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71–272 2011

ELIMINATING JOB-SAPPING FEDERAL RULES 

THROUGH RETROSPECTIVE REVIEWS—OVERSIGHT OF THE PRESIDENT’S EFFORTS 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 21, 2011 

Small Business Committee Document Number 112–036 

Available via the GPO Website: http://www.fdsys.gov 


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

ROBERT SCHILLING, Illinois 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

JANIS HAHN, California 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 


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C O N T E N T S 

OPENING STATEMENTS 

Page 

Graves, Hon. Sam .................................................................................................... 1 

Vela ́zquez, Hon. Nydia M ........................................................................................ 2 

WITNESS 

The Honorable Cass Sunstein, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC ............... 3 

APPENDIX 

Prepared Statements: 

The Honorable Cass Sunstein, Administrator, Office of Information and 

Regulatory Affairs, Office of Management and Budget, Washington, 

DC .................................................................................................................. 24 


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(1) 

ELIMINATING JOB-SAPPING FEDERAL RULES 

THROUGH RETROSPECTIVE REVIEWS— 

OVERSIGHT OF THE PRESIDENT’S EFFORTS 

WEDNESDAY, SEPTEMBER 21, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 1 p.m., in room 2360, 

Rayburn House Office Building. Hon. Sam Graves (chairman of the 

Committee) presiding. 

Present: Representatives Graves, Bartlett, Tipton, West, Herrera 

Beutler, Ellmers, Hanna, Vela ́zquez, Clarke, and Owens. 

Chairman GRAVES. Good afternoon. We’ll call the hearing to 

order. And I appreciate everyone being here. 

On January 18, 2011, the President issued Executive Order No. 

13,563 mandating that agencies review the economic consequences 

of their existing rules. In this regard, President Obama follows a 

very well-trodden path that started with President Carter and has 

been followed by each succeeding president. President Obama, like 

his predecessors when calling for a review of regulations, noted the 

special importance of small businesses in the economy and the potential adverse consequences of imposing unnecessary and unduly 

burdensome rules on small businesses. At the same time he issued 

that Executive Order, the President also released a memorandum 

reminding agencies of the importance of assessing the impact of 

regulations on small businesses through compliance with the Regulatory Flexibility Act. Despite these reviews, the Code of Federal 

Regulations now extends to about 26 linear feet. Of course, this excludes the potentially hundreds of thousands of pages of guidance 

documents interpreting those 26 feet of regulations. 

This complexity imposes serious strains on small businesses. 

They have to divert limited management resources from running 

their business to understanding how they must comply with federal 

regulations. And once they figure out how to comply, they must expend scarce capital on the cost of compliance, be it modifications 

to facilities or new data systems to maintain those records. Since 

small businesses represent the bulk of entities subject to regulation 

and generate the most new jobs, I believe that it is very appropriate to focus the regulatory review on small businesses. 

I will close with the admonition from Albert Einstein that it is 

easy to make things bigger and more complex, but it takes a touch 

of genius and courage to move in the opposite direction. I hope that 

the Administrator can provide that touch of genius and courage to 


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reduce the complexity of federal regulation and eliminate unnecessary burdens on small businesses so that they can create jobs and 

put Americans back to work. 

With that I will recognize the ranking member for her opening 

statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Small businesses are critical to the economy, creating nearly 70 

percent of new jobs, generating more than 50 percent of GDP. The 

contributions are needed now more than ever but rising regulatory 

costs threaten to undermine this important role. With the total cost 

of regulations equal to an estimated $1.75 trillion, this has become 

a real headwind that small businesses face day-to-day. 

Over time, this burden has grown, regardless of the political 

stripes of the White House. Recent research shows that between 

2004 and 2008, the cost of regulation rose from $12,000 per U.S. 

household to $16,000. Many of these costs have come from major 

regulations and there were 72 between 2001 and 2008, while there 

were 32 in 2008–2009. While benefits far exceeded costs each year 

for these major rules, this is no excuse to avoid reducing this cost 

further. With the weight of compliance continuing to rise, it will 

take substantial efforts from all those involved to ease this impact. 

One such way to minimize this burden is to ensure that regulations are reviewed after they have been in force for several years. 

This makes sense because it is nearly impossible to understand 

how a particular rule will fully impact society at the time it becomes final. Such retrospective examinations are critical to reducing compliance costs, while ensuring that a regulations benefit is 

still realized. 

Over the last 30 years, the efforts have been far and wide to impose a workable and successful regulatory look back process. Presidents from Carter through Bush have called for reviews of existing 

regulations. At the same time, Congress passed the Regulatory 

Flexibility Act in 1980, giving small businesses greater influence in 

the regulatory process. In Section 610, the RFA also included its 

own periodic review process. 

While these efforts have produced some positive results, regulatory costs have continued to grow annually. This year an additional tool was put forth to deal with this issue. Executive Order 

13,563 required agencies to produce a plan to review existing regulations with a particular focus on promoting economic growth, innovation, competitiveness, and job creation. For many agencies, the 

level of public engagement in the development of these strategies 

was impressive, culminating in their release last month. 

Many of these plans were far-reaching and include noble approaches to reducing regulatory burden. However, it is important 

for everyone in the room to realize that many of these suggestions 

require investment from the government to implement a technology-based system or change complex reporting processes. That 

means reducing the compliance burden for the private sector entails higher costs for the public sector and the taxpayers who foot 

the bill. 

In addition, a plan is only as good as its execution. Given past 

failures and loopholes in the review of existing regulations, I think 

we are all interested in how it will be different this time. With no 


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real consequences for agency inaction, many of these plans may 

end up being pipedreams that do little but collect dust on the 

shelves. Irrespective of these concerns, reducing burden is a laudable, if elusive, goal. It is something that we all must work toward 

and constantly improve as the regulatory environment evolves. 

With this in mind, I look forward to hearing from the OIRA administrator and I thank him for being here today. 

I yield back, Mr. Chairman. 

Chairman GRAVES. I will now introduce the Honorable Cass 

Sunstein, who is the administrator of the Office of Information and 

Regulatory Affairs within the Office of Management and Budget. 

He is the official responsible for oversight of the President’s regulatory agenda and agency compliance with Executive Order 13,563. 

Mr. Sunstein, your written statement will be entered into the 

record and you may proceed. And you have all the time you want. 

STATEMENT OF CASS SUNSTEIN, ADMINISTRATOR, OFFICE 

OF INFORMATION AND REGULATORY AFFAIRS, OFFICE OF 

MANAGEMENT AND BUDGET 

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

Ms. VELA ́ ZQUEZ. Mr. Chairman, I just would like to make an inquiry. 

Chairman GRAVES. Sure. 

Ms. VELA ́ ZQUEZ. I feel that part of the agreement for him to be 

here today was that you will sing him Happy Birthday. 

Chairman GRAVES. Is today his birthday? 

Ms. VELA ́ ZQUEZ. Yes. 

Chairman GRAVES. Do you want to lead that? 

Ms. VELA ́ ZQUEZ. No. 

Chairman GRAVES. Administrator, I’ll tell you what, we’ll wish 

you an official Happy Birthday and enter that into the record as 

well. 

STATEMENT OF CASS SUNSTEIN 

Mr. SUNSTEIN. Thank you very much for that. I had almost forgotten myself that it was my birthday and I’m grateful to be reminded that 29 years ago today something happened. Maybe not 

my birthday. 

It is, birthday or no birthday, an honor to be here. And this is 

the perfect occasion for this. I have been looking forward to this 

discussion greatly because of the current economic situation and 

the opportunities that we have. 

In light of the Executive Order to which both of you referred, we 

have been able to make a lot of progress in a relatively short time 

to eliminate unjustified regulatory costs imposed on small businesses. In the future we are hoping to do a great deal more and 

we are expecting to be able to achieve that. 

Section 6 of the new Executive Order calls for the development 

of agency plans to reduce burdens in general. And one of our particular emphases has been on small business in the last months. 

Last May, agencies released over two dozen preliminary plans, and 

this is the first time that a president has actually had the plans 

go out to the public, including to the business community for their 

scrutiny and review. What the agencies did in releasing the plans 


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was very publicly to ask small business, large business individuals 

about existing burdens and to help identify ways to ratchet up the 

burden reduction effort. 

As noted by the ranking member, last month over 2,000 agencies 

released their preliminary plans. They span over 805 pages. This 

could be a book, though we will not publish it in order to ensure 

compliance with the Paperwork Reduction Act. We are keeping it 

online. They include over 500 initiatives that will simplify the system and eliminate redundancy and inconsistency. 

What I would like to emphasize is that as the plans demonstrate, 

a lot has already been achieved. These are not just promissory 

notes. They are initiatives that have been finalized or publicly proposed from just a handful of agencies that are expected to save 

over $6 billion over the next five years. That is a down payment. 

It is not enough but it is very far from trivial. 

A final ruling from the Department of Health and Human Services reduces costs and improves access to care in rural areas by 

permitting hospitals to use telemedicine to obtain services from 

practitioners credentialed at distant hospitals. This is going to save 

money, including for small businesses that depend on or actually 

operate hospitals, and it is also going to help patients. 

The Department of Labor in an initiative that was particularly 

welcomed by the business community—in fact in my own communications with people in the business community there was a degree of astonishment that this actually happened—the Department 

of Labor finalized, didn’t propose, finalized a rule eliminating nearly two million annual burden hours imposed on employers. It is 

going to save hundreds of millions of dollars over the next five 

years. 

The EPA finalized, finally—the small business community had 

been urging this for a long time—finalized, finally, a rule excluding 

all milk and milk product containers from its oil spill rules. This 

is going to save $700 million over the next five years. 

The relevant reforms, as even a glance at the plan suggests, span 

a wide range. What we heard in our outreach to the small business 

community is that many are burdened by paperwork and reporting 

requirements that turn out in theory to be innocuous and helpful, 

but on the ground in practice, as the ranking member suggested, 

to be a hardship and sometimes incomprehensible. Many of our 

other initiatives are eliminating redundancy or regulatory burdens 

that just aren’t justified anymore. 

The Department of Defense recently issued——this is finalizing 

a new rule to accelerate payments on contracts to as many as 

60,000 small businesses, improving their cash flow in an economically difficult time, to help small business borrowers who are struggling, many of them. The Small Business Administration is adopting a new electronic application to reduce the paperwork burden 

now imposed on certain lenders. That is going to help borrowers 

who seek small amounts of capital to grow and to succeed. 

I would like to draw attention in particular to the plan of the Department of Transportation, which lists over two dozen reforms 

specifically tailored to impositions on small business with an effort 

to relieve them of existing burdens. Every single one of the plans 

recognizes that this lookback enterprise is not a one-shot endeavor. 


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What I am particularly excited about is that the plans encode the 

creation of teams or frameworks or working groups ensuring that 

there is a listening process that is ongoing. If the plans do not have 

initiatives that should be included, then we are all ears. We want 

to see what would be a good way of reducing burdens now, and the 

agencies are available to hear the concerns. I would like to be cc’d 

on any suggestions for additions. 

Many people have expressed concern with the flow of new rules, 

not just the existing stock of rules. And I can give you some details 

about things we have done in the recent past to get a good control 

on the stock. There was a reference both the chairman and the 

ranking member made to the President’s January 18th memo on 

small business, which not only reflects the Regulatory Flexibility 

Act. In important ways it goes beyond it and imposes requirements 

that are supplemental that are already helping to reduce the flow 

of new rules. 

What the President said in January of this year is, ‘‘ We can 

make our economy stronger and more competitive while meeting 

our fundamental responsibilities to one another.’’ We are going to 

continue to eliminate unjustified regulatory costs—this process has 

just started—and thus strengthen our economy in an economically 

challenging time. 

Thank you so much, and I am much looking forward to your 

questions. 

[The statement of Mr. Sunstein follows on page 24.] 

Chairman GRAVES. Thank you, Administrator. I am going to 

open up with Representative West. 

Mr. WEST. Thank you, Mr. Chairman, and also Madam Ranking 

Member and Honorable Cass Sunstein. It is a pleasure to have you 

here today. 

One of my concerns is we have had many people come here, especially from the Office of Advocacy, and testify that their greatest 

concern is that they are getting backdoored by the federal government as far as implementing a lot of new regulations. One of the 

things that I am concerned about is there are approximately 4,300 

regulatory actions that are waiting in the pipeline right now, and 

219 of those are considered economically significant, meaning they 

can have more than $100 million of impact on our private sector, 

especially on small businesses. 

The number one thing when we go back and we talk to the people down on the ground is the regulatory environment and especially when you talk to small banks, community banks with DoddFrank and a lot of the means by which they have been caught in 

there, can you really tell us and give us an understanding of what 

the federal government is doing to not allow the agencies to do— 

I call it behavior modification through regulation. What they could 

not get through the legislative process it seems they are doing 

through the regulatory process. So can you kind of lay out the plan 

that you all have? 

Mr. SUNSTEIN. Great. The first point is that anything that is 

done by the Executive Branch has to comply with the law and 

within the boundaries that you set out. Article 1, that is legislative 

power in the Congress of the United States. That is the first substantive sentence in the Constitution. The executive—— 


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Mr. WEST. But let me interrupt you. I will give you a great example. Numeric nutrient criteria, which is something that the EPA 

sent down, I don’t think anyone up here, you know, there is no law 

that, you know, complies with that. And that is something that the 

EPA has instituted. And as a matter of fact, in the state of Florida 

there is a lawsuit that is being brought against the state when it 

comes to that. So. 

Mr. SUNSTEIN [continuing]. Okay. The big numeric criteria rule 

from EPA was numeric limits for stormwater. And that—I don’t 

know if you saw EPA actually withdrew it in a way that produced 

a great deal of applause from the National Homebuilders saying 

this is a great thing for the economy, for people who want to buy 

homes, and for people who build homes. It was completely withdrawn. 

Mr. WEST. But not for farmers. 

Mr. SUNSTEIN. No, it was completely withdrawn for everybody. 

The stormwater rule was completely withdrawn. 

Mr. WEST. Okay. 

Mr. SUNSTEIN. I can give you a bunch of other examples of cases 

where we are all working together to address the problem that you 

mentioned. Winslow Sargeant, who is the chief consulate of the 

SBA, is a close partner. His February 2010 report emphasizes the 

big impact and the growing impact that SBA has been having on 

federal rule-making. It applauds the trend line. And since then, or 

contemporaneous to then, a number of things have happened. You 

may have noticed just a few days ago the Department of Labor 

withdrew its very controversial fiduciary rule. That was a rule that 

got a lot of concern from members of the House and also from the 

small business community. That has been withdrawn. They are 

going to re-propose that. 

The Department of Labor also had a rule involving musculoskeletal disorders, a new reporting rule, where the Office of Advocacy and the small business community were both very troubled. 

They did not know what it meant. What is a musculoskeletal disorder? And they thought that it would be burdensome. Are they 

going to have to hire doctors to test all of their employees who have 

back pain? That one was withdrawn. And the Department of Labor 

is working well with SBA. There was a noise interpretation from 

OSHA that the small business community was very concerned 

about just this year. OSHA withdrew that one also. 

So the number of rules that are being carefully reconsidered by— 

I have given you four examples just now. I could multiply that by 

three if you like. In response to the current economic situation and 

the very clear direction the president has given me and all of us 

to make sure that what we are doing on the regulatory side is consistent with the economic recovery. If there are other areas where 

we are not being sufficiently responsive, gosh, I would love to hear 

it because this is the time. 

Mr. WEST. Okay. The last question that follows along with that, 

you know, right now it looks like we are on a track to have fulltime regulatory employees expected to reach a level of 291,676. Is 

there a way that we can freeze the hiring of new regulatory employees? 


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Mr. SUNSTEIN. Well, that is your lane and mine is the implementation job. I work at the Office of Management and Budget but the 

budget, the B-side, is not something that I am directly involved in. 

I can tell you, you referred to the 219 economically significant rules 

so called in the pipeline. The number is a little confusing because 

these are things that are under general contemplation by the agencies. They are not in the pipeline. They are not pending. They are 

not proposed. They are kind of like—as if there is a law that one 

of you is thinking about and you give a heads-up to the public. It 

does not mean it is going to come. And I can assure you those 219 

are not going to see the light of day unless they can pass very careful scrutiny in terms of the new direction the president is giving 

us this year. 

Mr. WEST. Thank you very much. And I yield back, Mr. Chairman. 

Chairman GRAVES. Ms. Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. And welcome, Administrator. 

We have been here before and from Carter on, everyone has 

checked that list on regulation and impact on small businesses. 

What would you tell the Committee this time it is going to be different? And how would you get the 26 federal agencies to get with 

this issue in a way that produced the results that are expected, especially at this time when we are facing this economic downturn? 

Mr. SUNSTEIN. Okay. The first thing that we have done that no 

previous president did was to have public plans that actually have 

concrete details with schedules and timelines in many cases for 

taking action. So I actually had the privilege of working in the 

Reagan Administration. I was six years old at the time, as you can 

tell from earlier. But in the Reagan Administration there was a 

very firm effort to discipline regulatory burdens. And he deserves 

a lot of credit for that. He did not have a sustained lookback effort 

to this sort. President Bush had an effort in the domain of manufacturing, but the agencies did not come up with plans. 

So the fact that there are plans with timelines promotes accountability. What we are doing on our side is not just having, you 

know, plans and aspirations but trying actually to take action. So 

there are things that have been done by the Department of Transportation, taking hundreds of millions of costs away and a proposed 

rule just a while ago. The Department of Health and Human Services is going to try to free up hospitals and doctors from regulatory 

requirements that have not been revisited. That is a $600 million 

annual savings that is well beyond the planned stage. That is actually a rule under review and that is no secret here. That is a rule 

under review at OIRA today. 

The Environmental Protection Agency has finalized rules. This is 

not just a wish list. And what we are trying to develop is fast track 

procedures for the cost reduction initiatives that we see on the 

plans. So some of them have actually been proposed, some of these 

things, which means they are going to be finalized in the relatively 

near future. Others already have been finalized. And if you see 

things that you really like on the plans—maybe they are the export 

initiatives, some of which have been finalized proposed—please let 


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us know if they really have an impact. And then we can see if we 

can do them quickly. 

Ms. VELA ́ ZQUEZ. Would you have a mechanism in place to evaluate the work of the federal agencies? 

Mr. SUNSTEIN. Yeah. We do. We have an informal process in my 

office where we are very alert to the 500 reforms on the plans and 

looking carefully at what stage each of them is at. And so the ones 

that are proposed, like the Department of Transportation rule 

which eliminates hundreds of millions of dollars and costs, we are 

looking to see how quickly that can go. There is an OSHA rule that 

is going to eliminate over $500 million in annual costs. That one 

has been proposed. We are looking to see if we can finalize that 

pretty quickly. 

And for everything on the 800 pages that looks really promising, 

we are engaged in an ongoing monitoring exercise. It is a little 

lonely, so if you would like to join us and help monitor and expedite, that would be very welcome. 

Ms. VELA ́ ZQUEZ. Thank you. 

Agencies reach out to the public in particularly innovative ways. 

And you mentioned some of those like EPA held 20 public meetings, as well as participating in the Department of Transportation’s 

meeting where participants could attend those meetings over the 

Internet. The Department of Labor designed a website that permitted participants to post suggestions, respond to other posts, and 

agree or disagree with submissions. It seems that those agencies 

that had low public participation rates could benefit from those 

ideas. And so are you considering sharing these outreach strategies 

across agencies? 

Mr. SUNSTEIN. Yes. What we encourage them all to do—we had 

some guidance documents during the initial phases of the lookback 

process where we encouraged everyone to engage the public because as you said, often the people who are faced by rules and burdened by them have the best insights about how they are adversely 

affecting operations. So we have encouraged public outreach. We 

have tended to the fact that a number of agencies—and this also 

is new. For all their good work, prior presidents did nothing like 

this—have websites that are specifically dedicated to business outreach to see how we can simplify and streamline the regulatory 

process. Those are ongoing. And we have encouraged agencies to 

follow the model that several agencies, including the Department 

of Transportation and EPA, have. 

What I am very hopeful about is that there is a cultural change, 

which was started within the agencies, where each of them has either a formal or an incipient institution that is particularly dedicated to eliminating regulatory burdens. And they might be burdens that have been in place for 30 years. They might be burdens 

that have been in place for a couple of months and that just are 

causing unintended or unexpected harm. And maybe that can be 

fixed quickly. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Chairman GRAVES. Mr. Bartlett. 

Mr. BARTLETT. Thank you very much. 

In a former life as a small business person and now nearly 20 

years in the Congress, I have been watching the creation and the 


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application of these rules and regulations. And I have noted a phenomenon that results in increased regulations, and I am wondering 

if you have a solution to this problem. 

Initially, very rational, simple rules and regulations are enacted, 

and then when they are used, applied, some modest deviation from 

the intended response of the regulated is observed. And the usual 

response to that is more regulations. We do not want that to happen again, do we? And frequently these increased regulations pass 

over the line of the rationable and/or reasonable, and there appears 

to be no attempt to do a cost benefit analysis. Is the benefit we 

might get from these increased regulations really going to be justified by the economic effects and just the harassment of the poor 

business trying to succeed in a tough economic environment? How 

can we get our people to do a rational cost benefit analysis? The 

old farmer says why would you do it if the juice is not worth the 

squeezing? For many of these increased regulations, the juice is not 

worth the squeezing. 

Mr. SUNSTEIN. Great. What President Reagan inaugurated in the 

early ’80s was cost benefit analysis as a test for regulatory proposals and final rules. President Obama had a very clear embrace 

of cost benefit analysis in his executive order this past January. 

And we are taking cost benefit analysis extremely seriously. I do 

not believe you will see a single rule issued in the last eight 

months that fails cost benefit analysis, and you will see very few 

in the last two and a half years. I think there is only one that 

clearly fails cost benefit analysis and that one was a congressional 

mandate on safety on trains. And we did the best we could to reduce costs. As noted, you could have a rule that survives cost benefit analysis but still the costs are too high. It could have higher 

net benefit if you scaled the costs back. But basically, the president 

has given us extremely clear guidance on following cost benefit 

analysis, and we are responding to his direction. 

You may have noticed—this has got a lot of attention—the president directed me to issue a return letter on the EPA’s draft ozone 

rule. The bulk of that return letter was emphasizing some very 

specific points that bore on the rule in particular, but the next to 

last paragraph emphasized more generally apart from the ozone 

rule. The president has directed me to take strong steps to diminish regulatory costs and to make sure they were really justified 

going forward. 

And that commitment to cost benefit analysis you will see in 

every rule we have issued so far. You will see it in the reconsideration of certain rules. The fiduciary rule, which was of very grave 

concern to a number of businesses, would expand the definition of 

fiduciary. It had some—well, I think what everyone agrees are 

some strong, well motivated arguments in it. But it was not really 

ready yet and the Department of Labor said we are going to do a 

new analysis, analyze the costs and benefits, and see what really 

the best proposal would be. And it is not identical to what they 

originally proposed. 

But the examples I gave are rules that have been taken back, are 

frequently taken back in order to get the analysis of costs and benefits as accurate as possible. And one of the most important parts 

of the new executive order says agencies are not supposed to proVerDate Mar 15 2010 01:40 Apr 05, 2012 Jkt 071272 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A272.XXX A272

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ceed unless there is a reasoned determination that the benefits justify the costs. 

Mr. BARTLETT. How could you have even in the back of your 

mind this notion that there ought to be a cost benefit analysis and 

the side that spilled milk was an oil spill? Is that an anomaly that 

will not happen again? 

Mr. SUNSTEIN. Well, that was not the—I am pleased to say that 

that was not a government regulation. That was a statute and it 

was an old statute. 

Mr. BARTLETT. It was our fault? We did that? 

Mr. SUNSTEIN. No one in this room had anything to do with it. 

Mr. BARTLETT. But we, the Congress, did that? 

Mr. SUNSTEIN. Yes. That is correct. 

Mr. BARTLETT. Oh, my. 

Mr. SUNSTEIN. It was—— 

Mr. BARTLETT. Please help us to keep from doing dumb things. 

Mr. Chairman, thank you very much. 

Mr. SUNSTEIN [continuing]. I don’t think anyone intended to include milk. It was an artifact of the definition. 

Well, there is some fat in milk and that is in oil. 

Mr. BARTLETT. You got it. 

Mr. SUNSTEIN. It was a stretch, isn’t it? 

Mr. BARTLETT. Exactly. But you gave us a chance to fix it and 

we did. 

Chairman GRAVES. Ms. Clarke. 

Ms. CLARKE. Thank you, Mr. Chairman and Ranking Member 

Vela ́zquez. 

I want to thank you, Administrator Sunstein—Sunstein or Stine? 

Mr. SUNSTEIN. Sunstein. 

Ms. CLARKE. Got it. 

We are from New York. Well, I am from New York. So is the 

ranking member, so we just wanted to get that correct. 

Clearly, we recognize the need to streamline regulatory obligations, especially when and if they interfere with the viability of the 

small business community. 

And just sort of picking up on Mr. Bartlett’s train of thought, I 

wanted to ask could you briefly explain or distil, if you will, your 

cost benefit—excuse me, the rubric, the general rubric used to— 

through your cost benefit analysis to determine what costs, whatever they may be, outweigh the benefits or the benefits outweigh 

the burdens? 

Mr. SUNSTEIN. Okay. Thank you for that. That is fundamental to 

what we are trying to do. Sometimes we will have a rule that will 

impose costs, let’s say, on companies that have to adopt certain 

management practices to ensure that people are not going to get 

salmonella from their eggs. Okay? And that maybe we will be able 

to have a cost estimate that industry will be informative on. And 

we might find that it is going to cost, let’s suppose, $100,000 a 

year, in which case it is economically significant. If it is going to cost $100 million a year, we need a full-born regulatory impact analysis as it is called, which gets a full account of 

the costs and the benefits. 

Now, if it is going to involve salmonella, let’s say, it is going to 

prevent a certain number of diseases in a case of one rule we had, 


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which incidentally exempted small business because they were not 

the problem. 

It is going to cause a certain—prevent a certain number of 

deaths from salmonella food poisoning, and it is going to cause a 

certain number of diseases averted. Economists have some tools for 

giving an economic value to the diseases averted and the mortalities avoided. And there is something a little, you know, a little mechanical, maybe, about turning diseases and lives into dollar 

amounts. But if you do not do that then you might be spending a 

zillion dollars for something that is actually a low level risk. So 

these are tools that are used. 

In cases that are sometimes a bit easier we will have a rule, like 

the milk rule, which will eliminate costs or save people money, and 

then you don’t have to do any translation of health problem into 

dollar equivalents; you will just have dollars. And so for some of 

our deregulatory initiatives, some of our initiatives that involve 

saving consumers money from various rules that reduce the costs 

they face, then it is dollars. And what we try to do is do our best 

techniques for turning all the benefits into dollar equivalents. The 

president has called for quantification in ways that have gone beyond even what President Reagan did. If we have something where 

the costs are higher than the benefits, let’s say it is going to cost 

$100 million and the best account of the benefits is it is $50 million, that is a really serious problem. And we are going to try to 

work on that rule to get those $100 million costs down to $40 million. Then the benefits will justify the costs. But as the ranking 

member suggested, it may be that that $40 million is too high and 

you can get the same, let’s say, health benefit for $30 million or 

$10 million. 

And so a lot of our time is spent seeing ways to achieve the same 

goal less expensively. And you have seen in the last eight months 

a number of rules where the agencies have gone forward but the 

final rule was far less burdensome than the proposed rule. And one 

reason is typically that the small business community will say, 

‘‘What are you doing here?’’ So there was an EPA rule involving 

lead renovation for homes where kids can get, you know, sick if the 

lead levels are high. The small business community, including the 

Office of Advocacy, said you have some—it is called a ‘‘ dust white’’ 

procedure, which is really expensive and it is not worth it given the 

relatively marginal, as the EPA ultimately concluded, health benefits of that procedure. So the EPA took it away. And the small business community said now you have something that we can work 

with. And that is an example of where cost reduction, as part of 

cost benefit analysis, can lead to a rule that’s economically maybe 

more rational. 

Chairman GRAVES. Mr. Hanna. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman, Ranking Member. Appreciate you being here. 

Mr. SUNSTEIN. Thank you. 

Mr. TIPTON. You know, I was just out in Colorado. We held a 

Small Business Subcommittee Hearing, and the constant rejoinder 

that we heard through that was government regulation. It was not 

a stepping stone to success and to be able to create jobs but it was 

a stumbling block. In fact, you may have seen this report just came 


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out, recent study, and it’s showing that the regulatory burden on 

the American people cost approximately $1.75 trillion annually. 

That’s with full knowledge. We need some regulations. But the 

overreach of this, when we get this down to actual dollars, when 

we’re talking about creating jobs which is something that the president has indicated that he is in favor of—I am certainly in favor 

of doing—is we are seeing $160,000 each year that businesses are 

having to pay for regulatory costs. When we distill that down to 

small businesses according to this report, each employee—each employee of the business is having to pay $10,585 for regulatory costs 

per employee. This must stop. We are, and I truly respect your 

comment of trying to clean it up and maybe we really need some 

legislation because when you’re talking about President Reagan, 

you’re talking about President Obama, we’re actually looking at executive orders as opposed to legislative direction that is coming out. 

But I do have a question. Reading through your testimony, I 

want to go back actually to the milk regulations that you had 

brought up. I am very curious because you state that, and this perplexes me, that the EPA estimates—you noted this was a law and 

you just clarified with the regulation—but you further stated that 

this milk exemption will actually save our economy over $700 million over the next five years. How can we save what we never 

spent, what was never incorporated? 

Mr. SUNSTEIN. Okay. There are a lot of great points there so let 

me say a little bit. 

In terms of the report, the $1.75 trillion report, the general concern that regulatory costs on small business and the economy are 

too high and that we should be doing a lot to reduce those costs, 

I agree with completely. That $1.75 trillion figure is in the nature 

of an urban legend as a report by the Congressional Research Service recently laid out. It is based on an assumption, some analysis 

of a World Bank study that confuses regulatory quality and regulatory stringency. And if the study is right, then the U.S. GDP 

would be higher if we had a regulatory system like Sweden and 

Canada. I do not think anybody thinks that is true. So the $1.75 

trillion probably to say it should be treated with a grain of salt is 

too weak; it should be treated as, you know, not a reliable number. 

Having said that, the general thrust of your question I completely agree with. On the milk rule, what happened was there was 

a formal requirement in the law that the milk producers be subject 

to this oil spill rule. And we had heard, as the Bush Administration 

had heard from the agricultural community, this is a looming, serious problem for us. Enforcement, as I understand it, of the requirements of the milk producers was weak for understandable reasons. 

It just didn’t make much sense. But no one had taken care of the 

problem, and this was a very significant cost. 

Mr. TIPTON. How does that still save $700 million? It was never 

spent. That is the claim that you were making. 

Mr. SUNSTEIN. Because it was a regulatory requirement imposed 

on them that would have imposed burdens. 

Mr. TIPTON. Would have, but it was not. So how are we claiming 

$700 million in savings? 


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Mr. SUNSTEIN. No, it would have in the sense that the formal law 

required it. And if we had not done anything about it, under the 

formal law—— 

Mr. TIPTON. So it is really—and when we are talking about an urban legend, the $700 million in savings is actually a mute point. 

Mr. SUNSTEIN [continuing]. No. That is an accurate number. And 

the agricultural community, which celebrated with great enthusiasm, what the EPA did to take away that cost—— 

Mr. TIPTON. No. I applaud it. 

Mr. SUNSTEIN [continuing]. Did not deny that the cost was taken 

away. They had worked for years to get the cost taken away. You 

are right in one sense. The cost—the requirement of the law was 

not being enforced. So what it was meaning on the ground is a reasonable question to ask. Nonetheless, the industry’s own plea, and 

ultimately very enthusiastic reaction, is suggestive that there was 

a problem that needed to be solved. I can say while the Bush Administration commendably started the effort that we completed, 

our final rule is actually significantly more deregulatory than the 

Bush proposal. 

Mr. TIPTON. We are running out of time but I know you have a 

complex job but we are looking at 3,573 new final rules and you 

are talking about the complexity of you and it is your job keeping 

up with it. How in the world can small business keep up with this? 

Because we are creating uncertainty. 

Mr. SUNSTEIN. I completely agree that is the problem. Three 

thousand, five hundred seventy-three new final rules. I wonder 

where that comes from. In the last two and a half years the rules 

that have been through my office are not that numerous. In fact, 

we have finalized fewer rules in our first two years than the Bush 

Administration did on average in its eight. Nonetheless, the concern that there should be great care and a reduction in regulatory 

complexity uncertainty, that is something the president has directed us to do. And I would love to get your ideas about how we 

can make the lookback process as effective and full as it can possibly be. 

Mr. TIPTON. Mr. Chairman, I yield back time I do not have. 

Chairman GRAVES. Mr. Owens. 

Mr. OWENS. Thank you, Mr. Chairman. Mr. Sunstein, thank you 

for testifying today. 

If you could just walk through with me the process that a small 

business goes through in communicating to your office an issue related to a regulation, I think that would be very helpful. 

Mr. SUNSTEIN. Okay, great. What we have available now, this is 

actually one of the first things we did, was to create on a website 

called reginfo.gov, complete visibility into what rules are now before the Office of Information and Regulatory Affairs. So this to my 

dismay is not the most popular website on the Internet, 

reginfo.gov, but I wish it would be very popular for small businesses because if there is any rule that is with us, they can see immediately. 

Now, that gives two opportunities for them to communicate with 

us. One is a letter to Yours Truly is going to be read very carefully. 

And if it refers to concerns that the small business community has 

about a rule under review, I can assure you it is going to be read 


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very carefully in view of the fact that small businesses are the 

principal job creators in the country. In fact, in our data call as it 

is described to the agencies asking them to tell us what they are 

contemplating for the next year, we, this past summer, asked them 

specifically to call out and list separately whatever they are doing 

that would have an effect on small business. So we are available 

by letter with respect to anything. 

But we are doing better than that actually in availability, and I 

do not think this is widely known. I wish it would be. If any member of the small business community wants to talk to us about a 

rule under review, our doors are open. We have 100 percent availability. If people want to come and tell us that this rule is trouble, 

maybe it has been proposed and there are concerns about it, maybe 

people do not want it to be proposed because they think the very 

proposal will create uncertainty, to the congressman’s point just a 

moment ago, we are available. And my staff is—in these meetings 

they are called not so charmingly, 12866 meetings under the executive order that makes them possible. People can come in. And if 

there is a legitimate concern as there not infrequently is, it is really going to be given attention. And that mechanism of face-to-face 

contact, I think it is insufficiently understood that it is there. The 

agency, by the way that is in support of the rule, will be there, too. 

And not infrequently the agency will say, oh, this is going to have 

this adverse effect; maybe we can change the rule so that it 

achieves its goal without having that adverse effect. 

Mr. OWENS. Thanks. You indicated that your website may not be 

the most popular on the Internet. Do you have an approximation 

of the number of hits you get on a weekly or monthly basis? 

Mr. SUNSTEIN. It is a lot. I do not have it in my head but we 

would be happy to get that to you. I can tell you one thing we noticed was when we went to a somewhat technical presentation to 

this very clear graphical presentation where you just see colors and 

it says EPA and it will have the number. HHS, it will have the 

number. Small Business Administration has a number. You can 

click on it and see every rule that they have before my office. The 

numbers spiked. We saw a very significant spike in usage. 

Mr. OWENS. Is there an average lag time between the enactment 

of legislation and the enactment of a rule interpreting the legislation? 

Mr. SUNSTEIN. I am sure there is. It would vary depending on 

whether there is a statutory deadline. So when there is legislation 

that says we have to do something by a certain date, that is taken 

really seriously. Every time we have a rule that comes before us 

that has a statutory deadline, that is one of the first questions we 

ask. 

Mr. OWENS. Understand. 

Mr. SUNSTEIN. So our average review time is about 51 days, 

roughly. That is part of the lag but because rules typically are proposed and then finalized, a number of months. Of course, the urgency of the problem really matters. So if it is something where life 

is at stake, then the likelihood of a relatively prompt rule increases. 

Mr. OWENS. Thank you very much. I yield back. 


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Chairman GRAVES. I am going to jump in here for a second because you are painting a picture that we are seeing less and less 

regulations actually being passed. But to get very parochial for just 

a second, when it comes to the FAA, and some of this has security 

aspects, but you have got the Large Aircraft Security Proposal 

being put out there; you have got the BART Program being eliminated by the Department of Transportation; you have got security 

badges in general aviation at airports that security is not an issue; 

you have got aircraft certification standards that are changing all 

the time; you have got airworthiness standards that are changing 

for aircraft or being proposed to be changed considerably which will 

hamper operators and air shows in a big way; you have got letter 

of authorization changes for certification for pilots to be able to fly 

these aircraft; you have got fuel issue changes that are happening 

from the EPA. And that is coming down hard and fast and there 

are lots and lots of regulations out there. And I see nothing but 

proliferation of regulations when it comes to aircraft and flying. 

And it is concerning the aviation community in a huge way because 

it can cripple that industry in a huge way. And that is one area 

that the United States is blowing everybody else around the world 

out when it comes to exports and when it comes to production, 

when it comes to an entire industry, but I would be real interested 

on your comments there. 

Mr. SUNSTEIN. I do agree that there are some sectors that are 

facing cumulative burdens that are not welcome, and there are 

other sectors that are facing overlapping redundant or inconsistent 

burdens which can cause a real hardship. And in the area you are 

describing in particular, I do not know what the trendline is for the 

volume of rules over, let’s say, the last eight years, but I do know 

that there is an acute concern about what you exactly said. And we 

are working really hard to try to make sure that the problem of 

cumulative burdens inconsistency is addressed. 

If there are particular rules that you think have been issued in 

the recent or even distant past that are not worth it, that is a terrific candidate for inclusion in DOT’s lookback plan. And in fact, 

if you look at DOT’s plan you will see the FAA has some very 

promising candidates. And if you see rules coming down the pike 

that ought not to be issued in your view or that ought to be issued 

in a way that meshes better with other rules or ought to be harmonized to use the word of the president’s executive order, we 

would love some help on that. 

I would not want to say that the, you know, anything general 

about a diminution of rulemaking on the airline industry. Every 

single one has to pass a series of filters. All I wanted to say with 

respect to the volume of rules is that the number of final economically significant rules in the first years of the Obama Administration—this is not widely known—but it is actually lower than the 

preceding two years and lower than the average under President 

Bush. That is not to say that we have the right level of rules. And 

one of our principal goals these days is to reduce regulatory costs. 

So the $6 billion over the next five years is a down payment but 

we hope to be able to do a lot better than that in reducing regulatory costs. And on the airline industry in particular, that is something we are looking very carefully at. 


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Chairman GRAVES. Well, all of these aspects that—or these areas 

that I put out do not have anything to do with the airline industry; 

it is all about general aviation, which is going to have a huge— 

again, a huge impact. And what we are finding from, whether it 

is the Department of Transportation or it is the FAA, which is a 

division of the Department of Transportation or even the EPA, we 

are not getting any interest in listening to our concerns. They are 

moving forward and not going to take the concerns into account 

and that is very frustrating for me. And it is not just this Administration; it has happened in other administrations. And they are not 

interested in listening. And that is very frustrating, particularly 

when you have an industry that could be impacted as greatly as 

general aviation. And again, that is—every bit of this has to do 

with GA. And when I say GA, I am talking about business aviation 

all the way down to your weekend flyer. And every business that 

is associated with that around the airport and in those companies 

that are in those business parks and everything else, it is going to 

have huge impacts. 

Mr. SUNSTEIN. Okay. I hear you, Mr. Chairman. If you would 

write me or write the FAA and cc me, I promise you, you are going 

to get our attention. You know, the EPA withdrew its stormwater 

rule. It decided it had to reconsider it. The Labor Department withdrew its fiduciary rule. We have a bunch of things that have been 

rethought in the recent past and if there is something that is not 

thought through very well we will get a handle on it. 

Chairman GRAVES. Ms. Herrera Beutler. 

Ms. HERRERA BEUTLER. Thank you, Mr. Sunstein. I appreciate 

your time. I have a couple things I want to get to so we will have 

to be a little brief. 

Generally, what rule does congressional review play in your decision-making process? For instance, Congressman Schrader and I, a 

congressman from Oregon, introduced a bill that exempts certain 

force activities from being regulated essentially like an industrial 

type. You have a private forest, we do not believe you should have 

to get the same permits that an industrial site would have to get 

to operate. Right? In the Pacific Northwest we have lots of water 

rules. 

So for 35 years that is how EPA has looked at this. They are now 

moving to regulate it, and rules like that cost jobs, especially, 

again, in the Pacific Northwest where we have hundreds of thousands of dollars in jobs on the line when it comes to our forest 

economy. Will legislation like this and the tremendous amount of 

support it has received from labor, from business, be taken into 

consideration in your review process? 

Mr. SUNSTEIN. The law is authoritative. So if that law is enacted, 

that is it. New trumps everything. So the legal constraints on regulatory action, that is a trump card. 

Ms. HERRERA BEUTLER. So would your office be willing to help 

promote this or at least be favorable as we work it through the 

process? 

Mr. SUNSTEIN. When the lane—the Office of Information Regulatory Affairs has a narrow lane which is implementation, we do 

not get involved in what legislation the administration supports, or 


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if we do it is—we play a very modest role in that. So there are others at OMB who would have the lead on that. 

Ms. HERRERA BEUTLER. Okay. Well, we would like the chance to 

submit for your consideration and possibly if you need to move it 

up or down or laterally we would love to have your help in that. 

Mr. SUNSTEIN. I can get you in touch with the right people. 

Ms. HERRERA BEUTLER. With that, and I do applaud the president’s decision to again—he said it in the State of the Union, he 

made the case about a week ago, two weeks ago now—that he 

wants to review and I think it is incredibly important. One of the 

things I would like to have you consider, it is not just not implementing a rule. In many cases it is the indefinite delay that is 

causing a problem. You know, I think of certain things. I think of 

Boilermate. I think of others. Yes, we are glad that the job-killing 

rule did not go into place, that is good. But then sitting on it for 

three years, or what have you, causes business to continue to constrict. I mean, the uncertainty is just as deadly as the rule itself 

would be. And you said—we were talking about general contemplation. When you kind of put out there that you are thinking of something, it has that same paralytic effect. We do not actually float 

that we are going to release bills that we really do not have the 

intention, or at least the more cautious legislators do not do that 

because we know it will have an impact just floating the idea. And 

so I would ask as you are considering these things, do not float 

something that you—just because it is not in the pipeline does not 

mean that it is not going to add to the uncertainty that our small 

business owners are feeling. 

Mr. SUNSTEIN. You are clearly right that there is a tradeoff between transparency—this is under consideration—and adverse effect. 

Ms. HERRERA BEUTLER. Now, if you are going to be taking action, 

it is different than general contemplation. Like, there is an issue 

we would like to consider versus, hey, maybe we will add another, 

you know, person on—like you do not have enough to do. 

Mr. SUNSTEIN. I appreciate the concern and we are—we are 

going to see what we can do on this. 

Ms. HERRERA BEUTLER. With that, a couple more things. You 

know, I know the executive order requires agencies to review regulations. What is their timeframe or required reporting process? Do 

they report back to you at a certain time? Is this a general ongoing 

thing? 

Mr. SUNSTEIN. Okay, great. So what the executive order required 

was within 120 days they had to submit to the public really preliminary plans. And as noted, before they did that actually with 

our encouragement, they had public meetings, websites, engagement, or what should be on the preliminary plans. That happened 

in May. Then they had another 80 days to finalize the plans. And 

so in late August, August 22nd, I think it was, they issued final 

plans to the public. Every single one of the plans says that this is 

an ongoing process and that the plans can be supplemented if there 

are new ideas. What we are focused on now is taking those of the 

500 reforms that are particularly promising and well enough along 

that we can expedite them and get them out and deliver some relief. 


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We calculate up to $10 billion in monetizable savings over the 

next five years from a small subset of the reforms where monetization is possible. We would like to see progress on those, finalization 

of those in the near future. 

Ms. HERRERA BEUTLER. Great. And one final parting thought. As 

you are doing that we want to help. You offered several times. If 

you want help, go ahead and kick those things to Congress for an 

up or down vote and we will let you know whether you think moving forward you are on track. 

Mr. SUNSTEIN. And thank you for that. 

Ms. HERRERA BEUTLER. You asked, so we are offering. 

Thank you, Mr. Chairman. 

Chairman GRAVES. Ms. Ellmers. 

Ms. ELLMERS. Thank you, Mr. Chairman. And thank you, Mr. 

Sunstein, for being here today. 

I would like to follow up on one of the comments. You had mentioned that if any small business, small business owners, would 

like to sit down with you, that your door is open to them. You 

know, right now in our economy, with our unemployment rate 

where it is and it is sustained, one of the things that I have heard 

consistently in talking with my constituents, and I know this goes 

across the country, you know, in North Carolina and throughout, 

regulations are killing us is the number one issue. Does that call 

to action—do you hear that? Are you aware of that? And is that 

promoting you to move forward on more things? 

Mr. SUNSTEIN. Yes. I hear that every day, not just on my birthday, that regulations are causing problems. That is—I think killing 

us is the strongest phrasing but I have heard that a lot also. I 

would say if I hear that only once a day it is an unusual day. 

And because of the historic role of the Office of Information and 

Regulatory Affairs created in its current form by President Reagan, 

that is something that we are intensely focused on. So there are 

two ways that we focus on that. One is this unprecedentedly ambitious lookback process where we are trying to go forward with 500 

reforms that will be helpful in eliminating regulatory burdens. And 

the Occupational Safety and Health Administration elimination of 

nearly two million burden hours, when I’ve talked to the business 

communities, is regulation killing us, the reaction I have gotten to 

that one is you are kidding. You actually did that? You took away 

reporting and paperwork burdens? That was greeted enthusiastically. So a lot of what we are trying to do is take away justified 

burdens. 

The other thing we are trying to do is to make sure that regulations going forward, which in some cases are the bulk of the concern, have—if they are going to go forward they better have commensurate benefits. They better be saving lives or doing something 

great. And even if they are, maybe they can accomplish the same 

goal more cheaply and in some cases maybe they ought not to go 

forward at all. 

So the fact that you have seen many of the rules, not all to be 

sure, but many of the rules that have been of particular concern 

to the small business community being withdrawn for further engagement with the small business community, the most prominent 

of these was the Labor Department’s musculoskeletal disorder reVerDate Mar 15 2010 01:40 Apr 05, 2012 Jkt 071272 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HR\OC\A272.XXX A272

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porting rule where the Office of Advocacy of the SBA and the small 

business community in general found it confusing. And what happened to that is it was withdrawn. There was an EEOC rule implementing the statute that enacted the Americans with Disabilities 

Act amendments which when proposed encountered a great deal of 

concern from the business community saying this is confusing, regulatory uncertainty, and overreach. As it was finalized after a great 

deal of engagement under the—with reference to the president’s executive order on regulation, the Chamber of Commerce said you 

heard us. It is good. This is very reasonable. We applaud this final 

rule. And that is a model where the disability community thought 

this was a good implementation and the business community 

thought it is okay. It is fine. That is a model that would be nice 

to follow. 

Ms. HERRERA BEUTLER. I have one more specific question. One 

of the issues that has been brought to my attention are on private 

right of actions in the regulatory agencies being forced to overregulate for fear of lawsuits. If this were something that were removed, 

do you see that this would decrease the amount of regulation moving forward? 

Mr. SUNSTEIN. I think the answer to that is clearly yes. Sometimes Congress likes private rights of action as a supplement to 

federal regulatory actions. Sometimes Congress hates private 

rights of action as a recipe for overregulation. And sometimes Congress is neutral. So fundamentally it is in your hands. 

Ms. HERRERA BEUTLER. Well, thank you very much. I appreciate 

that. And I yield back the remainder of my time. 

Chairman GRAVES. Ms. Vela ́zquez. 

Ms. VELA ́ ZQUEZ. No, I do not have any more questions. Thank 

you. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. 

Just a couple of other questions. As I was listening to your comments in terms of inviting us, and it goes back to Congressman 

Beutler’s statement as well, in terms of the lookback that is going 

on, does it really—when we are hearing about all the challenges 

that small businesses, in particular, are facing, very shallow pools 

of money to be able to pay in and they are paying it out for regulations, does it really make sense to you that the only real lookback 

going on right now is the same agency that created the rules? 

Mr. SUNSTEIN. Well, I take your point. The way the process 

works is a little better than that, I think. The agency that is doing 

the lookback per OIRA guidance actually, is strongly encouraged to 

make sure that the rulemaking officials are not the ones looking 

at the rules for your reason that within the agency there is a kind 

of separation between the rule makers and the rule evaluators. 

That is the first point. 

The second point is that the lookback process has been greatly 

informed, not by the agency’s own soul searching but by engagement with the public that is subject to the rules. So there is a process you may know about called Start Up America, and I have actually traveled myself to ask members of the small business community what is causing problems. And a lot of the ideas on the rules 

and in a number of cases this is specifically called out, they do not 


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come from the agencies themselves; they come from members of the 

public who have said this is causing a problem for us. 

The milk one to which you referred, the source of the concern 

was the agricultural industry. We have a rule eliminating redundant air pollution control requirements imposed on local gas stations, and the gas stations have said this is a very good thing. So 

it is not just the agency’s own internal mechanism; it is also a process within the executive branch. In some cases members of Congress have said this is something you should look back at; this is 

a cause for concern. The fiduciary rule, which has been revisited, 

it does not look back in the same sense of eliminating rules on the 

books but it is a lookback in the sense of reassessing a proposal. 

And many members of Congress said to the Department of Labor, 

we are worried about cost and benefits and unintended adverse 

consequences. 

Mr. TIPTON. You know, I certainly went after the thought if you 

want to try on something experimentally before you go active with 

rules, bring them back to the Committee, and we would take a 

look. 

One other point that I would—we did hold a Subcommittee hearing that I had the privilege of being able to chair and it was in regards to the GIPSA rule. There have been three recent studies that 

have been conducted showing that the costs on the GIPSA rule will 

well exceed $100 million, which crosses the threshold to have this 

re-examined by the agency. Are you looking back at the GIPSA rule 

now? 

Mr. SUNSTEIN. Not the slightest. And the Department of Agriculture is very much engaged in assessing costs and benefits. 

Mr. TIPTON. Okay. Great. Thank you, Mr. Chairman. I yield 

back. 

Chairman GRAVES. Mr. Hanna. 

Mr. HANNA. Thank you, Mr. Chairman. 

I am generally curious. It has been widely stated here that rules 

and regulations are killing us. How do you personally feel about 

that? Do you think that is a fair estimate, a fair interpretation? 

In coupling with that, how much of what is done in your office 

is subjective? What type of people do this? 

Mr. SUNSTEIN. Those are great questions. Thank you. 

I generally do not talk in the terms of regulations killing us. 

That just would not be my preferred phrasing, but it is extremely 

important in an economically hard time to reduce unjustified regulatory costs and to make sure benefits justify costs. Absolutely. So 

the fact that we are able to save billions of dollars in regulatory 

costs, that is a very good thing. 

In the SBA’s report in February 2010, what they said was their own interventions have contributed to the elimination of $14 billion 

in regulatory costs. That is a very good thing. So the fact that certain rules are being reconsidered to engage with the cost issue is 

really important. The President said just a few nights ago that regulations should be issued only if they are necessary, and that is 

phrasing that is orienting all of our efforts. 

So the idea of getting a hold of the regulatory process to make 

sure the benefits justify the costs to scale back on justified requirements, that is a very high priority. To get a hold of the problem 


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of regulatory uncertainty for small business in particular, that is 

something the President has directed all of us to pay very careful 

attention to. 

In terms of the people at the office, there is an extraordinary 

staff at the Office of Information and Regulatory Affairs. They are 

not political. Many of them have been there for a number of years 

going back across administrations. They are typically first-rate 

technical analysts whose basic job is to think what are the impacts 

of this rule going to be? How much does it cost? What are the benefits? Are the costs real? Are the benefits real? How can we do it 

in a way that is as cost effective as possible? And they have been 

doing this work in some cases for a couple of years and in some 

cases for a lot longer than that. And they are highly professional. 

Mr. HANNA. Which way would you describe the subjective momentum of what they do in terms of regulation? Would you suggest 

that—would you say that it is generally more or less or—— 

Mr. SUNSTEIN. Well, I think the goal is to be as objective as possible. And with respect to regulation where the anticipated cost is 

between let’s say $100 million and $500 million, we want to get as 

close as we can to the objective account. And it would not be shocking for a random regulation, if those who were excited about it, 

let’s say in a community outside government think the costs are 

going to be lower than we expect, and if those who are nervous 

about it think the costs are going to be bigger and we work really 

closely with the Council of Economic Advisors, which is an 

indispensible partner in getting the economic analysis right, so I 

would say that really our goal is to get the numbers right. Subjectivity is hard to eliminate from human life but objectivity is our 

goal. 

Mr. HANNA. And do you think that at the end of the day it is 

a pretty balanced approach and that that would be your opinion? 

Mr. SUNSTEIN. Well, I am honored to serve with a staff of professionals at this office, who have been under multiple administrations, and I think they are really good. 

Mr. HANNA. You said it took a couple of years to withdraw the 

milk rule? 

Mr. SUNSTEIN. Well, this rule, there was—the EPA proposed it, 

I believe it was in the last couple of weeks of the Bush Administration. There were a series of public comments. Agencies have a lot 

of activity, some deregulatory, some regulatory. We work very hard 

to make the deregulation as expansive as possible, and yeah, it 

took a while. Sometimes the fact that rulemaking takes a while is 

not ideal, either because it would deliver excellent public protections or because it would produce big savings. But sometimes the 

machinery works pretty quickly. 

Mr. HANNA. Thank you. I yield back. 

Chairman GRAVES. A couple of last questions. Do you think that 

the agencies are going to have problems with the current budgetary 

issues that we have when it comes to doing their retrospective review? 

Mr. SUNSTEIN. Oh, on the retrospective review? I am very optimistic that even in the current budgetary environment we are 

going to be able to see a lot of progress in a short time. 


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Chairman GRAVES. And my next question deals with the guidance documents, which can be just as big a problem as the proposed rule itself. 

Mr. SUNSTEIN. Yeah. 

Chairman GRAVES. Is anything being done about that? 

Mr. SUNSTEIN. Yes. I agree completely with the concern as some 

of the Courts of Appeal have said that a guidance document is actually a rule. And a few things have been done. The former head 

of OMB, Peter Orszag, in a very short but really important document said that significant guidance documents just like rules 

should come into the Office of Information and Regulatory Affairs 

for review. And we have worked very hard to make sure that guidance documents when they go out are not rules in sheep’s clothing, 

and to make sure that they are really styled as, and going to operate as, non-binding. And in cases where that cannot be done, the 

best course is to make it a real rule. 

Chairman GRAVES. Okay. And last question. What about the outside independent agencies, like the SEC? Is there anything you can 

do there? 

Mr. SUNSTEIN. Yes. The President issued actually an historic executive order. I think it is 13,579, which says that the independent 

agencies should follow the cost saving burden reducing requirements of his January executive order and should engage within 120 

days in the retrospective review. So that no president had done before. It is an executive order. We have already seen some activity 

from the Federal Communications Commission in particular, which 

has announced, I believe, 83 burden-reducing initiatives. They finally got rid, by the way, of the Fairness Doctrine formally under 

the impetus of or in parallel certainly with the President’s actions. 

And with your help, there is limited presidential authority over the 

independent agencies. We think that there is real opportunity for 

cost saving initiatives from the independents. 

Chairman GRAVES. I want to thank you for coming in. I appreciate it. And I would ask that you maintain contact with the Committee to update us on the progress of the retrospective reviews. 

And with that I would ask unanimous consent that all members 

have five legislative days to review and extend their remarks. 

Without objection—— 

Ms. VELA ́ ZQUEZ. Mr. Chairman, I would like to ask unanimous 

consent that—to submit for the record a report on two surveys conducted by FIB and the Chamber of Commerce that shows that regulation is not the number one issue impacting or facing small businesses, but consumer spending, economic uncertainty, and taxes. 

And since some members have continued to state that this is the 

number one issue, I just would like to ask unanimous consent to 

enter that into the record. 

Chairman GRAVES. Without objection, so ordered on both consents. 

With that, the hearing is adjourned. Thank you very much. 

[Whereupon, at 2:19 p.m., the Committee hearing was adjourned.] 


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