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32–351 PDF 2007

S. Hrg. 109–955

NOMINATION OF SUSAN E. DUDLEY

HEARING

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON THE

NOMINATION OF SUSAN E. DUDLEY TO BE ADMINISTRATOR, OFFICE OF 

INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT 

AND BUDGET

NOVEMBER 13, 2006

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

BRANDON L. MILHORN, Staff Director 

JOHN K. GRANT, Professional Staff Member 

MICHAEL L. ALEXANDER, Minority Staff Director 

ADAM R. SEDGEWICK, Minority Professional Staff Member 

TRINA DRIESSNACK TYRER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Collins ................................................................................................. 1

Senator Akaka .................................................................................................. 2

Senator Warner ................................................................................................ 4

WITNESS 

MONDAY, NOVEMBER 13, 2006

Susan E. Dudley to be Administrator, Office of Information and Regulatory 

Affairs, Office of Management and Budget: 

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 27

Biographical and professional information ..................................................... 29

Letter from U.S. Office of Government Ethics ............................................... 48

Responses to pre-hearing questions ................................................................ 49

Additional responses to pre-hearing questions .............................................. 67

Responses to post-hearing questions .............................................................. 101

Additional responses to post-hearing questions ............................................. 112

Additional support and non-support letter and information for the record 127

(1)

NOMINATION OF SUSAN E. DUDLEY 

MONDAY, NOVEMBER 13, 2006

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 2:32 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Susan M. Collins, 

Chairman of the Committee, presiding. 

Present: Senators Collins, Warner, Levin, Akaka, Carper, and 

Pryor. 

OPENING STATEMENT OF CHAIRMAN COLLINS 

Chairman COLLINS. The Committee will come to order. 

Good afternoon. Today, the Committee will consider the nomination of Susan Dudley to be the Administrator of the Office of Information and Regulatory Affairs at the Office of Management and 

Budget. With the nominee to lead OIRA before us, this Committee 

will continue a longstanding debate: When should the government 

regulate and when should government rely on market forces to 

produce desirable outcomes? 

Regulations affect virtually every part of our lives. They make us 

safer and healthier. They help keep our air and water clean. They 

protect consumers from abusive practices. At the same time, excessive regulation can impose real burdens, from mere inconvenience 

to significant costs. The government must consider these trade-offs 

as it deliberates the need for and the extent of regulations. How 

the government weighs competing interests often depends in part 

on the methodology used to calculate costs and benefits, on the accuracy of the data that informs decisionmakers, and on the way alternative regulatory approaches are developed and compared. 

OIRA plays a significant role in the Federal rulemaking process. 

OIRA is one of those alphabet-soup agencies that few people would 

recognize. Its lack of name recognition, however, contrasts with the 

impact that its work has on the lives of all Americans. The office 

was created by the Paperwork Reduction Act of 1980 and has specific statutory responsibilities, such as reviewing the amount of paperwork generated by Federal agencies and assessing the costs and 

benefits of Federal rules. 

For the past 25 years, OIRA has also been responsible for reviewing the substance of proposed and final rules before agencies publish them in the Federal Register. The agency staff thus plays an 

important role in the rulemaking process. They advise agencies on 

an informal basis as regulations are developed and formally review 

2

proposed rules to ensure that proper cost/benefit principles have 

been followed. 

Let me be clear. Technically, OIRA does not approve or reject 

regulations. Individual agencies must ultimately decide whether or 

not to accept OIRA’s suggested changes or proceed with the publication of a rule as drafted by the agency. But OIRA has significant 

influence over the regulatory process. Its officials ask some important and sometimes challenging questions, such as: Is the science 

behind the regulation sound? Do these cost/benefit calculations 

make sense? Is this regulation the best alternative to achieve our 

goals? 

I am particularly interested in the influence that OIRA has on 

the development of environmental regulations. The work of the Environmental Protection Agency is vital to the protection of our 

lakes, rivers, and the air we breathe. The regulations that the EPA 

drafts often involve calculating benefits that can be difficult, if not 

impossible, to quantify. At times, these regulations may be based 

on conflicting data that spark fierce debate in the scientific community. 

The President’s nominee, Susan Dudley, has had considerable experience working with OIRA. After earning a master’s degree from 

the Sloan School of Management at MIT, Ms. Dudley worked for 

a time with the EPA and then on the staff of OIRA itself. She 

spent 8 years as a consultant doing environmental analysis before 

joining the Mercatus Center at George Mason University, where 

she served as a senior research fellow and later as director of the 

Regulatory Studies Program. While with the Mercatus Center, Ms. 

Dudley has filed numerous public comments in regulatory proceedings concerning a broad spectrum of issues. The Committee 

has closely reviewed these comments and numerous other published articles in its consideration of Ms. Dudley’s nomination to 

this important position, and I am certain that the Committee members today will explore many of these writings in some detail. 

For my part, I intend to discuss with the nominee some of her 

comments on safety and environmental standards. I also want to 

explore her advocacy of ‘‘regulatory budgets’’ to cap the costs that 

can be imposed on any one industry as a result of regulation. Ms. 

Dudley, your views on these and other matters are most important 

for the Committee to fully understand as we deliberate on your 

nomination, and I look forward to exploring these and other issues 

with you today. 

Senator Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Madam Chairman. It is 

good to be back here with you again and with the Committee. And 

I join you in welcoming Ms. Dudley, the President’s nominee to 

head the Office of Information and Regulatory Affairs, to our Committee today. Ms. Dudley, I notice your family sitting in back of 

you, and I want to welcome them to this hearing. 

This position is far more important than is generally recognized. 

Those who understand the inner workings of the Federal Government know the critical nature of this office. OIRA, created as part 

of the Paperwork Reduction Act (PRA), has wide-ranging responsiVerDate 0ct 09 2002 10:55 Aug 24, 2007 Jkt 032351 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\32351.TXT SAFFAIRS PsN: PAT
3

bility for the collection of government information under the PRA—

reviewing draft regulations, developing and promoting governmentwide policies on information technology, privacy, and statistics. 

The influence of OIRA is truly substantial. The office affects the 

daily life of every citizen, from the distribution of government benefits to privacy rights, to regulations affecting the environment. 

That is why these decisions cannot be left to political whim or individual political preferences. If OIRA disregards the technical expertise of and decisions made by Federal agencies, then public health 

and safety is at risk. 

Unfortunately, I have several concerns with Ms. Dudley’s nomination. Madam Chairman, I would like to ask that my full statement be placed in the record, and I will finish off with an abbreviated statement. 

Chairman COLLINS. Without objection. 

[The prepared statement of Senator Akaka follows:]

PREPARED STATEMENT OF SENATOR AKAKA 

Thank you Madam Chairman. I join you in welcoming Ms. Dudley, the President’s 

nominee to head the Office of Information and Regulatory Affairs (OIRA), to our 

Committee today. I also welcome her family this afternoon. 

This position is far more important than is generally recognized. Those who understand the inner workings of the Federal Government know the critical nature of 

this office. OIRA, created as part of the Paperwork Reduction Act (PRA) in 1980, 

has wide-ranging responsibility for collecting government information under the 

PRA, reviewing draft regulations, and developing and promoting government-wide 

policies on information technology, privacy, and statistics. 

The influence of OIRA is substantial. The office affects the daily life of every citizen—from the distribution of government benefits to privacy rights to regulations 

affecting the environment. That is why these decisions cannot be left to political 

whim or individual political preferences. If OIRA disregards the technical expertise 

of and decisions made by Federal agencies then public health and safety is at risk. 

Unfortunately, I have several concerns with Ms. Dudley’s nomination. 

First, Ms. Dudley has written in opposition to regulations preserving the environment, protecting individual privacy, and promoting public safety and workers’ 

rights. For example, since 2001, OIRA sought public comment three times for suggestions on regulations that should be modified or repealed. Twice, Ms. Dudley and 

her colleagues at the Mercatus Center submitted proposals that, if implemented, 

would benefit industry over the environment, public health, and workers’ rights. In 

2001, Ms. Dudley submitted to OIRA 44 different regulations for repeal or modification—most of which impacted the environment. OIRA should not become a place 

where environmental regulations go to die. 

Second, I am concerned that Ms. Dudley may expand upon Mr. Graham’s risk assessment and peer review proposals and set impossibly high scientific evidence 

standards before accepting agency proposals for regulatory action. Too stringent a 

criteria, in my opinion, would lead to unnecessary delay which would only endanger 

the public. I expect the OIRA Administrator to trust agencies to use the scientific 

evidence available, instead of requiring irrefragable proof before a regulation is implemented. 

Third, a number of respected organizations have raised additional concerns about 

Ms. Dudley’s inconsistent approach to applying common economic principles in a 

manner that is outside of mainstream economic usage. According to her writings, 

the one constant is that Ms. Dudley always seems to find regulations onerous or 

without need. I want to know how Ms. Dudley would apply common economic principles to ensure, should she be confirmed, that OIRA operates in a fair and transparent manner. 

Again, Madam Chairman I appreciate your holding today’s hearing, and I look forward to our discussion with Ms. Dudley.

Senator AKAKA. It is very important that we have regulations 

preserving the environment, protecting individual privacy, and promoting public safety and workers’ rights. As such, peer review and 

risk assessment programs cannot set scientific evidence standards 

4

so high that OIRA cannot accept agency proposals for regulatory 

action. 

Also, I am concerned about an issue raised by a number of respected organizations. They claim that Ms. Dudley uses common 

economic principles in a manner that is outside of mainstream economic usage. I want to know how Ms. Dudley would apply common 

economic principles to ensure that OIRA operates in a fair and 

transparent manner. 

Again, Madam Chairman, I appreciate your holding today’s hearing and look forward to our discussion with Ms. Dudley. 

Thank you very much. 

Chairman COLLINS. Thank you. Senator Levin. 

Senator LEVIN. Madam Chairman, I don’t have an opening statement. I do share a number of the concerns of Senator Akaka, which 

we could explore during questions. I notice that our dear colleague, 

Senator Warner, is here to introduce Ms. Dudley, and I think on 

our side we would be willing to yield to him before any other opening statements are made because of his time schedule, if that 

would be desirable from his perspective. 

Chairman COLLINS. If that is OK with my two colleagues, we 

will——

Senator CARPER. Madam Chairman. 

Chairman COLLINS. Senator Carper. 

Senator CARPER. I have been yielding to John Warner since he 

was Secretary of the Navy and I was Lieutenant Tom Carper in the 

U.S. Navy 7th Fleet. So I am happy to yield again. 

Chairman COLLINS. And, Senator Pryor, thank you. 

Senator Warner, we are very pleased to have you with us today 

as a Member of this panel and also the distinguished chairman for 

a little while longer of the Senate Armed Services Committee and, 

of course, as the senior Senator from the Commonwealth of Virginia. We welcome you to introduce the nominee. 

Senator WARNER. Thank you, Chairman Collins, my colleagues 

on the Committee, and I appreciate the courtesy, Senator Levin, 

that you have always extended me and other colleagues. 

I was sorry to be a few minutes late. This Committee is known 

for punctuality. The Armed Services Committee somehow does not 

have the same reputation. [Laughter.] 

First, may I inquire, have you introduced the members of your 

family? 

Chairman COLLINS. Not yet. 

Ms. DUDLEY. No. 

Senator WARNER. I wonder if we might invite the nominee to introduce her family. 

Chairman COLLINS. I was planning to do that in a few moments, 

but now would be a fine time as well. 

Ms. DUDLEY. OK. With me I have Brian Mannix, my husband, 

and my two children, Christopher Mannix and Gregory Mannix. 

Chairman COLLINS. We welcome all of you. 

Ms. DUDLEY. Thank you. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. Thank you. We are delighted that you have accepted this nomination by the President. You have brought your 

5

family, and you now appear before this Committee of the U.S. Senate. The Senate is not an unfamiliar institution to you because of 

your extensive background. 

Madam Chairman, you recited much of her biography, but I 

would like to just add another perspective. Without a doubt, the 

nominee has accumulated a wealth of experience in the regulatory 

process as she has held several positions in regulatory-related 

fields. 

After receiving her B.S. summa cum laude—that is a plateau 

that I never achieved, nor will I ever in my lifetime—from the University of Massachusetts and her M.S. from the Sloan School of 

Management at MIT, she began a career that spanned almost 8 

years within the Federal Government serving in various agencies: 

served in the Environmental Protection Agency as a financial consultant; in the Department of Energy Office of Environment, Safety, and Health, assisting the Assistant Secretary; in the Commodity Futures Trading Commission as an economic adviser to 

Commissioner Albrecht; and more recently she has already served 

the OIRA for almost 4 years as both a senior economist and a deputy chief of the Natural Resources Branch. And you recited what 

she has done in the interim, so I will not go further except to ask 

to have my entire statement put in the record. 

Chairman COLLINS. Without objection. 

[The prepared statement of Senator Warner follows:]

PREPARED STATEMENT OF SENATOR WARNER 

Chairman Collins and Senator Lieberman, I thank you for holding this confirmation hearing today and allowing me the courtesy of introducing a fellow Virginian, 

Susan Dudley. Ms. Dudley has been nominated to serve as Administrator for the 

Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB). She is joined today by her husband, Brian Mannix and 

her two sons, Gregory and Christopher Mannix. 

The Office of Information and Regulatory Affairs was first established under 

President Ronald Reagan through the Paperwork Reduction Act of 1980. This Act 

required the office to manage information and statistical policy while enforcing paperwork reduction controls. In addition, subsequent Presidential Executive Orders 

have further refined the Office’s role in the regulatory process, providing OIRA the 

responsibility to review the substance of agencies’ regulatory actions before publication in the Federal Register. 

Without a doubt, Susan Dudley has accumulated a wealth of experience in the 

regulatory process as she has held several positions in regulatory related fields. 

After receiving her BS, summa cum laude, from the University of Massachusetts 

and her MS from the Sloan School of Management at MIT, Ms. Dudley began a career that spanned almost 8 years within the Federal Government serving in various 

agencies. She has served in the Environmental Protection Agency as a financial consultant; in the Department of Energy Office of Environment, Safety and Health assisting the Assistant Secretary; in the Commodity Futures Trading Commission as 

an Economic Advisor to Commissioner Albrecht. And more importantly, she already 

has served in OIRA for almost 4 years as both a Senior Economist and a Deputy 

Chief in the Natural Resources Branch. 

Subsequent to her public service, Ms. Dudley has worked in different facets of the 

private sector from financial and environmental consulting to working as an Adjunct 

Law Professor at the George Mason University School of Law teaching regulatory 

studies. Most recently, Ms. Dudley served as Director of the Mercatus Center at 

George Mason University, which focuses its research efforts on the conditions that 

enable good governance and successful economies. 

In my view, Susan Dudley’s impressive credentials makes her highly qualified to 

serve as Administrator of OIRA. 

I am pleased to introduce her today, and I look forward to the Committee’s favorable consideration of her nomination.

6

1The prepared statement of Ms. Dudley appears in the Appendix on page 27. 

Senator WARNER. I am aware of concerns about her background 

in the positions she has held in public service, but I would only say 

that any individual worth their salt who has served in various public positions has engendered some controversy in their lifetime. And 

I would accept willingly, hopefully, that controversy in exchange for 

the extraordinary record of public service. Were I to ever stand—

and it is most unlikely—for a public office again, not in the Senate—that is likely to happen, but I mean in other avenues, there 

would be thunder directed at me as a consequence of my previous 

positions in the Executive Branch of our government. So accept it 

with the bravery that you have shown in the past, and look them 

in the eye and tell it as it is, and be responsibe. And I wish you 

luck, and you’re on your own. [Laughter.] 

Chairman COLLINS. Ms. Dudley, I am not sure you should take 

great confidence in that. 

Thank you, Senator Warner, for that introduction. 

We now will resume opening statements. Senator Levin, were 

you finished? 

Senator LEVIN. Yes. Thank you. 

Chairman COLLINS. Senator Carper. 

Senator CARPER. No, thank you. 

Chairman COLLINS. Senator Pryor. 

Senator PRYOR. No, thank you. 

Chairman COLLINS. Thank you. 

I do want to thank Senator Warner for his introduction of Ms. 

Dudley. Susan Dudley has filed responses to the biographical and 

financial questionnaires, answered pre-hearing questions submitted 

by the Committee, and had her financial statements reviewed by 

the Office of Government Ethics. Without objection, this information will be made part of the hearing record with the exception of 

the financial data, which are on file and available for public inspection at the Committee offices. 

Our Committee rules require that all witnesses at nomination 

hearings be sworn in and give their testimony under oath, so, Ms. 

Dudley, if you would please stand and raise your right hand. Do 

you swear that the testimony you are about to give to the Committee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Ms. DUDLEY. I do. 

Chairman COLLINS. You may be seated. 

Ms. Dudley, please proceed with your statement. 

TESTIMONY OF SUSAN E. DUDLEY1 TO BE ADMINISTRATOR, 

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

Ms. DUDLEY. Thank you, Chairman Collins, Senator Lieberman, 

and Members of the Committee for the opportunity to be here to 

answer your questions this afternoon. I am honored to be President 

Bush’s nominee to be Administrator of the Office of Information 

and Regulatory Affairs at the Office of Management and Budget. 

And if I am confirmed, I look forward to working with each Member of this Committee. 

7

I came to Washington almost 25 years ago as a newly minted 

MBA from MIT’s Sloan School of Management, deeply committed 

to environmental issues and interested in learning how government 

policy can foster environmental and economic prosperity. At the 

Environmental Protection Agency, I observed how incentives matter when it comes to promoting compliance with environmental policy. 

To provide incentives for compliance with environmental regulation, I developed the BEN model, still in use today, to estimate the 

economic benefit of noncompliance for civil penalty assessments 

and used it to help negotiate the largest civil penalty for a water 

quality violation at that time. I went on to work as a career staff 

economist at OIRA and later at the Commodity Futures Trading 

Commission. 

For the last 8 years, I have studied and written on regulatory 

process and policy at the Mercatus Center at George Mason University. I also teach courses on regulation as an adjunct professor 

at the George Mason University School of Law. I believe my years 

working with, studying, and teaching about regulation will serve 

me well if I am confirmed as administrator of OIRA. But I also recognize that my role will be very different from what it is now. 

As a researcher and an academic, I have written extensively, 

both in scholarly journals and the popular press. Those writings 

have sometimes been provocative with the goal of challenging the 

way people think about the consequences of regulation. If confirmed, however, I will have a different role. The OIRA Administrator is responsible for implementing the laws of the land as Congress has written them. I will lead a team of talented and dedicated career analysts at OMB in working with agencies, Congress, 

and the public on issues regarding regulation, information technology and policy, privacy, paperwork review, and statistical policy. 

One thing I will continue to do is foster debate. As my students will 

attest, I am fair and open-minded and will listen to all who want 

to have a say in the public process. 

OIRA was created when President Carter signed into law the Paperwork Reduction Act of 1980. It is guided by several statutory 

authorities, such as the Privacy Act, the Unfunded Mandates Act, 

and the E-Government Act, as well as President Clinton’s Executive Order 12866 governing regulatory review. 

The common theme in these different authorities is the need for 

a central office to coordinate, oversee, and guide executive branch 

agencies to ensure their activities are consistent with statutory and 

executive objectives and accountable to Congress, the President, 

and the American people. 

OIRA plays a vital role in ensuring that this process is transparent, open, and accountable, not to special interests but to the 

broader public interest, and I am committed to that role. Throughout my career, I have endeavored to conduct myself with honesty 

and integrity and to treat others with respect and openness. If I 

am confirmed, I look forward to working with you to fulfill the important functions of OIRA. 

Thank you for giving me the opportunity to make this statement, 

and I look forward to your questions. 

8

Chairman COLLINS. Thank you for your statement. I am now 

going to ask you three standard questions that we ask of all nominees. 

First, is there anything that you are aware of in your background 

that might present a conflict of interest with the duties of the office 

to which you have been nominated? 

Ms. DUDLEY. Not that I am aware of, Senator. 

Chairman COLLINS. Second, do you know of anything, personal 

or otherwise, that would in any way prevent you from honorably 

and fully discharging the responsibilities of this office? 

Ms. DUDLEY. No, Senator. 

Chairman COLLINS. And, third, do you agree without reservation 

to respond to any reasonable summons to appear and testify before 

any duly constituted Committee of Congress if you are confirmed? 

Ms. DUDLEY. Yes, Senator, I do. 

Chairman COLLINS. We will now proceed to the first round of 

questions limited to 6 minutes each, but I would inform my colleagues that we will be doing a second round as well. 

Ms. Dudley, I have read many of your writings, and many of 

them are quite provocative in the approach that you have taken. 

I kept in mind as I read your many writings and comments that 

you were writing from a more academic perspective rather than as 

a public official with broader responsibilities. 

But if you read some of your writings, one could get the impression that you think that all regulatory matters can be boiled down 

to a hard dollar-and-cents calculation of the costs and the benefits. 

And yet it is very difficult to put a dollar value on many benefits. 

What is the value of being able to go outside and see an unpolluted 

sky? I am not talking about the health benefits. I am talking about 

the scenic value of being able to see a sparkling, unpolluted river 

or clean skies. What is the value of just knowing that our rivers 

and lakes are clean enough to swim in and to fish in? 

It is difficult to quantify everything. I think of that overplayed 

television ad about some things in life are priceless, but I am not 

sure you see it that way. I think you see everything as being quantifiable, that for everything else there is OIRA to calculate the cost 

and the benefit. 

What is your response to that? Does your approach to regulations 

take into account the nonquantifiable benefits? 

Ms. DUDLEY. Yes, indeed, I agree with everything that you said 

because I also enjoy a clear stream. I love going out and enjoying 

a clean environment, and a lot of these things are hard to quantify. 

I have actually never advocated for a strict benefit/cost analysis, 

and indeed, in my writings, in the comments that we file with Federal agencies we have a checklist that has seven elements, and 

cost/benefit is just one of seven. Other things include—and certainly there are a lot of nonquantifiable effects. So what kind of scientific information do we have? What are the distributional effects? 

Who is paying the cost? Who is getting the benefit? 

So there are a lot of different issues that need to be factored in, 

and cost/benefit analysis is not something that I would think is 

the—it certainly would not be a deciding factor. 

Chairman COLLINS. I want to follow up further on this theme. At 

one point you were quoted in the Washington Post as saying that 

9

a rule to increase fuel economy standards for light trucks was ‘‘the 

worst rule of 2003.’’ I personally believe that it is absolutely essential that we increase corporate average fuel economy standards, the 

so-called CAFE standards, because doing so would have important 

benefits for consumers, those are dollar-and-cents benefits, but also 

for our national security and for our environment. In the case of 

national security, I think it is very important that we decrease our 

dependence on foreign oil, so I have supported proposals that would 

save more than a million barrels of oil per day by raising CAFE 

standards. 

If you are confirmed, would you take into account the national 

security implications, the environmental benefits, as well as the 

more quantifiable consumer savings of reduced oil consumption in 

any future rulemakings on CAFE standards? 

Ms. DUDLEY. Well, it is interesting that my criticism of that rule 

in 2003 was just that, that it looked at the consumer savings but 

it didn’t look at the externalities, the energy security, the energy 

independence, the environmental benefits, the fact that—the unintended consequence, the size of the cars. So that was precisely my 

criticism of the analysis behind that regulation was that it didn’t, 

because indeed fuel economy is important to me, too. My husband 

and I bought—we drive two hybrid cars, and we had to wait in line 

for 6 months for the very first Prius that came out in the United 

States. So I believe in fuel efficiency, and I agree with you, those 

are all the reasons why we should be making those moves. 

And, in fact, the CAFE rule in 2006—I was not critical of that 

one because I think it did address specifically those issues that you 

mentioned. 

Chairman COLLINS. But why would you call it ‘‘the worst rule of 

2003’’ if it had additional benefits that weren’t recognized? 

Ms. DUDLEY. The criticism was really of the analysis, that the 

analysis was a one-size-fits-all analysis that didn’t recognize that 

some consumers may bear more—or have more or less benefits 

from that regulation, depending on how much they drove. So I 

thought rather than focusing on the consumer savings, which I 

think is a decision consumers can make for themselves, the whole 

purpose of a CAFE rule would be these things that are external, 

that are, in economic terms, external to the consumer’s pocketbook 

decision. 

Chairman COLLINS. Senator Akaka. 

Senator AKAKA. Thank you very much, Madam Chairman. 

Ms. Dudley, in ‘‘The Primer on Regulation’’ that was published 

in 2005 by the Mercatus Center, you wrote, ‘‘It is important to limit 

regulatory activity to identified market failures. In the absence of 

a significant market failure, individuals are better able to make decisions regarding trade-offs in their lives than Government regulators.’’

In many instances, individual citizens are not in a position to act 

in the manner that you advocate. The power and financial leverage 

of businesses and government can leave individuals at a distinct 

disadvantage. Government regulation is often the only recourse to 

protect the interests of citizens, and so I would like to ask you to 

share with us what you mean by the concept of market failure? 

10

Ms. DUDLEY. Yes, Senator. Market failure is a standard economic 

concept that really refers to what is the root cause of a problem 

that we observe. And the reason that I think it is important and 

the reason that it is widely accepted to be an important first step 

in looking at and understanding regulation is that if you don’t 

know what the root cause of the problem is, it is hard to address 

it in a way that actually targets the problem and doesn’t end up 

having unintended effects. 

So a market failure could include pollution because that is a cost 

that the company that is putting something up its smokestack does 

not bear, so that is an externality that would need regulation. Another is a common resource, like fishing. Nobody owns the fish 

until you take it out of the water, so you need to have some regulations so that we don’t overfish. And perhaps what you were speaking to is information asymmetry. If certain groups have information that others do not have, that is a market failure, and that can 

be addressed through regulation by providing that information. 

So I think understanding the root cause is the purpose of market 

failure. And, by the way, this is not something that is unique to 

me. I think standard textbooks will refer to it, and indeed, the 

guidelines issued by both President Clinton and President Bush 

refer to that as the first step in understanding regulation. 

Senator AKAKA. Thank you. Ms. Dudley, the Davis-Bacon Act requires that prevailing wages are paid to workers on public works 

projects. All Federal Government construction contracts over 

$2,000 must include a provision for paying workers no less than 

the prevailing wages and benefits paid for similar projects. On the 

record, you have criticized the Davis-Bacon Act imposing costs that 

fall disproportionately on young and minority workers. You also 

said that Davis-Bacon does not offer net benefits to society, that 

there is no economic justification for the act, and that alternative 

standards were not adequately explored. 

Now, given your comments about the Davis-Bacon Act, what assurances can you provide this Committee that, if confirmed, you 

will issue regulations related to the Davis-Bacon Act in an unbiased manner? 

Ms. DUDLEY. I have actually never suggested that the DavisBacon Act shouldn’t exist. I commented on a rule back in 1999 on 

a provision to implement one aspect of it—the helper rule, or how 

to define ‘‘helper’’ under the Davis-Bacon Act. And my concern with 

that particular regulation was that the proposed definition would 

harm young, lower-skilled minority and female workers. The quote 

that you said, I was actually quoting a GAO study there, so those 

were not my words, but rather the GAO statement about the 

Davis-Bacon Act. So I have not—it was almost 10 years ago that 

I wrote that, and it was about a very specific proposal. 

If I am confirmed, I have every intention of following the laws 

of the land as they are written, Senator. I would like to assure you 

that. 

Senator AKAKA. Ms. Dudley, as I mentioned in my opening statement, I am concerned about the value you will place on scientific 

evidence in determining whether regulatory action is necessary. 

Science can be extremely helpful in showing the consequences of 

actions and offer solutions to address resulting problems. However, 

11

science can have a degree of uncertainty, and I am concerned that 

you may require absolute scientific proof before relying on scientific 

evidence. 

If scientific evidence provides inconsistent results, how should 

agencies proceed with regulatory action? 

Ms. DUDLEY. There are guidelines that agencies rely on that talk 

about how to deal with uncertainty, and I have no intention to 

change those guidelines. I agree with you. We will never have perfect scientific information. 

Senator AKAKA. Thank you very much. Thank you for your responses. Thank you, Madam Chairman. 

Chairman COLLINS. Thank you. Senator Levin. 

Senator LEVIN. Thank you, Madam Chairman. 

In your answer to Senator Akaka, I think you said that the 

words that there is no economic justification for a Federal role in 

defining construction practices and determining wages as required 

by the Davis-Bacon Act were these not your words? 

Ms. DUDLEY. Oh, I am sure they were my words, Senator, but 

they were referencing a GAO study, peer-reviewed economic journal article and GAO. 

Senator LEVIN. Well, because I am looking at what purports to 

be your words. 

Ms. DUDLEY. Yes, I am saying——

Senator LEVIN. Did you believe that there is no economic justification for a Federal role in defining construction practices and 

determining wages as required by the Davis-Bacon Act? Did you 

believe that when you wrote it? 

Ms. DUDLEY. Yes. I examined the GAO study, and yes, I cited 

from the GAO study. 

Senator LEVIN. All right. And that is your current position? 

Ms. DUDLEY. I have not studied the Davis-Bacon Act at all except 

for that one regulation on helper rules, and my concern there was 

that it harmed the very people that I thought it was intended to 

protect. 

Senator LEVIN. Is there an economic justification for the Federal 

Government setting a minimum wage? 

Ms. DUDLEY. I have never studied the minimum wage. 

Senator LEVIN. Back in 2000, you wrote relative to the public’s 

right to know about chemical plant risks that if there is a public 

demand for this information, as EPA’s benefit assessment argues, 

nongovernmental organizations would find value in deriving it. 

How would a nongovernmental organization derive information 

from chemical plants? 

Ms. DUDLEY. I am not in detail familiar with that comment. I am 

not sure I could answer that part of the question. 

Senator LEVIN. OK. And then you went on to say, ‘‘The fact that 

they don’t suggests that the value of the information to the public 

is less than the cost of the information.’’ How do you value that information about the risks that people face from chemical plant accidents or attacks? 

Ms. DUDLEY. I think it is very important to inform people about 

hazards that are in their community, and I think that is very important because you cannot make decisions for yourself and your 

family if you do not have that information. 

12

I believe my general comment on that regulation was that we 

needed to consider what the trade-offs were, and I was concerned 

that—well, terrorists—this was in 2000 so we didn’t have evidence 

yet, but that terrorists might be able to access. That was information that developed scenarios for what is the worst-case thing that 

could happen if this chemical is released. 

Senator LEVIN. Is there always a nongovernmental organization 

out there to obtain information or to take action? That is the assumption of your comment. 

Ms. DUDLEY. With the Toxic Release Inventory, we certainly see 

a lot of nongovernmental organizations——

Senator LEVIN. Is there always a nongovernmental organization 

that you can rely on to protect the public interest? 

Ms. DUDLEY. Absolutely not. I definitely see a role for government in protecting the public and informing the public. 

Senator LEVIN. Because that statement says that nongovernmental organizations would find value in deriving that information. 

The fact that they don’t suggests what I just quoted; in other 

words, if there is value in obtaining it, there will be some nongovernmental organization that will obtain it. But isn’t it true that 

there is not always a nongovernmental organization that has either 

the resources or the priorities to pursue a particular cause and you 

need to have a government to protect the public interest? 

Ms. DUDLEY. Yes, you are certainly right. 

Senator LEVIN. In 2002, you commented on an SEC rule to protect consumer privacy by limiting financial institutions’ ability to 

share customer financial information without proper consent, and 

here is what you wrote about protecting the privacy of consumers’ 

financial information: ‘‘The implicit premise of the rule is that individuals and firms cannot come to a mutually satisfactory agreement as far as privacy is concerned without resort to government 

assistance.’’ Is that the premise of the rule? 

Ms. DUDLEY. Actually, I did not comment on that rule. That was 

another scholar at the Mercatus Center. 

Senator LEVIN. I see. So those are not your words? 

Ms. DUDLEY. I believe what that is, is in OMB’s Annual Report 

to Congress, they asked for recommendations for regulations, and 

what we did is we provided summaries of regulations we had researched. So I think that is where that came from. But I did not 

do that analysis, so I can’t——

Senator LEVIN. Those, then, were not your thoughts or words at 

the time. 

Ms. DUDLEY. Right. 

Senator LEVIN. You suggested that OIRA conduct independent 

assessments, that they have an outside organization to come up 

with an independent cost/benefit analysis separate from OIRA, 

rather than just having OIRA do the independent analysis, cost/

benefit analysis. So you would have a nongovernmental organization to operate above or alongside of OIRA to review and analyze 

regulations. You have said that OIRA from inside the Executive 

Branch cannot ‘‘provide the necessary check or independent assessment of costs and benefits.’’

Do you believe that? 

13

Ms. DUDLEY. I am not exactly sure where that is from, but I believe that was my recommendation for a congressional office of regulatory analysis. 

Senator LEVIN. According to my notes, outside of the Executive 

Branch you wanted independent analysis, outside of the government, not just the Executive Branch. 

Ms. DUDLEY. I would love to follow up on this if I am wrong 

about this, but I believe that is testimony before Congress where 

I recommended a congressional office—or supported the congressional office. 

Senator LEVIN. In any event, my last question here, because I am 

out of time, would be to close that thought. What would be the cost 

of that independent analysis? 

Ms. DUDLEY. I don’t know, sir. 

Senator LEVIN. Well, shouldn’t you make a cost/benefit analysis 

before you propose that? 

Ms. DUDLEY. It was a recommendation to Congress, and I assumed that the Members that I made the recommendation to could 

analyze it. 

Senator LEVIN. You have a lot of confidence in us. [Laughter.] 

Thank you, Madam Chairman. 

Chairman COLLINS. Senator Carper. 

Senator CARPER. Thank you, Madam Chairman. 

Ms. Dudley, would you tell us again the names of your sons and 

how old they are? 

Ms. DUDLEY. Gregory, who is behind me—who shouldn’t be, because every time I go back, I get his long legs. Gregory is 16, and 

he is in the 11th grade. And Christopher is 13 and in the 8th 

grade. 

Senator CARPER. OK. My sons are 16 and 18, and our oldest boy 

is actually a freshman engineering student at a school up in Massachusetts where you spent some time. 

Ms. DUDLEY. Very impressive. 

Senator CARPER. He is a lot more impressive than his father, I 

can assure you of that. 

I wanted just to start off by—every now and then I say to my 

sons, ‘‘There is nothing wrong with making a mistake. We all make 

mistakes. And sometimes we learn the most from the mistakes that 

we make. The key is not to make the same mistakes over and over 

and over again.’’

Senator Pryor and I, along with Senators Voinovich and Alexander, have sort of encouraged the Senate to start sponsoring every 

2 years right after the election something we call ‘‘orientation for 

new Senators and spouses.’’ And the idea is for the new guys and 

gals coming here to learn from our mistakes and the faculty of current Senators and spouses, to say these are the ways that we 

messed up and you don’t want to make our mistakes, to learn from 

our mistakes. 

If you had to talk about some mistakes that you have made of 

a professional nature with respect to really some of the issues that 

we are talking about here today and looking back in hindsight, 

what are some of the mistakes that you have learned from that 

would guide you maybe a bit differently in this new role? 

14

Ms. DUDLEY. I actually am proud of the things that I have written. If I had known I was going to be nominated for a position, I 

might have written less. But I think if you read—don’t just look at 

things pulled out of context, but if you read what I have written, 

I have always tried to be thoughtful and careful—and provocative, 

yes, challenge the way people think about things. But I have tried 

to do it openly, transparently, and with integrity. So I am sure I 

have made lots of mistakes, but in terms of the things that I have 

written, I think that they are sound. 

Senator CARPER. All right. We all have probably our own set of 

core values to guide us as we approach a particular job or an issue. 

My own core values are pretty basic. It is to figure out the right 

thing to do and just do it; to treat other people the way I want to 

be treated; to be committed to excellence in everything that I do; 

to use some common sense; and when I think I am right, just not 

to give up. And I call them sort of like my moral compass, and 

when I look at an issue or a challenge, I sort of look at the issue 

through that prism of those core values to help me figure out the 

way to go forward. And when I get off on the wrong track, these 

kind of help get me right back on track. 

Would you just take a minute and talk with us about your core 

values and how they guide you in approaching an issue or a regulation or whatever? 

Ms. DUDLEY. OK. I would say some of my core values are like 

yours. They are honesty and integrity and doing—I am a wonk; I 

am a nerd. I like to do the research, and I do not like to know the 

answer before I have done the research. But to back up from there, 

core values, I would say I care deeply about the environment. That 

is a core value. And I always have. When I came to Washington 

to try to do environmental policy that improves the environment, 

I was concerned that some of the policies did not have the intended 

effects. So what I have become is what I have seen written in the 

newspaper, ‘‘She is a free market environmentalist.’’ And I think 

that is true, and that is going back to the question I think Senator 

Akaka said. You need to look at what is the root cause of the problem and then address it. And often, if you look at the root cause, 

you can find there are ways to harness people’s incentive, harness 

market forces in order to respond to that, and really have the effects that we want on such issues as health care, worker safety, 

and the environment. 

But back to core values, honesty and openness, and I hope that 

is one message I can share with all of you, that I really am open 

and would really like to work with all of you and anybody who is 

interested in regulatory issues. 

Senator CARPER. All right. What I have read about you and what 

you have said here and what others have said about you suggests 

that you have spent a lot of your life and your career working on 

and studying regulatory issues. I believe you spent some time 

working at OIRA itself, and I think that has been spoken to today. 

Based on your experience and your work, what do you think we 

do right when it comes to regulations? And what do you think we 

do wrong? And if confirmed, how would you seek to address some 

of the problems that you see? 

15

Ms. DUDLEY. I think there are lot of things that we do right. I 

think that the analytical framework that President Clinton put in 

place with Executive Order 12866, which has been continued, I 

think that shows that it is not partisan. There is a nonpartisan approach to understanding regulations to make sure that they are 

having the intended effects. So I think we are doing that right. 

I think that we are doing a better and better job of understanding these hard-to-understand benefits and costs. And we are 

doing better and better in the environment area. We have new 

challenges that this Committee is very aware of, I am sure, in 

homeland security. They are all new challenges there for costs and 

benefits that we have to really understand how to measure those. 

And transparency, I think we are getting better and more open in 

transparency, not just in the review process, which the Office of Information and Regulatory Affairs I think has become better and 

better at being open and transparent in their review. But also with 

e-rulemaking, the general public has a much better opportunity 

now to get involved in this process. 

Senator CARPER. All right. Thanks. Thanks, Madam Chairman. 

Chairman COLLINS. Thank you. Senator Pryor. 

Senator PRYOR. Thank you, Madam Chairman. 

Chairman COLLINS. Senator Pryor, I would note that with the 

new Congress you are going to move up substantially on this Committee. 

Senator PRYOR. I know. I won’t have to do long-distance phone 

calls to you now. [Laughter.] 

Thank you so much. Let me ask, if I may follow up on Senator 

Levin’s question from a few moments ago, about financial information and privacy and the mutually satisfactory agreement that you 

talked about, and you said those were not your words, that someone else at the institute had written that? 

Ms. DUDLEY. That comment on SEC’s financial privacy was not 

mine, no. 

Senator PRYOR. But as I understand it, in that same analysis you 

did write to OPM under your name that the regulation in question 

was overly burdensome and should be withdrawn. Is that right? 

Ms. DUDLEY. I would have to check. I don’t think we suggested 

that it be withdrawn. But I can get back to you on that, Senator. 

Senator PRYOR. Yes. My research says that you did, but I just 

wanted to make sure and clarify that because in response to Senator Levin’s question, you almost indicated that you did not agree 

with that or you did not really comment on that. But I was sensing 

that you were distancing yourself from that. Do you agree with 

what he said when it comes to financial privacy? 

Ms. DUDLEY. I care a lot about privacy, but I am basically a 

nerd, and it is hard for me to comment on something when I have 

not done the research. So I did not—but I will get back to you this 

afternoon on that. 

Senator PRYOR. OK. And the center that you have been working 

for, is it called Mercatus? 

Ms. DUDLEY. Mercatus, yes, sir. 

Senator PRYOR. Do you generally agree with the positions that 

Mercatus takes? 

16

Ms. DUDLEY. The scholars at Mercatus are independent scholars. 

It is an academic environment, so we have the academic freedom 

of being independent scholars. But we do share a feeling that market-based processes can be more effective at achieving people’s 

needs and meeting social goals. So in that sense, yes, I would 

share——

Senator PRYOR. Generally? 

Ms. DUDLEY [continuing]. That basic value, yes, that generally—

yes. 

Senator PRYOR. Now, you have written something that I think is 

somewhat controversial on the senior death discount where you 

talked about this. 

Ms. DUDLEY. I have never written on a senior death discount. 

Senator PRYOR. OK. Do you agree that there is or should be such 

a thing as the senior death discount? 

Ms. DUDLEY. I think that what we all want for ourselves and our 

families and our children is to live long, healthy, and happy lives. 

So what I have recommended and what I have used is, in addition 

to—so this is what is—it is all coming down to whether you are 

measuring lives. I have recommended looking at the number of 

years of lives. I think it is important to understand longevity. That 

is not—there is something else that people have referred to as a 

senior death discount, and it is not the life years approach, which 

is what I have recommended, and it is in the guidelines. 

Senator PRYOR. Is it fair to say that you think that an older person’s life is worth less in an economic sense than a younger person’s life? 

Ms. DUDLEY. I think what I would say is that, regardless of how 

old you are, you would like to live longer. So if you are 60 and 

there are two options, two alternatives you could have—one that 

provides one more year of life and one that adds 10—you would 

like to have that piece of information. You would like to have it if 

you are 60 and looking at your own life. You would like to have 

it if you are looking at your 6-year-old’s life. You would like to 

know how much you are extending it. 

So I don’t think it is related to age, but it tells you if this rule 

will provide me 10 more years of life, that is better than a rule that 

provides me 5 years. 

Senator PRYOR. All right. Well, I am puzzled, then, because as 

I understand it, you wrote something called ‘‘How Not to Improve 

Public Health,’’ and you wrote something called ‘‘Arsenic Comments,’’ Public Interest Comment on the Environmental Protection 

Agency’s request for comments on national drinking water regulations for arsenic, and you are commenting on arsenic. And as I understand it, what you are saying, as I read your comments, is that 

these stricter standards for arsenic, you basically say, are ‘‘an unwelcome distraction.’’ I have that in quotes. It is ‘‘an unwelcome 

distraction.’’ And as I understand it, arsenic disproportionately 

harms older people, people who are advanced in age, and, therefore, if they had the information that you say they shouldn’t have, 

their life might be prolonged. But you are saying we shouldn’t have 

these regulations and people shouldn’t know about the arsenic in 

the water, so they might not be able to add that year to their life. 

How am I misunderstanding what you are writing? 

17

Ms. DUDLEY. Well, on that, I don’t know that it is true, but I 

don’t think that was the point of—I don’t think that it is true that 

arsenic disproportionately affects older people. I am not sure. Probably not because the concern is cancer, so it would be younger people. 

The point of that, because, of course, we all want safer drinking 

water, but there are small communities, particularly in the Southwest, that have higher natural levels of arsenic. They would have 

had to expend large amounts of money to meet those regulatory 

standards for their drinking water systems. And the unwelcome 

distraction was because it was at a time when we were all worried 

about whether terrorists might be attacking our water systems. 

So looking at a small community that has limited resources, how 

are they best to address those limited resources, and that was my 

concern. So it was not please do not give them information. I never 

suggested that, and I never suggested that we do not care about 

it because it is elderly people. It was really a question of how do 

we deal with the priorities given the different risks, public health 

risks with drinking water systems that we face. 

Senator PRYOR. OK. Well, maybe your writings are not clear or 

maybe I have not read them thoroughly enough, but as I understand your writings, basically you look at the age as a factor when 

you look at regulation. Is that not right? Is that not fair? 

Ms. DUDLEY. What I have recommended is that, in addition to 

looking at how many lives are saved, which is one standard metric, 

we should also use the second standard metric, which is life years. 

And that really just tells you how many years are we extending life 

by. I think both of them are valid, and I think they both provide 

valuable information, and that looking only at one does not tell you 

enough information. 

Senator PRYOR. Well, I am out of time, but I assume if you are 

going to have that second metric, as you call it, then you are making a judgment call on the number of years left as it relates to regulation. 

Ms. DUDLEY. I think that is information that we have, and so 

providing that information to make the decision, I think it does 

help you decide, will this regulation extend lives longer than that 

regulation? And I think that is an important piece of information 

to have. 

Senator PRYOR. Thank you, Madam Chairman. I have overstayed 

my time. 

Chairman COLLINS. Thank you. 

Ms. Dudley, I know it is difficult to go back and look at comments or writings that you made several years ago, but you have 

commented extensively in your academic role, and I want to go 

back to some comments that you made that were published in 1998 

in an issue of the magazine Regulation. 

In these comments, you suggested that a jurisdiction that expects 

ozone levels to exceed the standard might offer to compensate an 

upwind jurisdiction in order to reduce ozone pollution. I have to tell 

you, coming from a State that is downwind of almost all power 

plants in the United States, this seems completely backwards to 

me. Just one of these power plants can cause more pollution of the 

18

type that produces smog and acid rain than all of the automobiles, 

factories, and businesses in Maine combined. 

In other words, if you took every car off the road in Maine and 

closed down every factory, Maine would still have a pollution problem, including in beautiful sites such as Acadia National Park, because of the effect of the prevailing winds. 

So when I read that you are suggesting that a State like Maine 

might need to compensate a polluter’s State, I just don’t understand those comments. Could you explain what you meant by that 

and whether you still hold to that viewpoint? 

Ms. DUDLEY. Well, this is a time when I wish Senator Carper 

were still here because that would be one that I wish I had not 

said. This is one I wish I had taken back. 

This is a perfect example of you can be an academic theorist and 

you can talk, ‘‘Well, in theory, we could get the same result by the 

polluting State compensating the downwind State or vice versa.’’ 

That is not the way our statutes are written, and if I were confirmed as Administrator of OIRA, I assure you that is not the kind 

of proposal I would suggest. 

Chairman COLLINS. So is this more of an academic exercise to 

talk about the theoretical possibilities? 

Ms. DUDLEY. Yes. I mean, it is applying the Coase theorem. 

Coase was a Nobel Prize-winning economist, and that was his theorem. But it clearly does not work from an equity perspective or 

a fairness perspective. 

Chairman COLLINS. Exactly. 

Ms. DUDLEY. And I agree with you, and equity and fairness are 

definitely something I think are important to understand in regulation. 

Chairman COLLINS. Let me turn to another clean air issue that 

concerns me. In October of this year, just recently, the EPA’s Clean 

Air Scientific Advisory Committee unanimously recommended that 

air quality standards for ozone need to be substantially strengthened to protect human health, particularly in sensitive subpopulations, for example, children with asthma. 

This Committee found that the health impacts in healthy individuals at ozone levels below even the current standard were significant and were cause for concern, and it is already well known 

that sensitive individuals, such as the elderly with breathing difficulties or children with asthma, are even more susceptible than 

healthy individuals. Again, I recognize that this was sometime ago, 

but in 1997, you argued that the ozone standard should be set at 

a weaker level than even the current level, which has now been 

shown to be insufficient to safeguard the health of vulnerable populations. 

In light of this new evidence—and I realize it is new evidence 

since you wrote your comments—do you now believe that there is 

enough evidence to support an ozone standard at least as strong as, 

if not stronger than, the current standard? 

Ms. DUDLEY. You are right, it was 10 years ago when I wrote 

about ozone. And I do care about the air, having a son who has suffered from asthma. I understand those issues. I have looked at 

that. I have seen that, the Clean Air Science Advisory Committee’s 

19

letter, and I think it will certainly weigh in to EPA’s decision, particularly under the Clean Air Act. 

Chairman COLLINS. I have talked a lot this morning about the 

benefits of regulation, particularly in the environmental arena. 

There are times, however, when excessive regulations, costly regulations have a detrimental effect, and I want to bring to your attention an example that affects the State of Maine. 

As you know, for centuries Maine has had a fishing industry that 

is very important to our economy, to our way of life, and to our heritage. And yet the fishing industry is endangered in Maine because 

of excessive regulation that often seems to be grounded in the desire to avoid lawsuits rather than in sound scientific knowledge 

and expertise. 

Currently, the National Marine Fisheries Service is drafting a 

rule that could well have a detrimental effect on Maine’s lobster industry. I don’t want to go into exhaustive detail, and I realize this 

is not something that has probably been on your radar screen. But 

it is a good example of a regulation that has a noble goal, but 

would impose a tremendous burden on the lobster industry in our 

State. The regulation would require some gear modifications by requiring fishermen to replace their current floating ground lines 

with sinking ground lines. This is a costly change. Again, it has a 

worthwhile purpose. It is intended to help reduce the risk of interaction between fishermen and certain whales, and that is something that we all care about. But there may well be a better way 

to achieve that goal. The approach that the National Marine Fisheries Service is taking is using outdated cost estimates that do not 

reflect the true impact on our lobster industry. 

Now, I realize this is probably a new issue to you, but it seems 

to me that this is where OIRA could play an important role of ensuring that there is a full analysis and in-depth consideration of alternative methods of achieving the same goal without imposing 

such an onerous burden on our lobster industry. 

If you are confirmed, do you pledge to take a look at this rule 

and at any reasonable alternatives given the potentially detrimental impact on our lobster industry? 

Ms. DUDLEY. Yes, Senator, you are right. It is inappropriate for 

me to comment specifically, but if I am confirmed, I will definitely 

look at this and would love to talk to you about it if you are interested. 

Chairman COLLINS. Thank you. Senator Akaka. 

Senator AKAKA. Thank you, Madam Chairman. 

Ms. Dudley, I would like to clarify one of your earlier responses 

when I asked you about market failure. I looked up ‘‘market failures,’’ which is an economic term to describe when markets do not 

allocate goods and services efficiently. And normally the term is applied when the inefficiency is particularly dramatic. The term may 

also be used to describe situations where market forces do not 

serve the perceived public interest. 

When I asked you that question, you said that a lack of information can lead to a market failure. 

Ms. DUDLEY. Right. 

20

Senator AKAKA. I’d like to discuss this matter further. What 

about inability to act because of economic factors? Can the lack of 

economic resources lead to a market failure? 

Ms. DUDLEY. I don’t think it would fit the traditional definition 

of market failure. Certainly, that is a role for the government, but 

it probably does not fit the definition of market failure. 

Senator AKAKA. Ms. Dudley, in May 2004, GAO issued a report 

at my request on the number of data-mining activities in the Federal Government. At that time, GAO found 36 agencies using personal information obtained from the private sector in data-mining 

activities. What policies and safeguards do you believe should be in 

place to ensure the accuracy of information obtained from the private sector? 

Ms. DUDLEY. Well, there are several statutes that guide OMB as 

well as agencies on those issues, including the Privacy Act, the Paperwork Reduction Act itself, and if I am confirmed, I would like 

to work with the other offices within OMB as well as the agencies 

to make sure that if we are collecting information, especially that 

is personally identifiable, we need to make sure that we are consistent with the framework set up in the Privacy Act and the specifics laid out in these other acts. 

Senator AKAKA. Ms. Dudley, in 2001 and 2002, you and your colleagues in the Mercatus Center submitted numerous regulations to 

OIRA that you believed needed to be modified or repealed. What 

methodology was used to determine whether these existing regulations should be repealed, rescinded, or modified? And would you 

use the same methodology if you are confirmed as OIRA Administrator? 

Ms. DUDLEY. Well, in 2001, when OMB asked for comments on 

regulations that could be improved, we actually had already filed 

comments with agencies. We had our Public Interest Comment 

project operating for several years and had filed comments with 

agencies. So we had done research on particular rules, had suggestions for how to improve those rules, alternatives that could make 

them better. 

So when OMB asked for recommendations, we just sent one-page 

summaries of all the rules on which we had done research. So our 

list was not necessarily a priority list. It was a list of here is some 

information that we have already done some research on, and they 

were not necessarily saying you should repeal it. They were saying 

there are smarter ways to deal with it, and here is our research. 

So that was the methodology in both of those cases. We didn’t 

scratch our heads and say, ‘‘Gee, what could it be?’’ We really just 

supplied a list of what analysis we had already done. 

Senator AKAKA. And you feel that if you head up OIRA, you 

would use the same method? 

Ms. DUDLEY. Actually, I would like to use the method that is 

codified in President Clinton’s Executive order and statute. I do not 

plan to use any different methods. 

Senator AKAKA. Ms. Dudley, the Privacy Act and the E-Government Act are the primary mechanisms for protecting the privacy of 

citizens and legal residents. Do you believe that the Privacy Act 

and the E-Government Act provide adequate privacy protections? 

21

Ms. DUDLEY. Well, the Privacy Act, as you know, is getting pretty old. It is over 30 years old now, and yet from what I understand, 

the framework that is in the act, which is collect information and 

use it only for the purpose for which it was collected, unless somehow otherwise authorized, that general framework still seems to be 

working. And then as you have mentioned, the E-Government Act, 

as with FISMA, the Clinger-Cohen Act, several other statutes have 

updated it. 

I think the bottom line is it is a constant challenge, and privacy 

concerns are dynamic and ever-changing. And within the framework provided by those acts, I think memoranda and working with 

the CIOs in the agencies and OMB may be the best way to deal 

with that. But I don’t have all the answers and would love to talk 

to you if you have some thoughts on that. 

Senator AKAKA. I thank you so much for your responses. Thank 

you, Madam Chairman. 

Chairman COLLINS. Thank you. Senator Carper. 

Senator CARPER. Sometimes when we have had people who have 

been nominated by the President to serve as judges, Federal 

judges, I have tried to understand where they are coming from, especially if they do not have much of a judicial history, by saying, 

well, whose decisions, who on the court do you admire, and who do 

you see yourself sort of following in the footsteps of. 

Now, you are not going to have judicial decisions, but you have 

a lot out there in terms of where you are coming from, but I still 

want to ask a similar question, and maybe a two-parter. 

In your view, what should the role of the Director of OIRA be? 

How should it work and how should it play in the regulatory process? And how might the approach that you take in this job be different from the person who is not the incumbent, who I believe is 

there as an interim, but his predecessor, John Graham? So if you 

could take those on, I would appreciate it. 

Ms. DUDLEY. I see the role of OIRA as coordinating across agencies to make sure that one hand knows what the other hand is 

doing in the regulatory world, providing the guidance and the oversight. The agency has the ultimate authority for issuing the regulations, as Senator Collins said at the outset. So the OIRA role is 

more review and coordination. 

My style tends to be more collaborative, just by nature, and so 

I think—that is how I imagine that would be one thing that would 

maybe—I don’t know if I should say distinguish me from the previous administrator because he was very effective. But actually I 

know and actually have worked with all but one of the administrators. I am teaching with Sally Katzen at George Mason University, 

and I have worked with the others either in OIRA or elsewhere. 

So I think there are some big shoes to fill and a lot to build on, 

and so I hope to be able to take characteristics from each of them 

if I am confirmed. 

Senator CARPER. All right. Sometimes I like to say, one of my favorite sayings—Senator Collins has heard me say this a time or 

two—in politics our friends come and go, but our enemies accumulate. [Laughter.] 

Senator CARPER. You have had a chance, as we all have up at 

this table, to collect a few enemies. When my enemies criticize me, 

22

in some cases they are totally without any validity, but sometimes 

they strike tellingly true. And folks have been critical of your nomination and of your suitability for this position. When some folks are 

critical of you, which of the criticisms do you think come closest to 

being maybe true or have some basis in fact? How would you rebut 

those or address them? 

Ms. DUDLEY. I think generally I would say please look at my 

writing and please meet me. I mean, that is one thing. I guess I 

would rebut them by saying if people are concerned that I will not 

be open and transparent, I can assure you that is not true because 

if I am confirmed as Administrator, I would invite—there was a 

letter that was signed against me. I haven’t met anybody who 

signed that letter, but the letters that have been signed for me, I 

know all those 50 academics. I know the Nobel Prize winner; I 

know the OIRA Administrators who have all written supportive letters. I don’t know anybody on the other letter, and I hope to change 

that if I am confirmed. 

Senator CARPER. I wonder if I could just restate my question. 

When people criticize you, when you read criticisms people have 

made of you, which of the criticisms that you have heard have 

some basis in fact? How would you speak to those? 

Ms. DUDLEY. I guess a criticism that I believe that market forces 

work. It is true. I believe in people. I believe in people’s ability to 

make decisions. I respect diversity, and I respect people. And so I 

resist one-size-fits-all standards that do not understand that diversity and that people have different needs. 

Senator CARPER. OK. Let me ask a question with respect to your 

philosophy. What is your philosophy when it comes to when an 

agency should step in and propose a regulation? I serve on the Environment and Public Works Committee. We have been very much 

involved with the President’s Clear Skies proposal, which we defeated in Committee. EPA responded by issuing regulations to try 

to do through regulations what Clear Skies would have otherwise 

done or not done. 

But what kind of things do you think an agency like EPA ought 

to consider before putting forward regulations on clean air, for example? And assuming they are authorized to act, when would it be 

appropriate for them to do so, in this case, EPA? And if confirmed, 

how would you apply this philosophy to your work? 

Ms. DUDLEY. I would say the first criteria should be the statutory mandate and what does the statute require. And then actually 

my philosophy really fits very well with the guidelines that have 

been issued by the past several Presidents, and that is, first understand why we are seeing the problem, and it is this notion of root 

cause. What is the root cause? I really do think you need to know 

what the root cause of the problem is before you can address it because otherwise you may be just putting on a Band-Aid and actually having unintended consequences. 

The third step would be let’s look at some alternatives. Now, I 

will admit that as a writer, I think out of the box, but I promise 

not to think that far out of the box (if confirmed). You missed my 

apology to you in response to a question of Senator Collins earlier. 

Senator CARPER. An apology to me? I hate to miss those. 

23

Ms. DUDLEY. She identified something that I wished that I 

hadn’t said, but it was thinking out of the box. And I think as regulators we need to challenge our ideas, but obviously that box has 

to be constrained with what the statutory constraints are. And 

then the next step would be let’s try to look and see what we think 

the consequences are under different scenarios, then understand 

who is bearing the costs and the benefits. And I have run you out 

of time. 

Senator CARPER. All right. Thanks very much. 

Ms. DUDLEY. Thank you. 

Chairman COLLINS. Ms. Dudley, we haven’t talked very much 

this afternoon about the critical role that OIRA plays in helping to 

safeguard the confidentiality and the security of private information. This is a less visible role of OIRA, but in this electronic age, 

it is an incredibly and increasingly important role. 

Many Federal agencies in the course of carrying out their missions must have access to or store personal identifying information 

of citizens, including birth dates, addresses, Social Security numbers. In the past year, we have seen serious breaches in agencies 

that have exposed citizens to identity theft. Probably the most 

widespread one that affected millions of American citizens occurred 

at the Veterans Administration, and I am sure you are somewhat 

familiar with that. 

OMB has issued some guidelines to improve information security, but what more do you think can be done to ensure that personal information that is shared by the citizens of this country with 

Federal agencies, whether it is Social Security or Medicare or the 

IRS or the VA, is truly protected from an unauthorized release? 

Ms. DUDLEY. You are right, I mean, this is important, and there 

is certainly room to improve. As I understand it, this is a responsibility within OMB that is shared within different parts of OMB. 

The Deputy Director issued a memo about a year ago requiring 

agencies to look at not just the information that they use but how 

they store it, evaluate how well it is working. I believe their responses are due soon, if they are not already in. I think that might 

give the office a better look at understanding how do we do this 

and understand that it is a life-cycle approach. When you gather 

that personal information, you need to know how it is going to be 

stored and how it is going to be used to try to avoid situations like 

the VA laptops that you mentioned. And so I would like to work 

with the other parts of OMB as well as the agencies to try to do 

better, if I am confirmed. 

Chairman COLLINS. Another challenge that Federal agencies and 

departments, particularly the Department of Homeland Security, 

have is striking the right balance between privacy and security. We 

are seeing the Department of Homeland Security try to implement 

new programs at the border, the secure flight program, that require the collection of considerable amounts of private information. 

In general, what is your philosophy about how we strike the 

right balance between gathering information that we need about 

individuals and yet not creating vast government databases that 

could be used for inappropriate purposes? 

24

Ms. DUDLEY. I think it is a difficult challenge, and it is not a new 

challenge, but it is additionally challenging in recent years. So I 

think it is something that needs to be faced more. 

As I say, I think that the framework that is set up in pre-existing acts recognizes the need for those balances. So I imagine it requires a lot of serious case-by-case analysis about specific choices 

that we have and whether you can achieve the same security with 

less breach of privacy or understand what the trade-offs are, because there are serious trade-offs, and Americans want both. 

Chairman COLLINS. It is a very difficult trade-off because, obviously, the 9/11 Commission and other experts have pointed out 

that we did not do a good enough job with information sharing and 

with collecting as much information as possible and disseminating 

that information about those who would do us harm. 

The problem becomes figuring out who are the individuals who 

would do us harm versus law-abiding individuals for whom there 

is no need to collect information that involves a certain breach of 

privacy. And I think that is going to be a tremendous challenge 

throughout the Federal Government in the coming years. 

I do have a number of additional questions on everything from 

how the OIRA Director would interact with the E-Government Director and other more technical issues, which I am going to submit 

for the record. I would like to turn to my colleagues and give them 

an opportunity for any closing questions that they might have. 

Senator Akaka. 

Senator AKAKA. Thank you very much, Madam Chairman. 

Ms. Dudley, you said that you have always tried to be open and 

transparent and you would like to continue that. I appreciate that 

since I believe OIRA should operate in an open and transparent 

manner. 

In 2003, the GAO reported that the changes agencies made to 

regulations at OIRA’s request were not always available. In addition, although OIRA has said it can have its greatest impact on 

agencies’ rules during informal reviews, agencies are only required 

to disclose changes made at OIRA’s request during formal review. 

If confirmed, would you institute a policy whereby agencies disclose changes recommended by OIRA during informal review? 

Ms. DUDLEY. One of the things I have complimented OIRA on is 

its increased transparency because I do think sunshine makes for 

better government, and I think the work that it does is positive, 

and it should be open. So if I am confirmed, I am willing to discuss 

any reasonable request to see if there is a need to actually increase 

that transparency. So I am definitely willing to talk with you if I 

am confirmed. 

Senator AKAKA. Do you have any ideas to further improve the 

transparency of OIRA’s review process? 

Ms. DUDLEY. I am not at OIRA now and I have not been at OIRA 

in a long time, so I am not familiar with exactly how things work. 

But what I have appreciated is the posting on the website and the 

ability to track a regulation to see where it is in the review process. 

But I am sure there are more things that can be done. I just do 

not have specific suggestions. 

Senator AKAKA. It is well known that the former OIRA Administrator, John Graham, sent what are called ‘‘prompt letters’’ to agenVerDate 0ct 09 2002 10:55 Aug 24, 2007 Jkt 032351 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 C:\DOCS\32351.TXT SAFFAIRS PsN: PAT
25

cies to suggest that the agency develop regulations in a particular 

area or to encourage ongoing regulatory efforts. If confirmed, would 

you issue prompt letters? And if so, which areas of regulation 

would you encourage? 

Ms. DUDLEY. I actually do not have something specific in mind, 

as I mentioned in response to a question earlier. My personality 

tends to be more collaborative, but I know—the prompt letters 

were something that I thought actually were a good thing that Administrator Graham did. One in particular that I thought was important was to FDA on a trans fat regulation, and the prompt encouraged FDA to provide more information to consumers on trans 

fats. And that was one that I thought was a positive step. 

Senator AKAKA. Thank you, Ms. Dudley. Madam Chairman, I 

have other questions that I may submit for the record. Thank you 

very much. 

Ms. DUDLEY. Thank you. 

Chairman COLLINS. Thank you, Senator. Senator Carper. 

Senator CARPER. Just maybe one or two things in closing. In Senator Akaka’s comments, he mentioned the word ‘‘transparent’’ and 

presented it in a way that I think a lot of us think of transparency 

today. When we say someone is transparent or a process is transparent, we think of it in positive terms. I am old enough to remember whenever accused of being transparent, it was not a compliment. It is interesting how things change. 

I was sitting here watching you respond to these questions, Ms. 

Dudley, and it is hard not to see your boys here sitting behind you, 

and I know that if my sons at their age had to be here and sit—

this is worse than church. [Laughter.] 

Senator CARPER. You could not pay them to endure this for a 

couple of hours. At least in church you get to stand up from time 

to time and maybe sing or pray or close your eyes, or whatever. 

But they have done a very fine job in holding up their end of the 

bargain in all of this. 

Gentlemen, I don’t know if your mom is going to be confirmed 

or your wife is going to be confirmed, but if she is, we thank you 

for your willingness to share your mother and your wife with the 

people of our country. 

You have held a number of important and responsible positions 

to date, but if you end up in this one, you are going to be what 

I call ‘‘shooting with real bullets.’’ And that is not to say you have 

been shooting with blanks for the earlier part of your life, but you 

will have a fair amount of say as to the direction that we are able 

to take. 

We pass laws, and they are kind of like a skeleton, if you will, 

and then meat on the bones is the regulations that are adopted in 

response to those laws. What you have been nominated to do here 

is an important thing, and we appreciate your time and responses 

to our questions. But you may be in a position to decide what kind 

of air these guys have to breathe and what kind of fish they are 

going to have to eat and what kind of oceans they are going to have 

to swim in and what kind of pollution is going to be coming out 

of the cars or trucks or vans that they drive. It is important stuff, 

and I would just ask that you keep that in mind. 

26

You mentioned collaboration, you are into collaboration. Frankly, 

I would like to think that is one of my strong suits as well. My colleagues might deny that, but that is one of the things I try to do. 

And in the nature of the job that you might some day hold, that 

is a quality you do not want to let go. 

Thanks very much. 

Ms. DUDLEY. Thank you, Senator. 

Chairman COLLINS. Thank you. 

Ms. Dudley, I want to thank you for appearing before the Committee today and for your cooperation with the Committee’s process. I very much appreciate your frank responses to the many questions that you have been asked throughout this process. I know it 

is a long and involved one, and certainly your many writings have 

given us a lot to ponder. 

I do want to thank my staff for their hard work and the Minority 

staff for their hard work on this nomination. Given that the nominee did have voluminous writings, it was a great deal of work for 

the staff to read through all of them, and they probably could write 

a book on your writings at this point. 

I also do appreciate your willingness to serve. I think that many 

people looking at the contentious nomination process that too often 

seems to occur these days would decide that they were better off 

staying in an academic environment. Not to say that academia is 

not contentious, but I know it is very different to have a public 

nomination process, and I appreciate your willingness to put yourself forward and to consider serving in this role. 

Without objection, the hearing record will be kept open until 5 

p.m. on Wednesday. I do anticipate the submission of additional 

questions for the record. Senator Lieberman was not able to be 

here today, but as you know, he has a great interest in your nomination, and I suspect that he will have some follow-up questions, 

as will I and some of the other Members. 

I, too, want to join Senator Carper in thanking your family for 

being here and thanking them for their willingness to endure this 

process as well and for your commitment to public service. 

This hearing is now adjourned. 

[Whereupon, at 4:01 p.m., the Committee was adjourned.] 

(27)

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