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OFFICE OF INFORMATION AND REGULATORY AFFAIRS: FEDERAL REGULATIONS AND REGULATORY REFORM UNDER THE OBAMA ADMINISTRATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS, COMMERCIAL 

AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 21, 2012 

Serial No. 112–102 

Printed for the use of the Committee on the Judiciary 

( 

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

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

RICHARD HERTLING, Staff Director and Chief Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON COURTS, COMMERCIAL AND ADMINISTRATIVE LAW

HOWARD COBLE, North Carolina, Chairman 

TREY GOWDY, South Carolina, Vice-Chairman 

ELTON GALLEGLY, California 

TRENT FRANKS, Arizona 

DENNIS ROSS, Florida 

BEN QUAYLE, Arizona 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

MELVIN L. WATT, North Carolina 

JARED POLIS, Colorado 

DANIEL FLORES, Chief Counsel 

JAMES PARK, Minority Counsel 

(III) 

C O N T E N T S 

MARCH 21, 2012 

Page 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 1 

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

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 3 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Ranking Member, Subcommittee on Courts, Commercial 

and Administrative Law ...................................................................................... 8 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Chairman, Committee on the Judiciary ..................................... 10 

WITNESSES 

The Honorable Cass R. Sunstein, Administrator, Office of Information and 

Regulatory Affairs 

Oral Testimony ..................................................................................................... 11 

Prepared Statement ............................................................................................. 14 

John D. Graham, Dean, Indiana University School of Public and Environmental Affairs 

Oral Testimony ..................................................................................................... 27 

Prepared Statement ............................................................................................. 28 

Sally Katzen, Visiting Professor of Law, New York University School of Law 

Oral Testimony ..................................................................................................... 36 

Prepared Statement ............................................................................................. 38 

Richard A. Williams, Director of Policy Research, The Mercatus Center, 

George Mason University 

Oral Testimony ..................................................................................................... 44 

Prepared Statement ............................................................................................. 47 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 4 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Ranking Member, Subcommittee 

on Courts, Commercial and Administrative Law .............................................. 139 

Response to Post-Hearing Questions from the Honorable Cass R. Sunstein, 

Administrator, Office of Information and Regulatory Affairs .......................... 140 

Response to Post-Hearing Questions from John D. Graham, Dean, Indiana 

University School of Public and Environmental Affairs ................................... 142 

Response to Post-Hearing Questions from Sally Katzen, Visiting Professor 

of Law, New York University School of Law ..................................................... 144 

Response to Post-Hearing Questions from Richard A. Williams, Director of 

Policy Research, The Mercatus Center, George Mason University ................. 145 

Page

IV 

Material submitted by the Honorable Howard Coble, a Representative in 

Congress from the State of North Carolina, and Chairman, Subcommittee 

on Courts, Commercial and Administrative Law .............................................. 149 

(1) 

OFFICE OF INFORMATION AND REGULATORY 

AFFAIRS: FEDERAL REGULATIONS AND 

REGULATORY REFORM UNDER THE OBAMA 

ADMINISTRATION 

WEDNESDAY, MARCH 21, 2012 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, 

COMMERCIAL AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 1:32 p.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Smith, Gowdy, Franks, Ross, 

Cohen, and Conyers. 

Staff present: (Majority) Daniel Flores, Subcommittee Chief 

Counsel; Johnny Mautz, Counsel; Allison Rose, Professional Staff 

Member; Rachel Dresen, Professional Staff Member; Bobby 

Cornett, Professional Staff Member; Omar Raschid, Professional 

Staff Member; Ashley Lewis, Clerk; (Minority) James Park, Subcommittee Chief Counsel; Susan Jensen-Lachmann, Counsel; and 

Rosalind Jackson, Professional Staff Member. 

Mr. COBLE. This Subcommittee will come to order. 

I am told that there will be a vote on or about 2 o’clock, and that 

will probably keep us on the floor about 30 to 45 minutes. So we 

will stand in recess during that time. 

And I am furthermore told that a couple of our witnesses have 

airplane reservations. So we will try to accommodate that in due 

time. 

The Judiciary Committee has approved a number of regulatory 

proposals—the Regulatory Flexibility Improvement Act, the Regulatory Accountability Act, and the Regulations in Need of Scrutiny 

Act, REINS—all of which have been approved by the House. Improving our regulatory system has been a top priority for the Subcommittee and the full Committee in the 112th Congress. 

Now, as many of you likely know, there are a number of people 

in Congress who would reject every proposed regulation that surfaced regardless of its merit. They don’t like regulations. Conversely, there is a group that would embrace every prospective regulation that surfaced, whether it had merit or not. They simply do 

like regulations. I believe those two groups, however, do not speak 

2 

for the majority of the Congress. I think there is some balance that 

must, indeed, be struck. 

Some regulations are necessary. They protect our health and 

safety. They ensure that future generations will inherit a land and 

society that we hope is as bountiful as the one that we have inherited. But in order for our regulations to be successful, they must 

be effective and they must be efficient, and oftentimes effectiveness 

and efficiency is subject to personal interpretation. I think that 

goes without saying. 

I am deeply concerned, however, about our regulatory process 

and perhaps our regulators have lost touch with the American people. There seems to be a lack of accountability, lack of oversight, 

too much influence by special interests, and some poor judgment. 

Time and again we read reports about unwise regulations. Typically they create unnecessary red tape, have futile or duplicative 

requirements, or ignore lower cost alternatives. 

For instance, the EPA has proposed rules that would be an economic catastrophe for my district and perhaps other districts: the 

Boiler MACT rule, the Utility MACT rule, the Cement MACT rule, 

and greenhouse gas rules. Businesses in my district or representatives thereof have told me and the EPA that they would simply 

cease operations if some of these rules are implemented as proposed. Other larger businesses warned that they will likely move 

operations to another country. This is not a scare tactic. It is a reality. And my fear is that these plans may already be in the works 

due to the cost of energy which is also being driven by regulatory 

costs. 

Rules such as these are being prepared by the Obama administration at an alarming rate. In President Obama’s first 3 years in 

office, 78 more major rules were issued than were issued during 

the first 3 years of President Bush’s administration. It is also important to note that the attacks on 9/11 occurred during this time 

and resulted in a dramatic increase in homeland security-related 

regulations. 

The Heritage Foundation estimates that the Obama administration is responsible for $426 billion in new yearly regulatory costs. 

This estimate does not account for all the non-major rules. 

In late August, the Obama administration notified the Congress 

that it has several multi-billion rules in development and an additional 3,118 rules in the pipeline. 167 of these rules are expected 

to have a major impact on the economy, this is in addition to the 

1,010 regs that have already been completed. 

Perhaps folks I may be old-fashioned, or perhaps my information 

may be inaccurate. But it appears that the Administration has become obsessed with regulations. There are countless polls and surveys that illustrate general dismay about our regulatory system. 

Businesses, large and small, routinely say the greatest economic 

challenge in America is our regulatory system. It is unpredictable 

and oftentimes inefficient. 

Despite attempts by the Administration to implement policies 

through executive order and memoranda, our Federal regulators 

continue to impose and implement rules that oftentimes ignore the 

economic effect thereof. Many of these rules probably should not 

have been proposed, and while there may be no recourse to hold 

3 

the individuals who created the bad regulations accountable, the 

Administration can certainly control what rules are implemented. 

The bureaucracy is enormous and regulatory independence is a 

force to be reckoned with, even within the Administration. 

I appreciate the effort of Administrator Sunstein to join us today, 

as well as our other witnesses, and I hope at the conclusion of the 

hearing, we will have a better grasp on how we can help the Office 

of Information and Regulatory Affairs prevent bad regulations from 

being proposed and implemented. 

I am now pleased to recognize the distinguished gentleman from 

Michigan, the former full Committee Chairman, Mr. Conyers, for 

an opening statement. 

Mr. CONYERS. Thank you, Chairman Coble. 

I am going to be brief because I wanted to get the benefit of our 

witness, Professor Sunstein’s remarks before a vote interrupts us. 

But in summary, we marked up two bills yesterday: Regulatory 

Freeze for Jobs Act and the Sunshine for Regulatory Decrees and 

Settlement Act. Actually that was premature. We should have had 

this hearing today and then after today, we could have gone on to 

the bills after we have heard from you. We have done legislative 

work and now we are going to hear from not only our distinguished 

first witness, but other witnesses that are very important as well. 

Now, we were able to get the title of the bill changed. I thank 

Chairman Coble for that. 

What we are here today doing is trying to examine, among other 

things, why the Judiciary Committee has had more than 12 hearings on the subject of regulations. It has become an obsessive 

mania that I think we need to examine as we are moving through 

the titles. 

I think the Administration has demonstrated a competent ability 

to balance the Government’s obligation to protect the health, welfare, and safety of Americans. I do not know of anybody in the Congress that likes regulations and wants more of them as a matter 

of their philosophy. 

And so the only other thing I might want to add before our witness begins is that the Office of Management and Budget has concluded that the net benefits of regulations issued during the third 

fiscal year of the current Administration exceeded $91 billion, including not only monetary savings but the value of the lives saved 

and the injuries prevented. This is far more than any other Administration. 

And so it is important that we realize that some of the studies— 

and I can’t help but mention the Crain and Crain study because 

it has been the subject of criticism by numerous sources, including 

the Congressional Research Service, the Center for Progressive Reform, the Economic Policy Institute, among others. 

The Heritage Foundation has a regulations report, released only 

last week, and it was clear that the data and methodology were 

subject neither to peer review or public comment. Please. Some of 

the evidence cited is very important. 

And the last thing I will ask to put in the record is a communication released by Professor Sunstein only yesterday that just came 

to our attention, and with the consent of the Chairman, I will include that in the record with the rest of my statement. 

4 

Mr. COBLE. Without objection. 

[The prepared statement of Mr. Conyers follows:] 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 

As some of you may know, the House Judiciary Committee yesterday marked up 

two bills intended respectively to restrain the rulemaking process by the imposition 

of an indefinite moratorium and to impose a series of burdensome requirements on 

agency consent decrees and settlement agreements. 

Indeed, the markup of H.R. 4078, the ‘‘Regulatory Freeze for Jobs Act of 2012,’’ 

and H.R. 3862, the ‘‘Sunshine for Regulatory Decrees and Settlements Act of 2012,’’ 

was premature. 

At least we should have waited to hear what the Administration has been doing 

to address concerns about redundant or costly regulations before resorting to drastic 

statutory measures. 

These bills are part of a series of anti-regulatory measures considered by the 

Committee during this Congress. 

Indeed, today’s hearing is the 12th regulatory hearing this Subcommittee has held 

on the regulatory and administrative law process. 

I would, however, like to thank Subcommittee Chairman Coble for revising the 

title of today’s hearing. 

While the former title appeared to convey a predisposition against the Obama Administration’s regulatory accomplishments, the present title better reflects what this 

hearing should be about, namely, to get the facts about the following matters. 

To begin with, my colleagues and I want to know what the Administration has 

been doing to make the regulatory process better. I am sure Mr. Sunstein will be 

able to enlighten us about this matter. 

I believe all of us on this Subcommittee can agree that good regulations are necessary and that unnecessary regulations are burdensome to all. 

The Obama Administration has demonstrated a remarkable ability to balance the 

Government’s obligation to protect the health, welfare, and safety of Americans with 

the need to foster economic growth. This accomplishment is all the more remarkable 

in light of the fact that it inherited the most devastating economic crisis since the 

Great Depression. 

Just last week, the Office of Budget and Management, or OMB, issued a draft Report to Congress on the Benefits and Costs of Federal Regulations that reflects the 

numerous steps the Administration has undertaken to reduce unjustified regulatory 

costs. 

For example, this Report finds that the anticipated annual benefits of major federal regulations range between $141 billion and $700 billion, which substantially 

dwarfs the anticipated costs that range between $43.3 billion and $67.3 billion. 

The OMB report also concluded that the net benefits of regulations issued through 

the third fiscal year of the current Administration exceed $91 billion. This includes 

not only monetary savings, but reflects lives saved and injuries prevented. 

And, this amount is 25 times more than the net benefits of regulations for the 

same period for the prior Administration. 

These are indeed laudable accomplishments, but, of course, more needs to be 

done, which leads me to my second thought. 

How much should we trust the evidence used in debates about the proper way 

to regulate? 

We have heard over the course of these prior 11 hearings from our friends on the 

other side of the aisle that the Nation’s regulatory system is severely broken. 

At nearly every hearing, we have heard serious complaints about the alleged costs 

of regulations and that they exceed $1.75 trillion, a number that comes from the 

Crain and Crain study. 

Of course, I have repeatedly pointed out that the Crain study has been debunked 

by numerous sources, including the Congressional Research Service, the Center for 

Progressive Reform, and the Economic Policy Institute. 

5 

Even the authors of the study told CRS that it was never meant to be used in 

regulatory debates, as it did not consider any benefits of regulation. 

We have heard that regulations kill jobs and result in crippling uncertainty. 

And, just yesterday, we heard about a Heritage Foundation Report that claims 

the current Administration has ‘‘unleashed 106 new major regulations that increased regulatory burdens by more than $46 billion annually, five times the 

amount imposed’’ by the prior Administration. 

While this report was released only last week, it is clear that its data and methodology were not subject to peer review or public comment. Therefore, its conclusions 

should be approached with skepticism. 

Some of the evidence that has been cited in support of these arguments has already been thoroughly debunked. I hope all of the panelists will provide some more 

enlightenment on these allegations. 

Finally, I want our witnesses to contribute their thoughts on real regulatory reform, concepts that our colleagues on both sides of the aisle can embrace. 

Given the stature and experience of the witnesses on both panels, I am optimistic 

that they will have some pragmatic and meaningful recommendations for reform. 

To that end, I am again encouraged that President Obama has preemptively 

begun this process by the issuance of Executive Order 13563, ‘‘Improving Regulation 

and Regulatory Review,’’ which requires agencies to assess the costs of cumulative 

regulations. 

In particular, this Order requires agencies to identify sectors and industries that 

face redundant, inconsistent, or overlapping regulations. In addition, it directs these 

agencies to promote ‘‘coordination, simplification, and harmonization.’’ 

And, just yesterday, Mr. Sunstein issued guidance pursuant to this Order that directs agencies to reduce cumulative costs. These directives ask agencies to: 

• consult with affected stakeholders early in the process well in advance of proposing new rules; 

• specifically consider with respect to small businesses and start-ups the cumulative effects of regulations on these entities; 

• analyze the relationship between new regulations and those regulations currently in effect when determining costs and benefits; and 

• identify opportunities to harmonize the requirements of new and existing 

rules in order to eliminate inconsistency, excessive cost, and redundancy. 

I should also note that this guidance is immediately effective. 

Efforts like these are to be applauded and encouraged by my colleagues on both 

sides of the aisle. 

I would like to hear from our witnesses today additional ways that we can make 

our Nation’s regulatory system even better. 

6 

ATTACHMENT 


73417A-1.eps
7 

Mr. CONYERS. I thank the Chair. 

Mr. COBLE. I thank the distinguished gentleman from Michigan. 

We have been joined by Mr. Ross, the distinguished gentleman 

from Florida. Good to have you with us, Dennis. 

Mr. ROSS. Thank you, Mr. Chairman. 

Mr. COBLE. Our first witness is the Honorable Cass Sunstein, 

known to all of us. He is the Administrator of the Office of Information and Regulatory Affairs. Prior to becoming Administrator, he 


73417A-2.eps
8 

was Felix Frankfurter Professor of Law at Harvard Law School. He 

clerked with Judge Benjamin Kaplan of the Massachusetts Supreme Judicial Court and Justice Thurgood Marshall on the U.S. 

Supreme Court and then worked as an attorney-advisor in the Office of the Legal Counsel of the U.S. Department of Justice. He was 

also a faculty member of the University of Chicago School of Law 

until 2008. 

Mr. Sunstein has testified before congressional Committees on 

many subjects. He has been involved as an advisor in constitution 

making and law reform activities in a number of Nations. A specialist of administrative law, regulatory policy, and behavioral economics, Mr. Sunstein is the author of many articles and a number 

of books. The Honorable Mr. Sunstein graduated in 1975 from Harvard College and in 1978 from the Harvard Law School magna cum 

laude. 

Mr. Sunstein, good to have you with us, but in the interim, we 

have been joined by our distinguished friend from Tennessee who 

is the Ranking Member of the Subcommittee. Mr. Cohen, good to 

have you with us and I recognize you for an opening statement before we hear from Mr. Sunstein. 

Mr. COHEN. Thank you and I apologize for being a little bit late, 

but it is good to be here with each of you. And thank you, Mr. 

Chairman. 

Mr. COBLE. Thank you. 

Mr. COHEN. It has been about a year and a half since the last 

time Mr. Sunstein testified on the initiatives of OIRA, and we have 

had a lot happen since then. 

On January 18 of 2011, the President issued Executive Order 

13563 which supplemented, reaffirmed the principles of Executive 

Order 12866 issued by President Clinton. The most current recent 

executive order added emphasis on increasing public participation 

in the rulemaking process and identifying ways to reduce costs and 

simplify and harmonize rules through interagency coordination. 

And those are wonderful goals, and I think that is the reason Mr. 

Sunstein is where he is because he is doing those things and sometimes ruffling the feathers of people who you know would be his 

and the President’s natural allies, but he calls things the way he 

wants to and the way he sees them, which should be to the favor 

of the Republican side too. So that is a wonderful thing. 

This particular order clarifies that agencies must identify and 

consider regulatory approaches that reduce burdens and maintain 

flexibility and freedom of choice for the public, including considering alternatives to mandates, prohibitions, and command-andcontrol regulation. Most significantly, it requires agencies to develop a plan and conduct a periodic review of existing significant 

regulations that may be outmoded, ineffective, insufficiently or excessively burdensome and to modify, streamline, expand, or repeal 

them in accordance with what has been learned. 

Mr. Sunstein has issued a number of guidance memoranda regarding that order. In particular, it is a requirement that agencies 

conduct a periodic review of existing significant regulations, emphasize the need to consider strengthening, complementing, or 

modernizing rules where necessary or appropriate including, if relevant, undertaking new rulemaking. 

9 

As recently attorneys general as yesterday, Mr. Sunstein issued 

another guidance memorandum addressing this order and this requirement that agencies work to address the potential cumulative 

effects of regulations. I look forward to learning the results to date 

for the President’s push to have agencies improve and modernize 

the existing regulatory system. 

Based on some of the statements that I have heard recently from 

some of my colleagues, I imagine we will be discussing the volume 

and cost of regulations under the Obama administration, which has 

been part of the mantra that we have heard emanating from the 

other side of the aisle. I note that according to the Office of Management and Budget’s 2012 draft budget, a report on the benefits 

and costs of Federal regulations, that the net benefits of regulations the first 3 years total $91 billion, 25 times greater than during the comparable period under the Bush, the second, Administration. Moreover, fewer final rules have been reviewed by OIRA and 

issued by an executive agency in the first 3 years of the Obama administration than the comparable period of the Bush administration. Interesting facts, considering what we hear. 

As to the regulatory costs, the costs of economically significant 

rules reviewed by OIRA were highest in fiscal year 2007 which was 

during the Bush administration. In fact, the cost of regulations 

were higher in the last 2 years of the Bush administration than 

during the first 2 years of the Obama administration. 

So, Mr. Sunstein has done his job. 

Finally, I would like to know from all of our witnesses what steps 

Congress can take to better help OIRA to its job, including whether 

Congress should provide OIRA with more resources. 

I will be asking Mr. Sunstein about some rules that have really 

hurt the citizens in my district greatly, some EPA rules that have 

required people not to be able to get their licenses to drive their 

cars because their check engine light does not go off. Even me, yes. 

My check engine light did not go off. It stayed on. I was told I cannot get my tags. I have to go to my mechanic. My mechanic said 

it would cost me $800 to get my check engine light off. So being 

that I am who I am, I asked the City of Memphis to let me go and 

have a tailpipe test, the old, traditional way of determining whether you were emitting carbon to ruin the atmosphere, which I am 

very concerned about. They put the rod in my tailpipe and that 

came out perfect. They said you are emitting nothing. You are 

great. I still had to pay to get my check engine light off. 

That seems like a rule that is overly, overly, overly deemed toward some type of mechanical determination and not considering 

individuals that cannot afford it in my district to have to go get 

their engine light off. And we should not have machines controlling 

our lives and costing us to pay mechanics so we can get our licenses. 

So at some point, I will continue on that theme. We want to get 

rid of that rule. 

With that, I yield back the remainder of my time and look forward to Mr. Sunstein and his helping the poor people of Memphis 

who have check engine lights on not have to deal with that. I yield 

back the balance of my time. 

10 

Mr. COBLE. I thank the gentleman from Tennessee. And you 

echoed some of the comments I made prior to your arrival. 

Folks, I think we have a vote on now, do we not? 

We have been joined by the distinguished gentleman from South 

Carolina, Mr. Gowdy, and the distinguished gentleman from Texas, 

Mr. Smith, who I believe has an opening statement as well. 

Mr. SMITH. Thank you, Mr. Chairman. I do. If I may be recognized. 

Mr. COBLE. Pardon? 

Mr. SMITH. Am I recognized for my opening statement? 

Mr. COBLE. I think so. 

Mr. COHEN. I recognize him. He is Lamar. [Laughter.] 

Mr. COBLE. I will recognize him as well. I think we all recognize 

the Chairman. 

Mr. SMITH. Thank you, Mr. Chairman. 

Speaking of all this, I like Mr. Cohen’s three ‘‘overlys’’ description 

of some regulation, and I concur with him in that regard. 

Mr. Chairman, as America’s small businesses and job creators 

work to recover from a slack economy, a tide of new regulations 

and red tape constantly threatens to set them back. In its first 3 

years, the Obama administration has imposed 106 new major regulations on the private sector, which costs $46 billion annually. That 

is four times the number of major regulations the Bush administration imposed on the private sector in a similar period at more than 

five times the cost. It is no wonder that small business owners say 

that Government regulations are the single most important problem they face. 

In 2011, the Obama administration’s agenda had over 200 economically significant new rules, each of which typically affect the 

American economy $100 million or more each year. 

I have sponsored regulatory reform bills that lighten this load. 

The Regulatory Accountability Act of 2011 builds on and codifies 

proven regulatory reform principles. It guarantees that the benefits 

of all new regulations will justify the cost and that agencies will 

choose less burdensome regulations when possible. It also increases 

accountability, public participation, and transparency in the rulemaking process. 

The Regulatory Flexibility Improvements Act of 2011 reforms 

rulemaking specifically to help small businesses strained under the 

regulatory burden. It forces agencies to account for and minimize 

the impacts of new regulations on small businesses. It gives small 

business owners more opportunities to be heard as regulations are 

written, and it forces agencies to look harder at ways to cut the 

cost of regulations already on the books. 

Finally, the REINS Act guarantees that Congress will vote up or 

down before new, major regulations can take effect. The REINS Act 

restores accountability for decisions to impose large, new burdens 

on small businesses and job creators. 

Each of these bills passed the House of Representatives with bipartisan support and each enjoys companion legislation in the Senate. Yet, when the Judiciary Committee offered to work with the 

Administration to find mutually agreeable legislative terms, the 

Administration refused. And when each bill came to the House 

11 

floor, the Administration suggested that the President’s advisors 

would recommend that he veto the bill. 

This is inconsistent with the President’s own statements on regulatory reform. In the January 25, 2011, State of the Union Address, 

the President said that, ‘‘when we find rules that put an unnecessary burden on businesses, we will fix them.’’ The House-passed 

legislation does just that. 

In his September 8, 2011, address to a joint session of Congress, 

the President agreed that, ‘‘there are some rules and regulations 

that do put an unnecessary burden on businesses at a time when 

they can least afford it.’’ He also stated that, ‘‘we should have no 

more regulation than the health, safety, and security that the 

American people require. Every rule should meet that common 

sense test.’’ I agree and the House-passed legislation assures that 

result. 

I urge the Administration to reconsider its positions on these 

bills and work with Congress to make their reforms a reality. The 

Administration’s unilateral efforts to achieve regulatory reform 

under executive orders and presidential memoranda have produced 

very few results. What is truly needed is legislative action. If 

Washington does not adopt definitive regulatory reform, new regulatory burdens will continue to keep private sector capital on the 

sidelines and we will not be able to expect new jobs. 

Thank you, Mr. Chairman. I will yield back. 

Mr. COBLE. I thank the Chairman. Thank you as well. 

Mr. Sunstein, we are now pleased to recognize you for your statement. 

TESTIMONY OF THE HONORABLE CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY AFFAIRS 

Mr. SUNSTEIN. Thank you very much, Mr. Chairman and Members of the Committee. 

Mr. COBLE. Mr. Sunstein, if you can pull that mic a little closer 

to you. 

Mr. SUNSTEIN. One more time? 

Mr. COBLE. That is better. Thank you. 

Mr. SUNSTEIN. Thank you, Mr. Chairman, for that assist, and 

thank you, Members of the Committee, for your remarks and for 

hosting me on this very important topic. 

It is an honor really to be here to talk about regulation, and my 

focus will be on the President’s executive order known internally as 

Executive Order 13563, and our efforts in particular to try to look 

back at existing regulations to remove red tape and also to discipline the flow of new rules going forward. 

As I am sure you are aware, the President ordered in January 

of last year an ambitious Government-wide review of rules on the 

books. The goal was to eliminate rules that do not make sense and 

to eliminate paperwork requirements that are—I think these are 

the President’s words—just plain dumb. 

In August of last year, no fewer than 26 agencies released their 

review plans. Those plans included over 500 reforms, many of 

which will reduce costs, simplify the regulatory system, and help 

12 

small business in particular. That is one of our principal concerns 

in this challenging economic time. 

What I would like to emphasize is that just a small fraction of 

the reform initiatives, already finalized or formally proposed to the 

public, are expected to save more than $10 billion over the next 5 

years. That is a small fraction of the reforms on the plans. Ultimately, we expect to be able to do a lot better than that. 

In terms of what has happened in formal proposals or finalization, the Occupational Safety and Health Administration is often 

criticized for imposing too much red tape. Well, they heard the concerns and they have eliminated—this is final—over 1.9 million 

hours in annual red tape imposed on American employers. 

The Department of Agriculture has for years been aware of concerns on the part of the agricultural community that the poultry 

inspection requirements are outdated, kind of 1950’s carcass-bycarcass inspections. And they have said can you relieve us from 

this outdated requirement. The Department has proposed to do exactly that with a rule that would produce 5-year savings in excess 

of $1 billion. That is big money. 

The Department of Health and Human Services is soon going to 

finalize rules to eliminate a series of regulatory requirements that 

have accreted on hospitals and doctors over many years. That will 

save over $5 billion over the next 5 years. And as I say, that is expected quickly. 

All of the plans recognize that regulatory reform, our lookback 

exercise, is not just a one-time endeavor. Agencies are required 

now by recent guidance from my office to provide regular updates 

to the American people with time tables on reforms and to listen 

to the public about new ideas for streamlining rules on the books. 

And we heard from Representative Cohen an example that is a 

candidate. 

If any Members of the Committee have ideas for rules on the 

books that should be eliminated or streamlined, we are all ears. 

That is a top priority for my office. 

In terms of the flow of new regulations, the President has offered 

new discipline. He has asked agencies—not just asked—directed 

them—to take steps to harmonize and simplify and coordinate 

rules. He has asked them to consider flexible approaches that reduce burdens and maintain freedom of choice for the public, and 

he has placed new emphasis on our lodestar, which is careful consideration of costs and benefits and selection of the least burdensome alternative. That is built into the fabric of our regulatory system and it is newly reaffirmed by a guidance document issued by 

my office yesterday which is about cumulative burdens with particular reference to the cumulative burdens on small business. 

There is a lot of concern about costs of regulations. I share that 

concern. That is motivating our lookback effort. I would just note, 

while there is more work to be done in eliminating unjustified 

costs, the Obama administration has yet to hit the highs reached 

respectively by the Reagan administration, the Clinton administration, the Bush administration, and the other Bush administration 

in their high years. Each of them in their high year was significantly above our high years. In fact, in the last decade, the highest 

costs were imposed in fiscal year 2007. 

13 

A final point. Many of your comments suggest the extraordinary 

importance of listening to public comments about rules that are 

creating problems, whether it is for individual citizens trying to operate their cars on the street, little businesses trying to work without having to deal with bureaucrats, or just ordinary citizens trying 

to understand what the Government is up to. 

One of our top priorities is to alter the interface between the 

American people and the regulatory system through changing regulations.gov and reginfo.gov. Those are our principal portals. They 

are a whole lot better now than they were a few years ago, and we 

would love your help in making them better still. 

We look forward to working with the Committee and with your 

constituents to reduce regulatory costs and to strengthen our economy while protecting public health and safety in an economically 

challenging time. 

Thank you. 

[The prepared statement of Mr. Sunstein follows:] 

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Mr. COBLE. Thank you, Mr. Sunstein. I appreciate your comment. 

Mr. Sunstein, we try to impose the 5-minute rule against us and 

you almost met the 5-minute rule without imposition. So you are 

a jump ahead of the game. 

The Obama administration, Mr. Sunstein, has issued many 

statements about the need to restrain unnecessary regulatory 

costs, but during the Administration’s first 3 years in office, it 

issued 106 major rules that impose $46 billion in new annual reguVerDate Aug 31 2005 13:46 Jun 20, 2012 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\032112\73417.000 HJUD1 PsN: DOUGA

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latory burdens and $11 million more in one-time implementation 

costs. 

Can you commit to us today that you will do everything within 

your power to at least slow down or de-accelerate the growth of 

new major rules and regulatory costs? 

Mr. SUNSTEIN. Absolutely. 

Mr. COBLE. And, sir, I am not talking about compromising health 

or safety features. 

Mr. SUNSTEIN. Yes, I understand. 

I would just make a little footnote as a former professor which is that $46 billion figure comes from a study which has, on the 

right-hand side, the words ‘‘talking points.’’ And one thing that I 

have learned in Washington is that if there is a document that has 

‘‘talking points’’ on the right-hand side, it might not be entirely accurate. And that particular study has a series of inaccuracies that 

suggest—that mean that the number is not reliable. 

Nonetheless, I take your point and I am happy to make that 

commitment. 

Mr. COBLE. And I thank you for that. 

You mentioned that the Bush years had more regulations during 

a certain period of time as opposed to the Obama years. Am I correct—I am doing this from memory now, Mr. Sunstein, so it may 

be inaccurate. But I think the Bush trend as opposed to the Clinton 

trend was down, and I think President Obama’s trend is up compared to the Bush years. Am I right about that? 

Mr. SUNSTEIN. I believe that is correct. Sitting behind me are the 

OIRA administrators under President Bush and President Clinton, 

and I would defer to them on the numbers. 

Mr. COBLE. We will visit that when they take your chair. 

Mr. Sunstein, what have you done to make sure that the adverse 

jobs impact of some of these regulations were assessed and minimized before the regulations were issued? 

Mr. SUNSTEIN. Okay, great. The President’s executive order uses 

in the first sentence the words ‘‘job creation.’’ That is an unprecedented emphasis on the importance of promoting job creation in the 

regulatory arena as everywhere else. 

There are a few things we have done. We have not gone forward 

with certain regulations in part because of expressed concerns that 

seemed reasonable about job creation. 

More particularly in response to your question, in rules that 

come from a multitude of agencies, there is careful analysis in 

what we call the regulatory impact analysis of the anticipated job 

impacts of rules, and that analysis is subject to public scrutiny. If 

there is any rule that we are issuing that looks like it is going to 

have adverse job impacts, to the extent permitted by law, that is 

something that is exposed to public scrutiny and carefully considered in deciding whether to go forward. 

Mr. COBLE. I thank you, sir. 

Throughout this Administration, Mr. Sunstein, we have seen effective unemployment rates approaching 20 percent. What have 

you and your office done to ensure that these 106 new major rules 

are based on the less burdensome regulatory alternative or impact? 

Mr. SUNSTEIN. Okay. I would emphasize that at least of the category of rules called ‘‘major rules,’’ a large number of them are benVerDate Aug 31 2005 13:46 Jun 20, 2012 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\032112\73417.000 HJUD1 PsN: DOUGA
20 

efits programs, e.g., to farmers, as required by Congress and in 

some cases benefits programs under the Medicare and Medicaid 

statutes. So a lot of the major rules aren’t regulatory in the standard sense, though they do go through our office. 

We are acutely aware that the problem of economic growth is 

real and serious after the very difficult circumstances from which 

we are recovering and that the unemployment situation is as it is. 

What that means is that we look very carefully at two things in 

thinking about rules. One is the total costs and which way we can, 

as you suggest, identify to go forward while reducing those costs. 

There are a number of rules that have issued that were proposed, 

very expensive, and then were finalized much less expensive, or 

proposed in a way that the business community found vague and 

then finalized in a way that the business community found clear. 

And as I say, if there is a rule that finds adverse employment impacts, that is something that not only the public scrutinizes closely, 

that is something that we scrutinize closely. 

Mr. COBLE. I thank you, sir. 

I see my amber light has illuminated, so I recognize the distinguished gentleman from Tennessee. 

Mr. COHEN. Thank you. 

I am going to try to be real quick in the allotted 5-minute time 

in here. 

The Heritage Foundation did a study that basically accused the regulations of Obama costing $46 billion annually, five times the 

amount during the Bush administration. OMB has come up with 

some studies that say that the benefits of regulation far outweigh 

the costs. And the Crain study says that regulations cost $1.75 billion. Tell us what your way that you—consider all three of those 

opinions and which one is more accurate than the other. 

Mr. SUNSTEIN. Okay. A lot of numbers. There is a study done by 

two people, that might be related even, named Crain and Crain 

that says that the total costs of regulation are $1.75 trillion. That 

is an alarming number. It was criticized sharply by the Congressional Research Service in an explanation of why the number is in 

the nature of what I would call an urban legend. And one of the 

authors of the World Bank study on which Crain and Crain relied 

said this really is not the right use of our study. I will go into details if you want on that. The costs of regulation are not infinitesimal by any means, but that $1.75 trillion is an urban legend. 

With respect to The Heritage Foundation study, I have a lot of 

respect for The Heritage Foundation and for the author, so I want 

to preface that. And I also want to emphasize that they are right 

to say that we have had fewer regulations in our period than the 

Bush administration did in its period. So they rightly say that. 

The $46 billion number, as I say, did not go through public scrutiny or peer review, and it is based on a series of errors. There are 

a couple of rules that are in that $46 billion number that have actually been stayed or not issued by the relevant agencies, and there 

are other rules that The Heritage Foundation, while generally relying on the agency estimate—they have an estimate that is much 

higher than the agency estimate. 

So the real number is—we are going through peer review and 

public scrutiny. So our draft number for 3 years is about $19.8 bilVerDate Aug 31 2005 13:46 Jun 20, 2012 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\032112\73417.000 HJUD1 PsN: DOUGA
21 

lion. So that is the number. The $19.8 billion for 3 years is in line 

with historical figures, and as I say, we have yet to have a year 

that is as high as the highest years under the previous four Presidents. 

Mr. COHEN. Thank you, sir. 

Yesterday this Committee marked up a bill called the Regulatory 

Freeze for Jobs Act. It would essentially impose a moratorium on 

most major rulemaking until the unemployment rate dips to 6 percent. It is alleged that you said a moratorium would not be a scalpel or machete, it would be more like a nuclear bomb in the sense 

that it would prevent regulations that cost very little and have very 

significant economic or public health benefits. 

Would you like to explain your nuclear comment? 

Mr. SUNSTEIN. That was colorful language. 

Mr. COHEN. Explosive language. 

Mr. SUNSTEIN. Okay. The motivation for a moratorium we appreciate, which is about excessive regulatory costs. So that is a shared 

concern. 

There are a few problems with a moratorium. First, I just referred to three lookback initiatives that are de-regulatory. A moratorium could easily sweep up a series of de-regulatory initiatives 

that are actually cost savers and potentially beneficial for both 

growth and employment. An initiative of this sort, a moratorium, 

that is, could stop us from proceeding with a number of rules that 

industry actually actively seeks and comes to us saying will you 

please get this one out quickly under circumstances in which they 

need it in order to simplify their operations, say, by getting a general permit or to come up with some certainty in the face of, let’s 

say, something coming from other States which will create complication until the Federal Government acts. So in a number of 

cases, rules are actually actively sought by industry. 

It is also the case, as you say, that there are rules that have very 

high net benefits and a moratorium would cut hard against those. 

It is a great achievement of both Republican and Democratic administrations that the number of deaths on highways in the United 

States right now is at an all-time low in recorded history. That is, 

in 60 years fewer people have died on the highways than ever before. That is in part a product of public/private partnership and 

safety rules and probably people that I am looking at right now— 

people and their family or close friends who avoided death or serious injury as a result of those rules which are typically, by the 

way, producing benefits far in excess of costs. 

Mr. COHEN. So it is good. Even if you consider it good intent, the 

implementation would not work. It would mitigate against the intent. 

Mr. SUNSTEIN. That is the nuclear point, which is provocative 

language, I acknowledge, but it cuts too crudely to come to terms 

sufficiently with what is admittedly something that we need to be 

very careful about. 

Mr. COHEN. Thank you, sir. 

I have got two more questions, but we have rules and regulations 

here and I do not want to get beyond them. And the wonderful 

Chairman is too nice. So I yield back the remainder of my time. 

Mr. COBLE. I thank the gentleman. 

22 

The distinguished gentleman from Florida, Mr. Ross, is recognized for 5 minutes. 

Mr. ROSS. Thank you, Mr. Chairman. 

And thank you, Mr. Administrator, for being here. 

Interesting on your comments there. I understand and, believe 

me, I think regulations have a limited role especially when it comes 

to protecting consumers. But I also understand that industries, 

such as auto industries, have done well because they realize that 

in order to have the best product out there, they have to make safety features. Even the insurance industry has complemented that 

well and market forces, market factors also enter into play where 

the regulatory environment did not need to enter into. 

With that being said, as you know, I am from Florida, and in 

Florida we have had an issue going on called the Numeric Nutrient 

Water Criteria, which I am sure you are very familiar with, and 

I guess right now it is in a state of abeyance pending—now the 

Florida Department of Environmental Protection has passed its 

water standards, signed into law by the Governor. Hopefully the 

EPA will accept that and we can move on. 

But my concern about that is how we even got to this point in 

the first place. Under the Numeric Nutrient Water Criteria, estimated impacts on Florida alone—Florida citrus would have a capital cost for compliance of $325 million, annual cost of compliance 

over $100 million. The dairy industry would have over $220 million 

of capital costs for compliance, annual costs of over $70 million. 

The impact was staggering. Annual cost, impact on Florida’s economy was $1.148 billion and loss of full-time and part-time jobs, 

14,545. And yet, I look at the executive order and it has, as you 

indicate, must consider both benefits and costs and use the least 

burdensome tools to achieve that end. 

If that is the case, how did the NNC issue ever get to the extent 

it is? Were there job impact studies done on that? 

Mr. SUNSTEIN. I appreciate the question. My recollection is that 

this particular regulation was issued before Executive Order 13563. 

Mr. ROSS. Correct. 

Mr. SUNSTEIN. That was one that was under a legal cloud; that 

is, the failure to issue the rule was under a legal cloud. The rule 

was very much influenced by the fact that there was a pending 

legal proceeding that put a great deal of pressure—— 

Mr. ROSS. And a consent decree eventually or a consent judgment was entered into that did not include the State of Florida as 

a party. 

Mr. SUNSTEIN. I believe, though—correct me if I am mistaken— 

that the particular rule was preceded by a legal proceeding that 

had a deadline on it, and that put pressure on the Administration 

to act. 

What I would say, with respect to the numbers you give, there 

are legal constraints both from the court and from the underlying 

statute on exactly what flexibilities there are. But as you began 

this very important point, my understanding is that this is currently in the process of discussion, and the circumstance to which 

you refer—it is a very unusual one where there is that level of 

legal pressure to issue something where the cost/benefit relationship isn’t what we normally like—— 

23 

Mr. ROSS. Correct. 

And just getting back to my initial comments, I mean, as a native of the State of Florida, we are surrounded by water. We have 

salt water. We have tremendous fresh water. Recreational, commercial livelihoods are dependent on our water criteria. I firmly believe that there is no better steward of our resources than those 

whose livelihoods depend on it, and that is where I talk about market forces and market factors coming into play where the regulatory environment can be a watch dog but not an everyday 

intrusionary component. 

Mr. SUNSTEIN. Well, I spent a lot of time at the University of 

Chicago where what you just said is our favorite song; that is, that 

market forces are often very beneficial to safety and public goals. 

The only thing I would add is I was recently talking to some 

State and local officials in Colorado where there is a similar issue, 

as you are about to see. I mentioned our lookback. They did not 

know what I was talking about. But then I said remember that 

rule that came from a prior Administration that required street 

signs to be redesigned with different fonts and the traffic control 

devices to be altered with deadlines, and did you know we changed 

that? And everyone in the room knew what I was talking about because it is an analogous thing where it was a State and local issue 

that the Department of Transportation in good faith had affected. 

And Secretary LaHood, as part of the President’s lookback, hearing 

the concerns, actually had a very ambitious set of revisions to what 

prior Administrations had done basically saying in this economically challenging time—— 

Mr. ROSS. Let me ask you a quick question before my time runs 

out because when we talk about economically challenging times 

and market forces, I look at it globally. I see some industries considering whether they can afford the investment of dollars and 

time of 3 to 4 years for the environmental impact studies to build 

or manufacture here and instead decide to go overseas or elsewhere 

outside the country. Are these factors not given consideration when 

promulgating and implementing these rules? 

Mr. SUNSTEIN. Well, it is a great point, and I really appreciate 

it. And if there are rules that we are not doing properly for failure 

to consider that, please talk to us. 

Mr. ROSS. I will. 

Mr. SUNSTEIN. I will tell you the President’s new executive order 

has the word ‘‘competitiveness’’ in the first sentence, and we just 

issued a rule that allows American companies not to meet separate 

standards with respect to hazard warnings for workers, whether 

they are in Canada or the United States. And the Chamber of 

Commerce had very favorable reactions to this because it takes 

down a trade barrier. So to the extent that there is a rule here that 

would make people not want to do business in the United States, 

if the law permits us to worry over that, gosh, we are going to 

worry over that. 

Mr. ROSS. Then I look forward to working with you, Mr. Administrator. I thank you for your time and I yield back. 

Mr. COBLE. Thank you, Mr. Ross. 

The distinguished gentleman from Michigan, Mr. Conyers, is recognized. 

24 

Mr. CONYERS. Thank you, Chairman Coble. 

Thank you for your testimony, sir. We are always pleased when 

you can come to the Congress. 

How do you see the challenge of being at the head of the Office 

of Information and Regulatory Affairs? How do you see that as a 

challenge in a career as varied as yours and more than often not 

a governmental one? 

Mr. SUNSTEIN. I will tell you a story. When I first went into Government, what I tried to do is write a document that maybe would 

be a guidance document from our office. I meant it as a very early 

draft for people to consider, and often it was about something that 

I thought would make regulation better, but people would look at 

it and think what is he doing. And I was finally given very good 

advice for someone who goes into Government on the executive 

branch side, and the advice was meet and then write. Meet with 

people first before you write because if you write something that 

is maybe not well thought out, they will think you mean it when 

in fact it is just an invitation to talk. 

So what I have learned is the immense importance—and this 

bears on the topic of over-regulation and getting regulation right. 

You have got to listen to people. In academic life, you probably 

should listen to people, certainly your students, but it is not the 

kind of minute-by-minute imperative that it is for someone who is 

working for the American people. 

Mr. CONYERS. Do you envision any recommendations for changes 

in the way the Office of Information and Regulatory Affairs works 

now, or do you think that it is set up in a way that meets your 

approval? 

Mr. SUNSTEIN. Well, I would really give a tip of the hat to my 

predecessors in the office and this Committee in particular for its 

support of the office across partisan lines. I think the office is an 

extraordinarily important part of the operations of Government regardless of who is privileged to be its administrator. 

I do think that there are improvements that can be made. Yesterday’s guidance document emphasizing attending to cumulative 

burdens which are often a problem for small businesses, I am sure 

in Florida, as well as other States. And the point of that document 

is to say you have something that on its own makes sense but 

maybe in concert with other things starts to overwhelm people. If 

we can make progress on that one, that would be a big step forward. 

Mr. CONYERS. Thank you. 

Can you talk about the Administration’s proactive approach toward addressing regulatory issues in terms of your views and 

theirs? 

Mr. SUNSTEIN. I can tell you about mine, which is that the one 

thing, going to your first question as well as this one, that has been 

most vividly new to me is that public comments are crucially important to getting rules right. You all interact with constituents, so 

you know a lot more than some of us who are basically in our offices now. We need to know what things are going to mean on the 

ground. So in terms of my interactions with the operations of my 

office, I find it is crucial to read personally public comments on 

rules. So I need to read with my own eyes. If people are enthusiVerDate Aug 31 2005 13:46 Jun 20, 2012 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\032112\73417.000 HJUD1 PsN: DOUGA
25 

astic about a proposal, if they think it is going to be great for public safety and health and explain why, I need to know that. If there 

are companies who say there is a less restrictive—going to the 

Chairman’s first point—less restrictive way of achieving your goal 

where you can protect safety but it will cost half as much, I need 

to read that. So the engagement with public comments on proposed 

rules is foremost for me. 

Mr. CONYERS. I want to thank you for your refreshing point of 

view that you bring to OIRA. The Judiciary Committee looks forward to working closely with you in the future. Thank you very 

much. 

Mr. SUNSTEIN. Thank you, sir. 

Mr. COBLE. Thank you, Mr. Conyers. 

Folks, we have votes on the floor. So we will stand in recess subject to the call of the Chair. We should be back within approximately 40 to 45 minutes. So if you all would just stand easy during 

that time, the Subcommittee stands in recess. 

[Recess.] 

Mr. COBLE. We need two Members on the podium before we can 

resume the hearing. So if you all bear with me. I see the Chairman 

over there now, so we can start. We will suspend the recess and 

we will come back to order. 

And no one else is here. I am inclined to think our best bet is 

probably to excuse you, Mr. Sunstein, because no one else has come 

back. We will check again. I do not want to shut anybody off, but 

we will see if anybody is on their way. 

John, I figure if you and I can make it, anybody can make it. 

Right? [Laughter.] 

I am inclined to dismiss you, Mr. Sunstein, because you have 

given your testimony and only Mr. Conyers and I are back. So you 

may be excused. If further questions are forthcoming, we can communicate that to you and you can respond accordingly. 

Mr. SUNSTEIN. Thank you, sir. Thank you for your kindness 

today. 

Mr. COBLE. Thank you, sir. Thank you for being with us. 

We will call our second panel to the table. Refresh my memory, 

folks, who has the travel commitments. Well, I think what we will 

do, without objection, is we will hear from the two travelers and 

then let them submit to examination. It is sort of irregular, but I 

do not want to slow them down. Does that suit you, Dr. Williams? 

You concur with that? 

Well, let me read the bios on members of our second panel. 

John Graham is Dean of the School of Public and Environmental 

Affairs at Indiana University, one of the largest public policy 

schools in the United States. Dr. Graham has a bachelor’s degree 

in politics and economics from Wake Forest University and a master’s degree in public affairs from Duke and a Ph.D. in urban and 

public affairs from the Carnegie-Mellon University. 

Dean, do you have North Carolina connections other than those 

two institutions of higher learning? 

Mr. GRAHAM. I have a feeble golf game. 

Mr. COBLE. So do I and I represent Pinehurst and they have 

never forgiven me for not being a golf player. 

26 

Dr. Graham’s professional experience in the field of cost/benefit 

analysis spans the theoretical and the practical. As a tenured professor in the Harvard School of Public Health, which he attained 

at the age of 34, Dr. Graham founded and led the Harvard Center 

for Risk Analysis, the author and editor of numerous books, articles 

and academic papers from 2001 to 2006. Dr. Graham served as the 

Administrator of the Office of Information and Regulatory Affairs 

in the Office of Management and Budget in this capacity. Dr. 

Graham furthermore worked to slow the growth in regulatory costs 

by 70 percent by simplifying hundreds of regulations and designing 

valuable new rules on clean air, auto fuel economy, and food safety. 

Dr. Graham, good to have you with us. 

Our second witness is Dr. Richard Williams, the Mercatus Center’s Director of Policy Research. He served in the Office of Management and Budget for 27 years and as the Director of Social 

Sciences at the Center for Food and Applied Nutrition in the Food 

and Drug Administration. Dr. Williams is an expert in benefit/cost 

analysis and risk analysis, particularly relating to food safety and 

nutrition. He has published a risk analysis and general policy analysis and management and has consulted with foreign governments, 

including the United Kingdom, the South Korea, and Australia. 

A Vietnam veteran, Dr. Williams received his Ph.D. and his M.A. 

in economics from Virginia Tech and his B.S. in business administration from the Old Dominion University. He has served as an advisor to the Harvard Center for Risk Analysis and taught economics at the Washington Lee University. 

Good to have you with us as well, Dr. Williams. 

Our third and final witness is Ms. Sally Katzen, who is Senior 

Advisor at the Podesta Group and visiting professor at New York 

University School of Law. Sally Katzen has enjoyed a distinguished 

career in legal practice, government services, and academia. The 

first female partner at the law firm of Wilmer, Cutler & Pickering, 

Ms. Katzen also has served as section chair of the American Bar 

Association’s Admin Law and Regulatory Practice Group. Ms. 

Katzen served for 8 years in the Clinton administration, including 

5 years as Administrator for the Office of Information and Regulatory Affairs and in the Office of Management and Budget. 

Ms. Katzen holds a bachelor’s degree from Smith College and a 

J.D. from the University of Michigan School of Law. She has 

taught law at George Washington University, the University of 

Michigan, George Mason University, the University of Pennsylvania, and Georgetown University schools of law and currently is 

a visiting professor at NYU School of Law. 

Ms. Katzen, good to have you as well. 

Dr. Graham, why don’t you start us off? Then it will be followed 

by Ms. Katzen. Then we can have you all submit to examination, 

again if that sits with your itinerary, Dr. Williams. If you can, try 

to limit it to 5 minutes. When the red light illuminates, you will 

not be keel-hauled at that point, but it will be your warning that 

the ice on which you are skating is thin. Good to have you all with 

us. Dean Graham, you are recognized. 

27 

TESTIMONY OF JOHN D. GRAHAM, DEAN, INDIANA UNIVERSITY SCHOOL OF PUBLIC AND ENVIRONMENTAL AFFAIRS 

Mr. GRAHAM. Thank you, Mr. Chairman. 

Let me start with the congratulations to Professor Sunstein and 

the OMB staff for the hard work they have on their desks on regulatory reform. As a former OIRA Administrator, I have tire tracks 

on my chest to prove the difficulty of the job they faced, and I 

praise them for their efforts. 

Question for reflection: If the benefits from regulation are so 

huge and the costs are so modest, as we have heard today, what 

is all the concern about? In my testimony, I try to explain some of 

that. 

There is a vast network of regulatory activities outside of OMB 

oversight and outside of cost/benefit review that are experienced by 

businesses and the American people but are not in the numbers 

that OMB is telling you about. I will give two illustrations, one in 

the coal industry and one in the automotive industry. 

Example one. There is currently being implemented a de facto 

ban on mountaintop mining for coal throughout the Appalachian 

States of West Virginia, Ohio, Kentucky, and Pennsylvania. This is 

a controversial issue and an interesting one. On the benefits side, 

you have valuable low sulfur coal for steel making and electric 

power, and you also have 14,000 direct jobs in rural Appalachia. 

On the risk side, you have mountaintops being leveled, rock and 

dirt being put into valley fills which are burying streams and creating aquatic toxicity and water problems. You have requirements 

for reclamation and mitigation that have uneven effectiveness depending on the particular site. 

What is happening? The Army Corps, Interior, and EPA have 

adopted, at the beginning of this Administration, a major shift in 

energy policy to restrict mountaintop mining of coal. 

How was it accomplished? Press release, memo, guidance document. No cost/benefit analysis, no rulemaking, and in fact permits 

began to be stopped for new mining operations and even existing 

mining operations, which had been previously approved—had their 

permits revoked. 

There is now massive litigation underway. Basically the Federal 

regulators are at war with business and labor in Appalachia, and 

who knows where this issue is headed. 

Example number two. Recent, very recent, California regulations 

requiring at least 15 percent of cars sold in California to have zero 

pollution by 2025. Now, you have to keep in mind what zero pollution means in a California regulatory setting. It means basically an 

electric car or maybe a fuel cell vehicle, but we know they are not 

zero pollution. There is pollution back at the power plant when 

these vehicles are actually recharged. 

You might ask, well, why do we have to have these California 

regulations? The Obama administration already has a national policy toward electric vehicles. We are requiring 50-mile-per-gallon vehicles by 2025. We are offering compliance incentives for manufacturers. They can count an electric car twice compared to a gasolinepowered car when they calculate their compliance. And we have 

$7,500 Federal income tax credits for people who buy an electric 

28 

car, and President Obama wants to make it $10,000 in his latest 

proposal. 

Is there any cost/benefit analysis behind this California zero 

emission vehicle mandate? Well, their own numbers from the California regulators are they expect 1.4 million electric cars at a cost 

premium of $10,000 per vehicle. That is a $14 billion regulation, 

larger than virtually everything that Professor Sunstein talked 

about, one regulation in the State of California. 

Well, consumers want a payback for their investment in these 

vehicles. There is an effort in the California document to say that 

within 10 years consumers will save enough on energy to pay for 

this. But as I explained in my written testimony, if you look at the 

hard calculations, it does not add up. These vehicles are very unlikely to pay for themselves. 

But won’t we protect the environment with these electric cars? 

Well, if automakers are forced to sell more electric cars in California, they earn compliance credits under Obama administration 

rules under the national program. The result? Automakers are entitled to sell more high-emitting cars in all 50 States of the country. There is no basis for believing the environment is going to be 

any cleaner after California’s regulation. 

Which regions of the country will bear this cost? It won’t be California because they don’t assemble cars in California. But their 

own analysis shows there will be more jobs in California because 

they sell more recharging equipment from companies based in California. 

Where will the costs be incurred? They will be in the Midwest 

and the South where automobiles are manufactured and assembled. 

You might ask me, why blame Washington? This is a California 

problem. The Federal Government has the power, if they choose to 

use it, to prevent California from implementing this regulation, 

and they have never even analyzed it from a cost/benefit perspective. No document you will find in the Federal Government analyzes the zero emission vehicle rule in the State of California. And 

even if the executive branch can’t, the Congress certainly would 

have the ability to rein in this type of regulation if they were motivated to do so. 

Details are in the written testimony, but there is a lot going on 

in burdensome regulation that is not even covered in the numbers 

that you have heard today. 

[The prepared statement of Mr. Graham follows:] 

Prepared Statement of John D. Graham, Ph.D., Dean, 

Indiana University School of Public and Environmental Affairs 

My name is John D. Graham. I am Dean of the School of Public and Environmental Affairs (SPEA) at Indiana University and former Administrator of the Office 

of Information and Regulatory Affairs, OMB in the George W. Bush administration 

(2001–2006). SPEA is one of the largest schools of public affairs in the country and, 

just one week ago, the new graduate-school rankings of U.S. News and World Report rated SPEA’s Master’s of Public Affairs (MPA) degree program as second in the 

country out of 266 total programs. Prior to serving at Indiana University and OMB, 

I was a tenured faculty member and founding director at the Center for Risk Analysis, Harvard School of Public Health (1985–2001). My technical expertise is in the 

application of risk analysis and benefit-cost analysis to health, safety and environmental issues. I have published eight books and over two hundred articles in this 

field. Several years ago, I was awarded the Distinguished Lifetime Achievement 

29 

Award by my professional society, the Society for Risk Analysis. I earned my BA 

degree (economics and politics) at Wake Forest University (1978), my MA in public 

affairs at Duke University (1980), and my Ph.D. in public affairs at Carnegie-Mellon 

University (1983). My doctoral dissertation was a benefit-cost analysis of automobile 

airbag technology. Before joining the faculty of the Harvard School of Public Health 

in 1985, I was a post-doctoral fellow at Harvard in environmental health (1983–84). 

I have been asked to speak today about benefit-cost analysis of regulation and 

how the regulatory reform initiatives of the Obama administration can be buttressed and extended. The theme of my testimony is that a substantial amount of 

costly regulatory activity is occurring without any requirement for benefit-cost analysis or OIRA oversight. I shall illustrate my concerns with case studies of the coal, 

automotive and housing industries. To rectify the current situation, I recommend 

that Congress consider legislation that would broaden the scope of federal agency 

actions that are subject to cost-benefit justification and/or OIRA review. 

First, federal regulators are issuing press releases, memoranda of understanding, 

policy statements, and guidance documents with burdensome impacts on specific industries, yet these quasi-regulatory actions are often not subject to any formal benefitcost analysis and/or OIRA review. 

A vivid illustration of this behavior is the recent use of quasi-regulatory documents by federal regulators to institute dramatic changes in the policy toward 

granting permits for surface coal mining operations in Appalachia, especially new 

mining projects in Kentucky, Ohio, Pennsylvania, and West Virginia. Before considering the policy change, I consider why mountaintop mining is undertaken in the 

first place. 

Over the last twenty years, coal mining in Appalachia has changed due to new 

technology, efforts to minimize labor costs, and the safety concerns about underground mining. While the practice of underground mining still accounts for almost 

60% of the coal mined in Appalachia, surface mining at the top of mountains—often 

called ‘‘mountaintop mining’’—already accounts for more than 40% of the coal mined 

in Appalachia and 45% in West Virginia (NMA, 2009). The coal mined in Appalachia 

is used as fuel for electric power plants in the United States, as in input to iron 

making in the United States, and as a valuable export to countries in the world that 

cannot mine enough coal to meet their own needs for electric power and steel making. 

Both forms of mining in Appalachia are associated with risk: underground mines, 

even when operated properly, entail a certain amount of risk to the safety of coal 

miners; mountaintop mining, even when conducted with proper reclamation practices, entails a risk of surface water contamination and ecosystem damage. Thus, 

there is no such thing as zero-risk coal mining. 

Specific mining projects, including reclamation plans, need to be analyzed for benefit, risk, and cost, and this project-by-project analysis has historically occurred at 

the state level under guidance and oversight from federal officials at the Army 

Corps of Engineers/Department of Defense, the Department of Interior and the Environmental Protection Agency. From 2000 to 2008, for example, about 511 mining 

reclamation projects were approved in the state of West Virginia alone under procedures spelled out by the Army Corps of Engineers in Nationwide General Permit 

21. A key principle of this Permit is that mountaintop mining may proceed as long 

as adverse aquatic impacts are minimized through reclamation and mitigation 

measures (Copeland, 2010). 

Mountaintop mining is controversial because there are important stakes on both 

sides of the issue. It is estimated that the practice creates about 14,000 direct jobs 

and 60,000 indirect jobs, with average salaries ($66,000) that are relatively high for 

rural Appalachia. In the state of West Virginia alone, almost 10% of the state’s tax 

revenue is linked to the economic stimulus of mountaintop mining (NMA, 2009). 

On the other hand, by its very nature the practice of mountaintop mining has adverse ecological impact. The tops of mountains are leveled (to access coal seams) and 

the excess dirt and rock is disposed of in the valley fills on the sides of the mountains. Entire streams are often buried. Although only a small percentage of streams 

in Appalachia are impacted by mountaintop mining, the impacted streams are a significant environmental concern. In theory, mines are reclaimed and disrupted 

streams are mitigated on at least a one-to-one basis. Buried streams are replaced, 

or new streams are created in another location, or already degraded streams are improved. However, reclamation and mitigation efforts are sometimes inadequate, and 

continued damages are found after mines have been abandoned (GAO, 2010). Recent 

evidence suggests that even reclaimed areas can become a significant source of surface water contamination, and the extent of contamination is proportional to the 

amount of mountaintop mining in the area (Lindberg et al, 2011). In some cases, 

contamination continues almost two decades after reclamation plans were impleVerDate Aug 31 2005 13:46 Jun 20, 2012 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6621 H:\WORK\COURTS\032112\73417.000 HJUD1 PsN: DOUGA
30 

mented. The impacted streams have been shown to experience aquatic toxicity and 

other forms of ecological damage (GAO, 2010). More study is needed to determine 

how the precise placement and treatment of rock spoil in valleys affects the mobility 

and transport of pollutants in impacted watersheds. 

A big change in regulatory policy occurred soon after President Obama took office. 

In June 2009 EPA issued a press release entitled ‘‘Obama Administration Takes Unprecedented Steps to Reduce Environmental Impacts of Mountaintop Coal Mining, 

Announces Interagency Action Plan to Implement Reform’’ (EPA, 2009). A memorandum of understanding signed by EPA, the Corps and the Office of Surface Mining and Reclamation and Enforcement (OSM) in the Interior Department accompanied the press release. Although the interagency plan contained a significant shift 

from existing regulatory policy defined in the Corps Nationwide General Permit 21, 

there was no prior request for public comment on the new plan and no benefit-cost 

analysis was conducted to support the major shift in policy toward more restrictions 

on mountaintop mining. While the Corps did formally propose a suspension of General Permit 21 (as applied to mountaintop mining) in July 2009 (EPA, 2009), the 

action was not finalized until June 2010, many months after regulators had changed 

their approach to issuing permits (EPA, 2010). 

Basically, the Obama administration authorized EPA to make project-by-project 

determinations on water-quality issues rather than rely primarily on the states and 

the Army Corps of Engineers. Industry complained that the criteria for EPA’s 

project-by-project determinations were not clear, and thus developers of mining 

projects did not know what was expected of them (Fahrenthold, 2010). Ultimately, 

after many months of uncertainty, on April 21, 2010, EPA issued a 31-page guidance document that did not prohibit mountaintop mining but called for minimal or 

no filling of valleys with mining debris (EPA, 2010). The guidance was effective immediately, even though no public comments were solicited and no benefit-cost analysis was undertaken. In particular, the new guidance expects mining projects to adhere to strict limits on conductivity levels in streams (a measure of salinity in 

water). But EPA’s numeric approach was based on two draft scientific documents 

that were not yet finalized (Copeland, 2012). 

A year earlier (October 2009), EPA also stunned the industry by reversing a 2007 

decision of the Army Corps of Engineers to approve a 2,300-acre mining operation 

in Logan County, West Virginia (Ward, 2009; Copeland, 2010). The Spruce #1 Mine 

in Logan County, which had been scaled back to address environmental concerns, 

was still the largest mountaintop removal mine in West Virginia history (Ward, 

2009). Meanwhile, EPA took more than a year to make decisions on 175 proposed 

mining sites. It ultimately signed off on only 48 (EPA IG, 2011; Quinones, 2011; 

Fahrenthold, 2010). EPA argued that it was using legal authority under the Clean 

Water Act and its new technical approach to assessing water quality impacts. The 

industry countered that EPA’s new, unprecedented regulatory approach would effectively prohibit a majority of surface coal mining in Appalachia, and the entire matter is now the subject of expensive, time consuming litigation in multiple federal 

courts (Copeland, 2011). 

A key lesson from this example is that changes in regulatory policy accomplished 

through press releases, memoranda of understanding, policy statements and guidance documents can have the same costly impact, at least in the short run, as an 

official rulemaking under the Administrative Procedure Act. Congress should require agencies, when making significant shifts in regulatory policy, to support those 

shifts with a benefit-cost analysis that is informed by a public comment process. In 

effect, what is now required for rulemakings should apply to regulatory policy shifts 

initiated through press releases, memoranda of understanding, policy statements, 

and guidance documents. 

Second, federal regulators are refusing to use their power to restrict or reform regulatory activities by the states that are unnecessarily costly to industry. Of particular 

concern are arbitrary inconsistencies in state regulations that burden companies that 

sell products across state lines. In some cases, federal regulators collaborate with 

state regulators in the promulgation of overly costly rules that completely evade benefit-cost requirements and/or OIRA review. 

A sobering example of this behavior is the recent decision of federal regulators 

to allow the State of California to require that automakers produce an increasing 

number of zero-emission vehicles (ZEVs) from 2018 to 2025. (As a practical matter, 

a ZEV under California criteria is likely to be a plug-in vehicle that is powered entirely or partly by electricity, though some hydrogen-powered vehicles also qualify). 

By 2025, each major automaker doing business in California is required to sell 

enough ZEVs to comprise at least 15% of their new-vehicle sales in California 

(CARB, 2011). Since the cost of producing a ZEV is currently $10,000 to $20,000 

per vehicle greater than the cost of producing a similar gasoline-powered vehicle, 

31 

the ZEV program is certainly worth reviewing from a cost-benefit perspective. If 

California succeeds in compelling the sale of 1.4 million ZEVs by 2025 at an extra 

cost of $10,000 per vehicle, the overall cost to consumers will be in the neighborhood 

of $14 billion. 

According to the State of California, the ZEV program is evolving from a traditional focus on public health protection from localized air pollution (smog and soot) 

to a new focus on control of greenhouse gases linked to the global phenomenon of 

climate change. Both rationales remain but, due to the dramatic progress in reducing smog and soot from new gasoline-powered vehicles, California regulators acknowledge that the future rationale for the ZEV program will be the control of 

greenhouse gases (CARB, 2011). 

Under the national Clean Air Act, California regulators are given special regulatory privileges because of the poor air quality in southern California but California 

is not permitted to issue its own rules without permission from the federal government. Congress wanted to make sure that California’s regulatory actions are necessary and appropriate, since automakers might be forced to design and produce a 

different fleet of cars and trucks for California than for other states. (There are 

about ten states that have chosen to align with California’s standards but I shall 

simplify the presentation by referring to compliance in California). Moreover, the 

statute underpinning the Department of Transportation’s Corporate Average Fuel 

Economy (CAFE) program prohibits all 50 states (including California) from adopting any regulatory programs ‘‘related to’’ the fuel economy of vehicles, since that is 

the province of CAFE. There may be creative legal arguments that can rescue an 

unnecessary and costly California ZEV program from litigation trouble, but surely 

Congress, through new legislation, has the power to subject California’s ZEV program to serious cost-benefit analysis and OIRA review under a national regulatory 

reform statute. So the key legislative questions are: Is the California ZEV program 

necessary and appropriate, and does it have any plausible benefit-cost justification? 

The case for the California ZEV rule is certainly questionable, given the force of 

the following arguments: 

—California regulators cannot slow global climate change to a meaningful degree unless China and India control their greenhouse gas emissions but the 

California ZEV program does not—and cannot—cover China and India; 

—The Obama administration, through a joint rulemaking of EPA and DOT, has 

already mandated a sharp reduction in greenhouse gases from new cars and 

light trucks for model years 2017 to 2025 through a performance standard, 

a numeric standard based on carbon emissions that allows automakers to undertake some averaging of low-emitting and high-emitting vehicles (EPANHTSA, 2011); 

—The joint EPA-DOT rule already provides generous compliance incentives for 

manufacturers who offer ZEVs (e.g., a ZEV’s ‘‘upstream’’ emissions at the 

electric power plant are ignored and each ZEV may be counted more than 

once in the compliance process) to supplement the federal government’s generous $7500 income tax credit to purchasers of ZEV-like vehicles; 

—The California ZEV program may not accomplish additional greenhouse-gas 

control (beyond the control achieved by the EPA-DOT joint rule) because any 

extra ZEVs produced and sold due to California’s rule will be offset in the production plans of automakers by extra sales of more high-emitting vehicles in 

the 50 states covered by the EPA-DOT rule; and 

—The California ZEV program, by forcing automakers to sell more expensive 

vehicles that are cheaper to operate, will exacerbate greenhouse gas emissions 

due to two perverse behavioral responses: some consumers will hold on to 

their old, high-emitting vehicles longer than they would otherwise 

(Gruenspecht, 2001), and those consumers who do purchase an expensive ZEV 

will drive them more miles each year because electricity is cheaper than gasoline (Tierney, 2011; Bialik, 2009). 

Even if these arguments are overstated, and the ZEV program is determined to 

be a promising contributor to global greenhouse gas control, it is highly unlikely 

that the program would pass a cost-benefit test under the official technical guidance 

in OMB Circular A-4, which governs regulatory analysis in the federal government. 

The staff of the California Air Resources Board released in December 2011 a rudimentary analysis aimed at providing some analytic justification for the tighter ZEV 

requirements for model years 2018 to 2025. The basic result of the staff analysis 

is that the energy savings provided by ZEVs, accumulated over the vehicle’s life, are 

32 

about equal to the $10,000 additional cost of producing a ZEV (CARB, 2011, Table 

5.7). 

The State of California does not have an OIRA-like office and thus CARB staff 

have considerable analytic discretion, more than EPA or DOT analysts have. Based 

on a careful read of the CARB analysis, I noted several analytical assumptions that 

would be unlikely to survive a careful OIRA review under OMB Circular A-4. 

1. The cost of producing ZEVs will decline by about 40% between today and 2025 

due to learning by doing in the manufacturing process. The 40% figure is at the top 

of the range of estimates in the literature on learning by doing in the manufacturing 

sector. However, the battery advances necessary to satisfy the consumer’s demand 

for driving range may cause the cost of future ZEVs to increase, not decline. CARB 

staff have also ignored the possible increase in prices of rare earths and lithium— 

these are inputs to lithium ion batteries and electric motors—that may result from 

Chinese actions, once the U.S. transport sector becomes significantly dependent on 

ZEVs. Rare earths and lithium currently account for a small percentage of the cost 

of producing a ZEV but that percentage could rise significantly in ways that are difficult for the United States to control. The Obama administration has recently 

joined with the EU and other nations in a WTO action against China, citing Chinese 

price manipulation of rare earths through export restrictions (Lee, 2012). 

2. The ZEV will last for an average of 14 years and be driven for 186,000 miles. 

These figures are on the high end of the range of estimates of average light-duty 

vehicle lifetime and mileage. 

3. A 5% real discount rate is applied to future fuel savings to express them in 

present value. A 7% discount rate is typically applied to future fuel savings. Changing this assumption alone is likely to reverse the conclusion of CARB’s ‘‘payback 

analysis’’. 

4. A long-term gasoline price of $4 per gallon is assumed. This figure could be 

too low or too high in the short run but fuel prices in the USA can be brought well 

below $4 per gallon over the 2018–2050 period if the US enacts enlightened energy 

policies (e.g., expanded oil and gas production in the USA in conjunction with the 

tighter CAFE standards and other consumer-focused conservation measures to reduce demand for oil). 

Overall, based on the implausibility of CARB’s assumptions, it seems unlikely 

that a ZEV mandate would pass a careful payback analysis from the consumer’s 

perspective, at least not ZEVs produced in the pre-2025 period. Consumers may be 

further disinclined to purchase PEVs if the federal and state tax incentives are reduced for fiscal reasons (California has already reduced its ZEV rebate from $5,000 

to $2,500 and the U.S. Congress has not renewed the $2,000 tax credit for the costs 

of installing a recharging system in one’s home). 

If ZEVs prove to be a loser in the eyes of the consumer, automakers and dealers 

will have a difficult time selling them. The early commercial experiences with the 

Nissan Leaf and the Chevrolet Volt suggest that commercialization of ZEVs will not 

be easy. Moreover, surveys of consumers indicate that they are not willing to pay 

a large price premium to obtain the advantages of a plug-in vehicle (White, 2012; 

Woodyard, 2011; Child and Sedgwick, 2012). Under these circumstances, either the 

ZEV mandate will have to be relaxed (as has occurred in the past) or automakers 

and dealers will have to cut prices of ZEVs, incur substantial losses on each ZEV 

that is sold, and raise prices on all non-ZEV products to cover the losses. In effect, 

the ZEV mandate will become a price increase on all new vehicles sold in the United 

States (a troubling scenario that is acknowledged in the CARB document). If this 

occurs, the result will be fewer new vehicle sales throughout the United States and 

fewer jobs at plants where new non-ZEV vehicles are produced and at plants of suppliers of non-ZEV vehicles. 

The job losses from the ZEV mandate are unlikely to occur in the State of California because very few automotive suppliers and vehicle assembly plants are located in California. This is a point noted in the CARB document. Here are some 

examples of plants that might be adversely impacted, since they are busiest North 

American plants that assemble non-ZEV vehicles (measured by 2011 production levels). 

1. VW/Puebla, Mexico 514,910 

2. Ford/Kansas City, Missouri 460,338 

3. Nissan/Aguascalientes, Mexico 410,693 

4. GM/Oshawa, Ontario 380,149 

5. Ford/Dearborn, Michigan 343,888 

6. Hyundai/Montgomery, Alabama 342,162 

7. Nissan/Smyrna, Tennessee 333,392 

33 

8. Ford/Hermosillo, Mexico 328,599 

9. Toyota/Georgetown, Kentucky 315,889 

10. Ford/Louisville, Kentucky 310,270 

The supplier community for non-ZEV vehicles also has a broad geographic distribution (including many plants outside the United States) but many suppliers locate their plants near assembly plants in the United States (e.g., in the Midwest 

and the South). 

The CARB analysis does not make employment forecasts outside of California 

with and without the ZEV regulation. CARB does, however, forecast positive job impacts in California because a variety of the companies that makes recharging equipment for electric vehicles are located in California (CARB, 2011, 68–9). I think it 

is fair to say that the employment analysis of the California ZEV mandate, if had 

been conducted under OIRA review, would have looked at many more regions of the 

United States than the state of California. 

In summary, federal regulators have permitted the State of California to promulgate a costly ZEV mandate that, in reality, may do little or nothing to protect the 

world against the forces of global climate change. The economic impacts of the California program are likely to be significant and nationwide in scope. A comprehensive 

benefit-cost analysis of the ZEV program has not yet been performed, yet the program is already on a clear path toward implementation. 

Congress can address this problem in a general regulatory reform bill. In particular, federal agencies should be required to use their powers to restrict or reform 

state regulatory actions to ensure that regulatory benefits justify costs. When a federal agency decides to allow state regulators to issue rules with national economic 

ramifications, the agency should be required to justify the decision with a benefitcost analysis under OMB Circular A-4. 

Third, federal regulators are issuing hazard determinations that appear to be at 

tension with findings reported by committees of the U.S. National Research Council/ 

National Academy of Sciences. A hazard determination is a claim that exposure to 

a technology or chemical substance is known to be hazardous to human health. Congress can address this problem by requiring OIRA and/or the White House Office 

of Science and Technology Policy (OSTP) to resolve disputes about hazard, at least 

in cases where there have been clear determinations by NRC/NAS. 

The federal government’s recent handling of formaldehyde illustrates this conundrum. Formaldehyde is a widely used industrial chemical that is useful in activities 

ranging from housing construction to health care services. Each year sales of formaldehyde are worth about $1.5 billion and products that make use of formaldehyde 

are linked to about four million jobs and $145 billion in economic activity. It is estimated that, if formaldehyde had to be substituted in the U.S. economy, consumers 

would incur costs of about $17 billion per year. The industrial sector where formaldehyde generates its largest economic value is the housing industry. 

Human exposures to formaldehyde are already heavily regulated by multiple federal agencies because high doses of formaldehyde are known to cause irritation of 

the respiratory system and a rare form of nasal cancer. Spurred by a provocative 

report (IARC, 2004) from an international organization in Lyon, France, EPA— 

through the Integrated Risk Information System—made a preliminary determination in 2010 that formaldehyde exposure is known to cause leukemia as well as 

nasal cancer (EPA, 2010). If the scientific evidence is definitive, EPA should make 

a definitive hazard determination, since it may help trigger a variety of regulatory 

and market-based actions that offer additional protection to workers, consumers, 

and the general public. 

A hazard determination should not, however, be based on inconclusive scientific 

information. An official determination that formaldehyde exposure causes leukemia 

has the potential to cause a variety of adverse impacts on industry (e.g., lawsuits 

among people who have leukemia and may have been exposed to formaldehyde, and 

voluntary product withdrawals), even before any new federal regulation is adopted. 

The stigma of a hazard determination, once imposed, is very difficult to erase, even 

if the technology or substance is completely exonerated through additional scientific 

research. 

In this case, industrial scientists were skeptical of EPA’s preliminary determination because the epidemiological literature on formaldehyde is difficult to interpret 

with confidence and the biological mechanism (i.e., how formaldehyde causes leukemia) is not clear. They persuaded Congress to compel EPA to subject their scientific evidence and reasoning to independent review by a panel of the National Research Council/National Academy of Sciences, an official scientific advisory group to 

the federal government. In a rather critical report, the NRC/NAS panel raised serious questions about EPA’s theory that formaldehyde exposure causes leukemia 

34 

while reaffirming the known link between formaldehyde exposure and respiratory 

cancer (NRC, 2011; Jacobs, 2011). NRC/NAS also raised broader questions about the 

scientific credibility of EPA’s IRIS process since there is a pattern of NRC/NAS 

questions about EPA’s hazard determinations (e.g., in the cases of dioxin and perchlorate). 

Before EPA could respond to the NAS/NRC report, an entirely different federal 

agency—the Department of Health and Human Services’ National Toxicology Program (HHS-NTP)—included in its Annual Report to Congress an addendum on 

formaldehyde. The addendum makes a strong claim about the formaldehyde-leukemia link that is similar to the preliminary EPA claim (NTP, 2011). NTP makes 

a limited effort to reconcile its view with the view of NRC/NAS but ultimately acknowledges that it agrees with NRC/NAS’s view that it is not known—from a biological mode of action perspective—how formaldehyde is causing leukemia. NTP 

takes the position that a substance can be known to cause cancer even if the biological mode of action is unknown. 

A key question becomes who in the federal government should be in charge of 

managing and resolving these issues. The actions of EPA and HHS-NTP may not 

appear to be ‘‘regulations’’ but they are ‘‘science-policy’’ determinations that can 

have the practical impact of a regulation (e.g., economic burdens). Before making 

these kinds of determinations, agencies should be expected to make an assessment 

of whether significant economic impact may result. If the impact is likely to be significant, an independent review by an organization such as NRC/NAS should be required, and federal agency compliance with the findings of the NRC/NAS panel 

should be overseen by OIRA and/or OSTP in consultation with other interested federal agencies. 

In order to play this role effectively, OIRA and OSTP will need a modest increase 

in scientific staffing above their current levels. However, it is important to recognize 

that the roles of OIRA and OSTP are not to redo the agency’s hazard determination. 

Instead, the OIRA/OSTP role is to determine whether a hazard determination 

should be referred to NRC/NAS and, if so, whether the agency has adhered to the 

determinations made by NRC/NAS in the agency’s final determination. OIRA and 

OSTP will also supervise interagency discussions of these matters, since multiple 

federal agencies may have an interest. 

Finally, federal regulators, after being sued by pro- or anti-regulation activist 

groups, are entering into binding agreements with litigants that call for new 

rulemakings within specified deadlines. The rulemaking commitments are being 

made prior to any benefit-cost analysis or public comment and without OIRA review. 

Sometimes the deadlines are set in a manner that ensures that benefit-cost analysis 

and OIRA review will be compromised. Congress should constrain agency powers to 

enter into such settlements without first conducting appropriate analysis (to determine whether a rule is necessary and desirable) and seeking public comment. Congress should require that ample time be made available for OIRA review. 

During my tenure at OMB, I experienced the consequences of ‘‘regulation by consent decree’’ on several occasions. For example, EPA entered into a litigation settlement that virtually committed the agency to an expensive rulemaking aimed at reducing mercury emissions from coal-fired power plants. When EPA staff briefed me 

on the benefit-cost basis for the mercury rule, it became clear that many of the 

emissions reductions expected from the mercury rule were already to be accomplished by another rule aimed at reducing nitrogen dioxide emissions from coal 

plants. (The same control technology that reduces nitrogen dioxide also reduces 

oxidized mercury but not elemental mercury). According to EPA staff, the residual 

benefits (of reducing elemental mercury) were not sufficient to justify the entire cost 

of the mercury rule, yet the agency was legally committed to issuing a rule by a 

fixed deadline, and expectations for a rule had been established in the environmental advocacy community. EPA tried to craft a different rationale for the mercury 

rule based on the ‘‘co-benefits’’ resulting from simultaneous control of a different pollutant, particulate matter. In principle, co-benefits should be considered in such a 

rulemaking. The obvious counterargument to this position is that direct regulation 

of particulate matter from many sources (not just coal plants) might be a more costeffective method of capturing those benefits. With a judicial deadline forcing our 

hand, we did work with EPA to issue a mercury rule but it had a weak benefitcost justification. The rule was ultimately overturned in court for reasons unrelated 

to the benefit-cost issue. 

The lesson I drew from this example is that regulators are not necessarily reluctant, during settlement negotiations, to commit themselves to rulemakings that 

have not yet been analyzed from a cost-benefit perspective. If we are serious about 

regulatory reform, this practice needs to be restrained. I am pleased that legislators 

are already looking for solutions. For example, I understand that Congressmen Ben 

35 

Quayle, Dennis Ross and Howard Coble have introduced H.R. 3862 ‘‘Sunshine for 

Regulatees and Settlements Act of 2012’’ and this bill has already been discussed 

at a separate hearing. 

Thank you for the opportunity to submit this testimony. 

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(on-line, Early Edition). www.pnas.org/cgi/doi/10.1073/pnas.1112381108. 

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36 

Tierney, J. When Energy Efficiency Sullies the Environment. New York Times. 

March 7, 2011. 

Ward, K. Huge MTR News: EPA Moves to Veto Spruce Mine Permit. West Virginia 

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Mr. COBLE. You beat the red light. I was asleep at the switch. 

I didn’t know you had concluded. Thank you, sir. 

Professor Katzen? 

I mean, you were finished, were you not, Dean? You were 

through with your testimony, or did I cut you off? 

Mr. GRAHAM. Yes, sir. I was through. I did not conclude very eloquently, though. 

Mr. COBLE. Pardon? 

Mr. GRAHAM. I did not conclude very eloquently. 

Mr. COBLE. Well, you did it very well. 

Professor Katzen, you are recognized for 5 minutes. 

TESTIMONY OF SALLY KATZEN, VISITING PROFESSOR OF LAW, 

NEW YORK UNIVERSITY SCHOOL OF LAW 

Ms. KATZEN. Thank you, Mr. Chairman, and I do appreciate the 

opportunity to be here today. 

As you noted in your opening comments, there have been a lot 

of polls and surveys and rhetoric about the increase of regulation 

under the Obama administration and the resulting drain on the 

economy. And apparently from the earlier discussion, everybody 

has a set of data that they can cite to with regard to the costs and 

the numbers of regulations. The credible data that I have looked 

at makes one point that I do not think was disputed earlier and 

that is that the net benefits of the regulations issued during the 

first 3 years of the Obama administration are quite substantial and 

that society is better off as a result. 

Now, there are obvious difficulties of and limitations on quantifying and monetizing the consequences of regulation. But if one is 

going to talk about the costs and one is going to champion cost/benefit analysis, then I think equal attention should be paid to the 

benefits. 

President Obama has taken several steps to ensure that the regulations that his Administration issues protect the public health, 

safety, and the environment while promoting economic growth. I 

believe the record of his Administration is strong and positive and 

the path charted during the last few years is the right path to pursue. He has put more emphasis and energy into the lookback initiative than any of the former Administrations that undertook such 

an effort, including the one that I served in and the one that Dr. 

Graham served in. And President Obama has been more aggressive 

than his predecessors in extending sound regulatory principles to 

the independent regulatory commissions, and this brings me to my 

second point. 

Dr. Graham speaks of broadening the scope of Federal agency action and you asked what can the Congress do. I would suggest that 

the place to start is with the IRC’s. There is considerable public 

37 

support across the spectrum for extending executive order requirements to the independent regulatory commissions. And the President’s Council on Jobs and Competitiveness included this as one of 

its recommendations for regulatory reform, calling on Congress to 

take the lead rather than the President. 

The concern is well documented, and that is that IRC’s do not 

typically engage in the analysis that we have come to expect of executive branch agencies. This is troubling because there is likely to 

be a lot of regulations issued pursuant to the Dodd-Frank Act, 

much of which will be generated by the IRC’s. 

Past Presidents of both political parties have been reluctant to 

extend executive order requirements for economic analysis and 

OIRA review to the IRC’s out of deference to Congress. So a sense 

of the Congress that such a course would be desirable would go a 

long way to ameliorate any concerns in this area, or Congress could 

simply pass a bill authorizing the President to take such action. 

Third, President Obama has focused needed attention on the 

issue of cumulative costs of regulation. Often an industry or sector 

is subject to regulation under various programs from a single division, under various divisions within a single agency, or by several 

agencies. And over time, the risk of contradictory or inconsistent 

requirements or unreasonable cumulative requirements becomes 

more of a possibility. The President’s Council noted its concern 

with cumulative costs of regulation, and you heard earlier that 

OIRA has now issued guidance to the agencies providing various 

steps for them to take, and factors for them to consider, to give 

more content to the words of the executive order. 

In my written testimony, I suggest that OIRA could go further 

and use the planning process in section 4 of EO 12866 to construct 

a framework for addressing the problems of cumulative costs. Currently both executive branch agencies and IRC’s provide semiannually a summary of the most important regulatory actions they expect to issue in proposed or final form in that fiscal year or thereafter. These are published in the regulatory agenda, but the exercise is more of a paper exercise than an analytical tool. I would 

hope that the Administration would use this tool to better assess 

cumulative burdens, and I spell this out in my written testimony, 

which brings me to my last point. 

Resources. It was mentioned in a couple of the opening statements. When President Reagan tasked OIRA with the responsibility for centralized review of regulations, there were over 80 professionals at OIRA. The current number is roughly half of that. 

Meanwhile over the years, Congress has assigned OIRA substantial 

additional responsibilities, including administering various provisions of the Unfunded Mandates Reform Act, the Reg Flex Act, the 

Information Quality Act, and compiling and filing various reports 

to Congress. Now, the same can be said for the regulatory agencies; 

they have been asked to do more with the same or fewer resources 

as we straight-line or chip away their budgets. 

But the focus of this hearing is on OIRA where the disparity between responsibilities and resources is very clear. In fact, each of 

us here is suggesting that OIRA do even more, and I think the answer is they need more. resources I understand the appeal for 

smaller Government, but having the privilege of having served as 

38 

an Administrator of OIRA, I believe that the OIRA staff is the best 

investment we have in further progress in the regulatory area. 

Again, the President’s Council called for an increase in resources, 

and I strongly concur with that recommendation. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. Katzen follows:] 

Prepared Statement of Sally Katzen, Visiting Professor of Law, New York 

University School of Law, and Senior Advisor at the Podesta Group 

Chairman Coble, Ranking Member Cohen, Members of the Subcommittee. Thank 

you for inviting me to testify today about the Office of Information and Regulatory 

Affairs (OIRA) and the state of federal regulatory policy and practice under the 

Obama Administration. The last oversight committee hearing was in July 2010, and 

much has happened since then. I believe that the record is strong and positive, and 

the path charted during the last few years is the right path to pursue. 

I served as the Administrator of OIRA at the Office of Management and Budget 

(OMB) for the first five years of the Clinton Administration, then as the Deputy Assistant to the President for Economic Policy and Deputy Director of the National 

Economic Council, and then as the Deputy Director for Management of OMB. After 

leaving the government in January 2001, I taught administrative and constitutional 

law courses at various law schools and courses in American Government at several 

undergraduate institutions. Currently I am teaching a seminar in advanced administrative law and a first-year course, the Administrative and Regulatory State, as 

a Visiting Professor at NYU School of Law. I am also a Senior Advisor at the Podesta Group here in Washington. Before entering government service in 1993, I was 

a partner at Wilmer, Cutler & Pickering, specializing in regulatory and legislative 

issues, and among other professional activities, I served as the Chair of the American Bar Association Section on Administrative Law and Regulatory Practice (1988– 

89). During my government service, I was the Vice Chair (and Acting Chair) of the 

Administrative Conference of the United States (ACUS). Since leaving the government in 2001, I have written articles for scholarly publications and have frequently 

been asked to speak on administrative law in general and rulemaking in particular. 

There has been a great deal of rhetoric about the increase of regulations, and the 

drain on the economy of the resulting regulatory burden, under the Obama Administration. There have, however, been very few facts to support these assertions or 

to put the available data in context. The data that I have seen—filed in Reports 

to Congress by OMB and in testimony and other statements by those who have compiled and analyzed the information—tell a very different story. 

Last Friday, March 16th, OIRA posted to its website a draft of its 2012 Report 

to Congress on the benefits and costs of federal regulation, which contains the latest 

available data. [These Reports to Congress have been submitted annually for over 

a decade now, by administrations of both political parties, presenting consistent 

data sets compiled by the career staff using the same methodology over the years.] 

The draft 2012 Report shows that while the number of significant rules issued in 

the first three years of the Obama Administration was higher than the number 

issued during the last three years of the Bush Administration, the estimated total 

cost of those rules was virtually the same. More importantly, the total estimated 

benefits of the rules issued during the first three years of the Obama Administration was significantly greater than the costs of those rules, leading to substantial 

net societal benefits from the rules issued during the Obama Administration. The 

draft Report candidly discusses the difficulties of and limitations on monetizing 

costs and benefits, but clearly if one is going to speak of regulatory costs, and embrace cost/benefit analysis, then it is critical that one also acknowledge regulatory 

benefits. 

It was interesting to note that, contrary to the claims of ever increasing regulatory activity by the Obama Administration, the data in the draft Report show that 

the number and costs (but not the benefits) of significant rules issued in 2011 was 

actually lower than those issued in 2010. It is possible that the number and/or cost 

of regulations would increase in 2012 (although I would be surprised if the net benefits would not also increase significantly). I say this because the 111th Congress enacted several major pieces of legislation, including the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection 

Act, both of which include delegations of authority to federal agencies and called for 

hundreds of regulations to implement these laws. That is what the Constitution assigns to the Executive: ‘‘to take care that the laws be faithfully executed.’’ (Art. II, 

Sec. 3.) There may be some in the current Congress who want to repeal these laws, 

39 

but their efforts to that end have so far been unsuccessful, and as long as the laws 

are on the books, the agencies are responsible for issuing implementing regulations 

giving effect to the legislative mandates. 

Since the last oversight hearing, there have been other events involving OIRA 

that are worth mentioning. The most important is President Obama’s signing Executive Order 13563, which called for restoring a proper balance in regulations (protecting public health, safety and the environment while promoting economic growth) 

and which reaffirmed the importance of centralized review and OIRA’s role in that 

effort. It is obvious from a number of well publicized actions that these directives 

are having an effect. It is also obvious that the agencies are taking seriously the 

President’s directive to engage in a retrospective review of existing regulations to 

reduce, improve or eliminate those regulations that are outmoded, ineffective or unduly burdensome. I should note that every recent President has called for a review 

of existing regulations, including Presidents Clinton and George W. Bush, but I 

have never seen the emphasis and energy that the current Administration is putting 

into this effort. 

President Obama has also been more aggressive than his predecessors in extending sound regulatory principles to the Independent Regulatory Commissions 

(IRCs)—those multi-headed agencies, such as the SEC, FCC, FTC, FEC, etc., whose 

members do not serve at the pleasure of the President and can be removed only for 

cause. Since the inception of centralized regulatory review by OIRA, the IRCs were 

treated differently than Executive Branch agencies. Neither President Reagan’s Executive Order (EO 12291) nor President Clinton’s Executive Order (EO 12866) extended the requirements for economic analysis or OIRA review of proposed rules to 

the IRCs (although President Clinton did include the IRCs in Section 4’s Planning 

Mechanism provisions of EO 12866). In both 1981 and 1993, the legal advisors to 

the executive order draftsmen concluded that the President had authority to impose 

these analytical requirements and review the rules of IRCs, but they decided not 

to do so for political reasons—namely, out of deference to the Congress. 

Like his predecessors, President Obama did not extend centralized review to the 

IRCs in EO 13563. But he did issue an Executive Order in July 2011 (EO 13579) 

urging the IRCs to ‘‘promote th[e] goal’’ in EO 13563 of producing a regulatory system protecting ‘‘public health, welfare, safety and our environment while promoting 

economic growth, innovation, competitiveness, and job creation.’’ Moreover, he singled out the requirements concerning ‘‘public participation, integration and innovation, flexible approaches, and science’’ and stated that ‘‘[t]o the extent permitted by 

law, independent regulatory agencies should comply with these provisions.’’ In addition, he directed the IRCs to develop plans within 120 days for retrospective review 

of their existing rules, ‘‘consistent with law and reflecting [their] resources and regulatory priorities and processes.’’ 

I would encourage the President to go further and extend the provisions of the 

applicable Executive Orders relating to economic analysis and OIRA review of proposed regulations to the IRCs. There is considerable support across the political 

spectrum for such an effort, and the President’s Council on Jobs and Competiveness 

specifically included this as one of its recommendations for regulatory reform in 

both its interim and final reports (although it called on Congress, rather than the 

President, to take the lead on this issue). About a year ago, Resources for the Future (a centrist think tank) held an all-day conference where various scholars and 

former government officials (from both sides of the aisle) from five different IRCs 

explored the status of IRC analysis in rulemaking and the agencies’ potential to do 

more. The materials compiled for that conference would provide a solid foundation 

for your further consideration of this issue. 

The concern is that the IRCs do not typically engage in the analysis that has 

come to be expected for Executive Branch agencies. For example, in the draft 2012 

OMB Report to Congress referred to earlier, it appears that roughly half of the rules 

developed by the IRCs over a ten-year period have no information on either costs 

or benefits, and those that do have very little monetization of benefits and costs; 

the draft cites the Government Accountability Office (GAO) for reporting that ‘‘none 

of the 17 rules [issued during FY2011] assessed both anticipated benefits and costs.’’ 

This is very troubling because, as noted above, there is likely to be a large increase 

in regulations under the Dodd-Frank Act, the vast majority of which will be originating from IRCs. 

While there appears to be a growing consensus on requiring IRCs to conduct economic analyses in developing their rules, there is less agreement on whether and, 

if so, what entity should review and critique those analyses the way OIRA reviews 

the work of Executive Branch agencies. It is generally accepted that nothing focuses 

the mind like knowing that someone will be reading (or listening) to your paper (or 

presentation), and that such review virtually always improves the product. For all 

40 

practical purposes, the way Executive Branch agencies and IRCs conduct rulemaking is the same, but the differences between the two types of agencies in terms 

of their structure and their relationship to the President have led me to conclude 

that the review process or the ‘‘enforcement’’ of any requirement for economic analysis should not—possibly, cannot—be the same without compromising the independence of the IRCs when they do not acquiesce in OIRA’s assessment. 

Congress confronted this very question in the Paperwork Reduction Act, where it 

provided for OIRA review of information collection requests (i.e., government forms) 

from all agencies, Executive Branch and IRCs. The solution Congress adopted was 

to authorize OIRA to approve or disapprove paperwork from Executive Branch agencies directly (Sec. 3507(b) and(c)), but to allow IRCs to void any disapproval by majority vote, explaining the reasons therefor (presumably in a public meeting) (Sec. 

3507 (f)). A variation on that approach could be used for regulatory review, whereby 

OIRA would provide its views of the underlying analysis in writing to the IRC, and 

that document would be presented to the Commission (presumably in a public meeting), where the critiques/suggestions could be discussed and disposed of (accepted 

or dismissed) per the will of the Commission before final approval of the regulatory 

action. 

As noted above, past presidents of both political parties have been reluctant to 

extend executive order requirements for economic analysis and centralized review 

by OIRA to the IRCs out of deference to Congress. A Sense of the Congress that 

such a course would be desirable would go a long way to ameliorate any concerns 

in that regard. Or Congress could pass a bill authorizing the President to take such 

action, which I think the President would likely sign. Alternatively, Congress could 

designate an entity outside the Executive Branch as the reviewer of the economic 

analysis undertaken by the IRCs. Two obvious candidates are the GAO and the 

Congressional Budget Office (CBO). The former was given a limited (check the box) 

role in reviewing and commenting (to Congress) on the regulations issued by IRCs 

under the Congressional Review Act, and the latter already has analytical capacity 

that could be directed to this effort. Both of these entities would need additional 

staff and resources if they were assigned this task, as would OIRA. While neither 

GAO nor CBO has OIRA’s level of expertise or experience with reviewing economic 

analyses, both have the ‘‘virtue’’ of being identified with Congress rather than the 

President, which may be important to those who read ‘‘independent regulatory commission’’ as independent of only one and not the other political player. 

President Obama has also focused needed attention on the issue of the cumulative 

costs of regulation. Often an industry or a sector of the economy is subject to regulation under various programs—indeed, under various offices or divisions within a single agency or by several agencies. Over time, the risk of contradictory or inconsistent requirements or unreasonable cumulative requirements becomes more of a 

possibility. EO 12866 mentioned ‘‘the costs of cumulative regulations’’ toward the 

end of a statement of principles governing rulemaking. (Sec.1 (b) (11).) EO 13563 

gave it more prominent attention. (Sec.1 (b) (2).) But more can and should be done 

to give content to these words. 

OIRA has traditionally focused virtually all of its time and resources on the review of individual regulatory actions developed by the agencies—one at a time (except where two or three arrive in close proximity to one another). While this review 

is critical not only in providing a dispassionate and analytical ‘‘second opinion’’ on 

an agency’s significant regulatory actions and in ensuring that each new significant 

regulatory action is consistent with the President’s policies and priorities (as well 

as coordinating regulatory policy within the Executive Branch through the interagency process over which it presides), I think OIRA should do more than just oneby-one reviews. The issues plaguing our country are not likely to be solved by a single regulatory action, nor do they always fit neatly in one agency. Whether it be 

clean air, worker safety, food purity, energy efficiency, or a host of other issues that 

are of concern, it is often essential to look beyond the specific proposal du jour and 

consider the broader picture—in effect, construct a framework for addressing the 

problem, allocating resources, and ensuring a coherent and comprehensive regulatory solution. 

The mechanism for embarking on and developing such an approach is already in 

place—Section 4 of Executive Oder 12866, ‘‘Planning Mechanism.’’ Under sub-section (c), ‘‘The Regulatory Plan,’’ both Executive Branch agencies and IRCs must 

send to OIRA (for OIRA review and circulation to other interested agencies) a document that includes a statement of the agency’s regulatory objectives and priorities 

as well as a summary of ‘‘the most important significant regulatory actions that the 

agency expects to issue in proposed or final form in that fiscal year or thereafter.’’ 

These materials are published in the semi-annual Unified Regulatory Agenda, but 

the process itself has become more of a paper exercise than an analytical tool. This 

41 

is not new; before, during and after my tenure at OIRA, the focus was on the transactions. But it does not have to be that way. Professor Peter Strauss of Columbia 

law School and others have called for OIRA to put meat on the bones of this planning process. I concur. 

This initiative and extending OIRA review to the IRCs are, in my view, definitely 

worth pursuing. But OIRA cannot take on these tasks with its existing resources. 

When President Reagan signed EO 12291, there were over 80 professionals at 

OIRA; the current number is roughly half of that. I understand the widespread appeal for smaller government as an abstract concept. But it would, in my opinion, 

be penny-wise and pound foolish to seek to apply that concept indiscriminatorily 

across all programs and agencies. As the President’s Council on Jobs and Competitiveness stated in its final report: ‘‘Thorough review by OIRA improves the quality 

of regulatory analysis and decisions . . . . Even modest improvements in regulations can yield billons of dollars in benefits to the public.’’ Having had the privilege 

of serving as Administrator of OIRA, I am convinced that the staff of OIRA is one 

of the best investments we can make to continue progress in the regulatory arena. 

For that reason, I agree with the Council’s recommendation that ‘‘OIRA’s staff be 

increased to a level that will permit it to conduct meaningful review of both executive branch and independent agency regulations.’’ 

Thank you again for inviting me to participate in this hearing, and I look forward 

to answering any questions you may have. 

Mr. COBLE. Thank you, Professor Katzen. 

Good to have all three of you with us. 

Dean Graham, the Obama administration and OIRA—it has 

been said that they have failed to assess both the cost and the benefits of new major regulations. Is that because of lack of—well, first 

of all, do you agree with it? Is it because of lack of techniques to 

identify costs and benefits, a lack of willpower at OIRA, or a lack 

of adequate staff at OIRA, or a combination of all of the above? 

Mr. GRAHAM. Well, the easy answer is it is a combination of all 

of the above. 

And having heard the testimony from earlier in the hearing, I 

think one thing that is important to keep in mind is a lot of the 

impetus for this regulation—and I do not mean to say this too loudly since we are in the Congress, but it does come from the Congress. When I came to OIRA as an administrator, it was 2001, and 

I was with a team of conservative deregulators and we were going 

to get rid of all this regulation. And then what happened? 9/11 happened, and all of a sudden I was approving all kinds of regulations. 

So the political winds go back and forth on this subject. 

But it is without question, if you just look at the raw data, that 

you are seeing a lot of regulatory activity in the Obama administration. And I think the thing that is particularly concerning given 

where we are in the economic recovery is you have a lot in the 

pipeline, whether it be through Dodd-Frank, whether it be the environmental regulations, whether it be the Obamacare regulations. 

And that is the part of it that is concerning because you have got 

a lot of that coming down the pike and we are not really sure what 

its impact is going to be. 

Mr. COBLE. I thank you, Dean. 

Professor Katzen, I agree with your well-made suggestion that 

independent agencies be brought within the scope of the OIRA regulatory review process. Do you think that Congress should consider 

extending OIRA’s authority to independent agencies through legislation? 

Ms. KATZEN. I think the President has the authority to do it, but 

past Presidents—and there have been several now, including the 

42 

current President—have not taken that step. President Reagan was 

told he had the legal authority and he declined to do it. President 

Clinton was told he had the legal authority and he declined to do 

it. And President Obama has declined to do it. I think that is because of deference to Congress. Independent agencies are some 

strange creatures that we have in our administrative state, and I 

think that a sense of the Congress, a joint resolution by the Congress that the President could do it, would help, or Congress could 

do the legislation itself as long as it was targeted on just that one 

issue. What has happened with many of the regulatory bills that 

we have seen is that they begin attracting a lot of other issues and 

that could bog it down, but if it were limited to the IRC’s only, I 

believe that it would have support across the spectrum and probably would be signed by the President. 

Mr. COBLE. Thank you, Professor. 

Dean, you may recall my comment to Mr. Sunstein regarding the 

trend, the President’s trend—strike that—President Bush’s trend 

as opposed to the Clinton number of regulatory bills versus the 

Obama trend compared with the Bush. And my conclusion was— 

and I was doing it from memory—that the Bush trend is lower 

than President Obama’s trend. Is that accurate? 

Mr. GRAHAM. I would have to go back and look at the specific 

numbers. One thing to keep in mind here is that the two Administrations—they were implementing regulations with different types 

of legislation behind them, and how much of it was the executive 

branch and how much of it was Congress, and the two situations 

I think has to be looked at carefully. To be honest with you, I do 

not have a firm answer for you on that. 

Mr. COBLE. Okay. 

Mr. GRAHAM. Give me a question and I will do best to figure it 

out for you. 

Mr. COBLE. I thank you, sir. 

The distinguished gentleman from South Carolina is recognized, 

Mr. Gowdy, from the land of the palmetto. 

Mr. GOWDY. Thank you, Chairman Coble, my friend from the 

great State of North Carolina. And, Mr. Chairman, I had some 

questions for Professor Sunstein and it is my fault, not his, that 

I was detained coming back from votes. 

But I may, nonetheless, since we have a panel of equally bright 

people on the second panel—I may try to go ahead and ask them 

anyway. Mr. Graham, I will start with you. 

I seem to remember the President in his State of the Union saying he had identified 500 rules or regulations that could be rescinded. Did I dream that or was that actually said? 

Mr. GRAHAM. First of all, it is good to see you again. 

Mr. GOWDY. Thank you. 

Mr. GRAHAM. It has been a good 8 or 10 years. You are looking 

extremely good. I wish I could say the same for myself. 

I remember vividly working on 500 existing regulations for President Bush that we had identified, and I believe they were predominantly in the manufacturing sector of the economy. And in the final 

analysis, my recollection is after all of our battles with the agencies 

and trying to get it done, we had about one in four success rate 

on those 500 regulations. 

43 

You know, in this town, you think OMB, OIRA—they can just do 

whatever they want and these people are so powerful. But in reality, the agencies, you know, both at the career level and the political level—they are very savvy. They have a lot invested in a lot 

of these regulations, and even when you have a President who is 

deeply interested in it, you have an OIRA staff who is charged to 

do it, and you work on these things, it is a pretty tough slog. That 

is a one in four hit rate. It would be interesting to compare that 

to what we have going in this Administration. 

Mr. GOWDY. Just for purposes of the record, something came 

up—I cannot recall when—earlier with respect to a bill—the chief 

sponsor is the gentleman from Arkansas, former United States Attorney Tim Griffin. And, Mr. Chairman, just for the record, I wanted to make it clear because I think Professor Sunstein cited one of 

the problems with the bill would be the inability to do what you 

and I were just discussing, which is to rescind a rule or regulation, 

but the bill was prescient enough to take care of that because it 

specifically says that it does not prohibit any substantive action by 

an agency for repealing a rule. It also allows the President to make 

exceptions if he wants to. 

I want to ask you about another bill. Sue and settle agreements 

where you file the complaint with a settlement agreement contemporaneous. Nobody has a chance to object to it. There is a bill that 

we marked up yesterday. What are your thoughts on that as a form 

of rulemaking to sue a friendly agency and settle it before anybody 

knows what is going on? 

Mr. GRAHAM. Well, I think it is an excellent question, and I will 

share an experience I had as OIRA Administrator with what we 

used to call the ‘‘Mercury Rule’’ that dealt with mercury emissions 

from coal-fired power plants. I think they now call it the Utility 

MACT Rule or something like that. 

But basically we were on a judicially set deadline to do that regulation before there had been a cost/benefit analysis of whether a 

regulation was even appropriate or whether or not the existing regulations that we were implementing on nitrogen dioxide and sulfur 

dioxide would have sufficient control on mercury as well, so that 

you wouldn’t even need to have a separate regulation. Yet ultimately, to be candid, we ended up signing off and clearing a substantial mercury rule that really have a very solid cost/benefit 

analysis behind it because we had basically an agency that had 

signed a judicial order or a consent decree with a deadline that basically jammed OIRA in its ability to review a regulation like that. 

It does happen with some frequency. 

So I think the general idea of trying to find a way to get some 

public comment in the process before you sign one of these deals 

and making sure that a judge respects OIRA review time when 

they do these types of orders—I think both of those would be extremely helpful. 

Mr. GOWDY. I was trying to think back to the old job I had where 

the tool that was used most often to try to elucidate the truth was 

cross-examination. I cannot imagine having a trial where defense 

counsel was not able to cross-examine the lead case agent. 

But in a hearing not similar to this and with none of the participants that we have now—I will make that very clear—there was 

44 

a witness from the minority who said that science matters should 

not be subject to cross-examination, that we should just accept 

them because somehow science—the truth has already been elucidated, which I found amazing because my guess is that fingerprint 

experts, DNA experts, blood spatter experts, all of which fall under 

science would be cross-examined. 

My time is up, but can you comment on what is the down side 

of allowing cross-examination during the rule or regulatory process 

because I think it is not always used? So why would we create a 

system where you couldn’t use the power of cross-examination? 

Mr. GRAHAM. Well, I think it is another good question. I guess 

I would start by saying in the history of regulation, there were periods when so-called formal rulemaking with cross-examination 

was more common. And my understanding is that agencies currently have the ability to go that direction if they really want to, 

but they find it much more efficient, meaning get more regulations 

out faster, to do the informal rulemaking process. 

I think it would be interesting to touch base with the key interest groups, both pro-regulation interest groups and groups that are 

burdened by regulation and have them give their views on whether 

they feel the process of merely electronic comment is sufficient or 

adequate compared to the cross-examination you are talking about. 

One thing is clear that would be very different. A scientist or an 

economist at a regulatory agency cannot really be subject to crossexamination in an informal rulemaking context. So really, you 

change the dynamics significantly in the burden on the agency— 

their technical people—to defend what they are doing when you 

have that cross-examination opportunity. 

Mr. GOWDY. Mr. Chairman, thank you for calling this hearing. 

Again, we had a wonderful panel, both sets of panels who are experts in the field. 

Mr. COBLE. And, Trey, I thank you, sir. You will be pleased to 

know we are going to keep the record open 5 days so you and Mr. 

Sunstein will be able to communicate. 

Mr. GOWDY. I am sure he will be glad to hear that, Mr. Chairman. Thank you. 

Mr. COBLE. Now, let me say to our two travelers, you all are invited to stay while Dr. Williams testifies, or if you must depart, you 

may be excused, but that will be your call. 

Ms. KATZEN. We will stay till 4. 

Mr. COBLE. And we appreciate that. 

Dr. Williams, good to have you, and we will hear from you now. 

TESTIMONY OF RICHARD A. WILLIAMS, DIRECTOR OF POLICY 

RESEARCH, THE MERCATUS CENTER, GEORGE MASON UNIVERSITY 

Mr. WILLIAMS. Good afternoon and thank you, Mr. Chairman, for 

the opportunity to testify today. I am Richard Williams, Director of 

Policy Research at the Mercatus Center at George Mason University. My testimony today is based on 30 years of experience and research on regulations, 27 of which were spent at the Food and 

Drug Administration. Today I want to address why we cannot solely look to the executive branch to improve regulations. 

45 

During the last year of his presidency, President Carter said although he knew from the beginning that dealing with the Federal 

bureaucracy would be one of the worst problems he would have to 

face, the reality had been even worse than he had anticipated. 

President Obama may be drawing the same conclusion. Despite 

his expectations that careful consideration will be given to the benefits and costs of proposed regulations, he acknowledged just a few 

months ago that sometimes these rules have gotten out of balance, 

placing unreasonable burdens on business, burdens that have stifled innovation and have had a chilling effect on growth and jobs. 

Why have Presidents been so unsuccessful at managing executive 

branch agencies? One reason is that agencies have a monopoly on 

analyzing their own regulatory decisions. Oftentimes this results in 

decisions more about what is perceived as good for the agency than 

fulfilling the President’s goals or meeting the needs of the American public. Nevertheless, for the past 15 years, OMB has provided 

Congress with reports on the combined annual benefits and costs 

of Federal agency regulatory programs. All have reported benefits 

exceeding costs. But these reports are misleading for two reasons. 

I am putting a chart up. 

First, in every year, the actual number of regulations that have 

quantified benefits and costs is a tiny fraction of the overall number of final rules. For example, in the fiscal year 2010 report, there 

were over 3,000 final rules and only 18 of them had quantified benefits and costs. 

The second reason is for those that they do analyze, the quality 

of the analysis is low. Since 2008, the Mercatus Center has been 

analyzing all of the economically significant proposed regulations, 

127 of them so far. The standard for our review is based on the executive branch’s own guidance to agencies. Over this 4-year period, 

which covers two Administrations, the average score is 28 points 

out of a possible 60 points. And despite good intentions, the Obama 

administration had an average score last year of 29, again out of 

60. 

But why should the agencies try to do good quality analysis? 

After all, good analysis can expose regulations that only benefit 

special interests and aren’t necessarily good for the public at large. 

In 1981, 30 years ago, President Carter created the Office of Information and Regulatory Affairs, otherwise known as OIRA, to try 

and capture some measure of control over the agencies, particularly 

ensuring that they do a good job on regulatory analysis. While 

OIRA has enjoyed some success, our report card shows it is clearly 

not sufficient. In fact, as Professor Katzen said, OIRA staff has 

been made harder. They have been reduced from a staff of about 

90 to 45 while staffing at the executive branch that they oversee 

has more than doubled to 277,000 employees. 

In my written testimony, I have outlined a number of steps that 

Congress can take toward remedying this situation. 

First, make regulatory impact analysis mandatory under law. If 

agencies had a statutory obligation to produce complete regulatory 

analysis, they would pay more attention to it. A current example 

is the Securities and Exchange Commission. Congress made it a 

law that they analyze the economic consequences of their rules. 

And after having lost three court cases in a row based on poor 

46 

analysis, they must now take action to seriously measure and consider the benefits and costs of their rules. 

Second, give stakeholders and OIRA a chance to comment early 

on the really big rules before the agencies choose a course of action 

and dig their heels in. This can be accomplished by requiring agencies to publish an advance notice of the problem they are trying to 

solve, along with the benefits and costs associated with various 

ways to solve it. 

Third, Congress can also establish a minimum review time for 

OIRA to review economically significant rules. For some of the 

most significant rules that this Administration has passed, eight 

interim final rules implementing the health care law, OIRA had an 

average review time of only 5 days. Is it because the Department 

of Health and Human Services did great analysis? No. The average 

score for these economically significant rules was 18 points out of 

60. This is truly regulating in the dark. 

Despite repeated attempts to use small legislative fixes and executive orders to improve the regulatory process, the improvements 

have not materialized. It is time to establish statutory standards 

that can incentivize agencies to produce quality regulatory analysis 

and use them to advance social welfare. 

I finished before my time. 

[The prepared statement of Mr. Williams follows:] 

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Mr. COBLE. Thank you, Dr. Williams. I appreciate that. I appreciate the testimony from all of you. 

Doctor, what do you believe would be the benefits of allowing 

OIRA to perform cost/benefit and other review of new rules from 

independent agencies? 

Mr. WILLIAMS. As Professor Katzen says, I think there would be 

a tremendous benefit. Right now, as we get ready to implement the 


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Dodd-Frank law—in fact, it is already taking place now. They are 

producing like one rule a day. None of those rules are going to be 

analyzed unless they come from the Department of Treasury. So I 

think it would make sense to either have the agencies review them, 

do them, or to give OIRA a chance to review them. 

I will say I do think it is always a problem when the agencies 

are analyzing their own decisions. Their incentives are not to do 

otherwise than to define the benefits exceeding costs. So the decisions they tend to make very early. 

Mr. COBLE. Doctor, I have heard criticism—and perhaps you all 

have as well—alleging that the Obama administration has not been 

as diligent as it could in the matter of regulatory reform. Between 

the Obama administration’s executive orders, presidential memoranda, and guidance on regulations and regulatory review, has the 

Obama administration added anything new to the regulatory review process that has teeth or has muscle? 

Mr. WILLIAMS. I would say no. In fact, the most recent executive 

order, the one that requires an analysis of cumulative costs—that 

is just a repetition of the executive order that was produced under 

President Clinton. Apparently the agencies are not paying any attention to it. They have not paid any attention to it since 1993. I 

can’t imagine they are going to pay much attention to it now. 

So I don’t think that anything new has been added, and I think 

that is the problem. The executive orders that the President issued 

are never going to solve the problems that we have. We have to 

change the underlying institutions if we are going to begin to address these problems. 

Mr. COBLE. Thank you, Dr. Williams. 

Dean Graham or Professor Katzen, do you all have any closing 

remarks prior to departure? 

Ms. KATZEN. I would like to address a few things, if you will permit me. 

First of all, I think there have been real results. We saw this 

summer a major Environmental Protection Agency regulation was 

withdrawn. I am speaking of the Ozone NAAQS. It was sent back 

to EPA to be reconsidered and it was withdrawn. There was a 

noise regulation that was proposed by OSHA that was withdrawn. 

And these are just two of the most well publicized withdrawals. 

There have been a series of individual transactions that have made 

a difference, and I think that the regulatory lookback itself, as I 

said in my comments, has gotten far more emphasis and energy 

than under any of the previous Administrations, all of whom tried 

it. 

And lastly, I would like to state for the record that the amount 

of time for review may be important; it may be telling, but it is not 

necessarily dispositive. In many of the instances, especially the 

ones that Dr. Williams referred to from the Affordable Care Act, 

these come from a very prescriptive statute with very tight dates 

due for the resulting regulations. There would not be a lot of opportunity to make a lot of changes, even if there were the most robust 

and most technically proficient cost/benefit analyses attached to 

them. 

Similarly, his figure that there were 18 regulations out of 3,000 

final rules is off the mark. Of the 3,000 final rules, fewer than 100 

137 

are economically significant. Most of the 3,000 are relatively mundane, if not ministerial, and it would not make any sense in a cost/ 

benefit calculation to do a cost/benefit analysis for whether you 

want to change the time for filing your tax returns from April 15th 

to April 16th if the 15th falls on a Sunday. You do not need to do 

cost/benefit analyses for a lot of these final rules. 

Looking at the rules where CBA is required, my recollection is 

that there were roughly 50 that were economically significant— 

rounding—of which 30 were transfer rules. These transfer rules 

were rules that did not impose any costs on the private sector. 

They were giving benefits to people from taxpayer money, and they 

are specified by Congress. So a cost/benefit analysis for a transfer 

rule does not make sense. 

If we could focus on where the problems are, I think that would 

be highly beneficial. And while there are some poster children, I 

think they should be addressed individually. 

I thank you for your patience. 

Mr. COBLE. Thank you, Professor. 

Dr. Williams or Dean Graham, any final words? 

Mr. GRAHAM. Very quickly just to endorse Sally’s comment about 

the need for some attention to OIRA staffing. It may be at the 45 

level close to its all-time low, maybe not exactly low, but very, very 

low compared to historically. 

And the second point is Sally did mention appropriately the return of the ozone rule that casted at the instruction of President 

Obama—I read very carefully the language in that because it is the 

only return letter that I have seen in this Administration. And basically what it says is not that the cost/benefit analysis wasn’t done 

well or not that the costs and benefits weren’t in sync, but that politically this is not a good time to do this kind of regulation. I 

mean, so basically you don’t have a single case yet where OIRA has 

said in a return letter this regulation has costs in excess of benefits. We are not going to do this one. I must have had like 2 dozen 

of those in the first 6 months that I was at OIRA. So it is a totally 

different kind of situation. It should be concerning. 

Mr. COBLE. Pardon? 

Mr. GRAHAM. It should be of concern. 

Mr. COBLE. Thank you, Dean. 

Dr. Williams, a final word? 

Mr. WILLIAMS. Yes, just two points on the health care rules. Our 

analysis showed that they did, in fact, miss significant opportunities, alternatives that would have been much more efficient than 

the ones they chose. So it was not just that those things were 

statutorily defined and they didn’t have much wiggle room. 

The second thing is basically on the lookback. We now have 

165,000 pages of rules in the Code of Federal Regulations. If you 

sat down to read them, it would take you approximately 3 and a 

half years. I don’t think that requiring agencies to look at them 

rule by rule is ever going to get us very far. I think we have got 

to find an alternative measure. 

Mr. COBLE. Well, folks, you all will recall, as I said at the outset, 

I am not anti regulations. I am anti sloppy regulations. And I think 

we can do better. 

138 

*See Appendix. 

And I think this has been a very distinguished panel. I apologize 

again for the delay with voting, but you assume that risk when you 

come to this Hill. You may have a delay put together. But I thank 

you again. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to respond as promptly as they can so that their answers may be made a part of the 

record. 

Without objection, all Members will have 5 legislative days to 

submit any additional materials for the record. 

And prior to adjournment, I would like to, without objection, introduce four articles applicable to regulatory matters from the 

Forbes Magazine, from Gallup, from The Heritage Foundation, and 

two from the Economist, and the Washington Times. I think that 

is all of them.* 

Again, thanks to you all and I thank the witnesses. Have safe 

travels, particularly to my travelers. Dr. Williams, you arrive safely 

as well. 

We stand adjourned. 

[Whereupon, at 3:53 p.m., the Subcommittee was adjourned.] 

(139) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Steve Cohen, a Representative in 

Congress from the State of Tennessee, and Ranking Member, Subcommittee on Courts, Commercial and Administrative Law 

It has been a little over a year and a half since the last time we had Cass 

Sunstein before us to testify about the initiatives of the Office of Information and 

Regulatory Affairs, and a lot has happened since then in terms of the President’s 

efforts to enhance review of regulations. 

On January 18, 2011, President Obama issued Executive Order 13563, which supplemented and reaffirmed the principles of Executive Order 12866, issued by President Clinton. EO 13563 added an emphasis on increasing public participation in the 

rulemaking process and identifying ways to reduce costs and simplify and harmonize rules through inter-agency coordination. 

EO 13563 clarifies that agencies must identify and consider regulatory approaches 

that reduce burdens and maintain flexibility and freedom of choice for the public, 

including considering alternatives to mandates, prohibitions, and command-and-control regulation. 

Perhaps most significantly, EO 13563 requires agencies to develop a plan to conduct a periodic review of existing significant regulations that ‘‘may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, 

or repeal them in accordance with what has been learned.’’ 

Mr. Sunstein issued a number of guidance memoranda regarding EO 13563 and 

particularly its requirement that agencies conduct periodic review of existing significant regulations, emphasizing the need for agencies to ‘‘consider strengthening, complementing, or modernizing rules where necessary or appropriate—including, if relevant, undertaking new rulemaking.’’ 

Just yesterday, Mr. Sunstein issued another guidance memorandum, this time addressing another aspect of EO 13563, which is the requirement that agencies work 

to address the potential cumulative effects of regulations. 

I look forward to learning the results to date of the President’s push to have agencies improve and modernize the existing regulatory system. 

Based on some of the statements I have heard recently from some of my colleagues, I imagine we will also be discussing the volume and costs of regulations 

under the Obama Administration. 

I note that according to the Office of Management and Budget’s 2012 Draft Report 

on the Benefits and Costs of Federal Regulations, the net benefits of regulations in 

the first three years of this Administration totaled $91 billion, which is 25 times 

greater than during the comparable period under the Bush Administration. 

Moreover, fewer final rules have been reviewed by OIRA and issued by executive 

agencies during the first three years of the Obama Administration than in the comparable period of the Bush Administration. 

As to regulatory cost, the costs of economically significant rules reviewed by OIRA 

were highest in fiscal year 2007, during the Bush Administration. In fact, the costs 

of regulation were higher during the last two years of the Bush Administration than 

during the first two years of the Obama Administration. 

Finally, I would like to know from all of our witnesses what steps Congress can 

take to better help OIRA do its job, including whether Congress should provide 

OIRA with more resources. 

I thank our witnesses for being here today and look forward to their testimony. 

f 

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Response to Post-Hearing Questions from the Honorable Cass R. Sunstein, 

Administrator, Office of Information and Regulatory Affairs 


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Response to Post-Hearing Questions from John D. Graham, Dean, 

Indiana University School of Public and Environmental Affairs 


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Response to Post-Hearing Questions from Sally Katzen, 

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Response to Post-Hearing Questions from Richard A. Williams, Director of 

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Material submitted by the Honorable Howard Coble, a Representative in 

Congress from the State of North Carolina, and Chairman, Subcommittee 

on Courts, Commercial and Administrative Law 


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