```
[House Report 112-461]
[From the U.S. Government Printing Office]


112th Congress                                            Rept. 112-461
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
                 REGULATORY FREEZE FOR JOBS ACT OF 2012

                                _______
                                

                 April 27, 2012.--Ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4078]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 4078) to provide that no agency may take any 
significant regulatory action until the unemployment rate is 
equal to or less than 6.0 percent, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2

Purpose and Summary..............................................     3

Background and Need for the Legislation..........................     3

Hearings.........................................................     8

Committee Consideration..........................................     8

Committee Votes..................................................     8

Committee Oversight Findings.....................................    14

New Budget Authority and Tax Expenditures........................    15

Congressional Budget Office Cost Estimate........................    15

Performance Goals and Objectives.................................    19

Advisory on Earmarks.............................................    20

Section-by-Section Analysis......................................    20

Dissenting Views.................................................    21

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Regulatory Freeze for Jobs Act of 
2012''.

SEC. 2. DEFINITIONS.

  In this Act--
          (1) the terms ``agency'' and ``rule'' have the meanings given 
        such terms under section 551 of title 5, United States Code;
          (2) the term ``regulatory action'' means any substantive 
        action by an agency that promulgates or is expected to lead to 
        the promulgation of a final rule or regulation, including 
        notices of inquiry, advance notices of proposed rulemaking, and 
        notices of proposed rulemaking, but not including any 
        substantive action by an agency for repealing a rule;
          (3) the term ``significant regulatory action'' means any 
        regulatory action that is likely to result in a rule or 
        guidance that may--
                  (A) have an annual cost to the economy of 
                $100,000,000 or more or adversely affect in a material 
                way the economy, a sector of the economy, productivity, 
                competition, jobs, the environment, public health or 
                safety, small entities, or State, local, or tribal 
                governments or communities;
                  (B) create a serious inconsistency or otherwise 
                interfere with an action taken or planned by another 
                agency;
                  (C) materially alter the budgetary impact of 
                entitlements, grants, user fees, or loan programs or 
                the rights and obligations of recipients thereof; or
                  (D) raise novel legal or policy issues; and
          (4) the term ``small entities'' has the meaning given such 
        term under section 601(6) of title 5, United States Code.

SEC. 3. SIGNIFICANT REGULATORY ACTIONS.

  (a) In General.--No agency may take any significant regulatory action 
during the period beginning on the date of enactment of this Act and 
ending on the date that the Secretary of Labor submits the report under 
subsection (b).
  (b) Determination.--The Secretary of Labor shall submit a report to 
the Director of the Office of Management and Budget whenever the 
Secretary determines that the Bureau of Labor Statistics average of 
monthly unemployment rates for any quarter beginning after the date of 
enactment of this Act is equal to or less than 6.0 percent.

SEC. 4. WAIVERS.

  (a) In General.--Notwithstanding any other provision of this Act, an 
agency may take a significant regulatory action only in accordance with 
either subsection (b) or subsection (c) during the period described in 
section 3(a).
  (b) Presidential Waiver.--An agency may take a significant regulatory 
action if the President determines by Executive order that the 
significant regulatory action is--
          (1) necessary because of an imminent threat to health or 
        safety or other emergency;
          (2) necessary for the enforcement of criminal laws;
          (3) necessary for the national security of the United States; 
        or
          (4) issued pursuant to any statute implementing an 
        international trade agreement.
  (c) Congressional Waivers.--
          (1) Submission.--For any significant regulatory action not 
        eligible for a Presidential waiver pursuant to subsection (b), 
        the President may submit a written request to Congress for a 
        waiver of the application of section 3 to the significant 
        regulatory action.
          (2) Contents.--A submission by the President under this 
        subsection shall--
                  (A) identify the significant regulatory action and 
                the scope of the requested waiver;
                  (B) give all reasons why the significant regulatory 
                action is necessary to protect the public health, 
                safety, or welfare; and
                  (C) explain why the significant regulatory action is 
                ineligible for a Presidential waiver pursuant to 
                subsection (b).
          (3) Congressional action.--Congress shall give expeditious 
        consideration and take appropriate legislative action with 
        respect to any submission by the President under this 
        subsection.

SEC. 5. JUDICIAL REVIEW.

  (a) Review.--Any party adversely affected or aggrieved by any 
regulatory action taken in violation of this Act is entitled to 
judicial review in accordance with chapter 7 of title 5, United States 
Code. Any determination by either the President or the Secretary of 
Labor under this Act shall be subject to judicial review under such 
chapter.
  (b) Jurisdiction.--Each court having jurisdiction to review any 
significant regulatory action for compliance with any other provision 
of law shall have jurisdiction to review all claims under this Act.
  (c) Relief.--In granting any relief in any civil action under this 
section, the court shall order the agency to take corrective action 
consistent with this Act and chapter 7 of title 5, United States Code, 
including remanding the significant regulatory action to the agency and 
enjoining the application or enforcement of that significant regulatory 
action, unless the court finds by a preponderance of the evidence that 
application or enforcement is required to protect against an imminent 
and serious threat to the national security of the United States.
  (d) Reasonable Attorney's Fees for Small Businesses.--The court shall 
award reasonable attorney's fees and costs to a substantially 
prevailing small business in any civil action arising under this Act. A 
small business may qualify as substantially prevailing even without 
obtaining a final judgment in its favor if the agency that took the 
significant regulatory action changes its position after the civil 
action is filed.
  (e) Limitation on Commencing Civil Action.--A party may seek and 
obtain judicial review during the 1-year period beginning on the date 
of the challenged agency action or within 90 days after an enforcement 
action or notice thereof, except that where another provision of law 
requires that a civil action be commenced before the expiration of that 
1-year period, such lesser period shall apply.
  (f) Definition.--In this section, the term ``small business'' means 
any business, including an unincorporated business or a sole 
proprietorship, that employs not more than 500 employees or that has a 
net worth of less than $7,000,000 on the date a civil action arising 
under this Act is filed.

                          Purpose and Summary

    H.R. 4078, the ``Regulatory Freeze for Jobs Act of 2012'' 
(``the Freeze Act'' or ``the Bill''), would put a moratorium on 
new significant regulations until the national unemployment 
rate stabilizes at or below 6.0%. The President could waive the 
moratorium by Executive Order and issue significant regulations 
for certain specific reasons, such as national security. With 
the consent of Congress, during the moratorium period the 
President may take any other significant regulatory action 
necessary to protect the public health, safety, or welfare. A 
significant regulatory action taken during the moratorium would 
be judicially reviewable, and a small business that 
successfully challenges such a regulation could recover 
attorney's fees.

                Background and Need for the Legislation

       A. OVERREGULATION IMPEDES JOB CREATION AND ECONOMIC GROWTH

    Wasteful, excessive and unnecessary regulations impede job 
creation and economic growth. A study for the Small Business 
Administration found that Federal regulations cost the American 
economy $1.75 trillion dollars annually, which is equal to 
about 14% of the national income\1\ and ``nearly twice as much 
as all individual income taxes collected last year.''\2\ ``Had 
every U.S. household paid an equal share of the Federal 
regulatory burden, each would have owed $15,586 in 2008.''\3\ 
Another study found that ``[e]ach million-dollar increase in 
the regulatory budget costs the economy 420 private sector 
jobs.''\4\ To extrapolate, ``[a]s the size of the regulatory 
budget decreases, each lost regulator results in a gain of $6.2 
million in annual GDP, and each lost regulatory position is 
offset by 98 private sector jobs. Switching to the mindset of a 
budget increase, we can conclude that the annual cost of a new 
regulator is about $6.2 million in GDP and 98 private sector 
jobs. In 2009, U.S. per-capita GDP was roughly $46,000, meaning 
each regulator destroys the economic output equivalent of about 
134 persons and eliminates the jobs of nearly as many. These 
effects are sizeable.''\5\
---------------------------------------------------------------------------
    \1\See Nicole V. Crain & W. Mark Crain, The Impact of Regulatory 
Costs on Small Firms, Small Business Administration, 6 & 48 (Sept. 
2010), available at http://archive.sba.gov/advo/research/rs371tot.pdf 
(last accessed Apr. 23, 2012).
    \2\James L. Gattuso, Diane Katz & Stephen A. Keen, Red Tape Rising: 
Obama's Torrent of New Regulation, Heritage Foundation (Oct. 26, 2010), 
available at http://www.heritage.org/research/reports/2010/10/red-tape-
rising-obamas-torrent-of-new-regulation (last accessed Apr. 23, 2012).
    \3\Crain & Crain, note 1 supra, at iv.
    \4\T. Randolph Beard et al., Regulatory Expenditures, Economic 
Growth and Jobs: An Empirical Study, Phoenix Center for Advanced Legal 
& Economic Policy Studies, 5 (Apr. 2011), available at http://
www.phoenix-center.org/PolicyBulletin/PCPB28Final.pdf (last accessed 
Apr. 23, 2012).
    \5\Id. at 16.
---------------------------------------------------------------------------
    A recent Gallup Poll found that, among the 85% of U.S. 
small business owners who are not hiring, nearly half (46%) of 
these cited being ``worried about new government regulations'' 
as a reason they are not hiring.\6\ A New York Times poll 
conducted in October 2011 found that ``half of the public 
favors reducing or repealing regulations on businesses in the 
United States.''\7\ And 63% of respondents to a poll conducted 
for the National Federation of Independent Businesses said 
``rules issued over the last 5 years have done more to hurt 
than to help small businesses.''\8\
---------------------------------------------------------------------------
    \6\See Dennis Jacobe, ``Health Costs, Gov't Regulations Curb Small 
Business Hiring,'' Gallup (Feb. 15, 2012), available at http://
www.gallup.com/poll/152654/Health-Costs-Gov-Regulations-Curb-Small-
Business-Hiring.aspx (last accessed Apr. 23, 2012).
    \7\Jeff Zeleny & Megan Thee-Brenan, ``New Poll Finds a Deep 
Distrust of Government,'' New York Times, Oct. 25, 2011, available at 
http://www.nytimes.com/2011/10/26/us/politics/poll-finds-anxiety-on-
the-economy-fuels-volatility-in-the-2012-race.html (last accessed Apr. 
23, 2012).
    \8\See ``Survey: Majority of Americans Support Reforms to Federal 
Regulatory Process,'' NFIB, Feb. 21, 2012, available at http://
www.sensibleregulations.org/wp-content/uploads/2012/02/Final-Final-
Final-SBSR-Poll-Press-release-0221.pdf (last accessed Apr. 23, 2012).
---------------------------------------------------------------------------
    President Clinton, for example, recognizes that over-
regulation is inimical to job creation, and has urged the 
Federal Government to grant states waivers from environmental 
regulations for construction projects.\9\ President Obama 
rhetorically seconded this viewpoint in a Wall Street Journal 
op-ed: ``Sometimes, those rules have gotten out of balance, 
placing unreasonable burdens on business--burdens that have 
stifled innovation and have had a chilling effect on growth and 
jobs.''\10\ On August 31, 2011, President Obama asked several 
cabinet secretaries each to identify three ``high-impact, job-
creating infrastructure projects that can be expedited through 
outstanding review and permitting processes.''\11\ The 
President described this as ``a common-sense step to speed job 
creation in the near term while increasing our competitiveness 
and strengthening the economy in the long term.''\12\ On 
October 11, 2011, in the interest of job creation and economic 
recovery the President announced 14 projects for expedited 
environmental review and permitting.\13\ The President has 
directed agencies to ``consider how best to promote 
retrospective analysis of [economically significant] rules that 
may be outmoded, ineffective, insufficient, or excessively 
burdensome, and to modify, streamline, expand, or repeal them. 
. . .''\14\ President Obama also urged independent agencies to 
``consider how best to promote'' the same regulatory 
review.\15\ Speaking to a joint session of Congress on 
September 8, 2011, President Obama said, ``We should have no 
more regulation than the health, safety and security of the 
American people require. Every rule should meet that common-
sense test.''
---------------------------------------------------------------------------
    \9\Bill Clinton, It's Still the Economy, Stupid, Newsweek, June 19, 
2011, available at http://www.thedailybeast.com/newsweek/2011/06/19/it-
s-still-the-economy-stupid.html (last accessed Apr. 23, 2012).
    \10\Barack Obama, ``Toward a 21st Century Regulatory System,'' Wall 
Street Journal, 
Jan. 18, 2011, available at http://online.wsj.com/article/
SB10001424052748703396604576088272112103698.html (last accessed Apr. 
23, 2012).
    \11\Press Release, ``White House Announces Steps to Expedite High 
Impact Infrastructure Projects to Create Jobs,'' Aug. 31, 2011, 
available at http://www.whitehouse.gov/the-press-office/2011/08/31/
white-house-announces-steps-expedite-high-impact-infrastructure-
projects (last accessed Apr. 23, 2012).
    \12\Id.
    \13\Press Release, ``Obama Administration Announces Selection of 14 
Infrastructure Projects to be Expedited Through Permitting and 
Environmental Review Process,'' Oct. 11, 2011, available at http://
www.whitehouse.gov/the-press-office/2011/10/11/obama-administration-
announces-selection-14-infrastructure-projects-be-e (last accessed Apr. 
23, 2012).
    \14\See Exec. Order 13563, Sec. 6(a) (Jan. 18, 2011).
    \15\See Exec. Order 13579, Sec. 2(a) (July 11, 2011).
---------------------------------------------------------------------------

             B. REGULATORY COSTS ARE INCREASING UNDER THE 
                          OBAMA ADMINISTRATION

    The national unemployment rate has not been below 6.0% 
since July 2008--but under the Obama Administration, the cost 
of regulations is increasing and the fear that yet another 
regulatory wave is swelling continues to stifle economic 
recovery. The need for regulatory restraint is apparent from 
the fact that agencies presently are issuing more of the 
regulations that are most costly to job creators.
    President Obama's Fall 2011 Unified Agenda of Regulatory 
and Deregulatory Activity lists 133 economically significant 
regulations in the proposed or final stage of the rulemaking 
process (5 more are in the pre-rule stage).\16\ By comparison, 
the Fall 2003 Unified Agenda--issued in the third year of the 
first term of the Bush Administration--listed 62 such 
economically significant regulations.\17\ ``In the past decade, 
the number of economically significant rules in the agenda has 
increased by more than 137 percent, rising from 56 in spring 
2001 to 133 in fall 2011.''\18\ These 133 rules each represent 
at least $100 million in annual economic effects. This is 
consistent with the Obama Administration's tactic of bypassing 
Congress and taking unilateral Executive action to advance its 
agenda.\19\
---------------------------------------------------------------------------
    \16\See James L. Gattuso & Diane Katz, ``Red Tape Rising: Obama-Era 
Regulation at the Three-Year Mark,'' Heritage Foundation (Mar. 13, 
2012), at 5, Chart 2, available 
at http://www.heritage.org/research/reports/2012/03/red-tape-rising-
obama-era-regulation-at-the-three-year-mark (last accessed Apr. 23, 
2012).
    \17\See id.
    \18\Id. at 6.
    \19\See, e.g., Peter Baker, ``Obama Making Plans to Use Executive 
Power,'' New York Times, Feb. 12, 2010 (Dan Pfeiffer: ``In 2010, 
executive actions will also play a key role in advancing the 
agenda.''); David Nakamura & Felicia Sonmez, ``Obama appoints Richard 
Cordray to head consumer watchdog bureau,'' Washington Post, Jan. 4, 
2012 (President Obama: ``When Congress refuses to act and as a result 
hurts our economy and puts people at risk, then I have an obligation as 
president to do what I can without them.'').
---------------------------------------------------------------------------
    The regulatory burden on the American economy undeniably 
increased between 2001 and 2009. The Heritage Foundation 
estimates that President Bush added approximately $60 billion 
in annual regulatory costs over 8 years.\20\ But in just 3 
years, President Obama adopted 106 major rules that impose on 
the private sector nearly $11 billion in one-time 
implementation costs and $46 billion in additional annual 
regulatory costs. By comparison, in his first 3 years President 
Bush adopted 28 major rules that impose $8.1 billion in 
additional annual private sector costs. In 2011, the largest 
portion of these 106 major rules was made to implement Dodd-
Frank. The most expensive were from the EPA, which issued five 
major rules costing more than $4 billion annually.\21\
---------------------------------------------------------------------------
    \20\See James L. Gattuso, Obama's Red Tape: Tsunami or Ripple?, 
Heritage Foundation (Nov. 8, 2011), available at http://
www.heritage.org/Research/Reports/2011/11/Obamas-Regulations-Red-Tape-
Tsunami-or-Ripple (last accessed Apr. 23, 2012).
    \21\See Gattuso & Katz, note 16 supra, at 3.
---------------------------------------------------------------------------
    The threat of even more significant regulations, to 
implement the Patient Protection and Affordable Care Act\22\ 
and the Dodd-Frank Wall Street Reform and Consumer Protection 
Act\23\, is another impediment to economic recovery. The 
President's signature health care law, for example, ``provides 
for the creation of nearly 160 boards, bureaus, bureaucracies, 
and commissions. . . . Overall, the Federal Government is 
expected to issue roughly 10,000 pages of new regulations to 
govern the implementation of the new law.''\24\ And ``the Dodd-
Frank Act is the most farreaching financial regulatory 
undertaking since the 1930's, authorizing or requiring agencies 
to enact 447 new rules and complete 63 reports and 59 
studies.''\25\ Agencies already have missed more than two-
thirds (69.8%) of Dodd-Frank's rulemaking deadlines, and more 
than one-third of the rules required by the Act have not even 
been proposed yet.\26\ Consequently, ``uncertainty reigns and 
nearly $2 trillion in cash sits in corporate coffers.''\27\
---------------------------------------------------------------------------
    \22\111 P.L. 148 (Mar. 23, 2010).
    \23\111 P.L. 203 (July 21, 2010).
    \24\ObamaCare: A Budget-Busting, Job-Killing Health Care Law, Jan. 
6, 2011, at 7-8, available at http://www.speaker.gov/UploadedFiles/
ObamaCareReport.pdf (last accessed Apr. 23, 2012).
    \25\Michael J. Ryan, Jr., U.S. Capital Markets Competitiveness: The 
Unfinished Agenda, Summer 2011, at 3, available at https://
www.uschamber.com/sites/default/files/reports/
1107_UnfinishedAgenda_WEB.pdf (last accessed Apr. 23, 2012).
    \26\Davis Polk LLP, ``Dodd-Frank Progress Report,'' Apr. 2012, 
available at http://www.davispolk.com/Dodd-Frank-Rulemaking-Progress-
Report/(last accessed Apr. 24, 2012).
    \27\George P. Shultz, et al., ``Principles for Economic Revival,'' 
Wall Street Journal, Sept. 16, 2010, available at http://
www.hoover.org/news/daily-report/48571 (last accessed Apr. 23, 2012).
---------------------------------------------------------------------------

                C. THE NEED FOR A REGULATORY MORATORIUM

    A September 16, 2010, op-ed by a group of Hoover 
Institution economists recommended a general regulatory freeze 
as part of a strategy for economic recovery:

        [E]nact a moratorium on all new regulations for the 
        next 3 years, with an exception for national security 
        and public safety. Going forward, regulations should be 
        transparent and simple, pass rigorous cost-benefit 
        tests, and rely to a maximum extent on market-based 
        incentives instead of command and control. Direct and 
        indirect cost estimates of regulations and subsidies 
        should be published before new regulations are put into 
        law.\28\
---------------------------------------------------------------------------
    \28\Id.

Dr. Allan Meltzer, a co-author of the op-ed, separately called 
for ``a 5-year moratorium on new regulation except for national 
security.''\29\ Wayne Crews, Vice President for Policy and 
Director of Technology Studies at the Competitive Enterprise 
Institute, has endorsed ``a year-long moratorium on 
`significant' rules, typically defined as those expected to 
cost $100 million annually.''\30\ Analyzing the above-cited 
poll results, Gallup's Chief Economist Dennis Jacobe, Ph.D., 
observed that ``lawmakers could place a moratorium on new 
regulations for some period of time. In turn, this might 
provide the extra push needed to get small-business owners to 
decide to hire the employees they actually need and get the 
economy growing at a pace the average American can recognize as 
an economic recovery.''\31\
---------------------------------------------------------------------------
    \29\``Get a Job!,'' Reason, Nov. 11, 2011, available at http://
reason.com/archives/2011/10/18/get-a-job/singlepage (last accessed Apr. 
23, 2012).
    \30\``Time Out for Federal Regulation,'' Forbes Blog, Oct. 13, 
2011, available at http://www.forbes.com/sites/waynecrews/2011/10/03/
time-out-for-federal-regulation/(last accessed Apr. 23, 2012).
    \31\Jacobe, note 6 supra.
---------------------------------------------------------------------------

                  D. LEGISLATIVE HISTORY OF H.R. 4078

    On February 27, 2012, the Committee on the Judiciary's 
Subcommittee on Courts, Commercial and Administrative Law held 
a hearing on the Freeze Act.\32\ At this hearing, the 
Subcommittee received testimony from three witnesses: 
Professors Allan H. Meltzer and John B. Taylor; and, Mr. Robert 
Weissman, President of Public Citizen, Inc. Professors Meltzer 
and Taylor testified in support of the Bill. In his testimony, 
Professor Meltzer explained that economic recovery and growth 
are stunted because ``investors and producers are uncertain 
about regulation and taxation.''\33\ According to Professor 
Meltzer, the Bill would prioritize employment and recovery by 
giving job creators greater confidence about future regulatory 
events.\34\ Professor Taylor testified that the economy has 
recovered at a much slower pace than it did from the recession 
of the early 1980's ``due to poor economic policy, including, 
among other things, a large increase in both the number of 
significant regulations and the regulatory uncertainty related 
to new legislation,'' such as Dodd-Frank.\35\ In Professor 
Taylor's view, this approach is based upon the misperception 
that the financial crisis and recession were caused by 
inadequate regulatory authority.\36\ Mr. Weissman testified 
against the Bill. Although he described the current 
unemployment rate as ``scandalously'' and ``shamefully'' 
high,\37\ Mr. Weissman testified that ``excessive regulation is 
neither the cause of the jobs crisis nor a meaningful 
impediment to job creation''; a lack of regulation contributed 
to the financial crisis and economic recession; ``regulatory 
protections make our country stronger, safer and more just''; 
and, the Bill could have the unintended consequence of blocking 
desirable regulations.\38\
---------------------------------------------------------------------------
    \32\Regulatory Freeze for Jobs Act of 2012: Hearing before the 
Subcomm. on Courts, Commercial and Administrative Law of the H. Comm. 
on the Judiciary, 112th Cong. (Feb. 27, 2012).
    \33\Id. at 15.
    \34\See id. at 16.
    \35\Id. at 25.
    \36\Ibid.
    \37\Id. at 30, 31.
    \38\Id. at 30, 34-37, 37 and 41-43.
---------------------------------------------------------------------------
    In addition to the Freeze Act, several regulatory 
moratorium bills have been introduced in the 112th Congress. 
Senator Johnson's (R-WI) bill, S. 1438, would prohibit any 
Federal agency from enacting a new significant regulation, as 
defined by President Clinton in Executive Order 12866, until 
the national unemployment rate is at or below 7.7% (it was 7.8% 
when President Obama took office). S. 1438 allows the President 
to waive the freeze and issue a new significant regulation ``on 
the basis of national security or a national emergency,'' or 
with the consent of Congress. On September 12, 2011, Mr. Ribble 
introduced the House companion, H.R. 2898, to Senator Johnson's 
bill. Other Members sponsoring regulatory freeze bills are: Mr. 
Young (H.R. 213 and H.R. 3181); Mr. Ribble (H.R. 1281 and H.R. 
2898); Mr. Carter (H.R. 1235); Mr. Rogers (H.R. 3518); Mr. 
Hanna (H.R. 3257); and, Mr. Griffin (H.R. 3194). H.R. 3400, the 
``Jobs Through Growth Act,'' contains a regulatory moratorium 
section under Title II. The Freeze Act utilizes concepts and 
language from these bills.
    In the 104th Congress, the House passed the Regulatory 
Transition Act of 1995 (``RTA''). In brief, the RTA would have 
put a moratorium on all rules--not just certain significant 
rules, as the Freeze Act does--until the earlier of either 
December 31, 1995, or a law was enacted requiring agencies to 
perform cost-benefit and risk-assessment analysis on all new 
regulations. The RTA excepted rules ``necessary because of an 
imminent threat to health or safety or other emergency'' or to 
enforce civil rights laws, and also did not cover rules related 
to the military, foreign affairs, international trade, agency 
administration, the IRS, the Federal Reserve or FDIC, or to any 
agency action repealing, narrowing or streamlining a rule. 
Unlike the Freeze Act, the RTA did not allow for judicial 
review. After passing the House with bipartisan support, the 
RTA did not advance out of the Committee on Governmental 
Affairs in the Senate.

                                Hearings

    On Monday, February 27, 2012, the Committee on the 
Judiciary's Subcommittee on Courts, Commercial and 
Administrative Law held a hearing on H.R. 4078. Testimony was 
received from Professor John B. Taylor, George P. Shultz Senior 
Fellow in Economics at the Hoover Institution and the Mary and 
Robert Raymond Professor of Economics at Stanford University; 
Professor Allan H. Meltzer, Distinguished Visiting Fellow at 
the Hoover Institution and the Allan H. Meltzer University 
Professor of Political Economy at the Tepper School of 
Business, Carnegie Mellon University; and, Mr. Robert Weissman, 
President of Public Citizen, Inc. Without objection at the 
hearing, Mr. Coble entered into the record a letter from the 
U.S. Chamber of Commerce endorsing the Bill; Mr. Cohen 
submitted for the record a letter from the Coalition for 
Sensible Safeguards in opposition to the Bill.

                        Committee Consideration

    On March 20, 2012, the Committee on the Judiciary met in 
open session and ordered the bill H.R. 4078 favorably reported, 
with an amendment, by a vote of 15 to 13, a quorum being 
present.

                            Committee Votes

    By unanimous consent, an amendment in the nature of a 
substitute offered by Mr. Griffin was considered the base text 
for purposes of markup. In compliance with clause 3(b) of rule 
XIII of the Rules of the House of Representatives, the 
Committee advises that the following rollcall votes occurred 
during the Committee's consideration of H.R. 4078.
    1. Amendment #1, offered by Mr. Conyers, to amend the 
definition of ``significant regulatory action'' to exclude any 
rule or guidance intended to protect the privacy of Americans. 
Not agreed to by a vote of 12 to 17.

                             ROLLCALL NO. 1
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................                X
Mr. Sensenbrenner, Jr........................                X
Mr. Coble....................................                X
Mr. Gallegly.................................                X
Mr. Goodlatte................................                X
Mr. Lungren..................................                X
Mr. Chabot...................................                X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................                X
Mr. King.....................................                X
Mr. Franks...................................
Mr. Gohmert..................................                X
Mr. Jordan...................................                X
Mr. Poe......................................
Mr. Chaffetz.................................                X
Mr. Griffin..................................                X
Mr. Marino...................................
Mr. Gowdy....................................                X
Mr. Ross.....................................                X
Ms. Adams....................................                X
Mr. Quayle...................................                X
Mr. Amodei...................................

Mr. Conyers, Jr., Ranking Member.............       X
Mr. Berman...................................
Mr. Nadler...................................       X
Mr. Scott....................................       X
Mr. Watt.....................................       X
Ms. Lofgren..................................       X
Ms. Jackson Lee..............................
Ms. Waters...................................       X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................       X
Mr. Quigley..................................       X
Ms. Chu......................................       X
Mr. Deutch...................................       X
Ms. Sanchez..................................       X
Mr. Polis....................................       X
                                              --------------------------
    Total....................................      12       17
------------------------------------------------------------------------

    2. Amendment #2, offered by Mr. Nadler, to amend the 
definition of ``significant regulatory action'' to exclude 
nuclear reactor safety standards. Not agreed to by a vote of 13 
to 17.

                             ROLLCALL NO. 2
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................                X
Mr. Sensenbrenner, Jr........................                X
Mr. Coble....................................                X
Mr. Gallegly.................................                X
Mr. Goodlatte................................
Mr. Lungren..................................                X
Mr. Chabot...................................                X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................                X
Mr. King.....................................                X
Mr. Franks...................................                X
Mr. Gohmert..................................                X
Mr. Jordan...................................                X
Mr. Poe......................................
Mr. Chaffetz.................................
Mr. Griffin..................................                X
Mr. Marino...................................
Mr. Gowdy....................................                X
Mr. Ross.....................................                X
Ms. Adams....................................                X
Mr. Quayle...................................                X
Mr. Amodei...................................                X

Mr. Conyers, Jr., Ranking Member.............       X
Mr. Berman...................................
Mr. Nadler...................................       X
Mr. Scott....................................       X
Mr. Watt.....................................       X
Ms. Lofgren..................................       X
Ms. Jackson Lee..............................       X
Ms. Waters...................................       X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................       X
Mr. Quigley..................................       X
Ms. Chu......................................       X
Mr. Deutch...................................       X
Ms. Sanchez..................................       X
Mr. Polis....................................       X
                                              --------------------------
    Total....................................      13       17
------------------------------------------------------------------------

    3. Amendment #5, offered by Ms. Jackson Lee, to amend the 
definition of ``significant regulatory action'' to exclude a 
rule or guidance issued by the Secretary of Homeland Security. 
Not agreed to by a vote of 12 to 15.

                             ROLLCALL NO. 3
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................                X
Mr. Sensenbrenner, Jr........................                X
Mr. Coble....................................                X
Mr. Gallegly.................................                X
Mr. Goodlatte................................
Mr. Lungren..................................                X
Mr. Chabot...................................                X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................                X
Mr. King.....................................                X
Mr. Franks...................................                X
Mr. Gohmert..................................                X
Mr. Jordan...................................
Mr. Poe......................................
Mr. Chaffetz.................................
Mr. Griffin..................................                X
Mr. Marino...................................
Mr. Gowdy....................................
Mr. Ross.....................................                X
Ms. Adams....................................                X
Mr. Quayle...................................                X
Mr. Amodei...................................                X

Mr. Conyers, Jr., Ranking Member.............       X
Mr. Berman...................................
Mr. Nadler...................................       X
Mr. Scott....................................       X
Mr. Watt.....................................       X
Ms. Lofgren..................................       X
Ms. Jackson Lee..............................       X
Ms. Waters...................................       X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................       X
Mr. Quigley..................................
Ms. Chu......................................       X
Mr. Deutch...................................       X
Ms. Sanchez..................................       X
Mr. Polis....................................       X
                                              --------------------------
    Total....................................      12       15
------------------------------------------------------------------------

    4. Amendment #3, offered by Ms. Jackson Lee, to amend the 
definition of ``significant regulatory action'' to exclude a 
rule or guidance made under the Dodd-Frank Wall Street Reform 
and Consumer Protection Act. Not agreed to by a vote of 11 to 
14.

                             ROLLCALL NO. 4
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................                X
Mr. Sensenbrenner, Jr........................                X
Mr. Coble....................................                X
Mr. Gallegly.................................                X
Mr. Goodlatte................................
Mr. Lungren..................................                X
Mr. Chabot...................................                X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................                X
Mr. King.....................................                X
Mr. Franks...................................
Mr. Gohmert..................................                X
Mr. Jordan...................................
Mr. Poe......................................
Mr. Chaffetz.................................
Mr. Griffin..................................                X
Mr. Marino...................................
Mr. Gowdy....................................                X
Mr. Ross.....................................
Ms. Adams....................................                X
Mr. Quayle...................................                X
Mr. Amodei...................................                X

Mr. Conyers, Jr., Ranking Member.............       X
Mr. Berman...................................
Mr. Nadler...................................       X
Mr. Scott....................................       X
Mr. Watt.....................................       X
Ms. Lofgren..................................
Ms. Jackson Lee..............................       X
Ms. Waters...................................       X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................       X
Mr. Quigley..................................
Ms. Chu......................................       X
Mr. Deutch...................................       X
Ms. Sanchez..................................       X
Mr. Polis....................................       X
                                              --------------------------
    Total....................................      11       14
------------------------------------------------------------------------

    5. Amendment in the Nature of a Substitute, offered by Mr. 
Griffin. Agreed to by a vote of 13 to 12.

                             ROLLCALL NO. 5
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................       X
Mr. Sensenbrenner, Jr........................
Mr. Coble....................................       X
Mr. Gallegly.................................       X
Mr. Goodlatte................................
Mr. Lungren..................................       X
Mr. Chabot...................................       X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................       X
Mr. King.....................................       X
Mr. Franks...................................       X
Mr. Gohmert..................................       X
Mr. Jordan...................................
Mr. Poe......................................
Mr. Chaffetz.................................
Mr. Griffin..................................       X
Mr. Marino...................................
Mr. Gowdy....................................
Mr. Ross.....................................
Ms. Adams....................................       X
Mr. Quayle...................................       X
Mr. Amodei...................................       X

Mr. Conyers, Jr., Ranking Member.............                X
Mr. Berman...................................
Mr. Nadler...................................                X
Mr. Scott....................................                X
Mr. Watt.....................................                X
Ms. Lofgren..................................                X
Ms. Jackson Lee..............................                X
Ms. Waters...................................                X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................                X
Mr. Quigley..................................
Ms. Chu......................................                X
Mr. Deutch...................................                X
Ms. Sanchez..................................                X
Mr. Polis....................................                X
                                              --------------------------
    Total....................................      13       12
------------------------------------------------------------------------

    6. Motion to report H.R. 4078, as amended, favorably to the 
House. Agreed to by a vote of 15 to 13.

                             ROLLCALL NO. 6
------------------------------------------------------------------------
                                                 Ayes     Nays   Present
------------------------------------------------------------------------
Mr. Smith, Chairman..........................       X
Mr. Sensenbrenner, Jr........................
Mr. Coble....................................       X
Mr. Gallegly.................................       X
Mr. Goodlatte................................
Mr. Lungren..................................       X
Mr. Chabot...................................       X
Mr. Issa.....................................
Mr. Pence....................................
Mr. Forbes...................................       X
Mr. King.....................................       X
Mr. Franks...................................       X
Mr. Gohmert..................................       X
Mr. Jordan...................................
Mr. Poe......................................
Mr. Chaffetz.................................
Mr. Griffin..................................       X
Mr. Marino...................................
Mr. Gowdy....................................       X
Mr. Ross.....................................       X
Ms. Adams....................................       X
Mr. Quayle...................................       X
Mr. Amodei...................................       X

Mr. Conyers, Jr., Ranking Member.............                X
Mr. Berman...................................
Mr. Nadler...................................                X
Mr. Scott....................................                X
Mr. Watt.....................................                X
Ms. Lofgren..................................                X
Ms. Jackson Lee..............................                X
Ms. Waters...................................                X
Mr. Cohen....................................
Mr. Johnson, Jr..............................
Mr. Pierluisi................................                X
Mr. Quigley..................................                X
Ms. Chu......................................                X
Mr. Deutch...................................                X
Ms. Sanchez..................................                X
Mr. Polis....................................                X
                                              --------------------------
    Total....................................      15       13
------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 4078, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 20, 2012.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4078, the 
``Regulatory Freeze for Jobs Act of 2012.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah Anders, 
who can be reached at 226-9010.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




           H.R. 4078--Regulatory Freeze for Jobs Act of 2012.

    As ordered reported by the House Committee on the Judiciary on 
                            March 20, 2012.




                                SUMMARY

    H.R. 4078 would prohibit Federal agencies from taking most 
significant regulatory actions until the unemployment rate 
falls to 6 percent or less. The legislation would affect many 
regulatory actions that vary greatly in nature and scope. CBO 
and the staff of the Joint Committee on Taxation (JCT) cannot 
determine the budgetary effects of delaying significant 
regulatory actions, but we expect that enacting H.R. 4078 would 
have effects on both direct spending and revenues. Pay-as-you-
go procedures apply because enacting the legislation would 
affect direct spending and revenues.
    CBO expects that implementing H.R. 4078 also could have a 
significant impact on spending subject to appropriation, 
although we cannot determine the magnitude of that effect.
    CBO expects that H.R. 4078 would impose no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

Background
    H.R. 4078 would prohibit agencies from taking significant 
regulatory actions until the average of monthly unemployment 
rates for any calendar quarter is 6 percent or less. H.R. 4078 
would allow exemptions for certain significant regulatory 
actions if the President determines via an executive order that 
the action is necessary for one of four reasons: (1) to respond 
to an imminent threat to health or safety, (2) to enforce 
criminal laws, (3) to protect national security, or (4) to 
implement an international trade agreement.
    Further, under the bill, the Congress would have to 
expeditiously consider and act on any additional waivers the 
President requests for significant regulatory actions that do 
not meet one of the four criteria listed above. If an agency 
were to pursue a significant regulatory action in violation of 
H.R. 4078, any party adversely affected by that action would be 
entitled to judicial review.
    H.R. 4078 defines a significant regulatory action as any 
Federal regulatory action that is likely to result in a rule or 
guidance that may:

         LHave an annual cost to the economy of $100 
        million or more or adversely affect in a material way 
        the economy, a sector of the economy, productivity, 
        competition, jobs, the environment, public health or 
        safety, small entities, or State, local, or tribal 
        governments or communities;

         LCreate a serious inconsistency or otherwise 
        interfere with an action taken or planned by another 
        agency;

         LMaterially alter the budgetary impact of 
        entitlements, grants, user fees, or loan programs or 
        the rights and obligations of recipients thereof; or

         LRaise novel legal or policy issues.

    The term significant regulatory action was originally 
defined in 1993 by Executive Order 12866, and is used to 
determine whether a regulatory action is subject to regulatory 
review by the Office of Information and Regulatory Affairs 
(OIRA).\1\ H.R. 4078 largely uses the same definition 
established by that executive order, but expands the scope to 
include guidance as well as rulemaking, and also to include 
independent regulatory agencies.\2\
---------------------------------------------------------------------------
    \1\See http://www.reginfo.gov/public/jsp/Utilities/EO_12866.pdf, 
pg. 4.
    \2\In addition, the definition of significant regulatory action in 
Executive Order 12866 applies to regulatory actions that have an annual 
effect on the economy of $100 million or more, whereas H.R. 4078 
applies to regulatory actions that have an annual cost to the economy 
of $100 million or more. However, a regulatory action that saves $100 
million or more would likely still be classified as a significant 
regulatory action under H.R. 4078 because such actions are likely to 
fall under the other clauses of the bill's definition as described 
above.
---------------------------------------------------------------------------
    Looking to recent regulatory actions as a way to estimate 
the number of future regulatory actions that would be affected 
by H.R. 4078 is uncertain because agencies can change course 
following the enactment of the bill. However, historical data 
shows that OIRA reviewed 740 significant regulatory actions in 
2011 and 657, on average, over the past five calendar years.\3\ 
Examples of those regulatory actions in 2011 include: required 
warnings for cigarette packages and advertisements, Medicare 
payment rates for inpatient psychiatric facilities, and 
national emission standards for hazardous air pollutants from 
industrial, commercial and institutional boilers.
---------------------------------------------------------------------------
    \3\See http://www.reginfo.gov/public/do/
eoCountsSearchInit?action=init. The number of significant regulatory 
actions under H.R. 4078 in a given year may exceed the number reviewed 
by OIRA because, unlike Executive Order 12866, H.R. 4078 applies to 
guidance and independent regulatory agencies.
---------------------------------------------------------------------------
    H.R. 4078 would delay significant regulatory actions until 
the average of monthly unemployment rates for any quarter is 
6.0 percent or lower. Under CBO's most recent economic 
forecast, the unemployment rate is expected to remain elevated 
for at least the next few years; in those projections the 
unemployment rate would remain above 6.0 percent until late 
2016.\4\ However, many developments could cause economic 
outcomes to differ substantially, in one direction or the 
other. For example, the economy could grow more rapidly--or 
more slowly--with a consequent acceleration (or reduction) in 
the pace of employment. Furthermore, changes in fiscal policy 
that diverge from the path assumed in CBO's baseline could have 
a significant impact on economic growth and, by extension, the 
unemployment rate.
---------------------------------------------------------------------------
    \4\See Congressional Budget Office, The Budget and Economic 
Outlook: Fiscal Years 2012 to 2022 (January 2012), Appendix E.
---------------------------------------------------------------------------
Impact on Direct Spending
    The budgetary consequences of preventing significant 
regulatory action also would vary tremendously because the 
budgetary impact of different rules varies considerably. For 
example, of the three rules mentioned above, only one--Medicare 
payment rates for inpatient psychiatric facilities--has a 
significant Federal budgetary impact.
    Delaying or preventing some significant regulatory actions 
would result in costs to the Federal Government, while delaying 
or preventing others would result in savings. On net, CBO 
estimates that enacting H.R. 4078 would have a significant 
effect on direct spending, but we cannot determine the 
magnitude or sign of those changes. Short-term effects would be 
driven by: (1) preventing annual updates to payment schedules 
for certain Medicare services and other routine revisions to 
aspects of selected government programs, (2) preventing payment 
rate reductions scheduled to take place under the Medicare 
physician fee schedule, and (3) altering the implementation of 
new Federal programs with substantial budget effects.
    Routine Updates to Government Programs. Many routine 
significant regulatory actions are health-related and in 
particular pertain to Medicare. Some examples include rules 
that establish annual updates to payment rates for services 
provided by hospitals, physicians, and other Medicare 
providers. Enacting H.R. 4078 would freeze payment structures 
for those providers at current levels. Similarly, payment rates 
(such as the annual benefit amount for each individual) under 
some other Federal programs may also be temporarily frozen 
under the bill. CBO cannot estimate the net impact of all such 
changes.
    Many programs, like Social Security, make annual 
adjustments in the benefits that are paid, often referred to as 
a cost-of-living adjustment. The new amounts are published in 
the Federal register, but do not rise to the level of 
significant regulatory action. Thus, under the bill, CBO 
expects that these types of programs would continue to operate 
as they normally do, though agencies would not be able to make 
significant changes to the program while the moratorium was in 
effect.
    Delay Implementation of Legislation. Enacting H.R. 4078 may 
also affect the implementation of new laws. For example, 
additional rules and guidance related to the implementation of 
the Affordable Care Act are expected in coming months. Many of 
these anticipated regulatory actions are consequential for 
health insurance exchanges, which are to become operational in 
2014 under current law. Delaying those regulatory actions could 
delay implementation of health insurance exchanges, which would 
in turn result in significant savings to the Federal budget, 
relative to spending expected under current law.
    This bill also could delay the implementation of new 
initiatives aimed at making more electromagnetic spectrum 
available for wireless services. As required by title VI of the 
Middle Class Tax Relief and Job Creation Act of 2012, the 
Federal Communications Commission (FCC) is developing proposed 
rules for what are known as ``incentive auctions,'' for private 
firms to voluntarily relinquish some or all of their existing 
spectrum rights in exchange for a payment from the FCC. That 
spectrum would then be available for new licensed uses. 
Provisions in that act regarding the use of spectrum by Federal 
agencies and the development of a wireless network for public 
safety users are being implemented by the Department of 
Commerce. A delay in the implementation of those programs would 
increase net direct spending (by reducing expected auction 
receipts) by several billion dollars over the 2013N2022 period, 
relative to current law.
Impact on Revenues
    Enacting H.R. 4078 also would affect revenues, and JCT 
expects that delaying significant regulatory actions of the 
Internal Revenue Service could reduce collections of revenues 
in some cases and increase collections in other cases. JCT 
cannot determine the sign or magnitude of the possible effects 
on revenues.
    Enacting H.R. 4078 would also directly affect revenues 
through the operations of the Federal Reserve, which remits its 
net earnings to the Treasury; those remittances are classified 
as revenues in the Federal budget. H.R. 4078 would prevent the 
Federal Reserve from writing rules and regulations to implement 
enacted legislation or to change any such rules and regulations 
currently in place if the rules or regulations would be 
considered significant regulatory action. The bill also would 
limit the ability of the Federal Reserve to conduct monetary 
policy because some parameters, such as the discount rate and 
the interest rate paid on reserves, are specified in 
regulations. However, H.R. 4078 probably would have no effect 
on the Federal Reserve's purchases and sales of securities. 
Preventing some rules and regulations from going into effect 
could reduce Federal Reserve remittances in some cases and 
increase remittances in other cases. CBO cannot determine the 
sign or magnitude of the possible effects on revenues.
Impact on Spending Subject to Appropriation
    H.R. 4078 also would affect programs for which spending is 
subject to the annual appropriations process. However, CBO 
cannot determine the magnitude of that effect. For example, if 
the Environmental Protection Agency were prohibited from 
issuing final rules while the unemployment rate exceeds 6 
percent, there could be reductions in spending for the agency, 
subject to appropriation action. A second example involves 
annual calculations made by the Department of Housing and Urban 
Development (HUD) of the fair-market rents that it uses to 
determine rental subsidies for low-income individuals. We 
expect that the bill would prohibit those calculations from 
being made and implemented, which would prevent the rental 
subsidy from adjusting for changes in market conditions. Any 
increase in rents would be paid for by the tenant and not by 
HUD and if tenants were unable to pay the increased rent, some 
landlords would likely leave the program.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. Pay-as-you-go procedures apply to 
H.R. 4078 because enacting the legislation would affect direct 
spending and revenues. CBO and JCT cannot determine the sign or 
magnitude of those effects.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    CBO expects that H.R. 4078 would impose no 
intergovernmental or private-sector mandates as defined in 
UMRA. By delaying significant regulatory actions, the bill 
could affect public or private entities in a number of ways, 
including slowing reimbursements and eliminating or changing 
regulatory requirements. While the costs and savings tied to 
those individual effects could be significant, CBO has no basis 
for estimating either the overall direction or magnitude of 
those effects on public or private entities because of 
uncertainty about the nature and number of regulations 
affected.

                         ESTIMATE PREPARED BY:

    Federal Costs: Sarah Anders
Impact on State, Local, and Tribal Governments: Elizabeth Cove 
    Delisle
Impact on the Private Sector: Paige Piper/Bach

                         ESTIMATE APPROVED BY:

    Holly Harvey
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
4078, will help create jobs by putting a moratorium on 
unnecessary significant regulatory actions until the 
unemployment rate stabilizes at or below 6.0 percent.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 4078 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Section 1: Short Title. This section designates the Bill as 
the ``Regulatory Freeze for Jobs Act of 2012.''
    Section 2: Definitions. This section defines the terms 
``agency'' and ``rule'' per the Administrative Procedure Act, 5 
U.S.C. Sec. 551; ``regulatory action'' per Executive Order 
12866, but not including a regulatory action that repeals an 
existing rule; ``significant regulatory action'' per Executive 
Order 12866, except that the bill only covers a regulatory 
action with ``costs to the economy of $100 million or more,'' 
while Executive Order 12866 speaks to ``effects on the economy 
of $100 million or more''; and, ``small entity'' per the 
Regulatory Flexibility Act of 1980, 5 U.S.C. Sec. 601(6).
    Section 3: Significant Regulatory Actions. Together, 
Sections 3(a)-(b) prohibit agencies from taking any significant 
regulatory action until the Secretary of Labor certifies to the 
Director of the Office of Management and Budget that the 
average national monthly unemployment rate for the last quarter 
is at or below 6.0%.
    Section 4: Waivers. Section 4(a) states that an agency may 
take a significant regulatory action during the moratorium 
period only pursuant to either Section 4(b) or Section 4(c). 
Using the same waiver criteria as H.R. 10, the REINS Act, 
Section 4(b) allows the President to waive Section 3 by an 
Executive Order certifying that the significant regulatory 
action is necessary because of an imminent threat to health or 
safety or other emergency; for the enforcement of criminal 
laws; for national security; or, was issued to implement an 
international trade agreement. Section 4(c) allows the 
President to submit to Congress a written request for a waiver 
to take a significant regulatory action during the moratorium 
period when the significant regulatory action is ``necessary to 
protect the public health, safety and welfare'' but is not 
eligible for a Presidential waiver under Section 4(b).
    Section 5: Judicial Review. This section authorizes 
judicial review for any person aggrieved by a regulatory action 
taken in violation of the Act. Section 5(c) allows a court to 
forgo enjoining a significant regulatory action taken in 
violation of the Act if the court finds by a preponderance of 
the evidence that the regulation is required to protect against 
an imminent and serious threat to the national security of the 
United States. Section 5(d) allows small businesses to collect 
reasonable attorney's fees in some cases; Section 5(f) draws 
upon the definition of ``small business'' given by the Equal 
Access to Justice Act, 24 U.S.C. Sec. 2412(d)(2)(B)(ii). 
Section 5(e) requires suit to be brought within 1 year, or 
within 90 days for an agency enforcement action (unless another 
law imposes a statute of limitations shorter than 1 year).

                            Dissenting Views

                              INTRODUCTION

    H.R. 4078, the ``Regulatory Freeze for Jobs Act of 2012,'' 
is the fifth time during this Congress that the Judiciary 
Committee has marked up legislation aimed at hobbling the 
ability of Federal agencies to promulgate regulations.\1\ This 
latest measure is based on the false assumption that 
regulations inhibit job creation. With only limited exceptions, 
H.R. 4078, as amended, would prohibit an agency from taking any 
``significant regulatory action''\2\ until the average of 
monthly unemployment rates for any quarter is six percent or 
less. The Congressional Budget Office (CBO) observes that the 
unemployment rate may remain above this threshold ``until late 
2016.''\3\
---------------------------------------------------------------------------
    \1\See H.R. 10, the Regulations From the Executive in Need of 
Scrutiny Act of 2011, 112th Cong. (2011); H.R. 527, Regulatory 
Flexibility Improvements Act of 2011, 112th Cong. (2011); H.R. 3010, 
the Regulatory Accountability Act of 2011, 112th Cong. (2011); H.R. 
3862, the Sunshine for Regulatory Decrees and Settlements Act, 112th 
Cong. (2012).
    \2\The bill defines ``significant regulatory action'' as any 
regulatory action that is likely to result in a rule or guidance that 
may have an annual cost to the economy of $100 million or more or have 
a material adverse effect on the economy, as explained in greater 
detail infra.
    \3\Congressional Budget Office Cost Estimate, H.R. 4078, the 
Regulatory Freeze for Jobs Act of 2012, at 3 (Apr. 20, 2012), available 
at http://www.cbo.gov/sites/default/files/cbofiles/attachments/
hr4078.pdf [hereinafter CBO Cost Estimate]. The CBO notes, however, 
that ``many developments could cause economic outcomes to differ 
substantially, in one direction or the other.'' Id.
---------------------------------------------------------------------------
    H.R. 4078 is bad policy because it: (1) is based on the 
false premise that regulations and job creation are linked; (2) 
is a blunt instrument that needlessly jeopardizes public health 
and safety; (3) ignores the benefits of regulation; (4) fails 
to account for the extensive procedural requirements of the 
rulemaking process; (5) is unworkable and will create more, not 
less, business uncertainty; (6) may undermine job creation by 
increasing the risk of regulatory failure; and (7) may present 
separation of powers concerns. As the Administrator of the 
Office of Information and Regulatory Affairs has observed, a 
rulemaking moratorium would be ``like a nuclear bomb in the 
sense that it would prevent regulations that . . . cost very 
little and have very significant economic or public health 
benefits.''\4\ Accordingly, H.R. 4078 is opposed by the 
Coalition for Sensible Safeguards, a coalition of more than 70 
organizations, including the AFL-CIO, BlueGreen Alliance, 
Center for Food Safety, Consumer Federation of America, 
Consumers Union, Friends of the Earth, League of Conservation 
Voters, National Women's Law Center, Natural Resources Defense 
Council, OMB Watch, Public Citizen, Service Employees 
International Union, Union of Concerned Scientists, and the 
UAW.\5\ Noting the legislation's ``overly broad scope and 
impact,'' the Coalition warns that H.R. 4078 would ``halt new 
standards to protect workplace safety, the environment, food 
safety and consumer product safety.''\6\ For these reasons, and 
those described below, we respectfully dissent and urge our 
colleagues to reject this seriously flawed bill.
---------------------------------------------------------------------------
    \4\How a Broken Process Leads To Flawed Regulations: Hearing Before 
the H. Comm. on Oversight and Government Reform, 112th Cong. 181 (2011) 
(testimony of Cass Sunstein, Administrator, Office of Information and 
Regulatory Affairs, Office of Management and Budget).
    \5\Letter from Katherine McFate, President and CEO, OMB Watch, & 
Robert Weissman, President, Public Citizen, Co-Chairs of the Coalition 
for Sensible Safeguards, to Rep. Lamar Smith (R-TX), Chair, and Rep. 
John Conyers, Jr. (D-MI), Ranking Member, House Committee on the 
Judiciary (Mar. 16, 2012), available at http://
www.sensiblesafeguards.org/assets/documents/css-letter-re-4078.pdf.
    \6\Id. at 2.
---------------------------------------------------------------------------

                       DESCRIPTION AND BACKGROUND

    H.R. 4078, as amended, would impose a moratorium on any 
regulatory action that is likely to result in a rule or 
guidance that may have an annual cost to the economy of $100 
million or more, or meets other specified criteria until the 
Bureau of Labor Statistics average of monthly unemployment 
rates for any quarter is six percent or less.
    Introduced by Rep. Tim Griffin (R-AR) on February 17, 2012, 
the bill was referred to the Committee on Oversight and 
Government Reform, and the Judiciary Committee. Currently, H.R. 
4078 has 17 cosponsors, all of whom are Republicans. On 
February 27, 2012, the Courts, Commercial and Administrative 
Law Subcommittee (Subcommittee) held a hearing on H.R. 4078.\7\ 
The Minority witness was Robert Weissman, President of Public 
Citizen. Mr. Weissman identified numerous flaws with the bill, 
including its highly limited exceptions. Noting that H.R. 4078 
was ``misguided'' and ``dangerous,'' he warned that the bill 
would effectively ``block for five years with almost no 
relevant exceptions the issuance of new health, safety, 
environmental, and financial protections.''\8\
---------------------------------------------------------------------------
    \7\Regulatory Freeze for Jobs Act of 2012: Hearing on H.R. 4078 
Before the Subcomm. on Courts, Commercial Admin. Law of the H. Comm. on 
the Judiciary, 112th Cong. (2012).
    \8\Id. at 28, 48 (testimony of Robert Weissman, President, Public 
Citizen).
---------------------------------------------------------------------------
    A section-by-section explanation of the reported version of 
the bill's principal provisions follows. Section 2 defines 
various terms used in the measure. First, it imports the 
definitions of ``agency'' and ``rule'' from the Administrative 
Procedure Act (APA).\9\ The APA defines ``agency'' as ``each 
authority of the Government of the United States, whether or 
not it is within or subject to review by another agency,'' with 
certain exceptions.\10\ Therefore, ``agency'' as used in this 
measure includes independent regulatory agencies, and not just 
the Executive Branch agencies subject to Presidential control. 
The APA defines ``rule'' as ``an agency statement of general or 
particular applicability and future effect designed to 
implement, interpret, or prescribe law or policy or describing 
the organization, procedure, or practice requirements of an 
agency.''\11\
---------------------------------------------------------------------------
    \9\5 U.S.C. Sec. Sec. 551-59, 701-06, 1305, 3105, 3344, 5372, 7521 
(2012).
    \10\5 U.S.C. Sec. 551(1) (2012).
    \11\5 U.S.C. Sec. 551(4) (2012).
---------------------------------------------------------------------------
    Second, section 2 defines ``regulatory action'' to mean 
``any substantive action by an agency that promulgates or is 
expected to lead to the promulgation of a final rule or 
regulation. . . .'' Such action includes various notices, such 
as notices of inquiry, advance notices of proposed rulemaking, 
and notices of proposed rulemaking. This definition is derived 
from President Clinton's Executive Order 12,866.\12\ Unlike 
this Executive Order, however, section 2 excepts any 
substantive action by an agency for repealing a rule.
---------------------------------------------------------------------------
    \12\Exec. Order No. 12,866, 58 Fed. Reg. 51735 (Oct. 4, 1993).
---------------------------------------------------------------------------
    Third, section 2 defines ``significant regulatory action'' 
broadly as any regulatory action that is likely to result in a 
rule or guidance that may have: (1) at least a $100 million 
cost to the economy; or (2) adversely affect in a material way 
the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, 
small entities, or state, local, or tribal governments or 
communities. ``Significant regulatory action'' also can include 
a rule or guidance that may: (1) create a serious inconsistency 
or interfere with another agency's action; (2) materially alter 
the budgetary impact of entitlements, grants, user fees, or 
loan programs or the rights and obligations of their 
recipients; or (3) raise novel legal or policy issues.
    Although this definition is largely derived from the 
definition of ``significant regulatory action'' contained in 
President Clinton's Executive Order 12866, it departs from that 
definition in several significant ways. First, the bill's 
definition is broader than its counterpart in the Executive 
Order in that it includes agency guidance and is not limited to 
rules. In addition, the Amendment's definition includes ``small 
entities,'' whereas the Executive Order does not. Further, the 
bill's definition with respect to ``novel legal or policy 
issues'' does not include the Executive Order's provision 
limiting these issues ``arising out of legal mandates, the 
President's priorities, or the principles'' set forth in the 
Executive Order. Finally, the bill's definition is narrower 
than the one in the Executive Order in that the $100 million 
threshold is limited to economic ``cost'' as opposed to 
economic ``effect.''
    Fourth, section 2 imports the definition of ``small 
entity'' contained in section 601(6) of the Regulatory 
Flexibility Act (RFA). The RFA defines ``small entity'' as a 
small business\13\, small organization\14\, or small 
governmental jurisdiction\15\.
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    \13\The RFA defines ``small business'' as having the same meaning 
as ``small business concern'' under section 3 of the Small Business Act 
unless an agency, after consultation with the Small Business 
Administration's Office of Advocacy, establishes a different 
definition. 5 U.S.C. Sec. 601(3) (2012). The Small Business Act defines 
``small business concern'' as ``one which is independently owned and 
operated and which is not dominant in its field of operation: Provided, 
That notwithstanding any other provision of law, an agricultural 
enterprise shall be deemed to be a small business concern if it 
(including its affiliates) has annual receipts not in excess of 
$750,000.'' Pub. L. No. 85-536.
    \14\The RFA defines ``small organization'' as ``any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field, unless an agency establishes, after opportunity 
for public comment, one or more definitions of such term which are 
appropriate to the activities of the agency and publishes such 
definition(s) in the Federal Register.'' 5 U.S.C. Sec. 601(4) (2012).
    \15\The RFA defines ``small governmental jurisdiction'' as 
governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than fifty 
thousand, unless an agency establishes, after opportunity for public 
comment, one or more definitions of such term which are appropriate to 
the activities of the agency and which are based on such factors as 
location in rural or sparsely populated areas or limited revenues due 
to the population of such jurisdiction, and publishes such 
definition(s) in the Federal Register.'' 5 U.S.C. Sec. 601(5) (2012).
---------------------------------------------------------------------------
    Section 3(a) of the bill provides that no agency may take 
any significant regulatory action until the Secretary of Labor 
submits a report required by subsection (b). Section 3(b) 
requires the Secretary of Labor to submit a report to the 
Office of Management and Budget whenever the Secretary 
determines that the Bureau of Labor Statistics average monthly 
unemployment rate for any quarter is equal to or less than six 
percent after the Amendment's enactment date.
    Section 4(a) provides that an agency may take a significant 
regulatory action only in accordance with subsection (b) or (c) 
of this measure. Subsection (b) provides that an agency may 
take a significant regulatory action if the President 
determines by executive order that such action is: (1) 
necessary because of an imminent threat to health or safety or 
other emergency; (2) necessary for the enforcement of criminal 
laws; (3) necessary for national security reasons; or (4) 
issued pursuant to any statute implementing an international 
trade agreement.
    With respect to any significant regulatory action not 
eligible for a Presidential waiver under subsection (b), 
subsection (c) provides that the President may submit a request 
to Congress for a waiver of this measure. The President's 
submission to Congress must: (1) identify the significant 
regulatory action and the scope of the requested waiver; (2) 
set forth all reasons why such action is necessary to protect 
the public health, safety, or welfare; and (3) explain why such 
action is ineligible for a Presidential waiver under subsection 
(b). The Amendment requires Congress to give ``expeditious 
consideration'' and to take appropriate legislative action with 
respect to such submission.
    Section 5(a) provides that any party adversely affected or 
aggrieved by a regulatory action taken in violation of this Act 
is entitled to judicial review. Additionally, any determination 
by the President or the Secretary of Labor is subject to 
judicial review. Section 5(b) provides that any court having 
jurisdiction to review a significant regulatory action for 
compliance with any other law has jurisdiction to consider 
claims under this measure.
    Section 5(c) requires a court to order corrective action by 
the agency, including remanding the significant regulatory 
action to the agency and enjoining the application or 
enforcement of such action, unless the court finds by a 
preponderance of the evidence that application or enforcement 
is required to protect against an imminent and serious threat 
to national security.
    Section 5(d) requires a court to award reasonable attorneys 
fees and costs to a ``substantially prevailing'' small business 
in connection with any civil action under this measure. A small 
business qualifies as ``substantially prevailing'' even if such 
entity failed to obtain a final judgment in its favor if the 
agency changes its position after the civil action is filed.
    Unless another provision of law requires filing suit in 
less than one year, section 5(e) permits a party to seek and 
obtain judicial review within one year following the date of 
the challenged agency action or or within 90 days after an 
enforcement action or notice thereof.
    Section 5(f) defines, for purposes of this section, a 
``small business'' that is different from how the term is 
defined in the RFA (and, by reference, in the rest of H.R. 
4078). As used in section 5 of the Amendment, ``small 
business'' means any business that employs no more than 500 
employees or has a net worth of less than $7 million on the 
date that a civil action is filed under this Act.

                        CONCERNS WITH H.R. 4078

  I. H.R. 4078 IS BASED ON THE FALSE PREMISE THAT REGULATIONS AND JOB 
                          CREATION ARE LINKED

    There is no credible evidence establishing that regulations 
have any substantive impact on job creation. Nonetheless, 
proponents of deregulatory measures such as H.R. 4078 wrongly 
and without any proof insist that regulations impose burdensome 
compliance costs on businesses and thereby stifle job creation. 
For instance, House Judiciary Committee Chairman Lamar Smith 
(R-TX) asserts:

          The American people urgently need jobs that only 
        economic growth can give. Standing in the way of growth 
        and job creation is a wall of Federal regulation.

                              *    *    *

          New regulatory burdens and uncertainty about the 
        economy have helped to keep trillions of dollars of 
        private sector capital on the sidelines. Companies 
        cannot safely invest if they cannot tell whether 
        tomorrow's regulations will make their investments 
        unprofitable.\16\
---------------------------------------------------------------------------
    \16\The Regulatory Accountability Act of 2011: Hearing on H.R. 3010 
Before the Subcomm. on Courts, Commercial and Admin. Law of the H. 
Comm. on the Judiciary, 112th Cong. (2011) [hereinafter H.R. 3010 
Hearing] (remarks of Rep. Lamar Smith (R-TX), Chair, H. Comm. on the 
Judiciary).

    The focus on a purported link between regulations and job 
creation is, in fact, a red herring. Bruce Bartlett, a senior 
policy analyst in the Reagan and George H.W. Bush 
Administrations, offers this explanation for why these 
arguments are fully embraced by conservatives as part of their 
---------------------------------------------------------------------------
deregulatory mantra:

          Republicans have a problem. People are increasingly 
        concerned about unemployment, but Republicans have 
        nothing to offer them. The G.O.P. opposes additional 
        government spending for jobs programs and, in fact, 
        favors big cuts in spending that would be likely to 
        lead to further layoffs at all levels of government. . 
        . .
          These constraints have led Republicans to embrace the 
        idea that government regulation is the principal factor 
        holding back employment. They assert that Barack Obama 
        has unleashed a tidal wave of new regulations, which 
        has created uncertainty among businesses and prevents 
        them from investing and hiring.
          No hard evidence is offered for this claim; it is 
        simply asserted as self-evident and repeated endlessly 
        throughout the conservative echo chamber.\17\
---------------------------------------------------------------------------
    \17\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and 
Jobs, N.Y. Times Economix, Oct. 4, 2011, available at http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/.

    The Majority's own witness clearly debunked the myth that 
regulations stymie job creation during his testimony at a 
legislative hearing held last year on an anti-regulatory bill 
authored by Chairman Smith. Christopher DeMuth, with the 
conservative think tank American Enterprise Institute, stated 
in his prepared testimony that the ``focus on jobs . . . can 
lead to confusion in regulatory debates'' and that ``the 
employment effects of regulation, while important, are 
indeterminate.''\18\ A recently released study supports Mr. 
Demuth's statement, finding that the effects of regulation are 
uncertain.\19\
---------------------------------------------------------------------------
    \18\H.R. 3010 Hearing (prepared statement of Christopher DeMuth, 
American Enterprise 
Institute); see also Jia Lynn Yang, Does Government Regulation Really 
Kill Jobs? Economists Say Overall Effect Minimal, Wash. Post, Nov. 13, 
2011, available at 
http://www.washingtonpost.com/business/economy/does-government-
regulation-really-kill-jobs-economists-say-overall-effect-minimal/2011/
10/19/gIQALRF5IN_story.html?hpid=z1 (``In 2010, 0.3 percent of the 
people who lost their jobs in layoffs were let go because of 
`government regulations/intervention.' By comparison, 25 percent were 
laid off because of a drop in business demand. . . . Economists who 
have studied the matter say that there is little evidence that 
regulations cause massive job loss in the economy, and that rolling 
them back would not lead to a boom in job creation.'').
    \19\See Regulation, Jobs, and Economic Growth: An Empirical 
Analysis, The George Washington University Regulatory Studies Center 
Working Paper, at 27 (Mar. 2012) (finding that the ``macroeconomic 
effects of regulation are uncertain'' and that the study's ``results 
reveal no impact'' when considering either the impact of regulations on 
the ``total economy or strictly the private sector''), available at 
http://regulatorystudies.gwu.edu/images/pdf/032212_
sinclair_vesey_reg_jobs_growth.pdf
---------------------------------------------------------------------------
    If anything, regulations can promote job growth and put 
Americans back to work. For instance, the BlueGreen Alliance, 
notes:

          Studies on the direct impact of regulations on job 
        growth have found that most regulations result in 
        modest job growth or have no effect, and economic 
        growth has consistently surged forward in concert with 
        these health and safety protections. The Clean Air Act 
        is a shining example, given that the economy has grown 
        204% and private sector job creation has expanded 86% 
        since its passage in 1970.\20\
---------------------------------------------------------------------------
    \20\Letter to Rep. Lamar Smith (R-TX), Chair, & Rep. John Conyers, 
Jr. (D-MI), Ranking Member, H. Committee on the Judiciary, from David 
A. Forster, Executive Director, BlueGreen Alliance, at 2 (Nov. 2, 2011) 
(on file with the H. Committee on the Judiciary, Democratic Staff).

    Also in reference to the Clean Air Act, the White House 
Office of Management and Budget (OMB) observed that 40 years of 
success with this measure has ``demonstrated that strong 
environmental protections and strong economic growth go hand in 
hand.''\21\ Similarly, the Natural Resources Defense Council, 
the United Auto Workers, and the National Wildlife Federation 
jointly issued a report finding that vehicle emissions 
standards and clean vehicle research, development and 
production are already responsible for 155,000 jobs at 504 
facilities in 43 states and the District of Columbia.\22\ 
According to the same report, 119,000 jobs have been created in 
this industry since 2009 alone.\23\
---------------------------------------------------------------------------
    \21\Executive Office of the President--Office of Management and 
Budget, Statement of Administration Policy on H.R. 2401, Transparency 
in Regulatory Analysis of Impacts on the Nation Act of 2011 (Sept. 21, 
2011).
    \22\Natural Resources Defense Council et al., Supplying Ingenuity: 
U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies (2011), 
available at http://www.nrdc.org/transportation/autosuppliers/files/
SupplierMappingReport.pdf
    \23\Id.
---------------------------------------------------------------------------
    In February 2012, The New York Times noted in an editorial 
that a pending rule under the Clean Air Act requiring power 
plants to reduce mercury and other toxic emissions by 90 
percent in the next five years, which was approved by the Obama 
Administration in December, would result in 45,000 temporary 
construction jobs over the next five years and possibly 8,000 
permanent jobs because of the upgrades required by the new 
rule.\24\ This job growth would be in addition to the rule's 
expected benefit of preventing 11,000 deaths from heart attacks 
and respiratory diseases like asthma.\25\
---------------------------------------------------------------------------
    \24\Editorial, The Job-Creating Mercury Rule, N.Y. Times, Feb. 22, 
2012, available at http://www.nytimes.com/2012/02/23/opinion/the-job-
creating-mercury-rule.html.
    \25\Id.
---------------------------------------------------------------------------
    Additionally, a report by Northeast States for Coordinated 
Air Use Management (NESCAUM) demonstrates a direct correlation 
between environmental regulations and job growth in the 
Northeast. It found that by enacting stricter fuel economy 
standards and pursuing cleaner forms of energy, more jobs would 
be created.\26\ Specifically, NESCAUM found that stricter fuel 
economy standards and regulations governing cleaner forms of 
energy would increase employment from 9,490 to 50,700 jobs; 
increase gross regional product, a measure of the states' 
economic output, by $2.1 billion to $4.9 billion; and increase 
household disposable income increases by $1 billion to $3.3 
billion.\27\
---------------------------------------------------------------------------
    \26\Northeast States for Coordinated Air Use Management (NESCAUM), 
Economic Analysis of a Program to Promote Clean Transportation Fuels in 
the Northeast/Mid-Atlantic Region (2011) (on file with Natural 
Resources Defense Council) available at http://switchboard.nrdc.org/
blogs/ngreene/CFS%20Economic%20Analysis%20Report%20INTERNAL.PDF
    \27\Id.
---------------------------------------------------------------------------
    H.R. 4078's proponents rely on an equally flawed corollary 
argument that regulatory uncertainty creates a disincentive for 
businesses to add jobs. Once again, Bruce Bartlett, the senior 
economic official from the Reagan and Bush Administrations, 
observed that:

          [R]egulatory uncertainty is a canard invented by 
        Republicans that allows them to use current economic 
        problems to pursue an agenda supported by the business 
        community year in and year out. In other words, it is a 
        simple case of political opportunism, not a serious 
        effort to deal with high unemployment.\28\
---------------------------------------------------------------------------
    \28\Bruce Bartlett, Op-Ed., Misrepresentations, Regulations and 
Jobs, N.Y. Times Economix Blog, Oct. 4, 2011, available at http://
economix.blogs.nytimes.com/2011/10/04/regulation-and-unemployment/
?scp=4&sq=bartlett&st=cse.

Likewise, Minority witness Professor Sidney Shapiro testified 
last year, ``All of the available evidence contradicts the 
claim that regulatory uncertainty is deterring business 
investment.''\29\ This may explain the findings of a July 2011 
Wall Street Journal survey of business economists, which found 
that the ``main reason U.S. companies are reluctant to step up 
hiring is scant demand, rather than uncertainty over government 
policies.''\30\ Not surprisingly, a September 2011 National 
Federation of Independent Business survey of its members found 
that ``poor sales''--not regulation--is the biggest 
problem.\31\ Indeed, the Main Street Alliance, a small business 
organization, observes:
---------------------------------------------------------------------------
    \29\H.R. 3010 Hearing (prepared statement of Prof. Sidney Shapiro, 
Wake Forest School of Law).
    \30\Phil Izzo, Dearth of Demand Seen Behind Weak Hiring, Wall St. 
J., July 18, 2011, available at http://online.wsj.com/article/
SB10001424052702303661904576452181063763332.html.
    \31\Press Release, Nat'l Federation of Independent Businesses, 
Small Business Confidence Takes Huge Hit: Optimism Index Now in Decline 
for Six Months Running (Sept. 13, 2011) (``Of those reporting negative 
sales trends, 45 percent blamed faltering sales, 5 percent higher labor 
costs, 15 percent higher materials costs, 3 percent insurance costs, 8 
percent lower selling prices and 10 percent higher taxes and regulatory 
costs.''), available at http://www.nfib.com/press-media/press-media-
item?cmsid=58190.

          In survey after survey and interview after interview, 
        Main Street small business owners confirm that what we 
        really need is more customers--more demand--not 
        deregulation. Policies that restore our customer base 
        are what we need now, not policies that shift more risk 
---------------------------------------------------------------------------
        and more costs onto us from big corporate actors.

                              *    *    *

          To create jobs and get our country on a path to a 
        strong economic future, what small businesses need is 
        customers--Americans with spending money in their 
        pockets--not watered down standards that give big 
        corporations free reign to cut corners, use their 
        market power at our expense, and force small businesses 
        to lay people off and close up shop.\32\
---------------------------------------------------------------------------
    \32\Letter to Rep. Lamar Smith (R-TX), Chair, & Rep. John Conyers, 
Jr. (D-MI), Ranking Member, H. Committee on the Judiciary, from Jim 
Houser, Co-Chair, The Main Street Alliance, et al., at 1-2 (Nov. 2, 
2011) (on file with the H. Committee on the Judiciary, Democratic 
Staff).

In sum, there is no credible evidence that regulations depress 
job creation.

  II. H.R. 4078'S REGULATORY MORATORIUM JEOPARDIZES PUBLIC HEALTH AND 
                                 SAFETY

A. The Bill Takes a Thoughtlessly Blunt Approach To Rulemaking
    In imposing a moratorium, H.R. 4078 does not distinguish 
between genuinely burdensome or duplicative regulations and 
those that ensure that the air we breathe, the automobiles we 
drive, the food we eat, or the planes on which we travel are 
safe. It is essentially a ``one-size-fits-all'' measure that 
jeopardizes the public health and safety of Americans as a 
result.
    Cass Sunstein, the Administrator of the Office of 
Information and Regulatory Affairs, addressed the ramifications 
of a regulatory moratorium during a hearing before the House 
Committee on Oversight and Government Reform last year. He 
warned:

          [A] moratorium would sweep up deregulatory measures 
        which we are pretty enthusiastic about expediting, 
        because they are regulatory actions. And . . . , and 
        this is an important point, a moratorium would not be a 
        scalpel or a machete. It would be more like a nuclear 
        bomb in the sense that it would prevent regulations 
        that, let's say, cost very little and have very 
        significant economic or public health benefits. So a 
        moratorium would have the disadvantage of defying what 
        every President since President Reagan has endorsed, 
        which is cost-benefit analysis.\33\
---------------------------------------------------------------------------
    \33\How a Broken Process Leads To Flawed Regulations: Hearing 
Before the H. Comm. on Oversight and Government Reform, 112th Cong. 181 
(2011) (testimony of Cass Sunstein, Administrator, Office of 
Information and Regulatory Affairs, Office of Management and Budget).

B. H.R. 4078's Exceptions Are Woefully Deficient
    Furthermore, the bill's limited exceptions to its 
moratorium fail to address our concerns. While section 4(b) of 
the bill permits the President to determine by Executive Order 
whether a regulation should be exempted from the moratorium, 
such exemptions are extremely narrow and would apply only if 
the regulation is: (1) necessary because of an imminent threat 
to health or safety or other emergency; (2) necessary for the 
enforcement of criminal laws; (3) necessary for national 
security reasons; or (4) issued pursuant to any statute 
implementing an international trade agreement. With respect to 
the requirement that threats to health or safety or other 
emergency be ``imminent'' before a regulation could qualify for 
the exception, the president of Public Citizen observed,

        Imminent threat means immediate, right now, something 
        that has to be done to prevent something that is 
        otherwise going to happen in a very near term with a 
        high degree of certainty. That is just why most 
        regulation takes place. Take the example of food 
        safety, we issue food safety rules usually because 
        there has just been an outbreak of some problem, but 
        not because we think it is about to happen again.
          You can go down the case of crib safety or auto 
        safety or environmental protection or preventing 
        another financial crisis, on and on, you go down the 
        list it will almost never meet the standard of an 
        imminent threat to health or safety or other 
        emergencies. I believe the proper interpretation of 
        this bill is that [there] will be a roughly 5-year 
        moratorium on all health, safety, environmental, 
        financial, et cetera, protections.\34\
---------------------------------------------------------------------------
    \34\Regulatory Freeze for Jobs Act of 2012: Hearing on H.R. 4078 
Before the Subcomm. on Courts, Commercial Admin. Law of the H. Comm. on 
the Judiciary, 112th Cong. 51 (2012) (testimony of Robert Weissman, 
President, Public Citizen).

    To illustrate the shortcomings of these exceptions, 
Democratic Committee Members offered a series of amendments 
specifically excepting various types of regulations. For 
example, Ranking Member John Conyers, Jr. (D-MI) offered an 
amendment that would have exempted any rule or guidance 
intended to protect the privacy of Americans.\35\ This 
amendment, however, failed by a vote of 12 to 17. Likewise, 
Representative Jerrold Nadler (D-NY) offered an amendment that 
would have exempted nuclear reactor safety standards from the 
bill's definition of ``significant regulatory action.'' That 
amendment failed by a vote of 13 to 17.\36\ Representative 
Sheila Jackson Lee (D-TX) offered an amendment that would have 
excepted a rule or guidance issued by the Secretary of Homeland 
Security from the bill. That amendment failed by a vote of 12 
to 15.
---------------------------------------------------------------------------
    \35\Unofficial Tr. of Markup of H.R. 4078, the Regulatory Freeze 
for Jobs Act of 2012, by the Comm. on the Judiciary, 112th Cong. 30 
(2012) [hereinafter Markup].
    \36\Id. at 70.
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C. H.R. 4078's Congressional Waiver Is Effectively Illusory
    Representative Griffin, the author of this legislation, 
offered an Amendment in the Nature of a Substitute at the 
Committee's markup that ostensibly sought to expand the bill's 
exception provisions.\37\ The Amendment authorizes the 
President, with respect to any significant regulatory action 
not eligible for a Presidential waiver, to submit a request to 
Congress to waive the moratorium. The President's submission to 
Congress must: (1) identify the significant regulatory action 
and the scope of the requested waiver; (2) set forth all 
reasons why such action is necessary to protect the public 
health, safety, or welfare; and (3) explain why such action is 
ineligible for a Presidential waiver under subsection (b). The 
Amendment requires Congress to give expeditious consideration 
and to take appropriate legislative action with respect to such 
submission, which as we all know, is not likely to occur.
---------------------------------------------------------------------------
    \37\Id. at 27.
---------------------------------------------------------------------------
    The benefits of this Amendment, however, are largely 
pyrrhic and effectively illusory. It provides no meaningful 
standards governing when Congress can or should grant a waiver 
and fails to provide for any expedited procedures for 
consideration of a Congressional waiver. Thus, left to languish 
in the regular legislative process, no Congressional waiver 
would ever realistically be granted in a timely manner.
    There are innumerable instances where noncontroversial 
bills were passed by one house of Congress only to die in the 
other house because of unrelated or political concerns. One 
need only consider the legislative history of the so-called 
``comma bill,'' which was passed by the House over the course 
of three Congresses before it became law.\38\ This measure, 
which made a purely technical correction to title 9 of the 
United States Code, was first introduced during the 105th 
Congress.\39\ The House passed it in 1997, but the Senate--on 
the last day of the Congress--passed the bill with a 
controversial and unrelated amendment. The following Congress, 
the bill was reintroduced in the House, but it was passed with 
a controversial amendment and, therefore, died in the 
Senate.\40\ Thereafter, the bill was again reintroduced in the 
107th Congress in 2001.\41\ Representative James F. 
Sensenbrenner, Jr. (R-WI), then-Chairman of the House Judiciary 
Committee, made the following plea:
---------------------------------------------------------------------------
    \38\See, e.g., Nancy Benac, Congressional Conundrum Leaves ``Comma 
Bill'' in Coma, Associated Press, Apr. 17, 2002, available at http://
news.google.com/
newspapers?nid=1696&dat=20020417&id=Ev4aAAAAIBAJ&sjid=IEgEAAAAIBAJ&pg=69
21,1940594
    \39\H.R. 2440, 105th Cong. (1997).
    \40\H.R. 916, 106th Cong. (1999).
    \41\H.R. 861, 107th Cong. (2001).

          Some may try to diminish the importance of this bill, 
        but one should never underestimate the importance of a 
        comma.
          To paraphrase the late Everett Dirksen, a comma here, 
        a comma there, and pretty soon you have got a full 
        sentence.
          Let us be honest with ourselves, when used properly, 
        a comma can be devastatingly effective. For those, 
        especially school children, who think that grammar and 
        punctuation do not matter and tune themselves out 
        during English class, today's action shows clearly that 
        it does.
          Thankfully, not every grammar mistake, not every 
        misplaced comma takes an act of Congress to correct, 
        but this particular section of the United States Code 
        does.
          This bill has been passed by each of the past two 
        Congresses, only to be held hostage by unrelated issues 
        in the other body.
          To my colleagues here and on the other side of the 
        Capitol who have previously loaded up this bill with 
        unrelated legislation, I say free the comma, and I urge 
        my colleagues to pass H.R. 861.\42\
---------------------------------------------------------------------------
    \42\147 Cong. Rec. H901 (daily ed. Mar. 14, 2001).

The legislation was finally enacted in 2002, five years after 
introduction.\43\ Likewise, any congressional waiver under H.R. 
4078 would be subject to the same political stalling and 
procedural hurdles.
---------------------------------------------------------------------------
    \43\Pub. L. 107-169 (2002).
---------------------------------------------------------------------------

           III. H.R. 4078 IGNORES THE BENEFITS OF REGULATIONS

    H.R. 4078 would impose a moratorium on a significant 
regulatory action, which it defines, in pertinent part, as a 
rule or guidance that may have an annual cost to the economy of 
$100 million or more.'' In addition to falsely claiming that 
regulations ``kill'' jobs, supporters of anti-regulatory 
measures such as H.R. 4078 contend that regulations impose 
burdensome costs on businesses. For example, in nearly every 
hearing before the House Judiciary Committe regarding 
regulatory issues this Congress,\44\ Majority witnesses have 
cited the same widely discredited study by economists Mark and 
Nicole Crain (Crain Study), which claims that Federal 
regulation imposes an annual cost of $1.75 trillion on 
business.\45\
---------------------------------------------------------------------------
    \44\See, e.g., Hearing on H.R. 3010; Formal Rulemaking and Judicial 
Review: Protecting Jobs and the Economy with Greater Regulatory 
Transparency and Accountability: Hearing Before the Subcomm. on Courts, 
Commercial and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 
(2011); Cost-Justifying Regulations: Protecting Jobs and the Economy by 
Presidential and Judicial Review of Costs and Benefits: Hearing Before 
the Subcomm. on Courts, Commercial and Admin. Law of the H. Comm. on 
the Judiciary, 112th Cong. (2011); Raising the Agencies' Grades--
Protecting the Economy, Assuring Regulatory Quality and Improving 
Assessments of Regulatory Need: Hearing Before the Subcomm. on Courts, 
Commercial and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 
(2011); The APA at 65--Is Reform Needed to Create Jobs, Promote 
Economic Growth, and Reduce Costs?: Hearing Before the Subcomm. on 
Courts, Commercial and Admin. Law of the H. Comm. on the Judiciary, 
112th Cong. (2011).
    \45\Nicole V. Crain & W. Mark Crain, The Impact of Regulatory Costs 
on Small Firms, Rep. No. SBAHQ-08-M-0466 (Sept. 2010), available at 
http://archive.sba.gov/advo/research/
    rs371tot.pdf.
---------------------------------------------------------------------------
    The Crain Study has been thoroughly and repeatedly 
criticized for exaggerating regulatory costs. For example, the 
Center for Progressive Reform (CPR) notes that the $1.75 
trillion cumulative burden cited by the study fails to account 
for any benefits of regulation.\46\ In addition, the study's 
methodology is seriously flawed with respect to how it 
calculated economic costs. The study, which relied on 
international public opinion polling by the World Bank on how 
friendly a particular country was to business interests, 
ignored actual data on costs imposed by Federal regulation in 
the United States.\47\
---------------------------------------------------------------------------
    \46\Sidney Shapiro et al., Setting the Record Straight: The Crain 
and Crain Report on Regulatory Costs, Center for Progressive Reform 
White Paper #1103 (Feb. 2011).
    \47\Id.
---------------------------------------------------------------------------
    CRS also conducted an extensive examination of the Crain 
Study and found much of its methodology to be flawed.\48\ 
Moreover, CRS noted that the authors of the Crain Study 
themselves acknowledged that their analysis was ```not meant to 
be a decision-making tool for lawmakers or Federal regulatory 
agencies to use in choosing the `right' level of regulation. In 
no place in any of the reports do we imply that our reports 
should be used for this purpose. (How could we recommend this 
use when we make no attempt to estimate the benefits?)'''\49\ 
CRS concluded that ``a valid, reasoned policy decision can only 
be made after considering information on both costs and 
benefits'' of regulation.\50\ The Economic Policy Institute 
reached a similar conclusion.\51\
---------------------------------------------------------------------------
    \48\Curtis W. Copeland, Analysis of an Estimate of the Total Costs 
of Federal Regulations, Congressional Research Service Report for 
Congress, R41763 (Apr. 6, 2011).
    \49\Id. at 26 (quoting an e-mail from Nicole and W. Mark Crain to 
te author of the CRS report).
    \50\Id. The Economic Policy Institute also issued a critique of the 
Crain study outlining additional concerns with the study's methodology 
and data. See John Irons & Andrew Green, Flaws Call for Rejecting Crain 
and Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not Worth 
Repeating, Economic Policy Institute, July 19, 2011, available at 
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
    \51\John Irons & Andrew Green, Flaws Call for Rejecting Crain and 
Crain Model: Cited $1.75 Trillion Cost of Regulations Is Not Worth 
Repeating, Economic Policy Institute, July 19, 2011, available at 
http://w3.epi-data.org/temp2011/IssueBrief308.pdf.
---------------------------------------------------------------------------
    OMB annually estimates the costs and benefits of 
regulations. Its Draft 2012 Report to Congress on Benefits and 
Costs of Federal Regulations finds that the net benefits of 
regulations through the third fiscal year of the Obama 
Administration exceed $91 billion, which is 25 times more than 
the net benefits during the first three years of the George W. 
Bush Administration.\52\ Similarly, the 2011 report concluded 
that for fiscal year 2010, Federal regulations cost between 
$6.5 billion and $12.5 billion, but generated between $18.8 
billion and $86.1 billion in benefits.\53\ According to OMB, 
the costs of regulations during the ten-year period from FY 
1999 through FY 2009 were between $43 billion and $55 billion, 
while their benefits ranged from $128 billion to $616 
billion.\54\ Therefore, even if one uses OMB's highest estimate 
of costs and its lowest estimate of benefits, the regulations 
issued over the past ten years have produced net benefits of 
$73 billion to our society. Such estimates were consistent 
across Democratic and Republican administrations.\55\ Given 
that the benefits of regulations consistently exceed the costs, 
the need for any legislation that would make the issuance of 
regulations more difficult or time consuming is certainly in 
question.
---------------------------------------------------------------------------
    \52\Office of Management and Budget, Draft 2012 Report to Congress 
on the Benefits and Costs of Federal Regulations and Unfunded Mandates 
on State, Local, and Tribal Entities 21, available at http://
www.whitehouse.gov/sites/default/files/omb/oira/
draft_2012_cost_benefit_
report.pdf.
    \53\Office of Management and Budget, 2011 Report to Congress on the 
Benefits and Costs of Federal Regulations and Unfunded Mandates on 
State, Local, and Tribal Entities 21, available at http://
www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/
2011_cba_report.pdf
    \54\See REINS Act--Promoting Jobs and Expanding Freedom by Reducing 
Needless Regulations: Hearing Before the Subcomm. on Courts, Commercial 
and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. (2011) 
(statement of Sally Katzen, former OIRA Administrator).
    \55\Id.
---------------------------------------------------------------------------
    The benefits of regulation are also apparent when viewed 
through the lens of prevention. For example, a 2011 
Environmental Protection Agency report found that the public 
health benefits of clean air regulations far outweigh the 
compliance cost to industry.\56\ The report concluded that 
restrictions on fine particle and ground-level ozone pollution 
mandated by the 1990 Clean Air Act amendments would prevent 
230,000 deaths and produce benefits of about $2 trillion by 
2020.\57\
---------------------------------------------------------------------------
    \56\Environmental Protection Agency, Benefits and Costs of the 
Clean Air Act, Second Prospective Study--1990 to 2020 (2011) available 
at http://www.epa.gov/air/sect812/prospective2.html
    \57\Id. See also Editorial, The Job-Creating Mercury Rule, N.Y. 
Times, Feb. 22, 2012, available at http://www.nytimes.com/2012/02/23/
opinion/the-job-creating-mercury-rule.html (noting that an estimated 
11,000 deaths will be prevented by pending mercury rule under the Clean 
Air Act).
---------------------------------------------------------------------------

  IV. H.R. 4078 FAILS TO ACCOUNT FOR THE ALREADY-EXTENSIVE RULEMAKING 
                                PROCESS

    As we have discussed over the course of a series of anti-
regulatory hearings during the past year,\58\ regulations are 
not promulgated in a vacuum. The Constitution provides that the 
government may not deprive anyone of life, liberty, or property 
without ``due process of law.''\59\ This constitutional mandate 
of fair procedure applies to the Federal regulatory rulemaking 
and adjudicatory processes, the impact of which can be 
extensive.
---------------------------------------------------------------------------
    \58\See, e.g., H.R. 3010 Hearing; Formal Rulemaking and Judicial 
Review: Protecting Jobs and the Economy with Greater Regulatory 
Transparency and Accountability: Hearing Before the Subcomm. on Courts, 
Commercial and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 
(2011) [hereinafter Formal Rulemaking Hearing]; Cost-Justifying 
Regulations: Protecting Jobs and the Economy by Presidential and 
Judicial Review of Costs and Benefits: Hearing Before the Subcomm. on 
Courts, Commercial and Admin. Law of the H. Comm. on the Judiciary, 
112th Cong. (2011); Raising the Agencies' Grades--Protecting the 
Economy, Assuring Regulatory Quality and Improving Assessments of 
Regulatory Need: Hearing Before the Subcomm. on Courts, Commercial and 
Admin. Law of the H. Comm. on the Judiciary, 112th Cong. (2011); The 
Regulations From the Executive in Need of Scrutiny Act of 2011: Hearing 
on H.R. 10 Before the Subcomm. on Courts, Commercial and Admin. Law of 
the H. Comm. on the Judiciary, 112th Cong. (2011); The APA at Six--Is 
Reform Needed to Create Jobs, Promote Economic Growth, and Reduce 
Costs?: Hearing Before the Subcomm. on Courts, Commercial and Admin. 
Law of the H. Comm. on the Judiciary, 112th Cong. (2011); Regulatory 
Flexibility Improvements Act of 2011''--Unleashing Small Businesses to 
Create Jobs: Hearing on H.R. 527 Before the Subcomm. on Courts, 
Commercial and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. 
(2011 The REINS Act--Promoting Jobs and Expanding Freedom by Reducing 
Needless Regulations: Hearing Before the Subcomm. on Courts, Commercial 
and Admin. Law of the H. Comm. on the Judiciary, 112th Cong. (2011).
    \59\U.S. Const. amend. XIV, Sec. 1.
---------------------------------------------------------------------------
    The APA, enacted in 1946, establishes the minimum 
rulemaking\60\ and formal adjudication requirements for all 
Federal agencies. The APA also sets forth standards for 
judicial review of final agency actions. While the APA sets 
minimum standards, many agency actions may involve procedures 
that depart from or go beyond APA requirements. As one academic 
noted, ``[T]he American administrative system, by evolution and 
design, is characterized by a considerable degree of 
informality, agency discretion and procedural 
flexibility.''\61\ The APA's baseline procedural requirements 
are designed to maintain a balance between this type of agency 
flexibility and the requirements of due process. As more than 
50 leading administrative law academics observed, ``The APA has 
served for 65 years as a kind of Constitution for 
administrative agencies and the affected public--flexible 
enough to accommodate the variety of agencies operating under 
it and the changes in modern life.''\62\
---------------------------------------------------------------------------
    \60\The APA defines ``rulemaking'' as the ``agency process for 
formulating, amending or repealing a rule.'' 5 U.S.C. Sec. 551(5) 
(2012). A ``rule,'' in turn, is defined as ``an agency statement of 
general or particular applicability and future effect designed to 
implement, interpret, or prescribe law or policy or describing the 
organization, procedure, or practice requirements of an agency.'' 5 
U.S.C. Sec. 551(4) (2012).
    \61\Gary J. Edles, Lessons from the Administrative Conference of 
the United States, 2 Eur. Pub. L. 571, 572 (1996).
    \62\Letter from 52 administrative law academics to House Judiciary 
Committee Chair Lamar Smith and House Judiciary Committee Ranking 
Member John Conyers, Jr., at 1 (Oct. 24, 2011) (on file with the H. 
Committee on the Judiciary, Democratic Staff).
---------------------------------------------------------------------------
    Agencies follow the informal notice-and-comment process for 
promulgating rules as outlined in section 553 of the APA in 
most instances. Notice-and-comment rulemaking, while flexible, 
is also subject to many procedural and analytical requirements, 
including those imposed by statutes other than the APA.\63\ In 
fact, the current process may already be too``ossified.'' As 
Harvard Law School Professor Matthew C. Stephenson testified 
last year:
---------------------------------------------------------------------------
    \63\See, e.g., Regulatory Flexibility Act, 5 U.S.C. Sec. Sec. 603, 
604 (2012) (requiring assessments of regulatory impact of proposed and 
final rules on small entities); Unfunded Mandates Reform Act, 2 U.S.C. 
Sec. Sec. 1531-1538 (2012) (requiring assessments of regulatory impact 
on state and local government entities of proposed and final rules).

          It turns out, however, that the term `informal 
        rulemaking' is misleading. Nominally `informal' notice-
        and-comment rulemaking is in fact heavily 
        proceduralized, to the point where many commentators 
        describe this process as a kind of ``paper hearing.'' 
        Agencies must provide a fairly detailed and specific 
        proposal, or set of alternatives, in their initial 
        published notice of proposed rulemaking. This notice 
        must also disclose the scientific or evidentiary basis 
        of the proposal, so that the agency's evidence can be 
        subjected to critical scrutiny. Any interested party 
        (indeed, any member of the public) may submit written 
        comments on the agency's proposal. These submissions 
        may criticize the agency's analysis and evidence, and 
        may also suggest alternatives. Under Executive Order 
        12866, executive branch agencies must also submit 
        proposed rules, along with a detailed cost-benefit 
        analysis, to the Office of Management and Budget for 
        review. If the agency decides to promulgate a final 
        rule, it must provide a detailed written explanation 
        that includes responses to all material comments 
        submitted by interested parties. If an agency fails to 
        respond adequately to criticisms or proposed 
        alternatives submitted by commenters, the agency risks 
        judicial reversal. This creates powerful incentives for 
        agencies to take comments seriously and to provide 
        detailed responses. Furthermore, if the agency decides 
        to change its policy substantially in response to 
        comments, it may have to initiate a new round of 
        notice-and-comment so that all parties have a fair 
        opportunity to critique the new proposal. . . . Indeed, 
        the more common criticism of notice-and-comment 
        rulemaking is that it is too demanding of agencies. . . 
        .\64\
---------------------------------------------------------------------------
    \64\Formal Rulemaking Hearing (statement of Matthew C. Stephenson, 
Harvard Law School) (citations omitted); see also H.R. 3010 Hearing 
(statement of Sidney Shapiro, Wake Forest Law School) (``The regulatory 
system is already too ossified, and H.R. 3010 would only exacerbate 
this problem.'').

Additionally, agencies may choose or may be required by statute 
to use other rulemaking procedures, including formal 
rulemaking, negotiated rulemaking, and hybrid or expedited 
approaches, which generally tend to have greater procedural 
requirements and be subject to stricter judicial review than 
section 553 notice-and-comment rulemaking.
    Admittedly, the regulatory process in the United States is 
not beyond perfection. President John F. Kennedy, in 1961, 
observed that ``the steady expansion of the Federal 
administrative process during the past several years has been 
attended by increasing concern over the efficiency and adequacy 
of department and agency procedures.''\65\ With Federal 
agencies issuing ``more than 4,000 final rules each year on 
topics ranging from the timing of bridge openings to the 
permissible levels of arsenic and other contaminants in 
drinking water,''\66\ the current Federal regulatory process 
faces some significant challenges.
---------------------------------------------------------------------------
    \65\Exec. Order No. 10,934, 26 Fed. Reg. 3233 (Apr. 13, 1961).
    \66\Curtis W. Copeland, Electronic Rulemaking in the Federal 
Government, Congressional Research Service Report for Congress, 
RL34210, at 2 (May 16, 2008).
---------------------------------------------------------------------------
    Nonetheless, opponents of regulation have made unsupported 
assertions that the rulemaking process failed properly to 
account for compliance costs and industry input, which were the 
subject of a series of hearings before the Subcommittee and 
full Committee last year. Testimony and other evidence 
presented by Minority witnesses at these hearings, however, 
clearly demonstrated that these assertions were completely 
unfounded.

           V. H.R. 4078 IS UNWORKABLE AND WILL CREATE MORE, 
                         NOT LESS, UNCERTAINTY

A. H.R. 4078 Is Inherently Unworkable
    Besides being based on false premises, H.R. 4078 also would 
impose an unworkable process on agencies. Section 3 of the bill 
specifically provides that the moratorium applies for ``any 
quarter'' where the Bureau of Labor Statistics average of 
monthly unemployment rates is equal to or less than six 
percent. In light of the fact that unemployment rates can 
fluctuate from quarter to quarter, this means that agencies 
would have to stop and restart the promulgation of a rulemaking 
depending on the average unemployment rate, including the 
period for public notice and comment. For example, the average 
unemployment rate in 2003 was below six percent for the first 
quarter, but then exceeded that threshold in the second and 
third quarters.\67\ It then was below six percent in the last 
quarter of 2003.\68\ Moreover, the bill is silent as to whether 
the agency would have to re-notice or simply suspend the 
comment period. Either way, the moratorium as conceived in H.R. 
4078 would be totally unpredictable and unnecessarily 
disruptive to the enforcement of Federal policy.
---------------------------------------------------------------------------
    \67\U.S. Dep't of Labor, Bureau of Labor Statistics--Labor Force 
Statistics from the Current Population Survey (data extracted Feb. 21, 
2012; 4:15 pm), available at http://data.bls.gov/timeseries/
LNS14000000.
    \68\Id.
---------------------------------------------------------------------------
B. H.R. 4078 Promotes More, Not Less Uncertainty
    Given the intermittent nature of the bill's regulatory 
moratorium, as explained in the preceding section, the clear 
import of H.R. 4078 will be to create uncertainty. Businesses 
would have no ability to predict when a rule would ever be 
finalized, especially given the impact of events that could 
occur, but over which the Federal Government has no control, 
e.g., a worldwide fuel shortage, an international virus 
outbreak, or other far-ranging crisis. In addition, the period 
during which a person may seek judicial review of a challenged 
agency action under the bill can be in excess of one year,\69\ 
which put businesses in the unfortunate position of having to 
expend funds to comply with a rule that is later successfully 
set aside under this bill.
---------------------------------------------------------------------------
    \69\Section 5(f) provides that the judicial review period is one 
year from the date of the challenged agency action or 90 days after an 
enforcement action.
---------------------------------------------------------------------------
    To illustrate the bill's deleterious effects, 
Representative Mel Watt (D-NC), during the Committee markup of 
H.R. 4078, discussed how H.R. 4078 would affect regulations 
required to be promulgated pursuant to the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (Dodd Frank).\70\ He 
explained:
---------------------------------------------------------------------------
    \70\Pub. L. No. 111-203 (2010).

          My concern with this bill is that it adds to the 
        level of uncertainty because what most of my 
        constituents are saying is we need to get on with 
        adopting and finalizing the regulations under Dodd-
        Frank so that we know what the rules of the road are 
        going forward.
          And it is that uncertainty that is causing us not to 
        be able to plan and not to be able to adapt our 
        business plans to what is necessary going forward so 
        that we don't have another economic, financial services 
        meltdown like we had in the past. We know that we need 
        to make adjustments, but we need to have the final 
        regulations in place to be able to do that.
          The problem I have with this bill is that it does not 
        add to the level of certainty that businesses have 
        because, apparently, whatever those regulations are in 
        process under Dodd-Frank will be put on hold now, 
        waiting for the unemployment rate to drop below 6 
        percent. If it drops below 6 percent for a little 
        while, maybe they can gear up again and start writing 
        the regulations again and publishing them.
          But if it happens to go back over 6 percent during 
        that period . . . then they have to suspend again, 
        apparently, under this bill. So we may get to a degree 
        of certainty. . . .\71\
---------------------------------------------------------------------------
    \71\Markup at 39-40.

    Representative Sheila Jackson Lee (D-TX) thereafter offered 
an amendment that would have excluded any rule or guidance 
issued pursuant to the Dodd-Frank Act. This amendment, however, 
failed by a vote of 11 to 14.
C. H.R. 4078 Does Not Specify Who Will Make the Determination That a 
        Regulatory Action is ``Significant''
    While section 2 of H.R. 4078 defines ``significant 
regulatory action,'' the bill fails to identify who would 
determine whether a rule or guidance is covered by such 
definition and how such determination would be made. 
Ostensibly, the bill appears to lift this definition largely 
from Executive Order 12866, but it does so in a vacuum. For 
example, the Executive Order specifies a protocol requiring 
agencies to submit to OIRA a ``list of its planned regulatory 
actions, including those which the agency believes are 
significant regulatory actions within the meaning of this 
Executive order.''\72\ Under the Executive Order, OIRA is given 
supervisory authority over agencies to ensure their compliance. 
In contrast, H.R. 4078 is silent as to who would make this 
determination and whether such determination is subject to 
challenge.
---------------------------------------------------------------------------
    \72\Exec. Order No. 12,866, 58 Fed. Reg. 51735, 51741 (Oct. 4, 
1993) (emphasis supplied).
---------------------------------------------------------------------------
D. H.R. 4078's Definition of Significant Regulatory Action Is Vague
    As noted above, H.R. 4078's definition of ``significant 
regulatory action'' is largely derived from Executive Order 
12866. By taking the language of the Executive Order out of 
context, however, H.R. 4078 fails to clarify how this 
definition should be interpreted and applied. For example, when 
would a proposed rule ``adversely affect in a material way the 
economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, small entities, 
or State, local, or tribal governments or communities''? What 
degree of materiality is contemplated by this provision?
E. H.R. 4078 Mandates Unreasonable Standards for the Award of Fees and 
        Costs
    Section 5(e) of the bill requires a court to award 
reasonable attorneys fees and costs to a ``substantially 
prevailing'' business in any civil action arising under this 
legislation. This provision is problematic for two reasons. 
First, it conflicts with most Federal fee-shifting provisions 
that give the courts discretion with regard to such awards. Of 
those statutes that mandate the award of fees and costs, 
usually there is a requirement that the court find the action 
of the litigant was in bad faith, frivolous, or otherwise 
lacking in merit. H.R. 4078, however, imposes a strict 
liability mandate, even if the agency acted in good faith. 
Second, the bill requires such awards be made even if the small 
business fails to obtain a final judgment where the agency 
changes its position after the civil action is filed. The 
measure, however, fails to require any causal link between the 
agency's action and the small business's lawsuit. Agencies may 
change their position for any number of reasons, none of which 
may have any connection to a pending civil action, such as 
newly discovered evidence, changed circumstances, or reordered 
priorities pursuant to a new Administration's assumption of 
power. This provision would result in unjust enrichment for 
private parties at the expense of the American taxpayer.
F. Not Even the Congressional Budget Office Can Determine the Budgetary 
        Impacts of H.R. 4078
    CBO, in its analysis of the budgetary impact of H.R. 4078, 
discussed a series of problematic aspects presented by the 
measure. While the bill ``could have a significant impact on 
spending subject to appropriation,'' it could not determine the 
``magnitude of that effect.''\73\ Part of the difficulty in 
analyzing the impact of H.R. 4078, CBO observed, is the fact 
that it would delay significant regulatory actions until the 
average of monthly unemployment rates for any quarter is six 
percent or lower. As CBO explained:
---------------------------------------------------------------------------
    \73\CBO Cost Estimate at 1.

        Under CBO's most recent economic forecast, the 
        unemployment rate is expected to remain elevated for at 
        least the next few years; in those projections the 
        unemployment rate would remain above 6.0 percent until 
        late 2016. However, many developments could cause 
        economic outcomes to differ substantially, in one 
        direction or the other. For example, the economy could 
        grow more rapidly--or more slowly--with a consequent 
        acceleration (or reduction) in the pace of employment. 
        Furthermore, changes in fiscal policy that diverge from 
        the path assumed in CBO's baseline could have a 
        significant impact on economic growth and, by 
        extension, the unemployment rate.\74\
---------------------------------------------------------------------------
    \74\Id. at 3.

    With respect to direct spending, CBO cited examples of how 
the legislation could adversely impact Medicare service 
providers and American taxpayers. CBO explained that the bill, 
if enacted, would freeze annual updates to payment schedules 
applicable to hospitals, physicians, and other Medicare service 
providers. On the other hand, H.R. 4078 would also prevent 
payment rate reductions scheduled to take place under the 
Medicare physician fee schedule.\75\
---------------------------------------------------------------------------
    \75\Id.
---------------------------------------------------------------------------
    In addition, the CBO observed that the bill may affect the 
implementation of new laws, including the Affordable Care Act, 
and other initiatives. As to the latter, CBO cited title VI of 
the Middle Class Tax Relief and Job Creation Act of 2012, which 
authorizes the Federal Communications Commission to develop 
proposed rules for incentive auctions. By delaying these 
initiatives, H.R. 4078 could reduce expected auction receipts 
``by several billion dollars over the 2013-2022 period, 
relative to current law.''\76\
---------------------------------------------------------------------------
    \76\Id. at 4.
---------------------------------------------------------------------------
    Finally, the CBO noted that the legislation, by ``delaying 
significant regulatory actions of the Internal Revenue 
Service,'' could reduce collections of revenues in some cases 
and increase the collections in other cases.\77\ The bill 
``would also directly affect revenues through the operations of 
the Federal Reserve'' by limiting its ability ``to conduct 
monetary policy because some parameters, such as the discount 
rate and the interest paid on reserves, are specified in 
regulations.''\78\
---------------------------------------------------------------------------
    \77\Id.
    \78\Id.
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VI. H.R. 4078 May Undermine Job Creation By Increasing the Risk of 
        Regulatory Failure
    During recessionary times, unemployment rates increase. 
Major financial distress in American history has often been 
triggered by a regulatory failure of some type. The Great 
Depression largely resulted from the failure of severely 
uncapitalized banks that engaged in imprudent lending practices 
and other speculative activities. The current Great Recession 
was largely fueled by an unregulated home mortgage industry and 
securitization market.
    Rather than promoting employment, however, H.R. 4078 would 
foster more unemployment by tying the hands of the government 
from instituting regulatory reforms that are most needed to 
address the causes of the major financial distress. For 
example, it is very likely that H.R. 4078, if it was enacted, 
would prevent regulators, such as the Securities and Exchange 
Commission, from instituting corrective regulations intended to 
prevent another Great Recession.
VII. Judicial Review of Executive Orders May Present Separation of 
        Powers Concerns
    Section 4(a) of the bill authorizes an agency to take a 
significant regulatory action if the President makes a 
determination that such action qualifies under one of the 
enumerated waivers set forth in section 4(b). Section 5(b) of 
the bill, in turn, specifies that ``[a]ny person who is 
adversely affected or aggrieved'' by any such determination by 
the President is subject to judicial review under the APA. In 
effect, this provision would permit a private individual to 
apply to a court, which could then second-guess the President's 
determination that a waiver was necessary to address national 
security or public health concerns under the various standards 
set forth in the APA. Under these standards, a court may set 
aside actions found to be:

        (A) arbitrary, capricious, an abuse of discretion, or 
        otherwise not in accordance with law;

        (B) contrary to constitutional right, power, privilege, 
        or immunity;

        (C) in excess of statutory jurisdiction, authority, or 
        limitations, or short of statutory right;

        (D) without observance of procedure required by law;

        (E) unsupported by substantial evidence in a case 
        subject to sections 556 and 557 of this title or 
        otherwise reviewed on the record of an agency hearing 
        provided by statute; or

        (F) unwarranted by the facts to the extent that the 
        facts are subject to trial de novo by the reviewing 
        court.\79\
---------------------------------------------------------------------------
    \79\5 U.S.C. Sec. 706 (2012).

In making this determination, the court must review the entire 
record.\80\
---------------------------------------------------------------------------
    \80\Id.
---------------------------------------------------------------------------
    The Supreme Court has held that the ``President is not an 
agency within the meaning of the [Administrative Procedure] 
Act.''\81\ To make the President subject to the APA, the Court 
stated that it ``would require an express statement by Congress 
before assuming it intended the performance of the President's 
statutory duties to be reviewed for abuse of discretion.''\82\ 
It is unclear, however, whether the requirements of H.R. 4078 
presents an unwarranted intrusion into the President's 
constitutional authority to ``take Care that the Laws be 
faithfully executed.''\83\
---------------------------------------------------------------------------
    \81\Franklin v. Massachusetts, 505 U.S. 788, 796 (1992).
    \82\Id. at 801.
    \83\U.S. Const. art. II, sec. 3.
---------------------------------------------------------------------------

                               CONCLUSION

    We oppose H.R. 4078 because it is based on the false 
premise that regulations stifle job creation and cause business 
uncertainty. By placing a moratorium on significant regulatory 
actions and by including insufficient exceptions and an 
illusory congressional waiver provision, H.R. 4078 ignores the 
benefits of regulation and threatens public health and safety. 
H.R. 4078 is also unworkable because it relies on an 
indeterminate standard for establishing when a regulatory 
moratorium should begin and end and is full of other 
ambiguities. These ambiguities will only lead to greater 
uncertainty and societal harm through regulatory failure. 
Finally, H.R. 4078 may raise separation of powers concerns 
because of its interference with the judicial role in reviewing 
regulatory action. For these reasons, we respectfully dissent 
and urge our colleagues to oppose this bill.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Robert C. ``Bobby'' Scott.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   Steve Cohen.
                                   Henry C. ``Hank'' Johnson, Jr.
                                   Mike Quigley.
                                   Ted Deutch.

                                  
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