```

[Senate Hearing 114-32]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-32
 
                EXAMINING FEDERAL RULEMAKING CHALLENGES
                  AND AREAS OF IMPROVEMENT WITHIN THE 
                     EXISTING REGULATORY PROCESS

=======================================================================

                                HEARING

                               BEFORE THE
                               
                            SUBCOMMITTEE ON
               REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 19, 2015

                               __________

                   Available via http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs
                        
                        
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                    Keith B. Ashdown, Staff Director
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
                     Laura W. Kilbride, Chief Clerk
                     Lauren Corcoran, Hearing Clerk

       SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL MANAGEMENT

                   JAMES LANKFORD, Oklahoma, Chairman
JOHN MCCAIN, Arizona                 HEIDI HEITKAMP, North Dakota
ROB PORTMAN, Ohio                    JON TESTER, Montana
MICHAEL B. ENZI, Wyoming             CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska
                     John Cuaderess, Staff Director
                  Eric Bursch, Minority Staff Director
                       Kelsey Stroud, Chief Clerk
                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Lankford.............................................     1
    Senator Heitkamp.............................................     2
    Senator Ernst................................................    13

                               WITNESSES
                        Thursday, March 19, 2015

Hon. John Graham, Dean, Indiana University School of Public and 
  Environmental Affairs, Former Director, Office of Information 
  and Regulatory Affairs.........................................     5
Neil Eisner, Senior Fellow, Administrative Conference of the 
  United States, Former Assistant General Counsel, Regulation and 
  Enforcement, U.S. Department of Transportation.................     7
Drew Greenblatt, President and Owner, Marlin Steel Wire Products, 
  LLC, Executive Board Member, National Association of 
  Manufacturers..................................................     9
Pamela Gilbert, Partner, Cuneo Gilbert and LaDuca, LLP, Former 
  Executive Director, Consumer Product Safety Commission.........    11

                     Alphabetical List of Witnesses

Eisner, Neil:
    Testimony....................................................     7
    Prepared statement...........................................    48
Gilbert, Pamela:
    Testimony....................................................    11
    Prepared statement...........................................    74
Greenblatt, Drew:
    Testimony....................................................     9
    Prepared statement...........................................    61
Graham, Hon. John:
    Testimony....................................................     5
    Prepared statement...........................................    33

                                APPENDIX

Responses to post-hearing questions for the Record:
    Mr. Graham...................................................    82
    Mr. Eisner...................................................    86
    Mr. Greenblatt...............................................    92
    Ms. Gilbert..................................................    97

                      EXAMINING FEDERAL RULEMAKING
                  CHALLENGES AND AREAS OF IMPROVEMENT
                 WITHIN THE EXISTING REGULATORY PROCESS

                              ----------                              

                        THURSDAY, MARCH 19, 2015

                                 U.S. Senate,      
                        Subcommittee on Regulatory,        
                      Affairs and Federal Management,      
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:01 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. James 
Lankford, Chairman of the Subcommittee, presiding.
    Present: Senators Lankford, Ernst, Heitkamp, and Peters.

             OPENING STATEMENT OF SENATOR LANKFORD

    Senator Lankford. Good morning. This is the first hearing 
in a series of hearings to pursue the issues and solutions 
surrounding the Federal regulations.
    I want to welcome each of our witnesses. We are very 
fortunate to have three witnesses who have been regulators and 
one witness who faces regulations on a daily basis. I thank you 
all for your written and your thoughtful testimony. I look 
forward to speaking with each of you and the contributions you 
can make to the ongoing conversation.
    Today's hearing will focus on the Federal Government's 
regulatory process. How does the regulatory process affect the 
quality, structure, efficiency, and accountability of agency 
rulemaking? Focusing on the processes will enable this 
Subcommittee to view the forest through the trees of all the 
regulations.
    Although Federal regulations have undoubtedly conferred 
benefits to everyday Americans, it is clear there are also 
regulatory excesses and significant burdens. More than 25,000 
pages of rules published on average from 2010 to 2013 by many 
of the Federal Government's 430-plus agencies, regulations 
today place a $2 trillion burden on the United States' economy. 
In other words, the regulatory burden today equals 12 percent 
of the Nation's gross domestic product (GDP).
    At some point individuals cannot make a reasonable day-to-
day decision to advance their own family or their business 
because they spend time and treasure completing forms and 
Federal requirements: forms to prove to the government what 
they do each day, even forms to tell the government they have 
nothing to tell the government.
    One simple way to ensure that the regulatory process 
benefits everyday Americans is to make sure that individuals 
have the opportunity to voice their opinions on all proposed 
regulations and make sure their comments are actually heard.
    In fact, Congress required notice and comment in the 
rulemaking process. When an agency seeks to promulgate a rule, 
that agency must provide notice of its proposed rule in the 
Federal Register and seek comment on that rule. In theory, 
notice and comment allows everyday Americans who are affected 
by regulations to participate with their government to develop 
the regulation. A government by the people, and for the people, 
should also hear and respond to the people when regulations are 
written.
    In practice, however, many Americans feel that their voices 
are not adequately heard. Those without the resources to hire 
attorneys or those who are too far outside the beltway to share 
their perspectives feel that notice and comment is not enough.
    Today, I hope we can discuss ways in which the Federal 
Government, whether it be individuals or agencies or Congress, 
can better respond to individuals' concerns.
    The Subcommittee takes these issues very seriously. In 
fact, I would like to announce before we begin the hearing a 
project that Ranking Member Heitkamp and I are working on 
together. Senator Heitkamp and I have designed a portal for the 
Subcommittee website called ``Cut Red Tape'' where we encourage 
Americans to tell us about how specific regulations negatively 
affect them. We want to know if there are particular Federal 
regulations that are onerous, out of date, lack common sense, 
or have an enormous burden. This is our own version of a 
regulatory look back.
    I do not believe that our Nation should have no 
regulations, but I do believe that regulations should be local 
whenever possible, limited in scope, and that the least costly 
solutions should be followed. We hope to have this web-based 
effort ready in the very near future. Once it is up and 
running, the Subcommittee will collect and read all 
submissions, and we hope to highlight regulatory stories in the 
future to address these individuals' particular concerns.
    I look forward to discussing these issues with our Members 
and witnesses today. With that, I would recognize Ranking 
Member Heitkamp.

             OPENING STATEMENT OF SENATOR HEITKAMP

    Senator Heitkamp. Thank you, Mr. Chairman.
    Welcome to the ``Redhead Caucus.'' You did not know you 
were signing in for that, did you?
    We are very excited about this project because what you 
will discover, kind of moving forward, is that this is not a 
partisan issue. Most of us who actually receive comments from 
constituents can tell you clearly that these issues do not know 
political parties. They are business issues. They are important 
issues of how we move the country forward.
    And so I want to tell you, Mr. Chairman, I am so grateful 
that we are going to be working on these regulatory issues, as 
well as other issues involving Federal employees, which fall 
under the Subcommittee's jurisdiction.
    When most people think of regulation, they probably think 
of paperwork a small business might have to fill out or the 
records someone needs to keep in order to file their income 
taxes, but regulations are much more than that.
    Regulations underpin almost everything our Nation and our 
citizens do. Regulations keep our products and food safe. 
Regulations work toward making a fair society. Regulations work 
to prevent fraud and keep our economy and America working. It 
is safe to say that regulations are one of the most important 
parts of the Federal Government, even if they are not always 
well understood.
    For our Nation to be successful, for our citizens to be 
able to work hard and provide for their families, for our 
Nation to be secure and safe, we need effective, efficient, and 
rational regulatory process that works for American business 
and American families.
    In the upcoming months, you will hear me talk a lot about 
efficiency and effectiveness. Those words need to be the key 
focus of any discussion about our regulatory process. A world 
without regulation will not work, but we need effective, 
efficient, and rational regulation.
    Businesses large and small need certainty. They do not get 
that if the Federal regulatory process stretches on for years 
and years. That is not efficient, and that is not effective, 
and that seriously harms the economy and local businesses.
    As we have been talking about this process and talking 
about existing regulation, I have also put on the table the 
delayed regulatory impacts, when regulations are delayed or not 
done in a timely fashion. I think a prime example of that is 
the Environmental Protection Agency (EPA's) continued failure 
to set renewable volume obligations under the renewal fuel 
standards. Because of their failure to follow the law, 
biodiesel plants across the country, including the one in 
Velva, North Dakota, have had to shut down production placing 
an economic burden on this critical industry.
    If the Agency had done its job, there would be no harm. 
Therefore, the lack of regulation has caused serious economic 
disruption in that industry.
    Effectiveness is just as important as efficiency. I think 
everyone agrees that a level playing field is a good thing. 
Effective regulations get us there, and effective regulation 
balances the costs imposed on business with the benefit to 
consumers and to Americans. They also balance the cost to 
manufacturers and the safety benefits our families experience.
    One of my focuses today is to engage with the witnesses on 
how best to make the Federal regulatory process more effective. 
A myriad of laws make up the regulatory framework, from the 
Administrative Procedure Act (APA) to the Paperwork Reduction 
Act and others. It is critical that we examine these rules for 
our regulatory process and determine what needs to change, what 
needs to be updated and what simply needs to be eliminated. 
Those last points are critical. We must always work to 
eliminate, simplify, and update regulations that are out of 
date.
    Think about that. Thousands of regulations that have no 
purpose, that add no value to our society, to our economy 
continue to be on the books. This retrospective review process 
needs to be at the heart of any consideration on how we improve 
this process. Technological changes, regulations that impact 
how industries operate must also change.
    The Administration has made retrospective review a 
priority, and we have seen some success. Federal agencies 
posted updated lists of regulations they are reviewing just 
yesterday. It is clear that a lot of good work is being done. 
The Administration reports that finalized initiatives through 
this retrospective process will achieve $20 billion in savings 
over 5 years.
    I met with the Office of Information Regulatory Affairs 
(OIRA) Administrator last week, and he reiterated to me the 
Administration's strong commitment to do better regulatory 
process, and I hope Howard and the Federal agencies will work 
with the Chairman and me as we examine this regulatory process 
from all sides.
    We will hear a strong variety of opinions at today's 
hearing, and I look forward to hearing about how we can best 
resource regulation.
    No one disagrees that we need an effective, efficient 
process, and I think that everyone understands the importance 
of retrospective review. However, all that work requires 
resources: People to do the process, people to review the cost 
benefits, all the things that we must do to achieve smart, 
efficient, and rational regulation.
    In the near future, Chairman Lankford, as he has discussed 
today, and I will launch an effort to not just hear from 
witnesses who have the resources to come here to Washington, 
DC. to have discussions, but to hear from North Dakotans, to 
hear from Oklahomians----
    Senator Lankford. Oklahomans. Just an Okie.
    Senator Heitkamp. Oklahomans. I was not going to use the 
other word. OK.
    To hear from people who have had for years this pent-up 
frustration who will now have a vent to talk to people who are 
serious about listening about those regulations, and we hope 
that this will ensure for us a continued commitment to the 
process as we read through this effort but also will give us a 
better understanding of how we prioritize.
    So, I think it is critical that any discussion on how to 
improve regulation begins with an honest discussion of 
resources and how we are going to modify and to take a look at 
the burdens that this body imposes on regulatory agencies.
    With that, I look forward to hearing from the witnesses and 
discussing with them their ideas on how we can improve for our 
Nation the regulatory process.
    Thank you, Mr. Chairman.
    Senator Lankford. Thank you. I look forward to the 
conversation.
    At this time we will proceed to testimony from our 
witnesses.
    John Graham is the Dean at Indiana University School of 
Public and Environmental Affairs where he has been since 2008. 
Dr. Graham served as the Administrator in the Office of 
Information and Regulatory Affairs--you will hear that term 
used a lot--from 2001 to 2006.
    Neil Eisner is the Senior Fellow of the Administrative 
Conference of the United States. Mr. Eisner served as the 
Assistant General Counsel to the U.S. Department of 
Transportation's Regulation and Enforcement Division through 
six Presidential administrations from 1978 to 2013. Mr. Eisner 
also teaches courses as an adjunct professor at the American 
University School of Law.
    Drew Greenblatt is the President and owner of Marlin Steel 
Wire Products, a manufacturing company out of Baltimore, 
Maryland. Mr. Greenblatt bought the company in 1998. Today 
Marlin Steel employs 25 people, had $5.5 million of sales in 
2014, and exports worldwide. He also serves on the executive 
board of the National Association of Manufacturers (NAM).
    Pamela Gilbert is a partner at the law firm of Cuneo 
Gilbert & LaDuca focusing on government relations, where she 
has been since 2003. Ms. Gilbert served as the Executive 
Director of the Consumer Product Safety Commission (CPSC) from 
1995 to 2001.
    I would like to thank the witnesses for appearing today. It 
is the custom of this Subcommittee to swear in all witnesses 
who appear before us. So, if you do not mind, I would like to 
ask you to stand and raise your right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give to this committee will be the truth, the whole 
truth, and nothing but the truth, so help you, God?
    Mr. Graham. I do.
    Mr. Eisner. I do.
    Mr. Greenblatt. I do.
    Ms. Gilbert. I do.
    Senator Lankford. Thank you. You may be seated.
    Let the record reflect the witnesses answered in the 
affirmative.
    We will be using timing today as we have your oral 
testimony. We have all received your excellent written 
testimony. That will be a part of the record. We would like to 
ask your oral testimony to be about 5 minutes to save time for 
questions.
    Dr. Graham, you are first up.

 TESTIMONY OF THE HON. JOHN GRAHAM,\1\ DEAN INDIANA UNIVERSITY 
    SCHOOL OF PUBLIC AND ENVIRONMENTAL AFFAIRS, AND FORMER 
     DIRECTOR, OFFICE OF INFORMATION AND REGULATORY AFFAIRS

    Mr. Graham. Thank you, Mr. Chairman and Members of the 
Subcommittee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Graham appears in the Appendix on 
page 33.
---------------------------------------------------------------------------
    It would seem that the process of rulemaking should be 
simple: define a problem, propose a solution, take comment, 
issue the rule, wait for the lawsuits. That is the American 
way.
    But in reality, it is a more complicated process than that. 
And it starts, quite frankly, not in the Executive Branch, but 
in the U.S. Congress. When Congress regulates in the dark, bad 
things can happen.
    There is a tendency to define this problem exclusively in 
terms of agency abstractions like EPA and CPSC but, if you look 
at a lot of the regulatory problems we have and trace it back 
to the original lawmaking, you see seeds of the problem in the 
legislation itself.
    I have in my written testimony the tortured history of the 
requirement for ethanol as a motor fuel. And coming from 
Indiana, I want you to know I have some sympathy with ethanols 
in motor fuel, but the details of the way Congress wrote the 
original legislation precipitated a lot of the problems we had 
with food prices and so forth.
    I suggest a little beefing up of the Congressional Budget 
Office (CBO). A little bit more of the analysis they do for 
budget issues should also apply to regulatory issues. We can 
talk about that more, if you would like.
    Theme No. 2, when regulators use poor quality data, bad 
things can happen. The Consumer Product Safety currently has an 
inquiry into the safety of table saws. Each year, believe it or 
not, 30,000 woodworkers end up in emergency rooms with injuries 
due to blade contact. About 2,000 of them lead to amputation of 
at least one digit.
    They tried to figure out at CPSC which of these categories 
of table saws were most involved, and they came to the 
conclusion that it is the large expensive cabinet saws that are 
responsible for most of this.
    This was a big surprise to many of us in the field of 
injury control and risk analysis. It turns out there was a 
wording error in the way the survey was designed to these 
patients in emergency rooms, and they made it sound like if 
they had a bench top, a small bench top saw, that they really 
had a cabinet saw. So they answered, ``I had a cabinet saw.''
    This data has been published and released to the public, 
and it has, in my opinion, created a misdirected effort at 
thinking a big cabinet saw is the problem when, frankly, the 
ordinary table saws, the small bench-top models at Walmart for 
$100 or $200, these are the ones that are most often used in 
these problems.
    Gee, aren't their remedies for this problem? The Office of 
Management and Budget (OMB) already has remedies for this 
problem. One, this type of study should be subject to 
independent peer review by qualified experts before it is 
released to the public. Two, there should be information 
quality correction mechanisms applied before it is 
disseminated. After it is disseminated, if there is an error, 
it should be corrected, but the OMB guidance has no teeth it. 
There is no remedy if, in fact, the agency does not solve these 
problems.
    Three, when multiple regulators tackle the same problem, 
bad things can happen. I highlight in the written testimony the 
incredible progress we are making in natural gas and oil 
production in this country, passing Saudi Arabia and Russia as 
the leading producer in the world, but yet what is incredible, 
we could be doing even better if our regulatory systems are 
more responsive to the needs of a growing industry like this.
    Take one simple example: In order to do hydraulic 
fracturing you need sand. You need a particular kind of sand 
that is uniquely available in Minnesota and Wisconsin, Northern 
White sand, because it can withstand the pressure and high 
temperatures at 10,000 feet below the earth's surface. To get 
sand, you have to mine sand. To mine sand, you have to get 
permits.
    I have laid out, with my doctoral student, in my written 
testimony, all of the steps in the State of Minnesota to get a 
permit to do sand mining. There are 15 separate steps, multiple 
agencies and, if you look carefully at it, a lot of it has its 
roots in the Federal Government, not in the State Government of 
Minnesota because this authority is being passed along to the 
local level.
    Fourth theme, when Federal agencies skirt OMB and cost-
benefit analysis review, bad things can happen. I cite a paper 
I have done with a Harvard law student where we lay out all the 
creative mechanisms that Federal agencies can use, and often do 
use, to regulate without having any OMB review and no cost-
benefit analysis.
    Neil and I have been on the opposite sides of this, so I 
will be fascinated to get him into the dialogue, but agencies 
often have an incentive to skirt OMB review. They do not want 
to deal with OMB. Believe me, I hired some of these examiners 
at OMB. I would not want have to deal with them either. They 
are tough.
    So, if you can figure out a way to navigate this process 
without dealing with OMB, why not? That is a big problem 
because that leads to no second looks, no cost-benefit 
analysis, and a lot of regulatory activity.
    Final theme, when U.S. regulators do not collaborate with 
our trading partners in Europe, bad things can happen. 
Automobiles, companies trying to sell cars on both sides of the 
Atlantic, are an illustration. The United States and EU both 
see tremendous opportunities for cooperation, but it turns out 
that going back all the way to 1958, the United States 
regulators and the European regulators could not agree on how 
they were going to do this process. So, we went in different 
directions, and we have different regulatory programs, and we 
have literally dozens of rules from tires to headlights to 
various aspects of the vehicle that are different in Europe 
than the United States.
    It would take a long time to make all of these rules 
compatible. A more simple approach the Europeans have proposed 
is a mutual recognition. We recognize their safety standards; 
they recognize our safety standards. It is a practical 
approach. It deserves consideration.
    I hope I have you off to a good start and put some ideas on 
the table. I look forward to the comments and discussion.
    Senator Lankford. Mr. Eisner.

  TESTIMONY OF NEIL EISNER,\1\ SENIOR FELLOW, ADMINISTRATIVE 
 CONFERENCE OF THE UNITED STATES, AND FORMER ASSISTANT GENERAL 
    COUNSEL, REGULATION AND ENFORCEMENT, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Mr. Eisner. Chairman Lankford, Ranking Member Heitkamp, 
Members of the committee, thank you for inviting me to testify 
today on this important topic.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Eisner appears in the Appendix on 
page 48.
---------------------------------------------------------------------------
    As one who has worked in the rulemaking process for many 
years, I appreciate the effort of the committee to hear from a 
diverse group of people in a bipartisan effort to examine the 
need for improvements.
    Based on a lot of my experience as an attorney in the 
government, working with other agencies and work I have done in 
a variety of different arenas, I have provided you some details 
in my prepared statement illustrating how I think the 
regulatory process works well--I am not saying everybody does 
it well, but it works well in general; the many voluntary 
actions agencies have taken to make the process more efficient 
and effective; and I have also provided some specific 
suggestions for improvements.
    I would like to summarize the key points in that statement 
now.
    First, the Administrative Procedure Act established an 
excellent, relatively simple process. Almost 70 years of agency 
experience and court decisions have provided a solid basis for 
determining what is acceptable and what works well.
    Since it was passed, however, dozens of additional 
requirements have been directly or indirectly imposed on the 
process. A consolidation of the requirements without 
substantive changes would be welcomed by many, but I admit that 
it would be very difficult to achieve.
    For it to work well, we need to have constant oversight of 
the process and, particular, rulemaking actions to ensure 
effective decisions. For example, the Department of 
Transportation (DOT's) Deputy Secretary meets each week with a 
different operating administration in the Department to discuss 
issues in all of its rulemakings.
    OIRA provides very good guidance. I hope John is not 
surprised by some of the good things I will say about OIRA. 
They provide very good guidance, they ensure appropriate 
coordination, and they provide a check on the objectivity of an 
agency's decisions. And in Congress, simply setting up a 
hearing gets the attention of very senior officials. That and 
other less formal action can help identify specific changes 
that an agency can be required or encouraged to take.
    Too many people believe that agencies do not take public 
comment seriously. My experience was that DOT did. It takes 
extra, voluntary steps to increase effective public 
participation, significant comments are discussed in senior 
level briefings, and changes are made to proposed rules.
    Legislation cannot correct the misperception, but Congress 
may be able to help, for example, by providing agencies the 
encouragement or resources they need to take the steps that 
have helped to educate the public in some instances and improve 
perceptions.
    Some also complain that agencies' compliance programs are 
based on a ``gotcha'' philosophy. DOT policy was different. It 
was not that way. It encouraged the highest level of 
compliance. We did not want to fine people after they had 
accidents. We wanted to help them learn how to comply so that 
they would have no accidents. They achieved this through a 
variety of steps such as providing time to fix a problem before 
they decide whether to impose a penalty.
    Some question the quality of risk assessments and cost-
benefit analyses. DOT agencies are generally well regarded for 
their analyses. The disagreements are usually over such things 
as assumptions made when good data is not available. Good 
agencies try to address these issues openly, mindful of the 
Paperwork Reduction Act and with techniques such as 
``teardown'' studies and sensitivity analyses.
    Another current issue is international regulatory 
cooperation. Done correctly, I agree with John, it can increase 
benefits and decrease costs. A good example involved DOT 
including the Canadian Government in a successful effort to 
negotiate a common, model rule to be used in both countries. 
However, under the Federal Advisory Committee Act the Canadians 
could participate in the process, but they could not vote. To 
prevent future problems, I would suggest Congress consider ways 
to address this issue.
    Many do not believe the agencies effectively review 
existing rules, however, a well-run agency is reviewing rules 
on an informal, but daily, basis, everyday looking at what is 
working and what is not working. Before reviews were even 
required, the Federal Aviation Administration (FAA) and the 
predecessor of the Pipeline and Hazardous Materials Safety 
Administration (PHMSA), had very impressive in-depth review 
programs. PHMSA's predecessor even created a separate office to 
conduct the reviews. But competing priorities and decreasing 
resources essentially ended both.
    Since 1988, DOT has tried to have a formal review program. 
We published a plan, and every 10 years we set up a new 
schedule to review all of our rules in the Department. 
Considering the limited resources available to agencies, I 
would not recommend any general legislative changes in this 
area. Agencies know they need to do a better job.
    The rulemaking process generally works very well. It can be 
improved, but we should not amend general requirements because 
some use them ineffectively, and we need to recognize that new 
requirements may unnecessarily slow down or stop good rules or 
the rescission of bad ones. They also may encourage agencies to 
use less effective tools than binding rules or stop use of 
valuable voluntary steps because of a lack of time or 
resources.
    I want to thank you for the opportunity to speak with you 
today. I look forward to any comments or questions you may 
have.
    Senator Lankford. Thank you. Mr. Greenblatt.

 TESTIMONY OF DREW GREENBLATT,\1\ PRESIDENT AND OWNER, MARLIN 
STEEL WIRE PRODUCTS, LLC, AND EXECUTIVE BOARD MEMBER, NATIONAL 
                  ASSOCIATION OF MANUFACTURERS

    Mr. Greenblatt. Good morning. My name is Drew Greenblatt, 
and I am the President of Marlin Steel. We are based in 
Baltimore, Maryland.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Greenblatt appears in the 
Appendix on page 61.
---------------------------------------------------------------------------
    I appreciate this opportunity to testify on behalf of the 
National Association of Manufacturers. We are the voice of 12 
million factory workers, men and women all throughout the 
Nation.
    Marlin Steel produces custom wire baskets, wire forms, and 
precision sheet metal fabrications like this one for material 
handling applications for clients all over America and the 
world, 38 countries. We make everything in the USA. Our sales 
are over $5.5 million, and our growth has come despite 
government policies and unnecessary burdensome and inefficient 
regulations that place us at a competitive disadvantage. We 
need to refine and revise these regulations to grow jobs in 
America.
    Manufacturers in the United States have been experiencing 
an economic recovery, but we continue to face extensive 
challenges. Our competitors in Europe, Asia, South America, 
they are aggressively seeking new customers and opportunities, 
and their countries strategize for success in manufacturing. 
They want to eat our lunch.
    Meanwhile, manufacturers in the United States face 
expanding regulatory requirements that impose increasing 
burdens, and it drives up our costs. This hurts our employees' 
chances. We believe that regulation is critical to the 
protection of worker safety, public health, and the 
environment. As a matter of fact, at our company, we have gone 
2,286 days without a safety incident. We buy into safety. It is 
important.
    Indeed, some critical government objectives can only be 
achieved through regulation, but new regulations are too often 
poorly designed, poorly analyzed, and inefficient. They can be 
unnecessarily complex. They can be duplicative, and their 
critical inputs, science and other technical data, are 
sometimes unreliable and fail to account for significant 
uncertainties.
    The cumulative burden of regulation is the greatest threat 
for a business like mine, small business. It is not just one 
regulation that could hurt my business. It is the collection of 
thousands of accumulated requirements. It is like Chinese water 
torture. These are hidden penalties that hold back Marlin's 
full potential and America's full potential.
    I can attest that poorly designed regulations and 
unnecessary paperwork requirements create real costs that 
affect the bottom line. For example, in 2010, we received a 
love letter from the Department of Treasury--I am being 
facetious here--imposing a $15,000 fine for inadvertently 
omitting a single signature on a 20-page form. We signed in 
three places. We forgot the fourth. This is from a 2006 form. 
This is for our 401(k) plan, which is a good thing for our 
employees. This simple oversight led to wasteful costs, 
activity unrelated to operating a business, and months of 
anxiety.
    We had to pay a small penalty for this missed signature. 
This episode totally diverted important resources away from 
more important pressing things, like competing with China, 
competing with Germany. Unfortunately regulations are allowed 
to accumulate with no real incentives to evaluate or cleanup 
the past, and they too often are a one size fits all--big 
company, small company, everybody in the same bucket--without 
the need or sensitivity to impact the small businesses. We can 
do better.
    Government would do well to adopt a practice from business 
called ``lean manufacturing.'' All factories do this nowadays. 
We constantly strive to eliminate waste or anything unrelated 
to accomplishing our objectives, making our client happy. Real 
incentives are necessary to promote such a culture. And some 
form of sunsetting regulations would do just that. We implore 
you to get sunsetting going.
    We believe that independent regulatory agencies need to be 
more accountable and should be required to follow cost-benefit 
requirements and be subject to third-party review. Principles 
for reviewing regulation should be statutory and improved for 
the increasingly complex and highly scientific inputs in modern 
regulations.
    The Regulatory Accountability Act introduced by Senator 
Portman would help ensure that agencies engage in these sound 
regulatory principles. The regulatory process should be more 
sensitive to small business. This act should be reformed to 
improve the quality of regulations and prevent agencies from 
exploiting loopholes in current law. Dollars spent by 
manufacturers on regulatory compliance for unnecessarily 
cumbersome or duplicative regulations are dollars not spent 
buying new tools, hiring new talent, making us more 
competitive. Marlin Steel and other manufacturers in the United 
States cannot achieve our full potential if we fail to change 
the regulatory system that is increasingly inefficient in 
meeting objectives.
    Reforming our regulatory system is a necessary component 
for growth and job creation. Manufacturers are ready to lead if 
Congress and regulators will remove some of the barriers in our 
success.
    Thank you for this opportunity to testify today. I will be 
happy to answer your questions.
    Senator Lankford. Thank you. Ms. Gilbert.

   TESTIMONY OF PAMELA GILBERT,\1\ PARTNER, CUNEO GILBERT & 
LADUCA, LLP, FORMER EXECUTIVE DIRECTOR, CONSUMER PRODUCT SAFETY 
                           COMMISSION

    Ms. Gilbert. Hi, good morning.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Gilbert appears in the Appendix 
on page 74.
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    Chairman Lankford, Ranking Member Heitkamp, Members of the 
Subcommittee, thank you for the opportunity to testify today on 
the issue of improving the efficiency and effectiveness of the 
Federal regulatory process.
    My name is Pamela Gilbert. I am a partner at Cuneo Gilbert 
& LaDuca, but I served as Executive Director of the Consumer 
Product Safety Commission from 1996 through mid-2001. Today I 
am testifying on my own behalf, and all of these opinions are 
just my own.
    When we discuss effective regulation, it is crucial that we 
remember what happens when the regulatory system breaks down. 
The public, the news media, public officials from both parties, 
every geographic region, people rise up. They ask how could 
this have happened? And they commit, we are going to make 
changes to make sure that the regulatory system steps up and 
this never happens again.
    We saw this last year when the National Highway Traffic 
Safety Administration (NHTSA), oversaw recalls involving more 
than 60 million vehicles: record setting. This record breaking 
number of recalls began when it was discovered that General 
Motors (GM) waited for over a decade to recall cars with a 
deadly ignition switch defect that now has been linked to 
scores of deaths and serious injuries. I sat in the hearings 
last year held by the Senate Commerce Committee in which 
Senator after Senator asked NHTSA's then-Acting Administrator 
``what went wrong? ''
    In 2007 the United States experienced a similar but 
different year of the recall in which hundreds of consumer 
products were recalled under the supervision of the CPSC. Many 
of them were toys that we grew up with and we gave to our 
children and our grandchildren like Barbie Dolls, Thomas the 
Tank, Easy-Bake Ovens. So, all of a sudden this relatively 
unknown agency was front page news, and it was a topic of 
conversation at the playground and the water cooler. Americans 
throughout the country in red States, blue States, purple 
States, were asking what is this agency doing to protect our 
children? Congress responded and passed, by almost a unanimous 
vote--I think there were three votes against on both sides, 
House and Senate--passed the Consumer Product Safety 
Improvement Act, which is the most far-reaching reform of the 
Agency since it was founded in 1973.
    Congress established the Federal regulatory system to 
protect the public health, safety, and welfare, and American 
consumers expect that this system is working to keep the 
products they purchase safe, the air they breathe clean, and 
the vehicles they drive free from defects. American businesses, 
in turn, thrive, in part, because consumers have confidence in 
the safety of the marketplace. If you ask the executives at 
General Motors and Mattel if they wish that the regulatory 
agency had caught these problems sooner, before they got out of 
hand, I know what they would say. Nobody benefits when the 
regulatory system fails.
    Our current regulatory system, unfortunately, is already 
burdened with insufficient resources and bureaucratic 
requirements that add unnecessary costs and inefficiencies, and 
these burdens have real costs. Unsafe cribs kill innocent 
babies. Children were sent to hospital emergency rooms with 
repeated and painful surgeries because they swallowed tiny 
magnets that were in toys. And, of course, we know that 
hundreds of people, thousands of people, are killed and injured 
in defective cars. The pain to the families is incalculable, 
but companies also suffer. They suffer financial losses and 
reputational harm.
    In 2008 Congress passed the Consumer Product Safety 
Improvement Act (CPSIA) in response to a crisis of public 
confidence in the safety of toys and other children's products. 
A key cause of this crisis was the inability of the CPSC, under 
its existing extensive analytical requirements, to address the 
hazards in the marketplace that were posed by unsafe children's 
products. Congress, in the CPSIA, acknowledged this, and 
directed CPSC to enact a series of mandatory safety standards 
for children's products, including toys and cribs, infant 
walkers, toddler beds, a long list. And it put those 
rulemakings under strict deadlines.
    But here is what is interesting about this. In order to 
enable the Commission to proceed expeditiously to protect 
children in this way, the CPSIA directed CPSC to bypass its 
existing regulatory requirements and proceed under the 
streamlined procedures of the Administrative Procedure Act, 
and, in fact, this was not the first time Congress had done 
that.
    Every time Congress has to step in because CPSC is not 
doing its job and it directs the Commission to issue a 
regulation, it directs CPSC to bypass its own requirements and 
proceed under streamlined requirements because Congress 
recognizes that CPSC's burdensome regulatory requirements stand 
in the way of an effective and efficient regulatory response.
    We have many successes to celebrate in our regulatory 
history: Cleaner air, purer water, safer food, drugs, and 
products, but our rulemaking system needs reform. As my 
experience at CPSC has demonstrated, timely and effective 
response to threats to public health, safety, and welfare can 
only occur if agencies are not bogged down with nonproductive, 
extensive analytical requirements and are provided with the 
resources necessary to carry out those actions.
    Thank you for this opportunity, and I am happy to answer 
your questions.
    Senator Lankford. Thank you. Using Chairman's privilege, I 
am going to defer to some of other Members, and I will actually 
go last in my questioning time today. So, I would like to 
recognize Joni Ernst if you are OK with that?
    Senator Heitkamp. Absolutely.

               OPENING STATEMENT OF SENATOR ERNST

    Senator Ernst. Good morning. Thank you to all of our 
witnesses here this morning, and thank you to the Chairman and 
the Ranking Member. I appreciate your steps to listen to our 
constituents and their concerns about rulemaking, the 
regulations process and how it is impacting their daily lives.
    This is such an exciting topic. I cannot believe we do not 
have a roomful of people here today.
    When I was out and about over the course of the past year 
in Iowa, this was one of the top issues. Rules and regulations 
impact every individual, every individual in Iowa. It does not 
matter--insert State here--rules and regulations impact 
everyone, whether it is in manufacturing--and thank you, Mr. 
Greenblatt, for being here today--manufacturing, healthcare, 
agriculture--very important in the Midwest--and many other 
industries.
    About 4 years ago in Iowa it had become such a great 
concern that the Governor, Republicans in the House and the 
Senate at the State legislature convened a rules and 
regulations tour across Iowa, and what we did, we established 
sites all across the State. We went out, as legislators, the 
Governor, lieutenant Governor, and we met with individuals and 
we took their testimony, both written and oral. And we compiled 
all of those statements.
    And at the end of the tour, we had binders with thousands 
of statements on how rules and regulations were sometimes 
positively impacting their lives, but for the most part, I 
would say probably 98 percent of the comments we got were how 
they were impeding innovation and productivity in their daily 
lives, again, whether it was as individuals or as businesses.
    Mr. Eisner, I would like to mention and ask you a question 
because you did mention public participation in the rules 
process, and you mentioned that the perception of the agencies 
is that they do not take public comment seriously. And I often 
got that perception also, is that many of our agencies out 
there--you may take that public comment, but whatever happens 
to it? Does it just go away or do we actually act on it and 
look into it, which is something we did in Iowa. We actually 
set priorities, separated out what we could work on in the 
State, separated out Federal regulations that would have to be 
dealt with another day. But we do need to take public comment 
seriously.
    I know you have done this. I think you have shown that very 
well through your time at DOT, but I am not convinced that 
other agencies do that.
    Could you please comment your knowledge of other agencies 
and where you think public comment fits in and how do we 
encourage agencies to take this seriously?
    Mr. Eisner. First of all, a lot of agencies do take 
voluntary steps to improve that participation. For example, we 
are not the only ones who have on our general regulatory site 
instructions on how to submit effective comments. EPA has 
something like that, I believe, the Federal Communications 
Commission (FCC) has something like that.
    At DOT we also, as I mentioned, had these regular meetings, 
things like that. And in these meetings, the briefing documents 
would say, ``here are the comments from,'' and then they would 
list major segments of the industries or the public that were 
regulated. Here is what they said, and then a few pages later 
you would have slides on changes that were made or not made.
    The important part--and that is why I stress oversight--is 
for other people like OMB, like my office, and other offices, 
the Small Business Administration's (SBA) Office for Advocacy, 
to ask questions during the review, to ask why this? Why 
couldn't you make that change? And see whether it is a 
reasonable explanation.
    I think a lot of agencies do that. I did not get involved 
in looking at a lot of their rules, but just from talking to 
them. We had an informal group that would meet periodically or 
communicate by e-mails. People were trying to do a better job 
in that regard.
    And, again, just some of the other examples that I have 
talked about that agencies could use. FAA would provide an 
expert before some of their hearings so that people who needed 
help in understanding the rules before they commented on them 
at a hearing could ask questions of the expert from the agency.
    Some of the agencies, like Coast Guard, will go to where 
the people are that they are regulating. When they were part of 
the department, they had fishery rules. They would go to the 
fishing areas to get public testimony.
    So a lot of that is done by a lot of different agencies 
inside DOT and elsewhere. More can be done. I have heard the 
comments and the concerns enough so that I know some are 
probably not doing it effectively.
    But in all honesty, Senator, I went to meet with a group 
representing a significant part of one of the industries we 
regulate, and I was talking about a new rulemaking when one of 
the members asked me why we made no changes. I was talking 
about an alcohol testing rule--and why we made no changes in 
response to their comments as a result of what we did in the 
drug testing rulemaking that we had issued earlier.
    And he said, ``You did not do anything. You changed 
nothing.'' And I said, ``I am not here prepared to talk about 
that rule in detail, but off the top of my head I remember''--
and I listed 10 significant changes we had made. And I said, 
``Why do you tell us we did not make changes when those 
responded to your comments and did make the rule a better 
rule?'' There were delicate balances.
    I cannot explain why some people think we do not make 
changes. I know that not everybody misunderstands. There are a 
lot of people who are not getting what they want and what they 
think they should get, but when we did it, they still told us 
we did not make any changes.
    Senator Ernst. That is an interesting comment. I know that 
there are a number--and I apologize, is that OK? I have gone 
over my time, if I could just have a couple more minutes on 
this topic.
    It is interesting. I think communication is a very 
important part of working with the public and making sure that, 
one, you have annotated that you have received or heard their 
concerns and explaining why it is necessary to have that rule 
or regulation or if it is not necessary or not common sense, 
maybe the changes that have been made that make it more common 
sense or whether it has gone away.
    What we did, what the result was in Iowa after the rules 
and regulations tour, the legislature did take on this issue. 
We prioritized 10 of the top priorities of Iowans. We looked at 
those. We responded back to constituents across the State, but 
we did enact legislation, which was rolling sunsets of the 
rules and regulations. Every 5 years, we need to review those, 
make sure they make sense. If they are no longer needed, they 
go away. If we still need them, then we renew them.
    Rolling regulatory reviews, we also did job impact 
statements where, if it fell within certain parameters, then 
the legislature would need to make approval of a rule or a 
regulation.
    There are things that can be done to make sure we are 
staying on top of rules and regulations. They need to make 
sense, first. If they do not, they need to go away. But 
communication, again, Mr. Eisner, is very important, I think, 
as part of this in working with our public.
    Thank you, Mr. Chairman.
    Senator Lankford. I recognize the Ranking Member.
    Senator Heitkamp. Thank you so much for your very 
thoughtful and--we are already exchanging notes based on what 
you have provided for us today. It has been a great first step 
in kind of a broad overview, and so I want to thank you so much 
for sharing your enormous talents today with us and your 
thoughts and your insights and really your experiences. It has 
been very helpful.
    I want to start out maybe with a story. I used to be the 
Attorney General of North Dakota, so as Attorney General, I had 
responsibility for truth in lending, truth in advertising. 
There was an industry--I will not mention it--it was notorious 
in terms of advertising, stretching the truth a little bit. And 
so we tried to kind of come in and set some parameters on what 
could be said and what could not be said in advertising.
    And I got a lot of pushback, and I said, ``That is fine.'' 
``You do not want these regulations. I will eliminate all 
regulation.'' And I said, ``But I am going to take out a full 
page ad with whatever, even personal resources, every Sunday 
saying, 'Do not believe a word you read in the paper in 
advertising. You think that there are laws that protect you 
against unfair advertising, but we do not have regulations that 
actually enforce those laws, so do not trust what you read.' ''
    ``Wait, wait, wait, Attorney General, do not do that.''
    And so my point in all of this is that when the public 
thinks there are regulations that protect our safety of our 
children, when they think there are regulations that protect 
and do the appropriate thing with automobiles--I mean, I could 
go down the line with food safety--and then when those systems 
fail, they wonder why. And we could have a long discussion 
about the financial system, right?
    And so we know that there is an essential part of this, 
which is the public's expectation and how do we meet those 
expectations without doing what you have suggested, Mr. 
Greenblatt, which is create a completely uncompetitive 
environment for American manufacturing, for American business, 
for American farmers, which I represent the best in the 
country, if not the world, and so we are very interested in all 
these processes.
    So I think my first question is to you, Mr. Graham. I think 
we are very interested in what resources OIRA needs, what 
powers they need. Obviously they do not control independent 
agencies. We have to rely on the regular process there. Kind of 
structural reforms and resource reforms that you think might 
address some of the issues that have been discussed today.
    Mr. Graham. On OIRA's resources, my recollection is that, 
when the Agency was established in the early 1980s, it had on 
the order of 80 full-time career professionals. You can check 
those exact numbers. When I was at OIRA in 2001 to 2006, we 
were at around 50, as OMB Director Mitch Daniels had given us 
four or five extra slots. We then declined to 45 or 46. The 
last I checked with the OIRA Administrator, which was a couple 
months ago, he said they were at the 38 level.
    So I think people should understand that OIRA is a troubled 
agency. It is not doing well, and a lot of the talented people 
that have been there for many years have retired. They have not 
had the ability to replace them with good young talent. So, 
parts of OMB are thriving and doing very well, but OIRA is not 
one of them. And I think you could have a big impact if you 
were able to make an impact on that part of the problem.
    Senator Heitkamp. I want to follow that up with what I see 
as a case-by-case struggle that we have, which is that there 
may be a new law passed like Ms. Gilbert discussed, where let 
us just bypass the system and do this. And so for all of the 
generalized rules that we have and whether it is Executive 
Orders (EO) or whether it is paperwork rules, every one of 
these laws that get enacted, for the most part, require 
regulation without ever analyzing what the cost will be on the 
agency of that regulation, that regulatory rulemaking process. 
And then they may create a completely different process with 
different kinds of requirements.
    And I am wondering when you were at OIRA, did you ever do a 
matrix of what those additional requirements were, what some of 
the reductions in requirements were? Did you ever look at how 
all of those individual pieces of legislation really affected 
kind of a uniform system of understanding of rulemaking?
    Mr. Graham. That is a hard question. That is a complicated 
one. I want to draw a distinction between analytical 
requirements that are placed on regulators and burdens that are 
placed on businesses of regulatees, and embedded in your 
question is a little bit of both of those.
    My experience is agencies, like the Department of 
Transportation and the Environmental Protection Agency, they do 
not have difficulty getting their act together to regulate when 
Congress authorizes them to do so. They do the analyses and 
they take the steps they need to. Could that be streamlined a 
little bit so that it is easier for them to regulate when they 
really need to? Yes, but I do not think that is the heart of 
the regulatory problem. The heart of the regulatory problem is 
the burden of regulation on the rest of society. That is the 
heart of the problem.
    Senator Heitkamp. But I do want to point out, I gave a 
classic example of where delay in regulation by EPA, who you 
say is well equipped to regulate, delay in regulation has cost 
my industry and biodiesel and the renewable fuels industry 
tremendous amount of uncertainty, if not expense.
    Mr. Graham. Right. I guess we would want to look at the 
question, is that really because of the analytical requirements 
that EPA has to go through? Is that they are delaying? Or are 
there reasons that relate to the politics of the issue which is 
why they are delaying?
    Senator Heitkamp. Right. This gets to the heart of the 
matter, doesn't it? The law is the law. We expect them to 
implement the law, and when there is a different competing 
opportunities for not necessarily a change in policy for the 
Administration but different industries coming at them in 
different directions, we end up stalemated, and stalemate is 
the order of the day in Washington, D.C. And we fail to give 
certainty.
    This is such a big topic. I could talk all day about it, 
but I guess my point is that looking at this and thinking about 
the overall regulatory process and maybe, Mr. Eisner, you are 
in better position and I am just going to turn this over 
because we are going to have a longer discussion here, but you 
are in a better position to kind of respond to this mishmash 
that we have where we have a generalized rule that gets co-
opted in individual pieces of legislation over a long period so 
we do not seem--you say, yes, but, our enabling act said this. 
So our authorizing act said do it this way as opposed to other 
ways.
    Mr. Eisner. I am sorry. Your question is whether----
    Senator Heitkamp. My question is, when we are trying to set 
an overall process here--and that is really what we are trying 
to do. We are trying to say, how can we streamline this? How 
can we make this simpler? How can we guarantee that there is at 
least public satisfaction that they have been heard? And I hear 
your response to the Senator from Iowa.
    But when the specifics or when the exceptions then change 
the general rules, that makes it extraordinarily difficult for 
us to say we have a process that is working in the way that we 
expect it to work when each enabling act or each authorizing 
act sets a different process.
    Mr. Eisner. If there are multiple processes imposed on 
agencies, and in some cases I do not think there are multiple 
processes, but there are overlapping requirements; they do slow 
the process down. But there are a lot of reasons the processes 
slow down. When I do a training course, when I initially set it 
up for DOT I had two slides with about 15 or 20 common 
explanations for delays. Some of them, as John said, could be 
political. Some of them could be incompetence. Some of them 
could be because they do not have the resources or they do not 
have the data. Some can be because they made mistakes while 
they were developing the document and had to go back and start 
over. There are good reasons and there are bad ones.
    Senator Heitkamp. Mr. Chairman.
    Senator Lankford. Thank you.
    I am going to go through a round of questions, and then we 
will start immediately our second round. And the second round, 
just to let everyone know, will be everyone's microphone is 
open. We will have open colloquy here on the dias and also at 
the table, and we will allow for a lot of more interaction as 
we go from there. Let me just walk through a couple quick 
questions on this as we try to deal with some solution issues 
on it.
    Mr. Graham, you talked about the cost-benefit analysis, and 
one of the things you brought up specifically was you mentioned 
the incentives to avoid going through the cost-benefit analysis 
just because of the process and the paperwork that is internal. 
So, I find it ironic that the companies are struggling with all 
the paperwork and internally in the agencies. They are 
struggling with all the paperwork and the process as well on 
it.
    Can we talk a little bit about the incentives and how do we 
fix that so that the incentive is to do a cost-benefit 
analysis--that was the desire of Congress--and benefits all of 
us rather than the discouragement from actually doing it.
    Mr. Graham. Right. Let me give you a concrete example. 
Suppose the Environmental Protection Agency we are about to 
say, we are going to require 15 percent of all new cars sold in 
the United States to be electric cars, and you have to sell 
that many. That is the way it is going to be. There will be 
$10,000 to $20,000 incremental costs for each of these electric 
cars. That rule would have a hard time, under a Democratic or 
Republican administration, getting through OMB. It would have 
to have a cost-benefit analysis, and OMB would review it.
    We have this regulation now in this country. How did it 
happen? It happened because EPA signed a waiver form that 
allowed California to enact this requirement. And then under 
the Clean Air Act, other States are allowed to follow 
California's program. Now we have 10 States doing this. A 
quarter of the country has this requirement by 2025.
    All of that was done, even though it is a regulation with 
national economic ramifications. There was never an OMB review. 
There was never a cost-benefit analysis.
    So you have to look very carefully at the ways in which 
these agencies can behave to avoid these requirements, you have 
some good legal staff that requires some good looks at it.
    Senator Lankford. It does. And here is the issue I think we 
can commonly agree on: regulations are not supposed to just 
appear out of the dark. They follow law. So we are not a nation 
of regulations. We are a nation of law, and we are not trying 
to promote more regulations, and regulations is not the answer. 
Law and following the law is the answer, and those regulations 
come out of statute.
    When something happens like that that has no statutory 
background to it that is invented, I think that is where 
Americans get furious.
    Mr. Graham. But it does have statutory background and it is 
complicated. The Clean Air Act says that States may not 
establish their own standards for motor vehicles unless they 
are California. California is entitled to a waiver, if certain 
criteria are satisfied, and EPA gave that waiver, but they did 
not do a cost-benefit analysis to support that waiver because 
the ``waiver'' isn't covered as the kind of activity that is 
subject to a cost-benefit analysis.
    Senator Lankford. Yes, we are back to the same issue where 
you go to the EPA with the ethanol rules that we have talked 
about a couple times as well. They have in the statute the 
ability to be able to waive the requirements, and it is not 
being exerted on that. They are locked up. We are literally a 
year-and-a-half past when they were supposed to tell us the 
quantities for last year, and manufacturers are sitting and 
waiting trying to determine how much they had to manufacture 
last year because they are waiting on EPA to try to give them a 
decision.
    Mr. Graham. Yes, and if you are a manufacturer of the more 
advanced biofuels--like in Indiana, we would like to make 
ethanol, not from the corn but from the cob and the stalk and 
get credit as advanced biofuels. Well, if they keep delaying 
this requirement, there is no guarantee there will ever be any 
market for this. So you have got yourself----
    Senator Lankford. Well, the largest manufacturer in the 
country that does cellulosic just went out of business last 
year in the process. We can talk about ethanol another time. In 
fact, we will in a few months. That is coming. That is one of 
the many things there.
    The incentive that sits out there for regulators when they 
are actually trying to impose meeting with companies, whether 
that be a fine for not signing a form or I have met with 
multiple different manufacturers that have told me if they go 
back 15 years ago, 20 years ago, government agents came to 
their business, did an inspection--whether it was the 
Occupational Safety and Health Administration (OSHA) or whoever 
it would be--and would help them find issues, and it was a 
helpful process. Now, they are terrified to have regulators 
show up because it is a fine because it does not seem to be, 
``Hey, here we are here to help you.'' It is, ``We are here to 
fine you,'' and there seems to be an attitude shift on it.
    Have you noticed, Mr. Greenblatt, on the manufacturing side 
of this, a shift in the way regulators interact with your 
business? You do not have to name any particular agency on it, 
but has there been an attitude shift that you have engaged?
    Mr. Greenblatt. We work with OSHA. In Maryland it is called 
MOSH, Maryland OSHA. There are two paths. There is the path you 
described, the mentoring counselor path, and there is the 
alternative path. And we have embraced the mentoring role, and 
we have found it to be very helpful and very productive.
    Senator Lankford. Good.
    Mr. Greenblatt. And they have given us many good ideas.
    One concern we have about that is I think we should 
consider the 80/20 rule. We have a factory with many different 
activities going on and when the inspector came around to our 
facility, he passed by 132-ton press brakes and he passed by 
20-ton punch presses that were very safe, and then what did he 
find? He found that we had a toaster oven connected to the wall 
in a certain receptacle, and he literally cut it with a scissor 
as if that is our biggest threat to our employee.
    Again, if you do an 80/20 rule, if you look at sheet metal 
fabricators, that is probably not the next big threat, the 
toaster oven issue. The next big threat is probably going to be 
something near the press brakes or the laser or somewhere.
    And so it was puzzling to us that that was something they 
would cut a cord, literally physically cut a cord on.
    Senator Lankford. I am going to ask this question and then 
I am just going to open it up for conversation from there, and 
we will shift into the second round.
    There is a Supreme Court ruling that just came out dealing 
with the Mortgage Bankers Association and the issue of 
interpretive rules.
    The Supreme Court ruled that the agencies have the ability 
to be able to transition interpretive rules without notice and 
comment and to make that change. Now, I do not want to deal 
with the Court aspect of it. My first response on that was, 
what is an interpretive rule? Is that clearly defined in law 
what an interpretive rule is? Or does this give the ability to 
agencies to be able to designate any rule change from here on 
out as interpretive, and then they do not have to go through 
notice and comment?
    Does anyone want to make a comment on the fact there may 
not be a comment in the days ahead?
    Mr. Eisner. I would like to start off the discussion on 
that, Senator. There are problems in that area, but I do not 
think we need a new definition of interpretation.
    Senator Lankford. Is there a current rule, an interpretive 
definition of what an interpretive rule is?
    Mr. Eisner. In simple terms, it is the agency's nonbinding 
statement on what it believes a rule requires, oftentimes in a 
particular situation. That is one of the reasons I would 
recommend we be very careful in this area. By statute in some 
cases, agencies are required to give out telephone numbers of 
people you can contact for advice like that, and a lot of what 
agencies do when an inspector goes into a plant or when 
somebody is going in and looking at books or looking at records 
that you have submitted is they get asked questions: How do I 
do this or how do I do that?
    And the agency responds. Sometimes it is in person, 
sometimes it is through an e-mail or a letter. Sometimes if 
they think it is generally applicable to everybody and it might 
help them, they will post it on the Web.
    But day in and day out they are giving advice in very 
informal ways on what you need to do. It is oftentimes ``if I 
do X, will that satisfy the rule? '' ``Yes.'' ``Good.'' 
``Fine.''
    There are times when agencies issue interpretations that 
cause people a lot of problems. Sometimes they are going way 
beyond what they had actually said in the rule and insisting it 
is just guidance. Sometimes they are treating it as if it is 
binding. That is wrong, and not just the courts but others try 
to get a hold of that.
    When John was the head of OIRA they set up a policy 
requiring agencies to submit certain kinds of guidance 
documents and interpretations to them. At the Department, if we 
see something like that, we will say, ``What is your basis for 
that?'' A lot of agencies ask for notice and comment on 
guidance that they think might be controversial and they want 
to hear people out and see how they can expand on it. Most try 
to do it well. I would be the first one to admit, some people 
abuse the process. That is something you cannot handle with a 
definitional change or a draft of a new term.
    Senator Lankford. So the challenge is what is an 
interpretive rule and how do we actually get that out there if 
now the courts have determined interpretive rule does not go 
through an Administrative Procedure Act. What is to stop any 
agency in the future from just saying every rule is 
interpretive basically?
    Mr. Eisner. They did not decide in that case that every 
interpretation does not have to go through notice and comment 
procedures. What they determined was that--because that is in 
the statute--it does not require it. There is an exception for 
it.
    Senator Lankford. Right.
    Mr. Eisner. The problem is people abuse it, and that is 
what gets into court. In this particular situation, they 
changed their interpretation.
    Senator Lankford. Right.
    Mr. Eisner. And the issue is should they have gone out for 
comment on changing the interpretation to make sure the change 
would not have an adverse affect. That is why a lot of agencies 
do ask for comment. But in this particular case, the Court said 
there was no reason to do that. The Court said when it is 
unreasonable, when the change is unreasonable, they can 
overturn it under the existing requirements in the APA.
    You do not want to stop agencies from being able to give 
out helpful guidance.
    Senator Lankford. No, I do not, because we have agencies 
that will not give help that literally I have had folks that 
have said, ``I have called an agency and said 'Does this 
count?' and they said, ``Well, we will determine that when we 
come out to inspect.'' At that point they say it is too late.
    It is happening a lot with FDIC right now with small 
community banks where they will call and say, ``I would like to 
do this kind of loan. Will this count?'' They say, ``well, we 
will tell you when we get there. `` It is too late at that 
point.
    Mr. Eisner. And to a certain extent John took care of it. 
It is one of reasons we created this website--we are not the 
only agency to put this up. We have a definition of each of our 
kinds of rules, interpretive rules, policy statements, and 
binding legislative rules. We also have detailed explanations 
of what guidance documents may look like, from the preamble to 
a proposed and final rule, which can provide helpful 
information all the way down to oral advice when there is no 
record of what the FAA or the NHTSA official said when he was 
talking to you.
    And we tell people about all these different kinds of ways 
of giving advice and how they should use some with care and how 
others they can rely on. The agency even says, ``You can rely 
on this.''
    That is the kind of thing that I think a lot of agencies 
do. Those that have problems need to do a better job.
    The Congress had problems with FDA many years ago with the 
way they use their interpretive authority. And Congress focused 
on them with some particular requirements, and they are now 
considered one of the leaders in the way they handle guidance 
documents. They have a good operating practice.
    Senator Heitkamp. One of the concerns that I have is that 
we do not want to get, in this Committee, into the weeds on 
each individual agency or each individual entity. What we want 
is we want to have the view from a mile high. That is our job 
on this Committee, and we have talked about this, and each one 
of these things are very helpful illustrations of what might be 
causing the problem, but I want to get to the overlay of State 
regulation and how much of that--whether the Federal agencies 
legitimately or actually engage in a review of what is 
happening with State regulation that needs to be harmonized or 
at least appreciated as we work forward.
    We go back to the discussion about automobiles. Well, it 
was done under the Clean Air Act, but California probably could 
have enacted a statute that said, just like renewable fuel 
standards, we are going to make all these cars go this way. 
Right? That is California sovereign prerogative. We do not 
always agree, trust me, in North Dakota on what California 
ought to be doing, but, we have to recognize that we are 
dealing with various levels of sovereignty and States' rights.
    And so we have this overlay of State regulation that does 
not seem to get very well harmonized with Federal regulation. 
Tell me what requirements are in the law today for Federal 
agencies to actually have consultation, meaningful consultation 
with State entities that are regulating at the same level. And 
I think, Mr. Greenblatt, you would probably agree that it is 
the cumulative effect of Federal and State regulation that 
really has you coming and going because they are not always 
consistent.
    So, what would you recommend to us? What would you suggest 
to us as a good model for better harmonization with State 
agencies?
    Mr. Graham. That is a great question. One of the things I 
have been doing is studying how the European Member States of 
the European Union interact with Brussels in this regulatory 
area. And, of course, there are lots of differences about 
Europe and their structure of government than the United 
States, but the one thing they have is they have a variety of 
processes that basically require--I forget what fraction, 60 
percent or two-thirds of the Member States--to agree on 
something before the Federal Government does it.
    Now, if you take that general principle and bring it into 
the regulatory area, maybe the Governors--I do not know, pick 
what fraction you want--three-quarters, two-thirds--should have 
to sign on to one of these big Federal regulations and say this 
is a good idea before you do it. I think it is a very different 
way to get meaningful participation of the State governments.
    But the agencies will say, ``Oh, we consult with the 
Governors, we consult with the National Governors 
Association,'' but there is not actually any formal teeth to 
it, if you understand what I am saying.
    Senator Lankford. That is part of the conversation here 
with Congress and with the Senate and everything else. There is 
this ongoing conversation because that is what we are supposed 
to do. We are supposed to represent our States bringing that 
message from our States to our own government to say, ``Wait a 
minute, this does not work in our State'' and bring it to us.
    How could that work within a Federal system even to where 
agencies--obviously as I mentioned before, regulations are 
supposed to be an extension of the lawmaking process that it 
actually comes back to lawmakers in whatever forms or back to 
States to be able to evaluate does this really work?
    Mr. Graham. Just following up, at the beginning of your 
question, prior to the Clean Air Act, California or any State 
was permitted to pass legislation and do whatever they want. 
But it was the Clean Air Act that prohibited any State from 
passing their own automobile legislation except they gave the 
out for California because of the smog in Los Angeles and the 
need to have very special activity there.
    Senator Heitkamp. The point I would make is there already 
was a level of preemption.
    Mr. Graham. There is a very strong level of preemption.
    Senator Heitkamp. Right. So California, if they were 
listening to this discussion, they would say, ``Well, you 
already preempted. We have the exception. You cannot complain 
about how we are administering our laws and our sovereignty to 
protect----''
    Mr. Graham. No, under the Clean Air Act California must get 
permission from EPA to exercise that authority.
    Senator Heitkamp. We could talk about the Toxic Substances 
Control Act (TSCA) right now and what is happening with 
labeling and TSCA, and that would probably be a better example 
because they have moved into the void.
    Mr. Graham. Right. So, for example, maybe a certain 
percentage of States should have to agree on that and sign onto 
a Federal chemical regulation under TSCA before it is done.
    Senator Heitkamp. Wow. I mean, this----
    Mr. Graham. I mean, if it is such a great idea, why can't 
you get a good chunk of Governors to say it is a good idea?
    Senator Ernst. Or the Senate, yes.
    Senator Lankford. This is something we have all talked 
about a lot and that is multiple forms. The trucking company I 
talked to recently in my State--it is a small trucking company 
and they talked about how many times they fill out basically 
the same form for different agencies.
    How can we work that through with OIRA or with whatever it 
may be to try to make sure that one company is not filling out 
basically the same form four times?
    Mr. Greenblatt, I saw in your testimony there was a comment 
you made there about filling out the same form for multiple 
sales over and over again--I think, for the Securities and 
Exchange Commission (SEC)--that you mentioned that as well. If 
you want to comment on that, but I want to comment on how do we 
fix this so that companies are not repetitively filling out 
forms?
    Mr. Greenblatt. So the SEC is requiring publicly traded 
companies to divulge their conflict minerals, their exposure to 
conflict minerals. So all the publicly traded companies that we 
sell to, and we sell to virtually 400 or 500 publicly traded 
companies right now, they all require us to fill out a form to 
confirm that we are not selling steel baskets that have these 
conflict minerals. We buy steel from Nucor in Indiana, all 100 
percent USA made. We are not buying anything from bad places in 
Africa.
    So, it is very unpleasant because every single one of the 
publicly traded companies has a different format of a document 
so that they can adhere to their SEC requirements. And it is a 
very complex form, and so you cannot have just anybody fill it 
out. It has to be a very smart person within your company, and 
every company has a different form.
    What happens is it sounds like a noble idea; however, it 
really impacts small business people because they have to 
address this----
    Senator Lankford. You are saying you just cannot have a 
certificate saying, ``We do not sell things from this one,'' 
and just give it to everybody and they keep it on file?
    Mr. Greenblatt. That would be the best way to do it. Please 
enact that.
    Senator Lankford. Well, that would be the independent 
agency that is sitting out there that is outside the bounds of 
everything, so that is a whole different issue.
    Senator Heitkamp. Yes, it sure is.
    Senator Lankford. Again, that goes back to the common sense 
thing, and it goes back to the big picture thing that, we just 
want to help solve--that companies are able to be protective, 
not having to chase down forms. That is not what you want to 
do. It is a reasonable thing to say we do not deal with bad 
actors. It is unreasonable to say verify it in 400 different 
ways.
    Mr. Graham, one quick comment on the duplication. Is there 
anything that can happen with OIRA to be able to help manage 
the duplication where entities are basically filling out the 
same form for multiple agencies?
    Mr. Graham. I think you have some good statutory authority 
that exists now under the Paperwork Reduction Act.
    Senator Lankford. Right.
    Mr. Graham. You do not really have a viable mechanism at a 
paperwork-burden-by-paperwork burden basis for OIRA to play a 
significant role. You are talking about 38 staffers, and you 
are talking about a gigantic regulatory system at the Federal, 
State, local levels. They cannot be there for all these 
paperwork activities.
    So basically what I would say is the thinking that needs to 
be done is how do you take the Paperwork Production Act, which 
is an existing statutory authority and then make it meaningful. 
That is a hard problem, but that is the assignment.
    Senator Lankford. Where would they go for this trucking 
company to say, ``I just filled out the same form three times 
for three different agencies.''
    Mr. Graham. Right.
    Senator Lankford. Who do they go to? Who do I go to to say 
``fix this''?
    Mr. Graham. Right.
    Senator Lankford. I think that is one of the key issues we 
could find is where do they go to say ``make this stop?''
    Mr. Graham. Right.
    Senator Heitkamp. Many States have adopted streamline 
processes where they make those agencies come together because 
they are obviously at the ground level much more responsive and 
nimble than we are and so those one-stop shops that can be 
great models that the States have created, in my State and 
other States, could be good models to talk about how you 
streamline permitting, how you streamline all of this.
    Senator Peters. Well, thank you, Mr. Chairman and Ranking 
Member.
    Actually, as I listen to this conversation of streamlining 
paperwork, I was involved in this issue in the House on a bill 
with Mr. Latta that we worked on, Mr. Chairman, that dealt with 
paperwork related to buying an automobile.
    As you know, when you buy automobiles, there is usually a 
pretty thick stack of documents that you have to fill out. One 
of the pieces of paper was that you had to sign to verify that 
the automobile complied with the Clean Air Act, which passed 
back in the 1970s. Every automobile complies with the Clean Air 
Act. There are all sorts of things on the car and all sorts of 
recognitions, but this paperwork was required, and it was 
required by Congress. It was not an agency that required it.
    It took an act of Congress to get rid of a piece of paper 
that is with every car purchase that makes no sense whatsoever. 
So we also have to put the light on us a little bit as well, 
that a lot of these paperwork requirements have some sort of 
congressional action that was taken sometimes 30, 40 years ago, 
that hopefully in this committee we will have an opportunity to 
continue to work on.
    Senator Lankford. That goes back to the same conversation. 
We have to have someplace that people can respond to and say 
``How do we fix this,'' and then we can separate out. That is 
congressional action that is needed to get rid of that, or that 
is already the agencies have authority. Somewhere people need 
to be able to go to fix that.
    Senator Peters. Right. And I look forward to doing that.
    If I can switch gears a little bit and just ask, Ms. 
Gilbert, I noticed in your testimony a lot about cost-benefit 
analysis, and that certainly has become a topic here in 
Congress and a lot of folks like to see cost-benefit analysis. 
I know you have had an interesting take on some of that, one 
that the costs tend to be overestimated versus the benefits 
when some of that is done.
    So if you could maybe flesh out a little bit of what you 
have said in your opening as well as your testimony as to what 
do you see as the role of cost-benefit analysis as we are 
looking at regulations and passing things and understanding 
that there are some biases perhaps in that?
    But if you could talk a little bit about that, that would 
be helpful.
    Ms. Gilbert. Sure. Thanks, Senator Peters.
    Just so you understand, at the Consumer Product Safety 
Commission, it is in the statute itself, not relying on 
Executive Orders or other things that have been passed since. 
The statute itself requires extensive cost-benefit analysis, 
not only for the rule that the Agency is proposing, but for all 
the alternatives that have been presented. Then the Commission 
also has to pick the least burdensome alternative of those 
alternatives using an extensive cost-benefit analysis.
    As the former Executive Director and also now as a consumer 
advocate working with the Agency, I will tell you that that 
often paralyzes the Agency.
    And the table saw rule is one example that, I know John 
Graham and I agree on. It is a very commonsense rule. It is 
tragic. Every single one of these amputations--and there are 
tens of thousands of them--can be prevented, and the Commission 
has the way to do it, but it cannot get through the process. So 
cost-benefit analysis can just hold back very important 
commonsense rules in the government.
    Of course, it makes sense to look at the costs of complying 
with regulations when you are putting a regulation together. 
There is a commissioner at the CPSC now, Bob Adler, who likes 
to talk about this, and I think he has it right that, it is 
really misstated to say a cost-benefit analysis. It is really 
cost versus cost.
    When there is a dangerous product out in the market that is 
killing and/or injuring people, there are costs to that, there 
are costs to not fixing it. There are societal costs. There are 
costs that are indirect and direct. And then to fix that 
problem, let us say it is putting air bags in automobiles, for 
example, or taking lead out of children's products, also costs. 
There is no doubt it costs companies. But we need to be looking 
at the cost of doing it and the cost of inaction. And as I have 
described it to you, you can imagine, it is hard, it is very 
hard to estimate. I think it is difficult to estimate on the 
business side how much does it cost to retool, to put those air 
bags in?
    I know when the air bag issue was going on for decades, the 
cost of putting air bags in cars was widely inflated to what it 
actually is today. And I would also say that I think the 
American public is very grateful we have a regulation that 
requires air bags in cars. It could have happened decades 
earlier, but it did not. And now nobody--manufacturers, 
dealers, consumers--would want to take that regulation away, I 
think.
    I think we want agencies to look at the costs for sure, but 
what you need to be very careful about is layering this cost-
benefit analysis on top of this one, on top of that one. And I 
would be very careful about requiring what CPSC is required to 
do, which is to do a cost-benefit analysis on all the 
alternatives that are out there because sometimes that is 
almost impossible to do. And yet, that holds up, again, the 
commonsense regulation that everyone may agree to.
    Mr. Graham. Just a quick response. I have done a cost-
benefit analysis of the rule she is talking about, and the 
benefits do look like they exceed the costs. I do not think the 
problem is in cost-benefit analysis. A lot of things she 
describes as a cost/cost analysis, that is what we do in a 
cost-benefit analysis.
    The problem with the CPSC is that it has a very particular 
way the statute was written by Congress in the beginning, and 
what it does is it creates this presumption for a voluntary 
standard before you can consider a mandatory standard, and the 
structure of the deliberation in the voluntary standard puts 
the industry that is to be regulated as in a key driver seat in 
the voluntary standard setting process. This makes it very hard 
for CPSC to enact regulation.
    This is a very unusual feature of the CPSC process. I do 
not think it is a generic thing that is across many agencies.
    I agree with you that the rule is potentially a very good 
idea, and I think it can pass, and I have published peer-
reviewed articles indicating that passes cost-benefits analysis 
tests, but the heart of the problem is that the feature of the 
rulemaking process at CPSC where they go through this very long 
industry-led voluntary standard setting process first.
    Senator Heitkamp. I want to make just a quick point because 
I do not know that I was really articulating my point about 
various laws that change the rules. Here we are. We think we 
are going to set a cost-benefit analysis. This makes sense. 
Well, we have an individual statute that says do it this way. 
How much of that is out there, is my point? How much of this do 
we think we are fixing a problem. We are not fixing anything 
because we have all these mini little structures out there that 
are in law already that make it impossible to set general 
rules.
    Mr. Graham. Well, I think that one is tempted to think what 
we should do is just go into each one of these areas, CPSC, 
DOT, and really learn and study the details of their system and 
then tweak and refine each of those systems.
    I have been working in this area for decades. If this 
committee goes down that path, OK, you will not----
    Senator Heitkamp. Therein lies despair?
    Mr. Graham. You will not succeed. Because there is just so 
much idiosyncracy along the way. You need to pick a couple 
themes, and you need to try to get them across the board at all 
of these agencies, including independent agencies, and there 
will be some awkwardness in how these things fit with each 
individual agency. I acknowledge that, but the alternative of 
thinking that you are going to go in and you are going to fine-
tune the architecture in each one of these agencies, that just 
is not going to be possible.
    Senator Heitkamp. I do not want to fine-tune anything. I 
just want to know where it is. No one knows where it is. No one 
has done that kind of systematic study.
    Mr. Graham. I will give you one example. And I wish the 
Senator from Iowa were here because she was talking about 
public participation. One of the things I think that members 
should be aware of is that agencies take public comment and 
public participation after they have proposed a solution. And 
like all human beings, once we think we know what the solution 
is, we put it on the table, it is not that easy to move people 
off that original proposal. They will refine it and change it a 
little bit.
    In some of these rules it is probably better if the agency 
says, ``Hey, we are thinking about regulating this area. We are 
going to do this advanced notice where we are going to lay out 
some data, what we think the problems are, look at a range of 
ideas,'' and not lock themselves into anything. Take comment at 
that stage, and then once they have that, then they go to a 
proposal.
    Does it slow them down 3 to 6 months? Probably does. In a 
lot of important rules it is probably better that they come out 
and just define the problem a little bit and have an advanced 
notice before they even get to the proposal, that way you do 
not have all that ego behind that position.
    Senator Lankford. Does anything prohibit that right now 
from an agency from doing that?
    Mr. Graham. No. But there is nothing that requires them to 
do that.
    Senator Lankford. Does anyone do that? Does any agency do 
that?
    Mr. Graham. Yes, on occasion they do that.
    Ms. Gilbert. So can I respond to that?
    Up until the CPSIA, CPSC was required to do that. CPSC had 
a three-stage rulemaking process: Advance notice of proposal 
rulemaking, notice of proposed rulemaking, final rule. It was 
incredibly burdensome. You had to do it every time.
    CPSIA in 2008 changed that. CPSC still, most of the time, 
does an ANPR. But they do it voluntarily.
    Mr. Eisner. If I could, Senator Heitkamp, there are 
statutes that say things like ``you cannot consider cost.'' 
That does not prohibit the agency from doing a cost-benefit 
analysis, and we have used those cost-benefit analyses in some 
instances to convince Congress to change the statute.
    Sometimes the statute specifically requires something. For 
example, some device that will tell you if a child is behind 
your car when you are backing up or mudflaps on trucks. We were 
required to do that. We came up with a cost-benefit analysis on 
the mudflaps on trucks and said we do not think it is worth it, 
and they agreed and changed the statute.
    But, again, the agency can do the analysis, and that is 
important, and, again, analyzing every alternative somebody 
suggests could be burdensome, but analyzing reasonable 
alternatives, yes, it takes time, but it is what a good agency 
should do, and it should be used before the decision is made.
    Senator Peters. If I could go back to the voluntary 
requirements, and, Ms. Gilbert, I know you have mentioned some 
of the concerns with voluntary standards and the potential for 
judicial review. Do you want to comment a little bit from Mr. 
Graham's comments and some of the challenges with those 
voluntary standards and how that makes it your job or jobs of 
folks in your former position very difficult?
    Ms. Gilbert. Sure. Thank you.
    CPSC does have a requirement that it has to defer to 
voluntary standards if they exist, and they will be adequate, 
and they will be likely to be complied with. And there is a 
different part of the statute that says the Commission actually 
has to wait to see if that voluntary standards process is going 
to happen, to give that process a chance. So as you can 
imagine, that can lead to enormous inordinate delays.
    When I was at the Commission, 90 percent of what we did on 
the regulatory end was through voluntary standards because the 
Commission's own regulatory process is so burdensome and that 
voluntary standard requirement existed. So we primarily worked 
through voluntary standards, which can work quite well, and we 
were able to participate in a lot of good voluntary standards. 
But we got to one point where we decided we had to regulate 
because the standard was not working and this deals with bunk 
beds.
    Children were strangling in their bunk beds because the 
slats were the wrong width apart, or there were cutouts for 
design purposes, and children's bodies could slip through and 
then their heads would get caught.
    A woman came to our agency who literally found her daughter 
strangled to death in the morning, one morning when she went to 
wake her up. And to her great credit, she took that tragedy and 
came to the Consumer Product Safety Commission and beseeched us 
to pass a mandatory rule because the voluntary standard was in 
place, but it did not work to save her daughter's life.
    We did regulate--and we were afraid we were going to get a 
lawsuit. We were really afraid that the industry was going to 
come in and say, ``We had a voluntary standard and therefore 
you could not regulate.'' They did not at the end of the day. I 
think it is because these deaths, while they do not occur 
often, are so horrific.
    But that is the kind of problem that agencies would come up 
against when you have a requirement, again, to work through the 
voluntary process.
    Senator Lankford. Thank you. Let me ask a question just 
following up on the same line. Mr. Eisner, there is an 
interesting comment that you made in your written testimony 
where you said the influence of officials outside the agency 
affect the manner in which agencies conduct notice and comment 
responses, regulatory impact analyses and such.
    Can you help me understand that a little bit? You have your 
folks inside the agency that are trying to work through making 
a decision impact, regulatory effects, all those things. When 
you say ``outside the agency,'' is that Congress? Where is that 
coming from on that? And how is it impacted?
    Mr. Eisner. Well, outside the agency could include other 
agencies that we coordinate with who might have questions or 
comments about the analysis we have done or the proposal we are 
making.
    Senator Lankford. How does that affect the decision of the 
agency as far as when you are evaluating effectiveness and 
cost-benefit, all of those things?
    Mr. Eisner. Well, for example, if we are working closely 
with another agency that is affected by our regulation, they 
may point out data to us that would affect the analysis we are 
doing, or they may point out an alternative we had not thought 
about, and we could go back and do that before we put it out 
for public comment.
    Senator Lankford. OK. So that is helpful input is what you 
are saying there?
    Mr. Eisner. It can be helpful, but it also can be negative. 
It can be another agency--when I say ``agency,'' it can include 
the White House--that does not want to rule in that area at 
that particular time.
    One of the points I think I was trying to make is do not 
assume it is the agency. I am not saying agencies do not make 
mistakes, but do not assume that what you do not like is the 
result of an agency decision.
    Senator Lankford. So you are saying sometimes the agency 
will make a decision, cost-benefit analysis, whatever it may 
be, whether it be the White House or another agency or somebody 
else, steps in, either slows it down, says, ``No, wait on it,'' 
or tries to influence it to change it.
    Mr. Eisner. Yes.
    Senator Lankford. OK. So is that a fixable issue, or is 
that just the nature of ``Welcome to Washington''? That is 
going to always happen.
    Mr. Eisner. Welcome to Washington.
    Senator Lankford. One of the things that we are trying to 
deal with is obviously there are a multitude of issues. We will 
try to bring as many as we can, and we are trying to address it 
in the most general fashion. You are right. We are not going to 
be able to go agency to agency and try to walk through that 
process. Ultimately that is the Executive Branch trying to work 
and managing it, but there are also legal issues that we have 
to be able establish as well that we want to make sure that we 
can clear as much as possible.
    Senator Heitkamp. You made a comment about how frequently 
we fall in love with our ideas or in love with our regulation 
and we are not going change them based on comment. I think that 
what you are hearing from this dialogue today is we are not in 
love with any idea; we are in love with what works. And this 
has been extremely helpful to me to begin to kind of narrow 
that down and trying to figure out 80/20. What is that big bang 
for--take care of the big stuff and maybe let the little stuff 
go.
    And so I want you to know, this is really an open process. 
This is really an opportunity to continue to have this dialogue 
with great intellectual folks like yourselves who have thought 
about this, who have spent a lot of time working directly in 
the process, and, please, stay tuned because I think we are 
going to be very serious about this. We hope that it could be 
one of those places where we actually have bipartisan consensus 
and actually respond to concerns that the American public has.
    But your discussion today has been enormously helpful to me 
personally as I try and sort through where that greatest 
opportunity is for collaboration and change.
    Senator Lankford. We will send some questions to you in the 
days ahead, if you do not mind, and we will try not to belabor 
you with even more paperwork since we have been discussing that 
as well. But some of the things we did not get to, but I do not 
want to continue on with a long hearing. You all have things to 
do as well today, but the issue of back-door rulemaking came up 
in a couple of our conversations, how to be able to manage 
that. I think that is a great frustration to a lot of 
manufacturers that I have talked to trying to figure out where 
did this come from, how did this happen, and then to figure out 
a process. How do we remove incentives to not follow the basic 
parts of the statutes?
    The other one is the independent agencies, and you had 
mentioned it as well. And that is how that needs to come in 
line. We have a group that are operating without OIRA engaging 
with them, small staff as they are, but there is no real 
oversight in that part of it as well. So, that is something I 
think we do need to address in the days ahead, and I will be 
interested in any kind of impact.
    I would like to also announce the Subcommittee's next 
hearing before we adjourn today. It will be on regulatory 
process and it will be Tuesday, April 28. It will be held 
addressing the proper role of judicial review in the Federal 
regulatory process. Obviously that is something that all of you 
care about deeply and are connected with.
    That concludes our day's hearing. I would like to thank our 
witnesses for their testimony. The hearing record will remain 
open for 15 days, until April 1, 5 p.m., for the submission of 
statements and questions for the record.
    Thank you for being here. This hearing is adjourned.
    [Whereupon, at 11:31 a.m., the subcommittee was adjourned.]
                            A P P E N D I X

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