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95–483 PDF 2015

OFFICE OF INFORMATION AND 

REGULATORY AFFAIRS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 15, 2015 

Serial No. 114–39 

Printed for the use of the Committee on the Judiciary 

( 

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

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

MIMI WALTERS, California 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

JULY 15, 2015 

Page 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 2 

WITNESSES 

The Honorable Howard A. Shelanski, Administrator, Office of Information 

and Regulatory Affairs 

Oral Testimony ..................................................................................................... 19 

Prepared Statement ............................................................................................. 22 

Douglas Holtz-Eakin, Ph.D., President, American Action Forum 

Oral Testimony ..................................................................................................... 40 

Prepared Statement ............................................................................................. 42 

Karen R. Harned, Esq., Executive Director, National Federation of Independent Business, Small Business Legal Center 

Oral Testimony ..................................................................................................... 52 

Prepared Statement ............................................................................................. 54 

Richard Williams, Ph.D., Director of Regulatory Studies Program, Mercatus 

Center 

Oral Testimony ..................................................................................................... 62 

Prepared Statement ............................................................................................. 64 

Noah M. Sachs, Professor, and Director, Robert R. Merhige Center for Environmental Studies, University of Richmond School of Law 

Oral Testimony ..................................................................................................... 73 

Prepared Statement ............................................................................................. 75 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

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

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

on the Judiciary ................................................................................................... 5 

Prepared Statement of the Honorable Bob Goodlatte, a Representative in 

Congress from the State of Virginia, and Chairman, Committee on the 

Judiciary ............................................................................................................... 13 

Material submitted by the Honorable Doug Collins, a Representative in Congress from the State of Georgia, and Member, Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law ............................................................ 33 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Material submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Ranking Member, 

Subcommittee on Regulatory Reform, Commercial and Antitrust Law .......... 96 

Response to Questions for the Record from the Honorable Howard A. 

Shelanski, Administrator, Office of Information and Regulatory Affairs ........ 100 
Page

IV 

Response to Question for the Record from Noah M. Sachs, Professor, University of Richmond School of Law, Member Scholar, Center for Progressive 

Reform, and Director, Robert R. Merhige Center for Environmental Studies 108 
(1) 

OFFICE OF INFORMATION AND 

REGULATORY AFFAIRS 

WEDNESDAY, JULY 15, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 3:05 p.m., in room 

2141, Rayburn House Office Building, the Honorable Tom Marino 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Farethold, Collins, 

Ratcliffe, Trott, Bishop, Johnson, and Peters. 

Staff Present: (Majority) Dan Huff, Counsel; Andrea Lindsey, 

Clerk; and (Minority) Slade Bond, Counsel. 

Mr. MARINO. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law will come to order. In the interest of our 

people that are testifying, we are going to get started. 

Without objection, the Chair is authorized to declare a recess of 

the Committee at any time. And I think that will happen, because 

we have our last series of votes coming up maybe in an hour or 

so. 

We welcome everyone to today’s oversight hearing on the Office 

of Information and Regulatory Affairs. And I will begin by recognizing myself for my opening statement. 

Congress has an ally in the fight against overregulation. The Office of Information and Regulatory Affairs, known as OIRA, is 

charged with ensuring that agency regulations are the least burdensome possible and that their benefits justify their cost. 

Accordingly, I asked Administrator Shelanski, how can Congress 

help you? I understand your staffing levels are near historic lows 

and that your team has been moved out of the Executive Office 

complex. I know that resources and proximity matter. 

How can we help you combat the scourge of midnight rules, in 

which Presidential administrations issue a heightened number of 

new regulations as their terms reach a close? The George W. Bush 

administration took steps to prevent the practice. What steps do 

you plan to take? 

I am also concerned that the agencies are failing to comply with 

important procedures designed to improve the quality of rulemaking. For example, a 2008 study found that required regulatory 
2 

impact analyses have become perfunctory, rather than real inquiries into the necessity of new regulations. 

Similarly, agencies make the questionable claim that their rules 

will not have a significant impact on a substantial number of small 

businesses in order to skirt Federal requirements designed to limit 

regulatory burdens. The EPA made just such a certification for its 

controversial waters of the United States regulation, despite the 

obvious potential consequences for impacts on small businesses. 

What can be done? Does OIRA need additional enforcement powers? 

There also seems to be a wide disparity in the seriousness with 

which agencies are taking their obligations to perform regulatory 

lookbacks. A number of articles in academic journals suggest ways 

to improve the regulatory lookback process. I am curious if you 

have been able to incorporate any of them. 

Former OIRA Administrator Cass Sunstein wrote recently that, 

‘‘Many independent agency regulations, including very expensive 

ones, have not been accompanied by careful cost-benefit analysis.’’ 

This suggests that Executive orders from President Obama urging 

independent agencies to conduct cost-benefit analysis have been inadequate. Is there anything more OIRA can do, or is congressional 

action mandating OIRA review in order? 

While I support OIRA, I have concerns. These include a potentially flawed cost-benefit methodology and the controversial update 

to the social cost of carbon. We are also missing OIRA’s required 

annual report to Congress on the cost and benefits of the previous 

year’s Federal regulations. By law, it is to be submitted ‘‘with the 

budget.’’ This timing—as Congress is determining how much 

money to allocate to each agency—helps ensure agency accountability for is regulatory determinations. That report needs to be delivered on time. 

My overall message to Administrator Shelanski is this: Help us 

help you stand up to the Sdministration pressure, particularly as 

the midnight regulation period commences. 

I thank all of our witnesses and look forward to the discussion. 

And I now recognize the Ranking Member of the Subcommittee, 

the gentleman from Georgia, Congressman Johnson, for his opening statement. 

Mr. JOHNSON. And thank you, Mr. Chairman. 

Impeccable timing, if I must say, on my part. Sorry for being 

late, though, and thank you for forbearing. 

Established by the Paperwork Reduction Act of 1980 and empowered with centralized regulatory review responsibilities under 

President Reagan, the Office of Information and Regulatory Affairs, 

or OIRA, functions as the gatekeeper of the regulatory system for 

the most important Federal rules. 

Issued by President Clinton in 1993, September, Executive Order 

12866 requires that OIRA review all significant regulatory actions, 

between 500 and 700 a year. It additionally requires that Federal 

agencies prepare a cost-benefit analysis for economically significant 

rules. 

In January 2011, President Obama issued Executive Order 

13563, which reaffirmed the principles of Executive Order 12866 

but also requires that agencies develop plans for a retrospective re-
3 

view of existing regulations to determine whether any should be 

modified, streamlined, expanded, or repealed. 

Finally, the Obama administration issued Executive Order 13610 

in May 2012 to further increase public participation in retrospective reviews. 

According to Mr. Shelanski’s predecessor, Cass Sunstein, these 

orders have energized agencies to identify hundreds of outdated 

rules for elimination, and many agencies have already finalized or 

formally proposed over 100 of these reforms. For instance, the Department of Health and Human Services has finalized several rules 

to remove hospital and healthcare reporting requirements, saving 

$5 billion over 5 years. 

These efforts have continued under Mr. Shelanski and, thus far, 

appear to be working. As Mr. Shelanski noted in March, the retrospective review process is expected to achieve $20 billion in savings 

over 5 years and is on track to eliminate over 100 million paperwork burden reduction hours. Combined, it is clear that these initiatives have already resulted in hundreds of formal proposals to 

eliminate rules, representing billions of dollars in savings over the 

next several years and substantially more in eventual savings. 

I look forward to learning about the continuing efforts, to date, 

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

the existing regulatory system. 

In addition to conducting oversight of OIRA, witnesses on our 

second panel will also discuss larger concerns with our Nation’s 

regulatory system. 

I would note that the most pressing issue facing our regulatory 

system today is the timely response to public health and safety crises through the expeditious promulgation of Federal rules. But, 

sadly, it has become common for my colleagues to assert that the 

same regulations that protect our health, safety, environment, and 

financial system have undermined the economic recovery and job 

growth. But this could not be further from the truth. 

The latest report from the Bureau of Labor Statistics shows that 

unemployment has fallen to 5.3 percent. While there is more work 

to do to grow the economy and help our Nation’s middle class, 

there have been 64 straight months of private-sector job growth. 

That is 12.8 million private-sector jobs created amidst a regulatory 

system that is pro-worker, pro-environment, pro-public health and 

safety, and pro-innovation. 

Furthermore, as I have noted on many occasions, there is overwhelming consensus that the benefits of regulation vastly exceed 

their costs. According to the Office of Management and Budget’s 

2012 draft report on the benefits and costs of Federal regulations, 

the net benefits of regulations in the first 3 years of this Administration totaled $91 billion, which is 25 times greater than during 

the comparable period under the Bush administration. 

Additionally, according to the 2014 benefits-costs report, OMB 

estimates that the benefits of regulations are in the aggregate between $217 billion and $863 billion, while the estimated annual 

costs are in the aggregate of between $57 billion and $84 billion. 

In closing, I thank Administrator Shelanski for taking the time 

to appear before us today, and I thank our witnesses for being here 

today. And I look forward to today’s hearing. 
4 

And, with that, I yield back. 

Mr. MARINO. Thank you, Congressman. 

Mr. JOHNSON. Mr. Chairman, if I might, I would like to introduce 

the statement of the Ranking Member, Mr. Conyers, into the 

record, without objection. 

Mr. MARINO. So ordered. 

[The prepared statement of Mr. Conyers follows:] 
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10 
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Mr. MARINO. And the Chairman of the full Committee, Congressman Goodlatte from Virginia, he is in a meeting also and will not 

be here. Therefore, I will, without objection, ask that his statement 

be entered into the record. 

Seeing none, so ordered. 

[The prepared statement of Mr. Goodlatte follows:] 
13 
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15 
16 
17 
18 
19 

Mr. MARINO. Without objection, other Members’ opening statements will be made part of the record. 

Administrator, would you please stand and raise your right hand 

to be sworn in? 

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

this Committee is the whole truth and nothing but the truth, so 

help you God? 

Mr. SHELANSKI. I do so swear. 

Mr. MARINO. Thank you. Please be seated. 

And let the record reflect that the witness has answered in the 

affirmative. 

Administrator Shelanski of the Office of Information and Regulatory Affairs in the Office of Management and Budget, it is an 

honor to have you here today. 

The Administrator was previously Director of the Bureau of Economics at the Federal Trade Commission (FTC) and a professor at 

Georgetown University Law Center. From 2011 to 2012, he was of 

counsel at the firm of Davis and Polk. From 1999 to 2000, Administrator Shelanski served as Chief Economist of the Federal Communications Commission and, from 1998 to 1999, as Senior Economist 

for the President’s Council of Economic Advisors at the White 

House. 

Administrator Shelanski received his B.A. From Haverford College and a J.D. and Ph.D. from the University of California at 

Berkley. After law school, he clerked for Judge Williams on the 

D.C. Circuit Court of Appeals and Justice Antonin Scalia, as the 

Justice referred to, on the U.S. Supreme Legislature, just recently. 

The witness’ written statement will be entered into the record in 

its entirety. 

I ask that you would please summarize your statement in 5 minutes or less. And you see the lights in front of you. I am color blind; 

I don’t know what color they are. But I know when the third one 

goes on your time is up. 

And I will politely—and this seems to work, because I focus on 

my statement as opposed to watching the light. I will diplomatically just pick up the gavel and ask you to please, when you see 

that, summarize. 

TESTIMONY OF THE HONORABLE HOWARD A. SHELANSKI, ADMINISTRATOR, OFFICE OF INFORMATION AND REGULATORY 

AFFAIRS 

Mr. SHELANSKI. Very good. 

Thank you very much, Chairman Marino, Ranking Member 

Johnson, and Members of the Subcommittee. Thank you for the invitation to appear before you today. I am pleased to have this opportunity to discuss the role of the Office of Information and Regulatory Affairs, OIRA, in regulatory review. 

I would like to start by noting that OIRA has a broad portfolio. 

For example, under the Paperwork Reduction Act, OIRA is responsible for reviewing collections of information by the Federal Government and ensures that those collections are not unduly burdensome. OIRA also develops and oversees the implementation of government-wide statistical standards and policies. And we also, pur-
20 

suant to Executive order, have a fundamental role in international 

regulatory cooperation. 

The largest area of OIRA’s work, however, is the review of regulations issued by executive branch departments and agencies. Several Executive orders, as have been noted, establish the principles 

and procedures for OIRA’s regulatory reviews. Executive Order 

12866, implemented across Administrations of both parties, sets 

forth standards and analytic requirements for rulemaking by departments and agencies and calls, to the extent permitted by law, 

for agencies to regulate only when the benefits of a rule justify its 

costs. 

OIRA works with agencies to continually improve the review 

process and the quality of government regulation. OIRA first and 

foremost upholds the standards of review that the Executive orders 

establish while remaining mindful that unnecessary delays in reviews are harmful across the board—harmful to those wishing to 

comment on proposed rules, to those who must make plans to comply with rules, and to those denied the benefits of regulation. Both 

rigor and efficiency in regulatory review are essential to improving 

the clarity and quality of our regulatory environment. 

OIRA does not review all executive branch regulations, nor would 

it make sense for the office to do so. OIRA review applies only to 

significant regulatory actions. The most fundamental category of 

significant regulations are those that are economically significant, 

the threshold for which is an annual effect on the economy of $100 

million or more. 

There are other factors that may lead to a rule to be deemed significant beyond economic impact. Under Executive Order 12866, 

rules are also potentially significant and subject to interagency review if they create a serious inconsistency or otherwise interfere 

with an action taken or planned by another agency; if they materially alter the rights and obligations related to entitlements, grants, 

user fees, or loan programs; or if they raise novel legal or policy 

issues. 

Once a rule is under review, OIRA plays two basic roles. The 

first is to coordinate interagency review of regulations. OIRA circulates the rule to other agencies around the Federal Government 

whose own policies and responsibilities may in some way interrelate with the rule under review. 

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

complies with the Executive order principles for sound regulation 

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

significant rules, and OIRA reviews those analyses for consistency 

with these guidelines as a standard part of our review. 

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

the principles set forth in the Executive orders. Often, the focus of 

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

strengthen or clarify a regulation. 

Finally, another important objective of the Executive orders 

under which OIRA operates is the introduction of flexibility into 
21 

and removal of unnecessary burdens from Federal rules. Ensuring 

regulatory flexibility for small businesses and reducing regulatory 

burdens for everyone through the retrospective review process are 

high priorities for OIRA. 

In conclusion, regulation can bring great benefits to Americans 

but also carries costs. It is critical to ensure that Federal agencies 

base their regulatory actions on high-quality evidence and sound 

analysis. Beneficial regulation must remain consistent with the 

overarching goals of job creation, economic growth, and public safety. We look forward to continuing our efforts to meet these challenges. 

Thank you for your time and attention. I would be happy to answer your questions. 

[The prepared statement of Mr. Shelanski follows:] 
22 
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Mr. MARINO. Thank you, Administrator. 

I am going to begin with recognizing myself for my 5 minutes of 

questions for you. 

Administrator, the Bush administration took steps to prevent 

‘‘midnight rules,’’ in which Presidential administrations issue a 

heightened number of new regulations as their term reaches a 

close. 

What steps will you take to prevent the practice of this ‘‘midnight rules’’ situation? 

Mr. SHELANSKI. Thank you very much for that question, Mr. 

Chairman. 

We have been engaging with agencies now to set priorities and 

to try to establish a smooth and orderly process for the issuance 

of regulations over the remainder of this Administration. 

As I said in my statement, the most important thing to OIRA is 

to ensure that there is high-quality review of the significant regulations that the executive branch issues. We cannot do high-quality 

review if we have a flood of last-minute regulations. 

So we are working closely and regularly with agencies to ensure 

that they are continuing to move their priorities forward in the 

chain so that we will have time to perform that review. 

Mr. MARINO. Thank you. 

My concern is with apparent victories. The Supreme Court recently remanded without vacating the EPA’s Utility MACT rule to 

regulate mercury emissions. The Justices found that the EPA failed 

to appropriately consider costs when it promulgated the rule. 

This decision was an incomplete victory because this rule has 

been in effect since 2012. For 3 years now, while litigation was pursued, millions of dollars was spent to comply with the rule, only for 

it to be found unlawful. This is a major drain on our economy and 

costs jobs. 

What can be done to ensure that OIRA better reviews these regulations and that the effective date of major rules is delayed until 

the judicial process has been exhausted? 

Mr. SHELANSKI. Thank you, sir. 

So, on the particular rule that you referenced, I think the Supreme Court’s decision is still being reviewed, and how that will be 

handled in the context of this specific rule is not something I am 

able to speak to today. But your general question is an important 

one. 

It is an uncommon situation for a fundamental legal question of 

that magnitude to be raised in a rule. So, typically, OIRA review 

can proceed because the agency has the authority to issue the rule, 

and we are typically getting the kinds of analysis that we require 

under the Executive orders. There isn’t a perceived statutory barrier to that analysis, and we are able to perform our review. 

Now, of course, the Administrative Procedure Act provides for judicial review of final rules. In the normal case, where an effective 

date might come into play prior to the end of the judicial process, 

it is up to the courts to determine whether or not there would be 

a sufficient prejudice to affected parties by having the rule take effect pending the judicial process. 
27 

So, fortunately, the judicial process affords a very good forum in 

which the courts can decide should the rule be allowed to take effect while we are reviewing it or not. 

Mr. MARINO. Administrator, does anything prevent you or OIRA 

from suggesting to the courts that the issue be stayed, pending litigation, because of the expense involved for industry? 

Mr. SHELANSKI. OIRA does not play a role in the judicial process. 

That would be up to the Justice Department, typically. 

What OIRA does is to ensure that the agency has done a sufficient—if it is an economically significant rule, a sufficient analysis 

that is part of the administrative record, that the court can review 

the record and come to a determination of precisely that kind of 

issue. 

Mr. MARINO. Thank you. 

My last question, it looks like. 98.98 percent of the claimed benefits from EPA’s mercury rule came from reducing particles other 

than mercury. Chief Justice Roberts called such a disproportionate 

reliance on co-benefits a potentially illegitimate way of avoiding 

limits on agency power. 

Will OIRA reevaluate the extent to which it permits agencies to 

rely on secondary benefits? 

Mr. SHELANSKI. When OIRA reviews a rule, we look at all the 

costs and benefits, direct and indirect, that might come from a rule. 

But one of the things that we try to do is to ensure that a rule is 

well-tailored to its stated purposes. So OIRA does try to make sure 

that a rule does achieve its stated purposes and that its benefits 

come from the lawful purpose for which the rule is being promulgated. 

Mr. MARINO. Thank you, Administrator. My time has expired. 

The Chair recognizes the Ranking Member of the Subcommittee, 

the gentleman from Georgia, Congressman Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Administrator Shelanski, bills have been proposed, such as H.R. 

427, the REINS Act of 2015, which would require both houses of 

Congress and the President to approve all new major rules—i.e., 

rules with an annual impact on the economy of at least $100 million or having one of a number of economic impacts—before they 

can take effect. 

Are you familiar with the REINS Act? 

Mr. SHELANSKI. Yes, sir, I am. 

Mr. JOHNSON. And what do you think about that concept? 

Mr. SHELANSKI. Thank you, Mr. Johnson. 

The REINS Act is something on which the Administration has 

spoken, at least in the last Congress and the Congress before that. 

I understand the bill may come up again in this Congress, and the 

Administration will have to determine its view at that time on the 

current version. But the Administration has issued a statement 

against this bill, and I certainly share that view. 

The main concern with the REINS Act is that it introduces, in 

my view, an unnecessary layer of review and delay in what could 

be very important health, safety, and welfare regulations. By requiring a joint resolution of Congress, the authority of the executive branch agency to put forward its policies is subject to potentially limitless delay or very long delay. 
28 

And that seems to me, in the context of a regulatory system with 

numerous checks and balances—internal review by OIRA within 

the executive branch, public comment, and judicial review under 

the Administrative Procedure Act—strikes me as an unnecessary 

hurdle to getting the business of the country done. 

Mr. JOHNSON. Thank you. 

Among other things, H.R. 1155, which is the SCRUB Act—are 

you familiar with the SCRUB Act? 

Mr. SHELANSKI. I have just learned about the SCRUB Act. I don’t 

have sufficient familiarity at this point to comment on it. 

Mr. JOHNSON. It would establish a regulatory CutGo process. Are 

you familiar with the CutGo process? 

Mr. SHELANSKI. I do understand what that refers to, yes. 

Mr. JOHNSON. Yeah. Would you discuss the ramifications of a 

mandatory CutGo process? 

Mr. SHELANSKI. I think this is something I would really like to 

engage with anybody in the Congress who would like to talk about 

a CutGo process or some kind of regulatory review commission. 

The devil really is in the details on the kinds of proposals that 

are in the SCRUB Act. The Administration has not yet, I think, 

had a chance to formulate a view on this, and I certainly can’t 

speak for the Administration, but it is something we are certainly 

interested in working with you on and learning more about. 

Mr. JOHNSON. Okay. 

Other bills, such as H.R. 185, the Regulatory Accountability Act, 

would give greater power to the courts and the Administration to 

override congressional mandates. It does this by requiring the 

courts to exercise their independent judgment over that agency’s 

experts. 

What are your views regarding heightened judicial review of 

agency rulemaking? 

Mr. SHELANSKI. Mr. Johnson, we have grave concerns and I have 

grave concerns about judicial review over the expert processes 

within the agencies. There is no single, one-size-fits-all type of 

analysis or type of process that is fit for all the different kinds of 

agency processes that go on. So I have concerns that this introduces judicial review at a far more granular level, a very technical 

and detailed level, where I think good decisionmaking by general 

courts will be extremely difficult. 

Moreover, we should keep in mind courts have the opportunity 

to review the complete administrative record. So if there is not sufficient evidence and basis for an agency’s decision, courts already 

get to review that. Agencies are already held to a good standard 

of having record evidence for their decisions. Further judicial review down to the expert level within the agency strikes me as 

something that could grind to a halt the deliberative process and 

good policy development. 

Mr. JOHNSON. And going back to regulatory CutGo, is it wise to 

have a broad restriction on introduction of new regulations, mandating that if one comes in you have to get rid of another? Is that 

wise? 

Mr. SHELANSKI. Thank you, sir. 
29 

As a general matter, I do not favor some kind of a cut-and-go or, 

often called, regulatory PAYGO obligation. Sometimes a rule needs 

to be issued to meet a vital public matter. 

The United States Department of Transportation had to engage 

in a very, I think, essential set of rules relating to the transport 

of volatile crude oil by rail. This was something that received, sort 

of, broad support across the spectrum from many States. For the 

Department to have had to spend a lot of time thinking about what 

rules it was going to have to cut before it could go with its new 

vital health and safety regulation, I think, could have been very 

harmful. 

More to the point, we have a retrospective review process. I 

would much prefer that we use the retrospective review process to 

get rid of rules that should be cut, because that way those rules 

could be considered on a full record. They could be considered on 

an appropriate timeline. We at OIRA would have the opportunity 

to review any rules that were implementing retrospective review, 

either repeal or reform. And that way we would be sure that the 

rules that are cut are rules that we don’t need. My concern is we 

lose that review in a kind of process like cut-and-go, mandatory 

cut-and-go, as you described. 

Mr. JOHNSON. Thank you. 

And I yield back. 

Mr. MARINO. Thank you, Congressman. 

The Chair now are recognizes the gentleman from Michigan, 

Congressman Trott. 

Mr. TROTT. Thank you, Mr. Chairman. 

I appreciate the witness testifying today. 

One of the attributes of the REINS Act was it called for more opportunities for industry experts to provide input into the rulemaking process. Do you think there is a enough, or too much, or 

need more input from industry experts when writing rules? 

Mr. SHELANSKI. Thank you, Mr. Trott. 

I think, as a general matter—and then I will get specifically to 

your question—as a general matter, I think OIRA has the tools and 

the input that it needs to do good regulatory review. 

On the specific question of industry input, I think there are numerous opportunities for industry in the system we have today to 

have serious input into the process. It is extremely rare, I mean, 

hard for me to think of a significant regulation where industry has 

not actually been involved with the agency as a stakeholder in the 

development of a rule. 

Once the agency sends the rule to us at OIRA, that fact that the 

rule is with us becomes public, and we are required under our Executive orders to have meetings with anybody who requests a meeting, under Executive Order 12866. As it so happens, we have no 

control over this. Industry avails itself quite heavily of that opportunity, so we are hearing a lot from industry. 

Now, typically, this just gets us to ask questions, and the agency 

is often very familiar with the arguments that industry is making. 

And then, of course, once the proposed rule is out for public comment, industry has a great opportunity to get all of the facts and 

issues into the public record—a record that the agency is required 

by law to address in order to withstand judicial review. 
30 

Of course, during the finalization process, there is further interaction at the agency level and then back through the 12866 process. 

So it strikes me that industry has a wealth of opportunity, as 

things currently stand, to be involved with the rulemaking process. 

Mr. TROTT. I appreciate those comments. That is helpful. In 

hindsight, maybe some of the feedback I am getting from businesses is they have plenty of opportunity for input but some of 

their input is not listened to or followed, so maybe that is the real 

issue. 

But, along those lines, one of the concerns I have heard from a 

number of businesses is the timeframe when rules are finalized 

and implemented is sometimes too short of a window for them to 

properly respond and implement procedures and software changes 

to adapt. Do you have any concerns in that regard? 

You know, when I was in the business sector for many years, 

that was one of my biggest nightmares, was when a client or customer would give us a short timeframe to implement significant 

changes in operations, and we had no choice but to make it happen. But I just worry sometimes that the rulemaking undermines 

businesses because they don’t have adequate time to respond. 

Mr. SHELANSKI. I fully agree that a realistic implementation period is vital to a regulation. It is vital for a number of reasons. 

Stakeholders do need time to order their affairs. The businesses 

that are being regulated are the engines of our economy, they are 

engines of employment. And we need to ensure that the timeframe 

in which a rule will be implemented and the way it will be implemented is consistent with those vital functions that industry plays. 

We review implementation periods, typically, as part of our review of a rule, because costs can change drastically depending on 

what the ramp-up period is or the implementation period is. Do 

agencies always get it right? My supposition is occasionally they 

don’t, but it is not for lack of trying. It is part of our review, and 

it is something on which we frequently take input. 

Mr. TROTT. Executive Order 12866 calls on agencies to bring regulatory burdens to your attention and to give suggestions on how 

they can be resolved. Is that being done, to your knowledge? And 

do you get many suggestions on how we can improve the regulatory 

burden on businesses? And if not, how can we make sure they cooperate? 

Mr. SHELANSKI. Yes, sir. We do have a lot of back-and-forth with 

the agencies on precisely that point. 

One of the things we are most concerned with at OIRA is to 

make sure that rules achieve their goals but that, in doing so, they 

don’t take an unnecessarily high-cost path. 

And so, during the course of review, we have a number of sources 

of information that lead to almost a majority of our exchanges with 

agencies are questions on this kind of topic, whether they are 

brought to us by other agencies, which is frequently the case 

through the interagency process, or the Small Business Administration, which is a very effective advocate for small businesses on 

business burdens, and also through our obligation under the Regulatory Flexibility Act to ask agencies to think about alternatives. 

Mr. TROTT. Great. 
31 

I see my time has expired. I thank you for your time and your 

insight this afternoon, sir. 

Mr. MARINO. The Chair now recognizes another gentleman from 

Michigan, Congressman Mike Bishop. 

Mr. BISHOP. Thank you, Mr. Chair. 

Administrator Shelanski, I appreciate your testimony today. 

I would like to build on what my colleague from Michigan was 

getting to, and I want to refer you to an event. At the end of May, 

the Department of HHS and Treasury and Labor published a rule 

announcing that, as of 2016, all plans would be required to embed 

an individual cost-sharing limit in all options offering family coverage. 

This is a huge change in the plan for both the employee and the 

employer, large and small, and their administrative vendors and 

carriers, as Mr. Trott indicated, will not be able to accommodate 

the rule by 2016. 

I am wondering how it is possible that something of this magnitude can be implemented by the government without any statutory requirement and without any rules by way of the Administrative Procedure Act? 

Mr. SHELANSKI. There are a number of things that agencies can 

do that don’t have to be done by rule, whether explicitly by statute 

or by precedent. I would have to go back and look into the particular situation that you are raising, because I can’t explain under 

what authority they acted. 

But, typically, there are many lawful authorities that do allow 

agencies to proceed with administrative changes that occur outside 

of the regulatory process and that are not subject to OIRA jurisdiction. 

Mr. BISHOP. Okay. 

I have a couple questions with regard to the process, as well. 

A recent analysis by the GAO found that, since 2011, 43 major 

or significant rules were not submitted to Congress, as required by 

the Congressional Review Act. Without this submission, Congress 

is, in effect, robbed of the opportunity to introduce resolutions of 

disapproval. 

I am wondering what OIRA can do to remind agencies of their 

obligations according to this rule so we don’t go through this over 

and over again? 

Mr. SHELANSKI. Thank you, Congressman. You raise a very good 

point. The GAO pointed out something I think is very important, 

and I absolutely agree that agencies should up hold their obligations to report these rules. 

After we received the GAO report, we contacted agencies to remind them strongly that they have the obligation to report these 

rules. Under the statute, under the law, this is an agency obligation. It is not something OIRA can do for the agencies. But we have 

reminded the agencies that they have this obligation and should 

live up to it. 

Mr. BISHOP. So we know the agencies must submit rules to OIRA 

for review, but what process do you use to ensure that the agencies 

properly comply with the submission requirements? 

Mr. SHELANSKI. The submission requirements to OIRA? 

Mr. BISHOP. Yes. 
32 

Mr. SHELANSKI. So we typically know what rules an agency has 

on the agenda going forward because we publish twice a year, or 

publish and then update, a regulatory plan and agenda. It is very 

unusual for an agency to—in fact, I can almost not think of an example in the 2 years that I have been in the job where an agency 

has not submitted a rule to OIRA that should be submitted to us. 

So we don’t have a problem. Agencies comply quite well with that. 

We often will have differences of opinion about something that 

is not a rule and whether OIRA should review it. And so we have 

often called in things that the agencies have captioned as guidances or notices because we believe they have regulatory effect. But 

the agencies have been very cooperative when we have identified 

such documents. 

Furthermore, agencies will often have a difference of opinion 

with OIRA over a significance determination and whether we 

should review a rule. They have shown us the rule; we know it exists. The significance determination is ultimately up to us. So, 

while we have had agencies ask that rules not be deemed significant, we make an independent judgment. Again, agencies have 

been quite cooperative. 

So we have not had a problem with the agencies’ compliance and 

cooperation with submissions. 

Mr. BISHOP. Thank you very much, sir. I appreciate it. 

I yield back my time. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from Georgia, Congressman Collins. 

Mr. COLLINS. Mr. Chairman, I just have a unanimous-consent request. 

We had sent a letter to your department. We are working on 

that. We have not received a response yet. This was from several 

months ago. I just wanted to insert that into the record and also 

just ask that you do everything in your power to make sure that 

your office is complying with our office to get the answers that are 

needed. 

[The information referred to follows:] 
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Mr. SHELANSKI. Thank you, Mr. Collins. 

I did just this morning receive your letter from our Legislative 

Affairs Office. I assure you of a response. 

I have also read the letter, and I found it extremely interesting 

and look forward to reading the report you reference in the letter 

and acting accordingly. 

Mr. COLLINS. Thank you. 

Mr. Chairman, thank you. 

Mr. MARINO. The Chair now recognizes the Vice-Chairman of the 

Regulatory Subcommittee, the gentleman from Texas, Congressman Farenthold. 

Mr. FARENTHOLD. Thank you. Administrator Shelanski, I appreciate your being with us. 

I want to start at a 30,000-foot view, and I wanted to get your 

opinion on how you think the law of diminishing returns applies 

in the regulatory context. 

In other words, once basic safeguards are in place, will further 

improvements often require spending increasingly more money to 

achieve increasingly less results? 

Mr. SHELANSKI. That is a great question, Congressman. 

One of the things that we look at when we review a rule is 

whether that rule, specifically that rule, building on the baseline 

of the costs that exist in the industry and what the state of play 

is in the industry as it stands when the rule is brought to us, 

whether it will achieve benefits that justify the costs. 

Mr. FARENTHOLD. At some point, we might just get the low-hanging fruit and leave the rest for the plaintiffs’ attorneys. 

I want to get down into the weeds a little bit with some specific 

regulations that directly affect folks in Texas and throughout the 

country. 

The EPA’s controversial waters of the U.S. rule has obvious potential consequences for small businesses, especially agribusiness, 

our farmers and ranchers. Yet the EPA did not convene a Small 

Business Advisory Panel, as required by the Regulatory Flexibility 

Act. 

Why didn’t OIRA insist that the EPA follow the law? 

Mr. SHELANSKI. The EPA’s determination at the time that the 

SBREFA issue, the Small Business Panel issue, came up was that 

what they were doing in this rule was effectively codifying in regulation what had been existing jurisdictional practice, just trying to 

spell out more clearly what had been happening through many, 

many years of practice, in which the courts, indeed the Supreme 

Court, had found had not been sufficiently spelled out. 

So the—— 

Mr. FARENTHOLD. I am going to take issue, and, certainly, I 

think some of the farmers and ranchers, who feel like they are directly affected by these rules. They hadn’t had the EPA crawling 

over their property, and this certainly seems to give the EPA a 

whole lot more jurisdiction, down to stock tanks, irrigation ditches, 

and, if we keep along this path, probably swimming pools in people’s backyards. 

Mr. SHELANSKI. Well, I think I would have a different take on 

what the possible reach of the rule is. But I think, as a general 

matter, what the EPA was doing was simply spelling out jurisdic-
36 

tion that it had previously under the Clean Water Act and trying 

to make a little clearer when and where it would exercise it. 

At this point, for any given body of water, there is still a determination to be made on whether permitting and whether the Clean 

Water Act provisions would apply. 

Mr. FARENTHOLD. Well, OIRA approved these waters of the U.S. 

Rules in just 2 months. That seems awful fast considering that the 

final costs that showed up for the rule were triple the original cost 

projections, and the final version further extended the EPA’s jurisdiction. 

Was there any pressure that you all faced from the outside to 

run this rule through? And what factors was your approval and the 

speedy decision thereof based on? 

Mr. SHELANSKI. Thank you very much. 

Under the Executive orders, the normative time for review of 

regulations is 90 days. Sometimes we are able to be much faster. 

By far, the biggest component in the timing of regulation is the 

priority that the agency places on the rule. Very often, OIRA conducts an interagency process rather quickly, gets feedback from the 

agencies, passes its comments and the interagency comments back 

to the agency, and, if an agency has made a rule a high priority, 

the rule then comes back to us. And when we have decided that 

the rule has sufficiently addressed the concerns that were raised, 

we conclude review. 

Mr. FARENTHOLD. Well, generally, I am a supporter of the government being more efficient, but I certainly don’t think in the 

rulemaking process there should be any incentive to cut corners, 

especially considering the financial impact. 

One last question on the EPA. Congress has long been concerned 

about their evaluation of co-benefits from lowering particulate matter emissions in the context of limiting other air pollution. 

What is your view of how the EPA accounts for co-benefits? In 

particular, how robust is the science about the health effect of additional marginal reductions in particulate matter emissions? 

Mr. MARINO. Administrator, could you pull that microphone a little closer to you? You are not coming over loud enough on the TV. 

Mr. SHELANSKI. Is that better? 

Mr. MARINO. That is better. 

Mr. SHELANSKI. Okay. My teenage son tells me I am very loud. 

Mr. FARENTHOLD. I am an old radio guy. You can’t beat me in 

loud. 

Mr. SHELANSKI. In terms of co-benefits—and I believe I got a 

similar question from Chairman Marino—what we try to do when 

an agency comes to us with a rule is we look at what the rule 

achieves. We try to make sure that the agency, although we do not 

typically make independent legal determinations, has the authority 

to achieve what it is trying to achieve. And then we look at the 

costs and benefits to make sure that those costs are justified by the 

benefits. 

When it comes to the state of the science and the analysis underneath the rule, OIRA does not do an independent scientific evaluation. We are not scientists. What we do, however, is make sure that 

the evidence that the agency relies on meets certain requirements, 

that it meets the requirements of generally accepted science to the 
37 

extent it exists, that the agency employs a generally accepted 

method, and that the quality of data and evidence that the agency 

is relying on meets sufficient data quality standards. And one of 

the things that we are very mindful of is that the agency look at 

the full body of evidence that is in the scientific record, does not 

choose selectively things that cut only in favor of its rule. 

So we do a pretty rigorous set of questioning of the agency. And 

if an agency is basing its determination on supposition rather than 

science, that will make it harder to get a rule through us. 

Mr. FARENTHOLD. Thank you. I see my time is well-expired. 

Mr. MARINO. The Chair recognizes the gentleman from Texas, 

Congressman John Ratcliffe. 

Mr. RATCLIFFE. I thank the Chairman for holding this hearing, 

because the Texans that I represent certainly are frustrated with 

what they see as an ever-expanding government that invades so 

many aspects of their lives. And they are certainly frustrated with 

unelected bureaucrats that sometimes have the power to impose 

regulations that have the force of law with little or no time for 

meaningful preparation. 

So I think it is important that we, at a minimum, make sure the 

folks do get the information they need to comply with new regulations and to fully analyze the effects that these regulations would 

have on their businesses. 

Administrator Shelanski, I appreciate you being with us today. 

I am sure that it won’t come as a surprise to you that some of 

the concern that I am talking about does relate to OIRA’s tendency 

to have delayed informing the American people about regulations 

developed by Federal regulations—the Unified Agenda, as we call 

it. So I would like to ask you a couple of questions about some of 

those factors that I hope that we are able to agree on. 

First of all, do you believe that getting this information about 

agency regulations to the American people, particularly the small 

businesses who are especially burdened by compliance costs, that 

that is something that is vitally important? 

Mr. SHELANSKI. I fully agree that getting the agenda and plan 

is extremely important so that stakeholders can have notice of the 

rules that are going to be forthcoming. 

Mr. RATCLIFFE. So, putting yourself in the place of a small-business owner trying to prepare for impending regulation, you would 

agree with me that getting that information on time and in a 

streamlined manner is equally important? 

Mr. SHELANSKI. I think, to the extent at all possible, getting information out in advance and in a timely fashion is quite important. 

Mr. RATCLIFFE. Okay. 

And I know you are relatively new to the position there at OIRA, 

but I am hoping that you will agree with me that such reports on 

upcoming Federal regulations should never be a political exercise. 

Mr. SHELANSKI. I would agree with that. Certainly, in the 2 

years that I have been in the job, we have been able to get the 

agenda and plan out each spring and fall, as required and on time. 

Mr. RATCLIFFE. But, obviously, you are aware of the past history 

at OIRA. And so, in that respect, do you find it troubling that during the 2012 election year the Obama administration refused to 
38 

issue either a spring or a fall Unified Agenda of planned 

rulemakings? 

Mr. SHELANSKI. My understanding—and, of course, I wasn’t 

there, so I can’t answer as to what happened or what the reasons 

were—was that one plan and agenda did not get issued. 

Mr. RATCLIFFE. Okay. 

Mr. SHELANSKI. Just one. I certainly—— 

Mr. RATCLIFFE. But that one—we can try and minimize that, but 

the fact is that one would be one violation of law. 

Mr. SHELANSKI. Even apart from being a violation of law, I think 

it is not good policy. Therefore, when I was having my confirmation 

hearings a little over 2 years ago, one of the things I pledged to 

do and that I have carried through on was to ensure that each 

spring and fall that plan and agenda does get published and, moreover, to work closely with the agencies to try to improve the completeness and accuracy of that plan and agenda. 

Mr. RATCLIFFE. So can I take it by your answer, then, that you 

have just given me your assurance that in 2016, the next election 

year, that the Unified Agenda will issue on time? 

Mr. SHELANSKI. Yes, sir. 

Mr. RATCLIFFE. And you have taken steps to ensure that that 

will be the case? 

Mr. SHELANSKI. To the extent that it is within my power, sir, 

those plans and agenda will be published on time. 

Mr. RATCLIFFE. Okay. Very good. 

I thank you for being here today, and I am going to yield back 

the balance of my time. 

Mr. MARINO. Thank you. 

And this concludes today’s first panel of our hearing. I want to 

thank Administrator Shelanski for being here. 

You are excused, sir. 

Mr. SHELANSKI. Thank you. 

Mr. MARINO. And we have been called to vote. So we have four 

votes, and it looks like it could be about 30 minutes before we call 

the second panel. We will get back here as soon as possible. 

I declare a recess at this point. 

[Recess.] 

Mr. MARINO. The Regulatory Reform Subcommittee will come to 

order. And I will begin by swearing in our witnesses for our second 

panel. 

Would you please stand and raise your right hand? 

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

this Committee is the truth, the whole truth, and nothing but the 

truth, so help you God? 

Please let the record reflect that the witnesses have answered in 

the affirmative. 

And, yes, please be seated. 

I am going to introduce all four members before we start out 

with your opening statements, if you don’t mind. 

Dr. Douglas Holtz-Eakin—am I pronouncing that correctly? 

Mr. HOLTZ-EAKIN. It is actually ‘‘Holtz-Eakin.’’ 

Mr. MARINO. ‘‘Holtz-Eakin.’’ Okay. Thank you—is the president 

of the American Action Forum. 
39 

Dr. Holtz-Eakin has served in numerous government and policy 

positions, including as Director of the nonpartisan Congressional 

Budget Office. During his time with the President’s Council of Economic Advisors, he helped to formulate policies addressing the 

2000-2001 recession in the aftermath of the terrorist attacks of 

September 11, 2001. 

Dr. Holtz-Eakin received his B.A. From Denison University in 

mathematics and his Ph.D. in economics from Princeton. 

And welcome, Doctor. 

Ms. Karen Harned—is that correct? 

Ms. HARNED. Yes. 

Mr. MARINO. Just want to make sure. Thank you—has served as 

executive director of the National Federation of Independent Business’ Small Business Legal Center since April of 2002. Prior to 

that, Ms. Harned was an attorney at a Washington, DC, law firm 

specializing in food and drug law, where she represented clients before Congress and Federal agencies. 

Ms. Harned appears frequently in the national media to discuss 

issues including regulations, health care, and other issues important to small business. She is a graduate of the University of Oklahoma and earned her J.D. From The George Washington University Law Center. 

Welcome. 

Dr. Richard Williams is director of the Regulatory Studies Program at George Mason University’s Mercatus Center. Prior to that, 

Mr. Williams served as Director for Social Sciences at the Center 

for Food Safety and Applied Nutrition in the Food and Drug Administration. 

Dr. Williams has appeared in national media outlets, including 

NPR and The Wall Street Journal. He is a U.S. Army veteran who 

served in Vietnam—and, sir, thank you for your service. 

Dr. Williams holds a B.S. in business administration from Old 

Dominion University and earned his M.A. and Ph.D. in economics 

from Virginia Tech. 

Welcome. 

Professor Noah Sachs is a professor at the University of Richmond School of Law and Director of the school’s Merhige Center for 

Environmental Studies. He specializes in environmental law, torts, 

and administrative law and has written casebooks in those areas. 

In 2014, Professor Sachs was awarded a Fulbright grant to study 

challenges to market-oriented environmental reforms in developing 

countries. Professor Sachs received his B.A. from Brown University, his M.P.P. from Princeton, and his J.D. from Stanford Law 

School. 

Welcome, Professor. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. 

I ask that each of you summarize your statements in 5 minutes 

or less. And you see the lights in front of you, and by the time it 

gets to the last one, that pretty much means your 5 minutes is up. 

I know that people concentrate on their statements, so I will just 

politely do this, and that will give you an indication to please wrap 

your statement up. 

And, with that, thank you all for being here. 
40 

Dr. Holtz-Eakin, please. 

TESTIMONY OF DOUGLAS HOLTZ-EAKIN, Ph.D., PRESIDENT, 

AMERICAN ACTION FORUM 

Mr. HOLTZ-EAKIN. Well, thank you, Chairman Marino, Ranking 

Member Johnson, Congressman Bishop, for the privilege of being 

here today. 

Let me make three brief points and submit my written statement 

for the record. 

The first is that OIRA is doing a very important and valuable 

job. And this is, I think, highlighted by the scale of recent regulatory activity. There are a lot of details in the written statement, 

but paperwork burdens have risen by 30 percent since the year 

2000 to the present. That is an enormous rise in the cost of regulation. The year 2010 alone saw 100 major rules finalized. OIRA has 

put in its data that 2012 is probably the most expensive regulatory 

year in recent history. 

And if you look at the success in taking costs off the books, the 

retrospective reviews done under the Executive orders that have 

been discussed have, on net, increased costs and have often not 

even included retrospective review. It has been new regulations 

and higher costs. So there is a significant issue that needs to be 

addressed. 

And OIRA itself could do a better job; there’s no question. There 

are issues in transparency that have been highlighted by its history with the Unified Agenda in recent years—not putting it out 

in some years in the spring, putting it out on the 23rd of December 

or just before Thanksgiving, just before Memorial Day, July 3. The 

tradition of waiting for a holiday and doing it at 4 o’clock on a Friday or something is something that is not exactly consistent with 

their mandate. 

There is the failure to comply on a regular basis with the Unfunded Mandates Reform Act and highlight mandates placed on the 

private sector. There is the inconsistent performance on the Congressional Review Act and reporting of regulations to the House, 

the Senate, and the Government Accountability Office. 

In their annual report, there is a highly incomplete accounting 

of the overall costs and benefits of regulatory activity. And there 

is, as the Chairman noted in his opening remarks, the failure to 

deliver it along with the budget each year, as was originally intended. 

But, more broadly, even if OIRA did a better job, it is our belief 

that broader regulatory reform is needed in the United States and 

that, in doing that, it would be important to codify the benefit-cost 

principles that are in the various Executive orders, to include judicial review, so that agencies face some consequence for the failure 

to undertake a rigorous economic analysis of the activities that 

they are about to impact; that legislation should include some limits on the regulatory activity under that legislation and maybe 

even a budget of some sort to limit it; and that there needs to be 

a formal and systematic retrospective review of existing rules in 

order to, on a regular basis, answer the question, is this regulation 

still a good idea, presuming it was done well at the time of its initial enactment. 
41 

So I’m delighted for the chance to be here today to discuss OIRA 

and regulation in general, and I look forward to your questions. 

[The prepared statement of Mr. Holtz-Eakin follows:] 
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Mr. MARINO. Thank you, Doctor. 

Ms. Harned? 

TESTIMONY OF KAREN R. HARNED, ESQ., EXECUTIVE DIRECTOR, NATIONAL FEDERATION OF INDEPENDENT BUSINESS, 

SMALL BUSINESS LEGAL CENTER 

Ms. HARNED. Thank you, Chairman Marino, Ranking Member 

Johnson, and Congressman Bishop. On behalf of the proximately 

350,000 small-business members of NFIB, I thank the Subcommittee for its work to ensure that OIRA is effectively carrying 

out its mission. 

Overzealous regulation is a perennial cause of concern for small 

business. Since January 2009, government requirements and red 

tape have been listed as among the top three problems for smallbusiness owners. When it comes to regulations, small businesses 

bear a disproportionate amount of the regulatory burden. Regulatory costs are now nearly $12,000 per employee per year, which 

is 30 percent higher than the regulatory-cost burden that larger 

businesses face. 

This is not surprising, that the small-business burden is higher, 

since it’s the small-business owner, not one of the team of compliance officers, who is charged with understanding new regulations, 

filling out required paperwork, and ensuring that the business is 

in compliance with new Federal mandates. 

When reflecting on her time as OIRA Administrator, Susan Dudley stated that the first lesson she learned at OIRA was that OIRA 

has no constituency. From the perspective of the Administrator, 

that may indeed be true. OIRA is the proverbial skunk at the picnic, keeping agencies wanting to do more in check. I have great respect for Ms. Dudley, but, from NFIB’s perspective, OIRA does 

have a very important constituency: small business. 

During my 13 years at NFIB, I have heard countless stories from 

small-business owners struggling with a new regulatory requirement. To them, the requirement came out of nowhere, and they are 

frustrated that they had no say in its development. 

Small-business owners are not roaming the halls of administrative agencies, reading the Federal Register, or even inside EPA. 

Small-business owners rely heavily on SBA’s Office of Advocacy 

and OIRA to check agency power so they are doing what the Regulatory Flexibility Act requires, which is ensuring that agencies 

don’t impose costly new mandates on small businesses when viable 

and less expensive alternatives to achieve regulatory objectives 

exist. 

Recently, we have seen a number of costly rules and proposals 

come out of Federal agencies despite stakeholders raising significant cost concerns about them. NFIB is concerned that OIRA is not 

performing the rigorous independent analysis needed to ensure 

that the proposed benefits of a new rule truly outweigh the negative economic impacts. 

Two recent examples are of particular concern. On June 29, the 

waters of the U.S. rule was issued. The rule radically expands Federal jurisdiction and regulatory power over hundreds of thousands 

of landowners, including small businesses. The Administration has 

consistently touted this rule as one that will give small businesses 
53 

more certainly in determining whether a Federal permit is going 

to be required, yet the only certainty that small businesses will see 

from this rule is a certainty of more costs in consulting and permitting fees, not to mention the risk of 37,500-day penalties if they 

make the wrong decision. 

Remarkably, EPA had the audacity to certify the rule as not having a significant economic impact on small business. Even SBA’s 

Office of Advocacy publically called on EPA to withdraw the rule 

and perform an RFA analysis before moving forward. Yet OIRA did 

not require the agencies to comply with the RFA. OIRA’s lack of 

engagement truly was astounding and begs the question, is anyone 

minding the regulatory store? 

On July 6, the Department of Labor’s Wage and Hour Division 

published a proposed rule that would more than double the salary 

threshold for white-collar employees who are eligible to receive 

overtime pay. According to DOL’s own estimates, under the rule, 

small businesses would pay on average $100 to $600 in direct costs 

and $320 to $2,700 in additional payroll costs to employees in the 

first year after the proposed rule becomes effective. 

As the Obama administration is in its final stretch, OIRA should 

be proactive in discouraging agencies from promulgating midnight 

regulations. Administrator Shelanski and the White House should 

establish and enforce firm deadlines for regulatory actions in the 

Administration’s final months. At a minimum, all final rules should 

issue by November 1, 2016. 

Finally, NFIB is very concerned about the efforts of agencies to 

subvert OIRA in the rulemaking process altogether. The Legal 

Center has conducted significant research and analysis of several 

regulatory activities by Federal agencies that harm small business, 

and we will be issuing a detailed report in the coming weeks. 

Small businesses are drowning in a sea of regulation. NFIB is 

concerned that OIRA has given final approval to new regulations 

that have significant costs and few benefits. 

Thank you for holding this hearing. 

[The prepared statement of Ms. Harned follows:] 
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Mr. MARINO. Thank you, Ms. Harned. 

Dr. Williams? 

TESTIMONY OF RICHARD WILLIAMS, Ph.D., DIRECTOR OF 

REGULATORY STUDIES PROGRAM, MERCATUS CENTER 

Mr. WILLIAMS. Yes. I thank you for the invitation, Mr. Chairman 

and Ranking Member. 

Mr. MARINO. Doctor, is your microphone on? 

Mr. WILLIAMS. Now it is. 

Mr. MARINO. Thank you. 

Mr. WILLIAMS. Thirty-five years ago, President Carter began an 

experiment based on the proposition that the best way to ensure 

we have only those regulations that work would be to require an 

economic analysis of those regulations and to have them overseen 

by a centralized reviewer. Subsequent to President Carter, every 

President has agreed with that goal. 

In President Carter’s words, he said we needed to ‘‘regulate the 

regulators’’ so that we could, again, in his words, ‘‘eliminate unnecessary Federal regulations.’’ No doubt he had looked at the nearly 

85,000 pages of regulations in 1977 and thought something had to 

be done. 

He said, going into office, he knew he was going to have difficulty 

controlling the regulatory agencies, so at first he tried a few internal committees to oversee them. But, ultimately, in 1980, he settled on creating the Office of Information and Regulatory Affairs in 

the President’s Office of Management and Budget, and he staffed 

it with about 80 people. 

That was his experiment to control the regulatory state from getting out of hand. But here we are, 35 years later, with lots of evidence as to whether or not President Carter’s experiment, OIRA, 

is the only thing necessary to achieve his goal. It is not. 

That is not to say that OIRA has not been punching above their 

weight and trying. They have. But they have not nor cannot solve 

the problems alone. Even if we could solve the internal problems 

of OIRA, such as having way too few people, being constrained not 

to touch politically favored agencies, and putting independent agencies under OIRA review, they would still be, as many people call 

them, a speed bump. 

The reason that is true is because they reside in the executive 

branch, the same branch as the regulatory agencies. The only way 

they can stop unnecessary rules is to use their extremely limited 

political capital within the White House. 

So what is the evidence that President Carter’s experiment has 

failed? I believe there are five pieces of evidence. 

Number one, as I said, OIRA is too small relative to the regulatory agencies to exercise effective oversight. OIRA now has about 

45 people, compared to several hundred thousand regulators who 

are producing 3,000 to 4,000 rules per year. 

Number two, agencies know and use lots of ways to get around 

OIRA through what we call stealth regulation, things like guidance, notices, sue and settle, and other tools that get firms to comply, and OIRA plays no role in those. And agencies use these despite the fact that OIRA examines so few of their rules. 
63 

Number three, the regulatory state has grown to gigantic proportions since OIRA’s founding. In 1977, as I said, there were 85,000 

pages of rules; in 2014, there are now 175,000 pages of rules. And 

those rules contain over 1 million requirements. These rules are 

cranked out by regulatory agencies, and they almost never go 

away. This leaves firms and small governments to attempt to comply with this staggering set of commandments. 

Number four, Presidents can’t control the regulatory state, as 

evidenced by, amongst other things, midnight rules—rules that are 

rushed through at the end of an Administration. I will get back to 

that. 

Finally, number five, too many regulations don’t have a solid analytical foundation, the economic analysis that President Carter insisted on, and, therefore, they don’t achieve the results that are 

promised. 

So the evidence is that OIRA is too small, they are easy to get 

around using stealth regulations, and both informal regulations 

and stealth regulations continue to grow at a fantastic rate, and 

there is very little quality analysis accompanying the informal 

rules. 

We also know that every President since President Carter has 

complained about how hard it is to control the regulatory agencies, 

and every one of them has supported OIRA and the requirements 

to do economic analysis, in hopes of constraining regulations to 

only those that are truly necessary. But every President since 1980 

has failed. 

So the answer has to lie beyond the President. The answer lies 

in getting both other branches of government, Congress and the Judiciary, more involved in overseeing agencies. Congress needs better information to help it exercise oversight, and stakeholders need 

to be able to use the judicial system to remedy missing, misleading, 

or ignored regulatory analysis. 

We now appear to be entering a very strange period of midnight 

rules. It appears as though agencies are rushing out big rules to 

ensure that they are finalized well before the 60-day period that a 

new Congress and a new President would have to disapprove them 

under the Congressional Review Act. This would ensure that no 

new President could come in and change the rules that have been 

rushed through the process with very little political accountability. 

With all of the tools at their disposals, agencies are masters at 

avoiding OIRA, and the evidence for President Carter’s failed experiment is clear after 35 years. 

Thank you. 

[The prepared statement of Mr. Williams follows:] 
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Mr. MARINO. Thank you, Doctor. 

Professor Sachs? 

TESTIMONY OF NOAH M. SACHS, PROFESSOR, AND DIRECTOR, 

ROBERT R. MERHIGE CENTER FOR ENVIRONMENTAL STUDIES, UNIVERSITY OF RICHMOND SCHOOL OF LAW 

Mr. SACHS. Thank you, Mr. Chairman and Ranking Member 

Johnson, other Members of the Committee. Thank you for inviting 

me here today. 

I am going to speak today about the need for both an effective 

and an efficient regulatory system. Agency regulations have been 

essential for carrying out congressional mandates, and they have 

protected life, health, fair competition, and property. 

The focus of attacks on the regulatory system usually goes to 

their costs, but numerous studies have found that the benefits of 

Federal regulations vastly exceed the costs. OMB’s 2014 report to 

Congress showed that the benefits of regulations that were enacted 

between 2003 and 2013 exceeded their costs by 3 to 15 times. And 

I would say that is an excellent return on investment by any measure. 

There is no evidence that Federal regulations are contributing to 

layoffs. In fact, a comprehensive book-length investigation on this 

subject by scholars at the University of Pennsylvania concluded, 

‘‘The empirical works suggests that regulations plays relatively little role in affecting the aggregate number of jobs in the United 

States.’’ 

And there are a lot of myths about the costs of regulation. There 

is a number that is frequently heard around this town, that regulations from the Federal Government are costing over $1.8 trillion 

per year. That is a number that was used in some of the testimony 

submitted by others today. And that figure is 20 to 30 times the 

cost estimate provided by OMB itself. The number comes from a report 3 years ago by two economists, Crain and Crain. It was recirculated again last year by the Competitive Enterprise Institute. 

And the number has been thoroughly debunked by The Washington 

Post, by the Congressional Research Service, and others. 

Restoring efficiency to the system means, first and foremost, that 

we have to reduce the delay that now occurs between the time 

when agencies formulate policy and when regulation goes final. 

The system is slow, cumbersome, complex, and opaque, and OIRA 

contributes to all of that. 

For an agency, the time from policy development to final regulation is easily between 3 and 7 years. And what that means for Congress is that it can often be a decade between the time that Congress passes a law ordering the agency to do something and the 

time when the agency actually enacts its implementing regulations. 

So, rather than adding to the procedural requirements that we 

have, Congress should be examining ways to streamline it, including by reducing multiple levels of review, reforming the OIRA process, and ensuring that agencies have sufficient personnel. 

If you recall the original APA, the Administrative Procedure Act, 

it set out essentially a four-step process for enacting rules. The 

agency issues a draft rule, it takes public comment, it considers the 

comments, and then it enacts the final regulation. And what we 
74 

have done over the past 30 years is we have added onto that a really dizzying array of procedural requirements and complexity. And 

we can debate whether any particular requirement is good or bad, 

but the upshot of this is that the requirements have contributed to 

an extraordinary delay in rulemaking. 

OIRA is part of the problem here. First of all, OIRA provides an 

opportunity for industry to raise arguments and to scale back public health and safety protections, when those same arguments were 

already made in the agency process itself during public comment. 

Second, OIRA has amassed a great deal of power over agency 

priorities and rules. In fact, it has effective veto power over which 

rules can go forward and which cannot, even though OIRA itself is 

not staffed by scientific or technical experts, as Administrator 

Shelanski said this morning. 

Third, OIRA routinely delays rulemakings without explanation, 

exceeding its own 90-day limit on reviews, and, in many cases, that 

delay effectively kills the regulations. 

Finally, transparency within OIRA remains low. It doesn’t disclose its internal deliberations. It doesn’t disclose who within the 

executive branch has requested changes to regulations. And it 

doesn’t explain to the agency itself why regulations are being held 

up. 

So reform of this process must begin with transparency, and it 

must also begin with giving agencies the resources and the personnel that they need. 

Thank you for your attention. 

[The prepared statement of Mr. Sachs follows:] 
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Mr. MARINO. Thank you, Professor. 

I will begin with my 5 minutes of questioning, and I will start 

with Dr. Holtz-Eakin. 

Doctor, some suggest that, since employment is improving, 

whether that is marginally or not, concerns about overregulation 

are overblown. How do you respond to that? 

Mr. HOLTZ-EAKIN. To say something has no impact on the level 

of employment is not the same thing as saying there is no impact 

on the labor market or the welfare of employees. 

So, if you look at the work that has been done at the American 

Action Forum on the regulatory burden of finalized rules since the 

beginning of the Obama administration, that is about $650 billion, 

so about $100 billion a year. 

That money has to come from somewhere. So businesses might choose to pay their workers $650 billion less. That is about a percentage point in wage growth every year. And that has been the 

achilles heels of the labor market, no wage growth. It is hardly surprising, because the resources have to come from somewhere. 

Or they can pass it along to their customers, who would need to come up with another $650 billion in raises just to pay the higher 

costs. 

So you can keep employment fixed, but that doesn’t mean that 

regulations don’t affect the labor market and that they aren’t very 

costly to the welfare of employees. 

Mr. MARINO. Thank you. 

Ms. Harned, do you have anything to add to that? 

Ms. HARNED. Yes, I think that when you look at it from the perspective of the small-business owners that we represent, you see it 

daily. I hear it in anecdotes. They are very aware of the regulatory 

requirements coming down the pike that they might—whenever 

you ask them, how many employees do you have, they say, well, 

we are trying—not everybody, but depending on where their number is—let’s say they are at 30—we are trying to stay under, you 

know, 50, or we are trying to stay under—there are certain members of the small-business community that are very aware that 

when they hit that next level they are going to have a whole new 

raft of regulatory requirements. 

And so I do think that you see that inhibit growth. They want 

to stay where they are comfortable, where they know they are not 

going to have to hire that extra compliance officer. We have definitely seen that in our dealings with our small-business members. 

Mr. MARINO. Dr. Williams, should we be strengthening OIRA, 

improving the regulation process? And if that is done, do you see 

that as a partisan issue, or does everyone stand to gain in the long 

run? 

Mr. WILLIAMS. I don’t believe that strengthening OIRA is a partisan issue. Certainly, every President has agreed that OIRA is 

necessary to try to control the executive branch, and every President has agreed toward the end of their Administration that they 

haven’t been successful at doing that. As I said in my testimony, 

I believe that OIRA can only be a part, and perhaps a small part, 

of solving the problems of the regulatory state. 

Mr. MARINO. Professor Sachs, does the law of diminishing marginal returns apply in the regulatory context—i.e., once basic safe-
87 

guards are in place, does further improvement required spending 

increasingly more to achieve increasingly less? Do you understand 

my question? 

Mr. SACHS. I do, yes. 

I can imagine a situation where it is true, where there is a remarkably effective regulation in place, and it makes little sense to 

keep adding on to that. But that is certainly not the case in a lot 

of areas of law. What I see in my work is there are whole areas 

of law that are either uncovered by regulation or that are covered 

by very weak regulations. 

And one thing that I urge the Committee to look at is the GAO’s 

biannual report on high-risk Federal programs, those that are in 

danger of failure or in need of transformation. And so, in that report, it is a great example of how the law of diminishing returns 

does not apply. These are broken regulations that need fixing and 

need attention from Congress. 

Mr. MARINO. Professor, you said—I think it was in your opening 

statement or even in a document that I read—you referred to the 

regulatory agencies are being slowed by ‘‘excessive procedural hurdles.’’ 

Why is regulating regulators more bad but overregulating small 

businesses appears to some regulatory agencies as good? 

Mr. SACHS. Well, I mean, there are several costs to the way that 

we conduct regulation in the U.S.—costs in terms of delay, costs in 

terms of injuries that could have been avoided, deaths that could 

have been avoided because of that delay. So that is my big concern 

about the number of procedural hurdles that we have put in front 

of the agencies. 

Impacts on small business, I am concerned about that, as well, 

and support the laws we have in place to make sure that those are 

addressed. 

Mr. MARINO. Okay. 

My time has expired. The Chair now recognizes the Ranking 

Member, Congressman Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Dr. Williams, would you agree with me that the 2008 Great Recession was not caused by too much regulation? 

Mr. WILLIAMS. Yes, I would absolutely agree with that. 

Mr. JOHNSON. So, in other words, it is possible that too little regulation was what caused the Great Recession of 2008, correct? 

Mr. WILLIAMS. Sir, I am not an expert in the regulation of financial products, but I would have serious doubts that too little regulation is what caused the financial crisis. 

Mr. JOHNSON. Well, I will tell you, do you remember when Alan 

Greenspan came to Congress after the onset of the Great Recession 

and after he was finished with his chairmanship of the Federal Reserve and he testified that he had made a mistake in believing that 

banks operating in their own self-interest would do what was necessary to protect their shareholders and their institutions and that 

he recommended during his testimony that the government should 

play a much more active regulatory role over financial firms? Do 

you remember that? 
88 

Mr. WILLIAMS. I do. And I think my concern, particularly with 

respect to financial regulation, is there is a great deal of financial 

regulation that is going on right now for which there is no analysis. 

Mr. JOHNSON. Well, but—— 

Mr. WILLIAMS. Too few analysis overall, but there is no cost-benefit analysis—— 

Mr. JOHNSON. Well, there may be some regulations that are 

questionable, but I guess the point that I am making is that that 

environment was caused, according to Alan Greenspan, a famous 

free-marketer, was caused by a lack of regulations. 

Ms. Harned, you would agree that costly rules, such as airbags, 

came down the pike on businesses at some point in the past, but 

those costly rules were passed on to consumers, and they were actually beneficial to American families. Would you agree? 

Ms. HARNED. Well, small businesses are not opposed to all regulation. There are regulations that—— 

Mr. JOHNSON. Well, and I take it from your—— 

Ms. HARNED [continuing]. Need to happen. But at the same 

point—— 

Mr. JOHNSON.—I take it from your testimony that there was 

really no fine distinction between good rules and bad rules. It was 

almost like all rules are bad. And you would agree with me that 

that is not the case. 

Ms. HARNED. All rules are not bad. But there are definitely ways 

to do this where it is not a one-size-fits-all that really hurts the 

small-business owner disproportionate to the larger counterpart. 

Mr. JOHNSON. Well, and so we should not just look simply at the 

cost—at the cost of a rule without regard to the benefit of the rule 

in determining whether or not the rule is a good rule. 

Ms. HARNED. Right. But I feel—I think my concern has been—— 

Mr. JOHNSON. So you agree with that? 

Ms. HARNED [continuing]. It has been more focused—they have 

been overselling the benefits and underplaying the costs in recent 

years on many of these regulatory requirements. 

Mr. JOHNSON. Well, I appreciate your—you know, the weight of 

your testimony goes more towards, you know, the emphasis on cost 

as opposed to benefits. But you do agree that you should consider 

both cost and benefits in analyzing whether or not a rule is appropriate. 

Ms. HARNED. Yes. 

Mr. JOHNSON. And how about you, Dr. Holtz-Eakin? You would 

not disagree with that, would you? 

Mr. HOLTZ-EAKIN. I think no one would disagree with the notion 

that we should examine both benefits and costs. 

Mr. JOHNSON. So we should not—— 

Mr. HOLTZ-EAKIN. The concern is that we don’t. 

Mr. JOHNSON [continuing]. We should not overemphasize cost, 

then, when it comes to, you know, the regulatory reform, as they 

call it. 

Mr. HOLTZ-EAKIN. I think that the most important reform would 

be to actually require that agencies, including the independent 

agencies, look at both benefits and costs in a systematic and rigorous fashion, which they do not and are not required to do, and, 
89 

as a result, there is the great potential that we have some very 

poor regulations. 

The second thing we don’t ever do is go back and essentially do 

a program evaluation of a regulation. 

Mr. JOHNSON. Okay. 

Mr. HOLTZ-EAKIN. And there are a lot of estimates of benefits 

that turn out to be way too high, and there is literature on that. 

Mr. JOHNSON. Okay. Well, let me—— 

Mr. HOLTZ-EAKIN. Let’s look at actual benefits and actual costs. 

Mr. JOHNSON. Okay. Thank you. 

Let me get Professor Sachs to weigh in. 

What do you think about what you have just heard? 

Mr. SACHS. Yeah, a few points. 

I mean, in general, I support the idea of a full accounting of the 

costs of regulations and the benefits. I think it should be done with 

a knowledge that, in a lot of areas of law, it is hard to measure 

the benefits. They may come a few years down the line. They may 

involve health issues that are hard to put a dollar sign on. 

Another point I want to respond to is the idea that, you know, 

regulations might harm wages or might result in price rises for 

customers. We have to keep in mind that a lot of regulations are 

simply shifting cost and saying it is not fair to impose those costs 

on consumers or on the public, who might be threatened, let’s say, 

by a mountain of coal ash, and that it is appropriate and correct 

to put those costs where they belong, which is on the company that 

is responsible for accumulating that ash. 

Mr. JOHNSON. Thank you. 

And I yield back. 

Mr. MARINO. Thank you. 

The Chair recognizes the Chairman of the full Judiciary Committee, Congressman Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. Mr. Chairman, I am 

sorry I wasn’t here at the outset. I will put my statement in the 

record. 

And I want to thank all of the witnesses for being here today. 

Ms. Harned, I will start with you. Your written testimony references sub-regulatory activities by which agencies evade OIRA review, but you do not provide details. Can you elaborate for us on 

what evasions are occurring and how they impact small businesses? 

Ms. HARNED. As I mentioned in my testimony, we will be issuing 

a detailed report in the coming weeks on this. But examples I mentioned in the testimony are regulation by amicus, where, literally, 

new standards are being proffered by agencies in amicus briefs in 

courts across this country. In addition, you see through guidance 

documents, field rulings, and informal letters new regulatory requirements really being imposed on stakeholders across the Nation. 

Enforcement continues to be a tool, as well. 

Mr. GOODLATTE. What are field rulings? 

Ms. HARNED. Like, memos to field staff, to enforcement staff for 

different agencies, announcing, now we are going to look at X, Y, 

or Z. 

Mr. GOODLATTE. Got it. 
90 

Dr. Williams, Professor Sachs argues that subjecting independent 

agencies to OIRA review is unwarranted because they are already 

bound by the notice and comment requirements of the Administrative Procedure Act. Would you care to respond to that? 

Mr. WILLIAMS. The notice and comment, the APA, absolutely contains nothing about estimating costs and benefits. And we certainly 

see this. We have seen that the Securities and Exchange Commission has attempted to do benefit-cost analysis. Four court cases 

later, the courts have said, and the courts are perfectly capable of 

saying, you didn’t follow the right procedure to do benefit-cost analysis, and they have remanded those rules back to the SEC. 

I think this states the need that we need to have all of these 

independent agencies required to do benefit-cost analysis. We now 

have some 400 to 500 rules coming out of Dodd-Frank. Almost none 

of them are going to have benefit-cost analysis. We have no idea, 

at the end of the day, how all of them as a whole are going to affect 

the financial sector of this country. 

Mr. GOODLATTE. Professor Sachs, you cite a number of factors 

that you say make estimates of regulatory costs unreliable. Would 

you concede that there are, equally, factors that make claimed benefits similarly speculative? 

Mr. SACHS. Look, estimating benefits of a regulation that might 

be on the books for years, for decades, it is a difficult task—— 

Mr. GOODLATTE. Or even what is going to happen in months or 

weeks, right? 

Mr. SACHS. Agencies do the best job they can of estimating benefits. And that is one of the reasons I have called for more retrospective reviews of whether those agency estimates of both cost and 

benefits actually turned out to be correct years down the road. 

Mr. GOODLATTE. You say that agencies rely on industry for cost 

estimates and that industry has an incentive to inflate the numbers. Do you agree that agencies have an incentive to inflate the 

benefits of the regulations that they wish to promulgate? 

Mr. SACHS. Their estimates of benefits are going to be subject to 

OIRA review and to judicial review, so they better do a good job 

of getting it right. 

Mr. GOODLATTE. Dr. Holtz-Eakin, thank you for coming back to 

our Committee. We always appreciate having you here. 

Do you believe that the Supreme Court’s opinion in Michigan v. 

EPA will have a significant impact on the way agencies view costbenefit analysis? 

Mr. HOLTZ-EAKIN. I hope so. It is a very blunt statement of the 

importance of benefit-cost analysis being the legal definition of 

what is an acceptable regulation. And it would be my hope that the 

independent agencies looking for some sort of judicial prophylactic 

would run their estimates by OIRA and get them a more effective 

and systematic vetting of the analysis they do. 

Mr. GOODLATTE. How positive a development do you think this 

is? As an economist, do you have any way to express that? 

Mr. HOLTZ-EAKIN. As I said, the scale of recent regulatory activities is quite striking. I guess I would just disagree politely with 

Professor Sachs on how fast it has happened. I mean, we took a 

look at 362 major regulations over the past decade, and the median 

time to completion was 400 days. This isn’t something that takes 
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decades. There were 62 major, economically significant regs in 

Dodd-Frank and the Affordable Care Act that got done in the first 

2 years. 

When they want to move fast, the agencies move fast. As an 

economist, I would say the fact that that is being done without a 

systematic evaluation of the benefits and the costs is a significant 

risk. 

Mr. GOODLATTE. Thank you. 

Thank you, Mr. Chairman. 

Mr. MARINO. Thank you. 

The Chair now recognizes the gentleman from California, Congressman Peters. 

Mr. PETERS. Thanks for being here. And I, too, apologize for 

being here a little bit after some of your presentations. 

I want to express sympathy for the effort here. I practiced law 

for some time and practiced environmental law. I had a lot of clients who were businesses, some large but mostly small, and some 

local governments trying to get through regulatory process. And it 

is very frustrating when you have the inconsistency of the various 

letters and the rulings. And I am more than willing to work to figure out how we can avoid that. 

Let me also say that I have had a little bit of frustration in this 

Committee before on being one of the folks over here who would 

like to work with the folks to your left but definitely to my right. 

And I will give you the example of on NEPA. I worked on the 

National Environmental Policy Act, efforts to streamline that, to 

provide deadlines for agencies, to require that all comments be 

made in a central place so that they could all be considered and 

so that you wouldn’t see these major projects go on for years and 

years before you got an answer. And I have always felt and my clients always felt, you know, you can tell me yes or tell me no, but 

tell me soon so I can make plans. I am totally sympathetic with 

that. 

My effort to cooperate on that had been derailed, though, because 

of the insistence of the majority of including a prohibition on talking about particular content—in this case, the social cost of carbon. 

So if we can separate the ideology out from the process, I want 

you to know that you have an avid advocate for process reform that 

would help all of business. And I think it is really important—it 

is really one of the most important aspects for us to support economic growth in the economy. So, if you help me eliminate some 

of the ideology and let the process come up with the answer, not 

inject the answer ahead of time, I am more than happy to help you. 

And I would look forward to working on this in the future. 

I did want to ask Professor Sachs an open-ended question, 

though, with respect to cost-benefit analysis. And maybe you could 

just tell us whether you think there is a role and what that role 

would be for cost-benefit analysis in the regulation of economic activity. 

Mr. SACHS. I do believe there is a role. I am not an opponent of 

cost-benefit analysis as a concept. I think the devil is in the details 

on it. How is it done? What role does it play? Is it a decision rule 

so that only those regulations with benefits that exceed costs can 

go forward? Or is it just one input into the process? 
92 

I think that there is a role for cost-benefit analysis in telling us 

where the bad regulations are, where are the ones that have vastly 

excessive costs compared to benefits. 

So I would agree with you on that. 

Mr. PETERS. I guess, maybe, as we look at how to maybe land 

this plane, is there some agency you think is doing it right that we 

could look at and use as an example? 

You know, the problem with saying that it is not exact and it 

should be a factor is it doesn’t really provide the kind of guidance 

and even oversight that I think this Committee would like to have 

in the process. 

Mr. SACHS. Uh-huh. I am not able to say which agencies as a 

rule are doing it better than others. What I will say, though, is we 

can point to a number of cases where Congress itself has not called 

for cost-benefit analysis and has said, look, we are addressing a difficult field of law, addressing a difficult problem, and the standard 

we want to put into the statute is something other than cost-benefit analysis, something like ‘‘use best available technology’’—— 

Mr. PETERS. Right. 

Mr. SACHS [continuing]. Or something like ‘‘regulate in the public 

interest.’’ 

Mr. PETERS. Right. Okay. 

Well, I know it is a tremendously difficult issue to handle via 

broad brush, but I do think it is important. I want to thank the 

Chairman for having this hearing. And I look forward to trying to 

work constructively to come up with bipartisan solutions to make 

sure that we get high standards but we do it in a way that, in 

itself, doesn’t slow down the economic activity and job creation we 

would all like to see. And I hope to be a partner in that. 

And I yield back. 

Mr. MARINO. Thank you, Congressman. And I look forward to 

working with you on these issues. 

The Chair now recognizes the gentleman from Michigan, Congressman Bishop. 

Mr. BISHOP. Thank you, Mr. Chair. 

And thank you to the panel for your testimony today. Always 

good to discuss ways in which we can be more efficient, especially 

with regard to our small-business community. 

Having spent the good part of my professional career in the practice of law and representing small business and just coming out of 

a small business myself, helping run a small business, I can attest 

firsthand to how difficult it is to comply with the massive amount 

of regulation that exists. I was the compliance officer in the business, so I know how this works, everything from HIPAA to DoddFrank to across the board, the spectrum. 

I am a little bit taken aback by the idea that, somehow, someone 

came to the conclusion that in this environment the benefits outweigh the costs of regulation. And I am wondering how that is 

measured. How do we measure costs? How do we measure benefits? 

Is that a unified system and standard? 

I guess I would like to get your take on that, Professor Sachs. 

Mr. SACHS. Yeah, I think the studies on whether the benefits exceed the costs are done annually by OMB. And what they are looking at are the benefits and costs that are used in the regulatory 
93 

process, that are submitted by the agencies themselves, and that 

form the basis of the OIRA review. So that is where the numbers 

come from. They are estimates; there is no doubt about that. Both 

that the cost and the benefits are estimates. 

Mr. BISHOP. From my perspective, in kind of a real-world setting, 

having been in a small business, and for virtually everybody—and 

I can’t think of a single soul that I have spoken to in a small business who has made that conclusion. I mean, all I get from the constituents, the folks that I represent is that it is wildly oppressive, 

and they are overburdened with the excessive amounts of regulation. 

I would be interested to hear the NFIB’s position on that. Just 

give me an idea as to what the reaction would be from your membership if they were up on this stand and heard that testimony 

about the benefits outweighing the costs. 

Ms. HARNED. Well, they would react like your constituents. We 

see that every month. Our research foundation does their smallbusiness economic trends, where they look at what is the plans for 

hiring in the next 3 months, what is the plans for layoffs, inventory, all of that. And then, when it is not a good time to hire, they 

ask why. Every month, they ask, why, if you are not going to hire, 

is this not a good time? And for the last several years, one of the 

top three answers has been government regulation. So that is a 

realtime, real-world thing we are facing. 

On the benefits, one thing I would say, you know, we have been 

talking generally about how we, at least on the side of small business, think that benefits have been inflated in the calculations as 

of late. 

The Clean Power Plan Rule that was issued last year is a perfect 

example of this. They weighed the benefits to the world. Literally, 

go look. It’s the benefits to the world, not just to Americans, that 

was used as part of their benefit calculation. And we think that 

was inappropriate. 

Mr. BISHOP. Thank you very much for that. 

Mr. Holtz-Eakin, I wondered if you might be able to—as a former 

head of the CBO, it is obvious that you are familiar with this process of estimating costs. And I am wondering, what is your current 

view of the Administration’s cost-estimating methodology for major 

rules? And if you can give me some background on this. And is 

there any current rule or Committee in place in Congress to oversee the methods? How did we get to this point? 

Mr. HOLTZ-EAKIN. I think the major problem is the lack of consistency and the incompleteness in the process. 

Estimating benefits and costs is hard, but it should be done. You 

should do it to the best of your ability, explain how you did it, be 

quite transparent in your efforts. And every agency, the independent ones, the Cabinet-level ones, should be doing it. They 

should be doing it using the same methods. And that is not happening right now, and you get very incomplete reports as a result. 

So, for example, the report that Professor Sachs mentioned about 

how benefits exceed costs, if you look in the 2013 report, OIRA 

monetized seven rules and came up with their estimate of cost. We 

looked at the same data in the Federal Register, and there were 

310 rules that had significant paperwork or burden costs. 
94 

So it is a very incomplete accounting of cost and benefit. So you 

need a completeness in the process and completeness in the accounting. 

Mr. BISHOP. Thank you, sir. 

I yield back. 

Mr. MARINO. Thank you. 

Seeing no other congressional Members, this concludes today’s 

hearing. 

I want to thank all of the witnesses for attending. I learn something from you each time. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

This hearing is adjourned. 

[Whereupon, at 5:24 p.m., the Subcommittee was adjourned.] 
(95) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Material submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Ranking Member, 

Subcommittee on Regulatory Reform, Commercial and Antitrust Law 
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Response to Questions for the Record from the Honorable Howard A. 

Shelanski, Administrator, Office of Information and Regulatory Affairs 
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Response to Question for the Record from Noah M. Sachs, Professor, University of Richmond School of Law, Member Scholar, Center for Progressive Reform, and Director, Robert R. Merhige Center for Environmental 

Studies 

Æ