S. Hrg. 112–220 

FEDERAL REGULATION—2011 

HEARINGS 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

APRIL 14, 2011 

HOW BEST TO ADVANCE THE PUBLIC INTEREST? 

JUNE 23, 2011 

A REVIEW OF LEGISLATIVE PROPOSALS—PART I 

JULY 20, 2011 

A REVIEW OF LEGISLATIVE PROPOSALS—PART II 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

FEDERAL REGULATION—2011 

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

67–634 PDF 2012

S. Hrg. 112–220 

FEDERAL REGULATION—2011 

HEARINGS 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

APRIL 14, 2011 

HOW BEST TO ADVANCE THE PUBLIC INTEREST? 

JUNE 23, 2011 

A REVIEW OF LEGISLATIVE PROPOSALS—PART I 

JULY 20, 2011 

A REVIEW OF LEGISLATIVE PROPOSALS—PART II 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

JOHN ENSIGN, Nevada * 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas * 

MICHAEL L. ALEXANDER, Staff Director 

LAWRENCE B. NOVEY, Associate Staff Director and Chief Counsel for Governmental Affairs 

HOLLY A. IDELSON, Senior Counsel 

CARLY A. STEIER, Professional Staff Member 

NICHOLAS A. ROSSI, Minority Staff Director 

J. KATHRYN FRENCH, Minority Director for Governmental Affairs 

MARK B. LEDUC, Minority Legislative Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk 

LAURA W. KILBRIDE, Hearing Clerk 

*Senator Ensign resigned on May 3 and was replaced on the Committee by Senator Moran 

on May 11. 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ..................................................................................... 1, 35, 73 

Senator Collins............................................................................................ 2, 36, 76 

Senator Johnson ....................................................................................... 11, 62, 93 

Senator McCain ................................................................................................ 13 

Senator Begich .................................................................................................. 15 

Senator Portman....................................................................................... 18, 38, 95 

Senator Carper ................................................................................................. 24 

Senator Paul.................................................................................................... 50, 98 

Senator Pryor .................................................................................................... 52 

Senator Coburn ................................................................................................. 52 

Senator Landrieu .............................................................................................. 53 

Senator Levin .................................................................................................... 65 

Prepared statements: 

Senator Lieberman ............................................................................. 105, 114, 199 

Senator Collins.................................................................................... 106, 118, 200 

Senator Pryor .................................................................................................... 121 

Senator Portman .............................................................................................. 123 

Senator Landrieu .............................................................................................. 127 

Senator Paul ..................................................................................................... 129 

WITNESSES 

THURSDAY, APRIL 14, 2011 

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

Affairs, Office of Management and Budget ........................................................ 4 

THURSDAY, JUNE 23 

Hon. Olympia J. Snowe, a U.S. Senator from the State of Maine ....................... 41 

Hon. Pat Roberts, a U.S. Senator from the State of Kansas ............................... 44 

Hon. David Vitter, a U.S. Senator from the State of Louisiana .......................... 46 

Hon. Mark R. Warner, a U.S. Senator from the State of Virginia ...................... 48 

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

Affairs, Office of Management and Budget ........................................................ 53 

WEDNESDAY, JULY 20, 2011 

Hon. Sheldon Whitehouse, a U.S. Senator from the State of Rhode Island ....... 74 

Hon. Sally Katzen, Former Administrator of the Office of Information and 

Regulatory Affairs (1993–1998) .......................................................................... 79 

Hon. Susan E. Dudley, Former Administrator of the Office of Information 

and Regulatory Affairs (2007–2009) ................................................................... 83 

David J. Goldston, Director, Government Affairs, Natural Resources Defense 

Council .................................................................................................................. 85 

Karen R. Harned, Executive Director, Small Business Legal Center, National 

Federation of Independent Business .................................................................. 87 

ALPHABETICAL LIST OF WITNESSES

Dudley, Hon. Susan E.: 

Testimony .......................................................................................................... 83 

Prepared statement .......................................................................................... 220 

Goldston, David J.: 

Testimony .......................................................................................................... 85 

Prepared statement .......................................................................................... 242 

Page

IV 

Harned, Karen R.: 

Testimony .......................................................................................................... 87 

Prepared statement .......................................................................................... 245 

Katzen, Hon. Sally: 

Testimony .......................................................................................................... 79 

Prepared statement .......................................................................................... 209 

Roberts, Hon. Pat: 

Testimony .......................................................................................................... 44 

Prepared statement .......................................................................................... 164 

Snowe, Hon. Olympia J.: 

Testimony .......................................................................................................... 41 

Prepared statement .......................................................................................... 161 

Sunstein, Hon. Cass R.: 

Testimony .......................................................................................................... 4, 53 

Prepared statement .................................................................................... 108, 173 

Vitter, Hon. David: 

Testimony .......................................................................................................... 46 

Prepared statement .......................................................................................... 166 

Warner, Hon. Mark: 

Testimony .......................................................................................................... 48 

Prepared statement .......................................................................................... 171 

Whitehouse, Hon. Sheldon: 

Testimony .......................................................................................................... 74 

Prepared statement .......................................................................................... 207 

APPENDIX 

Responses to post-hearing questions for the Record from: 

Mr. Sunstein, April 14, 2011 ........................................................................... 111 

Mr. Sunstein, June 23, 2011, with an attachment ........................................ 177 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD: 

Letter from Natural Resources Defense Council, dated June 23, 2011, 

submitted by Senator Lieberman ................................................................ 115 

Letter from Coalition for Sensible Safeguards, dated June 23, 2011, submitted by Senator Lieberman ...................................................................... 116 

Chart titled ‘‘Economically Significant Rules In The Pipeline, 2005–2010,’’ 

Federal Register, submitted by Senator Portman ...................................... 126 

Letter from U.S. Chamber of Commerce, dated June 22, 2011, submitted 

by Senator Paul ............................................................................................. 135 

‘‘The Regulations from the Executive In Need of Security (REINS) Act,’’ 

Publication from Federalalist Society for Law and Public Policy Studies, by Jonathan H. Adler, submitted by Senator Paul ............................. 139 

Statement of David Schoenbrod, Trustee Professor, New York Law School 

and Visiting Scholar, American Enterprise Institute, submitted by Senator Paul ........................................................................................................ 144 

Letter from representatives of small businesses, dated June 8, 2011, 

submitted by Senator Coburn ...................................................................... 159 

Letter from Windham Millwork, Inc., dated July 12, 2011, submitted 

by Senator Collins ......................................................................................... 204 

ADDITIONAL LETTERS SUBMITTED FOR THE RECORD FROM: 

AFL-CIO, dated July 19, 2011 ......................................................................... 253 

American Sustainable Business Council, dated July 19, 2011 ..................... 256 

Coalition for Sensible Safeguards, dated July 20, 2011 ................................ 258 

Council for Occupational Safety and Health, dated July 19, 2011 ............... 260 

Demos, dated July 20, 2011 ............................................................................. 262 

Main Street Alliance, dated July 19, 2011 ..................................................... 264 

OMB Watch, dated July 19, 2011 ................................................................... 266 

Public Citizen, dated July 20, 2011 ................................................................ 268 

UAW, dated July 20, 2011 ............................................................................... 270 

Union of Concerned Scientists, dated July 20, 2011 ..................................... 272 

(1) 

FEDERAL REGULATION: HOW BEST TO 

ADVANCE THE PUBLIC INTEREST? 

THURSDAY, APRIL 14, 2011 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, presiding. 

Present: Senators Lieberman, Carper, Begich, Collins, McCain, 

Johnson, and Portman. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. I want to 

thank everybody for being here. This is a hearing on ‘‘Federal Regulation: How Best to Advance the Public Interest.’’ 

The hearing is occasioned by an interest, once again—I do not 

know that the interest in regulatory reform ever goes away, but it 

seems to have peaked again. We have several pieces of legislation 

before the Committee about which we are going to hold a hearing 

in June. But we thought it would be important to convene this 

hearing with Cass Sunstein to really set the predicate for what is 

to follow, both to discuss the values, the concepts of law that are 

at play here, and Mr. Sunstein is particularly well-suited to do that 

based on his long experience in this area, but also to discuss, to the 

extent that he wants, the initiative that President Barack Obama 

took in January toward regulatory reform. 

This is another one of those issues where probably there is more 

agreement than the tenor of the debate would indicate, or the content of the debate would indicate, which is to say that I have not 

yet met anybody who does not think there should be some regulation. Regulation emerges to implement laws that we pass—one of 

the first major legislative experiences I had was in the amendments to the Clean Air Act in 1990, which fortunately were adopted on a broadly bipartisan basis. But we are dealing with a topic 

so large that you simply could not cover it in the law, so regulations follow to achieve that purpose and need to be based in that 

exercise of congressional authority. 

I suppose the question is how effectively it is done. Inevitably, 

regulations ask something of individuals, businesses, etc. They impose requirements. Some people think that the requirements are, 

in case to case, burdensome and beyond what either was intended 

by Congress or beyond what they achieve. I am always affected by 

2 

this, and maybe this takes me back to the fact that nobody ever 

argues for no regulation just as no one argues for no law. This is 

the insight of the Talmud in which one of the rabbis says that if 

there was no government, unfortunately, by our nature, people 

would act like fish, which is that the larger ones would eat the 

smaller ones. 

And so it is a bit vivid, I would say, but it makes the point that 

the law exists to make this a more orderly and fair society. The 

point, as always, in this is to find processes in a government, which 

has become very large and very complicated really, that find the 

sweet spot, that regulates, if I could put it this way, as little as 

possible to achieve the objectives that the laws that Congress 

adopts have. 

Again, I cannot thank Mr. Sunstein enough for being here because he is perfectly situated by both past and present to help us 

set the table, if you will, for our focus on the legislative proposals 

that are before our Committee because, again, Office of Information 

and Regulatory Affairs (OIRA), which Mr. Sunstein heads, is within the governmental affairs jurisdiction of this Committee. So I 

thank you for being here. I look forward to your testimony and the 

question and answer period. 

I now call on Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. I was trying to 

think of a Catholic analogy to the one that you quoted from Jewish 

tradition—— [Laughter.] 

Chairman LIEBERMAN. I am sure there are many. 

Senator COLLINS [continuing]. But since none comes instantly to 

mind, I am going to proceed with my statement instead. 

At the outset, I want to thank the Chairman for holding this 

hearing today and also for agreeing to schedule another hearing 

soon on the many legislative reform proposals that have been referred to our Committee. With these hearings, we begin our review 

of the Federal regulatory process, how it works now, what its impact is on jobs, the economy, and our well-being, and how it might 

work better in the future. 

We are beginning this review with the Office of Information and 

Regulatory Affairs. I welcome its Administrator, Cass Sunstein, 

back to our Committee and look forward to hearing his views on 

how the regulatory burdens on our economy, especially on our 

smaller businesses, can be lightened or simplified. 

Although few outside of Washington are familiar with OIRA, it, 

in fact, has tremendous influence on the regulations that affect the 

everyday lives of Americans. Through the process of regulatory review, OIRA plays a critical role in shaping the rules by which Federal laws are implemented. OIRA both informally advises agencies 

as they are developing their rules and then formally reviews the 

rigor of the methodologies used to develop the regulations. 

In Administrator Sunstein’s confirmation hearing, I noted with 

approval his support for cost-benefit analysis as well as his recommendation that agencies be required to explain a decision to regulate when the costs of a proposed rule exceed its benefits. I also 

3 

noted that he recognized that such analysis has limitations when 

it comes to considering intangible costs and benefits. 

The idea of using cost-benefit analysis is not new, of course. In 

1981, President Ronald Reagan issued an Executive Order (EO) 

prohibiting agencies from issuing regulations unless the potential 

benefits to society from regulation outweighed the potential costs. 

In 1993, President William Clinton issued an Executive Order that 

incorporated cost-benefit analysis requirements. And, of course, in 

January of this year, President Obama issued his own Executive 

Order. 

When President Obama issued his Executive Order, he also authored an op-ed piece in the Wall Street Journal in which he said 

that Federal regulations have ‘‘sometimes gotten out of balance, 

placing unreasonable burdens on business, burdens that have stifled innovation and have had a chilling effect on growth and jobs.’’ 

I agree. All too often, it seems that Federal agencies do not take 

into account the impact on small businesses and job growth before 

imposing new rules and regulations. Without a thoughtful analysis 

of the impact of regulations, we risk imposing an unnecessary burden on job creation, an unacceptable result at a time when so many 

Americans remain without jobs. 

Furthermore, too often, I have seen the goals of one agency directly contradicted by the regulations of another agency. Let me 

give you a concrete example. Last year, the Environmental Protection Agency (EPA) proposed new regulations known as Boiler Maximum Achievable Control Technology (MACT). These regulations, 

as originally proposed, could have cost Maine businesses $640 million, despite the availability of less costly approaches to address 

boiler emissions. These proposed rules also pitted two agencies directly against each other. The Department of Energy at that time 

had recently awarded a Maine high school a $300,000 grant to help 

buy a new wood pellet boiler to reduce the school’s use of fossil 

fuels. But because the EPA’s proposed regulations would have 

greatly increased the cost of that boiler, the school board ended up 

turning down the Federal grant. 

Another example of poorly thought out regulation was the EPA’s 

new lead paint rule. While all of us want to see lead paint removed 

or contained for health and safety reasons, the EPA’s flawed implementation of its lead paint regulations would have imposed an impossible burden on our carpenters, painters, plumbers, and electricians; virtually everyone in the construction industry. The rules 

required contractors who worked in homes built before 1978 to be 

EPA certified or to face massive fines of up to $37,500 per violation 

per day. That is more than many of the painters and carpenters 

and plumbers and electricians in my State make in an entire year. 

At the time, however, there were only three certification trainers 

in my entire State and all of them were in Southern Maine. Two 

States had no trainers at all. I am looking at my colleague from 

Alaska, who was a co-sponsor with me of this amendment and had 

a similar problem in the vast State of Alaska. 

So last June, the Senate passed a bipartisan amendment that I 

authored by more than 60 votes to extend the training deadline 

and to delay the punitive fines until the trainers were in place. The 

support for my amendment was a strong indication that many 

4 

1The prepared statement of Mr. Sunstein appears in the Appendix on page 108. 

States were facing this regulatory catch-22 of being required to get 

contractors certified from non-existent trainers. 

Last month, I offered legislation which I call the Clearing Unnecessary Regulatory Burdens (CURB) Act to clear unnecessary regulatory burdens that are holding our job creators back. My proposal 

would codify the cost-benefit analysis provisions of President Clinton’s Executive Order, impose good guidance practices on Federal 

agencies, and help small businesses that face penalties for firsttime non-harmful paperwork violations. 

The struggling economy has challenged our Nation’s entrepreneurial spirit. We are recovering and that recovery will come from 

the innovative and bold job creators of America’s small business 

community. I look forward today to hearing Mr. Sunstein’s testimony on how we can work together to improve the regulatory process to ensure that we are not crushing that entrepreneurial spirit 

that produces innovation, economic growth, and most important, 

new jobs. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks very much, Senator Collins. 

I cannot resist, in continuing the Catholic-Jewish dialogue, recalling for the record—the first time I have had the honor to do 

this—that almost 10 years ago, there were eight or nine Senators— 

Senator McCain was with us—who went over to Afghanistan after 

we had won the war at the outset there, and we were on a military 

plane flying back. It was a very long flight, and for some reason, 

Senator Collins, Senator Jack Reed and I got into a debate to pass 

the time on the relative merits of Catholic guilt versus Jewish 

guilt. [Laughter.] 

And after an hour—it seemed hard to imagine we could spend 

that much time, but again, we were trapped in a plane, and Senator Fred Thompson was next to us snoring loudly—do you remember that? 

Senator COLLINS. I do. [Laughter.] 

Chairman LIEBERMAN. And Senator Collins closed the argument, 

as she very often does by saying, OK, let us agree with regard to 

guilt that your people created it and my people perfected it. 

[Laughter.] 

What relevance that has here—I suppose if there was more guilt, 

there would be need for less law and regulation because people 

would always do the right thing. 

You need not respond in any ecumenical way, Mr. Sunstein, but 

we are glad you are here. 

He is Administrator of the Office of Information and Regulatory 

Affairs within the Office of Management and Budget (OMB), and 

before that, really one of America’s leading law professors, writers, 

and experts on administrative law. Thank you for being here. 

TESTIMONY OF HON. CASS R. SUNSTEIN,1 ADMINISTRATOR, 

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

Mr. SUNSTEIN. Thank you, Mr. Chairman, Ranking Member Collins, and Members of the Committee. You are witnessing not only 

a discussion of regulation but a Catholic-Jewish marriage. My wife, 

5 

Samantha Power, is here, and our wedding, which was relatively 

recent, was blessed personally by the Pope—a story which I will 

tell you if you like—and I hope and trust by my many rabbinical 

ancestors, as well. 

Chairman LIEBERMAN. Good beginning. 

Mr. SUNSTEIN. I am grateful to have the opportunity to appear 

before you—honored, even—to discuss the topic of Federal regulation and regulatory review. As both of you indicated, the President 

issued an Executive Order on January 18, 2011, an historic Executive Order, and that will be my principal focus. 

I will also briefly discuss a presidential memorandum involving 

small business also on January 18, which focuses in particular on 

protecting small businesses, as job creators from excessive regulation. 

And I will say a bit about a presidential memorandum more recently, from late February, with the title ‘‘Administrative Flexibility,’’ which is focused in particular on streamlining regulations 

imposed on economically challenged State, local, and tribal governments. So there, the emphasis is on protecting them from undue 

regulatory and paperwork requirements. 

The new EO 13563 is meant to lay the foundations for a regulatory system that protects public health, welfare, safety, and our 

environment while also—and this is in the first sentence of the Executive Order—promoting economic growth, innovation, competitiveness, and job creation. The words ‘‘job creation’’ are up front in 

the new Executive Order. It requires a series of concrete steps to 

achieve that overriding goal. 

As Senator Collins indicated, the process of regulatory review 

was actually initiated by President Reagan in 1981, shortly after 

assuming office, and continued by President Clinton with an Executive Order in 1993. The two documents, that is, the Clinton and 

Reagan documents, are continuous in the sense that they both require careful consideration of costs and benefits—that has been at 

the heart of regulatory review now for decades; for tailoring regulations to impose the least burden on society, which the Chairman 

referred to in his opening remarks; for selection of the approach 

that maximizes net benefits, which means even if the benefits justify the costs, we ought to find an approach that drives the cost 

down and drives the benefits up to the extent permitted by law; for 

consideration of alternatives, a point that has turned out to be extremely important in the last 2 years, where we have sought to 

identify alternatives that maybe are more creative, less costly, 

more beneficial; and for a process of interagency review, which the 

Office of Information and Regulatory Affairs coordinates. 

President Obama’s Executive Order, issued on January 18, is designed to supplement and to improve that process. In reaffirming 

the Clinton Executive Order, which, you recall, reaffirms many of 

the core principles of the Reagan Executive Order, it also stresses 

as no similar Executive Order had before the need for predictability 

and certainty, responding to the emphasis in the last years on concern that regulation had become less predictable in a way that had 

deterred economic growth. 

The new Executive Order squarely affirms the need to ensure 

that the benefits of regulation justify the costs, emphasizes the imVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
6 

portance of attending to cumulative burdens which often can run 

the burdens imposed by individual regulations, and emphasizes in 

an unprecedented way the need to measure and seek to improve 

the actual results of regulatory requirements. That is a quotation. 

Second, the Executive Order calls for increased public participation. It directs agencies to promote an open exchange—that is the 

language of the EO—that involves not only a 60-day period of public comment before rules are finalized, an opportunity to receive 

input on rules to correct errors, but also use of the Internet to provide for the first time access both to rules and to supporting documents, such as technical and scientific documents, so that they can 

be corrected by the public if there is an error. 

The Executive Order also asks agencies to act even in advance 

of rulemaking to seek the views of those who are likely to be affected. This emphatically includes small business, to seek their 

views before regulations are even proposed. 

Third, the Executive Order directs agencies as no President had 

so clearly in the past to harmonize, simplify, and coordinate rules. 

Senator Collins referred to the risk that agencies will impose conflicting and inconsistent requirements. The President has squarely 

addressed that risk by saying that to promote simplicity and to reduce costs, agencies must coordinate with one another in a way 

that will promote advance planning and prevent confusion. 

Fourth, the Executive Order directs agencies to consider flexible 

approaches—that is the name of the section to which I am pointing—that reduce burdens and maintain freedom of choice for the 

American public. I would like to underline those words, maintain 

freedom of choice for the American public. The idea here is that to 

the extent that the law permits, agencies should give careful consideration to and identify approaches that promote flexibility, allow 

companies both large and small to find their own best, cheapest, 

most effective ways of promoting the end in question. Flexible approaches may, for example, include provision of information rather 

than a flat ban, or public warnings rather than a mandate. 

Fifth, the Executive Order calls for scientific integrity. There has 

been bipartisan emphasis on the need to ensure that the information that underlies regulatory judgments is objective, and this Executive Order more clearly than anything that preceded it calls for 

regulatory processes to include the scientific integrity principles 

that have recently been applied elsewhere in the Federal Government and that must animate regulatory choices. 

Sixth and finally—this is the last one on the Executive Order— 

there is a call for retrospective analysis of existing rules. What the 

Executive Order does is to ask for periodic review to ensure that 

rules that might be outmoded, ineffective, insufficient, or excessively burdensome—these are rules that are already on the books, 

not new ones—are revisited periodically and streamlined. The Executive Order has a concrete requirement here, which is by May 

18—an important date—agencies are now required to produce preliminary plans for that retrospective review, and we have seen impressive results in the last months of agencies going back, revisiting proposed, and longstanding rules to increase flexibility and diminish costs. 

7 

Briefly on the Memorandum on Small Business, what the President has done here is squarely to direct agencies to consider methods to reduce those regulatory burdens, methods that include simplified reporting and compliance requirements, so the paperwork 

burden is lower next year than it is today; extended compliance 

dates, so small businesses which often have a harder time complying have more time in which to comply; and even partial or total 

exemptions. 

The most noteworthy part of the President’s Memorandum on 

Small Business may be the specific requirement that if agencies 

are not providing flexibilities for small businesses, they must specifically explain themselves. No president had done that before. 

The Memorandum on Administrative Flexibility, as noted, focuses on State, local, and tribal governments. It acknowledges, as 

Senator Collins noted in general, that there are sometimes onerous 

requirements imposed on them, and asks the Director of the Office 

of Management and Budget to explore how best to eliminate those 

unnecessary requirements, and directs agencies within 180 days to 

identify requirements that can be streamlined, reduced, or eliminated. 

In the recent past, in a quite remarkable development, countless 

agencies in the Federal Government have been reaching out to the 

public for ideas about how to eliminate or streamline excessive regulations. The Environmental Protection Agency, the General Services Administration, the Department of Transportation, the Department of Defense, the Department of Energy, the Department of 

Treasury, and many more have issued Federal Register notices saying, help us to comply with the President’s requirement. Not only 

that, a number of agencies have created Web sites dedicated to the 

purpose of regulation, regulatory reform, and regulatory relief. 

The Executive Order and the two memoranda create strong foundations for improving regulation and regulatory review in an economically challenging time. I greatly appreciate the Committee’s 

interest in this topic and look forward to answering your questions. 

Chairman LIEBERMAN. Thanks very much. That was an excellent 

opening statement. 

We will do a round in which Senators will have 7 minutes each 

to question. 

Let me get to this basic test that, as you said, has been fundamental to the regulatory process or attempts to reform it, which 

are to try to calculate costs against benefits of particular regulations, and necessarily, I will get to the retrospective part of it in 

a minute, but some of this has to happen before we actually know, 

so we are trying to make educated guesses. And I know it is a requirement that OMB submit regular reports annually, I guess, in 

this regard to Congress. 

Tell us a little bit more, without telling us too much, about how 

you rationally go about calculating costs and benefits. 

Mr. SUNSTEIN. Some of it is very straightforward. So if you have 

a regulation, let us say it is a regulation that involves automobile 

safety, it may cost companies a certain amount of money to make 

their cars safer, and then we work with companies, which provide 

relevant information, to find out what the cost is, and if the information provided by the companies looks inflated or may be too low, 

8 

we have a very careful reality check which involves a number of 

parts of the Federal Government, including the Council of Economic Advisors. So on the cost side, if the cost is purely economic, 

basically, we need to see what companies, consumers, and workers 

are going to bear. 

On the benefit side, there are a number of regulations that provide monetary benefits, such as a recent, this week, rule that eliminates the application of the oil spill rule to milk producers. That 

one, which has been called for by many Members of Congress, is 

going to save companies $140 million a year, mostly small business, by the way. So that is economic. 

There are others that are not strictly speaking economic benefits, 

but you are going to save lives or make people healthier. For example, there is a Food and Drug Administration (FDA) regulation involving salmonella. It involves best practices with respect to eggs. 

And there are well established techniques for trying to turn those 

health and safety benefits into monetary equivalents. What we are 

typically talking about with respect to death is a risk of death, and 

economists have what Republican and Democratic Administrations 

have agreed are at least state-of-the-art techniques for valuing 

that. But it is important to see that the economic benefits, purely 

economic benefits, really matter. Frequently, regulation involves 

protecting lives, and sometimes significant numbers of lives. 

Chairman LIEBERMAN. Yes. That is a very helpful answer. It always strikes me that it is easier to calculate the costs. For instance, in your case, you speak to the auto industry about the costs 

of a particular regulation. They can do pretty well at estimating it. 

It is harder in advance to—but maybe there is a credible system— 

to calculate the benefits, because often, obviously, when you try to 

monetize them, the benefits are of costs that are avoided. So those 

are often subject to dispute and debate. 

But really, what you are saying is that—and I appreciate it— 

both Republican and Democratic Administrations have accepted 

some of the science now of calculating benefits. I guess the question 

in the example is whether the auto industry accepted the science 

of calculating the benefits as opposed to the costs that they knew 

were real. 

Mr. SUNSTEIN. Our rules involving fuel economy are among our 

most expensive rules. They are saving consumers a great deal of 

money, actually billions of dollars in terms of reduced costs from 

gasoline. So this is, especially in a situation where the cost of gasoline is increasing, the fuel economy standards are going to save a 

lot of money. So consumers are gaining a great deal. 

The automobile companies themselves actually not merely accepted the analysis and the outcome, but participated in celebrating it on the ground that it helped solve a problem of the sort 

to which Senator Collins referred, of lack of coordination of two 

kinds: Lack of coordination between the Department of Transportation and the Environmental Protection Agency—they had to 

mesh their legal authorities, and they did; and lack of coordination 

between State governments and Federal Government, in particular 

California, and these were meshed, as well. So in this case, the 

auto companies were very helpful with respect to the analysis of 

9 

costs, but also were informative with respect to the analysis of benefits. 

Chairman LIEBERMAN. I am going to go to the retrospective analysis that you are asking for now, because obviously there, in simple 

terms, you are still estimating, but there is experience to inform as 

opposed to the estimate of what is happening. In March of this 

year, EPA put out a report on the benefits and costs of the Clean 

Air Act, which I referenced in my opening statement, from 1990 to 

2020, so part of it is look-back, but part of it, obviously, is still forward, and the benefits were substantially greater than the initial 

prospective analysis. A note at the bottom here, ‘‘The most influential change appears to result from updates over the last decade in 

the epidemiological studies which provide estimates of changes in 

population, risk of premature mortality associated with exposure to 

fine particles.’’ 

Has this report been broadly accepted by people who are regulated under the Clean Air Act of 1990, because more of it is the 

look-back? 

Mr. SUNSTEIN. That particular report was subject to peer review—— 

Chairman LIEBERMAN. Yes. 

Mr. SUNSTEIN [continuing]. So it was carefully analyzed by specialists. I do not know whether it has received a careful assessment 

by those who are subject to regulatory requirements. I do know it 

is broadly agreed that the benefits of the Clean Air Act, on balance, 

exceed the costs of the Clean Air Act. 

Chairman LIEBERMAN. My time is rapidly expiring. Let me ask 

for a quick response. Just add a little bit more on that interesting 

case because I saw you blogged on it the other day, about the milk 

products and milk product containers which were originally included—which surprised people, I suppose—in oil spill prevention 

regulations. EPA then delayed compliance by the milk sector while 

it reviewed their concerns. And then, as you say, the agency decided it would place unjustifiable burdens on dairy farmers and 

producers. Can you give us a quick explanation of what happened 

there because that is the way the process should work, I think 

most of us would say. How did it get to that point? 

Mr. SUNSTEIN. Yes. One of the representatives of the dairy industry, who had been arguing for this exemption, said on the day it 

was announced the phrase ‘‘Got Milk?’’ does not ordinarily mean 

the same thing as the phrase ‘‘Got Oil?’’ He was trying to explain 

that this was a common sensical decision. 

Chairman LIEBERMAN. Yes. 

Mr. SUNSTEIN. It has a complicated history. Roughly, the original 

definition of oil could pick up milk products under the statute from 

the 1970s. There is a subsequent statute that gave EPA the authority to make adjustments to the original definition. In 2006, 

2007, 2008, the milk industry said that this exemption, you have 

to make, because you are imposing costs on us, and while oil has 

serious environmental effects, the kinds of milk spills that this 

would control, this is imposing costs for no significant environmental benefit. 

The Bush Administration proposed, actually, in its final week, I 

believe, an exemption of milk. What we did was actually to broaden 

10 

the exemption. It is less conditional and it is broader than what 

was initially proposed. 

Chairman LIEBERMAN. Thank you very much, Mr. Sunstein. My 

time is up. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

Administrator Sunstein, what I have found is that cost-benefit 

analysis can be subjected to very strange interpretations on what 

is the benefit. So let me give you an example by illustrating from 

a recent EPA rule on waste incinerators. According to reports, the 

EPA counted as a benefit the cost to firms of hiring workers to 

comply with the new regulations. Now, I doubt that any small business that was subjected to this new regulation would consider it a 

benefit to have to hire new employees specifically to comply with 

the regulation, yet EPA put it this way: ‘‘Environmental regulations create employment in many basic industries.’’ So translated 

into English, the EPA is actually saying that the regulations create 

jobs by forcing companies to hire more people to comply with the 

regulations. Do you believe that is what is intended by a benefit 

of regulation? 

Mr. SUNSTEIN. No, I do not, but I can tell you what my recollection is of what the EPA actually said. I take your point completely. 

My recollection is that the EPA did not count the increased jobs 

that come from needing to comply with a regulation as a benefit, 

as part of cost-benefit analysis. So there was a part of the regulatory impact analysis which analyzes benefits and costs with great 

care and finds ways to reduce costs, and then there is a separate 

part of the document that analyzes job effects and that is responsive not only to the President’s call in the Executive Order to investigate job creation, but also the concern that many people have expressed about the adverse effects—the potentially adverse effects of 

environmental regulation on jobs. 

And so what the EPA was doing there was not saying the fact 

that you have to hire people to comply is an independent benefit 

that jacks up the benefit figures. It was just trying to make a projection of the total employment consequences of the rule, and for 

a typical environmental regulation, there can be adverse effects— 

if you increase cost, that is not a great thing by itself for job 

growth—but it can also be the case that you, by virtue of imposing 

costs, produce some more employment, which may not be a wonderful thing from the standpoint of competitiveness, but does suggest 

that when you are thinking about job growth as such, there may 

be an offset. 

Senator COLLINS. I will tell you that a small business or even a 

larger business that reads that regulation and looks at what EPA 

is doing assumes that EPA is saying that the fact that the company 

has to hire more people to comply with the new regulations is a 

benefit. I understand your more sophisticated analysis, but that is 

certainly what it sounds like. 

Let me switch to a different issue. There are rules, in fact, there 

are many rules where the benefits do outweigh the costs and the 

regulations may, in fact, be worthwhile. But there may nevertheless, be a less expensive way of achieving those benefits or of 

achieving most of those benefits. Often, the complaint that I hear— 

and I heard it just this last week from wastewater treatment plant 

11 

operators in Maine who were criticizing EPA—is that the marginal 

benefit is so small compared to the cost. That is a slightly different 

issue. Does OIRA look at whether there is a less expensive way of 

achieving the benefits that EPA or other agencies might propose? 

Mr. SUNSTEIN. Yes, we do, Senator Collins, and this is something 

that the President has placed a great emphasis on in the Executive 

Order. So there are a couple separate ideas here. One is that independent of the benefits having to justify the costs, we have to find 

the approach that maximizes net benefits, and that is kind of technical speak, but it is exactly on the point that you raise, where you 

can have a rule where the benefits are a little higher than the 

costs, but maybe there is a way of doing it where the costs go way 

down and the benefits go just a little down and the net benefits are 

way higher that way, and we are really interested in that. 

One thing that the notice and comment process does is to raise 

alternatives and have an analysis of costs and benefits for those. 

So if we have situations where the benefits are justifying the costs, 

that is a good thing, but we are not maximizing net benefits, there 

is a problem and we should do better. 

The President’s emphasis on flexible approaches, and Section 1 

of the Executive Order refers to performance standards rather than 

design standards, that is designed to say to companies, we will not 

tell you how to do it. We will tell you the outcome. You choose the 

way. So there are a bunch of ideas in this very short Executive 

Order that are meant squarely to address that problem. 

Senator COLLINS. Well, I want to thank you for taking a look at 

many of the regulations that have been issued and applying a more 

common sense approach, so that we can achieve benefits without 

so overburdening our businesses that they cannot create jobs and 

we are getting only a marginal benefit. I know you have worked 

very hard in a number of areas to achieve that goal, and I appreciate it. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you very much, Senator Collins. 

In order of appearance this morning, we will call on Senators 

Johnson, McCain, Begich, and Portman. Senator Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Mr. Chairman. 

Mr. Sunstein, welcome. Recently, probably within the last year, 

the Small Business Administration issued a report that estimated 

the annual cost of Federal Government regulations at about $1.7 

trillion a year, which is more than 10 percent of our total Gross Domestic Product. Is that a number that you pretty well agree with? 

Mr. SUNSTEIN. I have not studied that document with care. Our 

own analysis of costs and benefits, annually and cumulatively, suggests that number is too high. 

Senator JOHNSON. What would your analysis put it at? 

Mr. SUNSTEIN. Well, I can tell you based on the last 2 years, the 

total costs of final economically significant regulations are about 

$11.9 billion, and if you look at the 2-year average over the course 

of the decades for which we have numbers, that number, $4 or $5 

billion a year, is not way off. Two-thousand-and-seven was the big 

year for regulation in the recent past under the Bush AdministraVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
12 

tion and there, it was significantly over that $11 billion figure. But 

if you add them all up, it is going to be hard to get in the trillions. 

There is a paper by a guy named Thomas Hopkins, who tried to 

estimate the aggregate figure, and it was significantly lower than 

those trillions. 

Senator JOHNSON. But you are saying your own analysis has $11 billion versus $1.7 trillion? 

Mr. SUNSTEIN. Well, no. The $11 billion is for the last 2 years, 

our addition to the stock. So what the Crane and Crane study to 

which you refer tries to do is think of the total costs of all regulations and we do not have an analysis of that, OMB and OIRA do 

not. What we do have an analysis of is each year, and we have an 

analysis of decades, and if we are adding to the stock, I hope the 

numbers are as low as possible for us, but if you are adding to the 

stock as the Clinton Administration did, roughly $5 billion a year, 

then it is going to be hard to get you up in the trillions. 

Senator JOHNSON. If you are adding $5 billion a year, what is the 

benefit of that, then? What is your estimate of the benefit? 

Mr. SUNSTEIN. Well, what I can tell you is our benefit estimate 

is over $40 billion—the discussion we just had with Senator Collins—actually, for our first two fiscal years, the net benefits of the 

Obama Administration are more than three times the net benefits 

of the Clinton Administration and more than 10 times the net benefits of the Bush Administration in its 2 years. 

Senator JOHNSON. I am not an attorney, but as I read this Executive Order, to me, it looks like it is sort of putting the burden of 

proof on a cost-benefit analysis on the agency. Is that kind of how 

you view that Executive Order? 

Mr. SUNSTEIN. I think that is fair. 

Senator JOHNSON. In terms of just classic cost-benefit analysis, 

I mean, it really is pretty simple—from a manufacturer’s standpoint, if you have a piece of equipment that is broken, it costs me 

$25,000 to repair it, I look at what is the revenue stream. If it is 

a couple hundred thousand dollars, I go, yes, I am going to spend 

that $25,000. 

My concern with this Executive Order is I think there is just a 

huge loophole, and I am sure you are aware of the phrase, in terms 

of measuring benefits, it allows the agency to take into account values that are difficult or impossible to quantify, including equity, 

human dignity, fairness, and distributive impacts. I mean, is that 

not a rather large loophole? Is that not a pretty amorphous standard? I mean, how can you even begin to—and again, I am looking 

at the standards you also put on there in terms of something that 

is measurable, predictable, certain, something with scientific integrity. How can you defend that type of standard? 

Mr. SUNSTEIN. Thank you for that, Senator. I can walk you 

through, if I may—— 

Senator JOHNSON. Sure. 

Mr. SUNSTEIN [continuing]. The structure of the Executive Order 

on this. The immediately preceding sentence requires quantification through the best available techniques in a way that is more 

focused on quantifiable measures than any President has been in 

the past. So the opening sentence of that section is quantify, in 

italics. 

13 

Then there is a recognition that under relevant statutes, which 

is what this Executive Order is ensuring implementation of, under 

relevant statutes, there are sometimes values that cannot easily be 

turned into monetary equivalents. I will give you a couple of examples, both involving dignity. 

There were rules issued by the Department of Justice involving 

access to buildings, both public and private, and the quantifiable 

benefits well exceeded the quantifiable costs. The Department of 

Justice did a very quantitative analysis of the benefits and costs. 

But for one provision, we are talking about access to bathrooms for 

people who are in wheelchairs, and the Department of Justice acknowledged without embarrassment that if we are speaking about 

wheelchair-bound people—a number of them may be veterans returning from wars—who are now going to be able to use bathrooms 

without relying on their colleagues for assistance to get in the 

room, that has something to do with dignity under the—— 

Senator JOHNSON. And those are wonderful things. We all agree 

with that. But again, the purpose of this Executive Order was to 

put a burden of proof on the agencies, and when you have such an 

amorphous standard, including distributive impacts—I am not 

quite sure what that is. I mean, the EPA, I think in one of their 

rulings, is environmental justice. How does that create a burden of 

proof when it is a loophole that you can drive a truck through? 

Mr. SUNSTEIN. Well, as it is operating on the ground, it is hardly 

a loophole. It is a recognition that under some statutes, a statute 

that prevents rape, a statute that is designed to prevent children 

from being run over in driveways by ensuring better rearview visibility, under some statutes, there is a value that is not readily 

turned into a monetary equivalent and agencies may—it is just a 

‘‘may’’—consider that. 

I take your point completely that in the abstract, a reference to 

qualitative values can be harmful to the enterprise. But on the 

ground, if you look at what happened in the Bush and Clinton Administrations, which had distributive impacts, also, and equity, 

this was just a nod in the direction of statutes that may be concerned with protecting people from sexual harassment, which may 

not easily be turned into dollar equivalents. It is not intended and 

it will not operate as an obstacle to the enterprise of ensuring that 

we get the costs as low as possible and the benefits as high as possible. 

Senator JOHNSON. Thank you. 

Chairman LIEBERMAN. Thank you, Senator Johnson. Next is Senator McCain. 

OPENING STATEMENT OF SENATOR MCCAIN 

Senator MCCAIN. Welcome, sir. Are you familiar with the ongoing rulemaking for the proposed Department of Agriculture (USDA) 

Catfish Inspection Office? 

Mr. SUNSTEIN. Yes, sir. 

Senator MCCAIN. Are you aware of the recent GAO report entitled, ‘‘Opportunities to Reduce Potential Duplication in Government Programs and Save Tax Dollars,’’ that warrants the proposed 

USDA Catfish Inspection Office as duplicative, high risk for waste, 

further fragments our food safety system, and estimates it will cost 

14 

$30 million just to implement the new USDA Catfish Inspection 

Office? 

Mr. SUNSTEIN. I am aware of the existence of that report, but I 

have not read it. 

Senator MCCAIN. Well, it is only $30 million. You might want to 

take a minute. So you would not know how much it would cost taxpayers to continue operating the USDA Catfish Inspection Office 

after it has been established? 

Mr. SUNSTEIN. What I do know is that the proposed rule, and it 

is merely a proposed rule, has a wide range of alternatives, and 

consistent with the President’s call for public participation and 

comment, the USDA is receiving a lot of comments not only on 

what option it ought to select, but also on exactly the issue to 

which you point, which is the cost issue. 

Senator MCCAIN. Are you consulting with the U.S. Trade Representative in the State Department because they obviously have 

significant concerns, as well? 

Mr. SUNSTEIN. Yes. We have worked very closely with them on 

this issue. 

Senator MCCAIN. Your biography mentions that you authored a 

book, Laws of Fear Beyond the Precautionary Principle, which 

Cambridge University Press synopsizes as ‘‘attacking the idea that 

regulators must always take extreme steps to protect against potential harms, even if we do not know that harms are likely to 

come to fruition.’’ Is this USDA Catfish Inspection Office driven by 

food safety fears or an issue drummed up by the domestic catfish 

industry and farmville politics? 

Mr. SUNSTEIN. Well, the Secretary of Agriculture is very aware 

of his obligations to implement the law, and what the rule to which 

you are referring begins with is a recitation of the language of the 

farm bill of the statute. So he is in the implementation business 

in this area, as well, and the analysis that accompanies the rule, 

as you will see, it is very long, has a detailed, science-driven account of the possible costs and possible benefits. 

Senator MCCAIN. So the commentary comes back to the actions 

of Congress. They snuck a phrase into a massive bill which now 

has the effect, according to the Government Accountability Office, 

that will cost the taxpayers an additional $30 million, again, emphasize the redundancy between two different agencies and overlap 

between two different agencies, all in the name of—and, of course, 

if this is implemented, it will cause a fight at the World Trade Organization (WTO). It will obviously increase the cost dramatically 

or even shut off the importation of catfish, which then the consumer pays a higher price even. There is an article in the Wall 

Street Journal this morning about the higher price of catfish triggered by ethanol, because the corn growers now sell their corn for 

ethanol rather than feeding various consumers of it in the animal 

world. So we find ourselves in a rather interesting cycle, which the 

ultimate victim is the unwitting taxpayer. Would you disagree with 

that rant? [Laughter.] 

Mr. SUNSTEIN. Thank you, Senator. I guess what I would say is 

that this is a proposed rule. Whether the adverse consequences to 

which you point are possibly going to occur depends on what alternative the U.S. Department of Agriculture chooses. Your comments 

15 

and those comments of others who are concerned about one or another of the proposals are more than welcome. They are needed to 

make sure we make the right decision. 

Senator MCCAIN. And thank you. By the way, if we get into this 

kind of trade dispute with Vietnam, it would cut off the tens of millions of dollars of exports that we have of our agricultural products 

to Vietnam. 

Mr. SUNSTEIN. We work very closely with the U.S. Trade Representative to make sure there are not violations of any agreements and to make sure that what is done in the regulatory area 

is consistent with our interest in trade and exports, partly because 

of the connection to jobs. 

Senator MCCAIN. Given your vast academic background and candor and good work, do you have an opinion on ethanol tax credit. 

Mr. SUNSTEIN. Not quite my lane. 

Senator MCCAIN. All right. 

Mr. SUNSTEIN. I barely remember my academic work, and if the 

issue involves legislation, that is not quite our domain. 

Senator MCCAIN. Well, again, it really is an interesting ripple effect that one line in a very large piece of legislation can have the 

both intended for the sponsors of that, but many unintended consequences, again, which ends up with the American taxpayer and 

the American consumer being the ones who pay the penalty for it. 

So it is, I think, a graphic example of sort of the irresponsibility 

of the way that we do business as we criticize other bureaucracies 

about the way that they do business. 

I thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you, Senator McCain. Senator 

Begich. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much. Thanks for being here. 

I actually want to ask a quick question to follow up with Senator 

McCain’s. I guess the simple question is, in your office, will you review if, for example, that type of operation needs to exist? 

Mr. SUNSTEIN. No. We review regulatory actions. 

Senator BEGICH. Well, let me ask it this way, then. If you review 

that and the regulatory action is another layer on top of another 

department or division, will you comment on that? 

Mr. SUNSTEIN. Our office does not have that role. Others in the 

Office of Management and Budget may. Certainly, if there are 

budgetary implementations, OMB would be involved, but our role 

is narrowly focused on regulatory action. 

Senator BEGICH. Let me ask you, and I had to remind myself of 

it, I chaired a hearing yesterday with, as a matter of fact, Senator 

Collins’ colleague, Senator Snowe. Senator Collins, it is about the 

blue fin tuna, so I do not want to go down the wrong path. If I say 

something wrong, please correct me. 

But the question came up, and it was intriguing when you said 

through some Executive Orders, there is this engagement with the 

business community or the small business community, flexibility, 

some of the phrases you used, so I am going to give you an example 

that I heard yesterday from Senator Collins’s colleague, Senator 

Snowe. 

16 

There is an endangered species listing of the blue fin, or potential listing on the blue fin tuna. Their fishing grounds are right 

next to, obviously, Canada, which does not have it listed. But as 

soon as it does its process of listing, it goes right into the rulemaking process for a year. And the question that Senator Snowe 

had yesterday—is there a way to have a kind of a middle step, 

where what is going to happen is the business community, which 

are fishermen, will be impacted. So when you talk about that Executive Order, does the National Oceanic and Atmospheric Administration (NOAA) have to follow that, also, because, to be very frank 

with you, we asked the question and they did not have an answer. 

But according to this Executive Order where you laid it out, they 

should show some flexibility, especially if it affects small business. 

Is that a fair statement? 

Mr. SUNSTEIN. Well, it is so that any regulatory action, including 

regulatory action that involves protection of endangered species is 

subject to the Executive Order, and we actually had regulatory action very recently involving killer whales where great flexibility 

was introduced in the final rule, in part because of public comments from small business. 

Senator BEGICH. Well, I just wanted to get that on the record because they will maybe cross that over to Commerce, and I will just 

leave it to Senator Collins and Senator Snowe, but it was a very 

interesting question, but the response was not as flexible as your 

response just was. I will use your phrase. 

You made a list of agencies that have gone out to ask for input 

on how to improve their system and so forth. You listed off a whole 

slew of them. I did not hear you list EPA. Is that just because you 

did not list it, or they are doing that, too? 

Mr. SUNSTEIN. EPA has actually been a leader here. They have 

gone out for public comment—— 

Senator BEGICH. I smile only because I am waiting for that moment that they are a leader, but—— 

Mr. SUNSTEIN. Well, Senator Collins has been emphatic that the 

greenhouse gas permits should not include biomass, and EPA exempted for 3 years. EPA, as just noted with respect to milk, followed up a series of concerns from the agriculture community and 

EPA has held a series of meeting about eliminating and streamlining existing rules, and they have a whole Web site dedicated to 

the topic. 

Senator BEGICH. Let me ask this, and I will just give you some 

examples from Alaska’s perspective. We have large issues, large 

projects, and it is always around development, may it be resource 

development, oil and gas, or mineral resources. But in almost every 

case, it seems to be EPA comes into the mix and the delay process 

is enormous. And one of the suggestions and a piece of legislation 

we are going to lay down is a coordinating office that deals with 

all Outer Continental Shelf development (OCS), to coordinate these 

offices because it seems like they just stumble over each other. We 

have leases that are 10-year leases. Five years into them, nothing 

is developed. 

How does your office connect in those situations, the larger 

macro and big projects, and trying to figure out how to streamline 

this system just for an answer, not necessarily—obviously, I would 

17 

like a positive answer, but sometimes we just do not get an answer. 

What do you do to engage—because it is a very expensive process. 

As we talked about some here that are in the millions, a few millions, these are in the hundreds of millions of dollars of regulatory 

requirements. 

Mr. SUNSTEIN. I appreciate it. We have heard a lot about this in 

the last 2 years, so our role is—— 

Senator BEGICH. I am sure you have seen those emails, so go 

ahead. 

Mr. SUNSTEIN. Yes. [Laughter.] 

Our role is in overseeing the rules that underlie particular permit decisions. So if there are rules that are proposed or coming 

through, our charge is to make sure that they are compatible with 

the President’s goals, including economic growth and job creation. 

Senator BEGICH. If I can interrupt for a second, that is good to 

know that last part there, job creation. Is there also the consistency 

of the rule, and what I mean by that is EPA regulates air quality 

for Alaska’s water, but in the Gulf of Mexico, it is the Interior Department, and they have two different regimes for the exact same 

development elements in the sense of oil and gas. Do you intervene 

and say, these have to be cleaned up, because it is a significant disadvantage for us in Alaska, to be very frank with you. 

Mr. SUNSTEIN. This is extremely important and there is a long 

way to go, and we hope in the next short period even to try to promote coordination. When there is regulatory action—I guess I will 

step back and tell you a little bit about the process. What is often 

called in those small segments of American society that have terms 

for such esoteric OIRA review is actually interagency review. 

So if we have a rule from EPA that bears on the action of Interior, and that is not rare, then the Interior Department will specifically be asked to comment on the EPA regulatory action, and because they have expertise and, as you say, legal authority, they will 

not infrequently have something significant to say. And then our 

job is to make sure that what is done by one or the other fits with 

the authorities and perspective of the sibling agency. 

And the President really has underlined that in a very clear way 

with this section. It is only a few sentences, but it starts out with 

exactly your point, that sectors and industries often face overlapping, inconsistent, or redundant requirements, and it identifies 

that as a problem. 

So our role has been to try to diminish that, and if this is causing 

problems in Alaska or elsewhere, we really should hear about it, 

partly because we are looking back at the stock of regulations—— 

Senator BEGICH. Right. 

Mr. SUNSTEIN [continuing]. And this is a really terrific opportunity to try to fix this. 

Senator BEGICH. And, Mr. Chairman, there are clearly two agencies doing the exact same thing. I do not want you to raise the requirement. I just want to get equal treatment, and so I will leave 

it at that and we will send you definitely something on this. 

Mr. SUNSTEIN. Great. 

Senator BEGICH. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Begich. Senator Portman, welcome. 

18 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Mr. Chairman, and Administrator 

Sunstein, thank you for being here. I do not have to tell you what 

an incredibly important job you have. It was always important, but 

particularly at a time like this, with a weak economy and a recovery that is not as strong as any of us would hope for with high unemployment. This is one of the areas, regulatory review, where we 

all believe, I think, Democrat and Republican alike, that there is 

room to help get the economy moving again and create more jobs, 

and there are certainly plenty of examples. You just heard about 

some of them from my colleagues from Alaska and Maine, where 

there are specific job impacts of legislation and regulation that does 

not make sense. 

One of the things that I am particularly interested in, as you 

probably know, is the inability for us to have the same cost-benefit 

analysis of independent agencies that we do with the other parts 

of our regulatory system—and you have written about this—and 

this independent agency exemption is significant because so many 

independent agencies now are promulgating regulations and they 

are not under the scrutiny of the Unfunded Mandate Reform Act 

(UMRA) or the Executive Orders you talked about earlier today, 

EO 13563 and EO 12866. 

I looked at a law review article that you wrote back in 2002 

where you said the commitment to cost-benefit analysis has been 

far too narrow. It should be widened through efforts to incorporate 

independent regulatory commissions within its reach. In that article, you proposed including independent agencies. You named the 

Federal Trade Commission (FTC), the Federal Communications 

Commission (FCC), the U.S. Consumer Product Safety Commission 

(CPSC), and you said there is every reason to include independent 

agencies within the basic structure of an Executive Order on Federal regulation. I notice that President Obama’s Executive Order 

you talked about today, EO 13563, does not move in that direction. 

Can you tell the Committee why not? 

Mr. SUNSTEIN. Senator, as former head of OMB, I bet you are as 

alert as anyone to the fact that pre-government experience writings 

are just that and that once you are in government, you are part 

of a team and you are responsible to the President, the team’s captain. So that is what I would like to speak to. 

What the President did in his Executive Order was to follow the 

precedent set by President Reagan in the 1980s in the Executive 

Order to which Senator Collins referred, and President Reagan’s 

judgment at the time—I happen to know, because I was in the Department of Justice and I saw it close up—was that there were various concerns about presidential overreaching that would arise, 

legal or political, by application to the independent agencies. And 

what followed that in the last generation has been Republican and 

Democratic Presidents have agreed with President Reagan that 

they would continue the process and not extend to the independent 

agencies. 

Senator PORTMAN. So given that there are legal concerns about 

OIRA, the Executive Branch, and the Office of the President extending that reach to independent agencies, does it not make sense 

for Congress to enact legislation that brings independent agencies 

19 

at least within the cost-benefit requirements of the Unfunded Mandates Reform Act? 

Mr. SUNSTEIN. We have encouraged in our guidance document 

that independent agencies voluntarily comply with the most recent 

Executive Order in early February. 

In terms of legislation, the Office of Information and Regulatory 

Affairs, as again I know you know, has a narrow implementation 

mission, and so we are hard at work in implementing the Executive Order and there is a process for formulating Administration 

positions on questions of the sort you raise. It is not really my role 

to take that position. 

Senator PORTMAN. You know, as a professor, he is really learning 

this bureaucracy thing well. [Laughter.] 

Chairman LIEBERMAN. It is unsettling, is it not? 

Senator PORTMAN. It really is. [Laughter.] 

Well, let me look at this another way with you. Assuming that 

you agree, based on your previous writings, and assuming that the 

hundreds of regulations that are now being promulgated by the 

independent agencies, you believe, ought to come under the same 

cost-benefit analysis as you have asked them to do voluntarily, let 

me just ask you, not as a matter of commenting on specific legislation but as a general matter, does it not make sense for Congress 

then to act to the extent there is not a legal concern with Congress 

acting on independent agencies to be able to bring them under this 

same rubric that other agencies are required to follow? 

Mr. SUNSTEIN. If you will permit, that is a question that would 

benefit from sustained engagement, both in the standard Administration-wide process for formulating positions on controversial 

questions—— 

Senator PORTMAN. I will take that as a yes. Well, and seriously, 

I think it is only logical that to the extent you have concerns, 

which I understand, and you mentioned political and legal concerns, I think it is the legal concerns that would constrain you, 

Congress has the ability to do this and it seems to me it only 

makes sense, at least under UMRA, to be sure that we are not exempting so many regulations that affect our small businesses, 

State, local, and tribal governments. 

I would like to turn, if I could, to guidance documents for a second. The D.C. Circuit has described the use and abuse of guidance 

documents this way. They have said, several words in a regulation 

may spawn hundreds of pages of text as the agency offers more and 

more detail regarding what regulations demand to regulate entities. Law is made without notice and comment, without public participation, without publication in the Federal Register or the Code 

of Federal Regulations (CFR). I think you would agree that guidance documents are often an end run, and I certainly found that 

when I was at OMB, an end run around what would normally be 

the deliberative process and the give and take that you get in a notice and comment rulemaking process. 

EO 13422 required agencies to give OIRA advance notice of significant guidance documents and permitted OIRA to review those 

documents for, among other things, their effect on the economy, 

which as I said at the outset is a critical issue right now. My understanding is President Obama revoked that Executive Order, and 

20 

I do not understand why. Under your leadership, is OIRA continuing to review significant guidance documents? 

Mr. SUNSTEIN. Absolutely. In fact, the review of guidance documents, significant ones, is at least as robust under this Administration as it has ever been. I can give you a little background there. 

President Bush revoked an Executive Order which had a number 

of elements in it, five or six, one of which was the review of significant guidance documents. It is just the case, as I am sure you are 

aware, that even before President Bush’s Executive Order, OIRA 

had been reviewing significant guidance documents. In fact, that 

was a practice even under President Clinton. And after the revocation, just the question you asked arose and the then-Director of 

OMB, Peter Orszag—and this is in March 2009—issued a short but 

really important memorandum to the heads of agencies and departments saying that OIRA will be reviewing significant guidance documents, and the number is not small. 

Senator PORTMAN. Do you think another Executive Order is appropriate then? It sounds like the practice does not differ from the 

substance of that part of the Executive Order that was revoked. In 

fact, it seems more robust than it was in previous Administrations. 

Mr. SUNSTEIN. At least as robust. So I take your point about ensuring that guidance documents both are not evading the requirements of the Administrative Procedure Act and that they are, even 

when they are genuinely guidance documents, subjected, where appropriate, to public comment and review, those are concerns we 

take very seriously. Those are kind of our staples. 

Because of the OMB Director, his memorandum is so extremely 

clear that significant guidance documents go through OIRA and 

every agency and department now understands that, it is not clear 

that there needs to be an Executive Order on that point. 

Senator PORTMAN. Mr. Chairman, I think my time has more 

than expired. Thank you, Mr. Sunstein. 

Chairman LIEBERMAN. I have a couple more questions that I 

would like to ask. This has been a very good exchange. Both of 

these, to some extent, deal with the role of Congress. As you know, 

there are proposals pending before our Committee that would require Congress to approve certain regulations once they are finalized within the Executive Branch. I want to ask about Congress’ 

input, however, on the front end, which is in the authorizing laws 

that we passed that give rise to regulations. 

There is always a tension about how specific to make those laws 

and how much decision to leave to the Executive Branch, the experts within the agencies. I wanted to ask you, generally, if you 

have any standards that you would apply to our work on legislation 

that leads to regulation and if you can think of examples where 

legislative mandates either significantly promoted or significantly 

impeded what you have called smarter rules. 

Mr. SUNSTEIN. Thank you for that, Mr. Chairman. I have a few 

different thoughts. One is that, just as you say, it is often a hard 

decision about what level of detail to put in legislation, and then 

the decision is often made by asking such questions as, are circumstances changing so rapidly that precision would be regretted 

after a year or two, and the separate question, is there sufficient 

information now to set forth something with a high level of detail 

21 

or not, and another question, is there sufficient trust in the Executive Branch implementation process in the particular context that 

degree of discretion is acceptable? So those are some of the questions that are standardly asked. 

In line with Senator Collins’ line of questions, one point is that 

benefits should ordinarily justify costs, recognizing that some benefits are hard to quantify and cannot be monetized, and it is probably a good idea, at least as a general rule, to allow careful consideration of benefits and costs so that we do not get unintended adverse effects of the sort that Senator McCain is obviously concerned 

about. 

It is hard to answer. I am giving an abstract answer, which is 

not ideal, but we probably have to go statute by statute. I have 

seen in the last 2 years there is often the implementation involves 

a narrow band of discretion, and not infrequently, that is just right, 

because Congress has made the decision. 

Chairman LIEBERMAN. Yes. That was general, but it was helpful. 

It is worth pondering by us. 

Let me ask you about e-rulemaking. The Executive Order of the 

President directs agencies to promote public participation, specifically by providing the public with ‘‘timely online access to rulemaking docket on regulation at .gov, including relevant scientific 

and technical findings, in an open format that can be easily 

searched and downloaded.’’ I know you have issued three memoranda to guide agencies on how to improve electronic rulemaking, 

the process insofar as users are concerned. I wonder if you could 

describe progress in implementing that goal and, as you may know, 

Senator Collins and I have been working on this, as well, in our 

e-rulemaking bill. Are there other enhancements you would suggest 

legislatively that would maximize public participation in rulemaking? 

Mr. SUNSTEIN. Sure. This has been a high priority for us, and 

what we did at the outset was we improved greatly a Web site 

called reginfo.gov, which while maybe not the most exciting Web 

site on the Internet, does have the advantage of providing access 

to every rule, at least the basic description of every rule that is 

under review at OIRA—the name, the agency, whether it is economically significant. And what we did with that was to create a 

graphic which is very clear—we call it a dashboard—where you can 

press EPA and see every rule under review from EPA. You can 

press the Department of Health and Human Services (HHS) and 

see every one there. And this gives the public—and we have found 

that it has been used by a large number of people—it gives the 

public a way of seeing what is under review and being contemplated. 

We have also worked hard to improve regulations.gov, which is 

the online portal, which is now much more user friendly and clear. 

As Samantha, my wife, can tell you, I am on regulations.gov sometimes at night reading public comments and it is easy now. It was 

harder before. You can also on regulations.gov get access to the full 

rule basically in an instant. 

What we have required in one of our guidance documents, and 

it is working, is that agencies put online basically everything they 

have in paper in a timely fashion so that if people are concerned 

22 

that there is a regulation involving, let us say, automobile safety 

that is not strong enough, that is too expensive, or that is going 

to have harmful effects on small business, they can see everything 

there. So those have been our initial steps. We have also tried to 

make the OIRA Web site a lot more usable. 

In terms of legislation, again, this is not quite our lane, but we 

are broadly supportive of the effort to bring rulemaking into the 

21st Century, as the President has made very clear in the Executive Order, and the kind of basic principle should be easy accessibility and clear transparency. 

Chairman LIEBERMAN. Good. Do you have a sense, or can you report to us on what kind of usage there is of the Web site you talked 

about? I mean, what you have done is very laudable and I appreciate it. 

Mr. SUNSTEIN. We actually do have the numbers and I believe 

they are in our draft cost-benefit report, which was released recently. I do not have them offhand, but there has been a significant 

increase. 

Chairman LIEBERMAN. So that is the point. I do not care about 

the specific number, but there has been an increase and people—— 

Mr. SUNSTEIN. Yes. 

Chairman LIEBERMAN. Thanks. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. I want to follow up 

on an issue that Senator Begich raised with you about whether 

OIRA has the authority on its own initiative to undertake a review 

of a regulation that affects many different aspects of our economy. 

The ethanol regulation is a perfect example of that, as Senator 

McCain pointed out, as well. I will concede up front, I am not a 

fan of the ethanol subsidy, but EPA recently increased the amount 

of ethanol that can be used in gasoline. This has all sorts of implications. It fouls the engines of snowmobiles and of lawn mowers, 

for example, and older cars. It drives up the cost of food as corn 

is grown for fuel rather than for food. Who looks at issues like that, 

other than, I suppose, Congress that cross agency lines and that 

have a multitude of impacts on our economy? 

Mr. SUNSTEIN. If it takes the form of regulatory action, whose 

core is rulemaking, but which also extends to guidance documents, 

interpretative rules, and other related things, then we will see it. 

There are related actions being taken by EPA, including misbranding actions, which are definitely rulemaking, and those we do 

oversee, and our oversight really is a coordinating role. There are 

other things that agencies do that are permits that are not quite 

rulemaking and there we are not involved except we are available 

to consult if asked by you, others, or if asked by the agency. 

Senator COLLINS. I am intrigued by the issue that the Senator 

from Alaska raised, because it seems to me ethanol is a perfect example of where we need a cross-cutting review of the implications. 

But if there is no agency currently involved in rulemaking on it, 

then it does not seem to happen, does it? 

Mr. SUNSTEIN. No, but there is an opportunity now under the Executive Order, the retrospective review provision, to get a handle 

on that, and there are a couple of things to emphasize here. One 

is May 18 is a very important date. That is when the plans have 

to be submitted to us, and so ideas about problems stemming from 

23 

lack of coordination from you and your staffs and those who have 

concerns in Alaska or elsewhere, this is a great time for that. And 

also, what the President asked for is preliminary plans, which suggests clearly that this process of overseeing the stock of existing 

regulations to make sure what we are doing makes sense is not 

just a one-time matter. It will be a continuing series of evaluations. 

Senator COLLINS. Senator Portman asked a question I was going 

to ask you about the 2002 University of Pennsylvania Law Review 

article that you wrote and about extending the cost-benefit analysis 

to independent agencies. But there was another part of that article 

which I thought was intriguing and that is you said that the requirements for cost-benefit analysis were widely ignored by Federal 

agencies. That was one of the findings that you made. What is 

being done by OIRA now to make sure that agencies are not ignoring the requirement for cost-benefit analysis? 

Mr. SUNSTEIN. We work every day to make sure that the benefits 

exceed the costs and the benefits are very carefully and accurately 

assessed and the costs, as well. So it is our kind of staple to make 

sure that these are not ignored. And if you look through the regulatory impact analysis, you will see not necessarily unquestionable 

analysis, and the public comment period is designed to make sure 

we eventually get it right, but extreme care about costs and benefits. 

And one thing that we have recommended and implemented that 

seems like a small step, but I think is significant, is that agencies 

put clear cost-benefit tables up front in the most conspicuous manner so that any Member of Congress or staff or any member of the 

public can see exactly what we are getting and exactly what we are 

losing as a result of a regulation. And we have emphasized that 

need for clarity about costs and benefits, which is the initial way 

of ensuring it is actually done, was something we quietly posted in 

late October, which is a checklist. It is a page and a half and it 

says what agencies have to do. It takes a 50-page technical document, turns it into a page and a half which will promote accountability and compliance. 

And one thing on that page-and-a-half checklist is if you quantify 

the costs, in other words, if you quantify the benefits, a third, have 

you shown that the benefits justify the costs? 

Senator COLLINS. And if that has not been done, does OIRA have 

the authority to block the issuance of the regulation? 

Mr. SUNSTEIN. Absolutely. 

Senator COLLINS. One final issue, just very quickly, that I want 

to get into, and that is the complexity of regulation. You would 

think when Congress passed the 2,700-page health reform bill that 

we would have taken care of every possible issue, but in fact, the 

new law directs the Secretary of HHS to make nearly 2,000 separate determinations, and these rules can come and turn into hundreds of pages each. 

An example is the Medicare Shared Savings Program. I happen 

to think this is one of the few provisions of the bill that actually 

could help increase quality and hold down costs. The program 

takes up six pages of the new law, but the regulations implementing the program are 429 pages long. Do you look at complexity 

24 

and excessiveness as you look at the analysis done by Federal 

agencies? 

Mr. SUNSTEIN. We just posted last night, I believe at 7 p.m., a 

guidance document that I think Senator Akaka would be pleased 

with. It is on plain writing. There is the Plain Writing Act, as you 

know, and this is something we have prioritized. And what we are 

trying to do in the regulatory area is to use executive summaries, 

so people can take a 400-page document and get the core of it in 

8 or 10 pages. There is sometimes a trade-off, because a 400-page 

document—and do I not know it—can take a lot of time to read. 

But if you want to have the full analysis of effects, sometimes it 

just takes a lot of space. If there is not clarity in an executive summary that says exactly what the rule is doing and what its likely 

consequences are in brief form, then that is somewhere between 

not ideal and it is a disservice to the public. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Collins. 

I want to ask the indulgence of my colleagues. You have been 

more engaging for a longer period of time than I thought you would 

be and I have to step out for a meeting. I do not know if you are 

able to stay, if you will take us to the finish. Senator Portman, 

Senator Begich, I believe it is the custom, if not the rule, of the 

Committee, since Senator Carper has not had a round, to call on 

him next if you can suffer your way through that. 

Thanks, Mr. Sunstein. You have been very gracious. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Mr. Chairman, my guess is they have been 

waiting until I arrive. They did not want to miss any of this, any 

of the fireworks. 

Mr. Sunstein, it is very nice to see you. Thanks for coming by. 

And my colleagues, thank you for allowing me to join in. 

My staff, when they were putting together my schedule, they 

weighted this hearing today as a low priority. I have just come 

from another hearing on the Environment and Public Works Committee that focuses on transportation, what are we going to do 

about our transportation infrastructure, which is decaying, and we 

are not willing to summon the courage to pay for fixing it, and they 

thought that was high priority. That is, but this is high priority, 

as well. 

I was very pleased in 1993 when President Clinton issued his 

Executive Order and called for making sure that we are trying to 

figure out what is the cost-benefit analysis when you promulgate 

regulations across Federal agencies, and I was especially pleased 

when our current President updated or supplemented the earlier 

Executive Order. 

Let me just ask you—and for folks, if they have already asked 

this question, then please bear with me—but just talk to us about 

the implementation of this Executive Order. How is it being implemented? What effect does it appear to be having? Are there any 

evident consequences? Are other agencies paying attention to it? 

Thank you. 

25 

Mr. SUNSTEIN. Well, there are two things the Executive Order 

does that are significant. The first is that it creates a process for 

retrospective review of regulations—— 

Senator CARPER. Explain that, if you would, and give me an example, please. 

Mr. SUNSTEIN. There are a lot of regulations on the books. The 

President, both in this Executive Order and in the Chamber of 

Commerce speech and in the State of the Union Address, emphasized that we are having a government-wide review of the existing 

regulations, meaning not just control of new regulations, but also 

assessment of regulations on the book. 

Senator CARPER. That is a pretty big job. 

Mr. SUNSTEIN. It is a big job. 

Senator CARPER. Who is doing that? 

Mr. SUNSTEIN. Well, what has happened is the EPA, the Department of Transportation, the Department of Defense, the General 

Services Administration, the Department of Commerce—am I boring you yet? 

Senator CARPER. No, this is good. 

Mr. SUNSTEIN. It is a very long list. I have asked the public for 

comments about what regulations they should change, streamline, 

eliminate, and modify. 

Senator CARPER. And what kind of response are we getting, or 

are they getting across those agencies? 

Mr. SUNSTEIN. We are getting significant responses from the 

public. I have been cc’d on a bunch of letters saying these are bad. 

And not only that, we have had the EPA, the Department of Labor, 

and HHS actually taking concrete steps, well before the May 18, 

2011, deadline to get rid of or reconsider rules that are causing 

problems, like the EPA exempted milk and milk products from its 

oil spill regulation, something that is going to save a lot of money. 

EPA also exempted biomass from its greenhouse gas regulations, 

something that creates a great deal of flexibility. Some regulations 

from the Department of Labor that had been proposed and caused 

considerable concern in the business community, including small 

business in particular, have been withdrawn for reconsideration, 

and that is just for starters. 

Senator CARPER. Well, that is good. Talk about, if you would, unintended consequences of this new Executive Order from the President. 

Mr. SUNSTEIN. Well, so far, all—— 

Senator CARPER. Everything that you have just described would 

be a consequence, but are there any unintended consequences of 

which you are mindful? 

Mr. SUNSTEIN. Well, my hours have gotten even longer. 

Senator CARPER. You were saying earlier, at night, you are up 

reading these regulations or something on the Internet. I do not 

know if that is an unintended consequence. For your wife and your 

family, it is probably not a good one. 

Mr. SUNSTEIN. My wife works for the Natinal Security Council 

(NSC). Her hours are pretty long, also. 

Senator CARPER. Fine. But other than that—— 

Mr. SUNSTEIN. I can tell you that to say ‘‘so far, so good’’ would 

be to understate. 

26 

Senator CARPER. Did you say, ‘‘so far, so good’’ would be understated? 

Mr. SUNSTEIN. Yes. So far, extraordinary. With respect to looking 

back at existing regulations, we have had something the Nation 

has ever seen before, which is a thorough engagement by a vast 

array of agencies with the public about what regulations are causing problems and should be eliminated, accompanied by a series of 

steps actually to withdraw or reconsider regulations that are causing problems. 

With respect to the flow of new regulations, all of the consequences are the intended ones, which is we have had considerable discussion of the harmonization of different agencies’ actions 

so as to ensure against inconsistency and overlap, and that is happening. Agencies are working carefully together so that companies 

and their workers and their consumers are not hit from the left, 

the right, and the center. Instead, they are working cooperatively 

to see what makes best sense, and that was an intended consequence. 

Senator CARPER. All right. From time to time, we hear from constituents in Delaware, and actually from around the country, sometimes they are families, sometimes they are businesses large or 

small, and they suggest to us that a rule or regulation that is being 

considered, or maybe has been promulgated, does not appear to be 

consistent in spirit with our determination to provide a nurturing 

environment for job creation and job preservation. When those examples are submitted to us, what is the best way to convey them 

to somebody who is going to do something about it? 

Mr. SUNSTEIN. Great. There are two ways. If there is a letter 

from you or any Member of the Senate or the House, that really 

gets our attention. So if you send a letter to me and to the relevant 

agency, that is, needless to say, very significant input into ultimate 

decision. And if you look over the last 2 years, there have been a 

number of options that have been meaningfully informed by concerns about effects on job creation, meaning we do not want those 

adverse effects. 

The other thing which is maybe not as generally known as it 

ought to be is when a rule is under review at the Office of Information and Regulatory Affairs, our doors are open for discussion. 

Sometimes, Members’ staffs have come over and said, this one is 

causing a great deal of consternation. Because it will have unintended adverse effects, it is going to hurt some companies and in 

the relevant area, it is not going to help anybody. This is a great 

time for that, both because we have the new Executive Order 

where public participation is actually the name of the second section and because it is an economically challenging time when the 

President has emphasized we need to square our regulatory requirements with our interest in economic growth. 

Senator CARPER. Let me conclude by just saying to my colleagues, I do not know if the first time I heard of this Presidential 

Executive Order was at the State of the Union address. I think it 

may have been promulgated before, but I think the President highlighted it in his State of the Union address. We were sitting there 

that night saying this is terrific. And what you are describing is 

27 

even more encouraging in terms of retrospective aspects of the Executive Order. 

And for Senator Portman, who literally was in position as the 

OMB Director, I am interested just in talking with you maybe later 

on, since I did not hear your comments, but just to hear how you 

view this. But this is very encouraging. 

My staff had said this was a low priority hearing. I just want to 

say, this is a high priority for our country and for me, as well, so 

thank you. 

Mr. SUNSTEIN. Thank you. Your staff is laughing. 

Senator COLLINS [presiding]. Thank you, Senator Carper. Your 

staffer is saying, ‘‘I did not do it. It was not me.’’ [Laughter.] 

I was really looking forward to gaveling you down today, but it 

did not happen, and if I did do it, I would not get Senator 

Lieberman to give me the gavel again, so Senator Begich? 

Senator BEGICH. Thank you very much. 

I want to echo what Senator Carper said. I mean, I know you 

know this. I was not one of those that supported your appointment, 

but I am actually very impressed with the conversation today and 

I want to thank you for that. 

Let me ask you, if I can, the retrospective review, that will be 

accumulated on May 18 and then you will review that. Is that what 

the next step will be, and then you will do what? I heard some that 

we should just get rid of. Here are some that we need to refine. 

So we will go through your process after that? 

Mr. SUNSTEIN. Here is how it is going to work. In late April, 

under our guidance document, agencies will submit drafts of their 

preliminary plans to us, and these will be early versions and there 

will be what I expect to be a very intensive process—— 

Senator BEGICH. Give them back, yes—— 

Mr. SUNSTEIN. That is right. And then May 18, they will be formally submitted to us and our expectation is that they will generally then be made public. Now, we have a bunch of rules—they 

have not received a lot of attention. It has been quiet except in 

communities that have been quite excited to see. We have had a 

bunch of rules that have been streamlined, repealed, or withdrawn. 

Senator BEGICH. Those are some examples you gave a little bit 

ago—— 

Mr. SUNSTEIN. Yes, and we have every expectation that the preliminary plans will have many more examples of things that are 

either achieved by them or anticipated to proceed to public review. 

Now, if it is a guidance document, then that can be changed relatively quickly. 

Senator BEGICH. Right. 

Mr. SUNSTEIN. If it is a rule, then there is a process for that and 

we will be involved in that. 

Senator BEGICH. Will you maybe, by that point, be able to, for 

the public consumption—and I do not know if you have it now on 

your Web site— make a list of those rules that you have been able 

to repeal or streamline? Will there be some sort of quick list that 

people can go to? This is what you have done. 

Mr. SUNSTEIN. Thank you. That is a great question and we are 

thinking about exactly how to do this. 

28 

Senator BEGICH. I think we, in Congress, would love to see that. 

That will help us understand the role, but also give some assurances to folks we get calls from all the time saying, what are they 

doing actually? 

Mr. SUNSTEIN. Right. I did have a blog post on the White House 

blog that has our preliminary list. 

Senator BEGICH. OK. 

Mr. SUNSTEIN. So there is publicly now about eight or nine that 

are collected. But there have been a bunch since, and—— 

Senator BEGICH. Excellent. So you are thinking of how to weave 

that into a future Web site, maybe? 

Mr. SUNSTEIN. Yes. 

Senator BEGICH. Let me ask you, as this process is getting comments from people, as a small business owner, my wife is a small 

business owner, the odds that we—and I say collectively, small 

business owners who are busy doing many other things—even 

know that you are doing what you are doing is probably pretty 

slim. I know some people will say, well, we contacted trade organizations, but I will tell you, that is limited. As a member of multiple 

trade organizations over the years, you are busy. If you are a threeperson operation in a business, you do not have time to read more 

paper. You are just trying to keep the customers happy. What is 

your outreach to ensure the small business—usually, the small 

business community reacts once the regulation is in place. 

Mr. SUNSTEIN. Yes. 

Senator BEGICH. Then, it is too late. Then we have this whole 

process. So what are the steps now, or what do you think that we 

need to do—and I say, again, collectively, because there may be 

stuff we need to do—to get the small business community to know 

exactly what is happening here? Or get input to what they—— 

Mr. SUNSTEIN. That is great, and we have time to do a lot. The 

President has an initiative called Start Up America, which is very 

much focused on small business and start-ups, thinking that we 

can do so much more, in part through regulatory relief, to help job 

creation. 

I was recently in Boston to talk to entrepreneurs about what 

their concerns are, what regulations on the books are causing problems, where there is the inconsistency, and Karen Mills, the head 

of the Small Business Administration (SBA), has been traveling a 

lot. Regulatory relief and our look-back retrospective review is 

something she has been highlighting. So we are getting a ton of 

ideas through that and the reaction there is extremely positive. 

Still, your point is absolutely right. My dad was a small business 

owner in Concord, so I understand that Start Up America. He was 

not going to know about that and certainly did not have time to 

go. 

Senator BEGICH. Right. 

Mr. SUNSTEIN. So we are counting on a couple of things, and if 

you have other ideas, that would be great. One is Winslow 

Sargeant, who heads the Office of Advocacy at the SBA, is someone 

with whom we work really closely, and he was very enthusiastic 

about the Presidential Memorandum on Small Business, which is 

a little bit like a younger sibling to the Executive Order, and he 

is doing what he can to collect information from small businesses 

29 

about regulations that are coming that make them nervous and 

about regulations on the books that make them struggle. 

Senator BEGICH. I am assuming you have on your Web site, and 

we will look at it now, but is there a link—is there a place where 

if someone has a suggestion, they go to? 

Mr. SUNSTEIN. Since the agencies have rulemaking authority, the 

agencies that have published Federal Register notices, and I believe 

in four cases cabinet-level departments, now have Web sites specifically dedicated to retrospective review of regulations. They all provide it. 

Senator BEGICH. But the problem will be that the small business 

owner, when they see a regulation, they do not have the time to 

figure out what agency—— 

Mr. SUNSTEIN. Right. 

Senator BEGICH [continuing]. Is in charge of that regulation. 

They know—so I am wondering, and maybe we can explore this 

through our office—for example, we have on our Web site a feature 

that you can go to to give suggestions on the budget, whatever. 

They just put it on there. Then we accumulate those and utilize 

them in our budget meetings that we have. 

Maybe there is a similar thing that we can do to accumulate it, 

and maybe instead of figuring out what agency to deliver it to, we 

just deliver it—I hate to do this—deliver it to you. 

Mr. SUNSTEIN. Sure. 

Senator BEGICH. But that is the issue that the small business 

folks need, is kind of a central depository, because otherwise, they 

will just give up. They will call us once the regulation is in play. 

I do not want to say they will totally give up. Once it is in play 

and they do not like it, we will hear about it, and then we will be 

doing who knows what here and probably causing all kinds of 

havoc. So maybe we will explore that. 

Let me end on one last comment and that is on transportation. 

The Department of Transportation (DOT) is also doing the same 

thing. I am a former mayor. We did projects, trying not to get near 

Federal dollars because it would take too long, cost too much, we 

could produce a better product, in shorter time, and have actually 

higher environmental standards. In your office, do you use those? 

And I will use transportation as an example. When DOT is starting 

to do their regulatory, those local impacts, I know you mentioned 

something about local. Is that part of the equation? 

Mr. SUNSTEIN. Yes, in two different ways. The President’s Executive Order requires consultation with local officials and there are 

other presidential documents that call for emphasis on federalism 

and interactions with State and local governments. So we hear a 

lot from State and local government. This regulation makes sense. 

This regulation is going to hurt us. And that can have a very significant impact on what ends up in the regulation. 

Senator BEGICH. Very good. Thank you very much for your testimony. Thanks for being here. It was very enlightening. Thank you. 

Mr. SUNSTEIN. Thank you. 

Senator COLLINS. Thank you. Senator Portman. 

Senator PORTMAN. Thank you, Senator Collins. 

Since you talked about the Small Business Administration, let 

me just ask you about some small business questions quickly, if I 

30 

could. One is what you think about their Office of Advocacy report. 

The Small Business Office of Advocacy has said that the annual 

burden of Federal regulations on the American economy is now 

$1.75 trillion. And in that same study, they talked about small 

business and they said that among small businesses, there is an 

annual regulatory cost of over $10,000 per employee. With unemployment close to 9 percent or over 9 percent in Ohio, obviously, 

we need to get serious. We talked earlier about using this regulatory burden on job creators. 

During your tenure as OIRA Administrator, how many times has 

OIRA rejected or recommended revisions to a proposed rule based 

specifically on your assessment that there was a negative impact 

on jobs? 

Mr. SUNSTEIN. Well, we have had 100-plus rules withdrawn from 

OIRA review. That is about 8 percent of the full set of rules that 

have come to us. And a significant number of those have been withdrawn because of concerns about costs. It is also the case that of 

the rules that we have approved, a very strong majority, something 

around 70 to 80 percent, are approved consistent with change, and 

that means that there has been some rethinking of the approach 

as a result of OIRA review. 

I would want to emphasis that OIRA review means interagency 

review, so sometimes the idea will come from—the Department of 

Energy might have something to say about a rule that the Department of Transportation is proposing, or the SBA might have an 

idea about a rule the Department of Labor is proposing. We do not 

think, as under the Bush Administration where return letters were 

extremely rare, we tend not to think about rejecting. We tend to 

think about what is the best way to get the rule in the best place, 

and it is very frequently the case that adverse effects on small 

business are a basis for getting the rule in the best place and that 

unjustified costs are something that agencies are alert to—— 

Senator PORTMAN. But specifically on job creation, you do not 

keep a record of that. You do not have a way to answer that question as to how many were either recommended for revision or rejected based on jobs? 

Mr. SUNSTEIN. I would have to take a look to get a number for 

you. But what is very clear is that under the President’s Executive 

Order, job creation is kind of a front line issue, and you can see 

from recent developments, including withdrawals of rules, adverse 

effects on jobs are a primary consideration. 

Senator PORTMAN. Under EO 12866, significant regulatory actions are defined as either having an effect on the economy of $100 

million or more or adversely affect in a material way the economy, 

productivity, or jobs. How many rules have you treated as significant regulatory actions based on their adverse impact on the jobs 

part of that, based on EO 12866? Can you tell us? 

Mr. SUNSTEIN. Standardly, the $100 million threshold is the 

basis for deeming a rule economically significant. But note that you 

are referring to economically significant. The significant rules actually are far more numerous and we care about costs and benefits 

for those, too, even if they do not cost $100 million. So if there is 

a rule that costs, say, $50 million, it may not qualify as economically significant under EO 12866, but it might hurt a sector, as EO 

31 

12866 recognizes. You could have adverse effects on a small sector—$50 million is a lot of money—even if it does not have economy-wide effects of $100 million. Then it could be deemed economically significant or it could well be deemed significant. 

So in terms of pure numbers, we have reviewed approximately 

1,400 rules, proposed or final, including guidance documents and 

regulatory actions, and a large number of them are significant, 

even though the vast majority, roughly 85 percent, are significant, 

even though they do not have $100 million or more in annual costs. 

Senator PORTMAN. So, again, if you can provide this to the Committee, how many you have treated as significant regulatory actions because of their adverse impact on jobs as opposed to the 

level of $100 million. It sounds like today, you would not have that 

answer—— 

Mr. SUNSTEIN. I would not. 

Senator PORTMAN [continuing]. But that is something you might 

be able to provide the Committee, is that accurate? 

Mr. SUNSTEIN. Yes. 

Senator PORTMAN. I think that would be very helpful to know. 

In your legal scholarship that Senator Collins talked about earlier, you have been an advocate for strengthening cost-benefit scrutiny of proposed rules. I would be interested to know how often the 

theory meets practice, now that you are in this position. How many 

times as OIRA Administrator have you recommended against the 

adoption of a particular proposed or final rule because of its projected costs exceeding its benefits? 

Mr. SUNSTEIN. Well, I think the best—— 

Senator PORTMAN. Have you ever recommended against a rule on 

that basis? 

Mr. SUNSTEIN. Well, the way we do it, as I am sure you remember from your OMB experience, is suppose you have a rule that 

comes in and either the costs are higher than the benefits, or while 

the benefits are higher than the costs, it does not maximize net 

benefits. To recommend against a rule would be a little nuclear and 

uncollaborative. So the standard approach would be to work with 

the agency to think, is there a way you can do it so you drive down 

the costs so the benefits justify the costs, or is the way that you 

can do it so that the net benefits are higher, even though—— 

Senator PORTMAN. Collaboration is great, but at some point, 

there is a friction between you and the agency, I take it. Sometimes 

you have said the costs do not meet the standard of cost-benefit 

analysis, and then are there instances in that case where you have 

said to the agency, I have objections on the rule’s costs and benefits 

and yet the agency has proceeded to issue a final rule? Has that 

ever happened? 

Mr. SUNSTEIN. The only rule we have in the last 2 years where 

the benefits are unambiguously lower than the costs is a rule involving Positive Train Control, something that Senator Coburn has 

been particularly interested in, and that was one where we all 

worked together to try to make the costs as low as possible, but the 

underlying statute was quite prescriptive. The statute says—— 

Senator PORTMAN. So that is the only case where the costs have 

exceeded the benefits? 

32 

Mr. SUNSTEIN. It is the only case where the costs unambiguously 

exceeded the benefits. 

Senator PORTMAN. OK. 

Mr. SUNSTEIN. There are a few other—— 

Senator PORTMAN. But are there other instances where you believe the costs exceeded the benefits and yet the agency went to a 

final rule? 

Mr. SUNSTEIN. Well, those were ones where there is a range, and 

so there is no other clear case aside from that one. There are some 

that have a range where the high end of the costs or the mid-point 

of the costs is higher than the mid-point or the high end of the benefits—— 

Senator PORTMAN. It sounds like the costs exceeded the benefits. 

Mr. SUNSTEIN. Well, not necessarily, because it may be the best 

projection of the benefits is in the high end of the range and the 

best projection of the cost is—so the Positive Train Control one is 

the—I can get you the list. It is a very short list. And in everything 

that we have—the Administration has done, either the benefits exceed the costs, and that is the overwhelming majority, or there is 

some legal constraint on ensuring that the monetized benefits—— 

Senator PORTMAN. Would it be beneficial for Congress to 

strengthen the requirement of this cost justification debate you obviously have with the agencies, and that is part of your job, by permitting judicial review of an agency’s compliance with UMRA? 

Would that help? 

Mr. SUNSTEIN. As you are aware from your former colleagues and 

subordinates, Susan Dudley and John Graham, and the Administrator of OIRA is in the implementation business and not really in 

a position to recommend legislation. 

Senator PORTMAN. Thanks for being here today. 

Mr. SUNSTEIN. Thank you. 

Senator PORTMAN. And thank you, Madam Chairman. 

Senator COLLINS. Thank you. I want to thank our witness for appearing today. I think this was an excellent exchange that sets the 

groundwork for the Committee’s future work on regulatory reform 

proposals, including one that I have introduced, and there are bills 

that have been referred to our Committee that have been introduced by other Members. 

We recognize that OIRA is not in the business of determining the 

Administration’s positions on regulatory reform bills or any other 

piece of legislation, but we also know that you have insights and 

data, and I hope that you will be willing to work with the Committee to give us your best technical advice on what the ramifications of the bills would be. We need that guidance to make sure 

that we are avoiding unintended consequences through a lack of 

understanding of exactly what the implications would be. So I 

would urge you to work with the Committee at least as a technical 

adviser as we begin to review all of these regulatory reform proposals. 

Mr. SUNSTEIN. We would be delighted. 

Senator COLLINS. Thank you. I anticipate that the hearing will 

occur in June, as the Chairman has announced, so we will be in 

touch with you very shortly to ask your analysis and technical advice as these various bills are considered by the Committee. 

33 

But again, I thank you very much for your very helpful and 

straightforward testimony, and for the very important work that 

you are doing. As I said in my opening statement, if you did a poll 

of the American people, I doubt that you would find very many who 

have ever heard of OIRA, and yet the office that you head is extraordinarily important in reviewing all regulations that go 

through the Federal process, and I, for one, think that you have approached that job very seriously and as we have intended. 

The record for this hearing will remain open for 15 days for the 

submission of any additional questions, statements, or materials. 

And with that, this hearing is adjourned. Thank you. 

[Whereupon, at 12:04 p.m., the Committee was adjourned.] 

(35) 

FEDERAL REGULATION: A REVIEW OF 

LEGISLATIVE PROPOSALS—PART I 

THURSDAY, JUNE 23, 2011 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:02 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding. 

Present: Senators Lieberman, Levin, Pryor, Landrieu, Collins, 

Coburn, Brown, Johnson, Portman, and Paul. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. Good 

morning. Today we are going to continue our Committee’s consideration of regulatory reform. Last month, we explored the structure 

of the Federal regulatory process and the Administration’s recent 

efforts to ensure that rules and rulemaking are as effective and efficient as they can be. 

Today we are going to focus on some of the legislative proposals 

to revise the existing system, which is a topic that has attracted 

particular attention in this Congress. At this moment, six Senators 

have legislation now pending before this Committee on regulatory 

reform. At this moment in my prepared remarks I was going to 

welcome and thank our colleagues who are testifying today, but I 

will do that when they appear. 

I was also going to promise to make my opening comments brief 

in deference, but now I will just keep on talking. [Laughter.] 

But I want to thank Cass Sunstein, the Administration’s point 

man, as it were, on matters of regulation, who will be testifying on 

the second panel. 

The question before us, as I see it, is not whether to regulate but 

how to regulate because a Nation without regulation would be a 

Nation at risk. For example, last week I read a news story about 

the devastating effects of lead poisoning in parts of China. Workers 

have apparently been absorbing dangerous amounts of lead in factories, and many children, who are particularly vulnerable to the 

neurological damage lead can cause, have been sickened in homes 

and schools that are located near those factories. Here in the 

United States, we have known for quite a long time that air pollution and workplace safety regulations were necessary, and they 

have protected workers and families living near similar industrial 

plants from being ill, and those were regulations that Congress diVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00041 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
36 

rected agencies to put in place. And I think this example, and others that we could cite, such as the failure of regulation in a different sense to prevent some of the bad behavior in the financial 

sector of the American economy that contributed greatly to the 

Great Recession that we are still fighting our way out of—these 

kinds of regulations or the concept of regulation is not only correct 

but something that the public wants us to do. So the question in 

my mind is not whether to regulate but how. 

Smart regulations, of course, can also help industry by, for instance, providing a predictable field on which they can operate. For 

instance, after recent national outbreaks of salmonella and other 

foodborne illnesses, the food industry, as I viewed it, seemed to 

welcome the recent food safety law as a way to fortify consumer 

confidence and restore damaged sales. 

Of course, many regulations do impose costs on businesses, and 

not all of them are justified. So it is important to oversee the regulatory process continually to ensure that it is achieving the greatest 

public benefit at the smallest cost. That is particularly important 

now, of course, when our economy is struggling and businesses will 

be threatened in an especially consequential way by unjustified 

regulatory burdens. 

In that spirit, President Obama moved recently to strengthen the 

process through an Executive Order (EO) that clarified and toughened guidelines for evaluating the costs and benefits of proposed 

regulations in order to select the least burdensome ones. The President has called on agencies to review existing regulations to ensure 

that they are still necessary. These so-called look-back reports are 

being assembled and, I gather, have identified ways to save a lot 

of money in reduced compliance costs as well as millions of hours 

of reduced paperwork for businesses and individuals. So I look forward to hearing about that effort from Cass Sunstein, who is overseeing the process as the head of the Office of Information and Regulatory Affairs (OIRA). 

Once again, I thank our colleagues for the work that they have 

done—Senator Snowe is here now; we will call on her first—in this 

important area of governance. We are really fortunate to have several Members of our own Committee, as well as Senators not on 

the Committee, who have worked in this subject area and will testify before us today. 

Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. At the outset of this 

hearing, I want to thank you for agreeing to hold this hearing 

today to allow our colleagues to describe their legislative proposals 

for regulatory reform. I am particularly pleased that my senior colleague from Maine, Senator Snowe, is here to present her bill. As 

the Ranking Member of the Small Business Committee, she brings 

a great deal of expertise to this issue, and so I welcome her. 

I would also note, Mr. Chairman, that she is the only Member 

who is on time for our hearing and, thus, I believe that her bill deserves extra consideration. [Laughter.] 

Chairman LIEBERMAN. I agree. Thank you. 

37 

Senator COLLINS. Our April hearing laid the groundwork for a 

thoughtful examination of how the regulatory burdens on our economy—especially on job creation and productivity—might be lightened or simplified, without diminishing important safety and 

health protections. 

I am optimistic that we can build a bipartisan consensus to 

achieve this goal. President Obama has acknowledged that Federal 

regulations have ‘‘sometimes gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation 

and have had a chilling effect on growth and jobs.’’ 

Most recently, when the President’s Chief of Staff met with a 

group of manufacturers who complained to him about excessive and 

burdensome regulation, the President’s Chief of Staff was quoted as 

saying that sometimes you just cannot defend the indefensible. 

Notwithstanding these comments and the President’s intentions, 

the growth of the Federal regulatory state, as measured in terms 

of employment by regulatory agencies, continues unabated. As this 

chart on display illustrates, since March 2010, job growth in the 

Federal regulatory agencies has far outstripped job growth in the 

rest of the Federal Government. Much more significantly, it has far 

outpaced job growth in the private sector. 

Now, in some cases this is a reaction to new regulations that we 

have mandated in the financial area, for example, but in other 

cases there is no doubt that we have more Federal regulators 

churning out regulation that has had the effect of impeding private 

sector job growth. 

All too often it seems that Federal agencies do not really take 

into account the impact on small businesses and job growth before 

imposing new rules and regulations. 

I have introduced my own bill to address this problem. It is 

called the CURB Act, which stands for Clearing Unnecessary Regulatory Burdens. 

First, the CURB Act requires Federal agencies to analyze thoroughly the costs and benefits of regulations, including indirect 

costs, such as the impact on job creation, the cost of energy, and 

consumer prices. Currently, most Federal agencies are not required 

by law to analyze these indirect costs and benefits. 

The idea of using cost/benefit analysis is not new, of course. In 

1981, President Ronald Reagan issued an Executive Order prohibiting agencies from issuing regulations unless the potential benefits 

outweighed the potential costs. President Clinton revised that Executive Order in 1993, obligating agencies to provide OIRA, the office that Cass Sunstein heads within the Office of Management and 

Budget (OMB), with an assessment of the costs and benefits of regulations. The focus of the Clinton Executive Order was on regulations that are ‘‘significant’’—meaning those which can reasonably 

be expected to have an impact of $100 million or more on the economy. My bill would essentially codify that requirement. 

Second, the CURB Act compels Federal agencies to comply with 

public notice and comment requirements and prohibits them from 

circumventing these requirements by issuing unofficial rules as 

‘‘guidance documents.’’ This has been a real problem. It is one that 

our colleague now-Senator Rob Portman tried to address when he 

was head of OMB in 2007. He tried to close the loophole by imposVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
38 

ing good guidance practices on Federal agencies. But the fact is 

that does not in many cases have the force of law, and I think we 

need to codify that. 

Third, the CURB Act helps out the ‘‘little guy’’ trying to navigate 

our incredibly complex and burdensome regulatory environment. 

When a small company, a small business, inadvertently runs afoul 

of a Federal regulation and there is no harm done, I do not understand why we slap that business with a financial penalty. After all, 

that first-time violation that caused no harm, that may well be a 

paperwork violations, could impose a financial burden that could 

sink the business and all the jobs that it supports. It does not 

make sense to me to penalize a small business the first time it 

accidently fails to comply with paperwork requirements so long as 

no harm comes from that failure. 

Each of the provisions in the CURB Act has been endorsed by 

the National Federation of Independent Business and the Small 

Business and Entrepreneurship Council. 

So I would urge the Members of this Committee and my colleagues to take a close look at the CURB Act, to endorse it, I hope, 

and I also look forward to learning about the regulatory reforms 

proposed by my colleagues in the hope that we can produce a regulatory reform bill this session. 

Thank you, Mr. Chairman. Again, thank you for holding this important hearing. 

Chairman LIEBERMAN. Thank you, Senator Collins. 

The original plan had been to go to the Senators not on the Committee who are visiting, but Senator Portman has a conflict at this 

hour, and with the leave of the others—because he has introduced 

a bill also, as has Senator Paul. I wonder if you would allow him 

to go forward. Senator Portman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Well, thank you, Mr. Chairman. Thank you 

very much for holding the hearing, and I thank you and Senator 

Collins for your interest in the issue, and specifically, Senator Collins, your great work on this issue. The CURB Act is, as you said, 

an important codification of some existing practices, and it goes beyond that in some really important ways. So I am a supporter and 

I encourage her to continue to push this through this Committee. 

There has been discussion already this morning about the importance of regulations and their impact on the economy, and I think 

it goes without saying that we are all looking for ways to stimulate 

growth right now, and certainly taking away this regulatory burden is an appropriate focus. 

Let me give you a number: $1.75 trillion annually is the economic toll of Federal regulations. When you think about that, that 

is more than the Internal Revenue Service (IRS) collects in income 

taxes. So it is clearly an area for us to focus on. 

A great Senator Lieberman quote this morning, ‘‘not whether to 

regulate but how to regulate,’’ I would agree with that. But we certainly need to be smarter and better at it. 

And I hear this all the time, as do my colleagues, I am sure, who 

are here today, from businesses saying—regardless, really, of what 

business they are in—that there is a Federal regulatory issue that 

39 

1The chart submitted by Senator Portman appears in the Appendix on page 126. 

they are dealing with and making it more difficult to move forward 

and hire. 

President Obama’s Executive Order was spoken about earlier, 

EO 13563. I think the words in that Executive Order are very encouraging, actually, and I am hopeful that some of that lookback 

will be successful. But I have to tell you, I continue to be very concerned about the actual direction they are moving in, and I think 

this is, again, at this time in our Nation, with our economic problems, something that we appropriately should focus on. 

I see more costs, more agency action. I think one of the best ways 

to get our hands around it to look at these regulations that have 

the most impact, and those are called ‘‘major’’ regulations or ‘‘economically significant’’ rules. That means they have an annual impact on the economy of $100 million or more. Of the 4,000 rules 

that Federal agencies issue every year—that is a rough estimate— 

only about 50 to 70 are in this category. But they are the ones that 

have the biggest impact, and I think that is one way for us to logically approach this. 

The chart that I have distributed puts this in an interesting context.1 It is about the regulatory trend. It shows that these economically significant rules that are in development across all Federal 

agencies are increasing dramatically. This is the 2010 OMB Fall 

Regulatory Plan, 224 of these major or economically significant regulations in the pipeline. That is a 60-percent increase since 2005. 

So this notion that somehow we are successfully dealing with these 

major impacts on our economy I think is not accurate based on the 

facts. 

This might not be the perfect measure of regulatory burden, but 

I think it is an important one, and it is one we ought to be looking 

at because the trajectory we are on is not good for business. 

I believe the best approach to bringing some balance is twofold. 

First, I think we need to reform the way agencies develop these 

new rules—especially on these economically significant rules, as I 

say—by making the process more cost-conscious, more transparent—I think what Senator Collins talked about helps in that 

area—and more accounts. That is the goal of the Unfunded Mandates Accountability Act that I am going to talk about briefly here 

that I introduced this month, and we now have 20 co-sponsors. 

Second, I think we should move toward a regulatory budgeting 

process—a more systematic framework for tracking and controlling 

these large, what really are unbudgeted costs that, again, Washington is imposing every year on the private sector. It is a subject 

I have been working on recently and discussing with Senator Mark 

Warner, who is here with us today. He has done great work in this 

area, and I know that he is going to talk about it today. He is very 

well versed on it, and I look forward to what he has to say. 

On this first point—process reform—this legislation that I introduced this morning is focused on the Unfunded Mandates Reform 

Act of 1995 (UMRA), which is existing law. I was involved in that 

as the House co-sponsor back in 1995, and it was a bipartisan way 

to prevent the regulators and Congress, frankly, from imposing 

40 

burdens on State and local government, but also on the private sector. 

My legislation improves UMRA in five ways. A thumbnail sketch: 

Broader scope. It says that instead of having a direct expenditure, it has to be an effect on the economy. This is consistent, actually, with the way OMB currently looks at it through the OIRA 

regulatory review process, so I think that makes sense given, 

again, our economic situation. 

Second, a stronger economic impact analysis. It would require an 

impact on jobs, which, again, is consistent with the President’s 

speech when he talked about the importance of identifying and assessing available alternatives to encourage job creation. 

Third, least onerous alternative. Right now the legislation does 

require the agencies to look at the least costly, least burdensome. 

This bill would change that to make it a requirement. It is discretionary now. This would say at least on these most costly rules, 

again, 50 to 70 a year, it ought to be required. 

Fourth, it applies to independent agencies. This only makes 

sense. Independent agencies are regulating more, and, frankly, in 

1995 we should have extended it. Think about the Securities and 

Exchange Commission (SEC) or even the newly created Consumer 

Financial Protection Bureau. There is no reason it should not apply 

to independent agencies. 

Cass Sunstein, who is here today, and I have talked about this 

in testimony before, but he wrote a brilliant law review article back 

in 2002 where he advocated just that. 

Finally, judicial review. Improving the enforcement of UMRA by 

permitting judicial review of agency actions, to me this is critical 

in terms of actual enforcement. 

So, Mr. Chairman, thank you again for holding this hearing. No 

major regulation, whatever its source, should be imposed without 

a careful consideration of the cost, the benefits, and the availability 

of less onerous alternatives, and that is what this legislation is 

meant to achieve. 

Chairman LIEBERMAN. Thanks, Senator Portman. 

It would be my intention now to go to the panel, Senator Paul, 

and then go to you after. I am hoping that you will be staying. 

Senator Snowe, Senator Roberts, Senator Vitter, and Senator 

Warner, thanks for being here. When I see Senator Roberts, I always have to feel that I should reassure him that all proceedings 

before this Committee are conducted in compliance with the Geneva Convention. [Laughter.] 

Thank you. It is an ongoing routine that we do. It goes back to 

Jack Benny—most of you do not even know who Jack Benny was. 

Senator Snowe, you have been a real leader in this area of regulatory reform, sometimes in a way that is frustrating to you, I 

know, but you are indefatigable, and we welcome you here and 

would welcome your testimony at this time. 

41 

1The prepared statement of Senator Snowe appears in the Appendix on page 161. 

TESTIMONY OF HON. OLYMPIA J. SNOWE,1 A U.S. SENATOR 

FROM THE STATE OF MAINE 

Senator SNOWE. Thank you, Chairman Lieberman, and Ranking 

Member Collins for convening this crucial hearing on regulatory reform, and I applaud your efforts. 

Mr. Chairman, I know you have been a steadfast advocate for 

small businesses as a longstanding member of the Small Business 

Committee and as my fellow co-chair on the Senate Task Force on 

Manufacturing. And, of course, Ranking Member Collins has been 

a true champion of small businesses. She hails from a family of entrepreneurs and small business owners and previously served as 

the New England Regional Administrator of the Small Business 

Administration. I want to commend you, Senator Collins, for your 

initiative on small businesses and on regulatory reform. I appreciate many of the issues that you have raised here this morning, 

as well as Senator Portman. We could certainly find common 

ground on a number of these issues, so I appreciate what you have 

offered here today. 

I am very pleased to be able to testify on the Freedom from 

Restictive Excessive Executive Demands and Onerous Mandates 

(FREEDOM) Act, which garnered support of 53 Senators, including 

10 Members of this Committee, when I offered it in the form of an 

amendment back on June 9 on the Senate Floor. I am especially 

thankful to my co-author, Senator Coburn, who was instrumental 

in the process of drafting and re-drafting this legislation in response to many of the issues that have been raised by our colleagues. 

Mr. Chairman, we have experienced the highest percentage increase in long-term unemployment, of any recession since World 

War II. It is going to require us to create 285,000 jobs every month 

for 5 consecutive years to return to the pre-recession unemployment levels of 2007. 

Since the recession began, small businesses have already lost $2 

trillion in asset valuation and profits. So when we ask the question 

of why regulatory reform, why now, I think we know the answer 

to it. And even Chairman Bernanke yesterday indicated that economic growth is going to be lower than originally anticipated. 

We need an economic game changer so that we can have entrepreneurs and small businesses—and all businesses, for that matter—to be able to take the risk to create jobs through investments. 

And that is why regulatory reform becomes so essential. 

As a letter endorsing our bill from 32 major small business organizations stated, Federal regulations ‘‘add up and increase the cost 

of labor. If the cost of labor continues to increase, then job creation 

will be stifled because small businesses will not be able to afford 

to hire new employees.’’ Moreover, we learned in a Small Business 

Committee hearing in November that a 30-percent reduction in 

regulations would result in a $32,000 saving for small business, 

which would be the equivalent of an additional new hire. So think 

about it. If we have 27 to 30 million small businesses in this country, if every business was able to add one additional employee, 

think about where we would be today. 

42 

It is not hard to understand why regulations are stifling small 

business. Since the enactment of the Small Business Regulatory 

Enforcement Fairness Act back in 1996, more than 50,000 new 

rules have gone into effect, including 1,000 ‘‘major’’ rules, which 

Senator Portman referred to, each with an estimated impact of 

more than $100 million annually on the economy. More than 3,000 

new rules are established each year. 

In fact, just recently, in 2009 and 2010, there was an 11.5-percent increase in those rules that specifically affected small businesses. The Administration’s own cost estimates for the 407 proposed or enacted regulations this year is over $68 billion with likely broader economic costs on our economy. So it is no coincidence, 

if you compare us to China, India, and other major competitors, 

that it costs American firms 18 percent more to manufacture goods. 

The FREEDOM Act is based on existing laws and those processes that actually work. We include small business review panels, 

such as those that have already been in place for 15 years at the 

Environmental Protection Agency (EPA) and the Occupational 

Safety and Health Administration (OSHA), and now at the Consumer Financial Protection Bureau. The 32 organizations supporting our legislation stated ‘‘these panels have proven to be an 

extremely effective mechanism.’’ The panels have evaluated 41 

rules at EPA and 10 at OSHA, including the arsenic in drinking 

water rule, the ground water rule, and the ergonomics standard 

rule. And while we originally sought panels at every agency, in response to those who had concerns about having a smaller, phasedin approach, we decided to add nine agencies over 3 years, and that 

was one of five revisions that we made to our legislation to forge 

a consensus. 

The Regulatory Flexibility Act (RFA) was passed in 1980, and 

that was at a similarly difficult economic time in our country. The 

RFA requires agencies to conduct small business analysis for any 

regulation that would impose a significant harm on a substantial 

number of small businesses. Yet agencies have circumvented this 

obligation by issuing ‘‘guidance documents,’’ as Senator Collins has 

referred to, instead of formal rules, as occurred with OSHA’s recent 

‘‘proposed reinterpretation’’ of the noise standard. When Chairman 

Lieberman and I weighed in on behalf of small businesses, OSHA 

withdrew that proposal. Now, to prevent similar future occurrences, our bill extends the RFA to guidance documents as well. 

Another disregard for the Regulatory Flexibility Act is when 

agencies fail to conduct a meaningful small business impact analysis at the proposed rule stage. Regrettably, the law does not allow 

small businesses to challenge these rules at that point in court, instead they must wait until a burdensome rule is finalized, when it 

is already too late with costly ramifications for small businesses. 

Therefore, using the nearly identical language from legislation that 

was previously filed by the chairman of the Small Business Committee, Senator Landrieu, and by Senator Benjamin Cardin, our 

bill extends judicial review to the proposed rule stage. 

Agencies also ignore the Regulatory Flexibility Act, without consequence, when they do not review their rules each decade for possible elimination or to be made less onerous and punitive. That is 

why the FREEDOM Act also includes a ‘‘stick’’ for enforcement. If 

43 

agencies fail to do what they are required to do by law, to review 

these regulations every 10 years, then they would lose 1 percent of 

their budgets for salaries unless Congress intervenes. After all, 

why should citizens seeking to create jobs and prosperity bear the 

brunt of noncompliance by Federal agencies? 

Now, as has been discussed here this morning, the President is 

conducting a review of regulations across 30 agencies. I know you 

will hear from Cass Sunstein from OMB. It is critial to note that 

the rules the Administration is examining diverse and areas consequential as Endangered Species Act procedures and EPA regulations on air pollution. And he expects that this examination will 

yield billions in savings. In fact, I brought here a sampling of the 

rules that are being reviewed by the Administration currently, and 

that is just a sampling of what is going to be reviewed by the Administration, which is a fragment of the Federal regulations. 

That is the point. Why isn’t this review the norm not the exception? That is how Congress can play its part in meaningful regulatory reform by adding consistency to the process, adding accountability through enforcement, and you only can achieve that with assurances through the weight of law. We have to have a consistent 

practice of regulatory reviews so that businesses can rely on it with 

certainty and predictability. 

Finally, the FREEDOM Act requires agencies to consider foreseeable indirect costs of rules, as Ranking Member Collins has also 

proposed, which is a top legislative priority of the President’s Small 

Business Administration (SBA) Office of Advocacy. Currently, the 

Regulatory Flexibility Act only mandates regulators to take into account the direct effects by a proposed rule—completely ignoring the 

secondary effects. If you have a factory that closes in a community, 

it can also affect the suppliers and the contractors. And we have 

addressed the concerns with our original language that might require agencies to consider too many types of indirect effects, by taking the precise language that was proposed by Dr. Winslow 

Sargeant, who is the SBA Office of Advocacy Chief Counsel. 

To conclude, Mr. Chairman, the time to act to remove these barriers and impediments to job creation is now. Small businesses 

need the relief. Our economy needs help. The American people desperately need jobs in this country and we have failed them in providing the right kind of economic conditions. Regulatory reform will 

be paramount in being able to revive the economy and make a 

major step in the right direction. 

Chairman LIEBERMAN. Thanks very much for your testimony, 

Senator Snowe, and we obviously look forward to working with you 

on this matter as we go forward. 

Senator SNOWE. Thank you. 

Chairman LIEBERMAN. I would say to my colleagues that our inclination is not to ask questions of the Senators at this point, so 

if your schedule requires you to leave, please feel free. 

Senator Roberts, thanks for being here, and I am going to control 

myself and try not to be funny anymore. You somehow motivate me 

in that direction. I will just call on you because this is a serious 

subject. 

44 

1The prepared statement of Senator Roberts appears in the Appendix on page 164. 

TESTIMONY OF HON. PAT ROBERTS,1 A U.S. SENATOR FROM 

THE STATE OF KANSAS 

Senator ROBERTS. Well, good morning, Chairman Lieberman, 

Ranking Member Collins. Chairman Lieberman, I was going to do 

our Jack Benny routine. 

Chairman LIEBERMAN. It is a great one. 

Senator ROBERTS. Thinking that perhaps it would add a little 

levity to this subject, but there are four regulations that prohibit 

that in this hearing room. [Laughter.] 

I was not aware of that until this morning, and I had the full 

stack of regulations here, but it kept leaning over like the Leaning 

Tower of Pisa, and I did not want to have a problem. 

I could say, ‘‘Now, Joe, cut that out.’’ But I will not do that. 

Chairman LIEBERMAN. Thank you. 

Senator ROBERTS. All right. And distinguished Members of the 

Committee, I am pleased to be here today to testify on regulatory 

reform issues, obviously the topic of the day. Senator Warner’s bill, 

Senator Vitter’s bill, I am a co-sponsor of Senator Collins’ bill and 

Senator Snowe’s bill. I have 47 co-sponsors on my bill. Senator 

Warner, we need your help. I will visit with you. 

My bill, the Regulatory Responsibility for Our Economy Act of 

2011, would strengthen and codify President Obama’s Executive 

Order from January 18. The President made a commitment to review, modify, streamline, expand, or repeal those significant regulatory actions that are duplicative, unnecessary, overly burdensome, or would have significant economic impacts. 

My bill would ensure just that and would require that all regulations put forth by the current and future Administrations consider 

the economic burden on American businesses, ensure stakeholder 

input during the regulatory process, and promote innovation. 

My legislation would ensure that this happens by laying out specific conditions that the Federal regulatory system must meet. It 

also puts forth new and codifies existing agency requirements for 

promulgating the regulations. 

In a Wall Street Journal op-ed, the President stated, ‘‘We have 

preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our 

health and safety and to safeguard people and businesses from 

abuse.’’ But he also noted, ‘‘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.’’ 

I absolutely agree with that statement. I hear Kansan after Kansan who find themselves weighed down by the deluge of regulations 

that threaten the future of their businesses. 

During fiscal year 2010, 43 new major regulations were adopted, 

with estimated net new burdens on Americans exceeding $26.5 billion each year. Now, that is a record increase. Fifteen of the 43 new 

major rules involve financial regulation. Another five stem from 

health care reform. Ten rules adopted by the EPA were responsible 

for the lion’s share of new regulatory costs—some $23.2 billion. 

45 

Regulatory burdens—and the taxpayer burden—are expected to 

increase again this year as agencies continue to promulgate literally thousands of new rules. 

A September 2010 report prepared for the Small Business Administration stated that the annual cost of Federal regulations— 

the annual cost today—was an outstanding $1.75 trillion in 2008. 

Now, imagine the cost since then. My legislation would simply codify the President’s Executive Order and assure a review of these 

regulations. 

The President’s Executive Order ‘‘requires that Federal agencies 

ensure that regulations protect our safety, health, and environment 

while promoting economic growth.’’ So does my legislation. However, it strengthens the President’s commitment by promoting economic growth, innovation, competitiveness, and job creation. 

The President’s Executive Order commissions ‘‘a governmentwide review . . . to remove outdated regulations that stifle job creation and make our economy less competitive.’’ So does my legislation. 

My legislation requires each agency to submit a plan to review 

existing significant regulatory actions, and then they must continue 

to do so once every 5 years and must report to the Congress. 

We need to add some teeth to the President’s commitment by 

closing existing loopholes. My legislation also requires the independent agencies to complete a review of their regulatory actions 

and imposes the same requirements on them. I am sure every office 

in the Congress, everybody here, hears about the egregious overregulation by independent agencies such as the Commodity Futures Trading Commission (CFTC) and the EPA. 

My bill also ensures valuable stakeholder input on regulatory actions, including standardizing the length of the comment period 

and when it should start. Today’s comment periods can range from 

2 weeks to 90 days, causing inconsistency, and stakeholders should 

have the time and a say in protecting their future. 

In 2010, Federal agencies issued 3,573 final rules. The Administration’s own cost estimates for the 280 proposed or enacted regulations this year is over $29.4 billion—almost $30 billion—with potentially even broader economic costs on our economy. And this is 

just a snapshot in time, with the hundreds of pages, more and 

more, that are coming out every day. 

President Obama has made it his ‘‘mission to root out regulations 

that conflict, that are not worth the cost, or that are just plain 

dumb.’’ I agree. We need to eliminate more of the ‘‘just plain dumb’’ 

in government, and I would encourage the Administration and my 

colleagues to support my legislation. 

I thank the Chairman and the Ranking Member. 

Chairman LIEBERMAN. Thanks, Senator Roberts. It is very heartening to hear the ways in which you and President Obama are of 

like mind. 

Senator ROBERTS. He has a blueprint, sir, and I simply codify his 

rules and take out the exemptions. If you would like, I could read 

one particular exemption, or loophole, that I think is very egregious. 

Chairman LIEBERMAN. I knew I should not have commented. 

[Laughter.] 

46 

1The prepared statement of Senator Vitter appears in the Appendix on page 166. 

Go right ahead. 

Senator ROBERTS. Let me just say that in applying these principles—this is for each agency head and for Mr. Sunstein over here 

to take a look at it. ‘‘Each agency is directed to use the best available techniques to quantify anticipated and present and future benefits and costs as accurately as possible. Well, that is pretty good. 

But, where appropriate and permitted by law, each agency may 

consider and discuss qualitatively’’—qualitatively now, Mr. Chairman—‘‘values that are difficult or impossible to quantify, including 

equity, human dignity, fairness, and distributive impacts.’’ 

Now, I defy anybody here to really define what that means, and, 

Mr. Sunstein, if you can define it, bless your heart. And many 

agency heads simply got their people together and said at the initial speech by the President back on January 18, when he issued 

the Executive Order, and said, ‘‘Well, are we doing equity? Are we 

doing human dignity? Are we doing fairness? Are we doing distributive impacts?’’ And everybody said, ‘‘Well, sure.’’ And so the 

EPA came out and said, ‘‘Well, none of this applies to us.’’ Now, 

they have changed their mind a little bit after they testified before 

Congress and after the President’s Executive Order has been fully 

discussed. 

I give the President great credit. Our bill simply uses his order 

as a blueprint to, I think, improve it some and put teeth in it, and 

I appreciate your indulgence. 

Chairman LIEBERMAN. Thanks, Senator Roberts. When Mr. 

Sunstein is before us, I will ask him to respond on that particular 

paragraph that you read. I appreciate your taking the time to come 

and be with us and also for the work that you did on your proposal. 

Next, our friend and colleague from Louisiana, Senator David 

Vitter. 

TESTIMONY OF HON. DAVID VITTER,1 A U.S. SENATOR FROM 

THE STATE OF LOUISIANA 

Senator VITTER. Thank you, Mr. Chairman, Ranking Member 

Collins and Members, for the opportunity to visit with you today 

and for this very important hearing. And I certainly agree with all 

of the previous comments. It is sometimes amazing that small business owners really have any significant time to actually run their 

business, grow their business, do anything else after all of this paperwork is done. Businesses have to deal with a myriad universe 

of Federal agencies—EPA, Corps of Engineers, Coast Guard, SBA, 

Labor, Commerce, IRS, and Customs, just to name a few. 

I talk to and try to help Louisiana businesses every week who 

are trying to get through this maze, and it is very difficult. And 

that does not even mention the State and local regulatory agencies 

that they deal with on top of that. 

There have been many great explanations and metrics about that 

burden. I will not belabor the point, but let me just add one. 

In September of last year, the SBA Office of Advocacy released 

a study that gave us a little glimpse of the burden. The reports 

shows that small businesses with 20 or fewer employees face an 

47 

annual cost from Federal regulations alone of $10,585 per employee. 

When you are talking about that sort of family business, that 

sort of small business, that is an enormous burden. If we could cut 

that in half—and that burden would still be too high, in my opinion—that would mean for a business of 20 people, over $100,000 a 

year. That is a lot of money for a very small business. That is a 

lot of opportunity to hire, to grow, to innovate, and to compete 

more effectively. That is a big deal. So this is important work and 

an important topic. 

Most of my other colleagues are talking about major regulatory 

reform, and I support those efforts. What I am going to talk about 

in terms of legislation, the Small Business Paperwork Relief Act, 

is fundamentally different and I think is an important complement 

to that and is a much more immediate relief valve. So I encourage 

you to look at this as a supplement to broader regulatory reform 

efforts. 

Again, it is called the Small Business Paperwork Relief Act. I 

have been working on it since I was in the House, brought it to the 

Senate. It still is a leading proposition in the House, and it would 

direct Federal agencies not to impose civil fines for a first-time violation of their agency’s paperwork requirements by a small business unless the head of the agency determines that, first, the violation has the potential to cause serious harm to the public interest; 

second, forgoing a fine would impair criminal investigations; third, 

the violation involves internal revenue law; fourth, the paperwork 

violation is not corrected within 6 months; or, fifth, the violation 

presents a clear danger to public health or safety. 

Also, the bill says that fines can be waived in the case of a violation that could present a danger to public health or safety if the 

issue is corrected within 24 hours of the small business receiving 

notification. 

So, again, this is an immediate relief valve. It does not take the 

place of much broader reform efforts, which I support, but it is a 

quick, immediate relief valve which we could pass and which would 

give immediate relief to small business. 

Now, there are some who may argue against the proposal that 

it would encourage small business owners to break the law. I really 

do not think it would do that in any way. 

Others could argue that devious business owners could wait for 

their free shot before filling out required documents. I do not think 

that would be the case. The bill does not remove any obligations. 

The bill is about pure paperwork violations. The bill lays out all 

of the requirements I just mentioned. And the bill would only temporarily provide relief from fines regarding first-time violations— 

not a series of violations, not a bunch of violations put together, 

but one first-time violation. 

So I do think it is sensible, common sense, and would give some 

immediate relief as we work on broader reform efforts. I encourage 

the Committee to look hard at it along with these broader reform 

efforts. 

Thank you very much for the opportunity to present the idea, 

and I look forward to following up with each of you. 

48 

1The prepared statement of Senator Warner appears in the Appendix on page 171. 

Chairman LIEBERMAN. Thanks, Senator Vitter. We definitely will 

look at that proposal. I appreciate your describing it to us. Thanks 

for taking the time to be here. 

Senator Mark Warner of Virginia. 

TESTIMONY OF HON. MARK R. WARNER,1 A U.S. SENATOR 

FROM THE STATE OF VIRGINIA 

Senator WARNER. Thank you, Mr. Chairman, Ranking Member 

Collins, and Members of the Committee. 

Obviously, this is a topic whose time has come, the question and 

challenge of how we try to get our regulatory burden in the right 

shape. 

If you will let me be slightly controversial, I actually think rules 

and regulations are important, and I am not here to question the 

whole need for regulations. But I do think it is time to question 

how we can go about this process in a much smarter way and a 

more cost accountable way. 

I actually have run small businesses. I have been involved in 

business for 20 years. I have been in business longer than I have 

been in politics. And it is kind of stunning to me at times—that 

any business that does not regularly review its processes, review 

its rules, review how it operates would soon be out of business. 

Unfortunately, we cannot necessarily say that about government. 

Much of what we are talking about today is not the result of any 

single action. It is simply the accumulation over decades of rules 

and regulations without ever having a process to go back and fully 

prune out what has kind of outlived its purpose or moved beyond 

where technology is today. 

I do want to commend the President as well, like Senator Roberts, in terms of his efforts, and I think Mr. Sunstein has moved 

forward on this. If I was doing this smartly, I would take Senator 

Snowe’s prop and bring it down right here and point out the fact 

that OIRA has moved forward with the President’s direction. Just 

in the last month after reviewing 30 agencies, it identified over 500 

regulations. Some of those are pointed out over there. Most of those 

have not had cost analysis, but 5 percent of the recommendations 

did include potential savings. And even if 5 percent of those potential savings were realized, that is more than $7 billion and 60 million hours in possible compliance savings. So this is an area where 

we can, I think, make progress. 

I have been working on a proposal for almost a year, working 

with Senator Portman, and would look forward to working with 

other Members, on seeing if this might be a slightly different approach. And it would do two things. 

First, it would require all government agencies, both independent 

and executive agencies, to conduct the kind of impact analysis of 

economically significant rules that OMB already requires for executive agencies. I think it is time that we broaden that reach to independent agencies as well. 

Next, my proposal would include a regulatory pay-as-you-go 

(PAYGO) approach that I think would start to put the appropriate 

balance in place. This PAYGO process would ensure that agencies 

49 

act on and expand their retrospective review plans to eliminate 

outdated rules and modernize others over the next few years. 

Now, what does regulatory PAYGO mean? It actually says that 

as an agency puts forward a new regulation—and there is a need 

clearly at times to put forward new regulations as science and circumstance change—they would conduct an economic analysis of 

that regulation, and if they feel it is so critical to put forward, they 

would have to go back and, in effect, find one of equal size and 

shape and burden and take it off the books. 

What this would do is to align the incentives inside the agencies 

the right way. Agencies do very important work, but right now, 

agencies often are rewarded with additional staff and personnel the 

more regulations they add. This would try to on an internal basis 

kind of get that process right. 

I believe this PAYGO process would actually force more conversations about alternatives to necessary regulations and get that 

rebalancing done before the whole regulatory process goes forward. 

And it would actually force that weighing of costs/benefits beyond 

some of the proposals which my colleagues have put forward. This 

PAYGO process would be overseen by OIRA, and I think it would 

be appropriate. 

Now, I have had a number of folks say it is a great concept, but 

how would you actually do it? Could you actually put this kind of 

process forward where you could have regulatory PAYGO? 

I would simply add that, as much as I would love to claim this 

was an idea that I came up with, it is not. This is something the 

U.K. Government has actually done. It is called ‘‘one-in, one-out.’’ 

It has been embraced by both the Labour Government and the new 

Coalition Government. And one of the things that constantly kind 

of haunts me is the United Kingdom, which for I think for most 

of our lives was always viewed as this kind of overly burdensome 

with regulations—we did not want to become like the United Kingdom. The United Kingdom has actually passed the United States 

in terms of ranking of international competitiveness because the 

United Kingdom has taken on this issue of regulatory reform and 

has taken bold steps like one-in, one-out. I think regulatory 

PAYGO would be a similar type approach, and, again, I commend 

the Committee and all the Members for taking on this issue. I hope 

my idea that could be put into the mix will get appropriate review 

as well. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Warner. That is a very 

interesting idea, and I promise you we will give it full consideration, and I hope we can engage with you in more detail about how 

to implement it. Thank you. 

Two other Members of the Committee have introduced regulatory 

legislation, Senator Paul and Senator Pryor, so I would call on Senator Paul at this time. 

50 

1The prepared statement of Senator Paul appears in the Appendix on page 129. 

OPENING STATEMENT OF SENATOR PAUL 

Senator PAUL. Thank you, Mr. Chairman, and thank you, Senator Collins, for having these hearings. I think they have been very 

informative. 

I think if we truly care about our country, if we care about joblessness, if we care about unemployment, if we wanted to stimulate 

the economy, we should incorporate the ideas we have heard today, 

a lot of good ideas from a lot of different Senators, Republicans and 

Democrats. I would encourage the Chairman, who is famous for 

being independent and respected for working with both sides of the 

aisle, to let us do something. I mean, why not take these ideas— 

if we cannot put them into one bill, let us stack them, have five 

or six regulatory freedom bills, and let us get them passed. Let us 

say within a month we will get them to the floor and we will vote 

on them. If people do not like them, vote no, but let us get them 

to the floor, because this would provide jobs. 

The President said, well, the shovel-ready jobs were not so shovel-ready. Well, the thing is that there is sort of a fallacy there. 

That is the government creating jobs. What we are talking about 

here is regulatory freedom, letting business create more jobs, who 

already are creating jobs. The businesses who have already been 

voted on by the consumer and they are succeeding, but could succeed more and create more jobs if we would free them up. 

The whole idea of the government passing out shovels just is not 

really good. It incorporates an economic fallacy. Milton Friedman 

one time was traveling in Asia, and they wanted to show him a 

canal project. So he went down there, and there were a bunch of 

guys with shovels, and he looked at them and he said, ‘‘Well, where 

are the bull dozers? Where is the heavy equipment to build your 

canal?’’ And they said, ‘‘Oh, no. This is a jobs project.’’ And he said, 

‘‘Well, if it is a jobs project, why don’t you give them spoons?’’ 

So, really, it is not about shovels or spoons. Let us try to help 

the businesses that are already out there being voted on by the 

consumer every day, and they are succeeding. But they are burdened with these regulations. 

Senator Portman talked about there being $1.75 trillion worth of 

regulations. That is true. That is from the President’s own estimates. They estimate that any business that has over 500 employees, it is costing $8,000 per employee. If you have only 20 employees, it is costing about $10,000 per employee. These costs are what 

make us noncompetitive with the world. We can control our taxes 

in our country, but our taxes are higher than much of the rest of 

the world. We can control our regulatory burden, but our regulatory burden is much higher than the rest of the world. 

This is something we could do immediately to help people get 

jobs. We need regulatory reform. We need regulatory freedom. And 

I think it is a bipartisan thing. I think there is a lot of—we might 

not agree on everything, but there is a lot here that we could agree 

on. 

You know, I am new here, and I feel the snail’s pace. I feel like, 

well, people are out of work, let us do something to help them. I 

think we could get together, pass something within a month, at 

51 

least get it out there and let us vote on it. We may not pass all 

of these things. It may be easiest to look at them individually, just 

stack a whole bunch of regulatory reform votes, and let us try to 

get them out to the full Senate and see what we can get done. 

My bill was originated by Congressman Geoff Davis in the 

House, but it came from a constituent who is a friend and a supporter of both of ours named Lloyd Rogers, and he is a veteran of 

the Korean War, he received medals, but he comes to Tea Party 

meetings and says, ‘‘Why do unelected bureaucrats get to write the 

rules? Why are the bureaucrats writing the rules? Why are you not 

writing the rules?’’ 

A good example of this: ‘‘ObamaCare’’ has 1,700 references to the 

Health Secretary shall write these rules at a later date. Well, we 

do not even know what they are. That is why the comment by Congresswoman Nancy Pelosi was, ‘‘You will find out about it afterwards.’’ Now we are finding out more and more because we did not 

know and we are not writing the rules. 

The Dodd-Frank Act had hundreds of regulations in it, and these 

regulations are said to maybe lead to 5,000 pages of regulations. 

We are not going to write them. Furthermore, we are not even 

going to reappropriate the agencies that write them. The consumer 

agency that is going to be created is going to be under the Federal 

Reserve. It will be appropriated like the Fed creates credit: Out of 

thin air. They will just write their own appropriations. If we do not 

control the appropriations for these things and we do not write the 

rules for these things, we are not doing a good job. Our job should 

be oversight of these things. Our job should be whether to fund or 

not to fund, and particularly big regulations. 

So the idea that came from my constituent, which Congressman 

Geoff Davis introduced in the House, is that big regulations— 

maybe we cannot oversee every regulation, but big regulations, regulations that cost the economy over $100 million, major rules, 

should not be written by unelected bureaucrats. They should come 

back to us. And what I would argue is that even if you like the regulation, if there are some on the other side of the aisle who say we 

need this regulation, let us vote on it. Do not let people who are 

not us—we are supposed to be responsive to the people. Those bureaucrats are not. Something so important as to add $100 million 

worth of cost should come back to us. I find that if you polled this, 

probably 90 percent of the public think it is supposed to happen 

that way. This is good government. A lot of these ideas are good 

government. But we have to do something about it. We cannot just 

sit and say, oh, it is so big, we can never do anything about it. 

We have to start. We have to immediately get started reforming 

government, reining it in. And that is what our act is called. It is 

called the Regulations from the Executive in Need of Scrutiny 

(REINS) Act, and it simply says that these large regulations, once 

they are written by regulatory agencies, have to come back to Congress. 

There are about 200 of them in the pipeline right now that would 

cost over $100 million. I think last year about 100 were enacted. 

We need to do something about this. This legislation would fix this 

problem. It would make us more meaningful. It would bring back 

congressional authority. And I think it can be a bipartisan issue in 

52 

1The letter referenced by Senator Coburn appears in the Appendix on page 159. 

2The letters referenced by Senator Lieberman appear in the Appendix on page 115. 

the sense that it is not about even whether you are for or against 

the regulation. It is whether or not you are for or against the constitutional authority of the Congress to be writing these rules and 

not unelected bureaucrats. 

I thank the Chairman very much for having this hearing and for 

letting me speak. 

Chairman LIEBERMAN. Thanks, Senator Paul. And Senator Collins and I will work together to see if we can find some common 

ground here. 

Senator Pryor, I have been informed now that you have actually 

not introduced regulatory reform legislation, but you intend to, so 

I guess under the rules that we have chosen for today, that gives 

you the opportunity to make a short opening statement—— 

Senator PRYOR. I will be very brief. 

Chairman LIEBERMAN [continuing]. Of intention. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. My intentional statement here. 

Let me just say that I thank the Chairman and thank the Committee for having this hearing today and this great discussion. I 

look forward to hearing from our witness in just a minute, so I will 

not take long at all. 

I am working on some legislation and the motivation for it is 

that we need to rethink how we regulate in this country. I think 

we are always going to need some regulation. I think that you can 

go back to any government in history—back to the Sumerian cuneiform tablets, which regulated different aspects of their society and 

their economy, and you will see that regulation goes all the way 

to today. So we are always going to have this, and we just need 

to make sure that as we are doing this, we are doing it in the 

smartest way possible. We need to recognize the changes in the 

global economy and how we want the U.S. economy to be more 

competitive. I feel like a lot of times our regulations hamper job 

growth, hamper economic growth, and as we are making the decisions that we are going to have to make, we need to keep our eye 

on the ball of the big picture. And I think sometimes when we regulate, we lose that. 

We are working on this, and I look forward to working with all 

the Members of the Committee and all the previous panelists on 

their ideas. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Pryor. Senator Coburn, 

I think you have a letter you want to enter into the record—— 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. I do want to enter an endorsement letter for 

the Snowe-Coburn FREEDOM Act listing 32 organizations who 

support our bill. I would just submit that for the record.1

Chairman LIEBERMAN. Thanks, Senator Coburn. 

While we are at that, I will just introduce letters from a group 

called the Coalition for Sensible Safeguards and another one from 

the Natural Resources Defense Council (NRDC).2

53 

1The prepared statement of Senator Landrieu appears in the Appendix on page 127. 

2The prepared statement of Mr. Sunstein appears in the Appendix on page 173. 

Chairman LIEBERMAN. So let us go to Senator Landrieu. 

Senator LANDRIEU. Thank you. I am sorry to slip in. I had a previous meeting. 

OPENING STATEMENT OF SENATOR LANDRIEU 1

Senator LANDRIEU. I am going to submit my opening statement 

for the record. But I just want to thank you, Senator Lieberman 

and Senator Collins, for holding this hearing. I have urged the calling of this hearing now for some time. As chair of the Small Business Committee, some of the bills that are pending for action in the 

Senate, my Committee has partial jurisdiction, but this Committee 

has primary jurisdiction. So I really appreciate the effort that you 

all are making, along with your staffs, to pull together the various 

bills that are presently before the Senate and try to pick the best 

pieces of them. 

I understand, Senator Collins, you have a bill yourself to put forward to the Senate for consideration. I am glad that we are not 

doing this in a haphazard, disorganized fashion which will make an 

already difficult situation that much worse. 

So I thank you, Mr. Chairman, and I will look forward to working with you all, the Members of our Committee, to try to fashion 

something we can bring to the Senate floor and to the Congress as 

soon as possible. 

Chairman LIEBERMAN. Thanks, Senator Landrieu. We look forward to working with you, of course. 

Mr. Sunstein, welcome once again. I am glad you were able to 

hear the testimony of our various colleagues, and we give you an 

opportunity now, obviously, to offer testimony of your own, but also 

to respond to anything you heard, and then we will go to questions 

and answers. Thanks very much. And you had the unique pleasure 

of hearing a Member of the Senate describe one of your articles as 

‘‘brilliant,’’ which is something, I am sure, that will carry you forward at least through the rest of the week. [Laughter.] 

Mr. SUNSTEIN. Thank you so much. I wish my wife were here to 

hear that. [Laughter.] 

TESTIMONY OF HON. CASS R. SUNSTEIN,2 ADMINISTRATOR, 

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

Mr. SUNSTEIN. Thank you, Mr. Chairman. Thank you, Members 

of the Committee. I am honored to be here, and especially grateful 

to be discussing this topic, which is the daily fare of life at the Office of Information and Regulatory Affairs. 

We start from common ground, which is to try to improve our 

regulatory system and to ensure, to quote from the opening words 

of the recent Executive Order, that ‘‘our regulatory system helps to 

promote economic growth, innovation, competitiveness, and job creation.’’ Those words are in the first sentence of the Executive 

Order. 

It is important to emphasize that the basic framework both for 

regulation and for regulatory review comes from Congress. Article 

54 

I of the Constitution, referred to earlier, is the dominant article for 

our process. Relevant statutes establish both the sources and the 

limits of agency authority. These are partly specific statutes that, 

for example, create authorities for the Department of Energy, the 

Department of Interior, and also so-called generic legislation, which 

cuts across a range of agency activities. 

There are four pillars in terms of the generic statutes, and as 

background for your discussions, I would like to just draw attention 

to them. 

The first and the oldest is the Administrative Procedures Act, a 

central document both for public participation and for judicial review, creating mechanisms to ensure public participation in rulemaking and to test through the courts the question whether the 

agency has acted in conformity to law, and also whether the agency 

has acted arbitrarily or capriciously. 

Fidelity to law is the first obligation of the Executive Branch 

under the Take Care Clause of the Constitution, and that is our 

foremost task as we oversee rules. The prohibition on arbitrary or 

capricious action in the Administrative Procedures Act is also of 

central importance for disciplining the exercise of such discretion, 

as Congress has seen fit to authorize. 

The three other pillars are more recent. The Unfunded Mandates 

Reform Act has been referred to earlier. This imposes important requirements both of participation and of analysis, including analysis 

of costs and benefits, for rules that impose $100 million or more of 

cost not only on the public sector but also on the private sector. 

And you can see a clear overlap between the regulatory review 

process that dates back to President Reagan and the requirements 

of the Unfunded Mandates Reform Act. 

There has been a great deal of discussion in the last hour of the 

difficulties that small businesses are facing, in part because of regulatory requirements. The Regulatory Flexibility Act, the third of 

the four pillars, is specifically designed to protect small business 

from excessive regulation, and we take that extremely seriously. 

The fourth of the pillars is the Congressional Review Act, which 

provides Congress with the authority to oversee the rulemaking 

process, most importantly by vetoing rules of which it disapproves. 

Under the act, as you are aware, agencies are required to submit 

reports on rules to both Houses of Congress, and Congress has a 

period in which to assess those rules and, if it chooses, to prevent 

them from going into effect. 

I would emphasize here that, like judicial review, the importance 

of the Congressional Review Act is not only its actual use but its 

existence. The Congressional Review Act is well understood by 

agencies, and the fact that Congress has the power to exercise authority under the Congressional Review Act is an ongoing material 

fact as agencies devise rules. 

These statutes, as well as the organic statutes—that is, those 

that create the agencies in the first place—create ample opportunities for public participation and congressional oversight. 

We also have three recent documents which are Article II rather 

than Article I of the Constitution, that is, documents that continue 

the process of disciplining the regulatory state by requiring careful 

attention to costs and benefits to alternatives and to the avoidance 

55 

of unjustified burdens. This process has contributed to a situation—and I would like to underline this—in which under both Republican and Democratic Administrations, the annual benefits of 

regulation have in every one of the last 10 years far exceeded their 

annual costs. Those benefits, which are frequently in the billions of 

dollars—and these are the benefits of actually finalized regulations, 

not regulations that turn up on an agenda that may never be materialized in the real world. The benefits of regulation include not 

only purely economic benefits, though those are often in the billions, but also savings in terms of deaths and illnesses prevented. 

Consider as just one example the fact that highway deaths in the 

United States are at their lowest level in 60 years, in part as a result of highway safety rules. That is a statistic, but it is important 

to keep in mind that a number of our fellow citizens are alive today 

as a result of regulatory initiatives. 

There has been a reference to a study that the Small Business Administration sponsored which finds $1.75 trillion in costs. We 

share the belief that the costs of regulation are too high. That particular study is deeply flawed and should not be relied on as a 

basis for quantifying regulatory costs. It has attained the status of 

an urban legend. We have cost estimates that are concerning. That 

one should not be the basis for our analysis. 

The most recent guidance we have from the President of overriding importance is EO 13563, and as you are all aware, that Executive Order is designed both to discipline the flow of new regulations and to get better hold than ever before at the stock of existing 

rules. 

New requirements are imposed on agencies for the quantification 

of costs and benefits, as Senator Roberts emphasized, and new requirements are also created for public participation and for the 

choice of flexible approaches that preserve—and I would like to emphasize these words—‘‘freedom of choice for the public.’’ Those 

words are in the Executive Order. 

In terms of reviewing the stock of existing rules, our basic goal 

is to eliminate unnecessary burdens. Senator Warner referred to a 

$7 billion figure. In the fullness of time, we hope to be able to do 

better than that. In the short run, we have been able to release, 

in an unprecedented step, 30 preliminary plans for public review. 

Several of the steps outlined in those plans are not mere promises 

or hopes. They have actually been realized, meaning that we have 

been able to generate an elimination of tens of millions of hours in 

annual paperwork burdens and also to eliminate hundreds of millions of regulatory costs. We expect that figure will jump to over 

$1 billion in the very soon future. 

It is important to emphasize, as some of the opening remarks 

have done, that while a great deal has been accomplished, the 

agency plans are preliminary and our efforts to get hold of the 

stock of existing rules and to reduce existing burdens is in a preliminary state. The comments are sought from the public and from 

you, your staff, and your constituents. We hope when the plans are 

finalized in August to have a higher level of ambition, and as we 

recently insisted in guidance issued by my office, we will ensure we 

have timelines and deadlines to make sure that this actually happens. 

56 

The President has also issued two memoranda: One involving 

small business in particular, going well beyond the Regulatory 

Flexibility Act; and another memorandum designed to recognize 

the problems that State and local governments are facing, particularly in the current economic climate, and seeking steps to reduce 

costs that they face. That will overlap with our lookback effort. 

We are aware that there are a number of regulatory reform bills 

here that you are considering, and we agree on the importance of 

reducing unnecessary costs and paperwork burdens. 

We believe that with the introduction of the new Executive Order 

we have the tools necessary to produce a smart and effective regulatory framework. The existing statutes and the Executive Order, 

now 6 months old, provide new guidance and discipline, creating a 

kind of framework to accomplish our shared goals. 

With respect to the existing proposals, I would just emphasize 

one concern for present purposes, which is that it is important to 

be aware that increases in judicial power over regulation may have 

unintended adverse effects. Increases in judicial authority over 

what are often highly technical issues often can compromise both 

cost reduction and benefit creation and can create problems that 

might be worse than the disease. 

In sum, we believe that the foundational statutes and the recent 

documents provide a basis for a system that, to return to the opening words of the Executive Order, ‘‘protect public health, welfare, 

safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.’’ 

I am looking forward to your questions. 

Chairman LIEBERMAN. Thanks very much for that typically 

thoughtful opening statement. We will have 7-minute rounds of 

questions in the first round. 

Let me pick up in a way where you concluded, which is to ask 

whether I am taking the correct inference here that, notwithstanding the testimony of our colleagues this morning about the 

legislation they are introducing, at this time the Administration 

would oppose any additional regulatory reform legislation? 

Mr. SUNSTEIN. I would phrase it a little more cautiously than 

that. We believe we have the tools we need, and we believe we 

need your help in making sure that those tools actually operate the 

way we hope. 

With respect to particular provisions, we would like to see them 

and study them. I can talk about principles and areas of concern. 

Chairman LIEBERMAN. Right, and that is fair. Is there anything, 

any specific idea that you heard today that you thought was interesting enough to engage further consideration? Let me just phrase 

it, by yourself in your role at OIRA as opposed to asking you to do 

what you cannot really do, which is to commit the Administration. 

Mr. SUNSTEIN. Yes. I think generally all ideas are welcome with 

respect to burden reduction and protection of small business in particular in the current economic environment. So to engage on all 

of those ideas is a good thing, and the motivation for the particular 

proposals we completely share. That is what is motivated the 

lookback process. 

I would emphasize that insofar as there is an increase in judicial 

authority over administrative decisionmaking, that is a problem. 

57 

And there is also a risk that some procedural requirements would 

create the problem of paralysis by analysis. That could be a worry 

not only for regulation that is in the public interest, but also for 

deregulation that is in the public interest. So some of the lookback 

plans we hope to be able to implement in a hurry. Procedural barriers would make that more difficult. 

Chairman LIEBERMAN. Let me ask you to speak in a little more 

detail about the concerns you have about the expansion of judicial 

review and how legislation expanding the role of courts and the 

regulatory system actually could, as you said, increase regulatory 

uncertainty and result in what you have described as unwelcome, 

unintended consequences. 

Mr. SUNSTEIN. Right. Maybe the best way to answer that is to 

mention that our process of reviewing rules for consideration of 

costs and benefits is organized under a circular that is 50 singlespaced pages. It is very complicated. It has material on dealing 

with the discount rate, the flow of costs and benefits over time, for 

dealing with uncertainty about costs and benefits, for a lot of technically complex issues. 

Federal courts are indispensable to our system, but their skill set 

is not well designed to deal with economic complexity. And there 

is a risk that judicial review would get courts into areas to which 

the Congress and the Executive Branch are much better suited. 

There is also a risk that rules, whether they are regulatory or deregulatory, would be tied up in litigation for years so that the milk 

rule, which some of you, I am sure, are aware of, which is helping 

small business avoid $140 million in annual cost, we got that done 

fast after the President’s Executive Order. 

Chairman LIEBERMAN. Right. 

Mr. SUNSTEIN. That one might be tied up in litigation, and that 

would not be in the national interest. 

Chairman LIEBERMAN. Let me go to the lookback review, which 

I find very encouraging, particularly to hear, as you said in your 

testimony, that more than $1 billion in savings are anticipated in 

the near future from the lookback review and that ultimately as it 

goes on it could save a lot more money. 

Let me ask the question this way, which is, systemically why 

weren’t those improvements identified earlier? And do they reveal 

weaknesses in the original rulemaking process? Or have circumstances changed since the original process, or both? 

Mr. SUNSTEIN. Thank you, Mr. Chairman, for that. That is a 

great topic for an assessment of what is not working ideally for a 

regulatory state. Some of the rules that are being re-thought have 

been rendered redundant by changed circumstances, so there is a 

requirement of fuel vapor recovery systems for gas stations, which 

at the time was not crazy, but now cars have pollution control devices, so this is completely redundant. And we are talking tens of 

millions of dollars borne in significant part by small business. Because cars are now better in terms of pollution avoidance, this is 

rendered useless by changed circumstances. 

For something like the milk rule, what happened was there was 

a statute designed to prevent oil spills, and the definition, just because of how the English language works, picked up milk. It took 

a while in terms of congressional action and then EPA action to 

58 

correct that not unfamiliar problem of excessive generalization 

from a well-motivated enactment. 

Then there are other ideas on the plans that just learning over 

time has helped create improvements for us. OSHA has eliminated 

1.9 million annual hours in paperwork and reporting burdens, and 

when I have talked to the business community, that is the one that 

has caught their eye. And that is not something that is going to 

happen soon. That is something that happened. 

That one was OSHA that just investigated its reporting and paperwork requirements and saw this really was not necessary. It 

was not helping workers so they eliminated it. 

So sometimes it is changed circumstances. Sometimes it is a rule 

that is written too generally. Sometimes it is just seeing how something is operating on the ground. 

Chairman LIEBERMAN. Well, that is a very powerful and I hope 

instructive answer to the question. So the natural follow-on is: How 

do we, to the best of our ability, guarantee that essentially there 

is a constant lookback review? Because in the case of the fuel vapor 

that you cite, it is really outrageous that somebody somewhere did 

not say, this is totally redundant now, it is not necessary, and costing, as you said, businesses, including a lot of small businesses, 

tens of millions of dollars for something that is being achieved in 

other ways. 

Mr. SUNSTEIN. What we are trying to do—and we would love 

your help on this—is to change the culture of regulation. So what 

the President has done is unprecedented. There has been a lot of 

talk about it. There has never been a case where dozens of agencies 

have formal lookback plans for the public. 

One of the kind of sleeper provisions in a lot of the plans is they 

are creating offices or altering the mission of existing offices to 

make sure that retrospective review is hard-wired into agency operations. Ideas or support or emphasis on how that can be made to 

happen at every rulemaking agency, that would be very helpful 

and would leave a legacy. 

Chairman LIEBERMAN. My time is up. Thank you very much. 

Senator Collins. 

Senator COLLINS. Thank you. 

Mr. Sunstein, just yesterday I met with business leaders of the 

forest products industry in my State, and once again they wanted 

to talk to me about the EPA Boiler Maximum Achievable Control 

Technology (MACT) rules which govern emissions. And you and I 

have had many conversations about those rules, and Senator 

Landrieu, Senator Pryor, and Senator Alexander—there are many 

of us who have been concerned. In fact, 41 Senators signed a letter 

that Senator Landrieu and I sent to the EPA. 

The EPA has clearly made some progress—you have been very 

helpful in that regard—since its first attempt to propose a rule. 

But the fact is that this is still, if it goes forth, going to be an enormously expensive rule. The estimates are $5 billion for the forest 

products industry alone, $14 billion for general manufacturing. 

My frustration is: How do we get EPA to better consider the economic impact of its rules, particularly the impact on jobs, in the 

first place, unless we mandate it by law? If this kind of rule, the 

first draft of which was so onerous and burdensome to the very 

59 

fragile forest products industry and manufacturing sector, was so 

off base and so expensive to start with, I have very little confidence 

that we can get reforms administratively. That is why I think we 

need to have legislation. 

Mr. SUNSTEIN. Well, I completely appreciate the point. The first 

sentence of the new Executive Order has the words ‘‘job creation’’ 

in it, and for that final rule, as for all rules that have measurable 

and potentially significant impacts on jobs, that sentence of the Executive Order is taken really seriously. So if you look at EPA expensive proposals, they have careful analysis of job impacts, and 

that is something the President has really charged us to do. That 

is now built into the system. 

With respect to the rule you mentioned, that has been stayed indefinitely, as I recall, in part by reference to the need for increased 

public comment and taking account of public comment on those 

issues. And the job impacts, that is something that not only for 

that rule but for all of them, the President has charged us to really 

focus on. 

Senator COLLINS. I guess what I am saying is we need to build 

that into the process at the beginning rather than having these 

rules come out that are so onerous. And I know you are working 

toward that, but I for one think we need to legislate in that area. 

Mr. SUNSTEIN. Well, I agree with the premise completely that if 

a proposed rule would have significant job impacts but the job impacts are not explored, that is a problem. And you may have noticed that an EPA rule, sometimes referred to as ‘‘Electric Generating Utility (EGU) MACT,’’ which is also an important anti-pollution initiative with potentially very significant benefits, that has an 

analysis of job impacts at the proposal stage. 

Another provision of the Executive Order kind of builds on the 

theme. It requires, for the first time, really, agencies to engage 

with affected members of the public, including those who would be 

burdened by a rule, before they issue a Notice of Proposed Rulemaking. And that is a way of getting hold of potentially adverse effects on the economy. And as I am sure you have noticed—in fact, 

some of this you were a leader on—there have been rules that have 

been altered or withdrawn for careful engagement with those who 

would be adversely affected, in part because the President has 

called for that form of advance engagement. 

Senator COLLINS. And I do appreciate that, and we have made 

some progress on the biomass rule, for example. 

Let me switch to another issue. By issuing guidance documents, 

agencies can essentially make regulations without notice and comment, without public participation, without publishing them in the 

Federal Register or the Code of Federal Regulations. And your 

predecessor, John Graham, at a recent business event noted that 

agencies are now trying to circumvent the very important OIRA review process by issuing guidance documents instead of regulations. 

And he has recommended that the regulatory process be expanded 

to capture these guidance documents. 

The bill that I have introduced would give the force of law to the 

Good Guidance Practices Bulletin that was issued, when Rob 

Portman was head of OMB, to try to prevent agencies from circumVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00065 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
60 

venting the Administrative Procedure Act (APA) and the very important public notice and comment provisions. 

Since it is just codifying a bulletin that is in effect today at OMB, 

surely you cannot be opposed to that part of my bill becoming law. 

Mr. SUNSTEIN. Well, that part of your bill, complete agreement 

with the goals, and would welcome further discussion with you on 

exactly that. 

On the general point about guidance documents, you may have 

noticed that within the last months some guidance documents have 

gone out with great clarity about two points: 

One, they are there for public comment. They are not just being 

issued in advance of public comment. 

And, two, they are not binding on the private sector. They do not 

have the force of law. 

So this is something that with Senator Portman’s document and 

with some of the keen interest on the part of affected stakeholders 

in the last 2 years that we very much have our eye on. It is also 

the case there are a number of judicial decisions which have invalidated guidance documents as rules in disguised. That is a very serious problem when that happens, and this is something we are 

very focused on. 

So I would be happy to continue that discussion, and if you see 

in the next months guidance documents that are rules in disguise 

or guidance documents that have not gone out for public comment 

when they ought to, then we would love to hear about it. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thanks very much, Senator Collins. Senator Paul, you are next. 

Senator PAUL. Thank you, and thank you for your testimony. 

You say you have the tools for regulatory reform, that you really 

do not need that much from Congress. I am a little bit doubtful, 

and I would say this whether you were from a Republican Administration or a Democrat Administration. I would say it has not happened, it has just been getting worse and worse and worse. But 

particularly for this Administration that added enormous amounts 

of new regulations through ObamaCare and through Dodd-Frank, 

I am a little concerned about really saying, well, everything is fine 

and I can trust you to go ahead and get rid of some of these bad 

regulations. 

A couple of examples from ObamaCare: The health exchanges 

were said to, well, about 10 million people will lose their private 

insurance and go into these publicly subsidized ones in these exchanges. Now think tanks are saying it might be 100 million. The 

bottom line is we do not know. There are a lot of things we do not 

know, and that is why I do not want you involved in the economy 

in such a big way. I would rather you keep your hands out of the 

economy for the most part because there are so many unintended 

consequences that no one individual, no matter how smart, can 

know the consequences of. The marketplace is smarter than central 

planners. 

With ObamaCare, 3 million waivers are being given, so you write 

these rules, you write these regulations, say this is how you are 

going to get your health care. But then if people are political supporters of yours, they get waivers. There seems to be some prefVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00066 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
61 

erential treatment for people to get waivers if they are political 

supporters. That is troublesome, that some people get waivers from 

these laws and other people do not. 

Are there regulations that are coming forward that are so important that sort of contravene the will of Congress? A couple of examples. Greenhouse regulations are being pushed, and there have 

been quotes from people in the Administration saying, ‘‘We do not 

care what Congress thinks. We are going to do it anyway.’’ The 

EPA says they have the authority and they will do it. 

Congressman John Dingell, one of the authors of the Clean Air 

Act—and he is a Democrat—stated, ‘‘The Clean Air Act was not designed to regulate greenhouse emissions. I know what was intended when I wrote the legislation. I have said from the beginning 

that such regulation will result in a glorious mess, and regulation 

of greenhouse gas emissions should be left to Congress.’’ 

The Grain Inspection, Packers and Stockyards Administration 

(GIPSA) rule will fundamentally change the market rules for the 

sale of poultry and livestock in this country. Over 120 members 

have signed letters to the department affirmatively stating that 

this rule represents a drastic overstep and is not what was intended under the 2008 farm bill. 

The EPA on its own accord will expand government jurisdiction 

over water and land that is currently regulated by the States. The 

text of the guidance is almost exactly the same as the Clean Water 

Restoration Act, which Congress has refused to vote on. The EPA 

is going to do it anyway. 

Net neutrality, is perhaps the most blatant and dangerous subversion of congressional intent to date. The Federal Communications Commission (FCC) has promulgated its regulation despite the 

fact that Congress refused to pass this legislation at least three 

times and the fact that an appeals court unanimously agreed the 

FCC does not have the authority to engage in this regulation. 

So when you say to us, ‘‘Well, we have got it under control, do 

not worry about it,’’ and you say to us, ‘‘Well, the REINS Act would 

undermine our system by converting rules into mere proposals,’’ 

well, yes, that is what we want. We think that you are undermining the economy with rules that are vast overreaches, that go 

against what Congress intended to happen, and are basically 

unelected bureaucrats deciding the law. We do not want that anymore. We want you to be restrained. We want Congress to have a 

say in this. And we frankly do not trust you—not just Democrats. 

If you were a Republican, I would say exactly the same thing. 

I want there to be a separation of powers, checks and balances. 

We have gone way overboard in allowing the President and the Executive Branch to have way too much power. The bureaucracies 

have become a fourth estate. We really need more checks and balances. Businesses know it. It is out of control. We want to restrain 

the regulatory branch. Your comments? 

Mr. SUNSTEIN. Well, there is a lot there. Thank you for that, Senator. I would say a couple of things. 

Our first obligation is to respect the will of Congress, so I took 

an oath to do that. If there is anything proposed or finalized that 

is inconsistent with the will of Congress, that is a very serious 

problem. 

62 

I believe that no rule in the Obama Administration has been 

struck down as inconsistent with the will of Congress, and I hope 

that will continue. But if it does not, that is a big problem. 

I also agree very much that regulatory costs are too high and we 

want to get them down. That is one reason that the lookback process is my current priority in terms of day-to-day work. 

There is a bit of a myth about Obama rules and what has actually happened in the last few years. I understand the myth, and 

it stems from the fact that we are in a tough economy and rules 

can be simplified and costs can be reduced, but let me get at the 

content of the myth. 

Fiscal year 2007 was actually the highest-cost year of the last 10 

under President Bush. Fiscal year 2007–2008 had higher costs 

than fiscal year 2009 and 2010 in terms of final economically significant rules. And Senator Portman referred to the economically 

significant rules. Those were the ones that mattered. 

In fact, the picture for our sensitivity costs is even better than 

that because in fiscal year 2009, the Bush Administration, in 4 

months imposed more regulatory costs by a large margin than we 

did in 8 months. 

Senator PAUL. Let me just interject. I agree with you. It is a bipartisan problem. That is why I want to make it not about Republicans and Democrats. It is a bipartisan problem. But it is a problem. The major rules, there are 224 major rules. Last year there 

were 180, the year before 160. The regulations are being piled on, 

and it is a problem. We need congressional oversight. 

Mr. SUNSTEIN. Well, I certainly agree with the premise that to 

control the flow of existing rules disciplining costs is really important and to reduce costs through taking away the unjustified burdens in the stock is also really important. 

The only thing I guess I would add is that there are a number 

of rules that are costly that have been benefits that dwarf costs 

and that actually industry invites. So you may know that the first 

round of the fuel economy standards, the automobile companies 

were very worried about California creating regulation that would 

actually be very aggressive and create a kind of odd inversion of 

what the Federal structure is supposed to do where California 

would dictate national policy. And nearly everyone celebrated 

something that relieved the burdens that California might have 

created and the interstate complexity at the same time that the 

benefits in terms of health dollars and energy security—they just 

dwarf the costs, even though the costs were high. 

Senator PAUL. One quick rejoinder. You may have noticed that 

the car companies are still struggling, and part of their struggle is 

under regulatory burdens such as fuel efficiency. 

Mr. SUNSTEIN. Agreed entirely. They are one of our areas where 

we want to figure out ways to reduce some of the costs that are 

now being imposed. 

Chairman LIEBERMAN. Thanks, Senator Paul. Senator Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thanks, Mr. Chairman, and, Mr. Sunstein, 

welcome back. 

63 

To pick up on Senator Paul’s comment that this is a bipartisan 

problem, I realize this is not a perfect surrogate for the size of the 

Federal bureaucracy, but at the end of President Franklin Roosevelt’s terms, we had 86,000 pages in the Federal Register. By the 

end of President Richard Nixon’s term, there were 560,000 pages 

in the Federal Register. Today there are over 3 million pages of 

rules, rulemaking, and regulations. It is really incomprehensible. 

I have been building a manufacturing business for the last 31 

years. I have certainly lived under the rules and regulations. I kind 

of get it. One thing that amazes me is, as I traveled around Wisconsin, not only was this out-of-control spending a primary issue 

because people understood the fact that we are bankrupting this 

country, that threat created a high level of uncertainty and prevented job creation. But right after that was the number of regulations and the burden it was imposing on businesses that was really 

preventing businesses from growing and job creation. 

Now that I am here, every day I cannot tell you how many business people come in from the State of Wisconsin, and I am just 

amazed at the rules and regulations they are talking about and 

begging me to help them, ‘‘Please stop this. It is going to put us 

out of business.’’ This is a very serious problem. 

I read in the Wall Street Journal an estimate—and I just want 

to get your comment on this. The mercury control proposal the 

EPA has proposed as an amendment to the Clean Air Act, would 

put 17.6 percent of coal-fired electrical generation out of commission. Have you looked at that? Do you know what that would cost 

our economy on an overall basis? 

Mr. SUNSTEIN. Thanks very much for that. On the general point 

about business concern about regulation, I would emphasize a couple of things. 

The first is that the notice and comment process is crucially important to make sure that those concerns are noticed. 

By the way, this noise is not a result of a bad regulation issued 

by either a Democratic or a Republican Administration. 

The process of taking account so business concerns is perhaps insufficiently appreciated even by the business community. There is 

a regulation from the Equal Employment Opportunity Commission 

(EEOC) implementing the Americans with Disabilities Amendments Act which, at the proposed stage, was celebrated by the disability community, but a grave source of concern from the Chamber 

of Commerce. 

In the final stage, it was celebrated again by the disability community, but also celebrated by the Chamber of Commerce, which 

said the EEOC completely got our concerns about a lack of clarity 

and about excessive regulation. 

Senator JOHNSON. Can you address the EPA regulation on coalfired generation plans? Because that is going to be huge. 

Mr. SUNSTEIN. You referred to the increases in pages in the Federal Register. The regulatory impact analysis are also longer, but 

that is because we are being really careful. Those issues are addressed at great length there. What the proposal finds is this is an 

expensive rule. 

Senator JOHNSON. How expensive? 

Mr. SUNSTEIN. Approximately $9 billion annually total. 

64 

Senator JOHNSON. That has to be such an incredible understatement. That is unbelievably understated. 

Mr. SUNSTEIN. If so, then that comment is welcome because this 

rule is in a proposed stage. The benefits, I should say, the health 

benefits for this rule are enormous. This is a rule where the benefits at the proposed stage are well in excess of the costs. But if the 

cost estimate is low-ball and if the benefits are too high, then we 

are going to fix that. 

Senator JOHNSON. Did the EPA just admit that their estimates 

for mercury were 1,000 times overstated? And is that the basis of 

your net analysis? 

Mr. SUNSTEIN. What I see about this correction of error, as in the 

case of the EEOC rule, is that it is a sign of the process working. 

When a proposal is exposed as having an error in it, either an error 

of judgment or an error of fact, that shows how indispensable the 

system of public comment and finalization only after thorough engagement with comment is. So if you or your constituents have concerns about that rule in particular, and if you think the cost estimate is too low, please tell us. We need to get that right. 

Senator JOHNSON. You are on notice. Please look into that carefully. 

You said that the SBA study that found the annual cost of regulation at $1.7 trillion is an incorrect study. What is the cost on an 

annual basis of people trying to comply with 3 million pages’ worth 

of rules and regulations? What is that cost? 

Mr. SUNSTEIN. We have it for the last 10 years, and on average it is about $5 billion a year. 

Senator JOHNSON. I have seen reports from the IRS, I believe— and it is a range—anywhere from $200 to $338 billion a year just 

to comply with the Tax Code. Now, we are generating a little more 

than $2 trillion in tax revenue, maybe $2.5 trillion; $338 billion 

would be 15 percent of that. 

Mr. SUNSTEIN. What I am talking about is the final economically 

significant rules that come through the Executive Branch. The Tax 

Code is a kind of separate animal, and it is not ordinarily thought 

of as regulation in the sense that we have been discussing. 

Senator JOHNSON. Well, it is a cost of compliance, isn’t it? It is 

a drag on the economy. It reduces job creation. 

Mr. SUNSTEIN. Absolutely. And one of my keenest interests, by 

the way, is in working with the IRS to reduce some of the reporting 

and paperwork burdens, and their proposals in the last couple of 

years promise to eliminate approximately 55 million annual hours 

in paperwork and reporting burdens. That cuts some of that cost. 

We would like to think of ways to cut more. 

Senator JOHNSON. I guess my final comment is we are looking 

at a huge bureaucracy, and it is just out of control. And my concern 

in terms of having another bureaucracy built up to control another 

bureaucracy I just do not think works. We are spending over $1.5 

trillion this year that we do not have, and certainly in business, if 

you want to control a department, you stop feeding the best. Or if 

you want to reduce regulations, you cut the budget. 

I guess that would be my final comment. If we are really going 

to get control over this government, if we are going to actually 

move our economy forward and start creating jobs, we have to stop 

65 

feeding the beast. We have to prevent America from going bankrupt. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Johnson. 

We will go to Senator Levin and then back to Senator Portman. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you, and welcome. As you know, I have 

been a long-time supporter of cost/benefit analyses and think they 

have a very critical role, and I want to make sure that we are 

using them as broadly as they need to be. 

When looking at costs and benefits, do you look at struggling industries differently? Do you look at impacted industries differently 

than other industries? Is that part of the calculus? 

Mr. SUNSTEIN. Well, it would not be a technical part of cost/benefit analysis, but it would be part of a full accounting of the anticipated effects. So if we are going to close businesses, that would 

have job impacts; we would take careful account of that. 

Senator LEVIN. There is a great deal of emphasis you put on 

lookback. What agencies are doing a better job in lookback than 

other agencies? Give us the best agencies, if you know them offhand. 

Mr. SUNSTEIN. Well, I hope the ones I am not going to mention 

are not listening, but the Department—— 

Senator LEVIN. I hope the ones that you do not mention are listening, as a matter of fact. 

Mr. SUNSTEIN [continuing]. Of Transportation did an excellent 

job. The Department of Health and Human Services (HHS) has a 

very impressive plan, and the EPA plan has a number of very impressive items on it. 

Senator LEVIN. Are there any agencies that should be singled out 

for not doing a good job in terms of lookback? 

Mr. SUNSTEIN. Well, I think the answer to that cannot be no, but 

what I would like to do now because these are preliminary plans 

that are out for public comment—they will be finalized in late August—is to give you all and the public an opportunity to make the 

ones that are not as good as they should be terrific by late August. 

Senator LEVIN. And would you let this Committee know which 

agencies you think fall short by the end of the summer? 

Mr. SUNSTEIN. Well, I think in my position—it is probably more 

appropriate for those who are scrutinizing the plans even as we 

speak to be saying these are not good than for me to intervene in 

the middle of the process. 

Senator LEVIN. I was suggesting at the end of the process. 

Mr. SUNSTEIN. Oh, sure, absolutely. 

Senator LEVIN. That is why I said at the end of August. 

Mr. SUNSTEIN. Yes. Definitely. 

Senator LEVIN. Would you let us know which ones after the process is over are falling short? 

Mr. SUNSTEIN. I would be happy to do that, and I would also be 

happy to see what you and your constituents and others think 

needs improvement. 

As some of the earlier questions suggested, this is an effort not 

to do a one-shot deal but to change the regulatory culture. And so 

this can be seen as Lookback 1.0. 

66 

1 ‘‘Agency Guidance, Congressional Review of Agency Rules,’’ submitted by Mr. Sunstein appears in the Appendix on page 189. 

Senator LEVIN. But I think that if we ask you for that kind of 

an assessment and if they all know that you are going to be giving 

it to us, it can help you get good results. 

Mr. SUNSTEIN. I bet you are right. 

Senator LEVIN. On the interim final rules that are issued now 

under certain circumstances, are those rules subject to legislative 

review? 

Mr. SUNSTEIN. Yes. They are not subject to review under the 

Congressional Review Act.1

Senator LEVIN. That is what I mean. 

Mr. SUNSTEIN. The Congressional Review Act—the legislative 

history I think is pretty clear on this—does not pick up interim 

final rules, but there is an opportunity, of course, for Congress to 

overturn an interim final in the ordinary course. 

Senator LEVIN. Right. But in terms of using that expedited procedure, it is not available for that. Should it be? 

Mr. SUNSTEIN. I would want to think hard about that. I can give 

you some competing considerations. One is in my view the most important word in the phrase ‘‘interim final rule’’ is ‘‘interim.’’ 

Senator LEVIN. For others, the most important word is ‘‘final.’’ 

Mr. SUNSTEIN. Second most important. 

Senator LEVIN. Because sometimes they, in effect, become final 

rules and last for years. 

Mr. SUNSTEIN. Yes, that is not ideal. Interim final rules invite 

public comments. We have seen that a lot in the last 6 months. 

And it is important to take account of those comments. 

Senator LEVIN. All right. Would you let us know any thinking on 

that issue. 

Mr. SUNSTEIN. Sure. 

Senator LEVIN. Because if we are going to do legislation, that is 

one of the things I think we ought to be looking at. 

What is the relationship between OIRA and the Council on Environmental Quality (CEQ)? 

Mr. SUNSTEIN. Friendly. We are both part of the Executive Office 

of the President, and we work carefully with CEQ on rulemaking. 

Senator LEVIN. There was a meeting between the CEQ and some 

of the automobile industry, I think yesterday, and there was a scenario that was placed on the table, which, frankly, shocked me. It 

was very different from what we were told was not in the cards 

even in terms of discussions just hours before. Were you involved 

in that? 

Mr. SUNSTEIN. No, I was not. 

Senator LEVIN. Was OIRA involved in that? 

Mr. SUNSTEIN. I do not believe so. 

Senator LEVIN. Should they be? 

Mr. SUNSTEIN. Well, our formal role is to review rules once they 

are submitted to us. That particular rule has not been submitted 

to us. It is still under formulation. It is perfectly appropriate, 

though it is not obligatory, for someone at OIRA to be apprised of 

discussions about rules as they are being formulated, especially if 

they are really important. 

67 

Senator LEVIN. Well, I think you know that is an important rule 

that is being considered, and I am wondering if you would check 

that out, and if you think it is appropriate, whether you would become involved in those discussions. 

Mr. SUNSTEIN. Sure. I have been discussing this coming rule 

with CEQ. The meeting to which you refer—I was not there. 

Senator LEVIN. Nor was anyone from OIRA? 

Mr. SUNSTEIN. I do not believe so. 

Senator LEVIN. You made reference to California and the waiver 

that they have been given, and that is, of course, a hotly discussed 

issue as to whether or not they should have any right to assume 

they would be given a waiver. 

Are you familiar enough with the law to agree with me that 

whether they get a waiver is totally discretionary and that there 

is no assumption that they would be given a waiver under the 

Clean Air Act? 

Mr. SUNSTEIN. I concur broadly with that statement, though the 

exercise of discretion would, as any other exercise of discretion, be 

subject to Clean Air Act and arbitrariness constraints. 

Senator LEVIN. Subject to any constraints either way, whether 

they exercise the discretion or lack thereof is arbitrary, which can 

go either way and can be challenged. But would you agree that it 

is discretionary, it is not something which anyone has a right to 

assume would be forthcoming? 

Mr. SUNSTEIN. I would want to study this a little bit more, if you 

will permit, before giving an answer. 

Senator LEVIN. Sure. I would be happy to have you study it and 

let me know the outcome. Would you let us know what the outcome 

of that study is? 

Mr. SUNSTEIN. Sure. 

Senator LEVIN. Thank you. 

Thank you, Mr. Chairman. Thank you for holding this really important hearing. 

Chairman LIEBERMAN. Thanks, Senator Levin. Thanks for being 

here. I know you have been involved in these questions constructively for quite a while. 

Senator Portman, welcome back. 

Senator PORTMAN. Thank you, Mr. Chairman, and I would reiterate what I said earlier and echo the comments of Senator Levin. 

Thanks for doing this. 

I have so many questions and so little time, but Senator Levin 

talked a little bit about the lookback and how it is working. I said 

some things earlier about how I was encouraged by the President’s 

EO 13563 and some of the comments he made, and I was. But I 

am now looking at the results, and I have some questions. 

If we could explore today a little about how we have translated 

some of these commitments into action, looking particularly at the 

30 preliminary agency plans for retrospective analysis of existing 

regulations that we have been able to look at. There may be more 

out there that you have seen or you can give me some better data 

on this, but based on our analysis, it looks like less than 10 percent 

of those rules slated for revision are linked to any estimate at all 

of any monetary cost savings or compliance hours saved, which is 

discouraging. At what stage in the process do you expect agencies 

68 

to be able to report or at least project some quantifiable savings 

from these revisions or repeals of the rules that they have identified? 

Mr. SUNSTEIN. We directed them very recently, in the last week 

or so, to quantify and monetize more, as much as they can. As you 

are aware from being OMB Director, it depends on how far along 

the agency is in its thinking. If you have some proposal, let us say, 

to reduce burdens on hospitals on the ground that they are redundant, and you have a sense that this is duplicative of a requirement that is already in play and doing the relevant work, if that 

is all you know, you will not be able to project at that stage hours 

or money. 

Senator PORTMAN. At what point do you expect them to be able 

to do that? What have you directed them to give to you so you can 

quantify it? 

Mr. SUNSTEIN. I would like to get that number, the 5 to 10-percent figure up significantly in the next few months, by late August. 

But for some of them, it is at a sufficiently preliminary state that 

it will only happen at the state of proposed rulemaking. 

Senator PORTMAN. Have you given them guidance on what your 

targets are for either costs or reductions in compliance costs? 

Mr. SUNSTEIN. We have not given them a number, but we would 

like it to be as high as possible, and they are aware of that. 

Senator PORTMAN. Well, we look forward to the next hearing 

where we will see whether, in fact, we begin to get some real meat 

around the bones of this good idea of looking back. We do not have 

it yet. 

Mr. SUNSTEIN. If I may say, Senator, we have about $1 billion 

in savings, and Senator Dirksen is said to have said, ‘‘A billion dollars here, a billion dollars there, sooner or later . . .’’—— 

Senator PORTMAN. That has been revised to a trillion now. 

[Laughter.] 

Mr. SUNSTEIN. But a billion dollars, and we are right about there 

as of today. Very close. 

Senator PORTMAN. You noted in your testimony in connection 

with judicial review, which, as you know, is part of our legislation 

we talked about earlier, that you do not think the courts have the 

‘‘skill set’’ to review issues such as the adequacy and rationality of 

an agency’s consideration of cost. So you are basically casting doubt 

on the court’s ability to do that. As you might imagine, I disagree, 

and that is why we have it in the legislation. I agree that no court 

can take the place of OIRA. Your job is safe. But I do feel strongly 

that having that judicial review would have a significant impact on 

how the agencies went about their work. 

I just would like to ask you about that. Look, you have been in 

the legal profession. You have been a professor. You understand 

how these cases work. And courts are already reviewing 

rulemakings constantly. They are looking at it under all sorts of 

enabling statutes that make cost or feasibility either a mandatory 

or a discretionary factor. And I just wonder why you think courts 

cannot do it. Let us talk about the D.C. Circuit for a second, which, 

as you know, routinely decides APA challenges. The Administrative 

Procedures Act is always before them, and they look at very complex, scientific, technical issues. Do you think they are actually unVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00074 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
69 

prepared to apply at least the arbitrary and capricious standard? 

Which would be the standard, I suppose, that they would apply, basically saying, are there any obvious gaps in the agency’s rulemaking? Why are you so skeptical about the court’s ability to do 

that? 

Mr. SUNSTEIN. I do believe that courts have the skill set to decide 

whether agencies, first, are statutorily required to consider costs, 

and I believe they have the skill set to engage in arbitrariness review of such requirements as Congress has imposed, including a requirement to do cost/benefit analysis as under the Toxic Substances 

Control Act. 

The concern is more specific than that. It is that if the analysis 

produced under the relevant Executive Orders, including dealing 

with what is the appropriate discount rate for the future stream of 

cost and benefits, is subject judicial review, then you tend to get 

into murky waters—and I speak from experience as a lawyer; that 

is, lawyers are not well trained, and especially generalist lawyers 

are not well trained, and judges—to decide whether the discount 

rate should be 3 percent or 7 percent or, as some economists believe, a little higher than 7 percent, or some believe in the context 

of intergenerational issues 1 percent of 2 percent. This is very technical stuff. 

I think we have a shared belief that there is a serious problem 

here, that steps need to be taken to reduce or eliminate the problem. The problem that the regulatory state now faces is not insufficient oversight by the Federal judiciary. 

Senator PORTMAN. Well, I would tell you that if you look at what, 

again, courts are already, again, applying the arbitrary and capricious standard to very complex, scientific, technical analysis, then 

I would think applying it to the cost issue and the cost/benefit 

would have an impact, and they certainly have proven capable of 

doing it. 

Let me ask you one other question, if I could, and get your views 

more broadly on the feasibility of tracking actual costs of these 

rules over time. Right now OIRA and Federal agencies generally 

make a great effort to evaluate the cost of rules ex ante, so they 

are looking at what the cost is going to be. And that analysis I 

think has been critical in some cases in producing a better result 

at lower cost. At the same time, that estimate occurs when we 

know the very least about what the actual cost is going to be, 

which would be after implementation. 

So what are your thoughts on the feasibility of asking agencies 

to periodically evaluate and report the actual costs annually or on 

a quarterly basis of compliance with all or some subset of economically significant regulations? Again, all this is in the context of the 

50 to 70 major rules. 

Mr. SUNSTEIN. Yes. Well, without speaking about legislative requirements but speaking about the general principle, I completely 

agree, and I think it is one of the most important things that could 

improve both assessment and eventually performance of the regulatory state. So the fact is that there are sometimes retrospective 

analysis of rules that show the costs were higher than anticipated 

or the benefits lower or vice versa. And that should very much inform decisions about what to do with rules. So the President’s ExVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00075 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
70 

ecutive Order refers to the need to measure and improve the actual 

results of regulatory requirements. That is ex post. That is not ex 

ante. 

Senator PORTMAN. Don’t you think a better accounting of the actual costs would help to actually, again, translate that good language into something that is meaningful? 

Mr. SUNSTEIN. I absolutely agree. 

Senator PORTMAN. Do you intend to proceed with something 

along those lines? 

Mr. SUNSTEIN. Oh, we do. This is something we have discussed 

in our draft cost/benefit report. I hope that will be finalized fairly 

soon, and we are very keen on retrospective analysis of rules and 

trying to learn from analysis of what has actually happened. We 

had a discussion of a rule where the concern was the prospective 

assessment was too low. We want to see where we have gotten it 

wrong, fix the rules accordingly. And the beauty of that is if we 

know where we have gotten it wrong on the cost or benefit side, 

that should make our prospective estimates more accurate. 

Senator PORTMAN. It absolutely can be applied then prospectively 

with additional rules and give us a little basis for coming up with 

a cost that is more based on reality. Thank you very much, Mr. 

Sunstein. 

Thank you, Mr. Chairman, for your indulgence. 

Chairman LIEBERMAN. Thank you, Senator Portman. 

Before we wind up, would you like an opportunity to respond to 

Senator Roberts’ reference to the thresholds of human dignity and 

equity? 

Mr. SUNSTEIN. Thank you, Mr. Chairman, for that. I would be 

delighted. A couple of things. 

First, the words ‘‘equity’’ and ‘‘distributive impacts’’ are not new 

in this Executive Order. President Bush operated under those 

words for 8 years. And I think no one thought under President 

Bush or under this Administration’s first 21⁄2 years that is some 

loophole that creates a terrible problem. 

What President Bush was thinking and President Clinton before 

him is suppose you have a rule that really hammers poor people. 

Suppose the regulatory costs hit people who are struggling particularly really hard. It is legitimate for the agency to consider that. 

Or suppose a rule has particular benefits for people who are struggling. It is not illegitimate, if the law authorizes, for that to be considered. 

With respect to human dignity, which is a new term, if you have 

returning veterans who are in wheelchairs and protected under the 

Americans with Disabilities Act, it is legitimate to consider whether their access to bathrooms would be improved by the rule so that 

returning veterans get to go to the bathroom without having to rely 

on their colleagues. That is a point that has a connection to human 

dignity. 

If you have a rule—and we have one—that would reduce the incidence of rape, it is important to acknowledge that whether or not 

you can turn the active rape into a monetary equivalent, something 

which is a big challenge. Rape is an assault on dignity, and under 

a law that is designed to reduce the incidence of rape, to take acVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00076 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
71 

count of that fact, the assault on dignity is not a loophole but it 

is an acknowledgment of a legal and human reality. 

Chairman LIEBERMAN. I will tell Senator Roberts your answer. I 

find it thoughtful and sensible. 

I want to thank you for your testimony. It has been actually a 

very good exchange this morning. And I will tell you that I think 

you enjoy credibility among Members of this Committee of both 

parties. That is a compliment and a statement of truth, which will 

lead undoubtedly to a burden on you, which is to say that there is 

real interest in both parties on the Committee and in the full Senate in regulatory reform, notwithstanding the advances in regulatory reform that this Administration has carried out. And if we 

could, I look forward to engaging you in that process. 

Again, I understand, as I said earlier, that decisions about what 

the Administration will or will not support are—you will presumably be involved in those, but they are not singularly yours. On the 

other hand, the fortunate fact is, as Senator Portman said in describing your Wall Street Journal article as ‘‘brilliant,’’ that you are 

about the best resource we could have for assisting us in not a kind 

of wanton deregulation, because nobody wants that—I certainly do 

not—but in figuring out how we can make the regulatory process 

work better, work more efficiently. 

And so it is with that hope—and I know Senator Collins feels 

that—that we conclude this hearing, with thanks to you for what 

you have added to it, and we will keep the record of the hearing 

open for 15 days for additional questions and statements. But I 

hope this is not the end of the dialogue but a continuation of it. 

I thank you very much. 

The hearing is adjourned. 

[Whereupon, at 12:04 p.m., the Committee was adjourned.] 

(73) 

FEDERAL REGULATION: A REVIEW OF 

LEGISLATIVE PROPOSALS, PART II 

WEDNESDAY, JULY 20, 2011 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:04 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding. 

Present: Senators Lieberman, Carper, Pryor, Collins, Johnson, 

Portman, and Paul. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. Good 

morning and thanks to everyone for being here. This is the third 

in a series of hearings we have been doing in our Committee to assess the impacts of Federal regulation and consider whether legislation is needed in this session to improve the process or substance 

of rulemaking. In fact, you might say this is actually the second 

half of a hearing we began last month to focus on the various legislative proposals that have been introduced by Members of our Committee relating to rulemaking. 

At the first session we heard from Senators, on and off the Committee, who are sponsoring reform proposals and from the Director 

of the Office of Information and Regulatory Affairs (OIRA), Cass 

Sunstein, who testified on behalf of the Administration. Today we 

are going to welcome one more colleague, Senator Sheldon 

Whitehouse of Rhode Island, who has introduced two new regulatory reform proposals since our last hearing. 

Perhaps we should announce that this is the last time we will 

hear another colleague, just in case there are more bills that are 

imminent. But we are glad to welcome Senator Whitehouse today. 

Then we are going to have the honor of hearing from four experts 

and advocates, including two former directors of the Office of Information and Regulatory Affairs, the aforementioned OIRA, who 

have extensive knowledge of the regulatory process and many of 

the proposed changes. 

As I said at our last hearing, the question—for me, anyway—is 

not whether to regulate but how best to regulate, how to weigh the 

benefits and the costs of regulation, and our aim, which I think is 

broadly shared, is to have the most efficient and effective ruleVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00079 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
74 

1The prepared statement of Senator Lieberman appears in the Appendix on page 199. 

2The prepared statement of Senator Whitehouse appears in the Appendix on page 207. 

making process we can. So, with that in mind, I am going to put 

the rest of my statement in the record.1

I will say, as we continue our discussion today, that after this I 

think the Committee is going to move to a stage where we are 

going to work with each other to see whether there is a consensus 

on the Committee that will enable us to legislate, essentially to 

move to markup on one or more of the pieces of legislation, hopefully one that there is a broad agreement on, but if there is enough 

of an interest in Members of the Committee, including, obviously, 

the Ranking Member, then we will go to markup, even if there is 

a lot of uncertainty or dissension about it because I know that 

there is a lot of interest in this subject. 

So with that, Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. Mr. Chairman, my 

statement is quite lengthy, and yet I do want to give it, and so I 

would be happy to yield to our colleague to go before my statement, 

even though he will miss the wisdom of my statement. 

Chairman LIEBERMAN. Yes. [Laughter.] 

Senator COLLINS. But in order to respect what I am sure is a 

very tight schedule. 

Chairman LIEBERMAN. Thank you. 

In many ways Senator Collins has presented you with a very difficult choice, Senator Whitehouse. [Laughter.] 

But we will understand if you go ahead because we know your 

schedule. 

TESTIMONY OF HON. SHELDON WHITEHOUSE,2 A U.S. 

SENATOR FROM THE STATE OF RHODE ISLAND 

Senator WHITEHOUSE. I appreciate the difficulty of that choice, 

and I appreciate the courtesy both of the Chairman, Senator 

Lieberman, and the Ranking Member, Senator Collins, in allowing 

me this time. I do have the Defense of Marriage Act hearing in the 

Judiciary Committee, an issue on which both Senator Lieberman 

and Senator Collins have shown immense leadership in the military context. So I will just thank both of you for your interest in 

improving regulation for the American people and how best to regulate, as the Chairman said, and thank you for inviting me to testify about my proposals to improve our regulatory system by rooting out and preventing regulatory capture. 

Federal regulations touch broad swaths of American life and are 

a key reason why highway deaths have fallen to their lowest levels 

in 60 years, why we have safe and clean drinking water, and why 

our food producers are held to high safety standards. By preventing 

injury, illness, and environmental harm, effective and appropriate 

regulations also save the country money. Cass Sunstein, the Administrator of the Office of Information and Regulatory Affairs at 

the Office of Management and Budget (OMB), recently explained, 

for example, that in the first 2 years of the Obama Administration, 

the net benefit of regulations exceeded $35 billion for Americans. 

There are two major hazards to regulation, however. One is unwise or obsolete regulation. The Obama Administration approVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00080 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
75 

priately has begun an effort to target and eliminate such regulations. The other hazard is regulatory capture. 

‘‘We the People’’ pass laws through our democratic and open 

American process of lawmaking. Regulated industries and other 

powerful interests then seek to ‘‘capture’’ the agencies that enforce 

those laws to avoid their intended effect and to seek regulations 

and enforcement practices that protect their limited private interests as opposed to the public interest that was intended to be 

served by the law. Regulatory capture both violates fundamental 

principles of the American system of government and, as we saw 

in the Gulf, can lead to disaster. 

The concept of regulatory capture is extremely well established. 

There is a consensus on in economic, regulatory, and administrative law theory. It is a doctrine that is reflected in the research of 

Nobel Laureate George Stigler, in the writings of President Woodrow Wilson, in the opinion pages of the Wall Street Journal, and 

in innumerable textbooks and hornbooks. So agreement on the subject is broad. During a hearing on regulatory capture that I chaired 

last year, the witnesses of a wide range of political perspectives all 

agreed on each of the following seven propositions. 

First, regulatory capture is a real phenomenon and a threat to 

the integrity of government. 

Second, regulated entities have a concentrated incentive to gain 

as much influence as possible over regulators, opposed only by a 

diffuse public interest. 

Third, regulated entities ordinarily have substantial organizational and resource advantages in the regulatory process when 

compared to public interest groups. 

Fourth, some regulatory processes lend themselves to gaming by 

regulated entities seeking undue control over regulation. 

Fifth, significantly, regulatory capture by its nature happens in 

the dark—done as quietly as possible. No industry puts up a flag 

announcing its capture of a regulatory agency. 

Sixth, as we have seen, the potential damage from regulatory 

capture is enormous. 

And, finally, the point that all agreed on, effective congressional 

oversight is key to keeping regulators focused on the public interest. 

We have seen the devastation in the Gulf of Mexico that occurred 

after the Minerals and Management Service was captured by the 

industry it was supposed to regulate. The cost of that disaster in 

lives and economic well-being, as well as the human toll of what 

I would contend also was capture at the Mine Health and Safety 

Administration and the Securities and Exchange Commission 

(SEC), should be a call to action to finally address in the political 

world this established problem of regulatory capture. The doctrine 

has an undeniable basis in academic regulatory theory and in the 

precepts of administrative law. We have known about it for a hundred years; we have seen it in action; but we have never yet done 

anything specific to prevent it. 

I have introduced the Regulatory Capture Prevention Act to create an office within the Office of Management and Budget that 

would investigate and report on regulatory capture wherever it 

may appear. The office would shine a light into neglected corners 

76 

of the regulatory system and would sound the alarm if a regulatory 

agency were showing the symptoms of capture. This office’s ability 

to bring scrutiny and publicity to the dark corners where regulatory capture flourishes would strengthen the integrity of our regulatory agencies. 

To provide even more sunlight into agency action, a second bill, 

the Regulatory Information Reporting Act, would require regulatory agencies to report to a public Web site three important 

pieces of information: First, the name and affiliation of each party 

that comments on an agency regulation; second, whether that party 

affected the regulatory process; and finally, whether that party is 

an economic, non-economic, or citizen interest. This information 

would help inform effective public scrutiny and congressional oversight of who seeks to influence regulatory behavior and who succeeds. 

Thank you again for inviting me to testify. I appreciate the opportunity to explain why Congress should pursue efforts to prevent 

regulatory capture in our Federal administrative agencies. People 

may disagree about particular cases, but I hope that we can all recognize that powerful special interests have a constant interest in 

capturing our regulatory agencies and have the means to do so, 

and that we have a systemic interest on behalf of ordinary Americans in preventing the capture of those American agencies. 

Thank you very much for this opportunity. 

Chairman LIEBERMAN. Thanks, Senator Whitehouse. That was 

really most interesting to me, and I suppose I have always felt that 

what you are describing as regulatory capture existed, regardless 

of which party was in control of the White House. That is part of 

a natural sort of functioning of the political system. But it has consequences. I must say I never have thought before about the way 

in which, apart from through transparency, you are trying to encourage; that the normal flow of media, political opposition, etc., 

could be combated legislatively. But you have made an interesting 

and thoughtful proposal, and I promise you that I will certainly 

give it my own due consideration. 

Senator WHITEHOUSE. I appreciate that, and I thank the Committee for its attention. 

Chairman LIEBERMAN. Thanks. Have a good day. Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. 

Mr. Chairman, before beginning my formal remarks, let me first 

thank you for holding this series of hearings to examine the regulatory system and efforts to improve it. I believe that the testimony 

we just heard shows the breadth of our proposals that have been 

introduced and referred to this Committee for consideration, and I 

share your interest and determination in putting together the best 

provisions from all the bills that have been referred to us to come 

up with a comprehensive, bipartisan bill. 

It is absolutely critical that we reform the regulatory system 

with the goal of reducing the regulatory burden. Data released earlier this month show an economy on the brink, I fear, of a doubleVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00082 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
77 

dip recession. Unemployment is up, job creation is down, and the 

news just keeps getting worse. 

Technically, we are in the 24th month of an economic recovery, 

but it surely does not feel that way. Based on past recoveries, we 

should be adding hundreds of thousands of new jobs every month, 

and the jobless rate should be dropping briskly. Two years after the 

end of the 1981 recession, for example, almost 7 million new jobs 

had been created, and the unemployment rate had fallen from 10.8 

to 7.2 percent. Most important, the number of Americans looking 

for work who could not find a job had dropped by almost a third 

below the recession’s peak, but not so in today’s so-called recovery. 

The recession supposedly ended in June 2009; the unemployment 

rate at that time stood at 9.5 percent. Today, after an initial drop, 

it is back up to 9.2 percent and going up. Incredibly, instead of 

adding jobs, we have actually lost jobs. More than 14 million Americans are still without jobs, half a million more than just 4 months 

ago. 

So where are all the jobs? 

Well, there is an area of robust job growth, and that is in our 

regulatory agencies. Job growth in the Federal regulatory agencies 

has far outpaced job growth not only in the rest of the Federal Government but, much more significant, in the private sector. 

In the past, we could rely on small businesses—our Nation’s job 

creators—to put America back to work, but no longer. And I believe 

the heavy cost of regulation is one reason why. Instead of helping 

these small businesses create jobs, too many agencies have issued 

a flood of rules that have swamped small business in red tape and 

created so much uncertainty that it is impossible for them to plan, 

grow, or add jobs. 

Recently, I received a letter from a constituent that really sums 

up this problem. The letter is from Bruce Pulkkinen, who runs 

Windham Millwork, a small business founded by his father in 1957 

that employs 65 people. Mr. Pulkkinen’s letter describes an attitude in the regulatory agencies that he says is ‘‘undermining the 

creation of new jobs’’ and has gone from ‘‘helpful and informative 

to disruptive and punitive.’’ 

One example he shared with me is the Boiler Maximum Achievable Control Technology (MACT) rules proposed by the Environmental Protection Agency (EPA). Just a few years ago, Mr. 

Pulkkinen’s company made a $300,000 investment in a state-of-theart wood waste boiler that allowed his company to stop using fossil 

fuels for heat and to eliminate its landfill waste stream. But the 

EPA’s proposed Boiler MACT rules would have required him to 

scrap that boiler and install a new one that burned fossil fuels, 

squandering the investment that he made, for minuscule and, indeed, I would argue no public benefit because we are trying to reduce the dependence on fossil fuels. 

Now, EPA has scaled back that portion of the initial Boiler 

MACT rules, but Mr. Pulkkinen remains concerned that it is only 

a matter of time before the EPA takes aim against small boilers 

once again. To help prevent that from happening, today I am introducing a bipartisan bill that attempts to give more time to EPA to 

come up with more reasonable rules, and I would like to ask unaniVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00083 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
78 

1The letter from Mr. Pulkkinen appears in the Appendix on page 204. 

2The chart referenced by Senator Collins appears in the Appendix on page 202. 

mous consent that Mr. Pulkkinen’s letter be included in our hearing record.1

Chairman LIEBERMAN. Without objection, so ordered. 

Senator COLLINS. Mr. Pulkkinen’s experience is not unique or 

even unusual. Small businesses all over the country are facing the 

same kind of pressure from regulators and drawing the same conclusion. Instead of investing and growing, they are hunkering down 

just to survive. 

Let me share a few statistics to underscore the point: Federal 

agencies are at work on more than 4,200 new rules, 845 of which 

affect small businesses; 224 of these rules are major rules—that 

means that their impact is $100 million or more. 

One has only to look at the growth of the Federal Register over 

the past few decades to see the growth of regulation. As the chart 

on display demonstrates,2 the Federal Register has grown by almost three-quarters of a million pages in the first decade of this 

century—a rate of 73,000 pages per year. That is nearly 40 percent 

more than in the 1980s, and the trend is up. 

These regulations do not come without a cost. According to the 

Crain study, commissioned by the U.S. Small Business Administration (SBA), the annual cost of Federal regulations now exceeds 

$1.75 trillion. OMB has a very different estimate, but it is still billions and billions of dollars, and these costs fall disproportionately 

on small businesses. For companies with fewer than 20 workers, 

the cost per worker of complying now exceeds $10,500 per year. 

That is way more than the cost per worker faced by big businesses, 

which is approximately $2,800 a year. 

Now, let me indicate that, like the Chairman, I recognize the role 

for effective regulation. It does have benefits to our society. So that 

is not what we are talking about. We are not talking about wiping 

out essential health and safety regulations. What we are trying to 

do is to come up with balance. I believe that regulatory reform requires three essential elements at a minimum: 

First, we should require agencies to evaluate the costs and benefits of proposed rules, including the indirect costs on job creation, 

productivity, and the economy, including energy prices; 

Second, to make sure agencies do not attempt to go around the 

rulemaking process by issuing guidance documents, and that is 

something that Senator Portman worked on when he was head of 

OMB; 

And, third, we must provide relief to small businesses that face 

first-time paperwork violations that result in no harm. That is the 

key qualification. 

I have offered these concepts as part of my Clearing Unnecessary 

Regulatory Burdens (CURB) Act, one of the bills referred to this 

Committee. Many Members of this Committee—and others in the 

Senate—have also introduced excellent legislation deserves careful 

consideration. Again, I hope we can work together in the tradition 

of this Committee under the strong leadership of our Chairman to 

advance legislation that improves the regulatory process, to make 

79 

1The prepared statement of Ms. Katzen appears in the Appendix on page 209. 

it less burdensome, more friendly to job creators, and no less protective of the public interest. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Collins, very much. I 

share that hope of course. 

Let me invite the witnesses to the table, and while you are coming up I can say for the record who you are: 

Sally Katzen is the former Administrator of the Office of Information and Regulatory Affairs (1993–98); 

Susan Dudley, former Administrator also of OIRA (2007–09); 

David Goldston is the Director of Government Affairs at the National Resources Defense Council; 

And Karen Harned is the executive director of the Small Business Legal Center, which is part of the National Federation of 

Independent Businesses. 

This is an excellent panel, very diverse, very balanced, and essentially we are asking you to give us your judgment on the state 

of regulation in our country and whether we need some regulatory 

reform. 

We will start with Ms. Katzen. Welcome back. 

TESTIMONY OF HON. SALLY KATZEN,1 FORMER ADMINISTRATOR OF THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS (1993–98) 

Ms. KATZEN. Thank you very much, Mr. Chairman and Senator 

Collins. 

There are a number of issues with the various legislative proposals before you, but in the limited time available for my oral 

presentation, I wanted to focus on three. The top three would be 

the codification of the cost/benefit provisions of Executive Order 

12866, the suggestion to add additional analytical and procedural 

requirements during rulemaking, and the subject of judicial review. 

To provide some context for my comments, I was struck by the 

fact that virtually all of the bills before this Committee apply 

across the board to all Federal agencies, from the Department of 

Agriculture and EPA to the Department of Homeland Security and 

the Department of Defense. And they would apply to all types of 

regulations, from eligibility for government programs and benefits 

to standards for public health and safety or financial institution 

safety and soundness requirements. 

The coverages of these bills and the one-size-fits-all approach 

raises for me the questions: Are all Federal agencies bad actors? 

Are all regulations equally problematic? And I would urge you to 

please keep this in mind as I touch on these three subjects. 

First is the codification of the cost/benefit provisions, such as 

quantifying and monetizing the costs and benefits, ensuring the 

benefits justify the costs, and selecting the alternative that maximizes net benefits. 

Having had a hand in drafting Executive Order 12866, I think 

these provisions are eminently sensible. But given their reaffirmation by Executive Order 13563 and the now more than 30-year implementation of these principles by presidents of both political parVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00085 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
80 

ties, what, I would ask, is the benefit, the value-added, of putting 

them in legislation? Executive Branch agencies routinely undertake 

cost/benefit analysis, and if more is needed, OIRA works with them 

to assure that happens. 

To be sure, the quality of the work done—how sophisticated, 

technically proficient—is mixed, but this should not be surprising 

because agencies are very different from one another, with different 

cultures and different resources. The latter is particularly important because thoughtful, careful, comprehensive analysis takes 

time and resources, and the more significant the proposal, the more 

time and resources it should consume. And yet some of the same 

people who call for more analysis are the first to suggest 

straightlining or reducing the agencies’ budgets. 

Those who support codifying these provisions argue that legislation would be better than an Executive Order (EO). I am very dubious about that because OIRA is well situated to impress upon Executive Branch agencies in real time the need for compliance with 

the terms of the Executive Order. Really—and I think Senator 

Portman would support me in this—agencies do listen when OMB 

talks; whereas, legislation may or may not be self-executing or selfenforcing. 

But even if there were a case made that legislation is superior, 

there are serious problems with legislating these principles. Among 

other things, they are not simple and straightforward. Look at how 

many different definitions of costs you have in the various bills before you. Incidentally, it is not easy to capture these things. OMB 

Circular A–4 is 50 pages single-spaced to tell agencies how to do 

a regulatory impact analysis. 

Moreover, while undertaking economic analysis in the course of 

developing regulations is highly beneficial, it is, of course, only an 

input. Even if it is carried out by the most eminent economists, according to tried and true methodology, it is not and cannot be dispositive. It was Professor Einstein who had a sign in his office that 

said, ‘‘Not everything that can be counted counts, and not everything that counts can be counted.’’ 

So under the Executive Order, those costs and benefits which 

cannot be quantified and monetized are, nonetheless, essential to 

consider, and there are other considerations—like disparate effects 

or regional effects—that have to be taken into account. And different agencies face different challenges. I would remind this Committee that the Department of Homeland Security (DHS) has its 

own set of issues. How do you quantify and monetize a reduction 

in risk of a terrorist attack? And if you can figure it out, do you 

really want to publish this and let the world know what sites you 

have hardened and what you have not? 

Most importantly, under the Executive Order, while agencies are 

required to conduct economic analysis in developing the regulations, they are in the first instance bound by their authorizing legislation—what Congress decided they should do and what they 

should consider when they were delegated the authority to do it. 

Some of the authorizing statutes are silent on the role of costs. 

Others do not permit consideration of such factors. And for that 

reason, the EO applies ‘‘to the extent permitted by law.’’ But if 

these provisions were codified, they would become the law. And as 

81 

a result, a proposed regulation, even a regulation under a statute 

that does not permit the consideration of costs, could not become 

effective unless the benefits justify the costs. So by codifying these 

provisions, Congress is amending or would be amending a host of 

previously enacted statutes, and at this point we do not know how 

many, we do not know which ones, and we do not know the implications for either the regulated entities or the intended beneficiaries. Talk about uncertainty. Talk about what businesses need 

in order to plan rationally. This would throw, truly, a monkey 

wrench into the whole system. 

Now, there is one area where I think you can proceed, and that 

is extending the economic analysis and centralized review requirements to the independent regulatory commissions (IRCs). A number of people have touched on it, and I will not go there for now. 

The second subject is the imposition of additional analytical and 

procedural requirements on the agencies, and one proposal is to require affirmative congressional approval before rules become effective. 

Chairman LIEBERMAN. Let me interrupt a moment. I think we 

gave you only 7 minutes. Normally we give the witnesses 10 minutes, so I am going to add 3 minutes to everybody. If you can finish 

within 7 minutes, you will have earned the gratitude of the Committee, but if you need the extra 3 minutes, go ahead. 

Ms. KATZEN. Thank you, Mr. Chairman. 

These extra steps are not cost free, both in terms of delaying or 

eliminating beneficial regulations as well as the cost of increased 

uncertainty and unpredictability. So, again, what is the compelling 

need? 

The bills’ sponsors cite the relatively slow recovery from the recent economic meltdown, which some commentators believe is attributable to inadequate regulation of the banking industry rather 

than too much regulation. They cite the numbers of regulations. In 

fact, in the first 2 years of the Obama Administration, there were 

fewer regulations than in the last 2 years of the Bush Administration. And they cite the total regulatory burden on the U.S. economy, the $1.75 trillion, which has taken on a life of its own, notwithstanding reputable scholars’ critiques of both the assumptions 

and the methodologies. 

If, however, you are moved by the aggregates, then I would urge 

you to look at the document that Senator Whitehouse referred to 

earlier, which shows that in the aggregate Federal regulations do, 

in fact, provide more benefits, greater benefits than costs, producing net benefits, and these reports have been issued for over the 

last 10 years, so it is not a partisan document. 

The other question is: Why now? President Obama launched an 

initiative 6 months ago, which is continuing to date. As recently as 

2 weeks ago, he issued an Executive Order affecting the IRCs. He 

has called for a regulatory lookback, and I have a sense, having 

lived through several of these, that this is being done much more 

aggressively than others in the past. 

He has also called for greater public participation, and his Executive Order specifically stresses the importance of promoting the 

economy, innovation, competitiveness, and job creation. 

82 

So how will these edicts from the President to those who report 

to him and for whom he is constitutionally responsible play out? At 

least will the results of his efforts not inform you where the real 

problems are? Again, going back, it is not a one-size-fits-all. It is 

not all agencies. Where do you want to focus your attention and 

your resources? 

As you know, Congress has imposed on the agencies a series of 

process and analytic requirements over the last 30 years, including 

the Paperwork Reduction Act, Regulatory Flexibility Act, Small 

Business Regulatory Enforcement Fairness Act, the Unfunded 

Mandate Reform Act, to name a few, without increasing the agencies’ resources to carry out those tasks assigned. Whether there is 

a causal connection or not, it takes years now rather than months 

to dot all the ‘‘i’s’’ and cross all the ‘‘t’s,’’ and the additional requirements in these bills will necessarily lengthen the process, if not 

lead to paralysis by analysis or due process to due death. 

Perhaps Congress should rationalize the current set of requirements before adding another one or provide more resources to the 

agencies to do what they are already required to do. If there is an 

implementation, Congress should address that specifically and not 

just add another requirement that cannot be implemented. 

You obviously have a number of alternatives by which you can 

target your concerns, like Senator Collins’ concern with the Boiler 

MACT and the Utility MACT that EPA is producing. Maybe it is 

agency overreach. Maybe it is the underlying statute, which Congress can do something about. But we do not know, and an acrossthe-board provision is not going to help us figure that one out. 

My time is running out, so I am just going to be very fast on the 

third subject which is the question of judicial review. 

Chairman LIEBERMAN. Just give us a couple of sentences because 

I promise you we are going to ask you about that. 

Ms. KATZEN. Yes, OK. I think it would be a mistake to add the 

courts as another check to the President and to the Congress in 

overseeing whether the economists are right about how to maximize benefits and the various determinations that must be made 

in implementing cost/benefit analysis in addition to the lawyers 

who are now going to have an opportunity to debate whether this 

statute trumps all the other statutes that have been out there in 

terms of substantive requirements. 

With Chevron and the hard-look doctrine, I suspect there will be 

deference to the agencies but there, nonetheless, will be a lot of 

time and money devoted to trying to pin down what are essentially 

judgment calls. And I want to emphasize the time element because, 

as I mentioned earlier, the issue of uncertainty. In my private practice and in my consulting work, I run across so many businessmen 

who want to do what is right. They want to comply with applicable 

regulations. They may not be happy with the rules, but they really 

want to do what is right. What is driving them crazy is regulatory 

uncertainty. And so if it takes years to do a regulation now, let us 

add another couple of years for more judicial review of these 

issues? What are we asking these people to do? I think that is a 

serious problem. Thank you. 

Chairman LIEBERMAN. Thank you. 

83 

1The prepared statement of Ms. Dudley appears in the Appendix on page 220. 

Ms. Dudley, thanks very much for being here. We welcome you 

back. 

TESTIMONY OF HON. SUSAN E. DUDLEY,1 FORMER ADMINISTRATOR OF THE OFFICE OF INFORMATION AND REGULATORY AFFAIRS (2007–09) 

Ms. DUDLEY. Thank you, Chairman Lieberman, Ranking Member 

Collins, and Members of the Committee. I am Susan Dudley, Director of the George Washington University (GWU) Regulatory Studies Center and a research professor of public policy at GWU. And 

as you mentioned, from April 2007 to January 2009, I oversaw the 

Executive Branch regulations of the Federal Government as Administrator of the Office of Information and Regulatory Affairs, 

where I had the pleasure to work under OMB Director Rob 

Portman. But the views I express here are my own. 

I appreciate this Committee’s interest in bringing more accountability to Federal regulation. Successful regulatory reform efforts in 

the past have been bipartisan, and this Committee has an opportunity to effect needed improvements through bipartisan reforms. 

Probably the most significant historic period of reform was in the 

1970s when bipartisan efforts of both branches of government 

brought about dramatic improvements in innovation and consumer 

welfare by removing unnecessary regulation that kept prices high, 

to the benefit of the regulated industries and at the expense of consumers. At the same time, a new form of regulation aimed at addressing environmental safety and health concerns was emerging, 

administered by newly formed agencies such as EPA, Occupational 

Safety and Health Administration, National Highway Traffic Safety Administration (NHTSA), and the Consumer Product Safety 

Commission. 

Concerns over the burden of these new regulations led President 

Jimmy Carter to expand on procedures begun by Presidents Nixon 

and Gerald Ford for analyzing the impact of new regulations and 

minimizing their costs. Every modern President has continued and 

expanded the procedural and analytical requirements that began in 

the 1970s. Nevertheless, the growth in regulation continues and 

with it concerns that we may have reached a point of diminishing 

returns. 

Executive and legislative requirements for analysis of new regulations appear to have been inadequate to counter the powerful motivations in favor of regulation. Politicians and policy officials have 

faced strong incentives to do something, and passing legislation 

and issuing regulations demonstrates action. Requirements to 

evaluate the outcomes of those actions—the benefits, the costs, and 

the unintended consequences—tend to take a back seat. So I really 

appreciate this Committee’s interest in examining the merits of legislative reforms that alter both the procedures by which regulations 

are developed and the decision criteria on which they are based. 

In the procedural reform category, I would include the Regulations in Need of Scrutiny (REINS) Act and regulatory pay-as-yougo (PAYGO). 

84 

The REINS Act would require a congressional vote before a 

major new regulation can become effective. It would have the benefit of making not only legislators but presidents more accountable 

for the content of major new regulation. On the other hand, it could 

alter agency incentives in unintended ways. 

Under the regulatory PAYGO proposal about which Senator 

Warner spoke with the Committee last month, for every new regulation issued, agencies would have to remove an equivalent burden 

from regulations already on the books. While this poses non-trivial 

analytical challenges, a regulatory PAYGO system has the potential to impose needed discipline on regulatory agencies and generate a constructive debate on the real impacts of regulation. 

In the decision criteria category, several bills would build upon 

the widely accepted regulatory analysis requirements reinforced by 

President Obama in January. Some bills, including Senator Collins’ 

CURB Act, would codify the requirements to examine regulatory 

costs and benefits currently embodied in Executive Orders and extend them to independent agencies. Others would expand the coverage of existing cross-cutting regulatory statutes, such as Senator 

Portman’s Unfunded Mandates Accountability Act and Senators 

Snowe and Coburn’s Freedom from Restrictive Excessive Executive 

Demands and Onerous Mandates (FREEDOM) Act. 

Since presidents of both parties have adopted virtually identical 

analytical requirements, I do not think codification is necessary to 

ensure future presidents continue to do so. But I do see three important advantages to creating a statutory obligation for regulatory 

impact analysis. 

One, it would lend congressional support for these non-partisan 

principles and decision tools. 

Two, legislation could apply them to independent agencies, something presidents have been reluctant to do but many policy experts 

endorse. 

And, three, legislation could make compliance with these requirements judicially reviewable, though it sounds like we will have a 

debate on whether that is a pro or a con. 

In my view, Congress should not limit legislation to codifying the 

requirement for benefit/cost analysis but, rather, should capture 

the broader philosophy and principles articulated in EO 12866 that 

regulation should be based on the identification of a compelling 

public need, an objective review of alternatives, and an understanding of the distributional impacts of different approaches—who 

is expected to gain or lose. 

Congress may also need to consider whether these cross-cutting 

decisional criteria would supersede or be subordinate to the decision criteria expressed in individual statutes. Rather than a super 

mandate, Congress may prefer to amend those statutes that constrain agencies’ ability to weigh trade-offs, which have produced 

regulations with questionable benefits that divert scarce resources 

for more pressing issues, and I think the Boiler MACT may be an 

example of that. 

In closing, let me offer one more idea and respectfully encourage 

you to consider assigning responsibility for evaluating regulatory 

bills and regulations to a congressional office. Just as the Congressional Budget Office provides independent estimates of the onVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00090 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
85 

1The prepared statement of Mr. Goldston appears in the Appendix on page 242. 

budget costs of legislation and Federal programs, a staff of congressional regulatory experts could provide Congress and the public 

independent analysis regarding the likely off-budget effects of legislation and regulation. 

And with that, I will close—earning myself undying gratitude 

from the Committee. [Laughter.] 

Chairman LIEBERMAN. Yes, really, a gold star next to your name. 

Thanks very much. That is an interesting idea that you ended 

with. I appreciate it. We will talk more about it. 

Mr. Goldston, thanks for being here, and we welcome your testimony now. 

TESTIMONY OF DAVID J. GOLDSTON,1 DIRECTOR, GOVERNMENT AFFAIRS, NATURAL RESOURCES DEFENSE COUNCIL 

Mr. GOLDSTON. Thank you, Mr. Chairman, Senator Collins, and 

Members of the Committee. Thank you for inviting me to testify 

today and for setting up a balanced review of the many bills pending before the Committee. 

I would add that as someone who spent more than 20 years as 

a House staffer, it is nice to be sitting in a seat in the Senate 

where they might feel obligated to hear me out. [Laughter.] 

It seems to me that the question before the Committee today is 

not whether regulatory agencies sometimes make mistakes or issue 

controversial rules. The question, rather, is twofold: One, is there 

something fundamentally amiss with the regulatory system? And, 

two, would the pending legislation make things better or worse? In 

other words, the Committee ought to be asking itself the very questions the existing Executive Orders and some of the pending bills 

put forward to the agencies: What problems are you trying to 

solve? Is this the best way to solve them? And would the benefits 

outweigh the costs? 

It seems to me that no one has identified a fundamental problem 

with the regulatory system for which the pending bills would serve 

as a remedy. The regulatory system has repeatedly been shown to 

yield benefits that significantly outstrip its costs, and studies have 

found the system to have, at worst, a neutral effect on employment. 

Moreover, the system produces benefits that the public has rightly 

come to expect: Cleaner air and water, safer food, and so on. When 

banks lend money with abandon, an oil platform collapses in the 

Gulf of Mexico, or salmonella sickens consumers, no one responds 

by praising the restraint of regulators. 

And I must say the complaints about the specific rules, including 

the industrial boiler rule that Senator Collins brought up that I am 

sure we will be discussing more, that are held up as examples of 

why these bills are necessary seem almost entirely unrelated to the 

legislative text. The offending rules, whatever their merits or flaws, 

have undergone cost/benefit analysis and public comment and are 

subject to judicial review. It is often not clear how the proposed 

measures would have changed anything except by making the process more time-consuming, expensive, and cumbersome for all concerned. 

86 

It seems at times that these bills are not an effort to craft targeted solutions to specified problems but, rather, to use any tool at 

hand to run a war of attrition against already overburdened agencies that are trying to follow the laws that Congress has passed. 

Surely inducing exhaustion is not the proper way to reform the regulatory system, whatever its failings. 

Which brings me to my second question: Would these bills make 

the system better or worse? In general, I fear the bills would make 

the system less able to provide the protections the public expects. 

First, the additional, often ill-defined analysis required by some of 

these bills would provide little reliable or needed information but 

would impose additional costs on the agencies. Especially at a time 

when agencies may see their budgets cut substantially, these additional requirements seem like the wrong priority. In effect, the bills 

themselves would end up imposing unfunded mandates on the 

agencies. 

Allowing judicial review—I guess we will all be discussing that 

to some extent. Allowing judicial review before a rule is final would 

needlessly burden courts and agencies and short-circuit the regulatory process. It would fly in the face of an elementary principle: 

How can one sue over something that, by definition, is not affecting 

anyone? That seems like a particularly odd approach for conservatives who have not been enamored of recourse to the courts. 

And early judicial review seems to contradict other goals of these 

bills, such as more open discussion of alternatives. How open will 

agencies be if they can be hauled into court simply for broaching 

an idea someone does not like? 

The worst and by far the most radical bill before the Committee 

is the REINS Act, which sets out really to destroy the regulatory 

system as it has existed for well over a century. Congress rightly 

decided long ago that it was not the right venue to decide every scientific, technical, and quasi-judicial issue that a modern economy 

poses for the government. The REINS Act rejects that hard-earned 

wisdom in a way that legislators, business, and the general public 

would all quickly come to regret if this measure were ever enacted. 

If Congress truly believes the regulatory system needs reform, 

the proper approach would be to review the underlying statutes 

that direct the regulatory agencies, not to impose one-size-fits-all 

work-arounds. Agencies are carrying out their legislative mandates. 

If there are problems with those mandates, the solution is not monkeying with the regulatory process or, in the case of REINS, trying 

to overthrow it. No doubt one reason Congress is reluctant to address these purported concerns more directly is the level of public 

support for these underlying statutes, which have been and continue to accomplish their goals. 

Indeed, it is interesting that lists of offending rules are almost 

always prospective. Once rules are in effect, they generally are 

viewed as successful and far less expensive than anyone had 

claimed in advance. 

I urge the Committee not to further complicate a system that is 

fundamentally protecting the public without unduly burdening the 

economy. Thank you very much. 

I do not know if I left more or less time than—— [Laughter.] 

87 

1The prepared statement of Ms. Harned appears in the Appendix on page 245. 

Chairman LIEBERMAN. There is a momentum here. Thanks very 

much, Mr. Goldston. 

Finally, Ms. Harned, thanks for being with us, and we welcome 

your testimony now. 

TESTIMONY OF KAREN R. HARNED,1 EXECUTIVE DIRECTOR, 

SMALL BUSINESS LEGAL CENTER, NATIONAL FEDERATION 

OF INDEPENDENT BUSINESS 

Ms. HARNED. Thank you. Good morning, Chairman Lieberman, 

Ranking Member Collins, and Members of this Committee. 

The National Federation of Independent Business (NFIB), the 

Nation’s largest small business advocacy organization, commends 

this Committee for examining legislative solutions which would 

help grow the economy by reducing overly burdensome regulation. 

We believe that it is vitally important to the Nation’s economy to 

achieve regulatory reform now, especially when there is momentum 

to do so in the 112th Congress. Various proposals have been introduced or discussed that would improve current law, and we are 

hopeful that the Committee takes the needed steps to act in a bipartisan way and pass these important provisions. 

The NFIB Research Foundation’s Problems and Priorities, has 

found ‘‘unreasonable government regulations’’ to be a top 10 problem for small businesses for the last two decades. 

Job growth in America remains at recession levels. Small businesses create two-thirds of the net new jobs in this country, yet 

those with less than 20 employees have shed more jobs than they 

have created every quarter but one since the second quarter of 

2007, according to the Bureau of Labor Statistics. Moreover, for the 

first 6 months of 2011, 17 percent of small businesses responding 

to the NFIB Research Foundation’s Small Business Economic 

Trends report cite regulation as their single most important problem. Therefore, reducing the regulatory burden would go a long 

way toward giving entrepreneurs the confidence they need to expand their workforce. NFIB believes that Congress must take actions to level the regulatory playing field for small business. 

The Small Business Regulatory Enforcement and Fairness Act 

(SBREFA)—when followed correctly—can be a valuable tool for 

agencies to identify flexible and less burdensome regulatory alternatives. NFIB supports reforms like S. 1030, introduced by Senator 

Snow, which would expand SBREFA’s reach into other agencies 

and laws affecting small businesses. SBREFA and its associated 

processes, such as the Small Business Advocacy Review (SBAR) 

panels, are important ways for agencies to understand how small 

businesses fundamentally operate, how the regulatory burden disproportionately impacts them, and how the agency can develop 

simple and concise guidance materials. 

In reality, small business owners are not walking the halls of 

Federal agencies lobbying about the impact of a proposed regulation on their businesses. Despite great strides in regulatory reform, 

too often a small business owner will find out about a regulation 

after it has taken effect. Expanding SBAR panels and SBREFA requirements to other agencies would help regulators learn the poVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00093 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
88 

tential impact of regulations on small business before they are promulgated. It also would help small businesses be alerted to new 

regulatory proposals in the first instance. 

Regulatory agencies often proclaim indirect benefits for the regulatory proposals they offer, but they decline to analyze and make 

publicly available the indirect costs to consumers, such as higher 

energy costs, jobs lost, and higher prices. As an example, environmental regulations have particularly high costs. Whether a regulation mandates a new manufacturing process, sets lower emission 

limits, or requires implementation of new technology, the rule will 

increase the cost of producing goods and services. Those costs will 

be passed on to the small business consumers that purchase them. 

Does that mean that all environmental regulation is bad? No. But 

it does mean that indirect costs must be included in the calculation 

when analyzing the costs and benefits of new regulatory proposals. 

NFIB would like to thank Senator Collins for ensuring more 

small business owners had a chance to learn about and be certified 

under EPA’s lead renovation and repair rule. Although the rule 

took effect in April of last year, Senator Collins was successful in 

pushing the effective date back to October 2010. However, the rule 

continues to negatively impact small business. NFIB member Jack 

Buschur, of Buschur Electric in Minster, Ohio, recently testified 

that because of the time and financial costs of EPA’s lead renovation and repair rule, he will no longer bid on residential renovation 

projects. Because he will no longer be bidding on these projects, 

Mr. Buschur will not be hiring new employees at his company that 

currently has 18 employees. That is down from 30 employees in 

2009. 

Reforms like those in the CURB Act, introduced by Senator Collins, S. 602, and S. 1030 would be a great start in ensuring that 

agencies make public a reasonable estimate of a rule’s indirect impact. Other regulatory reforms that would help minimize unintended consequences of regulation on small business include reforms to strengthen the role of the Small Business Administration’s 

Office of Advocacy, increased judicial review within SBREFA, and 

ensure agencies focus adequate resources on compliance assistance. 

Finally, Congress should pass legislation which would waive 

fines and penalties for small businesses the first time they commit 

a non-harmful error on regulatory paperwork. Because of a lack of 

specialized staff, mistakes in paperwork will happen. If no harm is 

committed as a result of the error, the agencies should waive penalties for first-time offenses and instead help owners to understand 

the mistake they made. We appreciate that Senator Collins and 

Senator Vitter have introduced legislation to add a first-time waiver protection into law, and we look forward to working with them 

toward finding an effective solution. 

With high rates of unemployment continuing, Congress needs to 

take steps to address the growing regulatory burden on small businesses. NFIB is hopeful that the 112th Congress can pass regulatory reforms that would improve current law and level the regulatory playing field for small businesses. 

NFIB looks forward to working with you on this and other issues 

that are important to small business. Thank you. 

89 

Chairman LIEBERMAN. Thanks, Ms. Harned. That was very helpful testimony. Thanks to all of you. 

I am very pleased that there is a good turnout of Members of the 

Committee here, which expresses the interest in Congress in this 

subject, so we will have 7-minute rounds of questions. 

The Committee has heard in recent hearings, particularly from 

Cass Sunstein—and as you know, because it is a matter of public 

record—the Administration has undertaken some regulatory reform 

initiatives of its own, including a lookback process which is designed to weed out flawed regulations already on the books. I wanted to ask each of you, if you are familiar with this, to give the Committee a quick reaction to the recent Administration executive regulatory reform effort. Ms. Katzen. 

Ms. KATZEN. Thank you, Mr. Chairman. We had a lookback process during the Clinton Administration. There was another one during the Bush Administration, and now we have the Obama Administration. 

Chairman LIEBERMAN. Yes, we do. [Laughter.] 

Ms. KATZEN. I think this is being pursued more aggressively 

than in earlier times. I think we will find some savings, as Cass 

Sunstein has indicated. But there is something that Mr. Goldston 

mentioned that I think is very relevant here, and that is, when the 

regulation is being proposed, everyone says it is going to cost a fortune and it is going to be totally disruptive and it is going to be 

impossible to comply. Then the regulation is adopted, and we find 

that the estimated cost is appreciably less than had been originally 

estimated, in part because of American ingenuity. When you are 

told you have to do something, you figure out an efficient way of 

doing it. 

Similarly with existing rules. Once they are on the books, they 

become part of what we do. So we have a lookback. Do you want 

to get rid of seat-belt regulation? After all, we have airbags now. 

But the assembly lines have already been set up with the seat belts 

all ready to be put in. So what kind of savings would we have? 

Therefore, while I think a lookback is important and it keeps the 

regulators on their toes and provides the right incentives, I am not 

so sure that we will find that this is the silver bullet that will cure 

all. 

Chairman LIEBERMAN. Thank you. Ms. Dudley. 

Ms. DUDLEY. Yes, it has been done before. Previous Administrations have taken a look back. And I think there is an element of 

truth to the idea that for existing regulations, once we have complied with them, some costs are sunk. And so removing them— 

there are some big regulations, if you have already invested in that 

very expensive boiler, you do not want to hear that if you did not 

have to. But I do take issue with the idea that costs are always 

less than predicted. There are some academic studies that suggest 

that, others that suggest otherwise, because there are opportunity 

costs to complying with regulation. So the American ingenuity that 

is diverted to addressing the regulatory goal is not addressing 

something else that consumers may want more. So I think you do 

need to keep that in account. 

As far as looking specifically at the current lookback, I think we 

need to look carefully at what the effects of those reforms are. For 

90 

example, one of the big ones that has been used as an example is 

that milk will not be classified as a hazardous waste if it is spilled. 

Chairman LIEBERMAN. That is right. 

Ms. DUDLEY. That was never enforced. Maybe some zealous enforcement officials at EPA thought, under the statute we could define milk that way, but that was not something that was ever implemented that way. And, in fact, that was one of the midnight regulations on my watch, was to put that clarifying regulation in 

place. It was withdrawn and then reissued in this Administration. 

Chairman LIEBERMAN. Mr. Goldston, is the Administration review a good idea, enough, or not enough? 

Mr. GOLDSTON. We think it is a reasonable idea. It would not 

necessarily be our top priority for what they should be doing, but 

it is reasonable to look at past regulations. We think that it has 

been done in a serious and reasonable way. The regulations that 

they have come up with seem in this preliminary look—and there 

is a notice and comment period now, or a comment period now on 

it—seem to be regulations that merit being looked at. 

But I would say the point that—taking a slightly different take 

on the point that Ms. Dudley just made, I mean, the fact is some 

of these horror stories about regulations on the books, when you 

look at what has actually happened with them, they are not enforced or they did not actually create a problem. So I think that 

needs to be kept in mind as well. 

A last point on—I believe it is—I cannot find it quickly, but it 

is a Resources for the Future study that is most often cited that 

did look in detail at costs of regulations that had been anticipated 

and then that actually occurred, and not in every case, but in the 

vast majority of the cases, the actual costs were far smaller than 

the predicted ones—for two reasons: One, innovation, as Sally 

Ericsson and Ms. Katzen said. I am thinking of the current OMB 

person—as Sally Katzen said; and also because most of the cost estimates come from industry that has no incentive to give the lowest 

cost estimates. So it is not a surprise, but there have been some 

studies, and routinely but not universally, the actual costs are significantly below the predicted ones. 

Chairman LIEBERMAN. Thanks. Ms. Harned. 

Ms. HARNED. Yes, I mean, NFIB thinks it is a good step that the 

Obama Administration is looking at existing regulations. But we 

really believe that, as a practical matter, we need more regulatory 

reform so that we can really get teeth and, as a practical matter, 

actually eliminate some regulations that are on the books. We just 

have not seen, as Ms. Dudley indicated, regulations that have been 

a true problem for small business eliminated under these provisions, these lookback provisions yet. 

And I would also say, as Ms. Dudley alluded to, and actually 

even Ms. Katzen said, there is an issue—again, once the regulation 

is in effect, we see that it is very hard to get it off the books, and 

that is why NFIB is so committed to reforms that will do more on 

the front end to assess small business impact, because once they 

are on the books, it is hard to pull them back. And really getting 

our homework done on the front end will help with that. 

Chairman LIEBERMAN. Thank you. My time is up. Senator Collins. 

91 

Senator COLLINS. Thank you, Mr. Chairman. 

Ms. Harned, I want to start just where you left off. I could not 

help but think when we were talking about the recently repealed 

regulation on spilled milk being treated as if it were an oil spill— 

and we heard that it has never been enforced—that to me is not 

of great comfort because it raises the issue of why was it issued in 

the first place, and that is why I think we do need more attention 

on the front end. 

There is a lot of disagreement about the cost of regulation, and 

I would like to ask you a few questions about the Crain study that 

was commissioned by SBA, and that study estimated the total cost 

of the regulatory system as more than $1.75 trillion. By contrast, 

OMB estimates the cost as far, far lower, ranging between $62 billion and $73 billion. 

Now, clearly, that is an extraordinary range. I know you have 

looked at the Crain study. Could you explain for the Committee the 

difference in methodology and what OMB covered versus what the 

Crain study covered? 

Ms. HARNED. Right. Well, one of the main things that the Crain 

study covered that OMB did not capture, my understanding is, is 

those rules that are not considered to have a significant economic 

impact. And there are hundreds of those that come out every year. 

Senator COLLINS. Let me just interject. So OMB’s estimate only included major rules which have an impact of $100 million on the 

economy, correct? 

Ms. HARNED. That is correct. And, truthfully, what small business owners face is the death by a thousand cuts, and we feel like 

the Crain study better reflects that number because it does show 

the disproportionate impact to small business by capturing the entire regulatory burden that they are experiencing and not just focusing on those major rules. 

Senator COLLINS. It is also my understanding that OMB did not 

count rules that were adopted 10 years ago. Is that correct also, to 

your knowledge? 

Ms. HARNED. To my knowledge, that is correct. And, again, small 

business owners, every paperwork requirement, once it is out there, 

that is a continuing burden for them because they do not have the 

in-house staff to deal with these issues. So they really do feel the 

burdens longer than, I would say, a larger company. I think it is 

easier for a large firm to absorb those earlier. 

Senator COLLINS. Now, Ms. Katzen made the point that once regulations are in effect, she believes that the costs go away or disappear or tend to be much lower. Yet your survey, which was done 

just a month ago, seems to indicate that small businesses still consider government regulations to be a major problem for them. 

Could you tell me where it ranked among the 10 issues that you 

asked small businesses about? 

Ms. HARNED. Right. Well, this year, like I mentioned, we do this 

monthly study that is very well regarded and is a very good indicator of where the economy is and what small business owners are 

thinking about the economy. And regulation has consistently come 

in third only to poor sales and taxes as the biggest issues that they 

are facing. And we have definitely seen the numbers, if you look 

at the trends over the past probably 30 or more years—I think it 

92 

was somewhere in the middle of last year and in the high teens 

consistently as one of the most important problems they are facing 

today as they are trying to grow their business. 

Senator COLLINS. And has that grown as a higher percentage in 

the last couple of years? 

Ms. HARNED. Yes, very much so. 

Senator COLLINS. Thank you. 

I would like to, for my final question, ask each of the panelists 

about the issue of applying cost/benefit analysis and other provisions of the President’s Executive Order to independent regulatory 

agencies because this is a big issue. It is something that Cass 

Sunstein advocated for when he was an academic at Harvard but 

no longer advocates for it now that he is head of OIRA. So I would 

like to get the opinion of each of you, and let me start by pointing 

out that last week, on July 11, 2011, the President issued an Executive Order and a directive, a Memorandum to the Executive, to 

the independent regulatory agencies in which he requests that they 

comply with cost/benefit analysis, public participation, and other 

provisions of the Executive Order. He cannot direct it without 

changes in law, but he asked them to do so. 

So, Ms. Katzen, do you agree with the President’s request in this 

area? 

Ms. KATZEN. It is somewhat more complicated than that. When 

I was at OMB, we were drafting EO 12866, and we asked the Office of Legal Counsel at the Department of Justice whether or not 

the President had the constitutional authority to extend these requirements to the IRCs. We were told yes. We declined to do so 

solely for political reasons, and that was in deference to the Congress. 

The same thing was true with President Reagan in 1981. His Office of Legal Counsel, in which a young man named Mr. Sunstein 

worked, said that they had the constitutional authority to do it, but 

might want to consider deferring that out of deference to Congress. 

I have flipped completely. Having recommended that we not extend these provisions to the IRCs in 1993 when the President 

signed the Executive Order, I am now a staunch supporter and 

have been testifying in the House on several occasions over the last 

3 or 4 years in favor of extending these requirements to the IRCs. 

I think it is a no-brainer. 

Senator COLLINS. Thank you. Ms. Dudley. 

Ms. DUDLEY. I think they should be extended to the independent 

agencies. We had a conference of all the former OIRA Administrators on the 30th anniversary of ORIA last month, and all the 

former Administrators agreed they should be extended to the independent agencies. 

Senator COLLINS. Very interesting. Mr. Goldston. 

Mr. GOLDSTON. Claiming some of my earlier time, if I could say 

two quick things before that. First is the Crain study has been discredited by numerous people, even if you accept what should be in 

or out of the package, the methodology used, and I refer the Committee particularly to the Congressional Research Service (CRS) report on that. 

Second, in terms of regulations that are already on the books, it 

is not just that there are sunk costs; it is that the public comes to 

93 

expect the benefits of those, and it turns out those benefits come 

at acceptable costs. So it is actually truly accepting those—— 

Senator COLLINS. Since my time has expired, if you could answer 

the question I asked. 

Mr. GOLDSTON. Yes, absolutely. We do not support the extension 

to the IRCs because we feel their independence is a feature of law 

that should be maintained. I would say that Sally Katzen in her 

testimony, even when talking about extending them, talks about 

treating the IRCs differently, recognizing that difference in statute. 

And, again, CRS in their review of the bills has pointed out that 

it would change the fundamental understanding of the IRCs. 

Senator COLLINS. Thank you. Ms. Harned. 

Ms. HARNED. Yes, NFIB strongly supports extending to the independent agencies. 

Senator COLLINS. Thank you. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Collins. 

As is the Committee’s tradition, in order of appearance we will 

have Senators Johnson, Pryor, Portman, Carper, and Paul. Senator 

Johnson. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Mr. Chairman. 

As somebody who has lived under the rules and regulations in 

a manufacturing plant for about 31 or 32 years, I will just say that 

certainly there are up-front costs of compliance with regulations, so 

you maybe have to invest in some equipment, and that is kind of 

a one-time cost, but even that equipment has to be maintained. 

And the costs of reporting compliances, that is a continuous cost. 

It is a cumulative cost. It simply is. And it costs jobs in the long 

term. 

Mr. Goldston, you said that we are looking at what is the fundamental problem with regulation. I think the fundamental issue 

here is the fact that there is a trade-off between safety and economic activity. I think the theory behind regulation is that you are 

doing something for the public good, in the public interest. But 

from my standpoint, the first part of the public interest is robust 

economic activity, and I think we are not seeing it. 

As an accountant, I kind of look for metrics, and if you go back 

to the Franklin Roosevelt Administration—I know that is a long 

time ago—the total number of pages in the Federal Register was 

about 80,000. As recently as under the Nixon Administration, the 

total number of pages was about half a million. Right now the Federal Register totals about 3 million pages. I realize that is not an 

exact replica in terms of what the regulatory burden is, but it is 

a pretty good indicator. 

In trying to maintain that delicate balance between public safety 

and economic activity, which is the trade-off, certainly in hard economic times people like me, people who have lived under the rules 

and regulations, do come down on the side that I think we have 

overregulated. I think regulation is strangling our economy. I want 

to get everybody’s opinion in terms of where you fit in that spectrum. Do we have too many regulations? And is it harming our 

economy? Ms. Katzen. 

94 

Ms. KATZEN. Well, first, if I could talk about the number of pages 

in the Federal Register because it has been used now by both Senator Collins and by yourself. When I teach a course in administrative law, I have a 1977 NHTSA rule on airbags and a 1997 NHTSA 

rule on airbags. One is four pages. One is 40 pages. The difference? 

The 40-page rule has all the data that everybody wants to see displayed, and it has a response to all the comments which everybody 

wants to have considered. Repetition to the point of insanity, so 

that the number of pages I would respectfully say is not a—— 

Senator JOHNSON. And I admit it is not perfect, but it is indicative. But to answer my question, what is the effect of regulation 

on employment? Do you believe we are at a point where it is harming our economic activity? 

Ms. KATZEN. I think most of the academic studies show that it 

is essentially neutral on employment, and I think the Wall Street 

Journal yesterday said lack of employment is because of lack of demand. Lack of employment is because the Federal payments to the 

States have been, and are expected to continue to be cut and the 

States have fired a lot of people. And in the private sector, I think 

part of the reluctance to add jobs is regulatory uncertainty, not regulatory burden; employers are not sure what is going to be happening. While unemployment is still up, it is interesting that corporate profits are at an all-time high. So if regulation is such a 

burden, why is it not coming out of the corporations’ bottom line? 

Senator JOHNSON. Ms. Dudley. 

Ms. DUDLEY. I think everyone agrees that regulations have benefits as well as costs. We have heard several times today that OMB’s 

estimates of the benefits are so much higher than their estimates 

of costs, and I think it is important to understand what those benefits are. The costs, as you say, are real compliance costs. They 

might prevent you from hiring a new employee or being able to 

make a new innovation. Whereas, the benefits—and I will not take 

up too much of your time, but the benefits are much more uncertain. They are not dollars that a family can use to put food on the 

table or that you can use to hire a new employee. They are estimates of how people might value a change in risk. 

So I think while we all agree that some regulation is necessary, 

I think we have reached a point of diminishing returns. And that 

does not mean all regulations, but there are some that are not providing incremental net benefits. 

Senator JOHNSON. Mr. Goldston. 

Mr. GOLDSTON. First of all, I would agree with everything that 

Sally Katzen said on this. Obviously, we are not arguing that there 

are no regulations that are in error or that regulations do not impose costs on industry. But the idea that the Nation is grossly overregulated or that regulations are responsible for the current unfortunate economic situation I do not think can be borne out by the 

facts. 

The other thing I would say is regulations also protects the economy. I think there is certainly a strong argument to be made that 

one of the reasons we got into this problem that we have right now 

is because of inadequate regulation, and those are real costs. 

Senator JOHNSON. Do you think the banking industry was underregulated? 

95 

Mr. GOLDSTON. I am not an expert on the banking industry, but 

there is certainly an argument that they were not sufficiently regulated in terms of the kinds of loans they were allowed to make, in 

terms of the way they packaged them, and in terms of the kinds 

of reserves they had to hold. 

Senator JOHNSON. So there is a difference, though, in terms of 

effective regulation versus the number of regulators. 

Mr. GOLDSTON. Sure. 

Senator JOHNSON. Coming from a small business that had to 

compete against large businesses, it was very easy to compete, because as a small business you were close to the customer, you were 

very nimble, you could be very effective in terms of customer service. Whereas, the bureaucracies in large businesses made it very 

easy to compete, and I think that is part of my problem with the 

regulatory environment. Actually, I agree with you, Ms. Katzen. 

Throwing more laws on top of this, another layer of bureaucracy— 

I am quite dubious about putting more bureaucrats in charge of 

making other bureaucrats more effective and efficient. I have a real 

concern about that. 

Ms. Harned. 

Ms. HARNED. Yes, three quick points. What we continue to hear 

from our small business owners anecdotally is, ‘‘We need the government to get off our backs, out of our way, so we can get moving 

again.’’ That is borne out again by the numbers I reflected earlier 

today where nearly one in five small business owners are saying 

that regulation is their most important problem today. 

And, finally, to your point on the regulatory costs, the continuous 

regulatory costs, our research has shown—the ‘‘Coping with Regulations’’ study that our research foundation did—that 26 percent of 

small business owners say that paperwork costs are their biggest 

Federal regulatory burden, and that is an ongoing annual cost that 

they must incur. 

Senator JOHNSON. I will just make one final statement in terms 

of government’s ability to estimate costs. Back when they passed 

Medicare in the 1960s, they said it would cost $12 billion in 1990. 

It ended up costing $109 billion. So I just do not have a great deal 

of faith in government’s ability to estimate costs. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Johnson. Senator 

Portman—and the Committee will note the extraordinary tribute 

paid to you by your former employee, Ms. Dudley here. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. I thought it was kind of mild, actually. 

[Laughter.] 

Chairman LIEBERMAN. It just all depends on where you sit how 

you hear these things. 

Senator PORTMAN. Well, first of all, she did a terrific job, and I 

am delighted that you are here today, Professor Dudley. And, Ms. 

Katzen, thank you for your testimony. 

Sally Katzen actually asked me to come up and speak at one of 

her classes at the University of Michigan Law School, which was 

really intimidating. Not just that these students are so bright, but 

there is Ms. Katzen, as a former OIRA Director, and me talking 

96 

about OIRA, and as Administrator you did get involved in a lot of 

these issues, so this is a great experience for us to have. 

If I could just quickly talk about this legislation we have introduced, we have over 20 co-sponsors. It addresses many of the 

issues that have been raised here today. It gets into this issue of 

strengthening the economic impact analysis. Understanding that 

we do not want to overburden the agencies, you also, I think want 

to have consistent information coming from the agencies. And, 

frankly, the Unfunded Mandates Reform Act, which I was a cosponsor of in the House, was directed as much at State and local 

government as it was at the private sector. In fact, that was our 

focus. And so there are some things that I think need to be 

changed to be sure that it makes sense for the private sector. One 

I would say is broadening the economic impact definition. 

Under UMRA now it is triggered by rules that require a direct expenditure of $100 million or more, and I think major rules is 

where we need to put most of our focus. That works well for State 

and local government. It works less well for the private sector. So 

in this legislation we have a change in the economic impact definition to say it focuses on expenditures, not from intergovernmental 

mandates but on a whole host of other compliance costs that may 

be borne by the private sector. So it says annual effect on the economy of $100 million or more. I think that would be helpful to put 

more rules into this major rule category. 

It also says, as we have talked about today, that independent 

agencies ought to be covered, and I really appreciate the testimony 

today. It was sort of fun, as Senator Collins was saying, to talk to 

Professor Sunstein about his previous writings in 2002. I think it 

was a law review article where he said what Ms. Katzen said, in 

essence. You said ‘‘no-brainer.’’ He did not go that far. He used 

more legalistic language, but that it should be done. And I think 

it makes sense. In the last 15 years, there have been over 200 

major rules over $100 million in expenditure, and that is the Government Accountability Office (GAO) data. Seventeen rules, by the 

way, in fiscal year 2010 and none of them included a monetized assessment of both costs and benefits, despite, again, the urging from 

OIRA and OMB. 

I think, Ms. Katzen, you and I may disagree a little bit on the 

President’s ability to direct the independent agencies. You received 

legal advice at the time in the Clinton Administration, it sounds 

like, saying it could be done. There is certainly a mixed view on 

that, and it is a question that we can address through a statute. 

As Senator Collins said, we can put into statutory language what 

the President has just put into an Executive Order last week and 

a presidential memorandum. And we have offered that now on, I 

think, three bills, and I have separate legislation on that as well. 

And this is an area, Mr. Chairman, I would hope we could find 

some bipartisan buy-in. 

But this legislation is broader than that. It also talks about judicial review, which is more controversial, so let me talk about judicial review for a second. 

The debate often gets focused on what should the criteria be that 

agencies follow in writing new rules. How do they weigh the costs 

and the benefits? And how do they evaluate the economic impact, 

97 

consider alternatives, and so on? And the goal, as then-Professor 

Sunstein said, ought to be for judicial review to ‘‘increase the likelihood that agencies will take the order’s requirements seriously.’’ 

Again, that is when he was a professor. I am not saying he is taking that position today as Administrator. 

I think that is about right, and I guess my question would be to 

Professor Dudley and Ms. Katzen: Do you agree that agencies 

would tend to take their obligations more seriously and do a more 

thorough job if there was some judicial check? 

Ms. KATZEN. No. I can add to that—but, first of all, I do support 

the bill that you have to extend the requirements to the IRCs. I 

think that is a sensible, sound decision. 

What I was referring to in terms of the complexity—what David 

Goldston referred to is how the requirements are enforced. Do you 

go straight through OIRA or do you have another oversight group? 

And if you do not want to go the full nine yards, you could simply 

have a Sense of Congress resolution that the President can do this. 

That would give the signal, I think, for the President to go ahead. 

But on the issue of judicial review, I think the agencies take 

their responsibilities seriously now, period. I do not think they sit 

around saying, ‘‘Will we get caught? Will anyone take us to court?’’ 

I mean, we are a litigious country, and there is virtually no disincentive for running off to Federal court whenever you are unhappy with what an agency has done. I think the agencies expect 

that they will constantly be under scrutiny for something. But I do 

not think simply saying, ‘‘And now there is going to be a third 

check on you, in addition to the President, in addition to the Congress, we are now going to have the courts looking at these things,’’ 

I do not think that is going to make them take their job more seriously. 

Senator PORTMAN. I would say there is a current check, which 

is OIRA. I would not say that Congress, once it passes the statute, 

does not do an ongoing check. 

Let me hear from Professor Dudley, and then I am going to ask 

you about an example. 

Ms. DUDLEY. I do not think courts are expert in economic analysis. But I do think that having the judicial review will make agencies take their analysis more seriously. I think what a lot of these 

bills do is it adds checks and balances, which is what our Constitution is founded on, and that is why I think judicial review could 

be very helpful. 

Senator PORTMAN. Let me give you an example. Section 321(a) 

of the Clean Air Act says that, ‘‘The EPA Administrator shall conduct continuing evaluations of potential loss or shifts of employment caused by certain regulations.’’ Would it be fair to say that 

they take this statutory obligation seriously? Have you ever seen 

any rigorous or regular job impacts analysis coming out of Section 

321(a)? I mean, it is just one example, because I think it has been 

effectively ignored. It is not subject to judicial review. They never 

produce an analysis as is called for in Section 321(a). And when it 

includes job impact assessments in some of these individual proposed rules we have been talking about, the estimates are viewed 

by others—subjectively, I think, some third-party groups—as being 

incomplete. 

98 

So I agree with what Professor Dudley says. The courts are not 

necessarily experts at this, although they do it a lot. I mean, you 

think about all the statutes within which there is judicial review. 

The courts are asked to do it frequently, and so I do think it would 

help. The Toxic Substances Control Act, Energy Policy and Conservation Act, Federal law governing pesticides, safe drinking 

water—all those are ones where the courts are asked to step in and 

provide some of that expertise, both on the science and the economic impact side. 

Any thoughts on that, Ms. Katzen? 

Ms. KATZEN. I think, again, the agencies do what they can with 

the resources that they have, focused on the most pressing obligations. They are subject to OIRA oversight. You are right, Congress 

has not been diligent in its oversight, and I think that is something 

that should and could easily be improved. But while the courts 

have some expertise, I would not just throw them in wholesale. Remember, major regulations cover the whole gamut, and I would 

refer you back to Department of Homeland Security problems, in 

quantifying and monetizing costs and benefits. Do you really want 

courts going through that with a fine-tooth comb? I do not think 

it is very helpful. 

Senator PORTMAN. And, again, fine-tooth comb, this would be the 

arbitrary and capricious standard, a highly deferential standard? 

Ms. KATZEN. Even substantial evidence—and I know that has 

been in the bills proposing to change the standard, a subject that 

one could write volumes on. But, in fact, as Justice Scalia has said, 

you are looking for rationality, and there is not a whole lot of daylight between arbitrary, capricious, and substantial evidence. What 

you are talking about is the difference between two types of proceedings, formal and informal. I know there is support now for formal rulemakings, but in my view that is misguided. With formal 

rulemaking, we had the peanut butter case that took two decades 

to figure out something because we due process to due death. 

Senator PORTMAN. Well, again, I think if you look at the statutes 

where agencies are discouraged from cutting corners, it works. And 

it may be imperfect because not all courts have the expertise, but 

at that deferential standard, I think it would be an improvement 

and would not be, therefore, the exception rather than the rule that 

you have that kind of review. 

My time is up, and I want to keep in good graces with the Chairman because I know he is eager to move forward on all this legislation, and I want to support him in that. So I will end my questions, 

hoping we have a second round. 

Chairman LIEBERMAN. Thanks, Senator Portman. We will. Senator Paul. 

OPENING STATEMENT OF SENATOR PAUL 

Senator PAUL. Thank you. Much has been said about this President looking back at regulations. I think trusting this President to 

look back at regulations is sort of like trusting the fox to guard the 

henhouse. If this Administration was serious about reducing regulations, we would see proposals to reduce regulations. Instead we 

have seen ObamaCare, we have seen Dodd-Frank, we have seen a 

whole host of new regulations. In fact, the estimates are now that 

99 

the regulations for this current year will cost us $26 billion, and 

it will set a record for the most regulations. 

Mike and Claudia Sackett bought a lot up near Priest Lake in 

Idaho, and they wanted to build a house on it. There is a house 

on either side of them. There is a sewage hook-up already in the 

ground that the developer put in there. They dumped some gravel 

down. The EPA told them it was a wetlands. There is no river. 

There is no pond. There is no standing water on their lot. But to 

fight this, to fight for their property, to build on it, will cost them 

more than their property is worth. For anybody to argue that we 

are short of regulations I think is just on its face wrong, and the 

public disagrees with you. 

I think we need checks and balances. The problem is that professional regulators want to regulate. They do not care about business. They may think they do, but they think they do a good job 

when they regulate. Our job is to protect the interest of people trying to do business, people trying to create jobs. And so I think you 

need give and take, but you also need review. 

I think our Founding Fathers would roll over in their grave to think that we are passing rules that would cost $100 million and 

the people’s representatives have no say in that. I think to say that 

we are going to trust this Administration just to review these rules 

when there is no evidence that they are against regulations, I think 

the REINS Act is what we need. It is what the American people 

expect. They think that we are supposed to be writing these rules. 

They do not understand why unelected people would write rules 

that would have such impact on the economy. 

Now, some have said this is paralysis by analysis. If only we 

could paralyze some of the onslaught of new regulations, I think we 

would unleash an economic boom. If we could get some of these 

regulatory reforms, we could unleash an economic boom unseen— 

it would be a stimulus unforeseen, unseen before in our economy. 

My question for Professor Dudley is: With the REINS Act, would 

it not help to bring back and have some checks and balances to 

have Congress involved in these major rulemaking processes? 

Ms. DUDLEY. I do think that is a real advantage of the REINS 

Act. I think OMB is a necessary office, OIRA’s review is necessary, 

but it is not sufficient. Part of the problem is that legislators can 

pass legislation with good-sounding goals, but then they can turn 

around and blame agencies for the implementation of those regulations. I think really it should be called the ‘‘Congressional Accountability Act’’ because it would make Congress accountable for the 

legislation it passes. 

I do not really see it slowing things down because agencies would 

still go through the analysis, but the final determination would be 

made by our elected officials rather than unelected. 

Senator PAUL. It would at least give the people some say and 

there would be some check and balance, because I think even honest regulators are honestly trying to regulate. They really think 

they are doing the right thing. But they are not seeing it from our 

perspective because they are not business people. They do not employ people. They are seeing only one side of the equation. We need 

somebody who is on the other side of the equation which would be 

the check and balance. 

100 

The other problem we have is there are disagreements. I mean, 

we cannot agree on how much regulations cost, and obviously that 

is probably difficult to make estimates and difficult to be precise 

about. But when we come to regulating mercury—Senator Johnson 

has talked about this—how do we know and can we prove that two 

parts per billion is better than four? Well, less is better than more, 

but do we know that there might be crippling effects? Some are estimating 17 percent of the power plants will shut down. Some have 

estimated that the greenhouse regulations could be so onerous as 

to make it difficult to continue to produce the electricity we 

produce for our country. 

So the realistic aspect of this, I think, is difficult when you only 

have one side, professional bureaucrats, professional regulators, 

and no people speaking out for the people. And I just think that 

the system is so horribly broken, but I can tell you from being on 

the front lines that the people out there in industry and the business and the farmers—I have a farmer, a German immigrant in 

northern Kentucky who was moving some dirt around on his cattle 

pond, and a host of bureaucrats showed upon his land one day and 

said, ‘‘We will fine you $25,000 a day until you put the dirt back.’’ 

It was, like, ‘‘Well, how do I know exactly where I pushed the dirt 

from? And what business do you have on my land?’’ And finally he 

showed them the bill—they were out there, 10 of them, some of 

them armed. He had to show them the bill that said, ‘‘Farms are 

exempt from this regulation.’’ They were not even reading their 

own regulations properly, and he said, ‘‘Get off my land.’’ 

That is what is going on in America. People want you off their 

land. And that is why we have to have checks and balances. We 

feel like it is out of control. 

I guess I would like to hear Professor Dudley make a comment 

about the mercury rule. And how can we get to agreeable science 

and how do we impose science that may not be even technologically 

feasible? 

Ms. DUDLEY. I have looked a little bit at the mercury rule. What 

you will find with the mercury rule and a lot of EPA’s regulations 

is that the benefits that are being estimated are not actually from 

reducing mercury. The benefits from reducing mercury, according 

to EPA’s analysis, are 510 intelligence quotient (IQ) points per year 

nationwide. That works out to two one-thousandths, I think, or 

maybe two ten-thousandths of an IQ point per affected child. The 

calculated benefits are from reductions in particulate matter, which 

comprise the vast majority of OMB’s benefits estimates; more than 

65 percent are from particles in the air. 

Senator PAUL. We lose some general things, is that, if you talk 

to school kids in America, what they are being taught, they are 

being taught that we are polluting the world in a horrible way. Pollution is much better than it has ever been. Air quality is much 

better than it has ever been. The whole point is: Is there a reasonable amount of regulations? No one is proposing that we pollute the 

air or that we go back to the way it was in 1919. But I think we 

have gotten to the point where everybody is accepting that polar 

bears are dying, New York will be flooded next year. This environmental extremism has taken over education and public debate, and 

101 

because of that we have a real problem with having any sensibleness to the regulations being promulgated. 

I have reached the end of my time. Thank you. 

Chairman LIEBERMAN. Thanks, Senator Paul. 

I have just a couple of quick questions. Some of the bills that are 

before us would codify all or parts of existing Executive Orders governing the regulatory process, and I wanted to ask for a quick reaction from the panelists whether you think the advantages outweigh 

the disadvantages of doing that or vice versa. Maybe we will start 

with you, Ms. Harned. 

Ms. HARNED. Well, I think that Ms. Dudley actually articulated 

very well why codification is such an important thing. It will signal 

to the agencies, again, culturally that this is important, that Congress needs to follow these rules going forward. That truthfully is 

an issue we continue to see out of different agencies, if there are 

still instances where the rules are not being followed. And, also, 

the judicial review component would be something that NFIB 

would very much support that would happen as a result of that. 

Chairman LIEBERMAN. Mr. Goldston. 

Mr. GOLDSTON. I think the disadvantages of codification were 

cited by Ms. Katzen well. I do not think there is any particular advantage. I do not think there is any agency at this point that 

thinks that they are going to escape from doing cost/benefit analysis. And many of the bills actually, when you look closely—as, of 

course, you have—they actually expand on the requirements of the 

current Executive Orders. The CURB Act, for example, CRS says 

would add about another 650 rules a year for OIRA to look at because of the definition it uses. That is rules—separate from the 

guidance issue. 

Chairman LIEBERMAN. Ms. Dudley, you talked a little about this. 

I wonder if you think codifying an Executive Order would have the 

effect of opening up an agency’s actions under its provisions to judicial review and how you would weigh that. 

Ms. DUDLEY. Well, I think future presidents will definitely continue to require regulatory impact analysis, so I am not worried 

that it is necessary for that. I do think it is valuable for extending 

it. Mr. Goldston said that every agency does it. No, they do not. 

Independent agencies do not do benefit/cost analysis, as Senator 

Collins’ bill would do. They do not always do it for a guidance document, so her bill would require more analysis of guidance documents that are big enough to have the effect of law. 

And then I do think it is valuable for judicial review for the reasons mentioned earlier. Not that courts are going to be great at it, 

but agencies take more seriously things they might get sued over. 

Chairman LIEBERMAN. Ms. Katzen, codification. 

Ms. KATZEN. I think this is where I used the bulk of my time, 

and so I will not use it again. 

Chairman LIEBERMAN. OK. 

Ms. KATZEN. But I think the disadvantages greatly outweigh the 

advantages. Or stated a different way, I think the benefits do not 

justify the costs. 

Chairman LIEBERMAN. That was clear. Thank you. 

Let me ask you and Ms. Dudley particularly, if Congress enacts 

legislation that mandates cost/benefit analysis or other requireVerDate Nov 24 2008 10:54 Apr 02, 2012 Jkt 067634 PO 00000 Frm 00107 Fmt 6601 Sfmt 6601 P:\DOCS\67634.TXT SAFFAIRS PsN: PAT
102 

ments, a question has naturally been raised about whether—and 

there has been some testimony on this—that language would 

trump the provisions of existing statutes, and both of you testified 

on this, Ms. Katzen, saying, I believe, you would oppose that, and 

Ms. Dudley raising some concerns, I think it is fair to say, about 

whether it might be more appropriate to amend existing statutes. 

But I wanted to invite you both to speak a little more in detail to 

that question. 

Ms. KATZEN. I think codifying Executive Order provisions would, 

in fact, amend previously existing laws, and it would create a super 

mandate, and that would be, I think, highly detrimental. There are 

some underlying statutes that maybe should be amended, but it 

should be done one at a time with attention through the authorizing committee that knows the subject rather than an across-theboard, government-wide, change-all-the-laws, and we do not even 

know which laws we are changing. 

Chairman LIEBERMAN. Ms. Dudley. 

Ms. DUDLEY. I do think that is something that Congress needs 

to think through—whether a benefit-cost requirement should supersede or be subordinate to existing statutory requirements. There 

are several statutes that are silent, and it may be that Congress 

would like those statutes to—when they are reviewed judicially— 

for courts not to say silence means you cannot consider trade-offs. 

Chairman LIEBERMAN. Right. 

Ms. DUDLEY. I think there are some specific statutes that really 

are doing more harm than good because they prohibit trade-offs, in 

part because they suggest that science can give you an answer on 

the right level of risk, and science alone can not. And I think Mr. 

Goldston has actually said this more articulately than I can. A lot 

of the problems or concerns about politicization of science, are really because we have statutes that ask science to do things it is not 

capable of doing. Policy decisions need to weigh trade-offs. So I 

think going after some of those statutes—and only Congress can do 

that—would be very useful. 

Chairman LIEBERMAN. Do the two of you have any comments on 

a super mandate? 

Mr. GOLDSTON. I think we would be particularly concerned about 

that. I think as both Ms. Katzen and Ms. Dudley said, that requires looking at the individual statutes and thinking through 

them, even in the case that we have alluded to, sometimes indirectly, sometimes directly, of the one part of the Clean Air Act that 

has been interpreted 9–0 by the Supreme Court to say that you 

cannot take costs into effect. It is for that piece of setting the 

standard and then for how you actually apply the standard, costs 

are allowed. 

So I think that it really does—I think a super mandate would 

probably cause collateral damage that Congress would not intend 

or even fully be aware of if it were done in that way. 

Chairman LIEBERMAN. Ms. Harned. 

Ms. HARNED. I do not have a comment. 

Chairman LIEBERMAN. Thank you. You have been really helpful. 

Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. I think we have a 

vote coming up momentarily. 

103 

Chairman LIEBERMAN. We do. 

Senator COLLINS. So I am going to withhold any further questions for the record, but let me just thank all of the members of 

the panel. I think this was a very helpful discussion that will be 

very valuable to our Committee as we move ahead. So thank you 

all for your testimony. 

Chairman LIEBERMAN. Thanks, Senator Collins. I agree with you. 

As has become clear throughout this discussion particularly and 

our earlier hearings, these regulations do not spring miraculously 

into the Federal Register. They are the result of congressional action. And so part of the problem is us, and how we regulate ourselves, how we self-regulate in that regard is an interesting question and a challenge. 

But the other thing to say is that, generally speaking, it is not 

easy to get legislation through this checks and balances system of 

ours, so that there is probably some reason why it was passed, 

which the public is interested in. On the other hand, it is clear that 

some of the regulations have a disproportionate effect on some of 

those who are regulated. And how we balance this—I am not saying anything new because this is always the challenge. It takes me 

back to what I said at the outset. The question is not whether to 

regulate, because there is and should be regulation, but it is how 

best to regulate, how most fairly to regulate, and you have all 

helped us—you have really informed our efforts here. 

There is a lot of interest in this subject in this Congress. It is 

a controversial area, and it is politically touched, but Senator Collins and I have waded into such storms before—— 

Senator COLLINS. And emerged. 

Chairman LIEBERMAN [continuing]. And emerged on our feet and 

hopefully with some rational response. So we are going to try that 

again. 

We will leave the record of the hearing open for 15 days for any 

additional questions or statements. I thank you very much for your 

testimony today, and with that, the hearing is adjourned. 

[Whereupon, at 11:47 a.m., the Committee was adjourned.] 

(105) 

A P P E N D I X 


67634.169
106 


67634.001
107 


67634.002
108 


67634.003
109 


67634.004
110 


67634.005
111 


67634.006
112 


67634.007
113 


67634.008
114 


67634.009
115 


67634.027
116 


67634.028
117 


67634.029
118 


67634.010
119 


67634.011
120 


67634.012
121 


67634.013
122 


67634.014
123 


67634.015
124 


67634.016
125 


67634.017
126 


67634.018
127 


67634.019
128 


67634.020
129 


67634.021
130 


67634.022
131 


67634.023
132 


67634.024
133 


67634.025
134 


67634.026
135 


67634.032
136 


67634.033
137 


67634.034
138 


67634.035
139 


67634.036
140 


67634.037
141 


67634.038
142 


67634.039
143 


67634.040
144 


67634.041
145 


67634.042
146 


67634.043
147 


67634.044
148 


67634.045
149 


67634.046
150 


67634.047
151 


67634.048
152 


67634.049
153 


67634.050
154 


67634.051
155 


67634.052
156 


67634.053
157 


67634.054
158 


67634.055
159 


67634.030
160 


67634.031
161 


67634.056
162 


67634.057
163 


67634.058
164 


67634.059
165 


67634.060
166 


67634.061
167 


67634.062
168 


67634.063
169 


67634.064
170 


67634.065
171 


67634.066
172 


67634.067
173 


67634.068
174 


67634.069
175 


67634.070
176 


67634.071
177 


67634.072
178 


67634.073
179 


67634.074
180 


67634.075
181 


67634.076
182 


67634.077
183 


67634.078
184 


67634.079
185 


67634.080
186 


67634.081
187 


67634.082
188 


67634.083
189 


67634.084
190 


67634.085
191 


67634.086
192 


67634.087
193 


67634.088
194 


67634.089
195 


67634.090
196 


67634.091
197 


67634.092
198 


67634.093
199 


67634.094
200 


67634.095
201 


67634.096
202 


67634.097
203 


67634.098
204 


67634.099
205 


67634.100
206 


67634.101
207 


67634.102
208 


67634.103
209 


67634.104
210 


67634.105
211 


67634.106
212 


67634.107
213 


67634.108
214 


67634.109
215 


67634.110
216 


67634.111
217 


67634.112
218 


67634.113
219 


67634.114
220 


67634.115
221 


67634.116
222 


67634.117
223 


67634.118
224 


67634.119
225 


67634.120
226 


67634.121
227 


67634.122
228 


67634.123
229 


67634.124
230 


67634.125
231 


67634.126
232 


67634.127
233 


67634.128
234 


67634.129
235 


67634.130
236 


67634.131
237 


67634.132
238 


67634.133
239 


67634.134
240 


67634.135
241 


67634.136
242 


67634.137
243 


67634.138
244 


67634.139
245 


67634.140
246 


67634.141
247 


67634.142
248 


67634.143
249 


67634.144
250 


67634.145
251 


67634.146
252 


67634.147
253 


67634.148
254 


67634.149
255 


67634.150
256 


67634.151
257 


67634.152
258 


67634.153
259 


67634.154
260 


67634.155
261 


67634.156
262 


67634.157
263 


67634.158
264 


67634.159
265 


67634.160
266 


67634.161
267 


67634.162
268 


67634.163
269 


67634.164
270 


67634.165
271 


67634.166
272 


67634.167
273 

Æ 


67634.168