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70–678 PDF 2011

UNFUNDED MANDATES, REGULATORY BURDENS

AND THE ROLE OF THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS

HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION

POLICY, INTERGOVERNMENTAL RELATIONS AND

PROCUREMENT REFORM

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MAY 25, 2011

Serial No. 112–56

Printed for the use of the Committee on Oversight and Government Reform

(

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

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY, INTERGOVERNMENTAL

RELATIONS AND PROCUREMENT REFORM

JAMES LANKFORD, Oklahoma, Chairman

MIKE KELLY, Pennsylvania, Vice Chairman

JASON CHAFFETZ, Utah

TIM WALBERG, Michigan

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

BLAKE FARENTHOLD, Texas

GERALD E. CONNOLLY, Virginia, Ranking

Minority Member

CHRISTOPHER S. MURPHY, Connecticut

STEPHEN F. LYNCH, Massachusetts

JACKIE SPEIER, California

(III)

C O N T E N T S

Page

Hearing held on May 25, 2011 ............................................................................... 1

Statement of:

Sunstein, Cass R., Administrator, Office of Information and Regulatory

Affairs, Office of Management and Budget ................................................. 16

Letters, statements, etc., submitted for the record by:

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 13

Lankford, Hon. James, a Representative in Congress from the State

of Oklahoma, prepared statement of ........................................................... 5

Sunstein, Cass R., Administrator, Office of Information and Regulatory

Affairs, Office of Management and Budget, prepared statement of ......... 18

(1)

UNFUNDED MANDATES, REGULATORY BURDENS AND THE ROLE OF THE OFFICE OF

INFORMATION AND REGULATORY AFFAIRS

WEDNESDAY, MAY 25, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TECHNOLOGY, INFORMATION POLICY,

INTERGOVERNMENTAL RELATIONS AND PROCUREMENT

REFORM,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

2154, Rayburn House Office Building, Hon. James Lankford (chairman of the subcommittee) presiding.

Present: Representatives Lankford, Kelly, Chaffetz, Labrador,

and Connolly.

Also present: Representatives Issa and Cummings.

Staff present: Sharon Casey, senior assistant clerk; Adam P.

Fromm, director of Member liaison and floor operations; Ryan Little, manager of floor operations; Justin LoFranco, press assistant;

Kristina M. Moore, senior counsel; Kristin L. Nelson, professional

staff member; Laura L. Rush, deputy chief clerk; Becca Watkins,

deputy press secretary; Peter Warren, policy director; Jeff Wease,

deputy CIO; Ronald Allen, minority staff assistant; Krista Boyd,

minority counsel; Jaron Bourke, minority director of administration; Lucinda Lessley, minority policy director; and Adam Miles,

minority professional staff member.

Mr. LANKFORD. Good morning. The Unfunded Mandates, Regulatory Burdens and the Role of the Office of Information and Regulatory Affairs hearing will come to order this morning.

The Oversight Committee mission statement, we begin every single one of our meetings with it. We exist to secure two fundamental

principles: first, Americans have the right to know that the money

Washington takes from them is well spent; second, Americans deserve an efficient, effective government that works for them. Our

duty on the Oversight and Government Reform Committee is to

protect these rights.

Our solemn responsibility is to hold government accountable to

taxpayers because taxpayers do have the right to know what they

get from their government. We will work tirelessly in partnership

with citizen watchdogs to deliver the facts to the American people

and bring genuine reform to the Federal bureaucracy. This is the

mission of the Oversight and Government Reform Committee.

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Specifically, today we are dealing with the Unfunded Mandates

Reform Act of 1995 [UMRA]. It was to set the Federal mandates

on State, local, and tribal governments and the private sector by

shedding light on the expected economic impact of pending statutes

and regulations. Under UMRA, each agency is to assess the effect

of each type of non-Federal entity regulatory actions it plans to

take.

UMRA was to help inform Congress of the potential burden of

laws and regulatory actions might impose so that those could be

weighed against the potential benefits. But in the subcommittee’s

two prior hearings on UMRA, we heard from representatives of

State and local governments and the private sector that UMRA is

not identifying all of the unfunded mandates being imposed on

them and it does not always capture the full cost of those mandates

that it does identify.

In fact, in the past 10 years, only four rules have been classified

as constituting unfunded mandates in State, local and tribal governments under UMRA. Further, only 13 of 66 major rules issued

in 2010 were classified as unfunded mandates; only 1 of the 13 was

identified as intergovernmental mandate.

I have two different slides I want to be able to show on that one.

The first one deals with just the number of economically significant

rules in the pipeline. You will see that has continued to grow over

the years. And the second one gives us a snapshot of the major economically significant regulations from 2006 to 2010.

In the purple there, you will see those are regulations subject to

UMRA review, that very small little part; the red there is major

regulations reviewed by OIRA; and in the green there major regulations that have been issued as a whole. So obviously we have several that are slipping through the mix here, that are not being

evaluated by UMRA.

While I appreciate President Obama’s recognition of the burdens

the Federal Government puts on State, local, and tribal governments in his Presidential Memorandum on Administrative Flexibility, Lower Costs and Better Results for State, Local, and Tribal

Governments, this is not a substitute for legislation to ensure the

burdens placed on the agenda, these are fully recognized and taken

into account.

As the charts that we just looked at show, when you look at the

number of major regulations in the pipeline and those reviewed by

OIRA, you see a rising trend of major regulations from the Federal

Government. This is one recent indication that the UMRA statute

is failing to live up to its promise of reducing unfunded mandates.

It is time to look at closing some of UMRA’s loopholes, exemptions, and exceptions that this subcommittee has heard about from

its previous two hearings on unfunded mandates. We need to examine whether cost estimates under UMRA are being accurately

reflected. UMRA only captures direct costs or expenditures, not the

total effects on the economy, as required under Executive Order

12866. UMRA thresholds are based on adjustments for inflation. It

is my understanding that is not the case for Executive Order

12866. UMRA also does not take into account the need to prepare

for an unfunded mandate by a local government or private business.

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During the first UMRA hearing in February, the subcommittee

heard testimony from the Government Accountability Office, local

government representatives, and the former OIRA Administrator,

Susan Dudley. Ms. Dudley, who served as the OIRA Administrator

from 2007 to 2009, provided expertise and insight into the process

by which the Federal Government imposes unfunded mandates on

non-Federal parties. She also described widely recognized flaws

that exist within the current UMRA statute and suggested multiple

remedies and potential legislative solutions to address the concerns

addressed by many affected parties.

At the subcommittee’s second hearing on UMRA in March, the

subcommittee heard from witnesses representing State governments and the private sector. During the hearing, the subcommittee heard from the chief economist of the Small Business

Entrepreneur Council regarding how unfunded mandates and regulations continually stifle private sector growth and economic expansion.

I am glad to see that President Obama shares the same concerns

that Mr. Keating articulated to the subcommittee at our March

hearing. I welcome his Executive Order 13563 and the public statements on regulations. Indeed, the President has stated that sometimes rules have just gotten out of balance, placing unreasonable

burdens on businesses, burdens that have stifled innovation and

have had a chilling effect on growth and jobs.

Further, President Obama made it crystal clear to the American

people in a Presidential Memorandum that my administration is

firmly committed to eliminating excessive and unjustified burdens

on small businesses, and to ensure that regulations are designed

with careful consideration of their effects, including their cumulative effects on small businesses.

In light of this backdrop, it seems very appropriate that we look

at reforming UMRA, not only in the context of State, local and tribal governments, but also with the private sector as well. Many regulations that are on tap will not be covered by UMRA in its current

form or, for that matter, in Executive Order 12866.

For example, the U.S. Chamber of Commerce estimates the

Dodd-Frank Wall Street Reform Act and Consumer Protection Act,

signed into law by the President, contains 259 unmandated

rulemakings, 188 suggested rulemakings, 63 reports, and 59 studies. Most of these rules, those not issued by the Treasury Department, will be issued through independent regulatory agencies such

as the SEC, Commodities Future Trading Commission, FDIC, Federal Reserve, and the newly created CFPB, which are exempt from

the requirements of UMRA, as well as Executive Orders 12866 and

13563. All these new rulemakings create potential for the issuance

of more unchecked, unfunded mandates.

Indeed, in light of the Presidents’ recent statements, it is curious

that a recent report by George Washington University Regulatory

Studies Center and the Weidenbaum Center at Washington University in St. Louis finds that a number of staff employed on regulatory matters within the Federal Government is on schedule to

grow at a rate of about 10,000 new regulatory employees per year

in 2011 and 2012. The number of full-time regulatory employees is

expected to reach an all-time high of 291,676 in 2012. The authors

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of the report, which include former OIRA Administrator Susan

Dudley, believe this data offers useful information on the composition and evolution of Federal regulation over the past 52 years and

serves as a barometer of future regulatory activity.

I have stated before, and will state again with this hearing, like

other hearings, this is not an attack on the current administration.

Many of the issues we will deal with today did not originate during

this administration, and the solutions we propose will extend well

beyond this administration. It is essential that we look at the bigger picture and the long-term effects of our Federal involvement in

State, local, and tribal governments and private business operations. But it is also essential that each agency is evaluated on

their results, not just their rhetoric.

Today’s hearing is designed to be another teachable moment to

discover the facts to assist us in developing solutions. It is the role

and responsibility of this subcommittee and Congress as a whole to

ensure this administration is regulating in the best interest of the

American people. I am here to make certain in this modern regulatory environment the Federal Government does not overstep its

clearly defined constitutional boundaries and well-intentioned bureaucrats don’t impose their preferences on State, local, and tribal

governments and private industry. It is my hope that we can also

discern issues that must be addressed in a legislative solution to

our unfunded mandates.

I would like to now recognize the distinguished ranking member,

Mr. Cummings, for an opening statement.

[The prepared statement of Hon. James Lankford follows:]

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Mr. CUMMINGS. Thank you very much, Mr. Chairman. I want to

thank you and our ranking member, Mr. Connolly, for this hearing.

This is the third hearing this subcommittee has held on the Unfunded Mandates Reform Act. Having heard from State, local, and

tribal officials at previous hearings, I am grateful that Mr.

Sunstein is here today to provide us with the administration’s perspective on this important issue.

The original purpose of UMRA, which was passed in 1995, was

to make Congress more accountable when imposing new Federal

mandates on State, local, and tribal governments. As a former

member of the Maryland House of Delegates, I am sensitive to the

budgetary pressures facing State and local governments. It is important for Congress and agencies to carefully evaluate and balance

the potential impact before imposing new requirements on small

governments.

However, this is also the fourth hearing in which this subcommittee has stressed only the burdens imposed by regulations.

There is a common assumption in the titles and the focus of these

hearings that regulations are burdensome and hinder economic recovery. Yet we know that regulations are necessary to protect the

health, welfare, and safety of the American public, of our constituents, by the way. As Mr. Sunstein has often stated, we also know

that some regulations create jobs.

As I have said in the past, I fully support a comprehensive review of regulations to ensure that they are effective and efficient.

That must be a very balanced review. But a review cannot be onesided. It is important that we base any review on the facts rather

than the rhetoric. Here are the facts:

In 2011, the Office of Information and Regulatory Affairs estimates that the annual benefits of major Federal regulations issued

between 2000 and 2010 are between $136 billion and $651 billion.

In contrast, the estimated annual costs are between $44 billion and

$62 billion. In other words, the economic benefits of regulations are

up to 10 times the costs.

This conclusion is not limited to the Obama administration. In

2008, the Bush administration estimated that the annual benefits

of regulations issued between 1997 and 2007 ranged from $122 billion to $656 billion, while the estimated annual costs range was

from $46 billion to $54 billion.

According to both the Obama and Bush administrations, the benefits of these regulations greatly outweigh the costs.

In the context of UMRA, the reality is that State and local governments are often the direct beneficiaries of Federal regulation.

We must ensure that industry addresses the costs they impose on

society in the form of pollution, effective or deceptive products, and

unsafe workplaces, again, to protect the American people, our constituents. This can and does save local governments from significant expenses they otherwise would have to bear themselves to

protect the health and well-being of their citizens.

Administrator Sunstein, I look forward to your testimony today

and I look forward to hearing more about your office’s role in the

regulatory process, its role in ensuring that Federal agencies are

conducting a balanced review of existing regulations and Executive

Order 13563, and your efforts to improve the cost-benefit analysis.

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Finally, Mr. Chairman, I hope we can and I agree with you this

must be a bipartisan effort. We must leave our political hats at the

door. So I hope that we can take a fair and balanced view of regulations and that we can all work together to identify ways to help

create jobs and support the work of the State and local governments, while making sure that Americans are able to live and work

in safe and healthy communities.

I have often said, when I look at the worker and people that

these regulations often protect, I respect those people who get up

early in the morning and go to their jobs, looking forward to coming home to their families. I do not want a situation where we disregard important regulation or try to do away with important regulations that are needed to protect them. I want them to come home

to their families and I do not want them to be shipped home to

their families in a coffin. And I will say that over and over again

because I have seen it so many times.

So I look forward to the testimony, and with that I yield back,

and I want to thank the chairman for his courtesy.

Mr. LANKFORD. Absolutely. Thank you, Mr. Cummings, who is

the ranking member of the full OGR Committee.

Now I would like to recognize Mr. Connolly, who is the ranking

member of our subcommittee.

Mr. CONNOLLY. Thank you. Thank you, Mr. Chairman.

Welcome, Mr. Sunstein.

I appreciate, Mr. Chairman, your continued interest in this subject and I also hope we will have some subcommittee hearings in

Technology and Procurement at some point in the near future,

issues very dear to my home district.

For this hearing, it is appropriate we are hearing from the Director of the Office of Information and Regulatory Affairs, the arm of

OMB which was used to propose agency regulations. During the

previous administration, OIRA intervened to block proposed regulations of greenhouse gas pollution under the Clean Air Act amendment. The consequences of failing to prevent global warming could

be severe.

Recently, the Director of the Climate Analysis Section of the National Center for Atmospheric Research stated given that global

warming is unequivocal, the null hub hypothesis should be that all

weather events are affected by global warming. According to the

global insurance company Munich Ray, the only plausible explanation for the rise in weather-related catastrophes is in fact climate change.

Unprecedented tornadoes killed hundreds of Americans recently

in Missouri, Alabama, and my home State of Virginia, and I will

include for the record a recent Washington Post article discussing

the connection between climate change and extreme weather. Extreme drought rivaling even the dust bowl is threatening viability

in agriculture in the southwest. The acidity of the ocean has increased 30 percent due to higher atmospheric carbon concentrations, threatening coastalries from Florida to Australia. Sea levels

are rising in the Atlantic and Chesapeake Bay, threatening critical

infrastructure, including National Airport and Norfolk Naval Base.

As recent extreme weather has demonstrated, the devastation of

climate change can reach biblical proportions. Meanwhile, oppoVerDate 17-JUN-2003 14:27 Nov 09, 2011 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70678.TXT KATIE PsN: KATIE
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nents of regulation ignore both the benefits of regulation and the

cost of failing to regulate when regulation is necessary. Empirical

data repeatedly and consistently suggests that the benefits of Federal regulations outweigh the costs by considerable margins. The

ranking member of the full committee just went through some of

those statistics, but other examples exist as well.

For example, the vehicle efficiency standards enacted in the Clean Air Act will save consumers $3,000 per vehicle by improving

the average vehicle’s efficiency by 30 percent. In aggregate, OMB

says this regulation will produce $12.4 billion in benefits for consumers for only $3.7 billion in costs, a 4 to 1 ratio.

As this subcommittee contemplates changes to UMRA, we must

also include an estimate of the benefits of new regulations to the

private sector, as well as States and local governments. Based on

the data, many of these regulations create significant private sector

savings, and we should understand those so we do not delay meritorious regulations in the manner that the previous Bush administration blocked regulation, for example, of greenhouse emissions.

In addition to understanding the benefits, as well as the costs,

of regulations, we need to do a better job understanding that new

costs could be imposed, unfunded mandates could be imposed on

State and local governments by curtailing Medicare, Medicaid, and

Social Security, as some have suggested. For example, under the

Ryan budget plan, passed on a strict party line vote, Federal Medicaid payments would be cut by 35 to 49 percent, or $771 billion,

over the next 10 years, putting enormous stress on States, localities, and families.

Medicaid primarily benefits children of poor parents, seniors in

nursing homes, and disabled individuals. To illustrate how important Medicaid is to seniors in nursing homes, consider these examples from my district in Northern Virginia. Renaissance Gardens at

Greenspring has 148 seniors, all of whom receive Medicaid. Fairfax

Nursing Center has 200 residents, 134 of whom receive Medicaid;

Leewood Health Center has 132 residents, 91 of whom receive

Medicaid; the Iliff Nursing and Rehabilitation Center has 132 residents, 91 of whom receive Medicaid.

Based on data from the American Communities Survey, approximately 131⁄2 percent of my constituents totally receive Medicaid.

That is 132,000 residents of Fairfax and Prince William Counties

alone.

The cruelty and political toxicity of Chairman Ryan’s proposed

privatization of Medicare has received a great deal of attention in

the press, but the evisceration of Medicaid would have a similar

negative effect on individuals, and especially unfunded mandates

in State and local governments. If the Federal Government cuts

Medicaid by 35 to 49 percent, who is going to foot the bill for nursing home costs? Do our colleagues propose to put seniors out on the

street or do they expect local and State governments to pick up the

tab and raise taxes to cover those costs?

Ultimately, slashing Medicaid is a shell game in which the House

majority would shift costs to the States and localities and the families of America. The cruel proposal would create an unfunded mandate and, more troubling, return America to the era of the poor

farm.

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I think we need to look at that aspect of this subject as well, Mr.

Chairman, and with that I yield back.

[The prepared statement of Hon. Gerald E. Connolly follows:]

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Mr. LANKFORD. Thank you, Mr. Connolly.

All Members will have 7 days to submit opening statements and

other extraneous materials for the record.

We will now recognize our panel. We have one witness today, the

Honorable Cass Sunstein. He is the Administrator of the Office of

Information and Regulatory Affairs from the Office of Management

and Budget. Glad to be able to have you here today.

Pursuant to committee rules, we do swear in all witnesses before

they testify, so if you would please rise and raise your right hand.

Thank you, sir.

[Witness sworn.]

Mr. LANKFORD. Let the record reflect the witness answered in

the affirmative.

You may be seated. Thank you. In order to allow time for discussion, I am going to ask you to be able to limit your opening statement. We have already discussed it would be around 6 minutes

long or so, and that is very appropriate. We are honored to be able

to receive your statement as part of the record at this moment.

Thank you.

STATEMENT OF CASS R. SUNSTEIN, ADMINISTRATOR, OFFICE

OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF

MANAGEMENT AND BUDGET

Mr. SUNSTEIN. Thank you, Mr. Chairman. I will try to beat the

6-minute constraint, because I am eager to hear your questions and

concerns.

I am very grateful to be here. This is a timely hearing on a crucially important topic. As the opening remarks suggest, a central

goal of UMRA is to minimize burdens on State, local, and tribal

governments and also on the private sector, and to make sure that

those burdens are imposed only after informed and careful consideration.

What I will be emphasizing here is the very close relationship between the goals of UMRA and the goals of the Presidential Memorandum on Administrative Flexibility from February and the goals

of the Executive order on regulation and regulatory review from

this past January.

As you are aware, Title II of UMRA, our principle focus here, imposes reporting and consultation requirements with respect to certain rules imposing mandates that may result in the annual expenditure of $100 million or more on State, local, and tribal governments or on the private sector, all of those. These reporting requirements involve, among other things, a careful assessment of

costs and benefits, as well as an accounting of various potential effects on the economy.

In these respects UMRA, from 1995, has a clear relationship to

President Reagan’s Executive Order 12291 from the early 1980’s.

The Office of Management and Budget, where I am privileged to

work, is directed to provide annual reports to Congress on new regulations covered by UMRA, so there is an important information on

reporting rule that my office has.

Insofar as the statute is designed to require analysis of the effects of rules in advance, and to try to reduce burdens and costs,

it has clear connection with Executive Order 12866 from the ClinVerDate 17-JUN-2003 14:27 Nov 09, 2011 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70678.TXT KATIE PsN: KATIE
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ton administration, which has long governed the process of regulatory review. More recently, President Obama has issued Executive Order 13563, which reaffirms the requirements of 12866 and

also contains a number of revisions that bear directly on the goals

of UMRA. I would like to give particular attention to four of those

provisions from this January to underline their relationship with

UMRA.

First, the new Executive order specifically directs regulations to

be based on the open exchange of information and perspectives

among State, local, and tribal officials, and the public as a whole.

With this direction, what the Executive order is trying to do is to

ensure consultation in advance with those who are likely to be affected by regulation.

Second, the Executive order, the new one, requires that before

even issuing a Notice of Proposed Rulemaking, before anything appears in the Federal Register, the agencies are supposed to seek

the views who are likely to be affected, including those who are potentially subject to the relevant rulemaking. What this means is

that the President has required, with clarity beyond that we have

seen from any previous president, advanced consultation with those

who are potentially burdened by rules.

Third, the Executive order takes new steps to require burden reduction and minimization of costs. Agencies are directed to select

the least burdensome approaches; to minimize cumulative costs; to

simplify and harmonize overlapping regulations, which can often be

confusing and very expensive; and to identify and consider flexible

approaches that maintain freedom of choice for the American public. It is clear that these requirements bear directly on rules that

affect State, local, and tribal governments, as well as the private

sector.

Fourth, and finally, the new Executive order requires a regulatory look-back through the creation of plans by which agencies

and departments will eliminate excessive costs and burdens, revise

rules that are too complicated and confusing, streamline rules that

have too much red tape; and that applies directly to State, local,

and tribal government, as well as the private sector.

There is a sibling to the Executive order, the Presidential Memorandum on Administrative Flexibility, which draws explicit attention to requirements that have been sometimes ‘‘onerous’’ and ‘‘unnecessary.’’ With references of that sort, the memorandum seeks to

increase flexibility for non-Federal entities. To that end, it directs

the Office of Management and Budget, the Director, in fact, to lead

a process of consultation to promote increased flexibility. The Presidential Memorandum also requires agencies to work with State,

local, and tribal governments to improve program outcomes, including reduction and streamlining of duplicative reporting, paperwork,

and regulatory requirements.

It should be clear that UMRA, the new Executive order, and the

Administrative Flexibility Memorandum are mutually reinforcing.

We are greatly looking forward to working with you on implementing and promoting the purposes of the three sets of requirements, and I look forward now to answering your questions.

[The prepared statement of Mr. Sunstein follows:]

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Mr. LANKFORD. Thank you, sir, and you did successfully beat

your time there.

I am going to yield myself 5 minutes in the question time. We

will probably do two rounds of questions, as I mentioned to you before. If there are additional things, we will continue to hold our

conversation.

Can I just give you a general statement that we also gave to

Susan Dudley when she was here? What have you learned from the

unfunded mandates, the application of 12866 and now for the

13563 Executive orders that you would suggest goes into an updated writing of an UMRA law, that you would say these are deficiencies, this existed in UMRA or did not exist in UMRA, it does

exist in the Executive orders, or these are ways to be able to fix

it? So that is just a general question to you.

Mr. Sunstein. I will tell you the most important thing I have

learned that bears on all of those, and that is the crucial importance of public participation to good regulatory outcomes. I taught

administrative law for many years. There is a cliche among administrative law professors: that by the time a rule goes out for public

comment, it is baked, it is cooked, and the public comments are not

that important. I have learned that cliche is false. And to get rules

right, it is very important to engage with the public.

Mr. LANKFORD. OK. With that, I heard you mention that as well,

how do you select who gives the public comments? Since this is not

an open, large-scale process, it is not already out there, obviously,

there has to be some sort of notification behind the scenes to get

the public comment. If it a State, tribal government, if it is a private entity, who selects that?

Mr. SUNSTEIN. The best way is connected with the Executive orders’ reference to freedom of choice for the American public. So the

best way is to let people who have interests and concerns voice

those interests and concerns, rather than having bureaucrats select

people. There are two mechanisms for that are built into the existing process, of which UMRA is a significant part.

One is the rule goes out for public notice, and then people, and

sometimes many thousands of people, suggest their comments; and

no one asks them or chose them, they chose themselves. The second is our office is—and this is very important for those concerned

about regulatory burdens to be aware of—our office is open, our

doors are open to those who think that a proposed rule or a final

rule is a problem, and we want to hear what they have to say.

Mr. LANKFORD. So in that conversation back and forth, you mentioned specifically using the term onerous. If a regulation in a lookback, or whatever stage of the process it may be, whether it is already on the books and we are looking back at it, or whether it is

a proposed rule, if some groups consider it onerous and other

groups do not. Let me give you a for instance. If a private entity

or a State or local government says this is a really onerous rule

and the Federal agency says no, it is not, who arbitrates that?

Mr. SUNSTEIN. Thank you for that. That is a crucial thing for my

office and you all who have lawmaking authority to try to get right.

What we try to do is have both an internal and external process

of peer review. So if a rule comes in with, let’s say, a low cost estimate, and then people in the private sector or State and local govVerDate 17-JUN-2003 14:27 Nov 09, 2011 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70678.TXT KATIE PsN: KATIE
22

ernment have said at some part of the process that is inaccurate,

we have an internal process which involves the Council of Economic Advisors, the National Economic Council, economists, and

informed people within the government who try to make an assessment.

And there is not always literal peer review, but there is a form

of external peer review, speaking colloquially, in the sense that the

regulatory impact analysis goes out for public review and not infrequently people who are affected say that cost estimate is inaccurate, and the question is what is their evidence, and sometimes

they have pretty good evidence.

Mr. LANKFORD. So who do they appeal up to? When there is a

disagreement, there is public comment, there is all that back, is it

within that same agency or does it come to OIRA or is a judicial

review? Who reviews it and says, no, an outside arbitrator?

Mr. SUNSTEIN. It definitely, the ultimate decision is made by the

agency working with OIRA, so we ultimately have the authority

not to approve a regulatory impact analysis, and that means that

it will be a consensual process to make sure we get it right.

Mr. LANKFORD. OK, let me ask a couple questions as well, then

I am going to defer my time as well. The private sector, you mentioned that multiple times. In UMRA it is very clear that it is

State, local, tribal governments, and the private sector. It mentions

it multiple times; it defines it clearly in UMRA and the law. That

is included.

You also made the statement several times; the President has

made the statement several times. What are your thoughts on the

private sector and regulations that are coming down on them, as

well as the public sector? Is there a difference? Do we need to

evaluate it the same?

Mr. SUNSTEIN. It is a great question. We are very concerned, in

this economic environment, with any form of costs. State and local

government are particularly strapped, so if there is a rule that burdens them economically, the choice of the least burdensome alternative, as the Executive order and UMRA require, and even the

best alternative may not be to impose the burden at all. So that

is one set of——

Mr. LANKFORD. Would that be true for the private sector as well

as the State and local governments?

Mr. SUNSTEIN. Absolutely. What I was going to say is that even

though each raises distinctive concerns, I wouldn’t want to rank

one higher in the hierarchy. If you are hitting small business hard

in an economically challenging time, that is a problem.

Mr. LANKFORD. OK, thank you.

I now recognize Mr. Connolly for 5 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Presumably, Mr. Sunstein, we hear a lot of talk in this Congress

about the burden of regulation, but there is also benefit to be derived from regulation and protecting the public, and sometimes in

concrete savings, is that not true?

Mr. SUNSTEIN. Absolutely.

Mr. CONNOLLY. And certainly your office looks at the benefits as

well as the costs.

23

Mr. SUNSTEIN. Under the President’s Executive order, benefits

are as highlighted as costs.

Mr. CONNOLLY. For example, in agreeing to new fuel efficiency

standards, which certainly has an impact both in the public and

private sector, EPA projects that over the lifetime of a model, a

2016 model, the average consumer will save $3,000 and the United

States will save 1.8 billion barrels of imported oil. Is that a benefit?

Mr. SUNSTEIN. No question.

Mr. CONNOLLY. Do we put a number on that benefit?

Mr. SUNSTEIN. Yes.

Mr. CONNOLLY. And we certainly consider that as we contemplate new regulations.

Mr. SUNSTEIN. Absolutely.

Mr. CONNOLLY. So there is an example where we are weighing

costs and benefits. In looking at light bulb standards, the same

thing. EPA came up with—or DOE came up with an analysis that

said we could save $1.4 billion with new energy efficient standards

for light bulbs. That would be another benefit, presumably, from a

regulation.

Mr. SUNSTEIN. Energy efficiency standards have benefits and imposed costs.

Mr. CONNOLLY. Now, when one looks at—let me ask does your

office also look at the risks of cost shifting? For example, I spent

14 years in local government. Sometimes my State government

conveniently would shift costs onto the local governments and it

would become our burden, and that has a real cost to it.

I mentioned in my opening statement that in the partisan budget

that passed the House here a few months ago, it slashes Medicaid

funding 35 to 49 percent. That has the effect of shifting the cost

of Medicaid onto State and localities, and indeed even the private

sector. Has your office looked at that issue of cost shifting as, in

effect, an unfunded mandate?

Mr. SUNSTEIN. That is not a standard part of what our role is

under the Executive order and under the Unfunded Mandates Act,

but there is a role for the analysis to which you point, under the

rubric of distributional impacts. So if it is the case that a cost is

shifted from one sector to another sector, and that is a consequence

of a rule, that is appropriate to lay out.

Mr. CONNOLLY. Now, that same budget also, in many respects,

eviscerated the ability of EPA to continue to regulate under the

Clean Air Act. Has your office looked at the cost benefit analysis

over the years of the Clean Air Act?

Mr. SUNSTEIN. We look at the costs and benefits of particular

rules issued under the Clean Air Act. EPA has recently issued a

general report on costs and benefits. Our analysis tends to be ruleby-rule, though we do some cataloging in our annual report to you.

Mr. CONNOLLY. For example, do you also look at externalities? I

know when you start to get into something like global warming, it

is a little harder, we know what the problems are, it is a little

harder to put a value on averting something or mitigating something, but does your office also do that analysis as well?

Mr. SUNSTEIN. Absolutely. That is a significant part of the analysis of rules under the Clean Air Act, the externality which comes

24

from mortality and morbidity effects from high levels of air pollution.

Mr. CONNOLLY. What about more physical things like rise in sea

levels and potential damage to coastal areas and infrastructure?

Mr. SUNSTEIN. The global warming issue poses very difficult conceptual and empirical challenges in terms of monetization. What

has happened in the last years is there is an effort to build on existing scientific models, not to do significant departures from the

existing models, and to incorporate them into our analysis, and

they do include economic costs of rising sea levels.

Mr. CONNOLLY. And when we look at this undue burden on the

private sector, and certainly none of us want an undue burden, for

example, look at the liability cap, regulatory liability cap on oil

companies for oil spills is at $75 million. Obviously, if we don’t address that inadequacy, all it does is shift the cost of cleanup when

an oil spill occurs, such as did at Deepwater Horizon, onto the public, is that not correct?

Mr. SUNSTEIN. That particular issue isn’t one that my office sees

because our role is to look over regulations, rather than legislation,

but you are absolutely right that if there is a regulation that prevents some significant economic or public health related harm, that

is part of the analysis.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Mr. LANKFORD. I would like to now go for questioning to the

chairman of the full committee, Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman. I will be brief with this

question.

After the election that created an opportunity for Mr. Connolly

to start calling anything that passes by the majority as a partisan

budget and eviscerating and so on, right after that, November 15th,

I sent your department a letter with a series of questions, and in

December I got a quick response that basically said here is the

public record, we will give you no more. We have twice since requested responses. Will you commit today to answer questions that

were asked and that you agreed to answer as early as December,

but have not yet answered?

Mr. SUNSTEIN. Thank you for that, Mr. Chairman. I am very focused on your concerns about regulatory costs and burdens. I want

to see what questions exactly, but——

Mr. ISSA. We will give you the questions, but they are the questions from November 15th.

Mr. SUNSTEIN. I would be very happy to engage with you on

questions involving regulatory burdens. I don’t have the piece of

paper in front of me right now.

Mr. ISSA. So it never got to you or it has been forgotten since November 15th of last year?

Mr. SUNSTEIN. I have a pretty good memory, but I don’t remember exactly what the questions were.

Mr. ISSA. No, I understand that you wouldn’t remember the

questions, but it is your signature responding on this—unfortunately, it is an undated letter, but it came in to us in December,

in which you said you would give us the rest of the responses. I

am just saying will you commit today to keep that promise from

December of last year.

25

Mr. SUNSTEIN. I think if there is a promise there that my office

made, I can commit to following through.

Mr. ISSA. OK, then I will take that as a yes, that what you

signed and said you would do you will now do in a timely fashion.

Let me just ask a basic question. You referred to the previous administration more than any other administration. Let me ask a

question, though, about this whole idea of announcing you are

going to go through a rule process or an executive order and then

basically consulting. That is a great thing and I think all of us on

the dais would commend that, but if in fact an agency announces

that they are going to do something and then begins effectively

compelling States or individual parties to live up to the proposed

rule, isn’t that contrary to good government?

Mr. SUNSTEIN. Well, it is very important for agencies to listen to

what people have to say, so if the agency hasn’t carefully considered comments, then that would not be consistent with the spirit

of the President’s Executive order or the Administrative Procedure

Act.

Mr. ISSA. So if the administration wanted to make it clear that

they were looking at something but did not want to have it be compelled as though it was a rule, they should say so in the process,

shouldn’t they?

Mr. SUNSTEIN. I am not sure I understand exactly——

Mr. ISSA. Well, let me just make it clear. EPA has a policy that

now what they do is they announce or give guidance to what may

someday be rules, and if they get enough compliance from the

States and other stakeholders, they never have to issue a rule that

they have changed things without ever having it.

That seems to be a part of this administration’s direction, and I

am asking you shouldn’t the administration, any agency be clear

that if rulemaking is the appropriate goal, that they make it clear

that they are not looking for change in advance of rulemaking unless there is a real emergency and that emergency is stated and

stated here on the Hill?

Mr. SUNSTEIN. I fundamentally agree with what you have just

said, and what I would say is the Administrative Procedure Act

makes a clear distinction between guidance documents and rules.

Guidance documents lack the force of law; they are not binding;

they have an advisory quality; and under a memorandum from

March 2009, guidance documents are subject to OIRA review, as

are rules, and we work very closely with agencies to make sure the

guidance documents don’t become rules.

Mr. ISSA. And the guidance from the previous administration,

13422, you revoked it, you have gone your own way. Let me ask

a broader question, though, in addition to that, since the time is

limited. Yesterday we had the EPA Administrator repeatedly tell

us that something was from the previous administration, in other

words, permits, rules, studies, and so on; and that they automatically appear to have been set aside to start over anew simply because this is a new administration. Don’t you believe that, for the

most part, there is a binding authority, unless justified for a

change, from previous administrations, whether they be republican

or democratic?

26

Mr. SUNSTEIN. My mind is going through. I taught administrative law for many years and, as you are aware, there is a jurisprudence on exactly that question.

Mr. ISSA. Certainly, if a permit is granted under one administration, wouldn’t you think that permit is a contract with the government and should not be essentially revoked simply because there

has been a change in party? That is pretty Third World, isn’t it?

Mr. SUNSTEIN. Rulemaking is my lane, and what I can tell you

is that rules issued under the Bush administration are binding on

everybody until they are changed.

Mr. ISSA. Changed by a full rulemaking procedure.

Mr. SUNSTEIN. Absolutely. Interpretive rules and guidance documents can be changed more quickly, but rules typically are binding

until changed.

Mr. ISSA. Thank you.

Thank you, Mr. Chairman.

Mr. LANKFORD. I would like to recognize the ranking member of

the full committee, Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

Mr. Sunstein, today I come concerned about Medicaid, as Mr.

Connolly. I want to pick up on some of the things that he was talking about. As you know, Medicaid is a vital program that serves

the most vulnerable Americans in this country. As a matter of fact,

Medicaid accounts for 42 percent of long-term care spending. And

in a time when there are those on the other side of the aisle who

want to eliminate the traditional Medicare, put private insurance

companies in charge of health benefits, and costing users to pay

more for their health care, I am concerned about the shifting to

States with regard to our seniors.

It is the No. 1 topic when I go into my district. As you know, programs like Medicaid and No Child Left Behind are not technically

covered by UMRA; however, we also know that the Federal Government can impose significant costs on States when it changes the

conditions required to receive Federal aid.

The Republican budget resolution would dramatically change

Medicaid from an entitlement program into a block grant, essentially removing any guaranty of care for those least likely to be

able to care for themselves, people like my mother, who is 85 years

old. Medicaid would be cut by $771 billion over the next 10 years.

The Congressional Budget Office’s analysis of the Republican budget plan estimates that the Federal Medicaid funding to States

would be cut by 35 percent in 2022 and by 49 percent in 2030.

Whether technically covered by UMRA or not, these changes would

impose a remarkable unfunded mandate on States that would like

to continue to provide the same level of existing coverage for their

most vulnerable citizens.

Now, this subcommittee has held three hearings on unfunded

mandates and offered rhetorical support for relief from Federal

mandates. But when it comes to their budget resolution, it is clear

that the Republicans have no problem whatsoever imposing greater

costs on States and local governments. The drastic cuts to Medicaid

would add significant burdens on State budgets to maintain current coverage or cover a consequent increase in emergency room

visits by previously Medicaid eligible people.

27

Administrator Sunstein, have you considered how converting

Medicaid into a block grant would impact the ability of States to

provide care to their citizens?

Mr. SUNSTEIN. Thank you, Congressman, for that. That question

I want to defer to some of my OMB colleagues.

Mr. CUMMINGS. OK.

Mr. SUNSTEIN. That is their business, not quite mine.

Mr. CUMMINGS. All right. Let me ask you this. If States are given

less money from the Federal Government as part of a Medicaid

block grant, what kind of budget pressures would States likely face

in maintaining existing levels of care and coverage for their most

vulnerable citizens?

Mr. SUNSTEIN. Again——

Mr. CUMMINGS. That same answer?

Mr. SUNSTEIN. Yes. My boss, Jack Lew, is the expert on——

Mr. CUMMINGS. OK. I am sure we will be talking to Mr. Lew at

some point. Let me ask you this. What would happen to Medicaid

beneficiaries who are forced out of coverage because of program

cuts or if funds from the block grant simply run out?

Mr. SUNSTEIN. Same answer.

Mr. CUMMINGS. The Federal Government increased its percentage of contribution for Medicaid costs as the recession hit. This increase resulted in States receiving an estimated $107 billion in additional funding to help defray the costs associated with increasing

Medicaid enrollment. According to the Kaiser Foundation, Mr.

Sunstein, for every 1 percent increase in national unemployment,

Medicaid enrollment increases by 1 million individuals. Does the

Republican budget block grant plan include any funding contingencies in the event of another economic downturn or a natural disaster similar to Hurricane Katrina?

Mr. SUNSTEIN. With your indulgence, I would like to note that

the Office of Information and Regulatory Affairs, we have a defined

narrow rule and there are budget colleagues who specialize in that

sort of question.

Mr. CUMMINGS. Well, let me ask you this, Mr. Sunstein. Some

have suggested the UMRA be modified by expanding its judicial review provision to allow agency rules to be delayed or invalidated

if an agency fails to adequately perform the required analysis.

UMRA currently includes language expressly providing that an

agency’s failure to perform any estimate analysis statement or description under UMRA cannot be used as a basis for delaying or

invalidating a rule. Removing this language limiting judicial review

would be a significant change to UMRA. In 2009, GAO issued a report on rulemaking process. In that report, GAO found that, of the

agencies reviewed, the average time needed to complete a rulemaking was 4 years.

If UMRA was amended to allow rules to be delayed by legal challenges, what kind of impact could that have on agencies’ ability to

issue rules in a timely manner?

Mr. SUNSTEIN. It is a very important question and it is a pervasive question whether judicial review is worth a candle, whether it

provides sufficient safeguards to rely on self-policing or whether a

judicial check is an important supplement. On that question you

28

pose a crucial empirical question, and I just don’t have the data on

that.

Mr. CUMMINGS. Very well. Can you get back to me on that one?

Mr. SUNSTEIN. We can——

Mr. CUMMINGS. That is within your purview, is it not?

Mr. SUNSTEIN. Well, I should say that it is in my purview,

though I don’t know if the information is available on what kind

of incremental delay you get from judicial——

Mr. CUMMINGS. Well, do the best you can.

Thank you very much, Mr. Chairman, for your indulgence.

Mr. LANKFORD. Thank you.

I want to now yield 5 minutes to the Vice Chair of this committee, Mr. Kelly.

Mr. KELLY. Professor, thanks for being here, and I appreciate

your indulgence as we test out campaign strategies for the 2012

elections.

But more directly, as evidence of Executive Order 13563 in President Obama’s recent announcement that he will propose a package

of regulations to delineate in the coming weeks, would you agree

that the President has clearly recognized that at least some regulations and businesses are having a negative effect?

Mr. SUNSTEIN. Yes.

Mr. KELLY. OK, thank you. And isn’t it true that one of the purposes of UMRA is to assist Congress in its consideration of proposed legislation containing Federal mandates in the private sector?

Mr. SUNSTEIN. Yes, absolutely.

Mr. KELLY. In fact, the law states that each agency shall assess

the effects of the Federal regulatory actions on State, local, tribal

governments, and the private sector, isn’t that correct?

Mr. SUNSTEIN. Yes.

Mr. KELLY. OK. So if the President has made that commitment,

and we all agree that there is this overwhelming amount of regulation that comes out, and I have to tell you, coming from the private

sector and somebody who actually funds all these programs that

are mandated, and a lot of these unfunded mandates in the direction we go, I want to ask you is there any remedial process at all,

having sat through many, many, many, many audits myself, both

in my private life and serving in a city council, where is the remedial process?

Mr. SUNSTEIN. OK. Well, since the President issued Executive

Order 13563, we have seen some significant developments. Dairy

farmers and the milk industry have not been thrilled at the fact

that milk has been defined as oil under the oil spill rule, and there

were concerns and references to expenses, and the EPA recently exempted milk and dairy from the oil spill rule. That saves $140 million annually.

Mr. KELLY. I understand. Let me just, if I could, because we really run short in this and I don’t want to be disrespectful to you, and

I know you are being asked questions that absolutely have nothing

to do with what we are talking about today, but these committees’

agencies that come in and the oversight that takes place or the audits that take place, my concern has always been in the private

29

sector, that where is the private sector’s role on these committees

and when do we get a chance to weigh in?

Because most of the time the people that come in have never actually done what the people that they are overseeing have done

and actually haven’t walked in their shoes, so really don’t know

what it takes to run these different entities, and yet they are being

regulated and mandated to do things that in some cases can’t be

done for a number of reasons. So is there a process——

Mr. SUNSTEIN. Yes.

Mr. KELLY [continuing]. That we actually can come to the table?

I have never been invited, that is why I ask.

Mr. SUNSTEIN. Oh, for members. Oh, OK. Well——

Mr. KELLY. Not for Members of Congress. I am talking about

people in the private sector.

Mr. SUNSTEIN. OK, well, what we have done for the regulatory

look-back is to ask the public for ideas, and we have gotten a lot,

about rules that are causing the sorts of problems to which you

point, and those ideas have come in and they are reflected in the

agency plans that will be released soon.

Mr. KELLY. OK, I know you said we have asked the public, but

have we actually engaged those people who are actually doing what

it is that we are overseeing or regulating to be at the table to have

some input as to what is being asked of them?

Mr. SUNSTEIN. Yes. There are a few mechanisms for that. We are

available, that is, the Office of Information and Regulatory Affairs

is available for meeting with people certainly on rules under review. If there are concerns about a rule on the books or a coming

rule, then if a letter is sent to me, the chance that I will read it

is 100 percent.

Mr. KELLY. Would it happen during the regulatory process?

Mr. SUNSTEIN. Yes. If a rule goes out for public comment, then

there——

Mr. KELLY. I am not talking about public comment. What I am

speaking of, and I mean specifically because I am involved in a lot

of these different things, the private sector is really not consulted

on a cost-benefit analysis. In fact, in your testimony it says the

agency, at its sole discretion. So what that says to me is it will determine.

Again, I am very leery of a government that thinks it can do better than anybody else and thinks it is smarter than anybody else,

but has actually never done what it is that they are trying to regulate, and it drives the cost of that up. Now, we talk about cost savings and cost benefits. I would suggest to you that is not always

the case. At the end of the day, the government decides what it is

going to be, and those people who are left holding the bag, are left

holding the bill, are not really brought to the table; and I would

say that is more the case than not the case.

Mr. SUNSTEIN. OK, you are absolutely right. For some of the high

profile, high expense rules, including the CAFE rule, the fuel economy rule, where the benefits were really high and costs were a lot

lower, people were brought to the table, the automobile industry

was brought to the table to ask what is feasible and what is reasonable, and that is happening on an ongoing basis.

30

Mr. KELLY. And I understand it, being an automobile dealer. But

while they are brought to the table, they are pretty much told what

the gas mileage is going to be, and there are unintended consequences. As we know, a lot of the things that are funded in the

highway transportation are revenues derived from the sale of gasoline. So when you eliminate one source, it has to come up someplace else.

And we have this habit down here to try and place the blame on,

when you are up to your rear end in alligators, who was supposed

to drain the swam; and I think it is a little bit of bass-ackwards

way of doing things, and I would just suggest that while you have

this ability, please, let’s make sure that we get the private sector

to the table. Let’s get their input before we impose regulations and

costs to them that are really burdensome and cannot be done.

Mr. SUNSTEIN. I agree completely and I would love to explore

ways to do that going forward.

Mr. KELLY. I will work with you on that. Thank you.

I yield back, Mr. Chairman.

Mr. LANKFORD. Thank you, Mr. Kelly.

I would like to recognize Mr. Chaffetz for 5 minutes.

Mr. CHAFFETZ. Thank you.

Thank you, Administrator, for being here. In a 2007 speech I believe you said, ‘‘We ought to ban hunting.’’ Is that something you

or anybody in the administration is working on at this point?

Mr. SUNSTEIN. Absolutely not.

Mr. CHAFFETZ. You had said, in your book, written in your book

Radicals and Robes, ‘‘Almost all gun control legislation is constitutionally fine. And if the court is right, then fundamentalism does

not justify the view that the Second Amendment protects an individual’s right to bear arms.’’ Is that something that you or anybody

in the administration is working on?

Mr. SUNSTEIN. No. That quotation, actually, was from a position,

not a position I held at the time, I was describing a position that

some other people held. In any case, one thing that is very clear

is what academics write in their academic capacity has exactly no

appropriate bearing on what government officials do in their governmental capacity.

Mr. CHAFFETZ. And I appreciate that. That is why I am asking

you if those previous positions are something that you are currently working on now. I believe you had said, ‘‘Animals should be

permitted to bring suit with human beings as their representatives.’’ Is that something you are working on or anybody in the administration is working on?

Mr. SUNSTEIN. I am working on implementation of Executive

Order 13563, and not on those issues.

Mr. CHAFFETZ. Let me ask one more specific one. This is something, again, the rights of animals, ‘‘There should be extensive regulation of the use of animals in entertainment scientific experiments and in agriculture.’’ Is that something you or anybody in the

administration is working on or has worked on?

Mr. SUNSTEIN. Well, I can’t speak for all of the

administration——

Mr. CHAFFETZ. To the best of your knowledge.

31

Mr. SUNSTEIN [continuing]. But I would be very surprised, and

I am certainly not working on those issues.

Mr. CHAFFETZ. At an earlier hearing the GAO testified that one

of the most frequently cited reasons that a rule was not considered

to be an unfunded mandate was the fact that the rule did not go

through the proposed rule stage, meaning that the agency skipped

the regular process and, instead, issued an interim final or direct

final rule. Do you find concurrence with that view, of what GAO

came up with in their conclusion?

Mr. SUNSTEIN. I don’t actually know about the numbers, but I do

know that the general claim about the law is correct, that if there

is no proposed rule stage, then UMRA doesn’t apply.

Mr. CHAFFETZ. So they can just bypass that whole thing and——

Mr. SUNSTEIN. Well, in a sense it is bypassing; in a sense it is

built into the fabric, it is kind of hardwired into UMRA, which applies only when there is a proposed rule stage.

Mr. CHAFFETZ. One of the other concerns here is that the major

exclusions from UMRA is the status of an agency as ‘‘independent.’’

If the issuing agency is considered to be an independent regulatory

agency, they are not required to conduct an UMRA analysis, so this

would include the SEC, the FCC, the FTC, the CFTC, the new Consumer Financial Protection Bureau. All are not subject to UMRA.

Mr. SUNSTEIN. That is correct.

Mr. CHAFFETZ. But why? I mean, I realize we are looking back,

but moving forward it seems that these are some of the agencies

that are some of the most egregious in just unilateral rulemaking

that is bypassing the Congress and causing chaos.

Mr. SUNSTEIN. Well, it is a very important question. The Office

of Information and Regulatory Affairs has an implementation rule.

To answer that important question, there would be an independent

process where, of course, this would be Congress’s judgment, and

I am sure the executive branch would have a view.

Mr. CHAFFETZ. There are some of us that are really struggling

to understand where rulemaking should stop and where, really,

Congress should have the ability to write the laws of the land. Do

you see any conflict with the rules as it relates to the separation

of powers and Congress’s ability and mandate to actually institute

the laws of the land?

Mr. SUNSTEIN. Well, if it were the case that rulemaking were

done without congressional authorization, that would be a serious

problem. So the first question we ask, the first question I personally ask is is there legal authority from Congress to act. That is the

foundation stone for every exercise of rulemaking authority that

the executive branch legitimately engages in.

Mr. CHAFFETZ. OK, so the other end. And, again, I am just doing

a hypothetical. You said there aren’t going to be any rulemaking

authority, it all has to go through Congress. What you are saying,

though, right now is that Congress has given the executive branch

too much of this power.

Mr. SUNSTEIN. Well, I wouldn’t want to say too much, but I

would say that the exercises of legitimate rulemaking authority are

congressionally authorized.

Mr. CHAFFETZ. Are there any exceptions that you see to that?

32

Mr. SUNSTEIN. Well, the President has some constitutional authorities that may relate to rulemaking, but that would be very

limited.

Mr. CHAFFETZ. Thank you. My time has expired.

I yield back.

Mr. LANKFORD. Thank you, Mr. Chaffetz.

I yield to Mr. Labrador.

Mr. LABRADOR. Mr. Chairman, I have no questions. I yield back

to the Chair.

Mr. LANKFORD. Thank you.

Let me followup on a few things Mr. Chaffetz was saying. It is

hard for me to find a rule out there that I couldn’t find, at some

point, some benefit for. If I look hard enough and you allow me to

be able to pick the assumptions, I can say this will prolong life for

certain people; this will help the economy in some country, ours or

some other place; this will help, somehow, the global environment.

Just about everything that we could do, if you allow me to create

the assumptions, I could come up with enough benefit to say, yes,

we should do this. I know it is going to cost $75 million, but we

should do this because it will benefit the economy over the next 50

years, $75 million. So the cost-benefit weighs out. The difficulty of

this becomes how do we evaluate that.

And the previous question that you were just referring to, do we

have authority to do this, is this constitutional, is this the right

thing to do within our free republic, or are we imposing arbitrary

rules on people because we have a preference and we think, at this

point, this is a good idea, knowing full well if the politics change

and the presidency changes and the Executive Office changes, they

may switch it right back, as this administration released some of

the old rules and said, no, we are not going to do those, we are

going to do it differently. What we want to have is a stable environment that is not just at the whims of the executive branch, constantly moving on State and local governments, tribal governments, and private business. How do we balance that out, where

it is not preference-based with some benefits out there in the sky?

Mr. SUNSTEIN. Great. The new Executive order, I think for the

first time, actually, has prominent references to predictability and

reduction of uncertainty. So especially in this economic environment, to have people surprised by rules or hit on the left and hit

on the right by rules, that is a real problem. In terms of the avoidance of arbitrariness, you are clearly right that costs and benefits

can be in the eye of the beholder, and it is possible to have manipulation of the process.

Mr. LANKFORD. Correct. If I say that global warming is caused

by manmade pollution, suddenly everything that we do that ever

relates to global warming, it is we are saving the planet. What

value can you put on the earth? So everything, whether it is $100

billion, it doesn’t matter, we are saving the planet.

Mr. SUNSTEIN. Yes. What we have tried to do, and I think there

is real continuity, actually, over many years in this effort, is to

have pretty disciplined method, at least in the domains that are

the kind of staple of government rulemaking, so that if someone

says, I guess your number was something like $70 million that we

have over the next 50 years, $70 million of benefit to justify that,

33

that $70 million can’t be just asserted or a political preference, it

has to be earned by reference to evidence. So the fuel economy rule

is pretty strong, this isn’t weak stuff. The benefit figures that we

are given have been through the wringer.

Mr. LANKFORD. Correct. But in the same preference there, as Mr.

Kelly was referencing before, those rules, if you change, for instance, fuel economy standard, which does save us fuel, which does

all of those great dynamics over the life of a car, if it also makes

a lighter weight car and someone dies in a crash, how do you

evaluate the benefit?

Mr. SUNSTEIN. That is an extremely important question and that

is something that we, meaning not just the Office of Information

and Regulatory Affairs, but the Department of Transportation, the

Environmental Protection Agency, and the Council of Economic Advisors, look extremely carefully at.

Mr. LANKFORD. But that is the challenge, because once you start

getting into those assumptions and you start evaluating it, it is

very difficult for me to be able to say let’s hand that to an agency

and if private industry or if the government, State, local, tribal government, has a problem with that, considers it onerous, then the

agency itself evaluates it and says, no, we like our rule, we are

going to keep it.

Mr. SUNSTEIN. I tell you something——

Mr. LANKFORD. And I know it is not that simplistic, but they go

through the feedback to go through the end of it, but at the end

of the day they can still say, no, we are keeping it.

Mr. SUNSTEIN. It is a very important point, and if you look at our

guidance on the regulatory look-back, that is, the guidance the Office of Information and Regulatory Affairs issued, it tried to

produce independence between those evaluating the effects of the

rules and those who wrote the rules, just because of the concern

you mentioned.

Mr. LANKFORD. Still within the same agency, though.

Mr. SUNSTEIN. It can be still within——

Mr. LANKFORD. So it is down the hall, but it is still within the

same agency.

Mr. SUNSTEIN. Well, there is some separation. And note that if

the numbers aren’t good, there are checks, both internal and external. So there are a number of occasions where a projection of costs

has been, let’s say, optimistic and internal or external review has

helped.

Mr. LANKFORD. But you would not suggest that we have a judicial review process or a legislative review that may come back over

here, if there is a question that it comes back over for a legislative

determination to say this was the legislation, the regulation is

written and it doesn’t fulfill legislative intent?

Mr. SUNSTEIN. I think judicial review generally is required by

the Administrative Procedure Act; it has bipartisan support. On

the particular question——

Mr. LANKFORD. Not in UMRA, though.

Mr. SUNSTEIN. That is a question for people who have other roles

than my implementation role.

Mr. LANKFORD. OK, thank you. Just to be able to catch you up,

we have gone through the initial round. Mr. Labrador just deferred

34

his question to me, now we are going to start the second round. So

I get to reload and do 5 minutes again.

Thank you. Let me get a chance to continue on, then. Referencing something, you noted the 13563 on predictability and uncertainty. Is there a benefit in setting rules when they are set,

whether they be UMRA and they are an unfunded mandate that

is coming down or whatever significant rule may be coming out and

also giving a time line that lengthens that out?

For instance, where a State government that only meets every 2

years in their legislative branch, if they suddenly have a rule that

is now going to start 18 months from now, but they just finished

their legislative session, they have to call in a special session to figure out how to be able to budget for something that is coming down

on them. How is that warranted and how do we start establishing

a time period for these?

Mr. SUNSTEIN. That is a great point. One place where the President has clearly signaled this in the small business memorandum,

where he called out that part of the Regulatory Flex Act that refers

to delayed compliance dates.

Mr. LANKFORD. But is that a waiver that needs to be done or is

that something that needs to be established as a process to say regulation cannot go into effect until——

Mr. SUNSTEIN. OK, great. OK, so the first question is whether

the law allows consideration of delayed compliance dates for small

businesses or for anybody else, State and local government in particular, and not infrequently the law does give the executive branch

some discretion in terms of timing. So that is the first question.

Then the second question is whether the delayed compliance date

is important to protect predictability, especially perhaps in a very

difficult economic time, or whether, in some cases, it would delay

very important public health benefits; and that is an assessment

that is common.

Mr. LANKFORD. Right. Well, there is a significant challenge for

a local municipality that the Department of Transportation says

your street signs are not reflective enough, so you have to change

all of your street signs. They get some allotment to be able to do

that through a grant, there is not enough, and now they are having

to determine to make the deadline do I pay police officers and firefighters or do I put in new street signs. It suddenly becomes this

whole challenge of if they are given more time.

Now, the battle of that is you shouldn’t also have 1,000 waivers

sitting on your desk and be able to decide back and forth who gets

it and who doesn’t, but to establish some sort of process for that.

That is what I am suggesting.

Bringing back up the independent agencies, we have a lot of

independent agencies, and, by the way, this was very helpful. This

is your book, Risk and Reason, going through a prospective in 2002

that you wrote about OIRA, and some of the details in that was

very helpful to be able to go through in preparation.

But you made a statement in there about OIRA should also see

as one of its central assignments the task of overcoming governmental tunnel vision by ensuring that aggregate risks are reduced

and that agencies focus on particular risks, and that does not mean

their ancillary risks are ignored or increased. So avoiding this govVerDate 17-JUN-2003 14:27 Nov 09, 2011 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70678.TXT KATIE PsN: KATIE
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ernmental tunnel vision. I think that is a great statement to be

able to make.

The difficulty becomes in the independent agencies. How do we

engage with oversight in the independent agencies, and do you see

one of the independents that is out there that you would say they

should not have oversight, they should have tunnel vision and be

allowed to have that?

Mr. SUNSTEIN. Well, because the independent agencies aren’t

covered by the Executive order——

Mr. LANKFORD. Correct, or UMRA.

Mr. SUNSTEIN [continuing]. Or UMRA, I will have to be a little

cautious in discussing them. I would just add two points. One is

that noticing concerns of the sort to which you just pointed—and

my voice is genuinely failing, it is not failing because of the difficulty of the question——

Mr. LANKFORD. It wasn’t that hard of a question, so I wouldn’t

worry about it.

Mr. SUNSTEIN [continuing]. We have asked the independent

agencies voluntarily to comply.

Mr. LANKFORD. How many of them have voluntarily complied?

Mr. SUNSTEIN. At this date we haven’t gotten the returns in, but

if past history is prologue, the likelihood of 100 percent compliance

is not something you would want to bet on——

Mr. LANKFORD. OK.

Mr. SUNSTEIN [continuing]. With the request. So our, that is, the

Office of Information and Regulatory Affairs, has limited tools

given——

Mr. LANKFORD. And that is part of my concern. Let me give you

a for instance. The new CFPB group. They would be exempt from

the executive orders and oversight; they would be exempt from

UMRA as they come in as an independent. How do we keep a

group with so much authority and so little accountability from getting this tunnel vision that you talk about in your book?

Mr. SUNSTEIN. It is a very important question and since we are

narrowly focused on implementation as an OIRA administration, I

don’t have a position on that, but it is a very important question,

and if there is legislation that is proposed, I am sure the appropriate people would be——

Mr. LANKFORD. There will obviously be significant rules that will

come out of those, many of them with millions of dollars of impact

on the economy, just based on the basis of how it comes out with

Dodd-Frank. We suddenly have a group with no accountability to

anyone, and when there is an issue that arises, who checks unfunded mandates with an agency that is that large?

So with that I would like to be able to defer to Mr. Connolly, my

ranking member, for 5 minutes of questions.

Mr. CONNOLLY. Thank you again, Mr. Chairman.

Mr. Sunstein, a couple of things. I am sorry our full committee

chairman, Mr. Issa, is not here, but he took some exception to the

characterization of the adoption of H.R. 1 earlier this year as a partisan budget. When only Members of one party vote for it and not

a single Member of the other party vote for it, I don’t know that

is a normative statement; I think it is just a factual statement, it

is a partisan budget.

36

He made reference to a shift in direction from the Bush administration to the Obama administration, and his specific reference, I

believe, had to do with a mining issue, the issue of permits under

regulatory review. Now, it is my understanding that some of the

strip mining permits granted under the previous administration

were in fact in violation of Federal law under the Clean Water Act.

Is that the case?

Mr. SUNSTEIN. You know, our role is not in—we don’t have a role

over permits except insofar as there are rules behind the permit

process. So I would plead limited role with respect to that question.

Mr. CONNOLLY. But you might agree that if a subsequent administration finds that, deliberately or inadvertently, there is in fact,

by the issuance of a permit, the circumvention of existing statutory

framework with respect to regulation, it is incumbent upon that administration to enforce the law.

Mr. SUNSTEIN. I would agree with that.

Mr. CONNOLLY. And, therefore, the issuance of permits be revoked.

Mr. SUNSTEIN. Well, on that question I would want to look in the

details.

Mr. CONNOLLY. With respect to this subject, mining, have there

been any loss of human lives in the mining industry in the last 10

years?

Mr. SUNSTEIN. Yes.

Mr. CONNOLLY. Does Federal regulation cover that industry?

Mr. SUNSTEIN. Yes.

Mr. CONNOLLY. Does it constitute an undue burden on the mining industry?

Mr. SUNSTEIN. The rules that have been proposed and issued in

this administration have been carefully scrutinized to make sure

there is compliance with the law and with existing executive orders, and insofar as they are not finalized but proposed, we are

eager to hear what people have to say.

Mr. CONNOLLY. But presumably, again, we use that word

externalities, but, I mean, the value of a human life, the prevention

of the loss of it has to factor in to the decision about whether or

not A, to enforce regulations and/or new regulations, I mean, to impose, and second, to enforce those that are existing, is that not correct?

Mr. SUNSTEIN. That is a crucially important point, and the fact

is that the net benefits of regulations in the first 2 years of this

administration are significantly higher, actually three times those

under the Clinton administration, more than three times those in

the first years of the Clinton administration, and the main reason

is lifesaving initiatives.

Mr. CONNOLLY. I wasn’t clear on your response to our friend, my

colleague, Mr. Kelly, his questions. Like him, I spent 20 years in

the private sector, more in the technology realm, so I intersected

with the Federal Government regulatory frameworks in technology

before I came here to Congress, but I also served, like he did, in

local government for 14 years. Could you expand a little bit on

what is the current process for the opportunity of the private sector

or, for that matter, the public sector, to participate in the formulaVerDate 17-JUN-2003 14:27 Nov 09, 2011 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70678.TXT KATIE PsN: KATIE
37

tion of new regulations or a review of existing ones to streamline

or eliminate or make better?

Mr. SUNSTEIN. OK, great. Thank you for that. I will give you a

bunch of opportunities people have, and they won’t be in sequence,

but they are all really important. If there is a rule pending before

the Office of Information and Regulatory Affairs, we have about

125 right now, our doors are open at both the proposed and final

stage for people to come in and express their concerns. This is very

important and perhaps not sufficiently appreciated, the availability

of the process. By the way, the agency, the rulemaking agency will

be present also to hear the concerns, and that is something that

happens a great deal; it could happen more.

Under the President’s Executive order, before a rule is proposed,

if feasible, agencies should be engaging with State and local officials to see whether the rulemakes sense. So for rules that affect

their interest—and that could be well under $100 million annually,

it could be an exemption for one or another reason from the

UMRA—there is supposed to be engagement before the fact.

Then there is an opportunity, after the rule is proposed, to engage through the comment process. And while it seems a little dry

and perhaps formal, one thing I have learned in government is,

yes, it is dry, but it is not formal in the sense of empty; it really

matters. Many people in agencies, and I personally, spend a lot of

time—it is a little pathetic on my part, to be sure, to be studying

Regulations.gov and the comments that come in from State and

local government at night, but I actually do because you often learn

a great deal about something that is maybe not going in quite the

right direction, and you can make it better. So there is that stage

of commenting.

Then at the final stage agencies not infrequently engage, before

they write the final rule, with State and local government, and that

is consistent with the President’s Executive order. And also when

the final rule comes over to OIRA there is an additional bite at the

apple.

Now, you referred to the look-back process, which is an unprecedented and, in that sense, historic effort to look at the regulations

now on the books, and this has gotten a lot of bipartisan enthusiasm. The agencies went out to the private and public sectors,

most cabinet level departments and agencies, asking for comments

by the Federal Register.

But that is just the beginning. The plans that will be announced

soon are under the Executive order, by design, preliminary plans,

and under guidance we issued, taking note of many of the points

that have come up today, and maybe we will be able to do a better

job now that I and we in back of me have heard these concerns,

will have a public process where, if people think the plans are too

aggressive, maybe, in the deregulatory area, then that is important

to hear. If they think they are too weak, if they have other ideas

for cost reduction, then there is a great opportunity.

So this is really taking the open government goal with a new

level of seriousness in the rulemaking process.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Mr. LANKFORD. Thank you.

I defer to Mr. Labrador for 5 minutes.

38

Mr. LABRADOR. Thank you, Mr. Chair. I just have a quick question.

Is there a point of diminishing returns in regulation?

Mr. SUNSTEIN. Yes.

Mr. LABRADOR. And when does that point occur?

Mr. SUNSTEIN. Offhand, where the costs of increased stringency

are higher than the benefits.

Mr. LABRADOR. OK, I will give you an example. A lot of the mayors in my cities in Idaho are complaining, and these are bipartisan,

Republicans, Democrats, Independents, they are complaining because they are being asked to clean the water and get rid of phosphorus in the water, and they are going to be spending billions of

dollars over the next 10 years, and the improvement is going to be

0.5 percent. So from something like 2 percent of phosphorous in the

water to 11⁄2 percent. And obviously this is going to cost money to

fix it, and it is going to cost businesses. At what point do we start

realizing the difference between 2 percent and 11⁄2 percent is not

worth the cost?

Mr. SUNSTEIN. That is a really important point, and on the particulars I would want to study the details. But if it turned out that

it cost billions of dollars over the next 10 years, then the question

is what do you get on the other side. Is it significant ecological and

human health benefits? That would be one thing. If it is not, that

would be another thing.

Mr. LABRADOR. So how do we study that and is that something

that we can send to you and you can look at?

Mr. SUNSTEIN. We would be happy to look at it. If it stems from

a rule, then that is really our lane. We would be happy to look at

it and engage with the agency. But the question you are asking is

under the President’s Executive order, our staple, which is is that

increased level of stringency really protective, is it really expensive,

is it worthwhile.

Mr. LABRADOR. OK, thank you.

I yield the balance of my time to the chairman.

Mr. LANKFORD. Thank you.

We will have the same challenge dealing with that same issue

on it. It could be that we require every single traveler and passenger of every single vehicle in America to also wear bubble wrap

suits while they drive and say that not just seatbelts, but bubble

wrap. At some point it gets absurd. But you can always say, but

it will save it a life. So we have to require that in balancing out

the freedom of our Nation with any kind of onerous requirement.

And evaluating who determines whether it is onerous or not becomes the other challenge.

You also mentioned the historic nature of the look-back. I would

agree that it is historic. But there will also be a lot of people very

attuned to seeing what the agencies consider as things to be able

to kick out. If they are choosing only certain regulations that came

down during certain political times in our Nation’s history and say,

OK, this one, this one and this one we no longer prefer, then that

definitely becomes even more historic, where we are now clearing

the deck of everything that doesn’t meet our personal preferences

of the day. So that is part of the challenge as well and part of the

anxiety of watching the look-back. It is a good idea. The application

39

of it, though, will be interesting to see if it has political consequences with it as well. We had spoken before about the issue of $100 million or $50 million in UMRA in those requirements and as it is allotted for inflation as well. Do you think that number is still the right number?

12866 just does $100 million, period, without the inflation on it. Is

that too high, is that too low? Should it be $20 million? What becomes an unfunded mandate and economically significant?

Mr. SUNSTEIN. I think what I can tell you is kind of our day-today operation and how it bears on that question. If, under the

President’s Executive order, incorporating 12866, the $100 million

threshold not adjusted for inflation is met, then there has to be a

whole apparatus, including a regulatory impact analysis, to try to

make sure we have what you are concerned about, which is an objective and kind of scrutinized analysis of costs and benefits. The

President’s reaffirmation of the $100 million threshold fits well, I

think, with our best practices in this——

Mr. LANKFORD. So that number you think is about right?

Mr. SUNSTEIN. I think it is fine. The only thing I would add is

that if there is a $40 million or $50 million expenditure, under the

Executive order, that is, we look carefully at that too. So that is

a lot of money.

Mr. LANKFORD. So just to clarify on it, $100 million nationwide, so $2 million per State, added altogether in aggregate, that suddenly becomes an unfunded mandate.

Mr. SUNSTEIN. That would be—under UMRA, you would have to

adjust for inflation.

Mr. LANKFORD. Correct.

Mr. SUNSTEIN. But with that qualification, yes.

Mr. LANKFORD. Right. Well, in UMRA the standard would actually be even lower because for State and local governments it is actually $50 million, adjusted for inflation.

Let me ask this. Regulation is the fulfillment of a piece of legislation. Would you agree with that? Legislation comes first; regulation

is filling in the details from there. When there is a question about

regulation, and if it is appropriate or inappropriate, who do you

think is the best entity to determine whether that regulation fulfills the legislative intent?

Mr. SUNSTEIN. Well, ultimately the best is the Federal courts.

That is what they are there for. Before that, then the relevant lawyers or the Justice Department and the General Council’s Office,

including the OMB General Council’s Office, have a role.

Mr. LANKFORD. Do you sense the judicial branch, not just determining whether this is constitutional or whether the actions are

consistent with the law, but is there a gain to be able to go back

to the legislative branch to say what was the intent here, or do you

think you ask the administration can’t determine what the intent

is and so you go to a third party and ask them what the intent is?

Is there a gain to just sending it back to the people who wrote it

and say, what is the intent here?

Mr. SUNSTEIN. Well, a little out of my OIRA lane on that question, but the courts’ view is that the best indicator of the views or

intentions of the enacting Congress is the language and supporting

materials of the enacting Congress, and the courts are typically

40

wary of what a subsequent Congress, which may have either different membership or different attitudes, thinks about the judgments of its predecessor.

Mr. LANKFORD. Just to be clear on it, when we are dealing with

the Judicial Branch reviewing the regulatory intent, you would

think that is appropriate. But if you are dealing with an agency

doing something that the private sector or a State considers onerous, you think the agency should be the one to settle that, not the

Judicial Branch?

Mr. SUNSTEIN. Well, ultimately on onerousness Congress has the

final say.

Mr. LANKFORD. So that one should come back to the legislative

branch.

Mr. SUNSTEIN. Well, to determine reasonableness and legitimacy,

the lawmaking authority is final. To determine legality, then the

judicial judgment is the one. But we have had occasions over the

last years where an administrative action doesn’t fit with the views

of the current Congress and then the current Congress makes a

change.

Mr. LANKFORD. OK. Terrific.

With that——

Mr. Connolly. Can I——

Mr. LANKFORD. Yes, you sure may.

Mr. CONNOLLY. I just wanted to ask one followup to your line of

questioning, Mr. Chairman.

Given your answer to the chairman with respect to what constituted an unfunded mandate, would No Child Left Behind become

an unfunded mandate?

Mr. SUNSTEIN. You know, that one I would want to look at the

particular regulations and whether they meet the statutory requirements. The regulations under that statute have not fallen

within the Unfunded Mandates Act. In fact, as the chairman said,

we have only had four in the last 10 years, none under that statute.

Mr. CONNOLLY. Well, if I could commend it to your review, as

somebody who ran the eleventh largest school district in America,

it costs a lot of money to implement No Child Left Behind, well in

excess of $100 million. And given the timeliness of it, the President

himself has recognized some of the flaws in the legislation and

many of us certainly hear from our respective school districts about

the fact that good intentions, though it may represent, it is an onerous burden.

And remember that in lean times for State and local governments and school systems, it also represents an opportunity cost;

every dollar I have to spend implementing that, in addition to the

cash outlay, is a dollar I am not investing somewhere else in the

school system. So I would urge OMB to look at No Child Left Behind in a timely fashion so the Congress can benefit from your

analysis before we consider legislation later this year. Thank you

very much.

Mr. SUNSTEIN. Thank you.

Mr. CONNOLLY. Thank you, Mr. Chairman.

Mr. LANKFORD. You are very welcome. And I would recommend

to you, you just said it is an onerous regulation. You don’t get to

41

pick if it is an onerous regulation, only the agency does. Just a little joke for you.

Can I mention one thing with that as well? Then I would like

to be able to close out. Is there the opportunity you sense for an

agency to say here is a larger regulation, we think this is going to

be over $100 million. If we break this up into five pieces of $20 million each, it is basically not taking an aggregate, is it possible for

an agency to break up a piece into multiple sections and to now

say it is under the threshold because it is not one big piece, it is

five smaller?

Mr. SUNSTEIN. It is possible. We haven’t seen it.

Mr. LANKFORD. OK. Well, hopefully we never will on that one.

Thank you very much for coming and being able to testify today.

Appreciate your input on this as we try to settle this issue. This

is a piece of legislation that desperately needs repair, and I am

sure we will have very robust conversations on the solutions to repair it. Thank you very much for this.

We stand adjourned.

[Whereupon, at 11 a.m., the subcommittee was adjourned.]

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