee returns to the subject of the Executive order on regulatory reform issued in January by President Obama. The implementation of this 

order is overseen by the Office of Information and Regulatory Affairs, also known 

as OIRA (‘‘oh-eye-rah’’), and we are fortunate to have OIRA Administrator Cass 

Sunstein with us today. He will be able to tell us about the Administration’s regulatory review activities that have occurred since the Subcommittee took testimony 

from him in January. 

The stated focus of this hearing is to learn more about the agency plans for regulatory reform that the White House released last week for public review and comment. These plans and other steps the Administration is taking to review regulations certainly merit congressional oversight. 

But if we are going to have an honest discussion about the costs of regulations, 

we need to consider all of the relevant facts. We should examine costs and reduce 

them wherever possible. But we also need to give equal consideration to benefits. 

Yesterday, we were supposed to mark up a bill called the TRAIN Act, which calls 

for an analysis of the cumulative impacts of EPA regulations. The markup was postponed, but the bill illustrates what’s wrong with how we have been approaching regulatory reform in this Committee. 

The TRAIN Act focuses nearly exclusively on economic costs. It mandates analyses of the impacts of the regulations on jobs . electricity costs . manufacturing . 

and trade. But it ignores the dangers of unchecked pollution on health, the environment, and global climate change. 

This one-sided approach is the antithesis of what we should be doing. We should 

be looking at both sides of the equation—costs and benefits—and maximizing the 

benefits while minimizing the costs. 

11 

A good case in point is the Clean Air Act, which along with health care has become the Republicans’ favorite beˆte noire. We have considered proposal after proposal to weaken the Clean Air Act on the theory that reducing pollution is a job 

killer. 

We shouldn’t have to pick between jobs and clean air. That’s a false choice. 

When this Committee wrote the Clean Air Act Amendments of 1990, we heard 

horror stories about how the law would impose ruinous costs on industry. None of 

them turned out to be true. 

Ranking Member Rush and I asked EPA to do a balanced analysis of both the 

costs and benefits of the Clean Air Act. The results show that the law has been a 

stunning success. EPA found that implementing the Clean Air Act ‘‘creates American jobs and bolsters the global competitiveness of American industry, even as it 

lowers healthcare costs and protects American families from birth defects, illnesses, 

and premature death.’’ 

The health benefits of the Act are legion. In one year, the Clean Air Act prevented 

18 million child respiratory illnesses, 850,000 asthma attacks, 674,000 cases of 

chronic bronchitis, and 205,000 premature deaths. The health benefits are projected 

to reach $2 trillion by 2020. 

And the implementation of the Act also creates American jobs. The environmental 

technology industry now generates $300 billion in annual revenues and supports 1.7 

million jobs. 

I’ve seen the value of regulation over and over again during my career. Following 

the collapse of the financial markets in 2008, the economy entered the deepest recession since the Great Depression and millions of Americans lost their jobs. The 

cause of the financial crisis was not regulation; it was the absence of regulation. Our 

hearings last year showed that the Deepwater Horizon oil spill, which created widespread economic dislocation, was caused by too little oversight and regulation—not 

too much. 

That is why it so important that we put aside the partisan anti-regulation rhetoric and look dispassionately at both costs and benefits. Unnecessary regulations 

should be identified and eliminated, and I am pleased that President Obama has 

made this a priority. But as this review continues, we must remember that sound 

regulations are vital in protecting our Nation’s economy and well-being. 

Mr. STEARNS. I thank the gentleman. 

And, with that, we welcome Mr. Cass R. Sunstein, administrator, 

Office of Information and Regulatory Affairs, before our subcommittee. 

And, before we start, let me just make some comments considering your testimony. 

You are aware that the committee is holding an investigative 

hearing and, when doing so, has had the practice of taking testimony under oath. Do you have any objection to testifying under 

oath? 

Mr. SUNSTEIN. No. 

Mr. STEARNS. The chair then advises you that, under the rules 

of the House and the rules of the committee, you are entitled to be 

advised by counsel. Do you desire to be advised by counsel during 

your testimony? 

Mr. SUNSTEIN. [Nonverbal response.] 

Mr. STEARNS. In that case, if you would please rise and raise 

your right hand, we will swear you in. 

[Witness sworn.] 

Mr. STEARNS. You are now under oath and subject to the penalties set forth in Title 18, section 1001, of the United States Code. 

You may now give a 5-minute summary of your written statement. 

12 

TESTIMONY OF THE HON. CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET 

Mr. SUNSTEIN. Thank you so much, Mr. Chairman. 

And thanks to you and members of the committee, not only for 

your strong commitment to the reduction of unjustified regulatory 

burdens, but also for your generosity and kindness to me and my 

staff over the last months as we try to work together on these 

issues. 

My focus in these opening remarks will be on the process of retrospective review of regulations, the ‘‘lookback,’’ as we call it, 

though I will devote a few words to the effort to control regulatory 

efforts going forward, something addressed in many of your opening remarks. 

In the January 18th Executive order, the President, in the first 

sentence, referred specifically to two topics that have come up in 

the last minutes: One is economic growth, and the other is job creation. Those are central factors in the process that he has inaugurated. 

For the process going forward—that is, with respect to new 

rules—I would like to underline four elements of the Executive 

order. 

First, it requires agencies to consider costs and benefits, to ensure that the benefits justify the costs, and to select the least burdensome alternative. Those ideas are central going forward, and 

they will be followed, to the extent permitted by law. 

Second, the Executive order requires unprecedented levels of 

public participation. It asks agencies, before they issue rules, to engage with State, local, and tribal officials. And there was a reference earlier to costs imposed on State and local government, to 

affected stakeholders, and to experts in relevant disciplines. What 

I would like to underline here is the requirement that agencies act 

even in advance of proposed rulemaking to seek the views of those 

who are likely to be affected. 

Third, the Executive order directs agencies to harmonize, simplify, and coordinate rules, with the specific goal of cost reduction. 

Fourth, the Executive order directs agencies to consider flexible 

approaches that reduce burdens and maintain freedom of choice for 

the public. 

Those are directions for all of us, going forward, within the executive branch. 

What many of your opening remarks focus on is the lookback 

process. Last week, in compliance with the Executive order, 30 departments and agencies released their preliminary plans to this 

subcommittee and the public in an unprecedented process. Some of 

the steps outlined in these hundreds of pages of plans have already 

eliminated hundreds of millions of dollars in annual regulatory 

costs, including, by the way, costs imposed on employers. Over $1 billion in savings can be expected in the near future. So 

these are not mere aspirations or plans to plan; these are concrete 

products that have either been delivered already or that will be delivered in the very near future. Over the coming years, the reforms 

have the potential to eliminate billions of dollars in regulatory burdens. 

13 

Many of the initiatives represent a fundamental rethinking of 

how things have long been done. We have heard in the last month 

since the Executive order was written that red tape and paperwork 

and reporting burdens exert a significant toll on the economy, including on small business. There is an effort throughout the plans 

to try to reduce those burdens. There is also an effort to rethink 

rules that require the use of outdated technologies in a way that 

is consistent with the innovation that is now occurring and may 

even promote innovation. 

Many of the reforms have already saved significant money. The 

EPA has recently exempted milk and dairy industries from its oil 

spill rule. There is a long tale there. The punch line of the tale is, 

over the next decade, the milk and dairy industries will cry not at 

all over spilled milk and will save over $1 billion in the next decade. 

A few additional illustrations: Several of you referred to burdens 

on employers. We are very alert to that. I am personally very alert 

to that. Last week, the Occupational Safety and Health Administration announced a final rule that will remove over 1.9 million annual hours of recordkeeping and paperwork burdens. That will save 

over $40 million in annual costs, and that may be a lowball estimate. In recent discussions with people in the business community, 

that burden-saving measure was highlighted as an extraordinary 

step forward. 

OSHA also plans to finalize in the near future a proposed rule 

that is projected to result in over half a billion annualized savings 

for employers—not $40 million, over half a billion. 

To eliminate unjustified economic burdens on railroads, the Department of Transportation is reconsidering a rule that requires 

railroads to impose certain equipment on—to create certain equipment that is very expensive. This would save, potentially, over a 

billion dollars in the next 20 years. 

These are just illustrations. There was a reference by you, Mr. 

Chairman, to a cultural change. We are determined to create that 

cultural change. 

While a great deal has been done in a short time, an unprecedented effort, and while substantial savings have already been 

achieved, the agency plans are preliminary. They are just drafts. 

They are being offered to you, other Members of Congress, elected 

representatives at all levels, and the public, emphatically including 

the business community, for views and perspectives. Suggestions 

are eagerly welcome. We need your help in order to make these 

plans as good as possible and to do as much as possible to promote 

economic growth and job creations. Agencies will be carefully assessing those comments and suggestions before they finalize their 

plans. And we have a number of weeks, in fact months, in which 

to do that. 

To change the regulatory culture of Washington, we need a constant exploration, not a one-shot endeavor, of what is working and 

what is not. We need close reference to the evidence and data, and 

we need very close reference to the views of stakeholders about 

what is actually happening on the ground. To quote the opening 

words, we are trying to promote public health and also economic 

growth and job creations. 

14 

I am happy to answer your questions. 

[The statement of Mr. Sunstein follows:] 

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71347.002
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71347.003
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71347.004
19 

Mr. STEARNS. Thank you, Mr. Sunstein. 

The Oversight and Investigations Committee, before I start, is a 

little different than some of the other committees. We ask questions that pretty much are asking for ‘‘yes’’ or ‘‘no’’ answers. And 

sometimes the press would criticize, but we are asking for direct 

answers. So it is a little bit different. We are trying to seek information. So if we do ask, we would appreciate a direct answer, ‘‘yes’’ 

or ‘‘no.’’ 

And so, just to establish the ground rules, we want to make sure 

that you are the administrator of OIRA and you comply with Executive orders dealing with regulatory reform. That is our understanding. That is correct? 

Mr. SUNSTEIN. That would be a ‘‘yes.’’ 

Mr. STEARNS. OK. And, as the administrator, you have a role in 

ensuring this very important President Executive order, which is 

13563 and 12866. Is that correct? 

Mr. SUNSTEIN. Yes. 

Mr. STEARNS. You are the man. OK. 

Now, when you have a rule and it has an economically significant impact in the economy, wouldn’t that particular rule require 

more attention than one that is not economically significant? I am 

just trying to—— 

Mr. SUNSTEIN. Absolutely. 

Mr. STEARNS. Absolutely. Because there are huge implications on 

the impact in the economy with this regulatory framework. And, 

also, there is risk analysis that should be done and supporting documents. So we agree there. 

OIRA officials have repeatedly claimed that, during the Obama 

administration, regulatory reviews by your office have been shorter 

than regulatory reviews of previous administrations. And I think 

that is—is that a fair claim to say what the administration has 

been touting? 

Mr. SUNSTEIN. No. 

Mr. STEARNS. No. OK. 

While the economic impacts of the rules are much larger than in 

previous administrations, your staff, I think, has remained—your 

staff has remained small. I have a graph up here, if it will stop 

wiggling. It looks like it is wigging quite a bit there. 

I am trying to show you two charts. I think we have it there. The 

first one shows that OIRA is reviewing more large, complex regulation. And the second one shows that the agency spends less time 

on the review of these regulations. 

So this would be contrary to what we just talked about and 

which you just agreed. So isn’t it true that your office’s reviews are 

shorter in duration—— 

Ms. DEGETTE. Mr. Chairman? 

Mr. STEARNS. Yes? 

Ms. DEGETTE. Do we have a printed chart we could give to Mr. 

Sunstein? 

Mr. STEARNS. We do. I think we have it printed. 

Will the staff give him a chart that is not—— 

Ms. DEGETTE. Moving. 

Mr. STEARNS [continuing]. moving, quivering? OK. 

20 

So I guess the question is, isn’t it true that your office reviews 

are shorter in duration than those under previous administrations, 

based upon that graph? 

Mr. SUNSTEIN. Well, I would want to check those numbers. I 

know—— 

Mr. STEARNS. OK. 

Mr. SUNSTEIN [continuing]. in the first year we were fast. Whether we are as fast in the recent past, I would want to check. 

Mr. STEARNS. OK. 

Why are so many regulations issued after short OIRA reviews to 

public comments that they violate the Executive order principles? 

Mr. SUNSTEIN. I don’t agree with the premise of the question. We 

have had about the same number of rules as in the first 2 years 

of the Bush administration. And, actually, 2007, 2008, the Bush administration imposed significantly higher costs than we did in 

2009, 2010. 

Mr. STEARNS. I have here a study by the Mercatus Center that 

I will insert into the record. 

The study grades the economic analysis in reviews by OIRA. It 

shows that the quality of analysis declined when the reviews were 

shortened. 

Were you familiar with this? 

Mr. SUNSTEIN. I am familiar with that study. 

Mr. STEARNS. Do you agree with this study? 

Mr. SUNSTEIN. Well, not really. I think the important thing is not 

how many days on the calendar are spent. The important thing is 

the degree of attention and care. 

And I believe the same study shows no diminution in quality between the Bush administration and the Obama administration, 

though we are eager to increase the quality and to get it better and 

better. 

Mr. STEARNS. The Executive order that I cited earlier, the 12866, 

section 6 requires agencies to, quote, ‘‘identify for the public in a 

complete, clear, and simple manner the substantive changes between the drafts submitted to OIRA for review and the actions subsequently announced,’’ end quote, as well as those changes in the 

regulatory action that were made at the suggestion or recommendation of OIRA. 

Despite claiming to be the most transparent administration in 

history, we understand that the position of the administration is 

that this requirement only applies to the formal regulatory review 

process. Is that correct? 

Mr. SUNSTEIN. I believe that is correct, that we are following the 

practice of the Bush administration and its predecessor with respect to the interpretation of 12866. There has been continuity 

across Republican and Democratic administrations. I am not sure 

exactly what you mean by ‘‘informal,’’ but what you said sounded 

right. 

Mr. STEARNS. However, most big rules are submitted to OIRA on 

an informal basis before the draft rule is officially submitted. With 

respect to significant rules issued since the passage of the PPACA, 

would you be willing to provide the changes suggested by OIRA 

during the informal review process? 

21 

Mr. SUNSTEIN. It is actually very rare that a rule is submitted 

informally. That is not the normal practice. It is extremely unusual. And we don’t make—all I would say that happens sometimes 

is there are interagency discussions about rules pre-submission. 

And we don’t have the authority to make changes in those discussions. But sometimes the agency decides that the discussions are 

informative and goes—so, in other words, informal review is extremely rare. 

What is not extremely rare is their interagency discussions. And 

there are no changes made, because there is no rule text, typically. 

There is just discussion of a policy issue. 

Mr. STEARNS. You are saying it is rare, but was it done with the 

health-care policy, PPACA? 

Mr. SUNSTEIN. Informal review? No. There are discussions, but 

not informal—typically, not informal review of rules. 

Mr. STEARNS. You are saying it is rare, but you are saying it did 

occur with the health-care review. 

Mr. SUNSTEIN. Well, I would want to go back and see, because 

my own involvement is standardly during formal review. I would 

want to go back and see whether—— 

Mr. STEARNS. Well, obviously, we would probably not agree on 

that point, because we think there has been a lot in the health-care 

reform of informal. 

Mr. SUNSTEIN. I think there is informal review, which is very 

rare, where someone sends over a rule and says, what do you 

think? In the health-care context, HHS and Labor—— 

Mr. STEARNS. OK. Do you mind, Mr. Sunstein, if you would follow up—because you are saying, yourself, right now you not sure 

you can remember this correctly—if you would follow up with the 

data, just to confirm. 

Mr. SUNSTEIN. Delighted. 

Mr. STEARNS. All right. 

With that, my questions are complete, and we recognize the 

ranking member. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Sunstein, it sounds like the definition of ‘‘informal review’’ 

is a term of art, in your mind, and that what you are meaning is 

informal review would be if somebody actually sent text over and 

it was reviewed and sent back, versus general discussions about potential rules and policies. Would that be correct? 

Mr. SUNSTEIN. Exactly. 

Ms. DEGETTE. Mr. Sunstein, I would like to ask you about the 

cost of regulations because we keep hearing on the other side of the 

aisle that the annual cost of Federal regulations is more than $1.75 

trillion. And, as I understand it, the basis for that figure is a September 2010 study called the Crain & Crain study, by Nicole and 

Mark Crain, that stated that the annual cost of Federal regulation 

totaled approximately $1.75 trillion in 2008. 

OMB, though, reached a different conclusion, finding that regulatory costs in 2008 ranged from $62 billion to $73 billion. 

So I guess I am wondering, how does OMB calculate its estimate 

on total regulatory costs? 

Mr. SUNSTEIN. Thank you for that, Congresswoman. 

22 

What we do is to aggregate the costs of all the rules in a year. 

And then, over a 10-year period, we can multiply the number of 

rules issued by the cost that we generate. And then you can have 

a 10-year aggregate cost as a result. 

The study to which you refer, with the 1.75—the extraordinary $1.75 trillion figure, is deeply flawed, as a report by the Congressional Research Service this April suggests. And it has become a 

bit of an urban legend, the particular number. 

We share, definitely, the concern. But one implication of that 

analysis is the United States would be richer if it adopted regulations more like those of Sweden or Canada, even though both the 

World Bank and the OECD rate those countries as having more restrictive business environments. 

Ms. DEGETTE. Who said that? The Crain & Crain study said 

that? 

Mr. SUNSTEIN. The Crain & Crain study, with the $1.75 trillion. 

I should say, I respect those authors—— 

Ms. DEGETTE. So they said that we should have regulations more 

like Sweden and these other countries? 

Mr. SUNSTEIN. No, but—— 

Ms. DEGETTE. That is the urban myth? 

Mr. SUNSTEIN. No, no, it is an implication of their analysis—— 

Ms. DEGETTE. I see. OK. 

Mr. SUNSTEIN [continuing]. That we would be doing better if we 

had regulations—— 

Ms. DEGETTE. And the administration does not agree with that, 

right? 

Mr. SUNSTEIN. We do not except that 1.7—— 

Ms. DEGETTE. OK. And one of the reasons that what the CRS 

review showed and what others have demonstrated is that the estimate was so high in that study because the authors only utilized 

the highest cost estimates in their calculations, correct? 

Mr. SUNSTEIN. Yes. 

Ms. DEGETTE. Now, additionally, what I have heard is that the 

authors of that Crain & Crain study did not calculate the monetary 

benefits of regulations where there are benefits. And the OMB 

found that in 2008 annual benefits of regulation ranged from $153 

billion to $806 billion. Is that correct? 

Mr. SUNSTEIN. Yes. 

Ms. DEGETTE. Now, can you please tell us how regulations could 

actually benefit Americans and save money? 

Mr. SUNSTEIN. OK, there are various different ways. 

I referred to the milk rule, which is deregulatory. That can save 

money. 

There is a lot of concern about rising gasoline prices, of course, 

now. If you have a more fuel-efficient fleet, then consumers can 

save money. And we recently released a new fuel economy label 

which clarifies the savings. So, a law, a rule that promotes fuel 

economy can save consumers a lot of money. 

If you have a law that saves lives, that saves money, in the sense 

that healthier and living people are good for the economy and we 

value people’s health and longevity. 

So, in those three different ways, we can have very significant 

benefits from regulation. 

23 

Ms. DEGETTE. So, really, it seems to me—I don’t want to be implying either that more regulations would save more money or 

fewer regulations would cost or save more money. In truth, you 

have to look at it on a continuum. Sometimes regulations are not 

cost-effective, and they should either be fixed or repealed. But 

sometimes regulations protect the public health and actually can 

save money. 

So you have to look at it regulation by regulation, which is what 

the administration is trying to do. Is that correct? 

Mr. SUNSTEIN. Exactly. 

Ms. DEGETTE. Thank you. 

Thank you very much, Mr. Chairman. I yield back. 

Mr. STEARNS. The gentlelady yields back. 

Dr. Burgess is recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. 

Mr. Sunstein, are you familiar with the paper from 2003, ‘‘Lives, 

Life-Years, and Willingness to Pay’’? 

Mr. SUNSTEIN. I have a vague recollection of that paper. 

Mr. BURGESS. On page 14 of the paper, this is quoting from the 

paper, ‘‘Under the life-years approach, older people are treated 

worse for one reason: They are older. This is not an injustice.’’ 

So I guess the question here—I mean, some people have described this as sort of a senior death discount. Your office that 

oversees regulations, will you be doing an analysis of the upcoming 

Health and Human Services rule for the Independent Payment Advisory Board in light of this philosophy? 

Mr. SUNSTEIN. I am a lot older now than the author with my 

name was, and I am starting to think I am not sure what I think 

of what that young man wrote. 

Things written as an academic are, you know, not a legitimate 

part of what you do as a government official, part of a team. So 

I am not focusing on sentences that a young Cass Sunstein wrote 

years ago. So the answer is ‘‘no.’’ 

Mr. BURGESS. But, still, it does point out an important philosophical approach. And many of us are concerned about the Independent Payment Advisory Board. Right now, this is the only plan, 

promulgated by the administration and, therefore, by the Democratic Party, this is the only plan put out there for dealing with the 

cost increases in the Medicare program over time. 

And the difficulty that a lot of—I mean, I was a physician in my 

former life. One of the difficulties I have with an Independent Payment Advisory Board is, now, for the first time, some central planner, who may be a very benevolent central planner, but a central 

planner who is pushing data points around on a big spreadsheet 

in a far-off Washington, D.C., is going to be able to tell me where 

to get my care, when to get my care, but the most important thing 

is when I have had enough. And if that is based upon the fact that 

I am old, and we are dealing with a health-care program that deals 

with senior citizens, that is a troubling relationship. 

But I appreciate your answer, and we will take that at face value 

and incorporate that into our evaluation of the Independent Payment Advisory Board that the President has popularized as his approach to saving money in Medicare for the future. 

24 

Our last hearing, earlier this year—and, again, appreciate you 

coming back—we talked a little bit about the Texas flexible permitting program, so shifting gears from HHS to EPA. So here is another example of a mandate that is inconsistent with the Executive 

orders for regulatory efficiency. 

The EPA’s proposed—their Federal implementation plan for 

greenhouse gases that would affect the State of Texas, and, to my 

read, probably exclusively the State of Texas, but a Federal implementation plan that is going to be implemented because Texas did 

not meet the requirements under a State implementation plan, and 

so the EPA said it was necessary to step in. 

But here is the problem. This is a Wall Street Journal editorial, 

‘‘EPA’s War on Texas,’’ from—I think it was from earlier this year, 

probably right before you came and testified to us before, that this 

was the result of an error that escaped the EPA’s notice for 18 

years—18 years—that the Texas plan did not address all pollutants 

newly subject to regulation, among them greenhouse gases. 

So, somehow, regulators in Texas 18 years ago weren’t able to intuit congressional intent or the intent of the courts 18 years in the 

future. And, as a consequence now, the EPA will come in and regulate at a Federal level all of the power production, electricity production in the State of Texas. 

This seems incomprehensible, with the Executive order that we 

are going to streamline the process. 

Mr. SUNSTEIN. OK. Appreciate the question. 

And you are exactly right; the Executive order is designed to reduce costs of all rules, including rules that involve greenhouse gasses. That is something we are very focused on. 

My understanding of the Texas situation is this: that there was 

an intervening Supreme Court decision, a badly split Court, but the 

majority said greenhouse gasses were a pollutant within the meaning of the Clean Air Act. 

Mr. BURGESS. No, it said the EPA could regulate. I don’t think 

they said they were a pollutant. 

Mr. SUNSTEIN. My recollection is that the Court said greenhouse 

gasses are a pollutant and the EPA could not conclude that they 

weren’t. 

Mr. BURGESS. We are trying to help the EPA with legislation. 

Mr. SUNSTEIN. Well, Justice Scalia dissented. It is a very active 

debate within the Court. And when the Court said that—so it 

wasn’t as if, I hope, the EPA thought that it had been made a mistake for 18 years, but, instead, that it had to do something to allow 

those permits to be given out in Texas so people could build. 

And so it was responding to, my understanding is, a difficult situation caused by the confluence of the Supreme Court decision and 

the permitting practices—— 

Mr. BURGESS. It may be a difficult situation, if I may, that they 

made impossible. Because then they came back and said, ‘‘Well, 

you can’t do a State implementation plan. We are going to take 

that over at the Federal level.’’ 

Texas was the only State singled for that. In the Wall Street 

Journal article that I will submit for the record, they call it ‘‘pure 

political revenge, an effort intimidate other States from joining 

Texas in lawsuits.’’ 

25 

Mr. SUNSTEIN. Well, I will tell you something that nicely connects the enterprise we are now engaged in with your question, 

which is that we are looking back at regulatory practices. And EPA 

has one rule, actually, that I hope will benefit Texas that is going 

to eliminate a redundant regulatory requirement that costs a lot of 

money. And—— 

Mr. STEARNS. The gentleman’s time has expired. 

Mr. SUNSTEIN [continuing]. It is completely fair game to raise 

that question. 

Mr. BURGESS. And, Mr. Chairman, I would like to submit this for 

the record. 

Mr. STEARNS. By unanimous consent, so ordered. 

Ms. DEGETTE. No, I would like to review it. 

Mr. STEARNS. The ranking member—— 

Ms. DEGETTE. Mr. Chairman, I would like to review it before it 

is submitted for the record. 

Mr. STEARNS. While we are waiting for her to review it, we will 

take our next—— 

Ms. DEGETTE. Let’s just start with the next questions. 

Mr. STEARNS. Yes, we will start. 

The gentleman from California, Mr. Waxman, is recognized for 5 

minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Mr. Sunstein, I believe in government because government can 

help set the rules in place that will make this society of ours and 

our economy more productive, more competitive, provide for more 

jobs, and also protect the public health and safety. And that is 

often exactly what regulations are all about. And sometimes we 

hear such negative, anti-government, anti-regulation statements 

that you would wonder what they think would operate in its place 

except for whatever industry wanted, which may or may not be the 

best for the economy and for our public. 

But I want to focus on what I think you are here to talk about, 

and that is efforts to ensure that executive-branch agencies employ 

a transparent regulatory process that produces commonsense, balanced regulations. That should be our goal. And I am pleased that 

we are going to look at this topic. 

In January, President Obama directed executive-branch agencies 

to undertake a thorough lookback at regulations within their jurisdictions and to examine ways to make those rules more efficient, 

more effective, more reflective of input from the public at large. 

At this point, you have received lookback action plans from 30 

departments and agencies; is that right? 

Mr. SUNSTEIN. That is correct. 

Mr. WAXMAN. Can you tell us a little bit about some of the ideas 

that have emerged from these department and agency plans? 

Mr. SUNSTEIN. Happy to do that. 

There has been a lot of discussion in the last decade about conditions of participation from the Department of Health and Human 

Services, which are conditions imposed on hospitals and doctors, 

and that a lot of these haven’t been rescrutinized in light of what 

has happened on the ground and possible redundancy and changes 

in medical practice and hospitals over time. Hospitals are often 

concerned that the Federal Government is too hard on them, hamVerDate Nov 24 2008 15:18 Jan 12, 2012 Jkt 037690 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-58 060311\112-58 CHRIS
26 

mering them a little bit with respect to regulatory requirements. 

And HHS has a very detailed discussion of steps that they are taking to reconsider those requirements. 

We have, in the context of hazard communication from the Department of Labor, OSHA in particular, there has been long suggestion from the business community, employers in particular, that 

these requirements need to be harmonized by what is happening 

in other nations so that they can do business across international 

lines and so that things are simpler and less burdensome for them. 

They have proposed that rule, and their plan says they are going 

to finalize it in a hurry. 

There has been a great deal of discussion about medical devices 

and innovation in the United States and whether these often small 

companies which are trying to bring medical devices to market 

have an adequate process within the FDA or whether it is too bureaucratic and time-consuming and difficult. The FDA has announced a number of initiatives to try to speed up that process, 

promote competitiveness and innovation. That should save a lot of 

money. 

One thing with potentially a very large payoff involves exports. 

We know that American companies, often small companies, have 

the best opportunity to grow if they are able to export. One thing 

we have heard a great deal from, in the last year and a half, from 

small business in particular, is that it is too cumbersome and difficult to navigate the system, there are too many restrictions. And 

we have taken away some of those restrictions, and we are going 

to take away more. And that should promote economic growth, and 

not in the long term. 

Mr. WAXMAN. So we are hear from many Members who are very 

frustrated or hearing from their frustrated constituents that a lot 

of the regulations don’t make sense to them. The purpose of the administration’s review is to see if they are right and, if they are 

right, to revise those regulations and bring them up to date and 

make sure they meet basic common sense and that they try to accomplish both the positive economic goals as well as the protection 

of the public, which is another side of it. 

What happens next in this review process? By the end of the 

summer, do you expect the agencies to have final regulatory 

lookback plans in place? 

Mr. SUNSTEIN. Late August. 

Mr. WAXMAN. And what will happen then? 

Mr. SUNSTEIN. My expectation is that we will have in late August three tracks. One track will be things that are completed. 

And, as I say, we expect a billion dollars in savings to be able to 

be achieved in the very short term. 

Other things that are on fast tracks, in the sense that the rulemaking apparatus has already gotten moving. Maybe there is a 

proposed rule out there; maybe we can propose it relatively quickly. 

And that is the second track, which is potentially rapid for many 

of the rules. 

Then there is a third track, where the rulemaking apparatus has 

to be inaugurated. And my hope is that we will be able to 

prioritize, with the aid of the views of people on this committee and 

your constituents and affected stakeholders, and prioritize things 

27 

that we will be able to complete in the relatively short term, even 

though the work is being inaugurated these days and through the 

summer. 

Mr. WAXMAN. Well, it appears to me that the President’s regulatory review process holds the promise for creating a more effective, efficient, and responsive Federal Government. I applaud it. 

And it seems to me something that both sides of the aisle, all reasonable people who want to see government succeed, should welcome. So I certainly want to encourage you in your efforts. And we 

should be willing, in Congress, to do whatever we need to to help 

out. 

Mr. SUNSTEIN. Thank you so much. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Mr. STEARNS. I thank the gentleman. 

Mr. Scalise is recognized for 5 minutes. 

We have a vote. We have just under 10 minutes. And after Mr. 

Scalise, we are going to break. I remind all Members, we have a 

second panel here, and so I encourage all Members to come back. 

Mr. Scalise? 

Mr. SCALISE. Thank you, Mr. Chairman. 

Mr. Sunstein, last time you had testified before our committee, 

I had asked you about the rule that you imposed, the Deepwater 

moratorium on drilling. And I think you said that that didn’t fall 

under the purview of the types of rules you would review under the 

Executive order. 

When the rule came out, the scientific experts that the President 

himself appointed actually disagreed with it. They said it would reduce safety in the gulf. They said it would lead to some of your best 

rigs and your crew base leaving, leaving the country. 

They turned out to be true, unfortunately. We have lost over 

13,000 jobs. We have lost about a dozen of those Deepwater rigs 

to foreign countries. So the scientific experts that the President appointed were actually correct, unfortunately, because those terrible 

consequences happened, and so we have lost those jobs. Safety was 

surely not improved. 

And yet, under the rule, you are still, I guess, taking the position 

that that type of rule wouldn’t even fall under your purview. 

So what I would ask, is the rule maybe not properly drawn if an 

actual rule that has gone through the process, that cost our country 

13,000 jobs and, according to the scientific experts the President 

appointed, would actually reduce safety, and it still doesn’t even 

fall under your purview, so is that something that you should 

relook at? 

Mr. SUNSTEIN. That is a great question. 

Anything that has an adverse job impact we are very focused on. 

Our domain is the domain of regulatory actions as defined under 

Executive Order 12866. And, for technical reasons, a moratorium 

doesn’t count as regulatory actions. 

Mr. SCALISE. All right, but should the Executive order be updated, amended, revised to take into account those types of rules, 

as well, since—again, I am talking about a rule that actually cost 

13,000 jobs and did nothing to improve safety, and it didn’t even 

fall under your purview. 

28 

Mr. SUNSTEIN. It is a legitimate question. And I should say that 

anything that costs jobs in that domain or any other domain is 

definitely a legitimate part of the lookback process. 

Mr. SCALISE. I know the FCC is one of the entities who said that, 

even though they don’t fall under the purview, they would like to 

be included. And I think there are some other independent agencies that said that they would voluntarily look to be involved in 

this. 

Have you gotten any requests from the FCC or any of these other 

independent agencies? 

Mr. SUNSTEIN. We have gotten a plan, actually, from the NLRB. 

So that is significant. It is short plan—— 

Mr. SCALISE. I heard it was a one-page plan. 

Mr. SUNSTEIN. Yes, short—— 

Mr. SCALISE. So, of all these independent agencies, you have one 

page to review? Do you just think—— 

Mr. SUNSTEIN. And we very much hope for more. 

Mr. SCALISE [continuing]. This is it? 

Mr. SUNSTEIN. We very much hope for more. 

Mr. SCALISE. OK. So you haven’t gotten anything from FCC? Beyond this one page from NLRB, you haven’t gotten anything else? 

Mr. SUNSTEIN. You are exactly right. The independent agencies 

have not delivered plans. But we are hopeful and we are encouraging them to engage in a lookback process. 

Mr. SCALISE. I know we had our meeting with the President on 

Wednesday. I think you were there. One of the questions that was 

asked to the President was specifically relating to the EPA. And we 

have had this conversation with the EPA on many of their proposed rules and regulations that have no impact on improving safety. It is much more aligned with a political agenda, ideology, rather 

than safety. And, in fact, the EPA has almost bragged that they 

don’t have to comply with your rule. We brought this to the President’s attention. 

Has anything changed in that regard? 

Mr. SUNSTEIN. The EPA is very clearly complying with the Executive order. And you have seen both a plan from the EPA, which 

is detailed—it has 31 suggestions for reforms, and the EPA will be 

considering what comes in in the next period to add to that 31— 

and the EPA’s recent rules have been detailed in their compliance 

with the Executive order, including their analysis of what you point 

to, job impacts. 

Mr. SCALISE. Can you give our committee any examples of where 

you have said ‘‘no’’ to the EPA in any of their rules or regulations? 

Or the Department of Interior, for that matter? 

Mr. SUNSTEIN. The way we work with EPA and Interior is collaborative rather than anything else. And you can see that—— 

Mr. SCALISE. Well, have you all collaborated in a way where 

some of their proposals were rolled back? 

Mr. SUNSTEIN. You can see that a number of their rules, when 

they were finalized, were far more modest than when they were 

proposed. 

Mr. SCALISE. Can you send examples to our committee of cases, 

both the previous proposal and then the rolled-back proposal that 

29 

I guess ultimately made its way into—I don’t know if it made it 

all the way to regulation yet or just further in the process. 

Mr. SUNSTEIN. We would be delighted to show examples. I know 

the National Association of Manufacturers particularly applauded 

the—— 

Mr. STEARNS. The gentleman’s time has expired. And we just 

want to—— 

Mr. SCALISE. I appreciate that. 

Mr. SUNSTEIN. You don’t want to hear what the National Association of Manufacturers applauded? 

Mr. STEARNS. Why don’t you complete the answer, and then we 

will call it to a close. 

Mr. SUNSTEIN. The EPA’s action with respect to the Boiler MACT 

rule, which included a recent stay and also a scale-back in response 

to concerns. 

Mr. SCALISE. All right. I would appreciate if you could get us all 

of that information to the committee. 

And thanks. I yield back. 

Ms. DEGETTE. And, Mr. Chairman, we don’t have any objection 

to Mr. Burgess’ article being inserted—— 

Mr. STEARNS. OK. By unanimous consent, Dr. Burgess’ article 

will be made part of the record. 

[The information appears at the conclusion of the hearing.] 

Mr. STEARNS. And we will reconvene right after the vote. 

Thank you for appearing. 

[Recess.] 

Mr. STEARNS. The Subcommittee on Oversight will reconvene. 

And we will recognize for the next series of questions the gentleman from Pennsylvania, Mr. Murphy, recognized for 5 minutes. 

Mr. MURPHY. Thank you. 

And appreciate your being here today. 

I am reflecting back on a quote from Ronald Reagan that says, 

‘‘It is not my intention to do away with government. It is, rather, 

to make it work—work with us, not over us, stand by our side, not 

ride our back. Government can and must provide opportunity, not 

smother it, foster opportunity and not stifle it.’’ He said that back 

in 1981, and I would think we would all agree. 

And, certainly, I haven’t heard anybody from our side of aisle say 

we don’t like regulations. We recognize they do provide a valuable 

role in health and safety. 

But there is some ambiguity added on. When the administration 

came out with its Executive order in January of this year, it said 

that regulations should be evaluated by values that are difficult or 

impossible to quantify, including equity, human dignity, fairness, 

and distributive impacts. 

Are those measures that you use when reviewing regulations? 

Mr. SUNSTEIN. Our principal focus, as the previous sentence of 

the Executive order emphasizes, is costs and benefits and quantified. So our focus is, how much does this cost, what are the benefits, and monetizable if possible. That is our principal focus. 

Mr. MURPHY. With that Executive order, does it is have the authority to overturn laws that Congress passes? 

Mr. SUNSTEIN. Absolutely not. And the phrases you pointed to 

were actually a recognition that, under some laws, like those deVerDate Nov 24 2008 15:18 Jan 12, 2012 Jkt 037690 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-58 060311\112-58 CHRIS
30 

signed to prevent rape or to prevent discrimination against returning veterans, for example, who are in wheelchairs and can’t use 

bathrooms without assistance—dignity is involved. 

Mr. MURPHY. One of the things that we had a hearing on the 

other day had to do with Yucca Mountain. And the law very clearly 

states that, when these licenses and other things go forth, action 

is to be taken. And yet, now we hear a new standard coming out, 

that we are supposed to look at issues of consensus, social consensus, in those areas. 

And yet, what you just said was, you don’t have the authority to 

overturn laws. I am assuming that the Department of Energy is 

one areas you can have oversight over? 

Mr. SUNSTEIN. Yes. 

Mr. MURPHY. Do you intend to have any discussion with them 

with regard to if they decide to ignore the law based upon a new 

standard that is not even in the law? 

Mr. SUNSTEIN. Well, I should say that fidelity to law is our first 

foundation stone. That is the requirement of everything we do. 

We oversee DOE rulemakings. So if there is rulemaking activity 

in that domain, we would, as a matter of course, engage with them. 

And if there isn’t something as a matter of course we would engage 

with them on, we would be happy to engage with them. 

Mr. MURPHY. I think it is extremely valuable if you could report 

to this committee on that very specific issue. Because the law is 

quite clear, but the dance the Department of Energy is doing that 

is thwarting that law, adding new standards that are not in the 

law, is also quite clear. And we need to have your response. Will 

you submit it to me? 

Mr. SUNSTEIN. Yes. 

Mr. MURPHY. Thank you. 

Another issue has to do with impact of the health-care bill on 

small businesses. According to the administration’s own estimates, 

its regulations are going to force half of all employers, or as many 

as 80 percent of small businesses, to give up their coverage in the 

next 2 years. And that is a big concern. 

Are you aware of that assessment of the negative impact? 

Mr. SUNSTEIN. That particular number I was not aware of, but 

I certainly know of the general concern. 

Mr. MURPHY. And when you look at cost-benefit analysis—and 

we are seeing numbers grow, in terms of the cost of the health-care 

bill. And we see estimates that are not 9 million people will lose 

their benefits, but as many as 30 million, 40 million, 80 million. 

Even those exceeding what the estimates are that the bill would 

actually provide health care, an equal or double that amount may 

lose health care. 

And so, along those lines, for PPACA or otherwise, have you been 

pushed in any way to move rules through quicker, despite information like that? 

Mr. SUNSTEIN. No. 

Mr. MURPHY. Can you delay finalizing any of the rules based 

upon how the agencies have handled or incorporated public comment and responses from the business community? 

Mr. SUNSTEIN. The basic answer is ‘‘yes.’’ And we often engage 

for lengthy periods with agencies because of those public comVerDate Nov 24 2008 15:18 Jan 12, 2012 Jkt 037690 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-58 060311\112-58 CHRIS
31 

ments. In fact, I spend a lot of personal time on the Web site 

known as regulations.gov, studying those comments. 

The only qualification, as you suggest, fidelity to law is our first 

obligation. And if the law requires action or requires action by a 

date certain, then we have to respect that. 

Mr. MURPHY. I know when Republican Members were at the 

White House this week, the President was asked questions by the 

EPA and regulations and looking at cost-benefit analysis, that how 

would we look at that in terms of the impact upon jobs, as well. 

And he said that, basically, there were mandates and standards of 

law that we had to adhere to, and if Congress wanted to do something otherwise, we should change those laws. And, certainly, I 

agree with him, that is, once the law of the land is there. 

But the question also becomes of how you act. I mean, you are 

in a position of considerable authority here. And so, on these areas 

of delays or pushback, have you ever actually done so, in terms of 

to any agency? Can you give us an example of how you have 

pushed back, how you have said, ‘‘You need to delay in putting on 

this regulation until we analyze it or until you have come back 

with a cost-benefit analysis that is different’’? 

Mr. SUNSTEIN. Well, what you can see is, over 100 rules have 

been withdrawn from OIRA review. And, in many cases, the reason 

for the withdrawal is insufficient engagement with issues of cost 

and economic impacts. So you can see that. 

You can also see that, often, the final rule comes out a lot different from the proposed rule. Often, it is a lot less expensive and 

less burdensome. And sometimes proposed rules just aren’t finalized because there is significant concern from the standpoint you 

have raised. 

And the interagency review, which involves not just the Office of 

Information and Regulatory Affairs but the Department of Commerce, the Council of Economic Advisors, plays a role. 

Mr. MURPHY. But how about pushback on the health-care rules? 

Have you done any of that? 

Mr. SUNSTEIN. Our first obligation, with respect to the healthcare rules, is to obey the law. We are in the implementation 

phase—— 

Mr. MURPHY. But have you pushed back? 

Mr. SUNSTEIN. Well, I wouldn’t want to phrase it ‘‘push back.’’ I 

think we work closely with the agencies to make sure that the 

costs are as low as possible and to make sure that the burdens are 

reduced. 

And you may have noticed with respect to the grandfathering 

rule, there was an amendment to the rule that responded very concretely to concerns from affected stakeholders about excessive burdens. And there has been a lot that has been done, and we and others have been participating in that, in trying to make sure that the 

implementation—— 

Mr. MURPHY. I am not sure I am getting an answer here. Has 

it happened? 

Mr. SUNSTEIN. Well, I wouldn’t want to claim personal credit for 

anything, but what I would say—or blame—but what I would 

say—— 

32 

Mr. MURPHY. Let me word it this way. Because employers routinely opt to change carriers but keep the same benefits, in order 

to cut health care-costs without any change coverage. Now, under 

the interim final rule, or the grandfathering plans, issued in June 

of last year, employer plans lost their grandfathered status for 

changing carriers regardless of whether benefits remained the 

same. 

So do you believe Health and Human Services should have instead proposed a rule open to comments from stakeholders who 

could have advised HHS of its own flawed decision before the problem began? 

Mr. SUNSTEIN. What I would say about that is that the interim 

final rules receive comments, and HHS should be and is, has been, 

highly responsive to those comments. In the particular case you 

give, so responsive as to amend in a hurry the rule to respond to 

some of the concerns. And we all discussed that. 

It is also the case that there were Q&As and guidance clarifications that were very responsive to concerns raised by exactly the 

people to whom you refer. And that is good government. 

Mr. MURPHY. Thank you. 

Thank you, Mr. Chairman. 

Mr. STEARNS. I see no one on the Democrat side. We will go to 

the chairman emeritus, Joe Barton from Texas, for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

Congressman Burgess was speaking to you about some rules that 

impact Texas, and I am going to follow up on that but in a little 

bit different way. 

Are you familiar with the PM2.5 and ozone transport rule that 

EPA is in the process of promulgating to replace the CAIR standards that were ruled not in compliance with the Clean Air Act several years ago? 

Mr. SUNSTEIN. Yes, I am. 

Mr. BARTON. OK. 

Are you aware that, I think just this week or maybe last week, 

EPA disallowed a Texas State implementation plan and put down 

some requirements that, if implemented, are probably going to shut 

down 25 percent of Texas’ electricity generation capacity? 

Mr. SUNSTEIN. Is this in the Clean Air transport rule draft? Is 

that—— 

Mr. BARTON. It is what just came out. 

Mr. SUNSTEIN. Yes. That rule is under review at OIRA now. And 

so my understanding is that nothing has been done along the lines 

you have just described. 

Mr. BARTON. Now, I want to give you an opportunity to demonstrate real accountability. 

My understanding is, the office that you hold is the President’s 

direct link to reviewing all the various regulations except those 

that are specifically exempted by the Executive order. In other 

words, you are the President’s man who makes sure that all these 

myriad agency regulations do pass some minimum tests for costbenefit and things like that. And you are supposed to review every 

significant order, et cetera, et cetera. 

I want to read you what the EPA said about this interstate 

transport decision that they just handed down. It says, ‘‘This proVerDate Nov 24 2008 15:18 Jan 12, 2012 Jkt 037690 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-58 060311\112-58 CHRIS
33 

posed action is not a significant regulatory action under the terms 

of Executive Order 12866’’ La di da di da. ‘‘It is, therefore, not subject to review under Executive Order 12866 and 13563.’’ 

It is going to shut down 25 percent of the power generation in 

Texas. That is not significant? Do you consider it significant? 

Mr. SUNSTEIN. OK, that—if that has—under our Executive 

order—now I know what you are talking about. Under our Executive order, if it has $100 million in annual cost 

or a significant impact on a sector area, then it counts as significant. So, if you would like, I will definitely look into that. 

Mr. BARTON. Now, I want you to do more than definitely look 

into it. I want you to do something about it. If your agency disagrees with the executive branch regulatory decision, can you stop 

it? 

Mr. SUNSTEIN. If there is a regulatory action, we have the authority to stop it, to the extent consistent with law. 

Mr. BARTON. Have you ever exercised that authority? 

Mr. SUNSTEIN. Well, we have seen over a hundred withdrawals 

of rules—— 

Mr. BARTON. OK. 

Mr. SUNSTEIN [continuing]. About 110. And that speaks for itself. 

Mr. BARTON. Well, I am going to read you something. Now, this 

is generated by the State of Texas, so that is the source. It says, 

‘‘The only way to achieve EPA’s contemplated emission reduction 

mandate by the 2012 compliance date,’’ which is next year, ‘‘will, 

in fact, be to cease operating the affected units for most of the year, 

leading to the loss of jobs, shutdown of lignite mines, and serious 

risk to electric reliability.’’ 

Now, keep in mind that Texas is in compliance, in terms of the 

standards. Keep in mind that the regions that are supposedly affected by Texas—St. Louis and, I think, Baton Rouge—have just 

been declared in compliance. And yet, EPA has come out in the last 

week and stipulated that, by next year, Texas has to achieve an additional 34 percent reduction in SO22 emissions. 

We have already achieved a 33 percent reduction in the last 10 

years. And in the next 6 months, we have to achieve 34 percent 

more or shut down all these plants. I think that is pretty dadgum 

significant. 

Mr. SUNSTEIN. I think you said one of my favorite words in the 

English language, which is the word ‘‘proposed.’’ This is a proposed 

rule, correct, not final? 

OK, well, from the standpoint of those concerns, that is excellent 

news. And it has happened in the last few years that something 

has been proposed and not been deemed significant, and then, as 

a result of further assessment and public concern, it has been 

deemed significant at the final stage, and there has been OIRA involvement. So—— 

Mr. BARTON. My time—— 

Mr. SUNSTEIN [continuing]. We will definitely take a look at that. 

Mr. BARTON. My time has expired, but I am going to work with 

Chairman Stearns and Ranking Member DeGette and Chairman 

Upton and Ranking Member Waxman. We are going to follow up 

on this. 

Mr. SUNSTEIN. Great. 

34 

Mr. BARTON. And we are going to expect—we are going to work 

cooperatively with you with you and your staff. But if you really 

have any authority, now is the time to exercise it. 

Mr. SUNSTEIN. Understood. 

Mr. BARTON. Thank you. 

Mr. STEARNS. I thank the gentleman. 

The gentleman, Mr. Sullivan, is recognized for 5 minutes. 

Mr. SULLIVAN. Thank you, Mr. Chairman. Thank you for holding 

this hearing. 

And thank you, Mr. Sunstein, for being here. 

What is the process for determining whether a regulation is subject to Executive order? 

Mr. SUNSTEIN. The basic idea is, is it significant? Meaning, does 

it have $100 million in annual costs on the economy—or benefit, by 

the way, and $100 million in impact—then it can be deemed significant. Also, if it affects a sector or an area. So there can be something that falls short of the $100 million threshold that, nonetheless, has an economic effect. Or it can raise novel issues of policy 

or law. 

So the net is wide, but it doesn’t include more routine or mechanical or, kind of, daily, mundane things. 

Mr. SULLIVAN. Well, I have here, right here, a proposal of disapproval of Oklahoma’s implementation plan for regional haze. And 

I talked to you a little bit before about that before. 

EPA proposes to disapprove Oklahoma’s plan. They did what 

they were told to do, and they achieved the goals that were supposed to be achieved, at much less cost. Yet, the Federal Government stepped in and said, no, we want to implement our Federal 

implementation plan, which has a much more aggressive timeline 

and will cost ratepayers almost $2 billion. 

And what I would like to know is, did OIRA review this proposal? 

Mr. SUNSTEIN. A Federal implementation plan, as in Texas, we 

would review the decision to go forward with that. A disapproval 

of a State implementation plan isn’t a rule, so that we would not 

review. 

Mr. SULLIVAN. You know, I have introduced a bill recently; it is 

called the TRAIN Act. And I have talked to you a little bit about 

that. It requires a cumulative analysis of the big regulations that 

impact America’s manufacturing and energy prices to better understand how they will impact international competitiveness and job 

creation. 

Will you and the administration support this? 

Mr. SUNSTEIN. There are three words you used—cumulative 

costs, competitiveness, and job creation—that are very much our 

focus. They are prominent in the Executive order. And this is something daily we are attending to. 

With respect to legislation, my own lane is the narrow one of implementation, and I defer to others on that issue. 

Mr. SULLIVAN. And I have talked to the White House, the President about this, too, and they seem supportive. I don’t know if they 

are telling me that just to placate me or anything. They could be. 

But, Mr. Sunstein, you are a very intelligent man, there is no 

question about it. In the administration you are highly regarded. 

35 

What you say carries a lot of depth and weight. And will you tell 

the President that you think he should sign that bill? 

Mr. SUNSTEIN. Well, I tend not to tell the President what he 

should and shouldn’t do. 

Mr. SULLIVAN. I think he would listen to you, though. He doesn’t 

know all this stuff, like you. And if you come in there, Mr. 

Sunstein, a guy like you, he is going to say, ‘‘Oh, OK, I think we 

will do it.’’ 

Mr. SUNSTEIN. He might have done that when we were colleagues at the University of Chicago. He is kind of President now. 

Mr. SULLIVAN. See, you guys go way back. And he is good at 

some things; you are good at other things. And I think you could 

be a big impact on him on this. 

Mr. SUNSTEIN. Appreciate it. 

Mr. SULLIVAN. And I would hope you can. 

Because I go around my district, Oklahoma, around the country, 

and I have never heard people talk about the EPA like they are 

now. I think people are tuned in that this is costing, and everything that is done is passed down to consumers, the people. It is 

not on the businesses; they just pass it through. So we have to 

keep that in mind. And it does affect competitiveness and jobs and 

our economy. 

And, Mr. Sunstein, you have said good things today, and I hope 

that you will support this, because I think it is something we 

should do. And I don’t think it is too much to ask, to do these costbenefit analyses on global competitiveness and jobs. 

Mr. SUNSTEIN. Appreciate it. 

Mr. SULLIVAN. Thank you. 

Mr. STEARNS. I thank the gentleman. 

The gentlelady from Tennessee, Ms. Blackburn, is recognized for 

5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

Mr. Sunstein, I think you can tell that we are all hearing from 

our constituents that they are frustrated with what is coming from 

this administration. 

I started in January doing listening sessions with our employers 

in our district. They were jobs-related listening sessions. I mentioned that to you the last time we talked. And they are incredibly 

frustrated with—as one of my constituents said, ‘‘You know, we 

used to get an update on a rule, a periodic, one-page update. Now 

the regulation comes in reams and reams and reams of paperwork.’’ 

And it is such a heavy burden that the jobs numbers today 

should not surprise you all, because what you are doing isn’t working. So this should be instructive to you, and I hope we can work 

with you on this. 

And I know that you all are saying, well, we have draft proposals 

that are out there, we need input. And what the input that is coming back to you is, you are on the wrong track. So if you are on 

the wrong track, sir, please advise the administration to change 

what they are doing. 

Now, I know that the Executive order, the 13563 that we are discussing, independent regulatory agencies are not to be subject to 

the OIRA review. But these agencies are—and I am using your 

36 

words—encouraged to do so on a voluntary basis and to perform 

retrospective analysis of existing rules. And you had hoped that 

they would do that. Is that correct? 

Mr. SUNSTEIN. That is correct. 

Mrs. BLACKBURN. OK. 

I have a June 1st letter to the editor in the Wall Street Journal 

where Commissioner Nord from the CPSC notes that, under the 

Obama administration, CPSC has—and I am quoting her—‘‘ignored 

the recent direction to look for and eliminate burdensome regulations. We are just too busy putting out new regulations,’’ end quote. 

I got to tell you, that is the kind of thing that we are hearing 

from our employers is frustrating to them. 

So let me ask you this. Among the 30 preliminary draft plans 

that are supplied by the agencies to OIRA by May 18th and released on the White House Web site, did any of them come from 

the FCC, the FTC, CPSC, FERC, or the NRC? 

Mr. SUNSTEIN. No. 

Mrs. BLACKBURN. They did not. And, sir, what is going to be your 

next step to address it? 

Mr. SUNSTEIN. Well, I am hopeful, and I have said in writing and 

I will say right now, that we would very much like the independent 

agencies to engage in this lookback process. 

Mrs. BLACKBURN. OK. I have to tell you, the American people are 

hopeful for jobs. And you all have dropped the ball. They are getting tired of this. 

Mr. SUNSTEIN. Well—— 

Mrs. BLACKBURN. And they are expecting us to take some action. 

Mr. SUNSTEIN. Well, I—— 

Mrs. BLACKBURN. And what you are doing with sending out all 

these regulations is wrong. If it is going to have a $100 million impact, we are going to pull it in here. And we are going to hold you 

all accountable of this, and the American people are going to hold 

you accountable for this. You have to find a way to get these agencies to get some of this regulation off the book. 

Let me ask you about—11⁄2 minutes left—the accountable care 

organizations. Health care in Tennessee is a very important industrial sector for us. The proposed rule on the accountable care organizations is incomprehensible. It is huge, it is incomprehensible. 

There is a group representing some of these organizations, such 

as the Mayo Clinic, that wrote the administration, saying that 

more than 90 percent of its members would not participate because 

the rules—the rules—not the law, the rules—as written, are so onerous that it would be nearly impossible for them to succeed. I am 

hearing the same thing from my constituent companies. 

In addition, the regulations were stated to be overly prescriptive, 

operationally burdensome, and the incentives are too difficult to 

achieve to make this voluntary program attractive. One of the 

major problems seems to be that the medical groups have little experience in managing insurance risk, and the administration blueprint rapidly exposes them to potential financial losses. 

What has OIRA’s role been in reviewing this rule to date for the 

accountable care organizations? 

37 

Mr. SUNSTEIN. OK. The quote you gave is very reminiscent of 

some stakeholder response to the meaningful-use rule, which HHS 

proposed a while back. 

Mrs. BLACKBURN. And there are problems with that, too, aren’t 

there, sir? 

Mr. SUNSTEIN. As it—— 

Mrs. BLACKBURN. We are hearing about those problems with the 

meaningful-use rule. 

Mr. SUNSTEIN. And the lookback process can potentially help 

there. 

Mrs. BLACKBURN. Are we going to speed that lookback process 

up? 

Mr. SUNSTEIN. Well, I would love—I would like nothing more—— 

Mrs. BLACKBURN. How do we help you speed that process up? 

Mr. SUNSTEIN. OK. Well, your idea—there are two things. 

First, this very hearing and your interest in making sure that 

what is on the plans and not implemented already or not on a very 

fast track, that those things are implemented in a hurry or put on 

a fast track. Your ideas about what should be on the plans that 

aren’t on the plans, very welcome. With respect to the rule you 

raise, as I said, it is a little pitiful, but it—— 

Mrs. BLACKBURN. Should we retrieve the rulemaking authority 

and address it statutorily? 

Mr. SUNSTEIN. Well, I wouldn’t say that. What I would say is the 

Administrative Procedure Act has a mechanism and the word ‘‘proposed,’’ not just because I am recently married, but also because 

the fundamentally constructive nature of proposed rules or interim 

final, where you get a chance for people to fix things, I have heard 

the concerns to which you point, and our role will be in trying to 

address those concerns and make—— 

Mrs. BLACKBURN. Mr. Sunstein, my time has expired. But I 

would just like to place a motherly reminder: Actions speak louder 

than words. And the American people have gotten very tired. They 

are ill and fatigued with the talk. 

I yield back. 

Mr. STEARNS. I thank the gentlelady. 

Mr. Gardner, the gentleman from Colorado, you are recognized 

for 5 minutes. 

Mr. GARDNER. Thank you, Mr. Chairman. 

And thank you, Mr. Sunstein, for appearing before the committee 

today to answer some questions. 

Just a couple quick questions. Do you believe that we an overregulation problem in the United States? 

Mr. SUNSTEIN. I would say—if it is a ‘‘yes’’ or ‘‘no’’ answer I am 

pleased to give yes. 

Mr. GARDNER. Could you put a price to your own price tag? You 

said you disagreed with some of the others. Do you have a price 

tag in mind of that overregulation? 

Mr. SUNSTEIN. Well, I don’t. But I hope to be able to cut, with 

the leadership of the relevant agencies, to cut the re-existing costs 

down very significantly. 

Mr. GARDNER. But you don’t know what those costs would be 

right now? 

38 

Mr. SUNSTEIN. Well, what we can say is that we have already cut 

hundreds of millions, and in a very short term we will be able to 

cut a billion. If we aren’t able to cut billions out of this process, 

that would be a surprise. 

Mr. GARDNER. Executive Order 13563 specifies that regulations 

should promote job creation and that regulations should impose the 

least burden on society. 

When will your office issue guidelines for analyses that will identify whether rules promote job creation or whether they will result 

in job destruction? 

Mr. SUNSTEIN. OK, what we have been doing is working carefully 

with the agencies in—rather than the guidelines approach, though 

that is an interesting suggestion, we have been working carefully 

with agencies when a rule has potential job impacts to make sure 

that that is addressed fully. And—— 

Mr. GARDNER. So will you be issuing guidelines, though, for analyses to identify those rules? 

Mr. SUNSTEIN. It is an interesting question, whether this should 

be done via guidelines versus a rule-by-rule basis. And that is 

one—we have been focusing on the 30 plans in the last months. 

That is a question—— 

Mr. GARDNER. So you will not be issuing guidelines on the job 

creation—— 

Mr. SUNSTEIN. No, I didn’t say that. We are focusing, really 

laser-like, on job impacts of rules. And you can see, actually, with 

rules withdrawn or amended in the last months, in part because 

of concerns about job impacts, some of them very prominent. So 

this is something we have been doing on a daily basis. 

Whether this should be done through guidelines or not, it is an 

interesting question. It is consistent with the Executive order and 

also OMB Circular A–4, which has some words on this, to focus on 

job impacts of rules. Whether guidelines are useful or not, as I say, 

that is an interesting question and very worth considering. 

Mr. GARDNER. And then, so, I mean, under the process that you 

are considering then, are you going to require methods of analysis 

that account for both direct and indirect job impacts, or will your 

office follow EPA’s lead—we had testimony here from the assistant 

administrator of EPA—and ignore the job losses that result from 

shutting down facilities and increasing energy prices? 

Mr. SUNSTEIN. I believe that testimony was focused on a rule 

issued before the recent Executive order. And, under the recent Executive order, job impacts have been and will continue to be discussed. 

Mr. GARDNER. But it also requires a lookback, though, so they 

should have done a lookback on that. 

Mr. SUNSTEIN. Oh, well, if EPA—the rule I think you are referring to is a proposed rule where there is an extensive set of comments, including comments that involve job impacts. And it would 

be very surprising if those impacts weren’t carefully addressed before the rule is issued. 

In terms of the lookback process, we are very much concerned 

with prioritizing the lookback so as to get job growth going. 

Mr. GARDNER. And so, there are a number of studies—I have a 

study right here in my hands here—a number of studies that show 

39 

health affects associated with a job loss—health affects and impacts on family, impacts on education. 

If a rule is expected to shut down a facility, shut down a business, or reduce employment, don’t you think that cost to Americans’ health associated with that shutdown should be considered 

under the Executive order? 

Mr. SUNSTEIN. Well, I am aware of that empirical literature. It 

is an interesting set of findings. 

What I would say is that the job impacts of rules definitely 

should be addressed. Whether health impacts that are a consequence of job impacts should be addressed, it is a little bit of a 

frontiers question in social science. I know the literature to which 

you are pointing. And existing OMB documents don’t require that, 

but it is certainly worth thinking about. 

Mr. GARDNER. So, right now, you are not taking into account impacts on children or families when they lose a job as a result of a 

regulation? 

Mr. SUNSTEIN. Well, to take account of job impacts, which, as I 

say, is a central focus of ours, is to consider job impacts on families 

and children. The word ‘‘job impacts,’’ in ordinary language, especially in the current economic environment, even before, the word 

‘‘job impacts’’ naturally calls up adverse effects on families and children. 

Mr. GARDNER. Are you aware of rules at the Department of 

Transportation relating to new signage requirements that are costing counties tens of thousands, if not more, dollars each? 

Mr. SUNSTEIN. Yes. And I am aware that the Secretary of Transportation is very concerned about that and pulled back on those 

rules. 

Mr. GARDNER. And so, they have pulled back on those rules? 

Mr. SUNSTEIN. Absolutely. He personally has been engaged. 

Mr. GARDNER. And so that rule is no longer in effect and it has 

been stopped? 

Mr. SUNSTEIN. Well, the rule that was causing the public concern 

was pulled back, and there is reassessment. And you can be sure 

that the most vocal and convincing concerns about unjustified costs 

have been well heard by the Department of Transportation. 

Mr. STEARNS. Thank the gentleman. His time has expired. 

The gentleman from Virginia, Mr. Griffith, is recognized for 5 

minutes. 

Mr. GRIFFITH. Mr. Sunstein, Executive Order 13563 states that 

regulatory actions must be based on the best available science. 

Your office has primary responsibility for helping the President 

achieve this objective. 

You may be aware that there is a pending science policy decision 

at the National Toxicology Program that involves the listing status 

of formaldehyde in an upcoming report on carcinogens. This listing 

status is very important. It is the basis for regulatory actions that 

may be taken now or in the future by OSHA, EPA, and other Federal agencies and, additionally, may directly affect marketplace 

purchasing and legal decisions in the near future. 

My understanding is that the studies and data sets that were reviewed by the NTP in its ongoing decision-making process are the 

same as those used in the draft formaldehyde assessment by the 

40 

EPA. As you may know, the National Academy of Sciences recently 

called that EPA draft assessment into question and raised serious 

concerns suggesting the draft assessment is in need of substantial 

revision, at the very best. 

I assume you agree the Federal Government must have consistent, clear, and coordinated scientific positions on matters of 

public health. Considering the inconsistent positions on fundamental science issues between these bodies, can you assure me that 

you will personally be involved in reviewing this issue and ensuring that any policy decision made by the NTP will reflect the best 

available in sound science, including recommendations and conclusions of the National Academies? 

Also, OIRA, from time to time, has found it useful to engage the 

National Academy of Sciences to review scientific evidence and provide an independent assessment. Will you engage the Academy on 

scientific questions at hand in the NTP report prior to its release? 

Mr. SUNSTEIN. Thank you for that. 

Our domain, our central domain, involves regulation and rulemaking, and the best available science is crucial to that. And we 

care a lot about the National Academy of Sciences. I work closely 

with the President’s science advisor, John Holdren, and the Office 

of Science and Technology Policy to make sure the science is right. 

On the particular issue you raise, it is not rulemaking in the 

sense that is our normal domain. But I can promise you this, that 

in the next 24 hours I will discuss this with John Holdren. 

Mr. GRIFFITH. And let me let you know why I am concerned 

about it. We heard earlier that regulations are good. And they are, 

in some cases. I am not sure they are always good for jobs, but 

sometimes they are, sometimes they aren’t. 

But formaldehyde is of great concern. In Giles County alone, we 

have an industry there that employs over 600 people. We are also 

looking at probably an announcement in the next week that we are 

going to lose some jobs in that same county. The county is 17,000 

people. And we are looking, based on regulations, losing—over the 

course of the next couple of years, we have a good chance of losing, 

if these regulations go into effect, 700 jobs. And you can do the 

multipliers on that and then realize that the multiplier is higher 

in rural areas where the money tends to stay in the community. 

When I am talking about the county, we are not talking about 

one town; we are talking about all the towns add up to 17. So the 

end of the county that has the 600 jobs based on an industry that 

uses formaldehyde is extremely significant. And it is not the only 

county in the Ninth Congressional District of Virginia where jobs 

can be impacted by these regulations, so I do ask you to look into 

that. 

Let me switch over to another subject of interest in the district, 

and that is the milk regulations. We do appreciate that the EPA 

did decide not to regulate. And I assume you stand by your statement in your opening statement, both written and oral, as to that, 

and I appreciate that. 

Let me ask you this. It is also fair to say that those regulations 

treating milk, because of the animal fats, as an oil never actually 

went into effect, that they had been—the phrase around here I am 

learning is, the can had been kicked down the road for some time. 

41 

And without the April 12th EPA announcement that they were 

not going to—that they were going to exempt the milk products 

that you mentioned in your written statement, without that exemption, they would have been regulated in November of this year. Is 

that not correct? 

Mr. SUNSTEIN. I believe that is mostly correct. My understanding 

is that the coverage of milk actually was real and in the law; enforcement—and this is a good thing—was not firm. So it was in 

kind of an enforcement limbo. 

Mr. GRIFFITH. Yes, sir. And without the action on April 12th, the 

enforcement would have begun in November? 

Mr. SUNSTEIN. That is correct. 

Mr. GRIFFITH. All right. I appreciate that. 

And thank you very much and appreciate your work on trying to 

save jobs. Like so many others, that is a main concern in our district. And we hope that you do have the President’s ear and that 

you can convince him to roll back some of these regulations that 

have already gone into effect and not propose—or not have them 

go into effect where they are going to cost jobs, like the milk regulation would have done. 

Mr. STEARNS. I thank the gentleman. 

The gentleman from Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

And thank you, Mr. Sunstein, for being here. And I would like 

to talk about the importance of regulations on protecting our economy. 

In advance of the hearing, both Chairman Upton and Chairman 

Stearns stated, ‘‘We are pleased the administration is sharing our 

concerns that burdensome regulations are stifling investment and 

chasing jobs overseas.’’ I have an industrial base, and I share that 

concern. Although I am concerned about some of my Republican 

colleagues believe that all regulations, regardless of the protections 

they afford, hurt the economy. 

And let me give you an example. Years of deregulation brought 

the markets to the point of collapse in 2008. The Federal Reserve 

had the authority to stop the lending practices that fueled the subprime mortgage market, but Chairman Greenspan refused to regulate the industry. The Securities and Exchange Commission relaxed its net capital rule in 2004, allowing investment banks to increase their leverage ratios 33:1. 

The Treasury Department opposed legislative efforts to require 

transparency and oversight concerning trading in energy derivatives. The Office of Thrift Supervision and the Comptroller of the 

Currency prevented States from protecting home buyers from predatory lending. In what was the result, in the fall of 2008, the financial markets in the United States collapsed. This economic crisis 

created a recession, causing 8 million Americans to lose their jobs 

and the stock market to lose 50 percent of its value. 

I also want to read to you conclusions from the congressional 

TARP oversight panel. They concluded that, ‘‘Had regulators given 

adequate attention to any one of the three key areas of risk management, transparency, and fairness, we might have averted the 

worst aspects of the current crisis.’’ Mr. Sunstein, this oversight 

42 

panel concluded that lack of regulation was a primary cause of the 

financial crisis. 

My first question is, do you agree with the findings of the TARP 

oversight panel, and was this a case where the lack of regulation 

harmed the economy and caused the Nation to lose these millions 

of jobs? 

Mr. SUNSTEIN. I am in general agreement with that. 

Mr. GREEN. OK. 

In the view of President Obama, any increase of government 

rules and regulations, do they hurt the economy? 

Mr. SUNSTEIN. Depends on the rules and regulations. Some do. 

Some don’t. 

Mr. GREEN. Well, and hopefully we learned our lesson, although 

sometimes we keep having to learn our lesson. We saw during the 

financial crisis targeted and effective regulations can provide important safeguards for our economy. And we hope we remember 

that government regulations can play an important role in protecting our country and our citizens. 

But also, on the other hand, I see a lot of what I think are really 

silly regulations come out and think, OK, how did they get to that 

point? And I tell people, Congress is the only institute known to 

man that can turn an elephant into a giraffe. Sometimes I think 

committees coming up with these regulations can do the same 

thing. 

Mr. Chairman, I appreciate the opportunity to ask these questions. 

Mr. STEARNS. I thank the gentleman. 

And, Mr. Sunstein, we are going to do a second round, so we 

won’t hold you too much longer. I will start out. 

I want to go back to the chart that was quivering up there. I 

think we have given you a copy of that chart. Did you know that 

that chart came from the Web page reginfo.gov, that is where we 

got it all? 

Mr. SUNSTEIN. I did not, but reginfo.gov is one of my favorite 

Web pages, and I trust it. 

Mr. STEARNS. OK. So, assuming that that information is correct, 

if you look at the graph again, you will see that the one graph 

shows the number increasing in number of regulations that have 

economic significance reviewed by OIRA from 2008, 2009. Do you 

see that? 

Mr. SUNSTEIN. I do. 

Mr. STEARNS. And then you would assume—it came from your 

Web site—that that is accurate? 

Mr. SUNSTEIN. I would. 

Mr. STEARNS. OK. Then you go to the second graph, and you see 

that, during the same time, particularly in 2010 and 2009, the average duration for those reviews have gone down. Do you agree 

with that? 

Mr. SUNSTEIN. That looks about right. I wouldn’t put a lot of 

weight on the fact—— 

Mr. STEARNS. Well, let me just finish. 

So you agree that the information came from your Web site, that 

you approve, it is accurate. You agree that the first graph is correct 

and the second graph is correct. 

43 

So I guess, going back to the first question where you disagreed, 

I guess you would now agree that the second chart shows you 

spend less time in review of these regulations and you would have 

to agree with the chart. 

Mr. SUNSTEIN. I will tell what I would want to see before signing 

off on that. The left-hand chart says, ‘‘economically significant rules 

reviewed by OIRA,’’ and the right-hand chart says, ‘‘average duration of OIRA regulatory review.’’ Most of the rules we review are 

not economically significant. 

So what I believe is the case, though I would want to see the 

chart to make sure, is that in 2010 our average duration for rules 

in general is pretty close to the predecessor. I believe that is true, 

but I want to see the chart to make sure. 

Mr. STEARNS. Well, I am glad you agree that the charts are accurate. I think you are parsing your words here by saying the actual 

wording of our titles you might not agree with. 

Mr. SUNSTEIN. No, no, it is not semantics. It is that we review 

mostly significant rules that are not economically significant. So, 

economically significant are well under 50 percent of the rules we 

review. So what we would want to compare is the significant rules 

to the average review time or the economically—— 

Mr. STEARNS. OK. All right. 

Mr. SUNSTEIN. You get the point. 

Mr. STEARNS. It sounds like a Chicago professor at law. 

I think the point we are trying to make is that, basically, that 

you have had more economically significant rules in the years from 

2008 to 2010, and, at the same time, the actual review and the economic impact has gone down. So that is our point we want to clearly make. And we want you to understand that you might come 

back with a little different interpretation, but these came from your 

Web page. 

Let me move on to my next set of questions dealing with endof-life-care rules. During your last appearance before the economy, 

you testified that the decision to include end-of-life-care rules into 

a Medicare regulation was inappropriate and that the American 

people deserve to see the content of the rules before they are finalized. That is what you said. 

Do you still agree with that statement? 

Mr. SUNSTEIN. Absolutely. 

Mr. STEARNS. OK. But are you aware, on March 3rd, 2011, in an 

appearance before the Subcommittee on Health, Secretary Sebelius 

freely admitted that she made the decision to publish this regulation without notice or public comment? Were you aware of that? 

Mr. SUNSTEIN. I was not aware of that. 

Mr. STEARNS. OK, well, that is a fact, that based upon what you 

said, obviously she did not comply with it. 

Have you ever had any discussion with Secretary Sebelius about 

this admission? 

Mr. SUNSTEIN. What I would say is, Secretary Sebelius was very 

responsive to the concern that this had not been adequately ventilated by the public. And that was promptly corrected on exactly the 

ground you state, and that was the Secretary’s decision. 

Mr. STEARNS. Yes. So here we have end-of-life-care rules in Medicare—controversial, to say the least. And she agreed that she had 

44 

not even sought public notice. Don’t you find that—is the word 

‘‘preposterous’’? 

Mr. SUNSTEIN. Well, I think what happened was that, long before 

anything like that went into effect, the correction was made. And 

that is a good thing. 

Mr. STEARNS. But you agree that she was incorrect by not asking 

for public comment? 

Mr. SUNSTEIN. Well, HHS, I think what they formally said was 

not that they hadn’t asked for public comment, but that it hadn’t 

been adequately ventilated by the public. This is a very—— 

Mr. STEARNS. Ventilated? Ventilated. OK. 

Mr. SUNSTEIN. Ventilated, not in the sense of air, but in the 

sense of—— 

Mr. STEARNS. But don’t you think those particular rules, end-oflife care, should certainly have asked publically for public comment 

in a very clear manner, unambiguous, so that the American people 

have confidence? I mean, that seems to be so basic. Wouldn’t you 

agree? 

Mr. SUNSTEIN. Yes. And that is why the Secretary amended the 

rule. 

Mr. STEARNS. Yes. 

Was your office ever briefed on the decision to include this regulation? 

Mr. SUNSTEIN. We saw the regulation. We were not—— 

Mr. STEARNS. Just ‘‘yes’’ or ‘‘no.’’ 

Mr. SUNSTEIN. We were not briefed on that particular issue. 

Mr. STEARNS. No. The answer is ‘‘no.’’ 

Were any materials provided by HHS about this regulation to 

you? 

Mr. SUNSTEIN. The regulation was presented to us. 

Mr. STEARNS. Could you please submit those for the record for 

us? 

Mr. SUNSTEIN. The regulation is the same regulation that was 

published. So you already have it. 

Mr. STEARNS. But the materials—the question I had, were any 

materials provided? 

Mr. SUNSTEIN. Independent—— 

Mr. STEARNS. Not the regulation. We are talking about the materials—— 

Mr. SUNSTEIN. No, I don’t believe any independent materials 

were provided. 

Mr. STEARNS. So there is nothing you could provide. 

Mr. SUNSTEIN. I don’t believe so. 

Mr. STEARNS. Has your office ever been contacted about the possibility of including end-of-life-care rules into future regulation? 

Mr. SUNSTEIN. No. 

Mr. STEARNS. OK. 

And, at this point, do you feel that the analysis for the end-oflife-care rules has been sufficient by the administration and a comment period, that it has been adequate? 

Mr. SUNSTEIN. What I understand is that the provision to which 

you object has been eliminated. And I support the Secretary’s decision. 

45 

Mr. STEARNS. And so we don’t think it will ever come up again, 

a new rule for the end-of-life care? 

Mr. SUNSTEIN. Well, you know, we are in the business of reviewing rules that come before us. I would defer to the Secretary’s 

statement—— 

Mr. STEARNS. But your understanding is, by her amending and 

pulling this, that there is not going to be any further end-of-life 

rules? Or they are going to be amended? 

Mr. SUNSTEIN. I would defer to her on any such issues. 

Mr. STEARNS. OK. 

All right, my time has expired. 

I recognize the gentlelady, 5 minutes. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. Sunstein, in your testimony, you talked about how initiatives 

described in the preliminary regulatory lookback plans released by 

Federal departments and agencies can potentially save billions of 

dollars in the future. 

Can you describe some of the steps that agencies have taken that 

have already led to significant cost savings for individuals and 

businesses? 

Mr. SUNSTEIN. Yes. We have from DHS something that happened 

in December, which was a reporting requirement imposed on airlines, that is 1.5 million hours. So that 1.5-million-hours burden 

has just been eliminated already. 

I mentioned the EPA milk rule. EPA also exempted biomass from 

the greenhouse-gas permitting requirement, something that was of 

great interest to the biomass industry. That is a 3-year exemption, 

potentially longer. That will have significant economic consequences. 

OSHA has proposed and now has announced it will finalize a 

$500 million burden-reduction initiative. And we have a number of 

initiatives that actually were announced long before the President’s 

Executive order that promised over 60 million hours in annual burden reduction. And I don’t know how much an hour is worth, but 

even if it is worth relatively little, which I don’t believe, that 60 

million hours turns into a lot of money. 

Ms. DEGETTE. So, as you described in your testimony, now that 

you have had this comment period and the public process, I think 

you said now through August the agencies are actually going to be 

looking at more exact ways that they can cut regulatory burdens 

and start implementing the plans, I would assume, August, September. Is that correct? 

Mr. SUNSTEIN. Exactly. 

Ms. DEGETTE. So I hate to do this to you, but I have suggested 

to Chairman Stearns that we have you come back in the fall, after 

Labor Day, and talk to us about what progress has been made over 

the summer. Because just like you, we are very committed to commonsense regulatory reform. 

And like I said to you before, at least my view, I have always 

been a proponent of regulatory reform, but I don’t think regulations 

are—I don’t think regulations per se have values attached to them. 

I don’t think that they are inherently good or bad. I think some 

regulations are helpful, and they can protect the public interest, 

46 

and they can save money. And I think some are overly burdensome. 

I think that that is the view that you share and the administration shares, too, correct? 

Mr. SUNSTEIN. Yes. 

Ms. DEGETTE. So if you can come back and let us know what 

kind of progress you have made, I think that would be helpful. 

Would you be willing to do something like that? 

Mr. SUNSTEIN. I would be delighted. 

Ms. DEGETTE. OK. 

One of the priorities that the Executive order said is that he 

wants to tailor—the President wants to tailor regulations to impose 

the least burden on society. And a lot of our concern, on both sides 

of the aisle, is the concern about regulatory burdens on small businesses. 

So I am wondering if you can talk to me about what you have 

seen already and what you see coming ahead this summer to reduce regulatory burdens specifically on small businesses. 

Mr. SUNSTEIN. OK, great. 

On the same day that the President issued the Executive order, 

he issued a memorandum on small business, protecting small business from unjustified regulation. 

And what the memorandum does is two things. First, it reiterates and underlines the requirements of the Regulatory Flexibility 

Act, an extremely important statute for small business. And, second, it goes further by saying, if an agency is not going to have 

flexibility for small business, such as a delayed compliance date, a 

partial or total exemption, simplified reporting requirements, it 

must specifically explain itself. 

Now, we have seen, in the last months, some prominent actions 

by Cabinet-level departments eliminating burdens for small business—sometimes reporting burdens; sometimes not reporting burdens, sometimes regulatory burdens—and, in two important cases, 

by pulling rules back so as to engage with the small business community to see if there is a way of doing it that would be minimally 

burdensome on them. 

Ms. DEGETTE. You know, one of the things I noticed—I was 

thinking about this. When I talk to businesses in my district, small 

and large, one of the great frustrations is obsolete regulations that 

have reporting requirements that are based on a lack of technology. 

And now that technology has moved ahead, they are saying, ‘‘Why 

can’t we just report electronically? Why do we have to fill out all 

these forms too?’’ 

Is the administration doing anything to specifically address those 

concerns? 

Mr. SUNSTEIN. Absolutely. And we have heard the same thing. 

It sounds more small potatoes than it actually is. Small business 

says, ‘‘We could do it electronically. It would be easy. It would take 

us a short time. You are having us do all this paperwork, which 

is a mess for us.’’ 

If you look through the plans, you will see numerous initiatives 

from numerous agencies that say, we are going to go from paper 

to electronic. And we have a little precedent here—actually, not so 

little. The Department of Treasury has a paperless initiative that 

47 

is going to save $500 million in the next years just by eliminating 

the use of paper. That is taxpayer dollars. We hope to transfer that 

to the private sector. 

Ms. DEGETTE. Let me just ask you, Mr. Sunstein. If you can get 

somebody from your staff to send us an e-mail—don’t send us a letter—— 

Mr. SUNSTEIN. Not paper. 

Ms. DEGETTE [continuing]. Send us an e-mail listing all of those 

initiatives so that we can actually know what is going on and communicate that to our constituents. 

Mr. SUNSTEIN. Great. 

Ms. DEGETTE. Thank you very much for coming back to us. 

Mr. STEARNS. The gentlelady’s time has expired. 

The gentleman from Texas, Dr. Burgess, is recognized for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. 

And thank you again, Mr. Sunstein. We are appreciative of you 

spending so much time with us today. 

You wrote a piece for the Wall Street Journal: ‘‘21st-Century 

Regulation: An Update on the President’s Reforms.’’ You talked a 

little bit about, let’s stop crying over spilled milk. 

But just to set the record straight, everyone in this town loves 

to blame all the problems of the world on the previous administration. But sometimes we need to give credit where credit is due to 

the previous administration. And the spilled-milk rule actually was 

proposed in the Federal Register January 15th of 2009, which was 

a few days before the President took the oath of office. Is that correct? 

Mr. SUNSTEIN. Yes. And our final rule is much more aggressive 

in its deregulation than the Bush proposal. 

Mr. BURGESS. All right. Well, give the former President credit 

when we talk about that. 

I do have to follow up on some of the ACO questions that Ms. 

Blackburn asked, because this is—and, Mr. Chairman, if I may, I 

would ask that today’s—in today’s Politico, Tevi Troy, a former 

Deputy Secretary at Health and Human Services, now with the 

Hudson Institute, senior fellow at the Hudson Institute, said it is 

time to redraft the rules that cover ACOs. 

It gives a very good description. ACO is actually a concept started with the Physician Group Practice Demonstration Project under 

Secretary Michael Leavitt in the previous administration. ACOs, 

while perhaps not my individual favorite, may have been a bipartisan approach to bringing down the cost of delivering health care 

in this country, particularly within the Medicare system. Many 

clinics across the country had embraced this concept, but they were 

left with a mishmash of a regulation, that they just threw up their 

hands and said, ‘‘We can’t do this; this doesn’t work.’’ And yet, it 

was working in their demonstration projects in Secretary Leavitt’s 

administration. 

Now, one of the things Secretary Leavitt found was that they put 

a 2 percent savings—before the ACO got to participate in any of 

the shared savings, there was a 2 percent barrier. And under the 

rule, it is now 2 percent to almost 4 percent. 

48 

So what they found under Secretary Leavitt was only 4 out of the 

10 practices, as I recall, the Physician Group Practice Demonstration Project data, only 4 were actually able to meet that bar. And 

now we have, in fact, increased that bar and made it higher. Is 

that really a positive step in this regulation? 

Mr. SUNSTEIN. The rule is proposed, and your comments and 

those of your staff, as well as those of your constituents, are not 

just welcome but needed so we get this right. 

Mr. BURGESS. But, just to be clear, we have a hard deadline, do 

we not, in the Patient Protection Affordable Care Act of January 

1, 2012? So this rule is going to have to be either revised or reproposed. The clinics are going to have to assimilate this data, digest 

this data, and decide whether or not they can meet the statutory 

and the financial requirements, which are significant, all by January 1st, 2012; is that correct? 

Mr. SUNSTEIN. If we could in 4 months produce 600 pages of 

lookback plans with hundreds of rules to be revised, then we can 

get that done on the schedule. 

Mr. BURGESS. You can get it done, but I am talking about 

Geisinger, I am talking about Mayo Clinic, I am talking about 

Gundersen Lutheran. Are these organizations going to be able to 

do the complex financial analysis that is going to be required in 

order to meet this January 1, 2012, deadline? 

Mr. SUNSTEIN. The statutory deadline, yes? 

Mr. BURGESS. Yes. 

Mr. SUNSTEIN. Well, we are going to do our best we can—— 

Mr. BURGESS. You told Ms. Blackburn that no more statutory or 

legislative interference was necessary, but I would submit to you 

that perhaps we do need to amend this sacred document to allow 

clinics more time to analyze what you are going to put forward. 

Well, what is the minimum financial outlay that a clinic is likely 

going to have to come up with to institute an accountable care organization, by your reckoning? 

Mr. SUNSTEIN. I don’t have a figure for that. This is a proposed 

rule, where all these issues are under discussion. 

Mr. BURGESS. Well, the figure that is given is, like, $1.8 million, 

but the American Hospital Association estimates that it is going to 

be between $11 million and $25 million. So it is a significant financial investment. 

And here is one of the problems with ACOs. I am a doctor. Doctors should be in the driver’s seat with ACOs. If they are going to 

really deliver on the promise—as a patient, I want my doctor to be 

in charge. I don’t want my health plan to be in charge. I don’t want 

the government to be in charge. I don’t want the insurance company to be in charge. 

But the doctors are in a poor position to be able to manage the 

financial outlay, because not only do you have to pay the startup 

costs of all of the things—the ancillary personnel, the electronic 

health records, and all the things that are required for disease 

management, care coordination, but you also have to manage 

against the financial risk of taking on a group of patients who have 

a set of chronic illnesses, which is ideally what the ACO is going 

to be managing. 

49 

And here is the problem that we have. We are trying to figure 

out what to do with the sustainable growth rate formula. And 

many people were thinking an ACO model may be the way we can 

pivot to a different way of Medicare payment, so we stop paying for 

stuff and pay for wellness. And you delivered to us a regulation 

that is so confusing that the people who purport to be able to do 

this are now shaking their heads and walking away, and we have 

6 months to fix the problem. 

Mr. SUNSTEIN. Well, I appreciate that. And you are clearly a specialist in this, and we need your help to get it right. 

There was a somewhat analogous controversy over an EOC regulation under the Americans with Disabilities Act. The Chamber of 

Commerce, incidentally, raised many questions about lack of clarity 

and overreaching. And the first people out of the box to celebrate 

what the EOC eventually finalized was the Chamber of Commerce. 

So our hope is we can fix this. 

Mr. BURGESS. I am going to submit a question in writing that 

deals with the FDA and medical devices, because we have heard 

a lot of testimony about that in this committee. It is an extremely 

important issue, the FDA guidance documents that are under development by the agency and how the streamlining process is going 

to impact those. It is of critical importance, not for our manufacturing in this country, but for America’s patients and America’s patients in the future. 

So thank you. 

Mr. SUNSTEIN. Thank you. 

Mr. STEARNS. I thank the gentleman. 

Mr. Bilbray is recognized for 5 minutes. 

Mr. BILBRAY. Thank you, Mr. Chairman. 

One of the things that has frustrated me, after 35 years in public 

life one way or the other, working with regulatory agencies and 

being in regulatory agencies, is this huge gap between the intention of the legislation and the actual application. 

A good example would be, wouldn’t you agree that any environmental law that is deemed implemented in a manner that hurts 

the environment, you know, may not be—obviously, it was not 

being implemented in the manner that the—with the legislative intent. 

In other words, would you agree that no environmental law 

should hurt the environment? 

Mr. SUNSTEIN. Sounds right. 

Mr. BILBRAY. I will give you an example of what we have had 

for a long time in San Diego. The Clean Water Act requires going 

to secondary activated sludge for sewage treatment. Scripps Institution of Oceanography, Roger Revelle, the father of the greenhouse-gas issue, stood up and demanded that we take a second look 

at the law. 

And as you know, we require that you do environmental assessment. The environmental review said not implementing the law 

would be the best environmental option. There were negative environmental impacts to habitat, to the ocean introducing chemicals, 

air pollution. But the bureaucracy still is caught on this issue that 

don’t confuse us with the scientific facts, we have the law and the 

law says you have got to do this no matter what. And we have been 

50 

fighting this battle for 20 years and we still are running into this 

issue. 

Don’t you think that the administration has two ways to do this? 

Either make the call like the judge did—we had to have a judge 

with the Sierra Club and the county health department suing EPA 

to force them not put this in. That is an interesting coalition there. 

Remember, the county environmental health is run by five Republicans. Either accept that or come back and ask us to change this 

law to allow the item to be done. How would you propose we handle that kind of conflict? 

Mr. SUNSTEIN. Well, I don’t know the particular controversy, 

though I know some of the names there. The first obligation of the 

executive branch is to follow the law. So it is profoundly to be 

hoped that following the law is environmentally desirable and, by 

and large, that is the case. The Clean Air Act as noted previously—— 

Mr. BILBRAY. It is the Clean Water Act. 

Mr. SUNSTEIN. The Clean Air Act is the one that there is good 

data on overwhelming health benefits. But there is some good data 

on the benefits on the Clean Water Act also. So we have to follow 

the law. There may be no choice. It may not be available for the 

executive branch to say we are not going to implement the law and 

go to Congress. 

Mr. BILBRAY. OK. Let me interrupt right there, I served 6 years 

on the Air Resources Board and 10 years on Air District. The success of the Clean Air Act was quantified. You actually know, you 

spend this much money, you reduce this many metric tons, you 

save this many lives per million; right? 

Mr. SUNSTEIN. Yes. 

Mr. BILBRAY. The Clean Water Act does not do that. It predated 

the Clean Air Act and it is not sophisticated enough. When you 

bring that up, wouldn’t you admit that maybe we ought to be sitting down and talking about quantifying the Clean Water Act because the Clean Water Act originally really was an Act to allow 

pollutants. I mean, Chicago dumping into a river that went into 

the Ohio and dumped—and polluting everybody’s water all the way 

down to New Orleans rather than clean up their mess and from 

what they historically did. 

Mr. SUNSTEIN. OIRA’s role is a narrow one of implementing what 

you have told us to do. I would not want to comment just in my 

little domain on what you should do tomorrow. But I would say 

that the Executive order makes a strong plea for quantification of 

costs and benefits and that would certainly apply to the Clean 

Water Act. 

Mr. BILBRAY. OK. Let me shift over. Is there anything in the Endangered Species Act that requires 4 or 5 to one mitigation for disturbing habitat? 

Mr. SUNSTEIN. I don’t believe so. 

Mr. BILBRAY. No, there is not. Is there anything in the Endangered Species Act that requires that when you go in to clean out 

a flood control channel to you to go back and mitigate every few 

years, you have to remitigate for that again, even though you had 

originally mitigated. 

51 

Mr. SUNSTEIN. I am pleased to say that I am confident that there 

is nothing like that in the Act. But I just note that the Department 

of the Interior in its lookback plan has referred specifically to 

streamlining the requirements under the Endangered Species Act 

and taking another look at that. 

Mr. BILBRAY. Let me tell you something. I have run into that 

where it is not only an impact on the local government and local 

communities, but it has actually displaced public space, park land, 

because you have agents under fish and game, and Fish and Wildlife screaming bloody murder that we have to get our pound of 

flesh from you, four on one, to make up for somebody else’s problems. And I don’t know, do you know anywhere in the Endangered 

Species Act that allows agencies to make a permitee mitigate for 

other people’s violations? 

Mr. SUNSTEIN. The way I would phrase it, it is a pretty short 

statute and I would say it does not require what you particularly 

described. I think it is authorized, the Secretary of Interior has a 

lot of authority under some broad terms. So I believe it is not required, but it is authorized. 

Mr. BILBRAY. Mr. Chairman, I think that the one thing that was 

in the rulemaking where so many of these things were done, by in 

the rulemaking process, that was never included in the legislation 

that was passed by the representatives of the people of the United 

States. And I think this is one thing that Republicans and Democrats ought to be able to work at, getting the Act back to where 

it was meant to. Make sure the Clean Water Act is cleaning up and 

helping the environment, not just fulfilling a bureaucratic agenda 

and hurting it. That the Clean Air Act is being implementing to 

where it is helping public health and not just running up costs. I 

hope both sides could work on this and I appreciate your testimony 

today. 

Mr. STEARNS. I thank the gentleman. The gentleman from Virginia is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, and I do thank you for spending time 

here and I appreciate what you are doing. We have to roll back 

some of these regulations that are killing jobs, and it really does 

not matter to me who gets the credit as long as we get the job 

done. 

In my earlier questioning, and you were very kind to say that 

you would look into it in regard to the national toxicology program 

related to formaldehyde, that affects hundreds of jobs on the northern end of the district, and affecting thousands of jobs across the 

Nation, and particularly some well needed jobs in the southern end 

of my district—my district is about the size of the State of New 

Jersey—is styrene. Interestingly, the science is similar and it is believed that there may be the national toxicology program may be 

labeling that as a reasonably anticipated carcinogen, although 

there is huge debate on that. Most of the science indicates that it 

is not a problem. So if you could add that to the list, I would greatly appreciate it, looking at that. 

We actually, it is interesting because my predecessor and Congressman Shadegg wrote a letter last year that detailed some questions, and I will be happy to give you a copy if you would like. And 

I followed up along with Congressman Donnelly this year saying do 

52 

you have an answer to these questions? Because the main thrust 

of those questions were we have all of these jobs that are going to 

be impacted, and yet the science does not seem to back up the ruling. So I do ask you to take a look at that. 

Also related to jobs, obviously I come from a coal district and I 

know that the rest of the committee members are surprised it took 

me this long to get to coal. But I do come from a coal district and 

as we heard today there are a lot of regulations out there. And I 

really wish we could quantify, as Congressman Bilbray was just 

saying, because we all want clean water and we all want clean air 

and we all want jobs. And what you have to do, as you know, is 

a balance to see whether or not you are getting a bang for your 

buck. And my opinion, everybody on this committee knows is that 

a lot of the regulations proposed and the newer regulations related 

to the mining of coal have very little positive impact on the environment. I won’t say they don’t have any, but they have very little 

at the cost of huge amounts of jobs and huge usage of coal in the 

district and in this Nation. 

And one of the things that I think is interesting, and this applies 

to both the styrene and formaldehyde. These products are going to 

be made, the question is are they made here. Now, if they are causing people cancer, obviously we have to put a stop to it. If some 

other country wants cancer, that is fine. But the bottom line is 

when you talk about coal and you talk about some of the things, 

and one of the things I found interesting we had some testimony 

here that we actually may be creating a worse problem with coal 

by shipping the jobs overseas. We are still using the products. They 

are still coming back here. They are being made in China and 

Kazakhstan, and India, and you name it. Places that I didn’t know 

about when I was in high school, and now are on the map and they 

are competitors of ours. And we are shipping our coal over there 

and they are shipping their air pollution back to us, because as you 

know, it only takes a few days, 10 days according to a NASA study, 

to get the air to go from the Gobi desert to the eastern shore of 

Virginia. And as a result of that, I am concerned that not only are 

we getting a small bang for our buck on the regulations that are 

proposed and that are coming out and that have some that are already implemented, but we are actually increasing the air pollution 

in the United States by shipping these jobs off to countries where 

they don’t have even the reasonable regulations that I think everybody would agree the Clean Air Act did bring us in its early days. 

So I think we have to be very, very careful with what we are doing. 

And we are using the Clean Water Act to actually, I think, in my 

opinion and some others who testified here, inadvertently with 

good intentions to dirty our air. Thank you, and I yield back my 

time. 

Mr. STEARNS. Mr. Bilbray, you have a point of order? 

Mr. BILBRAY. I just want to point out that I agree with you about 

the fact that we are here to implement the law and sometimes 

there is problems. And God knows, at Air Resources Board, I didn’t 

want to touch colognes and hair sprays or consumer products. You 

start messing with a lady’s Chanel No. 9, you get into real problems. But in Arizona—the U.S. versus Arizona, just filed last year, 

this administration claims in that, that the executive branch has 

53 

the ability to pick and choose which laws it wants to enforce. And 

I would ask you to take a look at that file because to me it was 

extraordinary, but that is the position of this administration. That 

the executive has the right to choose when not to enforce the law. 

And they have got that on record. 

So if it can be applied to the issue of immigration, my question 

is why wouldn’t it be applicable to these other regulatory groups? 

And I leave that with you just to take a look at it and see how that 

position may affect your latitude and straightening out some of this 

problem. And I yield back. 

Mr. STEARNS. The gentleman yields back. Does the gentlewoman 

ranking member have any concluding comments? I am going to let 

you go. I just have one comment. You previously testified that you 

disagreed with the Crane report that stated that the current regulations are costing American businesses $1.7 trillion. Are you 

aware that the Crane report was a report commissioned by Obama 

administration’s Small Business Administration in 2009? 

Mr. SUNSTEIN. Yes. What I would say is I wouldn’t say I disagree, I would say—I hope this is not a subtle difference—I don’t 

agree. I don’t think it has been supported, that number hasn’t been 

supported. 

Mr. STEARNS. Well, I think your answer would be that you do not 

agree with the Crane report. 

Mr. SUNSTEIN. Yes, the number, I don’t believe, has a solid foundation. 

Mr. STEARNS. I just want to put on the record that you disagree 

with the Crane report? 

Mr. SUNSTEIN. Yes, I disagree with the analysis in the Crane report. 

Mr. STEARNS. All right. Thank you, Mr. Sunstein. I think you 

have won the prize here for forbearance here today. Thank you 

very much and we will welcome the second panel. 

I’m going to ask unanimous consent—Dr. Burgess asked that 

Tevi Troy’s opinion in Politico be put in part of the record. Without 

objection, so ordered. 

[The information appears at the conclusion of the record.] 

Mr. STEARNS. We will have you gentlemen sit down at your convenience, and I am going to point out who they are before I swear 

them in. Mr. James Gattuso is a senior research fellow at the Heritage Foundation; Mr. Williams Kovacs is a senior Vice President, 

U.S. Chamber of Commerce. And Mr. David Goldston is Director of 

Government Affairs at the National Resources Defense Council. 

And with that, gentlemen, you are aware that the committee is 

holding an investigative hearing and in doing so we have always 

had the practice of taking testimony under oath. Do you have any 

objection to taking testimony under oath? No? The chair then advises you that under the rules of the House and rules of the committee, you are entitled to be advised by counsel. Do you desire to 

be advised by counsel during your testimony today? No? In that 

case, please rise and I will swear you in. 

[Witnesses sworn.] 

Mr. STEARNS. You are now under oath and subject to the penalties set forth in title XVIII, Section 1001 of the United States 

Code. If you would give a 5 minutes summary of your written 

54 

statement, we would appreciate it. Mr. Kovacs, we will start with 

you. 

TESTIMONY OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, U.S. CHAMBER OF COMMERCE; JAMES GATTUSO, SENIOR RESEARCH FELLOW, THE HERITAGE FOUNDATION; AND 

DAVID GOLDSTON, DIRECTOR OF GOVERNMENT AFFAIRS, 

NATURAL RESOURCES DEFENSE COUNCIL 

TESTIMONY OF WILLIAM L. KOVACS 

Mr. KOVACS. Thank you, Mr. Chairman and ranking member. I 

appreciate being invited here to discuss Executive Order 13563 

which calls on agencies to eliminate duplicative outdated and unnecessary rules. This is certainly a very positive first step. And we 

have said that many times. I would like to bring to your attention 

the fact that Congress first mandated this in 1980 in the Regulatory Flexibility Act, and it has been a struggle to get it implemented. So it is a good start. 

Now, having said that, one of the concerns and we hope that the 

OIRA moves forward with it, we have got a long way to go. If we 

are going to deal with the jobs issue we have to look the at economically significant regulations which have been defined by the 

administrator, permit streamlining, which really creates jobs, and 

frankly, we have to begin looking at the standards for quick review. 

They have a lot of implications as to how the regulatory process 

works. 

And as we are talking about jobs, I want to highlight one point 

that I have in the testimony and that is, some of the agencies, like 

the Environmental Protection Agency have, in each one of the environmental statutes, a congressional mandate to do a continuing 

jobs analysis. That is Section 321(a) of the Clean Air Act, and that 

goes through the rest. And, to my knowledge, that has never been 

done and it has been on the books for decades. 

The regulatory process has been growing for years. This is not 

new. Since 1976, we have 170,000 new regulations. But—and the 

Chamber has always said we need a lot of these regulations. Some 

of these are just business practices. So when we go into the regulatory process, we have to go into it in a way in which we understand what it is that we are trying to do. 

The concern on our part seems to be the fact that the economically significant regulations have increased dramatically; from 2005 

to the present they have gone from 137 a year to 224. These are 

significant because they do impact large parts of society and many 

industries. 

So when we take a step back, how did we get here? Congress has 

been addressing this issue to try to bring it to some control since 

1946. I mean, this is 65 years of Congress doing this. You enacted 

the Administrative Procedure Act, and at that time, it was to bring 

the public in and it was to have a discussion of what the regulatory 

process is all about and to get the kind of comments, a lot of which 

frankly you are getting here today. But several things happened on 

the way to getting here today. 

The first is Congress actually began to pass very, very broad and 

vague laws and you asked the agencies and administrative bodies 

55 

to begin filling in the blanks and the agencies were very glad to 

fill in the blanks. Then in the 1970s, you had the courts in the 

Chevron decision for the first time award deference to the agencies. 

So two things were going on simultaneously. One is Congress was 

giving the agencies a lot of discretion over the vague laws and the 

courts were giving them deference. 

That literally tipped the scales as to how the regulatory process 

worked and from that point forward, Congress has struggled to get 

it back and it has been unable to. Just to go over it, and it’s all 

in my testimony, but since 1980, Congress has enacted the Regulatory Flexibility Act, Unfunded Mandates, Information Quality, 

Data Access, Paper Reduction, Jobs Analysis provisions, and we 

could go on. And each one of these, the Congress has struggled to 

get control over this and it has been unable to. A few suggestions 

that we have, not that any one of them should take preference over 

any other one, but there are some, and we ought to look at this. 

And one is, if you are going to focus on the regulatory process, 

you need to focus on those few hundred regulations that really 

make a difference. You have so many things in place. You have cost 

benefits, you have jobs analysis, least restrictive alternatives. You 

have that. We’ve got to find a way to make them work. And I think 

you can make them work quicker in the 200 large regulations than 

the 4,000 other regulations that occur. 

You have got the REINS Act before Congress, certainly would 

put Congress in the driver’s seat and should be considered. You 

could require economically significant rules for the agencies to actually have a higher standard of review. For example, all regulations right now, the smallest of them and the most minimal and 

the largest, are all subject to what—court review for what we call 

arbitrary and capricious, which means if the agency can find anything in the record—if the court can find anything in the record 

that the agency supports, the agency wins. That really has tipped 

playing field because the agency can always put something in the 

record. You might want to consider giving that a higher standard 

of review. Maybe for the 200 economically significant regulations 

you put—you have a formal rulemaking. 

You could also up, since the courts give deference, you could require all regulations to be subject to substantial evidence. You 

could put judicial review on many of the regulatory statutes that 

you have already enacted. That way the public can help you implement the regulatory process. 

And then finally in the final analysis—I always hate recommending anything to Congress, but the Constitution does give you 

sole legislative power. And I think at this point in time, that legislative power, because of the regulatory process, is shared. Thank 

you. 

[The prepared statement of Mr. Kovacs follows:] 

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Mr. STEARNS. I thank the gentleman. 

Mr. Gattuso, welcome. Your opening statement. 

TESTIMONY OF JAMES GATTUSO 

Mr. GATTUSO. Thank you, Chairman Stearns, Ranking Member 

DeGette, and members of the subcommittee, thank you for the opportunity to testify today on this important issue. Four months ago 

the President issued an Executive order instructing all executive 

branch agencies to submit plans for reviewing regulations on their 

books. Last week, and again this morning, OIRA Administrator 

Sunstein reported on the initial progress of that review at the various agencies. His report was encouraging as agencies have identified a substantial number of obsolete and unnecessarily costly regulations. At the same time the reforms proposed so far constitute 

only a very small step towards the rollback of red tape that the 

American economy needs. Much more substantial reform is required. 

This is not a new issue. The burden of regulation has been steadily increasing over the past three decades through Republican as 

well as Democratic administrations. During the present administration, however, the rate of increase has reached unprecedented 

levels. According to figures compiled by the Heritage Foundation 

based on data provided by the Government Accountability Office, 

Federal agencies promulgated an unprecedented 43 major regulations during fiscal 2010 alone, imposing annual costs as calculated 

by the agencies themselves of at least $28 billion. During the same 

period, only a handful of major rulemakings were completed which 

reduced burdens for the total calculated savings of about $1.5 billion. 

It is in this context that President Obama launched his regulatory review initiative. To address the issue, the President promised a governmentwide review of rules which was a welcomed step. 

But the requirement that the agencies submit plans for a regulatory review of agency regulations, however, is not a new or 

groundbreaking idea. In fact, agencies have been required to prepare such plans since 1993, under President Clinton’s Executive 

order on regulatory review. There is little evidence that such plans 

have had any impact. 

Moreover, the Obama initiative was hardly government-wide. It 

excluded independent agencies such as the Federal Communications Commission, the Securities and Exchange Commission, and 

the new Consumer Financial Protection Bureau. In so doing, the 

President excludes from scrutiny many of the largest producers of 

red tape. And I do understand that OIRA invited independent 

agencies to submit plans on their own, and apparently they almost 

uniformly declined to do so. 

There is precedent on this. And prior reviews of regulations by 

administrations, notably in the 1991 review by the Bush administration, it was made clear to independent agencies that they should 

participate and they did. Frankly, the President, who has his appointees serving in independent agencies, can persuade them to 

participate if he expresses his desires strongly enough. I don’t 

think that was done in this case. 

74 

Now despite the limitations the initiative has as reported by 

OIRA Administrator Sunstein, has some meaningful results. Overall, the executive branch agencies identified over 100 possible rule 

changes for the reported potential savings in the short term of 

about $1 billion. For an administration that up to now has reduced 

regulation on virtually nothing, this agenda is significant. As encouraging as that is the administration’s explicit acknowledgment 

that regulations have costs and that regulators must make time in 

their day to review the restrictions and mandates they have imposed to determine if they are actually necessary and effective. 

Still, it is too soon for Americans to breathe a collective sigh of 

regulatory relief. Many of the steps last week are the low hanging 

fruit of regulatory excesses which should have been plucked long 

ago. For instance, the rule describing milk as a potentially dangerous oil has been in place since the 1970s and the request to 

eliminate dairy from the regulations have been submitted to the 

EPA as early as 2007. The fact that it took 4 years to accomplish 

this is less a notable achievement than a sign of a broken regulatory system. 

Many more actions are merely suggestions for change at a later 

date. Of the 31 reforms identified in the EPA’s regulatory plan, 

nearly half are termed longer term actions that officials have simply marked for a closer look at some time in the future. Moreover, 

these proposed regulatory rollbacks are far exceeded by the new 

regulations which have been, or will be promulgated. Thus, while 

the $1 billion in claimed savings from the actions identified by the 

administration is significant, it is swamped by the nearly dozen 

new rules costing more than $1 billion each which have been 

adopted in the last 2 years. 

In other words, the savings expected in this initiative in the near 

term has been counteracted 11 times over by new regulations that 

have been adopted. And there are more in the pipeline. 

Until this torrent of new regulation is stopped or at least narrowed, net regulatory burdens will continue to increase. 

Let me finish by saying that help is needed from Congress as 

well. I have my written testimony of recommendations for reforms 

that can and should be taken legislatively, including establishing 

a sunset date for Federal regulations, creating a Congressional Office of Regulatory Analysis to provide Congress with its own capability to analyze and review regulations and requiring congressional approval of major regulations that place new burdens on the 

private sector. Thank you for your time. 

[The prepared statement of Mr. Gattuso follows:] 

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Mr. STEARNS. I thank the gentleman. 

Mr. Goldston, welcome for your 5 minutes. 

TESTIMONY OF DAVID GOLDSTON 

Mr. GOLDSTON. Thank you, Mr. Chairman, and thank you, Ranking Member DeGette and members of the subcommittee for having 

me here today. What I’m going to try to do is run quickly through 

14 points to summarize some of the points in my testimony and 

issues that have come up this morning. First is regulation are 

needed to safeguard the public. Neither individual action nor the 

marketplace can yield such public good as clean air and clean 

water. 

Second, repeated studies have concluded that the cumulative 

benefits of U.S. regulations outstrip the costs. 

Third studies have generally found that the impact of regulation 

on jobs is neutral to slightly positive. The phrase ‘‘job-killing regulation’’ may come trippingly off the tongue, but one gets tripped up 

looking for the data to back it up. And this doesn’t even account 

for the indirect benefits of regulation such as a stable banking system or a trusted system for reviewing drugs. 

Fourth, studies have found that estimates of what a regulation 

will cost tend to exceed the actual cost of implementing a regulation often by a large factor. This is because the estimates cannot 

account well for technological change and they are based on information from parties with an interest in producing higher estimates. 

Fifth, the Congressional Research Service has found that the 

number of major regulations has not been increasing wildly and 

the CRS count of major regulations differs from the count in the 

Chamber of Commerce’s testimony. There may be a difference in 

definition there perhaps. 

Sixth, looking on the basis of all that, while any governmental 

activity like any other human activity can be improved, there is no 

indication of any fundamental problem with the U.S. regulatory 

system. 

Seventh, the Obama administration lookback is a reasonable effort to improve safeguards and we look forward to reviewing the 

Agency’s more detailed proposals when they come out in August. 

Eighth, industry’s focus on criticizing future rules can be seen in 

part as a tacit acknowledgement that past rules did not turn out 

to be as problematic at they had predicted. 

Ninth, contrary to some of the claims the Chamber of Commerce 

makes in the testimony, EPA does not simply cave when lawsuits 

are filed and sue-and-settle narrative is faulty. 

Ten, proposals to upend the current regulatory system should be 

opposed. They run counter to historical experience, to public opinion, and to the public interest. Measures like the REINS Act, which 

are tantamount to dismantling the current system of public protection should be opposed with particular vigor. 

Eleven, proposals like REINS are designed to bias the regulatory 

process hopelessly in industry’s favor by changing procedures. This 

is probably because the industry knows the public would not propose changes in the underlying laws that the regulations are designed to enforce. 

84 

Twelfth, in the end, even industry would be harmed by some of 

these proposals because the system would lead to far less predictability than we have today. 

Thirteen, regulations by providing clear rules of the road helps 

produce a functioning marketplace and economic prosperity. 

And last, in conclusion, Congress should not be accepting claims 

of regulatory harms at face value and should not make radical 

changes to the regulatory system which has safeguarded the public 

at a reasonable cost. Thank you. 

[The prepared statement of Mr. Goldston follows:] 

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Mr. STEARNS. I thank you, gentlemen. I will start with my questions. Mr. Kovacs, do the amount of current regulations impede the 

ability of businesses to hire new workers to create jobs? We just 

saw that the unemployment has raised, has gotten higher. 

Mr. KOVACS. Within our testimony, we have a discussion of what 

we call Project, No Project, which is what we—— 

Mr. STEARNS. What we do in this committee is usually ask for 

a yes or no if possible. Can you say yes? 

Mr. KOVACS. Yes. 

Mr. STEARNS. OK. Is that some part of the problem with the current high rate of unemployment which is approaching 9.1 percent 

is that your feeling is due to regulation? I know we had Mr. Waxman saying he believes in regulation and so forth. But in your 

opinion it contributed to the unemployment? 

Mr. KOVACS. I am not—the answer is I am not an economist. 

Yes, but look at our Project, No Project study, because I think that 

gives you the kind of answers you need. 

Mr. STEARNS. That study will give more definitized information? 

Mr. KOVACS. Yes. 

Mr. STEARNS. And the name of that study is? 

Mr. KOVACS. It is Project, No Project. 

Mr. STEARNS. OK. I think both you indicated, and I think the 

third gentleman did too, the idea of these independent agencies, 

and I think all of us are concerned. Don’t independent agencies 

that issue regulations also contribute significantly to the total burden on the economy? The independent? Isn’t that true? I will ask 

each of you. Mr. Kovacs? 

Mr. KOVACS. Yes. 

Mr. STEARNS. Mr. Gattuso. 

Mr. GATTUSO. Yes. 

Mr. STEARNS. Mr. Goldston, is that true that the regulations 

from the independent agencies contribute to the burden on the 

economy? 

Mr. GOLDSTON. They contribute regulations, certainly. 

Mr. STEARNS. You don’t think they affect the—OK. All right. 

Were you surprised that of the 30 preliminary draft plans released 

by the White House on May 26, there were none from the independent regulatory agencies under this committee’s jurisdiction 

such as the Federal Communications Commission, the Federal 

Trade Commission, the Nuclear Regulatory Commission, the Consumer Products Safety Commission, and the Federal Energy Regulatory Commission? 

Mr. KOVACS. No, I was not surprised. 

Mr. STEARNS. Mr. Gattuso? 

Mr. GATTUSO. I was surprised there was not at least one or two. 

Mr. STEARNS. Mr. Goldston? 

Mr. GOLDSTON. I am not sure I had an opinion on that. There 

is the constitutional issue about whether they can be required to 

do it. There is no reason that they couldn’t obviously choose to submit plans. 

Mr. STEARNS. Do you think there is anything more that OIRA 

could have done to encourage independent regulatory agencies to 

sort of voluntarily submit retrospective analyses of their existing 

rules as set out in the President’s Executive order? Mr. Kovacs? 

88 

Mr. KOVACS. No, the President suggested it and they decided not 

to do it. 

Mr. STEARNS. Mr. Gattuso? 

Mr. GATTUSO. As I said in my testimony, I think the President 

can make clear when his request is very serious and when it is for 

show. I think he could have done more. 

Mr. STEARNS. Mr. Goldston? 

Mr. GOLDSTON. I have no expertise on that, but I imagine they 

could have done more. 

Mr. STEARNS. I think, Mr. Gattuso, you indicated it is too soon 

to breathe early a sigh of relief with President Obama’s January 

2011 Wall Street Journal op-ed, where he termed ‘‘rules have gotten out of bounds placing unreasonable burdens on businesses, burdens that have had a chilling effect on the growth and jobs.’’ 

Do you think after that particular op-ed, that an Executive Order 

13653, we’re any closer to achieving what Mr. Sunstein has cited 

as has aim of nurturing, ‘‘a consistent culture of retrospective review and analysis throughout the executive branch’’? 

Mr. KOVACS. I think we are closer, but we are dealing with a few 

micro millimeters perhaps moving forward. 

Mr. STEARNS. Micro millimeters? OK. Mr. Kovacs, do you think 

Congress should mandate a law that all agencies should conduct 

periodic retrospective reviews? 

Mr. KOVACS. I think you already had in 1980 with the Regulatory Flexibility Act, Section 610. 

Mr. STEARNS. So it is not being implemented? 

Mr. KOVACS. That is correct. 

Mr. STEARNS. You agree that we should—that the Agency should 

have a retrospective mandate to look at the regulatory environment 

in their department. 

Mr. KOVACS. Yes. 

Mr. STEARNS. And you agree also? 

Mr. GATTUSO. Definitely. 

Mr. STEARNS. Mr. Goldston? 

Mr. GOLDSTON. There is no harm in retrospective reviews if they 

don’t become the whole sum and substance of what agencies are 

doing. Many statues require regulations to be updated periodically, 

which, in effect, means that the previous reg is being looked at. 

Mr. STEARNS. You agree, Mr. Kovacs, as I understand your testimony, you believe there are two distinct categories of regulation, 

and the primary focus of oversight by Congress and the administration should be those regulations that are economically significant. 

In your view, what would be the most effective way to address this? 

Mr. KOVACS. There are several ways. One is that they have a 

higher standard of review within the courts. For example, when a 

court reviews a regulation, they treat—they treat their review the 

same as if it is greenhouse gases or if it is training for an employee. And what needs to occur, because when the courts gave deference to the agencies they literally tipped the balance in favor of 

the agencies and against Congress. And the way to address that 

would be to require the Agency on those major rules to go through 

a higher standard of review, which would be a formal on-the-record 

hearing or something like OSHA has which is a hybrid hearing and 

89 

then to have the court review it under the substantial evidence 

test. 

Mr. STEARNS. My time is over. It is just remarkable as you pointed out that the Regulatory Flexibility Act mandates that these 

agencies do it and no one is doing it. It is really disturbing to think 

that we have mandated Congress, and yet none of these agencies 

are complying. 

Mr. KOVACS. Well, the first testimony I ever gave 13 years ago 

was on that issue. 

Mr. STEARNS. 13 years ago? All right. My time has expired. The 

gentlewoman is recognized for 5 minutes. 

Ms. DEGETTE. Thank you, Mr. Chairman. Mr. Kovacs, I agree, 

regulatory reform works at a maddeningly slow rate. And I also 

agree with your written and verbal testimony, it seems to be a bipartisan problem. It seems to happen under Republican and Democratic administrations; isn’t that correct? 

Mr. KOVACS. That is correct. 

Ms. DEGETTE. Following up on the Chairman’s questions—here 

is the problem sometimes with yes or no answers. Here is a question for a yes or no answer. Sorry to pick on you. Is today’s jobless 

number which came out which we are all upset about caused primarily by overregulation; yes or no? 

Mr. KOVACS. I have absolutely no idea, I am not an economist. 

Ms. DEGETTE. Right, OK. Thanks. 

Let me ask you. You said we should really target these economically significant regulations which have increased since 2005, 

again, on a bipartisan basis. Those are regulations that cost $100 

million or more; is that right? 

Mr. KOVACS. It is a broader group than that, but it also includes—— 

Ms. DEGETTE. OK. That’s a term of art? 

Mr. KOVACS. Right. Right. 

Ms. DEGETTE. And I can’t disagree with that. I think that is 

probably a good idea. But I would also say that the cumulative effect of other regulations, smaller regulations can be, even though 

it is not one regulation, if a small business has to comply with a 

number of regulation, that, for them, might add up to a heavy burden. So we shouldn’t ignore the smaller regulations while we’re focusing on these economically significant regulations; correct? 

Mr. KOVACS. That’s correct. And that’s why I was saying the 

standard of review and the how the Agency approaches it is very 

important. And so that is one of the ways that you might be able 

to—— 

Ms. DEGETTE. Right. And I think that is an excellent suggestion. 

One of my questions because there have been different legislation 

proposed and one of the things you and Mr. Gattuso also said that 

you supported was the idea of having both Houses of Congress to 

approve any regulation that has this impact that is an economically 

significant regulation; correct? 

Mr. KOVACS. That is one of the approaches. 

Ms. DEGETTE. That’s correct? And in your written testimony, you 

said that there were about 180 regulations like that that were 

issued in 2008, which was the last year of the Bush administration; 

is that correct? 

90 

Mr. KOVACS. Those are the government numbers, yes. 

Ms. DEGETTE. So your answer is yes? 

Mr. KOVACS. Yes. 

Ms. DEGETTE. OK. So here is what I am concerned about. In 

2008, that same year, we were in session 118 days but there were 

180 such regulation. And I would assume it is not your view that 

every economically significant regulation should be repealed; right? 

Some of them are useful; right? 

Mr. KOVACS. No, we’re not—I am not here today saying that you 

should repeal anything. 

Ms. DEGETTE. What you are saying is that there should be a 

higher standard of scrutiny which I agree with. 

Mr. KOVACS. That’s correct. 

Ms. DEGETTE. My concern is if you require all of those things to 

come to Congress and Congress is only in session a few days a 

year, we might not get to reviewing all of those regulations. Do you 

understand that? 

Mr. KOVACS. There is nothing being proposed that would go 

retro—— 

Ms. DEGETTE. No, let’s say there is a new regulation that the 

Obama administration is proposing and it is an economically significant regulation. So it would come to Congress for review. If 

Congress did not review that regulation, what would happen is it 

would be null; isn’t that correct? Under that legislation? 

Mr. KOVACS. That is correct. It wouldn’t be null—— 

Ms. DEGETTE. So—I don’t have much time left. So that might affect a regulation that was a bad regulation or a good regulation; 

right? It’s a great big mallet that comes down and kills that regulation. 

Mr. KOVACS. No, it puts Congress in charge of the legislative—— 

Ms. DEGETTE. I hear what you’re saying. Mr. Goldston, I wanted 

to ask you a couple of questions about the Clean Air Act. Because 

recently, Mr. Waxman asked the EPA to do a report on the Clean 

Air Act and what the report said was that the Act created American jobs, and in fact that it prevented 18 million child respiratory 

illnesses, 850,000 asthma attacks, 674,000 cases of chronic bronchitis, and 205,000 premature deaths. And also there was monetary value of $2 trillion by 2020. 

Mr. Goldston, I am wondering if you can tell me whether you 

think—whether you agree with these results of this study that was 

done? 

Mr. GOLDSTON. Most studies that have looked at the job and 

health impacts of regulations show net benefits of the health benefits and show—— 

Ms. DEGETTE. Of the Clean Air Act? 

Mr. GOLDSTON. Of the Clean Air Act in particular. 

Ms. DEGETTE. Now to comply with updated pollution standards, 

businesses must design, manufacture, install and operate pollutionreducing technologies. And so a lot of people argue that the Clean 

Air Act has created hundreds of thousands of domestic jobs in the 

field of environmental technologies, and generated about $300 billion in annual revenues and supported 1.7 million jobs. 

So my question to you is, do you think that Federal regulations 

like these can support economic growth and foster job creation. 

91 

Mr. GOLDSTON. Yes, and again, most studies have found a neutral to net benefit of jobs overall. That has been on the whole. So 

yes, absolutely. 

Ms. DEGETTE. Thank you very much, Mr. Chairman. 

Mr. STEARNS. The gentlewoman’s time has expired. The gentleman from California, Mr. Bilbray, is recognized for 5 minutes. 

Mr. BILBRAY. Thank you very much, Mr. Chairman. David, let 

me go through a scenario that I will call the good, the bad, and the 

ugly. And you know my background in California. So let’s use California as sort of the test platform for a national strategy on regulatory oversight, especially environmental stuff. 

The Air Resources Board, one of the most successful environmental agencies ever implemented, has reduced pollution by—you 

know, the air in California is twice as clean as it was when the 

ARB started off. And the population is twice as much. Are you 

aware that the mandates to those of us that were at the ARB and 

are there now, there is a mandate that cost-effectiveness must be 

considered before passing any reg; right? 

Mr. GOLDSTON. I certainly take your word for that. 

Mr. BILBRAY. And it obviously has not been a major barrier to 

the protection of the public health or the implementation of that 

environmental strategy? 

Mr. GOLDSTON. Right. 

Mr. BILBRAY. The success speaks for itself. And in fact, let me 

tell you as somebody who worked 6 years with that program. Sixteen totally, between 10 years Air District and 6 years on the 

board, it actually helped us. And one of the things I get upset 

about is I find people here freak out about that as if it is anti-environmental, where I found that one of the great tools, even for myself, I got held up by that and stopped from doing—implementing 

a regulation that I thought was good because we had to look at 

that. 

Don’t you think that both Democrats, Republicans and everybody 

else in Washington could learn something by looking at that costeffective mandate, and the way ARB has handled it as being something that both sides should be able to agree looking at making 

that trying to learn from that and integrating it into our Federal 

program? 

Mr. GOLDSTON. Everybody obviously should look the at the range 

of experiences. I think the Federal Clean Air Act has been effective 

as well, and CARB obviously is operating under its general auspices. 

Mr. BILBRAY. But would you agree that when you say that—and 

I will come back on you and say was there another agency that has 

implemented the Clean Air Act that has had as much reduction as 

CARB? 

Mr. GOLDSTON. Not that I am aware of. 

Mr. BILBRAY. Not that I am aware of either. 

Mr. GOLDSTON. The point is under some parts of the Clean Air 

Act, the standard that is selected is based on health but then the 

decision on how to implement it, which is what you are talking 

about, economics are allowed to take into account and there are 

other parts of the Clean Air Act where economics are allowed to 

be—— 

92 

Mr. BILBRAY. David, you admit that the EPA and the Federal 

Government has recognized the leadership of CARB to the point 

where we have had carveouts and not just Federal Government, 

but other States have adopted our standards as being the gold 

standard for clean air; right? 

Mr. GOLDSTON. That is my understanding. 

Mr. BILBRAY. OK. Now let’s talk about the ugly. AB 32, an environmental strategy, was put into our legislation. But CEQA still 

applies to our implementation of our greenhouse stuff. Now that 

has created a situation where now my scientists who have developed alternatives to fossil fuels using California financing and research is forced to leave the state to go to production. They are actually leaving and doing their production in New Mexico for a good 

reason. Because under the regulations of CEQA, it will take 10 

years plus to go into production of algae, where in New Mexico it 

is 9 months minus. Big difference. 

And this is, I would say, the bad side of it and showing that— 

now the legislature said they cared enough about the environment 

to put in AB 32, but they didn’t care enough to exempt it from environmental regulations that would stop the implementation. And 

let me just point out this is the same legislature that exempted a 

football stadium and industry from CEQA. So it is not like, you 

know, absurd. 

Doesn’t this tell us something that when we go to implementation or we pick our goals we have got to do what it takes to implementation practical? 

Mr. GOLDSTON. I don’t know the specific case that you are talking about. As a general rule, certainly, as a New Yorker, it doesn’t 

hurt me to hear tales of the oddness of the California State legislature. But I don’t know the specific case. 

Mr. BILBRAY. I think it is mind-set, the problem was. Not understanding the great goals and standards are easy for legislators to 

do but it is tough for them to take the hit on the fact that regulatory obstructionism is a major barrier to innovative environmental and economic growth. 

I guess the other issue that I would bring up is a good example 

of, and you were aware of it because you were working on this, we 

are required to go to secondary sewage across the sec—with activated sludge. When you have the Scripps oceanographers telling us 

that it is going to not only to hurt the environment, but when we 

do the environmental assessment implementing the Federal law on 

secondary in certain instances hurts the environment to the point 

where the Sierra Club and the environmental health Department 

of the County of San Diego sued the Federal Government to stop 

it. 

Don’t you think we really need to go back and start looking at 

that outcome base, the cost-benefit and how it really affects the 

real world and not just what it was meant to do? 

Mr. GOLDSTON. Again, I don’t know the specific case, but the notion of judging by outcome I think makes a lot of sense, yes. 

Mr. STEARNS. I thank the gentleman. The gentleman from Virginia is recognized for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. Mr. Goldston, I believe, 

very mildly put, that rules have gotten out of balance placing unVerDate Nov 24 2008 15:18 Jan 12, 2012 Jkt 037690 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-58 060311\112-58 CHRIS
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reasonable burdens on business, burdens that have a chilling effect 

on growth and jobs. My understanding of your testimony is you disagree with that? 

Mr. GOLDSTON. I would say as a broad conclusion I disagree. 

That doesn’t mean that there are no rules that could be changed. 

Mr. GRIFFITH. And so that I’m being fair with you I will tell you 

that that actually is a line that I agree with. Probably my version 

would be put on steroids, but that is a line out of President 

Obama’s January 2011 Wall Street Journal op-ed piece. So it is not 

just me, it is the President who thinks we ought to do something 

about this. And that is why I was very pleased that Mr. Sunstein 

spent so much time with us because it is probably one of the few 

things that I would agree with the President’s administration on. 

I believe this is an area where we can all come together and recognize that it does have—these regulations do have an effect on jobs, 

and my district in particular, which is the ninth district of Virginia, which is a large district. Some would call it rural, others 

might not. It is heavily dependent on manufacturing and mining. 

We do have a university or two in the mix, but it is heavily dependent on that. And we are seeing the effects of these regulations. 

You indicated in your comments that you felt like that if we 

started rolling back some regulations it might make things less 

predictable. And I am just wondering if you have had the opportunity to hear the testimony in front of one of the committees 

where Notre Dame came in and testified that in 2004, they attempted to comply with what they believed the EPA regulations 

were going to be in regard to boilers. And of course, the EPA has 

backed off of its boiler MACT regulations, but they were very concerned about it because they spent millions of dollars to comply 

with what they thought the EPA wanted, only to find out a few 

years later that that wasn’t good enough and they were not going 

to be able to qualify as a valid boiler if the new regulations had 

come into effect. And these are folks who were really trying. And 

I just can’t agree with you. I believe that we need to do more to 

make things predictable. 

And Mr. Kovacs, if I might ask you, on page 12 of your prepared 

statement, you have got a copy, I believe I have seen this or a similar chart before of all the new regulations coming into effect at that 

time, and again, boiler MACT is not—it is on the back burner if 

not off the stove completely. 

But I just—you can look at all of these colors from over there and 

see. If a member of your organization, doesn’t matter which agency, 

whether it is EPA or OSHA, sees that much coming at them, do 

you think they think that is predictability in regulation? 

Mr. KOVACS. Well, it is clearly not predictability. 

Mr. GRIFFITH. That’s why I asked it. 

Mr. KOVACS. Whatever it is going to change. I would like to make 

a point without being stuck to the yes or no. We have been talking 

about jobs all day. And if jobs are really being created by all of 

these rules, then the Environmental Protection Agency should be 

implementing the continuing jobs analysis that it’s got under 321 

and all the other rules. There are mechanisms. 

If you go through everything that Congress has done for the last 

30 years, you have least restrictive alternatives. It is never applied. 

94 

You have unfunded mandates any time it is over 100 million dollars. There are an entire list of issues to be done. You have within 

each of the environmental statutes some form of this continuing 

jobs analysis. We have it there and it is not being done. So there 

are ways to bring resolution to this issue. 

But going back to your question, yes, that is an enormous 

amount of regulatory uncertainty. But if you look going forward between health care—which I am not an expert on—or financial services, we went from the 137 to 224, that chart is going to go this 

way. 

Mr. GRIFFITH. If I understand your answer in general, and your 

other comments as well what I am hearing you say—correct me if 

I am wrong—what I’m hearing you say is if, as some would like 

to think that regulations actually create jobs, then they should embrace congressional requests that they establish what jobs they are 

creating and what the impact is on jobs. Because if these regulations are so good for jobs, a requirement to detail the jobs effect 

of the regulation would come out that these regulations are actually helping everybody. 

And so the EPA and the administration and all the others actually ought to actually get behind the TRAIN Act and other Acts 

that call for more data that show that these regulations are, in 

fact, creating job, if that is true. Is that what you are saying sir? 

Mr. KOVACS. Absolutely. That is what they should do. The Congress has already mandated it in the other statutes. But I would 

even go one step further. EPA uses proprietary models. It does not 

use the public models as required under the Data Quality Act. It 

should begin releasing all of its models so that we can see the assumptions. They should go in and begin applying the Data Quality 

Act, which the administrator said gave a hint to that, it is a good 

way of testing the statistics, the data, the information. 

The agencies have written, since Congress passed that in 2000, 

the agencies have literally written that out. And the only thing it 

says is that the agencies are to open up their data, to use the most 

up-to-date data, put that data in the record and allow that data to 

be peer-reviewed and tested within the system. That has not occurred since the law has passed. 

Mr. GRIFFITH. Thank you, sir, I see my time is up. 

Mr. STEARNS. I thank the gentleman. We are ready to close. I 

think one thing I am getting out of this panel is that the frustration that routinely the Federal agency ignore the requirements contained in such laws as Mr. Kovacs mentioned, the Regulatory 

Flexibility Act, the Information Quality Act, and the unfunded 

Mandates Reform Act. 

I mean, that is a concern I think for a member of either party, 

a bipartisan issue to think that they routinely ignore that. And we 

really have a responsibility to make them comply. And so with 

that—— 

Ms. DEGETTE. Mr. Chairman, I just would point out to the gentleman from Virginia, I completely agree that there should be some 

explanation by these agencies, the EPA and the other agencies, 

about, in fact, what the impact of these regulations should be on 

jobs. And that is, as Mr. Kovacs says, why most of the existing 

laws require that analysis. 

95 

My concern about this REINS Act, which the gentleman refers 

to, is it does not just say you shall submit to Congress how many 

jobs it creates. It submits these regulations to Congress for approval or disapproval and if Congress just doesn’t get around to 

doing it, it fails. And it might be a useful regulation that we all 

could agree on. That’s the issue. It goes much farther than just 

that jobs issue. And with that, I yield back. 

Mr. STEARNS. Does the gentleman want to comment on that? 

Mr. GRIFFITH. Yes, Mr. Chairman, I would just say that the reference I made was actually to the TRAIN Act, which we had in 

subcommittee last week. I do support the REINS Act and your 

comments are valid but my reference was to TRAIN Act today. 

Ms. DEGETTE. Trains, reins. 

Mr. STEARNS. I thank my colleagues and with that, the subcommittee—oh, we have 10 days to submit for the record any opening statements or any questions that we might further ask for you 

folks. So thank you, and the subcommittee is adjourned. 

[Whereupon, at 12:45 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. JOE BARTON

Thank you, Mr. Chairman, for holding this important hearing to discuss OIRA’s 

role in reviewing proposed and final rules before those rules are published in the 

Federal Registrar. As the president stated, this new approach is supposed to remove 

outdated regulations that stifle job creation and make our economy less competitive. 

According to Obama’s 2011 Executive order, agencies were required to submit to 

OIRA a ‘‘preliminary plan’’ laying out how each agency intended to review its existing ‘‘significant’’ regulations and determine which ones should be modified or repealed. On the face of it, that sounds great. However, after reviewing those plans, 

I am troubled. 

I am not sure anyone really took this seriously. Many agencies submitted plans 

that simply regurgitated the Executive order, claiming that they were already engaged in the process of reviewing their existing significant regulations. Most of the 

agencies that actually submitted a substantive ‘‘plan’’ focused on streamlining reporting and making information available online. This type of review is not the ‘‘look 

back’’ that I was hoping for, or that the President ordered. 

What I consider significant regulations, are rules that have a major impact on 

American jobs and our economic recovery—such as the Environment Protection 

Agency’s move to regulate green house gasses, or their role in overseeing the implementation of Title V programs in States. Unfortunately, the EPA did not consider 

these important enough to consider in the near term. 

We were led to believe that agencies were directed to listen to the public’s grievances and consider the regulations identified by stakeholders in the private sector 

before submitting their plans. If the EPA had actually done this, they would have 

listened to the 12 states that have already filed suit to protect domestic jobs. They 

would have also heard from industry, small business. 

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