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REVIEWING INDEPENDENT AGENCY RULEMAKING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 8, 2016 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

JAMES LANKFORD, Oklahoma, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

MICHAEL B. ENZI, Wyoming 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

HEIDI HEITKAMP, North Dakota 

JON TESTER, Montana 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

JOHN CUADERESS, Staff Director 

ERIC BURSCH, Minority Staff Director 

RACHEL NITSCHE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator Lankford .............................................................................................. 1 

Senator Heitkamp ............................................................................................ 3 

Senator Ernst .................................................................................................... 10 

Senator Portman .............................................................................................. 11 

Prepared statement: 

Senator Lankford .............................................................................................. 31 

Senator Heitkamp ............................................................................................ 33 

WITNESSES 

THURSDAY, SEPTEMBER 8, 2016 

Robert R. Gasaway, of Counsel, Kirkland & Ellis, LLP ....................................... 5 

Adam White, Fellow, Hoover Institution ............................................................... 7 

Cary Coglianese, Ph.D., Edward B. Shils Professor of Law and Professor 

of Political Science, Director, Penn Program on Regulation, University of 

Pennsylvania Law School .................................................................................... 8 

ALPHABETICAL LIST OF WITNESSES

Coglianese, Cary Ph.D.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 69 

Gasaway, Robert R.: 

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

Prepared statement .......................................................................................... 34 

White, Adam: 

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

Prepared statement .......................................................................................... 48 

APPENDIX 

Report submitted by Adam White .......................................................................... 87 

Responses to post-hearing questions for the Record: 

Mr. White .......................................................................................................... 121 

Mr. Coglianese .................................................................................................. 126 

(1) 

REVIEWING INDEPENDENT AGENCY 

RULEMAKING 

THURSDAY, SEPTEMBER 8, 2016 

U.S. SENATE, SUBCOMMITTEE ON REGULATORY, AFFAIRS AND FEDERAL MANAGEMENT, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:02 a.m., in room 

342, Dirksen Senate Office Building, Hon. James Lankford, chairman of the Subcommittee, presiding. 

Present: Senators Lankford, Portman, Ernst and Heitkamp. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Good morning. Welcome to today’s Subcommittee hearing entitled ‘‘Reviewing Independent Agency Rulemaking.’’ This is the 13th hearing in the regulatory process that 

this Subcommittee has held during this Congress. All our prior 

hearings the Subcommittee has reviewed the regulatory actions of 

executive branch agencies. Today we turn to the rulemaking record 

of independent regulatory agencies. 

First of all, I want to recognize Senator Portman for his work on 

this topic, and as the Subcommittee moves toward addressing 

shortcomings independent agencies regulate, we have Senator 

Portman to thank for his tireless work in this area and the foundation he has laid regarding common sense solutions to fixing problems associated with independent agency rulemaking. 

Independent regulatory agencies were conceived to accomplish 

varied missions, but they have one thing in common. They were 

structured to be somewhat independent from the influence of the 

President, the Administration, or originally, the Judiciary. However, independent agencies should not be exempt from oversight. 

When an agency is independent of the executive branch, it does not 

require that they are also independent of Congress and the American people. Congress created each independent agency and Congress still has the authority to oversee the agency they created. No 

public entity should be exempt from oversight. 

Independent agencies take regulatory action just like their executive branch counterparts. They promulgate rules, issue guidance, 

take enforcement actions. Accordingly, independent regulatory 

agencies should be held to the same procedural standards as executive branch agencies. I would actually argue that independent regulatory agencies require a heightened level of oversight over their 
2 

regulatory regimes because the Executive Orders (EO) that have 

structured every aspect of the rulemaking process for executive 

branch agencies, and have been endorsed by both Democrat and 

Republican administrations for decades, do not apply to independent regulatory agencies. 

Part of the question we will have today is why not? According to 

the Office of Management and Budget (OMB’s) 2015 Report to Congress on the benefits and costs of Federal regulations from 2005 

through 2014, Federal agencies issued 549 major rules. Independent regulatory agencies were responsible for 141 of these rules, 

which equates to roughly 25 percent of rulemaking. 

There is cause for concern when it comes to the analysis to support those rules. In the same report, OMB found that in 2014, only 

10 of the 16 major rules issued by independent agencies provided 

some information on the benefits of the cost of regulation and that 

independent agencies continue to struggle in providing monetized 

estimates of benefits of cost and regulation. 

Another study published by the independent well-respected Administrative Conference of the United States in 2013 found that no 

major rule issued by an independent agency in 2012 contained a 

complete cost benefit analysis. Many of these rules that are issued 

without a cost benefit analysis are financial regulations issued by 

the Consumer Financial Protection Bureau (CFPB), the Commodity 

Futures Trading Commission (CFTC), the Securities and Exchange 

Commission (SEC) and the Federal Deposit Insurance Corporation 

(FDIC) and have a direct impact on the smaller community banks 

that small business owners and farmers depend on. 

Take for example the CFPB’s qualified mortgage rule. CFPB designed this in an attempt to extend credit only to those who can 

afford to repay a mortgage, preventing another mortgage crisis. Instead, the agency failed to monetize any of the costs and benefits 

and issued a one-size-fits-all rule that has crippled the ability of 

community banks to issue mortgages. Rules like this show that 

when agencies are not required to conduct a full cost benefit analysis before issuing a regulation, unintended consequences were 

likely to follow, such as uncertainty among community banks that 

limits their ability to issue credit to farmers and small businesses. 

Although community banks account for only 22 percent of all current loans, they hold three-quarters of all agricultural loans and 

half of all small business loans. Uncertainty for community banks 

means uncertainty for job creation. 

This Administration has made efforts to urge independent regulatory agencies to improve some of their regulatory processes. In 

July 2011, the President issued Executive Order 13579, which 

urged independent regulatory agencies to comply with the analytical requirements that applied to executive branch agencies. Requiring independent regulatory agencies to follow the analytical requirements of Executive Order 12866 and 13563 would be a reasonable and significant step toward achieving transparency and predictability for regulatory entities. 

We are pleased to have three witnesses today, and I look forward 

to hearing from each of you and what Congress can and should do 

to ensure that all agencies work for and hold accountable these 
3 

independent agencies for the American people. With that, I recognize Ranking Member Heitkamp for her opening remarks. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Mr. Chairman. Today’s hearing 

builds on the Subcommittee’s thorough investigation of the current 

State of Federal rulemaking. Together, we have explored virtually 

every aspect of the rulemaking process in a comprehensive and, I 

believe, bipartisan way. We have sought out views and opinions 

from individuals across the political spectrum in order to identify 

sensible steps Congress should be able to agree upon to make needed improvements to the regulatory system. 

Our focus today is independent agencies which occupy a unique 

position in our national government. They were deliberately, deliberately established by Congress to operate independent of the 

President. Among other things, they are charged with vital public 

health and safety functions, ensuring economic and financial stability and serving as stewards and guardians of fairness and equity 

on a wide range of public policy issues. These are critical responsibilities and those responsibilities will certainly require independent agencies to issue regulations when authorized or required 

by statute. 

What I want to explore today is how Congress can ensure such 

rulemaking is of the highest quality. I remain committed to making 

the Nation’s regulatory system more transparent, efficient, effective 

and certainly accountable. First, Congress cannot lessen its own 

authority through inaction on critical issues by blurring the lines 

between legislative, judicial and executive functions. In some cases 

though, excessive delegation to agencies, I think Congress has 

ceded their responsibility. I do not think there is any doubt about 

it. 

The clearest example that I can provide is Waters of the United 

States, where clearly over decades of litigation and decades of rulemaking there is not a clear answer. One would imagine in that factual situation Congress would see the important role of stepping in 

and providing the guidelines that need to be provided, the laws 

that need to be provided. But yet we do not do it because we would 

rather pound the table and complain about regulatory agencies. 

Simply stated, Congress must pass good laws by taking full responsibility for clearly articulating priorities and goals in legislation. If our statutory directives are unambiguous, we will not see 

as many claims of agency overreach. Second, while rulemaking is 

often mandated by statute, we must continue to understand the 

benefits and costs of regulation. That means that Congress must 

fulfill its obligation to the American people through oversight of the 

regulatory process and this has to include independent agencies 

whose rules in many cases have more impact on today’s business 

world and today’s health and safety world. 

To be clear, independent agencies face significant challenges in 

quantifying costs and benefit in the same manner as executive 

agencies. Nevertheless, in my opinion, their regulatory decisions 

should be based upon good regulatory analysis. It is not always 

easy to quantify cost and benefits. Decades of scholarship have re-
4 

vealed that it is often far easier to tabulate costs for regulation and 

much harder to capture benefits and quantify benefits. 

That just means that there will always be a role for quantifying 

cost and benefits in the regulatory analysis. We should be wary of 

imposing a one-size-fits-all requirement which would have serious 

unintended consequences. We must also be mindful of the regulatory resources if we expect agencies to compete and complete regulations in a timely fashion. 

Today I want to hear from our witnesses, all enormously gifted 

and knowledgeable in this area, on how to improve the regulatory 

process for independent agencies, with a focus on how best to improve congressional oversight. I look forward to continuing my 

work with Senator Lankford and the rest of my colleagues on these 

important issues, and I look forward to the testimony today and 

our continuing dialogue. Thank you, Mr. Chairman. 

Senator LANKFORD. Thank you. At this time, we will proceed 

with testimony from our witnesses. Robert Gasaway is of Counsel 

at Kirkland & Ellis, specializing in appellate litigation, where he 

represents clients before the Federal and State court and administrative agencies. He clerked for Judge James Buckley of the U.S. 

Court of Appeals for the D.C. Circuit. He has twice been recognized 

as one of the top lawyers in the country by the Legal 500. 

Adam White is a fellow at the Hoover Institution, adjunct professor at George Mason’s Scalia Law School, and of counsel at 

Boyden Gray & Associates. He serves on the leadership council of 

the American Bar Association (ABA), of the Administrative Law 

and Regulatory Practice, and on the executive committee of the 

Federalist Society’s Administrative Law and Regulatory Practice 

Group. He clerked for Judge David Sentelle; is that correct? 

Mr. WHITE. Sentelle. 

Senator LANKFORD. Sentelle, of the U.S. Court of Appeals to the 

D.C. Circuit. Cary Coglianese is the Edward Shils Professor of Law 

and professor of political science at the University of Pennsylvania, 

where he serves as the director of the Penn Program on regulation. 

He specializes in the study of regulation and regulatory process 

with an emphasis on the empirical evaluation of alternative regulatory strategies and the role of public participation, negotiation 

and business and government relations and policymaking. He holds 

an M.P.P., J.D. and Ph.D. from the University of Michigan. 

I would like to thank all of our witnesses for not only your preparation, your written testimony, but also being here personally for 

your oral testimony as well. It is the custom of this Subcommittee 

to be able to swear in all witnesses that appear before us. I would 

like you to please stand, raise your right hand so you can be sworn 

in for your testimony. 

Raise your right hand, please. Do you swear the testimony you 

will give before this Subcommittee will be the truth, the whole 

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

Mr. GASAWAY. I do. 

Mr. WHITE. I do. 

Mr. COGLIANESE. I do. 

Senator LANKFORD. Thank you. You may be seated. Let the 

record reflect all witnesses answered in the affirmative. 
5 

1The prepared statement of Mr. Gasaway appears in the Appendix on page 34. 

We are using a timing system today. You will see it in front of 

you with a 5-minute countdown to it. We will be somewhat lenient 

on that, merciful, maybe 4 or 5 seconds or so past. But we are trying to stick as close as we can so we can have a lot of questions 

and dialogue. The goal of this conversation will be not only receiving your testimony, your input, which has been excellent for all 

three of you, but it is also for us to have an open dialogue on some 

of these issues. 

So with that, Mr. Gasaway, we would be honored to be able to 

receive your oral testimony first. 

TESTIMONY OF ROBERT R. GASAWAY,1 OF COUNSEL, 

KIRKLAND & ELLIS, LLP 

Mr. GASAWAY. Thank you very much, Chairman Lankford. And 

Senator Heitkamp, thank you as well. I am going to try to be very 

brief and give an overview and pick up on the statements that we 

just heard, both from you Senator Lankford and Senator Heitkamp. 

These are incredibly important hearings. We have a number of different issues in the administrative state. Some of them are chronic 

syndromes and some of them are breaks and sprains. 

We are going to talk a little bit about breaks and sprains in the 

independent agencies, some of the specific issues that go to them. 

And these are very critical issues and they need to be addressed, 

but I think there are easy issues and easy things that can be done 

to address them. But I think you also have to look at the harder 

issues, the chronic syndromes. They are particularly acute in the 

administrative agencies for reasons that Senator Heitkamp referred to. They are independent of the executive branch, largely the 

Congressional Branch, and political accountability. 

And then we have to tie that back in, as Senator Heitkamp said, 

to the larger issues of this hearing. So see if I can do that with the 

remaining 4 minutes. First of all, the issue extending the Executive 

Orders 12866 and 13563, I think that is on the level of a nobrainer. More information is better information. I think it would 

clearly make a difference in agency decisionmaking. I do not think 

there is any good reason for exempting them. Their independence 

can be preserved through a carve-out, as has been effected in other 

statutes, and I do think it would make a difference. 

The American Equity Investment Life Insurance Company case 

is one, where as you know, under Section 2(b) of the Exchange Act, 

economic analyses are required because there was no Office of Information and Regulatory Affairs (OIRA) review, because there 

were no standards at that time at the SEC. They committed a very 

remarkable error of failing to measure the effects of their program 

against the existing legal baseline of State regulation. I think those 

are exactly the kinds of mistakes that would not happen if the Executive Orders were extended by statute. 

And again, there have been carve-outs in other statutes to preserve independence. I think that could be done. There are technical 

issues to be sure, and Professor Coglianese has looked at some of 

them. What is the threshold? Do you use cost or benefits? I like 

costs because they are more measurable. Is it adjusted for infla-
6 

tion? What is an independent agency? But those are all technical 

issues. 

The no-brainer is you should go ahead and do it. OIRA has an 

extraordinary wealth of capability. There would be an extraordinarily greater degree of coordination and the technical issues can 

be overcome. 

Now segueing briefly, I think that you also have to look at wider 

issues of actually bringing them under congressional control. And 

I stated briefly in my written testimony that I think an adaptation 

of the Red Tape Act that Senator Sullivan has introduced could 

function that way. I think, obviously, there are some challenges 

and there is a discussion that needs to be made. But the key point 

there is you overcome this cultural problem—and I will come back 

to that—that you see in Professor Coglianese’s testimony. He says 

retrospective review is not part of the culture of agencies. We want 

to push our agencies forward. 

The great thing about the Red Tape Act, the one-in, one-out, is 

that retrospective review is bound up with the prospective review, 

right? You have to take regulatory costs off the table to move it forward. So now everybody’s pushing together. And that division that 

we see reflected in Professor Coglianese’s testimony becomes unified. Looking at old regulations, doing new regulations all become 

one. So I would greatly encourage all the Members of the Committee to take a hard look at how that legislation could be adapted. 

And then third, I do have to go back very briefly within my time 

to the issues that you have been struggling with, the mega issues 

of over-delegation, and I will just hit on them briefly there. The 

‘‘Chevron’’ issue and over-delegation, Non-Delegation Doctrine in 

the Supreme Court is one of the challenges of this Congress and 

of our time. I am extraordinarily impressed with the testimony the 

Committee has received. I have tried to summarize that testimony 

in a new way and crystalize it in a new way, and I would urge the 

Committee to go back to previous witnesses and see if I have that 

right. Because if I do, ‘‘Chevron’’ is extraordinarily vulnerable and 

candidly more vulnerable than I expected when I first came to this 

Committee record. 

Second, very briefly, I emphasize that Congress does have to get 

back into the game. I put a couple novel proposals on there for 

using fast track administrative processes, just like you have fast 

track processes in the trade area. 

And then finally, I want to return to that word ‘‘culture.’’ Professor Herz gave testimony that it was a quote ‘‘completely infelicitous phrase, a completely infelicitous choice of language in ’Chevron’ to say administrators are freed unless Congress has quote, ’spoken to precise issues.’′′ 

He is absolutely correct about that. It has had pervasive cultural 

effects in independent agencies and executive agencies alike, and 

I would urge the Committee to return attention to that issue. 

Thank you. 

Senator LANKFORD. Thank you. Mr. White. 
7 

1The prepared statement of Mr. White appears in the Appendix on page 48. 

TESTIMONY OF ADAM WHITE,1 FELLOW, HOOVER 

INSTITUTION 

Mr. WHITE. Chairman Lankford, Ranking Member Heitkamp, 

and other Members of the Subcommittee, thank you for inviting me 

to testify today. In my written statement, I try to make three basic 

points. First, I recognize that so-called independent agencies have 

a long and varied history in American government. Nevertheless, 

the justifications for their independence from the President reflect 

largely a bygone era. 

Today, the rules of most independent agencies are largely indistinguishable from those of executive agencies, whose major rules 

are subject to full cost benefit analysis under OIRA’s oversight. 35 

years ago, the Reagan Administration made a prudential choice not 

to subject independent agencies to OIRA oversight because those 

agencies were at the time relatively unimportant. 

Today the regulatory world is completely different, with independent agencies like the Federal Reserve Board (FRB) of Governors, the SEC, the CFPB, the Federal Communications Commission (FCC) and even the Federal Energy Regulatory Commission 

(FERC), making immensely consequential policy decisions. Independent agencies issued at least 17 major rules from October 2013 

through September 2014, according to OIRA and the Government 

Accountability Office (GAO). It is time for the Congress and the 

President to take down the artificial and increasingly arbitrary 

wall that insulates independent agencies from OIRA’s review, as 

both the American Bar Association Section on Administrative Law 

and the Administrative Council of the United States have both long 

urged. 

My second point, we now see clearly what happens when independent agencies’ cost benefit analyses do not face meaningful review or interagency coordination. As to meaningful review, I cite 

criticism of the Government Accountability Office, the CFTC’s Inspector General (IG), the D.C. Circuit, and others who have found 

independent agencies’ analyses woefully lacking. 

This week my wife and I are sending our kids back to school, and 

just as our schools do not trust students to grade their own homework, we should not leave the independent agencies free to grade 

their own homework. This is not intended to cast aspersion on the 

agencies motives or their dedication, but only to point out a basic 

fact of human nature: We do our best work when we know that 

someone else will eventually grade it. 

And as to interagency coordination, this is perhaps the most important role that OIRA plays, even more than cost benefit analysis. 

The OIRA framework facilitates an interagency dialogue that helps 

to coordinate agency policies, but also to ensure that each agency 

is getting the best possible expertise and advise from its sister 

agencies in the context of White House, OIRA oversight. Independent agencies should be fully incorporated into the OIRA framework for precisely this reason. 

The third point that I make in my testimony, as you focus on 

subjecting independent agencies to greater OIRA oversight perhaps, I urge you to subject independent agencies to greater con-
8 

1The prepared statement of Mr. Coglianese appears in the Appendix on page 69. 

gressional oversight, and not just in terms of oversight hearings, 

but more importantly, in terms of the way that you structure independent agencies and fund them. I think right now the trend is in 

the wrong direction in terms of giving independent agencies too 

much independence, not just from the President but also structurally and financially from Congress. 

If I may add just one final note to reemphasize the basic point 

of my testimony and what I see to be the crux of the issue before 

the Subcommittee. Cost benefit analysis and interagency coordination are not simply ends in and of themselves. The point of cost 

benefit analysis, as I see it, is not to come up with some precise, 

absolutely correct numerical answer. As Senator Heitkamp noted 

in her opening remarks, I doubt that is even possible. I doubt the 

cost benefit analysis could even accomplish this, even if we wanted 

it to. 

And I think there is risk in putting too much faith in seemingly 

objective economic analysis. Rather, the point of cost benefit analysis, as I see it, is the process. It creates a framework for agencies 

to think through these issues rigorously, think through the impacts 

of their decisions, and just as importantly, to look back at their 

analyses years down the road to see where their previous assumptions were right and where they were wrong. 

That is the retrospective reviews that my fellow witnesses have 

mentioned. This process should teach agencies and all of us to be 

more modest in our predictions and our arguments and to be more 

accountable to the public. Thank you. 

Senator LANKFORD. Dr. Coglianese. 

TESTIMONY OF CARY COGLIANESE, PH.D.,1 EDWARD B. SHILS 

PROFESSOR OF LAW AND PROFESSOR OF POLITICAL 

SCIENCE, DIRECTOR, PENN PROGRAM ON REGULATION, 

UNIVERSITY OF PENNSYLVANIA LAW SCHOOL 

Mr. COGLIANESE. Chairman Lankford, Ranking Member 

Heitkamp, and other Members of the Subcommittee, thank you for 

the opportunity to be here today. And let me also thank you for 

your service to the Nation. I am pleased to talk about ways that 

Congress might help encourage independent agencies to engage in 

smarter regulation. Smarter regulation requires sound analysis, 

both upfront before rules are adopted prospectively as well as rigorous research after rules are adopted, to find out how well they 

are working, or retrospective analysis. 

With respect to prospective analysis, as has already been indicated, one option would be for Congress legislatively to codify the 

outline of and requirements in Executive Order 12866 and apply 

them to independent agencies. This would have the advantage of 

making symmetrical the analytical requirements between independent and executive agencies, but it would mark a major shift 

in the norms of independent decisionmaking by independent agencies. That is because Executive Order 12866 not only contains requirements for prospective analysis, but also establishes an institutional structure that places the President, and the president’s staff, 

in a more central role in regulatory decisions. 
9 

This option would also require a major increase in funding and 

staffing for OIRA. 

Let me suggest an alternative to that, which would have a similar advantage of creating symmetry in regulatory analysis requirements between independent and executive agencies, but would not 

bring with it the kinds of institutional changes and challenges that 

would accompany the first option. The alternative would be to 

eliminate the exemption in the Unfunded Mandates Reform Act 

(UMRA) for independent agencies. The Unfunded Mandates Reform Act simply imposes a requirement that all agencies, for certain rules, apply benefit-cost analysis to them, and that requirement is something that is enforceable through judicial review. 

The courts can make sure that the agencies have done that analysis, and then the quality of that analysis would form part of the 

standard arbitrary and capricious review that courts would give. 

If Congress should go forward with either of these options and 

apply a new mandate to independent agencies, it obviously should 

keep in mind that effectively implementing any such mandate will 

require resources by independent agencies, and even with these resources and the stronger incentives that a mandate would bring, 

regulatory analysis will always remain somewhat provisional. A 

mandate should not expect agencies always to be able to monetize 

costs and benefits, or at least all costs and all benefits, for every 

regulation. 

Let me turn in my remaining time briefly to retrospective analysis and possible steps to be taken to improve agencies study of 

their rules after they are adopted. Such analysis is absolutely vital 

to inform prospective analysis and it is something that is underproduced by both executive agencies and independent agencies. 

The Obama Administration’s Look Back Initiative has been a 

good move forward in this regard. And Congress, I think, could 

help by codifying a model like that Initiative and applying it to 

independent agencies, which have been exempt from the regular 

status reporting that executive agencies have had to make on their 

retrospective reviews. 

I would also suggest that requiring all agencies to develop some 

kind of structural evaluation plans at the time they adopt new 

rules would help shape their thinking about evaluation early on in 

the process, as well as form a basis for more rigorous review after 

the fact. The very frameworks that are called for in the Smarter 

Regs Act of 2015, for example, strike me as quite useful. 

Finally, as with prospective analysis, of course, ensuring high 

quality retrospective analysis requires resources, and Congress 

would need to allocate those as well. In these various ways, and for 

the reasons I have elaborated in my written testimony, Congress 

has an opportunity to strengthen the capacity for smarter regulatory decisions by the Nation’s independent agencies, by both encouraging better prospective and better retrospective analysis. 

Thank you very much for your time and dedication to these 

issues. 

Senator LANKFORD. Thank you, all three of you. The ranking 

member and I are going to defer our questions to the end, and I 

recognize Senator Ernst. 
10 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you very much. I appreciate that. And 

thank you, gentlemen, for appearing before us today. I am going to 

take just a moment and kind of set the stage, walk you through 

an issue that I have seen, and then certainly get your feedback on 

it. 

As you may know, in February, the FCC published its Notice of 

Proposed Rulemaking on the Set-Top Boxes that are now required. 

And I have received several letters from small cable companies in 

my State that are very concerned, serious concerns about what this 

rule means for the vitality of their business, some of which have 

been family owned for many decades. 

According to the Small Business Administration (SBA’s) Office of 

Advocacy, the FCC published an Initial Regulatory Flexibility 

Analysis (IRFA), with its notice of proposed rulemaking (NPRM). 

However, the FCC did not attempt to quantify or describe the economic impact that its proposed regulation might have on small entities. SBA goes on to say that the FCC’s analysis ‘‘Simply describes compliance requirements without making any attempt to 

explain what kinds of costs small multi channel video programming 

distributor (MVPDs) might incur in order to comply, and without 

any discussion of how those costs might be disproportionately burdensome for small entities.’’ 

So my questions to you are two-fold. Can either of you, Mr. 

White or Mr. Gasaway, comment on the FCC ruling and the quality control of that economic analysis, and with your experience and 

background, would you believe further defining what an economic 

analysis should entail from the Regulatory Flexibility Act side and 

how it could improve economic analysis of those independent agencies? How can we do better, if you would please? 

Mr. GASAWAY. Well, I will take a crack at that. Senators, first 

of all, let me say that I am aware that that rule is out there. I have 

not studied it and so it is hard for me to talk, but I am a lawyer, 

so I will talk at length. 

Senator ERNST. Thank you. Of course. 

Mr. GASAWAY. It is hard for me to talk about. I would be surprised if there was a quality Small Business Regulatory Enforcement Fairness Act (SBREFA) analysis. It could well be that that 

is the case. But unless there is a reason for doing a quality 

SBREFA analysis, often times it gets lost in the fact that there are 

limited resources at agencies, and I think the empirical work at 

independent agencies shows that many times they cut short those 

types of analyses. 

So I would not be at all surprised if in fact it was cut short. I 

do think the types of steps that we are talking about today can 

help. One of them, obviously, is subjecting SBREFA type analysis 

or other type of analysis to either the Small Business Administration Office of Advocate or Counsel of Revenue. It would be tying 

that more closely, tying it more closely to OIRA. 

But I would again say that there is not going to be better decisionmaking until there is some sort of fundamental reform. Now, 

one reform that people often think about is just making SBREFA 

judicially enforceable. And if you had only one card in your deck 

that might do it there. And I always support positive incremental 
11 

1The report submitted by Mr. White appears in the Appendix on page 87. 

reforms. But without spinning out of control, I do think that it 

shows the larger problems of administrative agencies and the larger problems this Committee has been dealing with. 

Remember, the FCC or any other agency is going to be thinking, 

I have a programmatic mandate, and my programmatic mandate is 

not to promote small businesses; it is to promote good telecommunications. And promoting good telecommunications requires 

the small Set-Top Box rule. So the SBREFA requirements are always going to be the caboose, and what I was trying to suggest 

with some of my broader reforms in my testimony is if you are 

going to change that culture, that word that I appropriated from 

my fellow witness, you are going to have to think very seriously 

about one of these other proposals that are on the table and these 

larger issues. 

I do not think there is a clear answer to that, but I do see the 

problem. 

Senator ERNST. Very good. And Mr. White, I cannot help but notice those Iowa Hawkeye cufflinks. They are glaring at me. This is 

a Cy-Hawk weekend, right? 

Mr. WHITE. I know, Senator. Thank you, and thank you very 

much for bringing the Committee to my hometown of Dubuque, 

Iowa last month. Thank you very much. 

If I may just add very briefly to what my friend just said. 

Senator ERNST. Absolutely. Thank you. 

Mr. WHITE. I think the key word, if I heard it correctly from the 

SBA, was the FCC did not attempt an economic analysis. And that 

is key. It is not even that they did it and did it poorly. It is that 

they did not even attempt it, which I think goes to the cultural, the 

regulatory culture issue that Mr. Gasaway mentioned. 

I read a recent report by an economist named Hal Singer—I am 

sorry. I do not have it off the top of my head, but I would be happy 

to submit it for the record1—focusing on the broader problems of 

the lack of economic analysis at the FCC. The FCC’s former chief 

economist called the recent Open Internet Order, he quipped that 

it was an economics free zone. And I think that is from the FCC’s 

own former chief economist. I think the same could be said for a 

lot of what the FCC is doing. 

Senator ERNST. OK. Thank you, gentlemen, very much. Thank 

you. 

Senator LANKFORD. Senator Portman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Well, first of all, thank you very much for 

holding the hearing. I mentioned to Senator Heitkamp a moment 

ago, I hold these two up as my model at other hearings. I chair the 

PSI Subcommittee, saying that they allow Members to come and 

ask their questions and leave, because our lives are all so crazy 

and busy rather than monopolize the microphone. So thank you for 

letting me ask a question. I did just get here, so I missed some of 

your opening remarks. I did have a chance to look through your 

testimonies. 
12 

Senator LANKFORD. You missed all my kind remarks about all 

your work for independent agencies. We talked about you positively 

even when you were not here. 

Senator HEITKAMP. Major moment of suck up. 

Senator PORTMAN. I missed it, but exactly, I heard about it, and 

I was not going to suck up again, as you—no, no. Seriously, thank 

you for mentioning that. And look, we have been working this a 

long time. Senator Warner deserves a lot of credit too, and I know 

some of you have disagreements with us in the way in which we 

make these agencies accountable, but give me a break. I mean, the 

American people are shocked to learn that independent agencies 

who play a bigger and bigger role in all of our lives do not have 

to go through a basic cost benefit analysis. I mean, they are 

shocked by that. And we have to figure this out. 

I am looking at some of these comments about how independent 

agencies are not subject to any influence from the White House. 

That is just not true. I mean, I would point you to April, when 

President Obama publicly announced his support for the FCC SetTop Box proposal. I mean, Homeland Security Committee, this 

Committee, issued a report finding that the White House had duly 

influenced the FCC’s decisions to reclassify broadband Internet 

under Title II. 

I mean, there is influence. I wish there was not that kind of influence, but there is. So this notion that they are somehow not subject to any kind of political pressure, unfortunately they are, but 

they do not have the same accountability. And I just think people 

really are ready to come up with some way. We can look, do the 

benefits outweigh the costs or not? And I think that is the least we 

should be asking for. 

So the way Senator Warner and I approach it is, as you know, 

is to have the independent agencies at least provide information to 

OIRA and have OIRA play an advisory role. There are various 

ways to do this, but I hope you will work with us on this. The 

President said that he is for it. All we really want to do is codify 

what the President has said through his Executive Order, and it 

has to be done legislatively because these are independent agencies. 

OMB found that 10 of the 16 major rules issued by independent 

agencies in 2014, which is the last year we have data for, included 

some information. That means six contained no information on cost 

or benefits and zero included a full analysis of the type of analysis 

required by executive agencies, zero. 

So I think we have a real problem here, and this Subcommittee 

has been terrific at focusing on it. We had hoped to get this Independent Agency Regulatory Analysis Act as part of a broader package on maybe six or seven bills. It seemed to have some bipartisan 

consensus. We were not able to get that done. Senator Heitkamp 

was helpful in trying to get that done, by the way, as were other 

Democrats, but there were others who just could not go along with 

the broader package. But I hope this is something that this Subcommittee can continue to work on and push on so we can get it 

done. 

I guess, Mr. White, if I could just ask you a couple questions, I 

would appreciate it. You have been at this for a while. I read your 
13 

testimony. I thought it was very informative, very well done. I 

think our legislation is pretty modest. It does not go as far as 

maybe you would like us to go and some others would. 

The American Bar Association, the Justice Department under 

President Reagan and President Clinton, the Administrative Conference of the United States, legal scholars across the spectrum, including Cass Sunstein, who all of you know, have said that the 

President, as head of the executive branch, has the authority to 

bring independent agencies under the same regulatory analysis 

and review framework that applies to executive agencies. 

And as you said, agencies currently are able to grade their own 

homework. Can you explain what you see as the benefits of having 

an outside entity review an independent agencies cost benefit analysis in terms of how it increases the quality of their work, and perhaps tell us the problems that come from a lack of accountability. 

Mr. WHITE. Sure. Well, with respect to the benefits, I think that 

oversight, while it provides an accountability mechanism for the 

people, I think it also helps make the agencies the best version of 

themselves when they know that they will have to explain and justify their analysis to a superior authority, whether it is in the 

White House or a Federal court, not to be micro-managed by the 

White House or the court, but just have someone kicking the tires 

seriously on their analysis and questioning their assumptions. I 

think that will spur the agencies to do better work. 

The Set-Top Box example, which again, I am not an expert on, 

but I have heard a lot about, is a worrisome example. The Open 

Internet Order, which I am involved in in litigation, I should make 

clear, is another example where everybody from the dissenting 

commissioner, Ajit Pai, to the dissenting judge, Judge Steve Williams of the D.C. Circuit, who is a former regulatory scholar himself, all had serious, serious criticism of the assumptions and often 

self-contradictions within the meager economic analysis that the 

FCC undertook. I think it is a glaring example of the need for serious accountability and cost benefit analysis before these rules are 

imposed on the public. 

Senator PORTMAN. Thank you. I do not want to overindulge you 

guys. Thank you for letting me come and ask the question, and I 

look forward to hearing more from you guys with other questions. 

And thank you, Mr. Chairman. 

Senator LANKFORD. Senator Heitkamp. 

Senator HEITKAMP. Thanks so much. We have covered kind of 

the whole watershed here from regulatory analysis to where that 

needs to be done all the way through judicial review and ‘‘Chevron.’’ I want to focus on independent agencies, because of all of the 

things that we have worked on, taking Senator Portman, and Senator Warner’s bill, trying to sell it in a political sense, has been a 

lot tougher than I ever thought it would be, because it seems so 

common sense to me that if you have a major rule that is being 

promulgated, no matter who is promulgating it, all the rules should 

be the same for major rules, and that is not what we have. 

And so I am going to offer you some of the criticisms that we 

have heard from the independent agencies about that concept and 

ask you to kind of help me work through—if we are going to do a 

full frontal attack, right, and say we are going to do this no matter 
14 

what, and it is going to go to OIRA, then we are going to lose politically, I can tell you that. 

We have already been—I know it is hard to imagine, because 

when you look at it and you look at the history of this, it has been 

very bipartisan. But it has been very difficult. And so let us walk 

through some of the criticism that we have received. First off, 

OIRA is an agency, a sub agency of OMB and under the control of 

the President, and simply giving regulatory review to OIRA under 

this procedure would in fact interject and interfere with independence. 

Now, what we have tried to do in response to that is look at another agency, whether it is the IGs, whether it is GAO, take a look 

at some other place where we could put that kind of regulatory 

analysis. Because I agree with you, Mr. White, I mean, none of this 

is ever going to be perfect, but if there is no level of scrutiny or 

analysis, work can be pretty sloppy, right? Your dog ate your homework every day, right? 

So how do we overcome, or how do we respond to an argument 

that OIRA is a sub-agency of the President and interference would 

be—Mr. Gasaway? 

Mr. GASAWAY. With the Paperwork Reduction Act (PRA) precedent. You just say this is for analysis purposes only. There is a 

carve-out. It has to go to the expert agency within the Federal Government on regulatory analysis for their comments. 

Senator HEITKAMP. That makes a lot of sense. However, the bill 

is very modest in terms of—I mean, it does not say they can stop 

the regulation. 

Mr. GASAWAY. Non-binding. 

Senator HEITKAMP. Yes, it is not binding. There is nothing in this 

legislation that would give OIRA any authority to stop the regulation. It just would give them review authority. And we still hear 

the argument that it is over-burdensome and attacks the independents. 

Mr. GASAWAY. Well, then I would say this is like sending a medical question to the experts at the National Institutes of Health 

(NIH), or something like that, for non-binding review. The greatest 

repository of medical information in our government, I think, is at 

NIH. And maybe somebody is taking a policy decision and they 

need medical input. You do not have to do what they say, but you 

have to ask the question. 

OIRA is a terrific agency with a terrific bipartisan level of competence. And obviously, Professor Sunstein is great, but many of 

his predecessors are. And it is absolutely inconceivable to me, if I 

were the United States senator, which I am not, that I would want 

independent agencies to avail themselves of that expertise. And 

that is what I would say. Do you really just want them to not avail 

themselves of that expertise? 

Senator HEITKAMP. I am looking for an alternative word, because 

we have said all these things. That is not the problem. The problem is not that we are not graded arguing our position. The problem is that we have reached this impasse that we need to somehow 

get over. And Mr. White, I am curious, I forget which witness 

talked about the need for coordination. I think it was you. Obviously, OIRA has a much better handle on all of the agency major 
15 

rulemaking and probably is the best place to balance, what is the 

Department of Commerce doing against what, the Consumer Finance Protection Bureau might be doing. 

So it is dangerous to take it out of OIRA, but yet we need to get 

this kind of review. We need to change the culture of, I should not 

say lack of accountability, but kind of this, we have our own funding stream, we have our own—once we get an appointment and 

confirmation, which is getting tougher to get because of these 

issues, in my opinion, so now hands off, we are in charge. 

And so we are trying to get beyond that. How do we find a mechanism or find a way to do a work-around that would accommodate 

what we all here believe needs to happen? 

Mr. WHITE. Well, if I may, I want to make clear, I do not mean 

to focus on OIRA to the exclusion of anything else. Whether it is 

accountability to the executive branch or to Congress, either 

through existing mechanisms or some new congressional office of 

regulatory review, or through the courts, at the end of the day, for 

me the most important point is there being a measure of accountability and oversight, not one particular branch doing it. 

And so I am open-minded on all these proposals. 

Senator HEITKAMP. One of the concerns that I have about leaving 

this up to judicial review, and I am not being critical, and maybe 

I am, but you will hear agency heads saying, we are going to implement this rule. If the court does not issue a stay on the rule, then 

the rule is going to take effect even though the rule was bad. So 

it is not a process that provides for immediate reaction or some 

kind of contemporary analysis. And so it fails. Judicial review fails 

and should be a last resort. That is my position. 

The Chairman and I have had long debates about reform of judicial review, but I am looking for some way to get this concept over 

the finish line in a way that we have legitimacy to the argument 

that we are not imposing Presidential review on an independent 

agency. 

Mr. WHITE. If I may just add on that point, at the end of the day, 

like I said, this is about accountability, not just to Congress, but 

to the people. In the last few years, especially in the aftermath of 

Dodd-Frank, where independent agencies on financial policy have 

had ever greater power, you see so many of these regulations. No 

matter what they say in terms of marketing them as anti-Wall 

Street, ultimately these regulations benefit the biggest banks and 

the biggest companies first and foremost, whether it is because of 

the compliance burdens that the community banks and other small 

entities face, whether it is through the Financial Stability Oversight Council and others seeming to place a too big to fail stamp 

on the biggest players. 

At the end of the day, if an agency is truly independent and not 

accountable to the people, there is the greater risk that the biggest, 

most influential corporate players will have a disproportionate 

voice on policymaking, and whether it is through the President or 

Congress or through the courts, if the people do not have a real 

means of accountability for these agencies, at the end of the day, 

they will have a disproportionately quieter voice relative to the bigger players. 

Senator HEITKAMP. I would like your thoughts. 
16 

Mr. COGLIANESE. Yes. Well, first, let me just say that from a constitutional structure point of view, if a president wanted to apply 

OIRA review just to a single agency—— 

Senator HEITKAMP. He could. 

Mr. COGLIANESE [continuing]. He could, right. The Executive 

Order is the president’s prerogative to design however he or she 

would like. The fact is that there is one piece of legislation that requires agencies to provide statements of cost and benefits of major 

rules, a piece of legislation that Congress has expressly exempted 

independent agencies from. 

So one way of making a cultural change might be for the Congress to say fundamentally, in what we have required of all other 

agencies, we are going to require of independent agencies as well. 

That would be a step forward. And it would address something that 

one reads time and again in responses by general counsel or others 

at independent agencies on these issues that, ‘‘oh, we are not required, we have no legal obligation’’. Amending the Unfunded Mandates Reform Act would, at least for those rules that pass that 

threshold, eliminate the ability to make that excuse. 

So that is one step, I think, that could be taken by the Congress 

that would also avoid the kinds of political issues that you have 

talked about, Senator Heitkamp. There are obviously limitations, 

right? I mean, this is not maybe providing the optimal level of oversight, peer review, and so forth. But the possibility exists for there 

to be judicial review, and the ex-post threat of judicial review does 

offer some ex-ante incentive for agencies upfront to do their homework. 

With respect to homework, I think the way I would characterize 

this is, yes, it would be great to get feedback from a teacher, but 

what is different about Executive Order 12866 is it involves not 

just a grade from the teacher, but also permission to graduate to 

the next grade. So there is this lever, the hammer that hangs over 

it, and that is causing the kind of constraints and responses that 

you are talking about, Senator Heitkamp. 

One other possible approach, and it is not mutually exclusive, 

might be for Congress to impose on, quite frankly, all agencies, 

something along the lines of the peer-review guidelines that OIRA 

has in place already for various scientific analyses that agencies 

are conducting. This would bolster the Information Quality or Data 

Quality Act provisions where agencies could in real time get that 

kind of feedback through a peer-review process. 

Maybe that peer review could come from other agencies. Maybe 

it could come from outside experts, but at least there would be 

some process of someone reviewing, providing feedback if indeed 

the option of having analysis reviewed by the White House staff is 

not politically feasible or wise for other reasons. 

Senator LANKFORD. I want to open this up and I want to open 

it up for the full dais to be able to talk about questions, be able 

to interact, but I want to give you a broad philosophical question 

that you are going to think I am kidding, but I am not. Independent of who? They are an independent agency. Independent of 

who? 

Mr. GASAWAY. I will give the answer. I think it is not independent of who but independent for what? To exercise independent 
17 

judgment. And I think the key word there is judgment and I think 

the key thought is in Adam’s testimony. They are originally 

thought of as kind of specialized courts, not as specialized legislatures. And I think unless you go back to that model of more an 

independent court with more circumscribed jurisdiction, I think you 

are going to have problems. 

Senator LANKFORD. I ask that question because the common 

question here is we cannot impose 12866 on them, we cannot put 

them in UMRA, we cannot put them in all these things because 

they are independent of the executive agencies and independent of 

Congress, and it is always they are independent of who. I think we 

have lost the why they were created, because they were supposed 

to be non-political, supposed to give faster judgments with greater 

expertise than what the Federal courts could do or other entities. 

They were going to be specialized in their area to be able to get 

faster, non-political responses, and now we have independents like 

the FCC where it is really a five-member board, that three members are selected by the president’s party and by the president, and 

so they are not non-political, they are not faster, and they are not 

cheaper. 

And so we are back to the same issue. We still have these independent entities that Congress seems to argue about who are they 

independent from and we have lost the why that they ever existed 

as an independent. And I think the argument really boils down to 

a philosophical argument of if we are going to determine what to 

do with the agencies that are creating billions of dollars in regulatory schemes and giving answers to people based on statutes that 

we are at a loss to figure out where it connected actually to statutes, then we have to figure out if they are really independent. 

Independent of who? Is it independent of Congress, independent 

of the executive branch, independent of the Judicial Branch, independent of the American people? Who are they independent of, and 

then how are they going to actually be formed? I know that may 

be a bigger philosophical argument, but we have not resolved that 

basic question, quite frankly, as a Congress, and if we can ever resolve that issue, I think it is going to go to the next step. 

Do we need agents to have better independent agencies anymore, 

and if we do, how do we reform them? Because they are not functioning as apolitical bodies any more. They very much seem to have 

a political agenda in their timing and their cost seems to be equated to other Federal benches. Mr. White. 

Mr. WHITE. I agree with all of that. And if I may add a further 

point, as I said earlier, I think the trend line is in the wrong direction with respect to independence from Congress. Independence 

from the president raises a whole host of questions in and of itself, 

but independence from Congress should not be a question at all. 

These agencies should be accountable. 

But in recent years, from Sarbanes-Oxley to the Affordable Care 

Act to Dodd-Frank, the move has been to make these agencies 

structurally independent from Congress, and that is very dangerous, and not just for these particular agencies but going forward. The New Deal era agencies and the ones before, from the 

Federal Trade Commission (FTC), the FCC and so on, they basically set the paradigm for the next 60 years or more. That defined 
18 

what the benchmark for independent agencies would be. And if 

Congress does not take steps to correct the structural mistakes 

that it made, with all due respect, in the Sarbanes-Oxley Act, the 

Affordable Care Act, and Dodd-Frank in making these agencies 

even more independent, that will become the paradigm for independent agencies going forward. The next independent agencies 

will not be modeled on the FTC. They were modeled on, for example, the CFPB. I think that is very dangerous. 

Senator LANKFORD. And the CFPB, as of now in Oklahoma, 24 

percent of our commercial banks no longer do home mortgages 

strictly based on the issues that Consumer Financial Protection 

Bureau created these set of regulations. There is so much liability 

now, they walked away from doing mortgages. 24 percent of our 

banks in Oklahoma. It is becoming more and difficult, especially in 

rural areas of my State, to be able to get a home loan because the 

banks have walked away from doing that because people have seasonal income, because their income does not come in every month 

in a predictable format that CFBP wants. It comes in when the 

crops come in or when there is a sale. So that seasonal income not 

consistent, too much risk. Those are things that should have been 

determined in a cost benefit analysis that should have oversight, 

and CFPB, as we all know extremely well, has no oversight. 

So I am back to the same issue. How do we get to a set of independents, that there is a sense that they are not independent of the 

American people? Congress created them. They are not independent of Congress’ oversight by far. If Congress created them, 

Congress can turn it off as well. But there has to be some level of 

oversight. All of us have oversight, and if there is an entity that 

has no oversight, that is more independent than our Constitution 

ever conceived of in any mindset. 

Does anyone want to make a quick comment on that, just—— 

Mr. COGLIANESE. You have asked a great question, and one of 

the reasons it is challenging, just to pick up on your last point 

about the Constitution, it really speaks to the independence from 

factions, if we go back to Madison. Both factional influences 

through political branches of government and through influence by 

private interests, through, say, regulatory capture— both of those 

speak to the type of independence that is reflected in the concern 

that motivates independence for agencies. 

I think that the formal structures are not always fully aligned 

with actual independence. It was mentioned before—I think Chairman Lankford you mentioned the comments by a president reflecting a policy preference for what action the FCC might take, and 

the FCC then pursuing that action. There are opportunities for influence, I agree, Senator Portman, for influence by members of either Article I institutions or Article II institutions to influence 

independent agencies. 

And there are also some executive branch agencies that operate 

with a great deal of actual practical autonomy. I think ultimately 

it is a challenging question because we are looking for something 

where there is at least independence on factual determinations, expert judgment. We want that to be pure and based on sound scientific assessment. We do not want that to be influenced. But on 

the other hand, we are a democracy and agencies must make value 
19 

choices. The fundamental values that are reflected in policy choices 

that independent agencies make should indeed reflect those of the 

Congress and the elected officials. 

Senator LANKFORD. So should we assume that executive agencies 

then will not have bipartisan or will not have non-political answers 

that are based on sound science and only independence can do 

that? Or should we assume that for both? 

Mr. COGLIANESE. No, I think that is not the implication—I mean, 

the Food and Drug Administration (FDA) has historically had a 

very strong reputation for operational independence on making 

those kinds of scientific judgments. 

Senator LANKFORD. So I am back to the same issue. Where we 

have evolved at this point in the structure of independent agencies 

and what has happened, whether it be Mr. White in all of your 

very good analysis just on the history and what happened in the 

Reagan Administration and opting out from OIRA at that time and 

some of the decisions that have been made and then the acceleration since then, is there a reason that we should have independent 

agencies separate from executive agencies, that they have two different structures due to operations? 

Because as all three of you noted in your written testimony, it 

is tough to get even a definition of what an independent agency is. 

I mean, there is the 19 that are listed, but operationally, it is ‘‘can 

the president fire the head of it without cause just to fire the head 

of it’’, and ‘‘are they under OIRA review’’ are the basics of it. But 

even that has some breakdown in some of the agencies that are 

called independents. 

So the issue is at this point, why do we have some entities now 

under current operation that are called independent and some are 

called an executive and have two sets of rules under them when 

they are all processing the same regulations? Mr. White. 

Mr. WHITE. While we are talking now about rulemaking, it is important to keep in mind that independent agencies do a lot of adjudication. The FTC and some of the other agencies do a lot of case 

by case adjudication. That really was in the core function of independent agencies at their origin, and I do think some measure of 

independence, a limited measure of independence is important for 

those functions. 

And another word—— 

Senator LANKFORD. But independent from who at that point? 

Mr. WHITE. Right. Again, at that point, it is independent from direct control and decision by the president, or at least insulation 

from it. And I am not saying that the president is constitutionally 

barred from getting involved in that. I am just saying I understand 

why that is a specific subset of agency action that might justify 

some measures—— 

Senator LANKFORD. Because it is more judicial? 

Mr. WHITE. It is more judicial. As they used to say, it is quasijudicial, which was the whole justification for their independence, 

and the Humphrey’s Executor case that recognized agency independence. And I will say with the independent commissions, when 

you have a multi-member structure, that does help build in an internal check and balance, right? At the very least, when the FCC 

makes a decision, you might have two dissenting commissioners 
20 

who, like judges on a court, are going to have dissenting opinions 

and in some limited ways, force a dialogue within the agency. 

I think that is a very important and very good aspect of independent regulatory commissions, that they have that multi-member 

body. And so that is a useful function, especially in that quasi-judicial context. 

Senator LANKFORD. So how are they functioning different than 

an administrative law judge, which is also quasi-judicial, but they 

are in executive agencies? 

Mr. WHITE. Well, that is a very fair point. I might say in the 

independent agencies, it is like the difference between a court of 

appeals and district court judge. An administrative law judge (ALJ) 

makes an independent decision and then it goes on to the multimember head. But you are right, in the executive agencies, that is 

a very good question why that should go directly to an executive 

branch official. 

Senator LANKFORD. Other thoughts? 

Mr. GASAWAY. I will just say that I think you are hitting the nail 

right on the head, and I think these are very, very complicated and 

critical issues and I do not have a blithe answer to them other than 

just to say that I do worry about giving too much in legislation and 

trying to extend this, because if you extend it only in a way that 

preserves too much independence, you are in a sense sending a signal that they really are independent. 

Senator LANKFORD. Yes, and that is really the concern for me, is 

that we are creating more and more sense that they really are 

truly independent of everyone, and with no accountability, we have 

a big issue. When you get to CFPB, that their funding does not 

connect to Congress, their oversight is not here, there is no oversight in the presidency, no board even to be able to check a single 

member of that same leader, you really have created a fourth 

branch of government in some ways that has very little to no restrictions around them. And even if they want to reinterpret some 

of their own originating statute, they have the opportunity to be 

able to do that, and that is a big concern for me. 

One quick question. Let me open this up for broader conversation, because I do not want to hog all the conversation. Does any 

of the three of you have an issue with codifying 12866 for both executive entities and for independent agencies, that that would 

move from being an Executive Order to being codified? 

Mr. WHITE. I do not. I would welcome it. 

Senator LANKFORD. OK. All right. Let me open this up. I do not 

want to hog the time, because I know several others that may have 

questions and thoughts. 

Senator PORTMAN. I think it is a very interesting conversation 

about what constitutes independence, and obviously, CFPB is sort 

of one end of the spectrum without having the board or commission 

that Mr. White talked about and not only that, having no appropriations. So, the congressional purse strings are not attached. 

Again, I think the reforms that we are talking about are pretty 

modest. One we have talked about with CFPB is how about an inspector general? I mean, they do not have an IG that relates to 

them and their work. It seems to me that is kind of a minimum 
21 

thing that we should be requiring that would allow them to continue their independence, but to have some check on their work. 

But let us get back to this issue of OK, without calling into question the whole notion of independent agencies, the fact is having 

some sort of a way to look at the cost and benefits everyone seems 

to agree on. The question is who should do it? I like what Mr. 

Gasaway said, that there is expertise actually in the Federal Government to do this. Unfortunately, it is not at GAO, it is not at the 

Congressional Budget Office (CBO). It is not at the IGs now. It 

could be created. It would be another expense to the taxpayer, and 

the question is whether you get the kind of smart career people 

that are at OIRA, who I used to have the honor of working with, 

to be able to do this. 

And we are not talking about a lot of rules. I mean, again, this is a modest proposal. We are talking about over $100 million per 

year in impact. It is roughly 12 to 15 rules per year. And it is advisory. And Senator Heitkamp is actually right on that; it is nonbinding. But the agency does have to respond to it. So when OIRA 

takes this on, they have a short period of time, 90 days max, to do 

it. 

And this notion that it is going to slow everything down, it is just 

not accurate. I mean, there is a deadline and, we do this with the 

executive agencies every day. But when they do get a non-binding 

analysis back, there has to be a response from the agency, which 

is part of this accountability we are talking about, and it is transparent. So as taxpayers, my constituents get to see it. As Members 

of Congress, we get to see it. As experts, you get to see it. I do 

think that it would have a very positive effect on coming up with 

some standards that are, viewed as reasonable in terms of looking 

at a cost versus a benefit. 

There is another criticism that we have seen out there, which is 

that somehow the individual statutes that have cost benefit within 

them would be overridden. We wrote the language explicitly to 

avoid that problem. It states that, and I quote, ‘‘The president may 

by Executive Order require an independent agency to comply, to 

the extent permitted by law, with regulatory analysis requirements 

applicable at other agencies.’’ 

This mirrors the qualifying language that is in President Clinton’s Executive Order, the 12866 we talked about. And everybody, 

including by the way, Elena Kagan, when she was a professor explained that to the extent permitted, a relevant statute means that, 

you would not be overriding those statutes. 

So again, kind of to Senator Heitkamp’s point, we have sort of 

gone through them. We have answered all these questions, and yet 

there just seems to be this concern out there that somehow these 

independent agencies should be able to be out on their own freelancing, and whatever we come up with, there seems to be some 

concern. So again, but I think we have responded to very specifically. 

One of the issues that is broadly talked about is that the accountability of independent agencies would somehow be reduced. 

To me that is also crazy. I mean, this adds more accountability. 

And I guess the argument there is that there would be less accountability to Congress and more to OIRA, more to the executive 
22 

branch. Congress needs to take its role seriously, which this Subcommittee does, to do the oversight, and it should have, I think, 

the obvious intent of this, to have more accountability. And again, 

we would know then what the analysis was and how it was not 

meeting what OIRA does for all the executive branch agencies. 

So again, I thank you guys for being here. I hope that you will 

continue to work with us on this and help us to be able to get the 

word out broadly. I do think Senator Heitkamp is right. We sort 

of make all these arguments, we are not succeeding. But part of 

it is maybe we are not making the arguments as effectively as we 

could and not doing it to the American people, who I think would 

be shocked to understand that there is this, lack of analysis at a 

time when so many of our businesses back home tell us the regulatory burden is making it difficult for them to add a job, to expand 

plant and equipment. We have an economy growing at 1.5 percent. 

We have flat wages. We have a middle class squeeze that is very 

real out there, and the regulatory burden is part of it. 

You mentioned the banks in Oklahoma, they are no longer offering mortgages. I would like to say that the community banks in 

Ohio are consolidating. What does that mean? That means there 

are fewer loans being available at the local level for smaller businesses. Where there is a personal relationship, there is less involvement in the community, and this is a function of regulations. 

They tell me that with very specific numbers this is what they 

had to put aside for compliance 5 years ago, his is what they are 

doing today. And they simply cannot be competitive with these levels of compliance and the regulatory burden, that sometimes it is 

more than one regulator, particularly with CFPB being involved. 

So thank you very much for coming in. I appreciate you guys 

having this hearing, and I hope we can get this legislation moving 

in the new Congress on a bipartisan basis. 

Senator HEITKAMP. I do too. The luxury that we have on this 

Committee is that we are trying to design a highway. We are not 

putting the cars on the highway. We are trying to design a highway that is safe, secure and accountable for agencies so everybody 

knows the rules. 

The problem that we have is we get mired down in analyzing 

this rule that someone does not like or that rule that someone does 

not like, and all of a sudden, this turns into a discussion about this 

agency or that agency. And we have not had a lot of good luck in 

saying, imagine that the president is of a different political party 

than yours. What do you want the rules to be? What do you want 

the accountability to be? 

Because this is not about partisan politics. This is about accountability on how we interact with the American people as the Federal 

Government. And it is enormously frustrating to keep—you see this 

very modest proposal somehow getting painted even in ‘‘The New 

York Times’’ as a huge giveaway, to some big corporate interest 

that will result in financial mayhem in 2 weeks if we do it. 

And so we are in this highly hyper-partisan exaggerated world 

trying to make common sense rules about how we move forward, 

and no one, if they really sat down like we do on this Committee 

and analyzed the rules, analyze the growth of what is happening 

with independent agencies, would ever think that they should not 
23 

be subject to the same kind of rules or regulations of other executive agencies. 

I mean, this just does not make a lot of common sense, but yet 

we have created this culture that somehow, as the chairman has 

said, that to have any kind of influence eliminates independence. 

And everybody loves independence because we all know what that 

means, independent from politics. Well, there is nothing in this 

town that is independent from politics. Get in the real world. 

We have to have rules that prevent overbroad political opinions 

from basically being embedded in so many of these rules. And so, 

we need to—the idea of regulatory reform has become so politicized 

that the common sense aspects of regulatory reform, whether it is 

a look back, we are working on a number of retroactive provisions, 

a number of look-back provisions, whether it is a cost benefit analysis which has progressed. From my days in law school in the 

1970s, when we first started talking about cost benefit analysis, it 

was like this magic world. 

I think it has become much more professional. We have a whole 

society that is dedicated to improving the quality of cost benefit or 

benefit cost analysis. However, we want to structure that. So we 

just have not made the factual argument very well, it seems to me, 

because we keep running into the political argument. We keep running into the hyper argument. 

When we can sit down, Mr. White, and you and I nod our heads 

in total agreement about kind of where we are, recognizing that we 

may not agree on everything as a matter of politics, we know that 

we have some fertile ground here to actually get something done. 

But we are not going to get it done if we have the constant sniping 

at this, as this is just a way to shut down this agency or shut down 

that agency or restrict that agency. 

We are not trying to shut down, restrict, or do any of that. What 

we are trying to do is say, justify to us the decision that you made 

and the analysis that you did. And we do not want just you, to say 

do not worry, I got it. We want there to be someone who is changing the culture that—we all know that when we have accountability, we perform better, we make better decisions. 

And so that is the problem that we have, is that this enormously 

modest proposal was at the heart of really an op-ed in ‘‘The New 

York Times’’ before we even got the proposal off the ground. And, 

shame on us that we did not anticipate that this would be this controversial. It should not be controversial, because I just keep asking 

my colleagues, you could have a president that is not a Democrat. 

What oversight, what accountability do you want for the decisions 

that are going to be made in that case? 

And when you can answer that question, then we can get to common ground. But we need people to really help us kind of bridge 

these gaps and create some momentum without having a package 

that has become so highly politicized. I think we have the elements 

of a pretty good regulatory reform package that would in fact 

amend the APA, would in fact do the things that I think any—80 

percent of people who live in the common sense world that we live 

in, and places like North Dakota would say, well that should be a 

no-brainer. 
24 

We have 80 percent of the no-brainer stuff, but we cannot get political consensus here to get it done, and it is enormously frustrating. And I think it is because, I guess my family taught me 

that if I am failing, I should look at what I need to do differently. 

And so it is not just about these people cannot agree with me. It 

is how do I get this done in the face of this opposition? 

And so we are really in need of a broader kind of academic consensus out there that these are the five things. No matter which 

side of the political aisle you are on, how you view the world, these 

are five really good reform packages. And I guess that is what we 

are kind of asking, is how do we build that kind of consensus within a broad spectrum of political thought on what change should 

look like in terms of regulatory reform? 

And I cannot leave it without saying this because I think I say 

it at every one of these hearings: Congress needs to start doing its 

job. When we have things that are in litigation for 30 years on definitional provisions of the Clean Water Act (CWA), maybe it is time 

for Congress to actually do its job and provide the lane or the 

framework for what constitutes things like Waters of the United 

States. 

And until we figure out how to do our job here, we are going to 

continue to over-delegate responsibility, I think, to executive and 

independent agencies. And then it is just a lot more comfortable for 

us to beat up on the agencies than to turn the finger pointing back 

at us to say, well, I guess we were not very clear in what we said. 

Maybe we ought to change that, because that is a lot of hard work. 

So much for my rant. 

Mr. COGLIANESE. May I make a comment? 

Senator LANKFORD. I am going to take up an offering after that. 

Mr. COGLIANESE. May I make a comment? If I could just add to 

the virtues that have been mentioned for the approach that Senator Portman was discussing. In addition to the modesty of that approach, as you said, Senator Heitkamp. There is another virtue 

that I think should go noted here, and it does address Chairman 

Lankford’s question earlier about whether it would be appropriate 

to adopt wholesale Executive Order 12866. I think that that approach would be problematic in some of the institutional aspects or 

design aspects of 12866. In particular, I am just not sure how practical the conflict resolution mechanism would work with multimember commissions, if 12866 were to become binding legislation 

imposed on those commissions. Just as a practical matter, it is 

hard to see the commissions going back and forth. 

So one of the virtues of the approach that Senator Portman was 

taking, where an OIRA review would lead to an advisory statement 

that then would need to be responded to, is that there is time for 

that, and you avoid the practical challenges that would be associated with a back and forth, which is how the Executive Order is 

really structured, but which is not going to work as well. It would 

be much more cumbersome with the multi-member commissions, 

and commissions by the way that are headed by individuals who 

in many cases cannot be removed at will by the president. 

Senator LANKFORD. But are often partisan placements. 

Mr. COGLIANESE. In some ways, one of the ironies of all of this 

is that with multi-member commissions, particularly where there 
25 

are bipartisan requirements, but even without that, in any multimember body, when you have multiple people who have to vote on 

something, that becomes a bit like a mini-legislative process. And 

there is a tension here that should not go unnoticed between setting up agencies that have that kind of collective decisionmaking 

structure and analysis which is supposed to be expert and non-political. 

So there is a deeper tension here as well. Again, that is why, if 

nothing else, I think it is important for Congress to go on the 

record in saying, if we are requiring cost benefit analysis in UMRA 

of executive agencies we could eliminate that exemption for independent agencies. 

Senator LANKFORD. I would have no issue eliminating that for 

Unfunded Mandates Reform Act because again, that was a compromise that was made years ago that has proved to be an error, 

because it does exempt out a whole group of folks that think the 

rule does not apply to them. Really, I think that was a compromise 

at that moment that should not have been done. 

It goes back to the same issue with the Reagan Administration 

not including OIRA connection to the executive branch, to those 

independent agencies. They could have at that moment. I wish they 

would have. But now we have several decades of history to be able 

to overcome, and I believe in some of the agency culture that they 

are independent of everyone, and they are not a fourth branch of 

government. 

We are incredibly grateful—and this is something we have talked 

about often. These are experts in the field in decisions that have 

to be made, that Congress is not the expert, the Federal courts are 

not the expert, and different agency folks are not the expert. These 

folks are, and we are grateful they are serving the American people 

in that spot. But there is a need to have accountability in every 

part of that, and I think that is the issue. You cannot be independent of everyone. There has to be a built-in accountability 

structure. 

Senator HEITKAMP. And it is not even accountability. It is transparency. 

Senator LANKFORD. True. 

Senator HEITKAMP. So who knew? I mean, how do you even have 

accountability when you do not know the rationality or the rationale—why they made decisions that they made. 

Senator LANKFORD. And that is the lowest tier on the judicial review. 

Senator HEITKAMP. Right. 

Senator LANKFORD. It is just ‘‘did you do everything you said you 

were going to do’’ ? Not even do we agree or disagree with it. Did 

you check the boxes to actually work through to be able to get the 

information? Can we see the homework? 

Senator HEITKAMP. It just seems to me that we are in a hyperpartisan environment dealing with an issue that should be, very bipartisan and very clear what rules we want to guarantee, that all 

sides have an opportunity to be heard and that we actually have 

a foundation in which to judge the decisionmaking that went into, 

in many cases, very expensive determination. And we just cannot 

get there because we get mired down in individual cases that then 
26 

become, oh, you do not like this agency or you do not like that person, that is why you wanted to change the rule. 

That is not why I want to do any of this. It is not because I do 

not trust anyone or I do not like anyone. It is that I believe that 

we have a responsibility in the U.S. Senate and in this Congress 

and in this government to hold agencies and government decisions 

accountable and to understand why they decided what they decided. And I think they will, Mr. White, make much better decisions when they know that there is someone who is going to have 

the ability to judge the judgers, and that is the challenge we have. 

Mr. GASAWAY. OK, now I will try to give you a practical solution. 

I gave you my political solution. The only thing I can think of 

would be to have it take effect some years in the future, if you say, 

I do not know who is going to control Congress the next day, I do 

not know who is going to be president. All I know, next date I want 

this to be the rule, because whoever is in those positions now. 

Senator HEITKAMP. So then it does not become personal. 

Mr. GASAWAY. So it does not become personal. It does not become 

partisan. If people say you are taking a shot at my former colleague Rich Cordray, you say, I do not know what Rich is going to 

be doing the next date. This is not about Rich. This is not about 

anybody else. So that is my only practical suggestions, Senator. 

Senator HEITKAMP. Yes. 

Mr. WHITE. It is about the third time in this hearing that Rob 

has beaten me to the punch on a good idea. I would like to reiterate that, that independent agencies are doing a lot right now and 

they will be doing a lot in coming years. If the legislation even said 

we are not going to go into effect for eight, 12 years, I will still take 

that. I think that would be a great improvement, because it gets 

around this problem of the immediate political ramifications. 

But one other point, Senator Heitkamp, that you raised a little 

bit ago, and I really do not want to let it go by, where you said 

about Congress doing its job. So much of Congress’ relationship to 

the issue of independent agencies and the administrative state in 

general comes back to appropriations. I ended my written statement with a quote from Madison, Federalist 58, the power of the 

purse. It is hard for me to go through any one of these, writing a 

testimony like this without quoting that. It is so important, the 

power of the purse. 

And I think meaningful regulatory reform requires not just reforming the Administrative Procedure Act requirements. It is about 

seriously rethinking the way that appropriations work with the 

agencies. And now we are obviously biting off something even bigger than just administrative law. But the appropriations process 

right now, this annual sort of race for a single vote on a budget, 

almost a cliff scenario of solving the funding for agencies that really does complicate even more the problems of Congress’ oversight 

of agencies. 

And when there comes a day when Congress is appropriating the 

agencies in a much more iterative process, much more tied to legislation and oversight, I think that is important, because at the end 

of the day, Congress’ job involves legislation and the appointments 

process and the appropriations process, and all three of those are 

crucial in Congress doing its job. 
27 

Senator LANKFORD. By the way, there are some proposals that 

are floating around now that a group of us have floated on reforming the budget process. If anyone is keeping score on this, it has 

been 20 years since Congress has passed a budget without a CR 

before it. Since 1974, when the Budget Act was passed, the Budget 

Act has only worked four times since 1974. So at some point, Congress has to admit that post-Watergate process that was created 

did not work as they hoped it would, and it does have to be reformed. 

But that is a different hearing for a different day. 

Senator HEITKAMP. The Budget and Impoundment Act, we are 

going to repeal it? 

Senator LANKFORD. We can fix it. 

Mr. COGLIANESE. One other, if I may, outside the box suggestion 

that I think is feasible to consider, but it is a long-term strategy 

as well, and that is to foster research. Let us just not there are just 

very clear research limitations well at issue in getting better analysis at these agencies. And I know that we have been talking here 

about legal structures and organizational structures that might encourage agencies to produce that work themselves. 

But there is another way of thinking about this, not mutually exclusive, but another way, that would say let us also, at the same 

time we are thinking about institutional structures, think about 

other ways of resolving some of the fundamental research questions 

that need to be answered in order to do good prospective analysis 

of financial regulation. 

Now, there is a big debate right now in the academic literature 

about whether financial regulation can be subjected to meaningful 

benefit cost analysis, whether we can actually get good estimates 

or not. And there is one side that sort of says ‘‘no, it is just not 

even possible’’, and there is another side that says, ‘‘yes, it is feasible’’. 

I think even the side that says it is feasible would agree that we 

are not anywhere near the level of sophistication or rigor in understanding the implications of financial regulations and how they affect financial markets to be able to make reliable forecasts as often 

as we would need to in order to get analysis to a level where some 

of the best executive agencies have it. 

I know from having taught environmental law that in the early 

days, in the 1970s, there were lots of analytical questions that were 

unanswered, and we just did not know a lot. Part of the reason 

why today we have much better consensus about how to estimate 

the benefits and costs of environmental regulations, is in part because of work that agencies have done, but it is also in part of 

funding and studies that have been done by the National Academies of Sciences and funding through the National Science Foundation. And to the extent that those institutional avenues could 

help. I do not think they should be neglected. They could be used 

to bring up the level of the state-of-the-art thinking about these 

issues. Then it will be harder for agencies to say, well, we just do 

not know how to do this. 

And part of what they are saying today is ‘‘we are not required 

to do it’’, but ‘‘we do not know how to do it’’, ‘‘there is not enough 

time’’, ‘‘we do not have the tools yet’’. Let us build a collective 
28 

knowledge base then. That is something that could be done wholly 

apart from administrative law reforms through targeted and strategic funding initiatives through other scientific enterprises. 

Senator LANKFORD. I think you could also accomplish some of 

those same things with advanced Notice of Proposed Rulemaking 

and get more people at the table earlier and so that they actually 

receive input from people that are affected. If you get the people 

that are affected at the table, they can give you a pretty good estimate of how it is going to actually—I cannot even begin to tell you 

the number of times I have talked to someone in business that 

said, X, Y, Z Agency estimated it would cost this much, just our 

business, it will cost three times that, just for our business not 

counting everyone else. 

And so when you do not get all the people at the table early with 

advanced Notice of Proposed Rulemaking, then you get a best 

guess from academics rather than from practitioners. 

Mr. COGLIANESE. Some of the questions might though take years 

to resolve. So I mean, one issue in the environmental context, how 

do you value the benefits of reducing air pollution over the Grand 

Canyon? There is not a market that one could refer to; you would 

normally like to use market values to input into a benefit analysis 

there. 

So there have been years of study of what are called contingent 

valuation techniques and a consensus emerging over that. And 

similar questions arise in other areas of regulation that need answers, and there are opportunities, I think, to make progress in 

those areas, as well. 

Senator HEITKAMP. But there also is an opportunity for everybody to recognize that some benefits cannot be monetized. And so, 

I think that everybody thinks that we are trying to put monetary 

values on things like a view shed, what does that mean that we 

can still see the Grand Canyon as a country? That has value. That 

is not easily monetized, but we can all agree it has intangible 

value, right? 

Mr. COGLIANESE. Oh, absolutely. And this is one of the things, 

in going forward legislatively that I would urge you to think about 

retaining in 12866 and in UMRA, which is a recognition that it is 

not always possible to get good estimates of these things, and that 

benefits should justify the cost, but that does not necessarily mean 

that we always have fully monetized benefits that outweigh fully 

monetized costs. There are sometimes going to be decisions that 

regulators have to make in the face of uncertainty. 

Senator LANKFORD. So quick comment on that, then I want to be 

able to wrap this up. We are at 11:30 and I appreciate everyone’s 

time. 

Cost benefit analysis, as several of you have brought up, is to inform rather than to check the box and to justify. It should not be 

the we want to do this regulation and so we are going to create a 

cost benefit analysis that then benefits the regulation that we want 

to create. It should inform to say we are thinking about this. We 

go and check it and say, you know what, that is not a good option. 

Let us look for other options, and I think we are missing that. 

And some of the conversation and some entities, it seems to be 

a justification to do what they want to do rather than informing 
29 

the best solution. The intent of it was, is this the best option. If 

we go down this track and the cost is so high and the benefit does 

not seem to do it, then let us find other alternatives to do it. 

So at some point, I hope we can get back to that, where it is an 

educational experience and a targeting different options rather 

than a justification to be able to do what we want to do. There are 

some pieces of common ground that I heard today from all of us 

in this conversation. There are things that I hope that we can continue to build on on these issues. 

Let me open this up to final comments that anyone wants to be 

able to have on some of the issues. Mr. Gasaway, I just want you 

to know, I showed my absolute best restraint not to drift into a 

‘‘Chevron’’ deference conversation when you had a significant part 

of your written testimony dealing with ‘‘Chevron,’’ which we will reserve for another day. But I do appreciate your comments in your 

written testimony adding to it and referring to other things. We appreciate that as an unresolved issue. But again, another conversation for another day. 

Any other comments? Mr. White. 

Mr. WHITE. Just on your last point, I think it is very important, 

like you said, that on the one end, it cannot just be a box-checking 

exercise. That 2011 CFTC inspector general report I cite is just 

devastating, where the CFTC repeatedly treats economic analysis 

as a caboose on the process, run by lawyers more than economists. 

At the other end, it is important that the economist not get so 

fixated on technical precision that they lose sight of the bigger picture. I studied economics in college and the old joke was an economist is someone who knows the price of everything but the value 

of nothing. And I think that that is important here, that at the end 

of the day, cost benefit analysis, the numbers are important, but 

the most important thing is the process and the exercise of thinking through these things rigorously to inform the value judgments. 

Mr. COGLIANESE. And if I may add also one thought about that, 

which I agree completely. The goal of the analysis should be learning and informing and making better decisions. That is just another factor that would weigh in favor of an approach that would 

have less of a hammer behind it, rather than more of a hammer. 

That is, if you want agency officials really to internalize and take 

seriously and act earnestly to use analysis to learn, they have to 

own it. And there is a risk, and we know this from a variety of research on performance measurement in organizations, that once 

you put high stakes associated with measurement, then you create 

incentives for gaming and box checking and not doing what, Chairman Lankford, you so rightly said, taking it seriously to make better decisions, to learn and not just to cover up and paper over decisions you already want to make. 

Senator HEITKAMP. Just one more observation, and I think when 

you get down to it, this is not an exact science. And if people want 

to kind of say, you missed the boat. But the other piece of this that 

is so critical, and it goes back to the other pieces we are trying to 

pull together, is the retrospective review. And so we have a bill 

that received unanimous approval in the Committee that would require every new major rule have a provision in it that was noticed. 
30 

That would require retrospective review within the provisions of 

that new rule. 

We have to deal with the body of work that is out there, but if 

we do not have retrospective review, we do not learn about the mistakes that we made in the last cost benefit analysis, and so we do 

not improve the quality of that work overall, because there is never 

a look back or a judgment. 

And so these are—we keep trying to compartmentalize these, but 

the package itself is what is going to get us where we need to be. 

And we laugh because the one area where we probably have some 

of the most interesting discussions between the chairman and the 

ranking member is ‘‘Chevron.’’ So just to give you a little insight. 

Senator LANKFORD. Just needs to be fixed, that is all it is. Just 

one little word change. 

Senator HEITKAMP. I guess we all agree with you, right? 

Senator LANKFORD. How about just switching it judicially to 

‘‘probable construction’’. Just that would probably fix this. But that 

is a whole different conversation. 

On the OIRA conversation as well and the cost benefit, the benefit of going through OIRA with everybody is cumulative effects. If 

independents are independent, we cannot get cumulative effects, 

and everyone says all these regs came down at different times, different deadlines, different authorities. Nothing seems to be coordinated. It is one of the many reasons independents need to go 

through OIRA, so someone can check cumulative effects. And it is 

very helpful to have somebody just talk and say, great, what other 

options did you look at, and how did the cost benefit work on the 

other options. That is a tremendous benefit just to have that conversation that currently we do not get. 

But hopefully in the days ahead we can, because as I remind everyone, independents are not independent of the American people. 

They are still all a part of us and we are grateful that they serve 

the way they do, but we have to all be connected and get on the 

plane together. 

So with that, thank you very much for your testimony and your 

preparation. I look forward to an ongoing conversation in the days 

ahead. I hope you will maintain the ongoing relationship you have 

with us and with our staff so we can get a chance to gather your 

ideas in the days ahead. 

Let me do a final closing statement. I think I have to get some 

deadlines in here. The next time that we are together as a subcommittee is the 22d of September. We will continue our examination of agency use of regulatory guidance in a hearing titled ‘‘Continued Review of Agency Regulatory Guidance, Part 3.’’ At the upcoming hearing, it will be the Department of Education, Department of Labor, and the Office of Information Regulatory Affairs, 

which we have discussed at length today. 

That concludes today’s hearing. I would like to thank all of our 

witnesses. The hearing record will remain open for 15 days, to the 

close of business on September 23rd for the submission of statements and questions for the record. This hearing is adjourned. 

[Whereupon, at 11:38 a.m., the Subcommittee was adjourned.] 
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