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96–251 PDF 2015

S. Hrg. 114–84 

REVIEWING THE OFFICE OF INFORMATION AND 

REGULATORY AFFAIRS’ ROLE IN THE 

REGULATORY PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 16, 2015 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN CORCORAN, Hearing Clerk 

SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

JAMES LANKFORD, Oklahoma, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

MICHAEL B. ENZI, Wyoming 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

HEIDI HEITKAMP, North Dakota 

JON TESTER, Montana 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

JOHN CUADERESS, Staff Director 

ERIC BURSCH, Minority Staff Director 

RACHEL NITSCHE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

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

Senator Heitkamp ............................................................................................ 2 

Senator Ernst .................................................................................................... 5 

Senator Enzi ..................................................................................................... 6 

Senator Portman .............................................................................................. 10 

Prepared statement: 

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

WITNESSES 

WEDNESDAY, JULY 16, 2015 

Hon. Howard Shelanski, Administrator, Office of Information and Regulatory 

Affairs, Office of Management and Budget 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 35 

APPENDIX 

Statement submitted for the Record from 60 Plus Foundation ........................... 39 

Responses to post-hearing questions for the Record from Mr. Shelanski ........... 54 

(1) 

REVIEWING THE OFFICE OF INFORMATION 

AND REGULATORY AFFAIR’S ROLE IN THE 

REGULATION PROCESS 

WEDNESDAY, JULY 16, 2015 

U.S. SENATE,

SUBCOMMITTEE ON REGULATORY,

AFFAIRS AND FEDERAL MANAGEMENT,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:34 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. James Lankford, 

Chairman of the Subcommittee, presiding. 

Present: Senators Lankford, Portman, Enzi, Ernst, Sasse, and 

Heitkamp. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Good afternoon. It is always nice to start a 

hearing on government efficiency 30 minutes late. We had a series 

of votes and I apologize we were delayed a little bit in getting 

started for that. 

This is the fourth in a series of hearings and roundtables in 

which the Subcommittee continues to examine the issues and solutions surrounding today’s regulatory state. Today we will hear 

about the Office of Information and Regulatory Affairs (OIRA), and 

the essential role that it plays in the Federal regulatory process. 

OIRA was created by Congress in 1980. It is an agency situated 

in the White House’s Office of Management and Budget (OMB). At 

that time OIRA’s primary role was to review government collections of information under the Paperwork Reduction Act (PRA). 

Since then, however, under various Executive Orders (EOs), OIRA’s 

role has expanded to include reviewing drafts of significant regulations at their proposal and final stages, as well as significant guidance, documents, and retrospective review plans. 

OIRA is also charged with coordinating interagency compliance 

with laws to better ensure the quality of information use, such a 

broad array of duties. One may assume OIRA’s office may be as 

large as those agencies it oversees. After all, the office reviews between 500 and 700 rules annually. But OIRA is a very small shop 

with around 47 employees. Am I right on that? Those employees 

are highly skilled with advanced degrees in their fields and are 

greatly respected by Congress for what they do. 
2 

1The prepared statement of Senator Heitkamp appears in the Appendix on page 33. 

Due to its centralized role in overseeing agency rulemaking, 

OIRA has been called the Executive Branch’s information 

aggregator and the gatekeeper to the regulatory process. Indeed, 

OIRA is uniquely positioned to ask agencies tough questions to ensure that the regulations it reviews are as nimble as possible and 

meet agencies objectives in the least costly manner and build consensus within the Federal Government’s regulatory process. 

The helm of OIRA is its Administrator, Howard Shelanski, who 

is here with us today. I want to welcome Mr. Shelanski. I look forward to speaking with him about OIRA’s many and varied functions which prove to be integral to the efficiency and the quality 

of the regulatory process. First I would like to recognize Ranking 

Member Heitkamp for her opening remarks. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Mr. Chairman, and in the interest of time, I am going to ask that the text of my opening comments be submitted to the record.1 But I want to welcome the Office of Information and Regulatory Affairs. I think you are probably 

one of the most important offices no one has ever heard of. 

And as we in this Subcommittee begin a razor-like focus on what 

we can do to improve the regulatory process, the role of your agency and of your employees in making that happen will be absolutely 

critical. And so one of the issues that I am very concerned about 

and hope we can have a more extended dialogue when we get to 

questioning is resources, the resources of OIRA and actually being 

able to perform the functions that you have today and that you 

may have expanded under other kinds of regulatory reform provisions. 

I do want to point out, just because we do this quite a bit, Chairman Lankford and I, that this might be the first time in congressional history that the only witness, and the Chairman and Ranking Member are all redheads. So we are expecting really good 

things, really important things. Thank you, Mr. Chairman. 

Senator LANKFORD. History is being made today. [Laughter.] 

At this time, we will proceed with testimony from our ginger witness, Howard Shelanski. He is the current Administrator of the Office of Information and Regulatory Affairs, a post he has held since 

confirmation in June, 2013. From 2009 to 2011, Mr. Shelanski 

served as the Deputy Director, Federal Trade Commission’s Bureau 

of Economics, served as the Director there from 2012 to 2013. 

Mr. Shelanski has also served as the Chief Economist of the Federal Communications Commission (FCC) and Senior Economist on 

President Obama’s Council of Economic Advisers. If I remember 

correctly—I do not have it in your bio—he also served and clerked 

with one of our Justices of the Supreme Court as well, Scalia, if 

I remember. Is that correct? 

Mr. SHELANSKI. That is correct. 

Senator LANKFORD. That gives you a decent, varied background, 

I would say. I would like to thank Mr. Shelanski for appearing before us today. It is the custom of this Subcommittee to swear in all 

witnesses. I would ask that you would rise, raise your right hand. 
3 

1The prepared statement of Mr. Shelanski appears in the Appendix on page 35. 

Do you swear that the testimony you are about to give before 

this Subcommittee will be the truth, the whole truth, and nothing 

but the truth, so help you, God? 

Mr. SHELANSKI. I do so swear. 

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

record reflect the witness answered in the affirmative. We would 

be glad to receive your opening statement. We typically do a 5- 

minute time period. You have a little bit of extra time on that 

today, but I would like you to get as close as you can at 5 minutes 

and then we will pepper you with questions after that. 

TESTIMONY OF HON. HOWARD SHELANSKI,1 ADMINISTRATOR, 

OFFICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET 

Mr. SHELANSKI. Thank you very much. Chairman Lankford, 

Ranking Member Heitkamp, Members of the Subcommittee, it is 

great to be part of history today, but I am also very grateful for 

the invitation to appear before you today and to discuss the work 

of the Office of Information and Regulatory Affairs. 

OIRA has a broad portfolio. For example, under the Paperwork 

Reduction Act, as Chairman Lankford noted, OIRA is responsible 

for reviewing collections of information by the Federal Government 

to ensure that those collections are not unnecessarily burdensome. 

OIRA also develops and oversees the implementation of governmentwide statistical standards and policies and has a role in international regulatory cooperation under some Executive Orders. The 

largest area of OIRA’s work, however, is the review of regulations 

promulgated by Executive Branch departments and agencies. 

A set of Executive Orders establishes the principles and procedures for OIRA’s regulatory reviews. Executive Order 12866, implemented across Administrations of both parties, sets forth standards 

and analytic requirements for rulemaking by departments and 

agencies and calls for agencies to regulate only when the benefits 

of a rule justify its cost to the extent permitted by law. 

OIRA works with agencies to continually improve the review 

process and the quality of government regulation. OIRA, first and 

foremost, upholds the standards of review that the Executive Orders establish while remaining mindful that unnecessary delays in 

reviews are harmful across the board. They are harmful to those 

wishing to comment on proposed rules, to those who must make 

plans to comply with the rules, and to those denied the benefits of 

regulation. Both rigor and efficiency in regulatory review are essential to improving the clarity and quality of our regulatory environment. OIRA does not review all Executive Branch regulations, nor 

would it make sense for the office to do so. Each year agencies 

issue many regulations which are minor and very technical. 

OIRA review applies only to what are called significant regulatory actions. Those may include guidance documents, notices or 

other actions in addition to those actions formally designated as 

rules. The most fundamental category of significant regulations are 

those that are economically significant, which is to say those that 
4 

have an annual effect on the economy of $100 million a year or 

more. 

And I would note that that threshold is the same one that Congress has used to define rules as major under the Congressional 

Review Act (CRA). There are other factors that may lead a rule to 

be deemed significant beyond economic impact. Under Executive 

Order 12866, rules are also potentially significant and subject to 

interagency review through OIRA if they create a serious inconsistency or otherwise interfere with an action taken or planned by another agency if they materially alter the rights or obligations related to entitlements, grants, user fees, or other kinds of government programs. 

And finally, they may be significant if they raise novel legal or 

policy issues. Once a rule is under review, OIRA plays two basic 

roles. The first of those roles is to coordinate interagency review of 

regulations. OIRA circulates the rule to other agencies beyond the 

rulemaking agency around the Federal Government to ensure that 

other agencies whose own policies and responsibilities may be affected in some way have an opportunity to comment and to talk 

about that. 

The second main role that OIRA plays is to ensure that the rule 

complies with the Executive Order principles for sound regulation 

and to review the analysis underlying the rule. OIRA has longstanding guidelines for how agencies should analyze economically 

significant rules and OIRA reviews those analyses for consistency 

with these guidelines as a standard part of our review process. 

When reviewing a rule, OIRA’s job is to review the reasonableness of the underlying analysis and to identify areas where the regulation potentially could be improved or be more consistent with 

the principles set forth in the Executive Orders. Often the focus of 

a regulatory review is to help the agency hone and sharpen its arguments and to identify areas where more evidence or discussion 

will strengthen or clarify a regulation. 

I would note that existing rules as well warrant scrutiny to ensure that they achieve their benefits and goals without imposing 

unnecessary costs. Ensuring flexibility in new regulations and looking retrospectively at existing regulations is, therefore, an important part of OIRA’s function. 

Retrospective review, which the President has advanced though 

his own series of Executive Orders, is a crucial way to ensure that 

our regulatory system is modern, streamlined, and does not impose 

unnecessary burdens on the American public. As President Obama 

made clear at remarks at the Business Roundtable this past December, retrospective review is a critical part of this Administration’s regulatory agenda moving forward. 

Finally, I would note that under Executive Order 13609, OIRA 

has important responsibilities related to international regulatory 

cooperation. We have made progress in a number of areas with our 

international partners through regulatory cooperation councils with 

Canada and with Mexico. We also further our international regulatory mission through work in coordination with the Department 

of State and through activities in support of the United States 

Trade Representative’s trade negotiations. 
5 

In conclusion, regulatory activities can bring great benefits to 

Americans, but they also carry costs. It is critical to ensure that 

Federal agencies base their regulatory actions on high-quality evidence and sound analysis. Beneficial regulation must remain consistent with the overarching goals of job creation, economic growth, 

and public safety. 

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

happy to answer any questions you may have. 

Senator LANKFORD. Thank you, Mr. Shelanski. I have chosen to 

defer my questions—Senator Heitkamp has chosen to do the 

same—toward the end. I recognize Senator Ernst for questions. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you, Mr. Chairman and Ranking Member 

Heitkamp. Thank you very much for being here today, Mr. 

Shelanski. I appreciate it very much. I do think your office has a 

very important role in the regulatory process. Just a pretty significant question, I think. Has the Environmental Protection Agency 

(EPA) sent its final rule on the ozone standard to your office for 

review? 

Mr. SHELANSKI. No, Senator. That rule has not yet reached our 

office for review. 

Senator ERNST. And then because of that, do you expect to be 

given the customary 90-day review period for this rulemaking 

since, the EPA is under a court order to issue a final rule by October 1? 

Mr. SHELANSKI. We do recognize that the court order is in place 

and we have been working with the EPA so that they will be able 

to submit this rule as quickly as possible so that we will have as 

much time as possible given the court order to do our review. 

Senator ERNST. What are the challenges that you will have then 

in reviewing this rule and implications to the States? 

Mr. SHELANSKI. Thank you. I think we will be able to meet the 

challenges of reviewing this rule. The time it takes us to review a 

rule is often very dependent on how high a priority the rule is with 

the agency. So we circulate the rule for interagency review, we assemble those comments, we do our own analysis of the agency’s underlying justification for the rule, we pass back our comments, and 

when the agency has completion of the rule as a high priority, we 

tend to get fairly fast responses and the process really moves much 

more quickly. 

Nothing sits for periods of time back at the agency. So I would 

expect that we will be able to conduct a high-quality and rigorous 

review of both the rule and the underlying evidence in the time 

that we have under the court order. 

Senator ERNST. OK. Under the court order. Do you ever feel pressure within your agency coming from the Administration on such 

big rules as this? 

Mr. SHELANSKI. I think there certainly is an eagerness to have 

us conduct our review and to keep forward progress, but I think 

everybody understands, and certainly in my 2 years as Administrator, I feel like I have always been given the time that I need 

to do a good analysis and to make sure that our office does its job. 
6 

Senator ERNST. Well, and I appreciate that, and I always am 

very hopeful that your views will always be impartial regardless of 

the pressures that are coming from the outside agencies or from 

the Administration as well. Would you say that is correct or that 

is accurate? 

Mr. SHELANSKI. Yes, that is certainly accurate, Senator. The 

OIRA staff are a bunch of super smart and very dedicated folks 

who really are focused on the evidence underlying a rule, on the 

rule’s justifications, and in carrying out the mandates of the Executive Orders. 

I think that they are very good at focusing on the analytic issues. 

They speak truth even when it is inconvenient, and I have always 

found them to be people of the highest honesty and integrity and 

it is a pleasure to work for them and carry their message and their 

work forward. 

Senator ERNST. OK. Well, great. I do appreciate that very much. 

We always want, of course, an impartial review and, of course, the 

utmost integrity in those reports coming forward. So I appreciate 

it. Thank you for your testimony today. Thank you, Mr. Chairman. 

Mr. SHELANSKI. Thank you, Senator. 

Senator LANKFORD. Senator Enzi. 

OPENING STATEMENT OF SENATOR ENZI 

Senator ENZI. Thank you, Mr. Chairman, Ranking Member. 

Thank you, Mr. Shelanski, for being here. From your testimony, I 

had a couple of questions. Who determines that $100 million 

threshold? 

Mr. SHELANSKI. That is an excellent question. Thank you, Senator. Often we receive from the agencies their own view of whether 

or not a rule is economically significant accompanied by some analysis to bolster the point. But the determination in the end lies with 

OIRA. And so, when we receive a rule, we actually have the final 

word on the significance determination and we will tend to push 

hard when we have questions or, I might even say, suspicions that 

we need more evidence. 

Senator ENZI. Thank you. And you mentioned that you do retrospective reviews, too. When you do the retrospective reviews, do 

you compare what you estimated the cost to be to what it actually 

comes out, or are you just looking to see if they administered the 

rule the way they were supposed to? 

Mr. SHELANSKI. Typically the way a retrospective review is that 

it is carried out by the agency, and the question that is really 

asked is, is the rule, standing here today, still accomplishing what 

it was established to accomplish and do the costs and benefits 

going forward still make it worthwhile to keep that rule on the 

books? 

We take a rule that is already on the books and then the agency 

asks whether, under current facts and circumstances, is it worth 

keeping a rule in place. 

Senator ENZI. Do you have any capability to do anything if the 

cost far exceeds what you thought and the benefits are far less 

than what you thought? 

Mr. SHELANSKI. So after we complete review of a rule, the rule 

goes back to the agency for publication and for implementation. 
7 

And the right place to go when the predictions underlying a rule 

turn out to be wrong and a rule turns out to be having harmful 

effects or not achieving good effects is the agency. So it is typically 

the agency that has those tools and is charged with undertaking 

that. 

Senator ENZI. Thank you. You may know that the Homeland Security Committee and the Budget Committee did a joint hearing, 

I think it has been about a month ago now, on measuring the cost 

of regulation. One of the witnesses was Canada’s Treasury Board 

member Tony Clement, and he told us how their regulatory process 

works and about their one-for-one policy to minimize the red tape 

growing in business and their mechanism for getting people to go 

back and look at old rules to see if they still operate. 

He mentioned that the two countries have a cooperative plan for 

sharing approaches to reduce that regulatory burden on small businesses. Have those joint discussions resulted in anything and what 

do you think about that one-for-one burden reduction? 

Mr. SHELANSKI. Thank you. So the joint regulatory process that 

we have with Canada is where agencies work together to try to 

come up with the elimination of unnecessary differences in regulation. We have, however, had some ongoing discussions with Canada 

to try to learn more about their policies and about their one-forone. 

We have some general concerns and I have some general concerns about a one-for-one policy, what is often called regulatory 

PAYGO. To be sure, there are some rules that need to be promulgated for the benefit of the public for health and safety. I am thinking about the Department of Transportation’s (DOT) recent crude 

oil by rail rule, for example. 

I think that it would be troublesome if such rules were delayed 

by the need to find a rule to cut and eliminate before the new rule 

could be promulgated. When we talked to Canada about that, they 

did suggest that they have a large number of exceptions and areas 

where their one-for-one rule does not apply. 

Senator ENZI. They also, though, have a mechanism for going 

back to old ones and having a ledger credit so that when something 

comes up, they already have the money in place, and that is the 

only mechanism that I have seen for us to encourage government 

to look at any old rules. They really do not have much interest in 

that. I thought that was quite a step forward. 

Now, the joint hearing also discussed the idea of a regulatory 

budget, and that fits in with this idea of having prior credit so you 

could have a carefully designed and implemented regulatory budget. They said that their scoring was all done on an internationally 

accepted standard. Are you familiar with their standard? Is it the 

same as our standard? 

Mr. SHELANSKI. We are still looking into exactly how they do 

their scoring and their accounting. This is something we are in the 

process of learning more about. We have some reservations about 

having in place a rigorous budget of the type that they are talking 

about and we do not fully understand how their system works, so 

we are learning more from them as we continue these discussions. 

I would note, though, that our retrospective review process is one 

that has been, I think, increasingly successful over time. Agencies 
8 

have several hundred initiatives right now that are in place and actually occurring. We are tracking a large number of those where 

they are going back and looking at rules on the books that are worthy of reform or even possibly repeal or, in some cases, strengthening. 

So the retrospective review process is one that the Administration has emphasized quite strongly and that we are seeing good response on from the agencies. I would be very willing, however, and 

would find very interesting the idea of having discussions with any 

of your offices about ways to improve or strengthen that process or 

ways to provide stronger incentives on the agencies. I think we can 

always do better than we are doing. 

Senator ENZI. Thank you. My time is expired. 

Senator LANKFORD. Senator Enzi, thank you for that. Let me just 

pick up where Senator Enzi was leaving off on that, and that is 

with respect to retrospective review and this issue. How do you ensure agencies are periodically doing a retrospective review that is 

thorough and is rigorous? 

The reason I can give you this example, this Committee has 

started asking the question of several agencies to say, How do you 

pick what you are going to do a retrospective review on? For instance, the Department of Labor (DOL) has 676 rules. They are 

doing four retrospective reviews this year. 

So we are just asking the question, How did you pick the four 

out of 676 rules that are out there? I understand some of them are 

going to be significant. That is going to eliminate some of them. So 

let us get past the significant issue. How do you make sure that 

the agencies are actually doing this in a rigorous way? 

Mr. SHELANSKI. Thank you, Chairman Lankford. I think that is 

a very important issue, to try to get the agencies to properly 

prioritize the retrospective review efforts. One of the things that we 

have been working with the agencies on doing is developing a more 

robust and thorough outreach process so that they hear from stakeholders, the people who actually have to comply with rules, or the 

State and local partners who have to operate rules on the ground, 

and from the folks who are supposed to benefit from rules so that 

they can hear what is working and what is not working. 

And we indeed at OIRA have been holding outside stakeholder 

meetings with different groups of folks, whether it is State and 

local governments, or business groups or advocacy groups, labor 

unions, folks like that. 

Senator LANKFORD. So what is the standard then? Is the standard then for the review of a rule, if they get a lot of complaints or 

a lot of praise on something, that they may try to do the review 

at that time? Is there a certain standard based on the length of 

time or the size and the significance to rules? What is the basic 

standard of which rules they should pick and the order that they 

should go through this and be able to do the priority for the review? 

Mr. SHELANSKI. What we would like to see the agencies do is 

look at those rules where the greatest savings and the greatest 

benefit from the retrospective review and for what results. And so 

trying to get them to rank and prioritize rules based on what will 
9 

give—to use a colloquial term—the biggest bang for the buck would 

be the first principle. 

Senator LANKFORD. What would you expect that they would do? 

What percentage or number that you would expect that they would 

do on a regular basis or is there a certain age to look at it and say, 

This rule is 30 years old and maybe it needs to be reevaluated? 

There does not seem to be a standard. It just seems to be an Executive Order saying, We believe that this should be done, but we cannot find a pattern for how it is being done in agencies nor a requirement that it really is done. 

It just seems to be a suggestion and I am not sure, and you can 

answer this question if you choose to on it. I am not sure that 

OIRA has the authority to step into an agency and say, Hey, you 

did one regulatory review this year. Maybe you should do at least 

two. You are really not being thorough in this. 

Mr. SHELANSKI. The way that agencies have to prioritize their resources leaves them overwhelmingly to focus on the rules and the 

policies, the new rules and policies that they have to implement 

going forward. They have a number of new problems that come up 

that they have to address. They have a number of statutory obligations in terms of rulemaking, court-ordered obligations. 

So that is typically, especially in a period of time when agencies’ 

resources are very tight, where they are going to prioritize, and retrospective review that looks at rules on the book is very often going 

to take a backseat. In some sense, that is warranted. 

What we have learned from a lot of our stakeholder groups is the 

30-year-old rules, they may not be doing much good, but there is 

not much value in repealing them either. There may be a lot of 

rules that we could look at that have piled up that are sitting on 

the shelf not terribly functional, but either they are not costing 

anybody anything or, we have heard often from stakeholders, once 

they fully absorb the cost of complying with the rules, those kind 

of costs, repealing the rule or removing the rule might not do them 

a lot of good. 

So it is hard to come up with sort of a systematic criterion like 

rules of a certain age or something like that should be reviewed. 

That is why the outside stakeholder process is so important. 

Senator LANKFORD. Do you feel like you have the authority to be 

able to step into an agency and say, This is really important, this 

has to be done, or do you feel like that needs to be someone else 

or it is just really the agency that is going to make that call on 

their own? 

Mr. SHELANSKI. Right now I feel like we do have that authority. 

In fact, we have a very clear mandate from the Administration. 

Senator LANKFORD. So if an agency does not do a retrospective 

review, you feel like you can come in and compel them to do that? 

Mr. SHELANSKI. We cannot compel them, but what we can do is 

push them to explain why they have not done more, and often they 

have good explanations for that. But they do not deny us an answer. 

Senator LANKFORD. Right. So the challenge of this—and I understand that budgets are tight on it and so it is difficult for agencies 

to prioritize their budgeting to go do a retrospective review because 

they are working on new rules on it. 
10 

The problem is the companies that they regulate, their budgets 

are tight as well and they are raising their hand and saying, Because your budget is tight, you are not reviewing a rule, we are 

suffering waiting for you to review this rule, and our budgets are 

tight on it across the entire country. 

And so, somehow we have to be able to balance that out, and if 

there is a need for additional authority or responsibility, we have 

discussed 12866. That is been an Executive Order for 20-plus years 

at this point and it may be time to codify some of those things and 

say, Congress believes in what multiple Administrations have done 

on this and to step in and say, Some of these things actually need 

to be put in statute rather than into Executive Order suggestions. 

Mr. SHELANSKI. We at OIRA think that we have the tools that 

we need under the Executive Orders to achieve what we need to 

achieve. I do think one of the things that would help and one of 

the reasons we focus a lot on pushing agencies not just to give us 

lists, but to conduct formalized and further developed outreach 

projects is so that we can get the specific suggestions from the very 

companies you say who have tight budgets and who have to comply 

with rules to get constructive suggestions about where to look for 

good retrospective review efforts. 

Senator LANKFORD. Right. And we are trying to help with that 

process as well. Senator Heitkamp. 

Senator HEITKAMP. I would defer my time to Senator Portman if 

he has someplace else he needs to be. 

Senator LANKFORD. Where else would you rather be at? 

Senator HEITKAMP. Right. Well, that is a good question. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. There is no place I would rather be, but I 

want to thank my colleague from North Dakota for giving me the 

chance to speak. I do have a flight to catch, as I am sure she does, 

and others, and she kindly asked me that. 

First of all, it is great to have this hearing. Thank you, Mr. 

Chairman and Senator Heitkamp, for encouraging us to keep focus 

on this regulatory issue. There is so much that can and should be 

done. We have already had some of these discussions in the process 

of your confirmation, Mr. Administrator, and I appreciate you coming back. 

One thing we talked about in your confirmation hearing is what 

is the role of independent agencies, and the fact that there are 

more and more major rules coming from the independent agencies 

and they are not subject to the same cost-benefit analysis that the 

Executive Branch agencies are, and I, at the time, talked to you 

about the fact that a number of your former OIRA colleagues have 

come out strongly in favor of providing this kind of cost-benefit 

analysis for the independent agencies as well. 

In fact, Democrat and Republican alike have called for extending 

12866 to independent agencies. Senator Warner, Senator Collins, 

and I have introduced legislation again this year to do that. Former 

OIRA Administrator Cass Sunstein, one of your immediate predecessors, said in a column before he became Administrator, The 

commitment to cost-benefit analysis under 12866 has become too 
11 

narrow. It should be widened through efforts to incorporate independent regulatory commissions within its reach. 

By the way, so does the American Bar Association, the Administrative Conference, the President’s Jobs Council believe that. All of 

them have recommended extending cost-benefit analysis for review 

and independent agencies. As you know, our proposal does that. It 

does not go as far as some of us would like to go, frankly. It does 

give you an important role and yet, it ultimately gives the responsibility to the independent agencies by saying that OIRA would have 

the ability to review, but would not have the power to stop and return regulations. So you would have more transparency, more public scrutiny, more accountability. 

When I asked you about this in your confirmation hearings, you 

said you needed some time to think it over. You have had some 

time now. You say you look forward to better understanding what 

the costs and benefits are of bringing, very clever, independent 

agencies under OIRA type of mandates would be. So can you tell 

us where you are on that now and whether you are willing to help 

us on this legislation to codify much of what the President himself 

has said he is for? 

Mr. SHELANSKI. Thank you very much, Senator Portman. I have 

had a couple of years to think about the issue and after thinking 

about it, I still have some reservations about extending OIRA review to independent agencies. I would separate two issues, however. One is the requirement for independent agencies to undertake 

cost-benefit analysis, something that the President has encouraged 

them to do in his Executive Orders and whether it is OIRA who 

should review the way that they undertake that cost-benefit analysis. 

I think cost-benefit analysis is a very healthy thing for a regulatory system and that goes for independent agencies and Executive Branch agencies alike. My concern is more with OIRA as the 

reviewer of those determinations. I have worked at two independent agencies. I really have some appreciation for the value of 

how those agencies function for the value of the independence and 

the way they are set up as independent agencies. 

I do worry about an Executive Branch review process that could 

interfere with that independence and possibly interfere with their 

functions under their authorizing statutes. That said, you asked if 

I would be willing to work with your offices to think further about 

this topic and to find a way that there might be a way to push costbenefit analysis more into independent agency rulemaking and the 

answer is absolutely yes. 

Senator PORTMAN. Well, I hope you will take a look at the legislation more carefully because I think it does precisely what you are 

saying. Here is the backdrop, just so we all know, and I know you 

know this. One quarter of the new major rules are now issued by 

independent agencies, and for our constituents, those are some of 

the toughest rules and we hear about it a lot. There is a broad consensus that there is not the kind of quantitative analysis that we 

need. 

In 2013, none of the 18 major rules, none of them, issued by the 

independent agencies was based on a complete analysis of best 

costs and benefits. In 2012, not one of the 21 major rules had a 
12 

complete cost-benefit analysis. According to the Administrative 

Conference of the United States, only one rule was supported by 

even a partial attempt to quantify benefits in 2012. 

So there is a huge gap here. Again, our legislation does not say 

that OIRA takes it over. It says that OIRA does provide advice, 

cannot require the independent agencies to follow it. But I would 

think your expertise you have at OIRA is badly needed and you 

should embrace this idea. With that, Mr. Chairman, I appreciate 

the time and I look forward to continuing to work with you, Mr. 

Administrator. 

Mr. SHELANSKI. Thank you, Senator. 

Senator LANKFORD. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. We keep talking 

about major rule, which is defined as having an impact of over 

$100 million on the economy, but it was adopted, that $100 million 

standard, was adopted in 1981. What would that $100 million be 

today if we were going to adjust for inflation? 

Mr. SHELANSKI. That is a good question. I have not actually run 

that calculation. I would be happy to get back to you on that, but 

it would be substantially higher. 

Senator HEITKAMP. Well, I mean, you think about it. The early 

1980s especially were a period of dramatic inflation, and so we 

want to kind of put this in light because we talk about the growth 

and major rules, but if we index this or if we adjusted it for inflation, we might find out that there are—I share the concern that 

Senator Portman has about independent agencies. 

But I just wanted to kind of lay down a marker on what is a major rule. That standard being set in 1981 at $100 million, obviously that would be much more significant in 1981 than a $100 

million rule today. 

But back to kind of my opening comments, if we back up. One 

of the major concerns that I have with this whole process, and we 

saw it a little bit with the DOT tank car rule, is that Congress consistently kind of kicks the can down the road and says, OK, some 

of these details are just too tough to get to. We are just going to 

throw this to rulemaking and we will see what they can come up 

with, and frequently the devil is in the details. 

But yet, that standard is out there, that requirement is out 

there. So a lot of times when we talk about these major rules, it 

is Congress that has initiated the major rules, congressional enactment. In fact, it should be that in all cases. So now we have Congress making these decisions on what the agencies are going to do. 

The agencies being understaffed in terms of developing the rules. 

We take away the potential for bias. And then we say, we want you 

to do more. 

And that is a problem because we cannot keep saying we want 

you to do more, which I think you might be surprised that we are 

going to send you more work if some of the initiatives that we are 

talking about are going to happen. What is a reasonable response 

when Congress puts more on you? How could you communicate better to us in terms of what the resource needs are? 

Mr. SHELANSKI. Thank you, Senator Heitkamp. It is an important question. I think we at OIRA, like I would say every office at 

OMB, has a heavy lift to perform and often it is a lift that is grow-
13 

ing heavier, both because of Executive Orders and because of statutes from Congress. So to do our job well we would love to have 

more resources. 

I think we have been doing the job that we have chartered to do 

quite well. Staff really work hard. They are eager to dig into their 

work and they do a great job. But of course, as we have more work 

to do, as we have broader mandates, if it were to happen that independent agencies were to be brought, even on a discretionary basis, 

under our jurisdiction, that would pose a resource challenge. 

Again, I want to emphasize, I do not think it is a resource challenge that is any greater than that faced by any of the other component offices at the Office of Management and Budget, but it is 

a challenge. 

Senator HEITKAMP. And it is a concern of mine as we kind of look 

at moving forward and designing perhaps a better retrospective 

package, a better path forward for increased oversight, on cost-benefits, that we may in fact be doing something we do not want to 

do which is delaying a rule, like the tank car rule, which was clearly involved in some pretty dramatic safety discussions. 

So, I want to just make sure that we are all on the same page. 

And I want to encourage you, as we, the Committee, and as Congress moves forward with regulatory reform and potentially providing more oversight and more responsibility to OIRA, that OIRA 

is able to say, We can do this in a timely fashion if we are given 

the resources and these are the resources we believe we need. 

And so, I just want to encourage you to ask because frequently 

we say Well, there was not enough resources. Well, you are not silent. You need to let us know. And with that, I am going to kind 

of stop this conversation and move to the next page. 

Senator LANKFORD. Mr. Shelanski, how we have done traditionally in this Subcommittee is the second round of questions is open. 

Any Member can ask any question at any time. There is more open 

colloquy here on the dais as well as with you, so there are no turns 

at this point so there will be more of an open dialogue and conversation. 

Let me step in to one of the things that Senator Portman was 

talking about as well just for the independent agencies. OIRA has 

a responsibility to be able to work with the agencies to say, This 

regulation that you are proposing has an effect or is connected to 

another regulation in another agency or one that they are planning. 

If the independent agencies are not included, how can OIRA help 

this agency in the Executive Branch stay away from doubling up 

on something that an independent agency is doing, just the basic 

awareness of that and then also the cost-benefit analysis? I come 

back to that as well. This agency may have a rule that they are 

creating that may be a $100 million rule plus this other agency 

that is an independent agency may create another one that is $75 

million, but the cumulative effect of that is pretty profound, to say 

the least, on it. If there is not coordination, how do we get that if 

they are not included in this conversation with OIRA? 

Mr. SHELANSKI. Thank you, Senator. The independent agencies, 

while we do not review their rules, can be brought into interagency 

discussions. 
14 

Senator LANKFORD. Can they? Because that is different. We are 

trying to find out if they are always brought in and are always 

being considered. 

Mr. SHELANSKI. When we at OIRA believe that an independent 

agency has an equity or something to say or regulates in a similar 

area, we do ask that they review the rule and comment on it. We 

cannot compel them to comment, we cannot compel anybody to 

comment, but we do afford them that opportunity. 

Senator LANKFORD. So what happens when SECRETARY or the 

Commodity Futures Trading Commission (CFTC) or some other 

independent agency is working on a rule and you have other banking rules that are happening simultaneously? Community banks 

are trying to figure out because they see two different sets of rules 

happening that are pretty similar. Who is being the referee in the 

middle of all that to make sure that they are going to get consistent rules and they are not having to fight a battle on two 

fronts? 

Mr. SHELANSKI. So when we know that an Executive Branch 

agency is issuing a regulation in an area where an independent 

agency is also working, we do ask that Executive Branch agency— 

and here we do have the authority to really push an answer—for 

an explanation of how their rule interrelates, what the cumulative 

burdens will be, whether there is duplication and or whether they 

are really doing something different from what the—— 

Senator LANKFORD. So in the pecking order, then, the independent agency is going to be on the top and the Executive agency 

is going to have to wait on the independent agency to be able to 

finish that out? 

Mr. SHELANSKI. I do not think that is necessarily the case. A dialogue can result that can lead to a decision about who will regulate 

where. I do not know that there is any pre-established pecking 

order, but we do require the Executive Branch agency to answer 

the question. 

Senator LANKFORD. Right. But there is a lot of authority there 

with the Executive Branch is where you have the ability to be able 

to have that dialogue where with the independent agencies it is 

only if they choose to come in and participate, and hopefully most 

of them do choose to participate. 

But multiple places, whether they be hospitals, whether they be 

banks, especially smaller community banks, all struggle with these 

multiple regulators stepping in and a lot of overlap. There may be 

four rules that all have serious effects on them coming down in a 

3-month time period and they are trying to catch up with these different rules. Sometimes they are conflicting, most of the time they 

are not. Most of the time it is just another layer that they are still 

trying to catch up from the previous one. Does that make sense? 

Mr. SHELANSKI. Where OMB has authority is to bring the independent agencies into the discussion. In terms of authority over approving or not approving the rule, that lies in the Executive 

Branch, not with the independent agencies. You are correct on 

that. 

Senator LANKFORD. Go ahead. It is all open. 

Senator ENZI. Thank you, Mr. Chairman. I have had a lot of 

questions on if these costs and benefits calculations are available 
15 

to anyone, even us. We have seen some things, some rules come 

through and we wondered how they got to those particular costs. 

What is the rule on transparency on those things? 

Mr. SHELANSKI. Thank you, Senator Enzi. When a rule goes out 

from our office, when a rule is published, the regulatory impact 

analysis on an economically significant rule is part of the record. 

So for example, if it is a proposed rule that goes out for public comment, it is not just the rule text and preamble that go out. It is 

also the underlying rule with accompanying tables and appendices. 

These studies and these impact analyses are often very long and 

we try to make sure that there is as much transparency as possible 

about the calculations, the underlying data and exactly how the 

agencies reached their conclusions, and those are available to the 

public. 

Senator ENZI. OK. Are they published in the Register at the 

time? 

Mr. SHELANSKI. Yes. They are part of the rule package the agency releases publicly. Whether they will always be published in the 

Register with the rule, they are always made available. It can be 

in the agency docket, on the agency website, but they are part of 

the administrative record of that rule and they are publicly available. 

Senator ENZI. And if somebody questions those, what do they do? 

Mr. SHELANSKI. So when it is a proposed rule, we actually want 

people to question those. In fact, we very often, both in the rules 

that go out for public comment, the proposed rules, we specifically 

ask for questions about the underlying analysis. And then when 

the rule comes back in final form, we make sure that the agency 

has addressed those concerns. 

Senator ENZI. Thank you. 

Senator HEITKAMP. I want to kind of get some information based 

on your experience, and I understand no two agencies are alike and 

that you are working with a lot of diverse subject matter. But some 

of the process pieces, you may see commonality and mistakes. You 

may see things that go where you go, Here they go again, the same 

thing. 

I am wondering if there are steps in the current rulemaking 

framework kind of across the board that have a tendency to trip 

up agencies as they are drafting these rules. Do we have any institutionalized kind of hiccups in the process that we could smooth 

out to make this process more responsive? 

Mr. SHELANSKI. Thank you, Senator. There is no doubt that 

there is unevenness across the Federal Government in the experience and the resources that agencies have to conduct these analyses. Some agencies are excellent and have large teams that are always doing these kinds of analyses. So we tend to have relatively 

few hiccups. We may have disagreements with them over aspects 

of the analysis, but they tend to know what they are doing. 

We have other agencies that have very little experience and 

sometimes a new area of rulemaking pursuant to statute or some 

public emergency may push an agency with limited experience into 

having to do kinds of analysis that they are not used to doing. In 

those cases, we tend to provide a lot of technical assistance. My 

staff, the OIRA staff, are really quite skilled at showing agencies 
16 

and finding solutions to their analytic problems. Sometimes they 

subcontract to experts. 

Senator HEITKAMP. Do you think people would have more faith 

in cost-benefit analysis if they were done by an independent agency 

and not an internal group within the subject matter? 

Mr. SHELANSKI. I can see certain reasons that intuitively one 

might see benefits to having some level of independent performance 

of those analyses, but I also think they are real drawbacks. Costbenefit analysis is certainly not a one-size-fits-all kind of exercise. 

There is not a set of algorithms or equations that one would always 

use in cost-benefit analysis. 

How one calculates particular costs or what particular benefits 

would be often require a lot of technical expertise that tend to be 

in the hands of the agencies. I would worry that a generalist kind 

of body to perform those analyses would not have that and would 

miss key areas of costs. 

Senator HEITKAMP. But you are a generalist kind of agency that 

is reviewing the cost benefit. 

Mr. SHELANSKI. And so we review them. The agencies perform 

those analyses and what we get to do is ask a lot of hard questions 

and come back to them and say, Why did you use this evidence? 

What about these studies? 

Senator HEITKAMP. Do you not think, though, there is some commonality in terms of best practices in doing that kind of analysis? 

Mr. SHELANSKI. There is. And indeed, we have tried to capture 

a lot of those best practices in a guidance document that is really 

the foundational guidance document for all regulatory impact analyses. 

Senator LANKFORD. Which one is that? 

Mr. SHELANSKI. That is Circular A–4. 

Senator LANKFORD. OK. 

Mr. SHELANSKI. And Circular A–4 really covers a large number 

of topics that are common, that will typically arise in regulatory 

impact analyses and we try to set parameters and bounds in particular subject areas that must be covered so that agencies have a 

pretty fair guide in what they need to do. 

Senator HEITKAMP. And not to belabor this, but have we ever 

gone back and done a look-back after we do all this analysis and 

say, Boy, we learned something about evaluating costs because 

costs could be higher costs, could be lower? It is a target. And then 

when we look at benefits, and I will give you the example which 

is on the conflict minerals regulation, which I hear about in North 

Dakota all the time, which is that the requirements that a lot of 

people work, a lot of things could have conflict minerals, it is really 

difficult for people to know or not know. 

We have done a supply drain kind of analysis. That means I better know what is in this before I buy it kind of thing. I am going 

to have to report it. But have we ever stopped anybody from buying 

conflict minerals? 

And that is the challenge that we have which is a good intention. 

No one wants us to be participating in human slavery. But by the 

same token, does that rule really accomplish anything? As frustrated as we get talking to our people, if we could say, Well, yes, 

but, because of that rule, we have shut down five mines in Africa 
17 

that are engaged in producing conflict minerals. It probably happened. 

Mr. SHELANSKI. We learn a lot from the past experience with 

regulations and it helps us at OIRA, when we review the analyses 

that agencies provide, because these experiences, things we learn 

through the retrospective review process, or from stakeholders who 

come in whether to the agency or to OIRA in meetings under the 

Executive Orders that we are required to accept, we learn a lot 

about what the experience has been with rules that are on the 

ground. 

And that enables us to ask hard questions when we see something that is similar in a rule that is being developed. One of the 

things that we do when we review an agency’s analysis is ask hard 

questions about how they got to their benefit determinations and 

actually the fit between the rule itself and how it will operate on 

the ground and the benefits that are projected. 

It is something we try to look at very closely, and in looking at 

that, we can be informed by what stakeholders tell us about past 

experiences. Is this going to be like this other rule where it has a 

similar structure, there was not a lot of benefit, but it ended up 

being very costly. 

One of the reasons it is great to have a retrospective review process is it allows those us to identify such rules for an agency to go 

back and look at, but it also helps us prospectively with identifying 

areas where the benefits may not be well predicted given the way 

the role is actually structured. 

Senator LANKFORD. Yes, and I know Senator Enzi is about to ask 

a question on this, too, but let me just give you an analogy of this 

same issue on, for instance, the conflict minerals, because there is 

more than just the cost and the benefit. It is also the gains to the 

agency as far as leverage that is gained with a regulation to say 

they have an amount of authority. 

I have a company in Oklahoma that did not turn in their form 

to say they do not have any conflict minerals. So they did not have 

any conflict minerals so they did not turn the form in to say they 

have none, and they were fined $1 million because they did not 

have a form to say they did not have to turn in a form. They ended 

up negotiating that with an agency who then dropped it down to 

only $100,000 fine, but it is a tremendous amount of leverage that 

an agency gains from someone who was saying, Why am I turning 

in a form to say I have nothing to turn in? 

There is this other piece that is out there as well that is a part 

of our own government relating to the citizens that run us that is 

a dynamic that is in this as well. I know Senator Enzi wanted to 

be able to make a comment on that, too, or on a different issue. 

Senator ENZI. Well, not necessarily different, a different cost 

thing, I think, and maybe more general than that. Is there any relationship between the time for the costs and the time for the benefits? A person can do something that is an immediate cost to the 

business and then that they can say, if they drag it out enough 

years, 50 years to the general public, it can be a great advantage. 

But it was an immediate cost and no immediate benefit. How do 

you work those things? 
18 

Mr. SHELANSKI. Thank you. That would be a very worrisome 

kind of manipulation in a regulatory impact analysis and we are 

certainly on the lookout for that kind of thing. One can always put 

out an amortization schedule for the costs that are required to comply that would be very long to make the annual costs look low. If 

that has nothing to do with the actual investment cycle and the 

way people really run their business, that is not a helpful cost estimate. 

One of the things we do is to ensure that agencies and guidance 

we provide in Circular A–4, makes sure that agencies do not get 

the alignment between the cost period and the projected benefit 

wrong. 

Senator ENZI. One of the areas we are concerned about in Wyoming is sent the regional haze requirement, which blames all of it 

on coal-fired power plants, not on the Canadian forest fires that we 

have been experiencing recently. 

They seem to think that if you cleanup—if you eliminate the 

coal-fired power plants, that that eliminates the problem, but it 

does not. The way that the cost is, it is an up-front cost for any 

plant to do it. There are also some difficulties over how long they 

can depreciate the thing which is forcing them all into a different 

kind of mechanism for taking care of the problem than would be 

logical. 

But the benefits, of course, accrue over a long period of time, but 

if you extend that period of time out there long enough, there is 

always a tremendous benefit even if it is not realistic to the problem. So I am just mentioning that as something you might look at 

in the future and we will have some more specific questions on 

that. 

Senator LANKFORD. Can I followup on that same question? What 

you are saying is, is there a one-for-one ratio? For instance, we are 

going to do the costs over the next 5 years and also the benefit over 

the next 5 years and lay those side-by-side, or is there a time the 

cost really is determined over this and the benefit is determined 

over 5 or 10 years? Is it always one-for-one? 

Mr. SHELANSKI. No, it is not always one-for-one. 

Senator LANKFORD. OK. So what is the ratio that is typically accepted? 

Mr. SHELANSKI. It depends on the circumstances. Under different 

circumstances, you might get a different timeframe in which there 

really are going to be benefits accruing and you might not want to 

align the costs with that. That could actually be a disadvantage for 

the analysis and for businesses by making it look like the 

annualized costs are—— 

Senator LANKFORD. Well, most of the costs of businesses in a 

heavily capitalized intensive business will probably be in the first 

5 years. 

Mr. SHELANSKI. Yes. 

Senator LANKFORD. But if the benefits are not for 20 years or for 

30 years, I think that is the heart of Senator Enzi’s question. What 

is the formula? Again, since we do not see it, we need to know how 

is that figured? 

Mr. SHELANSKI. So the first thing I would say is in any regulatory impact analysis, you actually can see what the assumptions 
19 

are as to time and when those costs and benefits will accrue. So 

that is something that can be commented on. 

Typically we look at the underlying evidence, what makes sense 

as a timeframe to measure costs and is there is solid evidence. 

What our concern is, is when benefits without good underlying evidence are projected infinitely into the future so that you get this 

massive accumulation of benefits. So we are very careful to make 

sure that any benefits that are—— 

Senator LANKFORD. Right, but there are multiple ways to do 

that. I do not mean to interrupt you, but it is the same thing, if, 

for instance it is a 10-year cost-benefit analysis on this, that is 

going to figure different than if it is 20, because again, for most 

businesses, the first 5 years are going to be the most capital intensive and then there is not going to show a lot of costs, and so it 

really shows that regulation is inexpensive for the last 15, but it 

may be 15 years from now when there is an actual benefit that 

kicks in. 

So whoever sets the parameter for the number of years that will 

be included in the study really sets how it is going to come out. So 

even if you said we are going to look at the next 10 years, or the 

next 5 years, or 50 years, it may go side-by-side, but the costs and 

the benefits come in at different times. 

So I guess that is where we are trying to get on some of the assumptions. Who sets that parameter? Is that you, is that the agency because you could figure it three different ways, take it 5 years, 

10 years, 15 years and you are going to get three different sets of 

answers at which one has the greater cost, which one has the 

greater benefit. 

Mr. SHELANSKI. So we will typically look at a typical kind of window that—we would look at for both costs and benefits is a 20-year 

period and we would ask at what point you have reached the fully 

realized costs and the fully realized benefits and try to make a 

measurement over of that period. For different kinds of rules, rules 

that take place in an industry with fast-changing technology or 

where the circumstances may change, shorter time periods can be 

warranted. It really depends on the particular circumstances. 

Senator LANKFORD. But in a 20-year window, I would just say almost always the people that are paying the capital up-front are 

going to lose. It is very difficult, because their cost is really the 

first few years and then you really are racking up benefits over two 

decades to try to catch up for the cost that is initially in 2 years, 

if it is a 20-year window, if that is what is typical. 

Mr. SHELANSKI. Well, there has to be real evidence about what 

those forward-looking benefits are and that those cost investments 

will continue to have that payoff. 

Senator LANKFORD. Is that 20-year window, is that typical? Has 

that been OIRA’s history since 1980 to do that or has that 

changed? 

Mr. SHELANSKI. Well, I would have to look back and see. I mean, 

it is really going to vary very much from rule to rule what is an 

appropriate timeframe to look over. But to come back to your point 

about the capital-intensive fixed costs, we try to make sure that the 

accounting for those costs is accurate. 
20 

If it is the case that they are going to be up-front costs that are 

likely to put an industry out of business, that would be something 

that we would take very substantially into account, because you 

are not going to get those benefits, if the engine for those benefits, 

if you will, is not going to be around to produce them. 

Senator LANKFORD. You might want to check on some of the regulations coming down in the coal industry then because that has 

been a pretty rapid acceleration, some of the call issues and the 

number of jobs that have been lost on that one. But, that is a different issue. But that is a big part of this. 

I would ask one other question related, and I do not want to hog 

all the time here because we have a lot of other questions. When 

you do the cost-benefit analysis, do you always include direct costs, 

direct benefit, and indirect cost and indirect benefit? Are those always included in a major or significant rule so there is never a 

time that there is indirect benefits done without indirect costs also 

being included? Are both always included? 

Mr. SHELANSKI. What we always ask for is the best evidence on 

the cost side and on the benefit side. But if, for example, there 

were only evidence of direct costs and we knew that there was 

probably going to be some indirect costs but we did not have the 

evidence, we would not simply discount of those to zero. 

We do not require that all costs and all benefits be rigorously 

quantified. We ask an agency to be rigorous on identifying what 

the categories of costs or benefits are and to do their best in quantifying those. But one always has to be careful of a mismatch of the 

kind that you described. 

Senator LANKFORD. And that is what I am trying to figure out. 

Would there ever be a rule that we could look at and say indirect 

benefits were counted, but indirect costs were not, that an agency 

would say, we cannot tell what the indirect costs are going to be, 

but we can tell what the indirect benefits are going to be? 

Mr. SHELANSKI. So often there is better evidence for one than the 

other. I would add, there is almost always better evidence for the 

costs than the benefits, at least when it comes to quantified benefits. So the bias, in that sense, that I have seen at least in my 2 

years as Administrator, has typically been against the benefits because cost data tends to be a little bit easier to come upon. 

But if we think there is good reason to believe there is a category 

of indirect costs but they are just hard to measure, we will push 

the agency to talk about those, to talk about ways that they might 

be accounted for and how they might relate to the benefits of the 

rule. 

Senator HEITKAMP. I have a question, and just bear with me on 

the example. Let us say, as we all know, that there is some pretty 

stringent, whether it is ozone or whether it is CO2, regulations 

coming down the track and now you have them on your desk. Just 

imagine that happens. And the end result—I mean, you are calculating what it may cost to retrofit power plants, what it may—implementation of this rule, what that would cost to basically develop 

the technology to meet the standard in the new rule. But let us say 

what actually happens is we then switch to renewables that have 

a higher cost to consumers. Would the higher cost to consumers be 

included as an indirect cost of that rule? 
21 

Mr. SHELANSKI. The higher cost to consumers, if there is a good 

case to be made that that will occur and one can come up with an 

analysis to show what that cost would be, would absolutely be 

something that we would ask to be included. 

Senator HEITKAMP. Because these regulations frequently have 

opportunity costs, the ones that are harder to quantify and will result in change in behavior which will then have consequences of its 

own. I think one of the concerns that we obviously have is that 

when the reviewer or the calculator of the cost benefit appears to 

have a bias, that maybe some of that is not calculated the way it 

ought to be calculated. 

And so, let us say that I could make a pretty persuasive case to 

you that if we switch to a different fuel source currently not right 

now with natural gas but maybe down the road and if you looked 

historically—let us say we are switching to natural gas as a fuel 

source and I could show you historic data that showed the average 

price of natural gas runs about $7, even though we are at a historic 

low, or probably at a historic low at this point if you adjust for inflation, and we can anticipate over a period of time the life of that 

power plant, that in fact you will have a dramatic increase cost to 

consumers. Is that something that ever gets considered? 

Mr. SHELANSKI. We would be very concerned by an analysis that 

simply carried forward a current state of the marketplace without 

good justification and good analysis showing that that was a reasonable assumption. 

Senator HEITKAMP. Well, that is good to know, and then we obviously are going to be taking a look at that. I want to switch gears 

just a little bit because I have something that I call prospective retrospective. I just think it is kind of fun to say it that way. 

What this is, is the idea that we have this big mess, and I will 

call it a big mess, of regulation with no real structure for retroactive review or retrospective review on those. And kind of a cajoling but not any kind of mandate. 

So the idea would be from this point forward when we promulgate new rules, as an essential part of that new rulemaking, you 

have to embed a retrospective review. You have to basically say— 

and issue that as part of the rule that then would be subject to 

comment on time period, comment on a number of things. What 

would be your reaction to a change in the regulatory process that 

would embed a prospective retrospective review process? 

Mr. SHELANSKI. I think this is an interesting idea and one that 

we would be very interested in discussing with you going forward. 

Senator HEITKAMP. Well, I hope I get a better answer than Senator Portman. You come back and you say, What a great idea. 

Mr. SHELANSKI. Well, I think that accountability is one of the 

really important things in any regulatory system and I think asking an agency to account for how its rule has actually operated and 

whether it is achieving its goals is an important objective. I think 

the devil again is going to be in the details, which is why I would 

welcome the chance to have further discussions with you on it. 

Senator HEITKAMP. We would not be setting any parameters. 

What we would be doing is requiring the agency to actually say, 

This is what we think we want to do, allowing stakeholders and 

people who are currently involved in that rulemaking process to 
22 

say 10 years is not right. You need to go back to 5 years and make 

that part of the notice and comment procedure so that we are not 

one-size-fits-all, but we are requiring that it be part of the deliberation and the discussion. 

Mr. SHELANSKI. One of the things that we have been encouraging 

agencies to do where appropriate is to put in place a provision 

where they will review, at some point in the future, what the effect 

of the rule has been. We have actually done that on a NAA regulation involving ship strikes and right wales. OK. You put in place 

that regulation. Can you come back in 5 years and tell us what the 

effect of this rule has been? 

Senator LANKFORD. Did you set an actual date like that? I think 

that is part of the issue. It would just say do it at some future 

point instead of just saying 5 years. 

Mr. SHELANSKI. I want to be careful because I am not sure I remember that specific detail—I believe we put a time period in 

there. 

Senator LANKFORD. OK. 

Mr. SHELANSKI. But again, what would be required specifically 

and what the consequences would be are things that I think are 

important details. One of the concerns I would have and that I 

think would have to be resolved is anything that suggested to those 

who must comply with the rule, that in 5 years there could be a 

review that has the rule not take effect, I think, would have a real 

effect on compliance and we would have to think about what the 

compliance incentives are. We want people to comply with the rule, 

for the rule to be able to take effect, so that the agency could do 

a meaningful assessment of whether it was working. 

Senator HEITKAMP. Just to clarify, I do not think that if we 

would embed the requirement that the rule would evaporate. What 

we are simply saying is that we are going to require that with 

every new rulemaking, you actually consider how you are going to 

review this rule and how you are going to provide stakeholders 

with an opportunity to comment at time certain on the effectiveness and the benefit. And it also has the added benefit of doing a 

look back on cost-benefit analysis with true data. 

Mr. SHELANSKI. This is something I would like to take back and 

talk to the team about and think more about, but we would welcome a further discussion on this topic. 

Senator LANKFORD. Great. Can I come back to the cost-benefit 

issues again? In retrospective review, we have multiple issues that 

we still want to be able to talk about. Let me just give you a hypothetical situation. Let us just say there was a Supreme Court case 

called Michigan versus EPA, just hypothetically. 

Senator HEITKAMP. Never heard of it. 

Senator LANKFORD. And there was a conversation about this 

term of appropriate and necessary and whether cost-benefit should 

be analyzed in that. EPA came out and said that they do not feel 

like they have to consider cost, that that was not necessarily in the 

appropriate and necessary. That came through OIRA to the process, gets to the Supreme Court, and they say, Of course you have 

to evaluate costs on it. 

Two questions, I guess. One is, obviously, that came through 

OIRA at some point and I do not know if it was while you were 
23 

sitting there or not. So one is, why did OIRA not catch that say, 

No, you have to do a cost-benefit analysis here. And the second one 

is, how does that change the process for OIRA in the future? 

Mr. SHELANSKI. There can be difficult legal issues underlying a 

statute. The way that the EPA did the analysis was the subtle 

legal understanding at the time. It obviously had to go to the Supreme Court to be clarified. So I do not think that it would be 

OIRA’s position to second-guess—— 

Senator LANKFORD. But the position has been that there has to 

be some kind of cost-benefit analysis. EPA basically said, That is 

not our responsibility. We do not have to do that on a cost-benefit 

analysis on something that was very significant and it ends up 

being a very costly rule at the end of the day. 

But their position was, We do not have to do that. That is what 

I am trying to figure out. How often does that occur, that OIRA 

would say to an agency, No, we concur, you do not have to do a 

cost-benefit analysis on this though it looks like a very significant 

rule? 

Mr. SHELANSKI. There are certain statutes, I think only one or 

two that I can think of, that appear to bar the agency from taking 

costs into account. Those would be the only cases where OIRA 

would give a free pass to the agency, and the Clean Air Act (CAA) 

is one of the statutes that was often held up by a number of authorities as a place where cost-benefit analysis was not something 

that could be mandated. 

The Executive Orders, of course, require a cost-benefit unless 

prevented by law. So those are very rare occurrences. So even 

where agencies think that their rule is of borderline economic significance or would rather not do the cost-benefit analysis, we do not 

give them a free pass. 

Senator LANKFORD. Well, you and I, a couple of years ago, had 

a protracted conversation about social cost of carbon right when it 

was being released as well, which is obviously a very significant decision, came out in a microwave oven rule, if I recall correctly. The 

first time it was released it was kind of slipped into the middle of 

that and the implication was it is going to kind of go into every 

rule just a little bit at a time. And then it came back and was reviewed and has gone through a process, has recently gone through 

that again. 

You had mentioned the Circular A–4 earlier as that is kind of 

the standard on it, but the social cost of carbon, if I remember correctly, did not use that same standard that was set in there at the 

discount rate of how you evaluate the long-term effects. It changed 

the number a little bit. Do you happen to know why, on that particular rule, when you said that the A–4 is kind of the gold standard there, why in that particular social cost of carbon rule the discount rate that is in A–4 was not used? 

Mr. SHELANSKI. Thank you, Senator. To clarify, the social cost of 

carbon is not a rule. The social cost of carbon is an input into—— 

Senator LANKFORD. It is an estimate, correct. 

Mr. SHELANSKI. Yes. It is an input that agencies can use where 

appropriate in a cost-benefit analysis. 

Senator LANKFORD. But it is obviously extremely important because when you are looking at cost and benefit, it is one of those 
24 

factors that goes in that if it is not right, again when you look at 

a 20-year window or a 50-year window, it changes pretty dramatically. 

Mr. SHELANSKI. Right. So the interagency body that came up 

with the cost, the social cost of carbon estimate, based their analysis on publicly available, independently developed, peer-reviewed 

models, used inputs that one would suggest were appropriately 

chosen, actually, under Circular A–4. Circular A–4 does not mandate that in every case a particular discount rate or discount range 

could be used. 

It gives guidance as to what we thought, at least at the time that 

the circular was last revised, that a good range of discount rates 

were from 3 to 7 percent, but which one is appropriate in a particular context will depend very much on the circumstances. 

The judgment was reached in the social cost of carbon and I was 

not there when the original estimate was developed. 

Senator LANKFORD. Right, but you have been there during the 

revision. 

Mr. SHELANSKI. I have been there during the revision. I think 

that what the revisions have done is to review whether we think 

we have the right inputs. We have actually been generally criticized on the outside for having a discount rate that is too high in 

that. 

And what we are doing next in the social cost of carbon process, 

which I might add that the Government Accountability Office 

(GAO) commented, I think favorably on, what we are doing now is 

moving forward in a process that we have recently announced with 

the National Academies, will develop again a very robust estimate 

that will go out for public comment and for peer review. 

Senator LANKFORD. And then how long is the look as far as the 

benefits on social cost of carbon? How far does it go out? 

Mr. SHELANSKI. I think we have a range that we look over and 

we have both the short and long-range estimates. So there is a 

range that will come out in that guidance. 

Senator LANKFORD. So give me the guess here. Is it a 5-year 

range, 10-year range, 20-year range? As you mentioned, most of 

those rules are 20 years in cost and benefit. Does it go out to the 

farthest extreme to 20 years? 

Mr. SHELANSKI. I am sure it does. I would have to go back and 

look and see. 

Senator LANKFORD. But it does not go farther than 20 years as 

far as benefits? 

Mr. SHELANSKI. I would have to go back and check how far out 

we are looking. The real question is under the circumstances given 

what we are trying to achieve what is an appropriate timeframe 

and some can be quite a long timeframe. 

Senator LANKFORD. So how do you do the indirect benefits as 

well as indirect costs when you deal with something like the social 

cost of carbon? Just take a microwave oven, for instance, where it 

all started there. There is a benefit to saying actually the food was 

cooked faster, it did not use other fuels, did not use other types of 

electricity or whatever it may be. How are you figuring that in as 

well as the cost that goes into it as well? 
25 

Mr. SHELANSKI. Well, the social cost of carbon would only be one 

input into that regulatory—— 

Senator LANKFORD. But it is a pretty significant input. 

Mr. SHELANSKI. It is, but equally significant would be other 

kinds of—for example, the benefits of using the microwave, the savings in time to people, the convenience, the cost savings that people 

might have from cooking more food at home because it is more convenient rather than going out. These are the kinds of things that 

we would ask the agency to consider as well. 

Senator LANKFORD. So back to the 7 percent versus 5 percent decision on social cost of carbon, can you help us understand how 

that decision was made? 

Mr. SHELANSKI. Well, I think that when you look at—and I cannot comment as to what the interagency deliberations were at the 

time, I was not there. But I would simply note this. If you used 

a 7 percent discount rate for the social cost of carbon, we would effectively be saying that environmental damage from carbon, just 

far enough forward for grandchildren to be becoming adults, would 

not matter at all to us. We would put a value of zero on that. 

And since what we are trying to achieve through the social cost 

of carbon is some accounting for the cost to society going forward 

to the cost of a well functioning economy, to the cost involving our 

health and safety, what that is going forward into the future, such 

a high discount rate would be inappropriate because—— 

Senator LANKFORD. That seems a get outside of that 20-year window we were talking about. 

Mr. SHELANSKI. Well, the actual calculations of the costs rather 

than what we think is an appropriate benefits range is something, 

as I said, I would be happy to go back and look at those and reengage you. 

Senator LANKFORD. Because again, let me just try to clarify that. 

But if you are doing that 7 percent and you are looking at the effects on our grandchildren, then now that our costs and our benefits are not side by side equal on that, now we have a long window 

for one and a short window for another one. 

Mr. SHELANSKI. And again, it would depend on the particular circumstances of the rule in which the social cost of carbon was being 

used. What the social cost of carbon does is it says, What are the 

costs to the economy, to society of putting an additional ton of carbon into the atmosphere. 

Senator LANKFORD. How far out though? 

Mr. SHELANSKI. Again, we had some different calculations because you get different numbers depending on—— 

Senator LANKFORD. Right, but I am trying to get back to this 20- 

year amount that you say is what is typical. It goes beyond that 

20 years though? 

Mr. SHELANSKI. As I said, I need to go back and double check our 

technical support document and get back to you on what our timeframes are. 

Senator LANKFORD. Yes, because I want to us to be able to help 

clarify this because this is important to us, to feel like there is a 

sense of fairness. If one side of the cost-benefit analysis is 20 years 

and the other side may go out 60, that is literally putting your 

thumb on the scale on one side and there is not a perception of 
26 

fairness in between the two. To say if we do this, this will have this 

long-term affect out there on the horizon. 

Mr. SHELANSKI. I think that it is a question of economics and of 

evidence, not of perceived fairness. It may be that you can incur 

a cost in one year that will lead to benefits that go out quite a bit 

farther. 

Senator LANKFORD. Right. 

Mr. SHELANSKI. The question is, is that a correct economic analysis on the cost side and do you have adequate evidence on the 

benefits side. 

Senator LANKFORD. And that is what a lot of our conversation 

last time was, social cost of carbon, because the rule is promulgated 

and then, if I remember, 3 years later, maybe it was 4 years later, 

it went up 50 percent, which is a pretty dramatic shift in the 

model, and then has been re-evaluated again and came back 

$1,000, if I recall correctly. 

Mr. SHELANSKI. Came down about a dollar ton, yes. 

Senator LANKFORD. So the shift is what is interesting, I guess. 

If it is a reliable model and 3 years later you have to adjust it 50 

percent, it causes all of us to raise our hand and say, Why is that 

a reliable model if you had to change it 3 years later by 50 percent 

when you are looking at modeling that may go out over the next 

hundred years. So 3 years ago, your hundred-year model was that 

bad. 

Mr. SHELANSKI. Well, I am not sure it was that bad. In fact, it 

understated the costs. So in that sense, the bias worked in favor 

of those who would not want regulatory costs imposed. I think 

what we are trying to do with the social cost of carbon is to use 

the best economics and science available as to what the benefits 

will be to our society of keeping a ton of carbon out of the atmosphere. 

We made clear in 2010 when the original estimate came out that 

this would be an ongoing process because the models are constantly 

updated by those who develop them. New scientific evidence is 

coming in. Now, we do have to ask a fundamental question, whether there is a minimum threshold of reliability and credibility to the 

underlying science that it is worth the enterprise. We believe that 

there is. 

One of the reasons that we are engaging the National Academies, 

one of the reasons that we look to all of the international bodies 

that are deeply engaged in this, is to make sure that the science 

is sound and that we are keeping up with the latest science and 

economics. 

Senator LANKFORD. OK. 

Senator HEITKAMP. If I could just switch gears here a little bit 

and talk about process. I think those of us who work on issues 

every day and who are here because we are interested in public 

policy, we tend to fall in love with our ideas. Right? We think, Oh, 

that is such a good idea, I think it should be a law. 

And one of the concerns that we have is that an agency, not 

wanting to be biased, gets out ahead, makes a proposal, and then 

becomes a defender of the proposal as opposed to a promulgator of 

an unbiased rationally based rule. 
27 

And so, we have been talking a lot about advanced notice of proposed rulemaking so that we do not have an embedded bias in that 

original drafting for which people hunker down and go into defense 

mode. Do you believe that if agencies engaged earlier with stakeholders in the process and actually have that comment before they 

begin to finalize their own thinking about the rules that we might 

have a more harmonious regulatory process and have greater use 

of advanced notice of proposed rulemaking? 

Mr. SHELANSKI. I think we have a shared view that early engagement with the whole range of stakeholders is important and beneficial to a rule. And if an agency does come forward with a proposed rule before they have gathered the evidence and the input, 

that could lead to real problems because the starting point for the 

rule, as you say, could be something that is not well grounded in 

the evidence or the reality of the world in which the rule is actually 

going to operate. 

So I think agencies, by and large, are quite good at doing notices 

of inquiry or the advanced notice of proposed rulemaking 

(ANPRMs) that will help them gather the necessary evidence. And 

I think they are good even when they are not doing that process 

to have a long development process for a notice of proposed rulemaking where they are gathering stakeholder input. 

Whether it is during the process of a notice of proposed rulemaking (NPRM) or through an ANPRM, I fully agree that an agency should not proceed with a rule without a good basis for understanding. 

Senator HEITKAMP. So you would agree that this would be a best 

practice in rulemaking generally? 

Mr. SHELANSKI. I think having the evidence and the understanding of, for lack of a better term, the marketplace in which the 

rule will operate, is a necessary baseline for doing a good rulemaking. What the particular procedural vehicle is could vary, but 

we certainly encourage agencies in that direction. 

Senator HEITKAMP. Do you think we should mandate agencies in 

that direction? 

Mr. SHELANSKI. I think requiring agencies to have a sound basis 

for proceeding is a fine idea. The particular way that we would put 

that in place is something I would welcome discussions on. I would 

also add, though, that I think our system has pretty good incentives for agencies to do that as things stand. 

Agencies do have to justify their rules on the record ultimately, 

when they are Executive Branch rules before us at OIRA when we 

review them; when they are not, for any rule under the Administrative Procedure Act (APA) before a court. There has to be public 

notice and comment in most cases, not all cases. But in almost 

every case, the rule is judicially reviewable and if the agency does 

not have a good record and looks like it is acting—— 

Senator HEITKAMP. So would you not agree that judicial review 

is a pretty cumbersome and expensive process and results? Let us 

take a look at waters of the United States. I am sure it is something that you have never had to deal with. And let us look at all 

the various attempts to do jurisdictional water determinations and 

what has happened. 
28 

I mean, when you end up with a court case that is 441, that is 

not particularly a good way to get guidance on how we are going 

to get certainty on what is jurisdictional waters under the Clean 

Water Act. And so, obviously lots of debate over that rule. I just 

use these as illustrations. I am not asking you to comment on the 

efficacy of the rule or whatever, but I use it as an illustration of 

where the process seems to have gone horribly wrong in terms of 

ships passing in the night. 

We need to have a definition so there is certainty to American 

businesses and American landowners, but yet we keep throwing 

more uncertainty at it. And so, it seems to me that the more input 

we can get on the front end, the more we can force a dialogue and 

collaboration, the less set people are. This is one of those examples 

that I think maybe proves the need to have more collaboration on 

the front end. 

Mr. SHELANSKI. I think the point about judicial review is we certainly would rather have rules that people do not feel the need to 

litigate and feel like there are good rules and ones that they can 

live with. But what judicial review does is provides an incentive. 

Agencies want to avoid it, just as litigants want to avoid it, but the 

mere knowledge that it exists and will happen in some cases, and 

it does happen frequently, is a notice to the agency, We really need 

to get our ducks in a row. 

So my suggestion is that it provides good incentives under the 

existing system for agencies to engage in outreach, but I think 

agencies, in many cases, could benefit from additional contact with 

the parties that are going to benefit and bear the cost from their 

rules and undergo preliminary steps, as I said, whether part of 

NPRM or through an ANPRM to create the rule on a more informed environment. 

Senator HEITKAMP. When you do your review—and we will go 

back to the renewable fuel standard (RFS). We held a hearing on 

that whole process and the justification for the authority to do that 

rule was very interesting to me because this was really about infrastructure even though historically and under our mandate here, 

the ability to review the rule based on infrastructure to accommodate the marketplace was taken out, and a clear sign, in my understanding of statutory interpretation, when it is in and it is taken 

out, might be an indication that it was not intended that you could 

use that. 

So bootstrapping another provision to do exactly that seems to 

me to be an extension, and an inappropriate extension, of authority. I mean, this is not news to you, I am sure, but it raised the 

question to me on what kind of review you do on the legality of the 

rule. Never mind the cost benefit or the appropriate process, but 

the fundamental legal authority to actually do a rule. 

Mr. SHELANSKI. We focus overwhelmingly on the analytics of the 

rule and how well the rule will function, but we are not blind to 

the legal issues. They are not primarily in OIRA as a bailiwick. 

They would line up in the first instance with the agency. 

But part of the interagency review process, and a critical one, is 

that both internal to the Executive Office of the President and external through other Executive Branch agencies, there is legal review of the rule. So we would expect, through the interagency re-
29 

view process, White House counsel and the Justice Department to 

alert us if there were legal concerns and we do require those concerns to be resolved. 

We do not act as an independent court. At any given day, there 

might not be a single lawyer in OIRA. I happen to have a law degree. A couple of people in my office happen to have law degrees, 

but it has not been unknown for there not to be a single lawyer 

in OIRA. 

Senator HEITKAMP. But in the history, there has never been a 

rule rejected for lack of legal authority to promulgate it? 

Mr. SHELANSKI. During the time that I have been Administrator, 

that has not been a basis on which we have asked an agency not 

to do a rule. Others have, but not us. 

Senator LANKFORD. Can I ask a couple of rapid fire questions 

here? On the retrospective review, can you ask, is there a better 

way to do this rather than what we have done? You had mentioned 

before some of the cost issues and everything. Is it permissible to 

say 10 years later, 20 years later, this is how we are regulating a 

retrospective review? Can it include the question, is there a better 

way, is there additional flexibility that would still accomplish the 

same thing? 

Mr. SHELANSKI. Absolutely. 

Senator HEITKAMP. OK. So that can be included in the conversation on a retrospective review? 

Mr. SHELANSKI. Yes. 

Senator LANKFORD. Is it typical? 

Mr. SHELANSKI. Yes, it is quite typical. 

Senator LANKFORD. Let me ask a question that is just, frankly, 

obvious. So it screams just obviously an easy question. What time 

is midnight when you are talking about midnight regulations? 

Mr. SHELANSKI. I guess the way I would answer that is that is 

that more important to me than midnight is when is 10 p.m. 

Senator LANKFORD. Sure. I can say 2008, that was prospective 

rule is June 1, final rule is finished by November 1. 

Mr. SHELANSKI. Right. So what I have asked agencies to do is to 

prioritize their rulemakings. We do not pick their priorities for 

them. But get your ducks in a row because what we care about at 

OIRA is having time to review the significant rules and to do a 

good and rigorous evaluation under the Executive Orders. And I 

cannot do that if I am getting rules too late in the day. 

Senator LANKFORD. So that the hard question is, can you commit 

to us you will follow through on Executive Order 12866 in 2016 

and even in the rush to try to get some rules done at the end, we 

are still going to do due diligence at OIRA? 

Mr. SHELANSKI. I can commit, Senator Lankford, that I will do 

my darndest to make sure that OIRA gets every opportunity to review all the rules that come through. I will do everything in my 

power to ensure that. We have started that work today with regular—I mean, today? We started it months ago, but it keeps going 

today and will continue through the remainder of the Administration to have ongoing prioritization meetings with agencies to make 

sure that we are getting the rules through in a cadence that allows 

us to do that review. I can commit to doing my darndest. 
30 

Senator LANKFORD. Will there be a setting of a time and a date 

to say, must be done prospective by this date, must be done final 

by this date to make sure that we are not cramming at the end so 

that agencies are aware in advance? 

Mr. SHELANSKI. I am not sure when that conversation would 

happen or whether such firm dates are necessary, but we are already letting agencies know what kind of time we need to review. 

Senator LANKFORD. I would suggest those kind of dates are necessary so that every agency sees the deadlines that are coming. 

Otherwise, it does get sloppy at the end. Every Legislative Branch, 

whether it be State or Federal, always knows how sloppy things 

get at the end as well as every agency. So setting the times early 

would be helpful to everyone in the process. 

Let me ask another quick question on this as well. In 2014 GAO 

found that 72 percent of the significant OIRA rules reviewed included no language to explain why the rule was designated as significant. Help us to understand that. How can we get better transparency, that if a rule is declared significant we understand why 

it was declared significant. 

Mr. SHELANSKI. I think typically when a rule is economically significant, for that category of significance, I think it is obvious, because we list the rule as economically significant. I think the other 

reasons are so varied. I would say the most common one, it usually 

is not stated because maybe it just seems evident on the process, 

is that another agency wants the opportunity to comment on what 

the rule issuing agency is doing. So I would say interagency equities are probably the biggest reason that we pull a rule in. 

Senator LANKFORD. But is there a way to be able to just say that 

so that people can see it and are aware of that? This is deemed significant because of this. It is the same thing when changes are 

made. When OIRA recommends something as a change to a regulation back to the agency, that is also supposed to be transparent on 

it and we are not getting that, I do not think, sometimes. Sometimes we are seeing the change in rules, but we do not see the 

OIRA recommendation. 

So these are just basic transparency aspects of it, to know why 

that was deemed significant, to know what OIRA was recommending, that an agency said you are right and we are making 

that change, would be helpful. 

Mr. SHELANSKI. Thank you. I will take that back and look at 

ways that we might be able to provide more insight into the basis 

for the significance determinations. 

Senator LANKFORD. OK. Senator Heitkamp. 

Senator HEITKAMP. As long as we are going rapid fire, I have one 

more question and that is about codifying Executive Order 12866 

and 13563. Obviously we rely on the good judgment of whoever sits 

in the Oval Office to make sure that these Executive Orders are 

continued Administration to Administration. 

We have proven kind of bipartisan support for that type of regulation or that type of oversight, that type of structure. Why should 

we not codify those two Executive Orders? 

Mr. SHELANSKI. I think we would be very open to exploring the 

ways in which you might be considering doing such a thing to talking about those with you. We feel right now that the Executive Or-
31 

ders are on very solid ground having stayed firm and really only 

been reaffirmed across Administrations of both parties. 

So we do not feel particularly vulnerable in that regard at OIRA. 

On the other hand, there may be aspects of the Executive Orders 

that we would be interested in hearing your thoughts on as you 

consider reform. 

Senator LANKFORD. So you are saying that of all 25 candidates 

for President out there, you are confident that all 25 of them will 

continue the same process? 

Mr. SHELANSKI. I looked in all of their platforms and some of 

them simply do not have an OIRA plank. 

Senator LANKFORD. That is our thought as well, is that maybe 

there is a need to codify some of these things because it is a possibility that someone may be elected that does not—— 

Senator HEITKAMP. They do not even know who you are. 

Mr. SHELANSKI. I would like to keep it that way. [Laughter.] 

Senator LANKFORD. I appreciate you being here. I appreciate the 

ongoing dialogue. The transparency part of it is extremely important. What you are doing is extremely important in OIRA. We do 

want to make sure the cost-benefit, that the retrospective reviews 

are actually happening. Cost-benefit is clear and it is happening. 

Things like the Michigan versus EPA case do cause alarm to us to 

say that there is an ongoing conversation somewhere out there 

where someone is saying maybe there is not a need for it. Waters 

of the United States had the same kind of issue to try to evaluate 

whether the cost is out there. So there are other things that raise 

our attention as well. 

To make sure that OIRA stays on top of some of these things, 

that the American people are kind of staying on top of, and to 

make sure that there is fair between cost-benefit analysis, and that 

it is very clear and consistent across the board. So appreciate the 

ongoing work. We will maintain this conversation in the days 

ahead. 

I am allowing seven additional days for any individual to be able 

to submit questions or statements for the record. With that, we are 

adjourned. 

[Whereupon, at 4:05 p.m., the hearing was adjourned.] 

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Æ