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A REVIEW OF REGULATORY REFORM PROPOSALS 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 16, 2015 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

SATYA P. THALLAM, Counsel 

JOSH P. MCLEOD, Professional Staff Member 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

KATHERINE C. SYBENGA, Minority Senior Counsel 

TROY H. CRIBB, Minority Chief Counsel for Governmental Affairs 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

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

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

Senator Portman .............................................................................................. 5 

Senator Heitkamp ............................................................................................ 7 

Senator Lankford .............................................................................................. 8 

Senator Enzi ..................................................................................................... 22 

Prepared statements: 

Senator Johnson ............................................................................................... 41 

Senator Carper ................................................................................................. 42 

Senator Heitkamp ............................................................................................ 44 

Senator Warner ................................................................................................ 144 

WITNESS 

WEDNESDAY, SEPTEMBER 16, 2015 

Hon. Susan E. Dudley, Director, Regulatory Studies Center, and Distinguished Professor of Practice, George Washington University ........................ 10 

Sidney A. Shapiro, Frank U. Fletcher Chair of Administrative Law, Wake 

Forest University School of Law, and Vice President, Center for Progressive 

Reform ................................................................................................................... 12 

ALPHABETICAL LIST OF WITNESSES

Dudley, Hon. Susan E.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 46 

Shapiro, Sidney A.: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 126 

APPENDIX 

Case Western Reserve article submitted by Hon. Dudley .................................... 54 

Regulatory Science and Policy article submitted by Hon. Dudley ....................... 86 

Statement submitted for the Record from Michael Greenstone, Milton Friedman Professor of Economics, University of Chicago, Director, Energy Policy 

Institute at Chicago ............................................................................................. 145 

Responses to post-hearing questions submitted for the Record: 

Hon. Dudley ...................................................................................................... 151 

Mr. Shapiro ....................................................................................................... 155 

(1) 

A REVIEW OF REGULATORY REFORM 

PROPOSALS 

WEDNESDAY, SEPTEMBER 16, 2015 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:04 a.m., in room 

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

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

Ernst, Carper, and Heitkamp. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This hearing will come to 

order. I want to welcome our witnesses for the first time and thank 

you again for your appearance here, taking the time, and for your 

thoughtful testimony. I think this is going to be a really good hearing. It is an important hearing. 

Coming from a manufacturing background, coming from a business background, I certainly understand what it is like when you 

are trying to run a business, when you are trying to create products, how sometimes, oftentimes, maybe universally, having to 

comply with Federal regulations, as much as we all know we need 

some, takes time. And as we have seen over the decades, as we 

have developed layer upon layer upon layer of rules and regulation 

and law, sometimes often conflicting, sometimes totally contrary to, 

one department versus the other, it creates an awful high level of 

uncertainty, which I think is harming economic growth. 

One of the things as a businessperson I have done a lot is strategic planning, and I can go through a quick strengths weaknesses, 

opportunities, and threats (SWOT) analysis on the American economy. Let me just quickly go through that. 

I am just going to concentrate on the strengths and weaknesses 

side. I would say our No. 1 strength as an economy is we are the 

world’s largest. We are the world’s largest customer. That is an 

enormous advantage in global economic competition. Now, trust 

me, as a manufacturer, manufacturers want to be close to their 

customers. 

Our other, I think, enormous advantage is we have relatively 

cheap and abundant energy. Again, coming from a manufacturing 

background, if you want to manufacture products, you need power. 

And, by and large, cheap power is better than expensive power. 

Now, we all want a clean environment. We need to be environ-
2 

mentally sensitive. But I think we can have a strong economy and 

a clean environment. We have to balance the costs versus the benefits of that. But the fact of the matter is, in order to have a clean 

environment, you need a strong economy. You have to be able to 

afford the luxury of the pollution controls to keep your environment 

clean. So we need a strong economy. 

Our weaknesses, certainly we have a completely uncompetitive 

tax situation, and Senator Portman had a great hearing here on 

the uncompetitive nature of our tax system in his Permanent Subcommittee on Investigations. So we have an uncompetitive tax system. 

For example, if you are a global company, a global manufacturer, 

and you want to come and manufacture close to the world’s largest 

customer, are you going to site your plant in Toronto with the top 

business tax rate of 15 percent or Detroit at 35? As Senator Claire 

McCaskill said in that hearing, it is just math. We have to benchmark that. 

And then the whole purpose of this hearing is the regulatory environment. The cost of regulation is onerous. We can put a chart 

up here. There have been a number of studies by the National Association of Manufacturers, the Competitive Enterprise Institute, 

and SBA pegging—estimating the cost of regulation somewhere 

around $2 trillion per year. 

Now, we are getting immune to these enormous numbers. What is $2 trillion? Just a quick aside. My wife does this all the time, 

but if I were to give you $1 per second, it would take me 12 days 

to give you a million dollars. It would take 32 years to give you $1 

billion. It would take 32,000 years to give you $1 trillion. Just understand that, those orders of magnitude, how much $1 trillion is. 

But another way to put it in perspective is only nine economies in the world are larger than $2 trillion. That is the extent of a regulatory burden that we are placing on the people that we really 

rely on to create innovative products and services that we all enjoy, 

that we rely on to produce the good-paying jobs that are self-sustainable in the private sector. 

So we need to address that regulatory burden in a common-sense 

way. We need regulations. No doubt about it. Were it not for the 

EPA, we would still have businesses dumping benzene out their 

back door. So we all agree that we need regulations, but they have 

to be common sense, and they have to have a very strong high benefit, versus the cost. When you take a look at the layer upon layer, 

I think you can start arguing that we may be at the point or potentially well past the point of diminishing returns in many 

areas—not all but in many—and we have to be very careful of that. 

So, again, I am looking forward to the testimony and to the hearing and the back-and-forth. The way we are going to do this is we 

have a number of Senators that have introduced pieces of legislation to address the regulatory burden, and we are going to give 

them an opportunity to have an opening statement, but I will first 

turn it over to our Ranking Member, Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman. Thanks so much for 

pulling this together, to our witnesses for joining us, to our col-
3 

leagues who have introduced legislation that will be discussed in 

part in today’s hearing. We are grateful for all of you. 

Before we turn to the subject of today’s hearing, I want to just 

take a moment and look back just a few days where Senator Johnson and I and our staff directors on the minority and majority side 

were privileged to join Secretary of Homeland Security Jeh Johnson and former Secretary of Homeland Security Tom Ridge in traveling to Shanksville, Pennsylvania, to visit the memorial and to 

participate in really a day of remembrance for folks that day who 

laid down their lives aboard United Flight 93 in order to make sure 

that that plane did not make its way to Washington, D.C., perhaps 

to the Capitol, where we believe it was the intended goal. It was 

a very moving, sobering, inspiring moment. And it was a great day 

for us to be able to look back and to thank and remember the people who gave their all. 

Today is the second anniversary of the tragic shooting in the 

Navy Yard, not far from where we are located here today, where 

12 lives were lost 2 years ago and several others were injured in 

really a senseless act of violence. And on this anniversary we remember the victims; we remember their loved ones and all those 

who were impacted by the tragedy. And we also remember the 

bravery of all those who came to the aid of others on that day. It 

is just an important time for us to remember the important work 

that we have to do in Congress and across government to protect 

Federal employees and Federal facilities, so I did not want to let 

this day pass without thinking of them and noting that. 

I agree with much of what Senator Johnson has said, and we all 

have the chance to go to schools. I love going to the schools. I have 

probably been at every public school in Delaware in my time as 

Governor and Senator. But I love to go to schools with little kids, 

elementary schools, and we have assemblies, and I am sure my colleagues do this sort of thing as well. And we do Q&A, and one of 

the questions that is often asked by students, especially third, 

fourth, fifth grades, ‘‘What do you do? ’’ And I say, ‘‘Well, I am a 

U.S. Senator. There are 100 of us. We work with 435 Representatives and the President and the Vice President to make the rules 

for our country. We call them ‘laws.’′′ 

And they say, ‘‘Oh, really? Well, what else do you do? ’’ And I tell 

them, ‘‘We try to help people,’’ and one of the best ways to help people is to make sure they have a job. And a big part of that is making sure that we are working focusing on a nurturing environment 

for job creation and job preservation. In our business, whether you 

are mayor in Gillette, Wyoming, or Governor of Delaware or some 

other place, if you have people working, productive lives, providing 

for themselves, the rest is really pretty easy. But a big part of that 

is access to capital—nurturing our environment and access to capital. Part of it a world-class workforce, public safety. There are 

many aspects. Transportation, good transportation systems. But it 

is also what I describe as common-sense regulation. Colleagues 

have heard me talk about my dad before. My dad, when I was a 

kid, my sister and I were kids growing up, he was always saying 

stuff to my sister and me about—like we would do some bone-headed stunt. He was always saying, ‘‘Just use some common sense.’’ 
4 

1The prepared statement of Senator Carper appears in the Appendix on page 42. 

2The prepared statement of Senator Johnson appears in the Appendix on page 41. 

3The prepared statement of Senator Warner appears in the Appendix on page 144. 

‘‘Just use some common sense.’’ He must have said it a million 

times. And I suspect Ron’s dad said that or mom said that to him 

a lot as well. But I learned to use some common sense. The point 

that he makes, and I would echo it again here, when people got up 

this morning, they had breakfast. The food that they ate, the milk 

that they drank, the juices, the fruit, it was clean, it was safe for 

them to consume. When people got on a train with me this morning, they knew that the likelihood was they would make it from 

wherever they wanted to go or needed to go, people on airplanes 

the same thing, people in the cars that we are driving around here. 

Part of what they expect is that our vehicles and modes of transportation, the food that we consume is safe for us, safe for us as 

consumers. 

The point that my colleagues have heard me make over and over 

again, some people say you cannot have a clean environment and 

a strong economy. They say it is sort of like you have to choose one 

or the other. Well, that is nonsense. We can have both, and we 

have over the years strengthened our economy and, frankly, provided safer places for us to live, work, and breathe. 

The last thing I would say is this: I sometimes explain to kids, 

we pass these laws, and they are like a skeleton. They are like a 

skeleton for what we want to do with respect to transportation, defense, farming, education, whatever. And then somebody has to 

come along and put the meat on the bones, and the ‘‘somebody’’ are 

the agencies usually in the executive branch of our government, 

and they put the meat on the bones through regulations. And it is 

not just a process. And a clean power plant is a good example. The 

EPA, what they are doing is complying with the 1970 Clean Air 

Act, modified in 1990 with the Clean Air Act Amendments. And 

from time to time they have to put some more meat on the bones 

or take some of meat off and put new meat on because the world 

in which we live changes and the threats and the nature of the 

missions that we face continues to change. 

So do we need regulations? Of course we do. Do we need regulations that enable us to strengthen our economy and continue to 

grow our economy while keeping us safe? Of course we do. And it 

is a false choice to say that we cannot do both. We have to do both, 

and we need to use some common sense. 

Thank you so much. And I would ask unanimous consent to 

enter my statement into the record,1 Mr. Chairman. 

Chairman JOHNSON. Without objection. 

I will also ask for the same unanimous consent to enter mine in 

the record.2

As long as we are doing that, I know Senator Mark Warner has 

a statement that he would like to make based on his piece of legislation, so we will also enter that in the record,3 without objection. 

I do want to just speak to the event in Shanksville as well, just 

briefly. It was inspiring. It is amazing. Out of that tragedy, you get 

a level of inspiration. I would recommend everybody to go to 

Shanksville and see that visitors center, listen to the messages, the 

voicemail messages of three of the passengers to their loved ones. 
5 

It is an amazing display of humanity. But it is also an amazing display of the American spirit. We are all aware of it, but to hear it 

again, and the wonderful speeches that day, all I can say is it is 

just incredibly inspiring. 

So, again, I really did appreciate the Secretary inviting us to 

that, and it was a journey well worth taking, and I would recommend it to everybody. 

With that, I think we will turn it over to Senator Portman, who 

would like to make some opening comments on his bill. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Mr. Chairman, and thank you, 

Professor Shapiro and Professor Dudley, for being with us again 

today. We look forward to your testimony later and talking about 

some of these bills. And I thank Chairman Johnson because he has 

made regulatory reform a priority of the Committee, and we are 

going to be talking about a number of different bills today. A couple 

of them I have been involved with. I am the author of the Independent Agency Regulatory Analysis Act, which we will be talking 

about. My cosponsor is Mark Warner, and I appreciate the fact that 

the Chairman just included his statement in the record. I have it 

here. It is a very good statement about the need for this legislation. 

This has been bipartisan. It has been something that we have been 

working on for a few years now, really trying to build on some of 

the President’s own comments about the need to expand the regulatory analysis to independent agencies. And I know both of you 

will be addressing that. I read your comments on it. 

I am also the author of the Regulatory Accountability Act, which 

is broader legislation. It is not part of the discussion today because 

it is not one of these bills that has been scheduled for markup yet. 

But a lot of the ideas in it are in other legislation we will talk 

about today, and I am hopeful we can move that forward as well. 

The independent agency bill is, again, common sense, I think. It 

is part of a recommendation from the President’s Jobs Council. It 

is something that affirms the authority of the President to extend 

to independent agencies some of these same regulatory analysis 

and review regimes that govern rulemaking by the executive agencies, again, consistent with the President’s own comments and Executive Order (EO). 

It was originally on the markup for the end of July. We decided 

to postpone it in order to address some minor concerns of a few of 

my colleagues on the other side of the aisle, including Senator 

Heitkamp, who I see is here with us today, and Senator McCaskill 

wanted to have a chance to further review some specific aspects of 

the legislation, and they have been very supportive of the intent of 

the legislation. I think we have made great progress. I think we 

are at about, to use a football analogy, at the one-yard line now. 

We are definitely in the red zone. And I thank both Senator 

McCaskill and Senator Heitkamp for their support and work on 

this. Hopefully we will be able to get it over the finish line. 

The independent agency bill is something that Presidents of both 

parties have talked about over the years, and, again, consistent 

with this notion that our regulators who are independent, like the 

Securities and Exchange Commission (SEC)—and I know you use 
6 

that as an example, Professor Dudley, in your comments today— 

the CFTC, and others are issuing more and more regulations, more 

and more major regulations, and yet are not subject to the same 

Executive Orders. 

Four years ago, President Obama issued Executive Order 13579 

saying that they should comply. Of course, he does not have the 

legal authority to be able to require them to comply because they 

are independent by definition; therefore, codifying that through the 

work we do here in this Committee is necessary. Unfortunately, the 

kind of analysis that we have seen with the executive branch agencies is just simply not being done on a consistent basis by the independent agencies. 

Here are some statistics worth repeating that we will hear, I 

think, later today. In a recent Office of Management and Budget 

(OMB) report, not one of the 18 major rules issued by an independent agency in 2013 was based on a complete quantified costbenefit analysis. The same was true in 2012 when there were 21 

major rules, none with a complete cost-benefit analysis. And, by the 

way, you can go back to 2009 and see the same record. 

A recent study commissioned by the Administrative Conference 

of the United States reported similar findings. Out of the major 

rules issued by independent agencies in fiscal year (FY) 2012, the 

last year which they analyzed, only one rule was supported by a 

partial quantification of benefits, and only six rules included a partial quantification of costs apart from paperwork burdens, which is 

a narrow subset of the total cost. 

In its fiscal year 2014 report to Congress, the Office of Information and Regulatory Affairs (OIRA) wrote, ‘‘It would be highly desirable to obtain better information on the benefits and costs of 

rules issued by independent regulatory agencies. The absence of 

such information is a continued obstacle to transparency. It might 

also have adverse effects on public policy.’’ That is the Obama Administration OIRA. 

So what does this bill do? It affirms the authority of the President to extend to independent agencies the same regulatory analysis and review regime that governs rulemaking by executive agencies. It provides that independent agencies may be required to assess the costs and benefits of a major rule. It would have independent agencies submit economically significant rules to OIRA for 

review. OIRA would then assess the quality of the agency’s costbenefit analysis. So, again, for major rules only, they would go to 

OIRA, and OIRA would do their analysis. 

The Independent Agency Act has been endorsed by a bipartisan 

group of former OIRA Administrators from the Clinton, Reagan, 

and Bush Administrations, a bipartisan group of former and current heads of independent agencies, including scholars of regulation and administrative law, the American Bar Association (ABA), 

the National Federation of Independent Businesses, and the National Association of Manufacturers. 

One concern that some of my colleagues had on the other side 

of the aisle was that this bill might result in a delay of rulemaking. 

I have agreed to accept Senator Heitkamp’s language that would 

clarify that OIRA has 90 days to review the agency’s cost-benefit 

analysis. If that review if not completed in 90 days, the inde-
7 

1The prepared statement of Senator Heitkamp appears in the Appendix on page 44. 

pendent agency would be deemed to have met the requirement for 

review. Any OIRA analysis issued after those 90 days would not be 

included in the rulemaking record. So that puts a deadline on 

them. 

Another concern was that the analysis this bill lays out might be 

duplicative. Senator Heitkamp and I are working on language to 

ensure that agencies that are already engaged in this type of analysis are not required to reinvent the wheel when they submit a 

cost-benefit analysis to OIRA, and she may want to talk more 

about that later. 

I look forward to continuing to work with her, Senator McCaskill, 

and others on the Committee, including Senator Carper, who has 

been a supporter of this notion of being sure you have consistency, 

and I appreciate that Senator Heitkamp and Senator McCaskill are 

committed to actually getting this to a markup in early October. 

Thank you, Mr. Chairman. And, again, on the Regulatory Accountability Act, Senator King, Senator Collins, and I have recently 

reintroduced that bill. This is something we have worked on for 

31⁄2, 4 years. It is a comprehensive bill, again, drawing on some of 

the existing tools in the administrative process to basically reform 

the Administrative Procedure Act (APA) for the first time in decades in a significant way to ensure we have a less costly and more 

stable regulatory environment for job creation. That bill, by the 

way, is supported by 80 different trade groups, including the 

Chamber of Commerce, Business Roundtable, National Association 

of Manufacturers, and many academics and former public officials. 

So I appreciate all the good work, again, that is being done by 

Senator Lankford, Senator Johnson, and others, and I hope we can 

move forward with the legislation that is before us today with a 

markup and then be able to actually begin to make a difference in 

the way that Senator Carper talked about. There is no inconsistency with having a clean environment, a safe environment, a safe 

workplace, and having a good economy. But it does require us to 

go through this cost-benefit analysis in a rigorous way. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Well, thank you, Senator Portman, for your 

efforts and leadership on this regulatory reform. 

Next I will turn to the Chairman and Ranking Member of basically our regulatory reform Subcommittee, and I really want to give 

a shout-out in terms of I think all of your good work and efforts. 

And so we can kind of keep it going back and forth, I will start 

with the Ranking Member, Senator Heitkamp. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Mr. Chairman, we have had such a great collaboration on this Committee, and I think you see it on the Committee as a whole, and I know there are a number of people on the 

Budget Committee, which is chaired by Senator Enzi, who also 

share a commitment to real reform. And so I am going to just ask 

that my opening statement be placed in the record1 and defer to 

my Chairman, Senator Lankford, for a description of the bills that 

we are working on. 
8 

Chairman JOHNSON. Well, thank you. I am sure our witnesses 

appreciate that. 

It is amazing what you can accomplish if you concentrate on the 

areas of agreement. Let us concentrate on what we agree on, and 

let us not exploit what divides us. So, again, I just really do appreciate, first of all this and just all of your efforts. Senator Lankford. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Thank you, Mr. Chairman. We have worked 

a lot together on this to find the common-ground areas. Regulatory 

reform should not be a partisan issue. It should be a conversation 

about how we actually deal with actual business and operations. 

We have three bills that we have worked very hard together on, 

and let me just kind of walk through the basics of those, and then 

we will get quickly to our witnesses on it. 

S. 1817, what we call the ‘‘Smarter Regs Act,’’ that act just starts 

laying out a plan for retrospective review. We believe there should 

be an assumption that when every major regulation is passed there 

is an assumption there will be a retrospective review and that will 

be a time certain. So we give 10 years or less that the agency, 

when they promulgate the rule, they say this will be reviewed at 

this date. So everyone knows we are going to do a real cost-benefit 

analysis after the fact to really get—we know what it was estimated; then we will give 7 or 8 or 10 years, whatever it may be, 

whatever is set, to get the real analysis of it. And then at that 

time, a new date is set for the next time as well, and you just keep 

that going on a major regulation. 

Again, what we believe is there should be this continual improvement and not to have you put a regulation in place and assume 30 

years from now nothing has changed. Well, 30 years from now, 

things will have changed in the world, and we need to make sure 

there is a continual lookback on that. 

Another one I want to be able to bring up to you of the three that 

are here is S. 1820, the Early Participation in Regulations Act. 

Again, we have this crazy belief that the government still is of the 

people, by the people, and for the people. And if it is a nation and 

a government of the people, by the people, for the people, that actually means people should be involved in the rulemaking process; 

that if an agency promulgates a rule and then it seems like everyone is trying to fight against the text of it, maybe we should back 

up and do an Advanced Notice of Proposed Rulemaking so that 

when we get into the major issues, the agency would put out the 

concept, and then we would have an opportunity for all the American people to engage early to say this is something handled by the 

States, or, yes, this is a major issue, that we need to do it, but 

when you do the rulemake sure it includes these areas. It will improve the inputs early on and will also allow people to be engaged 

in it, to have more common-sense rules come out, so when they are 

actually promulgated and you get to that stage, the majority of people have already looked at it and had good input, and now you really are tweaking it rather than fighting against it. 

And the third one is S. 1818. This one deals with just a very 

basic thing that should not be a controversial thing, we believe. For 

the past 20-plus years, regulations have been promulgated based 
9 

on two Executive Orders, 12866 and 13563, that the President has 

over and over again, both Democrat and Republican Presidents, 

said we need some basic standards of when we produce regulations, 

we should consider the science; we should look at cost-benefit analysis; we should consider the best available other methods and alternatives that are out there. You should get quality public participation not only from city, State, tribal governments, but also from 

affected parties. You should look at scientific objectivity. These are 

commonly agreed on things that function under Executive Orders 

that have never been codified. 

So our belief is, we know where we have been in the past. We 

do not know where we are going on this. We would like to have 

these commonly agreed upon principles be codified into statute, 

and so we know from here on out, when regulations are actually 

created, these basic requirements are put into place. 

So, again, we feel like these are common-ground issues that Republicans and Democrats alike can wrap around and start to make 

some significant regulatory reforms. I look forward to the conversation today that we have had multiple times being able to look 

through this and also broadening this out and then to head toward 

a markup and try to actually put this into statute in the days 

ahead. 

I yield back. 

Chairman JOHNSON. Thank you, Senator Lankford. And, again, 

how many times we just hear, ‘‘This is what we can agree on,’’ so 

I have to commend both of you as well as every Member of the 

Committee. As we have gone through these Committee markups 

and we have reported out now 49 pieces of legislation, pretty much 

on a unanimous basis, it has not always been easy. We have had 

one scheduled for a markup, and then we would pull it, so the parties can work with individual members as well as the administration, and we hammer out the differences, and we find the area of 

agreement. And he also mentioned the words ‘‘continuous improvement.’’ As, a manufacturer, that is just ingrained in my DNA, continuous improvement. You may not solve the whole problem. You 

do not let the perfect be the enemy of the good. But if we can find 

the continuous improvement, that is the right approach. 

So, again, I just want to really commend, both of you as well as 

the entire membership of this Committee. We have been trying to 

find that common ground and find those areas of agreement. 

This Committee swears in. It is the tradition of this Committee. 

So if you would both rise and raise your right hand. Do you swear 

that the testimony you will give before this Committee will be the 

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

God? 

Ms. DUDLEY. I do. 

Mr. SHAPIRO. I do. 

Chairman JOHNSON. Thank you. Please be seated. 

Our first witness will be the Hon. Susan Dudley. Ms. Dudley is 

the Director of the George Washington University Regulatory Studies Center and distinguished professor of practice at the 

Trachtenberg School of Public Policy and Public Administration. 

That is a really long title. She was previously Administrator of the 

Office of Information and Regulatory Affairs and Director of the 
10 

1The prepared statement of Hon. Dudley appears in the Appendix on page 46. 

Regulatory Studies Program at the Mercatus Center at George 

Mason University. Ms. Dudley. 

TESTIMONY OF THE HONORABLE SUSAN E. DUDLEY,1 DIRECTOR, REGULATORY STUDIES CENTER, AND DISTINGUISHED 

PROFESSOR OF PRACTICE, GEORGE WASHINGTON UNIVERSITY 

Ms. DUDLEY. Thank you very much, Chairman Johnson, Senator 

Carper, and all of you, for having me today. I appreciate your interest in regulatory reform, and I am happy to respond to your invitation to talk about these specific six bills. I think they are all constructive and would contribute to what you all have been talking 

about: a bipartisan tradition aimed at ensuring accountable and 

well-reasoned regulations. 

Three of the bills are aimed at retrospective review and would 

provide mechanisms for evaluating the effects of existing regulations and modifying them as appropriate. I think this is important. 

Agencies seldom look back to evaluate whether the regulations in 

place are achieving their intended effects. 

So S. 708 and S. 1683 would establish an independent body, 

modeled after the Base Realignment and Closing Commission 

(BRAC), to review existing regulations and present recommendations to Congress. Such a commission I think would address the 

natural accumulation of regulations over time and offer two main 

advantages. 

First, the independent third-party review would offer an objectivity that past efforts (which depend on regulatory agencies themselves to evaluate outmoded regulations) have lacked. 

Second, as the BRAC experience showed, an up-or-down vote in 

Congress on the complete set of recommendations could avoid having reforms get caught up in parochial interests regarding individual rules. 

I also wonder if the commission’s analysis might provide insights 

into whether the underlying statutory authority—the skeleton that 

you talked about, Senator Carper—contributed to any of the undesirable consequences. Since the executive branch can only issue 

regulations pursuant to authority delegated by Congress, the commission’s review might lead to improvements in underlying legislation. 

The ‘‘cut-go’’ element of S. 1683 would impose additional discipline on regulatory agencies, as discussed at the Committee’s recent joint hearing with the Budget Committee on regulatory budgeting concepts. 

On the other hand, a one-time commission responsible for evaluating 10-to 15-year-old rules might not contribute much to better 

designed regulations going forward, and that is where I think S. 

1817 would come in and complement this commission approach and 

ensure that not only are existing regulations being evaluated, but 

that new regulations are designed to facilitate such evaluation in 

the future. 

Another advantage of this approach is that it focuses not just on 

reducing burdens, but on improving regulatory outcomes through 
11 

rigorous evaluation and feedback, and I think that was a point you 

made, too, Senator Carper, in your opening remarks, that we care 

about the benefits and the outcomes of the regulations. 

Institutionalizing a requirement to evaluate whether the predicted effects of the regulation were realized would provide both a 

powerful incentive and the necessary information to improve ex 

ante RIAs. I think on this one, in addition to OIRA’s role in overseeing compliance with the bill, Congress might want to assign a 

congressional oversight body. 

Now, I recognize that accomplishing the important goals of these 

bills would require resources and suggest that perhaps shifting resources from ex ante analysis to ex post review would not only help 

with evaluation, but would improve our ex ante understanding of 

regulations. 

The other three bills under consideration focus on enhancing analytical procedures done before new regulations are issued. As Senator Lankford said, despite enjoying bipartisan support from Presidents of both parties for the last 30 years, these procedures have 

not been codified in statute, and so S. 1818, the LankfordHeitkamp bill, would do that. I think that has several advantages. 

First, it would lend congressional support to the order’s nonpartisan principles. Many existing authorizing statutes ignore or 

explicitly prohibit analysis of tradeoffs, leading to regulations with 

questionable benefits that divert scarce resources from more pressing issues. 

Second, judicial review could be valuable because agencies tend 

to take more seriously aspects of their mission that are subject to 

litigation. So like executive and congressional oversight, judicial review would likely make regulatory agencies more accountable for 

better decisions based on better analysis. 

Third, the legislation could apply these requirements to independent agencies, and that is where the bill that Senator Portman 

mentioned, S. 1607, comes in. That bill, as Senator Portman mentioned, has bipartisan support of former OIRA Administrators and 

legal scholars. It would facilitate the Administrative Conference of 

the United States’ recommendation that independent agencies 

adopt more transparent and rigorous regulatory analysis practices 

for major rules. 

And, finally, S. 1820 would require agencies to publish an Advanced Notice of Proposed Rulemaking for major rules, which I also 

think is very important. Regulatory impact analyses are often done 

after the fact to justify decisions rather than to inform them. And 

I think an advance notice of proposed rulemaking (ANPRs) could 

be valuable for soliciting from knowledgeable parties on a range of 

possible approaches, on data, on models, et cetera, before particular 

policy options have been selected. 

So, in closing, let me reiterate my appreciation for the Committee’s interest in regulation and its consideration of these six bipartisan bills that I think offer constructive approaches to regulatory 

process reform. In addition to my written statement that provides 

more context for my remarks, I would respectfully offer for the 

record two recent writings—a little bit of self-promotion here—that 

may be relevant as you consider the bills. One is an article in Case 
12 

1The article referenced by Ms. Dudley appears in the Appendix on page 54. 

2The article referenced by Ms. Dudley appears in the Appendix on page 86. 

3The prepared statement of Mr. Shapiro appears in the Appendix on page 126. 

Western Reserve Law Review1 where I review previous regulatory 

reform initiatives and offer recommendations going forward. And 

the second is a new working paper on ‘‘Regulatory Science and Policy’’2 in which I offer recommendations for improving how science 

is used in developing regulation. 

And, with that, thank you very much. 

Chairman JOHNSON. Thank you, Ms. Dudley. And without objection, we will happily enter those in the record. 

Our next witness is Sidney A. Shapiro. Mr. Shapiro holds the 

Fletcher Chair of Administrative Law at Wake Forest University 

and is vice president of the Center for Progressive Reform. He has 

published numerous books and articles on regulatory law and policy and has studied and advised several Federal agencies. Mr. Shapiro. 

TESTIMONY OF SIDNEY A. SHAPIRO,3 FRANK U. FLETCHER 

CHAIR OF ADMINISTRATIVE LAW, WAKE FOREST UNIVERSITY SCHOOL OF LAW, AND VICE PRESIDENT, CENTER FOR 

PROGRESSIVE REFORM 

Mr. SHAPIRO. Chairman Johnson, Ranking Member Carper, and 

Members of the Committee, thank you for inviting me here today 

to share with you my views on the proposed regulatory reform legislation under consideration by the Committee. 

While it is important that agencies protect the public, these protections must be achieved in an accountable and fair manner. The 

role of administrative procedure is to ensure sufficient accountability and fairness. But it is possible to have too much of a good 

thing. While it is always available to add more procedures, we 

must consider the impact of doing so on an agency’s capacity to 

protect the public. 

In short, administrative procedure seeks to advance the principles of accountability, fairness, and productivity. The administrative state will work best when administrative procedures are designed in a way that properly balances accountability, fairness, and 

productivity. 

In recent years, however, Congress, the President, and the judiciary have imposed numerous new analytical and procedural requirements on rulemaking. In most cases, these requirements are defended as necessary for advancing accountability and fairness, but 

their steady accumulation comes at the cost of productivity. 

As currently constituted, the rulemaking process contains more 

mechanisms for promoting the goals of fairness and accountability 

than is likely necessary. As a result, significant rules can take anywhere from 5 to 8 years, if not a decade, to complete the rulemaking. Add to this delay the 2, 3, or 4 years of judicial review 

which occur for almost every significant rule. During this 5-to 12- 

year delay, the risks that these rules are meant to address do not 

pause or even evaporate into the ether. Instead, the risks continue 

unabated, threatening the health and safety and security of families and businesses across the country. 
13 

For this reason, the American Bar Association recommends the 

President and Congress, I am quoting here, ‘‘exercise restraint in 

the number of rulemaking impact analyses, assess the usefulness 

of existing and planned analyses; and ensure agencies’ adherence 

to recommendations of the ABA and the Administrative Conference 

. . . pertaining to such impact analyses requirements.’’ 

In my written testimony, I measure the legislative proposals that 

are the subject of this hearing against each of the three principles 

that undergird the administrative process: accountability, fairness, 

and productivity. None of the proposed reforms would improve the 

productivity of agencies. Instead, to varying degrees, the proposed 

bills are likely to reduce productivity. Likewise, the bills vary concerning the extent to which they address actual gaps in accountability and fairness that might exist in the current regulatory system. For the most part, however, the proposed legislation would reduce agency productivity for only modest and in some cases no net 

gain in accountability and fairness. 

I would be pleased to answer questions about the specific proposed questions in the question-and-answer period, but allow me to 

conclude by making four general recommendations concerning regulatory reform. 

First, Congress should provide agencies with the necessary resources to meet their procedural requirements and be productive. 

A key reason why additional procedures reduce agency productivity 

is because agency budgets have stagnated for years while the job 

at hand—more food and imported toys to inspect, for example—has 

grown. Agency budgets addressed to rulemaking are such a small 

part of the Federal budget that additional funding would simply 

have no significant impact on the deficit or the annual Federal 

budget. 

Second, and particularly if budgets are not increased, Congress 

should free agencies from unnecessary and, more important, duplicative analytical requirements. The idea that the regulatory system 

is widely out of control, producing excessive regulation, is simply 

a myth. The regulatory system must be accountable and fair, but 

it also must be productive if the public is to be protected. 

Third, in my mind, the most effective tool in addressing regulation that is problematic for some firms, such as smaller firms, is 

what in an article I called ‘‘back-end adjustments.’’ Agencies can 

and do address implementation issues on a case-by-case basis, 

using exceptions, time extensions, variances, and waivers. Congress 

should ensure that all agencies have the authority and that they 

are using it to ensure that regulations are both effective and not 

unduly disruptive to regulatory entities. 

Finally, I think as has been recognized, the real need for regulatory reform substantive. For many years, regulatory agencies 

have been operating under statutes that have not been reviewed or 

refreshed for decades. The intervening years have revealed shortcomings in these statutes while new public health, safety, and environmental issues that were not initially addressed by the original 

statutes have emerged. In some cases, agencies lack the authority 

they need to tackle these issues. 

Again, I appreciate the invitation to appear, and I look forward 

to answering your questions. 
14 

Chairman JOHNSON. Thank you, Mr. Shapiro. 

The Ranking Member talked about we create these laws that are 

kind of like skeletons, and then we need the regulatory agencies to 

put the meat on the bones. I always use this example. I asked staff 

to do this about a year ago, so they are not up-to-date figures, but 

when previous Congresses passed the Patient Protection and Affordable Care Act, it was 380,000 words. A year ago, that act is 

now about 12 million words. So from 380,000 to 12 million. DoddFrank, when passed was about 350,000 words, and a year ago, it 

was up to about 15 million words. So that is an awful lot of meat 

being added to the bones by the fourth branch of government that 

is largely unaccountable. It is unelected, and from my standpoint 

that is somewhat of a problem. 

Mr. Shapiro, you certainly understand the concept of productivity. I think your statement was that all the imposed new requirements, the layer upon layer, the steady accumulation of those 

requirements on the regulatory agencies is reducing the productivity. Don’t you recognize the accumulation of layer upon layer 

upon layer of regulations coming out of those agencies is dramatically reducing the productivity of our economy? 

Mr. SHAPIRO. Senator, I do appreciate that. Like everything in 

life, we need to strike an appropriate balance, and, of course, people are going to differ exactly where that balance should be struck. 

I think sometimes it is very easy to look at regulatory costs. They 

are easily identified, and goodness knows those who have to bear 

those costs are happy to point them out. 

What we also have to consider, however, is that when we do not 

regulate, we leave in place dangers to the public, and those are real 

dangers. People die, people are injured, people get sick, people get 

cancer, on and on. People eat bad food, some of whom die. And 

those families, those individual families end up paying those costs. 

They do not go away. They settle on someone. So we have to 

achieve an appropriate degree of regulation, but we cannot simply 

look at costs. 

Now, I understand that there are difficulties for individual businesses. We need to strike an appropriate balance. But the productivity does have real terms, real effect on our economy and on people. 

Chairman JOHNSON. Do you know of anybody who argues we 

should not have any regulations? 

Mr. SHAPIRO. No, sir. 

Chairman JOHNSON. So we all agree, the Federal Government 

and State governments have a role in providing regulations that 

obviously protect the environment, protect worker safety, protection 

consumer safety. The argument is over, what level and at what 

point do we hit the law of diminishing returns? 

Do you know of anybody that does not want a clean environment? 

Mr. SHAPIRO. Senator, I appreciate everyone’s commitment to 

this, and as I say, we are going to disagree about where the appropriate balance gets struck. But with all due respect, I guess I have 

to take issue with your claim that agencies are largely unaccountable. 

Chairman JOHNSON. I did not make that claim. 
15 

Mr. SHAPIRO. Well, people do make it. Let me give you an example. Last week or 2 weeks ago, there was an article in the Washington Post, and the Department of Agriculture (USDA) wants to 

propose—they have not gotten to the proposal stage yet—a rule 

that would eliminate one of the ways, one of the designations for 

the size of raisins. So raisins are graded, like all agricultural products, and the smallest of the raisins in the regulations are called 

‘‘midget’’ raisins. They were asked to get rid of that term, and they 

say, ‘‘We are happy to do so. There is no one who disagrees with 

this. It is just a change of language. 

It has been over 2 years, and they have not gotten to the proposed rulemaking stage because they are going through all the various analytical steps that have been imposed on them, and that is 

something that is uncontroversial. 

So I do not think from the agency’s point of view they feel like 

they do not do any analysis or they do not do enough analysis. 

They do a lot of it. 

Chairman JOHNSON. Well, I would never argue that government 

agencies are efficient in the way they approach things. 

Ms. Dudley, the BRAC Commission concept here is trying to 

bring some measure of subtraction to the Federal Government. 

Certainly what I see is everything is additive. We are legislators, 

so we legislate, and we just keep adding layer upon layer upon 

layer. I mean, at some point in time, you have to take a look and 

say, OK, we need to remove some of these layers; we have got clean 

out the garage. 

Can you just kind of speak to really what the concept of that 

BRAC Commission would be? 

Ms. DUDLEY. It actually might get to something like the raisins, 

because that is an example of a regulation that is in place that we 

need to change. And so a commission that could identify that as 

part of a pool of regulations that perhaps no longer are serving 

their usefulness, if it ever did, I think would be valuable. 

And as I mentioned briefly in the testimony, I think another 

value of it is what we learned from the BRAC, that is, being able 

to vote up or down on the whole package because, otherwise, it is 

so easy to think about what special interest it might harm if we 

do this versus another one; whereas, if you look at it as a whole, 

it might be an efficient way to do it. 

Chairman JOHNSON. One of the insights I try and provide people 

from the private sector, having come from it myself, is that the motivation of government agencies is the exact same thing as the private sector. They want to grow, bottom line. The difference in the 

private sector, in order to grow you actually had to produce a product or a service that you can create at a cost less than you can sell 

it. That is how you grow in the private sector. 

In government, let us face it. Oftentimes not succeeding helps 

you to grow. You never solve that problem. You keep asking for additional resources. I mean, is that something you have noticed certainly in your capacity when you were in government, just the imperative of government agencies just wanting to grow, and expand 

their authority over the private sector? 

Ms. DUDLEY. Well, I think another difference is that in the private sector there is that constant feedback. You have your cus-
16 

tomers’ feedback. If you do not make a product that people want, 

you cannot sell it, and so there is constant evaluation and feedback. 

Yes, so I think that is another advantage of the BRAC Commission, is that it would step back and have a third-party evaluation. 

Michael Greenstein I think has said to this very Committee that 

point. He jokes that his wife thinks he is not capable of evaluating 

himself accurately and he needs a third party. I think we all do. 

Chairman JOHNSON. Basically what you are referring to in the 

private sector, you have the discipline in the marketplace. If you 

do not have a successful product that people want to buy, you do 

not produce at a cost less than you can sell, you go out of business. 

You go bankrupt. Where is that discipline in the Federal Government against the agencies? Isn’t that really what we are trying to 

address here? 

Ms. DUDLEY. I mean, I think the bills that you have in front of 

you would address some of those things, including the—is it 1817 

that would not only look back but say, going forward, we are going 

to create the data—or create the information that we can evaluate 

after the fact. 

Chairman JOHNSON. I also want to address—because I think I 

see this. I have been very impressed with the quality of the Federal 

workforce, their dedication. There is no doubt about that. With that 

being said, I am afraid that too often in regulatory agencies, you 

have individuals working in those agencies that have no connection, never came from the industry they are trying to regulate. I 

just want both of you to speak to the level of expertise within the 

agencies, the bureaucrats writing the rules within industries that 

they really do not understand. 

Ms. DUDLEY. I can tell you—— 

Chairman JOHNSON. Which is why you need that—— 

Ms. DUDLEY. Right. Anecdotally, that is what I have heard. People have come out and tried to implement the rules. They said, 

‘‘Oh, my goodness, we had no idea.’’ Part of the Labor Department, 

‘‘We had no idea what this would really be like to implement in 

practice.’’ 

Chairman JOHNSON. Mr. Shapiro, would you like to comment on 

that? 

Mr. SHAPIRO. Sure. As we all know, the rulemaking process sets 

up a dialogue between all interested parties, and most trade associations are only too happy to point out, let alone work with agency 

staff, concerning the implementation of rules and their objections 

to it. So agencies hear all of the time from these various components, but that does not mean everybody gets represented. That is 

why I endorse the idea of back-end review, that once the rule is in 

place, naturally enough, not everybody is similarly situated, and 

agencies ought to have the authority, if they do not already, to use 

various accommodation mechanisms for the particular problem of 

the regulated entity: ‘‘We are in Alaska. You did not take into account that the weather is cold up here, and we cannot possibly put 

in that piece of equipment. It will not work.’’ And then the agency 

has to say, ‘‘Yes, you are right. Let us take that into account.’’ 

Chairman JOHNSON. OK. Do you have something? 
17 

Ms. DUDLEY. Just a small point. That troubles me because it 

seems we are moving away from the rule of law to the rule of individual exemptions. And I think it is troubling to me. 

Chairman JOHNSON. And we are not seeing necessarily that 

back-end review being implemented properly or fairly. 

Ms. DUDLEY. Well, and if you are, you are seeing it to people who 

are connected and may be able to get the special favors. So that 

troubles me because I think it is connected people get the back-end 

outcome. 

Chairman JOHNSON. You are not saying that sometimes large organizations have an ability to utilize the regulatory framework to 

disadvantage their smaller competitors? I think that happens. Senator Carper. 

Senator CARPER. Thanks. Thanks again to both of you for joining 

us today. Great to see you. And you bring a lot of expertise to an 

important issue, and we need that expertise. 

One of the things that we try to accomplish at a hearing of this 

nature, as you know, is to deal with a tough issue or tough issues, 

to ask people who are really well schooled and bring a lot of understanding to these issues, and people who have a different perspective of how to deal with these issues. And we respect both of you 

enormously, and you do not agree on a number of things here. 

One of the things we need to do is develop consensus around the 

legislation that has been introduced because we are going to have 

hearings—we may have more hearings, but we will have a markup. 

We will actually vote on this, offer amendments and so forth. I 

want to see how we can develop some consensus here and ask both 

of you to help us with that as it pertains to these pieces of legislation. 

We will just start off with where do the two of you agree. Where 

do the two of you agree on what we have been talking about, what 

you have been talking about this morning? Professor Shapiro, 

would you go first? And then I will ask Professor Dudley. 

Mr. SHAPIRO. I was hoping you would ask Susan first. [Laughter.] 

I think we agree on several points: first, the need for fairness 

and accountability; and the need for smart regulation. And I do not 

deny any of those things. 

I think as we developed the regulatory system, it occurred piecemeal. If someone had a good idea about this and someone had a 

good idea about this, let us add this accountability mechanism, let 

us add that accountability mechanism. And in and of themselves, 

none of these are objectionable. The spirit and some of the content 

of these proposed bills are not objectionable, except that we are 

adding them on top of every other analytical and procedural requirement that exists. 

So it would be good if the Committee wants to go forward, for 

example, and codify the Executive Orders to also get rid of all the 

other kinds of duplicative analytical requirements that exist out 

there. We only need to do a cost-benefit analysis once, but it is required under three or four different statutes. So we have all of 

these various steps, and I assume Susan would join me by saying 

we only need to do this once; we need to streamline the process. 

But, of course, she will speak for herself. 
18 

Senator CARPER. All right. Professor Dudley, where do the two 

of you agree? 

Ms. DUDLEY. Let me first agree with that point. 

Senator CARPER. OK. 

Ms. DUDLEY. But with respect to the duplicative requirements, if 

they really are duplicative, agencies do not do them twice. They do 

it once. And so maybe one of the things to do, as you think about 

it, is how can you make sure that the language does not require 

a different format for delivering the same analysis, so, for example, 

the benefit-cost analysis that would be required in the Independent 

Regulatory Agency Act or the—I forget the numbers, but the 

smarter regulations. Agencies now do that analysis under Executive Orders, so they do the benefit-cost analysis according to 12866. 

And then they also have to do it for the Regulatory Flexibility Act, 

Unfunded Mandates Act. The fact is they tend to do the same analysis. Once you have done that analysis, it supports all these different things. 

So I think it is a valid point, and thinking about specific language can help with it, but I do not think it is a real concern that 

they really are finishing one benefit-cost analysis and then starting 

a whole new one from scratch, that is not my experience. 

The other area where I think we agree is that you talked about 

a lot of our legislation is really old and that we are trying to shoehorn regulations that fit new problems into old regulation, I 

agree—or old legislation. I think that Congress is the accountable 

body for passing legislation—for writing the laws of the land, and 

we should not be trying to do things like, for example, the Clean 

Power Plan based on 1970 sections of the Clean Air Act. 

Senator CARPER. Thank you. Thank you very much. Maybe that 

will get us started in thinking about some other areas where we 

can agree. 

Let us turn to retrospective reviews, if we could. I think this administration has done a particularly good job of trying to make 

sure that we look at all those old regs that are out there and take 

a look at them and saying which ones make sense, which ones 

should be freshened up, gotten rid of, and I know under Cass 

Sunstein’s leadership I think some good work has been done, and 

my guess is under yours some good work was done, too, Ms. Dudley. 

Senator Heitkamp has introduced legislation before this Committee, supported by a number of Members of the Committee, that 

I think provides a very promising approach to this. And I do have 

some concerns, though, with the idea of creating a regulatory commission and taking these decisions out of the hands of agencies 

which actually have a lot of expertise, whether it is toxic substances or air emissions, water emissions, and that sort of thing, 

and a whole lot of other things, too. 

I just want to ask you, do you think a panel of nine people can 

really have the expertise to review and make binding recommendations on regulations across the government? Susan, why don’t you 

go first. 

Ms. DUDLEY. I think the way I have read the bills, they would 

not be doing it in a vacuum. So they would be working with the 
19 

agencies, seeking public comment. There seem to be several opportunities for public comment. So I think it could be constructive. 

But I will use the opportunity to say I also think that Senator 

Heitkamp’s bill is really valuable because it does—right now we 

would be making those decisions without good data. We do not 

know. Agencies, when we go to look back at regulations, we really 

do not have the information to evaluate whether the predicted outcomes occurred, and that is what we need to do. We need to start 

planning for retrospective review with every new rule. 

Senator CARPER. OK. And, very briefly, Mr. Shapiro, would you 

respond? 

Mr. SHAPIRO. Senator, I share your concern. The Base Closing 

Commission, of course, is the model, and it has solved a real problem. But it is focused on one subject, and it can focus on that subject, which is base closing and the military’s need to be prepared 

and have the resources that are necessary to protect us. 

As you suggest, the commission sort of has this roving mandate 

to go all over the government, and I appreciate Professor Dudley’s 

point that it is going to receive input. The bill is very explicit about 

that. But at the end of the day, you have to make some judgments, 

and the value of doing this within the context of an agency is those 

judgments are made with expertise and experience of the staff and 

often of the administrator. And I do not think that the consulting 

process really can quite replicate that. 

Senator CARPER. All right. Thank you. When we come back—I 

will telegraph my pitch here for both of you. But when we come 

back, I am going to ask both of you to look at the issue of the regulatory analyses that are done at independent agencies, and I am 

going to be asking you is there a way to address those problems 

without requiring independent agencies to submit their analysis to 

OIRA. So just be thinking about that. I am going to come back. 

Thank you. 

Chairman JOHNSON. Senator Lankford. 

Senator LANKFORD. Thank you all for being here. I want to be 

able to follow-up on the same conversation we had about the 

BRAC-like commission. The concern that I have that I want to be 

able to talk a little bit about today is the time period. You have 

nine individuals taking on a lot of regs from across multiple agencies. Their time to be able to get up to speed on it, and then be 

able to make a good decision, make the proposal, and get it out, 

is the length of time that is allotted—do you think that is enough 

time for them to be able to study it, get public input, make a good 

recommendation, and then send it over to Congress? What kind of 

time period will that commission need to be able to get good input, 

do their own research, have conversation with agencies, and get it 

done? 

Ms. DUDLEY. I am not sure what is in the bill, but I think it 

should probably be 2 years or so. 

Senator LANKFORD. I think it is 2 years. I am just trying to figure out if it was a 2-year time period for them to be able to actually 

work through the process. 

Ms. DUDLEY. Yes, so you need at least that much time if you 

are—I believe so strongly in public comment because I think that 

there is information that none of us have individually that you 
20 

could get from that open comment. So I think there needs to be 

adequate time for that. 

Senator LANKFORD. OK. Mr. Shapiro. 

Mr. SHAPIRO. Thank you, Senator. I think that is a realistic concern, and I am not even sure 2 years does it. The fact of the matter 

is many of these regulatory statutes are just really complex. 

Senator LANKFORD. Sure. 

Mr. SHAPIRO. There are defensible reasons for that and sometimes not defensible reasons. And so to understand whether or not 

a particular regulation is doing its job and is appropriate, you have 

to also understand the statutory scheme. And it is all I can do to 

teach one subject in law school. I certainly cannot teach four or five 

with any kind of mastery of environmental law and food protection 

law and consumer protection law and, of course, add that up across 

our government. 

Senator LANKFORD. Let me follow-up a little bit on this conversation about judicial review as well. Ms. Dudley, you made a comment that you feel like judicial review makes for better regulations 

because there is accountability built in. I would tell you, when I 

talk to those that are regulated, they struggle with a place to go 

when they have a complaint, when they feel like something is truly 

not working. And, Mr. Shapiro, you talk about this back-door opportunity to be able to go to an agency. They feel like when they 

take that back door, someone says, ‘‘No. We wrote what we wrote,’’ 

and they have nowhere else to go. 

If there is not a regulation that is actually engaging with them 

to say this really is a problem, where do they go? So the mechanics 

of that, do you have concerns or comments about this judicial review and then opening that up? For you, Ms. Dudley. 

Ms. DUDLEY. I think judicial review, there will be some cases 

that we all might look at and say, ‘‘What were they thinking? ’’ Because judges do not necessarily have the skills to evaluate a regulatory analysis. But I do think the analyses will be better done if 

agencies know they are going to be subject to review. That is just 

the way we all work. If they know that there is going to be oversight, it will be done—it will be a better analysis. 

Senator LANKFORD. OK. Do you think it gets out of control in a 

hurry, that it ends up being so many cases that are filed that this 

quickly gets out of hand? 

Ms. DUDLEY. I do not know. We do not see that with the executive branch agencies. Are you asking more—I guess, yes, we see a 

lot of litigation, and what I think it would do is it would allow people to be litigating on the matters that really are what the tradeoffs that they are really thinking about rather than having to litigate on a few words that maybe really were not what everybody 

is talking about. I am not sure I made that very clear. 

Senator LANKFORD. That is OK. Well, the challenge is we want 

to—I think judicial review is important. I think it is the accountability that you had mentioned before, that does create that accountability out there, and it gives someone to be able to protest 

to that literally does not work in the cubicle next to the person who 

made the previous decision. So it gives you some opportunity to get 

an outside opinion on it, but I think it should be used sparingly. 

And so trying to be able to build into the language something that 
21 

actually works so that you have that opportunity but it is not 

abused. 

Ms. DUDLEY. Well, I am sitting next to an administrative law 

professor who can correct me if I am wrong, but there already is 

the Chevron Deference doctrine that would lead the judges to defer 

to the agencies unless there is something that is egregious. 

Senator LANKFORD. Which I would love to be able to discuss at 

length, because Chevron Deference I think is one of those areas 

that has grown up and is now out of control in many ways. There 

is the challenge to find, as we have mentioned already previously, 

statutes that are 40 years old that we are now interpreting in a 

way that was never considered by the original statute. There is no 

new statutes to be able to bring it, and they have deference to be 

able to expand it. Now you really do have a regulator that looks 

like they are writing law, but they are just expressing deference for 

an unconsidered item that is 45 years ago. So the challenge is how 

do we actually wrap back around that and say we do not need to 

have Chevron Deference that expands this far for something this 

old. 

Mr. Shapiro, you look like you have a smile on your face. You 

might have an interest in that. 

Mr. SHAPIRO. This is why my students do not like administrative 

law, Senator. We have this quandary, right? in Chevron, it is not 

unlimited deference, and various judges disagree—— 

Senator LANKFORD. It is pretty broad, though. 

Mr. SHAPIRO [continuing]. About various approaches. And at 

some point the courts will say that is just outside the bounds of 

what Congress intended. 

But from the agency’s point of view, there is a pressing national 

problem—climate change. It is their responsibility to try to deal 

with it, and so they propose, to the extent they can, to address that 

through existing statutory procedure. 

I actually think that the problem for agencies, though, is not so 

much Chevron, but a very detailed and careful review of the factual 

and legal basis, particularly the factual basis, for a rule called 

‘‘hard look review.’’ So we have courts of appeals out there that 

have very demanding, analytical requirements in order to sign onto 

a rule and affirm it. The difficulty is that agencies have trouble 

with coming up with precise evidence on every point. The world is 

uncertain. Scientific evidence is uncertain. Cost-benefit analysis in 

particular is uncertain. 

And so when we say, for example, that an agency did not quantify a particular benefit, that may be just sloppiness. But it is also 

very difficult to know how to quantify some of these benefits. So 

we have to find a way of both using cost-benefit analysis, which 

can give us useful insights, but not ignoring obvious benefits that 

we just cannot quite find a way to quantify very accurately or at 

all. 

Senator LANKFORD. Correct. It does seem that we can quantify 

the costs, but the benefits seem to get out of balance at times. And 

that is one of the other big challenges, is trying to get the cost-benefit to align on there. If we have 5 years of costs and 20 years or 

25 years of benefits, suddenly we are out of balance here, and we 

are skewing things one way or the other. Or when you take long 
22 

look on it, knowing that most of the costs will be early and most 

of the benefits may be far delayed, again, we are skewing the process on it. 

So I would like to continue this—obviously, I am out of time, but 

I would like to continue this conversation in the days ahead on 

Chevron Deference. I do think this is a big issue. We have so few 

laws that are being passed right now and such large effects on 

things, where an agency feels like they have the responsibility, as 

you mentioned to address it, but they do not necessarily have the 

legal authority to address it. Our system demands a new law is 

passed rather than the agency saying, ‘‘It is our job. We will just 

create this.’’ 

So, with that, I yield back. 

Chairman JOHNSON. Senator Enzi. 

OPENING STATEMENT OF SENATOR ENZI 

Senator ENZI. Thank you, Mr. Chairman. I want to thank the 

ones who have testified. You have covered quite a few areas and 

given quite a few suggestions, and I appreciate that. 

As an old shoe salesman, I was particularly impressed with Ms. 

Dudley’s comment about how we are trying to shoehorn new things 

into old ones, and I see a lot of that happening with our regulations. We are going to back—we found a solution, and now we are 

looking for a problem to solve. And we go back through the laws 

and find something that we can wedge it into. 

I used to be a mayor during a boom time in Gillette when the 

energy was beginning to be developed out there, and we have virtually all kinds of energy out there. But I reviewed all the Environmental Impact Statements for every new business that came, and 

there was supposed to be a comment period for them, and people 

commented. And the agencies were supposed to comment on the 

comments. What I found was that it was acceptable for them to 

say, ‘‘No comment necessary,’’ and dismiss thousands of comments. 

We have some problems in what we are doing. This shoehorn situation, one of the things I have been looking at is the rule on mercury and toxins, and sometimes I wonder whether they are designed to solve a problem or if they are intended to put a business 

out of business. 

The mercury and toxins rule was supposed to have a benefit of 

about $500 million to $1 billion. I never was able to determine over 

what period of time that was. But the cost is $40 to $70 billion a 

year. 

Now, there needs to be a solution for that, but did they pick a 

good solution? Half a billion dollars of benefit, $40 billion of cost, 

if you take the lowest estimates of both. Shouldn’t we be looking 

for solutions instead of just regulations? I think that that is included in some of your two articles that you put out. I appreciate 

you having done that. 

One of the things that this Committee and the Budget Committee combined for a hearing—I think that was the first time in 

40 years that the two Committees combined for a hearing. It was 

on regulations, and one of the people who testified was the equivalent of the Secretary of the Treasury of Canada, who was in charge 

of their regulations. And he mentioned that they have an inter-
23 

national standard that they use for measuring cost and benefit that 

aligns both the costs and the benefits in terms of years. Are either 

of you familiar with that? Could you comment on that a little bit? 

Ms. DUDLEY. Yes. As I understand it, it is a standard that looks 

at the—it would not be able to capture all of types of costs or benefits, but it looks at the number of hours required to do something 

times—so it is kind of a basic dollar-per-hour amount of time. So 

it gets at that aspect of regulations, but maybe not opportunity 

costs or other types of costs. 

Senator ENZI. Thank you. What we are talking about, of course, 

is how do you measure these regulatory costs and how do you 

measure the benefits and how do you match them up. Do the costbenefit analysis used by the agencies now, do you feel have standards that ensure that we are measuring anything consistently or 

accurately? I would ask each of you that. 

Mr. SHAPIRO. Yes, Senator, thank you. OMB has fairly detailed 

guidance, which are sort of the best economic principles, for doing 

cost-benefit analysis. And agencies do attempt to meet that, given 

resource constraints. So I think there is a pretty good sort of notion 

or norm as to how to do these things. 

But having said that, and going back to your previous question, 

these are not easy to do. As Senator Lankford pointed out earlier, 

for particularly toxic regulation, the costs are up front. Agencies 

have to add new protections; they have to add engineering equipment. And the benefits we achieve are in the future. It is someone 

not getting cancer 25 or 30 years down the road. 

So the question is: How do you put those on the same baseline? 

And so we use discounting because a dollar in the future is worth 

less than a dollar now. But the trick is: What is the discount rate? 

And so you can get a rule really out of balance by using a very high 

discount rate, but then those benefits in 25 or 30 years shrink. Of 

course, the costs are today and tomorrow, and they are very high. 

If you use a lower discount rate—and you can do that; there are 

good economic arguments for doing that—then these things tend to 

come more in balance. There is really no agreement, as I understand it, which set of discount rates are appropriate. It just depends on how you want to characterize regulation. If you characterize it using investment theory, you tend to use a higher rate. If 

you use the discount rate of government bonds, which now are very 

low, you use a very low discount rate. 

So it is a kind of policy issue rather than an economic issue. How 

are we going to treat benefits in the future? And I agree with Senator Lankford, that is a very tricky question. 

Senator ENZI. Well, and how do you make sure that the benefits 

that we are talking about are really related to the same project? 

Mr. SHAPIRO. Well—— 

Senator ENZI. Right no. 

Mr. SHAPIRO. I am sorry, Senator. 

Senator ENZI. Right now we are having a thing called regional 

haze that we are trying to correct in the West. Meanwhile, Washington, Oregon, and Idaho are burning up. The smoke is so thick 

you cannot see anything, and there is actually ash involved in that, 

which most of the commercial establishments have not been allowed to put ash in the air for about 50 years. But we are regu-
24 

lating the companies, but we are not regulating the problem with 

the wildfires. So the companies are the ones having to take the 

blame for the regional haze, when it is not even their problem, 

their cause. 

I do appreciate that we have a Small Business Advisory Committee that is supposed to be looking at any regulation that will 

cost small business over $100 million a year in costs, and I would 

hope that that could be expanded to other businesses as well. 

I yield back. 

Chairman JOHNSON. Thank you, Senator Enzi. Senator 

Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

There is so much here—I mean, we have been pretty wide-ranging, and so I kind of do not know where to start. But I will start 

by raising another issue that has not been raised here on duplication. 

We talk about the frustration of small business or the frustration 

of American business, and we think about the Federal Government, 

writ large, and who is doing what and duplication between agencies. But a lot of frustration that I hear is inconsistency and duplication between State and local regulation and Federal regulation, 

and we have not—I just want to lay down that marker because we 

have not even begun to talk about addressing those concerns. 

You take a look at the Uniform Law Commission. That was created to try and ease commerce across jurisdictions. We have all 

these various regulatory responsibilities that States have taken on 

or local municipalities have taken on because they reflect their political ethic, and they are not necessarily lending a path forward 

for interstate commerce. But that is probably an editorial comment 

I did not need to make. 

Mr. Shapiro, in your testimony, you recommended that the bill 

that we have introduced for retrospective—I like to call it my ‘‘prospective retrospective bill’’ because it would require any new regulation to actually think about how we are going to review that regulation into the future. And we really thought very hard about 

flexibility, and we said what better way than make it part of the 

review process, part of the drafting process, to say this is what we 

think would be appropriate, we are going to get notice and comment from the industry, from other stakeholders on what would be 

an appropriate lookback. 

And so I was surprised when I read that you thought it was inflexible, because we pretty much thought that what we created, although we did not want to leave this open-ended completely so we 

put some timeframe on it—10 years is kind of a long time, right? 

And so I am surprised, quite honestly, and would like further comment that you think that this is not flexible enough and what you 

would do to make it more flexible in your vision of how we could 

make that piece of legislation work better. 

Mr. SHAPIRO. Thank you, Senator. And I think it is obvious that 

you were concerned about that and tried to address it. Perhaps the 

point that is missing in the bill is that when you do these regulatory lookbacks, you have to do them under your statutory mission. And these regulatory requirements in various statutes across 

the government vary widely. And so I think perhaps what we need 
25 

to be careful of is that we are not asking an agency to do a type 

of review—I agree with you, 10 years is plenty—a type of review 

that does not fit within their statutory mandate, because they cannot change their statutory mandate. They have to comply with it, 

and the original regulation, hopefully, was serving that mandate. 

Senator HEITKAMP. Yes. 

Mr. SHAPIRO. So, for example, it may or may not be possible to 

develop metrics. It may be that you would have to use quantified 

or qualitative assessments as to whether it is working. 

Senator HEITKAMP. But, again, going back to the option that the 

agency has, what the bill does is force the agency to think about 

how will we evaluate this regulation into the future, not what do 

we need to do to get it done today, but then what does this mean 

for the future. And one of the regulations that we like talking 

about—and it was mandated by Congress, and I am going to close 

out talking about how we have not done our job. But it was mandated by Congress, which was on conflict minerals. We hear about 

this all the time, about the recordkeeping and the reporting and 

how do we know where this came from, and, we are subject to huge 

fines. Even if we do not file a report saying we do not have them, 

there are huge fines associated with them. 

And, when you look at cost-benefits of that kind of regulation 

and you say have we stopped the development or the production of 

conflict minerals, have we actually achieved a purpose here, or are 

we just, kowtowing to an ethic that understandably—and I am not 

saying that that is not a noble goal, to prevent people from enslaving people to produce minerals. But is this regulation really working to prevent that? And that is really what we are trying, I think 

very hard, to get at. 

If you kind of think about into the future—and I want to talk 

about Senator King’s bill and the kind of commission, because I 

think this is an idea that is going to bear fruit here. I think we 

are going to move a bill like this, and I think there is going to be 

a lot of bipartisan support. So we truly want to get at a bill that 

is the best it can be in terms of actually achieving a product. 

Now, we have been talking about this commission and saying it 

is nine people, but we consistently turn to OIRA and say, ‘‘You are 

now the expert,’’ right? ‘‘You are now the expert on rail safety. You 

are now the expert on this issue.’’ And so I do not know that we 

are going to solve some of your concerns today, but we really would 

like you to kind of at least think about this in the context of this 

is going to happen, how can we make it better? 

A final point that I want to make in the little time that I have 

left is Congress. We do not do our job. It is a lot easier to pound 

the table and damn the agency. It is a lot easier to say all the 

courts got that wrong. And we look at a regulation that is particularly troubling in my State, which is Waters of the United States. 

That has been back and forth, ping-ponged up to the Supreme 

Court. The Court has done nothing to provide clarity, right? And 

so we keep rewriting this. And I would tell you, if you flew over 

North Dakota and looked down, every bit of that water I think the 

Environmental Protection Agency (EPA) is asserting jurisdiction 

over. 
26 

Now, beyond the kind of craziness of that result, I would say, 

How are they going to manage that once they regulate it? And that 

is another challenge. And I guess I want to kind of close by saying 

what we need to do here in Congress is start legislating. When we 

do not agree with what the agency does or even when the agency 

is struggling with a 40-year-old law, we need to take responsibility. 

And we do not do that very well here. It is a lot easier to criticize 

than it is to actually make the decision. 

And so I want to give a shout-out to all the Federal workers who 

are working hard on these regulations. They could use a better 

partner in the U.S. Congress. 

Chairman JOHNSON. Thanks, Senator Heitkamp. Senator 

Portman. 

Senator PORTMAN. Thank you, Mr. Chairman. And I agree with 

what Senator Heitkamp just said about how Congress has a role 

here and that, when we get behind on the legislative front is sometimes when you have agencies step in and sometimes overreach, 

and we certainly have seen that recently with regard to the legislation that she is talking about in terms of Waters of the U.S. 

On the independent agencies, again, I want to thank Senator 

Heitkamp and Senator McCaskill and others for working with us 

on this. Senator Warner and I have been trying to be accommodating. I think we are close to a final result. But one of the things 

we have done is put a timeline on OIRA’s review of the independent agencies, and let me just be clear on this one for folks who 

are wondering why this is necessary. 

For 30 years, Presidents of both parties have said there should 

be an economic cost-benefit analysis, and this has been consistent. 

It is not terribly controversial. What President Obama did, which 

was the next step, was to say, well, look, these independent agencies—and there are more than a dozen of them—they have more 

and more power, they are issuing more and more regulations; I am 

going to issue an Executive Order saying they should also be subject to these rules that the executive branch agencies are subject 

to. 

And what our legislation attempts to do is to codify that in a sensible way, and because Senator Carper just returned, I know he is 

going to be interested in talking later about, who should do this. 

I would just say that I agree with Mr. Shapiro on one thing in his 

testimony, when you said, and I quote, ‘‘The White House would 

not have the same gatekeeping power that it enjoys under those 

Executive Orders to stop, stall, or change executive branch agencies’ rules for political reasons.’’ 

That is true, because what you are saying to OIRA in this case 

is give us an advisory opinion, so you submit the analysis to OIRA 

and they do an advisory opinion, in essence. So it is not the same 

as executive branch agencies. Some of us would like to go further, 

but to accommodate those who are concerned about these issues of 

timeliness and preserving the independence of those agencies otherwise, we came up with this, what we think is a very reasonable 

compromise. 

So that is where we are. Again, OMB has said that 18 major 

rules most recently that they analyzed in an entire year, not one 

was based on a complete quantified cost-benefit analysis. The Ad-
27 

ministrative Conference of the United States has issued similar 

things. The President’s Jobs Council, same thing. OIRA itself has 

said,‘‘. . . it would be highly desirable to obtain better information 

on the benefits and costs of the rules issued by independent agencies. The absence of it is a continued obstacle to transparency, and 

it might also have adverse effects on public policy.’’ So that is what 

we are trying to do. 

On the duplication side of it, there has been discussion of that 

today, and I just again want to clarify this. It is not requiring a 

duplication of the cost-benefit analysis, and, Professor Shapiro, in 

your testimony you said this type of duplication, and I quote, results ‘‘in the need to conduct years of analysis before significant 

rules may be adopted.’’ I do not think that is what is going to happen at all. If the agencies already have the requirement to go 

through a cost-benefit analysis, it is not duplicated. They submit 

that to OIRA. That is it. And so if they are required to engage in 

it, I do not see how it makes it duplicative. 

I know, Professor Dudley, you have worked on some of this. Do 

you have any comments on the duplication concern? 

Ms. DUDLEY. That is the same thing that I would say, and my 

observation is that if agencies have to do an analysis, they are not 

going to just go and redo a separate analysis or have a separate 

unit of their agency working on the two analyses. The same analysis will be able to comply with different requirements. 

So my only recommendation would be to do things that would 

make sure that you’re not asking—doing things that just require 

more kind of busy work in order to comply with different statutes. 

And I did not see that in your bill because I think your bill 

is—the general requirements of Executive Order 12866 really are 

very general. They essentially say make sure you do more good 

than harm; and to the extent you can quantify that, do. 

So one little comment—and we have been talking about regulatory impact analysis as if it is benefit-cost analysis, which requires quantification. That is not what any of the Executive Orders 

require, and in my understanding, it is not what your bills require. 

Regulatory impact analysis tries to look at the whole and understand that essential point: Are we going to making Americans better off or worse off if we do this? 

Senator PORTMAN. All right. I would love both of your comments, 

if I could, on the financial regulators. One of the pushbacks we 

have gotten specifically is from financial regulator who say somehow we are so different we should not be subject to cost-benefit 

analysis. And to me, a lot of these new regs are coming from the 

so-called financial regulators. They allege this bill would result in 

delay, the rulemaking, duplicative analysis. Alternatively, they 

have said that these financial regulations are in a class by themselves, and because they have to issue things quickly in response 

to market changes, and, they talk about financial stability, that 

that is their job and, therefore, they should not be subject to this. 

I would just ask you all, do you think they are unique from other 

types of independent agencies in terms of how this bill would affect 

their rulemaking? Should financial regulators be exempt from, as 

Professor Shapiro said earlier, fairness, accountability, transparency, and cost-benefit analysis? 
28 

Ms. DUDLEY. I know financial regulators have not been doing 

benefit-cost analysis. They have not been doing the same rigor of 

regulatory impact analysis. But it is impossible to think that it is 

harder than trying to measure environmental effects or homeland 

security effects. 

So it is analytically doable because things are already measured 

in dollars. So it seems to me that it is going to be simpler, if anything. 

Senator PORTMAN. Professor. 

Mr. SHAPIRO. Thank you, Senator. I do applaud your efforts to 

thread the needle here and get OIRA’s advice without giving them 

undue influence over the agency as long as Congress wants to keep 

the agency as independent. 

I think where perhaps the commissioners of the various agencies 

are nervous about this deals with the experience of the SEC so far. 

The court of appeals has read their statute as requiring that certain kinds of the new financial regulations meet a cost-benefit test 

in order to be enacted. Now, the statute does not say that. 

What Congress often does—and I think this is wise—is it gives 

an agency a series of things they need to take into account and balance without trying to put all of those on an economic scale or trying to do that in terms of costs and benefits. And so an agency has 

to speak to each of those. 

Now, as to all of those, cost-benefit analysis may be helpful, but 

the limitation of the methodology is such it really cannot tell us 

what to do. Yet the court of appeals has very exacting standards 

for this, and the SEC has sent three different rules up to the court 

of appeals, and they have knocked down each one, at least in my 

mind, by fairly picky objections to the failures of the SEC to do the 

cost-benefit analysis. And so far none of those rules have come 

back. The agency has not attempted to reissue those rules. 

So I think what makes the agencies nervous is finding the happy 

approach to judicial review, which makes sure the agency does its 

job, but does not allow it to pick apart the cost-benefit analysis because they are just so difficult to do. And at least in some of the 

cases, for some of the agencies, they may be even more difficult 

than environmental regulation. 

So, for example, one of the rules dealt with shareholder democracy. It dealt with the rules by which a dissident shareholder could 

put in an initiative on the annual ballot of the corporation. And the 

SEC now under this new requirement that the D.C. Circuit has imposed had to figure out the costs and benefits of that. Well, frankly, 

the cost has always seemed to me fairly minimal. They just need 

to put it on there. Of course, they do not want to because the board 

of directors wants to control the ballot. 

But when it came to benefits, the problem is: What is the benefit 

of that? I mean, how do you model that benefit? And they tried. 

And Susan is an economist. She probably has some better ideas 

about this than I do. And perhaps they fell short, but I think that 

is indicative of the difficulty sometimes of measuring these costs 

and benefits. I am not saying we should not try, but I think that 

is the difficulty, particularly under strict review. 

Sorry to go on for so long. 
29 

Senator PORTMAN. My time is way expired now, but just briefly, 

having that standard approach that is transparent I think actually 

helps with regard to judicial review rather than having it be left 

up to courts. 

Chairman JOHNSON. Senator Ayotte. 

Senator AYOTTE. I want to thank the Chairman, and I want to 

thank both of you for being here. 

Professor Dudley, first of all, what I hear a lot are two things. 

When I am around New Hampshire and I am meeting sort of businesses of all stripes—small, large—one thing that I hear consistently is whoever is putting together these regulations, they really 

do not know what it is going to manually take me in my business 

to actually do what you are asking us to do versus what we are 

getting for a benefit from it. And I do not know how we bridge that 

disconnect, but it is very common feedback that I get. Regardless 

of what the business is doing, regardless of what their political 

background is, it is a very consistent piece of feedback. 

But the other piece of feedback that I get is conflicts. So I recently visited a manufacturer that received conflicting requirements from the Occupational Safety and Health Administration 

(OSHA) and from the EPA on storage of an adhesive that it used 

for textiles. In fact, even one agency told the business to do something in a certain way. They did it. And then the next agency came 

in and was going to fine them for how they did it, for what the 

other Federal agency told them to do. And so you can imagine they 

are trying to comply. They just were very frustrated to have this 

conflict. And I was just surprised at how much they had to actually 

litigate their case even though they had been told by the other Federal agency, ‘‘This is the way you should do it.’’ They had invested 

resources in doing it and now were going to be fined by another 

agency. 

So how do we provide relief to people so that at least it is clear 

who is in charge and what they have to do? And who can be the 

referee? Do you think of having OMB or OIRA serve as an umpire 

when two agencies issue conflicting requirements? And I think that 

is the minimum that we owe people in terms of clarity and not having to—especially when you think people are trying to comply and 

then being told by another agency, ‘‘We want you to do it different.’’ 

Ms. DUDLEY. And that is really tough because OIRA does try to 

do that. I mean, that is part of OIRA’s job before the rule is issued. 

But OIRA is not involved at all in enforcement. So when agencies 

enforce it, you see those conflicts. 

It may be that this is something that the retrospective review 

could catch and improve. Particularly, this may be where the commission would be particularly valuable to get that kind of input. 

I think it is a very important problem. I remember hearing a 

story from a baker once that they wanted to put a fence around 

their parking lot for their bakery, and they could not do it. Between Homeland Security and OSHA and the other regulations 

they had to comply with, there was nothing within that that they 

could actually build this fence. 

Can I also respond to your first comment? 

Senator AYOTTE. Yes. 
30 

Ms. DUDLEY. Because I think that is really important, too. We 

do not really think through what the unintended consequences of 

the regulation might be. We do not understand how it will actually—how much time it would take to implement. And that one, I 

think some of the bills you are looking at, the Advanced Notice of 

Proposed Rulemaking, maybe get some feedback before we have 

gone too far down the path of this is the approach that we want 

to take, and also the retrospective review, doing a better job of 

looking back I think maybe could address that. 

Senator AYOTTE. Professor? 

Mr. SHAPIRO. Senator, may I respond in two points? 

First, I think that is one of the more useful roles that OIRA 

plays in the rulemaking process, is putting the rules out to various 

parts of the government to have them comment, so hopefully they 

could take in the point of view of other parts of the government, 

although I agree with her as well that sometimes these things 

come up in the enforcement provision. 

Earlier in my general comments, I spoke about we already have 

a lot of accountability procedures and process out there, and the 

Office of Advocacy of the Small Business Administration is particularly charged with the role of representing the particular and 

unique interests and needs of small business in the rulemaking 

process, which hopefully would lead them to point out to these 

agencies at the front end some of these difficulties. 

I am not at all sure they do that role as well as they can, and 

there have certainly been some reports, including by my own organization, suggesting they have a ways to go in doing that. And so 

one thing that you and perhaps others may want to consider is 

whether that existing mechanism could be made better by looking 

at what they do as opposed to adding another one. But I agree with 

you particularly the coordination problem is very difficult. 

Senator AYOTTE. Very challenging. And, in fact, I think just to 

put in perspective the Small Business Administration’s role, I serve 

on the Small Business Committee as well, and to cite the rule that 

Senator Heitkamp raised on the Waters of the U.S., the Small 

Business Administration is supposed to do an analysis of what the 

impact of regulations are on the small businesses, and that rule 

was issued before their analysis was actually taken into account. 

So I agree. I think that if you want to know, especially on small 

businesses who—they do not have an army of lawyers and accountants waiting to figure this out. Often, it is just one person or a few 

people who are working on the business. So I think we need to certainly make it more rigorous, and we need to make it clear for people, and the idea of looking back to this retrospective view, because 

even if OIRA puts it out in advance, we are not going to know 

sometimes all of the things that flow from it unless we are actually 

re-evaluating what happens based on the application of a regulation. So I do hope that is something that we can work together to 

address. 

The other issue is we talked a lot about cost-benefit analysis, and 

let me just give you an example in New Hampshire, and that is, 

our fishermen. So we happen to have—National Oceanic and Atmospheric Administration (NOAA) has the catch limits, puts catch 

limits in place to sustain the fishery, but part of their charge is to 
31 

sustain the fishery but also to balance to make sure that they look 

at the sustainability of the fishing communities and the economic 

impact. And so just recently in the last 5 years, our commercial 

fishermen have seen cod catch limits reduced by 95 percent. Can 

you imagine a business where 95 percent of what you can do goes 

down? I am not sure how anyone is able to survive that. But now 

on top of that, NOAA is also requiring that they pay more fees for 

them to actually monitor themselves. 

So we are in this situation where I cannot see how they are taking the balance of the fishery in. And as I look at this idea of costbenefit analysis, so often it seems that it is skewed one way or the 

other. And how do we ensure, like in the example of my fishermen 

and—women, who—we are in New England, iconic New England. 

We like to keep some fishermen working off our waters. They are 

going to be out of business. So I am trying to figure out—when the 

statute says ‘‘balance,’’ often the balance of how it is evaluated does 

not happen. How do we improve that? Either of you. 

Mr. SHAPIRO. Well, as a tourist, I hope we can keep this in place 

as well. 

Senator AYOTTE. I am talking about the small boats. 

Mr. SHAPIRO. And as the child of parents who ran a small business, I certainly appreciate—or try to—where you are coming from. 

And I do not know the particulars of that, but I know in general 

that on the benefit side, the agency and their scientists try to 

model the future of the fish population and the extent to which it 

is depleted, the extent to which they can help it grow faster, and 

the extent to which they apparently have to put in fairly drastic 

limits to preserve the sustainability of the particular species. And 

I do not have any doubt about both the difficulty of doing that, the 

complexity, and the controversy that probably surrounds how accurate their estimates are. But I think that goes to the difficulty of 

attaching a monetary value when we use cost-benefit analysis because it depends totally on those scientific projections. 

Ms. DUDLEY. I would love to get back to you on that one in particular, because often it is the case that the statute does not allow 

it. So the agency may do the analysis, but it really does not base 

its decision on it. So I would like to look into—and I should know 

this—just what NOAA’s statutory requirements are, if that is all 

right. 

Senator AYOTTE. We would love to have you follow-up on that. 

I appreciate it. 

[The information referred to follows:] 

Senator AYOTTE. And, by the way, I think I would argue that our 

iconic fishermen and—women, they are priceless. [Laughter.] 

Chairman JOHNSON. Thank you, Senator Ayotte. 

By the way, I wanted to commend you also for the hearing you 

held up in New Hampshire on heroin. We will probably bring something back here to the Committee on that as well. So we appreciate 

your leadership on that. 

I do want to quickly go through another round. The reason you 

are seeing such a bipartisan commitment to this regulatory reform 

is, just as Senator Ayotte pointed out, multiple times a day we hear 

the anecdotal evidence of businesses coming in, being threatened to 

be put out of business, or projects being stymied, people being sub-
32 

jected to conflicting regulations from different agencies, and that 

level of uncertainty is really hampering the ability for our economy 

to grow so that organizations can grow and produce good-paying 

jobs. So this is a real problem. That is why you are seeing the kind 

of bipartisan support. 

As an accountant, one thing that drives me nuts working with 

the Federal Government is you just do not get good information. I 

agree, these things are very difficult to quantify but you have to 

use some common sense. 

Mr. Shapiro, you talked a little bit about accountability. Again, 

what I had said is ‘‘largely unaccountable,’’ and I can see where 

you can draw the conclusion I said ‘‘unaccountable.’’ But I do want 

to talk about the unaccountable nature of the fourth branch of government and how they are in many respects getting out of control. 

And we have not talked yet about a very serious circumvention of 

our Constitution and really of this body of Congress, and that is 

the process of sue and settle. This is where, an outside group has 

got a problem with its environmental regulation, and they work 

with the regulatory agency that does not necessarily have the legal 

authority to do something. In a cooperative fashion, they sue the 

agency. That lawsuit goes to court, and then they settle. And what 

does the judge do other than say, ‘‘OK, well, case dismissed.’’ It becomes law. 

Ms. Dudley, would you comment on that? Because there have 

been multiple circumstances. I had staff just give me a list of the 

different types of regulations that are now in force from my standpoint—I think people would argue, and maybe it is a legitimate argument—no legal authority, no congressional law passed that gives 

them the authority, but it is legally binding because the courts 

have ruled it so. And to me that completely circumvents the constitutional three co-equal branches of government. 

Ms. DUDLEY. Well, it even cuts out the President, because it is 

hard for the President to be aware of an in control of all of those 

different litigations and settlements. 

Chairman JOHNSON. Although the President does control the 

agencies. 

Ms. DUDLEY. Well, he does, but—— 

Chairman JOHNSON. In theory. 

Ms. DUDLEY. So with the regulations, of course, it goes through 

OIRA, and so there is that oversight. With those settlements it 

does not go through OIRA the same way, and so you even have less 

Presidential accountability. I think it is a valid concern. 

Chairman JOHNSON. Mr. Shapiro, I would really like your comment, with you being an administrative law professor. What are 

you seeing there? Does that concern you? 

Mr. SHAPIRO. Not as much as you, perhaps, Senator, but that answer probably will not surprise you. Basically, agencies have a 

choice when they get sued—and, by the way, a lot of these lawsuits 

are over deadlines that Congress imposed for rulemaking that the 

agencies find impossible to complete because of resource limitations, and then they get sued, and then they settle that they are 

actually going to do something. 

So the question before the agency is: We got sued. There is some 

disagreement about the way we interpret this regulation, the way 
33 

we implement it, the way we enforce it. Should we go through a 

whole other round of rulemaking, 10 years, or should we settle this 

lawsuit? And I think the real objection is by people who also sue 

the agency, but they do not win. Or the agency forecasts they will 

not win, but they would have settled it some other way. This is just 

part of our system. 

Chairman JOHNSON. But, again, your answer kind of presupposes 

this is actually an adversarial lawsuit, some group is an adversary 

against the agency. And what we are seeing is, no, it is a completely cooperative arrangement where, they say we do not really 

have the legal authority that we can see, but, we are with you on 

this one, so why don’t you sue us? Again, this is my interpretation 

of what has happened. Do you deny that that has not happened in 

the past? 

Mr. SHAPIRO. It is a big government, Senator. I cannot deny that 

lots of things happen in the government. But I do not—— 

Chairman JOHNSON. But you would have a problem with that, 

would you not? 

Mr. SHAPIRO. I would have to see the specific situation, and that 

is the difficulty I am having because these things are very contextual. Does the Federal Government ever reach a compromise which 

is not a good one? Probably. But we would have to look case by 

case. 

Chairman JOHNSON. Ms. Dudley, would you want to cite an example? 

Ms. DUDLEY. I am not sure that I can cite an example, but there 

are law reviews that have been written about that, illustrating that 

problem where the agency says, ‘‘We could not get this through our 

notice and comment and through our normal rulemaking process. 

So twist my arm. Come in here and sue me on this, and we will 

find a way to settle.’’ So I think there is evidence that that happens. 

Chairman JOHNSON. Thank you. 

Mr. Shapiro, you talked about—and I really did appreciate Senator Carper’s question about what do we agree on. And you agreed, 

and you pointed to this duplication of requirements. And, trust me, 

this Committee is all about reducing duplication in all of its forms. 

Again, what I see is, coming here, everything is additive, which 

is how you get that duplication. You pass a new law; you 

pass a new law. So I think part of the purpose of the BRAC Commission—or in our previous hearing, we did talk about a one-in, 

one-out rule. What would you recommend in terms of a process of 

subtraction? How would you recommend we eliminate that duplication, not only in terms of requirements on the agencies but in 

terms of the regulations that have been written, the laws that have 

been passed that are, again, creating that conflict, the level of uncertainty, hampering organizations, including, for example, the 

University of Wisconsin at Madison, whose chancellor came in and 

was looking for some regulatory relief? How can we reduce that duplication? What process would you use if not a BRAC or not a onein, one-out rule? 

Mr. SHAPIRO. The particular duplication to which I was referring, 

Senator, was not so much the duplication of regulations over here 
34 

and over there. I have already stated I think that is a problem, and 

it is a difficult one. 

It is that agencies have all these analytical requirements, and 

they are different. And it would be good and more efficient if we 

had these in one place and Congress could decide which ones they 

want them to do. 

So, for example, there are Executive Orders on federalism, litigation analysis—— 

Chairman JOHNSON. Again, so, yes, we will stipulate there is duplication in both—there are duplication of regulations on the private sector and on organizations, and there is duplication in terms 

of requirements on the agencies. The question is: How do we eliminate that? What process of subtraction would actually work? Because, again, everything here is a process of addition. 

Mr. SHAPIRO. Well, we already engage in retrospective analysis. 

I am in favor of that. I am just against duplicative retrospective 

analysis. So, for example, under the Regulatory Flexibility Act, 

agencies, particularly OSHA and EPA, have to go back under that 

law—and I forgot the number of years; I think it is 8 or 10—and 

have to look at the impact on small business every 8 or 10 years. 

So my point is if Congress wants to do that another way—and 

that has been proposed here—then we ought to get rid of that way 

so they are not having to do it for both, even if they can somehow 

pass the same analysis off using for the same purpose. So that is 

what I would—— 

Chairman JOHNSON. Again, so I am sympathetic with duplication 

in all its forms. We are trying to figure out a process for elimination. 

Ms. Dudley, can you comment on that? And, are there that many 

examples where regulatory agencies are eliminating regulations 

themselves? 

Ms. DUDLEY. No, there are not. And the retrospective review, I 

think agencies are not thinking ahead to how they will do retrospective review. 

I think there is a difference in duplication in regulations, because 

if you really do have to report something one way to OSHA and another way to EPA, that really is duplication; whereas, if agencies 

have to report for the public record what their analysis is for different statutes, that is less duplicative. You have the same analysis 

and the same process. 

Chairman JOHNSON. OK. Senator Carper. 

Senator CARPER. Thanks. Thanks, Mr. Chairman. 

A couple of our colleagues have talked about how we contribute 

to the problems by the way we exercise responsibilities in the legislative branch, and sometimes we make situations worse than they 

otherwise would be. So there is a shared responsibility here. I actually jotted down while others were asking questions some of the 

ways that we in the Congress can help contribute positively or negatively to this process. It is not that we do not have the ability to 

have an impact on the regulations. We actually have a lot of opportunities to provide input on the regulations. One of those is by 

passing legislation that is clear and unambiguous, and it reduces 

the need for the regulators to come in and kind of put the meat 

on the bones. If we have robust bones, maybe less meat and less 
35 

interpretation is needed. I have seen legislation in which we basically tried to reach a compromise on legislation and actually having 

the same law or same bill, two different points of view, two directions, and basically say, OK, punt it to the regulators, you guys 

and gals figure this out, we should not do that. 

In the regulatory process, again, we have the opportunity to draft 

legislative language that is clear and unambiguous. We have the 

opportunity to pass it, and in the language coming out of a conference report that seeks to reconcile differences between the 

House and Senate, we can use that opportunity. We have colloquies 

on the floor, in the Committee, and so forth, which can help address ambiguities. We write report language at the end of the process that says this is what the bill is attempting to do. 

When the time comes from the regulators, the writers of the regulations on a particular issue, whether it is environmental or safety or financial services, but we have the opportunity to provide 

input beyond just the legislation that we have sent to them and to 

say—write to them, call them, meet with the regulators, and say, 

‘‘This is what we meant,’’ or maybe, ‘‘We made a mistake here, and 

this is another thought that we would like to share with you.’’ We 

can hold hearings on the draft regulations, and we do that sort of 

thing here, in another meeting, hearing rooms in the Senate and 

in the House. 

When the regulators actually draft regulations and send them to 

us, we can comment on those. We can comment on their writing. 

We can invite folks from the agencies to come over and meet with 

us, to take our questions and to accept our thoughts, our further 

thoughts. 

When an agency finalizes a regulation, we can actually ask for 

further delay, or they are about to finalize a regulation, and one 

example is fiduciary responsibility. The Department of Labor has 

promulgated draft regulations. We asked them to delay the 

amount—to extend the period of time where folks can comment by 

a week or a month or whatever. 

And, finally, at the end of the day, if a regulation is drafted and 

we think it is awful and something else needs to be done, there will 

be lawsuits filed against them, and we have the opportunity to join 

in those lawsuits in some cases as a friend of the court. I think 

that is what you call it. So we actually do have more opportunities 

to shape the regulations and the regulatory process than maybe we 

think of, and I just wanted to remind us of that. 

I have a question, if I could, both for Professor Dudley and Professor Shapiro, and this goes back to what I said I was going to 

ask earlier. This is the pitch well telegraphed. But even if we are 

to assume that there are problems with the quality of regulatory 

analysis at some of the independent agencies, is there a way to address those problems without requiring the independent agencies to 

submit their analysis to OIRA? Is there another way to do this that 

might make more sense? Professor Dudley, why don’t you go first. 

Ms. DUDLEY. I actually think OIRA review does add a layer of 

accountability, so I think it is an important element of it. Just asking them to do better analysis, if there is nobody checking their 

homework, it may not work. Or you will go back to the courts, 

which, you get inconsistent results. 
36 

One thought I have on that, though, is that it could work more 

like the Paperwork Reduction Act where OIRA reviews independent agencies’ requests to collect information, but OIRA’s decision—the agency by a vote of the commission can override OIRA’s 

decision. So that might be a way to maybe address that concern. 

Senator CARPER. That is a helpful thought. Thank you. Professor 

Shapiro. 

Mr. SHAPIRO. Not to harp on a theme, but I am. There already 

exists accountability mechanisms. The reason that the independent 

agencies are different is they are politically balanced to a point. So 

the party of the President has three; the minority has two. And 

that puts the minority commissioners in a position to write dissents. The SEC Commissioners, Republican Commissioners, do that 

all the time, including on the economic analysis. And the SEC has 

come a long ways, particularly since they have to—they are now required to—and they have gotten a lot better at economic analysis. 

And I just do not know to what extent OIRA is a useful addition 

here. I think they do offer good input, and if we are going to do 

this, I like the way the bill does it, which basically says give us 

your input and then get out of here, this is an independent commission. And that may be the way to do it, but that is duplicative 

on top of the two minority commissioners. 

Senator CARPER. OK, good. We are going to come back—I will 

come back to you with some questions in writing, and we will just 

try to flesh this out just a little bit and see if we cannot find some 

further consensus. 

With respect to codifying Executive Orders, Senators Lankford 

and Heitkamp, as we have heard, have put forward legislation to 

codify two key Executive Orders on rulemaking. I think they were 

issued by former President Clinton, and maybe by President 

Obama, too. And they lay out the current framework for agencies 

to follow when issuing regulations. These Executive Orders have, 

as you heard here, broad bipartisan support. 

First, I will ask, Mr. Shapiro, could you help us understand any 

concerns that maybe you or other observers may have with putting 

these Executive Orders in statute? You have spoken to this already, but I want you to revisit it. And then I want to come back 

to you, Professor Dudley, and ask you to restate your views on the 

value of judicial review. First, Professor Shapiro. 

Mr. SHAPIRO. I would say we need to be careful of a couple of 

things: first, that the requirements do not ask more of the analyses 

than it is capable of giving, particularly regarding benefits that are 

difficult to quantify; and, second, to be clear that there’s not direct 

judicial review of the cost-benefit analysis, which would be highly 

problematic. These things are difficult to do, and if somebody can 

sue just over the cost-benefit analysis, it would further delay the 

regulatory system. 

That is not to say these things do not get reviewed, but they become part of the rulemaking record, and if and when—and usually 

when—the agency is eventually sued, a court will take the analysis 

into account. 

The third thing I think it needs to be careful of is, as I indicated 

earlier, in many of these statutes, Congress anticipated the difficulty of using cost-benefit analysis as the sole guide as opposed 
37 

to an input. And so the statutory language says this is how you 

make a decision. Often there are four or five principles you have 

to take into account. You have to explain qualitatively how you 

took those into account and how you balanced the conflicts between 

all of these legislative principles, and the courts will expect you to 

do that and do that with some clarity. 

So we have to reconcile cost-benefit analysis with statutes that 

usually do not require it given the difficulty of making that the sole 

determining feature and make sure that the codification of the 

cost-benefit analysis, it is just codifying it as an input to that 

broader process. 

Senator CARPER. All right. And, last, Professor, on judicial review, you have mentioned this already before, so just very, very 

briefly, just touch again on that. 

Ms. DUDLEY. I think agencies will take it more seriously, but let 

me—and this is answering your question, but building on that. 

Senator CARPER. Yes. 

Ms. DUDLEY. What the Executive Orders say and what the codification of it says, it is talking about regulatory impact analysis, 

not just benefit-cost analysis, or cost-benefit analysis if you are a 

lawyer. Economists tend to call it ‘‘benefit-cost analysis.’’ And that 

is an important point because it is not just—you had earlier said 

that benefit-cost analysis cannot tell us what to do. I do not think 

anyone says that it should. It is a tool that provides us the best 

basis of information from which to make a decision, and that is 

what the judiciary would be reviewing. It is not did they quantify 

everything right, but it is did they do that regulatory impact analysis and lay out the pros and cons, the intended consequences, as 

well as the unintended consequences. 

Senator CARPER. Thank you. 

Well, Mr. Chairman, this has been a really good hearing, and 

really a lot of that is a tribute to our colleagues, but especially to 

our witnesses. I would just say sometimes, we think it is easy to 

do a benefit analysis or cost analysis. It is hard. On clear air 

issues, if you are trying to do a cost-benefit analysis, what is the 

benefit of a parent who does not have to leave work in order to be 

with a sick child who has an asthma attack? And how do you cost 

all that out? It is really not easy. And we try hard, we do our best. 

I guess it is the best we can do. 

Thank you for helping us do our jobs better. We are most grateful to you for your input and for your being good citizens. 

Thanks, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Carper. 

One thing we do like to do is let the witnesses basically make 

a final statement, and we will start with Mr. Shapiro. But before 

we do that, let me just reiterate the reason you are seeing such bipartisan support in that this is a real problem. There have been 

a number of very successful businesses in Wisconsin, on separate 

occasions have come up to me, the entrepreneurs, the owners, saying, ‘‘Ron, there is no way I could have started my business and 

grown it to the point I have in today’s regulatory environment. Just 

no way.’’ And, again, we all hear these anecdotes all the time. So 

this is a serious problem. 
38 

I will go to you, Mr. Shapiro, but before you do your closing 

statement, I just have one other quick question, because we talked 

about accountability. I just would like you to tell me to whom or 

to what is the Consumer Financial Protection Bureau accountable. 

Mr. SHAPIRO. They are accountable to you, sir. Senator Carper 

was talking about legislative hearings. They are accountable in 

terms of the entire regulatory process as it exists with the exception of the Executive Orders, which have not been applied to independent agencies. That was a judgment of Congress that it wanted 

to keep these agencies independent. I think there are some good 

reasons for that. You have built up an accountability mechanism 

that takes that into account. They have minority commissioners. 

They are subject to judicial review. They are subject to many of the 

same requirements, regulatory flexibility, and other statutes that 

you have passed—Paperwork Reduction. So I suspect if you work 

there, it does not sound like or feel like you are not accountable 

to anyone. 

Chairman JOHNSON. OK. Well, anyway, why don’t you finish 

with your final comments. Then we will turn it over to Professor 

Dudley. 

Mr. SHAPIRO. Thank you, Senator, and goodness knows I appreciate the invitation and the questions that have been asked, and 

I appreciate your struggle to find appropriate administrative procedures that handle the kinds of concerns that all of you have, and 

about that I say Godspeed, because there is nothing easy about 

this. 

Judge Leventhal, a judge in the 1960’s on the D.C. Circuit, once 

said that in administrative law, complexity has a bright future. 

And if today’s hearing proved anything, I suppose that is the case. 

So I would end only by saying that I agree with the ABA, which 

is a pretty bipartisan, centrist organization, when it said Congress 

should exercise restraint in the number of rulemaking impact analyses and assess the usefulness of existing and planned analyses. I 

appreciate the difficulty you are having in doing that, but we have 

built up a fairly thick level of analytical requirements. That is not 

to say that we might need new ones, but if we put new ones in 

place, we ought to take into account the old ones and what we 

want to do with them. 

And then I would end again on the issue of resources. One of the 

reasons we are having trouble balancing productivity and accountability is the cut in agency budgets. There is just not enough people 

to do this. If they had more people, they could probably do both 

better. 

Thank you. 

Chairman JOHNSON. Thank you. Professor Dudley. 

Ms. DUDLEY. Let me too thank you again, both of you and the 

whole Committee, for these efforts and for taking it so seriously. 

I think it really does continue. We have seen bipartisan efforts at 

improving how regulation is done ever since the founding of our 

country, and I think that you all are continuing that. 

I am just going to come back to what regulatory analysis is. 

What it is intended to be is really an evaluation of effects and trying to understand before we do something, to the best we can, what 

effect it will have. And then just like you said businesses have to 
39 

do, then we do need to come back and see if we were right. So analysis is the hypothesis. We need to be able to gather the data and 

test that hypothesis, and I think that is something that some of 

these bills would do. 

So I will paraphrase Winston Churchill when he talked about democracy, that regulatory impact analysis is the worst of all things, 

except for everything else that we have tried. So I think it is something that we need to do. 

Chairman JOHNSON. OK. Well, again, I want to thank both the 

witnesses for the time you have taken, for your thoughtful testimony and your thoughtful answers to our questions. 

With that, the hearing record will remain open for 15 days until 

October 1st at 5 p.m. for the submission of statements and questions for the record. This hearing is adjourned. 

[Whereupon, at 12:07 p.m., the Committee was adjourned.] 

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